G.R. No. 77154 June 30, 1987 JESUS DEL ROSARIO, petitioner, vs. HON.

JAIME HAMOY, Presiding Judge, RTC, Branch XV, Region IX, Zamboanga City, and WILEADO DE LEON, DOMINGO DE LEON, CRISTINO DE LEON, HENCIANO DE LEON, MARCIANO AIZON, and EPIFANIA DE LEON, respondents. SARMIENTO, J.: For want of a one-peso documentary stamp in a special power of attorney for pre-trial purposes, in lieu of the personal appearance of the plaintiff, the petitioner in this case, the respondent Judge declared him nonsuited and dismissed the complaint "for failure of the plaintiff to appear for pre-trial conference. 1 We do not agree. The respondent Judge manifestly erred. He acted with indecent haste. He could have easily required the counsel for the plaintiff to buy the required one-peso documentary stamp outside the court room and affix the same to the special power of attorney and that respite would not have taken ten minutes. Had he been less technical and more sensible, the present proceedings and the consequent waste of time of this Court and of his own would have been avoided. The respondent trial Judge had three chances to rectify his grave error but he missed all of them. He was adamant. By such rigidity he denied the petitioner substantial justice. (1) He procrastinated when the plaintiff and his counsel immediately after the hearing on the same morning of July 25, 1986, made oral representations with him inside his chamber for the reconsideration of his order declaring the plaintiff non-suited and dismissing the complaint. The plaintiff, through his counsel, explained that he was actually inside the court room while his lawyer and the defendants' counsel, were arguing, but he (plaintiff) was too timorous to interrupt the proceedings and make known his presence to his counsel or to the court. Despite the immediacy of the representations and the plausibility of this explanation considering the plaintiff's nescience, being merely an agricultural tenant and can hardly write his name, the respondent Judge still required him to file a written motion and set it for hearing "in accordance with the Rules of Court." (2) Complying, the plaintiff's counsel forthwith filed the written motion, 2 duly supported by an Affidavit of Merit of the plaintiff, on the same day, July 25, 1986, and set it for hearing as ordered by the respondent Judge. This motion for reconsideration was denied "for lack of merit" on August 29, 1986. 3 The order of denial states in part: xxx xxx xxx A judicious appraisal of the facts alleged in the motion for reconsideration and in the accompanying affidavit of merit fail to convince the Court to reconsider the Order. As admitted by the plaintiff, he was inside the Court room when the case was caned for pre-trial conference and when his counsel, Atty. Alejandro Saavedra and defendants' counsel Atty. Navarro Belar Navarro were arguing about the insufficiency of the special power of attorney, but he never made known his presence to the Court or to his counsel or to the defendants. He approached his counsel and presented himself to him when they were already outside the Courtroom and after the case was already dismissed. To the mind of the Court, the foregoing circumstances detailed by the plaintiff do not constitute excusable negligence or mistake. 4 xxx xxx xxx (3) Undaunted, seven days later, on September 5, 1986, the petitioner filed a second motion for reconsideration 5verified by his counsel, setting it for hearing on September 19, 1986, which was promptly denied on the same day of the hearing.

And, on October 7, 1986, as a coup de grace, an over-kill to be sure, the respondent Judge issued a court order which reads: xxx xxx xxx The Court having denied the second motion for reconsideration for not being allowed by Section 4 of the Interim Rules as per Order entered on September 19, 1986, the case at bar is therefore considered closed and terminated. SO ORDERED. 6 xxx xxx xxx The respondent Judge lost sight of the fact that even the Rules of Court themselves, fortified by jurisprudence, mandate a liberal construction of the rules and the pleadings in order to effect substantial justice. 7 After an, "[O]verriding all the foregoing technical considerations is the trend of the rulings of this Court to afford every partylitigant the amplest opportunity for the proper and just determination of his cause, freed from the constraints of technicalities. 8 In a recent case 9 where the trial court, as in this instance, declared the petitioner non-suited for failure to appear at the pre-trial conference, and consequently dismissed the complaint, this Court reiterated the doctrine of liberality in the construction of the rules of procedure to be followed by all courts. While it is true under Section 1, Rule 20 of the Rules of Court, it is mandatory for the parties and their counsel to appear at the pretrial to consider inter-alia "the possibility of an amicable settlement, the simplification of the issues, the possibility of obtaining stipulations or admission of facts, totally or partially, and such other matters as may aid in the prompt disposition of the action," and that a party who fails to appear at the pre-trial may be nonsuited or considered as in default, this rule was by no means intended as an implacable bludgeon but as a tool to assist the trial courts in the orderly and expeditious conduct of trials. Time and again WE have emphasized that the rule should be liberally construed in order to promote their object and assist the parties in obtaining not only speedy, but more importantly, just and inexpensive determination of every action and proceeding. 10 Practically on all fours with this case is Gabucan vs. Hon. Judge Luis D. Manta, et al., 11 in which the petition for the probate of a notarial will was dismissed on the sole ground that the will did not bear a thirty-centavo documentary stamp, and, hence, according to the respondent Judge, it was not admissible in evidence, citing section 238 of the Tax Code, now section 250 of the 1977 Tax Code, which reads: xxx xxx xxx SEC. 238. Effect of failure to stamp taxable document. An instrument, document, or paper which is required by law to be stamped and which has been signed, issued, accepted, or transferred without being duly stamped, shall not be recorded, nor shall it or any copy thereof or any record of transfer of the same be admitted or used in evidence in any court until the requisite stamp or stamps shall have been affixed thereto and cancelled. No notary public or other officer authorized to administer oaths shall add his jurat or acknowledgment to any document subject to documentary stamp tax unless the proper documentary stamps are affixed thereto and cancelled. 12 In reversing the interpretation of the provisions of sections 238 and 250 of the old Tax Codes above copied which are Identical to those of section 214 of the National Internal Code of 1986, as amended, the law now obtaining, this Court held: xxx xxx xxx What the probate court should have done was to require the petitioner or proponent to affix the requisite thirtycentavo documentary stamp to the notarial acknowledgment of the will which is the taxable portion of that document. That procedure may be implied from the provision of section 238 that the non-admissibility of the document, which does not bear the requisite documentary stamp, subsists only "until the requisite stamp or stamps shall have been affixed thereto and cancelled."

Thus, it was held that the documentary stamp may be affixed at the time the taxable document is presented in evidence (Del Castillo vs. Madrilena, 49 Phil. 749). If the promissory note does not bear a documentary stamp, the court should have allowed plaintiff's tender of a stamp of supply the deficiency. (Rodriguez vs. Martinez, 5 Phil. 67, 71. Note the holding in Azarraga vs. Rodriguez, 9 Phil. 637, that the lack of the documentary stamp on a document does not invalidate such document. See Cia. General de Tabacos vs. Jeanjaquet, 12 Phil. 195, 201-2 and Delgado and Figueroa vs. Amenabar, 16 Phil. 403, 405-6.) 13 This is as it should be because the quality of justice is not strained. WHEREFORE, the orders of the trial court complained of the first dated July 25, 1986 declaring the petitioner non-suited and dismissing his complaint, and those dated August 29, 1986 and October 7, 1986, denying the petitioner's motions for reconsideration are hereby ANNULLED and SET ASIDE. Civil Case No. 3331 is hereby remanded to the respondent trial court for further proceedings. No costs. Let a copy of this Decision be attached to the personal record of the respondent judge. SO ORDERED. G.R. No. L-56590 May 29, 1981 PERLA COMPAIA DE SEGUROS, INC., petitioner, vs. HON. ALFREDO B. CONCEPCION as Presiding Judge of the Court of First Instance of Cavite, Branch IV-Tagaytay City and MIGUEL ILAGAN, respondents. TEEHANKEE, J: The Court hereby sets aside the questioned orders of respondent judge disapproving herein petitioner's appeal bond in Civil Case No. TG-438 of the Court of First Instance of Cavite, Branch IV, Tagaytay City, upon the ground that said bond "is void and unenforceable for lack of a principal debtor or obligation," and peremptorily declaring his judgment under appeal as having become final and executory and ordering execution thereof. A mere technical defect or imperfection in the filing of an appeal bond does not render the decision subject of the appeal immediately final. and executory, for where said bond is in substantial conformity with the provisions of the law such that its legal effect accomplishes the objective of insuring to the appellee the payment of the costs of appeal, the appeal should be given due course. In an action for the enforcement of a commercial vehicle comprehensive insurance policy with damages, judgment was rendered by respondent judge sentencing petitioner as defendant to pay respondentplaintiff Ilagan "the total sum of P18,773.58 minus the sum of P500.00 representing the deductible franchise, plus attorney's fees in the amount of P5,600.00 or the total sum of P23,873.58, with interest thereon at the rate of 36% per annum from February 21, 1978 until said amount shall have been fully satisfied; and to pay the costs." From said judgment, petitioner-defendant timely filed a notice of appeal, appeal bond and a record on appeal. But the herein private respondent, the prevailing party in the lower court, filed therein a motion to dismiss the appeal and for the issuance of a writ of execution, impugning the validity of petitioner's appeal bond as having no principal debtor and therefore void. Despite opposition, respondent judge upheld respondent's contention and denied due course to the appeal and further directed the issuance of the corresponding writ of execution of judgment, in his questioned Order of January 28, 1981, as follows:1wph1.t No issue exists regarding the seasonable filing of the notice, bond and record of appeal. the issue centers on the efficacy of the appeal bond executed by Rodrigo Y. Arandia and Porfirio B. Yabut, both lawyers, as sureties whereby they 'jointly and severally bind (themselves) in favor of Miguel Ilagan, ... for the payment of cost ...

As correctly pointed out by the plaintiff the disputed appeal bond is void and unenforceable for lack of a principal debtor or obligation. Indeed, while the sureties bound t herself to pay, jointly and severally, 'such an undertaking presupposes that the obligation is enforceable against someone else besides the sureties and the latter could always claim that it was never ( their) intention to the sole person obligated thereby. (Manila Railroad Co., et al. vs. Alvendia, 17 SCRA 154,156.) It therefore, follows that the judgment rendered in this case had become final and executory, because the defendant had not filed any appeal bond in due time. Reconsideration was denied in respondent judge's Order of March 27, 1981. Hence, this petition for certiorari which we find to be meritorious Section 5 of Rule 41 of the Rules of Court. reads1wph1.t Section 5. Appeal Bond. The appeal bond shall answer for the payment of costs. It shall he in the amount of one hundred and twenty pesos (P120) unless the court shall fix a different amount. If the appeal bond is not in cash, it must be approved by the court before the transmittal of the record on appeal to the appellate court. The last sentence of the abovequoted section presupposes that before elevating the record on appeal to the appellate count, the trial court has the duty to pass upon the sufficiency of the appeal bond, and it is called upon to require the party-appellant within a period of time to fully comply with the requirements as to said appeal bond in case of some defect in its execution, in the same manner it requires correction or amplification of a deficient record on appeal. Thus, it behooves the trial court upon opposition to the effectivity of an appeal bond to examine it, to declare it lacking of the requirements if ii be so, and then to require and allow the appellant to complete or amend it in accordance with instructions within a reasonable period, so as to perfect the appeal. 1 Indeed, as in the filing of records on appeal, 2 the Court has invariably taken a liberal attitude in favor of the appellant when it comes to the filing of appeal bonds in relation to perfection of appeals. 3 Thus, it has been held that an appeal bond is sufficient when it is in substantial conformity with the provisions of the law as long as the legal effect is to insure to the appellee the payment of all costs required by law. 4 In Javier Cruz vs. Enriquez, 5 which is similar to the case at bar, the respondent judge therein ordered the disapproval of the appeal bond after discovering that the same consisted merely in the signatures of two lawyers. The Court ruled therein as follows:1wph1.t This provision of law 6 does not prescribe a special form for appeal bond. It only requires that the same be for the amount of sixty pesos, (at that time) conditioned for the payment of costs which the appellate court may award against the appellant.' The bond in question complies substantially with the provision of law, and we see no reason why the respondent judge found it defective. When he approved the record on appeal, there has been an implied approval of the original bond, and we find no reason either why after such approval, he had to disapprove said bond and dismiss the appeal on the allegation that the new bond was filed out of time. Furthermore, granting that the first bond was really defective, justice demands that herein petitioners, as appellants in that case, be given an opportunity to cure its defect by filing, as they did another bond. In dismissing the appeal the respondent judge has entirely overlooked the fact that the second bond was not a new one but merely a correction of the original supposedly defective bond. ... Respondent Laserna vigorously contends that under the inherent powers of the court to amend and control its process and orders so as to make them conformable to law and justice, the dismissal of the appeal on the ground that the first bond was defective and the second one was filed out of time, should be sustained; but under the facts obtaining in the case, this contention is evidently untenable for the original bond, in our opinion, is not defective, and even granting that it were, petitioners herein were diligent in curing the supposed defect by filing a new bond in order to protect their right to appeal.

Certainly, the respondent judge should not have been strictly technical in the application of the rules, for in so doing he has deprived herein petitioners of their right to appeal, or at least to perfect it within the time allowed by law. There is no question in the instant case, as acknowledged in the challenged order, that the record on appeal, notice of appeal and the appeal bond were filed on time. However, as in the above cited case of Cruz, the appeal bond in question was executed by petitioner's lawyers, Attys. Rodrigo Y. Arandia and Porfirio B. Yabut, both lawyers of the law firm representing herein petitioner as defendant in the main case, as well as in the case at t bar, whereby they did "hereby jointly and severally bind ourselves in favor of Miguel Ilagan, in the amount of One Hundred Twenty Pesos (P120.00) conditioned for the payment of costs which the appellate court may award against appellants." Clearly enough. this undertaking, albeit not signed by herein petitioner as party-appellant, effectively insures to the appellee the payment of costs and is, therefore, in substantial compliance with the requirement of the cited Rule, for they certainly are estopped from denying principal liability under the said bond, as baselessly feared by respondent judge in his Order. One additional observation. The authority cited by respondent judge in the questioned order, Manila Railroad Company (MRC) vs. Alvendia 7 wherein the appeal bond was held void and unenforceable for lack of a principal debtor or obligation since the MRC as coappellant of the Manila Port Service was not a sigtatory to the bond, has been superseded by the decision of the is same court in the later case of Manila Railroad Company vs. Alvendia 8where we held that the Manila Port Service must be deemed part of the Manila Railroad Company and not a separate entity in a suit against the MRC based on arrastre operations undertaken by it through its "agents and subsidiary," the Manila Port Service. Similarly, in this case the lawyers as agents and attorneys of petitioners properly executed the appeal bond in their own name but for the benefit and on behalf of petitioner as their client who has in turn ratified as principal the execution of said appeal bond with the very prosecution of this action, as evidenced by the verification of the petition at bar by petitioner's vice-president. 9 ACCORDINGLY, judgment is hereby rendered setting aside respondent judge's orders of January 28, 1981 and March 27, 1981 and ordering respondent judge to give due course to the appeal and to transmit the records to the Court of Appeals for proper proceedings and determination of the appeal on the merits. With costs against private respondent. SO ORDERED.

JUDGE ADORACION G. ANGELES, Petition er, - versus -

G.R. No. 165276

Present: HON. MANUEL B. GAITE, Acting Deputy Executive Secretary for Legal Affairs; HON. WALDO Q. FLORES, Senior Deputy Executive Secretary, Office of the President; Former DOJ SECRETARY HERNANDO B. PEREZ (now substituted by the Incumbent DOJ Secretary RAUL GONZALES); Former PROV. PROS. AMANDO C. VICENTE (now substituted by the Incumbent PROV. PROS. ALFREDO L. GERONIMO); PROS. BENJAMIN R. CARAIG, Malolos, Bulacan; and MICHAEL T. VISTAN, Respon dents. CORONA, J., Chairperson, CHICO-NAZARIO, VELASCO, JR., NACHURA, and PERALTA, JJ.

Promulgated: November 25, 2009

x----------------------------------------------------------------------------------------x DECISION PERALTA, J.: Before this Court is a Petition for Review,[1] under Rule 43 of the 1997 Rules of Civil Procedure, assailing the February 13, 2004 Decision[2] and September 16, 2004 Resolution[3] of the Court of Appeals (CA) in CA-G.R. SP No. 76019. The facts of the case, as alleged by petitioner and likewise adopted by the CA, are as follows: Petitioner [Judge Adoracion G. Angeles] was the foster mother of her fourteen (14) year-old grandniece Maria Mercedes Vistan who, in April 1990 was entrusted to the care of the former by the girls grandmother and petitioners sister Leonila Angeles Vda. de Vistan when the child was orphaned at the tender age of four. Petitioner provided the child with love and care, catered to her needs, sent her to a good school and attended to her general well-being for nine (9) memorable and happy years. The child also reciprocated the affections of her foster mother and wrote the latter letters. Petitioners love for the child extended to her siblings, particularly her half-brother respondent Michael Vistan, a former drug-addict, and the latters family who were regular beneficiaries of the undersigneds generosity. Michael would frequently run to the undersigned for his variety of needs ranging from day to day subsistence to the medical and hospital expenses of his children. In the evening of 11 April 1999, Michael Vistan had a falling out with petitioner for his failure to do a very important errand for which he was severely reprimanded over the phone. He was told that from then on, no assistance of any kind would be extended to him and that he was no longer welcome at petitioners residence.

Feeling thwarted, he, in conspiracy with his cohorts (sic), retaliated on 12 April 1999 by inducing his half-sister, Maria Mercedes, to leave petitioners custody. Michael used to have free access to the undersigneds house and he took the girl away while petitioner was at her office. In the evening of that day, 12 April 1999, petitioner, accompanied by her friend Ines Francisco, sought Michael Vistan in his residence in Sta. Cruz, Guiguinto, Bulacan to confront him about the whereabouts of his half-sister. He disclosed that he brought the girl to the residence of her maternal relatives in Sta. Monica, Hagonoy, Bulacan. Petitioner then reported the matter and requested for the assistance of the 303rd Criminal Investigation and Detective Group Field Office in Malolos, Bulacan to locate the girl. Consequently, PO3 Paquito M. Guillermo and Ruben Fred Ramirez accompanied petitioner and her friend to Hagonoy, Bulacan where they coordinated with police officers from the said place. The group failed to find the girl. Instead, they were given the runaround as the spouses Ruben and Lourdes Tolentino and spouses Gabriel and Olympia Nazareno misled them with the false information that Maria Mercedes was already brought by their brother Carmelito Guevarra and the latters wife Camilia to Casiguran, Quezon Province. On 13 April 1999, petitioner filed a complaint for Kidnapping under Article 271 of the Revised Penal Code (Inducing a Minor to Abandon His Home) against Michael Vistan, the Tolentino spouses, the Nazareno spouses and Guevarra spouses, all maternal relatives of Maria Mercedes Vistan. Warrants of arrest were subsequently issued against them and to evade the long arm of the law, Michael Vistan went into hiding. He dragged along with him his half-sister Maria Mercedes. From 12 April 1999 to 16 April 1999, Michael Vistan, with his little sister in tow, shuttled back and forth from Guiguinto to Hagonoy, Bulacan as well as in Manila and Quezon City, living the life of a fugitive from justice. He eventually brought the girl to ABS-CBN in Quezon City where he made her recite a concocted tale of child abuse against herein petitioner hoping that this would compel the latter to withdraw the kidnapping charge which she earlier filed. In the early morning of 16 April 1999, Michael Vistan brought Maria Mercedes to the DSWD after he felt himself cornered by the police dragnet laid for him. Prompted by his overwhelming desire to retaliate against petitioner and get himself off the hook from the kidnapping charge, Michael Vistan had deliberately, maliciously, selfishly and insensitively caused undue physical, emotional and psychological sufferings to Maria Mercedes Vistan, all of which were greatly prejudicial to her well-being and development. Thus, on 1 December 1999, petitioner filed a complaint against Michael Vistan before the Office of the Provincial Prosecutor in Malolos, Bulacan for five counts of Violation of Section 10 (a), Article VI of RA 7610, otherwise known as the Child Abuse Act, and for four counts of Violation of Sec. 1 (e) of PD 1829. She likewise filed a complaint for Libel against Maria Cristina Vistan, aunt of Michael and Maria Mercedes. In a Resolution dated March 3, 2000, Investigating Prosecutor Benjamin R. Caraig recommended upheld (sic) the charge of Violation of RA 7160 but recommended that only one Information be filed against Michael Vistan. The charge of Violation of PD 1829 was dismissed. Nonetheless, the Resolution to uphold the petitioners complaint against Maria Cristina Vistan must (sic) remained.

However, Provincial Prosecutor Amando C. Vicente denied the recommendation of the Investigating Prosecutor that Michael Vistan be indicted for Violation RA 7610. He also approved the recommendation for the dismissal of the charge for Violation of PD 1829. On 14 April 2000, petitioner filed a Motion for Partial Reconsideration. This was denied in a Resolution dated 28 April 2000. Petitioner then filed a Petition for Review before the Department of Justice on 18 May 2000. She also filed a Supplement thereto on 19 May 2000. In a Resolution dated 5 April 2001, Undersecretary Manuel A.J. Teehankee, acting for the Secretary of Justice, denied the petition for review. The undersigneds Motion for Reconsideration filed on25 April 2001 was likewise denied by then DOJ Secretary Hernando B. Perez in a Resolution dated 15 October 2001. On 26 November 2001, the undersigned filed a Petition for Review before the Office of President. The petition was dismissed and the motion for reconsideration was denied before said forum anchored on Memorandum Circular No. 58 which bars an appeal or a petition for review of decisions/orders/resolutions of the Secretary of Justice except those involving offenses punishable by reclusion perpetua or death.[4] On March 18, 2003, petitioner filed a petition for review[5] before the CA assailing the Order of the Office of President. Petitioner argued that the Office of the President erred in not addressing the merits of her petition by relying on Memorandum Circular No. 58, series of 1993. Petitioner assailed the constitutionality of the memorandum circular, specifically arguing that Memorandum Circular No. 58 is an invalid regulation because it diminishes the power of control of the President and bestows upon the Secretary of Justice, a subordinate officer, almost unfettered power.[6] Moreover, petitioner contended that the Department of Justice (DOJ) erred in dismissing the complaint against respondent Michael Vistan for violations of Presidential Decree No. 1829[7] (PD No. 1829) and for violation of Republic Act No. 7610[8] (RA No. 7610).[9] On February 13, 2004, the CA rendered a Decision, dismissing the petition, the dispositive portion of which reads: WHEREFORE, premises considered, the instant petition is hereby DISMISSED for lack of merit.[10] The CA affirmed the position of the Solicitor General (OSG) to apply the doctrine of qualified political agency, to wit: When the President herself did not revoke the order issued by respondent Acting Deputy Executive Secretary for Legal Affairs nor saw the necessity to exempt petitioners case from the application of Memorandum Circular No. 58, the act of the latter is deemed to be an act of the President herself.[11] Moreover, the CA ruled that the facts of the case as portrayed by petitioner do not warrant the filing of a separate Information for violation of Section 1(e) of PD No. 1829.[12] Lastly, the CA ruled that the DOJ did not err when it dismissed the complaint for violation for RA No. 7610 as the same was not attended by grave abuse of discretion. Petitioner filed a Motion for Reconsideration, which was, however, denied by the CA in a Resolution dated September 16, 2004.
[13]

Hence, herein petition, with petitioner raising the following assignment of errors, to wit:

1. THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE RELIANCE OF THE OFFICE OF THE PRESIDENT IN THE PROVISIONS OF MEMORANDUM CIRCULAR NO. 58. 2. THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE DISMISSAL BY THE DOJ SECRETARY OF THE COMPLAINT OF VIOLATION OF SECTION 1(E). P.D. 1829 (OBSTRUCTION OF JUSTICE) AGAINST PRIVATE RESPONDENT MICHAEL VISTAN. 3. THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE DISMISSAL OF THE COMPLAINT OF VIOLATION OF R.A. 7610 (CHILD ABUSE) AGAINST PRIVATE RESPONDENT MICHAEL VISTAN.[14] The petition is without merit. Petitioner's arguments have no leg to stand on. They are mere suppositions without any basis in law. Petitioner argues in the main that Memorandum Circular No. 58 is an invalid regulation, because it diminishes the power of control of the President and bestows upon the Secretary of Justice, a subordinate officer, almost unfettered power.[15] This argument is absurd. The President's act of delegating authority to the Secretary of Justice by virtue of said Memorandum Circular is well within the purview of the doctrine of qualified political agency, long been established in our jurisdiction. Under this doctrine, which primarily recognizes the establishment of a single executive, "all executive and administrative organizations are adjuncts of the Executive Department; the heads of the various executive departments are assistants and agents of the Chief Executive; and, except in cases where the Chief Executive is required by the Constitution or law to act in person or the exigencies of the situation demand that he act personally, the multifarious executive and administrative functions of the Chief Executive are performed by and through the executive departments, and the acts of the secretaries of such departments, performed and promulgated in the regular course of business, are, unless disapproved or reprobated by the Chief Executive, presumptively the acts of the Chief Executive.[16] The CA cannot be deemed to have committed any error in upholding the Office of the President's reliance on the Memorandum Circular as it merely interpreted and applied the law as it should be. As early as 1939, in Villena v. Secretary of Interior,[17] this Court has recognized and adopted from American jurisprudence this doctrine of qualified political agency, to wit: x x x With reference to the Executive Department of the government, there is one purpose which is crystalclear and is readily visible without the projection of judicial searchlight, and that is, the establishment of a single, not plural, Executive. The first section of Article VII of the Constitution, dealing with the Executive Department, begins with the enunciation of the principle that "The executive power shall be vested in a President of the Philippines." This means that the President of the Philippines is the Executive of the Government of the Philippines, and no other. The heads of the executive departments occupy political positions and hold office in an advisory capacity, and, in the language of Thomas Jefferson, "should be of the President's bosom confidence" (7 Writings, Ford ed., 498), and, in the language of Attorney-General Cushing (7 Op., Attorney-General, 453), "are subject to the direction of the President." Without minimizing the importance of the heads of the various departments, their personality is in reality but the projection of that of the President. Stated otherwise, and as forcibly

characterized by Chief Justice Taft of the Supreme Court of the United States, "each head of a department is, and must be, the President's alter ego in the matters of that department where the President is required by law to exercise authority" (Myers v. United States, 47 Sup. Ct. Rep., 21 at 30; 272 U.S., 52 at 133; 71 Law. ed., 160).[18] Memorandum Circular No. 58,[19] promulgated by the Office of the President on June 30, 1993 reads: In the interest of the speedy administration of justice, the guidelines enunciated in Memorandum Circular No. 1266 (4 November 1983) on the review by the Office of the President of resolutions/orders/decisions issued by the Secretary of Justice concerning preliminary investigations of criminal cases are reiterated and clarified. No appeal from or petition for review of decisions/orders/resolutions of the Secretary of Justice on preliminary investigations of criminal cases shall be entertained by the Office of the President, except those involving offenses punishable by reclusion perpetua to death x x x. Henceforth, if an appeal or petition for review does not clearly fall within the jurisdiction of the Office of the President, as set forth in the immediately preceding paragraph, it shall be dismissed outright x x x. It is quite evident from the foregoing that the President himself set the limits of his power to review decisions/orders/resolutions of the Secretary of Justice in order to expedite the disposition of cases. Petitioner's argument that the Memorandum Circular unduly expands the power of the Secretary of Justice to the extent of rendering even the Chief Executive helpless to rectify whatever errors or abuses the former may commit in the exercise of his discretion[20] is purely speculative to say the least. Petitioner cannot second- guess the President's power and the President's own judgment to delegate whatever it is he deems necessary to delegate in order to achieve proper and speedy administration of justice, especially that such delegation is upon a cabinet secretary his own alter ego. Nonetheless, the power of the President to delegate is not without limits. No less than the Constitution provides for restrictions. Justice Jose P. Laurel, in his ponencia inVillena, makes this clear: x x x Withal, at first blush, the argument of ratification may seem plausible under the circumstances, it should be observed that there are certain prerogative acts which, by their very nature, cannot be validated by subsequent approval or ratification by the President. There are certain constitutional powers and prerogatives of the Chief Executive of the Nation which must be exercised by him in person and no amount of approval or ratification will validate the exercise of any of those powers by any other person. Such, for instance, is his power to suspend the writ of habeas corpus and proclaim martial law (par. 3, sec. 11, Art. VII) and the exercise by him of the benign prerogative of mercy (par. 6, sec. 11, idem).[21] These restrictions hold true to this day as they remain embodied in our fundamental law. There are certain presidential powers which arise out of exceptional circumstances, and if exercised, would involve the suspension of fundamental freedoms, or at least call for the supersedence of executive prerogatives over those exercised by co-equal branches of government.[22] The declaration of martial law, the suspension of the writ of habeas corpus, and the exercise of the pardoning power, notwithstanding the judicial determination of guilt of the accused, all fall within this special class that demands the exclusive exercise by the President of the constitutionally vested power.[23] The list is by no means exclusive, but there must be a showing that the executive power in question is of similar gravitas and exceptional import.[24]

In the case at bar, the power of the President to review the Decision of the Secretary of Justice dealing with the preliminary investigation of cases cannot be considered as falling within the same exceptional class which cannot be delegated. Besides, the President has not fully abdicated his power of control as Memorandum Circular No. 58 allows an appeal if the imposable penalty is reclusion perpetua or higher. Certainly, it would be unreasonable to impose upon the President the task of reviewing all preliminary investigations decided by the Secretary of Justice. To do so will unduly hamper the other important duties of the President by having to scrutinize each and every decision of the Secretary of Justice notwithstanding the latters expertise in said matter. In Constantino, Jr. v. Cuisia,[25] this Court discussed the predicament of imposing upon the President duties which ordinarily should be delegated to a cabinet member, to wit: The evident exigency of having the Secretary of Finance implement the decision of the President to execute the debt-relief contracts is made manifest by the fact that the process of establishing and executing a strategy for managing the governments debt is deep within the realm of the expertise of the Department of Finance, primed as it is to raise the required amount of funding, achieve its risk and cost objectives, and meet any other sovereign debt management goals. If, as petitioners would have it, the President were to personally exercise every aspect of the foreign borrowing power, he/she would have to pause from running the country long enough to focus on a welter of time-consuming detailed activitiesthe propriety of incurring/guaranteeing loans, studying and choosing among the many methods that may be taken toward this end, meeting countless times with creditor representatives to negotiate, obtaining the concurrence of the Monetary Board, explaining and defending the negotiated deal to the public, and more often than not, flying to the agreed place of execution to sign the documents. This sort of constitutional interpretation would negate the very existence of cabinet positions and the respective expertise which the holders thereof are accorded and would unduly hamper the Presidents effectivity in running the government.[26] Based on the foregoing considerations, this Court cannot subscribe to petitioners position asking this Court to allow her to appeal to the Office of the President, notwithstanding that the crimes for which she charges respondent are not punishable by reclusion perpetua to death. It must be remembered that under the Administrative Code of 1987 (EO No. 292), the Department of Justice, under the leadership of the Secretary of Justice, is the governments principal law agency. As such, the Department serves as the governments prosecution arm and administers the governments criminal justice system by investigating crimes, prosecuting offenders and overseeing the correctional system, which are deep within the realm of its expertise.[27] These are known functions of the Department of Justice, which is under the executive branch and, thus, within the Chief Executive's power of control. Petitioners contention that Memorandum Circular No. 58 violates both the Constitution and Section 1, Chapter 1, Book III of EO No. 292, for depriving the President of his power of control over the executive departments deserves scant consideration. In the first place, Memorandum Circular No. 58 was promulgated by the Office of the President and it is settled that the acts of the secretaries of such departments, performed and promulgated in the regular course of business are, unless disapproved or

reprobated by the Chief Executive, presumptively the acts of the Chief Executive.[28] Memorandum Circular No. 58 has not been reprobated by the President; therefore, it goes without saying that the said Memorandum Circular has the approval of the President. Anent the second ground raised by petitioner, the same is without merit. Petitioner argues that the evasion of arrest constitutes a violation of Section 1(e) of PD No. 1829, the same is quoted hereunder as follows: (e) Delaying the prosecution of criminal case by obstructing the service of processes or court orders or disturbing proceedings in the fiscals' offices in Tanodbayan, or in the courts. x x x Specifically, petitioner contends that respondent's act of going underground obstructed the service of a court process, particularly the warrant of arrest.[29] This Court does not agree. There is no jurisprudence that would support the stance taken by petitioner. Notwithstanding petitioner's vehement objection in the manner the CA had disposed of the said issue, this Court agrees with the same. The CA ruled that the position taken by petitioner was contrary to the spirit of the law on "obstruction of justice, in the wise: x x x It is a surprise to hear from petitioner who is a member of the bench to argue that unserved warrants are tantamount to another violation of the law re: "obstruction of justice." Petitioner is like saying that every accused in a criminal case is committing another offense of obstruction of justice if and when the warrant of arrest issued for the former offense/ charge is unserved during its life or returned unserved after its life and that the accused should be charged therewith re: "obstruction of justice." What if the warrant of arrest for the latter charge ("obstruction of justice") is again unserved during its life or returned unserved? To follow the line of thinking of petitioner, another or a second charge of "obstruction of justice" should be filed against the accused. And if the warrant of arrest issued on this second charge is not served, again, a third charge of "obstruction of justice" is warranted or should be filed against the accused. Thus, petitioner is effectively saying that the number of charges for "obstruction of justice" is counting and/or countless, unless and until the accused is either arrested or voluntarily surrendered. We, therefore, find the position taken by petitioner as contrary to the intent and spirit of the law on "obstruction of justice." x x x[30] As correctly observed by the CA, the facts of the case, as portrayed by petitioner, do not warrant the filing of a separate information for violation of Section 1(e) of PD No. 1829. This Court agrees with the CA that based on the evidence presented by petitioner, the failure on the part of the arresting officer/s to arrest the person of the accused makes the latter a fugitive from justice and is not equivalent to a commission of another offense of obstruction of justice.[31] Petitioner, however, vehemently argues that the law does not explicitly provide that it is applicable only to another person and not to the offender himself. [32] Petitioner thus contends that where the law does not distinguish, we should not distinguish.[33] Again, this Court does not agree. Petitioner conveniently forgets that it is a basic rule of statutory construction that penal statutes are to be liberally construed in favor of the accused.[34] Courts must not bring cases within the provision of a law which are not clearly embraced by it. No act can be pronounced criminal which is not clearly made so by statute; so, too, no person

who is not clearly within the terms of a statute can be brought within them.[35] Any reasonable doubt must be resolved in favor of the accused.[36] Indeed, if the law is not explicit that it is applicable only to another person and not the offender himself, this Court must resolve the same in favor of the accused. In any case, this Court agrees with the discussion of the CA, however sarcastic it may be, is nevertheless correct given the circumstances of the case at bar. Lastly, petitioner argues that the CA erred in upholding the dismissal of the complaint against respondent for violation of Section 10 (a), Article VI, of RA No. 7610. Said Section reads: Any person who shall commit any other act of child abuse, cruelty or exploitation or responsible for other conditions prejudicial to the child's development, including those covered by Article 59 of PD No. 603, as amended, but not covered by the Revised Penal Code, as amended, shall suffer the penalty of prision mayor in its minimum period. On this note, the Provincial Prosecutor in disapproving the recommendation of the Investigating Prosecutor to file the information for violation of Section 10(a), Article VI, of RA No. 7610, gave the following reasons: APPROVED for: (1) x x x (2) x x x The recommendation to file an information for viol. of Sec. 10 (a) RA # 7610 vs. M. Vistan is hereby denied. The affidavit of Ma. Mercedes Vistan, the minor involved, is to the effect that she found happiness and peace of mind away from the complainant and in the company of her relatives, including her brother, respondent Michael Vistan. How can her joining the brother be prejudicial to her with such statement?[37] Said finding was affirmed by the Secretary of Justice. This Court is guided by First Women's Credit Corporation and Shig Katamaya v. Hon. Hernando B. Perez et. al,[38] where this Court emphasized the executive nature of preliminary investigations, to wit: x x x the determination of probable cause for the filing of an information in court is an executive function, one that properly pertains at the first instance to the public prosecutor and, ultimately, to the Secretary of Justice. For this reason, the Court considers it sound judicial policy to refrain from interfering in the conduct of preliminary investigations and to leave the Department of Justice ample latitude of discretion in the determination of what constitutes sufficient evidence to establish probable cause for the prosecution of supposed offenders. Consistent with this policy, courts do not reverse the Secretary of Justices findings and conclusions on the matter of probable cause except in clear cases of grave abuse of discretion. Thus, petitioners will prevail only if they can show that the CA erred in not holding that public respondents resolutions were tainted with grave abuse of discretion.[39] Were the acts of the Provincial Prosecutor or the Secretary of Justice tainted with grave abuse of discretion? By grave abuse of discretion is meant such capricious and whimsical exercise of judgment which is equivalent to an excess or lack of jurisdiction. The abuse of discretion must be so patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, or to act not at all in contemplation of law, as where the power is

exercised in an arbitrary and despotic manner by reason of passion or hostility.[40] Based on the foregoing, this Court finds that the provincial prosecutor and the Secretary of Justice did not act with grave abuse of discretion, as their conclusion of lack of probable cause was based on the affidavit of the alleged victim herself. The reasons for the cause of action were stated clearly and sufficiently. Was their reliance on the victim's affidavit constitutive of grave abuse of discretion? This Court does not think so. While petitioner would argue that the victim was "brainwashed" by respondent into executing the affidavit, [41] this Court finds no conclusive proof thereof. Besides, even if their reliance on the victims affidavit may be wrong, it is elementary that not every erroneous conclusion of fact is an abuse of discretion.[42] As such, this Court will not interfere with the said findings of the Provincial Prosecutor and the Secretary of Justice absent a clear showing of grave abuse of discretion. The determination of probable cause during a preliminary investigation is a function that belongs to the prosecutor and ultimately on the Secretary of Justice; it is an executive function, the correctness of the exercise of which is a matter that this Court will not pass upon absent a showing of grave abuse of discretion. WHEREFORE, premises considered, the February 13, 2004 Decision and September 16, 2004 Resolution of the Court of Appeals in CA-G.R. SP No. 76019 are herebyAFFIRMED. SO ORDERED. G.R. No. L-53460 May 27, 1983 THE PROVINCIAL CHAPTER of LAGUNA, NACIONALISTA PARTY (NP), petitioner, vs. COMMISSION ON ELECTIONS and FELICISIMO T. SAN LUIS, respondents. Marciano P. Brion Jr. for petitioner. The Solicitor General for respondent COMELEC. Felicisimo T San Luis and Rustico F. de los Reyes for private respondent. MAKASIAR, J.: This is a petition for certiorari filed by the petitioner against respondents which seeks to impugn the validity of the proceedings held before the respondent Commission on Elections (COMELEC) in PDC No. 165, wherein the disqualification of herein private respondent Felicisimo T. San Luis was sought, the same being allegedly violative of the due process clause of the Constitution; and to reverse the dismissal resolution issued by respondent COMELEC in said PDC No. 165, as being allegedly in contravention of the Constitution (Article XII-C, Section 10) and of Section 4, Batas Pambansa Blg. 52. In the elections of November 8, 1971, private respondent Felicisimo T. San Luis was the official candidate of' the Liberal Party (LP) for Governor of Laguna. Private respondent won and accordingly assumed said position, the term of which would have ordinarily expired on December 31, 1975. On January 18, 1980, petitioner filed with the COMELEC a petition (docketed as PDC No. 165) to disqualify the private respondent from running as official candidate of the Kilusang Bagong Lipunan (KBL) for the organization,'as of Governor in the province of Laguna based on "turncoatism" as provided for under Section 10, Article XIIC, of the 1973 Constitution in relation to Section 4 of Batas Pambansa Blg. 52 [pp. 22-24, rec.]. Section 10, Article XII-C, of the 1973 Constitution reads: Sec. 10. No elective public officer may change his political party affiliation during his term of office, and no candidate for any elective public office may change his political party affiliation within six months immediately preceding or following an election. The pertinent portion of Section 4, Batas Pambansa Blg. 52 reads: Sec. 4. Special Disqualification. In addition to violation of Section 10 of Article XII-C, of the Constitution and

disqualifications mentioned in existing laws, which are hereby declared as disqualifications for any of the elective officials enumerated in Section 1 hereof, any retired elective provincial, city or municipal official, who has received payment of the retirement benefits to which he is entitled under the law and who shall have been 65 years of age at the commencement of the term of office to which he seeks to be elected, shall not be qualified to run for the same elective local organization,'as from which he has retired (emphasis supplied). The records likewise reveal that prior to January 23, 1980, a similar petition to disqualify on the ground of turncoatism (docketed as PDC No. 172) was filed by the Provincial Chapter of Laguna, Kilusang Bagong Lipunan (KBL) against Wenceslao R. Lagumbay, the Nacionalista Party (NP) official candidate for Governor of Laguna, in the January 30, 1980 elections [pp.. 7980, rec.]. On January 21, 1980, private respondent Felicisimo T. San Luis filed with the Commission on Elections (COMELEC) his answer in PDC No. 165 [pp. 25-28, rec.]. On the same date, the Commission on Elections (COMELEC) set for joint hearing PDC No. 165 and PDC No. 172 on January 24, 1980 at 10:00 A.M. [pp. 75-76, rec.]. On January 23, 1980, the private respondent filed with the public respondent COMELEC his "Formal Submission of Annexes" [pp. 31-32, rec.]. On January 24, 1980, private respondent Felicisimo T. San Luis (respondent in PDC No. 165) filed with the Commission on Elections (COMELEC) a memorandum [pp. 77-78, rec.l. Likewise, on the same date, Wenceslao R. Lagumbay, respondent in PDC No. 172, filed with the COMELEC a "Formal Offer of Documentary Evidences with Comments on Petitioner's Own Evidences" [pp. 85-A to 87, rec.]. On January 25, 1980, herein petitioner filed with the Commission on Elections a memorandum [p. 2, COMELEC's Comment; p. 95, rec.]. On February 4, 1980, the private respondent filed with the COMELEC a motion for an early favorable resolution of the case, it allegedly appearing that he had won over Wenceslao R. Lagumbay, the Nacionalista Party (NP) official candidate, by a majority of around 55,000 votes [p. 2, COMELEC's Comment; p. 95, rec.]. On February 6, 1980, the petitioner filed with the COMELEC its reiteration to disqualify private respondent Felicisimo T. San Luis [p. 2, COMELEC's Comment; p. 95, rec.]. On February 21, 1980, the COMELEC, in a resolution, denied the petition to disqualify private respondent Felicisimo T. San Luis as "the petitioner failed to present sufficient evidence against herein respondent. " Thus, Resolution No. 9188 reads: 9188. (PDC No. 165). In the matter of the petition for disqualification, dated January 18, 1980, tied by the Provincial Chapter of Laguna, Nacionalista Party (NP), represented by Wenceslao R. Lagumbay, Acting Chairman, against Felicisimo T. San Luis, respondent, on the ground that said respondent allegedly violated the provision of Section 10, Article XII- C, Constitution in relation to Batas Pambansa Big. 52. A review of the said petition shows that the petitioner failed to present sufficient evidence against herein respondent. Premises considered, the Commission RESOLVED to deny the Petition of the Provincial Chapter of Laguna, Nacionalista Party (NP). SO ORDERED [p. 33, rec.; emphasis supplied]. Hence, the instant petition. I It is initially contended by the petitioner that public respondent Commission on Elections issued the questioned resolution (No. 9188) dismissing the petition in PDC No. 165, without observance of the cardinal precepts of due process. While petitioner admitted that the disqualification case was set for hearing on January 24, 1980 at 10:00 A.M., nevertheless, it vehemently argued that the mere

setting alone of such hearing cannot be taken as satisfying the requirements of due process. Thus, petitioner insisted "that at COMELEC no formal hearing was conducted wherein the parties could have confronted witnesses against each other. "NOT A SINGLE COMMISSIONER WAS IN ATTENDANCE. Only a staff member of its Legal Department was present when the case was called for hearing, and he directed the parties to submit their respective 'Annexes' (exhibits) after which, their memoranda" [p. 1, Petitioner's Reply; p. 118, rec.]. The aforesaid allegations of the petitioner have no foundation. It is to be noted that private respondent in its comment filed before this Court alleged the following. Private respondent thru counsel manifested that he was formally resting his case on the basis of the exhibits 1 evidence which he had formally offered in writing, and a copy of which was further presentation Atty. Marciano Brion Jr., counsel for the petitioner. Atty. Brion reserved his right to register his objections to the exhibits in writing, and manifested that he was; not presenting any more evidence, in view of the admission of private respondent that he was elected Governor of Laguna on November 8,1971 as official candidate of the Liberal Party and then ran for the same position as the standard bearer of the KBL Party during the January 30, 1980 elections. In fact, this was the same trend of argument adopted by petitioner when it argued as follows: If private respondent is bound, as all parties who filed pleadings in Court should be bound, by his affirmative allegations and admission in his pleadings signed by him under oath, then the case should end here with his disqualification and without any need for any presentation discussion.' Not that private respondent agrees with the aforegoing Argument of Petitioner. The same was merely cited to show that in the proceedings before respondent COMELEC, petitioner really preferred not to present evidence, contrary to its claim now, that it was denied procedural due process, in that its counsel was not able to present evidence confront witnesses or object to exhibits. Parties were even required to submit their respective memoranda. Private respondent submitted his memoranda in both cases, PDC No. 165 and 172, xerox copies of which are hereto attached as Annexes 3 and 4 of this comment. If Petitioner did not submit its memoranda, that is its fault, but certainly, it cannot shift the blame on the respondent COMELEC or to private respondent for not doing what it should have done. Attached to this Comment as Annex 5 is the xerox copy of the Formal Submission of Annexes of Respondent in PDC No. 166 showing on the bottom of page 2 thereof, that petitioner thru counsel was duly furnished a copy thereof. The fact of the matter is that counsel for petitioner concentrated his efforts more on PDC No. 172 entitled the Provincial Chapter of Laguna (KBL) vs. Wenceslao R. Lagumbay, as shown by the fact that on the date of the hearing on January 24, 1980, he submitted therein his own 'Formal Offer of Documentary Evidence with Comments on Petitioner's Own Evidences' a xerox copy of which is hereto attached as Annex 6 of this Comment [pp. 46, Comment of Private Respondent Felicisimo T. San Luis; pp. 48-50, rec.; emphasis supplied]. In its reply, petitioner miserably failed to deny the said allegations of the private respondent. This is fatal to the cause of the petitioner. WE are constrained to sustain the stand of private respondent; for, apart from the presumption of regularity accorded to respondent Commission in the performance of its duties, petitioner failed to timely assert his right prior to the issuance of the above-questioned resolution. From January 24, 1980 up to February 21, 1980, when respondent COMELEC issued the aforementioned resolution, petitioner failed to press before respondent COMELEC its bid for an opportunity to be heard and belatedly cry for an alleged denial of due process only after receipt of an adverse resolution. As correctly pointed out by the private respondent, "(I)ndeed, if petitioner had evidence to present or wanted to confront witnesses or object to evidence in open session (instead of submitting a written objection as he manifested before respondent COMELEC) why did it not

file a motion to set the case again for hearing, knouting that elections were over and either its candidate or the private respondent would be proclaimed sooner or later. Surely, if petitioner sincerely believed that it has not presented evidence, it should have acted immediately by asking the COMELEC to set the case for hearing for reception of its evidence, unless of course, petitioner thought that its candidate would win the elections, which was, of course, presumptuous on its part [pp. 8-9, Comment of Private Respondent Felicisimo T. San Luis, pp. 52-53, rec.; emphasis supplied]. The requirements of due process are obeyed as long as the parties are given the opportunity to be heard. In the case at bar, petitioner was afforded all the chances to be heard until it submitted the case for resolution by his manifestation that, because of the admission of private respondent that he ran as Liberal Party candidate in the 1971 elections, he was not presenting any more evidence, only reserving his right to object to respondent's evidence. In the case of Maglasang vs. Ople (L-38813, 63 SCRA 508 [19751, then Associate Justice, now Chief Justice Enrique M. Fernando, ruled that the right of due process is not denied where the aggrieved party was given the opportunity to be heard. The essence of due process is the requirement of notice and hearing, the presence of a party at a trial is not always of the essence of due process, and an that due process requires is an opportunity to be heard (Auyong Hian vs. Court of Tax Appeals, et al., L-28782, Sept. 12, 1974, 59 SCRA 110; Asprec vs. Itchon, L21685, April 30, 1966, 16 SCRA 921; Cornejo vs. Secretary of Justice, et al., L-32818, June 28, 1974, 57 SCRA 663). It is significant to note that respondent COMELEC's resolution was issued after private respondent submitted his "Formal Submission of Annexes" and after both parties submitted their respective memoranda. Thus, respondent COMELEC stated that it "decided PDC No. 165 based on the petition and memorandum of the petitioner and the answer, memorandum and the motion for the early favorable resolution of the case of the private respondent. To say, at this late hour, that the petitioner was denied the process in the COMELEC is unwarranted, ... . The petitioner had been allowed ample opportunity to ventilate its charge before the respondent COMELEC, as seen above, and failed in its attempt to support the same with proof " (p. 4, COMELEC's Comment; p. 97, rec.). In other words, the petition filed against private respondent in PDC No. 165 was deemed submitted for decision on the basis of the pleadings, annexes and memoranda of the parties. And there is no denial of due process if the decision was "rendered on the evidence presented at the hearing, or at least contained in the record and disclosed to the parties affected (Interstate Commerce Commission vs. L. & N.R. Co., 227 U.S. 88, 33 S. Ct. 185, 57 Law. ed. 431; cited in Ang Tibay, et al. vs. The Court of Industrial Relations, et al., 69 Phil. 635, 643; emphasis supplied). A case in point is the case of Armedilla vs. COMELEC, et al. (No. 53393, recently decided by this Court on March 31, 1981). In said case, the COMELEC dismissed Armedilla's petition to disqualify private respondent Dizon. The dismissal was anchored on the ground of insufficiency of evidence. Thus: 30. With respect to the disqualification case against Dizon, Armedilla interposed in this Court on March 18, 1980 an 'appeal by certiorari' wherein he contended that the Comelec did not observe due process in dismissing the case (G.R. No. 53393). 31. Dizon in his comment on that appeal traversed the allegation as to nonobservance of due process. He said that at the hearing of the petition for disqualification on January 26, 1980 in the Comelec the case was submitted on the basis of the pleadings (p. 30, rollo of G.R. No. 53393) [emphasis supplied]. In Ruling to the effect that the COMELEC complied with the basic requirements of procedural due process in

deciding the case on the basis of the pleadings submitted by the parties, this Court declared: With respect to the disqualification case against Mayor Dizon (G.R. No. 53393), the contention that due process was not observed in dismissing that case is not well-taken because petitioner Armedilla was given a chance to controvert Dizon's defense that he was already a KBL partisan in April 1978, or more than six months prior to January 30, 1980 but Armedilla was not able to overthrow that defense.He submitted the case for decision by the Comelec on the pleadings (emphasis supplied). Similarly, in the more recent case of Garcia vs. COMELEC, et al., (No. 53793, June 29,1981), this Court ruled: Likewise, We are not in accord with the argument of the petitioner that she was denied due process because she was not afforded the opportunity 'to refute the alleged findings of the handwriting experts of the Comelec.' Such contention is without merit. At the outset, it should be recalled that at the hearing on March 11, 1980 before the COMELEC, the parties dispensed with the presentation of testimonial evidence, and merely prepared oral arguments and submitted the case for decision after filing their 'Annexes' memoranda. Petitioner therefore waived further presentation of evidence(emphasis supplied). Aside from the fact that petitioner expressly waived its right to present presentation evidence, the mere act of petitioner's counsel in merely filing a memorandum after being satisfied with the alleged admission of private respondent until the issuance of the aforequoted adverse resolution, is already an implied manifestation that he was waiving his right to the other elements of a judicial hearing, like the presentation of additional evidence or the cross-examination of witnesses. And petitioner's right to a hearing embracing particular elements, appropriate to judicial proceedings may be waived by taking part in informal proceedings without objection (Martin vs. Wolfson, 218 Minn. 557, 16 NW 2d 884; cited in 2 Am. Jur. 2d 114). Thus: ... The right to present evidence, to have witnesses sworn and to have them subjected to direct and crossexamination in accordance with recognized judicial procedure was the right of any interested person present at the hearing. But unless that right was asserted, it must be considered waived While courts have a tender regard for the rights and privileges of citizens, there is no reason of public policy why they should invoke for him constitutional or statutory rights which he himself has voluntarily relinquished . ... And, if the failure to swear a witness in an ordinary civil trial, or even in a criminal trial, may be waived by failure to object or by express consent (70 C.J., Witnesses, S 654; 39 Am. Jur., New Trial, S 532), clearly the right to have witnesses sworn and subjected to examination in an administrative hearing conducted without traditional court ritual must be considered as waived where interested participate therein without questioning the procedure. People ex rel. Niebuhr v. McAdoo 184 N.Y. 304, 77 N.E. 260, 6 Ann. Cas. 56; Proctor v. Smith, Tex. Civ. App., 299 S.W. 663 ... [Martin vs. Wolfson,supra, p. 890; emphasis supplied]. It is finally contended by petitioner that private respondent Felicisimo T. San Luis is guilty of "turncoatism," in violation of Section 10, Article XII (C) of the 1973 Constitution in relation to Section 4 of Batas Pambansa Blg. 52 and P.D. No. 1661, as amended by P.D. No. 1661-A. It is undisputed that private respondent won the gubernatorial organization,'as in the 1971 local elections under the banner of the Liberal Party and that when he filed his certificate of candidacy for governor on January 3, 1980 for the January 30, 1980 elections, he indicated his party affiliation as that of Kilusang Bagong Lipunan (KBL). Since 1971 however, "much water has passed under the bridge." A review of the political events prior and subsequent to the November 8, 1971 local elections becomes imperative to resolve the aforesaid issue. On March 16, 1967, Congress of the Philippines passed Resolution No. 2, which was amended by Resolution No. 4 of said body, adopted on June 17, 1969, calling a Convention to propose amendments to the Constitution of the Philippines. Said Resolution No. 2, as amended, was

implemented by Republic Act No. 6132, approved on August 24, 1970, pursuant to the provisions of which the election of delegates to said Convention was held on November 10, 1970, and the 1971 Constitutional Convention began to perform its functions on June 1, 1971. While the Convention was in session on September 21, 1972, the President issued Proclamation No. 1081 placing the entire Philippines under Martial Law. On November 29, 1972, the Convention approved its Proposed Constitution of the Philippines. The next day, November 30, 1972, the President of the Philippines issued Presidential Decree No. 73, 'submitting to the Filipino people for ratification or rejection the Constitution of the Republic of the Philippines proposed by the 1971 Constitutional Convention, and appropriating funds thereof,' as well as setting the plebiscite for said ratification or rejection of the Proposed Constitution on January 15, 1973. ... (Javellana vs. The Executive Secretary, 50 SCRA 30, 55). In a Presidential Decree dated December 31, 1972, the President issued P.D. No. 86 organizing Citizens Assemblies in each barrio in municipalities and in each district or ward in chartered cities "to broaden the base of citizens participation in the democratic process and to afford ample opportunities for the citizenry to express their views on important national issues." This was subsequently amended by P.D. No. 86-A on January 5, 1973 and P.D. No. 86-B on January 7, 1973 requiring the submission of important national questions or issues, among them the approval of the New Constitution, and the holding of a plebiscite on the New Constitution. On January 17, 1973, the President issued Proclamation No. 1102 "(A)nnouncing the ratification by the Filipino people of the Constitution proposed by the 1971 Constitutional Convention." On March 31, 1973, this Court ruled in the abovequoted Javellana case that "there is no presentation judicial obstacle to the new Constitution being considered in force and effect." The aforesaid new Constitution in its Transitory Provisions extended indefinitely the term of organization,'as of all incumbent public officers and employees at the time of the ratification of the said Constitution. Thus: All officials and employees in the existing Government of the Republic of the Philippines shall continue in organization,'as until otherwise provided by law or decreed by the incumbent President of the Philippines, but all officials whose appointments are by this Constitution vested in the Prime Minister shall vacate their 'Annexes' offices upon the appointment and qualification of their successors (Sec. 9, Art. XVII). It is significant to point out at this juncture that a novel provision of the 1973 Constitution pertinent to the case at bar reads: No elective public officer may change his political party affiliation during his term of office, and no candidate for any elective public organization,'as may change his political party affiliation within six months immediately preceding or following an election (Sec. 10, Art. XII [C]). A casual perusal of Section 10, Article XII (C) of the 1973 Constitution would readily show that it imposes prohibition, on two classes of individuals, namely: (1) an elective public officer who changes political party affiliation during his term of office, and (2) a candidate for any elective public office who changes political party affiliation within 6 months immediately preceding or following an election. It is very much apparent from the pleadings filed by the petitioner that in seeking the disqualification of herein private respondent before respondent COMELEC it heavily relied on the first clause of Section 10, Article XII (C)-prohibiting elective public officers from changing party affiliation during their term of office. In arguing that private respondent is guilty of "turncoatism" under the second clause of Section 10, Article XII (C) of the 1973 Constitution, petitioner asserted: More than anything, it may not be safe to admit that private respondent, legally speaking, moved over to

the KBL on March 15, 1978, as contended. Not even if the genuineness of his purported Certificate of Affiliation with that organization is admitted. To be reckoned with, unfortunately for him, are the pronouncements of the Honorable Supreme Court in Peralta vs. Comelec, 82 SCRA 30 and Lakas ng Bayan vs. Comelec, 82 SCRA 196, to the effect that the KBL was not a political party in 1978, but only 'an umbrella organization,'as it specifically said: The KBL is NOT A POLITICAL PARTY. It is a group or aggrupation ..., which is "a tempo-alliance, union, or coalition ... of persons or parties for the purpose of joint action and combining their resources to support a common list of candidates (emphasis supplied). And so, insofar as the now involved, constitutional ban is concerned, when did private respondent transfer affiliation to the KBL? Certainly, not before KBL became a political party 'only in late December, 1979, after the sudden calling of the elections for January 30, 1980,' by the words of Justice Teehankee in concurring in the Reyes vs. Comelec decision. Thus, did private respondent also violate the second phase of the same constitutional prohibition that of changing party affiliation within six months before election (pp. 6-7, Petitioner's Reply; pp. 123-124, rec.). The above contention is not wen taken. In the case of Sevilleja vs. COMELEC (Nos. 52793 and 53504, August 31, 1981), reiterated in Geronimo vs. COMELEC (No. 52413, September 26, 1981), this Court ruled: ... (T)he question of whether or not the KBL is a political party has been foreclosed by subsequent political developments. As significantly observed by this Court in Santos vs. Commission on Elections, et al., supraUnder its Resolution Ne 1406, promulgated December 22, 1979 laying down rules on the accreditation of political parties, Section 1 thereof provides that any duly registered political party in the April 7, 1978 election shag be entitled to accreditation. Pursuant to this Resolution, KBL was duly accredited separately from the NP That KBL had always been a political party or aggrupation can, therefore, no longer be open to question. Were KBL not such a political party, block voting as was declared valid in the case of Peralta vs. COMELEC, 82 SCRA 30, G.R. No. L47771, March 11, 1978, could not have been availed of, by it, as it unquestionably did, in the 1978 elections. For block voting is voting for a political party. Moreover, after the decision in the case of LABAN vs. COMELEC (82 SCRA 196 [19781), the KBL was transformed into a distinct political party and ceased as a mere umbrella organization, as shown by subsequent political developments. It is significant to note that, after the April 1978 election, in the Interim Batasang Pambansa, majority of the assemblymen are Identified and Identify themselves with pride as KBL members sporting T-shirts, hats and pins labelled KBL; while the handful of opposition diehards Identify themselves as members of the Nacionalista Party or Pusyon Bisaya or Mindanao Alliance Much later, until December, 1979, the majority members of the IBP kept referring to themselves as KBL members and held caucuses or meetings to discuss vital issues and proposed legislations as such KBL members. On the floor of the IBP, the members of the KBL Identify themselves as such and the KBL has been referred to as the party of the administration. The actuations of the organizers, leaders and members of the KBL established the said party as a de facto political party since April 1, 1978. The acts performed by the KBL leaders and their members, not the formality of its registration as a party, should determine the commencement of its existence as such political party. It has been held with reference to illegal associations that the nature and true character of an organization are oftentimes determined by the speeches and activities of its leaders and members rather than by its constitution and by-laws (Mr. Justice Mariano Albert in People vs. Ramos, CA-G.R. No. 5318, Dec. 28,1940,40 O.G. 2305, Sept. 30,1941). The hesitant stance taken by petitioner in assailing the candidacy of private respondent based on the second clause of Section 10, Article XII (C), prohibiting candidates for any elective public office from changing party affiliation within 6 months immediately preceding or following an election is not surprising. It must

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be noted that as early as March, 1978, private respondent was undisputedly expelled from the Liberal Party together with other Liberal Party stalwarts as Governor Eduardo Joson of Nueva Ecija, Governor Faustino Dy of Isabela and Assemblyman Eddie Ilardeabout fifteen (15) months before the six-month prohibitive period commenced in July, 1979 (pp. 83-84, rec.). The expulsion was obviously due to private respondent's open support for and affiliation with the then newly organized Kilusang Bagong Lipunan (KBL). This is shown by the fact that he became Chairman of the KBL, Provincial Chapter in Laguna, and Chairman and Campaign Manager for Region IV-A consisting among others of the Southern Tagalog provinces and hence actively campaigned for KBL candidates in the April, 1978 elections for the members of the Interim Batasang Pambansa. It is likewise undisputed that private respondent has been a holder of a certificate of affiliation as a bona fide KBL member as early as of March, 1978. Of course, there can be no doubt that had private respondent sought within six months before January 30, 1980, his expulsion from the Liberal Party to anticipate a forthcoming elections as alluded to by petitioner, the same is clearly an act of political opportunism. But such expulsion could not have been sought by private respondent as there was no certainty as to the calling of elections on January 30, 1980. As a matter of fact, the January 30, 1980 local elections was not even contemplated in April, 1978. In the language of petitioner, "(N)o one for a fact, then knew when the next elections would be called" (p. 6, Petitioner's Reply; p. 123, rec.). The contention of petitioner that private respondent switched party affiliation during his term of organization,'as and hence guilty of "turncoatism" is not tenable. It is appropriate to note that private respondent was elected governor on November 8, 1971 for a frameup. term or up to 1975. As correctly pointed out by private respondent, that the term of office of those elected in the November 1971 elections expired on December 31, 1975, the period intended by the framers to be covered by the constitutional prohibition, can be gleaned from among the questions asked during the February 27, 1975 referendum and from one of the whereases of P.D. No. 1296, also known as "The 1978 Election Code." Thus, in the referendum of February 27, 1975, the following specific question was among the questions asked: ON LOCAL OFFICIALS At the expiration of the terms of office of your local elective officials on December 31, 1975, how do you want their successors chosen: to be appointed by the President or elected in accordance with the Election Code? (Emphasis supplied). And among the whereases of P.D. No. 1296, more popularly known as "The 1978 Election Code" reads: WHEREAS, the elective local officials whose terms of office expired on December 31, 1975 were allowed to continue in organization,'as subject to the pleasure of the President; (emphasis supplied). Furthermore, in the case of Seares vs. COMELEC (L34381, May 31, 1977, 77 SCRA 273, 278), this Court ruled that four-year term of office of those elected in the November 8, 1971 elections already expired. In the aforesaid Seares case, a petition was filed on November 23, 1971 against private respondents Carmelo Barbero and Gavino Balbin, who were duly elected as governor and vice-governor respectively, assailing the minute resolution issued by respondent COMELEC denying for lack of merit, petitioner's petition for the cancellation of the certificate of candidacy of private respondents and the minute resolution likewise issued by respondent COMELEC denying petitioner's motion for reconsideration subsequently filed. In dismissing the said petition, this Court, speaking through then Associate Justice Felix Q. Antonio, stated inter alia: "and considering further, that the four-year term of office of those elected and proclaimed in the election of November 8, 1971,

particularly the offices of Governor and Vice-Governor has already expired, We find the present petition moot and academic" (emphasis supplied). Noteworthy in the above-cited case is the fact that it was decided by this Court after December 1975 and over four (4) years prior to the January 30, 1980 local elections. While there might be plausibility in the contention of petitioner that Section 9, Article XVII in the Transitory Provisions extended indefinitely the term of organization,'as of all incumbent public officers and employees, nonetheless, the same will not suffice to bring the case of the private respondent within the constitutional prohibition. WE take the view that the evident intention of the new Constitution was to apply the prohibition, as to party switching (turncoatism) to the term of office for which one was previously elected in relation to the political party under which he ran and won. In the present case, the prombition, should only apply to the term for which private respondent was elected governor as a Liberal Party candidate from January 1, 1972 to December 3l,1975. It must be noted that the new Constitution was ratified on January 17, 1973 when the term of office of local elective public officials, who were elected as such under the two major political parties, the Nacionalista Party and Liberal Party, had not expired. Having been elected in the November, 1971 local elections, their term of organization,'as expired on December 31, 1975. It is worth noting that private respondent was allowed to continue in office at the pleasure of the President by virtue of the provisions of the Transitory Provisions and supplemented by the results of the referendum on February 27, 1975, thru which the people opted for appointment by the President as the manner of choosing the successors of local offtce whose terms were to expire on December 31, 1975. The period beyond December 31, 1975 is no longer within the coverage of the phrase "term of office" for which respondent was elected as a Liberal candidate for purposes of applying the constitutional prohibition. Thus, private respondent argued that "(E)ven granting arguendo therefore, that private respondent changed political party affiliation when the constitutional prohibition, was already in effect, and not before, as discussed earlier in this Comment, still it could not be said that he changed affiliation during the term for which he was elected Governor as a Liberal which is what is obviously contemplated in the prohibition. A public officer is prohibited from changing political party affiliation during his term of organization,'as to prevent opportunism of one who after having been catapulted to organization,'as with the help of a political party simply abandons his party and switches to another, while serving his term, thereby ignoring the meaning of the electoral results and making a mockery of the popular will. But if the change took place after the expiration of the term to which he had been elected under a particular party, as in this case, where private respondent ran as a KBL four (4) years after the expiration of his frameup. term on December 31, 1975, then the prombition, does not apply, for the reason that, that part of his term from December 31, 1975 up to March 2, 1980, was not by virtue of his having been elected as a Liberal but because he was allowed to continue in office 'at the pleasure of the President,' who apropos is the titular head of the KBL party" (pp. 24-25, Private Respondent's Comment; pp. 68-69, rec.; emphasis supplied). In fine, what is essential is the political party of the elective public official as of the date of his election and during the four-year term to which he had been elected and not his political inclinations after the said frameup. term expires. Finally, to make the constitutional prohibition, applicable to the period beyond the frameup. term to which public officials were elected in the 1971 local elections under their respective political parties would work manifest injustice and unduly impinge on the freedom of association guaranteed to all individuals. Incumbent public officials who ran during the last election (1971 elections) prior to the 1973 Constitution which embodies the said

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novel provision, would be undoubtedly unjustifiably prejudiced if the party under the banner of which they ran and won, would no longer participate in the succeeding elections after the effectivity of the new Constitution, such as the Liberal Party in the case at bar which boycotted all elections during and after the lifting of martial law. In the present case, it appears that most of the prominent LP leaders who participated in the elections held after the effectivity of the new Constitution, campaigned and ran under new opposition groups such as the Lakas ng Bayan (LABAN), National Union for Liberation (NUL) Mindanao Alliance (MA) Pusyon Bisaya, Bicol Saro and other new political aggrupations. This We believe was not the manifest intention of the framers. Indeed, "of two reasonably possible constructions, one of which wouId diminish or restrict fundamental right of people and the other of which would not do so, latter construction must be adopted" (16 C.J..S 69 footnote). Hence, the more logical interpretation is that which gives effect to Section 10 of Article XII (C) of the 1973 Constitution and does not violate the individual's basic right to association. WHEREFORE, THE PETITION IS HEREBY DISMISSED. NO COSTS. SO ORDERED. G.R. No. 108718 July 14, 1994 GENARO R. REYES CONSTRUCTION, INC. and UNIVERSAL DOCKYARD., petitioners, vs. THE HONORABLE COURT OF APPEALS, THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, JOSE P. DE JESUS, ROMULO M. DEL ROSARIO, ET AL. J.P. Villanueva & Associates and Ricardo J.M. Rivera Law Office for petitioners. MELO, J.: Herein petitioners Genaro G. Reyes Construction, Inc. (or GGRCI) and Universal Dockyard Ltd. (or UDL) seek the nullification of the decision dated October 20, 1992 and the resolution dated January 20, 1993 of the Eighth Division of the Court of Appeals in CA-G.R. SP No. 28632. The said decision and resolution affirmed the two orders issued by the Regional Trial Court of the National Capital Judicial Region (Branch 15) dated June 22, 1992 and August 5, 1992 in its Civil Case No. 9261345 which denied herein petitioners' application for a temporary restraining order and a writ of preliminary injunction to enjoin the Department of Public Works and Highways (DPWH) and then DPWH Secretary Jose P. de Jesus, and others therein impleaded from enforcing and implementing the notice of pretermination of petitioners' contract for the implementation of Lower Agusan Development Project, Stage I, Phase 1, Butuan City, or any part thereof, to any person; and prohibiting said defendants from bidding said project or any part thereof, or awarding it to any person. On March 1, 1992, the Government through respondent DPWH on one hand, and the joint venture of Genaro G. Reyes Construction, Inc. (GGRCI), Universal Dockyard, Ltd. (UDL), a British construction firm, Home Construction (HC), and JPL Construction (JPLC), (represented by petitioner Genaro G. Reyes, as President of lead contractor GGRCI) on the other hand, entered into a "Contract for the construction of the flood control facilities and land improvement works of the Lower Agusan Development Project, Stage 1, Phase 1, Butuan City" (Annex B, Petition; pp. 75-88, Rollo). In the bidding which preceded the awards by the DPWH of the contract to the GGRCI, et al. Joint Venture, petitioners submitted the lowest bid below the Approved Government Estimate (AGE) of P492,563,998.00. The following bids were submitted: 1. Petitioner P445,858,196.02 9.45% below approved government estimate of P492,563,998.00.

2. D.M. Wenceslao & Associates P659,980,029.00 33.99% above government estimate. 3. Hanil Development Corporation P696,524,897.91 41% above government estimate. 4. F.F. Cruz and China Stage Engineering backed out. 5. C.M. Pancho and A.M. Oreta disqualified. On May 8, 1992 the Notice to Proceed (Annex C, Petition; p. 89, Rollo) was issued by DPWH Undersecretary Romulo Del Rosario. It was received by petitioners on May 9, 1992 and they forthwith mobilized and deployed their men and equipment. The notice to proceed specifically stated that the contract would take effect not later than thirty days from its receipt by petitioners. On April 23, 1992, the other respondents, DPWH Project Engineers Japanese Eiichiro Araide and Engineer Aquiles C. Sollano recommended termination of the contract alleging that as of that date "the project work progress is already 9.50 percent behind schedule (negative slippage)" (Annex F, Petition; pp. 92-93, Rollo). Four days later, or on April 27, 1992, Consultant Eiichiro Araide gave another figure of 9.8% negative slippage (Annex G, Petition; pp. 93-96, Rollo). Under the law, specifically Presidential Decree No. 1870, the Government (herein represented by the DPWH) is authorized to take over delayed infrastructure projects only whenever a contractor is behind schedule in its contract and incurs 15% or more negative slippage based on its approved PERT/CM, and the implementing agency, at the discretion of the Minister concerned, may undertake the administration of the whole or a portion of the unfinished work or have the whole or portion of such unfinished work done by another contractor through a negotiated contract at the current valuation price. Also, Department Order No. 102, Series of 1988 of the DPWH, provides: To insure timely and effective remedial steps in response to delays in project implementation, all Project Managers (PMs), Regional Directors (RDs) and District Engineers (DEs) concerned shall undertake the following calibrated actions where contracts for infrastructure projects reach the levels of negative slippage (attributable to the contractor) indicated below: 1. Negative Slippage of 5% (Early Warning Stage). The contractor shall be given a warning and required to submit a "catch-up" program to eliminate the slippage. The PM/RD/DE shall provide temporary supervision and monitoring of the work. 2. Negative Slippage of 10% ("ICU" Stage). The contractor shall be given a second warning and required to submit a detailed action program on a fortnightly (two weeks) basis which commits him to accelerate the work and accomplish specific physical targets which will reduce the slippage over a definite time period. Furthermore, the contractor shall be instructed to specify the additional input resources money, manpower, materials, machines, and management in which he should mobilize for this action program. The PM/RD/DE shall exercise closer supervision and meet the contractor every other week to evaluate the progress of work and resolve any problems and bottlenecks. 3. Negative Slippage of 15% ("make or break" stage). The contractor shall be issued a final warning and required to come up with a more detailed program of activities with weekly physical targets together with the required additional input resources. On-site supervision shall be intensified, and evaluation of project performance will be done at least once a week. At the same time the PM/RD/DE shall prepare contingency plans for the termination and rescission of the contract and/or take over of the work by administration or contract. 4. Negative Slippage beyond 15% ("terminal" stage). The PM/RD/DE shall contract and/or take over of the remaining work by administration or assignment to another contractor/appropriate agency. Proper transitory measures shall be taken to minimize work disruptions, e.g., take over by administration while rebidding is going on. Because of negative slippage of 9.50% as of April 23, 1992, or 9.86% as revised on April 27, 1992, respondent Project Director Antonio A. Alpasan wrote a memorandum (Annex H, Petition; p. 98, Rollo) dated May 8, 1992 to

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respondent DPWH Undersecretary Romulo Del Rosario recommending either of two alternatives: 1. Negotiate the entire balance of the work with the second lowest bidder, but if the second lowest bidder is blacklisted, then to the third lowest bidder; or 2. Rebid the whole balance of the work or divide it into contract packages. On May 14, 1992, DPWH Acting Secretary Gregorio Alvarez notified petitioner GGRCI that its contract is being terminated (Annex D, Petition; p. 90, Rollo). Also on May 14, 1992, respondent DPWH Undersecretary Romulo Del Rosario wrote respondent Secretary De Jesus a memorandum (Annex I, Petition; p. 99, Rollo), "recommending that the balance of the work be offered to the third lowest bidder, the Korean firm of Hanil Development Corporation and that in the event that the negotiation with Hanil fails, the balance of the work be repackaged into several components for rebidding as soon as possible. At this juncture, note must be taken of the circumstance that the bid price of Hanil of P696,524,897.96 was 41.4% over and above the approved government estimate (AGE) of P492,563,998.00 for the project. Hanil's bid was higher by P254,666,701.94 vis-a-vis petitioners' bid and contract price. On May 14, 1992, respondent DPWH Secretary De Jesus wrote petitioners that its contract for the project was terminated (Annex E, Petition; p. 91, Rollo). On May 22, 1992, petitioners wrote a letter requesting reconsideration of the termination order, pointing out, inter alia, that: . . . the bid of Hanil Corp. when the project was bidded 15 October 1990 was already P696,524,897.00, 41.4% above the Approved Agency Estimate (AAE), which amounts to P492,563,998.00. Categorically, we are taking a price difference of P203,960,849.00, which is obviously much to the disadvantage of the Department and the Filipino people. In comparison to the contract price of P445,858,196.00, 9.48% below the AAE, the government and Filipino people stand to earn a savings of P46,705,802.00 and P250,666,651 compared to Hanil's bid price. . . . Reviewing the incurred negative slippage in detail, it can clearly be seen that the bulk can be attributed to the unaccomplished spoilbank and dredging section of the project. The spoilbank section, supposedly 100 hectares in area had right of way problems; that is, only 40 hectares or 40% of the total area have been acquired. (Annex J, Petition; pp. 100-101, Rollo.) The request for reconsideration was reiterated on May 26, 1992 and June 14, 1992 (Annexes K and L, Petition; pp. 102-106, Rollo) inviting the DPWH's attention that: (a) based on Hanil's bid price the government stands to lose P250,666,651.00, apart from the additional P100 Million worth in escalation price as indicated in the recommendation of respondents Alpasa (Annex H, Petition) and Del Rosario (Annex I, supra); (b) the delay and failure of the DPWH Project Office (PMO) to procure the 100 hectares right of way for the project's spoilbank area (only 40 hectares was acquired by the DPWH) as provided for in the tender documents, thereby contributing to a negative slippage equivalent to 3% due to the suspension of work in that area because of right of way problems. On June 2, 1992, DPWH Secretary De Jesus terminated the contract of the GGRCI, et al. Joint Venture (Annex M, Petition; p. 107, Rollo). On October 8, 1992, respondent DPWH Undersecretary Romulo del Rosario sent a letter (Annex N, Petition; pp. 108-110, Rollo) to Mr. Hideo Tanaka, Chief Representative of Japan's Overseas Economic Cooperation Fund (or OECF) recommending that the termination of petitioners' contract be lifted upon the following observations: . . . some reasons contributed to the delay covering the negative slippage was also due to the government's fault, such as:

a. Overlapping of duties and responsibilities among the expatriates, the local consultants and the field PMO. b. Unauthorized variation order with the project manager and the expatriate consultant issuing it without prior authority from the central office reducing the length of the flood wall from 5.825 km. to 1.868 km. and change it to levee, with a total cost reduction of P75,458,091.03. c. The right of way problem where the project has a socalled spoiled bank section which is supposed to be 100 hectares and the government has to secure the right-ofway. But as of the present, only about 40 hectares or 40% has been acquired, out of which, about 20 hectares are contiguous while the remaining are scattered. Because of this the contractor found it difficult to pursue the project as it is quite unrealistic to dispose of the dredged materials. Aside from this, there is also the right-of-way problems encountered in the floodwall and levee construction. 3. With the termination effected, the contractor filed a case in the trial court twice denied by the trial court. Right now the case has been appealed to the Court of Appeals. 4. The DPWH sent an investigating team to verify the allegations of the contractor on the faults of the Government and found to have been true. 5. To resolve the issue, we have studied and came up with three options to continue the project as presented in our report to Secretary De Jesus (copy attached). Considering the advantages and disadvantages presented, we recommend that the termination order be lifted and the contract with the joint venture be pursued on the premise that the vigorous action of the contractor in pursuing the case, it is evident that they have all the intention to finish the project. Otherwise all their actions would prove nothing and futile. The above recommendation was based on the report of Andres Canlas, DPWH Project Manager IV, dated September 8, 1992 (Annex C-2, Urgent Motion for Issuance of Temporary Restraining Order; p. 196, Rollo) that the negative slippage of the project was caused not only by the contractor but also by the government side. On May 28, 1992 GGRCI, et al. Joint Venture filed a case for prohibition, specific performance, and injunction against respondent DPWH as the sole defendant before the Regional Trial Court of Manila (Civil Case No. 9261345). The joint venture subsequently filed an Amended Petition impleading additional defendants (respondents herein) and including claims for damages. On June 25, 1992 and August 5, 1992, the regional trial court issued orders denying the joint venture's prayer for preliminary injunction citing Section 1 of Presidential Decree No. 1818 providing that: No court in the Philippines shall have jurisdiction to issue any restraining order, preliminary injunction, or preliminary mandatory injunction in any case, dispute or controversy involving any infrastructure project or a mining, fishery, forest or other natural resource development of the government or any public utility operated by the government including any other public utilities for the transport of the goods or commodities, stevedoring and arrastre contracts, to prohibit any person or persons, entity or government official from proceeding with, or continuing the execution or implementation of any such project, or the operation of such public utility, or pursuing any lawful activity necessary for such execution, implementation or operation. On August 11, 1992 the joint venture filed with the Court of Appeals a petition for certiorari and prohibition with a prayer for a writ of preliminary injunction to set aside the trial court's orders. The petition in CA-G.R. 28632 was dismissed by respondent Court of Appeals in a decision dated October 20, 1992 (Annex A, Petition; pp. 68-75, Rollo) and a subsequent motion for reconsideration was denied in a resolution dated January 20, 1993 (Annex A-1, Petition; p. 77, Rollo). Much reliance is placed on the prohibition embodied in Section 1 of Presidential Decree No. 1818 which forbids any Court in the Philippines, including this Court, from issuing any restraining order, preliminary injunction, or preliminary mandatory injunction in any case, dispute or

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controversy involving, as in the case at bar, an infrastructure project, to prohibit any person or entity from continuing with the execution or implementation of such project. It is on the basis of such provision that the door is being closed on petitioners' prayer for redress. Such proposition is not well-taken. Against the backdrop of the undisputed facts that (a) respondents terminated petitioners' contract based on slippage of 9.86% and (b) the contributory fault of the government which substantially added to the slippage the primary question that presents itself is whether the termination was proper even if the slippage had not reached the 15% level mentioned by the law as to justify termination. This is a legal, not a factual question. In consequence, if the termination be adjudged unjustified, are the courts powerless to intervene due to the caveat under the aforequoted Section 1 of Presidential Decree No. 1818? Although we entertain serious doubts in regard to the constitutionality of Presidential Decree No. 1818, we nonetheless feel that said decree finds no application to the case at bench. It will be observed that what Presidential Decree No. 1818 proscribes is the issuance of a writ of injunction to impede or, in the language of the statute: . . . to prohibit any person or persons, entity or government official from proceeding with, or continuing the execution or implementation of any such project, or the operation of such public utility, or pursuing any lawful activity necessary for such execution, implementation or operation. In the case at bench, the net effect of granting the petition is not to stave off implementation of a government project but precisely to say to public respondents that they ought to implement the award and should not thus cancel the contract of petitioners inasmuch as the negative slippage is less than the minimum level specified by Presidential Decree No. 1870. Hence, the proscription under Presidential Decree No. 1818 is inapplicable since we are not restraining implementation of a government project. Verily, we are instructing public respondents to allow petitioners to proceed with the project. In the determination of whether respondents have acted within the bounds of the law when they terminated the contract based on the admitted 9.86% slippage, resort must be had to the very law, Presidential Decree No. 1870 and DPWH Circular No. 102, upon which respondents anchor their authority to terminate the contract. The pertinent provisions of Presidential Decree No. 1870 give the implementing agency (in this instance, the DPWH) authority to terminate the contract whenever the contractor is behind schedule in its contract work and incurs 15% or more negative slippage based on its approved PERT/CPM. Section 1 of Presidential Decree No. 1870 reads thus: 1. Whenever a contractor is behind schedule in the contract work and incurs 15% or more negative slippage based on its approved PERT/CPM, the implementing agency, at the discretion of the Ministry concerned, may undertake by administration the whole or a portion of the unfinished work done by another qualified contractor through negotiated contract at the current valuation prices. Now Circular No. 102, Series of 1988, promulgated to implement Presidential Decree No. 1870, provides four stages of negative slippage with which calibrated action, at each stage, has to be undertaken as remedial steps to correct delays in project implementation, as follows: 1) Negative slippage of 5% ("early warning" stage). Contractor is given a warning; 2) Negative slippage of 10% ("ICU" stage). The contractor is given a second warning; 3) Negative slippage of 15% ("make or break" stage). The contractor shall be issued a final warning; 4) Negative slippage beyond 15% ("terminal" stage). The PM/RD/DE shall initiate termination/rescission of the contract and/or take-over of the remaining work by

administration or assignment to another contractor/appropriate agency. The discretion, therefore, of the DPWH to terminate or rescind the contract comes into play only in the event the contractor shall have incurred a negative slippage of 15% or more. In the instant case, the negative slippage of petitioners at the time they were served the notice of termination was only 9.86%. Hence, respondents violated the law and committed an illegal act and abused their discretion when they terminated petitioners contract based on negative slippage of only 9.86%. Such wrongful and illegal act is in derogation of petitioners' right not to be deprived of property without due process of law. Petitioners' contract with the DPWH covering the project in question is a proprietary right within the meaning of the Constitution and can only be rescinded strictly in accordance with the governing law, Presidential Decree No. 1870, as implemented by DPWH Circular No. 102. And relative to this axiom, it has been previously emphasized that courts may declare an action or resolution of an administrative authority to be illegal because it violates or fails to comply with some mandatory provision of the law or because it is corrupt, arbitrary, or capricious (Borromeo vs. City of Manila and Rodriguez Lanuza, 62 Phil. 512; 516 [1935]; Annotation on the Power of Judicial Review of Public Bidding and Awards of Government Contracts, 50 SCRA 491; 498 [1973]) The Office of the Solicitor General maintains that under Paragraph 2 of Presidential Decree No. 1870, the DPWH may take over or award a project to another contractor whenever work is not done on schedule, meaning anywhere from zero slippage to 15% slippage. This would lead to hopeless contradiction between Paragraph 1 and Paragraph 2. A law cannot possibly negate in one paragraph what it grants in another. Paragraph 2 can only be interpreted as allowing discretion after the 15% limit in Paragraph 1 is exceeded. It cannot be doubted that in cases of force majeure, revolution, anomalous transactions in the DPWH itself, and other similar reasons, the Department Head may still extend the contract beyond 15% slippage. Only then may sound discretion come in. Paragraph 3 of Presidential Decree No. 1870 refers to specific causes (a) refusal of the contractor to provide tools, equipment, and workers; (b) subletting or assigning the contract to subcontractors without DPWH permission; and (c) willful violation of covenants and agreements. Not one of the above exists in the case at bench. Respondents cannot, as they allege, rely on the ordinary rules of contract under the Civil Code that if the obligor does not comply with the terms and conditions of the contract, the obligee has the right to ask for rescission with damages. A special law fixes the condition of slippage at 15%. This has to be followed. The law on contracts cannot also penalize the obligor for faults of the obligee. The 15% slippage required by Presidential Decree No. 1870 can be likened to the 15-day reglementary period for appealing that cannot co-exist with a contradictory provision allowing a court, in its discretion, to reduce the period to one or two days. Fifteen days means fifteen days. Fifteen percent slippage does not mean 9.5%. The six (6) instances cited as capable of offsetting or negating the first requirement of 15% slippage would give the DPWH blanket prerogative to terminate a contract at anytime and on the slightest pretext, including those created by DPWH itself as in this case. It is a grant of arbitrary power. It is delegation running riot. The requirement of public bidding might as well be abolished. DPWH officials are compelled by law to accept only the best bid in the award of contract. However, what is the point in conducting a public bidding if, only a short while later, a winning bidder can be disqualified on a one or two percent slippage caused by DPWH itself or a claim that certain tools and equipment have not been provided or a pretext that any term or condition has been violated. The 15% limiting point must be followed. The other provisions come in only if they caused the slippage to go beyond 15%. It is argued that this Court is not a trier of facts. However, neither can this Court ignore facts coming from DPWH itself. Except for general statements and conclusions,

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there is nothing presented by respondents to show that the logical and convincing assertions of petitioner are not true. According to respondents, petitioners failed to mobilize the minimum equipment for the project and to send a sufficient number of engineers. Respondents state that from Day One, there should have been thirty-four (34) pieces of light and heavy equipment but that petitioners dispatched only fourteen (14) to the job site. Precisely, all these alleged shortcomings of petitioners were clearly taken into consideration in arriving at a conclusion that the negative slippage is only 9.50%. Petitioners, of course, deny the allegation of delay. They state that they mobilized surveyors, engineers, and laborers; brought all the necessary equipment to the job site, constructed bunk houses, relocated buildings such as those of the Pagatpatan Elementary School. Petitioners' engineers were old hands of DPWH and familiar with every aspect of the construction. The best evidence that the statements of petitioners are more accurate than those of respondents is that the DPWH Investigating Team went to the jobsite and thereafter filed a lengthy report. It was on the basis of the report that then Undersecretary del Rosario later recommended that the termination order be reconsidered and revoked and that petitioners should be allowed to continue with the construction under the original contract. The Undersecretary did not mention what respondents now allege in their memorandum. Common sense also dictates that 34 pieces of light and heavy equipment cannot all be used simultaneously on Day One. More so, because the right of way was admittedly not secured by DPWH. The machinery would only be idle or get in each other's way. Assuming respondents to be correct that there was a three-month delay in commencing the job, the slippage is still 9.86% inspite of all petitioners' alleged shortcomings. Petitioners claim to have mobilized the men and the materials on time and attribute the delay to DPWH but emphasize that "whatever dates are chosen and whatever causes are adduced by the respondents and given the worst scenario, the slippage does not go beyond 9.85%, still not a basis to cancel the contract" (p. 4, Petitioners' Memorandum dated February 2, 1994). Respondents keep on blaming petitioners for delay but their own DPWH Investigating Team and the second highest official of the DPWH laid the blame on the government engineers and purchasing officials. The right of way problem calls for special mention. The letter of DPWH Undersecretary Romulo del Rosario dated October 8, 1992 recommended the lifting of the cancellation of the contract, because of, among other things, the right-of-way problem. It was ascertained during the hearing conducted by the Court on January 12, 1994 that of the 100-hectare spoiled bank section, only 40 hectares have been acquired. Half of this 40 hectares is broken down into small parcels separate from each other. In the other half, DPWH paid the landowners but took no steps to attend to the tenants who refused and continue to refuse to vacate their farms unless compensated. The dredging on the river shall result in 1,300,000 cubic meters of mud, silt, and debris flowing into the area. Unless a ring embankment is constructed around the entire 100 hectares, the mud and silt would inundate neighboring areas. Petitioners cannot possibly start dredging until after the 100 hectares are acquired because this would drown or bury the people, work animals, and farms in the still-to-be acquired 60 hectares, not to mention the tenants who refuse to leave their farms in the 40 hectares already purchased until compensation benefits are given to them. The Solicitor General has also failed to explain the purchase of non-essential areas. There was no explanation for the sudden change from a reinforced concrete floodwall to an earthen levee along a six kilometer stretch of the project. The concrete floodwall calls for the purchase of a 10-meter wide strip of land along it. The earthen levee requires a 35-meter wide

adjacent strip of land. Anywhere up to 25 meters wide and six kilometers long of expensive urban land had to be purchased to cover up the use of right-of-way funds where it is not essential. There should likewise be an explanation why an extra P71,000,000 in addition to the earlier amount of P51,000,000 had to be appropriated for right of way. What is appalling and seemingly anomalous is the recommendation of respondent officials to offer the project to Hanil Corporation, the third lowest bidder, and whose bid had been previously disqualified for being 41.40% over and above the government estimate for the project of P492,563,998.00. Indeed, the Hanil bid was P696,524,897.96, or higher by P254,666,701.94 as compared to petitioners' bid and contract price of P445,858,196.02. Respondents' wrongful termination of the contract which petitioners agreed to execute, and have in fact executed partially, at the price of P445,858,196.02 and in offering it to Hanil, a disqualified bidder which previously entered with a bid of P696,524,817.96, would result in a financial loss to the government in the amount of no less than P254,666,201.94, Hence, respondents would seem to appear to be entering into a negotiated contract grossly disadvantageous to the government. The intent of the law (P.D. 1870) in allowing the government to take over delayed construction projects with negative slippage of 15% or more is primarily "to save money and to avoid dislocation of the financial projections and/or cash flow of the government", as clearly stated in the 3rd preambulatory clause of said decree, as follows: Whereas, any delay in the completion of the contract in accordance with the approved PERT/CPM and/or contract time as stipulated, will not only dislocate the financial projections and/or the cash flow of the Government on these projects, but also unduly prejudice the public interest sought to be subserved by the timely completion of the infrastructure project. The termination of petitioners' contract does not, therefore, subserve public interest. On the other hand, it would result in a huge dislocation of the financial projections and/or cash flow of the Government. On this score, it has been said as a general doctrine that though the law be fair on its face, and impartial in appearance, yet if it is applied and administered by the public authorities charged with their administration and thus representing the government itself, with an evil eye and unequal hand so as practically to make unjust and illegal discrimination, the denial of equal justice is still within the prohibition of the Constitution. (Yick Wo vs. Hopkins, 128 U.S. 356; Ex parte Virginia, 100 U.S. 339; Henderson vs. Mayor, 92 U.S. 259; Chy Lung vs. Freeman, 92 U.S. 175; Ned vs. Delaware, 103 U.S. 320; Soon Hing vs. Crowley, 113 U.S. 703). If the unjust and unlawful acts of respondents are not struck down and respondents are not restrained, the Government stands to lose from Three Hundred Fifty Million (P350 Million) Pesos additional expenditures. Under Presidential Decree No. 1870 when the project is rebidded or awarded through negotiated contract, compensation is at "current valuation price" (Sec. 1, P.D. 1870). Considering the increase in prices of labor and materials, it is a certainty that any new bidder would ask for prices much higher than the already high prices which the losing bidders offered in the March 1, 1991 bidding. Tremendous loss of taxpayers' money thus is inevitable. This Court cannot, therefore, close its eyes to the resultant evil which will be inflicted not only upon petitioners, but also on the Filipino people and the dissipation of taxpayers' money arising from the unjust termination of petitioners' contract and the rebidding to or renegotiation with other parties of the project. Public interest and the stakes of the Government dictate the issuance of the writs of injunction and prohibition restraining respondents from enforcing the order terminating petitioners' contract for the construction of the flood control facilities and land improvement works of the Lower Agusan Development Project, Stage I, Phase 1. It may be emphasized that the law fixing the stages of negative slippage before termination of a contract may be

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effected and the undisputed loss of P350 million if the termination is pushed through are not the only reasons why this petition should be granted. By the very admissions of respondent DPWH, such as the October 8, 1992 letter of Undersecretary Roberto del Rosario to the Japanese consultant, earlier cited, the main cause of the delay was due to respondent DPWH officials and not to petitioner. A total of P51 million was appropriated and released to acquire rights of way or to buy the lands upon which the flood control project would be constructed. The farmers and landowners refused to move out when the funds to compensate them were not forthcoming. This was the main cause of the 9.6% slippage and it is not attributable to petitioners. The DPWH Team which investigated the causes of slippage further found that there was an overlapping of duties and responsibilities among the Japanese consultant, the local consultants, and the Field Project Manager, thus sustaining petitioners' claim of unwarranted delays in the approval of work and equipment, not to mention changes of orders which left petitioners wondering what to do and whom to follow. There is ample evidence in the record before us to show that the DPWH was responsible for the main causes of the delay. As stated by petitioners, DPWH, in failing to comply with its obligations seemingly wants the contractors to work in a most unorthodox if not unthinkable manner to justify irregular purchases which should not have been made. In fine, not only was the slippage within legally tolerable limits but the cause of the slippage are attributable to respondent DPWH officials. The inflexible stance of respondents towards the compromise offers of petitioners, even before this Court ordered them to explore such a possibility, but especially after we asked them to do so, convinces the Court all the more that there are irregularities which respondents are sweeping under the rug. The record also shows that even after the stop-work order was given and while petitioners were trying to have it reconsidered, they continued working full force on the project thus minimizing or eliminating the slippage which caused the disputed problems. WHEREFORE, the petition is hereby GRANTED and the decision dated October 20, 1992, as well as the resolution dated January 20, 1993 of the Court of Appeals in CA-G.R. SP No. 28632 are hereby SET ASIDE. SO ORDERED. Feliciano, Bidin, Romero and Vitug, JJ., concur.

Separate Opinions FELICIANO, J.: dissenting I join in the dissent of my distinguished brother in the Court, Mr. Justice Vitug. I also confess to some difficulty in fully grasping what exactly the majority opinion by my learned brother Mr. Justice Melo is actually saying. I have assumed that the majority is saying that the Regional Trial Court (RTC) committed a grave abuse of discretion in denying the petitioner companies' application for a temporary restraining order or a writ of preliminary injunction, and that the Court of Appeals' refusal to set aside the RTC's order of denial constituted reversible error on the part of the appellate court. This would be straightforward enough. However, it should be noted that the RTC denied petitioners' application on legal grounds, that is, that the RTC had no lawful authority to grant that application. Assuming, for purposes of argument merely, that the RTC had erred in reaching its legal conclusion, it is very difficult to suppose that the RTC's error of law constituted grave abuse of discretion amounting to lack or excess of jurisdiction. And that is precisely what the Court of Appeals held. It would appear, however, that the majority opinion is also saying something else: that the Department of Public Works and Highways (DPWH) committed either an unlawful act or a grave abuse of discretion in

terminating its contract with petitioner Construction Company. A principal problem with this position is that there has as yet been no trial on the merits in the lower court. Petitioners' application for a temporary restraining order or a preliminary writ of injunction was made very early in the case, such that the RTC could not, and did not, make any findings of fact, and denied the application solely on legal grounds. The majority opinion is, however, replete with descriptive, fact-type, statements which cannot be said to reflect findings of fact, since none were made either by the RTC or by the Court of Appeals. It would, accordingly, appear that the majority opinion has treated the allegations of one or the other party (but principally the petitioners) as if such allegations constituted statements of established facts. They can scarcely be regarded as undisputed facts, since the respondents, defendants before the RTC, have not yet even filed their answer. I fear, therefore, that this Court, which is, of course, not a trier of facts, will, among other things, be pre-empting the results of the still forthcoming trial before the RTC. The Petition for Review on Certiorari should be denied, and I so vote. VITUG, J.: dissenting I regret inability to join my esteemed colleagues in their majority opinion. The facts and the events that led to petitioners' recourse to this Court, as far as I can gather from the available records of the case, could be detailed thusly: On 14 October 1990, a joint venture agreement was entered into by and among Genaro R. Reyes Construction, Inc. (GRRCI), Universal Dockyard Limited (UDL), Home Construction, and JPL Construction for the purpose of engaging in the construction business. On 01 March 1991, respondent Department of Public Works and Highways (DPWH), represented by then Secretary Jose P. de Jesus, executed a contract with the joint venture, represented by GRRCI President Genaro R. Reyes, for the construction of flood control facilities and land improvement works at the Lower Agusan Development Project, Stage I, Phase I, Butuan City. The project was to be completed within fiftytwo (52) calendar months from the date of the receipt of the formal notice to proceed. 1 On 14 May 1992, GRRCI, through Genaro R. Reyes, received identical notices from the DPWH, one from Undersecretary Gregorio S. Alvarez and another from Secretary Jose P. de Jesus, informing him of DPWH's decision to terminate the contract in "view of the minimal accomplishment of the Joint Venture despite . . . repeated granting of grace period . . . to register substantial accomplishment . . . ." 2 The notices were issued in response to the memorandum, dated 23 April 1992, addressed by Project Engineers Eiichiro Araida and Aquiles Sollano, to DPWH Regional Director Julio M. Luspo, recommending said termination. The memorandum, in part, expressed: Please be informed that as of April 23, 1992, the project work progress is already 9.50 percent behind schedule (negative slippage), and it has been observed that there is no indication at present that the situation will improve. xxx xxx xxx Considering the present situation, we believe that sooner or later, the negative slippage of the work progress will continue to increase beyond negative 15 percent. 3 On 27 April 1992, Project Engineer Araida issued another Memorandum to Regional Director Luspo, in which he indicated the individual performances of the joint venture, except UDL, and forecasted negative slippages for the succeeding months, which would reach 16.86% by October 1992. 4 On 28 May 1992, the joint venture filed a Petition (Civil Case No. 92-61345) for "Prohibition, Specific Performance and Injunction, with Prayer for the Issuance of a Writ of Preliminary Injunction and/or Temporary Restraining Order," with the Regional Trial Court (RTC), Branch 15, of Manila, seeking to prohibit DPWH from terminating the contract and rebidding the same. On 22 June 1992, the RTC denied the prayer for the issuance of a writ of preliminary injunction. On 08 July 1992, respondent DPWH filed a "Manifestation (In Lieu of

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Answer)," praying that it be relieved from filing an answer considering that the 22nd June 1992 order of the court has rendered the issues raised in the petition moot and academic. The petitioners filed an amended petition by adding other respondent officials of DPWH. On 05 August 1992, the RTC issued another order to the following effect: Anent the ground that there is no basis for DPWH to terminate its contract with plaintiff as this is depriving the latter of their right to property without due process, this Court believes that DPWH being an agency of the government is presumed to have performed a lawful activity. That, in fact, the acts done or to be done by DPWH is unlawful is for plaintiff to prove after due hearing. In the meantime, this Court following the directive of PD 1818, has no power to enjoin DPWH from pursuing any lawful act relative to the implementation of the infrastructure project. WHEREFORE, motion for the issuance of preliminary injunction is hereby DENIED. SO ORDERED. A petition for "Certiorari and Prohibition, with Prayer for Preliminary Injunction and Temporary Restraining Order," was filed with the Court of Appeals, followed, on 17 August 1992, by an "Extremely Urgent Motion for Issuance of Temporary Restraining Order." Meanwhile, the Solicitor-General, in his comment to the petition before the Court of Appeals, manifested that Home Construction and JPL Construction "had already signified their willingness to adhere to the DPWH Secretary's decision to terminate the contract." 5 On 10 September 1992, the appellate court issued a Resolution denying the petitioners' Urgent Motion. On 20 October 1992, the court dismissed the petition for lack of merit. The motion for reconsideration filed by the petitioners was denied in a resolution of 20 January 1993. The question that is sought to be resolved in the instant petition to the Court is whether or not the respondent appellate court has committed grave abuse of discretion in denying the petitioners' prayer for the issuance of the preliminary injunctive writ and in dismissing the petition. In opposing the grant of the petition, the Solicitor General cites the proscription on courts under Presidential Decree No. 1818, similar to Presidential Decree No. 605, against the issuance of injunctive writs. 6 He argues that the law, signed on 16 January 1981, is aimed at avoiding disruptions in the undertaking of essential government infrastructure projects. Letter of Instructions No. 1186 defines the term "infrastructure project," to include . . . all projects of all the Ministries of Government, those of offices and agencies under their supervision and those of corporations and institutions attached to them, excluding the Ministry of National Defense. For this purpose, infrastructure projects shall mean construction, improvement and rehabilitation of roads, and bridges, railways, airports, seaports, communication facilities, irrigation, flood control and drainage, water supply and sewerage systems, shore protection, power facilities, national buildings, school buildings, hospital buildings, and other related construction projects that form part of the government capital investment. There can hardly be any dispute that the project covered by the contract in question is embraced by Presidential Decree No. 1818. Section 1 of the Decree reads: Sec. 1. No court in the Philippines shall have jurisdiction to issue any restraining order, preliminary injunction, or preliminary mandatory injunction in any case, dispute, or controversy involving an infrastructure project, or a mining, fishery, forest or other natural resource development project of the government, or any public utility operated by the government, including among others public utilities for the transport of the goods or commodities, stevedoring and arrastre contracts, to prohibit any person or persons, entity or government official from proceeding with, or continuing the execution or implementation of

any such project, or the operation of such public utility, or pursuing any lawful activity necessary for such execution, implementation or operation. (Emphasis supplied). On the above score, the respondent appellate court elucidated, as follows: PD 1818 was promulgated to prohibit the courts from issuing restraining orders or preliminary injunctions in cases involving infrastructure projects in order not to disrupt or hamper the pursuit of essential government projects critical to the economic development effort of the nation (Second "Whereas" clause). The injunction sought seeks to restrain the DPWH and its officials from carrying out the order terminating the contract of petitioners, and if granted would in effect amount to an interference by the court or the substitution of its judgment for that of the said administrative agency in the discharge of its functions in pursuing the infrastructure project in question. The issuance of an injunction is clearly covered by the peremptory language of PD 1818. While the prohibition is by no means absolute, as the courts are not prevented from exercising jurisdiction where questions of law are involved (Datiles & Co. vs. Sucaldito, 186 SCRA 704) or when the administrative agency violates a citizen's constitutional right, or commits a grave abuse of discretion, or acts in excess of or without jurisdiction (Mantruste System, Inc. vs. CA, 179 SCRA 136) We are not convinced that petitioners' plea of a violation of its contractual/property rights is sufficient to override the letter and legislative purpose behind PD 1818. The arguments raised by petitioner in questioning the percentage of negative slippage and the computation of days of delay due to the various problems encountered which are allegedly attributable to respondent DPWH, involve questions of fact and the exercise of official discretion on the part of the administrative officials concerned, and do not justify judicial interference. As stated in Datiles and Co. vs. Sucaldito, supra., which involves a similar statutory prohibition contained in PD 605: The prohibition pertains to the issuance by the courts of injunctions or restraining orders, against administrative acts or controversies which involves facts or exercise of discretion in technical cases because to allow courts to judge these matters would disturb the smooth functioning of the administrative machinery. We are not convinced that the issues raised fall outside of the above dimension so that the courts will not be prevented by PD 1818 from exercising its power to restrain or prohibit administrative acts. The allegation that petitioners' constitutional right is being violated cannot be upheld. Its right to continue with the contract should be considered in light of the DPWH's official prerogative to terminate the same, and until the merits of this issue are fully litigated, the issuance of the preliminary injunction must be deemed covered by PD 1818, if the purpose of the latter issuance is to be served at all. The petitioner's insistence that its negative slippage of 10% as of May, 1992 is below the 15% negative slippage that would authorize take-over of its contract pursuant to PD 1870 and its implementing Circular No. 102 goes into the merits of the legality of the termination order, which merely adverted to petitioner's "minimal accomplishment." The idea behind PD 1818 to restrain the courts from interfering with administrative decisions arrived at in the pursuit of infrastructure projects is to enable the agency concerned, which is presumably more knowledgeable with respect to the technical matters involved in such critical projects, to utilize its technical expertise in the pursuit of the essential infrastructure projects. Courts should not block by an injunction the discharge of the agency's functions and the implementation of its decisions, in the absence of a clear violation of constitutional right. We are not convinced that there is such a violation. 7 Indeed, as the majority opinion (concurring with the petitioners) so well point out, one can take issue on what the respondents would assume to be a limitless application of the aforequoted provision. Section 5, Article VIII, of the 1987 Constitution explicitly vests in the Supreme Court original jurisdiction

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". . . over petitions for certiorari, prohibition, mandamus, quo warranto and habeas corpus." The conferment of that jurisdiction may be contended to likewise implicitly vest in the Court the ancillary remedies incidental to the proper exercise thereof. So, also, Section 1 of the same Article VIII provides that judicial power, this time residing in all courts of competent jurisdiction, includes the duty ". . . to determine whether or not there has a been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the government." 8 The Court need not, in my view, pass upon this constitutional question, albeit submitted by the parties, there being neither urgency nor necessity for it at this time. The settled rule is that if there are other grounds upon which a case may be disposed of and resolved, such as, I believe, in this case at bench, courts must refrain from ruling on constitutional issues. 9 What should be apropos, instead of now making a peremptory dictum on the question of the constitutionality or scope of application of the decree, is an inquiry beforehand on the legal propriety, on the basis of Rule 65 of the Rules of Court, of the petition for certiorari and prohibition itself. For the extraordinary writ to issue, the rules require the attendance, among other conditions sine qua non, of "grave abuse of discretion." Has there really been one in the case at bench? This is the prejudicial question to be asked. Grave abuse of discretion, albeit an "elastic phrase," 10 has always been understood as a capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, such as, to exemplify, "where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, . . . 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." 11 Looking at the several propositions advanced to support the petition, concededly well presented and skillfully argued by counsel, on the one hand, and evaluating the same on the basis of the foregoing standard, on the other hand, I can not see my way clear to holding the appellate court guilty of reversible error in not attributing grave abuse of discretion on the part of the court a quo in refusing to grant the extraordinary writ prayed for. In terminating the contract, said respondents have acted on the basis, preclusive of unessential details, of an official report to the effect that the pace of work on the project, despite "repeated grantings of grace period," has been unsatisfactory and behind schedule. The fear on their part of further delays in the completion of the projects has not at all been imaginary. To say that they have acted whimsically or capriciously I find hard to accept. The petitioners allege that under Presidential Decree No. 1870, signed on 12 July 1983, the authority to take over a delayed infrastructure project may be done only when the negative slippage, which must be actual and not merely anticipated, is more than 15%; hence 1. Whenever a contractor is behind schedule in its contract work and incur 15% or more negative slippage based on its approved PERT/CPM, the implementing agency, at the discretion of the Minister concerned, may undertake by administration the whole or a portion of the unfinished work, or have the whole or a portion of such unfinished work done by another qualified contractor through negotiated contract at the current valuation price. Petitioners' invocation is poorly placed according to public respondents who, on their part, strongly maintain that the termination of the contract is based on paragraphs 2 and 3 of the same Presidential Decree, providing thusly 2. Whenever a work activity in the project is not being done on schedule per approved PERT/CPM, the Minister concerned/Head of Implementing Agency shall notify and direct the contractor to immediately undertake such work activity. If, within fifteen (15) days from receipt of such notice, the contractor fails to start the

work and to show satisfactory performance, the Government may take over the whole or a portion of such work and, at the discretion of the Minister concerned, have such work done by administration or award the same to another qualified contractor through negotiated contract at the current valuation price. 3. If, at any time during the progress of the contract work, the contractor should fail, refuse or neglect to supply and provide the required tools, materials, supplies, equipment, facilities and labor-workmen; or if the contract or any part thereof is being sublet or assigned without the previous written consent of the Government; or if the contractor is willfully violating any of the terms, conditions, covements, agreements or technical requirements of the project, the Government shall have the option to take over the project in whole or in part and to complete the same. The Government, at the discretion of the Minister/Head of Implementing Agency concerned, may have the contract work done by administration or award the same to another qualified contractor through negotiated contract at the current valuation price. Additionally, the Solicitor General cites Section 11 of Presidential Decree 1594, which reads: Sec. 11. Government's Right to Take Over Contract Work. The Government may take over the contract work should the contractor abandon the contract work, or unduly delay the prosecution of the contract work, or become insolvent, or assign his assets for the benefit of his creditors, or be adjudged bankrupt, or assign the contract work without written approval by the Government, or violate any condition or term of the contract. In any of these cases, the Government may terminate the employment of the contractor and take over the contract work after giving due notice to the contractor and his sureties. The above-quoted provisions of Presidential Decree No. 1594 and Presidential Decree No. 1870 must be deemed to form part of, and to co-exist with, the contract, even if the parties did not explicitly provide for them. Applicable peremptory provisions of law of this nature, affecting as they do public policy or impressed as they are with public interest, are held to be written into the contract. 12 In Commissioner of Internal Revenue vs. United States Lines Company, 13 this Court ruled: . . . .Any agreement or contract to be enforceable in this jurisdiction is understood to incorporate therein the provision or provisions of law specifying the obligations of the parties under such contract. The contract between herein respondent Company and its principal consequently imposed upon the parties not only the rights and duties delineated therein, but also the provisions of law such as that of the Code of Commerce aforecited. Looking closely at Presidential Decree No. 1594 and Presidential Decree No. 1870, relied upon by DPWH, it is obvious that the government can terminate or take over a contract work in any of the following cases: 1. Whenever a contractor is behind schedule in its contract work and incurs a 15% or more negative slippage based on the approved PERT/CPM; 2. Whenever a work activity in the project is not being done on schedule per approved PERT/CPM and the Contractor fails, within fifteen (15) days from receipt of notice, to undertake the work and to show satisfactory performance; 3. If, at any time during the progress of the contract work, the contractor should fail, refuse or neglect to supply and provide the required tools, materials, supplies, equipment, facilities and labor-workmen; 4. If the contract or any part thereof is being sublet or assigned without the previous written consent of the Government; 5. If the contractor is willfully violating any of the terms, conditions, covements, agreements or technical requirements of the project; 6. If the contractor abandons the contract work, or unduly delays the prosecution of the contract work; or 7. If the contractor becomes insolvent, or assigns his assets for the benefit of creditors, or be adjudged a bankrupt. It cannot be seriously disputed that petitioners' work has been behind schedule, and that said petitioners' attention to such delays has more than once been called. It is rather

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on the extent and on the cause of such delays, both factual matters, that the parties strongly differ (reiterated by the parties during the hearing held by the Court on 12 January 1994 and again stressed in their respective memoranda). It should be understandable if courts would in the first place, and pending the judicial determination of the facts after due hearing, count on the findings of agencies equipped with the manpower, as well as technical competence, such as the DPWH in this case, to make that evaluation. This Court itself is not a trier of facts, and it must accord due respect and weight to their conclusions. And even if I were to assume, for the sake of argument, that there has been on the part of the public respondents, including both the trial court and the appellate court which sustained them, a misappreciation of the facts here involved, I cannot view such flaw, given the circumstances, as amounting to grave abuse of discretion more than, if at all, as mere error of judgment. In sum, I fail to see a clear case that can justify the grant of the petition and the issuance of the extraordinary writs prayed for. This Court's attention is called by herein petitioners on another matter. It is averred that there has been a recommendation by Undersecretary Romulo del Rosario to award the balance of the project to the third lowest bidder, the Hanil Construction (Hanil), whose bid is 41.4% (P203,960,899.96) over and above the government estimate for the venture; 14 hence, the petitioners' apprehension that the ultimate losers could be the government itself. There is absolutely no reason for such fear. The DPWH "Resolution Recommending the Prequalification of Fifteen (15), Thirteen (13) and Nine (9) Individual/Joint Venture Contractors and the Predisqualification of Twenty Three (23), Twenty One (21) and Eighteen (18) Individual/Joint Venture Contractors for Contract Packages A, B and C Respectively of the Lower Agusan Development Project, Stage I, Phase I," dated 30 June 1993, signed by "PBAC Chairman" and Undersecretary Romulo M. del Rosario, Bureau of Construction Director Clarita A. Bandonillo, Bureau of Design Director Bienvenido C. Leuterio, Chief of Legal Service Cesar D. Mejia and Project Director, PMO-Flood Control and Drainage Projects Antonio A. Cabrasan, and approved on 14 July 1993 by Secretary Gregorio R. Vigilar, explicitly states that the DPWH's request to negotiate the balance of the work to the next complying bidder has been denied by the Office of the President; instead, a directive was issued to repackage and rebid the project. 15 Accordingly, I vote for the dismissal of the petition, and the denial of the preliminary injunction or temporary restraining order prayed for.
# Separate Opinions FELICIANO, J.: Dissenting

I join in the dissent of my distinguished brother in the Court, Mr. Justice Vitug. I also confess to some difficulty in fully grasping what exactly the majority opinion by my learned brother Mr. Justice Melo is actually saying. I have assumed that the majority is saying that the Regional Trial Court (RTC) committed a grave abuse of discretion in denying the petitioner companies' application for a temporary restraining order or a writ of preliminary injunction, and that the Court of Appeals' refusal to set aside the RTC's order of denial constituted reversible error on the part of the appellate court. This would be straightforward enough. However, it should be noted that the RTC denied petitioners' application on legal grounds, that is, that the RTC had no lawful authority to grant that application. Assuming, for purposes of argument merely, that the RTC had erred in reaching its legal conclusion, it is very difficult to suppose that the RTC's error of law constituted grave abuse of discretion amounting to lack or excess of jurisdiction. And that is precisely what the Court of Appeals held. It would appear, however, that the majority opinion is also saying something else: that the Department of Public Works and Highways (DPWH) committed either

an unlawful act or a grave abuse of discretion in terminating its contract with petitioner Construction Company. A principal problem with this position is that there has as yet been no trial on the merits in the lower court. Petitioners' application for a temporary restraining order or a preliminary writ of injunction was made very early in the case, such that the RTC could not, and did not, make any findings of fact, and denied the application solely on legal grounds. The majority opinion is, however, replete with descriptive, fact-type, statements which cannot be said to reflect findings of fact, since none were made either by the RTC or by the Court of Appeals. It would, accordingly, appear that the majority opinion has treated the allegations of one or the other party (but principally the petitioners) as if such allegations constituted statements of established facts. They can scarcely be regarded as undisputed facts, since the respondents, defendants before the RTC, have not yet even filed their answer. I fear, therefore, that this Court, which is, of course, not a trier of facts, will, among other things, be pre-empting the results of the still forthcoming trial before the RTC. The Petition for Review on Certiorari should be denied, and I so vote. VITUG, J.: Dissenting I regret inability to join my esteemed colleagues in their majority opinion. The facts and the events that led to petitioners' recourse to this Court, as far as I can gather from the available records of the case, could be detailed thusly: On 14 October 1990, a joint venture agreement was entered into by and among Genaro R. Reyes Construction, Inc. (GRRCI), Universal Dockyard Limited (UDL), Home Construction, and JPL Construction for the purpose of engaging in the construction business. On 01 March 1991, respondent Department of Public Works and Highways (DPWH), represented by then Secretary Jose P. de Jesus, executed a contract with the joint venture, represented by GRRCI President Genaro R. Reyes, for the construction of flood control facilities and land improvement works at the Lower Agusan Development Project, Stage I, Phase I, Butuan City. The project was to be completed within fiftytwo (52) calendar months from the date of the receipt of the formal notice to proceed. 1 On 14 May 1992, GRRCI, through Genaro R. Reyes, received identical notices from the DPWH, one from Undersecretary Gregorio S. Alvarez and another from Secretary Jose P. de Jesus, informing him of DPWH's decision to terminate the contract in "view of the minimal accomplishment of the Joint Venture despite . . . repeated granting of grace period ... to register substantial accomplishment . . . ." 2 The notices were issued in response to the memorandum, dated 23 April 1992, addressed by Project Engineers Eiichiro Araida and Aquiles Sollano, to DPWH Regional Director Julio M. Luspo, recommending said termination. The memorandum, in part, expressed: Please be informed that as of April 23, 1992, the project work progress is already 9.50 percent behind schedule (negative slippage), and it has been observed that there is no indication at present that the situation will improve. xxx xxx xxx Considering the present situation, we believe that sooner or later, the negative slippage of the work progress will continue to increase beyond negative 15 percent. 3 On 27 April 1992, Project Engineer Araida issued another Memorandum to Regional Director Luspo, in which he indicated the individual performances of the joint venture, except UDL, and forecasted negative slippages for the succeeding months, which would reach 16.86% by October 1992. 4 On 28 May 1992, the joint venture filed a Petition (Civil Case No. 92-61345) for "Prohibition, Specific Performance and Injunction, with Prayer for the Issuance of a Writ of Preliminary Injunction and/or Temporary Restraining Order," with the Regional Trial Court (RTC), Branch 15, of Manila, seeking to prohibit DPWH from terminating the contract and rebidding the same. On 22 June 1992, the RTC denied the prayer for the issuance of a writ of preliminary injunction. On 08 July

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1992, respondent DPWH filed a "Manifestation (In Lieu of Answer)," praying that it be relieved from filing an answer considering that the 22nd June 1992 order of the court has rendered the issues raised in the petition moot and academic. The petitioners filed an amended petition by adding other respondent officials of DPWH. On 05 August 1992, the RTC issued another order to the following effect: Anent the ground that there is no basis for DPWH to terminate its contract with plaintiff as this is depriving the latter of their right to property without due process, this Court believes that DPWH being an agency of the government is presumed to have performed a lawful activity. That, in fact, the acts done or to be done by DPWH is unlawful is for plaintiff to prove after due hearing. In the meantime, this Court following the directive of PD 1818, has no power to enjoin DPWH from pursuing any lawful act relative to the implementation of the infrastructure project. WHEREFORE, motion for the issuance of preliminary injunction is hereby DENIED. SO ORDERED. A petition for "Certiorari and Prohibition, with Prayer for Preliminary Injunction and Temporary Restraining Order," was filed with the Court of Appeals, followed, on 17 August 1992, by an "Extremely Urgent Motion for Issuance of Temporary Restraining Order." Meanwhile, the Solicitor-General, in his comment to the petition before the Court of Appeals, manifested that Home Construction and JPL Construction "had already signified their willingness to adhere to the DPWH Secretary's decision to terminate the contract." 5 On 10 September 1992, the appellate court issued a Resolution denying the petitioners' Urgent Motion. On 20 October 1992, the court dismissed the petition for lack of merit. The motion for reconsideration filed by the petitioners was denied in a resolution of 20 January 1993. The question that is sought to be resolved in the instant petition to the Court is whether or not the respondent appellate court has committed grave abuse of discretion in denying the petitioners' prayer for the issuance of the preliminary injunctive writ and in dismissing the petition. In opposing the grant of the petition, the Solicitor General cites the proscription on courts under Presidential Decree No. 1818, similar to Presidential Decree No. 605, against the issuance of injunctive writs. 6 He argues that the law, signed on 16 January 1981, is aimed at avoiding disruptions in the undertaking of essential government infrastructure projects. Letter of Instructions No. 1186 defines the term "infrastructure project," to include . . . all projects of all the Ministries of Government, those of offices and agencies under their supervision and those of corporations and institutions attached to them, excluding the Ministry of National Defense. For this purpose, infrastructure projects shall mean construction, improvement and rehabilitation of roads, and bridges, railways, airports, seaports, communication facilities, irrigation, flood control and drainage, water supply and sewerage systems, shore protection, power facilities, national buildings, school buildings, hospital buildings, and other related construction projects that form part of the government capital investment. There can hardly be any dispute that the project covered by the contract in question is embraced by Presidential Decree No. 1818. Section 1 of the Decree reads: Sec. 1. No court in the Philippines shall have jurisdiction to issue any restraining order, preliminary injunction, or preliminary mandatory injunction in any case, dispute, or controversy involving an infrastructure project, or a mining, fishery, forest or other natural resource development project of the government, or any public utility operated by the government, including among others public utilities for the transport of the goods or commodities, stevedoring and arrastre contracts, to prohibit any person or persons, entity or government official from proceeding

with, or continuing the execution or implementation of any such project, or the operation of such public utility, or pursuing any lawful activity necessary for such execution, implementation or operation." (Italics supplied). On the above score, the respondent appellate court elucidated, as follows: PD 1818 was promulgated to prohibit the courts from issuing restraining orders or preliminary injunctions in cases involving infrastructure projects in order not to disrupt or hamper the pursuit of essential government projects critical to the economic development effort of the nation (Second 'Whereas' clause). The injunction sought seeks to restrain the DPWH and its officials from carrying out the order terminating the contract of petitioners, and if granted would in effect amount to an interference by the court or the substitution of its judgment for that of the said administrative agency in the discharge of its functions in pursuing the infrastructure project in question. The issuance of an injunction is clearly covered by the peremptory language of PD 1818. While the prohibition is by no means absolute, as the courts are not prevented from exercising jurisdiction where questions of law are involved (Datiles & Co. vs. Sucaldito, 186 SCRA 704) or when the administrative agency violates a citizen's constitutional right, or commits a grave abuse of discretion, or acts in excess of or without jurisdiction (Mantruste System, Inc. vs. CA, 179 SCRA 136) We are not convinced that petitioners' plea of a violation of its contractual/property rights is sufficient to override the letter and legislative purpose behind PD 1818. The arguments raised by petitioner in questioning the percentage of negative slippage and the computation of days of delay due to the various problems encountered which are allegedly attributable to respondent DPWH, involve questions of fact and the exercise of official discretion on the part of the administrative officials concerned, and do not justify judicial interference. As stated in Datiles and Co. vs. Sucaldito, supra., which involves a similar statutory prohibition contained in PD 605: The prohibition pertains to the issuance by the courts of injunctions or restraining orders, against administrative acts or controversies which involves facts or exercise of discretion in technical cases because to allow courts to judge these matters would disturb the smooth functioning of the administrative machinery.' We are not convinced that the issues raised fall outside of the above dimension so that the courts will not be prevented by PD 1818 from exercising its power to restrain or prohibit administrative acts. The allegation that petitioners' constitutional right is being violated cannot be upheld. Its right to continue with the contract should be considered in light of the DPWH's official prerogative to terminate the same, and until the merits of this issue are fully litigated, the issuance of the preliminary injunction must be deemed covered by PD 1818, if the purpose of the latter issuance is to be served at all. The petitioner's insistence that its negative slippage of 10% as of May, 1992 is below the 15% negative slippage that would authorize take-over of its contract pursuant to PD 1870 and its implementing Circular No. 102 goes into the merits of the legality of the termination order, which merely adverted to petitioner's 'minimal accomplishment.' The idea behind PD 1818 to restrain the courts from interfering with administrative decisions arrived at in the pursuit of infrastructure projects is to enable the agency concerned, which is presumably more knowledgeable with respect to the technical matters involved in such critical projects, to utilize its technical expertise in the pursuit of the essential infrastructure projects. Courts should not block by an injunction the discharge of the agency's functions and the implementation of its decisions, in the absence of a clear violation of constitutional right. We are not convinced that there is such a violation. 7 Indeed, as the majority opinion (concurring with the petitioners) so well point out, one can take issue on what the respondents would assume to be a limitless application of the aforequoted provision. Section 5, Article VIII, of the 1987 Constitution explicitly vests in the Supreme Court original jurisdiction "... over petitions

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for certiorari, prohibition, mandamus, quo warranto and habeas corpus." The conferment of that jurisdiction may be contended to likewise implicitly vest in the Court the ancillary remedies incidental to the proper exercise thereof. So, also, Section 1 of the same Article VIII provides that judicial power, this time residing in all courts of competent jurisdiction, includes the duty "... to determine whether or not there has a been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the government." 8 The Court need not, in my view, pass upon this constitutional question, albeit submitted by the parties, there being neither urgency nor necessity for it at this time. The settled rule is that if there are other grounds upon which a case may be disposed of and resolved, such as, I believe, in this case at bench, courts must refrain from ruling on constitutional issues. 9 What should be apropos, instead of now making a peremptory dictum on the question of the constitutionality or scope of application of the decree, is an inquiry beforehand on the legal propriety, on the basis of Rule 65 of the Rules of Court, of the petition for certiorari and prohibition itself. For the extraordinary writ to issue, the rules require the attendance, among other conditions sine qua non, of "grave abuse of discretion." Has there really been one in the case at bench? This is the prejudicial question to be asked. Grave abuse of discretion, albeit an "elastic phrase," 10 has always been understood as a capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, such as, to exemplify, "where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, ... 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." 11 Looking at the several propositions advanced to support the petition, concededly well presented and skillfully argued by counsel, on the one hand, and evaluating the same on the basis of the foregoing standard, on the other hand, I can not see my way clear to holding the appellate court guilty of reversible error in not attributing grave abuse of discretion on the part of the court a quo in refusing to grant the extraordinary writ prayed for. In terminating the contract, said respondents have acted on the basis, preclusive of unessential details, of an official report to the effect that the pace of work on the project, despite "repeated grantings of grace period," has been unsatisfactory and behind schedule. The fear on their part of further delays in the completion of the projects has not at all been imaginary. To say that they have acted whimsically or capriciously I find hard to accept. The petitioners allege that under Presidential Decree No. 1870, signed on 12 July 1983, the authority to take over a delayed infrastructure project may be done only when the negative slippage, which must be actual and not merely anticipated, is more than 15%; hence 1. Whenever a contractor is behind schedule in its contract work and incur 15% or more negative slippage based on its approved PERT/CPM, the implementing agency, at the discretion of the Minister concerned, may undertake by administration the whole or a portion of the unfinished work, or have the whole or a portion of such unfinished work done by another qualified contractor through negotiated contract at the current valuation price. Petitioners' invocation is poorly placed according to public respondents who, on their part, strongly maintain that the termination of the contract is based on paragraphs 2 and 3 of the same Presidential Decree, providing thusly 2. Whenever a work activity in the project is not being done on schedule per approved PERT/CPM, the Minister concerned/Head of Implementing Agency shall notify and direct the contractor to immediately undertake such work activity. If, within fifteen (15) days from receipt of such notice, the contractor fails to start the work and to show satisfactory performance, the

Government may take over the whole or a portion of such work and, at the discretion of the Minister concerned, have such work done by administration or award the same to another qualified contractor through negotiated contract at the current valuation price. 3. If, at any time during the progress of the contract work, the contractor should fail, refuse or neglect to supply and provide the required tools, materials, supplies, equipment, facilities and labor-workmen; or if the contract or any part thereof is being sublet or assigned without the previous written consent of the Government; or if the contractor is willfully violating any of the terms, conditions, covements, agreements or technical requirements of the project, the Government shall have the option to take over the project in whole or in part and to complete the same. The Government, at the discretion of the Minister/Head of Implementing Agency concerned, may have the contract work done by administration or award the same to another qualified contractor through negotiated contract at the current valuation price." Additionally, the Solicitor General cites Section 11 of Presidential Decree 1594, which reads: Section 11. Government's Right to Take Over Contract Work. The Government may take over the contract work should the contractor abandon the contract work, or unduly delay the prosecution of the contract work, or become insolvent, or assign his assets for the benefit of his creditors, or be adjudged bankrupt, or assign the contract work without written approval by the Government, or violate any condition or term of the contract. In any of these cases, the Government may terminate the employment of the contractor and take over the contract work after giving due notice to the contractor and his sureties. The above-quoted provisions of Presidential Decree No. 1594 and Presidential Decree No. 1870 must be deemed to form part of, and to co-exist with, the contract, even if the parties did not explicitly provide for them. Applicable peremptory provisions of law of this nature, affecting as they do public policy or impressed as they are with public interest, are held to be written into the contract. 12 In Commissioner of Internal Revenue vs. United States Lines Company, 13 this Court ruled: . . . . Any agreement or contract to be enforceable in this jurisdiction is understood to incorporate therein the provision or provisions of law specifying the obligations of the parties under such contract. The contract between herein respondent Company and its principal consequently imposed upon the parties not only the rights and duties delineated therein, but also the provisions of law such as that of the Code of Commerce aforecited." Looking closely at Presidential Decree No. 1594 and Presidential Decree No. 1870, relied upon by DPWH, it is obvious that the government can terminate or take over a contract work in any of the following cases: 1. Whenever a contractor is behind schedule in its contract work and incurs a 15% or more negative slippage based on the approved PERT/CPM; 2. Whenever a work activity in the project is not being done on schedule per approved PERT/CPM and the Contractor fails, within fifteen (15) days from receipt of notice, to undertake the work and to show satisfactory performance; 3. If, at any time during the progress of the contract work, the contractor should fail, refuse or neglect to supply and provide the required tools, materials, supplies, equipment, facilities and labor-workmen; 4. If the contract or any part thereof is being sublet or assigned without the previous written consent of the Government; 5. If the contractor is willfully violating any of the terms, conditions, covements, agreements or technical requirements of the project; 6. If the contractor abandons the contract work, or unduly delays the prosecution of the contract work; or 7. If the contractor becomes insolvent, or assigns his assets for the benefit of creditors, or be adjudged a bankrupt. It cannot be seriously disputed that petitioners' work has been behind schedule, and that said petitioners' attention to such delays has more than once been called. It is rather

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on the extent and on the cause of such delays, both factual matters, that the parties strongly differ (reiterated by the parties during the hearing held by the Court on 12 January 1994 and again stressed in their respective memoranda). It should be understandable if courts would in the first place, and pending the judicial determination of the facts after due hearing, count on the findings of agencies equipped with the manpower, as well as technical competence, such as the DPWH in this case, to make that evaluation. This Court itself is not a trier of facts, and it must accord due respect and weight to their conclusions. And even if I were to assume, for the sake of argument, that there has been on the part of the public respondents, including both the trial court and the appellate court which sustained them, a misappreciation of the facts here involved, I cannot view such flaw, given the circumstances, as amounting to grave abuse of discretion more than, if at all, as mere error of judgment. In sum, I fail to see a clear case that can justify the grant of the petition and the issuance of the extraordinary writs prayed for. This Court's attention is called by herein petitioners on another matter. It is averred that there has been a recommendation by Undersecretary Romulo del Rosario to award the balance of the project to the third lowest bidder, the Hanil Construction (Hanil), whose bid is 41.4% (P203,960,899.96) over and above the government estimate for the venture; 14 hence, the petitioners' apprehension that the ultimate losers could be the government itself. There is absolutely no reason for such fear. The DPWH "Resolution Recommending the Prequalification of Fifteen (15), Thirteen (13) and Nine (9) Individual/Joint Venture Contractors and the Predisqualification of Twenty Three (23), Twenty One (21) and Eighteen (18) Individual/Joint Venture Contractors for Contract Packages A, B and C Respectively of the Lower Agusan Development Project, Stage I, Phase I," dated 30 June 1993, signed by "PBAC Chairman" and Undersecretary Romulo M. del Rosario, Bureau of Construction Director Clarita A. Bandonillo, Bureau of Design Director Bienvenido C. Leuterio, Chief of Legal Service Cesar D. Mejia and Project Director, PMO-Flood Control and Drainage Projects Antonio A. Cabrasan, and approved on 14 July 1993 by Secretary Gregorio R. Vigilar, explicitly states that the DPWH's request to negotiate the balance of the work to the next complying bidder has been denied by the Office of the President; instead, a directive was issued to repackage and rebid the project. 15 Accordingly, I vote for the dismissal of the petition, and the denial of the preliminary injunction or temporary restraining order prayed for. G.R. No. L-25602 February 18, 1970 REPUBLIC FLOUR MILLS, INC., petitioner, vs. THE COMMISSIONER OF INTERNAL REVENUE and THE COURT OF TAX APPEALS, respondents. Agrava and Agrava for petitioner. Office of the Solicitor General Antonio P. Barredo, Assistant Solicitor General Felicisimo R. Rosete and Special Attorney Virgilio G. Saldajena for respondents. REYES, J.B.L., J.: Appeal by the Republic Flour Mills from the decision of the Court of Tax Appeals (in CTA Case No. 1151) on the sole question of whether or not in computing the manufacturer's sales tax due on the flour it manufactured and sold in 1959, wherein wheat grains imported tax-free in 1958 were utilized, the cost of said wheat grains is deductible. As stipulated by the parties and found by the court below, the facts of this case are briefly as follows: In 1957, the Republic Flour Mills, Inc., a domestic corporation engaged in the business of manufacturing flour, was granted tax-exemption privileges as a new and necessary industry pursuant to Republic Act

901,1 commencing on 28 January 1957 to continue as a diminishing exemption until 31 December 1962.2 In 1958, the corporation imported a quantity of wheat grains, part of which it was not able to mill and use in the business that year, so that by 1 January 1959 the corporation carried a surplus of P1,486,616.41 worth of wheat grains from the previous year's importation. These surplus grains were finally utilized and manufactured into flour and sold in 1959. For the year 1959, the corporation paid manufacturer's sales tax on its produce in the sum of P37,275.55, in the computation of which the cost of the wheat left over from the 1968 importation was treated as a deductible item from the gross sales in 1959. On 28 March 1961, the Commissioner of Internal Revenue assessed the corporation of deficiency tax for 1959 in the total sum of P23,170.17. The corporation requested a reinvestigation of the assessment, and when it was denied filed a petition for review in the Court of Tax Appeals (CTA Case No. 1151) to contest the assessment of advance sales tax on the wheat grains imported tax-free in 1958 and the disallowance of the deduction of the cost of said wheat grains from its gross sales of flour in 1959. Respondent Commissioner of Internal Revenue defended and maintained the assessment, on the ground that by 1959 the raw materials used by petitioner in its taxexempt industry were already subject to payment of 10% tax thereon. During the hearing, the parties entered into a Partial Stipulation of Facts, the pertinent provisions of which are the following: 12. That the legal issue is whether or not the cost of raw materials imported tax-free in the year 1958 which raw materials were utilized in the year 1959 for the manufacture of flour sold in 1959, is deductible from the gross sales in the year 1959; 13. If the legal question before this Honorable Court should be resolved in the affirmative, Petitioner's tax liability shall be P3,288.16 computed as follows: Net sales P21,011,818.17 Deduct: Cost of raw materials used for flour (including tax-free raw materials) 15,310,806.74 Taxable gross sales 5,701,011.43 7% tax thereon 339,070.80 10% of said tax P39,907.08 Less: Amount of Tax paid 37,276.55 Deficiency sales tax P2,630.53 Plus 25% surcharge 657.63 TOTAL AMOUNT PAYABLE P3,288.16 14. On the other hand, if the question is resolved in the negative, petitioner's tax liability shall be P24,587.98 computed as follows: Net sales P21,011,818.17 Deduct: Cost of raw materials used for flour P15,310.806.74 Less: Cost of tax-free raw materials 2,434,264.24 12,876,542.50 Taxable gross sales P8,135,275.67 7% tax thereon 569,469.30 10% of said tax 56,946.93 Less amount paid 37,276.55 Deficiency sales tax due P19,670.38 Plus 25% surcharge 4,917.60 TOTAL AMOUNT DUE & COLLECTIBLE P 24,587.98 On 12 December 1965, the Court of Tax Appeals sustained the correctness of the disputed assessment, and petitioner corporation was ordered to pay the sum of P24,587.98 as deficiency sales tax and surcharge. Hence the filing by petitioner of the present appeal, on the same legal issue litigated by the parties in the court below. It may be observed from the stipulated facts quoted above that the issue in this case has nothing to do with the enforcement or exercise of the tax-exemption privileges granted to the petitioner. The point in controversy is only whether or not the cost of the tax-free wheat grains used in the manufacture of flour, which is also tax-exempt, is a deductible item for purposes of computing the percentage tax (10%) admittedly due on the said manufactured product in 1959. Disputing the assessment of deficiency tax by the respondent Commissioner of Internal Revenue, herein petitioner insists that the cost of imported tax-free wheat

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grains is a deductible item from its gross sales of the flour, pursuant to Section 186-A of the Internal Revenue Code, which reads: SEC. 186-A. Whenever a tax free product is utilized in the manufacture or production of any article, in the determination of the value of such finished article, the value of such tax free product shall be deducted. Respondent Commissioner refutes this contention, saying that, as defined by the Internal Revenue Office, the term "tax-free product" mentioned in the abovequoted Section 186-A refers to raw materials purchased from tax-exempt industries,3 whereas the wheat grains involved in the case, although used by a tax-exempt industry, were not acquired from one enjoying tax-exemption privilege under our laws. In the resolution of the lone issue in this case, it is worthwhile to mention that prior to 22 June 1957 the prevailing rule on the matter was to allow the cost of raw materials used in the manufacture of another article to be deducted from gross sales, whenever such raw materials had been subjected to sales tax. The reason therefor, as expressed by this Court, was to preclude a second assessment of the percentage tax on the raw materials.4 This ruling finds basis in Section 186 of the Tax Code which reads: SEC. 186. Percentage tax on sales of other articles. There shall be levied, assessed and collected once only on every original sale, barter, exchange, and similar transaction either for nominal or valuable considerations, intended to transfer ownership of, or title to, the articles not enumerated in sections one hundred and eighty-four and one hundred and eightyfive a tax equivalent to seven per centum of the gross selling price or gross value in money of the articles so sold, bartered, exchanged or transferred, such tax to be paid by the manufacturer or producer: Provided, That where the articles subject to tax under this section are manufactured out of materials likewise subject to tax under this section and section one hundred and eighty-nine, the total cost of such materials, as duly established, shall be deductible from the gross selling price or gross value in money of such manufactured articles. xxx xxx xxx (Emphasis supplied) With the establishment of tax-exempt industries in the mid-50s, enforcement of the foregoing provision must have created a peculiar problem, so much so that On 22 June 1957 the legislature enacted Republic Act 2025, which inserted 186-A in the Tax Code, expressly constituting the value of tax-free products to be a deductible item from the gross sales of the finished goods manufactured out of the same. Cast against this background, We agree with the petitioner that there is actually no cause here calling for an administrative definition or interpretation of Section 186-A. For no reason exists to read into the provision a qualification that is not there, nor to give to the phrase "tax-free product" a meaning other than what it ordinarily and commonly conveys a material or article exempted from payment of tax. The respondent Commissioner himself could supply no plausible reason for excluding tax-free imported raw materials from the coverage of the term "tax-free" product other than the lame argument that wheat grains are not a "product" because they are not made out of another article (V. B.I.R. Circular No. V-252, 15 July 1957). The Commissioner's stand, upheld by the Tax Court, runs contrary to the legal definition of the term "product" which covers "anything that is produced, whether as the result of generation, growth, labor or thought" (Molina vs. Rafferty, 38 Phil. 171; 50 C.J.S., pages 631632). If, as held in the case cited, fish were agricultural product, no reason is seen why wheat grains should not equally be products of agriculture. Indeed, if the Commissioner's definition were correct, it would be logical to expect that Section 186-A of the Tax Code (ante) instead of referring to "a tax free product" utilized in the manufacture of other articles,

would have proclaimed the deductibility of the value of "products of a tax exempt industry ... utilized in the manufacture or production of any article." Further, it must not be overlooked that the exemption granted to the petitioner covered not only the sales tax of the manufactured product but also the sales tax "on raw materials and supplies to be used exclusively in the manufacture of such (exempt) products" (Brief for Appellee, page 1). To bar the deductibility of the value of such raw materials is to tear away the tax exemption from sales tax on said materials. Indeed, if, as is conceded, these wheat grains were allowed to enter in 1958 as exempt from paying advance sales tax, no reason exists why the value of this same material should be subjected to tax just because they were milled in 1959 and not in the year of importation. That petitioner's manufactured flour would be subject in 1959 to only a part of the normal sales tax, pursuant to Republic Act 901, would not alter the principles herein established. It is true that in the construction of tax statutes tax exemptions (and deductions are of this nature) are not favored in the law, and are construed strictissimi juris against the taxpayer.5 However, it is equally a recognized principle that where the provision of the law is clear and unambiguous, so that there is no occasion for the court's seeking the legislative intent, the law must be taken as it is, devoid of judicial addition or subtraction.6 In this case, we find the provision of Section 186-A "whenever a tax free product is utilized, etc." all encompassing to comprehend tax-free raw materials, even if imported. Where the law provided no qualification for the granting of the privilege, the court is not at liberty to supply any. WHEREFORE, and for the foregoing considerations, the decision appealed from is reversed and set aside, and, in accordance with the stipulation of the parties, petitioner is hereby ordered to pay to respondent Commissioner the sum of P3,288.16 as deficiency tax, with legal interest thereon from the date the tax became due.7 No costs. G.R. No. L-40858 September 15, 1987 SPOUSES FEDERICO SERFINO and LORNA BACHAR, petitioners, vs. THE COURT OF APPEALS and LOPEZ SUGAR CENTRAL MILL CO., INC., respondents. No. L-40751 September 15, 1987 PHILIPPINE NATIONAL BANK, petitioner, vs. THE HONORABLE COURT OF APPEALS, LOPEZ SUGAR CENTRAL MILL COMPANY, INC., SPOUSES FEDERICO SERFINO and LORNA BACHAR, respondents. PARAS, J.: Before Us are two (2) Petitions for certiorari to review the decision 1 of the Court of Appeals als in CA-G.R. No. 37748-R, consolidated for Our disposition since they arose from the same factual background. The records of the case show that on August 25, 1937, a parcel of land consisting of 21.1676 hectares situated in the Municipality of Sagay, Province of Negros Occidental, was patented in the name of Pacifico Casamayor, under Homestead Patent No. 44139. Upon registration of said patent in the office of the Register of Deeds of Negros Occidental, OCT No. 1839 was issued by said office in the name of Pacifico Casamayor. On December 14, 1945, the latter sold said land in favor of Nemesia D. Baltazar. Apparently, OCT No. 1839 was lost during the war and upon petition of Nemesia Baltazar, the Court of First Instance of Negros Occidental ordered 2 the reconstitution thereof. Pursuant thereto, OCT No. 14-R (1839) was issued on January 18, 1946 in the name of Pacifico Casamayor. On that same day, TCT No. 57-N was issued in the name of Nemesia Baltazar but after the cancellation of OCT No. 14-R (1839). On August 25, 1951, Nemesia Baltazar, sold said property to Lopez Sugar Central Mill Co., Inc. (Lopez Sugar Central, for brevity). The latter, however did not present the documents for registration until December 17, 1964 to the

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Office of the Registry of Deeds. Said office refused registration upon its discovery that the same property was covered by another certificate of title, TCT No. 38985, in the name of Federico Serfino. An inquiry into this discrepancy reveals that the Provincial Treasurer of Negros Occidental on October 30, 1956 had conducted a public auction sale of this property for tax delinquency for the period starting the year 1950. Notice of this public auction sale was sent to Pacifico Casamayor but none to Nemesia Baltazar and Lopez Sugar Million There being no public bidders on the scheduled date of sale, the Provincial Treasurer of Negros Occidental issued a Certification of Sale of Delinquent Real Property over the disputed land to the Province of Negros Occidental. On May 14, 1964, upon payment of the amount of P1,838.49 by Federico Serfino, a Certificate of Repurchase of Real Property was issued and executed by the Provincial Treasurer in favor of Federico Serfino, for and in behalf of Pacifico Casamayor. On May 28, 1964, Serfino filed a petition with the Court of First Instance of Negros Occidental for the Reconstitution of OCT No. 1839 in the name of Pacifico Casamayor, upon the allegation that said title was lost. After due publication and hearing, said OCT was ordered reconstituted and thus OCT No. RP-1304 (1839) was issued by the Registry of Deeds in the name of Casamayor. On October 30, 1964, Serfino petitioned the court for confirmation of his title to the land as purchaser in the auction sale. On October 31, 1964, court granted the petition and on November 2, 1964, OCT No. RP-1304 (1839) was cancelled and TCT No. 38985 was issued in the name of Federico Serfino, married to Lorna Bachar. On November 19, 1964, the spouses Serfinos mortgaged the land to the Philippine National Bank (PNB) to secure a loan in the amount of P5,000.00. Said mortgage in favor of PNB was inscribed in TCT No. 38985. Hence, this was the situation of the land when the Office of the Register of Deeds refused registration of the property in question requested by the Lopez Sugar Central. The lower court in its Order, dated January 16, 1965 in the Petition of the Office of the Register of Deeds seeking the cancellation of either TCT No. 57-N (in the name of Nemesia Baltazar) or TCT No. 38985 (in the name of Lopez Sugar Central), ordered Lopez Sugar Central and spouses Serfino to take the necessary steps towards the clearing of their respective titles before a court of general jurisdiction. Pursuant thereto, Lopez Sugar Central, on May 5, 1965, instituted an action for 1) annulment of OCT No. RP-1304 (1839), of TCT No. 38985 and of the mortgage executed by the Serfinos in favor of PNB, 2) for the registration of the Deed of Sale, 3) for the issuance of a TCT in its name and 4) for recovery of possession of the disputed land from the Serfinos. On February 4, 1966, the lower court rendered its decision, 3 the dispositive portion reading as follows: WHEREFORE, and considering the conclusions and opinion set forth above, judgment is hereby rendered as follows: 1. The Register of Deeds of Negros Occidental is hereby ordered to cancel Transfer Certificate of Title No. 38985; 2. The same Register of Deeds is ordered to register the deed of sale executed by Nemesia D. Baltazar on August 25, 1951, and after cancelling Transfer Certificate of Title No. 57-N and other titles issued prior thereto, to issue a new transfer certificate of title in the name of Lopez Sugar Central Mill Co., Inc., upon previous payments of the legal fees; 3. The Lopez Sugar Central Mill Co., Inc., shall pay the Philippine National Bank, Bacolod Branch, the sum of P5,261.11 secured by a real estate mortgaged registered and annotated on Transfer Certificate of Title 38985 which shall be carried over in the new transfer certificate of title to be issued to the Lopez Sugar Central Mill Co., Inc. with the right of recourse to the Assurance Fund; and

4. The defendant, Federico Serfino, is hereby ordered to vacate the land in question and to deliver the possession thereof to the plaintiff; 5. The plaintiff is exempt from reimbursing the defendant, Federico Serfino, for the sum of P602.94 which the latter paid for the repurchase of the land in question for the reason that the former is already burdened with the payment of the mortgage indebtedness with the Philippine National Bank in the amount of P5,261.11; and 6. The Court makes no award for damages and costs. SO ORDERED. (Rollo L-40751, pp. 117 & 118, Joint Record on Appeal, Annex "D", p. 50) Both parties appealed from this decision of the trial court. Ruling on the assignment of errors, the appellate court affirmed the judgment of the trial court with modification in its decision, the pertinent portion reading as follows: Plaintiff contends that the mortgage executed by the Serfinos in favor of PNB is null and void, because the property conveyed in mortgage did not belong to them. The contention is meritorious. That the mortgagor should be the absolute owner of the property mortgaged is an essential requisite for the validity of a contract of mortgage (Art. 2085, Civil Code); and a mortgage constituted by one not the owner of the property mortgaged is null and void, the registration of the mortgage notwithstanding (Parqui vs. PNB, 96 Phil. 157). Thus, the mortgage lien of PNB in the contract executed in its favor by the Serfinos did not attach to the property in question. The argument advanced by appellee PNB that it is a mortgagee in good faith deserves scant consideration. Note that when the mortgage was constituted, the disputed land was covered by a valid and existing title, TCT No. 57-N, in the name of Nemesis D. Baltazar. Indeed, the whole world, including appellee PNB, is charged with notice thereof. Consequently, that portion of the trial court's decision declaring plaintiff liable to the PNB for payment of the sum of P5,261.11 should beset aside. As to the plaintiff's claim for damages against the Serfinos, We find the same devoid of merit. Whatever injury plaintiff may have suffered was occasioned by the faulty and defective indexing and filing system in the office of the Register of Deeds of Negros Occidental, and not by any intentional Act on the part of the Serfino Spouses. Anyway, the evidence fails to show that they deliberately intended to cause damage to plaintiff. However, equity dictates that plaintiff should reimburse the Serfino spouses of the sum of P1,839.49, representing the unpaid taxes and penalties paid by the latter when they repurchased the property from the province of Negros Occidental. WHEREFORE, with the modifications above indicated, the judgment appealed from is hereby affirmed. No costs. SO ORDERED. (Decision, Annex "A", pp. 40-42, RolloL40751) From the aforesaid ruling, the spouses Serfino and the Philippine National Bank appealed to Us by way of certiorari. Petitioners, spouses Serfinos 4 assign the following errors: I. The Purchase by plaintiff-appellant corporation (Lopez Sugar Central) of the lot in question was null and void from the beginning. II. Petitioners are proper parties to challenge the legality of the sale of the land in question to private respondent. III. Notice to Nemesia Baltazar of the Tax Sale of the land in question was not essential to the validity of the sale. IV. The legality of the auction sale of the property in question was not in issue before the court a quo. Petitioner Philippine National Bank 5 submits the following. ASSIGNMENT OF ERRORS I. The Court of Appeals erred in holding that the auction sale of the disputed property was null and void. II. The Court of Appeals erred in not holding that petitioner is a mortgagee in good faith. Petitioners spouses Serfinos maintain that sale of a land covered by homestead to be valid must have the following requisites: 1) consent of the grantee 2) approval of the Secretary of Agriculture and Natural Resources 3) sale is solely for educational, religious, or charitable purposes or for a right of way (Sec. 121, CA No. 141 ).

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Petitioner spouses Serfinos in support of their first assignment of error cited Sec. 121, CA No. 141 reading as follows: SEC. 121. Except with the consent of the grantee and the approval of the Secretary of Agriculture and Commerce, and solely for commercial, industrial, educational, religious or charitable purposes or for a right of way, no corporation, association, or partnership may acquire or have any right, title, interest, or property right whatsoever to any land granted under the free patent, homestead or individual sale provisions of this Act or to any permanent improvement on such land. They argue that since private respondent is a corporation, it is barred from owning land granted under the free patent if the aforementioned requisites are not present. Such Pacifico Casamayor who obtained a Homestead Patent and later an original certificate of title in his name. Later it was this original grantee who sold the land in question to Nemesia Baltazar on December 14, 1945 or more than eight (8) years after he obtained his homestead patent on August 25, 1937. On these facts, We now apply Sec. 118 of Commonwealth Act No. 141 which prohibits the alienation of homestead lots to private individual within five (5) years from the date of the issuance of the patent and not Sec. 121 which governs sale to corporation. Since the grant was more than five (5) years before, the transfer to Nemesia Baltazar was valid and legal. Nemesia Baltazar who became the titled or registered owner as evidenced by TCT No. 57N, could exercise acts of ownership over the land such as disposing of it to private respondent by a deed of sale. The assailed decision of the appellate court declares that the prescribed procedure in auction sales of property for tax delinquency being in derogation of property rights should be followed punctiliously. Strict adherence to the statutes governing tax sales is imperative not only for the protection of the tax payers, but also to allay any possible suspicion of collusion between the buyer and the public officials called upon to enforce such laws. Notice of sale to the delinquent land owners and to the public in general is an essential and indispensable requirement of law, the non-fulfillment of which initiates the sale. We give our stamp of approval on the aforementioned ruling of the respondent court. In the case at bar, there is no evidence that Nemesia Baltazar, who had obtained a transfer certificate of title in her name on January 18, 1946, was notified of the auction sale which was scheduled on October 30, 1956. Neither was she furnished as the owner of the delinquent real property with the certificate of sale as prescribed by Sec. 37 of Commonwealth Act No. 470. These infirmities are fatal. Worth mentioning also is the fact that Lopez Sugar Central was not entirely negligent in its payment of land taxes. The record shows that taxes were paid for the years 1950 to 1953 and a receipt therefor was obtained in its name. The sale therefore by the Province of Negros Occidental of the land in dispute to the spouses Serfinos was void since the Province of Negros Occidental was not the real owner of the property thus sold. In turn, the spouses Serfinos title which has been derived from that of the Province of Negros Occidental is likewise void. A purchaser of real estate at the tax sale obtains only such title as that held by the taxpayer, the principle of caveat emptor applies. Where land is sold for delinquency taxes under the provisions of the Provincial Assessment Law, rights of registered but undeclared owners of the land are not affected by the proceedings and the sale conveys only such interest as the person who has declared the property for taxation has therein. We now come to the arguments of petitioner Philippine National Bank. The appellate court in modifying the trial court's decision nullified the mortgage in favor of Philippine National Bank and exempted Lopez Sugar Central from the payment to PNB of the amount of the mortgage loan. Petitioner Philippine National Bank now questions this maintaining that it is a mortgagee in

good faith and as such is entitled to the protection of the law. We find merit in petitioner's contention. The findings of fact by the trial court which were undisputed by the contending parties show that after TCT No. 38985 had been issued in the name of Federico Serfino, he declared the property in his name for the year 1965 under T.D. No. 9382, continuously paid the taxes and introduced improvements thereon in the nature of feeder roads and sugar cane plants. It was under these circumstances that PNB extended a loan to Serfino, secured by the land in question on the strength of TCT No. 38985 in the name of the Serfinos and after a spot investigation by one of the bank inspectors who made a report of his investigation. After the execution of a real estate mortgage in favor of the Philippine National Bank duly annotated on the title of the Serfinos TCT No. 38985, the bank actually loaned Serfino the amount of P5,000.00 which amounted to P5,261.11 as of August 17, 1965. Petitioner Philippine National Bank relied on TCT No. 38985, the genuineness of which is not in issue as it was really issued by the Register of Deeds of Negros Occidental. Philippine National Bank had every right to rely on TCT No. 38985 as it was a sufficient evidence of ownership of the mortgagor. The Philippine National Bank at that time had no way of knowing of the existence of another genuine title covering the same land in question. The fact that the public auction sale of the disputed property was not valid (for lack of notice of the auction sale to the actual owner) can not in any way be attributed to the mortgagee's (PNB's) fault. The fact remains that in spite of the lack of notice to the actual registered owner at that time (who was Nemesia Baltazar) the Register of Deeds issued a TCT in the name of Federico Serfino married to Lorna Bachar which title was relied upon by petitioner Philippine National Bank. The Register of Deeds disowned liability and negligence or connivance claiming that existence of TCT No. 57-N in the name of Nemesia Baltazar was not found in the records of the Register of Deeds for the reason that it did not exist in the index card as the land was not designated by cadastral lot number. Thus the discrepancy was due to the faulty system of indexing the parcels of land. Be it noted that the inability of the Register of Deeds to notify the actual owner or Lopez Sugar Central of the scheduled public auction sale was partly due to the failure of Lopez Sugar Central to declare the land in its name for a number of years and to pay the complete taxes thereon. Petitioner Philippine National Bank is therefore entitled to the payment of the mortgage loan as ruled by the trial court and exempted from the payment of costs. WHEREFORE, premises considered, with the slight modification that the PNB mortgage credit must be paid by Lopez Sugar Central, the assailed decision is hereby AFFIRMED. SO ORDERED. G.R. No. L-46881 September 15, 1988 PEOPLE OF THE PHILIPPINES, petitioner, vs. HON. MARIANO CASTAEDA JR., Judge of the Court of First Instance of Pampanga, Branch III, VICENTE LEE TENG, PRISCILLA CASTILLO VDA. DE CURA and FRANCISCO VALENCIA, respondents. The Solicitor General for petitioner. Martin N. Roque for respondents Priscilla Castillo Vda. de Cura and Francisco Valencia. Antonio N. Santos for respondent Judge. FELICIANO, J.: In this Petition for certiorari and mandamus, the People seek the annulment of the Orders of respondent Judge quashing criminal informations against the accused upon the grounds that: (a) accused Francisco Valencia was entitled to tax amnesty under Presidential Decree No. 370; and (b) that the dismissal of the criminal cases against accused Valencia inured to the benefit of his coaccused Vicente Lee Teng and Priscilla Castillo de Cura, and denying the People's Motion for Reconsideration of said Orders.

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Sometime in 1971, two (2) informants submitted sworn information under Republic Act No. 2338 (entitled "An Act to Provide for Reward to Informers of Violations of the Internal Revenue and Customs Laws," effective June 19, 1959) to the Bureau of Internal Revenue ("BIR"), concerning alleged violations of provisions of the Internal Revenue Code committed by the private respondents, The record of this case includes an affidavit executed on 27 December 1971 by Mr. William Chan, one of the said informers, describing the details of alleged violations of the tax code. 1 After conducting an investigation, the BIR applied for and obtained search warrants from Executive Judge Malcolm Sarmiento. Following investigation and examination by the BIR of the materials and documents yielded by service of such search warrants, criminal informations were filed in court against the private respondents. In July 1973, State Prosecutor Estanislao L. Granados Department of Justice, filed with the Court of First Instance of Pampanga an information docketed as Criminal Case No. 439 for violation of Sec. 170 (2) of the National Internal Revenue Code, as amended, against Francisco Valencia, Apolonio G. Erespe y Comia and Priscilla Castillo de Cura, committed as follows: That on or about the 19th day of January, 1972, in the premises of Valencia Distillery located at del Pilar Street, San Fernando, Pampanga, Philippines, and within the jurisdiction of the abovenamed Court, the accused FRANCISCO VALENCIA, APOLONIO ERESPE Y COMIA and PRISCILLA QUIAZON OR "QUIAPO" alias "MARY JO," conspiring and confederating with one another, did then and there willfully, unlawfully, and feloniously have in their possession, custody and control, false and counterfeit or fake internal revenue labels consisting of five (5) sheets containing ten (10) labels each purporting to be regular labels of the Tanduay Distillery, Inc. bearing Serial Nos. 2571891 to 2571901 to 2571910, 2571911 to 2571920, 05381 to 05390 and 05391 to 05400. CONTRARY to the provisions of Section 170, paragraph 2 of the National Internal Revenue Code, as amended.2 On the same date, another criminal information docketed as Criminal Case No. 440 was filed by the same State Prosecutor in the same court for violation of Section 174 (3) of the National Internal Revenue Code, as amended against the same persons, charging them as follows: That on or about the 19th day of January 1972 in the premises of Valencia Distillery located at del Pilar Street, San Fernando, Pampanga, Philippines and within the jurisdiction of this Honorable Court, the accused FRANCISCO VALENCIA, APOLONIO G. ERESPE y COMIA and PRISCILLA QUIAZON or QUIANO alias MARY JO, conspiring and confederating together, did then and there wilfully, unlawfully and feloniously, have in their possession, custody and control, locally manufactured articles subject to specific tax, the tax on which has not been paid in accordance with law, THIRTY THREE (33) boxes of 24 bottles each of alleged Anejo Rum, 375 cc., NINE (9) BOXES of alleged Tanduay Rum of TWELVE (12) BOTTLES each, 750 cc., TWENTY (20) BOXES of alleged Ginebra San Miguel Gin of TWENTY FOUR (24) BOTTLES each, 375 cc., THREE (3) BOXES OF TWENTY FOUR (24) BOTTLES each, 375 cc., of Ginebra San Miguel Gin, ONE (1) GALLON bottle of wine improver, NINE lbs. net with actual contents of 1/5 of the bottle, ONE (1) SMALL BOTTLE, 1 Ib, net, of Rum Jamaica, halffull, ONE (1) BOTTLE, 1 Ib. net of the wine improvers (full), TWELVE (12) BOTTLES of alleged Tanduay Rum, 750 cc., pale, FOUR (4) BOTTLES of Ginebra San Miguel (alleged) 350 cc. and TWO (2) BOTTLES of Tanduay Rum, 375 cc. the total specific tax due on which is P160.01. CONTRARY to Section 174 of the National Internal Revenue Code, as amended. 3 As a result of further investigation of the sworn complaints filed by the informers with the BIR, on 14 March 1974, six (6) more criminal informations docketed as Criminal Cases Nos., 538-543 were filed in the Pampanga Court of First Instance against Vicente

Lee Teng alias "Vicente Lee," alias "Lee Teng," and Francisco Valencia. These informations charged the two (2) with violations of Section 178, in relation to Sections 182 (A) (1) (3c) and 208 of the National Internal Revenue Code, as amended based on their failure to pay annual privilege taxes for each of the six (6) years from 1966 to 1972. The six (6) informations uniformly charged the accused as follows: The undersigned State Prosecutor accuses VICENTE LEE TENG alias VICENTE LEE alias LEE TENG, and FRANCISCO VALENCIA of the crime of Violation of Sec. 178 in relation with Sec. 182 (A) (1) 3c and Sec. 208 of the National Internal Revenue Code as amended, committed as follows: That on or about the 19th of January 1972, [also during the years 1967, 1968, 1969, 1970 and 1971] in the premises of Valencia Distillery located at del Pilar Street, San Fernando, Pampanga, Philippines and within the jurisdiction of this Honorable Court, the above-named accused, conspiring and confederating together and mutually helping one another, did then and there willfully, unlawfully and feloniously distill, rectify, repair compound or manufacture alcoholic products subject to specific tax without having paid the privilege tax therefor. CONTRARY TO LAW. 4 On 22 April 1974, after arraignment, accused Valencia filed a Motion to Quash Criminal Cases Nos. 538-543 inclusive, upon the grounds that the six (6) informations had been filed without conducting the necessary preliminary investigation and that he was entitled to the benefits of the tax amnesty provided by P.D. No. 370. The State Prosecutor opposed the Motion to Quash arguing that the necessary preliminary investigation in the six (6) criminal cases had in fact been conducted and that in any case, failure to hold the preliminary investigation was not a ground for a motion to quash. The State Prosecutor further argued that the accused Valencia was not entitled to avail himself of the benefits of P.D. No. 370 since his tax cases were the subject of valid information submitted under R.A. No. 2338 as of 31 December 1973. The respondent Judge granted the Motion to Quash and issued an Order, dated 15 July 1974, dismissing not only Criminal Cases Nos. 538-543 but also Criminal Cases Nos. 439 and 440 insofar as accused Francisco Valencia was concerned. A Motion for Reconsideration by the People was similarly denied by respondent Judge. On 14 December 1975, the remaining accused Vicente Lee Teng and Priscilla Castillo de Cura, having been arraigned, filed Motions to Quash Criminal Cases Nos. 538543 and 439 and 440, upon the common ground that the dismissal of said cases insofar as accused Francisco Valencia was concerned, inured to their benefit. The People opposed the Motions to Quash upon the ground that the accused were not entitled to the benefits of the tax amnesty under P.D. No. 370 and that, assuming the dismissal of said criminal cases was valid insofar as accused Valencia was concerned, the resulting immunity from criminal prosecution was personal to accused Valencia. The respondent Judge granted the Motions to Quash by Vicente Lee Teng and Priscilla Castillo de Cura, and denied the People's Motion for Reconsideration. There are two (2) preliminary issues which need to be addressed before dealing with the questions of substantive law posed by this case. The first preliminary issue-whether or not the People of the Philippines are guilty of laches-was raised by private respondents in their Answer. 5 The respondent Judge denied the People's Motion for Reconsideration of his Order granting Francisco Valencia's Motion to Quash the eight (8) criminal cases, on 18 November 1974. Vicente Lee Teng and Priscilla Castillo de Cura filed their respective Motions to Quash on 14 December 1975; respondent Judge granted their Motions to Quash on 31 March 1976. The People filed a Motion for Reconsideration which was denied on 17 February 1977. Approximately seven (7) months later, on 12 September 1977, the present Petition for certiorari and mandamus was filed by the People. Initially, the Court resolved to dismiss this Petition in a Resolution dated 5 July 1978. The People, however, filed a Motion for Reconsideration of that Order and the Court, in its Resolution of 1 October 1979, set aside its Resolution

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of dismissal and considered this case as submitted for decision. Ordinarily, perhaps, a Petition for certiorari brought seven (7) months after rendition of the last order sought to be set aside might be regarded as barred by laches. In the case at bar, however, the Court believes that the equitable principle of laches should not be applied to bar this Petition for certiorari and Mandamus. The effect of such application would not be the avoidance of an inequitable situation (the very raison d'etre of the laches principle), but rather the perpetuation of the state of facts brought about by the orders of the respondent Judge, a state of facts which, as will be seen later, is marked by a gross disregard of the legal rights of the People. The Court, in other words, is compelled to take into account both the importance of the substantive issues raised in this case and the nature of the result brought about by the respondent Judge's orders. Moreover, on a more practical level, the dismissal of the cases was resisted vigorously by the prosecution which filed both oppositions to the Motion to Dismiss and Motions for Reconsideration of the Orders granting the Motions to Quash. The private respondents, in other words, were under no illusion as to the position taken and urged by the People in this Case. We hold that, in the circumstances of this case, the Petition for certiorari and mandamus is not barred by laches. The second preliminary issue was also raised by private respondents in their Answer, that is, whether or not the defense of double jeopardy became available to them with the dismissal by respondent Judge of the eight (8) criminal cases. This defense need not detain us for long for it is clearly premature in the present certiorari proceeding. In the certiorari petition at bar, the validity and legal effect of the orders of dismissal issued by the respondent Judge of the eight (8) criminal cases are precisely in issue. Should the Court uphold these dismissal orders as valid and effective and should a second prosecution be brought against the accused respondents, that second prosecution may be defended against with the plea of double jeopardy. If, upon the other hand, the Court finds the dismissal orders to be invalid and of no legal effect, the legal consequence would follow that the first jeopardy commenced by the eight (8) informations against the accused has not yet been terminated and accordingly a plea of second jeopardy must be rejected both here and in the continuation of the criminal proceedings against the respondents-accused. We turn, therefore, to the first substantive issue that needs to be resolved: whether or not the accused Valencia, Lee Teng and de Cura are entitled to the benefits available under P.D. No. 370. The scope of application of the tax amnesty declared by P.D. No. 370 is marked out in the following broad terms: 1. A tax amnesty is hereby granted to any person, natural or juridical, who for any reason whatsoever failed to avail of Presidential Decree No. 23 and Presidential Decree No. 157; or, in so availing of the said Presidential Decrees failed to include all that were required to be declared therein if he now voluntarily discloses under this decree all his previously untaxed income and/or wealth such as earnings, receipts, gifts, bequests or any other acquisitions from any source whatsoever which are or were previously taxable under the National Internal Revenue Code, realized here or abroad by condoning all internal revenue taxes including the increments or penalties on account of non-payment as well as all civil, criminal or administrative liabilities, under the National Internal Revenue Code, the Revised Penal Code, the Anti-Graft and Corrupt Practices Act, the Revised Administrative Code, the Civil Service Laws and Regulations, laws and regulations on Immigration and Deportation, or any other applicable law or proclamation, as it is hereby condoned, provided a tax of fifteen (15%) per centum on such previously untaxed income and/or wealth is imposed subject to the following conditions:

a. Such previously untaxed income and/or wealth must have been earned or realized prior to 1973, except the following: b. Capital gains transactions where the taxpayer has availed of Presidential Decree No. 16, as amended, but has not complied with the conditions thereof; c. Tax liabilities with or without assessments, on withholding tax at source provided under Sections 53 and 54 of the National Internal Revenue Code, as amended; d. Tax liabilities with assessment notices issued as of December 31, 1 973; e. Tax cases which are the subject of a valid information under Republic Act No. 2338 as of December 31, 1973; and f. Property transferred by reason of death or by donation during the year 1972. xxx xxx xxx The first point that should be made in respect of P.D. No. 370 is that compliance with all the requirements of availment of tax amnesty under P.D. No. 370 would have the effect of condoning not just income tax liabilities but also "all internal revenue taxes including the increments or penalties on account of non-payment as well as all civil, criminal or administrative liabilities, under the Internal Revenue Code, the Revised Penal Code, the Anti-Graft and Corrupt Practices Act, the Revised Administrative Code, the Civil Service Laws and Regulations, laws and regulations on Immigration and Deportation, or any other applicable law or proclamation." Thus, entitlement to benefits of P.D. No. 370 would have the effect of condoning or extinguishing the liabilities consequent upon possession of false and counterfeit internal revenue labels; the manufacture of alcoholic products subject to specific tax without having paid the annual privilege tax therefor, and the possession, custody and control of locally manufactured articles subject to specific tax on which the taxes had not been paid in accordance with law, in other words, the criminal liabilities sought to be imposed upon the accused respondents by the several informations quoted above. It should be underscored, secondly, that to be entitled to the extinction of liability provided by P.D. No. 370, the claimant must have voluntarily disclosed his previously untaxed income or wealth and paid the required fifteen percent (15%) tax on such previously untaxed income or wealth imposed by P.D. No.370. 6 Where the disclosure of such previously untaxed income or wealth was not voluntary but rather the accompaniment or result of tax cases or tax assessments already pending as of 31 December 1973, the claimant is not entitled to the benefits of P.D. No. 370. Section 1 (a) (4) of P.D. No. 370, expressly excluded from the coverage of P.D. No. 370: "tax cases which are the subject of a valid information under R.A. No. 2338 as of December 31, 1973." 7 In the instant case, the violations of the National Internal Revenue Code with which the respondent accused were charged, had already been discovered by the BIR when P.D. No. 370 took effect on 9 January 1974, by reason of the sworn information or affidavit-complaints filed by informers with the BIR under Republic Act No. 2338 prior to 31 December 1973. It is necessary to note that the "valid information under Republic Act No. 2338" referred to in Section 1 (a) (4) of P.D. No. 370, refers not to a criminal information filed in court by a fiscal or special prosecutor, but rather to the sworn information or complaint filed by an informer with the BIR under R.A. No. 2338 in the hope of earning an informer's reward. The sworn information or complaint filed with the BIR under R.A. No. 2338 may be considered "valid" where the following conditions are complied with: (1) that the information was submitted by a person other than an internal revenue or customs official or employee or other public official, or a relative of such official or employee within the sixth degree of consanguinity; (2) that the information must be definite and sworn to and must state the facts constituting the grounds for such information; and (3) that such information was not yet in the possession of the BIR or the Bureau of Customs and does not refer to "a case already pending or previously investigated or examined by the Commissioner of Internal Revenue or the

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Commissioner of Customs, or any of their deputies, agents or examiners, as the case may be, or the Secretary of Finance or any of his deputies or agents. 8 In the instant case, not one but two (2) "informations' or affidavit-complaints concerning private respondents' operations said to be in violation of certain provisions of the National Internal Revenue Code, had been filed with the BIR as of 31 December 1973. In fact, those two (2) affidavit-complaints had matured into two (2) criminal informations in court -Criminal Cases Nos. 439 and 440 against the respondent accused, by 31 December 1973. The six (6) informations docketed as Criminal Cases Nos. 538-543, while filed in court only on 14 March 1974, had been based upon the sworn information previously submitted as of 31 December 1973 to the BIR. It follows that, even assuming respondent accused Francisco Valencia was otherwise entitled to the benefits of P.D. No. 370, none of the informations filed against him could have been condoned under the express provisions of the tax amnesty statute. Accused Valencia argued that the People were estopped from questioning his entitlement to the benefits of the tax amnesty, considering that agents of the BIR had already accepted his application for tax amnesty and his payment of the required fifteen percent (15%) special tax. This contention does not persuade. At the time he paid the special fifteen percent (15%) tax under P.D. No. 370, accused Francisco Valencia had in fact already been subjected by the BIR to extensive investigation such that the criminal charges against him could not be condoned under the provisions of the amnesty statute. Further, acceptance by the BIR agents of accused Valencia's application for tax amnesty and payment of the fifteen percent (15%) special tax was no more than a ministerial duty on the part of such agents. Accused Valencia does not pretend that the BIR had actually ruled that he was entitled to the benefits of the tax amnesty statute. In any case, even assuming, though only arguendo, that the BIR had so ruled, there is the long familiar rule that "erroneous application and enforcement of the law by public officers do not block, subsequent correct application of the statute and that the government is never estopped by mistake or error on the part of its agent." 9 which finds application in the case at bar. Still further, a tax amnesty, much like to a tax exemption, is never favored nor presumed in law and if granted by statute, the terms of the amnesty like that of a tax exemption must be construed strictly against the taxpayer and liberally in favor of the taxing authority. 10 Valencia's payment of the special fifteen percent (15%) tax must be regarded as legally ineffective. We turn to the second substantive issue which is whether or not the dismissal by the respondent court of the criminal informations against accused Valencia, inured to the benefit of Valencia's co-accused. Because of the conclusion reached above, that is, that accused Francisco Valencia was not legally entitled to the benefits of P.D. No. 370 and that the dismissal of the criminal information as against him was serious error on the part of the respondent Judge, it may not be strictly necessary to deal with this second issue. There was in fact nothing that could have inured to the benefit of Valencia's co-accused. It seems appropriate to stress, nonetheless, that co-accused and corespondents Lee Teng and Priscilla Castillo de Cura, in order to enjoy the benefits of the tax amnesty statute here involved, must show that they have individually complied with and come within the terms of that statute. 11 The fact that conspiracy had been alleged in each of the criminal informations here involved certainly could not result in an automatic exemption of Lee Teng and Priscilla Castillo de Cura from compliance with the requirements of the tax amnesty statute. In the second place, assuming, for present purposes only, that accused Francisco Valencia was (and he was not) legally entitled to the benefits of P.D. No. 370 the defense of amnesty which (hypothetically) became available to Valencia was personal to him. Once more,

the allegation of conspiracy made in the several criminal informations here involved, did not have the effect of making a defense available to one co-conspirator automatically available to the other co-conspirators. The defense of the tax amnesty under P.D. No. 370 is, like insanity, a personal defense; for that defense relates to the circumstances of a particular accused and not to the character of the acts charged in the criminal information. The statute makes the defense of extinguishment of liability available only under very specific circumstances and on the basis of reciprocity, as it were: the claimant must disclose his previously untaxed income or wealth (which then may be effectively subjected to future taxation) and surrender to the Government fifteen percent (15%) of such income or wealth; then, and only then, would the claimant's liability be extinguished. Lee Teng and Pricilla Castillo de Cura never pretended that they had complied with the requirements of PD No. 370, including that of reciprocity. We conclude that the respondent Judge's error in respect of the first and second substantive issues considered above is so gross and palpable as to amount to arbitrary and capricious action and to grave abuse of discretion. Those orders effectively prevented the People from prosecuting and presenting evidence against the accusedrespondents; they denied the People its day in court. It is well-settled that: [a] purely capricious dismissal of an information as herein involved, moreover, deprives the State of fair opportunity to prosecute and convict. It denies the prosecution its day in court. Accordingly, it is a dismissal without due process and, therefore, null and void. A dismissal invalid for lack of a fundamental requisite, such as due process, will not constitute a proper basis for the claim of double jeopardy. 12 WHEREFORE, the Orders of respondent Judge dated 15 July 1974, 18 November 1974, 31 March 1976 and 17 February 1977 are hereby SET ASIDE. Respondent Judge no longer being with the Judiciary, the branch of the Regional Trial Court of Pampanga seized of Criminal Cases Nos. 439 and 440, and 538-543 inclusive, against the surviving respondent accused, 13 is hereby ORDERED to proceed with the trial of these criminal cases. Costs against private respondents. SO ORDERED.

G.R. No. 108576 January 20, 1999 COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. THE COURT OF APPEALS, COURT OF TAX APPEALS and A. SORIANO CORP., respondents. MARTINEZ, J.: Petitioner Commissioner of Internal Revenue (CIR) seeks the reversal of the decision of the Court of Appeals (CA)1 which affirmed the ruling of the Court of Tax Appeals (CTA) 2 that private respondent A. Soriano Corporation's (hereinafter ANSCOR) redemption and exchange of the stocks of its foreign stockholders cannot be considered as "essentially equivalent to a distribution of taxable dividends" under, Section 83(b) of the 1939 Internal Revenue Act. 3 The undisputed facts are as follows: Sometime in the 1930s, Don Andres Soriano, a citizen and resident of the United States, formed the corporation "A. Soriano Y Cia", predecessor of ANSCOR, with a P1,000,000.00 capitalization divided into 10,000 common shares at a par value of P100/share. ANSCOR is wholly owned and controlled by the family of Don Andres, who are all non-resident aliens. 4 In 1937, Don Andres subscribed to 4,963 shares of the 5,000 shares originally issued. 5 On September 12, 1945, ANSCOR's authorized capital stock was increased to P2,500,000.00 divided into 25,000 common shares with the same par value of the additional 15,000 shares, only 10,000 was issued which were all subscribed by Don Andres, after the other stockholders waived in favor of the former their pre-emptive rights to subscribe to the new issues. 6 This increased his

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subscription to 14,963 common shares. 7 A month later, 8 Don Andres transferred 1,250 shares each to his two sons, Jose and Andres, Jr., as their initial investments in ANSCOR. 9 Both sons are foreigners. 10 By 1947, ANSCOR declared stock dividends. Other stock dividend declarations were made between 1949 and December 20, 1963. 11 On December 30, 1964 Don Andres died. As of that date, the records revealed that he has a total shareholdings of 185,154 shares 12 50,495 of which are original issues and the balance of 134.659 shares as stock dividend declarations. 13 Correspondingly, one-half of that shareholdings or 92,577 14 shares were transferred to his wife, Doa Carmen Soriano, as her conjugal share. The other half formed part of his estate. 15 A day after Don Andres died, ANSCOR increased its capital stock to P20M 16 and in 1966 further increased it to P30M. 17 In the same year (December 1966), stock dividends worth 46,290 and 46,287 shares were respectively received by the Don Andres estate 18 and Doa Carmen from ANSCOR. Hence, increasing their accumulated shareholdings to 138,867 and 138,864 19 common shares each. 20 On December 28, 1967, Doa Carmen requested a ruling from the United States Internal Revenue Service (IRS), inquiring if an exchange of common with preferred shares may be considered as a tax avoidance scheme 21under Section 367 of the 1954 U.S. Revenue Act. 22 By January 2, 1968, ANSCOR reclassified its existing 300,000 common shares into 150,000 common and 150,000 preferred shares. 23 In a letter-reply dated February 1968, the IRS opined that the exchange is only a recapitalization scheme and not tax avoidance. 24 Consequently, 25 on March 31, 1968 Doa Carmen exchanged her whole 138,864 common shares for 138,860 of the newly reclassified preferred shares. The estate of Don Andres in turn, exchanged 11,140 of its common shares, for the remaining 11,140 preferred shares, thus reducing its (the estate) common shares to 127,727. 26 On June 30, 1968, pursuant to a Board Resolution, ANSCOR redeemed 28,000 common shares from the Don Andres' estate. By November 1968, the Board further increased ANSCOR's capital stock to P75M divided into 150,000 preferred shares and 600,000 common shares. 27 About a year later, ANSCOR again redeemed 80,000 common shares from the Don Andres' estate, 28 further reducing the latter's common shareholdings to 19,727. As stated in the Board Resolutions, ANSCOR's business purpose for both redemptions of stocks is to partially retire said stocks as treasury shares in order to reduce the company's foreign exchange remittances in case cash dividends are declared. 29 In 1973, after examining ANSCOR's books of account and records, Revenue examiners issued a report proposing that ANSCOR be assessed for deficiency withholding tax-at-source, pursuant to Sections 53 and 54 of the 1939 Revenue Code, 30 for the year 1968 and the second quarter of 1969 based on the transactions of exchange 31 and redemption of stocks. 31 The Bureau of Internal Revenue (BIR) made the corresponding assessments despite the claim of ANSCOR that it availed of the tax amnesty under Presidential Decree (P.D.) 23 32 which were amended by P.D.'s 67 and 157. 33 However, petitioner ruled that the invoked decrees do not cover Sections 53 and 54 in relation to Article 83(b) of the 1939 Revenue Act under which ANSCOR was assessed. 34 ANSCOR's subsequent protest on the assessments was denied in 1983 by petitioner. 35 Subsequently, ANSCOR filed a petition for review with the CTA assailing the tax assessments on the redemptions and exchange of stocks. In its decision, the Tax Court reversed petitioner's ruling, after finding sufficient evidence to overcome the prima facie correctness of the questioned assessments. 36 In a petition for review the CA as mentioned, affirmed the ruling of the CTA. 37 Hence, this petition.

The bone of contention is the interpretation and application of Section 83(b) of the 1939 Revenue Act 38 which provides: Sec. 83. Distribution of dividends or assets by corporations. (b) Stock dividends A stock dividend representing the transfer of surplus to capital account shall not be subject to tax. However, if a corporation cancels or redeems stock issued as a dividend at such time and in such manner as to make the distribution and cancellation or redemption, in whole or in part, essentially equivalent to the distribution of a taxable dividend, the amount so distributed in redemption or cancellation of the stock shall be considered as taxable income to the extent it represents a distribution of earnings or profits accumulated after March first, nineteen hundred and thirteen. (Emphasis supplied) Specifically, the issue is whether ANSCOR's redemption of stocks from its stockholder as well as the exchange of common with preferred shares can be considered as "essentially equivalent to the distribution of taxable dividend" making the proceeds thereof taxable under the provisions of the above-quoted law. Petitioner contends that the exchange transaction a tantamount to "cancellation" under Section 83(b) making the proceeds thereof taxable. It also argues that the Section applies to stock dividends which is the bulk of stocks that ANSCOR redeemed. Further, petitioner claims that under the "net effect test," the estate of Don Andres gained from the redemption. Accordingly, it was the duty of ANSCOR to withhold the tax-at-source arising from the two transactions, pursuant to Section 53 and 54 of the 1939 Revenue Act. 39 ANSCOR, however, avers that it has no duty to withhold any tax either from the Don Andres estate or from Doa Carmen based on the two transactions, because the same were done for legitimate business purposes which are (a) to reduce its foreign exchange remittances in the event the company would declare cash dividends, 40 and to (b) subsequently "filipinized" ownership of ANSCOR, as allegedly, envisioned by Don Andres. 41 It likewise invoked the amnesty provisions of P.D. 67. We must emphasize that the application of Sec. 83(b) depends on the special factual circumstances of each case.42 The findings of facts of a special court (CTA) exercising particular expertise on the subject of tax, generally binds this Court, 43 considering that it is substantially similar to the findings of the CA which is the final arbiter of questions of facts. 44 The issue in this case does not only deal with facts but whether the law applies to a particular set of facts. Moreover, this Court is not necessarily bound by the lower courts' conclusions of law drawn from such facts. 45 AMNESTY: We will deal first with the issue of tax amnesty. Section 1 of P.D. 67 46 provides: 1. In all cases of voluntary disclosures of previously untaxed income and/or wealth such as earnings, receipts, gifts, bequests or any other acquisitions from any source whatsoever which are taxable under the National Internal Revenue Code, as amended, realized here or abroad by any taxpayer, natural or judicial; the collection of all internal revenue taxes including the increments or penalties or account of non-payment as well as all civil, criminal or administrative liabilities arising from or incident to such disclosures under the National Internal Revenue Code, the Revised Penal Code, the Anti-Graft and Corrupt Practices Act, the Revised Administrative Code, the Civil Service laws and regulations, laws and regulations on Immigration and Deportation, or any other applicable law or proclamation, are hereby condoned and, in lieu thereof, a tax of ten (10%) per centum on such previously untaxed income or wealth, is hereby imposed, subject to the following conditions: (conditions omitted) [Emphasis supplied]. The decree condones "the collection of all internal revenue taxes including the increments or penalties or account of non-payment as well as all civil, criminal or administrative liable arising from or incident to" (voluntary) disclosures under the NIRC of previously

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untaxed income and/or wealth "realized here or abroad by any taxpayer, natural or juridical." May the withholding agent, in such capacity, be deemed a taxpayer for it to avail of the amnesty? An income taxpayer covers all persons who derive taxable income. 47 ANSCOR was assessed by petitioner for deficiency withholding tax under Section 53 and 54 of the 1939 Code. As such, it is being held liable in its capacity as a withholding agent and not its personality as a taxpayer. In the operation of the withholding tax system, the withholding agent is the payor, a separate entity acting no more than an agent of the government for the collection of the tax 48 in order to ensure its payments; 49 the payer is the taxpayer he is the person subject to tax impose by law; 50 and the payee is the taxing authority. 51 In other words, the withholding agent is merely a tax collector, not a taxpayer. Under the withholding system, however, the agent-payor becomes a payee by fiction of law. His (agent) liability is direct and independent from the taxpayer, 52 because the income tax is still impose on and due from the latter. The agent is not liable for the tax as no wealth flowed into him he earned no income. The Tax Code only makes the agent personally liable for the tax 53 arising from the breach of its legal duty to withhold as distinguish from its duty to pay tax since: the government's cause of action against the withholding is not for the collection of income tax, but for the enforcement of the withholding provision of Section 53 of the Tax Code, compliance with which is imposed on the withholding agent and not upon the taxpayer. 54 Not being a taxpayer, a withholding agent, like ANSCOR in this transaction is not protected by the amnesty under the decree. Codal provisions on withholding tax are mandatory and must be complied with by the withholding agent. 55 The taxpayer should not answer for the non-performance by the withholding agent of its legal duty to withhold unless there is collusion or bad faith. The former could not be deemed to have evaded the tax had the withholding agent performed its duty. This could be the situation for which the amnesty decree was intended. Thus, to curtail tax evasion and give tax evaders a chance to reform, 56 it was deemed administratively feasible to grant tax amnesty in certain instances. In addition, a "tax amnesty, much like a tax exemption, is never favored nor presumed in law and if granted by a statute, the term of the amnesty like that of a tax exemption must be construed strictly against the taxpayer and liberally in favor of the taxing authority. 57 The rule on strictissimi juris equally applies. 58 So that, any doubt in the application of an amnesty law/decree should be resolved in favor of the taxing authority. Furthermore, ANSCOR's claim of amnesty cannot prosper. The implementing rules of P.D. 370 which expanded amnesty on previously untaxed income under P.D. 23 is very explicit, to wit: Sec. 4. Cases not covered by amnesty. The following cases are not covered by the amnesty subject of these regulations: xxx xxx xxx (2) Tax liabilities with or without assessments, on withholding tax at source provided under Section 53 and 54 of the National Internal Revenue Code, as amended; 59 ANSCOR was assessed under Sections 53 and 54 of the 1939 Tax Code. Thus, by specific provision of law, it is not covered by the amnesty. TAX ON STOCK DIVIDENDS General Rule Sec. 83(b) of the 1939 NIRC was taken from the Section 115(g)(1) of the U.S. Revenue Code of 1928. 60 It laid down the general rule known as the proportionate test 61 wherein stock dividends once issued form part of the capital and, thus, subject to income tax. 62 Specifically, the general rule states that:

A stock dividend representing the transfer of surplus to capital account shall not be subject to tax. Having been derived from a foreign law, resort to the jurisprudence of its origin may shed light. Under the US Revenue Code, this provision originally referred to "stock dividends" only, without any exception. Stock dividends, strictly speaking, represent capital and do not constitute income to its recipient. 63 So that the mere issuance thereof is not yet subject to income tax 64 as they are nothing but an "enrichment through increase in value of capital investment." 65 As capital, the stock dividends postpone the realization of profits because the "fund represented by the new stock has been transferred from surplus to capital and no longer available for actual distribution." 66Income in tax law is "an amount of money coming to a person within a specified time, whether as payment for services, interest, or profit from investment." 67 It means cash or its equivalent. 68 It is gain derived and severed from capital, 69 from labor or from both combined 70 so that to tax a stock dividend would be to tax a capital increase rather than the income. 71 In a loose sense, stock dividends issued by the corporation, are considered unrealized gain, and cannot be subjected to income tax until that gain has been realized. Before the realization, stock dividends are nothing but a representation of an interest in the corporate properties. 72 As capital, it is not yet subject to income tax. It should be noted that capital and income are different. Capital is wealth or fund; whereas income is profit or gain or the flow of wealth. 73 The determining factor for the imposition of income tax is whether any gain or profit was derived from a transaction. 74 The Exception However, if a corporation cancels or redeems stock issued as a dividend at such time and in such manner as to make the distribution and cancellation or redemption, in whole or in part, essentially equivalent to the distribution of a taxable dividend, the amount so distributed in redemption or cancellation of the stock shall be considered as taxable income to the extent it represents a distribution of earnings or profits accumulated after March first, nineteen hundred and thirteen. (Emphasis supplied). In a response to the ruling of the American Supreme Court in the case of Eisner v. Macomber 75 (that pro ratastock dividends are not taxable income), the exempting clause above quoted was added because provision corporation found a loophole in the original provision. They resorted to devious means to circumvent the law and evade the tax. Corporate earnings would be distributed under the guise of its initial capitalization by declaring the stock dividends previously issued and later redeem said dividends by paying cash to the stockholder. This process of issuanceredemption amounts to a distribution of taxable cash dividends which was lust delayed so as to escape the tax. It becomes a convenient technical strategy to avoid the effects of taxation. Thus, to plug the loophole the exempting clause was added. It provides that the redemption or cancellation of stock dividends, depending on the "time" and "manner" it was made, is essentially equivalent to a distribution of taxable dividends," making the proceeds thereof "taxable income" "to the extent it represents profits". The exception was designed to prevent the issuance and cancellation or redemption of stock dividends, which is fundamentally not taxable, from being made use of as a device for the actual distribution of cash dividends, which is taxable. 76 Thus, the provision had the obvious purpose of preventing a corporation from avoiding dividend tax treatment by distributing earnings to its shareholders in two transactions a pro rata stock dividend followed by a pro rataredemption that would have the same economic consequences as a simple dividend. 77 Although redemption and cancellation are generally considered capital transactions, as such. they are not subject to tax. However, it does not necessarily mean that a shareholder may not realize a taxable gain from such transactions. 78 Simply put, depending on the circumstances, the proceeds of redemption of stock dividends are essentially distribution of cash dividends,

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which when paid becomes the absolute property of the stockholder. Thereafter, the latter becomes the exclusive owner thereof and can exercise the freedom of choice. 79 Having realized gain from that redemption, the income earner cannot escape income tax. 80 As qualified by the phrase "such time and in such manner," the exception was not intended to characterize as taxable dividend every distribution of earnings arising from the redemption of stock dividend. 81 So that, whether the amount distributed in the redemption should be treated as the equivalent of a "taxable dividend" is a question of fact, 82 which is determinable on "the basis of the particular facts of the transaction in question. 83 No decisive test can be used to determine the application of the exemption under Section 83(b). The use of the words "such manner" and "essentially equivalent" negative any idea that a weighted formula can resolve a crucial issue Should the distribution be treated as taxable dividend. 84 On this aspect, American courts developed certain recognized criteria, which includes the following: 85 1) the presence or absence of real business purpose, 2) the amount of earnings and profits available for the declaration of a regular dividends and the corporation's past record with respect to the declaration of dividends, 3) the effect of the distribution, as compared with the declaration of regular dividend, 4) the lapse of time between issuance and redemption, 86 5) the presence of a substantial surplus 87 and a generous supply of cash which invites suspicion as does a meager policy in relation both to current earnings and accumulated surplus,88 REDEMPTION AND CANCELLATION For the exempting clause of Section, 83(b) to apply, it is indispensable that: (a) there is redemption or cancellation; (b) the transaction involves stock dividends and (c) the "time and manner" of the transaction makes it "essentially equivalent to a distribution of taxable dividends." Of these, the most important is the third. Redemption is repurchase, a reacquisition of stock by a corporation which issued the stock 89 in exchange for property, whether or not the acquired stock is cancelled, retired or held in the treasury. 90 Essentially, the corporation gets back some of its stock, distributes cash or property to the shareholder in payment for the stock, and continues in business as before. The redemption of stock dividends previously issued is used as a veil for the constructive distribution of cash dividends. In the instant case, there is no dispute that ANSCOR redeemed shares of stocks from a stockholder (Don Andres) twice (28,000 and 80,000 common shares). But where did the shares redeemed come from? If its source is the original capital subscriptions upon establishment of the corporation or from initial capital investment in an existing enterprise, its redemption to the concurrent value of acquisition may not invite the application of Sec. 83(b) under the 1939 Tax Code, as it is not income but a mere return of capital. On the contrary, if the redeemed shares are from stock dividend declarations other than as initial capital investment, the proceeds of the redemption is additional wealth, for it is not merely a return of capital but a gain thereon. It is not the stock dividends but the proceeds of its redemption that may be deemed as taxable dividends. Here, it is undisputed that at the time of the last redemption, the original common shares owned by the estate were only 25,247.5 91 This means that from the total of 108,000 shares redeemed from the estate, the balance of 82,752.5 (108,000 less 25,247.5) must have come from stock dividends. Besides, in the absence of evidence to the contrary, the Tax Code presumes that every distribution of corporate property, in whole or in part, is made out of corporate profits 92 such as stock dividends. The capital cannot be distributed in the form of redemption of stock dividends without violating the trust fund doctrine wherein the capital stock, property and other assets of the corporation are

regarded as equity in trust for the payment of the corporate creditors. 93 Once capital, it is always capital. 94 That doctrine was intended for the protection of corporate creditors. 95 With respect to the third requisite, ANSCOR redeemed stock dividends issued just 2 to 3 years earlier. The time alone that lapsed from the issuance to the redemption is not a sufficient indicator to determine taxability. It is a must to consider the factual circumstances as to the manner of both the issuance and the redemption. The "time" element is a factor to show a device to evade tax and the scheme of cancelling or redeeming the same shares is a method usually adopted to accomplish the end sought. 96 Was this transaction used as a "continuing plan," "device" or "artifice" to evade payment of tax? It is necessary to determine the "net effect" of the transaction between the shareholder-income taxpayer and the acquiring (redeeming) corporation. 97 The "net effect" test is not evidence or testimony to be considered; it is rather an inference to be drawn or a conclusion to be reached.98 It is also important to know whether the issuance of stock dividends was dictated by legitimate business reasons, the presence of which might negate a tax evasion plan. 99 The issuance of stock dividends and its subsequent redemption must be separate, distinct, and not related, for the redemption to be considered a legitimate tax scheme. 100 Redemption cannot be used as a cloak to distribute corporate earnings. 101 Otherwise, the apparent intention to avoid tax becomes doubtful as the intention to evade becomes manifest. It has been ruled that: [A]n operation with no business or corporate purpose is a mere devise which put on the form of a corporate reorganization as a disguise for concealing its real character, and the sole object and accomplishment of which was the consummation of a preconceived plan, not to reorganize a business or any part of a business, but to transfer a parcel of corporate shares to a stockholder. 102 Depending on each case, the exempting provision of Sec. 83(b) of the 1939 Code may not be applicable if the redeemed shares were issued with bona fide business purpose, 103 which is judged after each and every step of the transaction have been considered and the whole transaction does not amount to a tax evasion scheme. ANSCOR invoked two reasons to justify the redemptions (1) the alleged "filipinization" program and (2) the reduction of foreign exchange remittances in case cash dividends are declared. The Court is not concerned with the wisdom of these purposes but on their relevance to the whole transaction which can be inferred from the outcome thereof. Again, it is the "net effect rather than the motives and plans of the taxpayer or his corporation"104 that is the fundamental guide in administering Sec. 83(b). This tax provision is aimed at the result. 105 It also applies even if at the time of the issuance of the stock dividend, there was no intention to redeem it as a means of distributing profit or avoiding tax on dividends. 106 The existence of legitimate business purposes in support of the redemption of stock dividends is immaterial in income taxation. It has no relevance in determining "dividend equivalence". 107 Such purposes may be material only upon the issuance of the stock dividends. The test of taxability under the exempting clause, when it provides "such time and manner" as would make the redemption "essentially equivalent to the distribution of a taxable dividend", is whether the redemption resulted into a flow of wealth. If no wealth is realized from the redemption, there may not be a dividend equivalence treatment. In the metaphor of Eisner v. Macomber, income is not deemed "realize" until the fruit has fallen or been plucked from the tree. The three elements in the imposition of income tax are: (1) there must be gain or and profit, (2) that the gain or profit is realized or received, actually or constructively, 108 and (3) it is not exempted by law or treaty from income tax. Any business purpose as to why or how the income was earned by the taxpayer is not a requirement. Income tax is assessed on income received from any property, activity or service that produces the income because the Tax Code stands as an indifferent

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neutral party on the matter of where income comes from. 109 As stated above, the test of taxability under the exempting clause of Section 83(b) is, whether income was realized through the redemption of stock dividends. The redemption converts into money the stock dividends which become a realized profit or gain and consequently, the stockholder's separate property. 110 Profits derived from the capital invested cannot escape income tax. As realized income, the proceeds of the redeemed stock dividends can be reached by income taxation regardless of the existence of any business purpose for the redemption. Otherwise, to rule that the said proceeds are exempt from income tax when the redemption is supported by legitimate business reasons would defeat the very purpose of imposing tax on income. Such argument would open the door for income earners not to pay tax so long as the person from whom the income was derived has legitimate business reasons. In other words, the payment of tax under the exempting clause of Section 83(b) would be made to depend not on the income of the taxpayer, but on the business purposes of a third party (the corporation herein) from whom the income was earned. This is absurd, illogical and impractical considering that the Bureau of Internal Revenue (BIR) would be pestered with instances in determining the legitimacy of business reasons that every income earner may interposed. It is not administratively feasible and cannot therefore be allowed. The ruling in the American cases cited and relied upon by ANSCOR that "the redeemed shares are the equivalent of dividend only if the shares were not issued for genuine business purposes", 111 or the "redeemed shares have been issued by a corporation bona fide" 112 bears no relevance in determining the non-taxability of the proceeds of redemption ANSCOR, relying heavily and applying said cases, argued that so long as the redemption is supported by valid corporate purposes the proceeds are not subject to tax. 113 The adoption by the courts below 114 of such argument is misleading if not misplaced. A review of the cited American cases shows that the presence or absence of "genuine business purposes" may be material with respect to the issuance or declaration of stock dividends but not on its subsequent redemption. The issuance and the redemption of stocks are two different transactions. Although the existence of legitimate corporate purposes may justify a corporation's acquisition of its own shares under Section 41 of the Corporation Code, 115 such purposes cannot excuse the stockholder from the effects of taxation arising from the redemption. If the issuance of stock dividends is part of a tax evasion plan and thus, without legitimate business reasons, the redemption becomes suspicious which exempting clause. The substance of the whole transaction, not its form, usually controls the tax consequences.116 The two purposes invoked by ANSCOR, under the facts of this case are no excuse for its tax liability. First, the alleged "filipinization" plan cannot be considered legitimate as it was not implemented until the BIR started making assessments on the proceeds of the redemption. Such corporate plan was not stated in nor supported by any Board Resolution but a mere afterthought interposed by the counsel of ANSCOR. Being a separate entity, the corporation can act only through its Board of Directors. 117 The Board Resolutions authorizing the redemptions state only one purpose reduction of foreign exchange remittances in case cash dividends are declared. Not even this purpose can be given credence. Records show that despite the existence of enormous corporate profits no cash dividend was ever declared by ANSCOR from 1945 until the BIR started making assessments in the early 1970's. Although a corporation under certain exceptions, has the prerogative when to issue dividends, yet when no cash dividends was issued for about three decades, this circumstance negates the legitimacy of ANSCOR's alleged purposes. Moreover, to issue stock dividends is to increase the shareholdings

of ANSCOR's foreign stockholders contrary to its "filipinization" plan. This would also increase rather than reduce their need for foreign exchange remittances in case of cash dividend declaration, considering that ANSCOR is a family corporation where the majority shares at the time of redemptions were held by Don Andres' foreign heirs. Secondly, assuming arguendo, that those business purposes are legitimate, the same cannot be a valid excuse for the imposition of tax. Otherwise, the taxpayer's liability to pay income tax would be made to depend upon a third person who did not earn the income being taxed. Furthermore, even if the said purposes support the redemption and justify the issuance of stock dividends, the same has no bearing whatsoever on the imposition of the tax herein assessed because the proceeds of the redemption are deemed taxable dividends since it was shown that income was generated therefrom. Thirdly, ANSCOR argued that to treat as "taxable dividend" the proceeds of the redeemed stock dividends would be to impose on such stock an undisclosed lien and would be extremely unfair to intervening purchase, i.e. those who buys the stock dividends after their issuance. 118 Such argument, however, bears no relevance in this case as no intervening buyer is involved. And even if there is an intervening buyer, it is necessary to look into the factual milieu of the case if income was realized from the transaction. Again, we reiterate that the dividend equivalence test depends on such "time and manner" of the transaction and its net effect. The undisclosed lien119 may be unfair to a subsequent stock buyer who has no capital interest in the company. But the unfairness may not be true to an original subscriber like Don Andres, who holds stock dividends as gains from his investments. The subsequent buyer who buys stock dividends is investing capital. It just so happen that what he bought is stock dividends. The effect of its (stock dividends) redemption from that subsequent buyer is merely to return his capital subscription, which is income if redeemed from the original subscriber. After considering the manner and the circumstances by which the issuance and redemption of stock dividends were made, there is no other conclusion but that the proceeds thereof are essentially considered equivalent to a distribution of taxable dividends. As "taxable dividend" under Section 83(b), it is part of the "entire income" subject to tax under Section 22 in relation to Section 21 120 of the 1939 Code. Moreover, under Section 29(a) of said Code, dividends are included in "gross income". As income, it is subject to income tax which is required to be withheld at source. The 1997 Tax Code may have altered the situation but it does not change this disposition. EXCHANGE OF COMMON WITH PREFERRED SHARES 121 Exchange is an act of taking or giving one thing for another involving 122 reciprocal transfer 123 and is generally considered as a taxable transaction. The exchange of common stocks with preferred stocks, or preferred for common or a combination of either for both, may not produce a recognized gain or loss, so long as the provisions of Section 83(b) is not applicable. This is true in a trade between two (2) persons as well as a trade between a stockholder and a corporation. In general, this trade must be parts of merger, transfer to controlled corporation, corporate acquisitions or corporate reorganizations. No taxable gain or loss may be recognized on exchange of property, stock or securities related to reorganizations. 124 Both the Tax Court and the Court of Appeals found that ANSCOR reclassified its shares into common and preferred, and that parts of the common shares of the Don Andres estate and all of Doa Carmen's shares were exchanged for the whole 150.000 preferred shares. Thereafter, both the Don Andres estate and Doa Carmen remained as corporate subscribers except that their subscriptions now include preferred shares. There was no change in their proportional interest after the exchange. There was no cash flow. Both stocks had the same par value. Under the facts herein, any difference in their market value would be immaterial at the time of exchange because no income is yet realized it was a mere corporate paper transaction. It would have been different,

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if the exchange transaction resulted into a flow of wealth, in which case income tax may be imposed. 125 Reclassification of shares does not always bring any substantial alteration in the subscriber's proportional interest. But the exchange is different there would be a shifting of the balance of stock features, like priority in dividend declarations or absence of voting rights. Yet neither the reclassification nor exchange per se, yields realize income for tax purposes. A common stock represents the residual ownership interest in the corporation. It is a basic class of stock ordinarily and usually issued without extraordinary rights or privileges and entitles the shareholder to apro rata division of profits. 126 Preferred stocks are those which entitle the shareholder to some priority on dividends and asset distribution. 127 Both shares are part of the corporation's capital stock. Both stockholders are no different from ordinary investors who take on the same investment risks. Preferred and common shareholders participate in the same venture, willing to share in the profits and losses of the enterprise. 128 Moreover, under the doctrine of equality of shares all stocks issued by the corporation are presumed equal with the same privileges and liabilities, provided that the Articles of Incorporation is silent on such differences. 129 In this case, the exchange of shares, without more, produces no realized income to the subscriber. There is only a modification of the subscriber's rights and privileges which is not a flow of wealth for tax purposes. The issue of taxable dividend may arise only once a subscriber disposes of his entire interest and not when there is still maintenance of proprietary interest. 130 WHEREFORE, premises considered, the decision of the Court of Appeals is MODIFIED in that ANSCOR's redemption of 82,752.5 stock dividends is herein considered as essentially equivalent to a distribution of taxable dividends for which it is LIABLE for the withholding tax-at-source. The decision is AFFIRMED in all other respects. SO ORDERED. G.R. No. 85024 January 23, 1991 DOMINGO VICENTE, petitioner, vs. EMPLOYEES' COMPENSATION COMMISSION, respondent. Olandesca Law Offices for petitioner. SARMIENTO, J.:p Central to this petition for certiorari which assails the decision 1 dated August 24, 1988 of the Employees' Compensation Commission (ECC) in ECC Case No. 3764, affirming the decision of the Government Service Insurance System (GSIS), is the question on whether the petitioner suffers from permanent total disability as he claims, or from permanent partial disability as held by the respondent Commission. The undisputed facts of the case are as follows: The petitioner, Domingo Vicente, was formerly employed as a nursing attendant at the Veterans Memorial Medical Center in Quezon City. On August 5, 1981, at the age of forty-five, and after having rendered more than twenty-five years of government service, he applied for optional retirement (effective August 16, 1981) under the provisions of Section 12(c) of Republic Act No. 1616, giving as reason therefor his inability to continue working as a result of his physical disability. 2 The petitioner likewise filed with the Government Service Insurance System (GSIS) an application for "income benefits claim for payment" under Presidential Decree (PD) No. 626, as amended. Both applications were accompanied by the necessary supporting papers, among them being a "Physician's Certification" issued by the petitioner's attending doctor at the Veterans Memorial Medical Center, Dr. Avelino A. Lopez, M.D., F.P.C.S., ** F.I.C.S. *** (Section Chief, General, Thoracic & Peripheral Surgery, Surgical

Department, Veterans Medical Center, Hilaga Avenue, Quezon City), who had diagnosed the petitioner as suffering from: Osteoarthritis, multiple; Hypertensive Cardiovascular Disease; Cardiomegaly; and Left Ventricular Hypertrophy; and classified him as being under "permanent total disability." 3 The petitioner's application for income benefits claim payment was granted but only for permanent partial disability (PPD) compensation or for a period of nineteen months starting from August 16, 1981 up to March 1983. 4 On March 14, 1983, the petitioner requested the General Manager of the GSIS to reconsider the award given him and prayed that the same be extended beyond nineteen months invoking the findings of his attending physician, as indicated in the latter's Certification. 5 As a consequence of his motion for reconsideration, and on the basis of the "Summary of Findings and Recommendation" 6 of the Medical Services Center of the GSIS, the petitioner was granted the equivalent of an additional four (4) months benefits. 7 Still unsatisfied, the petitioner again sent a letter to the GSIS Disability Compensation Department Manager on November 6, 1986, insisting that he (petitioner) should be compensated no less than for "permanent total disability." On June 30, 1987, the said manager informed the petitioner that his request had been denied. Undaunted, the petitioner sought reconsideration and as a result of which, on September 10, 1987, his case was elevated to the respondent Employees Compensation Commission (ECC). Later, or on October 1, 1987, the petitioner notified the respondent Commission that he was confined at the Veterans Memorial Medical Center for "CVA probably thrombosis of the left middle cerebral artery."8 There was nothing he could do but wait and hope. Finally, on August 24, 1988, the respondent rendered a decision affirming the ruling of the GSIS Employees' Disability Compensation and dismissed the petitioner's appeal. Hence this recourse. Before us, the petitioner maintains that his disability is "permanent total" and not "permanent partial" as classified by the respondent Commission. In support of his position, the petitioner points to the clinical evaluation and certification earlier adverted to issued by his attending physicians at the Veterans Memorial Medical Center. He likewise contends that contrary to the respondent's ruling, his subsequent confinement in the hospital from August 31, 1987 to September 6, 1987, when he was found suffering from "CVA probably thrombosis," was a direct result of his other ailments as previously diagnosed (before his retirement) by his attending physician and the Personnel Physician of the Center, Dr. Salud C. Palattao. On the other hand, the respondent Commission argues that the petitioner only suffers from "permanent partial disability" and not from "permanent total disability." The findings of the petitioner's attending physician is not binding on the GSIS, nor on the Commission, as the proper evaluation of an employee's degree of disability exclusively belongs to the GSIS medical experts who have specialized on the subject. The petition is impressed with merit. Employee's disability under the Labor Code is classified into three distinct categories: (a) temporary total disability;9 (b) permanent total disability; 10 and (c) permanent partial disability. 11 Likewise, in Section 2, Rule VII of the Amended Rules on Employees Compensation, it is provided that: Sec. 2. Disability(a) A total disability is temporary if as a result of the injury or sickness the employee is unable to perform any gainful occupation for a continuous period not exceeding 120 days, except as otherwise provided in Rule X of these Rules. (b) A disability is total and permanent if as a result of the injury or sickness the employee is unable to perform any gainful occupation for a continuous period exceeding 120 days except as otherwise provided for in Rule X of these Rules.

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(c) A disability is partial permanent if as a result of the injury or sickness the employee suffers a permanent partial loss of the use of any part of his body. Here, there is no question that the petitioner is not under "temporary total disability" as defined by law. The respondent Commission's decision classifying the petitioner's disability as "permanent partial" attests, albeit indirectly, to this fact. Our focus therefore, as stated earlier, is only in resolving out whether the petitioner suffers from "permanent total disability" as he claims, or from "permanent partial disability" as the respondent Commission would have us believe. On the subject of "permanent total disability," the Court has stated, on several occasions, that: Other authoritative comments on the coverage of the term "permanent total disability" as used in the Workmen's Compensation Act, are (a) Comments and Annotations on the Workmen's Compensation Act by Severo M. Pucan and Cornelio R. Besinga, that "total disability does not mean a state of absolute helplessness, but means disablement of the employee to earn wages in the same kind of work, or a work of similar nature, that he was trained for, or accustomed to perform, or any kind of work which a person of his mentality and attainment could do;" (b) Philippine Labor and Social Legislation by Justice Ruperto Martin, that "permanent total disability means disablement of an employee to earn wages in the same kind of work, or work of a similar nature that he was trained for, or accustomed to perform, or any other kind of work which a person of his mentality and attainment could do . . .;" and (c) Labor Standards and Welfare Legislation by Perfecto Fernandez and Camilo Quiason that "permanent total disability means an incapacity to perform gainful work which is expected to be permanent. This status does not require a condition of complete helplessness. Nor is it affected by the performance of occasional odd jobs" (cited in Marcelino vs. Seven-up Bottling Co. of the Philippines, 47 SCRA 343). 12 It may therefore be inferred from the Court's pronouncements that while "permanent total disability" invariably results in an employee's loss of work or inability to perform his usual work, "permanent partial disability," on the other hand, occurs when an employee loses the use of any particular anatomical part of his body which disables him to continue with his former work. Stated otherwise, the test of whether or not an employee suffers from "permanent total disability" is a showing of the capacity of the employee to continue performing his work notwithstanding the disability he incurred. Thus, if by reason of the injury or sickness he sustained, the employee is unable to perform his customary job for more than 120 days and he does not come within the coverage of Rule X of the Amended Rules on Employees Compensability (which, in a more detailed manner, describes what constitutes temporary total disability), then the said employee undoubtedly suffers from "permanent total disability" regardless of whether or not he loses the use of any part of his body. In the case at bar, the petitioner's permanent total disability is established beyond doubt by several factors and circumstances. Noteworthy is the fact that from all available indications, it appears that the petitioner's application for optional retirement on the basis of his ailments had been approved. The decision of the respondent Commission even admits that the petitioner "retired from government service at the age of 45." 13 Considering that the petitioner was only 45 years old when he retired and still entitled, under good behavior, to 20 more years in service, the approval of his optional retirement application proves that he was no longer fit to continue in his employment. 14 For optional retirement is allowed only upon proof that the employee-applicant is already physically incapacitated to render sound and efficient service. 15 Further, the appropriate physicians of the petitioner's employer, the Veterans Memorial Medical Center, categorically certified that the petitioner was classified under permanent total disability. On this score, "the

doctor's certification as to the nature of the claimant's disability may be given credence as he normally would not make a false certification." 16 And, "[N]o physician in his right mind and who is aware of the far-reaching and serious effect that his statements would cause on a money claim filed with a government agency, would issue certifications indiscriminately without even minding his own interests and protection." 17 The fact that the petitioner was granted benefits amounting to the equivalent of twenty-three months shows that the petitioner was unable to perform any gainful occupation for a continuous period exceeding 120 days. This kind of disability is precisely covered by Section 2(b), Rule VII of the Amended Rules on Employees' Compensability which we again quote, to wit: Sec. 2. Disability(a) . . . (b) A disability is total and permanent if as a result of the injury or sickness the employee is unable to perform any gainful occupation for a continuous period exceeding 120 days except as otherwise provided for in Rule X of those Rules. xxx xxx xxx There being no showing, as we mentioned earlier, that the petitioner's disability is "temporary total" as defined by the law, the inescapable conclusion is that he suffers from permanent total disability. The court takes this occasion to stress once more its abiding concern for the welfare of government workers, especially the humble rank and file, whose patience, industry, and dedication to duty have often gone unheralded, but who, in spite of very little recognition, plod on dutifully to perform their appointed tasks. It is for this reason that the sympathy of the law on social security is toward its beneficiaries, and the law, by its own terms, 18 requires a construction of utmost liberality in their favor. It is likewise for this reason that the Court disposes of this case and ends a workingman's struggle for his just dues. WHEREFORE, the decision of the respondent Employees' Compensation Commission is SET ASIDE and another one is hereby ENTERED declaring the petitioner to be suffering from permanent total disability. Respondent Employees' Compensation Commission is accordingly ORDERED to award the petitioner the benefits corresponding to his permanent total disability. SO ORDERED. G.R. No. L-34382 July 20, 1983 THE HOME INSURANCE COMPANY, petitioner, vs. EASTERN SHIPPING LINES and/or ANGEL JOSE TRANSPORTATION, INC. and HON. A. MELENCIOHERRERA, Presiding Judge of the Manila Court of First Instance, Branch XVII, respondents. G.R. No. L-34383 July 20, 1983 THE HOME INSURANCE COMPANY, petitioner, vs. N. V. NEDLLOYD LIJNEN; COLUMBIAN PHILIPPINES, INC., and/or GUACODS, INC., and HON. A. MELENCIO-HERRERA, Presiding Judge of the Manila Court of First Instance, Branch XVII, respondents. No. L-34382. Zapa Law Office for petitioner. Bito, Misa & Lozada Law Office for respondents. No. L-34383. Zapa Law Office for petitioner. Ross, Salcedo, Del Rosario, Bito & Misa Law office for respondents. GUTIERREZ, JR., J.: Questioned in these consolidated petitions for review on certiorari are the decisions of the Court of First Instance of Manila, Branch XVII, dismissing the complaints in Civil Case No. 71923 and in Civil Case No. 71694, on the ground that plaintiff therein, now appellant, had failed to prove its capacity to sue. There is no dispute over the facts of these cases for recovery of maritime damages. In L-34382, the facts are found in the decision of the respondent court which stated:

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On or about January 13, 1967, S. Kajita & Co., on behalf of Atlas Consolidated Mining & Development Corporation, shipped on board the SS "Eastern Jupiter' from Osaka, Japan, 2,361 coils of "Black Hot Rolled Copper Wire Rods." The said VESSEL is owned and operated by defendant Eastern Shipping Lines (CARRIER). The shipment was covered by Bill of Lading No. O-MA-9, with arrival notice to Phelps Dodge Copper Products Corporation of the Philippines (CONSIGNEE) at Manila. The shipment was insured with plaintiff against all risks in the amount of P1,580,105.06 under its Insurance Policy No. AS-73633. xxx xxx xxx The coils discharged from the VESSEL numbered 2,361, of which 53 were in bad order. What the CONSIGNEE ultimately received at its warehouse was the same number of 2,361 coils with 73 coils loose and partly cut, and 28 coils entangled, partly cut, and which had to be considered as scrap. Upon weighing at CONSIGNEE's warehouse, the 2,361 coils were found to weight 263,940.85 kilos as against its invoiced weight of 264,534.00 kilos or a net loss/shortage of 593.15 kilos, according to Exhibit "A", or 1,209,56 lbs., according to the claims presented by the consignee against the plaintiff (Exhibit "D-1"), the CARRIER (Exhibit "J-1"), and the TRANSPORTATION COMPANY (Exhibit "K- l"). For the loss/damage suffered by the cargo, plaintiff paid the consignee under its insurance policy the amount of P3,260.44, by virtue of which plaintiff became subrogated to the rights and actions of the CONSIGNEE. Plaintiff made demands for payment against the CARRIER and the TRANSPORTATION COMPANY for reimbursement of the aforesaid amount but each refused to pay the same. ... The facts of L-34383 are found in the decision of the lower court as follows: On or about December 22, 1966, the Hansa Transport Kontor shipped from Bremen, Germany, 30 packages of Service Parts of Farm Equipment and Implements on board the VESSEL, SS "NEDER RIJN" owned by the defendant, N. V. Nedlloyd Lijnen, and represented in the Philippines by its local agent, the defendant Columbian Philippines, Inc. (CARRIER). The shipment was covered by Bill of Lading No. 22 for transportation to, and delivery at, Manila, in favor of the consignee, international Harvester Macleod, Inc. (CONSIGNEE). The shipment was insured with plaintiff company under its Cargo Policy No. AS-73735 "with average terms" for P98,567.79. xxx xxx xxx The packages discharged from the VESSEL numbered 29, of which seven packages were found to be in bad order. What the CONSIGNEE ultimately received at its warehouse was the same number of 29 packages with 9 packages in bad order. Out of these 9 packages, 1 package was accepted by the CONSIGNEE in good order due to the negligible damages sustained. Upon inspection at the consignee's warehouse, the contents of 3 out of the 8 cases were also found to be complete and intact, leaving 5 cases in bad order. The contents of these 5 packages showed several items missing in the total amount of $131.14; while the contents of the undelivered 1 package were valued at $394.66, or a total of $525.80 or P2,426.98. For the short-delivery of 1 package and the missing items in 5 other packages, plaintiff paid the CONSIGNEE under its Insurance Cargo Policy the amount of P2,426.98, by virtue of which plaintiff became subrogated to the rights and actions of the CONSIGNEE. Demands were made on defendants CARRIER and CONSIGNEE for reimbursement thereof but they failed and refused to pay the same. In both cases, the petitioner-appellant made the following averment regarding its capacity to sue: The plaintiff is a foreign insurance company duly authorized to do business in the Philippines through its agent, Mr. VICTOR H. BELLO, of legal age and with office address at Oledan Building, Ayala Avenue, Makati, Rizal.

In L-34382, the respondent-appellee Eastern Shipping Lines, Inc., filed its answer and alleged that it: Denies the allegations of Paragraph I which refer to plaintiff's capacity to sue for lack of knowledge or information sufficient to form a belief as to the truth thereof. Respondent-appellee, Angel Jose Transportation, Inc., in turn filed its answer admitting the allegations of the complaint, regarding the capacity of plaintiff-appellant. The pertinent paragraph of this answer reads as follows: Angel Jose Admits the jurisdictional averments in paragraphs 1, 2, and 3 of the heading Parties. In L-34383, the respondents-appellees N. V. Nedlloyd Lijhen, Columbian Philippines, Inc. and Guacods, Inc., filed their answers. They denied the petitioner-appellant's capacity to sue for lack of knowledge or information sufficient to form a belief as to the truth thereof. As earlier stated, the respondent court dismissed the complaints in the two cases on the same ground, that the plaintiff failed to prove its capacity to sue. The court reasoned as follows: In the opinion of the Court, if plaintiff had the capacity to sue, the Court should hold that a) defendant Eastern Shipping Lines should pay plaintiff the sum of P1,630.22 with interest at the legal rate from January 5, 1968, the date of the institution of the Complaint, until fully paid; b) defendant Angel Jose Transportation, Inc. should pay plaintiff the sum of P1,630.22 also with interest at the legal rate from January 5, 1968 until fully paid; c) the counterclaim of defendant Angel Jose transportation, Inc. should be ordered dismissed; and d) each defendant to pay one-half of the costs. The Court is of the opinion that Section 68 of the Corporation Law reflects a policy designed to protect the public interest. Hence, although defendants have not raised the question of plaintiff's compliance with that provision of law, the Court has resolved to take the matter into account. A suing foreign corporation, like plaintiff, has to plead affirmatively and prove either that the transaction upon which it bases its complaint is an isolated one, or that it is licensed to transact business in this country, failing which, it will be deemed that it has no valid cause of action (Atlantic Mutual Ins. Co. vs. Cebu Stevedoring Co., Inc., 17 SCRA 1037). In view of the number of cases filed by plaintiff before this Court, of which judicial cognizance can be taken, and under the ruling in Far East International Import and Export Corporation vs. Hankai Koayo Co., 6 SCRA 725, it has to be held that plaintiff is doing business in the Philippines. Consequently, it must have a license under Section 68 of the Corporation Law before it can be allowed to sue. The situation of plaintiff under said Section 68 has been described as follows in Civil Case No. 71923 of this Court, entitled 'Home Insurance Co. vs. N. V. Nedlloyd Lijnen, of which judicial cognizance can also be taken: Exhibit "R",presented by plaintiff is a certified copy of a license, dated July 1, 1967, issued by the Office of the Insurance Commissioner authorizing plaintiff to transact insurance business in this country. By virtue of Section 176 of the Insurance Law, it has to be presumed that a license to transact business under Section 68 of the Corporation Law had previously been issued to plaintiff. No copy thereof, however, was submitted for a reason unknown. The date of that license must not have been much anterior to July 1, 1967. The preponderance of the evidence would therefore call for the finding that the insurance contract involved in this case, which was executed at Makati, Rizal, on February 8, 1967, was contracted before plaintiff was licensed to transact business in the Philippines. This Court views Section 68 of the Corporation Law as reflective of a basic public policy. Hence, it is of the opinion that, in the eyes of Philippine law, the insurance contract involved in this case must be held void under the provisions of Article 1409 (1) of the Civil Code, and could not be validated by subsequent procurement of the license. That view of the Court finds support in the following citation: According to many authorities, a constitutional or statutory prohibition against a foreign corporation doing

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business in the state, unless such corporation has complied with conditions prescribed, is effective to make the contracts of such corporation void, or at least unenforceable, and prevents the maintenance by the corporation of any action on such contracts. Although the usual construction is to the contrary, and to the effect that only the remedy for enforcement is affected thereby, a statute prohibiting a non-complying corporation from suing in the state courts on any contract has been held by some courts to render the contract void and unenforceable by the corporation, even after its has complied with the statute." (36 Am. Jur. 2d 299-300). xxx xxx xxx The said Civil Case No. 71923 was dismissed by this Court. As the insurance contract involved herein was executed on January 20, 1967, the instant case should also be dismissed. We resolved to consolidate the two cases when we gave due course to the petition. The petitioner raised the following assignments of errors: First Assignment of Error THE HONORABLE TRIAL COURT ERRED IN CONSIDERING AS AN ISSUE THE LEGAL EXISTENCE OR CAPACITY OF PLAINTIFF-APPELLANT. Second Assignment of Error THE HONORABLE TRIAL COURT ERRED IN DISMISSING THE COMPLAINT ON THE FINDING THAT PLAINTIFFAPPELLANT HAS NO CAPACITY TO SUE. On the basis of factual and equitable considerations, there is no question that the private respondents should pay the obligations found by the trial court as owing to the petitioner. Only the question of validity of the contracts in relation to lack of capacity to sue stands in the way of the petitioner being given the affirmative relief it seeks. Whether or not the petitioner was engaged in single acts or solitary transactions and not engaged in business is likewise not in issue. The petitioner was engaged in business without a license. The private respondents' obligation to pay under the terms of the contracts has been proved. When the complaints in these two cases were filed, the petitioner had already secured the necessary license to conduct its insurance business in the Philippines. It could already filed suits. Petitioner was, therefore, telling the truth when it averred in its complaints that it was a foreign insurance company duly authorized to do business in the Philippines through its agent Mr. Victor H. Bello. However, when the insurance contracts which formed the basis of these cases were executed, the petitioner had not yet secured the necessary licenses and authority. The lower court, therefore, declared that pursuant to the basic public policy reflected in the Corporation Law, the insurance contracts executed before a license was secured must be held null and void. The court ruled that the contracts could not be validated by the subsequent procurement of the license. The applicable provisions of the old Corporation Law, Act 1459, as amended are: Sec. 68. No foreign corporation or corporations formed, organized, or existing under any laws other than those of the Philippine Islands shall be permitted to transact business in the Philippine Islands until after it shall have obtained a license for that purpose from the chief of the Mercantile Register of the Bureau of Commerce and Industry, (Now Securities and Exchange Commission. See RA 5455) upon order of the Secretary of Finance (Now Monetary Board) in case of banks, savings, and loan banks, trust corporations, and banking institutions of all kinds, and upon order of the Secretary of Commerce and Communications (Now Secretary of Trade. See 5455, section 4 for other requirements) in case of all other foreign corporations. ... xxx xxx xxx Sec. 69. No foreign corporation or corporation formed, organized, or existing under any laws other than those of the Philippine Islands shall be permitted to transact

business in the Philippine Islands or maintain by itself or assignee any suit for the recovery of any debt, claim, or demand whatever, unless it shall have the license prescribed in the section immediately preceding. Any officer, director, or agent of the corporation or any person transacting business for any foreign corporation not having the license prescribed shag be punished by imprisonment for not less than six months nor more than two years or by a fine of not less than two hundred pesos nor more than one thousand pesos, or by both such imprisonment and fine, in the discretion of the court. As early as 1924, this Court ruled in the leading case of Marshall Wells Co. v. Henry W. Elser & Co. (46 Phil. 70) that the object of Sections 68 and 69 of the Corporation Law was to subject the foreign corporation doing business in the Philippines to the jurisdiction of our courts. The Marshall Wells Co. decision referred to a litigation over an isolated act for the unpaid balance on a bill of goods but the philosophy behind the law applies to the factual circumstances of these cases. The Court stated: xxx xxx xxx Defendant isolates a portion of one sentence of section 69 of the Corporation Law and asks the court to give it a literal meaning Counsel would have the law read thus: "No foreign corporation shall be permitted to maintain by itself or assignee any suit for the recovery of any debt, claim, or demand whatever, unless it shall have the license prescribed in section 68 of the law." Plaintiff, on the contrary, desires for the court to consider the particular point under discussion with reference to all the law, and thereafter to give the law a common sense interpretation. The object of the statute was to subject the foreign corporation doing business in the Philippines to the jurisdiction of its courts. The object of the statute was not to prevent the foreign corporation from performing single acts, but to prevent it from acquiring a domicile for the purpose of business without taking the steps necessary to render it amenable to suit in the local courts. The implication of the law is that it was never the purpose of the Legislature to exclude a foreign corporation which happens to obtain an isolated order for business from the Philippines, from securing redress in the Philippine courts, and thus, in effect, to permit persons to avoid their contracts made with such foreign corporations. The effect of the statute preventing foreign corporations from doing business and from bringing actions in the local courts, except on compliance with elaborate requirements, must not be unduly extended or improperly applied. It should not be construed to extend beyond the plain meaning of its terms, considered in connection with its object, and in connection with the spirit of the entire law. (State vs. American Book Co. [1904], 69 Kan, 1; American De Forest Wireless Telegraph Co. vs. Superior Court of City & Country of San Francisco and Hebbard [1908], 153 Cal., 533; 5 Thompson on Corporations, 2d ed., chap. 184.) Confronted with the option of giving to the Corporation Law a harsh interpretation, which would disastrously embarrass trade, or of giving to the law a reasonable interpretation, which would markedly help in the development of trade; confronted with the option of barring from the courts foreign litigants with good causes of action or of assuming jurisdiction of their cases; confronted with the option of construing the law to mean that any corporation in the United States, which might want to sell to a person in the Philippines must send some representative to the Islands before the sale, and go through the complicated formulae provided by the Corporation Law with regard to the obtaining of the license, before the sale was made, in order to avoid being swindled by Philippine citizens, or of construing the law to mean that no foreign corporation doing business in the Philippines can maintain any suit until it shall possess the necessary license;-confronted with these options, can anyone doubt what our decision will be? The law simply means that no foreign corporation shall be permitted "to transact business in the Philippine Islands," as this phrase is known in corporation law, unless it shall have the license required by law, and, until it complies with the law, shall not be permitted to maintain any suit in the local courts. A contrary holding would bring the law to the

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verge of unconstitutionality, a result which should be and can be easily avoided. (Sioux Remedy Co. vs. Cope and Cope, supra;Perkins, Philippine Business Law, p. 264.) To repeat, the objective of the law was to subject the foreign corporation to the jurisdiction of our courts. The Corporation Law must be given a reasonable, not an unduly harsh, interpretation which does not hamper the development of trade relations and which fosters friendly commercial intercourse among countries. The objectives enunciated in the 1924 decision are even more relevant today when we view commercial relations in terms of a world economy, when the tendency is to re-examine the political boundaries separating one nation from another insofar as they define business requirements or restrict marketing conditions. We distinguish between the denial of a right to take remedial action and the penal sanction for nonregistration. Insofar as transacting business without a license is concerned, Section 69 of the Corporation Law imposed a penal sanction-imprisonment for not less than six months nor more than two years or payment of a fine not less than P200.00 nor more than P1,000.00 or both in the discretion of the court. There is a penalty for transacting business without registration. And insofar as litigation is concerned, the foreign corporation or its assignee may not maintain any suit for the recovery of any debt, claim, or demand whatever. The Corporation Law is silent on whether or not the contract executed by a foreign corporation with no capacity to sue is null and void ab initio. We are not unaware of the conflicting schools of thought both here and abroad which are divided on whether such contracts are void or merely voidable. Professor Sulpicio Guevarra in his book Corporation Law (Philippine Jurisprudence Series, U.P. Law Center, pp. 233-234) cites an Illinois decision which holds the contracts void and a Michigan statute and decision declaring them merely voidable: xxx xxx xxx Where a contract which is entered into by a foreign corporation without complying with the local requirements of doing business is rendered void either by the express terms of a statute or by statutory construction, a subsequent compliance with the statute by the corporation will not enable it to maintain an action on the contract. (Perkins Mfg. Co. v. Clinton Const. Co., 295 P. 1 [1930]. See also Diamond Glue Co. v. U.S. Glue Co., supra see note 18.) But where the statute merely prohibits the maintenance of a suit on such contract (without expressly declaring the contract "void"), it was held that a failure to comply with the statute rendered the contract voidable and not void, and compliance at any time before suit was sufficient. (Perkins Mfg. Co. v. Clinton Const. Co., supra.) Notwithstanding the above decision, the Illinois statute provides, among other things that a foreign corporation that fails to comply with the conditions of doing business in that state cannot maintain a suit or action, etc. The court said: 'The contract upon which this suit was brought, having been entered into in this state when appellant was not permitted to transact business in this state, is in violation of the plain provisions of the statute, and is therefore null and void, and no action can be maintained thereon at any time, even if the corporation shall, at some time after the making of the contract, qualify itself to transact business in this state by a compliance with our laws in reference to foreign corporations that desire to engage in business here. (United Lead Co. v. J.M. Ready Elevator Mfg. Co., 222 Ill. 199, 73 N.N. 567 [1906].) A Michigan statute provides: "No foreign corporation subject to the provisions of this Act, shall maintain any action in this state upon any contract made by it in this state after the taking effect of this Act, until it shall have fully complied with the requirement of this Act, and procured a certificate to that effect from the Secretary of State," It was held that the above statute does not render contracts of a foreign corporation that

fails to comply with the statute void, but they may be enforced only after compliance therewith. (Hastings Industrial Co. v. Moral, 143 Mich. 679,107 N.E. 706 [1906]; Kuennan v. U.S. Fidelity & G. Co., Mich. 122; 123 N.W. 799 [1909]; Despres, Bridges & Noel v. Zierleyn, 163 Mich. 399, 128 N.W. 769 [1910]). It has also been held that where the law provided that a corporation which has not complied with the statutory requirements "shall not maintain an action until such compliance". "At the commencement of this action the plaintiff had not filed the certified copy with the country clerk of Madera County, but it did file with the officer several months before the defendant filed his amended answer, setting up this defense, as that at the time this defense was pleaded by the defendant the plaintiff had complied with the statute. The defense pleaded by the defendant was therefore unavailable to him to prevent the plaintiff from thereafter maintaining the action. Section 299 does not declare that the plaintiff shall not commence an action in any county unless it has filed a certified copy in the office of the county clerk, but merely declares that it shall not maintain an action until it has filled it. To maintain an action is not the same as to commence an action, but implies that the action has already been commenced." (See also Kendrick & Roberts Inc. v. Warren Bros. Co., 110 Md. 47, 72 A. 461 [1909]). In another case, the court said: "The very fact that the prohibition against maintaining an action in the courts of the state was inserted in the statute ought to be conclusive proof that the legislature did not intend or understand that contracts made without compliance with the law were void. The statute does not fix any time within which foreign corporations shall comply with the Act. If such contracts were void, no suits could be prosecuted on them in any court. ... The primary purpose of our statute is to compel a foreign corporation desiring to do business within the state to submit itself to the jurisdiction of the courts of this state. The statute was not intended to exclude foreign corporations from the state. It does not, in terms, render invalid contracts made in this state by noncomplying corporations. The better reason, the wiser and fairer policy, and the greater weight lie with those decisions which hold that where, as here, there is a prohibition with a penalty, with no express or implied declarations respecting the validity of enforceability of contracts made by qualified foreign corporations, the contracts ... are enforceable ... upon compliance with the law." (Peter & Burghard Stone Co. v. Carper, 172 N.E. 319 [1930].) Our jurisprudence leans towards the later view. Apart from the objectives earlier cited from Marshall Wells Co. v. Henry W. Elser & Co (supra), it has long been the rule that a foreign corporation actually doing business in the Philippines without license to do so may be sued in our courts. The defendant American corporation in General Corporation of the Philippines v. Union Insurance Society of Canton Ltd et al. (87 Phil. 313) entered into insurance contracts without the necessary license or authority. When summons was served on the agent, the defendant had not yet been registered and authorized to do business. The registration and authority came a little less than two months later. This Court ruled: Counsel for appellant contends that at the time of the service of summons, the appellant had not yet been authorized to do business. But, as already stated, section 14, Rule 7 of the Rules of Court makes no distinction as to corporations with or without authority to do business in the Philippines. The test is whether a foreign corporation was actually doing business here. Otherwise, a foreign corporation illegally doing business here because of its refusal or neglect to obtain the corresponding license and authority to do business may successfully though unfairly plead such neglect or illegal act so as to avoid service and thereby impugn the jurisdiction of the local courts. It would indeed be anomalous and quite prejudicial, even disastrous, to the citizens in this jurisdiction who in all good faith and in the regular course of business accept and pay for shipments of goods from America, relying for their protection on duly executed foreign marine insurance policies made payable in Manila and duly endorsed and delivered to them, that when they go to

37

court to enforce said policies, the insurer who all along has been engaging in this business of issuing similar marine policies, serenely pleads immunity to local jurisdiction because of its refusal or neglect to obtain the corresponding license to do business here thereby compelling the consignees or purchasers of the goods insured to go to America and sue in its courts for redress. There is no question that the contracts are enforceable. The requirement of registration affects only the remedy. Significantly, Batas Pambansa Blg. 68, the Corporation Code of the Philippines has corrected the ambiguity caused by the wording of Section 69 of the old Corporation Law. Section 133 of the present Corporation Code provides: SEC. 133. Doing business without a license.-No foreign corporation transacting business in the Philippines without a license, or its successors or assigns, shag be permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency in the Philippines; but such corporation may be sued or proceeded against before Philippine courts or administrative tribunals on any valid cause of action recognized under Philippine laws. The old Section 69 has been reworded in terms of nonaccess to courts and administrative agencies in order to maintain or intervene in any action or proceeding. The prohibition against doing business without first securing a license is now given penal sanction which is also applicable to other violations of the Corporation Code under the general provisions of Section 144 of the Code. It is, therefore, not necessary to declare the contract nun and void even as against the erring foreign corporation. The penal sanction for the violation and the denial of access to our courts and administrative bodies are sufficient from the viewpoint of legislative policy. Our ruling that the lack of capacity at the time of the execution of the contracts was cured by the subsequent registration is also strengthened by the procedural aspects of these cases. The petitioner averred in its complaints that it is a foreign insurance company, that it is authorized to do business in the Philippines, that its agent is Mr. Victor H. Bello, and that its office address is the Oledan Building at Ayala Avenue, Makati. These are all the averments required by Section 4, Rule 8 of the Rules of Court. The petitioner sufficiently alleged its capacity to sue. The private respondents countered either with an admission of the plaintiff's jurisdictional averments or with a general denial based on lack of knowledge or information sufficient to form a belief as to the truth of the averments. We find the general denials inadequate to attack the foreign corporations lack of capacity to sue in the light of its positive averment that it is authorized to do so. Section 4, Rule 8 requires that "a party desiring to raise an issue as to the legal existence of any party or the capacity of any party to sue or be sued in a representative capacity shall do so by specific denial, which shag include such supporting particulars as are particularly within the pleader's knowledge. At the very least, the private respondents should have stated particulars in their answers upon which a specific denial of the petitioner's capacity to sue could have been based or which could have supported its denial for lack of knowledge. And yet, even if the plaintiff's lack of capacity to sue was not properly raised as an issue by the answers, the petitioner introduced documentary evidence that it had the authority to engage in the insurance business at the time it filed the complaints. WHEREFORE, the petitions are hereby granted. The decisions of the respondent court are reversed and set aside. In L-34382, respondent Eastern Shipping Lines is ordered to pay the petitioner the sum of P1,630.22 with interest at the legal rate from January 5, 1968 until fully paid and respondent Angel Jose

Transportation Inc. is ordered to pay the petitioner the sum of P1,630.22 also with interest at the legal rate from January 5, 1968 until fully paid. Each respondent shall pay one-half of the costs. The counterclaim of Angel Jose Transportation Inc. is dismissed. In L-34383, respondent N. V. Nedlloyd Lijnen, or its agent Columbian Phil. Inc. is ordered to pay the petitioner the sum of P2,426.98 with interest at the legal rate from February 1, 1968 until fully paid, the sum of P500.00 attorney's fees, and costs, The complaint against Guacods, Inc. is dismissed. SO ORDERED. G.R. No. L-16215 June 29, 1963 SIMEON DEL ROSARIO, plaintiff-appellee, vs. THE EQUITABLE INSURANCE AND CASUALTY CO., INC., defendant-appellant. Vicente J. Francisco and Jose R. Francisco for plaintiffappellee. K. V. Faylona for defendant-appellant. PAREDES, J.: On February 7, 1957, the defendant Equitable Insurance and Casualty Co., Inc., issued Personal Accident Policy No. 7136 on the life of Francisco del Rosario, alias Paquito Bolero, son of herein plaintiff-appellee, binding itself to pay the sum of P1,000.00 to P3,000.00, as indemnity for the death of the insured. The pertinent provisions of the Policy, recite: Part I. Indemnity For Death If the insured sustains any bodily injury which is effected solely through violent, external, visible and accidental means, and which shall result, independently of all other causes and within sixty (60) days from the occurrence thereof, in the Death of the Insured, the Company shall pay the amount set opposite such injury: Section 1. Injury sustained other than those specified below unless excepted hereinafter. . . . . . . .

P1,000 00

Section 2. Injury sustained by the wrecking or disablement of a railroad passenger car or street railway car in or on which the P1,500 Insured is travelling as a farepaying passenger. . . . . . . . 00 Section 3. Injury sustained by the burning of a church, theatre, public library or municipal administration building while the Insured is therein at the commencement of the fire. . . . . . . . Section 4. Injury sustained by the wrecking or disablement of a regular passenger elevator car in which the Insured is being conveyed as a passenger (Elevator in mines excluded) P2,500.00 Section 5. Injury sustained by a stroke of lightning or by a cyclone. . . . . . . .

P2,000 00

P3,000 00

xxx xxx xxx Part VI. Exceptions This policy shall not cover disappearance of the Insured nor shall it cover Death, Disability, Hospital fees, or Loss of Time, caused to the insured: . . . (h) By drowning except as a consequence of the wrecking or disablement in the Philippine waters of a passenger steam or motor vessel in which the Insured is travelling as a farepaying passenger; . . . . A rider to the Policy contained the following: IV. DROWNING It is hereby declared and agreed that exemption clause Letter (h) embodied in PART VI of the policy is hereby waived by the company, and to form a part of the provision covered by the policy. On February 24, 1957, the insured Francisco del Rosario, alias Paquito Bolero, while on board the motor launch "ISLAMA" together with 33 others, including his beneficiary in the Policy, Remedios Jayme, were forced to jump off said launch on account of fire which broke out on said vessel, resulting in the death of drowning, of the insured and beneficiary in the waters of Jolo. 1wph1.t On April 13, 1957, Simeon del Rosario, father of the insured, and as the sole heir, filed a claim for payment with defendant company, and on September 13, 1957, defendant company paid to him (plaintiff) the sum of P1,000.00, pursuant to Section 1 of Part I of the policy. The receipt signed by plaintiff reads

38

RECEIVED of the EQUITABLE INSURANCE & CASUALTY CO., INC., the sum of PESOS ONE THOUSAND (P1,000.00) Philippine Currency, being settlement in full for all claims and demands against said Company as a result of an accident which occurred on February 26, 1957, insured under out ACCIDENT Policy No. 7136, causing the death of the Assured. In view of the foregoing, this policy is hereby surrendered and CANCELLED. LOSS COMPUTATION Amount of Insurance P1,000.00 __________ vvvvv On the same date (September 13, 1957), Atty. Vicente J. Francisco, wrote defendant company acknowledging receipt by his client (plaintiff herein), of the P1,000.00, but informing said company that said amount was not the correct one. Atty. Francisco claimed The amount payable under the policy, I believe should be P1,500.00 under the provision of Section 2, part 1 of the policy, based on the rule of pari materia as the death of the insured occurred under the circumstances similar to that provided under the aforecited section. Defendant company, upon receipt of the letter, referred the matter to the Insurance Commissioner, who rendered an opinion that the liability of the company was only P1,000.00, pursuant to Section 1, Part I of the Provisions of the policy (Exh. F, or 3). Because of the above opinion, defendant insurance company refused to pay more than P1,000.00. In the meantime, Atty. Vicente Francisco, in a subsequent letter to the insurance company, asked for P3,000.00 which the Company refused, to pay. Hence, a complaint for the recovery of the balance of P2,000.00 more was instituted with the Court of First Instance of Rizal (Pasay City, Branch VII), praying for it further sum of P10,000.00 as attorney's fees, expenses of litigation and costs. Defendant Insurance Company presented a Motion to Dismiss, alleging that the demand or claim is set forth in the complaint had already been released, plaintiff having received the full amount due as appearing in policy and as per opinion of the Insurance Commissioner. An opposition to the motion to dismiss, was presented by plaintiff, and other pleadings were subsequently file by the parties. On December 28, 1957, the trial court deferred action on the motion to dismiss until termination of the trial of the case, it appearing that the ground thereof was not indubitable. In the Answer to the complaint, defendant company practically admitted all the allegations therein, denying only those which stated that under the policy its liability was P3,000.00. On September 1, 1958, the trial court promulgated an Amended Decision, the pertinent portions of which read xxx xxx xxx Since the contemporaneous and subsequent acts of the parties show that it was not their intention that the payment of P1,000.00 to the plaintiff and the signing of the loss receipt exhibit "1" would be considered as releasing the defendant completely from its liability on the policy in question, said intention of the parties should prevail over the contents of the loss receipt "1" (Articles 1370 and 1371, New Civil Code). ". . . . Under the terms of this policy, defendant company agreed to pay P1,000.00 to P3,000.00 as indemnity for the death of the insured. The insured died of drowning. Death by drowning is covered by the policy the pertinent provisions of which reads as follows: xxx xxx xxx "Part I of the policy fixes specific amounts as indemnities in case of death resulting from "bodily injury which is effected solely thru violence, external, visible and accidental means" but, Part I of the Policy is not applicable in case of death by drowning because death by drowning is not one resulting from "bodily injury which is affected solely thru violent, external, visible and accidental means" as "Bodily Injury" means

a cut, a bruise, or a wound and drowning is death due to suffocation and not to any cut, bruise or wound." xxx xxx xxx Besides, on the face of the policy Exhibit "A" itself, death by drowning is a ground for recovery apart from the bodily injury because death by bodily injury is covered by Part I of the policy while death by drowning is covered by Part VI thereof. But while the policy mentions specific amounts that may be recovered for death for bodily injury, yet, there is not specific amount mentioned in the policy for death thru drowning although the latter is, under Part VI of the policy, a ground for recovery thereunder. Since the defendant has bound itself to pay P1000.00 to P3,000.00 as indemnity for the death of the insured but the policy does not positively state any definite amount that may be recovered in case of death by drowning, there is an ambiguity in this respect in the policy, which ambiguity must be interpreted in favor of the insured and strictly against the insurer so as to allow greater indemnity. xxx xxx xxx . . . plaintiff is therefore entitled to recover P3,000.00. The defendant had already paid the amount of P1,000.00 to the plaintiff so that there still remains a balance of P2,000.00 of the amount to which plaintiff is entitled to recover under the policy Exhibit "A". The plaintiff asks for an award of P10,000.00 as attorney's fees and expenses of litigation. However, since it is evident that the defendant had not acted in bad faith in refusing to pay plaintiff's claim, the Court cannot award plaintiff's claim for attorney's fees and expenses of litigation. IN VIEW OF THE FOREGOING, the Court hereby reconsiders and sets aside its decision dated July 21, 1958 and hereby renders judgment, ordering the defendant to pay plaintiff the sum of Two Thousand (P2,000.00) Pesos and to pay the costs. The above judgment was appealed to the Court of Appeals on three (3) counts. Said Court, in a Resolution dated September 29, 1959, elevated the case to this Court, stating that the genuine issue is purely legal in nature. All the parties agree that indemnity has to be paid. The conflict centers on how much should the indemnity be. We believe that under the proven facts and circumstances, the findings and conclusions of the trial court, are well taken, for they are supported by the generally accepted principles or rulings on insurance, which enunciate that where there is an ambiguity with respect to the terms and conditions of the policy, the same will be resolved against the one responsible thereof. It should be recalled in this connection, that generally, the insured, has little, if any, participation in the preparation of the policy, together with the drafting of its terms and Conditions. The interpretation of obscure stipulations in a contract should not favor the party who cause the obscurity (Art. 1377, N.C.C.), which, in the case at bar, is the insurance company. . . . . And so it has been generally held that the "terms in an insurance policy, which are ambiguous, equivocal or uncertain . . . are to be construed strictly against, the insurer, and liberally in favor of the insured so as to effect the dominant purpose of indemnity or payment to the insured, especially where a forfeiture is involved," (29 Am. Jur. 181) and the reason for this rule is that the "insured usually has no voice in the selection or arrangement of the words employed and that the language of the contract is selected with great care and deliberation by expert and legal advisers employed by, and acting exclusively in the interest of, the insurance company" (44 C.J.S. 1174). Calanoc v. Court of Appeals, et al., G.R. No. L-8151, Dec. 16, 1955. . . . . Where two interpretations, equally fair, of languages used in an insurance policy may be made, that which allows the greater indemnity will prevail. (L'Engel v. Scotish Union & Nat. F. Ins. Co., 48 Fla. 82, 37 So. 462, 67 LRA 581 111 Am. St. Rep. 70, 5 Ann. Cas. 749). At any event, the policy under consideration, covers death or disability by accidental means, and the appellant insurance company agreed to pay P1,000.00 to P3,000.00. is indemnity for death of the insured. In view of the conclusions reached, it would seem unnecessary to discuss the other issues raised in the appeal.

39

The judgment appealed from is hereby affirmed. Without costs. G.R. No. L-24833 September 23, 1968 FIELDMEN'S INSURANCE CO., INC., petitioner, vs. MERCEDES VARGAS VDA. DE SONGCO, ET AL. and COURT OF APPEALS, respondents. Jose S. Suarez for petitioner. Eligio G. Lagman for respondents. FERNANDO, J.: An insurance firm, petitioner Fieldmen's Insurance Co., Inc., was not allowed to escape liability under a common carrier insurance policy on the pretext that what was insured, not once but twice, was a private vehicle and not a common carrier, the policy being issued upon the insistence of its agent who discounted fears of the insured that his privately owned vehicle might not fall within its terms, the insured moreover being "a man of scant education," finishing only the first grade. So it was held in a decision of the lower court thereafter affirmed by respondent Court of Appeals. Petitioner in seeking the review of the above decision of respondent Court of Appeals cannot be so sanguine as to entertain the belief that a different outcome could be expected. To be more explicit, we sustain the Court of Appeals. The facts as found by respondent Court of Appeals, binding upon us, follow: "This is a peculiar case. Federico Songco of Floridablanca, Pampanga, a man of scant education being only a first grader ..., owned a private jeepney with Plate No. 41-289 for the year 1960. On September 15, 1960, as such private vehicle owner, he was induced by Fieldmen's Insurance Company Pampanga agent Benjamin Sambat to apply for a Common Carrier's Liability Insurance Policy covering his motor vehicle ... Upon paying an annual premium of P16.50, defendant Fieldmen's Insurance Company, Inc. issued on September 19, 1960, Common Carriers Accident Insurance Policy No. 45-HO4254 ... the duration of which will be for one (1) year, effective September 15, 1960 to September 15, 1961. On September 22, 1961, the defendant company, upon payment of the corresponding premium, renewed the policy by extending the coverage from October 15, 1961 to October 15, 1962. This time Federico Songco's private jeepney carried Plate No. J-68136-Pampanga1961. ... On October 29, 1961, during the effectivity of the renewed policy, the insured vehicle while being driven by Rodolfo Songco, a duly licensed driver and son of Federico (the vehicle owner) collided with a car in the municipality of Calumpit, province of Bulacan, as a result of which mishap Federico Songco (father) and Rodolfo Songco (son) died, Carlos Songco (another son), the latter's wife, Angelita Songco, and a family friend by the name of Jose Manuel sustained physical injuries of varying degree." 1 It was further shown according to the decision of respondent Court of Appeals: "Amor Songco, 42-yearold son of deceased Federico Songco, testifying as witness, declared that when insurance agent Benjamin Sambat was inducing his father to insure his vehicle, he butted in saying: 'That cannot be, Mr. Sambat, because our vehicle is an "owner" private vehicle and not for passengers,' to which agent Sambat replied: 'whether our vehicle was an "owner" type or for passengers it could be insured because their company is not owned by the Government and the Government has nothing to do with their company. So they could do what they please whenever they believe a vehicle is insurable' ... In spite of the fact that the present case was filed and tried in the CFI of Pampanga, the defendant company did not even care to rebut Amor Songco's testimony by calling on the witness-stand agent Benjamin Sambat, its Pampanga Field Representative." 2 The plaintiffs in the lower court, likewise respondents here, were the surviving widow and children of the deceased Federico Songco as well as the injured passenger Jose Manuel. On the above facts

they prevailed, as had been mentioned, in the lower court and in the respondent Court of Appeals.1awphl.nt The basis for the favorable judgment is the doctrine announced in Qua Chee Gan v. Law Union and Rock Insurance Co., Ltd., 3 with Justice J. B. L. Reyes speaking for the Court. It is now beyond question that where inequitable conduct is shown by an insurance firm, it is "estopped from enforcing forfeitures in its favor, in order to forestall fraud or imposition on the insured." 4 As much, if not much more so than the Qua Chee Gan decision, this is a case where the doctrine of estoppel undeniably calls for application. After petitioner Fieldmen's Insurance Co., Inc. had led the insured Federico Songco to believe that he could qualify under the common carrier liability insurance policy, and to enter into contract of insurance paying the premiums due, it could not, thereafter, in any litigation arising out of such representation, be permitted to change its stand to the detriment of the heirs of the insured. As estoppel is primarily based on the doctrine of good faith and the avoidance of harm that will befall the innocent party due to its injurious reliance, the failure to apply it in this case would result in a gross travesty of justice. That is all that needs be said insofar as the first alleged error of respondent Court of Appeals is concerned, petitioner being adamant in its far-from-reasonable plea that estoppel could not be invoked by the heirs of the insured as a bar to the alleged breach of warranty and condition in the policy. lt would now rely on the fact that the insured owned a private vehicle, not a common carrier, something which it knew all along when not once but twice its agent, no doubt without any objection in its part, exerted the utmost pressure on the insured, a man of scant education, to enter into such a contract. Nor is there any merit to the second alleged error of respondent Court that no legal liability was incurred under the policy by petitioner. Why liability under the terms of the policy 5 was inescapable was set forth in the decision of respondent Court of Appeals. Thus: "Since some of the conditions contained in the policy issued by the defendant-appellant were impossible to comply with under the existing conditions at the time and 'inconsistent with the known facts,' the insurer 'is estopped from asserting breach of such conditions.' From this jurisprudence, we find no valid reason to deviate and consequently hold that the decision appealed from should be affirmed. The injured parties, to wit, Carlos Songco, Angelito Songco and Jose Manuel, for whose hospital and medical expenses the defendant company was being made liable, were passengers of the jeepney at the time of the occurrence, and Rodolfo Songco, for whose burial expenses the defendant company was also being made liable was the driver of the vehicle in question. Except for the fact, that they were not fare paying passengers, their status as beneficiaries under the policy is recognized therein." 6 Even if it be assumed that there was an ambiguity, an excerpt from the Qua Chee Gan decision would reveal anew the weakness of petitioner's contention. Thus: "Moreover, taking into account the well known rule that ambiguities or obscurities must be strictly interpreted against the party that caused them, the 'memo of warranty' invoked by appellant bars the latter from questioning the existence of the appliances called for in the insured premises, since its initial expression, 'the undernoted appliances for the extinction of fire being kept on the premises insured hereby, ... it is hereby warranted ...,' admits of interpretation as an admission of the existence of such appliances which appellant cannot now contradict, should the parol evidence rule apply." 7 To the same effect is the following citation from the same leading case: "This rigid application of the rule on ambiguities has become necessary in view of current business practices. The courts cannot ignore that nowadays monopolies, cartels and concentration of capital, endowed with overwhelming economic power, manage to impose upon parties dealing with them cunningly prepared 'agreements' that the weaker party may not change one whit, his participation in the 'agreement' being reduced to the alternative to 'take it or leave it' labelled since Raymond Saleilles 'contracts by adherence' (contrats d'adhesion), in contrast to those

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entered into by parties bargaining on an equal footing, such contracts (of which policies of insurance and international bills of lading are prime examples) obviously call for greater strictness and vigilance on the part of courts of justice with a view to protecting the weaker party from abuses and imposition, and prevent their becoming traps for the unwary (New Civil Code. Article 24; Sent. of Supreme Court of Spain, 13 Dec. 1934, 27 February 1942)." 8 The last error assigned which would find fault with the decision of respondent Court of Appeals insofar as it affirmed the lower court award for exemplary damages as well as attorney's fees is, on its face, of no persuasive force at all. The conclusion that inescapably emerges from the above is the correctness of the decision of respondent Court of Appeals sought to be reviewed. For, to borrow once again from the language of the Qua Chee Gan opinion: "The contract of insurance is one of perfect good faith (uberima fides) not for the insured alone,but equally so for the insurer; in fact, it is more so for the latter, since its dominant bargaining position carries with it stricter responsibility." 9 This is merely to stress that while the morality of the business world is not the morality of institutions of rectitude like the pulpit and the academe, it cannot descend so low as to be another name for guile or deception. Moreover, should it happen thus, no court of justice should allow itself to lend its approval and support.1awphl.nt We have no choice but to recognize the monetary responsibility of petitioner Fieldmen's Insurance Co., Inc. It did not succeed in its persistent effort to avoid complying with its obligation in the lower court and the Court of Appeals. Much less should it find any receptivity from us for its unwarranted and unjustified plea to escape from its liability. WHEREFORE, the decision of respondent Court of Appeals of July 20, 1965, is affirmed in its entirety. Costs against petitioner Fieldmen's Insurance Co., Inc. G.R. No. 96422 February 28, 1994 FRANCISCO S. TANTUICO, JR., petitioner, vs. HON. EUFEMIO DOMINGO, in his capacity as Chairman of the Commission on Audit, ESTELITO SALVADOR, MARGARITO SILOT, VALENTINA EUSTAQUIO, ANICIA CHICO and GERMINIA PASCO,respondents. Kenny H. Tantuico for petitioner. The Solicitor General for respondents. QUIASON, J.: This is a petition for certiorari, prohibition and mandamus, with prayer for temporary restraining order or preliminary injunction, under Rule 65 of the Revised Rules of Court. The petition mainly questions the withholding of onehalf of petitioner's retirement benefits. I On January 26, 1980, petitioner was appointed Chairman of the Commission on Audit (COA) to serve a term of seven years expiring on January 26, 1987. Petitioner had discharged the functions of Chairman of the COA in an acting capacity since 1975. On December 31, 1985, petitioner applied for clearance from all money, property and other accountabilities in preparation for his retirement. He obtained the clearance applied for, which covered the period from 1976 to December 31, 1985. The clearance had all the required signatures and bore a certification that petitioner was "cleared from money, property and/or other accountabilities by this Commission" (Rollo, p. 44). After the EDSA Revolution, petitioner submitted his courtesy resignation to President Corazon C. Aquino. He relinquished his office to the newly appointed Chairman, now Executive Secretary Teofisto Guingona, Jr. on March 10, 1986. That same day, he applied for retirement effective immediately.

Petitioner sought a second clearance to cover the period from January 1, 1986 to March 9, 1986. All the signatures necessary to complete the second clearance, except that of Chairman Guingona, were obtained. The second clearance embodies a certificate that petitioner was "cleared from money, property and/or accountability by this Commission" (Rollo, p. 49). Chairman Guingona, however, failed to take any action thereon. Chairman Guingona was replaced by respondent Chairman. A year later, respondent Chairman issued COA Office Order No. 87-10182 (Rollo, p. 50), which created a committee to inventory all equipment acquired during the tenure of his two predecessors. On May 7, 1987, respondent Chairman indorsed petitioner's retirement application to the Government Service Insurance System (GSIS), certifying, among other matters, that petitioner was cleared of money and property accountability (Rollo, p. 52). The application was returned to the COA pursuant to R.A. No. 1568, which vests in the COA the final approval thereof. On September 25, 1987, the inventory committee finally submitted its report, recommending petitioner's clearance from property accountability inasmuch as there was no showing that he personally gained from the missing property or was primarily liable for the loss thereof (Rollo, pp. 53-58). Not satisfied with the report, respondent Chairman issued a Memorandum directing the inventory committee to explain why no action should be filed against its members for failure to complete a physical inventory and verification of all equipment; for exceeding their authority in recommending clearances for petitioner and Chairman Guingona; and for recommending petitioner's clearance in total disregard of Section 102 of P.D. No. 1445 (Government Auditing Code of the Philippines). The members of the committee were subsequently administratively charged. On January 2, 1988, respondent Chairman created a special audit team for the purpose of conducting a financial and compliance audit of the COA transactions and accounts during the tenure of petitioner from 1976 to 1984 (COA Office Order 88-10677; Rollo, pp. 66-67). On February 28, 1989, the special audit team submitted its report stating: (i) that the audit consisted of selective review of post-audit transactions in the head offices and the State Accounting and Auditing Center; (ii) that the audit disclosed a number of deficiencies which adversely affected the financial condition and operation of the COA, such as violations of executive orders, presidential decrees and related rules and regulations; and (iii) that there were some constraints in the audit, such as the unavailability of records and documents, and personnel movements and turnover. While the report did not make any recommendation, it instead mentioned several officials and employees, including petitioner, who may be responsible or accountable for the questioned transactions (Rollo, pp. 73, 147-151). Respondent Chairman rendered a Decision dated November 20, 1989, in the administrative case filed against the principal members of the first inventory committee. He found them guilty as charged and issued them a reprimand. The other members were meted a stern warning, except for one who was exonerated for not taking part in the preparation of the inventory report. In a letter dated December 21, 1989, a copy of which was received by petitioner on December 27, 1989, respondent Chairman informed petitioner of the approval of his application for retirement under R.A. No. 1568, effective as of March 9, 1986 (Rollo, pp. 68-69). However, respondent Chairman added: . . . In view, however, of the audit findings and inventory report adverted to above, payment of only one-half () of the money value of the benefits due you by reason of such retirement will be allowed, subject to the availability of funds and the usual accounting and auditing rules. Payment of the balance of said retirement benefits shall be subject to the final results of the audit concerning your fiscal responsibility and/or accountability as former Chairman of this Commission. In a letter dated January 22, 1990, petitioner requested full payment of his retirement benefits.

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Petitioner was furnished a copy of the report of the special audit team in the letter dated December 21, 1989 of respondent Chairman on January 29, 1990, nearly a year after its completion. Attached to a copy of the report was a letter dated November 14, 1989 from respondent Chairman, who required petitioner to submit his comment within 30 days (Rollo, p. 153). Petitioner submitted a letter-complaint, wherein he cited certain defects in the manner the audit was conducted. He further claimed that the re-audit was not authorized by law since it covered closed and settled accounts. Upon petitioner's request, he was furnished a set of documents which he needed to prepare his comment. He was likewise given another 30-days to submit it. A series of correspondence between petitioner and respondent Chairman ensued. On September 10, 1990, petitioner requested a copy of the working papers on which the audit report was based. This was denied by respondent Chairman, who claimed that under the State Audit Manual, access to the working paper was restricted. Petitioner's reconsideration was likewise denied and he was given a non-extendible period of five days to submit his comment. Instead of submitting his comment, petitioner sought several clarifications and specification, and requested for 90 days within which to submit his comment, considering that the report covered a ten-year period of post-audited transactions. Ignoring petitioner's request, respondent Chairman demanded an accounting of funds and a turn over of the assets of the Fiscal Administration Foundation, Inc. within 30 days. II Petitioner then filed the instant petition. As prayed for by petitioner, this Court issued a temporary restraining order on January 17, 1991. Petitioner argues that notwithstanding the two clearances previously issued, and respondent Chairman's certification that petitioner had been cleared of money and property accountability, respondent Chairman still refuses to release the remaining half of his retirement benefits a purely ministerial act. Petitioner was already issued an initial clearance during his tenure, effective December 31, 1985 (Rollo, p. 44). All the required signatures were present "is cleared from money, property and/or accountabilities by this commission" with the following notation: No property accountability under the Chairman's name as the person. Final clearance as COA Chairman subject to the completion of ongoing reconciliation of Accounting & P(roperty) records and to complete turnover of COA property assigned to him as agency head. xxx xxx xxx The responsibility of the Chairman for the disbursement and collection accounts of this Commission for CYs Sept. '75 to Aug. '85, were completely post-audited, however as of Dec. 31, 1985, the suspensions and disallowances in the amounts of P36,196,962.11 and P28,762.36 respectively are still in the process of settlement (Rollo, pp. 44-45). Petitioner also applied for a second clearance to cover the period from January 1 to March 9, 1986, which application had been signed by all the officials, except the Chairman (Rollo, p. 49). Whatever infirmities or limitations existed in said clearances were cured after respondent Chairman favorably indorsed petitioner's application for retirement to the Government Service Insurance System and recommended its approval to take effect on March 10, 1986. In said endorsement, respondent Chairman made it clear that there were no pending administrative and criminal cases against petitioner (Rollo, p. 52). Regardless of petitioner's monetary liability to the government that may be discovered from the audit concerning his fiscal responsibility as former COA Chairman, respondent Chairman cannot withhold the benefits due petitioner under the retirement laws.

In Romana Cruz v. Hon. Francisco Tantuico, 166 SCRA 670 (1988), the National Treasurer withheld the retirement benefits of an employee because of his finding that she negligently allowed the anomalous encashment of falsified treasury warrants. In said case, where petitioner herein was one of the respondents, we found that the employee had been cleared by the National Treasurer from all money and property responsibility, and held that the retirement pay accruing to a public officer may not be withheld and applied to his indebtedness to the government. In Tantuico, we cited Justice Laurel's essay on the rationale for the benign ruling in favor of the retired employees, thus: . . . Pension in this case is a bounty flowing from the graciousness of the Government intended to reward past services and, at the same time, to provide the pensioner with the means with which to support himself and his family. Unless otherwise clearly provided, the pension should inure wholly to the benefit of the pensioner. It is true that the withholding and application of the amount involved was had under Section 624 of the Administrative Code and not by any judicial process, but if the gratuity could not be attached or levied upon execution in view of the prohibition of Section 3 of Act No. 4051, the appropriation thereof by administrative action, if allowed, would lead to the same prohibited result and enable the respondent to do indirectly what they can not do directly under Section 3 of the Act No. 4051. Act No. 4051 is a later statute having been approved on February 21, 1933, whereas the Administrative Code of 1917 which embodies Section 624 relied upon by the respondents was approved on March 10 of that year. Considering Section 3 of Act No. 4051 as an exception to the general authority granted in Section 624 of the Administrative Code, antagonism between the two provisions is avoided (Hunt v. Hernandez, 64 Phil. 753 [1937]). Under Section 4 of R.A. No. 1568 (An Act to Provide Life Pension to the Auditor General and the Chairman or Any Member of the Commission of Elections), the benefits granted by said law to the Auditor General and the Chairman and Members of the Commission on Elections shall not be subject to garnishment, levy or execution. Likewise, under Section 33 of P.D. No. 1146, as amended (The Revised Government Service Insurance Act of 1977), the benefits granted thereunder "shall not be subject, among others, to attachment, garnishment, levy or other processes." Well-settled is the rule that retirement laws are liberally interpreted in favor of the retiree because the intention is to provide for the retiree's sustenance and comfort, when he is no longer capable of earning his livelihood (Profeta vs. Drilon, 216 SCRA 777 [1992]). Petitioner also wants us to enjoin the re-audit of his fiscal responsibility or accountability, invoking the following grounds: 1. The re-audit involved settled and closed accounts which under Section 52 of the Audit Code can no longer be reopened and reviewed; 2. The re-audit was initiated by respondent Chairman alone, and not by the Commission as a collegial body; 3. The report of the special audit team that recommended the re-audit is faulty as the team members themselves admitted several constraints in conducting the re-audit, e.g. unavailability of the documents, frequent turn-over and movement of personnel, etc.; 4. The re-audit covered transactions done even after petitioner's retirement; 5. He was not given prior notice of the re-audit; 6. He was not given access to the working papers; and 7. Respondents were barred by res judicata from proceeding with the re-audit (Rollo, pp. 19-40). The petition must fail insofar as it seeks to abort the completion of the re-audit. While at the beginning petitioner raised objections to the manner the audit was conducted and the authority of respondents to re-open the same, he subsequently cooperated with the examination of his accounts and transactions as a COA official. With respect to the legal objections raised by petitioner to the partial findings of the respondents with respect to his

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accountability, such findings are still tentative. As petitioner has requested, he is entitled to a reasonable time within which to submit his comment thereon. But in order to prepare his comment, petitioner should be given access to the working papers used by the special audit team. The audit report covered a period of ten years (1976-1985) and involved numerous transactions. It would be unfair to expect petitioner to comment on the COA's findings of the report without giving him a chance to verify how those findings were arrived at. It has been seven years since petitioner's retirement. Since then he was only paid half of his retirement benefits, with the other half being withheld despite the issuance of two clearances and the approval of his retirement application. As of the filing of this petition on December 21, 1990, no criminal or administrative charge had been filed against petitioner in connection with his position as former Acting Chairman and Chairman of the COA. WHEREFORE, the petition is GRANTED insofar as it seeks to compel respondent Chairman of the COA to pay petitioner's retirement benefits in full and his monthly pensions beginning in March 1991. The petition is DENIED insofar as it seeks to nullify COA Office Order No. 88-10677 and the audit report dated February 28, 1989 but petitioner should be given full access to the working papers to enable him to prepare his comment to any adverse findings in said report. The temporary restraining order is LIFTED. SO ORDERED. G.R. No. L-14214 May 25, 1960 RICHARD VELASCO, petitioner-appellant, vs. REPUBLIC OF THE PHILIPPINES, oppositor-appellee. Salonga, Ordoez, Gonzales and Associates for appellant. First Assistant Solicitor General Guillermo E. Torres and Solicitor Eriberto D. Ignacio for appellee. BAUTISTA ANGELO, J.: This is a petition for naturalization filed before the Court of First Instance of Manila which, after trial, was denied for failure of petitioner to meet the requirements of the law. Petitioner has appealed. Petitioner was born in the Philippines on May 12, 1932 of spouses Peter Velasco and Miguela Tiu who became naturalized citizens in 1956. He alleges that since his birth in Manila on May 12, 1932 he continuously resided in the Philippines, particularly at 1441 Magdalena St., Manila; that he finished his elementary education at the Francisco Balagtas Elementary School, and his high school at the Arellano University; that he pursued his collegiate studies at the University of the East where he graduated in dentistry in 1954; that he is a citizen of the Republic of China in Formosa; that he has not followed the citizenship of his father when the latter became naturalized as he was then already 23 years old; that he is single, although he is engaged to be married to a Filipino girl by the name of Noemi Eugenio; that he is at present employed at the Wilson Drug Store since February, 1957 with a monthly salary of P150.00; that previously he worked as a salesman of his father with a salary of P2,400.00 per annum, even if his father was only an agent of Elizalde and Co.; that he knows how to speak and write English and Tagalog; he is a Catholic by faith; and he has never been convicted of any crime involving moral turpitude; that he does not believe in polygamy or in anarchy or the use of violence for the predominance of men's ideas; that he does not own any real property although he allegedly has cash savings amounting to P3,500.00 at the Republic Savings Bank, P1,000.00 worth of shares of stocks of the Far Eastern University, P2,000.00 shares of stock of the Marinduque Iron Mines, and P1,000.00 in cash; that he is not suffering from any contagious disease; that he has mingled socially with the Filipinos; that he has shown a desire to embrace the customs and traditions of the Filipinos; and that he desires to become a Filipino citizen

because he considered the Philippines as his country and the Filipinos as his countrymen. His qualifications as to moral character were attested by Santiago Mariano, a sergeant of the Manila Police Department, and Mrs. Paz J. Eugenio, a housekeeper, who admitted that she is the prospective mother-in-law of petitioner. The trial court found that there are three names mentioned in the petition and in the documentary evidence submitted in support thereof, namely, Richard Velasco, Richard C. Velasco, and Richard Chua Velasco, and that while petitioner states in his petition that his full name is Richard Velasco, the signature thereon is Richard C. Velasco. Again, the court found that the joint affidavit of said witnesses states that the affiants personally know and are acquainted with Richard Velasco while the documentary evidence shows that his name is Richard Chua Velasco. On the other hand, petitioner testified that he has no alias nor other names and has always been knows as Richard Velasco. No evidence was submitted to prove that they are one and the same person. The trial court likewise found that Mrs. Paz J. Eugenio, a character witness, is the prospective mother-in-law of petitioner, and such as her testimony is biased. It also found that she and her companion witness Santiago Mariano were also the character witnesses of brother of petitioner in his petition for naturalization, a circumstance which in its opinion indicates that petitioner has a limited circle of Filipino friends. The court finally found that the present income of petitioner is only P150.00 a month which, considering the present high cost of living and the low purchasing power of our peso, is neither lucrative now substantial to meet the requirement of the law. Because of the above facts and circumstances, the trial court declared petitioner not qualified to become a Filipino citizen. We agree to the foregoing finding. Indeed, it appears from the evidence that petitioner was employed at the Wilson Drug Store only on February, 1957 with a salary of P150.00 a month, or barely a month before he filed the instant petition, and that said store is partly owned by his mother who has one-fifth capital investment therein. This leads one to believe that petitioner's employment, even if true, is but a convenient arrangement planned out by him and his family in order to show a token compliance with the requirement of the law that to become a Filipino citizen one must a lucrative income or occupation. Considering that "naturalization laws should be rigidly enforced and strictly construed in favor of the government and against the applicant" (Co Quing y Reyes vs. Republic, 104 Phil., 889), we are constrained to hold that the trial court did not err in denying the petition for naturalization. Wherefore, the decision appealed from is affirmed, with costs against appellant. G.R. No. L-21905 March 31, 1966 EUFRONIO J. LLANTO, petitioner-appellant, vs. MOHAMAD ALI DIMAPORO, Provincial Governor of Lanao del Norte; PROVINCIAL BOARD OF LANAO DEL NORTE; VALERIO V. ROVIRA, Vice-Governor; BIENVENIDO L. PADILLA, Member; FELIXBERTO ABELLANOSA, Member; PROVINCE OF LANAO DEL NORTE; PROVINCIAL AUDITOR OF LANAO DEL NORTE; PROVINCIAL TREASURER OF LANAO DEL NORTE, and PROVINCIAL ASSESSOR OF LANAO DEL NORTE, respondents-appellees. Virgilio Llanto for petitioner-appellant. Moises F. Dalisay for respondents-appellees. SANCHEZ, J.: Resolution No. 7, Series of 1960, adopted by the Provincial Board of Lanao del Norte on January 6, 1960, reverted the 1960-1961 salary appropriation for the position of Assistant Provincial Assessor to the general fund. In effect, that position then held by petitioner was abolished. Appeals to the Commissioner of Civil Service, the Secretary of Finance, the Secretary of Justice, the Auditor General and the President of the Philippines were of no avail. Petitioner came to court on mandamus. He sought, (a) the annulment of the resolution aforesaid, (b) the

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restoration of the salary appropriation; (c) his reinstatement, and (d) payment of back salaries and damages. Respondents moved to dismiss. Ground therefor is lack of cause of action. The Court below granted the motion, dismissed the petition. The motion to reconsider failed. Offshoot is this appeal. 1. The threshold, questions are these: Was the dismissal order issued "without any hearing on the motion to dismiss"? Is it void? We go to the record. The motion to dismiss was filed on February 1, 1961 and set for hearing on February, 10 following. On February 8, 1961 petitioner's counsel telegraphed the court, "Request postponement motion dismissal till written opposition filed." He did not appear at the scheduled hearing. But on March 4, 1961 he followed up his wire, with his written opposition to the motion to dismiss. Adverting to the 5-page motion to dismiss and the 6-page opposition thereto, we find that the arguments pro and con on the question of the board's power to abolish petitioner's position minutely discussed the problem and profusely cited authorities. The May 15, 1961, 8-page court order recited at length the said arguments and concluded that petitioner made no case. One good reason for the statutory requirement of hearing on a motion as to enable the suitors to adduce evidence in support of their opposing claims.1 But here the motion to dismiss is grounded on lack of cause of action. Existence of a cause of action or lack of it is determined by a reference to the facts averred in the challenged pleading. The question raised in the motion is purely one of law. This legal issue was fully discussed in said motion and the opposition thereto. In this posture, oral arguments on the motion are reduced to an unnecessary ceremony and should be overlooked.2 And, correctly so, because the other intendment of the law in requiring hearing on a motion, i.e., "to avoid surprise upon the opposite party and to give to the latter time to study and meet the arguments of the motion",3 has been sufficiently met. And then, courts do not exalt form over substance. Besides, there is respondents' vehement claim that the motion to dismiss (originally set for February 10) has been actually reset for hearing for March 23, 1961, at 8:30 o'clock a.m.; that then there was no appearance on petitioner's behalf, but that respondents' attorneys appeared. Of course, petitioner now disputes this fact. But nothing extent in the record would support his position. On the contrary, his telegram of February 8 induces rational belief that all he wanted was to be given an opportunity to meet argument with argument by means of his "written opposition". He filed that opposition. And more. Adversely affected by the court's order, he sought reconsideration thereof. In that motion to reconsider he squarely brought to the court's attention his present averment that "no hearing was conducted on the motion to dismiss". The gravity of this charge notwithstanding, the same Judge shunted aside petitioner's contention with the statement that his motion is "not (being) meritorious". Implicit in this pronouncement is that there was such a second hearing and petitioner was there given an opportunity to argue his case. It is in this backdrop that we hew to the line drawn in the Ongsiako decision4 that "it is presumed that the proceeding was regular and that all the steps required by law to be taken before the court could validly act thereon, had been so taken". The quantum of proof required to overcome this presumption is reflected in a passage in another case,5 thus: in the absence of a clear showing to the contrary, the regularity of the court proceedings" is to be upheld. Petitioner offered no showing, let alone a clear showing, of irregularity. More to this. Even conceding for present purposes that there was no previous notice of hearing of the motion to dismiss before the court ruled (May 15, 1961) on the same adversely to petition, still this alleged defect was fully cured by his motion for reconsideration aforesaid (filed June 24, 1961), which was overruled. By the standard inDe Borja, et al. vs. Tan, etc., et al., 93 Phil.

167, 171, "the interested parties were given their day in court, and the previous objection of lack of notice or opportunity to be heard fully met". As the De Borja decision points out, what the law prohibits "is not the absence of previous notice, but the absolute absence thereof and lack of opportunity to be heard."6 2. The critical inquiry is whether or not the mandamus petition was correctly dismissed on the ground of lack of cause of action. The job of assistant provincial assessor is a creation of the provincial board. Petitioner concedes that, in the law of public administration, the power to create normally implies the power to abolish.7 The thrust of his argument, however, is that the power to abolish is not absolute; it is subject to the limitations that it be exercised (a) in good faith, (b) personal or political reasons, and (c) not in violation of Civil Service Law. He cites the Briones case.8 There, the reasons given for the abolition of the positions of petitioners therein, namely, "economy and efficiency", were found to be transparent and unimpressive and to constitute a mere subterfuge for the removal without cause of the said appellees, in violation of the security of Civil Service tenures as provided by the Constitution." And this, because in said case it was shown that the abolition of the 32 positions in the city mayor's office and the office of the municipal board was preceded by the creation of 35 positions in the city mayor's office, calling for an annual outlay of P68,100.00. Here, the case has not gone beyond the pleadings stage; there is no trial on the merits. And, taking the averments of the petition herein as bases, the Briones decision is not properly to he read as controlling. For, the wholesale creation and abolition of offices in almost the same breath there, are not here obtaining. Differences in factual background generate differences in legal consideration.1wph1.t Let us now take the petition on its face value. Paragraph VIII thereof avers that "with intent of circumventing the constitutional prohibition that 'no officer or employee in the civil service shall be removed or suspended except for cause as provided by law"', respondents "maliciously and illegally for the purpose of political persecution and political vengeance, reverted the fund of the salary item ... and furthermore eliminated or abolished the said position effective July 1, 1960". This statement by itself submits no justiciable controversy for the court's determination; it is not an allegation of ultimate facts; it is a mere conclusion of law unsupported by factual premise. Some such averments as that "defendant usurped the office of Senator of the Philippines";9 or that defendant had incurred damages as a consequence of the "malicious and unjustified" institution of the action, 10have heretofore been stricken down by this Court as nothing more than mere conclusions of law. 11 Finally as against the allegation of malicious and illegal abolition of petitioner's position, we have the presumption of good faith. 12 Not that this presumption stands alone. There is the other presumption that official duty had been regularly performed by the members of the provincial board. 13 And the facts set forth in resolution No. 7, lend stout support to these two precepts, viz: There was a huge deficit of P60,330.60; the position of assistant provincial assessor which is not required to be created by the Administrative Code l4 could be dispensed with and performed by others. 15 It results that petitioner's case is not within the coverage of the exceptions to the general rule that the provincial board's power to create normally carries with it the power to eliminate. And, petitioner has no cause for complaint. 3. Petitioner also advances the theory that the provincial board resolution abolishing his position is not effective, because it did not bear the stamp of approval of the Secretary of Finance, citing Republic Act No. 1062. The necessity for such approval, however, was done away with by the passage of Republic Act No. 2264, otherwise known as the Local Autonomy Act. Section 3(a) of the Local Autonomy Act gives the provincial board the power to appropriate money having in view the general welfare of the province and its inhabitants. Concomitant to this express power is the implied power to withdraw unexpended money already appropriated.

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We observe that the sole authority given by the Autonomy Act to the Secretary of Finance is to review provincial and city budgets and city and municipal tax ordinances. 16 Nothing therein contained requires his approval for the abolition of positions in the provincial or city or municipal governments. We do not even discern in the law a purpose to require such approval. For the language is restrictive. 17 We are not prepared to take imperishable liberties with and recast said law. Such is not within the scope of the powers entrusted to courts of justice. On top of all of these is the fact that section 12 of the Local Autonomy Act leaves us with but one guidepost in the interpretation of powers allocated to local governments, thus: Sec. 12. Rules for the interpretation of the Local Autonomy Act. 1. Implied power of a province, a city or municipality shall be liberally construed in its favor. Any fair and reasonable doubt as to the existence of the power should be interpreted in favor of the local government and it shall be presumed to exist. Autonomy is the underlying rationale of the Local Autonomy Act. By the statute itself no interpretation thereof should be indulged in which would cripple the board's powers. This legal yardstick stops us, too, from writing into the statute the Finance Secretary's approval as a condition precedent to effectivity of the resolution herein questioned. 4. By section 3, Rule 65 of the Rules of Court, mandamus will issue if the performance of an act is one "which the law specifically enjoins as a duty resulting from an office, trust or station". Mandamus compels performance of a ministerial duty. That duty must be clear and specific. But mandamus is not meant to control or review the normal exercise of judgment or discretion. 18 which is the case here. The respondent board, therefore, cannot be compelled to restore petitioner's item in the budget. The order appealed from is not legally infirm. We accordingly vote to affirm the same. Costs against appellant. So ordered. Bengzon, C.J., Bautista Angelo, Concepcion, Barrera, Dizon, Regala, Makalintal, Bengzon, J.P., and Zaldivar, JJ., concur. Reyes, J.B.L., J., took no part. G.R. No. L-44004 March 25, 1983 CRISPIN PENID, VICENTE RAPADA, CATALINO TUMANGGUIL and RUFINO AGCAOILI, petitioners vs. HON. CESAR VIRATA, in his capacity as SECRETARY OF FINANCE and HON. EFREN I. PLANA, in his capacity as COMMISSIONER OF INTERNAL REVENUE, respondents. Ramon O. Reynoso, Jr. & Arthur L. Villaraza for petitioners. The Solicitor General for respondents. ESCOLIN, J.: This petition cans for a determination of the amount which petitioners are entitled to as reward under Section 1 of Republic Act No. 2338, an Act providing for reward to informers of violations of Internal Revenue and Customs laws. The pertinent facts are the following: On March 8, 1962, petitioners, through a sworn statement filed as Confidential Information No. 28 of the Bureau of Internal Revenue [BIR], 1 informed then BIR Commissioner, Hon. Misael Vera, of underpayment of the 2% common carriers percentage tax by 27 shipping companies and agents listed therein. It was specifically alleged that these shipping companies and agents had been declaring their gross dollar earnings on the basis of the parity rate of P 2.00 to US $1.00, in violation of the conversion rate fixed by the Central Bank in 1960, thereby defrauding the Philippine government of millions of pesos in taxes. The case was referred for investigation to BIR Examiner Guillermo Cadutan who interviewed petitioners. In the

course thereof, petitioners further divulged that the erroneous conversion of the gross dollar receipts from US dollar to Philippine peso was a common practice not only on the part of the shipping companies listed in Confidential Information No. 28, but also of other shipping companies operating in the Philippines. Acting on this disclosure, the BIR, starting March 30, 1962, deployed its agents to investigate, inspect and verify the books and records of all shipping companies and agents operating in the Philippines. In December 1962, the BIR assessed certain shipping companies for deficiency taxes on their dollar earnings computed at the rate of P 3.10 to US$ 1.00 in accordance with applicable Central Bank circulars. One of the snipping companies thus assessed was Pan Fil Co. Inc., a firm not mentioned in the sworn statement filed by petitioners. Collection of said deficiency taxes was, however, held in abeyance pending resolution of the protest filed by Royal Inter-ocean Lines with the Court of Tax Appeals on February 11, 1963. Meanwhile, the shipping companies continued paying their percentage taxes on the basis of the P 2.00 to US$1.00 exchange rate until November 5, 1965 when the Central Bank lifted the exchange control and fixed the dollar conversion rate at P 3.65 to US$1.00. On September 24, 1966, the Court of Tax Appeals rendered a decision, sustaining the procedure used by Royal Inter-ocean Lines, Inc. in computing its dollar earnings into Philippine peso. Upon appeal by the BIR Commissioner, however, this Court reversed the decision of the Court of Tax Appeals in Commissioner of Internal Revenue v. Royal Inter-ocean Lines, Inc. 2 where We held that revenues derived from foreign exchange transactions should be taxed by computing the taxpayer's receipts at the prevailing free market rate of the Philippine peso to the US dollar and not on the parity rate of P2.00 to US$1.00. Consequently, the BIR collected from said shipping companies deficiency taxes corresponding to the period from 1957 to November 5, 1965 in the amount of P4,178,167.54. Included in this figure is the amount of P 216,846-00 paid by Pan Fil Co. Inc. Thereafter, petitioners filed with the Commissioner a claim for 25% of the total revenue collected [4,178,167.54] as the reward due them under Section I of RA No. 2338. Finding the claim of petitioners to be in accordance with law, Commissioner Vera endorsed the same to respondent Secretary [now Minister] of Finance for approval. Notwithstanding said endorsement, respondent Secretary, in his 3rd Indorsement dated October 29, 1971, set petitioners' reward to 25% of those deficiency collections corresponding only to the period covered by Confidential Information No. 28, i.e., from 1960 to March 8, 1962, for the reason that: l) The extent of the valid application for reward purposes of the information on the violations commenced in 1960 ceased from the moment the B I R took official notice and possession thereof on March 8, 1962. The statutory benefits to be derived from the deficiency taxes paid for the corresponding period should accrue to the informers, which otherwise, would not inure had not the BIR been derelict in the performance of its duties. 2) After the Bureau's cognizance, the information lost furtive significance and exclusive effectiveness. A contrary interpretation would in effect accord the informers vested rights to all other related and subsequent actions already failing within the scope of its inherent functions. Respondent Secretary further deducted from the total collection the amount of P216,846.04 paid by Pan Fil Co. Inc., the latter not having been cited by petitioners in Confidential Information No. 28. Thus, petitioners' reward under the aforementioned guideline set by respondent Secretary amounted only to 25% of P 1,188,818.19 or P297,204.55. After receipt of said amount, petitioners filed with respondent Secretary a request for reconsideration of his decision. Unable to obtain a favorable judgment, petitioners brought the matter to the Office of the President, with, however, the same result. As their last recourse, petitioners now seek redress from this Court thru this original action for certiorari and mandamus, raising as issues the following.

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FIRST: Whether or not the amount of P 216,846.04 collected from Pan Fil Co. Inc., a firm not listed in Confidential Information No. 28, but whose liability for the 2% common carrier's tax was discovered as a result of petitioners' disclosure during the interview, should be included in computing the 25% reward? SECOND: Whether or not respondent Secretary was correct in computing the reward due petitioners on the basis of the alleged period covered by Confidential Information No. 28, thereby resulting in the exclusion of deficiency collections totalling P 2,989,349.35, corresponding to the periods 1957-1959 and March 9, 1962 to 1965. We agree with petitioners that the deficiency taxes collected from Pan Fil Co. Inc., should be included in the computation of their reward. Section 1 of Republic Act No. 2338, relied upon by petitioners, provides: SECTION 1. Any person, except internal revenue or customs officials or employees, or other public officials or his relative within the sixth degree of consanguinity, who voluntarily gives definite and sworn information, stating the facts constituting as grounds for such information not yet in the possession of the BIR or the Bureau of Customs, leading to the discovery of frauds upon the internal revenue or customs laws, or violation of any of the provisions thereof, thereby resulting in the recovery of revenues, surcharges and fees and/or the conviction of the guilty party, and/or the imposition of any fine or penalty, shall be rewarded in a sum equivalent to twenty-five percentum of the revenues, surcharges or fees recovered and/or fine or penalty imposed and collected. ... The rule implementing the aforequoted provision is Section 4 of Finance Regulation No. 1 of the Department [now Ministry] of Finance, which states that: SECTION 4. Result of the Information Which Deserves Reward. -In order to entitle an informer to a reward, the information given by him must lead to or be instrumental in the discovery of the fraud or violation of any of the provisions of the Internal Revenue or Tariff and Customs Law, and results in the recovery or collection of revenues, surcharges and fees and/or the conviction of the guilty party, and/or the imposition of any fine or penalty or the collection of compromise in case of amicable settlement. In essence, what is vital under the above-cited legislation and its implementing rule is that the information given had led to or had been instrumental "in the discovery of the fraud upon or violation of any of the provisions of the Internal Revenue or Tariff and Customs Law," and that such discovery resulted in the recovery or collection of revenues, surcharges and fees. During the interview conducted by BIR Examiner Guillermo Cadutan, petitioners categorically asserted that the erroneous conversion of gross receipts was being committed not only by the shipping companies listed in Confidential Information No. 28, but likewise by other firms not specifically indicated therein. On the strength of this information, the BIR undertook an investigation of all shipping companies and agents. That this was the case is admitted by no less than Commissioner Vera himself in his 2nd Endorsement dated October 11, 1971, 3 which he issued in response to the query of respondent Secretary as to why the amount recovered from Pan Fil Co. Inc. was included in the computation of petitioners' reward. Thus: Upon receipt of the confidential information on March 8, 1962, the same was referred to an examiner of this Office who interviewed the above- named informers. In the course of the interview, it was disclosed that erroneous conversion of gross receipts from US dollar to Philippine peso for percentage tax was committed not only by the foreign shipping companies enumerated in the confidential information but also by other companies not specifically enumerated therein. Hence, this office investigated all the ship agents and foreign shipping companies concerned including those not mentioned in the confidential information. It is for

this reason that the foreign shipping companies represented by Pan Fil Co. Inc. which is not mentioned in the confidential information were investigated and subsequently assessed the deficiency 25% common carriers tax based on the findings of erroneous conversion of gross receipts. The inclusion of Pan Fil Co. Inc., among the firms investigated, was the direct, logical and necessary consequence of the information given by petitioners during their interview by BIR Examiner Cadutan. Because of said information, the probe was extended to other companies and agents not listed in Confidential Information No. 28 Indeed, it was the information given by petitioners during the interview that led to the discovery of the erroneous method of computation practised by Pan Fil Co. Inc., a firm not listed in Confidential Information No. 28, and which resulted in the ultimate recovery by the government of a substantial, albeit unexpected, income. Clearly then, the inclusion of the amount paid by Pan Fil Co. Inc., in the computation of petitioners' reward lies within the intendment and scope of the law. To sustain the contrary position of respondent Secretary would constitute a derogation of the basic tenet in both American and Philippine jurisprudence that statutes offering rewards must be liberally construed in favor of informers and with regard to the purpose for which they are intended, with mere technicality yielding to the substantive purpose of the law. Otherwise, the government would lose a positive and effective means of checking the anomalies that are committed to the detriment of the finances of the state. 4 The next question to be resolved is whether or not petitioners are entitled to a share in the taxes which accrued after 1962. It is Our considered view that to allow petitioners 25% of such revenue would be stretching the law too far. Note must be taken of the fact that the direct consequence of petitioner's information was the assessment against the various shipping companies sometime in December 1962. Thereafter until 1965, the shipping agents and companies continued to remit to the BIR their common carrier taxes on the basis of the parity rate of P2.00 to US$1.00. But this was done to maintain the status quo pending resolution of the protest filed with the Court of Tax Appeals by the Royal Inter-ocean Lines, Inc., and not because of the wilful desire on the part of these shipping companies to violate the law. The delay in the collection of deficiency taxes for the period from 1963 to 1966, therefore, was due to the pendency of the said protest case. Viewing the question from a different perspective, had no protest been lodged by Royal Inter-ocean Lines, Inc., the common carriers would have paid their deficiency taxes in 1962 and petitioners would then have been paid their corresponding reward. Had that happened, the petitioners' claim to any share in the revenues collected after 1962 would be clearly unjustified. As it is, We see no reason why petitioners, should be entitled to more than what is rightfully due them under the law. WHEREFORE, the decision of the respondent Secretary dated October 29, 1971 is hereby modified in the sense that petitioners are adjudged entitled to 25% f the revenues collected from the Pan Fil Co., Inc.; but their claim for reward in the taxes which accrued after 1962 is denied. SO ORDERED. EN BANC G.R. No. 92163 June 5, 1990 IN THE MATTER OF THE PETITION FOR HABEAS CORPUS. JUAN PONCE ENRILE, petitioner vs. JUDGE JAIME SALAZAR (Presiding Judge of the Regional Trial Court of Quezon City [Br. 103], SENIOR STATE PROSECUTOR AURELIO TRAMPE, PROSECUTOR FERDINAND R. ABESAMIS, AND CITY ASSISTANT CITY PROSECUTOR EULOGIO MANANQUIL, NATIONAL BUREAU OF INVESTIGATION DIRECTOR ALFREDO LIM, BRIG. GEN. EDGAR DULA TORRES (Superintendent of the Northern Police District) AND/ OR ANY AND ALL PERSONS WHO MAY

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HAVE ACTUAL CUSTODY OVER THE PERSON OF JUAN PONCE ENRILE,respondents. G.R. No. 92164 June 5, 1990 SPS. REBECCO E. PANLILIO AND ERLINDA E. PANLILIO, petitioners, vs. PROSECUTORS FERNANDO DE LEON, AURELIO C. TRAMPE, FFRDINAND R. ABESAMIS, AND EULOGIO C. MANANQUIL, and HON. JAIME W. SALAZAR, JR., in his capacity as Presiding Judge, Regional Trial Court, Quezon City, Branch 103, respondents. NARVASA, J.: Thirty-four years after it wrote history into our criminal jurisprudence, People vs. Hernandez 1 once more takes center stage as the focus of a confrontation at law that would re-examine, if not the validity of its doctrine, the limits of its applicability. To be sure, the intervening period saw a number of similar cases 2 that took issue with the ruling-all with a marked lack of success-but none, it would Beem, where season and circumstance had more effectively conspired to attract wide public attention and excite impassioned debate, even among laymen; none, certainly, which has seen quite the kind and range of arguments that are now brought to bear on the same question. The facts are not in dispute. In the afternoon of February 27, 1990, Senate Minority Floor Leader Juan Ponce Enrile was arrested by law enforcement officers led by Director Alfredo Lim of the National Bureau of Investigation on the strength of a warrant issued by Hon. Jaime Salazar of the Regional Trial Court of Quezon City Branch 103, in Criminal Case No. 9010941. The warrant had issued on an information signed and earlier that day filed by a panel of prosecutors composed of Senior State Prosecutor Aurelio C. Trampe, State Prosecutor Ferdinand R. Abesamis and Assistant City Prosecutor Eulogio Mananquil, Jr., charging Senator Enrile, the spouses Rebecco and Erlinda Panlilio, and Gregorio Honasan with the crime of rebellion with murder and multiple frustrated murder allegedly committed during the period of the failed coup attempt from November 29 to December 10, 1990. Senator Enrile was taken to and held overnight at the NBI headquarters on Taft Avenue, Manila, without bail, none having been recommended in the information and none fixed in the arrest warrant. The following morning, February 28, 1990, he was brought to Camp Tomas Karingal in Quezon City where he was given over to the custody of the Superintendent of the Northern Police District, Brig. Gen. Edgardo Dula Torres. 3 On the same date of February 28, 1990, Senator Enrile, through counsel, filed the petition for habeas corpusherein (which was followed by a supplemental petition filed on March 2, 1990), alleging that he was deprived of his constitutional rights in being, or having been: (a) held to answer for criminal offense which does not exist in the statute books; (b) charged with a criminal offense in an information for which no complaint was initially filed or preliminary investigation was conducted, hence was denied due process; (c) denied his right to bail; and (d) arrested and detained on the strength of a warrant issued without the judge who issued it first having personally determined the existence of probable cause. 4 The Court issued the writ prayed for, returnable March 5, 1990 and set the plea for hearing on March 6, 1990. 5On March 5, 1990, the Solicitor General filed a consolidated return 6 for the respondents in this case and in G.R. No. 92164 7 Which had been contemporaneously but separately filed by two of Senator Enrile's co-accused, the spouses Rebecco and Erlinda Panlilio, and raised similar questions. Said return urged that the petitioners' case does not fall within the Hernandez ruling because-and this is putting it very simply-the information in Hernandezcharged

murders and other common crimes committed as a necessary means for the commission of rebellion,whereas the information against Sen. Enrile et al. charged murder and frustrated murder committed on the occasion, but not in furtherance, of rebellion. Stated otherwise, the Solicitor General would distinguish between the complex crime ("delito complejo") arising from an offense being a necessary means for committing another, which is referred to in the second clause of Article 48, Revised Penal Code, and is the subject of the Hernandez ruling, and the compound crime ("delito compuesto") arising from a single act constituting two or more grave or less grave offenses referred to in the first clause of the same paragraph, with which Hernandez was not concerned and to which, therefore, it should not apply. The parties were heard in oral argument, as scheduled, on March 6, 1990, after which the Court issued its Resolution of the same date 8 granting Senator Enrile and the Panlilio spouses provisional liberty conditioned upon their filing, within 24 hours from notice, cash or surety bonds of P100,000.00 (for Senator Enrile) and P200,000.00 (for the Panlilios), respectively. The Resolution stated that it was issued without prejudice to a more extended resolution on the matter of the provisional liberty of the petitioners and stressed that it was not passing upon the legal issues raised in both cases. Four Members of the Court 9 voted against granting bail to Senator Enrile, and two 10 against granting bail to the Panlilios. The Court now addresses those issues insofar as they are raised and litigated in Senator Enrile's petition, G.R. No. 92163. The parties' oral and written pleas presented the Court with the following options: (a) abandon Hernandez and adopt the minority view expressed in the main dissent of Justice Montemayor in said case that rebellion cannot absorb more serious crimes, and that under Article 48 of the Revised Penal Code rebellion may properly be complexed with common offenses, so-called; this option was suggested by the Solicitor General in oral argument although it is not offered in his written pleadings; (b) hold Hernandez applicable only to offenses committed in furtherance, or as a necessary means for the commission, of rebellion, but not to acts committed in the course of a rebellion which also constitute "common" crimes of grave or less grave character; (c) maintain Hernandez as applying to make rebellion absorb all other offenses committed in its course, whether or not necessary to its commission or in furtherance thereof. On the first option, eleven (11) Members of the Court voted against abandoning Hernandez. Two (2) Members felt that the doctrine should be re-examined. 10-A In the view of the majority, the ruling remains good law, its substantive and logical bases have withstood all subsequent challenges and no new ones are presented here persuasive enough to warrant a complete reversal. This view is reinforced by the fact that not too long ago, the incumbent President, exercising her powers under the 1986 Freedom Constitution, saw fit to repeal, among others, Presidential Decree No. 942 of the former regime which precisely sought to nullify or neutralize Hernandezby enacting a new provision (Art. 142-A) into the Revised Penal Code to the effect that "(w)hen by reason, or on the occasion, of any of the crimes penalized in this Chapter (Chapter I of Title 3, which includes rebellion), acts which constitute offenses upon which graver penalties are imposed by law are committed, the penalty for the most serious offense in its maximum period shall be imposed upon the offender."' 11 In thus acting, the President in effect by legislative flat reinstated Hernandez as binding doctrine with the effect of law. The Court can do no less than accord it the same recognition, absent any sufficiently powerful reason against so doing. On the second option, the Court unanimously voted to reject the theory that Hernandez is, or should be, limited in its application to offenses committed as a necessary means for the commission of rebellion and that the ruling should not be interpreted as prohibiting the complexing of rebellion with other common crimes committed on the

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occasion, but not in furtherance, thereof. While four Members of the Court felt that the proponents' arguments were not entirely devoid of merit, the consensus was that they were not sufficient to overcome what appears to be the real thrust of Hernandez to rule out the complexing of rebellion with any other offense committed in its course under either of the aforecited clauses of Article 48, as is made clear by the following excerpt from the majority opinion in that case: There is one other reason-and a fundamental one at that-why Article 48 of our Penal Code cannot be applied in the case at bar. If murder were not complexed with rebellion, and the two crimes were punished separately (assuming that this could be done), the following penalties would be imposable upon the movant, namely: (1) for the crime of rebellion, a fine not exceeding P20,000 and prision mayor, in the corresponding period, depending upon the modifying circumstances present, but never exceeding 12 years of prision mayor, and (2) for the crime of murder, reclusion temporal in its maximum period to death, depending upon the modifying circumstances present. in other words, in the absence of aggravating circumstances, the extreme penalty could not be imposed upon him. However, under Article 48 said penalty would have to be meted out to him, even in the absence of a single aggravating circumstance. Thus, said provision, if construed in conformity with the theory of the prosecution, would be unfavorable to the movant. Upon the other hand, said Article 48 was enacted for the purpose of favoring the culprit, not of sentencing him to a penalty more severe than that which would be proper if the several acts performed by him were punished separately. In the words of Rodriguez Navarro: La unificacion de penas en los casos de concurso de delitos a que hace referencia este articulo (75 del Codigo de 1932), esta basado francamente en el principio pro reo.' (II Doctrina Penal del Tribunal Supremo de Espana, p. 2168.) We are aware of the fact that this observation refers to Article 71 (later 75) of the Spanish Penal Code (the counterpart of our Article 48), as amended in 1908 and then in 1932, reading: Las disposiciones del articulo anterior no son aplicables en el caso de que un solo hecho constituya dos o mas delitos, o cuando el uno de ellos sea medio necesario para cometer el otro. En estos casos solo se impondra la pena correspondiente al delito mas grave en su grado maximo, hasta el limite que represents la suma de las que pudieran imponerse, penando separadamente los delitos. Cuando la pena asi computada exceda de este limite, se sancionaran los delitos por separado. (Rodriguez Navarro, Doctrina Penal del Tribunal Supremo, Vol. II, p. 2163) and that our Article 48 does not contain the qualification inserted in said amendment, restricting the imposition of the penalty for the graver offense in its maximum period to the case when it does not exceed the sum total of the penalties imposable if the acts charged were dealt with separately. The absence of said limitation in our Penal Code does not, to our mind, affect substantially the spirit of said Article 48. Indeed, if one act constitutes two or more offenses, there can be no reason to inflict a punishment graver than that prescribed for each one of said offenses put together. In directing that the penalty for the graver offense be, in such case, imposed in its maximum period, Article 48 could have had no other purpose than to prescribe a penalty lower than the aggregate of the penalties for each offense, if imposed separately. The reason for this benevolent spirit of article 48 is readily discernible. When two or more crimes are the result of a single act, the offender is deemed less perverse than when he commits said crimes thru separate and distinct acts. Instead of sentencing him for each crime independently from the other, he must

suffer the maximum of the penalty for the more serious one, on the assumption that it is less grave than the sum total of the separate penalties for each offense. 12 The rejection of both options shapes and determines the primary ruling of the Court, which is that Hernandezremains binding doctrine operating to prohibit the complexing of rebellion with any other offense committed on the occasion thereof, either as a means necessary to its commission or as an unintended effect of an activity that constitutes rebellion. This, however, does not write finis to the case. Petitioner's guilt or innocence is not here inquired into, much less adjudged. That is for the trial court to do at the proper time. The Court's ruling merely provides a take-off point for the disposition of other questions relevant to the petitioner's complaints about the denial of his rights and to the propriety of the recourse he has taken. The Court rules further (by a vote of 11 to 3) that the information filed against the petitioner does in fact charge an offense. Disregarding the objectionable phrasing that would complex rebellion with murder and multiple frustrated murder, that indictment is to be read as charging simple rebellion. Thus, in Hernandez, the Court said: In conclusion, we hold that, under the allegations of the amended information against defendant-appellant Amado V. Hernandez, the murders, arsons and robberies described therein are mere ingredients of the crime of rebellion allegedly committed by said defendants, as means "necessary" (4) for the perpetration of said offense of rebellion; that the crime charged in the aforementioned amended information is, therefore, simple rebellion, not the complex crime of rebellion with multiple murder, arsons and robberies; that the maximum penalty imposable under such charge cannot exceed twelve (12) years of prision mayor and a fine of P2H,HHH; and that, in conformity with the policy of this court in dealing with accused persons amenable to a similar punishment, said defendant may be allowed bail. 13 The plaint of petitioner's counsel that he is charged with a crime that does not exist in the statute books, while technically correct so far as the Court has ruled that rebellion may not be complexed with other offenses committed on the occasion thereof, must therefore be dismissed as a mere flight of rhetoric. Read in the context ofHernandez, the information does indeed charge the petitioner with a crime defined and punished by the Revised Penal Code: simple rebellion. Was the petitioner charged without a complaint having been initially filed and/or preliminary investigation conducted? The record shows otherwise, that a complaint against petitioner for simple rebellion was filed by the Director of the National Bureau of Investigation, and that on the strength of said complaint a preliminary investigation was conducted by the respondent prosecutors, culminating in the filing of the questioned information.14 There is nothing inherently irregular or contrary to law in filing against a respondent an indictment for an offense different from what is charged in the initiatory complaint, if warranted by the evidence developed during the preliminary investigation. It is also contended that the respondent Judge issued the warrant for petitioner's arrest without first personallydetermining the existence of probable cause by examining under oath or affirmation the complainant and his witnesses, in violation of Art. III, sec. 2, of the Constitution. 15 This Court has already ruled, however, that it is not the unavoidable duty of the judge to make such a personal examination, it being sufficient that he follows established procedure by personally evaluating the report and the supporting documents submitted by the prosecutor. 16 Petitioner claims that the warrant of arrest issued barely one hour and twenty minutes after the case was raffled off to the respondent Judge, which hardly gave the latter sufficient time to personally go over the voluminous records of the preliminary investigation. 17 Merely because said respondent had what some might consider only a relatively brief period within which to comply with that duty, gives no reason to assume that he had not, or could not have, so complied; nor does that single circumstance

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suffice to overcome the legal presumption that official duty has been regularly performed. Petitioner finally claims that he was denied the right to bail. In the light of the Court's reaffirmation of Hernandez as applicable to petitioner's case, and of the logical and necessary corollary that the information against him should be considered as charging only the crime of simple rebellion, which is bailable before conviction, that must now be accepted as a correct proposition. But the question remains: Given the facts from which this case arose, was a petition for habeas corpus in this Court the appropriate vehicle for asserting a right to bail or vindicating its denial? The criminal case before the respondent Judge was the normal venue for invoking the petitioner's right to have provisional liberty pending trial and judgment. The original jurisdiction to grant or deny bail rested with said respondent. The correct course was for petitioner to invoke that jurisdiction by filing a petition to be admitted to bail, claiming a right to bail per se by reason of the weakness of the evidence against him. Only after that remedy was denied by the trial court should the review jurisdiction of this Court have been invoked, and even then, not without first applying to the Court of Appeals if appropriate relief was also available there. Even acceptance of petitioner's premise that going by the Hernandez ruling, the information charges a nonexistent crime or, contrarily, theorizing on the same basis that it charges more than one offense, would not excuse or justify his improper choice of remedies. Under either hypothesis, the obvious recourse would have been a motion to quash brought in the criminal action before the respondent Judge. 18 There thus seems to be no question that All the grounds upon which petitioner has founded the present petition, whether these went into the substance of what is charged in the information or imputed error or omission on the part of the prosecuting panel or of the respondent Judge in dealing with the charges against him, were originally justiciable in the criminal case before said Judge and should have been brought up there instead of directly to this Court. There was and is no reason to assume that the resolution of any of these questions was beyond the ability or competence of the respondent Judge-indeed such an assumption would be demeaning and less than fair to our trial courts; none whatever to hold them to be of such complexity or transcendental importance as to disqualify every court, except this Court, from deciding them; none, in short that would justify by passing established judicial processes designed to orderly move litigation through the hierarchy of our courts. Parenthentically, this is the reason behind the vote of four Members of the Court against the grant of bail to petitioner: the view that the trial court should not thus be precipitately ousted of its original jurisdiction to grant or deny bail, and if it erred in that matter, denied an opportunity to correct its error. It makes no difference that the respondent Judge here issued a warrant of arrest fixing no bail. Immemorial practice sanctions simply following the prosecutor's recommendation regarding bail, though it may be perceived as the better course for the judge motu proprio to set a bail hearing where a capital offense is charged. 19 It is, in any event, incumbent on the accused as to whom no bail has been recommended or fixed to claim the right to a bail hearing and thereby put to proof the strength or weakness of the evidence against him. It is apropos to point out that the present petition has triggered a rush to this Court of other parties in a similar situation, all apparently taking their cue from it, distrustful or contemptuous of the efficacy of seeking recourse in the regular manner just outlined. The proliferation of such pleas has only contributed to the delay that the petitioner may have hoped to avoid by coming directly to this Court. Not only because popular interest seems focused on the outcome of the present petition, but also because to wash the Court's hand off it on jurisdictional grounds

would only compound the delay that it has already gone through, the Court now decides the same on the merits. But in so doing, the Court cannot express too strongly the view that said petition interdicted the ordered and orderly progression of proceedings that should have started with the trial court and reached this Court only if the relief appealed for was denied by the former and, in a proper case, by the Court of Appeals on review. Let it be made very clear that hereafter the Court will no longer countenance, but will give short shrift to, pleas like the present, that clearly short-circuit the judicial process and burden it with the resolution of issues properly within the original competence of the lower courts. What has thus far been stated is equally applicable to and decisive of the petition of the Panlilio spouses (G.R. No. 92164) which is virtually Identical to that of petitioner Enrile in factualmilieu and is therefore determinable on the same principles already set forth. Said spouses have uncontestedly pleaded 20 that warrants of arrest issued against them as co-accused of petitioner Enrile in Criminal Case No. 90-10941, that when they appeared before NBI Director Alfredo Lim in the afternoon of March 1, 1990, they were taken into custody and detained without bail on the strength of said warrants in violation-they claim-of their constitutional rights. It may be that in the light of contemporary events, the act of rebellion has lost that quitessentiany quixotic quality that justifies the relative leniency with which it is regarded and punished by law, that present-day rebels are less impelled by love of country than by lust for power and have become no better than mere terrorists to whom nothing, not even the sanctity of human life, is allowed to stand in the way of their ambitions. Nothing so underscores this aberration as the rash of seemingly senseless killings, bombings, kidnappings and assorted mayhem so much in the news these days, as often perpetrated against innocent civilians as against the military, but by and large attributable to, or even claimed by so-called rebels to be part of, an ongoing rebellion. It is enough to give anyone pause-and the Court is no exception-that not even the crowded streets of our capital City seem safe from such unsettling violence that is disruptive of the public peace and stymies every effort at national economic recovery. There is an apparent need to restructure the law on rebellion, either to raise the penalty therefor or to clearly define and delimit the other offenses to be considered as absorbed thereby, so that it cannot be conveniently utilized as the umbrella for every sort of illegal activity undertaken in its name. The Court has no power to effect such change, for it can only interpret the law as it stands at any given time, and what is needed lies beyond interpretation. Hopefully, Congress will perceive the need for promptly seizing the initiative in this matter, which is properly within its province. WHEREFORE, the Court reiterates that based on the doctrine enunciated in People vs. Hernandez, the questioned information filed against petitioners Juan Ponce Enrile and the spouses Rebecco and Erlinda Panlilio must be read as charging simple rebellion only, hence said petitioners are entitled to bail, before final conviction, as a matter of right. The Court's earlier grant of bail to petitioners being merely provisional in character, the proceedings in both cases are ordered REMANDED to the respondent Judge to fix the amount of bail to be posted by the petitioners. Once bail is fixed by said respondent for any of the petitioners, the corresponding bail bond flied with this Court shall become functus oficio. No pronouncement as to costs. SO ORDERED. Cruz, Gancayco and Regalado, JJ., concur. Medialdea, J., concurs in G.R. No. 92164 but took no part in G.R. No. 92163. Cortes and Grio-Aquino, JJ., are on leave. Separate Opinions MELENCIO-HERRERA, J., concurring: I join my colleagues in holding that the Hernandez doctrine, which has been with us for the past three decades, remains good law and, thus, should

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remain undisturbed, despite periodic challenges to it that, ironically, have only served to strengthen its pronouncements. I take exception to the view, however, that habeas corpus was not the proper remedy. Had the Information filed below charged merely the simple crime of Rebellion, that proposition could have been plausible. But that Information charged Rebellion complexed with Murder and Multiple Frustrated Murder, a crime which does not exist in our statute books. The charge was obviously intended to make the penalty for the most serious offense in its maximum period imposable upon the offender pursuant to Article 48 of the Revised Penal Code. Thus, no bail was recommended in the Information nor was any prescribed in the Warrant of Arrest issued by the Trial Court. Under the attendant circumstances, therefore, to have filed a Motion to Quash before the lower Court would not have brought about the speedy relief from unlawful restraint that petitioner was seeking. During the pendency of said Motion before the lower Court, petitioner could have continued to languish in detention. Besides, the Writ ofHabeas Corpus may still issue even if another remedy, which is less effective, may be availed of (Chavez vs. Court of Appeals, 24 SCRA 663). It is true that habeas corpus would ordinarily not he when a person is under custody by virtue of a process issued by a Court. The Court, however, must have jurisdiction to issue the process. In this case, the Court below must be deemed to have been ousted of jurisdiction when it illegally curtailed petitioner's liberty. Habeas corpus is thus available. The writ of habeas corpus is available to relieve persons from unlawful restraint. But where the detention or confinement is the result of a process issued by the court or judge or by virtue of a judgment or sentence, the writ ordinarily cannot be availed of. It may still be invoked though if the process, judgment or sentence proceeded from a court or tribunal the jurisdiction of which may be assailed. Even if it had authority to act at the outset, it is now the prevailing doctrine that a deprivation of constitutional right, if shown to exist, would oust it of jurisdiction. In such a case, habeas corpus could be relied upon to regain one's liberty (Celeste vs. People, 31 SCRA 391) [Emphasis emphasis]. The Petition for habeas corpus was precisely premised on the violation of petitioner's constitutional right to bail inasmuch as rebellion, under the present state of the law, is a bailable offense and the crime for which petitioner stands accused of and for which he was denied bail is non-existent in law. While litigants should, as a rule, ascend the steps of the judicial ladder, nothing should stop this Court from taking cognizance of petitions brought before it raising urgent constitutional issues, any procedural flaw notwithstanding. The rules on habeas corpus are to be liberally construed (Ganaway v. Quilen, 42 Phil. 805), the writ of habeas corpus being the fundamental instrument for safeguarding individual freedom against arbitrary and lawless state action. The scope and flexibility of the writ-its capacity to reach all manner of illegal detention-its ability to cut through barriers of form and procedural mazes-have always been emphasized and jealously guarded by courts and lawmakers (Gumabon v. Director of Bureau of Prisons, 37 SCRA 420) [emphasis supplied]. The proliferation of cases in this Court, which followed in the wake of this Petition, was brought about by the insistence of the prosecution to charge the crime of Rebellion complexed with other common offenses notwithstanding the fact that this Court had not yet ruled on the validity of that charge and had granted provisional liberty to petitioner. If, indeed, it is desired to make the crime of Rebellion a capital offense (now punishable by reclusion perpetua), the remedy lies in legislation. But Article 142-A 1 of the

Revised Penal Code, along with P.D. No. 942, were repealed, for being "repressive," by EO No. 187 on 5 June 1987. EO 187 further explicitly provided that Article 134 (and others enumerated) of the Revised Penal Code was "restored to its full force and effect as it existed before said amendatory decrees." Having been so repealed, this Court is bereft of power to legislate into existence, under the guise of re-examining a settled doctrine, a "creature unknown in law"- the complex crime of Rebellion with Murder. The remand of the case to the lower Court for further proceedings is in order. The Writ of Habeas Corpushas served its purpose. GUTIERREZ, JR., J., concurring: I join the Court's decision to grant the petition. In reiterating the rule that under existing law rebellion may not be complexed with murder, the Court emphasizes that it cannot legislate a new-crime into existence nor prescribe a penalty for its commission. That function is exclusively for Congress. I write this separate opinion to make clear how I view certain issues arising from these cases, especially on how the defective informations filed by the prosecutors should have been treated. I agree with the ponente that a petition for habeas corpus is ordinarily not the proper procedure to assert the right to bail. Under the special circumstances of this case, however, the petitioners had no other recourse. They had to come to us. First, the trial court was certainly aware of the decision in People v. Hernandez, 99 Phil. 515 (1956) that there is no such crime in our statute books as rebellion complexed with murder, that murder committed in connection with a rebellion is absorbed by the crime of rebellion, and that a resort to arms resulting in the destruction of life or property constitutes neither two or more offenses nor a complex crime but one crime-rebellion pure and simple. Second, Hernandez has been the law for 34 years. It has been reiterated in equally sensational cases. All lawyers and even law students are aware of the doctrine. Attempts to have the doctrine re-examined have been consistently rejected by this Court. Third, President Marcos through the use of his then legislative powers, issued Pres. Decree 942, thereby installing the new crime of rebellion complexed with offenses like murder where graver penalties are imposed by law. However, President Aquino using her then legislative powers expressly repealed PD 942 by issuing Exec. Order 187. She thereby erased the crime of rebellion complexed with murder and made it clear that the Hernandezdoctrine remains the controlling rule. The prosecution has not explained why it insists on resurrecting an offense expressly wiped out by the President. The prosecution, in effect, questions the action of the President in repealing a repressive decree, a decree which, according to the repeal order, is violative of human rights. Fourth, any re-examination of the Hernandez doctrine brings the ex post facto principle into the picture. Decisions of this Court form part of our legal system. Even if we declare that rebellion may be complexed with murder, our declaration can not be made retroactive where the effect is to imprison a person for a crime which did not exist until the Supreme Court reversed itself. And fifth, the attempts to distinguish this case from the Hernandez case by stressing that the killings charged in the information were committed "on the occasion of, but not a necessary means for, the commission of rebellion" result in outlandish consequences and ignore the basic nature of rebellion. Thus, under the prosecution theory a bomb dropped on PTV-4 which kills government troopers results in simple rebellion because the act is a necessary means to make the rebellion succeed. However, if the same bomb also kills some civilians in the neighborhood, the dropping of the bomb becomes rebellion complexed with murder because the killing of civilians is not necessary for the success of a rebellion and, therefore, the killings are only "on the occasion of but not a 'necessary means for' the commission of rebellion. This argument is puerile.

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The crime of rebellion consists of many acts. The dropping of one bomb cannot be isolated as a separate crime of rebellion. Neither should the dropping of one hundred bombs or the firing of thousands of machine gun bullets be broken up into a hundred or thousands of separate offenses, if each bomb or each bullet happens to result in the destruction of life and property. The same act cannot be punishable by separate penalties depending on what strikes the fancy of prosecutors-punishment for the killing of soldiers or retribution for the deaths of civilians. The prosecution also loses sight of the regrettable fact that in total war and in rebellion the killing of civilians, the laying waste of civilian economies, the massacre of innocent people, the blowing up of passenger airplanes, and other acts of terrorism are all used by those engaged in rebellion. We cannot and should not try to ascertain the intent of rebels for each single act unless the act is plainly not connected to the rebellion. We cannot use Article 48 of the Revised Penal Code in lieu of still-to- be-enacted legislation. The killing of civilians during a rebel attack on military facilities furthers the rebellion and is part of the rebellion. The trial court was certainly aware of all the above considerations. I cannot understand why the trial Judge issued the warrant of arrest which categorically states therein that the accused was not entitled to bail. The petitioner was compelled to come to us so he would not be arrested without bail for a nonexistent crime. The trial court forgot to apply an established doctrine of the Supreme Court. Worse, it issued a warrant which reversed 34 years of established procedure based on a well-known Supreme Court ruling. All courts should remember that they form part of an independent judicial system; they do not belong to the prosecution service. A court should never play into the hands of the prosecution and blindly comply with its erroneous manifestations. Faced with an information charging a manifestly non-existent crime, the duty of a trial court is to throw it out. Or, at the very least and where possible, make it conform to the law. A lower court cannot re-examine and reverse a decision of the Supreme Court especially a decision consistently followed for 34 years. Where a Judge disagrees with a Supreme Court ruling, he is free to express his reservations in the body of his decision, order, or resolution. However, any judgment he renders, any order he prescribes, and any processes he issues must follow the Supreme Court precedent. A trial court has no jurisdiction to reverse or ignore precedents of the Supreme Court. In this particular case, it should have been the Solicitor General coming to this Court to question the lower court's rejection of the application for a warrant of arrest without bail. It should have been the Solicitor-General provoking the issue of re-examination instead of the petitioners asking to be freed from their arrest for a non-existent crime. The principle bears repeating: Respondent Court of Appeals really was devoid of any choice at all. It could not have ruled in any other way on the legal question raised. This Tribunal having spoken, its duty was to obey. It is as simple as that. There is relevance to this excerpt from Barrera v. Barrera. (L-31589, July 31, 1970, 34 SCRA 98) 'The delicate task of ascertaining the significance that attaches to a constitutional or statutory provision, an executive order, a procedural norm or a municipal ordinance is committed to the judiciary. It thus discharges a role no less crucial than that appertaining to the other two departments in the maintenance of the rule of law. To assure stability in legal relations and avoid confusion, it has to speak with one voice. It does so with finality, logically and rightly, through the highest judicial organ, this Court. What it says then should be definitive and authoritative, binding on those occupying the lower ranks in the judicial hierarchy. They have to defer and to submit.' (Ibid, 107. The opinion of Justice Laurel in People v. Vera, 65 Phil. 56 [1937] was cited). The ensuing paragraph of the opinion in Barrera further emphasizes the point: Such a

thought was reiterated in an opinion of Justice J.B.L. Reyes and further emphasized in these words: 'Judge Gaudencio Cloribel need not be reminded that the Supreme Court, by tradition and in our system of judicial administration, has the last word on what the law is; it is the final arbiter of any justifiable controversy. There is only one Supreme Court from whose decisions all other courts should take their bearings. (Ibid. Justice J.B.L. Reyes spoke thus in Albert v. Court of First Instance of Manila (Br. VI), L-26364, May 29, 1968, 23 SCRA 948, 961. (Tugade v. Court of Appeals, 85 SCRA 226 [1978]. See also Albert v. Court of First Instance, 23 SCRA 948 [1968] and Vir-Jen Shipping and Marine Services, Inc. v. NLRC, 125 SCRA 577 [1983]) I find the situation in Spouses Panlilio v. Prosecutors Fernando de Leon, et al. even more inexplicable. In the case of the Panlilios, any probable cause to commit the non- existent crime of rebellion complexed with murder exists only in the minds of the prosecutors, not in the records of the case. I have gone over the records and pleadings furnished to the members of the Supreme Court. I listened intently to the oral arguments during the hearing and it was quite apparent that the constitutional requirement of probable cause was not satisfied. In fact, in answer to my query for any other proofs to support the issuance of a warrant of arrest, the answer was that the evidence would be submitted in due time to the trial court. The spouses Panlilio and one parent have been in the restaurant business for decades. Under the records of these petitions, any restaurant owner or hotel manager who serves food to rebels is a co-conspirator in the rebellion. The absurdity of this proposition is apparent if we bear in mind that rebels ride in buses and jeepneys, eat meals in rural houses when mealtime finds them in the vicinity, join weddings, fiestas, and other parties, play basketball with barrio youths, attend masses and church services and otherwise mix with people in various gatherings. Even if the hosts recognize them to be rebels and fail to shoo them away, it does not necessarily follow that the former are co-conspirators in a rebellion. The only basis for probable cause shown by the records of the Panlilio case is the alleged fact that the petitioners served food to rebels at the Enrile household and a hotel supervisor asked two or three of their waiters, without reason, to go on a vacation. Clearly, a much, much stronger showing of probable cause must be shown. In Salonga v. Cruz Pao, 134 SCRA 438 (1985), then Senator Salonga was charged as a conspirator in the heinous bombing of innocent civilians because the man who planted the bomb had, sometime earlier, appeared in a group photograph taken during a birthday party in the United States with the Senator and other guests. It was a case of conspiracy proved through a group picture. Here, it is a case of conspiracy sought to proved through the catering of food. The Court in Salonga stressed: The purpose of a preliminary investigation is to secure the innocent against hasty, malicious and oppressive prosecution, and to protect him from an open and public accusation of crime, from the trouble, expense and anxiety of a public trial, and also to protect the state from useless and expensive trials. (Trocio v. Manta, 118 SCRA 241; citing Hashimn v. Boncan, 71 Phil. 216). The right to a preliminary investigation is a statutory grant, and to withhold it would be to transgress constitutional due process. (See People v. Oandasa, 25 SCRA 277) However, in order to satisfy the due process clause it is not enough that the preliminary investigation is conducted in the sense of making sure that a transgressor shall not escape with impunity. A preliminary investigation serves not only the purposes of the State. More important, it is a part of the guarantees of freedom and fair play which are birthrights of all who live in our country. It is, therefore, imperative upon the fiscal or the judge as the case may be, to relieve the accused from the pain of going through a trial once it is ascertained that the evidence is insufficient to sustain a prima facie case or that no probable cause exists to form a sufficient belief as to the guilt of the accused. Although there is no general formula or fixed rule for the determination of probable cause since the same must be decided in the light of the conditions

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obtaining in given situations and its existence depends to a large degree upon the finding or opinion of the judge conducting the examination, such a finding should not disregard the facts before the judge nor run counter to the clear dictates of reason (See La Chemise Lacoste, S.A. v. Fernandez, 129 SCRA 391). The judge or fiscal, therefore, should not go on with the prosecution in the hope that some credible evidence might later turn up during trial for this would be a flagrant violation of a basic right which the courts are created to uphold. It bears repeating that the judiciary lives up to its mission by vitalizing and not denigrating constitutional rights. So it has been before. It should continue to be so. (id., pp. 461- 462) Because of the foregoing, I take exception to that part of the ponencia which will read the informations as charging simple rebellion. This case did not arise from innocent error. If an information charges murder but its contents show only the ingredients of homicide, the Judge may rightly read it as charging homicide. In these cases, however, there is a deliberate attempt to charge the petitioners for an offense which this Court has ruled as non-existent. The prosecution wanted Hernandez to be reversed. Since the prosecution has filed informations for a crime which, under our rulings, does not exist, those informations should be treated as null and void. New informations charging the correct offense should be filed. And in G.R. No. 92164, an extra effort should be made to see whether or not the Principle in Salonga v. Cruz Patio, et al. (supra) has been violated. The Court is not, in any way, preventing the Government from using more effective weapons to suppress rebellion. If the Government feels that the current situation calls for the imposition of more severe penalties like death or the creation of new crimes like rebellion complexed with murder, the remedy is with Congress, not the courts. I, therefore, vote to GRANT the petitions and to ORDER the respondent court to DISMISS the void informations for a non-existent crime. FELICIANO, J., concurring: I concur in the result reached by the majority of the Court. I believe that there are certain aspects of the Hernandez doctrine that, as an abstract question of law, could stand reexamination or clarification. I have in mind in particular matters such as the correct or appropriate relationship between Article 134 and Article 135 of the Revised Penal Code. This is a matter which relates to the legal concept of rebellion in our legal system. If one examines the actual terms of Article 134 (entitled: "Rebellion or Insurrection-How Committed"), it would appear that this Article specifies both the overt acts and the criminal purpose which, when put together, would constitute the offense of rebellion. Thus, Article 134 states that "the crime of rebellion is committed by rising publicly and taking arms against the Government "(i.e., the overt acts comprising rebellion), "for the purpose of (i.e., the specific criminal intent or political objective) removing from the allegiance to said government or its laws the territory of the Republic of the Philippines or any part thereof, or any body of land, naval or other armed forces, or depriving the Chief Executive or the Legislature, wholly or partially, of their powers or prerogatives." At the same time, Article 135 (entitled: "Penalty for Rebellion or Insurrection.") sets out a listing of acts or particular measures which appear to fall under the rubric of rebellion or insurrection: "engaging in war against the forces of the Government, destroying property or committing serious violence, exacting contributions or diverting public funds from the lawful purpose for which they have been appropriated." Are these modalities of rebellion generally? Or are they particular modes by which those "who promote [ ], maintain [ ] or head [ ] a rebellion or insurrection" commit rebellion, or particular modes of participation in a rebellion by public officers or employees? Clearly, the scope of the

legal concept of rebellion relates to the distinction between, on the one hand, the indispensable acts or ingredients of the crime of rebellion under the Revised Penal Code and, on the other hand, differing optional modes of seeking to carry out the political or social objective of the rebellion or insurrection. The difficulty that is at once raised by any effort to examine once more even the above threshold questions is that the results of such re-examination may well be that acts which under the Hernandez doctrine are absorbed into rebellion, may be characterized as separate or discrete offenses which, as a matter of law, can either be prosecuted separately from rebellion or prosecuted under the provisions of Article 48 of the Revised Penal Code, which (both Clause 1 and Clause 2 thereof) clearly envisage the existence of at least two (2) distinct offenses. To reach such a conclusion in the case at bar, would, as far as I can see, result in colliding with the fundamental non-retroactivity principle (Article 4, Civil Code; Article 22, Revised Penal Code; both in relation to Article 8, Civil Code). The non-retroactivity rule applies to statutes principally. But, statutes do not exist in the abstract but rather bear upon the lives of people with the specific form given them by judicial decisions interpreting their norms. Judicial decisions construing statutory norms give specific shape and content to such norms. In time, the statutory norms become encrusted with the glosses placed upon them by the courts and the glosses become integral with the norms (Cf Caltex v. Palomar, 18 SCRA 247 [1966]). Thus, while in legal theory, judicial interpretation of a statute becomes part of the law as of the date that the law was originally enacted, I believe this theory is not to be applied rigorously where a new judicial doctrine is announced, in particular one overruling a previous existing doctrine of long standing (here, 36 years) and most specially not where the statute construed is criminal in nature and the new doctrine is more onerous for the accused than the pre-existing one (People v. Jabinal, 55 SCRA 607 [1974]; People v. Licera, 65 SCRA 270 [1975]; Gumabon v. Director of Prisons, 37 SCRA 420 [1971]). Moreover, the non-retroactivity rule whether in respect of legislative acts or judicial decisions has constitutional implications. The prevailing rule in the United States is that a judicial decision that retroactively renders an act criminal or enhances the severity of the penalty prescribed for an offense, is vulnerable to constitutional challenge based upon the rule against ex post facto laws and the due process clause (Bouie v. City of Columbia, 378 US 347,12 L. Ed. 2d 894 [1964]; Marks v. U.S., 43 US 188, 51 L. Ed. 2d 260 [1977]; Devine v. New Mexico Department of Corrections, 866 F. 2d 339 [1989]). It is urged by the Solicitor General that the nonretroactivity principle does not present any real problem for the reason that the Hernandez doctrine was based upon Article 48, second clause, of the Revised Penal Code and not upon the first clause thereof, while it is precisely the first clause of Article 48 that the Government here invokes. It is, however, open to serious doubt whether Hernandez can reasonably be so simply and sharply characterized. And assuming the Hernandez could be so characterized, subsequent cases refer to the Hernandezdoctrine in terms which do not distinguish clearly between the first clause and the second clause of Article 48 (e.g., People v. Geronimo, 100 Phil. 90 [1956]; People v. Rodriguez, 107 Phil. 659 [1960]). Thus, it appears to me that the critical question would be whether a man of ordinary intelligence would have necessarily read or understood the Hernandez doctrine as referring exclusively to Article 48, second clause. Put in slightly different terms, the important question would be whether the new doctrine here proposed by the Government could fairly have been derived by a man of average intelligence (or counsel of average competence in the law) from an examination of Articles 134 and 135 of the Revised Penal Code as interpreted by the Court in the Hernandez and subsequent cases. To formulate the question ill these terms would almost be to compel a negative answer, especially in view of the conclusions reached by the Court and its several Members today.

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Finally, there appears to be no question that the new doctrine that the Government would have us discover for the first time since the promulgation of the Revised Penal Code in 1932, would be more onerous for the respondent accused than the simple application of the Hernandez doctrine that murders which have been committed on the occasion of and in furtherance of the crime of rebellion must be deemed absorbed in the offense of simple rebellion. I agree therefore that the information in this case must be viewed as charging only the crime of simple rebellion. FERNAN, C.J., concurring and dissenting: I am constrained to write this separate opinion on what seems to be a rigid adherence to the 1956 ruling of the Court. The numerous challenges to the doctrine enunciated in the case of People vs. Hernandez, 99 Phil. 515 (1956) should at once demonstrate the need to redefine the applicability of said doctrine so as to make it conformable with accepted and well-settled principles of criminal law and jurisprudence. To my mind, the Hernandez doctrine should not be interpreted as an all-embracing authority for the rule that all common crimes committed on the occasion, or in furtherance of, or in connection with, rebellion are absorbed by the latter. To that extent, I cannot go along with the view of the majority in the instant case that 'Hernandez remains binding doctrine operating to prohibit the complexing of rebellion with any other offense committed on the occasion thereof, either as a means necessary to its commission or as an unintended effect of an activity that constitutes rebellion" (p. 9, Decision). The Hernandez doctrine has served the purpose for which it was appealed by the Court in 1956 during the communist-inspired rebellion of the Huks. The changes in our society in the span of 34 years since then have far-reaching effects on the all-embracing applicability of the doctrine considering the emergence of alternative modes of seizing the powers of the duly constituted Government not contemplated in Articles 134 and 135 of the Revised Penal Code and their consequent effects on the lives of our people. The doctrine was good law then, but I believe that there is a certain aspect of the Hernandez doctrine that needs clarification. With all due respect to the views of my brethren in the Court, I believe that the Court, in the instant case, should have further considered that distinction between acts or offenses which are indispensable in the commission of rebellion, on the one hand, and those acts or offenses that are merely necessary but not indispensable in the commission of rebellion, on the other. The majority of the Court is correct in adopting, albeit impliedly, the view in Hernandez case that when an offense perpetrated as a necessary means of committing another, which is an element of the latter, the resulting interlocking crimes should be considered as only one simple offense and must be deemed outside the operation of the complex crime provision (Article 48) of the Revised Penal Code. As in the case of Hernandez, the Court, however, failed in the instant case to distinguish what is indispensable from what is merely necessary in the commission of an offense, resulting thus in the rule that common crimes like murder, arson, robbery, etc. committed in the course or on the occasion of rebellion are absorbed or included in the latter as elements thereof. The relevance of the distinction is significant, more particularly, if applied to contemporaneous events happening in our country today. Theoretically, a crime which is indispensable in the commission of another must necessarily be an element of the latter; but a crime that is merely necessary but not indispensable in the commission of another is not an element of the latter, and if and when actually committed, brings the interlocking crime within the operation of the complex crime provision (Art. 48) of the Revised Penal Code. With that distinction, common crimes committed against Government forces and property in the course

of rebellion are properly considered indispensable overt acts of rebellion and are logically absorbed in it as virtual ingredients or elements thereof, but common crimes committed against the civilian population in the course or on the occasion of rebellion and in furtherance thereof, may be necessary but not indispensable in committing the latter, and may, therefore, not be considered as elements of the said crime of rebellion. To illustrate, the deaths occurring during armed confrontation or clashes between government forces and the rebels are absorbed in the rebellion, and would be those resulting from the bombing of military camps and installations, as these acts are indispensable in carrying out the rebellion. But deliberately shooting down an unarmed innocent civilian to instill fear or create chaos among the people, although done in the furtherance of the rebellion, should not be absorbed in the crime of rebellion as the felonious act is merely necessary, but not indispensable. In the latter case, Article 48 of the Revised Penal Code should apply. The occurrence of a coup d' etat in our country as a mode of seizing the powers of the duly-constituted government by staging surprise attacks or occupying centers of powers, of which this Court should take judicial notice, has introduced a new dimension to the interpretation of the provisions on rebellion and insurrection in the Revised Penal Code. Generally, as a mode of seizing the powers of the duly constituted government, it falls within the contemplation of rebellion under the Revised Penal Code, but, strictly construed, a coup d'etat per se is a class by itself. The manner of its execution and the extent and magnitude of its effects on the lives of the people distinguish a coup d'etat from the traditional definition and modes of commission attached by the Revised Penal Code to the crime of rebellion as applied by the Court to the communist-inspired rebellion of the 1950's. A coup d'etat may be executed successfully without its perpetrators resorting to the commission of other serious crimes such as murder, arson, kidnapping, robbery, etc. because of the element of surprise and the precise timing of its execution. In extreme cases where murder, arson, robbery, and other common crimes are committed on the occasion of a coup d' etat, the distinction referred to above on what is necessary and what is indispensable in the commission of the coup d'etat should be painstakingly considered as the Court should have done in the case of herein petitioners. I concur in the result insofar as the other issues are resolved by the Court but I take exception to the vote of the majority on the broad application of the Hernandez doctrine. BIDIN, J., concurring and dissenting: I concur with the majority opinion except as regards the dispositive portion thereof which orders the remand of the case to the respondent judge for further proceedings to fix the amount of bail to be posted by the petitioner. I submit that the proceedings need not be remanded to the respondent judge for the purpose of fixing bail since we have construed the indictment herein as charging simple rebellion, an offense which is bailable. Consequently,habeas corpus is the proper remedy available to petitioner as an accused who had been charged with simple rebellion, a bailable offense but who had been denied his right to bail by the respondent judge in violation of petitioner's constitutional right to bail. In view thereof, the responsibility of fixing the amount of bail and approval thereof when filed, devolves upon us, if complete relief is to be accorded to petitioner in the instant proceedings. It is indubitable that before conviction, admission to bail is a matter of right to the defendant, accused before the Regional Trial Court of an offense less than capital (Section 13 Article III, Constitution and Section 3, Rule 114). Petitioner is, before Us, on a petition for habeas corpus praying, among others, for his provisional release on bail. Since the offense charged (construed as simple rebellion) admits of bail, it is incumbent upon us m the exercise of our jurisdiction over the petition for habeas corpus (Section 5 (1), Article VIII, Constitution; Section 2, Rule 102), to grant petitioner his right to bail and having admitted him to bail, to fix the amount thereof in such sums as the court deems reasonable. Thereafter, the rules

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require that "the proceedings together with the bond" shall forthwith be certified to the respondent trial court (Section 14, Rule 102). Accordingly, the cash bond in the amount of P 100,000.00 posted by petitioner for his provisional release pursuant to our resolution dated March 6, 1990 should now be deemed and admitted as his bail bond for his provisional release in the case (simple rebellion) pending before the respondent judge, without necessity of a remand for further proceedings, conditioned for his (petitioner's) appearance before the trial court to abide its order or judgment in the said case. SARMIENTO, J., concurring and dissenting: I agree that People v. Hernandez 1 should abide. More than three decades after which it was penned, it has firmly settled in the tomes of our jurisprudence as correct doctrine. As Hernandez put it, rebellion means "engaging m war against the forces of the government," 2 which implies "resort to arms, requisition of property and services, collection of taxes and contributions, restraint of liberty, damage to property, physical injuries and loss of life, and the hunger, illness and unhappiness that war leaves in its wake. ..." 3 whether committed in furtherance, of as a necessary means for the commission, or in the course, of rebellion. To say that rebellion may be complexed with any other offense, in this case murder, is to play into a contradiction in terms because exactly, rebellion includes murder, among other possible crimes. I also agree that the information may stand as an accusation for simple rebellion. Since the acts complained of as constituting rebellion have been embodied in the information, mention therein of murder as a complexing offense is a surplusage, because in any case, the crime of rebellion is left fully described. 4 At any rate, the government need only amend the information by a clerical correction, since an amendment will not alter its substance. I dissent, however, insofar as the majority orders the remand of the matter of bail to the lower court. I take it that when we, in our Resolution of March 6, 1990, granted the petitioner "provisional liberty" upon the filing of a bond of P100,000.00, we granted him bail. The fact that we gave him "provisional liberty" is in my view, of no moment, because bail means provisional liberty. It will serve no useful purpose to have the trial court hear the incident again when we ourselves have been satisfied that the petitioner is entitled to temporary freedom. PADILLA, J., dissenting: I concur in the majority opinion insofar as it holds that the ruling in People vs. Hernandez, 99 Phil. 515 "remains binding doctrine operating to prohibit the complexing of rebellion with any other offense committed on the occasion thereof, either as a means necessary to its commission or as an unintended effect of an activity that constitutes rebellion." I dissent, however, from the majority opinion insofar as it holds that the information in question, while charging the complex crime of rebellion with murder and multiple frustrated murder, "is to be read as charging simple rebellion." The present cases are to be distinguished from the Hernandez case in at least one (1) material respect. In theHernandez case, this Court was confronted with an appealed case, i.e., Hernandez had been convicted by the trial court of the complex crime of rebellion with murder, arson and robbery, and his plea to be released on bail before the Supreme Court, pending appeal, gave birth to the now celebrated Hernandez doctrine that the crime of rebellion complexed with murder, arson and robbery does not exist. In the present cases, on the other hand, the Court is confronted with an original case, i.e., where an information has been recently filed in the

trial court and the petitioners have not even pleaded thereto. Furthermore, the Supreme Court, in the Hernandez case, was "ground-breaking" on the issue of whether rebellion can be complexed with murder, arson, robbery, etc. In the present cases, on the other hand, the prosecution and the lower court, not only had the Hernandez doctrine (as case law), but Executive Order No. 187 of President Corazon C. Aquino dated 5 June 1987 (as statutory law) to bind them to the legal proposition that the crime of rebellion complexed with murder, and multiple frustrated murder does not exist. And yet, notwithstanding these unmistakable and controlling beacon lights-absent when this Court laid down theHernandez doctrine-the prosecution has insisted in filing, and the lower court has persisted in hearing, an information charging the petitioners with rebellion complexed with murder an multiple frustrated murder. That information is clearly a nullity and plainly void ab initio. Its head should not be allowed to surface. As a nullity in substantive law, it charges nothing; it has given rise to nothing. The warrants of arrest issued pursuant thereto are as null and void as the information on which they are anchored. And, since the entire question of the information's validity is before the Court in these habeas corpus cases, I venture to say that the information is fatally defective,even under procedural law, because it charges more than one (1) offense (Sec. 13, Rule 110, Rules of Court). I submit then that it is not for this Court to energize a dead and, at best, fatally decrepit information by labelling or "baptizing" it differently from what it announces itself to be. The prosecution must file an entirely new and properinformation, for this entire exercise to merit the serious consideration of the courts. ACCORDINGLY, I vote to GRANT the petitions, QUASH the warrants of arrest, and ORDER the information for rebellion complexed with murder and multiple frustrated murder in Criminal Case Nos. 90-10941, RTC of Quezon City, DISMISSED. Consequently, the petitioners should be ordered permanently released and their bails cancelled. Paras, J., concurs. Separate Opinions MELENCIO-HERRERA, J., concurring: I join my colleagues in holding that the Hernandez doctrine, which has been with us for the past three decades, remains good law and, thus, should remain undisturbed, despite periodic challenges to it that, ironically, have only served to strengthen its pronouncements. I take exception to the view, however, that habeas corpus was not the proper remedy. Had the Information filed below charged merely the simple crime of Rebellion, that proposition could have been plausible. But that Information charged Rebellion complexed with Murder and Multiple Frustrated Murder, a crime which does not exist in our statute books. The charge was obviously intended to make the penalty for the most serious offense in its maximum period imposable upon the offender pursuant to Article 48 of the Revised Penal Code. Thus, no bail was recommended in the Information nor was any prescribed in the Warrant of Arrest issued by the Trial Court. Under the attendant circumstances, therefore, to have filed a Motion to Quash before the lower Court would not have brought about the speedy relief from unlawful restraint that petitioner was seeking. During the pendency of said Motion before the lower Court, petitioner could have continued to languish in detention. Besides, the Writ ofHabeas Corpus may still issue even if another remedy, which is less effective, may be availed of (Chavez vs. Court of Appeals, 24 SCRA 663). It is true that habeas corpus would ordinarily not he when a person is under custody by virtue of a process issued by a Court. The Court, however, must have jurisdiction to issue the process. In this case, the Court below must be deemed to

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have been ousted of jurisdiction when it illegally curtailed petitioner's liberty. Habeas corpus is thus available. The writ of habeas corpus is available to relieve persons from unlawful restraint. But where the detention or confinement is the result of a process issued by the court or judge or by virtue of a judgment or sentence, the writ ordinarily cannot be availed of. It may still be invoked though if the process, judgment or sentence proceeded from a court or tribunal the jurisdiction of which may be assailed. Even if it had authority to act at the outset, it is now the prevailing doctrine that a deprivation of constitutional right, if shown to exist, would oust it of jurisdiction. In such a case, habeas corpus could be relied upon to regain one's liberty (Celeste vs. People, 31 SCRA 391) [Emphasis emphasis]. The Petition for habeas corpus was precisely premised on the violation of petitioner's constitutional right to bail inasmuch as rebellion, under the present state of the law, is a bailable offense and the crime for which petitioner stands accused of and for which he was denied bail is non-existent in law. While litigants should, as a rule, ascend the steps of the judicial ladder, nothing should stop this Court from taking cognizance of petitions brought before it raising urgent constitutional issues, any procedural flaw notwithstanding. The rules on habeas corpus are to be liberally construed (Ganaway v. Quilen, 42 Phil. 805), the writ of habeas corpus being the fundamental instrument for safeguarding individual freedom against arbitrary and lawless state action. The scope and flexibility of the writ-its capacity to reach all manner of illegal detention-its ability to cut through barriers of form and procedural mazes-have always been emphasized and jealously guarded by courts and lawmakers (Gumabon v. Director of Bureau of Prisons, 37 SCRA 420) [emphasis supplied]. The proliferation of cases in this Court, which followed in the wake of this Petition, was brought about by the insistence of the prosecution to charge the crime of Rebellion complexed with other common offenses notwithstanding the fact that this Court had not yet ruled on the validity of that charge and had granted provisional liberty to petitioner. If, indeed, it is desired to make the crime of Rebellion a capital offense (now punishable by reclusion perpetua), the remedy lies in legislation. But Article 142-A 1 of the Revised Penal Code, along with P.D. No. 942, were repealed, for being "repressive," by EO No. 187 on 5 June 1987. EO 187 further explicitly provided that Article 134 (and others enumerated) of the Revised Penal Code was "restored to its full force and effect as it existed before said amendatory decrees." Having been so repealed, this Court is bereft of power to legislate into existence, under the guise of reexamining a settled doctrine, a "creature unknown in law"- the complex crime of Rebellion with Murder. The remand of the case to the lower Court for further proceedings is in order. The Writ of Habeas Corpushas served its purpose. GUTIERREZ, JR., J., concurring: I join the Court's decision to grant the petition. In reiterating the rule that under existing law rebellion may not be complexed with murder, the Court emphasizes that it cannot legislate a new-crime into existence nor prescribe a penalty for its commission. That function is exclusively for Congress. I write this separate opinion to make clear how I view certain issues arising from these cases, especially on how the defective informations filed by the prosecutors should have been treated. I agree with the ponente that a petition for habeas corpus is ordinarily not the proper procedure to assert the right to bail. Under the special circumstances of this case, however, the petitioners had no other recourse. They had to come to us. First, the trial court was certainly aware of the decision in People v. Hernandez, 99 Phil. 515 (1956) that there

is no such crime in our statute books as rebellion complexed with murder, that murder committed in connection with a rebellion is absorbed by the crime of rebellion, and that a resort to arms resulting in the destruction of life or property constitutes neither two or more offenses nor a complex crime but one crimerebellion pure and simple. Second, Hernandez has been the law for 34 years. It has been reiterated in equally sensational cases. All lawyers and even law students are aware of the doctrine. Attempts to have the doctrine re-examined have been consistently rejected by this Court. Third, President Marcos through the use of his then legislative powers, issued Pres. Decree 942, thereby installing the new crime of rebellion complexed with offenses like murder where graver penalties are imposed by law. However, President Aquino using her then legislative powers expressly repealed PD 942 by issuing Exec. Order 187. She thereby erased the crime of rebellion complexed with murder and made it clear that the Hernandezdoctrine remains the controlling rule. The prosecution has not explained why it insists on resurrecting an offense expressly wiped out by the President. The prosecution, in effect, questions the action of the President in repealing a repressive decree, a decree which, according to the repeal order, is violative of human rights. Fourth, any re-examination of the Hernandez doctrine brings the ex post facto principle into the picture. Decisions of this Court form part of our legal system. Even if we declare that rebellion may be complexed with murder, our declaration can not be made retroactive where the effect is to imprison a person for a crime which did not exist until the Supreme Court reversed itself. And fifth, the attempts to distinguish this case from the Hernandez case by stressing that the killings charged in the information were committed "on the occasion of, but not a necessary means for, the commission of rebellion" result in outlandish consequences and ignore the basic nature of rebellion. Thus, under the prosecution theory a bomb dropped on PTV-4 which kills government troopers results in simple rebellion because the act is a necessary means to make the rebellion succeed. However, if the same bomb also kills some civilians in the neighborhood, the dropping of the bomb becomes rebellion complexed with murder because the killing of civilians is not necessary for the success of a rebellion and, therefore, the killings are only "on the occasion of but not a 'necessary means for' the commission of rebellion. This argument is puerile. The crime of rebellion consists of many acts. The dropping of one bomb cannot be isolated as a separate crime of rebellion. Neither should the dropping of one hundred bombs or the firing of thousands of machine gun bullets be broken up into a hundred or thousands of separate offenses, if each bomb or each bullet happens to result in the destruction of life and property. The same act cannot be punishable by separate penalties depending on what strikes the fancy of prosecutors-punishment for the killing of soldiers or retribution for the deaths of civilians. The prosecution also loses sight of the regrettable fact that in total war and in rebellion the killing of civilians, the laying waste of civilian economies, the massacre of innocent people, the blowing up of passenger airplanes, and other acts of terrorism are all used by those engaged in rebellion. We cannot and should not try to ascertain the intent of rebels for each single act unless the act is plainly not connected to the rebellion. We cannot use Article 48 of the Revised Penal Code in lieu of still-to- be-enacted legislation. The killing of civilians during a rebel attack on military facilities furthers the rebellion and is part of the rebellion. The trial court was certainly aware of all the above considerations. I cannot understand why the trial Judge issued the warrant of arrest which categorically states therein that the accused was not entitled to bail. The petitioner was compelled to come to us so he would not be arrested without bail for a nonexistent crime. The trial court forgot to apply an established doctrine of the Supreme Court. Worse, it issued a warrant which reversed

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34 years of established procedure based on a wellknown Supreme Court ruling. All courts should remember that they form part of an independent judicial system; they do not belong to the prosecution service. A court should never play into the hands of the prosecution and blindly comply with its erroneous manifestations. Faced with an information charging a manifestly non-existent crime, the duty of a trial court is to throw it out. Or, at the very least and where possible, make it conform to the law. A lower court cannot re-examine and reverse a decision of the Supreme Court especially a decision consistently followed for 34 years. Where a Judge disagrees with a Supreme Court ruling, he is free to express his reservations in the body of his decision, order, or resolution. However, any judgment he renders, any order he prescribes, and any processes he issues must follow the Supreme Court precedent. A trial court has no jurisdiction to reverse or ignore precedents of the Supreme Court. In this particular case, it should have been the Solicitor General coming to this Court to question the lower court's rejection of the application for a warrant of arrest without bail. It should have been the Solicitor-General provoking the issue of re-examination instead of the petitioners asking to be freed from their arrest for a non-existent crime. The principle bears repeating: Respondent Court of Appeals really was devoid of any choice at all. It could not have ruled in any other way on the legal question raised. This Tribunal having spoken, its duty was to obey. It is as simple as that. There is relevance to this excerpt from Barrera v. Barrera. (L-31589, July 31, 1970, 34 SCRA 98) 'The delicate task of ascertaining the significance that attaches to a constitutional or statutory provision, an executive order, a procedural norm or a municipal ordinance is committed to the judiciary. It thus discharges a role no less crucial than that appertaining to the other two departments in the maintenance of the rule of law. To assure stability in legal relations and avoid confusion, it has to speak with one voice. It does so with finality, logically and rightly, through the highest judicial organ, this Court. What it says then should be definitive and authoritative, binding on those occupying the lower ranks in the judicial hierarchy. They have to defer and to submit.' (Ibid, 107. The opinion of Justice Laurel in People v. Vera, 65 Phil. 56 [1937] was cited). The ensuing paragraph of the opinion in Barrera further emphasizes the point: Such a thought was reiterated in an opinion of Justice J.B.L. Reyes and further emphasized in these words: 'Judge Gaudencio Cloribel need not be reminded that the Supreme Court, by tradition and in our system of judicial administration, has the last word on what the law is; it is the final arbiter of any justifiable controversy. There is only one Supreme Court from whose decisions all other courts should take their bearings. (Ibid. Justice J.B.L. Reyes spoke thus in Albert v. Court of First Instance of Manila (Br. VI), L-26364, May 29, 1968, 23 SCRA 948, 961. (Tugade v. Court of Appeals, 85 SCRA 226 [1978]. See also Albert v. Court of First Instance, 23 SCRA 948 [1968] and Vir-Jen Shipping and Marine Services, Inc. v. NLRC, 125 SCRA 577 [1983]) I find the situation in Spouses Panlilio v. Prosecutors Fernando de Leon, et al. even more inexplicable. In the case of the Panlilios, any probable cause to commit the non- existent crime of rebellion complexed with murder exists only in the minds of the prosecutors, not in the records of the case. I have gone over the records and pleadings furnished to the members of the Supreme Court. I listened intently to the oral arguments during the hearing and it was quite apparent that the constitutional requirement of probable cause was not satisfied. In fact, in answer to my query for any other proofs to support the issuance of a warrant of arrest, the answer was that the evidence would be submitted in due time to the trial court.

The spouses Panlilio and one parent have been in the restaurant business for decades. Under the records of these petitions, any restaurant owner or hotel manager who serves food to rebels is a co-conspirator in the rebellion. The absurdity of this proposition is apparent if we bear in mind that rebels ride in buses and jeepneys, eat meals in rural houses when mealtime finds them in the vicinity, join weddings, fiestas, and other parties, play basketball with barrio youths, attend masses and church services and otherwise mix with people in various gatherings. Even if the hosts recognize them to be rebels and fail to shoo them away, it does not necessarily follow that the former are co-conspirators in a rebellion. The only basis for probable cause shown by the records of the Panlilio case is the alleged fact that the petitioners served food to rebels at the Enrile household and a hotel supervisor asked two or three of their waiters, without reason, to go on a vacation. Clearly, a much, much stronger showing of probable cause must be shown. In Salonga v. Cruz Pao, 134 SCRA 438 (1985), then Senator Salonga was charged as a conspirator in the heinous bombing of innocent civilians because the man who planted the bomb had, sometime earlier, appeared in a group photograph taken during a birthday party in the United States with the Senator and other guests. It was a case of conspiracy proved through a group picture. Here, it is a case of conspiracy sought to proved through the catering of food. The Court in Salonga stressed: The purpose of a preliminary investigation is to secure the innocent against hasty, malicious and oppressive prosecution, and to protect him from an open and public accusation of crime, from the trouble, expense and anxiety of a public trial, and also to protect the state from useless and expensive trials. (Trocio v. Manta, 118 SCRA 241; citing Hashimn v. Boncan, 71 Phil. 216). The right to a preliminary investigation is a statutory grant, and to withhold it would be to transgress constitutional due process. (See People v. Oandasa, 25 SCRA 277) However, in order to satisfy the due process clause it is not enough that the preliminary investigation is conducted in the sense of making sure that a transgressor shall not escape with impunity. A preliminary investigation serves not only the purposes of the State. More important, it is a part of the guarantees of freedom and fair play which are birthrights of all who live in our country. It is, therefore, imperative upon the fiscal or the judge as the case may be, to relieve the accused from the pain of going through a trial once it is ascertained that the evidence is insufficient to sustain a prima facie case or that no probable cause exists to form a sufficient belief as to the guilt of the accused. Although there is no general formula or fixed rule for the determination of probable cause since the same must be decided in the light of the conditions obtaining in given situations and its existence depends to a large degree upon the finding or opinion of the judge conducting the examination, such a finding should not disregard the facts before the judge nor run counter to the clear dictates of reason (See La Chemise Lacoste, S.A. v. Fernandez, 129 SCRA 391). The judge or fiscal, therefore, should not go on with the prosecution in the hope that some credible evidence might later turn up during trial for this would be a flagrant violation of a basic right which the courts are created to uphold. It bears repeating that the judiciary lives up to its mission by vitalizing and not denigrating constitutional rights. So it has been before. It should continue to be so. (id., pp. 461- 462) Because of the foregoing, I take exception to that part of the ponencia which will read the informations as charging simple rebellion. This case did not arise from innocent error. If an information charges murder but its contents show only the ingredients of homicide, the Judge may rightly read it as charging homicide. In these cases, however, there is a deliberate attempt to charge the petitioners for an offense which this Court has ruled as non-existent. The prosecution wanted Hernandez to be reversed. Since the prosecution has filed informations for a crime which, under our rulings, does not exist, those informations should be treated as null and void. New informations charging the correct offense should be filed. And in G.R. No. 92164, an extra effort should be made to

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see whether or not the Principle in Salonga v. Cruz Patio, et al. (supra) has been violated. The Court is not, in any way, preventing the Government from using more effective weapons to suppress rebellion. If the Government feels that the current situation calls for the imposition of more severe penalties like death or the creation of new crimes like rebellion complexed with murder, the remedy is with Congress, not the courts. I, therefore, vote to GRANT the petitions and to ORDER the respondent court to DISMISS the void informations for a non-existent crime. FELICIANO, J., concurring: I concur in the result reached by the majority of the Court. I believe that there are certain aspects of the Hernandez doctrine that, as an abstract question of law, could stand reexamination or clarification. I have in mind in particular matters such as the correct or appropriate relationship between Article 134 and Article 135 of the Revised Penal Code. This is a matter which relates to the legal concept of rebellion in our legal system. If one examines the actual terms of Article 134 (entitled: "Rebellion or Insurrection-How Committed"), it would appear that this Article specifies both the overt acts and the criminal purpose which, when put together, would constitute the offense of rebellion. Thus, Article 134 states that "the crime of rebellion is committed by rising publicly and taking arms against the Government "(i.e., the overt acts comprising rebellion), "for the purpose of (i.e., the specific criminal intent or political objective) removing from the allegiance to said government or its laws the territory of the Republic of the Philippines or any part thereof, or any body of land, naval or other armed forces, or depriving the Chief Executive or the Legislature, wholly or partially, of their powers or prerogatives." At the same time, Article 135 (entitled: "Penalty for Rebellion or Insurrection.") sets out a listing of acts or particular measures which appear to fall under the rubric of rebellion or insurrection: "engaging in war against the forces of the Government, destroying property or committing serious violence, exacting contributions or diverting public funds from the lawful purpose for which they have been appropriated." Are these modalities of rebellion generally? Or are they particular modes by which those "who promote [ ], maintain [ ] or head [ ] a rebellion or insurrection" commit rebellion, or particular modes of participation in a rebellion by public officers or employees? Clearly, the scope of the legal concept of rebellion relates to the distinction between, on the one hand, the indispensable acts or ingredients of the crime of rebellion under the Revised Penal Code and, on the other hand, differing optional modes of seeking to carry out the political or social objective of the rebellion or insurrection. The difficulty that is at once raised by any effort to examine once more even the above threshold questions is that the results of such re-examination may well be that acts which under the Hernandez doctrine are absorbed into rebellion, may be characterized as separate or discrete offenses which, as a matter of law, can either be prosecuted separately from rebellion or prosecuted under the provisions of Article 48 of the Revised Penal Code, which (both Clause 1 and Clause 2 thereof) clearly envisage the existence of at least two (2) distinct offenses. To reach such a conclusion in the case at bar, would, as far as I can see, result in colliding with the fundamental non-retroactivity principle (Article 4, Civil Code; Article 22, Revised Penal Code; both in relation to Article 8, Civil Code). The non-retroactivity rule applies to statutes principally. But, statutes do not exist in the abstract but rather bear upon the lives of people with the specific form given them by judicial decisions interpreting their norms. Judicial decisions construing statutory norms give specific shape and content to such norms. In time, the statutory norms become

encrusted with the glosses placed upon them by the courts and the glosses become integral with the norms (Cf Caltex v. Palomar, 18 SCRA 247 [1966]). Thus, while in legal theory, judicial interpretation of a statute becomes part of the law as of the date that the law was originally enacted, I believe this theory is not to be applied rigorously where a new judicial doctrine is announced, in particular one overruling a previous existing doctrine of long standing (here, 36 years) and most specially not where the statute construed is criminal in nature and the new doctrine is more onerous for the accused than the pre-existing one (People v. Jabinal, 55 SCRA 607 [1974]; People v. Licera, 65 SCRA 270 [1975]; Gumabon v. Director of Prisons, 37 SCRA 420 [1971]). Moreover, the non-retroactivity rule whether in respect of legislative acts or judicial decisions has constitutional implications. The prevailing rule in the United States is that a judicial decision that retroactively renders an act criminal or enhances the severity of the penalty prescribed for an offense, is vulnerable to constitutional challenge based upon the rule against ex post facto laws and the due process clause (Bouie v. City of Columbia, 378 US 347,12 L. Ed. 2d 894 [1964]; Marks v. U.S., 43 US 188, 51 L. Ed. 2d 260 [1977]; Devine v. New Mexico Department of Corrections, 866 F. 2d 339 [1989]). It is urged by the Solicitor General that the nonretroactivity principle does not present any real problem for the reason that the Hernandez doctrine was based upon Article 48, second clause, of the Revised Penal Code and not upon the first clause thereof, while it is precisely the first clause of Article 48 that the Government here invokes. It is, however, open to serious doubt whether Hernandez can reasonably be so simply and sharply characterized. And assuming the Hernandez could be so characterized, subsequent cases refer to the Hernandezdoctrine in terms which do not distinguish clearly between the first clause and the second clause of Article 48 (e.g., People v. Geronimo, 100 Phil. 90 [1956]; People v. Rodriguez, 107 Phil. 659 [1960]). Thus, it appears to me that the critical question would be whether a man of ordinary intelligence would have necessarily read or understood the Hernandez doctrine as referring exclusively to Article 48, second clause. Put in slightly different terms, the important question would be whether the new doctrine here proposed by the Government could fairly have been derived by a man of average intelligence (or counsel of average competence in the law) from an examination of Articles 134 and 135 of the Revised Penal Code as interpreted by the Court in the Hernandez and subsequent cases. To formulate the question ill these terms would almost be to compel a negative answer, especially in view of the conclusions reached by the Court and its several Members today. Finally, there appears to be no question that the new doctrine that the Government would have us discover for the first time since the promulgation of the Revised Penal Code in 1932, would be more onerous for the respondent accused than the simple application of the Hernandez doctrine that murders which have been committed on the occasion of and in furtherance of the crime of rebellion must be deemed absorbed in the offense of simple rebellion. I agree therefore that the information in this case must be viewed as charging only the crime of simple rebellion. FERNAN, C.J., concurring and dissenting: I am constrained to write this separate opinion on what seems to be a rigid adherence to the 1956 ruling of the Court. The numerous challenges to the doctrine enunciated in the case of People vs. Hernandez, 99 Phil. 515 (1956) should at once demonstrate the need to redefine the applicability of said doctrine so as to make it conformable with accepted and well-settled principles of criminal law and jurisprudence. To my mind, the Hernandez doctrine should not be interpreted as an all-embracing authority for the rule that all common crimes committed on the occasion, or in furtherance of, or in connection with, rebellion are absorbed by the latter. To that extent, I cannot go along with the view of the majority in the instant case that 'Hernandez remains binding doctrine operating to prohibit

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the complexing of rebellion with any other offense committed on the occasion thereof, either as a means necessary to its commission or as an unintended effect of an activity that constitutes rebellion" (p. 9, Decision). The Hernandez doctrine has served the purpose for which it was appealed by the Court in 1956 during the communist-inspired rebellion of the Huks. The changes in our society in the span of 34 years since then have far-reaching effects on the all-embracing applicability of the doctrine considering the emergence of alternative modes of seizing the powers of the duly constituted Government not contemplated in Articles 134 and 135 of the Revised Penal Code and their consequent effects on the lives of our people. The doctrine was good law then, but I believe that there is a certain aspect of the Hernandez doctrine that needs clarification. With all due respect to the views of my brethren in the Court, I believe that the Court, in the instant case, should have further considered that distinction between acts or offenses which are indispensable in the commission of rebellion, on the one hand, and those acts or offenses that are merely necessary but not indispensable in the commission of rebellion, on the other. The majority of the Court is correct in adopting, albeit impliedly, the view in Hernandez case that when an offense perpetrated as a necessary means of committing another, which is an element of the latter, the resulting interlocking crimes should be considered as only one simple offense and must be deemed outside the operation of the complex crime provision (Article 48) of the Revised Penal Code. As in the case of Hernandez, the Court, however, failed in the instant case to distinguish what is indispensable from what is merely necessary in the commission of an offense, resulting thus in the rule that common crimes like murder, arson, robbery, etc. committed in the course or on the occasion of rebellion are absorbed or included in the latter as elements thereof. The relevance of the distinction is significant, more particularly, if applied to contemporaneous events happening in our country today. Theoretically, a crime which is indispensable in the commission of another must necessarily be an element of the latter; but a crime that is merely necessary but not indispensable in the commission of another is not an element of the latter, and if and when actually committed, brings the interlocking crime within the operation of the complex crime provision (Art. 48) of the Revised Penal Code. With that distinction, common crimes committed against Government forces and property in the course of rebellion are properly considered indispensable overt acts of rebellion and are logically absorbed in it as virtual ingredients or elements thereof, but common crimes committed against the civilian population in the course or on the occasion of rebellion and in furtherance thereof, may be necessary but not indispensable in committing the latter, and may, therefore, not be considered as elements of the said crime of rebellion. To illustrate, the deaths occurring during armed confrontation or clashes between government forces and the rebels are absorbed in the rebellion, and would be those resulting from the bombing of military camps and installations, as these acts are indispensable in carrying out the rebellion. But deliberately shooting down an unarmed innocent civilian to instill fear or create chaos among the people, although done in the furtherance of the rebellion, should not be absorbed in the crime of rebellion as the felonious act is merely necessary, but not indispensable. In the latter case, Article 48 of the Revised Penal Code should apply. The occurrence of a coup d' etat in our country as a mode of seizing the powers of the duly-constituted government by staging surprise attacks or occupying centers of powers, of which this Court should take judicial notice, has introduced a new dimension to the interpretation of the provisions on rebellion and insurrection in the Revised Penal Code. Generally, as a mode of seizing the powers of the duly constituted

government, it falls within the contemplation of rebellion under the Revised Penal Code, but, strictly construed, a coup d'etat per se is a class by itself. The manner of its execution and the extent and magnitude of its effects on the lives of the people distinguish a coup d'etat from the traditional definition and modes of commission attached by the Revised Penal Code to the crime of rebellion as applied by the Court to the communist-inspired rebellion of the 1950's. A coup d'etat may be executed successfully without its perpetrators resorting to the commission of other serious crimes such as murder, arson, kidnapping, robbery, etc. because of the element of surprise and the precise timing of its execution. In extreme cases where murder, arson, robbery, and other common crimes are committed on the occasion of a coup d' etat, the distinction referred to above on what is necessary and what is indispensable in the commission of the coup d'etat should be painstakingly considered as the Court should have done in the case of herein petitioners. I concur in the result insofar as the other issues are resolved by the Court but I take exception to the vote of the majority on the broad application of the Hernandez doctrine. BIDIN, J., concurring and dissenting: I concur with the majority opinion except as regards the dispositive portion thereof which orders the remand of the case to the respondent judge for further proceedings to fix the amount of bail to be posted by the petitioner. I submit that the proceedings need not be remanded to the respondent judge for the purpose of fixing bail since we have construed the indictment herein as charging simple rebellion, an offense which is bailable. Consequently,habeas corpus is the proper remedy available to petitioner as an accused who had been charged with simple rebellion, a bailable offense but who had been denied his right to bail by the respondent judge in violation of petitioner's constitutional right to bail. In view thereof, the responsibility of fixing the amount of bail and approval thereof when filed, devolves upon us, if complete relief is to be accorded to petitioner in the instant proceedings. It is indubitable that before conviction, admission to bail is a matter of right to the defendant, accused before the Regional Trial Court of an offense less than capital (Section 13 Article III, Constitution and Section 3, Rule 114). Petitioner is, before Us, on a petition for habeas corpus praying, among others, for his provisional release on bail. Since the offense charged (construed as simple rebellion) admits of bail, it is incumbent upon us m the exercise of our jurisdiction over the petition for habeas corpus (Section 5 (1), Article VIII, Constitution; Section 2, Rule 102), to grant petitioner his right to bail and having admitted him to bail, to fix the amount thereof in such sums as the court deems reasonable. Thereafter, the rules require that "the proceedings together with the bond" shall forthwith be certified to the respondent trial court (Section 14, Rule 102). Accordingly, the cash bond in the amount of P 100,000.00 posted by petitioner for his provisional release pursuant to our resolution dated March 6, 1990 should now be deemed and admitted as his bail bond for his provisional release in the case (simple rebellion) pending before the respondent judge, without necessity of a remand for further proceedings, conditioned for his (petitioner's) appearance before the trial court to abide its order or judgment in the said case. SARMIENTO, J., concurring and dissenting: I agree that People v. Hernandez 1 should abide. More than three decades after which it was penned, it has firmly settled in the tomes of our jurisprudence as correct doctrine. As Hernandez put it, rebellion means "engaging m war against the forces of the government," 2 which implies "resort to arms, requisition of property and services, collection of taxes and contributions, restraint of liberty, damage to property, physical injuries and loss of life, and the hunger, illness and unhappiness that war leaves in its wake. ..." 3 whether committed in furtherance, of as a necessary means for the commission, or in the course, of rebellion. To say that rebellion may be complexed with

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any other offense, in this case murder, is to play into a contradiction in terms because exactly, rebellion includes murder, among other possible crimes. I also agree that the information may stand as an accusation for simple rebellion. Since the acts complained of as constituting rebellion have been embodied in the information, mention therein of murder as a complexing offense is a surplusage, because in any case, the crime of rebellion is left fully described. 4 At any rate, the government need only amend the information by a clerical correction, since an amendment will not alter its substance. I dissent, however, insofar as the majority orders the remand of the matter of bail to the lower court. I take it that when we, in our Resolution of March 6, 1990, granted the petitioner "provisional liberty" upon the filing of a bond of P100,000.00, we granted him bail. The fact that we gave him "provisional liberty" is in my view, of no moment, because bail means provisional liberty. It will serve no useful purpose to have the trial court hear the incident again when we ourselves have been satisfied that the petitioner is entitled to temporary freedom. PADILLA, J., dissenting: I concur in the majority opinion insofar as it holds that the ruling in People vs. Hernandez, 99 Phil. 515 "remains binding doctrine operating to prohibit the complexing of rebellion with any other offense committed on the occasion thereof, either as a means necessary to its commission or as an unintended effect of an activity that constitutes rebellion." I dissent, however, from the majority opinion insofar as it holds that the information in question, while charging the complex crime of rebellion with murder and multiple frustrated murder, "is to be read as charging simple rebellion." The present cases are to be distinguished from the Hernandez case in at least one (1) material respect. In theHernandez case, this Court was confronted with an appealed case, i.e., Hernandez had been convicted by the trial court of the complex crime of rebellion with murder, arson and robbery, and his plea to be released on bail before the Supreme Court, pending appeal, gave birth to the now celebrated Hernandez doctrine that the crime of rebellion complexed with murder, arson and robbery does not exist. In the present cases, on the other hand, the Court is confronted with an original case, i.e., where an information has been recently filed in the trial court and the petitioners have not even pleaded thereto. Furthermore, the Supreme Court, in the Hernandez case, was "ground-breaking" on the issue of whether rebellion can be complexed with murder, arson, robbery, etc. In the present cases, on the other hand, the prosecution and the lower court, not only had the Hernandez doctrine (as case law), but Executive Order No. 187 of President Corazon C. Aquino dated 5 June 1987 (as statutory law) to bind them to the legal proposition that the crime of rebellion complexed with murder, and multiple frustrated murder does not exist. And yet, notwithstanding these unmistakable and controlling beacon lightsabsent when this Court laid down theHernandez doctrine-the prosecution has insisted in filing, and the lower court has persisted in hearing, an information charging the petitioners with rebellion complexed with murder an multiple frustrated murder. That information is clearly a nullity and plainly void ab initio. Its head should not be allowed to surface. As a nullity in substantive law, it charges nothing; it has given rise to nothing. The warrants of arrest issued pursuant thereto are as null and void as the information on which they are anchored. And, since the entire question of the information's validity is before the Court in these habeas corpus cases, I venture to say that the information is fatally defective,even under procedural law, because it

charges more than one (1) offense (Sec. 13, Rule 110, Rules of Court). I submit then that it is not for this Court to energize a dead and, at best, fatally decrepit information by labelling or "baptizing" it differently from what it announces itself to be. The prosecution must file an entirely new and properinformation, for this entire exercise to merit the serious consideration of the courts. ACCORDINGLY, I vote to GRANT the petitions, QUASH the warrants of arrest, and ORDER the information for rebellion complexed with murder and multiple frustrated murder in Criminal Case Nos. 90-10941, RTC of Quezon City, DISMISSED. Consequently, the petitioners should be ordered permanently released and their bails cancelled. G.R. No. L-55130 January 17, 1983 PEDRO SANTOS TO, petitioner, vs. HON. ERNANI CRUZ-PAO, Presiding Judge, Court of First Instance of Rizal, Quezon City Branch XVIII, and JUAN Y. OCAMPO, respondents. Dakila F. Castro & Associates for petitioner. Abundio J. Macaraas for private respondent. DE CASTRO, J.: Petitioner was convicted by respondent judge of the Court of First Instance of Rizal (Quezon City Branch) of the crime of estafa for having issued a bouncing check for P5,000.00, and sentenced to an indeterminate penalty of from seven years and eight months of prision mayor as minimum, to nine years and four months of prision mayor, as maximum. 1 He appealed to the Court of Appeals which reduced the penalty to one year and one day of prision correccional as minimum, to one year and eight months as maximum. 2 Upon the Court of Appeals' decision becoming final, petitioner not having appealed therefrom, he filed a petition for probation 3 with respondent judge, who, despite the favorable recommendation of the Probation Office, denied the petition on July 24, 1980, on the following grounds: (a) to grant probation to petitioner will depreciate the seriousness of the offense committed, and (b) petitioner is not a penitent offender. A motion for reconsideration filed by petitioner having been denied by the respondent judge, the present proceeding was resorted to, petitioner averring that the respondent judge erred in denying his petition for probation despite the recommendation for its approval by the Probation Office. We find for the petitioner. At the outset, it might be stated that the Solicitor General whose comment was required by this Court, recommends the granting of probation. As he points out, petitioner is not among the offenders enumerated in the probation law (Presidential Decree No. 968) from availing of the benefits of probation. Under Section 9 of said law, the disqualified offenders are the following: (a) those sentenced to serve a maximum term of imprisonment of more than six years; (b) those convicted of any offense against the security of the State; (c) those who have previously been convicted by final judgment of an offense punished by imprisonment of not less than one month and one day and/or a fine of not less than two hundred pesos; (d) those who have been once on probation under the provisions of the decree; and (e) those who were already serving sentence at the time the substantive provisions of the decree became applicable, pursuant to Section 33. Under the abovequoted provision, petitioner may not be disqualified from being entitled to the benefits of probation. Some other provisions have to be sought, if any, upon which to deny petitioner the benefits of probation which, from a reading of the law in its entirety, should with liberality, rather than undue strictness, be extended to anyone not listed as disqualified. In expressly enumerating offenders not qualified to enjoy the benefits

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of probation, the clear intent is to allow said benefits to those not included in the enumeration. If only for the above observation as to how the law should be applied in order that its objective could be realized and achieved, We cannot but find respondent judge's reasons for his denial of the petition for probation insufficient to justify a deviation from a policy of liberality with which the law should be applied. The first reason given by the judge is that "probation win depreciate the seriousness of the offense committed." According to him, the State has shown serious concern with the above of checks as a commercial paper, as shown by various measures taken to curb the pernicious practice of issuing bouncing checks. For purpose of probation, what the law gives more importance to is the offender, not the crime. The inquiry is more on whether probation will help the offender along the lines for which the probation system has been established, such as giving the first-time offender a second chance to maintain his place in society through a process of reformation, which is better achieved, at least as to one who has not committed a very serious offense, when he is not mixed with hardened criminals in an atmosphere not conducive to soul-searching as within prison walls. The consciousness of the State's benignity in giving him that second chance to continue in peaceful and cordial association with his fellowmen will advance, rather than retard, the process of reformation in him. If, therefore, reformation is what the law is more, if not solely, concerned with, not the prevention by means of punitive measures, of the commission of the offense, it is readily seen that the respondent judge has fallen into a wrong obsession. He would, in effect, disqualify all those who commit estafa through bouncing cheeks from enjoying the benefits of probation. He would thereby add to the crimes expressly mentioned in the law which are not subject to probation. Thus, the only crimes mentioned in the law based on the nature thereof are those against national security (Section 9, paragraph b), the other crimes being those punished by more than six years imprisonment. Respondent judge would thus be writing into the law a new ground for disqualifying a first-offender from the benefits of probation, based on the nature of the crime, not on the penalty imposed as is the main criterion laid down by the law in determining who may be granted probation. That crime would be estafa only by issuing bouncing check, but not all forms of estafa, which, incidentally, is one offense the criminal liability for which is generally separated by a thin line from mere civil liability. For those who would commit the offense a second time or oftener, or commit an offense of manifest gravity, it is the long prison term which must be served that will act as deterrent to protect society. In protecting society, the family of the offender which might be dependent or the latter to a greater or lesser extent for support or other necessities of life should not be lost sight of, it being the basic unit of that society. By the relative lightness of the offense, as measured by the penalty imposed, more than by its nature, as the law so ordains, the offender is not such a serious menace to society as to be wrested away therefrom, as the more dangerous type of criminals should be. The second reason of respondent judge for denying petition petitioner's bid for probation, is that petitioner is allegedly not a penitent offender, as shown by his protestation of innocence even after his conviction by the trial court and the affirmance of his conviction by the Court of Appeals. We find the respondent judge, likewise, in error in assuming that petitioner has not shown repentance in committing the crime of which he has been found guilty by both the trial and appellate courts. If petitioner appealed the decision of the respondent judge to the Court of Appeals, he cannot be blamed for insisting on his version by which he could hope either to be acquitted or at least given a lighter penalty that would entitle him to the benefits of

probation.1wph1.t The recourse he took has, indeed, proved to be well worth the effort. His penalty was reduced on appeal which placed him within the benign purpose of the Probation Law. By the move he took by which to achieve this objective, acquittal not quite being within reach, petitioner cannot be said to be a nonpenitent offender, under serving of probation benefits. Once the opportunity was laid open to him, he grasped it; for instead of appealing further to the Supreme Court, he promptly applied for probation, made possible only by the reduced penalty imposed by the Court of Appeals. The penalty imposed by respondent court placed petitioner beyond the pale of the Probation Law. How can he be said to be a non-penitent offender, as the law would judge one to be so, just because he appealed, as he could not have them applied for probation even if he wanted to? Who knows but that if the penalty imposed by the trial court is that imposed by the Court of Appeals petitioner would have applied for probation forthwith? Under the circumstances as just pointed out, We find no sufficient justification for respondent judge's holding petitioner to be a non-penitent offender. We find, instead, that the liberality with which the Probation Law should be applied in favor of the applicant for its benefits affords the better means of achieving the purpose of the law, as indicated in Our decision in the case of Balleta Jr. vs. Hon. Leviste, G.R. No. L-49907, August 21, 1979, 92 SCRA 719, cited by the Solicitor-General who, as earlier stated, recommends granting of the instant petition for probation. WHEREFORE, the order of the respondent judge denying probation is set aside, and petitioner is hereby declared admitted to probation, subject to the terms and conditions as are prescribed by the law, and recommended by the probation officer. G.R. No. 110170 February 21, 1994 ROLETO A. PAHILAN, petitioner, vs. RUDY A. TABALBA, COMMISSION ON ELECTIONS, and HONORABLE JUDGE SINFOROSO V. TABAMO, JR., BRANCH 28, MAMBAJAO, CAMIGUIN, respondents. Pimentel, Apostol, Layosa & Sibayan Law Office for petitioner. Marciano Ll. Aparte, Jr. for Rudy A. Tabalba. REGALADO, J.: This original action for certiorari impugns the Order 1 of respondent Commission on Elections, dated January 19, 1993, dismissing the appeal filed by petitioner Roleto A. Pahilan for the latter's failure to file a notice of appeal with the Regional Trial Court of Mumbajao, Camiguin, and, necessarily on the same rationale, the Resolution 2promulgated by said respondent on May 6, 1993 denying petitioner's motion for reconsideration. Petitioner Pahilan and private respondent Tabalba were candidates for Mayor of Guinsiliban, Camiguin during the local elections held on May 11, 1992. On May 13, 1992, the Municipal Board of Canvassers proclaimed Tabalba as the duly elected Mayor of Guinsilban, the latter having garnered 1,087 votes as against 806 votes for Pahilan. Thereafter, Pahilan filed an election protest 3 which he sent by registered mail on May 23, 1992, addressed to the Clerk of Court of the Regional Trial Court of Mambajao, Camiguin, attaching thereto P200.00 in cash as payment for docket fees. In a letter 4 dated May 28, 1992, the OICClerk of Court of the Regional Trial Court of Mambajao, Camiguin, Branch 28, informed Pahilan that the correct fees that where supposed to be paid amounted to P620.00, and that, accordingly, the petition would not be entered in the court docket and summons would not be issued pending payment of the balance of P420.00. On June 16, 1992, upon receipt of the latter, Pahilan paid the required balance in the total amount P470.00. 5 Subsequently, on June 22, 1992, Tabalba filed his answer with Counterclaim, 6 alleging as one of his affirmative defenses lack of jurisdiction on the part of the trial court to entertain the election protest for having been filed beyond the ten-day period provided by law. On August 17, 1992, Pahilan filed a Motion for Inhibition, dated August 14, 1992, because of alleged serious and grave doubts that the presiding judge could impartially

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hear and decide his election protest with the cold neutrality of an impartial judge, as the latter allegedly belongs to and had supported a political group adverse to the candidacy of petitioner. On August 18, 1992, the trial court proceeded with the pre-trial conference, heard the defense on the allegation of lack of jurisdiction for non-payment of docket fees, and thereafter ordered the parties to submit their respective memoranda. Tabalba filed his Memorandum in Support of Affirmative Defense of Lack of Jurisdiction, 7 dated September 4, 1992. Under date of September 22, 1992, Pahilan filed a Memorandum 8 as well as a Motion to Resolve Motion for Inhibition Prior to Resolution of Affirmative Defenses. 9 On October 2, 1992, the trial court issued an Order 10 denying the motion for inhibition and dismissing the election protest for "non-payment on time of the required fees for filing an initiatory pleading." Pahilan's counsel received a copy of said order on October 12, 1992 in Cagayan de Oro City. On October 17, 1992 and within the 5-day period to appeal, Pahilan filed a verified appeal brief 11 in respondent Commission on Elections, with copies duly served on the Regional Trial Court of Mambajao, Camiguin and the counsel for herein private respondent. On December 12, 1992, the Comelec Contests Adjudication Department directed the Clerk of Court, Regional Trial Court, Camiguin, Branch 28, to immediately transmit the complete records of EP case No. 3(92) which was being appealed by herein petitioner. 12 Thereafter, in a letter 13 dated January 7, 1993, the said Clerk of Court informed respondent Commission that "to this very late date, this office has not received any notice of appeal from the aggrieved party." As a consequence, respondent Commission, in an Order dated January 19, 1993, dismissed Pahilan's verified appeal for failure to appeal within the prescribed period. Pahilan filed a motion for reconsideration 14 of the order dismissing his appeal. Both parties were required by respondent Commission to file their respective memoranda. Finally, on May 6, 1993, respondent Commission issued its aforestated resolution denying Pahilan's motion for reconsideration. Hence, this petition on the bases of the following assigned errors: 1. Whether or not respondent Commission validly dismissed the verified "Appeal" of petitioner which contains all the elements of a "notice of appeal" and more expressive of the intent to elevate the case for review by said appellate body, and furnishing copies thereof to the respondent trial judge and counsel for the adverse party, aside from the incomplete payment of the appeal fee; and 2. Whether or not the respondent trial judge validly dismissed the petition of protest of petitioner for nonpayment on time of the required fee. We find cogency and merit in the petition. The bone of contention in this petition is the alleged erroneous dismissal of petitioner's appeal by respondent Commission because of the failure of petitioner to file a notice of appeal before the Regional Trial Court of Mambajao, Camiguin which, in turn, dismissed the election protest of petitioner for nonpayment of docket fees. The COMELEC RULES OF PROCEDURE provide for the manner in which appeals from decisions of courts in election contests shall be made, to wit: RULE 22 Appeals from Decisions of Courts in Election Protest Cases Sec. 1. Caption and title of appealed cases. In all election contests involving the elections, returns, and qualifications of municipal or barangay officials, the party interposing the appeal shall be called the "Appellant" and the adverse party the "Appellee", but the title of the case shall remain as it was in the court of origin. xxx xxx xxx

Sec. 3. Notice of Appeal. Within five (5) days after promulgation of the decision of the court, the aggrieved party may file with said court a notice of appeal, and serve a copy thereof upon the attorney of record of the adverse party. Sec. 4. Immediate transmittal of records of the case. The Clerk of the court concerned shall, within fifteen (15) days from the filing of the notice of appeal, transmit to the Electoral Contests Adjudication Department the complete records of the case, together with all the evidence, including the original and three(3) copies of the transcript of stenographic notes of the proceedings. Sec. 5. Filing of briefs. The Clerk of Court concerned, upon receipt of the complete records of the case, shall notify the appellant or his counsel to file with the Electoral Contests Adjudication Department within thirty (30) days from receipt of such notice, ten (10) legible copies of his brief with proof of service thereof upon the appellee. Within thirty (30) days from receipt of the brief of the appellant, the appellee shall file ten (10) legible copies of his brief with proof of service thereof upon the appellant. xxx xxx xxx Sec. 9. Grounds for dismissal of appeal. The appeal may be dismissed upon motion of either party or at the instance of the Commission on any of the following grounds: (a) Failure of the appellant to pay the appeal fee; (b) Failure of the appellant to file copies of his brief within the time provided by these rules; (c) Want of specific assignment of errors in the appellant's brief; and (d) Failure to file notice of appeal within the prescribed period. In the case at bar, petitioner received a copy of the trial court's order dismissing his election protest on October 12, 1992. As earlier stated, herein petitioner, instead of filing a notice of appeal as required by the rules, filed with respondent Commission a verified appeal brief within the five-day reglementary period by registered mail under Registry Receipt No. 43093, dated October 17, 1992. It will be noted, however, that on even date, petitioner likewise sent by registered mail copies of his appeal brief to the Regional Trial Court of Mambajao, Camiguin, under Registry Receipt No. 43091, and to the counsel of herein private respondent, under Registry Receipt No. 43092. 15 The question now posed by the foregoing factual situation is whether the notice of appeal can be validly substituted by an appeal brief. We firmly believe and so hold, under the considerations hereinunder discussed, that the same may be allowed. First, in cases where a record on appeal is required under the Rules of Court, it has been consistently held that the filing or presentation and approval of the record on appeal on time necessarily implies or involves the filing of the notice of appeal, 16 because the act of taking or perfecting an appeal is more expressive of the intention to appeal than the filing of a mere notice to do so. 17 If the courts can deign to be indulgent and lenient in the interpretation of the rules respecting ordinary civil actions involving private parties representing private interests, with more reason should the rules involving election cases, which are undoubtedly impressed with public interest, be construed with the same or even greater forbearance and liberality. It has been frequently decided, it may be stated as a general rule recognized by all courts, that statutes providing for election contests are to be liberally construed to the end that the will of the people in the choice of public officers may not be defeated by mere technical objections. An election contest, unlike an ordinary action, is imbued with public interest since it involves not only the adjudication of the private interests of rival candidates but also the paramount need of dispelling the uncertainty which beclouds the real choice of the electorate with respect to who shall discharge the prerogatives of the office within their gift. Moreover, it is neither fair nor just to keep in office for an uncertain period one whose right to it is under suspicion. It is imperative that his claim be immediately cleared not only for the benefit of the winner but for the sake of public

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interest, which can only be achieved by brushing aside technicalities of procedure with protract and delay the trial of an ordinary action. 18 For this reason, broad perspectives of public policy impose upon courts the imperative duty to ascertain by all means within their command who is the real candidate elected in as expeditious a manner as possible, without being fettered by technicalities and procedural barriers to the end that the will of the people may not be frustrated.19 It is true that perfection of an appeal in the manner and within the period laid down by law is not only mandatory but also jurisdictional, and that the failure to perfect an appeal as required by the rules has the effect of defeating the right of appeal of a party and precluding the appellate court from acquiring jurisdiction over the case. 20Nevertheless, in some instances, this Court has disregarded such unintended lapses so as to give due course to appeals on the basis of strong and compelling reasons, such as serving the ends of justice and preventing a grave miscarriage thereof in the exercise of our equity jurisdiction. 21 It is our considered opinion that public interest is of far greater importance than the justifications of substantial justice and equity in seeking an exception to the general rule. Hence, election cases, by their very nature, should and ought to merit a similar exemption from a strict application of technical rules of procedure. Second, it has been shown and it is not even denied that the Regional Trial Court of Camiguin, as well as the counsel for private respondent, was furnished copies of the appeal brief which were sent by registered mail on October 17, 1992, within the reglementary period to appeal. This fact was never refuted by the Solicitor General in his Comment. Concomitantly, although the Clerk of Court claimed that he had not received any notice of appeal from herein petitioner, it would be safe to assume, under the circumstances, that the appeal brief duly directed mailed was received in the regular course of the mail 22 and was, therefore, deemed filed with the trial court as of the date of mailing. Third, applying suppletorily the provisions of the Rules of Court, 23 particularly Section 4, Rule 41 thereof, the requirement is that a notice of appeal shall specify the parties to the appeal; shall designate the judgment or order, or part thereof, appealed from; and shall specify the court to which the appeal is taken. A perusal of herein petitioner's appeal brief will disclose the following information: that the parties to the case are Roleto A. Pahilan as protestant-appellant and Rudy A Tabalba as protestee-appellee; that appellant therein is appealing from the order of the Regional Trial Court of Mambajao, Camiguin, dismissing the petition for election contest in Election Case No. 3(92); and that the appeal is being made pursuant to Section 22 of Republic Act No. 7166, that is, before the Commission on Elections. Accordingly, there is no gainsaying the fact that the particulars which ought to be reflected in the notice of appeal have been specifically and categorically spelled out in the appeal brief of petitioner. Perforce, and in light of the foregoing disquisitions, we find and so hold that petitioner is entitled to the relief prayed for. We now proceed to resolve the issue anent the dismissal of petitioner's election protest by the Regional Trial Court for non-payment, or more accurately the incomplete payment, of docket fees. Ordinarily, with the reversal of the respondent Commission's questioned order, this case should be remanded to said court for adjudication on the merits. Considering, however, the exigencies of time appurtenant to the disposition of election cases, and considering further that the issue has at any rate been squarely raised in this petition, it is now incumbent upon this Court to act on the propriety of the trial court's order dismissing the election protest for failure of petitioner to pay the correct amount of docket fees.

In dismissing petitioner's action, the trial court relied on the rulings enunciated in the cases of Malimit vs. Degamo24 (an action for quo warranto), Magaspi, et al. vs. Ramolete, et al. 25 (a suit for recovery of possession and ownership of land), Lee vs. Republic 26 (a petition for declaration of intention to become a Filipino citizen),Manchester Development Corporation vs. Court of Appeals, et al. 27 (an action for a sum of money and damages),Sun Insurance Office, Ltd., (SIOL) et al. vs. Asuncion. 28 (a suit for a sum of money and damages), and Tacay, et al. vs. Regional Trial Court of Tagum, Davao del Norte, etc., et al. 29 (an action for damages). It bears emphasis that the foregoing cases, except for Malimit vs. Degamo, are ordinary civil actions. This fact alone would have sufficed for a declaration that there was no basis for the dismissal of petitioner's protest for the simple reason that an election contest is not an ordinary civil action. Consequently the rules governing ordinary civil actions are not necessarily binding on special actions like an election contest wherein public interest will be adversely affected. The case of Malimit vs. Degamo, on its part, is not on all fours with the present case. In that case, the petition forquo warranto was mailed to the clerk of Court on December 14, 1959 and was received by the latter on December 17, 1959. The docket fee was deemed paid only on January 5, 1960, because the petitioner therein failed to prove his allegation that a postal money order for the docket fee was attached to his petition. Hence, the petition for quo warranto was correctly dismissed. In the case at bar, it cannot be gainsaid that the sum of P200.00 was attached to the petition mailed to the Regional Trial Court of Camiguin and this fact was even acknowledged by the Clerk of Court thereof when he requested herein petitioner to pay the balance of the correct docket fee. In Malimit, there was no docket fee paid at all at the time of mailing; in the present case, the docket fee was paid except that the amount given was not correct. Considering the fact that there was an honest effort on the part of herein petitioner to pay the full amount of docket fees, we are not inclined to insist on a stringent application of the rules. Furthermore, there are strong and compelling reasons to rule that the doctrine we have established in Manchesterand cases subsequent thereto cannot be made to apply to election cases. As we have earlier stated, the cases cited are ordinary civil actions whereas election cases are not. The rules which apply to ordinary civil actions may not necessarily serve the purpose of election cases, especially if we consider the fact that election laws are to be accorded utmost liberality in their interpretation and application, bearing in mind always that the will of the people must be upheld. Ordinary civil actions would generally involve private interests while all elections cases are, at all times, invested with public interest which cannot be defeated by mere procedural or technical infirmities. Again, the Court in Manchester made its ruling in view of its finding that there existed the unethical practice of lawyers and parties of filing an original complaint without specifying in the prayer the amount of damages which, however, is stated in the body of the complaint. This stratagem is clearly intended for no other purpose than to evade the payment of the correct filing fees by misleading the docket clerk in the assessment thereof. Thus, the court therein held that jurisdiction shall be acquired only upon payment of the prescribed docket fee. That ruling was later relaxed in the case of Sun Insurance which allowed the subsequent payment of the correct docket fees provided it is made within the reglementary period or before prescription has set in. The reason given was that there was no intent on the part of the petitioners therein to defraud the government, unlike the plaintiff in the case of Manchester. In Tacay, et al. vs. Tagum, et al., it was stated that this Court, inspired by the doctrine laid down in Manchester,issued Circular No. 7 on March 24, 1988, which was aimed at the practice of certain parties who omit from the prayer of their complaints any specification of the amount of damages, the omission being clearly intended for no other purpose than to evade the payment

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of the correct filing fees by deluding the docket clerk in his assessment of the same. In all these cases, the rule was applied for failure of the plaintiff to include in the prayer of the complaint the total amount of damages sought against the defendant. The reason for this, according to the Tacaycase, is because the amount of damages will help determine two things: first, the jurisdiction of the court; and, second, the amount of docket fees to be paid. In the case now before us, and in election cases in general, it is not the amount of damages, if any, that is sought to be recovered which vests in the courts the jurisdiction to try the same. Rather, it is the nature of the action which is determinative of jurisdiction. Thus, regardless of the amount of damages claimed, the action will still have to be filed with the Regional Trial Court. In such a case, the evil sought to be avoided in Manchester and like cases will never arise. Peremptorily, there will be no occasion to apply the rulings in the cases mentioned. In addition, the filing fee to be paid in an election case is a fixed amount of P300.00. There will consequently be no opportunity for a situation to arise wherein an election contest will have to be dismissed for failure to state the exact amount of damages and thus evince an intent to deprive the Government of the docket fees due. Finally, in Manchester, there was a deliberate attempt on the part of the plaintiffs therein to evade payment of the correct docket fees. In the case of petitioner, he already explained, and this we find acceptable and justified, that "since the schedule of the new rates of court fees was not then available and the filing of the petition for election contests was done thru the mails, the old rates readily came to mind, and this was the reason why only two hundred pesos was remitted at the same time with the petition." 30 To summarize, the evil sought to be avoided in Manchester and similar cases can never obtain in election cases since (1) the filing fee in an election cases is fixed and not dependent on the amount of damages sought to be recovered, if any; and (2) a claim for damages in an election case is merely ancillary to the main cause of action and is not even determinative of the court's jurisdiction which is governed by the nature of the election filed. WHEREFORE, the Order of the Commission on Elections dated January 19, 1993, as well as its Resolution promulgated on May 6, 1993, both in EAC No. 24-92; and the Order of the Regional Trial court of Mambajao, Camiguin, dated October 2, 1992, in Election Case No. 3(92) are hereby REVERSED and SET ASIDE, and the records of this case are hereby ordered REMANDED to the court a quo for the expeditious continuation of the proceedings in and the adjudication of the election protest pending therein as early as practicable. SO ORDERED. G.R. No. 133676 April 14, 1999 TUPAY T. LOONG, petitioner, vs. COMMISSION ON ELECTIONS and ABDUSAKUR TAN, respondents. YUSOP JIKIRI, intervenor. PUNO, JIn a bid to, improve our elections, Congress enacted R.A. No. 8436 on December 22, 1997 prescribing the adoption of an automated election system. The new system was used in the May 11, 1998 regular elections held in the Autonomous Region in Muslim Mindanao (ARMM) which includes the Province of Sulu. Atty. Jose Tolentino, Jr. headed the COMELEC Task Force to have administrative oversight of the elections in Sulu. The voting in Sulu was relatively peaceful and orderly. 1 The problem started during the automated counting of votes for the local officials of Sulu at the Sulu at the Sulu State College. At about 6 a.m. of May 12, 1998, some election inspectors and watchers informed Atty. Tolentino, Jr. of discrepancies between the election returns and the votes cast for the

mayoralty candidates in the municipality of Pata. Some ballots picked at random by Atty. Tolentino, Jr. confirmed that votes in favor of a mayoralty candidate were not reflected in the printed election returns. He suspended the automated counting of ballots in Pata and immediately communicated the problem to the technical experts of COMELEC and the suppliers of the automated machine. After the consultations, the experts told him that the problem was caused by misalignment of the ovals opposite the names of candidates in the local ballots. They found nothing wrong with the automated machines. The error was in the printing of the local ballots, as a consequence of which, the automated machines failed to read them correctly. 2 At 12:30 p.m. of the same day, Atty. Tolentino, Jr. called for an emergency meeting of the local candidates and the military-police officials overseeing the Sulu elections. Those who attended were the various candidates for governor, namely, petitioner Tupay Loong, private respondent Abdusakar Tan, intervenor Yusop Jikiri and Kimar Tulawie. Also in attendance were Brig. Gen. Edgardo Espinosa, AFP, Marine forces, Southern Philippines, Brig. Gen. Percival Subala, AFP, 3rd Marine Brigade, Supt. Charlemagne Alejandrino, Provincial Director, Sulu, PNP Command and congressional candidate Bensandi Tulawie. 3 The meeting discussed how the ballots in Pata should be counted in light of the misaligned ovals. There was lack of agreement. Those who recommended a shift to manual count were Brig. Generals Espinosa and Subala, PNP Director Alejandro, gubernational candidates Tan and Tulawie and congressional candidate Bensandi Tulawie. Those who insisted on an automated count were gubernational candidates Loong and Jikiri. In view of their differences in opinion, Atty. Tolentino, Jr. requested the parties to submit their written position papers. 4 Reports that the automated counting of ballots in other municipalities in Sulu was not working well were received by the COMELEC Task Force. Local ballots in five (5) municipalities were rejected by the automated machines. These municipalities were Talipao, Siasi, Tudanan, Tapul and Jolo. The ballots were rejected because they had the wrong sequence code. 5 Private respondent Tan and Atty. Tolentino, Jr. sent separate commucations to the COMELEC en banc in Manila. Still, on May 12, 1998, Tan requested for the suspension of the automated counting of ballots throughout the Sulu province. 6 On the same day, COMELEC issued Minute Resolution No. 98-1747 ordering a manual count but only in the municipality of Pata. The resolution reads: 7 xxx xxx xxx In the matter of the Petition dated May 12, 1998 of Abdusakur Tan, Governor, Sulu, to suspend or stop counting of ballots through automation (sic) machines for the following grounds, quoted to wit: 1. The Election Returns for the Municipality of Pata, Province of Sulu-District II do not reflect or reveal the mandate of the voters: DISCUSSIONS That the watchers called the attention of our political leaders and candidates regarding their discovery that the election returns generated after the last ballots for a precinct is scanned revealed that some candidates obtained zero votes, among others the Provincial Board Members, Mayor, Vice-Mayor, and the councilors for the LAKAS-NUCD-UMDP; That the top ballot, however, reveals that the ballots contained votes for Anton Burahan, candidate for Municipal Mayor while the Election Return shows zero vote; That further review of the Election Return reveals that John Masillam, candidate for Mayor under the LAKASNUCD-UMDP-MNLF obtains (sic) 100% votes of the total number of voters who actually voted; The foregoing discrepancies were likewise noted and confirmed by the chairmen, poll clerks and members of the Board of Election Inspectors (BEI) such as Rena Jawan, Amkanta Hajirul, Dulba Kadil, Teddy Mirajuli, Rainer Talcon, Mike Jupakal, Armina Akmad, Romulo Roldan and Lerma Amrawali to mention some;

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The Pata incident can be confirmed by no less than Atty. Jose Tolentino, Head, task Force Sulu, whose attention was called regarding the discrepancies; The foregoing is a clear evidence that the automated machine (scanner) cannot be relied upon as to truly reflect the contents of the ballots. If such happened in the Municipality of Pata, it is very possible that the same is happening in the counting of votes in the other municipalities of this province. If this will not be suspended or stopped, the use of automated machines will serve as a vehicle to frustrate the will of the sovereign people of Sulu; Wherefore, the foregoing premises considered and in the interest of an honest and orderly election, it is respectfully prayed of this Honorable Commission that an Order be issued immediately suspending or stopping the use of the automated machine (scanner) in the counting of votes for all the eighteen (18) municipalities in the Province of Sulu and in lieu thereof, to avoid delay, counting be done through the usual way known tested by us. While the commission does not agree with the conclusions stated in the petition, and the failure of the machine to read votes may have been occasioned by other factors, a matter that requires immediate investigation, but in the public interest, the Commission, RESOLVED to grant the Petition dated May 12, 1998 and to Order that the counting of votes shall be done manually in the Municipality of PATA, the only place in Sulu where the automated machine failed to read the ballots, subject to notice to all parties concerned. Before midnight of May 12, 1998, Atty. Tolentino, Jr. was able to send to the COMELEC en banc his report and recommendation, urging the use of the manual count in the entire Province of Sulu, viz: 8 The undersigned stopped the counting in the municipality of Pata since he discovered that votes for a candidate for mayor was credited in favor of the other candidate. Verification with the Sulu Technical Staff, including Pat Squires of ES & S, reveals that the cause of the errors is the way the ballot was printed. Aside from misalignment of the ovals and use of codes assigned to another municipality (which caused the rejection of all local ballots in one precinct in Talipao), error messages appeared on the screen although the actual condition of the ballots would have shown a different message. Because of these, the undersigned directed that counting for all ballots in Sulu be stopped to enable the Commission to determine the problem and rectify the same. It is submitted that stopping the counting is more in consonance with the Commission's mandate than proceeding with an automated but inaccurate count.1wphi1.nt In view of the error discovered in Pata and the undersigned's order to suspend that counting, the following documents were submitted to him. 1. Unsigned letter dated May 12, 1998 submitted by Congressman Tulawie for manual counting and canvassing; 2. Petition of Governor Sakur Tan for manual counting; 3. Position paper of Tupay Loong, Benjamin Loong, and Asani Tamang for automated count; 4. MNLF Position for automated count; and 5. Recommendation of General E.V. Espinosa, General PM Subala, and PD CS Alejandrino for manual count; Additional marines have been deployed at the SSC. The undersigned is not sure if it is merely intended to tame a disorderly crowd, inside and outside SSC, or a show of force. It is submitted that since an error was discovered in a machine which is supposed to have an error rate of 1: 1,000,000, not a few people would believe that this error in Pata would extend to the other municipalities. Whether or not this true, it would be more prudent to stay away from a lifeless thing that has sown tension and anxiety among and between the voters of Sulu. Respectfully submitted: 12 May 1998 (Sgd.) JOSE M. TOLENTINO, JR.

The next day, May 13, 1998, COMELEC issued Resolution No. 98-1750 approving, Atty. Tolentino, Jr.'s recommendation and the manner of its implementation as suggested by Executive Director Resurrection Z. Borra. The Resolution reads: 9 In the matter of the Memorandum dated 13 May 1998 of Executive Director Resurrection Z. Borra, pertinent portion of which is quoted as follows: In connection with Min. Res. No. 98-1747 promulgated May 12, 1998 which resolved to order that the counting of votes shall be done manually in the municipality of Pata, the only place in Sulu where the automated counting machine failed to read the ballots, subject to notice to all parties concerned, please find the following: 1. Handwritten Memo of Director Jose M. Tolentino, Jr., Task Force Head, Sulu, addressed to the Executive Director on the subject counting and canvassing in the municipality of Pata due to the errors of the counting of votes by the machine brought about by the error in the printing of the ballot, causing misalignment of ovals and use of codes assigned to another municipality. He recommended to revert to the manual counting of votes in the whole of Sulu. He attached the stand of Congressman Tulawie, Governor Sakur Tan and recommendation of Brigadier General Edgardo Espinosa, General Percival Subla, P/Supt. Charlemagne Alejandrino for manual counting. The position paper of former Governor Tupay Loong, Mr. Benjamin Loong and Mr. Asani S. Tammang, who are candidates for Governor and Congressman of 1st and 2nd Districts respectively, who wanted the continuation of the automated counting. While the forces of AFP are ready to provide arm (sic) security to our Comelec officials, BEIs and other deputies, the political tensions and imminent violence and bloodshed may not be prevented, as per report received, the MNLF forces are readying their forces to surround the venue for automated counting and canvassing in Sulu in order that the automation process will continue. Director Borra recommends, that while he supports Minute Resolution No. 98-1747, implementation thereof shall be done as follows: 1. That all the counting machines from Jolo, Sulu be transported back by C130 to Manila and be located at the available space at PICC for purposes of both automated and manual operations. This approach will keep the COMELEC officials away from violence and bloodshed between the two camps who are determined to slug each other as above mentioned in Jolo, Sulu. Only authorized political party and candidate watchers will be allowed in PICC with proper security, both inside and outside the perimeters of the venue at PICC. 2. With this process, there will be an objective analysis and supervision of the automated and manual operations by both the MIS and Technical Expert of the ES & S away from the thundering mortars and the sounds of sophisticated heavy weapons from both sides of the warring factions. 3. Lastly, it will be directly under the close supervision and control of Commission on Elections En Banc. RESOLVED: 1. To transport all counting machines from Jolo, Sulu by C130 to Manila for purposes of both automated and manual operations, with notice to all parties concerned; 2. To authorize the official travel of the board of canvassers concerned for the conduct of the automated and manual operations of the counting of votes at PICC under the close supervision and control of the Commission En Banc. For this purpose, to make available a designated space at the PICC; 3. To authorize the presence of only the duly authorized representative of the political parties concerned and the candidates watchers both outside and inside the perimeters of the venue at PICC. Atty. Tolentino, Jr. furnished the parties with copies of Minute Resolution No. 98-1750 and called for another meeting the next day, May 14, 1998, to discuss the implementation of the resolution. 10 The meeting was attended by the parties, by Lt. Gen. Joselin Nazareno, then Chief of the AFP Southern Command, the NAMFREL, media, and the public. Especially discussed was the manner of transporting the ballots and the counting

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machines to the PICC in Manila. They agreed allow each political party to have at least one (1) escort/watcher for municipality to acompany the flight. Two C130s were used for purpose. 11 On May 15, 1998, the COMELEC en banc issued Minute Resolution No. 98-1796 laying down the rules for the manual count, viz: 12 In the matter of the Memorandum dated 15 May 1998 of Executive Director Resurrection Z. Borra, quoted to wit: In the implementation of COMELEC Min. Resolution No. 98-1750 promulgated 13 May 1998 in the manual counting of votes of Pata, Sulu, and in view of the arrival of the counting machines, ballot boxes, documents and other election paraphernalia for the whole province of Sulu now stored in PICC, as well as the arrival of the Municipal Board of Canvassers of said Municipality in Sulu, and after conference with some members of the Senior Staff and Technical Committee of this Commission, the following are hereby respectfully recommended: 1. Manual counting of the local ballots of the automated election system in Pata, Sulu; 2. Automated counting of the national ballots considering that there are no questions raised on the National Elective Officials as pre-printed in the marksensed ballots; 3. The creation of the following Special Boards of Inspectors under the supervision of Atty. Jose M. Tolentino, Jr., Task Force Head, Sulu, namely: a) Atty. Mamasapunod M. Aguam Ms. Gloria Fernandez Ms. Esperanza Nicolas b) Director Ester L. Villaflor-Roxas Ms. Celia Romero Ms. Rebecca Macaraya c) Atty. Zenaida S. Soriano Ms. Jocelyn Guiang Ma. Jacelyn Tan d) Atty. Erlinda C. Echavia Ms. Theresa A. Torralba Ms. Ma. Carmen Llamas e) Director Estrella P. de Mesa Ms. Teresita Velasco Ms. Nelly Jaena 4. Additional Special Board of Inspectors may be created when necessary. 5. The Provincial Board of Canvassers which by standing Resolution is headed by the Task Force Sulu Head shall consolidate the manual and automated results as submitted by the Municipal Boards of Canvassers of the whole province with two members composed of Directors Estrella P. de Mesa and Ester L. Villaflor-Roxas; 6. The political parties and the candidates in Sulu as well as the Party-List Candidates are authorized to appoint their own watchers upon approval of the Commission', RESOLVED to approve the foregoing recommendations in the implementation of Min. Resolution No. 98-1750 promulgated on 13 May 1998 providing for the manual counting of votes in the municipality of Pata, Sulu. RESOLVED, moreover, considering the recommendation of Comm. Manolo B. Gorospe, Commissioner-In-Charge, ARMM, to conduct a parallel manual counting on all 18 municipalities of Sulu as a final guidance of the reliability of the counting machine which will serve as basis for the proclamation of the winning candidates and for future reference on the use of the automated counting machine. On May 18, 1998, petitioner filed his objection to Minute Resolution No. 98-1796, viz: 13 1. The minute resolution under agenda No. 98-1796 violates the provisions of Republic Act No. 8436 providing for an automated counting of the ballots in the Autonomous Region in Muslim Mindanao. The automated counting is mandatory and could not be substituted by a manual counting. Where the machines are allegedly defective, the only remedy provided for by law is to replace the machine. Manual counting is prohibited by law;

2. There are strong indications that in the municipality of Pata the ballots of the said municipality were rejected by the counting machine because the ballots were tampered and/or the texture of the ballots fed to the counting machine are not the official ballots of the Comelec; 3. The automated counting machines of the Comelec have been designed in such a way that only genuine official ballots could be read and counted by the machine; 4. The counting machines in the other municipalities are in order. In fact, the automated counting has already started. The automated counting in the municipalities of Lugus and Panglima Tahil has been completed. There is no legal basis for the "parallel manual counting" ordained in the disputed minute resolution. Nonetheless, COMELEC started the manual count on the same date, May 18, 1998. On May 25, 1998, petitioner filed with this Court a petition for certiorari and prohibition under Rule 65 of the Rules of Court. He contended that: (a) COMELEC issued Minute Resolution Nos. 98-1747, 98-1750, and 98-1798 without prior notice and hearing to him; (b) the order for manual counting violated R.A. No. 8436; (c) manual counting gave "opportunity to the following election cheatings," namely: (a) The counting by human hands of the tampered, fake and counterfeit ballots which the counting machines have been programmed to reject (Section 7, 8 & 9 of Rep. Act 8436). (b) The opportunity to substitute the ballots all stored at the PICC. In fact, no less than the head of the COMELEC Task Force of Sulu, Atty. Jose M. Tolentino, Jr. who recommended to the COMELEC the anomalous manual counting, had approached the watchers of petitioners to allow the retrival of the ballots, saying "tayo, tayo lang mga watchers, pag-usapan natin," clearly indicating overtures of possible bribery of the watchers of petitioner (ANNEX E). (c) With the creation by the COMELEC of only 22 Boards of Election Inspectors to manually count the 1,194 precincts, the manipulators are given sufficient time to change and tamper the ballots to be manually counted. (d) There is the opportunity of delaying the proclamation of the winning candidates through the usually dilatory moves in a pre-proclamation controversy because the returns and certificates of canvass are already human (sic) made. In the automated counting there is no room for any dilatory pre-proclamation controversy because the returns and the MBC and PBC certificates of canvass are machine made and immediate proclamation is ordained thereafter. Petitioner then prayed: WHEREFORE, it is most especially prayed of the Honorable Court that: 1. upon filing of this petition, a temporary restraining order be issued enjoining the COMELEC from conducting a manual counting of the ballots of the 1,194 precincts of the 18 municipalities of the Province of Sulu but instead proceed with the automated counting of the ballots, [preparation of the election returns and MBC, PBC certificates of canvass and proclaim the winning candidates on the basis of the automated counting and consolidation of results; 2. this petition be given due course and the respondents be required to answer; 3. after due hearing, the questioned COMELEC En Banc Minute Resolutions of May 12, 13, 15, and 17, 1998 be all declared null and void ab initio for having been issued without jurisdiction and/or with grave abuse of discretion amounting to lack of jurisdiction and for being in violation of due process of law; 4. the winning candidates of the Province of Sulu be proclaimed on the basis of the results of the automated counting, automated election returns, automated MBC and PBC certificates of canvass; xxx xxx xxx On June 8, 1998, private respondents Tan was proclaimed governor-elect of Sulu on the basis of the manual count. 14 Private respondents garnered 43,573 votes. Petitioner was third with 35,452 votes or a difference of 8,121 votes. On June 23, 1998, this Court required the respondents to file their Comment to the petition and directed the parties

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"to maintain the status quo prevailing at the time of the filing of the petition." 15 The vice-governor elect was allowed to temporarily discharge the powers and functions of governor. On August 20, 1998, Yusop Jikiri, the LAKAS-NUCDUMDP-MNLF candidate for governor filed a motion for intervention and a Memorandum in Intervention. 16 The result of the manual count showed he received 38,993 votes and placed second. Similarly, he alleged denial of due process, lack of factual basis of the COMELEC resolutions and illegality of manual count in light of R.A. No. 8436. The Court noted his intervention. 17 A similar petition for intervention filed by Abdulwahid Sahidulla, a candidate for vice-governor, on October 7, 1998 was denied as it was filed too late. In due time, the parties filed their respective Comments. On September 25, 1998, the Court heard the parties in oral argument 18 which was followed by the submission of their written memoranda. The issues for resolution are the following: 1. Whether or not a petition for certiorari and prohibition under Rule 65 of the Rules of Court is the appropriate remedy to invalidate the disputed COMELEC resolutions. 2. Assuming the appropriateness of the remedy, whether or not COMELEC committed grave abuse of discretion amounting to lack of jurisdiction in ordering a manual count. 2.a. Is there a legal basis for the manual count? 2.b. Are its factual bases reasonable? 2.c. Were the petitioner and the intervenor denied due process by the COMELEC when it ordered a manual count? 3. Assuming the manual count is illegal and that its result is unreliable, whether or not it is proper to call for a special election for the position of governor of Sulu. We shall resolve the issues in seriatim. First. We hold that certiorari is the proper remedy of the petitioner. Section 7, Article IX (A) of the 1987 Constitution states that "unless provided by this Constitution or by law, any decision, order or ruling of each Commission may be brought to the Supreme Court on certiorari by the aggrieved party within thirty days from receipt of a copy thereof." We have interpreted this provision to mean final orders, rulings and decisions of the powers. 19 Contrariwise, administrative orders of the COMELEC are not, as a general rule, fit subjects of a petition for certiorari. The main issue in the case at bar is whether the COMELEC gravely abused its discretion when it ordered a manual count of the 1998 Sulu local elections. A resolution of the issue will involve an interpretation of R.A. No. 8436 on automated election in relation to the broad power of the COMELEC under Section 2(1), Article IX(C) of the Constitution "to enforce and administer all laws and regulations relative to the conduct of an election . . .." The issue is not only legal but one of first impression and undoubtedly suffered with significance to the entire nation. It is adjudicatory of the right of the petitioner, the private respondents and the intervenor to the position of governor of Sulu. These are enough considerations to call for an exercise of the certiorari jurisdiction of this Court. Second. The big issue, one of first impression, is whether the COMELEC committed grave abuse of discretion amounting to lack of jurisdiction when it ordered a manual count in light of R.A. No. 8436. The post election realities on ground will show that the order for a manual count cannot be characterized as arbitrary, capricious or whimsical. a. It is well established that the automated machines failed to read correctly the ballots in the municipality of Pata. A mayoralty candidate, Mr. Anton Burahan, obtained zero votes despite the representations of the Chairman of the Board of Election Inspectors and others that they voted for him. Another candidate garnered 100% of the votes. b. It is likewise conceded that the automated machines rejected and would not count the local ballots in the

municipalities of Pata, Talipao, Siasi, Indanan, Tapal and Jolo. c. These flaws in the automated counting of local ballots in the municipalities of Pata, Talipao, Siasi, Indanan, Tapal and Jolo were carefully analyzed by the technical experts of COMELEC and the supplier of the automated machines. All of them found nothing wrong the automated machines. They traced the problem to the printing of local ballots by he National Printing Office. In the case of the of the municipality of Pata, it was discovered that the ovals of the local ballots were misaligned and could not be read correctly by the automated machines. In the case of the municipalities of Talipao, Siasi, Indanan, Tapal and Jolo, it turned out that the local ballots contained the wrong sequence code. Each municipality was assigned a sequence code as a security measure. Ballots with the wrong sequence code were programmed to be rejected by the automated machines. It is plain that to continue with the automated count in these five (5) municipalities would result in a grossly erroneous count. It cannot also be gainsaid that the count in these five (5) municipalities will affect the local elections in Sulu. There was no need for more sampling of locals ballots in these municipalities as they suffered from the same defects. All local ballots in Pata with misaligned ovals will be erroneously read by the automated machines. Similarly, all local ballots in Talipao, Siasi, Indanan, Tapal and Jolo with wrong sequence codes are certain to be rejected by the automated machines. There is no showing in the records that the local ballots in these five (5) municipalities are dissimilar which could justify the call for their greater sampling. Third. These failures of automated counting created post election tension in Sulu, a province with a history of violent elections. COMELEC had to act desively in view of the fast deteriorating peace and order situation caused by the delay in the counting of votes. The evidence of this fragile peace and order cannot be downgraded. In his handwritten report to the COMELEC dated May 12, 1998, Atty. Tolentino, Jr. stated: xxx xxx xxx Additional marines have been deployed at the SSC. The undersigned is not sure if it is merely intended to tame a disorderly crowd inside and outside SSC, or a show of force. It is submitted that since an error was discovered in a machine which is supposed to have an error rate of 1:1,000,000, not a few people would believe that this error in Pata would extend to the other municipalities. Whether or not this is true, it would be more prudent to stay away from a lifeless thing that has shown tension and anxiety among and between the voters of Sulu. Executive Director Resurreccion Z. Borra, Task Force Head, ARMM in his May 13, 1998 Memorandum to the COMELEC likewise stated: xxx xxx xxx While the forces of AFP are ready to provide arm (sic) security to our COMELEC officials, BEI's and other deputies, the political tensions and imminent violence and bloodshed may not be prevented, as per report received, the MNLF forces are readying their forces to surround the venue for automated counting and canvassing in Sulu in order that automation process will continue. Last but not the least, the military and the police authorities unanimously recommended manual counting to preserve peace and order. Brig. Gen. Edgardo V. Espinosa, Commanding General, Marine Forces Southern Philippines, Brig. Gen. Percival M. Subala, Commanding General, 3rd Marine Brigade, and Supt. Charlemagne S. Alejandrino, Provincial Director, Sulu PNP Command explained that it". . . will not only serve the interest of majority of the political parties involved in the electoral process but also serve the interest of the military and police forces in maintaining peace and order throughout the province of Sulu." An automated count of the local votes in Sulu would have resulted in a wrong count, a travesty of the sovereignty of the electorate. Its aftermath could have been a bloodbath. COMELEC avoided this imminent probality by ordering a manual count of the votes. It would be the height of irony

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if the Court condemns COMELEC for aborting violence in the Sulu elections. Fourth. We also find that petitioner Loong and intervenor Jikiri were not denied process. The Tolentino memorandum clearly shows that they were given every opportunity to oppose the manual in count of the local ballots in Sulu. They were orally heard. They later submitted written position papers. Their representatives escorted the transfer of the ballots and the automated machines from Sulu to Manila. Their watchers observed the manual count from beginning to end. We quote the Tolentino memorandum, viz: xxx xxx xxx On or about 6:00 a.m. of May 12, 1998, while automated counting of all the ballots for the province of Sulu was being conducted at the counting center located at the Sulu State College, the COMELEC Sulu Task Force Head (TF Head) proceeded to the room where the counting machine assigned to the municipality of Pata was installed to verify the cause of the commotion therein. During the interview conducted by the TF Head, the members of the Board of Election Inspectors (BEI) and watchers present in said room stated that the counting machine assigned to the municipality of Pata did not reflect the true results of the voting thereat. The members of the BEI complained that their votes were not reflected in the printout of the election returns since per election returns of their precincts, the candidate they voted for obtained "zero". After verifying the printout of some election returns as against the official ballots, the TF Head discovered that votes cast in favor of a mayoralty candidate were credited in favor of his opponent. In his attempt to remedy the situation, the TF Head suspended the counting of all ballots for said municipality to enable COMELEC field technicians to determine the cause of the technical error, rectify the same, and thereafter proceed with automated counting. In the meantime, the counting of the ballots for the other municipalities proceeded under the automated system. Technical experts of the supplier based in Manila were informed of the problem and after numerous consultations through long distance calls, the technical experts concluded that the cause of the error was in the manner the ballots for local positions were printed by the National Printing Office (NPO), namely, that the ovals opposite the names of the candidates were not properly aligned. As regards the ballots for national positions, no error was found. Since the problem was not machine-related, it was obvious that the use of counting machines from other municipalities to count the ballots of the municipality of Pata would still result in the same erroneous count. Thus, it was found necessary to determine the extent of the error in the ballot printing process before proceeding with the automated counting. To avoid a situation where proceeding with automation will result in an erroneous count, the TF Head, on or about 11:45 a.m. ordered the suspension of the counting of all ballots in the province to enable him to call a meeting with the heads of the political parties which fielded candidates in the province, inform them of the technical error, and find solutions to the problem. On or about 12:30 p.m., the TF Head presided over a conference at Camp General Bautista (3rd Marine Brigade) to discuss the process by which the will of the electorate could be determined. Present during the meeting were: 1. Brig. Gen. Edgardo Espinoza Marine Forces, Southern Philippines. 2. Brig. Gen. Percival Subala 3rd Marine Brigade 3. Provincial Dir. Charlemagne Alejandrino Sulu PNP Command 4. Gubernatorial Candidate Tupay Loong LAKAS-NUCD Loong Wing 5. Gubernatorial Candidate Abdusakur Tan LAKAS-NUCD Tan Wing

6. Gubernatorial Candidate Yusop Jikiri LAKAS-NUCD Tan Wing 7. Gubernatorial Candidate Kimar Tulawie LAMMP 8. Congressional Candidate Bensaudi Tulawie LAMMP During said meeting, all of the above parties verbally advanced their respective positions. Those in favor of a manual count were: 1. Brig. Gen. Edgardo Espinoza 2. Brig. Gen. Percival Subala 3. Provincial Dir. Charlemagne Alejandrino 4. Gubernatorial Candidate Abdusakur Tan 5. Gubernatorial Candidate Kimar Tulawie 6. Congressional Candidate Bensaudi Tulawie and those in favor of an automated count were: 1. Gubernatorial Candidate Tupay Loong 2. Gubernatorial Candidate Yusop Jikiri Said parties were then requested by the TF Head to submit their respective position papers so that the same map be forwarded to the Commission en banc, together with the recommendations of the TF Head. The TF Head returned to the counting center at the Sulu State College and called his technical staff to determine the extent of the technical error and to enable him to submit the appropriate recommendation to the Commission en banc. Upon consultation with the technical staff, it was discovered that in the Municipality of Talipao, some of the local ballots were rejected by the machine. Verification showed that while the ballots were genuine, ballot paper bearing a wrong "sequence code" was used by the NPO during the printing process. Briefly, the following is the manner by which a "sequence code" determined genuineness of a ballot. A municipality is assigned a specific (except for Jolo, which assigned two (2) machines, and sharing of one (1) machine by two (2) municipalities, namely, H.P. Tahil and Maimbung, Apandami and K. Caluang, Pata and Tongkil and Panamao and Lugus). A machine is then assigned a specific "sequence code" as one of the security features to detect whether the ballots passing through it are genuine. Since a counting machine is programmed to read the specific "sequence code" assigned to it, ballots which bear a "sequence code" assigned to another machine/municipality, even if said ballots were genuine will be rejected by the machine. Other municipalities, such as Siasi, Indanan, Tapul and Jolo also had the same problem of rejected ballots. However, since the operators were not aware that one of the reasons for rejection of ballots is the use of wrong "sequence code", they failed to determine whether the cause for rejection of ballots for said municipalities was the same as that for the municipality of Talipao. In the case of "misaligned ovals", the counting machine will not reject the ballot because all the security features, such as "sequence code", are present in the ballot, however, since the oval is misaligned or not placed in its proper position, the machine will credit the shaded oval for the position where the machine is programmed to "read" the oval. Thus, instead of rejecting the ballot, the machine will credit the votes of a candidate in favor of his opponent, or in the adjacent space where the oval should be properly placed. It could not be determined if the other municipalities also had the same technical error in their official ballots since the "misaligned ovals" were discovered only after members of the Board of Election Inspectors of the Municipality of Pata complained that their votes were not reflected in the printout of the election results. As the extent or coverage of the technical errors could not be determined, the TF Head, upon consultation with his technical staff, was of the belief that it would be more prudent to count the ballots manually than to proceed with an automated system which will result in an erroneous count. The TF Head thus ordered the indefinite suspension of counting of ballots until such time as the Commission shall have resolved the petition/position papers to be submitted by the parties. The TF Head and his staff returned to

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Camp General Bautista to await the submission of the position papers of the parties concerned. Upon receipt of the position papers of the parties, the TF Head faxed the same in the evening of May 12, 1998, together with his handwritten recommendation to proceed with a manual count. Attached are copies of the recommendations of the TF Head (Annex "1"), and the position papers of the Philippine Marines and Philippine National Police (Annex "2"), LAKAS-NUCD Tan Wing Annex (Annex "3"), Lakas-NUCD Loong Wing (Annex "4"), LAKAS-NUCD-MNLF Wing (Annex "5") and LAMMP (Annex "6"). Said recommendations and position papers were the bases for the promulgation of COMELEC Minute Resolution No. 98-1750 dated May 13, 1998 (Annex "7"), directing, among other things, that the ballots and counting machines be transported by C130 to Manila for both automated and manual operations. Minute Resolution No. 98-1750 was received by the TF Head through fax on or about 5:30 in the evening of May 13, 1998. Copies were then served through personal delivery to the heads of the political parties, with notice to them that another conference will be conducted at the 3rd Marine Brigade on May 14, 1998 at 9:00 o'clock in the morning, this time, with Lt. General Joselin Nazareno, then AFP Commander, Southern Command. Attached is a copy of said notice (Annex "8") bearing the signatures of candidates Tan (Annex "8-A") and Loong (Annex "8-B") and the representatives of candidates Tulawie (Annex "8-C") and Jikiri (Annex "8-D"). On May 14, 1998, the TF Head presided over said conference in the presence of the heads of the political parties of Sulu, together with their counsel, including Lt. Gen. Nazareno, Brig. Gen. Subala, representatives of the NAMFREL, media and the public. After hearing the sides of all parties concerned, including that of NAMFREL, the procedure by which the ballots and counting machines were to be transported to Manila was finalized, with each political party authorized to send at least one (1) escort/watcher for every municipality to accompany the ballot boxes and counting machines from the counting center at the Sulu State College to the Sulu Airport to the PICC, where the COMELEC was then conducting its Senatariol Canvass. There being four parties, a total of seventytwo (72) escorts/watchers accompanied the ballots and counting machines. Two C130s left Sulu on May 15, 1998 to transport all the ballot boxes and counting machines, accompanied by all the authorized escorts. Said ballots boxes reached the PICC on the same day, with all escorts/watchers allowed to station themselves at the ballot box storage area. On May 17, 1998, another C130 left Sulu to ferry the members of the board of canvassers. Fifth. The evidence is clear that the integrity of the local ballots was safeguarded when they were transferred from Sulu to Manila and when they were manually counted. A shown by the Tolentino memorandum, representatives of the political parties escorted the transfer of ballots from Sulu to PICC. Indeed, in his May 14, 1992 letter to Atty. Tolentino, Jr., petitioner Tupay Loong himself submitted the names of his representative who would company the ballot boxes and other election paraphernalia,viz: 20 Dear Atty. Tolentino: Submitted herewith are the names of escort(s) to accompany the ballot boxes and other election pharaphernalia to be transported to COMELEC, Manila, to wit: 1. Jolo Joseph Lu 2. Patikul Fathie B. Loong 3. Indanan Dixon Jadi 4. Siasi Jamal Ismael 5. K. Kaluang Enjimar Abam 6. Pata Marvin Hassan 7. Parang Siyang Loong 8. Pangutaran Hji. Nasser Loong 9. Marunggas Taib Mangkabong

10. Luuk Jun Arbison 11. Pandami Orkan Osman 12. Tongkil Usman Sahidulla 13. Tapul Alphawanis Tupay 14. Lugus Patta Alih 15. Maimbong Mike Bangahan 16. P. Estino Yasir Ibba 17. Panamso Hamba Loong 18. Talipao Ismael Sali Hoping for your kind and (sic) consideration for approval on this matter. Thank you. Very truly yours, (Sgd.) Tupay T. Loong (sgd.) Asani S. Tammang The ballot boxes were consistently under the watchful eyes of the parties representatives. They were placed in an open space at the PICC. The watchers stationed themselves some five (5) meters away form the ballot boxes. They watched 24 hours a day and slept at the PICC. 21 The parties' watchers again accompanied the transfer of the ballot boxes from PICC to the public schools of Pasay City where the ballots were counted. After the counting, they once more escorted the return of the ballot boxes to PICC. 22 In fine, petitioner's charge that the ballots could have been tampered with before the manual counting is totally unfounded. Sixth. The evidence also reveals that the result of the manual count is reliable. It bears stressing that the ballots used in the case at bar were specially made to suit an automated election. The ballots were uncomplicated. They had fairly large ovals opposite the names of candidates. A voter needed only to check the oval opposite the name of his candidate. When the COMELEC ordered a manual count of the votes, it issued special rules as the counting involved a different kind of ballot, albeit, more simple ballots. The Omnibus Election Code rules on appreciation of ballots cannot apply for they only apply to elections where the names of candidates are handwritten in the ballots. The rules were spelled out in Minute Resolution 98-1798, viz: 23 In the matter of the Memorandum dated 17 May 1998 of Executive Director Resurreccion Z. Borra, reprocedure of the counting of votes for Sulu for the convening of the Board of Election Inspectors, the Municipal Board of Canvassers and the Provincial Board on May 18, 1998 at 9:00 a.m. at the Philippine International Convention Center (PICC). RESOLVED to approve the following procedure for the counting of votes for Sulu at the PICC: I. Common Provisions: 1. Open the ballot box, retrieve the Minutes of Voting and the uncounted ballots or the envelope containing the counted ballots as the case may be; 2. Segregate the national ballots from the local ballots; 3. Count the number of pieces of both the national and local ballots and compare the same with the number of votes who actually voted as stated in the Minutes of Voting: If there is no Minutes of Voting, refer to the Voting Records at the back of the VRRs to determine the number of voters who actually voted. If there are more ballots than the number of voters who actually voted, the poll clerk shall draw out as many local and national ballots as may be equal to the excess and place them in the envelope for excess ballots. II. Counting of Votes A. National Ballots: 1. If the national ballots have already been counted, return the same inside the envelope for counted ballots, reseal and place the envelope inside the ballot box; 2. If the national ballots have not yet been counted, place them inside an envelope and give the envelope through a liaison officer to the machine operator concerned for counting and printing of the election returns; 3. The machine operator shall affix his signature and thumbmark thereon, and return the same to the members of the BEI concerned for their signatures and thumbmarks;

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4. The said returns shall then be placed in corresponding envelopes for distribution; B. Local Ballots: 1. Group the local ballots in piles of fifty (50); 2. The Chairman shall read the votes while the poll clerk and the third member shall simultaneously accomplish the election returns and the tally board respectively. If the voters shaded more ovals than the number of positions to be voted for, no vote shall be counted in favor of any candidate. 3. After all the local ballots shall have been manually counted, the same shall be given to the machine operator concerned for counting by the scanning machine. The machine operator shall then save the results in a diskette and print out the election returns for COMELEC reference. 4. The BEI shall accomplish the certification portion of the election returns and announce the results; 5. Place the election returns in their respective envelopes and distribute them accordingly; 6. Return all pertinent election documents and paraphernalia inside the ballot box. III. Consolidation of Results A. National Ballots 1. The results of the counting for the national ballots for each municipality shall be consolidated by using the ERs of the automated election system; 2. After the consolidation, the Machine Operator shall print the certificate of canvass by municipality and statement of votes by precinct; 3. To consolidate the provincial results, the MO shall load all the diskettes used in the scanner to the ERs; 4. The MO shall print the provincial certificate of canvass and the SOV by municipality; 5. In case there is system failure in the counting and/or consolidation of the results, the POBC/MOBC shall revert to manual consolidation. B. Local Ballots 1. The consolidation of votes shall be done manually by the Provincial/Municipal Board of Canvassers; 2. The proclamation of winning candidates shall be based manual consolidation. RESOLVED, moreover that the pertinent provisions of COMELEC Resolution Nos. 2971 and 3030 shall apply. Let the Executive Director implement this resolution. As aforestated, five (5) Special Boards were initially created under Atty. Tolentino, Jr. to undertake the manual counting, 24 viz: a) Atty. Mamasapunod M. Aguam Ms. G1oria Fernandez Ms. Esperanza Nicolas b) Director Ester L. Villaflor-Roxas Ms. Celia Romero Ms. Rebecca Macaraya c) Atty. Zenaida S. Soriano Ms. Jocelyn Guiang Ma. Jocelyn Tan d) Atty. Erlinda C. Echavia Ms. Teresa A. Torralba Ms. Ma. Carmen Llamas e) Director Estrella P. de Mesa Ms. Teresita Velasco Ms. Nelly Jaena Later, the COMELEC utilized the services of 600 public school teachers from Pasay City to do the manual counting. Five (5) elementary schools served as the venues of the counting, viz: 25 1. Gotamco Elementary School, Gotamco Street, Pasay City for the municipalities of Indanan, Pangutaran, Panglima Tahil, Maimbung; 2. Zamora Elementary School, Zamora Street, Pasay City for the municipalities of Jolo, Talipao, Panglima Estino, and Tapul; 3. Epifanio Elementary School, Tramo Street, Pasay City for the municipalities of Parang, Lugus, Panamao; 4. Burgos Elementary School, Burgos Street, Pasay City for the municipalities of Luuk and Tongkil; 5. Palma Elementary School for the municipalities of Siasi and Kalingalang Caluang.

From beginning to end, the manual counting was done with the watchers of the parties concerned in attendance. Thereafter, the certificates of canvass were prepared and signed by the City/Municipal Board of Canvassers composed of the Chairman, Vice-Chairman, and Secretary. They were also signed by the parties' watchers. 26 The correctness of the manual count cannot therefore be doubted. There was no need for an expert to count the votes. The naked eye could see the checkmarks opposite the big ovals. Indeed, nobody complained that the votes could not be read and counted. The COMELEC representatives had no difficulty counting the votes. The 600 public school teachers of Pasay City had no difficulty. The watchers of the parties had no difficulty. Petitioner did not object to the rules on manual count on the ground that the ballots cannot be manually counted. Indeed, in his original Petition, petitioner did not complain that the local ballots could not be counted by a layman. Neither did the intervenor complain in his petition for intervention. The allegation that it will take a trained eye to read the ballots is more imagined than real. This is not all. As private respondent Tan alleged, the manual count could not have been manipulated in his favor because the results shows that most of his political opponents won. Thus, "the official results show that the two congressional seats in Sulu were won by Congressman Hussin Amin of the LAKAS-MNLF Wing for the 1st District and Congressman Asani Tammang of the LAKAS-Loong Wing for the 2nd District. In the provincial level, of the eight (8) seats for the Sangguniang Panlalawigan, two (2) were won by the camp of respondent Tan; three (3) by the camp of petitioner Loong; two (2) by the MNLF; and one (1) by LAMMP. In the mayoral race, seven (7) out of eighteen (18) victorious municipal mayors were identified with respondent Tan; four (4) with petitioner Loong; three (3) with the MNLF; two (2) with LAMMP and one (1) with REPORMA. 27 There is logic to private respondent Tan's contention that if the manual count was tampered, his candidates would not have miserably lost.1wphi1.nt Seventh. We further hold that petitioner cannot insist on automated counting under R.A. No. 8436 after the machines misread or rejected the local ballots in five (5) municipalities in Sulu. Section 9 of R.A. No. 8436 provides: Sec. 9. Systems Breakdown in the Counting Center. In the event of a systems breakdown of all assigned machines in the counting center, the Commission shall use any available machine or any component thereof from another city/municipality upon approval of the Commission En Banc or any of its divisions. The transfer of such machines or any component thereof shall be undertaken in the presence of representatives of political parties and citizens' arm of the Commission who shall be notified by the election officer of such transfer. There is a systems breakdown in the counting center when the machine fails to read the ballots or fails to store/save results or fails to print the results after it has read the ballots; or when the computer fails to consolidate election results/reports or fails to print election resultsreports after consolidation. As the facts show, it was inutile for the COMELEC to use other machines to count the local votes in Sulu. The errors in counting were due to the misprinting of ovals and the use of wrong sequence codes in the local ballots. The errors were not machine-related. Needless to state, to grant petitioner's prayer to continue the machine count of the local ballots will certainly result in an erroneous count and subvert the will of the electorate. Eighth. In enacting R.A. No. 8436, Congress obviously failed to provide a remedy where the error in counting is not machine-related for human foresight is not all-seeing. We hold, however, that the vacuum in the law cannot prevent the COMELEC from levitating above the problem. Section 2(1) of Article IX(C) of the Constitution gives the COMELEC the broad power "to enforce and administer all laws and regulations relative to the conduct of an election, plebiscite, initiative, referendum and recall." Undoubtedly, the text and intent of this provision is to give COMELEC all the necessary and incidental powers for it to achieve the objective of holding free, orderly, honest, peaceful, and credible elections. Congruent to this intent, this Court has

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not been niggardly in defining the parameters of powers of COMELEC in the conduct of our elections. Thus, we held in Sumulong v. COMELEC: 28 Politics is a practical matter, and political questions must be dealt with realistically not from the standpoint of pure theory. The Commission on Elections, because of its fact-finding facilities, its contacts with political strategists, and its knowledge derived from actual experience in dealing with political controversies, is in a peculiarly advantageous position to decide complex political questions . . .. There are no ready made formulas for solving public problems. Time and experience are necessary to evolve patterns that will serve the ends of good government. In the matter of the administration of laws relative to the conduct of election, . . . we must not by any excessive zeal take away from the Commission on Elections the initiative which by constitutional and legal mandates properly belongs to it. In the case at bar, the COMELEC order for a manual count was not reasonable. It was the only way to count the decisive local votes in the six (6) municipalities of Pata, Talipao, Siasi, Tudanan, Tapul and Jolo. The bottom line is that by means of the manual count, the will of the voters of Sulu was honestly determined. We cannot kick away the will of the people by giving a literal interpretation to R.A. 8436. R.A. 8436 did not prohibit manual counting when machine count does not work. Counting is part and parcel of the conduct of an election which is under the control and supervision of the COMELEC. It ought to be self-evident that the Constitution did not envision a COMELEC that cannot count the result of an election. Ninth. Our elections are not conducted under laboratory conditions. In running for public offices, candidates do not follow the rules of Emily Post. Too often, COMELEC has to make snap judgments to meet unforeseen circumstances that threaten to subvert the will of our voters. In the process, the actions of COMELEC may not be impeccable, indeed, may even be debatable. We cannot, however, engage in a swivel chair criticism of these actions often taken under very difficult circumstances. Even more, we cannot order a special election unless demanded by exceptional circumstances. Thus, the plea for this Court to call a special election for the governorship of Sulu is completely off-line. The plea can only be grounded on failure of election. Section 6 of the Omnibus Election Code tells us when there is a failure of election, viz: Sec. 6. Failure of election. If, on account of force majeure, terrorism, fraud, or other analogous causes, the election in any polling place has not been held on the date fixed, or had been suspended before the hour fixed by law for the closing of the voting, or after the voting and during the preparation and the transmission of the election returns or in the custody or canvass thereof, such election results in a failure to elect, and in any of such cases the failure or suspension of election would affect the result of the election, the Commission shall on the basis of a verified petition by any interested party and after due notice and hearing, call for the holding or continuation of the election, not held, suspended or which resulted in a failure to elect but not later than thirty days after the cessation of the cause of such postponement or suspension of the election or failure to elect. To begin with, the plea for a special election must be addressed to the COMELEC and not to this Court. Section 6 of the Omnibus Election Code should be read in relation to Section 4 of R.A. No. 7166 which provides: Sec. 4. Postponement, Failure of Election and Special Elections. The postponement, declaration of failure of elections and the calling of special elections as provided in Sections 5, 6, and 7 of the Omnibus Election Code shall be decided by the Commission en banc by a majority vote of its members. The causes for the declaration of a failure of election may occur before or after casting of votes or on the day of the election.

The grounds for failure of election force majeure, terrorism, fraud or other analogous causes clearly involve questions of fact. It is for this reason that they can only be determined by the COMELEC en bancafter due notice and hearing to the parties. In the case at bar, petitioner never asked the COMELEC en banc to call for a special election in Sulu. Even his original petition with this Court, petitioner did not pray for a special election. His plea for a special election is a mere afterthought. Too late in the day and too unprocedural. Worse, the grounds for failure of election are inexistent. The records show that the voters of Sulu were able to cast their votes freely and fairly. Their votes were counted correctly, albeit manually. The people have spoken. Their sovereign will has to be obeyed. There is another reason why a special election cannot be ordered by this Court. To hold a special election only for the position of Governor will be discriminatory and will violate the right of private respondent to equal protection of the law. The records show that all elected officials in Sulu have been proclaimed and are now discharging their powers and duties. Thus, two (2) congressmen, a vicegovernor, eight (8) members of the Sangguniang Panlalawigan and eighteen (18) mayors, numerous vicemayors and municipal councilors are now serving in their official capacities. These officials were proclaimed on the basis of the same manually counted votes of Sulu. If manual counting is illegal, their assumption of office cannot also be countenanced. Private respondent's election cannot be singled out as invalid for alikes cannot be treated unalikes. A final word. Our decision merely reinforces our collective efforts to endow COMELEC with enough power to hold free, honest, orderly and credible elections. A quick flashback of its history is necessary lest our efforts be lost in the labyrinth of time. The COMELEC was organized under Commonwealth Act No. 607 enacted on August 22, 1940. The power to enforce our election laws was originally vested in the President and exercised through the Department of Interior. According to Dean Sinco, 29 the view ultimately that an independent body could better protect the right of suffrage of our people. Hence, the enforcement of our election laws, while an executive power, was transferred to the COMELEC. From a statutory creation, the COMELEC was transformed to a constitutional body by virtue of the 1940 amendments to the 1935 Constitution which took effect on December 2, 1940. COMELEC was generously granted the power to "have exclusive charge of the enforcement and administration of all laws relative to the conduct of elections . . .. 30 Then came the 1973 Constitution. It further broadened the powers of COMELEC by making it the sole judge of all election contests relating to the election, returns and qualifications of members of the national legislature and elective provincial and city officials. 31 In fine, the COMELEC was given judicial power aside from its traditional administrative and executive functions. The 1987 Constitution quickened this trend of strengthening the COMELEC. Today, COMELEC enforces and administers all laws and regulations relative to the conduct of elections, plebiscites, initiatives, referenda and recalls. Election contests involving regional, provincial and city elective officials are under its exclusive original jurisdiction. All contests involving elective municipal and barangay officials are under its appellate jurisdiction. 32 Our decisions have been in cadence with the movement towards empowering the COMELEC in order that it can more effectively perform its duty of safeguarding the sanctity of our elections. In Cauton vs. COMELEC, 33 we laid down this liberal approach, viz: xxx xxx xxx The purpose of the Revised Election Code is to protect the integrity of elections and to suppress all evils that may violate its purity and defeat the will of the voters. The purity of the elections is one of the most fundamental requisites of popular government. The Commission on Elections, by constitutional mandate, must do everything in its power to secure a fair and honest canvass of the votes cast in the elections. In the performance of its

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duties, the Commission must be given a considerable latitude in adopting means and methods that will insure the accomplishment of the great objective for which it was created to promote free, orderly, and honest elections. The choice of means taken by the Commission on Elections, unless they are clearly illegal or constitute grave abuse of discretion, should not be interfered with. In Pacis vs. COMELEC, 34 we reiterated the guiding principle that "clean elections control the appropriateness of the remedy." The dissent, for all its depth, is out of step with this movement. It condemns COMELEC for exercising its discretion to resort to manual count when this was its only viable alternative. It would set aside the results of the manual count even when the results are free from fraud and irregularity. Worse, it would set aside the judgment of the people electing the private respondent as Governor. Upholding the sovereignty of the people is what democracy is all about. When the sovereignty of the people expressed thru the ballot is at stake, it is not enough for this Court to make a statement but it should do everything have that sovereignty obeyed by all. Well done is always better than well said. IN VIEW WHEREOF, the petition of Tupay Loong and the petition in intervention of Yusop Jikiri are dismissed, there being no showing that public respondent gravely abused its discretion in issuing Minute Resolution Nos. 98-1748, 98-1750, 98-1796 and 98-1798. Our status quo order of June 23, 1998 is lifted. No costs. SO ORDERED. Davide, Jr., C.J., Romero, Bellosillo, Melo, Vitug, Kapunan, Mendoza, Quisumbing, Purisima, Buena and Gonzaga-Reyes, JJ., concur. Panganiban, J., Please see dissenting opinion. Pardo and Santiago, JJ., took no part.

Separate Opinions PANGANIBAN, J., dissenting opinion; With due respect, I dissent. I submit that the Commission on Elections (Comelec) blatantly violated its express and specific statutory mandate to conduct automated elections in the Province of Sulu without any adequate legal or factual bases. Specifically, the Comelec gravely abused its discretion in the following acts: 1. In peremptorily stopping the ongoing automated counting of ballots in the Municipality of Pata and in the entire Province of Sulu on the flimsy ground that three ballots for a mayoralty candidate in said municipality were not tallied by the counting machine assigned to said town 2. In changing the venue and the mode of counting from automated to manual, due to alleged imminent danger of violence 3. In violating its own Resolution ordering both an automated count and a parallel manual count, by actually holding only a manual count, without giving any reason for completely abandoning the automated system which was already 65 percent complete in the entire province 4. In counting and appreciating the automated ballots with the use of the rules peculiar to manual elections, not to the automated election system; that is, the Comelec manually tallied the ballots in a way different from how the automated machines would have counted them; hence, the results as manually appreciated substantially differed from the machinegenerated ones 5. In issuing, without due process of law, its assailed Minute Resolutions relating to the change in the manner and venue of counting Let me explain each of these grounds. 1. Stoppage of Automated Count Legally and Factually Flawed To begin with, there is absolutely no dispute that Congress required the Comelec to conduct automated,

not manual, elections in the Autonomous Region in Muslim Mindanao (ARMM), including the Province of Sulu, during the May 11, 1998 elections. Republic Act (RA) 8436 explicitly mandates the Comelec to "use an automated election system . . . for process of voting, counting of votes and canvassing/consolidation of results" 1 in the ARMM. However, contrary to its above clear mandate, the Comelec abondoned the ongoing automated counting of votes in Sulu during the last elections and substituted it mid-stream with the manual system. This reversion to the manual election system is nowhere authorized in the same or any other law. Clearly, the poll body has no legislative power to modify, much less to contravene, the law. 2 Neither can it assume powers not granted to it either by the Constitution or by Congress. On the other hand, the majority justifies this reversion to the manual method as a valid exercise of the Comelec's discretion to ensure a free, orderly, honest, and credible electoral exercise, stressing that this Court's ruling is "in cadence with the movement towards empowering the Comelec in order that it can more effectively perform its duty of safeguarding the sanctity of our elections." I respectfully say, however, that such "movement" should be canalized by the proposition that the Comelec may exercise its discretion only in accordance with law and never in violation of it. In any event, let me delve deeper into the factual and legal antecedents which led to the stoppage of the automated count, if only to demonstrate the utter lack of prudence in the Comelec's actions. Factual Antecedents of Stoppage of Count About 6:00 a.m. on May 12, 1998, the day after the election, while the automated counting of the ballots was being conducted at the Sulu State College, some election inspectors as well as watchers called the attention of the Comelec Task Force head in Sulu, Atty. Jose Tolentino Jr., to allegedly patent discrepancies between the printed election returns and the actual votes cast for the mayoralty candidates in the Municipality of Pata. On the spot, Atty. Tolentino picked out three local ballots that had already been counted. He noticed that while they contained votes for a certain mayoralty candidate, such votes were not credited in the latter's favor in the precinct election return, which showed zero (0) vote for that candidate (Mr. Anton Burahan). Atty. Tolentino then took it upon himself to immediately order the suspension of the automated counting of the ballots from Pata. Tracing the error to misprinted ballots, he forthwith ordered a province-wide suspension of the automated count, on the suspicionthat the printing defect was prevalent province-wide. At that point, about 65 percent of the ballots cast in Sulu were already machine-counted. Intervenor Jikiri alleged he was at the time leading the count. I believe that Atty. Tolentino acted with grave abuse of discretion. First, he had no legal authority to order even a temporary stoppage of the counting. During the Oral Argument on September 15, 1998, he candidly admitted that he had no statutory or even regulatory basis for his action. 3 Second, the verbal manifestation of a BEI member or a watcher that a vote for a certain candidate was not reflected in the election return conferred no legal authority upon the election official to examine the ballots personally. Third, granting that Atty. Tolentino had such authority, the factual basis of his exercise of discretion was sorely insufficient. He saw only three (3) ballots out of about 200 from a single precinct in Pata, which had 27 precincts; noted that the votes for a certain mayoralty candidate, which were indicated in the three ballots, were not reflected on the election return, which instead printed zero vote for such candidate; when without much ado, ordered the stoppage of the counting of the rest of the ballots from Pata. At the time, only 13 ballot boxes had been, and 14 more remained to be, counted. Under RA 8436, it would have taken only one (1) minute for the counting machine to process 100 to 150 ballots. 4 Thus, it would not have taken very long to finish the count for the entire municipality.

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Atty., Tolentino did not even try to get the aggregate votes cast in the municipality for each mayoral candidate, in order to see if three or even 200 votes would spell a material difference in the result. Even under the manual election system, election cases are heard on the assumption that the protested ballots or returns would, if validated, change the election results. By analogy, the same logic should apply to automated elections. But Atty. Tolentino immediately assumed that the three ballots would be determinative of the election results in the municipality, where about 5,400 5 votes had been cast. Not even the manual election system allows a suspension of the entire counting process on the mere allegation that a few ballots or votes for one candidate in one precinct are questionable. Doctrinally, it would be imprudent, even dangerous, to discard the automated system cavalierly and thereafter resort to manual count on the flimsy basis that a few ballots were allegedly miscounted. Such holding would give losing parties and candidates a convenient device to scuttle the automated system by the simple expedient of alleging that a few ballots were improperly counted by the machine. It would give them a convenient excuse to revive and use an antiquated and fraud-ridden electoral method and thus lead to a prolonged counting and canvassing, the very evil sought to be remedied by RA 8436. Remedy in Cases of False Returns and Questionable Ballots Moreover, since verbal complaints of incorrect tallying by the machine were not a valid reason to suspend the counting, the charges made by the candidates' watchers should have prompted Atty. Tolentino to require the complaining parties to file their protests for proper action in accordance with law and the Comelec rules. During the canvassing (which, under the automated system, is also done separately from the counting), the adversely affected parties could have objected to the inclusion of the questioned election return and followed, by analogy, the procedure for a pre-proclamation controversy laid down in Section 243 of the OEC, as amended by Section 20 of RA 7166. Had that recourse failed, the aggrieved candidate's remedy was an election protest. Suspending and finally stopping the automated count were completely uncalled for. There simply was no basis for it. Making matters worse, Atty. Tolentino directed the suspension of the automated count in all the 18 municipalities of Sulu, even the alleged errors were reportedly discovered in partial returns from only six (6) municipalities Pata, Talipao, Siasi, Indanan, Tapul and Jolo. If only on this basis, the assailed Comelec Minute Resolutions authorizing the manual count must be set aside and declared null and void for having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction. 6 But there are even more odious grounds, as I will now show. 2. No Imminent Danger of Violence The ponencia justifies the Comelec's precipitate shift to manual counting "in view of the fast deteriorating peace and order situation caused by the delay in the counting of the votes." It pays heed to the unsubstantiated report of Atty. Tolentino, but totally ignores the PNP provincial director's Comprehensive Report on the Sulu Election 7dated May 18, 1998, which was submitted to this Court by, Private Respondent Tan. Said Report makes no mention of or reference to any incident that would substantiate Tolentino's statement. Rather, it bares the relative tranquillity of the recent, electoral process in the province, viz. 1. The conduct of election in the province of Sulu, by her own standard, was generally peaceful sans some isolated cases of mortar shelling and failure of voting in some barangays of Panamao, ballot boxes damaged resulting from pump boat capsizing in Tongkil and failure of conducting elections in two precincts is Siasi, all of Sulu. Automated counting of the ballots, however, was stopped the day after the election when

inconsistency in the print out of results were discovered in the counting machine assigned to Pata municipality. This prompted the COMELEC to order the counting to be done in Manila. xxx xxx xxx SIGNIFICANT INCIDENTS Voting in the areas assigned to Sulu PPO was generally peaceful and orderly except for some minor hitches. In Tongkil, three ballot boxes fell into the sea when the pump boat carrying them capsized. There was also allegation of ballot snatching thereat and this matter is being investigated by this PPO. In Indanan, there was a minor misunderstanding between the Ahajan brothers of Brgy. Panabuan but this was immediately resolved. In Jolo, particularly at the polling places at Hadji Butu School of Arts and Trade there was a short commotion among followers of candidates. In the areas covered by the 3rd MBde, violence erupted only in Talipao, and Panamao. Reportedly, there [was] gunfire heard in the outskirts of Tapul but neither opposing group reacted. xxx xxx xxx 3. ASSESSMENT The conduct of election in Sulu was generally peaceful compared with the previous elections. Political rivalry was less intense; the extent of cheating was also less; and a good number of registered voters actually voted. This phenomenon may have been brought about by the fact that since there were four sets of candidates, the partisan armed groups were thinly distributed, meaning the more number of groupings, the lesser is the threat of violence. Even assuming arguendo that imminent violence threatened the counting center, such situation would justify only the transfer of the counting venue. Even then, the concurrence of the majority of the watchers for such transfer is still required under the OEC. It does not appear on record that the consent of the watchers was ever sought, not to say given. On the contrary, Minute Resolution No. 98-1750 (dated May 13, 1998), which ordered the change of venue for the counting, was issued ex parte by the Comelec en banc, without any petition, recommendation or proper investigation for said purpose. Such arbitrary and peremptory issuance, in violation of law, again amounted to an abusive exercise of discretion. But, even granting arguendo that the transfer of the counting venue was valid, the abandonment of the automated count was definitely not a necessary legal consequence thereof. In other words, only the venue could have been changed, but not the method of counting. If the Comelec had conducted an automated count in Manila, that may even be arguably sustained. I repeat, the alleged imminent threat of violence did not at all justify the manualization of the counting process; if at all, it only authorized a change of venue of the automated count. 3. No Justification to Abandon Automated Count Please note that the Comelec, in its Minute Resolution 981796 8 dated May 15, 1998, actually resolved "to conduct a parallel manual counting [i]n all 18 municipalities of Sulu . . .. 9 Originally, it would appear that the Commission intended to conduct in Manila an automated count first, and then a parallel manual count. Hence, it ordered the air-lifting to its head office of all the relevant election paraphernalia, including the automated machines. However, the Comelec did not obey its own Resolution. Worse, it did not explain why this vital provision requiring an automated count was not implemented, and why only a manual count was conducted. I could have conceded the propriety of a parallel manual count which plainly means that both automated and manual counts were to be performed. Although not expressly sanctioned by law, such parallel manual count may arguably be regarded as falling within the residual regulatory authority of the Comelec. Unfortunately and inexplicably, however, only a manual count was done; the Resolution ordering an automated count was simply ignored without the Comelec giving any reason therefor. To repeat, there was no reason at all to completely abandon the automated count. The Comelec had a duty to comply with the mandate of Congress. Yet, for unstated

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and I submit, unexplainable reasons, it simply substituted the will of Congress with its own arbitrary action. Clearly, the Comelec acted without or in excess of its jurisdiction. 4. Rules for Manual Elections Different from Those for the Automated System I would like to emphasize that the resort to a manual appreciation of the ballots is precluded by the basic features of the automated election system, 10 which requires minimum human intervention, the use of a special quality of ballot paper, the use of security codes, the mere shading of an oval corresponding to the name of the candidate voted for, and the mechanized discrimination of genuine from spurious ballots, as well as rejection of fake or counterfeit ones. The automated system takes away the discretion of the boards of election inspectors (BEI) in appreciating ballots. 11 A simple cursory reading of the rules 12 laid down in the Omnibus Election Code (OEC) for the appreciation and counting of ballots cast in a manual election easily discloses that they are inappropriate, if not downright useless, to the proper appreciation and reading of the ballots used in the automated system, wherein the names of the candidates are printed on the ballots beforehand and are not handwritten by the voters themselves, and wherein each name has a corresponding oval which must have its own exact location on the ballot, conforming to the design that has been programmed in the counting machine. In other words, the automated election system has peculiar features designed for electronic, not manual, verification. Under the automated system, the machines are programmed to recognize or read only the presence of carbon in the ovals. To erase a vote is, in fact, not advisable (the voter may, under Comelec rules, ask for a new ballot), because some carbon content may be left in the oval that would still be recognized and tallied by the machine. Human handling of the automated ballots will also make it all too easy to nullify the voter's will. A blank ballot (in which the voter intentionally refrained from voting for any candidate) can be easily pencil-marked in favor a certain candidate. Or a vote can be facilely nullified by simply marking the oval of another candidate for the same office. The point is: human handling of automated ballots is fraught with dangers to the integrity of the votes therein; it actually makes the political exercise more vulnerable to electoral fraud. To be more concrete and specific, during the physical examination of the ballots used in several precincts in Pata and Jolo, conducted pursuant to the Court's Resolution dated February 9, 1999, as well as in the operation of the counting machines to which these ballots were fed, 13 there were significant discrepancies between the results of the manual count, as reflected in the official election returns, and those of the machine count. 14 Such were brought about by the following: 1. Ovals that were ink-shaded were validated by the BEIs pursuant to the OEC 15 and the Comelec rules. 16On the other hand, these were ignored by the machines, which could detect only ovals with sufficient carbon content. 2. Some ovals that were only partly shaded were not read by the machines, but were counted by the BEI, pursuant to said Comelec rules. 3. In some ballots, several ovals for candidates for one office were shaded but, except for one, also crossed out or marked with an "X." The counting machine invalidated these votes, because it could not recognize the difference between an "X" mark and any other mark on the oval. All it could "read" was the carbon content, and due to the presence of carbon on more than one oval for a single office, the machine concluded that there was an "over-vote." Under the automated program, an "over-vote" is considered "no vote." However, the BEIs counted the remaining uncrossed vote, considering it the voter's true and valid vote, pursuant to the OEC rules.17

4. Ballots on which the voter manually wrote the candidates' names were considered marked ballots by some BEIs, pursuant to the OEC. But the machines counted the votes therein and ignored such writings, as long as they were not found inside the ovals. I could cite several other examples of why the manual count was not reflective of the machine count. Inspite of theponencia's plain admission that the OEC Rules on the appreciation of ballots "only apply to elections where the names of the candidates are handwritten in the ballots," the stark fact is that such Rules were actually (and erroneously) used here. Indeed, he use of inappropriate Rules by the BEIs necessarily begot a misappreciation of the ballots. Such misappreciation, in turn, led to a substantial difference in the election results, as yielded by the manual and the automated counts. In sum, the manual count was not reflective of the automated count. This Court's Ruling Sets Back Election Modernization It must be borne in mind that, verily, the consistency and the accuracy of the machine count were the underlying factors in adopting the automated system of election. Precisely, human error, inconsistency and fraud were intended to be eliminated in the automated system. In fact, the BEIs had no role in the counting and canvassing. Thus, the resort to a manual count under the facts of this case was antithetical to the rationale and intent behind RA 8436. The very purpose of the law was defeated by the cumbersome, inaccurate and error-prone manual system of counting automated votes. Indeed, to uphold the results of the manual count would set a dangerous precedent. It would be tantamount to validating the arbitrary and illegal acts of the Comelec. It would provide the candidates a degenerated means to delay the proclamation of winners. It would effectively nullify the purpose of delivering speedy and accurate election results and thus defeat the election modernization ordained by Congress. Definitely, it would critically set back efforts at eliminating electoral fraud. To paraphrase then Vice President, now President, Joseph E. Estrada, the automated election system, which was prescribed as the "cure for electoral fraud," may, in the imprudent hands of an indiscreet poll body, be truly "worse than the disease." 5. Lack of Due Process in Issuance of Assailed Comelec Resolutions The ponencia, citing the Tolentino Memorandum, states that Petitioner Loong and Intervenor Jikiri "were given every opportunity to oppose the manual count of the local ballots in Sulu." Hence, contrary to their allegations, they were not denied due process. Again, I beg to disagree. Some factual antecedents have to be brought up to set the record straight. The meeting among the candidates and other parties concerned, which Atty. Tolentino convened in the early afternoon of May 12, 1998, was already post facto. The talking points in that meeting related to the alleged incorrect reading of ballots for Pata, Sulu. They did not discuss the issue of whether to stop the tallying because much earlier in the morning of that same day, Atty. Tolentino had already suspended the counting in that municipality and, shortly thereafter, in the entire province. Furthermore, the group that convened did not yet take up the alleged rejection by the machines of ballots in other municipalities, since the reports thereon came only after the said meeting. And such stoppage, as I discussed earlier, was based merely on the verbal complaints of some watchers and members of the BEI and Atty. Tolentino's personal, albeit unauthorized, examination of three ballots from one precinct, which showed that votes for a certain mayoralty candidate were not reflected in the election return. Immediately after that meeting adjourned, Private Respondent Abdusakur Tan sent his petition 18 directly to the Comelec, requesting the immediate suspension of the automated count and the holding of a manual count in the entire Province of Sulu. In response, the Comelec en banc forthwith issued on the very same day May 12, 1998 assailed Minute Resolution 98-1747, 19 granting

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the petition insofar as the votes in the Municipality of Pata were concerned. The assailed Resolution was issued even before the report-recommendation of Atty. Tolentino was submitted to the Comelec en banc, close to midnight of that day. 20 While the effectivity of Minute Resolution 98-1747 was expressly "subject to notice to all parties concerned," its very issuance by the Comelec en banc was obviously (1) without notice to the other candidates, (2) without any hearing at all, and (3) without an independent investigation by the Comelec. It relied totally on the contents of the petition itself. Clearly, while the parties may have been heard by Atty. Tolentino, their inputs were definitely not communicated to nor required by the Commission en banc prior to its issuance of Minute Resolution 981747. Besides, the Tolentino meeting took up the problems in the Municipality of Pata only, for the alleged problems in the five other municipalities of Sulu were discovered after that meeting was adjourned already. Such meeting, therefore, did not serve as a sufficient basis for the Comelec to abandon the automated count in the entire province; to transfer the counting venue from Sulu to Manila; and to totally shift to the manual count. In making these decisions and issuing the resolutions therefor, the Comelec clearly did not accord the parties due process. It did not give them any opportunity to be heard prior the promulgation of its rulings. The Comelec simply acted on its own. Epilogue Special Election as the Equitable Remedy The assailed Comelec Resolutions have heretofore been shown to be tainted with grave abuse of discretion; hence, the manual count has no legal leg to stand on. Consequently, its results cannot be upheld. That which proceeds from a void order is likewise void. The invalidity of the manual count resulted in no count at all. Equally important, the manual count was not reflective of the results of an automated count because the ballots were not appreciated in the manner the scanning machine would have counted them. During the Oral Argument, the parties, as well as the solicitor general, agreed that an automated count was no longer possible because, after the ballots had been manually handled (and blemished or rumpled in the process), the scanning machines could not accurately read all of them anymore. 21 While the great majority of the ballots could still be counted by the machines, there were those that could no longer be electronically processed ballots that were torn, dirty or sticky; and the damp ones that the machine found difficult to disengage. The ultimate effect of the invalidity of the manual count and the futility of an automated count at this time is the annulment or junking of the votes of the people of Sulu in the last elections. The will of the electorate, expressed through the ballots, has been frustrated or virtually canceled by the unauthorized acts of the Comelec. There is then no basis for the proclamation of Private Respondent Tan as the duly elected governor of Sulu. It must be pointed out, however, that the nullity of Tan's proclamation is not equivalent to a judicial disenfranchisement of the Sulu electorate. Indeed, there is no evidence showing that the voting process itself was tainted with undue irregularity. It was the counting process, rather, that was shrouded with uncertainty. The manual count, I repeat, was not the prescribed or even the appropriate method of validating the ballots intended to be electronically verified. Time and again, the Court has held that the sovereign will must prevail over legal technicalities. 22 But when the popular will itself is placed in serious doubt due to the irregularity of the very method used in determining it, we must allow the people involved another chance to express their true choice. We simply cannot impose upon the people of Sulu one who was not their clear choice, or whose election was, at the very least, placed

in serious doubt by the spuriousness of the method used in counting the votes. The consequent loss of a legal and appropriate means to ascertain the genuine will of the voters during the last election in Sulu necessitates the holding of a special election. I believe that this is the only equitable remedy left under the circumstances, if we are to give true justice to the people of Sulu and let their sovereign will prevail. 23Such special election will, however, concern only the position of governor of the Province of Sulu. Only this position was contested in the instant petition; only the candidates therefor have timely sought relief from this Court to assail the manual count and the subject Minute Resolutions of the Comelec. The same relief cannot be granted to the candidates for the other positions who, insofar as they are concerned, are deemed to have accepted the results of the manual count as truly reflective of the will of the people of Sulu. Their failure to object in due time to the process, as well as the results, manifests their conformity and acceptance. They are now estopped from questioning the validity of the assumption into office of the duly proclaimed winners of the other positions in the province, whose rights cannot be adversely affected in these proceedings without them being haled to and accorded their day in court. 24 Even this Court has admitted the wisdom of this caveat as it denied the late intervention of Vice Gubernatorial Candidate Abdulwahid Sahidulla. The Need for Legislative Action The foregoing disquisition shows that RA 8436 had not foreseen flaws in the automated system that were unrelated to the counting machines or components thereof; thus, the lacuna of the proper recourse in such event. No remedies were expressly prescribed (1) for candidates who believe there was a wrong count or canvass by the machine, or more relevantly, (2) on whether Comelec may resort to a manual count of automated ballots, and if so, under what circumstances. 25 Well-settled is the rule, that courts have no jurisdiction to make legislative pronouncements. 26 They have no power to fill a vacuum in the law. Thus, the Court, I submit, should not give its imprimatur to the Comelec's resort to the manual method of determining election results, where Congress has categorically prescribed the automated system. Only Congress, the legislative arm of the government, can prescribe a precise remedy that will address the flaws identified in this case. For the courts or the Comelec to do so (like a resort to manual count) would be tantamount to judicial or administrative legislation, a course diametrical to the constitutional principle of separation of powers. WHEREFORE, I vote that the petition be GRANTED. Assailed Comelec Resolution Nos. 98-1747, 98-1750, 981796 and 98-1798 should be declared NULL and VOID. The manually determined election results for the position of governor of Sulu and the proclamation of Respondent Abdusakur Tan as the elected governor of said province must thus be SET ASIDE and the Comelec ORDERED to call a special election for such position as soon as practicable. Separate Opinions PANGANIBAN, J., dissenting opinion; With due respect, I dissent. I submit that the Commission on Elections (Comelec) blatantly violated its express and specific statutory mandate to conduct automated elections in the Province of Sulu without any adequate legal or factual bases. Specifically, the Comelec gravely abused its discretion in the following acts: 1. In peremptorily stopping the ongoing automated counting of ballots in the Municipality of Pata and in the entire Province of Sulu on the flimsy ground that three ballots for a mayoralty candidate in said municipality were not tallied by the counting machine assigned to said town 2. In changing the venue and the mode of counting from automated to manual, due to alleged imminent danger of violence 3. In violating its own Resolution ordering both an automated count and a parallel manual count, by actually holding only a manual count, without giving any reason for completely abandoning the automated system which was already 65 percent complete in the entire province

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4. In counting and appreciating the automated ballots with the use of the rules peculiar to manual elections, not to the automated election system; that is, the Comelec manually tallied the ballots in a way different from how the automated machines would have counted them; hence, the results as manually appreciated substantially differed from the machinegenerated ones 5. In issuing, without due process of law, its assailed Minute Resolutions relating to the change in the manner and venue of counting Let me explain each of these grounds. 1. Stoppage of Automated Count Legally and Factually Flawed To begin with, there is absolutely no dispute that Congress required the Comelec to conduct automated, not manual, elections in the Autonomous Region in Muslim Mindanao (ARMM), including the Province of Sulu, during the May 11, 1998 elections. Republic Act (RA) 8436 explicitly mandates the Comelec to "use an automated election system . . . for process of voting, counting of votes and canvassing/consolidation of results" 1 in the ARMM. However, contrary to its above clear mandate, the Comelec abondoned the ongoing automated counting of votes in Sulu during the last elections and substituted it mid-stream with the manual system. This reversion to the manual election system is nowhere authorized in the same or any other law. Clearly, the poll body has no legislative power to modify, much less to contravene, the law. 2 Neither can it assume powers not granted to it either by the Constitution or by Congress. On the other hand, the majority justifies this reversion to the manual method as a valid exercise of the Comelec's discretion to ensure a free, orderly, honest, and credible electoral exercise, stressing that this Court's ruling is "in cadence with the movement towards empowering the Comelec in order that it can more effectively perform its duty of safeguarding the sanctity of our elections." I respectfully say, however, that such "movement" should be canalized by the proposition that the Comelec may exercise its discretion only in accordance with law and never in violation of it. In any event, let me delve deeper into the factual and legal antecedents which led to the stoppage of the automated count, if only to demonstrate the utter lack of prudence in the Comelec's actions. Factual Antecedents of Stoppage of Count About 6:00 a.m. on May 12, 1998, the day after the election, while the automated counting of the ballots was being conducted at the Sulu State College, some election inspectors as well as watchers called the attention of the Comelec Task Force head in Sulu, Atty. Jose Tolentino Jr., to allegedly patent discrepancies between the printed election returns and the actual votes cast for the mayoralty candidates in the Municipality of Pata. On the spot, Atty. Tolentino picked out three local ballots that had already been counted. He noticed that while they contained votes for a certain mayoralty candidate, such votes were not credited in the latter's favor in the precinct election return, which showed zero (0) vote for that candidate (Mr. Anton Burahan). Atty. Tolentino then took it upon himself to immediately order the suspension of the automated counting of the ballots from Pata. Tracing the error to misprinted ballots, he forthwith ordered a province-wide suspension of the automated count, on the suspicionthat the printing defect was prevalent province-wide. At that point, about 65 percent of the ballots cast in Sulu were already machine-counted. Intervenor Jikiri alleged he was at the time leading the count. I believe that Atty. Tolentino acted with grave abuse of discretion. First, he had no legal authority to order even a temporary stoppage of the counting. During the Oral Argument on September 15, 1998, he candidly admitted that he had no statutory or even regulatory basis for his action. 3 Second, the verbal manifestation

of a BEI member or a watcher that a vote for a certain candidate was not reflected in the election return conferred no legal authority upon the election official to examine the ballots personally. Third, granting that Atty. Tolentino had such authority, the factual basis of his exercise of discretion was sorely insufficient. He saw only three (3) ballots out of about 200 from a single precinct in Pata, which had 27 precincts; noted that the votes for a certain mayoralty candidate, which were indicated in the three ballots, were not reflected on the election return, which instead printed zero vote for such candidate; when without much ado, ordered the stoppage of the counting of the rest of the ballots from Pata. At the time, only 13 ballot boxes had been, and 14 more remained to be, counted. Under RA 8436, it would have taken only one (1) minute for the counting machine to process 100 to 150 ballots. 4 Thus, it would not have taken very long to finish the count for the entire municipality. Atty., Tolentino did not even try to get the aggregate votes cast in the municipality for each mayoral candidate, in order to see if three or even 200 votes would spell a material difference in the result. Even under the manual election system, election cases are heard on the assumption that the protested ballots or returns would, if validated, change the election results. By analogy, the same logic should apply to automated elections. But Atty. Tolentino immediately assumed that the three ballots would be determinative of the election results in the municipality, where about 5,400 5 votes had been cast. Not even the manual election system allows a suspension of the entire counting process on the mere allegation that a few ballots or votes for one candidate in one precinct are questionable. Doctrinally, it would be imprudent, even dangerous, to discard the automated system cavalierly and thereafter resort to manual count on the flimsy basis that a few ballots were allegedly miscounted. Such holding would give losing parties and candidates a convenient device to scuttle the automated system by the simple expedient of alleging that a few ballots were improperly counted by the machine. It would give them a convenient excuse to revive and use an antiquated and fraud-ridden electoral method and thus lead to a prolonged counting and canvassing, the very evil sought to be remedied by RA 8436. Remedy in Cases of False Returns and Questionable Ballots Moreover, since verbal complaints of incorrect tallying by the machine were not a valid reason to suspend the counting, the charges made by the candidates' watchers should have prompted Atty. Tolentino to require the complaining parties to file their protests for proper action in accordance with law and the Comelec rules. During the canvassing (which, under the automated system, is also done separately from the counting), the adversely affected parties could have objected to the inclusion of the questioned election return and followed, by analogy, the procedure for a pre-proclamation controversy laid down in Section 243 of the OEC, as amended by Section 20 of RA 7166. Had that recourse failed, the aggrieved candidate's remedy was an election protest. Suspending and finally stopping the automated count were completely uncalled for. There simply was no basis for it. Making matters worse, Atty. Tolentino directed the suspension of the automated count in all the 18 municipalities of Sulu, even the alleged errors were reportedly discovered in partial returns from only six (6) municipalities Pata, Talipao, Siasi, Indanan, Tapul and Jolo. If only on this basis, the assailed Comelec Minute Resolutions authorizing the manual count must be set aside and declared null and void for having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction. 6 But there are even more odious grounds, as I will now show. 2. No Imminent Danger of Violence The ponencia justifies the Comelec's precipitate shift to manual counting "in view of the fast deteriorating peace and order situation caused by the delay in the counting of the votes." It pays heed to the unsubstantiated report of

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Atty. Tolentino, but totally ignores the PNP provincial director's Comprehensive Report on the Sulu Election 7dated May 18, 1998, which was submitted to this Court by, Private Respondent Tan. Said Report makes no mention of or reference to any incident that would substantiate Tolentino's statement. Rather, it bares the relative tranquillity of the recent, electoral process in the province, viz. 1. The conduct of election in the province of Sulu, by her own standard, was generally peaceful sans some isolated cases of mortar shelling and failure of voting in some barangays of Panamao, ballot boxes damaged resulting from pump boat capsizing in Tongkil and failure of conducting elections in two precincts is Siasi, all of Sulu. Automated counting of the ballots, however, was stopped the day after the election when inconsistency in the print out of results were discovered in the counting machine assigned to Pata municipality. This prompted the COMELEC to order the counting to be done in Manila. xxx xxx xxx SIGNIFICANT INCIDENTS Voting in the areas assigned to Sulu PPO was generally peaceful and orderly except for some minor hitches. In Tongkil, three ballot boxes fell into the sea when the pump boat carrying them capsized. There was also allegation of ballot snatching thereat and this matter is being investigated by this PPO. In Indanan, there was a minor misunderstanding between the Ahajan brothers of Brgy. Panabuan but this was immediately resolved. In Jolo, particularly at the polling places at Hadji Butu School of Arts and Trade there was a short commotion among followers of candidates. In the areas covered by the 3rd MBde, violence erupted only in Talipao, and Panamao. Reportedly, there [was] gunfire heard in the outskirts of Tapul but neither opposing group reacted. xxx xxx xxx 3. ASSESSMENT The conduct of election in Sulu was generally peaceful compared with the previous elections. Political rivalry was less intense; the extent of cheating was also less; and a good number of registered voters actually voted. This phenomenon may have been brought about by the fact that since there were four sets of candidates, the partisan armed groups were thinly distributed, meaning the more number of groupings, the lesser is the threat of violence. Even assuming arguendo that imminent violence threatened the counting center, such situation would justify only the transfer of the counting venue. Even then, the concurrence of the majority of the watchers for such transfer is still required under the OEC. It does not appear on record that the consent of the watchers was ever sought, not to say given. On the contrary, Minute Resolution No. 98-1750 (dated May 13, 1998), which ordered the change of venue for the counting, was issued ex parte by the Comelec en banc, without any petition, recommendation or proper investigation for said purpose. Such arbitrary and peremptory issuance, in violation of law, again amounted to an abusive exercise of discretion. But, even granting arguendo that the transfer of the counting venue was valid, the abandonment of the automated count was definitely not a necessary legal consequence thereof. In other words, only the venue could have been changed, but not the method of counting. If the Comelec had conducted an automated count in Manila, that may even be arguably sustained. I repeat, the alleged imminent threat of violence did not at all justify the manualization of the counting process; if at all, it only authorized a change of venue of the automated count. 3. No Justification to Abandon Automated Count Please note that the Comelec, in its Minute Resolution 98-1796 8 dated May 15, 1998, actually resolved "to conduct a parallel manual counting [i]n all 18 municipalities of Sulu . . .. 9 Originally, it would appear that the Commission intended to conduct in Manila an automated count first, and then a parallel manual

count. Hence, it ordered the air-lifting to its head office of all the relevant election paraphernalia, including the automated machines. However, the Comelec did not obey its own Resolution. Worse, it did not explain why this vital provision requiring an automated count was not implemented, and why only a manual count was conducted. I could have conceded the propriety of a parallel manual count which plainly means that both automated and manual counts were to be performed. Although not expressly sanctioned by law, such parallel manual count may arguably be regarded as falling within the residual regulatory authority of the Comelec. Unfortunately and inexplicably, however, only a manual count was done; the Resolution ordering an automated count was simply ignored without the Comelec giving any reason therefor. To repeat, there was no reason at all to completely abandon the automated count. The Comelec had a duty to comply with the mandate of Congress. Yet, for unstated and I submit, unexplainable reasons, it simply substituted the will of Congress with its own arbitrary action. Clearly, the Comelec acted without or in excess of its jurisdiction. 4. Rules for Manual Elections Different from Those for the Automated System I would like to emphasize that the resort to a manual appreciation of the ballots is precluded by the basic features of the automated election system, 10 which requires minimum human intervention, the use of a special quality of ballot paper, the use of security codes, the mere shading of an oval corresponding to the name of the candidate voted for, and the mechanized discrimination of genuine from spurious ballots, as well as rejection of fake or counterfeit ones. The automated system takes away the discretion of the boards of election inspectors (BEI) in appreciating ballots. 11 A simple cursory reading of the rules 12 laid down in the Omnibus Election Code (OEC) for the appreciation and counting of ballots cast in a manual election easily discloses that they are inappropriate, if not downright useless, to the proper appreciation and reading of the ballots used in the automated system, wherein the names of the candidates are printed on the ballots beforehand and are not handwritten by the voters themselves, and wherein each name has a corresponding oval which must have its own exact location on the ballot, conforming to the design that has been programmed in the counting machine. In other words, the automated election system has peculiar features designed for electronic, not manual, verification. Under the automated system, the machines are programmed to recognize or read only the presence of carbon in the ovals. To erase a vote is, in fact, not advisable (the voter may, under Comelec rules, ask for a new ballot), because some carbon content may be left in the oval that would still be recognized and tallied by the machine. Human handling of the automated ballots will also make it all too easy to nullify the voter's will. A blank ballot (in which the voter intentionally refrained from voting for any candidate) can be easily pencil-marked in favor a certain candidate. Or a vote can be facilely nullified by simply marking the oval of another candidate for the same office. The point is: human handling of automated ballots is fraught with dangers to the integrity of the votes therein; it actually makes the political exercise more vulnerable to electoral fraud. To be more concrete and specific, during the physical examination of the ballots used in several precincts in Pata and Jolo, conducted pursuant to the Court's Resolution dated February 9, 1999, as well as in the operation of the counting machines to which these ballots were fed, 13 there were significant discrepancies between the results of the manual count, as reflected in the official election returns, and those of the machine count. 14 Such were brought about by the following: 1. Ovals that were ink-shaded were validated by the BEIs pursuant to the OEC 15 and the Comelec rules. 16On the other hand, these were ignored by the machines, which could detect only ovals with sufficient carbon content. 2. Some ovals that were only partly shaded were not read by the machines, but were counted by the BEI, pursuant to said Comelec rules.

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3. In some ballots, several ovals for candidates for one office were shaded but, except for one, also crossed out or marked with an "X." The counting machine invalidated these votes, because it could not recognize the difference between an "X" mark and any other mark on the oval. All it could "read" was the carbon content, and due to the presence of carbon on more than one oval for a single office, the machine concluded that there was an "over-vote." Under the automated program, an "over-vote" is considered "no vote." However, the BEIs counted the remaining uncrossed vote, considering it the voter's true and valid vote, pursuant to the OEC rules.17 4. Ballots on which the voter manually wrote the candidates' names were considered marked ballots by some BEIs, pursuant to the OEC. But the machines counted the votes therein and ignored such writings, as long as they were not found inside the ovals. I could cite several other examples of why the manual count was not reflective of the machine count. Inspite of theponencia's plain admission that the OEC Rules on the appreciation of ballots "only apply to elections where the names of the candidates are handwritten in the ballots," the stark fact is that such Rules were actually (and erroneously) used here. Indeed, he use of inappropriate Rules by the BEIs necessarily begot a misappreciation of the ballots. Such misappreciation, in turn, led to a substantial difference in the election results, as yielded by the manual and the automated counts. In sum, the manual count was not reflective of the automated count. This Court's Ruling Sets Back Election Modernization It must be borne in mind that, verily, the consistency and the accuracy of the machine count were the underlying factors in adopting the automated system of election. Precisely, human error, inconsistency and fraud were intended to be eliminated in the automated system. In fact, the BEIs had no role in the counting and canvassing. Thus, the resort to a manual count under the facts of this case was antithetical to the rationale and intent behind RA 8436. The very purpose of the law was defeated by the cumbersome, inaccurate and error-prone manual system of counting automated votes. Indeed, to uphold the results of the manual count would set a dangerous precedent. It would be tantamount to validating the arbitrary and illegal acts of the Comelec. It would provide the candidates a degenerated means to delay the proclamation of winners. It would effectively nullify the purpose of delivering speedy and accurate election results and thus defeat the election modernization ordained by Congress. Definitely, it would critically set back efforts at eliminating electoral fraud. To paraphrase then Vice President, now President, Joseph E. Estrada, the automated election system, which was prescribed as the "cure for electoral fraud," may, in the imprudent hands of an indiscreet poll body, be truly "worse than the disease." 5. Lack of Due Process in Issuance of Assailed Comelec Resolutions The ponencia, citing the Tolentino Memorandum, states that Petitioner Loong and Intervenor Jikiri "were given every opportunity to oppose the manual count of the local ballots in Sulu." Hence, contrary to their allegations, they were not denied due process. Again, I beg to disagree. Some factual antecedents have to be brought up to set the record straight. The meeting among the candidates and other parties concerned, which Atty. Tolentino convened in the early afternoon of May 12, 1998, was already post facto. The talking points in that meeting related to the alleged incorrect reading of ballots for Pata, Sulu. They did not discuss the issue of whether to stop the tallying because much earlier in the morning of that same day, Atty. Tolentino had already suspended the counting in that municipality and, shortly thereafter, in the entire province. Furthermore, the group that convened did not yet take up the alleged rejection by the machines of ballots in other municipalities, since the reports

thereon came only after the said meeting. And such stoppage, as I discussed earlier, was based merely on the verbal complaints of some watchers and members of the BEI and Atty. Tolentino's personal, albeit unauthorized, examination of three ballots from one precinct, which showed that votes for a certain mayoralty candidate were not reflected in the election return. Immediately after that meeting adjourned, Private Respondent Abdusakur Tan sent his petition 18 directly to the Comelec, requesting the immediate suspension of the automated count and the holding of a manual count in the entire Province of Sulu. In response, the Comelec en banc forthwith issued on the very same day May 12, 1998 assailed Minute Resolution 98-1747, 19 granting the petition insofar as the votes in the Municipality of Pata were concerned. The assailed Resolution was issued even before the report-recommendation of Atty. Tolentino was submitted to the Comelec en banc, close to midnight of that day. 20 While the effectivity of Minute Resolution 98-1747 was expressly "subject to notice to all parties concerned," its very issuance by the Comelec en banc was obviously (1) without notice to the other candidates, (2) without any hearing at all, and (3) without an independent investigation by the Comelec. It relied totally on the contents of the petition itself. Clearly, while the parties may have been heard by Atty. Tolentino, their inputs were definitely not communicated to nor required by the Commission en banc prior to its issuance of Minute Resolution 98-1747. Besides, the Tolentino meeting took up the problems in the Municipality of Pata only, for the alleged problems in the five other municipalities of Sulu were discovered after that meeting was adjourned already. Such meeting, therefore, did not serve as a sufficient basis for the Comelec to abandon the automated count in the entire province; to transfer the counting venue from Sulu to Manila; and to totally shift to the manual count. In making these decisions and issuing the resolutions therefor, the Comelec clearly did not accord the parties due process. It did not give them any opportunity to be heard prior the promulgation of its rulings. The Comelec simply acted on its own. Epilogue Special Election as the Equitable Remedy The assailed Comelec Resolutions have heretofore been shown to be tainted with grave abuse of discretion; hence, the manual count has no legal leg to stand on. Consequently, its results cannot be upheld. That which proceeds from a void order is likewise void. The invalidity of the manual count resulted in no count at all. Equally important, the manual count was not reflective of the results of an automated count because the ballots were not appreciated in the manner the scanning machine would have counted them. During the Oral Argument, the parties, as well as the solicitor general, agreed that an automated count was no longer possible because, after the ballots had been manually handled (and blemished or rumpled in the process), the scanning machines could not accurately read all of them anymore. 21 While the great majority of the ballots could still be counted by the machines, there were those that could no longer be electronically processed ballots that were torn, dirty or sticky; and the damp ones that the machine found difficult to disengage. The ultimate effect of the invalidity of the manual count and the futility of an automated count at this time is the annulment or junking of the votes of the people of Sulu in the last elections. The will of the electorate, expressed through the ballots, has been frustrated or virtually canceled by the unauthorized acts of the Comelec. There is then no basis for the proclamation of Private Respondent Tan as the duly elected governor of Sulu. It must be pointed out, however, that the nullity of Tan's proclamation is not equivalent to a judicial disenfranchisement of the Sulu electorate. Indeed, there is no evidence showing that the voting process itself was tainted with undue irregularity. It was the counting process, rather, that was shrouded with uncertainty. The manual count, I repeat, was not the prescribed or even

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the appropriate method of validating the ballots intended to be electronically verified. Time and again, the Court has held that the sovereign will must prevail over legal technicalities. 22 But when the popular will itself is placed in serious doubt due to the irregularity of the very method used in determining it, we must allow the people involved another chance to express their true choice. We simply cannot impose upon the people of Sulu one who was not their clear choice, or whose election was, at the very least, placed in serious doubt by the spuriousness of the method used in counting the votes. The consequent loss of a legal and appropriate means to ascertain the genuine will of the voters during the last election in Sulu necessitates the holding of a special election. I believe that this is the only equitable remedy left under the circumstances, if we are to give true justice to the people of Sulu and let their sovereign will prevail. 23Such special election will, however, concern only the position of governor of the Province of Sulu. Only this position was contested in the instant petition; only the candidates therefor have timely sought relief from this Court to assail the manual count and the subject Minute Resolutions of the Comelec. The same relief cannot be granted to the candidates for the other positions who, insofar as they are concerned, are deemed to have accepted the results of the manual count as truly reflective of the will of the people of Sulu. Their failure to object in due time to the process, as well as the results, manifests their conformity and acceptance. They are now estopped from questioning the validity of the assumption into office of the duly proclaimed winners of the other positions in the province, whose rights cannot be adversely affected in these proceedings without them being haled to and accorded their day in court. 24 Even this Court has admitted the wisdom of this caveat as it denied the late intervention of Vice Gubernatorial Candidate Abdulwahid Sahidulla. The Need for Legislative Action The foregoing disquisition shows that RA 8436 had not foreseen flaws in the automated system that were unrelated to the counting machines or components thereof; thus, the lacuna of the proper recourse in such event. No remedies were expressly prescribed (1) for candidates who believe there was a wrong count or canvass by the machine, or more relevantly, (2) on whether Comelec may resort to a manual count of automated ballots, and if so, under what circumstances. 25 Well-settled is the rule, that courts have no jurisdiction to make legislative pronouncements. 26 They have no power to fill a vacuum in the law. Thus, the Court, I submit, should not give its imprimatur to the Comelec's resort to the manual method of determining election results, where Congress has categorically prescribed the automated system. Only Congress, the legislative arm of the government, can prescribe a precise remedy that will address the flaws identified in this case. For the courts or the Comelec to do so (like a resort to manual count) would be tantamount to judicial or administrative legislation, a course diametrical to the constitutional principle of separation of powers. WHEREFORE, I vote that the petition be GRANTED. Assailed Comelec Resolution Nos. 98-1747, 98-1750, 98-1796 and 98-1798 should be declared NULL and VOID. The manually determined election results for the position of governor of Sulu and the proclamation of Respondent Abdusakur Tan as the elected governor of said province must thus be SET ASIDE and the Comelec ORDERED to call a special election for such position as soon as practicable.

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