G.R. No.

186269 February 15, 2012

SPOUSES ROMAN A. PASCUAL and MERCEDITA R. PASCUAL, FRANCISCO A. PASCUAL,

MARGARITA CORAZON D. MARIANO, EDWIN D. MARIANO and DANNY R.
MARIANO Petitioners,
vs.
SPOUSES ANTONIO BALLESTEROS and LORENZA MELCHOR-BALLESTEROS, Respondents.

RESOLUTION

REYES, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court filed by the spouses
Roman A. Pascual and Mercedita R. Pascual (Spouses Pascual), Francisco A. Pascual (Francisco),
Margarita Corazon D. Mariano (Margarita), Edwin D. Mariano and Danny R. Mariano (petitioners)
assailing the Decision dated July 29, 2008 and Resolution dated January 30, 2009 issued by the
1 2

Court of Appeals (CA) in CA-G.R. CV No. 89111.

The instant case involves a 1,539 square meter parcel of land (subject property) situated in
Barangay Sta. Maria, Laoag City and covered by Transfer Certificate of Title (TCT) No. T-30375 of
3

the Laoag City registry. The subject property is owned by the following persons, with the extent of
their respective shares over the same: (1) the spouses Albino and Margarita Corazon Mariano, 330
square meters; (2) Angela Melchor (Angela), 466.5 square meters; and (3) the spouses Melecio and
Victoria Melchor (Spouses Melchor), 796.5 square meters.

Upon the death of the Spouses Melchor, their share in the subject property was inherited by their
daughter Lorenza Melchor Ballesteros (Lorenza). Subsequently, Lorenza and her husband Antonio
Ballesteros (respondents) acquired the share of Angela in the subject property by virtue of an
Affidavit of Extrajudicial Settlement with Absolute Sale dated October 1, 1986.
4

On August 11, 2000, Margarita, then already widowed, together with her children, sold their share in
the subject property to Spouses Pascual and Francisco. Subsequently, Spouses Pascual and
5

Francisco caused the cancellation of TCT No. 30375 and, thus, TCT No. T-32522 was then issued
6

in their names together with Angela and Spouses Melchor.

Consequently, the respondents, claiming that they did not receive any written notice of the said sale
in favor of Spouses Pascual and Francisco, filed with the Regional Trial Court (RTC) of Laoag City a
Complaint for legal redemption against the petitioners. The respondents claimed that they are
7

entitled to redeem the portion of the subject property sold to Spouses Pascual and Francisco being
co-owners of the same.

For their part, the petitioners claimed that there was no co-ownership over the subject property
considering that the shares of the registered owners thereof had been particularized, specified and
subdivided and, hence, the respondents has no right to redeem the portion of the subject property
that was sold to them.8

On January 31, 2007, the RTC rendered a decision dismissing the complaint for legal redemption
9

filed by the respondents. In disposing of the said complaint, the RTC summed up the issues raised
therein as follows: (1) whether the respondents herein and the predecessors-in-interest of the
petitioners are co-owners of the subject property who have the right of redemption under Article
1620 of the Civil Code; and (2) if so, whether that right was seasonably exercised by the
respondents within the 30-day redemption period under Article 1623 of the Civil Code.

On the first issue, the RTC held that the respondents and the predecessors-in-interest of the
petitioners are co-owners of the subject property considering that the petitioners failed to adduce any
evidence showing that the respective shares of each of the registered owners thereof were indeed
particularized, specified and subdivided.

On the second issue, the RTC ruled that the respondents failed to seasonably exercise their right of
redemption within the 30-day period pursuant to Article 1623 of the Civil Code. Notwithstanding the
lack of a written notice of the sale of a portion of the subject property to Spouses Pascual and
Francisco, the RTC asserted that the respondents had actual notice of the said sale. Failing to
exercise their right of redemption within 30 days from actual notice of the said sale, the RTC opined
that the respondents can no longer seek for the redemption of the property as against the
petitioners.

Thereupon, the respondents appealed from the January 31, 2007 decision of the RTC of Laoag City
with the CA. On July 29, 2008, the CA rendered the herein assailed Decision the decretal portion of
10

which reads:

WHEREFORE, the appeal is GRANTED and the appealed January 31, 2007 Decision is,
accordingly, REVERSED and SET ASIDE. In lieu thereof, another is entered approving
[respondents’] legal redemption of the portion in litigation. The rest of their monetary claims are,
however, DENIED for lack of factual and/or legal bases.

SO ORDERED. 11

In allowing the respondents to exercise their right of redemption, the CA held that the 30-day period
within which to exercise the said right had not yet lapsed considering the absence of a written notice
of the said sale. Thus, the CA stated that "[t]he mandatory nature of the ‘written notice requirement’
is such that, notwithstanding the actual knowledge of the sale, written notice from the seller is still
necessary in order to remove all uncertainties about the sale, its terms and conditions, as well as its
efficacy and status."12

The petitioners sought for a reconsideration of the said July 29, 2008 Decision, but it was denied by
the CA in its Resolution dated January 30, 2009.
13

Undaunted, the petitioners instituted the instant petition for review on certiorari before this Court
essentially asserting the following arguments: (1) their predecessors-in-interest and the respondents
are not co-owners of the subject property since their respective shares therein had already been
particularized, specified and subdivided; and (2) even if such co-ownership exists, the respondents
could no longer exercise their right of redemption having failed to exercise the same within 30 days
from actual knowledge of the said sale.

The petition is denied.

Primarily, Section 1, Rule 45 of the Rules of Court categorically states that the petition filed shall
raise only questions of law, which must be distinctly set forth. A question of law arises when there is
doubt as to what the law is on a certain state of facts, while there is a question of fact when the
doubt arises as to the truth or falsity of the alleged facts. For a question to be one of law, the same
must not involve an examination of the probative value of the evidence presented by the litigants or
any of them. The resolution of the issue must rest solely on what the law provides on the given set of
circumstances. Once it is clear that the issue invites a review of the evidence presented, the
question posed is one of fact. 14

The first issue raised by the petitioners is a factual question as it entails a determination of whether
the subject property was indeed co-owned by the respondents and the predecessors-in-interest of
the petitioners. Such determination would inevitably necessitate a review of the probative value of
the evidence adduced in the case below.

In any case, it ought to be stressed that both the RTC and the CA found that the subject property
was indeed co-owned by the respondents and the predecessors-in-interest of the petitioners. Thus,
in the absence of any exceptional circumstances to warrant the contrary, this Court must abide by
the prevailing rule that findings of fact of the trial court, more so when affirmed by the CA, are
binding and conclusive upon it. 15

Anent the second issue asserted by the petitioners, we find no reversible error on the part of the CA
in ruling that the 30-day period given to the respondents within which to exercise their right of
redemption has not commenced in view of the absence of a written notice. Verily, despite the
respondents’ actual knowledge of the sale to the respondents, a written notice is still mandatory and
indispensable for purposes of the commencement of the 30-day period within which to exercise the
right of redemption.

Article 1623 of the Civil Code succinctly provides that:

Article 1623. The right of legal pre-emption or redemption shall not be exercised except within thirty
days from the notice in writing by the prospective vendor, or by the vendor, as the case may be. The
deed of sale shall not be recorded in the Registry of Property, unless accompanied by an affidavit of
the vendor that he has given written notice thereof to all possible redemptioners.

The right of redemption of co-owners excludes that of adjoining owners. (emphasis supplied)

The indispensability of the "written notice requirement" for purposes of the exercise of the right of
redemption was explained by this Court in Barcellano v. Bañas, thus:
16

Nothing in the records and pleadings submitted by the parties shows that there was a written notice
sent to the respondents. Without a written notice, the period of thirty days within which the right of
legal pre-emption may be exercised, does not start.

The indispensability of a written notice had long been discussed in the early case of Conejero v.
Court of Appeals, penned by Justice J.B.L. Reyes:

With regard to the written notice, we agree with petitioners that such notice is indispensable, and
that, in view of the terms in which Article of the Philippine Civil Code is couched, mere knowledge of
the sale, acquired in some other manner by the redemptioner, does not satisfy the statute. The
written notice was obviously exacted by the Code to remove all uncertainty as to the sale, its terms
and its validity, and to quiet any doubts that the alienation is not definitive. The statute not having
provided for any alternative, the method of notification prescribed remains exclusive.

This is the same ruling in Verdad v. Court of Appeals:

The written notice of sale is mandatory. This Court has long established the rule that notwithstanding
actual knowledge of a co-owner, the latter is still entitled to a written notice from the selling co-owner
in order to remove all uncertainties about the sale, its terms and conditions, as well as its efficacy
and status.

Lately, in Gosiengfiao Guillen v. The Court of Appeals, this Court again emphasized the mandatory
character of a written notice in legal redemption:

From these premises, we ruled that "[P]etitioner-heirs have not lost their right to redeem, for in the
absence of a written notification of the sale by the vendors, the 30-day period has not even begun to
run." These premises and conclusion leave no doubt about the thrust of Mariano: The right of the
petitioner-heirs to exercise their right of legal redemption exists, and the running of the
period for its exercise has not even been triggered because they have not been notified in
writing of the fact of sale.

xxxx

Justice Edgardo Paras, referring to the origins of the requirement, would explain in his commentaries
on the New Civil Code that despite actual knowledge, the person having the right to redeem
is STILL entitled to the written notice. Both the letter and the spirit of the New Civil Code argue
against any attempt to widen the scope of the "written notice" by including therein any other kind of
notice such as an oral one, or by registration. If the intent of the law has been to include verbal
notice or any other means of information as sufficient to give the effect of this notice, there would
have been no necessity or reason to specify in the article that said notice be in writing, for under the
old law, a verbal notice or mere information was already deemed sufficient.

Time and time again, it has been repeatedly declared by this Court that where the law speaks in
clear and categorical language, there is no room for interpretation. There is only room for
application. Where the language of a statute is clear and unambiguous, the law is applied according
to its express terms, and interpretation should be resorted to only where a literal interpretation would
be either impossible or absurd or would lead to an injustice. x x x (citations omitted)1avvphi1

Here, it is undisputed that the respondents did not receive a written notice of the sale in favor of the
petitioners. Accordingly, the 30-day period stated under Article 1623 of the Civil Code within which to
exercise their right of redemption has not begun to run. Consequently, the respondents may still
redeem from the petitioners the portion of the subject property that was sold to the latter.

WHEREFORE, in consideration of the foregoing disquisitions, the petition is DENIED. The assailed
Decision dated July 29, 2008 and Resolution dated January 30, 2009 issued by the Court of Appeals
in CA-G.R. CV No. 89111 are AFFIRMED.

SO ORDERED.

BIENVENIDO L. REYES
Associate Justice

WE CONCUR:
G.R. No. 180462 February 9, 2011

SOUTH PACIFIC SUGAR CORPORATION and SOUTH EAST ASIA SUGAR MILL
CORPORATION, Petitioners,
vs.
COURT OF APPEALS and SUGAR REGULATORY ADMINISTRATION, Respondents.

DECISION

CARPIO, J.:

The Case

This is a petition for review on certiorari1 of the 6 November 2007 Decision2 of the Court of Appeals
in CA-G.R. SP No. 100571, which set aside the 26 June 2007, 6 August 2007, and 31 August 2007
Orders3 as well as the 6 September 2007 Writ of Execution and the 12 September 2007 Amended
Writ of Execution of the Regional Trial Court (Branch 77) of Quezon City in Civil Case No. Q-02-
46236.

The Facts

In 1999, the government projected a shortage of some 500,000 metric tons of sugar due to the
effects of El Niño and La Niña phenomena. To fill the expected shortage and to ensure stable sugar
prices, then President Joseph Ejercito Estrada issued Executive Order No. 87, Series of 1999 (EO
87),4 facilitating sugar importation by the private sector.

Section 2 of EO 87 created a Committee on Sugar Conversion/Auction to determine procedures for

sugar importation as well as for collection and remittance of conversion fee.

Under Section 3 of EO 87, sugar conversion is by auction and is subject to conversion fee to be
remitted by respondent Sugar Regulatory Administration (SRA) to the Bureau of Treasury.

On 3 May 1999, the Committee on Sugar Conversion/Auction issued the Bidding Rules providing
guidelines for sugar importation. Under the Bidding Rules, the importer pays 25% of the conversion
fee within three working days from receipt of notice of the bid award and the 75% balance upon
arrival of the imported sugar.

The Bidding Rules also provide that if the importer fails to make the importation or if the imported
sugar fails to arrive on or before the set arrival date, 25% of the conversion fee is forfeited in favor of
the SRA, to wit:

G. Forfeiture of Conversion Fee

G.1 In case of failure of the importer to make the importation or for the imported sugar to
arrive in the Philippines on or before the Arrival Date, the 25% of Conversion Fee Bid already
paid shall be forfeited in favor of the SRA and the imported sugar shall not be classified as "B"
(domestic sugar) unless, upon application with the SRA and without objection of the Committee, the
SRA allows such conversion after payment by the importer of 100% of the Conversion Fee
applicable to the shipment.5 (Emphasis supplied)

The SRA forthwith authorized the importation of 300,000 metric tons of sugar, to be made in three
tranches, as follows:

Tranche Volume Arrival Date

1st 100,000MT 15 May-15 June 1999
2nd 100,000MT 15 June-July 15 1999
3rd 100,000MT 15 July-15 August 19996

The Committee on Sugar Conversion/Auction caused the publication of the invitation to bid. Several
sugar importers submitted sealed bid tenders. Petitioners Southeast Asia Sugar Mill Corporation
(Sugar Mill) and South Pacific Sugar Corporation (Pacific Sugar) emerged as winning bidders for the
1st, 2nd, and 3rd tranches.

For the 3rd tranche, Sugar Mill submitted the winning bid of ₱286.80 per 50 kilogram for 10,000
metric tons of sugar, while Pacific Sugar submitted the winning bid of ₱285.99 per 50 kilogram for
20,000 metric tons of sugar, for a combined total volume of 30,000 metric tons of sugar.

Pursuant to the Bidding Rules, Sugar Mill paid 25% of the conversion fee amounting to
₱14,340,000.00, while Pacific Sugar paid 25% of the conversion fee amounting to ₱28,599,000.00.

As it turned out, Sugar Mill and Pacific Sugar (sugar corporations) delivered only 10% of their sugar
import allocation, or a total of only 3,000 metric tons of sugar. They requested the SRA to cancel the
remaining 27,000 metric tons of sugar import allocation blaming sharp decline in sugar prices. The
sugar corporations sought immediate reimbursement of the corresponding 25% of the conversion
fee amounting to ₱38,637,000.00.

The SRA informed the sugar corporations that the conversion fee would be forfeited pursuant to
paragraph G.1 of the Bidding Rules. The SRA also notified the sugar corporations that the authority
to reconsider their request for reimbursement was vested with the Committee on Sugar
Conversion/Auction.

On 26 February 2002, the sugar corporations filed a complaint for breach of contract and damages
in the Regional Trial Court (Branch 77) of Quezon City, docketed as Civil Case No. Q-02-46236.

In its notice of appearance,7 the Office of the Solicitor General (OSG) deputized Atty. Raul Labay of
the SRA’s legal department to assist the OSG in this case, thus:

Please be informed that Atty. Raul M. Labay has been authorized to appear in this case, and
therefore, should also be furnished with notices of hearings, orders, resolutions, decisions, and other
processes. However, as the Solicitor General retains supervision and control of the representation in
this case and has to approve withdrawal of the case, non-appeal, or other actions which appear to
compromise the interests of the Government, only notices of orders, resolutions, and decisions
served on him will bind the party represented.8

The Ruling of the RTC

The RTC held that paragraph G.1 of the Bidding Rules contemplated delay in the arrival of imported
sugar, not cancellation of sugar importation. It concluded that the forfeiture provision did not apply to
the sugar corporations which merely cancelled the sugar importation. In its 19 December 2006
Decision,9 the RTC ruled, thus:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs,

ORDERING the defendant Sugar Regulatory Administration to pay plaintiffs the amount of
₱38,637,000.00 as reimbursement of 25% of the conversion fee they paid in 1999. The claim for
legal interests, compensatory damages, exemplary damages, and attorney’s fees is hereby
DENIED.

SO ORDERED.10

On 5 January 2007, the OSG received its copy of the RTC Decision.11 On 24 January 2007, the
deputized SRA counsel, Atty. Raul Labay, received his own copy of the Decision and filed a notice of
appeal on 7 February 2007.12

The sugar corporations moved to expunge the notice of appeal on the ground that only the OSG, as
the principal counsel, can decide whether an appeal should be made. The sugar corporations
stressed that a lawyer deputized by the OSG has no authority to decide whether an appeal should
be made.

The OSG filed its opposition13 to the motion to expunge the notice of appeal. The OSG pointed out
that in its notice of appearance,14 it authorized SRA counsel Atty. Labay to assist the OSG in this
case.

In its 26 June 2007 Order, the RTC granted the motion to expunge the notice of appeal. The OSG
moved for reconsideration stressing that the OSG ratified Atty. Labay’s filing of a notice of appeal.
The RTC, in its 6 August 2007 Order, denied the OSG’s motion for reconsideration.

In its 31 August 2007 Order, the RTC granted the sugar corporations’ motion for execution, to wit:

WHEREFORE, premises considered, the plaintiffs’ motion for execution is hereby granted.
Accordingly, issue a writ of execution for the enforcement of the decision rendered in this case.

SO ORDERED.15

Accordingly, the RTC issued on 6 September 2007 a Writ of Execution and on 12 September 2007
an Amended Writ of Execution.

Aggrieved, the SRA filed in the Court of Appeals a petition for certiorari under Rule 65 seeking to set
aside the RTC’s 26 June 2007, 6 August 2007, and 31 August 2007 Orders as well as the 6
September 2007 Writ of Execution and the 12 September 2007 Amended Writ of Execution.

The Ruling of the Court of Appeals

The Court of Appeals held that the deputized SRA counsel had authority to file a notice of appeal.
The appellate court thus directed the RTC to give due course to the appeal that Atty. Labay timely
filed. The decretal part of its 6 November 2007 Decision reads:
WHEREFORE, premises considered, the present petition is hereby GIVEN DUE COURSE and the
writ prayed for accordingly GRANTED. The Orders dated June 26, 2007, August 6, 2007, and
August 31, 2007, as well as the Writ of Execution dated September 6, 2007 and Amended Writ of
Execution dated September 12, 2007 issued in Civil Case No. Q-02-46236 of the Regional Trial
Court of Quezon City, Branch 77 are hereby all ANNULLED and SET ASIDE. Said court is hereby
DIRECTED to GIVE DUE COURSE to the Notice of Appeal dated February 7, 2007 filed by Atty.
Raul M. Labay in behalf of petitioner Sugar Regulatory Administration.

No pronouncement as to costs.

SO ORDERED.16

Dissatisfied with the decision of the Court of Appeals, the sugar corporations filed in this Court a
petition for review on certiorari.

The Issues

The issues are (1) whether a deputized SRA counsel may file a notice of appeal and (2) whether the
sugar corporations are entitled to reimbursement of ₱38,637,000.00 in conversion fee.

The Court’s Ruling

The petition lacks merit.

The sugar corporations contend that the deputized SRA counsel, Atty. Labay, was not authorized to
file a notice of appeal; that the OSG, as the principal counsel, had the sole authority to file a notice of
appeal; that certiorari may not be interposed as a substitute for the lost remedy of appeal; and that
the subject conversion fee amounting to ₱38,637,000.00 remained as private funds in view of its
summary forfeiture and as such, it could not be deemed part of public funds.

The OSG counters that assuming Atty. Labay had no authority to file the notice of appeal, the defect
was cured when the OSG subsequently filed its opposition to the sugar corporations’ motion to
expunge the notice of appeal. The OSG claims that if the denial of the appeal is sustained, the SRA
would no longer have a remedy to assail the RTC decision adjudging it liable to reimburse the sugar
corporations ₱38,637,000.00 in conversion fee despite the admitted failure of the sugar corporations
to comply with their contractual undertaking to import sugar.

The deputized SRA counsel may file a notice of appeal.

Section 35, Chapter 12, Title III, Book IV of the Administrative Code of 198717 authorizes the OSG to
represent the SRA, a government agency established pursuant to Executive Order No. 18, Series of
1986,18 in any litigation, proceeding, investigation, or matter requiring the services of lawyers. It
provides:

SEC. 35. Powers and Functions. – The Office of the Solicitor General shall represent the
Government of the Philippines, its agencies and instrumentalities and its officials and agents
in any litigation, proceeding, investigation, or matter requiring the services of lawyers. When
authorized by the President or head of the office concerned, it shall also represent government
owned or controlled corporations. The Office of the Solicitor General shall constitute the law office of
the Government and, as such, shall discharge duties requiring the services of lawyers. (Emphasis
supplied)
The OSG is empowered to deputize legal officers of government departments, bureaus, agencies,
and offices in cases involving their respective offices. Paragraph 8 of the same section reads:

(8) Deputize legal officers of government departments, bureaus, agencies, and offices to
assist the Solicitor General and appear or represent the Government in cases involving their
respective offices, brought before the courts and exercise supervision and control over such legal
officers with respect to such cases. (Emphasis supplied)

In National Power Corporation v. Vine Development Corporation,19 this Court ruled that the
deputization by the OSG of NAPOCOR counsels in cases involving the NAPOCOR included the
authority to file a notice of appeal. The Court explained that the OSG could have withdrawn the
appeal if it believed that the appeal would not advance the government’s cause. The Court held that
even if the deputized NAPOCOR counsel had no authority to file a notice of appeal, the defect was
cured by the OSG’s subsequent manifestation that the deputized NAPOCOR counsel had authority
to file a notice of appeal.

The sugar corporations’ reliance on another NAPOCOR case, National Power Corporation v.
NLRC,20 is misplaced. There, service of the decision was never made on the OSG, the principal
counsel for NAPOCOR. Only the deputized NAPOCOR counsel was served a copy of the decision.
Hence, the Court held that the period to appeal the decision did not commence to run. The Court
explained that service of the decision on the deputized NAPOCOR counsel was insufficient and not
binding on the OSG. This was why the Court stated in that case that the deputized NAPOCOR
counsel had no authority to decide whether an appeal should be made.

Noteworthy, in National Power Corporation v. Vine Development Corporation, both the OSG and the
deputized NAPOCOR counsel were served copies of the decision subject of the appeal. In National
Power Corporation v. NLRC, only the deputized NAPOCOR counsel was furnished a copy of the
appealed decision. Hence, the differing rulings by this Court.

In the present case, records show that both the OSG and the deputized SRA counsel were served
copies of the RTC decision subject of the appeal. Thus, what applies is National Power Corporation
v. Vine Development Corporation. Applying here the doctrine laid down in the said case, deputized
SRA counsel Atty. Labay is, without a doubt, authorized to file a notice of appeal.

Assuming Atty. Labay had no authority to file a notice of appeal, such defect was cured when the
OSG subsequently filed its opposition to the motion to expunge the notice of appeal. As the OSG
explained, its reservation21 to "approve the withdrawal of the case, the non-appeal, or other actions
which appear to compromise the interest of the government" was meant to protect the interest of the
government in case the deputized SRA counsel acted in any manner prejudicial to government.
Obviously, what required the approval of the OSG was the non-appeal, not the appeal, of a decision
adverse to government.

We hold that the RTC should have given due course to the notice of appeal that Atty. Labay timely
filed. Thus, the 19 December 2006 Decision of the RTC in Civil Case No. Q-02-46236 cannot be
deemed to have attained finality.

The next logical step is to remand the case to the RTC. However, a remand would only delay the
resolution of this case and frustrate the ends of justice. As a rule, remand is avoided in the following
instances: (a) where the ends of justice would not be served; (b) where public interest demands an
early disposition of the case; or (c) where the trial court already received all the evidence presented
by both parties, and the Supreme Court is in a position, based upon said evidence, to decide the
case on its merits.22 All three conditions are present here.
The sugar corporations are not entitled to reimbursement

of 25% of the conversion fee amounting to ₱38,637,000.00.

Section 2 of EO 87 granted the Committee on Sugar Conversion/Auction power to promulgate rules

governing sugar importation by the private sector. It provides:

SEC. 2. Committee on Sugar Conversion/Auction. – There is hereby created a Committee on Sugar

Conversion/Auction which shall be headed by the DA, with the following as members: NEDA, DTI,
DOF, SRA, and a representative each from the sugar planters’ group and the sugar millers’ group.
The Committee is hereby authorized to determine the parameters and procedures on the
importation of sugar by the private sector, and the collection and remittance of the fee for the
conversion of sugar from "C" (reserve sugar) to "B" (domestic sugar). (Emphasis supplied)

Pursuant to this authority, the Committee issued the Bidding Rules subject of the
controversy, paragraph G.1 of which provides that if the importer fails to make the importation,
25% of the conversion fee shall be forfeited in favor of the SRA, thus:

G. Forfeiture of Conversion Fee

G.1 In case of failure of the importer to make the importation or for the imported sugar to arrive
in the Philippines on or before the Arrival Date, the 25% of Conversion Fee Bid already paid shall
be forfeited in favor of the SRA and the imported sugar shall not be classified as "B" (domestic
sugar) unless, upon application with the SRA and without objection of the Committee, the SRA
allows such conversion after payment by the importer of 100% of the Conversion Fee applicable to
the shipment.23 (Emphasis supplied)

In joining the bid for sugar importation, the sugar corporations are deemed to have assented to the
Bidding Rules, including the forfeiture provision under paragraph G.1. The Bidding Rules bind the
sugar corporations. The latter cannot rely on the lame excuse that they are not aware of the
forfeiture provision.

At the trial, Teresita Tan testified that the Bidding Rules were duly published in a newspaper of
general circulation.24 Vicente Cenzon, a sugar importer who participated in the bidding for the 3rd
tranche, testified that he attended the pre-bid conference where the Bidding Rules were discussed
and copies of the same were distributed to all the bidders.25

On the other hand, all that the sugar corporations managed to come up with was the self-serving
testimony of its witness, Daniel Fajardo, that the sugar corporations were not informed of the
forfeiture provision in the Bidding Rules.26

The Bidding Rules passed through a consultative process actively participated by various
government agencies and their counterpart in the private sector: the Department of Agriculture, the
National Economic Development Authority, the Department of Trade and Industry, the Department of
Finance, the Sugar Regulatory Administration, and a representative each from the sugar planters’
group and the sugar millers’ group.27

We find nothing in the forfeiture provision of the Bidding Rules that is contrary to law, morals, good
customs, public order, or public policy. On the contrary, the forfeiture provision fully supports
government efforts to aid the country’s ailing sugar industry. Conversion fees, including those that
are forfeited under paragraph G.1 of the Bidding Rules, are automatically remitted to the Bureau of
Treasury and go directly to the Agricultural Competitiveness Enhancement Fund.28

It is unrefuted that the sugar corporations failed in their contractual undertaking to import the
remaining 27,000 metric tons of sugar specified in their sugar import allocation. Applying paragraph
G.1 of the Bidding Rules, such failure is subject to forfeiture of the 25% of the conversion fee the
sugar corporations paid as part of their contractual undertaking. 1avvphi1

The RTC gravely erred in ordering the SRA to return the forfeited conversion fee to the sugar
corporations. Its strained interpretation that paragraph G.1 of the Bidding Rules contemplates cases
of delay in the arrival of imported sugar but not cases of cancellation of sugar importation defies
logic and the express provision of paragraph G.1. If delay in the arrival of imported sugar is subject
to forfeiture of 25% of the conversion fee, with more reason is outright failure to import sugar, by
cancelling the sugar importation altogether, subject to forfeiture of the 25% of the conversion fee.

Plainly and expressly, paragraph G.1 identifies two situations which would bring about the forfeiture
of 25% of the conversion fee: (1) when the importer fails to make the importation or (2) when the
imported sugar fails to arrive in the Philippines on or before the set arrival date. It is wrong for the
RTC to interpret the forfeiture provision in a way departing from its plain and express language.

Where the language of a rule is clear, it is the duty of the court to enforce it according to the plain
meaning of the word. There is no occasion to resort to other means of interpretation.29

WHEREFORE, we DENY the petition. We AFFIRM the 6 November 2007 Decision of the Court of
Appeals in CA-G.R. SP No. 100571, which set aside the 26 June 2007, 6 August 2007, and 31
August 2007 Orders as well as the 6 September 2007 Writ of Execution and the 12 September 2007
Amended Writ of Execution of the Regional Trial Court (Branch 77) of Quezon City in Civil Case No.
Q-02-46236. Further, the 19 December 2006 Decision of the Regional Trial Court (Branch 77) of
Quezon City in Civil Case No. Q-02-46236 is SET ASIDE.

Costs against petitioners.

SO ORDERED.

ANTONIO T. CARPIO
Associate Justice

WE CONCUR:
G.R. No. L-26100 February 28, 1969

CITY OF BAGUlO, REFORESTATION ADMINISTRATION,

FRANCISCO G. JOAQUIN, SR., FRANCISCO G. JOAQUIN, JR., and TERESITA J.
BUCHHOLZ petitioners,
vs.
HON. PIO R. MARCOS, Judge of the Court of First Instance of Baguio,
BELONG LUTES, and the HONORABLE COURT OF APPEALS, respondents.

1st Assistant City Fiscal Dionisio C. Claridad, Augusto Tobias and Feria, Feria, Lugtu and La'O for
petitioners.
Bernardo C. Ronquillo for respondents.

SANCHEZ, J.:

Petitioners attack the jurisdiction of the Court of First Instance of Baguio to reopen cadastral
proceedings under Republic Act 931. Private petitioner's specifically question the ruling of the Court
of Appeals that they have no personality to oppose reopening. The three-pronged contentions of all
the petitioners are: (1) the reopening petition was filed outside the 40-year period next preceding the
approval of Republic Act 931; (2) said petition was not published; and (3) private petitioners, as
lessees of the public land in question, have court standing under Republic Act 931. The facts follow:

On April 12, 1912, the cadastral proceedings sought to be reopened, Civil Reservation Case No. 1,
GLRO Record No. 211, Baguio Townsite, were instituted by the Director of Lands in the Court of
First Instance of Baguio. It is not disputed that the land here involved (described in Plan Psu-
186187) was amongst those declared public lands by final decision rendered in that case
on November 13, 1922.

On July 25, 1961, respondent Belong Lutes petitioned the cadastral court to reopen said Civil
Reservation Case No. 1 as to the parcel of land he claims. His prayer was that the land be
registered in his name upon the grounds that: (1) he and his predecessors have been in actual,
open, adverse, peaceful and continuous possession and cultivation of the land since Spanish times,
or before July 26, 1894, paying the taxes thereon; and (2) his predecessors were illiterate Igorots
without personal notice of the cadastral proceedings aforestated and were not able to file their claim
to the land in question within the statutory period.

On December 18, 1961, private petitioners Francisco G. Joaquin, Sr., Francisco G. Joaquin, Jr., and
Teresita J. Buchholz registered opposition to the reopening. Ground: They are tree farm lessees
upon agreements executed by the Bureau of Forestry in their favor for 15,395.65 square meters on
March. 16, 1959, for 12,108 square meters on July 24, 1959, and for 14,771 square meters on July
17, 1959, respectively.

On May 5, 1962, the City of Baguio likewise opposed reopening.

On May 8, 1962, upon Lutes' opposition, the cadastral court denied private petitioners' right to
intervene in the case because of a final declaratory relief judgment dated March 9, 1962 in Yaranon
vs. Castrillo [Civil Case 946, Court of First Instance of Baguio] which declared that such tree farm
leases were null and void.

On May 18, 1962, private petitioners moved to reconsider. They averred that said declaratory relief
judgment did not bind them, for they were not parties to that action.

On September 14, 1962, the cadastral court reversed its own ruling of May 8, 1962, allowed
petitioners to cross-examine the witnesses of respondent Lutes.

On October 16, 1962, Lutes replied to and moved to dismiss private petitioners' opposition to his
reopening petition. On October 25, 1962, private petitioners' rejoinder was filed.

On August 5, 1963, the cadastral court dismissed private petitioners' opposition to the reopening. A
motion to reconsider was rejected by the court on November 5, 1963.

On January 6, 1964, it was the turn of the City of Baguio to lodge a motion to dismiss the petition to
reopen. This motion was adopted as its own by the Reforestation Administration. They maintained
the position that the declaratory judgment in Civil Case 946 was not binding on those not parties
thereto. Respondent Lutes opposed on February 24, 1964. On April 6, 1964, private petitioners
reiterated their motion to dismiss on jurisdictional grounds.

On September 17, 1964, the court denied for lack of merit the City's motion as well as the April 6,
1964 motion to dismiss made by private petitioners.

On November 13, 1964, all the petitioners went to the Court of Appeals on certiorari, prohibition, and
mandamus with preliminary injunction. 1 They then questioned the cadastral court's jurisdiction over
the petition to reopen and the latter's order of August 5, 1963 dismissing private petitioners'
opposition. The appellate court issued a writ of preliminary injunction upon a P500-bond.

Then came the judgment of the Court of Appeals of September 30, 1965. The court held that
petitioners were not bound by the declaratory judgment heretofore hated. Nevertheless, the
appellate court ruled that as lessees, private petitioners had no right to oppose the reopening of the
cadastral case. Petitioners moved to reconsider. It was thwarted on May 6, 1966.

Petitioners now seek redress from this Court. On July 6, 1966, respondents moved to dismiss the
petition before us. On August 5, 1966, petitioners opposed. On August 12, 1966, we gave due
course.

1. Do private petitioners have personality to appear in the reopening proceedings?

First, to the controlling statute, Republic Act 931, effective June 20, 1953.

The title of the Act reads —

AN ACT TO AUTHORIZE THE FILING IN THE PROPER COURT, UNDER CERTAIN

CONDITIONS, OF CERTAIN CLAIMS OF TITLE TO PARCELS OF LAND THAT HAVE BEEN
DECLARED PUBLIC LAND, BY VIRTUE OF JUDICIAL DECISIONS RENDERED WITHIN THE
FORTY YEARS NEXT PRECEDING THE APPROVAL OF THIS ACT.

Section 1 thereof provides —

SECTION 1. All persons claiming title to parcels of land that have been the object of cadastral
proceedings, who at the time of the survey were in actual possession of the same, but for some
justifiable reason had been unable to file their claim in the proper court during the time limit
established by law, in case such parcels of land, on account of their failure to file such claims, have
been, or are about to be declared land of the public domain by virtue of judicial proceedings
instituted within the forty years next preceding the approval of this Act, are hereby granted the right
within five years 2 after the date on which this Act shall take effect, to petition for a reopening of the
judicial proceedings under the provisions of Act Numbered Twenty-two hundred and fifty-nine, as
amended, only with respect to such of said parcels of land as have not been alienated, reserved,
leased, granted, or otherwise provisionally or permanently disposed of by the Government, and the
competent Court of First Instance, upon receiving such petition, shall notify the Government through
the Solicitor General, and if after hearing the parties, said court shall find that all conditions herein
established have been complied with, and that all taxes, interests and penalties thereof have been
paid from the time when land tax should have been collected until the day when the motion is
presented, it shall order said judicial proceedings reopened as if no action has been taken on such
parcels. 3

We concede that in Leyva vs. Jandoc, L-16965, February 28, 1962, a land registration case where
oppositors were "foreshore lessees of public land", a principle was hammered out that although
Section 34, Land Registration Act, 4 "apparently authorizes any person claiming any kind of interest
to file an opposition to an application for registration, ... nevertheless ... the opposition must be
based on a right of dominion or some other real right independent of, and not at all subordinate to,
the rights of the Government."5 The opposition, according to the Leyva decision, "must necessarily
be predicated upon the property in question being part of the public domain." Leyva thus
pronounced that "it is incumbent upon the duly authorized representatives of the Government to
represent its interests as well as private claims intrinsically dependent upon it."

But the Leyva case concerned an ordinary land registration proceeding under the provisions of the
Land Registration Act. Normally and logically, lessees cannot there present issues of ownership.
The case at bar, however, stands on a different footing. It involves a special statute R.A. 931, which
allows a petition for reopening on lands "about to be declared" or already "declared land of the
public domain" by virtue of judicial proceedings. Such right, however, is made to
cover limited cases, i.e., "only with respect to such of said parcels of land as have not been
alienated, reserved, leased, granted, or otherwise provisionally or permanently disposed of by the
Government." 6 The lessee's right is thus impliedly recognized by R.A. 931. This statutory phrase
steers the present case clear from the impact of the precept forged by Leyva. So it is, that if the land
subject of a petition to reopen has already been leased by the government, that petition can no
longer prosper.

This was the holding in Director of Land vs. Benitez, L-21368, March 31, 1966. The reopening
petition there filed was opposed by the Director of Lands in behalf of 62 lessees of public land
holding revocable permits issued by the government. We struck down the petition in that Case
because the public land, subject-matter of the suit, had already been leased by the government to
private persons.

Of course, the Benitez ruling came about not by representations of the lessees alone, but through
the Director of Lands. But we may well scale the heights of injustice or abet violations of R.A. 931 if
we entertain the view that only the Director of Lands 7 can here properly oppose the reopening
petition. Suppose the lands office fails to do so? Will legitimate lessees be left at the mercy of
government officials? Should the cadastral court close its eyes to the fact of lease that may be
proved by the lessees themselves, and which is enough to bar the reopening petition? R.A. 931
could not have intended that this situation should happen. The point is that, with the fact of lease, no
question of ownership need be inquired into pursuant to R.A. 931. From this standpoint, lessees
have sufficient legal interest in the proceedings.

The right of private petitioners to oppose a reopening petition here becomes the more patent when
we take stock of their averment that they have introduced improvements on the land affected. It
would seem to us that lessees insofar as R.A. 931 is concerned, come within the purview of those
who, according to the Rules of Court, 8 may intervene in an action. For, they are persons who have
"legal interest in the matter in litigation, or in the success of either of the parties." 9 In the event herein
private petitioners are able to show that they are legitimate lessees, then their lease will continue.
And this because it is sufficient that it be proven that the land is leased to withdraw it from the
operation of Republic Act 931 and place it beyond the reach of a petition for reopening. 10

In line with the Court of Appeals' conclusion, not disputed by respondent Lutes herein, the cadastral
court should have ruled on the validity of private petitioners 'tree farm leases — on the merits.
Because there is need for Lutes' right to reopen and petitioners' right to continue as lessees to be
threshed out in that court.

We, accordingly, hold that private petitioners, who aver that they are lessees, have the necessary
personality to intervene in and oppose respondent Lutes' petition for reopening.

2. Petitioners next contend that the reopening petition below, filed under R.A. 931, should have been
published in accordance with the Cadastral Act.

To resolve this contention, we need but refer to a very recent decision of this Court in De Castro vs.
Marcos, supra, involving exactly the same set of facts bearing upon the question. We there held,
after a discussion of law and jurisprudence, that: "In sum, the subject matter of the petition for
reopening — a parcel of land claimed by respondent Akia — was already embraced in the cadastral
proceedings filed by the Director of Lands. Consequently, the Baguio cadastral court already
acquired jurisdiction over the said property. The petition, therefore, need not be published." We find
no reason to break away from such conclusion.

Respondent Lutes attached to the record a certified true copy of the November 13, 1922 decision in
the Baguio Townsite Reservation case to show, amongst others, that the land here involved was
part of that case. Petitioners do not take issue with respondent Lutes on this point of fact.

We here reiterate our ruling in De Castro, supra, that the power of the cadastral court below over
petitions to reopen, as in this case, is not jurisdictionally tainted by want of publication.

3. A question of transcendental importance is this: Does the cadastral court have power to reopen
the cadastral proceedings upon the application of respondent Lutes?

The facts are: The cadastral proceedings sought to be reopened were instituted on April 12, 1912.
Final decision was rendered on November 13, 1922. Lutes filed the petition to reopen on July
25, 1961.

It will be noted that the title of R.A. 931, heretofore transcribed, authorizes "the filing in the proper
court, under certain conditions, of certain claims of title to parcels of land that have been declared
public land, by virtue of judicial decisions rendered within the forty years next preceding the approval
of this Act." The body of the statute, however, in its Section 1, speaks of parcels of land that "have
been, or are about to be declared land of the public domain, by virtue of judicial proceedings
instituted within the forty years next preceding the approval of this Act." There thus appears to be a
seeming inconsistency between title and body.

It must be stressed at this point that R.A. 931 is not under siege on constitutional grounds. No
charge has been made hero or in the courts below that the statute offends the constitutional
injunction that the subject of legislation must be expressed in the title thereof. Well-entrenched in
constitutional law is the precept that constitutional questions will not be entertained by courts unless
they are "specifically raised, insisted upon and adequately argued." 11 At any rate it cannot be
seriously disputed that the subject of R.A. 931 is expressed in its title.

This narrows our problem down to one of legal hermeneutics.

Many are the principles evolved in the interpretation of laws. It is thus not difficult to stray away from
the true path of construction, unless we constantly bear in mind the goal we seek. The office of
statutory interpretation, let us not for a moment forget, is to determine legislative intent. In the words
of a well-known authority, "[t]he true object of all interpretation is to ascertain the meaning and will of
the law-making body, to the end that it may be enforced." 12 In varying language, "the, purpose of all
rules or maxims" in interpretation "is to discover the true intention of the law." 13 They "are only
valuable when they subserve this purpose." 14 In fact, "the spirit or intention of a statute prevails over
the letter thereof." 15 A statute "should be construed according to its spirit and reason, disregarding
as far as necessary, the letter of the law." 16 By this, we do not "correct the act of the Legislature, but
rather ... carry out and give due course to" its true intent. 17

It should be certain by now that when engaged in the task of construing an obscure expression in
the law 18 or where exact or literal rendering of the words would not carry out the legislative
intent, 19 the title thereof may be resorted to in the ascertainment of congressional will. Reason
therefor is that the title of the law may properly be regarded as an index of or clue or guide to
legislative intention. 20 This is especially true in this jurisdiction. For the reason that by specific
constitutional precept, "[n]o bill which may be enacted into law shall embrace more than one
subject which shall be expressed in the title of the bill." 21 In such case, courts "are compelled by the
Constitution to consider both the body and the title in order to arrive at the legislative intention." 22

With the foregoing guideposts on hand, let us go back to the situation that confronts us. We take
another look at the title of R.A. 931, viz: "AN ACT TO AUTHORIZE THE FILING IN THE PROPER
COURT, UNDER CERTAIN CONDITIONS, OF CERTAIN CLAIMS OF TITLE TO PARCELS OF
LAND THAT HAVE BEEN DECLARED PUBLIC LAND, BY VIRTUE OF JUDICIAL DECISIONS
RENDERED WITHIN THE FORTY YEARS NEXT PRECEDING THE APPROVAL OF THIS ACT."
Readily to be noted is that the title is not merely composed of catchwords. 23 It expresses in language
clear the very substance of the law itself. From this, it is easy to see that Congress intended to give
some effect to the title of R.A. 931.

To be carefully noted is that the same imperfection in the language of R.A. 931 aforesaid — from
which surfaces a seeming inconsistency between the title and the body — attended Commonwealth
Act 276, the present statute's predecessor. That prior law used the very same language in the body
thereof and in its title. We attach meaning to this circumstance. Had the legislature meant to shake
off any legal effects that the title of the statute might have, it had a chance to do so in the
reenactment of the law. Congress could have altered with great facility the wording of the title of R.A.
931. The fact is that it did not.

It has been observed that "in modern practice the title is adopted by the Legislature, more thoroughly
read than the act itself, and in many states is the subject of constitutional regulation." 24 The
constitutional in jurisdiction that the subject of the statute must be expressed in the title of the bill,
breathes the spirit of command because "the Constitution does not exact of Congress the obligation
to read during its deliberations the entire text of the bill." 25 Reliance, therefore, may be placed on the
title of a bill, which, while not an enacting part, no doubt "is in some sort a part of the act, although
only a formal part." 26 These considerations are all the more valid here because R.A. 931 was
passed without benefit of congressional debate in the House from which it originated as House Bill
1410, 27 and in the Senate. 28

The title now under scrutiny possesses the strength of clarity and positiveness. It recites that it
authorizes court proceedings of claims to parcels of land declared public land "by virtue of
judicial decisions rendered within the forty years next preceding the approval of this Act." That title is
written "in capital letters" — by Congress itself; such kind of a title then "is not to be classed with
words or titles used by compilers of statutes" because "it is the legislature speaking." 29 Accordingly,
it is not hard to come to a deduction that the phrase last quoted from R.A. 931 — "by virtue of judicial
decisions rendered" — was but inadvertently omitted from the body. Parting from this premise, there
is, at bottom, no contradiction between title and body. In line with views herein stated, the title
belongs to that type of titles which; should be regarded as part of the rules or provisions expressed
in the body. 30 At the very least, the words "by virtue of judicial decisions rendered" in the title of the
law stand in equal importance to the phrase in Section 1 thereof, "by virtue of judicial proceedings
instituted."

Given the fact then that there are two phrases to consider the choice of construction we must give to
the statute does not need such reflection. We lean towards a liberal view. And this, because of the
principle long accepted that remedial legislation should receive the blessings of liberal
construction. 31 And, there should be no quibbling as to the fact that R.A. 931 is a piece of remedial
legislation. In essence, it provides a mode of relief to landowners who, before the Act, had no legal
means of perfecting their titles. This is plainly evident from the explanatory note thereof, which
reads:

This bill is intended to give an opportunity to any person or claimant who has any interest in any
parcel of land which has been declared as public land in cadastral proceeding for failure of said
person or claimant to present his claim within the time prescribed by law.

There are many meritorious cases wherein claimants to certain parcels of land have not had the
opportunity to answer or appear at the hearing of cases affecting their claims in the corresponding
cadastral proceedings for lack of sufficient notice or for other reasons and circumstances which are
beyond their control. Under C.A. No. 276, said persons or claimants have no more legal remedy as
the effectivity of said Act expired in 1940.

This measure seeks to remedy the lack of any existing law within said persons or claimants with
meritorious claims or interests in parcels of land may seek justice and protection. This bill proposes
to give said persons or claimants their day in court. Approval of this bill is earnestly requested.

In fine, we say that lingual imperfections in the drafting of a statute should never be permitted to
hamstring judicial search for legislative intent, which can otherwise be discovered. Legal
technicalities should not abort the beneficent effects intended by legislation.

The sum of all the foregoing is that, as we now view Republic Act 931, claims of title that may be
filed thereunder embrace those parcels of land that have been declared public land "by virtue
of judicial decisions rendered within the forty years next preceding the approval of this Act."
Therefore, by that statute, the July 25, 1961 petition of respondent Belong Lutes to reopen Civil
Reservation Case No. 1, GLRO Record No. 211 of the cadastral court of Baguio, the decision on
which was rendered on November 13, 1922, comes within the 40-year period.lawphi1.nêt
FOR THE REASONS GIVEN, the petition for certiorari is hereby granted; the cadastral court's
orders of August 5, 1963, November 5, 1963 and September 17, 1964 are hereby declared null and
void and the cadastral court is hereby directed to admit petitioners' oppositions and proceed
accordingly. No costs. So ordered.

Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Fernando, Teehankee and Barredo, JJ., concur.
Concepcion, C.J., Castro and Capistrano, JJ., took no part..
People vs. Purisima (Statutory Construction)

Facts:

These twenty-six (26) Petitions for Review filed by the People of the Philippines represented,
respectively, by the Office of the City Fiscal of Manila, the Office of the Provincial Fiscal of Samar,
and joined by the Solicitor General, are consolidated in this one Decision as they involve one basic
question of law.

The respondent-courts are: CFI of Manila Branches VII and XVIII and CFI of Samar

Several informations were filed before the abovementioned courts charging the accused of Illegal
Possession of Deadly Weapon in violation of Presidential Decree #9. The counsel of the defense
filed motions to quash the said informations after which the respondent-courts passed their own
orders quashing the said informations on common ground that the informations did not allege facts
constituting an offense penalized until PD#9 for failure to state an essential element of the crime,
which is, that the carrying outside of the accused’s residence of a bladed, pointed, or blunt weapon
is in furtherance or on the occasion of, connected with, or related to subversion, insurrection, or
rebellion, organized lawlessness or public disorder.

The respondent courts stand that PD#9 should be read in the context of Proc.1081 which seeks to
maintain law and order in the country as well as the prevention and suppression of all forms of
lawless violence. The non-inclusion of the aforementioned element may not be distinguished from
other legislation related to the illegal possession of deadly weapons. Judge Purisima, in particular,
reasoned that the information must allege that the purpose of possession of the weapon was
intended for the purposes of abetting the conditions of criminality, organized lawlessness, public
disorder. The petitioners said that the purpose of subversion is not necessary in this regard because
the prohibited act is basically a malum prohibitum or is an action or conduct that is prohibited by
virtue of a statute. The City Fiscal also added in cases of statutory offenses, the intent is immaterial
and that the commission of the act is voluntary is enough.

Issue:

Are the informations filed by the people sufficient in form and substance to constitute the offense of
“Illegal possession of deadly weapon” penalized under Presidential Decree No. 9?

Held:

1. It is the constitutional right of any person who stands charged in a criminal prosecution to be
informed of the nature and cause of the accusation against him.

2. Under Sec. 5 Rule 110 of the Rules of Court, for a complaint or information to be sufficient, it must
state the designation of the offense by the statute and the acts or omissions complained of as
constituting the offense. This is essential to avoid surprise on the accused and to afford him the
opportunity to prepare his defense accordingly.
3. The supreme court says that the preamble of PD#9 states that the intention of such decree is to
penalize the acts which are related to Proc.1081 which aim to suppress lawlessness, rebellion,
subversive acts, and the like. While the preamble is not a part of the statute, it implies the intent and
spirit of the decree. The preamble and whereas clauses also enumerate the facts or events which
justify the promulgation of the decree and the stiff sanctions provided.

G.R. No. 187919 April 25, 2012

RAFAEL H. GALVEZ and KATHERINE L. GUY, Petitioners,

vs.
HON. COURT OF APPEALS and ASIA UNITED BANK, Respondents.

x-----------------------x

G.R. No. 187979

ASIA UNITED BANK, Petitioner,

vs.
GILBERT G. GUY, PHILIP LEUNG, KATHERINE L. GUY, RAFAEL H. GALVEZ and EUGENIO H.
GALVEZ, JR., Respondents.

x-----------------------x

G.R. No. 188030

GILBERT G. GUY, PHILIP LEUNG and EUGENIO H. GALVEZ, JR., Petitioners,

vs.
ASIA UNITED BANK, Respondent.

DECISION

PEREZ, J.:

THE FACTS

In 1999, Radio Marine Network (Smartnet) Inc. (RMSI) claiming to do business under the name
Smartnet Philippines and/or Smartnet Philippines, Inc. (SPI), applied for an Omnibus Credit Line for
1 2

various credit facilities with Asia United Bank (AUB). To induce AUB to extend the Omnibus Credit
Line, RMSI, through its directors and officers, presented its Articles of Incorporation with its 400-
peso million capitalization and its congressional telecom franchise. RMSI was represented by the
following officers and directors occupying the following positions:

Gilbert Guy - Exec. V-Pres./Director

Philip Leung - Managing Director

Katherine Guy - Treasurer

Rafael Galvez - Executive Officer

 Eugenio Galvez, Jr. - Chief Financial Officer/Comptroller

Satisfied with the credit worthiness of RMSI, AUB granted it a ₱250 million Omnibus Credit Line,
under the name of Smartnet Philippines, RMSI’s Division. On 1 February 2000, the credit line was
increased to ₱452 million pesos after a third-party real estate mortgage by Goodland Company,
Inc., an affiliate of Guy Group of Companies, in favor of Smartnet Philippines, was offered to the
3 4

bank. Simultaneous to the increase of the Omibus Credit Line, RMSI submitted a proof of authority
to open the Omnibus Credit Line and peso and dollar accounts in the name of Smartnet Philippines,
Inc., which Gilbert Guy, et al. represented as a division of RMSI, as evidenced by the letterhead
5

used in its formal correspondences with the bank and the financial audit made by SGV & Co., an
independent accounting firm. Attached to this authority was the Amended Articles of Incorporation of
RMSI, doing business under the name of Smartnet Philippines, and the Secretary’s Certificate of SPI
authorizing its directors, Gilbert Guy and Philip Leung to transact with AUB. Prior to this major
6

transaction, however, and, unknown to AUB, while RMSI was doing business under the name of
Smartnet Philippines, and that there was a division under the name Smartnet Philippines, Gilbert
Guy, et al. formed a subsidiary corporation, the SPI with a paid-up capital of only ₱62,500.00.

Believing that SPI is the same as Smartnet Philippines - the division of RMSI - AUB granted to it,
among others, Irrevocable Letter of Credit No. 990361 in the total sum of $29,300.00 in favor of
Rohde & Schwarz Support Centre Asia Ptd. Ltd., which is the subject of these consolidated petitions.
To cover the liability of this Irrevocable Letter of Credit, Gilbert Guy executed Promissory Note No.
010445 in behalf of SPI in favor of AUB. This promissory note was renewed twice, once, in the name
of SPI (Promissory Note No. 011686), and last, in the name of Smartnet Philippines under
Promissory Note No. 136131, bolstering AUB’s belief that RMSI’s directors and officers consistently
treated this letter of credit, among others, as obligations of RMSI.

When RMSI’s obligations remained unpaid, AUB sent letters demanding payments. RMSI denied
liability contending that the transaction was incurred solely by SPI, a corporation which belongs to
the Guy Group of Companies, but which has a separate and distinct personality from RMSI. RMSI
further claimed that while Smartnet Philippines is an RMSI division, SPI, is a subsidiary of RMSI, and
hence, is a separate entity.

Aggrieved, AUB filed a case of syndicated estafa under Article 315 (2) (a) of the Revised Penal
Code in relation to Section 1 of Presidential Decree (PD) No. 1689 against the interlocking directors
of RMSI and SPI, namely, Gilbert G. Guy, Rafael H. Galvez, Philip Leung, Katherine L. Guy, and
Eugenio H. Galvez, Jr., before the Office of the City Prosecutor of Pasig City.

AUB alleged that the directors of RMSI deceived it into believing that SPI was a division of RMSI,
only to insist on its separate juridical personality later on to escape from its liabilities with AUB. AUB
contended that had it not been for the fraudulent scheme employed by Gilbert Guy, et al., AUB
would not have parted with its money, which, including the controversy subject of this petition,
amounted to hundreds of millions of pesos.

In a Resolution dated 3 April 2006, the Prosecutor found probable cause to indict Gilbert G. Guy, et
7

al. for estafa but dismissed the charge of violation of PD No. 1689 against the same for insufficiency
of evidence, thus:

WHEREFORE, it is recommended that respondents be charged for ESTAFA under Article 315, par.
2(a) of the Revised Penal Code, and the attached information be filed with the Regional Trial Court
in Pasig City, with a recommended bail of ₱40,000.00 for each respondent.
It is further recommended that the charge of violation of P.D. 1689 against the said respondents be
dismissed for insufficiency of evidence. 8

Accordingly, an Information dated 3 April 2006 was filed against Gilbert Guy, et al. with the Regional
9

Trial Court of Pasig City.

Both parties, i.e., the AUB and Gilbert Guy, et al., filed their respective Petitions for Review with the
Department of Justice (DOJ) assailing the 3 April 2006 Resolution of the Office of the City
Prosecutor of Pasig City.

In a Resolution dated 15 August 2006, the DOJ reversed the City Prosecutor’s Resolution and
10

ordered the dismissal of the estafa charges against Gilbert Guy, et al. for insufficiency of evidence.

The AUB’s Motion for Reconsideration was denied, constraining it to assail the DOJ Resolution
before the Court of Appeals (CA).

The CA partially granted AUB’s petition in a Decision dated 27 June 2008, thus:

WHEREFORE, the instant petition is GRANTED, finding probable cause against private
respondents for the crime of ESTAFA under Article 315, par 2 (a) of the Revised Penal Code. The
assailed Resolution dated August 15, 2006 of the Department of Justice is REVERSED AND SET
ASIDE, subject to our ruling that the private respondents are not liable under P.D. 1689. The April 3,
2006 Resolution of Assistant City Prosecutor Paudac is hereby REINSTATED. 11

Aggrieved, Gilbert Guy, Philip Leung and Eugenio H. Galvez Jr. (in G.R. No. 188030) and
separately, Rafael Galvez and Katherine Guy (in G.R. No. 187919) filed the present petitions before
this Court assailing the CA Decision which reinstated the City Prosecutor’s Resolution indicting them
of the crime of estafa. The AUB also filed its own petition before us, docketed as G.R. No. 187979,
assailing the Court of Appeals Decision for dismissing the charge in relation to Section 1 of PD No.
1689.

Hence, these consolidated petitions.

Gilbert Guy, et al. argue that this case is but a case for collection of sum of money, and, hence, civil
in nature and that no fraud or deceit was present at the onset of the transaction which gave rise to
this controversy, an element indispensable for estafa to prosper. 12

AUB, on the other, insists that this controversy is within the scope of PD No. 1689, otherwise known
as syndicated estafa. It contends that Guy, et al., induced AUB to grant SPI’s letter of credit to AUB’s
damage and prejudice by misleading AUB into believing that SPI is one and the same entity as
Smartnet Philippines which AUB granted an Omnibus Credit Transaction. After receiving and
profiting from the proceeds of the aforesaid letter of credit, Gilbert Guy, et al. denied and avoided
liability therefrom by declaring that the obligation should have been booked under SPI as RMSI
never contracted, nor authorized the same. It is on this premise that AUB accuses Gilbert Guy, et
al. to have committed the crime of estafa under Article 315 (2) (a) of the Revised Penal Code in
relation to PD No. 1689.

At issue, therefore, is whether or not there is probable cause to prosecute Gilbert Guy, et al. for the
crime of syndicated estafa on the basis of fraudulent acts or fraudulent means employed to deceive
AUB into releasing the proceeds of Irrevocable Letter of Credit No. 990361 in favor of SPI.
 Our Ruling

This controversy could have been just a simple case for collection of sum of money had it not been
for the sophisticated fraudulent scheme which Gilbert Guy, et al. employed in inducing AUB to part
with its money.

Records show that on 17 February 1995, Radio Marine Network, Inc. (Radio Marine) amended its
corporate name to what it stands today – Radio Marine Network (Smartnet), Inc. This was a month
after organizing its subsidiary corporation the Smartnet Philippines, Inc. with a capital of only
₱62,500.00. A year earlier, Gilbert Guy, et al., established Smartnet Philippines as a division of
13

Radio Marine under which RMSI operated its business.

It was, however, only on 26 March 1998, when the Securities and Exchange Commission approved
the amended corporate name, and only in October 1999 did RMSI register Smartnet Philippines as
its business name with the Department of Trade and Industry. 14

It is in this milieu that RMSI transacted business with AUB under the name Smartnet Philippines
and/or SPI.

Article 315 (2) (a) of the Revised Penal Code provides:

Art. 315. Swindling (estafa) – any person who shall defraud another by any of the means mentioned
herein below x x x :

xxxx

2. By means of any of the following false pretenses or fraudulent acts executed prior to or
simultaneous with the commission of the fraud:

(a) By using a fictitious name, or falsely pretending to possess power, influence, qualifications,
property, credit, agency, business or imaginary transactions; or by means of other similar
deceits. x x x.

The elements of estafa by means of deceit are the following:

a. That there must be a false pretense, fraudulent act or fraudulent means;

b. That such false pretense, fraudulent act or fraudulent means must be made or executed prior to or
simultaneously with the commission of the fraud;

c. That the offended party must have relied on the false pretense, fraudulent act, or fraudulent
means, that is, he was induced to part with his money or property because of the false pretense,
fraudulent act, or fraudulent means;

d. That as a result thereof, the offended party suffered damage. 15

First, Gilbert Guy, Philip Leung, Katherine Guy, Rafael Galvez and Eugene Galvez, Jr., interlocking
directors of RMSI and SPI, represented to AUB in their transactions that Smartnet Philippines and
SPI were one and the same entity. While Eugene Galvez, Jr. was not a director of SPI, he actively
dealt with AUB in his capacity as RMSI’s Chief Financial Officer/Comptroller by falsely representing
that SPI and RMSI were the same entity. Gilbert Guy, Philip Leung, Katherine Guy, Rafael Galvez,
and Eugene Galvez, Jr. used the business names Smartnet Philippines, RMSI, and SPI
interchangeably and without any distinction. They successfully did this by using the confusing
similarity of RMSI’s business name, i.e., Smartnet Philippines – its division, and, Smartnet
Philippines, Inc. – the subsidiary corporation. Further, they were able to hide the identity of SPI, by
having almost the same directors as that of RMSI. In order to let it appear that SPI is the same as
that of Smartnet Philippines, they submitted in their application documents of RMSI, including its
Amended Articles of Incorporation, third-party real estate mortgage of Goodland Company in favor
16 17

of Smartnet Philippines, and audited annual financial statement of SGV & Co. Gilbert Guy, et
18

al. also used RMSI letterhead in their official communications with the bank and the contents of
these official communications conclusively pointed to RMSI as the one which transacted with the
19

bank.

These circumstances are all indicia of deceit. Deceit is the false representation of a matter of fact
whether by words or conduct, by false or misleading allegations, or by concealment of that which
should have been disclosed which deceives or is intended to deceive another so that he shall act
upon it to his legal injury.
20

Second, the intent to deceive AUB was manifest from the start. Gilbert Guy et al. laid down first all
the necessary materials they need for this deception before defrauding the bank by first establishing
Smartnet Philippines as a division of Radio Marine under which Radio Marine Network Inc. operated
its business. Then it organized a subsidiary corporation, the SPI, with a capital of only
21

₱62,000.00. Later, it changed the corporate name of Radio Marine Network Inc. into RMSI.
22 23

Undoubtedly, deceit here was conceived in relation to Gilbert Guy, et al.’s transaction with AUB.
There was a plan, documented in corporation’s papers, that led to the defraudation of the bank. The
circumstances of the directors’ and officers’ acts in inserting in Radio Marine the name of Smartnet;
the creation of its division – Smartnet Philippines; and its registration as business name as Smartnet
Philippines with the Department of Trade and Industry, together with the incorporation of its
subsidiary, the SPI, are indicia of a pre-conceived scheme to create this elaborate fraud, victimizing
a banking institution, which perhaps, is the first of a kind in Philippine business.

We emphasize that fraud in its general sense, is deemed to comprise anything calculated to
deceive, including all acts, omissions, and concealment involving a breach of legal duty or equitable
duty, trust, or confidence justly reposed, resulting in damage to another, or by which an undue and
unconscientious advantage is taken of another. It is a generic term embracing all multifarious
24

means which human ingenuity can device and which are resorted to by one individual to secure an
advantage over another by false suggestions or by suppression of truth and includes all surprise,
trick, cunning, dissembling and any unfair way by which another is cheated. 25

As early as 1903, in U.S. v. Mendezona, we held that an accused may be convicted for estafa if the
26

deceit of false pretense is committed prior to or simultaneous with fraud and is the efficient cause or
primary consideration which induced the offended party to part with his money or property.

Third, AUB would not have granted the Irrevocable Letter of Credit No. 990361, among others, had it
known that SPI which had only ₱62,500.00 paid-up capital and no assets, is a separate entity and
not the division or business name of RMSI. Gilbert Guy, et al. however, contends that the transaction
subject in this controversy is a letter of credit and not a loan, hence, SPI’s capital does not
matter. This was also the contention of the DOJ in reversing the Resolution of the City Prosecutor’s
27

Office of Pasig. The DOJ contended that:

It is also noted that the subject transaction, one of the several series of transactions between
complainant AUB and SPI, is not a loan transaction. It is a letter of credit transaction intended to
facilitate the importation of goods by SPI. The allegation as to the lack of capitalization of SPI is
therefore immaterial and irrelevant since it is a letter of credit transaction. The seller gets paid only if
it delivers the documents of title over the goods to the bank which issued the letter of credit, while
the buyer/importer acquires title to the goods once it reimburses the issuing bank. The transaction
secures the obligation of the buyer/importer to the issuing bank. 28

It is true that ordinarily, in a letter of credit transaction, the bank merely substitutes its own promise
to pay for the promise to pay of one of its customers, who in turn promises to pay the bank the
amount of funds mentioned in the letters of credit plus credit or commitments fees mutually agreed
upon. Once the issuing bank shall have paid the beneficiary after the latter’s compliance with the
terms of the letter of credit, the issuing bank is entitled to reimbursement for the amount it paid under
the letter of credit.
29

In the present case, however, no reimbursement was made outright, precisely because the letter of
credit was secured by a promissory note executed by SPI. The bank would have not agreed to this
transaction had it not been deceived by Gilbert Guy, et al. into believing the RMSI and SPI were one
and the same entity. Guy and his cohorts’ acts in (1) securing the letter of credit guaranteed by a
promissory note in behalf of SPI; and, (2) their act of representing SPI as RMSI’s Division,
were indicia of fraudulent acts because they fully well know, even before transacting with the bank,
that: (a) SPI was a separate entity from Smartnet Philippines, the RMSI’s Division, which has the
Omnibus Credit Line; and (b) despite this knowledge, they misrepresented to the bank that SPI is
RMSI’s division. Had it not for this false representation, AUB would have not granted SPI’s letter of
credit to be secured with a promissory note because SPI as a corporation has no credit line with
AUB and SPI by its own, has no credit standing.

Fourth, it is not in dispute that the bank suffered damage, which, including this controversy,
amounted to hundreds of millions of pesos.

It is worth emphasizing that under Section 1, Rule 112 of the Revised Rules on Criminal Procedure,
the function of a preliminary investigation is to determine "whether there is a sufficient ground to
engender a well-grounded belief that a crime x x x has been committed and that the respondent is
probably guilty thereof and should be held for trial." 30

A finding of probable cause needs only to rest on evidence showing that more likely than not, the
accused committed the crime. Preliminary investigation is not the occasion for the full and
31

exhaustive display of the parties' evidence. It is for the presentation of such evidence only as may
32

engender a well-founded belief that an offense has been committed and that the accused is probably
guilty thereof. The validity and merits of a party's accusation or defense, as well as admissibility of
33

testimonies and evidence, are better ventilated during the trial proper. 34

We, therefore, sustain the findings of the CA and the City Prosecutor’s Resolution finding that
probable cause exists against Gilbert Guy, et al. for the crime of estafa under Article 315 (2)(a) of the
Revised Penal Code and that Gilbert Guy, et al. are probably guilty thereof and should be held for
trial. AUB’s voluminous documents submitted to this Court overcome this difficulty and established
that there is sufficient ground to engender a well-grounded belief that a crime has been committed
and that the respondents are probably guilty thereof and should be held for trial.

Lest it be misunderstood, we reiterate that this Court’s finding of probable cause is grounded on
fraud committed through deceit which surrounded Gilbert Guy, et al. transaction with AUB, thus,
violating Article 315 (2) (a) of the Revised Penal Code; it is neither their act of borrowing money and
not paying them, nor their denial thereof, but their very act of deceiving AUB in order for the latter to
part with its money. As early as the Penal Code of Spain, which was enforced in the Philippines as
early as 1887 until it was replaced by the Revised Penal Code in 1932, the act of fraud through false
pretenses or similar deceit was already being punished. Article 335 of the Penal Code of Spain
punished a person who defrauded another "by falsely pretending to possess any power, influence,
qualification, property, credit, agency or business, or by means of similar deceit."35

Anent the issue as to whether or not Gilbert Guy, et al. should be charged for syndicated estafa in
relation to Section 1 of PD No. 1689, which states that:

SEC 1. Any person or persons who shall commit estafa or other forms of swindling as defined in
Article 315 and 316 of the Revised Penal Code, as amended, shall be punished by life imprisonment
to death if the swindling (estafa) is committed by a syndicate consisting of five or more persons
formed with the intention of carrying out the unlawful or illegal act, transaction, enterprise or scheme,
and the defraudation results in the misappropriation of moneys contributed by stockholders, or
members of rural banks, cooperatives, "samahang nayon(s)", or farmers associations, or of funds
solicited by corporations/ associations from the general public.

We hold that the afore-quoted law applies to the case at bar, for the following reasons:

Under Section 1 of PD No. 1689, the elements of syndicated estafa are: (a) estafa or other forms of
swindling as defined in Artilce 315 and 316 of the Revised Penal Code is committed; (b)
the estafa or swindling is committed by a syndicate of five or more persons; and (c) defraudation
results in the misappropriation of moneys contributed by stockholders, or members of rural banks,
cooperatives, "samahang nayon[s]," or farmers associations or of funds solicited by
corporations/associations from the general public. 36

First, as defined under Section 1 of PD No. 1689, a syndicate "consists of five or more persons
formed with the intention of carrying out the unlawful or illegal act, transaction, enterprise or
scheme." Five (5) accused, namely, Gilbert G. Guy, Rafael H. Galvez, Philip Leung, Katherine L.
Guy, and Eugenio H. Galvez, Jr. were, (a) all involved in the formation of the entities used to defraud
AUB; and (b) they were the officers and directors, both of RMSI and SPI, whose conformities paved
the way for AUB to grant the letter of credit subject of this case, in AUB’s honest belief that SPI, as
Gilbert Guy, et al. represented, was a mere division of RMSI. As already discussed, although
Eugenio Galvez, Jr. was not a director of SPI, he, together with Gilbert Guy and Philip Leung,
actively participated in the scheme through their signed correspondences with the bank and their
attendance in the meetings with executives of AUB. Rafael Galvez and Katherine Guy, on the other
37

hand, were the directors of RMSI and SPI who caused and authorized Gilbert Guy and Philip Leung
to transact with AUB. 38

Second, while these corporations were established presumably in accordance with law, it cannot be
denied that Gilbert G. Guy, Rafael H. Galvez, Philip Leung, Katherine L. Guy, and Eugenio H.
Galvez, Jr. used these corporations to carry out the illegal and unlawful act of misrepresenting SPI
as a mere division of RMSI, and, despite knowing SPI’s separate juridical personality, applied for a
letter of credit secured by SPI’s promissory note, knowing fully that SPI has no credit line with AUB.
The circumstances of the creation of these entities and their dealings with the bank reveal this
criminal intent to defraud and to deceive AUB.

Third, the fact that the defraudation of AUB resulted to misappropriation of the money which it
solicited from the general public in the form of deposits was substantially established. Section 3.1 of
39

the General Banking Law defines banks as "entities engaged in the lending of funds obtained in the
form of deposits." The Old General Banking Act (R.A. No. 337) gave a fuller picture of the basic
banking function of obtaining funds from the public by way of deposits and the lending of these funds
as follows:
Sec 2. Only entities duly authorized by the Monetary Board of the Central Bank may engage in the
lending of funds obtained from the public through the receipt of deposits of any kind, and all
entities regularly conducting such operations shall be considered as banking institutions, xxxx.

Gilbert Guy et al. want this Court to believe that AUB, being a commercial bank, is beyond the
coverage of PD No. 1689. We hold, however, that a bank is a corporation whose fund comes from
the general public. P.D. No. 1689 does not distinguish the nature of the corporation. It requires,
rather, that the funds of such corporation should come from the general public. This is bolstered by
the third "whereas clause" of the quoted law which states that the same also applies to other
"corporations/associations operating on funds solicited from the general public." This is precisely the
very same scheme that PD No. 1689 contemplates that this species of estafa "be checked or at least
be minimized by imposing capital punishment involving funds solicited by corporations/associations
from the general public" because "this erodes the confidence of the public in the banking and
cooperative system, contravenes public interest and constitutes economic sabotage that threatens
the stability of the nation."
40
1âwphi1

Hence, for the stated reasons, we applied the law in People v. Balasa, a non-stock/non-profit
41

corporation – the Panata Foundation of the Philippines, Inc. We held that PD No. 1689 also applies
to other corporations/associations operating on funds solicited from the general public.

In People v. Romero, we also applied the law to a stock corporation engaged in marketing, the
42

Surigao San Andres Industrial Development Corporation. Likewise, in People v. Menil, we applied
43

the law to another marketing firm known as ABM Appliance and Upholstery.

In these cited cases, the accused used the legitimacy of their entities to perpetrate their unlawful and
illegal acts. We see no reason not to apply this law to a banking institution, a corporation imbued
with public interest, when a clear reading of the PD 1689 reveals that it is within its coverage.

WHEREFORE, the Decision of the Court of Appeals dated 27 June 2008 in CA-G.R. SP No. 97160
is hereby AFFIRMED with MODIFICATION that Gilbert G. Guy, Rafael H. Galvez, Philip Leung,
Katherine L. Guy and Eugenio H. Galvez, Jr. be charged for SYNDICATED ESTAFA under Article
315 (2) (a) of the Revised Penal Code in relation to Section 1 of Presidential Decree No. 1689.

SO ORDERED.

JOSE PORTUGAL PEREZ

Associate Justice

WE CONCUR:
 FIRST DIVISION

[G.R. No. 8848. November 21, 1913. ]

THE UNITED STATES, Plaintiff-Appellee, v. WILLIAM C. HART, C.J. MILLER, and

SERVILLANO NATIVIDAD, Defendants-Appellants.

Pedro Abad Santos for appellants Hart and Natividad.

W.H. Booram for appellant Miller.

Solicitor-General Harvey for Appellee.

SYLLABUS

1. VAGRANCY; LOITERING ABOUT SALOONS, DRAM SHOPS, OR GAMBLING HOUSES;

VISIBLE MEANS OF SUPPORT. — A person is not guilty of vagrancy under the second
paragraph of section 1 of the Vagrancy Act for frequenting saloon (public room), dram
shops(bar), or gambling houses, unless it be shown that he is without visible means of
support.

2. STATUTORY CONSTRUCTION; PUNCTUATION EMPLOYED. — If the punctuation of a

statute gives it a meaning which is reasonable and in apparent accord with the
legislative will, it may be used as an additional argument for adopting the literal
meaning of the words of a statute as thus punctuated. But an argument based upon
punctuation alone is not conclusive, and the courts will not hesitate change the
punctuation when necessary, to give to the Act the effect intended by the Legislature,
disregarding superfluous or incorrect punctuation marks, and inserting others where
necessary.

DECISION

TRENT, J. :

The appellants, Hart, Miller, and Natividad, were arraigned in the Court of First Instance
of Pampanga on a charge of vagrancy under the provision of Act No. 519, found guilty,
and were each sentenced to six months’ imprisonment. Hart and Miller were further
sentenced to a fine of P200, and Natividad to a fine of P100. All appealed.

The evidence of the prosecution as to the defendant Hart shows that he pleaded guilty
and was convicted on a gambling charge about two or three weeks before his arrest on
the vagrancy charge; that he had been conducting two gambling games, one in his
saloon and the other in another house, for a considerable length of time, the games
running every night. The defense showed that Hart and one Dunn operated a hotel and
saloon at Angeles which did a business, according to the bookkeeper, of P96,000 during
the nineteen months preceding the trial; that Hart was also the sole proprietor of a
saloon in the barrio of Tacondo; that he raised imparted hogs which he sold to the
Army garrison at Camp Stotsenberg, which business netted him during the preceding
year about P4,000; that he was authorized to sell several hundred hectares of land
owned by one Carrillo in Tacondo; that he administered, under power of attorney, the
same property; and that he furnished a building for and paid the teacher of the first
public school in Tacondo, said school being under Government supervision. The
evidence of the prosecution as to Miller was that he had the reputation of being a
gambler; that he pleaded guilty and was fined for participating in a gambling game
about two weeks before his arrest on the present charge of vagrancy; and that he was
seen in houses of prostitution and in a public dance hall in Tacondo on various
occasions. The defense showed without contradiction that Miller had been discharged
from the Army about the year previously; that during his term of enlistment he had
been made sergeant; that he received rating as "excellent" on being discharged; that
since his discharge he had been engaged in tailoring business near Camp Stotsenberg
under articles of partnership with one Buckerd, Miller having contributed P1,000 to the
partnership; that the business netted each partner about P300 per month; that Miller
attended to business in an efficient manner every day; and that his work was first
class.

The evidence of the prosecution as to Natividad was that he had gambled nearly every
night for a considerable time prior to his arrest on the charge of vagrancy, in the saloon
of one Raymundo, as well as in Hart’s saloon; that Natividad sometimes acted as
banker; and that he had pleaded guilty to a charge of gambling and had been
sentenced to pay a fine therefor about two weeks before his arrest on the vagrancy
charge. The defense showed that Natividad was a tailor, married, and had a house of
his own; that he made good clothes, and earned from P80 to P100 per month, which
was sufficient to support his family.

From his evidence it will be noted that each of the defendants was earning a living at a
lawful trade or business, quite sufficient to support himself in comfort, and that the
evidence which the prosecution must rely upon for a conviction consists of their having
spent their evenings in regularly licensed saloons, participating in gambling games
which are expressly made unlawful by the Gambling Act, No. 1757, and that Miller
frequented a dance hall and houses of prostitution.

Section 1 of Act No. 519 is divided into seven clauses, separated by semicolons. Each
clause enumerates a certain calls of person who, within the meaning of this statute, are
to be considered as vagrants. For the purpose of this discussion, we quote this section
below, and number each of these seven clauses.

"(1) Every person having no apparent means of subsistence, who had the physical
ability to work, and who neglects to apply himself or herself to some lawful calling; (2)
every person found loitering about saloons or dram shops or gambling housed,
or tramping or straying through the country without visible means of support;
(3) every person known to be a pickpocket, thief, burglar, ladrone, either by his own
confession or by his having been convicted of either said offenses, and having no visible
or lawful means of support when found loitering about any gambling house, cockpit, or
in any outlying barrio of a pueblo; (4) every idle or dissolute person of associate of
known thieves or ladrones who wanders about the country at unusual hours of the
night; (5) every idle person who lodges in any barn, shed, outhouse, vessel, or place
other than such as is kept for lodging purposed, without the permission of the owner or
a person entitled to the possession thereof; (6) every lewd or dissolute person who
lives in and about houses of ill fame; every common prostitute and common drunkard,
is a vagrant."
cralaw virtua1aw library

It is insisted by the Attorney-General that as visible means of support would not be

a bar to a conviction under any one of the last four clauses of this act, it was
not the intention of the Legislature to limit the crime of vagrancy to those having no
visible means of support. Relying upon the second clause to sustain the guilt of the
defendant, the Attorney-General then proceeds to argue that "visible means of support"
as used in that clause does not apply to "every person found loitering about saloons or
dram shops on gambling houses," but is confined entirely to "or tramping or straying
through the country." It is insisted that had it been intended for "without visible means
of support" to qualify the first part of the clause, either the comma after gambling
house would have been omitted, or else a comma after country would have been
inserted.

When the meaning of legislative enactment is in question, it is the duty of the courts to
ascertain, if possible, the true legislative intention, and adopt that the construction of
the statute of the statute which will give it effect. The construction finally adopted
should be based upon something more substantial than the mere punctuation found in
the printed Act. If the punctuation of the statute gives it a meaning which is reasonable
and in apparent accord with the legislative will, it may be used as an additional
argument for adopting the literal meaning of the words of the statute as thus
punctuated. But an argument based upon punctuation alone is not conclusive, and the
courts will not hesitate to a change the punctuation when necessary, to give to the Act
the effect intended by the Legislature, disregarding superfluous or incorrect punctuation
marks, and inserting others where necessary.

The Attorney-General has based his argument upon the proposition that neither visible
means of support not a lawful calling is a sufficient defense under the last four
paragraphs of the section; hence, not being universally a defense to a charge of
vagrancy, they should not be allowed except where the Legislature has so provided. He
then proceeds to show, by a "mere grammatical criticism: of the second paragraph,
that the Legislature did not intend to allow visible means of support or a lawful calling
to block a prosecution for vagrancy founded on the charge that the defendant was
found loitering around saloons, dram shops, and gambling houses.

A most important step in this reasoning, necessary to make it sound, is to ascertain the
consequences flowing from such a construction of the law. What is loitering? The
dictionaries say it is idling or wasting one’s time. The time spent in saloons, dram
shops, and gambling houses is seldom anything but that. So that under the proposed
construction, practically all who frequent such places commit a crime in so doing, for
which they are liable to punishment under the Vagrancy Law. We cannot believe that it
was the intention of the Legislature to penalize what, in the case of saloons and dram
shops, is under the law’s protection. If it be urged that what is true of saloons and dram
shops is not true of gambling houses in this respect, we encounter the wording of the
law, which makes no distinction whatever between loitering around saloon and dram
shops, and loitering around gambling houses.

The offense of vagrancy and defined in Act No. 519 is the Anglo-Saxon method of
dealing with the habitually idle and harmful parasites society. While the statutes of the
various States of the American Union differ greatly as to the classification of such
persons, their scope is substantially the same. Of those statutes we have had an
opportunity to examine, but two or three contain a provision similar to the second
paragraph of Act No. 519. (Mo. Ann. Stat., sec. 2228; sec 1314.) That the absence of
visible means of support or a lawful calling is necessary under these statutes to a
conviction for loitering around saloons, dram shops, and gambling houses is not even
negatived by the punctuation employed. In the State of Tennessee, however, we find
an exact counterpart for paragraph 2 of section 1 of our own Act (Code of Tenn., sec
3023), with the same punctuation: jgc:chanrobles.com.ph

". . . or for any person to be found loitering about saloons or dram shops, gambling
houses, or houses of ill fame, or tramping or strolling through the country without any
visible means of support."cralaw virtua1aw library

A further thought suggests itself on connection with the punctuation of the paragraph in
question. The section, as stated above, is divided into seven clauses, separated by
semicolons. To say that two classes of vagrants are defined in paragraph 2, as to one of
which visible means of support or a lawful calling is not a good defense, and as to the
other which such a defense is sufficient, would imply a lack of logical classification on
the part of the legislature of the various classes of vagrants. this we are not inclined to
do.

In the case at bar, all three of the defendants were earning a living by legitimate
methods in a degree of comfort higher than the average. Their sole offense was
gambling, which the legislature deemed advisable to make the subject of a penal law.
the games in which they participated were apparently played openly, in a licenses
public saloon, where the officers of the law could have entered as easily as did the
patrons. It is believed that Act No. 1757 is adequate, if enforced, to suppress the
gambling proclivities of any person making a good living ar a lawful trade of business.

For these reasons, the defendants are acquitted, with the costs de oficio.

Arellano, C.J., Torres and Carson, JJ., concur.

Johnson and Moreland, JJ., concur the result.

G.R. No. 123169 November 4, 1996

DANILO E. PARAS, petitioner,

vs.
COMMISSION ON ELECTIONS, respondent.

RESOLUTION

FRANCISCO, J.:

Petitioner Danilo E. Paras is the incumbent Punong Barangay of Pula, Cabanatuan City who won
during the last regular barangay election in 1994. A petition for his recall as Punong Barangay was
filed by the registered voters of the barangay. Acting on the petition for recall, public respondent
Commission on Elections (COMELEC) resolved to approve the petition, scheduled the petition
signing on October 14, 1995, and set the recall election on November 13,
1995. At least 29.30% of the registered voters signed the petition, well above the 25% requirement
1

provided by law. The COMELEC, however, deferred(postponed)the recall election in view of

petitioner's opposition. On December 6, 1995, the COMELEC set anew the recall election, this time
on December 16, 1995. To prevent the holding of the recall election, petitioner filed before the
Regional Trial Court of Cabanatuan City a petition for injunction, docketed as SP Civil Action No.
2254-AF, with the trial court issuing a temporary restraining order. After conducting a summary
hearing, the trial court lifted the restraining order, dismissed the petition and required petitioner and
his counsel to explain why they should not be cited for contempt for misrepresenting that the
barangay recall election was without COMELEC approval. 2

In a resolution dated January 5, 1996, the COMELEC, for the third time, re-scheduled the recall
election an January 13, 1996; hence, the instant petition for certiorari with urgent prayer for
injunction. On January 12, 1996, the Court issued a temporary restraining order and required the
Office of the Solicitor General, in behalf of public respondent, to comment on the petition. In view of
the Office of the Solicitor General's manifestation maintaining an opinion adverse to that of the
COMELEC, the latter through its law department filed the required comment. Petitioner thereafter
filed a reply.
3

Petitioner's argument is simple and to the point. Citing Section 74 (b) of Republic Act No. 7160,
otherwise known as the Local Government Code, which states that "no recall shall take place within
one (1) year from the date of the official's assumption to office or one (1) year immediately preceding
a regular local election", petitioner insists that the scheduled January 13, 1996 recall election is now
barred as the Sangguniang Kabataan (SK) election was set by Republic Act No. 7808 on the first
Monday of May 1996, and every three years thereafter. In support thereof, petitioner
cites Associated Labor Union v. Letrondo-Montejo, 237 SCRA 621, where the Court considered the
SK election as a regular local election. Petitioner maintains that as the SK election is a regular local
election, hence no recall election can be had for barely four months separate the SK election from
the recall election. We do not agree.
The subject provision of the Local Government Code provides:

Sec. 74. Limitations on Recall. — (a) Any elective local official may be the subject of
a recall election only once during his term of office for loss of confidence.

(b) No recall shall take place within one (1) year from the date of the official's
assumption to office or one (1) year immediately preceding a regular local election.

[Emphasis added]

Topic: Interpretation of a statute in the context of a whole text

It is a rule in statutory construction that every part of the statute must be interpreted with
reference to the context, i.e., that every part of the statute must be considered together with
the other parts, and kept subservient to the general intent of the whole enactment. The 4

evident intent of Section 74 is to subject an elective local official to recall election once during his
term of office. Paragraph (b) construed together with paragraph (a) merely designates the period
when such elective local official may be subject of a recall election, that is, during the second year
of his term of office. Thus, subscribing to petitioner's interpretation of the phrase regular local
election to include the SK election will unduly circumscribe the novel provision of the Local
Government Code on recall, a mode of removal of public officers by initiation of the people before
the end of his term. And if the SK election which is set by R.A No. 7808 to be held every three years
from May 1996 were to be deemed within the purview of the phrase "regular local election", as
erroneously insisted by petitioner, then no recall election can be conducted rendering inutile the
recall provision of the Local Government Code.

In the interpretation of a statute, the Court should start with the assumption that the legislature
intended to enact an effective law, and the legislature is not presumed to have done a vain thing in
the enactment of a statute. An interpretation should, if possible, be avoided under which a statute or
5

provision being construed is defeated, or as otherwise expressed, nullified, destroyed, emasculated,

repealed, explained away, or rendered insignificant, meaningless, inoperative or nugatory. 6

It is likewise a basic precept in statutory construction that a statute should be interpreted in harmony
with the Constitution. Thus, the interpretation of Section 74 of the Local Government Code,
7

specifically paragraph (b) thereof, should not be in conflict with the Constitutional mandate of Section
3 of Article X of the Constitution to "enact a local government code which shall provide for a more
responsive and accountable local government structure instituted through a system of
decentralization with effective mechanism of recall, initiative, and referendum . . . ."

Moreover, petitioner's too literal interpretation of the law leads to absurdity which we cannot
countenance. Thus, in a case, the Court made the following admonition:

We admonish against a too-literal reading of the law as this is apt to constrict rather
than fulfill its purpose and defeat the intention of its authors. That intention is usually
found not in "the letter that killeth but in the spirit that vivifieth". . .
8

The spirit, rather than the letter of a law determines its construction; hence, a statute, as in
this case, must be read according to its spirit and intent.

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

Nevertheless, recall at this time is no longer possible because of the limitation stated under Section
74 (b) of the Code considering that the next regular election involving the barangay office concerned
is barely seven (7) months away, the same having been scheduled on May 1997. 9

ACCORDINGLY, the petition is hereby dismissed for having become moot and academic. The
temporary restraining order issued by the Court on January 12, 1996, enjoining the recall election
should be as it is hereby made permanent.

SO ORDERED.

Narvasa, C.J., Padilla, Regalado, Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza,
Hermosisima, Jr., Panganiban and Torres, Jr., JJ., concur.
G.R. No. L-7747 November 29, 1955

NIEVES TINIO, ET AL., plaintiffs-appellants,

vs.
GREGORIO FRANCES, ET AL., defendants and appellees.

Pedro D. Maldia for appellants.

Godofredo V. Salamanca for appellees.

LABRADOR, J.:

This action was brought by the heirs of the deceased Sergio Nicolas to annul the sale of a
homestead( a house, especially a farmhouse, and outbuildings)which had been inherited by them
from said decedent. Sergio Nicolas applied for a parcel of land containing an area of 10.0709
hectares, more or less, in San Fabian, Santo Domingo, Nueva Ecija in the year 1917. His application
was approved on June 22, 1917. He filed the corresponding final proof papers in relation to the
homestead and on June 15, 1943 the said final proof was approved by the Director of Lands, who
thereupon ordered the issuance of a patent in his favor. (Exhibit A.) At the time of the issuance of the
above order, Sergio Nicolas had already died, so the order directs the issuance of the patent to his
heirs, represented by his widow. In or about the year 1947 the heirs transferred their rights to the
homestead to the defendants. The above transfers were approved by the Secretary of Agriculture
and Commerce on March 9, 1948 and thereafter the defendants secured the issuance of a
homestead patent in their favor. Original Certificate of Title No. P-558 has been issued also in their
favor, covering the said parcel of land.

The present action was commenced on April 27, 1953 to annul the conveyances executed by
plaintiffs to defendants and to recover the land, together with the fruits of the land received by the
defendants, as damages. The defendants alleged the execution of the sales in their favor. After the
issues had been joined the parties presented an agreed statement of facts, the most pertinent parts
of which have already been set forth above. The trial court held that the transfer or conveyance
(Conveyance is the process of transferring property from one party to another)of the homestead
made by the heirs of the original homesteader was a mere transfer of the rights of the original
homesteader to the land authorized under the provisions of Section 20 of the Public Land Act (A. A.
141); therefore, as it was approved by the Secretary of Agriculture and Commerce, the conveyance
was valid. It held that section 118 of the Public Land Act is not applicable; that both Section 20 and
Section 118 being apparently conflicting, they should be reconciled subh that the prohibition
contained in section 118 should be made to apply only if the patent had already been issued,
otherwise section 20 would be absolutely useless. Against this judgment the appeal was prosecuted
in this Court.The provisions which affect the conveyance sought to be annulled are as follows:

SEC. 20. If at any time after the approval of the application and before patent is issued the
applicant shall prove to the satisfaction of the Director of Lands that he has complied with all
the requirements of the law, but cannot continue with his homestead, through no fault of his
own, and there is a bona fide purchaser for the rights and improvements of the applicant on
the land, and that the conveyance is not made for purposes of speculation, then the
applicant, with the previous approval of the Secretary of Agriculture and Commerce, may
transfer his rights to the land and improvements to any person legally qualified to apply for a
homestead, and immediately after such transfer, the purchaser shall file a homestead
 application to the land so acquired and shall succeed the original homesteader in his rights
and obligations beginning with the date of the approval of said application of the purchaser.
Any person who has so transferred his rights may not agan apply for a new homestead.
Every transfer made without the previous approval of the Secretary of Agriculture and
Commerce shall be null and void and shall result in the cancellation of the entry and the
refusal of the patent. (C. A. 141).

SEC. 118. Except in favor of the Government or any of its branches, units, or institutions,
lands acquired under free patentor homestead provisions shall not be subject to
encumbrance or alienation from the date of the approval of the application and for a term of
five years from and after the date of the issuance of the patent or grant, nor shall they
become liable to the satisfaction of any debt contracted prior to the expiration of said period,
but the improvements or crop on the land may be mortgaged or pledged to qualified persons,
associations, or corporations.

No alienation, transfer, or conveyance of any homestead after five years and before twenty-
five years after issuance of title shall be valid without the approval of the Secretary of
Agriculture and Commerce, which approval shall not be denied except on constitutional and
legal grounds. (Id.).

The legislative policy or intent is to conserve the land which a homesteader has acquired under the
Public Land Law, as above stated, for him and his heirs. The legislative policy is so strone and
consistent that the original period of five years from the issuance of the patent, within which period
conveyance or sale thereof by the homesteader or his heirs was prohibited (section 116 of Act No.
2874) is now extended to 25 years if no approval of the Secretary of Agriculture and Commerce is
secured. (Sec. 118, par. 2, C. a. No. 141, as amended by C. A. No. 456.) Provision has also been
inserted authorizing the repurchase of the homestead when properly sold by the homesteader within
five years from the date of the sale. (Sec. 119, C. A. No. 141.) This legislative intent and policy is
also sought to be carried out in Section 20, as may be seen from the fact that transfer of homestead
rights from a homesteader can only be justified upon proof satisfactory to the Director of Lands that
the homesteader cannot continue with his homestead through no fault of his own. This is not the
only requirement; a previous permission of the Secretary of Agriculture and Commerce should first
be obtained, as it is also expressly provided that any transfer made without such previous
approval is null and void and shall result in the cancellation of the entry and the refusal of the
patent." (C. A. 141). As the conveyances now in question are claimed to have been and were
evidently made under the provisions of section 20 of the Public Land Act, the important question to
be determined is whether said conveyances satisfy requirements of said section 20 of the Act.

The stipulation of facts on this point is as follows:

That the heirs of Sergio Nicolas executed in or about 1947 a transfer of homestead rights
over the land in question in favor of the defendants, which transfer was approved by the
Secretary of Agriculture and Commerce on March 9, 1948; that with the approval of said
transger of homestead rights, the defendants caused the issuance of a homestead patent in
their favor, the title being evidenced by Original Certificate of Title No. P-558 of the land
records of Nueva Ecija.

The above stipulation does not state expressly that the Director of Lands had, after investigation,
been satisfied that the applicant or homesteader "has complied with all the requirements of the law,
but cannot continue with the homestead through no fault of his own." Furthermore, according to the
stipulation, the transfer was made in 1947 and approved by the Secretary of Agriculture in 1948 so
that the conveyances were not made with with previous approval of the Secretary of Agriculture and
Commerce. So neither of the requirements of section 20 has been complied with.

But it is suggested that in accordance with the presumption of regularity of official acts the Director of
Lands must have recommended the approval of the transfer. Admitting arguendo that such is the
case, the conveyances still suffer from at least one fatal defect in that it does not appear that they
had to be made because the homesteader could not continue with his homestead through no fault of
his own. We may not and cannot indulge in presumptions on this necessary requirements, because
the order for the issuance of the patent states just the opposite. The order for the issuance of the
patent states expressly that the homesteader had already complied with all the requirements of the
law with respect to cultivation, possession and otherwise, thus:

(5) That an investigation for the purpose of verifying the statements contained in the final
proof papers was conducted by a representative of the Bureau of Lands, who found that the
applicant has fully complied with the residence and cultivation requirements of the law; and

xxx xxx xxx

. . ., the undersigned is of the opinion that the applicant has complied with the requirements
of law preliminary to the issuance of patent to the land applied for and already surveyed."
(Exhibit A.).

The order for the issuance of a patent as well as the statements of fact therein contained, as above-
quoted, conclusively disprove the existence of the requirement that the homesteader could not
continue with the homestead through no fault of his own.

In a legal sense, furthermore, when the Director of Lands issues the order for the issuance of a
patent, after the approval of the final proof, the right of the homesteader to the patent becomes
absolute and then it becomes the ministerial duty of the corresponding officials of the Government to
issue said patent. To all intents and purposes the order for the issuance of a patent is the same in
effect as the issuance of a patent itself (Balboa vs. Farrales, 51 Phil., 499). And if the law (section
118, C. A. No. 114) prohibits the sale or conveyance of a homestead after the issuance of a patent,
the prohibition should be extended, in view of the apparent policy of the law, to the date on which the
order for the issuance of the patent is issued, which in this case is June 13, 1943.

Resuming what we have stated above, we find that the conveyances made by the heirs of the
homesteader to the defendants heren in the year 1947 do not comply with the first requirements of
section 20 of the Public Land Act that the Director of Lands is satisfied from proofs submitted by the
homesteader that he (homesteader) could not continue with his homestead through no fault of his
own, and with the second that a conveyance must be made with the prior or previous approval of the
Secretary of Agriculture and Commerce; that from the date of an order for the issuance of a patent
for a homestead the homesteader to all intents and purposes is considered as having the patent
actually issued to himself, in so far as the prohibition contained in section 118 of the Public Land Act,
otherwise the intent and policy of the law may be avoided by the homesteader by postponing the
getting of his patent.

In accordance herewith the conveyances executed by the plaintiffs to the defendants are hereby
declared null and void, the transfer certificate of title issued in the name of the defendants (P-558 of
the Office of the Register of Deeds of Nueva Ecija) ordered cancelled, and the possession of the
land returned to the plaintiffs upon return to the defendants of the amounts received as price for the
sale. No damages or costs. So ordered.