G.R. Nos.
L-12011-14 September 30, 1958 Section 15 of the same law, which treats of "penalties and recovery of wages due", likewise provides:
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellant,
vs.
ALFONSO GATCHALIAN, defendant-appellee.
Office of the Solicitor General Ambrosio Padilla and Solicitor Troadio T. Quiazon, Jr. for appellant.
Ishmael Rodriguez for appellee.
BAUTISTA ANGELO, J.:
Alfonso Gatchalian was charged before the Court of First Instance of Zamboanga with a violation of Section 3 of
Republic Act No. 602 in four separate informations (Criminal Cases Nos. 2206, 2207, 2208 and 2209) committed
as follows:
That on or about August 4, 1951, up to and including December 31, 1953 and within the jurisdiction of
this Court, viz, in the City of Zamboanga, Philippines, the above named accused, owner or manager of
the New Life Drug Store, a business establishment in the City of Zamboanga and having under his
employ one Expedito Fernandez as salesman in the said establishment, did then and there willfully,
and feloniously, pay and cause to be paid to said Expedito Fernandez, a monthly salary of P60 to P90
for the period above-mentioned which is less than that provided for by law, thereby leaving a
difference of an unpaid salary to the latter in the total amount of P1,016.64 for the period above-
mentioned.
When arraigned on June 19, 1956, he pleaded not guilty to the charge. On August 29, 1956, his counsel, in his
behalf, filed a written motion to dismiss based on two grounds which in substance merely consist in that the
violation charged does not constitute a criminal offense but carries only a civil liability, and even if it does, the
section of the law alleged to have been violated does not carry any penalty penalizing it. On September 25, 1956,
the City Attorney of Zamboanga filed his answer to the motion to dismiss contending that the law which was
violated by the accused carries with it both civil and criminal liability, the latter being covered by Section 15 which
provides for the penalty for all willful violations of any of the provisions of the Minimum Wage Law. On December
3, 1956, the Court, after hearing the arguments of both parties, as well as some members of the local bar, issued
an order dismissing the informations with costs de oficio and cancelling the bail bond filed by the accused. The
court in the same order directed the Regional Representative of the Department of Labor to immediately institute
a civil action against the erring employer for the collection of the alleged underpayment of wages due the
employees. A motion for reconsideration having been denied, the Government took the present appeal.
The pertinent portion of Section 3 of Republic Act 602 under which appellee was prosecuted, reads as follows:.
SEC. 3. Minimum wage. (a) Every employer shall pay to each of his employees who is employed by
an enterprise other than in agriculture wages at the rate of not less than
(1) Four pesos a day on the effective date of this Act and thereafter for employees of an establishment
located in Manila or its environs;
It is clear from the above-quoted provisions that while Section 3 explicitly requires every owner of an
(2) Three pesos a day on the effective date of this Act and for one year after the effective date, and
establishment located outside of Manila or its environs to pay each of its employees P3.00 a day on the effective
thereafter P4 a day, for employees of establishment located outside of Manila or its
date of the Act, and one year thereafter P4.00 a day, Section 15 imposes both a criminal penalty for a willful
environs: Provided, That this Act shall not apply to any retail or service enterprise that regularly
violation of any of the above provisions and a civil liability for any underpayment of wages due an employee. The
employs not more than five employees.
SEC. 15. Penalties and recovery of wage due under this Act.
(a) Any person who wilfully violates any of the provisions of this Act shall upon conviction thereof be
subject to a fine of not more than two thousand pesos, or, upon second conviction, to imprisonment
of not more than one year, or to both fine and imprisonment, in the discretion of the court.
(b) If any violation of this Act is committed by a corporation, trust, partnership or association, the
manager or in his default, the person acting as such when the violation took place, shall be
responsible. In the case of a government corporation, the managing head shall be made responsible,
except when shown that the violation was due to an act or commission of some other person, over
whom he has no control, in which case the latter shall be held responsible.
(c) The Secretary is authorized to supervise the payment of the unpaid minimum wages or the wages
found owing to any employee under this Act.
(d) The Secretary may bring an action in any competent court to recover the wages owing to an
employee under this Act, with legal interest. Any sum thus recovered by the Secretary on behalf of an
employee pursuant to this subsection shall be held in a special deposit account and shall be paid, on
order of the Secretary, directly to the employee or employees affected. Any such sums not paid to an
employee because he cannot be located within a period of three years shall be covered into the
Treasury as miscellaneous receipts.
(e) Any employer who underpays an employee in violation of this Act shall be liable to the employee
affected in the amount of the unpaid wages with legal interest. Action to recover such liability may be
maintained in any competent court by anyone or more employees on behalf of himself or themselves.
The court in such action shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a
reasonable attorney's fee which shall not exceed ten per cent of the amount awarded to the plaintiffs,
unless the amount awarded is less than one hundred pesos, in which event the fee may be ten pesos,
but not in excess of that amount. Payment of the amount found due to the plaintiffs shall be made
directly to the plaintiffs, in the presence of a representative of the Secretary or the Court. In the event
payment is witnessed by the court or its representative, the Secretary shall be notified within ten days
of payment that the payment has been made.
(f) No employer, attorney, or any other person, other than the employee to whom underpayment are
found due, shall receive any part of the underpayment due the employee; and no attorney shall
receive any fee in excess of the maximum specified herein.
(g) In determining when an action is commenced under this section for the purpose of the statute of
limitation, it shall be considered to be commenced in the case of any individual claimant on the date
when the complaint is filed if he is specifically named as a party plaintiff in the complaint, or if his
name did not so appear, on the subsequent date on which his name is added as a party plaintiff in such
action.
intention of the law is clear: to slap not only a criminal liability upon an erring employer for any willful violation of
the acts sought to be enjoined but to attach concurrently a civil liability for any underpayment he may commit as
a result thereof. The law speaks of a willful violation of "any of the provisions of this Act", which is all-embracing,
and the same must include what is enjoined in Section 3 thereof which embodies the very fundamental purpose
for which the law has been adopted. A study of the origin of our Minimum Wage Law (Republic Act 602) may be
of help in arriving at an enlightened and proper interpretation of the provisions under consideration. Our research
shows that this Act was patterned after the U. S. Fair Labor Standards Act of 1938, as amended, and so a
comparative study of the pertinent provisions of both would be enlightening.
The pertinent provisions of the U. S. Fair Labor Stardards Act of 1938, as amended, follow:
MINIMUM WAGES.
SEC. 6. (a) Every employer shall pay to each of his employees who is engaged in commerce or in the
production of goods for commerce wages at the following rates
(1) not less than 75 cents an hour;
PROHIBITED ACTS
SEC. 15. (a) After the expiration of one hundred and twenty days from the date of enactment of this
Act, it shall be unlawful for any person
(1) to transport, offer for transportation, ship, deliver, or sell in commerce, or to ship, deliver, or sell
with knowledge that shipment or delivery or sale thereof in commerce is intended, any goods in the
production of which any employee was employed in violation of section 6 or section 7, or in violation
of any regulation or order of the Administrator issued under section 14; . . . .
(2) to violate any of the provisions of section 6 or section 7, or any of the provisions of any regulation
or order of the Administrator issued under section 14;
(3) to discharge or in any other manner discriminate against any employee because such employee has
filed any complaint or instituted or cause to be instituted any proceeding under or related to this Act,
or has testified or is about to testify in any such proceeding, or has served or is about to serve on an
industry committee;
(4) to violate any of the provisions of section 11 (c) or any regulation or order made or continued in
effect under the provisions of section 11 (d), or to make any statement, report, or record filed or kept
pursuant to the provisions of such section or of any regulation or order thereunder, knowing such
statement, report, or record to be false in a material respect.
PENALTIES
SEC. 16. (a) Any person who willfully violates any of the provisions of section 15 shall upon conviction
thereof be subject to a line of not more than P10,000, or to imprisonment for not more than six
months, or both. No person shall be imprisoned under this subsection except for an offense
committed after the conviction of such person for a prior offense under this subsection.
(b) Any employer who violates the provisions of section 6 or 7 of this Act shall be liable to the
employee or employees affected in the amount of their unpaid minimum wages, or their unpaid
overtime compensation, as the case may be, and in additional equal amount as liquidated damages.
Action to recover such liability may be maintained in any court of competent jurisdiction by any one or
more employees for and in behalf of himself or themselves and other employees similarly situated. No
employee shall be a party plaintiff to any such action unless he gives his consent in writing to become
such a party and such consent is filed in the court in which such action is brought. The court in such
action shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable
attorney's fee to be paid by the defendant costs of the action.
The pertinent provisions of Republic Act 602 read:
SEC. 3. Minimum wage. (a) Every employer shall pay to each of his employees who is employed by
an enterprise other than in agriculture wages at the rate of not less than
(2) Three pesos a day on the effective date of this Act and for one year after the effective date, and
thereafter P4 a day, for employees of establishments located outside of Manila or its environs:
Provided, That this Act shall not apply to any retail or service enterprise that regularly employs not
more than five employees.
SEC. 15. Penalties and recovery of wage due under this Act.
(a) Any person who willfully violates any of the provisions of this Act shall upon conviction thereof be
subject to a fine of not more than two thousand pesos, or, upon second conviction, to imprisonment
of not more than one year, or to both fine and imprisonment, in the discretion of the court.
(e) Any employer who underpays an employee in violation of this Act shall be liable to the employee
affected in the amount of the unpaid wages with legal interest. Action to recover such liability may be
maintained in any competent court by anyone or employees on behalf of himself or themselves. The
court in such action shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a
reasonable attorney's fee which shall not exceed ten per cent of the amount awarded to the plaintiffs,
unless the amount awarded is less than one hundred pesos, in which event the fee may be ten pesos,
but not in excess of that amount. Payment of the amount found due to the plaintiffs shall be made
directly to the plaintiffs, in the presence of a representative of the Secretary or of the Court. In the
event payment is witnessed by the court or its representative, the Secretary shall be notified within
ten days of payment that the payment has been made.
An examination of the above-quoted provisions of the two Acts will show that while in substance they are similar,
they however contain some differences in their phraseology and in the apportionment of their provisions. Thus,
while Section 15 (a), paragraph 2, of the Fair Labor Standards Act makes it unlawful for an employer not to pay
the minimum wage prescribed therein, our Minimum Wage Law does not contain a similar provision. Again, the
Fair Labor Standards Act enumerates in one single section all those acts which are declared unlawful and are not
spread out in different sections as done in our law. Thus, the acts that are declared unlawful by the former law as
enumerated in Section 15(a) are: (1) to transport or deliver any goods in the production of which any employee
was employed in violation of Section 6 or Section 7, or in violation of any regulation or order of the Administrator;
(2) failure to pay the minimum wage; (3) to discharge or in any other manner discriminate against an employee
who has filed a complaint against the employer in relation to the Act; and (4) failure to keep the record or report
required by law or to make a false record or report. On the other hand, our law declares unlawful the following
acts, to wit: (1) to pay wages in the form of promissory notes, vouchers, coupons, tokens or any other form
alleged to represent legal tender [Section 10 (a) (1)]; (2) to make any deduction or withhold any amount from the
wages of an employee, or induce any employee to give part of his wages by force or intimidation [ Section 10 (g)]; To begin with, the Minimum Wage Law is a social legislation which has been adopted for the benefit of labor and
(3) to commit any act of discrimination against an employee because of certain complaint he has filed or caused as such it contains provisions that are enjoined to be observed by the employer. These provisions are substantive
to be filed against the employer (Section 13); and (4) to make any false statement, report or record to subvert the in nature and had been adopted for common observance by the persons affected. They cannot be eluded nor
purpose of the Act (Section 14), which acts are contained in separate sections mentioned therein. The failure to subverted lest the erring employer runs into the sanction of the law. On the other hand, the provisions adverted
pay the prescribed minimum wage is not declared unlawful in our law. to by counsel are merely administrative in character which had been adopted to set the machinery by which the
law is to be enforced. They are provisions established for observance by the officials entrusted with its
enforcement. Failure to comply with them would therefore subject them merely to administrative sanction. They
It should also be noted that while Section 16 of the Fair Labor Standards Act which provides for the penalties to be
do not come under the penal clause embodied in Section 15(a). This is clearly inferred from Section 18(c), of
imposed for any willful violation of the provisions of the Act specifically states that those penalties refer to acts
Republic Act No. 602, which provides: "Any official of the Government to whom responsibility in administration
declared unlawful under Section 15 of the same Act, our law does not contain such specification. It merely
and enforcement has been delegated under this Act shall be removable on the sustaining of charges of
provides in Section 15 (a) that "Any person who willfully violates any of the provisions of this Act shall upon
malfeasance or non-feasance in office." This specific provision should be interpreted as qualifying the penal clause
conviction" be subject to the penalty therein prescribed. This distinction is very revealing. It clearly indicates that
provided for in Section 15(a).
while the Fair Labor Standards Act intends to subject to criminal action only acts that are declared unlawful, our
law by legislative fiat intends to punish not only those expressly declared unlawful but even those not so declared
but are clearly enjoined to be observed to carry out the fundamental purpose of the law. One such provision is It is true that Section 3 under which appellee was charged does not state that it shall be unlawfull for an employer
undoubtedly that which refers to the payment of the minimum wage embodied in Section 3. This is the only to pay his employees wages below the minimum wage but merely requires that the employer shall pay wages not
rational interpretation that can be drawn from the attitude of our Congress in framing our law in a manner below the minimum wage. But failure of such declaration does not make the non-observance of the provisions
different from that appearing in the mother law. less unlawful than otherwise, for such provision embodies precisely the raison d'etre of the law itself. Indeed,
Section 3 is the very provision on which all the other provisions of the law are built. Thus, the prohibition against
discriminating against any employee because he has filed a complaint or caused to be instituted one against the
Indeed, the main objective of the law is to provide for a rock-bottom wage to be observed and by an employers of
employer is just a means to insure the effective enforcement of that provision (Section 13); and so the prohibition
an agricultural and industrial establishment. This objective would be defeated were we to adopt a restrictive
against the making of a false statement, report or record required to be filed or kept by the law (Section 13); the
interpretation of the above penal clause, for an employer who knows that he cannot be amenable to a criminal
prohibition against the payment of wages in the form of promissory notes, vouchers, coupons, tokens, or any
action would be prone to subvert the law because if he is detected it would be easy for him to pay the
other form to represent legal tender (Section 10, par. a, sub-paragraph 1); and the prohibition against making
underpayment and the corresponding interest as would be the case were he to assume merely a civil liability. This
deductions or withholding any amount from the wages of an employee (Section 10, par. g). These are acts which
would be a mockery and a derision of the law not contemplated by our lawmaker which would certainly render it
were declared unlawful because they may be resorted to by unscrupulous employers with the evident purpose of
nugatory and abortive. We are not prepared to adopt an interpretation which would give such adverse result to a
subverting or defeating the payment of the minimum wage. If these supplementary provisions are mere
legislation conceived in the lofty purpose of protecting labor and giving it a living wage. If the law is to survive, it
safeguards established by the lawmaker to close every avenue to trickery or subversion on the part of the
must be real, militant and effective.
employer, they cannot be more important and imperative as the central provision fixing the minimum wage
without which the law will have no reason to exist. We cannot therefore entertain the claim that because said
The establishment of the maximum wage benefits directly the low- provision was not declared unlawful it cannot be subject to the penal sanction embodied in Section 15.
paid employees, who now receiveinadequate wages on which to support themselves and their families
. It benefits all wage earners indirectly bysetting a floor below which their remuneration cannot fail. It r
It is likewise true that the informations under which the accused was charged only mention Section 3 of the law as
aises the standards of competition amongemployers, since it would protect the fair-
the one violated and this section does not contain a penal clause, but this does not make the informations
minded employer who voluntarily pays a wage that supports thewage earner from the competition of t
defective. There is no law which requires that in order that an accused may be convicted the specific provision
he employer, who operates at lower cost by reasons of paying hisworkers a wage below subsistence. If
which penalizes that act charged be mentioned in the information. The Rules of Court do not require such
, in fact, the employer cannot pay a subsistence wage, then he shouldnot continue his operation unless
designation. In fact, the rule provides that an information, to be sufficient, should state only the name of the
he improves his methods and equipment so as to make the payment of theminimum wage feasible for
defendant, the designation of the offense by the statute, the acts or omissions complained of as constituting the
him; otherwise the employer is wasting the toil of the worker and the materialresources used in the e
offense, the name of the offended party, the approximate time of the commission of the offense, and the place
mployment. Second methods of operation, progressive and fair-
wherein the offense was committed (Rule 106, Section 5). The rule does not require that it should mention the
minded management,and an adequate minimum wage go hand in hand. (Explanatory Note to H.B. No.
particular penal provision penalizing the offense.
1476).

The final claim of appellee is that inasmuch as the provisions of the law under which he was prosecuted are
Counsel for appellee however entertains a different interpretation. He contends that if Section 15(a) should be
ambiguous and there is doubt as to their interpretation, that doubt should be resolved in his favor because a
interpreted in a manner that would embrace a willful violation of any of the provisions of the law we would have a
penal statute should be strictly construed against the State. This contention must also fail if we are to be
situation where even the officials entrusted with its enforcement may be held criminally liable which is not
consistent with our interpretation of the provisions of Section 15 (a) of the law. We have stated that that section
contemplated in the law. Thus, he contends, the Secretary of Labor may be criminally prosecuted for willfully not
is clear and unambiguous and covers the provisions embodied in Section 3 of the law, and if such is the case then
using all available devices for investigation [Section 4 (c)], for not presenting to the Wage Board all the evidence in
there is no room for the application of the principle invoked by appellee. We are therefore persuaded to conclude
his possession relating to the wages in the industries for which the Wage Board is appointed and other
that the court a quo erred in dismissing the informations filed against the appellee and, consequently, its order of
information relevant to the establishment of the minimum wage [Section 5 (p)], and for not doing all other acts
December 3, 1956, subject of this appeal should be set aside. Wherefore, the order appealed from is hereby set
which the law requires him to do under Section 6. This, he emphasizes, is absurd and should not be entertained.
aside. It is ordered that these cases be remanded to the court a quo for further proceedings, with costs against
appellee..
G.R. No. 14129 July 31, 1962
PEOPLE OF THE PHILIPPINES, plaintiff-appellant,
vs.
GUILLERMO MANANTAN, defendant-appellee.
Office of the Solicitor General for plaintiff-appellant.
Padilla Law Office for defendant-appellee.
REGALA, J.:
This is an appeal of the Solicitor General from the order of the Court of First Instance of Pangasinan dismissing the
information against the defendant.
The records show that the statement of the case and the facts, as recited in the brief of plaintiff-appellant, is
complete and accurate. The same is, consequently, here adopted, to wit:
In an information filed by the Provincial Fiscal of Pangasinan in the Court of First Instance of that
Province, defendant Guillermo Manantan was charged with a violation Section 54 of the Revised
Election Code. A preliminary investigation conducted by said court resulted in the finding a probable
cause that the crime charged as committed by defendant. Thereafter, the trial started upon
defendant's plea of not guilty, the defense moved to dismiss the information on the ground that as
justice of the peace the defendant is one of the officers enumerated in Section 54 of the Revised
Election Code. The lower court denied the motion to dismiss holding that a justice of the peace is
within the purview Section 54. A second motion was filed by defense counsel who cited in support
thereof the decision of the Court of Appeals in People vs. Macaraeg, (CA-G.R. No. 15613-R, 54 Off.
Gaz., pp. 1873-76) where it was held that a justice of the peace is excluded from the prohibition of
Section 54 of the Revised Election Code. Acting on this second motion to dismiss, the answer of the
prosecution, the reply of the defense, and the opposition of the prosecution, the lower court
dismissed the information against the accused upon the authority of the ruling in the case cited by the
defense.
Both parties are submitting this case upon the determination of this single question of law: Is a justice the peace
included in the prohibition of Section 54 of the Revised Election Code?
Section 54 of the said Code reads:
No justice, judge, fiscal, treasurer, or assessor of any province, no officer or employee of the Army, no
member of the national, provincial, city, municipal or rural police force and no classified civil service
officer or employee shall aid any candidate, or exert any influence in any manner in a election or take
part therein, except to vote, if entitled thereto, or to preserve public peace, if he is a peace officer.
Defendant-appellee argues that a justice of the peace is not comprehended among the officers enumerated in
Section 54 of the Revised Election Code. He submits the aforecited section was taken from Section 449 of the
Revised Administrative Code, which provided the following:
SEC. 449. Persons prohibited from influencing elections. No judge of the First Instance, justice of the
peace, or treasurer, fiscal or assessor of any province and no officer or employee of the Philippine
Constabulary, or any Bureau or employee of the classified civil service, shall aid any candidate or exert
influence in any manner in any election or take part therein otherwise than exercising the right to vote.
When, therefore, section 54 of the Revised Election Code omitted the words "justice of the peace," the omission
revealed the intention of the Legislature to exclude justices of the peace from its operation.
The above argument overlooks one fundamental fact. It is to be noted that under Section 449 of the Revised
Administrative Code, the word "judge" was modified or qualified by the phrase "of First instance", while under
Section 54 of the Revised Election Code, no such modification exists. In other words, justices of the peace were
expressly included in Section 449 of the Revised Administrative Code because the kinds of judges therein were
specified, i.e., judge of the First Instance and justice of the peace. In Section 54, however, there was no necessity
therefore to include justices of the peace in the enumeration because the legislature had availed itself of the
more generic and broader term, "judge." It was a term not modified by any word or phrase and was intended to
comprehend all kinds of judges, like judges of the courts of First Instance, Judges of the courts of Agrarian
Relations, judges of the courts of Industrial Relations, and justices of the peace.
It is a well known fact that a justice of the peace is sometimes addressed as "judge" in this jurisdiction. It is
because a justice of the peace is indeed a judge. A "judge" is a public officer, who, by virtue of his office, is clothed
with judicial authority (U.S. v. Clark, 25 Fed. Cas. 441, 422). According to Bouvier Law Dictionary, "a judge is a
public officer lawfully appointed to decide litigated questions according to law. In its most extensive sense the
term includes all officers appointed to decide litigated questions while acting in that capacity, including justices of
the peace, and even jurors, it is said, who are judges of facts."
A review of the history of the Revised Election Code will help to justify and clarify the above conclusion.
The first election law in the Philippines was Act 1582 enacted by the Philippine Commission in 1907, and which
was later amended by Act. Nos. 1669, 1709, 1726 and 1768. (Of these 4 amendments, however, only Act No.
1709 has a relation to the discussion of the instant case as shall be shown later.) Act No. 1582, with its subsequent
4 amendments were later on incorporated Chapter 18 of the Administrative Code. Under the Philippine
Legislature, several amendments were made through the passage of Acts Nos. 2310, 3336 and 3387. (Again, of
these last 3 amendments, only Act No. 3587 has pertinent to the case at bar as shall be seen later.) During the
time of the Commonwealth, the National Assembly passed Commonwealth Act No. 23 and later on enacted
Commonwealth Act No. 357, which was the law enforced until June 1947, when the Revised Election Code was
approved. Included as its basic provisions are the provisions of Commonwealth Acts Nos. 233, 357, 605, 666, 657.
The present Code was further amended by Republic Acts Nos. 599, 867, 2242 and again, during the session of
Congress in 1960, amended by Rep. Acts Nos. 3036 and 3038. In the history of our election law, the following
should be noted:
Under Act 1582, Section 29, it was provided:
No public officer shall offer himself as a candidate for elections, nor shall he be eligible during the time
that he holds said public office to election at any municipal, provincial or Assembly election, except for
reelection to the position which he may be holding, and no judge of the First Instance, justice of the
peace, provincial fiscal, or officer or employee of the Philippine Constabulary or of the Bureau of
Education shall aid any candidate or influence in any manner or take part in any municipal, provincial,
or Assembly election under the penalty of being deprived of his office and being disqualified to hold
any public office whatsoever for a term of 5 year: Provide, however, That the foregoing provisions shall
not be construe to deprive any person otherwise qualified of the right to vote it any election."
(Enacted January 9, 1907; Took effect on January 15, 1907.)
Then, in Act 1709, Sec. 6, it was likewise provided:
. . . No judge of the First Instance, Justice of the peace provincial fiscal or officer or employee of the
Bureau of Constabulary or of the Bureau of Education shall aid any candidate or influence in any
manner to take part in any municipal provincial or Assembly election. Any person violating the
provisions of this section shall be deprived of his office or employment and shall be disqualified to hold
any public office or employment whatever for a term of 5 years, Provided, however, that the foregoing
provisions shall not be construed to deprive any person otherwise qualified of the right to vote at any
election. (Enacted on August 31, 1907; Took effect on September 15, 1907.)
Again, when the existing election laws were incorporated in the Administrative Code on March 10, 1917, the
provisions in question read:
SEC. 449. Persons prohibited from influencing elections. No judge of the First Instance, justice of the
peace, or treasurer, fiscal or assessor of any province and no officer or employee of the Philippine
Constabulary or any Bureau or employee of the classified civil service, shall aid any candidate or exert
influence in any manner in any election or take part therein otherwise than exercising the right to vote.
(Emphasis supplied)
After the Administrative Code, the next pertinent legislation was Act No. 3387. This Act reads:
SEC. 2636. Officers and employees meddling with the election. Any judge of the First Instance,
justice of the peace, treasurer, fiscal or assessor of any province, any officer or employee of the
Philippine Constabulary or of the police of any municipality, or any officer or employee of any Bureau
of the classified civil service, who aids any candidate or violated in any manner the provisions of this
section or takes part in any election otherwise by exercising the right to vote, shall be punished by a
fine of not less than P100.00 nor more than P2,000.00, or by imprisonment for not less than 2 months
nor more than 2 years, and in all cases by disqualification from public office and deprivation of the
right of suffrage for a period of 5 years. (Approved December 3, 1927.) (Emphasis supplied.)
Subsequently, however, Commonwealth Act No. 357 was enacted on August 22, 1938. This law provided in
Section 48:
The above-mentioned pattern of congressional phraseology would seem to justify the conclusion that when the
legislature omitted the words "justice of the peace" in Rep. Act No. 180, it did not intend to exempt the said
officer from its operation. Rather, it had considered the said officer as already comprehended in the broader term
"judge".
It is unfortunate and regrettable that the last World War had destroyed congressional records which might have
offered some explanation of the discussion of Com. Act No. 357 which legislation, as indicated above, has
eliminated for the first time the words "justice of the peace." Having been completely destroyed, all efforts to
seek deeper and additional clarifications from these records proved futile. Nevertheless, the conclusions drawn
from the historical background of Rep. Act No. 180 is sufficiently borne out by reason hid equity.
Defendant further argues that he cannot possibly be among the officers enumerated in Section 54 inasmuch as
under that said section, the word "judge" is modified or qualified by the phrase "of any province." The last
mentioned phrase, defendant submits, cannot then refer to a justice of the peace since the latter is not an officer
of a province but of a municipality.
Defendant's argument in that respect is too strained. If it is true that the phrase "of any province" necessarily
removes justices of the peace from the enumeration for the reason that they are municipal and not provincial
officials, then the same thing may be said of the Justices of the Supreme Court and of the Court of Appeals. They
are national officials. Yet, can there be any doubt that Justices of the Supreme Court and of the Court of Appeals
are not included in the prohibition? The more sensible and logical interpretation of the said phrase is that it
qualifies fiscals, treasurers and assessors who are generally known as provincial officers.
The rule of "casus omisus pro omisso habendus est" is likewise invoked by the defendant-appellee. Under the said
rule, a person, object or thing omitted from an enumeration must be held to have been omitted intentionally. If
that rule is applicable to the present, then indeed, justices of the peace must be held to have been intentionally
and deliberately exempted from the operation of Section 54 of the Revised Election Code.
The rule has no applicability to the case at bar. The maxim "casus omisus" can operate and apply only if and when
the omission has been clearly established. In the case under consideration, it has already been shown that the
legislature did not exclude or omit justices of the peace from the enumeration of officers precluded from
engaging in partisan political activities. Rather, they were merely called by another term. In the new law, or
Section 54 of the Revised Election Code, justices of the peace were just called "judges."

SEC. 48. Active Interventation of Public Officers and Employees. No justice, judge, fiscal, treasurer or
In insisting on the application of the rule of "casus omisus" to this case, defendant-appellee cites authorities to the
assessor of any province, no officer or employee of the Army, the Constabulary of the national,
effect that the said rule, being restrictive in nature, has more particular application to statutes that should be
provincial, municipal or rural police, and no classified civil service officer or employee shall aid any
strictly construed. It is pointed out that Section 54 must be strictly construed against the government since
candidate, nor exert influence in any manner in any election nor take part therein, except to vote, if
proceedings under it are criminal in nature and the jurisprudence is settled that penal statutes should be strictly
entitled thereto, or to preserve public peace, if he is a peace officer.
interpreted against the state.

This last law was the legislation from which Section 54 of the Revised Election Code was taken.
Amplifying on the above argument regarding strict interpretation of penal statutes, defendant asserts that the
spirit of fair play and due process demand such strict construction in order to give "fair warning of what the law
It will thus be observed from the foregoing narration of the legislative development or history of Section 54 of the intends to do, if a certain line is passed, in language that the common world will understand." (Justice Holmes, in
Revised Election Code that the first omission of the word "justice of the peace" was effected in Section 48 of McBoyle v. U.S., 283 U.S. 25, L. Ed. 816).
Commonwealth Act No. 357 and not in the present code as averred by defendant-appellee. Note carefully,
however, that in the two instances when the words "justice of the peace" were omitted (in Com. Act No. 357 and
The application of the rule of "casus omisus" does not proceed from the mere fact that a case is criminal in
Rep. Act No. 180), the word "judge" which preceded in the enumeration did not carry the qualification "of the
nature, but rather from a reasonable certainty that a particular person, object or thing has been omitted from a
First Instance." In other words, whenever the word "judge" was qualified by the phrase "of the First Instance", the
legislative enumeration. In the present case, and for reasons already mentioned, there has been no such
words "justice of the peace" would follow; however, if the law simply said "judge," the words "justice of the
omission. There has only been a substitution of terms.
peace" were omitted.
The rule that penal statutes are given a strict construction is not the only factor controlling the interpretation of note that one of the causes of the separation of the petitioner was the fact that he was found guilty in engaging in
such laws; instead, the rule merely serves as an additional, single factor to be considered as an aid in determining electioneering, contrary to the provisions of the Election Code.
the meaning of penal laws. This has been recognized time and again by decisions of various courts. (3 Sutherland,
Statutory Construction, p. 56.) Thus, cases will frequently be found enunciating the principle that the intent of the
Defendant-appellee calls the attention of this Court to House Bill No. 2676, which was filed on January 25, 1955.
legislature will govern (U.S. vs. Corbet, 215 U.S. 233). It is to be noted that a strict construction should not be
In that proposed legislation, under Section 56, justices of the peace are already expressly included among the
permitted to defeat the policy and purposes of the statute (Ash Sheep Co. v. U.S., 252 U.S. 159). The court may
officers enjoined from active political participation. The argument is that with the filing of the said House Bill,
consider the spirit and reason of a statute, as in this particular instance, where a literal meaning would lead to
Congress impliedly acknowledged that existing laws do not prohibit justices of the peace from partisan political
absurdity, contradiction, injustice, or would defeat the clear purpose of the law makers (Crawford, Interpretation
activities.
of Laws, Sec. 78, p. 294). A Federal District court in the U.S. has well said:

The argument is unacceptable. To begin with, House Bill No. 2676 was a proposed amendment to Rep. Act No.
The strict construction of a criminal statute does not mean such construction of it as to deprive it of
180 as a whole and not merely to section 54 of said Rep. Act No. 180. In other words, House Bill No. 2676 was a
the meaning intended. Penal statutes must be construed in the sense which best harmonizes with
proposed re-codification of the existing election laws at the time that it was filed. Besides, the proposed
their intent and purpose. (U.S. v. Betteridge 43 F. Supp. 53, 56, cited in 3 Sutherland Statutory
amendment, until it has become a law, cannot be considered to contain or manifest any legislative intent. If the
Construction 56.)
motives, opinions, and the reasons expressed by the individual members of the legislature even in debates,
cannot be properly taken into consideration in ascertaining the meaning of a statute (Crawford, Statutory
As well stated by the Supreme Court of the United States, the language of criminal statutes, frequently, has been Construction, Sec. 213, pp. 375-376), a fortiori what weight can We give to a mere draft of a bill.
narrowed where the letter includes situations inconsistent with the legislative plan (U.S. v. Katz, 271 U.S. 354; See
also Ernest Brunchen, Interpretation of the Written Law (1915) 25 Yale L.J. 129.)
On law reason and public policy, defendant-appellee's contention that justices of the peace are not covered by
the injunction of Section 54 must be rejected. To accept it is to render ineffective a policy so clearly and
Another reason in support of the conclusion reached herein is the fact that the purpose of the statute is to emphatically laid down by the legislature.
enlarge the officers within its purview. Justices of the Supreme Court, the Court of Appeals, and various judges,
such as the judges of the Court of Industrial Relations, judges of the Court of Agrarian Relations, etc., who were
Our law-making body has consistently prohibited justices of the peace from participating in partisan politics. They
not included in the prohibition under the old statute, are now within its encompass. If such were the evident
were prohibited under the old Election Law since 1907 (Act No. 1582 and Act No. 1709). Likewise, they were so
purpose, can the legislature intend to eliminate the justice of the peace within its orbit? Certainly not. This point is
enjoined by the Revised Administrative Code. Another which expressed the prohibition to them was Act No. 3387,
fully explained in the brief of the Solicitor General, to wit:
and later, Com. Act No. 357.

On the other hand, when the legislature eliminated the phrases "Judge of First Instance" and justice of
Lastly, it is observed that both the Court of Appeals and the trial court applied the rule of "expressio unius, est
the peace", found in Section 449 of the Revised Administrative Code, and used "judge" in lieu thereof,
exclusion alterius" in arriving at the conclusion that justices of the peace are not covered by Section 54. Said the
the obvious intention was to include in the scope of the term not just one class of judges but all judges,
Court of Appeals: "Anyway, guided by the rule of exclusion, otherwise known as expressio unius est exclusion
whether of first Instance justices of the peace or special courts, such as judges of the Court of
alterius, it would not be beyond reason to infer that there was an intention of omitting the term "justice of the
Industrial Relations. . . . .
peace from Section 54 of the Revised Election Code. . . ."

The weakest link in our judicial system is the justice of the peace court, and to so construe the law as
The rule has no application. If the legislature had intended to exclude a justice of the peace from the purview of
to allow a judge thereof to engage in partisan political activities would weaken rather than strengthen
Section 54, neither the trial court nor the Court of Appeals has given the reason for the exclusion. Indeed, there
the judiciary. On the other hand, there are cogent reasons found in the Revised Election Code itself
appears no reason for the alleged change. Hence, the rule of expressio unius est exclusion alterius has been
why justices of the peace should be prohibited from electioneering. Along with Justices of the
erroneously applied. (Appellant's Brief, p. 6.)
appellate courts and judges of the Court of First Instance, they are given authority and jurisdiction over
certain election cases (See Secs. 103, 104, 117-123). Justices of the peace are authorized to hear and
decided inclusion and exclusion cases, and if they are permitted to campaign for candidates for an Where a statute appears on its face to limit the operation of its provisions to particular persons or
elective office the impartiality of their decisions in election cases would be open to serious doubt. We things by enumerating them, but no reason exists why other persons or things not so enumerated
do not believe that the legislature had, in Section 54 of the Revised Election Code, intended to create should not have been included, and manifest injustice will follow by not so including them, the
such an unfortunate situation. (pp. 708, Appellant's Brief.) maxim expressio unius est exclusion alterius, should not be invoked. (Blevins v. Mullally 135 p. 307, 22
Cal. App. 519.) .
Another factor which fortifies the conclusion reached herein is the fact that the administrative or executive
department has regarded justices of the peace within the purview of Section 54 of the Revised Election Code. FOR THE ABOVE REASONS, the order of dismissal entered by the trial court should be set aside and this case is
remanded for trial on the merits.
In Tranquilino O. Calo, Jr. v. The Executive Secretary, the Secretary of Justice, etc. (G.R. No. L-12601), this Court did
not give due course to the petition for certiorari and prohibition with preliminary injunction against the
respondents, for not setting aside, among others, Administrative Order No. 237, dated March 31, 1957, of the
President of the Philippines, dismissing the petitioner as justice of the peace of Carmen, Agusan. It is worthy of
 G.R. No. L-38725 October 31, 1933
THE PEOPLE OF THE PHILIPPINE ISLANDS, Plaintiff-Appellee, vs. PEDRO MANABA,Defendant-Appellant.
Jose Ma. Cavanna for appellant.
Office of the Solicitor-General Hilado for appellee.
VICKERS, J.:
This is an appeal from a decision of Judge Eulalio Garcia in this Court of First Instance of Oriental Negros in
criminal case No. 1827 dated November 15, 1932, finding the defendant guilty of rape and sentencing him to
suffer seventeen years and four months of reclusion temporal, and the accessory penalties of the law, to
indemnify the offended party, Celestina Adapon, in the amount of P500, to maintain the offspring, if any, at P5 a
month until said offspring should become of age, and to pay the costs.chanroblesvirtualawlibrary chanrobles
virtual law library
It appears that on May 10, 1932, the chief of police of Dumaguete subscribed and swore to a criminal complaint
wherein he charged Pedro Manaba with the crime of rape, committed on the person of Celestina Adapon. This
complaint was filed with the justice of the peace of Dumaguete on June 1, 1932 and in due course the case
reached the Court of First Instance. The accused was tried and convicted, but on motion of the attorney for the
defendant the judgment was set aside and the case dismissed on the ground that the court had no jurisdiction
over the person of the defendant or the subject matter of the action, because the complaint had not been filed by
the offended party, but by the chief of police (criminal case No. 1801).chanroblesvirtualawlibrary chanrobles
virtual law library
On August 17, 1932, the offended girl subscribed and swore to a complaint charging the defendant with the crime
of rape. This complaint was filed in the Court of First Instance (criminal case No. 1872), but was referred to the
justice of the peace of Dumaguete for preliminary investigation. The defendant waived his right to the preliminary
investigation, but asked for the dismissal of the complaint on the ground that he had previously been placed in
jeopardy for the same offense. This motion was denied by the justice of the peace, and the case was remanded to
the Court of First Instance, where the provincial fiscal in an information charged the defendant with having
committed the crime of rape as follows:
Que en o hacia la noche del dia 9 de mayo de 1932, en el Municipio de Dumaguete, Provincia de Negros Oriental,
Islas Filipinas, y dentro de la jurisdiccion de este Juzgado. el referido acusado Pedro Manaba, aprovechandose de
la oscuridad de la noche y mediante fuerza, violencia e intimidacion, voluntaria, ilegal y criminalmente yacio y
tuvo acceso carnal con una nia llamada Celestina Adapon, contra la voluntad de esta. El acusado Pedro Manaba
ya ha sido convicto por Juzgado competente y en sentencia firme por este mismo delito de
violacion.chanroblesvirtualawlibrary chanrobles virtual law library
Hecho cometido con infraccion de la ley.
The defendant renewed his motion for dismissal in the case on the ground of double jeopardy, but his motion was
denied; and upon the termination of the trial the defendant was found guilty and sentenced as hereinabove
stated.chanroblesvirtualawlibrary chanrobles virtual law library
Whether the defendant was placed in jeopardy for the second time or not when he was tried in the present case
depends on whether or not he was tried on a valid complaint in the first case. The offense in question was
committed on May 9, 1932, or subsequent to the date when the Revised Penal Code became
effective.chanroblesvirtualawlibrary chanrobles virtual law library
The third paragraph of the article 344 of the Revised Penal Code, which relates to the prosecution of the crimes of
adultery, concubinage, seduction, rape and acts of lasciviousness reads as follows:
The offenses of seduction, abduction, rape or acts of lasciviousness, shall not be prosecuted except upon a
complaint filed by the offended party or her parents, grandparents, or guardian, nor, in any case, if the offender
has been expressly pardoned by the above-named persons, as the case may be.
The Spanish text of this paragraph is as follows:
Tampoco puede procederse por causa de estupro, rapto, violacion o abusos deshonestos, sino en virtud de
denuncia de la parte agraviada, o de sus padres, o abuelos o tutor, ni despues de haberse otorgado al ofensor,
perdon expreso por dicha partes, segun los casos.
It will be observed that the Spanish equivalent of the word "filed" is not found in the Spanish text, which is
controlling, as it was the Spanish text of the Revised Penal Code that was approved by the
Legislature.chanroblesvirtualawlibrary chanrobles virtual law library
The first complaint filed against the defendant was signed and sworn to by the chief of police of Dumaguete. As it
was not the complaint of the offended party, it was not a valid complaint in accordance with the law. The
judgment of the court was therefore void for lack of jurisdiction over the subject matter, and the defendant was
never in jeopardy.chanroblesvirtualawlibrary chanrobles virtual law library
It might be observed in this connection that the judgment was set aside and the case dismissed on the motion of
defendant's attorney, who subsequently set up the plea of double jeopardy in the present
case.chanroblesvirtualawlibrary chanrobles virtual law library
The other assignments of error relate to the sufficiency of the evidence, which in our opinion fully sustains the
findings of the trial judge.chanroblesvirtualawlibrary chanrobles virtual law library
The recommendation of the Solicitor-General is erroneous in several respects, chiefly due to the fact that it is
based on the decision of July 30, 1932 that was set aside, and not on the decision now under consideration. The
accused should not be ordered to acknowledge the offspring, if should there be any, because the record shows
that the accused is a married man.chanroblesvirtualawlibrary chanrobles virtual law library
It appears that the lower court should have taken into consideration the aggravating circumstances of nocturnity.
The defendant is therefore sentenced to suffer seventeen years, four months, and one day of reclusion temporal,
to indemnify the offended party, Celestina Adapon, in the sum of P500, and to support the offspring, if any. As
thus modified, the decision appealed from is affirmed, with the costs of both instances against the
appellant.chanroblesvirtualawlibrary chanrobles virtual law library
Street, Abad Santos, Imperial, and Butte, JJ., concur.
G.R. No. L-12436 May 31, 1961
LA CARLOTA SUGAR CENTRAL and ELIZALDE & CO., INC., petitioners-appellants,
vs.
PEDRO JIMENEZ, AUDITOR GENERAL OF THE PHILIPPINES, respondent-appellee.
Pacifico de Ocampo for petitioners-appellants.
Office of the Solicitor General for respondent-appellee.
DIZON, J.:
Sometime in September, 1955 La Carlota Sugar Central a domestic corporation hereinafter referred to as the
Central, managed, controlled and operated by Elizalde & Co., Inc., referred to hereinafter as Elizalde, imported
500 short tons of ammonium sulphate and 350 short tons of ammonium phosphate. The corresponding letter of
credit in the sum of $60,930.00, U.S. currency, was opened through the Hongkong & Shanghai Banking
Corporation in the name of the Central and in favor of the Overseas Central Enterprises, Inc., 141 Battery St., San
Francisco 11, California, U.S.A. The invoices, bill of lading, and all other papers incident to said importation were
also in the name of the Central.
When the fertilizers arrived in the Philippines, the Central Bank imposed on, and demanded with the provisions of
Republic Act No. 601, as amended, and the Central paid in that connection the total sum of P20,872.09 (Annexes
B and C attached to the Petition for Review).
On November 18, 1955 the Central filed, through the Hongkong & Shanghai Banking Corporation, a petition for
the refund of the P20,872.09 paid as above stated, claiming that it had imported the fertilizers mentioned
heretofore upon request and for the exclusive use of five haciendas known as "Esperanza", "Nahalin", "Valencia"
owned by Elizalde "Consuelo" and "Maayon", these last two managed by the same company, and therefore
the importation was exempt from the 17% exchange tax in accordance with Sec. 2, Rep. Act 601, as amended by
Act 1375. The Auditor of the Central Bank, however, denied the petition on July 2, 1956. The Central requested
the Auditor to reconsider his ruling, but after a reexamination of all pertinent papers the reconsideration was
denied. The Central then appealed to the Auditor General of the Philippines, who on January 18, 1957, affirmed
the ruling of the Auditor of the Central Bank upon the ground that "the importation of the fertilizers here in
question does not fall within the scope of the exempting provisions of Section 2 of Republic Act No. 601, as
amended by Republic Act No. 1357. Accordingly, the decision of the Auditor, Central Bank of the Philippines,
denying the aforementioned request for refund of 17% exchange tax, is hereby affirmed." In view of this result,
the Central and Elizalde filed the present petition for review.
The only question to be resolved is whether upon the undisputed facts of the case the importation of the
fertilizers mentioned heretofore is covered by the exemption provided by Sections 1 and 2 of Republic Act No.
601, as amended by Republic Acts Nos. 1175, 1197 and 1375, which read as follows:
SECTION 1. Except as herein otherwise provided, there shall be assessed, collected and paid a special
excise tax of seventeen per centum on the value in Philippine peso of foreign exchange sold by the
Central Bank of the Philippines, or any of its agents until June thirtieth, nineteen hundred and fifty-six.
SEC. 2. The tax provided for in section one of this Act shall not be collected on foreign exchange used
for the payment of the cost, transportation and/or other charges of canned milk, canned beef, cattle,
canned fish, cocoa beans, malt, stabilizer and flavors, vitamin concentrate; supplies and equipment
purchased directly by the Government or any of its instrumentalities for its own exclusive use;
machinery, equipment, accessories, and spare parts, for the use of industries, miners, mining
enterprises, planters and farmers; and fertilizers when imported by planters or farmers directly or
through their cooperatives; . . . .
The law is, therefore, clear that imported fertilizers are exempt from the payment of the 17% tax only if the same
were imported by planters or farmers directly or through their cooperatives. In the present case, as appellants
admit that the Central "is not the planter ultimately benefited by the fertilizers, much less a cooperative within
the purview of Rep. Act No. 601, as amended", the only possible conclusion is that the imported fertilizers in
question are not entitled to the exemption provided by law.
It is, however, argued that the Central imported the fertilizers for the exclusive purpose of accommodating the
haciendas mentioned heretofore, who were to use the fertilizers; that the Central acted merely as an agent of the
aforesaid haciendas; that considering the relationship and corporate tie-up between the Central, on the one
hand, and Elizalde, on the other, the act of the Central in importing the fertilizers should be considered as an act
of Elizalde and, therefore, the act of the haciendas themselves, three of which were owned and two managed by
Elizalde. We find these contentions to be without merit.
As already stated, the exemption covers exclusively fertilizers imported by planters or farmers directly or through
their cooperatives. The word "directly" has been interpreted to mean "without anything intervening" (Words and
Phrases, Vol. 12A, p. 140 citing Gulf Atlantic Warehouse, etc. vs. Bennet, 51 So 2nd 544, 546, 36 Ala. App. 33);
"proximately or without intervening agency or person" (Idem, p. 142 citing Employers' Casualty Co. v.
Underwood, 286 P. 7, 10; 142 Okl. 208). Consequently, an importation of fertilizers made by a farmer or planter
through an agent, other than his cooperative, is not imported directly as required by the exemption. This
conclusion acquires added force upon consideration of the fact that the legal provision in question has already
established an exception from the meaning or scope of the term "directly" by providing coverage for fertilizers
imported by planters or farmers through their cooperatives. The latter, therefore, is the only agent of planters or
farmers recognized by the exception, and we can not recognize any other.
On the other hand, that the agent acted simply to accommodate the planter or farmer and without any idea of
making any profit from the transaction would seem to be immaterial considering the language employed in the
statute under consideration.
In connection with what has been stated heretofore, we have to bear in mind likewise that when the issue is
whether or not the exemption from a tax imposed by law is applicable, the rule is that the exempting provision is
to be construed liberally in favor of the taxing authority and strictly against exemption from tax liability, the result
being that statutory provisions for the refund of taxes are strictly construed in favor of the State and against the
taxpayer (82 C.J.S. pp. 957-958; Helvering vs. Northwest Steel Rolling Mills, 311 US 46 85 L. ed. 29 S. Ct., 51 Am.
Jur. p. 526). Indeed, were we to adopt appellants' construction of the law by exempting from the 17% tax all
fertilizers imported by planters or farmers through any agent other than their cooperatives, we would be
rendering useless the only exception expressly established in the case of fertilizers imported by planters or
farmers through their cooperatives.
IN VIEW OF THE FOREGOING, the ruling appealed from is hereby affirmed, with costs.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes J.B.L., Paredes, De Leon and Natividad,
JJ.,concur.
Barrera, J., took no part.
G.R. No. L-52306 October 12, 1981
ABS-CBN BROADCASTING CORPORATION, petitioner,
vs.
COURT OF TAX APPEALS and THE COMMISSIONER OF INTERNAL REVENUE, respondents.
MELENCIO-HERRERA, J.:
This is a Petition for Review on certiorari of the Decision of the Court of Tax Appeals in C.T.A. Case No. 2809, dated
November 29, 1979, which affirmed the assessment by the Commissioner of Internal Revenue, dated April 16,
1971, of a deficiency withholding income tax against petitioner, ABS-CBN Broadcasting Corporation, for the years
1965, 1966, 1967 and 1968 in the respective amounts of P75,895.24, P99,239.18, P128,502.00 and P222, 260.64,
or a total of P525,897.06.
During the period pertinent to this case, petitioner corporation was engaged in the business of telecasting local as
well as foreign films acquired from foreign corporations not engaged in trade or business within the Philippines.
for which petitioner paid rentals after withholding income tax of 30%of one-half of the film rentals.
In so far as the income tax on non-resident corporations is concerned, section 24 (b) of the National Internal
Revenue Code, as amended by Republic Act No. 2343 dated June 20, 1959, used to provide:
(b) Tax on foreign corporations.(1) Non-resident corporations. There shall be levied,
collected, and paid for each taxable year, in lieu of the tax imposed by the preceding
paragraph, upon the amount received by every foreign corporation not engaged in trade or
business within the Philippines, from an sources within the Philippines, as interest,
dividends, rents, salaries, wages, premiums, annuities, compensations, remunerations,
emoluments, or other fixed or determinable annual or periodical gains, profits, and income,
a tax equal to thirty per centum of such amount. (Emphasis supplied)
On April 12, 1961, in implementation of the aforequoted provision, the Commissioner of Internal Revenue issued
General Circular No. V-334 reading thus:
In connection with Section 24 (b) of Tax Code, the amendment introduced by Republic Act
No. 2343, under which an income tax equal to 30% is levied upon the amount received by
every foreign corporation not engaged in trade or business within the Philippines from all
sources within this country as interest, dividends, rents, salaries, wages, premiums,
annuities, compensations, remunerations, emoluments, or other fixed or determinable
annual or periodical gains, profits, and income, it has been determined that the tax is still
imposed on income derived from capital, or labor, or both combined, in accordance with
the basic principle of income taxation (Sec. 39, Income Tax Regulations), and that a mere
return of capital or investment is not income (Par. 5,06, 1 Mertens Law of Federal
'Taxation). Since according to the findings of the Special Team who inquired into business of
the non-resident foreign film distributors, the distribution or exhibition right on a film is
invariably acquired for a consideration, either for a lump sum or a percentage of the film
rentals, whether from a parent company or an independent outside producer, apart of the
receipts of a non-resident foreign film distributor derived from said film represents,
therefore, a return of investment.
xxx xxx xxx
4. The local distributor should withhold 30% of one-half of the film rentals paid to the non-
resident foreign film distributor and pay the same to this office in accordance with law
unless the non- resident foreign film distributor makes a prior settlement of its income tax
liability. (Emphasis ours).
Pursuant to the foregoing, petitioner dutifully withheld and turned over to the Bureau of Internal Revenue the
amount of 30% of one-half of the film rentals paid by it to foreign corporations not engaged in trade or business
within the Philippines. The last year that petitioner withheld taxes pursuant to the foregoing Circular was in 1968.
On June 27, 1968, Republic Act No. 5431 amended Section 24 (b) of the Tax Code increasing the tax rate from 30
% to 35 % and revising the tax basis from "such amount" referring to rents, etc. to "gross income," as follows:
(b) Tax on foreign corporations.(1) Non-resident corporations.A foreign corporation not
engaged in trade or business in the Philippines including a foreign life insurance company
not engaged in the life insurance business in the Philippines shall pay a tax equal to thirty-
five per cent of the gross income received during each taxable year from all sources within
the Philippines, as interests, dividends, rents, royalties, salaries, wages, premiums,
annuities, compensations, remunerations for technical services or otherwise, emoluments
or other fixed or determinable annual, periodical or casual gains, profits, and income, and
capital gains, Provided however, That premiums shah not include reinsurance premiums.
(Emphasis supplied)
On February 8, 1971, the Commissioner of Internal Revenue issued Revenue Memorandum Circular No. 4-71,
revoking General Circular No. V-334, and holding that the latter was "erroneous for lack of legal basis," because
"the tax therein prescribed should be based on gross income without deduction whatever," thus:
After a restudy and analysis of Section 24 (b) of the National Internal Revenue Code, as
amended by Republic Act No. 5431, and guided by the interpretation given by tax
authorities to a similar provision in the Internal Revenue Code of the United States, on
which the aforementioned provision of our Tax Code was patterned, this Office has come to
the conclusion that the tax therein prescribed should be based on gross income without t
deduction whatever. Consequently, the ruling in General Circular No. V-334, dated April 12,
1961, allowing the deduction of the proportionate cost of production or exhibition of
motion picture films from the rental income of non- resident foreign corporations, is
erroneous for lack of legal basis.
In view thereof, General Circular No. V-334, dated April 12, 1961, is hereby revoked and
henceforth, local films distributors and exhibitors shall deduct and withhold 35% of the
entire amount payable by them to non-resident foreign corporations, as film rental or
royalty, or whatever such payment may be denominated, without any deduction whatever,
pursuant to Section 24 (b), and pay the withheld taxes in accordance with Section 54 of the
Tax Code, as amended.
All rulings inconsistent with this Circular is likewise revoked. (Emphasis ours)
On the basis of this new Circular, respondent Commissioner of Internal Revenue issued against petitioner a letter
of assessment and demand dated April 15, 1971, but allegedly released by it and received by petitioner on April
12, 1971, requiring them to pay deficiency withholding income tax on the remitted film rentals for the years 1965
through 1968 and film royalty as of the end of 1968 in the total amount of P525,897.06 computed as follows:
On May 5, 1971, petitioner requested for a reconsideration and withdrawal of the assessment. However, without
acting thereon, respondent, on April 6, 1976, issued a warrant of distraint and levy over petitioner's personal as
well as real properties. The petitioner then filed its Petition for Review with the Court of Tax Appeals whose
Decision, dated November 29, 1979, is, in turn, the subject of this review. The Tax Court held:
For the reasons given, the Court finds the assessment issued by respondent on April 16,
1971 against petitioner in the amounts of P75,895.24, P 99,239.18, P128,502.00 and
P222,260.64 or a total of P525,897.06 as deficiency withholding income tax for the years
1965, 1966, 1967 and 1968, respectively, in accordance with law. As prayed for, the
petition for review filed in this case is dismissed, and petitioner ABS-CBN Broadcasting
Corporation is hereby ordered to pay the sum of P525,897.06 to respondent Commissioner
of Internal Revenue as deficiency withholding income tax for the taxable years 1965 thru
1968, plus the surcharge and interest which have accrued thereon incident to delinquency
pursuant to Section 51 (e) of the National Internal Revenue Code, as amended.
WHEREFORE, the decision appealed from is hereby affirmed at petitioner's cost.
SO ORDERED. 2
The issues raised are two-fold:
I. Whether or not respondent can apply General Circular No. 4-71 retroactively and issue a
deficiency assessment against petitioner in the amount of P 525,897.06 as deficiency
withholding income tax for the years 1965, 1966, 1967 and 1968.
II. Whether or not the right of the Commissioner of Internal Revenue to assess the
deficiency withholding income tax for the year 196,5 has prescribed. 3
Upon the facts and circumstances of the case, review is warranted.
In point is Sec. 338-A (now Sec. 327) of the Tax Code. As inserted by Republic Act No. 6110 on August 9, 1969, it
provides:
Sec. 338-A. Non-retroactivity of rulings. Any revocation, modification, or reversal of and
of the rules and regulations promulgated in accordance with the preceding section or any
of the rulings or circulars promulgated by the Commissioner of Internal Revenue shall not
be given retroactive application if the relocation, modification, or reversal will be prejudicial
to the taxpayers, except in the following cases: (a) where the taxpayer deliberately mis-
states or omits material facts from his return or any document required of him by the
Bureau of Internal Revenue: (b) where the facts subsequently gathered by the Bureau of
Internal Revenue are materially different from the facts on which the ruling is based; or (c)
where the taxpayer acted in bad faith. (italics for emphasis)
It is clear from the foregoing that rulings or circulars promulgated by the Commissioner of Internal Revenue have
no retroactive application where to so apply them would be prejudicial to taxpayers. The prejudice to petitioner
of the retroactive application of Memorandum Circular No. 4-71 is beyond question. It was issued only in 1971, or
three years after 1968, the last year that petitioner had withheld taxes under General Circular No. V-334. The
assessment and demand on petitioner to pay deficiency withholding income tax was also made three years after
1968 for a period of time commencing in 1965. Petitioner was no longer in a position to withhold taxes due from
foreign corporations because it had already remitted all film rentals and no longer had any control over them
when the new Circular was issued. And in so far as the enumerated exceptions are concerned, admittedly,
petitioner does not fall under any of them.
Respondent claims, however, that the provision on non-retroactivity is inapplicable in the present case in that
General Circular No. V-334 is a nullity because in effect, it changed the law on the matter. The Court of Tax
Appeals sustained this position holding that: "Deductions are wholly and exclusively within the power of Congress
or the law-making body to grant, condition or deny; and where the statute imposes a tax equal to a specified rate
or percentage of the gross or entire amount received by the taxpayer, the authority of some administrative
officials to modify or change, much less reduce, the basis or measure of the tax should not be read into
law." 4 Therefore, the Tax Court concluded, petitioner did not acquire any vested right thereunder as the same
was a nullity.
The rationale behind General Circular No. V-334 was clearly stated therein, however: "It ha(d) been determined
that the tax is still imposed on income derived from capital, or labor, or both combined, in accordance with the
basic principle of income taxation ...and that a mere return of capital or investment is not income ... ." "A part of
the receipts of a non-resident foreign film distributor derived from said film represents, therefore, a return of
investment." The Circular thus fixed the return of capital at 50% to simplify the administrative chore of
determining the portion of the rentals covering the return of capital." 5
Were the "gross income" base clear from Sec. 24 (b), perhaps, the ratiocination of the Tax Court could be upheld.
It should be noted, however, that said Section was not too plain and simple to understand. The fact that the
issuance of the General Circular in question was rendered necessary leads to no other conclusion than that it was
not easy of comprehension and could be subjected to different interpretations.
In fact, Republic Act No. 2343, dated June 20, 1959, supra, which was the basis of General Circular No. V-334, was
just one in a series of enactments regarding Sec. 24 (b) of the Tax Code. Republic Act No. 3825 came next on June
22, 1963 without changing the basis but merely adding a proviso (in bold letters).
(b) Tax on foreign corporation.(1) Non-resident corporations. There shall be levied,
collected and paid for each taxable year, in lieu of the tax imposed by the preceding
paragraph, upon the amount received by every foreign corporation not engaged in trade or
business within the Philippines, from all sources within the Philippines, as interest,
dividends, rents, salaries, wages, premiums annuities, compensations, remunerations,
emoluments, or other fixed or determinable annual or periodical gains, profits, and income,
a tax equal to thirty per centum of such amount: PROVIDED, HOWEVER, THAT PREMIUMS
SHALL NOT INCLUDE REINSURANCE PREMIUMS. (double emphasis ours).
Republic Act No. 3841, dated likewise on June 22, 1963, followed after, omitting the proviso and inserting some
words (also in bold letters).
(b) Tax on foreign corporations.(1) Non-resident corporations.There shall be levied,
collected and paid for each taxable year, in lieu of the tax imposed by the preceding
paragraph, upon the amount received by every foreign corporation not engaged in trade or
business within the Philippines, from all sources within the Philippines, as interest,
dividends, rents, salaries, wages, premiums, annuities, compensations, remunerations,
emoluments, or other fixed or determinable annual or periodical OR CASUAL gains, profits
and income, AND CAPITAL GAINS, a tax equal to thirty per centum of such
amount. 6 (double emphasis supplied)
The principle of legislative approval of administrative interpretation by re-enactment clearly obtains in this case. It
provides that "the re-enactment of a statute substantially unchanged is persuasive indication of the adoption by
Congress of a prior executive construction. 7 Note should be taken of the fact that this case involves not a mere
opinion of the Commissioner or ruling rendered on a mere query, but a Circular formally issued to "all internal
revenue officials" by the then Commissioner of Internal Revenue.

It was only on June 27, 1968 under Republic Act No. 5431, supra, which became the basis of Revenue
Memorandum Circular No. 4-71, that Sec. 24 (b) was amended to refer specifically to 35% of the "gross income."

This Court is not unaware of the well-entrenched principle that the Government is never estopped from collecting
taxes because of mistakes or errors on the part of its
agents. 8 In fact, utmost caution should be taken in this regard. 9 But, like other principles of law, this also admits
of exceptions in the interest of justice and fairplay. The insertion of Sec. 338-A into the National Internal Revenue
Code, as held in the case of Tuason, Jr. vs. Lingad, 10 is indicative of legislative intention to support the principle of
good faith. In fact, in the United States, from where Sec. 24 (b) was patterned, it has been held that the
Commissioner of Collector is precluded from adopting a position inconsistent with one previously taken where
injustice would result therefrom, 11 or where there has been a misrepresentation to the taxpayer. 12

We have also noted that in its Decision, the Court of Tax Appeals further required the petitioner to pay interest
and surcharge as provided for in Sec. 51 (e) of the Tax Code in addition to the deficiency withholding tax of P
525,897.06. This additional requirement is much less called for because the petitioner relied in good faith and
religiously complied with no less than a Circular issued "to all internal revenue officials" by the highest official of
the Bureau of Internal Revenue and approved by the then Secretary of Finance. 13

With the foregoing conclusions arrived at, resolution of the issue of prescription becomes unnecessary.

WHEREFORE, the judgment of the Court of Tax Appeals is hereby reversed, and the questioned assessment set
aside. No costs.

SO ORDERED.

Makasiar (Acting Chairman), Fernandez, Guerrero and De Castro, * JJ., concur.

G.R. No. 115349 April 18, 1997 WHEREFORE, in view of the foregoing, respondent's decision is SET
ASIDE. The deficiency contractor's tax assessment in the amount of
P46,516.41 exclusive of surcharge and interest for the fiscal year
COMMISSIONER OF INTERNAL REVENUE, petitioner,
ended March 31, 1978 is hereby CANCELED. No pronouncement as
vs.
to cost.
THE COURT OF APPEALS, THE COURT OF TAX APPEALS and ATENEO DE MANILA UNIVERSITY, respondents.

SO ORDERED.

Not in accord with said decision, petitioner has come to this Court via the present petition for review
PANGANIBAN, J.:
raising the following issues:

In conducting researches and studies of social organizations and cultural values thru its Institute of Philippine
1) WHETHER OR NOT PRIVATE RESPONDENT FALLS UNDER THE
Culture, is the Ateneo de Manila University performing the work of an independent contractor and thus taxable
PURVIEW OF INDEPENDENT CONTRACTOR PURSUANT TO SECTION
within the purview of then Section 205 of the National Internal Revenue Code levying a three percent contractor's
205 OF THE TAX CODE; and
tax? This question is answer by the Court in the negative as it resolves this petition assailing the Decision 1 of the
Respondent Court of Appeals 2 in CA-G.R. SP No. 31790 promulgated on April 27, 1994 affirming that of the Court
of Tax Appeals. 3 2) WHETHER OR NOT PRIVATE RESPONDENT IS SUBJECT TO 3%
CONTRACTOR'S TAX UNDER SECTION 205 OF THE TAX CODE.
The Antecedent Facts
The pertinent portions of Section 205 of the National Internal Revenue Code, as amended, provide:
The antecedents as found by the Court of Appeals are reproduced hereinbelow, the same being largely
undisputed by the parties. Sec. 205. Contractor, proprietors or operators of dockyards, and others. A contractor's
tax of threeper centum of the gross receipts is hereby imposed on the following:
Private respondent is a non-stock, non-profit educational institution with auxiliary units and
branches all over the Philippines. One such auxiliary unit is the Institute of Philippine xxx xxx xxx
Culture (IPC), which has no legal personality separate and distinct from that of private
respondent. The IPC is a Philippine unit engaged in social science studies of Philippine
(16) Business agents and other independent contractors except
society and culture. Occasionally, it accepts sponsorships for its research activities from
persons, associations and corporations under contract for
international organizations, private foundations and government agencies.
embroidery and apparel for export, as well as their agents and
contractors and except gross receipts of or from a pioneer industry
On July 8, 1983, private respondent received from petitioner Commissioner of Internal registered with the Board of Investments under Republic Act No.
Revenue a demand letter dated June 3, 1983, assessing private respondent the sum of 5186:
P174,043.97 for alleged deficiency contractor's tax, and an assessment dated June 27, 1983
in the sum of P1,141,837 for alleged deficiency income tax, both for the fiscal year ended
xxx xxx xxx
March 31, 1978. Denying said tax liabilities, private respondent sent petitioner a letter-
protest and subsequently filed with the latter a memorandum contesting the validity of the
assessments. The term "independent contractors" include persons (juridical or
natural) not enumerated above (but not including individuals subject
to the occupation tax under Section 12 of the Local Tax Code) whose
On March 17, 1988, petitioner rendered a letter-decision canceling the assessment for
activity consists essentially of the sale of all kinds of services for a fee
deficiency income tax but modifying the assessment for deficiency contractor's tax by
regardless of whether or not the performance of the service calls for
increasing the amount due to P193,475.55. Unsatisfied, private respondent requested for a
the exercise or use of the physical or mental faculties of such
reconsideration or reinvestigation of the modified assessment. At the same time, it filed in
contractors or their employees.
the respondent court a petition for review of the said letter-decision of the petitioner.
While the petition was pending before the respondent court, petitioner issued a final
decision dated August 3, 1988 reducing the assessment for deficiency contractor's tax from xxx xxx xxx
P193,475.55 to P46,516.41, exclusive of surcharge and interest.
Petitioner contends that the respondent court erred in holding that private respondent is
On July 12, 1993, the respondent court rendered the questioned decision which not an "independent contractor" within the purview of Section 205 of the Tax Code. To
dispositively reads: petitioner, the term "independent contractor", as defined by the Code, encompasses all
kinds of services rendered for a fee and that the only exceptions are the following:
 a. Persons, association and corporations under contract for embroidery and apparel for
export and gross receipts of or from pioneer industry registered with the Board of
Investment under R.A. No. 5186;
b. Individuals occupation tax under Section 12 of the Local Tax Code (under the old Section
182 [b] of the Tax Code); and
c. Regional or area headquarters established in the Philippines by multinational
corporations, including their alien executives, and which headquarters do not earn or
derive income from the Philippines and which act as supervisory, communication and
coordinating centers for their affiliates, subsidiaries or branches in the Asia Pacific Region
(Section 205 of the Tax Code).
Petitioner thus submits that since private respondent falls under the definition of an
"independent contractor" and is not among the aforementioned exceptions, private
respondent is therefore subject to the 3% contractor's tax imposed under the same Code. 4
The Court of Appeals disagreed with the Petitioner Commissioner of Internal Revenue and affirmed the assailed
decision of the Court of Tax Appeals. Unfazed, petitioner now asks us to reverse the CA through this petition for
review.
The Issues
Petitioner submits before us the following issues:
1) Whether or not private respondent falls under the purview of independent contractor
pursuant to Section 205 of the Tax Code.
2) Whether or not private respondent is subject to 3% contractor's tax under Section 205 of
the Tax Code. 5
In fine, these may be reduced to a single issue: Is Ateneo de Manila University, through its auxiliary unit or branch
the Institute of Philippine Culture performing the work of an independent contractor and, thus, subject to
the three percent contractor's tax levied by then Section 205 of the National Internal Revenue Code?
The Court's Ruling
The petition is unmeritorious.
Interpretation of Tax Laws
The parts of then Section 205 of the National Internal Revenue Code germane to the case before us read:
Sec. 205. Contractors, proprietors or operators of dockyards, and others. A contractor's
tax of threeper centum of the gross receipts is hereby imposed on the following:
xxx xxx xxx
(16) Business agents and other independent contractors, except persons, associations and
corporations under contract for embroidery and apparel for export, as well as their agents
and contractors, and except gross receipts of or from a pioneer industry registered with the
Board of Investments under the provisions of Republic Act No. 5186;
xxx xxx xxx
The term "independent contractors" include persons (juridical or natural) not enumerated
above (but not including individuals subject to the occupation tax under Section 12 of the
Local Tax Code) whose activity consists essentially of the sale of all kinds of services for a
fee regardless of whether or not the performance of the service calls for the exercise or use
of the physical or mental faculties of such contractors or their employees.
The term "independent contractor" shall not include regional or area headquarters
established in the Philippines by multinational corporations, including their alien executives,
and which headquarters do not earn or derive income from the Philippines and which act
as supervisory, communications and coordinating centers for their affiliates, subsidiaries or
branches in the Asia-Pacific Region.
The term "gross receipts" means all amounts received by the prime or principal contractor
as the total contract price, undiminished by amount paid to the subcontractor, shall be
excluded from the taxable gross receipts of the subcontractor.
Petitioner Commissioner of Internal Revenue contends that Private Respondent Ateneo de Manila University "falls
within the definition" of an independent contractor and "is not one of those mentioned as excepted"; hence, it is
properly a subject of the three percent contractor's tax levied by the foregoing provision of law. 6 Petitioner states
that the "term 'independent contractor' is not specifically defined so as to delimit the scope thereof, so much so
that any person who . . . renders physical and mental service for a fee, is now indubitably considered an
independent contractor liable to 3% contractor's tax." 7 According to petitioner, Ateneo has the burden of proof to
show its exemption from the coverage of the law.
We disagree. Petitioner Commissioner of Internal Revenue erred in applying the principles of tax exemption
without first applying the well-settled doctrine of strict interpretation in the imposition of taxes. It is obviously
both illogical and impractical to determine who are exempted without first determining who are covered by the
aforesaid provision. The Commissioner should have determined first if private respondent was covered by Section
205, applying the rule of strict interpretation of laws imposing taxes and other burdens on the populace, before
asking Ateneo to prove its exemption therefrom. The Court takes this occasion to reiterate the hornbook doctrine
in the interpretation of tax laws that "(a) statute will not be construed as imposing a tax unless it does so clearly,
expressly, and unambiguously . . . (A) tax cannot be imposed without clear and express words for that purpose.
Accordingly, the general rule of requiring adherence to the letter in construing statutes applies with peculiar
strictness to tax lawsand the provisions of a taxing act are not to be extended by implication." 8 Parenthetically, in
answering the question of who is subject to tax statutes, it is basic that "in case of doubt, such statutes are to be
construed most strongly against the government and in favor of the subjects or citizens because burdens are not
to be imposed nor presumed to be imposed beyond what statutes expressly and clearly import." 9
To fall under its coverage, Section 205 of the National Internal Revenue Code requires that the independent
contractor be engaged in the business of selling its services. Hence, to impose the three percent contractor's tax
on Ateneo's Institute of Philippine Culture, it should be sufficiently proven that the private respondent is indeed
selling its services for a fee in pursuit of an independent business. And it is only after private respondent has been
found clearly to be subject to the provisions of Sec. 205 that the question of exemption therefrom would arise.
Only after such coverage is shown does the rule of construction that tax exemptions are to be strictly
construed against the taxpayer come into play, contrary to petitioner's position. This is the main line of
reasoning of the Court of Tax Appeals in its decision, 10 which was affirmed by the CA.
The Ateneo de Manila University Did Not Contract
for the Sale of the Service of its Institute of Philippine Culture
After reviewing the records of this case, we find no evidence that Ateneo's Institute of Philippine Culture ever sold
its services for a fee to anyone or was ever engaged in a business apart from and independently of the academic
purposes of the university.
Stressing that "it is not the Ateneo de Manila University per se which is being taxed," Petitioner Commissioner of
Internal Revenue contends that "the tax is due on its activity of conducting researches for a fee. The tax is due on
the gross receipts made in favor of IPC pursuant to the contracts the latter entered to conduct researches for the
benefit primarily of its clients. The tax is imposed on the exercise of a taxable activity. . . . [T]he sale of services of
private respondent is made under a contract and the various contracts entered into between private respondent
and its clients are almost of the same terms, showing, among others, the compensation and terms of
payment." 11(Emphasis supplied.)
In theory, the Commissioner of Internal Revenue may be correct. However, the records do not show that Ateneo's
IPC in fact contracted to sell its research services for a fee. Clearly then, as found by the Court of Appeals and the
Court of Tax Appeals, petitioner's theory is inapplicable to the established factual milieu obtaining in the instant
case.
In the first place, the petitioner has presented no evidence to prove its bare contention that, indeed, contracts for
sale of services were ever entered into by the private respondent. As appropriately pointed out by the latter:
An examination of the Commissioner's Written Formal Offer of Evidence in the Court of Tax
Appeals shows that only the following documentary evidence was presented:
Exhibit 1 BIR letter of authority no. 331844
2 Examiner's Field Audit Report
3 Adjustments to Sales/Receipts
4 Letter-decision of BIR Commissioner
Bienvenido A. Tan Jr.
None of the foregoing evidence even comes close to purport to be contracts between
private respondent and third parties. 12
Moreover, the Court of Tax Appeals accurately and correctly declared that the " funds received by the Ateneo de
Manila University are technically not a fee. They may however fall as gifts or donations which are tax-exempt" as
shown by private respondent's compliance with the requirement of Section 123 of the National Internal Revenue
Code providing for the exemption of such gifts to an educational institution. 13
Respondent Court of Appeals elucidated on the ruling of the Court of Tax Appeals:
To our mind, private respondent hardly fits into the definition of an "independent
contractor".
For one, the established facts show that IPC, as a unit of the private respondent, is not
engaged in business. Undisputedly, private respondent is mandated by law to undertake
research activities to maintain its university status. In fact, the research activities being
carried out by the IPC is focused not on business or profit but on social sciences studies of
Philippine society and culture. Since it can only finance a limited number of IPC's research
projects, private respondent occasionally accepts sponsorship for unfunded IPC research
projects from international organizations, private foundations and governmental
agencies. However, such sponsorships are subject to private respondent's terms and
conditions, among which are, that the research is confined to topics consistent with the
private respondent's academic agenda; that no proprietary or commercial purpose research
is done; and that private respondent retains not only the absolute right to publish but also
the ownership of the results of the research conducted by the IPC. Quite clearly, the
aforementioned terms and conditions belie the allegation that private respondent is a
contractor or is engaged in business.
For another, it bears stressing that private respondent is a non-stock, non-profit
educational corporation. The fact that it accepted sponsorship for IPC's unfunded projects
is merely incidental. For, the main function of the IPC is to undertake research projects
under the academic agenda of the private respondent. Moreover the records do not show
that in accepting sponsorship of research work, IPC realized profits from such work. On the
contrary, the evidence shows that for about 30 years, IPC had continuously operated at a
loss, which means that sponsored funds are less than actual expenses for its research
projects. That IPC has been operating at a loss loudly bespeaks of the fact that education
and not profit is the motive for undertaking the research projects.
Then, too, granting arguendo that IPC made profits from the sponsored research projects,
the fact still remains that there is no proof that part of such earnings or profits was ever
distributed as dividends to any stockholder, as in fact none was so distributed because they
accrued to the benefit of the private respondent which is a non-profit educational
institution. 14
Therefore, it is clear that the funds received by Ateneo's Institute of Philippine Culture are not given in the
concept of a fee or price in exchange for the performance of a service or delivery of an object. Rather, the
amounts are in the nature of an endowment or donation given by IPC's benefactors solely for the purpose of
sponsoring or funding the research with no strings attached. As found by the two courts below, such sponsorships
are subject to IPC's terms and conditions. No proprietary or commercial research is done, and IPC retains the
ownership of the results of the research, including the absolute right to publish the same. The copyrights over the
results of the research are owned by
Ateneo and, consequently, no portion thereof may be reproduced without its permission. 15 The amounts given to
IPC, therefore, may not be deemed, it bears stressing as fees or gross receipts that can be subjected to the three
percent contractor's tax.
It is also well to stress that the questioned transactions of Ateneo's Institute of Philippine Culture cannot be
deemed either as a contract of sale or a contract of a piece of work. "By the contract of sale, one of the
contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the
other to pay therefor a price certain in money or its equivalent." 16 By its very nature, a contract of sale requires a
transfer of ownership. Thus, Article 1458 of the Civil Code "expressly makes the obligation to transfer ownership
as an essential element of the contract of sale, following modern codes, such as the German and the Swiss. Even
in the absence of this express requirement, however, most writers, including Sanchez Roman, Gayoso, Valverde,
Ruggiero, Colin and Capitant, have considered such transfer of ownership as the primary purpose of sale. Perez
and Alguer follow the same view, stating that the delivery of the thing does not mean a mere physical transfer,
but is a means of transmitting ownership. Transfer of title or an agreement to transfer it for a price paid or
promised to be paid is the essence of sale." 17 In the case of a contract for a piece of work, "the contractor binds
himself to execute a piece of work for the employer, in consideration of a certain price or compensation. . . . If the
contractor agrees to produce the work from materials furnished by him, he shall deliver the thing produced to the
employer and transfer dominion over the thing, . . ." 18 Ineludably, whether the contract be one of sale or one for
a piece of work, a transfer of ownership is involved and a party necessarily walks away with an object. 19 In the
case at bench, it is clear from the evidence on record that there was no sale either of objects or services because,
as adverted to earlier, there was no transfer of ownership over the research data obtained or the results of
research projects undertaken by the Institute of Philippine Culture.
Furthermore, it is clear that the research activity of the Institute of Philippine Culture is done in pursuance of
maintaining Ateneo's university status and not in the course of an independent business of selling such research
with profit in mind. This is clear from a reading of the regulations governing universities:
31. In addition to the legal requisites an institution must meet, among others, the following
requirements before an application for university status shall be considered:
xxx xxx xxx
(e) The institution must undertake research and operate with a competent qualified staff at
least three graduate departments in accordance with the rules and standards for graduate
education. One of the departments shall be science and technology. The competence of the
staff shall be judged by their effective teaching, scholarly publications and research activities
published in its school journal as well as their leadership activities in the profession.
(f) The institution must show evidence of adequate and stable financial resources and
support, a reasonable portion of which should be devoted to institutional development and
research. (emphasis supplied)
xxx xxx xxx
32. University status may be withdrawn, after due notice and hearing, for failure to
maintain satisfactorily the standards and requirements therefor. 20
Petitioner's contention that it is the Institute of Philippine Culture that is being taxed and not the Ateneo is
patently erroneous because the former is not an independent juridical entity that is separate and distinct form the
latter.
Factual Findings and Conclusions of the Court of Tax Appeals Affirmed by the Court of Appeals
Generally Conclusive
In addition, we reiterate that the "Court of Tax Appeals is a highly specialized body specifically created for the
purpose of reviewing tax cases. Through its expertise, it is undeniably competent to determine the issue of
whether" 21 Ateneo de Manila University may be deemed a subject of the three percent contractor's tax "through
the evidence presented before it." Consequently, "as a matter of principle, this Court will not set aside the
conclusion reached by . . . the Court of Tax Appeals which is, by the very nature of its function, dedicated
exclusively to the study and consideration of tax problems and has necessarily developed an expertise on the
subject unless there has been an abuse or improvident exercise of authority . . ." 22 This point becomes more
evident in the case before us where the findings and conclusions of both the Court of Tax Appeals and the Court
of Appeals appear untainted by any abuse of authority, much less grave abuse of discretion. Thus, we find the
decision of the latter affirming that of the former free from any palpable error.
Public Service, Not Profit, is the Motive
The records show that the Institute of Philippine Culture conducted its research activities at a huge deficit of
P1,624,014.00 as shown in its statements of fund and disbursements for the period 1972 to 1985. 23 In fact, it was
Ateneo de Manila University itself that had funded the research projects of the institute, and it was only when
Ateneo could no longer produce the needed funds that the institute sought funding from outside. The testimony
of Ateneo's Director for Accounting Services, Ms. Leonor Wijangco, provides significant insight on the academic
and nonprofit nature of the institute's research activities done in furtherance of the university's purposes, as
follows:
Q Now it was testified to earlier by Miss Thelma Padero (Office Manager of the Institute of
Philippine Culture) that as far as grants from sponsored research it is possible that the grant
sometimes is less than the actual cost. Will you please tell us in this case when the actual
cost is a lot less than the grant who shoulders the additional cost?
A The University.
Q Now, why is this done by the University?
A Because of our faculty development program as a university, because a university has to
have its own research institute. 24
So, why is it that Ateneo continues to operate and conduct researches through its Institute of Philippine Culture
when it undisputedly loses not an insignificant amount in the process? The plain and simple answer is that private
respondent is not a contractor selling its services for a fee but an academic institution conducting these
researches pursuant to its commitments to education and, ultimately, to public service. For the institute to have
tenaciously continued operating for so long despite its accumulation of significant losses, we can only agree with
both the Court of Tax Appeals and the Court of Appeals that "education and not profit is [IPC's] motive for
undertaking the research
projects." 25
WHEREFORE, premises considered, the petition is DENIED and the assailed Decision of the Court of Appeals is
hereby AFFIRMED in full.
SO ORDERED.
Narvasa, C.J., Davide, Jr., Melo and Francisco JJ., concur.
G.R. No. 120082 September 11, 1996 On October 11, 1994, however, Mr. Eustaquio B. Cesa, Officer-in-Charge, Office of the
Treasurer of the City of Cebu, demanded payment for realty taxes on several parcels of land
belonging to the petitioner (Lot Nos. 913-G, 743, 88 SWO, 948-A, 989-A, 474, 109(931), I-
MACTAN CEBU INTERNATIONAL AIRPORT AUTHORITY, petitioner,
M, 918, 919, 913-F, 941, 942, 947, 77 Psd., 746 and 991-A), located at Barrio Apas and
vs.
Barrio Kasambagan, Lahug, Cebu City, in the total amount of P2,229,078.79.
HON. FERDINAND J. MARCOS, in his capacity as the Presiding Judge of the Regional Trial Court, Branch 20, Cebu City,
THE CITY OF CEBU, represented by its Mayor HON. TOMAS R. OSMEA, and EUSTAQUIO B. CESA, respondents.
Petitioner objected to such demand for payment as baseless and unjustified, claiming in its
favor the aforecited Section 14 of RA 6958 which exempt it from payment of realty taxes. It
was also asserted that it is an instrumentality of the government performing governmental
functions, citing section 133 of the Local Government Code of 1991 which puts limitations
DAVIDE, JR., J.: on the taxing powers of local government units:

For review under Rule 45 of the Rules of Court on a pure question of law are the decision of 22 March Sec. 133. Common Limitations on the Taxing Powers of Local
19951of the Regional Trial Court (RTC) of Cebu City, Branch 20, dismissing the petition for declaratory Government Units. Unless otherwise provided herein, the exercise
relief in Civil Case No. CEB-16900 entitled "Mactan Cebu International Airport Authority vs. City of of the taxing powers of provinces, cities, municipalities, and barangay
Cebu", and its order of 4, May 19952 denying the motion to reconsider the decision. shall not extend to the levy of the following:

We resolved to give due course to this petition for its raises issues dwelling on the scope of the taxing a) . . .
power of local government-owned and controlled corporations.
xxx xxx xxx
The uncontradicted factual antecedents are summarized in the instant petition as follows:
o) Taxes, fees or charges of any kind on the
Petitioner Mactan Cebu International Airport Authority (MCIAA) was created by virtue of National Government, its agencies and
Republic Act No. 6958, mandated to "principally undertake the economical, efficient and instrumentalities, and local government units.
effective control, management and supervision of the Mactan International Airport in the (Emphasis supplied)
Province of Cebu and the Lahug Airport in Cebu City, . . . and such other Airports as may be
established in the Province of Cebu . . . (Sec. 3, RA 6958). It is also mandated to:
Respondent City refused to cancel and set aside petitioner's realty tax account, insisting
that the MCIAA is a government-controlled corporation whose tax exemption privilege has
a) encourage, promote and develop been withdrawn by virtue of Sections 193 and 234 of the Local Governmental Code that
international and domestic air traffic in the took effect on January 1, 1992:
Central Visayas and Mindanao regions as a
means of making the regions centers of
Sec. 193. Withdrawal of Tax Exemption Privilege. Unless otherwise provided in this Code,
international trade and tourism, and
tax exemptions or incentives granted to, or presently enjoyed by all persons whether
accelerating the development of the means of
natural or juridical, including government-owned or controlled corporations, except local
transportation and communication in the
water districts, cooperatives duly registered under RA No. 6938, non-stock, and non-profit
country; and
hospitals and educational institutions, are hereby withdrawn upon the effectivity of this
Code. (Emphasis supplied)
b) upgrade the services and facilities of the
airports and to formulate internationally
xxx xxx xxx
acceptable standards of airport
accommodation and service.
Sec. 234. Exemptions from Real Property taxes. . . .
Since the time of its creation, petitioner MCIAA enjoyed the privilege of exemption from
payment of realty taxes in accordance with Section 14 of its Charter. (a) . . .

Sec. 14. Tax Exemptions. The authority shall be exempt from realty xxx xxx xxx
taxes imposed by the National Government or any of its political
subdivisions, agencies and instrumentalities . . .
(c) . . .
 Except as provided herein, any exemption from payment of real
property tax previously granted to, or presently enjoyed by all
persons, whether natural or juridical, including government-owned
or controlled corporations are hereby withdrawn upon the effectivity
of this Code.
As the City of Cebu was about to issue a warrant of levy against the properties of petitioner,
the latter was compelled to pay its tax account "under protest" and thereafter filed a
Petition for Declaratory Relief with the Regional Trial Court of Cebu, Branch 20, on
December 29, 1994. MCIAA basically contended that the taxing powers of local government
units do not extend to the levy of taxes or fees of any kind on an instrumentality of the
national government. Petitioner insisted that while it is indeed a government-owned
corporation, it nonetheless stands on the same footing as an agency or instrumentality of
the national government. Petitioner insisted that while it is indeed a government-owned
corporation, it nonetheless stands on the same footing as an agency or instrumentality of
the national government by the very nature of its powers and functions.
Respondent City, however, asserted that MACIAA is not an instrumentality of the
government but merely a government-owned corporation performing proprietary functions
As such, all exemptions previously granted to it were deemed withdrawn by operation of
law, as provided under Sections 193 and 234 of the Local Government Code when it took
effect on January 1, 1992.3
The petition for declaratory relief was docketed as Civil Case No. CEB-16900.
In its decision of 22 March 1995,4 the trial court dismissed the petition in light of its findings, to wit:
A close reading of the New Local Government Code of 1991 or RA 7160 provides the
express cancellation and withdrawal of exemption of taxes by government owned and
controlled corporation per Sections after the effectivity of said Code on January 1, 1992, to
wit: [proceeds to quote Sections 193 and 234]
Petitioners claimed that its real properties assessed by respondent City Government of
Cebu are exempted from paying realty taxes in view of the exemption granted under RA
6958 to pay the same (citing Section 14 of RA 6958).
However, RA 7160 expressly provides that "All general and special laws, acts, city charters,
decress [sic], executive orders, proclamations and administrative regulations, or part or
parts thereof which are inconsistent with any of the provisions of this Code are hereby
repealed or modified accordingly." ([f], Section 534, RA 7160).
With that repealing clause in RA 7160, it is safe to infer and state that the tax exemption
provided for in RA 6958 creating petitioner had been expressly repealed by the provisions
of the New Local Government Code of 1991.
So that petitioner in this case has to pay the assessed realty tax of its properties effective
after January 1, 1992 until the present.
This Court's ruling finds expression to give impetus and meaning to the overall objectives of
the New Local Government Code of 1991, RA 7160. "It is hereby declared the policy of the
State that the territorial and political subdivisions of the State shall enjoy genuine and
meaningful local autonomy to enable them to attain their fullest development as self-
reliant communities and make them more effective partners in the attainment of national
goals. Towards this end, the State shall provide for a more responsive and accountable local
government structure instituted through a system of decentralization whereby local
government units shall be given more powers, authority, responsibilities, and resources.
The process of decentralization shall proceed from the national government to the local
government units. . . .5
Its motion for reconsideration having been denied by the trial court in its 4 May 1995 order, the
petitioner filed the instant petition based on the following assignment of errors:
I RESPONDENT JUDGE ERRED IN FAILING TO RULE THAT THE
PETITIONER IS VESTED WITH GOVERNMENT POWERS AND
FUNCTIONS WHICH PLACE IT IN THE SAME CATEGORY AS AN
INSTRUMENTALITY OR AGENCY OF THE GOVERNMENT.
II RESPONDENT JUDGE ERRED IN RULING THAT PETITIONER IS LIABLE
TO PAY REAL PROPERTY TAXES TO THE CITY OF CEBU.
Anent the first assigned error, the petitioner asserts that although it is a government-owned or
controlled corporation it is mandated to perform functions in the same category as an instrumentality
of Government. An instrumentality of Government is one created to perform governmental functions
primarily to promote certain aspects of the economic life of the people.6 Considering its task "not
merely to efficiently operate and manage the Mactan-Cebu International Airport, but more
importantly, to carry out the Government policies of promoting and developing the Central Visayas
and Mindanao regions as centers of international trade and tourism, and accelerating the
development of the means of transportation and communication in the country,"7and that it is an
attached agency of the Department of Transportation and Communication (DOTC),8 the petitioner
"may stand in [sic] the same footing as an agency or instrumentality of the national government."
Hence, its tax exemption privilege under Section 14 of its Charter "cannot be considered withdrawn
with the passage of the Local Government Code of 1991 (hereinafter LGC) because Section 133
thereof specifically states that the taxing powers of local government units shall not extend to the levy
of taxes of fees or charges of any kind on the national government its agencies and instrumentalities."
As to the second assigned error, the petitioner contends that being an instrumentality of the National
Government, respondent City of Cebu has no power nor authority to impose realty taxes upon it in
accordance with the aforesaid Section 133 of the LGC, as explained in Basco vs. Philippine Amusement
and Gaming Corporation;9
Local governments have no power to tax instrumentalities of the National Government.
PAGCOR is a government owned or controlled corporation with an original character, PD
1869. All its shares of stock are owned by the National Government. . . .
PAGCOR has a dual role, to operate and regulate gambling casinos. The latter joke is
governmental, which places it in the category of an agency or instrumentality of the
Government. Being an instrumentality of the Government, PAGCOR should be and actually
 is exempt from local taxes. Otherwise, its operation might be burdened, impeded or
subjected to control by a mere Local government.
The states have no power by taxation or otherwise, to retard, impede, burden or in any
manner control the operation of constitutional laws enacted by Congress to carry into
execution the powers vested in the federal government. (McCulloch v. Maryland, 4 Wheat
316, 4 L Ed. 579).
This doctrine emanates from the "supremacy" of the National Government over local
government.
Justice Holmes, speaking for the Supreme Court, make references to the entire absence of
power on the part of the States to touch, in that way (taxation) at least, the
instrumentalities of the United States (Johnson v. Maryland, 254 US 51) and it can be
agreed that no state or political subdivision can regulate a federal instrumentality in such a
way as to prevent it from consummating its federal responsibilities, or even to seriously
burden it in the accomplishment of them. (Antieau Modern Constitutional Law, Vol. 2, p.
140)
Otherwise mere creature of the State can defeat National policies thru extermination of
what local authorities may perceive to be undesirable activities or enterprise using the
power to tax as "a toll for regulation" (U.S. v. Sanchez, 340 US 42). The power to tax which
was called by Justice Marshall as the "power to destroy" (McCulloch v. Maryland, supra)
cannot be allowed to defeat an instrumentality or creation of the very entity which has the
inherent power to wield it. (Emphasis supplied)
It then concludes that the respondent Judge "cannot therefore correctly say that the questioned
provisions of the Code do not contain any distinction between a governmental function as against one
performing merely proprietary ones such that the exemption privilege withdrawn under the said Code
would apply to allgovernment corporations." For it is clear from Section 133, in relation to Section 234,
of the LGC that the legislature meant to exclude instrumentalities of the national government from the
taxing power of the local government units.
In its comment respondent City of Cebu alleges that as local a government unit and a political
subdivision, it has the power to impose, levy, assess, and collect taxes within its jurisdiction. Such
power is guaranteed by the Constitution10 and enhanced further by the LGC. While it may be true that
under its Charter the petitioner was exempt from the payment of realty taxes,11 this exemption was
withdrawn by Section 234 of the LGC. In response to the petitioner's claim that such exemption was
not repealed because being an instrumentality of the National Government, Section 133 of the LGC
prohibits local government units from imposing taxes, fees, or charges of any kind on it, respondent
City of Cebu points out that the petitioner is likewise a government-owned corporation, and Section
234 thereof does not distinguish between government-owned corporation, and Section 234 thereof
does not distinguish between government-owned corporation, and Section 234 thereof does not
distinguish between government-owned or controlled corporations performing governmental and
purely proprietary functions. Respondent city of Cebu urges this the Manila International Airport
Authority is a governmental-owned corporation, 12 and to reject the application of Basco because it
was "promulgated . . . before the enactment and the singing into law of R.A. No. 7160," and was not,
therefore, decided "in the light of the spirit and intention of the framers of the said law.
As a general rule, the power to tax is an incident of sovereignty and is unlimited in its range,
acknowledging in its very nature no limits, so that security against its abuse is to be found only in the
responsibility of the legislature which imposes the tax on the constituency who are to pay it.
Nevertheless, effective limitations thereon may be imposed by the people through their
Constitutions.13 Our Constitution, for instance, provides that the rule of taxation shall be uniform and
equitable and Congress shall evolve a progressive system of taxation.14 So potent indeed is the power
that it was once opined that "the power to tax involves the power to destroy."15 Verily, taxation is a
destructive power which interferes with the personal and property for the support of the government.
Accordingly, tax statutes must be construed strictly against the government and liberally in favor of the
taxpayer.16 But since taxes are what we pay for civilized society,17 or are the lifeblood of the nation, the
law frowns against exemptions from taxation and statutes granting tax exemptions are thus
construed strictissimi juris against the taxpayers and liberally in favor of the taxing authority.18 A claim
of exemption from tax payment must be clearly shown and based on language in the law too plain to
be mistaken.19 Elsewise stated, taxation is the rule, exemption therefrom is the exception.20 However,
if the grantee of the exemption is a political subdivision or instrumentality, the rigid rule of
construction does not apply because the practical effect of the exemption is merely to reduce the
amount of money that has to be handled by the government in the course of its operations.21
The power to tax is primarily vested in the Congress; however, in our jurisdiction, it may be exercised
by local legislative bodies, no longer merely by virtue of a valid delegation as before, but pursuant to
direct authority conferred by Section 5, Article X of the Constitution.22 Under the latter, the exercise of
the power may be subject to such guidelines and limitations as the Congress may provide which,
however, must be consistent with the basic policy of local autonomy.
There can be no question that under Section 14 of R.A. No. 6958 the petitioner is exempt from the
payment of realty taxes imposed by the National Government or any of its political subdivisions,
agencies, and instrumentalities. Nevertheless, since taxation is the rule and exemption therefrom the
exception, the exemption may thus be withdrawn at the pleasure of the taxing authority. The only
exception to this rule is where the exemption was granted to private parties based on material
consideration of a mutual nature, which then becomes contractual and is thus covered by the non-
impairment clause of the Constitution.23
The LGC, enacted pursuant to Section 3, Article X of the constitution provides for the exercise by local
government units of their power to tax, the scope thereof or its limitations, and the exemption from
taxation.
Section 133 of the LGC prescribes the common limitations on the taxing powers of local government
units as follows:
Sec. 133. Common Limitations on the Taxing Power of Local Government Units. Unless
otherwise provided herein, the exercise of the taxing powers of provinces, cities,
municipalities, and barangays shall not extend to the levy of the following:
(a) Income tax, except when levied on banks and other financial
institutions;
(b) Documentary stamp tax;
(c) Taxes on estates, "inheritance, gifts, legacies and other
acquisitions mortis causa, except as otherwise provided herein
(d) Customs duties, registration fees of vessels and wharfage on
wharves, tonnage dues, and all other kinds of customs fees charges
and dues except wharfage on wharves constructed and maintained
by the local government unit concerned:
(e) Taxes, fees and charges and other imposition upon goods carried
into or out of, or passing through, the territorial jurisdictions of local
government units in the guise or charges for wharfages, tolls for
bridges or otherwise, or other taxes, fees or charges in any form
whatsoever upon such goods or merchandise;
(f) Taxes fees or charges on agricultural and aquatic products when
sold by marginal farmers or fishermen;
(g) Taxes on business enterprise certified to be the Board of
Investment as pioneer or non-pioneer for a period of six (6) and four
(4) years, respectively from the date of registration;
(h) Excise taxes on articles enumerated under the National Internal
Revenue Code, as amended, and taxes, fees or charges on petroleum
products;
(i) Percentage or value added tax (VAT) on sales, barters or
exchanges or similar transactions on goods or services except as
otherwise provided herein;
(j) Taxes on the gross receipts of transportation contractor and
person engage in the transportation of passengers of freight by hire
and common carriers by air, land, or water, except as provided in this
code;
(k) Taxes on premiums paid by ways reinsurance or retrocession;
(l) Taxes, fees, or charges for the registration of motor vehicles and
for the issuance of all kinds of licenses or permits for the driving of
thereof, except, tricycles;
(m) Taxes, fees, or other charges on Philippine product actually
exported, except as otherwise provided herein;
(n) Taxes, fees, or charges, on Countryside and Barangay Business
Enterprise and Cooperatives duly registered under R.A. No. 6810 and
Republic Act Numbered Sixty nine hundred thirty-eight (R.A. No.
6938) otherwise known as the "Cooperative Code of the Philippines;
and
(o) TAXES, FEES, OR CHARGES OF ANY KIND ON THE NATIONAL
GOVERNMENT, ITS AGENCIES AND INSTRUMENTALITIES, AND LOCAL
GOVERNMENT UNITS. (emphasis supplied)
Needless to say the last item (item o) is pertinent in this case. The "taxes, fees or charges" referred to
are "of any kind", hence they include all of these, unless otherwise provided by the LGC. The term
"taxes" is well understood so as to need no further elaboration, especially in the light of the above
enumeration. The term "fees" means charges fixed by law or Ordinance for the regulation or
inspection of business activity,24 while "charges" are pecuniary liabilities such as rents or fees against
person or property.25
Among the "taxes" enumerated in the LGC is real property tax, which is governed by Section 232. It
reads as follows:
Sec. 232. Power to Levy Real Property Tax. A province or city or a municipality within the
Metropolitan Manila Area may levy on an annual ad valorem tax on real property such as
land, building, machinery and other improvements not hereafter specifically exempted.
Section 234 of LGC provides for the exemptions from payment of real property taxes and withdraws
previous exemptions therefrom granted to natural and juridical persons, including government owned
and controlled corporations, except as provided therein. It provides:
Sec. 234. Exemptions from Real Property Tax. The following are exempted from payment
of the real property tax:
(a) Real property owned by the Republic of the Philippines or any of
its political subdivisions except when the beneficial use thereof had
been granted, for reconsideration or otherwise, to a taxable person;
(b) Charitable institutions, churches, parsonages or convents
appurtenants thereto, mosques nonprofits or religious cemeteries
and all lands, building and improvements actually, directly, and
exclusively used for religious charitable or educational purposes;
(c) All machineries and equipment that are actually, directly and
exclusively used by local water districts and government-owned or
controlled corporations engaged in the supply and distribution of
water and/or generation and transmission of electric power;
(d) All real property owned by duly registered cooperatives as
provided for under R.A. No. 6938; and;
(e) Machinery and equipment used for pollution control and
environmental protection.
Except as provided herein, any exemptions from payment of real
property tax previously granted to or presently enjoyed by, all
persons whether natural or juridical, including all government owned
 or controlled corporations are hereby withdrawn upon the effectivity
of his Code.
These exemptions are based on the ownership, character, and use of the property. Thus;
(a) Ownership Exemptions. Exemptions from real property taxes on
the basis of ownership are real properties owned by: (i) the Republic,
(ii) a province, (iii) a city, (iv) a municipality, (v) a barangay, and (vi)
registered cooperatives.
(b) Character Exemptions. Exempted from real property taxes on the
basis of their character are: (i) charitable institutions, (ii) houses and
temples of prayer like churches, parsonages or convents appurtenant
thereto, mosques, and (iii) non profit or religious cemeteries.
(c) Usage exemptions. Exempted from real property taxes on the
basis of the actual, direct and exclusive use to which they are
devoted are: (i) all lands buildings and improvements which are
actually, directed and exclusively used for religious, charitable or
educational purpose; (ii) all machineries and equipment actually,
directly and exclusively used or by local water districts or by
government-owned or controlled corporations engaged in the supply
and distribution of water and/or generation and transmission of
electric power; and (iii) all machinery and equipment used for
pollution control and environmental protection.
To help provide a healthy environment in the midst of the modernization of the country, all
machinery and equipment for pollution control and environmental protection may not be
taxed by local governments.
2. Other Exemptions Withdrawn. All other exemptions previously
granted to natural or juridical persons including government-owned
or controlled corporations are withdrawn upon the effectivity of the
Code.26
Section 193 of the LGC is the general provision on withdrawal of tax exemption privileges. It provides:
Sec. 193. Withdrawal of Tax Exemption Privileges. Unless otherwise provided in this
code, tax exemptions or incentives granted to or presently enjoyed by all persons, whether
natural or juridical, including government-owned, or controlled corporations, except local
water districts, cooperatives duly registered under R.A. 6938, non stock and non profit
hospitals and educational constitutions, are hereby withdrawn upon the effectivity of this
Code.
On the other hand, the LGC authorizes local government units to grant tax exemption privileges. Thus,
Section 192 thereof provides:
Sec. 192. Authority to Grant Tax Exemption Privileges. Local government units may,
through ordinances duly approved, grant tax exemptions, incentives or reliefs under such
terms and conditions as they may deem necessary.
The foregoing sections of the LGC speaks of: (a) the limitations on the taxing powers of local
government units and the exceptions to such limitations; and (b) the rule on tax exemptions and the
exceptions thereto. The use of exceptions of provisos in these section, as shown by the following
clauses:
(1) "unless otherwise provided herein" in the opening paragraph of
Section 133;
(2) "Unless otherwise provided in this Code" in section 193;
(3) "not hereafter specifically exempted" in Section 232; and
(4) "Except as provided herein" in the last paragraph of Section 234
initially hampers a ready understanding of the sections. Note, too, that the aforementioned clause in
section 133 seems to be inaccurately worded. Instead of the clause "unless otherwise provided
herein," with the "herein" to mean, of course, the section, it should have used the clause "unless
otherwise provided in this Code." The former results in absurdity since the section itself enumerates
what are beyond the taxing powers of local government units and, where exceptions were intended,
the exceptions were explicitly indicated in the text. For instance, in item (a) which excepts the income
taxes "when livied on banks and other financial institutions", item (d) which excepts "wharfage on
wharves constructed and maintained by the local government until concerned"; and item (1) which
excepts taxes, fees, and charges for the registration and issuance of license or permits for the driving
of "tricycles". It may also be observed that within the body itself of the section, there are exceptions
which can be found only in other parts of the LGC, but the section interchangeably uses therein the
clause "except as otherwise provided herein" as in items (c) and (i), or the clause "except as otherwise
provided herein" as in items (c) and (i), or the clause "excepts as provided in this Code" in item (j).
These clauses would be obviously unnecessary or mere surplus-ages if the opening clause of the
section were" "Unless otherwise provided in this Code" instead of "Unless otherwise provided herein".
In any event, even if the latter is used, since under Section 232 local government units have the power
to levy real property tax, except those exempted therefrom under Section 234, then Section 232 must
be deemed to qualify Section 133.
Thus, reading together Section 133, 232 and 234 of the LGC, we conclude that as a general rule, as laid
down in Section 133 the taxing powers of local government units cannot extend to the levy of inter
alia, "taxes, fees, and charges of any kind of the National Government, its agencies and
instrumentalties, and local government units"; however, pursuant to Section 232, provinces, cities,
municipalities in the Metropolitan Manila Area may impose the real property tax except on, inter alia,
"real property owned by the Republic of the Philippines or any of its political subdivisions except when
the beneficial used thereof has been granted, for consideration or otherwise, to a taxable person", as
provided in item (a) of the first paragraph of Section 234.
As to tax exemptions or incentives granted to or presently enjoyed by natural or juridical persons,
including government-owned and controlled corporations, Section 193 of the LGC prescribes the
general rule, viz., they are withdrawn upon the effectivity of the LGC, except upon the effectivity of the
LGC, except those granted to local water districts, cooperatives duly registered under R.A. No. 6938,
non stock and non-profit hospitals and educational institutions, and unless otherwise provided in the
LGC. The latter proviso could refer to Section 234, which enumerates the properties exempt from real
property tax. But the last paragraph of Section 234 further qualifies the retention of the exemption in
so far as the real property taxes are concerned by limiting the retention only to those enumerated
there-in; all others not included in the enumeration lost the privilege upon the effectivity of the LGC.
Moreover, even as the real property is owned by the Republic of the Philippines, or any of its political
subdivisions covered by item (a) of the first paragraph of Section 234, the exemption is withdrawn if
the beneficial use of such property has been granted to taxable person for consideration or otherwise.
Since the last paragraph of Section 234 unequivocally withdrew, upon the effectivity of the LGC,
exemptions from real property taxes granted to natural or juridical persons, including government-
owned or controlled corporations, except as provided in the said section, and the petitioner is,
undoubtedly, a government-owned corporation, it necessarily follows that its exemption from such tax
granted it in Section 14 of its charter, R.A. No. 6958, has been withdrawn. Any claim to the contrary
can only be justified if the petitioner can seek refuge under any of the exceptions provided in Section
234, but not under Section 133, as it now asserts, since, as shown above, the said section is qualified
by Section 232 and 234.
In short, the petitioner can no longer invoke the general rule in Section 133 that the taxing powers of
the local government units cannot extend to the levy of:
(o) taxes, fees, or charges of any kind on the National Government,
its agencies, or instrumentalities, and local government units.
I must show that the parcels of land in question, which are real property, are any one of those
enumerated in Section 234, either by virtue of ownership, character, or use of the property. Most
likely, it could only be the first, but not under any explicit provision of the said section, for one exists. In
light of the petitioner's theory that it is an "instrumentality of the Government", it could only be within
be first item of the first paragraph of the section by expanding the scope of the terms Republic of the
Philippines" to embrace . . . . . . "instrumentalities" and "agencies" or expediency we quote:
(a) real property owned by the Republic of the Philippines, or any of
the Philippines, or any of its political subdivisions except when the
beneficial use thereof has been granted, for consideration or
otherwise, to a taxable person.
This view does not persuade us. In the first place, the petitioner's claim that it is an instrumentality of
the Government is based on Section 133(o), which expressly mentions the word "instrumentalities";
and in the second place it fails to consider the fact that the legislature used the phrase "National
Government, its agencies and instrumentalities" "in Section 133(o),but only the phrase "Republic of
the Philippines or any of its political subdivision "in Section 234(a).
The terms "Republic of the Philippines" and "National Government" are not interchangeable. The
former is boarder and synonymous with "Government of the Republic of the Philippines" which the
Administrative Code of the 1987 defines as the "corporate governmental entity though which the
functions of the government are exercised through at the Philippines, including, saves as the contrary
appears from the context, the various arms through which political authority is made effective in the
Philippines, whether pertaining to the autonomous reason, the provincial, city, municipal or barangay
subdivision or other forms of local government."27 These autonomous regions, provincial, city,
municipal or barangay subdivisions" are the political subdivision.28
On the other hand, "National Government" refers "to the entire machinery of the central government,
as distinguished from the different forms of local Governments."29 The National Government then is
composed of the three great departments the executive, the legislative and the judicial.30
An "agency" of the Government refers to "any of the various units of the Government, including a
department, bureau, office instrumentality, or government-owned or controlled corporation, or a local
government or a distinct unit therein;"31 while an "instrumentality" refers to "any agency of the
National Government, not integrated within the department framework, vested with special functions
or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and
enjoying operational autonomy; usually through a charter. This term includes regulatory agencies,
chartered institutions and government-owned and controlled corporations".32
If Section 234(a) intended to extend the exception therein to the withdrawal of the exemption from
payment of real property taxes under the last sentence of the said section to the agencies and
instrumentalities of the National Government mentioned in Section 133(o), then it should have
restated the wording of the latter. Yet, it did not Moreover, that Congress did not wish to expand the
scope of the exemption in Section 234(a) to include real property owned by other instrumentalities or
agencies of the government including government-owned and controlled corporations is further borne
out by the fact that the source of this exemption is Section 40(a) of P.D. No. 646, otherwise known as
the Real Property Tax Code, which reads:
Sec 40. Exemption from Real Property Tax. The exemption shall be as follows:
(a) Real property owned by the Republic of the
Philippines or any of its political subdivisions
and any government-owned or controlled
corporations so exempt by is
charter: Provided, however, that this
exemption shall not apply to real property of
the above mentioned entities the beneficial
use of which has been granted, for
consideration or otherwise, to a taxable
person.
Note that as a reproduced in Section 234(a), the phrase "and any government-owned or controlled
corporation so exempt by its charter" was excluded. The justification for this restricted exemption in
Section 234(a) seems obvious: to limit further tax exemption privileges, specially in light of the general
provision on withdrawal of exemption from payment of real property taxes in the last paragraph of
property taxes in the last paragraph of Section 234. These policy considerations are consistent with the
State policy to ensure autonomy to local governments33 and the objective of the LGC that they enjoy
genuine and meaningful local autonomy to enable them to attain their fullest development as self-
reliant communities and make them effective partners in the attainment of national goals.34 The power
to tax is the most effective instrument to raise needed revenues to finance and support myriad
activities of local government units for the delivery of basic services essential to the promotion of the
general welfare and the enhancement of peace, progress, and prosperity of the people. It may also be
relevant to recall that the original reasons for the withdrawal of tax exemption privileges granted to
government-owned and controlled corporations and all other units of government were that such
privilege resulted in serious tax base erosion and distortions in the tax treatment of similarly situated
enterprises, and there was a need for this entities to share in the requirements of the development,
fiscal or otherwise, by paying the taxes and other charges due from them.35
The crucial issues then to be addressed are: (a) whether the parcels of land in question belong to the WHEREFORE, the instant petition is DENIED. The challenged decision and order of the Regional Trial
Republic of the Philippines whose beneficial use has been granted to the petitioner, and (b) whether Court of Cebu, Branch 20, in Civil Case No. CEB-16900 are AFFIRMED.
the petitioner is a "taxable person".
No pronouncement as to costs.
Section 15 of the petitioner's Charter provides:
SO ORDERED.
Sec. 15. Transfer of Existing Facilities and Intangible Assets. All existing public airport
facilities, runways, lands, buildings and other properties, movable or immovable, belonging
Narvasa, C.J., Melo, Francisco and Panganiban, JJ., concur.
to or presently administered by the airports, and all assets, powers, rights, interests and
privileges relating on airport works, or air operations, including all equipment which are
necessary for the operations of air navigation, acrodrome control towers, crash, fire, and
rescue facilities are hereby transferred to the Authority: Provided however, that the
operations control of all equipment necessary for the operation of radio aids to air
navigation, airways communication, the approach control office, and the area control
center shall be retained by the Air Transportation Office. No equipment, however, shall be
removed by the Air Transportation Office from Mactan without the concurrence of the
authority. The authority may assist in the maintenance of the Air Transportation Office
equipment.

The "airports" referred to are the "Lahug Air Port" in Cebu City and the "Mactan International AirPort
in the Province of Cebu",36 which belonged to the Republic of the Philippines, then under the Air
Transportation Office (ATO).37

It may be reasonable to assume that the term "lands" refer to "lands" in Cebu City then administered
by the Lahug Air Port and includes the parcels of land the respondent City of Cebu seeks to levy on for
real property taxes. This section involves a "transfer" of the "lands" among other things, to the
petitioner and not just the transfer of the beneficial use thereof, with the ownership being retained by
the Republic of the Philippines.

This "transfer" is actually an absolute conveyance of the ownership thereof because the petitioner's
authorized capital stock consists of, inter alia "the value of such real estate owned and/or
administered by the airports."38 Hence, the petitioner is now the owner of the land in question and the
exception in Section 234(c) of the LGC is inapplicable.

Moreover, the petitioner cannot claim that it was never a "taxable person" under its Charter. It
was only exempted from the payment of real property taxes. The grant of the privilege only in respect
of this tax is conclusive proof of the legislative intent to make it a taxable person subject to all taxes,
except real property tax.

Finally, even if the petitioner was originally not a taxable person for purposes of real property tax, in
light of the forgoing disquisitions, it had already become even if it be conceded to be an "agency" or
"instrumentality" of the Government, a taxable person for such purpose in view of the withdrawal in
the last paragraph of Section 234 of exemptions from the payment of real property taxes, which, as
earlier adverted to, applies to the petitioner.

Accordingly, the position taken by the petitioner is untenable. Reliance on Basco vs. Philippine
Amusement and Gaming Corporation39 is unavailing since it was decided before the effectivity of the
LGC. Besides, nothing can prevent Congress from decreeing that even instrumentalities or agencies of
the government performing governmental functions may be subject to tax. Where it is done precisely
to fulfill a constitutional mandate and national policy, no one can doubt its wisdom.
G.R. No. L-40858 September 15, 1987 After due publication and hearing, said OCT was ordered reconstituted and thus OCT No. RP-1304 (1839) was
issued by the Registry of Deeds in the name of Casamayor.
SPOUSES FEDERICO SERFINO and LORNA BACHAR, petitioners,
vs. On October 30, 1964, Serfino petitioned the court for confirmation of his title to the land as purchaser in the
THE COURT OF APPEALS and LOPEZ SUGAR CENTRAL MILL CO., INC., respondents. auction sale. On October 31, 1964, court granted the petition and on November 2, 1964, OCT No. RP-1304 (1839)
was cancelled and TCT No. 38985 was issued in the name of Federico Serfino, married to Lorna Bachar.
No. L-40751 September 15, 1987
On November 19, 1964, the spouses Serfinos mortgaged the land to the Philippine National Bank (PNB) to secure
a loan in the amount of P5,000.00. Said mortgage in favor of PNB was inscribed in TCT No. 38985. Hence, this was
PHILIPPINE NATIONAL BANK, petitioner,
the situation of the land when the Office of the Register of Deeds refused registration of the property in question
vs.
requested by the Lopez Sugar Central.
THE HONORABLE COURT OF APPEALS, LOPEZ SUGAR CENTRAL MILL COMPANY, INC., SPOUSES FEDERICO SERFINO
and LORNA BACHAR, respondents.
The lower court in its Order, dated January 16, 1965 in the Petition of the Office of the Register of Deeds seeking
the cancellation of either TCT No. 57-N (in the name of Nemesia Baltazar) or TCT No. 38985 (in the name of Lopez
Sugar Central), ordered Lopez Sugar Central and spouses Serfino to take the necessary steps towards the clearing
of their respective titles before a court of general jurisdiction. Pursuant thereto, Lopez Sugar Central, on May 5,
PARAS, J.: 1965, instituted an action for 1) annulment of OCT No. RP-1304 (1839), of TCT No. 38985 and of the mortgage
executed by the Serfinos in favor of PNB, 2) for the registration of the Deed of Sale, 3) for the issuance of a TCT in
Before Us are two (2) Petitions for certiorari to review the decision 1 of the Court of Appeals als in CA-G.R. No. its name and 4) for recovery of possession of the disputed land from the Serfinos.
37748-R, consolidated for Our disposition since they arose from the same factual background.
On February 4, 1966, the lower court rendered its decision, 3 the dispositive portion reading as follows:
The records of the case show that on August 25, 1937, a parcel of land consisting of 21.1676 hectares situated in
the Municipality of Sagay, Province of Negros Occidental, was patented in the name of Pacifico Casamayor, under WHEREFORE, and considering the conclusions and opinion set forth above, judgment is
Homestead Patent No. 44139. Upon registration of said patent in the office of the Register of Deeds of Negros hereby rendered as follows:
Occidental, OCT No. 1839 was issued by said office in the name of Pacifico Casamayor. On December 14, 1945,
the latter sold said land in favor of Nemesia D. Baltazar.
1. The Register of Deeds of Negros Occidental is hereby ordered to cancel Transfer
Certificate of Title No. 38985;
Apparently, OCT No. 1839 was lost during the war and upon petition of Nemesia Baltazar, the Court of First
Instance of Negros Occidental ordered 2 the reconstitution thereof. Pursuant thereto, OCT No. 14-R (1839) was
2. The same Register of Deeds is ordered to register the deed of sale executed by Nemesia
issued on January 18, 1946 in the name of Pacifico Casamayor. On that same day, TCT No. 57-N was issued in the
D. Baltazar on August 25, 1951, and after cancelling Transfer Certificate of Title No. 57-N
name of Nemesia Baltazar but after the cancellation of OCT No. 14-R (1839).
and other titles issued prior thereto, to issue a new transfer certificate of title in the name
of Lopez Sugar Central Mill Co., Inc., upon previous payments of the legal fees;
On August 25, 1951, Nemesia Baltazar, sold said property to Lopez Sugar Central Mill Co., Inc. (Lopez Sugar
Central, for brevity). The latter, however did not present the documents for registration until December 17, 1964
3. The Lopez Sugar Central Mill Co., Inc., shall pay the Philippine National Bank, Bacolod
to the Office of the Registry of Deeds. Said office refused registration upon its discovery that the same property
Branch, the sum of P5,261.11 secured by a real estate mortgaged registered and annotated
was covered by another certificate of title, TCT No. 38985, in the name of Federico Serfino.
on Transfer Certificate of Title 38985 which shall be carried over in the new transfer
certificate of title to be issued to the Lopez Sugar Central Mill Co., Inc. with the right of
An inquiry into this discrepancy reveals that the Provincial Treasurer of Negros Occidental on October 30, 1956 recourse to the Assurance Fund; and
had conducted a public auction sale of this property for tax delinquency for the period starting the year 1950.
Notice of this public auction sale was sent to Pacifico Casamayor but none to Nemesia Baltazar and Lopez Sugar
4. The defendant, Federico Serfino, is hereby ordered to vacate the land in question and to
Million There being no public bidders on the scheduled date of sale, the Provincial Treasurer of Negros Occidental
deliver the possession thereof to the plaintiff;
issued a Certification of Sale of Delinquent Real Property over the disputed land to the Province of Negros
Occidental. On May 14, 1964, upon payment of the amount of P1,838.49 by Federico Serfino, a Certificate of
Repurchase of Real Property was issued and executed by the Provincial Treasurer in favor of Federico Serfino, for 5. The plaintiff is exempt from reimbursing the defendant, Federico Serfino, for the sum of
and in behalf of Pacifico Casamayor. P602.94 which the latter paid for the repurchase of the land in question for the reason that
the former is already burdened with the payment of the mortgage indebtedness with the
Philippine National Bank in the amount of P5,261.11; and
On May 28, 1964, Serfino filed a petition with the Court of First Instance of Negros Occidental for the
Reconstitution of OCT No. 1839 in the name of Pacifico Casamayor, upon the allegation that said title was lost.
6. The Court makes no award for damages and costs.
 SO ORDERED. (Rollo L-40751, pp. 117 & 118, Joint Record on Appeal, Annex "D", p. 50)
Both parties appealed from this decision of the trial court. Ruling on the assignment of errors, the appellate court
affirmed the judgment of the trial court with modification in its decision, the pertinent portion reading as follows:
Plaintiff contends that the mortgage executed by the Serfinos in favor of PNB is null and
void, because the property conveyed in mortgage did not belong to them. The contention is
meritorious. That the mortgagor should be the absolute owner of the property mortgaged
is an essential requisite for the validity of a contract of mortgage (Art. 2085, Civil Code); and
a mortgage constituted by one not the owner of the property mortgaged is null and void,
the registration of the mortgage notwithstanding (Parqui vs. PNB, 96 Phil. 157). Thus, the
mortgage lien of PNB in the contract executed in its favor by the Serfinos did not attach to
the property in question.
The argument advanced by appellee PNB that it is a mortgagee in good faith deserves scant
consideration. Note that when the mortgage was constituted, the disputed land was
covered by a valid and existing title, TCT No. 57-N, in the name of Nemesis D. Baltazar.
Indeed, the whole world, including appellee PNB, is charged with notice thereof.
Consequently, that portion of the trial court's decision declaring plaintiff liable to the PNB
for payment of the sum of P5,261.11 should beset aside.
As to the plaintiff's claim for damages against the Serfinos, We find the same devoid of
merit. Whatever injury plaintiff may have suffered was occasioned by the faulty and
defective indexing and filing system in the office of the Register of Deeds of Negros
Occidental, and not by any intentional Act on the part of the Serfino Spouses. Anyway, the
evidence fails to show that they deliberately intended to cause damage to plaintiff.
However, equity dictates that plaintiff should reimburse the Serfino spouses of the sum of
P1,839.49, representing the unpaid taxes and penalties paid by the latter when they
repurchased the property from the province of Negros Occidental.
WHEREFORE, with the modifications above indicated, the judgment appealed from is
hereby affirmed. No costs.
SO ORDERED. (Decision, Annex "A", pp. 40-42, Rollo-L40751)
From the aforesaid ruling, the spouses Serfino and the Philippine National Bank appealed to Us by way of
certiorari. Petitioners, spouses Serfinos 4 assign the following errors:
I. The Purchase by plaintiff-appellant corporation (Lopez Sugar Central) of the lot in
question was null and void from the beginning.
II. Petitioners are proper parties to challenge the legality of the sale of the land in question
to private respondent.
III. Notice to Nemesia Baltazar of the Tax Sale of the land in question was not essential to
the validity of the sale.
IV. The legality of the auction sale of the property in question was not in issue before the
court a quo.
Petitioner Philippine National Bank 5 submits the following.
ASSIGNMENT OF ERRORS
I. The Court of Appeals erred in holding that the auction sale of the disputed property was
null and void.
II. The Court of Appeals erred in not holding that petitioner is a mortgagee in good faith.
Petitioners spouses Serfinos maintain that sale of a land covered by homestead to be valid must have the
following requisites: 1) consent of the grantee 2) approval of the Secretary of Agriculture and Natural Resources
3) sale is solely for educational, religious, or charitable purposes or for a right of way (Sec. 121, CA No. 141 ).
Petitioner spouses Serfinos in support of their first assignment of error cited Sec. 121, CA No. 141 reading as
follows:
SEC. 121. Except with the consent of the grantee and the approval of the Secretary of
Agriculture and Commerce, and solely for commercial, industrial, educational, religious or
charitable purposes or for a right of way, no corporation, association, or partnership may
acquire or have any right, title, interest, or property right whatsoever to any land granted
under the free patent, homestead or individual sale provisions of this Act or to any
permanent improvement on such land.
They argue that since private respondent is a corporation, it is barred from owning land granted under the free
patent if the aforementioned requisites are not present. Such Pacifico Casamayor who obtained a Homestead
Patent and later an original certificate of title in his name. Later it was this original grantee who sold the land in
question to Nemesia Baltazar on December 14, 1945 or more than eight (8) years after he obtained his
homestead patent on August 25, 1937. On these facts, We now apply Sec. 118 of Commonwealth Act No. 141
which prohibits the alienation of homestead lots to private individual within five (5) years from the date of the
issuance of the patent and not Sec. 121 which governs sale to corporation. Since the grant was more than five (5)
years before, the transfer to Nemesia Baltazar was valid and legal. Nemesia Baltazar who became the titled or
registered owner as evidenced by TCT No. 57-N, could exercise acts of ownership over the land such as disposing
of it to private respondent by a deed of sale.
The assailed decision of the appellate court declares that the prescribed procedure in auction sales of property for
tax delinquency being in derogation of property rights should be followed punctiliously. Strict adherence to the
statutes governing tax sales is imperative not only for the protection of the tax payers, but also to allay any
possible suspicion of collusion between the buyer and the public officials called upon to enforce such laws. Notice
of sale to the delinquent land owners and to the public in general is an essential and indispensable requirement of
law, the non-fulfillment of which initiates the sale.
We give our stamp of approval on the aforementioned ruling of the respondent court. In the case at bar, there is
no evidence that Nemesia Baltazar, who had obtained a transfer certificate of title in her name on January 18,
1946, was notified of the auction sale which was scheduled on October 30, 1956. Neither was she furnished as the
owner of the delinquent real property with the certificate of sale as prescribed by Sec. 37 of Commonwealth Act
No. 470. These infirmities are fatal. Worth mentioning also is the fact that Lopez Sugar Central was not entirely
negligent in its payment of land taxes. The record shows that taxes were paid for the years 1950 to 1953 and a
receipt therefor was obtained in its name. The sale therefore by the Province of Negros Occidental of the land in
dispute to the spouses Serfinos was void since the Province of Negros Occidental was not the real owner of the
property thus sold. In turn, the spouses Serfinos title which has been derived from that of the Province of Negros
Occidental is likewise void. A purchaser of real estate at the tax sale obtains only such title as that held by the
taxpayer, the principle of caveat emptor applies. Where land is sold for delinquency taxes under the provisions of
the Provincial Assessment Law, rights of registered but undeclared owners of the land are not affected by the
proceedings and the sale conveys only such interest as the person who has declared the property for taxation has
therein.

We now come to the arguments of petitioner Philippine National Bank. The appellate court in modifying the trial
court's decision nullified the mortgage in favor of Philippine National Bank and exempted Lopez Sugar Central
from the payment to PNB of the amount of the mortgage loan. Petitioner Philippine National Bank now questions
this maintaining that it is a mortgagee in good faith and as such is entitled to the protection of the law.

We find merit in petitioner's contention. The findings of fact by the trial court which were undisputed by the
contending parties show that after TCT No. 38985 had been issued in the name of Federico Serfino, he declared
the property in his name for the year 1965 under T.D. No. 9382, continuously paid the taxes and introduced
improvements thereon in the nature of feeder roads and sugar cane plants. It was under these circumstances that
PNB extended a loan to Serfino, secured by the land in question on the strength of TCT No. 38985 in the name of
the Serfinos and after a spot investigation by one of the bank inspectors who made a report of his investigation.
After the execution of a real estate mortgage in favor of the Philippine National Bank duly annotated on the title
of the Serfinos TCT No. 38985, the bank actually loaned Serfino the amount of P5,000.00 which amounted to
P5,261.11 as of August 17, 1965. Petitioner Philippine National Bank relied on TCT No. 38985, the genuineness of
which is not in issue as it was really issued by the Register of Deeds of Negros Occidental. Philippine National Bank
had every right to rely on TCT No. 38985 as it was a sufficient evidence of ownership of the mortgagor. The
Philippine National Bank at that time had no way of knowing of the existence of another genuine title covering the
same land in question.

The fact that the public auction sale of the disputed property was not valid (for lack of notice of the auction sale
to the actual owner) can not in any way be attributed to the mortgagee's (PNB's) fault. The fact remains that in
spite of the lack of notice to the actual registered owner at that time (who was Nemesia Baltazar) the Register of
Deeds issued a TCT in the name of Federico Serfino married to Lorna Bachar which title was relied upon by
petitioner Philippine National Bank. The Register of Deeds disowned liability and negligence or connivance
claiming that existence of TCT No. 57-N in the name of Nemesia Baltazar was not found in the records of the
Register of Deeds for the reason that it did not exist in the index card as the land was not designated by cadastral
lot number. Thus the discrepancy was due to the faulty system of indexing the parcels of land. Be it noted that the
inability of the Register of Deeds to notify the actual owner or Lopez Sugar Central of the scheduled public auction
sale was partly due to the failure of Lopez Sugar Central to declare the land in its name for a number of years and
to pay the complete taxes thereon. Petitioner Philippine National Bank is therefore entitled to the payment of the
mortgage loan as ruled by the trial court and exempted from the payment of costs.

WHEREFORE, premises considered, with the slight modification that the PNB mortgage credit must be paid by
Lopez Sugar Central, the assailed decision is hereby AFFIRMED.

SO ORDERED.

Yap (Chairman), Melencio-Herrera, Padilla and Sarmiento, JJ., concur.

 [G.R. No. 118432. May 23, 1997]
CONRADO COSICO, JR., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, EVA AIRWAYS CORPORATION,
LEWIS CHANG, and ALLEN SOONG, respondents.
DECISION
KAPUNAN, J.:
Through this special civil action for certiorari, petitioner seeks the reversal and nullification of the August 31,
1994 and the December 15, 1994 resolutions of respondent National Labor Relations Commission (NLRC) in NLRC
NCR-CA Case No. 005304-93 for having been issued with grave abuse of discretion.
The relevant antecedents are as follows:
Petitioner Conrado Cosico, Jr. was hired by respondent Eva Airways Corporation (Eva Air) through its General
Sales Agent, Don Tim Air Service, Inc., on April 4, 1992 as Assistant Station Manager for the Manila office for a
mutually agreed monthly salary of P30,000.00.
As Assistant Station Manager, petitioner was tasked, among others, to supervise the construction of
respondent Eva Air's office in a space reserved for the purpose at the Ninoy Aquino International Airport (NAIA) and
to see to it that respondent Eva Air's target of flying at least sixty (60) passengers per flight be realized in order to
maintain the company's overhead operations.
After five (5) months of operation, a performance audit of respondent Eva Air's Manila office was undertaken
and the same yielded the finding that the airline had only an average of twenty-five (25) passengers per flight, way
below its targeted passenger load. After evaluating the situation further, respondent Eva Air decided to implement
measures to make the Manila office cost-efficient. It was decided that the position of Assistant Station Manager be
abolished.
On September 24, 1992, petitioner was advised of respondent Eva Air's decision in a letter which reads in
full:
Mr. Conrado Cosico Our Ref: PSN-81030
Asst. Station Manager Date: Sep. 24, 1992
Through: Mr. Allen Soong
EVA Taipei Representative
RE: ABOLITION OF POSITION - ASST. STATION MANAGER
We have been reviewing the developments and performance of our Philippine station. Our reviews of the
past four and one third months show that passenger & cargo loads are below the target given by our
office.
In view of this, it is Management's decision to abolish the position of the Asst. Station Manager and also
keep the position of Station Manager vacant. In the meantime, the EVA TAIPEI REP in Manila is given
charge of the operation of the Manila Station. He will handle the day to day activities and operations of the
Airline.
You are therefore given notice that your position is hereby abolish (sic) and your services terminated on
account thereof 15 days upon receipt of this notice. Please effect the necessary turnover within the said 15
days period.
Thank you and we hope you will understand the position taken by the company.
Very truly yours,
(Sgd.)
Lewis Chang
Deputy Senior Vice President
Personnel Division[1]
Respondent Eva Air, likewise, offered to pay the petitioner separation pay equivalent to one (1) month salary and
proportionate 13th month pay for his six (6) months and eleven (11) days service to the company.
Petitioner rejected the offer and instead filed a complaint for illegal dismissal, underpayment of wages and
moral and exemplary damages against respondents Eva Air and its officers, Lewis Chang and Allen Soong. The case
was docketed as NLRC NCR Case No. 00-10-05891-92.
On June 9, 1993, Labor Arbiter Ernesto Dinopal rendered a decision, the dispositive portion of which reads:
WHEREFORE, decision is hereby rendered declaring the dismissal of complainant CONRADO COSICO, JR. by
respondents EVA AIRWAYS CORPORATION and LEWIS CHANG as illegal and without justifiable cause and ordering
them to reinstate complainant Cosico, Jr. to his former position without loss of seniority rights and other
privileges and pay him, jointly and severally, the following sums:
Backwages from October 9, 1992 up to the date of reinstatement, either actually or by payroll, which if computed
as of June 9, 1993 amounts to (P30,000.00 x 8 months). . . . . . . .P 240,000.00
Thirteenth Month Pay--------------30,000.00
Moral Damages-----------------1,000,000.00
Exemplary Damages----------1,000,000.00
10% attorney's fees---------------227,000.00
TOTAL-------------------P2,497,000.00
Respondent ALLEN SOONG is declared free from any liability it appearing that he had no active participation in
complainant's illegal dismissal.
SO ORDERED.[2]
Respondents Eva Air and Lewis Chang elevated their case to respondent NLRC where they filed their appeal
memorandum and posted a surety bond in the amount of Two Hundred Seventy Thousand Pesos
(P270,000.00). Petitioner filed a motion to dismiss the appeal on the ground that the supersedeas bond posted by
private respondents was insufficient as it did not cover the award of moral and exemplary damages as well as
attorney's fees.
 Respondent NLRC denied the motion and instead gave due course to the appeal. On August 31, 1994, it
issued a resolution setting aside the decision of the labor arbiter, disposing thusly:
WHEREFORE, in view of the foregoing premises, the Appeal is hereby given due course and the decision of Labor
Arbiter, Ernesto Dinopol dated June 09, 1993, is hereby set aside. However, respondents are ordered to pay
complainant full separation benefits equivalents (sic) to one (1) month for every year of service and thirteenth
month pay for 1992.
SO ORDERED.[3]
Petitioner moved to reconsider the resolution but the same was denied on December 15, 1994 in a resolution
which reads:
After due consideration of the Motion for Reconsideration filed by complainant on September 16, 1994, from the
Resolution of August 31, 1994, the Commission (Second Division) RESOLVED to deny the same for lack of merit.[4]
Hence, this petition predicated on the following grounds for consideration, to wit:
I
THE NLRC GRAVELY ABUSED ITS DISCRETION WHEN IT GAVE PRIVATE RESPONDENTS' APPEAL DUE COURSE
NOTWITHSTANDING THE FACT THAT RESPONDENTS' APPEAL WAS NOT DULY PERFECTED FOR FAILURE TO POST
THE CORRECT SUPERSEDEAS BOND IN AN AMOUNT EQUIVALENT TO THE MONETARY AWARD.
II
THE NLRC GRAVELY ABUSED ITS DISCRETION WHEN IT SET ASIDE THE DECISION OF LABOR ARBITER EERNESTO
(sic) DINOPOL AND INSTEAD RULED THAT COMPLAINANT WAS NOT ILLEGALLY DISMISSED.
III
THE NLRC GRAVELY ABUSED ITS DISCRETION WHEN IT RULED THAT THE POSITION OF THE PETITIONER WAS DULY
ABOLISHED.
IV
THE NLRC GRAVELY ABUSED ITS DISCRETION IN RULING THAT PETITIONER IS NOT ENTITLED TO DAMAGE (Sic).[5]
The petition is devoid of merit.
Inceptively, petitioner asseverates that respondent NLRC gravely abused its discretion in giving due course
to the appeal of private respondents albeit the latter's failure to post the correct supersedeas bond which is
supposed to be equivalent to the monetary award in the judgment.
Article 223 of the Labor Code, as amended by Republic Act No. 6715 (Herrera-Veloso Law), provides:
ART. 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders.
xxx
xxx
In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the
posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the
amount equivalent to the monetary award in the judgment appealed from.
xxx
For the proper guidance of lawyers and litigants and pursuant to the provisions of Article 218[6] of the Labor
Code, the NLRC adopted and promulgated its New Rules of Procedure on August 31, 1990. The Rules were published
in the Manila Bulletin and the Philippine Daily Inquirer on September 24, 1990 and became effective fifteen (15)
days thereafter. Section 6, Rule VI of the said Rules reads:
Section 6. Bond. In case the decision of a Labor Arbiter involves a monetary award, an appeal by the employer
shall be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the Commission or the Supreme Court in an amount equivalent to the monetary award.
The Commission, may, in meritorious cases and upon Motion of the Appellant, reduce the amount of the bond.
However, an appeal is deemed perfected upon posting of the bond equivalent to the monetary award exclusive of
moral and exemplary damages as well as attorney's fees.
Nothing herein however, shall be construed as extending the period of appeal. (Underscoring ours.)
Said provision was amended on May 21, 1991 per Resolution No. 5-01-91 which became effective ten (10)
days after its publication in the Philippine Daily Inquirer and the Philippine Star on June 2, 1991. It was again
amended on November 7, 1991 in Resolution No. 11-01-91 which became effective ten (10) days after its
publication in the Manila Bulletin and the Philippine Star on January 5, 1992. The amended provision reads:
Section 6. Bond. In case the decision of a Labor Arbiter involves a monetary award, an appeal by the employer
shall be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the Commission or the Supreme Court in an amount equivalent to the monetary award.
The Commission may, in meritorious cases and upon Motion of the Appellant, reduce the amount of the
bond. (However, an appeal is deemed perfected upon the posting of the bond equivalent to the monetary award
exclusive of moral and exemplary damages as well as attorney's fees. [Deleted, effective on Jan. 14, 1992])
Nothing herein however, shall be construed as extending the period of appeal.
On November 5, 1993, said provision was further amended by Resolution No. 11-01-93 which became
effective ten (10) days after its publication in the Philippine Star and the Manila Times on November 20, 1993. The
latest amended provision reads:
Section 6. Bond. In case the decision of a Labor Arbiter POEA Administrator and Regional Director or his duly
authorized hearing officer involves a monetary award, an appeal by the employer shall be perfected only upon the
posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission or
the Supreme Court in an amount equivalent to the monetary award, exclusive of moral and exemplary damages
and attorney's fees.
The employer as well as counsel shall submit a joint declaration under oath attesting that the surety bond posted
is genuine and that it shall be in effect until final disposition of the case.
The Commission may, in meritorious cases and upon Motion of the Appellant, reduce the amount of the bond. (As
amended by Nov. 5, 1993) (Underscoring ours.)
As can be seen from the foregoing pertinent provisions, the phrase "exclusive of moral and exemplary
damages and attorney's fees" with reference to the computation of the cash or surety bond to be posted by an
employer who wishes to appeal was originally contained in the new Rules. It was later deleted sometime in 1991
and 1992, then restored on November 20, 1993.
The successive changes in the Rules only mirror the fact that respondent NLRC in the performance of its rule-
making power had considered seriously and judiciously the ramifications of the law and came out ultimately with
the correct rule excluding from the monetary award moral and exemplary damages, as well as attorney's fees, for
purposes of computing the amount of the appeal bond.
It may be noted that while respondent NLRC in its Resolution No. 11-01-91 dated November 7, 1991 deleted
the phrase "exclusive of moral and exemplary damages as well as attorney's fees" in the determination of the
amount of the bond, it provided a safeguard against the imposition of excessive bonds by providing that "(T)he
Commission may, in meritorious cases and upon Motion of the Appellant, reduce the amount of the bond."
Moreover, the latest amendment is more in consonance with the right of appeal given to the employer,
which is actually a statutory right. An unreasonable and excessive amount of bond would be oppressive and unjust
and would have the effect of depriving a party of his right to appeal. It is a well-settled rule in statutory construction
that:
xxx (S)tatutes should receive a sensible construction, such as will give effect to the legislative intention and
so as to avoid an unjust or an absurd conclusion. INTERPRETATIO TALIS IN AMBIGUIS SEMPER FRIENDA
EST, UT EVITATUR INCONVENIENS ET ABSURDUM. Where there is ambiguity, such interpretation as will
avoid inconvenience and absurdity is to be adopted. x x x.[7]
In the case at bar, the backwages and thirteenth month pay awarded to petitioner amounted only
to P270,000.00, but the moral and exemplary damages, plus 10% attorney's fees, totalled P2,497,000.00. In other
words, the moral and exemplary damages and attorney's fees are almost ten (10) times greater than the basic
monetary judgment. Private respondents posted a supersedeas bond of P270,000.00, obviously, on the honest
belief that the amount was sufficient. At the very least, therefore, there was substantial compliance with the
requirement of appeal bond. For to rule otherwise would negate the interest of justice and deviate from the
mandate of the Labor Code that the rules of procedure should be liberally construed, thus:
SECTION 2. CONSTRUCTION . These Rules shall be liberally construed to carry out the objectives of the
Constitution and the Labor Code of the Philippines and to assist the parties in obtaining a just, expeditious and
inexpensive settlement of labor disputes.
In Ruga v. NLRC,[8] we held:
Fundamental considerations of substantial justice persuade Us to decide the instant case on the merits rather
than to dismiss it on a mere technicality. In so doing, we exercise the prerogative accorded to this Court
enunciated in Firestone Filipinas Employees Association, et al. v. Firestone Tire and Rubber Co. of the Philippines,
Inc., 61 SCRA 340 (1974), thus 'the well-settled doctrine is that in labor cases before this Tribunal, no undue
sympathy is to be accorded to any claim of a procedural misstep, the idea being that its power be exercised
according to justice and equity and substantial merits of the controversy.'
Since private respondents filed a bond which they honestly believed sufficient for purposes of their appeal,
respondent NLRC should have called their attention that the bond was inadequate, which it did not.
In YBL (Your Bus Line) v. NLRC,[9] we had occasion to rule that:
The Court finds that while Article 223 of the Labor Code, as amended by Republic Act No. 6715, requiring a cash
or surety bond in the amount equivalent to the monetary award in the judgment appealed from for the appeal to
be perfected, may be considered a jurisdictional requirement, nevertheless, adhering to the principle that
substantial justice is better served by allowing the appeal on the merits threshed out by the NLRC, the Court finds
and so holds that the foregoing requirement of the law should be given a liberal interpretation.
In Star Angel Handicraft v. NLRC,[10] we likewise declared that the provisions of the Labor Code on requiring
a bond on appeals involving monetary awards must be given liberal interpretation in line with the desired objective
of resolving controversies on the merits.[11]
Consequently, respondent NLRC conformably took cognizance of the appeal filed by private respondents.
We turn then to the issue of petitioner's separation from employment.
Petitioner claims that the position he was occupying was not duly abolished, hence, his employment was
illegally terminated.
We do not agree. It is a management prerogative to abolish a position which it deems no longer necessary
and this Court, absent any findings of malice and arbitrariness on the part of management, will not efface such
privilege if only to protect the person holding that office.[12] In the present case, the position of Assistant Station
Manager was deemed a superfluity as the functions of the said office could be performed by trained personnel
already in the company's employ. Moreover, the abolition of the position was seen as a cost-effective measure to
cut operational expenses so as not to incur further losses already suffered by the company's Manila office on
account of low passenger yield. Certainly, the position was not abolished because the petitioner was the occupant
thereof but because the functions of the position had become redundant and unnecessary. Verily, therefore, the
deletion of the petitioner's position should be accepted and validated as a valid exercise of management
prerogative.
We quote with favor public respondent's ratiocination on the point:
Complainant Conrado Cosico, Jr., occupied a managerial position prior to the abolition of his position and as such
had a limited tenure of office because the company has the prerogative to abolish managerial and confidential
positions or create new ones as the necessity for them requires (BONDOC VS. PEOPLES'S (sic) BANK AND TRUST
COMPANY, L-43835, MARCH 31, 1981, 103 SCRA 599). A managerial position must be distinguished from the case
of ordinary rank and file employees whose termination on the basis of this same grounds requires a higher proof
of involvement in the events in question. Unfortunately, the Labor Arbiter applied the rule for rank and file
employees in this particular case.
The Supreme Court, in the case of CAFFCO INTERNATIONAL LIMITED VS. OFFICE OF THE MINISTER MINISTRY OF
LABOR AND EMPLOYMENT AND CAFFCO EMPLOYEES UNION ADLO, G.R. NO. 76966, AUG. 7, 1992 had the
occasion to differentiate between redundancy and retrenchment in that:

When an employer decides to reduce the number of its personnel in order to prevent further losses, he is
exercising his right to retrench employees to prevent losses in his business operations. On the other hand, where
for purposes of economy, a company decides to reorganize its departments by imposing on employees of one
department the duties performed by the employees of the other department, thus rendering unnecessary the job
of the latter, the service of the employees whose functions are not being performed by the others may be validly
terminated on the ground of redundancy.

We therefore, find and so hold that respondent company's action was justified in exercising its management
prerogative in abolishing the position of complainant without any abuse of discretion resulting in a malicious and
arbitrary manner constituting bad faith.[13]

Given the preceding factual and legal milieu, petitioner's claim for moral and exemplary damages falls to
naught. Moral and exemplary damages are recoverable only where the dismissal of an employee was attended by
bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good
customs or public policy.[14] Since none of the circumstances warranting the grant of moral and exemplary damages
obtains here, the same cannot be awarded.

WHEREFORE, the petition for certiorari is hereby DISMISSED, and the challenged resolutions of respondent
National Labor Relations Commission are hereby AFFIRMED.

SO ORDERED.

Bellosillo, Vitug, and Hermosisima, Jr., JJ., concur.

Padilla, J., on leave.
People vs. Purisima (Statutory Construction)

Facts:
These twenty-six (26) Petitions for Review filed by the People of the Philippines represented, respectively, by the
Office of the City Fiscal of Manila, the Office of the Provincial Fiscal of Samar, and joined by the Solicitor General,
are consolidated in this one Decision as they involve one basic question of law.
The respondent-courts are: CFI of Manila Branches VII and XVIII and CFI of Samar
2. Under Sec. 5 Rule 110 of the Rules of Court, for a complaint or information to be sufficient, it must state the
designation of the offense by the statute and the acts or omissions complained of as constituting the offense. This
is essential to avoid surprise on the accused and to afford him the opportunity to prepare his defense accordingly.
3. The supreme court says that the preamble of PD#9 states that the intention of such decree is to penalize the
acts which are related to Proc.1081 which aim to suppress lawlessness, rebellion, subversive acts, and the like.
While the preamble is not a part of the statute, it implies the intent and spirit of the decree. The preamble and
whereas clauses also enumerate the facts or events which justify the promulgation of the decree and the stiff
sanctions provided.

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

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

Issue:

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

Held:

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