DEMETRIA ESTRADA, plaintiff and appellant, vs. ULDARICO CASEDA, defendant and appellee. TUASON, J.

: This case is before this Court for review of a decision of the Court of First Instance of Manila reversing the judgment of the municipal court and declaring that "the plaintiff may not eject the defendant from the premises in question." It appears that on September 5, 1945, plaintiff brought this suit, for unlawful detainer, allegmg that defendant leased from her a part of a dwelling at a monthly rental of P26; that on August 11, 1945, plaintiff notified defendant in writing to vacate the premises under lease, because one of her married daughters was going to occupy them by the first of the following month; that defendant refused to leave. On October 13, 1945, Judge Mariano Nable, then of the municipal court, gave judgnient for plaintiff with order for defendant to pay the rent from October 1, 1945, at the rate of P26 a month. On the case being appealed to the Court of First Instance, defendant filed an answer alleging as special defense, among others not necessary to the solution of this appeal, "that the main motive of the plaintiff in bringing the present action is to oust the defendant and lease the same premises to third parties who are willing to pay the black market rental." In reversing the judgment of the municipal court, the Court of First Instance of Manila, Judge Rafael Dinglasan presiding, said that "Commonwealth Act No. 689, as amended only provides three grounds for ejecting a lessee or occupant from a building destined solely for dwelling, namely (1) for willful and deliberate non-payment of rents, (2) when the lessor has to occupy the building leased, and (3) when the lessee shall have subleased the building or any part thereof as dwelling or for dwelling purposes without the written consent of the proprietor." None of these conditions, according to the court, was alleged much less proved. The court correctly held that the fact that the premises under lease were needed by plaintiff's married daughter was not comprehended in the second ground. The above requirements were provided in Commonwealth Act No. 689, which was approved October 15, 1945. Section 14 of that Act provided that the same "shall be in force for a period of two years after its approval." Republic Act No. 66, approved October 18, 1946, amended section 14 of Commonwealth Act No. 689 so as to read as

follows: "Section 14. This Act shall be in force for a period of four years after its approval." When did this four-year period commence to run? Is the present lease still within this period? An amended act is ordinarily to be construed as if the original statute had been repealed, and a new and independent act in the amended form had been adopted in its stead; or, as frequently stated by the courts, so far as regards any action after the adoption of the amendment, as if the statute had been originally enacted in its amended form. The amendment becomes a part of the original statute as if it had always been contained therein, unless such amendment involves the abrogation of contractual relations between the state and others. Where an amendment leaves certain portions of the original act unchanged, such portions are continued in force, with the same meaning and effect they had before the amendment. So where an amendatory act provides that an existing statute shall be amended to read as recited in the amendatory act, such portions of the existing law as are retained, either literally or substantially, are regarded as a continuation of the existing law, and not as a new enactment. (59 C. J., 1096, 1097.) In accordance with this rule, the provision of Republic Act No. 66 amending section 14 of Commonwealth Act No. 689, related back to, and should be computed from, the date of the approval of the amended act, that is October 15, 1945. The period as thus construed expired on October 15, 1949. The judgment of Judge Dinglasan was correct, but, the period reckoned by the trial court being now over, our decision is that judgment shall be rendered ejecting defendant from the house described in the complaint and ordering him to pay rent at the rate of P26 a month from October 1, 1945. It is so ordered, without costs. Moran, C. J., Ozaeta, Paras, Feria, Montemayor, Reyes, and Torres, JJ., concur. MORAN, C. J.: Mr. Justice Bengzon voted in conformity with this decision. PADILLA, J.: I concur in the result. Commonwealth Act No. 689, as amended by Republic Act No. 66, cannot be given retroactive effect. The cause of action in the case at bar arose before the passage of the Acts. Judgment modified. [Estrada vs. Caseda, 84 Phil. 791(1949)]

MANILA JOCKEY CLUB, INC., petitioner and appellant, vs. GAMES AND AMUSEMENTS BOARD, ET AL., respondents and appellees. PHILIPPINE RACING CLUB, INC., petitioner-intervenor and appellant. [Manila Jockey Club, Inc. vs. Games and Amusements Board et al., 107 Phil. 151(1960)]BARRERA, J.: This is a petition for declaratory relief filed by petitioner Manila Jockey Club, Inc., in the Court of First Instance of Manila (Civil Case No. 31274), in which the Philippine Racing Club, Inc. intervened as party in interest with leave of court, praying that judgment be rendered against respondents Games and Amusements Board (GAB), Philippine Charity Sweepstakes Office (PCSO), and Executive Secretary Fortunato de Leon: [Manila Jockey Club, Inc. vs. Games and Amusements Board et al., 107 Phil. 151(1960)]nato de Leon: "(a) Interpreting Republic Acts Nos. 309 and 1502 in such a manner that the 30 Sundays unreserved for charitable institutions and therefore belonging to the private racing clubs under Section 4 of Republic Act No. 309 continue to pertain to said private entities. and that the 6 additional sweepstakes races authorized under Republic Act No. 1502 should be held on 6 of the 12 Saturdays not reserved for any private entity or particular charitable institution under Section 4 of Republic Act No. 309, or on any other day of the week besides Sunday, Saturday and legal holiday; "(b) Holding that respondent PCSO does not have the right or power to appropriate or use the race tracks and equipment of petitioner without its consent, nor can respondents compel petitioner to so allow such use of its race tracks and equipment under pain of having its license revoked." Respondents duly filed their respective answers to said petition and the case was heard. After hearing, the court, on July 5, 1957, rendered a decision which, in part, reads: "The court does not deem it necessary to rule on the deprivation of property of the petitioner and the intervenor without due process of law, as feared by them, because as they have stated, the Philippine Charity Sweepstakes Office is using their premises and equipment under separate contracts of lease voluntarily and willingly entered into by the parties upon payment of a corresponding rental. There is therefore no deprivation of property without due process of law. "Wherefore, the court is of the opinion and so holds that once a month on a Sunday not reserved for the Anti-Tuberculosis Society, the White Cross and other charitable institutions by Section 4 of Republic Act No. 309, the Philippine Charity Sweepstakes Office is authorized to hold one regular sweepstakes draw and races, pursuant to Section 9 of Republic Act No. 1502, thus reducing the number of Sundays which may be alloted to private entities by the Games and Amusements Board. * * *,"
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From this judgment, petitioner and intervenor interposed the present appeal. The issue is the proper placement of the six (6) additional racing days given to the Philippine Charity Sweepstakes Office, in virtue of Republic Act No. 1502, approved on June 16, 1956. The authorized racing days specifically designated and distributed in Section 4 of Republic Act No. 309, the basic law on horse racing in the Philippines, as later amended by Republic Act No. 983, are as follows: A. Sundays: (1) For the Philippine Anti-Tuberculosis Society 12 Sundays (2) For the Philippine Charity Sweepstakes Office (PCSO) ....................................................... 6 Sundays (3) For the White Cross, Inc ................................ 4 Sundays (4) For the Grand Derby Race of the Philippine Anti-Tuberculosis Society ........................... 1 Sunday B. Saturdays: (1)
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Total 23 Sundays (5) For private individuals and entities duly licensed by the GAB, other Sundays not reserved under this Act, as may be determined by the GAB ...................................... 29 Sundays

or 30 for Leap years Total for the year ........................... 52 Sundays

or 53 for leap years

For the Philippine Anti-Tuberculosis Society 12 Saturdays (2) For the White Cross, Inc., .............................. 4 Saturdays (3) For private Individuals and entities duly licensed by GAB and as may be determined by it ........................................................... 21 Saturdays (4) For races authorized by the President for

charitable, relief, or civic purposes other than the particular charitable institutions named above, all other Saturdays not reserved for the latter ................................. 12 Saturdays

Total ............................................... 52 Saturdays C. Legal Holidays: All, except Thursday and Friday of the Holy Week, July 4th and December 30th, have been reserved for private individuals and entities duly licensed by the GAB.

As stated, Republic Act No. 1502 increased the sweepstakes draw and races of the PCSO to twelve, but without specifying the days on which they are to be run. To accommodate these additional races, the GAB resolved to reduce the number of Sundays assigned to private individuals and entities by six. Appellants protested, contending that the said increased should be taken from the 12 Saturdays reserved to the President, for charitable, relief, or civic purposes, or should be assigned to any other day of the week besides Sunday, Saturday, and legal holiday. Appellants' contention cannot be sustained. Section 4 of Republic Act No. 309, as amended by Republic Act No. 983, by express terms, specifically reserved 23 Sundays and 16 Saturdays for the Philippine Anti-Tuberculosis Society, the White Cross, Inc. and the PCSO, and 12 Saturdays to the President for other charitable, relief, or civic purposes. These days can not be disposed of by the GAB without authority of law. As to the remaining racing days, the law provides:

"SEC. 4. Racing days.Private individuals and entities duly licensed by the Commission on Races (now GAB) may hold horse races on Sundays not reserved under this Act, on twenty-four Saturdays as may be determined by the said Commission (GAB), and on legal holidays, except Thursday and Friday of Holy Week, July fourth, commonly known as Independence Day, and December thirtieth, commonly known as Rizal Day." It is clear from the above-quoted provision that appellants have no vested right to the unreserved Sundays, or even to the 24 Saturdays (except, perhaps, on the holidays), because their holding of races on these days is merely permissive, subject to the licensing and determination by the GAB. When, therefore, Republic Act No. 1502 was enacted increasing by six (6) the sweepstakes draw and races, but without specifying the days for holding them, the GAB had no alternative except to make room for the additional races, as it did, from among the only available racing days unreserved by any lawthe Sundays on which the private individuals and entities have been permitted to hold their races, subject to licensing and determination by the GAB. It is suggested that the GAB should have chosen any week days or Saturday afternoons. In the first place, weeks days are out of the question. The law does not authorize the holding of horse races with betting on week days (See Article 198 of the Revised Penal Code). Secondly, sweepstakes races have always been held on Sundays. Besides, it is not possible to hold them on Saturdays afternoons as, it is claimed, a whole day is necessary for the mixing of the sweepstakes balls, the drawing of winning sweepstakes numbers, and the running of the sweepstakes races. Be that as it may, since the law has given certain amount of discretion to the GAB in determining and allocating racing days not specifically reserved, and since the court does not find that a grave abuse of this discretion has been committed, there seems to be no reason, legal or otherwise, to set aside the resolution of the GAB. Furthermore, appellants contend that even granting that the six (6) additional sweepstakes races should be run on Sundays, yet if they are held on a club race day, the GAB should only insert them in the club races and not give the whole day to the PCSO, to the exclusion of appellants. In support of this contention, the following quotation from the debate in the House of Representatives before the voting on House Bill No. 5732, which became Republic Act No. 1502, is cited: 'Mr. ABELEDA. If there are no more amendments, I move that we vote on the measure. "Mr. MARCOS. Mr. Speaker, before we proceed to vote on this bill, I want to make it of record that it is the clear intention of the House to increase by two the ten regular and special Sweepstakes races making it all in all, twelve, and that in cases where a

sweepstake face falls in a club race days the Sweepstakes race should be inserted in the club race. "Mr. ABELEDA. The gentleman from Ilocos Norte is correct. * * *." (t.s.n., Proceedings in House of Representatives, Congress, May 17, 1956; italics supplied.) Appellants cite in their briefs a number of authorities sustaining the view that in the interpretation of statutes susceptible of widely differing constructions, legislative debates and explanatory statements by members of the legislature may be resorted to, to throw light on the meaning of the words used in the statutes. Upon the other hand, the appellees, likewise, quote in their briefs other authorities to the effect that statements made by the individual members of the legislature as to the meaning of provisions in the bill subsequently enacted into law, made during the general debate on the bill on the floor of each legislative house, following its presentation by a standing committee, are generally held to be inadmissable as an aid in construing the statute. Legislative debates are expressive of the views and motives of individual members and are not safe guides and, hence, may not be resorted to in ascertaining the meaning and purpose of the lawmaking body. It is impossible to determine with certainty what construction was put upon an act by the members of the legislative body that passed the bill, by resorting to the speeches of the members thereof. Those who did not speak, may not have agreed with those who did; and those who spoke, might differ from each other.1 In view of these conflicting authorities, no appreciable reliance can safely be placed on any of them. It is to be noted in the specific case before us, that while Congressmen Marcos and Abeleda were, admittedly, of the view that the additional sweepstakes races may be inserted in the club races, still there is nothing in Republic Act No. 1502, as it was finally enacted, which would indicate that such an understanding on the part of these two members of the Lower House of Congress received the sanction or conformity of their colleagues, for the law is absolutely devoid of any such indication. This is, therefore, not a case where a doubtful wording is sought to be interpreted; rather, if we adopt appellants' theory, we would be supplying something that does not appear in the statute. It is pertinent to observe here that, as pointed out by one of appellants' own cited authorities,2 in the interpretation of a legal document, especially a statute, unlike in the interpretation of an ordinary written document, it is not enough to obtain information to the intention or meaning of the author or authors, but also to see whether the intention or meaning has been expressed in such a way as to give it legal effect and validity. In short, the purpose of the inquiry, is not only to know what the author meant by the language he used, but also to see that the language used sufficiently expresses that meaning. The legal act, so to speak, is made up of two elementsan internal and an external one; it originates in intention and is perfected by
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expression. Failure of the latter may defeat the former. The following, taken from 59 Corpus Juris 1017, is in line with this theory: "The intention of the legislature to which effect must be given is that expressed in the statute and the courts will not inquire into the motives which influence the legislature, or individual members, in voting for its passage; nor indeed as to the intention of the draftsman, or the legislature, so far as it has been expressed in the act. So, in ascertaining the meaning of a statute the court will not be governed or influenced by the views or opinions of any or all members of the legislature or its legislative committees or any other persons." Upon the other hand, at the time of the enactment of Republic Act No. 1502 in June, 1956, the long, continuous, and uniform practice was that all sweepstakes draws and races were held on Sundays and during the whole day. With this background, when Congress chose not to specify in express terms how the additional sweepstakes draws and races would be held, it is safe to conclude that it did not intend to disturb the then prevailing situation and practice. "On the principle of contemporaneous exposition, common usage and practice under the statute, or a course of conduct indicating a particular undertaking of it, will frequently be of great value in determining its real meaning, especially where the usage has been acquired in by all parties concerned and has extended over a long period of time; * * *. (59 C. J. 1023) Likewise, the language of Republic Act No. 1502 in authorizing the increase, clearly speaks of regular sweepstakes draws and races. If the intention of Congress were to authorize additional sweepstakes draws only which could, admittedly, be inserted in the club races, the law would not have included regular races; and since regular sweepstakes races were specifically authorized, and it would be confusing, inconvenient, if not impossible to mix these sweepstakes races with the regular club races all on the same day (and it has never been done before), the conclusion seems inevitable that the additional sweepstakes draws and races were intended to be held on a whole day, separate and apart from the club races. Appellants' contention that to compel them to permit the PCSO to use their premises and equipment against their will would constitute deprivation of property without due process of law, deserves no serious consideration. As the lower court has found, every time the PCSO uses appellants' premises and equipment, they are paid rentals in accordance with the terms of separate contracts of lease existing between them and the PCSO. The decision appealed from, being in consonance with the above findings and considerations of this Court, the same is hereby affirmed, with costs against the
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appellants. So ordered. [Manila Jockey Club, Inc. vs. Games and Amusements Board et al., 107 Phil. 151(1960)]

FERNANDO, J.: Is the power of preventive suspension of a municipal mayor against whom charges have been filed still vested in the provincial governor? That is the novel question presented in this petition for certiorari and prohibition. Such an authority he did possess under the former law.1 Then came the Decentralization Act of 1967, which took effect on September 12 of that year.2 What before could not be denied apparently no longer holds true. The statutory provision now controlling yields a contrary impression. The question must thus be answered in the negative. We hold that such a power has been withheld from the provincial governor and may no longer be exercised by him. Petitioner, Domingo N. Sarcos, the duly elected Mayor of Barobo, Surigao del Sur, running as an independent candidate but winning, nonetheless, in the November 14, 1967 election, was charged with misconduct and dishonesty in office by respondent Recaredo Castillo, the Provincial Governor of Surigao del Sur.3 The act constituting the alleged dishonesty and misconduct in office consisted in petitioner allegedly "[conniving] with certain private individuals to cut and fell [timber] and [selling] the [timber] or logs so cut or felled, for their own use and benefit, within the communal forest reserve of the municipality of Barobo, province of Surigao del Sur, to the damage and prejudice of the public and of the government; X X X."4 In the answer of respondent Castillo as well as the other respondent, the Provincial Board of Surigao del Sur, there was an admission of the fact that as set forth in the
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petition on October 4, 1968, such an administrative complaint for such an alleged offense was indeed filed by respondent Governor with respondent Provincial Board. What was sought to be stressed in the answer, however, was that as early as April 18, 1968, a charge under oath for abuse of official power in consenting to and authorizing the violations of forestry laws was filed against petitioner by the Municipal Council of Barobo, Surigao del Sur. He was then given the opportunity to answer and explain within 72 hours, in an order of respondent Governor dated May 21, 1968. The explanation offered by petitioner contained the following: "These logs which I caused to be hauled sometime within the month of January, 1968, were the same logs cut and tumbled down by the persons abovementioned within the communal forests of Barobo, Surigao del Sur, and which were seized by the patrolmen of the undersigned. The said logs were sold in order to raise funds for the purchase of the police uniforms and arms."5 It was on the basis of the above administrative complaint that respondent Governor, according to the petition, ordered "the immediate suspension [of petitioner] from his position as Mayor of Barobo, Surigao del Sur; the same Administrative Order x x x [containing] the immediate designation of Vice-Mayor [Brigido L. Mercader] of the same town as Acting [Mayor]."6 Such administrative order for the preventive suspension of' petitioner was admitted by respondent Governor and sought to be justified thus: " [Considering] that the acts charged against and admitted by the petitioner 'affects his official integrity/ as such Municipal Mayor, by his having taken the law into his own hands; x x x, there was an urgent necessity to order the immediate 'preventive suspension' of the petitioner, in accordance with the provisions of Section 5, of Republic Act No. 5185, otherwise known as the 'Decentralization Act of 1967'."7 The decisive issue therefore, as set forth at the outset of this opinion, is whether or not respondent Provincial Governor is vested with power to order such preventive suspension under the Decentralization Act of 1967, more specifically Section 5 thereof. For if no such authority exists, then whatever be the alleged justification for preventive suspension cannot validate the action taken by the Governor. To assert otherwise would be to negate the rule of law. What does Section 5 provide? It opens with the categorical declaration: "Any provision of law to the contrary notwithstanding, the suspension and removal of elective local officials shall be governed exclusively by the provisions of this section." After setting forth in the next paragraph the grounds for suspension and removal of elective local officials, namely, dislovalty to the Republic of the Philippines, dishonesty, oppression, and misconduct in office, it continues: "Written subscribed and sworn
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charges against any elective provincial and city official shall be preferred before the President of the Philippines; against any elective municipal official before the provincial governor or the secretary of the provincial board concerned; and against any elective barrio official before the municipal or city mayor or the municipal or city secretary concerned." Then comes the portion specifically dealing with preventive suspension. This paragraph reads thus: "Within seven days after the charges are preferred, the President, Governor, or Mayor, as the case may be, or his duly authorized representative, as provided in the preceding paragraph, shall notify the respondent of such charges. The President, Provincial Board and City or Municipal Council, as the case may be, shall hear and investigate the truth or falsity of the charges within ten days after receipt of such notice: Provided, That no investigation shall commence or continue within ninety days immediately prior to an election. The preventive suspension of the respondent officer shall not extend beyond sixty days after the date of his suspension. At the expiration of sixty days, the suspended officer shall be reinstated in office without prejudice to the continuation of the proceedings against him until their completion, unless the delay in the decision of the case is due to the fault, neglect or request of the suspended officer, in which case, the time of delay shall not be counted in computing the time of suspension: Provided, however, That if the suspended officer shall have been found guilty as charged before the expiration of the thirty days, his suspension, in the case of municipal and barrio officials, may continue until the case is finally decided by the Provincial Board." Considering that Section 5 leaves no doubt as to this particular paragraph governing exclusively the suspension and removal of elective local officials, it must be apparent why. as previously stated, respondent Provincial Governor lacks the authority to order the preventive suspension of petitioner. 1. Under the former law then in force which stands repealed by virtue of the Decentralization Act,8 the provincial governor, if the charge against a municipal official was one affecting his official integrity, could order his preventive suspension.9 At present, the law is anything but that. A reading of the pertinent paragraph above quoted makes manifest that it is the provincial board to which such a power has been granted under conditions therein specified. The statutory provision is worded differently. The principle, that the deliberate selection of language other than that used in an earlier act is indicative that a change in the law was intended, calls for application.10 2. This conclusion has reinforcement from a fundamental postulate of constitutional law. Public officials possess powers, not rights. There must be, therefore, a grant of authority whether express or implied, to justify any action taken by them. In the absence thereof, what they do as public officials lacks validity and, if challenged, must be set aside. To
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paraphrase a leading American decision,11 law is the only supreme power under constitutional government, and every man who by accepting office participates in its function is only the more strongly bound to submit to that supremacy, and to observe the limitations which it imposes upon the exercise of the authority which it gives. Here, clearly, no such authority is vested in the provincial governor. Instead, the statutory scheme, complete on its face, would locate such power in the provincial board. There would be no support for the view, then, that the action taken by the provincial governor in issuing the order of preventive suspension in this case was in accordance with law. 3. Moreover, any other view would be to betray lack of fidelity to the purpose so manifest in the controlling legal provision. It is fundamental that once the policy or purpose of the law has been ascertained, effect should be given to it by the judiciary. From Ty Sue v. Hord,12 decided in 1909, it has been our constant holding that the choice between conflicting theories falls on that which best accords with the letter of the law and with its purpose. The next year, in an equally leading decision, United States v. Toribio,13 there was a caveat against a construction that would tend "to defeat the purpose and object of the legislator." Then came the admonition in Riera v. Palmaroli,14 against an application so narrow "as to defeat the manifest purpose of the legislator." This was repeated in the latest case, Commissioner of Customs v. Caltex,15 in almost identical language. So it is in the United States.16 Thus, in an 1898 decision, the then Justice, later Chief Justice, White minimized reliance on the subtle signification of words and the niceties of verbal distinction stressing the fundamental rule of carrying out the purpose and objective of legislation.17 As succinctly put by the then Justice, later Chief Justice,. Stone: "All statutes must be construed in the light of their purpose."18 The same thought has been phrased differently. Thus: "The purpose of Congress is a dominant factor in determining meaning."19 For, to paraphrase Frankfurter, legislative words are not inert but derive vitality from the obvious purposes at which they are aimed.20 The same jurist likewise had occasion to state: "Regard for [its] purposes should infuse the construction of the legislation if it is to be treated as a working instrument of government and not merely as a collection of English words."21 In the sixth annual Benjamin Nathan Cardozo lecture delivered by him, entitled "Some Reflections on the Reading of Statutes", he developed the theme further: "The generating consideration is that legislation is more than composition. It is an active instrument of govern-. ment which, for purposes of interpretation, means that laws have ends to be achieved. It is in this connection that Holmes said, 'words are flexible/ Again it was Holmes, the last judge to give quarter to loose thinking or vague yearning, who said that 'the general purpose is a more important aid to the meaning than any rule which grammar or formal logic may lay down.' And it was Holmes who chided courts for being 'apt to err by sticking too closely
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to the words of a law where those words import a policy that goes beyond them.' Note, however, that he found the policy in 'those words'."22 It may be noted parenthetically that earlier, the United States Supreme Court was partial more to the term "objective" or "policy" rather than "purpose." So it was in the first decision where this fundamental principle of construction was relied upon, the opinion coming from Chief Justice Marshall. Thus: "The two subjects were equally within the province of the legislature, equally demanded their attention, and were brought together to their view. If, then, the words making provision for each, fairly admit of an equally extensive interpretation, and of one of which will effect the object that seems to have been in contemplation, and which was certainly desirable, they ought to receive that interpretation."23 So, too, with his successor, Chief Justice Taney. Thus: "This construction cannot be maintained. In expounding a statute, we must not be guided by a single sentence or member of a sentence, but look to the whole law, and to its object and policy."24 It should not escape attention that the above excerpt was quoted with approval by the present Chief Justice Warren as late as 1957.25 What is the purpose of the Decentralization Act of 1967? It is set f orth in its declaration of policy.26 It is "to transform local governments gradually into effective instruments through which the people can in a most genuine fashion, govern themselves and work out their own destinies."27 In consonance with such policy, its purpose is "to grant to local governments greater freedom and ampler means to respond to the needs of their people and promote their prosperity and happiness and to effect a more equitable and systematic distribution of governmental powers and resources."28 It is undeniable therefore that municipalities, as much as cities and provinces, are by this act invested with "greater freedom and ampler means to respond to the needs of their people and promote their prosperity and 'happiness." It is implicit in our constitutional scheme that full autonomy be accorded the inhabitants of the local units to govern themselves. Their choice as to who should be their public officials must be respected. Those elected must serve out their term. If they have to be removed at all, it should be for cause in accordance with the procedure prescribed and by the specific officials of higher category entrusted with such responsibility. It is easily understandable why as held in a leading case, Lacson v. Roque,29 "strict construction of law relating to suspension and removal is the universal rule." As was further emphasized by Justice Tuason who penned the opinion: "When dealing with elective posts, the necessity for restricted construction is greater." Deference to such a doctrine possessed of intrinsic merit calls for due care lest by inadvertence the power to suspend preventively is given to officials other than those specifically mentioned in the
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act. For any other view would result in a dilution of the avowed purpose to vest as great a degree of local autonomy as is possible to municipal corporations. That would be to defeat and frustrate rather than to foster the policy of the act. 4. Lastly, the construction here reached', as to the absence of power on the part of provincial governors to suspend preventively a municipal mayor is buttressed by the avoidance of undesirable consequences flowing from a different doctrine. Time and time again, it has been stressed that while democracy presupposes the right of the people to govern themselves in elections that call for political parties contending for supremacy, once the election is over the equally pressing and urgent concern for efficiency would necessitate that purely partisan considerations be ignored, and if not entirely possible, be restricted to a minimum. The present litigation gives rise to the suspicion that politics did intrude itself. Petitioner Municipal Mayor, an independent candidate, and thus of a different political persuasion, appeared to have been placed at a disadvantage. It would be a realistic assumption that there is the ever present temptation on the part of provincial governors, to utilize every opportunity to favor those belonging to his party. At times, it may even prove irresistible. It is desirable theref ore that such opportunity be limited. The statutory provision then should be given such a construction that would be productive of such a result. That is what we do in this case. To paraphrase Justice Tuason, we test a doctrine by its consequences. It could be said, of course, that to deny such a power to a provincial governor but at the same time to affirm the existence thereof insofar as the provincial board is concerned would not advance the cause of decentralization any. In answer, it suffices to note that the Decentralization Act having so recognized such an authority in the provincial board, the judiciary must perforce recognize its existence. Until after the legislature decrees otherwise, the courts have no alternative but to accord deference to such declared congressional policy. It may also be stated that the provincial board being a collective body, the first, second and third class provinces being composed of the provincial governor, the vice-governor and three other members elected at large by the qualified electors of the province, and that in the f ourth, f ifth, sixth and seventh class provinces having in addition to the provincial governor and the vice-governor two other members likewise elected at large,30 there is a safeguard against the temptation to utilize this power of preventive suspension for purely partisan ends. What one person may feel free to do, fully conscious as be is that the authority belongs to him alone, may not even be attempted when such an individual shares such power with others who could possibly hold dissenting views. At any rate, there is a brake, which it is hoped would suffice on most if not all occasions.

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Such a restraining influence is indeed needed for the undeniable facts of the contemporary political scene bear witness to efforts, at times disguised, at other times quite blatant, on the part of local officials to make use of their positions to gain partisan advantage. Harassment of those belonging to opposing factions or groups is not unknown. Unfortunately, no stigma seems to attach to what really amounts to a misuse of official power. The truism that a public office is a public trust, implicit in which is the recognition that public advantage and not private benefit should be the test of one's conduct, seems to have been ignored all too often. The construction of any statute therefore, even assuming that it is tainted by ambiguity, which would reduce the opportunity of any public official to make use of his position for partisan ends, has much to recommend it. 5. We hold, therefore, that under Section 5 of the Decentralization Act of 1967, the power of preventive suspension is not lodged in the provincial governor. To rule otherwise would be at war with the plain purpose of the law and likewise fraught with consequences far from desirable. We close with this appropriate excerpt from an opinion of Justice Holmes rendered on circuit duty: "The Legislature has the power to decide what the policy of the law shall be, and if it has intimated its will, however indirectly, that will should be recognized and obeyed. The major premise of the conclusion expressed in a statute, the change of policy that induces the enactment. may not be set out in terms, but It is not an adequate discharge of duty for the courts to say: We see what you are driving at, but you have not said it, and therefore, we shall go on as before."31 WHEREFORE, the writs prayed for are granted, the preventive suspension of petitioner by respondent Castillo annulled and set aside with the result that his immediate reinstatement to his position as Municipal Mayor of Barobo, Surigao del Sur, is ordered, without prejudice to any further proceedings to be taken by respondent Provincial Board in connection with the charge of misconduct and dishonesty in office against petitioner, respondent Provincial Board being strictly enjoined in the disposition of such administrative complaint to act strictly in accordance with the applicable law. Without costs. [Sarcos vs. Castillo, 26 SCRA 853(1969)]

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ERECTORS, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, HON. JULIO ANDRES, JR. and FLORENCIO BURGOS, respondents. [Erectors, Inc. vs. National Labor Relations Commission, 256 SCRA 629(1996)] PUNO, J.: Petitioner Erectors, Inc. challenges the jurisdiction of respondent Labor Arbiter Julio F. Andres, Jr. to hear and decide the complaint1 for underpayment of wages and nonpayment of overtime pay filed by private respondent Florencio Burgos, an overseas contract worker. On December 18, 1979, private respondent left the country and worked at petitioners Buraidah Sports Complex project in Saudi Arabia, performing the job of a helper/laborer. He received a monthly salary and allowance of US$210.00, in accordance with the second contract. Private respondent renewed his contract of employment after one year. His salary and allowance were increased to US$231.00. Private respondent returned to the Philippines on August 24, 1981. He then invoked his first employment contract. He demanded from the petitioner the difference between his salary and allowance as indicated in the said contract, and the amount actually paid to him, plus the contractual bonus which should have been awarded to him for not availing of his vacation or home leave credits. Petitioner denied private respondents claim. On March 31, 1982, private respondent filed with the Labor Arbiter a complaint against the petitioner for underpayment of wages and non-payment of overtime pay and contractual bonus.
16

On May 1, 1982, while the case was still in the conciliation stage, Executive Order (E.O.) No. 797 creating the Philippine Overseas Employment Administration (POEA) took effect. Section 4(a) of E.O. No. 797 vested the POEA with original and exclusive jurisdiction over all cases, including money claims, involving employer-employee relations arising out of or by virtue of any law or contract involving Filipino workers for overseas employment.2 Despite E.O. No. 797, respondent Labor Arbiter proceeded to try the case on the merits. On September 23, 1983, he rendered a Decision3 in favor of private respondent, the dispositive portion of which reads: WHEREFORE, judgment is hereby rendered ordering the respondent to pay the complainant as follows: 1. The sum of US$2,496.00 in its peso equivalent on August 25, 1981 as difference between his allowance as Service Driver as against his position as Helper/Laborer; 2. The sum of US$1,000.00 in its peso equivalent as of the same date, as his contractual bonus. The complaints for non-payment/underpayment of overtime pay and unpaid wages or commission are DISMISSED for lack of merit.4 Petitioner appealed to respondent National Labor Relations Commission (NLRC). It questioned the jurisdiction of the Labor Arbiter over the case in view of the enactment of E.O. No. 797. In a Resolution dated July 17, 1991,5 respondent NLRC dismissed the petitioners appeal and upheld the Labor Arbiters jurisdiction. It ruled: To begin with, the Labor Arbiter has the authority to decide this case. On May 29, 1978, the Labor Arbiters were integrated into the Regional Offices under P.D. 1391. On May 1, 1980, P.D. 1691 was promulgated giving the Regional Offices of the Ministry of Labor and Employment the original and exclusive jurisdiction over all cases arising out of or by virtue of any law or contract involving Filipino workers for overseas employment. There is no dispute that the Labor Arbiter had the legal authority over the case on hand, which accrued and was filed when the two above mentioned Presidential Decrees were in force.6 Petitioner filed this special civil action for certiorari reiterating the argument that: The NLRC committed grave abuse of discretion tantamount to lack of jurisdiction in affirming the Labor Arbiters void judgment in the case a quo.7

17

It asserts that E.O. No. 797 divested the Labor Arbiter of his authority to try and resolve cases arising from overseas employment contract. Invoking this Courts ruling in Briad Agro Development Corp. vs. Dela Cerna,8 petitioner argues that E.O No. 797 applies retroactively to affect pending cases, including the complaint filed by private respondent. The petition is devoid of merit. The rule is that jurisdiction over the subject matter is determined by the law in force at the time of the commencement of the action.9 On March 31, 1982, at the time private respondent filed his complaint against the petitioner, the prevailing laws were Presidential Decree No. 169110 and Presidential Decree No. 139111 which vested the Regional Offices of the Ministry of Labor and the Labor Arbiters with original and exclusive jurisdiction over all cases involving employer-employee relations including money claims arising out of any law or contracts involving Filipino workers for overseas employment.12 At the time of the filing of the complaint, the Labor Arbiter had clear jurisdiction over the same. E.O. No. 797 did not divest the Labor Arbiters authority to hear and decide the case filed by private respondent prior to its effectivity. Laws should only be applied prospectively unless the legislative intent to give them retroactive effect is expressly declared or is necessarily implied from the language used.13 We fail to perceive in the language of E.O. No. 797 an intention to give it retroactive effect. The case of Briad Agro Development Corp. vs. Dela Cerna 14 cited by the petitioner is not applicable to the case at bar. In Briad, the Court applied the exception rather than the general rule. In this case, Briad Agro Development Corp. and L.M. Camus Engineering Corp. challenged the jurisdiction of the Regional Director of the Department of Labor and Employment over cases involving workers money claims, since Article 217 of the Labor Code, the law in force at the time of the filing of the complaint, vested in the Labor Arbiters exclusive jurisdiction over such cases. The Court dismissed the petition in its Decision dated June 29, 1989.15 It ruled that the enactment of E.O. No. 111, amending Article 217 of the Labor Code, cured the Regional Directors lack of jurisdiction by giving the Labor Arbiter and the Regional Director concurrent jurisdiction over all cases involving money claims. However, on November 9, 1989, the Court, in a Resolution,16 reconsidered and set aside its June 29 Decision and referred the case to the Labor Arbiter for proper proceedings, in view of the promulgation of Republic Act (R.A.) 6715 which divested the Regional Directors of the power to hear money claims. It bears emphasis that the Court accorded E.O. No. 111 and R.A. 6715 a retroactive application because as curative statutes, they fall under the exceptions to the rule on prospectivity of laws.

18

E.O. No. 111, amended Article 217 of the Labor Code to widen the workers access to the government for redress of grievances by giving the Regional Directors and Labor Arbiters concurrent jurisdiction over cases involving money claims. This amendment, however, created a situation where the jurisdiction of the Regional Directors and the Labor Arbiters overlapped. As a remedy, R.A. 6715 further amended Article 217 by delineating their respective jurisdictions. Under R.A. 6715, the Regional Director has exclusive original jurisdiction over cases involving money claims provided: (1) the claim is presented by an employer or person employed in domestic or household service, or househelper under the Code; (2) the claimant, no longer being employed, does not seek reinstatement; and (3) the aggregate money claim of the employee or househelper does not exceed P5,000.00. All other cases are within the exclusive and original jurisdiction of the Labor Arbiter. E.O. No. 111 and R.A. 6715 are therefore curative statutes. A curative statute is enacted to cure defects in a prior law or to validate legal proceedings, instruments or acts of public authorities which would otherwise be void for want of conformity with certain existing legal requirements. The law at bar, E.O. No. 797, is not a curative statute. It was not intended to remedy any defect in the law. It created the POEA to assume the functions of the Overseas Employment Development Board, the National Seamen Board and the overseas employment functions of the Bureau of Employment Services. Accordingly, it gave the POEA original and exclusive jurisdiction over all cases, including money claims, involving employer-employee relations arising out of or by virtue of any law or contract involving Filipino workers for overseas employment, including seamen.17 The rule on prospectivity of laws should therefore apply to E.O. No. 797. It should not affect jurisdiction over cases filed prior to its effectivity. Our ruling in Philippine-Singapore Ports Corp. vs. NLRC,18 is more apt to the case at bar. In this case, PSPC hired Jardin to work in Saudi Arabia. Jardin filed a complaint against PSPC for illegal dismissal and recovery of backwages on January 31, 1979 with the Labor Arbiter. PSPC questioned the jurisdiction of the Labor Arbiter because at that time, the power to hear and decide cases involving overseas workers was vested in the Bureau of Employment Services. We held: When Jardin filed the complaint for illegal dismissal on January 31, 1979, Art. 217 (5) of the Labor Code provided that Labor Arbiters and the NLRC shall have exclusive jurisdiction to hear and decide all cases arising from employer-employee relations unless expressly excluded by this Code. At that time Art. 15 of the same Code had been amended by P.D. No. 1412 which took effect on June 9, 1978. The pertinent provision of the said presidential decree states: Article 15. Bureau of Employment Services.

19

(a) x x x

xxx

(b) The Bureau shall have the original and exclusive jurisdiction over all matters or cases involving employer-employee relations including money claims, arising out of or by virtue of any law or contracts involving Filipino workers for overseas employment, except seamen. The decisions of the Bureau shall be final and executory subject to appeal to the Secretary of Labor whose decision shall be final and inappealable. Considering that private respondent Jardins claims undeniably arose out of an employer-employee relationship with petitioner PSPC and that private respondent worked overseas or in Saudi Arabia, the Bureau of Employment Services and not the Labor Arbiter had jurisdiction over the case. x x x Art. 15 was further amended by P.D. No. 1691 which took effect on May 1, 1990. Such amendment qualifies the jurisdiction of the Bureau of Employment Services as follows: (b) The regional offices of the Ministry of Labor shall have the original and exclusive jurisdiction over all matters or cases involving employer-employee relations including money claims, arising out of or by virtue of any law or contracts involving Filipino workers for overseas employment except seamen: Provided that the Bureau of Employment Services may, in the case of the National Capital Region, exercise such power, whenever the Minister of Labor deems it appropriate. The decisions of the regional offices or the Bureau of Employment Services if so authorized by the Minister of Labor as provided in this Article, shall be appealable to the National Labor Relations Commission upon the same grounds provided in Article 223 hereof. The decisions of the National Labor Relations Commission shall be final and inappealable. Hence, as further amended, Art. 15 provided for concurrent jurisdiction between the regional offices of the then Ministry of Labor and Bureau of Employment Services in the National Capital Region. It is noteworthy that P.D. No. 1691, while likewise amending Art. 217 of the Labor Code, did not alter the provision that Labor Arbiters shall have jurisdiction over all claims arising from employer-employee relations unless expressly excluded by this Code. The functions of the Bureau of Employment Services were subsequently assumed by the Philippine Overseas Employment Administration (POEA) on May 1, 1982 by virtue of Executive Order No. 797 by granting the POEA original and exclusive jurisdiction over all cases, including money claims, involving employeremployee relations arising out of or by virtue of any law or contract involving Filipino workers for overseas employment, including seamen. (Sec. 4 (a); Eastern Shipping Lines v. Philippine Overseas Employment Administration [POEA], 200 SCRA 663 [1991]). This development showed the legislative authoritys continuing intent to exclude from the Labor Arbiters jurisdiction claims arising from overseas employment.
20

These amendments notwithstanding, when the complaint for illegal dismissal was filed on January 31, 1979, under Art. 15, as amended by P.D. No. 1412, it was the Bureau of Employment Services which had jurisdiction over the case and not the Labor Arbiters. It is a settled rule that jurisdiction is determined by the statute in force at the time of the commencement of the action (Municipality of Sogod v. Rosal, 201 SCRA 632, 637 [1991]). P.D. 1691 which gave the regional offices of the Ministry of Labor concurrent jurisdiction with the Bureau of Employment Services, was promulgated more than a year after the complaint was filed. (emphasis supplied) In sum, we hold that respondent NLRC did not commit grave abuse of discretion in upholding the jurisdiction of respondent Labor Arbiter over the complaint filed by private respondent against the petitioner. IN VIEW WHEREOF, the Petition is DISMISSED. Costs against petitioner. SO ORDERED. Regalado (Chairman), Romero, Mendoza and Torres, Jr., JJ., concur. Petition dismissed. [Erectors, Inc. vs. National Labor Relations Commission, 256 SCRA 629(1996)] ALFREDO MONTELIBANO, PASTOR MALLORCA, GONZALGO DE LA TORRE, and JOSE ARTICULO, petitioners and appellants, vs. THE HONORABLE FELIX S. FERRER, as Judge Of the Municipal Court of Bacolod, and JOSE F. BENARES, respondents and appellees. [Montelibano, et al. vs. Hon. Ferrer, etc., and Benares, 97 Phil. 228(1955)] CONCEPCION, J.: The question involved in this case is one purely of law. On June 13, 1953, respondent Jose F. Benares filed, with the Municipal Court of the City of Bacolod, a criminal complaint, which was docketed as Case No. 2864 of said court, against petitioners herein, Alfredo Montelibano, Pastor Mallorca, Gonzalgo de la Torre and Jose Articulo, charging them with the crime of malicious mischief. It is alleged in said complaint: "That on or about the 5th, the 7th and the 8th of June, 1953, in the City of Bacolod, Philippines, and within the jurisdiction of this court, Alfredo Montelibano, as author by inducement, Pastor Mallorca, Gonzalo de la Torre and Jose Articulo, as authors by direct participations, conspiring and confederating together and helping one another, did then and there, wilfully, unlawfully and deliberately cause damage to the sugarcane plantation belonging to Jose F. Benares, the offended party herein, intentionally and using bulldozer and destroying completely eighteen (18) hectares of sugarcanes obviously under the impulse of hatred and a desire for revenge, as the accused, Alfredo
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Montelibano, failed in his attempt to have the herein offended party punished for contempt of Court in Civil Case No. 1896 of the Court of First Instance of Negros Occidental, thereby causing upon said Jose F. Benares damage in the amount of more than P13,000.00." Upon the filing of this complaint, due course was given thereto by the herein respondent, Hon. Felix S. Ferrer, Municipal Judge of the City of Bacolod, who, likewise, issued the corresponding warrant of arrest. On or about June 22, 1953, the aforementioned defendants (petitioners herein) filed a motion to quash said warrant of arrest, as well as the complaint, upon several grounds, which may be reduced to two, namely: (1) The only officer authorized by the Charter of the City of Bacolod to initiate criminal cases in the courts thereof is its City Attorney, who is opposed to the institution of said Case No. 2864; and (2) Said case involves a prejudicial question. In this connection, petitioners alleged, and Benares has not denied, the following: Sometime in 1940, the Capitol Subdivision Inc. (hereinafter referred to as the Subdivision), of which petitioner Alfredo Montelibano is the president and general manager, leased Lot No. 1205-I-1 (which is the same property involved in Case No. 2864) to Benares, for a period of five (5) crop years, ending in the crop-year 1944-1945, with an option in f avor of Benares, of another five (5) crop-years. On June 5, 1951, the Subdivision instituted against Benares, unlawful detainer case No. 1896 of the Municipal Court of the City of Bacolod, which, in due course, subsequently, rendered a decision ordering his ejectment from said lot. Benares appealed to the Court of First Instance of Negros Occidental (in which it was docketed as Civil Case No. 1896). On motion of the Subdivision, this court issued a writ of preliminary mandatory injunction, commanding Benares to turn over the aforementioned lot to the Subdivision, which filed a bond undertaking to pay to Benares "all damages which he may sustain" by reason of the issuance of said writ, "if the court should finally decide that the plaintiff was not entitled thereto." Inasmuch as Benares continued planting on Lot No. 1205-L-1, instead of delivering it to the Subdivision, the latter filed a petition praying that the former be declared in contempt of court. This petition was denied, by an order dated April 30, 1953, which, however, required Benares to "immediately and promptly obey the order of preliminary mandatory injunction." On June 5, 1953, the provincial sheriff delivered the land in question to the Subdivision. Seemingly, acting upon instructions of petitioner Montelibano, his co-petitioners thereupon cleared the land of the sugarcane planted therein by Benares. Hence, the criminal complaint filed by the latter. The Municipal Court denied the aforementioned motion to quash said complaint and the warrant of arrest, as well as a subsequent motion for reconsideration, whereupon petitioners instituted the case at bar, in the Court of First Instance of Negros Occidental, where it was dock-eted as Civil Case No. 2828, against said Municipal Judge, and complainant Benares, for the purpose of securing a writ of certiorari and mandamus
22

"annulling and vacating all the proceedings so far taken by respondent Judge in said Case No. 2864" and "holding that said Judge had no jurisdiction to take cognizance of the same" and "dismissing said case"with a writ of preliminary injunction, enjoining respondent judge "to desist from further proceedings in the case." The writ of preliminary injunction was issued by said court of first instance, which, in due course, eventually rendered a decision, dismissing the petition for certiorari and mandamus, and dissolving the writ of preliminary injunction, with costs against the petitioners. The case is now before us on appeal taken, from said decision, by the aforementioned petitioners, the defendants in said criminal case. It is not disputed that the complaint in question was filed by Benares directly with the municipal court of Bacolod, and that the City Attorney had, not only no intervention whatsoever therein, but, also, expressed, in open court, his opposition thereto. The issue boils down to whether said municipal court may entertain said complaint Petitioners contend that it may not, relying upon section 22 of Commonwealth Act No. 326, otherwise known as the Charter of the City of Bacolod, the pertinent part of which provides: "* * * The City attorney * * * shall also have charge of the prosecution of all crimes, misdemeanors, and violations of city ordinances, in the Court of First Instance and the Municipal Court of the city, and shall discharge all the duties in respect to criminal prosecutions enjoined by law upon provincial fiscals. "The city attorney shall cause to be investigated all charges of crimes, misdemeanors, and violation of ordinances, and have the necessary informations or complaints prepared or made against the persons accused. * * *." Upon the other hand, respondents argue that this provision is merely declaratory of the powers of the City Attorney of Bacolod and does not preclude the application of Sec. 2 of Rule 106 of the Rules of Court reading: "Complaint is a sworn written statement charging a person with an offense, subscribed by the offended party, any peace officer or other employees of the government or governmental institution in charge of the enforcement or execution of the law violated-" This was the very same provision invoked by the petitioner in the case of Espiritu vs. Dela Rosa (45 Off. Gaz. 196), in which this Court refused to issue a writ of mandamus to compel the Court of First Instance of Manila to accept a complaint filed, directly with said court, by the offended party in a given case, without the intervention of the City Fiscal of Manila. In his concurring opinion therein, then Chief Justice Moran had the following to say:

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"I concur upon the ground that Rule 108 section 4 does not apply in the City of Manila where the only officer authorized by law to conduct preliminary investigation is the City Fiscal (sec. 2474, Adm. Code) and therefore, all criminal complaints should be filed 'with that officer who in turn may, after investigation, file the corresponding information with the Court of First Instance. The provisions of the Administrative Code on this matter have not been repealed by the Rules of Court. (Hashim vs. Boncan, 40 Off. Gaz., p. 13.)" (Italics supplied.) As indicated in said decision, the same was based, partly, upon the rule laid down in Hashim vs. Boncan (71 Phil. 216), which, in turn, was predicated upon earlier' precedents (U. S. vs. Wilson, 4 Phil 317; U. S. vs. McGovern, 6 Phil. 621; U. S. vs. Ocampo, 18 Phil. 1; U. S. vs. Grant and Kennedy, 18 Phil. 122; U. S. vs. Carlos, 21 Phil. 553). In case of Sayo vs. Chief of Police (45 Off. Gaz. 4875) the language used by this Court was: "Under the law, a complaint charging a person with the commission of an offense cognizable by the courts of Manila is not filed with the municipal court of First Instance of Manila, because as above stated, the latter do not make or conduct a preliminary investigation proper. The complaint must be made or filed with the city fiscal of Manila who, personally or through one of his assistance, makes the investigation, not for the purpose of ordering the arrest of the accused, but of filing with the proper court the necessary information against the accused if the result of the investigation so warrants, and obtaining from the court a warrant of arrest or commitment of the accused. * * * * * * *

"In the City of Manila, where complaints are not filed directly with the municipal court or the Court of First Instance, the officer or person making the arrest without warrant shall surrender or take the person arrested to the city fiscal, and the latter shall make the investigation above mentioned and file, if proper, the corresponding information without the time prescribed by section 125 of the Revised Penal Code, so that the court may issue a warrant of commitment for the temporary detention of the accused. * * *." (Italics supplied.) It is clear, therefore, that, in the City of Manila, criminal complaints may be filed only with the City Fiscal, who is thereby given, by implication, the exclusive authority to institute criminal cases in the different courts of said city, under the provisions of its Charter, originally found in Section 39 of Act No. 183, the pertinent part of which we quote:

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"* * * The prosecuting attorney of the city of Manila shall have charge of the prosecution of all crimes, misdemeanors. and violations of city ordinances, in the Court of First Instance and the municipal courts of the city of Manila. He shall investigate all charges of crimes, misdemeanors, and violations of ordinances, and prepare the necessary informations or make the necessary complaints against the persons accused, and discharge all other duties in respect to criminal prosecutions enjoined upon provincial fiscals * * *." This provision was mutatis mutandis reproduced, firstly, in section 2437 of the Old Administrative Code (Act No. 2657), then in section 2465 of the Revised Administrative Code, and lastly in section 38 of Republic Act No. 409. We do not see, and respondents herein have not pointed out, any reason why the above quoted provision of the Charter of the City of Bacolod, should be interpreted differently from said sections of the Charter of the City of Manila, which are substantially identical thereto. On the contrary, considering that said provisions of the Charter of the City of Manila had been consistently construed in the manner above indicated, before being incorporated in the Charter of the City of Bacolod, the conclusion is inevitable that the framers of the latter had reproduced the former with intent of adopting, also its settled interpretation by the judicial department (In re Dick, 38 Phil. 41, 77), "In the interpretation of reenacted statutes the court will follow the construction which they received when previously in force. The legislature will be presumed to know the effect which such status originally had, and by reenactment to intend that they should again have the same effect. * * * It is not necessary that a statute should be reenacted in identical words in order that the rule may apply. It is sufficient if it is reenacted in substantially the same words. * * * The rule has been held to apply to the reenactment of a statute which received a practical construction on the part of those who are called upon to execute it. The Supreme Court of Nebraska says: 'Where the legislature in framing an act resorts to language similar in its import to the language of other acts which have received a practical construction by the executive departments and by the legislature itself, it is fair to presume that the language was used in the later act with a view to the construction so given the earlier.' * * *." (Sutherland Statutory Construction, Vol. II, 2d. ed., section 403) "* * * two statutes with a parallel scope, purpose and terminology should, each in its own field, have a like interpretation, unless in particular instances there is something peculiar in the question under consideration, or dissimilar in the terms of the act relating thereto, requiring a different conclusion." (50 Am. Jur. 343) "* * * Since it may be presumed that the legislature knew a construction, long acquieced in, which had been given by the courts to a- statute re-enacted by the legislature, there is a presumption of an intention to adopt the construction as well as the language of the
25

prior enactment. It is accordingly a settled rule of statutory construction that when a statute or a clause or provision thereof has been construed by a court of last resort, and the same is substantially reenacted, the legislature may be regarded as adopting such construction." (50 Am. Jur. 461) In view of the foregoing, the decision appealed from must be, as it is hereby, reversed and another one shall be entered annulling the warrant of arrest issued by respondent Judge and enjoining the latter to refrain from entertaining the complaint aforementioned and to dismiss the same. With cost against respondent Jose F. Benares. It is so ordered. Bengzon, Padilla, Montemayor, Reyes, A., Jugo, Bautista Angelo, Labrador and Reyes, J. B. L., JJ., concur. Judgement reversed. [Montelibano, et al. vs. Hon. Ferrer, etc., and Benares, 97 Phil. 228(1955)]

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AMERICAN BIBLE SOCIETY, plaintiff and appellant, vs. CITY OF MANILA, defendant and appellee. [American Bible Society vs. City of Manila,, 101 Phil. 386(1957)] FLIX, J.: Plaintiff-appellant is a foreign, non-stock, non-profit, religious, missionary corporation duly registered and doing business in the Philippines through its Philippine agency established in Manila in November, 1898, with its principal office at 636 Isaac Peral in said City. The defendantappellee is a municipal corporation with powers that are to be exercised in conformity with the provisions of Republic Act No. 409, known as the Revised Charter of the City of Manila. In the course of its ministry, plaintiff's Philippine agency has been distributing and selling bibles and/or gospel portions thereof (except during the Japanese occupation) throughout the Philippines and translating the same into several Philippine dialects. On May 29, 1953, the acting City Treasurer of the City of Manila informed plaintiff that it was conducting the business of general merchandise since November, 1945, without providing itself with the necessary Mayor's permit and municipal license, in violation of Ordinance No. 3000, as amended, and Ordinances Nos. 2529, 3028 and 3364, and required plaintiff to secure, within three days, the corresponding permit and license fees, together with compromise covering the period from the 4th quarter of 1945 to the 2nd quarter of 1953, in the total sum of P5,821.45 (Annex A). Plaintiff protested against this requirement, but the City Treasurer demanded that plaintiff deposit and pay under protest the sum of P5,891.45, if suit was to be taken in court regarding the same (Annex B). To avoid the closing of its business as well as f urther fines and penalties in the premises, on October 24, 1953, plaintiff paid to the defendant under protest the said permit and license fees in the aforementioned amount, giving at the same time notice to the City Treasurer that suit would be taken in court to question the legality of the ordinances under which, the said fees were being collected (Annex C), which was done on the same date by filing the complaint that gave rise to this action. In its complaint plaintiff prays that judgment be rendered declaring the said Municipal Ordinance No. 3000, as amended, and Ordinances Nos. 2529, 3028 and 3364 illegal and unconstitutional, and that the defendant be ordered to refund to the plaintiff the sum of P5,891.45 paid under protest, together with legal interest thereon, and the costs, plaintiff further praying for such other relief and remedy as the court may deem just and equitable. Defendant answered the complaint, maintaining in turn that said ordinances were enacted by the Municipal Board of the City of Manila by virtue of the power granted to it by section 2444, subsection (m-2) of the Revised Administrative Code, superseded on June 18, 1949, by section 18, subsection (1) of Republic Act No. 409, known as the
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Revised Charter of the City of Manila, and praying that the complaint be dismissed, with costs against plaintiff. This answer was replied by the plaintiff reiterating the unconstitutionality of the often-repeated ordinances. Before trial the parties submitted the following stipulation of facts: "COME NOW the parties in the above-entitled case, thru their undersigned attorneys and respectfully submit the following stipulation of facts: 1. That the plaintiff sold for the use of the purchasers at its principal office at 636 Isaac Peral, Manila, Bibles, New Testaments, bible portions and bible concordance in English and other foreign languages imported by it from the United States as well as Bibles, New Testaments and bible portions in the local dialects imported and/or purchased locally; that from the fourth quarter of 1945 to the first quarter of 1953 inclusive the sales made by the plaintiff were as follows: [American Bible Society vs. City of Manila,, 101 Phil. 386(1957)] 2. That the parties hereby reserve the right to present evidence of other facts not herein stipulated. WHEREFORE, it is respectfully prayed that this case be set for behalf. so the parties may present further evidence on their behalf. (Record on Appeal, pp. 15-16)" When the case was set for hearing, plaintiff proved, among other things, that it has been in existence in the Philippines since 1899, and that its parent society is in New York, United States of America; that its contiguous real properties located at Isaac Peral are exempt from real estate taxes; and that it was never required to pay any municipal license fee or tax before the war, nor does the American Bible Society in the United States pay any license fee or sales tax for the sale of bible therein. Plaintiff further tried to establish that it never made any profit from the sale of its bibles, which are disposed of for as low as one third of the cost, and that in order to maintain its operating cost it obtains substantial remittances from its New York office and voluntary contributions and gifts from certain churches, both in the United States and in the Philippines, which are interested in its missionary work. Regarding plaintiff's contention of lack of profit in the sale of bibles, defendant retorts that the admissions of plaintiff-appellant's lone witness who testified on cross-examination that bibles bearing the price of 70 cents each from plaintiff-appellant's New York office are sold here by plaintiff-appellant at P1.30 each; those bearing the price of $4.50 each are sold here at P10 each; those bearing the price of $7 each are sold here at P15 each; and those bearing the price of $11 each are sold here at P22 each, clearly show that plaintiff's contention that it never makes any profit from the sale of its bible, is evidently untenable. After hearing the Court rendered judgment, the last part of which is as follows:

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"As may be seen from the repealed section (m-2) of the Revised Administrative Code and the repealing portions (o) of section 18 of Republic Act No. 409, although they seemingly differ in the way the legislative intent is expressed, yet their meaning is practically the same for the purpose of taxing the merchandise mentioned in said legal provisions, and that the taxes to be levied by said ordinances is in the nature of percentage graduated taxes (Sec. 3 of Ordinance No. 3000, as amended, and Sec. 1, Group 2, of Ordinance No. 2529, as amended by Ordinance No. 3364). IN VIEW OF THE FOREGOING CONSIDERATIONS, this Court is of the opinion and so holds that this case should be dismissed, as it is hereby dismissed, for lack of merits, with costs against the plaintiff." Not satisfied with this verdict plaintiff took up the matter to the Court of Appeals which certified the case to Us for the reason that the errors assigned to the lower Court involved only questions of law. Appellant contends that the lower Court erred: 1. In holding that Ordinances Nos. 2529 and 3000, as respectively amended, are not unconstitutional; 2. In holding that subsection m-2 of Section 2444 of the Revised Administrative Code under which Ordinances Nos. 2529 and 3000 were promulgated, was not repealed by Section 18 of Republic Act No. 409; 3. In not holding that an ordinance providing for percentage taxes based on gross sales or receipts, in order to be valid under the new Charter of the City of Manila, must first be approved by the President of the Philippines; and 4. In holding that, as the sales made by the plaintiff-appellant have assumed commercial proportions, it cannot escape from the operation of said municipal ordinances under the cloak of religious privilege. The issues.As may be seen from the preceding statement of the case, the issues involved in the present controversy may be reduced to the following: (1) whether or not the ordinances of the City of Manila, Nos. 3000, as amended, and 2529, 3028 and 3364, are constitutional and valid; and (2) whether the provisions of said ordinances are applicable or not to the case at bar. Section 1, subsection (7) of Article III of the Constitution of the Republic of the Philippines, provides that: "(7) No law shall be made respecting an establishment of religion, or prohibiting the free exercise thereof, and the free exercise and enjoyment of religious profession and
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worship, without discrimination or preference, shall forever be allowed. No religion test shall be required for the exercise of civil or political rights." Predicated on this constitutional mandate, plaintiff-appellant contends that Ordinances Nos. 2529 and 3000, as respectively amended, are unconstitutional and illegal in so far as its society is concerned, because they provide for religious censorship and restrain the free exercise and enjoyment of its religious profession, to wit: the distribution and sale of bibles and other religious literature to the people of the Philippines. Before entering into a discussion of the constitutional aspect of the case, We shall first consider the provisions of the questioned ordinances in relation to their application to the sale of bibles, etc. by appellant. The records show that by letter of May 29, 1953 (Annex A), the City Treasurer required plaintiff to secure a Mayor's permit in connection with the society's alleged business of distributing and selling bibles, etc. and to pay permit dues in the sum of P35 for the period covered in this litigation, plus the sum of P35 for compromise on account of plaintiffs failure to secure the permit required by Ordinance No.. 3000 of the City of Manila, as amended. This Ordinance is of general application and not particularly directed against institutions like the plaintiff, and it does not contain any provisions whatsoever prescribing religious censorship nor restraining the free exercise and enjoyment of any religious profession. Section 1 of Ordinance No. 3000 reads as follows: "SEC. 1. PERMITS NECESSARY.It shall be unlawful for any person or entity to conduct or engage in any of the businesses, trades, or occupations enumerated in Section 3 of this Ordinance or other businesses, trades, or occupations for which a permit is required for the proper supervision and enforcement of existing laws and ordinances governing the sanitation, security, and welfare of the public and the health of the employees engaged in the business specified in said section 3 hereof, WITHOUT FIRST HAVING OBTAINED A PERMIT THEREFOR FROM THE MAYOR AND THE NECESSARY LICENSE FROM THE CITY TREASURER." The business, trade or occupation of the plaintiff involved in this case is not particularly mentioned in Section 3 of the Ordinance, and the record does not show that a permit is required therefor under existing laws and ordinances for the proper supervision and enforcement of their provisions governing the sanitation, security and welfare of the public and the health of the employees engaged in the business of the plaintiff. However, section 3 of Ordinance 3000 contains item No. 79, which reads as follows: "79. All other businesses, trades or occupations not mentioned in this Ordinance, except those upon which the City is not empowered to license or to tax .... P5.00" Therefore, the necessity of the permit is made to depend upon the power of the City to license or tax said business, trade or occupation.
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As to the license fees that the Treasurer of the City of Manila required the society to pay from the 4th quarter of 1945 to the 1st quarter of 1953 in the sum of P5,821.45, including the sum of P50 as compromise, Ordinance No. 2529, as amended by Ordinances Nos. 2779, 2821 and 3028 prescribes the following: "SEC. 1. FEES.Subject to the provisions of section 578 of the Revised Ordinances of the City of Manila, as amended, there shall be paid to the City Treasurer for engaging in any of the businesses or occupations below enumerated, quarterly, license fees based on gross sales or receipts realized during the preceding quarter in accordance with the rates herein prescribed: PROVIDED, HOWEVER, That a person engaged in any business or occupation for the first time shall pay the initial license fee based on the probable gross sales or receipts for the first quarter beginning from the date of the opening of the business as indicated herein for the corresponding business or occupation. GROUP 2.Retail dealers in new (not yet used) merchandise, which dealers are not yet subject to the payment of any municipal tax, such as (1) retail dealers in general merchandise; (2) retail dealers exclusively engaged in the sale of * * * books, including stationery. As may be seen, the license fees required to be paid quarterly in Section 1 of said Ordinance No. 2529, as amended, are not imposed directly upon any religious institution but upon those engaged in any of the business or occupations therein enumerated, such as retail "dealers in general merchandise" which, it is alleged, cover the business or occupation of selling bibles, books, etc. Chapter 60 of the Revised Administrative Code which includes section 2444, subsection (m-2) of said legal body, as amended by Act No. 3659, approved on December 8, 1929, empowers the Municipal Board of the City of Manila: "(M-2) To tax and fix the license fee on (a) dealers in new automobiles or accessories or both, and (b) retail dealers in new (not yet used) merchandise, which dealers are not yet subject to the payment of any municipal tax. "For the purpose of taxation, these retail dealers shall be classified as (1) retail dealers in general merchandise, and (2) retail dealers exclusively engaged in the sale of (a) textiles * * * (e) books, including stationery, paper and office supplies, * * *: PROVIDED, HOWEVER, That the combined total tax of any debtor or manufacturer, or both, enumerated under these subsections (m-1) and (m-2), whether dealing in one or all of the articles mentioned herein, SHALL NOT BE IN EXCESS OF FIVE HUNDRED PESOS PER ANNUM."

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and appellee's counsel maintains that City Ordinances Nos. 2529 and 3000, as amended, were enacted in virtue of the power that said Act No. 3669 conferred upon the City of Manila. Appellant, however, contends that said ordinances are no longer in force and effect as the law under which they were promulgated has been expressly repealed by Section 102 of Republic Act No. 409 passed on June 18, 1949, known as the Revised Manila Charter. Passing upon this point the lower Court categorically stated that Republic Act No. 409 expressly repealed the provisions of Chapter 60 of the Revised Administrative Code but in the opinion of the trial Judge, although Section 2444 (m-2) of the former Manila Charter and section 18 (o) of the new seemingly differ in the way the legislative intent was expressed, yet their meaning is practically same for the purpose of taxing the merchandise mentioned in both legal provisions and, consequently, Ordinances Nos. 2529 and 3000, as amended, are to be considered as still in full force and effect uninterruptedly up to the present. "Often the legislature, instead of simply amending the preexisting statute, will repeal the old statute in its entirety and by the same enactment re-enact all or certain portions of the preexisting law. Of course, the problem created by this sort of legislative action involves mainly the effect of the repeal upon rights and liabilities which accrued under the original statute. Are those rights and liabilities destroyed or preserved? The authorities are divided as to the effect of simultaneous repeals and re-enactments. Some adhere to the view that the rights and liabilities accrued under the repealed act are destroyed, since the statutes from which they sprang are actually terminated, even though for only a very short period of time. Others, and they seem to be in the majority, refuse to accept this view of the situation, and consequently maintain that all rights and liabilities which have accrued under the original statute are preserved and may be enforced, since the re-enactment neutralizes the repeal, therefore continuing the law in force without interruption". (CrawfordStatutory Construction, Sec. 322). Appellant's counsel states that section 18 (o) of Republic Act No. 409 introduces a new and wider concept of taxation and is so different from the provisions of Section 2444 (m2) that the former cannot be considered as a substantial re-enactment of the provisions of the latter. We have quoted above the provisions of section 2444 (m-2) of the Revised Administrative Code and We shall now copy hereunder the provisions of Section 18, subdivision (o) of Republic Act No. 409, which reads as follows: "(o) To tax and fix the license fee on dealers in general merchandise, including importers and indentors, except those dealers who may be expressly subject to the payment of some other municipal tax under the provisions of this section.

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Dealers in general merchandise shall be classified as (a) wholesale dealers and (b) retail dealers. For purposes of the tax on retail dealers, general merchandise shall be classified into four main classes: namely (1) luxury articles, (2) semi-luxury articles, (3) essential commodities, and (4) miscellaneous articles. A separate license shall be prescribed for each class but where commodities of different classes are sold in the same establishment, it shall not be compulsory for the owner to secure more than one license if he pays the higher or highest rate of tax prescribed by ordinance. Wholesale dealers shall pay the license tax as such, as may be provided by ordinance. For purposes of this section, the term 'General merchandise' shall include poultry and livestock, agricultural products, fish and other allied products." The only essential difference that We find between these two provisions that may have any bearing on the case at bar, is that while subsection (m-2) prescribes that the combined total tax of any dealer or manufacturer, or both, enumerated under subsections (m-1) and (m-2), whether dealing in one or all of the articles mentioned therein, shall not be in excess of P500 per annum, the corresponding section 18, subsection (o) of Republic Act No. 409, does not contain any limitation as to the amount of tax or license fee that the retail dealer has to pay per annum. Hence, and in accordance with the weight of the authorities above referred to that maintain that "all rights and liabilities which have accrued under the original statute are preserved and may be enforced,, since the reenactment neutralizes the repeal, therefore continuing the law in force without interruption", We hold that the questioned ordinances of the City of Manila are still in force and effect. Plaintiff, however, argues that the questioned ordinances, to be valid, must first be approved by the President of the Philippines as per section 18, subsection (ii) of Republic Act No. 409, which reads as follows: "(ii) To tax, license and regulate any business, trade or occupation being conducted within the City of Manila, not otherwise enumerated in the preceding subsections, including percentage taxes based on gross sales or receipts, subject to the approval of the PRESIDENT, except amusement taxes" but this requirement of the President's approval was not contained in section 2444 of the former Charter of the City of Manila under which Ordinance No. 2529 was promulgated. Anyway, as stated by appellee's counsel, the business of "retail dealers in general merchandise" is expressly enumerated in subsection (o), section 18 of Republic Act No. 409; hence, an ordinance prescribing a municipal tax on said business does not have to be approved by the President to be effective, as it is not among those referred to in said subsection (ii). Moreover, the questioned ordinances are still in force, having

33

been promulgated by the Municipal Board of the City of Manila under the authority granted to it by law. The question that now remains to be determined is whether said ordinances are inapplicable, invalid or unconstitutional if applied to the alleged business of distribution and sale of bibles to the people of the Philippines by a religious corporation like the American Bible Society, plaintiff herein. With regard to Ordinance No. 2529, as amended by Ordinances Nos. 2779, 2821 and 3028, appellant contends that it is unconstitutional and illegal because it restrains the free exercise and enjoyment of the religious profession and worship of appellant. Article III, section 1, clause (7) of the Constitution of the Philippines aforequoted, guarantees the freedom of religious profession and worship. "Religion has been spoken of as 'a profession of faith to an active power that binds and elevates man to its Creator' (Aglipay vs. Ruiz, 64 Phil., 201). It has reference to one's views of his relations to His Creator and to the obligations they impose of reverence to His being and character, and obedience to His Will (Davis vs. Beason, 133 U.S., 342). The constitutional guaranty of the free exercise and enjoyment of religious profession and worship carries with it the right to disseminate religious information. Any restraint of such right can only be justified like other restraints of freedom of expression on the grounds that there is a clear and present danger of any substantive evil which the State has the right to prevent". (Taada and Fernando on the Constitution of the Philippines, Vol. I, 4th ed., p. 297). In the case at bar the license fee herein involved is imposed upon appellant for its distribution and sale of bibles and other religious literature: "In the case of Murdock vs. Pennsylvania, it was held that an ordinance requiring that a license be obtained before a person could canvass or solicit orders for goods, paintings, pictures, wares or merchandise cannot be made to apply to members of Jehovah's Witnesses who went about from door to door distributing literature and soliciting people to 'purchase' certain religious books and pamphlets, all published by the Watch Tower Bible & Tract Society. The 'price' of the books was twenty-five cents each, the 'price' of the pamphlets five cents each. It was shown that in making the solicitations there was a request for additional 'contribution' of twenty-five cents each for the books and five cents each for the pamphlets. Lesser sum were accepted, however, and books were even donated in case interested persons were without funds. On the above facts the Supreme Court held that it could not be said that petitioners were engaged in commercial rather than a religious venture. Their activities could not be described as embraced in the occupation of selling books and pamphlets. Then the Court continued: 'We do not mean to say that religious groups and the press are free from all financial burdens of government. See Grosjean vs. American Press Co., 297 U.S., 233, 250, 80
34

L. ed. 660, 668, 56 S. Ct. 444. We have here something quite different, for example, from a tax on the income of one who engages in religious activities or a tax on property used or employed in connection with those activities. It is one thing to impose a tax on the income or property of a preacher. It is quite another thing to exact a tax from him for the privilege of delivering a sermon. The tax imposed by the City of Jeannette is a flat license tax, payment of which is a condition of the exercise of these constitutional privileges. The power to tax the exercise of a privilege is the power to control or suppress its enjoyment. * * * Those who can tax the exercise of this religious practice can make its exercise so costly as to deprive it of the resources necessary for its maintenance. Those who can tax the privilege of engaging in this form of missionary evangelism can close all its doors to all those who do not have a full purse. Spreading religious beliefs in this ancient and honorable manner would thus be denied the needy. * * * It is contended however that the fact that the license tax can suppress or control this activity is unimportant if it does not do so. But that is to disregard the nature of this tax. It is a license taxa flat tax imposed on the exercise of a privilege granted by the Bill of Rights * * * The power to impose a license tax on the exercise of these freedoms is indeed as potent as the power of censorship which this Court has repeatedly struck down. * * * It is not a nominal fee imposed as a regulatory measure to defray the expenses of policing the activities in question. It is in no way apportioned. It is flat license tax levied and collected as a condition to the pursuit of activities whose 'enjoyment is guaranted by the constitutional liberties of press and religion and inevitably tends to suppress their exercise. That is almost uniformly recognized as the inherent vice and evil of this flat license tax.' Nor could dissemination of religious information be conditioned upon the approval of an official or manager even if the town were owned by a corporation as held in the case of Marsh vs. State of Alabama (326 U.S. 501), or by the United States itself as held in the case of Tucker vs. Texas (326 U.S. 517). In the former case the Supreme Court expressed the opinion that the right to enjoy freedom of the press and religion occupies a preferred position as against the constitutional right of property owners. 'When we balance the constitutional rights of owners of property against those of the people to enjoy freedom of press and religion, as we must here, we remain mindful of the fact that the latter occupy a preferred position. * * * In our view the circumstance that the property rights to the premises where the deprivation of property here involved, took place, were held by others than the public, is not sufficient to justify the State's permitting a corporation to govern a community of citizens so as to restrict their fundamental liberties and the enforcement of such restraint by the application of a State statute.'" (Taada and Fernando on the Constitution of the Philippines, Vol. I, 4th ed., p. 304-306).

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Section 27 of Commonwealth Act No. 466, otherwise known as the National Internal Revenue Code, provides: "SEC. 27. EXEMPTIONS FROM TAX ON CORPORATIONS.The following organizations shall not be taxed under this Title in respect to income received by them as such "(e) Corporations or associations organized and operated exclusively for religious, charitable, * * * or educational purposes, * * *: Provided, however, That the income of whatever kind and character from any of its properties, real or personal, or from any activity conducted for profit, regardless of the disposition made of such income, shall be liable to the tax imposed under this Code;". Appellant's counsel claims that the Collector of Internal Revenue has exempted the plaintiff from this tax and says that such exemption clearly indicates that the act of distributing and selling bibles, etc. is purely religious and does not fall under the above legal provisions. It may be true that in the case at bar the price asked for the bibles and other religious pamphlets was in some instances a little bit higher than the actual cost of the same, but this cannot mean that appellant was engaged in the business or occupation of selling said "merchandise" for profit. For this reason We believe that the provisions of City of Manila Ordinance No. 2529, as amended, cannot be applied to appellant, for in doing so it would impair its free exercise and enjoyment of its religious profession and worship as well as its rights of dissemination of religious beliefs. With respect to Ordinance No. 3000, as amended, which requires the obtention of the Mayor's permit before any person can engage in any of the businesses, trades or occupations enumerated therein, We do not find that it imposes any charge upon the enjoyment of a right granted by the Constitution, nor tax the exercise of religious practices. In the case of Coleman vs. City of Griffin, 189 S.E. 427, this point was elucidated as follows: "An ordinance by the City of Griffin, declaring that the practice of distributing either by hand or otherwise, circulars, handbooks, advertising, or literature of any kind, whether said articles are being delivered free, or whether same are being sold within the city limits of the City of Griffin, without first obtaining written permission from the city manager of the City of Griffin, shall be deemed a nuisance and punishable as an offense against the City of Griffin, does not deprive defendant of his constitutional right of the free exercise and enjoyment of religious profession and worship, even though it prohibits him from introducing and carrying out a scheme or purpose which he sees fit to claim as a part of his religious system."

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It seems clear, therefore, that Ordinance No. 3000 cannot be considered unconstitutional, even if applied to plaintiff Society. But as Ordinance No. 2529 of the City of Manila, as amended, is not applicable to plaintiff-appellant and defendantappellee is powerless to license or tax the business of plaintiff Society involved herein for, as stated before, it would impair plaintiff's right to the free exercise and enjoyment of its religious profession and worship, as well as its rights of dissemination of religious beliefs, We find that Ordinance No. 3000, as amended, is also inapplicable to said business, trade or occupation of the plaintiff. Wherefore, and on the strength of the foregoing considerations, We hereby reverse the decision appealed from, sentencing defendant to return to plaintiff the sum of P5,891.45 unduly collected from it. Without pronouncement as to costs. It is so ordered. [American Bible Society vs. City of Manila,, 101 Phil. 386(1957)]

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PETITION for review or certiorari of a decision of the Court of Appeals. The facts are stated in the opinion of the Court. Gancayco Law Offices for petitioners. Peaflor & Perez Law Offices and Belo, Gozon, Elma, Parel, Asuncion & Lucila for Republic Broadcasting System, Inc. Bengzon, Narciso, Cadula, Jimenez, Gonzales & Liwanag for VIVA Productions and V. del Rosario DAVIDE, JR., C.J.: In this petition for review on certiorari, petitioner ABS-CBN Broadcasting Corp. (hereafter ABSCBN) seeks to reverse and set aside the decision1 of 31 October 1996 and the resolution2 of 10 March 1997 of the Court of Appeals in CAThe antecedents, as found by the RTC and adopted by the Court of Appeals, are as follows: In 1990, ABS-CBN and Viva executed a Film Exhibition Agreement (Exh. A) whereby Viva gave ABS-CBN an exclusive right to exhibit some Viva films. Sometime in December 1991, in accordance with paragraph 2.4 [sic] of said agreement stating that 1.4 ABS-CBN shall have the right of first refusal to the next twenty-four (24) Viva films for TV telecast under such terms as may be agreed upon by the parties hereto, provided, however, that such right shall be exercised by ABS-CBN from the actual offer in writing. Viva, through defendant Del Rosario, offered ABS-CBN, through its vice-president Charo Santos-Concio, a list of three (3) film packages (36 title) from which ABS-CBN may exercise its right of first refusal under the aforesaid agreement (Exhs. 1 par. 2, 2, 2-A and 2-B-Viva). ABS-CBN, however through Mrs. Concio, can tick off only ten (10) titles (from the list) we can purchase (Exh. 3-Viva) and therefore did not accept said list (TSN, June 8, 1992, pp. 9-10). The titles ticked off by Mrs. Concio are not the subject of the case at bar except the film Maging Sino Ka Man. For further enlightenment, this rejection letter dated January 06, 1992 (Exh. 3-Viva) is hereby quoted: 6 January 1992 Dear Vic, This is not a very formal business letter I am writing to you as I would like to express my difficulty in recommending the purchase of the three film packages you are offering ABS-CBN. From among the three packages I can only tick off 10 titles we can purchase. Please see attached. I hope you will understand my position. Most of the action pictures in the list do not have big action stars in the cast. They are not for prime-time. In line with this I wish to mention 38

that I have not scheduled for telecast several action pictures in our very first contract because of the cheap production value of these movies as well as the lack of big action stars. As a film producer, I am sure you understand what I am trying to say as Viva produces only big action pictures. In fact, I would like to request two (2) additional runs for these movies as I can only schedule them in our non-primetime slots. We have to cover the amount that was paid for these movies because as you very well know that non-primetime advertising rates are very low. These are the unaired titles in the first contract. 1. Kontra Persa [sic] 2. Raider Platoon 3. Underground guerillas 4. Tiger Command 5. Boy de Sabog 6. Lady Commando 7. Batang Matadero 8. Rebelyon I hope you will consider this request of mine. The other dramatic films have been offered to us before and have been rejected because of the ruling of MTRCB to have them aired at 9:00 p.m. due to their very adult themes. As for the 10 titles I have choosen [sic] from the 3 packages please consider including all the other Viva movies produced last year. I have quite an attractive offer to make. Thanking you and with my warmest regards. (Signed) Charo Santos-Concio On February 27, 1992, defendant Del Rosario approached ABS-CBNs Ms. Concio, with a list consisting of 52 original movie titles (i.e. not yet aired on television) including the 14 titles subject of the present case, as well as 104 re-runs (previously aired on television) from which ABS-CBN may choose another 52 titles, as a total of 156 titles, proposing to sell to ABS-CBN airing rights over this package of 52 originals and 52 re-runs for P60,000,000.00 of which P30,000,000.00 will be in cash and P30,000,000.00 worth of television spots (Exhs. 4 to 4-CViva; 9-Viva).

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On April 2, 1992, defendant Del Rosario and ABS-CBNs general manager, Eugenio Lopez III, met at the Tamarind Grill Restaurant in Quezon City to discuss the package proposal of Viva. What transpired in that lunch meeting is the subject of conflicting versions. Mr. Lopez testified that he and Mr. Del Rosario allegedly agreed that ABS-CBN was granted exclusive film rights to fourteen (14) films for a total consideration of P36 million; that he allegedly put this agreement as to the price and number of films in a napkin and signed it and gave it to Mr. Del Rosario (Exh. D; TSN, pp. 24-26, 77-78, June 8, 1992). On the other hand, Del Rosario denied having made any agreement with Lopez regarding the 14 Viva films; denied the existence of a napkin in which Lopez wrote something; and insisted that what he and Lopez discussed at the lunch meeting was Vivas film package offer of 104 films (52 originals and 52 re-runs) for a total price of P60 million. Mr. Lopez promising [sic] to make a counter proposal which came in the form of a proposal contract Annex C of the complaint (Exh. 1-Viva; Exh. C-ABS-CBN). On April 06, 1992, Del Rosario and Mr. Graciano Gozon of RBS Senior vice-president for Finance discussed the terms and conditions of Vivas offer to sell the 104 films, after the rejection of the same package by ABS-CBN. On April 07, 1992, defendant Del Rosario received through his secretary, a handwritten note from Ms. Concio, (Exh. 5-Viva), which reads: Heres the draft of the contract. I hope you find everything in order, to which was attached a draft exhibition agreement (Exh. C-ABS-CBN; Exh. 9-Viva, p. 3) a counter-proposal covering 53 films, 52 of which came from the list sent by defendant Del Rosario and one film was added by Ms. Concio, for a consideration of P35 million. Exhibit C provides that ABS-CBN is granted film rights to 53 films and contains a right of first refusal to 1992 Viva Films. The said counter proposal was however rejected by Vivas Board of Directors [in the] evening of the same day, April 7, 1992, as Viva would not sell anything less than the package of 104 films for P60 million pesos (Exh. 9-Viva), and such rejection was relayed to Ms. Concio. On April 29, 1992, after the rejection of ABS-CBN and following several negotiations and meetings defendant Del Rosario and Vivas President Teresita Cruz, in consideration of P60 million, signed a letter of agreement dated April 24, 1992, granting RBS the exclusive right to air 104 Viva-produced and/or acquired films (Exh. 7-A -RBS; Exh. 4-RBS) including the fourteen (14) films subject of the present case.4 On 27 May 1992, ABS-CBN filed before the RTC a complaint for specific performance with a prayer for a writ of preliminary injunction and/or temporary restraining order against private respondents Republic Broadcasting Corporation5 (hereafter RBS), Viva Productions (hereafter VIVA), and Vicente del Rosario. The complaint was docketed as Civil Case No. Q-92-12309. On 28 May 1992, the RTC issued a temporary restraining order6 enjoining private respondents from proceeding with the airing, broadcasting, and televising of the fourteen VIVA films subject of the controversy, starting with the film Maging Sino Ka Man, which was scheduled to be shown on private respondent RBS channel 7 at seven oclock in the evening of said date. On 17 June 1992, after appropriate proceedings, the RTC issued an order7 directing the issuance of a writ of preliminary injunction upon ABS-CBNs posting of a P35 million bond. ABS40

CBN moved for the reduction of the bond,8 while private respondents moved for reconsideration of the order and offered to put up a counterbond.9 In the meantime, private respondents filed separate answers with counterclaim.10 RBS also set up a cross-claim against VIVA. On 3 August 1992, the RTC issued an order11 dissolving the writ of preliminary injunction upon the posting by RBS of a P30 million counterbond to answer for whatever damages ABS-CBN might suffer by virtue of such dissolution. However, it reduced petitioners injunction bond to P15 million as a condition precedent for the reinstatement of the writ of preliminary injunction should private respondents be unable to post a counterbond. At the pre-trial12 on 6 August 1992, the parties, upon suggestion of the court, agreed to explore the possibility of an amicable settlement. In the meantime, RBS prayed for and was granted reasonable time within which to put up a P30 million counterbond in the event that no settlement would be reached. As the parties failed to enter into an amicable settlement, RBS posted on 1 October 1992 a counterbond, which the RTC approved in its Order of 15 October 1992.13 On 19 October 1992, ABS-CBN filed a motion for reconsideration14 of the 3 August and 15 October 1992 Orders, which RBS opposed.15 On 29 October 1992, the RTC conducted a pre-trial.16 Pending resolution of its motion for reconsideration, ABS-CBN filed with the Court of Appeals a petition17 challenging the RTCs Orders of 3 August and 15 October 1992 and praying for the issuance of a writ of preliminary injunction to enjoin the RTC from enforcing said orders. The case was docketed as CA-G.R. SP No. 29300. On 3 November 1992, the Court of Appeals issued a temporary restraining order18 to enjoin the airing, broadcasting, and televising of any or all of the films involved in the controversy. On 18 December 1992, the Court of Appeals promulgated a decision19 dismissing the petition in CA-G.R. SP No. 29300 for being premature. ABS-CBN challenged the dismissal in a petition for review filed with this Court on 19 January 1993, which was docketed as G.R. No. 108363. In the meantime the RTC received the evidence for the parties in Civil Case No. Q-92-12309. Thereafter, on 28 April 1993, it rendered a decision20 in favor of RBS and VIVA and against ABS-CBN disposing as follows: WHEREFORE, under cool reflection and prescinding from the foregoing, judgment is rendered in favor of defendants and against the plaintiff. (1) The complaint is hereby dismissed. (2) Plaintiff ABS-CBN is ordered to pay defendant RBS the following:

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a) P107,727.00, the amount of premium paid by RBS to the surety which issued defendant RBSs bond to lift the injunction; b) P191,843.00 for the amount of print advertisement for Maging Sino Ka Man in various newspapers; c) Attorneys fees in the amount of P1 million; d) P5 million as and by way of moral damages; e) P5 million as and by way of exemplary damages; (3) For defendant VIVA, plaintiff ABS-CBN is ordered to pay P212,000.00 by way of reasonable attorneys fees. ABS-CBN Broadcasting Corporation vs. Court of Appeals (4) The cross-claim of defendant RBS against defendant VIVA is dismissed. (5) Plaintiff to pay the costs. According to the RTC, there was no meeting of minds on the price and terms of the offer. The alleged agreement between Lopez III and Del Rosario was subject to the approval of the VIVA Board of Directors, and said agreement was disapproved during the meeting of the Board on 7 April 1992. Hence, there was no basis for ABS-CBNs demand that VIVA signed the 1992 Film Exhibition Agreement. Furthermore, the right of first refusal under the 1990 Film Exhibition Agreement had previously been exercised per Ms. Concios letter to Del Rosario ticking off ten titles acceptable to them, which would have made the 1992 agreement an entirely new contract. On 21 June 1993, this Court denied21 ABS-CBNs petition for review in G.R. No. 108363, as no reversible error was committed by the Court of Appeals in its challenged decision and the case had become moot and academic in view of the dismissal of the main action by the court a quo in its decision of 28 April 1993. Aggrieved by the RTCs decision, ABS-CBN appealed to the Court of Appeals claiming that there was a perfected contract between ABS-CBN and VIVA granting ABS-CBN the exclusive right to exhibit the subject films. Private respondents VIVA and Del Rosario also appealed seeking moral and exemplary damages and additional attorneys fees. In its decision of 31 October 1996, the Court of Appeals agreed with the RTC that the contract between ABS-CBN and VIVA had not been perfected, absent the approval by the VIVA Board of Directors of whatever Del Rosario, its agent, might have agreed with Lopez III. The appellate court did not even believe ABS-CBNs evidence that Lopez III actually wrote down such an agreement on a napkin, as the same was never produced in court. It likewise rejected ABSCBNs insistence on its right of first refusal and ratiocinated as follows:

42

As regards the matter of right of first refusal, it may be true that a Film Exhibition Agreement was entered into between Appellant ABS-CBN and appellant VIVA under Exhibit A in 1990, and that parag. 1.4 thereof provides: 1.4 ABS-CBN shall have the right of first refusal to the next twenty-four (24) VIVA films for TV telecast under such terms as may be agreed upon by the parties hereto, provided, however, that such right shall be exercised by ABS-CBN within a period of fifteen (15) days from the actual offer in writing (Records, p. 14). [H]owever, it is very clear that said right of first refusal in favor of ABS-CBN shall still be subject to such terms as may be agreed upon by the parties thereto, and that the said right shall be exercised by ABS-CBN within fifteen (15) days from the actual offer in writing. Said parag. 1.4 of the agreement Exhibit A on the right of first refusal did not fix the price of the film right to the twenty-four (24) films, nor did it specify the terms thereof. The same are still left to be agreed upon by the parties. In the instant case, ABS-CBNs letter of rejection Exhibit 3 (Records, p. 89) stated that it can only tick off ten (10) films, and the draft contract Exhibit C accepted only fourteen (14) films, while parag. 1.4 of Exhibit A speaks of the next twenty-four (24) films. The offer of VIVA was sometime in December 1991 (Exhibits 2, 2-A, 2-B; Records, pp. 86-88; Decision, p. 11, Records, p. 1150), when the first list of VIVA films was sent by Mr. Del Rosario to ABS-CBN. The Vice President of ABS-CBN, Mrs. Charo Santos-Concio, sent a letter dated January 6, 1992 (Exhibit 3, Records, p. 89) where ABS-CBN exercised its right of refusal by rejecting the offer of VIVA. As aptly observed by the trial court, with the said letter of Mrs. Concio of January 6, 1992, ABS-CBN had lost its right of first refusal. And even if We reckon the fifteen (15) day period from February 27, 1992 (Exhibits 4 to 4-C) when another list was sent to ABS-CBN after the letter of Mrs. Concio, still the fifteen (15) day period within which ABS-CBN shall exercise its right of first refusal has already expired.22 Accordingly, respondent court sustained the award of actual damages consisting in the cost of print advertisements and the premium payments for the counterbond, there being adequate proof of the pecuniary loss which RBSs had suffered as a result of the filing of the complaint by ABS-CBN. As to the award of moral damages, the Court of Appeals found reasonable basis therefor, holding that RBS reputation was debased by the filing of the complaint in Civil Case No. Q-92-12309 and by the non-showing of the film Maging Sino Ka Man. Respondent court also held that exemplary damages were correctly imposed by way of example or correction for the public good in view of the filing of the complaint despite petitioners knowledge that the contract with VIVA had not been perfected. It also upheld the award of attorneys fees, reasoning that with ABS-CBNs act of instituting Civil Case No. Q-92-12309, RBS was unnecessarily forced to litigate. The appellate court, however, reduced the awards of moral damages to P2 million, exemplary damages to P2 million, and attorneys fees to P500,000.00. On the other hand, respondent Court of Appeals denied VIVA and Del Rosarios appeal because it was RBS and not VIVA which was actually prejudiced when the complaint was filed by ABS-CBN. 43

Its motion for reconsideration having been denied, ABS-CBN filed the petition in this case, contending that the Court of Appeals gravely erred in I . . . RULING THAT THERE WAS NO PERFECTED CONTRACT BETWEEN PETITIONER AND PRIVATE RESPONDENT VIVA NOTWITHSTANDING PREPONDERANCE OF EVIDENCE ADDUCED BY PETITIONER TO THE CONTRARY. II . . . IN AWARDING ACTUAL AND COMPENSATORY DAMAGES IN FAVOR OF PRIVATE RESPONDENT RBS. III . . . IN AWARDING MORAL AND EXEMPLARY DAMAGES IN FAVOR OF PRIVATE RESPONDENT RBS. IV . . . IN AWARDING ATTORNEYS FEES IN FAVOR OF RBS. ABS-CBN claims that it had yet to fully exercise its right of first refusal over twenty-four titles under the 1990 Film Exhibition Agreement, as it had chosen only ten titles from the first list. It insists that we give credence to Lopezs testimony that he and Del Rosario met at the Tamarind Grill Restaurant, discussed the terms and conditions of the second list (the 1992 Film Exhibition Agreement) and upon agreement thereon, wrote the same on a paper napkin. It also asserts that the contract has already been effective, as the elements thereof, namely, consent, object, and consideration were established. It then concludes that the Court of Appeals pronouncements were not supported by law and jurisprudence, as per our decision of 1 December 1995 in Limketkai Sons Milling, Inc. v. Court of Appeals,23 which cited Toyota Shaw, Inc. v. Court of Appeals;24 Ang Yu Asuncion v. Court of Appeals;25 and Villonco Realty Company v. Bormaheco, Inc.26 Anent the actual damages awarded to RBS, ABS-CBN disavows liability therefor. RBS spent for the premium on the counterbond of its own volition in order to negate the injunction issued by the trial court after the parties had ventilated their respective positions during the hearings for the purpose. The filing of the counterbond was an option available to RBS, but it can hardly be argued that ABS-CBN compelled RBS to incur such expense. Besides, RBS had another available option, i.e., move for the dissolution of the injunction; or if it was determined to put up a counterbond, it could have presented a cash bond. Furthermore under Article 2203 of the Civil Code, the party suffering loss or injury is also required to exercise the diligence of a good father of a family to minimize the damages resulting from the act or omission. As regards the cost of print advertisements, RBS had not convincingly established that this was a loss attributable to the non-showing of Maging Sino Ka Man; on the contrary, it was brought out during trial that

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with or without the case or the injunction, RBS would have spent such an amount to generate interest in the film. ABS-CBN further contends that there was no clear basis for the awards of moral and exemplary damages. The controversy involving ABS-CBN and RBS did not in any way originate from business transaction between them. The claims for such damages did not arise from any contractual dealings or from specific acts committed by ABS-CBN against RBS that may be characterized as wanton, fraudulent, or reckless; they arose by virtue only of the filing of the complaint. An award of moral and exemplary damages is not warranted where the record is bereft of any proof that a party acted maliciously or in bad faith in filing an action.27 In any case, free resort to courts for redress of wrongs is a matter of public policy. The law recognizes the right of every one to sue for that which he honestly believes to be his right without fear of standing trial for damages where by lack of sufficient evidence, legal technicalities, or a different interpretation of the laws on the matter, the case would lose ground.28 One who makes use of his own legal right does no injury.29 If damage results from the filing of the complaint, it is damnum absque injuria.30 Besides, moral damages are generally not awarded in favor of a juridical person, unless it enjoys a good reputation that was debased by the offending party resulting in social humiliation.31 As regards the award of attorneys fees, ABS-CBN maintains that the same had no factual, legal, or equitable justification. In sustaining the trial courts award, the Court of Appeals acted in clear disregard of the doctrine laid down in Buan v. Camaganacan32 that the text of the decision should state the reason why attorneys fees are being awarded; otherwise, the award should be disallowed. Besides, no bad faith has been imputed on, much less proved as having been committed by, ABS-CBN. It has been held that where no sufficient showing of bad faith would be reflected in a partys persistence in a case other than an erroneous conviction of the righteousness of his cause, attorneys fees shall not be recovered as cost.33 On the other hand, RBS asserts that there was no perfected contract between ABS-CBN and VIVA absent any meeting of minds between them regarding the object and consideration of the alleged contract. It affirms that ABS-CBNs claim of a right of first refusal was correctly rejected by the trial court. RBS insists the premium it had paid for the counterbond constituted a pecuniary loss upon which it may recover. It was obliged to put up the counterbond due to the injunction procured by ABS-CBN. Since the trial court found that ABS-CBN had no cause of action or valid claim against RBS and, therefore not entitled to the writ of injunction, RBS could recover from ABS-CBN the premium paid on the counterbond. Contrary to the claim of ABSCBN, the cash bond would prove to be more expensive, as the loss would be equivalent to the cost of money RBS would forego in case the P30 million came from its funds or was borrowed from banks. RBS likewise asserts that it was entitled to the cost of advertisements for the cancelled showing of the film Maging Sino Ka Man because the print advertisements were put out to announce the showing on a particular day and hour on Channel 7, i.e., in its entirety at one time, not as series to be shown on a periodic basis. Hence, the print advertisements were good and relevant

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for the particular date of showing, and since the film could not be shown on that particular date and hour because of the injunction, the expenses for the advertisements had gone to waste. As regards moral and exemplary damages, RBS asserts that ABS-CBN filed the case and secured injunctions purely for the purpose of harassing and prejudicing RBS. Pursuant then to Articles 19 and 21 of the Civil Code, ABS-CBN must be held liable for such damages. Citing Tolentino,34 damages may be awarded in cases of abuse of rights even if the act done is not illicit, and there is abuse of rights where a plaintiff institutes an action purely for the purpose of harassing or prejudicing the defendant. In support of its stand that a juridical entity can recover moral and exemplary damages, private respondent RBS cited People v. Manero,35 where it was stated that such entity may recover moral and exemplary damages if it has a good reputation that is debased resulting in social humiliation. It then ratiocinates; thus: There can be no doubt that RBS reputation has been debased by ABS-CBNs acts in this case. When RBS was not able to fulfill its commitment to the viewing public to show the film Maging Sino Ka Man on the scheduled dates and times (and on two occasions that RBS advertised), it suffered serious embarrassment and social humiliation. When the showing was canceled, irate viewers called up RBS offices and subjected RBS to verbal abuse (Announce kayo ng announce, hindi ninyo naman ilalabas, nanloloko yata kayo) (Exh. 3-RBS, par. 3). This alone was not something RBS brought upon itself. It was exactly what ABS-CBN had planned to happen. The amount of moral and exemplary damages cannot be said to be excessive. Two reasons justify the amount of the award. The first is that the humiliation suffered by RBS is national in extent. RBS operations as a broadcasting company is [sic] nationwide. Its clientele, like that of ABS-CBN, consists of those who own and watch television. It is not an exaggeration to state, and it is a matter of judicial notice that almost every other person in the country watches television. The humiliation suffered by RBS is multiplied by the number of televiewers who had anticipated the showing of the film Maging Sino Ka Man on May 28 and November 3, 1992 but did not see it owing to the cancellation. Added to this are the advertisers who had placed commercial spots for the telecast and to whom RBS had a commitment in consideration of the placement to show the film in the dates and times specified. The second is that it is a competitor that caused RBS to suffer the humiliation. The humiliation and injury are far greater in degree when caused by an entity whose ultimate business objective is to lure customers (viewers in this case) away from the competition.36 For their part, VIVA and Vicente del Rosario contend that the findings of fact of the trial court and the Court of Appeals do not support ABS-CBNs claim that there was a perfected contract. Such factual findings can no longer be disturbed in this petition for review under Rule 45, as only questions of law can be raised, not questions of fact. On the issue of damages and attorneys fees, they adopted the arguments of RBS. 46

The key issues for our consideration are (1) whether there was a perfected contract between VIVA and ABS-CBN, and (2) whether RBS is entitled to damages and attorneys fees. It may be noted that the award of attorneys fees of P212,000 in favor of VIVA is not assigned as another error. I The first issue should be resolved against ABS-CBN. A contract is a meeting of minds between two persons whereby one binds himself to give something or to render some service to another37 for a consideration. There is no contract unless the following requisites concur: (1) consent of the contracting parties; (2) object certain which is the subject of the contract; and (3) cause of the obligation, which is established.38 A contract undergoes three stages: (a) preparation, conception, or generation, which is the period of negotiation and bargaining, ending at the moment of agreement of the parties; (b) perfection or birth of the contract, which is the moment when the parties come to agree on the terms of the contract; and (c) consummation or death, which is the fulfillment or performance of the terms agreed upon in the contract.39 Contracts that are consensual in nature are perfected upon mere meeting of the minds. Once there is concurrence between the offer and the acceptance upon the subject matter, consideration, and terms of payment a contract is produced. The offer must be certain. To convert the offer into a contract, the acceptance must be absolute and must not qualify the terms of the offer; it must be plain, unequivocal, unconditional, and without variance of any sort from the proposal. A qualified acceptance, or one that involves a new proposal, constitutes a counter-offer and is a rejection of the original offer. Consequently, when something is desired which is not exactly what is proposed in the offer, such acceptance is not sufficient to generate consent because any modification or variation from the terms of the offer annuls the offer.40 When Mr. Del Rosario of VIVA met with Mr. Lopez of ABS-CBN at the Tamarind Grill on 2 April 1992 to discuss the package of films, said package of 104 VIVA films was VIVAs offer to ABSCBN to enter into a new Film Exhibition Agreement. But ABS-CBN, sent, through Ms. Concio, a counter-proposal in the form of a draft contract proposing exhibition of 53 films for a consideration of P35 million. This counter-proposal could be nothing less than the counter-offer of Mr. Lopez during his conference with Del Rosario at Tamarind Grill Restaurant. Clearly, there was no acceptance of VIVAs offer, for it was met by a counter-offer which substantially varied the terms of the offer. ABS-CBNs reliance in Limketkai Sons Milling, Inc. v. Court of Appeals 41 and Villonco Realty Company v. Bormaheco, Inc.,42 is misplaced. In these cases, it was held that an acceptance may contain a request for certain changes in the terms of the offer and yet be a binding acceptance as long as it is clear that the meaning of the acceptance is positively and unequivocally to accept the offer, whether such request is granted or not. This ruling was, however, reversed in the resolution of 29 March 1996,43 which ruled that the acceptance of an 47

offer must be unqualified and absolute, i.e., it must be identical in all respects with that of the offer so as to produce consent or meeting of the minds. On the other hand, in Villonco, cited in Limketkai, the alleged changes in the revised counteroffer were not material but merely clarificatory of what had previously been agreed upon. It cited the statement in Stuart v. Franklin Life Insurance Co.44 that a vendors change in a phrase of the offer to purchase, which change does not essentially change the terms of the offer, does not amount to a rejection of the offer and the tender of a counter-offer.45 However, when any of the elements of the contract is modified upon acceptance, such alteration amounts to a counteroffer. In the case at bar, ABS-CBN made no unqualified acceptance of VIVAs offer. Hence, they underwent a period of bargaining. ABS-CBN then formalized its counter-proposals or counteroffer in a draft contract. VIVA through its Board of Directors, rejected such counter-offer. Even if it be conceded arguendo that Del Rosario had accepted the counter-offer, the acceptance did not bind VIVA, as there was no proof whatsoever that Del Rosario had the specific authority to do so. Under the Corporation Code,46 unless otherwise provided by said Code, corporate powers, such as the power to enter into contracts, are exercised by the Board of Directors. However, the Board may delegate such powers to either an execu-tive committee or officials or contracted managers. The delegation, except for the executive committee, must be for specific purposes.47 Delegation to officers makes the latter agents of the corporation; accordingly, the general rules of agency as to the binding effects of their acts would apply.48 For such officers to be deemed fully clothed by the corporation to exercise a power of the Board, the latter must specially authorize them to do so. That Del Rosario did not have the authority to accept ABSCBNs counter-offer was best evidenced by his submission of the draft contract to VIVAs Board of Directors for the latters approval. In any event, there was between Del Rosario and Lopez III no meeting of minds. The following findings of the trial court are instructive: A number of considerations militate against ABS-CBNs claim that a contract was perfected at that lunch meeting on April 02, 1992 at the Tamarind Grill. FIRST, Mr. Lopez claimed that what was agreed upon at the Tamarind Grill referred to the price and the number of films, which he wrote on a napkin. However, Exhibit C contains numerous provisions which were not discussed at the Tamarind Grill, if Lopez testimony was to be believed nor could they have been physically written on a napkin. There was even doubt as to whether it was a paper napkin or a cloth napkin. In short what were written in Exhibit C were not discussed, and therefore could not have been agreed upon, by the parties. How then could this court compel the parties to sign Exhibit C when the provisions thereof were not previously agreed upon? SECOND, Mr. Lopez claimed that what was agreed upon as the subject matter of the contract was 14 films. The complaint in fact prays for delivery of 14 films. But Exhibit C mentions 53 films as its subject matter. Which is which? If Exhibit C reflected the true intent of the parties, then ABS-CBNs claim for 14 films in its complaint is false or if what it alleged in the complaint is 48

true, then Exhibit C did not reflect what was agreed upon by the parties. This underscores the fact that there was no meeting of the minds as to the subject matter of the contract, so as to preclude perfection thereof. For settled is the rule that there can be no contract where there is no object certain which is its subject matter (Art. 1318, NCC). THIRD, Mr. Lopez [sic] answer to question 29 of his affidavit testimony (Exh. D) states: We were able to reach an agreement. VIVA gave us the exclusive license to show these fourteen (14) films, and we agreed to pay Viva the amount of P16,050,000.00 as well as grant Viva commercial slots worth P19,950,000.00. We had already earmarked this P16,050,000.00. which gives a total consideration of P36 million (P19,950,000.00 plus P16,050,000.00 equals P36,000,000.00). On cross-examination Mr. Lopez testified: Q What was written in this napkin? A The total price, the breakdown the known Viva movies, the 7 blockbuster movies and the other 7 Viva movies because the price was broken down accordingly. The none [sic] Viva and the seven other Viva movies and the sharing between the cash portion and the concerned spot portion in the total amount of P35 million pesos. Now, which is which? P36 million or P35 million? This weakens ABS-CBNs claim. FOURTH. Mrs. Concio, testifying for ABS-CBN stated that she transmitted Exhibit C to Mr. Del Rosario with a handwritten note, describing said Exhibit C as a draft. (Exh. 5-Viva; tsn, pp. 23-24, June 08, 1992). The said draft has a well defined meaning. ... Since Exhibit C is only a draft, or a tentative, provisional or preparatory writing prepared for discussion, the terms and conditions thereof could not have been previously agreed upon by ABS-CBN and Viva. Exhibit C could not therefore legally bind Viva, not having agreed thereto. In fact, Ms. Concio admitted that the terms and conditions embodied in Exhibit C were prepared by ABS-CBNs lawyers and there was no discussion on said terms and conditions . . . . As the parties had not yet discussed the proposed terms and conditions in Exhibit C, and there was no evidence whatsoever that Viva agreed to the terms and conditions thereof, said document cannot be a binding contract. The fact that Viva refused to sign Exhibit C reveals only two [sic] well that it did not agree on its terms and conditions, and this court has no authority to compel Viva to agree thereto.

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FIFTH. Mr. Lopez understand [sic] that what he and Mr. Del Rosario agreed upon at the Tamarind Grill was only provisional, in the sense that it was subject to approval by the Board of Directors of Viva. He testified: Q Now, Mr. Witness, and after that Tamarind meeting . . . the second meeting wherein you claimed that you have the meeting of the minds between you and Mr. Vic del Rosario, what happened? A Vic Del Rosario was supposed to call us up and tell us specifically the result of the discussion with the Board of fsDirectors. Q And you are referring to the so-called agreement which you wrote in [sic] a piece of paper? A Yes, sir. Q So, he was going to forward that to the board of Directors for approval? A Yes, sir. (Tsn, pp. 42-43, June 8, 1992) Q Did Mr. Del Rosario tell you that he will submit it to his Board for approval? A Yes, sir. (Tsn, p. 69, June 8, 1992). The above testimony of Mr. Lopez shows beyond doubt that he knew Mr. Del Rosario had no authority to bind Viva to a contract with ABS-CBN until and unless its Board of Directors approved it. The complaint, in fact, alleges that Mr. Del Rosario is the Executive Producer of defendant Viva which is a corporation. (par. 2, complaint). As a mere agent of Viva, Del Rosario could not bind Viva unless what he did is ratified by its Board of Directors. (Vicente vs. Geraldez, 52 SCRA 210; Arnold vs. Willets and Paterson, 44 Phil. 634). As a mere agent, recognized as such by plaintiff, Del Rosario could not be held liable jointly and severally with Viva and his inclusion as party defendant has no legal basis. (Salonga vs. Warner Barner [sic], COLTA, 88 Phil. 125; Salmon vs. Tan, 36 Phil. 556).

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The testimony of Mr. Lopez and the allegations in the complaint are clear admissions that what was supposed to have been agreed upon at the Tamarind Grill between Mr. Lopez and Del Rosario was not a binding agreement. It is as it should be because corporate power to enter into a contract is lodged in the Board of Directors. (Sec. 23, Corporation Code). Without such board approval by the Viva board, whatever agreement Lopez and Del Rosario arrived at could not ripen into a valid contract binding upon Viva (Yao Ka Sin Trading vs. Court of Appeals, 209 SCRA 763). The evidence adduced shows that the Board of Directors of Viva rejected Exhibit C and insisted that the film package for 104 films be maintained (Exh. 7-1-Viva).49 The contention that ABS-CBN had yet to fully exercise its right of first refusal over twenty-four films under the 1990 Film Exhibition Agreement and that the meeting between Lopez and Del Rosario was a continuation of said previous contract is untenable. As observed by the trial court, ABS-CBNs right of first refusal had already been exercised when Ms. Concio wrote to VIVA ticking off ten films. Thus: [T]he subsequent negotiation with ABS-CBN two (2) months after this letter was sent, was for an entirely different package. Ms. Concio herself admitted on cross-examination to having used or exercised the right of first refusal. She stated that the list was not acceptable and was indeed not accepted by ABS-CBN, (TSN, June 8, 1992, pp. 8-10). Even Mr. Lopez himself admitted that the right of first refusal may have been already exercised by Ms. Concio (as she had). (TSN, June 8, 1992, pp. 71-75). Del Rosario himself knew and understand [sic] that ABS-CBN has lost its right of first refusal when his list of 36 titles were rejected (Tsn, June 9, 1992, pp. 1011).50 II However, we find for ABS-CBN on the issue of damages. We shall first take up actual damages. Chapter 2, Title XVIII, Book IV of the Civil Code is the specific law on actual or compensatory damages. Except as provided by law or by stipulation, one is entitled to compensation for actual damages only for such pecuniary loss suffered by him as he has duly proved.51 The indemnification shall comprehend not only the value of the loss suffered, but also that of the profits that the obligee failed to obtain.52 In contracts and quasi-contracts the damages which may be awarded are dependent on whether the obligor acted with good faith or otherwise. In case of good faith, the damages recoverable are those which are the natural and probable consequences of the breach of the obligation and which the parties have foreseen or could have reasonably foreseen at the time of the constitution of the obligation. If the obligor acted with fraud, bad faith, malice, or wanton attitude, he shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation.53 In crimes and quasi-delicts, the defendant shall be liable for all damages which are the natural and probable consequences of the act or omission complained of, whether or not such damages have been foreseen or could have reasonably been foreseen by the defendant.54

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Actual damages may likewise be recovered for loss or impairment of earning capacity in cases of temporary or permanent personal injury, or for injury to the plaintiffs business standing or commercial credit.55 The claim of RBS for actual damages did not arise from contract, quasi-contract, delict, or quasi-delict. It arose from the fact of filing of the complaint despite ABS-CBNs alleged knowledge of lack of cause of action. Thus paragraph 12 of RBSs Answer with Counterclaim and Cross-claim under the heading COUNTERCLAIM specifically alleges: 12. ABS-CBN filed the complaint knowing fully well that it has no cause of action against RBS. As a result thereof, RBS suffered actual damages in the amount of P6,621,195.32.56 Needless to state the award of actual damages cannot be comprehended under the above law on actual damages. RBS could only probably take refuge under Articles 19, 20, and 21 of the Civil Code, which read as follows: ART. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. ART. 20. Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same. ART. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. It may further be observed that in cases where a writ of preliminary injunction is issued, the damages which the defendant may suffer by reason of the writ are recoverable from the injunctive bond.57 In this case, ABS-CBN had not yet filed the required bond; as a matter of fact, it asked for reduction of the bond and even went to the Court of Appeals to challenge the order on the matter. Clearly then, it was not necessary for RBS to file a counterbond. Hence, ABS-CBN cannot be held responsible for the premium RBS paid for the counterbond. Neither could ABS-CBN be liable for the print advertisements for Maging Sino Ka Man for lack of sufficient legal basis. The RTC issued a temporary restraining order and later, a writ of preliminary injunction on the basis of its determination that there existed sufficient ground for the issuance thereof. Notably, the RTC did not dissolve the injunction on the ground of lack of legal and factual basis, but because of the plea of RBS that it be allowed to put up a counterbond. As regards attorneys fees, the law is clear that in the absence of stipulation, attorneys fees may be recovered as actual or compensatory damages under any of the circumstances provided for in Article 2208 of the Civil Code.58 ART. 2208. In the absence of stipulation, attorneys fees and expenses of litigation, other than judicial costs, cannot be recovered, except: (1) When exemplary damages are awarded;

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(2) When the defendants act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest; The general rule is that attorneys fees cannot be recovered as part of damages because of the policy that no premium should be placed on the right to litigate.59 They are not to be awarded every time a party wins a suit. The power of the court to award attorneys fees under Article 2208 demands factual, legal, and equitable justification.60 Even when a claimant is compelled to litigate with third persons or to incur expenses to protect his rights, still attorneys fees may not be awarded where no sufficient showing of bad faith could be reflected in a partys persistence in a case other than an erroneous conviction of the righteousness of his cause.61 As to moral damages the law is Section 1, Chapter 3, Title XVIII, Book IV of the Civil Code. Article 2217 thereof defines what are included in moral damages, while Article 2219 enumerates the cases where they may be recovered. Article 2220 provides that moral damages may be recovered in breaches of contract where the defendant acted fraudulently or in bad faith. RBSs claim for moral damages could possibly fall only under item (10) of Article 2219, thereof which reads: (10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35. Moral damages are in the category of an award designed to compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer.62 The award is not meant to enrich the complainant at the expense of the defendant, but to enable the injured party to obtain means, diversion, or amusements that will serve to obviate the moral suffering he has undergone. It is aimed at the restoration, within the limits of the possible, of the spiritual status quo ante, and should be proportionate to the suffering inflicted.63 Trial courts must then guard against the award of exorbitant damages; they should exercise balanced restrained and measured objectivity to avoid suspicion that it was due to passion, prejudice, or corruption on the part of the trial court.64 The award of moral damages cannot be granted in favor of a corporation because, being an artificial person and having existence only in legal contemplation, it has no feelings, no emotions, no senses. It cannot, therefore, experience physical suffering and mental anguish, which can be experienced only by one having a nervous system.65 The statement in People v. Manero 66 and Mambulao Lumber Co. v. PNB 67 that a corporation may recover moral damages if it has a good reputation that is debased, resulting in social humiliation is an obiter dictum. On this score alone the award for damages must be set aside, since RBS is a corporation. The basic law on exemplary damages is Section 5, Chapter 3, Title XVIII, Book IV of the Civil Code. These are imposed by way of example or correction for the public good, in addition to moral, temperate, liquidated, or compensatory damages.68 They are recoverable in criminal cases as part of the civil liability when the crime was committed with one or more aggravating circumstances;69 in quasi-delicts, if the defendant acted with gross negligence;70 and in contracts and quasicontracts, if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.71 53

It may be reiterated that the claim of RBS against ABS-CBN is not based on contract, quasicontract, delict, or quasidelict. Hence, the claims for moral and exemplary damages can only be based on Articles 19, 20, and 21 of the Civil Code. The elements of abuse of right under Article 19 are the following: (1) the existence of a legal right or duty, (2) which is exercised in bad faith, and (3) for the sole intent of prejudicing or injuring another. Article 20 speaks of the general sanction for all other provisions of law which do not especially provide for their own sanction; while Article 21 deals with acts contra bonus mores, and has the following elements: (1) there is an act which is legal, (2) but which is contrary to morals, good custom, public order, or public policy, and (3) and it is done with intent to injure.72 Verily then, malice or bad faith is at the core of Articles 19, 20, and 21. Malice or bad faith implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity.73 Such must be substantiated by evidence.74 There is no adequate proof that ABS-CBN was inspired by malice or bad faith. It was honestly convinced of the merits of its cause after it had undergone serious negotiations culminating in its formal submission of a draft contract. Settled is the rule that the adverse result of an action does not per se make the action wrongful and subject the actor to damages, for the law could not have meant to impose a penalty on the right to litigate. If damages result from a persons exercise of a right, it is damnum absque injuria.75 WHEREFORE, the instant petition is GRANTED. The challenged decision of the Court of Appeals in CA-G.R. CV No. 44125 is hereby REVERSED except as to unappealed award of attorneys fees in favor of VIVA Productions, Inc. No pronouncement as to costs. SO ORDERED. [ABS-CBN Broadcasting Corporation vs. Court of Appeals, 301 SCRA 572(1999)]

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Ortiz vs. Commission on Elections PETITION for certiorari to review the decision of the Commission on Elections. The facts are stated in the opinion of the Court. FERNAN, J.: In this petition for certiorari, petitioner presents before the Court the issue of whether or not a constitutional official whose courtesy resignation was accepted by the President of the Philippines during the effectivity of the Freedom Constitution may be entitled to retirement benefits under Republic Act No. 1568, as amended. Petitioner was appointed Commissioner of the Commission on Elections [COMELEC] by then President Ferdinand E. Marcos for a term expiring May 17, 1992.1 He took his oath of office on July 30, 1985. On March 5, 1986, together with Commissioners Quirino D. Marquinez and Mangontawar G. Guro, petitioner sent President Corazon C. Aquino a letter which reads as follows: The undersigned Commissioners were appointed to the Commission on Elections on July 30, 1985. Following the example of Honorable Justices of the Supreme Court, on the premise that we have now a revolutionary government, we hereby place our position at your disposal.2 Thereafter, or on March 25, 1986, the Freedom Constitution was promulgated through Proclamation No. 3, Article III thereof provides: SECTION 1. In the reorganization of the government, priority shall be given to measures to promote economy, efficiency, and the eradication of graft and corruption. SEC. 2. All elective and appointive officials and employees under the 1973 Constitution shall continue in office until otherwise provided by proclamation or executive order or upon the designation or appointment and qualification of their successors, if such is made within a period of one year from February 25, 1986. SEC. 3. Any public officer or employee separated from the service as a result of the reorganization effected under this Proclamation shall, if entitled under the laws then in force, receive the retirement and other benefits accruing thereunder.

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On April 16, 1986, the COMELEC, then composed of Acting Chairman Ramon H. Felipe, Jr. and Commissioners Froilan M. Bacungan, Quirino A. Marquinez, Mario D. Ortiz (petitioner herein), Ruben E. Agpalo and Jaime J. Layosa, adopted Resolution No. 86-2364 approving the application for retirement of Commissioners Victorino Savellano and Jaime Opinion. Seven days later, the same body passed Resolution No. 86-2370 approving the application for retirement of Commissioner Mangontawar B. Guro. On July 21, 1986, the Deputy Executive Secretary requested Acting Chairman Felipe to convey the information to Commissioners Marquinez, Ortiz, Agpalo and Layosa that the President had accepted, with regrets, their respective resignations, effective immediately.3 After the presidential acceptance of said resignations, the new COMELEC was composed of Ramon H. Felipe, Jr. as Chairman and Commissioners Froilan M. Bacungan, Leopoldo L. Africa, Haydee B. Yorac, Andres R. Flores, Dario C. Rama and Anacleto D. Badoy, Jr., as members. It was to this body that Commissioners Agpalo, Ortiz and Marquinez submitted on July 30, 1986 their respective applications for retirement. They were followed by Commissioner Layosa on August 1, 1986. To justify their petitions for retirement and their requests for payment of retirement benefits, all seven former COMELEC Commissioners invoked Republic Act No. 1568 as amended by Republic Act No. 3595 and re-enacted by Republic Act No. 6118, specifically the following provision: SECTION 1. When the Auditor General or the Chairman or any Member of the Commission on Elections retires from the service for having completed his term of office or by reason of his incapacity to discharge the duties of his office, or dies while in the service, or resigns at any time after reaching the age of sixty years but before the expiration of his term of office, he or his heirs shall be paid in lump sum his salary for one year, not exceeding five years, for every year of service based upon the last annual salary that he was receiving at the time of retirement incapacity, death or resignation, as the case may be: Provided, That in case of resignation, he has rendered not less than twenty years of service in the government; And provided, further, That he shall receive an annuity payable monthly during the residue of his natural life equivalent to the amount of monthly salary he was receiving on the date of retirement, incapacity or resignation. In its en banc Resolution No. 86-2491** of August 13, 1986,4 the COMELEC revoked Resolutions Nos. 86-2364 dated April 16, 1986 and 86-2370 dated April 23, 1986, and denied the applications for retirement of Commissioners Marquinez, Agpalo, Ortiz and Layosa on the ground that they were not entitled to retirement benefits under Republic Act No. 1568, as amended without specifying the reason therefor.5

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Petitioner Ortiz moved for the reconsideration of said resolution, contending that he was entitled to the benefits under Republic Act No. 1568, as amended. He averred therein that he did not resign but simply placed his position at the disposal of the President; that he had in fact completed his term as Commissioner by the change in the term of [his] office and eventual replacement, and that he was entitled to retirement benefits under the aforementioned law because Article 1186 of the Civil Code which states that the condition [with regard to an obligation] shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment. He invoked the aforequoted provisions of Proclamation No. 3 and cited the cases of former Chief Justice Ramon C. Aquino and Associate Justice Hermogenes Concepcion, Jr. who were allowed to retire by this Court and receive retirement benefits.6 Petitioners letter/motion for reconsideration was denied by the COMELEC in its en banc resolution of October 1, 1986.*** On December 18, 1986, petitioner appealed the denial of his claim to the Chairman of the Commission on Audit [COA]. In its memorandum dated January 15, 1987, the COA referred the matter to the COMELEC resident auditor for comment and recommendation. Having failed to receive any communication from the COA for some six months, on June 3, 1987, petitioner reiterated his appeal thereto. Again, the matter was referred to the COMELEC resident auditor with a request for immediate action thereon. A month later, or on July 9, 1987, petitioner filed the instant petition for certiorari alleging that the COMELECs arbitrary and unjust denial of his claim for retirement benefits and of his subsequent motion for reconsideration constitutes grave and whimsical abuse of discretion amounting to lack of jurisdiction which can only be remedied through the instant petition in the absence of an appeal or any plain, speedy and adequate remedy.7 In his memorandum, however, petitioner admits that, as correctly stated by the Solicitor General in respondents comment on the petition, this petition is basically one for a writ of mandamus aimed at compelling both the COMELEC and the COA to approve his claim for retirement benefits.8 We consider this case as a special civil action of both certiorari and mandamus and, notwithstanding the Solicitor Generals contention that action herein is premature as the COA may yet render a decision favorable to the petitioner, We opt to decide this case to shed light on the legal issue presented. The respondents posit the view that petitioners voluntary resignation prevented the completion of his term of office, and, therefore, having rendered only sixteen years of service to the government, he is not entitled to retirement benefits.9 We disagree. Petitioners separation from government service as a result of the reorganization ordained by the then nascent Aquino government may not be considered
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a resignation within the contemplation of the law. Resignation is defined as the act of giving up or the act of an officer by which he declines his office and renounces the further right to use it.10 To constitute a complete and operative act of resignation, the officer or employee must show a clear intention to relinquish or surrender his position accompanied by the act of relinquishment.11 Resignation implies an expression of the incumbent in some form, express or implied, of the intention to surrender, renounce and relinquish the office, and its acceptance by competent and lawful authority.12 From the foregoing it is evident that petitioners resignation lacks the element of clear intention to surrender his position. We cannot presume such intention from his statement in his letter of March 5, 1986 that he was placing his position at the disposal of the President. He did not categorically state therein that he was unconditionally giving up his position. It should be remembered that said letter was actually a response to Proclamation No. 1 which President Aquino issued on February 25, 1986 when she called on all appointive public officials to tender their courtesy resignation as a first step to restore confidence in public administration. Verily, a courtesy resignation cannot properly be interpreted as resignation in the legal sense for it is not necessarily a reflection of a public officials intention to surrender his position. Rather, it manifests his submission to the will of the political authority and the appointing power. A stringent interpretation of courtesy resignations must therefore be observed, particularly in cases involving constitutional officials like the petitioner whose removal from office entails an impeachment proceeding.13 For even if working for the government is regarded as no more than a privilege, discharge for disloyalty or for doubt about loyalty may involve such legal rights as those in reputation and eligibility for other employment.14 The curtailment of his term not being attributable to any voluntary act on the part of the petitioner, equity and justice demand that he should be deemed to have completed his term albeit much ahead of the date stated in his appointment paper. Petitioners case should be placed in the same category as that of an official holding a primarily confidential position whose tenure ends upon his superiors loss of confidence in him. His cessation from the service entails no removal but an expiration of his term.15 As he is deemed to have completed his term of office, petitioner should be considered retired from the service. And, in the absence of proof that he has been found guilty of malfeasance or misfeasance in office or that there is a pending administrative case against him, petitioner is entitled to a life pension under Republic Act No. 1568 as amended and reenacted by Republic Act No. 6118. He is, therefore, protected by the mantle of the Freedom Constitution specifically Article III, Section 3 thereof which was in
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effect when he was replaced by the appointment and qualification of a new Commissioner. Parenthetically, to a public servant, pension is not a gratuity but rather a form of deferred compensation for services performed and his right thereto commences to vest upon his entry into the retirement system and becomes an enforcible obligation in court upon fulfillment of all conditions under which it is to be paid.16 Similarly, retirement benefits receivable by public employees are valuable parts of the consideration for entrance into and continuation in public employment.17 They serve a public purpose and a primary objective in establishing them is to induce able persons to enter and remain in public employment, and to render faithful and efficient service while so employed.18 Worth noting is the fact that, as originally enacted, Republic Act No. 1568 required not less than twenty years of service in the government at the time of the retirement, death or resignation of the Auditor General or the Chairman and any Member of the COMELEC. The same length of service was required after Republic Act No. 3473 amended the law. However, Republic Act No. 3595 further amended Republic Act No. 1568 and the 20-year service requirement was mandated only in case of resignation of the public official covered by the law. Although Republic Act No. 1568, as amended, was inoperative and abolished in Section 9 of Republic Act No. 4968, it was re-enacted under Republic Act No. 6118. On the respondents assertion that the retirement law is clear and hence, there is no room for its interpretation, We reiterate the basic principle that, being remedial in character, a statute creating pensions should be liberally construed and administered in favor of the persons intended to be benefited thereby.19 This is as it should be because the liberal approach aims to achieve the humanitarian purposes of the law in order that the efficiency, security, and well-being of government employees may be enhanced.20 WHEREFORE, respondent Commission on Elections denial of petitioners application for retirement benefits is hereby reversed and set aside. The Commission on Audit and other public offices concerned are directed to facilitate the processing and payment of petitioners retirement benefits. SO ORDERED. [Ortiz vs. Commission on Elections, 162 SCRA 812(1988)]

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ANTONIO A. MECANO, petitioner, vs. COMMISSION ON AUDIT, respondent. [Mecano vs. Commission on Audit, 216 SCRA 500(1992)]CAMPOS, JR., J.: Antonio A. Mecano, through a petition for certiorari, seeks to nullify the decision of the Commission on Audit (COA, for brevity) embodied in its 7th Indorsement, dated January 16, 1992, denying his claim for reimbursement under Section 699 of the Revised Administrative Code (RAC), as amended, in the total amount of P40,831.00. Petitioner is a Director II of the National Bureau of Investigation (NBI). He was hospitalized for cholecystitis from March 26, 1990 to April 7, 1990, on account of which he incurred medical and hospitalization expenses, the total amount of which he is claiming from the COA. On May 11, 1990, in a memorandum to the NBI Director, Alfredo S. Lim (Director Lim, for brevity), he requested reimbursement for his expenses on the ground that he is entitled to the benefits under Section 6991 of the RAC, the pertinent provisions of which read: Sec. 699. Allowances in case of injury, death, or sickness incurred in performance of duty.When a person in the service of the national government or in the service of the government of a province, city, municipality or municipal district is so injured in the performance of duty as thereby to receive some actual physical hurt or wound, the proper Head of Department may direct that absence during any period of disability thereby occasioned shall be on full pay, though not more than six months, and in such case he may in his discretion also authorize the payment of the medical attendance, necessary transportation, subsistence and hospital fees of the injured person. Absence in the case contemplated shall be charged first against vacation leave, if any there be. xxx xxx

In case of sickness caused by or connected directly with the performance of some act in the line of duty, the Department head may in his discretion authorize the payment of the necessary hospital fees. Director Lim then forwarded petitioners claim, in a 1st Indorsement dated June 22, 1990, to the Secretary of Justice, along with the comment, bearing the same date, of Gerarda Galang, Chief, LED of the NBI, recommending favorable action thereof. Finding petitioners illness to be service-connected, the Committee on Physical Examination of the Department of Justice favorably recommended the payment of petitioners claim. However, then Undersecretary of Justice Silvestre H. Bello III, in a 4th Indorsement dated November 21, 1990, returned petitioners claim to Director Lim, having
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considered the statements of the Chairman of the COA in its 5th Indorsement dated 19 September 1990, to the effect that the RAC being relied upon was repealed by the Administrative Code of 1987. Petitioner then re-submitted his claim to Director Lim, with a copy of Opinion No. 73, S. 19912 dated April 26, 1991 of then Secretary of Justice Franklin M. Drilon (Secretary Drilon, for brevity) stating that the issuance of the Administrative Code did not operate to repeal or abrogate in its entirety the Revised Administrative Code, including the particular Section 699 of the latter. On May 10, 1991, Director Lim, under a 5th Indorsement transmitted anew Mecanos claim to then Undersecretary Bello for favorable consideration. Under a 6th Indorsement, dated July 2, 1991, Secretary Drilon forwarded petitioners claim to the COA Chairman, recommending payment of the same. COA Chairman Eufemio C. Domingo, in his 7th Indorsement of January 16, 1992, however, denied petitioners claim on the ground that Section 699 of the RAC has been repealed by the Administrative Code of 1987, solely for the reason that the same section was not restated nor re-enacted in the Administrative Code of 1987. He commented, however, that the claim may be filed with the Employees Compensation Commission, considering that the illness of Director Mecano occurred after the effectivity of the Administrative Code of 1987. Eventually, petitioners claim was returned by Undersecretary of Justice Eduardo Montenegro to Director Lim under a 9th Indorsement dated February 7, 1992, with the advice that petitioner elevate the matter to the Supreme Court if he so desires. On the sole issue of whether or not the Administrative Code of 1987 repealed or abrogated Section 699 of the RAC, this petition was brought for the consideration of this Court. Petitioner anchors his claim on Section 699 of the RAC, as amended, and on the aforementioned Opinion No. 73, S. 1991 of Secretary Drilon. He further maintains that in the event that a claim is filed with the Employees Compensation Commission, as suggested by respondent, he would still not be barred from filing a claim under the subject section. Thus, the resolution of whether or not there was a repeal of the Revised Administrative Code of 1917 would decide the fate of petitioners claim for reimbursement. The COA, on the other hand, strongly maintains that the enactment of the Administrative Code of 1987 (Exec. Order No. 292) operated to revoke or supplant in its entirety the Revised Administrative Code of 1917. The COA claims that from the whereas clauses of the new Administrative Code, it can be gleaned that it was the intent of the legislature to repeal the old Code. Moreover, the COA questions the
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applicability of the aforesaid opinion of the Secretary of Justice in deciding the matter. Lastly, the COA contends that employment-related sickness, injury or death is adequately covered by the Employees Compensation Program under P.D. 626, such that to allow simultaneous recovery of benefits under both laws on account of the same contingency would be unfair and unjust to the Government. The question of whether a particular law has been repealed or not by a subsequent law is a matter of legislative intent. The lawmakers may expressly repeal a law by incorporating therein a repealing provision which expressly and specifically cites the particular law or laws, and portions thereof, that are intended to be repealed.3 A declaration in a statute, usually in its repealing clause, that a particular and specific law, identified by its number or title, is repealed is an express repeal; all others are implied repeals.4 In the case of the two Administrative Codes in question, the ascertainment of whether or not it was the intent of the legislature to supplant the old Code with the new Code partly depends on the scrutiny of the repealing clause of the new Code. This provision is found in Section 27, Book VII (Final Provisions) of the Administrative Code of 1987 which reads: Sec. 27. Repealing Clause.All laws, decrees, orders, rules and regulations, or portions thereof, inconsistent with this Code are hereby repealed or modified accordingly. The question that should be asked is: What is the nature of this repealing clause? It is certainly not an express repealing clause because it fails to identify or designate the act or acts that are intended to be repealed.5 Rather, it is an example of a general repealing provision, as stated in Opinion No. 73, S. 1991. It is a clause which predicates the intended repeal under the condition that a substantial conflict must be found in existing and prior acts. The failure to add a specific repealing clause indicates that the intent was not to repeal any existing law, unless an irreconcilable inconsistency and repugnancy exist in the terms of the new and old laws.6 This latter situation falls under the category of an implied repeal. Repeal by implication proceeds on the premise that where a statute of later date clearly reveals an intention on the part of the legislature to abrogate a prior act on the subject, that intention must be given effect.7 Hence, before there can be a repeal, there must be a clear showing on the part of the lawmaker that the intent in enacting the new law was to abrogate the old one. The intention to repeal must be clear and manifest;8 otherwise, at least, as a general rule, the later act is to be construed as a continuation of, and not a substitute for, the first act and will continue so far as the two acts are the same from the time of the first enactment.9
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There are two categories of repeal by implication. The first is where provisions in the two acts on the same subject matter are in an irreconcilable conflict, the later act to the extent of the conflict constitutes an implied repeal of the earlier one. The second is if the later act covers the whole subject of the earlier one and is clearly intended as a substitute, it will operate to repeal the earlier law.10 Implied repeal by irreconcilable inconsistency takes place when the two statutes cover the same subject matter; they are so clearly inconsistent and incompatible with each other that they cannot be reconciled or harmonized; and both cannot be given effect, that is, that one law cannot be enforced without nullifying the other.11 Comparing the two Codes, it is apparent that the new Code does not cover not attempt to cover the entire subject matter of the old Code. There are several matters treated in the old Code which are not found in the new Code, such as the provisions on notaries public, the leave law, the public bonding law, military reservations, claims for sickness benefits under Section 699, and still others. Moreover, the COA failed to demonstrate that the provisions of the two Codes on the matter of the subject claim are in an irreconcilable conflict. In fact, there can be no such conflict because the provision on sickness benefits of the nature being claimed by petitioner has not been restated in the Administrative Code of 1987. However, the COA would have Us consider that the fact that Section 699 was not restated in the Administrative Code of 1987 meant that the same section had been repealed. It further maintained that to allow the particular provisions not restated in the new Code to continue in force argues against the Code itself. The COA anchored this argument on the whereas clause of the 1987 Code, which states: WHEREREAS, the effectiveness of the Government will be enhanced by a new Administrative Code which incorporates in a unified document the major structural, functional and procedural principles and rules of governance; and xxx x x x

It argues, in effect, that what is contemplated is only one Codethe Administrative Code of 1987. This contention is untenable. The fact that a later enactment may relate to the same subject matter as that of an earlier statute is not of itself sufficient to cause an implied repeal of the prior act, since the new statute may merely be cumulative or a continuation of the old one.12 What is necessary is a manifest indication of legislative purpose to repeal.13 We come now to the second category of repealthe enactment of a statute revising or codifying the former laws on the whole subject matter. This is only possible if the
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revised statute or code was intended to cover the whole subject to be a complete and perfect system in itself. It is the rule that a subsequent statute is deemed to repeal a prior law if the former revises the whole subject matter of the former statute.14 When both intent and scope clearly evince the idea of a repeal, then all parts and provisions of the prior act that are omitted from the revised act are deemed repealed.15 Furthermore, before there can be an implied repeal under this category, it must be the clear intent of the legislature that the later act be the substitute to the prior act.16 According to Opinion No. 73, S. 1991 of the Secretary of Justice, what appears clear is the intent to cover only those aspects of government that pertain to administration, organization and procedure, understandably because of the many changes that transpired in the government structure since the enactment of the RAC decades of years ago. The COA challenges the weight that this opinion carries in the determination of this controversy inasmuch as the body which had been entrusted with the implementation of this particular provision has already rendered its decision. The COA relied on the rule in administrative law enunciated in the case of Sison vs. Pangramuyen17 that in the absence of palpable error or grave abuse of discretion, the Court would be loathe to substitute its own judgment for that of the administrative agency entrusted with the enforcement and implementation of the law. This will not hold water. This principle is subject to limitations. Administrative decisions may be reviewed by the courts upon a showing that the decision is vitiated by fraud, imposition or mistake.18 It has been held that Opinions of the Secretary and Undersecretary of Justice are material in the construction of statutes in pari materia.19 Lastly, it is a well-settled rule of statutory construction that repeals of statutes by implication are not favored.20 The presumption is against inconsistency and repugnancy for the legislature is presumed to know the existing laws on the subject and not to have enacted inconsistent or conflicting statutes.21 This Court, in a case, explains the principle in detail as follows: Repeals by implication are not favored, and will not be decreed unless it is manifest that the legislature so intended. As laws are presumed to be passed with deliberation with full knowledge of all existing ones on the subject, it is but reasonable to conclude that in passing a statute it was not intended to interfere with or abrogate any former law relating to some matter, unless the repugnancy between the two is not only irreconcilable, but also clear and convincing, and flowing necessarily from the language used, unless the later act fully embraces the subject matter of the earlier, or unless the reason for the earlier act is beyond peradventure renewed. Hence, every effort must be used to make all acts stand and if, by any reasonable construction, they can be reconciled, the later act will not operate as a repeal of the earlier.22

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Regarding respondents contention that recovery under this subject section shall bar the recovery of benefits under the Employees Compensation Program, the same cannot be upheld. The second sentence of Article 173, Chapter II, Title II (dealing on Employees Compensation and State Insurance Fund), Book IV of the Labor Code, as amended by P.D. 1921, expressly provides that the payment of compensation under this Title shall not bar the recovery of benefits as provided for in Section 699 of the Revised Administrative Code x x x whose benefits are administered by the system (meaning SSS or GSIS) or by other agencies of the government. WHEREFORE, premises considered, the Court resolves to GRANT the petition; respondent is hereby ordered to give due course to petitioners claim for benefits. No costs. SO ORDERED. [Mecano vs. Commission on Audit, 216 SCRA 500(1992)]

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