Republic of the Philippines SUPREME COURT

Manila

EN BANC

G.R. No. L-63915 April 24, 1985

LORENZO M. TAÑADA, ABRAHAM F. SARMIENTO, and MOVEMENT OF ATTORNEYS FOR BROTHERHOOD, INTEGRITY AND NATIONALISM, INC. [MABINI], petitioners, vs. HON. JUAN C. TUVERA, in his capacity as Executive Assistant to the President, HON. JOAQUIN VENUS, in his capacity as Deputy Executive Assistant to the President , MELQUIADES P. DE LA CRUZ, in his capacity as Director, Malacañang Records Office, and FLORENDO S. PABLO, in his capacity as Director, Bureau of Printing, respondents.

ESCOLIN, J.:

Invoking the people's right to be informed on matters of public concern, a right recognized in Section 6, Article IV of the 1973 Philippine Constitution, 1 as

well as the principle that laws to be valid and enforceable must be published in the Official Gazette or otherwise effectively promulgated, petitioners seek a writ of mandamus to compel respondent public officials to publish, and/or cause the publication in the Official Gazette of various presidential decrees, letters of instructions, general orders, proclamations, executive orders, letter of implementation and administrative orders.

Specifically, the publication of the following presidential issuances is sought:

a] Presidential Decrees Nos. 12, 22, 37, 38, 59, 64, 103, 171, 179, 184, 197, 200, 234, 265, 286, 298, 303, 312, 324, 325, 326, 337, 355, 358, 359, 360, 361, 368, 404, 406, 415, 427, 429, 445, 447, 473, 486, 491, 503, 504, 521, 528, 551, 566, 573, 574, 594, 599, 644, 658, 661, 718, 731, 733, 793, 800, 802, 835, 836, 923, 935, 961, 1017-1030, 1050, 1060-1061, 1085, 1143, 1165, 1166, 1242, 1246, 1250, 1278, 1279, 1300, 1644, 1772, 1808, 1810, 1813-1817, 1819-1826, 1829-1840, 1842-1847.

b] Letter of Instructions Nos.: 10, 39, 49, 72, 107, 108, 116, 130, 136, 141, 150, 153, 155, 161, 173, 180, 187, 188, 192, 193, 199, 202, 204, 205, 209, 211-213, 215-224, 226-228, 231-239, 241-245, 248, 251, 253-261, 263-269, 271-273, 275-283, 285-289, 291, 293, 297-299, 301-303, 309, 312-315, 325, 327, 343, 346, 349, 357, 358, 362, 367, 370, 382, 385, 386, 396-397, 405, 438-440, 444- 445, 473, 486, 488, 498, 501, 399, 527, 561, 576, 587, 594, 599, 600, 602, 609, 610, 611, 612, 615, 641, 642, 665, 702, 712-713, 726, 837-839, 878-879, 881, 882, 939-940, 964,997,1149-1178,1180-1278.

c] General Orders Nos.: 14, 52, 58, 59, 60, 62, 63, 64 & 65.

d] Proclamation Nos.: 1126, 1144, 1147, 1151, 1196, 1270, 1281, 1319-1526, 1529, 1532, 1535, 1538, 1540-1547, 1550-1558, 1561-1588, 1590-1595, 1594-1600, 1606-1609, 1612-1628, 1630-1649, 1694-1695, 1697-1701, 1705-1723, 1731-1734, 1737-1742, 1744, 1746-1751, 1752, 1754, 1762, 1764-1787, 1789-1795, 1797, 1800, 1802-1804, 1806-1807, 1812-1814, 1816, 1825-1826, 1829, 1831-1832, 1835-1836, 1839-1840, 1843-1844, 1846-1847, 1849, 1853-1858, 1860, 1866, 1868, 1870, 1876-1889, 1892, 1900, 1918, 1923, 1933, 1952, 1963, 1965-1966, 1968-1984, 1986-2028, 2030-2044, 2046-2145, 2147-2161, 2163-2244.

e] Executive Orders Nos.: 411, 413, 414, 427, 429-454, 457- 471, 474-492, 494-507, 509-510, 522, 524-528, 531-532, 536, 538, 543-544, 549, 551-553, 560, 563, 567-568, 570, 574, 593, 594, 598-604, 609, 611- 647, 649-677, 679-703, 705-707, 712-786, 788-852, 854-857.

f] Letters of Implementation Nos.: 7, 8, 9, 10, 11-22, 25-27, 39, 50, 51, 59, 76, 80-81, 92, 94, 95, 107, 120, 122, 123.

g] Administrative Orders Nos.: 347, 348, 352-354, 360- 378, 380-433, 436-439.

The respondents, through the Solicitor General, would have this case dismissed outright on the ground that petitioners have no legal personality or standing to bring the instant petition. The view is submitted that in the absence of any showing that petitioners are personally and directly affected or prejudiced by the alleged non-publication of the presidential issuances in question

2 said petitioners are without the requisite legal personality to institute

this mandamus proceeding, they are not being "aggrieved parties" within the meaning of Section 3, Rule 65 of the Rules of Court, which we quote:

SEC. 3. Petition for Mandamus.—When any tribunal, corporation, board or person unlawfully neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes another from the use a rd enjoyment of a right or office to which such other is entitled, and there is no other plain, speedy and adequate remedy in the ordinary course of law, the person aggrieved thereby may file a verified petition in the proper court alleging the facts with certainty and praying that judgment be rendered commanding the defendant, immediately or at some other specified time, to do the act required to be done to Protect the rights of the petitioner, and to pay the damages sustained by the petitioner by reason of the wrongful acts of the defendant.

Upon the other hand, petitioners maintain that since the subject of the petition concerns a public right and its object is to compel the performance of a public duty, they need not show any specific interest for their petition to be given due course.

The issue posed is not one of first impression. As early as the 1910 case of Severino vs. Governor General, 3 this Court held that while the general rule

is that "a writ of mandamus would be granted to a private individual only in those cases where he has some private or particular interest to be subserved, or some particular right to be protected, independent of that which he holds with the public at large," and "it is for the public officers exclusively to apply for the writ when public rights are to be subserved [Mithchell vs. Boardmen, 79 M.e., 469]," nevertheless, "when the question is one of public right and the object of the mandamus is to procure the enforcement of a public duty, the people are regarded as the real party in interest and the relator at whose instigation the proceedings are instituted need not show that he has any legal or special interest in the result, it being sufficient to show that he is a citizen and as such interested in the execution of the laws [High, Extraordinary Legal Remedies, 3rd ed., sec. 431].

Thus, in said case, this Court recognized the relator Lope Severino, a private individual, as a proper party to the mandamus proceedings brought to compel the Governor General to call a special election for the position of municipal president in the town of Silay, Negros Occidental. Speaking for this Court, Mr. Justice Grant T. Trent said:

We are therefore of the opinion that the weight of authority supports the proposition that the relator is a proper party to proceedings of this character when a public right is sought to be enforced. If the general rule in America were otherwise, we think that it would not be applicable to the case at bar for the reason 'that it is always dangerous to apply a general rule to a particular case without keeping in mind the reason for the rule, because, if under the particular circumstances the reason for the rule does not exist, the rule itself is not applicable and reliance upon the rule may well lead to error'

No reason exists in the case at bar for applying the general rule insisted upon by counsel for the respondent. The circumstances which surround this case are different from those in the United States, inasmuch as if the relator is not a proper party to these proceedings no other person could be, as we have seen that it is not the duty of the law officer of the Government to appear and represent the people in cases of this character.

The reasons given by the Court in recognizing a private citizen's legal personality in the aforementioned case apply squarely to the present petition. Clearly, the right sought to be enforced by petitioners herein is a public right recognized by no less than the fundamental law of the land. If petitioners were not allowed to institute this proceeding, it would indeed be difficult to conceive of any other person to initiate the same, considering that the Solicitor General, the government officer generally empowered to represent the people, has entered his appearance for respondents in this case.

Respondents further contend that publication in the Official Gazette is not a sine qua non requirement for the effectivity of laws where the laws themselves provide for their own effectivity dates. It is thus submitted that since the presidential issuances in question contain special provisions as to the date they are to take effect, publication in the Official Gazette is not indispensable for their effectivity. The point stressed is anchored on Article 2 of the Civil Code:

Art. 2. Laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided, ...

The interpretation given by respondent is in accord with this Court's construction of said article. In a long line of decisions, 4 this Court has ruled that

publication in the Official Gazette is necessary in those cases where the legislation itself does not provide for its effectivity date-for then the date of publication is material for determining its date of effectivity, which is the fifteenth day following its publication-but not when the law itself provides for the date when it goes into effect.

Respondents' argument, however, is logically correct only insofar as it equates the effectivity of laws with the fact of publication. Considered in the light of other statutes applicable to the issue at hand, the conclusion is easily reached that said Article 2 does not preclude the requirement of publication in the Official Gazette, even if the law itself provides for the date of its effectivity. Thus, Section 1 of Commonwealth Act 638 provides as follows:

Section 1. There shall be published in the Official Gazette [1] all important legisiative acts and resolutions of a public nature of the, Congress of the Philippines; [2] all executive and administrative orders and proclamations, except such as have no general applicability; [3] decisions or abstracts of decisions of the Supreme Court and the Court of Appeals as may be deemed by said courts of sufficient importance to be so published; [4] such documents or classes of documents as may be required so to be published by law; and [5] such documents or classes of documents as the President of the Philippines shall determine from time to time to have general applicability and legal effect, or which he may authorize so to be published. ...

The clear object of the above-quoted provision is to give the general public adequate notice of the various laws which are to regulate their actions and conduct as citizens. Without such notice and publication, there would be no basis for the application of the maxim "ignorantia legis non excusat." It would be the height of injustice to punish or otherwise burden a citizen for the transgression of a law of which he had no notice whatsoever, not even a constructive one.

Perhaps at no time since the establishment of the Philippine Republic has the publication of laws taken so vital significance that at this time when the people have bestowed upon the President a power heretofore enjoyed solely by the legislature. While the people are kept abreast by the mass media of the debates and deliberations in the Batasan Pambansa—and for the diligent ones, ready access to the legislative records—no such publicity accompanies the law-making process of the President. Thus, without publication, the people have no means of knowing what presidential decrees have actually been promulgated, much less a definite way of informing themselves of the specific contents and texts of such decrees. As the Supreme Court of Spain ruled: "Bajo la denominacion generica de leyes, se comprenden tambien los reglamentos, Reales decretos, Instrucciones, Circulares y Reales ordines dictadas de conformidad con las mismas por el Gobierno en uso de su potestad.

5

The very first clause of Section I of Commonwealth Act 638 reads: "There shall be published in the Official Gazette ... ." The word "shall" used therein imposes upon respondent officials an imperative duty. That duty must be enforced if the Constitutional right of the people to be informed on matters of public concern is to be given substance and reality. The law itself makes a list of what should be published in the Official Gazette. Such listing, to our mind, leaves respondents with no discretion whatsoever as to what must be included or excluded from such publication.

The publication of all presidential issuances "of a public nature" or "of general applicability" is mandated by law. Obviously, presidential decrees that provide for fines, forfeitures or penalties for their violation or otherwise impose a burden or. the people, such as tax and revenue measures, fall within this category. Other presidential issuances which apply only to particular persons or class of persons such as administrative and executive orders need not be published on the assumption that they have been circularized to all concerned.

6

It is needless to add that the publication of presidential issuances "of a public nature" or "of general applicability" is a requirement of due process. It is a rule of law that before a person may be bound by law, he must first be officially and specifically informed of its contents. As Justice Claudio Teehankee said in Peralta vs. COMELEC

7:

In a time of proliferating decrees, orders and letters of instructions which all form part of the law of the land, the requirement of due process and the Rule of Law demand that the Official Gazette as the official government repository promulgate and publish the texts of all such decrees, orders and instructions so that the people may know where to obtain their official and specific contents.

The Court therefore declares that presidential issuances of general application, which have not been published, shall have no force and effect. Some members of the Court, quite apprehensive about the possible unsettling effect this decision might have on acts done in reliance of the validity of those presidential decrees which were published only during the pendency of this petition, have put the question as to whether the Court's declaration of invalidity apply to P.D.s which had been enforced or implemented prior to their publication. The answer is all too familiar. In similar situations in the past this Court had taken the pragmatic and realistic course set forth in Chicot County Drainage District vs. Baxter Bank

8 to wit:

The courts below have proceeded on the theory that the Act of Congress, having been found to be unconstitutional, was not a law; that it was inoperative, conferring no rights and imposing no duties, and hence affording no basis for the challenged decree. Norton v. Shelby County, 118 U.S. 425, 442; Chicago, 1. & L. Ry. Co. v. Hackett, 228 U.S. 559, 566. It is quite clear, however, that such broad statements as to the effect of a determination of unconstitutionality must be taken with qualifications. The actual existence of a statute, prior to such a determination, is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be considered in various aspects-with respect to particular conduct, private and official. Questions of rights claimed to have become vested, of status, of prior determinations deemed to have finality and acted upon accordingly, of public policy in the light of the nature both of the statute and of its previous application, demand examination. These questions are among the most difficult of those which have engaged the attention of courts, state and federal and it is manifest from numerous decisions that an all-inclusive statement of a principle of absolute retroactive invalidity cannot be justified.

Consistently with the above principle, this Court in Rutter vs. Esteban 9 sustained the right of a party under the Moratorium Law, albeit said right had

accrued in his favor before said law was declared unconstitutional by this Court.

Similarly, the implementation/enforcement of presidential decrees prior to their publication in the Official Gazette is "an operative fact which may have consequences which cannot be justly ignored. The past cannot always be erased by a new judicial declaration ... that an all-inclusive statement of a principle of absolute retroactive invalidity cannot be justified."

From the report submitted to the Court by the Clerk of Court, it appears that of the presidential decrees sought by petitioners to be published in the Official Gazette, only Presidential Decrees Nos. 1019 to 1030, inclusive, 1278, and 1937 to 1939, inclusive, have not been so published.

10 Neither the

subject matters nor the texts of these PDs can be ascertained since no copies thereof are available. But whatever their subject matter may be, it is undisputed that none of these unpublished PDs has ever been implemented or enforced by the government. In Pesigan vs. Angeles,

11 the Court,

through Justice Ramon Aquino, ruled that "publication is necessary to apprise the public of the contents of [penal] regulations and make the said penalties binding on the persons affected thereby. " The cogency of this holding is apparently recognized by respondent officials considering the manifestation in their comment that "the government, as a matter of policy, refrains from prosecuting violations of criminal laws until the same shall have been published in the Official Gazette or in some other publication, even though some criminal laws provide that they shall take effect immediately.

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

SO ORDERED.

Relova, J., concurs.

Aquino, J., took no part.

Concepcion, Jr., J., is on leave.

Republic of the Philippines SUPREME COURT

Manila

THIRD DIVISION

G.R. No. 175451 September 28, 2007

ROSARIO L. DADULO, Petitioner, vs. THE HON. COURT OF APPEALS, OFFICE OF THE OMBUDSMAN, HON. FELICIANO BELMONTE, JR., in his capacity as City Mayor of Quezon City and GLORIA PATANGUI, Respondents.

R E S O L U T I O N

YNARES-SANTIAGO, J.:

For resolution is the motion for reconsideration filed by petitioner Rosario Dadulo of the Decision dated April 13, 2007 which disposed of the case as follows:

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 89909 affirming the March 4, 2003 Decision of the Office of the Ombudsman in OMB-C-A-0470-J which found petitioner Rosario Dadulo guilty of conduct prejudicial to the best interest of the service and imposed upon her the penalty of suspension for six months is AFFIRMED.

SO ORDERED.1

Petitioner insists that the decision of the Office of the Ombudsman which found her guilty of conduct prejudicial to the best interest of the service and imposed upon her the penalty of suspension for six months, which was affirmed by the Court of Appeals in the assailed April 13, 2007 Decision, was not supported by substantial evidence and that the implementation of the suspension Order is premature.

We deny the motion for reconsideration.

The factual findings of the Office of the Ombudsman upon which its decision on petitioner’s administrative liability was based are supported by the evidence on record. These include the affidavits of the parties to the instant case including those of respondent Gloria Patangui and Jessica Patangui, and the counter-affidavits of petitioner and of the other Barangay Security Development Officers (BSDO).

Respondent Gloria Patangui testified that on September 22, 2002, the construction materials were taken from her house and were brought to the barangay outpost. Patangui was informed by a BSDO that petitioner ordered the seizure.

Jessica, respondent’s 9 year-old daughter, testified that she witnessed the actual taking of the construction materials; that she saw two men enter their premises and take the construction materials while a woman was supervising the activity. She later identified these men as the co-accused of petitioner.

Efren Pagabao, one of the BSDO administratively charged with petitioner, admitted that they went to the residence of respondent upon orders of petitioner on September 22, 2002 to verify whether respondent has a barangay permit for the house construction they were undertaking. This established the presence of the barangay officials at the respondent’s residence and that they were there upon orders of petitioner.

On the other hand, other than a sweeping general denial of the charges against her, petitioner merely alleged that respondent was a professional squatter. She did not specifically deny any of the acts imputed against her nor did she explain why the construction materials were later found at the barangay outpost.

Thus, contrary to petitioner’s claim, there is substantial evidence on record sufficient to hold her administratively liable.

As to the alleged premature implementation of the suspension order, the same is likewise bereft of merit.

Petitioner argues that her appeal has the effect of staying the execution of the decision of the Ombudsman hence, the immediate implementation of the suspension order before it has become final and executory, was premature. She cited the cases of Lapid v. Court of Appeals

2 and Laxina v. Court of

Appeals3 where this Court ruled against the immediate implementation of the Ombudsman’s dismissal orders in view of Section 27

4 of Republic Act No.

6770.5

As correctly observed by the Solicitor General, at the time the Lapid and Laxina cases were decided, Section 7, Rule III of the Rules of Procedure of the Office of the Ombudsman was silent as to the execution of its decisions pending appeal. This was later amended by Administrative Order No. 17 and Administrative Order No. 14-A as implemented by Memorandum Circular No. 1 s. 2006. Hence, as amended, Section 7 of Rule III now reads:

Section 7. Finality and execution of decision. – Where the respondent is absolved of the charge, and in case of conviction where the penalty imposed is public censure or reprimand, suspension of not more than one month, or a fine equivalent to one month salary, the decision shall be final, executory and unappealable. In all other cases, the decision may be appealed to the Court of Appeals on a verified petition for review under the requirements and

conditions set forth in Rule 43 of the Rules of Court, within fifteen (15) days from receipt of the written Notice of the Decision or Order denying the Motion for Reconsideration.1âwphi1

An appeal shall not stop the decision from being executory. In case the penalty is suspension or removal and the respondent wins such appeal, he shall be considered as having been under preventive suspension and shall be paid the salary and such other emoluments that he did not receive by reason of the suspension or removal.

A decision of the Office of the Ombudsman in administrative cases shall be executed as a matter of course.1âwphi1 The Office of the Ombudsman shall ensure that the decision shall be strictly enforced and properly implemented. The refusal or failure by any officer without just cause to comply with an order of the Office of the Ombudsman to remove, suspend, demote, fine, or censure shall be a ground for disciplinary action against said officer.

In the case of In the Matter to Declare in Contempt of Court Hon. Simeon A. Datumanong, Secretary of DPWH,6we held that:

The Rules of Procedure of the Office of the Ombudsman are clearly procedural and no vested right of the petitioner is violated as he is considered preventively suspended while his case is on appeal. Moreover, in the event he wins on appeal, he shall be paid the salary and such other emoluments that he did not receive by reason of the suspension or removal. Besides, there is no such thing as a vested interest in an office, or even an absolute right to hold office. Excepting constitutional offices which provide for special immunity as regards salary and tenure, no one can be said to have any vested right in an office.

7

Well-settled is the rule that procedural laws are construed to be applicable to actions pending and undetermined at the time of their passage, and are deemed retroactive in that sense and to that extent. As a general rule, the retroactive application of procedural laws cannot be considered violative of any personal rights because no vested right may attach to nor arise therefrom.

8

Following the ruling in the above cited case, this Court, in Buencamino v. Court of Appeals,9 upheld the resolution of the Court of Appeals denying

Buencamino’s application for preliminary injunction against the immediate implementation of the suspension order against him. The Court stated therein that considering that an appeal under Administrative Order No. 17, the amendatory rule, shall not stop the Decision of the Office of the Ombudsman from being executory, the Court of Appeals did not commit grave abuse of discretion in denying petitioner’s application for injunctive relief.

Finally, the appeal of the decision of the Ombudsman to the Court of Appeals is through a Petition for Review under Rule 43 of the Rules of Court, Section 12 of which categorically provides that the appeal shall not stay the award, judgment, final order or resolution sought to be reviewed unless the Court of Appeals shall direct otherwise upon such terms as it may deem just.

WHEREFORE, the instant motion for reconsideration is DENIED with FINALITY.

SO ORDERED.

CONSUELO YNARES-SANTIAGO Associate Justice

WE CONCUR:

MA. ALICIA AUSTRIA-MARTINEZ Associate Justice

MINITA V. CHICO-NAZARIO Associate Justice

ANTONIO EDUARDO B. NACHURA Associate Justice

RUBEN T. REYES Associate Justice

A T T E S T A T I O N

I attest that the conclusions in the above resolution were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

CONSUELO YNARES-SANTIAGO Associate Justice Chairperson, Third Division

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, it is hereby certified that the conclusions in the above Resolution were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

REYNATO S. PUNO Chief Justice

Republic of the Philippines SUPREME COURT

Manila

THIRD DIVISION

G.R. No. 175451 April 13, 2007

ROSARIO L. DADULO, Petitioner, vs. THE HON. COURT OF APPEALS, OFFICE OF THE OMBUDSMAN, HON. FELICIANO BELMONTE, JR., in his capacity as City Mayor of Quezon City and GLORIA PATANGUI, Respondents.

D E C I S I O N

YNARES-SANTIAGO, J.:

Assailed in this petition is the July 20, 2006 Decision1 of the Court of Appeals in CA-G.R. SP No. 89909, affirming the March 4, 2003 Decision

2 of the

Office of the Ombudsman in OMB-C-A-02-0470-J, which found petitioner Rosario Dadulo guilty of conduct prejudicial to the best interest of the service and imposed upon her the penalty of six months suspension.

On September 26, 2002, private respondent Gloria Patangui (Patangui) filed before the Office of the Ombudsman an administrative complaint against petitioner Rosario Dadulo, Barangay Chairperson of Barangay Payatas A, Quezon City; and against Barangay Security Development Officers (BSDOs) Edgar Saraga and Rogelio Dumadigo; and Deputy BSDO Efren Pagabao. Patangui declared in her Salaysay ng Pagrereklamo

3 that at around 4:30 in

the afternoon of September 22, 2002, while she was out of their house, petitioner and the said BSDOs stole several galvanized iron sheets, lumber, and rolled plain iron sheets from her backyard. The incident was purportedly witnessed by Patangui’s two daughters who saw two men cart away the items upon the orders of a woman who was standing nearby. A BSDO on duty told Patangui that it was petitioner who ordered the seizure of the subject construction materials. The same information was relayed to her by a certain Elsie Castillejos. The following day, Patangui found out that some of the galvanized iron sheets taken from her backyard were utilized in building the new barangay outpost. She recognized said items because she is familiar with the campaign stickers still posted on the galvanized iron sheets.

In her Sinumpaang Salaysay,4 Jessica, 9 year old daughter of Patangui, stated that while she was playing in their yard, two men seized their

construction materials upon the orders of a woman. The following day, she pointed to a BSDO wearing a black jacket as one of those who took the construction materials. Upon inquiry, said man was identified as Edgar Saraga. Jessica later learned from their neighbors and from her mother that the woman who was standing near their house and giving orders to the BSDOs, was petitioner Rosario Dadulo.

Deputy BSDO Efren Pagabao stated in his counter-affidavit that they were directed by petitioner to inspect the house of Patangui to verify whether she has the necessary permit in connection with the ongoing construction in the site. He stressed that they acted with courtesy during the said inspection.

5 BSDOs Edgar Saraga and Rogelio Dumadigo added that the complaint filed against them was fabricated and aimed to conceal that

Patangui was illegally building a structure on a land owned by the government.6

In her counter-affidavit, petitioner denied the charge against her and declared that on September 11, 2002, a certain Elsie Castillejos applied for a permit to construct a house extension but was denied because the structure was intended to be built on the land owned by the National Waterworks and Sewerage Authority (NAWASA). Nevertheless, the construction proceeded. Petitioner inspected the site and found out that the structure is owned by Patangui and not by Elsie Castillejos.

7

Based on the affidavit of the parties, the Office of the Ombudsman rendered the assailed Decision finding petitioner and BSDO Edgar Saraga guilty of conduct prejudicial to the best interest of the service and imposed upon them the penalty of six months suspension. The charges against BSDO Rogelio Dumadigo and Deputy BSDO Efren Pagabao were dismissed for not having been identified as among those who took the construction materials of petitioner. The dispositive portion of the decision of the Office of the Ombudsman, reads:

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered finding respondents ROSARIO DADULO and EDGAR SARAGA Guilty of Conduct Prejudicial to the Best Interest of the Service, for which the penalty of Suspension for Six (6) Months Without Pay is hereby recommended, pursuant to the provisions of Section 10, Rule III of Administrative Order No. 07, in relation to Section 25 of Republic Act No. 6770.

The Honorable, the Mayor, Quezon City, is hereby furnished a copy of this Decision for its implementation in accordance with law, with the directive to inform this Office of the action taken thereon.

SO RESOLVED.8

Only petitioner elevated the case to the Court of Appeals which affirmed the assailed decision of the Office of the Ombudsman on July 20, 2006.9 It held

that there is substantial evidence to prove that petitioner ordered the seizure of the construction materials of Patangui. The dispositive portion thereof, provides:

WHEREFORE, premises considered, the appealed decision of the Office of the Ombudsman in OMB-C-A-02-0470-J is hereby AFFIRMED and the petition is DENIED.

SO ORDERED.10

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On October 26, 2006, public respondent Feliciano Belmonte, Jr. issued an Order implementing the suspension of petitioner.11

Hence, the instant recourse with prayer for the issuance of a temporary restraining order. On December 13, 2006, the Court issued a Resolution enjoining the implementation of petitioner’s suspension.

12

The issue for resolution is whether there is substantial evidence to show that petitioner ordered the seizure of Patangui’s construction materials.

Administrative proceedings are governed by the "substantial evidence rule." Otherwise stated, a finding of guilt in an administrative case would have to be sustained for as long as it is supported by substantial evidence that the respondent has committed acts stated in the complaint.

13 Substantial

evidence is more than a mere scintilla of evidence. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds equally reasonable might conceivably opine otherwise.

14

A review of the records of the case shows that the factual findings of the Ombudsman upon which its decision on petitioner’s administrative liability was based are supported by the evidence on record. Petitioner and BSDO Edgar Saraga were identified as the persons who took the construction materials. Respondent’s claim was corroborated by the testimony of her daughter who saw the actual taking of the construction materials. Moreover, respondent testified that the materials taken from her premises were used in the construction of the new barangay outpost.

15

On the other hand, the defense proffered by petitioner failed to rebut the charges against her. She cannot rely on the sweeping general denial of the charges in the face of a positive and categorical assertion made by respondent and her witness.

16 Petitioner was afforded the opportunity to disprove the

charges against her but still failed to offer any plausible explanation as to why the construction materials were in their possession, some of which were even used in the barangay outpost. Instead, she accused private respondent of illegally constructing a structure. However, even if the construction materials were to be used in constructing an illegal structure, their summary seizure would still make the public officers ordering or affecting the seizure administratively liable.

Findings of fact of the Office of the Ombudsman are conclusive when supported by substantial evidence and are accorded due respect and weight especially when they are affirmed by the Court of Appeals. It is only when there is grave abuse of discretion by the Ombudsman that a review of factual findings may aptly be made.

17 In reviewing administrative decisions, it is beyond the province of this Court to weigh the conflicting evidence, determine

the credibility of witnesses, or otherwise substitute its judgment for that of the administrative agency with respect to the sufficiency of evidence.18

It is not the function of this Court to analyze and weigh the parties’ evidence all over again except when there is serious ground to believe that a possible miscarriage of justice would thereby result. Our task in an appeal by petition for review on certiorari is limited, as a jurisdictional matter, to reviewing errors of law that might have been committed by the Court of Appeals.

191awphi1.nét

WHEREFORE, the petition is DENIED.1awphi1.nét The Decision of the Court of Appeals in CA-G.R. SP. No. 89909, affirming the March 4, 2003 Decision of the Office of the Ombudsman in OMB-C-A-0470-J which found petitioner Rosario Dadulo guilty of conduct prejudicial to the best interest of the service and imposed upon her the penalty of suspension for six months is AFFIRMED.

SO ORDERED.

CONSUELO YNARES-SANTIAGO Associate Justice

WE CONCUR:

MA. ALICIA AUSTRIA-MARTINEZ Associate Justice

ROMEO J. CALLEJO, SR. Associate Justice

MINITA V. CHICO-NAZARIO Asscociate Justice

ANTONIO EDUARDO B. NACHURA Associate Justice

A T T E S T A T I O N

I attest that the conclusions in the above decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

CONSUELO YNARES-SANTIAGO Associate Justice Chairperson, Third Division

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

REYNATO S. PUNO Chief Justice

Republic of the Philippines SUPREME COURT

Manila

SPECIAL SECOND DIVISION

G.R. No. 173942 June 25, 2008

FIL-ESTATE PROPERTIES, INC. and FAIRWAYS AND BLUE-WATERS RESORT AND COUNTRY CLUB, INC.,petitioners, vs. HON. MARIETTA J. HOMENA-VALENCIA, in her capacity as Presiding Judge of Branch 1, Regional Trial Court, Kalibo, Aklan, and SULLIAN SY NAVAL, respondents.

R E S O L U T I O N

CARPIO MORALES, J.:

For resolution is a Motion for Reconsideration1 dated 19 November 2007 filed by petitioners Fil-Estate Properties, Inc. and Blue-waters Resort and

Country Club, seeking reconsideration of the Decision2 of this Court dated 15 October 2007 which denied their petition.

A brief recapitulation of the relevant facts, even though they have already been narrated in the Decision, is in order.

In 1998, private respondent Sullian Sy Naval filed a complaint3 against petitioners, seeking the recovery of a parcel of land which petitioners had

allegedly taken possession of by constructing a golf course within the vicinity of her property. Counsel for petitioners failed to attend the pre-trial, and only private respondent presented evidence before the Regional Trial Court (RTC) of Aklan which heard the complaint. The RTC rendered a decision

4 in

favor of private respondent of which petitioners moved for reconsideration.

The crux of the present matter lies with the facts surrounding the motion for reconsideration. The motion was filed on 10 May 2000,5 thirteen (13) days

after petitioners received their copy of the RTC’s decision. On 26 July 2000, the RTC issued an order6 of even date denying the motion. Petitioners

alleged in their petition that they received the order denying the motion for reconsideration on 9 August 2000. They filed a Notice of Appeal on 11 August 2000,

7 but the postal money orders purchased and obtained to pay the filing fee were posted

only on 25 August 2000, or beyond the reglementary period to perfect the appeal. Consequently, the RTC denied the appeal8 and such denial was

sustained by the Court of Appeals after petitioners filed a special civil action for certiorari9 assailing the RTC’s refusal to give due course to the appeal.

The Petition10

before this Court relied on a rather idiosyncratic theory that only upon the adoption of the amendments to Section 13, Rule 41 of the Rules of Civil Procedure effective 1 May 2000 did it become obligatory on the part of trial courts to dismiss appeals on account of the failure to pay the full docket fees. The Court, in its 15 October 2007 Decision,

11 rejected this theory and reaffirmed the rule ordaining the disallowance of the appeal or notice

of appeal when the docket fee is not paid in full within the period for taking the appeal.

The present Motion for Reconsideration12

centers on a different line of argument: that following our 2005 decision in Neypes v. Court of Appeals,13

their Notice of Appeal was perfected on time as the full docket fees were paid within fifteen (15) days from their receipt of the RTC’s order denying their motion for reconsideration. Neypes has established a new rule whereby an appellant is granted a fresh 15-day period, reckoned from receipt of the order denying the motion for reconsideration, within which to perfect the appeal.

Petitioners clarify that they received the RTC’s order denying their motion for reconsideration on 11 August 2005,14

a fact which is confirmed by the case records even though the petition had misstated that said order was received on 9 August 2005. Petitioners argue that following Neypes, they were entitled to a new 15-day period,i.e., until 26 August 2005 or one (1) day after they had posted the full appellate docket fees, to perfect the appeal.

Most vitally, petitioners point out that on 10 October 2007, or just five (5) days before the promulgation of the assailed Decision, the Court through the Third Division rendered a decision in Sps. De los Santos v. Vda. De Mangubat

15 declaring that the Neypes ruling indeed can be retroactively applied to

prior instances.

Private respondent filed her Comment16

on the Motion for Reconsideration. She insists that Neypes should not be retroactively applied, but she fails to cite any authority on that argument or otherwise contend with the ruling inSps. De los Santos.

The determinative issue is whether the "fresh period" rule announced in Neypes could retroactively apply in cases where the period for appeal had lapsed prior to 14 September 2005 when Neypes was promulgated. That question may be answered with the guidance of the general rule that procedural laws may be given retroactive effect to actions pending and undetermined at the time of their passage, there being no vested rights in the rules of procedure.

17 Amendments to procedural rules are procedural or remedial in character as they do not create new or remove vested rights, but

only operate in furtherance of the remedy or confirmation of rights already existing.18

Sps. De los Santos reaffirms these principles and categorically warrants that Neypes bears the quested retroactive effect, to wit:

Procedural law refers to the adjective law which prescribes rules and forms of procedure in order that courts may be able to administer justice. Procedural laws do not come within the legal conception of a retroactive law, or the general rule against the retroactive operation of statues ― they may be given retroactive effect on actions pending and undetermined at the time of their passage and this will not violate any right of a person who may feel

that he is adversely affected, insomuch as there are no vested rights in rules of procedure.

The "fresh period rule" is a procedural law as it prescribes a fresh period of 15 days within which an appeal may be made in the event that the motion for reconsideration is denied by the lower court. Following the rule on retroactivity of procedural laws, the "fresh period rule" should be applied to pending actions, such as the present case.

Also, to deny herein petitioners the benefit of the "fresh period rule" will amount to injustice, if not absurdity, since the subject notice of judgment and final order were issued two years later or in the year 2000, as compared to the notice of judgment and final order in Neypes which were issued in 1998. It will be incongruous and illogical that parties receiving notices of judgment and final orders issued in the year 1998 will enjoy the benefit of the "fresh period rule" while those later rulings of the lower courts such as in the instant case, will not.

19

Notably, the subject incidents in Sps. De los Santos occurred in August 2000, at the same month as the relevant incidents at bar. There is no reason to adopt herein a rule that is divergent from that in Sps. De los Santos.

We have reexamined the petition to ascertain whether there is any other impediment to granting favorable relief to petitioners based on the retroactive application of the Neypes doctrine.

Private respondent does argue in her comment on the petition20

and on the motion for reconsideration21

that petitioners’ special civil action for certiorari before the Court of Appeals was not timely lodged. This argument is premised on petitioners’ requested relief that direct that proceedings de novo be had starting from pre-trial, by annulling the RTC’s decision and the court’s ruling on the motion for reconsideration, which was filed by petitioners beyond the 60-day period mandated by Section 4, Rule 65 of the Rules of Court for filing a special civil action for certiorari.

Petitioners, in their Reply,22

argue that the certiorari action was timely filed since the RTC had disallowed the notice of appeal in its 13 September 2000 Order, a copy of which was received by petitioners on 22 September 2000 or within the 60-day period prior to the filing of their certiorari petition.

Certainly, the RTC’s order denying the notice of appeal was timely assailed by petitioners via a special civil action filed w ith the Court of Appeals. Granting positive relief on that point would have the effect of giving due course to the notice of appeal. But is there basis for this Court to take the extra step as requested by petitioners and go as far as to annul the RTC’s rulings that granted the complaint filed by private respondent?

We deem the challenges raised by petitioners against the correctness of the RTC’s decision and its subsequent resolution on the motion for reconsideration as inappropriate for this Court to decide. Such issues may very well be tackled in petitioners’ appeal before the Court of Appeals. After all, as is now conceded, the appeal was timely filed and the existence of such appeal would, per Section 1, Rule 65, bar the certiorari action from correcting errors which may be reversed on appeal. Besides, the resolution of such issues requires a certain level of factual determination, especially as to the circumstances surrounding the resignation of the counsel who had initially appeared in behalf of the petitioners, the service of the order resetting the pre-trial and all subsequent notices of trial to petitioners after private respondent had been allowed to present evidence ex parte. Unlike the Court of Appeals, this Court is not a trier of facts.

23

WHEREFORE, the motion for reconsideration is GRANTED and the instant petition is GRANTED IN PART. The assailed rulings of the Court of Appeals and the RTC Order dated 13 September 2000 are SET ASIDE. The Court of Appeals is DIRECTED to give due course to petitioners’ appeal in Civil Case No. 5626, and to hear and decide such appeal with deliberate dispatch. No pronouncement as to costs.

SO ORDERED.

DANTE O. TINGA Associate Justice

WE CONCUR:

LEONARDO A. QUISUMBING Associate Justice

Chairperson

ANTONIO T. CARPIO Associate Justice

CONCHITA CARPIO MORALES Associate Justice

PRESBITERO J. VELASCO, JR. Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

LEONARDO A. QUISUMBING Associate Justice

Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

REYNATO S. PUNO Chief Justice

Republic of the Philippines SUPREME COURT

Manila

FIRST DIVISION

G.R. No. 90634-35 June 6, 1990

CARMELCRAFT CORPORATION &/OR CARMEN V. YULO, President and General Manager, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, CARMELCRAFT EMPLOYEES UNION, PROGRESSIVE FEDERATION OF LABOR, represented by its Local President GEORGE OBANA, respondents.

Tee, Tomas & Associates for petitioners.

Raul E. Espinosa for private respondents.

CRUZ, J.:

The Court is appalled by the degree of bad faith that has characterized the petitioners' treatment of their employees. It borders on puredisdain. And on top of this, they now have the temerity to seek from us a relief to which they are clearly not entitled. The petition must be dismissed.

The record shows that after its registration as a labor union, the Camelcraft Employees Union sought but did not get recognition from the petitioners. Consequently, it filed a petition for certification election in June 1987. On July 13, 1987, Camelcraft Corporation, through its president and general manager, Carmen Yulo, announced in a meeting with the employees that it would cease operations on August 13, 1987, due to serious financial losses. Operations did cease as announced. On August 17, 1987, the union filed a complaint with the Department of Labor against the petitioners for illegal lockout, unfair labor practice and damages, followed the next day with another complaint for payment of unpaid wages, emergency cost of living allowances, holiday pay, and other benefits. On November 29, 1988, the Labor Arbiter declared the shutdown illegal and violative of the employees' right to self-organization. The claim for unpaid benefits was also granted.

1 After reviewing the decision on appeal, the respondent NLRC declared:

WHEREFORE, premises considered, the appealed decision is modified. In addition to the underpayment in their wages, emergency living allowance, 13th month pay, legal holiday pay and premium pay for holidays for a period of three years, the respondents are ordered to pay complainants their separation pay equivalent to one-month pay for every year of service, a fraction of six months or more shall be considered as one (1) whole year.

The rest of the disposition stand. 2

We do not find that the above decision is tainted with grave abuse of discretion. On the contrary, it is comformable to the pertinent laws and the facts clearly established at the hearing.

The reason invoked by the petitioner company to justify the cessation of its operations is hardly credible; in fact, it is preposterous when viewed in the light of the other relevent circumstances. Its justification is that it sustained losses in the amount of P 1,603.88 as of December 31, 1986 .

3 There is no

report, however, of its operations during the period after that date, that is, during the succeeding seven and a half months before it decided to close its business. Significantly, the company is capitalized at P 3 million .

4 Considering such a substantial investment, we hardly think that a loss of the paltry

sum of less than P 2,000.00 could be considered serious enough to call for the closure of the company.

We agree with the public respondent that the real reason for the decision of the petitioners to cease operations was the establishment of respondent Carmelcraft Employees Union. It was apparently unwelcome to the corporation, which would rather shut down than deal with the union. There is the allegation from the private respondent that the company had suggested that it might decide not to close the business if the employees were to affiliate with another union which the management preferred.

5 This allegation has not been satisfactorily disproved. At any rate, the finding of the NLRC is more

believable than the ground invoked by the petitioners. Notably, this justification was made only eight months after the alleged year-end loss and shortly after the respondent union filed a petition for certification election.

The act of the petitioners was an unfair labor practice prohibited by Article 248 of the Labor Code, to wit:

ART. 248. Unfair labor practices of employers.-It shall be unlawful for an employer to commit any of the following unfair labor practice:

(a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization;

More importantly, it was a defiance of the constitutional provision guaranteeing to workers the right to self-organization and to enter into collective bargaining with management through the labor union of their own choice and confidence.

6

The determination to cease operations is a prerogative of management that is usually not interfered with by the State as no business can be required to continue operating at a loss simply to maintain the workers in employment.

7 That would be a taking of property without due process of law which the

employer has a right to resist. But where it is manifest that the closure is motivated not by a desire to avoid further losses but to discourage the workers from organizing themselves into a union for more effective negotiations with the management, the State is bound to intervene.

And, indeed, even without such motivation, the closure cannot be justified because the claimed losses are obviously not serious. In this situation, the employees are entitled to separation pay at the rate of one-half month for every year of service under Art. 283 of the Labor Code.

The contention of the petitioners that the employees are estopped from claiming the alleged unpaid wages and other compensation must also be rejected. This claim is based on the waivers supposedly made by the complainants on the understanding that "the management will implement prospectively all benefits under existing labor standard laws." The petitioners argue that this assurance provided the consideration that made the quitclaims executed by the employees valid. They add that the waivers were made voluntarily and contend that the contract should be respected as the law between the parties.

Even if voluntarily executed, agreements are invalid if they are contrary to public policy. This is elementary. The protection of labor is one of the policies laid down by the Constitution not only by specific provision but also as part of social justice. The Civil Code itself provides:

ART. 6. Rights may be waived, unless the waiver is contrary to law, public order, public policy, morals, or good customs, or prejudicial to a third person with a right recognized by law.

ART. 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.

The subordinate position of the individual employee vis-a-vis management renders him especially vulnerable to its blandishments and importunings, and even intimidations, that may result in his improvidently if reluctantly signing over benefits to which he is clearly entitled. Recognizing this danger, we have consistently held that quitclaims of the workers' benefits win not estop them from asserting them just the same on the ground that public policy prohibits such waivers.

That the employee has signed a satisfaction receipt does not result in a waiver; the law does not consider as valid any agreement to receive less compensation than what a worker is entitled to recover. A deed of release or quitclaim cannot bar an employee from demanding benefits to which he is legally entitled.

8

Release and quitclaim is inequitable and incongruous to the declared public policy of the State to afford protection to labor and to assure the rights of workers to security of tenure.

9

We find also untenable the contention of Carmen Yulo that she is not liable for the acts of the petitioner company, assuming it had acted illegally, because the Carmelcraft Corporation is a distinct and separate entity with a legal personality of its own. Yulo claims she is only an agent of the company carrying out the decisions of its board of directors. We do not agree. Our finding is that she is in fact and legal effect the corporation, being not only its president and general manager but also its owner.

10

Moreover, and this is a no less important consideration, she is raising this issue only at this tardy hour, when she should have invoked this argument earlier, when the case was being heard before the labor arbiter and later m the NLRC. It is too late now to shunt these responsibilities to the company after she herself had been found liable.

All told, the conduct of the petitioners toward the employees has been less than commendable. Indeed, it is reprehensible. First, the company inveigled them to waive their claims to compensation due them on the promise that future benefits would be paid (and to make matters worse, there is no showing that they were indeed paid). Second, it refused to recognize the respondent union, suggesting to the employees that they join another union acceptable to management. Third, it threatened the employees with the closure of the company and then actually did so when the employees insisted on their demands. All these acts reflect on the bona fides of the petitioners and unmistakably indicate their ill will toward the employees.

The petitioners obviously regard the private respondents as mere servants simply because they are paid employees. That is a mistake. Laborers are not just hired help to be exploited, without the right to defend and improve their interest . The working class is an equal partner of management and should always be treated as such.

The more labor is prevented from pursuing its legitimate demands for its protection and enhancement, the more it is likely to lose faith in our free institutions and to incline toward Ideologies offering a more if deceptive regime. One way of disabusing our working men and women of this delusion is to assure them that under our form of government, the interests of labor deserve and will get proper recognition from an enlightened and compassionate management, no less than the total sympathy of a solicitous State.

WHEREFORE, the petition is DISMISSED and the challenged decision is AFFIRMED, with costs against the petitioner. It is so ordered.

Narvasa (Chairman), Gancayco and Medialdea, JJ., concur.

Griño-Aquino, J., is on leave.

EN BANC

[G.R. Nos. 180880-81 : June 07, 2011]

KEPPEL CEBU SHIPYARD, INC. V. PIONEER INSURANCE AND SURETY CORPORATION

[G.R. NOS. 180896-97. JUNE 7, 2011]

PIONEER INSURANCE AND SURETY CORPORATION V. KEPPEL CEBU SHIPYARD, INC.

Sirs/Mesdames:

Please take notice that the Court en banc issued a Resolution dated JUNE 7, 2011, which reads as follows:

"G.R. Nos. 180880-81 (Keppel Cebu Shipyard, Inc. v. Pioneer Insurance and Surety Corporation); G.R. Nos. 180896-97 (Pioneer Insurance and Surety Corporation v. Keppel Cebu Shipyard, Inc.). - On September 25, 2009, the Court rendered a

decision in these consolidated cases, the dispositive portion of which reads:

WHEREFORE, the Petition of Pioneer Insurance and Surety Corporation in G.R. Nos. 180896-97 and the Petition of Keppel Cebu Shipyard. Inc. in G.R. Nos. 180880-81 are PARTIALLY GRANTED and the Amended Decision dated December 20, 2007 of the Court of

Appeals is MODIFIED. Accordingly, KCSI is ordered to pay Pioneer the amount of P360,000,000.00 less P30,252,648.09, equivalent to the salvage value recovered by Pioneer from M/V "Superferry 3," or the net total amount of P329,747,351.91, with six percent

(6%) interest per annum reckoned from the time the Request for Arbitration was filed until this Decision becomes final and

executory, plus twelve percent (12%) interest per annum on the said amount or any balance thereof from the finality of the Decision until the same will have been fully paid. The arbitration costs shall be borne by both parties on a pro rata basis. Costs against KCSI.

Keppel Cebu Shipyard, Inc. (KCSI) filed a Motion for Reconsideration, which was denied in a Resolution dated June 21, 2010.

Thereafter, KCSI filed its Second Motion for Reconsideration to Refer to the Court En Banc and for Oral Arguments and its letter

dated July 30, 2010. KCSI later filed another letter dated September 29, 2010, requesting for the status of its previous letter dated

July 30, 2010.

In a Resolution[1] dated October 20, 2010, the Court disposed of KCSI's Second Motion for Reconsideration to Refer to the Court En

Banc and for Oral Arguments and its letters dated July 30, 2010 and September 29, 2010, thus:

WHEREFORE, premises considered, the Court resolves to DENY the Second Motion for Reconsideration to Refer to the Court En Bane and for Oral Arguments of the Resolution dated June 21, 2010 and the Decision dated September 25, 2009 for lack of merit.

Accordingly, the (1) 1st Indorsement dated August 4, 2010 of the Office of the Chief Justice, referring the attached letter dated July 30, 2010 of Atty. Emmanuel M. Lombos of SSHG Law Centre for appropriate action; (2) aforesaid letter dated July 30. 2010; (3) 1st

Indorsement dated October 1. 2010 of the Office of the Clerk of Court-Third Division, referring the attached letter of Atty. Emmanuel

M. Lombos of SSHG Law Center for appropriate action; and (4) aforesaid letter dated September 29, 2010 are NOTED.

On November 4, 2010, the Decision became final and executory.

On November 23r 2010, KSCI filed a Motion to Re-Open Proceedings and Motion to Refer to the CourtEn Banc.

In the said motion, KCSI contended that it was denied due process when the Court reviewed and reversed the Court of Appeals'

finding of fact, despite its not having asked for case records containing the evidence presented at the Construction Industry

Arbitration Commission (CIAC), on the ground that a petition for review on certiorari is generally required to append "such material portions of the record as would support the petition," as stated in the Court Resolution dated October 20, 2010.[2]

KCSI stated that the most crucial finding of fact of the Court of Appeals was that both Pioneer and KCSI were guilty of negligence

that caused the fire which destroyed the vessel, M/V Super Ferry 3; thus, it held that both parties should be liable for the loss on a proportionate basis. Both the Court of Appeals and the CIAC based their unanimous findings of fact on the testimony of dozens of

witnesses contained in the transcripts of record.

KCSI stated that even as it raised prohibited factual issues in its petition before the Court, Pioneer did not attach any of those

transcripts to its petition. Since it (KCSI) appealed only questions of law, it had no need to attach said transcripts, and, therefore, did

not supply any of those transcripts to the Court.

Thus, KCSI questioned how the Court could have weighed those many contradictory accounts of witnesses and how it could have

decided which witnesses and which portions of their testimonies to believe, since neither party attached and supplied the transcripts, and the Court had none of the transcripts of record. KCSI asserted that without the transcripts of record, the Court had no basis to

review the issues of fact and to reverse the findings of fact of the CIAC and Court of Appeals, which actually read the evidence and

transcripts of record. It stated that the Court has repeatedly ruled that appellate courts, such as itself, may not review issues of fact without reviewing the evidence.[3]

KCSI further moved that its Motion to Re-open Proceedings be referred to the Court en banc, which has the authority, under A.M.

No. 10-4-20-SC (The Internal Rules of the Supreme Court), to act on matters and cases including those "cases that the Court en banc deems of sufficient importance to merit its attention."[4] It alleged that these consolidated cases are of transcendental

importance and of paramount public interest to merit referral to the Court en banc, so that the said cases may be decided in accordance with law and the evidence.

On December 13, 2010, KCSI filed a Supplemental Motion (to the Motion to Re-Open Proceedings and the Motion to Refer to the

Court En Banc) alleging the following: (1) it was denied its substantive right to due process; (2) the limitation-of-liability clause under the Ship Repair Agreement between KCSI and WG&A is valid, such that WG&A is estopped to question the same; and (3) the

imposition of the six percent (6%) interest is unwarranted.

In the Supplemental Motion, KCSI argued that the limitation-of-liability clause under the Shiprepair Agreement between it and WG&A was valid, and that WG&A was estopped to question it, since WG&A was fully aware not only of the standards of KCSI, but also of

other yards in the ship repair industry. KCSI pointed out that on at least 22 different occasions, it dry-docked and repaired various ships owned and/or managed by Aboitiz Shipping Corporation, members of the Aboitiz Group of Companies, WG&A, Inc., WG&A

Jebsens Shipmanagement, Inc., and companies related to them under ship repair agreements incorporating the same conditions, but

these conditions were never previously questioned.

The Standard Terms of the Ship Repair Agreement provide:

20. The Contractor (KCSI) shall not be under any liability to the Customer (WG & A) either in contract or otherwise except for negligence and such liability shall itself be subject to the following overriding limitations and exceptions, namely:

(a) The total liability of the Contractor to the Customer (including the liability to replace under Clause 17) or of any Sub-contractor

shall be limited in respect of any and/or all defect(s) or event(s) to the sum of Pesos Philippine Currency Fifty Million only xxx

The issue on the limitation of liability was decided upon by this Court in its Decision dated September 25, 2009, thus:

Clause 20 is also a void and ineffectual waiver of the right of WG&A to be compensated for the full insured value of the vessel or, at the very least, for its actual market value. There was clearly no intention on the part of WG&A to relinquish such right. It is an

elementary rule that a waiver must be positively proved, since a waiver by implication is not normally countenanced. The norm is

that a waiver must not only be voluntary, but must have been made knowingly, intelligently, and with sufficient awareness of the relevant circumstances and likely consequences. There must be persuasive evidence to show an actual intention to relinquish the

right. This has not been demonstrated in this case.

Likewise, Clause 20 is a stipulation that may be considered contrary to public policy. To allow KCSI to limit its liability to only P50,000,000.00, notwithstanding the fact that there was a constructive total loss in the amount of P360,000,000.00, would sanction

the exercise of a degree of diligence short of what is ordinarily required. It would not be difficult for a negligent party to escape liability by the simple expedient of paying an amount very much lower than the actual damage or loss sustained by the other.

There are serious allegations in the petition that if the decision of the Court is not vacated, there is a far-reaching effect on similar

cases already decided by the Court. Thus, by a vote of 4 to 1 in the Second Division that rendered the decision, the case was elevated to the En Banc for acceptance, in accordance with the Internal Rules of the Supreme Court, particularly Section 3 (n), Rule

2[5] thereof which states that the Court en banc can act on matters and cases that it deems of sufficient importance to merit its attention. In regard to this matter, ten (10) members, or two-thirds of the Court en banc, voted to grant KCSI's Motion to Refer to

the Court En Banc its Motion to Re-Open Proceedings, while three (3) members dissented and two (2) members did not take part.

In view of the foregoing, KCSI's Motion to Refer to the Court En Banc is GRANTED. The Court en bancshall determine whether or not the allegations of KCSI are meritorious." Corona, C.J., and Bersamin, J., no part. Nachura, Velasco and Brion, JJ., dissenting.

Lacbayan vs. Samoy

Facts:

• Betty Lacbayan (petitioner) and Bayani S. Samoy (respondent) had an illicit relationship.

• During their relationship, they, together with three more incorporators, were able to establish a manpower services company.

• The company acquired five parcels of land were registered in petitioner and respondent’s names, ostensibly as husband and wife.

• When their relationship turned sour, they decided to divide the said properties and terminate their business partnership by executing a Partition Agreement.

• Initially, respondent agreed to petitioner’s proposal that the properties in Malvar St. and Don Enrique Heights be assigned to the latter, while the ownership over

the three other properties will go to respondent.

• However, when Lacbayan wanted additional demands to be included in the partition agreement, Samoy refused.

• Feeling aggrieved, petitioner filed a complaint for judicial partition of the said properties.

• Petitioner’s contention: She claimed that they started to live together as husband and wife in 1979 without the benefit of marriage and worked together as

business partners, acquiring real properties amounting to P15,500,000.00.

• Respondent’s contention: He purchased the properties using his own personal funds.

• RTC and CA ruled in favor or respondent.

Issues:

1. WON an action for partition precludes a settlement on the issue of ownership.

2. Would a resolution on the issue of ownership subject the Torrens title issued over the disputed realties to a collateral attack?

Held:

1. No.

While it is true that the complaint involved here is one for partition, the same is premised on the existence or non-existence of co-ownership between the parties.

Until and unless this issue of co-ownership is definitely and finally resolved, it would be premature to effect a partition of the disputed properties. More importantly,

the complaint will not even lie if the claimant, or petitioner in this case, does not even have any rightful interest over the subject properties.

A careful perusal of the contents of the so-called Partition Agreement indicates that the document involves matters which necessitate prior settlement of questions

of law, basic of which is a determination as to whether the parties have the right to freely divide among themselves the subject properties.

2. No.

There is no dispute that a Torrens certificate of title cannot be collaterally attacked, but that rule is not material to the case at bar. What cannot be collaterally

attacked is the certificate of title and not the title itself. The certificate referred to is that document issued by the Register of Deeds known as the TCT. In contrast, the

title referred to by law means ownership which is, more often than not, represented by that document.

Moreover, placing a parcel of land under the mantle of the Torrens system does not mean that ownership thereof can no longer be disputed. Mere issuance of the

certificate of title in the name of any person does not foreclose the possibility that the real property may be under co-ownership with persons not named in the

certificate, or that the registrant may only be a trustee, or that other parties may have acquired interest over the property subsequent to the issuance of the

certificate of title. Needless to say, registration does not vest ownership over a property, but may be the best evidence thereof.

Other topic:

Whether respondent is estopped from repudiating co-ownership over the subject realties.

YES. Petitioner herself admitted that she did not assent to the Partition Agreement after seeing the need to amend the same to include other matters. Petitioner does

not have any right to insist on the contents of an agreement she intentionally refused to sign.

Moreover, to follow petitioner’s argument would be to allow respondent not only to admit against his own interest but that of his legal spouse as well, who may also

be lawfully entitled co-ownership over the said properties.

Republic of the Philippines SUPREME COURT

Manila

EN BANC

G.R. No. 187485 October 8, 2013

COMMISSIONER OF INTERNAL REVENUE, Petitioner, vs. SAN ROQUE POWER CORPORATION, Respondent.

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

G.R. No. 196113

TAGANITO MINING CORPORATION, Petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, Respondent.

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

G.R. No. 197156

PHILEX MINING CORPORATION, Petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, Respondent.

R E S O L U T I O N

CARPIO, J.:

This Resolution resolves the Motion for Reconsideration and the Supplemental Motion for Reconsideration filed by San Roque Power Corporation (San Roque) in G.R. No. 187485, the Comment to the Motion for Reconsideration filed by the Commissioner of Internal Revenue (CIR) in G.R. No. 187485, the Motion for Reconsideration filed by the CIR in G.R.No. 196113, and the Comment to the Motion for Reconsideration filed by Taganito Mining Corporation (Taganito) in G.R. No. 196113.

San Roque prays that the rule established in our 12 February 2013 Decision be given only a prospective effect, arguing that "the manner by which the Bureau of Internal Revenue (BIR) and the Court of Tax Appeals(CTA) actually treated the 120 + 30 day periods constitutes an operative fact the effects and consequences of which cannot be erased or undone."

1

The CIR, on the other hand, asserts that Taganito Mining Corporation's (Taganito) judicial claim for tax credit or refund was prematurely filed before the CTA and should be disallowed because BIR Ruling No. DA-489-03 was issued by a Deputy Commissioner, not by the Commissioner of Internal Revenue.

We deny both motions.

The Doctrine of Operative Fact

The general rule is that a void law or administrative act cannot be the source of legal rights or duties. Article 7 of the Civil Code enunciates this general rule, as well as its exception: "Laws are repealed only by subsequent ones, and their violation or non-observance shall not be excused by disuse, or custom or practice to the contrary. When the courts declared a law to be inconsistent with the Constitution, the former shall be void and the latter shall govern. Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the laws or the Constitution."

The doctrine of operative fact is an exception to the general rule, such that a judicial declaration of invalidity may not necessarily obliterate all the effects and consequences of a void act prior to such declaration.

2 In Serrano de Agbayani v. Philippine National Bank,

3 the application of the doctrine of

operative fact was discussed as follows:

The decision now on appeal reflects the orthodox view that an unconstitutional act, for that matter an executive order or a municipal ordinance likewise suffering from that infirmity, cannot be the source of any legal rights or duties. Nor can it justify any official act taken under it. Its repugnancy to the fundamental law once judicially declared results in its being to all intents and purposes a mere scrap of paper. As the new Civil Code puts it: "When the courts declare a law to be inconsistent with the Constitution, the former shall be void and the latter shall govern. Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the laws of the Constitution." It is understandable why it should be so, the Constitution being supreme and paramount. Any legislative or executive act contrary to its terms cannot survive.

Such a view has support in logic and possesses the merit of simplicity. It may not however be sufficiently realistic. It does not admit of doubt that prior to the declaration of nullity such challenged legislative or executive act must have been in force and had to be complied with. This is so as until after the

judiciary, in an appropriate case, declares its invalidity, it is entitled to obedience and respect. Parties may have acted under it and may have changed their positions. What could be more fitting than that in a subsequent litigation regard be had to what has been done while such legislative or executive act was in operation and presumed to be valid in all respects. It is now accepted as a doctrine that prior to its being nullified, its existence as a fact must be reckoned with. This is merely to reflect awareness that precisely because the judiciary is the governmental organ which has the final say on whether or not a legislative or executive measure is valid, a period of time may have elapsed before it can exercise the power of judicial review that may lead to a declaration of nullity. It would be to deprive the law of its quality of fairness and justice then, if there be no recognition of what had transpired prior to such adjudication.

In the language of an American Supreme Court decision: "The actual existence of a statute, prior to such a determination of unconstitutionality, is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be considered in various aspects, with respect to particular relations, individual and corporate, and particular conduct, private and official." This language has been quoted with approval in a resolution in Araneta v. Hill and the decision in Manila Motor Co., Inc. v. Flores. An even more recent instance is the opinion of Justice Zaldivar speaking for the Court in Fernandez v. Cuerva and Co. (Boldfacing and italicization supplied)

Clearly, for the operative fact doctrine to apply, there must be a "legislative or executive measure," meaning a law or executive issuance, that is invalidated by the court. From the passage of such law or promulgation of such executive issuance until its invalidation by the court, the effects of the law or executive issuance, when relied upon by the public in good faith, may have to be recognized as valid. In the present case, however, there is no such law or executive issuance that has been invalidated by the Court except BIR Ruling No. DA-489-03.

To justify the application of the doctrine of operative fact as an exemption, San Roque asserts that "the BIR and the CTA in actual practice did not observe and did not require refund seekers to comply with the120+30 day periods."

4 This is glaring error because an administrative practice is neither a

law nor an executive issuance. Moreover, in the present case, there is even no such administrative practice by the BIR as claimed by San Roque.

In BIR Ruling No. DA-489-03 dated 10 December 2003, the Department of Finance’s One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center (DOF-OSS) asked the BIR to rule on the propriety of the actions taken by Lazi Bay Resources Development, Inc. (LBRDI). LBRDI filed an administrative claim for refund for alleged input VAT for the four quarters of 1998. Before the lapse of 120 days from the filing of its administrative claim, LBRDI also filed a judicial claim with the CTA on 28March 2000 as well as a supplemental judicial claim on 29 September 2000.In its Memorandum dated 13 August 2002 before the BIR, the DOF-OSS pointed out that LBRDI is "not yet on the right forum in violation of the provision of Section 112(D) of the NIRC" when it sought judicial relief before the CTA. Section 112(D) provides for the 120+30 day periods for claiming tax refunds.

The DOF-OSS itself alerted the BIR that LBRDI did not follow the120+30 day periods. In BIR Ruling No. DA-489-03, Deputy Commissioner Jose Mario C. Buñag ruled that "a taxpayer-claimant need not wait for the lapse of the 120-day period before it could seek judicial relief with the CTA by way of Petition for Review." Deputy Commissioner Buñag, citing the 7February 2002 decision of the Court of Appeals (CA) in Commissioner of Internal Revenue v. Hitachi Computer Products (Asia) Corporation

5 (Hitachi), stated that the claim for refund with the Commissioner could be pending

simultaneously with a suit for refund filed before the CTA.

Before the issuance of BIR Ruling No. DA-489-03 on 10 December 2003, there was no administrative practice by the BIR that supported simultaneous filing of claims. Prior to BIR Ruling No. DA-489-03, the BIR considered the 120+30 day periods mandatory and jurisdictional.

Thus, prior to BIR Ruling No. DA-489-03, the BIR’s actual administrative practice was to contest simultaneous filing of claims at the administrative and judicial levels, until the CA declared in Hitachi that the BIR’s position was wrong. The CA’s Hitachi decision is the basis of BIR Ruling No. DA-489-03 dated 10 December 2003 allowing simultaneous filing. From then on taxpayers could rely in good faith on BIR Ruling No. DA-489-03 even though it was erroneous as this Court subsequently decided in Aichi that the 120+30 day periods were mandatory and jurisdictional.

We reiterate our pronouncements in our Decision as follows:

At the time San Roque filed its petition for review with the CTA, the 120+30 day mandatory periods were already in the law. Section112(C) expressly grants the Commissioner 120 days within which to decide the taxpayer’s claim. The law is clear, plain, and unequivocal: "x x x the Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents." Following the verbalegis doctrine, this law must be applied exactly as worded since it is clear, plain, and unequivocal. The taxpayer cannot simply file a petition with the CTA without waiting for the Commissioner’s decision within the 120-daymandatory and jurisdictional period. The CTA will have no jurisdiction because there will be no "decision" or "deemed a denial" decision of the Commissioner for the CTA to review. In San Roque’s case, it filed its petition with the CTA a mere 13 days after it filed its administrative claim with the Commissioner. Indisputably, San Roque knowingly violated the mandatory 120-day period, and it cannot blame anyone but itself.

Section 112(C) also expressly grants the taxpayer a 30-day period to appeal to the CTA the decision or inaction of the Commissioner x x x.

x x x x

To repeat, a claim for tax refund or credit, like a claim for tax exemption, is construed strictly against the taxpayer.1âwphi1One of the conditions for a judicial claim of refund or credit under the VAT System is compliance with the 120+30 day mandatory and jurisdictional periods. Thus, strict compliance with the 120+30 day periods is necessary for such a claim to prosper, whether before, during, or after the effectivity of the Atlas doctrine, except for the period from the issuance of BIR Ruling No. DA-489-03 on 10 December 2003 to 6 October 2010 when the Aichi doctrine was adopted, which again reinstated the 120+30 day periods as mandatory and jurisdictional.

6

San Roque’s argument must, therefore, fail. The doctrine of operative fact is an argument for the application of equity and fair play. In the present case, we applied the doctrine of operative fact when we recognized simultaneous filing during the period between 10 December 2003, when BIR Ruling No. DA-489-03 was issued, and 6 October 2010, when this Court promulgated Aichi declaring the 120+30 day periods mandatory and jurisdictional, thus reversing BIR Ruling No. DA-489-03.

The doctrine of operative fact is in fact incorporated in Section 246 of the Tax Code, which provides:

SEC. 246. Non-Retroactivity of Rulings. - Any revocation, modification or reversal of any of the rules and regulations promulgated in accordance with the preceding Sections or any of the rulings or circulars promulgated by the Commissioner shall not be given retroactive application if the revocation, modification or reversal will be prejudicial to the taxpayers, except in the following cases:

(a) Where the taxpayer deliberately misstates or omits material facts from his return or any document required of him by the Bureau of Internal Revenue;

(b) Where the facts subsequently gathered by the Bureau of Internal Revenue are materially different from the facts on which the ruling is based; or

(c) Where the taxpayer acted in bad faith. (Emphasis supplied)

Under Section 246, taxpayers may rely upon a rule or ruling issued by the Commissioner from the time the rule or ruling is issued up to its reversal by the Commissioner or this Court. The reversal is not given retroactive effect. This, in essence, is the doctrine of operative fact. There must, however, be a rule or ruling issued by the Commissioner that is relied upon by the taxpayer in good faith. A mere administrative practice, not formalized into a rule or ruling, will not suffice because such a mere administrative practice may not be uniformly and consistently applied. An administrative practice, if not formalized as a rule or ruling, will not be known to the general public and can be availed of only by those within formal contacts with the government agency.

Since the law has already prescribed in Section 246 of the Tax Code how the doctrine of operative fact should be applied, there can be no invocation of the doctrine of operative fact other than what the law has specifically provided in Section 246. In the present case, the rule or ruling subject of the operative fact doctrine is BIR Ruling No. DA-489-03 dated 10 December 2003. Prior to this date, there is no such rule or ruling calling for the application of the operative fact doctrine in Section 246. Section246, being an exemption to statutory taxation, must be applied strictly against the taxpayer claiming such exemption.

San Roque insists that this Court should not decide the present case in violation of the rulings of the CTA; otherwise, there will be adverse effects on the national economy. In effect, San Roque’s doomsday scenario is a protest against this Court’s power of appellate review. San Roque cites cases decided by the CTA to underscore that the CTA did not treat the 120+30 day periods as mandatory and jurisdictional. However, CTA or CA rulings are not the executive issuances covered by Section 246 of the Tax Code, which adopts the operative fact doctrine. CTA or CA decisions are specific rulings applicable only to the parties to the case and not to the general public. CTA or CA decisions, unlike those of this Court, do not form part of the law of the land. Decisions of lower courts do not have any value as precedents. Obviously, decisions of lower courts are not binding on this Court. To hold that CTA or CA decisions, even if reversed by this Court, should still prevail is to turn upside down our legal system and hierarchy of courts, with adverse effects far worse than the dubious doomsday scenario San Roque has conjured.

San Roque cited cases7 in its Supplemental Motion for Reconsideration to support its position that retroactive application of the doctrine in the present

case will violate San Roque’s right to equal protection of the law. However, San Roque itself admits that the cited cases never mentioned the issue of premature or simultaneous filing, nor of compliance with the 120+30 day period requirement. We reiterate that "any issue, whether raised or not by the parties, but not passed upon by the Court, does not have any value as precedent."

8 Therefore, the cases cited by San Roque to bolster its claim against

the application of the 120+30 day period requirement do not have any value as precedents in the present case.

Authority of the Commissioner to Delegate Power

In asking this Court to disallow Taganito’s claim for tax refund or credit, the CIR repudiates the validity of the issuance of its own BIR Ruling No. DA-489-03. "Taganito cannot rely on the pronouncements in BIR Ruling No. DA-489-03, being a mere issuance of a Deputy Commissioner."

9

Although Section 4 of the 1997 Tax Code provides that the "power to interpret the provisions of this Code and other tax laws shall be under the exclusive and original jurisdiction of the Commissioner, subject to review by the Secretary of Finance," Section 7 of the same Code does not prohibit the delegation of such power. Thus, "the Commissioner may delegate the powers vested in him under the pertinent provisions of this Code to any or such subordinate officials with the rank equivalent to a division chief or higher, subject to such limitations and restrictions as may be imposed under rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner."

WHEREFORE, we DENY with FINALITY the Motions for Reconsideration filed by San Roque Power Corporation in G.R. No. 187485,and the Commissioner of Internal Revenue in G.R. No. 196113.

SO ORDERED.

ANTONIO T. CARPIO Associate Justice

WE CONCUR:

FIRST DIVISION

[G.R. No. L-39990. July 22, 1975.]

THE PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. RAFAEL LICERA, Defendant-Appellant.

Solicitor General Felix Q. Antonio, Assistant Solicitor General Crispin V. Bautista and Solicitor Pedro A. Ramirez for Plaintiff-Appellee.

Romeo Mercado (Counsel de Oficio), for Defendant-Appellant.

SYNOPSIS

In the municipal court, defendant was charged with the offenses of illegal possession of firearm and assault upon an agent of a

person in authority. Found guilty of the first charge, he appealed to the Court of First Instance of the province. The second case

against him was forwarded to the same court where the parties agreed to a joint trial of the two cases but was only convicted of illegal possession of firearm. Plaintiff brought the case to the Court of Appeals invoking as his legal jurisdiction for his possession of

firearm his appointment as a secret agent by the Governor of Batangas. He claimed that as secret agent he was a "peace officer" and, thus, pursuant to People v. Macarandang (L-12081, Dec. 23, 1959), he was exempt from the requirements relating to issuance

of license to possess. He alleged that the lower court erred in relying on the later case of People v. Mapa (L-22301, Aug. 30, 1967),

which held that Section 879 of the Revised Administrative Code provides no exemption for persons appointed as secret agents by provincial governors for the requirements relating to firearms licenses. The case was certified to this Court on the ground that a

question of law was involved.

The Supreme Court held that pursuant to the Macarandang rule obtaining not only at the time of defendant’s appointment as secret

agent, which appointment included a grant of authority to possess the firearm, but as well as at the time of his apprehension, defendants incurred no criminal liability for possession of the said rifle, notwithstanding his non-compliance with the legal

requirements relating to firearm licenses.

SYLLABUS

1. COURT DECISIONS; PRINCIPLE OF STARE DECISIS. — Article 8 of the Civil Code of the Philippines decrees that judicial decisions

applying or interpreting the laws of the Constitution form part of this jurisdiction’s legal system. These decisions, although in

themselves are not laws, constitute evidence of what the laws mean. The application or interpretation merely establishes the contemporaneous legislative intent that the construed law purports to carry into effect.

2. ILLEGAL POSSESSION OF FIREARMS; DOCTRINE EXEMPTING SECRET AGENTS FROM THE FIREARM LICENSE REQUIREMENT,

ABANDONED. — The rule enunciated in Macarandang (106 Phil. 713) to the effect that the appointment of a civilian as a "secret

agent to assist in the maintenance of peace and order campaigns and detection of crimes sufficiently puts him within the category of a ‘peace officer’ equivalent to a member of the municipal police" whom Section 879 of the Revised Administrative Code exempts

from the requirements relating to firearms licenses, had been revoked by the rule in Mapa (L-22301, August 30, 1967) which held

that said section provides no exemption for persons appointed as secret agents by provincial governors from the firearm license requirement.

3. CONSTITUTIONAL LAW; EX POST FACTO LAW; CONSTITUTIONAL GUARANTEE AGAINST EX POST FACTO LAW APPLIED TO

JUDICIAL DOCTRINES. — Where a new doctrine abrogates an old rule, the new doctrine should operate prospectively only and

should not adversely affect those favored by the old rule, especially those who relied thereon and acted on the faith thereof. This holds more especially true in the application or interpretation of statutes in the field of penal law, for, in this area, more than in any

other it is imperative that the punishability of an act be reasonably foreseen for the guidance of society.

4. ID.; ID.; ILLEGAL POSSESSION OF FIREARMS; DOCTRINE OBTAINING AT THE TIME OF POSSESSION OF FIREARM BY SECRET

AGENT APPLIES. — Where the rule obtaining not only at the time of his appointment as secret agent, but as well as at the time of his apprehension, Accused as such secret agent was exempt from the firearm license requirements under Section 879 of the Revised

Administrative Code and therefore incurred no criminal liability for possession of the firearm, a subsequent rule holding that said law

does not exempt a secret agent from the firearm license requirement shall not adversely affect said accused who was favored by the abandoned doctrine.

D E C I S I O N

CASTRO, J.:

This is an appeal, on a question of law, by Rafael Licera from the judgment dated August 14, 1968 of the Court of First Instance of Occidental Mindoro convicting him of the crime of illegal possession of firearm and sentencing him to imprisonment of five (5) years.

We reverse the judgment of conviction, for the reasons hereunder stated.

On December 3, 1965 the Chief of Police of Abra de Ilog, Occidental Mindoro, filed a complaint, subscribed and sworn to by him, with

the municipal court of the said municipality, charging Rafael Licera with illegal possession of a Winchester rifle, Model 55, Caliber .30. On August 13, 1966 the municipal court rendered judgment finding Licera guilty of the crime charged, sentencing him to suffer an

indeterminate penalty ranging five years and one day to six years and eight months of imprisonment. Licera appealed to the Court of

First Instance of Occidental Mindoro.

In the Court of First Instance, the parties agreed to the joint trial of the case for illegal possession of firearm and another case, likewise filed against Licera with the municipal court but already forwarded to the said Court of First Instance, for assault upon an

agent of a person in authority, the two offenses having arisen from the same occasion: apprehension of Licera by the Chief of Police

and a patrolman of Abra de Ilog on December 2, 1965 for possession of the Winchester rifle without the requisite license or permit therefor.

On August 14, 1968 the court a quo rendered judgment acquitting Licera of the charge of assault upon an agent of a person in authority, but convicting him of illegal possession of firearm, sentencing him to suffer five years of imprisonment, and ordering the

forfeiture of the Winchester rifle in favor of the Government.

Licera’s appeal to the Court of Appeals was certified on October 16, 1974 to this Court as involving only one question of law.

Licera invokes as his legal justification for his possession of the Winschester rifle his appointment as secret agent on December 11,

1961 by Governor Feliciano Leviste of Batangas. He claims that as secret agent, he was a "peace officer" and, thus, pursuant to People v. Macarandang, 1 was exempt from the requirements relating to the issuance of license to possess firearms. He alleges that

the court a quo erred in relying on the later case of People v. Mapa 2 which held that section 879 of the Revised Administrative Code

provides no exemption for persons appointed as secret agents by provincial governors from the requirements relating to firearm licenses.

The principal question thus posed calls for a determination of the rule that should be applied to the case at bar — that enunciated in

Macarandang or that in Mapa.

The appointment given to Licera by Governor Leviste which bears the date "December 11, 1961" includes a grant of authority to

Licera to possess the Winchester rifle in these terms: "In accordance with the decision of the Supreme Court in G.R. No. L-12088

dated December 23, 1959, you will have the right to bear a firearm . . . for use in connection with the performance of your duties." Under the rule then prevailing enunciated in Macarandang, 3 the appointment of a civilian as a "secret agent to assist in the

maintenance of peace and order campaigns and detection of crimes sufficiently put[s] him within the category of a ‘peace officer’ equivalent even to a member of the municipal police" whom section 879 of the Revised Administrative Code exempts from the

requirement relating to firearm licenses.

Article 8 of the Civil Code of the Philippines decrees that judicial decisions applying or interpreting the laws or the Constitution form

part of this jurisdiction’s legal system. These decisions, although in themselves not laws, constitute evidence of what the laws mean. The application or interpretation placed by the Court upon a law is part of the law as of the date of the enactment of the said law

since the Court’s application or interpretation merely establishes the contemporaneous legislative intent that the construed law

purports to carry into effect. 4

At the time of Licera’s designation as secret agent in 1961 and at the time of his apprehension for possession of the Winchester rifle

without the requisite license or permit therefor in 1965, the Macarandang rule — the Courts interpretation of section 879 of the Revised Administrative Code — formed part of our jurisprudence and, hence, of this jurisdiction’s legal system. Mapa revoked the

Macarandang precedent only in 1967. Certainly, where a new doctrine abrogates an old rule, the new doctrine should operate prospectively only and should not adversely affect those favored by the old rule, especially those who relied thereon and acted on

the faith thereof. This holds more especially true in the application or interpretation of statutes in the field of penal law, for, in this

area, more than in any other, it is imperative that the punishability of an act be reasonably foreseen for the guidance of society. 5

Pursuant to the Macarandang rule obtaining not only at the time of Licera’s appointment as secret agent, which appointment included a grant of authority to possess the Winchester rifle, but as well at the time as of his apprehension, Licera incurred no

criminal liability for possession of the said rifle, notwithstanding his non-compliance with the legal requirements relating to firearm

licenses.

ACCORDINGLY, the judgment a quo is reversed, and Rafael Licera is hereby acquitted. Costs de oficio.

Makasiar, Esguerra, Muñoz, Palma and Martin, JJ., concur.

Teehankee, J., is on leave.

SECOND DIVISION

[G.R. No. L-30061. February 27, 1974.]

THE PEOPLE OF THE PHILIPPINES, Plaintiffs-Appellees, v. JOSE JABINAL Y CARMEN,Defendant-Appellant.

Solicitor General Felix V . Makasiar and Solicitor Antonio M. Martinez for Plaintiff-Appellee.

Pedro Panganiban y Tolentino, for Defendant-Appellant.

D E C I S I O N

ANTONIO, J.:

Appeal from the judgment of the Municipal Court of Batangas (provincial capital), Batangas, in Criminal Case No. 889, finding the accused guilty of the crime of Illegal Possession of Firearm and Ammunition and sentencing him to suffer an indeterminate penalty

ranging from one (1) year and one (1) day to two (2) years imprisonment, with the accessories provided by law, which raises in issue the validity of his conviction based on a retroactive application of Our ruling in People v. Mapa. 1

The complaint filed against the accused reads:jgc:chanrobles.com.ph

"That on or about 9:00 o’clock, p.m., the 5th day of September, 1964, in the poblacion, Municipality of Batangas, Province of Batangas, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, a person not authorized by law,

did then and there wilfully, unlawfully and feloniously keep in his possession, custody and direct control a revolver Cal. .22, RG-8

German made with one (1) live ammunition and four (4) empty shells without first securing the necessary permit or license to possess the same."cralaw virtua1aw library

At the arraignment on September 11, 1964, the accused entered a plea of not guilty, after which trial was accordingly held.

The accused admitted that on September 5, 1964, he was in possession of the revolver and the ammunition described in the complaint, without the requisite license or permit. He, however, claimed to be entitled to exoneration because, although he had no

license or permit, he had an appointment as Secret Agent from the Provincial Governor of Batangas and an appointment as

Confidential Agent from the PC Provincial Commander, and the said appointments expressly carried with them the authority to possess and carry the firearm in question.

Indeed, the accused had appointments from the above-mentioned officials as claimed by him. His appointment from Governor

Feliciano Leviste, dated December 10, 1962, reads:jgc:chanrobles.com.ph

"Reposing special trust and confidence in your civic spirit, and trusting that you will be an effective agent in the detection of crimes

and in the preservation of peace and order in the province of Batangas, especially with respect to the suppression of trafficking in

explosives, jueteng, illegal cockfighting, cattle rustling, robbery and the detection of unlicensed firearms, you are hereby appointed a SECRET AGENT of the undersigned, the appointment to take effect immediately, or as soon as you have qualified for the position. As

such Secret Agent, your duties shall be those generally of a peace officer and particularly to help in the preservation of peace and order in this province and to make reports thereon to me once or twice a month. It should be clearly understood that any abuse of

authority on your part shall be considered sufficient ground for the automatic cancellation of your appointment and immediate

separation from the service. In accordance with the decision of the Supreme Court in G.R. No. L-12088 dated December 23, 1969, you will have the right to bear a firearm, particularly described below, for use in connection with the performance of your duties.

"By virtue hereof, you may qualify and enter upon the performance of your duties by taking your oath of office and filing the original

thereof with us.

Very truly yours,

(Sgd.) FELICIANO LEVISTE

Provincial Governor

FIREARM AUTHORIZED TO CARRY:chanrob1es virtual 1aw library

Kind: — ROHM-Revolver

Make: — German

SN: — 64

Cal: — .22"

On March 15, 1964, the accused was also appointed by the PC Provincial Commander of Batangas as Confidential Agent with duties

to furnish information regarding smuggling activities wanted persons, loose firearms, subversives and other similar subjects that night affect the peace and order condition in Batangas province, and in connection with these duties he was temporarily authorized

to possess an ROHM revolver, Cal. .22 RG-8 SN-64, for his personal protection while in the performance of official duties.

The accused contended before the court a quo that in view of his above-mentioned appointments as Secret Agent and Confidential Agent, with authority to possess the firearm subject matter of the prosecution, he was entitled to acquittal on the basis of the

Supreme Court’s decisions in People v. Macarandang 2 and People v. Lucero. 3 The trial court, while conceding that on the basis of the evidence of record the accused had really been appointed Secret Agent and Confidential Agent by the Provincial Governor and

the PC Provincial Commander of Batangas, respectively, with authority to possess and carry the firearm described in the complaint,

nevertheless held the accused in its decision dated December 27, 1968, criminally liable for illegal possession of a firearm and ammunition on the ground that the rulings of the Supreme Court in the cases of Macarandang and Lucero were reversed and

abandoned in People v. Mapa, supra. The court considered as mitigating circumstances the appointments of the accused as Secret

Agent and Confidential Agent.

Let us advert to Our decisions in People v. Macarandang, supra, People v. Lucero, supra, and People v. Mapa, supra. In Macarandang, We reversed the trial court’s judgment of conviction against the accused because it was shown that at the time he was

found to possess a certain firearm and ammunition without license or permit, he had an appointment from the Provincial Governor as

Secret Agent to assist in the maintenance of peace and order and in the detection of crimes, with authority to hold and carry the said firearm and ammunition. We there held that while it is true that the Governor has no authority to issue any firearm license or permit,

nevertheless, section 879 of the Revised Administrative Code provides that "peace officers" are exempted from the requirements relating to the issuance of license to possess firearms; and Macarandang’s appointment as Secret Agent to assist in the maintenance

of peace and order and detection of crimes, sufficiently placed him in the category of a "peace officer" equivalent even to a member

of the municipal police who under section 879 of the Revised Administrative Code are exempted from the requirements relating to the issuance of license to possess firearms. In Lucero, We held that under the circumstances of the case, the granting of the

temporary use of the firearm to the accused was a necessary means to carry out the lawful purpose of the battalion commander and must be deemed incident to or necessarily included in the duty and power of said military commander to effect the capture of a Huk

leader. In Mapa, expressly abandoning the doctrine in Macarandang, and by implication, that in Lucero, We sustained the judgment

of conviction on the following ground:jgc:chanrobles.com.ph

"The law is explicit that except as thereafter specifically allowed, ‘it shall be unlawful for any person to . . . possess any firearm,

detached parts of firearms or ammunition therefor, or any instrument or implement used or intended to be used in the manufacture of firearms, parts of firearms, or ammunition. (Sec. 878, as amended by Republic Act No. 4, Revised Administrative Code.) The next

section provides that ‘firearms and ammunition regularly and lawfully issued to officers, soldiers, sailors, or marines [of the Armed Forces of the Philippines], the Philippine Constabulary, guards in the employment of the Bureau of Prisons, municipal police,

provincial governors, lieutenant governors, provincial treasurers, municipal treasurers, municipal mayors, and guards of provincial

prisoners and jails,’ are not covered ‘when such firearms are in possession of such officials and public servants for use in the performance of their official duties.’ (Sec. 879, Revised Administrative Code.)

‘The law cannot be any clearer. No provision is made for a secret agent. As such he is not exempt. . . ."cralaw virtua1aw library

It will be noted that when appellant was appointed Secret Agent by the Provincial Government in 1962, and Confidential Agent by the Provincial Commander in 1964, the prevailing doctrine on the matter was that laid down by Us in People v. Macarandang (1959)

and People v. Lucero (1958). Our decision in People v. Mapa reversing the aforesaid doctrine came only in 1967. The sole question in

this appeal is: Should appellant be acquitted on the basis of Our rulings in Macarandang and Lucero, or should his conviction stand in view of the complete reversal of the Macarandang and Lucero doctrine in Mapa? The Solicitor General is of the first view, and he

accordingly recommends reversal of the appealed judgment.

Decisions of this Court, although in themselves not laws, are nevertheless evidence of what the laws mean, and this is the reason

why under Article 8 of the New Civil Code, "Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system . . ." The interpretation upon a law by this Court constitutes, in a way, a part of the law as of the date that law was

originally passed, since this Court’s construction merely establishes the contemporaneous legislative intent that the law thus construed intends to effectuate. The settled rule supported by numerous authorities is a restatement of the legal maxim "legis

interpretatio legis vim obtinet" — the interpretation placed upon the written law by a competent court has the force of law. The

doctrine laid down in Lucero and Macarandang was part of the jurisprudence, hence, of the law, of the land, at the time appellant was found by possession of the firearm in question and when he was arraigned by the trial court. It is true that the doctrine was

overruled in the Mapa case in 1967, but when a doctrine of this Court is overruled and a different view is adopted, the new doctrine

should be applied prospectively, and should not apply to parties who had relied on the old doctrine and acted on the faith thereof. This is especially true in the construction and application of criminal laws, where it is necessary that the punishability of an act be

reasonably foreseen for the guidance of society.

It follows, therefore, that considering that appellant was conferred his appointments as Secret Agent and Confidential Agent and

authorized to possess a firearm pursuant to the prevailing doctrine enunciated in Macarandang and Lucero, under which no criminal liability would attach to his possession of said firearm in spite of the absence of a license and permit therefor, appellant must he

absolved. Certainly, appellant may not be punished for an act which at the time it was done was held not to be punishable.

WHEREFORE, the judgment appealed from is hereby reversed, and appellant is acquitted, with costs de oficio.

Zaldivar, Barredo, Fernandez and Aquino, JJ., concur.

Fernando, J., did not take part.

FIRST DIVISION

[G.R. No. 134241. August 11, 2003.]

DAVID REYES (Substituted by Victoria R. Fabella), Petitioner, v. JOSE LIM, CHUY CHENG KENG and HARRISON LUMBER,

INC., Respondents.

D E C I S I O N

CARPIO, J.:

The Case

This is a petition for review on certiorari of the Decision 1 dated 12 May 1998 of the Court of Appeals in CA-G.R. SP No. 46224. The Court of Appeals dismissed the petition for certiorari assailing the Orders dated 6 March 1997, 3 July 1997 and 3 October 1997 of the

Regional Trial Court of Parañaque, Branch 260 2 ("trial court") in Civil Case No. 95-032.chanrob1es virtua1 1aw 1ibrary

The Facts

On 23 March 1995, petitioner David Reyes ("Reyes") filed before the trial court a complaint for annulment of contract and damages

against respondents Jose Lim ("Lim"), Chuy Cheng Keng ("Keng") and Harrison Lumber, Inc. ("Harrison Lumber").

The complaint 3 alleged that on 7 November 1994, Reyes as seller and Lim as buyer entered into a contract to sell ("Contract to

Sell") a parcel of land ("Property") located along F.B. Harrison Street, Pasay City. Harrison Lumber occupied the Property as lessee with a monthly rental of P35,000. The Contract to Sell provided for the following terms and conditions:chanrob1es virtual 1aw library

1. The total consideration for the purchase of the aforedescribed parcel of land together with the perimeter walls found therein is TWENTY EIGHT MILLION (P28,000,000.00) PESOS payable as follows:chanrob1es virtual 1aw library

(a) TEN MILLION (P10,000,000.00) PESOS upon signing of this Contract to Sell;

(b) The balance of EIGHTEEN MILLION (P18,000,000.00) PESOS shall be paid on or before March 8, 1995 at 9:30 A.M. at a bank to be designated by the Buyer but upon the complete vacation of all the tenants or occupants of the property and execution of the Deed

of Absolute Sale. However, if the tenants or occupants have vacated the premises earlier than March 8, 1995, the VENDOR shall give the VENDEE at least one week advance notice for the payment of the balance and execution of the Deed of Absolute Sale.

2. That in the event, the tenants or occupants of the premises subject of this sale shall not vacate the premises on March 8, 1995 as stated above, the VENDEE shall withhold the payment of the balance of P18,000,000.00 and the VENDOR agrees to pay a penalty of

Four percent (4%) per month to the herein VENDEE based on the amount of the downpayment of TEN MILLION (P10,000,000.00)

PESOS until the complete vacation of the premises by the tenants therein. 4

The complaint claimed that Reyes had informed Harrison Lumber to vacate the Property before the end of January 1995. Reyes also informed Keng 5 and Harrison Lumber that if they failed to vacate by 8 March 1995, he would hold them liable for the penalty of

P400,000 a month as provided in the Contract to Sell. The complaint further alleged that Lim connived with Harrison Lumber not to

vacate the Property until the P400,000 monthly penalty would have accumulated and equaled the unpaid purchase price of P18,000,000.

On 3 May 1995, Keng and Harrison Lumber filed their Answer 6 denying they connived with Lim to defraud Reyes. Keng and Harrison

Lumber alleged that Reyes approved their request for an extension of time to vacate the Property due to their difficulty in finding a

new location for their business. Harrison Lumber claimed that as of March 1995, it had already started transferring some of its merchandise to its new business location in Malabon. 7

On 31 May 1995, Lim filed his Answer 8 stating that he was ready and willing to pay the balance of the purchase price on or before 8

March 1995. Lim requested a meeting with Reyes through the latter’s daughter on the signing of the Deed of Absolute Sale and the

payment of the balance but Reyes kept postponing their meeting. On 9 March 1995, Reyes offered to return the P10 million down payment to Lim because Reyes was having problems in removing the lessee from the Property. Lim rejected Reyes’ offer and

proceeded to verify the status of Reyes’ title to the Property. Lim learned that Reyes had already sold the Property to Line One Foods

Corporation ("Line One") on 1 March 1995 for P16,782,840. After the registration of the Deed of Absolute Sale, the Register of Deeds issued to Line One TCT No. 134767 covering the Property. Lim denied conniving with Keng and Harrison Lumber to defraud

Reyes.cralaw : red

On 2 November 1995, Reyes filed a Motion for Leave to File Amended Complaint due to supervening facts. These included the filing

by Lim of a complaint for estafa against Reyes as well as an action for specific performance and nullification of sale and title plus damages before another trial court. 9 The trial court granted the motion in an Order dated 23 November 1995.

In his Amended Answer dated 18 January 1996, 10 Lim prayed for the cancellation of the Contract to Sell and for the issuance of a

writ of preliminary attachment against Reyes. The trial court denied the prayer for a writ of preliminary attachment in an Order dated

7 October 1996.

On 6 March 1997, Lim requested in open court that Reyes be ordered to deposit the P10 million down payment with the cashier of

the Regional Trial Court of Parañaque. The trial court granted this motion.

On 25 March 1997, Reyes filed a Motion to Set Aside the Order dated 6 March 1997 on the ground the Order practically granted the reliefs Lim prayed for in his Amended Answer. 11 The trial court denied Reyes’ motion in an Order 12 dated 3 July 1997. Citing

Article 1385 of the Civil Code, the trial court ruled that an action for rescission could prosper only if the party demanding rescission

can return whatever he may be obliged to restore should the court grant the rescission.

The trial court denied Reyes’ Motion for Reconsideration in its Order 13 dated 3 October 1997. In the same order, the trial court

directed Reyes to deposit the P10 million down payment with the Clerk of Court on or before 30 October 1997.

On 8 December 1997, Reyes 14 filed a Petition for Certiorari 15 with the Court of Appeals. Reyes prayed that the Orders of the trial court dated 6 March 1997, 3 July 1997 and 3 October 1997 be set aside for having been issued with grave abuse of discretion

amounting to lack of jurisdiction. On 12 May 1998, the Court of Appeals dismissed the petition for lack of merit.

Hence, this petition for review.

The Ruling of the Court of Appeals

The Court of Appeals ruled the trial court could validly issue the assailed orders in the exercise of its equity jurisdiction. The court may grant equitable reliefs to breathe life and force to substantive law such as Article 1385 16 of the Civil Code since the provisional

remedies under the Rules of Court do not apply to this case.

The Court of Appeals held the assailed orders merely directed Reyes to deposit the P10 million to the custody of the trial court to

protect the interest of Lim who paid the amount to Reyes as down payment. This did not mean the money would be returned automatically to Lim.

The Issues

Reyes raises the following issues:chanrob1es virtual 1aw library

1. Whether the Court of Appeals erred in holding the trial court could issue the questioned Orders dated March 6, 1997, July 3, 1997

and October 3, 1997, requiring petitioner David Reyes to deposit the amount of Ten Million Pesos (P10,000,000.00) during the pendency of the action, when deposit is not among the provisional remedies enumerated in Rule 57 to 61 of the 1997 Rules on Civil

Procedure.chanrob1es virtua1 1aw 1ibrary

2. Whether the Court of Appeals erred in finding the trial court could issue the questioned Orders on grounds of equity when there is

an applicable law on the matter, that is, Rules 57 to 61 of the 1997 Rules on Civil Procedure. 17

The Court’s Ruling

Reyes’ contentions are without merit.

Reyes points out that deposit is not among the provisional remedies enumerated in the 1997 Rules of Civil Procedure. Reyes stresses

the enumeration in the Rules is exclusive. Not one of the provisional remedies in Rules 57 to 61 18 applies to this case. Reyes argues

that a court cannot apply equity and require deposit if the law already prescribes the specific provisional remedies which do not include deposit. Reyes invokes the principle that equity is "applied only in the absence of, and never against, statutory law or . . .

judicial rules of procedure." 19 Reyes adds the fact that the provisional remedies do not include deposit is a matter of dura lex sed lex. 20

The instant case, however, is precisely one where there is a hiatus in the law and in the Rules of Court. If left alone, the hiatus will result in unjust enrichment to Reyes at the expense of Lim. The hiatus may also imperil restitution, which is a precondition to the

rescission of the Contract to Sell that Reyes himself seeks. This is not a case of equity overruling a positive provision of law or

judicial rule for there is none that governs this particular case. This is a case of silence or insufficiency of the law and the Rules of Court. In this case, Article 9 of the Civil Code expressly mandates the courts to make a ruling despite the "silence, obscurity or

insufficiency of the laws." 21 This calls for the application of equity, 22 which "fills the open spaces in the law." 23

Thus, the trial court in the exercise of its equity jurisdiction may validly order the deposit of the P10 million down payment in court.

The purpose of the exercise of equity jurisdiction in this case is to prevent unjust enrichment and to ensure restitution. Equity jurisdiction aims to do complete justice in cases where a court of law is unable to adapt its judgments to the special circumstances of

a case because of the inflexibility of its statutory or legal jurisdiction. 24 Equity is the principle by which substantial justice may be attained in cases where the prescribed or customary forms of ordinary law are inadequate.25cralaw:red

Reyes is seeking rescission of the Contract to Sell. In his amended answer, Lim is also seeking cancellation of the Contract to Sell. The trial court then ordered Reyes to deposit in court the P10 million down payment that Lim made under the Contract to Sell. Reyes

admits receipt of the P10 million down payment but opposes the order to deposit the amount in court. Reyes contends that prior to a judgment annulling the Contract to Sell, he has the "right to use, possess and enjoy" 26 the P10 million as its "owner" 27 unless the

court orders its preliminary attachment. 28

To subscribe to Reyes’ contention will unjustly enrich Reyes at the expense of Lim. Reyes sold to Line One the Property even before

the balance of P18 million under the Contract to Sell with Lim became due on 8 March 1995. On 1 March 1995, Reyes signed a Deed

of Absolute Sale 29 in favor of Line One. On 3 March 1995, the Register of Deeds issued TCT No. 134767 30 in the name of Line

One. 31 Reyes cannot claim ownership of the P10 million down payment because Reyes had already sold to another buyer the Property for which Lim made the down payment. In fact, in his Comment 32 dated 20 March 1996, Reyes reiterated his offer to

return to Lim the P10 million down payment.chanrob1es virtua1 1aw 1ibrary

On balance, it is unreasonable and unjust for Reyes to object to the deposit of the P10 million down payment. The application of

equity always involves a balancing of the equities in a particular case, a matter addressed to the sound discretion of the court. Here, we find the equities weigh heavily in favor of Lim, who paid the P10 million down payment in good faith only to discover later that

Reyes had subsequently sold the Property to another buyer.

In Eternal Gardens Memorial Parks Corp. v. IAC, 33 this Court held the plaintiff could not continue to benefit from the property or

funds in litigation during the pendency of the suit at the expense of whomever the court might ultimately adjudge as the lawful owner. The Court declared:chanrob1es virtual 1aw library

In the case at bar, a careful analysis of the records will show that petitioner admitted among others in its complaint in Interpleader that it is still obligated to pay certain amounts to private respondent; that it claims no interest in such amounts due and is willing to

pay whoever is declared entitled to said amounts. . . .

Under the circumstances, there appears to be no plausible reason for petitioner’s objections to the deposit of the amounts in

litigation after having asked for the assistance of the lower court by filing a complaint for interpleader where the deposit of aforesaid amounts is not only required by the nature of the action but is a contractual obligation of the petitioner under the Land Development

Program (Rollo, p. 252).

There is also no plausible or justifiable reason for Reyes to object to the deposit of the P10 million down payment in court. The

Contract to Sell can no longer be enforced because Reyes himself subsequently sold the Property to Line One. Both Reyes and Lim are now seeking rescission of the Contract to Sell. Under Article 1385 of the Civil Code, rescission creates the obligation to return the

things that are the object of the contract. Rescission is possible only when the person demanding rescission can return whatever he

may be obliged to restore. A court of equity will not rescind a contract unless there is restitution, that is, the parties are restored to the status quo ante. 34

Thus, since Reyes is demanding to rescind the Contract to Sell, he cannot refuse to deposit the P10 million down payment in court.

35 Such deposit will ensure restitution of the P10 million to its rightful owner. Lim, on the other hand, has nothing to refund, as he

has not received anything under the Contract to Sell. 36

In Government of the Philippine Islands v. Wagner and Cleland Wagner, 37 the Court ruled the refund of amounts received under a contract is a precondition to the rescission of the contract. The Court declared:chanrob1es virtual 1aw library

The Government, having asked for rescission, must restore to the defendants whatever it has received under the contract. It will only be just if, as a condition to rescission, the Government be required to refund to the defendants an amount equal to the

purchase price, plus the sums expended by them in improving the land. (Civil Code, art. 1295.)

The principle that no person may unjustly enrich himself at the expense of another is embodied in Article 22 38 of the Civil Code.

This principle applies not only to substantive rights but also to procedural remedies. One condition for invoking this principle is that the aggrieved party has no other action based on contract, quasi-contract, crime, quasi-delict or any other provision of law. 39

Courts can extend this condition to the hiatus in the Rules of Court where the aggrieved party, during the pendency of the case, has

no other recourse based on the provisional remedies of the Rules of Court.chanrob1es virtua1 1aw 1ibrary

Thus, a court may not permit a seller to retain, pendente lite, money paid by a buyer if the seller himself seeks rescission of the sale because he has subsequently sold the same property to another buyer. 40 By seeking rescission, a seller necessarily offers to return

what he has received from the buyer. Such a seller may not take back his offer if the court deems it equitable, to prevent unjust

enrichment and ensure restitution, to put the money in judicial deposit.

There is unjust enrichment when a person unjustly retains a benefit to the loss of another, or when a person retains money or

property of another against the fundamental principles of justice, equity and good conscience. 41 In this case, it was just, equitable and proper for the trial court to order the deposit of the P10 million down payment to prevent unjust enrichment by Reyes at the

expense of Lim. 42

WHEREFORE, we AFFIRM the Decision of the Court of Appeals.

SO ORDERED.

Davide, Jr., C.J., Vitug, Ynares-Santiago and Azcuna, JJ., concur.

THIRD DIVISION

[G.R. NO. 148311. March 31, 2005]

IN THE MATTER OF THE ADOPTION OF STEPHANIE NATHY ASTORGA GARCIA

HONORATO B. CATINDIG, Petitioner.

D E C I S I O N

SANDOVAL-GUTIERREZ, J.:

May an illegitimate child, upon adoption by her natural father, use the surname of her natural mother as her middle name? This is the issue raised in the instant case.

The facts are undisputed.

On August 31, 2000, Honorato B. Catindig, herein petitioner, filed a petition1 to adopt his minor illegitimate child Stephanie Nathy Astorga Garcia. He alleged therein, among others, that Stephanie was born on June 26, 1994;2 that her mother is Gemma

Astorga Garcia; that Stephanie has been using her mother's middle name and surname; and that he is now a widower and qualified to be her adopting parent. He prayed that Stephanie's middle name Astorga be changed to "Garcia," her mother's surname, and

that her surname "Garcia" be changed to "Catindig," his surname.

On March 23, 2001,3 the trial court rendered the assailed Decision granting the adoption, thus:

"After a careful consideration of the evidence presented by the petitioner, and in the absence of any opposition to the petition, this

Court finds that the petitioner possesses all the qualifications and none of the disqualification provided for by law as an adoptive parent, and that as such he is qualified to maintain, care for and educate the child to be adopted; that the grant of this petition

would redound to the best interest and welfare of the minor Stephanie Nathy Astorga Garcia. The Court further holds that the

petitioner's care and custody of the child since her birth up to the present constitute more than enough compliance with the requirement of Article 35 of Presidential Decree No. 603.

WHEREFORE, finding the petition to be meritorious, the same is GRANTED. Henceforth, Stephanie Nathy Astorga Garcia is hereby freed from all obligations of obedience and maintenance with respect to her natural mother, and for civil purposes, shall henceforth

be the petitioner's legitimate child and legal heir. Pursuant to Article 189 of the Family Code of the Philippines, the minor shall be

known as STEPHANIE NATHY CATINDIG.

Upon finality of this Decision, let the same be entered in the Local Civil Registrar concerned pursuant to Rule 99 of the Rules of

Court.

Let copy of this Decision be furnished the National Statistics Office for record purposes.

SO ORDERED."4

On April 20, 2001, petitioner filed a motion for clarification and/or reconsideration5 praying that Stephanie should be allowed to use the surname of her natural mother (GARCIA) as her middle name.

On May 28, 2001,6 the trial court denied petitioner's motion for reconsideration holding that there is no law or jurisprudence allowing

an adopted child to use the surname of his biological mother as his middle name.

Hence, the present petition raising the issue of whether an illegitimate child may use the surname of her mother as her middle name

when she is subsequently adopted by her natural father.

Petitioner submits that the trial court erred in depriving Stephanie of a middle name as a consequence of adoption because: (1)

there is no law prohibiting an adopted child from having a middle name in case there is only one adopting parent; (2) it is customary

for every Filipino to have as middle name the surname of the mother; (3) the middle name or initial is a part of the name of a person; (4) adoption is for the benefit and best interest of the adopted child, hence, her right to bear a proper name should not be

violated; (5) permitting Stephanie to use the middle name "Garcia" (her mother's surname) avoids the stigma of her illegitimacy;

and; (6) her continued use of "Garcia" as her middle name is not opposed by either the Catindig or Garcia families.

The Republic, through the Office of the Solicitor General (OSG), agrees with petitioner that Stephanie should be permitted to use, as

her middle name, the surname of her natural mother for the following reasons:

First, it is necessary to preserve and maintain Stephanie's filiation with her natural mother because under Article 189 of the Family

Code, she remains to be an intestate heir of the latter. Thus, to prevent any confusion and needless hardship in the future, her

relationship or proof of that relationship with her natural mother should be maintained.

Second, there is no law expressly prohibiting Stephanie to use the surname of her natural mother as her middle name. What the law

does not prohibit, it allows.

Last, it is customary for every Filipino to have a middle name, which is ordinarily the surname of the mother. This custom has been

recognized by the Civil Code and Family Code. In fact, the Family Law Committees agreed that "the initial or surname of the mother should immediately precede the surname of the father so that the second name, if any, will be before the surname of the mother."7

We find merit in the petition.

Use Of Surname Is Fixed By Law '

For all practical and legal purposes, a man's name is the designation by which he is known and called in the community in which he

lives and is best known. It is defined as the word or combination of words by which a person is distinguished from other individuals

and, also, as the label or appellation which he bears for the convenience of the world at large addressing him, or in speaking of or dealing with him.8 It is both of personal as well as public interest that every person must have a name.

The name of an individual has two parts: (1) the given or proper name and (2) the surname or family name. The given or proper name is that which is given to the individual at birth or at baptism, to distinguish him from other individuals. The surname or

family name is that which identifies the family to which he belongs and is continued from parent to child. The given name may be

freely selected by the parents for the child, but the surname to which the child is entitled is fixed by law.9

Thus, Articles 364 to 380 of the Civil Code provides the substantive rules which regulate the use of surname10 of an individual

whatever may be his status in life, i.e., whether he may be legitimate or illegitimate, an adopted child, a married woman or a previously married woman, or a widow, thus:

"Art. 364. Legitimate and legitimated children shall principally use the surname of the father.

Art. 365. An adopted child shall bear the surname of the adopter.

x x x

Art. 369. Children conceived before the decree annulling a voidable marriage shall principally use thesurname of the father.

Art. 370. A married woman may use:

(1) Her maiden first name and surname and add her husband's surname, or

(2) Her maiden first name and her husband's surname or

(3) Her husband's full name, but prefixing a word indicating that she is his wife, such as 'Mrs.'

Art. 371. In case of annulment of marriage, and the wife is the guilty party, she shall resume her maiden name and surname. If she

is the innocent spouse, she may resume her maiden name and surname. However, she may choose to continue employing her former husband's surname, unless:

(1) The court decrees otherwise, or

(2) She or the former husband is married again to another person.

Art. 372. When legal separation has been granted, the wife shall continue using her name andsurname employed before the legal

separation.

Art. 373. A widow may use the deceased husband's surname as though he were still living, in accordance with Article 370.

Art. 374. In case of identity of names and surnames, the younger person shall be obliged to use such additional name or surname as will avoid confusion.

Art. 375. In case of identity of names and surnames between ascendants and descendants, the word 'Junior' can be used only by a

son. Grandsons and other direct male descendants shall either:

(1) Add a middle name or the mother's surname,

(2) Add the Roman numerals II, III, and so on.

x x x"

Law Is Silent As To The Use Of

Middle Name '

As correctly submitted by both parties, there is no law regulating the use of a middle name. Even Article 17611 of the Family Code, as amended by Republic Act No. 9255, otherwise known as "An Act Allowing Illegitimate Children To Use The Surname Of Their Father,"

is silent as to what middle name a child may use.

The middle name or the mother's surname is only considered in Article 375(1), quoted above, in case there is identity of names and surnames between ascendants and descendants, in which case, the middle name or the mother's surname shall be added.

Notably, the law is likewise silent as to what middle name an adoptee may use. Article 365 of the Civil Code merely

provides that "an adopted child shall bear the surname of the adopter." Also, Article 189 of the Family Code, enumerating the legal effects of adoption, is likewise silent on the matter, thus:

"(1) For civil purposes, the adopted shall be deemed to be a legitimate child of the adopters and both shall acquire the reciprocal rights and obligations arising from the relationship of parent and child, including the right of the adopted to use the

surname of the adopters;

x x x"

However, as correctly pointed out by the OSG, the members of the Civil Code and Family Law Committees that drafted the Family

Code recognized the Filipino custom of adding the surname of the child's mother as his middle name. In the Minutes of the Joint Meeting of the Civil Code and Family Law Committees, the members approved the suggestion that the initial or surname

of the mother should immediately precede the surname of the father, thus

"Justice Caguioa commented that there is a difference between the use by the wife of the surname and that of the child because the father's surname indicates the family to which he belongs, for which reason he would insist on the use of the father's

surname by the child but that, if he wants to, the child may also use the surname of the mother.

Justice Puno posed the question: If the child chooses to use the surname of the mother, how will his name be written? Justice

Caguioa replied that it is up to him but that his point is that it should be mandatory that the child uses the surname of the

father and permissive in the case of the surname of the mother.

Prof. Baviera remarked that Justice Caguioa's point is covered by the present Article 364, which reads:

Legitimate and legitimated children shall principally use the surname of the father.

Justice Puno pointed out that many names change through no choice of the person himself precisely because of this misunderstanding. He then cited the following example: Alfonso Ponce Enrile's correct surname is Ponce since the mother's surname

is Enrile but everybody calls him Atty. Enrile. Justice Jose Gutierrez David's family name is Gutierrez and his mother's surname is David but they all call him Justice David.

Justice Caguioa suggested that the proposed Article (12) be modified to the effect that it shall be mandatory on the

child to use the surname of the father but he may use the surname of the mother by way of an initial or a middle name. Prof. Balane stated that they take note of this for inclusion in the Chapter on Use of Surnames since in the proposed Article (10) they

are just enumerating the rights of legitimate children so that the details can be covered in the appropriate chapter.

x x x

Justice Puno remarked that there is logic in the simplification suggested by Justice Caguioa that the surname of the father should

always be last because there are so many traditions like the American tradition where they like to use their second given name and the Latin tradition, which is also followed by the Chinese wherein they even include the Clan name.

x x x

Justice Puno suggested that they agree in principle that in the Chapter on the Use of Surnames, they should say that initial or surname of the mother should immediately precede the surname of the father so that the second name, if any,

will be before the surname of the mother. Prof. Balane added that this is really the Filipino way. The Committee approved the suggestion."12(Emphasis supplied)ςrαlαωlιbrαrÿ

In the case of an adopted child, the law provides that "the adopted shall bear the surname of the adopters."13 Again, it is silent

whether he can use a middle name. What it only expressly allows, as a matter of right and obligation, is for the adoptee to bear the surname of the adopter, upon issuance of the decree of adoption.14

The Underlying Intent of

Adoption Is In Favor of the

Adopted Child '

Adoption is defined as the process of making a child, whether related or not to the adopter, possess in general, the rights accorded to a legitimate child.15 It is a juridical act, a proceeding in rem which creates between two persons a relationship similar to that which

results from legitimate paternity and filiation.16 The modern trend is to consider adoption not merely as an act to establish a

relationship of paternity and filiation, but also as an act which endows the child with a legitimate status.17 This was, indeed, confirmed in 1989, when the Philippines, as a State Party to the Convention of the Rights of the Child initiated by the

United Nations, accepted the principle that adoption is impressed with social and moral responsibility, and that its underlying intent is geared to favor the adopted child.18 Republic Act No. 8552, otherwise known as the "Domestic Adoption

Act of 1998,"19 secures these rights and privileges for the adopted.20

One of the effects of adoption is that the adopted is deemed to be a legitimate child of the adopter for all intents and purposes pursuant to Article 18921 of the Family Code and Section 1722 Article V of RA 8552.23

Being a legitimate child by virtue of her adoption, it follows that Stephanie is entitled to all the rights provided by law to a legitimate child without discrimination of any kind, including the right to bear the surname of her father and her

mother, as discussed above. This is consistent with the intention of the members of the Civil Code and Family Law Committees as

earlier discussed. In fact, it is a Filipino custom that the initial or surname of the mother should immediately precede the surname of the father.

Additionally, as aptly stated by both parties, Stephanie's continued use of her mother's surname (Garcia) as her middle name will maintain her maternal lineage. It is to be noted that Article 189(3) of the Family Code and Section 1824, Article V of RA 8552 (law on

adoption) provide that the adoptee remains an intestate heir of his/her biological parent. Hence, Stephanie can well assert or claim

her hereditary rights from her natural mother in the future.

Moreover, records show that Stephanie and her mother are living together in the house built by petitioner for them at 390 Tumana,

San Jose, Baliuag, Bulacan. Petitioner provides for all their needs. Stephanie is closely attached to both her mother and father. She

calls them "Mama" and "Papa". Indeed, they are one normal happy family. Hence, to allow Stephanie to use her mother's surname as her middle name will not only sustain her continued loving relationship with her mother but will also eliminate the stigma of her

illegitimacy.

Liberal Construction of

Adoption Statutes In Favor Of

Adoption '

It is a settled rule that adoption statutes, being humane and salutary, should be liberally construed to carry out the beneficent

purposes of adoption.25 The interests and welfare of the adopted child are of primary and paramount consideration,26 hence, every reasonable intendment should be sustained to promote and fulfill these noble and compassionate objectives of the law.27

Lastly, Art. 10 of the New Civil Code provides that:

"In case of doubt in the interpretation or application of laws, it is presumed that the lawmaking body intended right and justice to prevail."

This provision, according to the Code Commission, "is necessary so that it may tip the scales in favor of right and justice when the

law is doubtful or obscure. It will strengthen the determination of the courts to avoid an injustice which may apparently be authorized by some way of interpreting the law."28

Hence, since there is no law prohibiting an illegitimate child adopted by her natural father, like Stephanie, to use, as middle name her mother's surname, we find no reason why she should not be allowed to do so.

WHEREFORE, the petition is GRANTED. The assailed Decision is partly MODIFIED in the sense that Stephanie should be allowed to

use her mother's surname "GARCIA" as her middle name.

Let the corresponding entry of her correct and complete name be entered in the decree of adoption.

SO ORDERED.

Panganiban, (Chairman), Corona, Carpio-Morales, and Garcia, JJ., concur.

THIRD DIVISION

[G.R. No. L-55960. November 24, 1988.]

YAO KEE, SZE SOOK WAH, SZE LAI CHO, and SY CHUN YEN, Petitioners, v. AIDA SY-GONZALES, MANUEL SY, TERESITA

SY-BERNABE, RODOLFO SY, and HONORABLE COURT OF APPEALS, Respondents.

Montesa, Albon & Associates for Petitioner.

De Lapa, Salonga, Fulgencio & De Lunas for Respondents.

SYLLABUS

1. CIVIL LAW; CUSTOM, DEFINED. — Custom is defined as "a rule of conduct formed by repetition of acts, uniformly observed

(practiced) as a social rule, legally binding and obligatory" [In the Matter of the Petition for Authority to Continue Use of the Firm Name "Ozaeta, Romulo, de Leon, Mabanta and Reyes", July 30, 1979, 92 SCRA 3, 12].

2. ID.; ID.; MUST BE PROVED ACCORDING TO THE RULES ON EVIDENCE. — The law requires that "a custom must be proved as a

fact, according to the rules of evidence" [Article 12, Civil Code.] On this score the Court had occasion to state that "a local custom as

a source of right can not be considered by a court of justice unless such custom is properly established by competent evidence like any other fact" [Patriarca v. Orate, 7 Phil. 390, 395 (1907).] The same evidence, if not one of a higher degree, should be required of

a foreign custom.

3. ID.; FOREIGN MARRIAGE; HOW PROVED. — To establish a valid foreign marriage two things must be proven, namely: (1) the

existence of the foreign law as a question of fact; and (2) the alleged foreign marriage by convincing evidence [Adong v. Cheong Seng Gee, 43 Phil. 43, 49 (1922)].

4. REMEDIAL LAE; EVIDENCE; PROOF OF WRITTEN FOREIGN LAW; TESTIMONY OF COMPETENT WITNESS, INCLUDED. — In proving a foreign law the procedure is provided in the Rules of Court. Proof of a written foreign law, on the other hand, is provided for under

Rule 132 Section 25. The Court has interpreted section 25 to include competent evidence like the testimony of a witness to prove the existence of a written foreign law [Collector of Internal Revenue v. Fisher 110 Phil. 686, 700-701 (1961) citing Willamette Iron and

Steel Works v. Muzzal, 61 Phil. 471 (1935).]

5. ID.; ID.; ID.; MARRIAGE CONTRACTED PURSUANT TO A FOREIGN LAW MUST BE PROVED TO BE RECOGNIZED; CASE AT BAR. —

Accordingly, in the absence of proof of the Chinese law on marriage, it should be presumed that it is the same as ours . . . [Wong Woo Yiu v. Vivo, G.R. No. L-21076, March 31, 1965, 13 SCRA 552, 555.] Since Yao Kee admitted in her testimony that there was no

solemnizing officer as is known here in the Philippines [See Article 56, Civil Code] when her alleged marriage to Sy Kiat was

celebrated it therefore follows that her marriage to Sy Kiat, even if true, cannot be recognized in this jurisdiction [Wong Woo Yiu v. Vivo, supra., pp. 555-556.]

6. ID.; PHILIPPINE COURTS CANNOT TAKE JUDICIAL NOTICE OF FOREIGN LAWS. — Philippine courts cannot take judicial notice of foreign laws. They must be alleged and proved as any other fact [Yam Ka Lim v. Collector of Customs, 30 Phil. 46, 48 (1915);

Fluemer v. Hix, 54 Phil. 610 (1930).]

7. ID.; EVIDENCE; PROOF OF WRITTEN FOREIGN LAW; RULING IN MEMORACION CASE, NOT APPLICABLE TOP CASE AT BAR. — The

Memoracion case however is not applicable to the case at bar as said case did not concern a foreign marriage and the issue posed was whether or not the oral testimony of a spouse is competent evidence to prove the fact of marriage in a complaint for adultery.

8. CIVIL LAW; PERSONS; PATERNITY AND FILIATION; FAILURE TO ESTABLISH CELEBRATION OF MARRIAGE ACCORDING TO THE

LAWS OF CHINA; EFFECT ON STATUS OF CHILDREN. — Failure to establish the marriage of Yao Kee with Sy Kiat according to the

laws of China, they cannot be accorded the status of legitimate children but only that of acknowledged natural children. Petitioners are natural children, it appearing that at the time of their conception Yao Kee and Sy Kiat were not disqualified by any impediment to

marry one another [See Art. 269, Civil Code.] And they are acknowledged children of the deceased because of Sy Kiat’s recognition of Sze Sook Wah.

9. ID.; ID.; ID.; RECOGNITION OF NATURAL CHILDREN; ACKNOWLEDGMENT OF ONE NATURAL CHILD BENEFITS HER SISTERS AND BROTHERS OF THE FULL BLOOD. — The acknowledgment of Sze Sook Wah extends to Sze Lai Cho and Sy Chun yen who are her

sisters of the full blood [See Art. 271, Civil Code].

10. ID.; ID.; ID.; COMPROMISE AGREEMENT ACKNOWLEDGING THEIR NATURAL CHILDREN AND PROVIDING FOR THEIR SUPPORT

CONSTITUTES A STATEMENT BEFORE A COURT OF RECORD. — Compromise agreement entered into by their parents acknowledging their five (5) natural children and providing for their support approved by the by the Court of First Instance constitutes a statement

before a court of record by which a child may be voluntarily acknowledged [See Art. 278, Civil Code].

11. REMEDIAL LAW; BATAS PAMBANSA BLG. 129; FUNCTIONS AND JURISDICTION OF THE JUVENILE AND DOMESTIC RELATIONS

COURTS, VESTED NOW WITH THE REGIONAL TRIAL COURT. — With the enactment of Batas Pambansa Blg. 129, otherwise known as the Judiciary Reorganization Act of 1980, the Juvenile and Domestic Relations Courts were abolished. Their functions and jurisdiction

are now vested with the Regional Trial Courts [See Section 19 (7), B.P. Blg. 129 and Divinagracia v. Belosillo, G.R. No. L-47407,

August 12, 1986, 143 SCRA 356, 360]

12. ID.; ACTIONS; ISSUE ON PATERNITY AND FILIATION MAY BE PASSED UPON IN A TESTATE OF INTESTATE PROCEEDING;

REASON. — A case involving paternity and acknowledgment may be ventilated as an incident in the intestate or testate proceeding

(See Baluyot v. Ines Luciano, L-42215, July 13, 1976). But that legal provision presupposes that such an administration proceeding

is pending or existing and has not been terminated. The reason for this rule is not only "to obviate the rendition of conflicting rulings on the same issue by the Court of First Instance and the Juvenile and Domestic Relations Court" [Vda. de Baluyut v. Luciano, G.R.

No. L-42215, July 13, 1976, 72 SCRA 52, 63] but more importantly to prevent multiplicity of suits.

D E C I S I O N

CORTES, J.:

Sy Kiat, a Chinese national, died on January 17, 1977 in Caloocan City where he was then residing, leaving behind real and personal properties here in the Philippines worth P300,000.00 more or less.

Thereafter, Aida Sy-Gonzales, Manuel Sy, Teresita Sy-Bernabe and Rodolfo Sy filed a petition for the grant of letters of

administration docketed as Special Proceedings Case No. C-699 of the then Court of First Instance of Rizal Branch XXXIII, Caloocan

City. In said petition they alleged among others that (a) they are the children of the deceased with Asuncion Gillego; (b) to their knowledge Sy Kiat died intestate; (c) they do not recognize Sy Kiat’s marriage to Yao Kee nor the filiation of her children to him;

and, (d) they nominate Aida Sy-Gonzales for appointment as administratrix of the intestate estate of the deceased [Record on Appeal, pp. 4-9; Rollo, p. 107.]

The petition was opposed by Yao Kee, Sze Sook Wah, Sze Lai Cho and Sy Yun Chen who alleged that: (a) Yao Kee is the lawful wife of Sy Kiat whom he married on January 19, 1931 in China; (b) the other oppositors are the legitimate children of the deceased with

Yao Kee; and, (c) Sze Sook Wah is the eldest among them and is competent, willing and desirous to become the administratrix of the estate of Sy Kiat [Record on Appeal, pp. 12-13; Rollo, p. 107.]

After hearing, the probate court, finding among others that:chanrob1es virtual 1aw library

(1) Sy Kiat was legally married to Yao Kee [CFI decision, pp. 12-27; Rollo, pp. 49-64;]

(2) Sze Sook Wah, Sze Lai Cho and Sze Chum Yen are the legitimate children of Yao Kee with Sy Kiat [CFI decision, pp. 28-31;

Rollo. pp. 65-68;] and,

(3) Aida Sy-Gonzales, Manuel Sy, Teresita Sy-Bernabe and Rodolfo Sy are the acknowledged illegitimate offsprings of Sy Kiat with

Asuncion Gillego [CFI decision, pp. 27-28; Rollo, pp. 64-65.]

held if favor of the oppositors (petitioners herein) and appointed Sze Sook Wah as the administratrix of the intestate estate of the deceased [CFI decision, pp. 68-69; Rollo, pp. 106.]

On appeal the Court of Appeals rendered a decision modifying that of the probate court, the dispositive portion of which reads:chanrob1es virtual 1aw library

IN VIEW OF THE FOREGOING, the decision of the lower Court is hereby MODIFIED and SET ASIDE and a new judgment rendered as follows:chanrob1es virtual 1aw library

(1) Declaring petitioners Aida Sy-Gonzales, Manuel Sy, Teresita Sy-Bernabe and Rodolfo Sy acknowledged natural children of the

deceased Sy Kiat with Asuncion Gillego, an unmarried woman with whom he lived as husband and wife without benefit of marriage

for many years:chanrob1es virtual 1aw library

(2) Declaring oppositors Sze Sook Wah, Sze Lai Chu and Sze Chun Yen, the acknowledged natural children of the deceased Sy Kiat with his Chinese wife Yao Kee, also known as Yui Yip, since the legality of the alleged marriage of Sy Kiat to Yao Kee in China had

not been proven to be valid to the laws of the Chinese People’s Republic of China (sic);

(3) Declaring the deed of sale executed by Sy Kiat on December 7, 1976 in favor of Tomas Sy (Exhibit "G-1", English translation of

Exhibit "G") of the Avenue Tractor and Diesel Parts Supply to be valid and accordingly, said property should be excluded from the estate of the deceased Sy Kiat; and

(4) Affirming the appointment by the lower court of Sze Sook Wah as judicial administratrix of the estate of the deceased. [CA decision, pp. 11-12; Rollo, pp. 36-37.]

From said decision both parties moved for partial reconsideration, which was however denied by respondent court. They thus interposed their respective appeals to this Court.

Private respondents filed a petition with this Court docketed as G.R. No. 56045 entitled "Aida Sy-Gonzales, Manuel Sy, Teresita Sy-

Bernabe and Rodolfo Sy v. Court of Appeals, Yao Kee, Sze Sook Wah, Sze Lai Cho and Sy Chun Yen" questioning paragraphs (3) and

(4) of the dispositive portion of the Court of Appeals’ decision. The Supreme Court however resolved to deny the petition and the motion for reconsideration. Thus on March 8, 1982 entry of judgment was made in G.R. No. 56045. **

The instant petition, on the other hand, questions paragraphs (1) and (2) of the dispositive portion of the decision of the Court of

Appeals. This petition was initially denied by the Supreme Court on June 22, 1981. Upon motion of the petitioners the Court in a

resolution dated September 16, 1981 reconsidered the denial and decided to give due course to this petition.

Herein petitioners assign the following as errors:chanrob1es virtual 1aw library

I. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN DECLARING THE MARRIAGE OF SY KIAT TO YAO YEE AS NOT HAVE (sic) BEEN PROVEN VALID IN ACCORDANCE WITH LAWS OF THE PEOPLE’S REPUBLIC OF CHINA.

II. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DECLARING AIDA SY-GONZALES, MANUEL SY, TERESITA SY-BERNABE

AND RODOLFO SY AS NATURAL CHILDREN OF SY KIAT WITH ASUNCION GILLEGO. [Petition, p. 2; Rollo, p. 6.]

I. Petitioners argue that the marriage of Sy Kiat to Yao Kee in accordance with Chinese law and custom was conclusively proven. To

buttress this argument they rely on the following testimonial and documentary evidence.

First, the testimony of Yao Kee summarized by the trial court as follows:chanrob1es virtual 1aw library

Yao Kee testified that she was married to Sy Kiat on January 19, 1931 in Fookien, China; that she does not have a marriage

certificate because the practice during that time was for elders to agree upon the betrothal of their children, and in her case, her

elder brother was the one who contracted or entered into [an] agreement with the parents of her husband; that the agreement was that she and Sy Kiat would be married, the wedding date was set, and invitations were sent out; that the said agreement was

complied with; that she has five children with Sy Kiat, but two of them died; that those who are alive are Sze Sook Wah, Sze Lai Cho, and Sze Chun Yen, the eldest being Sze Sook Wah who is already 38 years old; that Sze Sook Wah was born on November 7,

1939; that she and her husband, Sy Kiat, have been living in Fookien, China before he went to the Philippines on several occasions;

that the practice during the time of her marriage was a written document [is exchanged] just between the parents of the bride and the parents of the groom, or any elder for that matter; that in China, the custom is that there is a go-between, a sort of marriage

broker who is known to both parties who would talk to the parents of the bride-to-be; that if the parents of the bride-to-be agree to have the groom-to-be their son-in-law, then they agree on a date as an engagement day; that on engagement day, the parents of

the groom would bring some pieces of jewelry to the parents of the bride-to-be, and then one month after that, a date would be set

for the wedding, which in her case, the wedding date to Sy Kiat was set on January 19, 1931; that during the wedding the bridegroom brings with him a couch (sic) where the bride would ride and on that same day, the parents of the bride would give the

dowry for her daughter and then the document would be signed by the parties but there is no solemnizing officer as is known in the

Philippines; that during the wedding day, the document is signed only by the parents of the bridegroom as well as by the parents of the bride; that the parties themselves do not sign the document; that the bride would then be placed in a carriage where she would

be brought to the town of the bridegroom and before departure the bride would be covered with a sort of a veil; that upon reaching the town of the bridegroom, the bridegroom takes away the veil; that during her wedding to Sy Kiat (according to said Chinese

custom), there were many persons present; that after Sy Kiat opened the door of the carriage, two old ladies helped her go down

the carriage and brought her inside the house of Sy Kiat; that during her wedding, Sy Chiok, the eldest brother of Sy Kiat, signed the document with her mother; that as to the whereabouts of that document, she and Sy Kiat were married for 46 years already and the

document was left in China and she doubt if that document can still be found now; that it was left in the possession of Sy Kiat’s family; that right now, she does not know the whereabouts of that document because of the lapse of many years and because they

left it in a certain place and it was already eaten by the termites; that after her wedding with Sy Kiat, they lived immediately

together as husband and wife, and from then on, they lived together; that Sy Kiat went to the Philippines sometime in March or April in the same year they were married; that she went to the Philippines in 1970, and then came back to China; that again she went

back to the Philippines and lived with Sy Kiat as husband and wife; that she begot her children with Sy Kiat during the several trips

by Sy Kiat made back to China. [CFI decision, pp. 13-15; Rollo, pp. 50-52.]

Second, the testimony of Gan Ching, a younger brother of Yao Kee who stated that he was among the many people who attended the wedding of his sister with Sy Kiat and that no marriage certificate is issued by the Chinese government, a document signed by

the parents or elders of the parties being sufficient [CFI decision, pp. 15-16; Rollo, pp. 52-53.]

Third, the statements made by Asuncion Gillego when she testified before the trial court to the effect that (a) Sy Kiat was married to

Yao Kee according to Chinese custom; and, (b) Sy Kiat’s admission to her that he has a Chinese wife whom he married according to Chinese custom [CFI decision, p. 17; Rollo, p. 54.]

Fourth, Sy Kiat’s Master Card of Registered Alien issued in Caloocan City on October 3, 1972 where the following entries are found: "Marital status — Married" ; "If married give name of spouse — Yao Kee" ; "Address — China" ; "Date of marriage — 1931" ; and

"Place of marriage — China" [Exhibit "SS-1." ]

Fifth, Sy Kiat’s Alien Certificate of Registration issued in Manila on January 12, 1968 where the following entries are likewise found:

"Civil status — Married" ; and, "If married, state name and address of spouse — Yao Kee Chingkang, China" [Exhibit "4." ]

And lastly, the certification issued in Manila on October 28, 1977 by the Embassy of the People’s Republic of China to the effect that

"according to the information available at the Embassy Mr. Sy Kiat a Chinese national and Mrs. Yao Kee alias Yui Yip also Chinese were married on January 19, 1931 in Fukien, the People’s Republic of China" [Exhibit "5." ]

These evidence may very well prove the fact of marriage between Yao Kee and Sy Kiat. However, the same do not suffice to

establish the validity of said marriage in accordance with Chinese law or custom.

Custom is defined as "a rule of conduct formed by repetition of acts, uniformly observed (practiced) as a social rule, legally binding

and obligatory" [In the Matter of the Petition for Authority to Continue Use of the Firm Name "Ozaeta, Romulo, de Leon, Mabanta and Reyes", July 30, 1979, SCRA 3, 12 citing JBL Reyes & RC Puno, Outline of Phil. Civil Law, Fourth Ed. Vol. 1, p. 7.] The law

requires that "a custom must be proved as a fact, according to the rules of evidence" [Article 12, Civil Code.] On this score the Court

had occasion to state that "a local custom as a source of right can not be considered by a court of justice unless such custom is properly established by competent evidence like any other fact" [Patriarca v. Orate, 7 Phil. 390, 395 (1907).] The same evidence, if

not one of a higher degree, should be required of a foreign custom.

The law on foreign marriages is provided by Article 71 of the Civil Code which states that:chanrob1es virtual 1aw library

Art. 71. All marriages performed outside the Philippines in accordance with the laws in force in the country where they were

performed, and valid there as such, shall also be valid in this country, except bigamous, polygamous, or incestuous marriages, as determined by Philippine law. (Emphasis supplied.) ***

Construing this provision of law the Court has held that to establish a valid foreign marriage two things must be proven, namely: (1)

the existence of the foreign law as a question of fact; and (2) the alleged foreign marriage by convincing evidence [Adong v. Cheong

Seng Gee, 43 Phil. 43, 49 (1922).]

In proving a foreign law the procedure is provided in the Rules of Court. With respect to an unwritten foreign law, Rule 130 section

45 states that:chanrob1es virtual 1aw library

SEC. 45. Unwritten law. — The oral testimony of witnesses, skilled therein, is admissible as evidence of the unwritten law of a foreign country, as are also printed and published books of reports of decisions of the courts of the foreign country, if proved to be

commonly admitted in such courts.

Proof of a written foreign law, on the other hand, is provided for under Rule 132 section 25, thus:chanrob1es virtual 1aw library

SEC. 25. Proof of public or official record. — An official record or an entry therein, when admissible for any purpose, may be

evidenced by an official publication thereof or by a copy attested by the officer having the legal custody of the record, or by his

deputy, and accompanied, if the record is not kept in the Philippines, with a certificate that such officer has the custody. If the office in which the record is kept is in a foreign country, the certificate may be made by a secretary of embassy or legation, consul general,

consul, vice consul, or consular agent or by any officer in the foreign service of the Philippines stationed in the foreign country in which the record is kept and authenticated by the seal of his office.

The Court has interpreted section 25 to include competent evidence like the testimony of a witness to prove the existence of a written foreign law [Collector of Internal Revenue v. Fisher 110 Phil. 686, 700-701 (1961) citing Willamette Iron and Steel Works v.

Muzzal, 61 Phil. 471 (1935).]

In the case at bar petitioners did not present any competent evidence relative to the law and custom of China on marriage. The

testimonies of Yao and Gan Ching cannot be considered as proof of China’s law or custom on marriage not only because they are self-serving evidence, but more importantly, there is no showing that they are competent to testify on the subject matter. For failure

to prove the foreign law or custom, and consequently, the validity of the marriage in accordance with said law or custom, the

marriage between Yao Kee and Sy Kiat cannot be recognized in this jurisdiction.

Petitioners contend that contrary to the Court of Appeals’ ruling they are not duty bound to prove the Chinese law on marriage as judicial notice thereof had been taken by this Court in the case of Sy Joc Lieng v. Sy Quia [16 Phil. 137 (1910).]

This contention is erroneous. Well-established in this jurisdiction is the principle that Philippine courts cannot take judicial notice of foreign laws. They must be alleged and proved as any other fact [Yam Ka Lim v. Collector of Customs, 30 Phil. 46, 48 (1915);

Fluemer v. Hix, 54 Phil. 610 (1930).]

Moreover a reading of said case would show that the party alleging the foreign marriage presented a witness, one Li Ung Bieng, to

prove that matrimonial letters mutually exchanged by the contracting parties constitute the essential requisite for a marriage to be considered duly solemnized in China. Based on his testimony, which as found by the Court is uniformly corroborated by authors on

the subject of Chinese marriage, what was left to be decided was the issue of whether or not the fact of marriage in accordance with

Chinese law was duly proven [Sy Joc Lieng v. Sy Quia, supra., at p. 160.]

Further, even assuming for the sake of argument that the Court has indeed taken judicial notice of the law of China on marriage in the aforecited case, petitioners however have not shown any proof that the Chinese law or custom obtaining at the time the Sy Joc

Lieng marriage was celebrated in 1847 was still the law when the alleged marriage of Sy Kiat to Yao Kee took place in 1931 or

eighty-four (84) years later.

Petitioners moreover cite the case of U.S. v. Memoracion [34 Phil. 633 (1916)] as being applicable to the instant case. They aver

that the judicial pronouncement in the Memoracion case, that the testimony of one of the contracting parties is competent evidence to show the fact of marriage, holds true in this case.

The Memoracion case however is not applicable to the case at bar as said case did not concern a foreign marriage and the issue

posed was whether or not the oral testimony of a spouse is competent evidence to prove the fact of marriage in a complaint for

adultery.

Accordingly, in the absence of proof of the Chinese law on marriage, it should be presumed that it is the same as ours **** [Wong Woo Yiu v. Vivo, G.R. No. L-21076, March 31, 1965, 13 SCRA 552, 555.] Since Yao Kee admitted in her testimony that there was no

solemnizing officer as i6 known here in the Philippines [See Article 56, Civil Code] when her alleged marriage to Sy Kiat was

celebrated [CFI decision, p. 14; Rollo, p. 51], it therefore follows that her marriage to Sy Kiat, even if true, cannot be recognized in this jurisdiction [Wong Woo Yiu v. Vivo, supra., pp. 555-556.]

II. The second issue raised by petitioners concerns the status of private respondents.

Respondent court found the following evidence of petitioners’ filiation:chanrob1es virtual 1aw library

(1) Sy Kiat’s Master Card of Registered Alien where the following are entered: "Children if any: give number of children — Four" ;

and, "Name — All living in China" [Exhibit "SS-1" ;]

(2) the testimony of their mother Yao Kee who stated that she had five children with Sy Kiat, only three of whom are alive namely,

Sze Sook Wah Sze Lai Chu and Sze Chin Yan [TSN, December 12, 1977, pp. 9-11;] and,

(3) an affidavit executed on March 22, 1961 by Sy Kiat for presentation to the Local Civil Registrar of Manila to support Sze Sook

Wah’s application for a marriage license, wherein Sy Kiat expressly stated that she is his daughter [Exhibit "3." ]

Likewise on the record is the testimony of Asuncion Gillego that Sy Kiat told her he has three daughters with his Chinese wife, two of

whom — Sook Wah and Sze Kai Cho — she knows, and one adopted son [TSN, December 6, 1977, pp. 87-88.]

However, as petitioners failed to establish the marriage of Yao Kee with Sy Kiat according to the laws of China, they cannot be

accorded the status of legitimate children but only that of acknowledged natural children. Petitioners are natural children, it appearing that at the time of their conception Yao Kee and Sy Kiat were not disqualified by any impediment to marry one another

[See Art. 269, Civil Code.] And they are acknowledged children of the deceased because of Sy Kiat’s recognition of Sze Sook Wah [Exhibit "3" ] and its extension to Sze Lai Cho and Sy Chun Yen who are her sisters of the full blood [See Art. 271, Civil Code.]

Private respondents on the other hand are also the deceased’s acknowledged natural children with Asuncion Gillego, a Filipina with whom he lived for twenty-five (25) years with out the benefit of marriage. They have in their favor their father’s acknowledgment,

evidenced by a compromise agreement entered into by and between their parents and approved by the Court of First Instance on February 12, 1974 wherein Sy Kiat not only acknowledged them as his children by Asuncion Gillego but likewise made provisions for

their support and future inheritance, thus:chanrob1es virtual 1aw library

x x x

2. The parties also acknowledge that they are common-law husband and wife and that out of such relationship, which they have

likewise decided to definitely and finally terminate effective immediately, they begot five children, namely: Aida Sy, born on May 30,

1950; Manuel Sy, born on July 1, 1953; Teresita Sy, born on January 28, 1955; Ricardo Sy now deceased, born on December 14, 1956; and Rodolfo Sy, born on May 7, 1958.

3. With respect to the AVENUE TRACTOR AND DIESEL PARTS SUPPLY . . ., the parties mutually agree and convenant that —

(a) The stocks and merchandise and the furniture and equipments . . ., shall be divided into two equal shares between, and distributed to, Sy Kiat who shall own one-half of the total and the other half to Asuncion Gillego who shall transfer the same to their

children, namely, Aida Sy, Manuel Sy, Teresita Sy, and Rodolfo Sy.

(b) the business name and premises . . . shall be retained by Sy Kiat. However, it shall be his obligation to give to the aforenamed

children an amount of One Thousand Pesos (P1,000;00) monthly out of the rental of the two doors of the same building now occupied by Everett Construction.

x x x

(5) With respect to the acquisition, during the existence of the common-law husband-and-wife relationship between the parties, of

the real estates and properties registered and/or appearing in the name of Asuncion Gillego . . ., the parties mutually agree and convenant that the said real estates and properties shall be transferred in equal shares to their children, namely, Aida Sy, Manuel

Sy, Teresita Sy, and Rodolfo Sy, but to be administered by Asuncion Gillego during her lifetime. . . . [Exhibit "D." ] (Emphasis supplied.)

x x x

This compromise agreement constitutes a statement before a court of record by which a child may be voluntarily acknowledged [See Art. 278, Civil Code.]

Petitioners further argue that the questions on the validity of Sy Kiat’s marriage to Yao Kee and the paternity and filiation of the parties should have been ventilated in the Juvenile and Domestic Relations Court.

Specifically, petitioners rely on the following provision of Republic Act No. 5502, entitled "An Act Revising Rep. Act No. 3278, otherwise known as the Charter of the City of Caloocan" ; with regard to the Juvenile and Domestic Relations Court:chanrob1es

virtual 1aw library

SEC. 91-A. Creation and Jurisdiction of the Court. —

x x x

The provisions of the Judiciary Act to the contrary notwithstanding, the court shall have exclusive original jurisdiction to hear and

decide the following cases;

x x x

(2) Cases involving custody, guardianship, adoption, revocation of adoption, paternity and acknowledgment;

(3) Annulment of marriages, relief from marital obligations legal separation of spouses, and actions for support;

(4) Proceedings brought under the provisions of title six and title seven, chapters one to three of the civil code;

x x x

and the ruling in the case of Bartolome v. Bartolome [G.R. No. L-23661, 21 SCRA 1324] reiterated in Divinagracia v. Rovira [G.R.

No. L-42615, 72 SCRA 307.]

With the enactment of Batas Pambansa Blg. 129, otherwise known as the Judiciary Reorganization Act of 1980, the Juvenile and

Domestic Relations Courts were abolished. Their functions and jurisdiction are now vested with the Regional Trial Courts [See Section 19 (7), B.P. Blg. 129 and Divinagracia v. Belosillo, G.R. No. L-47407, August 12, 1986, 143 SCRA 356, 360] hence it is no longer

necessary to pass upon the issue of jurisdiction raised by petitioners.

Moreover, even without the enactment of Batas Pambansa Blg. 129 we find in Rep. Act No. 5502 sec. 91-A last paragraph

that:chanrob1es virtual 1aw library

x x x

If any question involving any of the above matters should arise as an incident in any case pending in the ordinary court, said incident

shall be determined in the main case.

x x x

As held in the case of Divinagracia v. Rovira [G.R. No. L-42615. August 10, 1976, 72 SCRA 307]:chanrob1es virtual 1aw library

x x x

It is true that under the aforequoted section 1 of Republic Act No. 4834 ***** a case involving paternity and acknowledgment may be ventilated as an incident in the intestate or testate proceeding (See Baluyot v. Ines Luciano, L-42215, July 13, 1976). But that

legal provision presupposes that such an administration proceeding is pending or existing and has not been terminated. [at pp. 313-

314.] (Emphasis supplied.)

x x x

The reason for this rule is not only "to obviate the rendition of conflicting rulings on the same issue by the Court of First Instance and

the Juvenile and Domestic Relations Court" [Vda. de Baluyut v. Luciano, G.R. No. L-42215, July 13, 1976, 72 SCRA 52, 63] but more importantly to prevent multiplicity of suits.

Accordingly, this Court finds no reversible error committed by respondent court.

WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED.

SO ORDERED.

Fernan, C.J., Gutierrez, Jr., Feliciano and Bidin, JJ., concur.

FIRST DIVISION

[G.R. NO. 162155 : August 28, 2007]

COMMISSIONER OF INTERNAL REVENUE and ARTURO V. PARCERO in his official capacity as Revenue District Officer of

Revenue District No. 049 (Makati), Petitioners, v. PRIMETOWN PROPERTY GROUP, INC., Respondent.

D E C I S I O N

CORONA, J.:

This Petition for Review on Certiorari 1 seeks to set aside the August 1, 2003 decision2 of the Court of Appeals (CA) in CA-G.R. SP No. 64782 and its February 9, 2004 resolution denying reconsideration.3

On March 11, 1999, Gilbert Yap, vice chair of respondent Primetown Property Group, Inc., applied for the refund or credit of income

tax respondent paid in 1997. In Yap's letter to petitioner revenue district officer Arturo V. Parcero of Revenue District No. 049 (Makati) of the Bureau of Internal Revenue (BIR),4 he explained that the increase in the cost of labor and materials and difficulty in

obtaining financing for projects and collecting receivables caused the real estate industry to slowdown.5 As a consequence, while business was good during the first quarter of 1997, respondent suffered losses amounting to P71,879,228 that year.6

According to Yap, because respondent suffered losses, it was not liable for income taxes.7Nevertheless, respondent paid its quarterly

corporate income tax and remitted creditable withholding tax from real estate sales to the BIR in the total amount of P26,318,398.32.8 Therefore, respondent was entitled to tax refund or tax credit.9

On May 13, 1999, revenue officer Elizabeth Y. Santos required respondent to submit additional documents to support its claim.10 Respondent complied but its claim was not acted upon. Thus, on April 14, 2000, it filed a Petition for Review 11 in the Court

of Tax Appeals (CTA).

On December 15, 2000, the CTA dismissed the petition as it was filed beyond the two-year prescriptive period for filing a judicial claim for tax refund or tax credit.12 It invoked Section 229 of the National Internal Revenue Code (NIRC):

Sec. 229. Recovery of Taxes Erroneously or Illegally Collected. - - No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any

penalty claimed to have been collected without authority, or of any sum alleged to have been excessively or in any manner

wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress.

In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of

the tax or penalty regardless of any supervening cause that may arise after payment: Provided, however, That the Commissioner may, even without a claim therefor, refund or credit any tax, where on the face of the return upon which payment was

made, such payment appears clearly to have been erroneously paid. (emphasis supplied)

The CTA found that respondent filed its final adjusted return on April 14, 1998. Thus, its right to claim a refund or credit commenced

on that date.13

The tax court applied Article 13 of the Civil Code which states:

Art. 13. When the law speaks of years, months, days or nights, it shall be understood that years are of three hundred sixty-five

days each; months, of thirty days; days, of twenty-four hours, and nights from sunset to sunrise.

If the months are designated by their name, they shall be computed by the number of days which they respectively have.

In computing a period, the first day shall be excluded, and the last included. (emphasis supplied)

Thus, according to the CTA, the two-year prescriptive period under Section 229 of the NIRC for the filing of judicial claims was equivalent to 730 days. Because the year 2000 was a leap year, respondent's petition, which was filed 731 days14 after respondent

filed its final adjusted return, was filed beyond the reglementary period.15

Respondent moved for reconsideration but it was denied.16 Hence, it filed an appeal in the CA.17

On August 1, 2003, the CA reversed and set aside the decision of the CTA.18 It ruled that Article 13 of the Civil Code did not

distinguish between a regular year and a leap year. According to the CA:

The rule that a year has 365 days applies, notwithstanding the fact that a particular year is a leap year.19

In other words, even if the year 2000 was a leap year, the periods covered by April 15, 1998 to April 14, 1999 and April 15, 1999 to

April 14, 2000 should still be counted as 365 days each or a total of 730 days. A statute which is clear and explicit shall be neither interpreted nor construed.20

Petitioners moved for reconsideration but it was denied.21 Thus, this appeal.

Petitioners contend that tax refunds, being in the nature of an exemption, should be strictly construed against claimants.22 Section

229 of the NIRC should be strictly applied against respondent inasmuch as it has been consistently held that the prescriptive period

(for the filing of tax refunds and tax credits) begins to run on the day claimants file their final adjusted returns.23 Hence, the claim should have been filed on or before April 13, 2000 or within 730 days, reckoned from the time respondent filed its final adjusted

return.

The conclusion of the CA that respondent filed its Petition for Review in the CTA within the two-year prescriptive period provided in Section 229 of the NIRC is correct. Its basis, however, is not.

The rule is that the two-year prescriptive period is reckoned from the filing of the final adjusted return.24 But how should the two-year prescriptive period be computed?cralaw library

As already quoted, Article 13 of the Civil Code provides that when the law speaks of a year, it is understood to be equivalent to 365

days. In National Marketing Corporation v. Tecson,25 we ruled that a year is equivalent to 365 days regardless of whether it is a regular year or a leap year.26

However, in 1987, EO27 292 or the Administrative Code of 1987 was enacted. Section 31, Chapter VIII, Book I thereof provides:

Sec. 31. Legal Periods. - "Year" shall be understood to be twelve calendar months; "month" of thirty days, unless it refers to a

specific calendar month in which case it shall be computed according to the number of days the specific month contains; "day", to a

day of twenty-four hours and; "night" from sunrise to sunset. (emphasis supplied)

A calendar month is "a month designated in the calendar without regard to the number of days it may contain."28 It is the "period of

time running from the beginning of a certain numbered day up to, but not including, the corresponding numbered day of the next month, and if there is not a sufficient number of days in the next month, then up to and including the last day of that month."29 To

illustrate, one calendar month from December 31, 2007 will be from January 1, 2008 to January 31, 2008; one calendar month from

January 31, 2008 will be from February 1, 2008 until February 29, 2008.30

A law may be repealed expressly (by a categorical declaration that the law is revoked and abrogated by another) or impliedly (when

the provisions of a more recent law cannot be reasonably reconciled with the previous one).31 Section 27, Book VII (Final Provisions)

of the Administrative Code of 1987 states:

Sec. 27. Repealing clause. - All laws, decrees, orders, rules and regulation, or portions thereof, inconsistent with this Code are

hereby repealed or modified accordingly.

A repealing clause like Sec. 27 above is not an express repealing clause because it fails to identify or designate the laws to be

abolished.32 Thus, the provision above only impliedly repealed all laws inconsistent with the Administrative Code of 1987.chanrobles

virtual law library

Implied repeals, however, are not favored. An implied repeal must have been clearly and unmistakably intended by the legislature.

The test is whether the subsequent law encompasses entirely the subject matter of the former law and they cannot be logically or reasonably reconciled.33

Both Article 13 of the Civil Code and Section 31, Chapter VIII, Book I of the Administrative Code of 1987 deal with the same subject

matter - the computation of legal periods. Under the Civil Code, a year is equivalent to 365 days whether it be a regular year or a leap year. Under the Administrative Code of 1987, however, a year is composed of 12 calendar months. Needless to state, under the

Administrative Code of 1987, the number of days is irrelevant.

There obviously exists a manifest incompatibility in the manner of computing legal periods under the Civil Code and the Administrative Code of 1987. For this reason, we hold that Section 31, Chapter VIII, Book I of the Administrative Code of 1987,

being the more recent law, governs the computation of legal periods. Lex posteriori derogat priori.

Applying Section 31, Chapter VIII, Book I of the Administrative Code of 1987 to this case, the two-year prescriptive period (reckoned

from the time respondent filed its final adjusted return34 on April 14, 1998) consisted of 24 calendar months, computed as follows:

Year 1 1st calendar month April 15, 1998 to May 14, 1998

2nd calendar month May 15, 1998 to June 14, 1998

3rd calendar month June 15, 1998 to July 14, 1998

4th calendar month July 15, 1998 to August 14, 1998

5th calendar month August 15, 1998 to September 14, 1998

6th calendar month September 15, 1998 to October 14, 1998

7th calendar month October 15, 1998 to November 14, 1998

8th calendar month November 15, 1998 to December 14, 1998

9th calendar month December 15, 1998 to January 14, 1999

10th calendar month January 15, 1999 to February 14, 1999

11th calendar month February 15, 1999 to March 14, 1999

12th calendar month March 15, 1999 to April 14, 1999

Year 2 13th calendar month April 15, 1999 to May 14, 1999

14th calendar month May 15, 1999 to June 14, 1999

15th calendar month June 15, 1999 to July 14, 1999

16th calendar month July 15, 1999 to August 14, 1999

17th calendar month August 15, 1999 to September 14, 1999

18th calendar month September 15, 1999 to October 14, 1999

19th calendar month October 15, 1999 to November 14, 1999

20th calendar month November 15, 1999 to December 14, 1999

21st calendar month December 15, 1999 to January 14, 2000

22nd calendar month January 15, 2000 to February 14, 2000

23rd calendar month February 15, 2000 to March 14, 2000

24th calendar month March 15, 2000 to April 14, 2000

We therefore hold that respondent's petition (filed on April 14, 2000) was filed on the last day of the 24th calendar month from the day respondent filed its final adjusted return. Hence, it was filed within the reglementary period.

Accordingly, the petition is hereby DENIED. The case is REMANDED to the Court of Tax Appeals which is ordered to expeditiously proceed to hear C.T.A. Case No. 6113 entitled Primetown Property Group, Inc. v. Commissioner of Internal Revenue and Arturo V.

Parcero.

No costs.

SO ORDERED.