Category Archives: Cases

July 10, 2015 · 10:27 am

Labor Standards Cases

EN BANC

G.R. No. 78909 June 30, 1989

MATERNITY CHILDREN’S HOSPITAL, represented by ANTERA L. DORADO, President, Petitioner, vs. THE HONORABLE SECRETARY OF LABOR AND THE REGIONAL DlRECTOR OF LABOR, REGION X, Respondents.

MEDIALDEA, J.:

This is a petition for certiorari seeking the annulment of the Decision of the respondent Secretary of Labor dated September 24, 1986, affirming with modification the Order of respondent Regional Director of Labor, Region X, dated August 4, 1986, awarding salary differentials and emergency cost of living allowances (ECOLAS) to employees of petitioner, and the Order denying petitioner’s motion for reconsideration dated May 13, 1987, on the ground of grave abuse of discretion.chanroblesvirtualawlibrary chanrobles virtual law library

Petitioner is a semi-government hospital, managed by the Board of Directors of the Cagayan de Oro Women’s Club and Puericulture Center, headed by Mrs. Antera Dorado, as holdover President. The hospital derives its finances from the club itself as well as from paying patients, averaging 130 per month. It is also partly subsidized by the Philippine Charity Sweepstakes Office and the Cagayan De Oro City government.chanroblesvirtualawlibrary chanrobles virtual law library

Petitioner has forty-one (41) employees. Aside from salary and living allowances, the employees are given food, but the amount spent therefor is deducted from their respective salaries (pp. 77-78, Rollo).chanroblesvirtualawlibrary chanrobles virtual law library

On May 23, 1986, ten (10) employees of the petitioner employed in different capacities/positions filed a complaint with the Office of the Regional Director of Labor and Employment, Region X, for underpayment of their salaries and ECOLAS, which was docketed as ROX Case No. CW-71-86.chanroblesvirtualawlibrarychanrobles virtual law library

On June 16, 1986, the Regional Director directed two of his Labor Standard and Welfare Officers to inspect the records of the petitioner to ascertain the truth of the allegations in the complaints (p. 98, Rollo). Payrolls covering the periods of May, 1974, January, 1985, November, 1985 and May, 1986, were duly submitted for inspection.chanroblesvirtualawlibrary chanrobles virtual law library

On July 17, 1986, the Labor Standard and Welfare Officers submitted their report confirming that there was underpayment of wages and ECOLAs of all the employees by the petitioner, the dispositive portion of which reads:

IN VIEW OF THE FOREGOING, deficiency on wage and ecola as verified and confirmed per review of the respondent payrolls and interviews with the complainant workers and all other information gathered by the team, it is respectfully recommended to the Honorable Regional Director, this office, that Antera Dorado, President be ORDERED to pay the amount of SIX HUNDRED FIFTY FOUR THOUSAND SEVEN HUNDRED FIFTY SIX & 01/100 (P654,756.01), representing underpayment of wages and ecola to the THIRTY SIX (36) employees of the said hospital as appearing in the attached Annex “F” worksheets and/or whatever action equitable under the premises. (p. 99, Rollo)

Based on this inspection report and recommendation, the Regional Director issued an Order dated August 4, 1986, directing the payment of P723,888.58, representing underpayment of wages and ECOLAs to all the petitioner’s employees, the dispositive portion of which reads:

WHEREFORE, premises considered, respondent Maternity and Children Hospital is hereby ordered to pay the above-listed complainants the total amount indicated opposite each name, thru this Office within ten (10) days from receipt thereof. Thenceforth, the respondent hospital is also ordered to pay its employees/workers the prevailing statutory minimum wage and allowance.chanroblesvirtualawlibrary chanrobles virtual law library

SO ORDERED. (p. 34, Rollo)

Petitioner appealed from this Order to the Minister of Labor and Employment, Hon. Augusto S. Sanchez, who rendered a Decision on September 24, 1986, modifying the said Order in that deficiency wages and ECOLAs should be computed only from May 23, 1983 to May 23, 1986, the dispositive portion of which reads:

WHEREFORE, the August 29, 1986 order is hereby MODIFIED in that the deficiency wages and ECOLAs should only be computed from May 23, 1983 to May 23, 1986. The case is remanded to the Regional Director, Region X, for recomputation specifying the amounts due each the complainants under each of the applicable Presidential Decrees. (p. 40, Rollo)

On October 24, 1986, the petitioner filed a motion for reconsideration which was denied by the Secretary of Labor in his Order dated May 13, 1987, for lack of merit (p. 43Rollo).chanroblesvirtualawlibrary chanrobles virtual law library

The instant petition questions the all-embracing applicability of the award involving salary differentials and ECOLAS, in that it covers not only the hospital employees who signed the complaints, but also those (a) who are not signatories to the complaint, and (b) those who were no longer in the service of the hospital at the time the complaints were filed.chanroblesvirtualawlibrary chanrobles virtual law library

Petitioner likewise maintains that the Order of the respondent Regional Director of Labor, as affirmed with modifications by respondent Secretary of Labor, does not clearly and distinctly state the facts and the law on which the award was based. In its “Rejoinder to Comment”, petitioner further questions the authority of the Regional Director to award salary differentials and ECOLAs to private respondents, (relying on the case of Encarnacion vs. Baltazar, G.R. No. L-16883, March 27, 1961, 1 SCRA 860, as authority for raising the additional issue of lack of jurisdiction at any stage of the proceedings, p. 52, Rollo), alleging that the original and exclusive jurisdiction over money claims is properly lodged in the Labor Arbiter, based on Article 217, paragraph 3 of the Labor Code.chanroblesvirtualawlibrary chanrobles virtual law library

The primary issue here is whether or not the Regional Director had jurisdiction over the case and if so, the extent of coverage of any award that should be forthcoming, arising from his visitorial and enforcement powers under Article 128 of the Labor Code. The matter of whether or not the decision states clearly and distinctly statement of facts as well as the law upon which it is based, becomes relevant after the issue on jurisdiction has been resolved.chanroblesvirtualawlibrary chanrobles virtual law library

This is a labor standards case, and is governed by Art. 128-b of the Labor Code, as amended by E.O. No. 111. Labor standards refer to the minimum requirements prescribed by existing laws, rules, and regulations relating to wages, hours of work, cost of living allowance and other monetary and welfare benefits, including occupational, safety, and health standards (Section 7, Rule I, Rules on the Disposition of Labor Standards Cases in the Regional Office, dated September 16, 1987). ¹ Under the present rules, a Regional Director exercises both visitorial and enforcement power over labor standards cases, and is therefore empowered to adjudicate money claims, providedthere still exists an employer-employee relationship, and the findings of the regional office is not contested by the employer concerned.chanroblesvirtualawlibrary chanrobles virtual law library

Prior to the promulgation of E.O. No. 111 on December 24, 1986, the Regional Director’s authority over money claims was unclear. The complaint in the present case was filed on May 23, 1986 when E.O. No. 111 was not yet in effect, and the prevailing view was that stated in the case of Antonio Ong, Sr. vs. Henry M. Parel, et al., G.R. No. 76710, dated December 21, 1987, thus:

. . . the Regional Director, in the exercise of his visitorial and enforcement powers under Article 128 of the Labor Code, has no authority to award money claims, properly falling within the jurisdiction of the labor arbiter. . . .chanroblesvirtualawlibrary chanrobles virtual law library

. . . If the inspection results in a finding that the employer has violated certain labor standard laws, then the regional director must order the necessary rectifications. However, this does not include adjudication of money claims, clearly within the ambit of the labor arbiter’s authority under Article 217 of the Code.

The Ong case relied on the ruling laid down in Zambales Base Metals Inc. vs. The Minister of Labor, et al., (G.R. Nos. 73184-88, November 26, 1986, 146 SCRA 50) that the “Regional Director was not empowered to share in the original and exclusive jurisdiction conferred on Labor Arbiters by Article 217.” chanrobles virtual law library

We believe, however, that even in the absence of E. O. No. 111, Regional Directors already had enforcement powers over money claims, effective under P.D. No. 850, issued on December 16, 1975, which transferred labor standards cases from the arbitration system to the enforcement system.chanroblesvirtualawlibrarychanrobles virtual law library

To clarify matters, it is necessary to enumerate a series of rules and provisions of law on the disposition of labor standards cases.

Prior to the promulgation of PD 850, labor standards cases were an exclusive function of labor arbiters, under Article 216 of the then Labor Code (PD No. 442, as amended by PD 570-a), which read in part:

Art. 216. Jurisdiction of the Commission. – The Commission shall have exclusive appellate jurisdiction over all cases decided by the Labor Arbiters and compulsory arbitrators.chanroblesvirtualawlibrary chanrobles virtual law library

The Labor Arbiters shall have exclusive jurisdiction to hear and decide the following cases involving all workers whether agricultural or non-agricultural.chanroblesvirtualawlibrarychanrobles virtual law library

xxx xxx xxx

(c) All money claims of workers, involving non-payment or underpayment of wages, overtime compensation, separation pay, maternity leave and other money claims arising from employee-employer relations, except claims for workmen’s compensation, social security and medicare benefits; chanrobles virtual law library

(d) Violations of labor standard laws;

xxx xxx xxxchanrobles virtual law library

(Emphasis supplied)

The Regional Director exercised visitorial rights only under then Article 127 of the Code as follows:

ART. 127. Visitorial Powers. – The Secretary of Labor or his duly authorized representatives, including, but not restricted, to the labor inspectorate, shall have access to employers’ records and premises at any time of the day or night whenever work is being undertaken therein, and the right to copy therefrom, to question any employee and investigate any fact, condition or matter which may be necessary to determine violations or in aid in the enforcement of this Title and of any Wage Order or regulation issued pursuant to this Code.

With the promulgation of PD 850, Regional Directors were given enforcement powers, in addition to visitorial powers. Article 127, as amended, provided in part:

SEC. 10. Article 127 of the Code is hereby amended to read as follows:

Art. 127. Visitorial and enforcement powers. –

xxx xxx xxx

(b) The Secretary of Labor or his duly authorized representatives shall have the power to order and administer, after due notice and hearing, compliance with the labor standards provisions of this Code based on the findings of labor regulation officers or industrial safety engineers made in the course of inspection, and to issue writs of execution to the appropriate authority for the enforcement of their order.

xxx xxx xxx

Labor Arbiters, on the other hand, lost jurisdiction over labor standards cases. Article 216, as then amended by PD 850, provided in part:

SEC. 22. Article 216 of the Code is hereby amended to read as follows:

Art. 216. Jurisdiction of Labor Arbiters and the Commission. – (a) The Labor Arbiters shall have exclusive jurisdiction to hear and decidethe following cases involving all workers, whether agricultural or non-agricultural:

xxx xxx xxx

(3) All money claims of workers involving non-payment or underpayment of wages, overtime or premium compensation, maternity or service incentive leave, separation pay and other money claims arising from employer-employee relations, except claims for employee’s compensation, social security and medicare benefits and as otherwise provided in Article 127 of this Code.

xxx xxx xxx

(Emphasis supplied)

Under the then Labor Code therefore (PD 442 as amended by PD 570-a, as further amended by PD 850), there were three adjudicatory units: The Regional Director, the Bureau of Labor Relations and the Labor Arbiter. It became necessary to clarify and consolidate all governing provisions on jurisdiction into one document. ² On April 23, 1976, MOLE Policy Instructions No. 6 was issued, and provides in part (on labor standards cases) as follows:

POLICY INSTRUCTIONS NO. 6chanrobles virtual law library

TO: All Concernedchanrobles virtual law library

SUBJECT: DISTRIBUTION OF JURISDICTION OVER LABOR CASES chanrobles virtual law library

xxx xxx xxx

1. The following cases are under the exclusive original jurisdiction of the Regional Director.

a) Labor standards cases arising from violations of labor standard laws discovered in the course of inspection or complaints where employer-employee relations still exist;

xxx xxx xxx

2. The following cases are under the exclusive original jurisdiction of the Conciliation Section of the Regional Office:

a) Labor standards cases where employer-employee relations no longer exist;

xxx xxx xxx

6. The following cases are certifiable to the Labor Arbiters:

a) Cases not settled by the Conciliation Section of the Regional Office, namely: chanrobles virtual law library

1) labor standard cases where employer-employee relationsno longer exist;

xxx xxx xxx

(Emphasis supplied)

MOLE Policy Instructions No. 7 (undated) was likewise subsequently issued, enunciating the rationale for, and the scope of, the enforcement power of the Regional Director, the first and second paragraphs of which provide as follows:

POLICY INSTRUCTIONS NO. 7 chanrobles virtual law library

TO: All Regional Directors chanrobles virtual law library

SUBJECT: LABOR STANDARDS CASES

Under PD 850, labor standards cases have been taken from the arbitration system and placed under the enforcement system, except where a) questions of law are involved as determined by the Regional Director, b) the amount involved exceeds P100,000.00 or over 40% of the equity of the employer, whichever is lower, c) the case requires evidentiary matters not disclosed or verified in the normal course of inspection, or d) there is no more employer-employee relationship.

The purpose is clear: to assure the worker the rights and benefits due to him under labor standards laws without having to go through arbitration. The worker need not litigate to get what legally belongs to him. The whole enforcement machinery of the Department of Labor exists to insure its expeditious delivery to him free of charge. (Emphasis supplied)

Under the foregoing, a complaining employee who was denied his rights and benefits due him under labor standards law need not litigate. The Regional Director, by virtue of his enforcement power, assured “expeditious delivery to him of his rights and benefits free of charge”, provided of course, he was still in the employ of the firm.chanroblesvirtualawlibrary chanrobles virtual law library

After PD 850, Article 216 underwent a series of amendments (aside from being re-numbered as Article 217) and with it a corresponding change in the jurisdiction of, and supervision over, the Labor Arbiters:

1. PD 1367 (5-1-78) – gave Labor Arbiters exclusive jurisdiction overunresolved issues in collective bargaining, etc., and those cases arising from employer-employee relations duly indorsed by the Regional Directors. (It also removed his jurisdiction over moral or other damages) In other words, the Labor Arbiter entertained casescertified to him. (Article 228, 1978 Labor Code.) chanrobles virtual law library

2. PD 1391 (5-29-78) – all regional units of the National Labor Relations Commission (NLRC) were integrated into the Regional Offices Proper of the Ministry of Labor; effectively transferring direct administrative control and supervision over the Arbitration Branch to the Director of the Regional Office of the Ministry of Labor. “Conciliable cases” which were thus previously under the jurisdiction of the defunct Conciliation Section of the Regional Office for purposes of conciliation or amicable settlement, became immediately assignable to the Arbitration Branch for joint conciliation and compulsory arbitration. In addition, the Labor Arbiter had jurisdiction even over termination and labor-standards cases that may be assigned to them for compulsory arbitration by the Director of the Regional Office. PD 1391 merged conciliation and compulsory arbitration functions in the person of the Labor Arbiter. The procedure governing the disposition of cases at the Arbitration Branch paralleled those in the Special Task Force and Field Services Division, with one major exception: the Labor Arbiter exercised full and untrammelled authority in the disposition of the case, particularly in the substantive aspect, his decisions and orders subject to review only on appeal to the NLRC. ³ chanrobles virtual law library

3. MOLE Policy Instructions No. 37 – Because of the seemingly overlapping functions as a result of PD 1391, MOLE Policy Instructions No. 37 was issued on October 7, 1978, and provided in part:

POLICY INSTRUCTIONS NO. 37 chanrobles virtual law library

TO: All Concerned chanrobles virtual law library

SUBJECT: ASSIGNMENT OF CASES TO LABOR ARBITERS

Pursuant to the provisions of Presidential Decree No. 1391 and to insure speedy disposition of labor cases, the following guidelines are hereby established for the information and guidance of all concerned.

1. Conciliable Cases.

Cases which are conciliable per se i.e., (a) labor standards cases where employer-employee relationship no longer exists; (b) cases involving deadlock in collective bargaining, except those falling under P.D. 823, as amended; (c) unfair labor practice cases; and (d) overseas employment cases, except those involving overseas seamen, shall be assigned by the Regional Director to the Labor Arbiter for conciliation and arbitration without coursing them through the conciliation section of the Regional Office.

2. Labor Standards Cases.

Cases involving violation of labor standards laws where employer- employee relationship still exists shall be assigned to the Labor Arbiters where:

a) intricate questions of law are involved; or chanrobles virtual law library

b) evidentiary matters not disclosed or verified in the normal course of inspection by labor regulations officers are required for their proper disposition.chanroblesvirtualawlibrary chanrobles virtual law library

3. Disposition of Cases.

When a case is assigned to a Labor Arbiter, all issues raised therein shall be resolved by him including those which are originally cognizable by the Regional Director to avoid multiplicity of proceedings. In other words, the whole case, and not merely issues involved therein, shall be assigned to and resolved by him.

xxx xxx xxxchanrobles virtual law library

(Emphasis supplied)

4. PD 1691(5-1-80) – original and exclusive jurisdiction overunresolved issues in collective bargaining and money claims, whichincludes moral or other damages.

Despite the original and exclusive jurisdiction of labor arbiters over money claims, however, the Regional Director nonetheless retained his enforcement power, and remained empowered to adjudicate uncontested money claims.

5. BP 130 (8-21-8l) – strengthened voluntary arbitration. The decree also returned the Labor Arbiters as part of the NLRC, operating as Arbitration Branch thereof.chanroblesvirtualawlibrary chanrobles virtual law library

6. BP 227(6-1- 82) – original and exclusive jurisdiction over questions involving legality of strikes and lock-outs.

The present petition questions the authority of the Regional Director to issue the Order, dated August 4, 1986, on the basis of his visitorial and enforcement powers under Article 128 (formerly Article 127) of the present Labor Code. It is contended that based on the rulings in the Ong vs. Parel (supra) and the Zambales Base Metals, Inc. vs. TheMinister of Labor (supra) cases, a Regional Director is precluded from adjudicating money claims on the ground that this is an exclusive function of the Labor Arbiter under Article 217 of the present Code.chanroblesvirtualawlibrary chanrobles virtual law library

On August 4, 1986, when the order was issued, Article 128(b) ⁴ read as follows:

(b) The Minister of Labor or his duly authorized representatives shall have the power to order and administer, after due notice and hearing, compliance with the labor standards provisions of this Code based on the findings of labor regulation officers or industrial safety engineers made in the course of inspection, and to issue writs of execution to the appropriate authority for the enforcement of theirorder, except in cases where the employer contests the findings of the labor regulations officer and raises issues which cannot be resolved without considering evidentiary matters that are not verifiable in the normal course of inspection. (Emphasis supplied)

On the other hand, Article 217 of the Labor Code as amended by P.D. 1691, effective May 1, 1980; Batas Pambansa Blg. 130, effective August 21, 1981; and Batas Pambansa Blg. 227, effective June 1, 1982, inter alia, provides:

ART. 217. Jurisdiction of Labor Arbiters and the Commission. – (a) The Labor Arbiters shall have the original and exclusive jurisdiction to hear and decide within thirty (30) working days after submission of the case by the parties for decision, the following cases involving all workers, whether agricultural or non-agricultural:

1. Unfair labor practice cases; chanrobles virtual law library

2. Those that workers may file involving wages, hours of work and other terms and conditions of employment; chanrobles virtual law library

3. All money claims of workers, including those based on non-payment or underpayment of wages, overtime compensation, separation pay and other benefits provided by law or appropriate agreement, except claims for employees’ compensation, social security, medicare and maternity benefits; chanrobles virtual law library

4. Cases involving household services; and chanrobles virtual law library

5. Cases arising from any violation of Article 265 of this Code, including questions involving the legality of strikes and lock-outs. (Emphasis supplied)

The Ong and Zambales cases involved workers who were still connected with the company. However, in the Ong case, the employer disputed the adequacy of the evidentiary foundation (employees’ affidavits) of the findings of the labor standards inspectors while in the Zambales case, the money claims which arose from alleged violations of labor standards provisions were not discovered in the course of normal inspection. Thus, the provisions of MOLE Policy Instructions Nos. 6, (Distribution of Jurisdiction Over Labor Cases) and 37 (Assignment of Cases to Labor Arbiters) giving Regional Directors adjudicatory powers over uncontested money claims discovered in the course of normal inspection, provided an employer-employee relationship still exists, are inapplicable.chanroblesvirtualawlibrary chanrobles virtual law library

In the present case, petitioner admitted the charge of underpayment of wages to workers still in its employ; in fact, it pleaded for time to raise funds to satisfy its obligation. There was thus no contest against the findings of the labor inspectors.chanroblesvirtualawlibrary chanrobles virtual law library

Barely less than a month after the promulgation on November 26, 1986 of the Zambales Base Metals case, Executive Order No. 111 was issued on December 24, 1986,⁵amending Article 128(b) of the Labor Code, to read as follows:

(b) THE PROVISIONS OF ARTICLE 217 OF THIS CODE TO THE CONTRARY NOTWITHSTANDING AND IN CASES WHERE THE RELATIONSHIP OF EMPLOYER-EMPLOYEE STILL EXISTS, the Minister of Labor and Employment or his duly authorized representatives shall have the power to order and administer, after due notice and hearing, compliance with the labor standards provisions of this Code AND OTHER LABOR LEGISLATION based on the findings of labor regulation officers or industrial safety engineers made in the course of inspection, and to issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor regulation officer and raises issues which cannot be resolved without considering evidentiary matters that are not verifiable in the normal course of inspection. (Emphasis supplied)

As seen from the foregoing, EO 111 authorizes a Regional Director to order compliance by an employer with labor standards provisions of the Labor Code and other legislation. It is Our considered opinion however, that the inclusion of the phrase, ” The provisions of Article 217 of this Code to the contrary notwithstanding and in cases where the relationship of employer-employee still exists” … in Article 128(b), as amended, above-cited, merely confirms/reiterates the enforcement adjudication authority of the Regional Director over uncontested money claims in cases where an employer-employee relationship still exists. ⁶ chanrobles virtual law library

Viewed in the light of PD 850 and read in coordination with MOLE Policy Instructions Nos. 6, 7 and 37, it is clear that it has always been the intention of our labor authorities to provide our workers immediate access (when still feasible, as where an employer-employee relationship still exists) to their rights and benefits, without being inconvenienced by arbitration/litigation processes that prove to be not only nerve-wracking, but financially burdensome in the long run.chanroblesvirtualawlibrary chanrobles virtual law library

Note further the second paragraph of Policy Instructions No. 7 indicating that the transfer of labor standards cases from the arbitration system to the enforcement system is

. . to assure the workers the rights and benefits due to him under labor standard laws, without having to go through arbitration. . .

so that

. . the workers would not litigate to get what legally belongs to him. .. ensuring delivery . . free of charge.

Social justice legislation, to be truly meaningful and rewarding to our workers, must not be hampered in its application by long-winded arbitration and litigation. Rights must be asserted and benefits received with the least inconvenience. Labor laws are meant to promote, not defeat, social justice.chanroblesvirtualawlibrary chanrobles virtual law library

This view is in consonance with the present “Rules on the Disposition of Labor Standard Cases in the Regional Offices ” ⁷ issued by the Secretary of Labor, Franklin M. Drilon on September 16, 1987.chanroblesvirtualawlibrary chanrobles virtual law library

Thus, Sections 2 and 3 of Rule II on “Money Claims Arising from Complaint Routine Inspection”, provide as follows:

Section 2. Complaint inspection. – All such complaints shall immediately be forwarded to the Regional Director who shall refer the case to the appropriate unit in the Regional Office for assignment to a Labor Standards and Welfare Officer (LSWO) for field inspection. When the field inspection does not produce the desired results, the Regional Director shall summon the parties for summary investigation to expedite the disposition of the case. . . .chanroblesvirtualawlibrary chanrobles virtual law library

Section 3. Complaints where no employer-employee relationship actually exists. – Where employer-employee relationship no longer exists by reason of the fact that it has already been severed, claims for payment of monetary benefits fall within the exclusive and original jurisdiction of the labor arbiters. . . . (Emphasis supplied)

Likewise, it is also clear that the limitation embodied in MOLE Policy Instructions No. 7 to amounts not exceeding P100,000.00 has been dispensed with, in view of the following provisions of pars. (b) and (c), Section 7 on “Restitution”, the same Rules, thus:

xxx xxx xxx

(b) Plant-level restitutions may be effected for money claims not exceeding Fifty Thousand (P50,000.00). . . .chanroblesvirtualawlibrary chanrobles virtual law library

(c) Restitutions in excess of the aforementioned amount shall be effected at the Regional Office or at the worksite subject to the prior approval of the Regional Director.

which indicate the intention to empower the Regional Director to award money claims in excess of P100,000.00; provided of course the employer does not contest the findings made, based on the provisions of Section 8 thereof:

Section 8. Compromise agreement. – Should the parties arrive at an agreement as to the whole or part of the dispute, said agreement shall be reduced in writing and signed by the parties in the presence of the Regional Director or his duly authorized representative.

E.O. No. 111 was issued on December 24, 1986 or three (3) months after the promulgation of the Secretary of Labor’s decision upholding private respondents’ salary differentials and ECOLAs on September 24, 1986. The amendment of the visitorial and enforcement powers of the Regional Director (Article 128-b) by said E.O. 111 reflects the intention enunciated in Policy Instructions Nos. 6 and 37 to empower the Regional Directors to resolve uncontested money claims in cases where an employer-employee relationship still exists. This intention must be given weight and entitled to great respect. As held in Progressive Workers’ Union, et. al. vs. F.P. Aguas, et. al. G.R. No. 59711-12, May 29, 1985, 150 SCRA 429:

. . The interpretation by officers of laws which are entrusted to their administration is entitled to great respect. We see no reason to detract from this rudimentary rule in administrative law, particularly when later events have proved said interpretation to be in accord with the legislative intent. ..

The proceedings before the Regional Director must, perforce, be upheld on the basis of Article 128(b) as amended by E.O. No. 111, dated December 24, 1986, this executive order “to be considered in the nature of a curative statute with retrospective application.” (Progressive Workers’ Union, et al. vs. Hon. F.P. Aguas, et al. (Supra); M. Garcia vs. Judge A. Martinez, et al., G.R. No. L- 47629, May 28, 1979, 90 SCRA 331).chanroblesvirtualawlibrary chanrobles virtual law library

We now come to the question of whether or not the Regional Director erred in extending the award to all hospital employees. We answer in the affirmative.chanroblesvirtualawlibrary chanrobles virtual law library

The Regional Director correctly applied the award with respect to those employees whosigned the complaint, as well as those who did not sign the complaint, but were still connected with the hospital at the time the complaint was filed (See Order, p. 33 dated August 4, 1986 of the Regional Director, Pedrito de Susi, p. 33, Rollo).chanroblesvirtualawlibrary chanrobles virtual law library

The justification for the award to this group of employees who were not signatories to the complaint is that the visitorial and enforcement powers given to the Secretary of Labor is relevant to, and exercisable over establishments, not over the individual members/employees, because what is sought to be achieved by its exercise is the observance of, and/or compliance by, such firm/establishment with the labor standards regulations. Necessarily, in case of an award resulting from a violation of labor legislation by such establishment, the entire members/employees should benefit therefrom. As aptly stated by then Minister of Labor Augusto S. Sanchez:

. . It would be highly derogatory to the rights of the workers, if after categorically finding the respondent hospital guilty of underpayment of wages and ECOLAs, we limit the award to only those who signed the complaint to the exclusion of the majority of the workers who are similarly situated. Indeed, this would be not only render the enforcement power of the Minister of Labor and Employment nugatory, but would be the pinnacle of injustice considering that it would not only discriminate but also deprive them of legislated benefits.chanroblesvirtualawlibrary chanrobles virtual law library

. . . (pp. 38-39, Rollo).

This view is further bolstered by the provisions of Sec. 6, Rule II of the “Rules on the Disposition of Labor Standards cases in the Regional Offices” (supra) presently enforced, viz:

SECTION 6. Coverage of complaint inspection. – A complaint inspection shall not be limited to the specific allegations or violations raised by the complainants/workers but shall be a thorough inquiry into and verification of the compliance by employer with existing labor standards and shall cover all workers similarly situated. (Emphasis supplied)

However, there is no legal justification for the award in favor of those employees whowere no longer connected with the hospital at the time the complaint was filed, having resigned therefrom in 1984, viz:

1. 1. Jean (Joan) Venzon (See Order, p. 33, Rollo)

chanrobles virtual law library

1. 1. Rosario Paclijan

chanrobles virtual law library

1. 1. Adela Peralta

chanrobles virtual law library

1. 1. Mauricio Nagales

chanrobles virtual law library

1. 1. Consesa Bautista

chanrobles virtual law library

1. 1. Teresita Agcopra

chanrobles virtual law library

1. 1. Felix Monleon

chanrobles virtual law library

1. 1. Teresita Salvador

chanrobles virtual law library

1. Edgar Cataluna; and

10. Raymond Manija ( p.7, Rollo)

The enforcement power of the Regional Director cannot legally be upheld in cases of separated employees. Article 129 of the Labor Code, cited by petitioner (p. 54, Rollo) is not applicable as said article is in aid of the enforcement power of the Regional Director; hence, not applicable where the employee seeking to be paid underpayment of wages is already separated from the service. His claim is purely a money claim that has to be the subject of arbitration proceedings and therefore within the original and exclusive jurisdiction of the Labor Arbiter.chanroblesvirtualawlibrary chanrobles virtual law library

Petitioner has likewise questioned the order dated August 4, 1986 of the Regional Director in that it does not clearly and distinctly state the facts and the law on which the award is based.chanroblesvirtualawlibrary chanrobles virtual law library

We invite attention to the Minister of Labor’s ruling thereon, as follows:

Finally, the respondent hospital assails the order under appeal as null and void because it does not clearly and distinctly state the facts and the law on which the awards were based. Contrary to the pretensions of the respondent hospital, we have carefully reviewed the order on appeal and we found that the same contains a brief statement of the (a) facts of the case; (b) issues involved; (c) applicable laws; (d) conclusions and the reasons therefor; (e) specific remedy granted (amount awarded). (p. 40, Rollo)

ACCORDINGLY, this petition should be dismissed, as it is hereby DISMISSED, as regards all persons still employed in the Hospital at the time of the filing of the complaint, but GRANTED as regards those employees no longer employed at that time.chanroblesvirtualawlibrary chanrobles virtual law library

SO ORDERED.

Fernan, C.J., Narvasa, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Cortes, Griño-Aquino and Regalado, JJ., concur.

chanrobles virtual law library

Separate Opinions

SARMIENTO, J., concurring:chanrobles virtual law library

Subject to my opinion in G.R. Nos. 82805 and 83205.

MELENCIO-HERRERA, J., concurring: chanrobles virtual law library

I concur, with the observation that even as reconciled, it would seem inevitable to state that the conclusion in the Zambales and Ong cases that, prior to Executive Order No. 111, Regional Directors were not empowered to share the original and exclusive jurisdiction conferred on Labor Arbiters over money claims, is now deemed modified, if not superseded.chanroblesvirtualawlibrary chanrobles virtual law library

It may not be amiss to state either that under Section 2, Republic Act No. 6715, which amends further the Labor Code of the Philippines (PD No. 442), Regional Directors have also been granted adjudicative powers, albeit limited, over monetary claims and benefits of workers, thereby settling any ambiguity on the matter. Thus:

SEC. 2. Article 129 of the Labor Code of the Philippines, as amended, is hereby further amended to read as follows:

Art. 129. Recovery of wages, simple money claims and other benefits. – Upon complaint of any interested party, the Regional Director of the Department of Labor and Employment or any of the duly authorized hearing officers of the Department is empowered, through summary proceeding and after due notice, to hear and decide any matter involving the recovery of wages and other monetary claims and benefits, including legal interest, owing to an employee or person employed in domestic or household service or househelper under this Code, arising from employer-employee relations: Provided, That such complaint does not include a claim for reinstatement: Provided, further, That the aggregate money claims of each employee or househelper do not exceed five thousand pesos (P5,000.00). The Regional Director or hearing officer shall decide or resolve the complaint within thirty (30) calendar days from the date of the filing of the same. …chanroblesvirtualawlibrary chanrobles virtual law library

Separate Opinions

SARMIENTO, J., concurring:

Subject to my opinion in G.R. Nos. 82805 and 83205.

MELENCIO-HERRERA, J., concurring:

SEC. 2. Article 129 of the Labor Code of the Philippines, as amended, is hereby further amended to read as follows:

Art. 129. Recovery of wages, simple money claims and other benefits. – Upon complaint of any interested party, the Regional Director of the Department of Labor and Employment or any of the duly authorized hearing officers of the Department is empowered, through summary proceeding and after due notice, to hear and decide any matter involving the recovery of wages and other monetary claims and benefits, including legal interest, owing to an employee or person employed in domestic or household service or househelper under this Code, arising from employer-employee relations: Provided, That such complaint does not include a claim for reinstatement: Provided, further, That the aggregate money claims of each employee or househelper do not exceed five thousand pesos (P5,000.00). The Regional Director or hearing officer shall decide or resolve the complaint within thirty (30) calendar days from the date of the filing of the same. …

Wednesday, March 7, 2012

Abella vs. National Labor Relations Commission, No. L-71813, 152 SCRA 140 , July

Posted by Alchemy Business Center and Marketing Consultancy at 1:01 AM Labels: 152 SCRA 140, Abella vs. National Labor Relations Commission, July, No. L-71813, Political Law

Abella vs. National Labor Relations Commission, No. L-71813, 152 SCRA 140 , July

G.R. No. 71813 July 20, 1987

ROSALINA PEREZ ABELLA/HDA. DANAO-RAMONA, petitioners,
vs.
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION, ROMEO QUITCO and RICARDO DIONELE, SR., respondents.

PARAS, J.:

This is a petition for review on certiorari of the April 8, 1985 Resolution of the Ministry of Labor and Employment affirming the July 16, 1982 Decision of the Labor Arbiter, which ruled in favor of granting separation pay to private respondents.

On June 27, 1960, herein petitioner Rosalina Perez Abella leased a farm land in Monteverde, Negros Occidental, known as Hacienda Danao-Ramona, for a period of ten (10) years, renewable, at her option, for another ten (10) years (Rollo, pp. 16-20).

On August 13, 1970, she opted to extend the lease contract for another ten (10) years (Ibid, pp. 26-27).

During the existence of the lease, she employed the herein private respondents. Private respondent Ricardo Dionele, Sr. has been a regular farm worker since 1949 and he was promoted to Cabo in 1963. On the other hand, private respondent Romeo Quitco started as a regular employee in 1968 and was promoted to Cabo in November of the same year.

Upon the expiration of her leasehold rights, petitioner dismissed private respondents and turned over the hacienda to the owners thereof on October 5, 1981, who continued the management, cultivation and operation of the farm (Rollo, pp. 33; 89).

On November 20, 1981, private respondents filed a complaint against the petitioner at the Ministry of Labor and Employment, Bacolod City District Office, for overtime pay, illegal dismissal and reinstatement with backwages. After the parties had presented their respective evidence, Labor Arbiter Manuel M. Lucas, Jr., in a Decision dated July 16, 1982 (Ibid, pp. 29-31), ruled that the dismissal is warranted by the cessation of business, but granted the private respondents separation pay. Pertinent portion of the dispositive portion of the Decision reads:

In the instant case, the respondent closed its business operation not by reason of business reverses or losses. Accordingly, the award of termination pay in complainants’ favor is warranted.

WHEREFORE, the respondent is hereby ordered to pay the complainants separation pay at the rate of half-month salary for every year of service, a fraction of six (6) months being considered one (1) year. (Rollo pp. 29-30)

On appeal on August 11, 1982, the National Labor Relations Commission, in a Resolution dated April 8, 1985 (Ibid, pp. 3940), affirmed the decision and dismissed the appeal for lack of merit.

On May 22, 1985, petitioner filed a Motion for Reconsideration (Ibid, pp. 41-45), but the same was denied in a Resolution dated June 10, 1985 (Ibid, p. 46). Hence, the present petition (Ibid, pp. 3-8).

The First Division of this Court, in a Resolution dated September 16, 1985, resolved to require the respondents to comment (Ibid, p. 58). In compliance therewith, private respondents filed their Comment on October 23, 1985 (Ibid, pp. 53-55); and the Solicitor General on December 17, 1985 (Ibid, pp. 71-73-B).

On February 19, 1986, petitioner filed her Consolidated Reply to the Comments of private and public respondents (Ibid, pp. 80-81).

The First Division of this Court, in a Resolution dated March 31, 1986, resolved to give due course to the petition; and to require the parties to submit simultaneous memoranda (Ibid., p. 83). In compliance therewith, the Solicitor General filed his Memorandum on June 18, 1986 (Ibid, pp. 89-94); and petitioner on July 23, 1986 (Ibid, pp. 96-194).

The petition is devoid of merit.

The sole issue in this case is —

WHETHER OR NOT PRIVATE RESPONDENTS ARE ENTITLED TO SEPARATION PAY.

Petitioner claims that since her lease agreement had already expired, she is not liable for payment of separation pay. Neither could she reinstate the complainants in the farm as this is a complete cessation or closure of a business operation, a just cause for employment termination under Article 272 of the Labor Code.

On the other hand, the legal basis of the Labor Arbiter in granting separation pay to the private respondents is Batas Pambansa Blg. 130, amending the Labor Code, Section 15 of which, specifically provides:

Sec 15 Articles 285 and 284 of the Labor Code are hereby amended to read as follows:

x x x x x x x x x

Art. 284. Closure of establishment and reduction of personnel. — The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establisment or undertaking unless the closing is for the purpose of circumventing the provisions of this title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closure or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.1avvphi1

There is no question that Article 284 of the Labor Code as amended by BP 130 is the law applicable in this case.

Article 272 of the same Code invoked by the petitioner pertains to the just causes of termination. The Labor Arbiter does not argue the justification of the termination of employment but applied Article 284 as amended, which provides for the rights of the employees under the circumstances of termination.

Petitioner then contends that the aforequoted provision violates the constitutional guarantee against impairment of obligations and contracts, because when she leased Hacienda Danao-Ramona on June 27, 1960, neither she nor the lessor contemplated the creation of the obligation to pay separation pay to workers at the end of the lease.

Such contention is untenable.

This issue has been laid to rest in the case of Anucension v. National Labor Union (80 SCRA 368-369 [1977]) where the Supreme Court ruled:

It should not be overlooked, however, that the prohibition to impair the obligation of contracts is not absolute and unqualified. The prohibition is general, affording a broad outline and requiring construction to fill in the details. The prohibition is not to read with literal exactness like a mathematical formula for it prohibits unreasonable impairment only. In spite of the constitutional prohibition the State continues to possess authority to safeguard the vital interests of its people. Legislation appropriate to safeguard said interest may modify or abrogate contracts already in effect. For not only are existing laws read into contracts in order to fix the obligations as between the parties but the reservation of essential attributes of sovereign power is also read into contracts as a postulate of the legal order. All contracts made with reference to any matter that is subject to regulation under the police power must be understood as made in reference to the possible exercise of that power. Otherwise, important and valuable reforms may be precluded by the simple device of entering into contracts for the purpose of doing that which otherwise maybe prohibited. …

In order to determine whether legislation unconstitutionally impairs contract of obligations, no unchanging yardstick, applicable at all times and under all circumstances, by which the validity of each statute may be measured or determined, has been fashioned, but every case must be determined upon its own circumstances. Legislation impairing the obligation of contracts can be sustained when it is enacted for the promotion of the general good of the people, and when the means adopted must be legitimate, i.e. within the scope of the reserved power of the state construed in harmony with the constitutional limitation of that power. (Citing Basa vs. Federacion Obrera de la Industria Tabaquera y Otros Trabajadores de Filipinas [FOITAF] [L-27113], November 19, 1974; 61 SCRA 93,102-113]).

The purpose of Article 284 as amended is obvious-the protection of the workers whose employment is terminated because of the closure of establishment and reduction of personnel. Without said law, employees like private respondents in the case at bar will lose the benefits to which they are entitled — for the thirty three years of service in the case of Dionele and fourteen years in the case of Quitco. Although they were absorbed by the new management of the hacienda, in the absence of any showing that the latter has assumed the responsibilities of the former employer, they will be considered as new employees and the years of service behind them would amount to nothing.

Moreover, to come under the constitutional prohibition, the law must effect a change in the rights of the parties with reference to each other and not with reference to non-parties.

As correctly observed by the Solicitor General, Article 284 as amended refers to employment benefits to farm hands who were not parties to petitioner’s lease contract with the owner of Hacienda Danao-Ramona. That contract cannot have the effect of annulling subsequent legislation designed to protect the interest of the working class.

In any event, it is well-settled that in the implementation and interpretation of the provisions of the Labor Code and its implementing regulations, the workingman’s welfare should be the primordial and paramount consideration. (Volshel Labor Union v. Bureau of Labor Relations, 137 SCRA 43 [1985]). It is the kind of interpretation which gives meaning and substance to the liberal and compassionate spirit of the law as provided for in Article 4 of the New Labor Code which states that “all doubts in the implementation and interpretation of the provisions of this Code including its implementing rules and regulations shall be resolved in favor of labor.” The policy is to extend the applicability of the decree to a greater number of employees who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and protection to labor. (Sarmiento v. Employees Compensation Commission, 144 SCRA 422 [1986] citing Cristobal v. Employees Compensation Commission, 103 SCRA 329; Acosta v. Employees Compensation Commission, 109 SCRA 209).

PREMISES CONSIDERED, the instant petition is hereby DISMISSED and the July 16, 1982 Decision of the Labor Arbiter and the April 8, 1985 Resolution of the Ministry of Labor and Employment are hereby AFFIRMED.

SO ORDERED.

Teehankee, C.J., Yap, Fernando, Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Feliciano, Gancayco, Padilla, Bidin, Sarmiento and Cortes, JJ., concur

FIRST DIVISION

[G.R. No. 132564. October 20, 1999]

SAMEER OVERSEAS PLACEMENT AGENCY, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, Third Division, Q.C. and PRISCILA ENDOZO, respondents.

D E C I S I O N

PARDO, J.:

The case before the Court is a special civil action for certiorari with application for a temporary restraining order seeking to set aside the resolution of the National Labor Relations Commission affirming in toto the decision of Labor Arbiter Andres C. Zaballa finding the termination of employment of respondent Priscila Endozo as domestic helper in Taiwan as unwarranted and ordering petitioner to pay her salary for the unexpired portion of her contract of employment of eleven (11) months and (19) nineteen days amounting to NT$151,996.60, plus ten percent (10%) thereof as attorney’s fees.

The facts are as follows:

In June 1993, respondent Priscila Endozo applied to petitioner Sameer Overseas Employment Agency, a local recruitment placement agency, for overseas employment in Taiwan as a domestic helper. As she was initially found to have a “minimal spot” she was advised to rest for at least two (2) months.

On April 6, 1994, petitioner told respondent Endozo that she would be finally deployed to Taiwan and required her to pay the amount of P30,000.00, which she did, but petitioner did not issue any receipt.

On April 8, 1994, respondent Endozo left for Taiwan. She was to be employed as a housemaid of Sung Kui Mei with a monthly salary of NT$13,380.00 for a period of one year.

However, she stayed in Taiwan only for eleven (11) days as her employer terminated her services, and sent her home on April 19, 1994 for alleged incompetence.

Immediately upon her return, she confronted petitioner agency and Rose Mahinay of said agency told her that she was just unlucky and that she would be refunded the amount of P50,000.00.

On June 20, 1995, private respondent filed with the Philippine Overseas Employment Administration a complaint against petitioner for illegal dismissal, payment of salary corresponding to the unexpired portion of her contract, illegal exaction, violation of the Labor Code, falsification of contract of employment, attorneys fees and costs.

Meantime, on June 7, 1995, Congress enacted Republic Act No. 8042, vesting jurisdiction over claims of overseas workers with the National Labor Relations Commission (hereafter NLRC). Consequently, respondents claim was transferred to the National Labor Relations Commission, Arbitration Branch, in San Pablo City.

After position papers were filed, on May 28, 1997, Labor Arbiter Andres C. Zavalla rendered a decision finding that private respondent was illegally dismissed and ordering petitioner to pay her salary corresponding to the unexpired portion of her contract of employment of eleven (11) months and nineteen (19) days equivalent to NT$151,996.80, plus ten percent (10%) of the award equivalent to NT$15,199.68 as attorney’s fees.^[1]

In time, petitioner appealed the decision to the National Labor Relations Commission, Third Division, Quezon City.

On November 28, 1997, the NLRC rendered decision affirming in toto the decision of the Labor Arbiter.^[2]

On December 23, 1997, petitioner filed with the NLRC a motion for reconsideration;^[3] however, on January 28, 1998, the NLRC denied the motion.^[4]

Hence, this recourse.^[5]

On May 14, 1998, we required respondents to comment on the petition within ten (10) days from notice.^[6] On July 13, 1998, the Solicitor General filed his comment, submitting the proposition that private respondent had been illegally dismissed by her foreign employer entitling her to payment of her salaries corresponding to the unexpired portion of her contract.^[7] However, private respondent failed to submit her comment, and on February 1, 1999, we required her counsel to show cause why she should not be disciplinarily dealt with or held in contempt for such failure.^[8]

We now resolve to give due course to the petition. We consider private respondent to have waived the filing of her comment and set aside the resolution of February 1, 1999.

The issue presented is whether the employer in Taiwan could lawfully terminate private respondent’s employment as domestic helper for incompetence during the probationary period of her employment.

Petitioner recruited private respondent for employment in Taiwan, and she executed a contract of employment with her Taiwanese employer under which she was to serve as domestic helper for a period of one year, with six months probationary period. After only eleven days of work, the Taiwanese employer terminated private respondent’s employment for alleged incompetence.

It is an elementary rule in the law on labor relations that even a probationary employee is entitled to security of tenure.^[9] A probationary employee can not be terminated, except for cause.^[10]

In this case, the employment contract was for a definite period of one (1) year, with six (6) months probationary period. After only eleven days of work, the employer dismissed private respondent without just cause.

Under Article 281 of the Labor Code, a probationary employee may be terminated on two grounds: (a) for just cause or (b) when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement.^[11] Under the contract of employment, the employer may terminate the services of private respondent during the probationary period for “being found losing ability to work.” However, the power of the employer to terminate a probationary employment contract is subject to limitations. First, it must be exercised in accordance with the specific requirements of the contract. Secondly, the dissatisfaction of the employer must be real and in good faith, not feigned so as to circumvent the contract or the law; and thirdly, there must be no unlawful discrimination in the dismissal.^[12] In termination cases, the burden of proving just or valid cause for dismissing an employee rests on the employer.^[13] In this case, petitioner was not able to present convincing proof establishing respondent Endozos alleged incompetence. Due process dictates that an employee be apprised beforehand of the conditions of his employment and of the terms of advancement therein.^[14] Precisely, implicit in Article 281 of the Code is the requirement that reasonable standards be previously made known by the employer to the probationary employee at the time of his engagement.^[15] Thus, the termination of respondent Endozos employment was not justified ^[16]and hence, illegal.^[17] Consequently, private respondent is entitled to payment of her salaries corresponding to the unexpired portion of her contract of employment for a period of one year.^[18]

WHEREFORE, the Court hereby DISMISSES the petition and AFFIRMS the resolution of the National Labor Relations Commission adopted on November 28, 1997, in NLRC NCR CA No. 013114-97.

No costs.

SO ORDERED.

Davide, Jr., C.J. (Chairman), and Puno, JJ., concur.

Kapunan, and Ynares-Santiago, JJ., on official business abroad.

Digest: People vs Vera Reyes

By nutshellgirl ¶ Posted in General ¶ Tagged digest, labor ¶ Leave a comment

People v. Vera Reyes, 67 Phil 190

Subject: Labor Standards

Doctrine: Police Power (Basis of State’s power to intervene)

Facts:

The defendant was charged with a violation of Act No. 2549, as amended by Acts Nos. 3085 and 3958 The information alleged that from September 9 to October 28, 1936, and for the some time after, the accused, in his capacity as president and general manager of the Consolidated Mines, having engaged the services of Severa Velasco de Vera as stenographer, at an agreed salary of P35 a month willfully and illegally refused to pay the salary of said stenographer corresponding to the above-mentioned period of time, which was long due and payable, in spite of her repeated demands.

The accused interposed a demurrer on the ground that the facts alleged in the information do not constitute any offense, and that even if they did, the laws penalizing it are unconstitutional.

After the hearing, the court sustained the demurrer, declaring unconstitutional the last part of section 1 of Act No. 2549 as last amended by Act No. 3958, which considers as an offense the facts alleged in the information, for the reason that it violates the constitutional prohibition against imprisonment for debt, and dismissed the case, with costs de oficio.

In this appeal the Solicitor-General contends that the court erred in declaring Act No. 3958 unconstitutional.

ISSUE: Whether the said constitutional provision is unconstitutional.

HELD:

No. The last part of section 1 considers as illegal the refusal of an employer to pay, when he can do so, the salaries of his employees or laborers on the fifteenth or last day of every month or on Saturday of every week, with only two days extension, and the nonpayment of the salary within the periods specified is considered as a violation of the law.

The same Act exempts from criminal responsibility the employer who, having failed to pay the salary, should prove satisfactorily that it was impossible to make such payment.

The court held that this provision is null because it violates the provision of section 1 (12), Article III, of the Constitution, which provides that no person shall be imprisoned for debt.

We do not believe that this constitutional provision has been correctly applied in this case. A close perusal of the last part of section 1 of Act No. 2549, as amended by section 1 of Act No. 3958, will show that its language refers only to the employer who, being able to make payment, shall abstain or refuse to do so, without justification and to the prejudice of the laborer or employee. An employer so circumstanced is not unlike a person who defrauds another, by refusing to pay his just debt. In both cases the deceit or fraud is the essential element constituting the offense. The first case is a violation of Act No. 3958, and the second isestafa punished by the Revised Penal Code. In either case the offender cannot certainly invoke the constitutional prohibition against imprisonment for debt.

Another doctrine:

Police power is the power inherent in a government to enact laws, within constitutional limits, to promote the order, safety, health, morals, and general welfare of society. (12 C. J., p. 904.) In the exercise of this power the Legislature has ample authority to approve the disputed portion of Act No. 3958 which punishes the employer who, being able to do so, refuses to pay the salaries of his laborers or employers in the specified periods of time.

Undoubtedly, one of the purposes of the law is to suppress possible abuses on the part of employers who hire laborers or employees without paying them the salaries agreed upon for their services, thus causing them financial difficulties.

Without this law, the laborers and employees who earn meager salaries would be compelled to institute civil actions which, in the majority of cases, would cost them more than that which they would receive in case of a decision in their favor.

THIRD DIVISION

[G.R. No. 128966. August 18, 1999]

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. EDWIN DE VERA y GARCIA, RODERICK GARCIA y GALAMGAM, KENNETH FLORENDO and ELMER CASTRO, accused, EDWIN DE VERA y GARCIA, appellant.

D E C I S I O N

PANGANIBAN, J.:

When is a lookout deemed an accomplice and when a conspirator? What is the distinction between the two?

^{Statement of the Case}

These are the main questions passed upon by the Court in resolving the present appeal, which assails the March 12, 1997 Decision^[1] of the Regional Trial Court of Quezon City (Branch 57) in Criminal Case No. Q-92-31323, finding Appellant Edwin De Vera and Accused Roderick Garcia guilty beyond reasonable doubt of murder and sentencing them to reclusion perpetua.

In an Information dated June 11, 1992, Assistant City Prosecutor Tirso M. Gavero charged with murder Appellant Edwin De Vera, together with Roderick Garcia and two other persons who were subsequently identified during the trial as Kenneth Florendo and Elmer Castro. The crime was allegedly committed as follows:

That on or about the 8th day of June, 1992, in Quezon City, Philippines, the said accused, conspiring [and] confederating [with] and helping xxx two (2) other persons, did then and there wilfully, unlawfully and feloniously with intent to kill, with evident premeditation, treachery and use of superior strength, attack, assault and employ personal violence upon the person of one FREDERICK CAPULONG y DIZON, by then and there shooting him with the use of a .22 cal. with trade mark Paspar Armas bearing SN-29069 with five (5) pieces of caliber 22 ammo inside, hitting him between his eyes and striking him with the use of a baseball bat in the mouth, thereby inflicting upon him serious and mortal wounds which were the direct and immediate cause of his untimely death, to the damage and prejudice of the heirs of the said Frederick Capulong y Dizon.^[2]

On July 9, 1992, Assistant City Prosecutor Enrico P. Bringas filed a Motion to Amend the Information to include the use of a .32 caliber firearm in the killing of Frederick Capulong. The trial court granted the Motion, and the Amended Information now reads as follows:

That on or about the 8th day of June, 1992, in Quezon City, Philippines, the said accused, conspiring [and] confederating [with] and helping xxx two (2) other persons, did then and there wilfully, unlawfully and feloniously with intent to kill, with evident premeditation, treachery and use of superior strength, attack, assault and employ personal violence upon the person of one FREDERICK CAPULONG y DIZON, by then and there shooting him with the use of a .22 cal. with trade mark Paspar Armas bearing SN-29069 with five (5) pieces of caliber 22 ammo inside and a .32 cal. firearm of still undetermined make, hitting him between his eyes and striking him with the use of a baseball bat in the mouth, thereby inflicting upon him serious and mortal wounds which were the direct and immediate cause of his untimely death, to the damage and prejudice of the heirs of the said Frederick Capulong y Dizon.^[3]

On their arraignment, Appellant Edwin De Vera^[4] and Roderick Garcia^[5] pleaded not guilty. The other two accused were at large. Trial in due course proceeded only against De Vera and Garcia. Thereafter, the trial court rendered the assailed Decision, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered finding the accused EDWIN DE VERA y GARCIA and RODERICK GARCIA y GALAMGAM guilty beyond reasonable doubt of the crime of MURDER and they are hereby accordingly sentenced to suffer reclusion perpetua, including all its accessory penalties; to indemnify the heirs of Frederick Capulong y Dizon, as follows:

a) P50,000.00, as death indemnity;
b) P211,670.00, as compensatory damages;
c) P600,000.00, as indemnification for loss of earning capacity;
d) P500,000.00, as moral damages;
e) Interest at the legal rate on a) and b), hereof from the filing of the information until full payment; and,
f) Costs of suit.^[6]

Only Edwin De Vera filed a Notice of Appeal.^[7]

^{The Facts}

^{Version of the Prosecution}

In its Brief,^[8] the Office of the Solicitor General presented the following narration of facts:^[9]

As earlier stated, the prosecution presented an eyewitness in the person of Bernardino Cacao, a resident of Denver Loop Street, Filinvest II, Quezon City before he moved to No. 58 Elisa Street, Caloocan City. He was residing at Filinvest II, together with his wife and children, at the time of the incident on June 28, 1992 in the house owned by David Lim. He was then employed at a Kodak branch in Caloocan City, while his wife served as secretary of the homeowners association.

About 1:30 in the afternoon of June 8, 1992, while bringing out the garbage, the witness saw a car passing by, driven by victim Frederick Capulong together with four (4) other passengers. He knew the victim by name who was a resident of the subdivision. He recognized and identified two of the passengers as Kenneth Florendo and Roderick Garcia, both familiar in the subdivision.

Cacao did not at first notice anything unusual inside the car while it passed by him, but then he heard unintelligible voices coming from the car as it was cruising around Denver Loop Street, a circular road whose entrance and exit were through the same point (ibid, p. 12). His curiosity taking [the] better part of him, Cacao walked to the opposite side of the road from where he saw the car already parked. Moments later, he saw the victim dragged out of the car by Florendo and brought to a grassy place. Florendo was holding a gun (ibid, p. 13). Upon reaching the grassy spot, Florendo aimed and fired the gun at the victim, hitting him between the eyes. After the shooting, Florendo and his companions fled in different directions.

When he submitted a sworn statement to the investigating prosecutor, Cacao attached a sketch of the crime scene prepared by police officers, indicating therein his relative position at the time of the incident. While testifying in court, Cacao identified Garcia and pointed to appellant as among the companions of Florendo.

Ten minutes later, or about 2:40 in the afternoon, the desk officer of the Investigation Division, Station 5, Central Police District, Quezon City received a report about the shooting incident from a security guard of the subdivision. The officer immediately dispatched a team to Filinvest II, composed of PO2 Armando Garcia, PO3 Armando Junio, and PO3 Jovencio Villacorte, to investigate and gather evidence (TSN, p. 5, September 13, 1993). A security guard guided the team to the corner of Denver and Doa Justina Streets, site of the shooting, where they discovered blood stains and damaged grass (ibid, p. 6). The guard informed them that the victim was rushed to the East Avenue Medical Center by other security guards. The policemen then found a color red sports car with plate no. NBZ 869, with engine still running and its doors opened. They recovered inside the car several class cards and a license belonging to one Ric Capulong, who was later identified as Frederick Capulong.

The policemen went around the subdivision to look for possible suspects. They came upon a person wearing muddied maong pants and white t-shirt standing and walking around near the clubhouse of the subdivision. When asked his name, the person identified himself as Edwin de Vera, herein appellant. Explaining the mud stains on his pants, appellant declared that he was a victim of a hold-up. Suspicious [of] his conduct, the policemen brought appellant to Station 5 and turned him over to the desk officer for investigation.

Another prosecution witness, SPO3 Mario Guspid, a police investigator since 1989, was assigned to investigate the shooting of Frederick Capulong. He was assisted by SPO4 Pablito Selvido, SPO2 Armando Rivera, SPO3 Jovencio Villacorte, SPO3 Rolando Gacute, SPO3 Danilo Castro and other police officers.

Upon receiving his assignment, SPO3 Guspid immediately went to the East Avenue Medical Center where he saw the victim lying inside the intensive care unit receiving medical treatment. The victim was unconscious. After conferring with the victims parents and relatives, SPO3 Guspid returned to Station 5. On his arrival, the desk officer referred appellant to him for questioning. He was told that appellant was picked up near the crime scene acting suspiciously. When appellant was asked about his participation in the shooting, he was reluctant at first to talk, but later relented after SPO3 Guspid told him that his conscience would bother him less if he would tell the truth.

Without any hesitation, appellant admitted being [with the] group which perpetrated the crime, and implicated Roderick Garcia. He was then persuaded to accompany a group of policemen to the residence of Garcia, which turned out to be at Doa Justina Street, Filinvest II Subdivision. Finding Garcia at home, SPO3 Guspid informed him that he was implicated by appellant [in] the crime. He was then invited to the station to shed light [on] the incident. Garcia consented.

At Station 5, SPO3 Guspid interviewed appellant and Garcia. In the course of the interview, Garcia revealed the place where he hid a .22 caliber gun, black t-shirt and black cap. According to Garcia, Florendo asked them to wear black t-shirts. With the revelation, SPO3 Guspid, SPO2 Rivera, SPO3 Gacute and SPO3 Castro, together with the suspects, went back to the subdivision and proceeded to a grassy portion near the boundary of Filinvest II and San Mateo, Rizal. The place was near a creek and about 50 meters away from the residence of Garcia (TSN, pp. 9-14, September 30, 1993). Truly, the policemen recovered a .22 caliber revolver, black t-shirt and black cap (TSN, pp. 12-13, August 24, 1993). While there, SPO3 Guspid and SPO2 Rivera prepared a sketch of the crime scene to reflect the explanations and answers given by appellant and Garcia in response to their questions. As identifying marks, SPO3 Gacute placed his initials OG (acronym for his first name and family name) between the handle and cylinder of the gun, and on the neck of the t-shirt, as well as in the inner lining of the black cap.

From the crime site, the policemen and the suspects returned to Station 5 where SPO3 Guspid asked them if they were willing to give their written statements, to which they assented. Consequently, they were brought to the Integrated Bar of the Philippines, Quezon City Chapter, at Malakas Street, Diliman, Quezon City. They were then introduced to Atty. Confesor Sansano, the [c]hairman of the Free Legal Aid of the IBP. Also, present at that time were appellants relatives, including his mother and sisters, and other lawyers of the IBP.

SPO3 Guspid inquired from them if they would agree to be assisted by Atty. Sansano, a competent lawyer. They replied in the affirmative. Thereafter, the two conferred with Atty. Sansano.

Atty. Sansano, a rebuttal witness of the prosecution, testified that upon arrival of the suspects [i]n his office, he requested the policemen, as a matter of policy, to step outside the building in order to assure that no pressure would be exerted on the suspects even by their mere presence (TSN, p. 6, November 6, 1996). After they left, Atty. Sansano interviewed the suspects for about twenty minutes, informing them of their rights under the constitution and inquiring from them if they indeed wanted to give voluntary statements. To the query, the suspects answered positively. They also affirmed their earlier declaration that they were willing to be assisted by the IBP (ibid, pp. 8-9). He further advised them of their right during the investigation to answer or not to answer the questions which they thought would incriminate them, but they retorted that they fully understood their right.

Satisfied that they were not coerced or threatened to give their statements, Atty. Sansano requested the suspects to show their upper bodies to enable him to determine any telltale signs of torture or bodily harm. Finding no such signs, he then summoned the policemen to re-enter the building. The investigators readied two typewriters and each suspect was assigned to an investigator. He served as the lawyer of the suspects, cautioning them against answering questions that they did not understand, and to seek xxx a clarification, if needed.

According to Atty. Sansano, the interrogation took place in his office, a single separate room from where his five staff members were visible. He sat between the two tables used by the investigators for typing the questions and answers, involving himself from beginning to end of the investigation until the signing of the statements. He never left the office to attend to anything else, consistent with [the] standing policy of the IBP to properly safeguard the rights of suspects during investigation.

He recalled that the investigators first typed the headings of the statements, then informed the suspects before starting the investigation about their rights under the constitution, specifically, the right of the suspects to have a lawyer of their own choice; if not, the police would provide them with one who would assist them; that they could answer or refuse to answer the questions. The investigators also asked him if he was willing to serve as counsel of the suspects. They also asked the suspects if they were willing to accept him as their counsel. They agreed expressly by saying: Oho.

SPO3 Guspid investigated Garcia while SPO4 Selvido investigated appellant. They conducted the question and answer investigation in Pilipino. The statement of appellant was marked as Exhibit O and that of Garcia was marked as Exhibit N. The statements were signed by the suspects and Atty. Sansano.

For his part, SPO4 Selvido declared that SPO3 Guspid requested his help in taking the statements of the suspects (TSN, p. 4, June 29, 1993). He took the statement of appellant in the presence of Atty. Sansano. Before proceeding, he reminded appellant of the constitutional warnings, consisting of four (4) questions under the heading Paunawa, to which the latter gave positive answers. The statement was signed by appellant and Atty. Sansano. After taking down the statement, he turned over appellant to SPO3 Guspid.

Following the investigation, the policemen brought the suspects to the Philippine National Police Crime Laboratory for paraffin testing. The result: both hands of Edwin de Vera y Garcia @ Boy/Bong gave positive results [in] the test for gunpowder nitrates while both hands of Roderick Garcia y Galamgam @ Deo gave negative result [in] the test for gunpowder nitrates.

After coming from the crime laboratory, SPO3 Guspid contacted the mother of the victim to get her own statement. Next, he obtained a death certificate and prepared a referral to the Quezon City Prosecution Office which was signed by Senior Inspector Ernesto Collado, Chief of the Station Investigation Division. During the inquest, the prosecutor asked the suspects some clarificatory questions.

Surveillance and follow-up operations were conducted against Florendo and his other companion, Elmer Castro. However, the two were never arrested and brought to trial.

^{Version of the Defense}

Appellant claims that he had no part in the killing, and that it was Kenneth Florendo who had shot the victim. He avers that he merely accompanied to Filinvest the other accused and Florendo, who was his friend, upon the latters request. A few hours after the shooting incident, appellant was picked up by the police, who subsequently tortured and coerced him into signing his Statement regarding the incident. The trial court summarized appellants evidence in this wise:^[10]

Edwin de Vera admitted that, as of June 8, 1992, he and Kenneth Florendo were already close friends for about a year, sometimes sleeping in the latters house at No 106 Kamias Road, Quezon City. His own residence at the time was at No. 7 Bignay Street, Project 2, Quezon City. That was also the address of Elmer Castro, his and Kenneths friend.

Edwin had slept in Kenneths house on Kamias Road from June 6 to June 8, 1992 and went home at 7:00 am of June 8^th. Later at around 10:30 am, Kenneth passed by Edwins house to invite him back to [the formers] house that morning and to bring Elmer along. Kenneth mentioned that he, his girlfriend, and Deo, who were then with him, would be going somewhere first. Deo, or Roderick Garcia, was another friend of Kenneths.

Edwin and Elmer later went to and arrived at Kenneths house at 11:00 am. Kenneth, his girlfriend, and Deo were already taking lunch, and invited the two to lunch. After lunch, Kenneth asked Edwin to go with him to Filinvest without telling why. It was Deo who mentioned to Edwin that Kenneth was going to see a friend. Edwin was not aware if Kenneth had also asked the others to go with him to Filinvest, but the four of them Kenneth, Edwin, Elmer, and Deo later proceeded to Filinvest [i]n Kenneths car. Edwin sat at the back seat. The time was past 12:00 noon.

Kenneth drove his car. Upon reaching Filinvest, Kenneth stopped at a house and the four of them alighted in front of the house. Edwin did not know whose house it was. Kenneth and Elmer told Edwin and Deo to wait near the car because they were going to see a friend. At that point in time, Edwin knew the person[,] whom Kenneth and Elmer went to see[,] by name, never having met him personally before then. From his conversation with Deo, Edwin found out that the house was where Deo stayed.

Then, Edwin heard the voices of Kenneth and his friend and they appeared to be arguing (x x x x parang nagtatalo sila). The voices came from some twenty-two (22) meters away. Not before long, Edwin also heard a gunshot which came from where Kenneth and Elmer had gone to. He was shocked because he was not used to hearing gunfire. Frightened, he panicked and ran away from the place. His singular thought while running was to get out of Filinvest. Deo also ran away.

Edwin denied that either he or Deo carried any firearm on that occasion.

Edwin was arrested by the police at past 2:00 pm when he was already outside of Filinvest subdivision in front of Batasan. He was brought to Station 5 where four (4) persons in civilian attire tortured him by forcing him to lie down on a bench, tying his feet together and binding his hands from his back with handcuffs, and then covering his face with a piece of dirty cloth into which water was poured little by little into his face and mouth, while one of them sat on his thighs. This maltreatment lasted for about 20 or 25 minutes, because they wanted him to admit something and to name my companions but he refused to admit or to name anyone. They next took him outside to a mango tree where they repeated his ordeal for 30 minutes. At one point during the torture, a policeman untied his feet and hands and poked a gun to his temple, telling him to run as it was his chance to escape, but he did not escape because he could see that they were merely frightening him.

None of the policemen told him that he could xxx get a lawyer[;] instead, one of them, whose name he [did] not know, told him that I should listen only to them and not to anyone else. He claimed that he saw one [of] his tormentors in court, and he identified him as police officer Rivera. Guspid did not participate in his torture, because he merely took down his statement. His tormentors were not drunk or under the influence of drugs, but Guspid seemed to be under the influence of drugs when he took his statement because of his troubled appearance.

Edwin was not advised to inform or call any of his relatives. Before his torture, his request to contact his relatives or lawyer was turned down. His intimidation continued (x x x x puro pananakot and ginawa nila sa akin). After his torture at the mango tree, he was returned inside and thrown into a cell, where he remained until the following day (June 9^th). During the night, an inmate named Cesar boxed him once in the upper body upon instruction of a policeman. He was not given any dinner.

At around noontime of the next day (June 9^th), Edwin was taken out of the cell and brought to the IBP office by police officers Guspid and Selvido. Also with them were Deo Garcia and two other police officers. At the IBP office, the officers talked with one of the lawyers there, whom Edwin came to know to be Atty. Sansano only after the lawyer was introduced (present) to him and Deo. That was the first he met and saw Atty. Sansano.

Atty. Sansano informed both Edwin and Deo that they had the choice whether to talk or not. Edwin could not make any comment because wala po ako sa sarili ko. Then, Atty. Sansano warned Edwin substantially that: Alam nyo ba na ang salaysay na ito ay maaring hindi ninyo sumpaan, referring to the statement taken from Edwin by officers Guspid at around past 8 pm until 9 pm on the day before (June 8, 1992) at the police station. He was not assisted by counsel, and had no relatives present. Guspid appeared to be like drunk or tipsy, when he took down Edwins statement that night.

At the IBP office, Edwins and Deos statement were taken separately by Guspid and Selvido, respectively. At the time, Edwin and Deo were about six (6) meters from each other, but he could hear what was being asked of Deo. Guspid asked the questions and typed both the questions and his answers, which were given in Tagalog. All the while, Atty. Sansano was inside his office, which was about seven (7) meters away from where he and Guspid were situated. The office of Atty. Sansano was separated by a divider, so that he could not see what Atty. Sansano was doing at the time. After the questioning, he signed a paper which he was not able to read. He did not see Atty. Sansano sign the paper.

x x x x x x x x x

On July 14, 1992, Edwin executed a so-called salaysay ng pagbabawi ng sinumpaang salaysay, which he swore to before Prosecutor Tobia of Quezon City, for the purpose of recanting his statements given at the precinct in the evening of June 8, 1992 and at the IBP office on June 9, 1992 on the ground that they were given under coercion, intimidation, and in violation of his constitutional rights.

^{Ruling of the Trial Court}

Based on the testimony of Eyewitness Bernardino Cacao, the trial court ruled that it was indeed Kenneth Florendo who had actually shot the victim, Roderick Capulong. It convicted appellant as a principal, however, because the scientific and forensic findings on the criminal incident directly and substantially confirmed the existence of conspiracy among the four [accused], namely, Kenneth Florendo, Elmer Castro, Edwin de Vera, and Roderick Garcia.^[11]

^{The Issues}

Appellant submits for the consideration of this Court the following alleged errors:

THE TRIAL JUDGE ERRED IN NOT FINDING THAT PROSECUTION EYE-WITNESS BERNARDO CACAO HAD TESTIFIED TO NO CRIMINAL ACT OF APPELLANT;

THE TRIAL JUDGE ERRED IN FINDING AND CONCLUDING THAT THERE WAS A CONSPIRACY TO KILL THE VICTIM AND THAT APPELLANT WAS A CO- CONSPIRATOR;

III

THE TRIAL JUDGE ERRED IN ADMITTING EXHIBIT O, ALLEGED STATEMENT OF APPELLANT; AND IN NOT DECLARING THE SAME AS AN INADMISSIBLE EVIDENCE CONSIDERING THE BARBARIC MANNER UNDER WHICH IT WAS EXTRACTED/OBTAINED FROM THE APPELLANT WHICH VIOLATED THE LATTERS CONSTITUTIONAL RIGHTS;

THE TRIAL COURT ERRED IN NOT FINDING AND DECLARING THAT THE PROSECUTION HAS NOT PROVED THE APPELLANTS GUILT BEYOND REASONABLE DOUBT AND IN NOT ACQUITTING THE APPELLANT.^[12]

In the main, the Court will resolve three questions: (1) the sufficiency of the prosecution evidence, (2) the admissibility of appellants extrajudicial statement, and (3) the nature of his liability.

^{The Courts Ruling}

The appeal is partly meritorious. Appellant should be convicted only as an accomplice, not as a principal.

^{First and Third Issues:}

^{Sufficiency of Prosecution Evidence and Appellants Liability}

Because the first and the third questions mentioned above are interrelated, they shall be discussed jointly.

^{Eyewitness Account}

In ruling that there was conspiracy between Florendo, Castro, Garcia and Appellant De Vera, the trial court relied mainly on the testimony of Eyewitness Cacao. Specifically, it based its conclusions on the following facts: appellant was seen with the other accused inside the victims car; the victim was clearly struck with a blunt object while inside the car, and it was unlikely for Florendo to have done it all by himself; moreover, it was impossible for De Vera and Garcia to have been unaware of Florendos dark design on Roderick.

We disagree. It is axiomatic that the prosecution must establish conspiracy beyond reasonable doubt.^[13] In the present case, the bare testimony of Cacao fails to do so.

Cacao testified that he saw Appellant De Vera in the car, where an altercation later occurred. Thereafter, he saw Florendo drag out of the vehicle an apparently disabled Capulong and shoot the victim in the head moments later.

Cacaos testimony contains nothing that could inculpate appellant. Aside from the fact that he was inside the car, no other act was imputed to him. Mere presence does not amount to conspiracy.^[14] Indeed, the trial court based its finding of conspiracy on mere presumptions, and not on solid facts indubitably indicating a common design to commit murder. Such suppositions do not constitute proof beyond reasonable doubt. As the Court has repeatedly stated, criminal conspiracy must be founded on facts, not on mere surmises or conjectures. Clearly, Cacaos testimony does not establish appellants culpability.

^{Appellants Extrajudicial Statement}

Aside from the testimony of Cacao, the prosecution also presented Appellant De Veras extrajudicial statement, which established three points.

First, appellant knew of Kenneth Florendos malevolent intention.

T: Ito bang balak ni Kenneth para patayin itong si Frederick ay alam mo ba ito at pumayag kang maging kasapakat nito?

S: Sinabi po niya ito sa akin. Hindi po ako pumayag. Pero noong araw na iyon ay nagkahiyaan na lamang at napilitan akong sumama.^[15]

Second, appellants companions were armed that day, a fact which revealed the unmistakable plan of the group.

T: Ikaw ba ay mayroong dalang armas noong hapon na iyo[n]?

S: Wala po akong dalang armas. Pero itong si Kenneth ay mayroong dalang dalawang baril[,] sina Deo at Elmer ay wala. Pero noong naroroon na kami sa lugar ay ibinigay ni Kenneth ang isang baril niya kay Deo at itong si Elmer ay mayroong nang dalang baseball bat.

Third, he cooperated with the other accused in the commission of the crime by placing himself at a certain distance from Kenneth and the victim in order to act as a lookout. This is clear from the following portion of his statement:

S: Kabarkada ko po si Kenneth at dalawang araw po akong nakitulog sa kanila at noong araw ng June 08, 1992 ay sinabihan ako ni Kenneth Gumabao na huwag raw akong uuwi, dahil [mayroon] daw po kaming lakad. Pagkaraan ng ilang oras ay dumating naman itong si Roderick Garcia @ Deo at may sinabi sa kanya itong si Kenneth at sinabi naman ito sa akin ni Deo na kaysa raw maunahan siya ni Frederick Sumulong [sic] ay uunahan na raw po niya ito. Umalis po itong si Kenneth na kasama ang kanyang nobya at itong si Deo, para ihatid ang kanyang [sic] sa hospital at bago sila umalis ay sinabihan ako ni Kenneth na sunduin ko raw itong si Elmer Castro at magbhihai [magbihis] na rin daw ako at pagdating nila ay xxx lalakad na raw po kami. Mga ilang oras pa ay sinundo ko na itong si Elmer Castro at pagdating namin sa bahay nila Kenneth ay naroroon na itong si Kenneth at Deo. Matapos magpalit ng damit itong si Kenneth ay sumakay na kami sa kanilang kotse at nagtuloy sa kanilang katabing bahay at doon ay kumain kami. Pagkatapos noon ay umalis na kami at nagtuloy sa F[i]l-Invest. P[a]gdating namin sa isang lugar doon sa medyo malayo-layo sa bahay nila Deo ay bumaba na itong si Deo at Elmer at sila ay nagpunta doon sa lugar ng pinagbarilan para kunin ang bayad sa utang ni Fred[er]ick Capulong sa tiyuhin ni Deo. P[a]gkaraan ng ilang minuto ay sumunod po kami ni Kenn[e]th sa lugar at ako ay naiwan nang medyo malayo-layo sa lugar upang tignan kung mayroong darating na tao. Samantalang si Kenneth ay lumapit kina Deo at Frederick at kasunod noon ay nagkaroon ng sagutan itong si Kenneth at Frederick at nakita kong inaawat ni Deo itong si Kenneth. Hindi nakapagpigil itong si Kenneth at nasipa niya s[i] Frederick at kasunod noon ay binunot niya ang kanyang baril na kalibre .38 at pinaputukan niya ng isang beses itong si Frederick na noong tamaan ay natumba sa lupa. Lumapit si Elmer kina Kenneth habang binabatak ni Kenneth itong si Frederick at kasunod po noon ay lumapit sa akin si Deo at sinabihan ako na tumakbo na kami. Tumakbo na po kami, pero ako po ay nahuli ng mga security guard ng Subdivision at itong si Deo ay nahuli naman sa kanilang bahay. Itong sina Kenneth at Elmer ay hindi pa nahuhuli.^[16]

^{Appellant an Accomplice, Not a Conspirator}

In other words, appellants presence was not innocuous. Knowing that Florendo intended to kill the victim and that the three co-accused were carrying weapons, he had acted as a lookout to watch for passersby. He was not an innocent spectator; he was at the locus criminis in order to aid and abet the commission of the crime. These facts, however, did not make him a conspirator; at most, he was only an accomplice.

The Revised Penal Code provides that a conspiracy exists when two or more persons come to an agreement concerning the commission of a felony and decide to commit it.^[17] To prove conspiracy, the prosecution must establish the following three requisites: (1) that two or more persons came to an agreement, (2) that the agreement concerned the commission of a crime, and (3) that the execution of the felony [was] decided upon.^[18] Except in the case of the mastermind of a crime, it must also be shown that the accused performed an overt act in furtherance of the conspiracy.^[19] The Court has held that in most instances, direct proof of a previous agreement need not be established, for conspiracy may be deduced from the acts of the accused pointing to a joint purpose, concerted action and community of interest.^[20]

On the other hand, the Revised Penal Code defines accomplices as those persons who, not being included in Article 17,^[21] cooperate in the execution of the offense by previous or simultaneous acts.^[22] The Court has held that an accomplice is one who knows the criminal design of the principal and cooperates knowingly or intentionally therewith by an act which, even if not rendered, the crime would be committed just the same.^[23] To hold a person liable as an accomplice, two elements must be present: (1) the community of criminal design; that is, knowing the criminal design of the principal by direct participation, he concurs with the latter in his purpose; and (2) the performance of previous or simultaneous acts that are not indispensable to the commission of the crime.^[24]

The distinction between the two concepts needs to be underscored, in view of its effect on appellants penalty. Once conspiracy is proven, the liability is collective and not individual. The act of one of them is deemed the act of all.^[25] In the case of an accomplice, the liability is one degree lower than that of a principal.

Conspirators and accomplices have one thing in common: they know and agree with the criminal design. Conspirators, however, know the criminal intention because they themselves have decided upon such course of action. Accomplices come to know about it after the principals have reached the decision, and only then do they agree to cooperate in its execution. Conspirators decide that a crime should be committed; accomplices merely concur in it. Accomplices do not decide whether the crime should be committed; they merely assent to the plan and cooperate in its accomplishment. Conspirators are the authors of a crime; accomplices are merely their instruments who perform acts not essential to the perpetration of the offense.

Thus, in People v. Castro,^[26] the Court convicted Rufino Cinco, together with two others, as a principal, although he had acted merely as a lookout. The Court held that their concerted action in going armed and together to their victims house, and there, while one stayed as a lookout, the other two entered and shot the mayor and his wife, leaving again together afterwards, admits no other rational explanation but conspiracy. It may be noted further that Cinco executed a Sworn Statement that the three of them, together with some others, had planned to kill the victim on the promise of a P5,000 reward.

In People v. Tawat et al.,^[27] the lookout, Nestor Rojo, was convicted as a principal for conspiring with two others. The Court ruled that the conspiracy was shown by their conduct before, during and after the commission of the crime. The Court also noted that, upon their arrest, they disclosed that they had intended to rob the victims store and that they did so in accordance with their plan. In that case, it was clear that all three of them, including the lookout, were the authors of the crime.

In People v. Loreno,^[28] the Supreme Court convicted all the accused as principals because they had acted in band. In acting as a lookout, Jimmy Marantal was armed at the time like the other conspirators, and he gave his companions effective means and encouragement to commit the crime of robbery and rape.

Upon the other hand, in People v. Corbes,^[29] the Court noted that Manuel Vergel knew of the criminal design to commit a robbery, and that he cooperated with the robbers by driving the vehicle to and from the crime scene. In convicting him as an accomplice and not as a conspirator, the Court observed that he was merely approached by one of the robbers who was tasked to look for a getaway vehicle. He was not with the robbers when they resolved to commit a robbery. When his services were requested, the decision to commit the crime had already been made.

In People v. Tatlonghari,^[30] the Court was asked to resolve the responsibility of some appellants who knowingly aid[ed] the actual killers by casting stones at the victim, and distracting his attention. The Court ruled that they were accomplices and not co-conspirators, [i]n the absence of clear proof that the killing was in fact envisaged by them.

In People v. Suarez et al.,^[31] Wilfredo Lara merely introduced the gang of Reyes to Suarez who intended to perpetrate the crime with the help of the said group. In ruling that he was merely an accomplice, the Court noted that there was no evidence showing that he took part in the planning or execution of the crime, or any proof indicating that he profited from the fruits of the crime, or of acts indicative of confederacy on his part.

In People v. Balili,^[32] the Court convicted appellant as an accomplice, holding that in going with them, knowing their criminal intention, and in staying outside of the house with them while the others went inside the store to rob and kill, [he] effectively supplied the criminals with material and moral aid, making him guilty as an accompliance. The Court noted that there was no evidence that he had conspired with the malefactors, nor that he actually participated in the commission of the crime.

In People v. Doble,^[33] the Court held that Cresencio Doble did not become a conspirator when he looked for a banca that was eventually used by the robbers. Ruled the Court: Neither would it appear that Joe Intsik wanted to draft Crescencio into his band of malefactors that would commit the robbery more than just asking his help to look for a banca. Joe Intsik had enough men, all with arms and weapons to perpetrate the crime, the commission of which needed planning and men to execute the plan with full mutual confidence of each other, which [was] not shown with respect to appellants by the way they were asked to look and provide for a banca just a few hours before the actual robbery.

In the present case, Appellant De Vera knew that Kenneth Florendo had intended to kill Capulong at the time, and he cooperated with the latter. But he himself did not participate in the decision to kill Capulong; that decision was made by Florendo and the others. He joined them that afternoon after the decision to kill had already been agreed upon; he was there because nagkahiyaan na. This is clear from his statement, which we quote again for the sake of clarity:

T: Ito bang balak ni Kenneth para patayin itong si Frederick ay alam mo ba ito at pumayag kang maging kasapakat nito?

S: Sinabi po niya ito sa akin. Hindi po ako pumayag. Pero noong araw na iyon ay nagkahiyaan na lamang at napilitan akong sumama.^[34]

Significantly, the plan to kill could have been accomplished without him. It should be noted further that he alone was unarmed that afternoon. Florendo and Garcia had guns, and Castro had a baseball bat.

In any event, the prosecution evidence has not established that appellant was part of the conspiracy to kill the victim. His participation, as culled from his own Statement, was made, after the decision to kill was already a fait accompli. Thus, in several cases, the Court has held:

[L]ack of complete evidence of conspiracy, that creates the doubt whether they had acted as principals or accomplices in the perpetration of the offense, impels this Court to resolve in their favor the question, by holding x x x that they were guilty of the milder form of responsibility, i.e., guilty as mere accomplices.^[35]

^{Second Issue:}

^{Admissibility of Extrajudicial Statement}

Extrajudicial confessions must conform to constitutional requirements. Section 12, Article III of the Constitution, provides:

(1) Any person under investigation for the commission of an offense shall have the right to be informed of his right to remain silent and to have competent and independent counsel preferably of his own choice. If the person cannot afford the services of counsel, he must be provided with one. These rights cannot be waived except in writing and in the presence of counsel.

x x x x x x x x x

(3) Any confession or admission obtained in violation of this or section 17 hereof shall be inadmissible in evidence against him.

If the confession meets these requirements, it is subsequently tested for voluntariness, i.e., if it was given freely — without coercion, intimidation, inducement, or false promises; and credibility, i.e., if it was consistent with the normal experience of mankind.^[36]

Appellant claims that his extrajudicial statement was inadmissible, because it was not made in the presence of counsel. Although Atty. Confesor Sansano of the Quezon City IBP Legal Aid Committee purportedly assisted him and his co-accused in the execution of their extrajudicial Statements, appellant asserts that the lawyer was in his office, not with them, at the time. Appellant adds that he was tortured.

Appellants claims must be rejected. Atty. Sansano testified that he did not leave them at any time.

Q: You were involved in the interrogation from the very start?

A: Yes, from the beginning to the end of the interview until the boys signed their statements.

Q: Did you recall having at any time left your office to attend to some official matters?

A: I never left the office to attend to anything.

Q: Is that the usual manner by which you assist persons referred to you by the police insofar as custodial investigation is concerned?

A: It is our policy that when we assist [in] that capacity, we [want] to see to it that the rights of the accused or suspects are properly [protected] during the course of the entire interrogation.^[37]

In fact, Atty. Sansano even checked to see if there were torture marks on Appellant De Vera, and Garcia and interviewed the two to make sure that they understood what they were doing.

Q: What was your purpose in asking the police officers to leave the room?

A: My purpose in asking the police officers to step out of the building was to assure myself that no pressure could be exerted on the two boys by the presence of the police officers during my personal interview. Before we allow any police officers to take the statements of people brought before us[,] we see to it [that] we interview the persons personally out of hearing and sight of any police officer.

Q: After the police officers left the room, completely left the room[,] you were able to interview the two accused namely Mr. de Vera and Mr. Garcia?

A: Yes, I spent about 15 to 20 minutes interviewing the boys.

Q: What was the nature of your initial interview with these two accused?

A: I asked the boys Roderick and Edwin if it [was] true that they [were] going to give their own statements to the police?

Q: And what did they say?

A: They said yes, sir.

Q: What was your reaction to that?

A: Routinely[,] I informed them about their rights under the constitution.

x x x x x x x x x

Q: Having obtained their answers, what next transpired?

A: After telling them the statements they may give to the police could be used against them for a [sic] in any court of the Phil., I was satisfied that nobody coerced them, that they were never threatened by anybody much less by the police officers to give these statements. Casually I asked the two boys to raise their upper clothes.

x x x x x x x x x

Q: What was your purpose in requiring these persons to show you or remove their upper clothing?

A: I wanted to assure myself that there were no telltale signs of torture or bodily harm committed on the[m] prior to their [being brought] to the office. In spite of their [personal] assurances xxx, verbal assurance that they were never hurt.^[38]

The right to counsel is enshrined in the Constitution in order to address, among others, the use of duress and undue influence in the execution of extrajudicial confessions.^[39] In the present case, the Court is satisfied that Atty. Sansano sufficiently fulfilled the objective of this constitutional mandate. Moreover, appellants allegations of torture must be disregarded for being unsubstantiated. To hold otherwise is to facilitate the retraction of solemnly made statements at the mere allegation of torture, without any proof whatsoever.

When an extrajudicial statement satisfies the requirements of the Constitution, it constitutes evidence of a high order, because of the strong presumption that no person of normal mind would deliberately and knowingly confess to a crime unless prompted by truth and conscience.^[40] The defense has the burden of proving that it was extracted by means of force, duress or promise of reward.^[41] Appellant failed to overcome the overwhelming prosecution evidence to the contrary.

Section 3, Rule 133 of the Rules of Court, provides that [a]n extrajudicial confession made by an accused shall not be sufficient ground for conviction, unless corroborated by evidence of corpus delicti. In the present case, the prosecution presented other evidence to prove the two elements of corpus delicti: (a) a certain result has been proven for example, a man has died; and (b) some person is criminally responsible.^[42] It is indubitable that a crime has been committed, and that the other pieces of prosecution evidence clearly show that appellant had conspired with the other accused to commit the crime. He himself does not deny that he was at the crime scene. In fact, he was seen by the prosecution eyewitness in the company of the gunman. Furthermore, Atty. Sansano and the police officers testified to the voluntariness of his confession. It must be stressed that the aforementioned rule merely requires that there should be some other evidence tending to show the commission of the crime apart from the confession.^[43]

^{Criminal and Civil Liability}

In ruling that the crime committed was murder, the trial court found that the killing was attended by treachery, evident premeditation and abuse of superior strength. One of these was enough to qualify the crime as murder; the two others constituted generic aggravating circumstances. The lower court explained that the evidence established evident premeditation, for Florendos group acted with deliberate forethought and tenacious persistence in the accomplishment of the criminal design. Treachery was also proven, because the attack was planned and performed in such a way as to guarantee the execution of the criminal design without risk to the group. There was also abuse of superior strength, because the attackers took advantage of their superiority in numbers and weapons.

We disagree with the court a quo in appreciating two generic aggravating circumstances, because treachery absorbs abuse of superior strength.^[44] Hence, there is only one generic aggravating circumstance, not two. Notwithstanding the presence of a generic aggravating circumstance, we cannot impose the death penalty, because the crime was committed before the effectivity of the Death Penalty Law.

In the present case, the penalty of appellant as an accomplice is one degree lower than that of a principal, which in murder cases is reclusion temporal in its maximum period to death. He is also entitled to the benefits of the Indeterminate Sentence Law.

We sustain the trial courts grant of P50,000 as indemnity ex delicto, which may be awarded without need of proof other than the commission of the crime. The award of P211,670 as compensatory damages was duly supported by evidence. Based on the evidence presented, moral damages is also warranted, but only in the amount of P50,000, not P500,000 as fixed by the trial court. Furthermore, we affirm the payment of interest.^[45] However, the grant of P600,000 for loss of earning capacity lacks factual basis. Such indemnification partakes of the nature of actual damages, which must be duly proven.^[46] In this case, the trial court merely presumed the amount of Capulongs earnings. Since the prosecution did not present evidence of the current income of the deceased, the indemnity for lost earnings must be rejected.

WHEREFORE, the appeal is hereby partially GRANTED. Appellant De Vera is CONVICTED as an accomplice, not as a principal, in the crime of murder. He is sentenced to an indeterminate prison term of 8 years and 1 day of prision mayor as minimum, to 14 years 8 months and 1 day of reclusion temporal as maximum. We AFFIRM the awards of: (a) P50,000 indemnity ex delicto, (b) P211,670 as compensatory damages and (c) interest of six percent per annum on these two amounts. The award of moral damages is however REDUCED to P50,000 and the award for the loss of earning capacity is DELETED. No pronouncement as to costs.

SO ORDERED.

Melo, (Chairman), Purisima, and Gonzaga-Reyes, JJ., concur.

Vitug, J., Please see separate opinion.

^{SEPARATE OPINION}

VITUG, J.:

I share the ponencia of my colleagues in its affirmance of the conviction of appellants except, with all due respect, insofar as it has concluded that appellant De Vera is guilty merely as an accomplice.

There is conspiracy under Article 8 of the Revised penal Code when two or more persons come to an agreement concerning the commission of a felony and decide to commit it. Conspiracy of, course, by itself is legally inconsequential unless the criminal plot is, in fact, carried out. Once the offense is perpetrated, the responsibility of the conspirators is collective, not individual, that render, all of them equally liable regardless of the extent of their respective participations, the act of one being deemed to be the act of the other or the others, in the commission of the felony. An accomplice, under Article 18 of the same Code, is one who, not being a principal who (a) takes a direct part in the execution of the act, (b) directly forces or induces others to commit, (c) cooperates in the commission of the offense by another act without which the offense would not have been accomplished (per Article 17 of the Code), collaborates in the execution of the offense by previous or simultaneous acts.

In the case at bar, De Vera, knowing that Florendo intended to kill the victim and that the three co-accused were carrying weapons, he had acted as a lookout to watch for passersby. He was not an innocent spectator; he was at the locus criminis in order to aid and abet the commission of the crime (ponencia).

I cannot bring myself to accept any material variance between the terms to decide, on the one hand, and to concur or to assent, on the other hand, in defining, i.e., whether as a conspirator or as an accomplice, the specific criminal liability of the criminal offender. Where there is concurrence or assent by one to a plan, even when previously hatched by another or others, to commit a felony which concurrence or assent is made prior to the actual perpetration of the offense, and he then actually participates in its commission, regardless of the extent of such participation, his liability should be deemed, in my view, that of a conspirator rather than that of an accomplice. I would equate the liability of an accomplice to one who, knowing of the criminal design, but neither concurring nor assenting to it, cooperates in the execution of the crime short of taking a direct part in, and short of taking an indispensable act for, the commission of the offense. In the last two instances (taking a direct part in, or taking an indispensable act for, the commission of the felony), his participation would be that of a principal under Article 17 of the Revised Penal Code.

When appellant De Vera, aware of the plan to kill the victim, agreed to be lookout during the commission of the crime which, in fact, so took place as planned, he rendered himself liable no less than that incurred by his co-accused.

FIRST DIVISION

[G.R. No. L-6846. July 20, 1955.]

GREGORIO ARANETA EMPLOYEES UNION, ETC., ET AL., Petitioners, v. ARSENIO C. ROLDAN, ET AL., Respondents.

Enage & Beltran, for Petitioners.

Araneta & Araneta for Respondents.
SYLLABUS

EMPLOYER AND EMPLOYEE; UNFAIR LABOR PRACTICE; LAY OFF; RETRENCHMENT POLICY. — The laying off of employees due to the retrenchment policy adopted by a company in order to reduce the overcapitalization and minimize expenses and as a consequence the volume of business is considerably reduced particularly when it is not aimed at the Union or any of its members for union or labor activities, is not an unfair labor practice.

D E C I S I O N
JUGO, J.:
This is a petition for certiorari to review the Resolution of the Court of Industrial Relations dated March 31, 1953.

Associate Judge Jose S. Bautista of said court, in his order of February 10, 1953, states the facts of the case substantially as follows:chanrob1es virtual 1aw library

The Agricultural Division of the Gregorio Araneta, Inc., was established in 1947 with a capital of P200,000. The total investment in that Division in 1953 was about P3,000,000. To reduce this overcapitalization, the Board of Directors felt that it was necessary either to invite fresh capital from outside or to adopt a retrenchment policy. When Heacock and Company refused the invitation to invest in the enterprise, the Board took the alternative of retrenchment.

The Board decided not to import as much merchandise as usual. It also reduced credits. All these plans required a reduction in the volume of business necessitating likewise a reduction of personnel and caused the laying off of 17 employees. The selection of those to be laid off was made by a technical man and approved by the Board. These employees were given one month separation pay, except Nicolas Gonzalez who refused to receive it.

The reorganization of the Agricultural Division was adopted by unanimous resolution of the Board of Directors as a consequence of the retrenchment policy. This was adopted even before the petitioner, “Gregorio Araneta Employees’ Union”, was organized and; consequently, it was never directed against the union. Judge Bautista adds: “. . . Considering this fact and taking into account all the circumstances of this case especially the actual reduction of business of said Division, the court fails to find sufficient justification for altering the action of the Board of Directors regarding those employees, who received their severance pay.”

Judge Bautista, however, believed that Gonzales should not have been separated because his work was shifted to another employee by the name of Augusto Achacoso, who was thus overburdened.

Both parties filed their respective motions for reconsideration with the court en banc. The latter modified the decision of Associate Judge Bautista in its resolution of March 31, 1953, prepared by the Presiding Judge Arsenio C. Roldan and concurred in by Associate Judges Modesto Castillo and Juan L. Lantin. The modification consists only in holding that the laying off of Gonzales was also legal. Judge Bautista dissented with regard to the separation of Gonzales, giving the same reasons he gave in his original opinion.

We find no reason for disturbing the decision of the Court of Industrial Relations, en banc. The laying off of the 17 employees was due to the retrenchment policy which the Company had to adopt in order to reduce the overcapitalization and minimize expenses. The volume of business was considerably reduced.

It should be noted that the retrenchment policy was adopted before even the organization of the petitioning union. It was not, therefore, aimed at the Union or any of its members for union or labor activities. It was not an unfair labor practice.

In view of the foregoing, the petition is denied, without pronouncement as to costs. It is so ordered.

Bengzon, Acting C.J., Padilla, Montemayor, Reyes, A. Bautista Angelo, Labrador, Concepcion and Reyes, J.B.L., JJ., concur.

SECOND DIVISION

[G.R. No. L-14120. February 29, 1960.]

ASSOCIATED WATCHMEN AND SECURITY UNION (PTWO), Petitioner, v. THE HON. JUDGES JUAN LANTING, ARSENIO MARTINEZ, EMILIANO TABIGNE, of the Court of Industrial Relations and MACONDRAY AND COMPANY, INC., Respondents.

Jose C. Espinas for Petitioner.

Simeón S. Andrés for respondent CIR.

Paredes, Balcoff & Poblador for respondent Macondray and Company.
SYLLABUS

EMPLOYERS AND EMPLOYEES; UNFAIR LABOR PRACTICE; REFUSAL OF SHIPPING AGENCY TO EMPLOY GUARDS UNLESS THEY FURNISH BOND AN EXERCISE OF A LEGITIMATE RIGHT. — The refusal of a shipping agency to employ guards affiliated with a security or watchmen agency that does not furnish a bond to respond for any negligence, misfeasance or malfeasance can not constitute an unfair labor practice. Such refusal is merely the exercise by the shipping agency of a legitimate right to protect its own interests, especially where the guards in question had previously abandoned a ship they were guarding without notice and exposed the ship to losses due to theft and pilferage.

D E C I S I O N
LABRADOR, J.:
The Republic Ships Security Agency is one of three agencies employed by certain shipping agencies in the City of Manila and respondent Macondray and Company, Inc., in guarding ships or vessels arriving at the port of Manila and discharging cargo on its piers. The other watchmen and security agencies are the K. Tagle Ship Watchmen Agency and the City Watchmen and Security Agency. Thirty-eight affiliates of the Republic Ships Security Agency belong to the petitioner labor union.

On or about February 18, 1956, petitioner union and its members declared a strike against 19 shipping firms in the City of Manila. The strike was certified by the President of the Philippines to the Court of Industrial Relations and the latter court immediately took cognizance of the strike. Attempts were made by the Court of Industrial Relations to settle the strike. At the hearing or conference before the court on March 16, 1956, the strikers, through counsel, expressed their desire to return back to work and maintain the status quo. Attorney for the respondents offered to see the shipping companies concerned and to ask them to try to have the 47 watchmen, who claim to have been discharged, to be reemployed. The strikers agreed to this proposal and on April 6, 1956, a petition was filed before the Court of Industrial Relations asking for reinstatement of 47 strikers who belong to the petitioner Associated Watchmen and Security Union (PTWO). The manager of respondent Macondray and Company, Inc. expressed willingness to employ the strikers belonging to the petitioner union under the condition that the agency to which they belong file a bond in the sum of P5,000 in favor of Macondray and Company, Inc. to respond for any negligence, misfeasance or malfeasance of any of the watchmen of petitioner (Exhibit “1”, respondent). This requirement of filing a bond was also demanded of the other two security agencies, the K. Tagle Ship Watchmen Agency and the City Watchmen and Security Agency. However, the Republic Ships Security Agency, to which most of the members of the petitioner union belonged, failed to comply with the demands of Macondray and Company, Inc. that they furnish such a bond. The manager of the agency was one by the name of Fernando Derupe. Because of the failure of the Republic Ships Security Agency to furnish a bond, Macondray and Company, Inc. refused to employ watchmen from the said agency. Some of the members of the agency transferred to the other two agencies that had furnished a bond and after having joined the said agencies they were employed as watchmen by the respondent Macondray and Company, Inc.

On November 15, 1956, Macondray and Company, Inc. was charged with unfair labor practice for having dismissed and refused to employ 38 members of the petitioner herein. Macondray and Company, Inc. answered the complaint alleging that the members of the petitioner union are not its employees, but employees of the Republic Ships Security Agency; that the respondent had not demanded a bond from the members of the petitioner union but from the Republic Ships Security Agency; that it has not discriminated against members of the petitioner union.

The judge of the Court of Industrial Relations who tried the case was Judge Jose S. Bautista. The said judge made the following findings of fact:red:chanrobles.com.ph

“1. On February 18, 1956 there were three (3) watchmen agencies servicing the respondent company with watchmen, namely, the City Watchmen and Security Agency, K. Tagle Ship Watchmen Agency and Republic Ship Security Agency.

“Of these three (3) agencies, only the members of the complainant union working under the Republic Ship Security Agency, struck and abandoned vessels of the respondent company. (Testimony of Gunner pp. 49-53, Hearing of November 2, 1957.) .

“After the said strike of the complaining union on February 18, 1956, a bond of P5,000 was required by the respondent company. No bond was required by the company before the strike. Whereas, K. Tagle Ship Watchmen and the City Watchmen and Security Agency, which did not strike and abandon vessels of the company, filed the required bond, the striking union Associated Watchmen and Security Union refused to file said bond. Consequently, the company stopped giving vessels to Republic Ship Security Agency, hence the watchmen working under said agency were refused reinstatement.

“2. It is an admitted fact that the said 38 individuals are members of the complainant union, working under the Republic Ship Security Agency. (Testimony of Fernando Derupe pp. 42-43, Bearing of September 16, 1957.) .

x x x

“In other words, the 38 watchmen were compelled to join the other two agencies who had bonds and resign from the complainant union. They had to do this or help Fernando Derupe to post a bond (which Derupe himself did not want to post) or post the bond themselves, which they could not afford to do.

“By imposing the posting of the bond as a prerequisite for the reinstatement of the strikers, the company could select agencies, which did not join the strike, could control Derupe, their checker and employee, not to post a bond which in fact Derupe did not post.”cralaw virtua1aw library

Judge Bautista, as a consequence, held that defendant-respondent is guilty of unfair labor practice in view of the circumstances of the case. He reasoned that by imposing the condition of posting a bond on the agency to which members of the petitioner are affiliated, and by the refusal of the owner of the agency to post the bond, the latter as agent of respondent rendered it impossible for the strikers to go back to work. He, therefore, ordered the members of the union to be reinstated with full back wages from February 18, 1956 up to their actual reinstatement and prohibited the respondent from committing further acts of unfair labor practice. The respondent appealed this decision to the court in banc. On the appeal, three of the judges of the court, Judges Lanting, Martinez and Tabigne, voted to reverse the decision of the trial judge and to dismiss the petition for lack of merit. The other two judges voted for the affirmance of the decision.

From the majority decision a petition has been filed with us, alleging that the respondent judges abused their discretion in making findings of fact without sufficient evidence. The majority decision found that there never was a relationship between petitioner union and respondent Macondray and Company, Inc., and that the agencies with which respondent had dealt with were the City Watchmen and Security Agency, K. Tagle Ship Watchmen Agency and the Republic Ships Security Agency. The majority further found that members of the petitioner union who had transferred to the two security agencies which had furnished the bond, were admitted to work, notwithstanding the fact that they continued to be members of the petitioner union; that if members of the petitioner union could not be employed by the respondent, it is because the agency under which they worked, the Republic Ships Security Agency, had not furnished the bond required of them, which bond was furnished by the two other agencies. We believe that the above findings or conclusions are supported by the evidence.

We also find that the demand of the respondent that the watchmen agencies furnish a bond had become necessary in view of the fact that on or about March 18, 1956, three guards from the Republic Ships Security Agency left the “M/V Talleyrand,” a ship of which respondent was an agent, without notice, abandoning their work, and then went on strike without giving advance notice of their intention or desire to do so. The requirement of a bond was, therefore, fully justified by the acts of the members of the petitioner union who were affiliated with the Republic Ships Security Agency and who struck without previous notice.

On the whole, therefore, we find that the majority decision is fully supported by the evidence and by the documents and papers on the record, insofar as it declares that respondent has not been guilty of unfair labor practice.

Judge Bautista, in his dissenting opinion, cites the cases of United States Lines, Et. Al. v. Associated Watchmen and Security Union (PTWO), G.R. No. L-12208-11, May 21, 1958, and Maligaya Shipwatchmen Agency, Et. Al. v. Associated Watchmen & Security Union (PTWO), 55 Off. Gaz. [52] 10681, 103 Phil., 920 in which we held that watchmen and security agencies are not contractors of the shipping agencies or shipping companies, but are merely agents of the same in the recruitment of guards, and that the relationship of employer and employee exists between the shipping lines and the security guards themselves. Our decision in the above cases has no materiality or relevance to the question at issue in the case at bar. The refusal of the respondent to employ guards affiliated with a security or watchmen agency that does not furnish a bond can not constitute an unfair labor practice. Such refusal is merely the exercise of respondent’s legitimate right to protect its own interests, especially as the members of the petitioner had abandoned a ship they were guarding without previous notice and exposed the ship to losses due to theft and pilferage. It is to be noted that the requirement of filing of a bond was not demanded from any of the labor unions, or from the petitioner union herein. We cannot conclude that because the respondent company refused to employ the guards affiliated with the Republic Ships Security Agency, which affiliates are members of the petitioner union, respondent committed an unfair labor practice or a discrimination against petitioner union. As the majority of the court below says, respondent never had any contract or agreement with the petitioner union; respondent secured security guards through the three watchmen agencies above mentioned, without reference to the unions to which the different guards may have pertained. The members of the petitioner union or of the shipping agencies are not ordinary permanent and continuous employees, but merely casual guards who are employed only when there is a ship to be guarded and during the stay of the ship in the port of Manila. Under the above circumstances, the judgment of the minority to the effect that members of the petitioner union be returned to their work and paid back wages is not justifiable.

Wherefore, we find no sufficient reasons for disturbing the findings of the majority of the judges of the court below to the effect that the acts of the respondent Macondray and Company, Inc. do not constitute an unfair labor practice, and we, therefore, affirm the decision of the said majority, with costs against the petitioner herein.

Bengzon, Montemayor, Bautista Angelo, Concepción, Reyes, J. B. L., Endencia, and Gutiérrez David,JJ., concur.

SUPREME COURT FIRST DIVISION GELMART INDUSTRIES PHILS., INC., Petitioner, -versus- G.R. No. 85668 August 10, 1989 THE HON. NATIONAL LABOR RELATIONS COMMISSION AND FELIX FRANCIS, Respondents. x—————————————————x D E C I S I O N GANCAYCO, J.: At issue in this Petition is whether or not the National Labor Relations Commission (hereinafter referred to as NLRC) committed a grave abuse of discretion amounting to lack or excess of jurisdiction in ordering the reinstatement of private respondent to his former position with payment of backwages equivalent to six (6) months.[1] chanroblespublishingcompany As revealed by the records, the background facts are as follows: Private respondent Felix Francis started working as an auto mechanic for petitioner Gelmart Industries Phils., Inc. (herein-after referred to as GELMART) sometime in 1971. As such, his work consisted of the repair of engines and under chassis, as well as trouble shooting and overhauling of company vehicles. He is likewise entrusted with some tools and spare parts in furtherance of the work assigned to him. chanroblespublishingcompany On April 11, 1987, private respondent was caught by the security guards taking out of GELMART’s premises one (1) plastic container filed with about 16 ounces of “used” motor oil, without the necessary gate pass to cover the same as required under GELMART’s rules and regulations. By reason thereof, petitioner, on April 13, 1987, was placed under preventive suspension pending investigation for violation of company rules and regulations. Under the said rules, theft and/or pilferage of company property merits an outright termination from employment. After due investigation, or on May 20, 1987, private respondent was found guilty of theft of company property. As a consequence, his services were severed. chanroblespublishingcompany Thereafter, private respondent filed a complaint for illegal dismissal before the NLRC. In a decision dated February 26, 1988, Labor Arbiter Ceferina J. Diosana ruled that private respondent was illegally dismissed and, accordingly, ordered the latter’s reinstatement with full backwages from April 13, 1987 up to the time of actual reinstatement.[2] The ground relied upon by the labor arbiter in her decision is worth quoting hereunder, to wit: “The most important aspect that should be considered in interpreting this rule (referring to the company’s rules on theft and pilferages) is the deprivation of the company of property belonging to it without any compensation. Hence, the property that must be stolen or pilfered must be property which has value. chanroblespublishingcompany x x x In the respondent company, the used oil is thrown away by the mechanics. In other words, the taking by complainant of the subject 16 ounces of used oil did not deprive the respondent company of anything. As it appears, the said used oil forms part of the waste that should be thrown away and the respondent company had no use for the same, hence, the respondent company was not deprived of any property and, therefore, and (sic) it is the position of this Labor Arbiter that there was no stealing or pilferage to speak of.”[3] (Emphasis supplied.) chanroblespublishingcompany From this decision, GELMART interposed an appeal with the NLRC. In its decision dated October 21, 1985, the NLRC affirmed with modification the ruling of Labor Arbiter Diosana,[4] the dispositive portion of which reads as follows: “WHEREFORE, in view of the foregoing, the decision is hereby MODIFIED. Respondent-appellant is hereby directed to reinstate complainant-appellee to his former position without loss of seniority rights and to pay him backwages equivalent to six (6) months. chanroblespublishingcompany SO ORDERED.”[5] On December 12, 1988, GELMART filed before this Court a special civil action for certiorari with a prayer for the issuance of a temporary restraining order. chanroblespublishingcompany On January 18, 1989, this Court, without necessarily giving due course to the petition, issued a temporary restraining order enjoining respondents from enforcing the assailed decision. On the same date, this Court required respondents to comment on the petition. Aside from the substantive issues raised in their comment which will be discussed later on in this decision, public respondent pointed to a procedural error allegedly committed by petitioner.[6] The Solicitor General contends that petitioner failed to exhaust “[t]he administrative remedies afforded by law before resort can be had to the courts.”[7] More specifically, our attention is called to the fact that no motion for reconsideration of the NLRC decision was filed by petitioner. The Solicitor General then concludes that “[s]ince petitioners failed to avail of the “plain, speedy and adequate’ remedy accorded to them in the ordinary course of law, the instant petition for certiorari is prematurely filed, and hence, does not state a cause of action.”[8] chanroblespublishingcompany The legal provision pertinent to this issue is found in Article 223 of the Labor Code which provides, in part: “ART. 223. Appeal. — x x x “The decision of the Commission shall be immediately executory even pending appeal.” (Emphasis supplied.) From this provision, it can be gleaned that the filing of a motion for reconsideration may not prove to be an adequate remedy. For one, assuming that a motion for reconsideration is filed, nowhere does it state that the filing thereof would automatically suspend the execution of the decision. Second, although a motion for reconsideration has often been considered a condition precedent for granting the writ of certiorari, this rule, however, finds exception in cases where execution had been ordered and the need for relief is extremely urgent.[9] chanroblespublishingcompany This Court is not unaware of Section 2, Rule XI of the Revised Rules of the National Labor Relations Commission which provides in paragraphs (a) and (b) thereof: “Sec. 2. Finality of Decisions of the Commission — (a) The decisions, resolutions or orders of the Commission shall become executory after ten (10) calendar days from receipt of the same. (b) Should there be a motion for reconsideration in accordance with Sec. 9, Rule X of these Rules, the decision shall be executory after 10 days from receipt of the resolution on such motion. chanroblespublishingcompany x x x” However, this Court has already ruled against the validity of the abovecited rule, particularly Section 2, Rule XI, paragraph (a)in Juan vs. Musñgi.[10] Interpreting the word “immediately” in Article 223 of the Labor Code to mean “without interval of time” or “without delay,” this Court declared that the NLRC rules which provide that decisions, resolutions or orders of the Commission shall become executory after ten (10) calendar days from receipt thereof cannot prevail over Article 223 of the Labor Code. Further amplifying on this ruling, this Court stated that administrative regulations under legislative authority by a particular department must be in harmony with the provision of the law for the sole purpose of carrying into effect its general provisions.[11] Otherwise stated, no period of time need elapse before the decision of the NLRC becomes executory. chanroblespublishingcompany From the foregoing, it will be seen that a motion for reconsideration may not be a plain, speedy and adequate remedy. Hence, a petition for certiorari with this Court with a prayer for the issuance of a temporary restraining order is but a proper remedy to forestall the immediate execution of the assailed decision. chanroblespublishingcompany The Court will now look into the substance of this petition. In their petition, GELMART ascribes grave abuse of discretion on the part of the NLRC for rendering a decision that is contrary to law and existing jurisprudence. chanroblespublishingcompany We find no merit in this petition. Consistent with the policy of the State to bridge the gap between the under privileged workingmen and the more affluent employers, the NLRC right fully tilted the balance in favor of the workingmen — and this was done without being blind to the concomitant right of the employer to the protection of his property. The NLRC went on to say as follows: chanroblespublishingcompany “We do not fully concur with the findings of the Labor Arbiter. Complainant-appellee’s suspension prior to termination had sufficient basis. We disagree with the conclusion that complainant-appellee did not violate respondent-appellant’s role requiring a gate pass for taking out company property as the used motor oil was not really in a sense ‘property’ considering that it was plain waste and had no commercial value. Used motor oil is not plain waste because it had its use to respondent-appellant’s motor pool. Besides, it is not for complainant-appellee to interpret the rule according to his own understanding. Respondent-appellant had the right to interpret the role and to exact discipline in the light of its policy to instill discipline on its 6,000 workforce. chanroblespublishingcompany We find, however, complainant-appellee’s dismissal unwarranted. The penalty of preventive suspension was sufficient punishment for the violation under the circumstances.”[12] (Emphasis supplied) Thus, without being too harsh to the employer, on the one hand, and naively liberal to labor, on the other, the NLRC correctly pointed out that private respondent cannot totally escape liability for what is patently a violation of company rules and regulations. chanroblespublishingcompany To reiterate, be it of big or small commercial value, intended to be reused or altogether disposed of or wasted, the “used” motor oil still remains, in legal contemplation, the property of GELMART. As such, to take the same out of GELMART’s premises without the corresponding gate pass is a violation of the company rule on theft and/or pilferage of company property. However, as this Court ruled in Meracap vs. International Ceramics Mfg. Co., Inc., “[w]here a penalty less punitive would suffice, whatever missteps may be committed by labor ought not to be visited with a consequence so severe.[13] On this score, it is very difficult for this Court to discern grave abuse of discretion on the part of the NLRC in modifying the appealed decision. The suspension imposed upon private respondent is a sufficient penalty for the misdemeanor committed. As stated earlier, petitioner assails the NLRC decision on the ground that the same is contrary to existing jurisprudence, particularly citing in support thereof Firestone Tire and Rubber Co. of the Phil. vs. Lariosa.[14] Petitioner contends that by virtue of this ruling they have the right to dismiss private respondent from employment on the ground of breach of trust or loss of confidence resulting from theft of company property. chanroblespublishingcompany We believe otherwise. There is nothing in Firestone which categorically gives management an unhampered right in terminating an employee’s services. The decision in Firestone specifically focuses only on the legality of a dismissal by reason of acts of dishonesty in the handling of company property for what was involved in that case is theft of sixteen (16) flannel swabs which were supposed to be used to clean certain machineries in the company.[15] In fact, a careful review of the cases cited in Firestone[16] will readily reveal that the underlying reason behind sustaining the penalty of dismissal or outright termination is that, under the circumstances obtaining in those cases, there exists ample reason to distrust the employees concerned. chanroblespublishingcompany Thus, in upholding the dismissal of a cashier found guilty of misappropriating corporate funds, this Court, in Metro Drug,[17] made a distinction between managerial personnel and other employees occupying positions of trust and confidence from ordinary employees. On the other hand, in Dole Philippines,[18] this Court spoke of the “nature of participation” which readers one absolutely unworthy of the trust and confidence demanded by the position in upholding the dismissal of employee found guilty of illegally selling for their own benefit two (2) drums of crude oil belonging to the company. Additionally, in Firestone, it clearly appears that to retain the employee would “[i]n the long run, endanger the company’s viability.”[19] The Court rules that these circumstances are not present in this instant case. chanroblespublishingcompany Contrary to the assertion of petitioner, the ruling in Firestone does not preclude the NLRC from looking into the particular facts of the case to determine if there is ample reason to dismissal employee charged and subsequently found guilty of theft of company property. The said decision cannot be deemed as a limitation on the right of the State in the exercise of its paramount police power to regulate or temper the prerogative of management to dismiss an erring employee.[20] Consequently, even when there exists some rules agreed upon between the employer and the employee, it cannot preclude the State from inquiring on whether or not its rigid application would work too harshly on the employee. chanroblespublishingcompany Considering that private respondent herein has no previous derogatory record in his fifteen (15) years of service with petitioner GELMART, the value of the property pilfered (16 ounces of used motor oil) is very minimal, plus the fact that petitioner failed to reasonably establish that non dismissal of private respondent would work undue prejudice to the viability of their operation or is patently inimical to the company’s interest, it is more in consonance with the policy of the State, as embodied in the Constitution, to resolve all doubts in favor of labor. This is our ruling in Philippine Air Lines, Inc. vs. Philippine Air Lines Employees Association[21] involving as it does essentially the same facts and circumstances. At this point, this Court does not see any reason to deviate from the said ruling. WHEREFORE, in view of the foregoing, the Petition is DISMISSED for lack of merit. The restraining order issued by this Court on January 18, 1989 enjoining the enforcement of the questioned decision of the National Labor Relations Commission is hereby lifted. No pronouncement as to costs. chanroblespublishingcompany SO ORDERED. chanroblespublishingcompany Narvasa, Cruz, Griño-Aquino and Medialdea, JJ., concur.

SECOND DIVISION

G.R. No. 73681 June 30, 1988

COLGATE PALMOLIVE PHILIPPINES, Inc., Petitioners, vs. HON. BLAS F. OPLE, COLGATE PALMOLIVE SALES UNION, Respondents.

PARAS, J.:

Before Us is a Petition for certiorari seeking to set aside and annul the Order of respondent Minister of Labor and Employment (MOLE) directly certifying private respondent as the recognized and duly-authorized collective bargaining agent for petitioner’s sales force and ordering the reinstatement of three employees of petitioner.chanroblesvirtualawlibrary chanrobles virtual law library

Acting on the petition for certiorari with prayer for temporary restraining order, this Court issued a Temporary Restraining Order enjoining respondents from enforcing and/or carrying out the assailed order.chanroblesvirtualawlibrary chanrobles virtual law library

The antecedent facts are as follows: chanrobles virtual law library

On March 1, 1985, the respondent Union filed a Notice of Strike with the Bureau of Labor Relations (BLR) on ground of unfair labor practice consisting of alleged refusal to bargain, dismissal of union officers/members; and coercing employees to retract their membership with the union and restraining non-union members from joining the union.chanroblesvirtualawlibrarychanrobles virtual law library

After efforts at amicable settlement proved unavailing, the Office of the MOLE, upon petition of petitioner assumed jurisdiction over the dispute pursuant to Article 264 (g) of the Labor Code, Thereafter the case was captioned AJML-3-142-85, BLR-3-86-85 “In Re: Assumption of Jurisdiction over the Labor Dispute at Colgate Palmolive Philippines, Inc.” In its position paper, petitioner pointed out that –

(a) There is no legal basis for the charge that the company refused to bargain collectively with the union considering that the alleged union is not the certified agent of the company salesmen; chanrobles virtual law library

(b) The union’s status as a legitimate labor organization is still under question because on 6 March 1985, a certain Monchito Rosales informed the BLR that an overwhelming majority of the salesmen are not in favor of the Notice of Strike allegedly filed by the Union (Annex “C”); chanrobles virtual law library

(c) Upon verification of the records of the Ministry of Labor and Employment, it appeared that a petition for cancellation of the registration of the alleged union was filed by Monchito Rosales on behalf of certain salesmen of the company who are obviously against the formation of the Colgate Palmolive Sales Labor Union which is supposed to represent them; chanrobles virtual law library

(d) The preventive suspensions of salesmen Peregrino Sayson, Salvador Reynante and Cornelio Mejia, and their eventual dismissal from the employ of the company were carried out pursuant to the inherent right and prerogative of management to discipline erring employees; that based on the preliminary investigation conducted by the company, there appeared substantial grounds to believe that Sayson, Reynante and Mejia violated company rules and regulations necessitating their suspension pending further investigation of their respective cases; chanrobles virtual law library

(e) It was also ascertained that the company sustained damages resulting from the infractions committed by the three salesmen, and that the final results of the investigation fully convinced the company of the existence of just causes for the dismissal of the three salesmen;chanrobles virtual law library

(f) The formation of the union and the membership therein of Sayson, Reynante and Mejia were not in any manner connected with the company’s decision to dismiss the three; that the fact that their dismissal came at a time when the alleged union was being formed was purely coincidental; chanrobles virtual law library

(g) The union’s charge therefore, that the membership in the union and refusal to retract precipitated their dismissal was totally false and amounted to a malicious imputation of union busting; chanrobles virtual law library

(h) The company never coerced or attempted to coerce employees, much less interferred in the exercise of their right to self-organization; the company never thwarted nor tried to defeat or frustrate the employees’ right to form their union in pursuit of their collective interest, as long as that right is exercised within the limits prescribed by law; in fact, there are at present two unions representing the rank and file employees of the company-the factory workers who are covered by a CBA which expired on 31 October 1985 (which was renewed on May 31, 1985) and are represented by Colgate Palmolive Employees Union (PAFLU); whereas, the salaried employees are covered by a CBA which will expire on 31 May 1986 represented by Philippine Association of Free Labor Union (PAFLU)-CPPI Office Chapter. (pp. 4-6, Rollo)

The respondent Union, on the other hand, in its position paper, reiterated the issue in its Notice to Strike, alleging that it was duly registered with the Bureau of Labor Relations under Registry No. 10312-LC with a total membership of 87 regular salesmen (nationwide) out of 117 regular salesmen presently employed by the company as of November 30, 1985 and that since the registration of the Union up to the present, more than 2/3 of the total salesmen employed are already members of the Union, leaving no doubt that the true sentiment of the salesmen was to form and organize the Colgate-Palmolive Salesmen Union. The Union further alleged that the company is unreasonably delaying the recognition of the union because when it was informed of the organization of the union, and when presented with a set of proposals for a collective bargaining agreement, the company took an adversarial stance by secretly distributing a “survey sheet on union membership” to newly hired salesmen from the Visayas, Mindanao and Metro Manila areas, purposely avoiding regular salesmen who are now members of the union; that in the accomplishment of the form, District Sales Managers, and Sales Supervisors coerced salesmen from the Visayas and Mindanao by requiring them to fill up and/or accomplish said form by checking answers which were adverse to the union; that with a handful of the survey sheets secured by management through coercion, it now would like to claim that all salesmen are not in favor of the organization of the union, which acts are clear manifestations of unfair labor practices.chanroblesvirtualawlibrary chanrobles virtual law library

On August 9,1985, respondent Minister rendered a decision which:

(a) found no merit in the Union’s Complaint for unfair labor practice allegedly committed by petitioner as regards the alleged refusal of petitioner to negotiate with the Union, and the secret distribution of survey sheets allegedly intended to discourage unionism, chanrobles virtual law library

(b) found the three salesmen, Peregrino Sayson, Salvador Reynante & Cornelio Mejia “not without fault” and that “the company ¹ has grounds to dismiss above named salesmen”

and at the same time respondent Minister directly certified the respondent Union as the collective bargaining agent for the sales force in petitioner company and ordered the reinstatement of the three salesmen to the company on the ground that the employees were first offenders.chanroblesvirtualawlibrary chanrobles virtual law library

Petitioner filed a Motion for Reconsideration which was denied by respondent Minister in his assailed Order, dated December 27, 1985. Petitioner now comes to Us with the following:

Assignment of Errors

Ichanrobles virtual law library

Respondent Minister committed a grave abuse of discretion when he directly certified the Union solely on the basis of the latter’s self-serving assertion that it enjoys the support of the majority of the sales force in petitioner’s company.chanroblesvirtualawlibrary chanrobles virtual law library

IIchanrobles virtual law library

Respondent Minister committed a grave abuse of discretion when, notwithstanding his very own finding that there was just cause for the dismissal of the three (3) salesmen, he nevertheless ordered their reinstatement. (pp. 7-8, Rollo)

Petitioner concedes that respondent Minister has the power to decide a labor dispute in a case assumed by him under Art. 264 (g) of the Labor Code but this power was exceeded when he certified respondent Union as the exclusive bargaining agent of the company’s salesmen since this is not a representation proceeding as described under the Labor Code. Moreover the Union did not pray for certification but merely for a finding of unfair labor practice imputed to petitioner-company.chanroblesvirtualawlibrary chanrobles virtual law library

The petition merits our consideration. The procedure for a representation case is outlined in Arts. 257-260 of the Labor Code, in relation to the provisions on cancellation of a Union registration under Arts. 239-240 thereof, the main purpose of which is to aid in ascertaining majority representation. The requirements under the law, specifically Secs. 2, 5, and 6 of Rule V, Book V, of the Rules Implementing the Labor Code are all calculated to ensure that the certified bargaining representative is the true choice of the employees against all contenders. The Constitutional mandate that the State shall “assure the rights of the workers to self-organization, collective bargaining, security of tenure and just and humane conditions of work,” should be achieved under a system of law such as the aforementioned provisions of the pertinent statutes. When an overzealous official by-passes the law on the pretext of retaining a laudable objective, the intendment or purpose of the law will lose its meaning as the law itself is disregarded. When respondent Minister directly certified the Union, he in fact disregarded this procedure and its legal requirements. There was therefore failure to determine with legal certainty whether the Union indeed enjoyed majority representation. Contrary to the respondent Minister’s observation, the holding of a certification election at the proper time is not necessarily a mere formality as there was a compelling legal reason not to directly and unilaterally certify a union whose legitimacy is precisely the object of litigation in a pending cancellation case filed by certain “concerned salesmen,” who also claim majority status. Even in a case where a union has filed a petition for certification elections, the mere fact that no opposition is made does not warrant a direct certification. More so as in the case at bar, when the records of the suit show that the required proof was not presented in an appropriate proceeding and that the basis of the direct certification was the Union’s mere allegation in its position paper that it has 87 out of 117 regular salesmen. In other words, respondent Minister merely relied on the self-serving assertion of the respondent Union that it enjoyed the support of the majority of the salesmen, without subjecting such assertion to the test of competing claims. As pointed out by petitioner in its petition, what the respondent Minister achieved in rendering the assailed orders was to make a mockery of the procedure provided under the law for representation cases because:

(a) He has created havoc by impliedly establishing a procedural short-cut to obtaining a direct certification-by merely filing a notice of strike.chanroblesvirtualawlibrary chanrobles virtual law library

(b) By creating such a short-cut, he has officially encouraged disrespect for the law.chanroblesvirtualawlibrary chanrobles virtual law library

(c) By directly certifying a Union without sufficient proof of majority representation, he has in effect arrogated unto himself the right, vested naturally in the employees, to choose their collective bargaining representative.chanroblesvirtualawlibrary chanrobles virtual law library

(d) He has in effect imposed upon the petitioner the obligation to negotiate with a union whose majority representation is under serious question. This is highly irregular because while the Union enjoys the blessing of the Minister, it does not enjoy the blessing of the employees. Petitioner is therefore under threat of being held liable for refusing to negotiate with a union whose right to bargaining status has not been legally established. (pp. 9-10, Rollo)

The order of the respondent Minister to reinstate the employees despite a clear finding of guilt on their part is not in conformity with law. Reinstatement is simply incompatible with a finding of guilt. Where the totality of the evidence was sufficient to warrant the dismissal of the employees the law warrants their dismissal without making any distinction between a first offender and a habitual delinquent. Under the law, respondent Minister is duly mandated to equally protect and respect not only the labor or workers’ side but also the management and/or employers’ side. The law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the employer. To order the reinstatement of the erring employees namely, Mejia, Sayson and Reynante would in effect encourage unequal protection of the laws as a managerial employee of petitioner company involved in the same incident was already dismissed and was not ordered to be reinstated. As stated by Us in the case of San Miguel Brewery vs. National Labor Union, ²“an employer cannot legally be compelled to continue with the employment of a person who admittedly was guilty of misfeasance or malfeasance towards his employer, and whose continuance in the service of the latter is patently inimical to his interest.”chanrobles virtual law library

In the subject order, respondent Minister cited a cases ³ implying that “the proximity of the dismissal of the employees to the assumption order created a doubt as to whether their dismissal was really for just cause or due to their activities.” ⁴chanrobles virtual law library

This is of no moment for the following reasons: chanrobles virtual law library

(a) Respondent Minister has still maintained in his assailed order that a just cause existed to justify the dismissal of the employees.chanroblesvirtualawlibrary chanrobles virtual law library

(b) Respondent Minister has not made any finding substantiated by evidence that the employees were dismissed because of their union activities.chanroblesvirtualawlibrary chanrobles virtual law library

WHEREFORE, judgment is hereby rendered REVERSING and SETTING ASIDE the Order of the respondent Minister, dated December 27, 1985 for grave abuse of discretion. However, in view of the fact that the dismissed employees are first offenders, petitioner is hereby ordered to give them separation pay. The temporary restraining order is hereby made permanent.chanroblesvirtualawlibrary chanrobles virtual law library

SO ORDERED.

Yap, C.J., Melencio-Herrera, Padilla and Sarmiento, JJ., concur.

FIRST DIVISION

G.R. No. L-48926 December 14, 1987

MANUEL SOSITO, Petitioner, vs. AGUINALDO DEVELOPMENT CORPORATION,Respondent.

CRUZ, J.:

We gave due course to this petition and required the parties to file simultaneous memoranda on the sole question of whether or not the petitioner is entitled to separation pay under the retrenchment program of the private respondent.chanrobles virtual law library

The facts are as follows:

Petitioner Manuel Sosito was employed in 1964 by the private respondent, a logging company, and was in charge of logging importation, with a monthly salary of P675.00, ¹when he went on indefinite leave with the consent of the company on January 16, 1976. ²On July 20, 1976, the private respondent, through its president, announced a retrenchment program and offered separation pay to employees in the active service as of June 30, 1976, who would tender their resignations not later than July 31, 1976. The petitioner decided to accept this offer and so submitted his resignation on July 29, 1976, “to avail himself of the gratuity benefits” promised. ³ However, his resignation was not acted upon and he was never given the separation pay he expected. The petitioner complained to the Department of Labor, where he was sustained by the labor arbiter. ⁴The company was ordered to pay Sosito the sum of P 4,387.50, representing his salary for six and a half months. On appeal to the National Labor Relations Commission, this decision was reversed and it was held that the petitioner was not covered by the retrenchment program. ⁵ The petitioner then came to us.chanrobles virtual law library

For a better understanding of this case, the memorandum of the private respondent on its retrenchment program is reproduced in full as follows:

July 20, 1976

Memorandum To: ALL EMPLOYEES

Re: RETRENCHMENT PROGRAM

As you are all aware, the operations of wood-based industries in the Philippines for the last two (2) years were adversely affected by the worldwide decline in the demand for and prices of logs and wood products. Our company was no exception to this general decline in the market, and has suffered tremendous losses. In 1975 alone, such losses amounted to nearly P20,000,000.00.chanrobles virtual law library

The company has made a general review of its operations and has come to the unhappy decision of the need to make adjustments in its manpower strength if it is to survive. This is indeed an unfortunate and painful decision to make, but it leaves the company no alternative but to reduce its tremendous and excessive overhead expense in order to prevent an ultimate closure.chanrobles virtual law library

Although the law allows the Company, in a situation such as this, to drastically reduce it manpower strength without any obligation to pay separation benefits, we recognize the need to provide our employees some financial assistance while they are looking for other jobs.chanrobles virtual law library

The Company therefore is adopting a retrenchment program whereby employees who are in the active service as of June 30, 1976 will be paid separation benefits in an amount equivalent to the employee’s one-half (1/2) month’s basic salary multiplied by his/her years of service with the Company. Employees interested in availing of the separation benefits offered by the Company must manifest such intention by submitting written letters of resignation to the Management not later than July 31, 1976. Those whose resignations are accepted shall be informed accordingly and shall be paid their separation benefits.chanrobles virtual law library

After July 31, 1976, this offer of payment of separation benefits will no longer be available. Thereafter, the Company shall apply for a clearance to terminate the services of such number of employees as may be necessary in order to reduce the manpower strength to such desired level as to prevent further losses.

(SGD.) JOSE G. RICAFORT

President

N.B.chanrobles virtual law library

For additional information

and/or resignation forms,

please see Mr. Vic Maceda

or Atty. Ben Aritao. ⁶

It is clear from the memorandum that the offer of separation pay was extended only to those who were in the active service of the company as of June 30, 1976. It is equally clear that the petitioner was not eligible for the promised gratuity as he was not actually working with the company as of the said date. Being on indefinite leave, he was not in the active service of the private respondent although, if one were to be technical, he was still in its employ. Even so, during the period of indefinite leave, he was not entitled to receive any salary or to enjoy any other benefits available to those in the active service.chanrobles virtual law library

It seems to us that the petitioner wants to enjoy the best of two worlds at the expense of the private respondent. He has insulated himself from the insecurities of the floundering firm but at the same time would demand the benefits it offers. Being on indefinite leave from the company, he could seek and try other employment and remain there if he should find it acceptable; but if not, he could go back to his former work and argue that he still had the right to return as he was only on leave.chanrobles virtual law library

There is no claim that the petitioner was temporarily laid off or forced to go on leave; on the contrary, the record shows that he voluntarily sought the indefinite leave which the private respondent granted. It is strange that the company should agree to such an open-ended arrangement, which is obviously one-sided. The company would not be free to replace the petitioner but the petitioner would have a right to resume his work as and when he saw fit.chanrobles virtual law library

We note that under the law then in force the private respondent could have validly reduced its work force because of its financial reverses without the obligation to grant separation pay. This was permitted under the original Article 272(a), of the Labor Code, ⁷ which was in force at the time. To its credit, however, the company voluntarily offered gratuities to those who would agree to be phased out pursuant to the terms and conditions of its retrenchment program, in recognition of their loyalty and to tide them over their own financial difficulties. The Court feels that such compassionate measure deserves commendation and support but at the same time rules that it should be available only to those who are qualified therefore. We hold that the petitioner is not one of them.chanrobles virtual law library

While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every labor dispute will be automatically decided in favor of labor. Management also has its own rights which, as such, are entitled to respect and enforcement in the interest of simple fair play. Out of its concern for those with less privileges in life, this Court has inclined more often than not toward the worker and upheld his cause in his conflicts with the employer. Such favoritism, however, has not blinded us to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and the applicable law and doctrine.chanrobles virtual law library

WHEREFORE, the petition is DISMISSED and the challenged decision AFFIRMED, with costs against the petitioner.chanrobles virtual law library

SO ORDERED.

Teehankee, C.J., Narvasa, Paras and Gancayco, JJ., concur.

EN BANC

G.R. No. L-2779 October 18, 1950

DANIEL SANCHEZ, ET AL., Plaintiffs-Appellees, v. HARRY LYONS CONSTRUCTION, INC., ET AL., Defendants-Appellants.

Gibbs, Gibbs, Chuidian and Quasha for appellant Harry Lyons Construction, Inc.
Cecilio I. Lim and Antonio M. Castro for appellees.

MORAN, C. J.: chanrobles virtual law library

This case originated in the Municipal Court of Manila upon a complaint filed on March 9, 1948, by the herein appellees as plaintiffs, against the herein appellants as defendants, for the sum of P2,210 plus interest, which plaintiffs claimed as one month advance pat due them. On April 28, 1948, the parties entered into a stipulation of facts upon which said municipal court rendered judgment for the plaintiffs. Upon denial of their motion for reconsideration of this judgment, the defendants filed an appeal to the Court of First Instance of Manila, wherein the parties submitted the case upon the same facts agreed upon in the Municipal Court. On October 2, 1948, the Court of First Instance of Manila rendered its decision holding for plaintiffs, as follows:chanrobles virtual law library

Wherefore judgment is hereby rendered –

Ordering defendant Material Distributors, Inc. to pay plaintiff Enrique Ramirez the sum of P360 and plaintiff Juan Ramirez the sum of P250 with legal interest on each of the said sums from the date of the filing of the complaint in the Municipal Court of Manila until the date of full payment thereof; andchanrobles virtual law library
Ordering defendant Harry Lyons Construction, Inc. to pay plaintiff Daniel Sanchez the sum of P250, and plaintiff Mariano Javier, Venancio Diaz, Esteban Bautista, Faustino Aquillo, Godofredo Diamante, Marcial Lazaro, Ambrosio de la Cruz, and Marcelino Maceda the sum of P150 each, with legal interest on each of the said sums from the date of the filing of the complaint in the Municipal Court of Manila until the date of full payment thereof.chanroblesvirtualawlibrarychanrobles virtual law library

One half of the costs is to be paid by Material Distributors, Inc. and the other half by Harry Lyons Construction, Inc.

From this judgment, defendants filed an appeal with this court purely upon a question of law. The stipulation of facts entered into by the parties on April 28, 1948, is as follows:

STIPULATION OF FACTS.chanroblesvirtualawlibrary chanrobles virtual law library

Come now the plaintiffs and the defendants, by their respective undersigned attorneys and to this Honorable Court, respectfully submit the following stipulation of facts:chanrobles virtual law library

That the plaintiffs were respectively employed as follows:chanrobles virtual law library

EMPLOYED BY DEFENDANT MATERIAL DISTRIBUTORS, INC.chanroblesvirtualawlibrary chanrobles virtual law library

Name Date of Position Salary
employment
Enrique Ramirez ………….. 12/16/46 Warehouseman P450 a mo.
Juan Ramirez ………………. do do 250 a mo.chanroblesvirtualawlibrary chanrobles virtual law library

NOTE. – The salary of Enrique Ramirez was later reduced to P360 per month. This was the amount he was receiving at the time of his dismissal.chanroblesvirtualawlibrary chanrobles virtual law library

EMPLOYED BY DEFENDANT HARRY LYONS CONSTRUCTION, INC.chanroblesvirtualawlibrary chanrobles virtual law library

Daniel Sanchez ……………. 1/1/47 Carpenter- P250 a mo.
Foreman
Mariano Javier …………….. ….do……………… Guard…………….. 5 a day
Venancio Diaz …………….. ….do……………… do………………….. 5 a day
Esteban Bautista ………… ….do……………… do………………….. 5 a day
Faustino Aquillo ………… ….do……………… do………………….. 5 a day
Godofredo Diamante ….. ….do……………… do………………….. 5 a day
Marcial Lazaro ……………. ….do……………… do………………….. 5 a day
Ambrosio de la Cruz ….. ….do……………… do………………….. 5 a day
Marcelino Macada …….. ….do……………… do………………….. 5 a daychanrobles virtual law library

as per contracts of employment, copies of which are attached to defendants’ answer marked Exhibits 1 to 11 inclusivechanrobles virtual law library

That in said contracts of employment the plaintiff agreed as follows:chanrobles virtual law library

“I accept the foregoing appointment, and in consideration thereof I hereby agree that such employment may be terminated at any time, without previous notice, and I further agree that salary and wages, shall be computed and paid at the rate specified up to the date of such termination.chanroblesvirtualawlibrary chanrobles virtual law library

“Also in consideration of such employment I hereby expressly waive the benefit of article 302 of the Code of Commerce and that of any other law, ruling, or custom which might require notice of discharge or payment of salary or wages after date of the termination of such employment.”chanrobles virtual law library

That the plaintiffs were dismissed by the defendants on December 31, 1947 without one months’ previous notice.chanroblesvirtualawlibrarychanrobles virtual law library
That each of the plaintiffs demanded payment of one month’s salary from the defendants and that the latter refused to pay the same.chanroblesvirtualawlibrarychanrobles virtual law library

WHEREFORE, it is respectfully prayed that judgment on the foregoing stipulation of facts be rendered by this Honorable Court.

The points in issue herein are: first, whether plaintiffs, both those paid on a monthly and daily basis, are entitled to the benefit granted in article 302 of the Code of Commerce; and secondly, if they are so entitled, was their waiver of such benefits legal and valid?chanrobles virtual law library

Article 302 of the Code of Commerce reads as follows:

ART. 302. In cases in which no special time is fixed in the contracts of service, any one of the parties thereto may cancel it, advising the other party thereof one month in advance.chanroblesvirtualawlibrary chanrobles virtual law library

The factor or shop clerk shall be entitled, in such case, to the salary due for said month.

It is a clear doctrine, as gleaned from the provision of the law and settled jurisprudence, 1that in a mercantile contract of service in which no special time is fixed, any one of the parties may cancel said contract upon giving of a one-month notice, called a mesada, to the other party. The law gives an added proviso that in the case of factors or shop clerks, these shall be entitled to salary during this one month of standing notice. In any case, the one-month notice must be given to any employee, whether factor, shop clerk or otherwise, so long as the two conditions concur, namely, that no special time is fixed in the contract of service, and that said employee is a commercial employee. And when such notice is not given under these conditions, not only the factor or shop clerk but any employee discharged without cause, is entitled to indemnity which may be one month’s salary. 2 chanrobles virtual law library

In the instant case, there lies no doubt that plaintiffs are commercial employees of appellant corporations, rendering service as warehousemen, carpenter-foreman and guards. There is likewise no doubt as can be seen from the contracts of employment submitted as exhibits, that no special time has been fixed in the contracts of services between plaintiffs-appellees and defendants-appellants. The stated computation or manner of payment, whether monthly or daily, does not represent nor determine a special time of employment. Thus, a commercial employee may be employed for one year and yet receive his salary on the daily or weekly or monthly or other basis.chanroblesvirtualawlibrary chanrobles virtual law library

Appellants allege that the use of the word “temporary” in the contracts of services of some of the plaintiffs shows that their employment was with a term, and the term was “temporary, on a day to day basis.” The record discloses that this conclusion is unwarranted. The contracts simply say – “You are hereby employed as temporary guard with a compensation at the rate of P5 a day . . . .” The word “temporary” as used herein does not mean the special time fixed in the contracts referred to in article 302 of the Code of Commerce. The daily basis therein stipulated is for the computation of pay, and is not necessarily the period of employment. Hence, this Court holds that plaintiffs-appellants come within the purview of article 302 of the Code of Commerce.chanroblesvirtualawlibrary chanrobles virtual law library

Now, as the second question, namely, the validity of plaintiffs’ waiver of the benefits given them by said article 302. This court holds that such a waiver, made in advance, is void as being contrary to public policy. Granting that the “mesada” given in article 302 of the Code of Commerce, is for the bilateral benefit of both employer and employee, nevertheless, this does not preclude the finding that a waiver of such “mesada” in advance by the employee is contrary to public policy.chanroblesvirtualawlibrary chanrobles virtual law library

Public policy, with regard to labor, is clearly stated in article II, section 5, of the Philippine Constitution, which reads –

The promotion of social justice to insure the well-being and economic security of all the people should be the concern of the State.

and article XIV, section 6, which reads –

The State shall afford protection to labor, especially to working women and minors, and shall regulate the relations between land-owner and tenant, and between labor and capital in industry and in agriculture. . . .

Article 302 of the Code of Commerce must be applied in consonance with these provisions of our constitution. In the matter of employment bargaining, there is no doubt that the employer stands on higher footing than the employee. First of all, there is greater supply than demand for labor. Secondly, the need for employment by labor comes from vital and even desperate, necessity. Consequently, the law must protect labor, at least, to the extent of raising him to equal footing in bargaining relations with capital and to shield him from abuses brought about by the necessity for survival. It is safe to presume therefore, that an employee or laborer who waives in advance any benefit granted him by law does so, certainly not in his interest or through generosity but under the forceful intimidation of urgent need, and hence, he could not have so acted freely and voluntarily.chanroblesvirtualawlibrary chanrobles virtual law library

For all the foregoing, this court hereby affirms the decision of the lower court, with costs against appellants.chanroblesvirtualawlibrary chanrobles virtual law library

Ozaeta, Paras, Feria, Pablo, Tuason, Bengzon and Reyes, JJ., concur.

FIRST DIVISION

G.R. No. L-58639 August 12, 1987

CEBU ROYAL PLANT (SAN MIGUEL CORPORATION), Petitioner, vs. THE HONORABLE DEPUTY MINISTER OF LABOR and RAMON PILONES, Respondents.chanrobles virtual law library

CRUZ, J.:

The private respondent was removed by the petitioner and complained to the Ministry of Labor. His complaint was dismissed by the regional director, who was, however, reversed by the public respondent. Required to reinstate the separated employee and pay him back wages, the petitioner has come to us, faulting the Deputy Minister with grave abuse of discretion. We have issued in the meantime a temporary restraining order. 1

The public respondent held that Ramon Pilones, the private respondent, was already a permanent employee at the time of his dismissal and so was entitled to security of tenure. The alleged ground for his removal, to wit, “pulmonary tuberculosis minimal,” was not certified as incurable within six months as to justify his separation. ² Additionally, the private respondent insists that the petitioner should have first obtained a clearance, as required by the regulations then in force, for the termination of his employment.chanroblesvirtualawlibrary chanrobles virtual law library

The petitioner for its part claims that the private respondent was still on probation at the time of his dismissal and so had no security of tenure. His dismissal was not only in conformity with company policy but also necessary for the protection of the public health, as he was handling ingredients in the processing of soft drinks which were being sold to the public. It is also argued that the findings of the regional director, who had direct access to the facts, should not have been disturbed on appeal. For these same reasons, it contends, the employee’s reinstatement as ordered by the public respondent should not be allowed.chanroblesvirtualawlibrary chanrobles virtual law library

The original findings were contained in a one-page order ³ reciting simply that “complainant was employed on a probationary period of employment for six (6) months. After said period, he underwent medical examination for qualification as regular employee but the results showed that he is suffering from PTB minimal. Consequently, he was informed of the termination of his employment by respondent.” The order then concluded that the termination was “justified.” That was all.chanroblesvirtualawlibrary chanrobles virtual law library

As there is no mention of the basis of the above order, we may assume it was the temporary payroll authority ⁴ submitted by the petitioner showing that the private respondent was employed on probation on February 16, 1978. Even supposing that it is not self- serving, we find nevertheless that it is self-defeating. The six-month period of probation started from the said date of appointment and so ended on August 17, 1978, but it is not shown that the private respondent’s employment also ended then; on the contrary, he continued working as usual. Under Article 282 of the Labor Code, “an employee who is allowed to work after a probationary period shall be considered a regular employee.” Hence, Pilones was already on permanent status when he was dismissed on August 21, 1978, or four days after he ceased to be a probationer.chanroblesvirtualawlibrary chanrobles virtual law library

The petitioner claims it could not have dismissed the private respondent earlier because the x-ray examination was made only on August 17, 1978, and the results were not immediately available. That excuse is untenable. We note that when the petitioner had all of six months during which to conduct such examination, it chose to wait until exactly thelast day of the probation period. In the light of such delay, its protestations now that reinstatement of Pilones would prejudice public health cannot but sound hollow and hypocritical. By its own implied admission, the petitioner had exposed its customers to the employee’s disease because of its failure to examine him before entrusting him with the functions of a “syrup man.” Its belated concern for the consuming public is hardly persuasive, if not clearly insincere and self-righteous.chanroblesvirtualawlibrary chanrobles virtual law library

There is proof in fact that the private respondent was first hired not on February 16, 1978, but earlier in 1977. This is the 1977 withholding tax statement ⁵ issued for him by the petitioner itself which it does not and cannot deny. The petitioner stresses that this is the only evidence of the private respondent’s earlier service and notes that he has not presented any co-worker to substantiate his claim. This is perfectly understandable. Given the natural reluctance of many workers to antagonize their employers, we need not wonder why none of them testified against the petitioner.chanroblesvirtualawlibrary chanrobles virtual law library

We are satisfied that whether his employment began on February 16, 1978, or even earlier as he claims, the private respondent was already a regular employee when he was dismissed on August 21, 1978. As such, he could validly claim the security of tenure guaranteed to him by the Constitution and the Labor Code.chanroblesvirtualawlibrary chanrobles virtual law library

The applicable rule on the ground for dismissal invoked against him is Section 8, Rule I, Book VI, of the Rules and Regulations Implementing the Labor Code reading as follows:

Sec. 8. Disease as a ground for dismissal. – Where the employee suffers from a disease and his continued employment is prohibited by law or prejudicial to his health or to the health of his co-employees, the employer shall not terminate his employment unless there is a certification by a competent public health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. If the disease or ailment can be cured within the period, the employer shall not terminate the employee but shall ask the employee to take a leave. The employer shall reinstate such employee to his former position immediately upon the restoration of his normal health.

The record does not contain the certification required by the above rule. The medical certificate offered by the petitioner came from its own physician, who was not a “competent public health authority,” and merely stated the employee’s disease, without more. We may surmise that if the required certification was not presented, it was because the disease was not of such a nature or seriousness that it could not be cured within a period of six months even with proper medical treatment. If so, dismissal was unquestionably a severe and unlawful sanction.chanroblesvirtualawlibrary chanrobles virtual law library

It is also worth noting that the petitioner’s application for clearance to terminate the employment of the private respondent was filed with the Ministry of Labor only on August 28, 1978, or seven days after his dismissal. ⁶ As the NLRC has repeatedly and correctly said, the prior clearance rule (which was in force at that time) was not a “trivial technicality.” It required “not just the mere filing of a petition or the mere attempt to procure a clearance” but that “the said clearance be obtained prior to the operative act of termination. ⁷ chanrobles virtual law library

We agree that there was here an attempt to circumvent the law by separating the employee after five months’ service to prevent him from becoming a regular employee, and then rehiring him on probation, again without security of tenure. We cannot permit this subterfuge if we are to be true to the spirit and mandate of social justice. On the other hand, we have also the health of the public and of the dismissed employee himself to consider. Hence, although we must rule in favor of his reinstatement, this must be conditioned on his fitness to resume his work, as certified by competent authority.chanroblesvirtualawlibrary chanrobles virtual law library

We take this opportunity to reaffirm our concern for the lowly worker who, often at the mercy of his employers, must look up to the law for his protection. Fittingly, that law regards him with tenderness and even favor and always with faith and hope in his capacity to help in shaping the nation’s future. It is error to take him for granted. He deserves our abiding respect. How society treats him will determine whether the knife in his hands shall be a caring tool for beauty and progress or an angry weapon of defiance and revenge. The choice is obvious, of course. If we cherish him as we should, we must resolve to lighten “the weight of centuries” of exploitation and disdain that bends his back but does not bow his head.chanroblesvirtualawlibrary chanrobles virtual law library

WHEREFORE, the petition is DISMISSED and the temporary restraining order of November 18, 1981, is LIFTED. The Order of the public respondent dated July 14, 1981, is AFFIRMED, but with the modification that the backwages shall be limited to three years only and the private respondent shall be reinstated only upon certification by a competent public health authority that he is fit to return to work. Costs against the petitioner.chanroblesvirtualawlibrary chanrobles virtual law library

SO ORDERED.

Teehankee (Chairman), C.J., Narvasa, Paras and Gancayco, JJ., concur.

FIRST DIVISION

[G.R. No. L-75782. December 1, 1987.]

EURO-LINEA, PHILS., INC., Petitioner, v. NATIONAL LABOR RELATIONS COMMISSION and JIMMY O. PASTORAL, Respondents.
D E C I S I O N
PARAS, J.:
This is a petition for review on certiorari seeking to reverse and set aside the resolution of public respondent, * NLRC, in Case No. RAB III-2-1589-84 entitled “Jimmy O. Pastoral v, Euro-Linea Phils., Inc.” affirming the decision of the Labor Arbiter ** which ordered the reinstatement of complainant with six months backwages.

The facts as found by the Solicitor General are as follows:chanrob1es virtual 1aw library

On August 17, 1983, petitioner hired Pastoral as shipping expediter on a probationary basis for a period of six months ending February 18, 1984. However, prior to hiring by petitioner, Pastoral had been employed by Fitscher Manufacturing Corporation also as shipping expediter for more than one and a half years. Pastoral was absorbed by petitioner but under a probationary basis.

On February 4, 1984, Pastoral received a memorandum dated January 31, 1984 terminating his probationary employment effective also on February 4, 1984 in view of his failure “to meet the performance standards set by the company.” To contest his dismissal, Pastoral filed a complaint for illegal dismissal against petitioner on February 6, 1984 (Rollo, pp. 45-46).chanrobles virtual lawlibrary

On July 19, 1985, the Labor Arbiter found petitioner guilty of illegal dismissal, the dispositive portion of the decision reading:jgc:chanrobles.com.ph

“WHEREFORE all things considered the respondent or its President and or General Manager should be as it is hereby ordered to reinstate complainant with six months backwages.

“SO ORDERED.

“San Fernando, Pampanga, Philippines, July 19, 1985.

EMILIO TONGIO

Labor Arbiter”

(Rollo, p. 32).

Petitioner appealed the decision to the NLRC on August 5, 1985 (Rollo, pp. 33-39) but the appeal was dismissed on July 16, 1986 (Resolution; Rollo, p. 41).

Hence, this petition.

Petitioner raises the following errors of the NLRC (Rollo, p. 7):chanrob1es virtual 1aw library

a) The Labor Arbiter decide a question of law in a manner contrary to the spirit and purpose of the law; and that

b) The Labor Arbiter gravely abused his discretion by ignoring the material and significant facts in favor of employer.

In the resolution of October 29, 1986, the Second Division of the Court without giving due course to the petition required the respondents to comment (Rollo, p. 42).

The Solicitor General submitted his comment on November 24, 1986 (Rollo, pp. 45-49), while petitioner through counsel filed its reply to public respondent National Labor Relations Commission’s comment in compliance with the resolution of December 10, 1986 (Rollo, p. 50).

In the resolution of February 18, 1987 (Rollo, 58), the Court gave due course to the petition and required the parties to file their respective memoranda.

The only issue is whether or not the National Labor Relations Commission acted with grave abuse of discretion amounting to excess of jurisdiction in ruling against the dismissal of the respondent, a temporary or probationary employee, by his employer (Petitioner).

Although a probationary or temporary employee has a limited tenure, he still enjoys the constitutional protection of security of tenure. During his tenure of employment or before his contract expires, he cannot be removed except for cause as provided for by law (Manila Hotel Corp. v. NLRC, 141 SCRA 169 [1986]).

This brings us to the issue of whether or not private respondent’s dismissal was justifiable.

Petitioner claims that the dismissal is with cause, since respondent during his period of employment failed to meet the performance standards set by the company; that employers should be given leeway in the application of his right to choose efficient workers (Rollo, p. 6) and that the determination of compliance with the standards is the prerogative of the employer as long as it is not whimsical; that it had terminated for cause the respondent before the expiration of the probationary employment (Rollo, p. 70, Petitioner’s Memorandum).

The records, however, reveal the contrary.

Petitioner not only failed to present sufficient evidence to substantiate the cause of private respondent’s dismissal, but likewise failed to cite particular acts or instances to show the latter’s poor performance.

As correctly argued by the Solicitor General —

“There is no dispute that failure to qualify as a regular employee in accordance with reasonable standards prescribed by the employer is a ground to terminate an employee engaged on a probationary basis (Art. 282, Labor Code; Bk. VI, Rule I, Section 6(c), Implementing Rules, Labor Code). In this case, petitioner alleged that Pastoral was dismissed because he failed to meet its performance standard. However, petitioner did not bother to cite particular acts or instances in its position paper which show that Pastoral was performing below par. . . .

“Petitioner’s performance as shipping expediter can readily be gauged from specific acts as may be gleaned from his duties enumerated by petitioner to include processing of export and import documents for dispatch or release and talking to customs personnel regarding said documents.” (p. 2, Annex “E” Petition).

Furthermore, what makes the dismissal highly suspicious is the fact that while petitioner claims that respondent was inefficient, it retained his services until the last remaining two weeks of the six months probationary employment.chanroblesvirtualawlibrary

No less important is the fact that private respondent had been a shipping expediter for more than one and a half years before he was absorbed by petitioner. It therefore appears that the dismissal in question is without sufficient justification.

It must be emphasized that the prerogative of management to dismiss or lay-off an employee must be done without abuse of discretion, for what is at stake is not only petitioner’s position but also his means of livelihood. (Remerco Garments Manufacturing v. Minister of Labor, 135 SCRA 137 [1985]). The right of an employer to freely select or discharge his employees is subject to regulation by the State, basically in the exercise of its paramount police power (PAL, Inc. v. PALEA, 57 SCRA 489 [1974]). This is so because the preservation of the lives of the citizens is a basic duty of the State, more vital than the preservation of corporate profits (Phil. Apparel Workers Union v. NLRC, 106 SCRA 444 [1981]; Manila Hotel Corp. v. NLRC, supra).

Finally, it is significant to note that in the interpretation of the protection to labor and social justice provisions of the constitution and the labor laws and rules and regulations implementing the constitutional mandate, the Supreme Court has always adopted the liberal approach which favors the exercise of labor rights. (Adamson & Adamson, Inc. v. CIR, 127 SCRA 268 [1984]).

In the instant case, it is evident that the NLRC correctly applied Article 282 in the light of the foregoing and that its resolution is not tainted with unfairness or arbitrariness that would amount to grave abuse of discretion or lack of jurisdiction (Rosario Brothers Inc. v. Ople, 131 SCRA 73 [1984]).chanrobles.com : virtual law library

PREMISES CONSIDERED, the petition is DISMISSED for lack of merit, and the resolution of the NLRC is affirmed.

SO ORDERED.

Teehankee (C.J.), Narvasa, Cruz and Gancayco, JJ., concur.

EN BANC

G.R. No. 81958 June 30, 1988

PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., Petitioner, vs. HON. FRANKLIN M. DRILON as Secretary of Labor and Employment, and TOMAS D. ACHACOSO, as Administrator of the Philippine Overseas Employment Administration, Respondents.

Gutierrez & Alo Law Offices for petitioner.

SARMIENTO, J.:

The petitioner, Philippine Association of Service Exporters, Inc. (PASEI, for short), a firm “engaged principally in the recruitment of Filipino workers, male and female, for overseas placement,” ¹challenges the Constitutional validity of Department Order No. 1, Series of 1988, of the Department of Labor and Employment, in the character of “GUIDELINES GOVERNING THE TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC AND HOUSEHOLD WORKERS,” in this petition for certiorari and prohibition. Specifically, the measure is assailed for “discrimination against males or females;” ²that it “does not apply to all Filipino workers but only to domestic helpers and females with similar skills;” ³and that it is violative of the right to travel. It is held likewise to be an invalid exercise of the lawmaking power, police power being legislative, and not executive, in character.chanroblesvirtualawlibrary chanrobles virtual law library

In its supplement to the petition, PASEI invokes Section 3, of Article XIII, of the Constitution, providing for worker participation “in policy and decision-making processes affecting their rights and benefits as may be provided by law.” ⁴Department Order No. 1, it is contended, was passed in the absence of prior consultations. It is claimed, finally, to be in violation of the Charter’s non-impairment clause, in addition to the “great and irreparable injury” that PASEI members face should the Order be further enforced.chanroblesvirtualawlibrary chanrobles virtual law library

On May 25, 1988, the Solicitor General, on behalf of the respondents Secretary of Labor and Administrator of the Philippine Overseas Employment Administration, filed a Comment informing the Court that on March 8, 1988, the respondent Labor Secretary lifted the deployment ban in the states of Iraq, Jordan, Qatar, Canada, Hongkong, United States, Italy, Norway, Austria, and Switzerland. * In submitting the validity of the challenged “guidelines,” the Solicitor General invokes the police power of the Philippine State.chanroblesvirtualawlibrary chanrobles virtual law library

It is admitted that Department Order No. 1 is in the nature of a police power measure. The only question is whether or not it is valid under the Constitution.chanroblesvirtualawlibrary chanrobles virtual law library

The concept of police power is well-established in this jurisdiction. It has been defined as the “state authority to enact legislation that may interfere with personal liberty or property in order to promote the general welfare.” ⁵As defined, it consists of (1) an imposition of restraint upon liberty or property, (2) in order to foster the common good. It is not capable of an exact definition but has been, purposely, veiled in general terms to underscore its all-comprehensive embrace.chanroblesvirtualawlibrary chanrobles virtual law library

“Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future where it could be done, provides enough room for an efficient and flexible response to conditions and circumstances thus assuring the greatest benefits.” ⁶chanrobles virtual law library

It finds no specific Constitutional grant for the plain reason that it does not owe its origin to the Charter. Along with the taxing power and eminent domain, it is inborn in the very fact of statehood and sovereignty. It is a fundamental attribute of government that has enabled it to perform the most vital functions of governance. Marshall, to whom the expression has been credited, ⁷refers to it succinctly as the plenary power of the State “to govern its citizens.” ⁸chanrobles virtual law library

“The police power of the State … is a power coextensive with self- protection, and it is not inaptly termed the “law of overwhelming necessity.” It may be said to be that inherent and plenary power in the State which enables it to prohibit all things hurtful to the comfort, safety, and welfare of society.” ⁹chanrobles virtual law library

It constitutes an implied limitation on the Bill of Rights. According to Fernando, it is “rooted in the conception that men in organizing the state and imposing upon its government limitations to safeguard constitutional rights did not intend thereby to enable an individual citizen or a group of citizens to obstruct unreasonably the enactment of such salutary measures calculated to ensure communal peace, safety, good order, and welfare.”¹⁰Significantly, the Bill of Rights itself does not purport to be an absolute guaranty of individual rights and liberties “Even liberty itself, the greatest of all rights, is not unrestricted license to act according to one’s will.” ¹¹It is subject to the far more overriding demands and requirements of the greater number.chanroblesvirtualawlibrary chanrobles virtual law library

Notwithstanding its extensive sweep, police power is not without its own limitations. For all its awesome consequences, it may not be exercised arbitrarily or unreasonably. Otherwise, and in that event, it defeats the purpose for which it is exercised, that is, to advance the public good. Thus, when the power is used to further private interests at the expense of the citizenry, there is a clear misuse of the power. ¹² chanrobles virtual law library

In the light of the foregoing, the petition must be dismissed.chanroblesvirtualawlibrary chanrobles virtual law library

As a general rule, official acts enjoy a presumed vahdity. ¹³In the absence of clear and convincing evidence to the contrary, the presumption logically stands.chanroblesvirtualawlibrary chanrobles virtual law library

The petitioner has shown no satisfactory reason why the contested measure should be nullified. There is no question that Department Order No. 1 applies only to “female contract workers,” ¹⁴but it does not thereby make an undue discrimination between the sexes. It is well-settled that “equality before the law” under the Constitution ¹⁵does not import a perfect Identity of rights among all men and women. It admits of classifications, provided that (1) such classifications rest on substantial distinctions; (2) they are germane to the purposes of the law; (3) they are not confined to existing conditions; and (4) they apply equally to all members of the same class. ¹⁶ chanrobles virtual law library

The Court is satisfied that the classification made-the preference for female workers – rests on substantial distinctions.chanroblesvirtualawlibrary chanrobles virtual law library

As a matter of judicial notice, the Court is well aware of the unhappy plight that has befallen our female labor force abroad, especially domestic servants, amid exploitative working conditions marked by, in not a few cases, physical and personal abuse. The sordid tales of maltreatment suffered by migrant Filipina workers, even rape and various forms of torture, confirmed by testimonies of returning workers, are compelling motives for urgent Government action. As precisely the caretaker of Constitutional rights, the Court is called upon to protect victims of exploitation. In fulfilling that duty, the Court sustains the Government’s efforts.chanroblesvirtualawlibrary chanrobles virtual law library

The same, however, cannot be said of our male workers. In the first place, there is no evidence that, except perhaps for isolated instances, our men abroad have been afflicted with an Identical predicament. The petitioner has proffered no argument that the Government should act similarly with respect to male workers. The Court, of course, is not impressing some male chauvinistic notion that men are superior to women. What the Court is saying is that it was largely a matter of evidence (that women domestic workers are being ill-treated abroad in massive instances) and not upon some fanciful or arbitrary yardstick that the Government acted in this case. It is evidence capable indeed of unquestionable demonstration and evidence this Court accepts. The Court cannot, however, say the same thing as far as men are concerned. There is simply no evidence to justify such an inference. Suffice it to state, then, that insofar as classifications are concerned, this Court is content that distinctions are borne by the evidence. Discrimination in this case is justified.chanroblesvirtualawlibrary chanrobles virtual law library

As we have furthermore indicated, executive determinations are generally final on the Court. Under a republican regime, it is the executive branch that enforces policy. For their part, the courts decide, in the proper cases, whether that policy, or the manner by which it is implemented, agrees with the Constitution or the laws, but it is not for them to question its wisdom. As a co-equal body, the judiciary has great respect for determinations of the Chief Executive or his subalterns, especially when the legislature itself has specifically given them enough room on how the law should be effectively enforced. In the case at bar, there is no gainsaying the fact, and the Court will deal with this at greater length shortly, that Department Order No. 1 implements the rule-making powers granted by the Labor Code. But what should be noted is the fact that in spite of such a fiction of finality, the Court is on its own persuaded that prevailing conditions indeed call for a deployment ban.chanroblesvirtualawlibrary chanrobles virtual law library

There is likewise no doubt that such a classification is germane to the purpose behind the measure. Unquestionably, it is the avowed objective of Department Order No. 1 to “enhance the protection for Filipino female overseas workers” ¹⁷ this Court has no quarrel that in the midst of the terrible mistreatment Filipina workers have suffered abroad, a ban on deployment will be for their own good and welfare.chanroblesvirtualawlibrary chanrobles virtual law library

The Order does not narrowly apply to existing conditions. Rather, it is intended to apply indefinitely so long as those conditions exist. This is clear from the Order itself (“Pending review of the administrative and legal measures, in the Philippines and in the host countries . . .”¹⁸), meaning to say that should the authorities arrive at a means impressed with a greater degree of permanency, the ban shall be lifted. As a stop-gap measure, it is possessed of a necessary malleability, depending on the circumstances of each case. Accordingly, it provides:

LIFTING OF SUSPENSION. – The Secretary of Labor and Employment (DOLE) may, upon recommendation of the Philippine Overseas Employment Administration (POEA), lift the suspension in countries where there are:chanrobles virtual law library
Bilateral agreements or understanding with the Philippines, and/or,chanrobles virtual law library
Existing mechanisms providing for sufficient safeguards to ensure the welfare and protection of Filipino workers.¹⁹

The Court finds, finally, the impugned guidelines to be applicable to all female domestic overseas workers. That it does not apply to “all Filipina workers” ²⁰is not an argument for unconstitutionality. Had the ban been given universal applicability, then it would have been unreasonable and arbitrary. For obvious reasons, not all of them are similarly circumstanced. What the Constitution prohibits is the singling out of a select person or group of persons within an existing class, to the prejudice of such a person or group or resulting in an unfair advantage to another person or group of persons. To apply the ban, say exclusively to workers deployed by A, but not to those recruited by B, would obviously clash with the equal protection clause of the Charter. It would be a classic case of what Chase refers to as a law that “takes property from A and gives it to B.” ²¹ It would be an unlawful invasion of property rights and freedom of contract and needless to state, an invalid act. ²²(Fernando says: “Where the classification is based on such distinctions that make a real difference as infancy, sex, and stage of civilization of minority groups, the better rule, it would seem, is to recognize its validity only if the young, the women, and the cultural minorities are singled out for favorable treatment. There would be an element of unreasonableness if on the contrary their status that calls for the law ministering to their needs is made the basis of discriminatory legislation against them. If such be the case, it would be difficult to refute the assertion of denial of equal protection.” ²³In the case at bar, the assailed Order clearly accords protection to certain women workers, and not the contrary.) chanrobles virtual law library

It is incorrect to say that Department Order No. 1 prescribes a total ban on overseas deployment. From scattered provisions of the Order, it is evident that such a total ban has hot been contemplated. We quote:

AUTHORIZED DEPLOYMENT-The deployment of domestic helpers and workers of similar skills defined herein to the following [sic] are authorized under these guidelines and are exempted from the suspension.

5.1 Hirings by immediate members of the family of Heads of State and Government; chanrobles virtual law library

5.2 Hirings by Minister, Deputy Minister and the other senior government officials; and chanrobles virtual law library

5.3 Hirings by senior officials of the diplomatic corps and duly accredited international organizations.chanroblesvirtualawlibrary chanrobles virtual law library

5.4 Hirings by employers in countries with whom the Philippines have [sic] bilateral labor agreements or understanding.

xxx xxx xxxchanrobles virtual law library

VACATIONING DOMESTIC HELPERS AND WORKERS OF SIMILAR SKILLS–Vacationing domestic helpers and/or workers of similar skills shall be allowed to process with the POEA and leave for worksite only if they are returning to the same employer to finish an existing or partially served employment contract. Those workers returning to worksite to serve a new employer shall be covered by the suspension and the provision of these guidelines.chanroblesvirtualawlibrarychanrobles virtual law library

xxx xxx xxxchanrobles virtual law library

LIFTING OF SUSPENSION-The Secretary of Labor and Employment (DOLE) may, upon recommendation of the Philippine Overseas Employment Administration (POEA), lift the suspension in countries where there are:
Bilateral agreements or understanding with the Philippines, and/or,chanrobles virtual law library
Existing mechanisms providing for sufficient safeguards to ensure the welfare and protection of Filipino workers.²⁴chanrobles virtual law library

xxx xxx xxx

The consequence the deployment ban has on the right to travel does not impair the right. The right to travel is subject, among other things, to the requirements of “public safety,” “as may be provided by law.” ²⁵Department Order No. 1 is a valid implementation of the Labor Code, in particular, its basic policy to “afford protection to labor,” ²⁶ pursuant to the respondent Department of Labor’s rule-making authority vested in it by the Labor Code.²⁷The petitioner assumes that it is unreasonable simply because of its impact on the right to travel, but as we have stated, the right itself is not absolute. The disputed Order is a valid qualification thereto.chanroblesvirtualawlibrary chanrobles virtual law library

Neither is there merit in the contention that Department Order No. 1 constitutes an invalid exercise of legislative power. It is true that police power is the domain of the legislature, but it does not mean that such an authority may not be lawfully delegated. As we have mentioned, the Labor Code itself vests the Department of Labor and Employment with rulemaking powers in the enforcement whereof. ²⁸ chanrobles virtual law library

The petitioners’s reliance on the Constitutional guaranty of worker participation “in policy and decision-making processes affecting their rights and benefits” ²⁹is not well-taken. The right granted by this provision, again, must submit to the demands and necessities of the State’s power of regulation.chanroblesvirtualawlibrary chanrobles virtual law library

The Constitution declares that:

Sec. 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. ³⁰chanrobles virtual law library

“Protection to labor” does not signify the promotion of employment alone. What concerns the Constitution more paramountly is that such an employment be above all, decent, just, and humane. It is bad enough that the country has to send its sons and daughters to strange lands because it cannot satisfy their employment needs at home. Under these circumstances, the Government is duty-bound to insure that our toiling expatriates have adequate protection, personally and economically, while away from home. In this case, the Government has evidence, an evidence the petitioner cannot seriously dispute, of the lack or inadequacy of such protection, and as part of its duty, it has precisely ordered an indefinite ban on deployment.chanroblesvirtualawlibrary chanrobles virtual law library

The Court finds furthermore that the Government has not indiscriminately made use of its authority. It is not contested that it has in fact removed the prohibition with respect to certain countries as manifested by the Solicitor General.chanroblesvirtualawlibrary chanrobles virtual law library

The non-impairment clause of the Constitution, invoked by the petitioner, must yield to the loftier purposes targetted by the Government. ³¹Freedom of contract and enterprise, like all other freedoms, is not free from restrictions, more so in this jurisdiction, where laissez faire has never been fully accepted as a controlling economic way of life.chanroblesvirtualawlibrary chanrobles virtual law library

This Court understands the grave implications the questioned Order has on the business of recruitment. The concern of the Government, however, is not necessarily to maintain profits of business firms. In the ordinary sequence of events, it is profits that suffer as a result of Government regulation. The interest of the State is to provide a decent living to its citizens. The Government has convinced the Court in this case that this is its intent. We do not find the impugned Order to be tainted with a grave abuse of discretion to warrant the extraordinary relief prayed for.chanroblesvirtualawlibrary chanrobles virtual law library

WHEREFORE, the petition is DISMISSED. No costs.chanroblesvirtualawlibrary chanrobles virtual law library

SO ORDERED.

Yap, C.J., Fernan, Narvasa, Melencio-Herrera, Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Cortes and Griño-Aquino, JJ., concur.chanroblesvirtualawlibrary chanrobles virtual law library

Gutierrez, Jr. and Medialdea, JJ., are on leave.

Public Corporation Cases

EN BANC

[G.R. No. L-23825. December 24, 1965.]

EMMANUEL PELAEZ, Petitioner, v. THE AUDITOR GENERAL, Respondent.

Zulueta, Gonzales, Paculdo & Associates for Petitioner.

Solicitor General for Respondent.
SYLLABUS

ADMINISTRATIVE LAW; POWER OF PRESIDENT TO CREATE MUNICIPALITIES. — Since January 1, 1960, when Republic Act No. 2370 became effective, barrios may “not be created or their boundaries altered nor their names changed” except by Act of Congress or of the corresponding provincial board “upon petition of a majority of the voters in the areas affected” and the “recommendation of the council of the municipality or municipalities in which the proposed barrio is situated.” This statutory denial of the presidential authority to create a new barrio implies a negation of the bigger power to create municipalities, each of which consists of several barrios.2. ID.; ID.; NATURE OF POWER TO CREATE MUNICIPALITIES. — Whereas the power to fix a common boundary, in order to avoid or settle conflicts of jurisdiction between adjoining municipalities, may partake of an administrative nature — involving, as it does, the adoption of means and ways to carry into effect the law creating said municipalities – the authority to create municipal corporations is essentially legislative in nature.
3. ID.; ID.; ID.; REQUISITES FOR VALID DELEGATION OF POWER. — Although Congress may delegate to another branch of the Government the power to fill in the details in the execution, enforcement or administration of a law, it is essential that said law: (a) be complete in itself, setting forth therein the policy to be executed, carried out or implemented by the delegate; and (b) fix a standard – the limits of which are sufficiently determinate or determinable to which the delegate must conform in the performance of his functions.

4. ID.; ID.; ID.; ID.; REQUIREMENTS OF DUE DELEGATION OF POWER NOT MET BY SECTION 68 OF REVISED ADMINISTRATIVE CODE. — Section 68 of the Revised Administrative Code, insofar as it grants to the President the power to create municipalities, does not meet the well-settled requirements for a valid delegation of the power to fix the details in the enforcement of a law. It does not enunciate any policy to be carried out or implemented by the President.

5. ID.; ID.; ID.; ID.; ID.; ABDICATION OF POWERS OF CONGRESS IN FAVOR OF THE EXECUTIVE. — If the validity of said delegation of powers, made in Section 68 of the Revised Administrative Code, were upheld, there would no longer be any legal impediment to a statutory grant of authority to the President to do anything which, in his opinion, may be required by public welfare or public interest. Such grant of authority would be a virtual abdication of the powers of Congress in favor of the Executive, and would bring about a total collapse of the democratic system established by the Constitution.

6. ID.; ID.; ID.; NATURE OF POWERS DEALT WITH IN SECTION 68 OF THE REVISED ADMINISTRATIVE CODE. — It is true that in Calalang v. Williams (70 Phil., 726) and People v. Rosenthal (68 Phil., 328), this Court had upheld “public welfare” and “public interest,” respectively, as sufficient standards, for a valid delegation of the authority to execute the law. But the doctrine laid down in these cases must be construed in relation to the specific facts and issues involved therein, outside of which they do not constitute precedents and have no binding effect. Both cases involved grants to administrative officers of powers related to the exercise of their administrative functions, calling for the determination of questions of fact. Such is not the nature of the powers dealt with in Section 68 of the Revised Administrative Code. The creation of municipalities being essentially and eminently legislative in character, the question whether or not “public interest” demands the exercise of such power is not one of fact. It is purely a legislative question (Carolina- Virginia Coastal Highway v. Coastal Turnpike Authority, 74 S.E. 21., 310-313, 315-318), or a political question (Udall v. Severn, 79 p. 2d., 347-349).

7. ID.; ID., ID.; ID.; PROOF THAT ISSUANCE OF EXECUTIVE ORDERS IN QUESTION ENTAILS EXERCISE OF PURELY LEGISLATIVE FUNCTIONS. — The fact that Executive Orders Nos. 93 to 121, 124 and 126 to 129, creating thirty-three municipalities, were issued after the legislative bills for the creation of the said municipalities had failed to pass Congress, is the best proof that their issuance entails the exercise of purely legislative functions.

8. ID.; ID.; ID.; POWER OF CONTROL OVER LOCAL GOVERNMENTS. — The power of control under Section 10(a) of Article X of the Constitution implies the right of the President to interfere in the exercise of such discretion as may be vested by law in the officers of the executive departments, bureaus or offices of the national government, as well as to act in lieu of such officers. This power is denied by the Constitution to the Executive, insofar as local governments are concerned. With respect to the latter, the fundamental law permits him to wield no more authority than that of checking whether said local governments or the officers thereof perform their duties as provided by statutory enactments. Hence, the President cannot interfere with local governments, so long as the same or its officers act within the scope of their authority. He may not, for instance, suspend an elective official of a regular municipality or take any disciplinary action against him, except on appeal from a decision of the corresponding provincial board. If, on the other hand, the President could create a municipality, he could, in effect, remove any of its officials, by creating a new municipality and including therein the barrio in which the official concerned resides, for his office would thereby become vacant (Section 2179, Revised Administrative Code). Thus, by merely brandishing the power to create a new municipality, without actually creating it, he could compel local officials to submit to his dictation, thereby, in effect, exercising over them the power of control denied to him by the Constitution.

9. ID.; ID.; ID.; ID.; SECTION 68, REVISED ADMINISTRATIVE CODE, REPEALED BY THE CONSTITUTION. — The power of control of the President over executive departments, bureaus or offices under Section 10 (a) of Article X of the Constitution implies no more than the authority to assume directly the functions thereof or to interfere in the exercise of discretion by its officials. Manifestly, such control does not include the authority either to abolish an executive department or bureau, or to create a new one. As a consequence, the alleged power of the President to create municipal corporations would necessarily connote the exercise by him of an authority even greater than that of control which he has over the executive departments, bureaus or offices. Instead of giving the President less power over local governments than that vested in him over the executive departments, bureaus or offices, it reverses the process and does the exact opposite, by conferring upon him more power over municipal corporations than that which he has over executive departments, bureaus or offices. Even if, therefore, it did not entail an undue delegation of legislative powers, as it certainly does, said Section 68, as part of the Revised Administrative Code, approved on March 10, 1917, must be deemed repealed by the subsequent adoption of the Constitution in 1935, which is utterly incompatible and inconsistent with said statutory enactment. (De los Santos v. Mallare, 87 Phil., 289, 298-299.)

10. ID. ID.; ID.; MUNICIPAL OFFICIALS CONCERNED DULY REPRESENTED IN PRESENT CASE. — It is contented that not all the proper parties have been impleaded in the present case. Suffice it to say that the records do not show, and the parties do not claim, that the officers of any of the municipalities concerned have been appointed or elected and have assumed office. At any rate, the Solicitor-General, who has appeared on behalf of respondent Auditor General, is the officer authorized by law “to act and represent the Government of the Philippines, its officers and agents, in any official investigation, proceeding or matter requiring the services of a lawyer” (Section 1661, Revised Administrative Code), and, in connection with the creation of the municipalities involved in this case, which involves a political, not proprietary functions, said local officials, if any, are mere agents or representatives of the national government. Their interest in the case has accordingly been duly represented. (Mangubat v. Osmeña Jr., G.R. No. L-12837, April 30, 1959; City of Cebu v. Judge Piccio, G.R. Nos. L-13012 & L-14876, December 31, 1960.)

11. ID.; ID.; ACTION NOT PREMATURE. — The present action cannot be said to be premature simply because respondent Auditor General has not yet acted on any of the executive orders in question and has not intimated how he would act in connection therewith. It is a matter of common knowledge that the President has for many years issued executive orders creating municipal corporations and that the same have been organized and are in actual operation, thus indicating, without peradventure of doubt, that the expenditures incidental thereto have been sanctioned, approved or passed in audit by the General Auditing Office and its officials. There is no reason to believe that respondent would adopt a different policy as regards the new municipalities involved in this case, in the absence of an allegation to such effect, and none has been made by him.

D E C I S I O N
CONCEPCION, J.:
During the period from September 4 to October 29,1964 the President of the Philippines, purporting to act pursuant to Section 68 of the Revised Administrative Code, issued Executive Orders Nos. 93 to 121, 124 and 126 to 129, creating thirty-three (33) municipalities enumerated in the margin. 1 Soon after the date last mentioned, or on November 10, 1964, petitioner Emmanuel Pelaez, as Vice-President of the Philippines and as taxpayer, instituted the present special civil action, for a writ of prohibition with preliminary injunction, against the Auditor General, to restrain him, as well as his representatives and agents, from passing in audit any expenditure of public funds in implementation of said executive orders and/or any disbursement by said municipalities.

Petitioner alleges that said executive orders are null and void, upon the ground that said Section 68 has been impliedly repealed by Republic Act 2370 and constitutes an undue delegation of legislative power. Respondent maintains the contrary view and avers that the present action is premature and that not all proper parties — referring to the officials of the new political subdivisions in question — have been impleaded. Subsequently, the mayors of several municipalities adversely affected by the aforementioned executive orders — because the latter have taken away from the former the barrios composing the new political subdivision — intervened in the case. Moreover, Attorneys Enrique M. Fernando and Emma Quisumbing-Fernando were allowed to and did appear as amici curiae.

The third paragraph of Section 3 of Republic Act No. 2370, reads:jgc:chanrobles.com.ph

“Barrios shall not be created or their boundaries altered nor their names changed except under the provisions of this Act or by Act of Congress.

Pursuant to the first two (2) paragraphs of the same Section 3:jgc:chanrobles.com.ph

“All barrios existing at the time of the passage of this Act shall come under the provisions hereof.

“Upon petition of a majority of the voters in the areas affected, a new barrio may be created or the name of an existing one may be changed by the provincial board of the province, upon recommendation of the council of the municipality or municipalities in which the proposed barrio is situated. The recommendation of the municipal council shall be embodied in a resolution approved by at least two-thirds of the entire membership of the said council: Provided, however, That no new barrio may be created if its population is less than five hundred persons.”cralaw virtua1aw library

Hence, since January 1, 1960, when Republic Act No. 2370 became effective, barrios may “not be created or their boundaries altered nor their names changed” except by Act of Congress or of the corresponding provincial board “upon petition of a majority of the voters in the areas affected” and the “recommendation of the council of the municipality or municipalities in which the proposed barrio is situated.” Petitioner argues, accordingly: “If the President, under this new law, cannot even create a barrio, can he create a municipality which is composed of several barrios, since barrios are units of municipalities?”

Respondent answers in the affirmative, upon the theory that a new municipality can be created without creating new barrios, such as, by placing old barrios under the jurisdiction of the new municipality. This theory overlooks, however, the main import of the petitioner’s argument, which is that the statutory denial of the presidential authority to create a new barrio implies a negation of the bigger power to create municipalities, each of which consists of several barrios. The cogency and force of this argument is too obvious to be denied or even questioned. Founded upon logic and experience, it cannot be offset except by a clear manifestation of the intent of Congress to the contrary, and no such manifestation, subsequent to the passage of Republic Act No. 2370. has been brought to our attention.

Moreover, section 68 of the Revised Administrative Code, upon which the disputed executive orders are based, provides:jgc:chanrobles.com.ph

“The (Governor-General) President of the Philippines may by executive order define the boundary, or boundaries, of any province, sub-province, municipality, [township] municipal district or other political subdivision, and increase or diminish the territory comprised therein, may divide any province into one or more subprovinces, separate any political division other than a province, into such portions as may be required, merge any of such subdivisions or portions with another, name any new subdivision so created, and may change the seat of government within any subdivision to such place therein as the public welfare may require: Provided, That the authorization of the (Philippine Legislature) Congress of the Philippines shall first be obtained whenever the boundary of any province or subprovince is to be defined or any province is to be divided into one or more subprovinces. When action by the (Governor-General) President of the Philippines in accordance herewith makes necessary a change of the territory under the jurisdiction of any administrative officer or any judicial officer, the (Governor-General) President of the Philippines, with the recommendation and advice of the head of the Department having executive control of such officer, shall redistrict the territory of the several officers affected and assign such officers to the new districts so formed.

“Upon the changing of the limits of political divisions in pursuance of the foregoing authority, an equitable distribution of the funds and obligations of the divisions thereby affected shall be made in such manner as may be recommended by the (Insular Auditor) Auditor General and approved by the (Governor-General) President of the Philippines.”cralaw virtua1aw library

Respondent alleges that the power of the President to create municipalities under this section does not amount to an undue delegation of legislative power, relying upon Municipality of Cardona v. Municipality of Binañgonan (36 Phil. 547), which, he claims, has settled it. Such claim is untenable, for said case involved, not the creation of a new municipality, but a mere transfer of territory — from an already existing municipality (Cardona) to another municipality (Binañgonan), likewise, existing at the time of and prior to said transfer (See Gov’t of the P.I. ex rel. Municipality of Cardona v. Municipality of Binañgonan [34 Phil. 518, 519-520], — in consequence of the fixing and definition, pursuant to Act No. 1748, of the common boundaries of two municipalities.

It is obvious, however, that, whereas the power to fix such common boundary, in order to avoid or settle conflicts of jurisdiction between adjoining municipalities, may partake of an administrative nature — involving, as it does, the adoption of means and ways to carry into effect the law creating said municipalities — the authority to create municipal corporations is essentially legislative in nature. In the language of other courts, it is “strictly a legislative function” (State ex rel. Higgins v. Aicklen, 119 S. 425, January 2, 1959) or “solely and exclusively the exercise of legislative power” (Udall v. Severn, May 29, 1938, 79 P. 2d. 347-349). As the Supreme Court of Washington has put it (Territory ex rel. Kelly v. Stewart, February 13, 1890, 23 Pac. 405, 409), “municipal corporations are purely the creatures of statutes.”cralaw virtua1aw library

Although 1 Congress may delegate to another branch of the government the power to fill in the details in the execution, enforcement or administration of a law, it is essential, to forestall a violation of the principle of separation of powers, that said law: (a) be complete in itself — it must set forth therein the policy to be executed, carried out or implemented by the delegate 2 — and (b) fix a standard — the limits of which are sufficiently determinate or determinable — to which the delegate must conform in the performance of his functions. 2 Indeed, without a statutory declaration of policy, the delegate would, in effect, make or formulate such policy, which is the essence of every law; and, without the aforementioned standard, there would be no means to determine, with reasonable certainty, whether the delegate has acted within or beyond the scope of his authority. 2 Hence, he could thereby arrogate upon himself the power, not only to make the law, but, also — and this is worse — to unmake it, by adopting measures inconsistent with the end sought to be attained by the Act of Congress, thus nullifying the principle of separation of powers and the system of checks and balances, and, consequently undermining the very foundation of our Republican system.

Section 68 of the Revised Administrative Code does not meet these well settled requirements for a valid delegation of the power to fix the details in the enforcement of a law. It does not enunciate any policy to be carried out or implemented by the President. Neither does it give a standard sufficiently precise to avoid the evil effects above referred to. In this connection, we do not overlook the fact that, under the last clause of the first sentence of Section 68, the President:jgc:chanrobles.com.ph

“. . . may change the seat of the government within any subdivision to such place therein as the public welfare may require.”cralaw virtua1aw library

It is apparent, however, from the language of this clause, that the phrase “as the public welfare may require” qualifies, not the clauses preceding the one just quoted, but only the place to which the seat of the government may be transferred. This fact becomes more apparent when we consider that said Section 68 was originally Section 1 of Act No. 1748, 3 which provided, that “whenever in the judgment of the Governor-General the public welfare requires, he may, by executive order”, effect the changes enumerated therein (as well as in said Section 68), including the change of the seat of the government “to such place . . . as the public interest requires.” The opening statement of said Section 1 of Act No. 1748 — which was not included in Section 68 of the Revised Administrative Code — governed the time at which, or the conditions under which, the powers therein conferred could be exercised; whereas the last part of the first sentence of said section referred exclusively to the place to which the seat of the government was to be transferred.

At any rate, the conclusion would be the same, insofar as the case at bar is concerned, even if we assumed that the phrase “as the public welfare may require”, in said Section 68, qualifies all other clauses thereof. It is true that in Calalang v. William (70 Phil. 726) and People v. Rosenthal (68 Phil. 328), this Court had upheld “public welfare” and “public interest”, respectively, as sufficient standards for a valid delegation of the authority to execute the law. But, the doctrine laid down in these cases — as all judicial pronouncements — must be construed in relation to the specific facts and issues involved therein, outside of which they do not constitute precedents and have no binding effect. 4 The law construed in the Calalang case conferred upon the Director of Public Works, with the approval of the Secretary of Public Works and Communications, the power to issue rules and regulations to promote safe transit upon national roads and streets. Upon the other hand, the Rosenthal case referred to the authority of the Insular Treasurer, under Act No. 2581, to issue and cancel certificates or permits for the sale of speculative securities. Both cases involved grants to administrative officers of powers related to the exercise of their administrative functions, calling for the determination of questions of fact.

Such is not the nature of the powers dealt with in section 68. As above indicated, the creation of municipalities, is not an administrative function, but one which is essentially and eminently legislative in character. The question whether or not “public interest” demands the exercise of such power is not one of fact. It is “purely a legislative question” (Carolina-Virginia Coastal Highway v. Coastal Turnpike Authority, 74 S.E. 2d., 310-313, 315-318), or a political question (Udall v. Severn, 79 P. 2d. 347-349). As the Supreme Court of Wisconsin has aptly characterized it, “the question as to whether incorporation is for the best interest of the community in any case is emphatically a question of public policy and statecraft” (In re Village of North Milwaukee, 67 N. W. 1033, 1035-1037).

For this reason, courts of justice have annulled, as constituting undue delegation of legislative powers, state laws granting the judicial department the power to determine whether certain territories should be annexed to a particular municipality (Udall v. Severn, supra, 358-359); or vesting in a Commission the right to determine the plan and frame of government of proposed villages and what functions shall be exercised by the same, although the powers and functions of the village are specifically limited by statute (In re Municipal Charters, 86 Atl. 307-308); or conferring upon courts the authority to declare a given town or village incorporated, and designate its meter and bounds, upon petition of a majority of the taxable inhabitants thereof, setting forth the area desired to be included in such village (Territory ex rel Kelly v. Stewart, 23 Pac. 405-409); or authorizing the territory of a town, containing a given area and population, to be incorporated as a town, on certain steps being taken by the inhabitants thereof and on certain determination by a court and subsequent vote of the inhabitants in favor thereof, insofar as the court is allowed to determine whether the lands embraced in the petition “ought justly” to be included in the village, and whether the interest of the inhabitants will be promoted by such incorporation, and to enlarge and diminish the boundaries of the proposed village “as justice may require” (In re Villages of North Milwaukee, 67 N.W. 1035- 1037); or creating a Municipal Board of Control which shall determine whether or not the laying out, construction or operation of a toll road is in the “public interest” and whether the requirements of the law had been complied with, in which case the Board shall enter an order creating a municipal corporation and fixing the name of the same (Carolina-Virginia Coastal Highway v. Coastal Turnpike Authority, 74 S. E. 2d. 310).

Insofar as the validity of a delegation of power by Congress to the President is concerned, the case of Schechter Poultry Corporation v. U. S. (79 L. ed. 1570) is quite relevant to the one at bar. The Schechter case involved the constitutionality of Section 3 of the National Industrial Recovery Act authorizing the President of the United States to approve “codes of fair competition” submitted to him by one or more trade or industrial associations or corporations which “impose no inequitable restrictions on admission to membership therein and are truly representative,” provided that such codes are not designed “to promote monopolies or to eliminate or oppress small enterprises and will not operate to discriminate against them, and will tend to effectuate the policy” of said Act. The Federal Supreme Court held:jgc:chanrobles.com.ph

“To summarize and conclude upon this point: Sec. 3 of the Recovery Act is without precedent. It supplies no standards for any trade, industry or activity. It does not undertake to prescribe rules of conduct to be applied to particular states of fact determined by appropriate administrative procedure. Instead of prescribing rules of conduct, it authorizes the making of codes to prescribe them. For that legislative undertaking, Sec. 3 sets up no standards, aside from the statement of the general aims of rehabilitation, correction and expansion described in Sec. 1. In view of the scope of that broad declaration, and of the nature of the few restrictions that are imposed, the discretion of the President in approving or prescribing codes, and thus enacting laws for the government of trade and industry throughout the country, is virtually unfettered. We think that the code-making authority thus conferred is an unconstitutional delegation of legislative power.”cralaw virtua1aw library

If the term “unfair competition” is so broad as to vest in the President a discretion that is “virtually unfettered”, and, consequently, tantamount to a delegation of legislative power, it is obvious that “public welfare”, which has even a broader connotation, leads to the same result. In fact, if the validity of the delegation of powers made in Section 68 were upheld, there would no longer be any legal impediment to a statutory grant of authority to the President to do anything which, in his opinion, may be required by public welfare or public interest. Such grant of authority would be a virtual abdication of the powers of Congress in favor of the Executive, and would bring about a total collapse of the democratic system established by our Constitution, which it is the special duty and privilege of this Court to uphold.

It may not be amiss to note that the executive orders in question were issued after the legislative bills for the creation of the municipalities involved in this case had failed to pass Congress. A better proof of the fact that the issuance of said executive orders entails the exercise of purely legislative functions can hardly be given.

Again, Section 10 (1) of Article VII of our fundamental law ordains:jgc:chanrobles.com.ph

“The President shall have control of all executive departments, bureaus or offices, exercise general supervision over all local governments as may be provided by law, and take care that the laws be faithfully executed.”cralaw virtua1aw library

The power of control under this provision implies the right of the President to interfere in the exercise of such discretion as may be vested by law in the officers of the executive departments, bureaus, or offices of the national government, as well as to act in lieu of such officers. This power is denied by the Constitution to the Executive, insofar as local governments are concerned. With respect to the latter, the fundamental law permits him to wield no more authority than that of checking whether said local governments or the officers thereof perform their duties as provided by statutory enactments. Hence, the President cannot interfere with local governments, so long as the same or its officers act within the scope of their authority. He may not enact an ordinance which the municipal council has failed or refused to pass, even if it had thereby violated a duty imposed thereto by law, although he may see to it that the corresponding provincial officials take appropriate disciplinary action therefor. Neither may he veto, set aside or annul an ordinance passed by said council within the scope of its jurisdiction, no matter how patently unwise it may be. He may not even suspend an elective official of a regular municipality or take any disciplinary action against him, except on appeal from a decision of the corresponding provincial board. 5

Upon the other hand, if the President could create a municipality, he could, in effect, remove any of its officials, by creating a new municipality and including therein the barrio in which the official concerned resides, for his office would thereby become vacant. 6 Thus, by merely brandishing the power to create a new municipality (if he had it), without actually creating it, he could compel local officials to submit to his dictation, thereby, in effect, exercising over them the power of control denied to him by the Constitution.

Then, also, the power of control of the President over executive departments, bureaus or offices implies no more than the authority to assume directly the functions thereof or to interfere in the exercise of discretion by its officials. Manifestly, such control does not include the authority either to abolish an executive department or bureaus, or to create a new one. As a consequence, the alleged power of the President to create municipal corporations would necessarily connote the exercise by him of an authority even greater than that of control which he has over the executive departments, bureaus or offices. In other words, Section 68 of the Revised Administrative Code does not merely fail to comply with the constitutional mandate above quoted. Instead of giving the President less power over local governments than that vested in him over the executive departments, bureaus or offices, it reverses the process and does the exact opposite, by conferring upon him more power over municipal corporations than that which he has over said executive departments, bureaus or offices.

In short, even if it did not entail an undue delegation of legislative powers, as it certainly does, said Section 68, as part of the Revised Administrative Code, approved on March 10, 1917, must be deemed repealed by the subsequent adoption of the Constitution, in 1935, which is utterly incompatible and inconsistent with said statutory enactment. 7

There are only two (2) other points left for consideration, namely, respondent’s claim (a) that “not all the proper parties” — referring to the officers of the newly created municipalities — “have been impleaded in this case”, and (b) that “the present petition is premature.”cralaw virtua1aw library

As regards the first point, suffice it to say that the records do not show, and the parties do not claim, that the officers of any of said municipalities have been appointed or elected and assumed office. At any rate, the Solicitor-General, who has appeared on behalf of respondent Auditor General, is the officer authorized by law “to act and represent the Government of the Philippines, its offices and agents, in any official investigation, proceeding or matter requiring the services of a lawyer” (Section 1661, Revised Administrative Code), and, in connection with the creation of the aforementioned municipalities, which involves a political, not proprietary, function, said local officials, if any, are mere agents or representatives of the national government. Their interest in the case at bar has, accordingly, been, in effect, duly represented. 8

With respect to the second point, respondent alleges that he has not as yet acted on any of the executive order in question and has not intimated how he would act in connection therewith. It is however, a matter of common, public knowledge, subject to judicial cognizance, that the President has, for many years, issued executive orders creating municipal corporations and that the same have been organized and in actual operation, thus indicating, without peradventure of doubt, that the expenditures incidental thereto have been sanctioned, approved or passed in audit by the General Auditing Office and its officials. There is no reason to believe, therefore, that respondent would adopt a different policy as regards the new municipalities involved in this case, in the absence of an allegation to such effect, and none has been made by him.

WHEREFORE the Executive Orders in question are hereby declared null and void ab initio and the respondent permanently restrained from passing in audit any expenditure of public funds in implementation of said Executive Orders or any disbursement by the municipalities above referred to. It is so ordered.

Bengzon, C.J., Bautista Angelo, Reyes, J.B.L., Barrera and Dizon, JJ., concur.

Zalvidar, J., took no part.

Separate Opinions

BENGZON, J.P., J., concurring and dissenting:chanrob1es virtual 1aw library

A sign of progress in a developing nation is the rise of new municipalities. Fostering their rapid growth has long been the aim pursued by all three branches of our Government.

So it was that the Governor-General during the time of the Jones Law was given authority by the legislature (Act No. 1748) to act upon certain details with respect to said local governments, such as fixing of boundaries, subdivisions and mergers. And the Supreme Court, within the framework of the Jones Law, ruled in 1917 that the execution or implementation of such details, did not entail abdication of legislative power (Government v. Municipality of Binangonan, 34 Phil. 518; Municipality of Cardona v. Municipality of Binangonan, 36 Phil. 547). Subsequently, Act No. 1748’s aforesaid statutory authorization was embodied in Section 68 of the Revised Administrative Code. And Chief Executives since then up to the present continued to avail of said provision, time and again invoking it to issue executive orders providing for the creation of municipalities.

From September 4, 1964 to October 29, 1964 the President of the Philippines issued executive orders to create thirty-three municipalities pursuant to Section 68 of the Revised Administrative Code. Public funds thereby stood to be disbursed in implementation of said executive orders.

Suing as private citizen and taxpayer, Vice-President Emmanuel Pelaez filed in this Court a petition for prohibition with preliminary injunction against the Auditor General. It seeks to restrain the respondent or any person acting in his behalf, from passing in audit any expenditure of public funds in implementation of the executive orders aforementioned.

Petitioner contends that the President has no power to create a municipality by executive order. It is argued that Section 68 of the Revised Administrative Code of 1917, so far as it purports to grant any such power, is invalid or, at least, already repealed in the light of the Philippine Constitution and Republic Act 2370 (The Barrio Charter).

Section 68 is again reproduced hereunder for convenience:jgc:chanrobles.com.ph

“SEC. 68. General authority of [Governor-General] President of the Philippines to fix boundaries and make new subdivisions. — The [Governor-General] President of the Philippines may by executive order define the boundary, or boundaries, of any province, subprovince, municipality, [township] municipal district, or other political subdivision, and increase or diminish the territory comprised therein, may divide any province into one or more subprovinces, separate any political division other than a province, into such portions as may be required, merge any of such subdivisions or portions with another, name any new subdivision so created, and may change the seat of government within any subdivision to such place therein as the public welfare may require: Provided, That the authorization of the [Philippine Legislature] Congress of the Philippines shall first be obtained whenever the boundary of any province or subprovince is to be defined or any province is to be divided into one or more subprovinces. When action by the [Governor- General] President of the Philippines in accordance herewith makes necessary a change of the territory under the jurisdiction of any administrative officer or any judicial officer, the [Governor-General] President of the Philippines, with the recommendation and advice of the head of the Department having executive control of such officer, shall redistrict the territory of the several officers affected and assign such officers to the new districts so formed.

“Upon the changing of the limits of political divisions in pursuance of the foregoing authority, an equitable distribution of the funds and obligations of the division thereby affected shall be made in such manner as may be recommended by the [Insular Auditor] Auditor General and approved by the [Governor-General] President of the Philippines.”cralaw virtua1aw library

From such wording I believe that power to create a municipality is included: to “separate any political division other than a province, into such portions as may be required, merge any of such subdivisions or portions with another, name any new subdivision so created.” The issue, however, is whether the Legislature can validly delegate to the Executive such power.

The power to create a municipality is legislative in character. American authorities have therefore favored the view that it cannot be delegated; that what is delegable is not the power to create municipalities but only the power to determine the existence of facts under which creation of a municipality will result (37 Am. Jur. 628).

The test is said to lie in whether the statute allows any discretion on the delegate as to whether the municipal corporation should be created. If so, there is an attempted delegation of legislative power and the statute is invalid (Ibid). Now Section 68 no doubt gives the President such discretion, since it says that the President “may by executive order” exercise the powers therein granted. Furthermore, Section 5 of the same Code states:jgc:chanrobles.com.ph

“SEC. 5. Exercise of administrative discretion. — The exercise of the permissive powers of all executive or administrative officers and bodies is based upon discretion, and when such officer or body is given authority to do any act but not required to do such act, the doing of the same shall be dependent on a sound discretion to be exercised for the good of the service and benefit of the public, whether so expressed in the statute giving the authority or not.”cralaw virtua1aw library

Under the prevailing rule in the United States — and Section 68 is of American origin — the provision in question would be an invalid attempt to delegate purely legislative powers, contrary to the principle of separation of powers.

It is very pertinent that Section 68 should be considered with the stream of history in mind. A proper knowledge of the past is the only adequate background for the present. Section 68 was adopted half a century ago. Political change, two world wars, the recognition of our independence and rightful place in the family of nations, have since taken place. In 1917 the Philippines had for its Organic Act the Jones Law. And under the set-up ordained therein no strict separation of powers was adhered to. Consequently, Section 68 was not constitutionally objectionable at the time of its enactment.

The advent of the Philippine Constitution in 1935 however altered the situation. For not only was separation of power strictly ordained, except only in specific instances therein provided, but the power of the Chief Executive over local governments suffered an explicit reduction.

Formerly, Section 21 of the Jones Law provided that the Governor-General “shall have general supervision and control of all the departments and bureaus of the government in the Philippine Islands.” Now Section 10 (1), Article VII of the Philippine Constitution provides: “The President shall have control of all the executive departments, bureaus, or offices, exercise general supervision over all local governments as may be provided by law, and take care that the laws be faithfully executed.”cralaw virtua1aw library

In short, the power of control over local governments had now been taken away from the Chief Executive. Again, to fully understand the significance of this provision, one must trace its development and growth.

As early as April 7, 1900 President McKinley of the United States, in his Instructions to the Second Philippine Commission, laid down the policy that our municipal governments should be “subject to the least degree of supervision and control” on the part of the national government. Said supervision and control was to be confined within the “narrowest limits” or so much only as “may be necessary to secure and enforce faithful and efficient administration by local officers.” And the national government “shall have no direct administration except of matters of purely general concern.” (See Hebron v. Reyes, L-9158, July 28, 1958.)

All this had one aim, to enable the Filipinos to acquire experience in the art of self-government, with the end in view of later allowing them to assume complete management and control of the administration of their local affairs. Such aim is the policy now embodied in Section 10(1), Article VII of the Constitution (Rodriguez v. Montinola, 50 O. G., 4820).

It is the evident decree of the Constitution, therefore, that the President shall have no power of control over local governments. Accordingly, Congress cannot by law grant him such power (Hebron v. Reyes, supra). And any such power formerly granted under the Jones Law thereby-became unavoidably inconsistent with the Philippine Constitution.

It remains to examine the relation of the power to create and the power to control local governments. Said relationship has already been passed upon by this Court in Hebron v. Reyes, supra. In said case, it was ruled that the power to control is an incident of the power to create or abolish municipalities. Respondent’s view, therefore, that creating municipalities and controlling their local governments are “two worlds apart”, is untenable. And since, as stated, the power to control local governments can no longer be conferred on or exercised by the President, it follows a fortiori that the power to create them, all the more cannot be so conferred or exercised.

I am impelled to conclude, therefore, that Section 10(1) of Article VII of the Constitution has repealed Section 68 of the Revised Administrative Code as far as the latter empowers the President to create local governments. Repeal by the Constitution of prior statutes inconsistent with it has already been sustained in De los Santos v. Mallare, 87 Phil. 289. And it was there held that such repeal differs from a declaration of unconstitutionality of a posterior legislation, so much so that only a majority vote of the Court is needed to sustain a finding of repeal.

Since the Constitution repealed Section 68 as far back as 1935, it is academic to ask whether Republic Act 2370 likewise has provisions in conflict with Section 68 so as to repeal it. Suffice it to state, at any rate, that statutory prohibition on the President from creating a barrio does not, in my opinion, warrant the inference of statutory prohibition for creating a municipality. For although municipalities consist of barrios, there is nothing in the statute that would preclude creation of new municipalities out of pre-existing barrios.

It is not contrary to the logic of local autonomy to be able to create larger political units and unable to create smaller ones. For as long ago observed in President McKinley’s Instructions to the Second Philippine Commission, greater autonomy is to be imparted to the smaller of the two political units. The smaller the unit of local government, the lesser is the need for the national government’s intervention in its political affairs. Furthermore, for practical reasons, local autonomy cannot be given from the top downwards. The national government, in such a case, could still exercise power over the supposedly autonomous unit, e.g., municipalities, by exercising it over the smaller units that comprise them, e.g., the barrios. A realistic program of decentralization therefore calls for autonomy from the bottom upwards, so that it is not surprising for Congress to deny the national government some power over barrios without denying it over municipalities. For this reason, I disagree with the majority view that because the President could not create a barrio under Republic Act 2370, a fortiori he cannot create a municipality.

It is my view, therefore, that the Constitution, and not Republic Act 2370, repealed Section 68 of the Revised Administrative Code’s provision giving the President authority to create local governments. And for this reason I agree with the ruling in the majority opinion that the executive orders in question are null and void.

In thus ruling, the Court is but sustaining the fulfillment of our historic desire to be free and independent under a republican form of government, and exercising a function derived from the very sovereignty that it upholds.

Makalintal and Regala, JJ., concur with the opinion of Justice J.P. Bengzon.

EN BANC

[G.R. NO. 161414 : January 17, 2005]

SULTAN OSOP B. CAMID, Petitioner, v. THE OFFICE OF THE PRESIDENT, DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT, AUTONOMOUS REGION IN MUSLIM MINDANAO, DEPARTMENT of FINANCE, DEPARTMENT of BUDGET AND MANAGEMENT, COMMISSION ON AUDIT, and the CONGRESS OF THE PHILIPPINES (HOUSE of REPRESENTATIVES AND SENATE), Respondents.

D E C I S I O N

TINGA, J.:

This Petition for Certiorari presents this Court with the prospect of our own Brigadoon¹ the municipality of Andong, Lanao del Sur―which like its counterpart in filmdom, is a town that is not supposed to exist yet is anyway insisted by some as actually alive and thriving. Yet unlike in the movies, there is nothing mystical, ghostly or anything even remotely charming about the purported existence of Andong. The creation of the putative municipality was declared void ab initio by this Court four decades ago, but the present petition insists that in spite of this insurmountable obstacle Andong thrives on, and hence, its legal personality should be given judicial affirmation. We disagree.

The factual antecedents derive from the promulgation of our ruling in Pelaez v. Auditor General² in 1965. As discussed therein, then President Diosdado Macapagal issued several Executive Orders³ creating thirty-three (33) municipalities in Mindanao. Among them was Andong in Lanao del Sur which was created by virtue of Executive Order No. 107.⁴

These executive orders were issued after legislative bills for the creation of municipalities involved in that case had failed to pass Congress.⁵ President Diosdado Macapagal justified the creation of these municipalities citing his powers under Section 68 of the Revised Administrative Code. Then Vice-President Emmanuel Pelaez filed a special civil action for a writ of prohibition, alleging in main that the Executive Orders were null and void, Section 68 having been repealed by Republic Act No. 2370,⁶ and said orders constituting an undue delegation of legislative power.⁷

After due deliberation, the Court unanimously held that the challenged Executive Orders were null and void. A majority of five justices, led by the ponente, Justice (later Chief Justice) Roberto Concepcion, ruled that Section 68 of the Revised Administrative Code did not meet the well-settled requirements for a valid delegation of legislative power to the executive branch,⁸ while three justices opined that the nullity of the issuances was the consequence of the enactment of the 1935 Constitution, which reduced the power of the Chief Executive over local governments.⁹ Pelaez was disposed in this wise:

WHEREFORE, the Executive Orders in question are declared null and void ab initio and the respondent permanently restrained from passing in audit any expenditure of public funds in implementation of said Executive Orders or any disbursement by the municipalities above referred to. It is so ordered.¹⁰

Among the Executive Orders annulled was Executive Order No. 107 which created the Municipality of Andong. Nevertheless, the core issue presented in the present petition is the continued efficacy of the judicial annulment of the Municipality of Andong.

Petitioner Sultan Osop B. Camid (Camid) represents himself as a current resident of Andong,¹¹ suing as a private citizen and taxpayer whose locus standi “is of public and paramount interest especially to the people of the Municipality of Andong, Province of Lanao del Sur.”¹² He alleges that Andong “has metamorphosed into a full-blown municipality with a complete set of officials appointed to handle essential services for the municipality and its constituents,”¹³ even though he concedes that since 1968, no person has been appointed, elected or qualified to serve any of the elective local government positions of Andong.¹⁴ Nonetheless, the municipality of Andong has its own high school, Bureau of Posts, a Department of Education, Culture and Sports office, and at least seventeen (17) “barangay units” with their own respective chairmen.¹⁵ From 1964 until 1972, according to Camid, the public officials of Andong “have been serving their constituents through the minimal means and resources with least (sic) honorarium and recognition from the Office of the then former President Diosdado Macapagal.” Since the time of Martial Law in 1972, Andong has allegedly been getting by despite the absence of public funds, with the “Interim Officials” serving their constituents “in their own little ways and means.”¹⁶

In support of his claim that Andong remains in existence, Camid presents to this Court aCertification issued by the Office of the Community Environment and Natural Resources (CENRO) of the Department of Environment and Natural Resources (DENR) certifying the total land area of the Municipality of Andong, “created under Executive Order No. 107 issued [last] October 1, 1964.”¹⁷ He also submits a Certification issued by the Provincial Statistics Office of Marawi City concerning the population of Andong, which is pegged at fourteen thousand fifty nine (14,059) strong. Camid also enumerates a list of governmental agencies and private groups that allegedly recognize Andong, and notes that other municipalities have recommended to the Speaker of the Regional Legislative Assembly for the immediate implementation of the revival or re-establishment of Andong.¹⁸

The petition assails a Certification dated 21 November 2003, issued by the Bureau of Local Government Supervision of the Department of Interior and Local Government (DILG).¹⁹The Certification enumerates eighteen (18) municipalities certified as “existing,” per DILG records. Notably, these eighteen (18) municipalities are among the thirty-three (33), along with Andong, whose creations were voided by this Court in Pelaez. These municipalities are Midaslip, Pitogo, Naga, and Bayog in Zamboanga del Sur; Siayan and Pres. Manuel A. Roxas in Zamboanga del Norte; Magsaysay, Sta. Maria and New Corella in Davao; Badiangan and Mina in Iloilo; Maguing in Lanao del Sur; Gloria in Oriental Mindoro; Maasim in Sarangani; Kalilangan and Lantapan in Bukidnon; and Maco in Compostela Valley.²⁰

Camid imputes grave abuse of discretion on the part of the DILG “in not classifying [Andong] as a regular existing municipality and in not including said municipality in its records and official database as [an] existing regular municipality.”²¹ He characterizes such non-classification as unequal treatment to the detriment of Andong, especially in light of the current recognition given to the eighteen (18) municipalities similarly annulled by reason of Pelaez. As appropriate relief, Camid prays that the Court annul the DILGCertification dated 21 November 2003; direct the DILG to classify Andong as a “regular existing municipality;” all public respondents, to extend full recognition and support to Andong; the Department of Finance and the Department of Budget and Management, to immediately release the internal revenue allotments of Andong; and the public respondents, particularly the DILG, to recognize the “Interim Local Officials” of Andong.²²

Moreover, Camid insists on the continuing validity of Executive Order No. 107. He argues that Pelaez has already been modified by supervening events consisting of subsequent laws and jurisprudence. Particularly cited is our Decision in Municipality of San Narciso v. Hon. Mendez,²³ wherein the Court affirmed the unique status of the municipality of San Andres in Quezon as a “de facto municipal corporation.”²⁴ Similar to Andong, the municipality of San Andres was created by way of executive order, precisely the manner which the Court in Pelaez had declared as unconstitutional. Moreover, San Narciso cited, as Camid does, Section 442(d) of the Local Government Code of 1991 as basis for the current recognition of the impugned municipality. The provision reads:

Section 442. Requisites for Creation. – xxx

(d) Municipalities existing as of the date of the effectivity of this Code shall continue to exist and operate as such. Existing municipal districts organized pursuant to presidential issuances or executive orders and which have their respective sets of elective municipal officials holding office at the time of the effectivity of (the) Code shall henceforth be considered as regular municipalities.²⁵

There are several reasons why the petition must be dismissed. These can be better discerned upon examination of the proper scope and application of Section 442(d), which does not sanction the recognition of just any municipality. This point shall be further explained further on.

Notably, as pointed out by the public respondents, through the Office of the Solicitor General (OSG), the case is not a fit subject for the special civil actions of certiorari andmandamus, as it pertains to the de novo appreciation of factual questions. There is indeed no way to confirm several of Camid’s astonishing factual allegations pertaining to the purported continuing operation of Andong in the decades since it was annulled by this Court. No trial court has had the opportunity to ascertain the validity of these factual claims, the appreciation of which is beyond the function of this Court since it is not a trier of facts.

The importance of proper factual ascertainment cannot be gainsaid, especially in light of the legal principles governing the recognition of de facto municipal corporations. It has been opined that municipal corporations may exist by prescription where it is shown that the community has claimed and exercised corporate functions, with the knowledge and acquiescence of the legislature, and without interruption or objection for period long enough to afford title by prescription.²⁶ These municipal corporations have exercised their powers for a long period without objection on the part of the government that although no charter is in existence, it is presumed that they were duly incorporated in the first place and that their charters had been lost.²⁷ They are especially common in England, which, as well-worth noting, has existed as a state for over a thousand years. The reason for the development of that rule in England is understandable, since that country was settled long before the Roman conquest by nomadic Celtic tribes, which could have hardly been expected to obtain a municipal charter in the absence of a national legal authority.

In the United States, municipal corporations by prescription are less common, but it has been held that when no charter or act of incorporation of a town can be found, it may be shown to have claimed and exercised the powers of a town with the knowledge and assent of the legislature, and without objection or interruption for so long a period as to furnish evidence of a prescriptive right.²⁸

What is clearly essential is a factual demonstration of the continuous exercise by the municipal corporation of its corporate powers, as well as the acquiescence thereto by the other instrumentalities of the state. Camid does not have the opportunity to make an initial factual demonstration of those circumstances before this Court. Indeed, the factual deficiencies aside, Camid’s plaint should have undergone the usual administrative gauntlet and, once that was done, should have been filed first with the Court of Appeals, which at least would have had the power to make the necessary factual determinations. Camid’s seeming ignorance of the principles of exhaustion of administrative remedies and hierarchy of courts, as well as the concomitant prematurity of the present petition, cannot be countenanced.

It is also difficult to capture the sense and viability of Camid’s present action. The assailed issuance is the Certification issued by the DILG. But such Certification does not pretend to bear the authority to create or revalidate a municipality. Certainly, the annulment of theCertification will really do nothing to serve Camid’s ultimate cause – the recognition of Andong. Neither does the Certification even expressly refute the claim that Andong still exists, as there is nothing in the document that comments on the present status of Andong. Perhaps the Certification is assailed before this Court if only to present an actual issuance, rather than a long-standing habit or pattern of action that can be annulled through the special civil action of certiorari . Still, the relation of the Certification to Camid’s central argument is forlornly strained.

These disquisitions aside, the central issue remains whether a municipality whose creation by executive fiat was previously voided by this Court may attain recognition in the absence of any curative or reimplementing statute. Apparently, the question has never been decided before, San Narciso and its kindred cases pertaining as they did to municipalities whose bases of creation were dubious yet were never judicially nullified. The effect of Section 442(d) of the Local Government Code on municipalities such as Andong warrants explanation. Besides, the residents of Andong who belabor under the impression that their town still exists, much less those who may comport themselves as the municipality’s “Interim Government,” would be well served by a rude awakening.

The Court can employ a simplistic approach in resolving the substantive aspect of the petition, merely by pointing out that the Municipality of Andong never existed.²⁹ Executive Order No. 107, which established Andong, was declared “null and void ab initio” in 1965 by this Court in Pelaez, along with thirty-three (33) other executive orders. The phrase “ab initio” means “from the beginning,”³⁰ “at first,”³¹ “from the inception.”³² Pelaez was never reversed by this Court but rather it was expressly affirmed in the cases of Municipality of San Joaquin v. Siva,³³ Municipality of Malabang v. Benito,³⁴ and Municipality of Kapalong v. Moya.³⁵ No subsequent ruling by this Court declared Pelaez as overturned or inoperative. No subsequent legislation has been passed since 1965 creating a Municipality of Andong. Given these facts, there is hardly any reason to elaborate why Andong does not exist as a duly constituted municipality.

This ratiocination does not admit to patent legal errors and has the additional virtue of blessed austerity. Still, its sweeping adoption may not be advisedly appropriate in light of Section 442(d) of the Local Government Code and our ruling in Municipality of San Narciso, both of which admit to the possibility of de facto municipal corporations.

To understand the applicability of Municipality of San Narciso and Section 442(b) of the Local Government Code to the situation of Andong, it is necessary again to consider the ramifications of our decision in Pelaez.

The eminent legal doctrine enunciated in Pelaez was that the President was then, and still is, not empowered to create municipalities through executive issuances. The Court therein recognized “that the President has, for many years, issued executive orders creating municipal corporations, and that the same have been organized and in actual operation . . . .”³⁶ However, the Court ultimately nullified only those thirty-three (33) municipalities, including Andong, created during the period from 4 September to 29 October 1964 whose existence petitioner Vice-President Pelaez had specifically assailed before this Court. No pronouncement was made as to the other municipalities which had been previously created by the President in the exercise of power the Court deemed unlawful.

Two years after Pelaez was decided, the issue again came to fore in Municipality of San Joaquin v. Siva.³⁷ The Municipality of Lawigan was created by virtue of Executive Order No. 436 in 1961. Lawigan was not one of the municipalities ordered annulled in Pelaez. A petition for prohibition was filed contesting the legality of the executive order, again on the ground that Section 68 of the Revised Administrative Code was unconstitutional. The trial court dismissed the petition, but the Supreme Court reversed the ruling and entered a new decision declaring Executive Order No. 436 void ab initio. The Court reasoned without elaboration that the issue had already been squarely taken up and settled in Pelaez which agreed with the argument posed by the challengers to Lawigan’s validity.³⁸

In the 1969 case of Municipality of Malabang v. Benito,³⁹ what was challenged is the validity of the constitution of the Municipality of Balabagan in Lanao del Sur, also created by an executive order,⁴⁰ and which, similar to Lawigan, was not one of the municipalities annulled in Pelaez. This time, the officials of Balabagan invoked de facto status as a municipal corporation in order to dissuade the Court from nullifying action. They alleged that its status as a de facto corporation cannot be collaterally attacked but should be inquired into directly in an action for quo warranto at the instance of the State, and not by a private individual as it was in that case. In response, the Court conceded that an inquiry into the legal existence of a municipality is reserved to the State in a proceeding for quo warranto, but only if the municipal corporation is a de facto corporation.⁴¹

Ultimately, the Court refused to acknowledge Balabagan as a de facto corporation, even though it had been organized prior to the Court’s decision in Pelaez. The Court declared void the executive order creating Balabagan and restrained its municipal officials from performing their official duties and functions.⁴² It cited conflicting American authorities on whether a de facto corporation can exist where the statute or charter creating it is unconstitutional.⁴³ But the Court’s final conclusion was unequivocal that Balabagan was not a de facto corporation.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

In the cases where a de facto municipal corporation was recognized as such despite the fact that the statute creating it was later invalidated, the decisions could fairly be made to rest on the consideration that there was some other valid law giving corporate vitality to the organization. Hence, in the case at bar, the mere fact that Balabagan was organized at a time when the statute had not been invalidated cannot conceivably make it a de factocorporation, as, independently of the Administrative Code provision in question, there is no other valid statute to give color of authority to its creation.⁴⁴

The Court did clarify in Malabang that the previous acts done by the municipality in the exercise of its corporate powers were not necessarily a nullity.⁴⁵ Camid devotes several pages of his petition in citing this point,⁴⁶ yet the relevance of the citation is unclear considering that Camid does not assert the validity of any corporate act of Andong prior to its judicial dissolution. Notwithstanding, the Court in Malabang retained an emphatic attitude as to the unconstitutionality of the power of the President to create municipal corporations by way of presidential promulgations, as authorized under Section 68 of the Revised Administrative Code.

This principle was most recently affirmed in 1988, in Municipality of Kapalong v. Moya.⁴⁷The municipality of Santo Tomas, created by President Carlos P. Garcia, filed a complaint against another municipality, who challenged Santo Tomas’s legal personality to institute suit. Again, Santo Tomas had not been expressly nullified by prior judicial action, yet the Court refused to recognize its legal existence. The blunt but simple ruling: “Now then, as ruled in the Pelaez case supra, the President has no power to create a municipality. Since [Santo Tomas] has no legal personality, it can not be a party to any civil action’. “⁴⁸

Nevertheless, when the Court decided Municipality of San Narciso⁴⁹ in 1995, it indicated a shift in the jurisprudential treatment of municipalities created through presidential issuances. The questioned municipality of San Andres, Quezon was created on 20 August 1959 by Executive Order No. 353 issued by President Carlos P. Garcia. Executive Order No. 353 was not one of the thirty-three issuances annulled by Pelaez in 1965. The legal status of the Municipality of San Andres was first challenged only in 1989, through a petition forquo warranto filed with the Regional Trial Court of Gumaca, Quezon, which did cite Pelaezas authority.⁵⁰ The RTC dismissed the petition for lack of cause of action, and the petitioners therein elevated the matter to this Court.

In dismissing the petition, the Court delved in the merits of the petition, if only to resolve further doubt on the legal status of San Andres. It noted a circumstance which is not present in the case at bar that San Andres was in existence for nearly thirty (30) years before its legality was challenged. The Court did not declare the executive order creating San Andres null and void. Still, acting on the premise that the said executive order was a complete nullity, the Court noted “peculiar circumstances” that led to the conclusion that San Andres had attained the unique status of a “de facto municipal corporation.”⁵¹ It noted that Pelaez limited its nullificatory effect only to those executive orders specifically challenged therein, despite the fact that the Court then could have very well extended the decision to invalidate San Andres as well.⁵² This statement squarely contradicts Camid’s reading of San Narciso that the creation of San Andres, just like Andong, had been declared a complete nullity on the same ground of unconstitutional delegation of legislative power found in Pelaez.⁵³

The Court also considered the applicability of Section 442(d)⁵⁴ of the Local Government Code of 1991. It clarified the implication of the provision as follows:

Equally significant is Section 442(d) of the Local Government Code to the effect that municipal districts “organized pursuant to presidential issuances or executive orders and which have their respective sets of elective municipal officials holding office at the time of the effectivity of (the) Code shall henceforth be considered as regular municipalities.” No pretension of unconstitutionality per se of Section 442(d) of the Local Government Code is preferred. It is doubtful whether such a pretext, even if made, would succeed. The power to create political subdivisions is a function of the legislature. Congress did just that when it has incorporated Section 442(d) in the Code. Curative laws, which in essence are retrospective, and aimed at giving “validity to acts done that would have been invalid under existing laws, as if existing laws have been complied with,” are validly accepted in this jurisdiction, subject to the usual qualification against impairment of vested rights. (Emphasis supplied)⁵⁵

The holding in San Narciso was subsequently affirmed in Municipality of Candijay v. Court of Appeals⁵⁶ and Municipality of Jimenez v. Baz⁵⁷ In Candijay, the juridical personality of the Municipality of Alicia, created in a 1949 executive order, was attacked only beginning in 1984. Pelaez was again invoked in support of the challenge, but the Court refused to invalidate the municipality, citing San Narciso at length. The Court noted that the situation of the Municipality of Alicia was strikingly similar to that in San Narciso; hence, the town should likewise “benefit from the effects of Section 442(d) of the Local Government Code, and should [be] considered as a regular, de jure municipality.” ⁵⁸

The valid existence of Municipality of Sinacaban, created in a 1949 executive order, was among the issues raised in Jimenez. The Court, through Justice Mendoza, provided an expert summation of the evolution of the rule.

The principal basis for the view that Sinacaban was not validly created as a municipal corporation is the ruling in Pelaez v. Auditor General that the creation of municipal corporations is essentially a legislative matter and therefore the President was without power to create by executive order the Municipality of Sinacaban. The ruling in this case has been reiterated in a number of cases later decided. However, we have since held that where a municipality created as such by executive order is later impliedly recognized and its acts are accorded legal validity, its creation can no longer be questioned. In Municipality of San Narciso, Quezon v. Mendez, Sr., this Court considered the following factors as having validated the creation of a municipal corporation, which, like the Municipality of Sinacaban, was created by executive order of the President before the ruling in Pelaez v. Auditor General: (1) the fact that for nearly 30 years the validity of the creation of the municipality had never been challenged; (2) the fact that following the ruling in Pelaez noquo warranto suit was filed to question the validity of the executive order creating such municipality; and (3) the fact that the municipality was later classified as a fifth class municipality, organized as part of a municipal circuit court and considered part of a legislative district in the Constitution apportioning the seats in the House of Representatives. Above all, it was held that whatever doubt there might be as to the dejure character of the municipality must be deemed to have been put to rest by the Local Government Code of 1991 (R. A. No. 7160), ‘442(d) of which provides that “municipal districts organized pursuant to presidential issuances or executive orders and which have their respective sets of elective officials holding office at the time of the effectivity of this Code shall henceforth be considered as regular municipalities.”

Here, the same factors are present so as to confer on Sinacaban the status of at least a de facto municipal corporation in the sense that its legal existence has been recognized and acquiesced publicly and officially. Sinacaban had been in existence for sixteen years whenPelaez v. Auditor General was decided on December 24, 1965. Yet the validity of E.O. No. 258 creating it had never been questioned. Created in 1949, it was only 40 years later that its existence was questioned and only because it had laid claim to an area that apparently is desired for its revenue. This fact must be underscored because under Rule 66, ’16 of the Rules of Court, a quo warranto suit against a corporation for forfeiture of its charter must be commenced within five (5) years from the time the act complained of was done or committed. On the contrary, the State and even the Municipality of Jimenez itself have recognized Sinacaban’s corporate existence. Under Administrative Order No. 33 dated June 13, 1978 of this Court, as reiterated by ’31 of the Judiciary Reorganization Act of 1980 (B. P. Blg. 129), Sinacaban is constituted part of a municipal circuit for purposes of the establishment of Municipal Circuit Trial Courts in the country. For its part, Jimenez had earlier recognized Sinacaban in 1950 by entering into an agreement with it regarding their common boundary. The agreement was embodied in Resolution No. 77 of the Provincial Board of Misamis Occidental.

Indeed Sinacaban has attained de jure status by virtue of the Ordinance appended to the 1987 Constitution, apportioning legislative districts throughout the country, which considered Sinacaban part of the Second District of Misamis Occidental. Moreover, following the ruling in Municipality of San Narciso, Quezon v. Mendez, Sr., 442(d) of the Local Government Code of 1991 must be deemed to have cured any defect in the creation of Sinacaban’.⁵⁹ ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

From this survey of relevant jurisprudence, we can gather the applicable rules. Pelaez and its offspring cases ruled that the President has no power to create municipalities, yet limited its nullificatory effects to the particular municipalities challenged in actual cases before this Court. However, with the promulgation of the Local Government Code in 1991, the legal cloud was lifted over the municipalities similarly created by executive order but not judicially annulled. The de facto status of such municipalities as San Andres, Alicia and Sinacaban was recognized by this Court, and Section 442(b) of the Local Government Code deemed curative whatever legal defects to title these municipalities had labored under.

Is Andong similarly entitled to recognition as a de facto municipal corporation? It is not. There are eminent differences between Andong and municipalities such as San Andres, Alicia and Sinacaban. Most prominent is the fact that the executive order creating Andong was expressly annulled by order of this Court in 1965. If we were to affirm Andong’s de facto status by reason of its alleged continued existence despite its nullification, we would in effect be condoning defiance of a valid order of this Court.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

Court decisions cannot obviously lose their efficacy due to the sheer defiance by the parties aggrieved.

It bears noting that based on Camid’s own admissions, Andong does not meet the requisites set forth by Section 442(d) of the Local Government Code. Section 442(d) requires that in order that the municipality created by executive order may receive recognition, they must “have their respective set of elective municipal officials holding office at the time of the effectivity of [the Local Government] Code.” Camid admits that Andong has never elected its municipal officers at all.⁶⁰ This incapacity ties in with the fact that Andong was judicially annulled in 1965. Out of obeisance to our ruling in Pelaez, the national government ceased to recognize the existence of Andong, depriving it of its share of the public funds, and refusing to conduct municipal elections for the void municipality.

The failure to appropriate funds for Andong and the absence of elections in the municipality in the last four decades are eloquent indicia of the non-recognition by the State of the existence of the town. The certifications relied upon by Camid, issued by the DENR-CENRO and the National Statistics Office, can hardly serve the purpose of attesting to Andong’s legal efficacy. In fact, both these certifications qualify that they were issued upon the request of Camid, “to support the restoration or re-operation of the Municipality of Andong, Lanao del Sur,”⁶¹ thus obviously conceding that the municipality is at present inoperative.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

We may likewise pay attention to the Ordinance appended to the 1987 Constitution, which had also been relied upon in Jimenez and San Narciso. This Ordinance, which apportioned the seats of the House of Representatives to the different legislative districts in the Philippines, enumerates the various municipalities that are encompassed by the various legislative districts. Andong is not listed therein as among the municipalities of Lanao del Sur, or of any other province for that matter.⁶² On the other hand, the municipalities of San Andres, Alicia and Sinacaban are mentioned in the Ordinance as part of Quezon,⁶³Bohol,⁶⁴ and Misamis Occidental⁶⁵ respectively.

How about the eighteen (18) municipalities similarly nullified in Pelaez but certified as existing in the DILG Certification presented by Camid? The petition fails to mention that subsequent to the ruling in Pelaez, legislation was enacted to reconstitute these municipalities.⁶⁶ It is thus not surprising that the DILG certified the existence of these eighteen (18) municipalities, or that these towns are among the municipalities enumerated in the Ordinance appended to the Constitution. Andong has not been similarly reestablished through statute. Clearly then, the fact that there are valid organic statutes passed by legislation recreating these eighteen (18) municipalities is sufficient legal basis to accord a different legal treatment to Andong as against these eighteen (18) other municipalities.

We thus assert the proper purview to Section 442(d) of the Local Government Code that it does not serve to affirm or reconstitute the judicially dissolved municipalities such as Andong, which had been previously created by presidential issuances or executive orders. The provision affirms the legal personalities only of those municipalities such as San Narciso, Alicia, and Sinacaban, which may have been created using the same infirm legal basis, yet were fortunate enough not to have been judicially annulled. On the other hand, the municipalities judicially dissolved in cases such as Pelaez, San Joaquin, and Malabang, remain inexistent, unless recreated through specific legislative enactments, as done with the eighteen (18) municipalities certified by the DILG. Those municipalities derive their legal personality not from the presidential issuances or executive orders which originally created them or from Section 442(d), but from the respective legislative statutes which were enacted to revive them.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

And what now of Andong and its residents? Certainly, neither Pelaez or this decision has obliterated Andong into a hole on the ground. The legal effect of the nullification of Andong in Pelaez was to revert the constituent barrios of the voided town back into their original municipalities, namely the municipalities of Lumbatan, Butig and Tubaran.⁶⁷ These three municipalities subsist to this day as part of Lanao del Sur,⁶⁸ and presumably continue to exercise corporate powers over the barrios which once belonged to Andong.

If there is truly a strong impulse calling for the reconstitution of Andong, the solution is through the legislature and not judicial confirmation of void title. If indeed the residents of Andong have, all these years, been governed not by their proper municipal governments but by a ragtag “Interim Government,” then an expedient political and legislative solution is perhaps necessary. Yet we can hardly sanction the retention of Andong’s legal personality solely on the basis of collective amnesia that may have allowed Andong to somehow pretend itself into existence despite its judicial dissolution. Maybe those who insist Andong still exists prefer to remain unperturbed in their blissful ignorance, like the inhabitants of the cave in Plato’s famed allegory. But the time has come for the light to seep in, and for the petitioner and like-minded persons to awaken to legal reality.

WHEREFORE, the Petition is DISMISSED for lack of merit. Costs against petitioner.

SO ORDERED.

Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., Azcuna, Chico-Nazario and Garcia, JJ., concur.

EN BANC

[G.R. No. 103702. December 6, 1994.]

MUNICIPALITY OF SAN NARCISO, QUEZON; MAYOR JUAN K. UY; COUNCILORS: DEOGRACIAS R. ARGOSINO III, BENITO T. CAPIO, EMMANUEL R. CORTEZ, NORMANDO MONTILLA, LEONARDO C. UY, FIDEL C. AURELLANA, PEDRO C. CARABIT, LEONARDO D. AURELLANA, FABIAN M. MEDENILLA, TRINIDAD F. CORTEZ, SALVADOR M. MEDENILLA, CERELITO B. AUREADA and FRANCISCA A. BAMBA, Petitioners, v. HON. ANTONIO V. MENDEZ, SR., Presiding Judge, Regional Trial Court, Branch 62, 4th Judicial Region, Gumaca, Quezon; MUNICIPALITY OF SAN ANDRES, QUEZON; MAYOR FRANCISCO DE LEON; COUNCILORS: FE LUPINAC, TOMAS AVERIA, MANUEL O. OSAS, WILFREDO O. FONTANIL, ENRICO U. NADRES, RODELITO LUZOIR, LENAC, JOSE L. CARABOT, DOMING AUSA, VIDAL BANQUELES and CORAZON M. MAXIMO, Respondents.
D E C I S I O N
VITUG, J.:
On 20 August 1959, President Carlos P. Garcia, issued, pursuant to the then Sections 68 and 2630 of the Revised Administrative Code, as amended, Executive Order No. 353 creating the municipal district of San Andres, Quezon, by segregating from the municipality of San Narciso of the same province, the barrios of San Andres, Mangero, Alibijaban, Pansoy, Camflora and Tala along with their respective sitios.chanrobles virtual lawlibrary

Executive Order No. 353 was issued upon the request, addressed to the President and coursed through the Provincial Board of Quezon, of the municipal council of San Narciso, Quezon, in its Resolution No. 8 of 24 May 1959. 1

By virtue of Executive Order No. 174, dated 05 October 1965, issued by President Diosdado Macapagal, the municipal district of San Andres was later officially recognized to have gained the status of a fifth class municipality beginning 01 July 1963 by operation of Section 2 of Republic Act No. 1515. 2 The executive order added that” (t)he conversion of this municipal district into (a) municipality as proposed in House Bill No. 4864 was approved by the House of Representatives.”cralaw virtua1aw library

On 05 June 1989, the Municipality of San Narciso filed a petition for quo warranto with the Regional Trial Court, Branch 62, in Gumaca, Quezon, against the officials of the Municipality of San Andres. Docketed Special Civil Action No. 2014-G, the petition sought the declaration of nullity of Executive Order No. 353 and prayed that the respondent local officials of the Municipality of San Andres be permanently ordered to refrain from performing the duties and functions of their respective offices. 3 Invoking the ruling of this Court in Pelaez v. Auditor General, 4 the petitioning municipality contended that Executive Order No. 353, a presidential act, was a clear usurpation of the inherent powers of the legislature and in violation of the constitutional principle of separation of powers. Hence, petitioner municipality argued, the officials of the Municipality or Municipal District of San Andres had no right to exercise the duties and functions of their respective offices that rightfully belonged to the corresponding officials of the Municipality of San Narciso.

In their answer, respondents asked for the dismissal of the petition, averring, by way of affirmative and special defenses, that since it was at the instance of petitioner municipality that the Municipality of San Andres was given life with the issuance of Executive Order No. 353, it (petitioner municipality) should be deemed estopped from questioning the creation of the new municipality; 5 that because the Municipality of San Andred had been in existence since 1959, its corporate personality could no longer be assailed; and that, considering the petition to be one for quo warranto, petitioner municipality was not the proper party to bring the action, that prerogative being reserved to the State acting through the Solicitor General. 6

On 18 July 1991, after the parties had submitted their respective pre-trial briefs, the trial court resolved to defer action on the motion to dismiss and to deny a judgment on the pleadings.cralawnad

On 27 November 1991, the Municipality of San Andres filed anew a motion to dismiss alleging that the case had become moot and academic with the enactment of Republic Act No. 7160, otherwise known as the Local Government Code of 1991, which took effect on 01 January 1991. The movant municipality cited Section 442(d) of the law, reading thusly:chanrob1es virtual 1aw library

Sec. 442. Requisites for Creation. — . . .

“(d) Municipalities existing as of the date of the effectivity of this Code shall continue to exist and operate as such. Existing municipal districts organized pursuant to presidential issuances or executive orders and which have their respective set of elective municipal officials holding office at the time of the effectivity of this Code shall henceforth be considered as regular municipalities.”cralaw virtua1aw library

The motion was opposed by petitioner municipality, contending that the above provision of law was inapplicable to the Municipality of San Andres since the enactment referred to legally existing municipalities and not to those whose mode of creation had been void ab initio. 7

In its Order of 02 December 1991, the lower court 8 finally dismissed the petition 9 for lack of cause of action on what it felt was a matter that belonged to the State, adding that “whatever defects (were) present in the creation of municipal districts by the President pursuant to presidential issuances and executive orders, (were) cured by the enactment of R. A. 7160, otherwise known as Local Government Code of 1991.” In an order, dated 17 January 1992, the same court denied petitioner municipality’s motion for reconsideration.

Hence, this petition “for review on certiorari.” Petitioners 10 argue that in issuing the orders of 02 December 1991 and 17 January 1992, the lower court has “acted with grave abuse of discretion amounting to lack of or in excess of jurisdiction.” Petitioners assert that the existence of a municipality created by a null and void presidential order may be attacked either directly or even collaterally by anyone whose interests or rights are affected, and that an unconstitutional act is not a law, creates no office and is inoperative such as though its has never been passed. 11

Petitioners consider the instant petition to be one for “review on certiorari” under Rules 42 and 45 of the Rules of Court; at the same time, however, they question the orders of the lower court for having been issued with “grave abuse of discretion amounting to lack of or in excess of jurisdiction, and that there is no other plain , speedy and adequate remedy in the ordinary course of law available to petitioners to correct said Orders, to protect their rights and to secure a final and definitive interpretation of the legal issues involved.” 12 Evidently, then, the petitioners intend to submit their case in this instance under Rule 65. We shall disregard the procedural incongruence.

The special civil action of quo warranto is a “prerogative writ by which the Government can call upon any person to show by what warrant he holds a public office or exercises a public franchise.” 13 When the inquiry is focused on the legal existence of a body politic, the action is reserved to the State in a proceeding for quo warranto or any other credit proceeding. 14 It must be brought “in the name of the Republic of the Philippines” 15 and commenced by the Solicitor General or the fiscal “when directed by the President of the Philippines . . . .” 16 Such officers may, under certain circumstances, bring such an action “at the request and upon the relation of another person” with the permission of the court. 17 The Rules of Court also allows an individual to commence an action for quo warranto in his own name but this initiative can be done when he claims to be “entitled to a public office or position usurped or unlawfully held or exercised by another.” 18 While the quo warranto proceedings filed below by petitioner municipality has so named only the officials of the Municipality of San Andres as respondents, it is virtually, however, a denunciation of the authority of the Municipality or Municipal District of San Andres to exist and to act in that capacity.

At any rate, in the interest of resolving any further doubt on the legal status of the Municipality of San Andres, the Court shall delve into the merits of the petition.chanrobles virtual lawlibrary

While petitioners would grant that the enactment of Republic Act No. 7160 may have converted the Municipality of San Andres into a de facto municipality, they, however, contend that since the petition for quo warranto had been filed prior to the passage of said law, petitioner municipality had acquired a vested right to seek the nullification of Executive Order No. 353, and any attempt to apply Section 442 of Republic Act 7160 to the petition would perforce be violative of due process and the equal protection clause of the Constitution.

Petitioners’ theory might perhaps be a point to consider had the case been seasonably brought. Executive Order No. 353 creating the municipal district of San Andres was issued on 20 August 1959 but it was only after almost thirty (30) years, or on 05 June 1989, that the municipality of San Narciso finally decided to challenge the legality of the executive order. In the meantime, the Municipal District, and later the Municipality, of San Andres, began and continued to exercise the powers and authority of a duly created local government unit. In the same manner that the failure of a public officer to question his ouster or the right of another to hold a position within one-year period can abrogate an action belatedly filed, 19 so also, if not indeed with greatest imperativeness, must a quo warranto proceeding assailing the lawful authority of a political subdivision be timely raised. 20 Public interest demands it.

Granting the Executive Order No. 353 was a complete nullity for being the result of an unconstitutional delegation of legislative power, the peculiar circumstances obtaining in this case hardly could offer a choice other than to consider the Municipality of San Andres to have at least attained a status uniquely of its own closely approximating, if not in fact attaining, that of a de facto municipal corporation. Conventional wisdom cannot allow it to be otherwise. Created in 1959 by virtue of Executive Order No. 353, the Municipality of San Andres had been in existence for more than six years when, on 24 December 1965, Pelaez v. Auditor General was promulgated. The ruling could have sounded the call for a similar declaration of the unconstitutionality of Executive Order No. 353 but it was not to be the case. On the contrary, certain governmental acts all pointed to the State’s recognition of the continued existence of the Municipality of San Andres. Thus, after more than five years as a municipal district, Executive Order No. 174 classified the Municipality of San Andres as a fifth class municipality after having surpassed the income requirement laid out in Republic Act No. 1515. Section 31 of Batas Pambansa Blg. 129, otherwise known as the Judiciary Reorganization Act of 1980, constituted as municipal circuits, in the establishment of Municipal Circuit Trial Courts in the country, certain municipalities that comprised the municipal circuits organized under Administrative Order No. 33, dated 13 June 1978, issued by this Court pursuant to Presidential Decree No. 537. Under this administrative order, the Municipality of San Andres had been covered by the 10th Municipal Circuit Court of San Francisco-San Andres for the province of Quezon.chanrobles virtual lawlibrary

At the present time, all doubts on the de jure standing of the municipality must be dispelled. Under the Ordinance (adopted on 15 October 1986) apportioning the seats of the House of Representatives, appended to the 1987 Constitution, the Municipality of San Andres has been considered to be one of the twelve (12) municipalities composing the Third District of the province of Quezon. Equally significant is Section 442(d) of the Local Government Code to the effect that municipal districts “organized pursuant to presidential issuances or executive orders and which have their respective sets of elective municipal officials holding office at the time of the effectivity of (the) Code shall henceforth be considered as regular municipalities.” No pretension of unconstitutionality per se of Section 442(d) of the Local Government Code is preferred. It is doubtful whether such a pretext, even if made, would succeed. The power to create political subdivisions is a function of the legislature. Congress did just that when it has incorporated Section 442(d) in the Code. Curative laws, which in essence are retrospective, 21 and aimed at giving “validity to acts done that would have been invalid under existing laws, as if existing laws have been complied with,” are validly accepted in this jurisdiction, subject to the usual qualification against impairment of vested rights. 22

All considered, the de jure status of the Municipality of San Andres in the province of Quezon must now be conceded.

WHEREFORE, the instant petition for certiorari is hereby DISMISSED. Costs against petitioners.

SO ORDERED.

Narvasa, C.J., Padilla, Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Quiason, Puno, Kapunan and Mendoza, JJ., concur.

Feliciano, J., is on leave.

THIRD DIVISION

[G.R. No. 116702. December 28, 1995.]

THE MUNICIPALITY OF CANDIJAY, BOHOL, acting through its. Sangguniang Bayan and Mayor,Petitioner, v. COURT OF APPEALS and THE MUNICIPALITY OF ALICIA, BOHOL, Respondents.
D E C I S I O N
PANGANIBAN, J.:
This is a petition for review on certiorari of the Decision of the Court of Appeals 1 promulgated on June 28, 1994, reversing the judgment 2 of the Regional Trial Court (Branch I) of the City of Tagbilaran, Bohol.

The lower court’s decision, among other things declared “barrio/barangay Pagahat as within the territorial jurisdiction of the plaintiff municipality of Candijay, Bohol, therefore, said barrio forms part and parcel of its territory, therefore, belonging to said plaintiff municipality”, and further permanently enjoined defendant municipality of Alicia “to respect plaintiff’s control, possession and political supervision of barangay Pagahat and never to molest, disturb, harass its possession and ownership over the same barrio” (RTC decision, p. 4; Rollo, p. 86).

On appeal, the respondent Court stated that” (S)crutiny of the conflicting claims and the respective evidence of the parties lead to the conclusion that the trial court committed an error in declaring that Barrio Pagahat is within the territorial jurisdiction of plaintiff-appellee (municipality of Candijay).” Said Court rejected the boundary line being claimed by petitioner based on certain exhibits, since it would in effect place “practically all of Barrio Pagahat . . ., part of Barrio Cagongcagong and portions of Barrio Putlongcam and La Hacienda and all of Barrio Mahayag and Barrio del Monte within the territorial jurisdiction of plaintiff-appellee Candijay.” Added the respondent Court, “As aptly pointed out by defendant-appellant in its appeal brief, ‘the plaintiff municipality will not only engulf the entire barrio of Pagahat, but also of the barrios of Putlongcam, Mahayag, Del Monte, Cagongcagong, and a part of the Municipality of Mabini. Candijay will eat up a big chunk of territories far exceeding her territorial jurisdiction under the law creating her. Her claim opens the floodgate of controversies over boundaries, including with Mabini.’” (Decision, p. 4; Rollo, p. 35.) The respondent Court concluded that “the trial court erred in relying on Exh. X-Commissioner [exhibit for petitioner], because, in effect, it included portions of Barrios Putlongcam and La Hacienda within the jurisdiction of appellee Candijay when said barrios are undisputedly part of appellant ‘ s (Alicia) territory under Executive Order No. 265 creating the latter” (Decision, p. 6, Rollo, p. 37).

The respondent Court also found, after an examination of the respective survey plans of petitioner and respondent submitted as exhibits, that “both plans are inadequate insofar as identifying the monuments of the boundary line between [petitioner] and the Municipality of Mabini (which is not a party to this case) as declared by the Provincial Board of Bohol . Neither plan shows where Looc-Tabasan, Lomislis Island, Tagtang Canlirong, mentioned in the afore-quoted boundary line declared by the Provincial Board of Bohol, are actually located.” (Decision, p. 4; Rollo, p. 35.) The respondent Court, after weighing and considering the import of certain official acts, including Executive Order No. 265 dated September 16, 1949 (which created the municipality of Alicia from out of certain barrios of the municipality of Mabini), and Act No. 968 of the Philippine Commission dated October 31, 1903 (which set forth the respective component territories of the municipalities of Mabini and Candijay), concluded that “Barrio Bulawan from where barrio Pagahat originated is not mentioned as one of the barrios constituted as part of defendant-appellant Municipality of Alicia. Neither do they show that Barrio Pagahat forms part of plaintiff-appellant Municipality of Candijay.”cralaw virtua1aw library

On that basis, the respondent Court held that:jgc:chanrobles.com.ph

“Clearly, from the foregoing, there is equiponderance of evidence. The Supreme Court has ruled:chanrob1es virtual 1aw library

‘Equiponderance of evidence rule states:chanrob1es virtual 1aw library

‘When the scale shall stand upon an equipoise and there is nothing in the evidence which shall incline it to one side or the other, the court will find for the defendant.

‘Under said principle, the plaintiff must rely on the strength of his evidence and not on the weakness of defendant’s claim. Even if the evidence of the plaintiff may be stronger than that of the defendant, there is no preponderance of evidence on his side if such evidence is insufficient in itself to establish his cause of action .

(Sapu-an, Et. Al. v. Court of Appeals, Oct. 19, 1992, 214 SCRA 701, 705-706 .)

“WHEREFORE, the appealed judgment is reversed and set aside. Another judgment is hereby entered dismissing the complaint in Civil Case No. 2402. No costs.” (Decision. p. 6, Rollo, p. 37.)

Petitioner’s motion for reconsideration having been rejected by the respondent Court, petitioner came to this Court, alleging (i) improper application by the respondent Court of Appeals of the so-called principle of “equiponderance of evidence”, for having based its ruling against petitioner on documentary evidence which, petitioner claims, are void, (ii) the respondent municipality’s purported lack of juridical personality, as a result of having been created under a void executive order, and (iii) that the challenged Decision “does not solve the problem of both towns but throws them back again to their controversy.” (Petition, p. 6, Rollo, p. 21.)

After deliberating on the petition, comment and reply, this Court is not persuaded to grant due course to the petition.

With respect to the first and third grounds, we find that the issues of fact in this case had been adequately passed upon by respondent Court in its Decision, which is well-supported by the evidence on record. The determination of equiponderance of evidence by the respondent Court involves the appreciation of evidence by the latter tribunal, which will not be reviewed by this Court unless shown to be whimsical or capricious; here, there has been no such showing.

In connection with the foregoing, that the assailed Decision, in dismissing the complaint in Civil Case No. 2402, may leave the parties where they are or may not resolve their problem one way or the other, is of no moment. The fact remains that, as correctly evaluated by the respondent Court, neither party was able to make out a case; neither side could establish its cause of action and prevail with the evidence it had. They are thus no better off than before they proceeded to litigate, and, as a consequence thereof, the courts can only leave them as they are. In such cases, courts have no choice but to dismiss the complaints/petitions.

On the second issue, we noted that petitioner commenced its collateral attack on the juridical personality of respondent municipality on 19 January 1984 (or some thirty five years after respondent municipality first came into existence in 1949) during the proceedings in the court a quo. It appears that, after presentation of its evidence, herein petitioner asked the trial court to bar respondent municipality from presenting its evidence on the ground that it had no juridical personality. Petitioner contended that Exec. Order No. 265 issued by President Quirino on September 16, 1949 creating respondent municipality is null and void ab initio, inasmuch as Section 68 of the Revised Administrative Code, on which said Executive Order was based, constituted an undue delegation of legislative powers to the President of the Philippines, and was therefore declared unconstitutional, per this Court’s ruling in Pelaez v. Auditor General. 3

In this regard, we call to mind the ruling of this Court in Municipality of San Narciso, Quezon v. Mendez, Sr., 4 which will be found very instructive in the case at bench. Therein we stated:jgc:chanrobles.com.ph

“While petitioners would grant that the enactment of Republic Act No. 7160 [Local Government Code of 1991] may have converted the Municipality of San Andres into a de facto municipality, they, however, contend that since the petition for quo warranto had been filed prior to the passage of said law, petitioner municipality had acquired a vested right to seek the nullification of Executive Order No. 353, and any attempt to apply Section 442 of Republic Act 7160 to the petition would perforce be violative of due process and the equal protection clause of the Constitution.

“Petitioner’s theory might perhaps be a point to consider had the case been seasonably brought. Executive Order No. 353 creating the municipal district of San Andres was issued on 20 August 1959 but it was only after almost thirty (30) years, or on 05 June 1989, that the municipality of San Narciso finally decided to challenge the legality of the executive order. In the meantime, the Municipal district, and later the Municipality of San Andres, began and continued to exercise the powers and authority of a duly created local government unit. In the same manner that the failure of a public officer to question his ouster or the right of another to hold a position within a one-year period can abrogate an action belatedly file, so also, if not indeed with greatest imperativeness, must a quo warranto proceeding assailing the lawful authority of a political subdivision be timely raised. Public interest demands it.

“Granting that Executive Order No. 353 was a complete nullity for being the result of an unconstitutional delegation of legislative power, the peculiar circumstances obtaining in this case hardly could offer a choice other than to consider the Municipality of San Andres to have at least attained a status uniquely of its own closely approximating, if not in fact attaining, that of a de facto municipal corporation. Conventional wisdom cannot allow it to be otherwise. Created in 1959 by virtue of Executive Order No. 353, the Municipality of San Andres had been in existence for more than six years when, on 24 December 1965, Pelaez v. Auditor General was promulgated. The ruling could have sounded the call for a similar declaration of the unconstitutionality of Executive Order No. 353 but it was not to be the case. On the contrary, certain governmental acts all pointed to the State’s recognition of the continued existence of the Municipality of San Andres. Thus, after more than five years as a municipal district, Executive Order No. 174 classified the Municipality of San Andres as a fifth class municipality after having surpassed the income requirement laid out in Republic Act No. 1515. Section 31 of Batas Pambansa Blg. 129, otherwise known as the Judiciary Reorganization Act of 1980, constituted as municipal circuits, in the establishment of Municipal Circuit Trial Courts in the country, certain municipalities that comprised the municipal circuits organized under Administrative Order No. 33, dated 13 June 1978, issued by this court pursuant to Presidential Decree No. 537. Under this administrative order, the Municipality of San Andres had been covered by the 10th Municipal Circuit Court of San Francisco-San Andres for the province of Quezon.

“At the present time, all doubts on the de jure standing of the municipality must be dispelled. Under the Ordinance (adopted on 15 October 1986) apportioning the seats of the House of Representatives, appended to the 1987 Constitution, the Municipality of San Andres has been considered to be one of the twelve (12) municipalities composing the Third District of the province of Quezon. Equally significant is Section 442 (d) of the Local Government Code to the effect that municipal districts “organized pursuant to presidential issuances or executive orders and which have their respective sets of elective municipal officials holding office at the time of the effectivity of (the) Code shall henceforth be considered as regular municipalities.” No pretension of unconstitutionality per se of Section 442(d) of the Local Government Code is proffered. It is doubtful whether such a pretext, even if made, would succeed. The power to create political subdivisions is a function of the legislature. congress did just that when it has incorporated Section 442(d) in the Code. Curative laws, which in essence are retrospective, and aimed at giving “validity to acts done that would have been complied with,” are validly accepted in this jurisdiction, subject to the usual qualification against impairment of vested rights.

“All considered, the de jure status of the Municipality of San Andres in the province of Quezon must now be conceded.”cralaw virtua1aw library

Respondent municipality’s situation in the instant case is strikingly similar to that of the municipality of San Andres. Respondent municipality of Alicia was created by virtue of Executive Order No. 265 in 1949, or ten years ahead of the municipality of San Andres, and therefore had been in existence for all of sixteen years when Pelaez v. Auditor General was promulgated. And various governmental acts throughout the years all indicate the State’s recognition and acknowledgment of the existence thereof. For instance, under Administrative Order No. 33 above-mentioned, the Municipality of Alicia was covered by the 7th Municipal Circuit Court of Alicia-Mabini for the province of Bohol. Likewise, under the Ordinance appended to the 1987 Constitution, the Municipality of Alicia is one of twenty municipalities comprising the Third District of Bohol.

Inasmuch as respondent municipality of Alicia is similarly situated as the municipality of San Andres, it should likewise benefit from the effects of Section 442 (d) of the Local Government Code, and should henceforth be considered as a regular, de jure municipality.

WHEREFORE, the instant petition for review on certiorari is hereby DENIED, with costs against petitioner.

SO ORDERED.

Romero, Melo and Vitug, JJ., concur.

EN BANC

[G.R. No. 105746. December 2, 1996.]

MUNICIPALITY OF JIMENEZ, through its MAYOR ELEUTERIO A. QUIMBO, VICE-MAYOR ROBINSON B. LOMO, COUNCILORS TEOFILO GALORIO, CASIANO ADORABLE, MARIO APAO, ANTONIO BIENES, VEDE SULLANO, MARIETO TAN, SR., HERMINIO SERINO, BENJAMIN DANO, and CRISPULO MUNAR, and ELEUTERIO A. QUIMBO, ROBINSON B. LOMO, TEOFILO GALORIO, CASIANO ADORABLE, MARIO APAO, ANTONIO BIENES, VEDE SULLANO, MARIETO TAN, SR., HERMINIO SERINO, BENJAMIN DANO, and CRISPULO MUNAR, in their private capacities as taxpayer in the Province of Misamis Occidental and in the Municipality of Jimenez, Misamis Occidental, and BENJAMIN C. GALINDO and BENHUR B. BAUTISTA, in their private capacities as taxpayers in the Province of Misamis Occidental and the Municipality of Jimenez, Misamis Occidental, Petitioners, v. HON. VICENTE T. BAZ. JR., Presiding Judge, REGIONAL, TRIAL COURT, BRANCH 14, 10th JUDICIAL REGION, OROQUIETA CITY, and MUNICIPALITY OF SINACABAN through its MAYOR EUFRACIO D. LOOD, VICE-MAYOR BASILIO M. BANAAG, COUNCILORS CONCEPCION E. LAGA-AC, MIGUEL F. ABCEDE, JUANITO B. TIU, CLAUDIO T. REGIL, ANICETO S. MEJAREZ NAZIANCINO PAYE, JOSE P. BANQUE, NUMERIANO B. MARIQUIT, and FEDERICO QUINIMON, and THE PROVINCE OF MISAMIS OCCIDENTAL through the PROVINCIAL BOARD OF MISAMIS OCCIDENTAL and its members, VICE-GOVERNOR FLORENCIO L. GARCIA, BOARD MEMBERS MARIVIC S. CHIONG, PACITA M. YAP, ALEGRIA V. CARINO, JULIO L. TIU, LEONARDO R. REGALADO II, CONSTANCIO C. BALAIS, and ERNESTO P. IRA, and THE COMMISSION ON AUDIT, through its Chairman. HON. EUFEMIO DOMINGO, and THE DEPARTMENT OF LOCAL GOVERNMENT through its Secretary, HON. LUIS SANTOS (now HON. CESAR SARINO), and THE DEPARTMENT OF BUDGET AND MANAGEMENT, through its Secretary, HON. GUILLERMO CARAGUE (now HON. SALVADOR ENRIQUEZ) and The Hon. CATALINO MACARAIG (now HON. FRANKLIN DRILON), EXECUTIVE SECRETARY, OFFICE OF THE PRESIDENT, Respondents.
D E C I S I O N
MENDOZA, J.:
This is a petition for review of the decision dated March 4, 1992 of the Regional Trial Court, Branch 14 of Oroquieta City, 1 affirming the legal existence of the Municipality of Sinacaban in Misamis Occidental and ordering the relocation of its boundary for the purpose of determining whether certain areas claimed by it belong to it.

The antecedent facts are as follows:chanrob1es virtual 1aw library

The Municipality of Sinacaban was created by Executive Order No. 258 of then President Elpidio Quirino, pursuant to §68 of the Revised Administrative Code of 1917. The full text of the Order reads:chanrob1es virtual 1aw library

EXECUTIVE ORDER NO. 258

CREATING THE MUNICIPALITY OF SINACABAN, IN THE PROVINCE OF MISAMIS OCCIDENTAL

Upon the recommendation of the Secretary of the Interior, and pursuant to the provisions of Section 68 of the Revised Administrative Code, there is hereby created, in the Province of Misamis Occidental, a municipality to be known as the municipality of Sinacaban, which shall consist of the southern portion of the municipality of Jimenez, Misamis Occidental, more particularly described and bounded as follows:chanrob1es virtual 1aw library

On the north by a line starting from point 1, the center of the lighthouse on the Tabo-o point S. 84º 30’W., 7,250 meters to point 2 which is on the bank of Palilan River branch; thence following Palilan River branch 2,400 meters southwesterly to point 3, thence a straight line S 87º 00’ W, 22,550 meters to point 4, where this intersects the Misamis Occidental-Zamboanga boundary; on the west, by the present Misamis Occidental-Zamboanga boundary; and on the south by the present Jimenez-Tudela boundary; and on the east, by the limits of the municipal waters which the municipality of Sinacaban shall have pursuant to section 2321 of the Revised Administrative Code, (Description based on data shown in Enlarged Map of Poblacion of Jimenez, Scale 1:8:000).

The municipality of Sinacaban contains the barrios of Sinacaban, which shall be the seat of the municipal government, Sinonoc, Libertad, the southern portion of the barrio of Macabayao, and the sitios of Tipan, Katipunan, Estrella, Flores, Senior, Adorable, San Isidro, Cagayanon, Kamanse, Kulupan and Libertad Alto.

The municipality of Jimenez shall have its present territory, minus the portion thereof included in the municipality of Sinacaban.

The municipality of Sinacaban shall begin to exist upon the appointment and qualification of the mayor, vice-mayor, and a majority of the councilors thereof. The new municipality shall, however, assume payment of a proportionate share of the loan of the municipality of Jimenez with the Rehabilitation Finance Corporation as may be outstanding on the date of its organization, the proportion of such payment to be determined by the Department of Finance.

Done in the City of Manila, this 30th day of August, in the year of Our Lord, nineteen hundred and forty-nine, and of the Independence of the Philippines, the fourth.

(SGD.) ELPIDIO QUIRINO

President of the Philippines

By the President:chanrob1es virtual 1aw library

(SGD.) TEODORO EVANGELISTA

Executive Secretary

By virtue of Municipal Council Resolution No. 171, 2 dated November 22, 1988, Sinacaban laid claim to a portion of Barrio Tabo-o and to Barrios Macabayao, Adorable, Sinara Baja, and Sinara Alto, 3 based on the technical description in E.O. No. 258. The claim was filed with the Provincial Board of Misamis Occidental against the Municipality of Jimenez.

In its answer, the Municipality of Jimenez, while conceding that under E.O. No. 258 the disputed area is part of Sinacaban, nonetheless asserted jurisdiction on the basis of an agreement it had with the Municipality of Sinacaban. This agreement was approved by the Provincial Board of Misamis Occidental, in its Resolution No. 77, dated February 18, 1950, which fixed the common boundary of Sinacaban and Jimenez as follows: 4

From a point at Cagayanon Beach follow Macabayao Road until it intersects Tabangag Creek at the back of the Macabayao Elementary School. Follow the Tabangag Creek until it intersect the Macabayao River at upper Adorable. Follow the Macabayao River such that the barrio of Macabayao. Sitio Adorable and site will be a part of Jimenez down and the sitios of San Vicente, Donan, Estrella, Mapula will be a part of Sinacaban. (Emphasis added)

In its decision dated October 11, 1989, 5 the Provincial Board declared the disputed area to be part of Sinacaban. It held that the previous resolution approving the agreement between the municipalities was void because the Board had no power to alter the boundaries of Sinacaban as fixed in E.O. No. 258, that power being vested in Congress pursuant to the Constitution and the Local Government Code of 1983 (B.P. Blg. 337), §134. 6 The Provincial Board denied in its Resolution No. 13-90 dated January 30, 1990 the motion of Jimenez seeking reconsideration. 7

On March 20, 1990, Jimenez filed a petition for certiorari, prohibition, and mandamus in the Regional Trial Court of Oroquieta City, Branch 14. The suit was filed against Sinacaban, the Province of Misamis Occidental and its Provincial Board, the Commission on Audit, the Departments of Local Government, Budget and Management, and the Executive Secretary. Jimenez alleged that, in accordance with the decision in Pelaez v. Auditor General, 8 the power to create municipalities is essentially legislative and consequently Sinacaban, which was created by an executive order, had no legal personality and no right to assert a territorial claim vis-a-vis Jimenez, of which it remains part. Jimenez prayed that Sinacaban be enjoined from assuming control and supervision over the disputed barrios; that the Provincial Board be enjoined from assuming jurisdiction over the claim of Sinacaban; that E.O. No. 258 be declared null and void; that the decision dated October 11, 1989 and Resolution No. 13-90 of the Provincial Board be set aside for having been rendered without jurisdiction; that the Commission on Audit be enjoined from passing in audit any expenditure of public funds by Sinacaban; that the Department of Budget and Management be enjoined from allotting public funds to Sinacaban; and that the Executive Secretary be enjoined from exercising control and supervision over said municipality.

During pre-trial, the parties agreed to limit the issues to the following:chanrob1es virtual 1aw library

A. Whether the Municipality of Sinacaban is a legal juridical entity, duly created in accordance with law;

B. If not, whether it is a de facto juridical entity;

C. Whether the validity of the existence of the Municipality can be properly questioned in this action on certiorari;

D. Whether the Municipality of Jimenez which had recognized the existence of the municipality for more than 40 years is estopped to question its existence;

E. Whether the existence of the municipality has been recognized by the laws of the land; and

F. Whether the decision of the Provincial Board had acquired finality.

On February 10, 1992, the RTC rendered its decision, the dispositive portion of which reads:chanrob1es virtual 1aw library

WHEREFORE, premises considered, it is the finding of this Court that the petition must be denied and judgment is hereby rendered declaring a STATUS QUO, that is. the municipality of Sinacaban shall continue to exist and operate as a regular municipality; declaring the decision dated October 11, 1989 rendered by the Sangguniang Panlalawigan fixing the boundaries between Sinacaban and Jimenez, Misamis Occi. as null and void, the same not being in accordance with the boundaries provided for in Executive Order No. 258 creating the municipality of Sinacaban; dismissing the petition for lack of merit, without pronouncement as to costs and damages. With respect to the without pronouncement as to costs and damages. With respect to the counterclaim, the same is hereby ordered dismissed.

The Commissioners are hereby ordered to conduct the relocation survey of the boundary of Sinacaban within 60 days from the time the decision shall have become final and executory and another 60 days within which to submit their report from the completion of the said relocation survey.

SO ORDERED.

The RTC inter alia, held that Sinacaban is a de facto corporation since it had completely organized itself even prior to the Pelaez case and exercised corporate powers for forty years before its existence was questioned; that Jimenez did not have the legal standing to question the existence of Sinacaban, the same being reserved to the State as represented by the Office of the Solicitor General in a quo warranto proceeding; that Jimenez was estopped from questioning the legal existence of Sinacaban by entering into an agreement with it concerning their common boundary; and that any question as to the legal existence of Sinacaban had been rendered moot by §442(d) of the Local Government Code of 1991 (R.A. No. 7160), which provides:chanrob1es virtual 1aw library

Municipalities existing as of the date of the effectivity of this Code shall continue to exist and operate as such. Existing municipal districts organized pursuant to presidential issuances or executive orders and which have their respective set of elective municipal officials holding office at the time of the effectivity of this Code shall henceforth be considered as regular municipalities.

On March 17, 1990, petitioner moved for a reconsideration of the decision but its motion was denied by the RTC. Hence this petition raising the following issues: (1) whether Sinacaban has legal personality to file a claim, and (2) if it has, whether it is the boundary provided for in E.O. No. 258 or in Resolution No. 77 of the Provincial Board of Misamis Occidental which should be used as the basis for adjudicating Sinacaban’s territorial claim.

First. The preliminary issue concerns the legal existence of Sinacaban. If Sinacaban legally exists, then it has standing to bring a claim in the Provincial Board. Otherwise, it cannot.

The principal basis for the view that Sinacaban was not validly created as a municipal corporation is the ruling in Pelaez v. Auditor General that the creation of municipal corporations is essentially a legislative matter and therefore the President was without power to create by executive order the Municipality of Sinacaban. The ruling in this case has been reiterated in a number of cases 9 later decided. However, we have since held that where a municipality created as such by executive order is later impliedly recognized and its acts are accorded legal validity, its creation can no longer be questioned. In Municipality of San Narciso, Quezon v. Mendez, Sr., 10 this Court considered the following factors as having validated the creation of a municipal corporation, which, like the Municipality of Sinacaban, was created by executive order of the President before the ruling in Pelaez v. Auditor General: (1) the fact that for nearly 30 years the validity of the creation of the municipality had never been challenged; (2) the fact that following the ruling in Pelaez no quo warranto suit was filed to question the validity of the executive order creating such municipality; and (3) the fact that the municipality was later classified as a fifth class municipality, organized as part of a municipal circuit court and considered part of a legislative district in the Constitution apportioning the seats in the House of Representatives. Above all, it was held that whatever doubt there might be as to the de jure character of the municipality must be deemed to have been put to rest by the Local Government Code of 1991 (R. A. No. 7160), §442(d) of which provides that “municipal districts organized pursuant to presidential issuances or executive orders and which have their respective sets of elective officials holding office at the time of the effectivity of this Code shall henceforth be considered as regular municipalities.”cralaw virtua1aw library

Here, the same factors are present so as to confer on Sinacaban the status of at least a de facto municipal corporation in the sense that its legal existence has been recognized and acquiesced publicly and officially. Sinacaban had been in existence for sixteen years when Pelaez v. Auditor General was decided on December 24, 1965. Yet the validity of E.O. No. 258 creating it had never been questioned. Created in 1949, it was only 40 years later that its existence was questioned and only because it had laid claim to an area that apparently is desired for its revenue. This fact must be underscored because under Rule 66, §16 of the Rules of Court, a quo warranto suit against a corporation for forfeiture of its charter must be commenced within five (5) years from the time the act complained of was done or committed. On the contrary, the State and even the Municipality of Jimenez itself have recognized Sinacaban’s corporate existence. Under Administrative Order No. 33 dated June 13, 1978 of this Court, as reiterated by §31 of the Judiciary Reorganization Act of 1980 (B. P. Blg. 129), Sinacaban is constituted part of a municipal circuit for purposes of the establishment of Municipal Circuit Trial Courts in the country. For its part, Jimenez had earlier recognized Sinacaban in 1950 by entering into an agreement with it regarding their common boundary. The agreement was embodied in Resolution No. 77 of the Provincial Board of Misamis Occidental.

Indeed Sinacaban has attained de jure status by virtue of the Ordinance appended to the 1987 Constitution, apportioning legislative districts throughout the country, which considered Sinacaban part of the Second District of Misamis Occidental. Moreover, following the ruling in Municipality of San Narciso, Quezon v. Mendez, Sr., 442(d) of the Local Government Code of 1991 must be deemed to have cured any defect in the creation of Sinacaban. This provision states:chanrob1es virtual 1aw library

Municipalities existing as of the date of the effectivity of this Code shall continue to exist and operate as such. Existing municipal districts organized pursuant to presidential issuances or executive orders and which have their respective set of elective municipal officials holding office at the time of the effectivity of the Code shall henceforth be considered as regular municipalities.

Second. Jimenez claims, however, that R.A. No. 7160, 442(d) is invalid, since it does not conform to the constitutional and statutory requirements for the holding of plebiscites in the creation of new municipalities. 11

This contention will not bear analysis. Since, as previously explained, Sinacaban had attained de facto status at the time the 1987 Constitution took effect on February 2, 1987, it is not subject to the plebiscite requirement. This requirement applies only to new municipalities created for the first time under the Constitution. Actually, the requirement of plebiscite was originally contained in Art. XI, §3 of the previous Constitution which took effect on January 17, 1973. It cannot, therefore, be applied to municipal corporations created before, such as the Municipality of Sinacaban in the case at bar.

Third. Finally, Jimenez argues that the RTC erred in ordering a relocation survey of the boundary of Sinacaban because the barangays which Sinacaban are claiming are not enumerated in E.O. No. 258 and that in any event in 1950 the parties entered into an agreement whereby the barangays in question were considered part of the territory of Jimenez.

E.O. No. 258 does not say that Sinacaban comprises only the barrios (now called barangays) therein mentioned. What it says is that “Sinacaban contains” those barrios, without saying they are the only ones comprising it. The reason for this is that the technical description, containing the metes and bounds of its territory, is controlling. The trial court correctly ordered a relocation survey as the only means of determining the boundaries of the municipality and consequently the question to which the municipality the barangays in question belong.

Now, as already stated, in 1950 the two municipalities agreed that certain barrios belonged to Jimenez, while certain other ones belonged to Sinacaban. This agreement was subsequently approved by the Provincial Board of Misamis Occidental. Whether this agreement conforms to E.O. No. 258 will be determined by the result of the survey. Jimenez contends, however, that regardless of its conformity to E.O. No. 258, the agreement as embodied in Resolution No. 77 of the Provincial Board, is binding on Sinacaban. This raises the question whether the Provincial Board had authority to approve the agreement or, to put it in another way, whether it had the power to declare certain barrios part of one or the other municipality. We hold it did not if the effect would be to amend the area as described in E.O. No. 258 creating the Municipality of Sinacaban.

At the time the Provincial Board passed Resolution No. 77 on February 18, 1950, the applicable law was §2167 of the Revised Administrative Code of 1917 which provided:chanrob1es virtual 1aw library

SEC. 2167. Municipal boundary disputes. — How settled. — Disputes as to jurisdiction of municipal governments over places or barrios shall be decided by the provincial boards of the provinces in which such municipalities are situated, after an investigation at which the municipalities concerned shall be duly heard. From the decision of the provincial board appeal may be taken by the municipality aggrieved to the Secretary of the Interior [now the Office of the Executive Secretary], whose decision shall be final. Where the places or barrios in dispute are claimed by municipalities situated in different provinces, the provincial boards of the provinces concerned shall come to an agreement if possible, but, in the event of their failing to agree, an appeal shall be had to the Secretary of Interior [Executive Secretary], whose decision shall be final.

As held in Pelaez v. Auditor General, 12 the power of provincial boards to settle boundary disputes is “of an administrative nature – involving, as it does, the adoption of means and ways to carry into effect the law creating said municipalities.” It is a power “to fix common boundary, in order to avoid or settle conflicts of jurisdiction between adjoining municipalities.” It is thus limited to implementing the law creating a municipality. It is obvious that any alteration of boundaries that is not in accordance with the law creating a municipality is not the carrying into effect of that law but its amendment. 13 If, therefore, Resolution No. 77 of the Provincial Board of Misamis Occidental is contrary to the technical description of the territory of Sinacaban, it cannot be used by Jimenez as basis for opposing the claim of Sinacaban.

Jimenez properly brought to the RTC for review the decision of October 11, 1989 and Resolution No. 13-90 of the Provincial Board. Its action is in accordance with the Local Government Code of 1983, §79 of which provides that in case no settlement of boundary disputes is made the dispute should be elevated to the RTC of the province. In 1989, when the action was brought by Jimenez, this Code was the governing law. The governing law is now the Local Government Code of 1991 (R.A. No. 7160), §§118-119.

Jimenez’s contention that the RTC failed to decide the case “within one year from the start of proceedings” as required by §79 of the Local Government Code of 1983 and the 90-day period provided for in Article VIII, §15 of the Constitution does not affect the validity of the decision rendered. For even granting that the court failed to decide within the period prescribed by law, its failure did not divest it of its jurisdiction to decide the case but only makes the judge thereof liable for possible administrative sanction. 14

WHEREFORE, the petition is DENIED and the decision of the Regional Trial Court of Oroquieta City, Branch 14 is AFFIRMED.

SO ORDERED.

Narvasa, C.J., Padilla, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Francisco, Hermosisima, Jr., Panganiban and Torres, Jr., JJ., concur.

4 Comments

Filed under Cases