G. R. No.
L-23004, June 30, 1965 The Manila Stock Exchange, obviously the beneficiary of the disputed rule,
MAKATI STOCK EXCHANGE, INC., PETITIONER, VS. SECURITIES
AND EXCHANGE COMMISSION AND MANILA STOCK
EXCHANGE, RESPONDENTS.
DECISION
BENGZON, C.J.:
This is a review of the resolution of the Securities and Exchange Commission
which would deny the Makati Stock Exchange, Inc., permission to operate a stock
exchange unless it agreed not to list for trading on its board, securities already listed
in the Manila Stock Exchange.
Objecting to the requirement, Makati Stock Exchange, Inc., contends that the
Commission has no power to impose it and that, anyway, it is illegal, discriminatory
and unjust.
Under the law, no stock exchange may do business in the Philippines unless it is
previously registered with the Commission by filing a statement containing the
information described in sec. 17 of the Securities act (Commonwealth 83, as
amended).
It is assumed that the Commission may permit registration if the section is
complied with; if not, it may refuse. And there is now no question that the section
has been complied with, or would be complied with, except that the Makati Stock
Exchange, upon challenging this particular requirement of the Commission (rule
against double listing) may be deemed to have shown inability or refusal to abide
by its rules, and thereby to have given ground for denying registration, [sec. 17(a)
(1) and (d)].
Such rule provides: * * * nor shall a security already listed in any securities exchange
be listed anew in any other securities exchange * * *.
The objection of Makati Stock Exchange, Inc., to this rule is understandable. There
is actually only one securities exchange—The Manila Stock Exchange,—that has
been operating alone for the past 25 years; and all—or presumably all—available
or worthwhile securities for trading in the market are now listed there. In effect,
the Commission permits the Makati Exchange, Inc., to deal only with other securities.
Which is tantamount to permitting a store to open provided it sells only those goods
not sold in other stores. And if there's only one existing store,[1] the result is a
monopoly.
It is not far-fetched to assert—as petitioner does[2]— that for all practical purposes,
the Commission's order of resolution, would make it impossible for the Makati
Stock Exchange to operate. So, its "permission" amounted to a "prohibition".
Apparently, the Commission acted "in the public interest".[3] Hence, it is pertinent
to inquire whether the Commission may "in the public interest" prohibit (or make
impossible) the establishment of another stock exchange (besides the Manila Stock
Exchange), on the ground that the operation of two or more exchanges adversely
affects the public interest.
At first glance, the answer should be in the negative, because the law itself
contemplated, and, therefore, tacitly-permitted or tolerated at least, the operation
of two oi more exchanges.
"Wherever two or more exchanges exist, the Commission, by order, shall require and
enforce uniformity of trading regulations in and/ or between said exchanges."
[Italics Ours] (Sec. 28b-13, Securities Act.)
In fact, as admitted by respondents, there were five stock exchanges in Manila,
before the Pacific War (p. 10, brief), when the Securities Act was approved or
amended. (Respondent Commission even admits that dual listing was practiced
then.) So if the existence of more than one exchange were contrary to public
interest, it is strange that the Congress having from time to time enacted legislation
amending the Securities Act[4], has not bared multiplicity of exchanges.
Forgetting for the moment the monopolistic aspect of the Commission's
resolution, let us examine the authority of the Commission to promulgate and
implement the rule in question.
It is fundamental that an administrative officer has only such powers as are
expressly granted to him by the statute, and these necessarily implied in the exercise
thereof.
In its brief and its resolution now subject to review, the Commission cites no
provision expressly supporting its rule. Nevertheless, it suggests that the power is
"necessary for the execution of the functions vested in it"; but it makes no
explanation, perhaps relying on the reasons advanced in support of its position
that trading of the same securities in two or more stock exchanges, fails to give
protection to the investors, besides contravening public interest. (Of this, we shall
treat later.)
On the legality of its rule, the Commission's argument is that: (a) it was approved
by the Department Head— before the War; and (b) it is not in conflict with the
provisions of the Securities Act. In our opinion, the approval of the Department[5],
by itself, adds no weight in a judicial litigation; and the test is not whether the Act
forbids the Commission from imposing a prohibition; but whether it empowers the
Commission to prohibit. No specific portion of the statute has been cited to
uphold this power. It is not found in sec. 28 (of the Securities Act), which is entitled
"Powers (of the Commission) with respect to Exchanges and Securities" [6].
According to many court precedents, the general power to "regulate" which the
Commission has (Sec. 33) does not imply authority to prohibit.[7]
contends that the power may be inferred from the express power of the
Commission to suspend trading in a security, under said sec. 28 which reads partly:
"* * * and if in its opinion, the public interest so requires: summarily to suspending
trading in any registered security on any Securities exchange. * * *." (Sec. 28(3),
Securities Act.)
However, the Commission has not acted—nor claimed to have acted—in
pursuance of such authority, for the simple reason that suspension under it, may
only be for ten days. Indeed, this section, if applicable, precisely argues against the
position of the Commission because the "suspension", if it is, and as applied to
Makati Stock Exchange, continues for an indefinite period, if not forever; whereas
this section 28 authorizes suspension for ten days only. Besides, the suspension of
trading in the security should not be on one exchange only, but on all exchanges;
bearing in mind that suspension should be ordered "for the protection of
investors" (first par., sec. 28) in all exchanges, naturally, and "if the public interest
so requires" [sec. 28(3)].
This brings up the Commission's principal conclusions underlying its
determination, viz, (a) that the establishment of another exchange in the environs
of Manila would be inimical to the public interest; and (b) that double or multiple
listing of securities should be prohibited for tho "protection of the investors."
(a) Public Interest.—Having already adverted to this aspect of the matter, and the
emerging monopoly of the Mania Stock Exchange, we may, at this juncture,
emphasize that by restricting free competition in the marketing of stocks, and
depriving the public of the advantages thereof, the Commission all but permits what
the law punishes as monopolies as "crimes against public interest".
"A stock exchange is essentially monopolistic" the Commission states in its
resolution (p. 14-a, Appendix, Brief for Petitioner). This reveals the basic
foundation of the Commission's process of reasoning. And yet, a few pages
afterwards, it recalls the benefits to be derived "from the existence of two or more
exchanges", and the desirability of "a healthy and fair competition in the securities
market", even as it expresses the belief that "a fair field of competition among
stock exchanges should be encouraged"; only to resolve, paradoxically enough,
that Manila Stock Exchange shall, in effect, continue to be the only stock exchange in
Manila or in the Philippines.[8]
"Double listing of a security," explains the Commission, "divides the sellers and
the buyers, thus destroying the essence of a stock exchange as a two-way auction
market for the securities, where all the buyers and sellers in one geographical area
converge in one defined place, and the bidders compete with each other to
purchase the security at the lowest possible price and those seeking to sell it
compete with each other to get the highest price therefor. In this sense, a stock
exchange is essentially monopolistic."
Inconclusive premises, for sure. For it is debatable whether the buyer of stock may
get the lowest price where all the sellers assemble in only one place. The price there,
in one sale, will tend to fix the price for the succeeding sales, and he has no chance to
get a lower price except at another stock exchange. Therefore, the arrangement desired
by the Commission may, at most, be beneficial to sellers of stock—not to buyers;—
although what applies to buyers, should obtain equally as to sellers (looking for
higher prices). Besides, there is the brokerage fee, which must be considered. Not
to mention the personality of the broker.
(b) Protection of investors.—At any rate, supposing the arrangement contemplated is
beneficial to investors (as the Commission says), it is to be doubted whether it is
"necessary" for their "protection" within the purview of the Securities Act. As the
purpose of the Act is to give adequate and effective protection to the investing
public against fraudulent representations, or false promises, and the imposition of
worthless ventures", it is hard to see how the proposed concentration of the
market, has a necessary bearing to the prevention of deceptive devices or unlawful
practices. For it is not mere semantics to declare that acts for the protection of
investors are necessarily beneficial to them; but not everything beneficial to them
is necessary for their protection.
And yet, the Commission realizes that if there were two or more exchanges "the
same security may sell for more in one exchange and sell for less in the other.
Variance in price of the same security would be the rule * * *." Needless to add,
the brokerage rates will also differ.
This precisely, strengthens the objection to the Commission's ruling. Such
difference in prices and rates gives the buyer of shares alternative options, with the
opportunity to invest at lower expense; and the seller, to dispose at higher prices.
Consequently, for the investors' benefit (protection is not the word), duality of
listing"1 should be permitted, nay, encouraged, and other exchanges allowed to
operate. The circumstance that some people "made a lot of money due to the
difference in prices of securities traded in the stock exchanges of Manila before
the war" as the Commission noted, furnishes no sufficient reason to let one
exchange corner the market. If there was undue manipulation or unfair advantage
in exchange trading the Commission should have other means to correct the
specific abuses.
Granted that, as the Commission observes, "what the country needs is not
another" market for securities already listed on the Manila Stock Exchange, but
"one that would focus its attention and energies to the listing, of now securities
and thus effectively help in raising capital sorely needed by our * * * unlisted
industries and enterprises."
Nonetheless, we discover no legal authority for it to shore up (and stiffle) free
enterprise and individual liberty along channels leading to that economic
desideratum.[11]
The Legislature has specified the conditions under which a stock exchange may
legally obtain a permit (sec. 17, Securities Act) ; it is not for the Commission to
impose others. If the existence of two competing exchanges jeopardizes public
interest which is doubtful—let the Congress speak.[12] Undoubtedly, the opinion
and recommendations of the Commission will be given weight by the Legislature,
in judging whether or not to restrict individual enterprises and business
opportunities. Cut until otherwise directed by law, the operation of exchanges
should not be so regulated as practically to create a monopoly by preventing the
establishment of other stock exchanges, and thereby contravening
(a) the organizers' (Makati's) Constitutional right to equality before the law;
(b) their guaranteed civil liberty to pursue any lawful employment or trade; and
(c) the investors' right to choose where to buy or to sell, and his privilege to select
the brokers in his employment.[13]
And no extended elucidation is needed to conclude that for a licensing officer to
deny license solely on the basis of what he believes is best for the economy or the
country, may amount to regimentation or, in this instance, the exercise of
undelegated legislative powers and discretion.
Thus, it has been held that where the licensing statute does not expressly or
impliedly authorize the officer in charge, he may not refuse to grant a license simply
on the ground that a sufficient number of licenses to serve the needs of the public,
have already been issued. (53 C.J.S. p. 636.)
Concerning res judicata.—Calling attention to the Commission order of May 27, 1963,
which Makati Stock did not appeal, the Manila Stock Exchange pleads the doctrine
of res judicata [14] (The order now reviewed is dated May 7, 1964.)
It appears that when Makati Stock Exchange, Inc. presented its articles of
incorporation to the Commission, the later, after making some inquiries, issued on
May 27, 1963, an order reading as follows:
"Let the certificate of incorporation of the MAKATI STOCK EXCHANGE be
issued, and if the organizers thereof are willing to abide by the foregoing
conditions, they may file the proper application for the registration and licensing
of the said Exchange."
In that order, the Commission advanced the opinion that "it would permit the
establishment and operation of the proposed Makati Stock Exchange, provided *
* * it shall not
list for trading on its board, securities already listed in The Manila Stock Exchange
* * *."
Admittedly, Makati Stock Exchange, Inc., has not appealed from that order of May
27, 1963. Now, Manila Stock insists on res judicata.
Why should Makati have appealed? It got the certificate of incorporation which it
wanted. The condition or proviso mentioned would only apply if and when it
subsequently filed the application for registration as stock exchange. It had not yet
applied. It was not the time to question the condition [51]; Makati was still exploring
the convenience of soliciting the permit to operate subject to that condition. And
it could have logically thought that, since the condition did not affect its articles of
incorporation, it should not appeal the order (of May 27, 1963) which after all,
granted the certificate of incorporation (corporate existence) it wanted at that time.
And when the Makati Stock Exchange finally found that it could not successfully
operate with the condition attached, it took the issue by the horns, and expressing
its desire for registration and license, it requested that the condition (against double
listing) be dispensed with. The order of the Commission denying such request is
dated May 7, 1964, and is now under review.
Indeed, there can be no valid objection to the discussion of this issue of double
listing now in, because even if the Makati Stock Exchange, Inc. may be held to
have accepted the permission to operate with the condition against double listing (for
having failed to appeal the order of May 27, 1963), still it was not precluded from
afterwards contesting17 the validity of such condition or rule:
"(1) An Agreement (which shall not be construed as a waiver of tiny count it constitutional
right or any right to contest the validiy of any rule or regulation) to comply and to enforce
so fur as is within its powers, compliance by its numbers, with the provisions of
this Act, and any amendment thereto, and any rule or regulation made or to be
made thereunder. (Sec. 17-a-l, Securities Act) Italics Ours]
Surely, this petition for review has suitably been coursed. And making reasonable
allowances for the presumption of regularity and validity of administrative action,
we feel constrained to reach the conclusion that the respondent Commission
possesses no power to impose the condition or rule, which, additionally, results in
discrimination and violation of constitutional rights.
Accordingly, the license of the petitioner to operate a stock exchange is approved
without such condition. Costs shall be paid by the Manila Stock Exchange. So
ordered.
Bautista Angelo, Conception, Reyes, J. B. L., Parades, Dizon, Regala, Makalintal, Bengzon,
J. P., and Zaldivar, JJ., concur.
Petition granted.
G.R. No. L-43653, November 29, 1977
RADIO COMMUNICATIONS OF THE PHILIPPINES, INC. (RCPI),
PETITIONER, VS. BOARD OF COMMUNICATIONS AND DIEGO
MORALES, RESPONDENTS.
[G.R. NO. L-45378. NOVEMBER 29, 1977]
RADIO COMMUNICATIONS OF THE PHILIPPINES, INC. (RCPI),
PETITIONER, VS. BOARD OF COMMUNICATIONS AND PACIFICO
INNOCENCIO, RESPONDENTS.
DECISION
MARTIN, J.:
These two petitions (G.R. No. L-43653 and G.R. L-45378) for review by certiorari
of the decisions of the Board of Communications in BC Case No. 75-01-OC,
entitled "Diego T. Morales vs. Radio Communications of the Philippines, Inc.
(RCPI)" and BC Case No. 75-08-OC, entitled "Pacifico Innocencio vs. Radio
Communications of the Philippines, Inc. (RCPI), " have been consolidated as per
resolution of this Court dated March 21, 1977, as they involve the same issue as to
whether the Board of Communications has jurisdiction over claims for damages
allegedly suffered by private respondents for failure to receive telegrams sent thru
the petitioner Radio Communications of the Philippines, Inc., RCPI for short.
In BC Case No. 75-01-OC (G.R. No. L-43653) complainant respondent Diego
Morales claims that while he was in Manila his daughter sent him a telegram on
October 15, 1974 from Santiago, Isabela, informing him of the death of his wife,
Mrs. Diego T. Morales. The telegram sent thru the petitioner RCPI however never
reached him. He had to be informed personally about the death of his wife and
so to catch up with the burial of his wife, he had to take the trip by airplane to
Isabela. In its answer petitioner RCPI claims that the telegram sent by respondent
was transmitted from Santiago, Isabela to its Message Center at Cubao, Quezon
City but when it was relayed from Cubao, the radio signal became intermittent
making the copy received at Sta. Cruz, Manila unreadable and
unintelligible. Because of the failure of the RCPI to transmit said telegram to him,
respondent allegedly suffered inconvenience and additional expenses and prays for
damages.
In BC Case No. 75-08-OC (G.R. No. L-45378) complainant respondent Pacifico
Innocencio claims that on July 13, 1975 Lourdes Innocencio sent a telegram from
Paniqui, Tarlac, thru the facilities of the petitioner RCPI to him at Barrio Lomot,
Cavinti, Laguna for the purpose of informing him about the death of their
father. The telegram was never received by Pacifico Innocencio. Inspite of the
non-receipt and/or non-delivery of the message sent to said address, the sender
(Lourdes Innocencio) has not been notified about its non-delivery. As a
consequence Pacifico Innocencio was not able to attend the internment of their
father at Moncada, Tarlac. Because of the failure of RCPI to deliver to him said
telegram he allegedly was "shocked when he learned about the death of their father
when he visited his hometown Moncada, Tarlac on August 14, 1975," and thus
suffered mental anguish and personal inconveniences. Likewise, he prays for
damages.
After hearing, the respondent Board in both cases held that the service rendered
by petitioner was inadequate and unsatisfactory and imposed upon the petitioner
in each case a disciplinary fine of P200 pursuant to Section 21 of Commonwealth
Act 146, as amended, by Presidential Decree No. 1 and Letter of Implementation
No. 1.
The main thrust of the argument of petitioner is that respondent Board has no
jurisdiction to entertain and take cognizance of complaints for injury caused by
breach of contractual obligation arising from negligence covered by Article 1170
of the Civil Code[1] and injury caused by quasi delict or tort liability under Article
2176 of the Civil Code[2] which according to it should be ventilated in the proper
courts of justice and not in the Board of Communications.
We agree with petitioner RCPI. In one case We have ruled that the Public Service
Commission and its successor in interest, the Board of Communications, "being a
creature of the legislature and not a court, can exercise only such jurisdiction and
powers as are expressly or by necessary implication, conferred upon it by statute".[3]
The functions of the Public Service Commission are limited and administrative in
nature and it has only jurisdiction and power as are expressly or by necessary
implication conferred upon it by statute.[4] As successor in interest of the Public
Service Commission, the Board of Communications exercises the same powers,
jurisdiction and functions as that provided for in the Public Service Act for the
Public Service Commission. One of these powers as provided under Section 129
of the Public Service Act governing the organization of the Specialized Regulatory
Board, is to issue certificate of public convenience. But this power to issue
certificate of public convenience does not carry with it the power of supervision
and control over matters not related to the issuance of certificate of public
convenience or in the performance therewith in a manner suitable to promote
public interest. But even assuming that the respondent Board of Communications
has the power or jurisdiction over petitioner in the exercise of its supervision to
insure adequate public service, petitioner cannot be subjected to payment of fine
under Section 21 of the Public Service Act, because this provision of the law
subjects to a fine every public service that violates or fails to comply with the terms
and conditions of any certificate or any orders, decisions or regulations of the
Commission. In the two cases before Us petitioner is not being charged nor
investigated for violation of the terms and conditions of its certificate of public
convenience or of any order, decision or regulations of the respondent Board of
Communications. The complaint of respondents in the two cases was that they
were allegedly inconvenienced or injured by the failure of the petitioner to transmit
to them telegrams informing them of the deaths of close relatives which according
to them constitute breach of contractual obligation through negligence under the
Civil Code. The charges, however, do not necessarily involve petitioner's failure
to comply with its certificate of public convenience or any order, decision or
regulation of the respondent Board of Communications. It is clear from the
record that petitioner has not been charged of any violation or failure to comply
with the terms and conditions of its certificate of public convenience or of any
order, decision or regulation of the respondent Board. The charge does not relate
to the management of the facilities and system of transmission of messages by
petitioner in accordance with its certificate of public convenience. If in the two
cases before Us complainants Diego Morales and Pacifico Innocencio allegedly
suffered injury due to petitioner's breach of contractual obligation arising from
negligence, the proper forum for them to ventilate their grievances for possible
recovery of damages against petitioner should be in the courts and not in the
respondent Board of Communications. Much less can it impose the disciplinary
fine of P200 upon the petitioner. In Francisco Santiago vs. RCPI (G.R. No. L-
29236) and Constancio Langan vs. RCPI (G.R. No. L-29247), this Court speaking
thru Justice Enrique Fernando, ruled:
"There can be no justification then for the Public Service Commission (now the
Board of Communications as successor in interest) imposing the fines in these two
petitions. The law cannot be any clearer. The only power it possessed, over radio
companies as noted was to fix rates. It could not take to task a radio company for
any negligence or misfeasance. It was not vested with such authority. What it did
then in these two petitions lacked the impress of validity.
"In the face of the provision itself; it is rather apparent that the Public Service
Commission lacked the required power to proceed against petitioner. There is
nothing in Section 21 thereof which empowers it to impose a fine that calls for a
different conclusion."
WHEREFORE, both decisions of respondent Board of Communications in BC
Case No. 75-01-OC and BC Case No. 75-08-OC are hereby reversed, set aside,
declared null and void for lack of jurisdiction to take cognizance of both
cases. Without costs.
SO ORDERED.
Teehankee, (Chairman), Makasiar, Muñoz Palma, Fernandez, and Guerrero, JJ., concur
G.R. No. L-45839, June 01, 1988
RUFINO MATIENZO, GODOFREDO ESPIRITU, DIOSCORRO
FRANCO, AND LA SUERTE TRANSPORTATION CORPORATION,
PETITIONERS, VS. HON. LEOPOLDO M. ABELLERA, ACTING
CHAIRMAN OF THE BOARD OF TRANSPORTATION, HON.
GODOFREDO Q. ASUNCION, MEMBER OF THE BOARD OF
TRANSPORTATION, ARTURO DELA CRUZ, MS
TRANSPORTATION CO., INC., NEW FAMILIA TRANSPORTATION
CO., ROBERTO MOJARES, ET AL., RESPONDENTS.
DECISION
GUTIERREZ, JR., J.:
This is a petition for certiorari and prohibition, with application for preliminary
injunction, seeking the annulment and inhibition of the grant or award of
provisional permits or special authority by the respondent Board of
Transportation (BOT) to respondent taxicab operators, for the operation and
legalization of "excess taxicab units" under certain provisions of Presidential
Decree No. 101 "despite the lapse of the power to do so thereunder," and "in
violation of other provisions of the Decree, Letter of Instructions No. 379 and
other relevant rules of the BOT."
The petitioners and private respondents are all authorized. taxicab operators in
Metro Manila. The respondents, however, admittedly operate "colorum" or "kabit"
taxicab unit's. On or about the second week of February, 1977, private respondents
filed their petitions with the respondent Board for the legalization of their
unauthorized "excess" taxicab units citing Presidential Decree No. 101,
promulgated on January 17, 1973, "to eradicate the harmful and unlawful trade of
clandestine operators, by replacing or allowing them to become legitimate and
responsible operators." Within a matter of days, the respondent Board
promulgated its orders setting the applications for hearing and granting applicants
provisional authority to operate their "excess taxicab units" for which legalization
was sought. Thus, the present petition.
Opposing the applications and seeking to restrain the grant of provisional permits
or authority, as well as the annulment of permits already granted under PD 101,
the petitioners allege that the BOT acted without jurisdiction in taking cognizance
of the petitions for legalization and awarding special permits to the private
respondents.
Presidential Decree No. 101 vested in the Board of Transportation the power,
among others "To grant special permits of limited term for the operation of public
utility motor vehicles as may. in the judgment of the Board, be necessary to replace
or convert clandestine operators into legitimate and responsible operators."
(Section 1, PD 101)
Citing, however, Section 4 of the Decree which provides:
"SEC. 4. Transitory Provision. — Six months after the promulgation of this Decree,
the Board of Transportation, the Bureau of Transportation, The Philippine
Constabulary, the city and municipal forces, and the provincial and city fiscals shall
wayc a concerted and relentless drive towards the total elimination and punishment
of all clandestine and unlawful operators of public utility motor vehicles."
the petitioners argue that neither the Board of Transportation chairman nor any
member thereof had the power, at the time the petitions were filed (i.e. in 1977).
to legitimize clandestine operations under PD 101 as such power had been limited
to a period of six (6) months from and after the promulgation of the Decree on
January 17, 1973. They state that, thereafter, the power lapses and becomes functus
officio.
To reinforce their stand, the petitioners refer to certain provisions of the Rules
and Regulations implementing PD 101 issued by respondent Board, Letter of
Instructions No. 379, and BOT Memorandum Circular No. 76-25 (a). In summary,
these rules provide inter alia that (1) only applications for special permits for
"colorum" or "kabit" operators filed before July 17. 1973 shall be accepted and
processed (Sees. 3 and 16 (c), BOT-LTC-HPG Joint Regulations Implementing
PD 101, pp. 33 and 47, Rollo); (2) Every provisional authority given to any taxi
operator shall be cancelled immediately and no provisional authority shall
thereafter be issued (par. 6, Letter of Instructions No. 379. issued March 10. 1976,
p. 58, Rollo); (3) Effective immediately, no provisional authorities on applications
for certificates of public convenience shall be granted or existing provisional
authorities on new applications extended to, among others, taxi denominations in
Metro Manila (BOT Memorandum Circular No. 75-25 (a), August 30. 1976, p. 64,
Rollo); (4) All taxis authorized to operate within Metro Manila shall obtain new
special permits from the BOT. which permits shall be the only ones recognized
within the area (par. 8. LOI No. 379, supra): and (5) No bonafide applicant may
apply for special permit to operate, among others, new taxicab services, and, no
application for such new service shall be accepted for filing or processed by any
LTC agency or granted under these regulations by any LTC Regional Office until
after it shall have announced its program of development for these types of public
motor vehicles (Sec. 16d. BOT-LTC-HPG Joint Regulations, p. 47, Rollo).
The petitioners raise the following issues:
I. WIIHTIIHR OR NOT THE BOARD OF TRANSPORTATION HAS
THE POWER TO GRANT PROVISIONAL PERMITS TO OPERATE
DESPITE THE BAN THEREON UNDER LETTER OF
INSTRUCTIONS NO. 379;
II. WHETHER OR NOT THE BOARD OF TRANSPORTATION HAS Tin;
POWER TO LEGALIZE, AT THIS TIME, CLANDESTINE AND
UNLAWFUL TAXICAB OPERATIONS UNDER SECTION 1, P.D. 101;
AND
"III.WHETHER OR NOT THE PROCEDURE BEING FOLLOWED BY
THE BOARD IN THE CASES IN QUESTION SATISFIES THE
PROCEDURAL DUE PROCESS REQUIREMENTS." (p. 119, Rollo)
We need not pass upon the first issue raised anent the grant of provisional
authority to respondents. Considering that the effectivity of the provisional
permits issued to the respondents was expressly limited to June 30, 1977, as
evidenced by the BOT orders granting the same (Annexes G, H, I and J among
others) and Memorandum Circular No. 77-4 dated January 20, 1977 (p. 151, Rollo),
implementing paragraph 6 of LOI 379 (ordering immediate cancellation of all
provisional authorities issued to taxicab operators, supra), which provides:
"5. After June 30, 1977, all provisional authorities are deemed cancelled, even if
hearings on the main application have not been terminated."
the issue is MOOT and ACADEMIC. Only the issue on legalization remains under
consideration.
Justifying its action on private respondent's applications, the respondent Board
emphasizes public need as the overriding concern. It is argued that under PD 101,
it is the fixed policy of the State "'to eradicate the harmful and unlawful trade of
clandestine operators by replacing or allowing them to become legitimate and
responsible ones" (Whereas clause, PD 101). In view thereof, it is maintained that
respondent Board may continue to grant to ''colorum" operators the benefits of
legalization under PD 101, despite the lapse of its power, after six (6) months, to
do so, without taking punitive measures against the said operators.
Indeed, a reading of Section 1, PD 101, shows a grant of powers to the respondent
Board to issue provisional permits as a step towards the legalization of colorum
taxicab operations without the alleged time limitation. There is nothing in Section requirement. The petitioners having been able to timely oppose the petitions in
4, cited by the petitioners, to suggest the expiration of such powers six (6) months question, any lack of notice is deemed cured.
after promulgation of the Decree. Rather, it merely provides for the withdrawal of
the State's waiver of its right to punish said colorum operators for their illegal acts. WHEREFORE, the petition is hereby DISMISSED for lack of merit. The
In other words, the cited section declares when the period of moratorium questioned orders of the then Board of Transportation are AFFIRMED.
suspending the relentless drive to eliminate illegal operators shall end. Clearly,
there is no impediment to the Board's exercise of jurisdiction under its broad SO ORDERED.
powers under the Public Service Act to issue certificates of public convenience to
achieve the avowed purpose of PD 101 (Sec. 16a, Public Service Act, Nov. 7,
1936).
G.R. No. 170251, June 01, 2011
It is a settled principle of law that in determining whether a board or commission CELIA S. VDA. DE HERRERA, PETITIONER, VS. EMELITA
has a certain power, the authority given should be liberally construed in the light BERNARDO, EVELYN BERNARDO AS GUARDIAN OF ERLYN,
of the purposes for which it was created, and that which is incidentally necessary CRISLYN AND CRISANTO BERNARDO,* RESPONDENTS.
to a full implementation of the legislative intent should be upheld as being germane
to the law. Necessarily, too, where the end is required, the appropriate means are DECISION
deemed given (Martin, Administrative Law, 1979, p. 46). Thus, as averred by the PERALTA, J.:
respondents: This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking
"x x x [A]ll things considered, the question is what is the best for the interest of to reverse and set aside the Decision[1] and Resolution[2] of the Court of Appeals
the public. Whether PD 101 has lost its effectiveness or not, will in no way prevent (CA) in CA-G.R. SP No. 73674.
this Board from resolving the question in the same candor and spirit that P.D. 101 and
LOI 379 were issued to cope with the multifarious ills that plague our transport The antecedents are as follows:
system, x x x" (Italics ours) (pp. 91-92, Rollo)
This, the private respondents appreciate, as they make reference to PD 101, merely Respondents heirs of Crisanto S. Bernardo, represented by Emelita Bernardo, filed
to cite the compassion with which colorum operators were dealt with under the a complaint before the Commission on the Settlement of Land Problems
law. They state that it is "in the same vein and spirit that this Honorable Board has (COSLAP) against Alfredo Herrera (Alfredo) for interference, disturbance,
extended the Decree of legalization to the operatives of the various PUI and PUB unlawful claim, harassment and trespassing over a portion of a parcel of land
services along legislative methods," that respondents pray for authorization of situated at Barangay Dalig, Cardona, Rizal, with an area of 7,993 square meters. The
their colorum units in actual operation in Metro Manila (Petitions for Legalization, complaint was docketed as COSLAP Case No. 99-221.
Annexes E & F, par. 7, pp. 65-79, Rollo).
Respondents claimed that said parcel of land was originally owned by their
Anent the petitioners1 reliance on the BOT Rules and Regulations Implementing predecessor-in-interest, Crisanto Bernardo, and was later on acquired by Crisanto
PD 101 as well as its Memorandum Circular No. 76-25(a), the BOT itself has S. Bernardo. The parcel of land was later on covered by Tax Declaration No. CD-
declared: 006-0828 under the name of the respondents.
"In line with its duty to rationalize the transport industry, the Board shall, from
time to time, re-study the public need for public utilities in any area in the Petitioner, on the other hand, alleged that the portion of the subject property
Philippines for the purpose of re-evaluating the policies." (p. 64, Rollo) consisting of about 700 square meters was bought by Diosdado Herrera, Alfredo's
Thus, the respondents correctly argue that "as the need of the public changes and father, from a certain Domingo Villaran. Upon the death of Diosdado Herrera,
oscillates with the trends of modern life, so must the Memo Orders issued by Alfredo inherited the 700-square-meter lot.
respondent jibe with the dynamic and flexible standards of public needs, x x x
Respondent Board is not supposed to 'tie its hands' on its issued Memo Orders The COSLAP, in a Resolution[3] dated December 6, 1999, ruled that respondents
should public interest demand otherwise" (Answer of private respondents, p. 121, have a rightful claim over the subject property. Consequently, a motion for
Rollo). reconsideration and/or reopening of the proceedings was filed by Alfredo. The
COSLAP, in an Order[4] dated August 21, 2002, denied the motion and reiterated
The fate of the private respondents' petitions is initially for the Board to determine. its Order dated December 6, 1999. Aggrieved, petitioner Celia S. Vda. de Herrera,
From the records of the case, acceptance of the respondents' applications appears as the surviving spouse of Alfredo, filed a petition for certiorari with the CA.[5] The
to be a question correctly within the discretion of the respondent Board to decide. CA, Twelfth Division, in its Decision dated April 28, 2005, dismissed the petition
As a rule, where the jurisdiction of the BOT to take cognizance of an application and affirmed the resolution of the COSLAP. The CA ruled that the COSLAP has
for legalization is settled, the Court enjoins the exercise thereof only when there is exclusive jurisdiction over the present case and, even assuming that the COSLAP
fraud, abuse of discretion or error of law. Furthermore, the court does not has no jurisdiction over the land dispute of the parties herein, petitioner is already
interfere, as a rule, with administrative action prior to its completion or finality. It estopped from raising the issue of jurisdiction because Alfredo failed to raise the
is only after judicial review is no longer premature that we ascertain in proper cases issue of lack of jurisdiction before the COSLAP and he actively participated in the
whether the administrative findings are not in violation of law, whether they are proceedings before the said body. Petitioner filed a motion for reconsideration,
free from fraud or imposition and whether they find substantial support from the which was denied by the CA in a Resolution dated October 17, 2005.
evidence.
Hence, petitioner elevated the case to this Court via Petition for Review on
Finally, with respect to the last issue raised by the petitioners alleging the denial of Certiorari under Rule 45 of the Rules of Court, with the following issues:
due process by respondent Board in granting the provisional permits to the private I
respondents and in taking cognizance of their applications for legalization without
notice and hearing, suffice it to say that PD 101 does not require such notice or WHETHER OR NOT COSLAP HAD JURISDICTION TO DECIDE THE
hearing for the grant of temporary authority. The provisional nature of the QUESTION OF OWNERSHIP.
authority and the fact that the primary application shall be given a full hearing are II
the safeguards against its abuse. As to the applications for legalization themselves,
the Public Service Act does enjoin the Board to give notice and hearing before WHETHER OR NOT THE ISSUANCE OF A TORRENS TITLE IN THE
exercising any of its powers under Sec. 16 thereof. However, the allegations that NAME OF THE PETITIONER'S HUSBAND IN 2002 RENDERED THE
due process has been denied are negated by the hearings set by the Board on the INSTANT CONTROVERSY ON THE ISSUE OF OWNERSHIP OVER THE
applications as expressed in its orders resolving the petitions for special permits SUBJECT PROPERTY MOOT AND ACADEMIC.[6]
(Annexes G. H. I. pp. 80-102, Rollo).
Petitioner averred that the COSLAP has no adjudicatory powers to settle and
The Board stated: decide the question of ownership over the subject land. Further, the present case
"The grounds involved in the petition are of first impression. It cannot resolve the cannot be classified as explosive in nature as the parties never resorted to violence
issue ex-parte. It needs to hear the views of other parties who may have an interest, in resolving the controversy. Petitioner submits that it is the Regional Trial Court
or whose ineterest may be affected by any decision that this Board may take. which has jurisdiction over controversies relative to ownership of the subject
property.
"The Board therefore, decides to set the petition for hearing.
Respondents, on the other hand, alleged that the COSLAP has jurisdiction over
xxx the present case. Further, respondents argued that petitioner is estopped from
As to the required notice, it is impossible for the respondent Board to give personal questioning the jurisdiction of the COSLAP by reason of laches due to
notice to all parties who may be interested in the matter, which parties are Alfredo's active participation in the actual proceedings before the COSLAP.
unknown to it. Its aforementioned order substantially complies with the Respondents said that Alfredo's filing of the Motion for Reconsideration and/or
Reopening of the proceedings before the COSLAP is indicative of his conformity
with the questioned resolution of the COSLAP.
The main issue for our resolution is whether the COSLAP has jurisdiction to
decide the question of ownership between the parties.
The petition is meritorious.
The COSLAP was created by virtue of Executive Order (E.O.) No. 561, issued on
September 21, 1979 by then President Ferdinand E. Marcos. It is an administrative
body established as a means of providing a mechanism for the expeditious
settlement of land problems among small settlers, landowners and members of the
cultural minorities to avoid social unrest.
Section 3 of E.O. No. 561 specifically enumerates the instances when the
COSLAP can exercise its adjudicatory functions:
Section 3. Powers and Functions. - The Commission shall have the following powers
and functions:
x x x x
2. Refer and follow up for immediate action by the agency having appropriate
jurisdiction any land problem or dispute referred to the Commission: Provided,
That the Commission may, in the following cases, assume jurisdiction and
resolve land problems or disputes which are critical and explosive in nature
considering, for instance, the large number of the parties involved, the
presence or emergence of social tension or unrest, or other similar critical
situations requiring immediate action:
(a) Between occupants/squatters and pasture lease agreement holders or timber
concessionaires;
(b) Between occupants/squatters and government reservation grantees;
(c) Between occupants/squatters and public land claimants or applicants;
(d) Petitions for classification, release and/or subdivision of lands of the public
domain; and
(e) Other similar land problems of grave urgency and magnitude.[7]
Administrative agencies, like the COSLAP, are tribunals of limited jurisdiction that
can only wield powers which are specifically granted to it by its enabling
statute.[8] Under Section 3 of E.O. No. 561, the COSLAP has two options in
acting on a land dispute or problem lodged before it, to wit: (a) refer the matter to
the agency having appropriate jurisdiction for settlement/resolution; or (b) assume
jurisdiction if the matter is one of those enumerated in paragraph 2 (a) to (e) of
the law, if such case is critical and explosive in nature, taking into account the large
number of parties involved, the presence or emergence of social unrest, or other
similar critical situations requiring immediate action. In resolving whether to
assume jurisdiction over a case or to refer the same to the particular agency
concerned, the COSLAP has to consider the nature or classification of the land
involved, the parties to the case, the nature of the questions raised, and the need
for immediate and urgent action thereon to prevent injuries to persons and damage
or destruction to property. The law does not vest jurisdiction on the COSLAP
over any land dispute or problem.[9]
In the instant case, the COSLAP has no jurisdiction over the subject matter of
respondents' complaint. The present case does not fall under any of the cases
enumerated under Section 3, paragraph 2 (a) to (e) of E.O. No. 561. The dispute
between the parties is not critical and explosive in nature, nor does it involve a
large number of parties, nor is there a presence or emergence of social tension or
unrest. It can also hardly be characterized as involving a critical situation that
requires immediate action.
It is axiomatic that the jurisdiction of a tribunal, including a quasi-judicial officer
or government agency, over the nature and subject matter of a petition or
complaint is determined by the material allegations therein and the character of
the relief prayed for, irrespective of whether the petitioner or complainant is
entitled to any or all such reliefs.[10]
Respondents' cause of action before the COSLAP pertains to their claim of
ownership over the subject property, which is an action involving title to or
possession of real property, or any interest therein,[11] the jurisdiction of which is
vested with the Regional Trial Courts or the Municipal Trial Courts depending on
the assessed value of the subject property.[12]
The case of Banaga v. Commission on the Settlement of Land Problems, [13] applied by the
CA and invoked by the respondents, is inapplicable to the present case. Banaga
involved parties with conflicting free patent applications over a parcel of public
land and pending with the Bureau of Lands. Because of the Bureau of Land's
inaction within a considerable period of time on the claims and protests of the
parties and to conduct an investigation, the COSLAP assumed jurisdiction and
resolved the conflicting claims of the parties. The Court held that since the dispute
involved a parcel of public land on a free patent issue, the COSLAP had
jurisdiction over that case. In the present case, there is no showing that the parties
have conflicting free patent applications over the subject parcel of land that would
justify the exercise of the COSLAP's jurisdiction.
Since the COSLAP has no jurisdiction over the action, all the proceedings therein,
including the decision rendered, are null and void.[14] A judgment issued by a quasi-
judicial body without jurisdiction is void. It cannot be the source of any right or
create any obligation.[15] All acts performed pursuant to it and all claims emanating
from it have no legal effect.[16] Having no legal effect, the situation is the same as
it would be as if there was no judgment at all. It leaves the parties in the position
they were before the proceedings.[17]
Respondents' allegation that petitioner is estopped from questioning the
jurisdiction of the COSLAP by reason of laches does not hold water. Petitioner is
not estopped from raising the jurisdictional issue, because it may be raised at any
stage of the proceedings, even on appeal, and is not lost by waiver or by
estoppel.[18] The fact that a person attempts to invoke unauthorized jurisdiction of
a court does not estop him from thereafter challenging its jurisdiction over the
subject matter, since such jurisdiction must arise by law and not by mere consent
of the parties.[19]
In Regalado v. Go,[20] the Court held that laches should be clearly present for the
Sibonghanoy[21] doctrine to apply, thus:
Laches is defined as the "failure or neglect for an unreasonable and unexplained
length of time, to do that which, by exercising due diligence, could or should have
been done earlier, it is negligence or omission to assert a right within a reasonable
length of time, warranting a presumption that the party entitled to assert it either
has abandoned it or declined to assert it."
The ruling in People v. Regalario that was based on the landmark doctrine enunciated
in Tijam v. Sibonghanoy on the matter of jurisdiction by estoppel is the exception
rather than the rule. Estoppel by laches may be invoked to bar the issue of lack of jurisdiction
only in cases in which the factual milieu is analogous to that in the cited case. In such
controversies, laches should have been clearly present; that is, lack of jurisdiction
must have been raised so belatedly as to warrant the presumption that the party
entitled to assert it had abandoned or declined to assert it.
In Sibonghanoy, the defense of lack of jurisdiction was raised for the first time in a
motion to dismiss filed by the Surety almost 15 years after the questioned ruling
had been rendered. At several stages of the proceedings, in the court a quo as well
as in the Court of Appeals, the Surety invoked the jurisdiction of the said courts
to obtain affirmative relief and submitted its case for final adjudication on the
merits. It was only when the adverse decision was rendered by the Court of
Appeals that it finally woke up to raise the question of jurisdiction.[22]
The factual settings attendant in Sibonghanoy are not present in the case at bar that
would justify the application of estoppel by laches against the petitioner. Here,
petitioner assailed the jurisdiction of the COSLAP when she appealed the case to
the CA and at that time, no considerable period had yet elapsed for laches to attach.
Therefore, petitioner is not estopped from assailing the jurisdiction of the
COSLAP. Additionally, no laches will even attach because the judgment is null and
void for want of jurisdiction.[23]
Anent the issuance of OCT No. M-10991 in favor of petitioner's husband Alfredo
Herrerra in 2002, respondents alleged that there was fraud, misrepresentation and
bad faith in the issuance thereof. Thus, respondents are now questioning the
legality of OCT No. M-10991, an issue which this Court cannot pass upon in this
present petition. It is a rule that the validity of a Torrens title cannot be assailed
collaterally.[24] Section 48 of Presidential Decree No. 1529 provides that:
Certificate not Subject to Collateral Attack. − A certificate of title shall not be subject
to collateral attack. It cannot be altered, modified, or canceled, except in a direct
proceeding in accordance with law.
The issue of the validity of the Title was brought only during the proceedings
before this Court as said title was issued in the name of petitioner's husband only
during the pendency of the appeal before the CA. The issue on the validity of title,
i.e., whether or not it was fraudulently issued, can only be raised in an action
expressly instituted for that purpose[25] and the present appeal before us, is simply
not the direct proceeding contemplated by law.
WHEREFORE, the petition is GRANTED. The Decision and the Resolution
of the Court of Appeals, dated April 28, 2005 and October 17, 2005, respectively,
in CA-G.R. SP No. 73674 are REVERSED and SET ASIDE. The Decision and
Order of the Commission on the Settlement of Land Problems, dated December
6, 1999 and August 21, 2002, respectively, in COSLAP Case No. 99-221, are
declared NULL and VOID for having been issued without jurisdiction.
SO ORDERED.
G.R. No. L-17778, November 30, 1962
IN RE CONTEMPT PROCEEDINGS AGAINST ARMANDO RAMOS.
JESUS L. CARMELO, IN HIS CAPACITY AS CHAIRMAN OF THE
PROBE COMMITTEE, OFFICE OF THE MAYOR OF MANILA,
PETITIONER AND APPELLANT, VS. ARMANDO RAMOS,
RESPONDENT AND APPELLEE.
DECISION
REGALA, J.:
On February 3, 1960, the Mayor of Manila issued an executive order creating a
committee "to investigate the anomalies involving the license inspectors and other
personnel of the License Inspection Division of the Office of the City Treasurer
and of the License and Permits Division of this Office (of the Mayor)." He named
Mr. Jesus L. Carmelo as chairman of said committee.
It appears that the committee issued subpoenas to Armando Ramos, a private
citizen working as a bookkeeper in the Casa de Alba, requiring him to appear
before it on June 3, 8, 9, 15 and 16 and August 4 and 11, 1960, in connection with
an administrative case against Crisanto Estanislao but that Ramos, on whom the
subpoenas were duly served, refused to appear.
Claiming that Ramos' refusal tended "to impede, obstruct, or degrade the
administrative proceedings," petitioner filed in the Court of First Instance of
Manila a petition to declare Armando Ramos in contempt. After hearing, during
which petitioner was required to show a prima facie case, the trial court dismissed
the petition. The lower court held that there is no law empowering committees
created by municipal mayors to issue subpoenas and demand that witnesses testify
under oath. It also held that to compel Ramos to testify would be to violate his
right against self-incrimination.
It appears that in a statement given to investigators of the office of the Mayor,
Ramos admitted having misappropriated, on several occasions, sums of money
given to him by the owner of Casa de Alba for the payment of the latter's taxes for
1956-1959 and that this fact had not been discovered earlier because Ramos used
to entertain employees in the City Treasurer's office at Casa de Alba where Ramos
was a bookkeeper as stated above. The trial court held that to compel Ramos to
confirm this statement in the administrative case against certain employees in the
Office of the City Treasurer would be to compel him to give testimony that could
be used against him in a criminal case for estafa of which the owner of Casa de
Alba was the offended party. From that decision, petitioner appealed to this Court.
The main issue in this case is the power, if any, of a committee, like the committee
of which petitioner is the chairman, to subpoena witnesses to appear before it and
to ask for their punishment in case of refusal.
The rule is that Rule 64 (Contempt)[1] of the Rules of Court applies only to inferior
and superior courts and does not comprehend contempt committed against
administrative officials or bodies like the one in this case, unless said contempt is
clearly considered and expressly defined as contempt of court, as in done in paragraph
2 of Section 580 of the Revised Administrative Code. (People vs. Mendoza and
Dizon, 92 Phil., 570; 49 Off. Gaz. No. 2, 541)
Petitioner invokes Section 580 of the Revised Administrative Code which provides
as follows:
"Powers incidental to taking of testimony. When authority to take testimony or evidence
is conferred upon an administrative officer or upon any nonjudicial person,
committee, or other body, such authority shall be understood to comprehend the
right to administer oaths and summon witnesses and shall include authority to
require the production of documents under a subpoena duces tecum or otherwise,
subject in all respects to the same restrictions and qualifications as apply in judicial
proceedings of a similar character.
"Saving the provisions of section one hundred and two of this Act, any one who,
without lawful excuse, falls to appear upon summons issued under the authority
of the preceding paragraph or who, appearing before any individual or body
exercising the power therein defined, refuses to make oath, give testimony, or
produce documents for inspection, when thereunto lawfully required, shall be
subject to discipline as in case of contempt of court and upon application of the
individual or body exercising the power in question shall be dealt with by the judge
of first instance having jurisdiction of the case in the manner provided by law."
One who invokes this provision of the law must first show that he has "authority
to take the testimony or evidence" before he can apply to the courts for the
punishment of hostile witnesses. (Francia vs. Pecson, et al., 87 Phil., 100)
Now, what authority to take testimony does petitioner's committee have from
which the power to cite witnesses may be implied, pursuant to section 580?
To be sure, there is nothing said in the executive order of the Mayor creating the
committee about such a grant of power. All that the order gives to this body is the
power to investigate anomalies involving certain city employees.
Petitioner contends that the Mayor of Manila has the implied power to investigate
city officials and employees appointed by him to the end that the power expressly
vested in him to suspend and remove such officials or employees (Sec. 22,
Republic Act No. 409) may be justly and fairly exercised. We agree with this
proposition and We held so in the case of Pagkanluñgan vs. de la Fuente, 92 Phil.,
94; 48 Off. Gaz., No. 10, p. 4332. But We do not agree with the petitioner that a
delegation of such power to investigate implies also a delegation of the power to
take testimony or evidence of witnesses whose appearance may be required by the
compulsory process of subpoena. Thus, in denying this power to an investigating
body in the Office of the Mayor of Manila, We said in Francia vs. Pecson, et al.,
supra: "We do not think the mayor (of Manila) can delegate or confer the powers
to administer oaths, to take testimony, and to issue subpoenas."
Furthermore, it is doubtful whether the provisions of section 580 of the
Administrative Code are applicable to the City of Manila as these pertain to
national bureaus or offices of the government.
Citing 50 Am. Jur. 449, petitioner contends that "the power of the investigation
committee to issue compulsory process to secure the attendance of witnesses
undoubtedly exists since only complimentary to the power of the mayor to
investigate, suspend and remove city officers and employees, supra, is the
recognized rule that where the statute grants a right, it also confers by implication
every particularly power necessary for the exercise thereof." There is no merit in
the argument. In the first place, the authority cited speaks of statutory grant of
power to a body. Here, We have seen that whatever power may be claimed by
petitioner's committee may only be traced to the power of the Mayor to investigate
as implied from his power to suspend or remove certain city employees. There is
no statutory grant of power to investigate to petitioner's committee.
In the second place, even granting that the Mayor has the implied power to require
the appearance of witnesses before him, the rule, as noted earlier, is that the Mayor
can not delegate this power to a body like the committee of the petitioner. (Francia
vs. Pecson, et al., supra)
Lastly, 50 Am. Jur. Sec. 428, p. 450 itself admits an exception to the rule invoked
by the petitioner. Thus, it is stated that "where the liberty and property of persons
are sought to be brought within the operation of a power claimed to be impliedly
granted by an act because necessary to its due execution, the case must be clearly
seen to be within those intended to be reached." Here, no less than the liberty of
Armando Ramos is involved in the claim of the committee to the right to cite
witnesses.
We hold, therefore, that petitioner's committee has no power to cite witnesses to
appear before it and to ask for their punishment in case of refusal. This conclusion
makes it unnecessary for Us to pass upon the other error assigned by petitioner as
having been allegedly committed by the trial court.
Wherefore, the decision of the Court of First Instance of Manila is hereby
affirmed, without pronouncement as to costs.
Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., Barrera, Paredes, Dizon,
and Makalintal, JJ., concur.
G.R. No. L-29274, November 27, 1975
SEC. QUIRICO P. EVANGELISTA, IN HIS CAPACITY AS
SECRETARY OF THE PRESIDENTIAL AGENCY ON REFORMS
AND GOVERNMENT OPERATIONS, AND THE PRESIDENTIAL
AGENCY ON REFORMS AND GOVERNMENT OPERATIONS
(PARGO), PETITIONERS VS. HON. HILARION U. JARENCIO, AS
PRESIDING JUDGE, COURT OF FIRST INSTANCE OF MANILA,
BRANCH XXIII, AND FERNANDO MANALASTAS, ASSISTANT CITY
PUBLIC SERVICE OFFICER OF MANILA, AND ALL OTHER CITY
OFFICIALS AND EMPLOYEES SIMILARLY SITUATED,
RESPONDENTS.
DECISION
MARTIN, J.:
This is an original action for certiorari and prohibition with preliminary injunction,
under Rule 65 of the Rules of Court, seeking to annul and set aside the order of
respondent Judge, the Honorable Hilarion U. Jarencio, Presiding Judge of the
Court of First Instance of Manila, dated July 1, 1968, in Civil Case No. 73305,
entitled "Fernando Manalastas vs. Sec. Ramon D. Bagatsing, etc.", which reads as follows:
"IT IS ORDERED that, upon the filing of a bond in the amount of P5,000.00, let
the writ of preliminary injunction prayed for by the petitioner [private respondent]
be issued restraining the respondents [petitioners], their agents, representatives,
attorneys and/or other persons acting in their behalf from further issuing
subpoenas in connection with the fact-finding investigations to the petitioner
[private respondents] and from instituting contempt proceedings against the
petitioner [private respondent] under Section 580 of the Revised Administrative
Code.] (Italics supplied).
Pursuant to his special powers and duties under Section 64 of the Revised
Administrative Code,[1] the President of the Philippines created the Presidential
Agency on Reforms and Government Operations (PARGO) under Executive
Order No. 4 of January 7, 1966.[2] Purposedly, he charged the Agency with the
following functions and responsibilities:[3]
"b. To investigate all activities involving or affecting immoral practices, graft and
corruptions, smuggling (physical or technical), lawlessness, subversion, and all
other activities which are prejudicial to the government and the public interests,
and to submit proper recommendations to the President of the Philippines.
"e. To investigate cases of graft and corruption and violations of Republic Acts
Nos. 1379 and 3019, and gather necessary evidence to establish prima facie, acts of
graft and acquisition of unlawfully amassed wealth . . .
"h. To receive and evaluate, and to conduct fact-finding investigations of sworn
complaints against the acts, conduct or behavior of any public official or employee
and to file and prosecute the proper charges with the appropriate agency."
For a realistic performance of these functions, the President vested in the Agency
all the powers of an investigating committee under Sections 71 and 580 of the
Revised Administrative Code, including the power to summon witnesses by
subpoena or subpoena duces tecum, administer oaths, take testimony or evidence
relevant to the investigation.[4]
Whereupon, on June 7, 1968, petitioner Quirico Evangelista, as Undersecretary of
the Agency, issued to respondent Fernando Manalastas, then Acting City Public
Service Officer of Manila, a subpoena ad testificandum commanding him "to be and
appear as witness at the Office of the PRESIDENTIAL AGENCY ON
REFORMS AND GOVERNMENT OPERATIONS * * * then and there to
declare and testify in a certain investigation pending therein."
Instead of obeying the subpoena, respondent Fernando Manalastas filed on June
25, 1968 with the Court of First Instance of Manila an Amended Petition for
prohibition, certiorari and/or injunction with preliminary injunction and/or
restraining order docketed as Civil Case No. 73305 and assailed its legality.
On July 1, 1968, respondent Judge issued the aforementioned Order:
"IT IS ORDERED that, upon the filing of a bond in the amount of P5,000.00, let
the writ of preliminary injunction prayed for by the petitioner [private respondent]
be issued restraining the respondents [petitioners], their agents, representatives,
attorneys and/or other persons acting in their behalf from further issuing
subpoenas in connection with the fact-finding investigations to the petitioner
[private respondent] and from instituting contempt proceedings against the
petitioner [private respondent] under Section 530 of the Revised Administrative
Code." (Italics supplied).
Because of this, petitioners[5] elevated the matter direct to Us without a motion for
reconsideration first filed on the fundamental submission that the Order is a patent
nullity.[6]
As unfurled, the dominant issue in this case is whether the Agency, acting thru its
officials enjoys the authority to issue subpoenas in its conduct of fact-finding
investigations.
It has been essayed that the life blood of the administrative process is the flow of
fact, the gathering, the organization and the analysis of evidence.[7] Investigations
are useful for all administrative functions, not only for rule making, adjudication,
and licensing, but also for prosecuting, for supervising and directing, for
determining general policy, for recommending, legislation, and for purposes no
more specific than illuminating obscure areas to find out what if anything should
he done.[8] An administrative agency may be authorized to make investigations, not
only in proceedings of a legislative or judicial nature, but also in proceedings whose
sole purpose is to obtain information upon which future action of a legislative or
judicial nature may he taken[9] and may require the attendance of witnesses in
proceedings of a purely investigatory nature. It may conduct general inquiries into
evils calling for correction, and to report findings to appropriate bodies and make
recommendations for actions.[10]
We recognize that in the case before Us, petitioner Agency draws its subpoena
power from Executive Order No. 4 para. 5 which, in an effectuating mood,
empowered it to "summon witnesses, administer oaths, and take testimony
relevant to the investigation"[11] with the authority "to require the production of
documents under a subpoena duces tecum or otherwise, subject in all respects to the
same restrictions and qualifications as apply in judicial proceedings of a similar
character."[12] Such subpoena power operates in extenso to all the functions of the
Agency as laid out in the aforequoted sub-paragraphs (b), (e), and (h). It is not
bordered by nor is it merely exercisable, as respondents would have it, in quasi-
judicial or adjudicatory function under sub-paragraph (b). The functions
enumerated in all these sub-paragraphs (b), (e), and (h) interlink or intertwine with
one another with the principal aim of meeting the very purpose of the creation of
the Agency, which is to forestall and erode nefarious activities and anomalies in
the civil service. To hold that the subpoena power of the Agency is confined to
mere quasi-judicial or adjudicatory function would therefore imperil it or inactivate
the Agency in its investigatory functions under sub-paragraphs (e) and (h). More
than that, the enabling authority itself (Executive Order No. 4, para. 5) fixes no
distinction when and in what function should the subpoena power be
exercised. Similarly, We see no reason to depart from the established rule that
forbids differentiation when the law itself makes none.
Nor could We impress upon this subpoena power the alleged strictures of a
subpoena issued under the Rules of Court[13] to abridge its application. The
seeming proviso in Section 580 of the Revised Administrative Code that the right
to summon witnesses and the authority to require the production of documents
under a subpoena duces tecum or otherwise shall be "subject in all respects to the
same restrictions and qualifications as apply in judicial proceedings of a similar
character" cannot be validly seized upon to require, in respondents' formulation,
that, as in a subpoena under the Rules, a specific case must be pending before a
court for hearing or trial and that the hearing or trial must be in connection with
the exercise of the court's judicial or adjudicatory functions[14] before a non-judicial
subpoena can be issued by an administrative agency like petitioner Agency. It must
be emphasized, however, that an administrative subpoena differs in essence from a
judicial subpoena. Clearly, what the Rules speaks of is a judicial subpoena, one
procurable from and issuable by a competent court, and not an administrative
subpoena. To an extent, therefore, the "restrictions and qualifications" referred to
in Section 580 of the Revised Administrative Code could mean the restraints
against infringement of constitutional rights or when the subpoena is unreasonable
or oppressive and when the relevancy of the books, documents or things does not
appear.[15]
Rightly, administrative agencies may enforce subpoenas issued in the course of
investigations, whether or not adjudication is involved, and whether or not
probable cause is shown[16] and even before the issuance of a complaint.[17] It is
not necessary, as in the case of a warrant, that a specific charge or complaint of
violation of law be pending or that the order be made pursuant to one. It is enough
that the investigation be for a lawfully authorized purpose.[18] The purpose of the
subpoena is to discover evidence, not to prove a pending charge, but upon which
to make one if the discovered evidence so justifies.[19] Its obligation cannot rest on
a trial of the value of testimony sought; it is enough that the proposed investigation
be for a lawfully authorized purpose, and that the proposed witness be claimed to
have information that might shed some helpful light.[20] Because judicial power is
reluctant if not unable to summon evidence until it is shown to be relevant to
issues on litigations it does not follow that an administrative agency charged with
seeing that the laws are enforced may not have and exercise powers of original
inquiry. The administrative agency has the power of inquisition which is not
dependent upon a case or controversy in order to get evidence, but can investigate
merely on suspicion that the law is being violated or even just because it wants
assurance that it is not. When investigative and accusatory duties are delegated by
statute to an administrative body, it, too may take steps to inform itself as to
whether there is probable violation of law.[21] In sum, it may be stated that a
subpoena meets the requirements for enforcement if the inquiry is (1) within the
authority of the agency; (2) the demand is not too indefinite; and (3) the
information is reasonably relevant.[22]
There is no doubt that the fact-finding investigations being conducted by the
Agency upon sworn statements implicating certain public officials of the City
Government of Manila in anomalous transactions[23] fall within the Agency's
sphere of authority and that the information sought to be elicited from respondent
Fernando Manalastas, of which he is claimed to be in possession,[24] is reasonably
relevant to the investigations.
We are mindful that the privilege against self-incrimination extends in
administrative investigations, generally, in scope similar to adversary
proceedings.[25] In Cabal vs. Kapunan, Jr.,[26] the Court ruled that since the
administrative charge of unexplained wealth against the respondent therein may
result in the forfeiture of the property under the Anti-Graft and Corrupt Practices
Act, a proceeding criminal or penal in nature, the complainant cannot call the
respondent to the witness stand without encroaching upon his Constitutional
privilege against self-incrimination. Later, in Pascual, Jr. vs. Board of Medical
Examiners,[27] the same approach was followed in the administrative proceedings
against a medical practitioner that could possibly result in the loss of his privilege
to practice the medical profession. Nevertheless, in the present case, We find that
respondent Fernando Manalastas is not facing any administrative charge.[28] He is
merely cited as a witness in connection with the fact-finding investigation of
anomalies and irregularities in the City Government of Manila with the object of
submitting the assembled facts to the President of the Philippines or to file the
corresponding charges.[29] Since the only purpose of investigation is to discover
facts as a basis of future action, any unnecessary extension of the privilege would
thus be unwise.[30] Anyway, by all means, respondent Fernando Manalastas may
contest any attempt in the investigation that tends to disregard his privilege against
self-incrimination.
A question of constitutional dimension is raised by respondents on the inherent
power of the President of the Philippines to issue subpoena.[31] More tersely stated,
respondents would now challenge, in a collateral way, the validity of the basic
authority, Executive Order No. 4, as amended in part by Executive Order No.
88. Unfortunately, for reasons of public policy, the constitutionality of executive
orders, which are commonly said to have the force and effect of statutes,[32] cannot
be collaterally impeached.[33] Much more when the issue was not duly pleaded in
the court below as to be acceptable for adjudication now.[34] The settled rule is that
the Court will not anticipate a question of constitutional law in advance of the
necessity of deciding it.[35]
Nothing then appears conclusive than that the disputed subpoena issued by
petitioner Quirico Evangelista to respondent Fernando Manalastas is well within
the legal competence of the Agency to issue.
WHEREFORE, the aforequoted order of respondent Judge, dated July 1, 1968,
is hereby set aside and declared of no force and effect.
Without pronouncement as to costs.
SO ORDERED.
G.R. No. L-27392, January 30, 1971
PABLO CATURA AND LUZ SALVADOR, PETITIONERS, VS. THE
COURT OF INDUSTRIAL RELATIONS AND CELESTINO
TABANIAG, ET AL., RESPONDENTS.
DECISION
FERNANDO, J.:
It is a novel question that presents itself before this Court in this petition for the
review of a resolution of respondent Court of Industrial Relations. Specifically, it
is whether respondent Court, in the exercise of its power of investigation to assure
compliance with the internal labor organization procedures under Section 17 of
the Industrial Peace Act,[1] can require a labor organization's "books of accounts,
bank accounts, pass books, union funds, receipts, vouchers and other documents
related to [its] finances" be delivered and deposited with it at the hearing to
conduct such investigation in accordance with a complaint duly filed without the
officials of such labor organization, therein named as respondents and petitioners
before us, being heard prior to the issuance of such order. The respondent Court,
first acting through Associate Judge Joaquin M. Salvador and thereafter en banc,
upheld its power to do so. The challenge to such competence sought to be
fortified by the allegation of the absence of procedural due process was
rejected. After a careful study of the matter, we cannot say that thereby
respondent Court was in error. We have no reason to reverse.
As set forth in the brief for the petitioners, Pablo Catura and Luz Salvador, the
President and Treasurer, respectively, of the Philippine Virginia Tobacco
Administration Employees Association, a legitimate labor organization duly
registered, there was, on December 27, 1966, a complaint against them under
Section 17 filed by the prosecution division of respondent Court, the principal
complainants being now respondent Celestino Tabaniag as well as other
employees constituting more than ten percent of the entire membership of such
labor organization. In the complaint, it was charged that during the tenure of
office of petitioners before us as such President and Treasurer, they were
responsible for "unauthorized disbursement of union funds" with complainants
on various occasions during the latter part of 1966 demanding from them "a full
and detailed report of all financial transactions of the union and to make the book
of accounts and other records of the financial activities of the union open to
inspection by the members", only to be met with a refusal on their part to
comply. It was further asserted that the executive board of such labor organization
passed a resolution calling for a general membership meeting so that petitioners
could be confronted about the status of union funds, but then, Pablo Catura, as
President, cancelled such meeting. There was thereafter a general membership
resolution reiterating previous demands "for a full and detailed report of all
financial transactions of the union", but again there was no response, thus
compelling the members to refer the matter to the Department of Labor which
duly issued subpoenas for the presentation of such book of accounts to petitioners
without any success. After setting forth that complainants had exhausted all
remedies provided in the union's constitution and by-laws, which were all
unavailing, the complaint sought, after due hearing and judgment, to declare
present petitioners, as respondents, guilty of unfair labor practice under the above
provision of the Industrial Peace Act, for them to cease and desist from further
committing such unfair labor practice complained of, and to render a full and
detailed report of all financial transactions of the union as well as to make the book
of accounts and other records of these financial activities open to inspection by
the members.[2]
Thereafter, on December 28, 1966, respondent Celestino Tabaniag and the other
members, as petitioners in the above complaint before respondent Court, sought
an injunction to prevent now petitioner Pablo Catura who, it turned out, was again
elected as President in an election on November 15, 1966, from taking his oath of
office in view of his alleged persistence in the abuse of his authority in the
disbursement of union funds as well as his refusal to make a full and detailed report
of all financial transactions of the union.[3]
Then came the order of December 29, 1966, by Associate Judge Joaquin M.
Salvador which, instead of granting the injunction sought, limited itself to requiring
and directing "personally the respondents Pablo Catura and Luz Salvador,
president and treasurer, respectively, of the Philippine Virginia Tobacco
Administration Employees' Association, to deliver and deposit to this Court all the
said Association's book of accounts, bank accounts, pass books, union funds,
receipts, vouchers and other documents related to the finances of the said labor
union at the hearing of this petition on January 3, 1967 at 9:00 o'clock in the
morning. Said respondents are hereby required to comply strictly with this
Order."[4] There was a motion for reconsideration on January 2, 1967 by now
petitioners Pablo Catura and Luz Salvador on the ground that they were not heard
before such order was issued, which moreover in their opinion was beyond the
power of respondent Court. With Associate Judge Ansberto P. Paredes dissenting,
the order was sustained in a resolution by the Court en banc on February 28,
1967. Hence the present petition filed on April 3, 1967.
The petition was given due course by this Court in a resolution of April 13, 1967
with a preliminary injunction issued upon petitioners' posting a bond of
P2,000.00. Respondents did not take the trouble of filing an answer within the
period expired on June 17, 1967 and petitioners were required to submit their brief
within thirty days under this Court's resolution of July 14, 1967. Such a brief was
duly filed on September 19 of that year. There was no brief for respondents. The
case was thus deemed submitted for decision on October 4, 1968.
In the light of the interpretation to be accorded the applicable legal provisions and
after a careful consideration of the contention that such a power to issue the
challenged order cannot be deemed as possessed by respondent Court which
moreover did not accord petitioners procedural due process, we have reached the
conclusion, as set forth at the opening of this opinion, that petitioners cannot
prevail. The order as issued first by Associate Judge Joaquin M. Salvador and
thereafter by respondent Court en banc must be sustained.
1. The controlling provisions of law to the specific situation before this Court
concerning the power of investigation of respondent Court to assure compliance
with internal labor organization procedures with the corresponding authority to
investigate to substantiate alleged violations may be found in paragraphs (b), (h),
and (1) of the aforecited Section 17 of the Industrial Peace Act. Thus: "The
members shall be entitled to full and detailed reports from their officers and
representatives of all financial transactions as provided in the constitution and by-
laws of the organization."[5] * * * "The funds of the organization shall not be
applied for any purpose or object other than those expressly stated in its
constitution or by-laws or those expressly authorized by a resolution of the
majority of the member."[6] * * * "The books of accounts and other records of the
financial activities of a legitimate labor organization shall be open to inspection by
any officer or member thereof."[7]
To repeat, the complaint before respondent Court against petitioners as President
and Treasurer of the union, specifically recited an unauthorized disbursement of
union funds as well as the failure to make a full and detailed report of financial
transactions of the union and to make the book of accounts and other records of
its financial activities open to inspection by the members. Clearly, the matter was
deemed serious enough by the prosecutor of respondent Court to call for the
exercise of the statutory power of investigation to substantiate the alleged violation
so as to assure that the rights and conditions of membership in a labor organization
as specifically set forth in Section 17 be respected. All that the challenged order
did was to require petitioners, as President and Treasurer of the labor organization,
to "deliver and deposit" with respondent Court all of its book of accounts, bank
accounts, pass books, union funds, receipts, vouchers and other documents related
to its finances at the hearing of the petition before it on January 3, 1967.
On its face, it cannot be said that such a requirement is beyond the statutory power
conferred. If it were otherwise, the specific provisions of law allegedly violated
may not be effectively complied with. The authority to investigate might be
rendered futile if respondent Court could be held as having acted contrary to
law. To paraphrase Justice Laurel, the power to investigate, to be conscientious
and rational at the very least, requires an inquiry into existing facts and
conditions. The documents required to be produced constitutes evidence of the
most solid character as to whether or not there was a failure to comply with the
mandates of the law. It is not for this Court to whittle down the authority
conferred on administrative agencies to assure the effective administration of a
statute, in this case intended to protect the rights of union members against its
officers. The matter was properly within its cognizance and the means necessary
to give it force and effectiveness should be deemed implied unless the power
sought to be exercised is so arbitrary as to trench upon private rights of petitioners
entitled to priority. No such showing has been made; no such showing can be
made. To repeat, there should be no question about the correctness of the order
herein challenged.
2. Nor is the validity of the order in question to be impugned by the allegation
that there was a denial of procedural due process. If the books and records sought
to be delivered and deposited in court for examination were the private property
of petitioners, perhaps the allegation of the absence of due process would not be
entirely lacking in plausibility. Such is not the case however. The pertinent section
of the Industrial Peace Act makes clear that such books of accounts and other
records of the financial activities are open to inspection by any member of a labor
organization. For the court to require their submission at the hearing of the
petition is, as above noted, beyond question, and no useful purpose would be
served by first hearing petitioners before an order to that effect can be
issued. Moreover, since as was shown in the very brief of petitioners, there was a
motion for reconsideration, the absence of any hearing, even if on the assumption
purely for argument's sake that there was such a requirement, has been cured. So
it was held by this Court in a recent decision. Thus: "As far back as 1935, it has
already been a settled doctrine that a plea of denial of procedural due process does
not lie where a defect consisting of an absence of notice of hearing was thereafter
cured by the alleged aggrieved party having had the opportunity to be heard on a
motion for reconsideration. 'What the law prohibits is not the absence of previous
notice, but the absolute absence thereof and lack of opportunity to be heard.'
There is then no occasion to impute deprivation of property without due process
where the adverse party was heard on a motion for reconsideration constituting as
it does 'sufficient opportunity' for him to inform the Tribunal concerned of his
side of the controversy. As was stated in a recent decision, what 'due process
contemplates is freedom from arbitrariness and what it requires is fairness or
justice, the substance rather than the form being paramount,' the conclusion being
that the hearing on a motion for reconsideration meets the strict requirement of
due process."[8]
WHEREFORE, the petition for certiorari is denied. The writ of preliminary
injunction issued under the resolution of April 13, 1967 is dissolved and declared
to be without any further force or effect.
G.R. No. L-16704, March 17, 1962
VICTORIAS MILLING COMPANY, INC., PETITIONER-
APPELLANT, VS. SOCIAL SECURITY COMMISSION,
RESPONDENT-APPELLEE.
DECISION
BARRERA, J.:
On October 15, 1958, the Social Security Commission issued its Circular No. 22
of the following tenor:
"Effective November 1, 1958, all Employers in computing the premiums due the
System, will take into consideration and include in the Employee's remuneration
all bonuses and overtime pay, as well as the cash value of other media of remuneration.
All these will comprise the Employee's remuneration or earnings, upon which the
3-1/2% and 2-1/2% contributions will be based, up to a maximum of P500 for
any one month."
Upon receipt of a copy thereof, petitioner Victorias Milling Company, Inc.,
through counsel, wrote the Social Security Commission in effect protesting against
the circular as contradictory to a previous Circular No. 7, dated October 7,1957
expressly excluding overtime pay and bonus in the computation of the employers'
and employees' respective monthly premium contributions, and submit ting, "In
order to assist your System in arriving at a proper interpretation of the term
compensation for the purposes of such computation, their observations on
Republic Act 1161 and its amendment and on the general interpretation of the words
"compensation", "remuneration" and "wages Counsel Further questioned the
validity of the circular for lack of authority on the part of the Social Security
Commission to promulgate it without the approval of the President and for lack
of publication in the Official Gazette.
Overruling these objections, the Social Security Commission ruled that Circular
No. 22 is not a rule or regulation that needed the approval of the President and ;
publication in the Official Gazette to be effective, but a mere administrative
interpretation of the statute, a mere statement of general policy or opinion as to
how the law should be construed.
Not satisfied with this ruling, petitioner comes to this Court on appeal.
The single issue involved in this appeal is whether of not Circular No. 22 is a rule
or regulation, as contemplated in Section 4 (a) of Republic Act 1161 empowering
the Social Security Commission "to adopt, amend and repeal subject to the
approval of the President such rules and regulations as may be necessary to carry
out the provisions and purposes of this Act."
There can be no doubt that there is a distinction between an administrative rule or
regulation and an administrative interpretation of a law whose enforcement is
entrusted to an administrative body. When an administrative agency promulgates
rules and regulations, it "makes" a new law with the force and effect of a valid law,
while when it renders an opinion or gives a statement of policy, it merely interprets
a pre-existing law (Parker, Administrative Law, p. 197; Davis, Administrative Law,
p. 194). Rules and regulations when promulgated in pursuance of the procedure
or authority conferred upon the administrative agency by law, partake of the nature
of a statute, and compliance therewith may be enforced by a penal sanction
provided in the law. This is so because statutes are usually couched in general
terms, after expressing the policy, purposes, objectives, remedies and sanction)
intended by the legislature. The details and the manner of carrying out the law are
often times left to the administrative agency entrusted with its enforcement. In this
sense, it has been said that rules and regulations are the product; of a delegated
power to create new or additional legal provisions that have the effect of law.
(Davis, op. cit. p. 194.)
A rule is binding on the courts so long as the procedure fixed for its promulgation
is followed and its scope is within the statutory authority granted by the legislature,
even if the courts are not in agreement with the policy stated therein or its innate
wisdom (Davis, op. cit. pp. 195-197). On the other hand, administrative
interpretation of the law is at best merely advisory, for it is the courts that finally
determine what the law means.
Circular No. 22 in question was issued by the Social Security Commission, in view
of the amendment of the provisions of the Social Security Law defining the term.
"compensation" contained Section .8(f) ,of Republic Act. No. 1161 which, before
its amendment, reads as follows:
"(f) Compensation — All remuneration, for employment include the cash value of
any remuneration, paid, in ;any medium other than) cash except (1) that part of
the renumeration in excess of P500 received during the month; (2) bonuses,
allowances or overtime pay; and (3) dismissal and all other payments which the
employer may make, although not legally required to do so,"
Republic Act No. 1792 changed the definition of "compensation" to:
"(f) Compensation — All renumeration for employment include the cash value of
any renumeration paid in any medium other than cash except that part of the
renumeration in excess of P500.00 received during the month."
It will thus be seen that whereat) prior to amendment, bonuses, allowances, and
overtime pay given in addition to the regular or base pay were expressly excluded
or exempted from the definition of the term "compensation", such exemption or
exclusion was deleted by the amendatory law. It thus became necessary for the
Social Security Commission to interpret the; effect of suck deletion or elimination.
Circular No, 22 was, therefore, issued to apprise those concerned of the
interpretation or understanding of the Commission,, of the, law as amended, which
it was its duty to enforce. It did not add any duty or detail that was not already in
the.law as amended. It merely stated and circularized the opinion of the
Commission as to how the law should be construed.
The case of People vs. Jolliffe ( G.R. No. L-9553, promulgated on May 30, 1959)
cited by appellant, does not support its contention that the circular in question is
a rule or regulation. What was there said was merely that a regulation may be
incorporated in the form of a circular. Such statement simply meant that the
substance and not the form of a regulation is decisive in determining its nature. It
does not lay down a general proposition of law that any circular, regardless of its
substance and even if it is only interpretative, constitutes a rule or regulation which
must be published in the Official Gazette before it could take effect.
The case of People vs. Que Po Lay ( 50 O.G. 2850) also cited by appellant is not
applicable to the present case, because the penalty that may be incurred by
employers and employees if they refuse to pay the corresponding premiums on
bonus, overtime pay, etc. which the employer pays to his employees, is not by
reason of non-compliance with Circular No. 22, but for violation of the specific
legal provisions contained in Section 27 (e) and (f) of Republic Act No. 1161.
We find, therefore, that Circular No. 22 purports merely to advise employers-
members of the System of what, in the light of the amendment of the law, they
should include in determining the monthly compensation of their employees upon
which the social security contributions should be based, and that such circular did
not require presidential approval and publication in the Official Gazette for its
effectivity.
It hardly need be said that the Commission's interpretation of the amendment
embodied in its Circular No. 22, is correct. The express elimination among the
exemptions excluded in the old law, of all bonuses, allowances and overtime pay
in the determination of the "compensation" paid to employees makes it imperative
that such bonuses and overtime pay must now be included in the employee's
remuneration in pursuance of the amendatory law. It is true that in previous cases,
this Court has held that bonus is not demandable because it is not part of the wage,
salary, or compensation of the employee. But the question in the instant case is
not whether bonus is demandable or not as part of compensation, but whether,
after the employer does, in fact, give or pay bonus to his employees, such bonuses
shall be considered compensation, under the Social Security Act after they have
been received by the employees. While it is true that terms or words are to be
interpreted in accordance with their well-accepted meaning in law, nevertheless,
when such term or word is specifically defined in a particular law, such
interpretation must be adopted in enforcing that particular law, for it can not be
gainsaid that a particular phrase or term may have one meaning for one purpose
and another meaning for some other purpose. Such is the case that is now before
us. Republic Act 1161 specifically defined what "compensation" should mean "For
the purposes of this Act". Republic Act 1792 amended such definition by deleting
some exceptions authorized in the original Act. By virtue of this express substantial
change in the phraseology of the law, whatever prior executive or judicial
construction may have been given to the phrase in question should give way to the
clear mandate of the new law.
In view of the foregoing, the Resolution appealed from is hereby affirmed, with
costs against appellant. So ordered
.
G.R. No. 10951, February 14, 1916
K. S. YOUNG ET AL., PLAINTIFFS AND APPELLEES, VS. JAMBS J.
RAFFERTY. COLLECTOR OF INTERNAL REVENUE,
DEFENDANT AND APPELLANT.
DECISION
TRENT, J.:
On December 29, 1914, the lower court issued a preliminary injunction against
the defendant, his agents, etc., "ordering them and every one of them absolutely
to desist and refrain from in any manner whatsoever enforcing or attempting to
enforce the provisions of the regulation contained in Internal Revenue Circular
Letter No. 467, in so far as it refers to the language in which any day book shall
be kept, and from arresting, procuring the arrest or prosecuting criminally or
administratively any person who fails to make the entries required by said
circular." After the termination of the trial of the case upon the merits, the
preliminary injunction was made permanent The defendant has appealed.

The circular letter above mentioned requires, among other things, every merchant
and manufacturer, with certain specified exceptions, subject to the tax imposed by
section 40 of Act No. 2339, to keep a record of their daily sales either in the English
or the Spanish language, and provides that any violation of or failure to comply
with the provisions of the circular will subject the guilty person to prosecution
under the provisions of section 185 of Act No. 2339. Whether the regulation
is authorized by the Internal Revenue Law (Act No. 2339) and whether this is a
proper case for injunction, are the questions submitted to us for
determination. These questions will be considered in their order.
1. Under section 40 of Act No. 2339, "merchants" are subject to a percentage tax
on the gross proceeds of sales. Section 5 of the Act provides:
"The Collector of Internal Revenue shall have the power, and it shall be his duty,
to make regulations, not inconsistent with law, necessary to carry this Act into full
effect and to secure an harmonious and efficient administration of his
branch of the service. Such regulations may be either general or
local in application and shall become effective as law when approved by the
department head and published."
Section 6 (j) provides:
"The Regulations of the Bureau of Internal Revenue shall, among other
things, contain provisions specifying, prescribing, or defining:
* * * * * * * * * *
"(j) The manner in which revenue shall be collected and paid, the instrument,
document, or object to which revenue stamps shall be affixed, the mode of
cancellation of the same,
the manner in which the proper books, records, invoices, and other papers shall
be kept and entries therein made by the person subject to the tax, as well as the
manner in
which licenses and stamps shall be gathered up and returned after serving their
purpose."
Under these provisions of law we do not doubt the authority of the Collector to
require the keeping of a daily record of sales. No one could say with any certainty
what the amount of the tax would be without such data. Moreover, section 6 (j),
above quoted recognizes the necessity that persons subject to the taxes imposed
by the Act keep "books, records, invoices, and other papers." This section is
general in its character and cannot be said to apply to any particular tax more than
to another. It does not prescribe the kind of records that must be kept in each
instance. It merely requires the proper records to be kept; and, of course, what is
proper must be left, in the first place, to the discretion of the Internal Revenue
authorities. It need hardly be said that the record which merchants are required to
keep of their daily sales under the provisions of the circular letter of the Collector
set out in the complaint is simplicity itself, and that it will, if honestly and faithfully
kept, enable the Government to collect the percentage tax exactly due it. The
requirement that the record must be kept in the form of a book of numbered pages
certified to by the revenue agents is, of course, only an additional security against
uncertainty and possible loss or disorder of parts of the record which might result
if the record were kept on loose sheets of paper. Thus far, therefore, it is clear
that the circular letter in question is in furtherance of section 6 (j) of the Act,,
wherein persons subject to the taxes imposed are required to keep the proper
books, etc
The important question is whether the act justifies the requirement of the circular
letter that this book be kept in either the English or the Spanish language. Section
6 (j) authorizes the revenue authorities to specify the manner in which the proper
books, etc., shall be kept We have seen that the Collector is authorized to
determine that persons subject to the percentage tax shall keep their sales record
in a bound book of numbered pages, and that this record shall be spread upon the
book in the tabulated form specified in the circular. But is it necessary that any
particular language shall be used in order that these requisites may be
observed? We apprehend that no one will deny that sales could be recorded in a
bound volume such as is specified, using the tabulated form desired by the
Collector, in any modern language. In other words, all the information could be
recorded in the designated book in the required form in Chinese or in a local dialect
or in some other language as accurately as it could be recorded in English or
Spanish.
The Collector of Internal Revenue has prepared a statement which has been
accepted by the plaintiff showing by nationalities the total number of wholesale
and retail merchants and their total sales, and the amount of capital, etc., employed
in manufacturing industries, all of whom are taxed under the Internal Revenue
Law on a percentage basis, and who are, therefore, affected by the regulation
complained of. It appears from this statement that there are altogether about
85,000 merchants in the Philippine Islands. Of this number about 71,000 are
Filipinos. There is no common vernacular in the Philippine Islands, but it is a
matter of common knowledge that a goodly portion of Filipino business men
have a practical command of either English or Spanish. Of the remainder of
the 85,000, about 1,500 are of either American or Spanish or British nationality,
and, hence, the regulation does not impose any burden upon them at all. Of the
remaining 12,500, nearly 12,000 are Chinese. The aggregate sales of this latter
number amount to more than sixty per cent of the total business done by
merchants in the Philippine Islands. A witness for the defendant testified that
about two-thirds of the Chinese business men can comply with the regulation.
This, of course, is nothing but an estimate and how near it is to accuracy we cannot
determine. But however this may be, the figures discussed show that the
regulation does affect a large and important class of business men, not
only Chinese but Filipinos as well, although it may be that the burden falls most
heavily upon the Chinese. To require this number of business men to engage
someone familiar with English or Spanish to keep a record for them which will
comply with the regulation would in many instances impose a greater burden
upon them than the entire amount of taxes which they have to pay.
The difficulties which beset any attempt to hasten the adoption of a common
language is well illustrated by the history of section 12 of the Code of Civil
Procedure, which prescribes the official language of the courts. The original
section, enacted in 1901, provided that the official language of the courts should
be Spanish until January 1, 1906, after which date it should be English. Even then
it was recognized that some concessions should be made to the use of Spanish
after that date, as is evident by the provisos to the original section. In April, 1904,
section 12 was amended making further concessions in favor of the use of
Spanish.
(Act No. 1123, sec. 1.) In December, 1905, section 12 was again amended,
postponing the substitution of English for Spanish as the official language of the
courts until January 1, 1911. '(Act No. 1427, sec. 1.) In May, 1909, the time for
the change was set forward to January 1, 1913. (Act No. 1946, sec. 1.) Finally, in
February, 1913, section 12 was again amended so that both English and Spanish
are recognized as official languages of the courts until January 1, 1920. (Act No.
2239, sec. 1.) Thus it appears that the desired substitution of English for Spanish
in one important branch of governmental activity has been deferred from time to
time and that the substitution is one which involves very
serious questions of public policy. Ever since the organization of the courts,
they have been doing business in both English and Spanish, as well as furnishing
interpreters of the Philippine dialects and Chinese.
Counsel for the appellant argues that the Collector of Internal Revenue is as
much entitled to prescribe English or Spanish as the language in which records of
the daily sales must be kept as are the customs authorities of the United States
to require that manifests of ships coming from foreign ports shall either be in
English or, if in a foreign language, that an English translation thereof be
furnished. We are of the opinion, however, that the analogy fails in important
particulars. Such a requirement in a customs regulation affects but few of the
business men of that English speaking country, and then only when they are
transacting business with that department of the government, while that part
of the regulation in question in the case under consideration reaches a great
number of business men in this country, where we have no common
language, and directly affects every one of them in his private transactions.
It is also urged that the regulation is designed to protect the Government against
evasion of the percentage tax. If it be necessary to impose such a burden upon
so large a number of the business community in order that the Government may
protect itself from such losses, we apprehend that it was never
intended that the initiative should be taken by the Collector of
Internal Revenue. The condition complained of by the Collector has confronted
the Government ever since the present system of internal revenue taxes was
inaugurated in 1904. It is not for the administrative head of a Government
bureau to say that such an obstacle to the collection of taxes shall be removed by
imposing burdens not specifically authorized in the law itself.
In view of the fact that a particular language is not essential to the recording of
the information desired by the Collector and the enforcement of
the objectionable provisions of his circular would be a very important step in the
solution of the language problem in this country, amounting, we believe, to a
question of public policy which should not be dictated by any administrative
authority, we must conclude that the Collector -has exceeded his authority in this
particular. In reaching this conclusion, we have carefully avoided using any
language which would indicate our views upon the plaintiffs' second proposition
to the effect that if the regulation were an Act of the Legislature itself, it
would be invalid as being in conflict with the paramount law of the land and
treaties regulating certain relations with foreigners.
2. As to whether this is a proper case for injunction the Attorney-General, on
behalf of the defendant, says:
"As authority for the contention of the defendant that the allegations made by the
plaintiffs that they are in danger of being prosecuted under the penal provisions
of the Internal Revenue Law (Act No. 2339) do not entitle them to the relief of
injunction, the attention of the court is invited to the following, appearing on
pages 1030 and 1031 of volume 6 of Encyclopedia of United States Supreme
Court Reports and to the cases cited thereunder:
" 'A court of equity has no general power to enjoin or stay criminal proceedings,
unless they are instituted by a party to a suit already pending
before it, and to try the same right that is in issue there, or to prohibit the
invasion of the rights of property by the enforcement of an unconstitutional law.'
"The validity of section 185 of the Internal Revenue Law is not raised by the
pleadings and evidence in this case; nor in accordance with the above
cited authorities can it be raised in injunction proceedings except in connection
with a criminal proceeding actually pending in the courts."
From the foregoing it will be seen that it is not contended that section 139 of Act
No. 2339, wherein it is provided that "No court shall have authority to grant an
injunction to restrain the collection of any internal revenue tax," is
applicable to the case under consideration. Forbidding the enforcement of that
part of the circular letter complained of is not the restraining of the collection of
a tax. Consequently, the principle laid down in the case of Churchill and Tait vs.
Rafferty (32 Phil. Rep., 580), just decided, to the effect that "the mere fact that
a tax is illegal or that the law by virtue of which it is imposed
is unconstitutional, does not authorize a court of equity to restrain its collection
by injunction," does not govern the question now being considered.
That principle, when applied to the collection of taxes, rests upon the
broadest grounds of public policy. It is upon the prompt collection of revenue
that the very existence of the Government depends. The Collector's circular letter,
requiring all merchants to keep records of their daily sales either in the English or
the Spanish language, has, as we have pointed out, no legitimate .connection under
the law with the collection of the taxes. That part of the circular amounts to no
more than an unauthorized attempt to impose an uncalled for burden upon a
large number of the business community. The result is that the solution of the
second question must be governed by those principles relating to the power of
courts of equity to enjoin the enforcement of an invalid law, municipal ordinance,
or regulation, which has for its object the penalizing of certain acts of omission or
commission under section 185 of Act No. 2339, which section reads as follows:
"A person who violates any provision of this Act or any lawful regulation of the
Bureau of Internal Revenue made in conformity with the same, for which
delinquency no specific penalty is provided by law, shall be punished by a fine of
not more than three hundred pesos or by imprisonment for not more than six
months, or both, in the discretion of the court."
There is some argument upon the point whether a disregard of the
regulation in question would bring into operation the provisions of this
section. We will assume, for the purposes of this case, that a non-
compliance with the language requirement of the circular would amount to
a criminal offense under the provisions of that section.
That no injunction issues as of course, but is granted only upon the oath of
a party and when there is no adequate remedy at law; that a court of equity
has no jurisdiction over the prosecution or the punishment of crimes and
misdemeanors ; and that in ordinary criminal cases injunctions will not
issue to restrain criminal prosecutions even under a void law or municipal
ordinance, are principles too well settled to require discussion. Generally,
the defense of nullity, under which the prosecution is brought, can be
interposed as a defense' to a prosecution as readily and efficiently as in any
other manner. (Fitts vs. McGhee, 172 U. S., 516.) In proceeding by
indictment to enforce a valid criminal statute, the state can only act through
its officers, and to enjoin the latter is to enjoin the state, and this cannot be
done without the state's consent. But if the act to be enforced is
unconstitutional, the use of the name of the state to enforce it to the injury
of an accused person is a proceeding without authority of and one which
does not affect the state in its sovereign or governmental capacity. (Ex
parte Young, 209 U. S., 123, 159.) Suits against state officers
to restrain them from enforcing a state statute which violates a person's
constitutional rights, either by its terms or by the manner of its enforcement,
are not suits against the state. (General Oil Co. vs. Crain, 209 U. S., 211,
and cases cited.) It therefore follows that courts of equity may enjoin the
enforcement of an invalid law or municipal ordinance where irreparable
injury to property rights would result or where persons would be subject to
a multiplicity of suits incurred by reason of the penalty attached to a
recurring act or omission. (Ex parte Young, supra; Adams Express Co. vs.
N. Y. City, 232 U. S., 14.)
When a multiplicity of suits is made probable by reason of the fact that a
large number of persons are adversely affected by a void law to which penal
provisions are attached to aid in its enforcement, injunction is the proper
remedy if all the persons concerned have identically the same interest, and
their rights will be determined by a decision respecting the validity of the
law or ordinance. Such was the holding in Wilkie vs. Chicago (188 111., 444;
80 Am. St. *Rep., 182), where the enforcement of a void ordinance
requiring master plumbers to take out a license was en- joined; and in
Spaulding vs. McNary (64 Ore., 491), where it was attempted to apply to
persons engaged in interstate commerce the provisions of a state law
requiring hawkers or peddlers to take out a license. Nor does it matter that
penalties for the nonobservance of a law or ordinance have not yet been
created or that officers of the law have not yet attempted to enforce penal
provisions already existing. So long as the law or ordinance
remains undisturbed on the statute books, it acts in terrorem and
practically accomplishes a prohibition against the act or omission which
the law intends to prevent. And so long as it has not been annulled
by judicial decision or repealed, the persons affected are in duty bound to
obey it, even though the danger of criminal prosecution be not
imminent. (City of Dallas vs. Dallas Consol. Elec. St. Ry. Co., 159 S. W.,
76.)
In the case at bar thousands of persons are admittedly interested in the
decision whether the regulation of the Collector is valid. If it is, they are
all bound to obey it. If it is not, none of them are liable. The rights of all
will be determined by passing upon the validity of the regulation. Under the
principles which distinguish cases in law from those in equity, our courts,
sitting in equity, can render a comprehensive judgment, which has been
done in this case, covering the whole ground and thus avoid a multiplicity
of suits that would inevitably arise under the regulation. There are, as we
have said, thousands of merchants whose interests in the question here
involved are identical and each of whom is liable to prosecution for every
daily omission to comply with the language provisions of the void
circular. This great number of merchants have been notified to keep their
daily sales' records in English or Spanish and threatened with arrest and
prosecution under section 186, supra, if they do not. If they continue to
record their daily sales in the same manner that they have been doing, the
defendant will put his threat into execution and they will be arrested for
each violation. Each prosecution will involve the same question. These
prosecutions will be so numerous that the interference of equity can well
be justified upon the ground that the judgment appealed from avoids
a multiplicity of suits and gives a remedy more certain and efficacious
than could be given in prosecutions against the various merchants affected
by the circular. The noncompliance with the regulation for a single day
would swamp the criminal courts of Manila; for those (law) courts could
only deal with each case separately. Only a court sitting in equity is
competent to meet such an emergency and to determine once and for all
questions such as the one under consideration.
For the foregoing reasons the judgment appealed from is affirmed, with
costs. So ordered.
G. R. No. L-12426, February 16, 1959
PHILIPPINE LAWYER'S ASSOCIATION, PETITIONER, VS.
CELEDONIO AGRAVA, IN HIS CAPACITY AS DIRECTOR OF THE
PHILIPPINES PATENT OFFICE, RESPONDENT.
DECISION
MONTEMAYOR, J.:
This is a petition filed by the Philippine Lawyer's Association for prohibition and
injunction against Celedonio Agrava, in his capacity as Director of the Philippines
Patent Office.
On May 27, 1957, respondent Director issued a circular announcing that he had
scheduled for June 27, 1957 an examination for the purpose of determining who
are qualified to practice as patent attorneys before the Philippines Patent Office,
the said examination to cover patent law and jurisprudence and the rules of
practice before said office. According to the circular, members of the Philippine
Bar, engineers and other persons with sufficient scientific and technical training
are qualified to take the said examination. It would appear that heretofore,
respondent Director has been holding similar examinations.
It is the contention of the petitioner Philippine Lawyer's Association that one who
has passed the bar examinations and is licensed by the Supreme Court to practice
law in the Philippines and who is in good standing, is duly qualified to practice
before the Philippines Patent Office, and that consequently, the act of the
respondent Director requiring members of the Philippine Bar in good standing
to take and pass an examination given by the Patent Office as a condition
precedent to their being allowed to practice before said office, such as representing
applicants in the preparation and prosecution of applications for patent, is in
excess of his jurisdiction and is in violation of the law.
In his answer, respondent Director, through the Solicitor General, maintains that
the prosecution of patent cases "does not involve entirely or purely the practice of
law but includes the application of scientific and technical knowledge and training,
so much so that, as a matter of actual practice, the prosecution of patent cases
may be handled not only by lawyers, but also by engineers and other persons with
sufficient scientific and technical training who pass the prescribed examinations
as given by the Patent Office; * * * that the Rules of Court do not prohibit the
Patent Office, or any other quasi-judicial body from requiring further condition
or qualification from those who would wish to handle cases before
such bodies, as in the prosecution of patent cases before the Patent Office
which, as stated in the preceding paragraph, requires more of an
application of scientific and technical knowledge than the mere application of
provisions of law; * * * that the action taken by the respondent is in accordance
with Republic Act No. 165, otherwise known as the Patent Law of the Philippines,
which is similar to the United States Patent Law, in accordance with which
the United States Patent Office has also prescribed a similar examination as
that prescribed by respondent. * * *."
Respondent further contends that just as the Patent Law of the United States of
America authorizes the Commissioner of Patents to prescribe examinations to
determine as to who may practice before the United States Patent Office, the
respondent, is similarly authorized to do so by our Patent Law, Republic Act
No. 165.
Although as already stated, the Director of Patents, in the past, would appear to
have been holding tests or examinations the passing of which was imposed as a
required qualification to practice before the Patent Office, to our knowledge, this
is the first time that the right of the Director of Patents to do so, specially as
regards members of the bar, has been questioned formally, or otherwise put in
issue. And we have given it careful thought and consideration.
The Supreme Court has the exclusive and constitutional power with respect to
admission to the practice of law in the Philippines[1] and any member of
the Philippine Bar in good standing may practice law anywhere and before any
entity, whether judicial or quasi-judicial or administrative, in the
Philippines. Naturally, the question arises as to whether or not appearance
before the Patent Office and the preparation and prosecution of patent
applications. etc., constitutes or is included in the practice of law.
"The practice of law is not limited to the conduct of cases or litigation m court; it embraces
the preparation of pleadings and other papers incident to actions and special
proceedings, the management of such actions and proceedings on behalf of clients
before judges and courts, and in addition, conveying. In general, all advice to
clients, and all action taken for them in matters connected with the law
incorporation sendees, assessment and condemnation services contemplating an
appearance before a judicial body, the foreclosure of a mortgage, enforcement
of a creditor's claim in bankruptcy and insolvency proceedings, and conducting
proceedings in attachment, and in matters of estate and guardianship have been
held to constitute law practice, as do the preparation and drafting of legal
instruments, where the work done involves the determination by the trained legal mind of the
legal effect of facts and conditions." (5 Am. Jur. p. 262, 263). (Italics supplied)
"Practice of law under modern conditions consists in no small part of work
performed outside of any court and having no immediate relation to proceedings
in court. It embraces conveyancing, the giving of legal advice on a large variety
of subjects, and the preparation and execution of legal instruments covering
an extensive field of business and trust relations and other affairs. Although these
transactions may have no direct connection with court proceedings, they are always subject to
become involved in litigation. They require in many aspects a high degree of legal skill, a
wide experience with men and affairs, and great capacity for adaptation to
difficult and complex situations. These customary functions of an attorney or
counselor at law bear an intimate relation to the administration of justice by the
courts. No valid distinction, so far as concerns the question set forth in the order,
can be drawn between that part of the work of the lawyer which involves
appearance in court and that part which involves advice and drafting
of instruments in his office. It is of importance to the welfare of the public
that these manifold customary functions be performed by persons possessed of
adequate learning and skill, of sound moral character, and acting at all times under
the heavy trust obligations to clients which rests
upon all attorneys." (Moran, Comments on the Rules of Court, Vol. 3 (1953
ed.), p. 665-666, citing In re Opinion of the Justices (Mass.), 194 N. E. 313,
quoted in Rhode Is. Bar Assoc. vs. Automobile Service Assoc. (R. I.) 179 A. 139,
144). (Italics ours)
In our opinion, the practice of law includes such appearance before the Patent
Office, the representation of applicants, oppositors, and other persons, and
the prosecution of their applications for patent, their oppositions thereto, or the
enforcement of their rights in patent cases. In the first place, although the
transaction of business in the Patent Office involves the use and application of
technical and scientific knowledge and training, still, all such business has to be
conducted and all orders and decisions of the Director of Patents have to be
rendered in accordance with the Patent Law, as well as other laws, including
the Rules and Regulations promulgated by the Patent Office in accordance with
law. Not only this, but practice before', the Patent Office involves
the interpretation and application of other laws and legal principles, as well as the
existence of facts to be established in accordance with the law of evidence and
procedure. For instance: Section 8 of our Patent Law provides that an invention
shall not be patentable if it is contrary to public order or morals, or to public
health or welfare. Section 9 says that an invention shall not be considered new
or patentable if it was known or used by others in the Philippines before the
invention thereof by the inventor named in the application for patent, or if it was
patented or described in any printed publication in the Philippines or any foreign
country more than one year before the application for a patent therefor, or if it
had been in public use or on sale in the Philippines for more than one year before
the application for the patent therefor. Section 10 provides that the right to the
patent belongs to the true and actual inventor, his heirs, legal representatives or
assigns, and Section 12 says that an application for a patent may be filed only by
the inventor, his heirs, legal representatives or assigns. Sections 25 and 26 refer to
correction of any mistake in a patent. Section 28 enumerates the grounds
for cancellation of a patent; that although any person may apply for such
cancellation, under Section 29, the Solicitor General is authorized to petition for
the cancellation of a patent. Section 30 mentions the requirements of a petition
for cancellation. Sections 31 and 32 provide for a notice of hearing of the petition
for cancellation of the patent by the Director of Patents in case the said
cancellation is warranted. Under Section 34, at any time after the expiration of
three years from the day the patent was granted, any person may apply for the
grant of a license under a particular patent on several grounds, such as, if the
patented invention is not being worked in the Philippines on a commercial
scale, or if the demand for the patented article in the Philippines is not being met
to an adequate extent and reasonable terms, or if by reason of the patentee's
refusal to grant a license on reasonable terms or by reason of the conditions
attached by him to the license, purchase, lease or use of the patented article or
working of the patented process or machine of production, the establishment of
a new trade or industry in the Philippines is prevented; or if the patent or invention
relates to food or medicine or is necessary to public health or public
safety. All these things involve the application of laws, legal principles, practice
and procedure. They call for legal knowledge, training and experience for
which a member of the bar has been prepared.
In support of the proposition that much of the business and many of the acts,
orders and decisions of the Patent Director involve questions of law or a
reasonable and correct evaluation of facts, the very Patent Law, Republic Act No.
165, Section 61, provides that:
"* * * the applicant for a patent or for the registration of a design, any party to
a proceeding to cancel a patent or to obtain a compulsory license, and any party
to any other proceeding in the Office may appeal to the Supreme Court from any
final order or decision of the Director."
In other words, the appeal is taken to this Tribunal. If the transaction of business
in the Patent Office and the acts, orders and decisions of the Patent Director
involved exclusively or mostly technical and scientific knowledge and training,
then logically, the appeal should be taken not to a court or judicial body, but rather
to a board of scientists, engineers or technical men, which is not the case.
Another aspect of the question involves the consideration of the nature of the
functions and acts of the Head of the Patent Office.
"* * * commissioner in issuing or withholding patents, in reissues, interferences,
and extensions, exercises quasi-judicial junctions. Patents are public records, and
it is the duty of the Commissioner to give authenticated copies to any person, on
payment of the legal fees." (40 Am. Jur. 537). (Italics supplied).
"* * *. The Commissioner has the only original initiatory" jurisdiction that exists
up to the granting and delivering of a patent, and it is his duty to decide whether
the patent is new and whether it is the proper subject of a patent; and his action
in awarding or refusing a patent is a judicial junction. In passing on an application
the commissioner should decide not only questions of law, but also questions
of fact, as whether there has been a prior public use or sale of
the article invented. * * *." (60 C.J.S. 460). (Italics supplied).
The Director of Patents, exercising as he does judicial or quasi-judicial
functions, it is reasonable to hold that a member of the bar, because of his
legal knowledge and training, should be allowed to practice before the Patent
Office, without further examination or other qualification. Of course, the
Director of Patents, if he deems it advisable or necessary, may require that
members of the bar practising before him enlist the assistance of technical men
and scientists in the preparation of papers and documents, such as, the drawing
or technical description of an invention or machine sought to be patented, in the
same way that a lawyer filing an application for the registration of a parcel of land
on behalf of his client, is required to submit a plan and technical description of
said land, prepared by a licensed surveyor.
But respondent Director claims that he is expressly authorized by the law to
require persons desiring to practice or to do business before him to submit to an
examination, even if they are already members of the bar. He contends that our
Patent Law, Republic Act No. 165, is patterned after the United States Patent
Law; and that the U. S. Patent Office in its Rules of Practice of the United States
Patent Office in Patent Cases prescribes an examination similar to that which he
(respondent) has prescribed and scheduled. He invites our attention to the
following provisions of said Rules of Practice:
"Registration of attorneys and agents.— A register of attorneys and a register of agents
are kept in the Patent Office on which are entered the names of all persons
recognized as entitled to represent applicants before the Patent Office in the
preparation and prosecution of applications for patent. Registration in the Patent
Office under the provisions of these rules shall only entitle the person registered
to practice before the Patent Office.
"(a) Attorneys at law.— Any attorney at law in good standing admitted to practice
before any United States Court or the highest court of any State or Territory of
the United States who fulfills the requirements and complied with the provisions
of these rules may be admitted to practice before the Patent Office and have his
name entered on the register of attorneys.
*******
"(c) Requirement for registration.— No person will be admitted to practice and
register unless he shall apply to the Commissioner of Patents in writing on a
prescribed form supplied by the Commissioner and furnish all requested
information and material; and shall establish to the satisfaction of the
Commissioner that he is of good moral character and of good repute and
possessed of the legal and scientific and technical qualifications necessary
to enable him to render applicants for patent valuable service, and is
otherwise competent to advise and assist him in the presentation and prosecution
of their application before the Patent Office. In
that the Commissioner may determine whether a person seeking to have his
name placed upon either of the registers has the qualifications specified,
satisfactory proof of good moral character and repute, and of sufficient
basic training in scientific and technical matters must be submitted and an
examination which is held from time to time must be taken and passed. The
taking of an examination may be waived in the case of any person
who has served for three years in the examining corps of the Patent Office."
Respondent states that the promulgation of the Rules of Practice of the
United States Patent Office in Patent Cases is authorized by the United States
Patent Law itself, which reads as follows:
"The Commissioner of Patents, subject to the approval of the Secretary of
Commerce may prescribe rules and regulations governing the recognition of agents,
attorneys, or other persona representing applicants or other parties before his office, and may
require of such persons, agents, or attorneys, before being recognized as
representatives of applicants or other persons, that they shall show they are of
good moral character and in good repute, are possessed of the necessary qualifications to
enable them to render to applicants or other persons valuable service, and are likewise competent
to advise and assist applicants or other persons in the presentation or prosecution of their
applications or other business before the Office. The Commissioner of Patents
may, after notice and opportunity for a hearing, suspend or exclude, either
generally or in any particular case, from further practice before his office any
person, agent, or attorney shown to be incompetent or disreputable, or guilty of
gross misconduct, or who refuses to comply with the said rules and regulations, or
who shall, with intent to defraud in any manner, deceive, mislead, or threaten any
applicant or prospective applicant, or other person
immediate or prospective business before the office, by word, circular, letter, or
by advertising. The reasons for any such suspension or exclusion shall be duly
recorded. The action of the Commissioner may be reviewed upon the petition of
the person so refused recognition or so suspended or excluded by the district
court of the United States for the District of Columbia under such conditions and
upon such proceedings as the said court may by its rules determine." (Italics
supplied).
Respondent Director concludes that Section 78 of Republic Act No. 165 being:
similar to the provisions of law just reproduced, then he is authorized to
prescribe the rules and regulations requiring that persons desiring to practice
before him should submit to and pass an examination. We reproduce said Section
78, Republic Act No. 165, for purposes of comparison:
"Sec. 78. Rules and regulations.— The Director subject to the approval of the
Secretary of Justice, shall promulgate the necessary rules and regulations, not
inconsistent with law, for the conduct of all business in the Patent Office."
The above provisions of Section 78 certainly and by far,y are different from the
provisions of the United States Patent Law as regards authority to hold
examinations to determine the qualifications of those allowed to practice before
the Patent Office. While the U. S. Patent Law authorizes the Commissioner of
Patents to require attorneys to show that they possess the necessary
qualifications and competence to render valuable service to and advise and assist
their clients in patent cases, which showing may take the form of a test or
examination to be held by the Commissioner, our Patent Law, Section 78,
is silent on this important point. Our attention has not been called to any
express provision of our Patent Law, giving such authority to determine the
qualifications of persons allowed to practice before the Patent Office.
Section 551 of the Revised Administrative Code authorizes every chief of bureau
to prescribe forms and make regulations or general orders not inconsistent with
law, to secure the harmonious and efficient administration of his branch of the
service and to carry into full effect the laws relating to matters within the
jurisdiction of his bureau. Section 608 of Republic Act 1937, known as the Tariff
and Customs Code of the Philippines, provides that the Commissioner of
Customs shall, subject to the approval of the Department Head, make all rules
and regulations necessary to enforce the provisions of said code. Section 338 of
the National Internal Revenue Code, Commonwealth Act No. 466 as amended,
states that the Secretary of Finance, upon recommendation of the Collector of
Internal Revenue, shall promulgate all needful rules and regulations for the
effective enforcement of the provisions of the code. We understand that rules
and regulations have been promulgated not only for the Bureaus of Customs and
Internal Revenue, but also for other bureaus of the Government, to govern the
transaction of business in and to enforce the law for said bureaus.
Were we to allow the Patent Office, in the absence of an express and clear
provision of law giving the necessary sanction, to require lawyers to submit to and
pass on examination prescribed by it before they are allowed to practice before
said Patent Office, then there would be no reason why other bureaus specially
the Bureaus of Internal Revenue and Customs, where the business in the same
area are more or less complicated, such as the presentation of books of accounts,
balance sheets, etc., assessments exemptions, depreciation, these as regards the
Bureau of Internal Revenue, and the classification of goods, imposition of customs
duties, seizures, confiscation, etc., as regards the Bureau of Customs, may not
also require that any lawyer practising before them or otherwise transacting
business with them on behalf of clients, shall first pass an examination to qualify.
order
In conclusion, we hold that under the present law, members of the Philippine Bar
authorized by this Tribunal to practice law, and in good standing, may practice
their profession before the Patent Office, for the reason that much of the business
in said office involves the interpretation and determination of the scope and
application of the Patent Law and other laws applicable, as well as the presentation
of evidence to establish facts involved; that part of the functions of the Patent
Director are judicial or quasi-judicial, so much so that appeals from his orders
and decisions are, under the law, taken to the Supreme Court.
Paras, C.J., Bengzon, Padilla, Reyes A., Bautista Angelo, Labrador, Concepcion, Reyes,
J.B.L., and Endencia, JJ., concur.
G.R. No. 180006, September 28, 2011
COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS.
FORTUNE TOBACCO CORPORATION, RESPONDENT.
DECISION
BRION, J.:
Before the Court is a petition for review on certiorari filed under Rule 45 of the
Rules of Court by petitioner Commissioner of Internal Revenue (CIR), assailing
the decision dated July 12, 2007[1] and the resolution dated October 4, 2007,[2] both
issued by the Court of Tax Appeals (CTA) en banc in CTA E.B. No. 228.
BACKGROUND FACTS
having
Under our tax laws, manufacturers of cigarettes are subject to pay excise taxes on
their products. Prior to January 1, 1997, the excises taxes on these products were
in the form of ad valorem taxes, pursuant to Section 142 of the 1977 National
Internal Revenue Code (1977 Tax Code).
Beginning January 1, 1997, Republic Act No. (RA) 8240[3] took effect and a shift
from ad valorem to specific taxes was made. Section 142(c) of the 1977 Tax Code,
as amended by RA 8240, reads in part:
Sec. 142. Cigars and cigarettes. -- x x x.
(c) Cigarettes packed by machine. -- There shall be levied, assessed and collected
on cigarettes packed by machine a tax at the rates prescribed below:
(1) If the net retail price (excluding the excise tax and the value-added tax) is above
Ten pesos (P10.00) per pack, the tax shall be Twelve pesos (P12.00) per pack;
(2) If the net retail price (excluding the excise tax and the value-added tax) exceeds
Six pesos and fifty centavos (P6.50) but does not exceed Ten pesos (P10.00) per
pack, the tax shall be Eight pesos (P8.00) per pack;
(3) If the net retail price (excluding the excise tax and the value-added tax) is Five
pesos (P5.00) but does not exceed Six pesos and fifty centavos (P6.50) per pack,
the tax shall be Five pesos (P5.00) per pack;
(4) If the net retail price (excluding the excise tax and the [value]-added tax) is
below Five pesos (P5.00) per pack, the tax shall be One peso (P1.00) per pack.
xxxx
The specific tax from any brand of cigarettes within the next three (3) years
of effectivity of this Act shall not be lower than the tax [which] is due from
each brand on October 1, 1996: Provided, however, That in cases where the
specific tax rates imposed in paragraphs (1), (2), (3) and (4) hereinabove will result The CIR disagrees with the CTA's ruling and assails it before this Court through
in an increase in excise tax of more than seventy percent (70%), for a brand of the present petition for review on certiorari. The CIR posits that the inclusion
cigarette, the increase shall take effect in two tranches: fifty percent (50%) of the of the proviso in Section 1 of RR 17-99 was made to carry into effect the law's
increase shall be effective in 1997 and one hundred percent (100%) of the increase intent and is well within the scope of his delegated legislative authority.[11]
shall be effective in 1998. He claims that the CTA's strict interpretation of the law ignored Congress' intent
xxxx "to increase the collection of excise taxes by increasing specific tax rates on `sin'
products."[12] He cites portions of the Senate's deliberation on House Bill No.
The rates of specific tax on cigars and cigarettes under paragraphs (1), (2), 7198 (the precursor of RA 8240) that conveyed the legislative intent to increase
(3) and (4) hereof, shall be increased by twelve percent (12%) on January 1, the excise taxes being paid.[13]
2000. [emphases ours]
The CIR points out that Section 145(c) of the 1997 Tax Code categorically declares
To implement RA 8240 and pursuant to its rule-making powers, the CIR issued that "[t]he excise tax from any brand of cigarettes within the [three-year transition
Revenue Regulation No. (RR) 1-97 whose Section 3(c) and (d) echoed the above- period from January 1, 1997 to December 31, 1999] shall not be lower than the
quoted portion of Section 142 of the 1977 Tax Code, as amended. [4] tax, which is due from each brand on October 1, 1996." He posits that there is no
plausible reason why the new specific tax rates due beginning January 1, 2000
The 1977 Tax Code was later repealed by RA 8424, or the National Internal should not be subject to the same rule as those due during the transition
Revenue Code of 1997 (1997 Tax Code), and Section 142, as amended by RA 8240, period. To the CIR, the adoption of the "higher tax rule" during the transition
was renumbered as Section 145. period unmistakably shows the intent of Congress not to lessen the excise tax
collection. Thus, the CTA should have construed the ambiguity or omission in
This time, to implement the 12% increase in specific taxes mandated under Section Section 145(c) in a manner that would uphold the law's policy and intent.
145 of the 1997 Tax Code and again pursuant to its rule-making powers, the CIR
issued RR 17-99, which reads: Fortune Tobacco argues otherwise. To it, Section 145(c) of the 1997 Tax Code
Section 1. New Rates of Specific Tax. The specific tax rates imposed under the read and interpreted as it is written; it imposes a 12% increase on the rates of excise
following sections are hereby increased by twelve percent (12%) and the new rates taxes provided under sub-paragraphs (1), (2), (3), and (4) only; it does not say that
to be levied, assessed, and collected are as follows: the tax due during the transition period shall continue to be collected if the amount
Present Specific Tax New Specific Tax is higher than the new specific tax rates. It contends that the "higher tax rule"
Section Description of Articles Rates (Prior to January Rates (Effective applies only to the three-year transition period to offset the burden caused by the
1, 2000) January 1, 2000) shift from ad valorem to specific taxes.
THE COURT'S RULING
145 CIGARS and CIGARETTES
B) Cigarettes Packed by Except for the tax period and the amounts involved,[14] the case at bar presents the
Machine same issue that the Court already resolved in 2008 in CIR v. Fortune Tobacco
(1) Net Retail Price (excluding Corporation.[15] In the 2008 Fortune Tobacco case, the Court upheld the tax refund
VAT & Excise) exceeds P12.00/pack P13.44/pack claims of Fortune Tobacco after finding invalid the proviso in Section 1 of RR 17-
P10.00 per pack 99. We ruled:
Section 145 states that during the transition period, i.e., within the next three (3)
(2) Net Retail Price (excluding years from the effectivity of the Tax Code, the excise tax from any brand of
VAT & Excise) is P6.51 up to P8.00/pack P8.96/pack cigarettes shall not be lower than the tax due from each brand on 1 October 1996.
P10.00 per pack This qualification, however, is conspicuously absent as regards the 12% increase
(3) Net Retail Price (excluding which is to be applied on cigars and cigarettes packed by machine, among others,
VAT & Excise) is P5.00 to P5.00/pack P5.60/pack effective on 1 January 2000. Clearly and unmistakably, Section 145 mandates a new
P6.50 per pack rate of excise tax for cigarettes packed by machine due to the 12% increase
(4) Net Retail Price (excluding effective on 1 January 2000 without regard to whether the revenue collection
VAT & Excise) is below P5.00 P1.00/pack P1.12/pack starting from this period may turn out to be lower than that collected prior to this
per pack date.

By adding the qualification that the tax due after the 12% increase becomes
Provided, however, that the new specific tax rate for any existing brand of
effective shall not be lower than the tax actually paid prior to 1 January 2000,
cigars [and] cigarettes packed by machine, distilled spirits, wines and
Revenue Regulation No. 17-99 effectively imposes a tax which is the higher
fermented liquors shall not be lower than the excise tax that is actually
amount between the ad valorem tax being paid at the end of the three (3)-year
being paid prior to January 1, 2000. [emphasis ours]
transition period and the specific tax under paragraph C, sub-paragraph (1)-(4), as
increased by 12% - a situation not supported by the plain wording of Section 145
THE FACTS OF THE CASE
of the Tax Code.[16]
Pursuant to these laws, respondent Fortune Tobacco Corporation (Fortune Tobacco)
Following the principle of stare decisis,[17] our ruling in the present case should no
paid in advance excise taxes for the year 2003 in the amount of P11.15 billion, and
longer come as a surprise. The proviso in Section 1 of RR 17-99 clearly went
for the period covering January 1 to May 31, 2004 in the amount of P4.90 billion.[5]
beyond the terms of the law it was supposed to implement, and therefore entitles
Fortune Tobacco to claim a refund of the overpaid excise taxes collected pursuant
In June 2004, Fortune Tobacco filed an administrative claim for tax refund with
to this provision.
the CIR for erroneously and/or illegally collected taxes in the amount of
P491 million.[6] Without waiting for the CIR's action on its claim, Fortune
The amount involved in the present case and the CIR's firm insistence of its
Tobacco filed with the CTA a judicial claim for tax refund. [7]
arguments nonetheless compel us to take a second look at the issue, but our
findings ultimately lead us to the same conclusion. Indeed, we find more reasons
In its decision dated May 26, 2006, the CTA First Division ruled in favor of
to disagree with the CIR's construction of the law than those stated in our 2008
Fortune Tobacco and granted its claim for refund.[8] The CTA First Division's
Fortune Tobacco ruling, which was largely based on the application of the rules of
ruling was upheld on appeal by the CTA en banc in its decision dated July 12,
statutory construction.
2007.[9] The CIR's motion for reconsideration of the CTA en banc's decision was
denied in a resolution dated October 4, 2007.[10]
Raising government revenue is not the
THE ISSUE
sole objective of RA 8240
Fortune Tobacco's claim for refund of overpaid excise taxes is based
That RA 8240 (incorporated as Section 145 of the 1997 Tax Code) was enacted to
primarily on what it considers as an "unauthorized administrative
raise government revenues is a given fact, but this is not the sole and only objective
legislation" on the part of the CIR. Specifically, it assails the proviso in
of the law.[18] Congressional deliberations show that the shift from ad valorem to
Section 1 of RR 17-99 that requires the payment of the "excise tax actually being
specific taxes introduced by the law was also intended to curb the corruption that
paid prior to January 1, 2000" if this amount is higher than the new specific tax
became endemic to the imposition of ad valorem taxes.[19] Since ad valorem taxes
rate, i.e., the rates of specific taxes imposed in 1997 for each category of cigarette,
were based on the value of the goods, the prices of the goods were often
plus 12%. It claimed that by including the proviso, the CIR went beyond the
manipulated to yield lesser taxes. The imposition of specific taxes, which are based
language of the law and usurped Congress' power. As mentioned, the CTA sided
on the volume of goods produced, would prevent price manipulation and also cure
with Fortune Tobacco and allowed the latter to claim the refund.
the unequal tax treatment created by the skewed valuation of similar goods.
 This bill serves as a catch-up measure as government attempts to collect additional
Rule of uniformity of taxation violated by revenues due it since 2001. Modifications are necessary indeed to capture the loss
the proviso in Section 1, RR 17-99 proceeds and prevent further erosion in revenue base. x x x. As it is, it plugs a
major loophole in the ambiguity of the law as evidenced by recent disputes
The Constitution requires that taxation should be uniform and resulting in the government being ordered by the courts to refund taxpayers. This
equitable.[20] Uniformity in taxation requires that all subjects or objects of taxation, bill clarifies that the excise tax due on the products shall not be lower than the tax
similarly situated, are to be treated alike both in privileges and liabilities.[21] This due as of the date immediately prior to the effectivity of the act or the excise tax
requirement, however, is unwittingly violated when the proviso in Section 1 of RR due as of December 31, 1999.[26]
17-99 is applied in certain cases. To illustrate this point, we consider three brands
of cigarettes, all classified as lower-priced cigarettes under Section 145(c)(4) of the This remark notwithstanding, the final version of the bill that became RA 9334
1997 Tax Code, since their net retail price is below P5.00 per pack: contained no provision similar to the proviso in Section 1 of RR 17-99 that
imposed the tax due as of December 31, 1999 if this tax is higher than the new
Brand[22 Net (A) (B) (C) (D) (E) specific tax rates. Thus, it appears that despite its awareness of the need to protect
] Reta New the increase of excise taxes to increase government revenue, Congress ultimately
il Ad Spe Specif Specif decided against adopting the "higher tax rule.
Pric Valore cific Tax ic Tax New ic Tax
e m Tax under Due Specific Due WHEREFORE, in view of the foregoing, the petition is DENIED. The
per Due Section Jan Tax impos by Jan decision dated July 12, 2007 and the resolution dated October 4, 2007 of the Court
pac prior 145(C)(4) 1997 ing 12% 2000 of Tax Appeals in CTA E.B. No. 228 are AFFIRMED. No pronouncement as
k to Jan to increase by per to costs.
1997 Dec Jan 2000 RR
1999 17-99 SO ORDERED.
Camel 4.71 5.50 1.00/pack 5.50 1.12/pack 5.50
KS
Champi 4.56 3.30 1.00/pack 3.30 1.12/pack 3.30
on M G.R. No. 77372, April 29, 1988
100 LUPO L. LUPANGCO, RAYMOND S. MUNGKAL, NORMAN A.
Union 4.64 1.09 1.00/pack 1.09 1.12/pack 1.12 MESINA, ALEXANDER R. REGUYAL, JOCELYN P. CATAPANG,
America ENRICO V. REGALADO, JEROME O. ARCEGA, ERNESTO C. BLAS,
n Blend JR., ELPIDIO M. ALMAZAN, KARL CAESAR R. RIMANDO,
PETITIONERS, VS. COURT OF APPEALS AND PROFESSIONAL
Although the brands all belong to the same category, the proviso in Section 1, RR REGULATION COMMISSION, RESPONDENTS.
17-99 authorized the imposition of different (and grossly disproportionate) tax
rates (see column [D]). It effectively extended the qualification stated in the third DECISION
paragraph of Section 145(c) of the 1997 Tax Code that was supposed to apply GANCAYCO, J.
only during the transition period: Is the Regional Trial Court of the same category as the Professional Regulation
The excise tax from any brand of cigarettes within the next three (3) years from Commission so that it cannot pass upon the validity of the administrative acts of
the effectivity of R.A. No. 8240 shall not be lower than the tax, which is due from the latter? Can this Commission lawfully prohibit the examinees from attending
each brand on October 1, 1996[.] review classes, receiving handout materials, tips or the like three (3) days before
the date of examination? These are the issues presented to the court by this petition
In the process, the CIR also perpetuated the unequal tax treatment of similar goods for certiorari to review the decision of the Court of Appeals promulgated on January
that was supposed to be cured by the shift from ad valorem to specific taxes. 13, 1987, in CA-G.R. SP No. 10591,** declaring null and void the Order dated
October 21, 1986 issued by the Regional Trial Court of Manila, Branch 32 in Civil
The omission in the law in fact reveals the legislative Case No. 86-37950 entitled "Lupo L. Lupangco, et al. vs. Professional Regulation
intent not to adopt the "higher tax rule" Commission."

The CIR claims that the proviso in Section 1 of RR 17-99 was patterned after the
third paragraph of Section 145(c) of the 1997 Tax Code. Since the law's intent was
to increase revenue, it found no reason not to apply the same "higher tax rule" to
excise taxes due after the transition period despite the absence of a similar text in
the wording of Section 145(c). What the CIR misses in his argument is that he
applied the rule not only for cigarettes, but also for cigars, distilled spirits, wines
and fermented liquors:
Provided, however, that the new specific tax rate for any existing brand of cigars
[and] cigarettes packed by machine, distilled spirits, wines and fermented liquors
shall not be lower than the excise tax that is actually being paid prior to January 1,
2000.
When the pertinent provisions of the 1997 Tax Code imposing excise taxes on
these products are read, however, there is nothing similar to the third paragraph
of Section 145(c) that can be found in the provisions imposing excise taxes on
distilled spirits (Section 141[23]) and wines (Section 142[24]). In fact, the rule will
also not apply to cigars as these products fall under Section 145(a).[25]
Evidently, the 1997 Tax Code's provisions on excise taxes have omitted the
adoption of certain tax measures. To our mind, these omissions are telling
indications of the intent of Congress not to adopt the omitted tax measures; they
are not simply unintended lapses in the law's wording that, as the CIR claims, are
nevertheless covered by the spirit of the law. Had the intention of Congress been
solely to increase revenue collection, a provision similar to the third paragraph of
Section 145(c) would have been incorporated in Sections 141 and 142 of the 1997
Tax Code. This, however, is not the case.
We note that Congress was not unaware that the "higher tax rule" is a proviso that
should ideally apply to the increase after the transition period (as the CIR
embodied in the proviso in Section 1 of RR 17-99). During the deliberations for
the law amending Section 145 of the 1997 Tax Code (RA 9334), Rep. Jesli Lapuz
adverted to the "higher tax rule" after December 31, 1999 when he stated:
The records show the following undisputed facts:
On or about October 6, 1986, herein respondent Professional Regulation
Commission (PRC) issued Resolution No. 105 as part of its "Additional
Instructions to Examinees," to all those applying for admission to take the
licensure examinations in accountancy. The resolution embodied the following
pertinent provisions:
"No examinee shall attend any review class, briefing, conference or the like
conducted by, or shall receive any hand-out, review material, or any tip from any
school, college or university, or any review center or the like or any reviewer,
lecturer, instructor official or employee of any of the aforementioned or similar
institutions during the three days immediately preceding every examination day
including the examination day.
"Any examinee violating this instruction shall be subject to the sanctions
prescribed by Sec. 8, Art. Ill of the Rules and Regulations of the Commission."[1]
On October 16, 1986, herein petitioners, all reviewees preparing to take the
licensure examinations in accountancy scheduled on October 25 and November 2
of the same year, filed in their own behalf and in behalf of all others similarly
situated like them, with the Regional Trial Court of Manila, Branch XXXII, a
complaint for injunction with a prayer for the issuance of a writ of preliminary
injunction against respondent PRC to restrain the latter from enforcing the above-
mentioned resolution and to declare the same unconstitution.
Respondent PRC filed a motion to dismiss on October 21, 1987 on the ground
that the lower court had no jurisdiction to review and to enjoin the enforcement
of its resolution. In an Order of October 21, 1987, the lower court declared that it
had jurisdiction to try the case and enjoined the respondent commission from
enforcing and giving effect to Resolution No. 105 which it found to be
unconstitutional.
Not satisfied therewith, respondent PRC, on November 10, 1986, filed with the
Court of Appeals a petition for the nullification of the above Order of the lower
court. Said petition was granted in the Decision of the Court of Appeals
promulgated on January 13, 1987, to wit:
"WHEREFORE, finding the petition meritorious the same is hereby GRANTED
and the order dated October 21,1986 issued by respondent court is declared null
and void. The respondent court is further directed to dismiss with prejudice Civil
Case No. 86-37950 for want of jurisdiction over the subject matter thereof. No
costs in this instance.
SO ORDERED."[2]
Hence, this petition.
The Court of Appeals, in deciding that the Regional Trial Court of Manila had no
jurisdiction to entertain the case and to enjoin the enforcement of Resolution No.
105, stated as its basis its conclusion that the Professional Regulation Commission
and the Regional Trial Court are co-equal bodies. Thus it held—
"That the petitioner Professional Regulatory Commission is at least a co-equal
body with the Regional Trial Court is beyond question, and co-equal bodies have
no power to control each other or interfere with each other's acts."[3]
To strengthen its position, the Court of Appeals relied heavily on National
Electrification Administration vs. Mendoza,[4] which cites Pineda vs. Lantin[5] and
Philippine Pacific Fishing, Inc. vs. Luna,[6] where this Court held that a Court of First
Instance cannot interfere with the orders of the Securities and Exchange
Commission, the two being co-equal bodies.
After a close scrutiny of the facts and the record of this case, We rule in favor of
the petitioner.
The cases cited by respondent court are not in point. It is glaringly apparent that
the reason why this Court ruled that the Court of First Instance could not interfere
with the orders of the Securities and Exchange Commission was that this was so
provided for by the law. In Pineda vs. Lantin, We explained that whenever a party
is aggrieved by or disagrees with an order or ruling of the Securities and Exchange
Commission, he cannot seek relief from courts of general jurisdiction since under
the Rules of Court and Commonwealth Act No. 83, as amended by Republic Act
No. 635, creating and setting forth the powers and functions of the old Securities
and Exchange Commission, his remedy is to go to the Supreme Court on a petition
for review. Likewise, in Philippine Pacific Fishing Co., Inc. vs. Luna, it was stressed that
if an order of the Securities and Exchange Commission is erroneous, the
appropriate remedy to take is first, within the Commission itself, then, to the
Supreme Court as mandated in Presidential Decree No. 902-A, the law creating
the new Securities and Exchange Commission. Nowhere in the said cases was it
held that a Court of First Instance has no jurisdiction over all other government
agencies. On the contrary, the ruling was specifically limited to the Securities and
Exchange Commission.
The respondent court erred when it placed the Securities and Exchange
Commission and the Professional Regulation Commission in the same category.
As already mentioned, with respect to the Securities and Exchange Commission,
the laws cited explicitly provide for the procedure that need be taken when one is
aggrieved by its order or ruling. Upon the other hand, there is no law providing
for the next course of action for a party who wants to question a ruling or order
of the Professional Regulation Commission. Unlike Commonwealth Act No. 83
and Presidential Decree No. 902-A, there is no provision in Presidential Decree
No. 223, the law creating the Professional Regulation Commission, that orders or
resolutions of the Commission are appealable either to the Court of Appeals or to
the Supreme Court. Consequently, Civil Case No. 86-37950, which was filed in
order to enjoin the enforcement of a resolution of the respondent Professional
Regulation Commission alleged to be unconstitutional, should fall within the
general jurisdiction of the Court of First Instance, now the Regional Trial Court.[7]
What is clear from Presidential Decree No. 223 is that the Professional Regulation
Commission is attached to the Office of the President for general direction and
coordination.[8] Well settled in our jurisprudence is the view that even acts of the
Office of the President may be reviewed by the Court of First Instance (now the
Regional Trial Court). In Medalla vs. Sayo,[9] this rule was thoroughly propounded
on, to wit:
"In so far as jurisdiction of the Court below to review by Certiorari decisions
and/or resolutions of the Civil Service Commission and of the Presidential
Executive Assistant is concerned, there should be no question but that the power
of judicial review should be upheld. The following rulings buttress this conclusion:
'The objection to a judicial review of a Presidential act arises from a failure to
recognize the most important principle in our system of government, i.e., the
separation of powers into three co-equal departments, the executives, the
legislative and the judicial, each supreme within its own assigned powers and
duties. When a presidential act is challenged before the courts of justice, it is not
to be implied therefrom that the Executive is being made subject and subordinate
to the courts. The legality of his acts are under judicial review, not because the
Executive is inferior to the courts, but because the law is above the Chief
Executive himself, and the courts seek only to interpret, apply or implement it (the
law). A judicial review of the President's decision on a case of an employee decided
by the Civil Service Board of Appeals should be viewed in this light and the
bringing of the case to the Courts should be governed by the same principles as
govern the judicial review of all administrative acts of all administrative officers."[10]
Republic vs. Presiding Judge, CFI of Lanao del Norte, Br. II,[11] is another case in point.
Here, "the Executive Office" of the Department of Education and Culture issued
Memorandum Order No. 93 under the authority of then Secretary of Education
Juan Manuel. As in this case, a complaint for injunction was filed with the Court
of First Instance of Lanao del Norte because, allegedly, the enforcement of the
circular would impair some contracts already entered into by public school
teachers. It was the contention of petitioner therein that "the Court of First
Instance is not empowered to amend, reverse and modify what is otherwise the
clear and explicit provision of the memorandum circular issued by the Executive
Office which has the force and effect of law." In resolving the issue, We held:
"xxx, We definitely state that respondent Court lawfully acquired jurisdiction in
Civil Case No. 11-240 (8) because the plaintiff therein asked the lower court for
relief, in the form of injunction, in defense of a legal right (freedom to enter into
contracts) . . . Hence there is a clear infringement of private respondent's
constitutional right to enter into agreements not contrary to law, which might ran
the risk of being violated by the threatened implementation of Executive Office
Memorandum Circular No. 93, dated February 5,1968, which prohibits, with
certain exceptions, cashiers and disbursing officers from honoring special powers
of attorney executed by the payee employees. The respondent Court is not only right but
duty bound to take cognizance of cases of this nature wherein a constitutional and statutory right
is allegedly infringed by the administrative action of a government office. Courts of First Instance
have original jurisdiction over all civil actions in which the subject of the litigation is not capable
of pecuniary estimation (Sec. 44, Republic Act 296, as amended)."[12] (Italics supplied.)
In San Miguel Corporation vs. Avelino,[13] We ruled that a judge of the Court of First
Instance has the authority to decide on the validity of a city tax ordinance even
after its validity had been contested before the Secretary of Justice and an opinion
thereon had been rendered.
In view of the foregoing, We find no cogent reason why Resolution No. 105,
issued by the respondent Professional Regulation Commission, should be
exempted from the general jurisdiction of the Regional Trial Court.
Respondent PRC, on the other hand, contends that under Section 9, paragraph 3
of B.P. Big. 129, it is the Court of Appeals which has jurisdiction over the case.
The said law provides:
"SEC. 9. Jurisdiction. — The Intermediate Appellate Court shall exercise:
xxx xxx xxx
(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders, or awards of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions, except those falling within the appellate
jurisdiction of the Supreme Court in accordance with the Constitution, the
provisions of this Act, and of subparagraph (1) of the third paragraph and
subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of
1948."
The contention is devoid of merit.
In order to invoke the exclusive appellate jurisdiction of the Court of Appeals as
provided for in Section 9, paragraph 3 of B.P. Big. 129, there has to be a final order
or ruling which resulted from proceedings wherein the administrative body
involved exercised its quasi-judicial functions. In Black's Law Dictionary, quasi-
judicial is defined as a term applied to the action, discretion, etc., of public
administrative officers or bodies required to investigate facts, or ascertain the
existence of facts, hold hearings, and draw conclusions from them, as a basis for
their official action, and to exercise discretion of a judicial nature. To expound
thereon, quasi-judicial adjudication would mean a determination of rights, privileges
and duties resulting in a decision or order which applies to a specific situation.[14]
This does not cover rules and regulations of general applicability issued by the
administrative body to implement its purely administrative policies and functions
like Resolution No. 105 which was adopted by the respondent PRC as a measure
to preserve the integrity of licensure examinations.
The above rule was adhered to in Filipinas Engineering and Machine Shop vs. Ferrer[15]
In this case, the issue presented was whether or not the Court of First Instance
had jurisdiction over a case involving an order of the Commission on Elections
awarding a contract to a private party which originated from an invitation to bid.
The said issue came about because under the laws then in force, final awards,
judgments, decisions or orders of the Commission on Elections fall within the
exclusive jurisdiction of the Supreme Court by way of certiorari. Hence, it has been
consistently held that "it is the Supreme Court, not the Court of First Instance,
which has exclusive jurisdiction to review on certiorari final decisions, orders, or
rulings of the Commission on Elections relative to the conduct of elections and
the enforcement of election laws."[16]
As to whether or not the Court of First Instance had jurisdiction in said case, We
said:
"We are however, far from convinced that an order of the COMELEC awarding
a contract to a private party, as a result of its choice among various proposals
submitted in response to its invitation to bid comes within the purview of a 'final
order' which is exclusively and directly appealable to this court on certiorari. What
is contemplated by the term 'final orders, rulings and decisions' of the COMELEC
reviewable by certiorari by the Supreme Court as provided by law are those rendered
in actions or proceedings before the COMELEC and taken cognizance of by the
said body in the exercise of its adjudicatory or quasi-judicial powers. (Italics supplied.)
xxx xxx xxx
"We agree with petitioner's contention that the order of the Commission granting
the award to a bidder is not an order rendered in a legal controversy before it
wherein the parties filed their respective pleadings and presented evidence after
which the questioned order was issued; and that this order of the commission was
issued pursuant to its authority to enter into contracts in relation to election
purposes. In short, the COMELEC resolution awarding the contract in favor of Acme was
not issued pursuant to its quasi-judicial functions But merely as an incident of its inherent
administrative functions over the conduct of elections, and hence, the said resolution may not be
deemed as a 'final order' reviewable by certiorari by the Supreme Court. Being non-judicial in
character, no contempt order may be imposed by the COMELEC from said order,
and no direct and exclusive appeal by certiorari to this Tribunal be from such
order. Any question arising from said order may be well taken in an ordinary civil
action before the trial courts. (Italics supplied)[17]
One other case that should be mentioned in this regard is Salud vs. Central Bank of
the Philippines.[18] Here, petitioner Central Bank, like respondent in this case, argued
that under Section 9, paragraph 3 of B.P. Big. 129, orders of the Monetary Board
are appealable only to the Intermediate Appellate Court. Thus:
"The Central Bank and its Liquidator also postulate, for the very first time, that
the Monetary Board is among the "quasi-judicial xxx boards' whose judgments are
within the exclusive appellate jurisdiction of the IAC; hence, it.is only said Court,
'to the exclusion of the Regional Trial Courts,' that may review the Monetary
Board's resolutions."[19]
Anent the posture of the Central Bank, We made the following pronouncement:
"The contention is utterly devoid of merit. The IAC has no appellate jurisdiction
over resolutions or orders of the Monetary Board. No law prescribes any mode of
appeal from the Monetary Board to the IAC."[20]
In view of the foregoing, We hold that the Regional Trial Court has jurisdiction to
entertain Civil Case No. 86-37950 and enjoin the respondent PRC from enforcing
its resolution.
Although We have finally settled the issue of jurisdiction, We find it imperative to
decide once and for all the validity of Resolution No. 105 so as to provide the
much awaited relief to those who are and will be affected by it.
Of course, We realize that the questioned resolution was adopted for a
commendable purpose which is "to preserve the integrity and purity of the
licensure examinations." However, its good aim cannot be a cloak to conceal its
constitutional infirmities. On its face, it can be readily seen that it is unreasonable
in that an examinee cannot even attend any review class, briefing, conference or the like, or
receive any hand-out, review material, or any tip from any school, college or university, or any
review center or the like or any reviewer, lecturer, instructor, official or employee of any of the
aforementioned or similar institutions xxx.[21]
The unreasonableness is more obvious in that one who is caught committing the
prohibited acts even without any ill motives will be barred from taking future
examinations conducted by the respondent PRC. Furthermore, it is inconceivable
how the Commission can manage to have a watchful eye on each and every
examinee during the three days before the examination period.
It is an axiom in administrative law that administrative authorities should not act
arbitrarily and capriciously in the issuance of rules and regulations. To be valid,
such rules and regulations must be reasonable and fairly adapted to secure the end
in view. If shown to bear no reasonable relation to the purposes for which they
are authorized to be issued, then they must be held to be invalid.[22]
Resolution No. 105 is not only unreasonable and arbitrary, it also infringes on the
examinees' right to liberty guaranteed by the Constitution. Respondent PRC has
no authority to dictate on the reviewees as to how they should prepare themselves
for the licensure examinations. They cannot be restrained from taking all the lawful
steps needed to assure the fulfillment of their ambition to become public
accountants. They have every right to make use of their faculties in attaining
success in their endeavors. They should be allowed to enjoy their freedom to
acquire useful knowledge that will promote their personal growth. As defined in a
decision of the United States Supreme Court:
"The term 'liberty' means more than mere freedom from physical restraint or the
bounds of a prison. It means freedom to go where one may choose and to act in
such a manner not inconsistent with the equal rights of others, as his judgment
may dictate for the promotion of his happiness, to pursue such callings and
vocations as may be most suitable to develop his capacities, and give to them their
highest enjoyment."[23]
Another evident objection to Resolution No. 105 is that it violates the academic
freedom of the schools concerned. Respondent PRC cannot interfere with the
conduct of review that review schools and centers believe would best enable their
enrolees to meet the standards required before becoming a full-pledged public
accountant. Unless the means or methods of instruction are clearly found to be
inefficient, impractical, or riddled with corruption, review schools and centers may
not be stopped from helping out their students. At this juncture, We call attention
to Our pronouncement in Garcia vs. The Faculty Admission Committee, Loyola School of
Theology,[24] regarding academic freedom, to wit:
x x x It would follow then that the school or college itself is possessed of such a
right. It decides for itself its aims and objectives and how best to attain them. It is
free from outside coercion or interference save possibly when the overriding
public welfare calls for some restraint. It has a wide spread of autonomy certainly
extending to the choice of students. This constitutional provision is not to be
construed in a niggardly manner or in a grudging fashion."
Needless to say, the enforcement of Resolution No. 105 is not a guarantee that the
alleged leakages in the licensure examinations will be eradicated or at least
minimized. Making the examinees suffer by depriving them of legitimate means of
review or preparation on those last three precious days-when they should be
refreshing themselves with all that they have learned in the review classes and
preparing their mental and psychological make-up for the examination day itself
— would be like uprooting the tree to get ride of a rotten branch. What is needed
to be done by the respondent is to find out the source of such leakages and stop
it right there. If corrupt officials or personnel should be terminated from their loss,
then so be it. Fixers or swindlers should be flushed out. Strict guidelines to be
observed by examiners should be set up and if violations are committed, then
licenses should be suspended or revoked. These are all within the powers of the
respondent commission as provided for in Presidential Decree No. 223. But by all
means the right and freedom of the examinees to avail of all legitimate means to
prepare for the examinations should not be curtailed.
In the light of the above, We hereby REVERSE and SET ASIDE, the decision of
the Court of Appeals in CA-G.R. SP No. 10591 and another judgment is hereby
rendered declaring Resolution No. 105 null and void and of no force and effect
for being unconstitutional. This decision is immediately executory. No costs.
SO ORDERED.
G.R. No. 11138, December 15, 1915
WALTER E. OLSEN & CO., PETITIONER, VS. BERNARD
HERSTEIN, AS THE INSULAR COLLECTOR OF CUSTOMS OF THE
PHILIPPINE ISLANDS, AND JAMES J. RAFFERTY, AS THE
COLLECTOR OF INTERNAL REVENUE OF THE PHILIPPINE
ISLANDS, RESPONDENTS.
DECISION
MORELAND, J.:
This is a petition to this court for a writ of mandamus directed to Bernard Herstein
as Insular Collector of Customs and James J. Rafferty as Collector of Internal
Revenue, requiring them "to furnish plaintiff the certificate covering: the origin
and the certificate of origin, respectively, of the cigars destined for exportation
from these Islands to the United States."
A demurrer was filed to the petition based on the ground that "the facts stated in
said petition do not entitle the plaintiff to the relief demanded, in that it does not
appear from the facts stated that the Insular Collector of Customs or the Collector
of Internal Revenue has failed or refused to perform any duty incumbent upon
either of said officers."
The question before us is that presented by the demurrer to the petition, or
complaint, the proceeding to obtain a writ of mandamus being, in this jurisdiction,
an "ordinary action."
It appears that the plaintiff, Walter E. Olsen & Co., a corporation, is a
manufacturer and exporter of cigars composed of tobacco grown in the Philippine
Islands. On or about the 16th day of July, 1915, this company applied to the
Collector of Internal Revenue for a certificate covering the origin of a certain
consignment of 10,000 cigars presented to the Collector at the time of the
application, duly packed, as required by the regulations of the Bureau, in proper
boxes of 100 cigars each, each box properly stamped with the United States
internal revenue stamps required by law and the regulations of the Bureau of
Internal Revenue, which cigars are known as "cortado," having straight instead of
spiral wrappers and shaped somewhat like a truncated cone, which said cigars the
company desired to introduced into the United States free of duty under the
provisions of the Tariff Act of the United States. On such application plaintiff
produced the statement required by the rules of the Bureau of Internal Revenue,
which it offered to verify before the collector as required by the rules of the Bureau
covering shipments of cigars, demonstrating that the cigars were entitled to free
entry into the United States under the provisions of the Tariff Act of the United
States relating to commerce with the Philippine Islands. The Collector of Internal
Revenue refused and still refuses Jo issue a certificate covering the origin of the
cigars on the ground, not that the material composing the cigars was not the
product of the Philippine Islands, but that the cigars in question did not conform
to a certain regulation relating to the exportation of Philippine cigars to the United
States issued by the Collector of Internal Revenue on the 26th of January, 1915,
providing that, after the expiration of a certain period, no certificate of origin
would be issued by said Bureau for cigars which were not "standard," it being held
by the Collector that the "cortado" cigars were not "well made" and, therefore,
were "not entitled to the standard mark" which a certificate of origin would place
on them, the only cigars entitled to such certificate being those of the regular
shape, having a spiral wrapper and with substantially the same diameter at each
end. On the refusal of the Collector of Internal Revenue to issue the certificate
prayed for, application was made to the Insular Collector of Customs for a
certificate of origin of the material of the cigars, which request was refused on the
ground that the certificate of the Collector of Internal Revenue covering the origin
of the cigars had not been issued and presented with the application as required
by the customs regulations.
The plaintiff alleges that the regulation of the Collector of Internal Revenue of
January 26, 1915, above referred to, relative to the exportation of cigars to the
United States, is "arbitrary, discriminating, illegal and void, and made without any
authority of law, and is an attempt to legislate and an endeavor by the Collector of
Internal Revenue to introduce provisions into the United States Tariff Acts
governing these Islands utterly inconsistent and at variance with the laws therein
expressed."
The complaint asserts that it is the duty of the Insular Collector of Customs "to
furnish exporters in these Islands certificates of origin of cigars and other tobacco
destined to the United States of America, to enable said merchandise to enter into
the United States free of duty, provided that they have complied with the Acts of
Congress of the United States of date of August 5, 1909, and October 3, 1913,
respectively, known as the Tariff Acts, and with the provisions thereof relating to
exports from the Philippine Islands to the United States; and provided that they
have complied with the rules and regulations relating thereto not inconsistent with
law, made and promulgated by the said Insular Collector of Customs of the
Philippine Islands, and approved by the Secretary of Finance and Justice thereof."
The question presented for our determination in this case is whether or not, in
connection with the issuance of "certificate covering the origin" and "certificate of
origin" mentioned in the complaint, there rests on the Collector of Internal
Revenue and the Insular Collector of Customs a duty the performance of which
the courts will enforce by mandamus. For convenience we will, in this decision,
use the phrase "certificate of origin" to describe both of the certificates above
mentioned, there appearing to be, in essence, little difference between them.
Section 222 of the Code of Civil Procedure, which is the only authority in the
Philippine Islands for the issuance of the writ of mandamus, provides: "When the
complaint in an action in a Court of First Instance alleges that any inferior tribunal,
corporation, board, or person unlawfully neglects the performance of an act which
the law specially enjoins as a duty resulting from an office, trust, or station, or
unlawfully excludes the plaintiff from the use and enjoyment of a right or office
to which he is entitled and from which he is unlawfully precluded by such inferior
tribunal, corporation, board, or person, and the court, on trial, finds the allegations
of the complain to be true, it may, if there is no other plain, speedy, and adequate
remedy in the ordinary courts of law, render a judgment granting a peremptory
order against the defendant, commanding him, immediately after the receipt of
such order, or at some other specified time, to do the act required to be done to
protect the rights of the plaintiff'."
Under this section the inquiry is narrowed to the determination of whether the
Insular Collector of Customs and the Collector of Internal Revenue have neglected
the performance of an act which the law specially enjoins as a duty resulting from
their office or unlawfully excludes the plaintiff from the use and enjoyment of a
right to which he is entitled and from which he is unlawfully precluded by them.
We are of the opinion that plaintiff's case as set out in the complaint is not one of
those provided for by the section just quoted. Unlike the statutes of many of the
States, our Code of Civil Procedure authorizes the issuance of a writ of mandamus
in two classes of cases only, "(a) where an official unlawfully neglects the
performance of an act which the law specially enjoins as a duty resulting from his
office/' and "(6) where he unlawfully excludes the plaintiff from the use and
enjoyment of a right to which he is entitled and from which he is unlawfully
precluded by such official." We do not believe the plaintiff has shown itself entitled
to the benefits of either of these provisions. Our attention has been called to no
statute which requires either the Insular Collector of Customs or the Collector of
Internal Revenue to issue a certificate of origin of the materials composing any
class of cigars, or of any other Philippine product for that matter. We have
examined all of the statutes which might have a bearing on this proceeding and in
none of them have we found any provision placing any such duty on either of the
officials named. The Tariff Act of October 3, 1913, entitled "The Tariff Act of
October 3, 1913," does not lay any such duty on these officials, having only this
to say with reference to the importation of tobacco from the Philippine Islands:
"C. That there shall be levied, collected, and paid upon all articles coming into the
United States from the Philippine Islands the rates of duty which are required to
be levied, collected, and paid upon like articles imported from foreign countries:
Provided, That all articles, the growth or product of or manufactured in the
Philippine Islands from materials the growth or product of the Philippine Islands
or of the United States, or of both, or which do not contain foreign materials to
the value of more than 20 pec centum of their total value, upon which no drawback
of customs duties has been allowed therein, coming into the United States from
the Philippine Islands shall hereafter be admitted free of duty: * * *"
Under this provision it is necessary, in the exportation of products of the
Philippine Islands to the United States, to satisfy the customs officials of that
country that the proposed importations are of the character described in that
portion of the Act of Congress of October 3, 1913, above quoted. By virtue of
this necessity, and pursuant to Executive Order No. 41 hereafter to be discussed,
there has grown up a custom in the Philippine Islands dating from 1909 (the Tariff
Act of August 5, 1909, having the same provision with respect to importations
from the Philippine Islands as the Act of October 3, 1913), by virtue of which the
Collector of Internal Revenue has issued and still issues to the manufacturers of
cigars in the Philippine Islands a certificate covering the origin of the material
composing the cigars which declares, in effect, that at least 80 per cent of the value
of the material composing the cigars was or is the growth or product of the
Philippine Islands. On this certificate the Insular Collector of Customs issued and
still issues a certificate of similar character. These certificates are the evidence on
which the customs officials in the United States act with respect to products
imported from the Philippine Islands in determining whether they are dutiable or
not. This custom was not based, as is clear from the quotation above made, on any
provision of the Congressional Tariff Act of 1913 requiring the issuance of such
certificate by any official, Federal or Insular. There is nothing in that act which
imposes a duty on either the Insular Collector of Customs or the Collector of
Internal Revenue with respect to certificates of origin relative to products or
merchandise exported from the Philippine Islands with destination in the United
States.
Nor was such or a similar duty imposed by any statute of the Philippine Islands.
The duties of the Insular Collector of Customs are laid down in section 3 of Act
No. 356, known as the Customs Administrative Act A careful reading of that
section, and indeed of the whole Act, produces the instant conviction that the duty
of making a certificate of origin with respect to Philippine products is not imposed
by that section or by any other portion of the Act. The same may be said with
respect to the statute imposing duties on the Collector of Internal Revenue. There
is nothingto be found in the Internal Revenue Act (No. 2339) which authorizes
the Collector, much less lays on him the duty, to issue certificates of origin. While,
as we have said above, it has been the custom to issue such certificates it was based
on no statute either of the United States or of the Philippine Islands and was not
adopted by virtue of any duty imposed on those officials by law. It arose from the
fact that it was far easier for Philippine exporters to present to Philippine officials
the evidence necessary to procure the admission of their exportations into the
United States free of duty than to offer it to the customs officials of the United
States. When an exporter in the Philippine Islands desired to export Philippine
products to the United States it became necessary, either by virtue of some rule
established by the United States customs authorities, or for some other reason as
to which we are not definitely informed by the complaint, to send along with the
exportation proof satisfactory to the customs officials of the United States
establishing the facts required by that portion of the Congressional Tariff Act of
1913 quoted hereinbefore as a condition to free entry into the United States. This
evidence was supplied by the certificates of origin.
We deem it clear, therefore, that the custom of issuing certificates of origin of
Philippine products about to be exported to the United States is based on no
statute of the United States or of the Philippine Islands. The benefit conferred by
the Congressional Tariff Act of 1913 on the Philippine exporter is the right to have
his goods entered free of duty in the ports of the United States, provided they meet
the requirements of that Act. This is the right and the only right which the exporter
in the Philippine Islands has by virtue of that Act. The presentation of certificates
of origin to the customs officials of the United States demonstrating that the article
sought to be imported falls within the definition of the Tariff Act is not based on
a right conferred by the Tariff Act but is simply a method by which such proof
can be made. The Philippine exporter is not limited in his proof that his exported
article falls within the provisions of the Tariff Act to the presentation of a
certificate of origin. So far as appears in this case, he may present to the customs
officials of the United States any other evidence which will establish the same fact;
and, if such evidence is satisfactory to those officials, the importation will be
entered free of duty although the importation is not accompanied by a certificate
of origin. The Tarifl1 Act sets out no particular method by which the fact that the
article is a Philippine product must be established; and the exporter, under that
Act, obtains no legal right to prove the fact of Philippine origin by any particular
method or means. He simply get the right to prove it. This being so, it must follow
that he has no legal right to present a certificate of origin to the customs officials
of the United States, nor has he a legal right to require the issuance of a certificate
of origin from any official of the Philippine Islands. Not having been granted by
the Act, no such right exists under the Act, and if no such right exists certainly it
can not be enforced in any sort of action.
Immediately on the passage of the Tariff Act of 1909 the (iovernor-General of the
Philippine Islands issued Executive Order No. 41, dated May 7, 1909. It dealt with
that provision of the Tariff Act of 1909 which was repeated in the Tarifl Act of
1913 which we have already quoted. It provides: "Upon the passage of a
Congressional enactment authorizing the free entry into the United States of goods
the product and growth of the Philippines, all customs and internal-revenue
officials will consider themselves charged with the duty of preventing the
fraudulent export for free entry into the United States of goods which are not the
product and growth of the Philippines. In case the Insular Collector of Customs,
the Collector of Internal Revenue, or their duly authorized representatives are
satisfied that goods sought to be exported to the United States for free entry
therein are really and truly the product and growth of the Philippines, they shall
issue proper certificates to the exporter of such goods to that effect, and shall
advise him that a duly authenticated copy of such certificates must accompany the
goods to che United States and be presented to the proper customs officials at the
port of entry in the United States.
"The Insular Auditor is hereby directed to transmit promptly at the close of each
month, through this office, to the Secretary of the Treasury of the United States
an abstract of such exports."
In pursuance of this order, Customs Administrative Circular No. 715, directed "to
all collectors of customs and others concerned' was issued on the 1st of August,
1914. Paragraphs 1, 2 and 3 thereof are as follows:
"The following regulations prescribing the manner of complying with the
provisions of section IV (e) of the United States Tariff Act of October 3, 1913,
for the shipment for free entry in the United States of Philippine products, upon
which no drawback of customs duties has been allowed, and which are for direct
shipment, under a through bill of lading, from the Philippine Islands to the United
States, are hereby published for the information and guidance of all concerned.
"The term 'Philippine products,' wherever used in these regulations, shall be held
to mean 'articles the growth or product of or manufactured in the Philippine
Islands from materials the growth or product of the Philippine Islands or of the
United States, or of both, or which do not contain foreign materials to the value
of more than 20 per centum of their total value,' in the sense of this phrase as used
in the aforecited section and Act.
"In accordance with the provisions of Executive Order No. 41, dated May 7, 1909,
collectors of customs and all other customs officials will consider themselves
charged with the duty of preventing fraudulent export for free entry into the
United States.
"Upon the filing of export entries covering Philippine products, as defined in
paragraph I, for direct shipment, under through bills of lading, to the United States
for free entry therein, the collector of customs at the port of loading shall furnish
the exporter, upon application therefor, a duly executed certificate of origin setting
forth that the articles to be exported are in truth and in fact the growth product,
or manufacture of the Philippine Islands, such certificates of origin to be on one
of the following forms: * * *"
The other paragraphs of this circular touching the exportation of Philippine
products are: "Par. IV. Exporters shall file with the collector of customs, prior to
the execution of the certificates of origin, a true copy of the original bill of lading
as evidence that the merchandise to be exported is for shipment to the United
States on through bill of lading, said copy to be attached to the duplicate copy of
the certificate of origin and forwarded therewith as provided for in paragraph X.
"Par. V. The certificate of origin provided for in paragraph III shall be required
for each consignment of merchandise exported to the United States, as evidenced
by each original bill of lading issued by the exporter, and shall have attached
thereto a customs fee stamp in the sum of two pesos (F2) Philippine currency:
Provided, That certificates of origin shall be issued free of charge in all cases in
which the consignment of merchandise does not exceed in value fifty pesos (F50)
Philippine currency."
"Par. VII. Certificates of origin covering cigars, cigarettes, manufactured tobacco,
or leaf tobacco, Bhall not be executed by collectors of customs until there has been
pro sented to them a sworn statement of the exporter covering such shipment of
tobaco, accompanied by a certificate from the Collector of Internal Revenue,
covering the origin of such tobacco and, in the case of manufactured tobacco, the
grading of the same; nor shall certificates of origin be issued for consignments of
manufactured tobacco unless such certificates, when presented by the exporter for
approval, shall show by indorsement of the Collector of Internal Revenue that
United States internal-revenue stamps have been attached to each and every
package of said consignment as required by law and regulations."
"Par. X. The certificates of origin provided for in paragraph III, for tobacco, shall
be executed and signed in triplicate, and for general merchandise, shall be executed
and signed in duplicate, the original to be delivered to the exporter and by him
forwarded to the consignee in the United States, and the duplicate to be
immediately forwarded to the Insular Collector of Customs at Manila; the triplicate
tobacco certificate being for file in the Bureau of Internal Revenue."
"Par. XII. Certificates of origin will not be issued for opium or preparations
thereof, liquors, playing cards, or other articles (with the exception of
manufactured tobacco) subject to United States internal-revenue tax; goods which
are not Philippine products, as defined in paragraph I; and articles upon which
drawback of customs duties has been claimed or allowed."
The Customs Administrative Act authorizes the Insular Collector of Customs to
make proper rules and regulations for carrying into effect the statute creating and
governing his department, while the Internal Revenue Law authorizes the
Collector of Internal Revenue and imposes it as a duty to publish all regulations
necessary to carry the Act into effect and to secure a harmonious and efficient
administration of his branch of the service. The regulations of both the Insular
Collector of Customs and the Collector of Internal Revenue become effective
when approved by the heads of the Departments to which they belong and after
they have been duly published.
Having seen that there is no statute, either of the United States or of the Philippine
Islands, w.hich places the duty on either the Insular Collector of Customs or the
Collector of Internal Revenue of issuing certificates of origin of products of the
Philippine Islands exported to the United States, the question remains whether
Executive Order No. 41 and the regulations of the Insular Collector of Customs
and the Collector of Internal Revenue referred to, issued thereunder, may be
considered as laws within the meaning of the section of the Code of Civil
Procedure authorizing the issuance of writs of mandamus.
In the Philippine Islands legal rights are conferred by statute. Unless a party can
establish a right by virtue of some statute or law in force in the Philippine Islands,
he has nothing on which he can base an action in any court. Until a legal right has
been violated, no cause of action exists. Executive Order No. 41 confers no legal
rights on anyone. It requires the adoption by the Insular Collector of Customs and
the Collector of Internal Revenue of such rules and regulations as will insure that
the Government of the United States will not be defrauded by a Philippine
exporter who, by manufactured evidence or otherwise, may attempt to introduce
into the United States free of duty articles which are not the product of the
Philippine Islands and which do not fall within the provisions of the Tariff Act of
1913; and to that end it lays on the officials named the duty of ascertaining whether
articles exported from the Philippine Islands to the United States are such that
they may be lawfully imported into the United States free of duty under the Tariff
Act. It is true that, while protecting the United States against fraud, the executive
order referred to greatly conveniences Philippine exporters by offering to them
the opportunity to make the proof which will be required by the customs officials
of the United States. It permits them, as we have already seen, in effect, to make
proof in the Philippine Islands which they would otherwise be required to make
in the United States. It presents to them an opportunity, a very valuable
opportunity, which they would not have had if the order had not been
promulgated. But while it does this, it does not confer a legal right, a right on which
an action in a court of law may be predicated, or one which may be enforced
against the officials charged with the formulation of the required evidence by any
process known to the law.
The matter before us may be looked at from another point of view. Executive
Order No. 41 is nothing more or less than a command from a superior to an
inferior. It creates no relation except between the official who issues it and the
official who receives it. Such orders, whether executive or departmental, have for
their object simply the efficient and economical administration of the affairs of the
department to which or in which they are issued in accordance with the law
governing the subject-matter. They are administrative in their nature and do not
pass beyond the limits of the department to which they are directed or in which
they are published, and, therefore, create no rights in third persons. They are based
on, and are the product of, a relationship in which power is their source and
obedience their object. Disobedience to or deviation from such an order can be
punished only by the power which issued it; and, if that power fails to administer
the corrective, then the disobedience goes unpunished. In that relationship no
third person or official may intervene, not even the courts. Such orders may be
very temporary, they being subject to instant revocation or modification by the
power which published them. Their very nature, as determined by the relationship
which produced them, demonstrates clearly the impossibility of any other person
enforcing them except the one who created them. An attempt on the part of the
courts to enforce such orders would result not only in confusion but, substantially,
in departmental anarchy also. The enforcement of such an order, and the
punishment which follows disobedience thereof, being at the will of the superior
who issued it, instant conflict between him and the courts would be the necessary
result of an effort on the part of the courts to enforce it. If courts can enforce,
they can punish for disobedience; and what that punishment shall be and what
form it will take, whether fine or imprisonment, or both, rests exclusively with
them. The intervention of the courts would thus produce this situation: The
official who issued the order and upon whom alone and exclusively rests the
responsibility for the due, orderly and efficient administration of his department is
not permitted to determine whether the order has been fulfilled or violated, or, if
there is disobedience or violation, how or when it shall be punished. Indeed, he
might be deprived of a number of his subordinates by reason of jail sentences
imposed by the courts for refusal to comply with their orders, and for reasons
which the official who issued the order might not think sufficient to justify any
punishment at all. The most serious results would almost necessarily follow if the
courts should undertake to compel the execution of the orders or the rules and
regulations of any department of the government except, perhaps, that in which
the courts are supreme. Moreover, if the courts should enter that field of activity,
there would be great difficulty in finding a stopping place. If they may enforce the
orders of the Governor-General directed to the Bureaus of Custom and Internal
Revenue, why not proceed and enforce all other executive orders, rules and
regulations in all branches of the Government? Certainly the courts should confine
themselves to the enforcement of legal and equitable rights, leaving the
administrative affairs of the government to administrative officials.
Taking as admitted all of the material allegations of the Complaint, as we have
taken them under the demurrer, the plaintiff is not entitled to the relief prayed for.
Its remedy lies with the superior powef which issued the order which is sought to
be enforced.
The demurrer is sustained and the plaintiff given 5 days in which to amend its
complaint. In case an amendment is not made within that time, the complaint will
be dismissed on the merits. So ordered.
G.R. No. L-32166, October 18, 1977
THE PEOPLE OF THE PHILIPPINES, PLAINTIFF-APPELLANT,
VS. HON. MAXIMO A. MACEREN, CFI, STA. CRUZ, LAGUNA, JOSE
BUENAVENTURA, GODOFREDO REYES, BENJAMIN REYES,
NAZARIO AQUINO AND CARLITO DEL ROSARIO, ACCUSED-
APPELLEES.
DECISION
AQUINO, J.:
This is a case involving the validity of a 1967 regulation, penalizing electro fishing
in fresh water fisheries, promulgated by the Secretary of Agriculture and Natural
Resources and the Commissioner of Fisheries under the old Fisheries Law and the
law creating the Fisheries Commission.
On March 7, 1969 Jose Buenaventura, Godofredo Reyes, Benjamin Reyes, Nazario
Aquino and Carlito del Rosario were charged by a Constabulary investigator in the
municipal court of Sta. Cruz, Laguna with having violated Fisheries Administrative
Order No. 84-1.
It was alleged in the complaint that the five accused in the morning of March 1,
1969 resorted to electro fishing in the waters of Barrio San Pablo Norte, Sta. Cruz
by "using their own motor banca, equipped with motor; with a generator colored
green with attached dynamo colored gray or somewhat white; and electrocuting
device locally known as 'senso' with a somewhat webbed copper wire on the tip or
other end of a bamboo pole with electric wire attachment which was attached to
the dynamo direct and with the use of these devices or equipments catches fish
thru electric current, which destroy any aquatic animals within its current reach, to
the detriment and prejudice of the populace" (Criminal Case No. 5429).
Upon motion of the accused, the municipal court quashed the complaint. The
prosecution appealed. The Court of First Instance of Laguna affirmed the order
of dismissal (Civil Case No. SC-36). The case is now before this Court on appeal
by the prosecution under Republic Act No. 5440.
The lower court held that electro fishing cannot be penalized because electric
current is not an obnoxious or poisonous substance as contemplated in section 11
of the Fisheries Law and that it is not a substance at all but a form of energy
conducted or transmitted by substances. The lower court further held that, since
the law does not clearly prohibit electro fishing, the executive and judicial
departments cannot consider it unlawful.
As legal background, it should be stated that section 11 of the Fisheries Law
prohibits "the use of any obnoxious or poisonous substance" in fishing.
Section 76 of the same law punishes any person who uses an obnoxious or
poisonous substance in fishing with a fine of not less than five hundred pesos nor
more than five thousand, and by imprisonment for not less than six months nor
more than five years.
It is noteworthy that the Fisheries Law does not expressly punish "electro
fishing". Notwithstanding the silence of the law, the Secretary of Agriculture and
Natural Resources, upon the recommendation of the Commissioner of Fisheries,
promulgated Fisheries Administrative Order No. 84 (62 O. G. 1224), prohibiting
electro fishing in all Philippine waters. The order is quoted below:
"SUBJECT: PROHIBITING ELECTRO FISHING IN ALL WATERS
OF THE PHILIPPINES.
"Pursuant to Section 4 of Act No. 4003, as amended, and Section 4(h) of R.A. No.
3512, the following rules and regulations regarding the prohibition of electro
fishing in all waters of the Philippines are hereby promulgated for the information
and guidance of all concerned.
"SECTION 1. - Definition. - Words and terms used in this Order shall be
construed as follows:
"(a) 'Philippine waters or territorial waters of the Philippines' includes all waters
of the Philippine Archipelago, as defined in the treaties between the United States
and Spain, dated respectively the tenth of December, eighteen hundred ninety
eight and the seventh of November, nineteen hundred. For the purpose of this
order, rivers, lakes and other bodies of fresh waters are included.
"(b) Electro fishing. - Electro Fishing is the catching of fish with the use of
electric current. The equipment used are of many electrical devices which may be
battery or generator-operated and from any available source of electric current.
"(c) 'Persons' includes firm, corporation, association, agent or employee.
"(d) 'Fish' includes other aquatic products.
"SEC. 2. - Prohibition. - It shall be unlawful for any person to engage in electro
fishing or to catch fish by the use of electric current in any portion of the Philippine
waters except for research, educational and scientific purposes which must be
covered by a permit issued by the Secretary of Agriculture and Natural Resources
which shall be carried at all times.
"SEC. 3. - Penalty. - Any violation of the provisions of this Administrative Order
shall subject the offender to a fine of not exceeding five hunred pesos (P500.00)
or imprisonment of not exceeding six (6) months or both at the discretion of the
Court.
"SEC. 4. – Repealing Provisions. - All administrative orders or parts thereof
inconsistent with the provisions of this Administrative Order are hereby revoked.
"SEC. 5. - Effectivity. - This Administrative Order shall take effect sixty (60) days
after its publication in the Official Gazette."
On June 28, 1967 the Secretary of Agriculture and Natural Resources, upon the
recommendation of the Fisheries Commission, issued Fisheries Administrative
Order No. 84-1, amending section 2 of Administrative Order No. 84, by restricting
the ban against electro fishing to fresh water fisheries (63 O. G. 9963).
Thus, the phrase "in any portion of the Philippine waters", found in section 2, was
changed by the amendatory order to read as follows: "in fresh water fisheries in
the Philippines, such as rivers, lakes, swamps, dams, irrigation canals and other
bodies of fresh water".
The Court of First Instance and the prosecution (p. 11 of brief) assumed that
electro fishing is punishable under section 83 of the Fisheries Law (not under
section 76 thereof), which provides that any other violation of that law "or of any
rules and regulations promulgated thereunder shall subject the offender to a fine
of not more than two hundred pesos (P200), or imprisonment for not more than
six months, or both, in the discretion of the court".
That assumption is incorrect because section 3 of the aforequoted Administrative
Order No. 84 imposes a fine of not exceeding P500 on a person engaged in electro
fishing, which amount exceeds the maximum fine of P200 fixed in section 83. It
seems that the Department Secretary and the Commissioner of Fisheries
prescribed their own penalty for electro fishing, which penalty is less than the
severe penalty imposed in section 76 and which is not identical to the light penalty
imposed in section 83.
Had Administrative Order No. 84 adopted the lighter penalty prescribed in section
83, then the crime of electro fishing would be within the exclusive original
jurisdiction of the inferior court (Sec. 44[f], Judiciary Law; People vs. Ragasi, L-
28663, September 22, 1976, 73 SCRA 23).
We have discussed this preliminary point, not raised in the briefs, because it is
obvious that the crime of electro fishing, which is punishable with a fine up to
P500, falls within the concurrent original jurisdiction of the inferior courts and the
Court of First Instance (People vs. Nazareno, L-40037, April 30, 1976, 70 SCRA
531 and the cases cited therein).
And since the instant case was filed in the municipal court of Sta. Cruz, Laguna, a
provincial capital, the order of dismissal rendered by that municipal court was
directly appealable to this Court, not to the Court of First Instance of Laguna (Sec.
45 and last par. of section 87 of the Judiciary Law; Esperat vs. Avila, L-25922, June
30, 1967, 20 SCRA 596).
It results that the Court of First Instance of Laguna had no appellate jurisdiction
over the case. Its order affirming the municipal court's order of dismissal is void
for lack of jurisdiction. This appeal shall be treated as a direct appeal from the
municipal court to this Court (See People vs. Del Rosario, 97 Phil. 67).
In this appeal, the prosecution argues that Administrative Orders Nos. 84 and 84-
1 were not issued under section 11 of the Fisheries Law which, as indicated above,
punishes fishing by means of an obnoxious or poisonous substance. This
contention is not well-taken because, as already stated, the penal provision of
Administrative Order No. 84 implies that electro fishing is penalized as a form of
fishing by means of an obnoxious or poisonous substance under section 11.
The prosecution cites as the legal sanctions for the prohibition against electro
fishing in fresh water fisheries (1) the rule-making power of the Department
Secretary under section 4 of the Fisheries Law; (2) the function of the
Commissioner of Fisheries to enforce the provisions of the Fisheries Law and the
regulations promulgated thereunder and to execute the rules and regulations
consistent with the purpose for the creation of the Fisheries Commission and for
the development of fisheries (Sec. 4[c] and [h], Republic Act No. 3512; (3) the
declared national policy to encourage, promote and conserve our fishing resources
(Sec. 1, Republic Act No. 3512), and (4) section 83 of the Fisheries Law which
provides that "any other violation of" the Fisheries Law or of any rules and
regulations promulgated thereunder "shall subject the offender to a fine of not
more than two hundred pesos, or imprisonment for not more than six months, or
both, in the discretion of the court".
As already pointed out above, the prosecution's reference to section 83 is out of
place because the penalty for electro fishing under Administrative Order No. 84 is
not the same as the penalty fixed in section 83.
We are of the opinion that the Secretary of Agriculture and Natural Resources and
the Commissioner of Fisheries exceeded their authority in issuing Fisheries
Administrative Orders Nos. 84 and 84-1 and that those orders are not warranted
under the Fisheries Law, Act No. 4003, and under the law creating the Fisheries
Commission, Republic Act No. 3512.
The reason is that the Fisheries Law does not expressly prohibit electro fishing. As
electro fishing is not banned under that law, the Secretary of Agriculture and
Natural Resources and the Commissioner of Fisheries are powerless to penalize
it. In other words, Administrative Orders Nos. 84 and 84-1, in penalizing electro
fishing, are devoid of any legal basis.
Had the lawmaking body intended to punish electro fishing, a penal provision to
that effect could have been easily embodied in the old Fisheries Law.
That law punishes (1) the use of obnoxious or poisonous substance, or explosives
in fishing; (2) unlawful fishing in deep-sea fisheries; (3) unlawful taking of marine
mollusca, (4) illegal taking of sponges; (5) failure of licensed fishermen to report
the kind and quantity of fish caught, and (6) other violations.
Nowhere in that law is electro fishing specifically punished. Administrative Order
No. 84, in punishing electro fishing, does not contemplate that such an offense
falls within the category of "other violations" because, as already shown, the
penalty for electro fishing is the penalty next lower to the penalty for fishing with
the use of obnoxious or poisonous substances, fixed in section 76, and is not the
same as the penalty for "other violations" of the law and regulations fixed in
section 83 of the Fisheries Law.
The lawmaking body cannot delegate to an executive official the power to declare
what acts should constitute a criminal offense. It can authorize the issuance of
regulations and the imposition of the penalty provided for in the law itself. (People
vs. Exconde, 101 Phil. 1125, citing 11 Am. Jur. 965 on p. 1132).
Originally, Administrative Order No. 84 punished electro fishing in all
waters. Later, the ban against electro fishing was confined to fresh water
fisheries. The amendment created the impression that electro fishing is not
condemnable per se. It could be tolerated in marine waters. That circumstance
strengthens the view that the old law does not eschew all forms of electro fishing.
However, at present, there is no more doubt that electro fishing is punishable
under the Fisheries Law and that it cannot be penalized merely by executive
regulation because Presidential Decree No. 704, which is a revision and
consolidation of all laws and decrees affecting fishing and fisheries and which was
promulgated on May 16, 1975 (71 O. G. 4269), expressly punishes electro fishing
in fresh water and salt water areas.
That decree provides:
"SEC. 33. - Illegal fishing, dealing in illegally caught fish or fishery/aquatic
products. - It shall be unlawful for any person to catch, take or gather or cause to
be caught, taken or gathered fish or fishery/aquatic products in Philippine waters
with the use of explosives, obnoxious or poisonous substance, or by the use of
electricity as defined in paragraphs (1), (m) and (d), respectively, of Section 3
hereof: x x x."
The decree repealed Act No. 4003, as amended, Republic Acts Nos. 428, 3048,
3512 and 3586, Presidential Decrees Nos. 43, 534 and 553, and all Decrees, Acts,
Executive Orders, rules and regulations or parts thereof inconsistent with it (Sec.
49, P. D. No. 704).
The inclusion in that decree of provisions defining and penalizing electro fishing
is a clear recognition of the deficiency or silence on that point of the old Fisheries
Law. It is an admission that a mere executive regulation is not legally adequate to
penalize electro fishing.
Note that the definition of electro fishing, which is found in section 1(c) of
Fisheries Administrative Order No. 84 and which is not provided for in the old
Fisheries Law, is now found in section 3(d) of the decree. Note further that the
decree penalizes electro fishing by "imprisonment from two (2) to four (4) years",
a punishment which is more severe than the penalty of a fine of not exceeding
P500 or imprisonment of not more than six months or both fixed in section 3 of
Fisheries Administrative Order No. 84.
An examination of the rule-making power of executive officials and administrative
agencies and, in particular, of the Secretary of Agriculture and Natural Resources
(now Secretary of Natural Resources) under the Fisheries Law sustains the view
that he exceeded his authority in penalizing electro fishing by means of an
administrative order.
Administrative agencies are clothed with rule-making powers because the
lawmaking body finds it impracticable, if not impossible, to anticipate and provide
for the multifarious and complex situations that may be encountered in enforcing
the law. All that is required is that the regulation should be germane to the objects
and purposes of the law and that it should conform to the standards that the law
prescribes (People vs. Exconde, 101 Phil. 1125; Director of Forestry vs. Muñoz,
L-24796, June 28, 1968, 23 SCRA 1183, 1198; Geukeko vs. Araneta, 102 Phil. 706,
712).
The lawmaking body cannot possibly provide for all the details in the enforcement
of a particular statute (U. S. vs. Tupasi Molina, 29 Phil. 119, 125, citing U. S. vs.
Grimaud, 220 U. S. 506; Interprovincial Autobus Co., Inc. vs. Coll. of Internal
Revenue, 98 Phil. 290, 295-6).
The grant of the rule-making power to administrative agencies is a relaxation of
the principle of separation of powers and is an exception to the nondelegation of
legislative powers. Administrative regulations or "subordinate legislation"
calculated to promote the public interest are necessary because of "the growing
complexity of modern life, the multiplication of the subjects of governmental
regulations, and the increased difficulty of administering the law" (Calalang vs.
Williams, 70 Phil. 726; People vs. Rosenthal and Osmeña, 68 Phil. 328).
Administrative regulations adopted under legislative authority by a particular
department must be in harmony with the provisions of the law, and should be for
the sole purpose of carrying into effect its general provisions. By such regulations,
of course, the law itself cannot be extended. (U. S. vs. Tupasi Molina, supra). An
administrative agency cannot amend an act of Congress (Santos vs. Estenzo, 109
Phil. 419, 422; Teoxon vs. Members of the Board of Administrators, L-25619, June
30, 1970, 33 SCRA 585; Manuel vs. General Auditing Office, L-28952, December
29, 1971, 42 SCRA 660; Deluao vs. Casteel, L-21906, August 29, 1969, 29 SCRA
350).
The rule-making power must be confined to details for regulating the mode or
proceeding to carry into effect the law as it has been enacted. The power cannot
be extended to amending or expanding the statutory requirements or to embrace
matters not covered by the statute. Rules that subvert the statute cannot be
sanctioned. (University of Santo Tomas vs. Board of Tax Appeals, 93 Phil. 376,
382, citing 12 C. J. 845-46. As to invalid regulations, see Collector of Internal
Revenue vs. Villaflor, 69 Phil. 319; Wise & Co. vs. Meer, 78 Phil. 655, 676; Del
Mar vs. Phil. Veterans Administration, L-27299, June 27, 1973, 51 SCRA 340, 349).
There is no question that the Secretary of Agriculture and Natural Resources has
rule-making powers. Section 4 of the Fisheries Law provides that the Secretary
"shall from time to time issue instructions, orders, and regulations consistent" with
that law, "as may be necessary and proper to carry into effect the provisions
thereof". That power is now vested in the Secretary of Natural Resources by
section 7 of the Revised Fisheries Law, Presidential Decree No. 704.
Section 4(h) of Republic Act No. 3512 empowers the Commissioner of Fisheries
"to prepare and execute upon the approval of the Secretary of Agriculture and
Natural Resources, forms, instructions, rules and regulations consistent with the
purpose" of that enactment "and for the development of fisheries".
Section 79(B) of the Revised Administrative Code provides that "the Department
Head shall have the power to promulgate, whenever he may see fit to do so, all
rules, regulations, orders, circulars, memorandums, and other instructions, not
contrary to law, necessary to regulate the proper working and harmonious and
efficient administration of each and all of the offices and dependencies of his
Department, and for the strict enforcement and proper execution of the laws
relative to matters under the jurisdiction of said Department; but none of said rules
or orders shall prescribe penalties for the violation thereof, except as expressly
authorized by law."
Administrative regulations issued by a Department Head in conformity with law
have the force of law (Valerio vs. Secretary of Agriculture and Natural Resources,
117 Phil. 729, 733; Antique Sawmills, Inc. vs. Zayco, L-20051, May 30, 1966, 17
SCRA 316). As he exercises the rule-making power by delegation of the
lawmaking body, it is a requisite that he should not transcend the bounds
demarcated by the statute for the exercise of that power; otherwise, he would be
improperly exercising legislative power in his own right and not as a surrogate of
the lawmaking body.
Article 7 of the Civil Code embodies the basic principle that "administrative or
executive acts, orders and regulations shall be valid only when they are not contrary
to the laws or the Constitution".
As noted by Justice Fernando, "except for constitutional officials who can trace
their competence to act to the fundamental law itself, a public official must locate
in the statute relied upon a grant of power before he can exercise it." "Department
zeal may not be permitted to outrun the authority conferred by statute." (Radio
Communications of the Philippines, Inc. vs. Santiago, L-29236, August 21, 1974,
58 SCRA 493, 496-8).
"Rules and regulations when promulgated in pursuance of the procedure or
authority conferred upon the administrative agency by law, partake of the nature
of a statute, and compliance therewith may be enforced by a penal sanction
provided in the law. This is so because statutes are usually couched in general
terms, after expressing the policy, purposes, objectives, remedies and sanctions
intended by the legislature. The details and the manner of carrying out the law are
oftentimes left to the administrative agency entrusted with its enforcement. In this
sense, it has been said that rules and regulations are the product of a delegated
power to create new or additional legal provisions that have the effect of law." The
rule or regulation should be within the scope of the statutory authority granted by
the legislature to the administrative agency. (Davis, Administrative Law, p. 194,
197, cited in Victorias Milling Co., Inc. vs. Social Security Commission, 114 Phil.
555, 558).
In case of discrepancy between the basic law and a rule or regulation issued to
implement said law, the basic law prevails because said rule or regulation cannot
go beyond the terms and provisions of the basic law (People vs. Lim, 108 Phil.
1091).
This Court in its decision in the Lim case, supra, promulgated on July 26, 1960,
called the attention of technical men in the executive departments, who draft rules
and regulations, to the importance and necessity of closely following the legal
provisions which they intend to implement so as to avoid any possible
misunderstanding or confusion.
The rule is that the violation of a regulation prescribed by an executive officer of
the government in conformity with and based upon a statute authorizing such
regulation constitutes an offense and renders the offender liable to punishment in
accordance with the provisions of the law (U. S. vs. Tupasi Molina, 29 Phil. 119,
124).
In other words, a violation or infringement of a rule or regulation validly issued
can constitute a crime punishable as provided in the authorizing statute and by
virtue of the latter (People vs. Exconde, 101 Phil. 1125, 1132).
It has been held that "to declare what shall constitute a crime and how it shall be
punished is a power vested exclusively in the legislature, and it may not be
delegated to any other body or agency" (1 Am. Jur. 2nd, sec. 127, p. 938; Texas
Co. vs. Montgomery, 73 F. Supp. 527).
In the instant case the regulation penalizing electro fishing is not strictly in
accordance with the Fisheries Law, under which the regulation was issued, because
the law itself does not expressly punish electro fishing.
The instant case is similar to People vs. Santos, 63 Phil. 300. The Santos case
involves section 28 of Fish and Game Administrative Order No. 2 issued by the
Secretary of Agriculture and Natural Resources pursuant to the aforementioned
section 4 of the Fisheries Law.
Section 28 contains the proviso that a fishing boat not licensed under the Fisheries
Law and under the said administrative order may fish within three kilometers of
the shoreline of islands and reservations over which jurisdiction is exercised by
naval and military reservations authorities of the United States only upon receiving
written permission therefor, which permission may be granted by the Secretary
upon recommendation of the military or naval authorities concerned. A violation
of the proviso may be proceeded against under section 45 of the Federal Penal
Code.
Augusto A. Santos was prosecuted under that provision in the Court of First
Instance of Cavite for having caused his two fishing boats to fish, loiter and anchor
without permission from the Secretary within three kilometers from the shoreline
of Corregidor Island.
This Court held that the Fisheries Law does not prohibit boats not subject to
license from fishing within three kilometers of the shoreline of islands and
reservations over which jurisdiction is exercised by naval and military authorities
of the United States, without permission from the Secretary of Agriculture and
Natural Resources upon recommendation of the military and naval authorities
concerned.
As the said law does not penalize the act mentioned in section 28 of the
administrative order, the promulgation of that provision by the Secretary "is
equivalent to legislating on the matter, a power which has not been and cannot be
delegated to him, it being expressly reserved" to the lawmaking body. "Such an act
constitutes not only an excess of the regulatory power conferred upon the
Secretary but also an exercise of a legislative power which he does not have, and
therefore" the said provision "is null and void and without effect". Hence, the
charge against Santos was dismissed.
A penal statute is strictly construed. While an administrative agency has the right
to make rules and regulations to carry into effect a law already enacted, that power
should not be confused with the power to enact a criminal statute. An
administrative agency can have only the administrative or policing powers
expressly or by necessary implication conferred upon it (Glustrom vs. State, 206
Ga. 734, 58 SE 2d 534; See 2 Am. Jur. 2nd 129-130).
Where the legislature has delegated to executive or administrative officers and
boards authority to promulgate rules to carry out an express legislative purpose,
the rules of administrative officers and boards, which have the effect of extending,
or which conflict with the authority-granting statute, do not represent a valid
exercise of the rule-making power but constitute an attempt by an administrative
body to legislate (State vs. Miles, 5 Wash. 2nd 322; 105 Pac. 2nd 51).
In a prosecution for a violation of an administrative order, it must clearly appear
that the order is one which falls within the scope of the authority conferred upon
the administrative body, and the order will be scrutinized with especial care (State
vs. Miles, supra).
The Miles case involved a statute which authorized the State Game Commission
"to adopt, promulgate, amend and/or repeal, and enforce reasonable rules and
regulations governing and/or prohibiting the taking of the various classes of
game".
Under that statute, the Game Commission promulgated a rule that "it shall be
unlawful to offer, pay or receive any reward, prize or compensation for the
hunting, pursuing, taking, killing or displaying of any game animal, game bird or
game fish or any part thereof".
Beryl S. Miles, the owner of a sporting goods store, regularly offered a ten-dollar
cash prize to the person displaying the largest deer in his store during the open
season for hunting such game animals. For that act, he was charged with a
violation of the rule promulgated by the State Game Commission.
It was held that there was no statute penalizing the display of game. What the
statute penalized was the taking of game. If the lawmaking body desired to
prohibit the display of game, it could have readily said so. It was not lawful for
the administrative board to extend or modify the statute. Hence, the indictment
against Miles was quashed. The Miles case is similar to this case.
WHEREFORE, the lower court's decision of June 9, 1970 is set aside for lack of
appellate jurisdiction and the order of dismissal rendered by the municipal court
of Sta. Cruz, Laguna in Criminal Case No. 5429 is affirmed. Costs de oficio.
SO ORDERED.
G.R. No. 9876, December 08, 1914
THE UNITED STATES, PLAINTIFF AND APPELLEE, VS. ADRIANO
PANLILIO, DEFENDANT AND APPELLANT.
DECISION
MORELAND, J.:
This is an appeal from a judgment of the Court of First Instance of the Province
of Pampanga convicting the accused of a violation of the law relating to the
quarantining of animals suffering from dangerous communicable or contagious
diseases and sentencing him to pay a fine of P40, with subsidiary imprisonment in
case of insolvency, and to pay the costs of the trial.
The information charges: "That on or about the 22d day of February, 1913, all of
the carabaos belonging to the above-named accused having been exposed to the
dangerous and contagious disease known as rinderpest, were, in accordance with
an order of a duly-authorized agent of the Director of Agriculture, duly
quarantined in a corral in the barrio of Masamat, municipality of Mexico, Province
of Pampanga, P. I.; that, on said date and at said place, the said accused, Adriano
Panlilio, illegally and voluntarily and without being authorized so to do, and while
the quarantine against said carabaos was still in force, permitted and ordered said
carabaos to be taken from the corral in which they were then quarantined and
conducted from one place to another; that by virtue of said orders of the accused,
his servants and agents took the said carabaos from the said corral and drove them
from one place to another for the purpose of working them."
The defendant demurred to this information on the ground that the acts
complained of did not constitute a crime. The demurrer was overruled and the
defendant duly excepted and pleaded not guilty.
From the evidence introduced by the prosecution on the trial of the cause it
appears that the defendant was notified in writing on February 22, 1913, by a duly
authorized agent of the Director of Agriculture, that all of his carabaos in the
barrio of Masamat, municipality of Mexico, Pampanga Province, had been
exposed to the disease commonly known as rinderpest, and that said carabaos were
accordingly declared under quarantine, and were ordered kept in a corral
designated by an agent of the Bureau of Agriculture and were to remain there until
released by further order of the Director of Agriculture.
It further appears from the testimony of the witnesses for the prosecution that the
defendant fully understood that, according to the orders of the Bureau of
Agriculture, he was not to remove the animals, or to permit anyone else to remove
them, from the quarantine in which they had been placed. In spite, however, of all
this, the carabaos were taken from the corral by the commands of the accused and
driven from place to place on his hacienda, and were used as work animals thereon
in the same manner as if they had not been quarantined.
The contention of the accused is that the facts alleged in the information and
proved on the trial do not constitute a violation of Act No. 1760 or any portion
thereof.
We are forced to agree with this contention.
The original information against the accused charged a violation of section 6 of
Act No. 1760 committed by the accused in that he ordered and permitted his
carabaos, which, at the time, were in quarantine, to be taken from quarantine and
moved from one place to another on his hacienda. An amended information was
filed. It failed, however, to specify the section of Act No. 1760 alleged to have
been violated, evidently leaving that to be ascertained by the court on the trial.
The only sections of Act No. 1760 which prohibit acts and pronounce them
unlawful are 3, 4 and 5. This case does not fall within any of them. Section 3
provides, in effect, that it shall be unlawful for any person, firm, or corporation
knowingly to ship or otherwise bring into the Philippine Islands any animal
suffering from, infected with, or dead of any dangerous communicable disease, or
any of the effects pertaining to such animal which are liable to introduce such
disease into the Philippine' Islands. Section 4 declares, substantially, that it shall be
unlawful for any person, firm, or corporation knowingly to ship, drive or otherwise
take or transport from one island, province, municipality, township, or settlement
to another any domestic animal suffering from any dangerous communicable
disease or to expose such animal either alive or dead on any public road or highway
where it may come in contact with other domestic animals. Section 5 provides that
whenever the Secretary of the Interior shall declare that a dangerous
communicable animal disease prevails in any island, province, municipality,
township, or settlement and that there is danger of spreading such disease by
shipping, driving or otherwise transporting or taking out of such island, province,
municipality, township, or settlement any class of domestic animal, it shall be
unlawful for any person, firm or corporation to ship, drive or otherwise remove
the kind of animals so specified from such locality except when accompanied by a
certificate issued by authority of the Director of Agriculture stating the number
and the kind of animals to be shipped, driven, taken or transported, their
destination, manner in which they are authorized to be shipped, driven, taken, or
transported, and their brands and distinguishing marks.
A simple reading of these sections demonstrates clearly that the case at bar does
not fall within any of them. There is no question here of importation and there is
no charge or proof that the animals in question were suffering from a dangerous
communicable disease or that the Secretary of the Interior had made the
declaration provided for in section 6 or that the accused had driven or taken said
animals from one island, province, municipality, township or settlement to
another. It was alleged in the information and proved on the trial that the animals
had been exposed to a dangerous communicable disease and that they had been
placed in a corral in quarantine on the premises of the accused and that he, in
violation of the quarantine, had taken them from the corral and worked them upon
the lands adjoining. They had not been in the highway nor moved from one
municipality or settlement to another. They were left upon defendant's hacienda,
where they were quarantined, and there worked by the servants of the accused.
The Solicitor-General in his brief in this court admits that the sections referred to
are not applicable to the case at bar and also admits that section 7 of said Act is
not applicable. This section provides: "Whenever the Director of Agriculture shall
order any animal placed in quarantine in accordance with the provisions of this
Act, the owner of such animal, or his agent, shall deliver it at the place designated
for the quarantine and shall provide it with proper food, water, and attendance.
Should the owner or his agent fail to comply with this requirement the Director
of Agriculture may furnish supplies and attendance needed, and the reasonable
cost of such supplies and attendance shall be collectible from the owner or his
agent."
We are in accord with the opinion expressed by the Solicitor-General with respect
to this section, as we are with his opinion as to sections 3, 4, and 5. The law
nowhere makes it a penal offense to refuse to comply with the provisions of
section 7, nor is the section itself so phrased as to warrant the conclusion that it
was intended to be a penal section. The section provides the means by which the
refusal of the owner to comply therewith shall be overcome and the punishment,
if we may call it punishment, which he shall receive by reason of that refusal. It
has none of the aspects of a penal provision or the form or substance of such a
provision. It does not prohibit any act. It does not compel an act nor does it make
the refusal to comply unlawful, nor does it really punish or impose a criminal
penalty. The other sections of the law under which punishments may be inflicted
are so phrased as to make the prohibited act unlawful, and section 8 provides the
punishment for any act declared unlawful by the law.
The Solicitor-General suggests, but does not argue, that section 6 is applicable to
the case at bar. Section 6 simply authorizes the Director of Agriculture to do
certain things, among them, paragraph (c) "to require that animals which are
suffering from dangerous communicable diseases or have been exposed thereto
be placed in quarantine at such place and for such time as may be deemed by him
necessary to prevent the spread of the disease." Nowhere in the law, however, is
the violation of the orders of the Bureau of Agriculture prohibited or made
unlawful, nor is there provided any punishment for a violation of such orders.
Section 8 provides that "any person violating any of the provisions of this Act
shall, upon conviction, be punished by a fine of not more than one thousand pesos,
or by imprisonment for not more than six months, or by both such fine and
imprisonment, in the discretion of the court, for each offense." ' A violation of the
orders of the Bureau of Agriculture, as authorized by paragraph (c), is not a
violation of the provisions of the Act. The orders of the Bureau of Agriculture,
while they may possibly be said to have the force of law, are not statutes and
particularly not penal statutes, and a violation of such orders is not a penal offense
unless the statute itself somewhere makes a violation thereof unlawful and
penalizes it. Nowhere in Act No. 1760 is a violation of the orders of the Bureau
of Agriculture made a penal offense, nor is such violation punished in any way
therein.
Finally, it is contended by the Government that if the offense stated in the
information and proved upon the trial does not constitute a violation of any of the
provisions of Act No. 1760, it does constitute a violation of article 581, paragraph
2, of the Penal Code. It provides:
"A fine of not less than fifteen and not more than seventy pesetas and censure
shall be imposed upon: * * *
"2. Any person who shall violate the regulations, ordinances, or proclamations
issued with reference to any ep£dwnic disease among animals, the extermination
of locusts1, or any other similar plague."
It is alleged in the information and was proved on the trial that the Bureau of
Agriculture had ordered a quarantine of the carabaos at the' time and place
mentioned; that the quarantine had been executed and completed and the animals
actually segregated and confined; that the accused, in violation of such quarantine
and of the orders of the Bureau of Agriculture, duly promulgated, broke the
quarantine, removed the animals and used them in the ordinary work of his
plantation. We consider these acts a plain violation of the article of the Penal Code
above quoted. The fact that the information in its preamble charged a viojation of
Act No. 1760 does not prevent us from finding the1 accused guilty of a violation
of an article of the Penal Com. The complaint opens as follows: "The undersigned
accuses Adriano Panlilio of a violation of Act No. 1760, committed as follows:"
Then follows the body of the information already quoted in this opinidn. We
would not permit an accused to be convicted under one Act when he is charged
with the violation of another, if the change from one statute to another involved
a change of the theory of the trial or required of the defendant a different defense
or surprised him in any other way. The allegations required under Act No. 1760
include those required under article 581. The accused could have defended himself
in no different manner if he had been expressly charged with a violation of article
581.
In the case of United States vs, Paua (6 Phil. Rep., 740), the information stating
the facts upon which the charge was founded terminated with this expression: "In
violation of section 315 of Act No. 355 of the Philippine Commision in effect on
the 6th of February, 1902."
In the resolution of this case the Supreme Court found that the facts set forth in
the information and proved on the trial did not constitute a violation of section
315 of Act No. 355 as alleged in the information, but did constitute a violation of
article 387 in connection with article 383 of the Penal Code, and accordingly
convicted the accused under those articles and sentenced him to the corresponding
penalty.
In that case the court said; "The foregoing facts, duly established as they were by
the testimony of credible witnesses who heard and saw everything that occurred,
show beyond peradventure of doubt that the crime of attempted bribery, as
defined in article 387, in connection with article 388 of the Penal Code, has been
committed, it being immaterial whether it is alleged in the complaint that section
315 of Act No. 355 of the Philippine Commission was violated by the defendant,
as the same recites facts and circumstances sufficient to constitute the crime of
bribery as defined and punished in the aforesaid articles of the Penal Code." (U. S.
vs. Lim San, 17 Phil. Rep., 273; U. S. vs. Jeffrey, 15 Phil. Rep., 391; U. S. vs. Guzman,
25 Phil. Rep., 22.)
The accused is accordingly convicted of a violation of article 581, paragraph 2, of
the Penal Code, and is sentenced to pay a fine of seventy pesetas (P14) and censure,
with subsidiary imprisonment in case of insolvency, and the costs of this appeal.
So ordered.
G.R. No. 9878, December 24, 1914
THE UNITED STATES, PLAINTIFF AND APPELLEE, VS. FRANK
TUPASI MOLINA, DEFENDANT AND APPELLANT.
DECISION
JOHNSON, J.:
On the 6th day of February, 1914, the prosecuting attorney of the Province of
Ilocos Sur filed a complaint against the defendant charging him with the crime of
perjury, alleged to have been committed as follows:
"The said Frank Tupasi Molina, the above-named defendant, did on September
10,1912, in the municipality of Tayum of the Province of Ilocos Sur, P. I., for the
purpose of gaining admission, as in fact he did, owing to the deceit he practiced,
as will be hereinafter related, to the examinations for the municipal police service
in the Province of Ilocos Sur, which were held in the municipality of Vigan, said
province, on or about January 18, 1913, willfully, unlawfully, and criminally take a
false oath by affirming and asserting in an oath that he knew to be false, in an
examination application which he himself filled out and signed, that prior to the
said date, to wit, September 10, 1912, he had never been indicted, tried, or
sentenced for the violation of any law, ordinance, or regulation in any court, when
he knew at the time he took that oath and signed his examination application, as
he knows at the present time, that he had been twice indicted for disturbing the
public peace, and for injurias graves, and sentenced to pay a fine and undergo
imprisonment therefor, by the justice of the peace court of Tayum and the Court
of First Instance of Ilocos Sur.
"The defendant made the false declaration previously mentioned after he had
sworn before Lucas Magno, notary public, authorized by law to administer oaths,
that he would state the truth; and said false declaration made under the oath taken
by the defendant, as above stated, concerned a fact of such importance that
without it he would not have been admitted to said examinations prescribed for
the municipal police service. In violation of the law. (Sec. 3, Act No. 1697.)"
After hearing the evidence adduced during the trial of the cause, the Honorable
Francisco Santamaria, judge,found the defendant guilty of the crime charged, and
sentenced him to be imprisoned for a period of two months and to pay a fine of
P100, in case of insolvency to suffer subsidiary imprisonment in accordance with
the provisions of the law, and to pay the costs. The defendant was further
sentenced to be disqualified from holding any public office or from giving
testimony in any court in the Philippine Islands until such time as the sentence
against him is reversed. From that sentence the defendant appealed to this court
and made the following assignments of error:
"1. The trial court erred in holding section 3 of Act No. 1697 to be applicable in
this case.
"2. The trial court manifestly erred in sentencing the appellant for violation of
section 3 of Act No. 1697, when the prosecution did not present any evidence
demonstrating that he had willfully and corruptly sworn or taken an oath.
"3. The trial court erred in not sustaining the defense set up by the appellant Tupasi
with reference to the construction he placed upon the fifth question of Exhibit A
of the prosecution.
"4. The trial court erred also in holding that the words 'which he does not believe
to be true,' used in Act No. 1697, are equivalent to the term 'knowingly used in
section 31 of Act No. 1761.
"5. The trial court erred in not acquitting the defendant." It appears from the
record that on the 10th day of September, 1912, the defendant signed a petition to
be permitted to take the examination for the position of municipal policeman. Said
petition was signed by the defendant and sworn to by him before a notary public.
Said petition contained a number of questions which the applicant was required to
answer. Among other questions we find that No. 5 was as follows:
"Have you ever been indicted, tried, or sentenced in any court for violation of any
law, ordinance, or regulations, or have you ever been tried or sentenced for
violation of regulations of the Army, Navy, or the Constabulary, in any court
martial of the Army or of the Constabulary, or in any other court?"
To said question the defendant answered: "No, sir; I cannot remember any."
During the trial of the cause the prosecuting attorney presented Exhibits B, C, and
D.
Exhibit B shows that one Francisco Tupasi and others, on the 8th day of February,
1911, had been arrested by an.order of the justice of the peace of the municipality
of Tayum, Province of Ilocos Sur, and charged with disturbing the public peace,
were found guilty, and sentenced, on the 20th day of February, 1911, to be
imprisoned for a period of fifteen days, and each to pay a fine of 25 pesetas, and to
pay the costs.
Exhibit C shows that Francisco Tupasi, on the 18th day of May, 1911, had been
arrested and taken before the justice of the peace of the municipality of Tayum,
Province of Ilocos Sur, charged with the crime of "injurias graves," and was
sentenced on the 22d day of May, 1911, to be imprisoned for a period of fifteen
days and to pay a fine of 75 pesetas and the costs.
Exhibit D is the certificate of the clerk of the Court of First Instance of the
Province of Ilocos Sur and shows that the Honorable Dionisio Chanco, on the
26th day of April, 1911, in an appealed case for disturbing the public peace,
sentenced the said Francisco Tupasi and others to pay a fine of 60 pesetas, in case
of insolvency to suffer subsidiary imprisonment, and to pay the costs.
Exhibit A was the sworn petition presented by the defendant for permission to
take the examination. Said petition was signed by Frank Tupasi y Molina. It was
shown during the trial of the cause, by the admission of the defendant himself,
that he was the same person accused and sentenced in Exhibits B, C, and I). It is
argued that the defendant signed said application in the name of "Frank Tupasi y
Molina" when he had theretofore been known as "Francisco Tupasi," for the
purpose of avoiding identity. The defendant said that "Francisco" was the same as
"Frank" and that he had adopted the name of "Frank" instead of "Francisco." The
answers to the questions in said application were made in English.
With reference to the first assignment of error, that the lower court committed an
error in applying section 3 of Act No. 1697 to the facts in the present case, it may
be said that said article provides that:
"Any person who, having taken an oath before a competent tribunal, officer, or
person", in any case in which a law of the Philippine Islands authorizes an oath to
be administered, that he will testify, declare, depose, or certify truly, or that any
written testimony, declaration, deposition or certificate by him subscribed is true,
wilfully and contrary to such oath states or subscribes any -material matter which
he does not believe to be true, is guilty of perjury, and shall be punished, etc."
Act No. 2169 of the Philippine Legislature, which is an Act to provide for the
reorganization, government, and inspection of municipal police of the
municipalities or provinces and subprovinces organized under Act No. 83,
provides for the reorganization of the municipal police of the municipalities or
provinces and subprovinces organized under Act No. 83.
Said Act further provides that, subject to the approval of the Secretary of
Commerce and Police, the Director of Constabulary shall prepare general
regulations for the good government, discipline, and inspection of the municipal
police, "compliance wherewith shall be obligatory for all members of the
organization."
Said Act further provides for an examining board for the municipal police. It
further provides that, subject to the approval of the Secretary of Commerce and
Police, the Director of Constabulary shall prepare an/examination manual,
prescribing, at the same time, suitable rules for the conduct of the examination.
Said Act (No. 2169) also provides for the time and place for holding said
examinations.
Section 9 of said Act provides that: "To be eligible for examination, a candidate
shall have the following requirements: * * * (6) Have no criminal record."
In accordance with the requirements of said law, the Director of Constabulary
prepared an examination manual, prescribing at the same time rules for conducting
examinations, which examination manual was approved by the Secretary of
Commerce and Police, and thereby was given the force of law. Said manual
prescribed a form in blank, known as (Municipal Form No. 11," which form each
applicant was required to fill, in order to be permitted to take said examination.
Said application required the applicant to swear to the facts stated therein. We
have, therefore, a law which authorizes the administration of an oath in the present
case.
Of course, the regulations adopted under legislative authority by a particular
department must be in harmony with the provisions of the law, and for the sole
purpose of carrying into effect its general provisions. By such regulations, of
course, the law itself can not be extended. So long, however, as the regulations
relate solely to carrying into effect the provisions of the law, they are valid. A
violation of a regulation prescribed by an executive officer of the Government in
conformity with and based upon a statute authorizing such regulation, constitutes
an offense and renders the offender liable to punishment in accordance with the
provisions of law. (United States vs. Bailey, 9 Pet., 238, 252, 254, 256; Caha vs.
United States, 152 U. S., 211, 218; United States vs. Eaton, 144 U. S., 677.)
In the very nature of things in many cases it becomes impracticable for the
legislative department of the Government to provide general regulations for the
various and varying details for the management of a particular department of the
Government. It therefore becomes convenient for the legislative department of
the Government, by law, in a most general way, to provide for the conduct,
control, and management of the work of the particular department of the
Government; to authorize certain persons, in charge of the management, control,
and direction of the particular department, to adopt certain rules and regulations
providing for the detail of the management and control of such department. Such
regulations have uniformly been held to have the force of law, whenever they are
found to be in consonance and in harmony with the general purposes and objects
of the law. Many illustrations might be given. For instance, the Civil Service Board
is given authority to examine applicants for various positions within the
Government service. The law generally provides the conditions in a most general
way, authorizing the chief of such Bureau to provide rules and regulations for the
management of the conduct of examinations, etc. The law provides that the
Collector of Customs shall examine persons who become applicants to act as
captains of ships for the coastwise trade, providing at the same time that the
Collector of Customs shall establish rules and regulations for such examinations.
Such regulations, once established and found to be in conformity with the general
purposes of the law, are just as binding upon all of the parties, as if the regulations
had been written in the original law itself. (United States vs. Grimaud, 220 U. S.,
506; Williamson vs. United States, 207 U. S., 425; United States vs. United Verde
Copper Co., 196U. S., 207.)
By reference to Exhibit A, the application made and sworn to by the defendant,
we find that the oath was taken before a notary public, a person qualified to
administer an oath, in accordance with the provisions of law.
The defendant, in support of his first assignment of error, argues that the purpose
of Act No. 1697 was not intended to cover cases like the present. He argues that
said Act was an Act only authorizing the appointment of commissioners, to make
official investigations, fixing their powers, for the payment of witness fees, and for
the punishment of perjury in official investigations. The same question was
presented to this court in the case of "United States vs. Conception (13 Phil. Rep.,
424). In that case the court decided against the contention of the defendant in the
present case. It is true that the title of said Act (No. 1697) does not seem to indicate
that said law contained a provision punishing the crime of perjury generally.
Reading the title alone, it would seem to be a law punishing the crime of perjury
in particular cases. The law (Act No. 1697) is a general law. It is not a private or
local law. In the United States the constitutions in the different States generally
provide that the title of a law shall indicate the general purpose of the law. There
seems to be no provision in the Philippine Islands that the title of a general law
shall contain a statement of the subject matter of the law. Section 5 of the Act of
Congress of July 1, 1902, provides:
"That no private or local bill which may be enacted into law shall embrace more than
one subject, and that subject shall be expressed in the title of the bill."
We held in the case of United States vs. Concepcion, supra, that said Act of
Congress did not apply to general laws, and that said section 3 was a provision
punishing the crime of perjury generally. (U. S. vs. De Chaves, 14 Phil. Rep., 565;
U. S. vs. Estraiia, 16 Phil. Rep., 520; U. S. vs. Fonseca, 20 Phil. Rep., 191.)
In the case of United States vs. Dumlao (R. G., No. 8721, not reported) this court
held the defendant guilty of the crime of perjury, under facts exactly analogous to
those in this case, under the provisions of section 3 of Act No. 1697. We find no
reason, either in law or in the argument of the appellant in the present case, to
modify or reverse our conclusions in that case (No. 8721).
With reference to the second assignment of error, the appellant alleged that the
lower court committed an error in finding that he had committed the crime of
perjury voluntarily and corruptly. There is nothing in the record which shows that
he did not present to the proper authorities Exhibit A voluntarily. It is difficult to
understand, in view of the fact that the defendant had theretofore been convicted
of two different offenses and in one of them by two courts, how he could, within
a few months thereafter, make a sworn statement that he "did not have a criminal
record," unless he answered said question No. 5 in the manner indicated in said
application for the express purpose of deceiving the authority to which said
application was presented.
With reference to the third assignment of error, it may be said that the language of
question No. 5 seems to be perfectly clear. The defendant admitted that he could
read and understand Spanish. It is to be noted also that at the very beginning of
said application there are three paragraphs devoted to instructions to the applicant,
which he should have read and no doubt did. Said instructions were sufficient to
indicate to the defendant that if there were any questions which he did not fully
understand, he should have acquired a full understanding of the same before
answering them. If there was any fault in understanding said question No. 5, it was
wholly due to his own negligence.
With reference to the fourth assignment of error, the appellant contends that the
lower court committed an error in holding that the phrase "which he does not
believe to be true," found in section 3 of Act No. 1697, is equivalent to the word
"knowingly," used in other laws. The lower court cited the case of U. S. vs. Tin
Masa (17 Phil. Rep., 463) in support of his conclusion. Said section 3, in effect,
provides that any person who takes an oath before a competent tribunal, officer
or person, in any case in which a law of the" Philippine Islands authorizes an oath,
that he will testify, etc., or that any written testimony, declaration, etc., by him
subscribed is true, and thereafter willfully and contrary to such oath states or
subscribes any material matter, "which he does not believe to be true," is guilty of
perjury. Under said section, three things are necessary, in order to constitute the
crime of perjury:
1. The person must have taken an oath, in a case where the law authorizes an oath,
before a competent person, or a person authorized to administer an oath;
2. That the person, who has taken the oath will testify, declare, depose, or certify
truly, or that any written testimony, declaration, deposition or certificate by him
subscribed is true;
3. That he willfully and contrary to such oath states or subscribes any material
matter, "which he does not believe to be true."
It is difficult to understand how a person can state, under oath, that a fact is true
or subscribe a document, asserting that the same is true, which he does not believe
to be true. If, under his oath, he declares that said facts are true, we must conclude
that he believed that they were true. If, as a matter of fact, they were not true, and
he had full knowledge of the fact that they were not true, then his declaration that
they were true would certainly be a sworn statement that a certain fact was true
which he did not believe to be true and, therefore, he must have made a false
statement knowingly. Without attempting to show or assert that the phrase "which
he does not believe to be true" is equivalent to the word "knowingly," as the lower
court held, we are of the opinion that whoever makes a statement or subscribes a
document, under the circumstances mentioned in said section 3, which is false and
which he, at the time he makes the same does not believe to be true, is guilty of
the crime of perjury. In other words, under the circumstances mentioned in said
section, if one swears positively that a fact is true, which he does not believe to be
true, and it turns out that it is false, he is guilty of the crime of perjury. No one
should swear positively that a fact is true or subscribe a document asserting that
the facts stated therein are true, unless he at least believes that they are true at the
time he takes such oath or subscribes such document. It can scarcely be believed
that the defendant in the present case believed that the answer to said question
No. 5 was true. He must have signed or answered said question not only believing
that it was not true, but, as a matter of fact, signed the same knowing that the
answer was false.
With reference to the fifth assignment of error, we are of the opinion that the
evidence adduced during the trial of the cause clearly shows that the defendant is
guilty of the crime charged and therefore the sentence of the lower court should
be and is hereby affirmed with costs.
Arellano, C. J., Torres, Carson, and Araullo, JJ., concur.
DISSENTING
MORELAND, J.
I dissent. The case of United States vs. George (228 U. S., 14), is decisive of this,
holding that an indictment for perjury can not be based on an affidavit not
authorized or required by any law of the United States. There is no law of the
Philippine Islands which authorizes or requires the affidavit which is the basis of
the charge of perjury in this case. (U. S. vs. Panlilio, 28 Phil. Rep., 608.)
G. R. No. 44291, August 15, 1936
THE PEOPLE OP THE PHILIPPINE ISLANDS, PLAINTIFF AND
APPELLANT, VS. AUGUSTO A. SANTOS, DEFENDANT AND
APPELLEE.
DECISION
VILLA-REAL, J.:
This case is before us by virtue of an appeal taken by the prosecuting attorney
from the order of the Court of First Instance of Cavite which reads as follows:
"ORDER
"When this case was called tot trial for the arraignment, counsel for the accused
appeared stating that in view of the ruling laid down by this court in criminal case
No. 6785 of this court, holding that the penalty applicable is under section 83 of
Act No. 4003 which falls within the original jurisdiction of the justice of the peace
court, he requests that the case be remanded to the justice of the peace court of
Cavite which conducted the preliminary investigation, so that the latter may try it,
being within its original jurisdiction.
"We agree that it falls within the jurisdiction of the corresponding justice of the
peace court, but it being alleged in the information that the infraction was
committed within the waters of the Island of Corregidor, the competent justice of
the peace court is that of Corregidor, not Cavite.
"Wherefore, we decree the dismissal of this case, cancelling the bond filed by the
accused, with costs de oficio, without prejudice to the filing by the prosecuting
attorney of a new information in the justice of the peace court of Corregidor, if he
so deems convenient. It is so ordered."
In support of his appeal the appellant assigns as the sole alleged error committed
by the court a quo its having dismissed the case on the ground that it does not fall
within its original jurisdiction.
On June 18, 1930, the provincial fiscal of Cavite filed against the accused-appellee
Augusto A. Santos an information which reads as follows:
"The undersigned Provincial Fiscal accuses Augusto A. Santos of violation of
section 28 of Fish and Game Administrative Order No. 2 and penalized by section
29 thereof committed as follows:
"That on or about April 29, 1935, within 1,500 yards north of
Cavalry Point, Corregidor Island, Province of Cavite, P. I., the said accused
Augusto A. Santos, the registered owner of two fishing motor boats Malabon II
and Malabon III, did then and there willfully, unlawfully and criminally have his
said boats, manned and operated by his fishermen, fish, loiter and anchor without
permission from the Secretary of Agriculture and Commerce within three (3)
kilometers from the shore line of the Island of Corregidor over which the naval
and military authorities of the United States exercise jurisdiction.
"Contrary to law.
"Cavite, Cavite, June 18, 1935."
Section 28 of Administrative Order No. 2 relative to fish and game, issued by the
Secretary of Agriculture and Commerce, provides as follows:
"28. Prohibited fishing areas.—No boats licensed in accordance with the provisions
of Act No. 4003 and this order to catch, collect, gather, take, or remove fish and
other sea products from Philippine waters shall be allowed to fish, loiter, or
anchor within 3 kilometers of the shore line of islands and reservations over
which jurisdiction is exercised by naval or military authorities of the United
States, particularly Corregidor, Pulo Caballo, La Monja, El Fraile, and
Carabao, and all other islands and detached rocks lying between Mariveles
Reservation on the north side of the entrance to Manila Bay and Calumpan Point
Reservation on the south side of said entrance: Provided, That boats not subject to
license under Act No. 4003 and this order may fish within the areas mentioned
above only upon receiving written permission therefor, which permission may be
granted by the Secretary of Agriculture and Commerce upon
recommendation of the military or naval authorities concerned.
"A violation of this paragraph may be proceeded against under section 45 of the
Federal Penal Code."
The above quoted provisions of Administrative Order No. 2 were issued by the
then Secretary of Agriculture and Natural Resources,
now Secretary of Agriculture and Commerce, by virtue of the authority vested
in him by section 4 of Act No. 4003 which reads as follows :
"SEC. 4. Instructions, orders, rules and regulations.—The Secretary of Agriculture and
Natural Resources shall from time to time issue such instructions, orders, rules
and regulations consistent with this Act, as may be necessary and proper to carry
into effect the provisions thereof and for the conduct of proceedings arising under
such provisions."
The herein accused and appellee Augusto A. Santos is charged with having
ordered his fishermen to manage and operate the motor launches Malabon II
and Malabon III registered in his name and to fish, loiter and anchor within three
kilometers of the shore line of the Island of Corregidor over which jurisdiction is
exercised by naval and military authorities of the United States, without
permission from the Secretary of Agriculture and Commerce.
These acts constitute a violation of the conditional clause of section 28 above
quoted, which reads as follows:
"Provided, That boats not subject to license under Act No. 4003 and this order may
fish within the areas mentioned above (within 3 kilometers of the shore line of
islands and reservations over which jurisdiction is exercised by naval and military
authorities of the United States, particularly Corregidor) only upon receiving
written permission there- for, which permission may be granted by the Secretary
of Agriculture and Commerce upon recommendation of the military or naval
authorities concerned.'' (Within parenthesis ours.)
Act No. 4003 contains no similar provision prohibiting boats not subject to license
from fishing within three kilometers of the shore line of islands and reservations
over which jurisdiction is exercised by naval and military authorities of the United
States, without permission from the Secretary of Agriculture and Commerce
upon recommendation of the military and naval authorities concerned. In
asmuch as the only authority granted to the Secretary of Agriculture and
Commerce, by section 4 of Act No. 4003, is to issue from time to time such
instructions, orders, rules and regulations consistent with said Act, as may be
necessary and proper to carry into effect the provisions thereof and for the
conduct of proceedings arising under such provisions; and inasmuch as said Act
No. 4003, as stated, contains no provisions similar to those contained in the above
quoted conditional clause of section 28 of Administrative Order No. 2, the
conditional clause in question supplies a defect of the law, extending it. This
is equivalent to legislating on the matter, a power which has not been and cannot
be delegated to him, it being exclusively reserved to the then Philippine Legislature
by the Jones Law, and now to the National Assembly by the Constitution of the
Philippines. Such act constitutes not only an excess of the regulatory power
conferred upon the Secretary of Agriculture and Commerce, but also an exercise
of a legislative power which he does not have, and therefore said conditional
clause is null and void and without effect (12 Corpus Juris, 845; Rubi vs. Provincial
Board of Mindoro, 39 Phil., 660; U. S. vs. Ang Tang Ho, 43 Phil., 1; U. S. vs.
Barrias, 11 Phil., 327).
For the foregoing considerations, we are of the opinion and so hold that the
conditional clause of section 28 of Administrative Order No. 2, issued by the
Secretary of Agriculture and Commerce, is null and void and without effect,
as constituting an excess of the regulatory power conferred upon him by section
4 of Act No. 4003 and an exercise of a legislative power which has not been
and cannot be delegated to him.
Wherefore, inasmuch as the facts with the commission of which Augusto
A. Santos is charged do not constitute a crime or a violation of some criminal law
within the jurisdiction of the civil courts, the information filed against him is
dismissal, with the costs de oficio. So ordered.
Avanceña, C. J., Abad Santos, Imperial, Diaz,Recto, and Laurel, JJ., concur
G.R. No. L-6791, March 29, 1954
THE PEOPLE OF THE PHILIPPINES, PLAINTIFF AND APPELLEE
VS. QUE PO LAY, DEFENDANT AND APPELLANT.
DECISION
MONTEMAYOR, J.:
Que Po Lay is appealing from the decision of the Court of First Instance of Manila,
finding him guilty of violating Central Bank Circular No. 20 in connection with
section 34 of Republic Act No. 265, and sentencing him to suffer six months
imprisonment, to pay a fine of Pl,000 with subsidiary imprisonment in case of
insolvency, and to pay the costs.
The charge was that the appellant who was in possession of foreign exchange
consisting of U. S. dollars, U. S. checks and U. S. money orders amounting to
about $7,000 failed to sell the same to the Central Bank through its agents within
one day following the receipt of such foreign exchange as required by Circular No.
20. The appeal is based on the claim that said circular No. 20 was not published in
the Official Gazette prior to the act or omission imputed to the appellant, and that
consequently, said circular had no force and effect. It is contended that
Commonwealth Act No. 638 and Act 2930 both require said circular to be
published in the Official Gazette, it being an order or notice of general
applicability. The Solicitor General answering this contention says that
Commonwealth Act No. 638 and 2930 do not require the publication in the
Official Gazette of said circular issued for the implementation of a law in order to
have force and effect.
We agree with the Solicitor General that the laws in question do not require the
publication of the circulars, regulations or notices therein mentioned in order to
become binding and effective. All that said two laws provide is that laws,
resolutions, decisions of the Supreme Court and Court of Appeals, notices and
documents required by law to be of no force and effect. In other words, said two
Acts merely enumerate and make a list of what should be published in the Official
Gazette, presumably, for the guidance of the different branches of the
Government issuing same, and of the Bureau of Printing.
However, section 11 of the Revised Administrative Code provides that statutes
passed by Congress shall, in the absence of special provision, take effect at the
beginning of the fifteenth day after the completion of the publication of the statute
in the Official Gazette. Article 2 of the new Civil Code (Republic Act 386) equally
provides that laws shall take effect after fifteen days following the completion of
their publication in the Official Gazette, unless it is otherwise provided. It is true
that Circular No. 20 of the Central Bank is not a statute or law but being issued
for the implementation of the law authorizing its issuance, it has the force and
effect of law according to settled jurisprudence. (See U. S. vs. Tupasi Molina, 29
Phil., 119 and authorities cited therein.) Moreover, as a rule, circulars and
regulations especially like the Circular No. 20 of the Central Bank in question
which prescribes a penalty for its violation should be published before becoming
effective, this, on the general principle and theory that before the public is bound
by its contents, especially its penal provisions, a law, regulation or circular must
first be published and the people officially and especifically informed of said
contents and its penalties.
Our old Civil Code (Spanish Civil Code of 1889) has a similar provision about the
effectivity of laws (Article V thereof), namely, that laws shall be binding twenty
days: after their promulgation, and that their promulgation shall be understood as
made on the day of the termination of the publication of the laws in the Gazette.
Manresa, commenting on this article is of the opinion that the word "laws" include
regulations and circulars issued in accordance with the game. He says:
"El Tribunal Supremo, ha interpretado el articulo 1.° del Codigo Civil en Sentencia
de 22 de Junio de 1910, en el sentido de que bajo la denominacion generica de
leyes, se comprenden tambien los Reglamentos, Reales decretos, Instrucciones,
Circulares y Eeales ordenes flictadas de conformidad con las mismas por el
Gobierno en uso de su potestad. Tambien el poder ejecutivo lo ha venido
entendiendo asi, como lo prueba el hecho de que muchas de sus disposiciones
contienen la advertencia de que empiezan a regir el mismo dia de su publicacion
en la Gaceta, advertencia que seria perfectamente inutii si no fuera de aplicaci6n al
caso el articulo 1.° del Codigo Civil." (Manresa, Codigo Civil Espaiiol, Vol. I. p. 52)
In the present case, although Circular No. 20 of the; Central Bank was issued in
the year 1949, it was not published until November 1951, that is, about 3 months
after appellant's conviction of its violation. It is clear that said circular, particularly
its penal provision, did not have any legal effect and bound no one until its
publication in the Official Gazette or after November 1951. In other words,
appellant could not be held liable for its violation, for it was not binding at the
time he was found to have failed to sell the foreign exchange in his possession
within one day following his taking possession thereof.
But the Solicitor General also contends that this question of non-publication of
the Circular is being raised for the first time on appeal in this Court, which cannot
be done by appellant. Ordinarily, one may raise on appeal any question of law or
fact that has been raised in the court below and which is within the issues made by
the parties in their pleadings. (Section 19, Rule 48 of the Rules of Court). But the
question of non-publication is fundamental and decisive. If as a matter of fact
Circular No. 20 had not been published as required by law before its violation,
then in the eyes of the law there was no such circular to be violated and
consequently appellant committed no violation of the circular or committed any
offense, and the trial court may be said to have had no jurisdiction. This question
may be raised at any stage of the proceeding whether or not raised in the court
below.
In view of the foregoing, we reverse the decision appealed from and acquit the
appellant, with costs de officio.
G.R. No. L-9408, October 31, 1956
EMILIO Y. HILADO, PETITIONER, VS. THE COLLECTOR OF
INTERNAL REVENUE AND THE COURT OF TAX APPEALS,
RESPONDENTS.
DECISION
BAUTISTA ANGELO, J.:
On March 31, 1952, petitioner filed his income tax return for 1951 with the
treasurer of Bacolod City wherein he claimed, among other things, the amount of
P12,837.65 as a deductible item from his gross income pursuant to General
Circular No. V-123 issued by the Collector of Internal Revenue. This circular was
issued pursuant to certain rules laid down by the Secretary of Finance On the basis
of said return, an assessment notice demanding the payment of P9,419 was sent
to petitioner, who paid the tax in monthly installments, the last payment having
been made on January 2, 1953.
Meanwhile, on August 30, 1952, the Secretary of Finance, through the Collector
of Internal Revenue, issued General Circular No. V-139 which not only revoked
and declared void his general Circular No. V-123 but laid down the rule that losses
of property which occurred during the period of World War II from fires, storms,
shipwreck or other casualty, or from robbery, theft, or embezzlement are
deductible in the year of actual loss or destruction of said property. As a
consequence, the amount of P12,837.65 was disallowed as a deduction from the
gross income of petitioner for 1951 and the Collector of Internal Revenue
demanded from him the payment of the sum of P3,546 as deficiency income tax
for said year. When the petition for reconsideration filed by petitioner was denied,
he filed a petition for review with the Court of Tax Appeals. In due time, this court
rendered decision affirming the assessment made by respondent Collector of
Internal Revenue. This is an appeal from said decision.
It appears that petitioner claimed in his 1951 income tax return the deduction of
the sum of P12,837.65 as a loss consisting in a portion of his war damage claim
which had been duly approved by the Philippine War Damage Commission under
the Philippine Rehabilitation Act of 1946 but which was not paid and never has
been paid pursuant to a notice served upon him by said Commission that said part
of his claim will not be paid until the United States Congress should make further
appropriation. He claims that said amount of P12,837.65 represents a ''business
asset" within the meaning of said Act which he is entitled to deduct as a loss in his
return for 1951. This claim is untenable.
To begin with, assuming that said amount represents a portion of the 75% of his
war damage claim which was not paid, the sa,me would not be deductible as a loss
in 1951 because, according to petitioner, the last installment he received from the
War Damage Commission, together with the notice that no further payment would
be made on his claim, was in 1950. In the circumstance, said amount would at
most be a proper deduction from his 1950 gross income. In the second place, said
amount cannot be considered as a "business asset" which can be deducted as a loss
in contemplation of law because its collection is not enforceable as a matter of
right, but is dependent merely upon the generosity and magnanimity of the U. S.
government. Note that, as of the end of 1945, there was absolutely no law under
which petitioner could claim compensation for the destruction of his properties
during the battle for the liberation of the Philippines. And under the Philippine
Rehabilitation Act of 1946, the payments of claims by the War Damage
Commission merely depended upon its discretion to be exercised in the manner it
may see lit, but the non-payment of which cannot give rise to any enforceable
right, for, under said Act, "All findings, of the Commission concerning the amount
of loss or damage sustained, the cause of such loss or damage, the persons to
whom compensation pursuant to this title is payable, and the value of the property
lost or damaged, shall be conclusive and shall not be reviewable by any court",
(section 113).
It is true that under the authority of section 338 of the National Internal Revenue
Code the Secretary of Finance, in the exercise of his administrative powers, caused
the issuance of General Circular No. V-123 as an implementation or interpretative
regulation of section 30 of the same Code, under which the amount of P12,837.65
was allowed to be deducted "in the year the last installment was received with
notice that no further payment would be made until the United States Congress
makes further appropriation therefor", but such circular was found later to be
wrong and was revoked. Thus, when doubts arose as to the soundness or validity
of such circular, the Secretary of Finance sought the advice of the Secretary of
Justice who, accordingly, gave his opinion the pertinent portion oi which reads as
follows:
"Yet it might be argued that war losses were not included as deductions for the
year when they were sustained because the taxpayers had prospects that losses
would be compensated for by the United States Government; that since only
uncompensated losses are deductible, they had to wait until after the determination
by the Philippine War Damage Commission as to the compensability in part or in
whole of their war losses so that they could exclude from the deductions those
compensated for by the said Commission; and that, of necessity, such
determination could be complete only much later than in the year 'when the loss
was sustained. This contention falls to the ground when it is considered that the
Philippine Rehabilitation Act which authorized the payment by the United States
Government of war losses suffered by property owners in the Philippines was
passed only on August 30, 1946, long after the losses were sustained. It cannot be
said therefore, that the property owners had any. conclusive assurance during the
years said losses were sustained, that the compensation was to be paid therefor.
Whatever assurance they could have had,4 could have been based only on some
information less reliable and less conclusive than the passage of the Act itself.
Hence, as diligent property owners, they should adopt the safest alternative by
considering such losses deductible during the year when they were sustained."
In line with this opinion, the Secretary of Finance, through the Collector of
Internal Revenue, issued General Circular No. V-I39 which not only revoked and
declared void his previous Circular No. V—123 but laid down the rule that losses;
of property which occurred during the period of World War II from fires, storms,
shipwreck or other casualty, or from robbery, theft, or embezzlement are
deductible for income tax purposes in the year of actual destruction of said
property. We can hardly argue against this opinion. Since we have already stated
that the amount claimed does not represent a "business asset" that may be
deducted as a loss in 1951, it is clear that the loss of the corresponding asset or
property could only be deducted in the year it was actually sustained. This is in line
with section 30 (d) of the National Internal Revenue Code which prescribes that
losses sustained are allowable as deduction only within the corresponding taxable
year.
Petitioner's contention that during the last war and as a consequence of enemy
occupation in the Philippines "there was no taxable year" within the meaning of
our internal revenue laws because during that period they were unenforceable, is
without merit. It is well known that our internal revenue laws are not political in
nature and as such were continued in force during the period of enemy occupation
and in effect were actually enforced by the occupation government. As a matter of
fact, income tax returns were filed during that period and income tax payment
were effected and considered valid and legal. Such tax laws are deemed to be the
laws of the occupied territory and not of the occupying enemy.
"Furthermore, it is a legal maxim, that excepting that of a political nature, 'Law
once established continues until changed by some competent legislative power. It
is not changed merely by change of sovereignty.' (Joseph H. Beale, Cases on
Conflict of Laws, III, Summary section 9, citing Commonwealth vs. Chapman, 13
Met., 68.) As the same author says, in his Treatise on the Conflict of Laws
(Cambridge, 1916, section 131): 'There can be no break or interregnun in law.
From the time the law comes into existence with the first-felt corporateness of a
primitive people it must last until the final disappearance of human society. Once
created, it persists until a change takes place, and when changed it continues in
such changed condition until the next change and so forever. Conquest or
colonization is impotent to bring law to an end; inspite of change of constitution,
the law continues unchanged until the new sovereign by legislative act creates a
change.'" (Co Kim Chan vs. Valdez Tan Keh and Dizon, 75 Phil., 113, 142-143.)
It is likewise contended that the power to pass upon the validity of General
Circular No. V-123 is vested exclusively in our courts in view of the principle of
separation of powers and, therefore, the Secretary of Finance acted without valid
authority in revoking it and approving in lieu thereof General Circular No. V-139.
It cannot be denied, however, that; the Secretary of Finance is vested with
authority to revoke, repeal or abrogate the acts or previous rulings of his
predecessor in office because the construction of a statute by those administering
it is not binding on their successors if thereafter the latter become satisfied that a
different construction should be given. [Association of Clerical Employees vs.
Brotherhood of Railways & Steamship Clerks, 85 F. (2d) 152, 109 A.L.R., 345.]
"When the Commissioner determined in 1937 that the petitioner was not exempt
and never had been, it was his duty to determine, assess and collect the tax due for
all years not barred by the statutes of limitation. The conclusion reached and
announced by his predecessor in 1924 was not binding upon him. It did not
exempt the petitioner from tax, This same point was decided in this way in
Stanford University Bookstore, 29 B. T. A., 1280; affd., 83 Fed. (2d) 710."
(Southern Maryland Agricultural Fair Association vs. Commissioner of Internal
Revenue, 40 B. T. A., 549, 554),
With regard to the contention that General Circular No. V-139 cannot be given
retroactive effect because that would affect and obliterate the vested right acquired
by petitioner under the previous circular, suffice it to say that General Circular No.
V-123, having been, issued on a wrong construction of the law, cannot give rise to
a vested right that can be invoked by a taxpayer. The reason, is obvious: a vested
right cannot spring from a wrong interpretation. This is too clear to require
elaboration.
"It seems too clear for serious argument that an administrative officer can not
change a law enacted by Congress. A regulation that is merely an interpretation of
the statute when once determined to have been erroneous becomes nullity. An
erroneous construction of the law by the Treasury Department or the collector of
internal revenue does not preclude or estop the government from collecting a tax
which is legally due." (Ben Stocker, et al., 12 B. T. A., 1351.)
"Art. 2254.—No vested or acquired right can arise from acts or omissions which
are against the law or which infringe upon the rights of others." (Article 2254,
New Civil Code.)
Wherefore, the decision appealed from is affirmed Without pronouncement as to
costs.
G.R. No. L-15397, October 31, 1960
FELIPE B. OLLADA, PETITIONER AND APPELLANT, VS. THE
SECRETARY OF FINANCE, ET AL., RESPONDENTS AND
APPELLEES.
DECISION
REYES, J.B.L., J.:
Direct appeal on questions of law from the decision of the Court of First Instance
of Manila in Civil Case No. 34731, dismissing appellant Ollada's petition for
mandamus with preliminary injunction and damages.
The root of this case lies in Section 334 of the National Internal Revenue Code,
as amended by Republic Acts Nos. 438 and 658, that provides as follows:
"Provided, however, that those whose quarterly sales, earnings, receipts, or output
do not exceed five thousand pesos shall keep and use a simplified set of
bookkeeping records duly authorized by the Secretary of Finance wherein all
transactions and results of operations are shown and from which all taxes due the
Government may readily be ascertained and determined anytime of the year."
Pursuant to the authority thus conferred upon the Secretary of Finance, the latter
promulgated Revenue Regulations No. V-13, a portion of which reads:
" 'Simplified set of bookkeeping records' consist of the record of daily sales and
cash deposits, the record of daily purchases, expenses, and cash disbursements,
record of the summary transactions, and the yearly statements of net worth and
operations, which may be in combined form or in separate booklets, as illustrated
in the forms forming part of those regulations. These forms may be printed,
mimeographed, typewritten or handwritten in print"
And consonant with said Revenue Regulations, the Secretary approved, for use by
taxpayers, simplified sets of bookkeeping records devised by Mrs. Sabina R.
Soriano and Messrs. Vicente I. Cruz, Yam Nam, and Jesus Lozada.
On January 25, 1956, the Secretary of Finance, again making use of his power and
authority under Republic Act No. 438, as amended by Republic Act No. 658,
amended Revenue Regulations No. V-13 by promulgating Revenue Regulations
No. V-43, which partly reads as follows:
"'Simplified set of bookkeeping records' consist of the records of daily sales and
cash receipts, the record of daily purchases, expenses and cash disbursements,
record of the summary of transactions, and the yearly statements of net worth and
operations, which may be in combined form or in separate booklets. Said records
should be especially designed for each class or kind of trade or business and
prepared by a Certified Public Accountant, should conform substantially with the
forms illustrated in Revenue Regulations No. V-13, should be regularly bound and
may be printed, mimeographed or typewritten."
Notwithstanding the promulgation of the foregoing amendatory Revenue
Regulations No. V-43, the Collector of Internal Revenue continued to accept and
approve for registration the simplified sets of bookkeeping records formerly
authorized under Revenue Regulations No V-13. It would appear that after the
promulgation of the subsequent Revenue Regulations No. V-43, Mr. Lozada, one
of those who prepared simplified sets of bookkeeping records under the anterior
Revenue Regulations No. V-13, raised the point whether his bookkeeping record
sets, as approved by the Secretary of Finance, could still be used after the
promulgation of Revenue Regulations No. V-13; and, in response to his query, the
latter answered that Revenue Regulations No. V-43 was not intended to have a
retroactive effect and could not, therefore, adversely affect those who, like Mr.
Lozada, had already acquired an accrued right to the use of their particular kind of
simplified sets of bookkeeping records.
Between October, 28, 1953 and October 15, 1956, appellant Felipe OUada, a
certified public accountant in the Philippines, prepared and devised his own
simplified sets of bookkeeping records, specially designed to suit each of the
different classes or kinds of business indicated therein, all of which were approved
by the Secretary ' of Finance upon recommendation of the Collector of Internal
Revenue.
The parties stipulated that, in devising, preparing and printing the aforesaid
simplified sets of bookkeeping records, appellant spent and invested the sum of
P42,746.50, not counting the cost and expenses of clerical and editorial work.
While there is no evidence showing the extent of similar expenses incurred by Mrs.
Sabina R. Soriano and Messrs. Vicente Cruz, Yam Nam and Jesus Lozada in
preparing their own versions of simplified sets of bookkeeping records pursuant
to Revenue Regulations No. V-13, like the appellant, it may be assumed that they
also made some investments in the process.
The parties agree that the requirements of Revenue Regulations No. V-43
constitute a distinct improvement over the requirements of Revenue Regulations
No. V-13. Likewise, they admit that, in promulgating both regulations, the
Secretary of Finance acted within the prerogatives conferred upon him by law.
Petitioner-appellant Ollada prays in these proceedings that respondents-appellees
Secretary of Finance and Collector (now Commissioner) of Internal Revenue be
enjoined from further accepting, authorizing, and tolerating the use by the public
of simplified sets of bookkeeping records that are not prepared in accordance with
Revenue Regulations No. V-43.
The National Internal Revenue Code has entrusted to the Secretary of Finance the
execution and implementation of Section 334, previously quoted. In carrying out
this mission, the Secretary promulgated Revenue Regulations Nos. V-13 and V-
43, and he was the one authorized to determine the respective spheres of
application of each. His later resolution that Revenue Regulation No. V-43 was
not intended to have retroactive effect (which in effect amounted to a ruling that
Regulation V-43 did not prohibit the use of simplified bookkeeping records
approved for use before V-43 became effective) was fully within the Secretary's
powers and authority, and becomes part of the regulation itself. Not being clearly
unreasonable or arbitrary, the Secretary's resolution is entitled to recognition and
respect from the Courts (Geukeko vs. Araneta, 101 Phil., 706; 54 Off. Gaz. [15]
4494). Surely, no one is better qualified to interpret the intent behind these
Revenue Regulations than the authority that issued them.
Even granting, ad argumentum, that the subsequent permission to use the old
bookkeeping forms was incompatible with Revenue Regulations No. V-43, such
incompatibility would not render the permission illegal or void, since it is not
disputed that the Secretary may, at any time, amend or revoke any of the
Regulations issued by him so long as it is in consonance with the statutes (Sec. 334,
N.I.R.C.).
For the purposes of the law, what is important is that the simplified bookkeeping
records should contain the necessary data from which the taxes due may be
ascertained, and the import of the disputed resolution is that those records that
were previously authorized, even if less convenient, are still adequate for the
purpose. That being the case, we fail to see how the petitioner has ground for
complaint. It may be true that his expected profits will be reduced by the continued
permission to use the records authorized under former Revenue Regulations No.
V-13, but that fact does not confer any right of action upon him. The authority to
print simplified records for sale to the public under the new Regulations carries no
assurance of monopoly or guarantee of a ready market, and, as appellant himself
admits, does not confer upon the licensee any exclusive, irrevocable or vested
property rights. In fact, such authority to print is deemed subject to the implied
condition that the Secretary may, at any time, change or repeal any of the
regulations issued by him, as he may see fit.
In view of the foregoing, the judgment appealed from dismissing the petition is
affirmed. Appellant to pay the costs.
G.R. No. 131457, November 17, 1998
HON. CARLOS O. FORTICH, PROVINCIAL GOVERNOR OF
BUKIDNON, HON. REY B. BAULA, MUNICIPAL MAYOR OF
SUMILAO, BUKIDNON, NQSR MANAGEMENT AND
DEVELOPMENT CORPORATION, PETITIONERS, VS. HON.
RENATO C. CORONA, DEPUTY EXECUTIVE SECRETARY, HON.
ERNESTO D. GARILAO, SECRETARY OF THE DEPARTMENT OF
AGRARIAN REFORM, RESPONDENTS.
OPINION
MARTINEZ, J.:
This pertains to the two (2) separate motions for reconsideration filed by herein
respondents and the applicants for intervention, seeking a reversal of our April 24,
1998 Decision nullifying the so-called "win-win" Resolution dated November 7,
1997, issued by the Office of the President in O.P. Case No. 96-C-6424, and
denying the applicants' Motion For Leave To Intervene.
Respondents' motion is based on the following grounds:
"I.
THE SO-CALLED WIN-WIN RESOLUTION DATED NOVEMBER 7, 1997
IS NOT A VOID RESOLUTION AS IT SEEKS TO CORRECT AN
ERRONEOUS RULING. THE MARCH 29, 1996 DECISION OF THE
OFFICE OF THE PRESIDENT COULD NOT AS YET BECOME FINAL
AND EXECUTORY AS TO BE BEYOND MODIFICATION.
"II.
THE PROPER REMEDY OF PETITIONERS IS A PETITION FOR
REVIEW UNDER RULE 43 AND NOT A PETITION FOR CERTIORARI
UNDER RULE 65 OF THE RULES OF COURT.
"III.
THE FILING OF A MOTION FOR RECONSIDERATION IS A
CONDITION SINE QUA NON BEFORE A PETITION FOR CERTIORARI
MAY BE FILED BECAUSE THE QUESTIONED RESOLUTION IS NOT
PATENTLY ILLEGAL.
"IV.
PETITIONERS ARE GUILTY OF FORUM-SHOPPING BECAUSE
ULTIMATELY PETITIONERS SEEK THE SAME RELIEF, WHICH IS TO
RESTRAIN THE DEPARTMENT OF AGRARIAN REFORM FROM
PLACING THE SUBJECT 144-HECTARE PROPERTY UNDER THE
COMPREHENSIVE AGRARIAN REFORM LAW (CARL)."[1]
For their part, the grounds relied upon by the applicants for intervention are as
follows:
"I.
THE INTERVENORS POSSESS A RIGHT TO INTERVENE IN THESE
PROCEEDINGS.
"II.
THE MODIFICATION BY THE OFFICE OF THE PRESIDENT (OP) OF
ITS 29 MARCH 1996 DECISION, THROUGH THE 7 NOVEMBER 1997
'WIN-WIN' RESOLUTION, WAS NOT ERRONEOUS BUT WAS A VALID
EXERCISE OF ITS POWERS AND PREROGATIVES.
"III.
THE 'WIN-WIN' RESOLUTION PROPERLY ADDRESSES THE
SUBSTANTIAL ISSUES RELATIVE TO THIS CASE."[2]
Both movants also ask that their respective motions be resolved by this Court en
banc since the issues they raise are, described by the respondents, "novel,"[3] or, as
characterized by the applicants for intervention, of "transcendental significance."[4]
Most specifically, movants are presenting the issue of whether or not the power of
the local government units to reclassify lands is subject to the approval of the
Department of Agrarian Reform (DAR).
The instant motions are being opposed vehemently by herein petitioners.
The grounds raised here were extensively covered and resolved in our challenged
Decision. A minute resolution denying the instant motions with finality would
have been sufficient, considering that the same follows as a matter of course if
warranted under the circumstances as in other equally important cases. However,
in view of the wide publicity and media coverage that this case has generated, in
addition to the demonstrations staged at the perimeter of this Court, as well as the
many letters coming from different sectors of society (the religious and the NGOs)
and even letters from abroad, we deem it necessary to write an extended resolution
to again reiterate the basis for our April 24, 1998 Decision, and hopefully write
finis to this controversy.
To support their request that their motions be referred to the Court en banc, the
movants cited the Resolutions of this Court dated February 9, 1993, in Bar Matter
No. 209, which enumerates the cases that may be resolved en banc, among which
are the following:
"x x x x x x x x x
3. Cases raising novel questions of law;
x x x x x x x x x the DAR must not disregard the reglementary period fixed by law, rule or
8. Cases assigned to a division which in the opinion of at least three (3) members
thereof merit the attention of the Court en banc and are acceptable to a majority of
the actual membership of the Court en banc; and
xxx xxx x x x"
Regrettably, the issues presented before us by the movants are matters of no
extraordinary import to merit the attention of the Court en banc. Specifically, the
issue of whether or not the power of the local government units to reclassify lands
is subject to the approval of the DAR is no longer novel, this having been decided
by this Court in the case of Province of Camarines Sur, et al. vs. Court of
Appeals[5] wherein we held that local government units need not obtain the
approval of the DAR to convert or reclassify lands from agricultural to non-
agricultural use. The dispositive portion of the Decision in the aforecited case
states:
"WHEREFORE, the petition is GRANTED and the questioned decision of
the Court of Appeals is set aside insofar as it (a) nullifies the trial court's order
allowing the Province of Camarines Sur to take possession of private respondent's
property; (b) orders the trial court to suspend the expropriation proceedings; and
(c) requires the Province of Camarines Sur to obtain the approval of the
Department of Agrarian Reform to convert or reclassify private
respondent's property from agricultural to non-agricultural use.
"x x x xxx x x x" (Emphasis supplied)
Moreover, the Decision sought to be reconsidered was arrived at by a unanimous
vote of all five (5) members of the Second Division of this Court. Stated otherwise,
this Second Division is of the opinion that the matters raised by movants are
nothing new and do not deserve the consideration of the Court en banc. Thus, the
participation of the full Court in the resolution of movants' motions for
reconsideration would be inappropriate.
We shall now resolve the respondents' motion for reconsideration.
In our Decision in question, we struck down as void the act of the Office of the
President (OP) in reopening the case in O.P. Case No. 96-C-6424 through the
issuance of the November 7, 1997 "win-win" Resolution which substantially
modified its March 29, 1996 Decision that had long become final and
executory, being in gross disregard of the rules and basic legal precept that accord
finality to administrative determinations. It will be recalled that the March 29,
1996 OP Decision was declared by the same office as final and executory in its
Order dated June 23, 1997 after the respondents DAR's motion for
reconsideration of the said decision was denied in the same order for having been
filed beyond the 15-day reglementary period.
In their instant motion, the respondents contend that the "win-win" Resolution of
November 7, 1997 "is not a void resolution as it seeks to correct an erroneous
ruling," hence, "(t)he March 29, 1996 decision of the Office of the President
could not as yet become final and executory as to be beyond modification."[6]
The respondents explained that the DAR's failure to file on time the motion for
reconsideration of the March 29, 1996 OP Decision was "excusable:"
"The manner of service of the copy of the March 29, 1996 decision also
made it impossible for DAR to file its motion for reconsideration on time.
The copy was received by the Records Section of the DAR, then referred to
the Office of the Secretary and then to the Bureau of Agrarian Legal
Assistance. By the time it was forwarded to the litigation office of the DAR,
the period to file the motion for reconsideration had already lapsed. Instead
of resolving the motion for reconsideration on the merits in the interest of
substantial justice, the Office of the President denied the same for having been
filed late."[7] (Emphasis supplied)
We cannot agree with the respondents' contention that the June 23, 1997 OP
Order which denied the DAR's motion for reconsideration of the March 29, 1996
OP Decision for having been filed late was "an erroneous ruling" which had to be
corrected by the November 7, 1997 "win-win" Resolution. The said denial of the
DAR's motion for reconsideration was in accordance with Section 7 of
Administrative Order No. 18, dated February 12, 1987, which mandates that
"decisions/resolutions/orders of the Office of the President shall, except as
otherwise provided for by special laws, become final after the lapse of fifteen
(15) days from receipt of a copy thereof x x x, unless a motion for
reconsideration thereof is filed within such period."[8]
Contrary to the respondents' submission, the late filing by the DAR of its motion
for reconsideration of the March 29, 1996 OP Decision is not excusable. The
respondents' explanation that the DAR's office procedure after receiving the copy
of the March 29, 1996 OP Decision "made it impossible foe DAR to file its
motion for reconsideration on time" since the said decision had to be
referred to the different departments of the DAR, cannot be considered a valid
justification. There is nothing wrong with referring the decision to the departments
concerned for the preparation of the motion for reconsideration, but in doing so,
regulation. In other words, the DAR must develop a system of procedure that
would enable it to comply with the reglementary period for filing said motion. For,
the rules relating to reglementary period should not be made subservient to
the internal office procedure of an administrative body. Otherwise, the
noble purpose of the rules prescribing a definite period for filing a motion
for reconsideration of a decision can easily be circumvented by the mere
expediency of claiming a long and arduous process of preparing the said
motion involving several departments of the administrative agency.
The respondents then faulted the Office of the President when they further
stressed that it should have resolved "the (DAR's) motion for reconsideration on
the merits in the interest of substantial justice," instead of simply denying the
same for having been filed late,[9] adding that "technicalities and procedural
lapses" should be "subordinated to the established merits of the case."[10]
Respondents thus plead for a relaxation in the application of the rules by
overlooking procedural lapses committed by the DAR.
We are persuaded.
Procedural rules, we must stress, should be treated with utmost respect and due
regard since they are designed to facilitate the adjudication of cases to remedy the
worsening problem of delay in the resolution of rival claims and in the
administration of justice. The requirement is in pursuance to the bill of rights
inscribed in the Constitution which guarantees that "all persons shall have a right
to the speedy disposition of their before all judicial, quasi-judicial and
administrative bodies,"[11] the adjudicatory bodies and the parties to a case are
thus enjoined to abide strictly by the rules.[12] While it is true that a litigation is not
a game of technicalities, it is equally true that every case must be prosecuted in
accordance with the prescribed procedure to ensure an orderly and speedy
administration of justice.[13] There have been some instances wherein this Court
allowed a relaxation in the application of the rules, but this flexibility was "never
intended to forge a bastion for erring litigants to violate the rules with impunity."[14]
A liberal interpretation and application of the rules of procedure can be resorted
to only in proper cases and under justifiable causes and circumstances.
In the instant case, we cannot grant respondents the relief prayed for since they
have not shown a justifiable for a relaxation of the rules. As we have discussed
earlier, the DAR/s late filing of its motion for reconsideration of the March 29,
1996 OP Decision was not justified. Hence, the final and executory character of
the said OP Decision can no longer be disturbed, much less substantially modified.
Res judicata has set in and the adjudicated thing or affair should forever be put
to rest. It is in this sense that we, in our decision under reconsideration, declared
as void and of no binding effect the "win-win" Resolution of November 7, 1997
which substantially modified the March 29, 1996 Decision, the said resolution
having been issued in excess of jurisdiction and in arrant violation of the
fundamental and time-honored principle of finality to administrative
determinations.
The movants, however, complain that the case was decided by us on the basis of
a "technicality," and, this has been the rallying cry of some newspaper columnists
who insists that we resolve this case not on mere "technical" grounds.
We do not think so.
It must be emphasized that a decision/resolution/order of an administrative body,
court or tribunal which is declared void on the ground that the same was rendered
without or in excess of jurisdiction, or with grave abuse of discretion, is by
no means a mere technicality of law or procedure. It is elementary that
jurisdiction of a body, court or tribunal is an essential and mandatory
requirement before it can act on a case or controversy. And even if said body,
court or tribunal has jurisdiction over a case, but has acted in excess of its
jurisdiction or with grave abuse of discretion, such act is still invalid. The decision
nullifying the questioned act is an adjudication on the merits.
In the instant case, several fatal violations of the law were committed, namely: (1)
the DAR filed its motion for reconsideration of the March 29, 1996 OP Decision
way beyond reglementary period; (2) after the said motion for reconsideration was
denied for having been filed late, the March 29, 1996 Decision was declared final
and executory, but the DAR still filed a second motion for reconsideration which
is prohibited by the rules;[15] (3) despite this, the second motion for
reconsideration was entertained by herein respondent, then Deputy Executive
Secretary Renato C. Corona, and on the basis thereof, issued the "win-win"
Resolution dated November 7, 1997, substantially modifying the March 29, 1996
Decision which had long become final and executory; and (4) the reopening of the
same case through the issuance of the November 7, 1997 "win-win" resolution
was in flagrant infringement of the doctrine of res judicata. These grave breaches
of the law, rules and settled jurisprudence are clearly substantial, not of technical
nature.
It should be stressed that when the March 29, 1996 OP Decision was declared
final and executory, vested rights were acquired by the herein petitioners,
namely, the province of Bukidnon, the municipality of Sumilao, Bukidnon, and the
NQSR Management and Development Corporation, and all others who should be
benefited by the said decision. Thus, we repeat, the issue here is not a question of
technicality but that of substance and merit. In the words of the learned Justice
Artemio V. Panganiban in the case of Videogram Regulatory Board vs. Court
of Appeals, et al.,[16] "(j)ust as a losing party has the right to file an appeal within
the prescribed period, the winning party also has the correlative right to enjoy
the finality of the resolution of his/her case."
Another matter which the movants bring to our attention is that when the DAR's
Order denying petitioners' application for conversion was first brought by
petitioner Carlos O. Fortich to the Office of the President, the appropriate
administrative rules were not complied with. We wish to point out that, apparently,
movants had the opportunity to questions this alleged lapsed in procedure but
chose not to avail of the same. For the "win-win" Resolution itself never
mentioned this supposed procedural lapse as an issue. Here, the issue which has
been brought to the fore is the validity of the "win-win" Resolution of
November 7, 1997, not that of any other previous proceedings. The movants
cannot now question the supposed procedural lapse for the first time before us. it
should have been raised and resolved at the first opportunity, that is, at the
administrative level.
The other grounds raised by respondents in their instant motion for
reconsideration concerning the propriety of petitioners' remedy, the absence of a
motion for reconsideration of the "win-win" Resolution before resorting to the
present petition for certiorari, and forum shopping have already been extensively
dealt with in our challenged decision. We need not further elaborate on these
grounds except to state that the same lacks merit.
With respect to the motion for reconsideration filed by the applicants for
intervention, we likewise find the same unmeritorious. The issue of the applicants'
right to intervene in this proceedings should be laid to rest. The rule in this
jurisdiction is that a party who wishes to intervene must have a "certain right" or
"legal interest" in the subject matter of the litigation.[17] Such interest must be
"actual, substantial, material, direct and immediate, and not simply contingent and
expectant."[18]
Here, the applicants for intervention categorically admitted that they were not
tenants of petitioner NQSR Management and Development Corporation, but
were merely seasonal farmworkers in a pineapple plantation on the subject land
which was under lease for ten (10) years to the Philippine Packing Corporation.[19]
Respondent, then DAR Secretary Ernesto Garilao, also admitted in his Order of
June 7, 1995 that "the subject land is neither tenanted nor validity covered for
compulsory acquisition xxx."[20]
Under Section 4, Article XIII of the 1987 Constitution, the right to own directly
or collectively the land they till belongs to the farmers and regular farmworkers
who are landless, and in the case of other farmworkers, the latter are entitled "to
receive a just share of the fruits" of the land. The pertinent portion of the
aforecited constitutional provision mandates:
"Sec. 4. The State shall, by law, undertake an agrarian reform program founded
on the right of farmers and regular farmworkers, who are landless, to own
directly or collectively the lands they till or, in the case of other farmworkers,
to receive a just share of the fruits thereof. x x x" (Emphasis supplied)
Commenting on the above-quoted provision, the eminent constitutionalist, Fr.
Joaquin G. Bernas, S.J., one of the framers of the 1987 Constitution, declares that
under the agrarian reform program the equitable distribution of the land is a right
given to landless farmers and regular farmworkers to own the land they till, while
the other or seasonal farmworkers are only entitled to a just share of the fruits of
the land.[21] Being merely seasonal farmerworkers without a right to own, the
applicants' motion for intervention must necessarily fail as they have no legal or
actual and substantial interest over the subject land.
It is noteworthy that even the "win-win" Resolution of November 7, 1997 which
the herein respondents and the applicants for intervention seek to uphold did not
recognize the latter as proper parties to intervene in the case simply because the
qualified farmer-beneficiaries have yet to be meticulously determined as
ordered in the said resolution. The dispositive portion of the "win-win"
Resolution reads:
"WHEREFORE, premises considered, the decision of the Office of the President,
through Executive Secretary Ruben Torres, dated March 29, 1996, is hereby
MODIFIED as follows:
x x x x x x x x x
"(3) The Department of Agrarian Reform is hereby directed to carefully and
meticulously determine who among the claimants are qualified
beneficiaries.
x x x x x x x x x
"We take note of the Memorandum in Intervention filed by 113 farmers on
October 10, 1997 without ruling on the propriety or merits thereof since it is
unnecessary to pass upon it at this time.
"SO ORDERED."[22] (Emphasis supplied)
These are all that are necessary to dispose of the instant separate motions for
reconsideration considering that the crucial issue in the present petitioner for
certiorari is simply the validity of the "win-win" resolution.
But even if we tackle the other issues which the movants describe as "substantial,"
namely: (1) whether the subject land is considered a prime agricultural land with
irrigation facility; (2) whether the land has long been covered by a Notice of
Compulsory Acquisition (NCA); (3) whether the land is tenanted, and if not,
whether the applicants for intervention are qualified to become beneficiaries
thereof; and (4) whether the Sangguniang Bayan of Sumilao has the legal authority
to reclassify the land into industrial/institutional use, to our mind, the March 29,
1996 OP Decision has thoroughly and properly disposed of the aforementioned
issues. We quote the pertinent portions of the said Decision:
"After a careful evaluation of the petition vis-avis the grounds upon which the
denial thereof by Secretary Garilao was based, we find that the instant application
for conversion by the Municipality of Sumilao, Bukidnon is impressed with merit.
To be sure, converting the land in question from agricultural to agro-industrial
would open great opportunities for employment and bring real development in
the area towards a sustained economic growth of the municipality. On the other
hand, distributing the land to would-be beneficiaries (who are not even tenants, as
there are none) does not guarantee such benefits.
"Nevertheless, on the issue that the land is considered a prime agricultural land
with irrigation facility it maybe appropriate to mention that, as claimed by
petitioner, while it is true that there is, indeed, an irrigation facility in the area, the
same merely passes thru the property (as a right of way) to provide water to the
ricelands located on the lower portion thereof. the land itself, subject of the instant
petition, is not irrigated as the same was, for several years, planted with pineapple
by the Philippine-Packing Corporation.
"On the issue that the land has long been covered by a Notice of Compulsory
Acquisition (NCA) and that the existing policy on withdrawal or lifting on areas
covered by NCA is not applicable, suffice it to state that the said NCA was declared
null and void by the Department of Agrarian Reform Adjudication Board
(DARAB) as early as March 1, 1992. Deciding in favor of NQSRMDC, the
DARAB correctly pointed out that under Section 8 R.A. No. 6657, the subject
property could not validly be the subject of compulsory acquisition until after the
expiration of the lease contract with Del Monte Philippines, a Multi-National
Company, or until April 1994, and ordered the DAR Regional Office and the land
Bank of the Philippines, both in Butuan City, to desist from pursuing any activity
or activities covering petitioner's land.
"On this score, we take special notice of the fact that the Quisumbing family has
already contributed substantially to the land reform program of the government,
as follows: 300 hectares of rice land in Nueva Ecija in the 70's and another 100
hectares in the nearby Municipality of Impasugong, Bukidnon, ten (10) years ago,
for which they have not received 'just compensation' up to this time.
"Neither can the assertion that 'there is no clear and tangible compensation
package arrangements for the beneficiaries' hold water as, in the first place, there
are no beneficiaries to speak about, for the land is not tenanted as already stated.
"Nor can procedural lapses in the manner of identifying/reclassifying the subject
property for agro-industrial purposes be allowed to defeat the very purpose of the
law granting autonomy to local government units in the management of their local
affairs. Stated more simply, the language of Section 20 of R.A. No. 7160, supra, is
clear and affords no room for any other interpretation. By unequivocal legal
mandate, it grants local government units autonomy in their affairs including the
power to convert portions of their agricultural lands and provide for the manner
of their utilization and disposition to enable them to attain their fullest
development as self-reliant communities.
"WHEREFORE, in pursuant of the spirit and intent of the said legal mandate and
in view of the favorable recommendations of the various government agencies
abovementioned, the subject Order, dated November 14, 1994 of the Hon.
Secretary, Department of Agrarian Reform, is hereby SET ASIDE and the instant
application of NQSRMDC/BAIDA is hereby APPROVED."[23] (Emphasis
supplied)
It is axiomatic that factual findings of administrative agencies which have acquired
expertise in their field are binding and conclusive on the Court,[24] considering that
the Office of the President is presumed to be most competent in matters falling
within its domain.
The interest of justice is invoked by movants. We are aware of that famous adage
of the late President Ramon Magsaysay that "those who have less in life should
have more in law." Our affirmation of the finality of the March 29, 1996 OP
Decision is precisely pro-poor considering that more of the impoverished of
society will be benefited by the agro-economical development of the disputed land
which the province of Bukidnon and the municipality of Sumilao, Bukidnon intend
to undertake. To our mind, the OP Decision of March 29, 1996 was for the
eventual benefit of the many, not just of the few. This is clearly shown from the
development plan on the subject land as conceived by the petitioners. The said
plan is supposed to have the following components as indicated in the OP
Decision of March 29, 1996:
"1. The Development Academy of Mindanao which constitutes the following:
Institute for Continuing Higher Education; Institute for Livelihood Science
(Vocational and Technical School); Institute for Agribusiness Research; Museum,
Library, Cultural Center, and Mindanao Sports Developments Complex which
covers an area of 24 hectares;
"2. Bukidnon Agro-Industrial Park which consists of corn processing for corn oil,
corn starch, various corn products; rice processing for wine, rice-based snacks,
exportable rice; cassava processing for starch, alcohol and food delicacies;
processing plants, fruits and fruit products such as juices; processing plants for
vegetables processed and prepared for market; cold storage and ice plant; cannery
system; commercial stores; public market; and abattoir needing about 67 hectares;
"3. Forest development which includes open spaces and parks for recreation,
horse-back riding, memorial and mini-zoo estimated to cover 33 hectares; and
"4. Support facilities which comprise the construction of a 360-room hotel,
restaurants, dormitories and a housing covering an area of 20 hectares."[25]
Expressing full support for the proposed project, the Sangguniang Bayan of
Sumilao, Bukidnon, on March 4, 1993, enacted Ordinance No. 24 converting or
re-classifying the subject 144-hectare land from agricultural to
industrial/institutional use with a view of providing an opportunity to attract
investors who can inject new economic vitality, provide more jobs and raise
the income of its people. The said project was also supported by the Bukidnon
Provincial Board which, on the basis of a Joint Committee Report submitted by
its Committee on Laws, Committee on Agrarian Reform and Socio-Economic
Committee, approved the said ordinance on February 1, 1994, now docketed as
Resolution No. 94-95.
Impressed with the proposed project, several government agencies and a private
cooperative, including the people of the affected barangay, recommended the same.
Again, we quote the pertinent portion of the OP Decision of March 29, 1996:
"The said NQSRMDC Proposal was, per Certification dated January 4, 1995,
adopted by the Department of Trade and Industry, Bukidnon Provincial
Office, as one of its flagship projects. The same was likewise favorably
recommended by the Provincial Development Council of Bukidnon; the
municipal, provincial and regional office of the DAR; the Regional Office (Region
X) of the DENR (which issued an Environmental Compliance Certificate on June
5, 1995); the Executive Director, signing 'By Authority of PAUL G.
DOMINGUEZ,' Office of the President - Mindanao; the Secretary of DILG; and
Undersecretary of DECS Wilfredo D. Clemente.
"In the same vein, the Natioal Irrigation Administration, Provincial Irrigation
Office, Bagontaas Valencia, Bukidnon, thru Mr. Juluis S. Maquiling, Chief,
Provincial Irrigation Office, interposed NO OBJECTION to the proposed
conversion x x x. Also, the Kisolom-San Vicente Irrigators Multi Purpose
Cooperative, San Vicente, Sumilao, Bukidnon, interposed no objection to
the proposed conversion of the land in question 'as it will provide more
economic benefits to the community in terms of outside investments that
will come and employment opportunities that will be generated by the
projects to be put up x x x.'
"On the same score, it is represented that during the public consultation held
at the Kisolan Elementary School on 18 March 1995 with Director Jose
Macalindong of DAR Central Office and DECS Undersecretary Clemente, the
people of the affected barangay rallied behind their respective officials in
endorsing the project."[26] (Emphasis supplied)
In this regard, the petitioners gave this assurance: "The proposed project is
petitioners' way of helping insure food, shelter and lifetime security of the greater
majority of Sumilao's 22,000 people. It is capable of employing thousands of
residents, enabling them to earn good income ranging about P40,000.00 to
P50,000.00 for each."[27]
We express our grave concern with the manner some sectors of society have been
trying to influence this Court into resolving this case on the basis of considerations
other than the applicable law, rules and settled jurisprudence and the evidence on
record. We wish to emphasize that withstanding the previous adverse comments
by some columnists in the print media, the assailed Decision was arrived at in the
pursuit of justice and the rule of law.
Finally, for those who refuse to understand, no explanation is possible, but for
those who understand, no explanation is necessary.
WHEREFORE, the separate motions for reconsideration of the April 24, 1998
Decision of this Court, filed by the respondents and the applicants for
intervention, are hereby DENIED with FINALITY.
SO ORDERED.
SEPARATE OPINION
PUNO, J.:
The salient facts are well established. The instant controversy originated from an
application for land use conversion filed on December 11, 1993 before the DAR
by Mr. Gaudencio Beduya in behalf of the Bukidnon Agro-Industrial
Development Association (BAIDA) and petitioner NQSR Management and
Development Corporation concerning its 144-hectare land in San Vicente,
Sumilao, Bukidnon. In an Order[1] dated November 14, 1994, DAR Secretary
Ernesto D. Garilao denied the application for conversation of the land from
agricultural to agro-industrial use and ordered its distribution to qualified landless
farmers. BAIDA and NQSR Management and Development Corporation filed a
motion for reconsideration[2] dated January 9, 1995, which was, however, denied
in an Order[3] dated June 7, 1995. Thereafter, Bukidnon Governor Carlos O.
Fortich sent a letter[4] to President Fidel V. Ramos requesting him to suspend the
Garilao Order and to confirm the ordinance enacted by the Sangguniang Bayan of
Sumilao converting the subject land from agricultural to industrial/institutional
land. Acting on the letter, then Executive Secretary Torres reversed the Garilao
Order and upheld the power of local government units to convert portions of their
agricultural lands into industrial areas.[5] Respondent DAR Secretary Garilao filed
a motion for reconsideration. Admittedly tardy, which was denied by then
Executive Secretary Torres on the ground that his March 29, 1996 decision had
already become final and executory in view of the lapse of the fifteen-day period
for filing a motion for reconsideration. A second motion for reconsideration was
filed during the pendency of which President Ramos constituted the Presidential
Fact-Finding Task Force. On November 7, 1997, Deputy Executive Secretary
Corona issued the herein-assailed "win-win" resolution which, pursuant to the
recommendations of the task force, substantially modified the Torres decision by
awarding one hundred (100) hectares of the Sumilao property to the qualified
farmer beneficiaries and allocating only forty four (44) hectares for the
establishment of an industrial and commercial zone.
In our decision promulgated in Baguio City on April 24, 1998, we annulled the
"win-win" resolution on the ground that public respondent Deputy Executive
Secretary Renato C. Corona committed grave abuse of discretion in modifying an
already final and executory decision of then Executive Secretary Ruben T. Torres.
It is undisputed that the Department of Agrarian Reform (DAR) failed to comply
with the fifteen-day period for filing a motion for reconsideration.[6] It received the
Torres decision on April 10, 1996 but transmitted its motion for reconsideration
to the DAR Records Management Division for mailing to the Office of the
President only on May 23, 1996.[7] The Office of the President received the motion
on July 14, 1997. Forthwith, we applied the rule on finality of administrative
determinations and upheld the policy of setting an end to litigation as an
indispensable aspect of orderly administration of justice. In their motions for
reconsideration, respondents and intervenors protest the technical basis of out
decision.
I vote to grant their motions for reconsideration and remand the case to the Court
of Appeals.
First. It is true that procedural rules are necessary to secure just, speedy and
inexpensive disposition of every action and proceeding.[8] Procedure, however, is
only a means to an end,[9] and they may be suspended when they subvert the
interests of justice. It is self-evident that the prerogative to suspend procedural
rules or to grant an exception in a particular case lies in the authority that
promulgated the rules.[10]
Rules concerning pleading, practice and procedure in all courts are promulgated
by this Court.[11] On the other hand, it is the President as administrative head who
is vested by the Administrative Code of 1987 to promulgate rules relating to
governmental operations, including administrative procedure. These rules take the
form of administrative orders.[12] This power is necessary for the President to
discharge his constitutional duty faithfully executing our laws.[13] Under
exceptional circumstances, this Court has suspended its rules to prevent
miscarriage of justice. In the same breath, we should hold that the President has
the power to suspend the effectivity of administrative rules of procedure when
they hamper, defeat or in any way undermine the effective enforcement of the laws
of the land. Indeed, we already recognize that Congress can suspend its own rules
if doing so will enable it to facilitate its task of lawmaking. The three great branches
of our government are co-equal and within their own sphere they have the same
responsibility to promote the good of our people. There is no reason to withhold
the power to suspend rules from the President and grant it alone to the two other
branches of government.
A closer scrutiny of the records in the instant case reveals that the fifteen-day rule
for filing a motion for reconsideration under Section 7 of Administrative Order
No. 18 was suspended by the President when he constituted, on October 15, 1997
or some six (6) months after the promulgation of the Torres decision, the
Presidential Fact-Finding Task Force to conduct a comprehensive review of the
proper land use of the 144-hectare Sumilao property. At that time, then Executive
Secretary Torres had already denied the first motion for reconsideration of the
DAR on the ground that his March 29, 1997 decision had already become final
and executory. This notwithstanding, the President treated the case as still open
and stated in his memorandum that the findings of the Presidential Fact-Finding
Task Force " will be inputs to the resolution of the case now pending at the Office
of the President regarding the said land" (emphasis ours).[14] The President took
cognizance of the special circumstances surrounding the tardy filing by the DAR
of its motion for reconsideration. The DAR lawyers assigned to the Sumilao case
received the Torres decision only after the lapse of the reglementary fifteen-day
period for appeal. The copy of the decision intended for them was passed from
one office to another, e.g., the Records Section of the DAR, the Office of the
DAR Secretary, the Bureau of Agrarian Legal Assistance, before it finally reached
the DAR Litigation Office. It does not appear to be just that DAR will be made
to lose a significant case because of bureaucratic lapses. Viewed in this context, we
should rule that the President suspended the effectivity of Section 7 of
Administrative Order No. 18 and that his exercise of discretion in this regard
cannot be assailed as whimsical.
I also respectfully submit this act of the President also finds full sanction under
the corollary principles of presidential power of control and qualified political
agency.
"This presidential power of control over the executive branch of government
extends over all executive officers from Cabinet Secretary to the lowliest clerk and
has been held by us, in the landmark case of Mondano vs. Silvosa to mean 'the
power of [the President] to alter or modify or nullify or set aside what a subordinate
officer had done in the performance of his duties and to substitute the judgment
of the former with that of the latter.' It is said to be at the very 'heart of the meaning
of Chief Executive.'
Equally well accepted, as a corollary rule to the control powers of the President, is
the 'Doctrine of Qualified Political Agency.' As the President cannot be expected
to exercise his control powers all at the same time and in person, he will have to
delegate of them to his Cabinet members.
Under this doctrine, which recognizes the establishment of a single executive, 'all
executive and administrative organizations are adjuncts of the Executive
Department, the heads of the various executive departments are assistants and
agents of the Chief Executive, and, except in cases where the Chief Executive is
required by the Constitution or law to act in person o[r] the exigencies of the
situation demand that he act personally, the multifarious executive and
administrative functions of the Chief Executive are performed by and through the
executive departments, and the acts of the Secretaries of such departments,
performed and promulgated in the regular course of business, are, unless
disapproved or reprobated by the Chief Executive presumptively the acts of the
Chief Executive.' x x x Reform Officer, Region X; Dolores Apostol, Municipal Agrarian Reform Officer,
Thus, and in short, 'the President's power of control is directly exercised by him
over the members of the Cabinet who, in turn, and by his authority, control the
bureaus and other offices under their respective jurisdictions in the executive
department.'"[15]
By suspending the fifteen-day period for filing a motion for reconsideration and
re-opening the Torres decision, the President clearly exercised his control power
over an alter-ego within the framework of a constitutional and presidential system
of governance.
The President's suspension of the fifteen-day rule for filing a motion for
reconsideration cannot be characterized as arbitrary. The Sumilao problem raises
fundamental issues which conflict between land reform and the industrialization
of the countryside, the power of control by the President over his alter egos vis-à-
vis the power of local government to convert agricultural land to industrial land.
The resolution of these has far reaching implications on the success of our land
reform program. Indeed, their successful resolution can bring peace or rebellion
in our countryside. The President should not be frustrated by an administrative
procedural rule that he himself promulgated, from formulating a creative, legal
solution to the Sumilao problem. There is no denying the liberal interpretation
equally accorded to both administrative and judicial rules in order to promote their
object to the extent that technically be not a bar to the vindication of a legitimate
grievance. We have trumpeted the truism that when technicality ceases to be an
aid to justice, the courts are justified in excepting from its operation a particular
case.16 We ought not to deny the same power to the Chief Executive who heads
a co-equal branch of government.
Second. The petitioners are estopped from assailing the authority of the Office of
the President to re-open the Sumilao case and resolve it based on the report of the
Presidential Fact-Finding Task Force. Undeniably, petitioners participated in the
processes conducted by the task force. Their participation in the administrative
proceedings without raising any objection thereto, bars them from raising any
jurisdictional infirmity after an adverse decision is rendered against them.[17]
Petitioners Carlos O Fortich and Rey B. Baula, Bukidnon Governor and Sumilao
Mayor, respectively, were named members of the task force.[18]The president
ordered the task force to confer with the representatives of, among others, the
landowners, namely, petitioner NQSR Management and Development
Corporation.[19] In a letter dated October 20, 1997 addressed to the President, the
counsel for NQSR Management and Development Corporation expressed its
reluctance "to comment on the merits and demerits of the [motion for intervention
and motion to admit additional evidence filed by the farmer beneficiaries] out of
respect of the Regional Trial Court and the Court of Appeals where these cases
are presently pending".[20] NQSR Management and Development Corporation,
however, did not question the authority of the President to constitute the task
force despite its express adherence to the declaration by then Executive Secretary
Torres as to the finality of his March 29, 1997 decision. It was confident that its
interests would be promoted and protected by Bukidnon Governor Fortich who
himself filed the appeal from the order of DAR Secretary Garilao[21] and Sumilao
Mayor Baula who certified as correct Resolution No. 24 approved by the
Sangguniang Bayan of Sumilao on March 4, 1993 converting the 144-hectare
property from agricultural to industrial/institutional land.[22] But when the "win-
win" resolution was issued by the Office of the President on November 7, 1997,
allowing the conversion into industrial land of only forty four (44) hectares of the
114-hectare Sumilao property and ordering the distribution of the rest to qualified
farmer beneficiaries, petitioners were flabbergasted. Mr. Norberto Quisumbing, Jr.
could hardly hide his disdain over that resolution in his letter to the provincial
agrarian officer protesting as absurd and arbitrary the valuation of the 100 hectares
at P5.1 million pesos. That resolution was allegedly an "unprecedented turn-
around which is most difficult for the discerning public to appreciate".[23]
The "win-win" resolution being adverse to petitioners, they now assail the
authority of the President to modify the Torres decision. Under the above-
mentioned circumstances, however, the principle of estoppel applies to effectively
bar petitioners from raising the issue of jurisdiction.[24] While lack of jurisdiction
of the court or quasi-judicial body may be assailed at any stage, a party's active
participation in the proceedings before it will estop him from assailing its lack of
jurisdiction.[25] This Court has always frowned upon the undesirable practice of a
party submitting his case for decision and then accepting the judgment, only if
favorable, and attacking it for lack of jurisdiction when adverse.[26]
Third. Considering the special circumstances of the case as detailed above, it would
better serve the ends of justice to obtain a definitive resolution of the issues raised
in the instant petition and remand the same to the Court of Appeals where
jurisdiction over this appeal lies. Noteworthy, is the pendency in the Court of
Appeals of two or more cases involving the Sumilao property: (1) Petition for
Certiorari and Prohibition, entitled, "N.Q.S.R. Management & Development
Corporation and Bukidnoon Agro-Industrial Association, Petitioner, vs. Hon.
Ernesto Garilao, Secretary of the Department of Agrarian Reform; Rogelio E.
Tamin, DAR Regional Director, Region X; Nicanor Peralta, Provincial Agrarian
Sumilao, Bukidnon, Respondents";[27] and (2) Petition for Certiorari and
Prohibition, entitled. "Rodolfo Buclasan, et al., Petitioners, vs. Hon. Leonardo N.
Demecillo, as Judge of RTC, Malaybalay, Bukidnon, Branch IX and NQSR
Management and Development Corporation, Respondents".[28]
The remand of the instant petition to the Court of Appeals would enable said court
to consolidate the same with the two other cases pending there which undoubtedly
contemplate of the same factual milieu and raise invariably the same issues as in
this petition, leaving no room for further confusion that will surely be wrought by
the rendition of conflicting decisions affecting a single controversy.
For the above reasons, I vote to grant the motions for reconsideration filed by the
respondents and the intervenors who should be allowed to intervene pursuant to
sec. 1, Rule 19 and to remand the instant petition to the Court of Appeals for
appropriate proceedings.
G.R. No. 116356, June 29, 1998 On March 14, 1991, defendant presented Celso Occidental, employee of
EASTERN SHIPPING LINES, INC., PETITIONER, VS. COURT OF defendant shipping company, in the course of which testimony submitted
APPEALS AND DAVAO PILOTS ASSOCIATION, RESPONDENTS. EXHIBITS "1" to "1-D" which is plaintiff’s Billing Rate, both old and new with a
payment of P79,585.64; and "2" to "2-G" representing plane ticket paid for by
DECISION defendant for transportation expenses of its counsel and cost of stenographic
PANGANIBAN, J.: transcripts.
In Philippine Interisland Shipping Association of the Philippines vs. Court of Appeals,[1] the Defendant’s last witness, Capt. Jose Dubouzet, Jr. and a Harbor Pilot was briefly
Court, en banc, ruled that Executive Order 1088[2] was not unconstitutional. We presented."[6]
adhere to said ruling in this case. After due trial, the trial court rendered its ruling, viz.:
The Case “Plaintiff’s evidence as to the unpaid pilotage services due from defendant duly
This is a petition for certiorari under Rule 45, assailing the Decision[3] of the Court supported by voluminous documentary exhibits has not been refuted nor rebutted
of Appeals[4] in CA-GR CV No. 34487 promulgated on July 18, 1994, the by defendant. On the contrary, when plaintiff’s documentary exhibits were
dispositive portion of which reads: formally offered, defendant did not raise any objection thereby leaving the
"WHEREFORE, finding no reversible error in the decision appealed from, the documents unchallenged and undisputed.
same is hereby AFFIRMED in toto. With costs against defendant-appellant." Upon the other hand, while the records show that defendant raised no less than
The Decision affirmed by Respondent Court disposed as follows: five (5) issues the evidence fails to show any proof to sustain defendant’s posture.
"WHEREFORE, judgment is rendered directing the defendant: On the contrary, neither of defendant’s two witnesses appear to have even grazed
1. To pay plaintiff the sum of P602,710.04 with legal rate of interest the outer peripheries of what could have been interesting issues with far-reaching
commencing from the filing of the complaint representing unpaid pilotage fees; consequences if resolved.”[7]
2. To pay attorney’s fees in the sum of P50,000.00; The factual antecedents of the controversy are simple. Petitioner insists on paying
3. And costs. pilotage fees prescribed under PPA circulars. Because EO 1088 sets a higher rate,
SO ORDERED." petitioner now assails its constitutionality.
Hence, this appeal.[5] Public Respondent’s Ruling
The Facts As stated earlier, Respondent Court of Appeals affirmed the trial court’s decision.
As found by the trial court, these are the undisputed facts: Respondent Court pointed out that petitioner, during the pre-trial, limited the
"On September 25, 1989, plaintiff [herein private respondent] elevated a complaint issues to whether: (1) EO 1088 is unconstitutional; (2) EO 1088 is illegal; (3)
against defendant [herein petitioner] for sum of money and attorney’s fees alleging private respondent itself may enforce and collect fees under EO 1088; and (4)
that plaintiff had rendered pilotage services to defendant between January 14, 1987 petitioner is liable and, if EO 1088 is legal, to what extent. It then affirmed the
to July 22, 1989 with total unpaid fees of P703,290.18. Despite repeated demands, factual findings and conclusion of the trial court that petitioner “fail[ed] to show
defendant failed to pay and prays that the latter be directed to pay P703,290.18 any proof” to support its position. Parenthetically, Respondent Court also noted
with legal rate of interest from the filing of the complaint; attorney’s fees equivalent two other cases decided by the Court of Appeals, upholding the constitutionality
to 25% of the principal obligation and such other relief. of EO 1088.[8]
On November 18, 1989 defendant answered vigorously disputing the claims of The Issue
plaintiff. It assailed the constitutionality of the Executive Order 1088 upon which In sum, petitioner raises this main issue: whether Executive Order 1088 is
plaintiff bases its claims; alleged that there is a pending case before the Court of unconstitutional.[9]
Appeals elevated by the United Harbor Pilots Association of the Philippines of The Court’s Ruling
which plaintiff is a member[;] whereas defendant is a member of the Chamber of The petition is unmeritorious.
Maritime Industries of the Philippine[s] which is an Intervenor in CA-G.R. SP No. EO 1088 Is Valid
18072; that there therefore is lis pendens by Section 1 (e), Rule 16 of the Rules; Petitioner contends that EO 1088[10] is unconstitutional, because (1) its
that the subject of the complaint falls within the scope and authority of the interpretation and application are left to private respondent, a private person,[11]
Philippine Ports Authority by virtue of PD No. 857 dated December 23, 1975; and (2) it constitutes an undue delegation of powers. Petitioner insists that it
that Executive Order No. 1088 is an unwarranted repeal or modification of the should pay pilotage fees in accordance with and on the basis of the memorandum
Philippine Ports Authority Charter; that the fees charged by plaintiff are arbitrary circulars issued by the PPA, the administrative body vested under PD 857[12] with
and confiscatory; and the basis of the Executive Order 1088 is offensive, sourced the power to regulate and prescribe pilotage fees. In assailing the constitutionality
from Amendment No. 6 of the 1973 Constitution and rendered inoperative by the of EO 1088, the petitioner repeatedly asks: “Is the private respondent vested with
Freedom Constitution of March 25, 1986 and the present Constitution; and that power to interpret Executive Order No. 1088?”[13]
the only agency vested by law to prescribe such rates, charges or fees for services The Court is not persuaded. The pertinent provisions of EO 1088 read:
rendered by any private organization like the plaintiff within a Port District is “SECTION 1. The following shall be the rate of pilotage fees or charges based on
governed by Section 20 of PD 857. As regular patron of plaintiff, defendant has tonnage for services rendered to both foreign and coastwise vessels:
never been remiss in paying plaintiff’s claim for pilotage fees and the present For Foreign Vessels Rate in US$ &/or its Peso Equivalent
complaint under the foregoing circumstances is without legal foundation. Less than 500GT $ 30.00
Defendant prays that plaintiff be advised to await the final outcome of the identical 500GT to
43.33
issues already elevated to and pending before the Court of Appeals as CA-G.R. SP 2,500GT
No. 18072. Defendant prays for an award of damages, attorney’s fees, litigation 2,500GT to
71.33
expense and costs. 5,000GT
At the Pre-Trial Conference, the only issue raised by plaintiff is whether the 5,000GT to
133.67
defendant is liable to the plaintiff for the money claims alleged in the complaint. 10,000GT
The defendant on the other hand raised the following issues: 10,000GT to
181.67
1. Whether or not Executive Order 1088 is constitutional; 15,000GT
2. Whether or not Executive Order 1088 is illegal; 15,000GT to
247.00
3. Whether or not the plaintiff may motu proprio and independently of 20,000GT
the Public Estates Authority enforce Executive Order 1088 and collect the pilotage 20,000GT to
300.00
fees prescribed thereunder; 30,000GT
4. Assuming Executive Order 1088 is constitutional, valid and self- 30,000GT to
416.67
executory, whether or not the defendant is liable; and if so, to what extent and for 40,000GT
what particular items; and 40,000GT to
483.33
5. Whether or not the plaintiff is liable under the counterclaims (p. 102, 60,000GT
Expediente). 60,000GT to
550.00
On September 5, 1990, plaintiff presented witness Capt. Felix N. Galope, in the 80,000GT
course of which testimony identified among others EXHIBITS “B” to "E-2" and 80,000GT to
616.67
"J" to to "I-2" consisting of documents related to the collection of the unpaid 100,000GT
pilotage fees; basis for such computations; Statement of Accounts; demand letter 100,000GT to
666.67
and official recipients of payment made. 120,000GT
On September 6, 1990, Simplicio Barao, plaintiff’s Billing Clerk testified among 120,000GT to
716.67
others on the records of plaintiff’s Captain’s Certificate/Pilotage Chits and 130,000GT
Bills/Statements of Accounts on the claims against defendant (EXHIBITS "G" to 130,000GT to
766.67
"H-48-A") and the details of the outstanding accounts in favor of plaintiff. The 140,000GT
records show defendant raised no objection thereto and by virtue of which all of Over 140,000 gross tonnage $0.05 or its peso equivalent every excess tonnage.
plaintiff’s documentary exhibits were admitted. (Order dated January 14, 1991, p. Rate for docking and undocking anchorage, conduction and shifting other related
277 Expediente).
special services is equal to 100%. Pilotage services shall be compulsory in
government and private wharves or piers.
For Coastwise Vessels Regular
100 and under 500 gross tons P 41.70
500 and under 600 gross tons 55.60
600 and under 1,000 gross tons 69.60
1,000 and under 3,000 gross tons 139.20
3,000 and under 5,000 gross tons 300.00
5,000 and over gross tons
SEC. 2. With respect to foreign vessels, payment of pilotage services shall be made
in dollars or in pesos at the prevailing exchange rate.
SEC. 3. All orders, letters of instructions, rules, regulations and other issuances
inconsistent with this Executive Order are hereby repealed or amended
accordingly.
SEC. 4. This Executive Order shall take effect immediately.”
In Philippine Interisland Shipping Association of the Philippines vs. Court of Appeals,[14] the
Supreme Court, through Mr. Justice Vicente V. Mendoza, upheld the validity and
constitutionality of Executive Order 1088 in no uncertain terms. We aptly iterate
our pronouncement in said case, viz.:
“It is not an answer to say that E.O. No. 1088 should not be considered a statute
because that would imply the withdrawal of power from the PPA. What
determines whether an act is a law or an administrative issuance is not its form but
its nature. Here as we have already said, the power to fix the rates of charges for
services, including pilotage service, has always been regarded as legislative in
character.
xxx xxx xxx
It is worthy to note that E.O. NO. 1088 provides for adjusted pilotage service rates
without withdrawing the power of the PPA to impose, prescribe, increase or
decrease rates, charges or fees. The reason is because E.O. No. 1088 is not meant
simply to fix new pilotage rates. Its legislative purpose is the “rationalization of
pilotage service charges, through the imposition of uniform and adjusted rates for
foreign and coastwise vessels in all Philippine ports.
xxx xxx xxx
We conclude that E.O. No. 1088 is a valid statute and that the PPA is duty bound
to comply with its provisions. The PPA may increase the rates but it may not
decrease them below those mandated by E.O. No. 1088. x x x.”[15]
We see no reason to depart from this ruling. The Court’s holding clearly debunks
petitioner’s insistence on paying its pilotage fees based on memorandum circulars
issued by the PPA.[16] Because the PPA circulars are inconsistent with EO 1088,
they are void and ineffective. “Administrative or executive acts, orders and
regulations shall be valid only when they are not contrary to the laws or the
Constitution.”[17] As stated by this Court in Land Bank of the Philippines vs. Court of
Appeals,[18] “[t]he conclusive effect of administrative construction is not absolute.
Action of an administrative agency may be disturbed or set aside by the judicial
department if there is an error of law, a grave abuse of power or lack of jurisdiction,
or grave abuse of discretion clearly conflicting with either the letter or spirit of the
law.”[19] It is axiomatic that an administrative agency, like the PPA, has no
discretion whether to implement the law or not. Its duty is to enforce it.
Unarguably, therefore, if there is any conflict between the PPA circular and a law,
such as EO 1088, the latter prevails.[20]
Based on the foregoing, petitioner has no legal basis to refuse payment of pilotage
fees to private respondent, as computed according to the rates set by EO 1088.
Private respondent cannot be faulted for relying on the clear and unmistakable
provisions of EO 1088. In fact, EO 1088 leaves no room for interpretation,
thereby unmistakably showing the duplicity of petitioner’s query: “Is the private
respondent vested with power to interpret Executive Order No. 1088?”
WHEREFORE, the petition is hereby DENIED and the assailed Decision of
the Court of Appeals is AFFIRMED. Costs against petitioner.
SO ORDERED.
PHILEX MINING CORPORATION, PETITIONER, VS. LUZ M.
ZALDIVIA AND THE SECRETARY OF AGRICULTURE AND
NATURAL RESOURCES, RESPONDENTS.
DECISION
REYES, J.B.L., J.:
Petition to review and set aside the decision of the Secretary of Agriculture and
Natural Resources, upholding, on appeal, the Director of Mines as being without
jurisdiction to adjudicate an adverse claim filed by herein petitioner Philex Mining
Corporation against the lode lease application recorded in the name of herein
private respondent Luz M. Zaldivia to a mining claim, known as "George Claim",
located in Tuba, Benguet, Mt. Province.
The records of the Bureau of Mines disclose that, by a registered deed of
assignment, dated 24 September 1955. George T. Scholey, as locator of the
aforesaid mining claim, sold, transferred and assigned all his rights, title and
interest therein to Milagros Yrastorza; on 7 December 1959, Yrastorza filed Lode
Lease Application No. V-4671 covering the said mining claim, but on 15 October
1963, she sold, transferred and conveyed all her rights and interests in the claim to
herein respondent Luz Zaldivia. The transfer was approved by the Director of
Mines on 29 December 1966; hence, Lode Lease Application No. V-4671 was
recorded in Zaldivia's name and given due course.
Upon publication of the lease application, herein petitioner Philex Mining
Corporation interposed an adverse claim to the lease application, alleging that it is
the beneficial and equitable owner of the mining claim; that it was located on 9
December 1955 by the petitioner corporation's then general manager for the
benefit of the corporation; that when Scholey transferred the claim to Yrastorza,
Scholey was still the general manager, while Yrastorza was also employed by the
company; and that Yrastorza and respondent Zaldivia, who had also been an
employee of the corporation, merely acted as agents of Scholey, so that, despite
the transfers, petitioner remained the equitable owner.
Respondent Zaldivia moved to dismiss the adverse claim on three (3) grounds,
namely: late filing of the adverse claim, lack of jurisdiction of the Director of
Mines to resolve the question of ownership raised by herein petitioner, and the
alleged defect of the adverse claim for non-compliance with certain requirements
of the Mining Act, as amended. In the course of an oral argument on the motion
to dismiss, only the question of jurisdiction was submitted for resolution.
In an order issued on 2 April 1968, the Director of Mines dismissed the adverse
on the ground that the Bureau had no jurisdiction to resolve the question of
ownership, because the question was judicial in character and should be ventilated
before the courts. Petitioner appealed to the Secretary of Agriculture and Natural
Resources but, in a decision rendered on 24 September 1968, the Secretary
affirmed the order of the Director of Mines.
Petitioner Philex Mining Corporation filed the present petition on the sole issue
of jurisdiction of the Director of Mines over the controverted issues.
Petitioner relies upon amendments introduced by Republic Act No. 4388 to the
Mining Act (Commonwealth Act No. 137); arguing that, before said amendments,
conflicts and disputes arising out of mining location were determined by the
Director of Mines, whose decision might be appealed to the Department Secretary,
and the latter's decision in turn was reviewable by a competent court, as provided
in the original Section 61 of Commonwealth Act 137, as follows:
"Sec. 61. Conflicts and disputes arising out of mining locations may be submitted
to the Director of the Bureau of Mines for decision; Provided, that such decision
may be appealed to the Secretary of Agriculture and Commerce within ninety days
from the date of its entry. In case any one of the interested parties should disagree
from the decision of the Director of Bureau of Mines or of the Secretary of
Agriculture and Commerce, the matter may be taken to the court of competent
jurisdiction within ninety days after notice of such decision, after which time
without the institution of such action the said decision shall be final and binding
upon the parties concerned."
and that an adverse claim to a lease application may be filed with the Director and
upon such filing, all proceedings, except the publication of notice of the
application and the making and filing of the proper affidavit, shall be stayed until
the controversy is settled by a competent court, as provided for in the original
Section 73 of Commonwealth Act 137, as follows:
"Sec. 73. At any time during the period of publication, any adverse claim may be
filed under oath with the Director of the Bureau of Mines, and shall state in full
detail the nature, boundaries, and extent of the adverse claim, and shall be
accompanied by all plans, documents, and agreements upon which such adverse
claim is based. Upon the filing of any adverse claim all proceedings except the
publication of notice of application for lease and the making and filing of the
affidavits in connection therewith, as herein prescribed, shall be stayed until the
controversy shall have been settled or decided by a court of competent jurisdiction,
or the adverse claim waived. * * *"
but that Congress realized that the two sections were defective in the sense that
great delays were incurred and so, Congress amended the two sections through
Republic Act 4388, as follows:
"Sec. 61. Conflicts and disputes arising out of mining locations shall be submitted
to the Director of Mines for decision; Provided, That the decision or order of the
Director of Mines may be appealed to the Secretary of Agriculture and Natural
Resources within thirty days from receipt of such decision or order. In case any
one of the parties should disagree from the decision or order of the Secretary of
Agriculture and Natural Resources, the matter may be taken to the Court of
Appeals or the Supreme Court, as the case may be, within thirty days from the
receipt of such decision or order, otherwise the said decision or order shall be final
and binding upon the parties concerned. Findings of facts in the decision or order
of the Director of Mines when affirmed by the Secretary of Agriculture and
Natural Resources shall be final and conclusive, and the aggrieved party or parties
desiring to appeal from such decision or order shall file in the Supreme Court a
petition for review wherein only questions of law may be raised."
"Sec. 73. At any time during the period of publication, any adverse claim may be
filed under oath with the Director of Mines, and shall state in full detail the nature,
boundaries, and extent of the adverse claim, and shall be accompanied by all plans,
documents, and agreements upon which such adverse claim is based; Provided,
however, That no adverse claim from any person, association, partnership or
corporation, whose protest filed under Section sixty-one of this Act has already
been finally decided by the Director of Mines and/or the Secretary of Agriculture
and Natural Resources, shall be entertained. Upon the filing of the adverse claim
all proceedings except the publication of notice of application for patent or lease
and the making and filing of the affidavit in connection therewith as herein
prescribed shall be stayed until the controversy shall have been settled or decided
in accordance with Section sixty-one of this Act or the adverse claim waived."
with the expressed intention embodied in the explanatory note to the bill that WHEREFORE , the petition for review is hereby dismissed and the executive
became Republic Act 4388, as follows: decision under review is affirmed, with costs against petitioner Philex Mining
"Sections 61 and 73, which refer to overlapping of claims are amended to expedite Corporation.
the resolution of mining conflicts which constitute one of the impediments to the Concepcion, C.J., Makalintal, Zaldivar, Castro, Teehankee, Barredo, Villamor, and
mining industry. Profitable mining properties are left idle due to delays in Makasiar, JJ., concur.
litigations over conflicting claims. The decision of the Director of Mines when G.R. No. 50444, August 31, 1987
affirmed by the Secretary of Agriculture and Natural Resources shall be final and ANTIPOLO REALTY CORPORATION, PETITIONER, VS. THE
conclusive and appealable only to the Court of Appeals or to the Supreme Court, NATIONAL HOUSING AUTHORITY, HON. G.V. TOBIAS, IN HIS
as the case may be. As contemplated in the proposed amendment to Section 73, CAPACITY AS GENERAL MANAGER OF THE NATIONAL
adverse claims shall be decided by the Director of Mines in accordance with HOUSING AUTHORITY, THE HON. JACOBO C. CLAVE, IN HIS
Section 61 of the Mining Act, instead of leaving the matter to the Court of First CAPACITY AS PRESIDENTIAL EXECUTIVE ASSISTANT AND
Instance. Due to thousands of cases, it takes years before the court can decide a VIRGILIO A. YUSON, RESPONDENTS.
case." (Congressional Records, Proceedings and Debates of the Fifth congress,
Second Regular Session, Vol. 11. Part II, No. 66, Page 1346) DECISION
It is thus made clear, according to the petitioner, that courts have been divested of FELICIANO, J.:
original jurisdiction to adjudicate adverse claims which, by the amendments, was By virtue of a Contract to Sell dated 18 August 1970. Jose Hernando acquired
transferred to the Director of Mines, whose decision may be appealed to the prospective and beneficial ownership over Lot No. 15, Block IV of the Ponderosa
Secretary; and the latter's decision, in turn, may be reviewed by the Court of Heights Subdivision in Antipolo, Rizal, from the petitioner Antipolo Realty
Appeals or the Supreme Court, as the case may be, so that, in the present case, the Corporation.
Secretary erred in affirming the dismissal by the Director of petitioner's adverse On 28 August 1974, Mr. Hernando transferred his rights over Lot No. 15 to
claim. private respondent Virgilio Yuson. The transfer was embodied in a Deed of
We can not agree with petitioner's contention. The sole issue raised by it is a pure Assignment and Substitution of Obligor (Delegacion), executed with the consent
question of law, to wit, whether Scholey, during the period of his management of of Antipolo Realty, in which Mr. Yuson assumed the performance of the vendee's
appellant's affairs, could lawfully locate mining claims for his sole and exclusive obligations under the original contract, including payment of his predecessor's
benefit, and transfer to others the rights thus acquired. There is here no question installments in arrears. However, for failure of Antipolo Realty to develop the
of fact nor matters requiring technological knowledge and experience. The issue subdivision project in accordance with its undertaking under Clause 17 of the
is one to be resolved in conformity with legal rules and standards governing the Contract to Sell, Mr. Yuson paid only the arrearages pertaining to the period up
powers of an agent, and the law's restrictions upon the latter's right to act for his to, and including, the month of August 1972 and stopped all monthly installment
own exclusive benefit while the agency is in force. Decision of such questions payments falling due thereafter. Clause 17 reads:
involves the interpretation and application of the laws and norms of justice "Clause 17. -- SUBDIVISION BEAUTIFICATION. To insure the beauty of the
established by society and constitutes essentially an exercise of the judicial power subdivision in line with the modern trend of urban development, the SELLER
which under the Constitution is exclusively allocated to the Supreme Court and hereby obligates itself to provide the subdivision with:
such courts as the Legislature may establish, and one that mining officials are ill- a) Concrete curbs and gutters
equipped to deal with. b) Underground drainage system
We see nothing in sections 61 and 73 of the Mining Law that indicates a legislative c) Asphalt paved roads
intent to confer real judicial power upon the Director of Mines. The very terms d) Independent water system
of section 73 of the Mining Law, as amended by Republic Act No. 4388, in e) Electrical installation with concrete posts
requiring that the adverse claim must "state in full detail the nature, boundaries and
f) Landscaping and concrete sidewalks
extent of the adverse claim" show that the conflicts to be decided by reason of
such adverse claim refer primarily to questions of fact. This is made even clearer g) Developed park or amphitheatre
by the explanatory note to House Bill No. 2522, later to become Republic Act h) 24-hour security guard service
4388, that "sections 61 and 73 that refer to the overlapping of claims are amended These improvements shall be complete within a period of two (2) years from date
to expedite resolutions of mining conflicts * * *." The controversies to be of this contract. Failure by the SELLER shall permit the BUYER to suspend his
submitted and resolved by the Director of Mines under the sections refer therfore monthly installments without any penalties or interest charges until such time that
only to the overlapping of claims and administrative matters incidental thereto. such improvements shall have been completed."[1]
As already shown, petitioner's adverse claim is not one grounded on overlapping
of claims nor is it a mining conflict arising out of mining locations (there being
only one involved) but one originating from the alleged fiduciary or contractual
relationship between petitioner and locator Scholey and his transferees Yrastorza
and respondent Zaldivia. As such, the adverse claim is not within the executive or
administrative authority of the mining director to resolve, but in that of the courts,
as it has been correctly held, on the basis of the doctrine stated in Espinosa vs.
Makalintal, 79 Phil. 134. This ruling, notwithstanding the amendments introduced
by Republic Act 4388, is still applicable to the case at bar. The doctrine was stated
thus:
"* * *. The powers granted to the Secretary of Agriculture and Commerce by the
pertinent provisions of law invoked by petitioners are all of executive and
administrative nature, such as panting of licenses, permits, lease, and contracts, or
approving, rejecting, reinstating, or cancelling applications, or deciding conflicting
applications. The controversies between the parties, as raised in the pleadings in
case No. 200 of the Court of First Instance of Iloilo appear to have arisen upon
disagreements in civil or contractual relations between the litigants to which the
legal provisions invoked by petitioner are not and cannot be applicable. It should
be far-fetched to recognize in the Secretary of Agriculture and Commerce the
power of determining whether or not, as alleged by Paranpan, he has been
deprived by defendants of the possession of the fishpond in question and of the
legal effects of such deprivation, or upon the nature of the two contracts of
mortgage in the form of sale with right to repurchase between Sason and Paranpan,
as alleged by the defendants, or whether Paranpan has charged Sason with usurious
interests. These are questions judicial in nature and only courts of justice can
decide them."
But petitioner claims that the Espinosa-Makalintal case cannot be invoked in the
present case because there the parcel of land involved was already the object of a
lease agreement between the government and the lessee, while here, the "George
Claim" has not yet been leased to respondent Zaldivia and, therefore, the mining
claim has not passed from the administrative control of the Director of
Mines. The objection is without merit, since the question presented in the
petitioner's adverse claim is judicial in nature, not a mining conflict, and it is
immaterial whether the mining claim in question has or has not passed out of
administrative control of the Director of Mines.
On 14 October 1976, the president of Antipolo Realty sent a notice to private
respondent Yuson advising that the required improvements in the subdivision had
already been completed, and requesting resumption of payment of the monthly
installments on Lot No. 15. For his part, Mr. Yuson replied that he would conform
with the request as soon as he was able to verify the truth of the representation in
the notice.
In a second letter dated 27 November 1976, Antipolo Realty reiterated its request
that Mr. Yuson resume payment of his monthly installments, citing the decision
rendered by the National Housing Authority (NHA) on 25 October 1976 in Case
No. 252 (entitled "Jose B. Viado Jr., complainant vs. Conrado S. Reyes,
respondent") declaring Antipolo Realty to have "substantially complied with its
commitment to the lot buyers pursuant to the Contract to Sell, executed by and
between the lot buyers and the respondent". In addition, a formal demand was
made for full and immediate payment of the amount of P16,994.73, representing
installments which, Antipolo Realty alleged, had accrued during the period while
the improvements were being completed -- i.e., between September 1972 and
October 1976.
Mr. Yuson refused to pay the September 1972 - October 1976 monthly
installments but agreed to pay the post October 1976 installments. Antipolo
Realty responded by rescinding the Contract to Sell, and claiming the forfeiture of
all installment payments previously made by Mr. Yuson.
Aggrieved by the rescission of the Contract to Sell, Mr. Yuson brought his dispute
with Antipolo Realty before public respondent NHA through a letter-complaint
dated 10 May 1977 which complaint was docketed in NHA as Case No. 2123.
Antipolo Realty filed a Motion to Dismiss which was heard on 2 September 1977.
Antipolo Realty, without presenting any evidence, moved for the consolidation of
Case No. 2123 with several other cases filed against it by other subdivision lot
buyers, then pending before the NHA. In an Order issued on 7 February 1978,
the NHA denied the motion to dismiss and scheduled Case No. 2123 for hearing.
After hearing, the NHA rendered a decision on 9 March 1978 ordering the
reinstatement of the Contract to Sell under the following conditions:
"1) Antipolo Realty Corporation shall sent [sic] to Virgilio Yuzon a statement of
account for the monthly amortizations from November 1976 to the present;
2) No penalty interest shall be charged for the period from November 1976 to the
date of the statement of account; and
3) Virgilio Yuzon shall be given sixty (60) days to pay the arrears shown in the
statement of account."[2]
Antipolo Realty filed a Motion for Reconsideration asserting: (a) that it had been
denied due process of law since it had not been served with notice of the scheduled
hearing; and (b) that the jurisdiction to hear and decide Mr. Yuson's complaint was
lodged in the regular courts, not in the NHA, since that complaint involved the
interpretation and application of the Contract to Sell.
The motion for reconsideration was denied on 28 June 1978 by respondent NHA
General Manager G.V. Tobias, who sustained the jurisdiction of the NHA to hear
and decide the Yuson complaint. He also found that Antipolo Realty had in fact
been served with notice of the date of the hearing, but that its counsel had failed
to attend the hearing.[3] The case was submitted for decision, and eventually
decided, solely on the evidence presented by the complainant.
On 2 October 1978, Antipolo Realty came to this Court with a Petition for
Certiorari and Prohibition with Writ of Preliminary Injunction, which was docketed
as G.R. No. L-49051. Once more, the jurisdiction of the NHA was assailed.
Petitioner further asserted that, under Clause 7 of the Contract to Sell, it could
validly terminate its agreement with Mr. Yuson and, as a consequence thereof,
retain all the prior installment payments made by the latter[4].
This Court denied certiorari in a minute resolution issued on 11 December 1978,
"without prejudice to petitioner's pursuing the administrative remedy."[5] A motion
for reconsideration was denied on 29 January 1979.
Thereafter, petitioner interposed an appeal from the NHA decision with the
Office of the President which, on 9 March 1979, dismissed the same through
public respondent Presidential Executive Assistant Jacobo C. Clave.[6]
In the present petition, Antipolo Realty again asserts that, in hearing the complaint
of private respondent Yuson and in ordering the reinstatement of the Contract to
Sell between the parties, the NHA had not only acted on a matter beyond its
competence, but had also, in effect, assumed the performance of judicial or quasi-
judicial functions which the NHA was not authorized to perform.
We find the petitioner's arguments lacking in merit.
It is by now commonplace learning that many administrative agencies exercise and
perform adjudicatory powers and functions, though to a limited extent only.
Limited delegation of judicial or quasi-judicial authority to administrative agencies
(e.g., the Securities and Exchange Commission and the National Labor Relations
Commission) is well recognized in our jurisdiction,[7] basically because the need for
special competence and experience has been recognized as essential in the
resolution of questions of complex or specialized character and because of a
companion recognition that the dockets of our regular courts have remained
crowded and clogged. In Spouses Jose Abejo and Aurora Abejo, et al., vs. Hon.
Rafael dela Cruz, etc., et. al.,[8] the Court, through Mr. Chief Justice Teehankee,
said:
"In the fifties, the Court taking cognizance of the move to vest jurisdiction in
administrative commissions and boards the power to resolve specialized disputes
in the field of labor (as in corporations, public transportation and public utilities)
ruled that Congress in requiring the Industrial Court's intervention in the
resolution of labor-management controversies likely to cause strikes or lockouts
meant such jurisdiction to be exclusive, although it did not so expressly state in
the law. The Court held that under the 'sense-making and expeditious doctrine of
primary jurisdiction ... the courts cannot or will not determine a controversy
involving a question which is within the jurisdiction of an administrative tribunal,
where the question demands the exercise of sound administrative discretion
requiring the special knowledge, experience, and services of the administrative
tribunal to determine technical and intricate matters of fact, and a uniformity of
ruling is essential to comply with the purposes of the regulatory statute
administered' (Pambujan Sur United Mine Workers v. Samar Mining Co., Inc., 94
Phil. 932, 941 [1954)].
In this era of clogged court dockets, the need for specialized administrative boards
or commissions with the special knowledge, experience and capability to hear and
determine promptly disputes on technical matters or essentially factual matters,
subject to judicial review in case of grave abuse of discretion, has become well high
indispensable. Thus, in 1984, the Court noted that 'between the power lodged in
an administrative body and a court, the unmistakeable trend has been to refer it to
the former. "Increasingly, this Court has been committed to the view that unless
the law speaks clearly and unequivocably, the choice should fall on [an
administrative agency]"' (NFL v. Eisma, 127 SCRA 419, 428, citing precedents).
The Court in the earlier case of Ebon vs De Guzman (113 SCRA 52, 56 [1982]),
noted that the lawmaking authority, in restoring to the labor arbiters and the
NLRC their jurisdiction to award all kinds of damages in labor cases, as against the
previous P.D. amendment splitting their jurisdiction with the regular courts,
'evidently, . . . had second thoughts about depriving the Labor Arbiters and the
NLRC of the jurisdiction to award damages in labor cases because that setup
would mean duplicity of suits, splitting the cause of action and possible conflicting
findings and conclusions by two tribunals on one and the same claim.' "
In an even more recent case, Tropical Homes, Inc. vs, National Housing
Authority, et al.,[9] Mr. Justice Gutierrez, speaking for the Court, observed that:
"There is no question that a statute may vest exclusive original jurisdiction in an
administrative agency over certain disputes and controversies falling within the
agency's special expertise. The very definition of an administrative agency includes
its being vested with quasi-judicial powers. The ever increasing variety of powers
and functions given to administrative agencies recognizes the need for the active
intervention of administrative agencies in matters calling for technical knowledge
and speed in countless controversies which cannot possibly be handled by regular
courts."
In general, the quantum of judicial or quasi-judicial powers which an administrative
agency may exercise is defined in the enabling act of such agency. In other words,
the extent to which an administrative entity may exercise such powers depends
largely, if not wholly, on the provisions of the statute creating or empowering such
agency.[10] In the exercise of such powers, the agency concerned must commonly
interpret and apply contracts and determine the rights of private parties under such
contracts. One thrust of the multiplication of administrative agencies is that the
interpretation of contracts and the determination of private rights thereunder is
no longer a uniquely judicial function, exercisable only by our regular courts.
Thus, the extent to which the NHA has been vested with quasi-judicial authority
must be determined by referring to the terms of Presidential Decree No. 957,
known as "The Subdivision and Condominium Buyers' Decree".[11] Section 3 of
this statute provides as follows:
"National Housing Authority. - The National Housing Authority shall have
exclusive jurisdiction to regulate the real estate trade and business in accordance
with the provisions of this decree." (Underscoring supplied)
The need for and therefore the scope of the regulatory authority thus lodged in
the NHA are indicated in the second and third preambular paragraphs of the
statute which provide:
"WHEREAS, numerous reports reveal that many real estate subdivision owners,
developers, operators, and/or sellers have reneged on their representations and
obligations to provide and maintain properly subdivision roads, drainage,
sewerage, water systems, lighting systems and other similar basic requirements,
thus endangering the health and safety of home and lot buyers;
WHEREAS, reports of alarming magnitude also show cases of swindling and
fraudulent manipulations perpetrated by unscrupulous subdivision and
condominium sellers and operators, such as failure to deliver titles to the buyers
or titles free from liens and encumbrances, and to pay real estate taxes, and
fraudulent sales of the same subdivision lots to different innocent purchasers for
value - - -" (Underscoring supplied)
Presidential Decree No. 1344[12] clarified and spelled out the quasi-judicial
dimensions of the grant of regulatory authority to the NHA in the following quite
specific terms:
"SECTION 1. In the exercise of its functions to regulate the real estate trade and
business and in addition to its powers provided for in Presidential Decree No. 957,
the National Housing Authority shall have exclusive jurisdiction to hear and decide
cases of the following nature:
A. Unsound real estate business practices:
B. Claims involving refund and any other claims filed by subdivision lot or
condominium unit buyer against the project owner, developer, dealer, broker or
salesman; and
C. Cases involving specific performance of contractual and statutory obligations
filed by buyers of subdivision lots or condominium units against the owner,
developer, dealer, broker or salesman." (Underscoring supplied.)
The substantive provisions being applied and enforced by the NHA in the instant
case are found in Section 23 of Presidential Decree No. 957 which reads:
"Sec. 23. -- Non-Forfeiture of Payments. -- No installment payment made by a
buyer in a subdivision or condominium project for the lot or unit he contracted
to buy shall be forfeited in favor of the owner or developer when the buyer, after
due notice to the owner or developer, desists from further payment due to the
failure of the owner or developer to develop the subdivision or condominium
project according to the approved plans and within the time limit for complying
with the same. Such buyer may, at his option, be reimbursed the total amount
paid including amortization and interests but excluding delinquency interests, with
interest thereon at the legal rate." (Underscoring supplied.)
Having failed to comply with its contractual obligation to complete certain
specified improvements in the subdivision within the specified period of two years
from the date of the execution of the Contract to Sell, petitioner was not entitled
to exercise its options under Clause 7 of the Contract. Hence, petitioner could
neither rescind the Contract to Sell nor treat the installment payments made by the
private respondent as forfeited in its favor. Indeed, under the general Civil Law,[13]
in view of petitioner's breach of its contract with private respondent, it is the latter
who is vested with the option either to rescind the contract and receive
reimbursement of all installment payments (with legal interest) made for the
purchase of the subdivision lot in question, or to suspend payment of further
purchase installments until such time as the petitioner had fulfilled its obligations
to the buyer. The NHA was therefore correct in holding that private respondent's
prior installment payments could not be forfeited in favor of petitioner.
Neither did the NHA commit any abuse, let alone a grave abuse, of discretion or
act in excess of its jurisdiction when it ordered the reinstatement of the Contract
to Sell between the parties. Such reinstatement is no more than a logical
consequence of the NHA's correct ruling, just noted, that the petitioner was not
entitled to rescind the Contract to Sell. There is, in any case, no question that
under Presidential Decree No. 957, the NHA was legally empowered to determine
and protect the rights of contracting parties under the law administered by it and
under the respective agreements, as well as to ensure that their obligations
thereunder are faithfully performed.
We turn to petitioner's assertion that it had been denied the right to due process.
This assertion lacks substance. The record shows that a copy of the order denying
the Motion to Dismiss and scheduling the hearing of the complaint for the
morning of 6 March 1978, was duly served on counsel for petitioner, as evidenced
by the annotation appearing at the bottom of said copy indicating that such service
had been effected.[14] But even if it be assumed, arguendo, that such notice had not
been served on the petitioner, nevertheless the latter was not deprived of due
process, for what the fundamental law abhors is not the absence of previous notice
but rather the absolute lack of opportunity to be heard.[15] In the instant case
petitioner was given ample opportunity to present its side and to be heard on a
motion for reconsideration as well, and not just on a motion to dismiss; the claim
of denial of due process must hence sound even more hollow.[16]
We turn finally to the question of the amount of P16,994.73 which petitioner
insists had accrued during the period from September 1972 to October 1976, when
private respondent had suspended payment of his monthly installments on his
chosen subdivision lot. The NHA in its 9 March 1978 resolution ruled that the
regular monthly installments under the Contract to Sell did not accrue during the
September 1972 -- October 1976 period:
"[R]espondent allowed the complainant to suspend payment of his monthly
installments until the improvements in the subdivision shall have been completed.
Respondent informed complainant on November 1976 that the improvements
have been completed. Monthly installments during the period of suspension of
payment did not become due and demandable. Neither did they accrue. Such
must be the case, otherwise, there is no sense in suspending payments. If the
suspension is lifted, the debtor shall resume payments but never did he incur any
arrears.
Such being the case, the demand of respondent for complainant to pay the arrears
due during the period of suspension of payment is null and void. Consequently,
the notice of cancellation based on the refusal to pay the arrears that were not due
and demandable is also null and void."[17]
The NHA resolution is probably too terse and in need of clarification and
amplification. The NHA correctly held that no installment payments should be
considered as having accrued during the period of suspension of payments.
Clearly, the critical issue is what happens to the installment payments which would
have accrued and fallen due during the period of suspension had no default on the
part of the petitioner intervened. To our mind, the NHA resolution is most
appropriately read as directing that the original period of payment in the Contract
to Sell must be deemed extended by a period of time equal to the period of
suspension (i.e., by four (4) years and two (2) months) during which extended time
(tacked on to the original contract period) private respondent buyer must continue
to pay the monthly installment payments until the entire original contract price
shall have been paid. We think that such is the intent of the NHA resolution which
directed that "[i]f the suspension is lifted, the debtor shall resume payments" and
that such is the most equitable and just reading that may be given to the NHA
resolution. To permit Antipolo Realty to collect the disputed amount in a lump
sum after it had defaulted on its obligations to its lot buyers, would tend to defeat
the purpose of the authorization (under Sec. 23 of Presidential Decree No. 957,
supra) to lot buyers to suspend installment payments. As the NHA resolution
pointed out, "[s]uch must be the case, otherwise, there is no sense in suspending
payments." Upon the other hand, to condone the entire amount that would have
become due would be an excessively harsh penalty upon the petitioner and would
result in the unjust enrichment of the private respondent at the expense of the
petitioner. It should be recalled that the latter had already fulfilled, albeit tardily,
its obligations to its lot buyers under their Contracts to Sell. At the same time, the
lot buyer should not be regarded as delinquent and as such charged penalty
interest. The suspension of installment payments was attributable to the
petitioner, not the private respondent. The tacking on of the period of suspension
to the end of the original period precisely prevents default on the part of the lot
buyer. In the words of the NHA resolution, "never would [the buyer] incur any
arrears."
WHEREFORE, the Petition for Certiorari is DISMISSED. The NHA decision
appealed from is hereby AFFIRMED and clarified as providing for the
lengthening of the original contract period for payment of installments under the
Contract to Sell by four (4) years and two (2) months, during which extended time
private respondent shall continue to pay the regular monthly installment payments
until the entire original contract price shall have been paid. No pronouncement
as to costs.
SO ORDERED.
G.R. No. 77707, August 08, 1988
PEDRO W. GUERZON, PETITIONER VS. COURT OF APPEALS,
BUREAU OF ENERGY UTILIZATION, F.C. CAASI, JR., AND
PILIPINAS SHELL PETROLEUM CORPORATION,
RESPONDENTS.
DECISION
CORTES, J.:
Raised by petitioner to this Court is the issue of whether or not the Bureau of
Energy Utilization, the agency charged with regulating the operations and trade
practices of the petroleum industry, has the power to order a service station
operator-lessee to vacate the service station and td turn over its possession to the
oil company-lessor upon the expiration of the dealership and lease agreements.
The facts, as found by the Court of Appeal, are as follows:
Basic antecedent facts show that on January 9, 1981 petitioner Pedro Guerzon
executed with Basic Landoil Energy Corporation, which was later acquired by
respondent Pilipinas Shell Petroleum Corporation, a contract denominated as
"Service Station Lease" for the use and operation of respondent SHELL'S
properties, facilities and equipment, which included four (4) pieces of fuel
dispensing pumps and one (1) piece air compressor, for a period of five (5) years
from January 15, 1981 and ending on January 14, 1986. On January 7, 1981
petitioner likewise executed with the same Corporation a "Dealer’s Sales Contract"
for the sale by petitioner of respondent SHELL'S petroleum and other products
in the leased service station which contract expired April 12, 1986. On April 13,
1981, respondent Bureau of Energy Utilization (BEU) approved the Dealer's Sales
Contract pursuant to which petitioner was appointed dealer of SHELL'S gasoline
and other petroleum products which he was to sell at the gasoline station located
at Cagayan de Oro City. On the same day, respondent BEU issued certificate of
authority in petitioner's favor, which had a 5-year period of validity, in line with
the terms of the contract.
Paragraph 9 of the Service Station Lease Contract provides:
The cancellation or termination of the Dealer's Sales Contract executed between
the COMPANY and the LESSEE on January 7, 1981 shall automatically cancel
this Lease.
As early as January 2, 1986, respondent SHELL through its District Manager -
Reseller Mindanao wrote to petitioner informing him that the Company was not
renewing the Dealer's Sales Contract which was to expire on April 12. 1986
together with the service station lease and reminding him to take appropriate steps
to wind up his business activities at the station and, on the appropriate date, to
hand over the station with all its facilities and equipment to the representative of
respondent., A copy of this letter was furnished respondent BEU, through the
latter’s Mindanao Division Office. On April 12, 1986, respondent SHELL wrote
petitioner reiterating the decision not to extend the Dealer's Sales Contract,
demanding the surrender of the station premises and all company owned
equipment,' to the respondent's representative.
On April 15, 1986: respondent BEU, through respondent Caasi, Jr., officer-in-
charge of its Mindanao Division Office, issued the assailed order directing the
petitioner as follows:
 (2) show cause in writing, under oath within ten (10) days from receipt hereof
(1) immediately vacate the service station abovementioned and turn it over why no administrative and/or criminal proceedings shall be instituted against you
to Pilipinas Shell Petroleum Corporation; and for the aforesaid violation.

(2) show cause in writing, under oath within ten (10) days from receipt hereof Let a copy of this directive be furnished the PC-INP Commander of Cagayan de
why no administrative and/or criminal proceedings shall be instituted against you Oro City, who is hereby requested to cause the prompt and effective enforcement
for the aforesaid violation. hereof and to submit to this Bureau the result/s of the action/s taken thereon.

Very truly yours,

The order directed that a copy of the same be furnished the PC-INP Commander
of Cagayan de Oro City, requesting prompt and effective enforcement of the (Sgd.) F.C. CAASI, JR.
directive and submitting to the BEU the result of the action taken thereon. Officer-In-Charge

On April 22, 1986, pursuant to the order of April 15, 1986, respondent SHELL, cc: PC/INP Commander
accompanied by law enforcement officers, was able to secure possession of the Cagayan de Oro City
gasoline station in question together with the requisite equipments and accessories,
and turned them over to the control of the personnel of respondent SHELL who Pilipinas Shell Petroleum Corporation
accompanied them. Sasa, Davao City/Cagayan de Oro City

On May 9, 1986, petitioner filed with the Regional Trial Court of Misamis Oriental BEU-Manila
a complaint for certiorari, injunction and damages with preliminary mandatory
injunction (Civil Case No. 10619) to annul the disputed order dated April 15, 1986 [Rollo, p. 122; Underscoring supplied.]
of respondent F.C. Caasi, Jr., but on September 18, 1986 this complaint was As stated at the outset, whether or not it is within the jurisdiction of the Bureau of
dismissed for lack of jurisdiction to annul the order of a quasi-judicial body of Energy Utilization to issue the above order is the primary issue to be resolved.
equivalent category as the Regional Trial Court. [Rollo, pp. 37-39.] The Solicitor General contends that since petitioner’s license to sell petroleum
Thus, petitioner filed in the Court of Appeals a petition for certiorari with a prayer products expired on April 12, 1986, when his dealership and lease contracts
for preliminary mandatory injunction against Pilipinas Shell Petroleum expired, as of the following day, April 13, 1986 he was engaged in illegal trading in
Corporation, F.C. Caasi, Jr. and the Bureau of Energy Utilization seeking the petroleum products in violation of Batas Pambansa Blg. 33 [Rollo, pp. 100-101.]
annulment of respondent Caasi, Jr.'s order dated April 15, 1986 and the restoration The pertinent provisions of B.P. No. 33 state:
to petitioner of possession of the service station and the equipment removed
therefrom. Sec. 2. Prohibited Acts. -- The following acts are prohibited and penalized:
In a decision promulgated on February 10, 1987,the Court of Appeals denied due
course and dismissed the petition after holding the disputed order valid and the (a) Illegal trading in petroleum and/or petroleum products;
proceedings undertaken to implement the same sanctioned by Presidential decree
No. 1206, as amended. * * *
Hence, petitioner's recourse to this Court.
In his petition for review, petitioner ascribed the following errors to the Court of Sec. 3. Definition of terms. -- For the purpose of this Act, the following terms
Appeals: shall be understood to mean:

I Illegal trading in petroleum and/or petroleum products - the sale or distribution

of petroleum products for profit without license or authority from the
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT Government; non-issuance of receipts by licensed traders; misrepresentation as to
RESPONDENT BUREAU OF ENERGY UTILIZATION HAS quality and/or quantity; and sale by oil companies, distributors and/or dealers
JURISDICTION TO EJECT THE PETITIONER FROM THE GASOLINE violative of government rules and regulations.
SERVICE STATION LEASED.
* * *
II Thus, concludes the Solicitor General, the Bureau of Energy Utilization had the
power to issue, and was justified in issuing, the order to vacate pursuant to
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT Presidential Decree No. 1206, as amended, the pertinent portion of which
THERE IS NO NECESSITY OF ANY NOTICE AND HEARING PRIOR TO provides:
THE ISSUANCE OF THE DISPUTED ORDER ISSUED BY RESPONDENT
BUREAU OF ENERGY UTILIZATION ORDERING THE PETITIONER Sec. 7. Bureau of Energy Utilization. -- There is created in the Department a
TO VACATE THE LEASED PREMISES [Rollo, p. 13.] Bureau of Energy Utilization, hereafter referred to in this Section as the Bureau,
The controversy revolves around the assailed order issued by respondent F.C. which shall have the following powers and functions, among others:
Caasi, Jr., Officer-in-Charge of the Mindanao Division Office of the Bureau of
Energy Utilization, which reads: * * *

15 April, 1986 e. After due notice and hearing, impose and collect a fine not exceeding One
Thousand Pesos, for every violation or non-compliance with any term or
Mr. Pedro W. Guerzon condition of any certificate, license, or permit issued by the Bureau or of any of its
Corner Velez-Recto Streets orders, decisions, rules and regulations.
Cagayan de Oro City
The fine so imposed shall be paid to the Bureau, and failure to pay the fine within
Sir: the time specified in the order or decision of the Bureau or failure to cease and
discontinue the violation or non-compliance shall be deemed good and sufficient
We were officially informed by Pilipinas Shell Petroleum Corporation that you refused to vacate reason for the suspension, closure or, stoppage of operations of the establishment
its company-owned service station at the above address despite the fact that you were advised by of the person guilty of the violation or non-compliance. In case the violation or
Shell in its letter of January 02, 1986 that it will not renew the Dealer's Sale Contract between default is committed by a corporation or association, the manager or person who
yourself and the company upon its expiration on April 12, 1986. has charge of the management of the corporation or association and the officers
or directors thereof who have ordered or authorized the violation or default shall
Your continued occupancy of the service station is not only considered a Violation of BEU laws, be solidarily liable for the payment of the fine.
rules and regulations but is also detrimental to the interests of the parties concerned and the public.
The Bureau shall have the power and authority to issue corresponding writs of
In view thereof, you are hereby directed to: execution .directing the City Sheriff or provincial Sheriff or other peace officers
whom it may appoint to enforce the fine or the order of closure, suspension or
(1) immediately vacate the service station abovementioned and turn it over to Pilipinas Shell stoppage of operations. Payment may also be enforced by appropriate action
Petroleum Corporation; and brought in a court of competent jurisdiction. The remedy provided herein shall
not be a bar to or affect any other remedy under existing laws, but shall be
cumulative and additional to such remedies;
* * * However, the right of petitioner to the possession of the service station and the
However, the Solicitor General’s line of reasoning is fatally flawed by the failure equipment and facilities having been extinguished, the prayer for the issuance of a
of the facts to support it. From a cursory reading of the assailed order, it is readily writ of mandatory injunction is DENIED.
apparent that the order is premised on petitioner's refusal to vacate the service SO ORDERED.
station in spite of the expiration and non-renewal of his dealership and lease
agreements with respondent Shell. Nowhere in the order is it stated that petitioner
had engaged in illegal trading in petroleum products or had committed any other
violation of B.P. Blg. 33. The order merely makes reference to a "violation of BEU
laws, rules and regulations, "without stating the specific provision violated. That
petitioner had engaged in illegal trading in petroleum products cannot even be
implied from the wording of the assailed order.
But then, even if petitioner was indeed engaged in illegal trading in petroleum
products, there was no basis under B.P. Blg. 33 to order him to vacate the service
station and to turn it over to respondent Shell. Illegal trading in petroleum
products is a criminal act wherein the injured party is the State. Respondent Shell
is not even alleged by the Solicitor General as a private party prejudiced and,
therefore, it can claim no relief if a criminal case is instituted.*
Even on the assumption that petitioner's continued occupancy and operation of
the service station constituted a violation of a law or regulation, still the Court has
no recourse but to rule against the legality of the order, the Bureau of Energy
Utilization not being empowered to issue it. Section 7 of P.D. No. 1206, as
amended, is very clear as to the courses of action that the Bureau of Energy
Utilization may take in ,case of a violation or non-compliance with any term or
condition of any certificate, license or permit issued by the Bureau or any of its
orders, decisions, rules or regulations. The Bureau may: (1) impose a fine not
exceeding P1,000.00; and (2) in case of failure to pay the fine impost or to cease
and discontinue the violation or non-compliance, order the suspension, closure or
stoppage of operations of the establishment of the guilty party. Its authority is limited
to these two (2) options. It can do no more, as there is nothing in P.D. No. 1206,
as amended, which empowers the Bureau to issue an order to vacate in case of a
violation.
As it is, jurisdiction to order a lessee to vacate the leased premises is vested in the
civil courts in an appropriate case for unlawful detainer or accion publiciana [Sec. 19
(2) and 33 (2), B.P. Blg. 129, as amended.] There is nothing in P.D. No. 1206, as
amended, that would suggest that the same or similar jurisdiction has been granted
to the Bureau of Energy Utilization. It is a fundamental rule that an administrative
agency has only such powers as are expressly granted to it by law and those that
are necessarily implied in the exercise thereof [Makati Stock Exchange, Inc. v. Securities
and Exchange Commission, G.R. No. L-23004, June 30, 1965, 14 SCRA 620; Sy v.
Central Bank, G.R. No. L-41480, April 30, 1976, 70 SCRA 570.] That issuing the
order to vacate was the most effective way of stopping any illegal trading in
petroleum products is no excuse for a deviation from this rule. Otherwise,
adherence to the rule of law would be rendered meaningless.
Moreover, contrary to the Solicitor General’s theory, the text of the assailed order
leaves no room for doubt that it was issued in connection with an adjudication of
the contractual dispute between respondent Shell and petitioner. But then the
Bureau of Energy Utilization, like its predecessor, the defunct Oil Industry
Commission, has no power to decide contractual disputes between gasoline dealers
and oil companies, in the absence of an express provision of law granting to it such
power [see Pilipinas Shell Petroleum Corp. v. Oil Industry Commission, G.R. No. L-41315,
November 13, 1986, 145 SCRA 433.] As explicitly stated in the law, in connection
with the exercise of quasi-judicial powers, the Bureau's jurisdiction is limited to
cases involving violation or non-compliance with any term or condition of any
certificate, license or permit issue by it or of any of its orders, decisions, rules or
regulations.
Viewed from any angle, respondent F.C. Caasi, Jr., in issuing the assailed order,
acted beyond his authority and overstepped the powers granted by P.D. No. 1206,
as amended. The assailed order was, therefore, null and void.
Even if the issuance of the order to vacate was Within the authority of respondent
Caasi, Jr., still its nullity is apparent because of the failure to comply with the
requirement of notice and hearing. That P.D. No. 1206, as amended, requires
notice and hearing before any administrative penalty provided in Sec. 7(e) may be
imposed is patent. Sec. 7(e) provides for a gradation of penalties of which the
imposition of a fine in an amount not exceeding P1,000.00 is the least severe, and
requires that even before a fine is imposed notice and an opportunity to be heard
be given to the offender.
While the order dated April 15. 1986 is null and void, the Court, however, finds
itself unable to issue the writ of mandatory injunction prayed for ordering
respondent Shell to restore possession of the service station and the equipment
and facilities therein to petitioner. Petitioner himself had admitted in his petition
that his dealership and lease agreements with respondent Shell had already expired.
Recognizing the validity of the termination of the agreements, he requested for
their renewal. However this request was denied. [Rollo, p. 9.] Undeniably, after
April 12, 1986, any right petitioner had to possess the service station and the
equipment and facilities therein had been extinguished. No basis for an affirmative
relief therefore exists.
WHEREFORE, in view of the foregoing, the Decision of the Court of Appeals
dated February 10, 1987 is REVERSED and the Order dated April 15, 1986 issued
by respondent Caasi, Jr. of the Bureau of Energy Utilization is ANNULED and
SET ASIDE.