EN BANC

EN BANC

[G.R. Nos. 124303-05. February 10, 1998]

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. ALEJANDRO ATOP @ “ALI,” accused-appellant.

D E C I S I O N

PANGANIBAN, J.:

The trial court sentenced the appellant to death, holding that his common-law relationship with the victim’s grandmother aggravated the penalty. We hold, however, that Sec. 11 of RA 7659 prescribes the capital penalty in rape, only “when the victim is under eighteen (18) years of age and the offender is a parent, ascendant, step-parent, guardian, relative by consanguinity or affinity within the third civil degree, or the common-law spouse of the parent of the victim,” and not by reason of any other kinship. On the other hand, “relationship” as an alternative aggravating circumstance under Art. 15 of the Revised Penal Code encompasses only “the spouse, ascendant, descendant, legitimate, natural or adopted brother or sister, and relative by affinity in the same degrees.” Outside these enumerations and consistent with the doctrine that criminal laws must be liberally construed in favor of the accused, no other relationship, kinship or association between the offender and the victim may aggravate the imposable penalty for the crime committed. The fact, then, that the offended party is the granddaughter or descendant of appellant’s live-in partner cannot justify the imposition of death upon the rapist.

The Case

This is a combined appeal from, and an automatic review of, the Joint Decision of the Regional Trial Court, Branch 12, of Ormoc City, finding Appellant Alejandro Atop, alias “Ali,” guilty beyond reasonable doubt of three (3) counts of rape and sentencing him to two (2) terms ofreclusion perpetua for the first two counts, and to death for the third.

On April 21, 1995, Provincial Prosecutor I Rosario D. Beleta filed four separate informations [1] against accused-appellant charging him with rape on three separate occasions -- on October 9, 1992, sometime in 1993 and on December 26, 1994 -- as well as with attempted rape on December 31, 1994. The informations charging rape, except for the date of commission and the age of the victim, similarly allege the following:

“That on or about the 9th day of October, 1992, at Sitio Tambunan, Brgy. Sta. Rosa, Municipality of Matag-ob, Province of Leyte, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, by means of force and intimidation, did then and there wilfully [sic], unlawfully and feloniously have carnal knowledge of the herein offended party REGINA GUAFIN, 11 years old, the accused is the live-in partner of her grandmother with whom she is living with [sic], against her will and without her consent, with the use of a knife, mashed her breast, embraced, kissed and inserted his penis over the victim’s genital organ to accomplish his lewd design, to her damage and prejudice.”

During his arraignment, appellant, assisted by Counsel de Oficio Wenceslao Vanilla of the Public Attorney’s Office, pleaded not guilty.[2]Thereafter, the cases were tried jointly. In his Decision,[3] the trial judge[4] disposed of the cases as follows:

“1. In Criminal Case No. 4627-0 finding the accused Alejandro Atop GUILTY beyond reasonable doubt of RAPE defined and penalized under Article 335 of the Revised Penal Code. Appreciating the aggravating circumstances of relationship and nighttime with no mitigating circumstance to offset any of the two, this court imposes upon the said ALEJANDRO ATOP the sentence of RECLUSION PERPETUA and to indemnify Regina Guafin the sum of THIRTY THOUSAND PESOS (P30,000.00) and to pay the costs.

2. In Criminal Case No. 4628-0 finding the accused Alejandro Atop GUILTY beyond reasonable doubt of RAPE defined and penalized under Article 335 of the Revised Penal Code. Appreciating the aggravating circumstances of relationship and nighttime with no mitigating circumstance to offset any of the two, this court imposes upon the said ALEJANDRO ATOP the sentence of RECLUSION PERPETUA and to indemnify Regina Guafin the sum of THIRTY THOUSAND PESOS (P30,000.00) and to pay the costs.

3. In Criminal Case No. 4630-0 finding the accused Alejandro Atop NOT GUILTY for insufficiency of evidence.

4. In Criminal Case No. 4629-0 finding the accused ALEJANDRO ATOP guilty beyond reasonable doubt of RAPE defined under Article 335 of the Revised Penal Code, as amended by Republic Act 7659. Appreciating the aggravating circumstances of relationship and nighttime with no mitigating circumstance to offset any of the two, this court imposes upon the said ALEJANDRO ATOP, also known as ‘Ali’, the sentence of DEATH. Further, the same Alejandro Atop is directed to indemnify Regina Guafin the sum of THIRTY THOUSAND PESOS (P30,000.00) as moral damages and to pay the costs.

By reason of the imposition of two reclusion perpetua and of the death penalties the jail warden is directed to immediately commit the person of Alejandro Atop to the National Penitentiary at Muntinlupa, Metro Manila while awaiting the review by the Supreme Court of this decision.”[5]

The FactsVersion of the Prosecution

The prosecution’s evidence is narrated by the trial court [6] as follows:

”Private complainant Regina Guafin, told the court that she is a granddaughter of Trinidad Mejos and that the accused Alejandro Atop is the common law husband of said Trinidad Atop [sic]. Her mother is a daughter of said Trinidad Atop [sic] and lives in Pangasinan. She is an illegitimate child and she does not even know her father. Since her early childhood she stayed with her grandmother Trinidad Atop [sic] and the accused at Barangay Santa Rosa, Matag-ob, Leyte. Sometime in 1991 when she was already 10 years of age the accused started having lustful desire on her. The accused then inserted his finger into her vagina. She told her grandmother about this but her grandmother did not believe her. She was then told by her grandmother, Trinidad Mejos, that what her grandfather did to her was just a manifestation of fatherly concern. She continued staying with her grandmother and her common law husband Alejandro Atop, the herein accused.

On October 9, 1992, she was called by the accused Alejandro Atop to do something for him. When she approached him the accused rushed towards her, removed her panty and inserted his male organ into her vagina. She was not able to do anything to resist him because the accused gagged her mouth and was carrying a knife with him. She was then 12 years old when the first rape was committed to her and at that time her grandmother was then attending a delivery since her grandmother was a ‘hilot’. When her grandmother returned home she told her what the accused did to her but her grandmother, again, refused to believe her. She also remember [sic] of another incident wherein she was raped again by the accused Alejandro Atop. It was in the year 1993 but she could not recall the month when it was committed. Only she and the accused were then at their house at Barangay Santa Rosa, Matag-ob, Leyte as her grandmother was at San Vicente attending to a delivery. Again, she told her grandmother about the heinous acts that the accused did to her but her Lola refused to believe her.

On December 26, 1994, the accused again raped her. She could not ask for help because her mouth was gagged by the accused. Aside from gagging her, the accused also carried a knife which he placed at his side.

On December 31, 1994, while she together with her Aunt Gloria Montealto and her two (2) nieces Rubilen and Jubilen Atop were about to go to sleep, she noticed that the accused was looking for her. Upon seeing her the accused rushed towards her and was about to lay on top of her. She kicked him. After that, the accused caressed and touched his nieces but his nieces also kicked him. Thereafter, the accused stopped molesting her and his nieces and went to sleep instead. In the following morning, January 1, 1995, she went to the barrio to go to school. She then forgot that there were no classes. She was not able to get a ride towards the school, so she went directly to the house of her grandfather Zacarias Geva. While she was at the house of her Lolo Geva, the accused arrived and immediately entered the house of her grandfather. The accused was met by Rubilen Atop who was about to box him but they immediately went out of the house and the accused followed them. The accused wanted to bring her back to their house but she refused. So, the accused pulled her. The accused kept on holding her until they reached the waiting shed were the accused smashed her to the concrete wall.

She reported the incidents of rape that happened in 1992, 1993 and 1994 only in January 1995. It took her so long to report the said incidents because she was afraid. The accused threatened to kill her should she tell anybody about the incidents. She was accompanied by her Aunts Fe Decio and Rosenda Andales in reporting the said incidents to the police. Her statement was taken by the police at the police headquarters. Thereafter, she filed a complaint with the Municipal Trial Judge of Matag-ob, Leyte. x x x In her sworn statement which was also marked as Exhibit ‘1’ for the defense, she only stated therein that what was inserted into her vagina on July 1991 was only the finger of the accused. Out of fear, she deliberately concealed from the investigator what actually had happened to her because at that time, because the accused was not yet apprehended and she was afraid that the accused would kill her. Then she filed complaints with the Office of the Provincial Prosecutor and requested the fiscal to make a re-investigation in these cases. She told the Fiscal the truth of what was done to her by the accused because at that time the accused was already arrested. x x x

x x x x x x x x x

Another prosecution witness Fe Decio, an aunt of the private offended party Regina Guafin, testified that she knows the accused Alejandro Atop, the latter being her stepfather. She pointed in court the said accused. She testified also that when her niece Regina Guafin went to her residence at Himarco, Palompon, Leyte on January 2, 1995, she noticed that Regina Guafin had abrasions on her body and was then crying. She asked her the reason why she cried and Regina told her that on January 1, 1995 the accused again tried to rape her but did not succeed because she fought back and was able to resist. The abrasions in her body was the result of the maltreatments made by the accused who forcibly pulled her back to their house. Further, Regina told her that the said accused Alejandro Atop had raped her 3 to 4 times. She was told by Regina when the said incidents happened but she forgot the actual dates that the latter told to her. She accompanied Regina to the police authorities of Matag-ob, Leyte and reported the said incidents. During the time that Regina was investigated by the police authorities, the accused had also fled. Thereafter, she submitted Regina for a medical examination at the Ormoc District Hospital. Then, Regina Guafin filed a complaint at the MCTC of Matag-ob, Leyte.

On cross examination, she testified that they offer no objection with the relationship of the accused to her mother. In fact during the time that the accused and her mother were living together, they were in good terms with the accused. She denied the fact of sending her mother to Manila for the purpose of separating her from the accused Alejandro Atop because it was only the decision of her mother to have a vacation in Manila. She testified also that the age of her mother is more than 50 years old.” [7]

The third prosecution witness, Dr. Judith V. Lomocso who was a resident gynecologist at the Ormoc District Hospital, testified that she examined Regina Guafin. Her findings were reduced in writing, as follows:

“External Findings:

1. Incised wound with scab formation (L) middle finger.2. Tenderness (L) breast.

OB-Gyne Findings:

External genetalia [sic] - grossly normal

- negative pubic hair Vaginal canal - admits 2 fingers with ease

hymen - healed laceration uterus - small LMP - December 4, 1994”[8]

Version of the Defense

Appellant denied the accusations of Guafin and imputed ill motive upon her aunts, who were the daughters of his live-in partner.[9]The trial court summed up his testimony this wise:

“Accused Alejandro Atop [then 37 years old] testified that he and Trinidad Mejos had been living together as husband and wife for about 10 years already. When they started living together, Trinidad Mejos was already a widow with eight (8) children of her previous marriage. When he started to live with Trinidad Mejos the latter’s children became mad at him because their mother was already old and he was still young. He personally knew Regina Guafin, the latter being their adopted child. Regina Guafin was still 2 years old when he and his wife took care of her. That Regina Guafin continuously resided at Sta. Rosa, Matag-ob, Leyte. The other persons who also lived with them aside from Regina Guafin, were the three sons of Trinidad and his two (2) nieces whom he took from Butuan City and sent them to school. He denied committing rape against Regina Guafin on October 9, 1992, in the year 1993 and on December 26, 1994. On December 31, 1994, while he was at his house, Regina went to the barrio proper to go to school. In the afternoon of the same date, he went to fetch Regina Guafin because at that time classes were not regular yet. At that time, the companions of Regina were Jovelyn and Rubilyn. He also denied committing an offense against Regina Guafin on December 31, 1994. He testified also that he did not evade arrest by going out of Matag-ob, Leyte because during that time he was working in Hideco as a laborer. The reason why Regina Guafin filed a case against him because the said private complainant was coached by her aunt who wanted him and his wife Trinidad to be separated.

On cross examination, he testified also that he was told by his cousin Nicolas Valencia that her [sic] wife Trinidad was prevented by her children from visiting him in jail upon her arrival from Manila.”[10]

Ruling of the Trial Court

The court a quo evaluated the testimony of the offended party in this manner:

“x x x this court observed both the complainant and the accused when both were on the witness stand. The tears that spontaneously flowed from the private complainant’s eyes and the sobs that punctuated complainant’s testimony when asked about her experience with the accused eloquently conveyed the hurt, the pain, and the anguish the private complainant has suffered and lived with during all the years. When she told the court that she was raped by the accused she said it all with candor. The mixed expression of sadness and anger shown in the private complainant’s face during her testimony convinced this court that she was telling the truth. This court then found nothing in the evidence which would indicate in any way that the said Regina Guafin was motivated in narrating to the court her ordeal other than her quest for justice. The defense’s claim that Regina was coached by her aunts to fabricate her rape story in order to force their mother Trinidad Mejos to separate from the accused is nothing but a mere speculation [upon] which this court found no probative value. This court then gives the testimony of the private offended party full faith and credit.”[11]

The trial court also ruled that the circumstances of nighttime and relationship aggravated all the three incidents of rape, but that there was no sufficient evidence proving attempted rape on December 31, 1994. Considering that the last rape occurred after the effectivity of RA 7659, the death penalty law, the court meted out the capital punishment to accused-appellant.

Issues

In his appeal[12] before us, appellant assigns the following errors:[13]

“I. The trial court erred in appreciating the circumstances of nighttime and relationship as aggravating the penalty imposable for the rape allegedly committed on October 9, 1992, in 1993 and on December 26, 1994.

“II. The trial court erred in finding accused guilty beyond reasonable doubt of the crimes charged.”

The Court’s Ruling

The appeal is partly meritorious. We find that the alleged aggravating circumstances were not duly proved.

First Issue: Nighttime and Relationship

The time-settled rule is that nocturnity, as an aggravating circumstance, must have been deliberately sought by the offender to facilitate the crime or prevent its discovery or evade his capture or facilitate his escape. [14] The culprit must have purposely taken advantage of the cover of night as an indispensable factor to attain his criminal purpose.[15]

We find merit in Appellant Atop’s contention, to which the solicitor general agrees, that the prosecution failed to prove that nighttime was deliberately sought by appellant to facilitate his dastardly acts. In fact, the prosecution failed to show that appellant consummated his carnal designs at night, except only for the December 26, 1994 incident which the victim said occurred at 11:00 p.m.[16] Much less is there any evidence substantiating the trial court’s conclusion that appellant intentionally sought the darkness to advance his criminal exploits.

Neither can we appreciate relationship as an aggravating circumstance. The scope of relationship as defined by law encompasses (1) the spouse, (2) an ascendant, (3) a descendant, (4) a legitimate, natural or adopted brother or sister, or (5) a relative by affinity in the same degree.[17] Relationship by affinity refers to a relation by virtue of a legal bond such as marriage. Relatives by affinity therefore are those commonly referred to as “in-laws,” or stepfather, stepmother, stepchild and the like; in contrast to relatives by consanguinity or blood relatives encompassed under the second, third and fourth enumeration above. The law cannot be stretched to include persons attached by common-law relations. Here, there is no blood relationship or legal bond that links the appellant to his victim. Thus, the modifying circumstance of relationship cannot be considered against him.

Neither is the following provision of Sec. 11, RA 7659 applicable:

“Sec. 11. Article 335 of the [Revised Penal] Code is hereby amended to read as follows:

‘x x x

The death penalty shall also be imposed if the crime of rape is committed with any of the following attendant circumstances:

1. when the victim is under eighteen (18) years of age and the offender is a parent, ascendant, step-parent, guardian, relative by consanguinity or affinity within the third civil degree, or the common law spouse of the parent of the victim.

x x x x x x x x x

Undisputed is the fact that appellant is not the common law spouse of the parent of the victim. He is the common law husband of the girl’sgrandmother. Needless to state, neither is appellant the victim’s “parent, ascendant, step-parent, guardian, relative by consanguinity or affinity within the third civil degree.” Hence, he is not encompassed in any of the relationships expressly enumerated in the aforecited provision.

It is a basic rule of statutory construction that penal statutes are to be liberally construed in favor of the accused.[18] Courts must not bring cases within the provision of a law which are not clearly embraced by it. No act can be pronounced criminal which is not clearly made so by statute; so, too, no person who is not clearly within the terms of a statute can be brought within them.[19] Any reasonable doubt must be resolved in favor of the accused.[20]

Second Issue: Sufficiency of Prosecution Evidence

However, we do not agree with the claim of appellant that the prosecution evidence was not sufficient to prove his guilt. In the main, appellant relies on the disparity between, on the one hand, the allegations of Regina in her sworn statement[21] executed before MCTC Judge Aquilino A. Inopiquez Jr. of Matag-ob, Leyte which merely prove acts of lasciviousness; and, on the other, her testimony in court showing three counts of rape.

Such disparity, which at first glance may raise some doubts on the truthfulness of complainant’s statements, was cogently and satisfactorily explained by her thus:

“Q x x x why did you state in your affidavit that only the finger that [sic] was inserted into your vagina?

A Because during the time of the investigation, I did not tell what was really true because he was not yet apprehended, sir.

Q So, you deliberately conceal[ed] from the investigator what actually happened out of fear?

A Yes, your Honor.

CONTINUE

PROSECUTOR

Q And when you appeared before the Office of the Prov’l. Fiscal, were you investigated?

A Yes, ma’am.

Q And did you tell the Fiscal the truth of what had this accused done to you?

A Yes, ma’am.

Q And what was that statement you have given to the Fiscal?

A I told the Fiscal the truth because the accused was already arrested.

Q And what was the truth?

A The truth that it was his penis that was inserted to my vagina.

Q How many times did the accused inserted [sic] his penis into your vagina?

A Many times ma’am but I can remember only three (3) to four (4) times.

Q And the first time that [sic] was on October 9, 1992?

A Yes, ma’am.

Q When was the second time he inserted his penis into your vagina?

A In the year 1993.

Q And the third time?

A On December 26, 1994.” [22]

From the testimony of Regina, the crimes evidently committed by appellant on the aforestated dates were consummated rapes, not merely acts of lasciviousness. Initially, she hesitated to completely divulge her ravishment by appellant because of his threats to kill her should she tell anybody of his assaults. [23] With his arrest and detention, she mustered the courage to finally and completely reveal her embarrassing story.

No simple barrio lass would so candidly admit before the public that a man who had lived as common-law husband to her grandmother had inserted his penis in her vagina for so many times in the past. It is unthinkable that complainant, a young lady of fifteen years, would allow her private parts to be examined and would withstand the rigors of a public trial -- along with the shame, humiliation and dishonor of exposing her own mortifying defilement -- if she was not in fact ravished. A careful examination of her testimony does not reveal any hint of prevarication. Rather, her straightforward and unequivocal statements, during both her direct and her cross-examinations, show indelible badges of truth. As the trial judge keenly observed, “The tears that spontaneously flowed from the private complainant’s eyes and the sobs that punctuated [her] testimony when asked about her experience with the accused eloquently conveyed the hurt, the pain, and the anguish the private complainant has suffered and lived with during all the years. When she told the court that she was raped by the accused, she said it all with candor. The mixed expression of sadness and anger shown in the private complainant’s face during her testimony convinced this court that she was telling the truth.” [24] We find it apt to say once again that when a woman, especially a minor, says that she has been raped, she says in effect all that is necessary to show that the crime was committed.[25]

Appellant’s contention that private complainant was merely induced by her aunts who had objected to his relationship with their mother, Trinidad Mejos, is a trite defense that is completely undeserving of credit. It is unnatural and unbelievable for Regina’s aunts to concoct a story of rape of their own very young niece, that would bring shame and scandal not only to her but to the entire family, especially to their mother. There could have been so many ways to alienate appellant from their mother, so many crimes to impute to him without dragging the family’s honor into it. The preposterousness of appellant’s assertion becomes more obvious in light of the fact that this case was instituted only after ten (10) years of his illegitimate union with Regina’s grandmother. If Regina’s aunts truly wanted them to discontinue such relationship, the long wait is inexplicable.

Consequently, in the face of private complainant’s positive and unequivocal testimony, appellant’s plain denial of the accusations against him cannot prevail. [26] It is well-settled that denial, if unsubstantiated by clear and convincing evidence, is a negative self-serving assertion which deserves no weight in law. [27] The recognized rule is that testimonies of rape victims who are young and immature are each worthy of full credence.[28]

Time and again, we have also held that when the question deals with the credibility of witnesses and their testimonies, the trial court’s observations and conclusions deserve great respect and are often accorded finality, unless there appears in the record some fact or circumstance of weight which the lower court may have overlooked, misunderstood or misappreciated and which, if properly considered, would alter the results of the case. [29] The trial judge has the valuable edge of observing the witness’ deportment and manner of testifying, her “furtive glance, blush of conscious shame, hesitation, flippant or sneering tone, calmness, sigh, or the scant or full realization of an oath” [30] -- all of which are useful aids for an accurate determination of a witness’ honesty and sincerity. After a thorough review of all the evidence on record, the Court finds no reason to reverse the trial court’s findings on the guilt of appellant.

Penalties Imposable

For the rape incidents on October 9, 1992 and sometime in 1993, the court a quo correctly imposed the penalty of reclusion perpetua for each of the two criminal acts. The third rape incident, however, occurred after the effectivity of RA 7659, the law which imposed the death penalty on certain heinous crimes. Under this amendatory law, the penalty for rape committed with the use of a deadly weapon is reclusion perpetua to death.[31] This provision is applicable in the instant case, since private complainant was threatened with a knife when appellant consummated his beastly acts on her.[32]

In cases where the penalty prescribed is composed of two indivisible penalties and there is neither an aggravating nor a mitigating circumstance in the commission of the felony, the lesser penalty should be applied. [33] Since there was no modifying circumstance even in the third rape, the penalty therefor should be reclusion perpetua, not the graver penalty of death as imposed by the court a quo. As earlier explained, the attendant relationships enumerated under Sec. 11 of RA 7659 do not apply either.

Consistent with prevailing jurisprudence,[34] we increase the civil indemnity imposed upon appellant by the trial court to P50,000 for each count of rape. The Court notes that, for appellant’s third conviction, the trial court ordered him to indemnify the victim in the amount of P30,000 “as moral damages.” Civil indemnity under Art. 100[35] of the Revised Penal Code is separate and distinct from moral damages under Arts. 2217 and 2219 of the Civil Code. [36] Conformably, Appellant Atop should indemnify Regina Guafin in the total amount of P150,000 for the three counts of rape -- separately from payment of moral damages which we find justified under the circumstances. The moral sufferings of private complainant were obvious during the court proceedings where, as observed by the trial judge and also noted in the transcripts, she spontaneously cried and sobbed, and showed a mixed expression of sadness, pain and anger.

WHEREFORE, the Decision appealed from is hereby AFFIRMED, with the MODIFICATION that Appellant Alejandro Atop shall not suffer the penalty of death but shall SERVE three (3) terms of reclusion perpetua, one for each of the three (3) counts of rape for which he was found GUILTY by the trial court, and is ordered to PAY Regina Guafin indemnity in the amount of P150,000 plus moral damages of P50,000.

SO ORDERED.

Narvasa, C.J., Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Francisco, Martinez, Quisumbing, andPurisima, JJ., concur.

Republic of the Philippines

SUPREME COURT

Manila

EN BANC

DECISION

October 31, 1919

G.R. No. L-14355

THE CITY OF MANILA, plaintiff-appellant,

vs.

CHINESE COMMUNITY OF MANILA, ET AL., defendants-appellees.

City Fiscal Diaz for appellant.

Crossfield and O’Brien, Williams, Ferrier and Sycip, Delgado and Delgado, Filemon Sotto, and Ramon Salinas for

appellees.

Johnson, J.:

The important question presented by this appeal is: In expropriation proceedings by the city of Manila, may the courts

inquire into, and hear proof upon, the necessity of the expropriation?

That question arose in the following manner:

On the 11th day of December, 1916, the city of Manila presented a petition in the Court of First Instance of said city,

praying that certain lands, therein particularly described, be expropriated for the purpose of constructing a public

improvement. The petitioner, in the second paragraph of the petition, alleged:

That for the purpose of constructing a public improvement, namely, the extension of Rizal Avenue, Manila, it is necessary

for the plaintiff to acquire ownership in fee simple of certain parcels of land situated in the district of Binondo of said city

within Block 83 of said district, and within the jurisdiction of this court.

The defendant, the Comunidad de Chinos de Manila [Chinese Community of Manila], answering the petition of the

plaintiff, alleged that it was a corporation organized and existing under and by virtue of the laws of the Philippine Islands,

having for its purpose the benefit and general welfare of the Chinese Community of the City of Manila; that it was the

owner of parcels one and two of the land described in paragraph 2 of the complaint; that it denied that it was either

necessary or expedient that the said parcels be expropriated for street purposes; that existing street and roads furnished

ample means of communication for the public in the district covered by such proposed expropriation; that if the

construction of the street or road should be considered a public necessity, other routes were available, which would fully

satisfy the plaintiff’s purposes, at much less expense and without disturbing the resting places of the dead; that it had a

Torrens title for the lands in question; that the lands in question had been used by the defendant for cemetery purposes;

that a great number of Chinese were buried in said cemetery; that if said expropriation be carried into effect, it would

disturb the resting places of the dead, would require the expenditure of a large sum of money in the transfer or removal of

the bodies to some other place or site and in the purchase of such new sites, would involve the destruction of existing

monuments and the erection of new monuments in their stead, and would create irreparable loss and injury to the

defendant and to all those persons owning and interested in the graves and monuments which would have to be

destroyed; that the plaintiff was without right or authority to expropriate said cemetery or any part or portion thereof for

street purposes; and that the expropriation, in fact, was not necessary as a public improvement.

The defendant Ildefonso Tambunting, answering the petition, denied each and every allegation of the complaint, and

alleged that said expropriation was not a public improvement; that it was not necessary for the plaintiff to acquire the

parcels of land in question; that a portion of the lands in question was used as a cemetery in which were the graves of his

ancestors; that monuments and tombstones of great value were found thereon; that the land had become quasi-public

property of a benevolent association, dedicated and used for the burial of the dead and that many dead were buried

there; that if the plaintiff deemed it necessary to extend Rizal Avenue, he had offered and still offers to grant a right of way

for the said extension over other land, without cost to the plaintiff, in order that the sepulchers, chapels and graves of his

ancestors may not be disturbed; that the land so offered, free of charge, would answer every public necessity on the part

of the plaintiff.

The defendant Feliza Concepcion de Delgado, with her husband, Jose Maria Delgado, and each of the other defendants,

answering separately, presented substantially the same defense as that presented by the Comunidad de Chinos de

Manila and Ildefonso Tambunting above referred to.

The foregoing parts of the defense presented by the defendants have been inserted in order to show the general

character of the defenses presented by each of the defendants. The plaintiff alleged that the expropriation was

necessary. The defendants each alleged (a) that no necessity existed for said expropriation and (b) that the land in

question was a cemetery, which had been used as such for many years, and was covered with sepulchres and

monuments, and that the same should not be converted into a street for public purposes.

Upon the issue thus presented by the petition and the various answers, the Honorable Simplicio del Rosario, judge, in a

very elucidated opinion, with very clear and explicit reasons, supported by ambulance of authorities, decided that there

was no necessity for the expropriation of the particular strip of land in question, and absolved each and all of the

defendants from all liability under the complaint, without any finding as to costs.

From that judgment the plaintiff appealed and presented the above question as its principal ground of appeal.

The theory of the plaintiff is, that once it has established the fact, under the law, that it has authority to expropriate land, it

may expropriate any land it may desire; that the only function of the court in such proceedings is to ascertain the value of

the land in question; that neither the court nor the owners of the land can inquire into the advisible purpose of purpose of

the expropriation or ask any questions concerning the necessities therefor; that the courts are mere appraisers of the land

involved in expropriation proceedings, and, when the value of the land is fixed by the method adopted by the law, to

render a judgment in favor of the defendant for its value.

That the city of Manila has authority to expropriate private lands for public purposes, is not denied. Section 2429 of Act

No. 2711 (Charter of the city of Manila) provides that “the city (Manila) . . . may condemn private property for public use.”

The Charter of the city of Manila contains no procedure by which the said authority may be carried into effect. We are

driven, therefore, to the procedure marked out by Act No. 190 to ascertain how the said authority may be exercised. From

an examination of Act No. 190, in its section 241, we find how the right of eminent domain may be exercised. Said section

241 provides that, “The Government of the Philippine Islands, or of any province or department thereof, or of any

municipality, and any person, or public or private corporation having, by law, the right to condemn private property for

public use, shall exercise that right in the manner hereinafter prescribed.”

Section 242 provides that a complaint in expropriation proceeding shall be presented; that the complaint shall state with

certainty the right of condemnation, with a description of the property sought to be condemned together with the interest

of each defendant separately.

Section 243 provides that if the court shall find upon trial that the right to expropriate the land in question exists, it shall

then appoint commissioners.

Sections 244, 245 and 246 provide the method of procedure and duty of the commissioners. Section 248 provides for an

appeal from the judgment of the Court of First Instance to the Supreme Court. Said section 248 gives the Supreme Court

authority to inquire into the right of expropriation on the part of the plaintiff. If the Supreme Court on appeal shall

determine that no right of expropriation existed, it shall remand the cause to the Court of First Instance with a mandate

that the defendant be replaced in the possession of the property and that he recover whatever damages he may have

sustained by reason of the possession of the plaintiff.

It is contended on the part of the plaintiff that the phrase in said section, “and if the court shall find the right to expropriate

exists,” means simply that, if the court finds that there is some law authorizing the plaintiff to expropriate, then the courts

have no other function than to authorize the expropriation and to proceed to ascertain the value of the land involved; that

the necessity for the expropriation is a legislative and not a judicial question.

Upon the question whether expropriation is a legislative function exclusively, and that the courts cannot intervene except

for the purpose of determining the value of the land in question, there is much legal legislature. Much has been written

upon both sides of that question. A careful examination of the discussions pro and con will disclose the fact that the

decisions depend largely upon particular constitutional or statutory provisions. It cannot be denied, if the legislature under

proper authority should grant the expropriation of a certain or particular parcel of land for some specified public purpose,

that the courts would be without jurisdiction to inquire into the purpose of that legislation.

If, upon the other hand, however, the Legislature should grant general authority to a municipal corporation to expropriate

private land for public purposes, we think the courts have ample authority in this jurisdiction, under the provisions above

quoted, to make inquiry and to hear proof, upon an issue properly presented, concerning whether or not the lands were

private and whether the purpose was, in fact, public. In other words, have no the courts in this jurisdiction the right,

inasmuch as the questions relating to expropriation must be referred to them (sec. 241, Act No. 190) for final decision, to

ask whether or not the law has been complied with? Suppose in a particular case, it should be denied that the property is

not private property but public, may not the courts hear proof upon that question? Or, suppose the defense is, that the

purpose of the expropriation is not public but private, or that there exists no public purpose at all, may not the courts make

inquiry and hear proof upon that question?

The city of Manila is given authority to expropriate private lands for public purposes. Can it be possible that said authority

confers the right to determine for itself that the land is private and that the purpose is public, and that the people of the

city of Manila who pay the taxes for its support, especially those who are directly affected, may not question one or the

other, or both, of these questions? Can it be successfully contended that the phrase used in Act No. 190, “and if the court

upon trial shall find that such right exists,” means simply that the court shall examine the statutes simply for the purpose

of ascertaining whether a law exists authorizing the petitioner to exercise the right of eminent domain? Or, when the case

arrives in the Supreme Court, can it be possible that the phrase, “if the Supreme Court shall determine that no right of

expropriation exists,” that that simply means that the Supreme Court shall also examine the enactments of the legislature

for the purpose of determining whether or not a law exists permitting the plaintiff to expropriate?

We are of the opinion that the power of the court is not limited to that question. The right of expropriation is not an

inherent power in a municipal corporation, and before it can exercise the right some law must exist conferring the power

upon it. When the courts come to determine the question, they must only find (a) that a law or authority exists for the

exercise of the right of eminent domain, but (b) also that the right or authority is being exercised in accordance with the

law. In the present case there are two conditions imposed upon the authority conceded to the City of Manila: First, the

land must be private; and, second, the purpose must be public. If the court, upon trial, finds that neither of these

conditions exists or that either one of them fails, certainly it cannot be contended that the right is being exercised in

accordance with law.

Whether the purpose for the exercise of the right of eminent domain is public, is a question of fact. Whether the land is

public, is a question of fact; and, in our opinion, when the legislature conferred upon the courts of the Philippine Islands

the right to ascertain upon trial whether the right exists for the exercise of eminent domain, it intended that the courts

should inquire into, and hear proof upon, those questions. Is it possible that the owner of valuable land in this jurisdiction

is compelled to stand mute while his land is being expropriated for a use not public, with the right simply to beg the city of

Manila to pay him the value of his land? Does the law in this jurisdiction permit municipalities to expropriate lands, without

question, simply for the purpose of satisfying the aesthetic sense of those who happen for the time being to be in

authority? Expropriation of lands usually calls for public expense. The taxpayers are called upon to pay the costs. Cannot

the owners of land question the public use or the public necessity?

As was said above, there is a wide divergence of opinion upon the authority of the court to question the necessity or

advisability of the exercise of the right of eminent domain. The divergence is usually found to depend upon particular

statutory or constitutional provisions.

It has been contended – and many cases are cited in support of that contention, and section 158 of volume 10 of Ruling

Case Law is cited as conclusive – that the necessity for taking property under the right of eminent domain is not a judicial

question. But those who cited said section evidently overlooked the section immediately following (sec. 159), which adds:

“But it is obvious that if the property is taken in the ostensible behalf of a public improvement which it can never by any

possibility serve, it is being taken for a use not public, and the owner’s constitutional rights call for protection by the

courts. While many courts have used sweeping expression in the decisions in which they have disclaimed the power of

supervising the power of supervising the selection of the sites of public improvements, it may be safely said that the

courts of the various states would feel bound to interfere to prevent an abuse of the discretion delegated by the

legislature, by an attempted appropriation of land in utter disregard of the possible necessity of its use, or when the

alleged purpose was a cloak to some sinister scheme.” (Norwich City vs. Johnson, 86 Conn., 151; Bell vs. Mattoon

Waterworks, etc. Co., 245 Ill., 544; Wheeling, etc. R. R. Co. vs. Toledo Ry. etc. Co., 72 Ohio St., 368; State vs. Stewart,

74 Wis., 620.)

Said section 158 (10 R. C. L., 183) which is cited as conclusive authority in support of the contention of the appellant,

says:

The legislature, in providing for the exercise of the power of eminent domain, may directly determine the necessity for

appropriating private property for a particular improvement for public use, and it may select the exact location of the

improvement. In such a case, it is well settled that the utility of the proposed improvement, the extent of the public

necessity for its construction, the expediency of constructing it, the suitableness of the location selected and the

consequent necessity of taking the land selected for its site, are all questions exclusively for the legislature to determine,

and the courts have no power to interfere, or to substitute their own views for those of the representatives of the people.

Practically every case cited in support of the above doctrine has been examined, and we are justified in making the

statement that in each case the legislature directly determined the necessity for the exercise of the right of eminent

domain in the particular case. It is not denied that if the necessity for the exercise of the right of eminent domain is

presented to the legislative department of the government and that department decides that there exists a necessity for

the exercise of the right in a particular case, that then and in that case, the courts will not go behind the action of the

legislature and make inquiry concerning the necessity. But, in the case of Wheeling, etc. R. R. Co. vs. Toledo, Ry, etc.,

Co. (72 Ohio St., 368 [106 Am. St. rep., 622, 628]), which was cited in support of the doctrine laid down in section 158

above quoted, the court said:

But when the statute does not designate the property to be taken nor how may be taken, then the necessity of taking

particular property is a question for the courts. Where the application to condemn or appropriate is made directly to the

court, the question (of necessity) should be raised and decided in limene.

The legislative department of the government was rarely undertakes to designate the precise property which should be

taken for public use. It has generally, like in the present case, merely conferred general authority to take land for public

use when a necessity exists therefor. We believe that it can be confidently asserted that, under such statute, the

allegation of the necessity for the appropriation is an issuable allegation which it is competent for the courts to decide.

(Lynch vs. Forbes, 161 Mass., 302 [42 Am. St. Rep., 402, 407].)

There is a wide distinction between a legislative declaration that a municipality is given authority to exercise the right of

eminent domain, and a decision by the municipality that there exist a necessity for the exercise of that right in a particular

case. The first is a declaration simply that there exist reasons why the right should be conferred upon municipal

corporation, while the second is the application of the right to a particular case. Certainly, the legislative declaration

relating to the advisability of granting the power cannot be converted into a declaration that a necessity exists for its

exercise in a particular case, and especially so when, perhaps, the land in question was not within the territorial authority

was granted.

Whether it was wise, advisable, or necessary to confer upon a municipality the power to exercise the right of eminent

domain, is a question with which the courts are not concerned. But when that right or authority is exercised for the

purpose of depriving citizens of their property, the courts are authorized, in this jurisdiction, to make inquiry and to hear

proof upon the necessity in the particular case, and not the general authority.

Volume 15 of the Cyclopedia of Law and Procedure (Cyc.), page 629, is cited as a further conclusive authority upon the

question that the necessity for the exercise of the right of eminent domain is a legislative and not a judicial question.

Cyclopedia, at the page stated, says:

In the absence of some constitutional or statutory provision to the contrary, the necessity and expediency of exercising

the right of eminent domain are questions essentially political and not judicial in their character. The determination of

those questions (the necessity and the expediency) belongs to the sovereign power; the legislative department is final

and conclusive, and the courts have no power to review it (the necessity and the expediency) . . . . It (the legislature) may

designate the particular property to be condemned, and its determination in this respect cannot be reviewed by the

courts.

The volume of Cyclopedia, above referred to, cites many cases in support of the doctrine quoted. While time has not

permitted an examination of all of said citations, many of them have been examined, and it can be confidently asserted

that said cases which are cited in support of the assertion that, “the necessity and expediency of exercising the right of

eminent domain are questions essentially political and not judicial,” show clearly and invariably that in each case the

legislature itself usually, by a special law, designated the particular case in which the right of eminent domain might be

exercised by the particular municipal corporation or entity within the state. (Eastern R. Co. vs. Boston, etc., R. Co., 11

Mass., 125 [15 Am. Rep., 13]; Brooklyn Park Com’rs vs. Armstrong, 45 N.Y., 234 [6 Am. Rep., 70]; Hairston vs. Danville,

etc. Ry. Co., 208 U. S. 598; Cincinnati vs. Louisville, etc. Ry. Co., 223 U. S., 390; U.S. vs. Chandler-Dunbar Water Power

Co., 229 U. S., 53; U.S. vs. Gettysburg, etc. Co., 160 U. S., 668; Traction Co. vs. Mining Co., 196 U.S., 239; Sears vs.

City of Akron, 246 U.S., 351 [erroneously cited as 242 U.S.].)

In the case of Traction Co. vs. Mining Co. (196 U.S., 239), the Supreme Court of the United States said: “It is erroneous

to suppose that the legislature is beyond the control of the courts in exercising the power of eminent domain, either as to

the nature of the use or the necessity to the use of any particular property. For if the use be not public or no necessity for

the taking exists, the legislature cannot authorize the taking of private property against the will of the owner,

notwithstanding compensation may be required.”

In the case of School Board of Carolina vs. Saldaña (14 Porto Rico, 339, 356), we find the Supreme Court of Porto Rico,

speaking through Justice MacLeary, quoting approvingly the following, upon the question which we are discussing: “It is

well settled that although the legislature must necessarily determine in the first instance whether the use for which they

(municipalities, etc.) attempt to exercise the power is a public one or not, their (municipalities, etc.) determination is not

final, but is subject to correction by the courts, who may undoubtedly declare the statute unconstitutional, if it shall clearly

appear that the use for which it is proposed to authorize the taking of private property is in reality not public but private.”

Many cases are cited in support of that doctrine.

Later, in the same decision, we find the Supreme Court of Porto Rico says: “At any rate, the rule is quite well settled that

in the cases under consideration the determination of the necessity of taking a particular piece or a certain amount of land

rests ultimately with the courts.” (Spring Valley etc. Co. vs. San Mateo, etc. Co., 64 Cal., 123.) .

In the case of Board of Water Com’rs., etc. vs. Johnson (86 Conn., 571 [41 L. R. A., N. S., 1024]), the Supreme Court of

Connecticut approvingly quoted the following doctrine from Lewis on Eminent Domain (3d ed.), section 599: “In all such

cases the necessity of public utility of the proposed work or improvement is a judicial question. In all such cases, where

the authority is to take property necessary for the purpose, the necessity of taking particular property for a particular

purpose is a judicial one, upon which the owner is entitled to be heard.” (Riley vs. Charleston, etc. Co., 71 S. C., 457, 489

[110 Am. St. Rep., 579]; Henderson vs. Lexington 132 Ky., 390, 403.)

The taking of private property for any use which is not required by the necessities or convenience of the inhabitants of the

state, is an unreasonable exercise of the right of eminent domain, and beyond the power of the legislature to delegate.

(Bennett vs. Marion, 106 Iowa, 628, 633; Wilson vs. Pittsburg, etc. Co., 222 Pa. St., 541, 545; Greasy, etc. Co. vs. Ely,

etc. Co., 132 Ky., 692, 697.)

In the case of New Central Coal Co. vs. George’s etc. Co. (37 Md., 537, 564), the Supreme Court of the State of

Maryland, discussing the question before us, said: “To justify the exercise of this extreme power (eminent domain) where

the legislature has left it to depend upon the necessity that may be found to exist, in order to accomplish the purpose of

the incorporation, as in this case, the party claiming the right to the exercise of the power should be required to show at

least a reasonable degree of necessity for its exercise. Any rule less strict than this, with the large and almost

indiscriminate delegation of the right to corporations, would likely lead to oppression and the sacrifice of private right to

corporate power.”

In the case of Dewey vs. Chicago, etc. Co. (184 Ill., 426, 433), the court said: “Its right to condemn property is not a

general power of condemnation, but is limited to cases where a necessity for resort to private property is shown to exist.

Such necessity must appear upon the face of the petition to condemn. If the necessary is denied the burden is upon the

company (municipality) to establish it.” (Highland, etc. Co. vs. Strickley, 116 Fed., 852, 856; Kiney vs. Citizens’ Water &

Light Co., 173 Ind., 252, 257 ; Bell vs. Mattoon Waterworks, etc. Co., 245 Ill., 544 [137 Am. St. Rep. 338].)

It is true that naby decisions may be found asserting that what is a public use is a legislative question, and many other

decisions declaring with equal emphasis that it is a judicial question. But, as long as there is a constitutional or statutory

provision denying the right to take land for any use other than a public use, it occurs to us that the question whether any

particular use is a public one or not is ultimately, at least, a judicial question. The legislative may, it is true, in effect

declare certain uses to be public, and, under the operation of the well-known rule that a statute will not be declared to be

unconstitutional except in a case free, or comparatively free, from doubt, the courts will certainly sustain the action of the

legislature unless it appears that the particular use is clearly not of a public nature. The decisions must be understood

with this limitation; for, certainly, no court of last resort will be willing to declare that any and every purpose which the

legislative might happen to designate as a public use shall be conclusively held to be so, irrespective of the purpose in

question and of its manifestly private character Blackstone in his Commentaries on the English Law remarks that, so

great is the regard of the law for private property that it will not authorize the least violation of it, even for the public good,

unless there exists a very great necessity therefor.

In the case of Wilkinson vs. Leland (2 Pet. [U.S.], 657), the Supreme Court of the United States said: “That government

can scarcely be deemed free where the rights of property are left solely defendant on the legislative body, without

restraint. The fundamental maxims of free government seem to require that the rights of personal liberty and private

property should be held sacred. At least no court of justice in this country would be warranted in assuming that the power

to violate and disregard them – a power so repugnant to the common principles of justice and civil liberty – lurked in any

general grant of legislature authority, or ought to be implied from any general expression of the people. The people ought

no to be presumed to part with rights so vital to their security and well-being without very strong and direct expression of

such intention.” (Lewis on Eminent Domain, sec. 603; Lecoul vs. Police Jury 20 La. Ann., 308; Jefferson vs. Jazem, 7 La.

Ann., 182.)

Blackstone, in his Commentaries on the English Law said that the right to own and possess land – a place to live

separate and apart from others – to retain it as a home for the family in a way not to be molested by others – is one of the

most sacred rights that men are heirs to. That right has been written into the organic law of every civilized nation. The

Acts of Congress of July 1, 1902, and of August 29, 1916, which provide that “no law shall be enacted in the Philippine

Islands which shall deprive any person of his property without due process of law,” are but a restatement of the time-

honored protection of the absolute right of the individual to his property. Neither did said Acts of Congress add anything to

the law already existing in the Philippine Islands. The Spaniard fully recognized the principle and adequately protected

the inhabitants of the Philippine Islands against the encroachment upon the private property of the individual. Article 349

of the Civil Code provides that: “No one may be deprived of his property unless it be by competent authority, for some

purpose of proven public utility, and after payment of the proper compensation Unless this requisite (proven public utility

and payment) has been complied with, it shall be the duty of the courts to protect the owner of such property in its

possession or to restore its possession to him , as the case may be.”

The exercise of the right of eminent domain, whether directly by the State, or by its authorized agents, is necessarily in

derogation of private rights, and the rule in that case is that the authority must be strictly construed. No species of

property is held by individuals with greater tenacity, and none is guarded by the constitution and laws more sedulously,

than the right to the freehold of inhabitants. When the legislature interferes with that right, and, for greater public

purposes, appropriates the land of an individual without his consent, the plain meaning of the law should not be enlarged

by doubtly interpretation. (Bensely vs. Mountainlake Water Co., 13 Cal., 306 and cases cited [73 Am. Dec., 576].)

The statutory power of taking property from the owner without his consent is one of the most delicate exercise of

government authority. It is to be watched with jealous scrutiny. Important as the power may be to the government, the

inviolable sanctity which all free constitutions attach to the right of property of the citizens, constrains the strict

observance of the substantial provisions of the law which are prescribed as modes of the exercise of the power, and to

protect it from abuse. Not only must the authority of municipal corporations to take property be expressly conferred and

the use for which it is taken specified, but the power, with all constitutional limitation and directions for its exercise, must

be strictly pursued. (Dillon on Municipal Corporations [5th Ed.], sec. 1040, and cases cited; Tenorio vs. Manila Railroad

Co., 22 Phil., 411.)

It can scarcely be contended that a municipality would be permitted to take property for some public use unless some

public necessity existed therefor. The right to take private property for public use originates in the necessity, and the

taking must be limited by such necessity. The appellant contends that inasmuch as the legislature has given it general

authority to take private property for public use, that the legislature has, therefore, settled the question of the necessity in

every case and that the courts are closed to the owners of the property upon that question. Can it be imagined, when the

legislature adopted section 2429 of Act No. 2711, that it thereby declared that it was necessary to appropriate the

property of Juan de la Cruz, whose property, perhaps, was not within the city limits at the time the law was adopted? The

legislature, then, not having declared the necessity, can it be contemplated that it intended that a municipality should be

the sole judge of the necessity in every case, and that the courts, in the face of the provision that “if upon trial they shall

find that a right exists,” cannot in that trial inquire into and hear proof upon the necessity for the appropriation in a

particular case?

The Charter of the city of Manila authorizes the taking of private property for public use. Suppose the owner of the

property denies and successfully proves that the taking of his property serves no public use: Would the courts not be

justified in inquiring into that question and in finally denying the petition if no public purpose was proved? Can it be denied

that the courts have a right to inquire into that question? If the courts can ask questions and decide, upon an issue

properly presented, whether the use is public or not, is not that tantamount to permitting the courts to inquire into the

necessity of the appropriation? If there is no public use, then there is no necessity, and if there is no necessity, it is

difficult to understand how a public use can necessarily exist. If the courts can inquire into the question whether a public

use exists or not, then it seems that it must follow that they can examine into the question of the necessity.

The very foundation of the right to exercise eminent domain is a genuine necessity, and that necessity must be of a public

character. The ascertainment of the necessity must precede or accompany, and not follow, the taking of the land.

(Morrison vs. Indianapolis, etc. Ry. Co., 166 Ind., 511; Stearns vs. Barre, 73 Vt., 281; Wheeling, etc. R. R. Co. vs. Toledo,

Ry. etc. Co., 72 Ohio St., 368.)

The general power to exercise the right of eminent domain must not be confused with the right to exercise it in a particular

case. The power of the legislature to confer, upon municipal corporations and other entities within the State, general

authority to exercise the right of eminent domain cannot be questioned by the courts, but that general authority of

municipalities or entities must not be confused with the right to exercise it in particular instances. The moment the

municipal corporation or entity attempts to exercise the authority conferred, it must comply with the conditions

accompanying the authority. The necessity for conferring the authority upon a municipal corporation to exercise the right

of eminent domain is admittedly within the power of the legislature. But whether or not the municipal corporation or entity

is exercising the right in a particular case under the conditions imposed by the general authority, is a question which the

courts have the right to inquire into.

The conflict in the authorities upon the question whether the necessity for the exercise of the right of eminent domain is

purely legislative and not judicial, arises generally in the wisdom and propriety of the legislature in authorizing the

exercise of the right of eminent domain instead of in the question of the right to exercise it in a particular case. (Creston

Waterworks Co. vs. McGrath, 89 Iowa, 502.)

By the weight of authorities, the courts have the power of restricting the exercise of eminent domain to the actual

reasonable necessities of the case and for the purposes designated by the law. (Fairchild vs. City of St. Paul. 48 Minn.,

540.)

And, moreover, the record does not show conclusively that the plaintiff has definitely decided that their exists a necessity

for the appropriation of the particular land described in the complaint. Exhibits 4, 5, 7, and E clearly indicate that the

municipal board believed at one time that other land might be used for the proposed improvement, thereby avoiding the

necessity of distributing the quiet resting place of the dead.

Aside from insisting that there exists no necessity for the alleged improvements, the defendants further contend that the

street in question should not be opened through the cemetery. One of the defendants alleges that said cemetery is public

property. If that allegations is true, then, of course, the city of Manila cannot appropriate it for public use. The city of

Manila can only expropriate private property.

It is a well known fact that cemeteries may be public or private. The former is a cemetery used by the general community,

or neighborhood, or church, while the latter is used only by a family, or a small portion of the community or neighborhood.

(11 C. J., 50.)

Where a cemetery is open to public, it is a public use and no part of the ground can be taken for other public uses under a

general authority. And this immunity extends to the unimproved and unoccupied parts which are held in good faith for

future use. (Lewis on Eminent Domain, sec. 434, and cases cited.)

The cemetery in question seems to have been established under governmental authority. The Spanish Governor-

General, in an order creating the same, used the following language:

The cemetery and general hospital for indigent Chinese having been founded and maintained by the spontaneous and

fraternal contribution of their protector, merchants and industrials, benefactors of mankind, in consideration of their

services to the Government of the Islands its internal administration, government and regime must necessarily be

adjusted to the taste and traditional practices of those born and educated in China in order that the sentiments which

animated the founders may be perpetually effectuated.

It is alleged, and not denied, that the cemetery in question may be used by the general community of Chinese, which fact,

in the general acceptation of the definition of a public cemetery, would make the cemetery in question public property. If

that is true, then, of course, the petition of the plaintiff must be denied, for the reason that the city of Manila has no

authority or right under the law to expropriate public property.

But, whether or not the cemetery is public or private property, its appropriation for the uses of a public street, especially

during the lifetime of those specially interested in its maintenance as a cemetery, should be a question of great concern,

and its appropriation should not be made for such purposes until it is fully established that the greatest necessity exists

therefor.

While we do not contend that the dead must not give place to the living, and while it is a matter of public knowledge that

in the process of time sepulchres may become the seat of cities and cemeteries traversed by streets and daily trod by the

feet of millions of men, yet, nevertheless such sacrifices and such uses of the places of the dead should not be made

unless and until it is fully established that there exists an eminent necessity therefor. While cemeteries and sepulchres

and the places of the burial of the dead are still within

the memory and command of the active care of the living; while they are still devoted to pious uses and sacred regard, it

is difficult to believe that even the legislature would adopt a law expressly providing that such places, under such

circumstances, should be violated.

In such an appropriation, what, we may ask, would be the measure of damages at law, for the wounded sensibilities of

the living, in having the graves of kindred and loved ones blotted out and desecrated by a common highway or street for

public travel? The impossibility of measuring the damage and inadequacy of a remedy at law is too apparent to admit of

argument. To disturb the mortal remains of those endeared to us in life sometimes becomes the sad duty of the living;

but, except in cases of necessity, or for laudable purposes, the sanctity of the grave, the last resting place of our friends,

should be maintained, and the preventative aid of the courts should be invoked for that object. (Railroad Company vs.

Cemetery Co., 116 Tenn., 400; Evergreen Cemetery Association vs. The City of New Haven, 43 Conn., 234; Anderson

vs. Acheson, 132 Iowa, 744; Beatty vs. Kurtz, 2 Peters, 566.)

In the present case, even granting that a necessity exists for the opening of the street in question, the record contains no

proof of the necessity of opening the same through the cemetery. The record shows that adjoining and adjacent lands

have been offered to the city free of charge, which will answer every purpose of the plaintiff.

For all of the foregoing, we are fully persuaded that the judgment of the lower court should be and is hereby affirmed, with

costs against the appellant. So ordered.

Arellano, C.J., Torres, Araullo and Avanceña, JJ., concur.

Separate Opinions

MALCOLM, J., concurring:

The Government of the Philippine Islands is authorized by the Philippine Bill to acquire real estate for public use by the

exercise of the right of eminent domain. (Act of Congress of July 1, 1902, sec. 63.) A portion of this power has been

delegated by the Philippine Legislature to the city of Manila, which is permitted to “condemn private property for public

use.” (Administrative Code of 1917, sec. 2429.) The Code of Civil Procedure, in prescribing how the right of eminent

domain may be exercised, also limits the condemnation to “private property for public use.” (Sec. 241.) As under the facts

actually presented, there can be no question that a public street constitutes a public use, the only remaining question is

whether or not the Chinese Cemetery and the other property here sought to be taken by the exercise of the right of

eminent domain is “private property.”

As narrowing our inquiry still further, let it be noted that cemeteries are of two classes, public and private. A public

cemetery is one used by the general community, or neighborhood, or church; while a private cemetery is one used only

by a family, or small portion of a community. (Lay vs. State, 12 Ind. App., 362; Cemetery Association vs. Meninger [1875],

14 Kan., 312.) Our specific question, then, is, whether the Chinese Cemetery in the city of Manila is a public, or a private

graveyard. If it be found to be the former, it is not subject to condemnation by the city of Manila; if it be found to be the

latter, it is subject to condemnation.

The Chinese Cemetery of Manila was established during the Spanish administration in the Philippines by public spirited

Chinese. The order of the Governor-General giving governmental recognition to the cemetery reads as follows: “The

cemetery and general hospital for indigent Chinese having been founded and maintained by the spontaneous and

fraternal contribution of their protectors, merchants and industrials, benefactors of mankind, in consideration of their

services to the Government of the Islands, its internal administration, government and regime, must necessarily be

adjusted to the taste and traditional practices of those born and educated in China in order that the sentiments which

animated the founders may be perpetually effectuated.” Sometimes after the inauguration of the new regime in the

Philippines, a corporation was organized to control the cemetery, and a Torrens title for the lands in question was

obtained.

From the time of its creation until the present the cemetery has been used by the Chinese community for the burial of

their dead. It is said that not less than four hundred graves, many of them with handsome monuments, would be

destroyed by the proposed street. This desecration is attempted as to the las t resting places of the dead of a people who,

because of their peculiar and ingrained ancestral workship, retain more than the usual reverence for the departed. These

facts lead us straight to the conclusion that the Chinese Cemetery is not used by a family or a small portion of a

community but by a particular race long existing in the country and of considerable numbers. The case, then, is one of

where the city of Manila, under a general authority permitting it to condemn private property for public use, is attempting

to convert a property already dedicated to a public use to an entirely different public use; and this, not directly pursuant to

legislative authority, but primarily through the sole advice of the consulting architect.

Two well considered decisions coming from the American state courts on almost identical facts are worthy of our

consideration. The first is the case of The Evergreen Cemetery Association vs. The City of New Haven ([1875], 43 Conn.,

234), of cited by other courts. Here the City of New Haven, Connecticut, under the general power conferred upon it to lay

out, construct, and maintain all necessary highways within its limits, proceeded to widen and straighten one of its streets

and in so doing took a small piece of land belonging to the Evergreen Cemetery Association. This association was

incorporated under the general statute. The city had no special power to take any part of the cemetery for such purposes.

It was found that the land taken was needed for the purposes of the cemetery and was not needed for the purpose of

widening and straightening the avenue. The court said that it is unquestionable that the Legislature has the power to

authorize the taking of land already applied to one public use and devote it to another. When the power is granted to

municipal or private corporations in express words, no question can arise. But, it was added, “The same land cannot

properly be used for burial lots and for a public highway at the same time. . . . Land therefore applied to one use should

not be taken for the other except in cases on necessity. . . . There is no difficulty in effecting the desired improvement by

taking land on the other side of the street. . . . The idea of running a public street, regardless of graves, monuments, and

the feelings of the living, through one of our public cemeteries, would be shocking to the moral sense of the community,

and would not be tolerated except upon the direst necessity.” It was then held that land already devoted to a public use

cannot be taken by the public for another use which is inconsistent with the first, without special authority from the

Legislature, or authority granted by necessary and reasonable implication.

The second decision is that of Memphis State Line Railroad Company vs. Forest Hill Cemetery Co. ([1906], 116 Tenn.,

400.) Here the purpose of the proceedings was to condemn a right of way for the railway company through the Forest Hill

Cemetery. The railroad proposed to run through the southeast corner of the cemetery where no bodies were interred. The

cemetery had been in use for about eight years, and during this period thirteen hundred bodies had been buried therein.

The cemetery was under the control of a corporation which, by its character, held itself out as being willing to sell lots to

any one who applies therefor and pays the price demanded, except to members of the Negro race.

It was found that there were two other routes along which the railroad might be located without touching the cemetery,

while the present line might be pursued without interfering with Forest Hill Cemetery by making a curve around it. In the

court below the railroad was granted the right of condemnation through the cemetery and damages were assessed. On

appeal, the certiorari applied for was granted, and the supersedeas awarded. The court, in effect, found that the land of

the Cemetery Company was devoted to a public purpose, and that under the general language of the Tennessee statute

of eminent domain it could not be taken for another public purpose. The court said that in process of time the sepulchres

of the dead “are made the seats of cities, and are traversed by streets, and daily trodden by the feet of man. This is

inevitable in the course of ages. But while these places are yet within the memory and under the active care of the living,

while they are still devoted to pious uses, they are sacred, and we cannot suppose that the legislature intended that they

should be violated, in the absence of special provisions upon the subject authorizing such invasion, and indicating a

method for the disinterment, removal, and reinterment of the bodies buried, and directing how the expense thereof shall

be borne.” Two members of the court, delivering a separate concurring opinion, concluded with this significant and

eloquent sentence: “The wheels of commerce must stop at the grave.”

For the foregoing reasons, and for others which are stated in the principal decision, I am of the opinion that the judgment

of the lower court should be affirmed.

STREET, J., dissenting:

It may be admitted that, upon the evidence before us, the projected condemnation of the Chinese Cemetery is

unnecessary and perhaps ill-considered. Nevertheless I concur with Justice Moir in the view that the authorities of the city

of Manila are the proper judges of the propriety of the condemnation and that this Court should have nothing to do with

the question of the necessity of the taking.

MOIR, J., dissenting:

I dissent from the majority opinion in this case, which has not yet been written, and because of the importance of the

question involved, present my dissent for the record.

This is an action by the city of Manila for the expropriation of land for an extension of Rizal Avenue north. The petition for

condemnation was opposed by the “Comunidad de Chinos de Manila” and Ildefonso Tambunting and various other who

obtained permission of the trial court to intervene in the case.

All of the defendants allege in their opposition that the proposed extension of Rizal Avenue cuts through a part of the

Chinese Cemetery, North of Manila, and necessitates the destruction of many monuments and the removal of many

graves.

The Court of First Instance of Manila, Honorable S. del Rosario, judge after hearing the parties, decided that there was no

need for constructing the street as and where proposed by the city, and dismissed the petition.

The plaintiff appealed and sets up the following errors:

1. The court erred in deciding that the determination of the necessity and convenience of the expropriation of the lands of

the defendants lies with the court and not with the Municipal Board of the city of Manila.

2. The court erred in permitting the presentation of proofs over the objection and exception of the plaintiff tending to

demonstrate the lack of necessity of the projected street and the need of the lands in question.

3. The court erred in declaring that the plaintiff had no right to expropriate the lands in question.

4. The court erred in dismissing the complaint.

The right of the plaintiff to expropriate property for public use cannot be denied. The “right of eminent domain is inherent

in all sovereignties and therefore would exist without any constitutional recognition . . . . The right of eminent domain

antedates constitutions . . . . The right can only be denied or restricted by fundamental law and is right inherent in

society.” (15 Cyc., pp. 557-8.) .

This general right was recognized in the Philippine Code of Civil Procedure effective October 1st, 1901, which prescribed

the manner of exercising the right. (Sections 241 et seq.)

It was further recognized in the Organic Act of July 1st, 1902, which provides in section 74 “that the Government of the

Philippine Islands may grant franchises . . . including the authority to exercise the right of eminent domain for the

construction and operation of works of public utility and service, and may authorize said works to be constructed and

maintained over and across the public property of the United States including . . . reservations.” This provisions is

repeated in the Jones Law of August, 1916.

The legislature of the Islands conferred the right on the city of Manila. (Section 2429, Administrative Code of 1917;

section 2402, Administrative Code of 1916.)

Clearly having the right of expropriation, the city of Manila selected the line of its street and asked the court by proper

order to place the plaintiff in possession of the land described in the complaint, and to appoint Commissioners to inspect

the property, appraise the value, and assess the damages. Instead of doing so, the court entered upon the question of

the right of the city to take the property and the necessity for the taking.

The court says:

The controversy relates to whether or not the Chinese Cemetery, where a great majority of this race is buried and other

persons belonging to other nationalities have been formerly inhumed, is private or public; whether or not said cemetery, in

case it is public, would be susceptible to expropriation for the purpose of public improvements proposed by the city of

Manila; whether or not the latter is justified of the necessity and expediency of similar expropriation before its right to the

same would be upheld by the courts of justice; and whether or not the appreciation of said necessity pertains to the

legislative or the judicial department before which the expropriation proceedings have been brought.

Relative to the first point, it is not necessary for the court to pass upon its consideration, in view of the conclusion it has

arrived at the appreciation of the other points connected with each other.

From the testimony of two reputable engineers produced by some of the defendants, it appears that the land chosen by

the plaintiff for the extension of Rizal Avenue to the municipality of Caloocan is not the best or the less expensive,

although upon it there may be constructed a straight road, without curves or winding; but that in order to construct said

road upon said land, the city of Manila would have to remove and transfer to other places about four hundred graves and

monuments, make some grubbings, undergo some leveling and build some bridges – the works thereon, together with

the construction of the road and the value of the lands expropriated, would mean an expenditure which will not be less

than P180,000.

Beside that considerable amount, the road would have a declivity of 3 per cent which, in order to cover a distance of one

kilometer, would require an energy equivalent to that which would be expanded in covering a distance of two and one-half

kilometers upon a level road.

On the other hand, if the road would be constructed with the deviation proposed by Ildefonso Tambunting, one of the

defendants, who even offered to donate gratuitously to the city of Manila part of the land upon which said road will have to

be constructed, the plaintiff entity would be able to save more than hundreds of thousand of pesos, which can be invested

in other improvements of greater pressure and necessity for the benefit of the taxpayers; and it will not have to employ

more time and incur greater expenditures in the removal and transfer of the remains buried in the land of the Chinese

Community and of Sr. Tambunting, although with the insignificant disadvantage that the road would be little longer by a

still more insignificant extension of 426 meters and 55 centimeters less than one-half kilometer, according to the plan

included in the records; but it would offer a better panorama to those who would use it, and who would not have to

traverse in their necessary or pleasure-making trips or walks any cemetery which, on account of its nature, always

deserves the respect of the travellers. It should be observed that the proposed straight road over the cemetery, which the

city of Manila is proposing to expropriate, does not lead to any commercial, industrial, or agricultural center, and if with

said road it is endeavored to benefit some community or created interest, the same object may be obtained by the

proposed deviation of the road by the defendants. The road traced by the plaintiffs has the disadvantage that the lands on

both sides thereof would not serve for residential purposes, for the reason that no one has the pleasure to construct

buildings upon cemeteries, unless it be in very overcrowded cities, so exhausted of land that every inch thereof

represents a dwelling house.

And it is against the ruling, that it lies with the court to determine the necessity of the proposed street and not with the

municipal board, that the appellant directs its first assignment of error.

It is a right of the city government to determine whether or not it will construct streets and where, and the court’s sole duty

was to see that the value of the property was paid the owners after proper legal proceedings ascertaining the value.

The law gives the city the right to take private property for public use. It is assumed it is unnecessary to argue that a

public road is a public use.

But it is argued that plaintiff must show that it is necessary to take this land for a public improvement. The law does not so

read, and it is believed that the great weight of authority, including the United States Supreme Court, is against the

contention.

The question of necessity is distinct from the question of public use, and former question is exclusively for the legislature,

except that if the constitution or statute authorizes the taking of property only in cases of necessity, then the necessity

becomes a judicial question. (McQuillen Municipal Corporations, Vol. IV, pp. 3090-3091.)

In the absence of some constitutional or statutory provision to the contrary, the necessity and expediency of exercising

the right of eminent domain are questions essentially political and not judicial in their character. The determination of

those questions belongs to the sovereign power; the legislative determination is final and conclusive, and the courts have

no power to review it. It rests with the legislature not only to determine when the power of eminent domain may be

exercised, but also the character, quality, method, and extent of such exercise. And this power is unqualified, other than

by the necessity of providing that compensation shall be made. Nevertheless, under the express provisions of the

constitution of some states the question of necessity is made a judicial one, to be determined by the courts and not by the

legislature.

While the legislature may itself exercise the right of determining the necessity for the exercise of the power of eminent

domain, it may, unless prohibited by the constitution, delegate this power to public officers or to private corporations

established to carry on enterprises in which the public are interested, and their determination that a necessity for the

exercise of the power exists is conclusive. There is no restraint upon the power except that requiring compensation to be

made. And when the power has been so delegated it is a subject of legislative discretion to determine what prudential

regulations shall be established to secure a discreet and judicious exercise of the authority. It has been held that in the

absence of any statutory provision submitting the matter to a court or jury the decision of the question of necessity lies

with the body of individuals to whom the state has delegated the authority to take, and the legislature may be express

provision confer this power on a corporation to whom the power of eminent domain is delegated unless prohibited by the

constitution. It is of course competent for the legislature to declare that the question shall be a judicial one, in which case

the court and not the corporation determines the question of necessity. (15 Cyc., pp. 629-632.)

To the same effect is Lewis on Eminen Domain (3d Edition, section 597).

I quote from the notes to Vol. 5, Encyclopedia of United States Supreme Court Reports, p. 762, as follows:

Neither can it be said that there is any fundamental right secured by the constitution of the United States to have the

questions of compensation and necessity both passed upon by one and the same jury. In many states the question of

necessity is never submitted to the jury which passes upon the question of compensation. It is either settled affirmatively

by the legislature, or left to the judgment of the corporation invested with the right to take property by condemnation. The

question of necessity is not one of a judicial character, but rather one for determination by the lawmaking branch of the

government. (Boom Co. vs. Patterson, 98 U.S., 403, 406 [25 L. ed., 206]; United States vs. Jones, 109 U.S., 513 [27 L.

ed., 1015]; Backus vs. Fort Street Union Depot Co., 169 U.S., 557, 568 [42 L. ed., 853].)

Speaking generally, it is for the state primarily and exclusively, to declare for what local public purposes private property,

within its limits may be taken upon compensation to the owner, as well as to prescribe a mode in which it may be

condemned and taken. (Madisonville Tract. Co. vs. St. Bernard Min. Co., 196 U.S., 239, 252 [49 L. ed., 462].)

Courts have no power to control the legislative authority in the exercise of their right to determine when it is necessary or

expedient to condemn a specific piece of property for public purposes. (Adirondack R. Co. vs. New York States, 176 U.S.,

335 [44 L. ed., 492].)

10 R. C. L. (p. 183), states the law as follows:

158. Necessity for taking ordinarily not judicial question. – The legislature, in providing for the exercise the power of

eminent domain, may directly determine the necessity for appropriating private property for a particular improvement or

public use, and it may select the exact location of the improvement. In such a case, it is well settled that the utility of the

proposed improvement, the extent of the public necessity for its construction, the expediency of constructing it, the

suitableness of the location selected and the consequent necessity of taking the land selected for its site, are all

questions exclusively for the legislature to determine, and the courts have no power to interfere, or to substitute their own

views for these of the representatives of the people. Similarly, when the legislature has delegated the power of eminent

domain to municipal or public service corporation or other tribunals or bodies, and has given them discretion as to when

the power is to be called into exercise and to what extent, the court will not inquire into the necessity or propriety of the

taking.

The United States Supreme Court recently said:

The uses to which this land are to be put are undeniably public uses. When that is the case the propriety or expediency of

the appropriation cannot be called in question by any other authority. (Cinnati vs. S. & N. R. R. Co., 223 U.S., 390,

quoting U.S. vs. Jones, 109, U.S., 519.)

And in Sears vs. City of Akron (246 U.S., 242), decided March 4th, 1918, it said:

Plaintiff contends that the ordinance is void because the general statute which authorized the appropriation violates both

Article 1, paragraph 10, of the Federal Constitution, and the Fourteenth Amendment, in that it authorizes the municipality

to determine the necessity for the taking of private property without the owners having an opportunity to be hear as to

such necessity; that in fact no necessity existed for any taking which would interfere with the company’s project; since the

city might have taken water from the Little Cuyahoga or the Tuscarawas rivers; and furthermore, that it has taken ten

times as much water as it can legitimately use. It is well settled that while the question whether the purpose of a taking is

a public one is judicial (Hairston vs. Danville & W. R. Co., 208 U.S. 598 [52 L. ed., 637; 28 Sup. Ct. Rep., 331; 13 Ann.

Cas., 1008]), the necessity and the proper extent of a taking is a legislative question. (Shoemaker vs. United States, 147

U.S., 282, 298 [57 L. ed., 170, 184; 13 Supt. Ct. Rep., 361]; United States vs. Gettysburg Electric R. Co., 160 U.S. 668,

685 [40 L. ed., 576, 582; 16 Sup. Ct. Rep., 427]; United States vs. Chandler-Dunbar Water Power Co., 229 U.S., 53, 65

[57 L. ed., 1063, 1076; 33 Sup. Ct. Rep., 667].)

I think the case should be decided in accordance with foregoing citations, but one other point has been argued so

extensively that it ought to be considered.

It is contended for the defense that this Chinese Cemetery is a public cemetery and that it cannot therefore be taken for

public use. In its answer the “Comunidad de Chinos de Manila” says it is “a corporation organized and existing under and

by virtue of the laws of the Philippine Islands,” and that it owns the land which plaintiff seeks to acquire. The facts that it is

private corporation owning land would seem of necessity to make the land it owns private land. The fact that it belongs to

the Chinese community deprives it of any public character.

But admitting that it is a public cemetery, although limited in its use to the Chinese Community of the city of Manila, can it

not be taken for public use? Must we let the reverence we feel for the dead and the sanctity of their final resting-place

obstruct the progress of the living? It will be instructive to inquire what other jurisdictions have held on that point.

On the Application of Board of Street Openings of New York City to acquire St. Johns Cemetery (133 N.Y., 329) the court

of appeal said:

. . . The board instituted this proceeding under the act to acquire for park purposes the title to land below One Hundred

and Fifty-fifth street known as St. John’s cemetery which belonged to a religious corporation in the city of New York,

commonly called Trinity Church. It was established as a cemetery as early as 1801, and used for that purpose until 1839,

during which time about ten thousand human bodies had been buried therein. In 1839 an ordinance was passed by the

city of New York forbidding interments south of Eighty-sixth street, and since that time no interments have been made in

the cemetery, but Trinity Church has preserved and kept it in order and prevented any disturbance thereof.

It is contended on behalf of Trinity Church that under the general authority given by statute of 1887, this land which had

been devoted to cemetery purposes could not be taken for a park. The authority conferred upon the board by the act is

broad and general. It is authorized to take for park purposes any land south of One Hundred and Fifty-fifth street. . . . .

The fact that lands have previously been devoted to cemetery purposes does not place them beyond the reach of the

power of eminent domain. That is an absolute transcendent power belonging to the sovereign which can be exercised for

the public welfare whenever the sovereign authority shall determine that a necessity for its exercise exists. By its

existence the homes and the dwellings of the living, and the resting-places of the dead may be alike condemned.

It seems always to have been recognized in the laws of this state, that under the general laws streets and highways could

be laid out through cemeteries, in the absence of special limitation or prohibition. . . .

In Re Opening of Twenty-second Street (102 Penn. State Reports, 108) the Supreme Court of the State said:

This was an action for the opening of a street through a cemetery in the City of Philadelphia. It was contended for the

United American Mechanics and United Daughters of America Cemetery Association that by an act of the legislature of

the State approved March 20th, 1849, they were forever exempt from the taking of any their property for streets, roads or

alleys and this Act was formally accepted by the Cemetery Company on April 9th, 1849, and there was, therefore, a

contract between the Cemetery Company and the State of Pennsylvania, which would be violated by the taking of any

part of their property for street purposes. It was further contended that there were 11,000 persons buried in the cemetery.

The court held that property and contracts of all kinds must yield to the demand of the sovereign and that under the power

of eminent domain all properties could be taken, and that if there was a contract between the State of Pennsylvania and

the Cemetery Association, the contract itself could be taken for public use, and ordered the opening of the street through

the cemetery.

In Vol. 5, Encyclopedia of United States Supreme Court Reports (p. 759), it is said:

Although it has been held, that where a state has delegated the power of eminent domain to a person or corporation and

where by its exercise lands have been subject to a public use, they cannot be applied to another public use without

specific authority expressed or implied to that effect, yet, the general rule seems to be that the fact that property is already

devoted to a public use, does not exempt it from being appropriated under the right of eminent domain but it may be so

taken for a use which is clearly superior or paramount to the one to which it is already devoted. (Citing many United

States Supreme Court decisions.)

A few cases have been cited where the courts refused to allow the opening of streets through cemeteries, but in my

opinion they are not as well considered as the cases and authorities relied upon herein.

The holding of this court in this case reverses well settled principles of law of long standing and almost universal

acceptance.

The other assignments of error need not be considered as they are involved in the foregoing.

The decision should be reversed and the record returned to the Court of First Instance with instructions to proceed with

the case in accordance with this decision.

SECOND DIVISION

[G.R. No. 168661, October 26, 2007]

ESTATE OF THE LATE JESUS S. YUJUICO, REPRESENTED BY ADMINISTRATORS BENEDICTO V. YUJUICO AND EDILBERTO V. YUJUICO; AND AUGUSTO Y. CARPIO, PETITIONERS, VS. REPUBLIC OF THE PHILIPPINES AND THE COURT OF APPEALS, RESPONDENTS.

D E C I S I O N

VELASCO JR., J.:

In 1973, Fermina Castro filed an application for the registration and confirmation of her title over a parcel of land with an area of 17,343 square meters covered by plan (LRC) Psu-964 located in the Municipality of Parañaque, Province of Rizal (now Parañaque City), in the Pasig-Rizal Court of First Instance (CFI), Branch 22. The application was docketed LRC Case No. N-8239. The application was opposed by the Office of the Solicitor General (OSG) on behalf of the Director of Lands, and by Mercedes Dizon, a private party. Both oppositions were stricken from the records since the opposition of Dizon was filed after the expiration of the period given by the court, and the opposition of the Director of Lands was filed after the entry of the order of general default. After considering the evidence, the trial court rendered its April 26, 1974 Decision. The dispositive portion reads:WHEREFORE, the Court hereby declares the applicant, Fermina Castro, of legal age, single, Filipino and a resident of 1515 F. Agoncillo St., Corner J. Escoda St., Ermita, Manila, the true and absolute owner of the land applied for situated in the Municipality of Parañaque, Province of Rizal, with an area of 17,343 square meters and covered by plan (LRC) Psu-964 and orders the registration of said parcel of land in her name with her aforementioned personal circumstances.

Once this decision becomes final and executory, let the corresponding order for the issuance of the decree be issued.

SO ORDERED.[1]

The Director of Lands and Mercedes Dizon did not appeal from the adverse decision of the Pasig-Rizal CFI. Thus, the order for the issuance of a decree of registration became final, and Decree No. N-150912 was issued by the Land Registration Commission (LRC).[2] Original Certificate of Title (OCT) No. 10215 was issued in the name of Fermina Castro by the Register of Deeds for the Province of Rizal on May 29, 1974.[3]

The land was then sold to Jesus S. Yujuico, and OCT No. 10215 was cancelled. On May 31, 1974, [4] Transfer Certificate of Title (TCT) No. 445863 was issued in Yujuico’s name, who subdivided the land into two lots. TCT No. 446386 [5] over Lot 1 was issued in his name, while TCT No. S-29361 [6] over Lot 2 was issued in the name of petitioner Augusto Y. Carpio.

Annotations at the back of TCT No. 446386 show that Yujuico had, at one time or another, mortgaged the lot to the Philippine Investments System Organization (PISO) and Citibank, N.A. Annotations in the title of petitioner Carpio reveal the lot was mortgaged in favor of Private Development Corporation (PDC), Rizal Commercial Banking Corporation (RCBC) and then Philippine Commercial and Industrial Bank (PCIB) and the Development Bank of the Philippines (DBP) to secure various loans.

Sometime in 1977 Presidential Decree No. (PD) 1085 entitled Conveying the Land Reclaimed in the Foreshore and

Offshore of the Manila Bay (The Manila-Cavite Coastal Road Project) as Property of the Public Estates Authority as well

as Rights and Interests with Assumptions of Obligations in the Reclamation Contract Covering Areas of the Manila Bay

between the Republic of the Philippines and the Construction and Development Corporation of the Philippines (1977) was issued. Land reclaimed in the foreshore and offshore areas of Manila Bay became the properties of the Public Estates Authority (PEA), a government corporation that undertook the reclamation of lands or the acquisition of reclaimed lands. On January 13, 1989, OCT No. SP 02 was issued in favor of PEA. The PEA also acquired ownership of other parcels of land along the Manila Bay coast, some of which were subsequently sold to the Manila Bay Development Corporation (MBDC), which in turn leased portions to Uniwide Holdings, Inc. [7]

The PEA undertook the construction of the Manila Coastal Road. As this was being planned, Yujuico and Carpio discovered that a verification survey they commissioned showed that the road directly overlapped their property, and that they owned a portion of the land sold by the PEA to the MBDC.

On July 24, 1996, Yujuico and Carpio filed before the Parañaque City Regional Trial Court (RTC), a complaint for the Removal of Cloud and Annulment of Title with Damages docketed as Civil Case No. 96-0317 against the PEA. On May 15, 1998 the parties entered into a compromise agreement approved by the trial court in a Resolution dated May 18, 1998. On June 17, 1998, the parties executed a Deed of Exchange of Real Property, pursuant to the compromise agreement, where the PEA property with an area of 1.4007 hectares would to be conveyed to Jesus Yujuico and petitioner Carpio in exchange for their property with a combined area of 1.7343 hectares.

On July 31, 1998, the incumbent PEA General Manager, Carlos P. Doble, informed the OSG that the new PEA board and management had reviewed the compromise agreement and had decided to defer its implementation and hold it in abeyance following the view of the former PEA General Manager, Atty. Arsenio Yulo, Jr., that the compromise agreement did not reflect a condition of the previous PEA Board, requiring the approval of the Office of the President. The new PEA management then filed a petition for relief from the resolution approving the compromise agreement on the ground of mistake and excusable negligence.

The petition was dismissed by the trial court on the ground that it was filed out of time and that the allegation of mistake and excusable negligence lacked basis.

The PEA fared no better in the Court of Appeals (CA), as the petition was dismissed for failure to pay the required docket fees and for lack of merit.

The matter was raised to the Supreme Court in Public Estates Authority v. Yujuico[8]but PEA’s petition was denied, upholding the trial court’s dismissal of the petition for relief for having been filed out of time. The allegation of fraud in the titling of the subject property in the name of Fermina Castro was not taken up by the Court.

On June 8, 2001, in a Complaint for Annulment and Cancellation of Decree No. N-150912 and its Derivative Titles, entitled Republic of the Philippines v. Fermina Castro, Jesus S. Yujuico, August Y. Carpio and the Registry of Deeds of

Parañaque Citydocketed as Civil Case No. 01-0222, filed with the Parañaque City RTC, respondent Republic of the Philippines, through the OSG, alleged that when the land registered to Castro was surveyed by Engr. H. Obreto on August 3, 1972 and subsequently approved by the LRC on April 23, 1973, the land was still a portion of Manila Bay as evidenced by Namria Hydrographic Map No. 4243, Surveys to 1980; 1 st Ed/. January 9/61: Revised 80-11-2; that Roman

Mataverde, the then OIC of the Surveys Division, Bureau of Lands, informed the OIC of the Legal Division that “[w]hen projected on Cadastral Maps CM 14 deg. 13’ N-120 deg, 59’E, Sec.2-A of Parañaque Cadastre (Cad. 299), (LRC) Psu-964 falls inside Manila Bay, outside Cad. 299”; that then Acting Regional Lands Director Narciso V. Villapando issued a Report dated November 15, 1973 stating that plan (LRC) Psu-964 is a portion of Manila Bay; that then Officer-in-Charge, Assistant Director of Lands, Ernesto C. Mendiola, submitted his Comment and Recommendation re: Application for Registration of Title of FERMINA CASTRO, LRC Case No. N-8239, dated Dec. 1, 1977, praying that the instant registration case be dismissed; and that Fermina Castro had no registrable rights over the property.

More significantly, respondent Republic argued that, first, since the subject land was still underwater, it could not be registered in the name of Fermina Castro. Second, the land registration court did not have jurisdiction to adjudicate inalienable lands, thus the decision adjudicating the subject parcel of land to Fermina Castro was void. And third, the titles of Yujuico and Carpio, being derived from a void title, were likewise void. [9]

On September 13, 2001, Yujuico and Carpio filed a Motion to Dismiss (With Cancellation of Notice of Lis Pendens),[10] on the grounds that: (1) the cause of action was barred by prior judgment; (2) the claim had been waived, abandoned, or otherwise extinguished; (3) a condition precedent for the filing of the complaint was not complied with; and (4) the complaint was not verified and the certification against forum shopping was not duly executed by the plaintiff or principal party.

On November 27, 2001, respondent Republic filed an Opposition [11] to the motion to dismiss to which defendants filed a Reply[12] on January 14, 2002, reiterating the grounds for the motion to dismiss.

In the August 7, 2002 Order of the RTC,[13] Civil Case No. 01-0222 was dismissed. The trial court stated that the matter had already been decided in LRC Case No. N-8239, and that after 28 years without being contested, the case had already become final and executory. The trial court also found that the OSG had participated in the LRC case, and could have questioned the validity of the decision but did not. Civil Case No. 01-0222 was thus found barred by prior judgment.

On appeal to the CA, in CA-G.R. CV No. 76212, respondent Republic alleged that the trial court erred in disregarding that appellant had evidence to prove that the subject parcel of land used to be foreshore land of the Manila Bay and that the trial court erred in dismissing Civil Case No. 01-0222 on the ground of res judicata.[14]

The CA observed that shores are properties of the public domain intended for public use and, therefore, not registrable and their inclusion in a certificate of title does not convert the same into properties of private ownership or confer title upon the registrant.

Further, according to the appellate court res judicata does not apply to lands of public domain, nor does possession of the land automatically divest the land of its public character.

The appellate court explained that rulings of the Supreme Court have made exceptions in cases where the findings of the Director of Lands and the Department of Environment and Natural Resources (DENR) were conflicting as to the true nature of the land in as much as reversion efforts pertaining foreshore lands are embued with public interest.

The dispositive portion of the CA decision reads,

WHEREFORE, premises considered, the present appeal is hereby GRANTED. The appealed Order dated August 7, 2002 of the trial court in Civil Case No. 01-0222 is hereby REVERSED and SET ASIDE. The case is hereby REMANDED to said court for further proceedings and a full-blown trial on the merits with utmost dispatch.[15]

Hence, this petition.

The Issues

Petitioners now raise the following issues before this Court:THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR AND DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORDANCE WITH LAW AND THE APPLICABLE DECISIONS OF THE HONORABLE COURT AND HAS DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS NECESSITATING THE HONORABLE COURT’S EXERCISE OF ITS POWER OF SUPERVISION CONSIDERING THAT:

I. THE REVERSAL BY THE COURT OF APPEALS OF THE TRIAL COURT’S APPLICATION OF THE PRINCIPLE OF RES JUDICATA IN THE INSTANT CASE IS BASED ON ITS ERRONEOUS ASSUMPTION THAT THE SUBJECT LAND IS OF PUBLIC DOMAIN, ALLEGEDLY PART OF MANILA BAY.

A. IN THE FIRESTONE CASE, THE HONORABLE COURT APPLIED THE PRINCIPLE OF RES

JUDICATANOTWITHSTANDING ALLEGATIONS OF LACK OF JURISDICTION OF A LAND REGISTRATION COURT, FORECLOSING ANY FURTHER ATTEMPT BY RESPONDENT THEREIN, AS IN THE INSTANT CASE, TO RESURRECT A LONG-SETTLED JUDICIAL DETERMINATION OF REGISTRABILITY OF A PARCEL OF LAND BASED ON THE SHEER ALLEGATION THAT THE SAME IS PART OF THE PUBLIC DOMAIN.

B. THE LAND REGISTRATION COURT HAD JURISDICTION TO DETERMINE WHETHER THE SUBJECT LAND WAS PART OF THE PUBLIC DOMAIN.

C. RESPONDENT’S REVERSION CASE SEEKS TO RETRY THE VERY SAME FACTUAL ISSUES THAT HAVE ALREADY BEEN JUDICIALLY DETERMINED OVER THIRTY (30) YEARS AGO.

D. THE JURISPRUDENTIAL BASES APPLIED BY THE COURT OF APPEALS IN ITS QUESTIONED DECISION ARE MISPLACED, CONSIDERING THAT THEY ARE ALL PREDICATED ON THE ERRONEOUS PREMISE THAT IT IS UNDISPUTED THAT THE SUBJECT LAND IS PART OF THE PUBLIC DOMAIN.

II. RESPONDENT IS BARRED BY JURISDICTIONAL ESTOPPEL AND LACHES FROM QUESTIONING THE JURISDICTION OF THE LAND REGISTRATION COURT.

III. RELIANCE BY THE COURT OF APPEALS ON THE ISOLATED PRONOUNCEMENT OF THE HONORABLE COURT IN THE PEA CASE IS UNWARRANTED AND MISLEADING CONSIDERING THAT THE MATTER OF WHETHER RES JUDICATA APPLIES WITH RESPECT TO THE LAND REGISTRATION COURT’S DECISION IN 1974 WAS NOT IN ISSUE IN SAID CASE.

A. THE INSTANT REVERSION CASE IS NOT THE PROPER RECOURSE.

B. THE VALIDITY OF THE COURT-APPROVED COMPROMISE AGREEMENT 15 MAY 1998 HAS ALREADY BEEN AFFIRMED BY THE HONORABLE COURT IN THE PEA CASE.

IV. EQUITABLE CONSIDERATIONS MANDATE THE APPLICATION OF THE RULE ON ORDINARY ESTOPPEL AND LACHES IN THE INSTANT CASE AGAINST RESPONDENT.

V. RESPONDENT CANNOT BE GIVEN SPECIAL CONSIDERATION AND EXCUSED FOR TRANSGRESSING RULES OF PROCEDURE.[16]

Essentially, the issues boil down to three: (1) Is a reversion suit proper in this case? (2) Is the present petition estopped by laches? (3) Did the CA erroneously apply the principle of res judicata?

An action for reversion seeks to restore public land fraudulently awarded and disposed of to private individuals or corporations to the mass of public domain.[17]This remedy is provided under Commonwealth Act (CA) No. 141 (Public Land Act) which became effective on December 1, 1936. Said law recognized the power of the state to recover lands of public domain. Section 124 of CA No. 141 reads:SEC. 124. Any acquisition, conveyance, alienation, transfer, or other contract made or executed in violation of any of the provisions of Sections one hundred and eighteen, one hundred and twenty, one hundred and twenty one, one hundred and twenty-two, and one hundred twenty-three of this Act shall be unlawful and null and void from its execution and shall produce the effect of annulling and cancelling the grant, title, patent, or permit originally issued, recognized or confirmed, actually or presumptively, and cause the reversion of the property and its improvements to the State . (Emphasis supplied.)Pursuant to Section 124 of the Public Land Act, reversion suits are proper in the following instances, to wit:

1. Alienations of land acquired under free patent or homestead provisions in violation of Section 118, CA No. 141;

2. Conveyances made by non-Christians in violation of Section 120, CA No. 141; and

3. Alienations of lands acquired under CA No. 141 in favor of persons not qualified under Sections 121, 122, and 123 of CA No. 141.

From the foregoing, an action for reversion to cancel titles derived from homestead patents or free patents based on transfers and conveyances in violation of CA No. 141 is filed by the OSG pursuant to its authority under the Administrative Code with the RTC. It is clear therefore that reversion suits were originally utilized to annul titles or patents administratively issued by the Director of the Land Management Bureau or the Secretary of the DENR.

While CA No. 141 did not specify whether judicial confirmation of titles by a land registration court can be subject of a reversion suit, the government availed of such remedy by filing actions with the RTC to cancel titles and decrees granted in land registration applications.

The situation changed on August 14, 1981 upon effectivity of Batas Pambansa (BP) Blg. 129 which gave the Intermediate Appellate Court the exclusive original jurisdiction over actions for annulment of judgments of RTCs.

When the 1997 Rules of Civil Procedure became effective on July 1, 1997, it incorporated Rule 47 on annulment of judgments or final orders and resolutions of the RTCs. The two grounds for annulment under Sec. 2, Rule 47 are extrinsic fraud and lack of jurisdiction. If based on extrinsic fraud, the action must be filed within four (4) years from its discovery, and if based on lack of jurisdiction, before it is barred by laches or estoppel as provided by Section 3, Rule 47. Thus, effective July 1, 1997, any action for reversion of public land instituted by the Government was already covered by Rule 47.

The instant Civil Case No. 01-0222 for annulment and cancellation of Decree No. N-150912 and its derivative titles was filed on June 8, 2001 with the Parañaque City RTC. It is clear therefore that the reversion suit was erroneously instituted in the Parañaque RTC and should have been dismissed for lack of jurisdiction. The proper court is the CA which is the body mandated by BP Blg. 129 and prescribed by Rule 47 to handle annulment of judgments of RTCs.

In Collado v. Court of Appeals,[18] the government, represented by the Solicitor General pursuant to Section 9(2) of BP Blg. 129, filed a petition for annulment of judgment with the CA. Similarly in the case of Republic v. Court of Appeals,[19] the Solicitor General correctly filed the annulment of judgment with the said appellate court.

This was not done in this case. The Republic misfiled the reversion suit with the Parañaque RTC. It should have been filed with the CA as required by Rule 47. Evidently, the Parañaque RTC had no jurisdiction over the instant reversion case.

Assuming that the Parañaque RTC has jurisdiction over the reversion case, still the lapse of almost three decades in filing the instant case, the inexplicable lack of action of the Republic and the injury this would cause constrain us to rule for petitioners. While it may be true that estoppel does not operate against the state or its agents, [20]deviations have been allowed. In Manila Lodge No. 761 v. Court of Appeals, we said:Estoppels against the public are little favored. They should not be invoked except in rare and unusual circumstances, and may not be invoked where they would operate to defeat the effective operation of a policy adopted to protect the public. They must be applied with circumspection and should be applied only in those special cases where the interests of justice clearly require it. Nevertheless, the government must not be allowed to deal dishonorably or capriciously with its

citizens, and must not play an ignoble part or do a shabby thing; and subject to limitations x x x, the doctrine of

equitable estoppel may be invoked against public authorities as well as against private individuals. [21] (Emphasis supplied.)

Equitable estoppel may be invoked against public authorities when as in this case, the lot was already alienated to innocent buyers for value and the government did not undertake any act to contest the title for an unreasonable length of time.

In Republic v. Court of Appeals, where the title of an innocent purchaser for value who relied on the clean certificates of the title was sought to be cancelled and the excess land to be reverted to the Government, we ruled that “[i]t is only fair

and reasonable to apply the equitable principle of estoppel by laches against the government to avoid an

injustice to innocent purchasers for value(emphasis supplied).”[22] We explained:Likewise time-settled is the doctrine that where innocent third persons, relying on the correctness of the certificate of title, acquire rights over the property, courts cannot disregard such rights and order the cancellation of the certificate. Such cancellation would impair public confidence in the certificate of title, for everyone dealing with property registered under the Torrens system would have to inquire in every instance whether the title has been regularly issued or not. This would be contrary to the very purpose of the law, which is to stabilize land titles. Verily, all persons dealing with registered land may safely rely on the correctness of the certificate of title issued therefore, and the law or the courts do not oblige them to go behind the certificate in order to investigate again the true condition of the property. They are only charged with notice of the liens and encumbrances on the property that are noted on the certificate. [23]

x x x x

But in the interest of justice and equity, neither may the titleholder be made to bear the unfavorable effect of the mistake or negligence of the State’s agents, in the absence of proof of his complicity in a fraud or of manifest damage to third persons. First, the real purpose of the Torrens system is to quiet title to land to put a stop forever to any question as to

the legality of the title, except claims that were noted in the certificate at the time of the registration or that may arise subsequent thereto.Second, as we discussed earlier, estoppel by laches now bars petitioner from questioning private respondents’ titles to the subdivision lots.Third, it was never proven that Private Respondent St. Jude was a party to the fraud that led to the increase in the area of the property after its subdivision. Finally, because petitioner even failed to give sufficient proof of any error that might have been committed by its agents who had surveyed the property, the presumption of regularity in the performance of their functions must be respected. Otherwise, the integrity of the Torrens system, which petitioner purportedly aims to protect by filing this case, shall forever be sullied by the ineptitude and inefficiency of land registration officials, who are ordinarily presumed to have regularly performed their duties.[24]

Republic v. Court of Appeals is reinforced by our ruling in Republic v. Umali,[25]where, in a reversion case, we held that even if the original grantee of a patent and title has obtained the same through fraud, reversion will no longer prosper as the land had become private land and the fraudulent acquisition cannot affect the titles of innocent purchasers for value.

Considering that innocent purchaser for value Yujuico bought the lot in 1974, and more than 27 years had elapsed before the action for reversion was filed, then said action is now barred by laches.

While the general rule is that an action to recover lands of public domain is imprescriptible, said right can be barred by laches or estoppel. Section 32 of PD 1592 recognized the rights of an innocent purchaser for value over and above the interests of the government. Section 32 provides:SEC. 32. Review of decree of registration; Innocent purchaser for value.—The decree of registration shall not be reopened or revised by reason of absence, minority, or other disability of any person adversely affected thereby, nor by any proceeding in any court for reversing judgments, subject, however, to the right of any person, including the

government and the branches thereof, deprived of land or of any estate or interest therein by such adjudication

or confirmation of title obtained by actual fraud, to file in the proper Court of First Instance a petition for

reopening and review of the decree of registration not later than one year from and after the date of the entry of

such decree of registration, but in no case shall such petition be entertained by the court where an innocent

purchaser for value has acquired the land or an interest therein, whose rights may be prejudiced . Whenever the phrase “innocent purchaser for value” or an equivalent phrase occurs in this Decree, it shall be deemed to include an innocent lessee, mortgagee, or other encumbrances for value. (Emphasis supplied.)In this petition, the LRC (now LRA), on May 30, 1974, issued Decree No. N-150912 in favor of Fermina Castro and OCT No. 10215 was issued by the Rizal Registrar of Deeds on May 29, 1974. OCT No. 10215 does not show any annotation, lien, or encumbrance on its face. Relying on the clean title, Yujuico bought the same in good faith and for value from her. He was issued TCT No. 445863 on May 31, 1974. There is no allegation that Yujuico was a buyer in bad faith, nor did he acquire the land fraudulently. He thus had the protection of the Torrens System that every subsequent purchaser of registered land taking a certificate of title for value and in good faith shall hold the same free from all encumbrances except those noted on the certificate and any of the x x x encumbrances which may be subsisting. [26] The same legal shield redounds to his successors-in-interest, the Yujuicos and Carpio, more particularly the latter since Carpio bought the lot from Jesus Y. Yujuico for value and in good faith.

Likewise protected are the rights of innocent mortgagees for value, the PISO, Citibank, N.A., PDC, RCBC, PCIB, and DBP. Even if the mortgagor’s title was proved fraudulent and the title declared null and void, such declaration cannot nullify the mortgage rights of a mortgagee in good faith. [27]

All told, a reversion suit will no longer be allowed at this stage.

More on the issue of laches. Laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which by exercising due diligence could or should have been done earlier. It is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled thereto has either abandoned or declined to assert it.[28]

When respondent government filed the reversion case in 2001, 27 years had already elapsed from the time the late Jesus Yujuico purchased the land from the original owner Castro. After the issuance of OCT No. 10215 to Castro, no further action was taken by the government to question the issuance of the title to Castro until the case of Public Estates

Authority, brought up in the oral argument before this Court on September 6, 2000. [29] We then held that allegation of fraud in the issuance of the title was not proper for consideration and determination at that stage of the case.

From the undisputed facts of the case, it is easily revealed that respondent Republic took its sweet time to nullify Castro’s title, notwithstanding the easy access to ample remedies which were readily available after OCT No. 10215 was registered in the name of Castro. First, it could have appealed to the CA when the Pasig-Rizal CFI rendered a decision ordering the registration of title in the name of applicant Castro on April 26, 1974. Had it done so, it could have elevated the matter to this Court if the appellate court affirms the decision of the land registration court. Second, when the entry of Decree No. N-150912 was made on May 29, 1974 by the Rizal Register of Deeds, the Republic had one (1) year from said date or up to May 28, 1975 to file a petition for the reopening and review of Decree No. N-150912 with the Rizal CFI (now RTC) on the ground of actual fraud under section 32 of PD 1592. Again, respondent Republic did not avail of such remedy. Third, when Jesus Yujuico filed a complaint forRemoval of Cloud and Annulment of Title with Damages against PEA before the Parañaque RTC in Civil Case No. 96-0317, respondent could have persevered to question and nullify Castro’s title. Instead, PEA undertook a compromise agreement on which the May 18, 1998 Resolution [30] was issued.

PEA in effect admitted that the disputed land was owned by the predecessors-in-interest of petitioners and their title legal and valid; and impliedly waived its right to contest the validity of said title; respondent Republic even filed the petition for relief from judgment beyond the time frames allowed by the rules, a fact even acknowledged by this Court in Public

Estates Authority. Lastly, respondent only filed the reversion suit on June 8, 2001 after the passage of 27 years from the date the decree of registration was issued to Fermina Castro.

Such a Rip Van Winkle, coupled with the signing of the settlement with PEA, understandably misled petitioners to believe that the government no longer had any right or interest in the disputed lot to the extent that the two lots were even mortgaged to several banks including a government financing institution. Any nullification of title at this stage would unsettle and prejudice the rights and obligations of innocent parties. All told, we are constrained to conclude that laches had set in.

Even granting arguendo that respondent Republic is not precluded by laches from challenging the title of petitioners in the case at bar, still we find that the instant action for reversion is already barred by res judicata.

Petitioners relying on Firestone Ceramics, Inc. v. Court of Appeals[31] as a precedent to the case at bar contend that the instant reversion suit is now barred by res judicata.

We agree with petitioners.

The doctrine on precedents is expressed in the latin maxim—Stare decisis et non quieta movere. Follow past precedents and do not disturb what has been settled. [32]In order however that a case can be considered as a precedent to another case which is pending consideration, the facts of the first case should be similar or analogous to the second case.

A perusal of the facts of the Firestone case and those of the case at bar reveals that the facts in the two (2) cases are parallel. First, in Firestone and in this case, the claimants filed land registration applications with the CFI; both claimants obtained decrees for registration of lots applied for and were issued OCTs. Second, inFirestone, the Republic filed a reversion case alleging that the land covered by the OCT was still inalienable forest land at the time of the application and hence the Land Registration Court did not acquire jurisdiction to adjudicate the property to the claimant. In the instant case, respondent Republic contend that the land applied for by Yujuico was within Manila Bay at the time of application and therefore the CFI had no jurisdiction over the subject matter of the complaint. Third, in Firestone, the validity of the title of the claimant was favorably ruled upon by this Court in G.R. No. 109490entitled Patrocinio E. Margolles v. CA. In the case at bar, the validity of the compromise agreement involving the disputed lot was in effect upheld when this Court in Public Estates Authority v. Yujuico dismissed the petition of PEA seeking to reinstate the petition for relief from the May 18, 1998 Resolution approving said compromise agreement. With the dismissal of the petition, the May 18, 1998 Resolution became final and executory and herein respondent Republic through PEA was deemed to have recognized Castro’s title over the disputed land as legal and valid. In Romero v. Tan,[33] we ruled that “a judicial compromise has the effect of res judicata.” We also made clear that a judgment based on a compromise agreement is a judgment on the merits, wherein the parties have validly entered into stipulations and the evidence was duly considered by the trial court that approved the agreement. In the instant case, the May 18, 1998 Resolution approving the compromise agreement confirmed the favorable decision directing the registration of the lot to Castro’s name in LRC Case No. N-8239. Similarly, in Firestone, the Margolles case confirmed the decision rendered in favor of Gana in Land Registration Case No. 672 ordering the issuance of the decree to said applicant. Fourth, in Firestone, the Supreme Court relied on the letter of then Solicitor General Francisco Chavez that the evidence of the Bureau of Lands and the LRC was not sufficient to support

an action for cancellation of OCT No. 4216. In the instant case, both the Solicitor General and the Government Corporate Counsel opined that the Yujuico land was not under water and that “there appears to be no sufficient basis for the Government to institute the action for annulment.” Fifth, in Firestone, we ruled that “the Margolles case had long become final, thus the validity of OCT No. 4216 should no longer be disturbed and should be applied in the instant case (reversion suit) based on the principle of res judicata or, otherwise, the rule on conclusiveness of judgment.” [34]

Clearly from the above, Firestone is a precedent case. The Public Estates Authorityhad become final and thus the validity of OCT No. 10215 issued to Castro could no longer be questioned.

While we said in Public Estates Authority that the court does not foreclose the right of the Republic from pursuing the proper recourse in a separate proceedings as it may deem warranted, the statement was obiter dictum since the inquiry on whether or not the disputed land was still under water at the time of its registration was a non-issue in the said case.

Even granting for the sake of argument that Firestone is not squarely applicable, still we find the reversion suit already barred by res judicata.

For res judicata to serve as an absolute bar to a subsequent action, the following requisites must concur: (1) there must be a final judgment or order; (2) the court rendering it must have jurisdiction over the subject matter and the parties; (3) it must be a judgment or order on the merits; and (4) there must be between the two cases, identity of parties, subject matter and causes of action.[35]

There is no question as to the first, third and last requisites. The threshold question pertains to the second requisite, whether or not the then Pasig-Rizal CFI, Branch 22 had jurisdiction over the subject matter in LRC Case No. N-8239. In Civil Case No. 01-0222, the Parañaque City RTC, Branch 257 held that the CFI had jurisdiction. The CA reversed the decision of the Parañaque City RTC based on the assertion of respondent Republic that the Pasig-Rizal CFI had no jurisdiction over the subject matter, and that there was a need to determine the character of the land in question.

The Parañaque City RTC Order dismissing the case for res judicata must be upheld.

The CA, in rejecting the dismissal of the reversion case by the Parañaque RTC, relied on two cases, namely: Municipality

of Antipolo v. Zapanta[36] and Republic v. Vda. De Castillo.[37]

In Municipality of Antipolo, we held that the land registration court had no jurisdiction to entertain any land registration application if the land was public property, thus:Since the Land Registration Court had no jurisdiction to entertain the application for registration of public property of ANTIPOLO, its Decision adjudicating the DISPUTED PROPERTY as of private ownership is null and void. It never attained finality, and can be attacked at any time. It was not a bar to the action brought by ANTIPOLO for its annulment by reason of res judicata.“[x x x] the want of jurisdiction by a court over the subject matter renders the judgment void and a mere nullity, and considering that a void judgment is in legal effect no judgment, by which no rights are divested, from which no rights can be obtained, which neither binds nor bars any one, and under which all acts performed and all claims flowing out of are void, and considering, further, that the decision, for want of jurisdiction of the court, is not a decision in contemplation of law, and hence, can never become executory, it follows that such a void judgment cannot constitute a bar to another case by reason of res judicata.”

x x x x

“It follows that ‘if a person obtains a title under the Public Land Act which includes, by oversight, lands which cannot be registered under the Torrens System, or when the Director of Lands did not have jurisdiction over the same because it is a public forest, the grantee does not, by virtue of the said certificate of title alone, become the owner of the land illegally included’ (Republic vs. Animas, 56 SCRA 499, 503; Ledesma vs. Municipality of Iloilo, 49 Phil. 769).”

[x x x x]

“Under these circumstances, the certificate of title may be ordered cancelled (Republic vs. Animas, et al., supra), and the cancellation maybe pursued through an ordinary action therefore. This action cannot be barred by the prior judgment of

the land registration court, since the said court had no jurisdiction over the subject matter. And if there was no such jurisdiction, then the principle of res judicata does not apply. [x x x] Certainly, one of the essential requisites, i.e., jurisdiction over the subject matter, is absent in this case.” (Italics supplied).[38]

The plain import of Municipality of Antipolo is that a land registration court, the RTC at present, has no jurisdiction over the subject matter of the application which respondent Republic claims is public land. This ruling needs elucidation.

Firmly entrenched is the principle that jurisdiction over the subject matter is conferred by law. [39] Consequently, the proper CFI (now the RTC) under Section 14 of PD 1529 [40] (Property Registration Decree) has jurisdiction over applications for registration of title to land.

Section 14 of PD 1592 provides:SEC. 14. Who may apply.—The following persons may file in the proper Court of First Instance an application for

registration of title to land, whether personally or through their duly authorized representatives:

(1) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of alienable and disposable lands of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier. (Emphasis supplied.)Conformably, the Pasig-Rizal CFI, Branch XXII has jurisdiction over the subject matter of the land registration case filed by Fermina Castro, petitioners’ predecessor-in-interest, since jurisdiction over the subject matter is determined by the allegations of the initiatory pleading-the application.[41] Settled is the rule that “the authority to decide a case and not the decision rendered therein is what makes up jurisdiction. When there is jurisdiction, the decision of all questions arising in the case is but an exercise of jurisdiction.”[42]

In our view, it was imprecise to state in Municipality of Antipolo that the “Land Registration Court [has] no jurisdiction

to entertain the application for registration of public property x x x” for such court precisely has the jurisdiction to entertain land registration applications since that is conferred by PD 1529. The applicant in a land registration case usually claims the land subject matter of the application as his/her private property, as in the case of the application of Castro. Thus, the conclusion of the CA that the Pasig-Rizal CFI has no jurisdiction over the subject matter of the application of Castro has no legal mooring. The land registration court initially has jurisdiction over the land applied for at the time of the filing of the application. After trial, the court, in the exercise of its jurisdiction, can determine whether the title to the land applied for is registrable and can be confirmed. In the event that the subject matter of the application turns out to be inalienable public land, then it has no jurisdiction to order the registration of the land and perforce must dismiss

the application.

Based on our ruling in Antipolo, the threshold question is whether the land covered by the titles of petitioners is under water and forms part of Manila Bay at the time of the land registration application in 1974. If the land was within Manila Bay, then res judicata does not apply. Otherwise, the decision of the land registration court is a bar to the instant reversion suit.

After a scrutiny of the case records and pleadings of the parties in LRC Case No. N-8239 and in the instant petition, we rule that the land of Fermina Castro is registrable and not part of Manila Bay at the time of the filing of the land registration application.

The trial court’s Decision in 1974 easily reveals the basis for its conclusion that the subject matter was a dry land, thus:On February 1, 1974, the applicant presented her evidence before the Deputy Clerk of this Court and among the evidence presented by her were certain documents which were marked as Exhibits D to J, inclusive. The applicant testified in her behalf and substantially declared that: she was 62 years old, single, housekeeper and residing at 1550 J. Escoda, Ermita, Manila; that she was born on June 3, 1911; that she first came to know of the land applied for which is situated in the Municipality of Parañaque, province of Rizal, with an area of 17,343 square meters and covered by plan (LRC) Psu-964 while she was still ten (10) years old or sometime in 1921; that when she first came to know of the land applied for, the person who was in possession and owner of said land was her father, Catalino Castro; that during that time her father used to plant on said land various crops like pechay, mustard, eggplant, etc.; that during that time, her father built a house on said land which was used by her father and the other members of the family, including the applicant, as their residential house; that the land applied for was inherited by her father from her grandfather Sergio Castro; that Catalino Castro continuously possessed and owned the land in question from 1921 up to the time of his death in 1952; and that during that period of time nobody ever disturbed the possession and ownership of her father over the said parcel of land; that after the death of her father in 1952 she left the place and transferred her place of residence but she had also occasions to visit said land twice or thrice a week and sometimes once a week; that after she left the land in question in 1952, she still continued possessing said land, through her caretaker Eliseo Salonga; that her possession over the land in question from the time she inherited it up to the time of the filing of the application has been continuous, public, adverse against the whole world and in the concept of an owner; that it was never encumbered, mortgaged, or disposed of by her father during his lifetime and neither did she ever encumber or sell the same; that it was declared for taxation purposes by her father when he was still alive and her father also paid the real estate taxes due to the government although the receipt evidencing the payment of said real estate taxes for the property applied for have been lost and could no longer be found inspite of diligent effort exerted to locate the same.

The other witness presented by the applicant was Emiliano de Leon, who declared that he was 70 years old, married, farmer and residing at San Jose, Baliwag, Bulacan; that he knew Catalino Castro, the father of the applicant because said Catalino Castro was his neighbor in Tambo, Parañaque, Rizal, he had a house erected on the land of Catalino Castro; that he was born in 1903 and he first came to know of the land in question when in 1918 when he was about 18 years old; that the area of the land owned and possessed by Catalino Castro where he constructed a residential house has an area of more than one and one-half (1 ½) hectares; that the possession of Catalino Castro over the land in question was peaceful, continuous, notorious, adverse against the whole world and in the concept of an owner; that during the time that Catalino Castro was in possession of the land applied for he planted on said parcel of land mango, coconut and banana, etc.; that Catalino Castro continuously possessed and owned said parcel of land up to the year 1952 when he died; that during the time that Catalino Castro was in possession of said land, nobody ever laid claim over the said property; that

said land is not within any military or naval reservation; that upon the death of Catalino Castro, the applicant took possession of the land applied for and that up to the present the applicant is in possession of said land; that he resided in the land in question from 1918 up to the time he transferred his place of residence in Baliwag, Bulacan in the year 1958.

On February 11, 1974, the Court, pursuant to the provision of Presidential Decree No. 230 issued by his Excellency, Ferdinand E. Marcos dated July 9, 1973 held in abeyance the rendition of a decision in this case and directed the applicant to submit a white print copy of plan (LRC) Psu-964 to the Director of lands who was directed by the Court to submit his comment and recommendation thereon.

The property in question is declared for taxation purposes under Tax Declaration No. 51842 (Exhibit G) and real estate taxes due thereon have been paid up to the year 1973 (Exhibit H).

In compliance with the Order of this Court February 11, 1974, the Director of Lands, thru Special Attorney

Saturnino A. Pacubas, submitted a report to this Court dated April 25, 1974, stating among other things, that

upon ocular inspection conducted by Land Inspector Adelino G. Gorospe and the subsequent joint ocular

inspection conducted by Geodetic Engineer Manuel A. Cervantes and Administrative Assistant Lazaro G.

Berania, it was established that the parcel of land covered by plan (LRC) Psu-964 no longer forms part of the

Manila Bay but is definitely solid and dry land.

In this connection, it should be noted that Administrative Assistant Lazaro G. Berania and Geodetic Engineer Manuel A. Cervantes, in their report dated March 22, 1974 have also stated that the land applied for cannot be reached by water

even in the highest tide and that the said land is occupied by squatter families who have erected makeshift

shanties and a basketball court which only prove that the same is dry and solid land away from the shores of

Manila Bay.

Furthermore, Land Inspector Adelino G. Gorospe in his letter-report dated November 28, 1973 has also stated that there is a house of pre-war vintage owned by the applicant on the land in question which in effect corroborates the testimony of the applicant and her witness that they have lived on the land in question even prior to the outbreak of the second world war and that the applicant has been in possession of the land in question long time ago.[43]

To counter the evidence of applicant Castro, and bolster its claim that she has no valid title, respondent Republic relies on the July 18, 1973 Office Memorandum[44] of Roman Mataverde, OIC, Surveys Division, to the OIC, Legal Division, of the Bureau of Lands, stating that “when projected on cadastral maps CM 14º 13’N -120º 59’ E., Sec. 3-D and CM 14º 30’N - 120º 59’E., Sec. 2-A of Paranaque [sic] Cadastre (Cad-299), (LRC) Psu-964 falls inside Manila Bay, outside Cad-299.” [45]

The same conclusion was adopted in a November 15, 1973 letter of Narciso Villapando, Acting Regional Lands Director to the Chief, Legal Division, Bureau of Lands and in the Comment and Recommendation of Ernesto C. Mendiola, Assistant Director, also of the Bureau of Lands.

Respondent likewise cites Namria Hydrographic Map No. 4243 Revised 80-11-2 to support its position that Castro’s lot is a portion of Manila Bay.

The burden of proving these averments falls to the shoulders of respondent Republic. The difficulty is locating the witnesses of the government. Roman Mataverde, then OIC of the Surveys Division retired from the government service in 1982. He should by this time be in his 90s. Moreover, Asst. Regional Director Narciso Villapando and Asst. Director

Ernesto C. Mendiola are no longer connected with the Bureau of Lands since 1986.

Assuming that OIC Roman Mataverde, Asst. Regional Director Narciso Villapando and Assistant Director Ernesto C. Mendiola are still available as witnesses, the projections made on the cadastral maps of the then Bureau of Lands cannot prevail over the results of the two ocular inspections by several Bureau of Lands officials that the disputed lot is definitely “dry and solid land” and not part of Manila Bay. Special Attorney Saturnino A. Pacubas, Land Inspector Adelino G. Gorospe, Geodetic Engineer Manuel A. Cervantes and Administrative Asst. Lazaro A. Berana, all officials of the Bureau of Lands, were positive that the disputed land is solid and dry land and no longer forms part of Manila Bay. Evidence gathered from the ocular inspection is considered direct and firsthand information entitled to great weight and credit while the Mataverde and Villapando reports are evidence weak in probative value, being merely based on theoretical projections “in the cadastral map or table surveys.” [46]Said projections must be confirmed by the actual inspection and verification survey by the land inspectors and geodetic engineers of the Bureau of Lands. Unfortunately for respondent Republic, the bureau land inspectors attested and affirmed that the disputed land is already dry land and not within Manila Bay.

On the other hand, the Namria Hydrographic Map No. 4243 does not reveal what portion of Manila Bay was Castro’s lot located in 1974. Moreover, a hydrographic map is not the best evidence to show the nature and location of the lot subject of a land registration application. It is derived from a hydrographic survey which is mainly used for navigation purposes, thus:Surveys whose principal purpose is the determination of data relating to bodies of water. A hydrographic survey may consist of the determination of one or several of the following classes of data: depth water; configuration and nature of the bottom; directions and force of currents; heights and times of tides and water stages; and location of fixed objects for survey and navigation purposes.[47]

Juxtaposed with finding of the ocular inspection by Bureau of Lands Special Attorney Pacubas and others that Castro’s lot is dry land in 1974, Namria Hydrographic Map No. 4243 is therefore inferior evidence and lacking in probative force.

Moreover, the reliability and veracity of the July 18, 1973 report of Roman Mataverde based on the alleged projection on cadastral maps and the Villapando report dated November 15, 1973 are put to serious doubt in the face of the opinion dated October 13, 1997 of the Government Corporate Counsel, the lawyer of the PEA, which upheld the validity of the titles of petitioners, thus:We maintain to agree with the findings of the court that the property of Fermina Castro was registrable land, as based on the two (2) ocular inspections conducted on March 22, 1974 by Lands Administrative Assistant Lazaro G. Berania and Lands Geodetic Engr. Manuel Cervantes,

finding ‘… the same no longer forms part of Manila Bay but is definitely solid land which cannot be reached by water even in the highest of tides’. This Berania-Cervantes report based on ocular inspections literally overturned the findings

and recommendations of Land Director Narciso V. Villapando dated November 15, 1973, and that of Director

Ernesto C. Mendiola dated December 1, 1977, and the fact that the Villapando-Mendiola reports were merely

based on projections in the cadastral map or table surveys.

x x x xA. The Legal prognosis of the case is not promising in favor of PEA.4.1 LRC Case No. N-8239 has already become final and executory and OCT No. 10215 was already issued in favor of Fermina Castro. Any and all attempts to question its validity can only be entertained in a quo warranto proceedings (sic),

assuming that there are legal grounds (not factual grounds) to support its nullification. Subjecting it to a collateral attack is not allowed under the Torrens Title System. In Calalang vs. Register of Deeds of Quezon City, 208 SCRA 215, the Supreme Court held that the present petition is not the proper remedy in challenging the validity of certificates of titles since the judicial action required is a direct and not a collateral attack (refer also to: Toyota Motor Philippine Corporation vs. CA, 216 SCRA 236).

4.2 OCT No. 10215 in favor of Fermina Castro was issued pursuant to a cadastral proceeding, hence is a rem proceedings which is translated as a constructive notice to the whole world, as held in Adez Realty Incorporated vs. CA, 212 SCRA 623.

4.3 From the cursory and intent reading of the decision of Judge Sison in LRC Case No. N-8239, we cannot find any iota of fraud having been committed by the court and the parties. In fact, due process was observed when the Office of the Solicitor General represented ably the Bureau of Lands. In Balangcad vs. Justices of the Court of Appeals, 206 SCRA 169, the Supreme Court held that title to registered property becomes indefeasible after one-year from date of registration except where there is actual fraud in which case it may be challenged in a direct proceeding within that period. This is also the ruling in Bishop vs. CA, 208 SCRA 636, that to sustain an action for annulment of a torrens certificate for being void ab initio, it must be shown that the registration court had not acquired jurisdiction over the case and there was actual fraud in securing the title.

4.4 As to priority of torrens title, PEA has no defense, assuming that both PEA and Yujuico titles are valid, as held in Metropolitan Waterworks and Sewerage System vs. CA, 215 SCRA 783, where two (2) certificates purport to include the same land, the earlier in date prevails.

4.5 The documents so far submitted by the parties to the court indicate that the mother title of the Yujuico land

when registered in 1974 was not underwater. This was shown in the two (2) ocular inspections conducted by the

officials of the Land Bureau.

4.6 The provision of P.D. 239 that no decree of registration may be issued by the court unless upon approval and recommendation of the Bureau of Lands was substantially complied with in the Report of Lands Special Attorney Saturnino Pacubas, submitted to the court.[48]

Even the counsel of respondent Republic, the OSG, arrived at the conclusion that there is no sufficient legal basis for said respondent to institute action to annul the titles of petitioners, thus:It may be stated at the outset that a petition for annulment of certificate of title or reconveyance of land may be based on fraud which attended the issuance of the decree of registration and the corresponding certificate of title.

Based on the decision in the LRC Case No. N-8239 involving the petition for registration and confirmation of title filed by Fermina Castro, there is no showing that fraud attended the issuance of OCT No. 10215. it appears that the evidence presented by Fermina Castro was sufficient for the trial court to grant her petition.

The testimony of Fermina Castro, which was corroborated by Emiliano de Leon, that she and her predecessors-in-interest had been in possession of the land for more than thirty (30) years sufficiently established her vested right over the property initially covered by OCT No. 10215. The report dated April 25, 1974 which was submitted to the trial court by the Director of Lands through Special Attorney Saturnino Pacubas showed that the parcel of land was solid and dry land when Fermina Castro’s application for registration of title was filed. It was based on the ocular inspection conducted by

Land Inspector Adelino Gorospe and the joint circular inspection conducted by Geodetic Engineer Manuel A. Cervantes and Administrative Assistant Lazaro Berania on November 28, 1973 and March 22, 1974 respectively.

The aforesaid report must be requested unless there is a concrete proof that there was an irregularity in the issuance thereof. In the absence of evidence to the contrary, the ocular inspection of the parcel of land, which was made the basis of said report, is presumed to be in order.

Based on the available records, there appears to be no sufficient basis for the Government to institute an action

for the annulment of OCT No. 10215 and its derivative titles. It is opined that a petition for cancellation/annulment

of Decree No. N-150912 and OCT No. 10215 and all its derivative titles will not prosper unless there is convincing

evidence to negate the report of the then Land Management Bureau through Special Attorney Pacubas. Should

the Government pursue the filing of such an action, the possibility of winning the case is remote. [49]

More so, respondent Government, through its counsel, admits that the land applied by Fermina Castro in 1973 was solid and dry land, negating the nebulous allegation that said land is underwater. The only conclusion that can be derived from the admissions of the Solicitor General and Government Corporate Counsel is that the land subject of the titles of petitioners is alienable land beyond the reach of the reversion suit of the state.

Notably, the land in question has been the subject of a compromise agreement upheld by this Court in Public Estates

Authority.[50] In that compromise agreement, among other provisions, it was held that the property covered by TCT Nos. 446386 and S-29361, the land subject of the instant case, would be exchanged for PEA property. The fact that PEA signed the May 15, 1998 Compromise Agreement is already a clear admission that it recognized petitioners as true and legal owners of the land subject of this controversy.

Moreover, PEA has waived its right to contest the legality and validity of Castro’s title. Such waiver is clearly within the powers of PEA since it was created by PD 1084 as a body corporate “which shall have the attribute of perpetual succession and possessed of the powers of the corporations, to be exercised in conformity with the provisions of this Charter [PD 1084].”[51] It has the power “to enter into, make, perform and carry out contracts of every class and description, including loan agreements, mortgages and other types of security arrangements, necessary or incidental to the realization of its purposes with any person, firm or corporation, private or public, and with any foreign government or entity.”[52] It also has the power to sue and be sued in its corporate name. [53] Thus, the Compromise Agreement and the Deed of Exchange of Real Property signed by PEA with the petitioners are legal, valid and binding on PEA. In the Compromise Agreement, it is provided that it “settles in full all the claims/counterclaims of the parties against each other.”[54] The waiver by PEA of its right to question petitioners’ title is fortified by the manifestation by PEA in the Joint Motion for Judgment based on Compromise Agreement that

4. The parties herein hereto waive and abandon any and all other claims and counterclaims which they may have against each other arising from this case or related thereto.[55]

Thus, there was a valid waiver of the right of respondent Republic through PEA to challenge petitioners’ titles.

The recognition of petitioners’ legal ownership of the land is further bolstered by the categorical and unequivocal acknowledgment made by PEA in its September 30, 2003 letter where it stated that: “Your ownership thereof was acknowledged by PEA when it did not object to your membership in the CBP-IA Association, in which an owner of a piece of land in CBP-IA automatically becomes a member thereof.” [56] Section 26, Rule 130 provides that “the act, declaration or

omission of a party as to a relevant fact may be given in evidence against him.” The admissions of PEA which is the real party-in-interest in this case on the nature of the land of Fermina Castro are valid and binding on respondent Republic. Respondent’s claim that the disputed land is underwater falls flat in the face of the admissions of PEA against its interests. Hence,res judicata now effectively precludes the relitigation of the issue of registrability of petitioners’ lot.

In sum, the Court finds that the reversion case should be dismissed for lack of jurisdiction on the part of the Parañaque RTC. Even if we treat said case as a petition for annulment of judgment under Rule 47 of the 1997 Rules of Civil Procedure, the dismissal of the case nevertheless has to be upheld because it is already barred by laches. Even if laches is disregarded, still the suit is already precluded by res judicatain view of the peculiar facts and circumstances obtaining therein.

WHEREFORE, premises considered, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No. 76212 is REVERSED and SET ASIDE, and the August 7, 2002 Order of the Parañaque City RTC, Branch 257 in Civil Case No. 01-0222 entitled Republic of the Philippines v. Fermina Castro, et al. dismissing the complaint is AFFIRMED.

No costs.

SO ORDERED.

Quisumbing, (Chairperson), Carpio-Morales, and Nachura, JJ., concur.Tinga, J., in the result.

EN BANC

[G.R. No. 120099. July 24, 1996]

EDUARDO T. RODRIGUEZ, petitioner, vs. COMMISSION ON ELECTIONS, BIENVENIDO O. MARQUEZ, JR.,respondents.

D E C I S I O N

FRANCISCO, J.:

Petitioner Eduardo T. Rodriguez and private respondent Bienvenido O. Marquez, Jr. (Rodriguez and Marquez, for brevity) were protagonists for the gubernatorial post of Quezon Province in the May 1992 elections. Rodriguez won and was proclaimed duly-elected governor.

Marquez challenged Rodriguez’ victory via petition for quo warranto before the COMELEC (EPC No. 92-28). Marquez revealed that Rodriguez left the United States where a charge, filed on November 12, 1985, is pending against the latter before the Los Angeles Municipal Court for fraudulent insurance claims, grand theft and attempted grand theft of personal property. Rodriguez is therefore a "fugitive from justice" which is a ground for his disqualification/ineligibility under Section 40(e) of the Local Government Code (R.A. 7160), so argued Marquez.

The COMELEC dismissed Marquez’ quo warranto petition (EPC No. 92-28) in a resolution of February 2, 1993, and likewise denied a reconsideration thereof.

Marquez challenged the COMELEC dismissal of EPC No. 92-28 before this Court via petition for certiorari, docketed as G.R. No. 112889. The crux of said petition is whether Rodriguez is a " fugitive from justice" as contemplated by Section 40(e) of the Local Government Code based on the alleged pendency of a criminal charge against him (as previously mentioned).

In resolving that Marquez petition (112889), the Court in "Marquez, Jr. vs. COMELEC" promulgated on April 18, 1995, now appearing in Volume 243, page 538 of the SCRA and hereinafter referred to as the MARQUEZ Decision, declared that:

“x x x, ‘fugitive from justice’ includes not only those who flee after conviction to avoid punishment but likewise those who, after being charged, flee to avoid prosecution. This definition truly finds support from jurisprudence (x x x), and it may be so conceded as expressing the general and ordinary connotation of the term."[1]

Whether or not Rodriguez is a "fugitive from justice" under the definition thus given was not passed upon by the Court. That task was to devolve on the COMELEC upon remand of the case to it, with the directive to proceed therewith with dispatch conformably with the MARQUEZ Decision. Rodriguez sought a reconsideration thereof. He also filed an "Urgent Motion to Admit Additional Argument in Support of the Motion for Reconsideration" to which was attached a certification from the Commission on Immigration showing that Rodriguez left the US on June 25, 1985 — roughly five (5) months prior to the institution of the criminal complaint filed against him before the Los Angeles court. The Court however denied a reconsideration of the MARQUEZ Decision.

In the May 8, 1995 election, Rodriguez and Marquez renewed their rivalry for the same position of governor. This time, Marquez challenged Rodriguez' candidacy via petition for disqualification before the COMELEC, based principally on the same allegation that Rodriguez is a "fugitive from justice." This petition for disqualification (SPA No. 95-089) was filed by Marquez on April 11, 1995 when Rodriguez' petition forcertiorari (112889) — from where the April 18, 1995 MARQUEZ Decision sprung — was still then pending before the Court.

On May 7, 1995 and after the promulgation of the MARQUEZ Decision, the COMELEC promulgated a Consolidated Resolution for EPC No. 92-28 (quo warranto case) and SPA No. 95-089 (disqualification case). In justifying a joint resolution of these two (2) cases, the COMELEC explained that:

1. EPC No. 92-28 and SPA No. 95-089 are inherently related cases;

2. the parties, facts and issue involved are identical in both cases

3. the same evidence is to be utilized in both cases in determining the common issue of whether Rodriguez is a "fugitive from justice"

4. on consultation with the Commission En Banc, the Commissioners unanimously agreed that a consolidated resolution of the two (2) cases is not procedurally flawed.

Going now into the meat of that Consolidated Resolution, the COMELEC, allegedly having kept in mind the MARQUEZ Decision definition of "fugitive from justice", found Rodriguez to be one. Such finding was essentially based on Marquez' documentary evidence consisting of

1. an authenticated copy of the November 12, 1995 warrant of arrest issued by the Los Angeles Municipal Court against Rodriguez, and

2. an authenticated copy of the felony complaint

which the COMELEC allowed to be presented ex-parte after Rodriguez walked-out of the hearing of the case on April 26, 1995 following the COMELEC's denial of Rodriguez' motion for postponement. With the walk-out, the COMELEC considered Rodriguez as having waived his right to disprove the authenticity of Marquez' aforementioned documentary evidence. The COMELEC thus made the following analysis:

"The authenticated documents submitted by petitioner (Marquez) to show the pendency of a criminal complaint against the respondent (Rodriguez) in the Municipal Court of Los Angeles, California, U.S.A., and the fact that there is an outstanding warrant against him amply proves petitioner's contention that the respondent is a fugitive from justice. The Commission cannot look with favor on respondent's defense that long before the felony complaint was allegedly filed, respondent was already in the Philippines and he did not know of the filing of the same nor was he aware that he was being proceeded against criminally. In a sense, thru this defense, respondent implicitly contends that he cannot be deemed a fugitive from justice, because to be so, one must be aware of the filing of the criminal complaint, and his disappearance in the place where the long arm of the law, thru the warrant of arrest, may reach him is predicated on a clear desire to avoid and evade the warrant. This allegation in the Answer, however, was not even fortified with any attached document to show when he left the United States and when he returned to this country, facts upon which the conclusion of absence of knowledge about the criminal complaint may be derived. On the contrary, the fact of arrest of respondent's wife on November 6, 1985 in the United States by the Fraud Bureau investigators in an apartment paid for respondent in that country can hardly rebut whatever presumption of knowledge there is against the respondent."[2]

And proceeding therefrom, the COMELEC, in the dispositive portion, declared:

"WHEREFORE, considering that respondent has been proven to be fugitive from justice, he is hereby ordered disqualified or ineligible from assuming and performing the functions of Governor of Quezon Province. Respondent is ordered to immediately vacate said office. Further, he is hereby disqualified from running for Governor for Quezon Province in the May 8, 1995 elections. Lastly, his certificate of candidacy for the May 8, 1995 elections is hereby set aside."

At any rate, Rodriguez again emerged as the victorious candidate in the May 8, 1995 election for the position of governor.

On May 10 and 11, 1995, Marquez filed urgent motions to suspend Rodriguez' proclamation which the COMELEC granted on May 11, 1995. The Provincial Board of Canvassers nonetheless proclaimed Rodriguez on May 12, 1995.

The COMELEC Consolidated Resolution in EPC No. 92-28 and SPA No. 95-089 and the May 11, 1995 Resolution suspending Rodriguez' proclamation thus gave rise to the filing of the instant petition for certiorari (G.R. No. 120099) on May 16, 1995.

On May 22, 1995, Marquez filed an "Omnibus Motion To Annul The Proclamation Of Rodriguez To Proclaim Marquez And To Cite The Provincial Board of Canvassers in Contempt" before the COMELEC (in EPC No. 92-28 and SPA No. 95-089).

Acting on Marquez' omnibus motion, the COMELEC, in its Resolution of June 23, 1995, nullified Rodriguez' proclamation and ordered certain members of the Quezon Province Provincial Board of Canvassers to explain why they should not be cited in contempt for disobeying the poll body's May 11, 1995 Resolution suspending Rodriguez' proclamation. But with respect to Marquez' motion for his proclamation, the COMELEC deferred action until after this Court has resolved the instant petition (G.R. No. 120099).

Rodriguez filed a motion to admit supplemental petition to include the aforesaid COMELEC June 23, 1995 Resolution, apart from the May 7 and May 11, 1995 Resolutions (Consolidated Resolution and Order to suspend Rodriguez' proclamation, respectively).

As directed by the Court, oral arguments were had in relation to the instant petition (G.R. No. 120099) on July 13, 1995.

Marquez, on August 3, 1995, filed an "Urgent Motion For Temporary Restraining Order Or Preliminary Injunction" which sought to restrain and enjoin Rodriguez "from exercising the powers, functions and prerogatives of Governor of Quezon x x x." Acting favorably thereon, the Court in a Resolution dated August 8, 1995 issued a temporary restraining order. Rodriguez' "Urgent Motion To Lift Temporary Restraining Order And/Or For Reconsideration" was denied by the Court in an August 15, 1995 Resolution. Another similar urgent motion was later on filed by Rodriguez which the Court also denied.

In a Resolution dated October 24, 1995, the Court

"x x x RESOLVED to DIRECT the Chairman of the Commission on Elections ('COMELEC') to designate a Commissioner or a ranking official of the COMELEC to RECEIVE AND EVALUATE such legally admissible evidence as herein petitioner Eduardo Rodriguez may be minded to present by way of refuting the evidence heretofore submitted by private respondent Bienvenido Marquez, Sr., or that which can tend to establish petitioner's contention that he does not fall within the legal concept of a ‘fugitive from justice.’ Private respondent Marquez may likewise, if he so desires, introduce additional and admissible evidence in support of his own position. The provisions of Sections 3 to 10, Rule 33, of the Rules of Court may be applied in the reception of the evidence. The Chairman of the COMELEC shall have the proceedings completed and the corresponding report submitted to this Court within thirty (30) days from notice hereof."

The COMELEC complied therewith by filing before the Court, on December 26, 1995, a report entitled "EVIDENCE OF THE PARTIES and COMMISSION'S EVALUATION" wherein the COMELEC, after calibrating the parties' evidence, declared that Rodriguez is NOT a "fugitive from justice" as defined in the main opinion of the MARQUEZ Decision, thus making a 180-degree turnaround from its finding in the Consolidated Resolution. In arriving at this new conclusion, the COMELEC opined that intent to evade is a material element of the MARQUEZ Decisiondefinition. Such intent to evade is absent in Rodriguez' case because evidence has established that Rodriguez arrived in the Philippines (June 25, 1985) long before the criminal charge was instituted in the Los Angeles Court (November 12, 1985).

But the COMELEC report did not end there. The poll body expressed what it describes as its "persistent discomfort" on whether it read and applied correctly the MARQUEZ Decision definition of "fugitive from justice". So as not to miss anything, we quote the COMELEC's observations in full:

“x x x. The main opinion's definition of a 'fugitive from justice ‘includes’ not only those who flee after conviction to avoid punishment but also those who, after being charged, flee to avoid prosecution.' It proceeded to state that:

This definition truly finds support from jurisprudence (Philippine Law Dictionary Third Edition, p. 399 by F.B. Moreno; Black's Law Dictionary, Sixth Edition, p. 671; King v. Noe, 244 SC 344; 137 SE 2d 102, 103; Hughes v. Pflanz, 138 Federal Reporter 980; Tobin v. Casaus, 275 Pacific Reporter 2d p. 792), and it may be so conceded as expressing the general and ordinary connotation of the term.

But in the majority of the cases cited, the definition of the term ' fugitive from justice' contemplates other instances not explicitly mentioned in the main opinion. Black's Law Dictionary begins the definition of the term by referring to a 'fugitive from justice' as:

(A) person, who, having committed a crime, flees from jurisdiction of the court where crime was committed or departs from his usual place of abode and conceals himself within the district. x x x

Then, citing King v. Noe, the definition continues and conceptualizes a 'fugitive from justice' as:

x x x a person who, having committed or been charged with a crime in one state, has left its jurisdiction and is found within the territory of another when it is sought to subject him to the criminal process of the former state. (our emphasis)

In Hughes v. Pflanz, the term was defined as:

a person who, having committed within a state a crime, when sought for, to be subjected to criminal process, is found within the territory of another state.

Moreno's Philippine Law Dictionary, 5th Ed. considers the term as an:

expression which refers to one having committed, or being accused, of a crime in one jurisdiction and is absent for any reason from that jurisdiction.

Specifically, one who flees to avoid punishment x x x (Italics ours)

From the above rulings, it can be gleaned that the objective facts sufficient to constitute flight from justice are: (a) a person committed a 'crime' or has been charged for the commission thereof; and (b) thereafter, leaves the jurisdiction of the court where said crime was committed or his usual place of abode.

Filing of charges prior to flight is not always an antecedent requirement to label one a ' fugitive from justice.’ Mere commission of a 'crime' without charges having been filed for the same and flight subsequent thereto sufficiently meet the definition. Attention is directed at the use of the word 'crime' which is not employed to connote guilt or conviction for the commission thereof. Justice Davide's separate opinion in G.R. No. 112889 elucidates that the disqualification for being a fugitive does not involve the issue of the presumption of innocence, the reason for disqualification being that a person 'was not brought within the jurisdiction of the court because he had successfully evaded arrest; or if he was brought within the jurisdiction of the court and was tried and convicted, he has successfully evaded service of sentence because he had jumped bail or escaped. The disqualification then is based on his ‘flight from justice.’

Other rulings of the United States Supreme Court further amplify the view that intent and purpose for departure is inconsequential to the inquiry. The texts, which are persuasive in our jurisdiction, are more unequivocal in their pronouncements. In King v. US (144 F. 2nd 729), citing Roberts v. Reilly (116 US 80) the United States Supreme Court held:

x x x it is not necessary that the party should have left the state or the judicial district where the crime is alleged to have been committed, after an indictment found, or for the purpose of avoiding an anticipated prosecution, but that, having committed a crime within a state or district, he has left and is found in another jurisdiction (Italics supplied)

Citing State v. Richter (37 Minn. 436), the Court further ruled in unmistakable language:

The simple fact that they (person who have committed crime within a state) are not within the state to answer its criminal process when required renders them, in legal intendment, fugitives from justice.

THEREFORE, IT APPEARS THAT GIVEN THE AUTHORITIES CITED IN G.R. NO. 112889, THE MERE FACT THAT THERE ARE PENDING CHARGES IN THE UNITED STATES AND THAT PETITIONER RODRIGUEZ IS IN THE PHILIPPINES MAKE PETITIONER A 'FUGITIVE FROM JUSTICE.'

From the foregoing discussions, the determination of whether or not Rodriguez is a fugitive from justice hinges on whether or not Rodriguez' evidence shall be measured against the two instances mentioned in the main opinion, or is to be expanded as to include other situations alluded to by the foreign jurisprudence cited by the Court. In fact, the spirited legal fray between the parties in this case focused on each camp's attempt to construe the Court's definition so as to fit or to exclude petitioner within the definition of a 'fugitive from justice'. Considering, therefore, the equally valid yet different interpretations resulting from the Supreme Court decision in G.R. No. 112889, the Commission deems it most conformable to said decision to evaluate the evidence in light of the varied constructions open to it and to respectfully submit the final determination of the case to the Honorable Supreme Court as the final interpreter of the law."

The instant petition dwells on that nagging issue of whether Rodriguez is a " fugitive from justice,” the determination of which, as we have directed the COMELEC on two (2) occasions (in the MARQUEZ Decision and in the Court's October 24, 1995 Resolution), must conform to how such term has been defined by the Court in the MARQUEZ Decision. To reiterate, a "fugitive from justice":

"x x x includes not only those who flee after conviction to avoid punishment but likewise who, after being charged, flee to avoid prosecution."

The definition thus indicates that the intent to evade is the compelling factor that animates one's flight from a particular jurisdiction. And obviously, there can only be an intent to evade prosecution or punishment when there is knowledge by the fleeing subject of an already instituted indictment, or of a promulgated judgment of conviction.

Rodriguez' case just cannot fit in this concept. There is no dispute that his arrival in the Philippines from the US on June 25, 1985, as per certifications issued by the Bureau of Immigrations dated April 27 [3] and June 26 of 1995,[4] preceded the filing of the felony complaint in the Los Angeles Court on November 12, 1985 and of the issuance on even date of the arrest warrant by that same foreign court, by almost five (5) months. It was clearly impossible for Rodriguez to have known about such felony complaint and arrest warrant at the time he left the US, as there was in fact no complaint and arrest warrant — much less conviction — to speak of yet at such time. What prosecution or punishment then was Rodriguez deliberately running away from with his departure from the US? The very essence of being a "fugitive from justice" under theMARQUEZ Decision definition, is just nowhere to be found in the circumstances of Rodriguez.

With that, the Court gives due credit to the COMELEC in having made the. same analysis in its "x x x COMMISSION'S EVALUATION". There are, in fact, other observations consistent with such analysis made by the poll body that are equally formidable so as to merit their adoption as part of this decision, to wit:

"It is acknowledged that there was an attempt by private respondent to show Rodriguez' intent to evade the law. This was done by offering for admission a voluminous copy of an investigation report (Exhibits I to I-17 and J to J-87 inclusive) on the alleged crimes committed which led to the filing of the charges against petitioner. It was offered for the sole purpose of establishing the fact that it was impossible for petitioner not to have known of said investigation due to its magnitude. Unfortunately, such conclusion misleads because investigations of this nature, no matter how extensive or prolonged, are shrouded with utmost secrecy to afford law enforcers the advantage of surprise and effect the arrest of those who would be charged. Otherwise, the indiscreet conduct of the investigation would be nothing short of a well-publicized announcement to the perpetrators of the imminent filing of charges against them. And having been forewarned, every effort to sabotage the investigation may be resorted to by its intended objects. But if private respondent's attempt to show Rodriguez' intent to evade the law at the time he left the United States has any legal consequence at all, it will be nothing more than proof that even private respondent accepts that intent to evade the law is a material element in the definition of a fugitive.

"The circumstantial fact that it was seventeen (17) days after Rodriguez' departure that charges against him were filed cannot overturn the presumption of good faith in his favor. The same suggests nothing more than the sequence of events which transpired. A subjective fact as that of petitioner's purpose cannot be inferred from the objective data at hand in the absence of further proof to substantiate such claim. In fact, the evidence of petitioner Rodriguez sufficiently proves that his compulsion to return to the Philippines was due to his desire to join and participate vigorously in the political campaigns against former President Ferdinand E. Marcos. For indeed, not long after petitioner's arrival in the country, the upheaval wrought by the political forces and the avalanche of events which occurred resulted in one of the more colorful events in Philippine history. The EDSA Revolution led to the ouster of former Pres. Marcos and precipitated changes in the political climate. And being a figure in these developments, petitioner Rodriguez began serving his home province as OIC-Board Member of the Sangguniang Panlalawigan ng Quezon in 1986. Then, he was elected Governor in 1988 and continues to be involved in politics in the same capacity as re-elected Governor in 1992 and the disputed re-election in 1995. Altogether, these landmark dates hem in for petitioner a period of relentless, intensive and extensive activity of varied political campaigns — first against the Marcos government, then for the governorship. And serving the people of Quezon province as such, the position entails absolute dedication of one's time to the demands of the office.

"Having established petitioner's lack of knowledge of the charges to be filed against him at the time he left the United States, it becomes immaterial under such construction to determine the exact time when he was made aware thereof. While the law, as interpreted by the Supreme Court, does not countenance flight from justice in the instance that a person flees the jurisdiction of another state after charges against him or a warrant for his arrest was issued or even in view of the imminent filing and issuance of the same, petitioner's plight is altogether a different situation. When, in good faith, a person leaves the territory of a state not his own, homeward bound, and learns subsequently of charges filed against him while in the relative peace and service of his own country, the fact that he does not subject himself to the jurisdiction of the former state does not qualify him outright as a fugitive from justice.

"The severity of the law construed in the manner as to require of a person that he subject himself to the jurisdiction of another state while already in his country or else be disqualified from office, is more apparent when applied in petitioner's case. The criminal process of the United States extends only within its territorial jurisdiction. That petitioner has already left said country when the latter sought to subject him to its criminal process is hardly petitioner's fault. In the absence of an intent to evade the laws of the United States, petitioner had every right to depart therefrom at the precise time that he did and to return to the Philippines. No justifiable reason existed to curtail or fetter petitioner's exercise of his right to leave the United State and return home. Hence, sustaining the contrary proposition would be to unduly burden and punish petitioner for exercising a right as he cannot be faulted for the circumstances that brought him within Philippine territory at the time he was sought to be placed under arrest and to answer for charges filed against him.

"Granting, as the evidence warrants, that petitioner Rodriguez came to know of the charges only later, and under his circumstances, is there a law that requires petitioner to travel to the United States and subject himself to the monetary burden and tedious process of defending himself before the country's courts?

"It must be noted that moral uprightness is not a standard too far-reaching as to demand of political candidate the performance of duties and obligations that are supererogatory in nature. We do not dispute that an alleged 'fugitive from justice' must perform acts in order not to be so categorized. Clearly, a person who is aware of the imminent filing of charges against him or of the same already filed in connection with acts he committed in the jurisdiction of a particular state, is under an obligation not to flee said place of commission. However, as in petitioner's case, his departure from the United States may not place him under a similar obligation. His subsequent knowledge while in the Philippines and non-submission to the jurisdiction of the former country does not operate to label petitioner automatically a fugitive from justice. As he was a public officer appointed and elected immediately after his return to the country, petitioner Rodriguez had every reason to devote utmost priority to the service of his office. He could not have gone back to the United States in the middle of his term nor could he have traveled intermittently thereto without jeopardizing the interest of the public he serves. To require that of petitioner would be to put him in a paradoxical quandary where he is compelled to violate the very functions of his office."

However, Marquez and the COMELEC (in its "COMMISSION'S EVALUATION" as earlier quoted) seem to urge the Court to re-define "fugitive from justice." They espouse the broader concept of the term as culled from foreign authorities (mainly of U.S. vintage) cited in theMARQUEZ Decision itself, i.e., that one becomes a "fugitive from justice" by the mere fact that he leaves the jurisdiction where a charge is pending against him, regardless of whether or not the charge has already been filed at the time of his flight.

Suffice it to say that the "law of the case" doctrine forbids the Court to craft an expanded re-definition of " fugitive from justice" (which is at variance with the MARQUEZ Decision) and proceed therefrom in resolving the instant petition. The various definitions of that doctrine have been laid down in People v. Pinuila, 103 Phil. 992, 999, to wit:

"'Law of the case' has been defined as the opinion delivered on a former appeal. More specifically, it means that whatever is once irrevocably established as the controlling legal rule of decision between the same parties in the same case continues to be the law of the case, whether correct on general principles or not, so long as the facts on which such decision was predicated continue to be the facts of the case before the court." (21 C.J.S. 330)

"It may be stated as a rule of general application that, where the evidence on a second or succeeding appeal is substantially the same as that on the first or preceding appeal, all matters, questions, points, or issues adjudicated on the prior appeal are the law of the case on all subsequent appeals and will not be considered or readjudicated therein." (5 C.J.S. 1267)

"In accordance with the general rule stated in Section 1821, where, after a definite determination, the court has remanded the cause for further action below, it will refuse to examine question other than those arising subsequently to such determination and remand, or other than the propriety of the compliance with its mandate; and if the court below has proceeded in substantial conformity to the directions of the appellate court, its action will not be questioned on a second appeal.

"As a general rule a decision on a prior appeal of the same case is held to be the law of the case whether that decision is right or wrong, the remedy of the party deeming himself aggrieved being to seek a rehearing." (5 C.J.S. 1276-77).

"Questions necessarily involved in the decision on a former appeal will be regarded as the law of the case on a subsequent appeal, although the questions are not expressly treated in the opinion of the court, as the presumption is that all the facts in the case bearing on the point decided have received due consideration whether all or none of them are mentioned in the opinion." (5 C.J.S. 1286-87).

To elaborate, the same parties (Rodriguez and Marquez) and issue (whether or not Rodriguez is a " fugitive from justice") are involved in theMARQUEZ Decision and the instant petition. The MARQUEZ Decision was an appeal from EPC No. 92-28 (the Marquez' quo warrantopetition before the COMELEC). The instant petition is also an appeal from EPC No. 92-28 although the COMELEC resolved the latter jointly with SPA No. 95-089 (Marquez' petition for the disqualification of Rodriguez). Therefore, what was irrevocably established as the controlling legal rule in the MARQUEZ Decision must govern the instant petition. And we specifically refer to the concept of "fugitive from justice" as defined in the main opinion in the MARQUEZ Decision which highlights the significance of an intent to evade but which Marquez and the COMELEC, with their proposed expanded definition, seem to trivialize.

Besides, to re-define "fugitive from justice" would only foment instability in our jurisprudence when hardly has the ink dried in the MARQUEZ Decision.

To summarize, the term "fugitive from justice" as a ground for the disqualification or ineligibility of a person seeking to run for any elective local position under Section 40(e) of the Local Government Code, should be understood according to the definition given in the MARQUEZ Decision, to wit:

"A 'fugitive from justice' includes not only those who flee after conviction to avoid punishment but likewise those who, after being charged, flee to avoid prosecution." (Italics ours.)"

Intent to evade on the part of a candidate must therefore be established by proof that there has already been a conviction or at least, a charge has already been filed, at the time of flight. Not being a "fugitive from justice" under this definition, Rodriguez cannot be denied the Quezon Province gubernatorial post.

WHEREFORE, in view of the foregoing, the instant petition is hereby GRANTED and the assailed Resolutions of the COMELEC dated May 7, 1995 (Consolidated Resolution), May 11, 1995 (Resolution suspending Rodriguez' proclamation) and June 23, 1995 (Resolution nullifying Rodriguez' proclamation and ordering the Quezon Province Provincial Board of Canvassers to explain why they should not be cited in contempt) are SET ASIDE.

SO ORDERED.

Romero, Melo, Puno, Kapunan, Hermosisima, Jr., and Panganiban, JJ., concur.Torres, Jr., J., concurs in a separate opinion.Vitug, J., dissents.Bellosillo, J., on leave.

Republic of the PhilippinesSUPREME COURTManila

EN BANC

G.R. No. 88291 June 8, 1993

ERNESTO M. MACEDA, petitioner, vs.HON. CATALINO MACARAIG, JR., in his capacity as Executive Secretary, Office of the President, HON. VICENTE JAYME, ETC., ET AL., respondents.

Angara, Abello, Concepcion & Cruz for respondent Pilipinas Shell Petroleum Corporation.

Siguion Reyna, Montecillo & Ongsiako for Caltex.

NOCON, J.:

Just like lightning which does strike the same place twice in some instances, this matter of indirect tax exemption of the private respondent National Power Corporation (NPC) is brought to this Court a second time. Unfazed by the Decision We promulgated on May 31, 1991 1 petitioner Ernesto Maceda asks this Court to reconsider said Decision. Lest We be criticized for denying due process to the petitioner. We have decided to take a second look at the issues. In the process, a hearing was held on July 9, 1992 where all parties presented their respective arguments. Etched in this Court's mind are the paradoxical claims by both petitioner and private respondents that their respective positions are for the benefit of the Filipino people.

I

A Chronological review of the relevant NPC laws, specially with respect to its tax exemption provisions, at the risk of being repetitious is, therefore, in order.

On November 3, 1936, Commonwealth Act No. 120 was enacted creating the National Power Corporation, a public corporation, mainly to develop hydraulic power from all water sources in the Philippines. 2 The sum of P250,000.00 was appropriated out of the funds in the Philippine Treasury for the purpose of organizing the NPC and conducting its

preliminary work. 3 The main source of funds for the NPC was the flotation of bonds in the capital markets 4 and these bonds

. . . issued under the authority of this Act shall be exempt from the payment of all taxes by the Commonwealth of the Philippines, or by any authority, branch, division or political subdivision thereof and subject to the provisions of the Act of Congress, approved March 24, 1934, otherwise known as the Tydings McDuffle Law, which facts shall be stated upon the face of said bonds. . . . . 5

On June 24, 1938, C.A. No. 344 was enacted increasing to P550,000.00 the funds needed for the initial operations of the NPC and reiterating the provision of the flotation of bonds as soon as the first construction of any hydraulic power project was to be decided by the NPC Board. 6 The provision on tax exemption in relation to the issuance of the NPC bonds was neither amended nor deleted.

On September 30, 1939, C.A. No. 495 was enacted removing the provision on the payment of the bond's principal and interest in "gold coins" but adding that payment could be made in United States dollars. 7 The provision on tax exemption in relation to the issuance of the NPC bonds was neither amended nor deleted.

On June 4, 1949, Republic Act No. 357 was enacted authorizing the President of the Philippines to guarantee, absolutely and unconditionally, as primary obligor, the payment of any and all NPC loans. 8 He was also authorized to contract on behalf of the NPC with the International Bank for Reconstruction and Development (IBRD) for NPC loans for the accomplishment of NPC's corporate objectives 9 and for the reconstruction and development of the economy of the country. 10 It was expressly stated that:

Any such loan or loans shall be exempt from taxes, duties, fees, imposts, charges, contributions and restrictions of the Republic of the Philippines, its provinces, cities and municipalities. 11

On the same date, R.A. No. 358 was enacted expressly authorizing the NPC, for the first time, to incur other types of indebtedness, aside from indebtedness incurred by flotation of bonds. 12 As to the pertinent tax exemption provision, the law stated as follows:

To facilitate payment of its indebtedness, the National Power Corporation shall be exempt from all taxes, duties, fees, imposts, charges, and restrictions of the Republic of the Philippines, its provinces, cities and municipalities. 13

On July 10, 1952, R.A. No. 813 was enacted amending R.A. No. 357 in that, aside from the IBRD, the President of the Philippines was authorized to negotiate, contract and guarantee loans with the Export-Import Bank of of Washigton, D.C., U.S.A., or any other international financial institution. 14 The tax provision for repayment of these loans, as stated in R.A. No. 357, was not amended.

On June 2, 1954, R.A. No. 987 was enacted specifically to withdraw NPC's tax exemption for real estate taxes. As enacted, the law states as follows:

To facilitate payment of its indebtedness, the National Power Corporation shall be exempt from all taxes, except real property tax, and from all duties, fees, imposts, charges, and restrictions of the Republic of the Philippines, its provinces, cities, and municipalities. 15

On September 8, 1955, R.A. No. 1397 was enacted directing that the NPC projects to be funded by the increased indebtedness 16 should bear the National Economic Council's stamp of approval. The tax exemption provision related to the payment of this total indebtedness was not amended nor deleted.

On June 13, 1958, R.A. No. 2055 was enacted increasing the total amount of foreign loans NPC was authorized to incur to US$100,000,000.00 from the US$50,000,000.00 ceiling in R.A. No. 357. 17 The tax provision related to the repayment of these loans was not amended nor deleted.

On June 13, 1958, R.A. No. 2058 was enacting fixing the corporate life of NPC to December 31, 2000. 18 All laws or provisions of laws and executive orders contrary to said R.A. No. 2058 were expressly repealed. 19

On June 18, 1960, R.A. No 2641 was enacted converting the NPC from a public corporation into a stock corporation with an authorized capital stock of P100,000,000.00 divided into 1,000.000 shares having a par value of P100.00 each, with said capital stock wholly subscribed to by the Government. 20 No tax exemption was incorporated in said Act.

On June 17, 1961, R.A. No. 3043 was enacted increasing the above-mentioned authorized capital stock to P250,000,000.00 with the increase to be wholly subscribed by the Government. 21 No tax provision was incorporated in said Act.

On June 17, 1967, R.A. No 4897 was enacted. NPC's capital stock was increased again to P300,000,000.00, the increase to be wholly subscribed by the Government. No tax provision was incorporated in said Act. 22

On September 10, 1971, R.A. No. 6395 was enacted revising the charter of the NPC, C.A. No. 120, as amended. Declared as primary objectives of the nation were:

Declaration of Policy. — Congress hereby declares that (1) the comprehensive development, utilization and conservation of Philippine water resources for all beneficial uses, including power generation, and (2) the total electrification of the Philippines through the development of power from all sources to meet the needs of industrial development and dispersal and the needs of rural electrification are primary objectives of the nation which shall be pursued coordinately and supported by all instrumentalities and agencies of the government, including the financial institutions. 23

Section 4 of C.A. No. 120, was renumbered as Section 8, and divided into sections 8 (a) (Authority to incur Domestic Indebtedness) and Section 8 (b) (Authority to Incur Foreign Loans).

As to the issuance of bonds by the NPC, Paragraph No. 3 of Section 8(a), states as follows:

The bonds issued under the authority of this subsection shall be exempt from the payment of all taxes by the Republic of the Philippines, or by any authority, branch, division or political subdivision thereof which facts shall be stated upon the face of said bonds. . . . 24

As to the foreign loans the NPC was authorized to contract, Paragraph No. 5, Section 8(b), states as follows:

The loans, credits and indebtedness contracted under this subsection and the payment of the principal, interest and other charges thereon, as well as the importation of machinery, equipment, materials and supplies by the Corporation, paid from the proceeds of any loan, credit or indebtedeness incurred under this Act, shall also be exempt from all taxes, fees, imposts, other charges and restrictions, including import restrictions, by the Republic of the Philippines, or any of its agencies and political subdivisions. 25

A new section was added to the charter, now known as Section 13, R.A. No. 6395, which declares the non-profit character and tax exemptions of NPC as follows:

The Corporation shall be non-profit and shall devote all its returns from its capital investment, as well as excess revenues from its operation, for expansion. To enable the Corporation to pay its indebtedness and obligations and in furtherance and effective implementation of the policy enunciated in Section one of this Act, the Corporation is hereby declared exempt:

(a) From the payment of all taxes, duties, fees, imposts, charges costs and service fees in any court or administrative proceedings in which it may be a party, restrictions and duties to the

Republic of the Philippines, its provinces, cities, and municipalities and other government agencies and instrumentalities;

(b) From all income taxes, franchise taxes and realty taxes to be paid to the National Government, its provinces, cities, municipalities and other government agencies and instrumentalities;

(c) From all import duties, compensating taxes and advanced sales tax, and wharfage fees on import of foreign goods required for its operations and projects; and

(d) From all taxes, duties, fees, imposts and all other charges its provinces, cities, municipalities and other government agencies and instrumentalities, on all petroleum products used by the Corporation in the generation, transmission, utilization, and sale of electric power. 26

On November 7, 1972, Presidential Decree No. 40 was issued declaring that the electrification of the entire country was one of the primary concerns of the country. And in connection with this, it was specifically stated that:

The setting up of transmission line grids and the construction of associated generation facilities in Luzon, Mindanao and major islands of the country, including the Visayas, shall be the responsibility of the National Power Corporation (NPC) as the authorized implementing agency of the State. 27

xxx xxx xxx

It is the ultimate objective of the State for the NPC to own and operate as a single integrated system all generating facilities supplying electric power to the entire area embraced by any grid set up by the NPC. 28

On January 22, 1974, P.D. No. 380 was issued giving extra powers to the NPC to enable it to fulfill its role under aforesaid P.D. No. 40. Its authorized capital stock was raised to P2,000,000,000.00, 29 its total domestic indebtedness was pegged at a maximum of P3,000,000,000.00 at any one time, 30 and the NPC was authorized to borrow a total of US$1,000,000,000.00 31 in foreign loans.

The relevant tax exemption provision for these foreign loans states as follows:

The loans, credits and indebtedness contracted under this subsection and the payment of the principal, interest and other charges thereon, as well as the importation of machinery, equipment, materials, supplies and services, by the Corporation, paid from the proceeds of any loan, credit or indebtedness incurred under this Act, shall also be exempt from all direct and indirect taxes, fees, imposts, other charges and restrictions, including import restrictions previously and presently imposed, and to be imposed by the Republic of the Philippines, or any of its agencies and political subdivisions. 32 (Emphasis supplied)

Section 13(a) and 13(d) of R.A. No 6395 were amended to read as follows:

(a) From the payment of all taxes, duties, fees, imposts, charges and restrictions to the Republic of the Philippines, its provinces, cities, municipalities and other government agencies and instrumentalities including the taxes, duties, fees, imposts and other charges provided for under the Tariff and Customs Code of the Philippines, Republic Act Numbered Nineteen Hundred Thirty-Seven, as amended, and as further amended by Presidential Decree No. 34 dated October 27, 1972, and Presidential Decree No. 69, dated November 24, 1972, and costs and service fees in any court or administrative proceedings in which it may be a party;

xxx xxx xxx

(d) From all taxes, duties, fees, imposts, and all other charges imposed directly or indirectly by the Republic of the Philippines, its provinces, cities, municipalities and other government agencies and instrumentalities, on all petroleum products used by the Corporation in the generation, transmission, utilization and sale of electric power. 33 (Emphasis supplied)

On February 26, 1970, P.D. No. 395 was issued removing certain restrictions in the NPC's sale of electricity to its different customers. 34 No tax exemption provision was amended, deleted or added.

On July 31, 1975, P.D. No. 758 was issued directing that P200,000,000.00 would be appropriated annually to cover the unpaid subscription of the Government in the NPC authorized capital stock, which amount would be taken from taxes accruing to the General Funds of the Government, proceeds from loans, issuance of bonds, treasury bills or notes to be issued by the Secretary of Finance for this particular purpose. 35

On May 27, 1976 P.D. No. 938 was issued

(I)n view of the accelerated expansion programs for generation and transmission facilities which includes nuclear power generation, the present capitalization of National Power Corporation (NPC) and the ceilings for domestic and foreign borrowings are deemed insufficient; 36

xxx xxx xxx

(I)n the application of the tax exemption provisions of the Revised Charter, the non-profit character of NPC has not been fully utilized because of restrictive interpretation of the taxing agencies of the government on said provisions; 37

xxx xxx xxx

(I)n order to effect the accelerated expansion program and attain the declared objective of total electrification of the country, further amendments of certain sections of Republic Act No. 6395, as amended by Presidential Decrees Nos. 380, 395 and 758, have become imperative; 38

Thus NPC's capital stock was raised to P8,000,000,000.00, 39 the total domestic indebtedness ceiling was increased to P12,000,000,000.00, 40 the total foreign loan ceiling was raised to US$4,000,000,000.00 41 and Section 13 of R.A. No. 6395, was amended to read as follows:

The Corporation shall be non-profit and shall devote all its returns from its capital investment as well as excess revenues from its operation, for expansion. To enable the Corporation to pay to its indebtedness and obligations and in furtherance and effective implementation of the policy enunciated in Section one of this Act, the Corporation, including its subsidiaries, is hereby declared exempt from the payment of all forms of taxes, duties, fees, imposts as well as costs and service fees including filing fees, appeal bonds, supersedeas bonds, in any court or administrative proceedings. 42

II

On the other hand, the pertinent tax laws involved in this controversy are P.D. Nos. 882, 1177, 1931 and Executive Order No. 93 (S'86).

On January 30, 1976, P.D. No. 882 was issued withdrawing the tax exemption of NPC with regard to imports as follows:

WHEREAS, importations by certain government agencies, including government-owned or controlled corporation, are exempt from the payment of customs duties and compensating tax; and

WHEREAS, in order to reduce foreign exchange spending and to protect domestic industries, it is necessary to restrict and regulate such tax-free importations.

NOW THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, and do hereby decree and order the following:

Sec. 1. All importations of any government agency, including government-owned or controlled corporations which are exempt from the payment of customs duties and internal revenue taxes, shall be subject to the prior approval of an Inter-Agency Committee which shall insure compliance with the following conditions:

(a) That no such article of local manufacture are available in sufficient quantity and comparable quality at reasonable prices;

(b) That the articles to be imported are directly and actually needed and will be used exclusively by the grantee of the exemption for its operations and projects or in the conduct of its functions; and

(c) The shipping documents covering the importation are in the name of the grantee to whom the goods shall be delivered directly by customs authorities.

xxx xxx xxx

Sec. 3. The Committee shall have the power to regulate and control the tax-free importation of government agencies in accordance with the conditions set forth in Section 1 hereof and the regulations to be promulgated to implement the provisions of this Decree. Provided, however, That any government agency or government-owned or controlled corporation, or any local manufacturer or business firm adversely affected by any decision or ruling of the Inter-Agency Committee may file an appeal with the Office of the President within ten days from the date of notice thereof. . . . .

xxx xxx xxx

Sec. 6. . . . . Section 13 of Republic Act No. 6395; . . .. and all similar provisions of all general and special laws and decrees are hereby amended accordingly.

xxx xxx xxx

On July 30, 1977, P.D. 1177 was issued as it was

. . . declared the policy of the State to formulate and implement a National Budget that is an instrument of national development, reflective of national objectives, strategies and plans. The budget shall be supportive of and consistent with the socio-economic development plan and shall be oriented towards the achievement of explicit objectives and expected results, to ensure that funds are utilized and operations are conducted effectively, economically and efficiently. The national budget shall be formulated within a context of a regionalized government structure and of the totality of revenues and other receipts, expenditures and borrowings of all levels of government-owned or controlled corporations. The budget shall likewise be prepared within the context of the national long-term plan and of a long-term budget program. 43

In line with such policy, the law decreed that

All units of government, including government-owned or controlled corporations, shall pay income taxes, customs duties and other taxes and fees are imposed under revenues laws: provided, that organizations otherwise exempted by law from the payment of such taxes/duties may ask for a subsidy from the General Fund in the exact amount of taxes/duties due: provided, further, that a procedure shall be established by the Secretary of Finance and the Commissioner of the Budget, whereby such subsidies shall automatically be considered as both revenue and expenditure of the General Fund. 44

The law also declared that —

[A]ll laws, decrees, executive orders, rules and regulations or parts thereof which are inconsistent with the provisions of the Decree are hereby repealed and/or modified accordingly. 45

On July 11, 1984, most likely due to the economic morass the Government found itself in after the Aquino assassination, P.D. No. 1931 was issued to reiterate that:

WHEREAS, Presidential Decree No. 1177 has already expressly repealed the grant of tax privileges to any government-owned or controlled corporation and all other units of government; 46

and since there was a

. . . need for government-owned or controlled corporations and all other units of government enjoying tax privileges to share in the requirements of development, fiscal or otherwise, by paying the duties, taxes and other charges due from them. 47

it was decreed that:

Sec. 1. The provisions of special on general law to the contrary notwithstanding, all exemptions from the payment of duties, taxes, fees, imposts and other charges heretofore granted in favor of government-owned or controlled corporations including their subsidiaries, are hereby withdrawn.

Sec. 2. The President of the Philippines and/or the Minister of Finance, upon the recommendation of the Fiscal Incentives Review Board created under Presidential Decree No. 776, is hereby empowered to restore, partially or totally, the exemptions withdrawn by Section 1 above, any applicable tax and duty, taking into account, among others, any or all of the following:

1) The effect on the relative price levels;

2) The relative contribution of the corporation to the revenue generation effort;

3) The nature of the activity in which the corporation is engaged in; or

4) In general the greater national interest to be served.

xxx xxx xxx

Sec. 5. The provisions of Presidential Decree No. 1177 as well as all other laws, decrees, executive orders, administrative orders, rules, regulations or parts thereof which are inconsistent with this Decree are hereby repealed, amended or modified accordingly.

On December 17, 1986, E.O. No. 93 (S'86) was issued with a view to correct presidential restoration or grant of tax exemption to other government and private entities without benefit of review by the Fiscal Incentives Review Board, to wit:

WHEREAS, Presidential Decree Nos. 1931 and 1955 issued on June 11, 1984 and October 14, 1984, respectively, withdrew the tax and duty exemption privileges, including the preferential tax treatment, of government and private entities with certain exceptions, in order that the requirements of national economic development, in terms of fiscals and other resources, may be met more adequately;

xxx xxx xxx

WHEREAS, in addition to those tax and duty exemption privileges were restored by the Fiscal Incentives Review Board (FIRB), a number of affected entities, government and private, had their tax and duty exemption privileges restored or granted by Presidential action without benefit or review by the Fiscal Incentives Review Board (FIRB);

xxx xxx xxx

Since it was decided that:

[A]ssistance to government and private entities may be better provided where necessary by explicit subsidy and budgetary support rather than tax and duty exemption privileges if only to improve the fiscal monitoring aspects of government operations.

It was thus ordered that:

Sec. 1. The Provisions of any general or special law to the contrary notwithstanding, all tax and duty incentives granted to government and private entities are hereby withdrawn, except:

a) those covered by the non-impairment clause of the Constitution;

b) those conferred by effective internation agreement to which the Government of the Republic of the Philippines is a signatory;

c) those enjoyed by enterprises registered with:

(i) the Board of Investment pursuant to Presidential Decree No. 1789, as amended;

(ii) the Export Processing Zone Authority, pursuant to Presidential Decree No. 66 as amended;

(iii) the Philippine Veterans Investment Development Corporation Industrial Authority pursuant to Presidential Decree No. 538, was amended.

d) those enjoyed by the copper mining industry pursuant to the provisions of Letter of Instructions No. 1416;

e) those conferred under the four basic codes namely:

(i) the Tariff and Customs Code, as amended;

(ii) the National Internal Revenue Code, as amended;

(iii) the Local Tax Code, as amended;

(iv) the Real Property Tax Code, as amended;

f) those approved by the President upon the recommendation of the Fiscal Incentives Review Board.

Sec. 2. The Fiscal Incentives Review Board created under Presidential Decree No. 776, as amended, is hereby authorized to:

a) restore tax and/or duty exemptions withdrawn hereunder in whole or in part;

b) revise the scope and coverage of tax and/or duty exemption that may be restored;

c) impose conditions for the restoration of tax and/or duty exemption;

d) prescribe the date of period of effectivity of the restoration of tax and/or duty exemption;

e) formulate and submit to the President for approval, a complete system for the grant of subsidies to deserving beneficiaries, in lieu of or in combination with the restoration of tax and duty exemptions or preferential treatment in taxation, indicating the source of funding therefor, eligible beneficiaries and the terms and conditions for the grant thereof taking into consideration the international commitment of the Philippines and the necessary precautions such that the grant of subsidies does not become the basis for countervailing action.

Sec. 3. In the discharge of its authority hereunder, the Fiscal Incentives Review Board shall take into account any or all of the following considerations:

a) the effect on relative price levels;

b) relative contribution of the beneficiary to the revenue generation effort;

c) nature of the activity the beneficiary is engaged; and

d) in general, the greater national interest to be served.

xxx xxx xxx

Sec. 5. All laws, orders, issuances, rules and regulations or parts thereof inconsistent with this Executive Order are hereby repealed or modified accordingly.

E.O. No. 93 (S'86) was decreed to be effective 48 upon the promulgation of the rules and regulations, to be issued by the Ministry of Finance. 49 Said rules and regulations were promulgated and published in the Official Gazette on February 23, 1987. These became effective on the 15th day after promulgation 50 in the Official Gasetter, 51which 15th day was March 10, 1987.

III

Now to some definitions. We refer to the very simplistic approach that all would-be lawyers, learn in their TAXATION I course, which fro convenient reference, is as follows:

Classifications or kinds of Taxes:

According to Persons who pay or who bear the burden:

a. Direct Tax — the where the person supposed to pay the tax really pays it. WITHOUT transferring the burden to someone else.

Examples: Individual income tax, corporate income tax, transfer taxes (estate tax, donor's tax), residence tax, immigration tax

b. Indirect Tax — that where the tax is imposed upon goods BEFORE reaching the consumer who ultimately pays for it, not as a tax, but as a part of the purchase price.

Examples: the internal revenue indirect taxes (specific tax, percentage taxes, (VAT) and the tariff and customs indirect taxes (import duties, special import tax and other dues) 52

IV

To simply matter, the issues raised by petitioner in his motion for reconsideration can be reduced to the following:

(1) What kind of tax exemption privileges did NPC have?

(2) For what periods in time were these privileges being enjoyed?

(3) If there are taxes to be paid, who shall pay for these taxes?

V

Petitioner contends that P.D. No. 938 repealed the indirect tax exemption of NPC as the phrase "all forms of taxes etc.," in its section 10, amending Section 13, R.A. No. 6395, as amended by P.D. No. 380, does not expressly include "indirect taxes."

His point is not well-taken.

A chronological review of the NPC laws will show that it has been the lawmaker's intention that the NPC was to be completely tax exempt from all forms of taxes — direct and indirect.

NPC's tax exemptions at first applied to the bonds it was authorized to float to finance its operations upon its creation by virtue of C.A. No. 120.

When the NPC was authorized to contract with the IBRD for foreign financing, any loans obtained were to be completely tax exempt.

After the NPC was authorized to borrow from other sources of funds — aside issuance of bonds — it was again specifically exempted from all types of taxes "to facilitate payment of its indebtedness." Even when the ceilings for domestic and foreign borrowings were periodically increased, the tax exemption privileges of the NPC were maintained.

NPC's tax exemption from real estate taxes was, however, specifically withdrawn by Rep. Act No. 987, as above stated. The exemption was, however, restored by R.A. No. 6395.

Section 13, R.A. No. 6395, was very comprehensive in its enumeration of the tax exemptions allowed NPC. Its section 13(d) is the starting point of this bone of contention among the parties. For easy reference, it is reproduced as follows:

[T]he Corporation is hereby declared exempt:

xxx xxx xxx

(d) From all taxes, duties, fees, imposts and all other charges imposed by the Republic of the Philippines, its provinces, cities, municipalities and other government agencies and instrumentalities, on all petroleum products used by the Corporation in the generation, transmission, utilization, and sale of electric power.

P.D. No. 380 added phrase "directly or indirectly" to said Section 13(d), which now reads as follows:

xxx xxx xxx

(d) From all taxes, duties, fees, imposts, and all other charges imposed directly or indirectly by the Republic of the Philippines, its provinces, cities, municipalities and other government agencies and instrumentalities, on all petroleum products used by the Corporation in the generation, transmission, utilization and sale of electric power. (Emphasis supplied)

Then came P.D. No. 938 which amended Sec. 13(a), (b), (c) and (d) into one very simple paragraph as follows:

The Corporation shall be non-profit and shall devote all its returns from its capital investment as well as excess revenues from its operation, for expansion. To enable the Corporation to pay its indebtedness and obligations and in furtherance and effective implementation of the policy enunciated in Section one of this Act, the Corporation, including its subsidiaries, is hereby declared exempt from the payment of ALL FORMS OF taxes, duties, fees, imposts as well as costs and service fees including filing fees, appeal bonds, supersedeas bonds, in any court or administrative proceedings. (Emphasis supplied)

Petitioner reminds Us that:

[I]t must be borne in mind that Presidential Decree Nos. 380 and 938 were issued by one man, acting as such the Executive and Legislative. 53

xxx xxx xxx

[S]ince both presidential decrees were made by the same person, it would have been very easy for him to retain the same or similar language used in P.D. No. 380 P.D. No. 938 if his intention were to preserve the indirect tax exemption of NPC. 54

Actually, P.D. No. 938 attests to the ingenuousness of then President Marcos no matter what his fault were. It should be noted that section 13, R.A. No. 6395, provided for tax exemptions for the following items:

13(a) : court or administrative proceedings;

13(b) : income, franchise, realty taxes;

13(c) : import of foreign goods required for its operations and projects;

13(d) : petroleum products used in generation of electric power.

P.D. No. 938 lumped up 13(b), 13(c), and 13(d) into the phrase "ALL FORMS OF TAXES, ETC.,", included 13(a) under the "as well as" clause and added PNOC subsidiaries as qualified for tax exemptions.

This is the only conclusion one can arrive at if he has read all the NPC laws in the order of enactment or issuance as narrated above in part I hereof. President Marcos must have considered all the NPC statutes from C.A. No. 120 up to its latest amendments, P.D. No. 380, P.D. No. 395 and P.D. No. 759, AND came up 55 with a very simple Section 13, R.A. No. 6395, as amended by P.D. No. 938.

One common theme in all these laws is that the NPC must be enable to pay its indebtedness 56 which, as of P.D. No. 938, was P12 Billion in total domestic indebtedness, at any one time, and U$4 Billion in total foreign loans at any one time. The NPC must be and has to be exempt from all forms of taxes if this goal is to be achieved.

By virtue of P.D. No. 938 NPC's capital stock was raised to P8 Billion. It must be remembered that to pay the government share in its capital stock P.D. No. 758 was issued mandating that P200 Million would be appropriated annually to cover the said unpaid subscription of the Government in NPC's authorized capital stock. And significantly one of the sources of this annual appropriation of P200 million is TAX MONEY accruing to the General Fund of the Government. It does not stand to reason then that former President Marcos would order P200 Million to be taken partially or totally from tax money to be used to pay the Government subscription in the NPC, on one hand, and then order the NPC to pay all its indirect taxes, on the other.

The above conclusion that then President Marcos lumped up Sections 13 (b), 13 (c) and (d) into the phrase "All FORMS OF" is supported by the fact that he did not do the same for the tax exemption provision for the foreign loans to be incurred.

The tax exemption on foreign loans found in Section 8(b), R.A. No. 6395, reads as follows:

The loans, credits and indebtedness contracted under this subsection and the payment of the principal, interest and other charges thereon, as well as the importation of machinery, equipment, materials and supplies by the Corporation, paid from the proceeds of any loan, credit or indebtedness incurred under this Act, shall also be exempt from all taxes, fees, imposts, other charges and restrictions, including import restrictions, by the Republic of the Philippines, or any of its agencies and political subdivisions. 57

The same was amended by P.D. No. 380 as follows:

The loans, credits and indebtedness contracted this subsection and the payment of the principal, interest and other charges thereon, as well as the importation of machinery, equipment, materials, supplies and services, by the Corporation, paid from the proceeds of any loan, credit or indebtedness incurred under this Act, shall also be exempt from all direct and indirect taxes, fees, imposts, other charges and restrictions, including import restrictions previously and presently imposed, and to be imposed by the Republic of the Philippines, or any of its agencies and political subdivisions. 58 (Emphasis supplied)

P.D. No. 938 did not amend the same 59 and so the tax exemption provision in Section 8 (b), R.A. No. 6395, as amended by P.D. No. 380, still stands. Since the subject matter of this particular Section 8 (b) had to do only with loans and machinery imported, paid for from the proceeds of these foreign loans, THERE WAS NO OTHER SUBJECT MATTER TO

LUMP IT UP WITH, and so, the tax exemption stood as is — with the express mention of "direct and indirect" tax exemptions. And this "direct and indirect" tax exemption privilege extended to "taxes, fees, imposts, other charges . . . to be imposed" in the future — surely, an indication that the lawmakers wanted the NPC to be exempt from ALL FORMS of taxes — direct and indirect.

It is crystal clear, therefore, that NPC had been granted tax exemption privileges for both direct and indirect taxes under P.D. No. 938.

VI

Five (5) years on into the now discredited New Society, the Government decided to rationalize government receipts and expenditures by formulating and implementing a National Budget. 60 The NPC, being a government owned and controlled corporation had to be shed off its tax exemption status privileges under P.D. No. 1177. It was, however, allowed to ask for a subsidy from the General Fund in the exact amount of taxes/duties due.

Actually, much earlier, P.D. No. 882 had already repealed NPC's tax-free importation privileges. It allowed, however, NPC to appeal said repeal with the Office of the President and to avail of tax-free importation privileges under its Section 1, subject to the prior approval of an Inter-Agency Committed created by virtue of said P.D. No. 882. It is presumed that the NPC, being the special creation of the State, was allowed to continue its tax-free importations.

This Court notes that petitioner brought to the attention of this Court, the matter of the abolition of NPC's tax exemption privileges by P.D. No. 1177 61 only in his Common Reply/Comment to private Respondents' "Opposition" and "Comment" to Motion for Reconsideration, four (4) months AFTER the motion for Reconsideration had been filed. During oral arguments heard on July 9, 1992, he proceeded to discuss this tax exemption withdrawal as explained by then Secretary of Justice Vicente Abad Santos in opinion No. 133 (S '77). 62 A careful perusal of petitioner's senate Blue Ribbon Committee Report No. 474, the basis of the petition at bar, fails to yield any mention of said P.D. No. 1177's effect on NPC's tax exemption privileges. 63 Applying by analogy Pulido vs. Pablo,64 the court declares that the matter of P.D. No. 1177 abolishing NPC's tax exemption privileges was not seasonably invoked 65 by the petitioner.

Be that as it may, the Court still has to discuss the effect of P.D. No. 1177 on the NPC tax exemption privileges as this statute has been reiterated twice in P.D. No. 1931. The express repeal of tax privileges of any government-owned or controlled corporation (GOCC). NPC included, was reiterated in the fourth whereas clause of P.D. No. 1931's preamble. The subsidy provided for in Section 23, P.D. No. 1177, being inconsistent with Section 2, P.D. No. 1931, was deemed repealed as the Fiscal Incentives Revenue Board was tasked with recommending the partial or total restoration of tax exemptions withdrawn by Section 1, P.D. No. 1931.

The records before Us do not indicate whether or not NPC asked for the subsidy contemplated in Section 23, P.D. No. 1177. Considering, however, that under Section 16 of P.D. No. 1177, NPC had to submit to the Office of the President its request for the P200 million mandated by P.D. No. 758 to be appropriated annually by the Government to cover its unpaid subscription to the NPC authorized capital stock and that under Section 22, of the same P.D. No. NPC had to likewise submit to the Office of the President its internal operating budget for review due to capital inputs of the government (P.D. No. 758) and to the national government's guarantee of the domestic and foreign indebtedness of the NPC, it is clear that NPC was covered by P.D. No. 1177.

There is reason to believe that NPC availed of subsidy granted to exempt GOCC's that suddenly found themselves having to pay taxes. It will be noted that Section 23, P.D. No. 1177, mandated that the Secretary of Finance and the Commissioner of the Budget had to establish the necessary procedure to accomplish the tax payment/tax subsidy scheme of the Government. In effect, NPC, did not put any cash to pay any tax as it got from the General Fund the amounts necessary to pay different revenue collectors for the taxes it had to pay.

In his memorandum filed July 16, 1992, petitioner submits:

[T]hat with the enactment of P.D. No. 1177 on July 30, 1977, the NPC lost all its duty and tax exemptions, whether direct or indirect. And so there was nothing to be withdrawn or to be restored under P.D. No. 1931, issued on June 11, 1984. This is evident from sections 1 and 2 of said P.D. No. 1931, which reads:

"Section 1. The provisions of special or general law to the contrary notwithstanding, all exemptions from the payment of duties, taxes, fees, imports and other charges heretofore granted in favor of government-owned or controlled corporations including their subsidiaries are hereby withdrawn."

Sec. 2. The President of the Philippines and/or the Minister of Finance, upon the recommendation of the Fiscal Incentives Review Board created under P.D. No. 776, is hereby empowered to restore partially or totally, the exemptions withdrawn by section 1 above. . . .

Hence, P.D. No. 1931 did not have any effect or did it change NPC's status. Since it had already lost all its tax exemptions privilege with the issuance of P.D. No. 1177 seven (7) years earlier or on July 30, 1977, there were no tax exemptions to be withdrawn by section 1 which could later be restored by the Minister of Finance upon the recommendation of the FIRB under Section 2 of P.D. No. 1931. Consequently, FIRB resolutions No. 10-85, and 1-86, were all illegally and validly issued since FIRB acted beyond their statutory authority by creating and not merely restoring the tax exempt status of NPC. The same is true for FIRB Res. No. 17-87 which restored NPC's tax exemption under E.O. No. 93 which likewise abolished all duties and tax exemptions but allowed the President upon recommendation of the FIRB to restore those abolished.

The Court disagrees.

Applying by analogy the weight of authority that:

When a revised and consolidated act re-enacts in the same or substantially the same terms the provisions of the act or acts so revised and consolidated, the revision and consolidation shall be taken to be a continuation of the former act or acts, although the former act or acts may be expressly repealed by the revised and consolidated act; and all rights and liabilities under the former act or acts are preserved and may be enforced. 66

the Court rules that when P.D. No. 1931 basically reenacted in its Section 1 the first half of Section 23, P.D. No. 1177, on withdrawal of tax exemption privileges of all GOCC's said Section 1, P.D. No. 1931 was deemed to be a continuation of the first half of Section 23, P.D. No. 1177, although the second half of Section 23, P.D. No. 177, on the subsidy scheme for former tax exempt GOCCs had been expressly repealed by Section 2 with its institution of the FIRB recommendation of partial/total restoration of tax exemption privileges.

The NPC tax privileges withdrawn by Section 1. P.D. No. 1931, were, therefore, the same NPC tax exemption privileges withdrawn by Section 23, P.D. No. 1177. NPC could no longer obtain a subsidy for the taxes it had to pay. It could, however, under P.D. No. 1931, ask for a total restoration of its tax exemption privileges, which, it did, and the same were granted under FIRB Resolutions Nos. 10-85 67 and 1-86 68 as approved by the Minister of Finance.

Consequently, contrary to petitioner's submission, FIRB Resolutions Nos. 10-85 and 1-86 were both legally and validly issued by the FIRB pursuant to P.D. No. 1931. FIRB did not created NPC's tax exemption status but merely restored it. 69

Some quarters have expressed the view that P.D. No. 1931 was illegally issued under the now rather infamous Amendment No. 6 70 as there was no showing that President Marcos' encroachment on legislative prerogatives was justified under the then prevailing condition that he could legislate "only if the Batasang Pambansa 'failed or was unable to act inadequately on any matter that in his judgment required immediate action' to meet the 'exigency'. 71

Actually under said Amendment No. 6, then President Marcos could issue decrees not only when the Interim Batasang Pambansa failed or was unable to act adequately on any matter for any reason that in his (Marcos') judgment required immediate action, but also when there existed a grave emergency or a threat or thereof. It must be remembered that said Presidential Decree was issued only around nine (9) months after the Philippines unilaterally declared a moratorium on its foreign debt payments 72 as a result of the economic crisis triggered by loss of confidence in the government brought about by the Aquino assassination. The Philippines was then trying to reschedule its debt payments. 73 One of the big

borrowers was the NPC 74 which had a US$ 2.1 billion white elephant of a Bataan Nuclear Power Plant on its back. 75 From all indications, it must have been this grave emergency of a debt rescheduling which compelled Marcos to issue P.D. No. 1931, under his Amendment 6 power.76

The rule, therefore, that under the 1973 Constitution "no law granting a tax exemption shall be passed without the concurrence of a majority of all the members of the Batasang Pambansa" 77 does not apply as said P.D. No. 1931 was not passed by the Interim Batasang Pambansa but by then President Marcos under His Amendment No. 6 power.

P.D. No. 1931 was, therefore, validly issued by then President Marcos under his Amendment No. 6 authority.

Under E.O No. 93 (S'86) NPC's tax exemption privileges were again clipped by, this time, President Aquino. Its section 2 allowed the NPC to apply for the restoration of its tax exemption privileges. The same was granted under FIRB Resolution No. 17-87 78 dated June 24, 1987 which restored NPC's tax exemption privileges effective, starting March 10, 1987, the date of effectivity of E.O. No. 93 (S'86).

FIRB Resolution No. 17-87 was approved by the President on October 5, 1987. 79 There is no indication, however, from the records of the case whether or not similar approvals were given by then President Marcos for FIRB Resolutions Nos. 10-85 and 1- 86. This has led some quarters to believe that a "travesty of justice" might have occurred when the Minister of Finance approved his own recommendation as Chairman of the Fiscal Incentives Review Board as what happened in Zambales Chromate vs. Court of Appeals 80 when the Secretary of Agriculture and Natural Resources approved a decision earlier rendered by him when he was the Director of Mines, 81 and inAnzaldo vs. Clave 82 where Presidential Executive Assistant Clave affirmed, on appeal to Malacañang, his own decision as Chairman of the Civil Service Commission. 83

Upon deeper analysis, the question arises as to whether one can talk about "due process" being violated when FIRB Resolutions Nos. 10-85 and 1-86 were approved by the Minister of Finance when the same were recommended by him in his capacity as Chairman of the Fiscal Incentives Review Board. 84

In Zambales Chromite and Anzaldo, two (2) different parties were involved: mining groups and scientist-doctors, respectively. Thus, there was a need for procedural due process to be followed.

In the case of the tax exemption restoration of NPC, there is no other comparable entity — not even a single public or private corporation — whose rights would be violated if NPC's tax exemption privileges were to be restored. While there might have been a MERALCO before Martial Law, it is of public knowledge that the MERALCO generating plants were sold to the NPC in line with the State policy that NPC was to be the State implementing arm for the electrification of the entire country. Besides, MERALCO was limited to Manila and its environs. And as of 1984, there was no more MERALCO — as a producer of electricity — which could have objected to the restoration of NPC's tax exemption privileges.

It should be noted that NPC was not asking to be granted tax exemption privileges for the first time. It was just asking that its tax exemption privileges be restored. It is for these reasons that, at least in NPC's case, the recommendation and approval of NPC's tax exemption privileges under FIRB Resolution Nos. 10-85 and 1-86, done by the same person acting in his dual capacities as Chairman of the Fiscal Incentives Review Board and Minister of Finance, respectively, do not violate procedural due process.

While as above-mentioned, FIRB Resolution No. 17-87 was approved by President Aquino on October 5, 1987, the view has been expressed that President Aquino, at least with regard to E.O. 93 (S'86), had no authority to sub-delegate to the FIRB, which was allegedly not a delegate of the legislature, the power delegated to her thereunder.

A misconception must be cleared up.

When E.O No. 93 (S'86) was issued, President Aquino was exercising both Executive and Legislative powers. Thus, there was no power delegated to her, rather it was she who was delegating her power. She delegated it to the FIRB, which, for purposes of E.O No. 93 (S'86), is a delegate of the legislature. Clearly, she was not sub-delegating her power.

And E.O. No. 93 (S'86), as a delegating law, was complete in itself — it set forth the policy to be carried out 85 and it fixed the standard to which the delegate had to conform in the performance of his functions, 86 both qualities having been enunciated by this Court in Pelaez vs. Auditor General. 87

Thus, after all has been said, it is clear that the NPC had its tax exemption privileges restored from June 11, 1984 up to the present.

VII

The next question that projects itself is — who pays the tax?

The answer to the question could be gleamed from the manner by which the Commissaries of the Armed Forces of the Philippines sell their goods.

By virtue of P.D. No. 83, 88 veterans, members of the Armed of the Philippines, and their defendants but groceries and other goods free of all taxes and duties if bought from any AFP Commissaries.

In practice, the AFP Commissary suppliers probably treat the unchargeable specific, ad valorem and other taxes on the goods earmarked for AFP Commissaries as an added cost of operation and distribute it over the total units of goods sold as it would any other cost. Thus, even the ordinary supermarket buyer probably pays for the specific,ad valorem and other taxes which theses suppliers do not charge the AFP Commissaries. 89

IN MUCH THE SAME MANNER, it is clear that private respondents-oil companies have to absorb the taxes they add to the bunker fuel oil they sell to NPC.

It should be stated at this juncture that, as early as May 14, 1954, the Secretary of Justice renders an opinion, 90wherein he stated and We quote:

xxx xxx xxx

Republic Act No. 358 exempts the National Power Corporation from "all taxes, duties, fees, imposts, charges, and restrictions of the Republic of the Philippines and its provinces, cities, and municipalities." This exemption is broad enough to include all taxes, whether direct or indirect, which the National Power Corporation may be required to pay, such as the specific tax on petroleum products. That it is indirect or is of no amount [should be of no moment], for it is the corporation that ultimately pays it. The view which refuses to accord the exemption because the tax is first paid by the seller disregards realities and gives more importance to form than to substance. Equity and law always exalt substance over from.

xxx xxx xxx

Tax exemptions are undoubtedly to be construed strictly but not so grudgingly as knowledge that many impositions taxpayers have to pay are in the nature of indirect taxes. To limit the exemption granted the National Power Corporation to direct taxes notwithstanding the general and broad language of the statue will be to thwrat the legislative intention in giving exemption from all forms of taxes and impositions without distinguishing between those that are direct and those that are not. (Emphasis supplied)

In view of all the foregoing, the Court rules and declares that the oil companies which supply bunker fuel oil to NPC have to pay the taxes imposed upon said bunker fuel oil sold to NPC. By the very nature of indirect taxation, the economic burden of such taxation is expected to be passed on through the channels of commerce to the user or consumer of the goods sold. Because, however, the NPC has been exempted from both direct and indirect taxation, the NPC must beheld exempted from absorbing the economic burden of indirect taxation. This means, on the one hand, that the oil companies which wish to sell to NPC absorb all or part of the economic burden of the taxes previously paid to BIR, which could they

shift to NPC if NPC did not enjoy exemption from indirect taxes. This means also, on the other hand, that the NPC may refuse to pay the part of the "normal" purchase price of bunker fuel oil which represents all or part of the taxes previously paid by the oil companies to BIR. If NPC nonetheless purchases such oil from the oil companies — because to do so may be more convenient and ultimately less costly for NPC than NPC itself importing and hauling and storing the oil from overseas — NPC is entitled to be reimbursed by the BIR for that part of the buying price of NPC which verifiably represents the tax already paid by the oil company-vendor to the BIR.

It should be noted at this point in time that the whole issue of who WILL pay these indirect taxes HAS BEEN RENDERED moot and academic by E.O. No. 195 issued on June 16, 1987 by virtue of which the ad valorem tax rate on bunker fuel oil was reduced to ZERO (0%) PER CENTUM. Said E.O. no. 195 reads as follows:

EXECUTIVE ORDER NO. 195

AMENDING PARAGRAPH (b) OF SECTION 128 OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED BY REVISING THE EXCISE TAX RATES OF CERTAIN PETROLEUM PRODUCTS.

xxx xxx xxx

Sec. 1. Paragraph (b) of Section 128 of the National Internal Revenue Code, as amended, is hereby amended to read as follows:

Par. (b) — For products subject to ad valorem tax only:

PRODUCT AD VALOREM TAX RATE

1. . . .

2. . . .

3. . . .

4. Fuel oil, commercially known as bunker oil and on similar fuel oils having more or less the same generating power 0%

xxx xxx xxx

Sec. 3. This Executive Order shall take effect immediately.

Done in the city of Manila, this 17th day of June, in the year of Our Lord, nineteen hundred and eighty-seven. (Emphasis supplied)

The oil companies can now deliver bunker fuel oil to NPC without having to worry about who is going to bear the economic burden of the ad valorem taxes. What this Court will now dispose of are petitioner's complaints that some indirect tax money has been illegally refunded by the Bureau of Internal Revenue to the NPC and that more claims for refunds by the NPC are being processed for payment by the BIR.

A case in point is the Tax Credit Memo issued by the Bureau of Internal Revenue in favor of the NPC last July 7, 1986 for P58.020.110.79 which were for "erroneously paid specific and ad valorem taxes during the period from October 31, 1984 to April 27, 1985. 91 Petitioner asks Us to declare this Tax Credit Memo illegal as the PNC did not have indirect tax exemptions with the enactment of P.D. No. 938. As We have already ruled otherwise, the only questions left are whether

NPC Is entitled to a tax refund for the tax component of the price of the bunker fuel oil purchased from Caltex (Phils.) Inc. and whether the Bureau of Internal Revenue properly refunded the amount to NPC.

After P.D. No. 1931 was issued on June 11, 1984 withdrawing the tax exemptions of all GOCCs — NPC included, it was only on May 8, 1985 when the BIR issues its letter authority to the NPC authorizing it to withdraw tax-free bunker fuel oil from the oil companies pursuant to FIRB Resolution No. 10-85. 92 Since the tax exemption restoration was retroactive to June 11, 1984 there was a need. therefore, to recover said amount as Caltex (PhiIs.) Inc. had already paid the BIR the specific and ad valorem taxes on the bunker oil it sold NPC during the period above indicated and had billed NPC correspondingly. 93 It should be noted that the NPC, in its letter-claim dated September 11, 1985 to the Commissioner of the Bureau of Internal Revenue DID NOT CATEGORICALLY AND UNEQUIVOCALLY STATE that itself paid the P58.020,110.79 as part of the bunker fuel oil price it purchased from Caltex (Phils) Inc. 94

The law governing recovery of erroneously or illegally, collected taxes is section 230 of the National Internal Revenue Code of 1977, as amended which reads as follows:

Sec. 230. Recover of tax erroneously or illegally collected. — No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessive or in any Manner wrongfully collected. until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress.

In any case, no such suit or proceeding shall be begun after the expiration of two years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment; Provided, however, That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly, to have been erroneously paid.

xxx xxx xxx

Inasmuch as NPC filled its claim for P58.020,110.79 on September 11, 1985, 95 the Commissioner correctly issued the Tax Credit Memo in view of NPC's indirect tax exemption.

Petitioner, however, asks Us to restrain the Commissioner from acting favorably on NPC's claim for P410.580,000.00 which represents specific and ad valorem taxes paid by the oil companies to the BIR from June 11, 1984 to the early part of 1986. 96

A careful examination of petitioner's pleadings and annexes attached thereto does not reveal when the alleged claim for a P410,580,000.00 tax refund was filed. It is only stated In paragraph No. 2 of the Deed of Assignment 97executed by and between NPC and Caltex (Phils.) Inc., as follows:

That the ASSIGNOR(NPC) has a pending tax credit claim with the Bureau of Internal Revenue amounting to P442,887,716.16. P58.020,110.79 of which is due to Assignor's oil purchases from the Assignee (Caltex [Phils.] Inc.)

Actually, as the Court sees it, this is a clear case of a "Mexican standoff." We cannot restrain the BIR from refunding said amount because of Our ruling that NPC has both direct and indirect tax exemption privileges. Neither can We order the BIR to refund said amount to NPC as there is no pending petition for review on certiorari of a suit for its collection before Us. At any rate, at this point in time, NPC can no longer file any suit to collect said amount EVEN IF lt has previously filed a claim with the BIR because it is time-barred under Section 230 of the National Internal Revenue Code of 1977. as amended, which states:

In any case, no such suit or proceeding shall be begun after the expiration of two years from the date of payment of the tax or penalty REGARDLESS of any supervening cause that may arise afterpayment. . . . (Emphasis supplied)

The date of the Deed of Assignment is June 6. 1986. Even if We were to assume that payment by NPC for the amount of P410,580,000.00 had been made on said date. it is clear that more than two (2) years had already elapsed from said date. At the same time, We should note that there is no legal obstacle to the BIR granting, even without a suit by NPC, the tax credit or refund claimed by NPC, assuming that NPC's claim had been made seasonably, and assuming the amounts covered had actually been paid previously by the oil companies to the BIR.

WHEREFORE, in view of all the foregoing, the Motion for Reconsideration of petitioner is hereby DENIED for lack of merit and the decision of this Court promulgated on May 31, 1991 is hereby AFFIRMED.

SO ORDERED.

Narvasa, C.J., Feliciano, Bidin, Regalado, Romero, Bellosillo and Melo, JJ., concur.

Padilla and Quiason, JJ. took no part.

Republic of the PhilippinesSUPREME COURTManila

EN BANC

G.R. No. L-19201 June 16, 1965

REV. FR. CASIMIRO LLADOC, petitioner, vs.The COMMISSIONER OF INTERNAL REVENUE and The COURT of TAX APPEALS, respondents.

Hilado and Hilado for petitioner.Office of the Solicitor General for respondents.

PAREDES, J.:

Sometime in 1957, the M.B. Estate, Inc., of Bacolod City, donated P10,000.00 in cash to Rev. Fr. Crispin Ruiz, then parish priest of Victorias, Negros Occidental, and predecessor of herein petitioner, for the construction of a new Catholic Church in the locality. The total amount was actually spent for the purpose intended.

On March 3, 1958, the donor M.B. Estate, Inc., filed the donor's gift tax return. Under date of April 29, 1960, the respondent Commissioner of Internal Revenue issued an assessment for donee's gift tax against the Catholic Parish of Victorias, Negros Occidental, of which petitioner was the priest. The tax amounted to P1,370.00 including surcharges, interests of 1% monthly from May 15, 1958 to June 15, 1960, and the compromise for the late filing of the return.

Petitioner lodged a protest to the assessment and requested the withdrawal thereof. The protest and the motion for reconsideration presented to the Commissioner of Internal Revenue were denied. The petitioner appealed to the Court of Tax Appeals on November 2, 1960. In the petition for review, the Rev. Fr. Casimiro Lladoc claimed, among others, that at the time of the donation, he was not the parish priest in Victorias; that there is no legal entity or juridical person known as the "Catholic Parish Priest of Victorias," and, therefore, he should not be liable for the donee's gift tax. It was also asserted that the assessment of the gift tax, even against the Roman Catholic Church, would not be valid, for such would be a clear violation of the provisions of the Constitution.

After hearing, the CTA rendered judgment, the pertinent portions of which are quoted below:

... . Parish priests of the Roman Catholic Church under canon laws are similarly situated as its Archbishops and Bishops with respect to the properties of the church within their parish. They are the guardians, superintendents or administrators of these properties, with the right of succession and may sue and be sued.

x x x x x x x x x

The petitioner impugns the, fairness of the assessment with the argument that he should not be held liable for gift taxes on donation which he did not receive personally since he was not yet the parish priest of Victorias in the year 1957 when said donation was given. It is intimated that if someone has to pay at all, it should be petitioner's predecessor, the Rev. Fr. Crispin Ruiz, who received the donation in behalf of the Catholic parish of Victorias or the Roman Catholic Church. Following petitioner's line of thinking, we should be equally unfair to hold that the assessment now in question should have been addressed to, and collected from, the Rev. Fr. Crispin Ruiz to be paid from income derived from his present parish where ever it may be. It does not seem right to indirectly burden the present parishioners of Rev. Fr. Ruiz for donee's gift tax on a donation to which they were not benefited.

x x x x x x x x x

We saw no legal basis then as we see none now, to include within the Constitutional exemption, taxes which partake of the nature of an excise upon the use made of the properties or upon the exercise of the privilege of receiving the properties. (Phipps vs. Commissioner of Internal Revenue, 91 F [2d] 627; 1938, 302 U.S. 742.)

It is a cardinal rule in taxation that exemptions from payment thereof are highly disfavored by law, and the party claiming exemption must justify his claim by a clear, positive, or express grant of such privilege by law. (Collector vs. Manila Jockey Club, G.R. No. L-8755, March 23, 1956; 53 O.G. 3762.)

The phrase "exempt from taxation" as employed in Section 22(3), Article VI of the Constitution of the Philippines, should not be interpreted to mean exemption from all kinds of taxes. Statutes exempting charitable and religious property from taxation should be construed fairly though strictly and in such manner as to give effect to the main intent of the lawmakers. (Roman Catholic Church vs. Hastrings 5 Phil. 701.)

x x x x x x x x x

WHEREFORE, in view of the foregoing considerations, the decision of the respondent Commissioner of Internal Revenue appealed from, is hereby affirmed except with regard to the imposition of the compromise penalty in the amount of P20.00 (Collector of Internal Revenue v. U.S.T., G.R. No. L-11274, Nov. 28, 1958); ..., and the petitioner, the Rev. Fr. Casimiro Lladoc is hereby ordered to pay to the respondent the amount of P900.00 as donee's gift tax, plus the surcharge of five per centum (5%) as ad valorem penalty under Section 119 (c) of the Tax Code, and one per centum (1%) monthly interest from May 15, 1958 to the date of actual payment. The surcharge of 25% provided in Section 120 for failure to file a return may not be imposed as the failure to file a return was not due to willful neglect.( ... ) No costs.

The above judgment is now before us on appeal, petitioner assigning two (2) errors allegedly committed by the Tax Court, all of which converge on the singular issue of whether or not petitioner should be liable for the assessed donee's gift tax on the P10,000.00 donated for the construction of the Victorias Parish Church.

Section 22 (3), Art. VI of the Constitution of the Philippines, exempts from taxation cemeteries, churches and parsonages or convents, appurtenant thereto, and all lands, buildings, and improvements used exclusively for religious purposes. The exemption is only from the payment of taxes assessed on such properties enumerated, as property taxes, as contra distinguished from excise taxes. In the present case, what the Collector assessed was a donee's gift tax; the assessment was not on the properties themselves. It did not rest upon general ownership; it was an excise upon the use made of the properties, upon the exercise of the privilege of receiving the properties (Phipps vs. Com. of Int. Rec. 91 F 2d 627). Manifestly, gift tax is not within the exempting provisions of the section just mentioned. A gift tax is not a property tax, but an excise tax imposed on the transfer of property by way of giftinter vivos, the imposition of which on property used exclusively for religious purposes, does not constitute an impairment of the Constitution. As well observed by the learned respondent Court, the phrase "exempt from taxation," as employed in the Constitution (supra) should not be interpreted to mean exemption from all kinds of taxes. And there being no clear, positive or express grant of such privilege by law, in favor of petitioner, the exemption herein must be denied.

The next issue which readily presents itself, in view of petitioner's thesis, and Our finding that a tax liability exists, is, who should be called upon to pay the gift tax? Petitioner postulates that he should not be liable, because at the time of the donation he was not the priest of Victorias. We note the merit of the above claim, and in order to put things in their proper light, this Court, in its Resolution of March 15, 1965, ordered the parties to show cause why the Head of the Diocese to which the parish of Victorias pertains, should not be substituted in lieu of petitioner Rev. Fr. Casimiro Lladoc it appearing that the Head of such Diocese is the real party in interest. The Solicitor General, in representation of the Commissioner of Internal Revenue, interposed no objection to such a substitution. Counsel for the petitioner did not also offer objection thereto.

On April 30, 1965, in a resolution, We ordered the Head of the Diocese to present whatever legal issues and/or defenses he might wish to raise, to which resolution counsel for petitioner, who also appeared as counsel for the Head of the Diocese, the Roman Catholic Bishop of Bacolod, manifested that it was submitting itself to the jurisdiction and orders of this Court and that it was presenting, by reference, the brief of petitioner Rev. Fr. Casimiro Lladoc as its own and for all purposes.

In view here of and considering that as heretofore stated, the assessment at bar had been properly made and the imposition of the tax is not a violation of the constitutional provision exempting churches, parsonages or convents, etc. (Art VI, sec. 22 [3], Constitution), the Head of the Diocese, to which the parish Victorias Pertains, is liable for the payment thereof.

The decision appealed from should be, as it is hereby affirmed insofar as tax liability is concerned; it is modified, in the sense that petitioner herein is not personally liable for the said gift tax, and that the Head of the Diocese, herein substitute petitioner, should pay, as he is presently ordered to pay, the said gift tax, without special, pronouncement as to costs.

Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Dizon, Regala, Makalintal, Bengzon, J.P., and Zaldivar, JJ., concur.Barrera, J., took no part.

FIRST DIVISION

[G.R. No. 119761. August 29, 1996]

COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. HON. COURT OF APPEALS, HON. COURT OF TAX APPEALS and FORTUNE TOBACCO CORPORATION, respondents.

D E C I S I O N

VITUG, J.:

The Commissioner of Internal Revenue ("CIR") disputes the decision, dated 31 March 1995, of respondent Court of Appeals[1] affirming the 10th August 1994 decision and the 11th October 1994 resolution of the Court of Tax Appeals[2] ("CTA") in C.T.A. Case No. 5015, entitled "Fortune Tobacco Corporation vs. Liwayway Vinzons-Chato in her capacity as Commissioner of Internal Revenue."

The facts, by and large, are not in dispute.

Fortune Tobacco Corporation ("Fortune Tobacco") is engaged in the manufacture of different brands of cigarettes.

On various dates, the Philippine Patent Office issued to the corporation separate certificates of trademark registration over "Champion," "Hope," and "More" cigarettes. In a letter, dated 06 January 1987, of then Commissioner of Internal Revenue Bienvenido A. Tan, Jr., to Deputy Minister Ramon Diaz of the Presidential Commission on Good Government, "the initial position of the Commission was to classify 'Champion,' 'Hope,' and 'More' as foreign brands since they were listed in the World Tobacco Directory as belonging to foreign companies. However, Fortune Tobacco changed the names of 'Hope' to Hope Luxury' and 'More' to 'Premium More,' thereby removing the said brands from the foreign brand category. Proof was also submitted to the Bureau (of Internal Revenue ['BIR']) that 'Champion' was an original Fortune Tobacco Corporation register and therefore a local brand." [3] Ad Valorem taxes were imposed on these brands,[4] at the following rates:

"BRAND AD VALOREM TAX RATE

E.O. 22

06-23-86

07-01-86 and E.O. 273

07-25-87

01-01-88 RA 6956

06-18-90

07-05-90

Hope Luxury M. 100's

Sec. 142, (c), (2) 40% 45%

Hope Luxury M. King

Sec. 142, (c), (2) 40% 45%

More Premium M. 100's

Sec. 142, (c), (2) 40% 45%

More Premium International

Sec. 142, (c), (2) 40% 45%

Champion Int'l. M. 100's

Sec. 142, (c), (2) 40% 45%

Champion M. 100's

Sec. 142, (c), (2) 40% 45%

Champion M. King

Sec. 142, (c), last par. 15% 20%

Champion Lights

Sec. 142, (c), last par. 15% 20%"[5]

A bill, which later became Republic Act ("RA") No. 7654, [6] was enacted, on 10 June 1993, by the legislature and signed into law, on 14 June 1993, by the President of the Philippines. The new law became effective on 03 July 1993. It amended Section 142(c)(1) of the National Internal Revenue Code ("NIRC") to read; as follows:

"SEC. 142. Cigars and Cigarettes. -

"x x x x x x x x x.

"(c) Cigarettes packed by machine. - There shall be levied, assessed and collected on cigarettes packed by machine a tax at the rates prescribed below based on the constructive manufacturer's wholesale price or the actual manufacturer's wholesale price, whichever is higher:

"(1) On locally manufactured cigarettes which are currently classified and taxed at fifty-five percent (55%) or the exportation of which is not authorized by contract or otherwise, fifty-five (55%) provided that the minimum tax shall not be less than Five Pesos (P5.00) per pack.

"(2). On other locally manufactured cigarettes, forty-five percent (45%) provided that the minimum tax shall not be less than Three Pesos (P3.00) per pack.

"x x x x x x x x x.

"When the registered manufacturer's wholesale price or the actual manufacturer's wholesale price whichever is higher of existing brands of cigarettes, including the amounts intended to cover the taxes, of cigarettes packed in twenties does not exceed Four Pesos and eighty centavos (P4.80) per pack, the rate shall be twenty percent (20%)."[7] (Italics supplied.)

About a month after the enactment and two (2) days before the effectivity of RA 7654, Revenue Memorandum Circular No. 37-93 ("RMC 37-93"), was issued by the BIR the full text of which expressed:

"REPUBLIKA NG PILIPINASKAGAWARAN NG PANANALAPIKAWANIHAN NG RENTAS INTERNAS

July 1, 1993

REVENUE MEMORANDUM CIRCULAR NO. 37-93

SUBJECT : Reclassification of Cigarettes Subject to Excise Tax

TO : All Internal Revenue Officers and Others Concerned.

"In view of the issues raised on whether 'HOPE,' 'MORE' and 'CHAMPION' cigarettes which are locally manufactured are appropriately considered as locally manufactured cigarettes bearing a foreign brand, this Office is compelled to review the previous rulings on the matter.

"Section 142(c)(1) National Internal Revenue Code, as amended by R.A. No. 6956, provides:

"'On locally manufactured cigarettes bearing a foreign brand, fifty-five percent (55%) Provided, That this rate shall apply regardless of whether or not the right to use or title to the foreign brand was sold or transferred by its owner to the local manufacturer. Whenever it has to be determined whether or not a cigarette bears a foreign brand, the listing of brands manufactured in foreign countries appearing in the current World Tobacco Directory shall govern."

"Under the foregoing, the test for imposition of the 55% ad valorem tax on cigarettes is that the locally manufactured cigarettes bear a foreign brand regardless of whether or not the right to use or title to the foreign brand was sold or transferred by its owner to the local manufacturer. The brand must be originally owned by a foreign manufacturer or producer. If ownership of the cigarette brand is, however, not definitely determinable, 'x x x the listing of brands manufactured in foreign countries appearing in the current World Tobacco Directory shall govern. x x x'

"'HOPE' is listed in the World Tobacco Directory as being manufactured by (a) Japan Tobacco, Japan and (b) Fortune Tobacco, Philippines. 'MORE' is listed in the said directory as being manufactured by: (a) Fills de Julia Reig, Andorra; (b) Rothmans, Australia; (c) RJR-Macdonald, Canada; (d) Rettig-Strenberg, Finland; (e) Karellas, Greece; (f) R.J. Reynolds, Malaysia; (g) Rothmans, New Zealand; (h) Fortune Tobacco, Philippines; (i) R.J. Reynolds, Puerto Rico; (j) R.J. Reynolds, Spain; (k) Tabacalera, Spain; (l) R.J. Reynolds, Switzerland; and (m) R.J. Reynolds, USA. 'Champion' is registered in the said directory as being manufactured by (a) Commonwealth Bangladesh; (b) Sudan, Brazil; (c) Japan Tobacco, Japan; (d) Fortune Tobacco, Philippines; (e) Haggar, Sudan; and (f) Tabac Reunies, Switzerland.

"Since there is no showing who among the above-listed manufacturers of the cigarettes bearing the said brands are the real owner/s thereof, then it follows that the same shall be considered foreign brand for purposes of determining the ad valorem tax pursuant to Section 142 of the National Internal Revenue Code. As held in BIR Ruling No. 410-88, dated August 24, 1988, 'in cases where it cannot be established or there is dearth of evidence as to whether a brand is foreign or not, resort to the World Tobacco Directory should be made.'

"In view of the foregoing, the aforesaid brands of cigarettes, viz: 'HOPE,' 'MORE' and 'CHAMPION' being manufactured by Fortune Tobacco Corporation are hereby considered locally manufactured cigarettes bearing a foreign brand subject to the 55% ad valorem tax on cigarettes.

"Any ruling inconsistent herewith is revoked or modified accordingly.

(SGD) LIWAYWAY VINZONS-CHATOCommissioner"

On 02 July 1993, at about 17:50 hours, BIR Deputy Commissioner Victor A. Deoferio, Jr., sent via telefax a copy of RMC 37-93 to Fortune Tobacco but it was addressed to no one in particular. On 15 July 1993, Fortune Tobacco received, by ordinary mail, a certified xerox copy of RMC 37-93.

In a letter, dated 19 July 1993, addressed to the appellate division of the BIR, Fortune Tobacco, requested for a review, reconsideration and recall of RMC 37-93. The request was denied on 29 July 1993. The following day, or on 30 July 1993, the CIR assessed Fortune Tobacco forad valorem tax deficiency amounting to P9,598,334.00.

On 03 August 1993, Fortune Tobacco filed a petition for review with the CTA. [8]

On 10 August 1994, the CTA upheld the position of Fortune Tobacco and adjudged:

"WHEREFORE, Revenue Memorandum Circular No. 37-93 reclassifying the brands of cigarettes, viz: `HOPE,' `MORE' and `CHAMPION' being manufactured by Fortune Tobacco Corporation as locally manufactured cigarettes bearing a foreign brand subject to the 55% ad valorem tax on cigarettes is found to be defective, invalid and unenforceable, such that when R.A. No. 7654 took effect on July 3, 1993, the brands in question were not CURRENTLY CLASSIFIED AND TAXED at 55% pursuant to Section 1142(c)(1) of the Tax Code, as amended by R.A. No. 7654 and were therefore still classified as other locally manufactured cigarettes and taxed at 45% or 20% as the case may be.

"Accordingly, the deficiency ad valorem tax assessment issued on petitioner Fortune Tobacco Corporation in the amount of P9,598,334.00, exclusive of surcharge and interest, is hereby canceled for lack of legal basis.

"Respondent Commissioner of Internal Revenue is hereby enjoined from collecting the deficiency tax assessment made and issued on petitioner in relation to the implementation of RMC No. 37-93.

"SO ORDERED." [9]

In its resolution, dated 11 October 1994, the CTA dismissed for lack of merit the motion for reconsideration.

The CIR forthwith filed a petition for review with the Court of Appeals, questioning the CTA's 10th August 1994 decision and 11th October 1994 resolution. On 31 March 1993, the appellate court's Special Thirteenth Division affirmed in all respects the assailed decision and resolution.

In the instant petition, the Solicitor General argues: That -

"I. RMC 37-93 IS A RULING OR OPINION OF THE COMMISSIONER OF INTERNAL REVENUE INTERPRETING THE PROVISIONS OF THE TAX CODE.

"II. BEING AN INTERPRETATIVE RULING OR OPINION, THE PUBLICATION OF RMC 37-93, FILING OF COPIES THEREOF WITH THE UP LAW CENTER AND PRIOR HEARING ARE NOT NECESSARY TO ITS VALIDITY, EFFECTIVITY AND ENFORCEABILITY.

"III. PRIVATE RESPONDENT IS DEEMED TO HAVE BEEN NOTIFIED OR RMC 37-93 ON JULY 2, 1993.

“IV. RMC 37-93 IS NOT DISCRIMINATORY SINCE IT APPLIES TO ALL LOCALLY MANUFACTURED CIGARETTES SIMILARLY SITUATED AS 'HOPE,' 'MORE' AND 'CHAMPION' CIGARETTES.

"V. PETITIONER WAS NOT LEGALLY PROSCRIBED FROM RECLASSIFYING ‘HOPE,’ ‘MORE’ AND ‘CHAMPION’ CIGARETTES BEFORE THE EFFECTIVITY OF R.A. NO. 7654.

“VI. SINCE RMC 37-93 IS AN INTERPRETATIVE RULE, THE INQUIRY IS NOT INTO ITS VALIDITY, EFFECTIVITY OR ENFORCEABILITY BUT INTO ITS CORRECTNESS OR PROPRIETY; RMC 37-93 IS CORRECT." [10]

In fine, petitioner opines that RMC 37-93 is merely an interpretative ruling of the BIR which can thus become effective without any prior need for notice and hearing, nor publication, and that its issuance is not discriminatory since it would apply under similar circumstances to all locally manufactured cigarettes.

The Court must sustain both the appellate court and the tax court.

Petitioner stresses on the wide and ample authority of the BIR in the issuance of rulings for the effective implementation of the provisions of the National Internal Revenue Code. Let it be made clear that such authority of the Commissioner is not here doubted. Like any other government agency, however, the CIR may not disregard legal requirements or applicable principles in the exercise of its quasi-legislative powers.

Let us first distinguish between two kinds of administrative issuances - a legislative rule and an interpretative rule.

In Misamis Oriental Association of Coco Traders, Inc., vs. Department of Finance Secretary , [11] the Court expressed:

"x x x a legislative rule is in the nature of subordinate legislation, designed to implement a primary legislation by providing the details thereof. In the same way that laws must have the benefit of public hearing, it is generally required that before a legislative rule is adopted there must be hearing. In this connection, the Administrative Code of 1987 provides:

"Public Participation. - If not otherwise required by law, an agency shall, as far as practicable, publish or circulate notices of proposed rules and afford interested parties the opportunity to submit their views prior to the adoption of any rule.

"(2) In the fixing of rates, no rule or final order shall be valid unless the proposed rates shall have been published in a newspaper of general circulation at least two (2) weeks before the first hearing thereon.

"(3) In case of opposition, the rules on contested cases shall be observed.

"In addition such rule must be published. On the other hand, interpretative rules are designed to provide guidelines to the law which the administrative agency is in charge of enforcing." [12]

It should be understandable that when an administrative rule is merely interpretative in nature, its applicability needs nothing further than its bare issuance for it gives no real consequence more than what the law itself has already prescribed. When, upon the other hand, the administrative rule goes beyond merely providing for the means that can facilitate or render least cumbersome the implementation of the law but substantially adds to or increases the burden of those governed, it behooves the agency to accord at least to those directly affected a chance to be heard, and thereafter to be duly informed, before that new issuance is given the force and effect of law.

A reading of RMC 37-93, particularly considering the circumstances under which it has been issued, convinces us that the circular cannot be viewed simply as a corrective measure (revoking in the process the previous holdings of past Commissioners) or merely as construing Section 142(c)(1) of the NIRC, as amended, but has, in fact and most importantly, been made in order to place "Hope Luxury," "Premium More" and "Champion" within the classification of locally manufactured cigarettes bearing foreign brands and to thereby have them covered by RA 7654. Specifically, the new law would have its amendatory provisions applied to locally manufactured cigarettes which at the time of its effectivity were not so classified as bearing foreign brands. Prior to the issuance of the questioned circular, "Hope Luxury," "Premium More," and "Champion" cigarettes were in the category of locally manufactured cigarettes not bearing foreign brand subject to 45% ad valorem tax. Hence, without RMC 37-93, the enactment of RA 7654, would have had no new tax rate consequence on private respondent's products. Evidently, in order to place "Hope Luxury," "Premium More," and "Champion" cigarettes within the scope of the amendatory law and subject them to an increased tax rate, the now disputed RMC 37-93 had to be issued. In so doing, the BIR not simply interpreted the law; verily, it legislated under its quasi-legislative authority. The due observance of the requirements of notice, of hearing, and of publication should not have been then ignored.

Indeed, the BIR itself, in its RMC 10-86, has observed and provided:

"RMC NO. 10-86

Effectivity of Internal Revenue Rules and Regulations

"It has been observed that one of the problem areas bearing on compliance with Internal Revenue Tax rules and regulations is lack or insufficiency of due notice to the tax paying public. Unless there is due notice, due compliance therewith may not be reasonably expected. And most importantly, their strict enforcement could possibly suffer from legal infirmity in the light of the constitutional provision on `due process of law' and the essence of the Civil Code provision concerning effectivity of laws, whereby due notice is a basic requirement (Sec. 1, Art. IV, Constitution; Art. 2, New Civil Code).

"In order that there shall be a just enforcement of rules and regulations, in conformity with the basic element of due process, the following procedures are hereby prescribed for the drafting, issuance and implementation of the said Revenue Tax Issuances:

"(1). This Circular shall apply only to (a) Revenue Regulations; (b) Revenue Audit Memorandum Orders; and (c) Revenue Memorandum Circulars and Revenue Memorandum Orders bearing on internal revenue tax rules and regulations.

"(2). Except when the law otherwise expressly provides, the aforesaid internal revenue tax issuances shall not begin to be operative until after due notice thereof may be fairly presumed.

"Due notice of the said issuances may be fairly presumed only after the following procedures have been taken:

"xxx xxx xxx

"(5). Strict compliance with the foregoing procedures is enjoined." [13]

Nothing on record could tell us that it was either impossible or impracticable for the BIR to observe and comply with the above requirements before giving effect to its questioned circular.

Not insignificantly, RMC 37-93 might have likewise infringed on uniformity of taxation.

Article VI, Section 28, paragraph 1, of the 1987 Constitution mandates taxation to be uniform and equitable. Uniformity requires that all subjects or objects of taxation, similarly situated, are to be treated alike or put on equal footing both in privileges and liabilities.[14] Thus, all taxable articles or kinds of property of the same class must be taxed at the same rate[15] and the tax must operate with the same force and effect in every place where the subject may be found.

Apparently, RMC 37-93 would only apply to "Hope Luxury," Premium More" and "Champion" cigarettes and, unless petitioner would be willing to concede to the submission of private respondent that the circular should, as in fact my esteemed colleague Mr. Justice Bellosillo so expresses in his separate opinion, be considered adjudicatory in nature and thus violative of due process following the Ang Tibay[16] doctrine, the measure suffers from lack of uniformity of taxation. In its decision, the CTA has keenly noted that other cigarettes bearing foreign brands have not been similarly included within the scope of the circular, such as -

"1. Locally manufactured by ALHAMBRA INDUSTRIES, INC.

(a) `PALM TREE' is listed as manufactured by office of Monopoly, Korea (Exhibit `R')

"2. Locally manufactured by LA SUERTE CIGAR and CIGARETTE COMPANY

(a) `GOLDEN KEY' is listed being manufactured by United Tobacco, Pakistan (Exhibit `S')

(b) `CANNON' is listed as being manufactured by Alpha Tobacco, Bangladesh (Exhibit `T')

"3. Locally manufactured by LA PERLA INDUSTRIES, INC.

(a) `WHITE HORSE' is listed as being manufactured by Rothman's, Malaysia (Exhibit `U')

(b) `RIGHT' is listed as being manufactured by SVENSKA, Tobaks, Sweden (Exhibit `V-1')

"4. Locally manufactured by MIGHTY CORPORATION

(a) 'WHITE HORSE' is listed as being manufactured by Rothman's, Malaysia (Exhibit 'U-1')

"5. Locally manufactured by STERLING TOBACCO CORPORATION

(a) ‘UNION' is listed as being manufactured by Sumatra Tobacco, Indonesia and Brown and Williamson, USA (Exhibit 'U-3')

(b) ‘WINNER' is listed as being manufactured by Alpha Tobacco, Bangladesh; Nanyang, Hongkong; Joo Lan, Malaysia; Pakistan Tobacco Co., Pakistan; Premier Tobacco, Pakistan and Haggar, Sudan (Exhibit 'U-4')." [17]

The court quoted at length from the transcript of the hearing conducted on 10 August 1993 by the Committee on Ways and Means of the House of Representatives; viz:

"THE CHAIRMAN. So you have specific information on Fortune Tobacco alone. You don't have specific information on other tobacco manufacturers. Now, there are other brands which are similarly situated. They are locally manufactured bearing foreign brands. And may I enumerate to you all these brands, which are also listed in the World Tobacco Directory x x x. Why were these brands not reclassified at 55 if your want to give a level playing field to foreign manufacturers?

"MS. CHATO. Mr. Chairman, in fact, we have already prepared a Revenue Memorandum Circular that was supposed to come after RMC No. 37-93 which have really named specifically the list of locally manufactured cigarettes bearing a foreign brand for excise tax purposes and includes all these brands that you mentioned at 55 percent except that at that time, when we had to come up with this, we were forced to study the brands of Hope, More and Champion because we were given documents that would indicate the that these brands were actually being claimed or patented in other countries because we went by Revenue Memorandum Circular 1488 and we wanted to give some rationality to how it came about but we couldn't find the rationale there. And we really found based on our own interpretation that the only test that is given by that existing law would be registration in the World Tobacco Directory. So we came out with this proposed revenue memorandum circular which we forwarded to the Secretary of Finance except that at that point in time, we went by the Republic Act 7654 in Section 1 which amended Section 142, C-1, it said, that on locally manufactured cigarettes which are currently classified and taxed at 55 percent. So we were saying that when this law took effect in July 3 and if we are going to come up with this revenue circular thereafter, then I think our action would really be subject to question but we feel that . . . Memorandum Circular Number 37-93 would really cover even similarly situated brands. And in fact, it was really because of the study, the short time that we were given to study the matter that we could not include all the rest of the other brands that would have been really classified as foreign brand if we went by the law itself. I am sure that by the reading of the law, you would without that ruling by Commissioner Tan they would really have been included in the definition or in the classification of foregoing brands. These brands that you referred to or just read to us and in fact just for your information, we really came out with a proposed revenue memorandum circular for those brands. (Italics supplied)

"Exhibit 'FF-2-C', pp. V-5 TO V-6, VI-1 to VI-3).

"x x x x x x x x x.

"MS. CHATO. x x x But I do agree with you now that it cannot and in fact that is why I felt that we . . . I wanted to come up with a more extensive coverage and precisely why I asked that revenue memorandum circular that would cover all those similarly situated would be prepared but because of the lack of time and I came out with a study of RA 7654, it would not have been possible to really come up with the reclassification or the proper classification of all brands that are listed there. x x x' (italics supplied) (Exhibit 'FF-2d', page IX-1)

"x x x x x x x x x.

"HON. DIAZ. But did you not consider that there are similarly situated?

"MS. CHATO. That is precisely why, Sir, after we have come up with this Revenue Memorandum Circular No. 37-93, the other brands came about the would have also clarified RMC 37-93 by I was saying really because of the fact that I was just recently appointed and the lack of time, the period that was allotted to us to come up with the right actions on the matter, we were really caught by the July 3 deadline. But in fact, We have already prepared a revenue memorandum circular clarifying with the other . . . does not yet, would have been a list of locally manufactured cigarettes bearing a foreign brand for excise tax purposes which would include all the other brands that were mentioned by the Honorable Chairman. (Italics supplied) (Exhibit 'FF-2-d,' par. IX-4)."18

All taken, the Court is convinced that the hastily promulgated RMC 37-93 has fallen short of a valid and effective administrative issuance.

WHEREFORE, the decision of the Court of Appeals, sustaining that of the Court of Tax Appeals, is AFFIRMED. No costs.

SO ORDERED.

Kapunan, J., concurs.Padilla, J., joins Justice Hermosisima, Jr., in his dissenting opinion.Bellosillo, J., see separate opinion.Hermosisima, Jr., J., see dissenting opinion.

Republic of the PhilippinesSUPREME COURTManila

EN BANC

G.R. No. L-17512 December 29, 1960

CLARO IBASCO, petitioner, vs.HON. MELQUIADES G. ILAO, ET AL., respondents.

M. A. Concordia, A. M. Maghirang, A. Zabala and M. Dating, Jr. for petitioner.Luis I. Barcelona for respondents.

BAUTISTA ANGELO, J.:

On December 2, 1959, Jose Pascual filed with the Court of First Instance of Camarines Norte a protest contesting the election of Claro Ibasco as Mayor of Mercedes, Camarines Norte. When summons was serve upon Ibasco, instead of filing an answer, he filed a motion for bill of particulars which was granted on January 5, 1960, the court ordering Pascual "to amend his motion of protest by naming the precincts where the alleged minors voted, the date and the precincts where they were registered, the persons who voted twice and the precincts where they voted, and the precincts where the inspectors allegedly committed irregularities", within five days from receipt of the order.

As protestant failed to file an amended protest, protestee filed a motion to dismiss on January 19, 1960, which was denied by the court. In the meantime, protestee failed to file his answer as required by law; he was not however declared in default, but was deemed to have entered a general denial as provided for in Section 176 (e) of the Revised Election Code.

During the hearing, protestee questioned the validity of the ballots cast in favor of protestant which had been marked by protestee as exhibits during the revision of the ballots before the Committee on Revision in precincts covered by the protest, but the trial court ruled that protestee cannot impugn said ballots because he failed to file an answer with affirmative defenses. Protestee filed a motion for reconsideration contending that, as he has not been declared in default, he has a right to contest the votes cast in favor of protestant provided that they are covered by the protest, but the motion was denied.

Hence, protestee came to this Court by way of certiorari praying that respondent court be ordered to allow him to present such evidence as may be necessary to nullify the questioned ballots cast in favor of protestant in those precincts involved in the protest. Upon his petition, this Court issued a writ of preliminary injunction.

The issue before us resolves around the interpretation to be placed on the terms "general denial" used in Section 176 (e) of the Revised Election Code. This portion of the law provides:

(e) If no answer shall be filed to the protests or to the counter-protest within the time limits respectively fixed, a general denial shall be deemed to have been entered.

The incident that gave rise to this proceeding arose when protestee questioned the validity of the ballots cast in favor of protestant in some of the precincts involved in the protest introducing as evidence the ballots which were marked by him as exhibits before the Committee on Revision, but the trial court did not allow him to do so on the ground that, having failed to file an answer, he is deemed to have entered merely a general denial. The trial court acted upon the theory that as the Rules of Court are suppletory in election contests resort must be had to the meaning of the terms "general denial" within the purview of said rules which in essence implies an admission of the material allegations of the complaint. In synthesis, it is the theory of the trial court that the failure of protestee to file an answer is tantamount to an admission on his part of the material allegations of the protest and, therefore, he is no longer in a position to dispute them.

There seems to be a misapprehension in the application of Rule 132 1 which provides for the extension of the Rules of Court to election cases on matters not specifically covered by the Election Law. While said rule provides that our rules shall apply to election cases "by analogy or in a suppletory character", the application is qualified. It says that the gap shall be filled "whenever practicable and convenient." This phrase connotes a meaning which prevents an unbriddled application of the Rules of Court, as well as of all matters incident thereto, for there is still need to show and analyze if the extension would help attain the objective of the law or would tend to defeat it. 2Apparently, this rationale has been

overlooked by the trial court when in one brush it adopted the meaning of the term "general denial" as understood in the realm of our procedural law. We believe such to be an error.

It is meet to recall here what we once said of general denial. This is what we said: "No rule is better settled in pleading and practice than that neither party can prove facts which he has not alleged, if objection is properly made. Under a general denial the defendant is permitted to present any evidence which disproves, or tends to disprove, any of the allegations in the complaint. The reason why "prescription" cannot be interposed under a demurrer or a general denial is the fact that the defendant thereby admits the allegations in the complaint, but seeks to avoid their effect by other proof. Evidence which amounts to a confession or an avoidance is not generally admissible under a general denial." (Karagdag vs. Barado, 33 Phil., 529, 532-533; Emphasis supplied) In other words, a general denial puts in issue the material allegations of the complaint, and, consequently, under such denial the protestee may present evidence which may disprove said allegations. But he cannot present evidence to prove any affirmative defense (Francisco, How to Try Election Cases, p. 136). It is in this sense that the terms "general denial" should be understood in election cases, for to give it a different meaning would render the provisions of Section 176 (e) nugatory and meaningless; that phrase would be purposeless if we were to hold that by "general denial" protestee would be deemed to have admitted all the material allegations of the protest.

There are weighty reasons that support the application of such theory in election cases. One is the cardinal principle that an election case involves public interest and, hence, it imposed upon the court the imperative duty to ascertain by all means within its command who is the real candidate elected by the electorate. That is why the law gives to the court the power, in interest of justice, to order motu proprio that the ballot boxes and other election documents be produced before it so that they may be examined and recounted regardless of whether the party raises any issue in its pleading concerning the validity of the ballots (Section 175, Revised Election Code). On the other hand, it has been postulated as a fundamental principle underlying the trial of election cases that technicalities or procedural barriers should not be allowed to stand if the same would tend to defeat rather than promote the interest of justice. Rather, it is enjoined that the Election Law should be liberally construed to the end that the will of the people may not be defeated.

As my be seen, the Revised Election Code does not provide for any particular procedure for the disposition of an election case once the issues are joined. On the other hand, Rule 132, of our Rules of Court, provides that the rules of court shall not apply to election cases "except by analogy or in a suppletory character and whenever practicable and convenient." It would therefore appear that by legislative fiat the trial of an election case shall be conducted in a summary litigations in order that its result may be determined in the shortest time possible. The reason is obvious: an election case, unlike an ordinary action, involves public interest, time element being of the essence in its disposition so that the uncertainty as to who is the real choice of the people may at once be dispelled. Moreover, it is neither fair no just that we keep in office for an uncertain period once whose right to it is under suspicion. It is imperative that his claim be immediately cleared not only for the benefit of the winner but for the sake of public interest, which can only be achieved by brushing aside technicalities of procedure which protract and delay the trial of an ordinary action. As this Court has aptly said: "The purpose of the legislature in declaring that contest should not be conducted upon pleadings or by action was to free the courts as far as possible from the technicalities incident to ordinary proceeding by action and to enable the court's to administer justice speedily and without complications" (Lucero vs. De Guzman, 45 Phil., 852). (Roforma vs. De Luna, 104 Phil., 278.)lawphil.net

It has been frequently decided, and it may be stated as a general rule recognized by all the courts, that statutes providing for election contest are to be liberally construed, to the end that the will of the people in the choice of public officers may not be defeated by merely technical objections. To that end immaterial defects in pleadings should be disregarded and necessary and proper amendments should be alowed as promptly as possible. (Heyfrom vs. Mahoney, 18 Am. St. Rep., 757, 763; McCrary on Elections, 3d ed., Sec. 396.) (Galang vs. Miranda and De Leon, 35 Phil., 269; 271-272; See also Jalandoni vs. Sarcon, 94 Phil., 266; 50 Off. Gaz., 587.)

In the light of the foregoing, it would appear that the trial court erred in blocking the attempt of protestee to impugn the validity of the ballots questioned by him that were cast in favor of protestant it appearing that they were all involved in the precincts covered by the protest. Such an attempt merely tends to disprove the claim of the protestant that irregularities were committed in the precincts involved, which is within the realm of "general denial" as we have already pointed out.

We are, therefore, persuaded to conclude that the trial court committed an abuse of discretion in issuing the orders subject of the present petition for certiorari. .

Wherefore, petition is granted. The orders of the trial court herein involved are set aside. No costs.

Paras, C. J., Bengzon, Padilla, Concepcion, Reyes J.B.L., Barrera, Gutierrez David, Paredes, and Dizon, JJ., concur.Labrador, J., concurs in the result.