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51. VERA vs CUEVAS

MISAEL P. VERA, as Commissioner of Internal Revenue, and THE FAIR TRADE BOARD, petitioner, vs HON.SERAFIN R. CUEVAS, as Judge of the Court of First Instance of Manila, Branch IV, INSTITUTE OF EVAPORATEDFILLED MILK MANUFACTURERS OF THE PHILIPPINES, INC., CONSOLIDATED MILK COMPANY (PHIL.) INC., andMILK INDUSTRIES, INC., respondents.

May 31, 1979

DE CASTRO, J.

Petition for Certiorari with Preliminary Injunction to review decision of Judge Cuevas of CFI Manila

SHORT VERSION: Three milk companies are being required by the Commission of Internal Revenue towithdraw their filled milk products from the market until they put words in their labels which are required bySection 169 of the tax code. The milk companies get a preliminary injunction against the CIR. Later, the CIRfiles for an injunction against the Fair Trade Board from hearing a special proceeding on a complaint formisleading advertisement, mislabeling and/or misbranding involving the same milk companies. The issue iswho among the CIR and the FTB have jurisdiction to decide the matter.

SC says neither. Section 169 of the Tax Code was enacted with other provisions that have already beenrepealed, resulting in Section 169 being repealed by implication and becoming a declaratory provision, losingits tax purpose. Without its tax purpose, the CIR loses his authority to enforce it. Neither the CIR nor the FTBhave jurisdiction as the law that repealed Section 169 (RA 3720) provides that the Board of Food and Drug

inspection and the Food and Drug Administrator, with the Secretary of Health and the Secretary of Justice (if acriminal prosecution need be instituted) have jurisdiction over the matter.

FACTS: Consolidated Milk Company sells the Darigold brand and Milk Industries sells Dutch Baby brand(Milk Companies). Along with General Milk selling under the brand Liberty, these three milk companies arethe plaintiffs of an action for declaratory relief for an adjudication of their respective rights and obligations inrelation to the enforcement of Section 169 of the Tax Code against their filled milk products. [Civil Case]Institute of Evaporated Milk Manufacturers of the Philippines, Inc. is a corporation organized for the principalpurpose of upholding and maintaining at its highest the standards of local filled milk industry, of which all themilk companies are members.

The Commissioner of Revenue (CIR) required the milk companies to withdraw from the market all of theirfilled milk products which do not bear the inscription required by Section 169 of the Tax Code warning thatfailure to comply will result in the institution of the necessary action against any violation. Section 169 of theTax Code reads as follows:

Section 169. Inscription to be placed on skimmed milk. All condensed skimmed milk and allmilk in whatever form, from which the fatty part has been removed totally or in part, sold orput on sale in the Philippines shall be clearly and legibly marked on its immediate containers,and in all the language in which such containers are marked, with the words, "This milk is notsuitable for nourishment for infants less than one year of age," or with other equivalent words.

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CFI issued a writ of preliminary injunction, preventing the CIR from requiring the Milk companies to print onthe labels of their filled milk products the words, "This milk is not suitable for nourishment for infants less thanone year of age or words of similar import," as directed by Law, and from taking any action to enforce theabove legal provision until the case can be tried on the merits. The OSG appealed the writ on certiorari to theSC.

Meanwhile, a special action for prohibition and injunction with a petition for preliminary injunction is filed bythe CIR praying that the Fair Trade Board (FTB) desist from further proceeding with FTB I.S. No. 1 entitled"Antonio R. de Joya vs. Institute of Evaporated Milk Manufacturers of the Philippines, etc." pending finaldetermination of the Civil Case. This special action concerned a complaint for misleading advertisement,mislabeling and/or misbranding, alleging that the milk companies omitted to state in their labels anystatement sufficient to Identify their filled milk products as "imitation milk" or as an imitation of genuine cowsmilk and omitting to mark the immediate containers of their filled milk products with the words: "This milk isnot suitable for nourishment for infants less than one year of age or with other equivalent words as requiredunder Section 169 of the Tax Code. A writ of preliminary injunction was issued by CFI.

Both cases were consolidated and heard jointly. The CFI rendered its decision:

With regard to the Civil Case: perpetually restraining the CIR from requiring the Milk Companies to print intheir labels the words required by law

With regard to the special action: perpetually restraining the FTB from continuing in the investigation of the

complaints against the Milk Companies or any charges related to the manufacture or sale of their filled milkproducts

The CIR and the FTB filed the present petition for certiorari.

ISSUE: WON Section 169 has been repealed by implication, resulting in the loss of authority of theCommissioner in enforcing the same and that the proper authority is now with the Secretary of Health andSecretary of Justice as provided for in RA 3720. (YES)

WON the Fair Trade Board has jurisdiction to investigate and prosecute alleged misbranding,mislabeling, and/or misleading advertisement of filled milk products. (NO)

RATIO: Section 169 of the tax code has already been repealed by implication. It was enacted in 1939, togetherwith Section 141 (which imposed a Specific tax on skimmed milk) and Section 177 (which penalized the sale ofskimmed milk without payment of the specific tax and without the legend required by Section 169), both ofwhich have been repealed, making section 169 a mere declaratory provision, without a tax purpose, or a penalsanction.

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Section 169 of the Tax Code does not apply to filled milk. The use of the specific and qualifying terms"skimmed milk" in the headnote and "condensed skimmed milk" in the text of the cited section, would restrictthe scope of the general clause "all milk, in whatever form, from which the fatty part has been removed totallyor in part." In other words, the general clause is restricted by the specific term "skimmed milk" under thefamiliar rule of ejusdem generis that general and unlimited terms are restrained and limited by the particularterms they follow in the statute.

Section 169 is being enforced only against manufacturer of filled milk product and not as againstmanufacturers, distributors or sellers of condensed skimmed milk such as SIMILAC, SMA, BREMIL, ENFAMIL,OLAC, in which, as admitted by the CIR and FTB, the fatty part has been removed and substituted withvegetable or corn oil. The enforcement of Section 169 against the specific Milk Companies only but not againstother persons similarly situated as them aounts to an unconstitutional denial of the equal pro petition of thelaws, for the law, equally enforced, would similarly offend against the Constitution.

As to jurisdiction/authority of the Commissioner of Internal Revenue

Since Section 169 is devoid of any tax purpose, petitioner Commissioner necessarily lost his authority toenforce the same. The Commissioner s contention that he still has jurisdiction to enforce Section 169 by virtueof Section 3 of the Tax Code which provides that the Bureau of Internal Revenue shall also "give effect to andadminister the supervisory and police power conferred to it by this Code or other laws" is untenable. TheBureau of Internal Revenue may claim police power only when necessary in the enforcement of its principalpowers and duties consisting of the "collection of all national internal revenue taxes, fees and charges, and the

enforcement of all forfeitures, penalties and fines connected therewith." The enforcement of Section 169entails the promotion of the health of the nation and is thus unconnected with any tax purpose. This is theexclusive function of the Food and Drug Administration of the Department of Health as provided for inRepublic Act No. 3720.

Republic Act No. 3720 provides:

Section 9. ... It shall be the duty of the Board (Food and Drug Inspection) , conformably with the

rules and regulations, to hold hearings and conduct investigations relative to matters touchingthe Administration of this Act, to investigate processes of food, drug and cosmetic manufactureand to subject reports to the Food and Drug Administrator , recommending food and drugstandards for adoption. Said Board shall also perform such additional functions, properly withinthe scope of the administration thereof, as maybe assigned to it by the Food and DrugAdministrator. The decisions of the Board shall be advisory to the Food and Drug Administrator.

Section 26. ...

xxx xxx xxx

(c) Hearing authorized or required by this Act shall be conducted by the Board of Food andDrug Inspection which shall submit recommendation to the Food and Drug Administrator.

(d) When it appears to the Food and Drug Administrator from the reports of the Food and DrugLaboratory that any article of food or any drug or cosmetic secured pursuant to Section 28 ofthis Act is adulterated or branded he shall cause notice thereof to be given to the person or

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persons concerned and such person or persons shall be given an opportunity to subjectevidence impeaching the correctness of the finding or charge in question.

(e) When a violation of any provisions of this Act comes to the knowledge of the Food andDrug Administrator of such character that a criminal prosecution ought to be institutedagainst the offender, he shall certify the facts to the Secretary of Justice through theSecretary of Health, together with the chemists' report, the findings of the Board of Food and

Drug Inspection, or other documentary evidence on which the charge is based.

(f) Nothing in this Act shall be construed as requiring the Food and Drug Administrator to certifyfor prosecution pursuant to subparagraph (e) hereof, minor violations of this Act whenever hebelieves that public interest will be adequately served by a suitable written notice or warning.

From this, it is clear that the Commissioner of Internal Revenue and the Fair Trade Board, are without jurisdiction to investigate and to prosecute alleged misbranding, mislabeling and/or misleadingadvertisements of filled milk. The jurisdiction on the matters cited is vested upon the Board of Food and Druginspection and the Food and Drug Administrator, with the Secretary of Health and the Secretary of Justice,also intervening in case criminal prosecution has to be instituted.

DISPOSITIVE: Decision appealed from is AFFIRMED.

-Mike

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Chartered Bank Employees Association v. Ople GR L-44717, 28 August 1985 (138 SCRA 273)En Banc, Gutierrez, Jr. (p): 10 concur, 1 concur in result, 1 took no part, 1 on leave

Facts: On 20 May 1975, the Chartered Bank Employees Association, in representation of its monthly paidemployees/members, instituted a complaint with the Regional Office IV, Department of Labor, now Ministryof Labor and Employment (MOLE) against Chartered Bank, for the payment of 10 unworked legal holidays, aswell as for premium and overtime differentials for worked legal holidays from 1 November 1974.

Both the arbitrator and the National Labor Relations Commission (NLRC) ruled in favor of the petitionersordering the bank to pay its monthly paid employees the holiday pay and the premium or overtime paydifferentials to all employees who rendered work during said legal holidays.

On appeal, the Minister of Labor set aside the decision of the NLRC and dismissed the petitioners claim forlack of merit basing its decision on Section 2, Rule IV, Book III of the Integrated Rules and Policy Instruction 9,claiming the rule that If the monthly paid employee is receiving not less than P240, the maximum monthly

minimum wage, and his monthly pay is uniform from January to December, he is presumed to be already paidthe 10 paid legal holidays. However, if deductions are made from his monthly salary on account of holidays inmonths where they occur, then he is still entitled to the 10 paid legal holidays.

Issue: Whether the Ministry of Labor is correct in maintaining that monthly paid employees are not entitled tothe holiday pay nor all employees who rendered work during said legal holidays are entitled to the premiumor overtime pay differentials.

Held: When the language of the law is clear and unequivocal the law must be taken to mean exactly what itsays. An administrative interpretation, which diminishes the benefits of labor more than what the statute

delimits or withholds, is obviously ultra vires. In the present case, the provisions of the Labor Code on theentitlement to the benefits of holiday pay are clear and explicit, it provides for both the coverage of andexclusion from the benefit. In Policy Instruction 9, the Secretary of Labor went as far as to categorically statethat the benefit is principally intended for daily paid employees, when the law clearly states that every workershall be paid their regular holiday pay.

While it is true that the contemporaneous construction placed upon a statute by executive officers whoseduty is to enforce it should be given great weight by the courts, still if such construction is so erroneous, thesame must be declared as null and void. It is the role of the Judiciary to refine and, when necessary, correct

constitutional (and/or statutory) interpretation, in the context of the interactions of the three branches of thegovernment, almost always in situations where some agency of the State has engaged in action that stemsultimately from some legitimate area of governmental power. Section 2, Rule IV, Book III of the Rules toimplement the Labor Code and Policy Instruction was declared null and void in IBAAEU v. Inciong, and thusapplies in the case at bar. Since the private respondent premises its action on the invalidated rule and policyinstruction, it is clear that the employees belonging to the petitioner association are entitled to the paymentof 10 legal holidays under Articles 82 and 94 of the Labor Code, aside from their monthly salary. They are notamong those excluded by law from the benefits of such holiday pay

The Supreme Court reversed and set aside the Labor Ministers 7 September 1976 order, and reinstated withmodification (deleting the interest payments) the 24 March 1976 decision of the NLRC affirming the 30October 1975 resolution of the Labor Arbiter.

BUSTAMANTE vs. NLRC (1996)

Padilla, J.

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FACTS:

Private respondent moves to reconsider the earlier decision of the Supreme Court First Division on grounds

that (a) petitioners are not entitled to recover backwages because they were not actually dismissed but theirprobationary employment was not converted to permanent employment; and (b) assuming that petitionersare entitled to backwages, computation thereof should not start from cessation of work up to actualreinstatement, and that salary earned elsewhere (during the period of illegal dismissal) should be deductedfrom the award of such backwages.

ISSUE: How should backwages be computed?

HELD:

- The prevailing rule is that backwages to be awarded to an illegally dismissed employee, should not bediminished or reduced by the earnings derived by him elsewhere during the period of his illegaldismissal. The underlying reason of this ruling is that the employee, while litigating the legality(illegality) of his dismissal, must still earn a living to support himself and family, while his backwages

have to be paid by the employer as part of the price or penalty he has to pay for illegally dismissing hisemployee.

- Under Art. 279, as amended, the provision handling for "full backwages" to illegally dismissedemployees is clear, plain and free from ambiguity and, therefore, must be applied without attemptedor strained interpretation. Index animi sermo est .

- Therefore, petitioners are entitled on their full backwages, inclusive of allowances and other benefitsor their monetary equivalent, from the time their actual compensation was withheld on them up to thetime of their actual reinstatement.

HISTORY:

- Pre-Labor Codeo Under RA 875, the CIR was given wide discretion to determine the amount of backwages. Thus,

in the exercise of its jurisdiction, the CIR increased or diminished the award of backpay,depending on several circumstances, among them, the good faith of the employer, theemployee's employment in other establishments during, the period of illegal dismissal, or theprobability that the employee could have realized net earnings from outside employment if hehad exercised due diligence to search for outside employment. In labor cases decided duringthe effectivity of R.A. No. 875, the Supreme Court acknowledged and upheld the CIR's authorityto deduct any amount from the employee's backwages, including the discretion to reduce suchaward of backwages whatever earnings were obtained by the employee elsewhere during theperiod of his illegal dismissal (Itogon-Suyoc ruling).

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o Then came the Mercury Drug ruling, where the Court ruled that a fixed amount of backwageswithout further qualifications should be awarded to an illegally dismissed employee, for thepurposes of expediency.

o A permutation of the aforementioned rule, the 3-year rule formulated by Teehankee wasadopted, where backwages are always computed for the fixed period of 3 years.

- Post-Labor Codeo Art. 279 provided that an unjustly dismissed employee shall be entitled to his back wages

computed from the time his compensation was withheld from him up to the time of hisreinstatement.

o Despite the express provision that it should be computed from the time compensation waswithheld up to reinstatement, the Mercury Drug rule with the 3-year constant was still applied.

o On March 1989, Republic Act No. 6715 took effect, amending the Art. 279 of the LC. This addedother benefits to the computation of backwages, which should also be computed from thetime compensation was withheld up to reinstatement.

o In 1993, the Court in the Pines City Educational Center went back to the pre-Mercury Drug rule,where the total amount derived from employment elsewhere by the employee from the dateof dismissal up to the date of reinstatement, if any, should be deducted therefrom. Therationale in allowing the deduction was to prevent unjust enrichment by the employee at theexpense of the employer.

o In the present case, the Court overrules the Pines City case, and adopts as a general rule thatemployees are entitled to full backwages from the time it was withheld up to the time ofreinstatement, without any deductions or limitatations as to period/amount.

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ESPIRITU VS CIPRIANO Case Digest

ESPIRITU VS CIPRIANO

FACTS:

For resolution is the problem of whether RA No. 6126 may be held applicable to the case at bar. Forconvenience we reproduce the pertinent provisions of law in question:

Section 1 no lessor of a dwelling unit or of land on which anothers dwelling is located shall, duringthe period of one year from March 31, 1970, increase the monthly rental agreed between the lessor and thelessee prior to the approval of this Act when said rental does not exceed 300php a month.

Section 6- This At shall take effect upon its approval.

Approved June 17, 1970

ISSUE:

Whether or not R.A. No. 6126 will have retroactive effect at the case at bara

Held:

It is the contention of respondent which was upheld by the trial court that the case at bar is covered bythe aforecited law. We rule, otherwise. Established and undisputed is the fact that the increase in the rental ofthe lot involved was effected in January, 1969, while the law in question took effect on June 17, 1970, or aftera period of one year and a half after the increase in rentals had been effected.

Likewise the claim of private respondent that the act is remedial and may. Therefore given retroactiveeffect is untenable. A close study of the provisions discloses that far from being remedial, the statute affectssubstantive rights and hence a strict and prospective construction therefore is in order. Article 4 of the civilcode ordains that law shall have no retroactive effect unless the contrary is provided and that where the law isclear. Our duty is equally plain. The law being a temporary measure designed to meet a temporary situation, ithas limited peri od of operation as in fact it was so worded in clear and unequivocal language that no lessor ofa dwelling unit or land shall during the period of one year from March 31, 1970, increase the monthly rentalagreed upon between the lessor and lessee prior to the approval of this act.

Hence the provision against the increase in monthly rental was effective only from March 1970 up toMarch 1971. Outside and beyond that period the law did not by the express mandate of the Act itself,operate. The said law did not, by express terms, purport to give retroactive effect.

We therefore rule that R.A. No. 6126 is not applicable at the case at bar. As the language of the law is

clear and unambiguous, it must be held to mean what it plainly says.

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Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 84240 March 25, 1992

OLIVIA S. PASCUAL and HERMES S. PASCUAL,petitioners,vs.ESPERANZA C. PASCUAL-BAUTISTA, MANUEL C. PASCUAL, JOSE C. PASCUAL, SUSANA C. PASCUAL-BAUTISTA,ERLINDA C. PASCUAL, WENCESLAO C. PASCUAL, JR., INTESTATE ESTATE OF ELEUTERIO T. PASCUAL, AVELINOPASCUAL, ISOCELES PASCUAL, LEIDA PASCUAL-MARTINES, VIRGINIA PASCUAL-NER, NONA PASCUAL-FERNANDO, OCTAVIO PASCUAL, GERANAIA PASCUAL-DUBERT, and THE HONORABLE PRESIDING JUDGE

MANUEL S. PADOLINA of Br. 162, RTC, Pasig, Metro Manila, respondents.

PARAS, J.:

This is a petition for review on certiorari which seeks to reverse and set aside: (a) the decision of the Court ofAppeals 1 dated April 29, 1988 in CA-G.R. SP. No. 14010 entitled "Olivia S. Pascual and Hermes S. Pascual v.Esperanza C. Pascual-Bautista, Manuel C. Pascual, Jose Pascual, Susana C. Pascual-Bautista, Erlinda C. Pascual,Wenceslao C. Pascual, Jr., et al." which dismissed the petition and in effect af firmed the decision of the trial

court and (b) the resolution dated July 14, 1988 denying petitioners' motion for reconsideration.

The undisputed facts of the case are as follows:

Petitioners Olivia and Hermes both surnamed Pascual are the acknowledged natural children of the late EligioPascual, the latter being the full blood brother of the decedent Don Andres Pascual ( Rollo , petition, p. 17).

Don Andres Pascual died intestate on October 12, 1973 without any issue, legitimate, acknowledged natural,adopted or spurious children and was survived by the following:

(a) Adela Soldevilla de Pascual, surviving spouses;

(b) Children of Wenceslao Pascual, Sr., a brother of the full blood of the deceased, to wit:

Esperanza C. Pascual-BautistaManuel C. PascualJose C. PascualSusana C. Pascual-BautistaErlinda C. Pascual

Wenceslao C. Pascual, Jr.

(c) Children of Pedro-Bautista, brother of the half blood of the deceased, to wit:

Avelino PascualIsoceles PascualLoida Pascual-MartinezVirginia Pascual-Ner

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Nona Pascual-FernandoOctavio PascualGeranaia Pascual-Dubert;

(d) Acknowledged natural children of Eligio Pascual, brother of the full blood of the deceased,to wit:

Olivia S. PascualHermes S. Pascual

(e) Intestate of Eleuterio T. Pascual, a brother of the half blood of the deceased andrepresented by the following:

Dominga M. PascualMamerta P. FugosoAbraham S. Sarmiento, III

Regina Sarmiento-MacaibayEleuterio P. SarmientoDomiga P. San DiegoNelia P. MarquezSilvestre M. PascualEleuterio M. Pascual(Rollo , pp. 46-47)

Adela Soldevilla de Pascual, the surviving spouse of the late Don Andres Pascual, filed with the Regional TrialCourt (RTC), Branch 162 (CFI of Rizal, Br. XXIII), a Special Proceeding, Case No. 7554, for administration of theintestate estate of her late husband ( Rollo , p. 47).

On December 18, 1973, Adela soldevilla de Pascual filed a Supplemental Petition to the Petition for letters ofAdministration, where she expressly stated that Olivia Pascual and Hermes Pascual, are among the heirs ofDon Andres Pascual ( Rollo , pp. 99-101).

On February 27, 1974, again Adela Soldevilla de Pascual executed an affidavit, to the effect that of her ownknowledge, Eligio Pascual is the younger full blood brother of her late husband Don Andres Pascual, to beliethe statement made by the oppositors, that they were are not among the known heirs of the deceased Don

Andres Pascual ( Rollo , p. 102).

On October 16, 1985, all the above-mentioned heirs entered into a COMPROMISE AGREEMENT, over thevehement objections of the herein petitioners Olivia S. Pascual and Hermes S. Pascual, although paragraph Vof such compromise agreement provides, to wit:

This Compromise Agreement shall be without prejudice to the continuation of the above-entitled proceedings until the final determination thereof by the court, or by anothercompromise agreement, as regards the claims of Olivia Pascual and Hermes Pascual as legal

heirs of the deceased, Don Andres Pascual. ( Rollo , p. 108)

The said Compromise Agreement had been entered into despite the Manifestation/Motion of the petitionersOlivia Pascual and Hermes Pascual, manifesting their hereditary rights in the intestate estate of Don AndresPascual, their uncle ( Rollo , pp. 111-112).

On September 30, 1987, petitioners filed their Motion to Reiterate Hereditary Rights ( Rollo , pp. 113-114) andthe Memorandum in Support of Motion to reiterate Hereditary Rights ( Rollo , pp. 116-130).

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On December 18, 1987, the Regional Trial Court, presided over by Judge Manuel S. Padolina issued an order,the dispositive portion of which reads:

WHEREFORE, premises considered, this Court resolves as it is hereby resolved to Deny thismotion reiterating the hereditary rights of Olivia and Hermes Pascual ( Rollo , p. 136).

On January 13, 1988, petitioners filed their motion for reconsideration (Rollo, pp. 515-526). and such motion

was denied.

Petitioner appealed their case to the Court of Appeals docketed as CA-G.R. No. 14010 ( Rollo , p. 15.).

On Aril 29, 1988, the respondent Court of Appeals rendered its decision the decision the dispositive part ofwhich reads:

WHEREFORE, the petition is DISMISSED. Costs against the petitioners.

SO ORDERED. (Rollo , p. 38)

Petitioners filed their motion for reconsideration of said decision and on July 14, 1988, the Court of Appealsissued its resolution denying the motion for reconsideration ( Rollo , p. 42).

Hence, this petition for review on certiorari .

After all the requirements had been filed, the case was given due course.

The main issue to be resolved in the case at bar is whether or not Article 992 of the Civil Code of the

Philippines, can be interpreted to exclude recognized natural children from the inheritance of the deceased.

Petitioners contend that they do not fall squarely within the purview of Article 992 of the Civil Code of thePhilippines, can be interpreted to exclude recognized and of the doctrine laid down in Diaz v. IAC (150 SCRA645 [1987]) because being acknowledged natural children, their illegitimacy is not due to the subsistence of aprior marriage when such children were under conception ( Rollo , p. 418).

Otherwise stated they say the term "illegitimate" children as provided in Article 992 must be strictly construedto refer only to spurious children ( Rollo , p. 419).

On the other hand, private respondents maintain that herein petitioners are within the prohibition of Article992 of the Civil Code and the doctrine laid down in Diaz v. IAC is applicable to them.

The petition is devoid of merit.

Pertinent thereto, Article 992 of the civil Code, provides:

An illegitimate child has no right to inherit ab intestato from the legitimate children andrelatives of his father or mother; nor shall such children or relatives inherit in the same mannerfrom the illegitimate child.

The issue in the case at bar, had already been laid to rest in Diaz v. IAC, supra, where this Court ruled that:

Article 992 of the Civil Code provides a barrier or iron curtain in that it prohibits absolutely asuccession ab intestato between the illegitimate child and the legitimate children and relativesof the father or mother of said legitimate child. They may have a natural tie of blood, but this isnot recognized by law for the purposes of Article 992. Between the legitimate family andillegitimate family there is presumed to be an intervening antagonism and incompatibility. The

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illegitimate child is disgracefully looked down upon by the legitimate family; the family is in turnhated by the illegitimate child; the latter considers the privileged condition of the former, andthe resources of which it is thereby deprived; the former, in turn, sees in the illegitimate childnothing but the product of sin, palpable evidence of a blemish broken in life; the law does nomore than recognize this truth, by avoiding further grounds of resentment.

Eligio Pascual is a legitimate child but petitioners are his illegitimate children.

Applying the above doctrine to the case at bar, respondent IAC did not err in holding that petitioners hereincannot represent their father Eligio Pascual in the succession of the latter to the intestate estate of thedecedent Andres Pascual, full blood brother of their father.

In their memorandum, petitioners insisted that Article 992 in the light of Articles 902 and 989 of the Civil Codeallows them (Olivia and Hermes) to represent Eligio Pascual in the intestate estate of Don Andres Pascual.

On motion for reconsideration of the decision in Diaz v. IAC, this Court further elucidated the successional

rights of illegitimate children, which squarely answers the questions raised by the petitioner on this point.

The Court held:

Article 902, 989, and 990 clearly speaks of successional rights of illegitimate children, whichrights are transmitted to their descendants upon their death. The descendants (of theseillegitimate children) who may inherit by virtue of the right of representation may be legitimateor illegitimate. In whatever manner, one should not overlook the fact that the persons to berepresented are themselves illegitimate. The three named provisions are very clear on thismatter. The right of representation is not available to illegitimate descendantsof legitimate children in the inheritance of a legitimate grandparent. It may be argued, as doneby petitioners, that the illegitimate descendant of a legitimate child is entitled to represent byvirtue of the provisions of Article 982, which provides that "the grandchildren and otherdescendants shall inherit by right of representation." Such a conclusion is erroneous. It wouldallow intestate succession by an illegitimate child to the legitimate parent of his father ormother, a situation which would set at naught the provisions of Article 992. Article 982 isinapplicable to the instant case because Article 992 prohibits absolutely a succession abintestato between the illegitimate child and the legitimate children and relatives of the father ormother. It may not be amiss to state Article 982 is the general rule and Article 992 theexception.

The rules laid down in Article 982 that "grandchildren and other descendants shall inherit byright of representation" and in Article 902 that the rights of illegitimate children . . . aretransmitted upon their death to their descendants, whether legitimate or illegitimateare subject to the limitation prescribed by Article 992 to the end that an illegitimate child has noright to inherit ab intestato from the legitimate children and relatives of his father or mother.(Amicus Curiae's Opinion by former Justice Minister Ricardo C. Puno, p. 12). Diaz v.Intermediate Appellate Court, 182 SCRA 427; pp. 431-432; [1990]).

Verily, the interpretation of the law desired by the petitioner may be more humane but it is also anelementary rule in statutory construction that when the words and phrases of the statute are clear andunequivocal, their meaning must be determined from the language employed and the statute must be takento mean exactly what is says. (Baranda v. Gustilo, 165 SCRA 758-759 [1988]). The courts may not speculate asto the probable intent of the legislature apart from the words (Aparri v. CA, 127 SCRA 233 [1984]). When thelaw is clear, it is not susceptible of interpretation. It must be applied regardless of who may be affected, evenif the law may be harsh or onerous. (Nepomuceno, et al. v. FC, 110 Phil. 42). And even granting that

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exceptions may be conceded, the same as a general rule, should be strictly but reasonably construed; theyextend only so far as their language fairly warrants, and all doubts should be resolved in favor of the generalprovisions rather than the exception. Thus, where a general rule is established by statute, the court will notcurtail the former nor add to the latter by implication (Samson v. C.A., 145 SCRA 654 [1986]).

Clearly the term "illegitimate" refers to both natural and spurious.

Finally under Article 176 of the Family Code, all illegitimate children are generally placed under one category,which undoubtedly settles the issue as to whether or not acknowledged natural children should be treateddifferently, in the negative.

It may be said that the law may be harsh but that is the law (DURA LEX SED LEX).

PREMISES CONSIDERED, the petition is DISMISSED for lack of merit and the assailed decision of therespondent Court of Appeals dated April 29, 1988 is AFFIRMED.

SO ORDERED.

Melencio-Herrera, Padilla, Regalado and Nocon, JJ., concur.

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PhilippineLaw.info Jurisprudence 1961 August PhilippineLaw.info Jurisprudence SCRA Vol. 2

G.R. No. L-16258, San Diego v. Sayson, 2 SCRA 1175

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

August 31, 1961

G.R. No. L-16258BARTOLOME E. SAN DIEGO, petitioner,vs.

ELIGIO SAYSON, respondent.

Gregorio R. Paruganan for petitioner.

C. E. Santiago for respondent.

LABRADOR, J .:

This is a petition for certiorari to review a decision of the Court of Appeals affirming a judgment of the Court ofFirst Instance of Manila which sentenced petitioner Bartolome San Diego to pay respondent Eligio Sayson thesum of P5,541.76 with legal interest thereon from September 10, 1956, plus P500 as attorney's fees and costs.

In the action brought by respondent Eligio Sayson in the Court of First Instance of Manila, he alleged that inNovember, 1954, he and San Diego entered into an agreement where by Sayson would furnish labor for theconstruction of a building at 1200 Arlegui, Farnecio Quiapo, Manila, in accordance with the plans approved bythe city engineer, at the price of P15,000; that in the course of the construction the plans approved by the cityengineer were modified and changes were made not called for in the approved plans, for which plaintiff hadto perform and or furnish additional labor valued at P6,840.31; and that San Diego has refused to pay thisadditional sum. In a special de defense, San Diego alleged that even granting that additional work had beenperformed, he may not be held liable for the same in view of the provisions of Article 1724 of the Civil Code.

At the trial the Court of First Instance of Manila found the following extra or additional work performed bySayson:

. . . he testified that the width of the building was in decreased from 13.80 meters in the plan as approved to14.30 meters; the party wall of hollow block as appearing in the plan was changed to reinforced concrete; thatalthough the mezzanine was ordered eliminated in the plan and therefore not included in the contract,defendant had it constructed; that after the stairs were constructed, it was ordered removed (Exhibit A-1-a)that the partitions were enlarged (Exhibit A-1-b); that the partitions on the second floor was raised, thetransem was removed and the partition elevated to the ceiling (Exh. A-1-c) ; that all the partitions which weresingle in the plan were ordered made into double wall; the wooden flooring in Section 22 in the plan waschanged to reinforced concrete (Exhibit A-3-a) ; that the eaves facing Farnecio Street although crossed out bythe City Engineer were ordered made (Exh. A-1-d) ; that the walls had "costura" only under the plan but wereordered plastered and ceilings were ordered although not included in the plan (Exhibit Ale These changeswhich were ordered by defendant and his engineer are summarized on page 8 Exhibit B as follows:

x x x x x x x x x

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For additional work performed P6,840.31. (Record on Appeal, pp. 18, 19-20.) .

Judgment for Sayson having been ordered for this amount the case was appealed to the Court of Appeals. Insaid court petitioner herein again raised as his defense the provisions of Article 1724 of the Civil Code, but thiscourt held:

We do not see any plausible reason why defendant should not compensate plaintiff for the alterations doneby the latter at the instance of the former who has benefited thereby. Bid for such alterations were notincluded in the amount of P15,000.00, which amount was computed and submitted in the light of theapproved plans. And since these alterations undoubtedly entailed expenses, time and efforts on the part ofthe contractor, then he should be in justice and equity to him paid for by defendant as owner of the buildingwhere they were done. It is true that there was no written agreement for such alterations but the absencethereof should not be allowed to make the contractor poorer and the owner of the building richer. Defendantin trying to justify his refusal to pay plaintiff for the latter's claim cites the following article of the Civil Code

Art. 1724. The contractor who undertakes to build a structure or any other work for a stipulated price, inconformity with plans and specifications agreed upon with the landowner, in neither withdraw from thecontract nor demand an increase to the price on account of the higher cost of labor or materials, save whenthere has been a change in the plans and specifications provided:

(1) Such change has been authorized by the proprietor in writing; and

(2) The additional price to be paid to the contractor has en determined in writing by both parties.

Obviously, the aforequoted provision of law is not applicable on the claim of defendant.

The decision was affirmed. Hence the case was brought re on an appeal by certiorari .

Article 1724 of the Civil Code is a modified form of article 1593 of the Spanish Civil Code which provides asfollows:

No architect or contractor who, for a lump sum, undertakes the construction of a building, or any other workto be done in accordance with a plan agreed upon with the owner the ground, may demand an increase of the

price, even if the cost of the materials or labor has increased; but he may do when any change increasing thework is made in the plans, provided the owner has given his consent thereto.

In his commentaries on this Article, Manresa said:

El articulo 1.793 del Codigo frances es mas previsor que el que comentamos, pues exige para que el aumentode precio eda pedirse que los cambios o amplicaciones del plano se hayan autorizado por escrito y que se hayaconvenido el precio con el propietario (X Manresa, Fifth ed., p. 926.)

Obviously influenced by the above criticism of the article, the Code Commission recommended and thelegislature proved the provision as it now stands. It will be noted at whereas under the old article recovery foradditional cost in a construction contract can be had if authorization on to make such additions can be proved,the amendment evidently requires that instead of merely proving authorization, such authorization by theproprietor must be made writing. The evident purpose of the amendment is prevent litigation for additionalcosts incurred by reason of additions or changes in the original plans. Is this additional requirement of awritten authorization, to be considered as a mere extension of the Statute of Frauds, or is it a substantiveprovision? That the requirement for a written authorization is not merely to prohibit admission of oral

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testimony against the objection Of the adverse fact that the provision is party, can be inferred 'from the notincluded among those specified in the Statute of Frauds, Article 1403 of the Civil Code. As it does not appearto have been intended as an extension of the Statute of Frauds, it must have been adopted as a substantiveprovision or a condition precedent to recovery.

Our duty in this respect is not to dispute the wisdom of the provision; we should only limit ourselves to

inquiring into the legislative intent, and once that is determined to make said intent effective. The newprovision was evidently adopted to prevent misunderstandings and litigations between contractors andowners. Clearly it was the intention of the legislature in making the amendment to require authorization inwriting before costs of additional labor in a contract for the construction of a building may be demanded. Wefind that the provision is applicable to the circumstances surrounding the case at bar, and we are duty boundto enforce the same. The trial court should have denied the demand for additional cost as directed by theprovisions of Article 1724 of the Civil Code.

WHEREFORE, the writ is hereby granted, the decision of the Court of Appeals reversed, and the action of

respondent dismissed. Without costs.

Bengzon, C.J., Padilla, Reyes, J.B.L., Paredes, Dizon and De Leon, JJ. concur. Concepcion, Barrera and Natividad, JJ., took no part.

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Demafiles v. Comelec

Case No. 91

G.R. No. L-28396 (December 29, 1967)

Chapter 4.18, Footnote 126, page 159

FACTS:

Respondent Galido won over Petitioner due to the Provincial Board voting to

reject returns. Petitioner challenged the right of 2 board members to sit, considering

that they were reelectionists. Respondent Commission ruled in favor of Petitioner.

Galido then asked for reconsideration, stating that the 2 board members in question

were disqualified only when the board was acting as a provincial but not as

municipal. In light of this, Respondent Commission reversed its previous decision.

ISSUES:

1. W/N this case is moot and the board had the authority to reject the returns from

Precinct 7.

2. W/N the board members who were candidates for reelection were disqualified

from sitting in the board in its capacity as a municipal board of canvassers.

3. W/N Respondent Commission can order the board of canvassers to count a return.

HELD:

RA 4970 reads the first mayor, vice -mayor and councilors of the municipality

of Sebaste shall be elected in the next general elections for local officials and shall

have qualified. The Supreme Court ruled that and shall have qualified is devoid of

meaning. The term of office of municipals shall begin in the 1st day of January

following their election, despite the fact that Sebaste was a newly created

municipality.

No, a canvassing board may not reject any returns due to whatever cause.

However, since there is a possibility of fraud, the canvass made and proclamation

should be annulled. The law states any memb er of a provincial board or of

municipal council who is a candidate for office in any election, shall be incompetent

to act on the said body. Since Respondent Commission has the power to annul and

illegal canvass and proclamation, there is no reason as to why it cannot order

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canvassing bodies to count all returns which are otherwise regular.

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PhilippineLaw.info Jurisprudence 1970 May PhilippineLaw.info Jurisprudence SCRA Vol. 33

G.R. No. L-25327, 33 SCRA 105

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

DECISION

May 29, 1970

G.R. No. L-25327

,vs.POLICARPIO HIDALGO, SERGIO DIMAANO, MARIA ARDE, SATURNINO HIDALGO, BERNARDINA MARQUEZ,VICENTE DIMAANO, ARCADIA DIMAANO, TEODULA DIMAANO, THE REGISTER OF DEEDS and THEPROVINCIAL ASSESSOR OF THE PROVINCE OF BATANGAS, respondents.

Jose O. Lara for petitioners. Pedro Panganiban y Tolentino for respondents.

Teehankee, J. :

Two petitions for review of decisions of the Court of Agrarian Relations dismissing petitioners' actions as sharetenants for the enforcerment of the right to redeem agricultural lands, under the provisions of section 12 ofthe Agricultural Land Reform Code. As the same issue of law is involved and the original landowner andvendees in both cases are the same, the two cases are herein jointly decided.

Respondent-vendor Policarpio Hidalgo was until the time of the execution of the deeds of sale on September27, 1963 and March 2, 1964 in favor of his seven above-named private co-respondents, the owner of the22,876-square meter and 7,638-square meter agricultural parcels of land situated in Lumil, San Jose, Batangas,described in the decisions under review.

In Case L-25326, respondent-vendor sold the 22,876-square meter parcel of land, together with two otherparcels of land for P4,000.00. Petitioners-spouses Igmidio Hidalgo and Martina Resales, as tenants thereof,alleging that the parcel worked by them as tenants is fairly worth P1,500.00, "taking into account therespective areas, productivities, accessibilities, and assessed values of three lots, seek by way of redemptionthe execution of a deed of sale for the same amount of P1,500.00 by respondents-vendees 1 in their favor.

In Case L-25327, respondent-vendor sold the 7,638-square meter parcel of land for P750.00, and petitioners-spouses Hilario Aguila and Adela Hidalgo as tenants thereof, seek by way of redemption the execution of adeed of sale for the same price of P750.00 by respondents-vendees in their favor.

As stated in the decisions under review, since the parties stipulated on the facts in both cases, petitioners-tenants have for several years been working on the lands as share tenants. No 90-day notice of intention tosell the lands for the exercise of the right of pre-emption prescribed by section 11 of the Agricultural LandReform Code (Republic Act No. 3844, enacted on August 8, 1963) was given by respondent-vendor to

petitioners-tenants. Subsequently, the deeds of sale executed by respondent-vendor were registered byrespondents register of deeds and provincial assessor of Batangas in the records of their respective offices

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notwithstanding the non-execution by respondent-vendor of the affidavit required by section 13 of the LandReform Code. 2 The actions for redemption were timely filled on March 26, 1965 by petitioners-tenants withinthe two-year prescriptive period from registration of the sale, prescribed by section 12 of the said Code.

The agrarian court rendered on July 19, 1965 two identical decisions dismissing the petitions for redemption.

It correctly focused on the sole issue of law as follows: "(T)he only issue in this case is whether or not plaintiffs,as share tenants, are entitled to redeem the parcel of land they are working from the purchasers thereof,where no notice was previously given to them by the vendor, who was their landholder, of the latter'sintention to sell the property and where the vendor did not execute the affidavit required by Sec. 13ofRepublic Act No. 3844 before the registration of the deed of sale. In other words, is the right of redemption

granted by Sec. 12 of Republic Act No. 3844 applicable to share tenants?"

But proceeding from several erroneous assumptions and premises, it arrived at its erroneous conclusion thatthe right of redemption granted by section 12 of the Land Reform Code is available to leasehold tenants onlybut not to share tenants, and thus dismissed the petitions: "(S)ec 12 of Republic Act No. 3844, which comes

under Chapter I of said Act, under the heading 'Agricultural Leasehold System,' reads as follows:

'SEC. 12. Lessee's Right of Redemption. - In case the landholding is sold to a third person without theknowledge of the agricultural lessee, the latter shall have the right to redeem the same at a reasonable priceand consideration: Provided: further, That where there are two or more agricultural lessees, each shall beentitled to said right of redemption only to the extent of the area actually cultivated by him. The right ofredemption under this Section may be exercised within two years from the registration of the sale, and shallhave priority over any other right of legal redemption.'

The systems of agricultural tenancy recognized in this jurisdiction are share tenancy and leasehold tenancy.(Sec. 4, Republic Act No. 1199; Sec. 4, Republic Act No. 3844) . A share tenant is altogether different from aleasehold tenant and their respective rights and obligations are not co-extensive or co-equal. (See Secs. 22 to41, inclusive, and Secs. 42 to 48, inclusive, of Republic Act No. 1199; see also Secs. 4 to 38, inclusive,

ofRepublic Act No. 3844) .

It is our considered view that the right of redemption granted by Section 12 o fRepublic Act No. 3844 isapplicable to leasehold tenants only, but not to share tenants, because said provision of law clearly, definitely,and unequivocally grants said right to the 'agricultural lessee,' and to nobody else. In enacting the AgriculturalLand Reform Code, Congress was fully aware of the existence of share tenancy and in fact provided for theabolition of the agricultural share tenancy system. (Sec. 4, Republic Act No. 3844. ) If it were the intention of

Congress to grant the right of redemption to share tenants, it would have unmistakably and unequivocallydone so. We cannot extend said right to share tenants through judicial legislation, wherever our sympathiesmay lie.

The agrarian court fell into several erroneous assumptions and premises in holding that agricultural sharetenancy remains recognized in this jurisdiction; that "a share tenant is altogether different from a leaseholdtenant and their respective rights and obligations are not co-extensive or co-equal"; and that the right ofredemption granted by section 12 of the Land Reform Code" is applicable to leasehold tenants only, but not to

share tenants, because said provision of law clearly, definitely, and unequivocally grants said right to the'agricultural lessee,' and to nobody else."

1. The very essence of the Agricultural Land Reform Code is the abolition of agricultural share tenancy asproclaimed in its title. Section 4 of the Code expressly outlaws agricultural share tenancy as "contrary to publicpolicy" and decrees its abolition. 3 Section 2 of the Code expressly declares it to be the policy of the State, interalia , "to establish owner cultivatorship and the economic family-size farm as the basis of Philippine agricultureand, as a consequence, divert landlord capital in agriculture to industrial development; to achieve a dignified

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existence for the small farmers free from pernicious institutional restraints and practices; ... and to make thesmall farmers more independent, self-reliant and responsible citizens, and a source of strength in ourdemocratic society." 4 It was error, therefore, for the agrarian court to state the premise after the LandReform Code had already been enacted, that "the systems of agricultural tenancy recognized in this

jurisdiction are share tenancy and leasehold tenancy." A more accurate statement of the premise is that basedon the transitory provision in the first proviso of section 4 of the Code, i.e. that existing share tenancycontracts are allowed to continue temporarily in force and effect, notwithstanding their express abolition,until whichever of the following events occurs earlier: (a) the end of the agricultural year when the NationalLand Reform Council makes the proclamation declaring the region or locality a land reform area; or (b) theshorter period provided in the share tenancy contracts expires; or (c) the share tenant sooner exercises hisoption to elect the leasehold system.

In anticipation of the expiration of share tenancy contracts - whether by contractual stipulation or the tenant'sexercise of his option to elect the leasehold system instead or by virtue of their nullity - occuring before theproclamation of the locality as a land reform area, the same section 4 has further declared in the third provisothereof that in such event, the tenant shall continue in possession of the land for cultivation and "there shall

be presumed to exist a leasehold relationship under the provisions of this Code."

2. The foregoing exposes the error of the agrarian court's corollary premise that "a share tenant is altogetherdifferent from a leasehold tenant." The agrarian court's dictum that "their respective rights and obligations arenot co-extensive or co-equal "refer to their contractual relations with the landowner, with respect to thecontributions given, management, division or payment of the produce. 5

But the Land Reform Code forges by operation of law, between the landowner and the farmer - be a leaseholdtenant or temporarily a share tenant - a vinculum juris with certain vital juridical consequences, such assecurity of tenure of the tenant and the tenant's right to continue in possession of the land he works despitethe expiration of the contract or the sale or transfer of the land to third persons, and now, more basically, thefarmer's pre-emptive right to buy the land he cultivates under section 11 of the Code 6 as well as the right toredeem the land, if sold to a third person without his knowledge, under section 12 of the Code.

This is an essential and indispensable mandate of the Code to implement the state's policy of establishingowner-cultivatorship and to achieve a dignified and self-reliant existence for the small farmers that wouldmake them a pillar of strength of our Republic. Aside from expropriation by the Land Authority of privateagricultural land for resale in economic family-size farm units "to bona fide tenants, occupants and qualifiedfarmers," 7 the purchase by farmers of the lands cultivated by them, when the owner decides to sell the same- through rights of pre-emption and redemption - are the only means prescribed by the Code to achieve thedeclared policy of the State.

3. The agrarian court therefore facilely let itself fall into the error of concluding that the right of redemption(as well as necessarily the right of pre-emption) imposed by the Code is available to leasehold tenants onlyand excludes share tenants for the literal reason that the Code grants said rights only to the "agriculturallessee and to nobody else." For one, it immediately comes to mind that the Code did not mention tenants,whether leasehold or share tenants, because it outlaws share tenancy and envisions the agricultural leasehold

system as its replacement. Thus, Chapter I of the Code, comprising sections 4 to 38, extensively deals with theestablishment of "agricultural leasehold relation," defines the parties thereto and the rights and obligations ofthe "agricultural lessor" and of the "agricultural lessee" (without the slightest mention of leasehold tenants)and the statutory consideration or rental for the leasehold to be paid by the lessee. There is a studiedomission in the Code of the use of the term tenant in deference to the "abolition of tenancy" as proclaimed inthe very title of the Code, and the elevation of the tenant's status to that of lessee.

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Then, the terms "agricultural lessor" and "agricultural lessee" are consistently used throughout the Chapterand carried over the particular sections (11 and 12) on pre-emption and redemption. The agrarian court'sliteral construction would wreak havoc on and defeat the proclaimed and announced legislative intent andpolicy of the State of establishing owner-cultivatorship for the farmers, who invariably were all share tenantsbefore the enactment of the Code and whom the Code would now uplift to the status of lessees.

A graphic instance of this fallacy would be found in section 11 providing that "In case the agricultural lessordecides to sell the landholding the agricultural lessee shall have the preferential right to buy the same underreasonable terms and conditions." It will be seen that the term "agricultural lessor" is here usedinterchangeably with the term "landowner"; which conflicts with the Code's definition of "agricultural lessor"to mean "a person natural or juridical, who, either as owner, civil law lessee, usufructuary, or legal possessor,lets or grants to another the cultivation and use of his land for a price certains." 8 Obviously, the Codeprecisely referred to the "agricultural lessor (who) decides to sell the landholding," when it could have moreprecisely referred to the "landowner," who alone as such, rather than a civil law lessee, usufructuary or legalpossessor, could sell the landholding, but it certainly cannot be logically contended that the imprecisionshould defeat the clear spirit and intent of the provision.

4. We have, here, then a case of where the true intent of the law is clear that calls for the application of thecardinal rule of statutory construction that such intent or spirit must prevail over the letter thereof, forwhatever is within the spirit of a statute is within the statute, since adherence to the letter would result inabsurdity, injustice and contradictions and would defeat the plain and vital purpose of the statute.

Section 11 of the Code providing for the "agricultural lessee's" preferential right to buy the land he cultivatesprovides expressly that "the entire landholding offered for sale must be pre-empted by the Land Authority if

the landowner so desires, unless the majority of the lessees object to such acquisition," presumably for beingbeyond their capabilities. Taken together with the provisions of Chapter III of the Code on the organizationand functions of the Land Authority and Chapter VII on the Land Project Administration and the creation andfunctions of the National Land Reform Council, (in which chapters the legislature obviously was not laboringunder the inhibition of referring to the term tenants as it was in Chapter I establishing the agriculturalleasehold system and decreeing the abolition of share tenancy, 9 the Code's intent, policy and objective togive both agricultural lessees and farmers who transitionally continue to be share tenants notwithstanding theCode's enactment, the same priority and preferential rights over the lands under their cultivation, in the eventof acquisition of the lands, by expropriation or voluntary sale, for distribution or resale that may be initiated

by the Land Authority or the National Land Reform Council, are clearly and expressly stated.

Thus Chapter III, section 51 of the Code decrees it the responsibility of the Land Authority "(1) To initiate andprosecute expropriation proceedings for the acquisition of private agricultural lands as defined in Section onehundred sixty-six of chapter XI of this Code for the purpose of subdivision into economic family - size farmunits and resale of said farm units to bona fide tenants, occupants and qualified farmers ... and "(2) Tohelp bona fide farmers without lands of agricultural owner-cultivators of uneconomic-size farms to acquireand own economic family-size farm units ...."

Similarly, Chapter VII, section 128 of the Code, in enjoining the National Land Reform Council to formulate thenecessary rules and regulations to implement the Code's provisions for selection of agricultural land to beacquired and distributed and of the beneficiaries of the family farms, ordains the giving of the same priority"to the actual occupants personally cultivating the land either as agricultural lessees or otherwise with respectto the area under their cultivation."

5. It would certainly result in absurdity, contradictions and injustice if a share tenant would be denied therights of pre-emption and redemption which he seeks to exercise on his own resources, notwithstanding thatthe National Land Reform Council has not yet proclaimed that all the government machineries and agencies in

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the region or locality envisioned in the Code are operating - which machineries and agencies, particularly, theLand Bank were precisely created "to finance the acquisition by the Government of landed estates for divisionand resale to small landholders, as well as the purchase of the landholding by the agricultural lessee from thelandowner." 10 The non-operation in the interval of the Land Bank and the government machineries andagencies in the region which are envisioned in the Code to assist the share tenant in shedding off the yoke oftenancy and afford him the financial assistance to exercise his option of electing the leasehold system and hispreferential right of purchasing the land cultivated by him could not possibly have been intended by Congressto prevent the exercise of any of these vital rights by a share tenant who is able to do so, e.g. to purchase theland, on his own and without government assistance. It would be absurd and unjust that while thegovernment is unable to render such assistance, the share tenant would be deemed deprived of the veryrights granted him by the Code which he is in a position to exercise even without government assistance.

6. Herein lies the distinction between the present case and Basbas vs. Entena 11 where the Court upheld theagrarian court's dismissal of the therein tenant's action to redeem the landholding sold to a third party byvirtue of the tenant's failure to tender payment or consign the purchase price of the property. There, thetenant-redemptioner was shown by the evidence to have no funds and had merely applied for them to theLand Authority which was not yet operating in the locality and hence, the Court held that no part of the Code"indicates or even hints that the 2-year redemption period will not commence to run (indefinitely) until thetenant obtains financing from the Land Bank, or stops the tenant from securing redemption funds from someother source." 12 In the present case, the petitioners-tenants' possession of funds and compliance with therequirements of redemption are not questioned, the case having been submitted and decided on the solelegal issue of the right of redemption being available to them as share tenants. The clear and logicalimplication of Basbas is where the tenant has his own resources or secures redemption funds from sourcesother than the Land Bank or government agencies under the Code, the fact that the locality has not beenproclaimed a land reform area and that such government machineries and agencies are not operating thereinis of no relevance and cannot prejudice the tenant's rights under the Code to redeem the landholding.

7. Even from the landowner's practical and equitable viewpoint, the landowner is not prejudiced in the leastby recognizing the share tenant's right of redemption. The landowner, having decided to sell his land, hasgotten his price therefor from his vendees. (The same holds true in case of the tenant's exercise of the pre -emptive right by the tenant who is called upon to pay the landowner the price, if reasonable, within ninetydays from the landowner's written notice.) As for the vendees, neither are they prejudiced for they will getback from the tenant-redemptioner the price that they paid the vendor, if reasonable, since the Code grantsthe agricultural lessee or tenant the top priority of redemption of the landholding cultivated by him andexpressly decrees that the same "shall have priority over any other right of legal redemption." In the absenceof any provision in the Code as to manner of and amounts payable on redemption, the pertinent provisions ofthe Civil Code apply in a suppletory character. 13 Hence, the vendees would be entitled to receive from theredemptioners the amount of their purchase besides "(1) the expenses of the contract, and any otherlegitimate payments made by reason of the sale; (and) (2) the necessary and useful expenses made on thething sold." 14

8. The historical background for the enactment of the Code's provisions on pre-emption and redemptionfurther strengthens the Court's opinion. It is noted by Dean Montemayor 15 that "(T)his is a new right whichhas not been granted to tenants under the Agricultural Tenancy Act. It further bolsters the security of tenureof the agricultural lessee and further encourages agricultural lessees to become owner-cultivators.

In the past, a landlord often ostensibly sold his land being cultivated by his tenant to another tenant, who inturn filed a petition for ejectment against the first tenant on the ground of personal cultivation. While many ofsuch sales were simulated, there was a formal transfer of title in every case, and the first tenant was invariablyordered ejected.

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There is indication in this case of the same pattern of sale by the landowner to another tenant, 16 in order toeffect the ejectment of petitioners-tenants. This is further bolstered by the fact that the sales were executedby respondent-vendor on September 27, 1963 and March 2, 1954 shortly after the enactment on August 8,1963 of the Land Reform Code - which furnishes still another reason for upholding ... petitioners-tenants' rightof redemption, for certainly a landowner cannot be permitted to defeat the Code's clear intent byprecipitately disposing of his lands, even before the tenant has been given the time to exercise his newlygranted option to elect the new agricultural leasehold system established by the Code as a replacement forthe share tenancy outlawed by it.

9. Clearly then, the Code intended, as above discussed, to afford the farmers' who transitionally continued tobe share tenants after its enactment but who inexorably would be agricultural lessees by virtue of the Code'sproclaimed abolition of tenancy, the same priority and preferential right as those other share tenants, whoupon the enactment of the Code or soon thereafter were earlier converted by fortuitous circumstance intoagricultural lessees, to acquire the lands under their cultivation in the event of their voluntary sale by theowner or of their acquisition, by expropriation or otherwise, by the Land Authority. It then becomes thecourt's duty to enforce the intent and will of the Code, for "... (I)n fact, the spirit or intention of a statuteprevails over the letter thereof.' (Ta?ada vs. Cuenco, L-10520, Feb. 23, 1957, citing 82 C.J.S., p. 526.) A statute'should be construed according to its spirit or intention, disregarding as far as necessary, the letter of the law.'(Lopez & Sons, Inc. vs. Court of Tax Appeals, 100 Phil. 855.) By this, we do not correct the act of theLegislature, but rather ... carry out and give due course to 'its intent.' (Lopez & Sons, Inc. vs. Court of TaxAppeals, 100 Phil. 850) ." 17 The Court has consistently held in line with authoritative principles of statutoryconstruction that, it will reject a narrow and literal interpretation, such as that given by the agrarian court,that would defeat and frustrate rather than foster and give life to the law's declared policy and intent. 18Finally, under the established jurisprudence of the Court, in the interpretation of tenancy and labor legislation,it will be guided by more than just an inquiry into the letter of the law as against its spirit and will ultimatelyresolve grave doubts in favor of the tenant and worker. 19

The agrarian court's dismissal of the cases at bar should therefore be reversed and petitioners-tenants' rightto redeem the landholdings recognized section 12 of the Code.

In Case L-25326, however, the deed of sale executed by respondent-vendor in favor of respondents-vendeesfor the price of P4,000.00 covers three parcels of land, while what is sought to be redeemed is only the firstparcel of land of 22,876 square meters, described in the deed. Petitioners-tenants' allegation that theproportionate worth of said parcel "taking into account the respective areas, productivities, accessibilities andassessed values of the three lots," is P1,500.00, was traversed by respondents in their answer, with the claimthat "the said land is fairly worth P20,000.00. 20 While the vendor would be bound by, and cannot claim morethan, the price stated in the deed, and the Code precisely provides that the farmer shall have "the preferentialright to buy the (landholding) under reasonable terms and conditions" or "redeem the same at a reasonableprice and consideration" 21 with a view to affording the farmer the right to seek judicial assistance and reliefto fix such reasonable price and terms when the landowner places in the notice to sell or deed an excessive orexorbitant amount in collusion with the vendee, we note that in this case the deed of sale itself acknowledgedthat the selling price of P4,000.00 therein stated was not the fair price since an additional considerationtherein stated was that the vendees would support the vendor during his lifetime and take care of him, should

he fall ill, and even assumed the expenses of his burial upon his death:

Ang halagang P4,000.00 ay hindi kaulat sa tunay na halaga ng mga lupa subalit ang mga bumili ay maykatungkulan na sostentohin ako habang ako'y nabubuhay, ipaanyo at ipagamot ako kung ako ay may sakit,saka ipalibing ako kung ako ay mamatay sa kanilang gastos at ito ay isa sa alang-alang o consideracion ngbilihang ito.

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Under these circumstances, since the agrarian court did not rule upon conflicting claims of the parties as towhat was the proportionate worth of the parcel of land in the stated price of P4,000.00 - whether P1,500.00as claimed by petitioners or a little bit more, considering the proportionate values of the two other parcels,but the whole total is not to exceed the stated price of P4,000.00, since the vendor is bound thereby - andlikewise, what was the additional proportionate worth of the expenses assumed by the vendees, assumingthat petitioners are not willing to assume the same obligation, the case should be remanded to the agrariancourt solely for the purpose of determining the reasonable price and consideration to be paid by petitionersfor redeeming the landholding, in accordance with these observations.

In Case L-25327, there is no question as to the price of P750.00 paid by the vendees and no additionalconsideration or expenses, unlike in Case L-25326, supra , assumed by the vendees. Hence, petitioners thereinare entitled to redeem the landholding for the same stated price.

ACCORDINGLY, the decisions appealed from are hereby reversed, and the petitions to redeem the subjectlandholdings are granted.

In Case L-25326, however, the case is remanded to the agrarian court solely for determining the reasonableprice to be paid by petitioners therein to respondents-vendees for redemption of the landholding inaccordance with the observations hereinabove made.

No pronouncement as to costs.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Fernando, Barredo and Villamor, JJ., concur.

Castro, J., is on leave.

Footnotes

1 Per answer of respondents and the parties' stipulation of facts, respondents-vendees Saturnino Hidalgo andBernardina Marquez, together with petitioners-spouses Igmidio Hidalgo and Martina Resales in Case L-25326and petitioners-spouses Hilario Aguila and Adela Hidalgo in Case L-25327 compose the three sets of tenantsworking on their lands.

2 "SEC. 13. Affidavit Required in Sale of Land Subject to Right of Pre-emption. - No deed of sale of agriculturalland under cultivation by an agricultural lessee or lessees shall be recorded in the Registry of Property unlessaccompanied by an affidavit of the vendor that he has given the written notice required in Section eleven ofthis Chapter or that the land is not worked by an agricultural lessee." (R.A. No. 3844. )

3 "SEC. 4. Abolition of Agricultural Share Tenancy. - Agricultural share tenancy, as herein defined, is herebydeclared to be contrary to public policy and shall be abolished: Provided, That existing share tenancy contractsmay continue in force and effect in any region or locality, to be governed in the meantime by the pertinentprovisions of Republic Act Numbered Eleven hundred and ninety-nine, as amended, until the end of theagricultural year when the National Land Reform Council proclaims that all the government Machineries andagencies in that region or locality relating to leasehold envisioned in this Code are operating, unless suchcontracts provide for a shorter period or the tenant sooner exercises his option to elect the leasehold system:Provided, further, That in order not to jeopardize international commitments, lands devoted to crops coveredby marketing allotments shall be made the subject of a separate proclamation that adequate provisions, suchas the organization of cooperatives, marketing agreements, or other similar workable arrangements, havebeen made to insure efficient management on all matters requiring synchronization of the agricultural withthe processing phases of such crops: Provided, furthermore, That where the agricultural share tenancycontract has ceased to be operative by virtue of this Code, or where such a tenancy contract has been entered

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into in violation of the provisions of this Code and is, therefore, null and void, and the tenant continues inpossession of the land for cultivation, there shall be presumed to exist a leasehold relationship under theprovisions of this Code, without prejudice to the right of the landowner and the former tenant to enter intoany other lawful contract in relation to the land formerly under tenancy contract, as long as in the interim thesecurity of tenure of the former tenant under Republic Act Numbered Eleven hundred and ninety-nine, asamended, and as provided in this Code, is not impaired: Provided, finally, That if a lawful leasehold tenancycontract was entered into prior to the effectivity of this Code, the rights and obligations arising therefrom shallcontinue to subsist until modified by the parties in accordance with the provisions of this Code." R.A. 3844, emphasis supplied.

4 Section 2, pars. (1), (2), and (6), R.A. 3844; emphasis supplied.

5 "(2) 'Agricultural lessee' means a person who, by himself and with the aid available from within hisimmediate farm household, cultivates the land belonging to, or possessed by another with the latter's consentfor purposes of production, for a price certain in money or in produce or both. It is distinguished from civil lawlessee as understood in the Civil Code of the Philippines." Sec. 166, R.A. 3844.

"(25) 'Share tenancy' as used in this Code means the relationship which exists whenever two persons agree ona joint undertaking for agricultural production wherein one party furnishes the land and the other his labor,with either or both contributing any one or several of the items of production, the tenant cultivating the landpersonally with the aid of labor available from members of his immediate farm household, and the producethereof to be divided between the landholder and the tenant." Idem .

6 "See. 11. Lessee's Right of Pre-emption. - In case the agricultural lessor decides to sell the landholding, theagricultural lessee shall have the preferential right to buy the same under reasonable terms and conditions:Provided, That the entire landholding offered for sale must be pre-empted by the Land Authority if the

landowner so desires, unless the majority of the lessees object to such acquisition: Provided, further, Thatwhere there are two or more agricultural lessees, each shall be entitled to said preferential right only to theextent of the area actually cultivated by him. The right of pre-emption under this Section may be exercisedwithin ninety days from notice in writing, which shall be served by the owner on all lessees affected." R.A.3844, emphasis supplied.

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G.R. No. 104528 PNB VS OFFICE OF THE PRESIDENT

THIRD DIVISION[. January 18, 1996]

PHILIPPINE NATIONAL BANK, petitioner, vs. OFFICE OF THE PRESIDENT, HOUSING AND LAND USE REGULATORYBOARD, ALFONSO MAGLAYA, ANGELINA MAGLAYA P. REYES, JORGE C. BERNARDINO, CORAZON DE LEON,VICTORIANO ACAYA, FLORENCIA CULTURA, MARIA CAMPOS, ERNESTO SARMIENTO, SANTIAGO TAMONAN,APOLONIA TADIAQUE, SIMEON DE LEON, NATIVIDAD J. CRUZ, NATIVIDAD B. LORESCO, FELICIDAD GARCIA, ANAANITA TAN, LUCAS SERVILLION, JOSE NARAWAL, represented by their duly authorized Attorney-in-Fact, CORAZON DELEON AND SPOUSES LEOPOLDO AND CARMEN SEBASTIAN, respondents.

R E S O L U T I O N

PANGANIBAN, J.:

May a buyer of a property at a foreclosure sale dispossess prior purchasers on installment of individual lots therein, or compel them to pay again for the lots which they previously bought from the defaulting mortgagor-subdivision developer, on the theory that P.D. 957,The Subdivision and Condominium Buyers Protective Decree, is not applicable to the mortgage contract in question, the same having been executed prior to the enactment of P.D. 957? This is the question confronting the Court in this Petition challenging theDecision dated March 10, 1992 of the Office of the President of the Philippines in O.P. Case No. 4249, signed by. the ExecutiveSecretary, Franklin M. Drilon, by authority of the President.

Private respondents were buyers on installment of subdivision lots from Marikina Village, Inc. (represented by spouses Antonio andSusana Astudillo). Notwithstanding the land purchase agreements it executed over said lots, the subdivision developer mortgaged thelots in favor of the petitioner, Philippine National Bank. Unaware of this mortgage, private respondents duly complied with theirobligations as lot buyers and constructed their houses on the lots in question.

Subsequently, the subdivision developer defaulted and PNB foreclosed on the mortgage. As highest bidder at the foreclosure sale, the bank became owner of the lots.

Acting on suits brought by private respondents (which were later consolidated), the HLURB Office of Appeals, Adjudication andLegal Affairs (OAALA) in a decision rendered on October 28, 1988 ruled that PNB -- without prejudice to seeking relief againstMarikina Village, -- Inc. may collect from private respondents only the remaining amortizations, in accordance with the land

purchase agreements they had previously entered into with Marikina Village, Inc., and cannot compel private respondents to pay all

over again for the lots they had already bought from said subdivision developer. On May 2, 1989, the Housing and Land UseRegulatory Board affirmed this decision. On March 10, 1992, the Office of the President, invoking P.D. 957, likewise concurred withthe HLURB. Hence, the present recourse to this Court.

Under Revised Administrative Circular No. 1- 95, appeals from judgments or final orders of the x xx Office of the President x xx may be taken to the Court of Appeals x xx. However, in order to hasten the resolution of this case, which was deemed submitted f ordecision three years ago, the Court resolved to make an exception to the said Circular in the interest of speedy justice.

Petitioner bank raised the following issues:

1 .The Office of the President erred in applying P.D. 957 because said law was enacted only on July 12, 1976, while the subjectmortgage was executed on December 18, 1975; and

2. Petitioner Bank is not privy to the contracts between private respondents and mortgagor-subdivision developer, hence, the Office ofthe President erred in ordering petitioner Bank to accept private respondents remaining amortizations and issue the corresp ondingtitles after payment thereof.

Normally, pursuant to Article 4 of the Civil Code, (1)aws shall have no retroactive effect, unless the contrary is provided. However,it is obvious and indubitable that P.D. 957 was intended to cover even those real estate mortgages, like the one at issue here, executed

prior to its enactment, and such intent (as succinctly captured in the preamble quoted below) must be given effect if the laudable purpose of protecting innocent purchasers is to be achieved:

WHEREAS, it is the policy of the State to afford its inhabitants the requirements of decent human settlement and to provide themwith ample opportunities for improving their quality of life;

WHEREAS, numerous reports reveal that many real estate subdivision owners, developers, operators, and/or sellers have renegedon their representations and obligations to provide and maintain properly subdivision roads, drainage, sewerage, water systems,lighting systems, and other similar basic requirements, thus endangering the health and safety of home and lot buyers;

WHEREAS, reports of alarming magnitude also show cases of swindling and fraudulent manipulations perpetrated by unscrupulous subdivision and condominium sellers and operators, such as failure to deliver titles to the buyers or titles free from liens andencumbrances, and to pay real estate taxes, and fraudulent sales of the same subdivision lots to different innocent purchasers forvalue; (Italics supplied).

While P.D. 957 did not expressly provide for retroactivity in its entirety, yet the same can be plainly inferred from the, unmistakableintent of the law to protect innocent lot buyers from scheming subdivision developers. As between these small lot buyers and thegigantic financial institutions which the developers deal with, it is obvious that the law -- as an instrument of social justice -- must

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favor the weak. Indeed, the petitioner Bank had at its disposal vast resources with which it could adequately protect its loan activities,and therefore is presumed to have conducted the usual due diligence checking and ascertained (whether thru ocular inspection orother modes of investigation) the actual status, condition, utilization and occupancy of the property offered as collateral. It could nothave been unaware that the property had been built on by small lot buyers. On the other hand, private respondents obviously were

powerless to discover the attempt of the land developer to hypothecate the property being sold to them. It was precisely in order todeal with this kind of situation that P.D. 957 was enacted, its very essence and intendment being to provide a protective mantle overhelpless citizens who may fall prey to the razzmatazz of what P.D. 957 termed unscrupulous subdivision and condominiu