CIR v. CA [GR 115349, 18 April 1997]
Third Division, Panganiban (p): 4 concurring.

Facts: Private respondent, Ateneo de Manila University, is a non-stock, non-profit educational institution with auxiliary units and branches all over the country. The Institute of Philippine Culture (IPC) is an auxiliary unit with no legal personality separate and distinct from private respondent. The IPC is a Philippine unit engaged in social science studies of Philippine society and culture. Occasionally, it accepts sponsorships for its research activities from international organizations, private foundations and government agencies. On 8 July 1983, private respondent received from CIR a demand letter dated 3 June 1983, assessing private respondent the sum of P174,043.97 for alleged deficiency contractor’s tax, and an assessment dated 27 June 1983 in the sum of P1,141,837 for alleged deficiency income tax, both for the fiscal year ended 31 March 1978. Denying said tax liabilities, private respondent sent petitioner a letter-protest and subsequently filed with the latter a memorandum contesting the validity of the assessments. On 17 March 988, petitioner rendered a letter-decision canceling the assessment for deficiency income tax but modifying the assessment for deficiency contractor’s tax by increasing the amount due to P193,475.55. Unsatisfied, private respondent requested for a reconsideration or reinvestigation of the modified assessment. At the same time, it filed in the respondent court a petition for review of the said letter-decision of the petitioner. While the petition was pending before the respondent court, petitioner issued a final decision dated 3 August 1988 reducing the assessment for deficiency contractor’s tax from P193,475.55 to P46,516.41, exclusive of surcharge and interest.

On 12 July 1993, the respondent court set aside respondent’s decision, and canceling the deficiency contractor’s tax assessment in the amount of P46,516.41 exclusive of surcharge and interest for the fiscal year ended 31 March 1978. No pronouncement as to cost.

On 27 April 1994, Court of Appeals, in CA-GR SP 31790, affirmed the decision of the Court of Tax Appeals. Not in accord with said decision, petitioner came to Supreme Court via a petition for review.

The Supreme Court denied the petition and affirmed the assailed Decision of the Court of Appeals. The Court ruled that the private respondent is not a contractor selling its services for a fee but an academic institution conducting these researches pursuant to its commitments to education and, ultimately, to public service. For the institute to have tenaciously continued operating for so long despite its accumulation of significant losses, we can only agree with both the Court of Tax Appeals and the Court of Appeals that “education and not profit is motive for undertaking the research projects.

1.     Application of Doctrine of strict implementation before Principle of tax exemption
CIR erred in applying the principles of tax exemption without first applying the well-settled doctrine of strict interpretation in the imposition of taxes. It is obviously both illogical and impractical to determine who are exempted without first determining who are covered by the aforesaid provision. The Commissioner should have determined first if private respondent was covered by Section 205, applying the rule of strict interpretation of laws imposing taxes and other burdens on the populace, before asking Ateneo to prove its exemption therefrom, following the rule of construction where “the tax exemptions are to be strictly construed against the taxpayer”.

2.    Doctrine of interpretation of tax laws
The doctrine in the interpretation of tax laws is that “(a) statute will not be construed as imposing a tax unless it does so clearly, expressly, and unambiguously. . . . (A) tax cannot be imposed without clear and express words for that purpose. Accordingly, the general rule of requiring adherence to the letter in construing statutes applies with peculiar strictness to tax laws and the provisions of a taxing act are not to be extended by implication.”  In case of doubt, such statutes are to be construed most strongly against the government and in favor of the subjects or citizens because burdens are not to be imposed nor presumed to be imposed beyond what statutes expressly and clearly import.
Ateneo’s Institute of Philippine Culture never sold its services for a fee to anyone or was ever engaged in a business apart from and independently of the academic purposes of the university. Funds received by the Ateneo de Manila University are technically not a fee. They may however fall as gifts or donations which are “tax-exempt” as shown by private respondent’s compliance with the requirement of Section 123 of the National Internal Revenue Code providing for the exemption of such gifts to an educational institution.

3.    Meaning of  “independent contractors”
The term ‘independent contractors’ include persons (juridical or natural) not enumerated as excepted (but not including individuals subject to the occupation tax under Section 12 of the Local Tax Code) whose activity consists essentially of the sale of all kinds of services for a fee regardless of whether or not the performance of the service calls for the exercise or use of the physical or mental faculties of such contractors or their employees.
The term ‘independent contractor’ does not include regional or area headquarters established in the Philippines by multinational corporations, including their alien executives, and which headquarters do not earn or derive income from the Philippines and which act as supervisory, communications and coordinating centers for their affiliates, subsidiaries or branches in the Asia-Pacific Region.

4.    Meaning of “gross receipts”
The term ‘gross receipts’ means all amounts received by the prime or principal contractor as the total contract price, undiminished by amount paid to the subcontractor, shall be excluded from the taxable gross receipts of the subcontractor.

5.    Transaction of IPC not a contract of sale nor a contract for a piece of work
The transactions of Ateneo’s Institute of Philippine Culture cannot be deemed either as a contract of sale or a contract for a piece of work. By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent. In the case of a contract for a piece of work, “the contractor binds himself to execute a piece of work for the employer, in consideration of a certain price or compensation. . . . If the contractor agrees to produce the work from materials furnished by him, he shall deliver the thing produced to the employer and transfer dominion over the thing. . . .” In the case at bench, it is clear from the evidence on record that there was no sale either of objects or services because, as adverted to earlier, there was no transfer of ownership over the research data obtained or the results of research projects undertaken by the Institute of Philippine Culture.

6.    Jurisdiction of Court of Tax Appeals in reviewing tax cases
The Court of Tax Appeals is a highly specialized body specifically created for the purpose of reviewing tax cases. Through its expertise, it is undeniably competent to determine the issue of whether the Ateneo may be deemed a subject of the three percent contractor’s tax through the evidence presented before it. Consequently, “as a matter of principle, the Supreme Court will not set aside the conclusion reached by . . . the Court of Tax Appeals which is, by the very nature of its function, dedicated exclusively to the study and consideration of tax problems and has necessarily developed an expertise on the subject unless there has been an abuse or improvident exercise of authority.

Manahan v. ECC [GR L-44899, 22 April 1981]
First Division, Fernandez (p): 4 concurring.

Facts: Maria E. Manahan, the petitioner, is the widow of Nazario Manahan, Jr., who died of “Enteric Fever” while employed as classroom teacher in Las Piñas Municipal High School, Las Piñas, Rizal, on 8 May, 1975. The deceased was in perfect health when he entered government service on 20 July 1969, and that in the course of his employment in 1974, he was treated for epigastric pain. He succumbed to enteric fever on May 8, 1975.

The petitioner filed a claim with the GSIS for death benefit under PD 626. In a letter dated 19 June 1975, the Government Service Insurance System denied the claim on a finding that the ailment of Nazario Manahan, Jr., typhoid fever, is not an occupational disease. The petitioner filed a motion for reconsideration on the ground that ailment of said deceased was attributable to his employment. The GSIS affirmed the denial of the claim on the ground that enteric fever or paratyphoid is similar in effect to typhoid fever, in the sense that both are produced by Salmonella organisms. Source of infection in enteric fever is feces or urine from patients and carriers; organism enter the body through the gastrointestinal tract, invading the bloodstream through the lymphatic channels. Enteric fever is referred to as typhoid fever or paratyphoid fever; wherein epigastric pain is a symptom of ulcer, and ulcer is a common complication of typhoid fever.

The petitioner appealed to the ECC, which affirmed the decision of the GSIS (in ECC Case 0070, “Maria Manahan v. GSIS) on a finding that the ailment of the deceased, enteric fever, was not induced by or aggravated by the nature of the duties of Nazario Manahan, Jr. as a teacher. Thus, the appeal.

The Supreme Court set aside the decision of the ECC and ordered the GSIS to  pay the petitioner the amount of P6,000.00 as death compensation benefit and P600.00 as attorney’s fees, to reimburse the petitioner’s expenses incurred for medical services, hospitalization and medicines of the deceased Nazario Manahan, Jr., duly supported by proper receipts, and to pay administrative fees.

1.    In case of doubt, social legislation should be liberally construed and resolve in favor of the worker
In any case, and case of doubt, the same should be resolved in favor of the worker, and that social legislations — like the Workmen’s Compensation Act and the Labor Code — should be liberally construed to attain their laudable objective, i.e., to give relief to the workman and/or his dependents in the event that the former should die or sustain an injury. Pursuant to such doctrine and applying now the provisions of the Workmen’s Compensation Act in this case, the presumption of compensability subsists in favor of the claimant.

2.     Claims accruing prior to effectivity of the Labor Code
Article 294, Title III (Transitory and Final Provisions) of the New Labor Code provides that all actions and claims accruing prior to the effectivity of this Code shall be determined in accordance with the laws in force at the time of their accrual and under the third paragraph of Article 292, Title II (Prescription of Offenses and Claims), workmen’s compensation claims accruing prior to the effectivity of this Code and during the period from 1 November 1974 up to 31 December 1974 shall be processed and adjudicated in accordance with the laws and rules at the time their causes of action accrued Hence, this Court applied the provisions of the Workmen’s Compensation Act, as amended, on passing upon petitioner’s claim. (Corales vs. ECC, L-44063, 27 February, 1979) The illness that claimed the life of the deceased may had its onset before 10 December 1974, thus, his action accrued before 10 December 1974.

3.    Social justice and labor protection warrants second look at evidence
The constitutional guarantee of social justice and protection to labor make the court take a second look at the evidence presented by the claimant. In the case at bar, as a teacher of the Las Piñas Municipal High School, the deceased used to eat his meals at the school canteen. He also used the toilet and other facilities of the school. It was not improbable that the deceased might have contracted the illness during those rare moments that he was away from his family, since it is medically accepted that enteric fever is caused by ’salmonella’ organisms which are acquired by ingestion of contaminated food or drinks. This lead to the conclusion that the risk of contracting the fatal illness was increased by the decedent’s working condition.

Bello v. CA [GR L-38161, 29 March 1974]
En Banc, Teehankee (p): 10 concurring.

Facts: On 25 August 1970, petitioner-spouses were charged for estafa before the City Court of Pasay for allegedly having misappropriated a lady’s ring with a value of P1,000.00 received by them from Atty. Prudencio de Guzman for sale on commission basis. After trial, they were convicted and sentenced under respondent city court’s decision of 26 February 1971 to six (6) months and one (1) day of prision correccional and to indemnify the offended party in the sum of P1,000.00 with costs of suit.

Petitioners filed their notice of appeal of the adverse judgment to the CFI Pasay City, but the prosecution filed a “petition to dismiss appeal” on the ground that since the case was within the concurrent jurisdiction of the city court and the CFI and the trial in the city court had been duly recorded, the appeal should have been taken directly to the CA as provided by section 87 of the Judiciary Act, RA 296, as amended.  The CFI per its order of 29 October1971 did find that the appeal should have been taken directly to the A but ordered the dismissal of the appeal and remand of the records to the city court “for execution of judgment.”

City court per its order of 11 December 1971 denied petitioners’ motion “for having been erroneously addressed to this court” instead of to the CFI ignoring petitioners’ predicament that the CFI had already turned them down and ordered the dismissal of their appeal without notice to them and that as a consequence it was poised to execute its judgment of conviction against them.Petitioners spouses then filed on 14 January 1972 their petition for prohibition and mandamus against the People and City court to prohibit the execution of the judgment and to compel City court to elevate their appeal to the CA.. The Solicitor General filed respondents’ answer to the petition manifesting that “we shall not interpose any objection whichever view point is adopted by this Honorable Court in resolving the two apparently conflicting or clashing principles of law — finality of judicial decision or equity in judicial decision (The fault being that of the petitioner’s counsel).

The CA, however, per its decision of 17 December 1973 dismissed the petition, after finding that the city court’s judgment was directly appealable to it. Although recognizing that the “CFI instead of dismissing appeal, could have in the exercise of its inherent powers directed appeal to be endorsed to the CA” it held that since petitioners did not implead the CFI as “principal party respondent” it could not “grant any relief at all even on the assumption that petitioners can be said to deserve some equities.” Petitioners moved for reconsideration on 2 January 1974 and for elevation of their appeal to the CA, stressing the merits of their appeal and of their defense to the charge.  CA denied the reconsideration “for lack of sufficient merit.” Hence, petitioners filed the petition for review.

The Supreme Court set aside the CA decision dismissing the petition and in lieu thereof, judgment was rendered granting the petition for prohibition against City court, enjoining it from executing its judgment of conviction against petitioners-accused and further commanding said city court to elevate petitioners’ appeal from its judgment to the CA for the latter’s disposition on the merits. No costs.

1.    Construction of statutes should not be narrowly interpreted to defeat purpose; Construction of Rules of Court liberally construed
The construction of statutes is always cautioned against “narrowly interpreting a statute ‘as to defeat the purpose of the legislator’”  and “it is of the essence of judicial duty to construe statutes so as to avoid such a deplorable result (of injustice or absurdity)” and therefore “a literal interpretation is to be rejected if it would be unjust or lead to absurd results”. In the construction of its own Rules of Court, this Court is all the more so bound to liberally construe them to avoid injustice, discrimination and unfairness and to supply the void — that is certainly within the spirit and purpose of the Rule to eliminate repugnancy and inconsistency — by holding as it does now that CFIs are equally bound as the higher courts not to dismiss misdirected appeals timely made but to certify them to the proper appellate court.

2.    Paucity of the language of Rule 50, section 3
In a mis-directed appeal to the CA of a case that pertains to the CFI’s jurisdiction, the said Rule expressly provides that the CA “shall not dismiss the appeal but shall certify the case to the proper court” viz, the CFI in the case at bar. There is no logical reason why in all fairness and justice the CFI in a misdirected appeal to it should not be likewise bound by the same rule and therefore enjoined not to dismiss the appeal but to certify the case to the CA as the proper court. The paucity of the language of the Rule and its failure to expressly provide for such cases of misdirected appeals to the CFI should not be a cause for unjustly depriving petitioners of their substantial right of appeal.

3.    Substantive over procedural
The formal impleading of the CFI which issued the challenged order of dismissal was not indispensable and could be “overlooked in the interest of speedy adjudication. The CA’s act of dismissing the petition and denying the relief sought of endorsing the appeal to the proper court simply because of the non-impleader of the CFI as a nominal party was tantamount to sacrificing substance to form and to subordinating substantial justice to a mere matter of procedural technicality. The procedural infirmity of petitioners mis-directing their appeal to the CFI rather than to the CA, which they had timely sought to correct in the CFI itself by asking that court to certify the appeal to the CA as the proper court, should not be over-magnified as to totally deprive them of their substantial right of appeal and leave them without any remedy.

4.    Grave Abuse of Discretion on part of CFI and CA
The Court finds merit in the petition and holds that the CFI acted with grave abuse of discretion in dismissing petitioners-accused’s appeal which was erroneously brought to it and ordering remand of the records to the city court for execution of judgment instead of certifying and endorsing the appeal to the CA as the proper court as timely prayed for by petitioners-accused in their opposition to the prosecution’s motion to dismiss appeal. The Court of Appeals also acted with grave abuse of discretion in dismissing their petition instead of setting aside the challenged order of the CFI peremptorily dismissing the appeal pursuant to which city court was poised to execute its judgment of conviction simply because the CFI which is but a nominal party had not been impleaded as party respondent in disregard of the substantive fact that the People as plaintiff and the real party in interest was duly impleaded as principal party respondent and was represented in the proceedings by the Solicitor General.

5.    Rule that respondent judge merely a nominal party in special civil actions
A respondent judge is “merely a nominal party” in special civil actions for certiorari, prohibition and mandamus and that he “is not a person ‘in interest’ within the purview (of Rule 65, section 5 )” and “accordingly, he has no standing or authority to appeal from or seek a review on certiorari” of an adverse decision of the appellate court setting aside his dismissal of a party’s appeal and issuing the writ of mandamus for him to allow the appeal (Torre vs. Ericta).

6.    Real party in interest
The real parties in interest are “the person or persons interested in sustaining the proceedings in the court” and who are charged with the duty of appearing and defending the challenged act both “in their own behalf and in behalf of the court or judge affected by the proceedings.”

Chartered Bank Employees Association v. Ople [GR L-44717, 28 August 1985]
En Banc, Gutierrez, Jr. (p): 10 concur, 1 concur in result, 1 took no part, 1 on leave

Facts: On 20 May 1975, the Chartered Bank Employees Association, in representation of its monthly paid employees/members, instituted a complaint with the Regional Office IV, Department of Labor, now Ministry of Labor and Employment (MOLE) against Chartered Bank, for the payment of 10 unworked legal holidays, as well as for premium and overtime differentials for worked legal holidays from 1 November 1974.

Both the arbitrator and the National Labor Relations Commission (NLRC) ruled in favor of the petitioners ordering the bank to pay its monthly paid employees the holiday pay and the premium or overtime pay differentials to all employees who rendered work during said legal holidays. On appeal, the Minister of Labor set aside the decision of the NLRC and dismissed the petitioner’s claim for lack of merit basing its decision on Section 2, Rule IV, Book III of the Integrated Rules and Policy Instruction 9, claiming the rule that “If the monthly paid employee is receiving not less than P240, the maximum monthly minimum wage, and his monthly pay is uniform from January to December, he is presumed to be already paid the 10 paid legal holidays. However, if deductions are made from his monthly salary on account of holidays in months where they occur, then he is still entitled to the 0 paid legal holidays.”

The Supreme Court reversed and set aside Ople’s 7 September 1976 order, and reinstated with modification (deleting the interest payments) the  24 March 1976 decision of the NLRC affirming the 30 October 1975 resolution of the Labor Arbiter.

1.    When the language is clear and unequivocal, the law must be taken to mean what is says
When the language of the law is clear and unequivocal the law must be taken to mean exactly what it says. An administrative interpretation, which diminishes the benefits of labor more than what the statute delimits or withholds, is obviously ultra vires. In the case at bar, the provisions of the Labor Code on the entitlement to the benefits of holiday pay are clear and explicit, it provides for both the coverage of and exclusion from the benefit. In Policy Instruction 9, the Secretary of Labor went as far as to categorically state that the benefit is principally intended for daily paid employees, when the law clearly states that every worker shall be paid their regular holiday pay.

2.    Executive construction given weight by court except when erroneous, thereby being null and void
While it is true that the contemporaneous construction placed upon a statute by executive officers whose duty is to enforce it should be given great weight by the courts, still if such construction is so erroneous, the same must be declared as null and void. It is the role of the Judiciary to refine and, when necessary, correct constitutional (and/or statutory) interpretation, in the context of the interactions of the three branches of the government, almost always in situations where some agency of the State has engaged in action that stems ultimately from some legitimate area of governmental power. Section 2, Rule IV, Book III of the Rules to implement the Labor Code and Policy Instruction was declared null and void in IBAAEU v. Inciong, and thus applies in the case at bar. Since the private respondent premises its action on the invalidated rule and policy instruction, it is clear that the employees belonging to the petitioner association are entitled to the payment of 10 legal holidays under Articles 82 and 94 of the Labor Code, aside from their monthly salary. They are not among those excluded by law from the benefits of such holiday pay (See PD 800, Article 82)

3.    Relevance of a divisor of 251 days in computation of overtime compensation as to intent
In computing overtime compensation for its employees, the bank employs a “divisor” of 251 days. The 251 working days divisor is the result of subtracting all Saturdays, Sundays and the 10 legal holidays from the total number of calendar days in a year. If the employees are already paid for all non-working days, the divisor should be 365 and not 251.

4.    All doubts construed resolved in favor of labor; Intent of legislature towards most beneficial effect
Any slight doubts, however, must be resolved in favor of the workers. This is in keeping with the constitutional mandate of promoting social justice and affording protection to labor (Sections 6 and 9, Article II, Constitution). Article 4 of the Labor Code, as amended, provides all doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor. Moreover, it shall always be presumed that the legislature intended to enact a valid and permanent statute which would have the most beneficial effect that its language permits. Any remaining doubts which may arise from the conflicting or different divisors used in the computation of overtime pay and employees’ absences are resolved by the manner in which work actually rendered on holidays is paid. Thus, whenever monthly paid employees work on a holiday, they are given an additional 100% base pay on top of a premium pay of 50%. If the employees’ monthly pay already includes their salaries for holidays, they should be paid only premium pay but not both base pay and premium pay.

5.    Equity, proper remedy; CBA amendment over administrative rule or policy instruction
It is not the intent of the Court to impose any undue burdens on an employer which is already doing its best for its personnel, as they are among the highest paid in the industry. However, the Court has to resolve the labor dispute in the light of the parties’ own collective bargaining agreement and the benefits given by law to all workers. When the law provides benefits for “employees in all establishments and undertakings, whether for profit or not” and lists specifically the employees not entitled to those benefits, the administrative agency implementing that law cannot exclude certain employees from its coverage simply because they are paid by the month or because they are already highly paid. The remedy lies in a clear redrafting of the collective bargaining agreement with a statement that monthly pay already includes holiday pay or an amendment of the law to that effect but not an administrative rule or a policy instruction.

In RE Tampoy: Diosdada Alberastine, petitioner [GR L-14322, 25 February 1960]
En Banc, Bautista Angelo (p): 10 concurring

Facts: On 19 November 1939, Petronila Tampoy, a widow and without children, requested with Bonifacio Minoza to read a testament and explain its contents to her in her house in San Miguel street, municipality of Argao, province of Cebu in 19 November 1939, which he did in the presence of tree instrumental witnesses, Rosario K. Chan, Mauricio de la Pena, and Simeona Omboy. After confirming the contents of the testament, she requested Bonifacio Minoza to write her name at the foot of the testament in the second page, which he did, and after which she stamped her thumbmark between her name and surname in the presence of all three instrumental witnesses. Bonifacio Minoza also signed at the foot of the testament, in the second page, in the presence of the testator and all three abovenamed witnesses. However, the testator, just like Bonifacio Minoza, did not sign on the left margin or any part of the first page of the testament, composed of two pages. All the three instrumental witnesses signed at the foot of the acknowledgment written in the second page of the testament, and the left margin of the first and second page, in the presence of the testator, Bonifacio Minoza, Atty. Kintanar, and the others. The testament was executed freely and spontaneously, without having been threatened, forced and intimidated, and not having exercised on her (the testator) undue influence, being the same in full use of her mental faculties and enjoying good health.

On 22 February 1957, the testator died in here house in Argao.

On 7 March 1957, or two weeks after, the heir found in the testament, Carman Aberastine died, leaving her mother, the petitioner Diosdada Alberastine.

After the petition was published in accordance with law and petitioner had presented oral and documentary evidence, the trial court denied the petition on the ground that the left hand margin of the first page of the will does not bear the thumbmark of the testatrix.

Petitioner appealed from this ruling. The Court of Appeals certified the case to the Supreme Court because it involves purely a question of law.

The Supreme Court affirmed the appealed order, without pronouncement as to costs.

1.    Wills are strictly construed; lack of thumbmark in any of the page fatal.
Statutes prescribing the formalities to be observed in the execution of wills are very strictly construed (Rodriguez vs. Alcala, 55 Phil., 150). A will must be executed in accordance with the statutory requirements; otherwise it is entirely void. (40 Cyc., 1097) All these requirements stand as of equal importance and must be observed, and courts cannot supply the defective execution of a will. No power or discretion is vested in them, either to superadd other conditions or dispense with those enumerated in the statutes (Uy Coque vs. Navas L. Sioca, 43 Phil., 405, 407; See also Saño vs. Quintana, 48 Phil., 506; Gumban vs. Gorecho 50 Phil., 30; Quinto vs. Morata, 54 Phil., 481). In the case at bar, the contention that the petition for probate is unopposed, and that the three testimonial witnesses testified and manifested to the court that the document expresses the true and voluntary will of the deceased, cannot be sustained as it runs counter to the express provision of the law. Since the will suffers the fatal defect, as it does not bear the thumbmark of the testatrix on its first page even if it bears the signature of the three instrumental witnesses, the same fails to comply with the law and therefore cannot be admitted to probate.

Paras v. Comelec [GR 123169, 4 November 1996]; Resolution
En Banc, Francisco (p): 14 concur

Facts: Danilo E. Paras is the incumbent Punong Barangay of Pula, Cabanatuan City who won during the 1994 barangay election. A petition for his recall as Punong Barangay was filed by the registered voters of the barangay. Acting on the petition for recall, Comelec resolved to approve the petition, scheduled the petition signing on 14 October 1995, and set the recall election on 13 November 1995. At least 29.30% of the registered voters signed the petition, well above the 25% requirement provided by law. The Comelec, however, deferred the recall election in view of petitioner’s opposition. On 6 December 1995, the Comelec set anew the recall election, this time on 16 December 1995. To prevent the holding of the recall election, petitioner filed before the RTC Cabanatuan City a petition for injunction (SP Civil Action 2254-AF), with the trial court issuing a TRO. After conducting a summary hearing, the trial court lifted the restraining order, dismissed the petition and required petitioner and his counsel to explain why they should not be cited for contempt for misrepresenting that the barangay recall election was without Comelec approval.

In a resolution dated 5 January 1996, the Comelec, for the third time, re-scheduled the recall election on 13 January 1996; hence, the instant petition for certiorari with urgent prayer for injunction. On 12 January 1996, the Court issued a TRO and required the OSG, in behalf of Comelec, to comment on the petition. In view of the OSG’s manifestation maintaining an opinion adverse to that of the Comelec, the latter through its law department filed the required comment. Paras thereafter filed a reply.

The Supreme Court dismissed the petition for having become moot and academic, as the next regular elections are 7 months away. The TRO issued on 12 January 1996, enjoining the recall election, was made permanent.

1. Every part of statute must be interpreted with reference to the context of the whole enactment
It is a rule in statutory construction that every part of the statute must be interpreted with reference to the context, i.e., that every part of the statute must be considered together with the other parts, and kept subservient to the general intent of the whole enactment. In the case at bar, Paragraph (b) of Section 74 construed together with paragraph (a) merely designates the period when such elective local official may be subject of a recall election, i.e. during the second year of his term of office. SK elections cannot be considered a regular election as this would render inutile the recall provision of the LGC.

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

3. Statute interpreted in harmony with the Constitution
It is a basic precept in statutory construction that a statute should be interpreted in harmony with the Constitution. In the case at bar, the interpretation of Section 74 of the LGC, specifically paragraph (b) thereof, should not be in conflict with the Constitutional mandate of Section 3 of Article X of the Constitution to enact a local government code which shall provide for a more responsive and accountable local government structure instituted through a system of decentralization with effective mechanisms of recall, initiative, and referendum.

4. Intent of law paramount; too literal interpretation discouraged
The spirit, rather than the letter of a law determines its construction; hence, a statute must be read according to its spirit and intent. The too literal interpretation of the law leads to absurdity which the Court cannot countenance. A too-literal reading of the law constrict rather than fulfill its purpose and defeat the intention of its authors. That intention is usually found not in ‘the letter that killeth but in the spirit that vivifieth’.

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

Daoang v. Judge of San Nicolas, Ilocos Norte [GR L-34568, 28 March 1988]
Second Division, Padilla (p): 4 concur

Facts: On 23 March 1971, spouses Antero and Amanda Agonoy filed a petition with the Municipal Court of San Nicolas, Ilocos Norte, seeking the adoption of the minors Quirino Bonilla and Wilson Marcos (n re Adoption of the Minors Quirino Bonilla and Wilson Marcos, Antero Agonoy and Amanda Ramos-Agonoy, petitioners, SP 37). The petition was set for hearing on 24 April 1971 and notices thereof were caused to be served upon the OSG and ordered published in the Ilocos Times, a weekly newspaper of general circulation in the province of Ilocos Norte, with editorial offices in Laoag City.

On 22 April 1971, the minors Roderick and Rommel Daoang, assisted by their father and guardian ad litem filed an opposition to the petition for adoption, claiming that the spouses Antero and Amanda Agonoy had a legitimate daughter named Estrella Agonoy, oppositors’ mother, who died on 1 March 1971, and therefore, said spouses were disqualified to adopt under Article 335 of the Civil Code.  After the required publication of notice had been accomplished, evidence was presented. Thereafter, on 30 June 1971, the Municipal Court of San Nicolas, Ilocos Norte rendered its decision, granting the petition for adoption.

Hence, the present recourse by the petitioners (oppositors in the lower court).

The Supreme Court denied the petition, and affirmed the judgment of the Municipal Court of San Nicolas, Ilocos Norte (SP 37), wthout pronouncement as to costs.

1.    The provisions of the law is clear and unambiguous; Law need not be constructed
The words used in paragraph (1) of Article 335 of the Civil Code, in enumerating the persons who cannot adopt, are clear and unambiguous. The children mentioned therein have a clearly defined meaning in law and do not include grandchildren. Well known is the rule of statutory construction to the effect that a statute clear and unambiguous on its face need not be interpreted. The rule is that only statutes with an ambiguous or doubtful meaning may be the subject of statutory construction.

2.    Intent of the law
The legislator, in enacting the Civil Code of the Philippines, obviously intended that only those persons who have certain classes of children, are disqualified to adopt. The Civil Code of Spain, which was once in force in the Philippines, and which served as the pattern for the Civil Code of the Philippines, in its Article 174, disqualified persons who have legitimate or legitimated descendants from adopting. When the Civil Code of the Philippines was adopted, the word “descendants” was changed to “children”, in paragraph (1) of Article 335.

3.    Purpose of the law: Disqualifications removed in Family Code
Adoption used to be for the benefit of the adoptor. It was intended to afford to persons who have no child of their own the consolation of having one, by creating through legal fiction, the relation of paternity and filiation where none exists by blood relationship. The present tendency, however, is geared more towards the promotion of the welfare of the child and the enhancement of his opportunities for a useful and happy life, and every intendment is sustained to promote that objective. Under the law now in force, having legitimate, legitimated, acknowledged natural children, or children by legal fiction, is no longer a ground for disqualification to adopt.

People v. Mapa [GR L-22301, 30 August 1967]
En Banc, Fernando (p): 9 concur

Facts: Accused was charged for illegal possession of firearm and ammmunition in an information dated 14 August 1962 in connection with Section 2692 of the Revised Administrative Code, as amended by CA 56 and as further amended by RA 4. Accused admits to possession of firearm on ground of being a  secret agent. On 27 November 1963, the lower court rendered a decision convicting the accused of the crime and sentenced him to imprisonment for one year and one day to two years. Appeal involves a question of law, as that it was taken to the Supreme Court.

The Supreme Court affirmed the appealed judgment.

1.    Law explicit, no provision made for secret agent
The law is explicit that except as thereafter specially 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. Firearms and ammunition regularly and lawfully issued to officers, soldiers, sailors, or marines [of the AFP, the PC, 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. No provision is made for a secret agent.

2.    Duty of the court to apply the law; Construction if application is impossible or inadequate
The first and fundamental duty of courts is to apply the law. Construction and interpretation come only after it has been demonstrated that application is impossible or inadequate without them. It is not within the power of this Court to set aside the clear and explicit mandate of a statutory provision.

3.    People v. Macarandang modified
In People v. Macarandang, a secret agent was acquitted on appeal on the assumption that the appointment “of the accused as a secret agent to assist in the maintenance of peace and order campaigns and detection of crimes, sufficiently put him within the category of a ‘peace officer’ equivalent even to a member of the municipal police expressly covered by section 879. The Court ruled however that such reliance is misplaced in the present case and that the decision in People v. Macarandang no longer speaks with authority to the extent that the present decision conflicts with.

Paat v. CA [GR 111107, 10 January 1997]
Second Division, Torres Jr. (p): 4 concur.

Facts: On 19 May 1989, Victoria de Guzman’s truck was seized by DENR personnel in Aritao, Nueva Vizcaya while on its ways to Bulacan from san Jose, Baggao, Cagayan because the driver could not produce the required documents for the forest products found concealed in the truck. On 23 May 1989, Aritao CENRO’s Jovito Layugan issued an order of confiscation of the truck and gave the owner 15 days within which to submit an explanation why the truck should not be forfeited. De Guzman failed to submit the required explanation. On 22 June 1989, Regional Executive Director Rogelio Baggayan of DENR sustained Layugan’s action of confiscation and ordered the forfeiture of the truck invoking Section 68-A of PD 705 as amended by EO 277. De Guzman filed a letter of reconsideration dated 28 June 1989, which was denied in a subsequent order of 12 July 1989.

The case was brought by the petitioners to the Secretary of DENR. Pending resolution however of the appeal, a suit for replevin, docketed as Civil Case 4031, was filed by the private respondents against petitioner Layugan and Executive Director Baggayan with the RTC Cagayan (Branch 2), which issued a writ ordering the return of the truck to private respondents. The trial court denied the motion to dismiss by the petititoners in an order dated 28 December 1989. Their motion for reconsideration having been likewise denied.

A petition for certiorari was filed by the petitioners with the CA which sustained the trial court’s order ruling that the question involved is purely a legal question. Hence, the petition, with prayer for TRO and/or preliminary injunction was filed by the petitioners on 9 September 1993. By virtue of the Resolution dated 27 September 1993,  the prayer for the issuance of TRO of petitioners was granted by the Supreme Court.

The Supreme Court granted the petition, reversed and set aside the 16 October decision and 14 July 1992 resolution of the CA, made permanent the restraining order promulgated on 27 September 1993, and directed the DENR secretary to resolve the controversy with utmost dispatch.

1.    Doctrine of exhaustion of administrative remedies
Before a party is allowed to seek the intervention of the court, it is a pre-condition that he should have availed of all the means of administrative processes afforded him. If a remedy within the administrative machinery can still be resorted to by giving the administrative officer concerned every opportunity to decide on a matter that comes within his jurisdiction then such remedy should be exhausted first before court’s judicial power can be sought. The premature invocation of court’s intervention is fatal to one’s cause of action. Thus, in the case at bar, the respondents cannot, without violating the principle of exhaustion of administrative remedies, seek court’s intervention by filing an action for replevin for the grant of their relief during the pendency of an administrative proceedings.

2.     Principle of exhaustion of administrative remedies not absolute
The doctrine is relative and its flexibility is called upon by the peculiarity and uniqueness of the factual and circumstantial settings of a case. It is disregarded (1) when there is a violation of due process, (2) when the issue involved is purely a legal question, (3) when the administrative action is patently illegal amounting to lack or excess of jurisdiction, (4) when there is estoppel on the part of the administrative agency concerned, (5) when there is irreparable injury, (6) when the respondent is a department secretary whose acts as an alter ego of the President bears the implied and assumed approval of the latter, (7) when to require exhaustion of administrative remedies would be unreasonable, (8) when it would amount to a nullification of a claim, (9) when the subject matter is a private land in land case proceedings, (10) when the rule does not provide a plain, speedy and adequate remedy, and (11) when there are circumstances indicating the urgency of judicial intervention.

3.    Doctrine of primary jurisdiction
The doctrine of primary jurisdiction does not warrant a court to arrogate unto itself the authority to resolve a controversy the jurisdiction over which is initially lodged with an administrative body of special competence. In the case at bar, the enforcement of forestry laws, rules and regulations and the protection, development and management of forest lands fall within the primary and special responsibilities of the Department of Environment and Natural Resources. By the very nature of its function, the DENR should be given a free hand unperturbed by judicial intrusion to determine a controversy which is well within its jurisdiction.  The assumption by the trial court of the replevin suit constitutes an unjustified encroachment into the domain of the administrative agency’s prerogative.

4.    Due process is opportunity or right to be heard, not necessarily requiring a hearing
Due process does not necessarily mean or require a hearing, but simply an opportunity or right to be heard. One may be heard, not solely by verbal presentation but also, and perhaps many times more creditably and practicable than oral argument, through pleadings. Further, deprivation of due process cannot be successfully invoked where a party was given the chance to be heard on his motion for reconsideration.
The essence of due process is simply an opportunity to be heard, or as applied to administrative proceedings, an opportunity to explain one’s side or an opportunity to seek a reconsideration of the action or ruling complained of. A formal or trial type hearing is not at all times and in all instances essential. The requirements are satisfied when the parties are afforded fair and reasonable opportunity to explain their side of the controversy at hand. What is frowned upon is the absolute lack of notice or hearing. (Navarro v. Damasco)

5.    Rules liberal in administrative proceedings
In administrative proceedings, technical rules of procedure and evidence are not strictly applied; administrative process cannot be fully equated with due process in its strict judicial sense.

6.    Statutes construed to give effect to purposes projected in statute; “To dispose of the same” includes conveyance
In the construction of statutes, it must be read in such a way as to give effect to the purpose projected in the statute. Statutes should be construed in the light of the object to be achieved and the evil or mischief to be suppressed, and they should be given such construction as will advance the object, suppress the mischief, and secure the benefits intended. In the case at bar, the phrase “to dispose of the same” is broad enough to cover the act of forfeiting conveyances in favor of the government. The only limitation is that it should be made “in accordance with pertinent laws, regulations or policies on the matter.”

7.    When statute is clear, court cannot rationalize the law
When the statute is clear and explicit, there is hardly room for any extended court ratiocination or rationalization of the law. In the case at bar, the language of EO277 when it eliminated the phrase “shall be guilty of qualified theft as defined and punished under Articles 309 and 310 of the Revised Penal Code ” and inserted the words ” shall be punished with the penalties imposed under Article 309 and 310 of the Revised Penal Code,” meant that the act of cutting, gathering, collecting, removing, or possessing forest products without authority constitutes a distinct offense independent now from the crime of theft under Articles 309 and 310 of the Revised Penal Code, but the penalty to be imposed is that provided for under Article 309 and 310 of the Revised Penal Code.

8.    Suit of replevin as relief
A suit for replevin is founded solely on the claim that the defendant wrongfully withholds the property sought to be recovered. It lies to recover possession of personal chattels that are unlawfully detained. Under the Rules of Court, it is indispensable in replevin proceeding that the plaintiff must show by his own affidavit that he is entitled to the possession of property, that the property is wrongfully detained by the defendant, alleging the cause of detention, that the same has not been taken for tax assessment, or seized under execution, or attachment, or if so seized, that it is exempt from such seizure, and the actual value of the property. In the case at bar, the suit for replevin is never intended as a procedural tool to question the orders of confiscation and forfeiture issued by the DENR in pursuance to the authority given under PD 705, as actions taken by the Director of the Bureau of Forest Development concerning the enforcement of the provisions of the said law are subject to review by the Secretary of DENR and that courts may not review the decisions of the Secretary except through a special civil action for certiorari or prohibition.

9.    “To detain” defined
“To detain” is defined as to mean “to hold or keep in custody,” and it has been held that there is tortious taking whenever there is an unlawful meddling with the property, or an exercise or claim of dominion over it, without any pretense of authority or right; this, without manual seizing of the property is sufficient.

Del Rosario & Sons v. NLRC
GR L-64204, 31 May 1985 (135 SCRA 669)
First Division, Melencio-Herrera (p): 5 concurring, 1 on leave

Facts: On 1 February 1978, Del Rosario and Sons Logging Enterprises, Inc. entered into a “Contract of Services” with Calmar Security Agency whereby the latter undertook to supply the former with security guards at the rate of P300.00 per month for each guard. Thereafter,  Paulino Mabuti, Napoleo Borata and Silvino Tudio filed a Complaint against the Security Agency and petitioner, for underpayment of salary, non-payment of living allowance, and 13th month pay. Thereafter, five other guards filed their complaint for the same causes of action. Petitioner contended that complainants have no cause of action against it due to absence of employer-employee relationship between them. They also denied liability alleging that due to the inadequacy of the amounts paid to it under the Contract of Services, it could not possibly comply with the payments required by labor laws.

Assigned for compulsory arbitration, the Labor Arbiter rendered a decision dismissing the complaint for want of employer-employee relationship. When the case was appealed to the NLRC, the decision was modified by holding that petitioner is liable to pay complainants, jointly and severally, with the Security Agency on the ground that the petitioner is an indirect employer pursuant to Articles 106 and 107.  Hence, the appeal. The petitioner contended that NLRC erred in giving due course to the appeal despite the fact that it was not under oath and the required appeal fee was not paid; in holding it jointly and severally liable with the Security Agency; and in refusing to give due course to its Motion for Reconsideration.

Issue(s):

• Whether the formal defects of the appeal of the security agency invalidate the appeal.
• Whether the security guards from the agency are entitled to benefits claimed from the company

Held: The formal defects in the appeal of the Security Agency were not fatal defects. The lack of verification could have been easily corrected by requiring an oath. The appeal fee had been paid although it was delayed. Failure to pay the docketing fees does not automatically result in the dismissal of the appeal. Dismissal is discretionary with the Appellate Court and discretion must be exercised wisely and prudently, never capriciously, with a view to substantial justice. Failure to pay the appeal docketing fee confers a directory and not a mandatory power to dismiss an appeal and such power must be exercised with sound discretion and with a great deal of circumspection, considering all attendant circumstances.” Moreover, as provided for by Article 221 of the Labor Code “in any proceeding before the Commission or any of the Labor Arbiters, the rules of evidence prevailing in Courts of law or equity shall not be controlling and it is the spirit and intention of this Code that the Commission and its members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law or procedure, all in the interest of due process.

Further, Articles 106 of the Labor Code provides that “in the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him,” and Article 107 provides that “the provisions of the immediately preceding Article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project.” In the case at bar, petitioner became an indirect employer of respondents-complainants when petitioner entered into a Contract of Services with the Security Agency and the latter hired the complainants to work as guards for the former. However, the petitioner’s liability should be without prejudice to a claim for reimbursement against the Security Agency for such amounts as petitioner may have to pay to complainants. The Security Agency may not seek exculpation by claiming that petitioner’s payments to it were inadequate. As an employer, it is charged with knowledge of labor laws and the adequacy of the compensation that it demands for contractual services is its principal concern and not any other’s.

The Supreme Court affirmed the judgment under review, without prejudice to petitioner’s right to seek reimbursement from Calmar Security Agency for such amounts as petitioner may have to pay to complainants. Costs against the private respondent.