Republic of the Philippines benefits, subject to release of funds for the purpose by the Department of Budget and
SUPREME COURT Management.11
Manila
EN BANC
G.R. No. 191890 December 04, 2012
EVALYN I. FETALINO and AMADO M. CALDERON, Petitioners,
MANUEL A. BARCELONA, JR., Petitioner-Intervenor,
vs.
COMMISSION ON ELECTIONS, Respondent.
DECISION
BRION, J.:
Before us is a Petition for Certiorari, Mandamus and Prohibition with Application for Writ of
Preliminary Injunction and/or Temporary Restraining Order, 1 seeking to nullify and enjoin the
implementation of Commission on Elections (Co melee) Resolution No. 8808 issued on March
30, 2010.2 Republic Act (R.A.) No. 1568, as amended,3 extends a five-year lump sum gratuity
to the chairman or any member of the Comelec upon retirement, after completion of the term
of office; incapacity; death; and resignation after reaching 60 years of age but before expiration
of the term of office. The Comelec en banc determined that former Comelec Commissioners
Evalyn I. Fetalino4 and Amado M. Calderon5 (petitioners) - whose ad interim appointments
were not acted upon by the Commission on Appointments (CA) and, who were subsequently,
not reappointed are not entitled to the five-year lump sum gratuity because they did not
complete in full the seven year term of office.
The Antecedent Facts
On February 10, 1998, President Fidel V. Ramos extended an interim appointment to the
petitioners as Comelec Commissioners, each for a term of seven (7) years, pursuant to Section
2, Article IX-D of the 1987 Constitution.6 Eleven days later (or on February 21, 1998), Pres.
Ramos renewed the petitioners ad interim appointments for the same position. Congress,
however, adjourned in May 1998 before the CA could act on their appointments. The
constitutional ban on presidential appointments later took effect and the petitioners were no
longer re-appointed as Comelec Commissioners.7 Thus, the petitioners merely served as
Comelec Commissioners for more than four months, or from February 16, 1998 to June 30,
1998.8
Subsequently, on March 15, 2005, the petitioners applied for their retirement benefits and
monthly pension with the Comelec, pursuant to R.A. No. 1568.9 The Comelec initially
approved the petitioners claims pursuant to its Resolution No. 06-136910 dated December 11,
2006 whose dispositive portion reads:
The Commission RESOLVED, as it hereby RESOLVES, to approve the recommendation of
Director Alioden D. Dalaig, Law Department, to grant the request of former Comelec
Commissioners Evalyn Fetalino and Amado Calderon for the payment of their retirement
On February 6, 2007, the Comelec issued Resolution No. 07-0202 granting the petitioners a
pro-rated gratuity and pension.12 Subsequently, on October 5, 2007, the petitioners asked for a
re-computation of their retirement pay on the principal ground that R.A. No. 1568,13 does not
cover a pro-rated computation of retirement pay. In response, the Comelec issued a resolution
referring the matter to its Finance Services Department for comment and recommendation.14
On July 14, 2009, the Comelec issued another resolution referring the same matter to its Law
Department for study and recommendation.15
In the presently assailed Resolution No. 880816 dated March 30, 2010, the Comelec, on the
basis of the Law Departments study, completely disapproved the petitioners claim for a lump
sum benefit under R.A. No. 1568. The Comelec reasoned out that:
Of these four (4) modes by which the Chairman or a Commissioner shall be entitled to lump
sum benefit, only the first instance (completion of term) is pertinent to the issue we have
formulated above. It is clear that the non-confirmation and non-renewal of appointment is not a
case of resignation or incapacity or death. The question rather is: Can it be considered as
retirement from service for having completed ones term of office?
xxxx
The full term of the Chairman and the Commissioners is seven (7) years. When there has been
a partial service, what remains is called the "unexpired term." The partial service is usually
called tenure. There is no doubt in the distinction between a term and tenure. Tenure is
necessarily variable while term is always fixed. When the law, in this case, RA 1568 refers to
completion of term of office, it can only mean finishing up to the end of the seven year term.
By completion of term, the law could not have meant partial service or a variable tenure that
does not reach the end. It could not have meant, the "expiration of term" of the Commissioner
whose appointment lapses by reason of non-confirmation of appointment by the Commission
on Appointments and non-renewal thereof by the President. It is rightly called expiration of
term but note: it is not completion of term. RA 1568 requires having completed his term of
office for the Commissioner to be entitled to the benefits.
Therefore, one whose ad interim appointment expires cannot be said to have completed his
term of office so as to fall under the provisions of Section 1 of RA 1568 that would entitle him
to a lump sum benefit of five (5) years salary.17 (emphasis, italics and underscores ours)
On this basis, the Comelec ruled on the matter, as follows:
Considering the foregoing, the Commission RESOLVED, as it hereby RESOLVES, to
APPROVE and ADOPT the study of the Law Department on the payment of retirement
benefits to members of the Commission.
Consequently, the following former Chairman and Commissioners of this Commission whose
appointments expired by reason of nonapproval by Commission on Appointments and non-
renewal by the President are not entitled to a lump sum benefit under Republic Act 1528 (sic):
Name Position Date of Service
1. Alfredo Benipayo, Jr. Chairman Feb. 16, 2001 to June 5, 2002
2. Evalyn Fetalino Commissioner Feb. 16, 1998 to June 30, 1998
3. Amado Calderon Commissioner Feb. 16, 1998 to June 30, 1998
4. Virgilio Garciliano Commissioner Feb. 12, 2004 to June 10, 2005
5. Manuel Barcelona, Jr. Commissioner Feb. 12, 2004 to June 10, 2005
6. Moslemen Macarambon Commissioner Nov[.] 05, 2007 to Oct. 10, 2008
7. Leonardo Leonida Commissioner July 03, 2008 to June 26, 2009
This resolution shall also apply to all requests of former COMELEC Chairmen and
Commissioners similarly situated. All previous resolutions which are inconsistent herewith are
hereby AMENDED or REVOKED accordingly.
Let the Finance Services and Personnel Departments implement this resolution.18(emphasis
ours)
The Petitions
The petitioners sought the nullification of Comelec Resolution No. 8808 via a petition for
certiorari under Rule 65 of the Rules of Court. Petitioner intervenor Manuel A. Barcelona, Jr.
later joined the petitioners in questioning the assailed resolution. Like the petitioners,
Barcelona did not complete the full seven-year term as Comelec Commissioner since he served
only from February 12, 2004 to July 10, 2005. The petitioners and Barcelona commonly argue
that:
(1) the non-renewal of their ad interim appointments by the CA until Congress already
adjourned qualifies as retirement under the law and entitles them to the full five-year lump sum
gratuity;
(2) Resolution No. 06-1369 that initially granted the five-year lump sum gratuity is already
final and executory and cannot be modified by the Comelec; and
(3) they now have a vested right over the full retirement benefits provided by RA No. 1568 in
view of the finality of Resolution No. 06- 1369.19
In the main, both the petitioners and Barcelona pray for a liberal interpretation of Section 1 of
R.A. No. 1568. They submit that the involuntary termination of their ad interim appointments
as Comelec Commissioners should be deemed by this Court as a retirement from the service.
Barcelona, in support of his plea for liberal construction, specifically cites the case of Ortiz v.
COMELEC.20 The Court ruled in this cited case that equity and justice demand that the
involuntary curtailment of Mario D. Ortizs term be deemed a completion of his term of office
so that he should be considered retired from the service.
In addition, the petitioners also bewail the lack of notice and hearing in the issuance of
Comelec Resolution No. 8808. Barcelona also assails the discontinuance of his monthly
pension on the basis of the assailed Comelec issuance.21
The Case for the Respondents
On July 22, 2010, the Comelec filed its Comment22 through the Office of the Solicitor
General. The Comelec prays for the dismissal of the petition on the grounds outlined below:
First, it submits that the petitioners reliance on Section 13, Rule 18 of the Comelec Rules of
Procedure to show that Resolution No. 06-1369 has attained finality is misplaced as this
resolution is not the final decision contemplated by the Rules. It also argues that estoppel does
not lie against the Comelec since the erroneous application and enforcement of the law by
public officers do not estop the Government from making a subsequent correction of its
errors.23
Second, the Comelec reiterates that the petitioners are not entitled to the lump sum gratuity,
considering that they cannot be considered as officials who retired after completing their term
of office. It emphasizes that R.A. No. 1568 refers to the completion of the term of office, not to
partial service or to a variable tenure that does not reach its end, as in the case of the
petitioners. The Comelec also draws the Courts attention to the case of Matibag v. Benipayo24
where the Court categorically ruled that an ad interim appointment that lapsed by inaction of
the Commission on Appointments does not constitute a term of office.25
Third, it argues that the petitioners do not have any vested right on their retirement benefits
considering that the retirements benefits afforded by R.A. No. 1568 are purely gratuitous in
nature; they are not similar to pension plans where employee participation is mandatory so that
they acquire vested rights in the pension as part of their compensation. Without such vested
rights, the Comelec concludes that the petitioners were not deprived of their property without
due process of law.26
The Courts Ruling
We DISMISS the petition and DENY Barcelonas petition for intervention.
Preliminary Considerations
R.A. No. 1568 provides two types of retirement benefits for a Comelec Chairperson or
Member: a gratuity or five-year lump sum, and an annuity or a lifetime monthly pension.27
Our review of the petitions, in particular, Barcelonas petition for intervention, indicates that he
merely questions the discontinuance of his monthly pension on the basis of Comelec
Resolution No. 8808.28 As the assailed resolution, by its plain terms (cited above), only
pertains to the lump sum benefit afforded by R.A. No. 1568, it appears that Barcelonas
petition for intervention is misdirected. We note, too, that Barcelona has not substantiated his
bare claim that the Comelec discontinued the payment of his monthly pension on the basis of
the assailed Resolution.
To put the case in its proper perspective, the task now before us is to determine whether the
petitioners are entitled to the full five-year lump sum gratuity provided for by R.A. No. 1568.
We conclude under our discussion below that they are not so entitled as they did not comply
with the conditions required by law.
The petitioners are not entitled to the lump sum gratuity under Section 1 of R.A. No. 1568, as
amended
That the petitioners failed to meet conditions of the applicable retirement law Section 1 of
R.A. No. 156829 is beyond dispute. The law provides:
Sec. 1. When the Auditor General or the Chairman or any Member of the Commission on
Elections retires from the service for having completed his term of office or by reason of his
incapacity to discharge the duties of his office, or dies while in the service, or resigns at any
time after reaching the age of sixty years but before the expiration of his term of office, he or
his heirs shall be paid in lump sum his salary for one year, not exceeding five years, for every
year of service based upon the last annual salary that he was receiving at the time of retirement,
incapacity, death or resignation, as the case may be: Provided, That in case of resignation, he
has rendered not less than twenty years of service in the government; And, provided, further,
That he shall receive an annuity payable monthly during the residue of his natural life
equivalent to the amount of monthly salary he was receiving on the date of retirement,
incapacity or resignation. [italics supplied]
To be entitled to the five-year lump sum gratuity under Section 1 of R.A. No. 1568, any of the
following events must transpire:
(1) Retirement from the service for having completed the term of office;
(2) Incapacity to discharge the duties of their office;
(3) Death while in the service; and
(4) Resignation after reaching the age of sixty (60) years but before the expiration of the term
of office. In addition, the officer should have rendered not less than twenty years of service in
the government at the time of retirement.
Death during the service obviously does not need to be considered in the present case, thus
leaving retirement, incapacity and resignation as the event that must transpire in order to be
entitled to the lump sum gratuity.
We note that the termination of the petitioners ad interim appointments could hardly be
considered as incapacity since it was not the result of any disability that rendered them
incapable of performing the duties of a Commissioner. Thus, incapacity is likewise effectively
removed from active consideration.
"Resignation is defined as the act of giving up or the act of an officer by which he declines his
office and renounces the further right to it. To constitute a complete and operative act of
resignation, the officer or employee must show a clear intention to relinquish or surrender his
position accompanied by the act of relinquishment."30 In this sense, resignation likewise does
not appear applicable as a ground because the petitioners did not voluntarily relinquish their
position as Commissioners; their termination was merely a consequence of the adjournment of
Congress without action by the CA on their ad interim appointments.
This eliminative process only leaves the question of whether the termination of the petitioners
ad interim appointments amounted to retirement from the service after completion of the term
of office. We emphasize at this point that the right to retirement benefits accrues only when two
conditions are met: first, when the conditions imposed by the applicable law in this case,
R.A. No. 1568 are fulfilled; and second, when an actual retirement takes place.31 This
Court has repeatedly emphasized that retirement entails compliance with certain age and
service requirements specified by law and jurisprudence, and takes effect by operation of
law.32
Section 1 of R.A. No. 1568 allows the grant of retirement benefits to the Chairman or any
Member of the Comelec who has retired from the service after having completed his term of
office. The petitioners obviously did not retire under R.A. No. 1568, as amended, since they
never completed the full seven-year term of office prescribed by Section 2, Article IX-D of the
1987 Constitution; they served as Comelec Commissioners for barely four months, i.e., from
February 16, 1998 to June 30, 1998. In the recent case of Re: Application for Retirement of
Judge Moslemen T. Macarambon under Republic Act No. 910, as amended by Republic Act
No. 9946,33 where the Court did not allow Judge Macarambon to retire under R.A. No. 910
because he did not comply with the age and service requirements of the law, the Court
emphasized:
Strict compliance with the age and service requirements under the law is the rule and the grant
of exception remains to be on a case to case basis. We have ruled that the Court allows seeming
exceptions to these fixed rules for certain judges and justices only and whenever there are
ample reasons to grant such exception. (emphasis ours; citations omitted)
More importantly, we agree with the Solicitor General that the petitioners service, if any, could
only amount to tenure in office and not to the term of office contemplated by Section 1 of R.A.
No. 1568. Tenure and term of office have well-defined meanings in law and jurisprudence. As
early as 1946, the Court, in Topacio Nueno v. Angeles,34 provided clear distinctions between
these concepts in this wise:
The term means the time during which the officer may claim to hold the office as of right, and
fixes the interval after which the several incumbents shall succeed one another. The tenure
represents the term during which the incumbent actually holds the office. The term of office is
not affected by the hold-over. The tenure may be shorter than the term for reasons within or
beyond the power of the incumbent. There is no principle, law or doctrine by which the term of
an office may be extended by reason of war. [emphasis ours]
This is the ruling that has been followed since then and is the settled jurisprudence on these
concepts.35
While we characterized an ad interim appointment in Matibag v. Benipayo36 "as a permanent
appointment that takes effect immediately and can no longer be withdrawn by the President
once the appointee has qualified into office," we have also positively ruled in that case that "an
ad interim appointment that has lapsed by inaction of the Commission on Appointments does
not constitute a term of office."37 We consequently ruled:
However, an ad interim appointment that has lapsed by inaction of the Commission on
Appointments does not constitute a term of office. The period from the time the ad interim
appointment is made to the time it lapses is neither a fixed term nor an unexpired term. To hold
otherwise would mean that the President by his unilateral action could start and complete the
running of a term of office in the COMELEC without the consent of the Commission on
Appointments. This interpretation renders inutile the confirming power of the Commission on
Appointments.38 (emphasis ours; italics supplied)
Based on these considerations, we conclude that the petitioners can never be considered to
have retired from the service not only because they did not complete the full term, but, more
importantly, because they did not serve a "term of office" as required by Section 1 of R.A. No.
1568, as amended.
Ortiz v. COMELEC cannot be applied to the present case
We are not unmindful of the Courts ruling in Ortiz v. COMELEC39 which Barcelona cites as
basis for his claim of retirement benefits despite the fact that like the petitioners he did
not complete the full term of his office.
In that case, the petitioner was appointed as Comelec Commissioner, for a term expiring on
May 17, 1992, by then President Ferdinand E. Marcos, and took his oath of office on July 30,
1985. When President Corazon Aquino assumed the Presidency and following the lead of the
Justices of the Supreme Court, Ortiz together with the other Comelec Commissioners
tendered his courtesy resignation on March 5, 1986. On July 21, 1986, President Aquino
accepted their resignations effective immediately. Thereafter, Ortiz applied for retirement
benefits under R.A. No. 1568, which application the Comelec denied. The Court, however,
reversed the Comelec and held that "[t]he curtailment of [Ortizs] term not being attributable to
any voluntary act on the part of the petitioner, equity and justice demand that he should be
deemed to have completed his term xxx. [That he] should be placed in the same category as
that of an official holding a primarily confidential position whose tenure ends upon his
superiors loss of confidence in him." Thus, as "he is deemed to have completed his term of
office, [Ortiz] should be considered retired from the service."40
A close reading of Ortiz reveals that it does not have the same fact situation as the present case
and is thus not decisive of the present controversy. We note that the impact of the principle of
stare decisis that Barcelona cited as basis is limited; specific judicial decisions are binding only
on the parties to the case and on future parties with similar or identical factual situations.41
Significantly, the factual situation in Ortiz is totally different so that its ruling cannot simply be
bodily lifted and applied arbitrarily to the present case.
First, in Ortiz, Ortizs appointment was a regular appointment made by then President Marcos,
while the petitioners were appointed by President Ramos ad interim or during the recess of
Congress.
Second, Ortizs appointment was made under the 1973 Constitution which did not require the
concurrence of the CA. Notably, the 1973 Constitution abolished the CA and did not provide
for an executive limit on the appointing authority of the President. In the present case, the
petitioners ad interim appointment was made under the 1987 Constitution which mandated
that an appointment shall be effective only until disapproval by the CA or until the next
adjournment of Congress.
Third, in Ortiz, the Court addressed the issue of whether a constitutional official, whose
"courtesy resignation" had been accepted by the President of the Philippines during the
effectivity of the Freedom Constitution, may be entitled to retirement benefits under R.A. No.
1568. In the present case, the issue is whether the termination of the petitioners ad interim
appointments entitles them to the full five-year lump sum gratuity provided for by R.A. No.
1568.
No occasion for liberal construction since Section 1 of R.A. No. 1568, as amended, is clear and
unambiguous
The petitioners appeal to liberal construction of Section 1 of R.A. No. 1568 is misplaced since
the law is clear and unambiguous. We emphasize that the primary modality of addressing the
present case is to look into the provisions of the retirement law itself. Guided by the rules of
statutory construction in this consideration, we find that the language of the retirement law is
clear and unequivocal; no room for construction or interpretation exists, only the application of
the letter of the law.
The application of the clear letter of the retirement law in this case is supported by
jurisprudence. As early as 1981, in the case of In Re: Claim of CAR Judge Noel,42 the Court
strictly adhered to the provisions of R.A. No. 910 and did not allow the judges claim of
monthly pension and annuity under the aforementioned law, considering that his length of
government service fell short of the minimum requirements.
Similarly, in Re: Judge Alex Z. Reyes,43 the Court dismissed CTA Judge Reyes invocation of
the doctrine of liberal construction of retirement laws to justify his request that the last step
increment of his salary grade be used in the computation of his retirement pay and terminal
leave benefits, and held:
In Borromeo, the court had occasion to say: "It is axiomatic that retirement laws are liberally
construed and administered in favor of the persons intended to be benefited. All doubts as to
the intent of the law should be resolved in favor of the retiree to achieve its humanitarian
purposes." Such interpretation in favor of the retiree is unfortunately not called for nor
warranted, where the clear intent of the applicable law and rules are demonstrably against the
petitioner's claim. (Paredes v. City of Manila, G.R. No. 88879, March 21, 1991). Section 4 is
explicit and categorical in its prohibition and, unfortunately for Judge Reyes, applies squarely
to the instant case.44 (emphasis ours; italics supplied)
Finally, in Govt Service Insurance System v. Civil Service Commission,45 the Court was
asked to resolve whether government service rendered on a per diem basis is creditable for
computing the length of service for retirement purposes. In disregarding the petitioners plea
for liberal construction, the Court held:
The law is very clear in its intent to exclude per diem in the definition of "compensation."
Originally, per diem was not among those excluded in the definition of compensation (See
Section 1(c) of C.A. No. 186), not until the passage of the amending laws which redefined it to
exclude per diem.
The law not only defines the word "compensation," but it also distinguishes it from other forms
of remunerations. Such distinction is significant not only for purposes of computing the
contribution of the employers and employees to the GSIS but also for computing the
employees' service record and benefits.
xxxx
Private respondents both claim that retirement laws must be liberally interpreted in favor of the
retirees. However, the doctrine of liberal construction cannot be applied in the instant petitions,
where the law invoked is clear, unequivocal and leaves no room for interpretation or
construction. Moreover, to accommodate private respondents' plea will contravene the purpose
for which the law was enacted, and will defeat the ends which it sought to attain (cf. Re: Judge
Alex Z. Reyes, 216 SCRA 720 [1992]).46 [italics supplied; emphasis ours]
No compelling reasons exist to warrant the liberal application of Section 1 of R.A. No. 1568,
as amended, to the present case
We find no compelling legal or factual reasons for the application of the Courts liberality in
the interpretation of retirement laws to the present case. The discretionary power of the Court
to exercise the liberal application of retirement laws is not limitless; its exercise of liberality is
on a case-to-case basis and only after a consideration of the factual circumstances that justify
the grant of an exception. The recent case of Re: Application for Retirement of Judge
Moslemen T. Macarambon under Republic Act No. 910, as amended by Republic Act No.
994647 fully explained how a liberal approach in the application of retirement laws should be
construed, viz:
The rule is that retirement laws are construed liberally in favor of the retiring employee.
However, when in the interest of liberal construction the Court allows seeming exceptions to
fixed rules for certain retired Judges or Justices, there are ample reasons behind each grant of
an exception. The crediting of accumulated leaves to make up for lack of required age or length
of service is not done indiscriminately. It is always on a case to case basis.
In some instances, the lacking elementsuch as the time to reach an age limit or comply with
length of service is de minimis. It could be that the amount of accumulated leave credits is
tremendous in comparison to the lacking period of time.
More important, there must be present an essential factor before an application under the Plana
or Britanico rulings may be granted. The Court allows a making up or compensating for lack of
required age or service only if satisfied that the career of the retiree was marked by
competence, integrity, and dedication to the public service; it was only a bowing to policy
considerations and an acceptance of the realities of political will which brought him or her to
premature retirement. (emphases and italics ours; citation omitted)
In the present case, as previously mentioned, Ortiz cannot be used as authority to justify a
liberal application of Section 1 of R.A. No. 1568, as amended not only because it is not on all
fours with the present case; more importantly, the Court in Ortiz had ample reasons, based on
the unique factual circumstances of the case, to grant an exception to the service requirements
of the law. In Ortiz, the Court took note of the involuntariness of Ortizs "courtesy resignation,"
as well as the peculiar circumstances obtaining at that time President Aquino issued
Proclamation No. 1 calling for the courtesy resignation of all appointive officials, viz:
From the foregoing it is evident that petitioner's "resignation" lacks the element of clear
intention to surrender his position. We cannot presume such intention from his statement in his
letter of March 5, 1986 that he was placing his position at the disposal of the President. He did
not categorically state therein that he was unconditionally giving up his position. It should be
remembered that said letter was actually a response to Proclamation No. 1 which President
Aquino issued on February 25, 1986 when she called on all appointive public officials to
tender their "courtesy resignation" as a "first step to restore confidence in public
administration."48
In stark contrast, no such peculiar circumstances obtain in the present case.
Finally, in the absence of any basis for liberal interpretation, the Court would be engaged in
judicial legislation if we grant the petitioners plea. We cannot overemphasize that the policy of
liberal construction cannot and should not be to the point of engaging in judicial legislation
an act that the Constitution absolutely forbids this Court to do. In the oft-cited case of Tanada
v. Yulo,49 Justice George A. Malcolm cautioned against judicial legislation and warned against
liberal construction being used as a license to legislate and not to simply interpret,50 thus:
Counsel in effect urges us to adopt a liberal construction of the statute. That in this instance, as
in the past, we aim to do. But counsel in his memorandum concedes "that the language of the
proviso in question is somewhat defective and does not clearly convey the legislative intent",
and at the hearing in response to questions was finally forced to admit that what the
Government desired was for the court to insert words and phrases in the law in order to supply
an intention for the legislature. That we cannot do. By liberal construction of statutes, courts
from the language used, the subject matter, and the purposes of those framing them are able to
find out their true meaning. There is a sharp distinction, however, between construction of this
nature and the act of a court in engrafting upon a law something that has been omitted which
someone believes ought to have been embraced. The former is liberal construction and is a
legitimate exercise of judicial power. The latter is judicial legislation forbidden by the tripartite
division of powers among the three departments of government, the executive, the legislative,
and the judicial.51
In the present case, Section 1 of R.A. No. 1568, by its plain terms, is clear that retirement
entails the completion of the term of office. To construe the term "retirement" in Section 1 of
R.A. No. 1568 to include termination of an ad interim appointment is to read into the clear
words of the law exemptions that its literal wording does not support; to depart from the
meaning expressed by the words of R.A. No. 1568 is to alter the law and to legislate, and not to
interpret. We would thereby violate the timehonored rule on the constitutional separation of
powers. The words of Justice E. Finley Johnson in the early case of Nicolas v. Alberto52 still
ring true today, viz.:
The courts have no legislative powers. In the interpretation and construction of statutes their
sole function is to determine, and, within the constitutional limits of the legislative power, to
give effect to the intention of the legislature. The courts cannot read into a statute something
which is not within the manifest intention of the legislature as gathered from the statute itself.
To depart from the meaning expressed by the words of a statute, is to alter the statute, to
legislate and not to interpret. The responsibility for the justice or wisdom of legislation rests
with the legislature, and it is the province of the courts to construe, not to make the laws.
To reiterate, in light of the express and clear terms of the law, the basic rule of statutory
construction should therefore apply: "legislative intent is to be determined from the language
employed, and where there is no ambiguity in the words, there is no room for construction."53
The Comelec did not violate the rule on finality of judgments
Petitioners argue that Resolution No. 06-1369, which initially granted them a five-year lump
sum gratuity, attained finality thirty (30) days after its promulgation, pursuant to Section 13,
Rule 18 of the Comelec Rules of Procedure, and, thus, can no longer be modified by the
Comelec.
We cannot agree with this position. Section 13, Rule 18 of the Comelec Rules of Procedure
reads:
Sec. 13. Finality of Decisions or Resolutions.
a. In ordinary actions, special proceedings, provisional remedies and special reliefs a decision
or resolution of the Commission en banc shall become final and executory after thirty (30) days
from its promulgation.
A simple reading of this provision shows that it only applies to ordinary actions, special
proceedings, provisional remedies and special reliefs. Under Section 5, Rule 1 of the Comelec
Rules of Procedures, ordinary actions refer to election protests, quo warranto, and appeals from
decisions of courts in election protest cases; special proceedings refer to annulment of
permanent list of voters, registration of political parties and accreditation of citizens arms of
the Commission; provisional remedies refer to injunction and/or restraining order; and special
reliefs refer to certiorari, prohibition, mandamus and contempt. Thus, it is clear that the
proceedings that precipitated the issuance of Resolution No. 06-1369 do not fall within the
coverage of the actions and proceedings under Section 13, Rule 18 of the Comelec Rules of
Procedure. Thus, the Comelec did not violate its own rule on finality of judgments.1wphi1
No denial of due process
they sought a re-computation of the initial pro-rated retirement benefits that were granted to
them by the Comelec. Under these facts, no violation of the right to due process of law took
place.
No vested rights over retirement benefits
As a last point, we agree with the Solicitor General that the retirement benefits granted to the
petitioners under Section 1 of R.A. No. 1568 are purely gratuitous in nature; thus, they have no
vested right over these benefits. 58 Retirement benefits as provided under R.A. No. 1568 must
be distinguished from a pension which is a form of deferred compensation for services
performed; in a pension, employee participation is mandatory, thus, employees acquire
contractual or vested rights over the pension as part of their compensation. 59 In the absence of
any vested right to the R.A. No. 1568 retirement benefits, the petitioners' due process argument
must perforce fail.
WHEREFORE, premises considered, we hereby DISMISS the petition for certiorari filed by
petitioners Evalyn I. Fetalino and Amado M. Calderon for lack of merit. We likewise DENY
Manuel A. Barcelona, Jr.'s petition for intervention for lack of merit. No costs.
SO ORDERED.

We also find no merit in the petitioners contention that that they were denied due process of
law when the Comelec issued Resolution No. 8808 without affording them the benefit of a
notice and hearing. We have held in the past that "[t]he essence of due process is simply the
opportunity to be heard, or as applied to administrative proceedings, an opportunity to explain
ones side or an opportunity to seek a reconsideration of the action or ruling complained of.
[Thus, a] formal or trial-type hearing is not at all times and in all instances essential. The
requirements are satisfied where the parties are given fair and reasonable opportunity to
explain their side of the controversy at hand. What is frowned upon is absolute lack of notice
and hearing." 54 In Bautista v. Commission on Elections,55 we emphasized:

In Zaldivar vs. Sandiganbayan (166 SCRA 316 [1988]), we held that the right to be heard does
not only refer to the right to present verbal arguments in court. A party may also be heard
through his pleadings. Where opportunity to be heard is accorded either through oral arguments
or pleadings, there is no denial of procedural due process. As reiterated in National
Semiconductor (HK) Distribution, Ltd. vs. NLRC (G.R. No. 123520, June 26, 1998), the
essence of due process is simply an opportunity to be heard, or as applied to administrative
proceedings, an opportunity to explain one's side. Hence, in Navarro III vs. Damaso (246
SCRA 260 1995), we held that a formal or trial-type hearing is not at all times and not in all
instances essential.56 (italics supplied)

Thus, "a party cannot successfully invoke deprivation of due process if he was accorded the
opportunity of a hearing, through either oral arguments or pleadings. There is no denial of due
process when a party is given an opportunity through his pleadings."57 In the present case, the
petitioners cannot claim deprivation of due process because they actively participated in the
Comelec proceedings that sought for payment of their retirement benefits under R.A. No. 1568.
The records clearly show that the issuance of the assailed Comelec resolution was precipitated
by the petitioners application for retirement benefits with the Comelec. Significantly, the
petitioners were given ample opportunity to present and explain their respective positions when Republic of the Philippines
 SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 100285 August 13, 1992
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
NAPOLEON DUQUE, accused-appellant.
The Solicitor General for plaintiff-appellee.
Trinidad, Reverente, Makalintal, Cabrera and Monsod Law Office for accused-appellant.
FELICIANO, J.:
Appellant Napoleon Duque was charged with and convicted of violating Section 38 in relation
to Section 39 of P.D. No. 442, as amended, known as The Labor Code of the Philippines. The
charge of illegal recruitment was set out in the information in the following terms:
That on or about and/or sometime in January 1986, at Calamba, Laguna and within the
jurisdiction of this Honorable Court, the above named accused well knowing that he is not
licensed nor authorized by the proper government agency (POEA) to engage in recruitment of
workers for placement abroad, did then and there wilfully, unlawfully and feloniously recruit
Glicerio Teodoro, Agustin Ulat, Ernesto Maunahan, Norma Francisco, Elmo Alcaraz and
Marcelino Desepida as workers abroad exacted and actually received money from the above-
named victims, to their damage and prejudice.
Contrary to law. 1
The evidence in chief of the prosecution consisted principally of the testimony of the following
witnesses: Agustin Ulat, Elmo Alcaraz, Marcelino Desepida and Norma Francisco. Their
testimonies were summarized in the trial court's decision as follows:
. . . sometime in January 1986, he (Agustin Ulat) was invited by the accused to his house in
Calamba, Laguna. Thereat accused informed him that he was recruiting workers for Saudi
Arabia and that he was interested in getting (sic) him. Accused likewise presented to him that
he (accused) was a licensed recruiter (TSN, 22 Oct. 1990, pp. 6-7). The accused told him to
secure his birth certificate, an NBI clearance and medical certificate. He was able to secure an
NBI clearance which he showed to the accused. The latter thereafter told him that he would
secure the rest of his papers like passport, visa and medical certificate for him and for this,
accused asked him to prepare the amount of P20,000.00. He did not have that money, so he
mortgaged his lot for P20,000.00 to the cousin of the accused, Socorro Arlata. He immediately
gave this amount to the accused who assured him that he would be able to leave within two
months. The accused did not issue a receipt for that amount despite his request. He did not
persist in asking the accused because he trusted him, accused coming from an affluent family
and a member of a well-known Catholic organization, the "Cursillo" (TSN, 22 Oct. 1990, pp.
4-9). However, accused failed to employ him at Saudi Arabia within two months despite
repeated promise (sic) to do so. Thus, he demanded the return of his money but accused failed.
Finally, he decided, together with the other complainants, to file a complaint against accused
before the Philippine Overseas Employment Agency (POEA). . . .
Elmo Alcaraz, Marcelino Desepida and Norma Francisco individually testified to the
following: sometime also in January 1986, they went to the house of accused for work abroad
as the latter had earlier told them that he was recruiting workers for the Saudi Arabia. The
accused asked money to process their papers. Alcaraz was able to give the accused on 22
February 1986 the amount of P5,000.00, but the accused failed to issue him a receipt and he
did not persist in asking for it because he trusted the accused on (TSN, 5 Nov. 1990, pp. 5-7).
Desepida was able to give the accused on 18 Feb. 1986, the amount of P7,000.00 as placement
fee for which the accused did not issue a receipt although he promised to issue one the next
day. However, the following day, when he reminded the accused of the receipt, he refused
saying that he (Desepida) should trust [the accused]. Francisco was able to give the accused
P9,000.00 on 21 February 1986 in the presence of the other applicants (TSN, 26 Nov. 1990, p.
5). But, the accused again failed to issue a receipt despite demand. She was told by the accused
to trust him (Ibid., p. 6). However, the accused failed to return their money notwithstanding.
Thus, all of them decided to file a complaint with the POEA against the accused. There, they
executed a joint affidavit (Exh. "A"). 2
During the trial, Duque denied the charges. He controverted the allegation that he had recruited
complainants for overseas employment. He also denied that he had received any monies in
consideration of promised employment. However, he acknowledged that his house had served
as a meeting place for a certain Delfin and one Engr. Acopado who allegedly were the persons
who had promised complainants, work abroad.
On the basis of the positive identification by private complainants of appellant Duque as the
person they had talked to for placement abroad, the person who had collected fees from them
and who had received information from them needed for arranging their departure for abroad,
the trial court concluded that accused Duque was primarily responsible for promising
placement and inducing private complainants to part with their money. The prosecution also
submitted a certification from the licensing branch of the Philippine Overseas Employment
Administration ("POEA") stating that no records existed whatsoever of a grant to the accused
of a license or authority to recruit for overseas employment. The dispositive part of the
decision reads:
Wherefore, this Court finds the accused guilty beyond reasonable doubt, [of] violation of [Art.]
38 in relation to [Art.] 39 of P.D. 442 otherwise known as the Labor Code of the Philippines,
and hereby sentences the accused to suffer the penalty of reclusion perpetua and a fine of
P100,000.00 without subsidiary imprisonment in case of insolvency and to indemnify the
offended parties: Agustin Ulat the amount of P20,000.00; Marcelino Desepida the amount of
P7,000.00; Norma Francisco the amount of P9,000.00; and Elmo Alcaraz the amount of
P3,000.00 and the cost of suit. 3
Before this Court, appellant Duque raises only one (1) issue: that of prescription of the criminal
offense for which he was convicted.
The recruitment of persons for overseas employment without the necessary recruiting permit or
authority form the POEA constitutes a crime penalized, not by the Revised Penal Code, but
rather by a special law, i.e., Article 38 in relation to Article 290 of the Labor Code. Article 290
of the Labor Code provides, in relevant part, that:
Art. 290. Offenses penalized under this Code and the rules and regulations issued pursuant
thereto shall prescribe in three (3) years.
xxx xxx xxx
The Labor Code, however, does not contain any provisions on the mode of computation of the
three-year prescriptive period it established.
The Solicitor General states, and we agree with him, that Act No. 3326, as amended, entitled
"An Act to Establish Periods of Prescription for Violations Penalized by Special Acts and
Municipal Ordinances and to Provide When Prescription Shall Begin to Run" (emphasis
supplied), supplied the applicable norm. 4 Section 2 of Act No. 3326, as amended, reads as
follows:
Section 2: . . .
xxx xxx xxx
Prescription shall begin to run from the day of the commission of the violation of the law, and
if the same be not known at the time, from the discovery thereof and institution of judicial
proceedings for its investigation and punishment.
Examination of the abovequoted Section 2 shows that there are two (2) rules for determining
the beginning of the prescriptive period: (a) on the day of the commission of the violation, if
such commission be known; and (b) if the commission of the violation was not known at the
time, then from discovery thereof and institution of judicial proceedings for investigation and
punishment. Appellant Duque contends that the prescriptive period in the case at bar
commenced from the time money in consideration of promises for overseas employment was
parted with by complainants. Duque thus contends that the prescriptive period began to run
sometime in January 1986. The information was, however, filed by the Assistant Provincial
Prosecutor of Laguna on 22 May 1990, i.e., more than four (4) years later. Duque concludes
that the offense of illegal recruitment had accordingly prescribed by May 1990.
We are not persuaded. Article 38 of the Labor Code as amended reads as follows:
Art. 38. Illegal Recruitment. (a) Any recruitment activities, including the prohibited
practices enumerated under Article 34 of this Code, to be undertaken by non-licensees or non-
holders of authority shall be deemed illegal and punishable under Article 39 of this Code. The
Ministry of Labor and Employment or any law enforcement officer may initiate complaints
under this Article.
(b) Illegal recruitment when committed by a syndicate or in large scale shall be
considered an offense involving economic sabotage and shall be penalized in accordance with
Article 39 hereof.
Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or
more persons conspiring and/or confederating with one another in carrying out any unlawful or
illegal transaction, enterprise or scheme defined under the first paragraph hereof. Illegal
recruitment is deemed committed in large scale if committed against three (3) or more persons
individually or as a group.
(c) The Minister of Labor and Employment or his duly authorized representatives shall
have the power to cause the arrest and detention of such non-license or non-holder of authority
if after investigation it is determined that his activities constitute a danger to national security
and public order or will lead to further exploitation of job-seekers. The Minister shall order the
search of the office or premises and seizure of documents, paraphernalia, properties and other
implements used in illegal recruitment activities and the closure of companies, establishments
and entities found to be engaged in the recruitment of workers for overseas employment,
without having been licensed or authorized to do so. (Emphasis supplied)
It will be seen that illegal recruitment has two (2) basic elements, to wit: (a) recruitment
activities as listed in Articles 38 and 34 of the Labor Code; and (b) the lack of the necessary
license or authority from the POEA to engage in such activities. Recruitment for overseas
employment is not in itself necessarily immoral or unlawful. It is the lack of necessary license
or permit that renders such recruitment activities unlawful and criminal. Such lack of necessary
permit or authority, while certainly known to appellant Duque back in January 1986, was not
known to private complainants at that time. Indeed, private complainants discovered that
appellant did not possess such authority or permit only when they went to the offices of the
POEA for the purpose of filing a claim for return of the money they had delivered to appellant
Duque. Since good faith is always presumed, the complainants were entitled to assume the
appellant Duque was acting in good faith when he presented himself as a recruiter for overseas
placement. Even if it be assumed arguendo that ordinary prudence required that a person
seeking overseas employment ought to check the authority or status of persons pretending to be
authorized or to speak for a recruitment or placement agency, the offended parties' failure to do
so did not start the running of the prescriptive period. In the nature of things, acts made
criminal by special laws are frequently not immoral or obviously criminal in themselves; for
this reason, the applicable statute requires that if the violation of the special law is not known
at the time, then prescription begins to run only from the discovery thereof, i.e., discovery of
the unlawful nature of the constitutive act or acts.
Appellant Duque assails Section 2 of Act No. 3326 as illogical or absurd. A literal reading of
Section 2 appears to suggest that two (2) elements must coincide for the beginning of the
running of the prescriptive period: first, the element of discovery of the commission of the
violation of the special law; and second, the "institution of judicial proceedings for its
investigation and punishment." It is then argued by appellant that because the co-existence of
these two (2) requirements is necessary under Section 2 of Act No. 3326, the relevant
prescriptive period would never begin to run.
Here appellant has a point. However, it should be noted, firstly, that the literal reading that
appellant suggests, does not benefit appellant, for the prescriptive period in the case at bar had
not in any case been exhausted since prosecution of appellant commenced only a few months
after the POEA and the complainants had discovered that appellant had no governmental
authority to recruit for overseas work and was merely pretending to recruit workers for
overseas employment and to receive money therefor, i.e., that appellant did not even attempt to
locate employment abroad for complainants. Secondly, we do not think there is any real need
for such a literal reading of Section 2. As is well-known, initiation of proceedings for
preliminary investigation of the offense normally marks the interruption of the period of
prescription. Under appellant Duque's literal reading, the prescription period would both begin
and be interrupted by the same occurrence; the net effect would be that the prescription period
would not have effectively begun, having been rendered academic by the simultaneous
interruption of that same period. A statute providing for prescription of defined criminal
offenses is more than a statute of repose and constitutes an act of grace by which the State,
after the lapse of a certain period of time, surrenders its sovereign power to prosecute the
criminal act. A statute on prescription of crimes is an act of liberality on the part of the State in
favor of the offender. 5 The applicable well-known principles of statutory interpretation are
that statutes must be construed in such a way as to give effect to the intention of the legislative
authority, 6 and so as to give a sensible meaning to the language of the statute and thus avoid
nonsensical or absurd results, 7 departing to the extent unavoidable from the literal language of
the statute. Appellant's literal reading would make nonsense of Section 2 of Act No. 3326.
In our view, the phrase "institution of judicial proceedings for its investigation and
punishment" may be either disregarded as surplusage or should be deemed preceded by the
word "until." Thus, Section 2 may be read as:
Prescription shall begin to run from the day of the commission of the violation of the law; and
if the same be not known at the time, from the discovery thereof;
or as:
Prescription shall begin to run from the day of the commission of the violation of the law, and
if the same be not known at the time, from the discovery thereof and until institution of judicial
proceedings for its investigation and punishment. (Emphasis supplied)
The term of prescription shall not run when the offender is absent from the Philippine
Archipelago. (Emphasis supplied)
Under the above-quoted Article 91, the prescriptive period in respect of the offense of illegal
recruitment began to run on the date of discovery thereof by the private complainants and the
authorities concerned (POEA) sometime in December 1989 and was interrupted on 16 April
1990 when the affidavit-sworn complaint was filed before the Office of the Provincial
Prosecutor, 9 and certainly by May 1990 when the criminal information was filed in court by
the Assistant Provincial Prosecutor of Laguna. Once more, the appellant's defense of
prescription must fail.
Under Section 39 of the Labor Code as amended, the penalty of life imprisonment is properly
imposable where the illegal recruitment is committed "in large scale," i.e., where it is
"committed against three (3) or more persons individually or as a group." 10 In the case at bar,
private complainants are more than three (3) in number. Moreover, appellant Duque had
represented to the public at large, including private complainants, that he was a licensed
recruiter. 11 Duque's house served as his business office and he asked the private complainants
to see him in his house. 12 There, complainants were "briefed" as to the requirements for
overseas employment before their supposed departure and were each required to secure a
clearance from the National Bureau of Investigation. 13 Considerable sums were collected
from each of the complainants supposedly to "facilitate" the processing of passports, medical
certificates and other working papers. 14 Complainants were, in addition, shown documents
which purported to be job placement orders. This organized modus operandi was repeated in
respect of each of the complainants and presumably in respect of other persons who were
similarly victimized by appellant. There is no question that the recruitment activities of Duque
were organized and "large scale" in nature. 15

We believe and so hold that the applicable prescriptive period in the case at bar began to run WHEREFORE, the judgment of conviction rendered by the trial court is hereby AFFIRMED,
from the time the recruitment activities of appellant Duque were ascertained by the with the sole modification that the penalty properly imposable and hereby imposed is life
complainants and by the POEA to have been carried out without any license or authority from imprisonment and not reclusion perpetua. Costs against appellant.
the government. The discovery by the complainants and by the POEA was, as a practical
matter, simultaneous in character and occurred sometime in December 1989 when the SO ORDERED.
complainants went to the POEA with the complaint for recovery of the placement fees and
expenses they had paid to appellant Duque, and the POEA, acting upon that complaint,
discovered and informed the private complainants that Duque had operated as a recruiter
without the essential government license or authority. Accordingly, the offense of illegal
recruitment had not prescribed when the complaint was filed with the Provincial Prosecutor's
Office in April 1990 and when the information was filed in court in May 1990.

It is relevant to note that the same result would be reached by giving supplemental effect to
provisions of the Revised Penal Code in the application of Article 290 of the Labor Code. 8
Article 91 of the Revised Penal Code reads as follows:

Art. 91. Computation of the prescription of offenses. The period of prescription shall
commence to run from the day on which the crime is discovered by the offended party, the
authorities, or their agents, and shall be interrupted by the filing of the complaint or
information, and shall commence to run again when such proceedings terminate without the
accused being convicted or acquitted, or are unjustifiably stopped for any reason not imputable
to him.
 Republic of the Philippines
SUPREME COURT On June 21, 1969 Republic Act No. 5520 was approved. It provided for the creation of the City
Manila of Dipolog from the then of the Municipality of Dipolog, to take effect on January 1, 1970.

FIRST DIVISION On July 28, 1971 the Arabay, Inc., a distributor of gas, oil and other petroleum products, filed
with the Court of First Instance of Zamboanga del Norte a complaint against the City of
Dipolog contesting the validity of the above-mentioned Section 1 of Ordinance No. 53 on the
ground that the same imposed a sales tax which is beyond the power of a municipality to levy
G.R. No. L-37684 September 10, 1975 under Section 2 of Republic Act No. 2264, otherwise known as the Local Autonomy Act of
1959. Said Section 2 provides:
ARABAY, INC., petitioner,
vs. SEC. 2 Taxation Any provision of law to the contrary notwithstanding, all chartered
THE COURT OF FIRST INSTANCE OF ZAMBOANGA DEL NORTE, BRANCH II, THE cities, municipalities and municipal districts shall have authority to impose municipal license
CITY OF DIPOLOG and EMILIO L. TAGAILO, in his capacity as City Treasurer of the City taxes or fees upon persons engaged in any occupation or business, or exercising privileges in
of Dipolog, et al., respondents. chartered cities, municipalities or municipal districts by requiring them to secure licenses at
rates fixed by the municipal board or city council of the city, the municipal council of the
Dominguez Law Office for petitioner. municipality, or the municipal district council of the municipal district; to collect fees and
charges for service rendered by the city, municipality or municipal district; to regulate and
Assistant City Fiscal Arquipo L. Adriatico for respondents. impose reasonable fees for services rendered in connection with any business, profession or
occupation being conducted within the city, municipality or municipal district and otherwise to
levy for public purposes, just and uniform taxes, licenses or fees: Provided, That municipalities
and municipal districts shall, in no case, impose any percentage tax on sales or other taxes in
CASTRO, J.: any form based thereon nor impose taxes on articles subject to specific tax, except gasoline,
under the provisions of the National Internal Revenue: Provided, however, That no city,
Before us is a petition for review of the decision of the Court of First Instance of Zamboanga municipality or municipal district may levy or impose any of the following: ... (emphasis
del Norte, Branch II, dismissing the complaint of the herein petitioner Arabay, Inc., for supplied)
annulment of a tax ordinance of the Municipal Council of Dipolog, Zamboanga del Norte, and
for refund of the taxes it had paid thereunder. On December 17, 1965 the Municipal Council of On August 30, 1972 the Arabay, Inc. filed a supplemental complaint which prayed, among
Dipolog enacted Ordinance No. 19 amending Section I of Ordinance No. 53 series of 1964. As others, for a refund of the taxes it had paid under the ordinance in question.
thus amended the said Section I reads as follows:
On October 30, 1972 the parties entered into a stipulation of facts which, inter alia, states:
Section 1. There shall be charged for the selling and distribution of refined and manufactured
mineral oils, motor and diesel fuels, and petroleum based on the monthly allocation actually 2. That plaintiff, pursuant to the above ordinance, paid sales taxes for the sale of
delivered and distributed and intended for sale, in any manner whatsoever, by the Company or Diesel fuel oils, lubricating oils, petroleum, kerosene and other related petroleum products, to
supplier to any person, firm, entity, or corporation, whether as dealer of such refined and the defendant City of Dipolog, from December, 1969 to July, 1972 in the total amount of FIVE
manufactured mineral oils, motor and diesel fuels, and petroleum or as operator of any station THOUSAND FOUR HUNDRED PESOS (P5,400.00). A schedule of the payments made by
thereof, the following tax payable monthly: plaintiff is hereto attached as Annex "A" and is made an integral part hereof. However, the
payments made from April, 1972 to July, 1972, in the total amount of P69.80 have been
refunded by defendant City of Dipolog to plaintiff.
Gasoline P0.01 per liter
Lubricating oils P0.01 per liter WHEREFORE, on the basis of the foregoing stipulation of facts and of the Memorandum of
Diesel Fuel oils centavo per liter Arguments to be submitted by the parties, the latter, through, their respective counsels, hereby
Petroleum or P0.05 per gallon can submit the case for the determination of this Honor.
kerosene or
P0.02 per half gallon tin On January 16, 1973 the court a quo rendered judgment upholding the validity of the
questioned provision of Ordinance No. 53, as amended, essentially on the grounds that the
Provided, however, that retail seller of not more than 5 gallon cans or its equivalent shall be Arabay, Inc. failed to present evidence that the tax provision in question imposed a sales tax,
exempted from the provisions of this ordinance. and the tax prescribed therein was, moreover, not a specific tax on the products themselves but
on the privilege of selling them.
Section 2. This Ordinance shall take effect on January 1, 1966.
The basic issues in the case at bar are: (1) whether or not the questioned tax provision imposes
a sales tax; and (2) if it imposes a sales tax, whether the Arabay, Inc. is entitled to a tax refund,
considering that Dipolog is now a city.
1. It is settled rule in this jurisdiction that for purposes of Section 2 of the Local
Autonomy Act, supra, a municipal tax ordinance which prescribes a set ratio between the
amount of the tax and the volume of sales of the taxpayer imposes a sales tax and is null and
void for being beyond the power of a municipality to enact. 1
In our view, the questioned section of Ordinance No. 53 of the Municipal Council of Dipolog
levies a sales tax, not only because the character of the ordinance as a sales tax ordinance was
admitted by the parties below, but as well because the phraseology of the said provision reveals
in clear terms the intention to impose a tax on the sale of oil, gasoline and other petroleum
products. Thus, the ordinance provides: "There shall be charged for the selling and distribution
of refined and manufactured oils ... based on the monthly allocation actually delivered and
distributed and intended for sale ... by the Company or supplier to any person ... whether as
dealer ... or as operator of any station ... the following tax payable monthly: ..." It is quite
evident from these terms that the amount of the tax that may be collected is directly dependent
upon or bears a direct relationship to the volume of sales which the owner or supplier of the
itemized products generates every month. The ordinance in question therefore exacts a tax
based on sales; it follows that the Municipality of Dipolog was not authorized to enact such an
ordinance under the local Autonomy Act.
2. The obligation of the City of Dipolog to refund the sum collected under the void
provisions of an ordinance enacted while it was still a municipality, is not open to doubt. In San
Miguel Corporation vs. The Municipal Council of Mandaue, Cebu, supra, the Court ordered,
the return to the taxpayer of the sums paid under an ordinance enacted under circumstances
similar to the case at bar, and rejected the argument that the municipality of Mandaue had in
the meantime been converted into a city. The Court said:
Respondent however claim that with the conversion of Mandaue into a city pursuant to
Republic Act No. 5519, which was approved on June 21, 1969, the issue has already become
moot, since the prohibition contained in section 2 of Republic Act 2264 applies only to
municipalities and not to chartered cities. The same contention has been rejected in City of
Naga v. Court of Appeals, and Laoag Producers' Cooperative Marketing Association, Inc. vs.
Municipality of Laoag, where We ruled that the legality of an ordinance depends upon the
power of the municipality at the time of the enactment of the challenged ordinance. Since the
municipality of Mandaue had no authority to enact the said ordinance, the subsequent approval
of Republic Act No. 5519 which became effective on June 21, 1969, did not remove the
original infirmity of the ordinance. Indeed there is no provision in the aforecited statute which
invests a curative effect upon the ordinances of the municipality which when enacted were
beyond its statutory authority.
The right of the Arabay, Inc. to a refund of the local sales taxes it had paid under the questioned
ordinance may not, however, include those levied on its gasoline sales. The relevant proviso of
Section 2 of the Local Autonomy Act states:
... Provided, That municipalities and municipal districts shall, in no case, impose any
percentage tax on sales or other taxes on articles subject to specific tax, except gasoline, under
the provisions of the National Internal Revenue Code:
xxx xxx xxx (Emphasis supplied)
Under the foregoing proviso of Section 2 of R.A. 2264, two courses of action in the exercise of
their taxing powers are denied to municipalities and municipal districts, to wit, (1) to levy any
sales tax in whatever form; and (2) to levy any tax on articles subject to specific tax under the
National Internal Revenue Code. It is not difficult to see that these two prohibitions overlap in
the sense that while the first clause of the said proviso forbids the levying of sales taxes of
whatever form or guise, the second clause of the same proviso forbids the levying of "taxes"
without any distinction as to the kind of tax, i.e.' whether percentage tax, sales tax, specific tax
or license tax, although this latter prohibition applies only to a limited class of articles, viz.,
those subject to the specific tax under the Tax Code.
Such an overlap would probably carry or connote no legal significance but for the exclusion of
gasoline from the prohibition contained in the second clause of the mentioned proviso. For,
with the exemption of gasoline from the coverage of the same, it becomes relevant to
determine the effect which such exclusion has on the previous prohibition against the levying
of the sales tax.
In our opinion, a reasonable and practical interpretation of the terms of the proviso in question
results in the conclusion that Congress, in excluding gasoline from the general disability
imposed on municipalities and municipal districts to exact any kind of taxes on articles subject
to specified tax under the Tax Code, deliberately and intentionally meant to put it within the
power of such local governments to impose whatever type or form of taxes the latter may deem
proper to levy on gasoline including a sales tax or one in that form. There is after all no clearly
demonstrable and convincing reason why the law would allow municipal imposition of taxes
on gasoline and yet withhold such power if the imposition is in the form of a sales tax, when it
was a known fact at the time of the enactment of the Local Autonomy Act in 1959 and this
still is true to this day that gasoline is of no profitable use to the companies which own it
unless turned over to the consuming public which, perforce, must pay for the right to obtain
that commodity.
ACCORDINGLY, the judgment a quo is set aside. The City of Dipolog is hereby ordered to
refund to the Arabay, Inc. the taxes the latter has paid under Section 1 of Ordinance No. 53,
series of 1964, as amended, deducting therefrom the amount representing the taxes paid by the
Arabay, Inc. on its gasoline sales. No costs.
Teehankee, Makasiar, Muoz Palma and Martin, JJ., concur.
Esguerra, J., is on leave.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-8782 April 28, 1956
MARCELINO B. FLORENTINO and LOURDES T. ZANDUETA, petitioners-appellants,
vs.
PHILIPPINE NATIONAL BANK, respondent-appellee.
Marcelino B. Florentino for appellants.
Ramon de los Reyes for appellee.
JUGO, J.:
The petitioners and appellants filed with the Court of First Instance of La Union a petition for
mandamus against respondent and appellee, Philippine National Bank, to compel it to accept
the backpay certificate of petitioner Marcelino B. Florentino issued to him by the Republic of
the Philippines, to pay an indebtedness to the Philippine National Bank in the sum of P6,800
secured by real estate mortgage on certain properties.
The case was submitted on an agreed statement of facts, which reads as follows:
Parties herein represented by counsel, have agreed on the following facts:
1. That the petitioners are indebted to the respondent bank in the amount of P6,800 plus
interest, the same having been incurred on January 2, 1953, which is due on January 2, 1954;.
2. That the said loan is secured by a mortgage of real properties;.
3. That the petitioner Marcelino B. Florentino is a holder of Backpay Acknowledgment No.
1721 dated October 6, 1954, in the amount of P22,896.33 by virtue of Republic Act No. 897
approved on June 20, 1953; and.
4. That on December 27, 1953, petitioners offered to pay their loan with the respondent bank
with their backpay certificate, but the respondent bank, on December 29, 1953, refused to
accept petitioner's offer to pay the said indebtedness with the latter's backpay certificate;
The legal provision involved is section 2 of Republic Act No. 879, which provides:
SEC. 2. Section two of the said Act (Republic Act 304) as amended by Republic Act Numbered
Eight hundred, is further amended to read:
SEC. 2. The Treasurer of the Philippines shall, upon application of all persons specified in
section one hereof and within one year from the approval of this Act, and under such rules and
regulations as may be promulgated by the Secretary of Finance, acknowledge and file requests
for the recognition of the right of the salaries or wages as provided in section one hereof, and
notice of such acknowledgment shall be issued to the applicant which shall state the total
amount of such salaries or wages due the applicant, and certify that it shall be redeemed by the
Government of the Philippines within ten years from the date of their issuance without interest:
Provided, That upon application and subject to such rules and regulations as may be approved
by the Secretary of Finance a certificate of indebtedness may be issued by the Treasurer of the
Philippines covering the whole or a part of the total salaries or wages the right to which has
been duly acknowledged and recognized, provided that the face value of such certificate of
indebtedness shall not exceed the amount that the applicant may need for the payment of (1)
obligations subsisting at the time of the approval of this amendatory Act for which the
applicant may directly be liable to the Government or to any of its branches or
instrumentalities, or the corporations owned or control by the Government, or to any citizen of
the Philippines, or to any association or corporation organized under the laws of the
Philippines, who may be willing to accept the same for such settlement.
The question raised is whether the clause "who may be willing to accept the same for
settlement" refers to all antecedents "the Government, any of its branches or instrumentalities,
the corporations owned or controlled by the Government, etc.," or only the last antecedent "any
citizen of the Philippines, or any association or corporation organized under the laws of the
Philippines.
The contention of the respondent-appellee, Philippine National Bank is that said qualifying
clause refers to all the antecedents, whereas the appellant's contention is that it refers only to
the last antecedent.
Incidentally, it may be stated that one of the purposes of Republic Act No. 879 was to include
veterans of the Philippine Army and their wives or orphans among the beneficiaries of the
Backpay Law, Republic Act No. 304, in recognition of their great sacrifices in the resistance
movement. as shown by the following quotation from the Congressional Record:
. . . This particular bill, House Bill No. 1228, has been filed by this public servant for three
objectives: First, to serve as a source of financial aid to needy veterans, like crippled or
disabled veterans, and to their wives or orphans. Secondly, to give recognition to the sacrifices
of those who joined the last war, and particularly to those who have given their all for the cause
of the last war. And thirdly, to eliminate the discrimination that has been committed either
through oversight, or on purpose, against the members of the Philippine Army, the Philippine
Scouts, and guerrillas or the so-called civilian volunteers, who joined the resistance movement.
(Congressional Record No. 61, 2nd Congress, 4th Regular Session, May 6, 1953, page 74;
quoted in Appellant's brief, pages 13-14.).
Grammatically, the qualifying clause refers only to the last antecedent; that is, "any citizen of
the Philippines or any association or corporation organized under the laws of the Philippines."
It should be noted that there is a comma before the words "or to any citizen, etc.," which
separates said phrase from the preceding ones.
But even disregarding the grammatical construction, as done by the appellee, still there are
cogent and powerful reasons why the qualifying clause should be limited to the last antecedent.
In the first place, to make the acceptance of the backpay certificates obligatory upon any
citizen, association, or corporation, which are not government entities or owned or controlled
by the government, would render section 2 of Republic Act No. 897 unconstitutional, for it
would amount to an impairment of the obligation of contracts by compelling private creditors
to accept a sort of promissory note payable within ten years with interest at a rate very much was approved. Consequently, the present case falls squarely under the provisions of section 2
lower than the current or even the legal one. of the Amendatory Act No. 897.

The other reason is found in the Congressional Record, which says:
Mr. TIBLE: On page 4, lines 17, between the words "this" and "act", insert the word
"amendatory".
Mr. ZOSA: What is the purpose of the amendment?.
Mr. TIBLE: The purpose of the amendment is to clarify the provision of section 2. I believe,
gentleman from Cebu, that section 2, as amended in this amendatory bill permits the use of
backpay certificates as payment for obligations and indebtedness in favor of the government.
(Congressional Record No. 64, 2nd Congress, 4th Regular Session May 11, 1953 page 41;
quoted in Appellants brief, p. 15.).
In view of the foregoing, the decision appealed from is reversed, and the appellee is ordered to
accept the backpay certificate above mentioned of the appellant, Marcelino B. Florentino, in
payment of his above cited debt to the appellee, without interest from December 27, 1953, the
date when he offered said backpay certificate in payment. Without pronouncement as to costs.
It is ordered.
Paras, Bengzon, C.J., Montemayor, Reyes, A., Jugo, Bautista Angelo, Concepcion, Reyes, J. B.
L. and Endencia, JJ., concur.
The Lawphil Project - Arellano Law Foundation

As there would have been no need to permit by law the use of backpay certificates in payment
of debts to private persons, if they are willing to accept them, the permission necessarily refers
to the Government of the Philippines, its agencies or other instrumentalities, etc.

Another reason is that it is matter of general knowledge that many officials and employees of
the Philippine Government, who had served during the Japanese Occupation, have already
received their backpay certificates and used them for the payment of the obligations to the
Government and its entities for debts incurred before the approval of Republic Act No. 304.

The case of Diokno vs. Rehabilitation Finance Corporation, 91 Phil., 608 (July 11, 1952), is
different from the present one. In the Diokno case, his debt to the Rehabilitation Finance
Corporation was incurred on January 27, 1950. He brought the action on November 10, 1950,
under the provisions of Republic Act No. 304 (section 2), which was approved on June 18,
1948; that is, one year and almost eight months before Diokno could not avail himself of the
provisions of section 2 of Act No. 304, because said section provides that the application for
recognition of backpay must have been filed within one year after the approval of said Act No.
304, and the debt must be subsisting at the time of said approval, Diokno having incurred the
debt on January 27, 1950, and brought action on November 10, 1950. It was, therefore,
discretionary in the Diokno case for the Rehabilitation Finance Corporation to accept or not his
backpay certificate in payment.

The Secretary of Justice, in his Opinion No. 226, series of 1948, held that the phrase "who may
be willing to accept the same for such settlement" qualifies only its immediate antecedent and
does not apply to the Government or its agencies.

The appellee asserts in his brief that the Secretary of Justice, in his letter of June 19, 1953,
remarked that the clause "who may be willing to accept such settlement" refers to all
antecedents, including the Government and its agencies. We are not impressed with this
observation of the Secretary, for we believe that his Opinion No. 226, series of 1948, correct
for the reasons we have stated above.

In the present case, Marcelino B. Florentino incurred his debt to the Philippine National Bank
on January 2, 1953; hence, the obligation was subsisting when the Amendatory Act No. 897
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-42935 February 15, 1935
FELIPE REGALADO, petitioner,
vs.
JOSE YULO, Secretary of Justice,
JUAN G. LESACA, Judge of First Instance of Albay,
and ESTEBAN T. VILLAR, respondents.
L.R. Pea for petitioner.
Office of the Solicitor-General Hilado for respondents.
Respondent Villar in his own behalf.
MALCOLM, J.:
This is an action of quo warranto originally brought in this court to determine the respective
rights of the petitioner Felipe Regalado and one of the respondents, Esteban T. Villar, to the
office of justice of the peace of Malinao, Albay. The issue in the case is whether or not under
the provisions of section 203 of the Administrative Code, as amended by Act No. 3899, the
justices of the peace and auxiliary justices of the peace appointed prior to the approval of the
last mentioned Act who reached the age of sixty-five years after said Act took effect shall cease
to hold office upon reaching the age of sixty-five years.
The facts as stipulated are principally the following: Felipe Regalado qualified for the office of
justice of the peace of Malinao, Albay, on April 12, 1906. On September 13, 1934, Regalado
became sixty-five years of age. As a consequence, shortly thereafter, the judge of first instance
of Albay, acting in accordance with instructions from the Secretary of Justice, designated
Esteban T. Villar, justice of the peace of Tabaco, Albay, to act as justice of the peace of
Malinao, Albay. Regalado surrendered the office to Villar under protest. On December 17,
1934, Villar qualified as justice of the peace of Malinao, Albay, and entered upon the discharge
of the duties of the office.
The text of section 203 of the Administrative Code, as amended by Act No. 3899, reads in
Spanish, the language in which this Act was enacted by the Philippine Legislature, as follows:
ART. 203. Nombramiento y distribucion de jueces de paz. El Gobernador General
nombrara, con el consejo y consentimiento del Senado de Filipinas, un juez de paz y un juez de
paz auxilizr para la Ciudad de Baguio y para cada municipio, township, y distrito municipal da
las Islas Filipinas y si el interes publico asi lo exigiere para cualquier otra division politica de
menos importancia y territorio no organizado en dichas Islas: Entendiendose, Que los jueces de
paz y jueces de paz auxiliares seran nombrados para servir cumplir sesenta y cinco aos de
edad: Entendiendose, ademas, Que los actuales jueces de paz y jueces de paz auxiliares que al
tiempo de la vigencia de esta Ley hayan cumplido sesenta y cinco aos de edad, cesaran el
primero de enero de mil novecientos treinta y tres en sus cargos; y el Gobernador General, con
el consejo y consentimiento del Senado de Filipinas, hara nuevos nombramientos para cubrir
las vacantes que habran de ocurir por ministerio de esta Ley.
The English version of the same codal section, as amended, reads as follows:
SEC. 203. Appointment and distribution of justices of the peace. One justice of the peace
and one auxiliary justice of the peace shall be appointed by the Governor-General, with the
advise and consent of the Philippine Senate, for the City of Baguio, and for each municipality,
township, and municipal district in the Philippine Islands, and if the public interests shall so
require, for any other minor political division or unorganized territory in said Islands:
Provided, That justices and auxiliary justices of the peace shall be appointed to serve until they
have reached the age of sixty-five years: Provided, further, That the present justices and
auxiliary justices of the peace who shall, at the time this Act takes effect, have completed sixty-
five years of age, shall automatically cease to hold office on January first, nineteen hundred
and thirty-three; and the Governor-General, with the advise and consent of the Philippine
Senate, shall make new appointments to cover the vacancies occurring by operation of this Act.
Petitioner Regalado insists that the law is clear and accordingly needs no interpretation. The
meaning of the law according to him is that only those justice of the peace and auxiliary
justices of the peace ceased to hold office who had completed sixty-five years of age on or
before November 16, 1931, when Act No. 3899 took effect. On the other hand, the Solicitor-
General, as attorney for the respondents, admits that the provisions of the second proviso added
to section 203 of the Administrative Code by Act No. 3899, are not very specific, but that
according to the real intention of the law the only sensible and proper construction that could
be place on the proviso in question in that under its provisions all justices of the peace and
auxiliary justices of the peace, whether appointed prior to the approval of the Act or subsequent
thereto, who had completed the age of sixty-five years of age at the time of the approval of the
Act, and those who shall complete that age thereafter, shall cease to hold office, the former on
January 1, 1933, and the latter at the time they complete that age.
All are agreed that the language which should prevail in the interpretation of Act No. 3899 is
Spanish, but that the English text may be consulted to explain the Spanish. The English text is
deficient in that it includes the word "automatically", the equivalent of which does not appear
in the Spanish. Also, in the Administrative Code containing a compilation of section 203, as
amended, the word "office" was omitted after the word "hold". Finally, the spanish uses the
term "al teimpo de la vigencia de esta ley", translated into English as "at the time this Act takes
effect". But the Solicitor-General insists that the equivalent of the term "al" is "at" and that "at"
can be construed as equivalent to "during".
The Solicitor-General properly invites attention to the history of the law and from that history
would deduce the legislative intention to be effectuated. Let us briefly notice this point.
Originally judges of first instance and justices of the peace had no age limits on their tenures of
office. Eventually, however, the Philippine Legislature enacted Act No. 2347. That law not
only provided that judges of first instance shall serve until they have reached the age of sixty-
five years, but it further provided that "... the present judges of Courts of First Instance ...
vacate their positions on the taking effect of this Act: and the Governor-General, with the
advice and consent of the Philippine Commission, shall make new appointments of judges of
the Courts of First Instance ... ." This law was held valid. (Chanco vs. Imperial [1916], 34 Phil.,
329.) Subsequently section 203 of the Administrative Code, relating to justices of the peace,
was amended by section 1 of Act No. 3107 by adding at the end thereof the following proviso:
"... Provided, That justices and auxiliary justices of the peace shall be appointed to serve until
they have reached the age of sixty-five years." It was held that the law should be given
prospective effect only and was not applicable to justices and auxiliary justices of the peace
appointed before it went into effect. (Segovia vs. Noel [1925], 47 Phil., 543.) Thereafter the
matter again came before the Philippine Legislature and apparently it was in the mind of
certain members of the Legislature to make the law fixing the age limit for justices of the peace
retroactive in nature. At least the bill as introduced in the Senate, and providing:
"Entendiendose, ademas, Que los actuales jueces de paz y jueces de paz auxiliares que al
tiempo de la vigencia de esta Ley hayan cumplido sesenta y cinco aos de edad, cesaran
automaticamente en sus cargos; y el Gobernador General, con el consejo y consentimiento del
Senado de Filipinas, hara nuevos nombramientos para cubrir las vacantes que habran de ocurrir
por ministerio de esta ley," appears to have had this purpose both because of the langage
used and because of what can be gleaned from the debates on the bill while it was under
consideration in the Senate. But when the bill left the Philippine Legislature it was in a
different form, for the word "automaticamente" had been omitted and instead there was to be
found the words "el primero de enero de mil novecientos treinta y tres".
The Solicitor-General finally points out that the Secretary of Justice has consistently
interpreted the proviso in question as meaning, that all justices of the peace and auxiliary
justices of the peace no matter when appointed who had completed the age of sixty-five years
prior to the approval of the law and those who shall complete that age thereafter, shall cease to
hold office upon their attaining that age. It is of course a cardinal rule that the practical
construction of a statute by the department whose duty it is to carry it into execution is entitled
to great weight. Nevertheless the court is not bound by such construction and the rule does not
apply in cases where the construction is not doubtful.
thirty-three", is also a date in the past, for on that date the petitioner had not yet reached the age
of sixty-five.
Before we conclude, let us again return to the consideration of the law and see if it would be
possible under any logical interpretation, to give the law the meaning which the Government
insists it should have. Supposing we give to the phrase "al tiempo de la vigencia de esta ley"
the unusual meaning of "within the time this Act is effective", but having done so, we then
reach the barrier that the petitioner within the time this Act is effective must have completed
sixty-five years of age and cease to hold office on January 1, 1933. The petitioner having
become sixty-five years of age on September 13, 1934, could not be included under a law
which required justices of the peace sixty-five years of age to cease to hold office on January 1,
1933.
For the reasons given, we are of the opinion that the natural and reasonable meaning of the
language used in Act No. 3899 leaves room for no other deduction than that a justice of the
peace appointed prior to the approval of the Act and who completed sixty-five years of age on
September 13, 1934, subsequent to the approval of the Act, which was on November 16, 1931,
and who by the law was required to cease to hold office on January 1, 1933, is not affected by
the said Act. Accordingly it is our judgment that the respondent Esteban T. Villar be ousted
from the office of justice of the peace of Malinao, Albay, and that the petitioner Felipe
Regalado be placed in possession of the same. So ordered, without special pronouncement as
to the costs.
Villa-Real, Imperial, Butte, and Goddard, JJ., concur.

The fundamental purpose in enacting Act No. 3899, it is argued, was to correct the phraseology The Lawphil Project - Arellano Law Foundation
of the first proviso to section 203 of the Administrative Code added thereto by Act No. 3107,
and to place justices of the peace and auxiliary justices of the peace on the same footing as
regards their cessation from office by reason of age. We are asked for effectuate this legislative
purpose. We would accede if that result was obtainable by any logical construction of the law
whether strict or liberal. But we cannot reach that result when to do so compels us to rewrite a
law and to insert words or phrases not found in it. If the court should do that it would pass
beyond the bounds of judicial power to usurp legislative power.

The intent of the Legislature to be ascertained and enforced is the intent expressed in the words
of the statute. If legislative intent is not expressed in some appropriate manner, the courts
cannot by interpretation speculate as to an intent and supply a meaning not found in the
phraseology of the law. In other words, the courts cannot assume some purpose in no way
expressed and then construe the statute to accomplish this supposed intention.

Delving a little more deeply into the meaning of the law as applied to the case of the petitioner,
at the time Act No. 3899 took effect he was one of the "actuales jueces de paz" (present justices
of the peace). Giving the term "al tiempo de la vigencia de la ley" the ordinary meaning of "at
the time this Act takes effect," which was on November 16, 1931, on that date the petitioner
was not sixty-five years of age. Proceeding further, the phrase "hayan cumplido se senta cinco
aos de edad", appearing in English as "have completed sixty-five years of age", is of the past
tense and could not regularly be taken to contemplate the future. Finally the phrase "el primero
de enero de mil novecientos treinta y tres", in English "on January first nineteen hundred and
 On January 2, 1989, petitioner was re-employed in the Office of the Deputy Ombudsman for
FIRST DIVISION Luzon.

In 1997, petitioner initiated moves to avail of early retirement under R.A. 660.[4] He requested
JOSE SANTOS, and received from the Government Service Insurance System (GSIS) Operating Unit a
Petitioner, tentative computation of retirement benefits under R.A. 660 amounting to P667,937.40.
Petitioner formally applied for retirement under R.A. 660 in January 1998.

However, in a Letter[5] dated May 4, 1998, the GSIS Operating Unit informed petitioner that
he could no longer retire under R.A. 660 but he could do so under R.A. 8291,[6] under which
-versus- petitioner is entitled to a reduced benefit of P81,557.20. This computation did not consider
petitioners 20.91553 years of service with the DAR prior to his previous retirement.

Petitioner appealed to respondent GSIS Committee on Claims. Unfortunately, respondent

affirmed the GSIS Operating Units computation under R.A. 8291.
COMMITTEE ON CLAIMS SETTLEMENT, and GOVERNMENT SERVICE INSURANCE
SYSTEM (GSIS), On August 25, 1999, petitioner filed with the GSIS Board of Trustees a complaint against
Respondents. respondent docketed as GSIS Case No. 002-99.
On February 15, 2000, the GSIS Board of Trustees rendered a decision[7] denying petitioners
G.R. No. 158071 complaint, thus:

WHEREFORE, judgment is hereby rendered denying Petitioner Jose S. Santos Petition to be

Present: allowed to retire under the pension plan under RA 660, and modifying the Resolution of the
Government Service Insurance Systems Committee on Claims Settlement adopted in its
PUNO, C.J., Chairperson Committee Meeting No. 158 held on September 23, 1996, insofar as it limits Petitioners mode
YNARES-SANTIAGO,* of retirement to that provided in RA 8291. The Operating Unit concerned is ordered to process
CARPIO, Petitioners retirement effective March 21, 2000 under the gratuity retirement of RA 1616 or the
CORONA, and pension retirement under RA 8291 after he formally indicates which mode he would like to
LEONARDO-DE CASTRO, JJ. avail of.

SO ORDERED.

Promulgated:
April 2, 2009
x-----------------------------------------------------------------------------------------x
DECISION
LEONARDO-DE CASTRO, J.:
Before us is a petition for review on certiorari assailing the Decision[1] dated January 6, 2003,
and Resolution[2] dated April 22, 2003 of the Court of Appeals (CA) in CA-G.R. SP No.
65163, entitled Jose Santos v. Committee on Claims Settlement and Government Service
Insurance System (GSIS).
The facts are as follows:
On August 16, 1986, petitioner Jose S. Santos retired from the Department of Agrarian Reform
(DAR) pursuant to Republic Act (R.A.) 1616[3] after rendering almost 21 years of service.
In the meantime, on March 20, 2000, petitioner was compulsorily retired for reaching the age
of sixty-five.
Petitioner filed a motion for reconsideration of the February 15, 2000 decision of the Board of
Trustees. He attached documentary evidence to his motion which showed several retirees who
were later on reemployed after their first retirement and were allowed to choose the law under
which they can again retire. Thus, like them, he should also be allowed to retire under the law
of his choice. The GSIS Board of Trustees denied his motion for reconsideration on March 27,
2001.
Aggrieved, petitioner filed with the CA a petition for review under Rule 43 of the 1997 Rules
of Civil Procedure.
On January 6, 2003, the CA rendered the herein challenged decision dismissing the petition for
lack of jurisdiction. It ruled as follows:[8]
This Court is of the belief, however, that the focal issue raised herein, i.e., whether or not the
petitioner can choose to retire under either Republic Act 8291 or Republic Act 660, is a pure
question of law. As such, this Court is not vested with jurisdiction to take cognizance of this
case since there is no dispute with respect to the fact that when an appeal raised only pure
question of law, it is only the Supreme Court which has jurisdiction to entertain the same
(Article VIII, Section 5 (2) (e), 1987 Constitution; Rule 45, Rules of Court; see also Santos, Jr.
vs. Court of Appeals, 152 SCRA [1987]).
xx xxx xxx
As can be seen from both parties['] arguments, the instant case calls for the determination of
what the law is on the particular situation of herein petitioner, i.e., whether RA 660 is
applicable in his case or only that of RA 8291, or both. Such question does not call for an
examination of the probative value of the evidence presented by the parties because there is no
dispute as to the truth or falsity of the facts obtaining in the case.
Hence, the procedure adopted by the petitioner in this case is improper. The proper procedure
that should have been followed was to file a petition for review on certiorari under Rule 45 of
the Rules of Court within 15 days from notice of judgment pointing out errors of law that will
warrant a reversal or modification of the decision or judgment sought to be reviewed.
xxx xxx xxx
WHEREFORE, the instant petition is hereby DISMISSED for lack of jurisdiction. (emphasis
ours)
Petitioner filed a motion for reconsideration but the CA denied the same in its Resolution dated
April 22, 2003.
Hence, this petition for review on certiorari with the following assignment of errors:
1. The Honorable Court of Appeals committed an error of law in holding that CA-G.R. SP No.
65163 entitled Jose S. Santos vs. Committee on Claims Settlement, GSIS raises only questions
of law, hence the proper remedy for petitioner is a petition for review on certiorari under Rule
45;
2. The Honorable Court of Appeals committed an error in not giving due course to the petition
as it raises questions of law only; a reading thereof shows that factual issues are raised therein.
The said dismissal left unresolved the questions of law and facts raised in CA-G.R. SP No.
65163;
3. The Honorable Court of Appeals erred in not reversing the decision of the GSIS of February
15, 2000, it being contrary to law.
4. The Honorable Court of Appeals erred in dismissing CA-G.R. SP No. 65163, allegedly for
lack of jurisdiction.
Petitioner avers that the CA erred in dismissing his petition which raised both questions of law
and fact which are well within its jurisdiction pursuant to Rule 43 of the 1997 Rules of Civil
Procedure. According to petitioner the petition raised factual issues which necessitated the
review of the records of the re-employed retirees who were allowed by the GSIS to retire under
the law of their choice. Petitioner further avers that even if CA-G.R. SP No. 65163 raises only
questions of law, the same is still within the jurisdiction of the CA pursuant to Section 31 of
Republic Act No. 8291, which provides that appeals from any decision or award by the Board
of Trustees shall be governed by Rules 43 and 45 of the 1997 Rules of Civil Procedure.
Respondent, on the other hand, maintains that the proper remedy of petitioner is to file a
petition for review under Rule 45 and not under Rule 43, there being only pure questions of
law involved in the case. Hence, the CA correctly dismissed the petition before it.
We deal first with the procedural issue raised by petitioner.
Rule 43 of the 1997 Rules of Civil Procedure clearly states:
Section 1. Scope. This Rule shall apply to appeals from judgments or final orders of the Court
of Tax Appeals and from awards, judgments, final orders or resolutions of or authorized by any
quasi-judicial agency in the exercise of its quasi-judicial functions. Among these agencies are
the Civil Service Commission, Central Board of Assessment Appeals, Securities and Exchange
Commission, Office of the President, Land Registration Authority, Social Security
Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks and Technology
Transfer, National Electrification Administration, Energy Regulatory Board, National
Telecommunications Commission, Department of Agrarian Reform under Republic Act 6657,
Government Service Insurance System, Employees Compensation Commission, Agricultural
Inventions Board, Insurance Commission, Philippine Atomic Energy Commission, Board of
Investments, Construction Industry Arbitration Commission, and voluntary arbitrators
authorized by law.
xxx
Section 3. Where to appeal. An appeal under this Rule may be taken to the Court of Appeals
within the period and in the manner herein provided, whether the appeal involves questions of
fact, of law, or mixed questions of fact and law. (emphasis ours)
In Posadas-Moya and Associates Construction Co., Inc. v. Greenfield Development
Corporation, et al.,[9] the Court distinguished a question of law from one of fact, thus:
A question of law exists when there is doubt or controversy on what the law is on a certain
state of facts. There is a question of fact when the doubt or difference arises from the truth or
the falsity of the allegations of facts.
Explained the Court:
A question of law exists when the doubt or controversy concerns the correct application of law
or jurisprudence to a certain set of facts; or when the issue does not call for an examination of
the probative value of the evidence presented, the truth or falsehood of facts being admitted. A
question of fact exists when the doubt or difference arises as to the truth or falsehood of facts
or when the query invites calibration of the whole evidence considering mainly the credibility
of the witnesses, the existence and relevancy of specific surrounding circumstances as well as
their relation to each other and to the whole, and the probability of the situation.
Thus, the question on whether petitioner can retire under RA 660 or RA 8291 is undoubtedly a
question of law because it centers on what law to apply in his case considering that he has
previously retired from the government under a particular statute and that he was re-employed
by the government. These facts are admitted and there is no need for an examination of the
probative value of the evidence presented.
As a general rule, appeals on pure questions of law are brought to this Court since Sec. 5 (2)
(e), Art. VIII of the Constitution includes in the enumeration of cases within its jurisdiction all
cases in which only an error or question of law is involved.[10] It should not be overlooked,
however, that the same provision vesting jurisdiction in this Court of the cases enumerated
therein is prefaced by the statement that it may review, revise, reverse, modify, or affirm on
appeal or certiorari as the law or the Rules of Court may provide, the judgments or final orders
of lower courts in the cases therein enumerated.[11] Rule 43 of the 1997 Rules of Civil
Procedure constitutes an exception to the aforesaid general rule on appeals. Rule 43 provides
for an instance where an appellate review solely on a question of law may be sought in the CA
instead of this Court.
Undeniably, an appeal to the CA may be taken within the reglementary period to appeal
whether the appeal involves questions of fact, law, or mixed questions of fact and law. As such,
a question of fact or question of law alone or a mix question of fact and law may be appealed
to the CA via Rule 43. Thus, in Carpio v. Sulu Resources Development Corporation,[12] we
held:
According to Section 3 of Rule 43, [a]n appeal under this Rule may be taken to the Court of
Appeals within the period and in the manner herein provided whether the appeal involves
questions of fact, of law, or mixed questions of fact and law. Hence, appeals from quasi-
judicial agencies even only on questions of law may be brought to the CA. (emphasis ours)
However, a remand of the case to the CA would serve no useful purpose, since the core issue in
this case, i.e., under which law petitioner can retire, can already be resolved based on the
records of the proceedings before the GSIS. A remand would unnecessarily impose on the
parties the concomitant difficulties and expenses of another proceeding where they would have
to present the same evidence and arguments again. This clearly runs counter to the Rules of
Court, which mandates liberal construction of the Rules to attain just, speedy and inexpensive
disposition of any action or proceeding.[13]
We now discuss petitioners arguments on the merits.
It is well settled that the construction given to a statute by an administrative agency charged
with the interpretation and application of that statute is entitled to great respect and should be
accorded great weight by the courts.[14] In the case at bar, this Court finds that the GSIS ruling
as to which retirement law is applicable to petitioner deserves full faith and credit. Petitioner
fails to convince us that there are justifiable reasons to depart from the GSIS decision in his
case.
As pertinently discussed by the GSIS Board of Trustees, the grant of the right to choose a mode
of retirement in Presidential Decree (P.D.) No. 1146 is found in Section 13. It was reproduced
in Section 11 (c), Rule IV of the Implementing Rules and Regulations on the Revised GSIS Act
of 1977, adopted by the Systems Board of Trustees pursuant to Board Resolution 223-78,
stating that:
(c) Employees who were in the government service at the time of the effectivity of Presidential
Decree No. 1146 shall, at the time of their retirement, have the option to retire under said
Decree or under Commonwealth Act No. 186, as previously amended.
On August 28, 1980, the GSIS Board of Trustees, in Board Resolution No. 583-80, adopted the
following amendment to Section 11 (c), Rule IV of the Implementing Rules for PD 1146, upon
the recommendation of the Committee on Gray Areas:
(c) Employees who were in the government service at the time of the effectivity of PD 1146
shall at the time of their retirement have the option to retire under said Decree or under CA 186
as previously amended Provided, that in the event the member is reinstated in the service after
having exercised the option to retire under RA 1616 he shall subsequently be retireable under
PD 1146 only.
On July 19, 1985, P.D. No. 1981 was promulgated amending Section 13 of PD 1146 as
follows:
Sec. 13. Retirement Option. Employees who are in the government service upon the effectivity
of this Act shall, at the time of their retirement, have the option to retire under this Act or under
Commonwealth Act No. 186, as amended, and their benefits and entitlement thereto shall be
determined in accordance with the provisions of the law so opted: Provided, however, That in
the event of re-employment, the employees subsequent retirement shall be governed by the
provisions of this Act: Provided further, That the member may change the mode of his
retirement within one year from the date of his retirement in accordance with such rules and
regulations as may be prescribed by the System. x x x (emphasis ours)
Clearly, the option to retire is preserved under PD 1146 for those who were in the government
service upon its effectivity in view of the rule on non-impairment of benefits. There is an
apparent gray area when an employee who was in the government service upon the effectivity
PD 1146 but opted to retire under one of the previous retirement laws. Once reinstated, are they
still entitled, upon reinstatement, to exercise the option to again retire under the old law?
The GSIS Board of Trustees, in agreement with the Committee on Claims Settlement
concluded that Mr. Santos right to choose the law under which he would retire and be covered
by R.A. 660 is no longer available to him because he had already exercised said right when he
availed of it during his previous retirement in 1986. In 1986, he chose to forego the benefits of
R.A. 660 and retired under R.A. 1616.
When petitioner first retired in 1986, the applicable law to his situation was P.D. 1146 as
amended by P.D. 1981. Section 13 of that law (upon which petitioner himself bases his right to
choose the law to govern his retirement) expressly states that in the event of re-employment the
subsequent retirement shall be governed by P.D. 1146.
Even the Government Corporate Counsel supported such view through its Opinion No. 100,
Series of 1981, stating that in the event the member is reinstated in the service after having
exercised the option to retire under RA 1616, he shall subsequently be retireable under PD
1146 only.
All employees of the government are covered by PD 1146 upon its effectivity. Only employees
who are in the government service upon the effectivity of the said law who shall have, at the
time of retirement, the option to retire under the old law or CA 186 (otherwise known as the
Government Service Insurance Act, or the GSIS Charter) are exempt from the coverage of PD
1146.
The foregoing applies notwithstanding the rule in Section 44 on non-impairment of benefits
that have become vested under the old law. Pursuant to the rule on prospectivity of laws,
employees who have previously retired under CA 186 and were reinstated after the effectivity
of the new law are already covered by the new law, not because they are deemed new or
original employees, but by mere prospective operation of the new law in force at the time they
reentered the service.
The same view was shared by the Government Corporate Counsel, in its Opinion No. 154,
Series of 1997, dated July 14, 1997, when it ruled that the legislature intended to withhold the
availability of retirement option from those who have been re-employed and are retiring for the
second time. If the intent was otherwise, then the said proviso should have also expressly stated
so and/or said proviso should not have been included at all. It stated, thus:
One of the purposes for the passage of P.D. 1981 is to clarify the parties to whom the
retirement option in Section 13 of P.D. 1146 is available, thus:
WHEREAS, there have been conflicting interpretations of certain provisions of Presidential
Decree No. 1146, particularly as for whether or not elective public officials are covered by the
GSIS for the duration of their term of office; whether or not a public officer or employee who
is separated for cause or considered resigned automatically forfeits his retirement benefits; and
whether or not public officers and employees in the government service at the time Presidential
Decree No. 1146 took effect have the option of retiring under the said Decree or
Commonwealth Act No. 186, as amended:
WHEREAS, conflicting claims for benefits have invariably been filed under the different laws
administered by the GSIS, which have oftentimes resulted in unnecessary litigation, delay and
inconvenience on the part of the rightful claimants.
xxx
WHEREAS, it has thus become necessary to amend Presidential Decree No. 1146 to clarify
some of its provisions to make it more responsive to the needs of the members of the GSIS and
to assure the actuarial solvency of the Funds administered by the GSIS during these times of
grave economic crisis affecting the country. (Underscoring ours)
With this legislative purpose in mind, the amendment of Section 13 of P.D. 1981, to include a
proviso that in the event of re-employment of a member his subsequent retirement shall be
governed by P.D. 1146, shows the clear legislative intent to withhold the availability of
retirement option from those who have been re-employed and are retiring for the second time.
If the intent was otherwise, then the said proviso should have also expressly stated so and/or
said proviso should not have been included at all.
Thus, the last proviso in Section 13 of P.D. 1146, as amended, granting the right to change the
mode of retirement within one year, may not be considered as referring to the immediately
preceding section, which is the proviso stating that subsequent retirements shall be governed
by P.D. 1146. Such interpretation would only render both provisos inconsistent and conflicting
with one another and effectively meaningless because even if the first proviso removes the
option, the second proviso prescribes the period by which the option may be exercised. It has
been held that statutes must be interpreted in such a way as to give a sensible meaning to the
language of the statutes and thus avoid non-sensical or absurd results (People vs. Duque, 212
SCRA 607; Automatic Parts and Equipment vs. Lingad, 30 SCRA 247, as cited in Agpalo, op.
Cit., pp. 114-115). Thus, a better and more sensible interpretation of Section 13 of P.D. 1146 as
amended is that the last proviso refers to the first part of the section which states to whom the
option is given. In other words, government employees who are in the service at the time of the
effectivity of P.D. 1146 have the option to retire under CA 186 or P.D. 1146 and if said option
is exercised, they may change the mode of retirement chosen or opted within one year from
date of retirement. Once the retired employees are however re-employed, they shall
subsequently retire only under P.D. 1146.
Further, this Court notes that when petitioner formally applied for retirement in 1998 R.A.
8291 which amended P.D. 1146 was already in force and it was indubitably the law applicable
to his second retirement. In contrast, the examples of subsequent retirements of re-employed
government employees cited by petitioner were all prior to the effectivity of R.A. 8291.
Significantly, Section 3 of R.A. 8291 provides:
SEC. 3. Repealing Clause. - All laws and any other law or parts of law specifically inconsistent
herewith are hereby repealed or modified accordingly: Provided, That the rights under the
existing laws, rules and regulations vested upon or acquired by an employee who is already in
the service as of the effectivity of this Act shall remain in force and effect: Provided, further,
That subsequent to the effectivity of this Act, a new employee or an employee who has
previously retired or separated and is reemployed in the service shall be covered by the
provisions of this Act. (emphasis ours)
In addition, Section 10 (b) of P.D. 1146, as amended by R.A. 8291, states:
(b) All service credited for retirement, resignation or separation for which corresponding
benefits have been awarded under this Act or other laws shall be excluded in the computation
of service in case of reinstatement in the service of an employer and subsequent retirement or
separation which is compensable under this Act.
As such, we find nothing objectionable in the following provisions of the GSIS the Rules and
Regulations Implementing R.A. 8291 which provides:
Section 8.6. Effect of Re-employment. When a retiree is re-employed, his/her previous services
credited at the time of his/her retirement shall be excluded in the computation of future
benefits. In effect, he/she shall be considered a new entrant. (emphasis ours)
Additionally, Section 5.2 of the same implementing rules states that all service credited for
retirement, resignation or separation for which corresponding benefits have been awarded shall
be excluded in the computation of service in case of re-employment.
As a re-employed member of the government service who is retiring during the effectivity of
RA 8291, petitioner cannot have his previous government service with the DAR credited in the
computation of his retirement benefit. Neither can he choose a mode of retirement except that
provided under R.A. 8291.
All told, even if we find that the CA committed reversible error when it dismissed for lack of
jurisdiction the petition filed before it, we see no reason to deviate from the findings of the
GSIS. Hence, the instant petition must necessarily fail.
WHEREFORE, the petition is hereby DENIED.
SO ORDERED.
Republic of the Philippines
Supreme Court DECISION
Manila

AUSTRIA-MARTINEZ, J.:
FIRST DIVISION

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court
Pedro Tagabi and which seeks to set aside the Resolutions of the Court of Appeals (CA) dated April 17, 2000[1]
and June 16, 2000[2] dismissing herein petitioners appeal docketed as CA-G.R. CV No. 58697,
G.R. No. 144024 and denying petitioners Motion for Reconsideration, respectively.
Demetrio Tabaniag,
The facts, as found by the trial court are as follows:

Petitioners, Plaintiff Margarito Tanque is the son of Anastasio Tanque who, during his lifetime, owned and
possessed a parcel of land with an area of 47,443 square meters, more or less, situated at
Present: Barangay Jolason, Tubungan, Iloilo. Upon the death of his father on December 16, 1966,
plaintiff took over the ownership and possession of the said land and declared the same in his
name for taxation purposes. He has, since then, paid the real property taxes on the land until
the present time.

The same parcel of land was the subject of a civil case for recovery of ownership filed
PANGANIBAN, CJ., Chairperson, sometime in 1968 by plaintiff against Genaro Tablatin, et al. docketed as Civil Case No. 7551
of the Court of First Instance of Iloilo, which was decided on February 8, 1974 (Exh. K) in
favor of herein plaintiff and which decision, on appeal by the losing party, was affirmed by the
YNARES-SANTIAGO, Court of Appeals on February 2, 1979 (Exh. K). The decision of the Court of Appeals attained
finality on March 4, 1979 (Exh. M).

AUSTRIA-MARTINEZ, When the lands in Tubungan, Iloilo were cadastrally surveyed by the Bureau of Lands in 1982,
- versus - plaintiffs parcel of land was surveyed and identified as Cadastral Lot 2104 with an area of
4.7433 hectares. On February 24, 1986, Original Certificate of Title No. F-31883 was issued to
CALLEJO, SR. and plaintiff based on Free Patent No. 17553 obtained from the Bureau of Lands (Exh. D).

Sometime in 1988, defendant Pedro Tagabi asserted ownership over a portion of Cadastral Lot
CHICO-NAZARIO, JJ. 2104 with an area of 654 square meters, claiming that the same forms part of Cadastral Lot
2097 which is owned by him. Without the knowledge and consent of plaintiff, defendant
Tagabi had the said portion entered into by his co-defendant, Demetrio Tabaniag, who planted
the same with palay and corn.

Plaintiff then went to the Bureau of Lands and asked that Cadastral Lot 2104 be relocated to
Promulgated: determine whether a portion was encroached upon by the defendant. Accordingly, relocation
Margarito Tanque, survey was made by Geodetic Engineer Ernesto Ciriaco in the presence of both plaintiff and
defendants and, thereafter, a sketch, Exhibit O, was prepared and issued by the said Geodetic
Engineer. It was found out that, indeed, a portion with an area of 654 square meters within lot
Respondent. 2104 was encroached upon by the defendants. The matter was then referred by plaintiff to the
barangay officials concerned for conciliation. But no settlement was reached (Exhs. P; P-1).
July 27, 2006 Hence, plaintiff filed the present action in court to recover possession of the disputed portion,
x------------------------------------------------x plus damages.[3]
On May 26, 1997, the Regional Trial Court (RTC) of Iloilo City, Branch 26, rendered a
Decision with the following dispositive portion:
WHEREFORE, judgment is hereby rendered declaring plaintiff the lawful owner of the
property in question and ordering the defendants to vacate and deliver possession of the same
to plaintiff and to pay plaintiff, jointly and severally, (1) the sum of P1,850.00 representing the
produce of the land annually from the time of filing of the complaint on September 29, 1992
until possession is delivered to plaintiff; (2) the sum of P5,600.00 representing expenses for the
relocation survey; (3) attorneys fees in the sum of P8,000.00; plus (4) costs of this suit.
SO ORDERED.[4]
Aggrieved by the judgment of the trial court, defendants Pedro Tagabi and Demetrio Tabaniag
(petitioners) filed an appeal with the CA.
On February 26, 2000, plaintiff-appellee Margarito Tanque (respondent) filed a Motion to
Dismiss on grounds that the appellants brief was filed beyond the period allowed by the CA
and that the said brief was not accompanied by a written explanation why it was not filed
personally in violation of Section 11, Rule 13 of the Rules of Court.[5]
Petitioners filed their Comment on the Motion to Dismiss contending that the delay of one day
in the filing of their appellants brief does not automatically cause the dismissal of the appeal.
Petitioners further contend that since there was no allegation of any prejudice on the part of the
appellee which may have been caused by the delay and since the issues raised are substantial
enough to merit consideration by the appellate court, the liberal interpretation of the rules is
justified. On the matter of lack of explanation why the appellants brief was not filed personally
with the CA, petitioners aver that the practicability of the filing is self-explanatory considering
that the law office of their counsel is in Iloilo City while the CA is in Manila; and that the court
may take judicial notice of the distance between these two places and, hence, the
impracticability of personal filing.[6]
In his Reply to petitioners Comment, respondent asserted that a correct interpretation of the
provisions of Section 1, Rule 50 of the Rules of Court would show that it is mandatory on the
part of the CA to dismiss an appeal if any of the grounds provided therein exists; that even a
delay of one day is a sufficient ground for dismissing the appeal. Respondent claimed that the
requirement of a written explanation in cases where briefs and other pleadings are not filed or
served personally is mandatory, and non-compliance therewith will result in the dismissal of an
appeal. Respondent brought to the appellate courts attention the fact that petitioners Comment
on the Motion to Dismiss is not also accompanied by a written explanation why it was not filed
with the CA personally. This, respondent contends, is evidence of petitioners deliberate
violation of the Rules.[7]
On April 17, 2000, the CA issued the presently assailed Resolution whereby, in the exercise of
its judicial discretion, it admitted herein petitioners brief for appellants despite having been
filed one day late but granted respondents Motion to Dismiss for failure to comply with
Section 11, Rule 13[8] of the Rules of Court and ordered that petitioners brief be expunged
from the records of the case.[9] Petitioners filed a Motion for Reconsideration but the same
was denied by the CA in a Resolution issued on June 16, 2000.[10]
Hence, the present petition raising the sole issue, to wit:
The petitioners submit that when the Court of Appeals dismissed the appeal of the petitioners
on the ground that there was no explanation why the said brief was filed by registered mail and
not by personal service in strictest compliance with Section 11, Rule 13 of the 1997 Rules of
Civil Procedure, the Court of Appeals acted not in accord with the said provisions and with the
cited decision of the Supreme Court.[11]
Petitioners argue that the dismissal by the CA of herein petitioners appeal on the ground of
failure to strictly comply with the provisions of Section 11, Rule 13 of the Rules of Court is not
in accord with the policy of liberal construction of the said Rules as provided in Section 6,
Rule 1 thereof. Petitioners submit that a strict interpretation of the above-cited provisions of
the Rules of Court will obstruct rather than serve the broader interests of justice. Moreover,
petitioners assert that the CA can take judicial notice of the distance between the CA office in
Manila and the law office of counsel for petitioners in Iloilo City; and that said distance
renders personal filing impracticable. Petitioners also contend that a mere perusal of their brief
already filed with the CA shows merit in their appeal and that its dismissal would prejudice the
substantial rights of herein petitioners.
In his Comment, respondent reiterates his contention that the requirements provided under
Section 11, Rule 13 of the Rules of Court are mandatory. Moreover, respondent contends that
the said Rule does not provide for any exception that would justify non-compliance therewith.
The Court finds the petition without merit on technical and substantive grounds.
On technical grounds, Section 11, Rule 13 of the Rules of Court provides that personal service
of petitions and other pleadings is the general rule, while a resort to other modes of service and
filing is the exception.[12] Where recourse is made to the exception, a written explanation why
the service and the filing were not done personally is indispensable, even when such
explanation by its nature is acceptable and manifest.[13] Where no explanation is offered to
justify the resort to other modes, the discretionary power of the court to expunge the pleading
becomes mandatory.[14] Thus, the CA did not err when it granted respondents Motion to
Dismiss and ordered that petitioners brief be expunged from the records in view of the latters
failure to present a written explanation why they did not personally file their appeal brief with
the CA.
Citing Kowloon House/Willy Ng v. Court of Appeals,[15] this Court reiterated the following
pronouncements in United Pulp and Paper Co., Inc. v. United Pulp and Paper Chapter-
Federation of Free Workers:[16]
[R]ules of procedure exist for a purpose, and to disregard such rules in the guise of liberal
construction would be to defeat such purpose. Procedural rules are not to be disdained as mere
technicalities. They may not be ignored to suit the convenience of a party. Adjective law
ensures the effective enforcement of substantive rights through the orderly and speedy
administration of justice. Rules are not intended to hamper litigants or complicate litigation.
But they help provide for a vital system of justice where suitors may be heard in the correct
form and manner, at the prescribed time in a peaceful though adversarial confrontation before a
judge whose authority litigants acknowledge. Public order and our system of justice are well
served by a conscientious observance of the rules of procedure, particularly by government
officials and agencies.[17]

Procedural rules are not to be belittled or dismissed simply because their non-observance may
have resulted in prejudice to a partys substantive rights.[18] Like all rules, they are required to
be followed except only for the most persuasive of reasons when they may be relaxed to
relieve a litigant of an injustice not commensurate with the degree of his thoughtlessness in not
complying with the procedure prescribed.[19]
In the present case, the CA already extended to petitioners the benefit of a liberal construction
of the Rules of Court by not dismissing their appeal on the ground that their appellants brief
was belatedly filed by one day. What cannot be ignored, however, are petitioners successive
violations of the Rule requiring explanation why they did not personally file their brief with the
CA. The first violation was committed when they filed their appellants brief and the second
violation was incurred when they filed their Comment on respondents Motion to Dismiss.
Petitioners cannot feign ignorance of such Rule because they are represented by counsel.
Moreover, they were already informed of such lapse through the Motion to Dismiss filed by
herein respondent.
In explaining the importance of faithful compliance with procedural rules, this Court held in
Land Bank of the Philippines v. Natividad[20] that:
[P]rocedural rules are designed to facilitate the adjudication of cases. Courts and litigants alike
are enjoined to abide strictly by the rules. While in certain instances, the Court allows a
relaxation in the application of the rules, there is no intention to forge a weapon for erring
litigants to violate the rules with impunity. The liberal interpretation and application of rules
apply only in proper cases of demonstrable merit and under justifiable causes and
circumstances. While it is true that litigation is not a game of technicalities, it is equally true
that every case must be prosecuted in accordance with the prescribed procedure to ensure an
orderly and speedy administration of justice. Party litigants and their counsel are well advised
to abide by, rather than flaunt, procedural rules for these rules illumine the path of the law and
rationalize the pursuit of justice.[21]
The right to appeal is a statutory right and the party who seeks to avail of the same must
comply with the requirements of the Rules.[22] Failing to do so, the right to appeal is lost,
more so, as in this case, where petitioners violated the same Rule not only once but twice. The
utter disregard of the rules made by petitioners cannot justly be rationalized by harking on the
policy of liberal construction and substantial compliance.[23] Concomitant to a liberal
application of the rules of procedure should be an effort on the part of the party invoking
liberality not only to explain and justify his failure to abide by the rules but also to avoid
committing the same mistake in the future. Hence, petitioners repeated failure to comply with
the provisions of Section 11, Rule 13 is enough basis to dismiss the present petition.
However, to write finis to the present controversy, the Court shall dwell on the merits of the
case in the interest of substantial justice and in consonance with the time-honored principle that
cases should be decided only after giving all parties the chance to argue their causes and
defenses.[24]
Even on substantive grounds, the Court still finds the present petition without merit.
The Court is not persuaded by petitioners contention in their appeal brief filed with the CA that
they are not bound by the report filed by the court-appointed commissioner showing that the
questioned area of 654 square meters is inside Cadastral Lot 2104. The Court finds no cogent
reason to deviate from the trial courts ruling, to wit:
As may be gleaned from the report submitted by the Commissioner, the 654-square-meter-
portion in dispute falls within Cadastral Lot 2104 of the Cadastral Survey of Tubungan, Iloilo.
Since Lot 2104 is owned by plaintiff in whose name the same is registered under Original
Certificate of Title No. F-31883, the conclusion is inevitable that plaintiff has a better right to
the portion in dispute.
Defendants objected to the findings and report of the Commissioner contending that the
resurvey should have been made on the basis of the previous survey not on the Cadastral
Survey. (Written Objection dated April 29, 1993, page 89, Records). Defendants objection is
woefully untenable.
Note that the Order dated February 5, 1993 was issued at the instance of both parties and this
Order categorically states that the relocation survey should be made to ascertain whether the
disputed portion is within Cadastral Lot 2097 or 2104 of the Cadastral Survey of Tubungan,
Iloilo. Since the lots to be relocated are cadastral lots, it is but logical and proper that the
relocation survey should be conducted on the basis of the data gathered during the cadastral
survey.
According to Geodetic Engineer Filomeno Dano, both plaintiff and defendant Tagabi, were
present during the relocation survey and both were fully aware of and, in fact, agreed to the use
by the Commissioner of the cadastral records and the available data pertinent to the cadastral
survey of the two lots. In fact, both parties helped the Commissioner and pointed to the
disputed portion using the available cadastral records relative to the two cadastral lots.
In any case, it is quite clear from the text of the Order dated February 5, 1993 appointing the
Commissioner that the parties agreed to abide by the results of the relocation survey which
results, according to the same Order, shall be made the basis of resolving the dispute between
them. It is now too late in the day, so to speak, for the defendants to back out from such
commitment that they had made.
Having agreed to abide by the results of the relocation survey, defendants are now estopped
from questioning the same. In Bulacan vs. Torcino, the Supreme Court held:
The Torcinos try to impugn the results of the relocation survey. We agree with the appellee that
the appellants are now estopped on this issue because they themselves prayed in the stipulation
of facts that the findings of the geodetic engineer would be the basis for the decision of the
Court of First Instance. We see no error, much less any grave abuse of discretion, in the lower
courts findings that the house of the Torcinos encroached on the lot of Victoriano Bulacan (134
SCRA 252; 259).
Defendants are thus bound by the results of the relocation survey conducted by Geodetic
Engineer Filomeno Dano, Chief of the Technical Services, DENR, Region VI, Iloilo City.[25]
Petitioners argue that the commissioners report stating that the disputed property is within
Cadastral Lot 2104 is not enough since there is nothing in the said report which categorically
states that the subject property is not inside Cadastral Lot 2097. The Court finds this reasoning
specious. Since the contested property has been declared to be within Cadastral Lot 2104, it
necessarily follows that it is not within Cadastral Lot 2097. Thus, there is no longer any need to
declare that the same property is not located within Cadastral Lot 2097. Any statement or
declaration to that effect is superfluous.
The Court, likewise, does not agree with petitioners argument that it was erroneous for the
lower court to consider their defense that respondents title over Cadastral Lot 2104 was
illegally obtained as a collateral attack on the said title.
Settled is the rule that a certificate of title cannot be subject to collateral attack and can be
altered, modified, or cancelled only in a direct proceeding in accordance with law.[26] In
Mallilin, Jr. v. Castillo[27], the Court held that an action is considered as an attack on a title
when the object of the action or proceeding is to nullify the title, and thus challenge the
judgment pursuant to which the title was decreed. The attack is direct when the object of an
action or proceeding is to annul, or set aside such judgment, or enjoin its enforcement.[28] On
the other hand, the attack is indirect or collateral when, in an action to obtain a different relief,
an attack on the judgment is nevertheless made as an incident thereof.[29] In the present case,
the attack on respondents title is definitely merely collateral as the relief being sought by
respondent in his action was recovery of ownership and possession. Petitioners attack on the
validity of respondents certificate of title was merely raised as a defense in their Answer filed
with the trial court.
However, considering the undisputed fact that respondent had been convicted by final and
executory judgment of the crime of falsification of public document used by him to support his
application for free patent[30] on which basis the certificate of title was issued in his favor, it
behooves the Court to modify the trial courts decision to the effect that its finding in Civil Case
No. 20636 is without prejudice to the filing of the proper action for cancellation or annulment
of title in the proper court.
WHEREFORE, the petition is DENIED. However, the Decision dated May 26, 1997 of the
Regional Trial Court, Iloilo City, Branch 26 in Civil Case No. 20636 is MODIFIED to the
effect that it is without prejudice to the filing of cancellation or annulment of title in the proper
court.
No costs.
SO ORDERED.
EN BANC
[G.R. No. 131012. April 21, 1999]
HON. RICARDO T. GLORIA, in his capacity as Secretary of the Department of
Education, Culture, and Sports, petitioner, vs. COURT OF APPEALS, AMPARO A.
ABAD, VIRGILIA M. BANDIGAS, ELIZABETH A. SOMEBANG and NICANOR
MARGALLO, respondents.
DECISION
MENDOZA, J.:
This case arose out of the unfortunate strikes and walk-outs staged by public school teachers on
different dates in September and October 1990. The illegality of the strikes was declared in our
1991 decision in Manila Public School Teachers Association v. Laguio, Jr.,[1] but many
incidents of those strikes are still to be resolved. At issue in this case is the right to back
salaries of teachers who were either dismissed or suspended because they did not report for
work but who were eventually ordered reinstated because they had not been shown to have
taken part in the strike, although reprimanded for being absent without leave.
The facts are as follows:
Private respondents are public school teachers. On various dates in September and October
1990, during the teachers strikes, they did not report for work. For this reason, they were
administratively charged with (1) grave misconduct, (2) gross neglect of duty, (3) gross
violation of Civil Service Law Rules and Regulations and reasonable office regulations, (4)
refusal to perform official duty, (5) gross insubordination, (6) conduct prejudicial to the best
interest of the service, and (7) absence without leave (AWOL), and placed under preventive
suspension. The investigation was concluded before the lapse of their 90-day suspension and
private respondents were found guilty as charged. Respondent Nicanor Margallo was ordered
dismissed from the service effective October 29, 1990, while respondents Amparo Abad,
Virgilia Bandigas, and Elizabeth Somebang were ordered suspended for six months effective
December 4, 1990.[2]
Respondent Margallo appealed to the Merit Systems and Protection Board (MSPB) which
found him guilty of conduct prejudicial to the best interest of the service and imposed on him a
six-month suspension.[3] The other respondents also appealed to the MSPB, but their appeal
was dismissed because of their failure to file their appeal memorandum on time.[4]
On appeal, the Civil Service Commission (CSC) affirmed the decision of the MSPB with
respect to Margallo, but found the other three (Abad, Bandigas, and Somebang) guilty only of
violation of reasonable office rules and regulations by failing to file applications for leave of
absence and, therefore, reduced the penalty imposed on them to reprimand and ordered them
reinstated to their former positions.
Respondents filed a petition for certiorari under Rule 65 in this Court. Pursuant to Revised
Administrative Circular No. 1-95, the case was referred to the Court of Appeals which, on
September 3, 1996, rendered a decision (1) affirming the decision of the CSC with respect to
Amparo Abad, Virgilia Bandigas, and Elizabeth Somebang but (2) reversing it insofar as the
CSC ordered the suspension of Nicanor Margallo. The appellate court found him guilty of
violation of reasonable office rules and regulations only and imposed on him the penalty of
reprimand.[5]

Private respondents moved for a reconsideration, contending that they should be exonerated of
all charges against them and that they be paid salaries during their suspension. In its resolution,
dated July 15, 1997, the Court of Appeals, while maintaining its finding that private
respondents were guilty of violation of reasonable office rules and regulations for which they
should be reprimanded, ruled that private respondents were entitled to the payment of salaries
during their suspension beyond ninety (90) days. Accordingly, the appellate court amended the
dispositive portion of its decision to read as follows:
WHEREFORE, IN VIEW OF THE FOREGOING, petition is hereby DENIED. CSC
Resolution Nos. 93-2302 dated June 24, 1993 and 93-3124 dated August 10, 1993 (In re:
Amparo Abad), CSC Resolution Nos. 93-2304 dated June 24, 1993 and 93-3227 dated August
17, 1993 (In re: Virgilia Bandigas) and CSC Resolution Nos. 93-2301 undated and 93-3125
dated August 10, 1993 (In re: Elizabeth Somebang) are hereby AFFIRMED while CSC
Resolution Nos. 93-2211 dated June 21, 1993 are hereby MODIFIED finding petitioner
Nicanor Margallo guilty of a lesser offense of violation of reasonable office rules and
regulations and meting upon him the penalty of reprimand. Respondent DECS is ordered to
pay petitioners Amparo Abad, Virgilia Bandigas, Elizabeth Somebang and Nicanor Margallo
their salaries, allowances and other benefits during the period of their suspension/dismissal
beyond the ninety (90) day preventive suspension. No pronouncement as to costs.[6]
Petitioner Ricardo T. Gloria, then Secretary of Education, Culture, and Sports, moved for a
reconsideration insofar as the resolution of the Court of Appeals ordered the payment of private
respondents salaries during the period of their appeal.[7] His motion was, however, denied by
the appellate court in its resolution of October 6, 1997.[8] Hence, this petition for review on
certiorari.
Petitioner contends that the administrative investigation of respondents was concluded within
the 90-day period of preventive suspension, implying that the continued suspension of private
respondents is due to their appeal, hence, the government should not be held answerable for
payment of their salaries. Moreover, petitioner lays so much store by the fact that, under the
law, private respondents are considered under preventive suspension during the period of their
appeal and, for this reason, are not entitled to the payment of their salaries during their
suspension.[9]
Petitioners contentions have no merit.
I. Preventive Suspension and the Right to Compensation in Case of Exoneration
The present Civil Service Law is found in Book V, Title I, Subtitle A of the Administrative
Code of 1987 (E.O. 292). So far as pertinent to the questions in this case, the law provides:
SEC. 47. Disciplinary Jurisdiction. -
....
(2) The Secretaries and heads of agencies and instrumentalities, provinces, cities and
municipalities shall have jurisdiction to investigate and decide matters involving disciplinary
action against officers and employees under their jurisdiction. Their decisions shall be final in
case the penalty imposed is suspension for not more than thirty days or fine in an amount not
exceeding thirty days salary. In case the decision rendered by a bureau or office head is
appealable to the Commission, the same may be initially appealed to the department and finally
to the Commission and pending appeal, the same shall be executory except when the penalty is
removal, in which case the same shall be executory only after confirmation by the Secretary
concerned.
....
(4) An appeal shall not stop the decision from being executory, and in case the penalty is
suspension or removal, the respondent shall be considered as having been under preventive
suspension during the pendency of the appeal in the event he wins an appeal.
SEC. 51. Preventive Suspension. - The proper disciplining authority may preventively suspend
any subordinate officer or employee under his authority pending an investigation, if the charge
against such officer or employee involves dishonesty, oppression or grave misconduct, or
neglect in the performance of duty, or if there are reasons to believe that the respondent is
guilty of charges which would warrant his removal from the service.
SEC. 52. Lifting of Preventive Suspension. Pending Administrative Investigation. - When the
administrative case against the officer or employee under preventive suspension is not finally
decided by the disciplining authority within the period of ninety (90) days after the date of
suspension of the respondent who is not a presidential appointee, the respondent shall be
automatically reinstated in the service: Provided, That when the delay in the disposition of the
case is due to the fault, negligence or petition of the respondent, the period of delay shall not be
counted in computing the period of suspension herein provided.
There are thus two kinds of preventive suspension of civil service employees who are charged
with offenses punishable by removal or suspension: (1) preventive suspension pending
investigation (51) and (2) preventive suspension pending appeal if the penalty imposed by the
disciplining authority is suspension or dismissal and, after review, the respondent is exonerated
(47(4)).
Preventive suspension pending investigation is not a penalty.[10] It is a measure intended to
enable the disciplining authority to investigate charges against respondent by preventing the
latter from intimidating or in any way influencing witnesses against him. If the investigation is
not finished and a decision is not rendered within that period, the suspension will be lifted and
the respondent will automatically be reinstated. If after investigation respondent is found
innocent of the charges and is exonerated, he should be reinstated.
A. No Right to Compensation for Preventive Suspension Pending Investigation Even if
Employee is Exonerated
Is he entitled to the payment of salaries during the period of suspension? As already stated, the
Court of Appeals ordered the DECS to pay private respondents their salaries, allowances, and
other benefits beyond the ninety (90) day preventive suspension. In other words, no
compensation was due for the period of the preventive suspension pending investigation but
only for the period of preventive suspension pending appeal in the event the employee is
exonerated.
The separate opinion of Justice Panganiban argues that the employee concerned should be paid
his salaries after his suspension.
The Civil Service Act of 1959 (R.A. No. 2260) provided for the payment of such salaries in
case of exoneration. Sec. 35 read:
Sec. 35. Lifting of Preventive Suspension Pending Administrative Investigation. - When the
administrative case against the officer or employee under preventive suspension is not finally
decided by the Commissioner of Civil Service within the period of sixty (60) days after the
date of suspension of the respondent, the respondent shall be reinstated in the service. If the
respondent officer or employee is exonerated, he shall be restored to his position with full pay
for the period of suspension.[11]
However, the law was revised in 1975 and the provision on the payment of salaries during
suspension was deleted. Sec. 42 of the Civil Service Decree (P.D. No. 807) read:
Sec. 42. Lifting of Preventive Suspension Pending Administrative Investigation. - When the
administrative case against the officer or employee under preventive suspension is not finally
decided by the disciplining authority within the period of ninety (90) days after the date of
suspension of the respondent who is not a presidential appointee, the respondent shall be
automatically reinstated in the service; Provided, That when the delay in the disposition of the
case is due to the fault, negligence or petition of the respondent, the period of delay shall not be
counted in computing the period of suspension herein provided.
This provision was reproduced in 52 of the present Civil Service Law. It is noteworthy that the
Ombudsman Act of 1989 (R.A. No. 6770) categorically provides that preventive suspension
shall be without pay. Sec. 24 reads:
Sec. 24. Preventive Suspension. The Ombudsman or his Deputy may preventively suspend any
officer or employee under his authority pending an investigation, if in his judgment the
evidence of guilt is strong, and (a) the charge against such officer or employee involves
dishonesty, oppression or grave misconduct or neglect in the performance of duty; (b) the
charges would warrant removal from the service; or (c) the respondents continued stay in office
may prejudice the case filed against him.
The preventive suspension shall continue until the case is terminated by the Office of the
Ombudsman but not more than six months, without pay, except when the delay in the
disposition of the case by the Office of the Ombudsman is due to the fault, negligence or
petition of the respondent, in which case the period of such delay shall not be counted in
computing the period of suspension herein provided.
It is clear that the purpose of the amendment is to disallow the payment of salaries for the
period of suspension. This conclusion is in accord with the rule of statutory construction that -
As a rule, the amendment by deletion of certain words or phrases in a statute indicates that the
legislature intended to change the meaning of the statute, for the presumption is that the
legislature would not have made the deletion had the intention been not in effect a change in its
meaning. The amended statute should accordingly be given a construction different from that
previous to its amendment.[12]
The separate opinion of Justice Panganiban pays no heed to the evident legislative intent to
deny payment of salaries for the preventive suspension pending investigation.
First, it says that to deny compensation for the period of preventive suspension would be to
reverse the course of decisions ordering the payment of salaries for such period. However, the
cases[13] cited are based either on the former rule which expressly provided that if the
respondent officer or employee is exonerated, he shall be restored to his position with full pay
for the period of suspension[14] or that upon subsequent reinstatement of the suspended person
or upon his exoneration, if death should render reinstatement impossible, any salary so
withheld shall be paid,[15] or on cases which do not really support the proposition advanced.
Second, it is contended that the exoneration of employees who have been preventively
suspended is proof that there was no reason at all to suspend them and thus makes their
preventive suspension a penalty.
The principle governing entitlement to salary during suspension is cogently stated in Floyd R.
Mechems A Treatise on the Law of Public Offices and Officers as follows:
864. Officer not entitled to Salary during Suspension from Office. - An officer who has been
lawfully suspended from his office is not entitled to compensation for the period during which
he was so suspended, even though it be subsequently determined that the cause for which he
was suspended was insufficient. The reason given is that salary and perquisites are the reward
of express or implied services, and therefore cannot belong to one who could not lawfully
perform such services.[16]
Thus, it is not enough that an employee is exonerated of the charges against him. In addition,
his suspension must be unjustified. The case of Bangalisan v. Court of Appeals itself similarly
states that payment of salaries corresponding to the period [1] when an employee is not
allowed to work may be decreed if he is found innocent of the charges which caused his
suspension and [2] when the suspension is unjustified.[17]
The preventive suspension of civil service employees charged with dishonesty, oppression or
grave misconduct, or neglect of duty is authorized by the Civil Service Law. It cannot,
therefore, be considered unjustified, even if later the charges are dismissed so as to justify the
payment of salaries to the employee concerned. It is one of those sacrifices which holding a
public office requires for the public good. For this reason, it is limited to ninety (90) days
unless the delay in the conclusion of the investigation is due to the employee concerned. After
that period, even if the investigation is not finished, the law provides that the employee shall be
automatically reinstated.
Third, it is argued in the separate opinion that to deny employees salaries on the frivolous
ground that the law does not provide for their payment would be to provide a tool for the
oppression of civil servants who, though innocent, may be falsely charged of grave or less
grave administrative offenses. Indeed, the possibility of abuse is not an argument against the
recognition of the existence of power. As Justice Story aptly put it, It is always a doubtful
course, to argue against the use or existence of a power, from the possibility of its abuse. . . .
[For] from the very nature of things, the absolute right of decision, in the last resort, must rest
somewhere - wherever it may be vested it is susceptible of abuse.[18] It may be added that if
and when such abuse occurs, that would be the time for the courts to exercise their nay-saying
function. Until then, however, the public interest in an upright civil service must be upheld.

Finally, it is argued that even in the private sector, the law provides that employees who are
unjustly dismissed are entitled to reinstatement with full pay. But that is because R.A. No. 6715
expressly provides for the payment to such employees of full backwages, inclusive of
allowances, and . . . other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement.[19] In the case
of the public sector, as has been noted, the provision for payment of salaries during the
preventive suspension pending investigation has been deleted.
B. Right to Compensation for Preventive Suspension Pending Appeal if Employee is
Exonerated
But although we hold that employees who are preventively suspended pending investigation
are not entitled to the payment of their salaries even if they are exonerated, we do not agree
with the government that they are not entitled to compensation for the period of their
suspension pending appeal if eventually they are found innocent.
Preventive suspension pending investigation, as already discussed, is not a penalty but only a
means of enabling the disciplining authority to conduct an unhampered investigation. On the
other hand, preventive suspension pending appeal is actually punitive although it is in effect
subsequently considered illegal if respondent is exonerated and the administrative decision
finding him guilty is reversed. Hence, he should be reinstated with full pay for the period of the
suspension. Thus, 47(4) states that respondent shall be considered as under preventive
suspension during the pendency of the appeal in the event he wins. On the other hand, if his
conviction is affirmed, i.e., if he is not exonerated, the period of his suspension becomes part of
the final penalty of suspension or dismissal.
It is precisely because respondent is penalized before his sentence is confirmed that he should
be paid his salaries in the event he is exonerated. It would be unjust to deprive him of his pay
as a result of the immediate execution of the decision against him and continue to do so even
after it is shown that he is innocent of the charges for which he was suspended. Indeed, to
sustain the governments theory would be to make the administrative decision not only
executory but final and executory. The fact is that 47(2) and (4) are similar to the execution of
judgment pending appeal under Rule 39, 2 of the Rules of Court. Rule 39, 5 provides that in
the event the executed judgment is reversed, there shall be restitution or reparation of damages
as equity and justice may require.
Sec. 47 of the present law providing that an administrative decision meting out the penalty of
suspension or dismissal shall be immediately executory and that if the respondent appeals he
shall be considered as being merely under preventive suspension if eventually he prevails is
taken from 37 of the Civil Service Decree of 1975 (P.D. No. 807). There was no similar
provision in the Civil Service Act of 1959 (R.A. No. 2260), although under it the
Commissioner of Civil Service could order the immediate execution of an administrative
decision in the interest of the public service.[20] Nor was there provision for immediate
execution of administrative decisions ordering dismissal or suspension in 695 of the
Administrative Code of 1917, as amended by C.A. No. 598, 1.[21] Nonetheless, under R.A.
No. 2260 the payment of salaries was ordered in cases in which employees were found to be
innocent of the charges[22] or their suspension was held to be unjustified, because the penalty
of suspension or dismissal was executed without a finding by the Civil Service Commissioner
that it was necessary in the interest of the public service.[23] On the other hand, payment of
back salaries was denied where it was shown that the employee concerned was guilty as
charged and the immediate execution of the decision was ordered by the Civil Service
Commissioner in the interest of the public service.[24]
Nothing in what has thus far been said is inconsistent with the reason for denying salaries for
the period of preventive suspension. We have said that an employee who is exonerated is not
entitled to the payment of his salaries because his suspension, being authorized by law, cannot
be unjustified. To be entitled to such compensation, the employee must not only be found
innocent of the charges but his suspension must likewise be unjustified. But though an
employee is considered under preventive suspension during the pendency of his appeal in the
event he wins, his suspension is unjustified because what the law authorizes is preventive
suspension for a period not exceeding 90 days. Beyond that period the suspension is illegal.
Hence, the employee concerned is entitled to reinstatement with full pay. Under existing
jurisprudence, such award should not exceed the equivalent of five years pay at the rate last
received before the suspension was imposed.[25]
II. Private Respondents Entitled to Back Salaries Although Found Guilty of Violation of Office
Rules and Regulations and Reprimanded
Private respondents were exonerated of all charges against them for acts connected with the
teachers strike of September and October 1990. Although they were absent from work, it was
not because of the strike. For being absent without leave, they were held liable for violation of
reasonable office rules and regulations for which the penalty is a reprimand. Their case thus
falls squarely within ruling in Bangalisan, which likewise involved a teacher found guilty of
having violated reasonable office rules and regulations. Explaining the grant of salaries during
their suspension despite the fact that they were meted out reprimand, this Court stated:
With respect to petitioner Rodolfo Mariano, payment of his backwages is in order. A reading of
the resolution of the Civil Service Commission will show that he was exonerated of the charges
which formed the basis for his suspension. The Secretary of the DECS charged him with and
he was later found guilty of grave misconduct, gross neglect of duty, gross violation of the
Civil Service Law, rules and regulations and reasonable office regulations, refusal to perform
official duty, gross insubordination, conduct prejudicial to the best interest of the service, and
absence without official leave, for his participation in the mass actions on September 18, 20
and 21, 1990. It was his alleged participation in the mass actions that was the basis of his
preventive suspension and, later, his dismissal from the service.
However, the Civil Service Commission, in the questioned resolution, made a finding that
Mariano was not involved in the mass actions but was absent because he was in Ilocos Sur to
attend the wake and interment of his grandmother. Although the CSC imposed upon him the
penalty of reprimand, the same was for his violation of reasonable office rules and regulations
because he failed to inform the school of his intended absence and neither did he file an
application for leave covering such absences.
Under Section 23 of the Rules Implementing Book V of Executive Order No. 292 and other
pertinent civil service laws, in violations of reasonable office rules and regulations, the first
offense is punishable by reprimand. To deny petitioner Mariano his back wages during his
suspension would be tantamount to punishing him after his exoneration from the charges which
caused his dismissal from the service.[26]
In Jacinto v. Court of Appeals,[27] a public school teacher who was found guilty of violation of Republic of the Philippines
reasonable office rules and regulations for having been absent without leave and reprimanded SUPREME COURT
was given back salaries after she was exonerated of the charge of having taken part in the Manila
strikes.
EN BANC
Petitioner Secretary of Education contends, however, that respondents Abad, Bandigas, and
Somebang signed a letter in which they admitted having taken part in the mass action. This G.R. No. L-31711 September 30, 1971
question cannot be raised now. The Civil Service Commission gave no weight to this letter in
view of individual letters written by the three citing reasons for their absences, to wit: Abad, ANTONIO J. VILLEGAS as Mayor of the City of Manila and MANUEL D. LAPID,
because she decided to stay home to correct student papers; Bandigas, because she had to petitioners-appellants,
accompany her brother to the Commission on Immigration, and Somebang because of vs.
economic reasons. Petitioner did not appeal from this ruling. Hence, he is bound by the factual ABELARDO SUBIDO as Civil Service Commissioner, EDUARDO Z. ROMUALDEZ as
findings of the CSC and the appellate court. Secretary of Finance, JOSE R. GLORIA as Acting Asst. City Treasurer of Manila, and HON.
CONRADO M. VASQUEZ as Presiding Judge of Branch V, Court of First Instance of Manila,
WHEREFORE, the decision, dated September 3, 1996, as amended by the resolutions, dated respondents-appellees.
July 15, 1997 and October 6, 1997, of the Court of Appeals, is hereby AFFIRMED with the
MODIFICATION that the award of salaries to private respondents shall be computed from the Gregorio A. Ejercito and Restituto R. Villanueva for petitioners-appellants.
time of their dismissal/suspension by the Department of Education, Culture, and Sports until
their actual reinstatement, for a period not exceeding five years. Office of the Solicitor General Felix Q. Antonio, Acting Assistant Solicitor General Hector C.
Fule and Solicitor Santiago M. Kapunan for respondents-appellees.
SO ORDERED.

FERNANDO, J.:

Petitioner Antonio J. Villegas, in this appeal from a decision of the lower court dismissing a
special civil action for prohibition, quo warranto and mandamus would lay claim as the Mayor
of the City of Manila to the power of appointment of the Assistant City Treasurer to which
office the other petitioner, Manuel D. Lapid, was by him named even if under its Charter 1
such a prerogative is expressly vested in the President of the Philippines. 2 He would invoke a
provision in the Decentralization Act to the effect that all "other employees, except teachers,
paid out of provincial, city or municipal general funds, and other local funds shall, subject to
civil service law, rules and regulations, be appointed by the provincial governor, city or
municipal mayor upon recommendation of the office head concerned." 3 He is not deterred by
the rather general and in explicit character of such statutory language as he contends for a
construction rather generous, if not latitudinarian, in scope purportedly in consonance with the
avowed purpose of the Act of enlarging boundaries of local autonomy. Respondent Abelardo
Subido, who was proceeded against as Commissioner of the Civil Service, 4 takes a stand
diametrically opposite not only because there is no legal basis for such a claim in the light of
what is expressly ordained in the City Charter but also because such an interpretation of the
provision related upon would disregard the well-settled doctrine that implied repeals are not
favored. The lower court, in a well-written decision by the Honorable Conrado M. Vasquez,
accepted such a view. After a careful study of the matter, we cannot discern any error. We
affirm.

The facts as found by the lower court follows: "In a letter dated June 3, 1968, respondent
Eduardo Z. Romualdez, Secretary of Finance, authorized respondent Jose R. Gloria of the
Office of the City Treasurer of Manila to assume the duties of Assistant City Treasurer
effective June 1, 1968, vice Felino Fineza who retired from the government service on May 31,
1968. In administrative Order No. 40, series of 1968, dated June 17, 1968, petitioner Antonio J.
Villegas, Mayor of the City of Manila, directed respondent Gloria to desist and refrain from
exercising the duties and functions of the Assistant City Treasurer,' on the ground that
respondent Romualdez "is not empowered to make such designation." On January 1, 1969,
Mayor Villegas, appointed petitioner Manuel D. Lapid, chief of the cash division of the Office
of the City Treasurer of Manila, as Assistant City Treasurer. In a 1st endorsement dated
February 14, 1969, respondent Abelardo Subido, Commissioner of Civil Service disapproved
the appointment of Lapid, basing his action, on an opinion of the Secretary of Justice dated
September 19, 1968 to the effect that the appointment of Assistant Provincial Treasurers is still
governed by Section 2088 (A) of the Revised Administrative Code, and not by Section 4 of the
Decentralization Law, Republic Act No. 5185." 5
Thereafter on February 25, 1969, to quote anew from the appealed decision: "Mayor Villegas
and Manuel D. Lapid filed the instant petition for prohibition, quo warranto and mandamus,
with application for writ of preliminary injunction, praying that judgment be rendered to
declare illegal and void ab initio the authorization given by respondent Romualdez to
respondent Gloria to assume the duties of assistant city treasurer of Manila, and that a writ of
mandamus be issued to respondent Commissioner of Civil Service Subido commanding him to
approve the appointment of petitioner Lapid to the said office in accordance with the civil
Service Rules." 6 It was not until the filing of the petition that respondent Jose R. Gloria was
nominated by the President of the Philippines to the position of Assistant City treasurer of
Manila and thereafter duly confirmed. After the case was submitted for judgment on the
pleadings and the documentary exhibits stipulated by the parties, the court rendered its decision
on August 4, 1969 dismissing the petition. Hence this appeal by way of certiorari.
With this Tribunal, as with the court below, the decisive question is the applicable law. The
Charter of the City of Manila, enacted in 1949, in express terms did confer on the President of
the Philippines, with the consent of the Commission on Appointments, the power to appoint the
Assistant City Treasurer. 7 On the other hand, support for the petition is premised on the
expansive interpretation that would be accorded the general provisions found in the
Decentralization Act of 1967 to the effect that it is a city mayor who has the power to appoint
all other employees paid out of city or local funds subject to civil service law, rules and
regulations. 8
It is understandable why the choice for the lower court was not difficult to make. What has
been so clearly ordained in the Charter is controlling. It survives in the face of the assertion
that the additional power granted local officials to appoint employees paid out of local funds
would suffice to transfer such authority to petitioner Mayor. A perusal of the words of the
statute, even if far from searching would not justify such an interpretation. This is all more
evident, considering the fidelity manifested by this Court to the doctrine that looks with less
than favor on implied appeals. The decision now on appeal, to repeat, must be affirmed.
1. The inherent weakness of the contention of petitioner Mayor that would seize upon
the vesting of the appointing power of all other "employees" except teachers paid out of local
funds to justify his choice of petitioner Manuel D. Lapid as Assistant City Treasurer is readily
disclosed. The Revised Administrative Code distinguishes one in that category from an
"officer" to designate those "whose duties, not being of a clerical or manual nature, may be
considered to involve the exercise of discretion in the performance of the function of
government, whether such duties are precisely defined by law or not." 9 Clearly, the Assistant
and City Treasurer is an officer, not an employee. Then, too, Section 4 of the Decentralization
Act relied upon by petitioner City Mayor specifically enumerates, the officials and their
assistants whom he can appoint, specifically excluding therefrom city treasurers. 10 The
expansive interpretation contended for is thus unwarranted.
Nor is the case strengthened for petitioner City Mayor by the invocation of Pineda v. Claudio.
11 It is not to be denied that in the opinion of the Court, penned by Justice Castro, undue
interference with the power and prerogatives of a local executive is sought to be avoided,
considering his primary responsibility for efficient governmental administration. What is not to
be ignored though is that such a principle was announced in connection with the appointment
of a department head, the chief of police, who necessarily must enjoy the fullest confidence of
the local executive, one moreover whose appointment is expressly vested in the city mayor.
The principle therein announced does not extend as far as the choice of an assistant city
treasurer whose functions do not require that much degree of confidence, not to mention the
specific grant of such authority to the President. Equally unavailing then is Villegas v. Subido,
12 where this Court, through the then Justice Capistrano, recognized that the choice of who the
city legal officer should be rests solely on the city mayor, such an office requiring as it does the
highest degree of confidence. It bears repeating that the situation in the case before us is of a
different category. The decision appealed from, then, is not to be impugned as a failure to abide
by controlling pronouncements of this Tribunal.
2. Much less is reversal of the lower court decision justified on the plea that the
aforesaid provision in the Decentralization Act had the effect of repealing what is specifically
ordained in the city charter. It has been the constant holding of this Court that repeals by
duplication are not favored and will not be so declared unless it be manifest that the legislature
so intended. Such a doctrine goes as far back as United States v. Reyes, a 1908 decision. 13 It
is necessary then before such a repeal is deemed to exist that it be shown that the statutes or
statutory provisions deal with the same subject matter and that the latter be inconsistent with
the former. 14 There must be a showing of repugnancy clear and convincing in character. The
language used in the latter statute must be such as to render it irreconcilable with what had
been formerly enacted. An inconsistency that falls short of that standard does not suffice. What
is needed is a manifest indication of the legislative purpose to repeal. 15
More specifically, a subsequent statute, general in character as to its terms and application, is
not to be construed as repealing a special or specific enactment, unless the legislative purpose
to do so is manifest. This is so even if the provisions of the latter are sufficiently
comprehensive to include what was set forth in the special act. This principle has likewise been
consistently applied in decisions of this Court from Manila Railroad Co. v. Rafferty, 16 decided
as far back as 1919. A citation from an opinion of Justice Tuason is illuminating. Thus: "From
another angle the presumption against repeal is stronger. A special law is not regarded as
having been amended or repealed by a general law unless the intent to repeal or alter is
manifest. Generalia specialibus non derogant. And this is true although the terms of the general
act are broad enough to include the matter in the special statute. ... At any rate, in the event
harmony between provisions of this type in the same law or in two laws is impossible, the
specific provision controls unless the statute, considered in its entirety, indicates a contrary
intention upon the part of the legislature. ... A general law is one which embraces a class of
subjects or places and does not omit any subject or place naturally belonging to such class
while a special act is one which relates to particular persons or things of a class. 17
WHEREFORE, the lower court decision of August 4, 1969 is affirmed. Without
pronouncement as to costs.
FIRST DIVISION
[G.R. No. 137904. October 19, 2001]
PURIFICACION M. VDA. DE URBANO, PEDRO DE CASTRO, AURELIO I.
ARRIENDA, ARNEL U. ARRIENDA, ALBERT U. ARRIENDA, ALICE A. PEDRON
and MARILYN C. BILOG, petitioners, vs. GOVERNMENT SERVICE INSURANCE
SYSTEM (GSIS), FELICIANO BELMONTE, JR., ZACARIAS BELTRAN, JR.,
MARCIAL SECOQUIAN and CRISPINA DELA CRUZ, respondents.
DECISION
PUNO, J.:
The petitioners in the case at bar have been fighting tooth and nail for a roof above their heads.
They have fought long and hard but still not enough, for while as a succor institution the
respondent GSIS can bend back to accommodate the needs of a member, it can only bend as far
as it can also assure the solvency of its funds for the common good of its members.
This is a petition for review on certiorari to annul and set aside the Court of Appeals' October
30, 1998 decision[1] and March 4, 1999 resolution affirming the decision of the Regional Trial
Court of Quezon City, Branch 102, dismissing petitioner's complaint for annulment of contract,
reconveyance and damages.
The facts, gathered mainly from the stipulation and admissions of the parties,[2] are as follows:
In 1971, petitioners mortgaged their 200-square meter property in Quezon City to the
respondent GSIS to secure a housing loan of P47,000.00. As petitioners failed to pay their loan
when it fell due, GSIS foreclosed the mortgage on October 28, 1983. With a bid of
P154,896.00, GSIS emerged as the highest bidder in the public auction of the property.
In a bid to redeem their property, petitioner Arnel Arrienda wrote on September 26, 1984 to the
Acquired Assets Department (AAD) of the GSIS signifying the petitioners' intention to redeem
their property. Two days after or on September 28, petitioner vda. de Urbano wrote the GSIS
Board of Trustees (the "Board") to inform them of her desire to redeem the subject property
and for advice on the procedure for redemption.[3] GSIS responded on October 16, 1984
advising her to pay the total redemption price of P154,896.00 on or before the expiry date of
redemption on November 18, 1984 in full and in cash, failing which the property would be
offered for sale through public bidding.
On October 29, 1984, petitioner vda. de Urbano requested for more time to redeem the subject
property. In a letter dated January 10, 1985, AAD Manager Marcial Secoquian informed
petitioners that the Board adopted Resolution No. 929 on November 16, 1984 approving the
"sale of the subject property to petitioner Purificacion Urbano for the sum of P174,572.62,
provided that the aforesaid price shall be paid in CASH, within sixty (60) days from notice of
this resolution, failing which, the property shall be sold thru public bidding with the fair market
value of the property as the minimum bid price."
Unable to find financing to repurchase the subject property, petitioners again wrote to the
Board through AAD Manager Secoquian on January 18, 1985 requesting for re-mortgage
through repurchase of the subject property.[4] On February 27, 1985, AAD Manager Secoquian
wrote to petitioners that "the granting of real estate/housing loan to the GSIS members is not
within the province and competence of this department, hence your request for a re-mortgage
of said property cannot be acted upon."[5] On June 19, 1985, petitioner vda. de Urbano wrote
to the Board requesting approval to file a loan of P240,000.00 with the GSIS Real Estate
Department to repurchase their foreclosed property.
On June 20, 1985, then Deputy Minister and Vice Governor Ismael A. Mathay, Jr. interceded
for the petitioners and wrote to the Board requesting for a more liberal arrangement to enable
petitioners to repurchase their property. In response to the letter, the Board adopted Resolution
No. 593 on July 6, 1985 granting petitioner Aurelio Arrienda "60 days from notice within
which to purchase the subject property for P174,572.62 payable in CASH. Should Mr. Arrienda
fail to pay the same within the time frame mentioned, the property shall be sold at public
auction without need of any further action by the Board." Petitioners were notified of this
Resolution in a letter dated August 2, 1985.[6]
On August 21, 1985, months after the expiration of the redemption period on November 18,
1984, GSIS consolidated its title over the property, leading to the cancellation of TCT No.
167532 covering the property and the issuance of TCT No. 33418 in favor of GSIS.[7]
On September 5, 1985, respondent Crispina dela Cruz commenced negotiations with
respondent GSIS for her purchase of the petitioners' foreclosed property for P250,000.00 spot
cash.
Unable to raise the entire amount of the property but still persistent to reacquire it, petitioner
Arnel Arrienda wrote to the Board on October 4, 1985, offering a downpayment of P50,000.00
to purchase their property, the balance of P124,572.62 to be paid within five years in equal
monthly installments. He enclosed a cashier's check in the amount of P10,000.00 as earnest
money. On October 30, 1985, AAD Manager Secoquian informed petitioners that the Board
adopted Resolution No. 881 on October 10, 1985 declining their offer to purchase the subject
property under their proposed terms and conditions.[8]
On November 11, 1985, petitioner Arnel Arrienda again wrote to the Board requesting
reconsideration of Resolution No. 881 and abeyance of the public sale or negotiation of the
subject property.[9] Secoquian wrote petitioner Arnel Arrienda on December 26, 1985
informing him that the Board adopted Resolution No. 1022 dated December 12, 1985 denying
his request for reconsideration of Resolution No. 881 and returning petitioners' cashier's check
of P10,000.00.[10] The Board also directed the "Operating Unit Concerned to inform Ms.
Cristina Cruz (sic) that her offer to purchase the above-mentioned property shall only be
entertained by the GSIS Board if accompanied by a Cashier's or Manager's check in the
amount equivalent to 10% of her offer, forfeitable in favor of the System in case she fails to
comply with the terms and conditions proposed by the System."[11]
With no let up on their efforts to repurchase their property, petitioner Aurelio Arrienda wrote to
the Board on January 6, 1986 requesting a restructuring or a liberal arrangement to purchase
back the subject property. This was denied by the Board in Resolution No. 36 dated January
16, 1986.
Meantime, GSIS continued negotiating with private respondent dela Cruz. On January 28,
1986, Secoquian recommended to the Board the approval of the sale to dela Cruz.
Not having lost their resolve and pinning their hopes on the new Board of Trustees under the
new administration of then President Corazon Aquino, petitioner vda. de Urbano wrote on
January 20, 1987 to Atty. Regalado Resurreccion, Head of the Operation Pabahay of the
Government Investments and Loan Department of the GSIS, requesting reconsideration of
GSIS' position with regard to the subject property.[12] As indicated in a GSIS internal
commmunication, Officer-in-Charge Rosales of the Residential Loans Department initially
handled the request, then endorsed it to Atty. Resurreccion on January 19, 1987 and enclosed in
his endorsement petitioner vda. de Urbano's June 19, 1985 letter applying for a loan of
P240,000.00 to repurchase the subject property. The matter was, in turn, endorsed by Atty.
Resurreccion to AAD Manager Secoquian on January 20, 1987 as "the Operation Pabahay Task
Force cannot undertake the processing of this kind of loan unless a certificate of award or sale
is issued in favor of the applicant." Atty. Resurreccion likewise noted in his endorsement that
the applicant for the loan was already 81 years old and no longer a member of the GSIS. AAD
Manager Secoquian returned said application to the head of the Operation Pabahay on March
3, 1987, enumerating the Board resolutions relative to the subject property and stating that
"pending action by the Board on the offer of CRISPINA VDA. DELA CRUZ to purchase the
subject property for the amount of P250,000.00, the request of Mrs. URBANO cannot as yet be
given due consideration."[13]
On August 11, 1987, GSIS approved under Resolution No. 342 the "sale of the subject property
to respondent dela Cruz for a consideration of P267,000.00 CASH." The following day,
respondent AAD & GRADE Acting Vice-President Zacarias C. Beltran, Jr. wrote to petitioners
Zenaida/Aurelio Arrienda calling their attention to the absence of a formal lease contract over
the subject property where petitioners continued to stay. He also demanded payment of rental
arrears on the property for 45 months as of July 31, 1987 amounting to P58,500.00[14] and
invited petitioners Zenaida and Aurelio Arrienda to the GSIS Office to make arrangements for
the payment of the rental arrears and to execute the corresponding lease contract. The letter did
not mention the negotiation with private respondent dela Cruz.
On September 1, 1987, GSIS wrote to private respondent dela Cruz that the Board, through
Board Resolution No. 342, approved the sale of the subject property payable in full and in cash
for P267,000.00, representing its current market value, within thirty days from notice of the
resolution. On January 20, 1988, a Deed of Absolute Sale over the subject property was
executed between GSIS and private respondent de la Cruz. The following day, TCT No.
374292 covering the subject property was issued to dela Cruz.
Meantime, having learned about the sale of the subject property to dela Cruz, petitioner Aurelio
Arrienda wrote to the GSIS on September 27, 1987 protesting the said sale and requesting its
reconsideration and recall. Respondent Beltran, then already the Vice President of the AAMG
& GRADE Department of the GSIS, responded on October 27, 1987 informing him of
Resolution No. 430, dated October 13, 1987, which reiterated the approval of the sale of the
subject property to respondent dela Cruz as previously approved under Board Resolution No.
342. On November 4, 1987, petitioner Aurelio Arrienda again wrote to the GSIS protesting the
sale of the property to respondent dela Cruz and requesting for a formal investigation of the
circumstances leading to the sale. The GSIS' Department of Investigation manager wrote to
petitioner Aurelio Arrienda on January 11, 1988 requesting petitioner Aurelio Arrienda to
"come for conference" with Atty. Gatpatan of the said department regarding his complaint on
the subject property.
Not satisfied with the investigation of GSIS, petitioners filed the instant case before the
Regional Trial Court of Quezon City, Branch 102. The lower court dismissed the complaint.
This was affirmed by the Court of Appeals. Hence, this petition for review with the following
assignment of errors:
"The Honorable Court of Appeals (Former Eleventh Division) erred as follows:
1. In not finding that the alleged negotiated sale of petitioners' foreclosed property was
consummated by respondent GSIS in favor of respondent Crispina Dela Cruz, a non-GSIS
member, in violation of its own Board Resolution Nos. 929 and 593, existing laws and
applicable jurisprudence.
2. In not finding that respondent GSIS had consummated the alleged negotiated sale in favor of
respondent Dela Cruz notwithstanding the failure of the latter to comply with the terms and
conditions of the alleged sale.
3. In not finding that respondent GSIS had committed dishonesty and/or perjury by falsely
alleging in their Answer to the Complaint that it acted on the request of petitioner Purificacion
Vda. De Urbano to re-acquire her former property through the GSIS Operation Pabahay by
transmitting said request to the Acquired Assets Department.
4. In not finding that the case of Valmonte vs. Belmonte, Jr., 170 SCRA 256 (1989), is
applicable to the case at bench.
5. In not finding that Section 35 of P.D. 1146, does not provide any prerogative to the GSIS
Board of Trustees to authorize and/or approve the alleged negotiated sale in favor of a non-
GSIS member or an outsider without complying with pertinent existing laws and established
jurisprudence.
6. In not finding that the appealed Decision of the lower court did not faithfully comply with
Sec. 1, Rule 36 of the Rules of Court.
7. In not finding that the case of Maharlika Publishing Corporation vs. Tagle, 142 SCRA 553
(1986), is a precedent to the case at bench.
8. In not giving due consideration to the newly discovered evidence of the petitioners (Annexes
"A" and "B", Brief for the Appellants) which showed that respondent Crispina Dela Cruz had
already withdrawn her offer to buy subject property and the same was accepted by respondent
GSIS."
The petition is devoid of merit.
The smorgasbord of issues raised by the petitioner can be reduced to three jugular issues, viz:
I. Do petitioners have a right to repurchase the subject property?
II. Does the GSIS have a duty to dispose of the subject property through public bidding?
III. Was GSIS in bad faith in dealing with petitioners?
I.
We first deal with the issue of repurchase. At the time petitioners offered to repurchase the
subject property from GSIS, the charter of the GSIS then in force was P.D. 1146 or the Revised
Government Insurance Act of 1977 (the "Act"). Sections 35 and 36 of the Act provide in
relevant part as follows:
"Sec. 35. Powers and Functions of the System. The System shall have the following powers
and functions specified in this Act and the usual general corporate powers:
xxx
(d) To acquire, utilize or dispose of, in any manner recognized by law, real or personal
properties in the Philippines or elsewhere necessary to carry out the purposes of this Act."
(emphasis supplied)
"Sec. 36. The Board of Trustees; Its Composition; Tenure and Compensation.- The Corporate
powers and functions of the System shall be vested in, and exercised by the Board of
Trustees. . ."
P.D. 1146 was amended by P.D. 1981 dated July 19, 1985 as follows:
"WHEREAS, the GSIS Board of Trustees should be vested with powers and authority
necessary or proper to ensure a fair and profitable return of the investments of the funds
administered by the GSIS, and, for this purpose, the GSIS Board of Trustees should be given
full and sole responsibility of controlling and monitoring insurance investments operations and
fixing and determining the terms and conditions of financial accomodations to its members,
including the power to compromise or release any claim or settled liability to the GSIS;
WHEREAS, it has thus become necessary to amend Presidential Decree No. 1146 to clarify
some of its provisions to make it more responsive to the needs of the members of the GSIS and
to assure the actuarial solvency of the Fund administered by the GSIS during these times of
grave economic crisis affecting the country;
xxx
Sec. 7. There is hereby incorporated a new paragraph after the third paragraph of Section 36,
which shall read as follows:
"The Board of Trustees has the following powers and functions, among others:
(a) To formulate the policies, guidelines and programs to effectively carry out the purposes and
objectives of this Act;
xxx
(f) The provisions of any law to the contrary notwithstanding, to compromise or release, in
whole or in part, any claim or settled liability to the System, regardless of the amount involved,
under such terms and conditions as it may impose for the best interest of the System; . . ."
(emphasis supplied)
The above laws grant the GSIS Board of Trustees (the "Board") the power, nay, the
responsibility, to exercise discretion in "determining the terms and conditions of financial
accomodations to its members" with the dual purpose of making the GSIS "more responsive to
the needs of the members of the GSIS" and assuring "the actuarial solvency of the Fund
administered by the GSIS." As mandated by P.D. 1146, this discretion may be exercised in
acquiring, utilizing or disposing of, in any manner recognized by law, "real or personal
properties in the Philippines or elsewhere necessary to carry out the purposes of this Act."
Contrary to petitioners' position, there is no restriction or qualification that the GSIS should
dispose of its real properties in favor only of GSIS members. Based on these laws, the Board
could exercise its discretion on whether to accept or reject petitioners' offer to repurchase the
subject property taking into account the dual purpose enunciated in the "whereas clause" of
P.D. 1981, i.e., making the GSIS "more responsive to the needs of the members of the GSIS"
and assuring "the actuarial solvency of the Fund administered by the GSIS."
Jurisprudence also supports the Board's exercise of discretion in case of repurchase, viz:
"The right to redeem becomes functus officio on the date of its expiry, and its exercise after the
period is not really one of redemption but a repurchase. Distinction must be made because
redemption is by force of law; the purchaser at public auction is bound to accept redemption.
Repurchase however of foreclosed property, after redemption period, imposes no such
obligation. After expiry, the purchaser may or may not re-sell the property but no law will
compel him to do so. And, he is not bound by the bid price; it is entirely within his discretion to
set a higher price, for after all, the property already belongs to him as owner."[15] (emphasis
supplied)
In response to petitioners' plea to repurchase the subject property after the redemption period
had expired, the Board approved its sale to petitioners by virtue of Resolution No. 929 dated
November 16, 1984, provided that the payment of its purchase price of P174,572.62 shall be
made in cash within sixty days from notice of the resolution, otherwise the property would be
sold through public bidding. After petitioners' failure to purchase the property within the
prescribed period, the Board, through Resolution No. 593 dated July 6, 1985, granted
petitioners another sixty days within which to purchase the property for the same amount and
under the same terms stated in Resolution No. 929. Counting from the expiry date of
redemption on November 18, 1984, the petitioners were given about ten months within which
to repurchase the subject property for the same price of P174,572.62. In view of petitioners'
repeated failure to repurchase coupled with their failure to pay rent on the subject property, the
Board denied through Resolution No. 1022 dated December 12, 1985 petitioners' subsequent
request to repurchase the subject property. The minutes of the Board Meeting on December 12,
1985 show the comment of the AAD Manager, viz:
"From the aforementioned background of the Case where the family of Mr. Arrienda has
repeatedly made different and/or conflicting offers/requests, it seems that their family
apparently lack(sic) the capacity to reacquire their former property, and are obviously delaying
our final disposition of the property. Moreover, since the expiry date of the redemption period,
Mr. Arrienda has not made any rental payments on the property."[16]
The Board's denial of petitioners' request to purchase the subject property was based not on
whim or caprice, but on a factual assessment of the financial capacity of the petitioners to make
good their repeated offers to purchase the subject property. Respondent GSIS struck a balance
between being "responsive to the needs of the members of the GSIS" and assuring "the
actuarial solvency of the Fund administered by the GSIS", and tilted the scale in favor of the
latter. Under the then GSIS charter or P.D. 1146, this was well within the powers of the Board.
Petitioners, in addition, fault their failure to meet the GSIS' terms for repurchase on the GSIS'
inaction on their January 20, 1987 request to re-acquire the subject property through the GSIS
Operation Pabahay. They allege that instead of acting upon this letter, what was acted upon was
their letter of June 19, 1985. The evidence on record, however, shows that Officer-in-Charge
Rosales of the Residential Loans Department endorsed the matter raised by petitioners in their
January 20, 1987 letter to Atty. Resurreccion, Head of the Operation Pabahay. While the
endorsement shows that enclosed therewith was petitioner vda. de Urbano's June 19, 1985
letter applying for a loan of P240,000.00 to repurchase the subject property, the endorsement
itself stated that the loan for reacquisition of the subject property was being made under the
"current Operations Pabahay." Thereafter, the matter was endorsed by Atty. Resurreccion to the
Manager of the AAD on January 20, 1987 as "the Operation Pabahay Task Force cannot
undertake the processing of this kind of loan unless a certificate of award or sale is issued in
favor of the applicant." AAD Manager Secoquian returned said application to the head of the
Operation Pabahay on March 3, 1987, enumerating the Board resolutions relative to the subject
property and stating that "pending action by the Board on the offer of CRISPINA VDA. DELA
CRUZ to purchase the subject property for the amount of P250,000.00, the request of Mrs.
URBANO cannot as yet be given due consideration."[17]
In sum, insofar as the petitioners' request for repurchase is concerned, they are not entitled to
repurchase as a matter of right. The Board exercised its discretion in accordance with law in
denying their requests and the GSIS cannot be faulted for petitioners' failure to repurchase as it
acted upon petitioners' application under the Operation Pabahay. The sale of the subject
property to respondent dela Cruz cannot therefore be annulled on the basis of petitioners'
alleged right to repurchase.
Neither can petitioners invoke Maharlika Publishing Corporation v. Tagle,[18] as a precedent
insofar as the Board's exercise of its discretion to grant loan restructuring is concerned.[19]
Petitioners point out that in that case, the Supreme Court found that the GSIS "created an
agreement of binding nature" with the owner of the foreclosed property when the owners
proposed to repurchase the property and the then GSIS General Manager Roman Cruz, Jr.
ordered that the public bidding of the property be stopped and the repurchase be discussed with
him a day before the scheduled date of the bidding. The case is not in point. In the Maharlika
case, this Court ruled that GSIS was deemed to have accepted the offer to repurchase when it
ordered the bidding to be stopped pending discussion of the repurchase with the owner of the
property. In the case at bar, however, the GSIS granted petitioners two opportunities under
Resolutions No. 929 dated November 16, 1984 and Resolution No. 593 dated July 6, 1985 to
repurchase the subject property, but petitioners failed to comply with the GSIS' terms of
repurchase. Subsequently, when petitioners offered to repurchase the subject property under
their own terms of payment, the GSIS under Resolution No. 881 dated October 10, 1985
denied the same. Unlike in the Maharlika case therefore, it cannot be said that the GSIS
"created an agreement (to repurchase) of binding nature" with the herein petitioners.
II.
We come now to the second issue of whether the GSIS should dispose of the subject property
through public bidding.
Petitioners aver that Section 79 of P.D. 1445[20] and Commission on Audit (COA) Circular
No. 86-264 mandate the GSIS to dispose of its assets, such as the subject property, primarily
through public bidding and only upon its failure, through a negotiated sale.
On the other hand, GSIS contends that Section 79 of P.D. 1445 does not apply to the case at bar
as this provision covers unserviceable government property and not acquired assets like the
subject property. Nor does the sale of the subject property come within the purview of COA
Circular No. 86-264 as it is a "sale of merchandise/inventory held for sale in the regular course
of business" which is carved out as an exception under the circular. GSIS posits that this
interpretation of COA Circular No. 86-264 was made clear by the subsequent COA Circular
No. 89-296.
We uphold the position of the GSIS.
Section 79 of P.D. 1445 does not apply to the case at bar as this provision applies only to
unserviceable property, viz:
"SECTION 79. Destruction or sale of unserviceable property. - When government property has
become unserviceable for any cause, or is no longer needed, it shall, upon application of the
officer accountable therefor, be inspected by the head of the agency or his duly authorized
representative in the presence of the auditor concerned and, if found to be valueless or
unsalable, it may be destroyed in their presence. If found to be valuable, it may be sold at
public auction to the highest bidder under the supervision of the proper committee on award or
similar body in the presence of the auditor concerned or other duly authorized representative of
the Commission, after advertising by printed notice in the Official Gazette, or for not less than
three consecutive days in any newspaper of general circulation, or where the value of the
property does not warrant the expense of publication, by notices posted for a like period in at
least three public places in the locality where the property is to be sold. In the event that the
public auction fails, the property may be sold at a private sale at such price as may be fixed by
the same committee or body concerned and approved by the Commission."
That the subject property is not "unserviceable" or useless is rather obvious. Petitioners are
precisely fighting tooth and nail to claim the subject property as they are still using it as their
family home. It still serves its purpose well. Neither is it "no longer needed" by the GSIS. As a
financial institution extending housing loans, the disposition of foreclosed properties - such as
the subject property - at a price beneficial to the GSIS helps maintain the actuarial solvency of
the GSIS fund. It cannot therefore be said that the subject property is "no longer needed" by the
GSIS.
We turn now to the COA circulars cited by the parties. COA Circular No. 86-264 dated October
16, 1986, the "General guidelines on the divestment or disposal of assets of government-owned
and/or controlled corporations, and their subsidiaries" provides in relevant part, viz:
"1.0 Rationale and Scope
These guidelines shall govern the general procedures on the divestment or disposal of assets of
government-owned and/or controlled corporations and their subsidiaries, which shall be
supplemented by specific procedures as may be adopted by the corporation concerned,
provided they do not contravene existing laws and the provisions of this circular.

xxx
3.0 Modes of Disposal
3.1. Public Auction
As a rule, public auction or bidding shall be the primary mode of disposal of assets.
3.2. Sale thru Negotiation
Disposal thru this mode, which is a sale without public bidding, shall be resorted to only in
case of failure of public auction.
xxx
5.0 Exceptions and Effectivity
This Circular shall not apply to sales of merchandise/inventory held for sale in the regular
course of business." (emphasis supplied)
On January 27, 1989, COA Circular No. 89-296 was issued providing also for "Audit
Guidelines on the Divestment or Disposal of Property and Other Assets of National
Government Agencies and Instrumentalities, Local Government Units and Government-Owned
or Controlled Corporations and their Subsidiaries." It provides for the disposition of
government assets, viz:
"III. DEFINITION AND SCOPE:
These audit guidelines shall be observed and adhered to in the divestment or disposal of
property and other assets of all government entities/instrumentalities, whether national, local or
corporate, including the subsidiaries thereof but shall not apply to the disposal of merchandise
or inventory held for sale in the regular course of business nor to the disposal by government
financial institutions of foreclosed assets or collaterals acquired in the regular course of
business and not transferred to the National Government under Proclamation No. 50. . .
xxx
V. MODES OF DISPOSAL/DIVESTMENT:
This Commission recognizes the following modes of disposal/divestment of assets and
property of national government agencies, local government units and government-owned and
controlled corporations and their subsidiaries, aside from such modes as may be provided by
law.
1. Public Auction
Conformably to existing state policy, the divestment or disposal of government property as
contemplated herein shall be undertaken primarily thru public auction. . .
2. Sale Thru Negotiation
For justifiable reasons and as demanded by the exigencies of the service, disposal thru
negotiated sale may be resorted to and undertaken by the proper committee or body in the
agency or entity concerned taking into consideration the following factors: . . ." (emphasis
supplied)
When the Board approved the sale of the subject property to private respondent dela Cruz
through Resolution No. 342 in August 1987 and Resolution No. 430 in October of the same
year, and when the Deed of Sale was executed between GSIS and private respondent dela Cruz
in January 1988, Circular No. 86-264 was then in force.
The pivotal question is whether the subject property is covered by COA Circular 86-264 or
falls under the exception in its paragraph 5 above. In construing this exception, we derive
insight from the exceptions provided under the subsequent COA Circular 89-296, viz:
"III. DEFINITION AND SCOPE:
These audit guidelines shall be observed and adhered to in the divestment or disposal of
property and other assets of all government entities/instrumentalities, whether national, local or
corporate, including the subsidiaries thereof but shall not apply to the disposal of merchandise
or inventory held for sale in the regular course of business nor to the disposal by government
financial institutions of foreclosed assets or collaterals acquired in the regular course of
business and not transferred to the National Government under Proclamation No. 50. . ."
We refer to Circular No. 89-296 in interpreting Circular No. 86-264 in adherence to the rule in
statutory construction, viz:
"The correct rule of interpretation is, that if divers (sic) statutes relate to the same thing, they
ought all to be taken into consideration in construing any one of them, and it is an established
rule of law, that all acts in pari materia are to be taken together, as if they were one law. (Doug.,
30; 2 Term Rep., 387, 586; 4 Maule & Selw., 210). If a thing contained in a subsequent statute,
be within the reason of a former statute, it shall be taken to be within the meaning of that
statute. (Lord Raym., 1028); and if it can be gathered from a subsequent statute in pari materia,
what meaning the Legislature attached to the words of a former statute, they will amount to a
legislative declaration of its meaning, and will govern the construction of the first statute.
(Morris v. Mellin, 6 Barn. & Cress., 454; 7 Barn. & Cress. 99)"[21]
In Riggs et al. v. Palmer et al.,[22] it was also ruled:
"It is a familiar canon of construction that a thing which is within the intention of the makers of
a statute is as much within the statute as if it were within the letter; and a thing which is within
the letter of the statute is not within the statute unless it be within the intention of the makers.
The writers of the laws do not always express their intention perfectly, but either exceed it or
fall short of it, so that judges are to collect it from probable or rational conjectures only, and
this is called 'rational interpretation;' and Rutherford, in his Institutes, (page 420,) says: 'Where
we make use of rational interpretation, sometimes we restrain the meaning of the writer so as to
take in less, and sometimes we extend or enlarge his meaning so as to take in more, than his
words express.' Such a construction ought to be put upon a statute as will best answer the
intention which the makers had in view, for qui haret in litera, haret in cortice. In Bac. Abr.
'Statutes,' 1.5; Puff. Law Nat. bk. 5, c. 12; Ruth. Inst. 422, 427, and in Smith's Commentaries,
814, many cases are mentioned where it was held that matters embraced in the general words
of statutes nevertheless were not within the statutes, because it could not have been the
intention of the law-makers that they should be included. They were taken out of the statutes
by an equitable construction; and it is said in Bacon: 'By an equitable construction a case not
within the letter of a statute is sometimes holden to be within the meaning, because it is within
the mischief for which the remedy is provided. The reason for such construction is that the law-
makers could not set down every case in express terms.'"[23]
In C&C Commercial Corporation v. National Waterworks and Sewerage Authority,[24] we
ruled that statutes in pari materia should be construed together to attain the purpose of an
expressed national policy, viz:
"On the presumption that whenever the legislature enacts a provision it has in mind the
previous statutes relating to the same subject matter, it is held that in the absence of any
express repeal or amendment therein, the new provision was enacted in accord with the
legislative policy embodied in those prior statutes, and they all should be construed together.
Provisions in an act which are omitted in another act relating to the same subject matter will be
applied in a proceeding under the other act, when not inconsistent with its purpose. Prior
statutes relating to the same subject matter are to be compared with the new provisions; and if
possible by reasonable construction, both are to be construed that effect is given to every
provision of each. Statutes in pari materia, although in apparent conflict, are so far as
reasonably possible construed to be in harmony with each other."[25]
Agpalo writes in his book, Statutory Construction, viz:
"Statutes in pari materia should be read and construed together because enactments of the same
legislature on the same subject are supposed to form part of one uniform system; later statutes
are supplementary or complimentary (sic) to the earlier enactments and in the passage of its
acts the legislature is supposed to have in mind the existing legislations on the subject and to
have enacted its new act with reference thereto."[26]
When both COA Circular No. 86-264 and COA Circular No. 89-296 were issued, affording
flexibility to government-owned and controlled corporations (GOCC's) to allow them to
generate more revenue for national development was a declared government policy. This
policy is unmistakable in laws executed before the issuance of Circular No. 86-264 in October
1986. P.D. 2029, "Defining Government-Owned and Controlled Corporations and Indentifying
Their Role in National Development," dated February 4, 1986, provides:
"WHEREAS, there is a need to assure the flexibility of such government corporations
consistent with the need for public accountability by providing for differential treatment for
government corporations;
xxx
SECTION 1. General Policy. - It is the policy of the State that the corporate form of
organization, utilized judiciously, is one of the valid forms through which the government may
participate in economic and social development.
xxx
SEC. 7. Provision of adequate operational flexiblity. -Government corporations shall be
provided with adequate operational flexibility in order to function properly and efficiently,
especially under conditions of market competition. Such flexibility shall nevertheless be
consistent with the requirements of public acountability.
xxx
SEC. 8. Differential treatment.- To implement the concept of greater flexibility, government
corporations in general shall be accorded differential treatment which is more consistent with
coporate organizational requirements as distinguished from regular government agencies, with
respect to the exercise by the various service-wide agencies, such as the Civil Service
Commission, the Commission on Audit, and the Office of Budget and Management, of their
respective jurisdiction."
Letter of Instructions No. 1520, issued on the same day as P.D. 2029 on February 4, 1986, also
provides for the role of government corporations in national development, viz:
"WHEREAS, it is necessary that the limited resources of government be utilized as efficiently,
as effectively, and as economically as possible to further national development and to support
the economic recovery program, for which the judicious use of the corporate form of
organization is critical;
xxx"
P.D. 2030, Providing for the Orderly Disposition of Certain Assets of Government Institutions,
also issued on February 4, 1986, made explicit the policy of the government to divest
government corporations of assets as an aid to national development, viz:
"WHEREAS, the National Government, through the agency of various financial and other
government institutions, has acquired or is otherwise the owner of a large number of assets in
the industrial, manufacturing and commercial sectors of the economy which, as part of the
economic recovery program adopted by the National Government, it has been deemed
necessary and appropriate for the National Government to divest in a planned and orderly
manner;
WHEREAS, as an integral part of this economic recovery program and in order to facilitate the
reorganization of certain government financial institutions, it is necessary to relieve those
institutions of assets which adversely affect their financial viability and liquidity, and for the
National Government to take over such assets and to assume the realted liabilities of those
institutions;
WHEREAS, it is the desire of the National Government to realize on such assets within the
shortest possible time and, to such end, to dispose of such assets generally on terms that would
permit immediate substantial cash returns to the National Government;
xxx"
Proclamation No. 50, "Proclaiming and Launching a Program for the Expeditious Disposition
and Privatization of Certain Government Corporations and/or the Assets Thereof, and Creating
the Committee on Privatization and the Asset Privatization Trust," issued on December 8, 1986
after the issuance of COA Circular No. 86-264, but prior to COA Circular No. 89-296,
reiterates the continuing policy of the government to encourage divestment of assets as an aid
to national development, viz:
"CONSIDERING that the government has decided to adopt, as the twin cornerstones of the
program, the following parallel imperatives for the attainment of national policy:
xxx
(b) reducing the number of government corporations which has proliferated to unmanageable
proportions; circumscribing the areas of economic activities within which the government
corporations may operate; and aiming to achieve these goals through the privatization of a
good number of government corporations, and the disposition and liquidation of the non-
relevant and non-performing assets of retained corporations as the logical first step to their
rehabilitation."
The above-quoted laws on GOCC's and disposition of their assets unmistakeably show the
policy of the government to allow flexibility to GOCC's and to promote disposition of non-
performing assets. This policy undergirds both COA Circular No. 86-264 and 89-296. Thus, the
exception provided in COA Circular No. 86-264 should be, to the widest extent possible,
construed to accommodate this policy and allow GOCC's wide latitude in the disposition of
their assets, including foreclosed assets or collaterals acquired in the regular course of business.
COA Circular No. 89-296 provides for two exceptions to the requirement of disposition
primarily through public bidding, i.e., (1) disposal of merchandise or inventory held for sale in
the regular course of business; and (2) disposal by government financial institutions of
foreclosed assets or collaterals acquired in the regular course of business." In light of the
declared policy of the government on GOCC's and their assets, COA Circular No. 89-296
should be understood to have clarified the coverage of the exception under COA Circular No.
86-264, i.e., sales of merchandise/inventory held for sale in the regular course of business.
The GSIS being a financial institution extending loans to its members, the foreclosure of the
subject property as collateral to a loan was done in the regular course of business. Its sale to
private respondent dela Cruz falls within the exception provided by COA Circular No. 86-264
as clarified by COA Circular 89-296, and thus does not offend the requirements of the said
COA circulars.
Instead, the policies and procedures of the GSIS on the disposition of acquired assets govern
the case at bar. Mr. Romeo Tejedor, manager of the Acquired Assets Department of GSIS,
testified that at the time the disputed transaction took place, the GSIS still did not have clear
cut policies on the sale of acquired assets. At that time, the GSIS Board of Trustees had the
prerogative to authorize the sale of acquired assets. Petitioners aver that the GSIS "Policy and
Procedural Guidelines Acquisition, Administration, and Disposition of Acquired Assets
(PPG)", a newspaper copy of which they annexed to their reply to the GSIS' brief, provides
that a negotiated sale may only be entered into after two failed public biddings on the acquired
property. Petitioners, however, omitted to state that the said newspaper copy was published and
the PPG took effect only on January 17, 1991, long after the sale of the subject property.[27] In
the absence of evidence of policies and procedures contrary to the testimony of Mr. Tejedor, we
give credence to Mr. Tejedor's testimony that at the time of the disputed sale to private
respondent dela Cruz, GSIS did not have clear cut policies on disposition of assets that
required it to first sell the subject property through public bidding before a negotiated sale. The
GSIS precisely came out with a PPG in 1991 to set the policies and procedures to govern the
disposition of acquired assets because these were not clear cut prior to 1991. We therefore hold
that the sale of the subject property to private respondent dela Cruz was not contrary to law.
Neither can petitioners invoke the Maharlika case to lend support to its contention that the
Board is bound to fulfill its representations in its letters to the petitioners that upon the latter's
failure to repurchase the property under Resolution Nos. 929 and 593, the GSIS will dispose of
the subject property through public bidding. Petitioners claim that these representations
constituted a contract between them and GSIS. The Court of Appeals correctly ruled that there
was no contract between GSIS and the petitioners that obligates the GSIS to sell the subject
property through public bidding, viz:
". . . the mortgage contract between the parties was not novated as to the extension of the
redemption period of appellants since this is not sanctioned by law. What GSIS did per
Resolution 929 was to make a counter proposal to appellants for the sale of the property at the
price of P174,572.62 payable in cash within 60 days from notice of resolution with a warning
that non-compliance thereof (sic) will result to the sale of the property at public auction. At this
point in time, there was still no meeting of the minds between the parties since the request of
appellants thru Purificacion Urbano is to extend the redemption period to enable them to
redeem the property while Resolution No. 929 is for outright sale for the price of P174,572.62.
These are two (2) separate and distinct legal transactions. Under Article 1319 of the Civil
Code, the offer must be certain. The offer of Ms. Urbano is certain and explicit as to the
extension of time to redeem their property. The acceptance of GSIS to this proposal must also
be absolute and clear in granting said extension. However, GSIS did not agree to the extension
due to legal constraints and instead a qualified acceptance was given in the sense that GSIS
made a counter-offer for appellants to buy the property under certain terms.
Was there an acceptance of the counter-offer of GSIS on the part of appellants? Definitely
none. On January 10, 1985, when appellants thru Purificacion Urbano was notified by GSIS
Manager M.M. Secoquian of the Acquired Assets Department of the approval of the sale under
Board Resolution No. 929, appellant Urbano replied on January 18, 1985 that they cannot pay
the price of P174,572.62 as it may be difficult for a financial institution to accommodate said
obligation within the grace period of 60 days. (Exhibit "E", Records). In turn, Ms. Urbano
made another counter-proposal "to have the said property be RE-MORTGAGE (sic) through
the process of repurchase with the GSIS". (Exhibit "F", Records). . . A similar request was sent
by appellant Aurelio Arrienda on May 20, 1985 but the same was denied in a Board Resolution
No. 516 dated June 6, 1985. (Exhibit "H", Records).
From the foregoing, this Court rules that there was no meeting of the minds between the parties
as the counter-offer of GSIS for the appellants to buy the property based on terms and
conditions laid down under Board Resolution No. 929 was NOT accepted by appellants. Under
Article 1319 of the Civil Code, there was no valid and perfected contract. Hence, appellants
cannot claim any right under Board Resolution No. 929, more particularly on the sale at public
auction since they did not agree to the counter-offer of GSIS as contained in Board Resolution
929.
. . . In response to the request of the First Lady Imelda Marcos, the GSIS Board of Trustees
approved Board Resolution No. 593 which granted to "Mr. Aurelio Arrienda sixty (60) days
from notice within which to purchase the property for P174,572.62 payable in cash. Should Mr.
Arrienda fail to pay the same within the time frame mentioned, the property shall be sold at respondent dela Cruz was by no stretch of the imagination imbued with public interest as it was
public auction, without need of any further action from the Board." (Exhibit "3", p. 232 a purely private transaction. Petitioners cannot therefore demand that it be informed of such
Records). Mr. Arrienda was notified of the Board Resolution 593 by Manager M.M. Secoquian negotiation and sale moreso since they no longer had any interest on the subject property upon
on August 2, 1985, asking him to remit the amount within 60 days from receipt of said letter failure to comply with GSIS' terms for repurchase and upon GSIS' denial of petitioners' offer to
(Exhibit "K", Records). However, on October 4, 1985, appellants thru Atty. Ariel Arrienda sent repurchase under their proposed terms and conditions. In the absence of proof of bad faith on
a letter to GSIS making a counter-offer to purchase said property. . . On October 10, 1985, the the part of the respondents, we deny petitioners' prayer for moral damages and attorney's fees.
GSIS Board passed Board Resolution 818 declining the offer of Mr. Arnel Arrienda to purchase
the property for P147,572,62 under the terms and conditions he proposed. . . WHEREFORE, the petition is DENIED and the impugned decision and resolution of the Court
of Appeals are AFFIRMED. No costs.
From the foregoing, We likewise conclude that there was no perfected contract between the
parties. The proposal of appellants thru Mr. Aurelio Arrienda is for the extension of the SO ORDERED.
redemption period or to restructure their loan with GSIS. (Exhibit "J", Records). The approval
of GSIS is for appellants to purchase the property at the price of P174,572.62 within 60 days
from receipt of notice. (Exhibit "3", Res. No. 592, Records). This was NOT approved by
appellants and instead they made another counter-proposal to pay said amount with a down
payment of P50,000.00 and the balance to be paid in 60 monthly installments. (Exhibit "1",
Records). This counter offer was denied in Resolution 1022. . . It is clear from the above-
described events that the offer of appellants to redeem the property or restructure the loan was
met with a qualified acceptance from GSIS which is for them to pay the prescribed price within
60 days. Said qualified acceptance constitutes a counter-offer under Article 1319 of the Civil
Code and the appellants did not accept the same by making another counter-offer to pay on
staggered basis. This counter offer was denied twice by GSIS and therefore there was clearly
no meeting of the minds and no perfected contract.

If there is completely no acceptance or if the offer is expressly rejected, there is no meeting of

the minds. (Leoquingco vs. Postal Savings Bank, 47 Phil. 772 and in Gamboa vs. Gonzales, 17
Phil. 381)

If the acceptance be qualified or not absolute, there is no concurrence of minds. There merely
is counter-offer. (Batangan vs. Cojuangco, 78 Phil. 481)

A counter-offer as a matter of fact extinguishes the offer. It may or may not be accepted by the
original offerer. (Trillana vs. Quezon Colleges, L-5003, June 27, 1953)" (emphasis supplied)
[28]

III.

Finally, on the issue of whether or not GSIS was in bad faith in dealing with the petitioners, we
rule in the negative. As earlier discussed, respondent GSIS' denial of petitioners' further
requests for repurchase of the subject property was based on a factual determination of
petitioners' financial incapacity and the then GSIS charter, P.D. 1146. It is also worth noting
that GSIS sold the subject property to respondent dela Cruz only after giving petitioners an
almost one year opportunity to repurchase the property and only after ascertaining that the
purchase price proposed by private respondent dela Cruz in payment of the subject property
would benefit the GSIS. Nor can petitioners, on the strength of Valmonte v. Belmonte, Jr.,[29]
impute bad faith on the part of GSIS when the latter did not disclose to petitioners that it was
negotiating with private respondent dela Cruz for the sale of the subject property as soon as it
started the negotiations. The Court ruled in the Valmonte case that the constitutional right to
information is limited to "matters of public concern," to "transactions involving public
interest." The negotiation and subsequent sale of the subject property by the GSIS to private