Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. L-45302 July 24, 1990

LATCHME MOTOOMULL, and MANUEL LACSON, petitioners, vs.JOFFRE DELA PAZ, FILOMENA ARANAS, LADHO CHUGANI, BHAGWANI CHUGANI, THE COURT OF APPEALS, and THE SECURITIES & EXCHANGE COMMISSION, respondents.

Estanislao A. Fernandez and Victor C. Fernandez for petitioners.

Calixto Zaldivar and Hilado, Hagad & Hilado for private respondents.

 

PARAS, J.:

This is a petition for review on certiorari of the November 4, 1976 resolution * of the Court of Appeals in CA-G.R. No. 05108-SP denying the issuance of a writ of preliminary injunction and lifting the restraining order previously issued; and the December 17, 1976 resolution of the same court denying the motion for reconsideration.

All the parties in this case are stockholders of Sarkara Trading Corporation. Said corporation was incorporated on September 7, 1973, with an authorized capital stock of P2,000,000.00, divided into 200,000 shares of the par value of P10.00 per share. Of the authorized stock, 51,500 shares valued at P515,000.00 were subscribed, of which P300,000.00 was paid up. The incorporators of the corporation with their initial capital contributions, were —

NO. OF AMOUNT SHARES PAID ON NAME SUBSCRIBED AMOUNT SUBSCRIPTION

Pacifico Aranas 5,000 P50,000 P25,000

Filomena G. Aranas 5,000 50,000 25,000 Latchme J. Motoomull 10,000 100,000 70,000 Manuel Lacson 10,000 100,000 70,000 Joeffre T. de la Paz 10,000 100,000 70,000 Lilaram Parmanand 5,000 50,000 25,000 Bhagwandas L. Chugani 2,500 25,000 12,500 Ladho L. Chugani 2,500 25,000 12,500 Rosanna M. Jesswani 1,500 15,000 10,000 TOTAL 51,500 P515,000 P 300,000

The initial directors of the corporation were herein petitioners Latchme Motoomull and Manuel Lacson; and herein private respondents Filomena G. Aranas, Joeffre de la Paz, and Bhagwani Chugani. The officers were Latchme Motoomull president; Manuel Lacson, treasurer, and Filomena Aranas, secretary A few months after its incorporation, the resources of the corporation expanded considerably brought about by the big volume of transactions in sugar and other products and relatively high profit in its first year of

operation. The business activity on sugar, however, abruptly sagged, and the corporation decided to engage in other ventures. Such was the state of affairs of the corporation until some factors developed which caused disunity among the stockholders. It started on May 4, 1974 when, perhaps with the view of augmenting its paid-up capital, the Board of Directors approved Resolution No. 27, authorizing the issuance of unissued shares of stock on a one to one basis to its stockholders on or before June 30, 1974. However, it is claimed by petitioners that on May 23, 1974, the Board of Directors amended the said resolution through its Resolution No. 33, authorizing the issuance of unissued shares out of the capital stock on a one to two basis to its stockholders payable on or before August 31, 1974. The resolution was to be submitted for the approval of all the stockholders in a special meeting to be called for the purpose two weeks from the date of the resolution. Allegedly, the resolution was approved by the stockholders at a special meeting held on June 11, 1974, with the qualification that a stockholder may not be required to exercise his right under said resolution. The resolution was submitted to the Securities and Exchange Commission by its corporate counsel Ricardo A. Nava through a letter dated June 25, 1974, which also included the list of stockholders indicating the number of shares to be alloted each of them from the unissued shares of stock, as follows:

NAME OF NO. OF VALUE OF STOCKHOLDERS SHARES SHARES Latchme Motoomull 500 P50,000.00 Joeffre de la Paz 500 50,000.00 Manuel Lacson 500 50,000.00 Filomena Aranas 250 25,000.00 Pacifico Aranas 250 25,000.00 Ladho L. Chugani 125 12,000.00 Bhagwandas L. Chugani 125 12,500.00 Lilaran Parmanand 250 25,000.00 Rosanna Jesswani 75 7,500.00 TOTAL 2,500 P257,500.00

Petitioners Latchme Motoomull and Manuel Lacson purchased unissued stock in accordance with the resolution and within the period stated therein, while the other stockholders did not exercise their right. Payment of the exemption fee, however, was made only on November 29, 1974 and as such, the certificate of exemption or resolution granting the same was issued by the Securities and Exchange Commission only on December 4, 1974. Meanwhile, because the by-laws provided that the annual stockholders' meeting should be held on the second Saturday of September of each year, a written notice for the holding thereof on September 14, 1974 was circularized on August 19, 1974 among the stockholders. The meeting was, however, advanced to September 11, 1974, after notification of the stockholders by telephone allegedly upon the request of Mr. and Mrs. Pacifico Aranas who were slated to leave on September 14, 1974 for Japan. The other stockholders allegedly agreed to this request. On this adjusted date, the meeting was held presided over by Manuel Lacson upon his designation by the President, petitioner Latchme Motoomull. During that meeting a financial statement was submitted, but the same was not approved by the stockholders. Thereafter, petitioner Lacson announced that an election for the members of the board of directors would be held. This was protested by private respondents who instead moved that the present set of officers be considered re-elected. This was not given due course by petitioner Lacson who then distributed the ballots. The voting was by secret ballot, utilizing the cumulative system. Thereafter, the votes were canvassed by Mr. Despi, an accountant, who announced the result which showed that petitioners Lacson and Motoomull garnered more votes than what they should have considering the actual number of shares subscribed. The other stockholders, particularly the private respondents, evinced surprise on the number of votes garnered by petitioners Motoomull and Lacson. Petitioner Lacson explained that the additional number of shares was a result of the exercise of their rights to the additional shares of stocks taken from the unissued shares, as authorized by the stockholders in

Resolution No. 33. This started the commotion, resulting in the walk-out of some stockholders. On September 14, 1974, another meeting was held, the proceedings of which appeared merely to be a repetition of the September 11 meeting. The minutes thereof (Exh. '27') show that the only stockholders present were Manuel Lacson, Latchme Motoomull and Rosalina Jesswani. Nevertheless, the meeting was held, with Rosalina Jesswani acting as the secretary. Another election was held by these stockholders, resulting in the alleged election of the following as Directors, with the number of votes garnered indicated opposite their respective names —

Manuel V. Lacson 520,000 Latchme Motoomull 525,000 Rosalina Jesswani 510,000 Jeoffre de la Paz 10,000 Filomena Aranas 10,000

Proclamation No. G-74 (EXH. '27') was allegedly passed by the new members of the board of directors declaring the foregoing stockholders as directors of the Sarkara Trading Co., Inc. for the fiscal year 1974-75. The foregoing incident was apparently the ultimate reason which constrained the private respondents to institute action against petitioners.

First, private respondents filed Civil Case No. 11601, which is still pending trial in the then Court of First Instance of Negros Occidental. They filed a letter-complaint dated November 26, 1976 (Rollo, p. 75) with the Securities and Exchange Commission (SEC). In the said letter-complaint, the alleged acts ommitted by the petitioners that jeopardize their rights are:

(a) Despite the provision in the by-laws fixing the date of the election of corporate directors, we were sent notices of a special meeting to be held earlier and then said officers rammed through a resolution for the election of directors on the earlier date.

(b) In order to assure their election, said officers also surreptitiously acquired additional shares of stock from the unissued shares of the corporation in derogation of our pre-emptive rights to purchase said shares.

(c) We have insisted on the dissolution of the corporation in view of these development but have been unable to accomplish this due to the resistance of said officers.

(d) We no longer have any control over the disbursements of corporate funds as there has been no meeting of the board of directors called.

(e) We have been denied access to the corporate books and records and have been compelled to go to court to enforce this right.'

After hearing, public respondent SEC rendered a decision dated May 9, 1975 (Rollo, pp. 42-45), the dispositive portion of which, reads:

IN VIEW OF ALL THE FOREGOING, the Commission is of the opinion and so holds that the issuance of an additional 5,000 shares in favor of Latchme Motoomull and another 5,000 shares of Manuel Lacson on August 28, and 29, respectively or prior to the granting of the exception from registration thereof on December 4, 1974, is void under Section 38 of the Securities Act, and therefore, they could not have been legally voted by them in the said meetings of September 11 and 14, 1974. It follows that the said election of directors which would have had a different result had not the additional shares been utilized for voting, is null and void. Accordingly, the incumbents members of the board of directors at the time of the said meetings shall continue to hold office until their successors shall have been duly elected and qualified.

For the purpose of electing their successors, the management of the corporation is hereby directed —

1) to call a special meeting of the stockholders to elect the members of the board of directors for this year within a reasonable time but not later than one month from date of receipt of this order;

2) to give all the stockholders the right to subscribe to additional shares in proportion to their holdings, pursuant to Resolution No. 33 dated May 23, 1974.

This is necessary because the stockholders could not have legally exercised their right to subscribe up to the deadline fixed for subscription on August 31, 1974 as the exemption permit had not yet been secured from the Commission. Every stockholder shall be accorded full opportunity to subscribe or purchase shares in proportion to his holdings within a reasonable time prior to the date fixed for the new election of the board of directors.

It shall, of course, be understood that those elected as directors in the special meeting of stockholders shall only hold office until the next annual election and qualification of the succeeding board of directors.

We need not express our opinion on the other issues.

SO ORDERED.

A Motion for Reconsideration was filed (Ibid., pp. 89-95), but the same was denied in an order dated February 5,1976 (Ibid., p. 62)

Petitioners, on February 20, 1976, appealed to public respondent Court of Appeals under R.A. No. 5434, and on February 26, 1976, filed an Urgent Motion 'or Restraining order and Preliminary Injunction (Ibid., pp. 63-74). Respondent Court of Appeals, in a resolution dated February 27, 1976, gave due course to the appeal and ordered the issuance of a restraining order (Ibid., p. 151).

On March 26,1976, private respondents filed their opposition to petitioners' motion (Ibid., pp. 152-171), to which, petitioners filed their reply dated April 21, 1976 (Ibid., pp. 172-190) while private respondents filed a Rejoinder and Motion to Dismiss (Ibid., pp. 191-212).

After an extensive discussion of the issues by the parties in their pleadings, among which is to the effect that the Honorable Court of Appeals not only has no jurisdiction to issue the preliminary injunction prayed for, but altogether the Court has no jurisdiction to continue taking cognizance of the case because of the passage of P.D. No. 902-A which transferred the jurisdiction of the appeal from the Court of Appeals to the Supreme Court. Respondent Court of Appeals issued a resolution dated November 4, 1976 (Ibid., pp. 243-254), the decretal portion of which, reads:

WHEREFORE, the appellant's motion for the issuance of a writ of preliminary injunction is hereby denied and the restraining order previously issued by this Court is hereby lifted.

A Motion for Reconsideration was filed (Ibid., pp. 255-261), but the same was denied in a resolution dated December 12, 1976 (Ibid., p. 273). Hence, the instant petition.

The First Division of this Court, after the parties had filed the required pleadings, in a resolution dated June 17, 1977 (Ibid., p. 319), resolved to give due course to the petition; and in a resolution dated July 20, 1977 (Ibid., p. 323), the case was declared submitted for decision.

The pivotal issue in this case is the meaning of the word "Court" as used in Section 5 of R.A. No. 5434, which reads:

Sec. 5. Effect of appeal. — Appeal shall not stay the award, order, ruling, decision or judgment unless the officer or body rendering the same or the court, on motion, after hearing, and on such terms as it may deem just, should provided otherwise. The propriety of a stay granted by the officer or body rendering the award, order, ruling, decision or judgment may be raised only by motion in the main case.

Respondent Court of Appeals ruled that the word "court" in the said section refers to the Court of Agrarian Relations and not to the Court of Appeals, the former belonging to the group of bodies whose decision under R.A. 5434 is appealable to the latter. Otherwise stated, the power to stay the appealed decision clearly belongs to the lower court, officer or body rendering the decision, in this case to the SEC alone and riot to the Court of Appeals.

On the other hand, petitioners maintain that the word "court" having been separated from the phrase officer or body rendering the same, refers to the Court of Appeals.

From the outset, the law unequivocably stated its declared objective that appeal shall not stay the appealed decision, award, order, etc. The exception given is where the officer or body rendering the same, or the court on motion, after hearing should provide otherwise. In line with the above objective, the law provides further that the propriety of a stay granted by the officer or body rendering the award, order, decision or ruling may be raised only by motion in the main case. Hence, the Court of Appeals correctly interpreted that if the adverse party intends to appeal from a decision of the SEC and pending appeal desires to stay the execution of the decision, then the motion must be filed with and be heard by the SEC before the adverse party perfects its appeal to the Court of Appeals (Rollo, p. 250).i•t•c-aüsl

By and large, such interpretation gives meaning and substance to the avowed purpose of the law where the need for immediacy of execution of decisions arrived at by said bodies, was recognized and considered imperative.

On the other hand, the contrary view would negate the expressed mandate of the law that appeal shall not stay the award, order, ruling, decision or judgment appealed from, should the appellate court and not the lower court or administrative body which tried the facts, be authorized to enjoin execution thereof.

More importantly, according to the maxim noscitur a socies where a particular word or phrase is ambiguous in itself or is equally susceptible of various meanings, its correct construction may be made clear and specific by considering the company of words in which it is found or with which it is associated (Gonzaga, "Statutes and Their Construction, p. 116 citing Black on Interpretation of Laws, 2d ed., pp. 194-196), or stated differently, its obscurity or doubt may be reviewed by reference to associate words (Luzon Stevedoring Co. v. Trinidad, 43 Phil. 804 [1922]). Accordingly, an interpretation which lead to patent inconsistency must be rejected as not in accordance with the legislative intent (Commissioner of Customs v. Philippine Acetylene Co., 39 SCRA 71 [1971]).

Thus, correct construction of the word "court" may be made clear by reference to Section 1 of R.A. No. 5434, where the court officer or bodies whose decision, award, etc. are appealable to the Court of Appeals, are enumerated as follows: Court of Agrarian Relations, the Secretary of Labor, the Land Registration Commission, the Securities and Exchange Commission, the Social Security Commission, the Civil Aeronautics Board, the Patent Office and the Agricultural Inventions Board.

From the said grouping, the enumeration in Section 5 is obviously derived and from which it is easy to see that the word "court" means Court of Agrarian Relations and not the Court of Appeals which by no stretch of the imagination can be deemed to belong to the same group.

As correctly stated by the Court of Appeals, while said Court possession considerable power to issue writ of injunction either in the exercise of its original or in aid of its appellate jurisdiction, but

where the law lodges the power to enjoin in some other body or court, as in -the case at bar, the issuance of the writ by the Court of Appeals would constitute a virtual usurpation of authority on the part of said Court. Consequently, it is evident that R.A. 5434 merely grants the adverse party the right to appeal from such decision (Rollo, p. 253).

As to whether or not the Court of Appeals still has jurisdiction over this appeal which was perfected before P.D. 902-A transferring jurisdiction of the appeal to the SEC, is answered by this Court in the case of Bengzon v. Inciong (91 SCRA 248, 256 [1979]) in the affirmative. It was held:

The rule is that where a court has already obtained and is exercising jurisdiction over a controversy, its jurisdiction to proceed to the final determination of the cause is not affected by new legislation placing jurisdiction over such proceedings in another tribunal. The exception to the rule is where the statute expressly provides, or is construed to the effect that it is intended to operate as to actions pending before its enactment. Where a statute changing the jurisdiction of a court has no retroactive effect, it cannot be applied to a case that was pending prior to the enactment of the statute...'

The exception not having been provided in P.D. 902, it is obvious that the Court of Appeals retains its jurisdiction over the case despite the issuance of said decree.

Finally, while it may be desirable to remand this case to the Court of Appeals considering that, what is involved herein is merely an interlocutory order of said appellate court but it is the consistent policy of tills Court where public interests so demands, to broaden its inquiry into a case and decide the same on the merits rather than merely resolve the procedural question raised (Velasco v. Court of Appeals, 95 SCRA 616 [1980]). Applying the rule enunciated in Gayos v. Gayos (67 SCRA 146 [l975]) and reiterated in Alger Electric, Inc. v. Court of Appeals (135 SCRA 43 [1985], the Court will always strive to settle the entire controversy in a single proceeding leaving no root or branch to bear the seeds of future litigation.

In view of the foregoing, it is evident that the disposition of the incident as well as the main issue in the case at bar is in consonance with an efficient administration of justice, now that the facts are before this Court.

The Securities and Exchange Commission carefully analyzed Section 30 and Section 38 of the Securities Act as amended and correctly arrived at the conclusion that under Section 30 thereof, the sale of the shares of stock made in violation of the Act is merely voidable at the election of the purchaser who acts in good faith as when the latter is unaware, without his fault, that they have not been registered nor exempted from registration as provided by law. Consequently, such purchaser should not be deprived of his rights resulting from said purchase.

On the other hand, under Section 38 of said Act, the purchaser who acquires shares knowing that they are not registered nor exempted from registration participates in, and is equally guilty of the violation of law. Accordingly, he cannot be accorded any rights by virtue of such acquisition (Rollo, p. 51).

Applying the foregoing analysis to the case at bar, the SEC noted that the petition for exemption was filed on June 25, 1974, the exemption fee was paid on November 29,1974 and the resolution exempting the share from registration was issued by the Commission only on December 4, 1974. Undoubtedly, therefore, the issuance of 10,000 additional shares on August 28 and 29, 1974 to Motoomull and Lacson respectively, which were divided equally between them, was made pending approval of the application for exemption. In the stockholders' meeting of September 11 and 14, 1974, these two stockholders made a surprise move by suddenly without the knowledge of private respondents utilized the additional shares for purposes of voting, thereby enabling them to gain control of the corporation.

Under the circumstances, Motoomull and Lacson, president and treasurer of subject corporation respectively, knew at the time they issued the shares in question to themselves that the exemption or filing fee had not yet been paid, much less has the corporation received the certificate or resolution of exemption from the Commission. They cannot, therefore, claim innocence of violation of law to whom the rights provided for under Section 30 of the Securities Act could be accorded. Consequently, the election of the Board of Directors which would have a different result had the additional shares not been utilized for voting was declared null and void and the incumbent members of the Board of Directors at the time of said meeting shall continue to hold office until their successors shall have been duly elected and qualified.

The foregoing view of the Securities and Exchange Commission can hardly be faulted.

This Court has time and time again reminded litigants that the interpretation of officers of laws which are entrusted to their administration is entitled to great respect (Sierra Madre Trust v. Hon. Secretary of Agriculture, et al., 121 SCRA 38 [1983]), and have in their favor a presumption of legality (Espanol v. Chairman PVA, 137 SCRA 319 [1985]).i•t•c-aüsl Findings of administrative officials and agencies who have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but at times even finality if such findings are supported by substantial evidence (Lianga Bay Logging Co., Inc. vs. Lopez Enage, 152 SCRA 81 [1987]).

After a careful review of the records, no plausible reason could be found to disturb the findings and conclusions of the Securities and Exchange Commission. On the contrary, an opposite view would grant premium to violators of the law and negate the very purpose for which it was enacted.

PREMISES CONSIDERED, the petition is hereby DENIED and the resolution of the Court of Appeals promulgated on November 4, 1976 in CA-G.R. No. 05108-SP and the decision of the SEC dated May 9, 1975, both entitled "De la Paz v. Motoomull et. al." are AFFIRMED.

SO ORDERED

PERALTA vs. COMELEC 82 SCRA 30

Facts: Section 4 of the 1978 Election Code provides that the election period shall be fixed by the Commission on Elections in accordance with Section 6, Article XII[C] of the Constitution. The period of campaign shall not be more than forty-five days immediately preceding the election, excluding the day before and the day of the election. Petitioners questioned the constitutionality of the 45-day campaign period because: (a) it was decreed by the President and not by the Commission on Elections as provided by Section 6 of Article XII-C and (b) the period should cover at least ninety days (90). They argue that Section 6 of Article XII-C of the Constitution provides that the election period shall commence ninety days before the day of election and shall end thirty days thereafter.” 

Issue: Whether or not the 45-day period is unconstitutional 

Held: The 45-day campaign period is constitutional. Although the campaign period prescribed in the 1978 Election Code for the election of the representatives to the interim Batasang Pambansa is less than 90 days and was decreed by the President and not by the Commission on Elections as provided by Section 6 of Article XII-C of the Constitution, the same does not violate the Constitution, because under Amendment 1, the manner of election of members of the interim Batasang Pambansa shall be prescribed and regulated by law, and the incumbent President under Amendment No. 5, shall continue to exercise legislative power until martial law shall have been lifted. Moreover, the election for members in the interim Batasang Pambansa is an election in a state of emergency requiring special rules, and only the incumbent President has the authority and means of obtaining information on the peace and order condition of the country within which an electoral campaign may be adequately conducted in all regions of the nation. But even assuming that it should be the Commission on Elections that should fix the period of campaign, the constitutional mandate is complied with by the fact that the Commission has adopted and is enforcing the period fixed in Section 4, Article 1, of the 1978 Election Code.

Digest: Garvida vs Sales

LYNETTE G. GARVIDA, petitioner, vs. FLORENCIO G. SALES, JR., THE HONORABLE COMMISSION ON ELECTIONS, ELECTION OFFICER DIONISIO F. RIOS and PROVINCIAL SUPERVISOR NOLI PIPO, respondents.G.R. No. 124893

Subject: Public CorporationDoctrine: Qualification of Elective Officers (SK)

FACTS:Petitioner Lynette Garvida seeks to annul and set aside the order dated May 2, 1996 of respondent COMELEC en banc suspending her proclamation as the duly elected Chairman of the SK of Barangay San Lorenzo, Municipality of Bangui, Ilocos Norte.- On March 16, 1996, petitioner applied for registration as member and voter of the Katipunan ng Kabataan of Barangay San Lorenzo. The Board of Election Tellers, however, denied her application on the ground that she being then twenty-one years and ten (10) months old, exceeded the age limit for membership in the Katipunan ng Kabataan as laid down in Section 3 [b] of COMELEC Resolution No. 2824.- On April 2, she filed a “Petition for Inclusion as Registered Kabataang Member and Voter” with the MCTC. In a decision dated April 18, 1996, the said court found petitioner qualified and ordered her registration as member and voter in the Katipunan ng Kabataan. The Board of Election Tellers appealed to the Regional Trial Court. The presiding judge of the Regional Trial Court, however, inhibited himself from acting on the appeal due to his close association with petitioner.- On April 23, Garvida filed her certificate of candidacy for the position of Chairman, Sangguniang Kabataan, Barangay San Lorenzo, Municipality of Bangui, Province of Ilocos Norte. In a letter dated April 23, 1996, Election Officer Rios, per advice of Provincial Election Supervisor, disapproved petitioner’s certificate of candidacy again due to her age. Petitioner, however, appealed to COMELEC Regional Director Asperin who set aside the order of respondent Rios and allowed petitioner to run.- On May 2, respondent Rios issued a memorandum to petitioner informing her of her ineligibility and giving her 24 hours to explain why her certificate of candidacy should not be disapproved.- Earlier and without the knowledge of the COMELEC officials, private respondent Florencio G. Sales, Jr., a rival candidate for Chairman of the Sangguniang Kabataan, filed with the COMELEC en banc a “Petition of Denial and/or Cancellation of Certificate of Candidacy” against petitioner Garvida for falsely representing her age qualification in her certificate of candidacy. The petition was sent by facsimile and registered mail on April 29, 1996 to the Commission on Elections National Office, Manila.On May 2, 1996, the same day acting on the facsimile, respondent Rios issued the memorandum to petitioner, the COMELEC en banc issued an order directing the Board of Election Tellers and Board of Canvassers of Barangay San Lorenzo to suspend the proclamation of petitioner in the event she won in the election.- On May 6, 1996, election day, petitioner garnered 78 votes as against private respondent’s votes of 76. In accordance with the May 2, 1996 order of the COMELEC en banc, the Board of Election Tellers did not proclaim petitioner as the winner. Hence, the instant petition for certiorari was filed on May 27, 1996.- On June 2, 1996, however, the Board of Election Tellers proclaimed petitioner the winner for the position of SK chairman, Barangay San Lorenzo, Bangui, Ilocos Norte. The proclamation was “without prejudice to any further action by the Commission on Elections or any other interested party.”

- On July 5, 1996, petitioner ran in the Pambayang Pederasyon ng mga Sangguniang Kabataan for the municipality of Bangui, Ilocos Norte. She won as Auditor and was proclaimed one of the elected officials of the Pederasyon.

ISSUES: 1) WON the COMELEC en banc has jurisdiction to act on the petition to deny or cancel her certificate of candidacy. (not pubcor)2) WON cancellation of her certificate of candidacy on the ground that she has exceeded the age requirement to run as an elective official of the SK is validHELD:1) Section 532 (a) of the Local Government Code of 1991 provides that the conduct of the SK elections is under the supervision of the COMELEC and shall be governed by the Omnibus Election Code. The Omnibus Election Code, in Section 78, Article IX, governs the procedure to deny due course to or cancel a certificate of candidacy.In relation thereto, Rule 23 of the COMELEC Rules of Procedure provides that a petition to deny due course to or cancel a certificate of candidacy for an elective office may be filed with the Law Department of the COMELEC on the ground that the candidate has made a false material representation in his certificate. The petition may be heard and evidence received by any official designated by the COMELEC after which the case shall be decided by the COMELEC itself and that the jurisdiction over a petition to cancel a certificate of candidacy lies with the COMELEC sitting in Division, not en banc. Cases before a Division may only be entertained by the COMELEC en banc when the required number of votes to reach a decision, resolution, order or ruling is not obtained in the Division. Moreover, only motions to reconsider decisions, resolutions, orders or rulings of the COMELEC in Division are resolved by the COMELEC en banc. It is therefore the COMELEC sitting in Divisions that can hear and decide election cases.In the instant case, the COMELEC en banc did not refer the case to any of its Divisions upon receipt of the petition. It therefore acted without jurisdiction or with grave abuse of discretion when it entertained the petition and issued the order of May 2, 1996.The COMELEC en banc also erred when it failed to note that the petition itself did not comply with the formal requirements of pleadings under the COMELEC Rules of Procedure. Every pleading before the COMELEC must be printed, mimeographed or typewritten in legal size bond paper and filed in at least ten (10) legible copies. Pleadings must be filed directly with the proper Clerk of Court of the COMELEC personally, or, by registered mail.In the instant case, the subject petition was not in proper form. Only two (2) copies of the petition were filed with the COMELEC.[19] Also, the COMELEC en banc issued its Resolution on the basis of the petition transmitted by facsimile, not by registered mail.2) The Katipunan ng Kabataan was originally created by PD 684 in 1975 as the Kabataang Barangay, a barangay youth organization composed of all residents of the barangay who were at least 15 years but less than 18 years of age. RA 7160 changed the Kabataang Barangay into the Katipunan ng Kabataan. It, however, retained the age limit of the members laid down in B.P. 337 at 15 but not more than 21 years old. The affairs of the Katipunan ng Kabataan are administered by the Sangguniang Kabataan (SK) composed of a chairman and seven (7) members who are elected by the Katipunan ng Kabataan. The chairman automatically becomes ex-officio member of the Sangguniang Barangay. A member of the SK holds office for a term of three (3) years, unless sooner removed for cause, or becomes permanently incapacitated, dies or resigns from office.Under Section 424 of the Local Government Code, a member of the Katipunan ng Kabataan must be: (a) a Filipino citizen; (b) an actual resident of the barangay for at least six months; (c) 15 but not more than 21 years of age; and (d) duly registered in the list of the Sangguniang Kabataan or in the official barangay list. Section 428 of the Code requires that an elective official of the Sangguniang Kabataan must be: (a) a Filipino citizen; (b) a qualified voter in the Katipunan ng Kabataan; (c) a resident of the barangay at least one (1) year immediately preceding the election; (d) at least 15

years but not more than 21 years of age on the day of his election; (e) able to read and write; and (f) must not have been convicted of any crime involving moral turpitude.For the May 6, 1996 SK elections, the COMELEC interpreted Sections 424 and 428 of the Local Government Code of 1991 in Resolution No. 2824 and defined how a member of the Katipunan ng Kabataan becomes a qualified voter and an elective official… voter must be born between May 6, 1975 and May 6, 1981, inclusive; and (c) a resident of the Philippines for at least one (1) year and an actual resident of the barangay at least six (6) months immediately preceding the elections. A candidate for the SK must: (a) possess the foregoing qualifications of a voter; (b) be a resident in the barangay at least one (1) year immediately preceding the elections; and (c) able to read and write.Except for the question of age, petitioner has all the qualifications of a member and voter in the Katipunan ng Kabataan and a candidate for the Sangguniang Kabataan.Petitioner’s age is admittedly beyond the limit set in Section 3 [b] of COMELEC Resolution No. 2824. Petitioner, however, argues that Section 3 [b] of Resolution No. 2824 is unlawful, ultra vires and beyond the scope of Sections 424 and 428 of the Local Government Code of 1991. She contends that the Code itself does not provide that the voter must be exactly 21 years of age on election day. She urges that so long as she did not turn twenty-two (22) years old, she was still twenty-one years of age on election day and therefore qualified as a member and voter in the Katipunan ng Kabataan and as candidate for the SK elections.Section 424 of the Code sets a member’s maximum age at 21 years only. There is no further provision as to when the member shall have turned 21 years of age. On the other hand, Section 428 provides that the maximum age of an elective SK official is 21 years old “on the day of his election.” The addition of the phrase “on the day of his election” is an additional qualification. The member may be more than 21 years of age on election day or on the day he registers as member of the Katipunan ng Kabataan. The elective official, however, must not be more than 21 years old on the day of election. The distinction is understandable considering that the Code itself provides more qualifications for an elective SK official than for a member of the Katipunan ng Kabataan. Dissimilum dissimilis est ratio. The courts may distinguish when there are facts and circumstances showing that the legislature intended a distinction or qualification.The provision that an elective official of the SK should not be more than 21 years of age on the day of his election is very clear. The Local Government Code speaks of years, not months nor days. When the law speaks of years, it is understood that years are of 365 days each. One born on the first day of the year is consequently deemed to be one year old on the 365th day after his birth — the last day of the year. In computing years, the first year is reached after completing the first 365 days. After the first 365th day, the first day of the second 365-day cycle begins. The phrase “not more than 21 years of age” means not over 21 years, not beyond 21 years. It means 21 365-day cycles. It does not mean 21 years and one or some days or a fraction of a year because that would be more than 21 365-day cycles. “Not more than 21 years old” is not equivalent to “less than 22 years old,” contrary to petitioner’s claims. The law does not state that the candidate be less than 22 years on election day. The requirement that a candidate possess the age qualification is founded on public policy and if he lacks the age on the day of the election, he can be declared ineligible.Ineligibility, on the other hand, refers to the lack of the qualifications prescribed in the Constitution or the statutes for holding public office. Ineligibility is not one of the grounds enumerated in Section 435 for succession of the SK Chairman.To avoid a hiatus in the office of SK Chairman, the Court deems it necessary to order that the vacancy be filled by the SK member chosen by the incumbent SK members of Barangay San Lorenzo, Bangui, Ilocos Norte by simple majority from among themselves. The member chosen shall assume the office of SK Chairman for the unexpired portion of the term, and shall discharge the powers and duties, and enjoy the rights and privileges appurtenant to said office.IN VIEW WHEREOF, the petition is dismissed and petitioner Lynette G. Garvida is declared

ineligible for being over the age qualification for candidacy in the May 6, 1996 elections of the Sangguniang Kabataan, and is ordered to vacate her position as Chairman of the Sangguniang Kabataan of Barangay San Lorenzo, Bangui, Ilocos Norte. The Sangguniang Kabataan member voted by simple majority by and from among the incumbent Sangguniang Kabataan members of Barangay San Lorenzo, Bangui, Ilocos Norte shall assume the office of Sangguniang Kabataan Chairman of Barangay San Lorenzo, Bangui, Ilocos Norte for the unexpired portion of the term.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-8238             May 25, 1955

CESAR M. CARANDANG, petitioner, vs.VICENTE SANTIAGO, in his capacity as Judge of the Court of First Instance of Manila and TOMAS VALENTON, Sr. and TOMAS VALENTON, Jr., respondents.

S. Mejia-Panganiban for petitioner.Evangelista and Valenton for respondents.

LABRADOR, J.:

This is a petition for certiorari against Honorable Vicente Santiago, Judge of the Court of First Instance of Manila, to annul his order in Civil Case No. 21173, entitled Cesar M. Carandang vs. Tomas Valenton, Sr. et al., suspending the trial of said civil case to await the result of the criminal Case No. 534, Court of First Instance of Batangas. In this criminal case, Tomas Valenton, Jr. was found guilty of the crime of frustrated homicide committed against the person of Cesar Carandang, petitioner herein. Tomas Valenton, Jr. appealed the decision to the Court of Appeals where the case is now pending.

The decision of the Court of First Instance of Batangas in the criminal case was rendered on September 1, 1953 and petitioner herein filed a complaint in the Court of First Instance of Manila to recover from the defendant Tomas Valenton, Jr. and his parents, damages, both actual and moral, for the bodily injuries received by him on occasion of the commission of the crime of frustrated homicide by said accused Tomas Valenton Jr. After the defendants submitted their answer, they presented a motion to suspend the trial of the civil case, pending the termination of the criminal case against Tomas Valenton, Jr. in the Court of Appeals. The judge ruled that the trial of the civil action must await the result of the criminal case on appeal. A motion for reconsideration was submitted, but the court denied the same; hence this petition for certiorari.

Petitioner invokes Article 33 of the new Civil Code, which is as follows:

In cases of defamation, fraud and physical injuries, a civil action for damages, entirely separate and distinct from the criminal action, may be brought by the injured party. Such civil action shall proceed independently of the criminal prosecution, and shall require only a preponderance of evidence.

The Code Commission itself states that the civil action allowed (under Article 33) is similar to the action in tort for libel or slander and assault and battery under American law (Reports of the Code Commission, pp. 46-47). But respondents argue that the term "physical injuries" is used to designate a specific crime defined in the Revised Penal Code, and therefore said term should be understood in its peculiar and technical sense, in accordance with the rules statutory construction (Sec. 578, 59 C. J. 979).

In the case at bar, the accused was charged with and convicted of the crime of frustrated homicide, and while it was found in the criminal case that a wound was inflicted by the defendant on the body of the petitioner herein Cesar Carandang, which wound is bodily injury, the crime committed is not physical injuries but frustrated homicide, for the reason that the infliction of the wound is attended by the intent to kill. So the question arises whether the term "physical injuries" used in Article 33 means physical injuries in the Revised Penal Code only, or any physical injury or bodily injury, whether inflicted with intent to kill or not.

The Article in question uses the words "defamation", "fraud" and "physical injuries." Defamation and fraud are used in their ordinary sense because there are no specific provisions in the Revised Penal Code using these terms as means of offenses defined therein, so that these two terms defamation and fraud must have been used not to impart to them any technical meaning in the laws of the Philippines, but in their generic sense. With this apparent circumstance in mind, it is evident that the term "physical injuries" could not have been used in its specific sense as a crime defined in the Revised Penal Code, for it is difficult to believe that the Code Commission would have used terms in the same article — some in their general and another in its technical sense. In other words, the term "physical injuries" should be understood to mean bodily injury, not the crime of physical injuries, because the terms used with the latter are general terms. In any case the Code Commission recommended that the civil for assault and battery in American Law, and this recommendation must have been accepted by the Legislature when it approved the article intact as recommended. If the intent has been to establish a civil action for the bodily harm received by the complainant similar to the civil action for assault and battery, as the Code Commission states, the civil action should lie whether the offense committed is that of physical injuries, or frustrated homicide, or attempted homicide, or even death.

A parallel case arose in that of Bixby vs Sioux City, 164 N. W. 641, 643. In that case, the appellant sought to take his case from the scope of the statute by pointing out that inasmuch as notice is required where the cause of action is founded on injury to the person, it has no application when the damages sought are for the death of the person. The court ruled that a claim to recover for death resulting from personal injury is as certainly "founded on injury to the person" as would be a claim to recover damages for a non-fatal injury resulting in a crippled body.

For the foregoing considerations, we find that the respondent judge committed an error in suspending the trial of the civil case, and his order to that affect is hereby revoked, and he is hereby ordered to proceed with the trial of said civil case without awaiting the result of the pending criminal case. With costs against the defendant-appellees.

National Power Corporation vs. Angas (May 8, 1992)Facts: On April 13, 1974 and December 3, 1974, petitioner National Power Corporation filed two complaints for eminent domain against private respondents before the Regional Trial Court (RTC) of Lanao del Sur, for the purpose of the development of hydro-electric power and production of electricity as well as the rection of such subsidiary works and constructions.

On May 16, 1980, one of the private respondents (Sittie Sohra Batara) filed an ex-parte motion praying that petitioner be directed to pay her the unpaid balance for the lands expropriated, including the legal interest which she computes 6% per annum as being contemplated in Art. 2209 of the Civil Code.

On February 10, 1981, one of the private respondents (Pangonatan Cosna Tagol), filed another ex-parte motion praying that the legal interest of the just compensation awarded to her by the court be computed at 12% per annum as allegedly authorized under and by virtue of Circular No. 416 of the Central Bank, in the absence of express contract.

Petitioner contended that the legal interest for just compensation of the lands condemned should be 6% per annum as contemplated in Art. 2209 of the Civil Code and not Central Bank Circular No. 416 which allows 12% interest per annum.

Issue: Whether or not, in the computation of the legal rate of interest on just computation for expropriated lands, the law applicable is Article 2209 of the Civil Code which prescribes a 6% legal interest rate or Central Bank Circular No. 416 which fixed the legal interest rate at 12% per annum.

Ruling: Central Bank Circular No. 416 and Art. 2209 of the Civil Code contemplate different situations and apply to different transactions. In transactions involving loan or forbearance of money, goods or credits and the rate allowed in judgments, in the absence of express contract, the Central Bank circular applies. Private respondents, however, take exception to the inclusion of the term "judgments" in the said circular, claiming that such term refers to any judgment directing the payment of legal interest.

Applying ejusdem generis to Central Bank Circular No. 416, the term "judgments" only refer to judgments in cases involving loans or forbearance of any money, goods or credits.

On the other hand, in cases requiring the payment of indemnities as damages, in connection with any delay in the performance of an obligation other than those involving loan or forbearance of money, goods or credits, Art. 2209 of the Civil Code applies.

In the case at bar, the transaction involved is clearly not a loan or forbearance of money, goods or credits but expropriation of certain parcels of land for a public purpose, and the legal interest required to be paid on the amount of just compensation for the properties expropriated is manifestly in the form of indemnity for damages for the delay in the payment thereof. Obviously, Art. 2209 of the Civil Code shall apply, declaring that the computation of legal interest be at 6% per annum, which is the correct and valid legal interest.

Judgment annulled and set aside.

EN BANC

[G. R. No.  5000.  March 11, 1909.]

THE UNITED STATES, Plaintiff-Appellant, vs. VICTOR SANTO NIÑO, Defendant-Appellee.

 

D E C I S I O N

WILLARD, J.:

Act No. 1780 is entitled as follows: chanrobles virtualawlibrary “An Act to regulate the importation, acquisition, possession, use, and transfer of firearms, and to prohibit the possession of same except in compliance with the provisions of this Act. ”

Section 26 of this Act is in part as follows: chanrobles virtualawlibrary

“It shall be unlawful for any person to carry concealed about his person any bowie knife, dirk, dagger, kris, or other deadly weapon: chanrobles virtualawlibrary Provided, That this prohibition shall not apply to firearms in possession of persons who have secured a license therefor or who are entitled to carry same under the provisions of this Act. ”

The amended complaint in this case is as follows: chanrobles virtualawlibrary

“The undersigned accuses Victor Santo Nino of the violation of Act No. 1780, committed as follows: chanrobles virtualawlibrary

“That on or about the 16th day of August, 1908, in the city of Manila, Philippine Islands, the said Victor Santo Nino, voluntarily, unlawfully, and criminally, had in his possession and concealed about his person a deadly weapon, to wit: chanrobles virtualawlibrary One (1) iron bar, about 15 inches in length provided with an iron ball on one end and a string on the other to tie to the wrist, which weapon had been designed and made for use in fighting, and as a deadly weapon.

“With violation of the provisions of section 26 of Act No. 1780 of the Philippine Commission. ”

A demurrer to this complaint was sustained in the court below the Government has appealed.

The basis for the holding of the court below was that —

“The words or other deadly weapon’ only signify a kind of weapon included within the preceding classification. In other words, the rule of ejusdem generis must be applied in the interpretation of this law, which rule is as follows: chanrobles virtualawlibrary

“‘The most frequent application of this rule is found where specific and generic terms of the same nature are employed in the same act, the latter following the former. While in the abstract, general terms are to be given their natural and full signification, yet where they follow specific words of a like nature they take their meaning from the latter, and are presumed to embrace only things or persons of the kind designated by them. ’“

In short, the court below held that the carrying of a revolver concealed about the person would not be a violation of this Act. The rule of construction above referred to is resorted to only for the purpose of determining what the intent of the legislature was in enacting the law. If that intent clearly appears from other parts of the law, and such intent thus clearly manifested is contrary to the result which would reached by application of the rule of ejusdem generis, the latter must give way. In this case the proviso of the Act clearly indicates that in the view of the legislature the carrying of an unlicensed revolver would be a violation of the Act. By the proviso it manifested its intention to include in the prohibition weapons other than the armas blancas therein specified.

The judgment of the court below is reversed, and the case is remanded for further proceedings.

No costs will be allowed to either party in this court. SO ORDERED.

G.R. No. 113092 September 1, 1994MARTIN CENTENO, vs. HON. VICTORIA VILLALON-PORNILLOS

236 SCRA 197

Facts: The officers of a group of elderly men of a civic organization known as theSamahang Katandaan ng Nayon ng Tikay launched a fund drive for the purpose of renovating the chapel of Barrio Tikay, Malolos, Bulacan. Martin Centeno, the chairman of the group, approached Judge Adoracion G. Angeles, a resident of Tikay, and solicited from her a contribution of P1,500.00. It is admitted that the solicitation was made without a permit from the Department of Social Welfare and Development. As a consequence, an information was filed against Centeno, for violation of PD No. 1564 or the Solicitation Permit Law. Centeno filed a motion to quash the information on the ground that the facts alleged therein do not constitute an offense, claiming that PD No. 1564 only covers solicitations made for charitable or public welfare purposes, but not those made for a religious purpose such as the construction of a chapel.

Issue: Should the phrase "charitable purposes" be construed in its broadest sense so as to include a religious purpose?

Ruling: No and that legislative enactments specifically spelled out "charitable" and "religious" in an enumeration, whereas Presidential Decree No. 1564 merely stated "charitable or public welfare purposes," only goes to show that the framers of the law in question never intended to include solicitations for religious purposes within its coverage. Otherwise, there is no reason why it would not have so stated expressly.

Solicitation for religious purposes may be subject to proper regulation by the State in the exercise of police power. However, in the case at bar, considering that solicitations intended for a religious purpose are not within the coverage of Presidential Decree No. 1564, as earlier demonstrated, petitioner cannot be held criminally liable therefor and therefore acquitted.

Amadora vs. CA Case Digest

Amadora vs. CA 

160 SCRA 274 

Facts: Like any prospective graduate, Alfredo Amadora was looking forward to the commencement exercises where he would ascend the stage and in the presence of his relatives and friends receive his high school diploma. As it turned out, though, fate would intervene and deny him that awaited experience. While they were in the auditorium of their school, the Colegio de San Jose-Recoletos, a classmate, Pablito Damon, fired a gun that mortally hit Alfredo, ending all his expectations and his life as well. 

Daffon was convicted of homicide thru reckless imprudence. Additionally, the herein petitioners, as the victim's parents, filed a civil action for damages under Article 2180 of the Civil Code against the Colegio de San Jose-Recoletos, its rector the high school principal, the dean of boys, and the physics teacher, together with Daffon and two other students, through their respective parents. The complaint against the students was later dropped. After trial, the CIF of Cebu held the remaining defendants liable to the plaintiffs. On appeal to the respondent court, however, the decision was reversed and all the defendants were completely absolved. 

Issue: Whether or not teachers or heads of establishments of arts and trades shall be liable for the death of Alfredo Amadora. 

Ruling: The Court has come to the conclusion that the provision in question (Art. 2180) should apply to all schools, academic as well as non-academic. 

Following the canon of reddendo singular singuli, where the school is academic, responsibility for the tort committed by the student will attach to the teacher in charge of such student. This is the general rule. Reason: Old academic schools, the heads just supervise the teachers who are the ones directly involved with the students. 

Where the school is for arts and trades, it is the head and only he who shall be held liable as an exception to the general rule. Reason: Old schools of arts and trades saw the masters or heads of the school personally and directly instructed the apprentices. 

Therefore, the heads are not liable. The teacher-in-charge is not also liable because there’s no showing that he was negligent in enforcing discipline against the accused or that he waived observance of the rules and regulations of the school, or condoned their non-observance. Also, the fact that he wasn’t present can’t be considered against him because he wasn’t required to report on that day. Classes had already ceased.

TOLENTINO VS. THE SECRETARY OF FINANCE Case Digest

ARTURO M. TOLENTINO VS. THE SECRETARY OF FINANCE and THE COMMISSIONER OF INTERNAL REVENUE

FACTS: The valued-added tax (VAT) is levied on the sale, barter or exchange of goods and properties as well as on the sale or exchange of services. It is equivalent to 10% of the gross selling price or gross value in money of goods or properties sold, bartered or exchanged or of the gross receipts from the sale or exchange of services. Republic Act No. 7716 seeks to widen the tax base of the existing VAT system and enhance its administration by amending the National Internal Revenue Code.

The Chamber of Real Estate and Builders Association (CREBA) contends that the imposition of VAT on sales and leases by virtue of contracts entered into prior to the effectivity of the law would violate the constitutional provision of “non-impairment of contracts.”

ISSUE: Whether R.A. No. 7716 is unconstitutional on ground that it violates the contract clause under Art. III, sec 10 of the Bill of Rights.

RULING: No. The Supreme Court the contention of CREBA, that the imposition of the VAT on the sales and leases of real estate by virtue of contracts entered into prior to the effectivity of the law would violate the constitutional provision of non-impairment of contracts, is only slightly less abstract but nonetheless hypothetical. It is enough to say that the parties to a contract cannot, through the exercise of prophetic discernment, fetter the exercise of the taxing power of the State. For not only are existing laws read into contracts in order to fix obligations as between parties, but the reservation of essential attributes of sovereign power is also read into contracts as a basic postulate of the legal order. The policy of protecting contracts against impairment presupposes the maintenance of a government which retains adequate authority to secure the peace and good order of society. In truth, the Contract Clause has never been thought as a limitation on the exercise of the State's power of taxation save only where a tax exemption has been granted for a valid consideration.

Such is not the case of PAL in G.R. No. 115852, and the Court does not understand it to make this claim. Rather, its position, as discussed above, is that the removal of its tax exemption cannot be made by a general, but only by a specific, law.

Further, the Supreme Court held the validity of Republic Act No. 7716 in its formal and substantive aspects as this has been raised in the various cases before it. To sum up, the Court holds:

(1) That the procedural requirements of the Constitution have been complied with by Congress in the enactment of the statute;

(2) That judicial inquiry whether the formal requirements for the enactment of statutes - beyond those prescribed by the Constitution - have been observed is precluded by the principle of separation of powers;

(3) That the law does not abridge freedom of speech, expression or the press, nor interfere with the free exercise of religion, nor deny to any of the parties the right to an education; and

(4) That, in view of the absence of a factual foundation of record, claims that the law is regressive, oppressive and confiscatory and that it violates vested rights protected under the Contract Clause are prematurely raised and do not justify the grant of prospective relief by writ of prohibition.

WHEREFORE, the petitions are DISMISSED.

ALU-TUCP vs NLRC Case Digest

[G.R. No. 109902 August 2, 1994] 

ALU-TUCP, Representing Members: ALAN BARINQUE, with 13 others, namely: ENGR. ALAN G. BARINQUE, ENGR. DARRELL LEE ELTAGONDE, EDUARD H. FOOKSON, JR., ROMEO R. SARONA, RUSSELL GACUS, JERRY BONTILAO, EUSEBIO MARIN, JR., LEONIDO ECHAVEZ, BONIFACIO MEJOS, EDGAR S. BONTUYAN, JOSE G. GARGUENA, JR., OSIAS B. DANDASAN, and GERRY I. FETALVERO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and NATIONAL STEEL CORPORATION (NSC), respondents. 

FACTS: Respondent company is a corporation engaged in the production and marketing of steel products. In the course of its operation, it undertook a “Five-year Expansion Program”, which resulted to the employment of the petitioners. The expansion program would consist of the ff. projects: 1. setting up of a “cold rolling mill expansion project; 2. establishment of a “billet steel-making plant”; 3. acquisition and installation of a “Five-stand TDM”; and 4. the “Cold Mill Peripherals Project”. Instead of contracting out with an outside or independent contactor the tasks of constructing the buildings with related civil and electrical works that would house the new machineries and equipment, the company chose to execute and carry out the expansion projects “in house”, as it were, by administration. Later, petitioners filed a complaint for unfair labor practice, regularization, etc. The Labor Arbiter declared petitioners as regular employees. But, upon appeal by the company, the NLRC ruled that the petitioners are project employees. Hence, this petition. 

ISSUE: Whether or not petitioners are project employees of NSC? 

HELD: The SC ruled that petitioners are project employees. it is evidently important to become clear about the meaning and scope of the term "project" in the present context. The "project" for the carrying out of which "project employees" are hired would ordinarily have some relationship to the usual business of the employer. 

In the realm of business and industry, we note that "project" could refer to one or the other of at least two (2) distinguishable types of activities. Firstly, a project could refer to a particular job or undertaking that is within the regular or usual business of the employer company, but which is distinct and separate, and identifiable as such, from the other undertakings of the company. Such job or undertaking begins and ends at determined or determinable times. The typical example of this first type of project is a particular construction job or project of a construction company. A construction company ordinarily carries out two or more discrete identifiable construction projects: e.g., a twenty-five- storey hotel in Makati; a residential condominium building in Baguio City; and a domestic air terminal in Iloilo City. Employees who are hired for the carrying out of one of these separate projects, the scope and duration of which has been determined and made known to the employees at the time of employment, are properly treated as "project employees," and their services may be lawfully terminated at completion of the project. 

The term "project" could also refer to, secondly, a particular job or undertaking that is not within the regular business of the corporation. Such a job or undertaking must also be identifiably separate and distinct from the ordinary or regular business operations of the employer. The job or undertaking also begins and ends at determined or determinable times. The case at bar presents what appears to our mind as a typical example of this kind of "project." 

The carrying out of the Five Year Expansion Program (or more precisely, each of its component projects) constitutes a distinct undertaking identifiable from the ordinary business and activity of NSC. Each component project, of course, begins and ends at specified times, which had already been determined by the time petitioners were engaged. We also note that NSC did the work here involved — the construction of buildings and civil and electrical works, installation of machinery and equipment and the commissioning of such machinery — only for itself. Private respondent NSC was not in the business of constructing buildings and installing plant machinery for the general business community, i.e., for unrelated, third party, corporations. NSC did not hold itself out to the public as a construction company or as an engineering corporation. 

Which ever type of project employment is found in a particular case, a common basic requisite is that the designation of named employees as "project employees" and their assignment to a specific project, are effected and implemented in good faith, and not merely as a means of evading otherwise applicable requirements of labor laws. 

Thus, the particular component projects embraced in the Five Year Expansion Program, to which petitioners were assigned, were distinguishable from the regular or ordinary business of NSC which, of course, is the production or making and marketing of steel products. During the time petitioners rendered services to NSC, their work was limited to one or another of the specific component projects which made up the FAYEP I and II. There is nothing in the record to show that petitioners were hired for, or in fact assigned to, other purposes, e.g., for operating or maintaining the old, or previously installed and commissioned, steel-making machinery and equipment, or for selling the finished steel products. 

We, therefore, agree with the basic finding of the NLRC (and the Labor Arbiter) that the petitioners were indeed "project employees:" 

The present case therefore strictly falls under the definition of "project employees" on paragraph one of Article 280 of the Labor Code, as amended. Moreover, it has been held that the length of service of a project employee is not the controlling test of employment tenure but whether or not "the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee". 

The proviso in the second paragraph of Article 280 relates only to casual employees and is not applicable to those who fall within the definition of said Article's first paragraph, i.e., project employees. The familiar grammatical rule is that a proviso is to be construed with reference to the immediately preceding part of the provision to which it is attached, and not to other sections thereof, unless the clear legislative intent is to restrict or qualify not only the phrase immediately preceding the proviso but also earlier provisions of the statute or even the statute itself as a whole. No such intent is observable in Article 280 of the Labor Code, which has been quoted earlier. 

Petition is dismissed.