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Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-63915 April 24, 1985 LORENZO M.

TAADA, 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, Malacaang 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, 15611588, 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, 18311832, 1835-1836, 1839-1840, 1843-1844, 1846-1847, 1849, 18531858, 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, 474492, 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 nonpublication 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, 3this 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 publicationbut 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 Pambansaand for the diligent ones, ready access to the legislative recordsno 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. COMELEC7: 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 inChicot 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. InPesigan 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 EN BANC G.R. No. L-6791 March 29, 1954

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. QUE PO LAY, defendant-appellant. Prudencio de Guzman for appellant. First Assistant Solicitor General Ruperto Kapunan, Jr., and Solicitor Lauro G. Marquez for appellee. MONTEMAYOR, J.: Que Po Lay is appealing from the decision of the Court of First Instance of Manila, finding him guilty of violating Central Bank Circular No. 20 in connection with section 34 of Republic Act No. 265, and sentencing him to suffer six months imprisonment, to pay a fine of P1,000 with subsidiary imprisonment in case of insolvency, and to pay the costs. The charge was that the appellant who was in possession of foreign exchange consisting of U.S. dollars, U.S. checks and U.S. money orders amounting to about $7,000 failed to sell the same to the Central Bank through its agents within one day following the receipt of such foreign exchange as required by Circular No. 20. the appeal is based on the claim that said circular No. 20 was not published in the Official Gazette prior to the act or omission imputed to the appellant, and that consequently, said circular had no force and effect. It is contended that Commonwealth Act. No., 638 and Act 2930 both require said circular to be published in the Official Gazette, it being an order or notice of general applicability. The Solicitor General answering this contention says that Commonwealth Act. No. 638 and 2930 do not require the publication in the Official Gazette of said circular issued for the implementation of a law in order to have force and effect. We agree with the Solicitor General that the laws in question do not require the publication of the circulars, regulations and notices therein mentioned in order to become binding and effective. All that said two laws provide is that laws, resolutions, decisions of the Supreme Court and Court of Appeals, notices and documents required by law to be of no force and effect. In other words, said two Acts merely enumerate and make a list of what should be published in the Official Gazette, presumably, for the guidance of the different branches of the Government issuing same, and of the Bureau of Printing.

However, section 11 of the Revised Administrative Code provides that statutes passed by Congress shall, in the absence of special provision, take effect at the beginning of the fifteenth day after the completion of the publication of the statute in the Official Gazette. Article 2 of the new Civil Code (Republic Act No. 386) equally provides that laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided. It is true that Circular No. 20 of the Central Bank is not a statute or law but being issued for the implementation of the law authorizing its issuance, it has the force and effect of law according to settled jurisprudence. (See U.S. vs. Tupasi Molina, 29 Phil., 119 and authorities cited therein.) Moreover, as a rule, circulars and regulations especially like the Circular No. 20 of the Central Bank in question which prescribes a penalty for its violation should be published before becoming effective, this, on the general principle and theory that before the public is bound by its contents, especially its penal provisions, a law, regulation or circular must first be published and the people officially and specifically informed of said contents and its penalties. Our Old Civil code, ( Spanish Civil Code of 1889) has a similar provision about the effectivity of laws, (Article 1 thereof), namely, that laws shall be binding twenty days after their promulgation, and that their promulgation shall be understood as made on the day of the termination of the publication of the laws in the Gazette. Manresa, commenting on this article is of the opinion that the word "laws" include regulations and circulars issued in accordance with the same. He says: El Tribunal Supremo, ha interpretado el articulo 1. del codigo Civil en Sentencia de 22 de Junio de 1910, en el sentido de que bajo la denominacion generica de leyes, se comprenden tambien los Reglamentos, Reales decretos, Instrucciones, Circulares y Reales ordenes dictadas de conformidad con las mismas por el Gobierno en uso de su potestad. Tambien el poder ejecutivo lo ha venido entendiendo asi, como lo prueba el hecho de que muchas de sus disposiciones contienen la advertencia de que empiezan a regir el mismo dia de su publicacion en la Gaceta, advertencia que seria perfectamente inutil si no fuera de aplicacion al caso el articulo 1.o del Codigo Civil. (Manresa, Codigo Civil Espaol, Vol. I. p. 52). In the present case, although circular No. 20 of the Central Bank was issued in the year 1949, it was not published until November 1951, that is, about 3 months after appellant's conviction of its violation. It is clear that said circular, particularly its penal provision, did not have any legal effect and bound no one until its publication in the Official Gazzette or after November 1951. In other words, appellant could not be held liable for its violation, for it was not binding at the time he was found to have failed to sell the foreign exchange in his possession thereof. But the Solicitor General also contends that this question of non-publication of the Circular is being raised for the first time on appeal in this Court, which cannot be done by appellant. Ordinarily, one may raise on appeal any question of law or fact

that has been raised in the court below and which is within the issues made by the parties in their pleadings. (Section 19, Rule 48 of the Rules of Court). But the question of non-publication is fundamental and decisive. If as a matter of fact Circular No. 20 had not been published as required by law before its violation, then in the eyes of the law there was no such circular to be violated and consequently appellant committed no violation of the circular or committed any offense, and the trial court may be said to have had no jurisdiction. This question may be raised at any stage of the proceeding whether or not raised in the court below. In view of the foregoing, we reverse the decision appealed from and acquit the appellant, with costs de oficio. Paras, C.J., Bengzon, Padilla, Reyes, Bautista Angelo, Labrador, Concepcion and Diokno, JJ., concur. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-16704 March 17, 1962

VICTORIAS MILLING COMPANY, INC., petitioner-appellant, vs. SOCIAL SECURITY COMMISSION, respondent-appellee. Ross, Selph and Carrascoso for petitioner-appellant. Office of the Solicitor General and Ernesto T. Duran for respondent-appellee. BARRERA, J.: On October 15, 1958, the Social Security Commission issued its Circular No. 22 of the following tenor: . Effective November 1, 1958, all Employers in computing the premiums due the System, will take into consideration and include in the Employee's remuneration all bonuses and overtime pay, as well as the cash value of other media of remuneration. All these will comprise the Employee's remuneration or earnings, upon which the 3-1/2% and 2-1/2% contributions will be based, up to a maximum of P500 for any one month. Upon receipt of a copy thereof, petitioner Victorias Milling Company, Inc., through counsel, wrote the Social Security Commission in effect protesting against the circular as contradictory to a previous Circular No. 7, dated October 7, 1957

expressly excluding overtime pay and bonus in the computation of the employers' and employees' respective monthly premium contributions, and submitting, "In order to assist your System in arriving at a proper interpretation of the term 'compensation' for the purposes of" such computation, their observations on Republic Act 1161 and its amendment and on the general interpretation of the words "compensation", "remuneration" and "wages". Counsel further questioned the validity of the circular for lack of authority on the part of the Social Security Commission to promulgate it without the approval of the President and for lack of publication in the Official Gazette. Overruling these objections, the Social Security Commission ruled that Circular No. 22 is not a rule or regulation that needed the approval of the President and publication in the Official Gazette to be effective, but a mere administrative interpretation of the statute, a mere statement of general policy or opinion as to how the law should be construed. Not satisfied with this ruling, petitioner comes to this Court on appeal. The single issue involved in this appeal is whether or not Circular No. 22 is a rule or regulation, as contemplated in Section 4(a) of Republic Act 1161 empowering the Social Security Commission "to adopt, amend and repeal subject to the approval of the President such rules and regulations as may be necessary to carry out the provisions and purposes of this Act." There can be no doubt that there is a distinction between an administrative rule or regulation and an administrative interpretation of a law whose enforcement is entrusted to an administrative body. When an administrative agency promulgates rules and regulations, it "makes" a new law with the force and effect of a valid law, while when it renders an opinion or gives a statement of policy, it merely interprets a pre-existing law (Parker, Administrative Law, p. 197; Davis, Administrative Law, p. 194). Rules and regulations when promulgated in pursuance of the procedure or authority conferred upon the administrative agency by law, partake of the nature of a statute, and compliance therewith may be enforced by a penal sanction provided in the law. This is so because statutes are usually couched in general terms, after expressing the policy, purposes, objectives, remedies and sanctions intended by the legislature. The details and the manner of carrying out the law are often times left to the administrative agency entrusted with its enforcement. In this sense, it has been said that rules and regulations are the product of a delegated power to create new or additional legal provisions that have the effect of law. (Davis, op. cit., p. 194.) . A rule is binding on the courts so long as the procedure fixed for its promulgation is followed and its scope is within the statutory authority granted by the legislature, even if the courts are not in agreement with the policy stated therein or its innate wisdom (Davis, op. cit., 195-197). On the other hand, administrative interpretation of

the law is at best merely advisory, for it is the courts that finally determine what the law means. Circular No. 22 in question was issued by the Social Security Commission, in view of the amendment of the provisions of the Social Security Law defining the term "compensation" contained in Section 8 (f) of Republic Act No. 1161 which, before its amendment, reads as follows: . (f) Compensation All remuneration for employment include the cash value of any remuneration paid in any medium other than cash except (1) that part of the remuneration in excess of P500 received during the month; (2) bonuses, allowances or overtime pay; and (3) dismissal and all other payments which the employer may make, although not legally required to do so. Republic Act No. 1792 changed the definition of "compensation" to: (f) Compensation All remuneration for employment include the cash value of any remuneration paid in any medium other than cash except that part of the remuneration in excess of P500.00 received during the month. It will thus be seen that whereas prior to the amendment, bonuses, allowances, and overtime pay given in addition to the regular or base pay were expressly excluded, or exempted from the definition of the term "compensation", such exemption or exclusion was deleted by the amendatory law. It thus became necessary for the Social Security Commission to interpret the effect of such deletion or elimination. Circular No. 22 was, therefore, issued to apprise those concerned of the interpretation or understanding of the Commission, of the law as amended, which it was its duty to enforce. It did not add any duty or detail that was not already in the law as amended. It merely stated and circularized the opinion of the Commission as to how the law should be construed.
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The case of People v. Jolliffe (G.R. No. L-9553, promulgated on May 30, 1959) cited by appellant, does not support its contention that the circular in question is a rule or regulation. What was there said was merely that a regulation may be incorporated in the form of a circular. Such statement simply meant that the substance and not the form of a regulation is decisive in determining its nature. It does not lay down a general proposition of law that any circular, regardless of its substance and even if it is only interpretative, constitutes a rule or regulation which must be published in the Official Gazette before it could take effect. The case of People v. Que Po Lay (50 O.G. 2850) also cited by appellant is not applicable to the present case, because the penalty that may be incurred by employers and employees if they refuse to pay the corresponding premiums on bonus, overtime pay, etc. which the employer pays to his employees, is not by

reason of non-compliance with Circular No. 22, but for violation of the specific legal provisions contained in Section 27(c) and (f) of Republic Act No. 1161. We find, therefore, that Circular No. 22 purports merely to advise employersmembers of the System of what, in the light of the amendment of the law, they should include in determining the monthly compensation of their employees upon which the social security contributions should be based, and that such circular did not require presidential approval and publication in the Official Gazette for its effectivity. It hardly need be said that the Commission's interpretation of the amendment embodied in its Circular No. 22, is correct. The express elimination among the exemptions excluded in the old law, of all bonuses, allowances and overtime pay in the determination of the "compensation" paid to employees makes it imperative that such bonuses and overtime pay must now be included in the employee's remuneration in pursuance of the amendatory law. It is true that in previous cases, this Court has held that bonus is not demandable because it is not part of the wage, salary, or compensation of the employee. But the question in the instant case is not whether bonus is demandable or not as part of compensation, but whether, after the employer does, in fact, give or pay bonus to his employees, such bonuses shall be considered compensation under the Social Security Act after they have been received by the employees. While it is true that terms or words are to be interpreted in accordance with their well-accepted meaning in law, nevertheless, when such term or word is specifically defined in a particular law, such interpretation must be adopted in enforcing that particular law, for it can not be gainsaid that a particular phrase or term may have one meaning for one purpose and another meaning for some other purpose. Such is the case that is now before us. Republic Act 1161 specifically defined what "compensation" should mean "For the purposes of this Act". Republic Act 1792 amended such definition by deleting same exemptions authorized in the original Act. By virtue of this express substantial change in the phraseology of the law, whatever prior executive or judicial construction may have been given to the phrase in question should give way to the clear mandate of the new law. IN VIEW OF THE FOREGOING, the Resolution appealed from is hereby affirmed, with costs against appellant. So ordered. Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Paredes, Dizon and De Leon, JJ., concur. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. L-22374 December 18, 1974 REPUBLIC OF THE PHILIPPINES, plaintiff-appellant, vs. EMILIO G. GUANZON, defendant-appellee. Office of the Solicitor General Arturo A. Alafriz Solicitor Camilo D. Quiason and Special Attorney Maria C. Paraiso for plaintiff-appellant. Romeo C. Gonzaga for defendant-appellee.

FERNANDO, J.:p A lower court decision, which on its face ignores the controlling statute as well as the applicable doctrines of this Court, is appealed by the Republic of the Philippines. It filed an action for the foreclosure of certain real estate and chattel mortgages executed by defendant Emilio G. Guanzon, now appellee, in favor of the former Bank of Taiwan, Ltd., as security for the payment of the loans obtained by him from said bank. The amount involved is P3,722.13, representing the principal and interest as of September 30, 1961, with an additional sum equivalent to ten percent of the total indebtedness as attorney's fees. The loan transaction took place in 1943 during the period of Japanese occupation. Upon the liberation of the Philippines in 1945, the United States, through its Alien Property Custodian, acquired such credit. Thereafter, by virtue of the Philippine Property Act of 1946, it was transferred to our government. With the statute and the controlling judicial decisions, 1 clearly pointing to one direction, the lower court, in a hasty and improvident exercise of judicial power, apparently oblivious of the law, took the other way. It held that the Republic of the Philippines lacked legal interest over such mortgage loan and dismissed the case. We have no choice but to reverse. The facts are undisputed. As set forth in the brief for appellant Republic of the Philippines: "On May and June, 1943, the defendant obtained two (2) loans from the former Bank of Taiwan, Ltd., at its offices in Bacolod City, in the total sum of P1,600.00, with interest at the rate of six per centum (6%) per annum, compounded quarterly, evidenced by two (2) promissory notes ... executed, signed and delivered by him to said bank. To secure prompt and full payment of the loans, the defendant executed a real estate mortgage ... on the two parcels of land covered by Transfer Certificate of Title Nos. 1848 and 1855 of the Register of Deeds of Negros Occidental and a Chattel Mortgage on standing crops ... growing on the same properties ... . By virtue of Vesting Order No. P-4, dated January 21, 1946, and under the authority of the Trading with the Enemy Act, as amended, the United

States of America vested in the Government of the United States the assets in the Philippines of the Bank of Taiwan, Ltd. Pursuant to the Philippine Property Act of 1946, these assets were subsequently transferred to the Republic of the Philippines by the Attorney General of the United States under Transfer Agreements dated July 20, 1954 and June 15, 1957, and are now administered by the Board of Liquidators, a government agency created under Executive Order No. 372, dated November 24, 1950, and in accordance with Republic Acts Nos. 477 and 8, and other pertinent laws." 2 According to the brief for appellee Guanzon: "The statement of facts stated in appellant's brief is substantially correct so that this representation finds no necessity in offering counter-statement of facts." 3 It is not easy to explain, and certainly there is no justification, in the light of the above facts and considering the state of the law, why the lower court, in its decision, dismissed the case on the ground that the Republic of the Philippines lacks legal interest. As noted, we have to reverse. 1. In the very able brief for appellant Republic of the Philippines, prepared by the then Solicitor General Arturo A. Alafriz and the former Solicitor, later Assistant Solicitor General Camilo D. Quiason, it was made clear that while the Bank of Taiwan, Ltd. was the original creditor of the loans thus secured, with defendant, now appellee, executing the mortages in question, the United States, pursuant to the Trading with the Enemy Act 4 acquired such account, being among the assets of a bank which was a declared national of an enemy country. This it did through a vesting order, 5 the legal effect of which was to effectuate immediately the transfer of title by operation of law without any necessity for any court action. Thus, title over such credit passed to the United States "as completely as if by conveyance, transfer, or assignment, ... . " 6 The brief for the Republic continues: "In accordance with the Philippine Property Act of 1946, the United States Government transferred, conveyed and assigned to the Government of the Republic of the Philippines under Transfer Agreements, dated July 20, 1954 and June 15, 1957, all its rights, title and interest to the loans in question. As such transferee, the Republic of the Philippines acquired the title and interest thereto ... . It follows, therefore, that plaintiff has a legal interest in the promissory notes and in the real and chattel mortgages and has a cause of action against the debtor-mortgagor, the defendant herein." 7 All that was set forth in the three-page brief of counsel for appellee Guanzon reads as follows: "There is no showing as to how plaintiff-appellant was able to acquire the Real and Chattel Mortgage executed by the defendant-appellee in favor of the Bank of Taiwan Ltd. a private bank of Japan, and therefore has no legal interest in the subject matter. The transfer of obligation in question cannot be taken Judicial Notice by our courts because the vesting order P-4 of the Government of the United States, pursuant to the Trading with the Enemy Act, as amended, of any and all property of any nature whatsoever subject to the Jurisdiction of the United States affecting alien property in the Philippines cannot be taken Judicial Notice in the light of Sec. 1 of Rule 129 of the New Rules of Court, inasmuch as the Trading with the Enemy Act is

a foreign law enacted by the U.S. Government which is not enumerated in the aforecited new Rules of Court. Consequently, proof should have been introduced to show how the United States Government was able to acquire the subject matter in litigation which was later transferred to the plaintiff-appellant." 8 It thus appears obvious that counsel for appellee lacks awareness of the controlling doctrine announced in the leading case of Brownell, Jr. v. Sun Life Assurance Company, 9 where Justice Labrador explicitly set forth: "This purpose of conveying enemy properties to the Philippines after all claims against them shall have been settled is expressly embodied in the Philippine Property Act of 1946," 10 A brief history of the Philippine Property Act of 1946 is likewise found in his opinion: "On July 3, 1946, the Congress of the United States passed Public Law 485-79th Congress, known as the Philippine Property Act of 1946. Section 3 thereof provides that "The Trading with the Enemy Act of October 6, 1917 (40 Stat. 411), as amended, shall continue in force in the Philippines after July 4, 1946, ... ." To implement the provisions of the act, the President of the United States on July 3, 1946, promulgated Executive Order No. 9747, "continuing the functions of the Alien Property Custodian and the Department of the Treasury in the Philippines." Prior to and preparatory to the approval of said Philippine Property Act of 1946, and agreement was entered into between President Manuel Roxas of the Commonwealth and U.S. Commissioner Paul V. McNutt whereby title to enemy agricultural lands and other properties was to be conveyed by the United States to the Philippines in order to help the rehabilitation of the latter, but that in order to avoid complex legal problems in relation to said enemy properties, the Alien Property Custodian of the United States was to continue operations in the Philippines even after the latter's independence, that he may settle all claims that may exist or arise against the above-mentioned enemy properties, in accordance with the Trading with the Enemy Act of the United States." 11 Nothing can be clearer, therefore, than that the lower court grievously erred in failing to perceive that precisely the Republic of the Philippines, contrary to its holding, possesses a legal interest over the subject matter of this controversy. 2. Apparently, the lower court, perhaps taken in by the contention of appellee, could not see its way clear to applying the Philippine Property Act of 1946 enacted by the United States Congress as it was a foreign statute not susceptible to judicial notice. Again, if it were cognizant of the leaning of the above Brownell decision, it would have realized how erroneous such a view is. For, as was made clear in the above decision, there was "conformity to the enactment of the Philippine Property Act of 1946 of the United States [as] announced by President Manuel Roxas in a joint statement signed by him and by Commissioner McNutt Ambassador Romulo also formally expressed the conformity of the Philippine Government to the approval of said act to the American Senate prior to its approval." 12 It was further stressed by Justice Labrador that after the grant of independence, the Congress of the Philippines approved Republic Act No. 8, which authorized the President of the

Philippines to enter into such contract or undertakings as may be necessary to effectuate the transfer to the Republic of the Philippines under the Philippine Property Act of 1946 of any property or property rights or the proceeds thereof authorized to be transferred thereunder. Then his opinion continues: "The Congress of the Philippines also approved Republic Act No. 7, which established a Foreign Funds Control Office. After the approval of the Philippine Property Act of 1946 of the United States, the Philippine Government also formally expressed, through the Secretary of Foreign Affairs conformity thereto. ... The Congress of the Philippines has also approved Republic Act No. 477, which provides for the administration and disposition of properties which have been or may hereafter be transferred to the Republic of the Philippines in accordance with the Philippine Property Act of 1946 of the United States." 13 From which, the above conclusion follows: "It is evident, therefore, that the consent of the Philippine Government to the application of the Philippine Property Act of 1946 to the Philippines after independence was given, not only by the Executive Department of the Philippine Government, but also by the Congress, which enacted the laws that would implement or carry out the benefits accruing from the operation of the United States law." 14 Under the circumstances, there is no question, as was pointed out by the same jurist, "that a foreign law may have extraterritorial effect in a country other than the country of origin, provided the latter, in which it is sought to be made operative, gives its consent thereto." 15 That is a sound legal proposition. It is a juridical norm that has found acceptance in the Philippines at the close of the nineteenth century after its acquisition by the United States. Its origins in American law can be traced back to Chief Justice Marshall's opinion in The Schooner Exchange v. M'Faddon, 16 an 1812 decision. It was cited with approval in the recent case of Reagan v. Commissioner of Internal Revenue. 17 The doctrine is not unknown to European law. So it was noted in Reagan, with a citation from Jellinek: "It is to be admitted that any state may, by its consent, express or implied, submit to a restriction of its sovereign rights. There may thus be a curtailment of what otherwise is a power plenary in character. That is the concept of sovereignty as auto-limitation, which, in the succinct language of Jellinek, "is the property of a state-force due to which it has the exclusive capacity of legal self-determination and self-restriction." A state then, if it chooses to, may refrain from the exercise of what otherwise is illimitable competence." 18 It is thus undoubted that the lower court misapplied the rule on judicial notice. 19 The lower court could not simply have closed its eyes to the plain command of the Philippine Property Act of 1946, which is a part of Philippine law, as was held so categorically by the above Brownell decision. To repeat, there is no justification for the appealed decision. 3. The tone of certitude with which the lower court summarily dismissed the claim of the Republic on the ground of lack of legal interest is thus uncalled for. It could have

been avoided by an acquaintance, even of the slightest, with the doctrines enunciated by this Tribunal. An excerpt from Barrera v. Barrera 20 is of some relevance: "The delicate task of ascertaining the significance that attaches to a constitutional or statutory provision, an executive order, a procedural norm or a municipal ordinance is committed to the judiciary. It thus discharges a role no less crucial than that appertaining to the other two departments in the maintenance of the rule of law. To assure stability in legal relations and avoid confusion, it has to speak with one voice. It does so with finality, logically and rightly , through the highest judicial organ, this Court. What it says then should be definitive and authoritative, binding on those occupying the lower ranks in the judicial hierarchy. They have to defer and to submit." 21 WHEREFORE, the decision of August 29, 1963 dismissing the complaint of the Republic of the Philippines is reversed and set aside. Costs against defendant Guanzon. Barredo, Antonio, Fernandez and Aquino, JJ., concur.

SECOND DIVISION

[G.R. No. 159590. October 18, 2004]

HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED, petitioner, vs. CECILIA DIEZ CATALAN, respondent.

[G.R. No. 159591. October 18, 2004]

HSBC INTERNATIONAL TRUSTEE LIMITED, petitioner, vs. CECILIA DIEZ CATALAN, respondent. DECISION
AUSTRIA-MARTINEZ, J.:

Before us are two petitions for review on certiorari under Rule 45 of the Rules of Court separately filed by the Hongkong and Shanghai Banking Corporation Limited (HSBANK) and HSBC International Trustee Limited (HSBC TRUSTEE). They seek the reversal of the consolidated

Decision, dated August 14, 2003, of the Court of Appeals (CA) in CA-G.R. SP Nos. 75756 and 75757, which dismissed the petitions for certiorari of herein petitioners assailing the Order, dated May 15, 2002, of the Regional Trial Court, Branch 44, Bacolod City (RTC) in Civil Case No. 01-11372 that denied their respective motions to dismiss the amended complaint of respondent Cecilia Diez Catalan.
[1]

The factual antecedents are as follows: On January 29, 2001, respondent filed before the RTC, a complaint for a sum of money with damages against petitioner HSBANK, docketed as Civil Case No. 01-11372, due to HSBANKs alleged wanton refusal to pay her the value of five HSBANK checks issued by Frederick Arthur Thomson (Thomson) amounting to HK$3,200,000.00.
[2]

On February 7, 2001, summons was served on HSBANK at the Enterprise Center, Tower I, Ayala Avenue corner Paseo de Roxas St., Makati City. HSBANK filed a Motion for Extension of Time to File Answer or Motion to Dismiss dated February 21, 2001. Then, it filed a Motion to Dismiss, dated March 8, 2001, on the grounds that (a) the RTC has no jurisdiction over the subject matter of the complaint; (b) the RTC has not acquired jurisdiction for failure of the plaintiff to pay the correct filing or docket fees; (c) the RTC has no jurisdiction over the person of HSBANK; (d) the complaint does not state a cause of action against HSBANK; and (e) plaintiff engages in forum-shopping.
[3] [4] [5]

On September 10, 2001, Catalan filed an Amended Complaint impleading petitioner HSBC TRUSTEE as co-defendant and invoking Article 19 of the Civil Code as basis for her cause of action.
[6]

The Amended Complaint alleges: Defendants HSBANK and HSBC TRUSTEE, doing business in the Philippines, are corporations duly organized under the laws of the British Virgin Islands with head office at 1 Grenville Street, St. Helier Jersey, Channel Islands and with branch offices at Level 12, 1 Queens Road Central, Hongkong and may be served with summons and other court processes through their main office in Manila with address at HSBC, the Enterprise Center, Tower 1, Ayala Avenue corner Paseo de Roxas Street, Makati City. Sometime in March 1997, Thomson issued five HSBANK checks payable to Catalan, to wit: CHECK NO. DATE AMOUNT

807852 807853 807854 807855 807856

Mar. 15, 1997 Mar. 17, 1997 Mar. 17, 1997 Mar. 22, 1997 Mar. 23, 1997 TOTAL

$600,000.00 800,000.00 600,000.00 600,000.00 600,000.00 $3,200,000.00

The checks when deposited were returned by HSBANK purportedly for reason of payment stopped pending confirmation, despite the fact that the checks were duly funded. On March 18, 1997, Thomson wrote a letter to a certain Ricky Sousa of HSBANK confirming the checks he issued to Catalan and requesting that all his checks be cleared. On March 20, 1997, Thomson wrote another letter to Sousa of HSBANK requesting an advice in writing to be sent to the Philippine National Bank, through the fastest means, that the checks he previously issued to Catalan were already cleared. Thereafter, Catalan demanded that HSBANK make good the checks issued by Thomson. On May 16, 1997, Marilou A. Lozada, personal secretary and attorney-in-fact of Thomson, wrote a letter to Sousa of HSBANK informing him that HSBANKs failure to clear all the checks had saddened Thomson and requesting that the clearing of the checks be facilitated. Subsequently, Thomson died and Catalan forwarded her demand to HSBC TRUSTEE. Catalan sent photocopies of the returned checks to HSBC TRUSTEE. Not satisfied, HSBC TRUSTEE through deceit and trickery, required Catalan, as a condition for the acceptance of the checks, to submit the original copies of the returned checks, purportedly, to hasten payment of her claim. HSBC TRUSTEE succeeded in its calculated deception because on April 21, 1999, Catalan and her former counsel went to Hongkong at their own expense to personally deliver the originals of the returned checks to the officers of HSBC TRUSTEE, anxious of receiving the money value of the checks but HSBC TRUSTEE despite receipt of the original checks, refused to pay Catalans claim. Having seen and received the original of the checks, upon its request, HSBC TRUSTEE is deemed to have impliedly accepted the checks. Moreover, the refusal of HSBANK and HSBC TRUSTEE to pay the checks is equivalent to illegal freezing of ones deposit. On the assurance of HSBC TRUSTEE that her claim will soon be paid, as she was made to believe that payments of the checks shall be made by HSBC TRUSTEE upon sight, the unsuspecting Catalan left the originals of the checks with HSBC TRUSTEE and was given only an acknowledgment receipt. Catalan made several demands and after several more follow ups, on August 16, 1999, Phoenix Lam, Senior Vice President of HSBC TRUSTEE, in obvious disregard of her valid claim, informed Catalan that her claim is disapproved. No reason or explanation whatsoever was made why her claim was disapproved, neither
[7]

were the checks returned to her. Catalan appealed for fairness and understanding, in the hope that HSBC TRUSTEE would act fairly and justly on her claim but these demands were met by a stonewall of silence. On June 9, 2000, Catalan through counsel sent a last and final demand to HSBC TRUSTEE to remit the amount covered by the checks but despite receipt of said letter, no payment was made. Clearly, the act of the HSBANK and HSBC TRUSTEE in refusing to honor and pay the checks validly issued by Thomson violates the abuse of rights principle under Article 19 of the Civil Code which requires that everyone must act with justice, give everyone his due and observe honesty and good faith. The refusal of HSBANK and HSBC TRUSTEE to pay the checks without any valid reason is intended solely to prejudice and injure Catalan. When they declined payment of the checks despite instructions of the drawer, Thomson, to honor them, coupled with the fact that the checks were duly funded, they acted in bad faith, thus causing damage to Catalan. A person may not exercise his right unjustly or in a manner that is not in keeping with honesty or good faith, otherwise he opens himself to liability for abuse of right.
[8]

Catalan prays that HSBANK and HSBC TRUSTEE be ordered to pay P20,864,000.00 representing the value of the five checks at the rate of P6.52 per HK$1 as of January 29, 2001 for the acts of HSBANK and HSBC TRUSTEE in refusing to pay the amount justly due her, in addition to moral and exemplary damages, attorneys fees and litigation expenses.
[9]

On October 2, 2001, HSBANK filed a Motion to Dismiss Amended Complaint on the grounds that: (a) the RTC has no jurisdiction over the subject matter of the complaint since the action is a money claim for a debt contracted by Thomson before his death which should have been filed in the estate or intestate proceedings of Thomson; (b) Catalan engages in forum shopping by filing the suit and at the same time filing a claim in the probate proceeding filed with another branch of the RTC; (c) the amended complaint states no cause of action against HSBANK since it has no obligation to pay the checks as it has not accepted the checks and Catalan did not re-deposit the checks or make a formal protest; (d) the RTC has not acquired jurisdiction over the person of HSBANK for improper service of summons; and, (e) it did not submit to the jurisdiction of the RTC by filing a motion for extension of time to file a motion to dismiss.
[10]

Meanwhile, on October tendered to the In House Enterprise Center, Tower Makati. Without submitting TRUSTEE filed a Special

17, 2001, summons for HSBC TRUSTEE was Counsel of HSBANK (Makati Branch) at the 1, Ayala Avenue corner Paseo de Roxas, itself to the jurisdiction of the RTC, HSBC Appearance for Motion to Dismiss Amended

Complaint, dated October 29, 2001, questioning the jurisdiction of the RTC over it. HSBC TRUSTEE alleges that tender of summons through HSBANK Makati did not confer upon the RTC jurisdiction over it because: (a) it is a corporation separate and distinct from HSBANK; (b) it does not hold office at the HSBANK Makati or in any other place in the Philippines; (c) it has not authorized HSBANK Makati to receive summons for it; and, (d) it has no resident agent upon whom summons may be served because it does not transact business in the Philippines.
[11]

Subsequently, HSBC TRUSTEE filed a Submission, dated November 15, 2001, attaching the Affidavit executed in Hongkong by Phoenix Lam, Senior Vice-President of HSBC TRUSTEE, attesting to the fact that: 1) HSBC TRUSTEE has not done nor is it doing business in the Philippines; 2) it does not maintain any office in Makati or anywhere in the Philippines; 3) it has not appointed any agent in Philippines; and 4) HSBANK Makati has no authority to receive any summons or court processes for HSBC TRUSTEE.
[12]

On May 15, 2002, the RTC issued an Order denying the two motions to dismiss. The RTC held that it has jurisdiction over the subject matter of the action because it is an action for damages under Article 19 of the Civil Code for the acts of unjustly refusing to honor the checks issued by Thomson and not a money claim against the estate of Thomson; that Catalan did not engage in forum-shopping because the elements thereof are not attendant in the case; that the question of cause of action should be threshed out or ventilated during the proceedings in the main action and after the plaintiff and defendants have adduced evidence in their favor; that it acquired jurisdiction over the person of defendants because the question of whether a foreign corporation is doing business or not in the Philippines cannot be a subject of a Motion to Dismiss but should be ventilated in the trial on the merits; and defendants voluntarily submitted to the jurisdiction of the RTC setting up in their Motions to Dismiss other grounds aside from lack of jurisdiction.
[13]

HSBANK and HSBC TRUSTEE filed separate motions for reconsideration but both proved futile as they were denied by the RTC in an Order dated December 20, 2002.
[14] [15]

On February 21, 2003, Catalan moved to declare HSBANK and HSBC TRUSTEE in default for failure to file their answer to the amended complaint. On March 5, 2003, HSBANK and HSBC TRUSTEE filed separate petitions for certiorari and/or prohibition with the CA, docketed as CA-G.R. SP Nos. 75756 and 75757, respectively.
[16] [17]

Subsequently, HSBANK and HSBC TRUSTEE filed before the RTC separate Answers ad cautelam, both dated March 18, 2003, as a precaution against being declared in default and without prejudice to the separate petitions for certiorari and/or prohibition then pending with the CA.
[18]

Meanwhile, the two petitions for certiorari before the CA were consolidated and after responsive pleadings were filed, the cases were deemed submitted for decision. In a consolidated Decision dated August 14, 2003, the CA dismissed the two petitions for certiorari. The CA held that the filing of petitioners answers before the RTC rendered moot and academic the issue of the RTCs lack of jurisdiction over the person of the petitioners; that the RTC has jurisdiction over the subject matter since it is one for damages under Article 19 of the Civil Code for the alleged unjust acts of petitioners and not a money claim against the estate of Thomson; and, that the amended complaint states a cause of action under Article 19 of the Civil Code which could merit a favorable judgment if found to be true. The CA noted that Catalan may have prayed for payment of the value of the checks but ratiocinated that she merely used the value as basis for the computation of the damages.
[19]

Hence, the present petitions. In G.R. No. 159590, HSBANK submits the following assigned errors:
I.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN HOLDING THAT THE COURT A QUO, ACTING AS AN (SIC) REGULAR COURT, HAS JURISDICTION OVER THE AMENDED COMPLAINT SEEKING TO ORDER HSBC TRUSTEE, THE EXECUTOR OF THE DECEASED FREDERICK ARTHUR THOMSON, TO PAY SUBJECT CHECKS ISSUED BY THE LATE FREDERICK ARTHUR THOMSON, ADMITTEDLY IN PAYMENT OF HIS INDEBTEDNESS TO CATALAN.
II.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN HOLDING THAT THE AMENDED COMPLAINT DOES NOT SEEK TO ORDER HSBANK AND HSBC INTERNATIONAL TRUSTEE LIMITED TO PAY THE OBLIGATION OF THE (SIC) FREDERICK ARTHUR THOMSON AS EVIDENCED BY THE CHECKS, BUT PRAYS FOR DAMAGES EQUIVALENT OR COMPUTED ON THE BASIS OF THE VALUE OF THE CHECKS BECAUSE THE DEFENDANTS FAILED TO COMPLY WITH THE MANDATES OF ARTICLE 19 OF THE NEW CIVIL CODE.

III.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN HOLDING THAT ALLEGATIONS IN THE AMENDED COMPLAINT MAKE OUT A CAUSE OF ACTION WHICH COULD MERIT A FAVORABLE JUDGMENT IF FOUND TO BE TRUE, OR IN NOT HOLDING THAT THE AMENDED COMPLAINT STATES NO CAUSE OF ACTION AGAINST HSBANK, AS DRAWEE BANK.
IV.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN DISREGARDING THE FACT THAT CATALAN ENGAGED IN FORUM SHOPPING BY FILING THE AMENDED COMPLAINT WHILE HER PETITION FOR THE PROBATE OF THE SUPPOSED WILL OF THE DECEASED FREDERICK ARTHUR THOMSON IS PENDING WITH ANOTHER BRANCH OF THE COURT A QUO.
V.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN HOLDING THAT HSBANK HAD SUBMITTED TO THE JURISDICTION OF THE COURT A QUO BY SUBMITTING AN ANSWER TO THE AMENDED COMPLAINT.
[20]

In G.R. No. 159591, HSBC TRUSTEE also assigns the foregoing first, second and fifth errors as its own. In addition, it claims that:
[21]

THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN NOT ORDERING THE DISMISSAL OF THE AMENDED COMPLAINT AGAINST HSBC TRUSTEE DESPITE THE FACT IT HAS NOT BEEN DULY SERVED WITH SUMMONS.
[22]

HSBANK and HSBC TRUSTEE contend in common that Catalan has no cause of action for abuse of rights under Article 19 of the Civil Code; that her complaint, under the guise of a claim for damages, is actually a money claim against the estate of Thomson arising from checks issued by the latter in her favor in payment of indebtedness. HSBANK claims that the money claim should be dismissed on the ground of forum-shopping since Catalan also filed a petition for probate of the alleged last will of Thomson before RTC, Branch 48, Bacolod City, docketed as Spec. Proc No. 00-892. In addition, HSBANK imputes error upon the CA in holding

that by filing an answer to the amended complaint, petitioners are estopped from questioning the jurisdiction of the RTC. HSBC TRUSTEE maintains that the RTC did not acquire jurisdiction over it for improper service of summons. In her Comment, Catalan insists that her complaint is one for damages under Article 19 of the Civil Code for the wanton refusal to honor and pay the value of five checks issued by the Thomson amounting to HK$3,200,000.00. She argues that the issue of jurisdiction has been rendered moot by petitioners participation in the proceedings before the RTC. Succinctly, the issues boil down to the following: 1) Does the complaint state a cause of action? 2) Did Catalan engage in forum-shopping by filing the complaint for damages when she also filed a petition for probate of the alleged last will of Thomson with another branch of the RTC? and, 3) Did the RTC acquire jurisdiction over HSBANK and HSBC TRUSTEE? Corollary thereto, did the filing of the answer before the RTC render the issue of lack of jurisdiction moot and academic? We shall resolve the issue in seriatim. Does the complaint state a cause of action against HSBANK and HSBC TRUSTEE? The elementary test for failure to state a cause of action is whether the complaint alleges facts which if true would justify the relief demanded. Stated otherwise, may the court render a valid judgment upon the facts alleged therein? The inquiry is into the sufficiency, not the veracity of the material allegations. If the allegations in the complaint furnish sufficient basis on which it can be maintained, it should not be dismissed regardless of the defense that may be presented by the defendants.
[23] [24] [25]

Catalan anchors her complaint for damages on Article 19 of the Civil Code. It speaks of the fundamental principle of law and human conduct that a person "must, in the exercise of his rights and in the performance of his duties, act with justice, give every one his due, and observe honesty and good faith." It sets the standards which may be observed not only in the exercise of ones rights but also in the performance of ones duties. When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be held responsible. But a right, though by itself legal because recognized or granted by law as such, may
[26]

nevertheless become the source of some illegality. A person should be protected only when he acts in the legitimate exercise of his right, that is, when he acts with prudence and in good faith; but not when he acts with negligence or abuse. There is an abuse of right when it is exercised for the only purpose of prejudicing or injuring another. The exercise of a right must be in accordance with the purpose for which it was established, and must not be excessive or unduly harsh; there must be no intention to injure another.
[27] [28]

Thus, in order to be liable under the abuse of rights principle, three elements must concur, to wit: (a) that there is a legal right or duty; (b) which is exercised in bad faith; and (c) for the sole intent of prejudicing or injuring another.
[29]

In this instance, after carefully examining the amended complaint, we are convinced that the allegations therein are in the nature of an action based on tort under Article 19 of the Civil Code. It is evident that Catalan is suing HSBANK and HSBC TRUSTEE for unjustified and willful refusal to pay the value of the checks. HSBANK is being sued for unwarranted failure to pay the checks notwithstanding the repeated assurance of the drawer Thomson as to the authenticity of the checks and frequent directives to pay the value thereof to Catalan. Her allegations in the complaint that the gross inaction of HSBANK on Thomsons instructions, as well as its evident failure to inform Catalan of the reason for its continued inaction and non-payment of the checks, smack of insouciance on its part, are sufficient statements of clear abuse of right for which it may be held liable to Catalan for any damages she incurred resulting therefrom. HSBANKs actions, or lack thereof, prevented Catalan from seeking further redress with Thomson for the recovery of her claim while the latter was alive. HSBANK claims that Catalan has no cause of action because under Section 189 of the Negotiable Instruments Law, a check of itself does not operate as an assignment of any part of the funds to the credit of the drawer with the bank, and the bank is not liable to the holder unless and until it accepts or certifies it. However, HSBANK is not being sued on the value of the check itself but for how it acted in relation to Catalans claim for payment despite the repeated directives of the drawer Thomson to recognize the check the latter issued. Catalan may have prayed that she be paid the value of the checks but it is axiomatic that what determines the nature of an action, as well as which court has jurisdiction over it, are the allegations of the complaint, irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein.
[30]

Anent HSBC TRUSTEE, it is being sued for the baseless rejection of Catalans claim. When Catalan parted with the checks as a requirement for the processing of her claim, even going to the extent of traveling to Hongkong to deliver personally the checks, HSBC TRUSTEE summarily disapproved her claim with nary a reason. HSBC TRUSTEE gave no heed to Catalans incessant appeals for an explanation. Her pleas fell on deaf and uncaring corporate ears. Clearly, HSBC TRUSTEEs acts are anathema to the prescription for human conduct enshrined in Article 19 of the Civil Code. Did Catalan engage in forum-shopping? It has been held that forum-shopping exists where a litigant sues the same party against whom another action or actions for the alleged violation of the same right and the enforcement of the same relief is/are still pending, the defense of litis pendentia in one case is a bar to the others; and, a final judgment in one would constitute res judicata and thus would cause the dismissal of the rest.
[31]

Thus, there is forum-shopping when there exist: a) identity of parties, or at least such parties as represent the same interests in both actions, b) identity of rights asserted and relief prayed for, the relief being founded on the same facts, and c) the identity of the two preceding particulars is such that any judgment rendered in the pending case, regardless of which party is successful would amount to res judicata in the other.
[32]

Applying the foregoing requisites to the case before us in relation to Spec. Proc No. 00-892, the probate proceeding brought by Catalan before RTC, Branch 48, Bacolod City, it is obvious that forum-shopping does not exist. There is no identity of parties. HSBANK is not a party in the probate proceeding. HSBC TRUSTEE is only a party in the probate proceeding because it is the executor and trustee named in the Hongkong will of Thomson. HSBC TRUSTEE is representing the interest of the estate of Thomson and not its own corporate interest. With respect to the second and third requisites, a scrutiny of the entirety of the allegations of the amended complaint in this case reveals that the rights asserted and reliefs prayed for therein are different from those pleaded in the probate proceeding, such that a judgment in one case would not bar the prosecution of the other case. Verily, there can be no forum-shopping where in one proceeding a party raises a claim for damages based on tort and, in another proceeding a party seeks the allowance of an alleged last will based on ones claim as an heir. After all, the merits of the action for damages is not to be determined in the probate proceeding and vice versa. Undeniably, the

facts or evidence as would support and establish the two causes of action are not the same. Consequently, HSBANKs reliance on the principle of forumshopping is clearly misplaced.
[33]

Did the RTC acquire jurisdiction over HSBANK and HSBC TRUSTEE? The Rules of Court provides that a court generally acquires jurisdiction over a person through either a valid service of summons in the manner required by law or the persons voluntary appearance in court.
[34]

In holding that it acquired jurisdiction over HSBANK and HSBC TRUSTEE, the RTC held that both voluntarily submitted to the jurisdiction of the court by setting up in their Motions to Dismiss other grounds aside from lack of jurisdiction. On the other hand, the CA ruled that HSBANK and HSBC TRUSTEE are estopped from challenging the jurisdiction of the RTC because they filed their respective answers before the RTC. We find that both lower courts overlooked Section 20 of Rule 14 of the 1997 Rules of Civil Procedure which provides that the inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the person of the defendant shall not be deemed a voluntary appearance. Nonetheless, such omission does not aid HSBANKs case. It must be noted that HSBANK initially filed a Motion for Extension of Time to File Answer or Motion to Dismiss. HSBANK already invoked the RTCs jurisdiction over it by praying that its motion for extension of time to file answer or a motion to dismiss be granted. The Court has held that the filing of motions seeking affirmative relief, such as, to admit answer, for additional time to file answer, for reconsideration of a default judgment, and to lift order of default with motion for reconsideration, are considered voluntary submission to the jurisdiction of the court. Consequently, HSBANKs expressed reservation in its Answer ad cautelam that it filed the same as a mere precaution against being declared in default, and without prejudice to the Petition for Certiorari and/or Prohibition xxx now pending before the Court of Appeals to assail the jurisdiction of the RTC over it is of no moment. Having earlier invoked the jurisdiction of the RTC to secure affirmative relief in its motion for additional time to file answer or motion to dismiss, HSBANK, effectively submitted voluntarily to the jurisdiction of the RTC and is thereby estopped from asserting otherwise, even before this Court.
[35] [36] [37]

In contrast, the filing by HSBC TRUSTEE of a motion to dismiss cannot be considered a voluntary submission to the jurisdiction of the RTC. It was a conditional appearance, entered precisely to question the regularity of the service of summons. It is settled that a party who makes a special

appearance in court challenging the jurisdiction of said court, e.g., invalidity of the service of summons, cannot be considered to have submitted himself to the jurisdiction of the court. HSBC TRUSTEE has been consistent in all its pleadings in assailing the service of summons and the jurisdiction of the RTC over it. Thus, HSBC TRUSTEE cannot be declared in estoppel when it filed an Answer ad cautelam before the RTC while its petition for certiorari was pending before the CA. Such answer did not render the petition for certiorari before the CA moot and academic. The Answer of HSBC TRUSTEE was only filed to prevent any declaration that it had by its inaction waived the right to file responsive pleadings.
[38]

Admittedly, HSBC TRUSTEE is a foreign corporation, organized and existing under the laws of the British Virgin Islands. For proper service of summons on foreign corporations, Section 12 of Rule 14 of the Revised Rules of Court provides: SEC. 12. Service upon foreign private juridical entity. When the defendant is a foreign private juridical entity which has transacted business in the Philippines, service may be made on its resident agent designated in accordance with law for that purpose, or if there be no such agent, on the government official designated by law to that effect, or on any of its officers or agents within the Philippines. In French Oil Mill Machinery Co., Inc. vs. Court of Appeals, we had occasion to rule that it is not enough to merely allege in the complaint that a defendant foreign corporation is doing business. For purposes of the rule on summons, the fact of doing business must first be "established by appropriate allegations in the complaint" and the court in determining such fact need not go beyond the allegations therein.
[39] [40]

The allegations in the amended complaint subject of the present cases did not sufficiently show the fact of HSBC TRUSTEEs doing business in the Philippines. It does not appear at all that HSBC TRUSTEE had performed any act which would give the general public the impression that it had been engaging, or intends to engage in its ordinary and usual business undertakings in the country. Absent from the amended complaint is an allegation that HSBC TRUSTEE had performed any act in the country that would place it within the sphere of the courts jurisdiction. We have held that a general allegation, standing alone, that a party is doing business in the Philippines does not make it so; a conclusion of fact or law cannot be derived from the unsubstantiated assertions of parties notwithstanding the demands of convenience or dispatch in legal actions,

otherwise, the Court would be guilty of sorcery; extracting substance out of nothingness.
[41]

Besides, there is no allegation in the amended complaint that HSBANK is the domestic agent of HSBC TRUSTEE to warrant service of summons upon it. Thus, the summons tendered to the In House Counsel of HSBANK (Makati Branch) for HSBC TRUSTEE was clearly improper. There being no proper service of summons, the RTC cannot take cognizance of the case against HSBC TRUSTEE for lack of jurisdiction over it. Any proceeding undertaken by the RTC is therefore null and void. Accordingly, the complaint against HSBC TRUSTEE should have been dismissed for lack of jurisdiction over it.
[42]

WHEREFORE, the petition in G.R. No. 159590 is DENIED. The Decision of the Court of Appeals, dated August 14, 2003, in CA-G.R. SP No. 75757 dismissing the petition for certiorari of the Hongkong and Shanghai Banking Corporation Limited is AFFIRMED. The petition in G.R. No. 159591 is GRANTED. The Decision of the Court of Appeals, dated August 14, 2003, in CA-G.R. SP No. 75756 dismissing the petition for certiorari of the HSBC International Trustee Limited is REVERSED and SET ASIDE. The Regional Trial Court, Branch 44, Bacolod City is declared without jurisdiction to take cognizance of Civil Case No. 01-11372 against the HSBC International Trustee Limited, and all its orders and issuances with respect to the latter are hereby ANNULLED and SET ASIDE. The said Regional Trial Court is hereby ORDERED to DESIST from maintaining further proceedings against the HSBC International Trustee Limited in the case aforestated. SO ORDERED. Puno, (Chairman), Callejo, Sr., and Tinga, JJ., concur. Chico-Nazario, J., on leave.

Perfecto Floresca vs Philex Mining Corporation


on November 6, 2010 SC Cannot Legislate Exception

Floresca et al are the heirs of the deceased employees of Philex Mining Corporation (hereinafter referred to as Philex), who, while working at its copper mines underground operations at Tuba, Benguet on June 28, 1967, died as a result of the cave-in that buried them in the tunnels of the mine. Specifically, the complaint alleges that Philex, in violation of government rules and regulations, negligently and deliberately failed to take the required precautions for the protection of the lives of its men working underground. Floresca et al moved to claim their benefits pursuant to the Workmens Compensation Act before the Workmens Compensation Commission. They also petitioned before the regular courts and sue Philex for additional damages. Philex invoked that they can no longer be sued because the petitioners have already claimed benefits under the WCA. ISSUE: Whether or not Floresca et al can claim benefits and at the same time sue. HELD: Under the law, Floresca et al could only do either one. If they filed for benefits under the WCA then they will be estopped from proceeding with a civil case before the regular courts. Conversely, if they sued before the civil courts then they would also be estopped from claiming benefits under the WCA. The SC however ruled that Floresca et al are excused from this deficiency due to ignorance of the fact. Had they been aware of such then they may have not availed of such a remedy. However, if in case theyll win in the lower court whatever award may be granted, the amount given to them under the WCA should be deducted. The SC emphasized that if they would go strictly by the book in this case then the purpose of the law may be defeated. Idolatrous reverence for the letter of the law sacrifices the human being. The spirit of the law insures mans survival and ennobles him. As Shakespeare said, the letter of the law killeth but its spirit giveth life.

Justice Gutierrez dissenting No civil suit should prosper after claiming benefits under the WCA. If employers are already liable to pay benefits under the WCA they should not be compelled to bear the cost of damage suits or get insurance for that purpose. The exclusion provided by the WCA can only be properly removed by the legislature NOT the SC.

Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. L-30642 April 30, 1985 PERFECTO S. FLORESCA, in his own behalf and on behalf of the minors ROMULO and NESTOR S. FLORESCA; and ERLINDA FLORESCA-GABUYO, PEDRO S. FLORESCA, JR., CELSO S. FLORESCA, MELBA S. FLORESCA, JUDITH S. FLORESCA and CARMEN S. FLORESCA; LYDIA CARAMAT VDA. DE MARTINEZ in her own behalf and on behalf of her minor children LINDA, ROMEO, ANTONIO JEAN and ELY, all surnamed Martinez; and DANIEL MARTINEZ and TOMAS MARTINEZ; SALUSTIANA ASPIRAS VDA. DE OBRA, in her own behalf and on behalf of her minor children JOSE, ESTELA, JULITA SALUD and DANILO, all surnamed OBRA; LYDIA CULBENGAN VDA. DE VILLAR, in her own behalf and on behalf of her minor children EDNA, GEORGE and LARRY III, all surnamed VILLAR; DOLORES LOLITA ADER VDA. DE LANUZA, in her own behalf and on behalf of her minor children EDITHA, ELIZABETH, DIVINA, RAYMUNDO, NESTOR and AURELIO, JR. all surnamed LANUZA; EMERENCIANA JOSE VDA. DE ISLA, in her own behalf and on behalf of her minor children JOSE, LORENZO, JR., MARIA, VENUS and FELIX, all surnamed ISLA, petitioners, vs. PHILEX MINING CORPORATION and HON. JESUS P. MORFE, Presiding Judge of Branch XIII, Court of First Instance of Manila, respondents. Rodolfo C. Pacampara for petitioners. Tito M. Villaluna for respondents.

MAKASIAR, J.: This is a petition to review the order of the former Court of First Instance of Manila, Branch XIII, dated December 16, 1968 dismissing petitioners' complaint for damages on the ground of lack of jurisdiction. Petitioners are the heirs of the deceased employees of Philex Mining Corporation (hereinafter referred to as Philex), who, while working at its copper mines underground operations at Tuba, Benguet on June 28, 1967, died as a result of the cave-in that buried them in the tunnels of the mine. Specifically, the complaint

alleges that Philex, in violation of government rules and regulations, negligently and deliberately failed to take the required precautions for the protection of the lives of its men working underground. Portion of the complaint reads: xxx xxx xxx 9. That for sometime prior and up to June 28,1967, the defendant PHILEX, with gross and reckless negligence and imprudence and deliberate failure to take the required precautions for the due protection of the lives of its men working underground at the time, and in utter violation of the laws and the rules and regulations duly promulgated by the Government pursuant thereto, allowed great amount of water and mud to accumulate in an open pit area at the mine above Block 43-S-1 which seeped through and saturated the 600 ft. column of broken ore and rock below it, thereby exerting tremendous pressure on the working spaces at its 4300 level, with the result that, on the said date, at about 4 o'clock in the afternoon, with the collapse of all underground supports due to such enormous pressure, approximately 500,000 cubic feet of broken ores rocks, mud and water, accompanied by surface boulders, blasted through the tunnels and flowed out and filled in, in a matter of approximately five (5) minutes, the underground workings, ripped timber supports and carried off materials, machines and equipment which blocked all avenues of exit, thereby trapping within its tunnels of all its men above referred to, including those named in the next preceding paragraph, represented by the plaintiffs herein; 10. That out of the 48 mine workers who were then working at defendant PHILEX's mine on the said date, five (5) were able to escape from the terrifying holocaust; 22 were rescued within the next 7 days; and the rest, 21 in number, including those referred to in paragraph 7 hereinabove, were left mercilessly to their fate, notwithstanding the fact that up to then, a great many of them were still alive, entombed in the tunnels of the mine, but were not rescued due to defendant PHILEX's decision to abandon rescue operations, in utter disregard of its bounden legal and moral duties in the premises; xxx xxx xxx 13. That defendant PHILEX not only violated the law and the rules and regulations duly promulgated by the duly constituted authorities as set out by the Special Committee above referred to, in their Report of investigation, pages 7-13, Annex 'B' hereof, but also failed completely to provide its men working underground the necessary security for the protection of their lives notwithstanding the fact that it had vast financial resources, it having made, during the year 1966 alone, a total operating

income of P 38,220,254.00, or net earnings, after taxes of P19,117,394.00, as per its llth Annual Report for the year ended December 31, 1966, and with aggregate assets totalling P 45,794,103.00 as of December 31, 1966; xxx xxx xxx (pp. 42-44, rec.) A motion to dismiss dated May 14, 1968 was filed by Philex alleging that the causes of action of petitioners based on an industrial accident are covered by the provisions of the Workmen's Compensation Act (Act 3428, as amended by RA 772) and that the former Court of First Instance has no jurisdiction over the case. Petitioners filed an opposition dated May 27, 1968 to the said motion to dismiss claiming that the causes of action are not based on the provisions of the Workmen's Compensation Act but on the provisions of the Civil Code allowing the award of actual, moral and exemplary damages, particularly: Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre- existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter. Art. 2178. The provisions of articles 1172 to 1174 are also applicable to a quasi-delict. (b) Art. 1173The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. When negligence shows bad faith, the provisions of Articles 1171 and 2201, paragraph 2 shall apply. Art. 2201. x x x x x x x x x In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation. Art. 2231. In quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence. After a reply and a rejoinder thereto were filed, respondent Judge issued an order dated June 27, 1968 dismissing the case on the ground that it falls within the exclusive jurisdiction of the Workmen's Compensation Commission. On petitioners'

motion for reconsideration of the said order, respondent Judge, on September 23, 1968, reconsidered and set aside his order of June 27, 1968 and allowed Philex to file an answer to the complaint. Philex moved to reconsider the aforesaid order which was opposed by petitioners. On December 16, 1968, respondent Judge dismissed the case for lack of jurisdiction and ruled that in accordance with the established jurisprudence, the Workmen's Compensation Commission has exclusive original jurisdiction over damage or compensation claims for work-connected deaths or injuries of workmen or employees, irrespective of whether or not the employer was negligent, adding that if the employer's negligence results in work-connected deaths or injuries, the employer shall, pursuant to Section 4-A of the Workmen's Compensation Act, pay additional compensation equal to 50% of the compensation fixed in the Act. Petitioners thus filed the present petition. In their brief, petitioners raised the following assignment of errors: I THE LOWER COURT ERRED IN DISMISSING THE PLAINTIFFSPETITIONERS' COMPLAINT FOR LACK OF JURISDICTION. II THE LOWER COURT ERRED IN FAILING TO CONSIDER THE CLEAR DISTINCTION BETWEEN CLAIMS FOR DAMAGES UNDER THE CIVIL CODE AND CLAIMS FOR COMPENSATION UNDER THE WORKMEN'S COMPENSATION ACT. A In the first assignment of error, petitioners argue that the lower court has jurisdiction over the cause of action since the complaint is based on the provisions of the Civil Code on damages, particularly Articles 2176, 2178, 1173, 2201 and 2231, and not on the provisions of the Workmen's Compensation Act. They point out that the complaint alleges gross and brazen negligence on the part of Philex in failing to take the necessary security for the protection of the lives of its employees working underground. They also assert that since Philex opted to file a motion to dismiss in the court a quo, the allegations in their complaint including those contained in the annexes are deemed admitted. In the second assignment of error, petitioners asseverate that respondent Judge failed to see the distinction between the claims for compensation under the Workmen's Compensation Act and the claims for damages based on gross

negligence of Philex under the Civil Code. They point out that workmen's compensation refers to liability for compensation for loss resulting from injury, disability or death of the working man through industrial accident or disease, without regard to the fault or negligence of the employer, while the claim for damages under the Civil Code which petitioners pursued in the regular court, refers to the employer's liability for reckless and wanton negligence resulting in the death of the employees and for which the regular court has jurisdiction to adjudicate the same. On the other hand, Philex asserts that work-connected injuries are compensable exclusively under the provisions of Sections 5 and 46 of the Workmen's Compensation Act, which read: SEC. 5. Exclusive right to compensation.The rights and remedies granted by this Act to an employee by reason of a personal injury entitling him to compensation shall exclude all other rights and remedies accruing to the employee, his personal representatives, dependents or nearest of kin against the employer under the Civil Code and other laws because of said injury ... SEC. 46. Jurisdiction. The Workmen's Compensation Commissioner shall have exclusive jurisdiction to hear and decide claims for compensation under the Workmen's Compensation Act, subject to appeal to the Supreme Court, ... Philex cites the case of Manalo vs. Foster Wheeler (98 Phil. 855 [1956]) where it was held that "all claims of workmen against their employer for damages due to accident suffered in the course of employment shall be investigated and adjudicated by the Workmen's Compensation Commission," subject to appeal to the Supreme Court. Philex maintains that the fact that an employer was negligent, does not remove the case from the exclusive character of recoveries under the Workmen's Compensation Act; because Section 4-A of the Act provides an additional compensation in case the employer fails to comply with the requirements of safety as imposed by law to prevent accidents. In fact, it points out that Philex voluntarily paid the compensation due the petitioners and all the payments have been accepted in behalf of the deceased miners, except the heirs of Nazarito Floresca who insisted that they are entitled to a greater amount of damages under the Civil Code. In the hearing of this case, then Undersecretary of Labor Israel Bocobo, then Atty. Edgardo Angara, now President of the University of the Philippines, Justice Manuel Lazaro, as corporate counsel and Assistant General Manager of the GSIS Legal Affairs Department, and Commissioner on Elections, formerly UP Law Center Director Froilan Bacungan, appeared as amici curiae and thereafter, submitted their respective memoranda.

The issue to be resolved as WE stated in the resolution of November 26, 1976, is: Whether the action of an injured employee or worker or that of his heirs in case of his death under the Workmen's Compensation Act is exclusive, selective or cumulative, that is to say, whether his or his heirs' action is exclusively restricted to seeking the limited compensation provided under the Workmen's Compensation Act or whether they have a right of selection or choice of action between availing of the worker's right under the Workmen's Compensation Act and suing in the regular courts under the Civil Code for higher damages (actual, moral and/or exemplary) from the employer by virtue of negligence (or fault) of the employer or of his other employees or whether they may avail cumulatively of both actions, i.e., collect the limited compensation under the Workmen's Compensation Act and sue in addition for damages in the regular courts. There are divergent opinions in this case. Justice Lazaro is of the opinion that an injured employee or worker, or the heirs in case of his death, may initiate a complaint to recover damages (not compensation under the Workmen's Compensation Act) with the regular court on the basis of negligence of an employer pursuant to the Civil Code provisions. Atty. Angara believes otherwise. He submits that the remedy of an injured employee for work-connected injury or accident is exclusive in accordance with Section 5 of the Workmen's Compensation Act, while Atty. Bacungan's position is that the action is selective. He opines that the heirs of the employee in case of his death have a right of choice to avail themselves of the benefits provided under the Workmen's Compensation Act or to sue in the regular court under the Civil Code for higher damages from the employer by virtue of negligence of the latter. Atty. Bocobo's stand is the same as that of Atty. Bacungan and adds that once the heirs elect the remedy provided for under the Act, they are no longer entitled to avail themselves of the remedy provided for under the Civil Code by filing an action for higher damages in the regular court, and vice versa. On August 3, 1978, petitioners-heirs of deceased employee Nazarito Floresca filed a motion to dismiss on the ground that they have amicably settled their claim with respondent Philex. In the resolution of September 7, 1978, WE dismissed the petition only insofar as the aforesaid petitioners are connected, it appearing that there are other petitioners in this case. WE hold that the former Court of First Instance has jurisdiction to try the case, It should be underscored that petitioners' complaint is not for compensation based on the Workmen's Compensation Act but a complaint for damages (actual, exemplary and moral) in the total amount of eight hundred twenty-five thousand (P825,000.00) pesos. Petitioners did not invoke the provisions of the Workmen's Compensation Act to entitle them to compensation thereunder. In fact, no allegation

appeared in the complaint that the employees died from accident arising out of and in the course of their employments. The complaint instead alleges gross and reckless negligence and deliberate failure on the part of Philex to protect the lives of its workers as a consequence of which a cave-in occurred resulting in the death of the employees working underground. Settled is the rule that in ascertaining whether or not the cause of action is in the nature of workmen's compensation claim or a claim for damages pursuant to the provisions of the Civil Code, the test is the averments or allegations in the complaint (Belandres vs. Lopez Sugar Mill, Co., Inc., 97 Phil. 100). In the present case, there exists between Philex and the deceased employees a contractual relationship. The alleged gross and reckless negligence and deliberate failure that amount to bad faith on the part of Philex, constitute a breach of contract for which it may be held liable for damages. The provisions of the Civil Code on cases of breach of contract when there is fraud or bad faith, read: Art. 2232. In contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is able shall be those that are the natural and probable consequences of the breach of the obligation, and which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted. In cases of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation. Furthermore, Articles 2216 et seq., Civil Code, allow the payment of all kinds of damages, as assessed by the court. The rationale in awarding compensation under the Workmen's Compensation Act differs from that in giving damages under the Civil Code. The compensation acts are based on a theory of compensation distinct from the existing theories of damages, payments under the acts being made as compensation and not as damages (99 C.J.S. 53). Compensation is given to mitigate the harshness and insecurity of industrial life for the workman and his family. Hence, an employer is liable whether negligence exists or not since liability is created by law. Recovery under the Act is not based on any theory of actionable wrong on the part of the employer (99 C.J.S. 36). In other words, under the compensation acts, the employer is liable to pay compensation benefits for loss of income, as long as the death, sickness or injury is

work-connected or work-aggravated, even if the death or injury is not due to the fault of the employer (Murillo vs. Mendoza, 66 Phil. 689). On the other hand, damages are awarded to one as a vindication of the wrongful invasion of his rights. It is the indemnity recoverable by a person who has sustained injury either in his person, property or relative rights, through the act or default of another (25 C.J.S. 452). The claimant for damages under the Civil Code has the burden of proving the causal relation between the defendant's negligence and the resulting injury as well as the damages suffered. While under the Workmen's Compensation Act, there is a presumption in favor of the deceased or injured employee that the death or injury is work-connected or work-aggravated; and the employer has the burden to prove otherwise (De los Angeles vs. GSIS, 94 SCRA 308; Carino vs. WCC, 93 SCRA 551; Maria Cristina Fertilizer Corp. vs. WCC, 60 SCRA 228). The claim of petitioners that the case is not cognizable by the Workmen's Compensation Commission then, now Employees Compensation Commission, is strengthened by the fact that unlike in the Civil Code, the Workmen's Compensation Act did not contain any provision for an award of actual, moral and exemplary damages. What the Act provided was merely the right of the heirs to claim limited compensation for the death in the amount of six thousand (P6,000.00) pesos plus burial expenses of two hundred (P200.00) pesos, and medical expenses when incurred (Sections 8, 12 and 13, Workmen's Compensation Act), and an additional compensation of only 50% if the complaint alleges failure on the part of the employer to "install and maintain safety appliances or to take other precautions for the prevention of accident or occupational disease" (Section 4-A, Ibid.). In the case at bar, the amount sought to be recovered is over and above that which was provided under the Workmen's Compensation Act and which cannot be granted by the Commission. Moreover, under the Workmen's Compensation Act, compensation benefits should be paid to an employee who suffered an accident not due to the facilities or lack of facilities in the industry of his employer but caused by factors outside the industrial plant of his employer. Under the Civil Code, the liability of the employer, depends on breach of contract or tort. The Workmen's Compensation Act was specifically enacted to afford protection to the employees or workmen. It is a social legislation designed to give relief to the workman who has been the victim of an accident causing his death or ailment or injury in the pursuit of his employment (Abong vs. WCC, 54 SCRA 379). WE now come to the query as to whether or not the injured employee or his heirs in case of death have a right of selection or choice of action between availing themselves of the worker's right under the Workmen's Compensation Act and suing in the regular courts under the Civil Code for higher damages (actual, moral and exemplary) from the employers by virtue of that negligence or fault of the employers or whether they may avail themselves cumulatively of both actions, i.e., collect the

limited compensation under the Workmen's Compensation Act and sue in addition for damages in the regular courts. In disposing of a similar issue, this Court in Pacana vs. Cebu Autobus Company, 32 SCRA 442, ruled that an injured worker has a choice of either to recover from the employer the fixed amounts set by the Workmen's Compensation Act or to prosecute an ordinary civil action against the tortfeasor for higher damages but he cannot pursue both courses of action simultaneously. In Pacaa WE said: In the analogous case of Esguerra vs. Munoz Palma, involving the application of Section 6 of the Workmen's Compensation Act on the injured workers' right to sue third- party tortfeasors in the regular courts, Mr. Justice J.B.L. Reyes, again speaking for the Court, pointed out that the injured worker has the choice of remedies but cannot pursue both courses of action simultaneously and thus balanced the relative advantage of recourse under the Workmen's Compensation Act as against an ordinary action. As applied to this case, petitioner Esguerra cannot maintain his action for damages against the respondents (defendants below), because he has elected to seek compensation under the Workmen's Compensation Law, and his claim (case No. 44549 of the Compensation Commission) was being processed at the time he filed this action in the Court of First Instance. It is argued for petitioner that as the damages recoverable under the Civil Code are much more extensive than the amounts that may be awarded under the Workmen's Compensation Act, they should not be deemed incompatible. As already indicated, the injured laborer was initially free to choose either to recover from the employer the fixed amounts set by the Compensation Law or else, to prosecute an ordinary civil action against the tortfeasor for higher damages. While perhaps not as profitable, the smaller indemnity obtainable by the first course is balanced by the claimant's being relieved of the burden of proving the causal connection between the defendant's negligence and the resulting injury, and of having to establish the extent of the damage suffered; issues that are apt to be troublesome to establish satisfactorily. Having staked his fortunes on a particular remedy, petitioner is precluded from pursuing the alternate course, at least until the prior claim is rejected by the Compensation Commission. Anyway, under the proviso of Section 6 aforequoted, if the employer Franklin Baker Company recovers, by derivative action against the alleged tortfeasors, a sum greater than the compensation he may have paid the herein petitioner, the excess accrues to the latter.

Although the doctrine in the case of Esguerra vs. Munoz Palma (104 Phil. 582), applies to third-party tortfeasor, said rule should likewise apply to the employertortfeasor. Insofar as the heirs of Nazarito Floresca are concerned, as already stated, the petition has been dismissed in the resolution of September 7, 1978 in view of the amicable settlement reached by Philex and the said heirs. With regard to the other petitioners, it was alleged by Philex in its motion to dismiss dated May 14, 1968 before the court a quo, that the heirs of the deceased employees, namely Emerito Obra, Larry Villar, Jr., Aurelio Lanuza, Lorenzo Isla and Saturnino Martinez submitted notices and claims for compensation to the Regional Office No. 1 of the then Department of Labor and all of them have been paid in full as of August 25, 1967, except Saturnino Martinez whose heirs decided that they be paid in installments (pp. 106-107, rec.). Such allegation was admitted by herein petitioners in their opposition to the motion to dismiss dated May 27, 1968 (pp. 121122, rec.) in the lower court, but they set up the defense that the claims were filed under the Workmen's Compensation Act before they learned of the official report of the committee created to investigate the accident which established the criminal negligence and violation of law by Philex, and which report was forwarded by the Director of Mines to the then Executive Secretary Rafael Salas in a letter dated October 19, 1967 only (p. 76, rec.). WE hold that although the other petitioners had received the benefits under the Workmen's Compensation Act, such may not preclude them from bringing an action before the regular court because they became cognizant of the fact that Philex has been remiss in its contractual obligations with the deceased miners only after receiving compensation under the Act. Had petitioners been aware of said violation of government rules and regulations by Philex, and of its negligence, they would not have sought redress under the Workmen's Compensation Commission which awarded a lesser amount for compensation. The choice of the first remedy was based on ignorance or a mistake of fact, which nullifies the choice as it was not an intelligent choice. The case should therefore be remanded to the lower court for further proceedings. However, should the petitioners be successful in their bid before the lower court, the payments made under the Workmen's Compensation Act should be deducted from the damages that may be decreed in their favor. B Contrary to the perception of the dissenting opinion, the Court does not legislate in the instant case. The Court merely applies and gives effect to the constitutional guarantees of social justice then secured by Section 5 of Article 11 and Section 6 of Article XIV of the 1935 Constitution, and now by Sections 6, 7, and 9 of Article 11 of the DECLARATION OF PRINCIPLES AND STATE POLICIES of the 1973

Constitution, as amended, and as implemented by Articles 2176, 2177, 2178, 1173, 2201, 2216, 2231 and 2232 of the New Civil Code of 1950. To emphasize, the 1935 Constitution declares that: Sec. 5. The promotion of social justice to insure the well-being and economic security of all the people should be the concern of the State (Art. II). Sec. 6. The State shall afford protection to labor, especially to working women, and minors, and shall regulate the relations between landowner and tenant, and between labor and capital in industry and in agriculture. The State may provide for compulsory arbitration (Art. XIV). The 1973 Constitution likewise commands the State to "promote social justice to insure the dignity, welfare, and security of all the people "... regulate the use ... and disposition of private property and equitably diffuse property ownership and profits "establish, maintain and ensure adequate social services in, the field of education, health, housing, employment, welfare and social security to guarantee the enjoyment by the people of a decent standard of living" (Sections 6 and 7, Art. II, 1973 Constitution); "... afford protection to labor, ... and regulate the relations between workers and employers ..., and assure the rights of workers to ... just and humane conditions of work" (Sec. 9, Art. II, 1973 Constitution, emphasis supplied). The foregoing constitutional guarantees in favor of labor institutionalized in Section 9 of Article 11 of the 1973 Constitution and re-stated as a declaration of basic policy in Article 3 of the New Labor Code, thus: Art. 3. Declaration of basic policy.The State shall afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. The State shall assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work. (emphasis supplied). The aforestated constitutional principles as implemented by the aforementioned articles of the New Civil Code cannot be impliedly repealed by the restrictive provisions of Article 173 of the New Labor Code. Section 5 of the Workmen's Compensation Act (before it was amended by R.A. No. 772 on June 20, 1952), predecessor of Article 173 of the New Labor Code, has been superseded by the aforestated provisions of the New Civil Code, a subsequent law, which took effect on August 30, 1950, which obey the constitutional mandates of social justice enhancing as they do the rights of the workers as against their employers. Article 173 of the New Labor Code seems to diminish the rights of the workers and therefore collides

with the social justice guarantee of the Constitution and the liberal provisions of the New Civil Code. The guarantees of social justice embodied in Sections 6, 7 and 9 of Article II of the 1973 Constitution are statements of legal principles to be applied and enforced by the courts. Mr. Justice Robert Jackson in the case of West Virginia State Board of Education vs. Barnette, with characteristic eloquence, enunciated: The very purpose of a Bill of Rights was to withdraw certain subjects from the vicissitudes of political controversy, to place them beyond the reach of majorities and officials and to establish them as legal principles to be applied by the courts. One's right to life, liberty, and property, to free speech, a free press, freedom of worship and assembly, and other fundamental rights may not be submitted to vote; they depend on the outcome of no elections (319 U.S. 625, 638, 87 L.ed. 1638, emphasis supplied). In case of any doubt which may be engendered by Article 173 of the New Labor Code, both the New Labor Code and the Civil Code direct that the doubts should be resolved in favor of the workers and employees. Thus, Article 4 of the New Labor Code, otherwise known as Presidential Decree No. 442, as amended, promulgated on May 1, 1974, but which took effect six months thereafter, provides that "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" (Art. 2, Labor Code). Article 10 of the New Civil Code states: "In case of doubt in the interpretation or application of laws, it is presumed that the law-making body intended right and justice to prevail. " More specifically, Article 1702 of the New Civil Code likewise directs that. "In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living of the laborer." Before it was amended by Commonwealth Act No. 772 on June 20, 1952, Section 5 of the Workmen's Compensation Act provided: Sec. 5. Exclusive right to compensation.- The rights and remedies granted by this Act to an employee by reason of a personal injury entitling him to compensation shall exclude all other rights and remedies accruing to the employee, his personal representatives, dependents or nearest of kin against the employer under the Civil Code and other laws, because of said injury (emphasis supplied).

Employers contracting laborecsrs in the Philippine Islands for work outside the same may stipulate with such laborers that the remedies prescribed by this Act shall apply exclusively to injuries received outside the Islands through accidents happening in and during the performance of the duties of the employment; and all service contracts made in the manner prescribed in this section shall be presumed to include such agreement. Only the second paragraph of Section 5 of the Workmen's Compensation Act No. 3428, was amended by Commonwealth Act No. 772 on June 20, 1952, thus: Sec. 5. Exclusive right to compensation.- The rights and remedies granted by this Act to an employee by reason of a personal injury entitling him to compensation shall exclude all other rights and remedies accruing to the employee, his personal representatives, dependents or nearest of kin against the employer under the Civil Code and other laws, because of said injury. Employers contracting laborers in the Philippine Islands for work outside the same shall stipulate with such laborers that the remedies prescribed by this Act shall apply to injuries received outside the Island through accidents happening in and during the performance of the duties of the employment. Such stipulation shall not prejudice the right of the laborers to the benefits of the Workmen's Compensation Law of the place where the accident occurs, should such law be more favorable to them (As amended by section 5 of Republic Act No. 772). Article 173 of the New Labor Code does not repeal expressly nor impliedly the applicable provisions of the New Civil Code, because said Article 173 provides: Art. 173. Exclusiveness of liability.- Unless otherwise provided, the liability of the State Insurance Fund under this Title shall be exclusive and in place of all other liabilities of the employer to the employee, his dependents or anyone otherwise entitled to receive damages on behalf of the employee or his dependents. The payment of compensation under this Title shall bar the recovery of benefits as provided for in Section 699 of the Revised Administrative Code, Republic Act Numbered Eleven hundred sixty-one, as amended, Commonwealth Act Numbered One hundred eighty- six, as amended, Commonwealth Act Numbered Six hundred ten, as amended, Republic Act Numbered Forty-eight hundred Sixty-four, as amended, and other laws whose benefits are administered by the System during the period of such payment for the same disability or death, and conversely (emphasis supplied).

As above-quoted, Article 173 of the New Labor Code expressly repealed only Section 699 of the Revised Administrative Code, R.A. No. 1161, as amended, C.A. No. 186, as amended, R.A. No. 610, as amended, R.A. No. 4864, as amended, and all other laws whose benefits are administered by the System (referring to the GSIS or SSS). Unlike Section 5 of the Workmen's Compensation Act as aforequoted, Article 173 of the New Labor Code does not even remotely, much less expressly, repeal the New Civil Code provisions heretofore quoted. It is patent, therefore, that recovery under the New Civil Code for damages arising from negligence, is not barred by Article 173 of the New Labor Code. And the damages recoverable under the New Civil Code are not administered by the System provided for by the New Labor Code, which defines the "System" as referring to the Government Service Insurance System or the Social Security System (Art. 167 [c], [d] and [e] of the New Labor Code). Furthermore, under Article 8 of the New Civil Code, decisions of the Supreme Court form part of the law of the land. Article 8 of the New Civil Code provides: Art. 8. Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system of the Philippines. The Court, through the late Chief Justice Fred Ruiz Castro, in People vs. Licera ruled: 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" (65 SCRA 270, 272-273 [1975]). WE ruled that judicial decisions of the Supreme Court assume the same authority as the statute itself (Caltex vs. Palomer, 18 SCRA 247; 124 Phil. 763). The aforequoted provisions of Section 5 of the Workmen's Compensation Act, before and after it was amended by Commonwealth Act No. 772 on June 20, 1952, limited the right of recovery in favor of the deceased, ailing or injured employee to the compensation provided for therein. Said Section 5 was not accorded controlling

application by the Supreme Court in the 1970 case of Pacana vs. Cebu Autobus Company (32 SCRA 442) when WE ruled that an injured worker has a choice of either to recover from the employer the fixed amount set by the Workmen's Compensation Act or to prosecute an ordinary civil action against the tortfeasor for greater damages; but he cannot pursue both courses of action simultaneously. Said Pacana case penned by Mr. Justice Teehankee, applied Article 1711 of the Civil Code as against the Workmen's Compensation Act, reiterating the 1969 ruling in the case of Valencia vs. Manila Yacht Club (28 SCRA 724, June 30,1969) and the 1958 case of Esguerra vs. Munoz Palma (104 Phil. 582), both penned by Justice J.B.L. Reyes. Said Pacana case was concurred in by Justices J.B.L. Reyes, Dizon, Makalintal, Zaldivar, Castro, Fernando and Villamor. Since the first sentence of Article 173 of the New Labor Code is merely a restatement of the first paragraph of Section 5 of the Workmen's Compensation Act, as amended, and does not even refer, neither expressly nor impliedly, to the Civil Code as Section 5 of the Workmen's Compensation Act did, with greater reason said Article 173 must be subject to the same interpretation adopted in the cases of Pacana, Valencia and Esguerra aforementioned as the doctrine in the aforesaid three (3) cases is faithful to and advances the social justice guarantees enshrined in both the 1935 and 1973 Constitutions. It should be stressed likewise that there is no similar provision on social justice in the American Federal Constitution, nor in the various state constitutions of the American Union. Consequently, the restrictive nature of the American decisions on the Workmen's Compensation Act cannot limit the range and compass of OUR interpretation of our own laws, especially Article 1711 of the New Civil Code, vis-avis Article 173 of the New Labor Code, in relation to Section 5 of Article II and Section 6 of Article XIV of the 1935 Constitution then, and now Sections 6, 7 and 9 of the Declaration of Principles and State Policies of Article II of the 1973 Constitution. The dissent seems to subordinate the life of the laborer to the property rights of the employer. The right to life is guaranteed specifically by the due process clause of the Constitution. To relieve the employer from liability for the death of his workers arising from his gross or wanton fault or failure to provide safety devices for the protection of his employees or workers against the dangers which are inherent in underground mining, is to deprive the deceased worker and his heirs of the right to recover indemnity for the loss of the life of the worker and the consequent loss to his family without due process of law. The dissent in effect condones and therefore encourages such gross or wanton neglect on the part of the employer to comply with his legal obligation to provide safety measures for the protection of the life, limb and health of his worker. Even from the moral viewpoint alone, such attitude is unChristian.

It is therefore patent that giving effect to the social justice guarantees of the Constitution, as implemented by the provisions of the New Civil Code, is not an exercise of the power of law-making, but is rendering obedience to the mandates of the fundamental law and the implementing legislation aforementioned. The Court, to repeat, is not legislating in the instant case. It is axiomatic that no ordinary statute can override a constitutional provision. The words of Section 5 of the Workmen's Compensation Act and of Article 173 of the New Labor Code subvert the rights of the petitioners as surviving heirs of the deceased mining employees. Section 5 of the Workmen's Compensation Act and Article 173 of the New Labor Code are retrogressive; because they are a throwback to the obsolete laissez-faire doctrine of Adam Smith enunciated in 1776 in his treatise Wealth of Nations (Collier's Encyclopedia, Vol. 21, p. 93, 1964), which has been discarded soon after the close of the 18th century due to the Industrial Revolution that generated the machines and other mechanical devices (beginning with Eli Whitney's cotton gin of 1793 and Robert Fulton's steamboat of 1807) for production and transportation which are dangerous to life, limb and health. The old socio-political-economic philosophy of live-and-let-live is now superdesed by the benign Christian shibboleth of live-and-help others to live. Those who profess to be Christians should not adhere to Cain's selfish affirmation that he is not his brother's keeper. In this our civilization, each one of us is our brother's keeper. No man is an island. To assert otherwise is to be as atavistic and ante-deluvian as the 1837 case of Prisley vs. Fowler (3 MN 1,150 reprint 1030) invoked by the dissent, The Prisley case was decided in 1837 during the era of economic royalists and robber barons of America. Only ruthless, unfeeling capitalistics and egoistic reactionaries continue to pay obeisance to such un-Christian doctrine. The Prisley rule humiliates man and debases him; because the decision derisively refers to the lowly worker as "servant" and utilizes with aristocratic arrogance "master" for "employer." It robs man of his inherent dignity and dehumanizes him. To stress this affront to human dignity, WE only have to restate the quotation from Prisley, thus: "The mere relation of the master and the servant never can imply an obligation on the part of the master to take more care of the servant than he may reasonably be expected to do himself." This is the very selfish doctrine that provoked the American Civil War which generated so much hatred and drew so much precious blood on American plains and valleys from 1861 to 1864. "Idolatrous reverence" for the letter of the law sacrifices the human being. The spirit of the law insures man's survival and ennobles him. In the words of Shakespeare, "the letter of the law killeth; its spirit giveth life." C

It is curious that the dissenting opinion clings to the myth that the courts cannot legislate. That myth had been exploded by Article 9 of the New Civil Code, which provides that "No judge or court shall decline to render judgment by reason of the silence, obscurity or insufficiency of the laws. " Hence, even the legislator himself, through Article 9 of the New Civil Code, recognizes that in certain instances, the court, in the language of Justice Holmes, "do and must legislate" to fill in the gaps in the law; because the mind of the legislator, like all human beings, is finite and therefore cannot envisage all possible cases to which the law may apply Nor has the human mind the infinite capacity to anticipate all situations. But about two centuries before Article 9 of the New Civil Code, the founding fathers of the American Constitution foresaw and recognized the eventuality that the courts may have to legislate to supply the omissions or to clarify the ambiguities in the American Constitution and the statutes. 'Thus, Alexander Hamilton pragmatically admits that judicial legislation may be justified but denies that the power of the Judiciary to nullify statutes may give rise to Judicial tyranny (The Federalist, Modern Library, pp. 503-511, 1937 ed.). Thomas Jefferson went farther to concede that the court is even independent of the Nation itself (A.F.L. vs. American Sash Company, 1949 335 US 538). Many of the great expounders of the American Constitution likewise share the same view. Chief Justice Marshall pronounced: "It is emphatically the province and duty of the Judicial department to say what the law is (Marbury vs. Madison I Cranch 127 1803), which was re-stated by Chief Justice Hughes when he said that "the Constitution is what the judge says it is (Address on May 3, 1907, quoted by President Franklin Delano Roosevelt on March 9, 1937). This was reiterated by Justice Cardozo who pronounced that "No doubt the limits for the judge are narrower. He legislates only between gaps. He fills the open spaces in the law. " (The Nature of the Judicial Process, p. 113). In the language of Chief Justice Harlan F. Stone, "The only limit to the judicial legislation is the restraint of the judge" (U.S. vs. Butler 297 U.S. 1 Dissenting Opinion, p. 79), which view is also entertained by Justice Frankfurter and Justice Robert Jackson. In the rhetoric of Justice Frankfurter, "the courts breathe life, feeble or strong, into the inert pages of the Constitution and all statute books." It should be stressed that the liability of the employer under Section 5 of the Workmen's Compensation Act or Article 173 of the New Labor Code is limited to death, ailment or injury caused by the nature of the work, without any fault on the part of the employers. It is correctly termed no fault liability. Section 5 of the Workmen's Compensation Act, as amended, or Article 173 of the New Labor Code,

does not cover the tortious liability of the employer occasioned by his fault or culpable negligence in failing to provide the safety devices required by the law for the protection of the life, limb and health of the workers. Under either Section 5 or Article 173, the employer remains liable to pay compensation benefits to the employee whose death, ailment or injury is work-connected, even if the employer has faithfully and diligently furnished all the safety measures and contrivances decreed by the law to protect the employee. The written word is no longer the "sovereign talisman." In the epigrammatic language of Mr. Justice Cardozo, "the law has outgrown its primitive stage of formalism when the precise word was the sovereign talisman, and every slip was fatal" (Wood vs. Duff Gordon 222 NW 88; Cardozo, The Nature of the Judicial Process 100). Justice Cardozo warned that: "Sometimes the conservatism of judges has threatened for an interval to rob the legislation of its efficacy. ... Precedents established in those items exert an unhappy influence even now" (citing Pound, Common Law and Legislation 21 Harvard Law Review 383, 387). Finally, Justice Holmes delivered the coup de grace when he pragmatically admitted, although with a cautionary undertone: "that judges do and must legislate, but they can do so only interstitially they are confined from molar to molecular motions" (Southern Pacific Company vs. Jensen, 244 US 204 1917). And in the subsequent case of Springer vs. Government (277 US 188, 210-212, 72 L.ed. 845, 852- 853), Justice Holmes pronounced: The great ordinances of the Constitution do not establish and divide fields of black and white. Even the more specific of them are found to terminate in a penumbra shading gradually from one extreme to the other. x x x. When we come to the fundamental distinctions it is still more obvious that they must be received with a certain latitude or our government could not go on. To make a rule of conduct applicable to an individual who but for such action would be free from it is to legislate yet it is what the judges do whenever they determine which of two competing principles of policy shall prevail. xxx xxx xxx It does not seem to need argument to show that however we may disguise it by veiling words we do not and cannot carry out the distinction between legislative and executive action with mathematical precision and divide the branches into waterlight compartments, were it ever so desirable to do so, which I am far from believing that it is, or that the Constitution requires.

True, there are jurists and legal writers who affirm that judges should not legislate, but grudgingly concede that in certain cases judges do legislate. They criticize the assumption by the courts of such law-making power as dangerous for it may degenerate into Judicial tyranny. They include Blackstone, Jeremy Bentham, Justice Black, Justice Harlan, Justice Roberts, Justice David Brewer, Ronald Dworkin, Rolf Sartorious, Macklin Fleming and Beryl Harold Levy. But said Justices, jurists or legal commentators, who either deny the power of the courts to legislate in-between gaps of the law, or decry the exercise of such power, have not pointed to examples of the exercise by the courts of such law-making authority in the interpretation and application of the laws in specific cases that gave rise to judicial tyranny or oppression or that such judicial legislation has not protected public interest or individual welfare, particularly the lowly workers or the underprivileged. On the other hand, there are numerous decisions interpreting the Bill of Rights and statutory enactments expanding the scope of such provisions to protect human rights. Foremost among them is the doctrine in the cases of Miranda vs. Arizona (384 US 436 1964), Gideon vs. Wainright (372 US 335), Escubedo vs. Illinois (378 US 478), which guaranteed the accused under custodial investigation his rights to remain silent and to counsel and to be informed of such rights as even as it protects him against the use of force or intimidation to extort confession from him. These rights are not found in the American Bill of Rights. These rights are now institutionalized in Section 20, Article IV of the 1973 Constitution. Only the peaceand-order adherents were critical of the activism of the American Supreme Court led by Chief Justice Earl Warren. Even the definition of Identical offenses for purposes of the double jeopardy provision was developed by American judicial decisions, not by amendment to the Bill of Rights on double jeopardy (see Justice Laurel in People vs. Tarok, 73 Phil. 260, 261-268). And these judicial decisions have been re-stated in Section 7 of Rule 117 of the 1985 Rules on Criminal Procedure, as well as in Section 9 of Rule 117 of the 1964 Revised Rules of Court. In both provisions, the second offense is the same as the first offense if the second offense is an attempt to commit the first or frustration thereof or necessarily includes or is necessarily included in the first offense. The requisites of double jeopardy are not spelled out in the Bill of Rights. They were also developed by judicial decisions in the United States and in the Philippines even before people vs. Ylagan (58 Phil. 851-853). Again, the equal protection clause was interpreted in the case of Plessy vs. Ferguson (163 US 537) as securing to the Negroes equal but separate facilities, which doctrine was revoked in the case of Brown vs. Maryland Board of Education (349 US 294), holding that the equal protection clause means that the Negroes are entitled to attend the same schools attended by the whites-equal facilities in the same school-which was extended to public parks and public buses.

De-segregation, not segregation, is now the governing principle. Among other examples, the due process clause was interpreted in the case of People vs. Pomar (46 Phil. 440) by a conservative, capitalistic court to invalidate a law granting maternity leave to working women-according primacy to property rights over human rights. The case of People vs. Pomar is no longer the rule. As early as 1904, in the case of Lochner vs. New York (198 US 45, 76, 49 L. ed. 937, 949), Justice Holmes had been railing against the conservatism of Judges perverting the guarantee of due process to protect property rights as against human rights or social justice for the working man. The law fixing maximum hours of labor was invalidated. Justice Holmes was vindicated finally in 1936 in the case of West Coast Hotel vs. Parish (300 US 377-79; 81 L. ed. 703) where the American Supreme Court upheld the rights of workers to social justice in the form of guaranteed minimum wage for women and minors, working hours not exceeding eight (8) daily, and maternity leave for women employees. The power of judicial review and the principle of separation of powers as well as the rule on political questions have been evolved and grafted into the American Constitution by judicial decisions (Marbury vs. Madison, supra Coleman vs. Miller, 307 US 433, 83 L. ed. 1385; Springer vs. Government, 277 US 210-212, 72 L. ed. 852, 853). It is noteworthy that Justice Black, who seems to be against judicial legislation, penned a separate concurring opinion in the case of Coleman vs. Miller, supra, affirming the doctrine of political question as beyond the ambit of judicial review. There is nothing in both the American and Philippine Constitutions expressly providing that the power of the courts is limited by the principle of separation of powers and the doctrine on political questions. There are numerous cases in Philippine jurisprudence applying the doctrines of separation of powers and political questions and invoking American precedents. Unlike the American Constitution, both the 1935 and 1973 Philippine Constitutions expressly vest in the Supreme Court the power to review the validity or constitutionality of any legislative enactment or executive act. WHEREFORE, THE TRIAL COURT'S ORDER OF DISMISSAL IS HEREBY REVERSED AND SET ASIDE AND THE CASE IS REMANDED TO IT FOR FURTHER PROCEEDINGS. SHOULD A GREATER AMOUNT OF DAMAGES BE DECREED IN FAVOR OF HEREIN PETITIONERS, THE PAYMENTS ALREADY MADE TO THEM PURSUANT TO THE WORKMEN'S COMPENSATION ACT SHALL BE DEDUCTED. NO COSTS. SO ORDERED.

Fernando, C.J., Teehankee, Plana, Escolin, De la Fuente, Cuevas and Alampay JJ., concur. Concepcion, Jr., J., is on leave. Abad Santos and Relova, JJ., took no part.

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