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Statcon CASE Digests - Module 7 Implications

Statutory Construction (Pamantasan ng Lungsod ng Maynila)

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MODULE 7: IMPLICATIONS

I. NECESSARY IMPLICATIONS

DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES (DENR) V.

UNITED PLANNERS’ CONSULTANTS, INC.
G.R. NO. 212081, FEBRUARY 23, 2015

FACTS: Petitioner, through the Land Management Bureau (LMB), entered into a
Consultancy Agreement with respondent United Planners Consultants, Inc. in connection with
the LMB’s Land Resource Management Master Plan Project (LRMMP). Under the Consultancy
Agreement, petitioner committed to pay a total contract price of P4,337,141.00, based on a
predetermined percentage corresponding to the particular stage of work accomplished.

Respondent completed the work required, which petitioner formally accepted. However,
petitioner was able to pay only 47% of the total contract price in the amount of P2,038,456.30.

The Commission on Audit (COA) released the Technical Services Office Report (TSO) finding
the contract price of the Agreement to be 84.14% excessive. This notwithstanding, petitioner,
acknowledged its liability to respondent in the amount of P2,239,479.60 and assured payment at
the soonest possible time.

For failure to pay its obligation under the Consultancy Agreement despite repeated demands,
respondent instituted a Complaint against petitioner before the Regional Trial Court of
Quezon City. Due to the existence of Arbitration clause, the respondent moved for the issue to
be tried through arbitration. The Arbitral Tribunal rendered its Arbitral Award in favor of
respondent.

Petitioner filed a motion for reconsideration. Arbitral Tribunal claimed that it had already lost
jurisdiction over the case after it had submitted to the RTC its Report together with a copy
of the Arbitral Award.

RTC merely noted petitioner’s aforesaid motions, finding that copies of the Arbitral Award
appear to have been sent to the parties by the Arbitral Tribunal, including the OSG, contrary to
petitioner’s claim. On the other hand, the RTC confirmed the Arbitral Award pursuant to Rule
11.2 (A)36 of the Special Alternative Dispute Resolution (ADR) Rules and ordered petitioner to
pay respondent the costs of confirming the award, as prayed for, in the total amount of
P50,000.00. From this order, petitioner did not file a motion for reconsideration.

Respondent moved for the issuance of a writ of execution, to which no comment/opposition was
filed by petitioner despite the RTC’s directive therefor. In an Order dated September 12, 2011,
the RTC granted respondent’s motion. Petitioner moved to quash the writ of execution, positing
that respondent was not entitled to its monetary claims. It also claimed that the issuance of said
writ was premature since the RTC should have first resolved its May 19, 2010 Motion for
Reconsideration and June 1, 2010 Manifestation and Motion, and not merely noted them,
thereby violating its right to due process.

RTC denied petitioner’s motion to quash.

Dissatisfied, it filed a petition for certiorari before the CA averring in the main that the RTC
acted with grave abuse of discretion in confirming and ordering the execution of the Arbitral
Award.

The CA dismissed the certiorari petition on two (2) grounds, namely: (a) the petition essentially
assailed the merits of the Arbitral Award which is prohibited under Rule 19 of the Special
ADR Rules and (b) the petition was filed out of time, having been filed way beyond 15 days
from notice of the RTC in violation of Rule 19.2852 in relation to Rule 19.853 of said Rules
which provide that a special civil action for certiorari must be filed before the CA within 15
days from notice of the judgment, order, or resolution sought to be annulled or set aside (or
until July 27, 2012). Aggrieved, petitioner filed the instant petition.

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ISSUE: Whether or not the petition is not covered by the Special ADR Rules particularly the 15-
day reglementary period to file a petition for certiorari it does not explicitly provide for a
procedure on execution.

HELD: NO. While it appears that the Special ADR Rules remain silent on the procedure for the
execution of a confirmed arbitral award, it is the Court’s considered view that the Rules’
procedural mechanisms cover not only aspects of confirmation but necessarily extend to a
confirmed award’s execution in light of the doctrine of necessary implication which states that
every statutory grant of power, right or privilege is deemed to include all incidental power, right
or privilege.

No statute can be enacted that can provide all the details involved in its application. There is
always an omission that may not meet a particular situation. What is thought, at the time of
enactment, to be an all-embracing legislation may be inadequate to provide for the unfolding of
events of the future. So-called gaps in the law develop as the law is enforced. One of the rules
of statutory construction used to fill in the gap is the doctrine of necessary implication. The
doctrine states that what is implied in a statute is as much a part thereof as that which is
expressed. Every statute is understood, by implication, to contain all such provisions as may be
necessary to effectuate its object and purpose, or to make effective rights, powers, privileges or
jurisdiction which it grants, including all such collateral and subsidiary consequences as may be
fairly and logically inferred from its terms. Ex necessitate legis. And every statutory grant of
power, right or privilege is deemed to include all incidental power, right or privilege. This is so
because the greater includes the lesser, expressed in the maxim, in eo plus sit, simper inest et
minus.

As the Court sees it, execution is but a necessary incident to the Court’s confirmation of an
arbitral award. To construe it otherwise would result in an absurd situation whereby the
confirming court previously applying the Special ADR Rules in its confirmation of the arbitral
award would later shift to the regular Rules of Procedure come execution. A court’s power to
confirm a judgment award under the Special ADR Rules should be deemed to include the
power to order its execution for such is but a collateral and subsidiary consequence that may
be fairly and logically inferred from the statutory grant to regional trial courts of the power to
confirm domestic arbitral awards.

All the more is such interpretation warranted under the principle of ratio legis est anima which
provides that a statute must be read according to its spirit or intent, for what is within the
spirit is within the statute although it is not within its letter, and that which is within the letter but
not within the spirit is not within the statute. Accordingly, since the Special ADR Rules are
intended to achieve speedy and efficient resolution of disputes and curb a litigious culture, every
interpretation thereof should be made consistent with these objectives.

Thus, with these principles in mind, the Court so concludes that the Special ADR Rules, as far
as practicable, should be made to apply not only to the proceedings on confirmation but
also to the confirmed award’s execution.

The petition for certiorari permitted under the Special ADR Rules must be filed within a period
of fifteen (15) days from notice of the judgment, order or resolution sought to be annulled or set
aside.80 Hence, since petitioner’s filing of its certiorari petition in CA-G.R. SP No. 126458 was
made nearly two months after its receipt of the RTC’s Order dated July 9, 2012,or on September
10, 2012,81 said petition was clearly dismissible.

SUGBUANON RURAL BANK, INC. V. HON. UNDERSECRETARY BIENVENIDO E.

LAGUESMA
G.R. NO. 116194, FEBRUARY 2, 2000

FACTS: Petitioner Sugbuanon Rural Bank, Inc., (SRBI) is a duly-registered banking

institution with principal office in Cebu City and a branch in Mandaue City. Private respondent
SRBI Association of Professional, Supervisory, Office, and Technical Employees Union
(APSOTEU) is a legitimate labor organization affiliated with the Trade Unions Congress of
the Philippines (TUCP).

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On October 8, 1993, the DOLE Regional Office in Cebu City granted Certificate of Registration
to the union.

The union filed a petition for certification election of the supervisory employees of SRBI. It
alleged, among others, that: (1) APSOTEU-TUCP was a labor organization duly-registered with
the Labor Department; (2) SRBI employed 5 or more supervisory employees; (3) a majority of
these employees supported the petition: (4) there was no existing collective bargaining
agreement (CBA) between any union and SRBI; and (5) no certification election had been held
in SRBI during the past 12 months prior to the petition.

The Med-Arbiter gave due course to the petition. The pre-certification election conference
between SRBI and APSOTEU-TUCP was set.

SRBI filed a motion to dismiss the union’s petition. It sought to prevent the holding of a
certification election on two grounds. First, that the members of APSOTEU-TUCP were in fact
managerial or confidential employees. Thus, they were disqualified from forming, joining, or
assisting any labor organization. Second, the Association of Labor Unions-Trade Unions
Congress of the Philippines or ALU-TUCP was representing the union. Since ALU-TUCP also
sought to represent the rank-and-file employees of SRBI, there was a violation of the principle of
separation of unions.

ISSUES: Whether or not the members of the respondent union are managerial employees and/or
highly-placed confidential employees, hence prohibited by law from joining labor organizations
and engaging in union activities.

RULING: YES. Petitioner’s explanation does not state who among the employees has access to
information specifically relating to its labor to relations policies. Even Cashier Patricia Maluya,
who serves as the secretary of the bank’s Board of Directors may not be so classified.

Confidential employees are those who (1) assist or act in a confidential capacity, in regard (2) to
persons who formulate, determine, and effectuate management policies [specifically in the field
of labor relations].9 The two criteria are cumulative, and both must be met if an employee is to
be considered a confidential employee — that is, the confidential relationship must exist between
the employee and his superior officer; and that officer must handle the prescribed responsibilities
relating to labor relations.

Art. 245 of the Labor Code does not directly prohibit confidential employees from engaging
in union activities. However, under the doctrine of necessary implication, the
disqualification of managerial employees equally applies to confidential employees. The
confidential-employee rule justifies exclusion of confidential employees because in the normal
course of their duties they become aware of management policies relating to labor relations.
It must be stressed, however, that when the employee does not have access to confidential labor
relations information, there is no legal prohibition against confidential employees from forming,
assisting, or joining a union.

II. GRANT OF POWER INCLUDES INCIDENTAL POWER

CARMELO F. LAZATIN V. HRET

G.R. NO. 84297, DECEMBER 8, 1988

FACTS: Petitioner and private respondent were among the candidates for Representative of the
first district of Pampanga during the elections of May 11, 1987. During the canvassing of votes,
Private respondent Lorenzo Timbol objected to the inclusion of certain election returns. But
since the Municipal Board of Canvassers did not rule on his objections, he brought his case to
COMELEC which ordered the Provincial Board of Canvassers to suspend the proclamation of
the winning candidate for the first district of Pampanga.

Later on, COMELEC ordered the Provincial Board of Canvassers to proceed with the canvassing
of votes and to proclaim the winner. Petitioner was proclaimed as Congressman-elect. Private
respondent thus filed in the COMELEC a petition to declare petitioner’s proclamation void
ab initio.

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Later, private respondent also filed a petition to prohibit petitioner from assuming office. The
COMELEC failed to act on the second petition so petitioner was able to assume office on June
30, 1987. On September 15, 1987, the COMELEC declared petitioner's proclamation void ab
initio. Court set aside the COMELEC's revocation of petitioner's proclamation. On February 8,
1988, private respondent filed in the House of Representatives Electoral Tribunal.

Petitioner argued that the private respondent’s protest had been filed late citing Sec 250 of the
Omnibus Election Code. However, the HRET filed that the protest had been filed on time in
accordance with Sec 9 of the HRET Rules.

ISSUE: Whether or not the House of Representative Electoral Tribunal has jurisdiction over the
case?

HELD: YES, the court ruled that the petitioner’s reliance on Sec 250 of the Omnibus Election
Code is misplaced. The COMELEC’s exclusive original jurisdiction over all contests relating to
the elections, returns and qualifications of all elective regional, provincial and city officials and
appellate jurisdiction over contests relating to the election of municipal and barangay officials
[Art. IX(C), Sec. 2(2)] expressly makes the Electoral Tribunals of the Senate and the House
of Representatives the sole judge of all contests relating to the election, returns and
qualifications of their respective Members [Art. VI, Sec. 17].

The power of the HRET, as the sole judge of all contests relating to the election, returns
and qualifications of the Members of the House of Representatives, to promulgate rules and
regulations relative to matters within its jurisdiction, including the period for filing election
protests before it, is beyond dispute. Its rule-making power necessarily flows from the
general power granted it by the Constitution. This is the import of the ruling in the landmark
case of Angara v. Electoral Commission.

It is a settled rule of construction that where a general power is conferred or duly enjoined,
every particular power necessary for the exercise of the one or the performance of the
other is also conferred (Cooley, Constitutional Limitations, eighth ed., vol. 1, pp. 138, 139). In
the absence of any further constitutional provision relating to the procedure to be followed in
filing protests before the Electoral Commission, therefore, the incidental power to promulgate
such rules necessary for the proper exercise of its exclusive power to judge all contests
relating to the election, returns and qualifications of members of the National Assembly,
must be deemed by necessary implication to have been lodged also in the Electoral
Commission.

The inescapable conclusion from the foregoing is that it is well within the power of the HRET to
prescribe the period within which protests may be filed before it. This is founded not only on
historical precedents and jurisprudence but, more importantly, on the clear language of the
Constitution itself.

Consequently, private respondent's election protest having been filed within the period
prescribed by the HRET, the latter cannot be charged with lack of jurisdiction to hear the case.

CEMCO HOLDINGS, INC. V. NATIONAL LIFE INSURANCE COMPANY OF THE

PHILIPPINES, INC.
G.R. NO. 171815, AUGUST 7, 2007

FACTS: Union Cement Corporation (UCC) has two principal stockholders UCHC and
petitioner Cemco. Majority of UCHCs stocks were owned by BCI and ACC. Cemco, on the
other hand, owned 9% of UCHC stocks. BCI informed the Philippine Stock Exchange (PSE) that
it and its subsidiary ACC had passed resolutions to sell to Cemco the BCIs stocks in UCHC
and ACCs stocks in UCHC. As a result of petitioner Cemco’s acquisition of BCI and ACCs
shares in UCHC, petitioner’s total beneficial ownership, direct and indirect, in UCC has
increased by 36% and amounted to at least 53% of the shares of UCC.

As a consequence, the PSE, inquired to SEC as to whether the Tender Offer Rule under Rule
19 of the Implementing Rules of the Securities Regulation Code is not applicable to the

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purchase by petitioner of the majority of shares of UCC. SEC responded to the query that while
it was the stance of the department that the tender offer rule was not applicable, the matter must
still have to be confirmed by the SEC en banc. Thereafter, SEC confirmed that the SEC en banc
had resolved that the Cemco transaction was not covered by the tender offer rule.

Feeling aggrieved by the transaction, respondent National Life Insurance Company of the
Philippines, Inc., a minority stockholder of UCC, sent a letter to Cemco demanding the latter
to comply with the rule on mandatory tender offer. Cemco, however, refused.

Respondent filed a complaint with the SEC asking it to reverse its Resolution and to declare the
purchase agreement of Cemco void and praying that the mandatory tender offer rule be applied
to its UCC shares.

SEC ruled in favor of the respondent by reversing and setting aside its Resolution and
directed petitioner Cemco to make a tender offer for UCC shares to respondent and other holders
of UCC shares similar to the class held by UCHC in accordance with Section 9(E), Rule 19 of
the Securities Regulation Code.

Petitioner filed a petition with the Court of Appeals challenging the SECs jurisdiction to take
cognizance of respondent’s complaint and its authority to require Cemco to make a tender offer
for UCC shares, and arguing that the tender offer rule does not apply. The Court of Appeals
rendered a decision affirming the ruling of the SEC.

ISSUE: Whether or not, the SEC has jurisdiction over respondent’s complaint.

HELD: YES, The Court affirmed the decision of the CA. SEC was acting pursuant to Rule
19(13) of the Amended Implementing Rules and Regulations of the Securities Regulation Code

Another provision of the statute, which provides the basis of Rule 19(13) of the Amended
Implementing Rules and Regulations of the Securities Regulation Code, is Section 5.1(n), viz:

[T]he Commission shall have, among others, the following powers and functions: x x x (n)
Exercise such other powers as may be provided by law as well as those which may be implied
from, or which are necessary or incidental to the carrying out of, the express powers granted the
Commission to achieve the objectives and purposes of these laws.

The foregoing provision bestows upon the SEC the general adjudicative power which is implied
from the express powers of the Commission or which is incidental to, or reasonably necessary to
carry out, the performance of the administrative duties entrusted to it. As a regulatory agency, it
has the incidental power to conduct hearings and render decisions fixing the rights and
obligations of the parties.

And as held by the Court of Appeals:

We must bear in mind in interpreting the powers and functions of the SEC that the law has made
the SEC primarily a regulatory body with the incidental power to conduct administrative
hearings and make decisions. A regulatory body like the SEC may conduct hearings in the
exercise of its regulatory powers, and if the case involves violations or conflicts in connection
with the performance of its regulatory functions, it will have the duty and authority to resolve the
dispute for the best interests of the public.

III. WHAT CANNOT BE DONE DIRECTLY CANNOT BE DONE INDIRECTLY

TAWANG MULTI-PURPOSE COOPERATIVE V. LA TRINIDAD WATER DISTRICT

G.R. NO. 166471, MARCH 22, 2011

FACTS: Petitioner Tawang Multi-Purpose Cooperative (TMPC) was organized to provide

domestic water services in Brgy. Twang, La Trinidad, Benguet. Respondent La Trinidad
Water District (LTWD) is a government owned and controlled corporation, a local water utility
created under PD No. 198, authorized to supply water for domestic, industrial and commercial
purpose within municipality of La Trinidad, Benguet.

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October 9, 2000, TMPC filed with National Water Resources Board an application for
Certificate of Public Convenience (CPC) to operate and maintain a waterworks system in
Brgy. Tawang. LTWD claimed that under Sec. 47 of PD No. 198, as amended, its franchise is
exclusive.

NWRB held that LTWD’s franchise cannot be exclusive since exclusive franchises are
unconstitutional under Sec. 2, Art. XII.

Upon appeal of LTWD to the RTC, the latter cancelled TMPC’s CPC and held that Sec. 47 of
PD No. 198 is valid; that the ultimate purpose of the Constitution is for the State, through its
authorized agencies or instrumentalities, to be able to keep and maintain ultimate control and
supervision over the operation of public utilities. What is repugnant to the Constitution is a grant
of franchise exclusive in character so as to preclude the State itself from granting a franchise to
any other person or entity than the present grantee when public interest so requires.

RTC denied the motion for reconsideration filed by TMPC.

ISSUE: Whether RTC erred in holding that Sec. 47 of PD No. 198 is valid

HELD: YES, the Supreme Court ruled in favor of petitioner. Quando aliquid prohibetur ex
directo, prohibetur et per obliquum – Those that cannot be done directly cannot be done
indirectly. Under Sec. 2 and 11, Art. XII of the 1987 Constitution, The President, Congress, and
Court cannot create indirectly franchises that are exclusive in character by allowing the Board of
Directors (BOD) of a water district and Local Water Utilities Administration (LWUA) to create
franchises that are exclusive in character. Sec. 47 of PD no. 198 is in conflict with the above-
mentioned provision of the Constitution. And the rule is that in case of conflict between the
Constitution and a statute, the former prevails, because the constitution is the basic law to which
all other laws must conform to.

What cannot be legally done directly cannot be done indirectly. This rule is basic and, to a
reasonable mind, does not need explanation. Indeed, if acts that cannot be legally done directly
can be done indirectly, then all laws would be illusory.

The President, Congress and the Court cannot create directly franchises for the operation of a
public utility that are exclusive in character. The 1935, 1973 and 1987 Constitutions expressly
and clearly prohibit the creation of franchises that are exclusive in character.

Section 11, Article XII of the 1987 Constitution states that:

No franchise, certificate, or any other form of authorization for the operation of a public utility
shall be granted except to citizens of the Philippines or to corporations or associations organized
under the laws of the Philippines, at least 60% of whose capital is owned by such citizens, nor
shall such franchise, certificate or authorization be exclusive in character or for a longer period
than 50 years.

The Constitution expressly and clearly state that, "nor shall such franchise x x x be exclusive in
character." There is no exception. Basic is the rule of statutory construction that when the law is
clear and unambiguous, the court is left with no alternative but to apply the same according to its
clear language.

Indeed, the President, Congress and the Court cannot create directly franchises that are
exclusive in character. What the President, Congress and the Court cannot legally do
directly they cannot do indirectly. Thus, the President, Congress and the Court cannot
create indirectly franchises that are exclusive in character by allowing the Board of
Directors (BOD) of a water district and the Local Water Utilities Administration (LWUA)
to create franchises that are exclusive in character.

In PD No. 198, as amended, former President Ferdinand E. Marcos (President Marcos) created
indirectly franchises that are exclusive in character by allowing the BOD of LTWD and the
LWUA to create directly franchises that are exclusive in character. Section 47 of PD No. 198, as

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amended, allows the BOD and the LWUA to create directly franchises that are exclusive in
character.

In case of conflict between the Constitution and a statute, the Constitution always prevails
because the Constitution is the basic law to which all other laws must conform to. The duty of
the Court is to uphold the Constitution and to declare void all laws that do not conform to it.

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