Tayug Rural Bank v Central Bank In its answer to the counterclaim, Appellee The Memorandum Circular was issued
emorandum Circular was issued on the
Facts: Plaintiff-Appellee, Tayug Rural Bank,
Inc., is a banking corporation in Tayug,
Pangasinan. During the period from December
28, 1962 to July 30, 1963, it obtained thirteen
(13) loans from Defendant-Appellant, Central
Bank of the Philippines
The loans, amounting to P813,000.00 as of July
30, 1963, were all covered by corresponding
promissory notes prescribing the terms and
conditions of the aforesaid loans (Record on
Appea, pp. 15-53). As of July 15, 1969, the
outstanding balance was P 444,809.45
On December 23, 1964, Appellant, thru the
Director of the Department of Loans and Credit,
issued Memorandum Circular No. DLC-8,
informing all rural banks that an additional
penalty interest rate of ten per cent (10%) per
annum would be assessed on all past due loans
beginning January 4, 1965. Said Memorandum
Circular was actually enforced on all rural banks
effective July 4, 1965.
On June 27, 1969, Appellee Rural Bank sued
Appellant in the Court of First Instance of
Manila, Branch III, to recover the 10% penalty
imposed by Appellant amounting to P16,874.97,
as of September 27, 1968 and to restrain
Appellant from continuing the imposition of the
penalty
Appellant justified the imposition of the penalty
by way of affirmative and special defenses,
stating that it was legally imposed under the
provisions of Section 147 and 148 of the Rules
and Regulations Governing Rural Banks
promulgated by the Monetary Board on
September 5, 1958, under authority of Section 3
of Republic Act No. 720, as amended
prayed for the dismissal of the counterclaim,
denying Appellant's allegations stating that if
Appellee has any unpaid obligations with
Appellant, it was due to the latter's fault on
account of its flexible and double standard
policy in the granting of rediscounting privileges
to Appellee and its subsequent arbitrary and
illegal imposition of the 10% penalty (Record on
Appeal, p. 57). In its Memorandum filed on
November 11, 1970, Appellee also asserts that
Appellant had no basis to impose the penalty
interest inasmuch as the promissory notes
covering the loans executed by Appellee in favor
of Appellants do not provide for penalty interest
rate of 10% per annum on just due loans
beginning January 4, 1965 (Record on Appeal p.
96).
The lower court, in its Order dated March 3,
1970, stated that "only a legal question has been
raised in the pleadings" and upholding the stand
of plaintiff Rural Bank, decided the case in its
favor.
Issue: Whether or not the Central Bank can
validly impose the 10% penalty on Appellee's
past overdue loans beginning July 4, 1965, by
virtue of Memorandum Circular No. DLC-8
dated December 23, 1964.
Ruling: The petition is denied.
It is undisputed that no penal clause has been
included in the promissory notes. For this
reason, the trial court is of the view that
Memorandum Circular DLC-8 issued on
December 23, 1964 prescribing retroactive
effect on all past due loans, impairs the
obligation of contract and deprives the plaintiff
of its property without due process of law.
basis of Sections 147 and 148 of the Rules and
Regulations Governing Rural Banks of the
Philippines approved on September 5, 1958
The "Rules and Regulations Governing Rural
Banks" was published in the Official Gazette, 55
O.G., on June 13, 1959, pp. 5186-5289. It is by
virtue of these same Rules that Rural Banks re-
discount their loan papers with the Central Bank
at 2-1/2% interest per annum and in turn lend the
money to the public at 12% interest per annum
Appellant maintains that it is pursuant to Section
3 of R.A. No. 720, as amended, that the
Monetary Board has adopted the set of Rules
and Regulations Governing Rural Banks.
SEC. 3. In furtherance of this policy, the
Monetary Board of the Central Bank of the
Philippines shall formulate the necessary rules
and regulations governing the establishment and
operatives of Rural Banks for the purpose of
providing adequate credit facilities to small
farmers and merchants, or to cooperatives of
such farmers or merchants and to supervise the
operation of such banks
The specific provision under the law claimed as
basis for Sections 147 and 148 of the Rules and
Regulations Governing Rural Banks, that is, on
Appellant's authority to extend loans to Rural
Banks by way of rediscounting is Section 13 of
R.A. 720
The specific provision under the law claimed as
basis for Sections 147 and 148 of the Rules and
Regulations Governing Rural Banks, that is, on
Appellant's authority to extend loans to Rural
Banks by way of rediscounting is Section 13 of
R.A. 720, as amended, which provides:
SEC. 13.In an emergency or when a financial
crisis is imminent the Central Bank may give a
loan to any Rural Bank against assets of the
Rural Bank which may be considered acceptable
by a concurrent vote of at least, five members of
the Monetary Board.
In normal times, the Central Bank may re-
discount against papers evidencing a loan
granted by a Rural Bank to any of its customers
which can be liquefied within a period of two
hundred and seventy days: PROVIDED,
HOWEVER, That for the purpose of
implementing a nationwide program of
agricultural and industrial development, Rural
Banks are hereby authorized under such terms
and conditions as the Central Bank shall
prescribe to borrow on a medium or long term
basis, funds that the Central Bank or any other
government financing institutions shall borrow
from the International Bank for Reconstruction
and Development or other international or
foreign lending institutions for the specific
purpose of financing the above stated
agricultural and industrial program. Repayment
of loans obtained by the Central Bank of the
Philippines or any other government financing
institution from said foreign lending institutions
under this section shall be guaranteed by the
Republic of the Philippines.
As to the supervising authority of the Monetary
Board of the Central Bank over Rural Banks, the
same is spelled-out under Section 10 of R.A.
720, as follows:
SEC. 10. The power to supervise the operation
of any Rural Bank by the Monetary Board of the
Central Bank as herein indicated, shall consist
in placing limits to the maximum credit allowed
any individual borrower; in prescribing the
interest rate; in determining the loan period and
loan procedure; in indicating the manner in
which technical assistance shall be extended to
Rural Banks; in imposing a uniform accounting
system and manner of keeping the accounts and
records of the Rural Banks; in undertaking
regular credit examination of the Rural Banks:
in instituting periodic surveys of loan and
lending procedures, audits, test check of cash
and other transactions of the Rural Banks; in
conducting training courses for personnel of
Rural Banks; and, in general in supervising the
business operation of the Rural Banks.
Nowhere in any of the above-quoted pertinent
provisions of R.A. 720 nor in any other
provision of R.A. 720 for that matter, is the
monetary Board authorized to mete out on rural
banks an additional penalty rate on their past due
accounts with Appellant. As correctly stated by
the trial court, while the Monetary Board
possesses broad supervisory powers,
nonetheless, the retroactive imposition of
administrative penalties cannot be taken as a
measure supervisory in character.
Administrative rules and regulations have the
force and effect of law. There are, however,
limitations to the rule-making power of
administrative agencies. A rule shaped out by
jurisprudence is that when Congress authorizes
promulgation of administrative rules and
regulations to implement given legislation, all
that is required is that the regulation be not in
contradiction with it, but conform to the
standards that the law prescribe
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 v. Lim, 108
Phil. 1091). Rules that subvert the statute cannot
be sanctioned.
When promulgated in pursuance of the
procedure or authority conferred upon the
administrative agency by law, the rules and
regulations partake of the nature of a statute, and
compliance therewith may be enforced by a
penal sanction provided in the law Conversely,
the rule is likewise clear. Hence an
administrative agency cannot impose a penalty
not so provided in the law authorizing the
promulgation of the rules and regulations, much
less one that is applied retroactively.
Philippine Association v Hon. Torres
Facts: This petition for prohibition with
temporary restraining order was filed by the
Philippine Association of Service Exporters
(PASEI, for short), to prohibit and enjoin the
Secretary of the Department of Labor and
Employment (DOLE) and the Administrator of
the Philippine Overseas Employment
Administration (or POEA) from enforcing and
implementing DOLE Department Order No.
16, Series of 1991 and POEA Memorandum
Circulars Nos. 30 and 37, Series of 1991,
temporarily suspending the recruitment by
private employment agencies of Filipino
domestic helpers for Hong Kong and vesting in
the DOLE, through the facilities of the POEA,
the task of processing and deploying such
workers.
PASEI is the largest national organization of
private employment and recruitment agencies
duly licensed and authorized by the POEA, to
engaged in the business of obtaining overseas
employment for Filipino landbased workers,
including domestic helpers.
On June 1, 1991, as a result of published stories
regarding the abuses suffered by Filipino
housemaids employed in Hong Kong, DOLE
Secretary Ruben D. Torres issued Department
Order No. 16, Series of 1991, temporarily
suspending the recruitment by private
employment agencies of "Filipino domestic
helpers going to Hong Kong" (p. 30, Rollo). The
DOLE itself, through the POEA took over the
business of deploying such Hong Kong-bound
workers.
Pursuant to Doles Order the POEA issued
Memorandum Circular No. 30, Series of 1991,
dated July 10, 1991, providing GUIDELINES
on the Government processing and deployment
of Filipino domestic helpers to Hong Kong and
the accreditation of Hong Kong recruitment
agencies intending to hire Filipino domestic
helpers.
On September 2, 1991, the petitioner, PASEI,
filed this petition for prohibition to annul the
aforementioned DOLE and POEA circulars and
to prohibit their implementation
Issue:
1.Whether or not that the respondents acted
with grave abuse of discretion and/or in excess
of their rule-making authority in issuing said
circulars;
2. That the assailed DOLE and POEA circulars
are contrary to the Constitution, are
unreasonable, unfair and oppressive
Ruling: The petition is granted.
Article 36 of the Labor Code grants the Labor
Secretary the power to restrict and regulate
recruitment and placement activities.
Art. 36. Regulatory Power. The Secretary of
Labor shall have the power to restrict and
regulate the recruitment and placement
activities of all agencies within the coverage of
this title [Regulation of Recruitment and
Placement Activities] and is hereby authorized
to issue orders and promulgate rules and
regulations to carry out the objectives and
implement the provisions of this title.
On the other hand, the scope of the regulatory
authority of the POEA, which was created by
Executive Order No. 797 on May 1, 1982 to take
over the functions of the Overseas Employment
Development Board, the National Seamen
Board, and the overseas employment functions
of the Bureau of Employment Services, is broad
and far-ranging
The vesture of quasi-legislative and quasi-
judicial powers in administrative bodies is not
unconstitutional, unreasonable and oppressive. It
has been necessitated by "the growing
complexity of the modern society" (Solid
Homes, Inc. vs. Payawal, 177 SCRA 72, 79).
More and more administrative bodies are
necessary to help in the regulation of society's
ramified activities. "Specialized in the particular
field assigned to them, they can deal with the
problems thereof with more expertise and
dispatch than can be expected from the
legislature or the courts of justice"
It is noteworthy that the assailed circulars do not
prohibit the petitioner from engaging in the
recruitment and deployment of Filipino
landbased workers for overseas employment. A
careful reading of the challenged administrative
issuances discloses that the same fall within the
"administrative and policing powers expressly or
by necessary implication conferred" upon the
respondents (People vs. Maceren, 79 SCRA
450). The power to "restrict and regulate
conferred by Article 36 of the Labor Code
involves a grant of police power (City of Naga
vs. Court of Appeals, 24 SCRA 898). To
"restrict" means "to confine, limit or stop" (p.
62, Rollo) and whereas the power to "regulate"
means "the power to protect, foster, promote,
preserve, and control with due regard for the
interests, first and foremost, of the public, then
of the utility and of its patrons" (Philippine
Communications Satellite Corporation vs.
Alcuaz, 180 SCRA 218).
The questioned circulars are therefore a valid
exercise of the police power as delegated to the
executive branch of Government.
Nevertheless, they are legally invalid, defective
and unenforceable for lack of power publication
and filing in the Office of the National
Administrative Register as required in Article 2
of the Civil Code, Article 5 of the Labor Code
and Sections 3(1) and 4, Chapter 2, Book VII of
the Administrative Code of 1987
For lack of proper publication, the
administrative circulars in question may not be
enforced and implemented.
Firestone v Lariosa and NLRC
Facts: In this petition for certiorari, petitioner
Firestone Tire and Rubber Company of the
Philippines [Firestone for brevity] assails the
decision of public respondent National Labor
Relations Commission which ordered the
reinstatement without backwages of Carlos
Lariosa, a dismissed tire builder of petitioner, as
having been rendered with grave abuse of
discretion amounting to lack of jurisdiction.
Carlos Lariosa started working with Firestone on
January 3, 1972 as a factory worker. At the time
of his dismissal, he was a tire builder.
At around 2:00 o'clock in the afternoon of July
27, 1983, as he was about to leave the company
premises Lariosa submitted himself to a routine
check by the security guards at the west gate. He
was frisked by Security Guard Ambrosio Liso
[Lizo] while his personal bag was inspected by
Security Guard Virgilio Olvez. In the course of
the inspection, sixteen [16] wool flannel swabs,
all belonging to the company, were found inside
his bag, tucked underneath his soiled clothes.
As a result of the incident, Firestone terminated
Lariosa's services citing as grounds therefor:
"stealing company property and loss of trust."
Lariosa, on the other hand, sued Firestone before
the Ministry of Labor and Employment for
illegal dismissal, violation of Batas Pambansa
Blg. 130 and its related rules and regulations,
and damages. The Labor Arbiter, in his decision
dated May 8, 1984, found Lariosa's dismissal
justified. However, on appeal, the National
Labor Relations Commission on December 28,
1984 reversed the decision of the Labor Arbiter
[with one commissioner voting for affirmance]
and held that the dismissal of Lariosa was too
severe a penalty. It therefore ordered Lariosa's
reinstatement but without backwages, the period
when he was out of work to be considered a
suspension.
Petitioner Firestone, in this special civil action
for certiorari, contends that the NLRC erred in
not dismissing Lariosa's appeal for being late, in
finding that Lariosa was not accorded due
process and in reversing the Labor Arbiter.
A review of the record shows that Lariosa was
indubitably involved in the attempted theft of the
flannel swabs. During the investigation called by
the company's industrial relations manager Ms.
Villavicencio on July 28, 1983, or one day after
the incident, Security Guards Liso and Olvez
contradicted Lariosa's bare claim that he had no
intention to bring home the swabs and that he
had simply overlooked that he had earlier placed
them inside his bag after they were given to him
by his shift supervisor while he was busy at
work. Guard Olvez stated that when he
confronted Lariosa with the swabs, the latter
replied that they were for "home use." And when
he requested Lariosa to stay behind while he
reported the matter to the authorities, Lariosa
refused and hurriedly left the premises and
boarded a passing jeepney.
Issue: Whether or not the NLRC act with grave
abuse of discretion on its decision
dated May 8, 1984
Ruling: The petition is granted.
From the records, it is likewise clear that
Firestone did not act arbitrarily in terminating
Lariosa's services. On the contrary, there are
transcripts to prove that an investigation of the
incident was promptly conducted in the presence
of the employee concerned, the union president
and the security guards who witnessed the
attempted asportation. Records also belie the
allegation that Lariosa was shown his walking
papers on the very day of the incident. The letter
of Ms. Villavicencio to Lariosa dated August 1,
1983 informing the latter of his dismissal
effective August 2, 1983 conclusively shows
that he was discharged only on August 2, 1983,
after an investigation was held to ventilate the
truth about the July 27 incident. Thus, we cannot
agree with the NLRC's conclusion that even if
Firestone had found substantial proof of
Lariosa's misconduct, it did not observe the
statutory requirements of due process.
There is no gainsaying that theft committed by
an employee constitutes a valid reason for his
dismissal by the employer. Although as a rule
this Court leans over backwards to help workers
and employees continue with their employment
or to mitigate the penalties imposed on them,
acts of dishonesty in the handling of company
property are a different matter. 8
Thus, under Article 283 of the Labor Code, an
employer may terminate an employment for
"serious misconduct" or for "fraud or willful
breach by the employee of the trust reposed in
him by his employer or representative."
If there is sufficient evidence that an employee
has been guilty of a breach of trust or that his
employer has ample reasons to distrust him, the
labor tribunal cannot justly deny to the employer
the authority to dismiss such an employee
Gonzaga v Lee David
Facts: Mariano Gonzaga, as owner, registered
with the Motor Vehicles Office a cargo truck
and a passenger bus, paying the first installment
for registration fees due on said vehicles for
1957. To cover the second installment for
registration fees, Gonzaga remitted to the
Provincial Treasurer of Cagayan, by registered
mail, P500.00, under postal money orders Nos.
18553, 18554 and 18555, purchased from and
issued by the Post Office of Camalaniugan,
Cagayan. The postal cancellation mark on the
envelope containing the remittance of Gonzaga
bears the date August 31, 1957; so does the
postal cancellation mark on the face of the
money orders.
The Registrar of the Motor Vehicles Office of
Cagayan ruled that pursuant to Section 8 (1), Act
3992, otherwise known as the Revised Motor
Vehicle Law, the second installment for
registration fees was payable on or before the
last working day of August; that the last working
day of August, 1957 was Friday, August 30,
1957; that consequently, the remittance of
Gonzaga bearing postal cancellation mark dated
August 31, 1957 was made beyond the time
fixed by law. Accordingly, said official sought
to impose a 50% delinquency penalty, or
otherwise, threatened to confiscate the certificate
of registration for the two trucks
Issue: Whether the remittance of petitioner-
appellee covering the second installment of
registration fees for 1957, made by registered
mail with postal cancellation dated August 31,
1957, was within the time fixed by law.
Ruling: The petition is granted.
The following are the pertinent provisions of
Act 3992 as amended
Sec. 8 (I) ". . . The registration fees provided in
this Act for trucks may be payable in two equal
installments, the first to be paid on or before the
last working day of February, and the second to
be paid on or before the last working day of
August. (Emphasis supplied)
Sec. 6 (b) "The date of cancellation of the
postage stamps of envelopes containing money
orders, checks, or cash shall be considered as
the date of
application. . . .
In support of its contention that August 30, and
not August 31, was the last working day of
August, 1957, respondent-appellant invokes
Republic Act No. 1880, otherwise known as the
"40-Hour Week Law", pursuant to which
government offices are to hold office from
Monday to Friday only, unless one of those
expressly exempted therefrom.
The fact that pursuant to Republic Act 1880, the
Motor Vehicles Office in Tuguegarao, Cagayan,
had no office on Saturday, Aug. 31, 1957, is
immaterial in the case. The last working day
contemplated in Sec. 8(I) of Act 3992 as
amended should not necessarily mean the last
working day for Motor Vehicle Office. Under
Sec. 6(b) of said Act, providing for payment of
registration fees by mail, the date of cancellation
of the postage stamps of the envelope containing
the remittance is considered the date of
application. Consequently, where the manner
of payment falls under said Section 6(b), the
law, in recognizing the date of cancellation as
the date of application, impliedly permits of a
remittance or payment within that last day of
August that the Post Office may still effect
cancellation; and the remittance, in fact, bears a
postal cancellation, dated August 31, 1957.
Moreover, it is not pretended by respondent-
appellant that the Post Office ceased or has
ceased to transact business and discharge its
functions on Saturdays by reason alone of
Republic Act No. 1880. Clearly, therefore,the
remittance by petitioner-appellee was within the
by law, as provided in Section 8 (I), in
connection with Section 6 (b) of Act 3992, as
amended.lawphil.net
The fact that August 31, 1957 was declared a
special public holiday by Proclamation No. 437
(dated August 21, 1957) of the President of the
Philippines did not have the effect of making the
preceding day, August 30, the last day for
paying registration fees without penalty. On the
contrary, Section 31 of the Revised
Administrative Code provides
Sec. 31. Pretermission of holiday. Where the
day, or the last day, for doing any act required
or permitted by law falls on a holiday, the act
may be done the next succeeding business day.
Rural Bank v CA
Facts: On December 7, 1959, respondent
Maxima Castro, accompanied by Severino
Valencia, went to the Rural Bank of Caloocan to
apply for an industrial loan. It was Severino
Valencia who arranged everything about the
loan with the bank and who supplied to the latter
the personal data required for Castro's loan
application. On December 11, 1959, after the
bank approved the loan for the amount of
P3,000.00, Castro, accompanied by the Valencia
spouses, signed a promissory note corresponding
to her loan in favor of the bank.
Castro affixed thereon her signature as co-
maker.
The two loans were secured by a real-estate
mortgage (Exhibit "6") on Castro's house and lot
of 150 square meters
On February 13, 1961, the sheriff of Manila,
thru Acting Chief Deputy Sheriff Basilio
Magsambol, sent a notice of sheriff's sale
addressed to Castro, announcing that her
property covered by T.C.T. No. 7419 would be
sold at public auction on March 10, 1961 to
satisfy the obligation covering the two
promissory notes plus interest and attorney's
fees.
Upon request by Castro and the Valencias and
with conformity of the bank, the auction sale
that was scheduled for March 10, 1961 was
postponed for April 10, 1961. But when April
10, 1961 was subsequently declared a special
holiday, the sheriff of Manila sold the property
covered by T.C.T. No. 7419 at a public auction
sale that was held on April 11, 1961, which was
the next succeeding business day following the
special holiday.
Castro alleged that it was only when she
received the letter from the Acting Deputy
Sheriff on February 13, 1961, when she learned
for the first time that the mortgage contract
(Exhibit "6") which was an encumbrance on her
property was for P6.000.00 and not for
P3,000.00 and that she was made to sign as co-
maker of the promissory note (Exhibit "2")
without her being informed of this.
On April 4, 1961, Castro filed a suit
denominated "Re: Sum of Money," against
petitioners Bank and Desiderio, the Spouses
Valencia, Basilio Magsambol and Arsenio
Reyes as defendants in Civil Case No. 46698
before the Court of First Instance of Manila
upon the charge, amongst others, that thru
mistake on her part or fraud on the part of
Valencias she was induced to sign as co-maker
of a promissory note (Exhibit "2") and to
constitute a mortgage on her house and lot to
secure the questioned note. At the time of filing
her complaint, respondent Castro deposited the
amount of P3,383.00 with the court a quo in full
payment of her personal loan plus interest.
Plaintiff claims she is a 70-year old widow who
cannot read and write the English language; that
she can speak the Pampango dialect only; that
she has only finished second grade (t.s.n., p. 4,
December 11, 1964); that in December 1959,
she needed money in the amount of P3,000.00 to
invest in the business of the defendant spouses
Valencia, who accompanied her to the defendant
bank for the purpose of securing a loan of
P3,000.00; that while at the defendant bank, an
employee handed to her several forms already
prepared which she was asked to sign on the
places indicated, with no one explaining to her
the nature and contents of the documents; that
she did not even receive a copy thereof; that she
was given a check in the amount of P2,882.85
which she delivered to defendant spouses; that
sometime in February 1961, she received a letter
from the Acting Deputy Sheriff of Manila,
regarding the extrajudicial foreclosure sale of
her property; that it was then when she learned
for the first time that the mortgage indebtedness
secured by the mortgage on her property was
P6,000.00 and not P3,000.00; that upon
investigation of her lawyer,
As additional evidence for the defendant bank,
its manager declared that sometime in
December, 1959, plaintiff was brought to the
Office of the Bank by an employee- (t.s.n., p 4,
January 27, 1966). She wept, there to inquire if
she could get a loan from the bank. The claims
he asked the amount and the purpose of the loan
and the security to he given and plaintiff said she
would need P3.000.00 to be invested in a
drugstore in which she was a partner (t.s.n., p.
811. She offered as security for the loan her lot
and house at Carola St., Sampaloc, Manila,
which was promptly investigated by the
defendant bank's inspector. Then a few days
later, plaintiff came back to the bank with the
wife of defendant Valencia A date was allegedly
set for plaintiff and the defendant spouses for the
processing of their application, but on the day
fixed, plaintiff came without the defendant
spouses. She signed the application and the other
papers pertinent to the loan after she was
interviewed by the manager of the defendant.
After the application of plaintiff was made,
defendant spouses had their application for a
loan also prepared and signed (see Exh. 13). In
his interview of plaintiff and defendant spouses,
the manager of the bank was able to gather that
plaintiff was in joint venture with the defendant
spouses wherein she agreed to invest P3,000.00
as additional capital in the laboratory owned by
said spouses
Issue:
1. Whether or not respondent court correctly
affirmed the lower court in declaring the
promissory note (Exhibit 2) invalid insofar as
they affect respondent Castro vis-a-vis petitioner
bank, and the mortgage contract (Exhibit 6)
valid up to the amount of P3,000.00 only.
2.Is the validity or invalidity of the extrajudicial
foreclosure sale at public auction of the
mortgaged property that was held on April 11,
1961
Ruling: The petition is denied.
Petitioners contended that the public auction sale
that was held on April 11, 1961 which was the
next business day after the scheduled date of the
sale on April 10, 1961, a special public holiday,
was permissible and valid pursuant to the
provisions of Section 31 of the Revised
Administrative Code which ordains:
Pretermission of holiday. Where the day, or
the last day, for doing any act required or
permitted by law falls on a holiday, the act may
be done on the next succeeding business day.
Respondent court ruled that the aforesaid sale is
null and void, it not having been carried out in
accordance with Section 9 of Act No. 3135,
which provides:
Respondent court ruled that the aforesaid sale is
null and void, it not having been carried out in
accordance with Section 9 of Act No. 3135,
which provides:
Section 9. Notice shall be given by posting
notices of the sale for not less than twenty days
in at least three public places of the municipality
or city where the property is situated, and if
such property is worth more than four hundred
pesos, such notice shall also be published once a
week for at least three consecutive weeks in a
newspaper of general circulation in the
municipality or city.
We agree with respondent court. The
pretermission of a holiday applies only "where
the day, or the last day for doing any act
required or permitted by law falls on a holiday,"
or when the last day of a given period for doing
an act falls on a holiday. It does not apply to a
day fixed by an office or officer of the
government for an act to be done, as
distinguished from a period of time within which
an act should be done, which may be on any day
within that specified period. For example, if a
party is required by law to file his answer to a
complaint within fifteen (15) days from receipt
of the summons and the last day falls on a
holiday, the last day is deemed moved to the
next succeeding business day. But, if the court
fixes the trial of a case on a certain day but the
said date is subsequently declared a public
holiday, the trial thereof is not automatically
transferred to the next succeeding business day.
Since April 10, 1961 was not the day or the last
day set by law for the extrajudicial foreclosure
sale, nor the last day of a given period but a date
fixed by the deputy sheriff, the aforesaid sale
cannot legally be made on the next succeeding
business day without the notices of the sale on
that day being posted as prescribed in Section 9,
Act No. 3135.
Pp v Del Rosario
Facts: An information was filed in the
Municipal Court of Pasay City charging Paz M.
del Rosario with slight physical injuries
committed on the 28th day of May, 1953. The
accused thereupon presented a motion to quash
the information on the ground that the offense
charged had already prescribed in accordance
with the provisions of Articles 90 and 91 of the
Revised Penal Code. The municipal court
sustained this motion and dismissed the case.
Against the order of dismissal appeal is made
directly to this Court under the provisions of
section 17, sub-paragraph 6 of the Judiciary Act
of 1948 as only questions of law are involved in
the appeal.
The pertinent provisions of Articles 90 and 91 of
the Revised Penal Code are as follows:
ART. 90. Prescription of crimes. . . . .
The offenses of oral defamation and slander by
deed shall prescribe in six months.
Light offenses prescribe in two months.
ART. 91. Computation of prescription of
offenses. The period of prescription shall
commence to run from the day on which the
crime is discovered by the offended party, the
authorities or their agents,
The court a quo held that in accordance with
Article 13 of the new Civil Code the "month"
mentioned in Article 90 of the Revised Penal
Code should be one of 30 days, and since the
period of prescription commences to run from
the day "on which the crime is discovered by the
offended party," i.e., in this case on May 28,
1953 when it was committed, the two months
period provided for the prescription of the
offense already expired when the information
was filed, because the filing was on the 61st day.
The Solicitor General in this appeal argues that
in the same manner that Article 13 of the new
Civil Code is applied to determine the length of
the two months period required for the
prescription of the offense, its provision (of the
said Article 13) contained in paragraph 3 which
reads "In computing a period, the first day shall
be excluded, and the last day included" should
also be applied, so that the information should
be considered as filed on the 60th day and not on
the 61st day after the offense has been
committed.
Issue:
1.Whether the prescriptive period should
commence from the very day on which the
crime was committed, or from the day following
that in which it was committed, in accordance
with the third paragraph of Article 13 of the
Civil Code of the Philippines, and second,
2.Whether the term "month" in the Revised
Penal Code should be understood to be a month
of 30 days, instead of the civil calendar or
calendar month.
Ruling: The petition is granted
1. As to the first question, we note that Article
91 of the Revised Penal Code provides that the
period shall commence to run from the day on
which the offense is committed or discovered.
The title indicates that the provision merely
purports to prescribe the manner of computing
the period of prescription. In the computation of
a period of time within which an act is to be
done, the law in this jurisdiction has always
directed the first day be excluded and the last
included.
It is logical to presume, therefore, that the
Legislature in enacting Article 91 of the Revised
Penal Code meant or intended to mean that in
the computation of the period provided for
therein, the first day is to be excluded and the
last one to be included, in accord with existing
laws.
We find much sense in the argument of the
Solicitor General that if the Civil Code of the
Philippines is to be resorted to in the
interpretation of the length of the month, so
should it be resorted to in the computation of the
period of prescription. Besides, Article 18 of the
Civil Code (Article 16 of the old Civil Code)
expressly directs that any deficiency in any
special law (such as the Revised Penal Code)
must be supplied by its provisions. As the
Revised Penal Code is deficient in that it does
not explicitly define how the period is to be
computed, resort must be had to its Article 13,
which contains in detail the manner of
computing a period. We find, therefore, that the
trial court committed error in not excluding the
first day in the computation of the period of
prescription of the offense.
2. It is to be noted that no provision of the
Revised Penal Code defines the length of the
month. Article 7 of the old Civil Code provided
that a month shall be understood as containing
30 days; but this concept was modified by
section 13 of the Revised Administrative Code
which provides that a month means the civil or
calendar month and not the regular 30-day
month (Gutierrez vs. Carpio, 53 Phil., 334).
With the approval of the Civil Code of the
Philippines (R.A. No. 386), however, we have
reverted to the provisions of the Spanish Civil
Code in accordance with which a month is to be
considered as the regular 30-day month (Article
13). This provision of the new Civil Code has
been intended for general application in the
interpretation of the laws. As the offense
charged in the information in the case at bar took
place on May 28, 1953, after the new Civil Code
had come to effect, this new provision should
apply, and in accordance therewith the month in
Article 90 of the Revised Penal Code should be
understood to mean the regular 30 day
month.
We hold, therefore, that the offense charged in
the information prescribed in 60 days, said
period to be counted by excluding May 28, the
commission of the offense, and we find that
when the information was filed on July 27, 1953
the offense had not yet been prescribed because
July 27 is the sixtieth day from May 29.
ABS CBN V Tax of CA
Facts: This is a Petition for Review on certiorari
of the Decision of the Court of Tax Appeals in
C.T.A. Case No. 2809, dated November 29,
1979, which affirmed the assessment by the
Commissioner of Internal Revenue, dated April
16, 1971, of a deficiency withholding income
tax against petitioner, ABS-CBN Broadcasting
Corporation,
During the period pertinent to this case,
petitioner corporation was engaged in the
business of telecasting local as well as foreign
films acquired from foreign corporations not
engaged in trade or business within the
Philippines. for which petitioner paid rentals
after withholding income tax of 30%of one-half
of the film rentals.
In so far as the income tax on non-resident
corporations is concerned, section 24 (b) of the
National Internal Revenue Code, as amended by
Republic Act No. 2343 dated June 20, 1959
On April 12, 1961, in implementation of the
aforequoted provision, the Commissioner of
Internal Revenue issued General Circular No. V-
334
In connection with Section 24 (b) of Tax Code,
the amendment introduced by Republic Act No.
2343, under which an income tax equal to 30%
is levied upon the amount received by every
foreign corporation not engaged in trade or
business within the Philippines from all sources
within this country as interest, dividends, rents,
salaries, wages, premiums, annuities,
compensations, remunerations, emoluments, or
other fixed or determinable annual or periodical
gains, profits, and income, it has been
determined that the tax is still imposed on
income derived from capital, or labor, or both
combined, in accordance with the basic
principle of income taxation (Sec. 39, Income
Tax Regulations), and that a mere return of
capital or investment is not income (Par. 5,06, 1
Mertens Law of Federal 'Taxation). Since
according to the findings of the Special Team
who inquired into business of the non-resident
foreign film distributors, the distribution or
exhibition right on a film is invariably acquired
for a consideration, either for a lump sum or a
percentage of the film rentals, whether from a
parent company or an independent outside
producer, apart of the receipts of a non-resident
foreign film distributor derived from said film
represents, therefore, a return of investment.
xxxxxx
4.The local distributor should withhold 30% of
one-half of the film rentals paid to the non-
resident foreign film distributor and pay the
same to this office in accordance with law unless
the non- resident foreign film distributor makes
a prior settlement of its income tax liability
Pursuant to the foregoing, petitioner dutifully
withheld and turned over to the Bureau of
Internal Revenue the amount of 30% of one-half
of the film rentals paid by it to foreign
corporations not engaged in trade or business
within the Philippines. The last year that
petitioner withheld taxes pursuant to the
foregoing Circular was in 1968.
On June 27, 1968, Republic Act No. 5431
amended Section 24 (b) of the Tax Code
increasing the tax rate from 30 % to 35 % and
revising the tax basis from "such amount"
referring to rents
On February 8, 1971, the Commissioner of
Internal Revenue issued Revenue Memorandum
Circular No. 4-71, revoking General Circular
No. V-334, and holding that the latter was
"erroneous for lack of legal basis," because "the
tax therein prescribed should be based on gross
income without deduction whatever,
On the basis of this new Circular, respondent
Commissioner of Internal Revenue issued
against petitioner a letter of assessment and
demand dated April 15, 1971, but allegedly
released by it and received by petitioner on April
12, 1971, requiring them to pay deficiency
withholding income tax on the remitted film
rentals for the years 1965 through 1968 and film
royalty as of the end of 1968 in the total amount
of P525,897.06
On May 5, 1971, petitioner requested for a
reconsideration and withdrawal of the
assessment. However, without acting thereon,
respondent, on April 6, 1976, issued a warrant of
distraint and levy over petitioner's personal as
well as real properties. The petitioner then filed
its Petition for Review with the Court of Tax
Appeals whose Decision, dated November 29,
1979, is, in turn, the subject of this review.
The tax court hold in favor of the respondent
Commissioner of Internal Revenue
Issue: Whether or not respondent can apply
General Circular No. 4-71 retroactively and
issue a deficiency assessment against petitioner.
Ruling: The petition is granted.
It is clear from the foregoing that rulings or
circulars promulgated by the Commissioner of
Internal Revenue have no retroactive application
where to so apply them would be prejudicial to
taxpayers. The prejudice to petitioner of the
retroactive application of Memorandum Circular
No. 4-71 is beyond question. It was issued only
in 1971, or three years after 1968, the last year
that petitioner had withheld taxes under General
Circular No. V-334. The assessment and
demand on petitioner to pay deficiency
withholding income tax was also made three
years after 1968 for a period of time
commencing in 1965. Petitioner was no longer
in a position to withhold taxes due from foreign
corporations because it had already remitted all
film rentals and no longer had any control over
them when the new Circular was issued. And in
so far as the enumerated exceptions are
concerned, admittedly, petitioner does not fall
under any of them.
Respondent claims, however, that the provision
on non-retroactivity is inapplicable in the
present case in that General Circular No. V-334
is a nullity because in effect, it changed the law
on the matter. The Court of Tax Appeals
sustained this position holding that: "Deductions
are wholly and exclusively within the power of
Congress or the law-making body to grant,
condition or deny; and where the statute imposes
a tax equal to a specified rate or percentage of
the gross or entire amount received by the
taxpayer, the authority of some administrative
officials to modify or change, much less reduce,
the basis or measure of the tax should not be
read into law." 4 Therefore, the Tax Court
concluded, petitioner did not acquire any vested
right thereunder as the same was a nullity.
Were the "gross income" base clear from Sec. 24
(b), perhaps, the ratiocination of the Tax Court
could be upheld. It should be noted, however,
that said Section was not too plain and simple to
understand. The fact that the issuance of the
General Circular in question was rendered
necessary leads to no other conclusion than that
it was not easy of comprehension and could be
subjected to different interpretations.
In fact, Republic Act No. 2343, dated June 20,
1959, supra, which was the basis of General
Circular No. V-334, was just one in a series of
enactments regarding Sec. 24 (b) of the Tax
Code. Republic Act No. 3825 came next on June
22, 1963 without changing the basis but merely
adding a proviso
(b) Tax on foreign corporation.(1) Non-resident
corporations. There shall be levied, collected and
paid for each taxable year, in lieu of the tax imposed
by the preceding paragraph, upon the amount
received by every foreign corporation not engaged in
trade or business within the Philippines, from all
sources within the Philippines, as interest, dividends,
rents, salaries, wages, premiums annuities,
compensations, remunerations, emoluments, or other
fixed or determinable annual or periodical gains,
profits, and income, a tax equal to thirty per centum of
such amount: PROVIDED, HOWEVER, THAT
PREMIUMS SHALL NOT INCLUDE REINSURANCE
PREMIUMS.
Republic Act No. 3841, dated likewise on June
22, 1963, followed after, omitting the proviso
and inserting some words (also in bold letters).
(b) Tax on foreign corporations.(1) Non-
resident corporations.There shall be levied,
collected and paid for each taxable year, in
lieu of the tax imposed by the preceding
paragraph, upon the amount received by
every foreign corporation not engaged in trade
or business within the Philippines, from all
sources within the Philippines, as interest,
dividends, rents, salaries, wages, premiums,
annuities, compensations, remunerations,
emoluments, or other fixed or determinable
annual or periodical OR CASUAL gains,
profits and income, AND CAPITAL GAINS, a
tax equal to thirty per centum of such amount.
The principle of legislative approval of
administrative interpretation by re-enactment
clearly obtains in this case. It provides that "the
re-enactment of a statute substantially
unchanged is persuasive indication of the
adoption by Congress of a prior executive
construction. Note should be taken of the fact
that this case involves not a mere opinion of the
Commissioner or ruling rendered on a mere
query, but a Circular formally issued to "all
internal revenue officials" by the then
Commissioner of Internal Revenue.
Any rulings or circulars promulgated by the CIR
have no retroactive application when it would be
prejudicial to taxpayers. The retroactive
application of Memorandum Circular No. 4-71
prejudices ABS-CBN since:
1. The assessment and demand on petitioner to
pay deficiency withholding income tax was also
made three years after 1968 for a period of time
commencing in 1965.
2. ABS-CBN was no longer in a position to the language of the statute clearly demands or
withhold taxes due from foreign corporations expresses that it shall have retroactive effect
because it had already remitted all film rentals Act No. 3606 does not contain any provisions
and no longer had any control over them when indicating a legislative intent to give it a
the new Circular was issued. retroactive effect. Therefore, the provisions of
Act No. 3606 cannot be applied to the case at
bar.
Lorenzo v Posadas
Facts: Herein petitioner Lorenzo, in his capacity
as trustee of the estate of a certain Thomas
Hanley, deceased, brought an action against
respondent Posadas, Collector of Internal
Revenue. Petitioner alleges the respondent to
have exceeded in its tax collection, which, as
assessed by the former, should only be in the
amount of PhP1,434.24 instead of PhP2,052.74.
Disregarding the allegation, respondent filed a
motion in the CFI of Zamboanga praying that
the trustee be made to pay such tax. The motion
was granted. Petitioner paid the amount in
protest, however notified the respondent that
until a refund is prompted, suit would be bought
for its recovery. Respondent overruled the
protest. Hence, the case at bar.
Issue/s:
Whether or not the provisions of Act No. 3606
(Tax Law) which is favorable to the taxpayer be
given retroactive effect?
Held and Reasoning: No. The respondent
levied and assessed the inheritance tax collected
from the petitioner under the provisions of
section 1544 of the Revised Administrative
Code as amended by Act No. 3606. However,
the latter only enacted in 1930 not the law in
force when the testator died in 1922. Laws
cannot be applied retroactively. The Court states
that it is a well-settled principle that inheritance
taxation is governed by the statue in force at the
time of the death of the decendent. The Court
also emphasized that a statute should be
considered as prospective in its operation, unless