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People vs.

Purisima (Statutory Construction) Issue:

Facts: Are the information filed by the people sufficient in form and substance to constitute
the offense of “Illegal possession of deadly weapon” penalized under Presidential Decree No.
These twenty-six (26) Petitions for Review filed by the People of the Philippines 9?
represented, respectively, by the Office of the City Fiscal of Manila, the Office of the
Provincial Fiscal of Samar, and joined by the Solicitor General, are consolidated in this one Held:
Decision as they involve one basic question of law.
1. It is the constitutional right of any person who stands charged in a criminal
The respondent-courts are: CFI of Manila Branches VII and XVIII and CFI of Samar prosecution to be informed of the nature and cause of the accusation against him.

Several information were filed before the abovementioned courts charging the 2. Under Sec. 5 Rule 110 of the Rules of Court, for a complaint or information to be
accused of Illegal Possession of Deadly Weapon in violation of Presidential Decree #9. The sufficient, it must state the designation of the offense by the statute and the acts or
counsel of the defense filed motions to quash the said information after which the omissions complained of as constituting the offense. This is essential to avoid surprise on the
respondent-courts passed their own orders quashing the said information on common accused and to afford him the opportunity to prepare his defense accordingly.
ground that the information did not allege facts constituting any offense penalized until PD#9
for failure to state an essential element of the crime, which is, that the carrying outside of 3. The Supreme Court says that the preamble of PD#9 states that the intention of
the accused’s residence of a bladed, pointed, or blunt weapon is in furtherance or on the such decree is to penalize the acts which are related to Proc.1081 which aim to suppress
occasion of, connected with, or related to subversion, insurrection, or rebellion, organized lawlessness, rebellion, subversive acts, and the like. While the preamble is not a part of the
lawlessness or public disorder. statute, it implies the intent and spirit of the decree. The preamble and whereas clauses also
enumerate the facts or events which justify the promulgation of the decree and the stiff
The respondent courts stand that PD#9 should be read in the context of Proc.1081 sanctions provided.
which seeks to maintain law and order in the country as well as the prevention and
suppression of all forms of lawless violence. The non-inclusion of the aforementioned The petition is DISMISSED.
element may not be distinguished from other legislation related to the illegal possession of
deadly weapons. Judge Purisima, in particular, reasoned that the information must allege
that the purpose of possession of the weapon was intended for the purposes of abetting the
conditions of criminality, organized lawlessness, public disorder. The petitioners said that the
purpose of subversion is not necessary in this regard because the prohibited act is basically a
malum prohibitum or is an action or conduct that is prohibited by virtue of a statute. The City
Fiscal also added in cases of statutory offenses, the intent is immaterial and that the
commission of the act is voluntary is enough.
Republic of the Philippines THE PEOPLE OF THE PHILIPPINES, petitioner,
SUPREME COURT vs.
Manila THE HONORABLE WENCESLAO M. POLO, Judge of the Court of First Instance
of Samar, and PANCHITO REFUNCION, respondents.
EN BANC
Jose L. Gamboa, Fermin Martin, Jr. & Jose D. Cajucom, Office of the City of Fiscal of
G.R. No. L-42050-66 November 20, 1978 Manila and the Office of Provincial Fiscal of Samar for petitioners.

THE PEOPLE OF THE PHILIPPINES, petitioner, Norberto Parto for respondents Candelosas, Baes and Garcia.
vs.
HONORABLE JUDGE AMANTE P. PURISIMA, COURT OF FIRST INSTANCE OF Amado C. de la Marced for respondents Simeon Bundalian Jr., et al.
MANILA, BRANCH VII, and PORFIRIO CANDELOSAS, NESTOR BAES, ELIAS L.
GARCIA, SIMEON BUNDALIAN, JR., JOSEPH C. MAISO, EDUARDO A. Manuel F. de Jesus for all the respondents in L-46229-32 and L-46313-16.
LIBORDO, ROMEO L. SUGAY, FEDERICO T. DIZON, GEORGE M. ALBINO,
MARIANO COTIA, JR., ARMANDO L. DIZON, ROGELIO B. PARENO, RODRIGO Norberto L. Apostol for respondent Panchito Refuncion.
V. ESTRADA, ALFREDO A. REYES, JOSE A. BACARRA, REYNALDO
BOGTONG, and EDGARDO M. MENDOZA, respondents. Hon. Amante P. Purisima for and in his own behalf.

G.R. No. L-46229-32 November 20, 1978 MUÑOZ PALMA, J.:

THE PEOPLE OF THE PHILIPPINES, petitioner, These twenty-six (26) Petitions for Review filed by the People of the Philippines
vs. represented, respectively, by the Office of the City Fiscal of Manila, the Office of the
JUDGE MAXIMO A. MACEREN, COURT OF FIRST INSTANCE OF MANILA, Provincial Fiscal of Samar, and joined by the Solicitor General, are consolidated in
BRANCH XVIII, and REYNALDO LAQUI Y AQUINO, ELPIDIO ARPON, VICTOR this one Decision as they involve one basic question of law.
EUGENIO Y ROQUE and ALFREDO VERSOZA, respondents.
These Petitions or appeals involve three Courts of First Instance, namely: the Court of
G.R. No. L-46313-16 November 20, 1978 First Instance of Manila, Branch VII, presided by Hon. Amante P. Purisima (17
Petitions), the Court of First Instance of Manila, Branch XVIII, presided by Hon.
THE PEOPLE OF THE PHILIPPINES, petitioner, Maximo A. Maceren (8 Petitions) and, the Court of First Instance of Samar, with Hon.
vs. Wenceslao M. Polo, presiding, (1 Petition).
JUDGE MAXIMO A. MACEREN, COURT OF FIRST INSTANCE OF MANILA,
BRANCH XVIII, and JUANITO DE LA CRUZ Y NUNEZ, SABINO BUENO Y Before those courts, Informations were filed charging the respective accused with
CACAL, TIRSO ISAGAN Y FRANCISCO and BEN CASTILLO Y "illegal possession of deadly weapon" in violation of Presidential Decree No. 9. On a
UBALDO, respondents. motion to quash filed by the accused, the three Judges mentioned above issued in
the respective cases filed before them — the details of which will be recounted below
G.R. No. L-46997 November 20, 1978 — an Order quashing or dismissing the Informations, on a common ground, viz, that
the Information did not allege facts which constitute the offense penalized by the said weapon not being used as a tool or implement necessary to
Presidential Decree No. 9 because it failed to state one essential element of the earn his livelihood nor being used in connection therewith.
crime.
Contrary to law. (p. 32, rollo of L-42050-66)
Thus, are the Informations filed by the People sufficient in form and substance to
constitute the offense of "illegal possession of deadly weapon" penalized under The other Informations are similarly worded except for the name of the accused, the
Presidential Decree (PD for short) No. 9? This is the central issue which we shall date and place of the commission of the crime, and the kind of weapon involved.
resolve and dispose of, all other corollary matters not being indispensable for the
moment. 2. In L-46229-32 and L-46313-16, the Information filed with the Court presided by
Judge Maceren follows:
A — The Information filed by the People —
THE PEOPLE OF THE PHILIPPINES, plaintiff, versus REYNALDO
1. In L-42050-66, one typical Information filed with the Court presided by Judge LAQUI Y AQUINO, accused.
Purisima follows:
CRIM. CASE NO. 29677
THE PEOPLE OF THE PHILIPPINES, plaintiff, versus PORFIRIO
CANDELOSAS Y DURAN, accused. VIOL. OF PAR. 3,

Crim. Case No. 19639 PD 9 IN REL. TO LOI

VIOLATION OF PAR. 3, PRES. DECREE No. 9 OF PROCLAMATION No. 266 of the Chief
1081
Executive dated April 1, 1975
INFORMATION
INFORMATION
The undersigned accuses PORFIRIO CANDELOSAS Y DURAN of a
violation of paragraph 3, Presidential Decree No. 9 of Proclamation The undersigned accuses REYNALDO LAQUI Y AQUINO of a
1081, committed as follows: VIOLATION OF PARAGRAPH 3, PRESIDENTIAL DECREE NO. 9 in
relation to Letter of Instruction No. 266 of the Chief Executive dated
That on or about the 14 th day of December, 1974, in the City of April 1, 1975, committed as follows:
Manila, Philippines, the said accused did then and there wilfully,
unlawfully, feloniously and knowingly have in his possession and under That on or about the 28 th day of January, 1977, in the City of Manila,
his custody and control one (1) carving knife with a blade of 6-½ Philippines, the said accused did then and there wilfully, unlawfully and
inches and a wooden handle of 5-1/4 inches, or an overall length of knowingly carry outside of his residence a bladed and pointed weapon,
11-¾ inches, which the said accused carried outside of his residence, to wit: an ice pick with an overall length of about 8½ inches, the same
not being used as a necessary tool or implement to earn his livelihood abovenamed accused, knowingly, wilfully, unlawfully and feloniously
nor being used in connection therewith. carried with him outside of his residence a deadly weapon called
socyatan, an instrument which from its very nature is no such as could
Contrary to law. (p. 14, rollo of L-46229-32) be used as a necessary tool or instrument to earn a livelihood, which
act committed by the accused is a Violation of Presidential Decree No.
The other Informations are likewise similarly worded except for the name of the 9.
accused, the date and place of the commission of the crime, and the kind of weapon
involved. CONTRARY TO LAW. (p. 8, rollo of L-46997)

3. In L-46997, the Information before the Court of First Instance of Samar is quoted B. — The Orders of dismissal —
hereunder:
In dismissing or quashing the Informations the trial courts concurred with the
PEOPLE OF THE PHILIPPINES, complainant, versus PANCHITO submittal of the defense that one essential element of the offense charged is missing
REFUNCION, accused. from the Information, viz: that the carrying outside of the accused's residence of a
bladed, pointed or blunt weapon is in furtherance or on the occasion of, connected
CRIM. CASE NO. 933 with or related to subversion, insurrection, or rebellion, organized lawlessness or
public disorder.
For:
1. Judge Purisima reasoned out, inter alia, in this manner:
ILLEGAL POSSESSION OF
... the Court is of the opinion that in order that possession of bladed
DEADLY WEAPON weapon or the like outside residence may be prosecuted and tried
under P.D. No. 9, the information must specifically allege that the
(VIOLATION OF PD NO. 9) possession of bladed weapon charged was for the purpose of abetting,
or in furtherance of the conditions of rampant criminality, organized
lawlessness, public disorder, etc. as are contemplated and recited in
INFORMATION
Proclamation No. 1081, as justification therefor. Devoid of this specific
allegation, not necessarily in the same words, the information is not
The undersigned First Assistant Provincial Fiscal of Samar, accuses complete, as it does not allege sufficient facts to constitute the offense
PANCHITO REFUNCION of the crime of ILLEGAL POSSESSION OF contemplated in P.D. No. 9. The information in these cases under
DEADLY WEAPON or VIOLATION OF PD NO. 9 issued by the consideration suffer from this defect.
President of the Philippines on Oct. 2, 1972, pursuant to Proclamation
No. 1081 dated Sept. 21 and 23, 1972, committed as follows:
xxx xxx xxx
That on or about the 6th day of October, 1976, in the evening at
And while there is no proof of it before the Court, it is not difficult to
Barangay Barruz, Municipality of Matuginao, Province of Samar
believe the murmurings of detained persons brought to Court upon a
Philippines, and within the jurisdiction of this Honorabe Court, the
charge of possession of bladed weapons under P.D. No. 9, that more by the fact that all previously existing laws that also made the carrying
than ever before, policemen - of course not all can be so heartless — of similar weapons punishable have not been repealed, whether
now have in their hands P.D. No. 9 as a most convenient tool for expressly or impliedly. It is noteworthy that Presidential Decree No. 9
extortion, what with the terrifying risk of being sentenced to does not contain any repealing clause or provisions.
imprisonment of five to ten years for a rusted kitchen knife or a pair of
scissors, which only God knows where it came from. Whereas before xxx xxx xxx
martial law an extortion-minded peace officer had to have a stock of
the cheapest paltik, and even that could only convey the coercive The mere carrying outside of one's residence of these deadly weapons
message of one year in jail, now anything that has the semblance of a if not concealed in one's person and if not carried in any of the
sharp edge or pointed object, available even in trash cans, may aforesaid specified places, would appear to be not unlawful and
already serve the same purpose, and yet five to ten times more punishable by law.
incriminating than the infamous paltik.
With the promulgation of Presidential Decree No. 9, however, the
For sure, P.D. No. 9 was conceived with the best of intentions and prosecution, through Assistant Fiscal Hilario H. Laqui, contends in his
wisely applied, its necessity can never be assailed. But it seems it is opposition to the motion to quash, that this act is now made unlawful
back-firing, because it is too hot in the hands of policemen who are and punishable, particularly by paragraph 3 thereof, regardless of the
inclined to backsliding. intention of the person carrying such weapon because the law makes it
"mala prohibita". If the contention of the prosecution is correct, then if a
The checkvalves against abuse of P.D. No. 9 are to be found in the person happens to be caught while on his way home by law
heart of the Fiscal and the conscience of the Court, and hence this enforcement officers carrying a kitchen knife that said person had just
resolution, let alone technical legal basis, is prompted by the desire of bought from a store in order that the same may be used by one's cook
this Court to apply said checkvalves. (pp. 55-57, rollo of L-42050-66) for preparing the meals in one's home, such person will be liable for
punishment with such a severe penalty as imprisonment from five to
2. Judge Maceren in turn gave his grounds for dismissing the charges as follows: ten years under the decree. Such person cannot claim that said knife
is going to be used by him to earn a livelihood because he intended it
xxx xxx xxx merely for use by his cook in preparing his meals.

As earlier noted the "desired result" sought to be attained by This possibility cannot be discounted if Presidential Decree No. 9 were
Proclamation No. 1081 is the maintenance of law and order throughout to be interpreted and applied in the manner that that the prosecution
the Philippines and the prevention and suppression of all forms of wants it to be done. The good intentions of the President in
lawless violence as well as any act of insurrection or rebellion. It is promulgating this decree may thus be perverted by some
therefore reasonable to conclude from the foregoing premises that the unscrupulous law enforcement officers. It may be used as a tool of
carrying of bladed, pointed or blunt weapons outside of one's oppression and tyranny or of extortion.
residence which is made unlawful and punishable by said par. 3 of
P.D. No. 9 is one that abets subversion, insurrection or rebellion, xxx xxx xxx
lawless violence, criminality, chaos and public disorder or is intended
to bring about these conditions. This conclusion is further strengthened
It is therefore the considered and humble view of this Court that the act accused was arraigned but at the same time moved to quash the Information. In all
which the President intended to make unlawful and punishable by the cases where the accused were under arrest, the three Judges ordered their
Presidential Decree No. 9, particularly by paragraph 3 thereof, is one immediate release unless held on other charges.
that abets or is intended to abet subversion, rebellion, insurrection,
lawless violence, criminality, chaos and public disorder. (pp. 28-30, C. — The law under which the Informations in question were filed by the People.
rollo of L-46229-32)
As seen from the Informations quoted above, the accused are charged with illegal
3. Judge Polo of the Court of First Instance of Samar expounded his order dismissing possession of deadly weapon in violation of Presidential Decree No. 9, Paragraph 3.
the Information filed before him, thus:
We quote in full Presidential Decree No. 9, to wit:
... We believe that to constitute an offense under the aforcited
Presidential decree, the same should be or there should be an PRESIDENTIAL DECREE NO. 9
allegation that a felony was committed in connection or in furtherance
of subversion, rebellion, insurrection, lawless violence and public DECLARING VIOLATIONS OF GENERAL ORDERS NO. 6 and NO. 7
disorder. Precisely Proclamation No. 1081 declaring a state of martial DATED SEPTEMBER 22, 1972, AND SEPTEMBER 23, 1972,
law throughout the country was issued because of wanton destruction RESPECTIVELY, TO BE UNLAWFUL AND PROVIDING PENALTIES
to lives and properties widespread lawlessness and anarchy. And in THEREFORE.
order to restore the tranquility and stability of the country and to secure
the people from violence anti loss of lives in the quickest possible WHEREAS, pursuant to Proclamation No. 1081 dated September 21,
manner and time, carrying firearms, explosives and deadly weapons 1972, the Philippines has been placed under a state of martial law;
without a permit unless the same would fall under the exception is
prohibited. This conclusion becomes more compelling when we
WHEREAS, by virtue of said Proclamation No. 1081, General Order
consider the penalty imposable, which is from five years to ten years.
No. 6 dated September 22, 1972 and General Order No. 7 dated
A strict enforcement of the provision of the said law would mean the
September 23, 1972, have been promulgated by me;
imposition of the Draconian penalty upon the accused.
WHEREAS, subversion, rebellion, insurrection, lawless violence,
xxx xxx xxx
criminality, chaos and public disorder mentioned in the aforesaid
Proclamation No. 1081 are committed and abetted by the use of
It is public knowledge that in rural areas, even before and during firearms, explosives and other deadly weapons;
martial law, as a matter of status symbol, carrying deadly weapons is
very common, not necessarily for committing a crime nor as their farm
NOW, THEREFORE, I, FERDINAND E. MARCOS, Commander-in-
implement but for self-preservation or self-defense if necessity would
Chief of all the Armed Forces of the Philippines, in older to attain the
arise specially in going to and from their farm. (pp. 18-19, rollo of L-
desired result of the aforesaid Proclamation No. 1081 and General
46997)
Orders Nos. 6 and 7, do hereby order and decree that:
In most if not all of the cases, the orders of dismissal were given before arraignment
of the accused. In the criminal case before the Court of (First Instance of Samar the
1. Any violation of the aforesaid General Orders Nos. 6 and 7 is shall be punished by imprisonment ranging from ten to fifteen years as
unlawful and the violator shall, upon conviction suffer: a Military Court/Tribunal/Commission may direct.

(a) The mandatory penalty of death by a firing squad or electrocution 3. It is unlawful to carry outside of residence any bladed, pointed or
as a Military, Court/Tribunal/Commission may direct, it the firearm blunt weapon such as "fan knife," "spear," "dagger," "bolo," "balisong,"
involved in the violation is unlicensed and is attended by assault upon, "barong," "kris," or club, except where such articles are being used as
or resistance to persons in authority or their agents in the performance necessary tools or implements to earn a livelihood and while being
of their official functions resulting in death to said persons in authority used in connection therewith; and any person found guilty thereof shall
or their agent; or if such unlicensed firearm is used in the commission suffer the penalty of imprisonment ranging from five to ten years as a
of crimes against persons, property or chastity causing the death of the Military Court/Tribunal/Commission may direct.
victim used in violation of any other General Orders and/or Letters of
Instructions promulgated under said Proclamation No. 1081: 4. When the violation penalized in the preceding paragraphs 2 and 3 is
committed during the commission of or for the purpose of committing,
(b) The penalty of imprisonment ranging from twenty years to life any other crime, the penalty shall be imposed upon the offender in its
imprisonment as a Military Court/Tribunal/commission may direct, maximum extent, in addition to the penalty provided for the particular
when the violation is not attended by any of the circumstances offenses committed or intended to be committed.
enumerated under the preceding paragraph;
Done in the City of Manila, this 2nd day of October in the year of Our
(c) The penalty provided for in the preceding paragraphs shall be Lord, nineteen hundred and seventy-two.
imposed upon the owner, president, manager, members of the board
of directors or other responsible officers of any public or private firms, (SGD) FERDINAND E. MARCOS
companies, corporations or entities who shall willfully or knowingly
allow any of the firearms owned by such firm, company, corporation or President
entity concerned to be used in violation of said General Orders Nos. 6
and 7. Republic of the Philippines

2. It is unlawful to posses deadly weapons, including hand grenades, D. — The arguments of the People —
rifle grenades and other explosives, including, but not limited to, "pill
box bombs," "molotov cocktail bombs," "fire bombs," or other In the Comment filed in these cases by the Solicitor General who as stated earlier
incendiary device consisting of any chemical, chemical compound, or joins the City Fiscal of Manila and the Provincial Fiscal of Samar in seeking the
detonating agents containing combustible units or other ingredients in setting aside of the questioned orders of dismissal, the main argument advanced on
such proportion, quantity, packing, or bottling that ignites by fire, by the issue now under consideration is that a perusal of paragraph 3 of P.D. 9 'shows
friction, by concussion, by percussion, or by detonation of all or part of that the prohibited acts need not be related to subversive activities; that the act
the compound or mixture which may cause such a sudden generation proscribed is essentially a malum prohibitum penalized for reasons of public policy.1
of highly heated gases that the resultant gaseous pressures are
capable of producing destructive effects on continguous objects or of
causing injury or death of a person; and any person convicted thereof
The City Fiscal of Manila in his brief adds further that in statutory offenses the Ordinance No. 3820 of the City of Manila as amended by Ordinance No. 3928 which
intention of the accused who commits the act is immaterial; that it is enough if the took effect on December 4, 1957, in turn penalizes with a fine of not more than
prohibited act is voluntarily perpetuated; that P.D. 9 provides and condemns not only P200.00 or imprisonment for not more than one months, or both, at the discretion of
the carrying of said weapon in connection with the commission of the crime of the court, anyone who shall carry concealed in his person in any manner that would
subversion or the like, but also that of criminality in general, that is, to eradicate disguise its deadly character any kind of firearm, bowie knife, or other deadly weapon
lawless violence which characterized pre-martial law days. It is also argued that the ... in any public place. Consequently, it is necessary that the particular law violated be
real nature of the criminal charge is determined not from the caption or preamble of specified as there exists a substantial difference between the statute and city
the information nor from the specification of the provision of law alleged to have been ordinance on the one hand and P.D. 9 (3) on the other regarding the circumstances of
violated but by the actual recital of facts in the complaint or information.2 the commission of the crime and the penalty imposed for the offense.

E. — Our Ruling on the matter — We do not agree with petitioner that the above-mentioned statute and the city
ordinance are deemed repealed by P.D. 9 (3). 5 P. D. 9(3) does not contain any
1. It is a constitutional right of any person who stands charged in a criminal repealing clause or provision, and repeal by implication is not favored. 6 This principle
prosecution to be informed of the nature and cause of the accusation against him.3 holds true with greater force with regards to penal statutes which as a rule are to be
construed strictly against the state and liberally in favor of the accused. 7 In fact,
Pursuant to the above, Section 5, Rule 110 of the Rules of Court, expressly requires Article 7 of the New Civil Code provides that laws are repealed only by subsequent
that for a complaint or information to be sufficient it must, inter alia state the ones and their violation or non- observance shall not be excused by disuse, or
designation of the offense by the statute, and the acts or omissions complained of as custom or practice to the contrary.
constituting the offense. This is essential to avoid surprise on the accused and to
afford him the opportunity to prepare his defense accordingly. 4 Thus we are faced with the situation where a particular act may be made to fall, at the
discretion of a police officer or a prosecuting fiscal, under the statute, or the city
To comply with these fundamental requirements of the Constitution and the Rules on ordinance, or the presidential decree. That being the case, the right becomes more
Criminal Procedure, it is imperative for the specific statute violated to be designated compelling for an accused to be confronted with the facts constituting the essential
or mentioned 4 in the charge. In fact, another compelling reason exists why a elements of the offense charged against him, if he is not to become an easy pawn of
specification of the statute violated is essential in these cases. As stated in the order oppression and harassment, or of negligent or misguided official action — a fear
of respondent Judge Maceren the carrying of so-called "deadly weapons" is the understandably shared by respondent Judges who by the nature of their judicial
subject of another penal statute and a Manila city ordinance. Thus, Section 26 of Act functions are daily exposed to such dangers.
No. 1780 provides:
2. In all the Informations filed by petitioner the accused are charged in the caption as
Section 26. It should be unlawful for any person to carry concealed well as in the body of the Information with a violation of paragraph 3, P.D. 9. What
about his person any bowie knife, dirk dagger, kris, or other deadly then are the elements of the offense treated in the presidential decree in question?
weapon: ... Any person violating the provisions of this section shall,
upon conviction in a court of competent jurisdiction, be punished by a We hold that the offense carries two elements: first, the carrying outside one's
fine not exceeding five hundred pesos, or by imprisonment for a period residence of any bladed, blunt, or pointed weapon, etc. not used as a necessary tool
not exceeding six months, or both such fine and imprisonment, in the or implement for a livelihood; and second, that the act of carrying the weapon was
discretion of the court. either in furtherance of, or to abet, or in connection with subversion, rebellion,
insurrection, lawless violence, criminality, chaos, or public disorder.
It is the second element which removes the act of carrying a deadly weapon, if The Solicitor General however contends that a preamble of a statute usually
concealed, outside of the scope of the statute or the city ordinance mentioned above. introduced by the word "whereas", is not an essential part of an act and cannot
In other words, a simple act of carrying any of the weapons described in the enlarge or confer powers, or cure inherent defects in the statute (p. 120, rollo of L-
presidential decree is not a criminal offense in itself. What makes the act criminal or 42050-66); that the explanatory note or enacting clause of the decree, if it indeed
punishable under the decree is the motivation behind it. Without that motivation, the limits the violation of the decree, cannot prevail over the text itself inasmuch as such
act falls within the purview of the city ordinance or some statute when the explanatory note merely states or explains the reason which prompted the issuance
circumstances so warrant. of the decree. (pp. 114-115, rollo of 46997)

Respondent Judges correctly ruled that this can be the only reasonably, logical, and We disagree with these contentions. Because of the problem of determining what
valid construction given to P.D. 9(3). acts fall within the purview of P.D. 9, it becomes necessary to inquire into the intent
and spirit of the decree and this can be found among others in the preamble or,
3. The position taken by petitioner that P.D. 9(3) covers one and all situations where a whereas" clauses which enumerate the facts or events which justify the promulgation
person carries outside his residence any of the weapons mentioned or described in of the decree and the stiff sanctions stated therein.
the decree irrespective of motivation, intent, or purpose, converts these cases into
one of "statutory construction." That there is ambiguity in the presidential decree is A "preamble" is the key of the statute, to open the minds of the makers
manifest from the conflicting views which arise from its implementation. When as to the mischiefs which are to be remedied, and objects which are to
ambiguity exists, it becomes a judicial task to construe and interpret the true meaning be accomplished, by the provisions of the statute." (West Norman
and scope of the measure, guided by the basic principle that penal statutes are to be Timber v. State, 224 P. 2d 635, 639, cited in Words and Phrases,
construed and applied liberally in favor of the accused and strictly against the state. "Preamble"; emphasis supplied)

4. In the construction or interpretation of a legislative measure — a presidential While the preamble of a statute is not strictly a part thereof, it may,
decree in these cases — the primary rule is to search for and determine the intent when the statute is in itself ambiguous and difficult of interpretation, be
and spirit of the law. Legislative intent is the controlling factor, for in the words of this resorted to, but not to create a doubt or uncertainty which otherwise
Court in Hidalgo v. Hidalgo, per Mr. Justice Claudio Teehankee, whatever is within does not exist." (James v. Du Bois, 16 N.J.L. (1 Har.) 285, 294, cited in
the spirit of a statute is within the statute, and this has to be so if strict adherence to Words and Phrases, "Preamble")
the letter would result in absurdity, injustice and contradictions. 8
In Aboitiz Shipping Corporation, et al. v. The City of Cebu, et al. this Court had
There are certain aids available to Us to ascertain the intent or reason for P.D. 9(3). occasion to state that '(L)egislative intent must be ascertained from a consideration of
the statute as a whole, and not of an isolated part or a particular provision alone. This
First, the presence of events which led to or precipitated the enactment of P.D. 9. is a cardinal rule of statutory construction. For taken in the abstract, a word or phrase
These events are clearly spelled out in the "Whereas" clauses of the presidential might easily convey a meaning quite different from the one actually intended and
decree, thus: (1) the state of martial law in the country pursuant to Proclamation 1081 evident when the word or phrase is considered with those with which it is associated.
dated September 21, 1972; (2) the desired result of Proclamation 1081 as well as Thus, an apparently general provision may have a limited application if read together
General Orders Nos. 6 and 7 which are particularly mentioned in P.D. 9; and (3) the with other provisions. 9
alleged fact that subversion, rebellion, insurrection, lawless violence, criminality,
chaos, aid public disorder mentioned in Proclamation 1081 are committed and Second, the result or effects of the presidential decree must be within its reason or
abetted by the use of firearms and explosives and other deadly weapons. intent.
In the paragraph immediately following the last "Whereas" clause, the presidential committed by the aforesaid lawless elements who have pledged to the
decree states: whole nation that they will not stop their dastardly effort and scheme
until and unless they have fully attained their primary and ultimate
NOW, THEREFORE, I , FERDINAND E. MARCOS, Commander-in- purpose of forcibly seizing political and state power in this country by
Chief of an the Armed Forces of the Philippines, in order to attain the overthrowing our present duly constituted government, ... (See Book I,
desired result of the aforesaid Proclamation No. 1081 and General Vital Documents on the Declaration of Martial Law in the Philippines by
Orders Nos. 6 and 7, do hereby order and decree that: the Supreme Court of the Philippines, pp. 13-39)

xxx xxx xxx It follows that it is only that act of carrying a blunt or bladed weapon with a motivation
connected with or related to the afore-quoted desired result of Proclamation 1081 that
From the above it is clear that the acts penalized in P.D. 9 are those is within the intent of P.D. 9(3), and nothing else.
related to the desired result of Proclamation 1081 and General Orders
Nos. 6 and 7. General Orders Nos. 6 and 7 refer to firearms and Statutes are to be construed in the light of purposes to be
therefore have no relevance to P.D. 9(3) which refers to blunt or achieved and the evils sought to be remedied. (U.S. v. American
bladed weapons. With respect to Proclamation 1081 some of the Tracking Association, 310 U.S. 534, cited in LVN Pictures v. Philippine
underlying reasons for its issuance are quoted hereunder: Musicians Guild, 110 Phil. 725, 731; emphasis supplied)

WHEREAS, these lawless elements having taken up arms against our When construing a statute, the reason for its enactment should be kept
duly constituted government and against our people, and having in mind, and the statute should be construed with reference to its
committed and are still committing acts of armed insurrection and intended scope and purpose. (Statutory Construction by E.T.
rebellion consisting of armed raids, forays, sorties, ambushes, wanton Crawford, pp. 604-605, cited in Commissioner of Internal Revenue v.
acts of murders, spoilage, plunder, looting, arsons, destruction of Filipinas Compania de Seguros, 107 Phil. 1055, 1060; emphasis
public and private buildings, and attacks against innocent and supplied)
defenseless civilian lives and property, all of which activities have
seriously endangered and continue to endanger public order and 5. In the construction of P.D. 9(3) it becomes relevant to inquire into the
safety and the security of the nation, ... consequences of the measure if a strict adherence to the letter of the paragraph is
followed.
xxx xxx xxx
It is a salutary principle in statutory construction that there exists a valid presumption
WHEREAS, it is evident that there is throughout the land a state of that undesirable consequences were never intended by a legislative measure, and
anarchy and lawlessness, chaos and disorder, turmoil and destruction that a construction of which the statute is fairly susceptible is favored, which will avoid
of a magnitude equivalent to an actual war between the forces of our all objectionable, mischievous, indefensible, wrongful, evil, and injurious
duly constituted government and the New People's Army and their consequences.9-a
satellite organizations because of the unmitigated forays, raids,
ambuscades, assaults, violence, murders, assassinations, acts of It is to be presumed that when P.D. 9 was promulgated by the President of the
terror, deceits, coercions, threats, intimidations, treachery, Republic there was no intent to work a hardship or an oppressive result, a possible
machinations, arsons, plunders and depredations committed and being
abuse of authority or act of oppression, arming one person with a weapon to impose Our own decisions have set down the same guidelines in this manner, viz:
hardship on another, and so on.10
Criminal statutes are to be construed strictly. No person should be
At this instance We quote from the order of Judge Purisima the following: brought within their terms who is not clearly within them, nor should
any act be pronounced criminal which is not made clearly so by the
And while there is no proof of it before the Court, it is not difficult to statute. (U.S. v. Abad Santos, 36 Phil. 243, 246)
believe the murmurings of detained persons brought to Court upon a
charge of possession of bladed weapons under P.D. No. 9, that more The rule that penal statutes are given a strict construction is not the
than ever before, policemen - of course not all can be so heartless — only factor controlling the interpretation of such laws, instead, the rule
now have in their hands P.D. No. 9 as a most convenient tool for merely serves as an additional, single factor to be considered as an
extortion, what with the terrifying risk of being sentenced to aid in determining the meaning of penal laws. (People v. Manantan, 5
imprisonment of five to ten years for a rusted kitchen knife or a pair of SCRA 684, 692)
scissors, which only God knows where it came from. Whereas before
martial law an extortion-minded peace officer had to have a stock of F. The Informations filed by petitioner are fatally defective.
the cheapest paltik, and even that could only convey the coercive
message of one year in jail, now anything that has the semblance of a The two elements of the offense covered by P.D. 9(3) must be alleged in the
sharp edge or pointed object, available even in trash cans, may Information in order that the latter may constitute a sufficiently valid charged. The
already serve the same purpose, and yet five to ten times more sufficiency of an Information is determined solely by the facts alleged
incriminating than the infamous paltik. (pp. 72-73, rollo L-42050-66) therein.13 Where the facts are incomplete and do not convey the elements of the
crime, the quashing of the accusation is in order.
And as respondent Judge Maceren points out, the people's interpretation of P.D. 9(3)
results in absurdity at times. To his example We may add a situation where a law- Section 2(a), Rule 117 of the Rules of Court provides that the defendant may move to
abiding citizen, a lawyer by profession, after gardening in his house remembers to quash the complaint or information when the facts charged do not constitute an
return the bolo used by him to his neighbor who lives about 30 meters or so away and offense.
while crossing the street meets a policeman. The latter upon seeing the bolo being
carried by that citizen places him under arrest and books him for a violation of P.D. In U.S.U. Gacutan, 1914, it was held that where an accused is charged with
9(3). Could the presidential decree have been conceived to produce such absurd, knowingly rendering an unjust judgment under Article 204 of the Revised Penal Code,
unreasonable, and insensible results? failure to allege in the Information that the judgment was rendered knowing it to be
unjust, is fatal. 14
6. Penal statutes are to be construed strictly against the state and liberally in favor of
an accused. In People v. Yadao, 1954, this Court through then Justice Cesar Bengzon who later
became Chief Justice of the Court affirmed an order of the trial court which quashed
American jurisprudence sets down the reason for this rule to be "the tenderness of an Information wherein the facts recited did not constitute a public offense as defined
the law of the rights of individuals; the object is to establish a certain rule by in Section 1, Republic Act 145. 15
conformity to which mankind would be safe, and the discretion of the court
limited." 11 The purpose is not to enable a guilty person to escape punishment through
a technicality but to provide a precise definition of forbidden acts.12
G. The filing of these Petitions was unnecessary because the People could have Section 8. Rule 117 states that:
availed itself of other available remedies below.
An order sustaining the motion to quash is not a bar to another
Pertinent provisions of the Rules of Court follow: prosecution for the same offense unless the motion was based on the
grounds specified in section 2, subsections (f) and (h) of this rule.
Rule 117, Section 7. Effect of sustaining the motion to quash. — If the
motion to quash is sustained the court may order that another Under the foregoing, the filing of another complaint or Information is barred only when
information be filed. If such order is made the defendant, if in custody, the criminal action or liability had been extinguished (Section 2[f]) or when the motion
shall remain so unless he shall be admitted to bail. If such order is not to quash was granted for reasons of double jeopardy. (ibid., [h])
made or if having been made another information is not filed
withuntime to be specified in the order, or within such further time as As to whether or not a plea of double jeopardy may be successfully invoked by the
the court may allow for good cause shown, the defendant, if in accused in all these cases should new complaints be filed against them, is a matter
custody, shall be discharged therefrom, unless he is in custody on We need not resolve for the present.
some other charge.
H. — We conclude with high expectations that police authorities and the prosecuting
Rule 110, Section 13. Amendment. — The information or complaint arm of the government true to the oath of office they have taken will exercise utmost
may be amended, in substance or form, without leave of court, at any circumspection and good faith in evaluating the particular circumstances of a case so
time before the defendant pleads; and thereafter and during the trial as as to reach a fair and just conclusion if a situation falls within the purview of P.D. 9(3)
to all matters of form, by leave and at the discretion of the court, when and the prosecution under said decree is warranted and justified. This obligation
the same can be done without prejudice to the rights of the defendant. becomes a sacred duty in the face of the severe penalty imposed for the offense.

xxx xxx xxx On this point, We commend the Chief State Prosecutor Rodolfo A. Nocon on his letter
to the City Fiscal of Manila on October 15, 1975, written for the Secretary, now
Two courses of action were open to Petitioner upon the quashing of the Informations Minister of Justice, where he stated the following:
in these cases, viz:
In any case, please study well each and every case of this nature so
First, if the evidence on hand so warranted, the People could have filed an amended that persons accused of carrying bladed weapons, specially those
Information to include the second element of the offense as defined in the disputed whose purpose is not to subvert the duly constituted authorities, may
orders of respondent Judges. We have ruled that if the facts alleged in the not be unduly indicted for the serious offenses falling under P.D. No.
Information do not constitute a punishable offense, the case should not be dismissed 9.17
but the prosecution should be given an opportunity to amend the Information.16
Yes, while it is not within the power of courts of justice to inquire into the wisdom of a
Second, if the facts so justified, the People could have filed a complaint either under law, it is however a judicial task and prerogative to determine if official action is within
Section 26 of Act No. 1780, quoted earlier, or Manila City Ordinance No. 3820, as the spirit and letter of the law and if basic fundamental rights of an individual
amended by Ordinance No. 3928, especially since in most if not all of the cases, the guaranteed by the Constitution are not violated in the process of its implementation.
dismissal was made prior to arraignment of the accused and on a motion to quash. We have to face the fact that it is an unwise and unjust application of a law,
necessary and justified under prevailing circumstances, which renders the measure G.R. No. L-47027 February 4, 1941
an instrument of oppression and evil and leads the citizenry to lose their faith in their
government. THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
WHEREFORE, We DENY these 26 Petitions for Review and We AFFIRM the Orders BENITO R. PADILLA and ALFRED VON AREND, defendants-appellants.
of respondent Judges dismissing or quashing the Information concerned, subject
however to Our observations made in the preceding pages 23 to 25 of this Decision Ross, Lawrence, Selph and Carrascoso for appellant Alfred Von Arend.
regarding the right of the State or Petitioner herein to file either an amended E.A. Picazo for appellant Benito R. Padilla.
Information under Presidential Decree No. 9, paragraph 3, or a new one under other Office of the Solicitor General Ozaeta for appellee.
existing statute or city ordinance as the facts may warrant.
LAUREL, J.:
Without costs.
On October 27, 1938, in criminal case No. 57235 of the Court of First Instance of
SO ORDERED. Manila, Benito R. Padilla and Alfred Von Arend were charged with a violation of
Commonwealth Act No. 108, in relation to Commonwealth Act No. 138. The
Fernando, Teehankee, Santos, Fernandez and Guerrero, JJ., concur. information filed against them by the fiscal of Manila is of the following tenor:

Castro, C.J. and Antonio, J, concur in the result. That on and during the period between December, 1936 to August, 1938, both
dates inclusive, in the City of Manila, Philippine Islands, Benito R. Padilla, a
Aquino, J, took no part. Filipino citizen, and Alfred Von Arend, a German citizen, voluntarily, illegally
and criminally, with intent to evade the provisions of Article 4 of
Commonwealth Act No. 138, which require Philippine or United States
citizenship before the exercise or enjoyment of the privilege established in
said article, acting jointly and conniving with each other, executed the
following acts, to wit: (a) the former permitting the latter and for the latter's
corporation, known as the "Insular Drug Co.," an entity which is not domestic
under the provisions of said Act, because 75% of its capital stock belongs to
neither Filipino or American, and of which Alfred Von Arend is the president
and general manager, to make use, as in effect made use of his name and of
his mercantile domestic firm, known as the "Padilla Central Distributors", in the
official auctions for the supply to the Government and its branches of articles,
materials and equipment for public use; and (b) the latter making use, in said
official auctions, of the name of the former and that of his commercial firm to
the benefit of said corporation, both the accused having gained from the
transactions which resulted from such illegal practice, in violation of Article 1
of Commonwealth Act. No. 138.
Upon his request, Alfred Von Arend was granted a separate trial, although by VIII. The trial court erred in not holding that section 4 of Commonwealth Act
agreement of the parties all the evidence presented by the prosecution and the No. 138 was enacted contrary to the provisions of section 1, subsection 17, of
defense in the trial of Alfred Von Arend were offered and admitted in Padilla's. The the Ordinance Appended to the Constitution of the Philippines and is
trial court, on July 25, 1939, rendered judgment finding the two accused guilty of the consequently void and ineffective.
offense charged, and sentenced each of them to an indeterminate penalty of from two
years to four years, to pay a fine of P2,000, with subsidiary imprisonment in case of IX. The trial court erred in finding that Padilla Central Distributors and Benito
insolvency, and to pay one-half of the costs. Both have appealed to this Court. R. Padilla were mere figure-heads or dummies.

Counsel for Von Arend makes the following assignment of errors: X. The trial court erred in disregarding the testimony establishing the
Government's practice of awarding contracts to the lowest bidder regardless
I. The trial court erred in ruling that Commonwealth Act. No. 108 had any of whether such bidder was a domestic or a foreign entity.
connection with Commonwealth Act No. 138 or that it punished any deviation
from the preferences provided by the law. XI. The trial court erred in making findings of facts contrary to the clear weight
of evidence.
II. The trial court erred in not finding that Commonwealth Act No. 108 as
interpreted by the trial court was enacted in violation of Article VI, sec. 12(1) of Counsel for Padilla assigns the following errors:
the Constitution of the Philippines.
I. In not holding that the facts charged in the information do not constitute a
III. The trial court erred in holding that Commonwealth Act No. 108 as applied public offense and that Act No. 138 is unconstitutional.
to Alfred Von Arend in this case did not deprive him of his liberty and property
without due process of law contrary to Article III, section 1, subsections 15 and II. In holding that the "Padilla Central Distributors" was organized by the
17 of the constitution of the Philippines. accused Benito R. Padilla as a mere nominal entity or name in which the
"Insular Drug Co., Inc.," made sales to the Government to evade the
IV. The trial court erred and acted contrary to Article III, sec. 1, subsections 15 provisions of Commonwealth Act No. 138.
and 17 of the Constitution of the Philippines in convicting Alfred Von Arend on
the basis of evidence not offered at the trial. III. In holding that the "Padilla Central Distributors" was managed and
administered by the "Insular Drug Co., Inc.,
V. The trial court erred in not properly complying with the provisions of section
33 of the Code of Criminal Procedure. IV. In holding that the accused Benito R. Padilla had in bad faith willfully
withheld from the Pharmaceutical Board or the person in charge of issuing
VI. The trial court erred in not holding that Commonwealth Act No. 138 was permits certain pertinent information when exhibits "12" and "13" were issued.
unconstitutional and void as being contrary to an act of the Congress of the
United States. V. In finding the accused Benito R. Padilla guilty of the crime charged in the
information.
VII. The trial court erred in not dismissing the information in this case on the
ground that more than one crime is charged therein.
The principal question to be determined is whether or not a violation of provides that "in all cases in which any constitutional or legal provision requires
Commonwealth Act No. 138, commonly known as the "Flag Law", may be prosecuted Philippine or United States citizenship as a requisite for the exercise of enjoyment of
under Commonwealth Act No. 108, entitled "An Act to punish acts of evasion of the a right, franchise or privilege, any citizen of the Philippines or the United States who
laws on the nationalization of certain rights, franchises or privileges." Other points allows his name or citizenship to be used for the purpose of evading such evading
raised in the briefs will be taken up in the course of this opinion. such provision, and any alien or foreigner profiting thereby, shall be punished by
imprisonment for not less than two nor more than ten years, and a fine of not less
It appears that shortly after the approval of Commonwealth Act No. 138, or on than two thousand nor more than ten thousand pesos." In Commonwealth Act No.
December 16, 1936, Benito R. Padilla resigned from the Insular Drug Company, 138, a domestic entity is defined as "any citizen of the Philippines or of the United
where he had been employed as a selling agent for seven years, and organized the States habitually established in business and engaged in the manufacture or sale of
"Padilla Central Distributors" capitalized at P1,000 (Exhibit A) for the distribution and the merchandise covered by his bid, or any corporate body or commercial company
sale of medicine, chemical products, and clinical, surgical and laboratory equipment. duly organized and registered under the laws of the Philippines of whose capital 75
At the same time, he opened with his old employer a credit account in the amount of per centum is owned by citizens of the Philippines or of the United States, or both."
P5,000, secured by his own and his wife's savings deposit, to enable him to purchase Section 4 of the same Act emphasizes that "whenever several bidders shall
drugs and other chemicals and facilitate his business transactions. In addition, he was participate in the bidding for supplying articles, materials and equipment for any of the
allowed a small space in the offices of the Insular Drug Company, and also the use of dependencies mentioned in section one of this Act for public use, public buildings, or
the latter's telephone, warehouse and delivery cars. To assist him in the venture, he public works, the award shall be made to the domestic entity making the lowest bid,
appointed Serafin Enriquez, secretary-treasurer of the Insular Drug Company, and provided that it is not more than fifteen per centum in excess of the lowest bid made
Bartolome Salapong, cashier of the same firm, as his attorney-in-fact and by a bidder other than a domestic entity." We are of the opinion that any citizen of the
bookkeeper, respectively. Serafin Enriquez, as attorney-in-fact, prepared and Philippines or of the United States who knowingly allows his name or citizenship to be
submitted all the bids of the Padilla Central Distributor for pharmaceutical supplies used so that a person not so qualified may enjoy the privilege granted to domestic
needed by the Government, and was successful in winning for it most of the contracts entities by Commonwealth Act No. 138, as well as any alien or foreigner profiting
as the lowest domestic bidder. The open-account agreement stipulated the amount of thereby, is guilty of violation of Commonwealth Act No. 108.
P5,000 as the limit of Padilla's credit, but the finding of the lower court is that this limit
had always been exceeded, the lowest instance being in January, 1938, when Benito The Insular Drug Company of which the appellant, Alfred Von Arend, is president and
R. Padilla's account totaled P5,692.88. As most of the government contracts were general manager, is a foreign entity because 75 per centum of its capital is not owned
awarded to the Padilla Central Distributors as the lowest domestic bidder under the by Filipino or American citizens. On the other hand, the Padilla Central Distributors,
provisions of Commonwealth Act No. 138, and as all the requisitioned supplies were as organized by the appellant, Benito R. Padilla, which is a domestic entity, enjoys
taken from the Insular Drug Company, the sales of the latter increased in volume, and the privilege afforded by Commonwealth Act No. 138. The lower court found that the
its president and general manager, defendant Alfred Von Arend, for a period organization by the Padilla Central Distributors was but an ingenious scheme to
comprised between January, 1937 and June, 1938, received dividends amounting to evade the requirements of Commonwealth Act No. 138 for the following reasons: (1)
P16,186, besides P1,000 as monthly salary and P200 as monthly expenses. Benito Benito R. Padilla did not invest a single centavo in the Padilla Central Distributors for
R. Padilla, for the same period, due to the 2-5 per cent discount granted by the the reason that the Insular Drug Company, through Alfred Von Arend, furnished him
Insular Drug Company, made a gross profit of P5,003.31 and a net profit of all the articles ordered by the Government. Von Arend accounted for his operating
P2,652.26. (Exhibit 25, Resume of Capitulation Statement.) capital on paper, and eventually they shared in the profits realized with the award of
government contracts to the Padilla Central Distributors. (2) The pledge agreement
It is admitted that Commonwealth Act No. 108 does not provide for any penalty for the (Exhibit I) between Benito R. Padilla and the Insular Drug Company was but a device
violation of any of its provisions. Section 1 of Commonwealth Act No. 108, however, to dispel the suspicion of business competitors and the authorities. The pledge
contract was not notarialized, it was never honored considering the monthly excess of citizenship as a requisite for the exercise of enjoyment of a right, franchise or
Padilla's account over the quota therein specified. Although Benito R. Padilla and his privilege." Under Act No. 108 any legal provision, whether existing at the time of the
wife had assigned their bank passbooks to Von Arend to answer for their credit, passage of said Act No. 108 or promulgated thereafter, would fall within its scope, so
Padilla always indorsed the government warrants to the Insular Drug Company which long as said legal provision requires Philippine or United States citizenship as a
collected the face value of said warrants. (3) Benito R. Padilla opened his office in the requisite for the enjoyment of a right, franchise or privilege. One of such legal
Insular Drug Company, and was allowed to use the latter's telephone, warehouse and provisions is section 4 of Commonwealth Act No. 138. While "statutes prescribing
delivery truck. This disproves the pretended independence of the Padilla Central punishments or penalties should not be extended further than their terms reasonably
Distributors from the Insular Drug Company. (4) Padilla's employees, Serafin justify" (Snowden v. Brown, 60 Fla. 212, 53 So. 548, 549), this rule of strict
Enriquez and Bartolome Salapong, are salaried men of the Insular Drug Company, construction is subordinate to the rule of reasonable, sensible construction having in
and Padilla's claim that they were paid by him was not accepted by the lower court. view the legislative purpose and intent, and giving effect to the same. It is not to be so
(5) Benito R. Padilla had no tangible investment in the Padilla Central Distributors, unreasonably applied as to defeat the true intent and meaning of the of the enactment
and it was Serafin Enriquez, his attorney-in-fact, and the secretary-treasurer of the found in the language actually used. (Chapman v. Lake, 151 So. 399, 402-403.)
Insular Drug Company, who supervised all the business transactions, from the formal Although not so expressly stated, Act No. 138 is cumulative of Act No. 108; and it is
submission of the bids to the endorsement of the government warrants to the Insular no objection that one statute creates an offense and another Act provides for its
Drug Company. These are conclusions of facts which we are not inclined to disturb. punishment.

The lower court also found that the appellant, Alfred Von Arend, had profited by the It is also urged that Acts Nos. 108 and 138 are unconstitutional: as to the former,
scheme, for the reason that under section 4 of the Flag Law, the Insular Drug because its provisions are vague and uncertain, covered more than one subject, and
Company being a foreign entity would have had to bid 15 per cent lower to deprived Alfred Von Arend of his liberty and property without due process of law; and
successfully outbid a domestic entity or a domestic bidder. With the establishment of as to the latter, because it is contrary to Act No. 428 of the 72nd Congress of the
the Padilla Central Distributors which submitted bids as a domestic entity, the Insular United States. We have examined these Commonwealth Acts and are of the opinion
Drug Company stood to lose only 2-5 per cent as a discount to Padilla. The that they are constitutional. Commonwealth Act No. 108 is sufficiently clear, and
advantage afforded by this arrangement is proved by the fact that, as hereinabove prescribes with reasonable certainty the elements of the offense that it punishes. It
stated, between the period comprised between September, 1937, and June, 1938 embraces only one general subject, to wit, the punishment of acts of evasion of the
alone, Alfred Von Arend, as president, general manager, and controlling stockholder laws on the nationalization of certain rights, franchises or privileges, which subject is
of the Insular Drug Company, received as dividends the sum of P16,186, in addition fairly suggestive of, and not foreign to, its intent and purpose. It does not deprive
to his monthly salary and expenses of P1,000 and P200, respectively; and Benito R. Alfred Von Arend, or any person for that matter, of liberty and property without due
Padilla, for the same period, realized a gross profit of P5,003.31. process of law. As to Commonwealth Act No. 138, this cannot be said to be
antagonistic to Act No. 428 of the 72nd Congress of the United States.
It is contended, however, that notwithstanding the infringement of section 4 of Act No. Fundamentally, it is in harmony with the congressional enactment.
138, the defendants cannot be punished therefor since the said Act No. 138 imposes
no appeal sanction whatsoever, and the penalty provided by Act No. 108 cannot be The judgment of the lower court as to Alfred Von Arend is affirmed in all respects. As
correctly extended to and applied in this case. This argument is, in our opinion, to Benito R. Padilla, the Court feels that as a Filipino citizen he has proved himself
without merit. The very title of Act No. 108 gives unmistakable notice of the legislative lacking in civic consciousness and responsibility as to require censure and
intent of the laws of the nationalization of certain rights, franchises or privileges," and punishment at once prompt and severe, in order to enliven the confidence of the
section 1 of the same Act applies the punishment provided therein to "all cases in people in their Government and their institutions. The penalty, in his case, is
which any constitutional or legal provision requires Philippine or United States accordingly increased to a minimum imprisonment of four (4) years to a maximum
imprisonment of six (6) years and a fine of P4,000, with subsidiary imprisonment in Leaving aside the question whether the accused, after renouncing his right to present
case of insolvency, both appellants to pay the costs. So ordered. evidence, and by reason of that waiver he was committed to the corresponding court for
trial, is estopped, we are of the opinion that the respondent judge did not act in excess of his
G.R. No. L-2068 October 20, 1948
jurisdiction or in abuse of discretion in refusing to grant the accused's motion to return the
DOMINADOR B. BUSTOS, Petitioner, vs. ANTONIO G. LUCERO, Judge of First Instance of record for the purpose set out therein. In Dequito and Saling Buhay vs. Arellano, G.R. No. L-
Pampanga, Respondent. 1336, recently promulgated, in which case the respondent justice of the peace had allowed
the accused, over the complaint's objection, to recall the complainant and her witnesses at
E. M. Banzali for petitioner. the preliminary investigation so that they might be cross-examined, we sustained the justice
Acting Provincial Fiscal Albino L. Figueroa and Assistant Provincial Fiscal Marcelo L. Mallari of the peace's order. We said that section 11 of Rule 108 does not curtail the sound
for respondent discretion of the justice of the peace on the matter. We said that "while section 11 of Rule
108 defines the bounds of the defendant's right in the preliminary investigation, there is
TUASON, J.:
nothing in it or any other law restricting the authority, inherent in a court of justice, to
The petitioner herein, an accused in a criminal case, filed a motion with the Court of First pursue a course of action reasonably calculated to bring out the truth."chanrobles virtual law
Instance of Pampanga after he had been bound over to that court for trial, praying that the library
record of the case be remanded to the justice of the peace court of Masantol, the court of
But we made it clear that the "defendant cannot, as a matter of right, compel the complaint
origin, in order that the petitioner might cross-examine the complainant and her witnesses in
and his witnesses to repeat in his presence what they had said at the preliminary
connection with their testimony, on the strength of which warrant was issued for the arrest
examination before the issuance of the order of arrest." We called attention to the fact that
of the accused. The motion was denied and that denial is the subject matter of this
"the constitutional right of an accused to be confronted by the witnesses against him does
proceeding.
not apply to preliminary hearings' nor will the absence of a preliminary examination be an
According to the memorandum submitted by the petitioner's attorney to the Court of First infringement of his right to confront witnesses." As a matter of fact, preliminary investigation
Instance in support of his motion, the accused, assisted by counsel, appeared at the may be done away with entirely without infringing the constitutional right of an accused
preliminary investigation. In that investigation, the justice of the peace informed him of the under the due process clause to a fair trial.
charges and asked him if he pleaded guilty or not guilty, upon which he entered the plea of
The foregoing decision was rendered by a divided court. The minority went farther than the
not guilty. "Then his counsel moved that the complainant present her evidence so that she
majority and denied even any discretion on the part of the justice of the peace or judge
and her witnesses could be examined and cross-examined in the manner and form provided
holding the preliminary investigation to compel the complainant and his witnesses to testify
by law." The fiscal and the private prosecutor objected, invoking section 11 of rule 108, and
anew.
the objection was sustained. "In view thereof, the accused's counsel announced his intention
to renounce his right to present evidence," and the justice of the peace forwarded the case Upon the foregoing considerations, the present petition is dismissed with costs against the
to the court of first instance. petitioner.
BUSTOS vs. LUCERO HELD: NO. Section 11 of Rule 108 is an adjective law and not a substantive law or
substantive right. Substantive law creates substantive rights and the two terms in this
G.R. No. L-2068 October 20, 1948/ March 8, 1949 respect may be said to be synonymous. Substantive rights is a term which includes
FACTS: those rights which one enjoys under the legal system prior to the disturbance of
normal relations. Substantive law is that part of the law which creates, defines and
Accused in this case during the preliminary investigation was informed of his charges regulates rights, or which regulates the rights and duties which give rise to a cause of
and asked whether he pleads guilty or not, the accused entered a plea of not guilty. action; that part of the law which courts are established to administer; as opposed to
His counsel moved that the complainant present her evidence so that she and her adjective or remedial law, which prescribes the method of enforcing rights or obtains
witnesses can be cross-examined. Fiscal and private prosecutor objected invoking redress for their invasion.
Sec 11 of R 108 which was sustained by the court. In view thereof, counsel of the
accused renounce his right to present evidence. Trial ensued. Petitioner then filed a SUNSTANTIVE LAW PROCEDURAL LAW
motion before CFI Pampanga to remand the record of the case to the justice of the
- which declares what acts are crimes - law which provides or regulates the
peace of Masantol, court of origin on the ground that the petitioner can cross-examine and prescribes the punishment for steps by which one who commits a crime
the complainant and witnesses. SC dismissed his petition citing Dequito and Saling committing them is to be punished.
Buhay vs. Arellano, G.R. No. L-1336: "The constitutional right of an accused to be
confronted by the witnesses against him does not apply to preliminary hearings; nor Preliminary investigation is eminently and essentially remedial; it is the first step taken
will the absence of a preliminary examination be an infringement of his right to in a criminal prosecution. As a rule of evidence, section 11 of Rule 108 is also
confront witness. As a matter of fact, preliminary investigation may be done away with procedural. Evidence — which is the "the mode and manner of proving the competent
entirely without infringing the constitutional right of an accused under the due process facts and circumstances on which a party relies to establish the fact in dispute in
clause to a fair trial." We took this ruling to be ample enough to dispose the judicial proceedings" — is identified with and forms part of the method by which, in
constitutional question pleaded in the application for certiorari. Heeding the wishes of private law, rights are enforced and redress obtained, and, in criminal law, a law
the petitioner, we shall enlarge upon the subject. Petitioner then filed his motion for transgressor is punished. Criminal procedure refers to pleading, evidence and
reconsideration.(NOTE: SEE SC’S RESOLUTION) practice the entire rules of evidence have been incorporated into the Rules of Court.
We cannot tear down section 11 of Rule 108 on constitutional grounds without
Petitioner’s contention:
throwing out the whole code of evidence embodied in these Rules.
i.
Section 11 of Rule 108 of the Rules of Court infringes section 13, Article Section 11 of Rule 108. Rights of defendant after arrest. — After the arrest of the
VIII, of the Constitution. defendant and his delivery to the court, he shall be informed of the complaint or
information filed against him. He shall also be informed of the substance of the
ii. That said deals with substantive matters and impairs substantive rights.
testimony and evidence presented against him, and, if he desires to testify or to
ISSUE: WoN said rule impairs substantive rights present witnesses or evidence in his favor, he may be allowed to do so. The
testimony of the witnesses need not be reduced to writing but that of the defendant
shall be taken in writing and subscribed by him.
Section 13, Article VIII. The Supreme Court shall have the power to promulgate rules Songco, et al. vs. National Labor Relations Commission
concerning pleading, practice, and procedure in all courts, and the admission to the
practice of law. Said rules shall be uniform for all courts of the same grade and shall G.R. Nos. 50999-51000
not diminish, increase, or modify substantive rights. The existing laws on pleading,
(March 23, 1990)
practice, and procedure are hereby repealed as statutes, and are declared Rules of
Courts, subject to the power of the Supreme Court to alter and modify the same. The FACTS: Zuelig filed an application for clearance to terminate the services of Songco, and
National Assembly shall have the power to repeal, alter, or supplement the rules others, on the ground of retrenchment due to financial losses. During the hearing, the
concerning pleading, practice, and procedure, and the admission to the practice of
parties agreed that the sole issue to be resolved was the basis of the separation pay
law in the Philippines.
due. The salesmen received monthly salaries of at least P400.00 and commission for every
sale they made.

The Collective Bargaining Agreements between Zuelig and the union of which Songco, et al.
were members contained the following provision: "Any employee who is separated from
employment due to old age, sickness, death or permanent lay-off, not due to the fault of said
employee, shall receive from the company a retirement gratuity in an amount equivalent to
one (1) month's salary per year of service."

The Labor Arbiter ordered Zuelig to pay Songco et al., separation pay equivalent to their one
month salary (exclusive of commissions, allowances, etc.) for every year of service with the
company.

The National Labor Relations Commission sustained the Arbiter.

ISSUE: Whether or not earned sales commissions and allowances should be included in the
monthly salary of Songco, et al. for the purpose of computing their separation pay.

RULING:

In the computation of backwages and separation pay, account must be taken not only of the
basic salary of the employee, but also of the transportation and emergency living allowances.

Even if the commissions were in the form of incentives or encouragement, so that the
salesman would be inspired to put a little more industry on jobs particularly assigned to
them, still these commissions are direct remunerations for services rendered which G.R. No. L-50999 March 23, 1990
contributed to the increase of income of the employee. Commission is the recompense
compensation or reward of an agent, salesman, executor, trustee, receiver, factor, broker or JOSE SONGCO, ROMEO CIPRES, and AMANCIO MANUEL, petitioners,
vs
bailee, when the same is calculated as a percentage on the amount of his transactions or on NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), LABOR
the profit to the principal. The nature of the work of a salesman and the reason for such type ARBITER FLAVIO AGUAS, and F.E. ZUELLIG (M), INC., respondents.
of remuneration for services rendered demonstrate that commissions are part of Songco, et
al's wage or salary. Raul E. Espinosa for petitioners.

The Court takes judicial notice of the fact that some salesmen do not receive any basic salary, Lucas Emmanuel B. Canilao for petitioner A. Manuel.
but depend on commissions and allowances or commissions alone, although an employer-
employee relationships exists. Atienza, Tabora, Del Rosario & Castillo for private respondent.

If the opposite view is adopted, i.e., that commissions do not form part of the wage or salary, MEDIALDEA, J.:
then in effect, we will be saying that this kind of salesmen do not receive any salary and,
This is a petition for certiorari seeking to modify the decision of the National Labor
therefore, not entitled to separation pay in the event of discharge from employment. This Relations Commission in NLRC Case No. RB-IV-20840-78-T entitled, "Jose Songco
narrow interpretation is not in accord with the liberal spirit of the labor laws, and considering and Romeo Cipres, Complainants-Appellants, v. F.E. Zuellig (M), Inc., Respondent-
the purpose of separation pay which is, to alleviate the difficulties which confront a Appellee" and NLRC Case No. RN- IV-20855-78-T entitled, "Amancio Manuel,
dismissed employee thrown to the streets to face the harsh necessities of life. Complainant-Appellant, v. F.E. Zuellig (M), Inc., Respondent-Appellee," which
dismissed the appeal of petitioners herein and in effect affirmed the decision of the
In Soriano vs. NLRC (155 SCRA 124), we held that the commissions also claimed by the Labor Arbiter ordering private respondent to pay petitioners separation pay equivalent
to their one month salary (exclusive of commissions, allowances, etc.) for every year
employee (override commission plus net deposit incentive) are not properly includible in
of service.
such base figure since such commissions must be earned by actual market transactions
attributable to the petitioner [salesman]. Since the commissions in the present case were The antecedent facts are as follows:
earned by actual transactions attributable to Song, et al., these should be included in their
separation pay. In the computation thereof, what should be taken into account is the Private respondent F.E. Zuellig (M), Inc., (hereinafter referred to as Zuellig) filed with
average commission earned during their last year of employment. the Department of Labor (Regional Office No. 4) an application seeking clearance to
terminate the services of petitioners Jose Songco, Romeo Cipres, and Amancio
Manuel (hereinafter referred to as petitioners) allegedly on the ground of
retrenchment due to financial losses. This application was seasonably opposed by
petitioners alleging that the company is not suffering from any losses. They alleged
further that they are being dismissed because of their membership in the union. At the
last hearing of the case, however, petitioners manifested that they are no longer
contesting their dismissal. The parties then agreed that the sole issue to be resolved
is the basis of the separation pay due to petitioners. Petitioners, who were in the xxx
sales force of Zuellig received monthly salaries of at least P40,000. In addition, they
received commissions for every sale they made. Sec. 9(b). Where the termination of employment is due to retrechment
initiated by the employer to prevent losses or other similar causes, or
The collective Bargaining Agreement entered into between Zuellig and F.E. Zuellig where the employee suffers from a disease and his continued
Employees Association, of which petitioners are members, contains the following employment is prohibited by law or is prejudicial to his health or to the
provision (p. 71, Rollo): health of his co-employees, the employee shall be entitled to
termination pay equivalent at least to his one month salary, or to one-
ARTICLE XIV — Retirement Gratuity half month pay for every year of service, whichever is higher, a fraction
of at least six (6) months being considered as one whole year.
Section l(a)-Any employee, who is separated from employment due to
old age, sickness, death or permanent lay-off not due to the fault of xxx
said employee shall receive from the company a retirement gratuity in
an amount equivalent to one (1) month's salary per year of service. Sec. 10. Basis of termination pay. — The computation of the
One month of salary as used in this paragraph shall be deemed termination pay of an employee as provided herein shall be based on
equivalent to the salary at date of retirement; years of service shall be his latest salary rate, unless the same was reduced by the employer to
deemed equivalent to total service credits, a fraction of at least six defeat the intention of the Code, in which case the basis of
months being considered one year, including probationary computation shall be the rate before its deduction. (Emphasis
employment. (Emphasis supplied) supplied)

On the other hand, Article 284 of the Labor Code then prevailing provides: On June 26,1978, the Labor Arbiter rendered a decision, the dispositive portion of
which reads (p. 78, Rollo):
Art. 284. Reduction of personnel. — The termination of employment of
any employee due to the installation of labor saving-devices, RESPONSIVE TO THE FOREGOING, respondent should be as it is
redundancy, retrenchment to prevent losses, and other similar causes, hereby, ordered to pay the complainants separation pay equivalent to
shall entitle the employee affected thereby to separation pay. In case their one month salary (exclusive of commissions, allowances, etc.) for
of termination due to the installation of labor-saving devices or every year of service that they have worked with the company.
redundancy, the separation pay shall be equivalent to one (1)
month pay or to at least one (1) month pay for every year of service, SO ORDERED.
whichever is higher. In case of retrenchment to prevent losses and
other similar causes, the separation pay shall be equivalent to one (1) The appeal by petitioners to the National Labor Relations Commission was dismissed
month pay or at least one-half (1/2) month pay for every year of for lack of merit.
service, whichever is higher. A fraction of at least six (6) months shall
be considered one (1) whole year. (Emphasis supplied) Hence, the present petition.

In addition, Sections 9(b) and 10, Rule 1, Book VI of the Rules Implementing the
Labor Code provide:
On June 2, 1980, the Court, acting on the verified "Notice of Voluntary Abandonment concerned, this has been settled in the case of Santos v. NLRC, et al., G.R. No.
and Withdrawal of Petition dated April 7, 1980 filed by petitioner Romeo Cipres, 76721, September 21, 1987, 154 SCRA 166, where We ruled that "in the computation
based on the ground that he wants "to abide by the decision appealed from" since he of backwages and separation pay, account must be taken not only of the basic salary
had "received, to his full and complete satisfaction, his separation pay," resolved to of petitioner but also of her transportation and emergency living allowances." This
dismiss the petition as to him. ruling was reiterated in Soriano v. NLRC, et al., G.R. No. 75510, October 27, 1987,
155 SCRA 124 and recently, in Planters Products, Inc. v. NLRC, et al., G.R. No.
The issue is whether or not earned sales commissions and allowances should be 78524, January 20, 1989.
included in the monthly salary of petitioners for the purpose of computation of their
separation pay. We shall concern ourselves now with the issue of whether or not earned sales
commission should be included in the monthly salary of petitioner for the purpose of
The petition is impressed with merit. computation of their separation pay.

Petitioners' position was that in arriving at the correct and legal amount of separation Article 97(f) by itself is explicit that commission is included in the definition of the term
pay due them, whether under the Labor Code or the CBA, their basic salary, earned "wage". It has been repeatedly declared by the courts that where the law speaks in
sales commissions and allowances should be added together. They cited Article 97(f) clear and categorical language, there is no room for interpretation or construction;
of the Labor Code which includes commission as part on one's salary, to wit; there is only room for application (Cebu Portland Cement Co. v. Municipality of Naga,
G.R. Nos. 24116-17, August 22, 1968, 24 SCRA 708; Gonzaga v. Court of Appeals,
(f) 'Wage' paid to any employee shall mean the remuneration or G.R.No. L-2 7455, June 28,1973, 51 SCRA 381). A plain and unambiguous statute
earnings, however designated, capable of being expressed in terms of speaks for itself, and any attempt to make it clearer is vain labor and tends only to
money, whether fixed or ascertained on a time, task, piece, or obscurity. How ever, it may be argued that if We correlate Article 97(f) with Article XIV
commission basis, or other method of calculating the same, which is of the Collective Bargaining Agreement, Article 284 of the Labor Code and Sections
payable by an employer to an employee under a written or unwritten 9(b) and 10 of the Implementing Rules, there appears to be an ambiguity. In this
contract of employment for work done or to be done, or for services regard, the Labor Arbiter rationalized his decision in this manner (pp. 74-76, Rollo):
rendered or to be rendered, and includes the fair and reasonable
value, as determined by the Secretary of Labor, of board, lodging, or The definition of 'wage' provided in Article 96 (sic) of the Code can be
other facilities customarily furnished by the employer to the employee. correctly be (sic) stated as a general definition. It is 'wage ' in its
'Fair reasonable value' shall not include any profit to the employer or to generic sense. A careful perusal of the same does not show any
any person affiliated with the employer. indication that commission is part of salary. We can say that
commission by itself may be considered a wage. This is not something
Zuellig argues that if it were really the intention of the Labor Code as well as its novel for it cannot be gainsaid that certain types of employees like
implementing rules to include commission in the computation of separation pay, it agents, field personnel and salesmen do not earn any regular daily,
could have explicitly said so in clear and unequivocal terms. Furthermore, in the weekly or monthly salaries, but rely mainly on commission earned.
definition of the term "wage", "commission" is used only as one of the features or
designations attached to the word remuneration or earnings. Upon the other hand, the provisions of Section 10, Rule 1, Book VI of
the implementing rules in conjunction with Articles 273 and 274 (sic) of
Insofar as the issue of whether or not allowances should be included in the monthly the Code specifically states that the basis of the termination pay due to
salary of petitioners for the purpose of computation of their separation pay is
one who is sought to be legally separated from the service is 'his latest to the computation of their separation pay. This situation, to our mind,
salary rates. is not the real intent of the Code and its rules.

x x x. We rule otherwise. The ambiguity between Article 97(f), which defines the term 'wage'
and Article XIV of the Collective Bargaining Agreement, Article 284 of the Labor Code
Even Articles 273 and 274 (sic) invariably use 'monthly pay or monthly and Sections 9(b) and 10 of the Implementing Rules, which mention the terms "pay"
salary'. and "salary", is more apparent than real. Broadly, the word "salary" means a
recompense or consideration made to a person for his pains or industry in another
The above terms found in those Articles and the particular Rules were man's business. Whether it be derived from "salarium," or more fancifully from "sal,"
intentionally used to express the intent of the framers of the law that for the pay of the Roman soldier, it carries with it the fundamental idea of compensation
purposes of separation pay they mean to be specifically referring to for services rendered. Indeed, there is eminent authority for holding that the words
salary only. "wages" and "salary" are in essence synonymous (Words and Phrases, Vol. 38
Permanent Edition, p. 44 citing Hopkins vs. Cromwell, 85 N.Y.S. 839,841,89 App. Div.
.... Each particular benefit provided in the Code and other Decrees on 481; 38 Am. Jur. 496). "Salary," the etymology of which is the Latin word "salarium,"
Labor has its own pecularities and nuances and should be interpreted is often used interchangeably with "wage", the etymology of which is the Middle
in that light. Thus, for a specific provision, a specific meaning is English word "wagen". Both words generally refer to one and the same meaning, that
attached to simplify matters that may arise there from. The general is, a reward or recompense for services performed. Likewise, "pay" is the synonym of
guidelines in (sic) the formation of specific rules for particular purpose. "wages" and "salary" (Black's Law Dictionary, 5th Ed.). Inasmuch as the words
Thus, that what should be controlling in matters concerning termination "wages", "pay" and "salary" have the same meaning, and commission is included in
pay should be the specific provisions of both Book VI of the Code and the definition of "wage", the logical conclusion, therefore, is, in the computation of the
the Rules. At any rate, settled is the rule that in matters of conflict separation pay of petitioners, their salary base should include also their earned sales
between the general provision of law and that of a particular- or commissions.
specific provision, the latter should prevail.
The aforequoted provisions are not the only consideration for deciding the petition in
On its part, the NLRC ruled (p. 110, Rollo): favor of the petitioners.

From the aforequoted provisions of the law and the implementing We agree with the Solicitor General that granting, in gratia argumenti, that the
rules, it could be deduced that wage is used in its generic sense and commissions were in the form of incentives or encouragement, so that the petitioners
obviously refers to the basic wage rate to be ascertained on a time, would be inspired to put a little more industry on the jobs particularly assigned to
task, piece or commission basis or other method of calculating the them, still these commissions are direct remuneration services rendered which
same. It does not, however, mean that commission, allowances or contributed to the increase of income of Zuellig . Commission is the recompense,
analogous income necessarily forms part of the employee's salary compensation or reward of an agent, salesman, executor, trustees, receiver, factor,
because to do so would lead to anomalies (sic), if not absurd, broker or bailee, when the same is calculated as a percentage on the amount of his
construction of the word "salary." For what will prevent the employee transactions or on the profit to the principal (Black's Law Dictionary, 5th Ed., citing
from insisting that emergency living allowance, 13th month pay, Weiner v. Swales, 217 Md. 123, 141 A.2d 749, 750). The nature of the work of a
overtime, and premium pay, and other fringe benefits should be added salesman and the reason for such type of remuneration for services rendered
demonstrate clearly that commission are part of petitioners' wage or salary. We take
judicial notice of the fact that some salesmen do not receive any basic salary but ACCORDINGLY, the petition is hereby GRANTED. The decision of the respondent
depend on commissions and allowances or commissions alone, are part of National Labor Relations Commission is MODIFIED by including allowances and
petitioners' wage or salary. We take judicial notice of the fact that some salesman do commissions in the separation pay of petitioners Jose Songco and Amancio Manuel.
not received any basic salary but depend on commissions and allowances or The case is remanded to the Labor Arbiter for the proper computation of said
commissions alone, although an employer-employee relationship exists. Bearing in separation pay.SO ORDERED.
mind the preceeding dicussions, if we adopt the opposite view that commissions, do
not form part of wage or salary, then, in effect, We will be saying that this kind of Narvasa (Chairman), Cruz, Gancayco and Griño-Aquino, JJ., concur.
salesmen do not receive any salary and therefore, not entitled to separation pay in
the event of discharge from employment. Will this not be absurd? This narrow
interpretation is not in accord with the liberal spirit of our labor laws and considering
the purpose of separation pay which is, to alleviate the difficulties which confront a
dismissed employee thrown the the streets to face the harsh necessities of life.

Additionally, in Soriano v. NLRC, et al., supra, in resolving the issue of the salary
base that should be used in computing the separation pay, We held that:

The commissions also claimed by petitioner ('override commission'


plus 'net deposit incentive') are not properly includible in such base
figure since such commissions must be earned by actual market
transactions attributable to petitioner.

Applying this by analogy, since the commissions in the present case were earned by
actual market transactions attributable to petitioners, these should be included in their
separation pay. In the computation thereof, what should be taken into account is the
average commissions earned during their last year of employment.

The final consideration is, in carrying out and interpreting the Labor Code's provisions
and its implementing regulations, the workingman's welfare should be the primordial
and paramount consideration. This kind of interpretation gives meaning and
substance to the liberal and compassionate spirit of the law as provided for in Article
4 of the Labor Code which states that "all doubts in the implementation and
interpretation of the provisions of the Labor Code including its implementing rules and
regulations shall be resolved in favor of labor" (Abella v. NLRC, G.R. No. 71812, July
30,1987,152 SCRA 140; Manila Electric Company v. NLRC, et al., G.R. No. 78763,
July 12,1989), and Article 1702 of the Civil Code which provides that "in case of
doubt, all labor legislation and all labor contracts shall be construed in favor of the
safety and decent living for the laborer.
G.R. No. L-72138 January 22, 1990 Bonamy's motion for reconsideration of the aforesaid resolution both issued by the
Fourth Special Cases Division in said AC-G.R. No. SP-04423.
SPS. FELICIDAD M. ALVENDIA and JESUS F. ALVENDIA, petitioners,
vs. Although no appeal was ever filed in G.R. No. 72138, the same was ordered
HON. INTERMEDIATE APPELLATE COURT, HON. ELSIE LIGOT-TELAN in her consolidated with G.R. No. 72373 in the resolution of February 3, 1986 of the First
capacity as Presiding Judge of the Regional Trial Court of Bulacan, Third Division of this Court.
Judicial Region, Branch VIII, the PROVINCIAL SHERIFF OF BULACAN, and
BONIFACIO BONAMY, respondents. The instant petitions trace their genesis to a simple collection suit, Civil Case No.
5182-M 1 filed on September 12, 1977, by Bonifacio Bonamy against the spouses
G.R. No. L-72373 January 22, 1990 Jesus F. Alvendia and Felicidad M. Alvendia before the then Court of First Instance
(CFI) of Bulacan, 5th Judicial District, Branch VI, for the sum of P107,481.50
BONIFACIO BONAMY, petitioner, representing construction materials which the Alvendias had purchased on credit from
vs. Bonamy.
HON. EDGARDO L. PARAS, in his capacity as Associate Appellate Justice and
Chairman, HON. VICENTE V. MENDOZA, in his capacity as Associate Appellate After the Alvendias had filed a "Motion to Dismiss" dated October 31, 1977 which was
Justice and Member, and HON. LUIS A. JAVELLANA, in his capacity as opposed by Bonamy on November 16, 1977 and an "Answer with Affirmative and
Associate Appellate Justice and Member of the Fourth Special Cases Division Negative Defenses and Counterclaim" dated December 1, 1977, both parties
of the Intermediate Appellate Court; FELICIDAD M. ALVENDIA and JESUS F. submitted to the trial court on January 6, 1978 a "Compromise Agreement" providing,
ALVENDIA, respondents. among other things:

Lesaca, Villasor, Espiritu, Orlina & Ferrer for petitioners in 72138. xxx xxx xxx

De Guzman, Florentino & Associates for Bonifacio Bonamy. (1) That defendants do hereby acknowledge the in debtedness of their family
corporation, Dona Felisa Village and Housing Corporation, in the amount of
FERNAN, C.J.: P107,481.50, representing the cost of construction materials bought on credit
from plaintiff from June 20 to August 12, 1975 and jointly with said family
In G.R. No. 72138, the spouses Felicidad M. Alvendia and Jesus F. Alvendia filed an corporation, do hereby bind themselves to pay said obligation out of the first
urgent motion for extension of time to file an appeal by certiorari from the denial of release or releases of funds from the Government Service Insurance System
their motion for reconsideration of the decision of the then Intermediate Appellate (GSIS) for housing units and lots sold by the said corporation to members of
Court (IAC) dismissing their petition docketed therein as AC-G.R. No. SP-04423, the GSIS provided, however, that the P47,000.00 previously assigned to Wells
entitled "Alvendia et al. v. Telan etc., et al." and Pu shall be first satisfied before applying such GSIS release to
satisfaction of said indebtedness to the herein plaintiff;
In G.R. No. 72373, a petition for certiorari and prohibition was filed by Bonifacio
Bonamy, seeking to annul and set aside: [a] Resolution II dated September 11, 1985 (2) That the plaintiff and defendants shall thereby join hands in asking the
granting the motion filed by the spouses Alvendia to pay Bonifacio Bonamy the GSIS to expedite the releases of the funds due to said corporation; and
amount of the judgment in cash, and [b] Resolution I dated October 8, 1985 denying
(3) That for and in consideration of this agreement the plaintiff and defendants In an order dated September 10, 1984, the trial court (now RTC of Bulacan, 3rd
hereby waive any and all further claims monetary or otherwise against each Judicial Region, Br. VIII) denied the spouses' motion to quash and ordered instead
other regarding the subject matter of this case. the issuance of a writ of possession in Bonamy's favor, thus:

xxx xxx xxx Premises considered, the pending incidents are hereby resolved, as follows:

On the same date, the trial court, finding the aforesaid compromise agreement not to (1) The motion to quash or annul the writ of execution is hereby denied;
be contrary to laws, morals, good customs public policy and public order, approved
and adopted the same as the decision in the case. 3 (2) The sale of the Toyota Land Cruiser is hereby declared null and void,
consequently, let the defendants be restored in the ownership and possession
Subsequently, Bonamy moved for execution of judgment, alleging that the Alvendias thereof;
"have not submitted any finished project with the GSIS, thereby preventing the full
realization of the aforesaid decision." 4 (3) The levy and sale of the defendants' rights over Foreshore Lease
Application No. V-1284 (EV-87) Lot 1 PSU-141243 is hereby confirmed and
On December 6, 1979, over the objection of the Alvendias, the court ordered the declared valid, for which reason, let a writ of possession of the said premises
issuance of the writ prayed for. The Alvendias did not move for reconsideration nor be issued forthwith.7
did they elevate the matter to the higher courts. 5
The records show that as per sheriffs return, possession of the fishpond was
In a motion dated April 23,1980, Bonamy sought the issuance of an alias writ of delivered to Bonamy on October 8, 1984. 8
execution, the first writ having been returned unsatisfied. He admitted though in the
same motion that he received P20,000.00 in cash from the Alvendias sometime in In a petition for certiorari and prohibition with prayer for preliminary injunction and
January 1980 and an additional amount of P4,000.00 by way of proceeds of the sale temporary restraining order filed with the Intermediate Appellate Court, (docketed as
of the Alvendias vehicle. 6 CA-G.R. No. SP-04423) the spouses Alvendias sought the annulment of the writ of
execution, the levy made upon the leasehold rights and the writ of possession.
Pursuant to the alias writ issued by the Court on May 2,1980, the Bulacan provincial
sheriff levied on the Alvendias "leasehold rights" over a fishpond (lease application In a nutshell, the spouses argued as follows:[1] that the writ and the alias writ of
no. V-1284 (EV-87) Lot I PSU-141243), located at Baluarte, Bulacan, Bulacan. execution levied upon properties not referred to in the judgment by compromise; [2]
the writs made only the Alvendias liable, when under the "agreement" their family
On January 15, 1981, a certificate of sale over said leasehold right was executed by corporation was also supposed to be liable; [3] the writ was premature because the
the Sheriff in favor of Bonamy. Compromise Agreement contained a condition which had not yet been fulfilled,
namely, the release of a loan from the GSIS; [4] the fishpond, owned by the
More than a year later, or on February 2, 1982, the spouses moved for the quashal government though leased to the Alvendias, cannot be a proper subject of a levy on
and annulment of the writ of execution, levy and sale. execution; and [5] the leasehold rights possessed by the Alvendias had already
expired before the issuance of the order. 9
A final deed of sale was executed on January 25, 1983 and registered with the
Register of Deeds of Bulacan on April 27, 1983.
In its Decision dated February 27, 1985, the IAC dismissed the aforesaid petition. The Seventhly, if it is really true that the lease had already expired before the writs
pertinent portion is hereunder quoted, thus: were issued, this is a matter that can be raised by the government, not the
Alvendias who have already ceased to become real parties in interest
xxx xxx xxx regarding the property.

Firstly, we note that after the questioned writ of possession had been xxx xxx xxx
issued, no motion for reconsideration was filed to give the respondent judge
an opportunity to correct any error that may have been committed. WHEREFORE, the instant petition is denied due course, and is hereby
DISMISSED. The restraining order previously issued is hereby lifted. 10
Secondly, the orders complained of and which are attached to the petition
are not certified true copies, in violation of the requirements under the rules of The Alvendias filed an urgent motion for reconsideration. Pending action thereon, the
court spouses manifested to the court, thru motion, their willingness to immediately pay to
Bonamy the remaining balance of the judgment sought to be enforced, which they
Thirdly, the writ of execution could properly levy on the properties of the place at P 37,481.50, plus interests due and/or any amount as the court may
Alvendias because their debt had already matured and remained unpaid determine to be due (the said amount was reached by deducting from the total sum of
despite demands. The judgment does not have to indicate what specific P107,481.50: P20,000.00, P4,000.00 representing the value of the Toyota Land
properties should be levied upon. Cruiser and the further amount of P46,000.00 representing the actual value of the
Toyota Land Cruiser minus the amount of P4,000.00 allegedly realized from the
Fourthly, there could be no execution against the family corporation because it execution sale thereof). 11
was not a party to the case, was not a party or signatory to the compromise
agreement. Neither was it represented by the Alvendias. On September 11, 1985, the IAC issued two resolutions, denominated as Resolutions
I and II.
Fifthly, the issuance of the writs was not premature. There is nothing in the
compromise agreement which says that the release of the GSIS loan was a Resolution I denied the Alvendias' motion for reconsideration for lack of merit, without
condition precedent to the payment of the debt. True, there was an indication prejudice to what was stated in Resolution II hereunder.
by the Alvendias as to where they would obtain the needed financing, but this
did not make the obtaining of the same a suspensive condition which would Resolution II granted their motion to satisfy the judgment sought to be enforced in
give rise to the creation of their obligation. The obligation to pay was cash thereby directing the parties to submit to the court an agreement duly signed by
admittedly there — even before any reference to the GSIS. Had they desired both parties regarding full satisfaction of the judgment but only after the total amount
to make the fund release a condition sine qua non words should have been involved in said judgment had been tendered and delivered to Bonamy. 12
used to that effect. Indeed, it is absurd to say that if the GSIS would not
release the money the Alvendias would be excused from the payment of their The Alvendias then tendered payment to Bonamy in the form of a cashier's check in
acknowledged indebtedness. the amount of P100,000.00. 13 Bonamy refused said tender of payment, and instead
moved for a reconsideration of Resolution II.
Sixthly, it is not the fishpond that was levied upon but the leasehold rights of
the Alvendias.
In the meantime, the spouses moved for the issuance of a temporary restraining On February 24, 1986, Bonamy, as private respondent in G.R. No. 72138, filed a
order to prevent or stop the allegedly unjust enforcement of the questioned writ of manifestation that since the Alvendias did not file their petition in said case, the
execution/possession and to prevent the sheriff and Bonamy and all persons acting proceeding should be ordered dismissed and that entry of the IAC judgment be
under them from entering and encroaching on the fishpond area. ordered.

On October 2, 1985, the IAC restrained Bonamy and his corespondents therein from Upon the Alvendias' failure to comply with the court's order to comment on the
enforcing the questioned Writ of Execution/Possession issued in Civil Case No. 5182- aforementioned manifestation, this Court issued a "show cause" resolution to the
M, as well as from entering and encroaching further into the subject fishpond. 14 spouses.

Bonamy moved for the lifting of that order on the averment, among others, that the Pleading absolute good faith and honesty and attributing failure to file the required
acts sought to be restrained had already been executed, Bonamy having been placed comment to the confusing circumstances engendered by the issued resolutions
in possession on October 8, 1984 by Deputy Sheriff Rufino I. Santiago of Bulacan by (denying respondents' motion for reconsideration but granting their motion to satisfy
virtue of the Writ of Possession issued in Civil Case No. 5182-M. 15 judgment in cash) the Alvendias prayed the Court to consider instead their urgent
petition (to extend time to file appeal) as their sufficient appeal, anchoring their
In an urgent motion for extension of time to file appeal by certiorari (from respondent entreaty on Bonamy's petition which is also pending in this Court and which has,
court's order denying their motion for reconsideration) spouses Alvendias elevated anyway, opened the entire case for review. This explanation and manifestation of
their case to this Tribunal, docketed as G.R. No. 72138. Such motion was granted by counsel for private respondents was noted in the resolution of October 15, 1986 of
the Court. A second motion was, however, denied. Hence, no petition was filed in the Second Division of this Court where this case was eventually referred.*
G.R. No. 72138.
The petition in G.R. No. 72373 is impressed with merit. The pivotal issue in this case
On October 8,1985, the IAC issued three resolutions embodied in a single document: is whether or not the judgment debtors may successfully ask that they be allowed to
Resolution I—denying Bonamy's motion for reconsideration; II—ordering him to pay the judgment debt in cash long after they have failed to pay or redeem their
comment on the motion for Deposit filed by the Alvendias; III—ordering the spouses properties which have been sold in execution.
to comment on the Manifestation and Motion to lift restraining order filed by Bonamy.
Bonamy puts forward the averment that respondent court committed grave abuse of
Hence, this petition for certiorari and prohibition, praying for the annulment of discretion in granting the Alvendias' motion that they be allowed to pay the judgment
respondent court's Resolution II of September 11, 1985 and its Resolution I of debt in cash.
October 8, 1985, filed with this Court on October 21, 1985 by Bonamy and docketed
as G.R. No. 72373. He anchors his contention on the fact that there having been a valid levy and sale on
execution of the Alvendias' leasehold rights over the fishpond in question, there is no
As earlier stated, on February 3, 1986, notwithstanding the Alvendias failure to file a longer any money judgment to be satisfied.
petition in G.R. No. 72138, the Court resolved to consolidate the two cases, namely,
G.R. Nos. 72138 and 72373, in the resolution of February 3, 1986, of the First He maintains the position that all the questioned writs herein as well as the
Division of this Court. 16 questioned orders have already been found by respondent IAC to be proper and legal
and had in fact dismissed the petition of the Alvendias in its decision of February 27,
1985. Since then, he has been in ownership and possession of the disputed fishpond
in Baluarte, Bulacan, and has been exercising all the acts of possession with respect In any event, it is axiomatic that there is no justification in law and in fact for the
to the same. 17 reopening of a case which has long become final and which has in fact been
executed. 21 Time and again this Court has said that the doctrine of finality of
Hence, petitioner claims that the assailed resolutions are in effect [a] an annulment of judgments is grounded on fundamental consideration of public policy and sound
the assailed Orders and Writs of the Bulacan Regional Trial Court, the Certificate of practice that at the risk of occasional error the judgments of courts must become final
Sale and the Final Deed of Sale of the Leasehold Rights over the Foreshore Lands; at some definite date fixed by law. 22
[b] an extension of the Alvendias' period to redeem the leasehold rights over said
land; and [c] orders directing Bonamy and the Alvendias to enter into a contract of On the other hand, the Alvendias invoke equity and aver that the IAC acted correctly
sale over said leasehold rights for the price of the judgment debt embodied in the in granting their motion to pay the balance of the judgment indebtedness in view of
Compromise Agreement. 18 highly exceptional circumstances such as the supposedly grossly fraudulent
irregularities committed by Bonamy and the Special Sheriff of Bulacan.
Verily, it is unrefuted that the writs and orders of the lower court sought to be annulled
or at least reopened are already final and executory and in fact already executed. It is a settled rule, however, that said Special Sheriff is under the control and
supervision of the trial court which issued the assailed writ of execution to the
The judgment which was executed was a compromise judgment, duly approved by exclusion of other courts. Accordingly, the court which rendered the judgment has a
the court and therefore, final and immediately executory. 19 Bonamy was clearly general supervisory control over its process of execution and this power carries with it
entitled to execution since the Alvendias failed to pay on time the judgment. Hence, the right to determine every question of fact and law which may be involved in the
the Bulacan Court ordered the execution thereof on December 9, 1979. 20 execution. 23 But as earlier stated, private respondents neither moved for
reconsideration of the December 6, 1979 order of the trial court directing the issuance
The compromise judgment against the Alvendias had been duly and legally executed of the writ of execution, nor appealed the same to the higher courts.
and fully satisfied as of January 15,1981 in accordance with Section 15 of Rule 39 of
the Rules of Court when the Bulacan Sheriff levied on the Alvendias foreshore In any event, the Alvendias cannot invoke equity as a ground for reopening the case
leasehold rights by selling the same and paying the judgment creditor Bonamy. The and making the payment of the judgment in cash possible. The records show that
Alvendias had one year within which to redeem said property rights but they failed to they had all the opportunity to make such payments on four occasions but failed.
do so. Hence, the Sheriff issued the Final Deed of Sale on January 25, 1983. These are: [1] from the time they got the building and construction materials worth
P107,461.50 from the petitioner (from June 26 to August 12, 1975) up to the time they
As above stated, on certiorari and prohibition in CA-G.R. No. SP-04423, all these agreed to a compromise agreement on January 6, 1978; [2] from the compromise
orders and writs, taken up one by one by the Intermediate Appellate Court were found judgment to the time execution was ordered by the respondent court (Order dated
to be legal and proper for which reason, the petition was dismissed in the decision of December 6, 1979); [3] from the Execution Order to the Execution Sale (on January
February 27, 1985. 15, 1981); and [4] from the Execution Sale up to the end of the redemption period,
finally ending in the Final Deed of Sale. 24
In this Court, private respondents moved for extension of time to file a petition for
review in G.R. No. 72138 but failed to file the same, thereby foreclosing their right to There is no question therefore, that the Alvendias failed to pay on time the judgment
appeal. of which the execution sale was a necessary consequence. They also failed to
redeem the property within the required period despite the fact that the Final Deed of
Sale was issued only on January 25, 1983, long past the aforesaid period; undeniably
showing a lack of intention or capability to pay the same.
Instead the offer to pay the judgment in cash was first made by private respondents at his own cost, should be taken into account under the familiar principle that "one
Alvendias on April 23, 1985 or two months after the decision of respondent Appellate who seeks equity must do equity." 32
Court on February 27, 1985 and more than two years after the redemption period had
elapsed. More importantly, the offer was made after Bonamy had introduced In resume, the Alvendias, after having allowed the period of redemption to lapse
improvements on the property worth one million pesos (P1,000,000.00) as evidenced without availing themselves of the same, and after petitioner had introduced
by irrefutable proof. Of course, the Alvendias claim the same amount as the value of improvements on the property at the latter's expense, cannot now be allowed to
the fishpond presumably before execution but such claim besides having been raised redeem the property sold to the latter thru the expediency of a motion or
only on appeal, specifically after the promulgation of the decision of the Intermediate manifestation.
Appellate Court on February 27, 1985, is unsupported by evidence on record. On the
contrary, petitioner Bonamy's pictures of the leased premises before and after he took As to other matters, there appears to be no cogent reason to disturb the findings and
possession of the same belie said claim of private respondents. 25 conclusions of the Intermediate Appellate Court in its decision of February 27, 1985
which has become final and executory when the Alvendias failed to file their
As insisted upon by petitioner, the money judgment against the Alvendias has already contemplated petition for review on certiorari in G.R. No. 72138. It has been held that
been satisfied and there is no more need to pay, in cash or otherwise. Hence, as failure to perfect an appeal renders the lower court's judgment final and executory
ruled by this Court, when judgment has been satisfied, the same passes beyond and a modification of such judgment by the appellate court cannot be allowed.
review, for satisfaction thereof is the last act and end of the proceedings. Payment Furthermore, an appellee who is not also an appellant may also assign errors in his
produces permanent and irrevocable discharge. 26 brief where his purpose is to maintain the judgment on other grounds, but he may not
do so if his purpose is to have the judgment modified or reversed, for, in such case,
On the other hand, equity has been aptly described as "a justice outside legality"; he must appeal. 33
winch is applied only in the absence of and never against statutory law or as in this
case, judicial rules of procedure. 27 The rule is "equity follows the law" but where a However, where there is an ambiguity caused by an omission or mistake in the
particular remedy is given by the law and that remedy is bounded and circumscribed dispositive portion of the decision, in this case in the questioned "Writ of Possession"
by particular rules, it would be very improper, for the court to take it up where the law issued by the trial court, where the twenty-three (23) hectare foreshore land (23.467
leaves it and to extend it further than the law allows. 28 There may be a moral hec.), described in the Sheriffs Certificate of Sale and Final Deed of Sale 34 became a
obligation but if there is no enforceable legal duty, the action for reconveyance must forty-hectare foreshore land (40.63 hec.), 35 it has been held that this Court may
fail. 29 Courts exercising equity jurisdiction are bound by rules of law and have no clarify such ambiguity by an amendment even after the judgment had become final. 36
arbitrary discretion to disregard them. Equitable reasons will not control against any
well-settled rule of law or public policy. 30 WHEREFORE, the assailed resolutions are hereby SET ASIDE and the decision
dismissing the Alvendias' petition is AFFIRMED save that portion upholding the
Moreover, it is oft repeated that "He who comes into Equity must come with clean validity of the writ of possession which contained an error in property description.
hands." 31 At this stage, to allow private respondents to pay in cash the balance of the Hence, the writ of possession is hereby AMENDED to conform to the description
judgment account for which they offered P100,000.00 to redeem the property on appearing in the Certificate of Sale and the Final Deed of Sale. Let the restraining
which petitioner has spent one million pesos (P1,000,000.00) in terms of order issued by the Intermediate Appellate Court on October 2, 1985 relative to the
improvements introduced would be less than fair. If equity is to be applied at all, it enforcement of said writ be lifted accordingly.
should be applied for the benefit of the petitioner. Thus, this Court in applying equity
jurisprudence in a partition case, ruled that improvements introduced on the property Petitioner is hereby ordered to return to private respondents, the amount of
by one who necessarily and in good faith improved the same and enhanced its value P12,518.50 pesos, which amount represents the difference between the execution
price of P100,000.00 and P 87,481.50, the latter amount having been arrived at by G.R. No. 84850 June 29, 1989
deducting P20,000.00 from the total amount of indebtedness which is P107,481.50. 37
RICARDO A. LLAMADO, petitioner,
In G.R. No. 72138, the petition for review on certiorari of Resolution I of the vs.
Intermediate Appellate Court denying private respondents' motion for reconsideration HONORABLE COURT OF APPEALS and LEON GAW, respondents.
of its decision of February 27, 1985, not having been filed, entry of judgment of
aforesaid decision may now be made by said Appellate Court. Ambrosio Padilla, Mempin & Reyes Law Offices for petitioner.

SO ORDERED. FELICIANO, J.:

Gutierrez, Jr., Feliciano, Bidin and Cortés, JJ., concur. Petitioner Ricardo A. Llamado was Treasurer of Pan Asia Finance Corporation.
Together with Jacinto N. Pascual, Sr., President of the same corporation, petitioner
Llamado was prosecuted for violation of Batas Pambansa Blg. 22 in Criminal Case
No. 85-38653, Regional Trial Court of Manila, Branch 49. The two (2) had co-signed a
postdated check payable to private respondent Leon Gaw in the amount of
P186,500.00, which check was dishonored for lack of sufficient funds.

In a decision dated 10 March 1987, the trial court convicted the petitioner alone, since
jurisdiction over the person of Pascual, who had thoughtfully fled the country, had not
been obtained. Petitioner was sentenced to imprisonment for a period of one (1) year
of prision correccional and to pay a fine of P 200,000.00 with subsidiary imprisonment
in case of insolvency. Petitioner was also required to reimburse respondent Gaw the
amount of P186,500.00 plus the cost of suit.

On 20 March 1987, after the decision of the trial court was read to him, petitioner
through counsel orally manifested that he was taking an appeal. Having been so
notified, the trial court on the same day ordered the forwarding of the records of the
case to the Court of Appeals. On 9 July 1987, petitioner through his counsel received
from the Court of Appeals a notice to file his Appellant's Brief within thirty (30) days.
Petitioner managed to secure several extensions of time within which to file his brief,
the last extension expiring on 18 November 1987. 1

Petitioner Llamado, even while his Appellant's Brief was being finalized by his then
counsel of record, sought advice from another counselor. On 30 November 1987,
petitioner, with the assistance of his new counsel, filed in the Regional Trial Court a
Petition for Probation invoking Presidential Decree No. 968, as amended. The
Petition was not, however, accepted by the lower court, since the records of the case to file Appellant's Brief had been sought from and granted by the Court of Appeals but
had already been forwarded to the Court of Appeals. before actual filing of such brief, is barred under P.D. No. 968, as amended.

Petitioner then filed with the Court of Appeals Manifestation and Petition for P.D. No. 968, known as the Probation Law of 1976, was promulgated on 24 July
Probation" dated 16 November 1987, enclosing a copy of the Petition for Probation 1976. Section 4 of this statute provided as follows:
that he had submitted to the trial court. Petitioner asked the Court of Appeals to grant
his Petition for Probation or, in the alternative, to remand the Petition back to the trial Sec. 4. Grant of Probation. Subject to the provisions of this Decree, the
court, together with the records of the criminal case, for consideration and approval court may, after it shall have convicted and sentenced a defendant and
under P.D. No. 968, as amended. At the same time, petitioner prayed that the running upon application at any time of said defendant, suspend the execution
of the period for the filing of his Appellant's Brief be held in abeyance until after the of said sentence and place the defendant on probation for such period
Court of Appeals shall have acted on his Petition for Probation. and upon such terms and conditions as it may deem best.

In a "Manifestation and Motion" dated 3 March 1988 and filed with the Court of Probation may be granted whether the sentence imposes a term of
Appeals, petitioner formally withdrew his appeal conditioned, however, on the imprisonment or a fine only. An application for probation shall be filed
approval of his Petition for Probation. 2 with the trial court, with notice to the appellate court if an appeal has
been taken from the sentence of conviction. The filing of the
Complying with a Resolution of the Court of Appeals, the Office of the Solicitor application shall be deemed a waiver of the right to appeal, or the
General filed a Comment stating that it had no objection to petitioner Llamado's automatic withdrawal of a pending appeal.
application for probation. Private respondent-complainant, upon the other hand,
sought and obtained leave to file a Comment on petitioner Llamado's application for An order granting or denying probation shall not be appealable.
probation, to which Comment, petitioner filed a Reply. Private respondent then filed (Emphasis supplied)
his "Comment" on the Office of the Solicitor General's Comment of 18 March 1988.
It will be noted that under Section 4 of P.D. No. 968, the trial court could grant an
In a Resolution dated 17 June 1988, the Court of Appeals, through Mr. Justice application for probation "at any time" "after it shall have convicted and sentenced a
Magsino, denied the Petition for Probation. A dissenting opinion was filed by Mr. defendant" and certainly after "an appeal has been taken from the sentence of
Justice Bellosillo while Mr. Justice Santiago submitted a concurring opinion. Petitioner conviction." Thus, the filing of the application for probation was "deemed [to
moved for reconsideration which Motion was denied by the Court of Appeals on 23 constitute] automatic withdrawal of a pending appeal."
August 1988, with another, briefer, dissenting opinion from Mr. Justice Bellosillo.
On 1 December 1977, Section 4 of P.D. No. 968 was amended by P.D. No. 1257 so
Petitioner now asks this Court to review and reverse the opinion of the majority in the as to read as follows:
Court of Appeals and, in effect, to accept and adopt the dissenting opinion as its own.
Sec. 4. Grant of Probation. Subject to the provisions of this Decree, the
The issue to be resolved here is whether or not petitioner's application for probation court may, senteafter it shall have convicted and sentenced a
which was filed after a notice of appeal had been filed with the trial court, after the defendant but before he begins to serve his sentence and upon his
records of the case had been forwarded to the Court of Appeals and the Court of application, suspend the execution of said sentence and place the
Appeals had issued the notice to file Appellant's Brief, after several extensions of time
defendant on probation for such period and upon such terms and On 5 October 1985, however, Section 4 of the Probation Law of 1976 was once again
conditions as it may deem best. amended. This time by P.D. No. 1990. As so amended and in its present form,
Section 4 reads as follows:
The prosecuting officer concerned shall be notified by the court of the filing of the
application for probation and he may submit his comment on such application within Sec. 4. Grant of Probation. Subject to the provisions of this Decree, the
ten days from receipt of the notification. trial court may, after it shall have convicted and sentenced a
defendant, and upon application by said defendant within the period for
Probation may be granted whether the sentence imposes a term of perfecting an appeal, suspend the execution of the sentence and place
imprisonment or a fine with subsidiary imprisonment in case of the defendant on probation for such period and upon such terms and
insolvency. An application for probation shall be filed with the trial conditions as it may deem best; Provided, That no application for
court, with notice to the appellate court if an appeal has been taken probation shall be entertained or granted if the defendant has
from the sentence of conviction. The filing of the application shall be perfected an appeal from the judgment of conviction.
deemed a waiver of the right to appeal, or the automatic withdrawal of
a pending appeal. In the latter case, however, if the application is filed Probation may be granted whether the sentence imposes a term of
on or after the date of the judgment of the appellate court, said imprisonment or a fine only An application for probation shall be filed
application shall be acted upon by the trial court on the basis of the with the trial court. The filing of the application shall be deemed a
judgment of the appellate court. (Emphasis supplied) waiver of the right to appeal.

Examination of Section 4, after its amendment by P.D. No. 1257, reveals that it had An order granting or denying probation shall not be appealable.
established a prolonged but definite period during which an application for probation (Emphasis supplied)
may be granted by the trial court. That period was: 'After [the trial court] shall have
convicted and sentenced a defendant but before he begins to serve his sentence." In sharp contrast with Section 4 as amended by PD No. 1257, in its present form,
Clearly, the cut-off time-commencement of service of sentence-takes place not only Section 4 establishes a much narrower period during which an application for
after an appeal has beentaken from the sentence of conviction, but even after probation may be filed with the trial court: "after [the trial court] shall have convicted
judgement has been rendered by the appellate court and after judgment has become and sentenced a defendant and — within the period for perfecting an appeal — ." As
final. Indeed, in this last situation, Section 4, as amended by P.D. No. 1257 provides if to provide emphasis, a new proviso was appended to the first paragraph of Section
that "the application [for probation] shall be acted upon by the trial court on the basis 4 that expressly prohibits the grant of an application for probation "if the defendant
of the judgment of the appellate court"; for the appellate court might have increased has perfected an appeal from the judgment of conviction." It is worthy of note too that
or reduced the original penalty imposed by the trial court. It would seem beyond Section 4 in its present form has dropped the phrase which said that the filing of an
dispute then that had the present case arisen while Section 4 of the statute as application for probation means "the automatic withdrawal of a pending appeal". The
amended by P.D. No. 1257 was still in effect, petitioner Llamado's application for deletion is quite logical since an application for probation can no longer be filed once
probation would have had to be granted. Mr. Llamado's application for probation was an appeal is perfected; there can, therefore, be no pending appeal that would have to
filed well before the cut-off time established by Section 4 as then amended by P.D. be withdrawn.
No. 1257.
In applying Section 4 in the form it exists today (and at the time petitioner Llamado
was convicted by the trial court), to the instant case, we must then inquire whether
petitioner Llamado had submitted his application for probation "within the period for
perfecting an appeal." Put a little differently, the question is whether by the time application by [the] defendant within the period for perfecting an appeal" and in
petitioner Llamado's application was filed, he had already "perfected an appeal" from reiterating in the proviso that
the judgment of conviction of the Regional Trial Court of Manila.
no application for probation shall be entertained or granted if the
The period for perfecting an appeal from a judgment rendered by the Regional Trial defendant has perfected an appeal from the judgment of conviction.
Court, under Section 39 of Batas Pambansa Blg. 129, Section 19 of the Interim Rules
and Guidelines for the Implementation of B.P. Blg. 129 and under the 1985 Rules on did not really mean to refer to the fifteen-day period established, as indicated above,
Criminal Procedure, as amended, or more specifically Section 5 of Rule 122 of the by B.P. Blg. 129, the Interim Rules and Guidelines Implementing B.P. Blg. 129 and
Revised Rules of Court, is fifteen (15) days from the promulgation or notice of the the 1985 Rules on Criminal Procedure, but rather to some vague and undefined time,
judgment appealed from. It is also clear from Section 3 (a) of Rule 122 that such i.e., "the earliest opportunity" to withdraw the defendant's appeal.
appeal is taken or perfected by simply filing a notice of appeal with the Regional Trial The whereas clauses invoked by petitioner did not, of course, refer to the fifteen-day
Court which rendered the judgment appealed from and by serving a copy thereof period. There was absolutely no reason why they should have so referred to that
upon the People of the Philippines. As noted earlier, petitioner Llamado had period for the operative words of Section 4 already do refer, in our view, to such
manifested orally and in open court his intention to appeal at the time of promulgation fifteen-day period. Whereas clauses do not form part of a statute, strictly speaking;
of the judgment of conviction, a manifestation at least equivalent to a written notice of they are not part of the operative language of the
appeal and treated as such by the Regional Trial Court. statute. 5 Nonetheless, whereas clauses may be helpful to the extent they articulate
the general purpose or reason underlying a new enactment, in the present case, an
Petitioner urges, however, that the phrase "period for perfecting an appeal" and the enactment which drastically but clearly changed the substantive content of Section 4
clause "if the defendant has perfected an appeal from the judgment of conviction" existing before the promulgation of P.D. No. 1990. Whereas clauses, however,
found in Section 4 in its current form, should not be interpreted to refer to Rule 122 of cannot control the specific terms of the statute; in the instant case,
the Revised Rules of Court; and that the "whereas" or preambulatory clauses of P.D. the whereas clauses of P.D. No. 1990 do not purport to control or modify the terms of
No. 1990 did not specify a period of fifteen (15) days for perfecting an appeal. 3 It is Section 4 as amended. Upon the other hand, the term "period for perfecting an
also urged that "the true legislative intent of the amendment (P.D. No. 1990) should appeal" used in Section 4 may be seen to furnish specification for the loose language
not apply to petitioner who filed his Petition for probation at the earliest "first opportunity" employed in the fourth whereas clause. "Perfection of an appeal" is,
opportunity then prevailing and withdrew his appeal." 4 of course, a term of art but it is a term of art widely understood by lawyers and judges
and Section 4 of the Probation Law addresses itself essentially to judges and lawyers.
Petitioner invokes the dissenting opinion rendered by Mr. Justice Bellosillo in the "Perfecting an appeal" has no sensible meaning apart from the meaning given to
Court of Appeals. Petitioner then asks us to have recourse to "the cardinal rule in those words in our procedural law and so the law-making agency could only have
statutory construction" that "penal laws [should] be liberally construed in favor of the intended to refer to the meaning of those words in the context of procedural law.
accused," and to avoid "a too literal and strict application of the proviso in P.D. No.
1990" which would "defeat the manifest purpose or policy for which the [probation Turning to petitioner's invocation of "liberal interpretation" of penal statutes, we note
law] was enacted-." at the outset that the Probation Law is not a penal statute. We, however, understand
petitioner's argument to be really that any statutory language that appears to favor the
We find ourselves unable to accept the eloquently stated arguments of petitioner's accused in a criminal case should be given a "liberal interpretation." Courts, however,
counsel and the dissenting opinion. We are unable to persuade ourselves that have no authority to invoke "liberal interpretation' or "the spirit of the law" where the
Section 4 as it now stands, in authorizing the trial court to grant probation "upon words of the statute themselves, and as illuminated by the history of that statute,
leave no room for doubt or interpretation. We do not believe that "the spirit of law"
may legitimately be invoked to set at naught words which have a clear and definite to the meaning of a given statute or contract until it has been submitted
meaning imparted to them by our procedural law. The "true legislative intent" must to some court for its interpretation and construction. 6
obviously be given effect by judges and all others who are charged with the
application and implementation of a statute. It is absolutely essential to bear in mind, The point in this warning may be expected to become sharper as our people's grasp
however, that the spirit of the law and the intent that is to be given effect are to be of English is steadily attenuated.
derived from the words actually used by the law-maker, and not from some external,
mystical or metajuridical source independent of and transcending the words of the There is another and more fundamental reason why a judge must read a statute as
legislature. the legislative authority wrote it, not as he would prefer it to have been written. The
words to be given meaning whether they be found in the Constitution or in a statute,
The Court is not here to be understood as giving a "strict interpretation rather than a define and therefore limit the authority and discretion of the judges who must apply
"liberal" one to Section 4 of the Probation Law of 1976 as amended by P.D. No. 1990. those words. If judges may, under cover of seeking the "true spirit" and "real intent" of
"Strict" and "liberal" are adjectives which too frequently impede a disciplined and the law, disregard the words in fact used by the law-giver, the judges will effectively
principled search for the meaning which the law-making authority projected when it escape the constitutional and statutory limitations on their authority and discretion.
promulgated the language which we must apply. That meaning is clearly visible in the Once a judge goes beyond the clear and ordinary import of the words of the
text of Section 4, as plain and unmistakable as the nose on a man's face. The Court legislative authority, he is essentially on uncharted seas. In a polity like ours which
is simply reading Section 4 as it is in fact written. There is no need for the involved enshrines the fundamental notion of limiting power through the separation and
process of construction that petitioner invites us to engage in, a process made distribution of powers, judges have to be particularly careful lest they substitute their
necessary only because petitioner rejects the conclusion or meaning which shines conceptions or preferences of policy for that actually projected by the legislative
through the words of the statute. The first duty of a judge is to take and apply a agency. Where a judge believes passionately that he knows what the legislative
statute as he finds it, not as he would like it to be. Otherwise, as this Court in Yangco agency should have said on the particular matter dealt with by a statute, it is easy
v. Court of First Instance of Manila warned, confusion and uncertainty in application enough for him to reach the conclusion that therefore that was what the law-making
will surely follow, making, we might add, stability and continuity in the law much more authority was really saying or trying to say, if somewhat ineptly As Mr. Justice
difficult to achieve: Frankfurter explained:

. . . [w]here language is plain, subtle refinements which tinge words so Even within their area of choice the courts are not at large. They are
as to give them the color of a particular judicial theory are not only confined by the nature and scope of the judicial function in its particular
unnecessary but decidedly harmful. That which has caused so much exercise in the field of interpretation. They are under the constraints
confusion in the law, which has made it so difficult for the public to imposed by the judicial function in our democratic society. As a matter
understand and know what the law is with respect to a given of verbal recognition certainly, no one will gainsay that the function in
matter, is in considerable measure the unwarranted interference by construing a statute is to ascertain the meaning of words used by the
judicial tribunals with the English language as found in statutes and legislature. To go beyond it is to usurp a power which our democracy
contracts, cutting the words here and inserting them there, making has lodged in its elected legislature. The great judges have constantly
them fit personal ideas of what the legislature ought to have done or admonished their brethren of the need for discipline in observing the
what parties should have agreed upon, giving them meanings which limitations A judge must not rewrite a statute, neither to enlarge nor to
they do not ordinarily have cutting, trimming, fitting, changing and contract it. Whatever temptations the statesmanship of policy-making
coloring until lawyers themselves are unable to advise their clients as might wisely suggest, construction must eschew interpolation and
evisceration He must not read in by way of creation. He must not read G.R. No. L-30644 March 9, 1987
out except to avoid patent nonsense of internal contradictions. ... 7
COMMISSIONER OF INTERNAL REVENUE, petitioner,
Petitioner finally argues that since under Section 4 of Probation Law as amended has vs.
vested in the trial court the authority to grant the application for probation, the Court of FIREMAN'S FUND INSURANCE COMPANY and the COURT OF TAX
Appeals had no jurisdiction to entertain the same and should have (as he had prayed APPEALS, respondents.
in the alternative) remanded instead the records to the lower court. Once more, we
are not persuaded. The trial court lost jurisdiction over the case when petitioner B.V. Abela, M.C. Gutierrez & F.J. Malate, Jr., for respondents.
perfected his appeal. The Court of Appeals was not, therefore, in a position to remand
the case except for execution of judgment. Moreover, having invoked the jurisdiction PARAS, J.:
of the Court of Appeals, petitioner is not at liberty casually to attack that jurisdiction
when exercised adversely to him. In any case, the argument is mooted by the This is an appeal from the decision of the respondent Court of Tax Appeals dated
conclusion that we have reached, that is, that petitioner's right to apply for probation May 24, 1969, in C.T.A. Case No. 1629, entitled "FIREMAN'S FUND INSURANCE
was lost when he perfected his appeal from the judgment of conviction. COMPANY v. COMMISSIONER OF INTERNAL REVENUE," which reversed the
decision of petitioner Commissioner of Internal Revenue holding private respondent
WHEREFORE, the Decision of the Court of Appeals in CAGR No. 04678 is hereby Fireman's Fund Insurance Company liable for the payment of the amount of
AFFIRMED. No pronouncement as to costs. P81,406.87 as documentary stamp taxes and compromise penalties for the years
1952 to 1958.
SO ORDERED.
Private respondent is a resident foreign insurance corporation organized under the
Fernan (C.J.), Gutierrez, Jr., Bidin and Cortes, JJ., concur. laws of the United States, authorized and duly licensed to do business in the
Philippines. It is a member of the American Foreign Insurance Association, through
which its business is cleared (Brief for Respondents, pp. 1-2)

The antecedent facts of this case are as follows:

From January, 1952 to December, 1958, herein private respondent Fireman's Fund
Insurance Company entered into various insurance contracts involving casualty, fire
and marine risks, for which the corresponding insurance policies were issued. From
January, 1952 to 1956, documentary stamps were bought and affixed to the monthly
statements of policies issues; and from 1957 to 1958 documentary stamps were
bought and affixed to the corresponding pages of the policy register, instead of on the
insurance policies issued. On July 3, 1959, respondent company discovered that its
monthly statements of business and policy register were lost. The loss was reported
to the Building Administration of Ayala Building and the National Bureau of
Investigation on July 6, 1959. Herein petitioner was also informed of such loss by
respondent company, through the latter's auditors, Sycip, Gorres and Velayo, in a Total...................................................................................P 82,320.41
letter dated July 14, 1959. After conducting an investigation of said loss, petitioner's
examiner ascertained that respondent company failed to affix the required Less: Stamp taxes paid per voucher shown:
documentary stamps to the insurance policies issued by it and failed to preserve its
accounting records within the time prescribed by Section 337 of the Revenue Code 1957............................................................... p 416.82
by using loose leaf forms as registers of documentary stamps without written authority
from the Commissioner of Internal Revenue as required by Section 4 of Revenue 1958................................................................2,096.72 2,513.54
Regulations No. V-1. As a consequence of these findings, petitioner, in a letter dated
December 7, 1962, assessed and demanded from petitioner the payment of AMOUNT DUE & COLLECTIBLE.............................................P 79,906.87
documentary stamp taxes for the years 1952 to 1958 in the total amount of P
79,806.87 and plus compromise penalties, a total of P 81,406.87.
(CTA Decision, Rollo, pp. 16-17).
A breakdown of the amount of taxes due and collectible are as follows:
The compromise penalties consisted of the sum of P1,000.00 as penalty for the
alleged failure to affix documentary stamps and the further sum of P 600.00 as
YEAR AMOUNT penalty for an alleged violation of Revenue Regulations No. V-1 otherwise known as
the Bookkeeping Regulations (Brief for Respondents, p. 4)
1952 P 6,500.00
In a letter dated January 14, 1963, respondent company contested the assessment.
1953 9,977.72
After petitioner denied the protest in a decision dated March 17, 1965, respondent
1954 10,908.89 company appealed to the respondent Court of Tax Appeals on May 8, 1965. After
hearing respondent court rendered its decision dated May 24, 1969 (Rollo, pp. 16-21)
1955 14,204.52 reversing the decision of the Commissioner of Internal Revenue. The assailed
decision reads in part:
1956 12,108.26
The affixture of documentary stamps to papers other than those authorized by law is
1957 7,880.68 not tantamount to failure to pay the same. It is true that the mode of affixing the
stamps as prescribed by law was not followed, but the fact remains that the
1958 16,257.60 documentary stamps corresponding to the various insurance policies were purchased
and paid by petitioner. There is no legal justification for respondent to require
Total stamp taxes due on policies issued from 1952 to 1958 77,837.67 petitioner to pay again the documentary stamp tax which it had already paid. To
sustain respondent's stand would require petitioner to pay the same tax twice. If at all,
Add: Stamp taxes on monthly statements during: the petitioner should be proceeded against for failure to comply with the requirement
of affixing the documentary stamps to the taxable insurance policies and not for
1957..........................................................................................1,218.35 failure to pay the tax. (See Sec. 239 and 332, Rev. Code).

1958..........................................................................................3,264.39
It should be observed that the law allows the affixture of documentary stamps' to such SEC. 232. Stamp tax on life insurance policies. — On all policies of insurance or
other paper as may be indicated by law or regulations as the proper recipient of the other instruments by whatever name the same may be called, whereby any insurance
stamp.' It appears from this provision that respondent has authority to allow shall be made or renewed upon any life or lives, there shall be collected a
documentary stamps to be affixed to papers other than the documents or instruments documentary stamp tax of thirty-five centavos on each two hundred pesos or
taxed. Although the practice adopted by petitioner in affixing the documentary stamps fractional part thereof, of the amount issued by any such policy. (220) (As amended
to the business statements and policy register was without specific permission from by PD 1457)
respondent but only on the strength of his ruling given to Wise & Company (see
Petitioner's Memorandum, p. 176, CTA rec.; p. 24, t.s.n.), one of the general agents Insurance policies issued by a Philippine company to persons in other countries are
of petitioner, however, considering that petitioner actually purchased the documentary not subject to documentary stamp tax. (Rev. Regs. No. 26)
stamps, affixed them to the business statements and policy register and cancelled the
stamps by perforating them, we hold that petitioner cannot be held liable to pay again Medical certificate attached to an insurance policy is not a part of the said policy.
the same tax. Insurance policy is subject to Section 232 of the Tax Code while medical certificate is
taxable under Section 237 of the same Code.
With respect to the 'compromise penalties' in the total sum of P 1,600.00, suffice it to
say that penalties cannot be imposed in the absence of a showing that petitioner Insurance policies are issued in the place where delivered to the person insured. (As
consented thereto. A compromise implies agreement. If the offer is rejected by the amended.)
taxpayer, as in this case, respondent cannot enforce it except through a criminal
action. (See Comm. of Int. Rev. vs. Abad, L-19627, June 27, 1968.) (CTA Decision, SEC. 221. Stamp tax on policies of insurance upon property. — On all policies of
Rollo, pp. 20-21). insurance or other instruments by whatever name the same may be called, by which
insurance shall be made or renewed upon property of any description, including rents
Hence, this petition filed on June 26, 1969 (Rollo, pp. 1-8). or profits, against peril by sea or on inland waters, or by fire or lightning, there shall be
collected a documentary stamp tax of six centavos on each four persons, or fractional
The petition is devoid of merit. part thereof, of the amount of premium charged," (Now Sec. 233.)

The principal issue in this case is whether or not respondent company may be SEC. 237. Payment of documentary stamp tax. — Documentary stamp taxes shall be
required to pay again the documentary stamps it has actually purchased, affixed and paid by the purchase and affixture of documentary stamps to the document or
cancelled. instrument taxed or to such other paper as may be indicated by law or regulations as
the proper recipient of the stamp, and by the subsequent cancellation of same, such
The relevant provisions of the National Internal Revenue Code provide: cancellation to be accomplished by writing, stamping, or perforating the date of the
cancellation across the face of each stamp in such manner that part of the writing,
SEC. 210. Stamp taxes upon documents, instruments, and papers. — Upon impression, or perforation shall be on the stamp itself and part on the paper to which
documents, instruments, and papers, and upon acceptances, assignments, sales, it is attached; Provided, That if the cancellation is accomplished by writing or
and transfers of the obligation, right, or property incident thereto, there shall be levied, stamping the date of cancellation, a hole sufficiently large to be visible to the naked
collected and paid for and in respect of the transaction so had or accomplished, the eye shall be punched, cut or perforated on both the stamp and the document either
corresponding documentary stamp taxes prescribed in the following sections of this by the use of a hand punch, knife, perforating machine, scissors, or any other cutting
Title, by the person making, signing, issuing, accepting, or transferring the same, and instrument; but if the cancellation is accomplished by perforating the date of
at the same time such act is done or transaction had. (Now. Sec. 222). cancellation, no other hole need be made on the stamp. (Now Sec. 249.)
SEC. 239. Failure to affix or cancel documentary stamps. — Any person who fails to P65,901.11. Verification with the files revealed that most of the monthly statements of
affix the correct amount of documentary stamps to any taxable document, instrument, business and registers of documentary stamps corresponding to insurance policies
or paper, or to cancel in the manner prescribed by section 237 any documentary issued were missing while some where the punched documentary stamps affixed
stamp affixed to any document, instrument, or paper, shall be subject to a fine of not were small in amount are still intact.
less than twenty pesos or more than three hundred pesos. (Emphasis supplied.)
(Now Sec. 250.) The taxpayer was found to be negligent in the preservation and keeping of its
records. Although the loss was found by the company's private investigator (see
As correctly pointed out by respondent Court of Tax Appeals, under the above-quoted attached true copies of his reports) was not an "Inside Job," still the company should
provisions of law, documentary tax is deemed paid by: (a) the purchase of be held liable for its negligence, it appearing that the said records were placed in a
documentary stamps; (b) affixture of documentary stamps to the document or bodega, where almost all patrons of the coffee shop nearby could see them. The
instrument taxed or to such other paper as may be indicated by law or regulations; company also violated the provision of Section 221 of the National Internal Revenue
and (c) cancellation of the stamps as required by law (Rollo, p. 18). Code which provides that the documentary stamps should be affixed and cancelled
on the duplicates of bonds and policies issued. In this case, the said stamps were
It will be observed however, that the over-riding purpose of these provisions of law is affixed on the register of documentary stamps. (pp. 35-36, BIR rec.; Emphasis
the collection of taxes. The three steps above-mentioned are but the means to that supplied.) (CTA Decision, Rollo, pp, 18-19.)
end. Thus, the purchase of the stamps is the form of payment made; the affixture
thereof on the document or instrument taxed is to insure that the corresponding tax Such findings were confirmed by the Memorandum of Acting Commissioner of
has been paid for such document while the cancellation of the stamps is to obviate Internal Revenue Jose B. Lingad, dated November 7, 1962 to the Chief, Business
the possibility that said stamps will be reused for similar documents for similar Tax Division, which states:
purposes.
The records show that the FIREMAN'S FUND INSURANCE COMPANY allegedly
In the case at bar, there appears to be no dispute on the fact that the documentary paid P 77,837.67 in documentary stamp taxes for the policies of insurance issued by
stamps corresponding to the various policies were purchased and paid for by the it for the years 1952 to 1958 but could only present as proof of payment Pll,936.56 of
respondent Company. Neither is there any argument that the same were cancelled as said taxes as the rest of the amount of P 65,901.11 were lost due to robbery. Upon
required by law. In fact such were the findings of petitioner's examiner Amando B. verification of this payment however it was found that the FIREMAN'S FUND
Melgar who stated as follows: INSURANCE COMPANY affixed the documentary stamps not on the individual
insurance policies issued by it but on a monthly statement of business and a register
Investigation disclosed that the subject insurance company is a duly organized of documentary stamps, the use of which was not authorized by this Office. It was
corporation doing business in the Philippines. It keeps the necessary books of claimed that the same procedure was used in the case of the lost documentary
accounts and other accounting records needed by the business. Further verification stamps aforementioned. As this practice is irregular and the remaining records are
revealed that it has, since July, 1959, been using a "HASLER" franking machine, not conclusive proofs of the payment of the corresponding documentary stamp tax on
Model F88, which stamps the documentary stamps on the duplicates of the policies the policies, the FIREMAN'S FUND AND INSURANCE COMPANY is still liable for the
issued. Prior to the acquisition of the said machine, the company buys its stamps by payment of the documentary stamp taxes on the policies found not affixed with
allowing the Manager to issue a Manager's check drawn against the National City stamps. (Original B I R Record, p. 87).
Bank of New York and payable to the City Treasurer of Manila. It was also found out
that during this period (1952 to 1958), the total purchases of documentary stamps Later, respondent Court of Tax Appeals correctly observed that the purchase of
amounted to P77,837.67, while the value of the used stamps lost amounted to documentary stamps and their being affixed to the monthly statements of business
and policy registers were also admitted by counsel for the Government as could Be that as it may, there is no justification for the government which has already
clearly be gleaned from his Memorandum submitted to the respondent Court. realized the revenue which is the object of the imposition of subject stamp tax, to
(Decision, CTA Rollo, pp. 4-5). require the payment of the same tax for the same documents. Enshrined in our basic
legal principles is the time honored doctrine that no person shall unjustly enrich
Thus, all investigations made by the petitioner show the same factual findings that himself at the expense of another. It goes without saying that the government is not
respondent company purchased documentary stamps for the various policies it has exempted from the application of this doctrine (Ramie Textiles, Inc. v. Mathay Sr., 89
issued for the period in question although it has attached the same on documents not SCRA 587 [1979]).
authorized by law.
Under the circumstances, this court RESOLVED to DISMISS this petition and to
There is no argument to petitioner's contention that the insurance policies with the AFFIRM the assailed decision of the Court of Tax Appeals.
corresponding documentary stamps affixed are the best evidence to prove payment
of said documentary stamp tax. This rule however does not preclude the admissibility Fernan (Chairman), Gutierrez, Jr., Padilla, Bidin and Cortes, JJ., concur.
of other proofs which are uncontradicted and of considerable weight, such as: copies
of the applications for manager's checks, copies of the manager's check vouchers of Alampay, J., is on leave.
the bank showing the purchases of documentary stamps corresponding to the various
insurance policies issued during the years 1952-1958 duly and properly Identified by
the witnesses for respondent company during the hearing and admitted by the
respondent Court of Tax Appeals (Brief for Respondent, p. 15).

It is a general rule in the interpretation of statutes levying taxes or duties, that in case
of doubt, such statutes are to be construed most strongly against the government and
in favor of the subjects or citizens, because burdens are not to be imposed, nor
presumed to be imposed beyond what statutes expressly and clearly import (Manila
Railroad Co. v. Collector of Customs, 52 Phil. 950 [1929]).

There appears to be no question that the purpose of imposing documentary stamp


taxes is to raise revenue and the corresponding amount has already been paid by
respondent and has actually become part of the revenue of the government. In the
same manner, it is evident that the affixture of the stamps on documents not
authorized by law is not attended by bad faith as the practice was adopted from the
authority granted to Wise & Company, one of respondent's general agents (CTA
Decision, Rollo, p. 20). Indeed, petitioner argued that such authority was not given to
respondent company specifically, but under the general principle of agency, where
the acts of the agents bind the principal, the conclusion is inescapable that the
justification for the acts of the agents may also be claimed for the acts of the principal
itself (Brief for the Respondents, pp. 12-13).
MANILA RACE HORSE TRAINERS ASSOCIATION, INC vs. G.R. No. 156 September 27, 1946

MANUEL DE LA FUENTE MILTON GREENFIELD, plaintiff-appellant,


vs.
G.R. No. L-2947 January 11, 1951 BIBIANO L. MEER, defendant-appellee.

Facts: Francisco Dalupan for appellant.


First Assistant Solicitor General Reyes and Solicitor Arguelles for appellee.
Manila Race Horses Trainers Association, Inc., a non-stock corporation, alleged that
they are owners of boarding stables for race horses and that their rights as such are FERIA, J.:
affected by Ordinance No. 3065 of the City of Manila. They pleaded that said
ordinance be declared invalid as it is violative under the Constitution. This is an appeal from the decision of the Court of First Instance of Manila which
dismisses the complaint of the plaintiff and appellant containing two causes of action;
On appeal, it is upheld that the ordinance is a tax on race horses as distinct from one to recover the sum of P9,008.14 paid as income tax for the year 1939 by plaintiff
boarding stables. to defendant under protest, by reason of defendant having disallowed a deduction of
P67,307.80 alleged by plaintiff to be losses in his trade or business; and the other to
Under Ordinance No. 3065, the tax is assessed not on the owners of the horses but reclaim, in the event the first cause of action is dismissed, the sum of P475 collected
on the owners of the stables, as counsel admitted in their brief. It is ordinary that the by defendant from plaintiff illegally according to the latter, because the former has
number of horses is used in the assessment purely as a method of fixing an equitable erroneously computed the tax on personal and additional exemptions.
and practical distribution of the burden imposed by the measure.
The following are the pertinent facts stipulated and submitted by the parties to the
Issue: lower court:

Whether or not the Ordinance is constitutional and valid as has been enacted in 2. That since the year 1933 up to the present time, the plaintiff has been continuously
accordance with the powers of the Municipal Board granted by the Charter of the City engaged in the embroidery business located at 385 Cristobal, City of Manila and
of Manila. carried on under his name;

Held: 3. That in 1935 the plaintiff began engaging in buying and selling mining stocks and
securities for his own exclusive account and not for the account of others . . .;
The Court did not believe that the Ordinance made arbitrary classification. There is
equality and uniformity in taxation if all articles or kinds of property of the same class 4. That Exhibit A attached to the complaint and made a part hereof represents
are taxed at the same rate. Thus, it was held that, the fact that some places of plaintiff's purchases and sales of each class of stock and security as well as the
amusement are not taxed while others are taxed is not argument at all against the profits and losses resulting on each class during the year 1939;
equality and uniformity of tax imposition." In applying this to the case, there would be
discrimination if some boarding stables of the same class used for the same number 5. That the plaintiff has not been a dealer in securities as defined in section 84 (t) of
of horses were not taxed or were made to pay less or more than others. Commonwealth Act No. 466; that he has no established place of business for the
purchase and sale of mining stocks and securities; and that he was never a member Amount of tax on net income as per office
of any stock exchange; audit P13,821.06
6. That the plaintiff filed an income tax return for the calendar year 1939 showing that Less: Tax on exemptions:
he made a net profit amounting to P52,449.29 on embroidery business and P17,850
on dividends from various corporations; and that from the purchase and sales of Personal exemption P2,500.00
mining stocks and securities he made a profit of P10,741.30 and incurred losses in
the amount of P78,049.10, thereby sustaining a net loss of P67,307.80, which income Additional exemption 1,000.00
tax return is hereto attached and marked Exhibit B;
Total P3,500.00
7. That in said income tax return for 1939, the plaintiff declared the results of his stock Tax on exemption 50.00
transactions under Schedule B (Income from Business);but the defendant ruled that
they should be declared in the income tax return, Exhibit B, under Schedule D (Gains P13,771.06
and Losses from Sales or Exchanges of Capital Assets, real or personal); Net amount of tax due =========

8. That in said income tax return, said plaintiff claims his deduction of P67,307.80
representing the net loss sustained by him in mining stocks securities during the year 10. That the defendant computed the graduated rate of income tax due on the entire
1939; and that the defendant disallowed said item of deduction on the ground that net income as per office audit, without first deducting therefrom the amount of
said losses were sustained by the plaintiff from the sale of mining stocks and personal and additional exemptions to which the plaintiff is entitled, allowing said
securities which are capital assets, and that the loss arising from the sale of the same plaintiff a deduction from the assessed tax the amount of P50 corresponding to the
should be allowed only to the extent of the gains from such sales, which gains were exemption of P3,500;
already taken into consideration in the computation of the alleged net loss of
P67,307.80; 11. That the plaintiff, objecting and excepting to all the ruling of the defendant above
mentioned and in assessing plaintiff with P13,771.06, claimed from the defendant the
9. That the defendant assessed plaintiff's income tax return for the year 1939 at refund of P9,008.14 or in the alternative case P475, which claim of plaintiff was
P13,771.06 as shown in the following computation appearing in the audit sheet of the overruled by the defendant;
defendant hereto attached and marked Exhibit C;
The questions raised by appellant in his four (4) assignments of error may be reduced
into the following: (1) Whether the losses sustained by the plaintiff from the buying
Net income as per return of plaintiff for 1939 P70,299.29 and selling of mining securities during the year 1939 are losses incurred in trade and
business, deductible under section 30 (d) (1)(A) of Commonwealth Act No. 466 from
Add: Net Loss on sale of mining stocks and his gains in his embroidery business and other income; or whether they are capital
securities disallowed in audit 67,307.80 losses from sales of capital assets which shall be allowed only to the extent of the
gains from such sales under section 34 of the same Commonwealth Act No. 466. And
P137,607.09
(2) whether, under the present law, the personal and additional exemptions granted
Total net income as per office audit =========
by section 23 of the same Act, should be considered as a credit against or be
deducted from the net income, or whether it is the tax on such exemptions that should Appellant assumes, however, that the above-quoted definition does not cover or
be deducted from the tax on the total net income. include all persons engaged in the trade or business of buying and selling securities
within the meaning of said section 30 (d) (1) (A). He contends that, although he is not
1. As to the first question, it is agreed in the above-quoted stipulation of facts that the a dealer in mining securities, he may be considered as having been engaged in the
plaintiff was not a dealer in securities or share of stock as defined in section 84 (t) of trade or business of buying and selling securities. And in support of his contention
Commonwealth Act No. 466. The question for determination is whether appellant, appellant quotes Opinion No. 1818 of the Income Tax Unit of the United States
though not a dealer in mining securities, may be considered as engaged in the Bureau of Internal Revenue(I.T. No. 1818, C.B. II, pp. 39-41), in which opinion the
business of buying and selling them under section 30 (d), (1) (A) of said Act No. 466. following was said:

It is evident that, taking into consideration the nature of mining securities, which may The taxpayer is not a member of any stock exchange, has no place of business, and
be bought or sold either as a business or for speculation purposes only, the National does not make purchase and sales of securities for customers. Much of his trading is
Assembly of the Philippines has deemed it necessary to define or determine done on margin. He devotes the greater part of the time in his broker's office keeping
beforehand in section 84 (t) of Commonwealth Act No. 466 who may be considered in touch with the market. He has no other trade or business, his income consisting
as persons engaged in the trade or business of buying and selling securities within entirely of interest bonds, dividends on stocks, and profits from the sale or disposition
the meaning of the phrase "incurred in trade or business" used in section 30 (d) (1) of securities.
(A) of the same Act, in order to avoid any question or doubt as to deductibility of all
losses incurred by a merchant in securities from his net income from whatever Advice is requested (1) whether this taxpayer is entitled to the benefit of section 204
source. The definition of dealer or merchant in securities given in said section 84 (t) of the Revenue Act of 1921, with reference to a net loss incurred in 1921, from the
includes persons, natural or juridical, who are engaged in the purchase and sale of sale of stocks; (2) whether he is entitled to the benefit of section 206 of the Revenue
securities whether for his their own account or for others, provided they have a place Act of 1921, with regard to gains derived in 1922 from the sale of two blocks of stock
of business and are regularly engaged therein. There was formerly some doubt or held more than two years.
question as to whether a person engaged in buying or selling securities for his own
account might be considered as engaged in that trade or business, and several cases 1. Section 204 (a) provides in part:
involving such question had been submitted to the United States Federal Courts for
ruling, and to the Income Tax Units of the United States Bureau of Internal Revenue That as used in this section the term "net loss" means only net losses resulting from
for opinion. But with the inclusive definition of the term "dealer" or merchant of the operation of any trade or business regularly carried on by the taxpayer . . .
securities given in section 84 (t) of Act No. 466, such doubt can no longer arise.
The question is, than, whether the taxpayer was regularly engaged in the trade or
Said section 84 (t) reads as follows: business of buying and selling securities.

(t) The term "dealer in securities" means a merchant of stocks or securities, whether The interpretation placed upon the term "business or trade" by the courts and the
an individual, partnership, or corporation, with an established place of business, department may be indicated by a few illustrative decisions. In two early cases (In
regularly engaged in the purchase of securities and their resale of customers; that is, re Marson [1871], Fed. Cas. No. 9142, and In re Woodward [1876], Fed. Cas. No.
one who as a merchant buys securities and sells them to customers with a view to the 18001) it was held that a speculator in stocks was not a "merchant or tradesman"
gains and profits that may be derived therefrom. within the meaning of the Bankruptcy Act of 1867. It was said in the former case:
"The only business he was engaged in was what is called speculating in stocks, that sufficient frequency, or occupying such portion of his time or attention as to constitute
is, buying and selling them, with a view to his own profit, to be made by the excess of a vocation," contained in article 8 of Regulations 41, relative to the war excess-profits
the selling price over the buying price . . . The fact that the bankrupt was engaged in tax (approved in Woods vs. Lewellyn [1921], 289 Fed., 498). . .
no other business can not have the effect to make him a merchant or a tradesman,
because he carried on the business he did carry on in the way which he carried it on." It is submitted that these decisions are a sound interpretation of the accepted
definition of business: "Business is a very comprehensive term and embraces
That is, although his business was buying and selling, since this business was simply everything about which a person can be employed." Black's Law Dictionary, 158,
with a view to his own profit and not for others, has was not a merchant or tradesman. citing People vs. Commissioners of Taxes (23 New York, 242, 244). "That which
Compare In re Surety Guarantee & Trust Co. ([1902], 121 Fed., 73) and In re H.R. occupies the time, attention and labor of men for the purpose of a livelihood or profit."
Leighton & Co. ([1906], 147 Fed., 311). Bouvier's Law Dictionary, Vol. 1, p. 273. Fling vs. Stone Tracy Co. (1910), 220 U. S.,
107 at 171; 31 Sup Ct., 342; 55 Law. ed., 389; Ann. Cas. 1912-B, 1312; cited with
With this background, the Department, in Treasury Decisions 1989, 2005, 2090, and approval in Von Baumbach vs. Sargent Land Company (1916), 242 U. S., 503, at
2135 (not published in Bulletin service), held that the provision of paragraph B of the 515. If they are sound, the facts of the instant case require a ruling that the taxpayer
1913 Act, allowing as a deduction for the purpose of the normal tax "losses actually was regularly engaged in the business of buying and selling securities on his own
sustained during the year, incurred in trade . . .", did not include losses from isolated account and was, therefore, entitled to the benefit of the provisions of section 204(a).
transactions; for instance, in stocks and bonds. In Mente vs. Eisner ([1920], 266 Fed., (I. T. No. 1818; C. B. II-2, pp. 39-41.)
161) (certiorari denied, 254 U.S., 635), these rulings were upheld in a case in which a
manufacturer of bagging was denied deductions for losses in buying and selling But, assuming arguendo that the above-quoted opinion may be applied to the present
cotton on the cotton exchange for his individual account, not connected with his case, it is evident that the appellant can not be considered as having been engaged
manufacturing business. (Cf. Black vs. Bolen [1920], 268 Fed., 427.) Likewise, in L.O. in the business of buying and selling securities within the meaning of section 30 (d)
601 (not published in Bulletin service), it was held that "losses sustained by a person (1) (A) of Act No. 466 According to said opinion, in order that he may so be
in buying and selling securities in his own account, he not being a licensed stock and considered, it is necessary that he must devote all his time or at least a major portion
bond broker buying and selling for others as well as for himself, are not deductible as thereof to said business and that the latter must be regularly carried on by him.
losses in trade within the meaning of paragraph B of the Act of October 3, 1913." The
basis of these opinions is thus seen to be (1) that dealing in securities on one's own In the stipulation of facts presented in this case it is agreed that "since the year 1933
account is not technically a "trade"; (2) that isolated transactions in securities, not up to the present time, the plaintiff has been continuously engaged in the embroidery
connected with the tax payer's regular business do not constitute a "trade." business," and that "in 1935, the plaintiff began engaging in buying and selling mining
stocks and securities for his own exclusive account." There is nothing therein to show
In the Act of September 8, 1916, the wording of the 1913 Act was slightly changed that plaintiff and appellant has regularly devoted all his time or the major portion
(section 5 [a], fourth) to permit a deduction of "losses actually sustained during the thereof to the business of buying and selling mining securities for his own account.
year, incurred in his business or trade . . ." Under this more liberal provision, it has On the contrary, it having been stipulated that he has been continuously engaged in
been uniformly held that where a taxpayer devoted all his time, or the major portion of the embroidery business during the same time, it necessarily follows that he has not
it, to buying and selling securities on his own account, this occupation was his and could not have devoted regularly all his time or a major portion thereof to the
"business"; and therefore he was permitted to deduct losses sustained in such buying and selling of mining securities.
dealings as being "incurred in his business." A. R. R. 404 (C.B. 4, p. 157); semble L.
O.601. These rulings are inferentially supported by the definitions of trade or business Furthermore, from Exhibit A attached to the complaint and made a part of said
to comprehend "all his activities for gain, profit, or livelihood, entered into with stipulation of facts, which represents plaintiff's purchases and sales of each class of
stocks and securities as well as the profits and losses resulting therefrom during the mining securities are not losses incurred in business or trade but are capital losses
year 1939, it appears that he made purchases and sales of securities only on several from sales of capital assets, as contended by appellee.
days of some months and nothing on others. As shown in said exhibit, during the
month of January, 1939, appellant purchased shares of stock of different mining 2. With regard to the second point, the lower court held that, as the new law does not
corporations on January 2, 3, 4, 6, 13, 19, 20, 25, 30, and sold some of them on provide that the personal exemptions shall be allowed in the nature of a deduction
January 4, 10, 13 and 31. During February he made purchases on the dates 1, 8, 13, from the net income, as prescribed in the old law, and there is a distinction between
14, 25, and 27; and sales on 6, 9, 10, 16, 22, and 30, and sold some on March 9 only. exemption and deduction, the tax due on said exemptions must be deducted from the
During April he made two purchases on April 3 and 5, and one sale on April 4. During tax due on the whole net income, instead of deducting the total amount of the
May he purchased mining shares of stock on May 9, 10, 13, 19, 24, and 25; and sold exemptions from the net income.
some of them on May 9, 10, 12, 13, and 31. During June appellant made purchases
on 1, 3, 5, 8, 13, 15, and 17, and sales on 22, 23, 24, and 28. During July, purchases The argument of the appellee in support of the lower court's decision is that the
on 1, 3, 6, 19; and sales on July 24, 25, 26, and 27. During August he purchased omission in section 23 of Act No. 466 of the phrase "in the nature of a deduction"
shares of stock on some mining corporations on 5,7, 16, and 18 and sold shares of found in section 7 of the old law, shows that it was the intention of the National
one mining corporation on August 10 only. During September appellant did not Assembly to adopt the innovation proposed by the Tax Commission which prepared
purchase or sell any securities. During October he sold securities only on the 12th of the draft of the new law, an innovation based on what is known as the "Wisconsin
said month, and he made no purchase at all. And during November and December he Plan" now in operation in several American states. Under said plan, the cumulative
did not purchase or sell any. amount of the tax is fixed on any given amount of net income without regard to the
status of the taxpayer, and then this amount is reduced by the tax credit fixed in the
Appellant contends that as from Exhibit A it appears that the mining securities were law according to the status of the taxpayer and the number of his dependents as
inventoried in order to arrive at his profits and losses, they cannot be considered as follows: for single individuals, there is allowed a tax credit of P10; for married persons
capital assets, because, according to section 34, the term capital assets does not or heads of family, P30; and for each dependent below 21 years of age, P10.
include property which would properly be included in the inventory. But it is to be
observed that the law refers not to property merely included, but to that which would Section 7 of the old law provided: "For the purpose of the normal tax only, there shall
be properly included in the inventory. Section 148 of the Income Tax Regulations No. be allowed as an exemption in the nature of a deduction from the amount of the net
2 of February 10, 1940 (39 Off. Gaz., 325), provides that "the securities (to be) income . . ."; while section 23 of the new law provides: "For the purpose of the tax
inventoried as here provided may include only those held for purposes of resale and provided for in this Title there shall be allowed the following exemptions." Now, the
not for investment," and that "the taxpayers who buy and sell or hold securities for question to be determined or answered is: Does this change in the phraseology of the
investment or speculation, . . . are not dealers insecurities within the meaning of this law show the intention of the National Assembly to change the theory or policy of the
rule." And the General Counsel of the Federal Bureau of Internal Revenue, after old law so as to deduct now the tax on the personal and additional exemptions from
quoting Article 105 of United States Regulations 74 from which said section 148 of the tax fixed on the amount of the net income, instead of deducting the amount of
our Income Tax Regulations was taken, said that a person not a dealer in securities is personal and additional exemptions from that of the net income, before determining
precluded from the use of inventories in computing his net income."(C. B. X-2, p. 128, the tax due on the latter?
G. C. M., 9656.)
It is a well-settled rule of statutory construction that where a statue has been enacted
The lower court has not therefore erred in dismissing appellant's first cause of action, which is susceptible of several interpretations there is no better means for
on the ground that the losses sustained by appellant from the buying and selling of ascertaining the will and intention of the legislature than that which is afforded by the
history of the statue. Taking into consideration the history of section 23 of the
Commonwealth Act No. 466, the answer to the above-propounded question must If it were the intention of the National Assembly to adopt the "Wisconsin plan"
obviously be in the negative. Section 22 of the bill entitled "An Act to revise, amend proposed by the tax Commission, it would have adopted literally, or at least
and codify the Internal Revenue Laws of the Philippines," prepared by the Tax substantially, the provisions of said section 22 as section 23 of Commonwealth Act
Commission and submitted to the National Assembly of the Philippines, in substitution No. 466, instead of substantially incorporating section 7 of the old Income Tax Law as
of section 7 of the old Income Tax Law, reads as follows: section 23 of the new, except the first paragraph thereof which reads: "For the
purpose of the normal tax only, there shall be allowed as an exemption in the nature
SEC. 22. Amount of tax credit allowable to individuals.—There shall be allowed as a of a deduction from the amount of the net income." This was changed in said section
credit in the nature of a deduction from the amount of the tax payable by each citizen 23, which provides: "For the purpose of the tax provided for in this Title, there shall be
or resident of the Philippines under section 20: allowed the following exemptions:" From the fact that the National Assembly
discarded completely section 22 of the bill drafted in accordance with the "Wisconsin
(a) Tax credit of single individuals.—The sum of P10 if the person making the return Plan" and submitted by the Tax Commission, it is to be presumed that the National
is a single person or a married person legally separated from his or her spouse. Assembly of the Philippines did not intend to introduce any substantial change in the
old law in so far as the effect of personal and additional exemptions on the income tax
(b) Tax credit of a married person or head of family.—The sum of P30 if the person is concerned.
making the return is a married man with a wife not legally separated from him, or a
married woman with a husband not legally separated from her, or the head of the The mere fact that the phrase "in the nature of a deduction" found in section 7 of the
family; Provided, That from the tax due on the aggregate income of both husband and old law was omitted in section 23 of the new or National Internal Revenue Code did
wife when not legally separated only one tax credit of P30 shall be deducted. For the not and could not effect any change in the law. It is evident that said phrase was
purpose of this section, the term "head of a family" includes an unmarried man or a added or inserted in said section 7 only out of extreme caution, because, even
woman with one or both parents, or one or more brothers or sisters, or one or more without it, the exemption would have to be deducted from the gross income in order to
legitimate, recognized natural or adopted children dependent upon him or her for their determine the net income subject to tax. Had the provision in the old law been drafted
chief support where such brothers, sisters, or children are less than twenty-one years in exactly the same term as that of said section 23, the same construction should
of age. have been adopted. Because "Exception is an immunity or privilege; it is freedom
from a charge or burden to which others are subjected." (Florar vs. Sherifan, 137 Ind.,
(c) Additional tax credit for dependents.—The sum of P10 for each legitimate, 28; 36 N. E., 365, 369.) If the amounts of personal and additional exemptions fixed in
recognized natural, or adopted child wholly dependent upon the taxpayer, if such section 23 are exempt from taxation, they should not be included as part of the net
dependents are under twenty-one years of age, or incapable of self-support because income, which is taxable. There is nothing in said section 23 to justify the contention
mentally or physically defective. The additional tax credit under this paragraph shall that the tax on personal exemptions (which are exempt from taxation) should first be
be allowed only if the person making the return is the head of the family. fixed, and then deducted from the tax on the net income.

But the National Assembly, instead of adopting or incorporating said proposed section The change of phraseology alone does not lead to the conclusion that it was the
22 in the National Internal Revenue Code, C. A. No. 466, copied substantially in intention of the lawmaker to amend or change the constructions of the old law as
section 23 of the latter provision of section 7 of the old law relating to personal and contended by the appellee. For it is a well-established rule, recognized by the
additional exemptions, with the only modification that the amount of personal Supreme Court of Ohio in the case of Conger vs. Barker's Adm'r (11 Ohio St., 1);
exemption of single individuals has been reduced from two thousand to one thousand "that in the revision of statutes, neither an alteration in phraseology nor the omission
pesos, and that of married persons or heads of family from four thousand to two or addition of words in the latter statute, shall be held, necessarily, to alter the
thousand five hundred pesos. construction of the former act. And the court is only warranted in holding the
construction of a statute, when revised, to be changed, where the intent of the The lower court, therefore, erred in not declaring that personal and additional
legislature to make such change is clear, or the language used in the new act plainly exemptions claimed by appellant should be credited against or deducted from the net
requires such change of construction. It should be remembered that condensation is income, and consequently in not sentencing appellee to refund to appellant the sum
a necessity in the work of compilation or codification. Very frequently words which do of P475.
not materially affect the sense will be omitted from the statutes as incorporated in the
code, or that same general idea will be expressed in briefer phrases. No design of In view of all the foregoing, the decision of the lower court is affirmed in so far as it
altering the law itself could rightly be predicated upon such modifications of the dismisses appellant's first cause of action, and is reversed in so far as it dismissed his
language." (Emphasis ours.) (See Black on the construction and Interpretation of the second cause of action. Appellee is sentenced to refund to appellant the sum of P475
Laws, Second Edition, pp. 594, 595.) claimed in the second cause of action of the complaint. Without pronouncement as to
costs. So ordered.
Our Income Tax Law is patterned after the United States Revenue or Income Tax
Laws. the United States Revenue Laws of 1916, 1918, 1921, 1924, 1926, 1928 and Moran, C.J., Pablo, Hilado, Bengzon, Briones, and Tuason, JJ., concur.
1932 considered the personal and additional exemptions as credits against the net
income for the purpose of the normal tax; and subsequently, the United States
Revenue Acts of 1934, 1936 and 1938 amended the former acts by making said
exemptions as credits against the net income for the purpose of both the normal tax
and surtax. Section 7 of our old Income Tax Law, instead of providing that the
personal and additional exemptions shall be allowed as a credit against the net
income, as in the United States Revenue Acts, prescribed that the amounts specified
therein shall be allowed as an exemption in a nature of deduction from the amount of
the net income. Which has exactly the same effect as the provision regarding
personal and additional exemptions in the said United States Revenue Acts. For, as it
was explained in the Ways and Means Committee Report No. 764, 73d Congress, 2d
Session, pages 6, 23:

To carry out the policy of retaining practically the same tax burden on ordinary
income, it is necessary in connection with the proposed plan to allow the personal
exemption and credits for dependents as an offset against surtax as well as normal
tax. The personal exemption and credits for defendants would appear to be in lieu of
deductions for necessary living expenses. They may well apply to both taxes as do all
other ordinary deductions.

And Paul and Mertens, Law of Federal Taxation, Vol. 3, p. 509, state regarding the
change in the United States Revenue Act of 1934: "The practical effect of this
statutory change is to convert the personal exemption and credit for dependents
into deductions . . ." (Emphasis ours.)
98 Phil. 670 brought the case on appeal to this Court.

It is not disputed that on the days the San Lazaro Hippodrome was leased and used
by the Philippine Charity Sweepstake Office to hold benefit races for charitable and
civic purposes, said Office employed its own employees, tellers and
[ G.R. No. L-8755, March 23, 1956 ] other personnel in the race track. It did not employ the personnel of the club but
merely used its track, apparatus and other paraphernalia necessary for horse
COLLECTOR OF INTERNAL REVENUE, PETITIONER, VS. MANILA JOCKEY racing. And for such use, the Club was paid for each day a flat rental and not on
CLUE, INC., RESPONDENT. percentage basis. It may therefore be said that during those days it was
the Philippine Charity Sweepstake Office that held the races and not the Club
DECISION itself. In the light of these facts can it be said that the rentals paid by the Philippine
Charity Sweepstake Office to the Club for the use of its facilities on those days are
BAUTISTA ANGELO, J.: exempt from income tax under section 3 of Republic Act No. 79? This would require
an analysis of the provisions of said Act to determine its real import.
The Manila Jockey Club, Inc. is the owner of the San, Lazaro Hippodrome
which is used principally for holding horse races either by the club itself or by Because of its importance, Republic Act No. 79 is hereunder reproduced in full.
the Philippine Charity Sweepstake Office or other charitable institutions authorized
by law to hold horse races. During the fiscal years 1951 and 1952, the Philippine "AN ACT TO AUTHORIZE THE HOLDING BY THE PHILIPPINE CHARITY
Charity Sweepstake Office held benefit races for charitable, relief and civic purposes SWEEPSTAKE OFFICE OF HORSE RACES, WITH
in said hippodrome for the use of which the Club was paid in the form of rentals the BETTING, ON SATURDAY AFTERNOONS, FOR CHARITABLE, BELIEF AND
sums of P107,185.02 and P122,855.47 respectively, which were included in its CIVIC PURPOSES.
total income declared in its return for said years. The Collector of Internal Revenue
collected on the first rental the amount of P30,011.S0 which was paid in two "Be it enacted by the Senate and House of Representatives of the Philippines in
installments and on the second the amount of P29,881.17 which was also paid in two Congress assembled:
installments as income taxes, and upon advice of. its counsel, the Club filed a claim
for refund of said amounts with the Collector claiming that they were illegally paid "Section 1. The provisions of existing laws to the contrary notwithstanding, the
and, when the refund was denied, it filed an action in the Court of First Instance of Board of Directors of the Philippine Charity Sweepstake Office is authorized to
Manila to recover the total sum of P59.692.97 against the Collector alleging that hold horse races, with betting, on such Saturday afternoons as it may determine for
the same has been wrongfully collected. The case was pending trial when Republic charitable, relief and civic purposes. Only native horses shall be allowed to run in any
Act No. 1125 creating the Court of Tax Appeals was approved on June 16, of these races.
1954. Pursuant to section 22 of said Act, the court transmitted the case to the Court
of Tax Appeals in an order dated August 18, 1954. "Sec. 2. All proceeds derived from these races, after deducting the prizes customarily
set aside for horses winning first, second, and third places and their jockeys; the
After hearing, the Court of Tax Appeals rendered a decision holding that the rentals prizes for the owners of the winning horses; and the necessary administration
received by the Club from the Philippine Charity Sweepstake Office for the use of its expenses not |to exceed ten per centum of the gross receipts, shall he apportioned
premises were exempt from income tax under section 5 of Republic Act No. 79 and, as and distributed by the Board of Directors of the Philippine Charity Sweepstake
a consequence, it ordered the Collector of Internal Revenue to refund to the Club the Office to disabled veterans, war widows and orphans and to charitable, relief and
amount of P59,692.97. From this decision, the Collector of Internal Revenue civic organizations in such amounts and under such rules and regulations as may be
approved, by the President of the Philippines. held" in order that it may be consistent with the purpose of the law.

"Sec. 3. The racing club holding these races shall be exempt from the payment It may be contended that if that law should be interpreted to mean that it merely
of any municipal or national tax. contemplates the holding of races by the Philippine Charity Sweepstakes Office, the
proviso regarding the exemption from the payment of tax would be a surplusage or
"Sec. 4. The term 'horses' when used in this Act shall be understood to refer to meaningless because, under section 6 of Act No. 4130, said Office is already exempt
stallions and mares. from paying any tax on the proceeds that it may derive, from said races. While
apparently there is some force in this argument, it is not so when we consider that
"Ssc. 5. This Act shall take effect upon its approval. owners or operators of race trades are required by other laws to pay certain specific
taxes for each day on which races are run on said tracks regardless of whether they
"Approved, October 21, 1946." are held by the club or by other entities. And such proviso was evidently inserted in
Note that the title of the Act says "An Act to authorize the Holding by the Philippine order to place the races held on said tracks by the Philippine Charity Sweepstake
Charity Sweepstake Office of Horse Races, with Betting, on Saturday Afternoons, Office out of the operation of said laws.
for Charitable, Relief and Civic Purposes." Note also that, under section 1, the
Board of Directors is the one authorized to hold the races for the purposes above- We refer to Republic. Act No. 309 which regulates the horse racing in
mentioned and, under section 2, it is provided that the administration expenses for the Philippines and section 193 of the National Internal Revenue Code, as amended
running the races, including the prizes to be paid to the winners, shall not exceed 10 by Republic Act No. 588. Thus, under section 26 of Republic Act No. 309, any
per cent of the gross receipts that may be collected, which shall be deducted from said person, race track, racing club, or other entities holding or conducting a horse race
gross receipts before turning them over to the beneficiaries named in the law. And, in shall be required to pay a city or municipal license fee of P600 for each day of
section 3, there appears the following proviso: "The racing club holding these races racing. And under section 193 of the National Internal Revenue Code, as amended,
shall be exempt from the payment of any municipal or national tax." It is under any owner of race tracks is required to pay a fixed tax of P500 for each, day on which
the proviso that the Club claims exemption from the payment of income tax on races are run on said, tracks. It should be noted that said provisions require
the rentals in question. the payment of said taxes from the owner of any race track for each day of horse
racing regardless of whether said horse racing is held by the owner himself or by
From the above analysis of the law, it can clearly be inferred that what is any other person or entity, it is therefore imperative that such exemption
contemplated is the holding of horse races, not merely under its auspices, but by the be expressly provided for in order, to exempt the owner of the race track of such
Philippine Charity Sweepstake Office itself, even if for that purpose it has to lease or taxes if the same is to be used by a charitable institution like the Philippine Charity
make use of race tracks belonging to private racing clubs. The purpose of the law Sweepstake Office, The foregoing lead us to the conclusion that the exemption clause
undoubtedly is to give to said Office full control of the horse races considering that provided for in section 3 of Republic Act No. 79 merely intends to exempt
they involve.the handling of funds. And evidently this is also the interpretation the racing club in whose premises or tracks the races are held by the Philippine
entertained by the officials of said Office, when, instead of employing the personnel Charity Sweepstake Office from the payment of the taxes we have above adverted to
of the Manila Jockey Club, Inc., employed its own personnel and assumed full because they are the only ones that have any connection with the races held by said
control of the races. It is because of this view of the law that we believe that the Office. It cannot certainly refer to any income tax that may be imposed on the rentals
provisions of section 3 should be interpreted as conveying the meaning that the one that may be paid for the use of those tracks and other paraphernalia. That is an
holding the races is not the racing club but the Philippine Charity Sweepstake Office income that the racing club has to account for income tax purposes because it is an
and that the exemption therein provided only refers to those taxes, municipal or income that the club earned because of the use of its tracks by the Philippine Charity
national, that the law requires to be. paid in connection with said races. In other Sweepstake Office. It is an income that, strictly speaking, did not coma from the horse
words, said section should be read to mean "the racing club where the races are races held by said club but it came to it as rentals paid for the use of its
property. And the tax paid for such income cannot therefore be considered as one Diokno v. Rehabilitation Finance Corporation G.R. No. L-4712 (July 11, 1952)
connected with those races within the purview of the exemption clause.
FACTS:
Our attention was called to the fact that, if the racing club were to pay income tax on
the rentals that may be paid to it for the use of its tracks by the Philippine Charity Petitioner, the holder of a back pay certificate of indebtedness issued under RA 304,
Sweepstake Office or were to. be denied the benefit of the exemption clause sought to compel Respondent company to accept his back pay certificate as payment
under consideration, the beneficiaries of the bounty would be the ones prejudiced of his loan from the latter. His basis was Sec. 2 of RA 304, which provides that
because the racing club might be obliged to shift the burden to the Philippine Charity “investment funds or banks or other financial institutions owned or controlled by the
Sweepstake Office in the form of additional rentals or by increasing their amount so government shall subject to availability of loanable funds … accept or
as to compensate, the club for the tax that it should otherwise pay to the Government. discount at not more than two per centum per annum for ten years such
Such fear can hardly be entertained not only because there are several racing clubs in certificate” for certain specified purposes. Respondent company contended
the City of Manila which may be availed of by the Philippine Charity Sweepstake however that the word “shall” used in this particular section of the law is merely
Office but also because the law itself limits the administration expenses that said directory. The lower court sustained Respondent company.
Office may incur in connection with the authorized horse races for the purposes
intended. And even if this contingency may eventually occur, this would not warrant
ISSUE:W/N Petitioner can use his back pay certificate to pay for his loan to
the adoption of an interpretation which would be contrary to the clear import and
Respondent company.
intendment of the law.

Another factor that should be borne in mind in connection with the interpretation of HELD:
the exemption clause under consideration is that by its. very nature the law
that exempts one from tax must be clearly expressed because the exemption cannot No. It is true that in its ordinary signification, the word “shall”
be created by implication. Thus, it was held that "Exemption from taxation are is imperative. However, the rule is not absolute; it may be construed as “may” when
highly disfavored in law; and he who claims an exemption must be able to justify his required by the context or by the intention of the statute. The modifier, “at not more
claim by the clearest grant of organic or statute law. An exemption from the than two per centum per annum for ten years.”, the interest to be
common burden cannot be permitted to exist upon vague implication." (Asiatic charged, that the verb phrase is mandatory because not only the law uses “at not
Petroleum Co. vs. Llanes, 49 Phil., 466; See also House vs. Posadas, 58 Phil., 338.) In more” but the legislative purpose and intent, to conserve the value of the back pay
the present" ease, there is no clear showing that the exemption clause under certificate for the benefit of the holders, for whose benefit the same have been
consideration exempts the racing club from its duty to pay income tax. issued, can be carried out by fixing a maximum limit for discounts. But as to when the
discounting or acceptance shall be made, the context and the sense demand a
Wherefore, the decision appealed from is reversed. The case is dismissed with costs contrary interpretation. If the acceptance or discount of the certificate is to be
against respondent. “subject” to the condition of the
availability of loanable funds, it is evident the legislature intended that the
Parás, C. J., Bengzon, Padilla, Montemayor, Reyes, A., Labrador, Concepcion, acceptance shall be allowed on the condition that there are “available loanable
Reyes, J. B. L., and Endencia, JJ., concur. funds.” In other words, acceptance or discount is to be permitted only if there are
loanable funds.
G.R. No. L-13341 July 21, 1962 In support of his petition, the petitioner presented a joint affidavit executed by
Cresencio Castro and Jose P. Castro, his character witnesses, who vouched for his
IN THE MATTER OF THE PETITION FOR CITIZENSHIP OF JUSTINO DEE CU. qualifications to be admitted to Philippine citizenship. They were also presented as
JUSTINO O. CU alias JUSTO DEE, petitioner-appellee, witnesses during the hearing.
vs.
REPUBLIC OF THE PHILIPPINES, oppositor-appellant. The assistant provincial fiscal of Ilocos Norte, representing the Solicitor General,
appeared and cross-examined the petitioner and the witnesses presented on his
Jose Castro for petitioner-appellee. behalf. After trial, as stated above, a decision was rendered approving the application
Office of the Solicitor General for oppositor-appellant. of petitioner to become a Filipino citizen. Not satisfied, the Solicitor General has
appealed.
REGALA, J.:
After a careful perusal of the record and the transcript of stenographic notes taken at
The Solicitor General has brought this case before Us on an appeal from a decision the hearing, We are convinced that petitioner had not proven that he has all the
of the Court of First Instance of Ilocos Norte. qualifications and none of the disqualifications enumerated in the Naturalization Law.

On January 6, 1956, Justino O. Cu alias Justo Dee filed a petition for naturalization Among the requirements for Philippine citizenship are that the petitioner must own
with the Court of First Instance of Ilocos Norte. On October 4, 1957, that court, with real estate in the Philippines worth not less than P5,000.00, Philippine currency, or
the Honorable Fidel Villanueva presiding approved the petition. must have some known lucrative trade, profession, or lawful occupation. (Sec. 2, par.
4, Revised Naturalization Law.)
During the hearing, the petitioner sought to establish that he was born in Laoag,
Ilocos Norte, on July 28, 1934, of Chinese parents; that he has mingled socially with While the petitioner in this case had stated in his petition that he is the owner of a
Filipinos; that he finished his high school education at the Northwestern College, and building for residential and commercial purposes with an assessed value of
took preparatory collegiate courses at the St. William's College, both schools being P5,000.00, he did not say so in his oral testimony. Only Atty. Jose B. Castro, one of
located at Laoag; that he studied Medicine at the University of Santo Tomas without, the character witnesses, during the cross-examination by the fiscal, made a
however, finishing it as he stopped to help his parents attend to their business; that statement to this effect. And it is not explained why no certificate of assessment or a
he knows how to read and write English and Ilocano, aside from Chinese; that he has declaration of real estate property, or any other piece of evidence from the treasurer's
embraced the customs and traditions of the Filipinos; that he is managing the or assessor's office was submitted. In the absence of credible proof to support the
business of his father from whom he receives P200.00 salary every month and 30% allegation as to property ownership of the petitioner in this case, We are constrained
bonus of the net income thereof; that before 1957, he was employed as manager of to conclude that petitioner has not met the requirement.
the Red Log Co. in Cagayan; that he is not a polygamist nor a believer in the practice
of polygamy; that he does not believe in communism or profess communistic ideals; As to the question of whether or not petitioner has a lucrative trade, profession or
that he does not believe in the use of violence to attain his objectives; that he is not lawful occupation, the petitioner testified to the effect that he is employed by his father
suffering from any contagious disease; and that he is willing to renounce his Chinese at a monthly salary of P200.00, with bonus equivalent to 30% of the profits from his
citizenship. father's business, and that he receives the benefits of free board and lodging from his
parents. Again, this bare testimony has not been supported by documentary
evidence. We had occasion to state in a previous naturalization case (Zacarias Tan v.
Republic, L-14860, May 30, 1961) that "the fact that petitioner's father is his employer
and that he is still living with him makes doubtful the truth of petitioner's employment United States Supreme Court
and gives rise to the suspicion that he was employed by his father, if it were true that
he was, only for the purpose of this petition." GOULD v. GOULD, (1917)
No. 41
While it is most usual and common for applicants for naturalization to present in Argued: Decided: November 19, 1917
evidence their income tax returns to prove their statement as to their occupation, and [245 U.S. 151, 152] Mr. Martin W. Littleton, of New York City, for plaintiff in error.
at the same time to show that they are law-abiding, the record of this case reveals not Mr. John L. McNab, of San Francisco, Cal., for defendant in error.
a single income tax return that petitioner had filed. To our mind, this failure would Mr. Justice McREYNOLDS delivered the opinion of the Court.
indicate that either petitioner has been delinquent in his payment of taxes or that his
income is not such that would call for income tax — less than P150.00 — in which A decree of the Supreme Court for New York county entered in 1909 forever
case, not lucrative, judging by present standards the cost of living and the low separated the parties to this proceeding, then and now citizens of the United States,
purchasing power of the peso. (Sy Ang Hoc v. Republic, L-12400, March 29, 1961; from bed and board; and further ordered that plaintiff in error pay to Katherine C.
Richard Velasco v. Republic, L-12214, May 25, 1960; Tan v. Republic, L-14861, Gould during her life the sum of $3,000 every month for her support and
March 17, 1961; and Zacarias Tan v. Republic, supra.) In the case of Benjamin Co v. maintenance. The question presented is whether such monthly payments during the
Republic, L-12150, May 26, 1960, this Court has ruled that the failure of the applicant years 1913 and 1914 constituted parts of Mrs. Gould's income within the intendment
to file an income tax return when his income is more than what is required by law for of the act of Congress approved October 3, 1913 (38 Stat. 114, 166, c. 16), and were
one to file an income tax return, indicates that he has not conducted himself properly subject as such to the tax prescribed therein. The court below answered in the
in his relations with our government. negative; and we think it reached the proper conclusion.
In naturalization cases, the burden is on the applicant to prove by competent and Pertinent portions of the act follow:
satisfactory evidence that he has all the qualifications and none of the
disqualifications specified by law. The naturalization law should be strictly construed,
'Section II, A. Subdivision 1. That there shall be levied, assessed, collected and paid
and doubts resolved, against the applicant (Pe v. Republic, L-16980, November 29,
annually upon the entire net income arising or accruing from all sources in the
1961, citing Yap Joco v. Com., 40 O.G. 1235; Cho v. Republic, L-12408, Dec.
preceding calendar year to every citizen of the United States, whether residing at
28,1959; Karam Singh v. Republic, L-7567, September 29, 1955.)
home or abroad, and to every person residing in the United States, though not a
citizen thereof, a tax of 1 per centum per annum upon such income, except as
The petitioner in the case at bar having failed to satisfy Us that he has not all the hereinafter provided. ...
qualifications to become a Filipino citizen, does not deserve the grant of his petition.
'B. That, subject only to such exemptions and deductions as are hereinafter allowed,
WHEREFORE, the decision appealed from is reversed, and petitioner's application the net income of a taxable person shall include gains, profits, and income derived
hereby dismissed. Costs against the petitioner-appellee. from salaries, wages, or compensation for personal service of whatever kind and in
whatever form paid, or from professions, vocations, business, trade, commerce,[245
Bengzon, C.J., Padilla, Labrador, Concepcion, Barrera, Paredes, Dizon and U.S. 151, 153] or sales, or dealings in property, whether real or personal, growing
Makalintal, JJ., concur. out of the ownership or use of or interest in real or personal property, also from
Bautista Angelo and Reyes, J.B.L., JJ., took no part. interest, rent, dividends, securities, or the transaction of any lawful business carried
on for gain or profit, or gains or profits and income derived from any source whatever,
including the income from but not the value of property acquired by gift, bequest, G.R. No. L-24383 August 26, 1967
devise, or descent. ...'
EQUITABLE INSURANCE and CASUALTY CO., INC., plaintiff-appellant,
In the interpretation of statutes levying taxes it is the established rule not to extend vs.
their provisions, by implication, beyond the clear import of the language used, or to SMITH, BELL and CO., (PHILIPPINES) INC., in its capacity as agents in the
enlarge their operations so as to embrace matters not specifically pointed out. In case Philippines for Klavenese Line, owner/operator of S/S "BONNEVILLE," and/or
of doubt they are construed most strongly against the government, and in favor of the THE BUREAU OF CUSTOMS, in its capacity as arrastre operator in the Port of
citizen. United States v. Wigglesworth, 2 Story, 369, Fed. Cas. No. 16,690; American Manila, defendants-appellees.
Net & Twine Co. v. Worthington, 141 U.S. 468, 474 , 12 S. Sup. Ct. 55; Benziger v.
United States, 192 U.S. 38, 55 , 24 S. Sup. Ct. 189. San Juan, Laig and Associates for plaintiff-appellant.
Felipe T. Cuison for defendant-appellee Bureau of Customs.
As appears from the above quotations, the net income upon which subdivision 1 Ross, Selph and Carrascoso for defendant-appellee Smith, Bell and Co., Inc.
directs that an annual tax shall be assessed, levied, collected and paid is defined in
division B. The use of the word itself in the definition of 'income' causes some SANCHEZ, J.:
obscurity, but we are unable to assert that alimony paid to a divorced wife under a
decree of court falls fairly within any of the terms employed. Alternative suit. The pivotal averments of the complaint are these: A cargo of divers
merchandise was imported by Manila Auto Supply Co., Inc., as consignee. The
In Audubon v. Shufeldt, 181 U.S. 575, 577 , 578 S., 21 Sup. Ct. 735, 736 ( 45 L. Ed. carrier thereof, s/s "Bonneville", dropped anchor at the Port of Manila on June 18,
1009), we said: 1963. Plaintiff, subrogee of the consignee, seeks recovery of the value of undelivered
merchandise amounting to P23,420.84. Unable to ascertain whether the cargo was
'Alimony does not arise from any business transaction, but from the relation of lost in the care and custody of the carrying vessel or the Bureau of Customs, plaintiff
marriage. It is not founded on a contract, express or implied, but on the natural and now sues defendants in the alternative.1
legal duty of the husband to support the wife. The general obligation to support is
made specific by the decree of the court of appropriate jurisdiction. ... Permanent Defendant Bureau of Customs moved to dismiss. Its ground: Non-suability. The lower
alimony is regarded rather as a portion of the husband's estate to which the wife is court's order of December 3, 1964 dismissed the case as against defendant Bureau
equitably entitled, than as strictly a debt; alimony from time to time may be regarded of Customs. Reconsideration failed. Plaintiff appealed.1äwphï1.ñët
as a portion of his current income or earnings. ...[245 U.S. 151, 154] The net income
of the divorced husband subject to taxation was not decreased by payment of alimony By all means, the question thus raised is not untrodden ground. We have heretofore
under the court's order; and, on the other hand, the sum received by the wife on declared that the Bureau of Customs cannot be a party defendant in a suit. Because,
account thereof cannot be regarded as income arising or accruing to her within the it is neither a natural nor a juridical person nor an entity authorized by law to be sued.
enactment. An arm of the Department of Finance, it has no personality of its own, apart from the
national government. Arrastre Service, it is true, is a proprietary function. But just the
The judgment of the court below is affirmed. same, it is a necessary incident to the primary governmental job of assessing and
collecting lawful revenues from imported article and all other tariff and customs duties,
fees, charges, fines, and penalties. Thus, regardless of the merits of plaintiff's case,
obvious reasons of public policy dictate that the present action should not be allowed
standing in court — it is a claim for money against the State itself. And the State has 45 Phil. 663
not consented to the suit.
[ G.R. No. 21700, February 05, 1924 ]
Statutory provisions waiving State immunity are construed in strictissimi juris. For,
waiver of immunity is in derogation of sovereignty. And, this claim should have been LA COMPANIA GENERAL DE TABACOS DE FILIPINAS, PLAINTIFF AND
lodged with the Auditor General, upon the procedure delineated in Commonwealth APPELLANT, VS. THE GOVERNMENT OP THE PHILIPPINE ISLANDS,
Act 327. DEFENDANT AND APPELLEE.

So it is that we have ruled, upon situations parallel to the present, that action against DECISION
the Bureau of Customs must be dismissed. There is by now impressive unanimity of
jurisprudence on this point.2 No new argument has been advanced which would give JOHNS, J.:
cause or reason for us to override our previous decisions. We do not now propose to
depart from the ruling therein expressed. At its special session of 1923, the Legislature passed a law entitled "An Act defining
the conditions under which the Government of the Philippine Islands may be sued,"
For the reasons given, the order of December 3, 1964 dismissing this case as against section 1 of which provides:
the Bureau of Customs, and the order of February 8, 1965 denying reconsideration
thereof, are hereby affirmed. "Subject to the provisions of this Act, the Government of the Philippine Islands hereby
consents and submits to be sued upon any moneyed claim involving liability arising
Without costs. So ordered. from contract, express or implied, which could serve as a basis of civil action between
private parties.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Castro,
Angeles and Fernando, JJ., concur. "Sec. 2. A person desiring to avail himself of the privilege herein conferred must show
that he has presented his claim to the Insular Auditor and that the latter did not decide
the same within two months from the date of its presentation."

The complaint alleges that about February 2, 1923, it and the defendant agreed that
the plaintiff's steamship Mauban should receive at Manila, Philippine Islands, and
carry and deliver to the port of Currimao, Ilocos Norte, six cases of denatured alcohol
and four cases of office supplies, for which the defendant agreed to pay the usual
charges. That the steamer arrived at its port of destination on February 13, 1923, and
duly made delivery of the merchandise; that the reasonable charges were P283.63,
no part of which has been paid.

"That on the 24th day of August, 1923, and in pursuance of the provisions of Act No.
3083 of the Philippine Legislature, plaintiff presented its claim to the Insular Auditor,
who, on the same date, decided the same adversely to plaintiff's contentions.
"Wherefore, plaintiff prays judgment against the defendant for the above-mentioned In the instant case, the claim was rejected upon the date it was presented.
sum, together with the interest thereon at the legal rate and for its costs of suit." The
defendant filed a general demurrer to the complaint, which was sustained. The Inasmuch as it is an unusual and extraordinary remedy, the right to maintain an action
plaintiff refused to plead further, and a corresponding judgment was entered, from against the Government must be conferred by the plain, positive, express provision of
which he appeals, claiming that "the lower court erred in sustaining the demurrer to a statute, the meaning of which should not be left to doubt or construction.
the complaint."
In the instant case, upon the facts stated, it is very apparent that the Legislature never
The question involved is the legal force and effect of section 2 of Act No. 3083 above intended that the plaintiff could maintain a cause of action against the Government.
quoted. Plaintiff contends that the purpose and intent of the Act was to enable a
claimant, who has a claim against the Government arising out of a contract, express The judgment is affirmed, with costs. So ordered.
or implied, to present it to the Government, and that, if the claim is denied by the
Insular Auditor at any time within sixty days after presented, or that if the Auditor Araullo, C. J., Johnson, Street, Malcolm, Avancena, Ostrand, and Romualdez,
failed to allow or reject the claim for the period of sixty days, after it was presented, JJ., concur.
that an action can then be maintained against the Government to recover the amount
of the claim. Plaintiff also claims that section 2 should be construed to read that
where a person "has presented his claim to the Insular Auditor, or that the latter did
riot decide the same within two months from the date of its presentation."

The rule is universal that no matter how meritorious a claim may be, in the absence of
express authority, a cause of action cannot be maintained upon it against the
Government.

It is admitted that, as a condition precedent, and in the ordinary course of business,


the claim must first be presented to the Insular Auditor, and that in the instant case it
was presented and rejected upon the day it was presented. But appellant contends
that the Act should be construed to mean that when its claim was rejected, its cause
of action then accrued.

We have read the Act as it was originally presented to the Legislature, and it is very
apparent that the purpose and intent of the original Act was to provide that a cause of
action could be maintained against the Government on a claim which has been
presented to, and disallowed by, the Insular Auditor. It is also very apparent that the
bill, as enacted in its amended form, was intended to prohibit anyone from suing the
Government, except upon the express condition stated in section 2 of the Act Giving
the language its plain, ordinary meaning, it should be construed to read that a
claimant must first present his claim to the Insular Auditor, and, second, that he did
not allow or reject it "within two months from the date of its presentation."
Prasnik v. Republic of the Philippines 95 Phil. 244

G.R. No. L-8639 (March 23, 1956) [ G.R. No. L-6294, June 28, 1954 ]

FACTS: IN THE MATTER OF THE ADOPTION OF THE MINOR MARCIAL ELEUTERIO


RESABA. LUIS SANTOS-YÑIGO AND LIGIA MIGUEL DE SANTOS-YÑIGO,
Petitioner seeks to adopt four children which he claims to be his and Paz Vasquez’ PETITIONERS AND APPELLEES, VS. REPUBLIC OF THE PHILIPPINES,
children without the benefit of marriage. The Solicitor General opposed this stating OPPOSITOR AND APPELLANT.
that Art. 338 of the Civil Code allows a natural child to be adopted by
his father refers only to a child who has not been acknowledged D E C I S I O NBAUTISTA ANGELO, J.:
as natural child. It maintains that in order that a natural child may be adopted by his
natural father or mother there should not be an acknowledgment of the status of the On June 24, 1952, a petition was filed in the Court of First Instance of Zamboanga by
natural child for it will go against Art. 335. Luis Santos-Yñigo and his wife for the adoption of a minor named Marcial Eleuterio
Resaba. It is alleged that the legitimate parents of said minor have given their consent
ISSUE: to the adoption in a document which was duly signed by them on March 20, 1950,
and that since then petitioners had reared and cared for the minor as if he were their
W/N the Civil Code allows for the adoption of acknowledged natural children of the own. It is likewise alleged that petitioners are financially and morally able to bring up
father or mother. and educate the minor.

HELD: By order of the court, copy of the petition was served on the Solicitor General who, in
due time, filed a written opposition on the ground that petitioners have two legitimate
The law intends to allow adoption whether the child be recognized or not. If the children, a boy and a girl, who are still minors, and as such they are disqualified to
intention were to allow adoption only to unrecognized children, Article 338 would be of adopt under the provisions of the new Civil Code.
no useful purpose. The rights of an acknowledged natural child are much less than
those of a legitimated child. Contending that this is unnecessary would deny The court granted the petition holding that, while petitioners have two legitimate
the illegitimate children the chance to acquire these rights. The trend when it comes children of their own, yet said children were born after the agreement for adoption
to adoption of children tends to go toward the liberal. The law does not was executed by petitioners and the parents of the minor. The court found that said
prohibit the adoption of an acknowledged natural child which when compared to a agreement was executed before the new Civil Code went into effect and while the
natural child is equitable. An acknowledged natural child is a natural child also and petition may not be granted under this new Code, it may be sanctioned under the old
following the words of the law, they should be allowed adoption. because it contains no provision which prohibits adoption in the form and manner
agreed upon by the parties. From this decision, the Solicitor General took the present
appeal.

The errors assigned by the Solicitor General are:


"I"The lower court erred in granting the petition to adopt in violation of the provisions relation of paternity and filiation by fiction of law without the sanction of court. The
of paragraph 1, article 335, new Civil Code. reason is simple. Rule 100 has taken the place of Chapter XLI of the Code of Civil
Procedure (sections 765-772, inclusive), which in turn replaced the provisions of the
"II"The lower court erred in giving Exhibit 'A', the agreement to adopt, a binding Spanish Civil Code on adoption. (Articles 173-180.) As was stated in one case, said
effect." chapter of the Code of Civil Procedure "appears to be a complete enactment on the
subject of adoption, and may thus be regarded as the expression of the whole law
There is merit in the contention that the petition should not be granted in view of the thereof. So. viewed, that chapter must be deemed to have repealed the provisions of
prohibition contained in article 335, paragraph 1, of the new Civil Code. This article the Civil Code on the matter." (In readoption of Emiliano Guzman, 73 Phil., 51.) Now,
provides that persons who have legitimate children cannot adopt, and there is no said rule expressly provides that a person desiring to adopt a minor shall present a
doubt about its application because the petition was filed on June 24, 1952 and at petition to the court of first instance of the province where he resides (section 1). This
that time petitioners had two legitimate children, one a boy born on November 12, means that the only valid adoption in this jurisdiction is that one made through court,
1950 and the other, a girl born on April 13, 1952. This case therefore comes squarely or in pursuance of the procedure laid down by the rule, which shows that the
within the prohibition. This prohibition is founded on sound moral grounds. The agreement under consideration can not have the effect of adoption as now pretended
purpose of adoption is to afford to persons who have no child of their own the by petitioners.
consolation of having one by creating, through legal fiction, the relation of paternity
and filiation where none exists by blood relationship. This purpose rejects the idea of Some members of the Court have advanced the opinion that, notwithstanding the
adoption by persons who have children of their own, for, otherwise, conflicts, friction, enactment of the Code of Civil Procedure or the adoption of the present Rules of
and differences may arise resulting from the infiltration of foreign element into a family Court concerning adoption, those provisions of the Spanish Civil Code that are
which already counts with children upon whom the parents can shower their paternal substantive in nature cannot be considered as having been impliedly repealed, such
love and affection (2 Manresa, 6th ed., 108-109). This moral consideration must have as the one providing that a person who has a legitimate child is prohibited to adopt
influenced the framers of the new Civil Code when they reiterated therein this salutary (article 74). But the majority is of the opinion that the repeal is complete as declared
provision. by this Court in the case of In re adoption of Emiliano Guzman, supra. At any rate,
this matter is not now of any consequence considering the fact that when the
But it is contended, this prohibition in the new Civil Code cannot have application to adoption agreement was executed the petitioners had not yet any legitimate child.
the present case because, to do so, as it is now attempted, would impair the acquired Their children were born subsequent to that agreement.
right of petitioners over the adopted child in violation of the transitory provisions of
article 2252 of said Code. It is pointed out that petitioners reared and took care of the We are sympathetic to the plea of equity of counsel considering the fact that
child, since February 24, 1950, and on March 20, 1950 they and the parents of the petitioners had taken custody of the child and had reared and educated him as their
child executed the adoption agreement in accordance with the Rules of Court, and own much prior to the approval of the new Civil Code and that all this was done with
since these rules do not forbid adoption to. persons who have legitimate children, that the consent of the natural parents to promote the welfare and happiness of the child,
agreement shall be given full effect in the same manner as any other contract which but the inexonerable mandate of the law forbids us from adopting a different course of
is not contrary to law, morals and public order. action. Our duty is to interpret and apply the law as we see it in accordance with
sound rules of statutory construction.
We find no merit in this contention. While the adoption agreement was executed at
the time when the law applicable to adoption is Rule 100 of the Rules of Court and The order appealed from is set aside, without pronouncement as to costs.
that rule does not prohibit persons who have legitimate children from adopting, we
cannot agree to the proposition that such agreement has the effect of establishing the
[ GR No. L-6359, Dec 29, 1953 ] Commission, because the statute does not thereby operate retroactively; it is made to
CARMEN CASTRO v. FRANCISCA SAGALES + operate upon claims formulated after the law's approval. As attorney for appellee
DECISION suggests, had the claim been filed before the effectivity of Republic Act No. 772 in a
94 Phil. 208 court of first instance, the question might be debatable whether such court should
now continue hearing the matter or not. "A retrospective law, in a legal sense, is one
BENGZON, J.: Appeal from an order of Hon. Jesus Y. Perez of the Court of First which takes away or impairs vested rights acquired under existing laws, or creates a
Instance of Bulacan dismissing plaintiffs' complaint for workmen's compensation on new obligation and imposes a new duty, or attaches a new disability, in respect of
the ground that the matter properly falls within the jurisdiction of the Workmen's transactions or consideration already past. Hence, remedial statutes, or statutes
Compensation Commission. relating to remedies or modes of procedure, which do not create new or take away
vested rights, but only operate in furtherance of the remedy or confirmation of rights
Republic Act No. 772 effective June 20, 1952 conferred upon the Workmen's already existing, do not come within the legal conception of a retrospective law, or the
Compensation Commissioner "exclusive jurisdiction" to hear and decide claims for general rule against the retrospective operation of statutes" (50 Am. Jur. p. 505).
compensation under the Workmen's Compensation Act, subject to appeal to this
Supreme Court. Before the passage of said Act demands for compensation had to be A parallel situation is not far to seek. The right of the heirs to the decedent's estate
submitted to the regular courts. begins from the moment of death. And yet it undoubtedly could be within the power of
the Legislature to establish by law probate courts to take charge even of estates of
The fatal accident which befell Dioscoro Cruz, husband of plaintiff Carmen Cruz, persons who had died before its approval. The creation of the People's Court to try
having occurred in January 1952 and action having been commenced in the Court of treason cases arising from acts committed during the Japanese occupation is another
First Instance of Bulacan in August, 1952, the resultant issue is the proper forum: example of recent times.
either the courts or the Workmen's Compensation Commission.
It is argued that Republic Act No. 772 should not be enforced as to accidents
For the appellants it is contended that the date of the accident, and not the date of happening before its approval, because it has introduced changes affecting vested
filing the complaint, should be considered because the right to compensation of the rights of the parties. Without going into details, it might be admitted that changes as to
laborer or employees or his dependents, like the obligation of the employer to pay the substantive rights will not govern such "previous" accidents. Yet here we are dealing
same, begins from the very moment of the accident. with remedies and jurisdiction which the Legislature has power to determine and
apportion. And then it is hard to imagine how one litigant could acquire a vested right
to be heard by one particular court, even before he has submitted himself to that
It is true that the right arises from the moment of the accident, but such right must be
particular court's jurisdiction.
declared or confirmed by the government agency empowered by law to make the
declaration. If at the time the petition for such declaration is addressed to the court,
the latter has no longer authority to do so, obviously it has no power to entertain the In the United States actions pending in one court maybe validly taken away by statute
petition. Republic Act No. 772 is very clear that on and after June 20, 1952 all claims and transferred to another (See 21 C. J. S., p. 148).
for compensation shall be decided exclusively by the Workmen's Compensation
Commissioner, subject to appeal to the Supreme Court. This claim having been Wherefore, the appealed order is affirmed, without costs.
formulated for the first time in August, 1952 in the Court of First Instance of Bulacan,
the latter had no jurisdiction, at that time, to act upon it. No constitutional objection Paras, C. J., Pablo, Padilla, Tuason, Reyes, Jugo, Bautista Angelo and Labrador,
may be interposed to the application of the law conferring jurisdiction upon the JJ., concur.
Lichauco v. Apostol, G.R. No. L-19628 (44 PHIL 138), December 4, 1922 [ GR No. 19628, Dec 04, 1922 ]
LICHAUCO v. SILVERIO APOSTOL +
Facts: DECISION
44 Phil. 138
Petitioner, a corporation duly organized under the Phil. laws, engaged for several STREET, J.:
years in the business of importing carabao and other draft animals, and was desirous
of importing, from Pnom-Pehn, a shipment of draft cattle and bovine cattle for the This is an original petition for the writs of mandamus and injunction, filed in this court
manufacture of serum. However, respondent Director of Agriculture refused to admit by Lichauco & Company against the respondents, Silverio Apostol, as Director of
said cattle except upon condition that drafts be immunized. Petitioner however Agriculture, and Rafael Corpus, as Secretary of Agriculture and Natural Resources.
contends that the respondent has no authority over the matter, invoking section 1762 An order having been issued by this court requiring the respondents to appear and
of the Administrative Code, as amended by Act No. 3052. On the other hand, relying show cause why the relief prayed for should not be granted, the Attorney-General
upon section 1770 of the Administrative Code, Admin. Order No. 21 of the Bureau of presented a return, in the nature of a demurrer, in their behalf; and the cause is now
Agriculture, and Dept. Order No. 6 of the Secretary of Agriculture and Natural before us for the determination of the questions thus presented.
Resources, respondent maintained its decision. Hence, the issue.
It is alleged in the complaint that the petitioner is a corporation duly organized under
Issue: Whether or not section 1770 (and other similar acts) has been repealed by the laws of the Philippine Islands and that it has been engaged for several years in
implication by Act 3052 and hence cannot be applied with the case at bar? the business of importing carabao and other draft animals into the Philippine Islands
and that it is now desirous of importing from Pnom-Pehn, in French Indo-China, a
Held and Reasoning: No. The Court ruled that the contention of the petitioner is shipment of draft cattle and bovine cattle for the manufacture of serum but that the
untenable for the reason that the invoked section 1762, as amended, is obviously of a respondent Director of Agriculture refuses to admit said cattle, except upon the
general nature while 1770 is a particular one. Section 1770 is therefore not condition, stated in Administrative Order No. 21 of the Bureau of Agriculture, that said
inconsistent with section 1762 and instead be considered a special qualification of the cattle shall have been immunized from rinderpest before embarcation at Pnom-Pehn.
latter provision. Moreover, the court emphasized that “specific legislation upon a The petitioner therefore asks for an order requiring the respondents to admit the
particular subject is not affected by a general law upon a same subject unless it contemplated importation of cattle into the Islands and enjoining them from the
clearly appears that the provision of the two laws are so repugnant..xxx…The special enforcement of said administrative order in the future.
act and the general law must stand together, the one as the law of the particular
subject and the other as the general law of the land.” Therefore, Section 1770 of the The petitioner asserts that under the first proviso to section 1762 of the Administrative
Administrative Code remains in effect and serves as a supplementary provision to Code, as amended by Act No. 3052 of the Philippine Legislature, it has "an absolute
section 1762, as amended. and unrestricted right to import carabao and other draft animals and bovine cattle for
the manufacture of serum from Pnom-Pehn, Indo-China, into the Philippine Islands"
and that the respondents have no authority to impose upon the petitioner the
restriction referred to above, requiring the immunization of the cattle before shipment.

The respondents, on the other hand, rely upon section 1770 of the Administrative
Code and upon Administrative Order No. 21 of the Bureau of Agriculture,
promulgated on July 29, 1922, by the Director of Agriculture, in relation with
Department Order No. 6, promulgated on July 28, 1922, by the Secretary of "SEC. 1770. Prohibition against bringing of animals from infected foreign countries.
Agriculture and Natural Resources, as supplying authority for the action taken. When the Department Head shall by general order declare that a dangerous
communicable animal disease prevails in any foreign country, port, or place and that
Such portions of the laws above-mentioned as are material to the present controversy there is danger of spreading such disease by the importation of domestic animals
will be set out in full, preceded by section 1762 of the Administrative Code, as therefrom, it shall be unlawful for any person knowingly to ship or bring into the
originally enacted, to which will be appended the pertinent parts of the orders referred Philippine Islands any such animal, animal effects, parts, or products from such place,
to and the communication of the Director of Agriculture of August 31,1922. unless the importation thereof shall be authorized under the regulations of the Bureau
of Agriculture,"
1. First paragraph of section 1762 of Administrative Code in original form:
4. Department Order No. 6, promulgated on July 28, 1922, by Secretary of
"SEC. 1762. Bringing of diseased animal into Islands forbidden. Except upon Agriculture and Natural Resources:
permission of the Director of Agriculture, with the approval of the head of Department
first had, it shall be unlawful for any person knowingly to ship or otherwise bring into "DEPARTMENT ORDER No. 6 } Series of 1922
the Philippine Islands any animal suffering from, infected with, or dead of any
dangerous communicable disease, or any effects pertaining to such animal which are "Owing to the fact that a dangerous communicable disease known as rinderpest
liable to introduce such disease into the Philippine Islands." exists in Hongkong, French Indo-China and British India, it is hereby declared, in
accordance with the provisions of section 1770 of Act No. 2711 (Administrative Code
2. First paragraph of section 1762 of Administrative Code, as amended by Act of the Philippine Islands of 1917), that rinderpest prevails in said countries, and as
No. 8052 of the Philippine Legislature: there is danger of spreading such disease by the importation of cattle, carabaos, and
pigs therefrom, it shall be unlawful for any person knowingly to ship or bring into the
"SEC. 1762. Bringing of animals imported from foreign countries into the Philippine Philippine Islands any such animal, animal effects, parts, or products from Hongkong,
Islands. It shall be unlawful for any person or corporation to import, bring or introduce French Indo-China and British India, unless the importation thereof shall be
live cattle into the Philippine Islands from any foreign country. The Director of authorized under the regulations of the Bureau of Agriculture.
Agriculture may, with the approval of the head of the department first had, authorize
the importation, bringing or introduction of various classes of thoroughbred cattle from "The provisions of this order shall take effect on and after August 1, 1922."
foreign countries for breeding the same to the native cattle of these Islands, and such
as may be necessary for the improvement of the breed, not to exceed five hundred 5. Administrative Order No. 21, of the Bureau of Agriculture, promulgated July
head per annum: Provided, however, That the Director of Agriculture shall in all cases 29, 1922, by the Director of Agriculture:
permit the importation, bringing or introduction of draft cattle and bovine cattle for the
manufacture of serum: Provided, further, That all live cattle from foreign countries the "ADMINISTRATIVE ORDER NO. 21. }
importation, bringing or introduction of which into the Islands is authorized by this Act,
shall be submitted to regulations issued by the Director of Agriculture, with the "Re importation of cattle, carabaos, and pigs from French Indo-China, Hongkong
approval of the head of the department, prior to authorizing its transfer to other and India.
provinces."
"1. Pursuant to the provisions of Department Order No. 6, series of 1922, of the
3. Section 1770 of Administrative Code: Department of Agriculture and Natural Resources, the present regulations of the
Bureau of Agriculture governing the importation of livestock from French Indo-China Upon glancing over the matter above collated, it will be seen at once that section
and Hongkong are hereby amended to the effect that the importation of livestock of 1770 of the Administrative Code on its face authorizes the action taken by the
the species named in the aforementioned Department Order is hereby prohibited from Secretary of Agriculture and Natural Resources in closing our ports (in the manner
French Indo-China, Hongkong and India. However, animals immunized against and to the extent indicated in Department Order No. 6) to the importation of cattle and
rinderpest, for which the importer before placing his order shall have obtained from carabao from French Indo-China, supposing of course, as everybody knows and as
the Director of Agriculture a written permit to import them from the above named the petitioner does not deny, that the disease of rinderpest exists in that country.
countries, may be allowed entrance into the Philippine Islands.
It is claimed, however, that section 1762 of the Administrative Code, so far as it
"2. This order shall take effect on and after August 1, 1922." authorizes restrictions upon the importation of draft cattle and bovine cattle for the
manufacture of serum, has been impliedly repealed by the amendatory Act No. 3052,
6. Communication of August 31, 192%, from the Acting Director of Agriculture to which is of later enactment than the Administrative Code; and in this connection
Faustino Lichauco (in part): reliance is chiefly placed on the first proviso to section 1762, as amended by said Act
No. 3052, which is in these words: "Provided, however, That the Director of
"SIR: In reply to your application for permission to import from 300 to 400 carabaos Agriculture shall in all cases permit the importation, bringing or introduction of draft
immunized against rinderpest from Pnom-Pehn, French Indo-China, I have the honor cattle and bovine cattle for the manufacture of serum." This then is the first and
to inform you that the permission is hereby granted, under the following conditions: principal question in the case, namely, whether section 1770 has been repealed by
implication, in so far as it relates to draft animals and bovine cattle for the
"1. Animals must be immunized by the simultaneous method before shipment. At manufacture of serum. We say repealed by implication, for it will be noted that that
least 10 c. c, of good virulent blood must be injected at the first injection Act No. 3052 has no repealing clause, and it contains only one section, i. e., that
simultaneously with the serum. Ten days after the simultaneous inoculation all non- amending section 1762 of the Administrative Code.
reactors must receive another injection of not less than 10 c. c. of virulent blood
(alone). We are of the opinion that the contention of the petitioner is untenable, for the reason
that section 1762, as amended, is obviously of a general nature, while section 1770
"2. The immunization must be done by a veterinarian designated by the French deals with a particular contingency not made the subject of legislation in section 1762.
Government for the purpose, who must issue a certificate stating the fact that the Section 1770 is therefore not to be considered as inconsistent with section 1762, as
animal has been immunized according to the requirements in number 1 and it must amended; on the other hand, it must be treated as a special qualification of section
not be embarked until ten days after the second injection of virulent blood. 1762. Of course the two provisions are different, in the sense that if section 1762, as
amended, is considered alone, the cattle which the petitioner wishes to bring in can
"* * * * * * * be imported without restriction, while if section 1770 is still in force the cattle, under
the conditions stated in the petition, can be brought in only upon compliance with the
requirements of Administrative Order No,. 21. But this difference between the
"Very respectfully,
practical effect of the two provisions does not make them inconsistent in the sense
that the earlier provision (sec. 1770) should be deemed repealed by the amendatory
"SILVERIO APOSTOL, Act (3052).
"Acting Director of Agriculture."
That section 1770 is special, in the sense of dealing with a special contingency not
dealt with in section 1762, is readily apparent upon comparing the two provisions.
Thus, we find that while section 1762 relates generally to the subject of the bringing of Wherever there is a particular enactment and a general enactment in the same
animals into the Islands at any time and from any place, section 1770 confers on the statute, and the latter, taken in Its most comprehensive sense, would overrule the
Department Head a special power to deal with the situation which arises when a former, the particular enactment must be operative, and the general enactment must
dangerous communicable disease prevails in some defined foreign country, and the be taken /to affect only the other parts of the statute to which it may properly apply.
provision is intended to operate only so long as that situation continues. Section 1770 (Sir John Romilly, Master of the Rolls, in Pretty vs. Solly, 26 Beav., 606, 610.)
is the backbone of the power to enforce animal quarantine in these Islands in the
special emergency therein contemplated; and if that section should be obliterated, the The additional words of qualification needed to harmonize a general and a prior
administrative authorities here would be powerless to protect the agricultural industry special provision in the same statute should be added to the general provision, rather
of the Islands from the spread of animal infection originating abroad. than to the special one. (Rodgers vs. United States, 185 U. S., 82; 46 L, ed., 816.)

We note that the argument for unrestricted importation extends only to the importation Specific legislation upon a particular subject is not affected by a general law upon the
of cattle for draft purposes and bovine cattle for the manufacture of serum, leaving same subject unless it clearly appears that the provisions of the two laws are so
section 1770 theoretically in full effect as regards the importation of cattle for other repugnant that the legislators must have intended by the later to modify or repeal the
purposes, as where they are imported for slaughter; but the importation of cattle for earlier legislation. The special act and the general law must stand together, the one
draft purposes is the principal thing, and unless that can be regulated under the as the law of the particular subject and the other as the general law of the land. (Ex
conditions and to the extent attempted by the respondents in this case, the power Parte United States, 226 U. S., 420; 57 L. ed., 281; Ex Parte Crow Dog, 109 U. S.,
given in section 1770 is obviously worthless. 556; 27 L. ed., 1030; Partee vs. St. Louis & S. F. R. Co., 204 Fed. Rep., 970.)

In our opinion section 1762, as amended, and section 1770 must be construed in pari Where there are two acts or provisions, one of which is special and particular, and
materia as harmonious parts of the law dealing with animal quarantine; and section certainly includes the matter in question, and the other general, which, if standing
1762, as amended, can be given effect only in so far as it is not restricted by section alone, would include the same matter and thus conflict with the special act or
1770. Here, as always, the general must yield to the particular. provision, the special must be taken as intended to constitute an exception to the
general act or provision, especially when such general and special acts or provisions
If the Congress of the United States should this day repeal the Chinese Exclusion are contemporaneous, as the Legislature is not to be presumed to have intended a
Law so far as it affects these Islands, and should declare that all persons of Chinese conflict. (Crane vs. .Reeder and Reeder, 22 Mich., 322, 334; University of Utah vs.
nationality shall be at liberty to enter the Philippine Islands without restriction, would Richards, 77 Am. St. Rep., 928.)
anybody suppose that such enactment would have the effect of abolishing the power
to maintain quarantine against any Chinese port where cholera or bubonic plague It is well settled that repeals by implication are not to be favored. And where two
might hereafter be raging in epidemic form? Yet the question now before us is not statutes cover, in whole or in part, the same matter, and are not absolutely
fundamentally different from the one thus supposed. irreconcilable, the duty of the court no purpose to repeal being clearly expressed or
indicated is, if possible, to give effect to both. In other words, it must not be supposed
The judicial precedents are conclusive to the effect that no implied repeal of a special that the Legislature intended by a later statute to repeal a prior one on the same
provision of the character of the one now under consideration will result from the subject, unless the last statute is so broad in its terms and so clear and explicit in its
enactment of broader provision of a general nature. In other words, a general statute words as to show that it was intended to cover the whole subject, and therefore to
without negative words does not repeal a previous statute which is particular, even displace the prior statute. (Frost vs. Wenie, 157 U. S., 46; 39 L. ed., 614, 619.)
though the provisions of one be different from the other. (Rymer vs. Luzerne County,
12 L. R. A., 192; Petri vs. F. E. Creelman Lumber Co., 199 U. S., 487; 50 L. ed., 281.)
As stated in the pages of the two most authoritative legal encyclopedias, the rule is or wrapper upon which there is nothing but the name and address of the person to
that a prior legislative apt will not be impliedly repealed by a later act unless there is a whom the letter is written, an offense within the act?' On behalf of the government it
plain, unavoidable and irreconcilable repugnancy between the two. If both acts can by was contended that the word 'writing' comprehended such a letter, but the Supreme
any reasonable construction stand together, both will be sustained. (36 Cyc., 1074- Court held otherwise. In the course of his argument in support of the view of the court,
1076; 26 Am. & Eng. Encyc. Law, 2d ed., 725-726.) Justice Lamar pointed out that the statute, after enumerating what articles shall be
nonmailable, adds a separate and distinct clause declaring that 'every letter upon the
A masterly analysis of the decisions of the United States Courts pertinent to the envelope of which * * * indecent, lewd, obscene, or lascivious delineations, epithets,
matter now in hand will be found in the monographic article on "Statutes and terms, or language may be written or printed * * * shall not be conveyed in the mails,'
Statutory Construction," written by Chas. C. Moore and prefixed as a General and the person knowingly or willfully depositing the same in the mails 'shall be
Introduction to Federal Statutes Annotated. The discussion there given is too lengthy deemed guilty of a misdemeanor,' etc. 'This distinctly additional clause/ continued the
to be here reproduced in full, but some of the observations of the learned author are Justice, 'specifically designating and describing the particular class of letters which
so appropriate to the case before us that we cannot forego the temptation to include shall be nonmailable, clearly limits the inhibitions of the statute to that class of letters
the same in this opinion. Says the writer: "The various provisions of an act should be alone whose indecent matter is exposed on the envelope.'" (1 Fed. Stat. Ann., 2d ed.,
read so that all may, if possible, have their due and conjoint effect without repugnancy 50-51; also at pp. 164-166.)
or inconsistency. The sections of a code relative to any subject must be harmonized
and to that end the letter of any section may sometimes be disregarded. But where The cases relating to the subject of repeal by implication all proceed on the
absolute harmony between parts of a statute is demonstrably non-existent, the court assumption that if the act of later date clearly reveals an intention on the part of the
must reject that one which is least in accord with the general plan of the whole, or if law-making power to abrogate the prior law, this intention must be given effect; but
there be no such ground for choice between inharmonious sections, the later section there must always be a sufficient revelation of this intention, and it has become an
being the last expression of the legislative mind must, in construction, vacate the unbending rule of statutory construction that the intention to repeal a former law will
former to the extent of the repugnancy." (1 Fed. Stat. Ann., 2d ed., 49-50.) not be imputed to the Legislature when it appears that the two statutes, or provisions,
with reference to which the question arises bear to each other the relation of general
And speaking with reference to the rule by which special provisions are held to to special. It is therefore idle to speculate whether in the case before us the Philippine
dominate over general provisions in the same or later laws, the author proceeds: " 'It Legislature may or may not have intended to modify or abrogate section 1770 of the
is an old and familiar rule said Mr. Justice Lamar, 'that where there is in the same Administrative Code at the time the amendment to section 1762 was enacted, for if
statute a particular enactment, and also a general one, which in its most any such intention was entertained, it was not revealed in a way that would justify a
comprehensive sense would include what is embraced in the former, the particular court in giving this intention effect. We may add, however, that, in the opinion of the
enactment must be operative, and the general enactment must be taken to affect only majority of the Justices participating in this decision, the Legislature in amending
such cases within its general language as are not within the provisions of the section 1762 could not possibly have entertained a design to modify section 1770; for,
particular enactment.' And the Justice proceeded to apply that rule in the construction as we have already shown, the abrogation of that provision, even as regards draft
of a statute upon which there had been much ingenious argument and a decided animals alone, would leave the animal industry of the Islands exposed to the danger
conflict of authority in the inferior federal courts. The statute was an act of Congress incident to the unrestricted importation of infected animals from districts where
of 1876, declaring nonmailable 'every obscene * * * book, pamphlet, paper, writing, rinderpest prevails. The unreasonableness of this interpretation of the amendatory
print, or other publication of an indecent character,' and other enumerated articles, law alone supplies sufficient warrant for rejecting it. The Legislature could not possibly
and making it a misdemeanor to deposit any of them for mailing. In a prosecution have intended to destroy the effectiveness of quarantine as regards imported
under the act, the Circuit Court certified to the Supreme Court the following Question: animals.
Is the knowingly depositing in the mails of an obscene letter, inclosed in an envelope
Our conclusion then is that section 1770 of the Administrative Code remains in full Upon the whole we are of the opinion that the petition does not show sufficient ground
force; and the determination of this question is we think necessarily fatal to the for granting the writs of mandamus and injunction. The demurrer interposed thereto
petitioner's case. by the respondents in their return to the order to show cause, dated October 7, 1922,
is therefore sustained, and the temporary restraining order heretofore promulgated in
It is insisted, however, that even supposing section 1770 of the Administrative Code this cause, dated September 21, 1922, is dissolved; and unless within five days after
to be in force, nevertheless, the requirement of immunization at the port of notification hereof the petitioner shall so amend his petition as to show a sufficient
embarcation is unreasonable, inasmuch as the immunization of the cattle at that port, cause of action, an order absolute will be entered, dismissing the same, with costs.
under the supervision of the Government veterinarians of French Indo-China, is not So ordered.
unconditionally accepted as efficacious by the Philippine authorities, as shown by the
fact that the latter further require tests to be made upon the arrival of the cattle here, Malcolm, Avanceña, Villamor, and Ostrand, JJ., concur.
consisting of inoculation with virulent blood of animals suffering from rinderpest which
involves additional expense and exposes the importer to the loss of his entire herd.

Considerations of this nature are we think more proper to be addressed to the


authorities responsible for the regulations than to this court. About the principal fact
that rinderpest exists in the regions referred to in Department Order No. 6, there is,
and can be no dispute; and when the Department Head declared that the disease
prevails in those regions and that there is danger of spreading it by the importation of
cattle and carabao into this country, he was acting upon a matter within his province,
and we are not disposed to review the conclusion.

It has been suggested that the regulative power vested in the Director of Agriculture
under section 1770 of the Administrative Code with respect to the admission of cattle
into the Philippine Islands attaches only when the importation has been effected; and
that the said Director has no authority to dictate the measures to be taken by the
importer before the cattle are embarked for transportation to these Islands. This
contention, in our opinion, reflects a mistaken point of view with reference to the effect
of the regulations; and the answer is to be found in the consideration that the
regulation in question has prospective reference to the condition of the cattle upon
their arrival here. In other words, the prior immunization of the cattle is made a
condition precedent to the right to bring them in; as much as to say, that only animals
conforming to the required type will be admitted. The importer is thus left at entire
liberty in respect to the taking of the necessary measures to gain admittance for his
cattle in our ports; and if he fails to do so, the penalty merely is that the cattle are not
admitted.
People vs. Butler, 120 SCRA 281 motion for reconsideration was subsequently filed which was also denied.
Hence, a petition for mandamus.
Facts:
Issues:
- Accused-appellant Michael Butler and the victim, Enriquita Alipo alias Gina
Barrios were together at Colonial Restaurant in Olongapo City. 1. WON the trial court erred in giving full credence to the testimony of the
- They were seen together by Lilia Paz, an entertainer and friend of the victim, prosecution witness
who claimed to have had a small conversation with the accused and one
Rosemarie Suarez. - As a matter of established jurisprudence, the findings of the trial court on
- The accused left the restaurant with the victim together with Rosemarie. credibility of a witness are not disturbed on appeal unless there is a showing
- Emelita Pasco, housemaid of the victim testified that Gina came home with that it failed to consider certain facts and circumstances which would change
Michael. They immediately went into the former’s bedroom. Shortly thereafter, the same.
the victim left the room with a paper containing the ff. words: MICHAEL - There were three persons who identified the accused. the finger print
BUTLER, 44252-8519 USS HANCOCK. examination showed that one of the three prints lifted from the cellophane
- She then rushed back to her room after instructing Pasco to wake her up in wrapping of the figurine was identical with the accused finger; and the
the morning. But before retiring. Rosemarie arrived and had a small accused failed to present clear and positive evidence to overcome the
conversation with her. scientific and specific finding and conclusion of the medico-legal officer.
- Pasco, in the morning, knocked at the door. She found that the victim was
lying on her bed, facing downward, naked up to the waist, with legs spread 2. WON the trial court erred in admitting in evidence the alleged extra-judicial
apart with a broken figurine beside her head. She immediately called the admission of the accused and appreciating it against him
landlord and the authorities.
- An investigation was conducted by the authorities. After being located and - Contrary to what the counsel for the accused-appellant contends, there is no
identified as a crew member of USS Hancock, the accused was brought to the evidence showing that the accused was roughly handed from the very start.
legal office of the ship. The accused was searched, handcuffed and was Neither is there any evidence to prove that he was first handcuffed and
brought to the Naval Investigation Services Resident Agency office. informed that he was first handcuffed and informed that he was a suspect in a
- The result of the NISRA investigation was a document taken from the accused murder case before he was warned of his rights.
consisting of 3 pages signed and initialed on all pages by him and containing - While it may be true that a considerable span of time elapsed from the
a statement that he was aware of his constitutional rights and a narration of moment the accused was brought to the NISRA office to the time the
the facts of the case. interrogation was begun and reduced to writing, there is no competent
- Dr. Roxas testified that the anal intercourse happened after the victim’s death. evidence presented to support the allegation that the statement made by the
He also testified that the victim died of asphyxia due to suffocation when accused was a result of pressure and badgerings.
extreme pressure was exerted on her head pushing it downward, thereby
pressing her nose and mouth against the mattress.
- After trial, the accused was found guilty of murder.
- A motion for new trial was filed by the accused-appellant alleging that he was 3. WON the trial court erred in finding the accused guilty of the crime of murder
a minor at the time the offense was committed. The motion was denied. A qualified by abuse of superior strength
- The Court holds that there was an abuse of superior strength attending the - The amendment to keep away from its beneficient provision cases of
commission of the crime. It is not only the notorious advantage of height that conviction of a minor when penalty imposed is death cannot prejudice the
the accused had over the hapless victim, but also his strength which he accused whose case was pending appeal when the amendment took effect.
wielded in striking her with the figurine on the head and in shoving her head
and pressing her mouth and nose against the bed mattress.

4. WON the trial court erred in appreciating treachery and abuse of superior Disposition: The case against the accused is DISMISSED. Civil liability imposed upon
strength simultaneously and separately him by the lower court shall remain.

- The evidence on record, however, is not sufficient to show clearly and prove DISSENTING OPINION
distinctly that treachery attended the commission of the crime since there was
no eyewitness account of the killing. Aquino, J

5. WON the trial court erred in accepting the testimony of Dr. Roxas, the medico- - The speculations of the medico-legal officer and the trial judge that there was
legal Officer, that asphyxiation by suffocation was the cause of death of the posthumous sodomy are unwarranted. The prosecution is bound by Butler’s
victim confession. He alleged that the squabble over his five-peso bill which the
victim took without his consent, was the cause of the fight which he had with
- The Court sustains the finding of the lower court that the aggravating the victim.
circumstance of outraging or scoffing at the corpse of the deceased applies - The confession also proves that Butler did not intend to commit so grave a
against the accused since it is established that he mocked or outraged the wrong as that which he committed and that he was intoxicated at the time the
person or corpse of his victim by having an anal intercourse with her after she killing was perpetrated.
was already dead. - I dissent from the ponente’s opinion that Butler should have been given a
- The fact that the muscles of the anus did not close and also the presence of suspended sentence and that, by reason of his good behavior while confined
spermatozoa in the anal region as testified to by Dr. Roxas and confirmed to in the Subic Naval Base Stockade , he should now be released and
be positive in the Laboratory Report clearly establishes the coitus after death. discharged.
- If at the time the case is decided by this Court, the accused is no longer a
6. WON the trial court erred in denying the accused the benefits of Sec. 192 of minor with more reason, he is not entitled to a suspended sentence.
PD 603 before its amendment by PD 1179 on Aug. 15, 1977

- At the time of the commission of the offense, the trial and rendition of
judgment, the applicable law was PD 603. The Court does not agree with the
reasoning of the trial court that the accused did not invoke the law because
the records manifestly show the vigorous plea of the accused for its
application.
- The Court likewise holds that the penalty of death was not justified. The
accused is a minor and he is entitled to the mitigating circumstance of
minority.
Republic of the Philippines assured or his assigns on the 21st day of February, 1938, and if he should die before
SUPREME COURT that date, then to his legal representatives. On June 23, 1919, the assured, Dy Poco,
Manila was adjudged an involuntary insolvent by the Court of First Instance of Manila, and
the defendant Frank B. Ingersoll, was appointed assignee of his estate. On July 10,
EN BANC 1919, the said Dy Poco died, and thereafter on August 21, 1919, the defendant, Tan
Sit, was duly appointed by the Court of First Instance of Manila as the administratrix
G.R. No. 16475 November 8, 1921 of his intestate estate.

SUN LIFE ASSURANCE COMPANY OF CANADA, plaintiff-appellee, By the terms of the policy it was provided that after the payment of three full
vs. premiums, the assured could surrender the policy to the company for a "cash
FRANK B. INGERSOLL, as assignee of the insolvent estate of DY POCO, and surrender value," indicated in an annexed table; but inasmuch as no more than two
TAN SIT, administratrix of the estate of Dy Poco, deceased, defendants. premiums had been paid upon the policy now in question up to the time of the death
TAN SIT, appellant. of the assured, this provision had not become effective; and it does not appear that
the company would in accordance with its own usage or otherwise have made any
Crossfield & O'Brien for appellant. concession to the assured in the event he had desired, before his death, to surrender
Ross & Lawrence for assignee. the policy. It must therefore be accepted that this policy had no cash surrender value,
No appearance for appellee. at the time of the assured's death, either by contract or by conventional practice of the
company in such cases.
STREET, J.:
The solution of the case depends upon the interpretation to be placed by us upon
This is an action of interpleader filed by the Sun Life Assurance Company, pursuant certain provisions of our Insolvency Law (Act No. 1956), but as the problem is by no
to section 120 of the Code of Civil Procedure, in order to compel the two defendants means free from difficulty, we deem it advisable to state at the outset the results
to interplead and litigate their claims to the proceeds of a policy of insurance which reached by the Supreme Court of the United States in dealing with a similar problem
the plaintiff had issued upon the life of one Dy Poco, now deceased. The defendants under the provisions of the Federal Bankruptcy Act of 1898.
Frank B. Ingersoll and Tan Sit, both answered, each asserting a claim to the
proceeds of said policy, the first in the character of assignee in insolvency of Dy In the first place that court has held that the title of the trustee is determined as of the
Poco, and the second as the administratrix of his estate. After hearing the cause, his date when the petition of bankruptcy is filed, and that the circumstance that the death
Honor, Judge James A. Ostrand, declared that Frank B. Ingersoll, the assignee in of the insolvent occurs after the petition is filed but before the adjudication of
insolvency had the better right and ordered the Insurance Company to pay the money bankruptcy does not give the trustee any additional right to the proceeds of the policy,
to him. From this judgment Tan Sit appealed. where he had none to the policy itself before death occurred (Everett vs. Judson, 228
U. S., 474; 57 L. ed., 927). Moreover, in such case, the personal representative of the
It appears in evidence that on April 16, 1918, the plaintiff, the Sun Life Assurance deceased is entitled to exercise the same rights that the deceased himself might have
Company of Canada, in consideration of the payment of a stipulated annual premium exercised, with reference to the policy and its proceeds. (Andrews vs. Partridge 228
during the period of the policy, or until the premiums had been completely paid for U. S., 479; 57 L. ed., 929.)
twenty years, issued a policy of insurance on the life of one Dy Poco, of Manila,
Philippine Islands, for the sum of $12,500, United State currency, payable to the said The rule thus declared is apparently applicable under our Insolvency Law, with the
sole difference that the operative act which under our law vests title in the assignee is
the transfer of the insolvent's property to the assignee by the clerk of the court (sec. is vested in the trustee, subject — in the case of insurance policies — to the limitation
32, Act No. 1956). This transfer, however, relates back to the commencement of the expressed in the proviso.
proceedings in insolvency, and the result is the same as under the American statute.
Now, prior to the decision in Burlingham vs. Crouse, supra, the idea more generally
Upon the question of the extent of the right or title, which the trustee acquires to prevailing in the Federal courts appears to have been to the effect that any policy of
insurance in existence on the life of the insolvent upon the date of the filing of the insurance in force upon the life of the bankrupt would, under the general language
petition in bankruptcy, great diversity of opinion formerly existed in the Federal above quoted, necessarily pass to the trustee in bankruptcy but for the proviso, which
tribunals; and great uncertainty upon this point prevailed until the case of enables the bankrupt to rescue certain policies, namely, those having a "cash
Burlingham vs. Crouse (228 U.S., 459; 57 L. ed., 920; 46 L.R.A. [N. S.], 148) was surrender value" by redeeming them from the trustee upon paying to him said
decided a few years ago by the Supreme Court of the United States. surrender value. In other words, the proviso was looked upon as an independent and
additional piece of legislation, establishing a special rule as to policies having a cash
The provision of law under consideration in that case was section 70 (a) of the surrender value, but not otherwise limiting the general words of the statute.
Bankruptcy Act of 1898.1 In the part here material to be quoted said provision is as
follows: In Burlingham vs. Crouse, supra, however, the Supreme Court of the United States
held that the proviso in question had the effect not only of securing to the insolvent
The trustee of the estate of a bankrupt, upon his appointment and qualification, and the right to redeem policies having a cash surrender value but of limiting the general
his successor or successors if he shall have one or more, upon his or their language preceding the proviso in such manner that a policy having no surrender
appointment and qualification, shall in turn be vested by operation of law with the title value does not vest in the trustee in bankruptcy at all. In other words, the proviso itself
of the bankcrupt, as of the date he was adjudged a bankcrupt, except in so far as it is contains a definitive statement of the rights of the trustee in bankruptcy to the
to property which is exempt, to all (1) documents relating to his property; (2) interests insurance effected prior to the insolvency on the life of the insolvent; and therefore the
in patents, patent rights, copyrights, and trade-marks; (3) powers which he might trustee can in no event take any insurance from the insolvent other than that which
have exercised for his own benefit, but not those which he might have exercised for has a cash surrender value. This result was reached by declaring that the proviso
some other person; (4) property transferred by him in fraud of his creditors; (5) fulfilled the office of a proviso proper, which is, to limit the general language which
property which, prior to the filing of the petition, he could by any means have precedes it.
transferred, or which might have been levied upon and sold under judicial process
against him: Provided, That when any bankcrupt shall have any insurance policy, At the same time the court accepted the proposition that a policy of insurance is
which has a cash surrender value payable to himself, his estate, or personal property, though admittedly of a peculiar character; and it further suggested that, but
representatives, he may within thirty days after the cash surrender value has been for the limiting effect of the proviso, the general words used in the statute would
ascertained and stated to the trustee by the company issuing the same, pay or secure apparently have been sufficient to pass the policy there in question to the trustee in
to the trustee the sum so ascertained and stated, and continue to hold, own, and bankruptcy.
carry such policy free from the claims of the creditors participating in the distribution
of his estate under the bankruptcy proceedings; otherwise the policy shall pass to the Upon inspection of the Insolvency Law in force in these Islands (Act No. 1956), it will
trustee as assets. be seen that it contains nothing similar to the proviso to section 70 (a) of the
American Bankruptcy Law now in force. It results that Burlingham vs.Crouse, supra,
Upon the inspection of this provision it will be seen that by the general language used is not decisive of the case before us; and furthermore, as will be readily seen, its
in the part preceding the proviso, and especially by the words used in the fifth implications are not particularly favorable to the pretensions of the appellant.
subsection, practically everything in the nature of property pertaining to the bankcrupt
The property and interests of the insolvent which, under the law here in force, have assigned to another. The Insolvency Law here in force, in common with the
become vested in the assignee of the insolvent are specified in section 32 of the predecessor laws above-mentioned, contains nothing similar to these provisions.
Insolvency Law which, in the part here material to be stated, reads as follows:
Having discovered the source of section 32 of our Insolvency Law to be in the
SEC. 32. As soon as an assignee is elected or appointed and qualified, the clerk of American Bankruptcy Act of 1867, we may properly look to the decisions of the courts
the court shall, by an instrument under his hand and seal of the court, assign and of the United States as instructive upon any question of interpretation arising in the
convey to the assignee all the real and personal property, estate, and effects of the application of said section; and in this connection we find a pertinent opinion from one
debtor with all his deeds, books, and papers relating thereto, and such assignment of the Federal courts, dealing with the very question whether an assignee in
shall relate back to the commencement of the proceedings in insolvency, and shall bankruptcy acquires the title to a policy of insurance over and above the net reserve
relate back to the acts upon which the adjudication was founded, and by operation of or cash surrender value, upon which point the decision is to the effect that he does
law shall vest the title to all such property, estate, and effects in the assignee, not.
although the same is then attached on mesne process, as the property of the debtor.
Such assignment shall operate to vest in the assignee all of the estate of the insolvent The case to which we refer is that of In re McKinney (15 Fed., 535), which arose upon
debtor not exempt by law from execution. the following facts: On July 23, 1856, one Andrew McKinney took out a policy of
insurance upon his life for $3,000, payable to his executors, administrators or
Now, it is a well-known fact in our legislative history that the Insolvency Law (Act No. assigns. The policy was continued in force until his death in October, 1882. Before
1956) is in great part a copy of the Insolvency Act of California, enacted in 1895, this event had occurred, however, the insured had been adjudicated a bankrupt and
though it contains a few provisions from the American Bankruptcy Law of 1898 (see had in fact secured a discharge from the court of bankruptcy.
observation of Justice Trent in Mitsui Bussan Kaisha vs. Hongkong and Shanghai
Banking Corporation, 36 Phil., 27, 37). Again, upon comparing the California Said policy of insurance had been mentioned in the schedule of assets submitted in
Insolvency Law of 1895 with the American Bankruptcy Act of 1867, it will be found the insolvency proceedings, but the assignee took no steps in reference to it; and all
that the former contains much in common with the latter; and among the provisions premiums accruing after the adjudication of insolvency were paid by the wife of the
common to the Bankruptcy Act of 1867, the California Insolvency Law of 1895, and insolvent out of her own funds, she supposing that the policy would inure to her
the Insolvency Law in force in these Islands (Act No. 1956), is precisely the provision benefit.
which appears as section 32 of our Act, defining the property which passes as assets
to the assignee in insolvency. (Bankruptcy Act of 1867, sec. 14; California Insolvency After the death of the insured, his assignee in bankruptcy was directed to transfer to
Law of 1895, sec. 21; Philippine Insolvency Law, sec. 32.) the widow of the bankrupt, as the proper person interested in his estate, the policy of
insurance, upon payment to the assignee of the surrender value of the policy
Under each of said laws the assignee acquires all the real and personal property, approximately as of the date when the assignee obtained title to the assets of the
estate, and effects of the debtor, not exempt by law from execution, with all deeds, bankrupt.
books and papers relating thereto; and while this language is broad, it nevertheless
lacks the comprehensiveness of section 70 (a) of the American Bankruptcy Law of In passing upon the facts above stated the court declared that no beneficial interest in
1898 in the least two particulars; for under subsection 3 of section 70 (a) of the last this policy had ever passed to the assignee over and beyond what constituted the
mentioned law, the trustee in bankruptcy acquires the right to exercise any powers surrender value, and that the legal title to the policy was vested in the assignee
which the insolvent might have exercised for his own benefit, and under subsection 5 merely in order to make the surrender value available to him. The conclusion
the trustee acquires any property of the insolvent which the latter could by any means therefore was that the assignee should surrender the policy upon the payment to him
of said value, as he was in fact directed to do.
In this connection the court observed that the assignee in bankruptcy had no right to organizations and benefit societies — for the payment of a premium sufficient to keep
keep the estate unsettled for an indefinite period, for the mere purpose of speculating the estimated risk covered; and in case of a lapse the policy-holder received nothing.
upon the chances of the bankrupt's death. The speedy settlement of the estates of Furthermore, the practice is common among insurance companies even now to
bankrupts, as contemplated by law, is incompatible with such course. Moreover, it concede nothing in the character of cash surrender value, until three full premiums
was observed that, as regards everything beyond the surrender value, the assignee have been paid, as in the policy now before us.
in bankruptcy would, after the discharge of the bankrupt, have no insurable interest in
the life of the bankrupt. In the course of the same opinion, his Honor, Judge Brown, discussing the legal
aspects of the case then before him, said:
In the course of the opinion in this case, an explanation was given of the meaning of
"surrender value" or "cash surrender value," as used in connection with a policy of To the extent of its actual cash surrender value, therefore, this policy, at the time of
insurance, and of the manner in which such value is acquired. Upon this point it was the bankruptcy, was "property" and "effects" of the bankrupt within sections 5044,
observed that the surrender value of a policy "arises from the fact that the fixed 5046, of the Revised Statutes, and as such passed to the bankrupt's assignee. So far
annual premiums is much in excess of the annual risk during the earlier years of the as necessary to make the cash surrender value available, the title to the policy also
policy, an excess made necessary in order to balance the deficiency of the same passed to the assignee, so that he might thereafter either surrender it to the
premium to meet the annual risk during the latter years of the policy. This excess in company, or assign it over, either to the bankrupt, or to any other person having an
the premium paid over the annual cost of insurance, with accumulations of interest, insurable interest in his life, on receiving payment of the surrender value at the time,
constitutes the surrender value. Though this excess of premiums paid is legally the or so much of it as the assignee might be able to obtain.
sole property of the company, still in practical effect, though not in law it is moneys of
the assured deposited with the company in advance to make up the deficiency in later Beyond this interest in the surrender value I think nothing passed to the assignee in
premiums to cover the annual cost of insurance, instead of being retained by the bankruptcy save the naked title to the policy in order to make that interest available.
assured and paid by him to the company in the shape of greatly-increased premiums, As an executory contract, aside from its surrender value, the policy had no pecuniary
when the risk is greatest. It is the 'net reserve' required by law to be kept by the value whatever. Assuming that the bankrupt had the average expectation of life, as a
company for the benefit of the assured, and to be maintained to the credit of the mere contract for future insurance it would be a burden rather than a benefit to the
policy. So long as the policy remains in force the company has not practically any estate; for, whatever might be afterwards obtained from it, (beyond the present
beneficial interest in it, except as its custodian, with the obligation to maintain it surrender value), a still greater sum must presumably be paid out in the shape of
unimpaired and suitably invested for the benefit of the insured. This is the practical, future premiums and interest in order to keep the policy alive, since these premiums,
though not the legal, relation of the company to this fund. with interest on the average, not only equal the amount ultimately payable, but all the
company's expenses and profits in addition. As an executory contract, therefore,
Upon the surrender of the policy before the death of the assured, the company, to be aside from its surrender value the policy was not "property" or "effects," but an
relieved from all responsibility for the increased risk, which is represented by this incumbrance which the assignee would be bound to reject, like leases at an
accumulating reserve, could well afford to surrender a considerable part of it to the unfavorable rent. . . . In such cases the assignee has at least an election to reject the
assured, or his representative. A return of a part in some form or other is now usually contract; and if, knowing its terms, he does nothing to avail himself of it, and allows
made. (In re McKinney, 15 Fed., 535, 538.) third persons to acquire an interest in it, he must, as against the latter, be deemed to
have rejected it, except in so far as the law itself casts it upon him. (In re McKinney,
In this connection it may be observed that the stipulation providing for a cash 15 Fed., 535, 538.)
surrender value is a comparatively recent innovation in life insurance. Formerly the
contracts provided — as they still commonly do in the policies issued by fraternal
We have quoted at length from this opinion and consider it the more respectable, And Mellish, L. J., added: "In this case the old policies were really worth nothing; they
because it has been cited or quoted with approval more than once by the Supreme were policies which an insolvent trader, knowing that he was going to become a
Court of the United States (Holden vs. Stratton, 198 U.S., 202; 49 L. ed., 1018; bankrupt, would naturally allow to drop, as he could have no interest in keeping up a
Hiscock vs. Mertens, 205 U.S., 202; 51 L ed., 771; Burlingham vs. Crouse, 228 U. S., policy and paying the premiums for the benefit of his creditors; or perhaps not even
459, 469), — an approval which certainly would not have been given if the reasoning for their benefit, because if the policy were such as these were, which had only been
along which that decision proceeds had been considered specious or unsound. effected for a single year, it would be no benefit to the creditors and would be
worthless in the hands of the trustee." (2 Ch. Div., 276.)
The conclusion reached in the case of In re McKinney, supra, to the effect that, in the
absence of express provision of law to the contrary, a policy of insurance constitutes The case of Morris vs. Dodd (110 Ga., 606; 50 L. R.. A., 33) from the year 1900 is to
assets for an assignee in insolvency only to the extent of its realizable value is the same effect; and although this case was decided after the American Bankruptcy
corroborated by the decision of the Court of Appeal of Great Britain in Holt vs. Everall Act of 1898 had been enacted, the reasoning proceeds along the line suggested in In
(2 Ch. Div., 266), which arose under the English Bankrupt Act of 1869. It there re McKinney and Holt vs. Everall, supra. The facts in Morris vs. Dodd, supra, were,
appeared that in 1870 a trader effected policies of insurance on his own life. In the briefly, that a husband, within four months prior to the filing of his petition in
following year, wishing that his wife might have the benefit of the policies, under the bankruptcy, had transferred to his wife an insurance policy which before such transfer
married woman's act, he surrendered them to the insurance company, and received had been payable to his legal representatives. The policy had no cash surrender
in substitution therefor policies at the same premiums, payable on the same day, and value either when the transfer was made or when the petition in bankruptcy was filed.
entitled to the same privileges, as the former, and which provided that the sums Upon the death of the husband pending the proceedings in bankruptcy, it was held
assured should be paid to the wife. Within two years from the date of the substitute that the wife was entitled to the proceeds of the policy. Said the court: "The purpose
policies the husband liquidated, dying before the discharge. The trustee claimed the of the bankruptcy act is to take the property owned by the bankrupt when the petition
insurance. is filed, and apply it towards the payment of his then existing debts, discharging him in
due course from any further liability; his after-acquired property not being subject to
All of the Lords Justices were of the opinion that the old policies, having no surrender such debts. This being true, it is apparent that the creditors represented by the
value, could not have been available as assets to the trustee, and therefore that the trustee, whose debts cannot continue against the bankrupt, can have no insurable
disposition made of them by the insured was not obnoxious to the Bankrupt Act. interest in his life for the purpose of indemnifying themselves against loss." (50 L. R.
A., 44.)
Said James, L. J.: "In that point of view it is important to see whether there was any
actual property — anything that could be called property — at the time when the Numerous decisions of later date, tending to the same conclusion, could be cited from
husband obtained the policies in question. If the husband at that time had anything of the Federal courts of the United States, but inasmuch as these decisions have been
value, and that was given up as part of the consideration of the new policies, there rendered under the regime of the Bankrupt Law of 1898, already discussed, we omit
might be this question; but i am satisfied that that which was given up was not of any mention of particular cases; and in this connection it suffices to refer to section 207 of
value whatever; that there was, in fact, nothing taken away from the creditors, and the title Bankruptcy (7 C. J., 122), under which the pertinent cases are collated.
that the transaction, as far as the creditors were concerned, was in substance exactly
the same as if the policies of 1871 had been made without any reference whatever to The authorities above marshaled clearly exhibit the resolute attitude of courts, both
the existing policies of 1870, which he might at any moment have given up or high and low upon the proposition that the assignee acquires no beneficial interest in
forfeited, or dealt with as he thought fit. There is, therefore, nothing substantial arising insurance effected on the life of the insolvent, except to the extent that such
from the fact that the policies of 1871 were in exchange for the policies of 1870." (2 insurance contains assets which can be realized upon as of the date when the
Ch. Div., 273-274.) petition of insolvency is filed; and this attitude is manifest whether the question has
arisen under provisions like section 32 of our Insolvency Law, corresponding to insolvency, and at the same time allow the insolvent debtor to retain anything subject
section 14 of the American Bankruptcy Act of 1867, or under section 70 (a) of the to the payment of his debts in a normal state of solvency.lawphil.net
American Bankruptcy Act of 1898. The explanation is to be found in the consideration
that the destruction of a contract of life insurance is not only highly prejudicial to the We are thus conducted to the conclusion that "leviable assets" and "assets in
insured and those dependent upon him, but is inimical to the interests of society. insolvency" are practically coextensive terms. Hence, in determining what elements of
Insurance is a species of property that should be conserved and not dissipated. As is value constitutes assets in insolvency, we are at liberty to consider what elements of
well known, life insurance is increasingly difficult to obtain with advancing years, and value are subject to be taken upon execution, and vice versa.
even when procurable after the age of fifty, the cost is then so great as to be
practically prohibitive to many. Insolvency is a disaster likely to overtake men in Accordingly, we proceed to inquire whether, under the laws prevailing in this
mature life; and one who has gone through the process of bankruptcy usually finds jurisdiction, a policy of insurance having no cash surrender value, but payable to the
himself in his declining years with the accumulated savings of years swept away and insured or his legal representative, is property that may be taken upon execution
earning power diminished. The courts are therefore practically unanimous in refusing against him. In this connection it must be admitted that the laws of these Islands
to permit the assignee in insolvency to wrest from the insolvent a policy of insurance declare no exemption with respect to insurance policies; and this species of property
which contains in it no present realizable assets. is not enumerated, in section 48 of the Insolvency Law, among items from the
ownership of which the assignee is excluded. Moreover, all life insurance policies are
Having reviewed the cases most directly pertinent to the situation before us, attention declared by law to be assignable, regardless of whether the assignee has an
will again be directed to section 32 of the Insolvency Law, and related provisions, in insurable interest in the life of theft insured or not (Insurance Act No. 2427, sec. 166)
order to exhibit an aspect of the case upon which we have not as yet commented. — a circumstance which debilitates in a slight degree the reasoning upon which the
That section, among other things, declares that the assignment to be made by the decision in the case of In re McKinney, supra, is based. Finally, this court itself has
clerk of the court "shall operate to vest in the assignee all of the estate of the held that insurance policies having a present cash surrender value are subject to be
insolvent debtor not exempt by law from execution." Moreover, by section 24, the taken upon execution. (Misut Garcia vs. West Coast San Francisco Life Ins. Co., 41
court is required, upon making an order adjudicating any person insolvent, to stay any Phil., 258.) Upon the question whether a life insurance policy having no surrender
civil proceedings pending against him; and it is declared in section 60 that no creditor value can be seized upon execution, this court has not passed; but the same
whose debt is provable under the Act shall be allowed, after the commencement of consideration would apparently be controlling upon this point that have determined
proceedings in insolvency, to prosecute to final judgment any action therefore against the position of the courts on the question whether such a policy passes to the
the debtor. In connection with the foregoing may be mentioned subsections 1 and 2 of assignee in insolvency. In other words, a policy devoid of a cash surrender value
section 36, as well as the opening words of section 33, to the effect that the assignee cannot be either "leviable assets" or "assets in insolvency." Certainly no case has
shall have the right and power to recover, and to take into his possession, all of the been called to our attention from the voluminous jurisprudence of the United States or
estate, assets, and claims belonging to the insolvent, except such as are exempt by of England where a policy of ordinary life insurance, having no surrender value, was
law from execution. ever taken upon process of execution from an insured person, or the beneficiary
named in the policy, during the life of the insured; and we have discovered no case in
These provisions clearly evince an intention to vest in the assignee, for the benefit of which such a policy has been declared to pass to the trustee as assets in bankruptcy,
all the creditors of the insolvent, such elements of property and property right as could during the life of the insured; though there are apparently cases in which, after death
be reached and subjected by process of law by any single creditor suing alone. And of the insured, the proceeds of such policies have been declared by some of the
this is exactly as it should be: for it cannot be supposed that the Legislature would Federal courts of the United States to be assets in insolvency — contrary to the rule
suppress the right of action of every individual creditor upon the adjudication of afterwards laid down by the Supreme Court of the United States in
Burlingham vs. Crouse, supra.
As applied to the facts of the case before us, the conclusion to which we have arrived
is that the assignee in insolvency acquired no beneficial interest in the policy of
insurance in question; that its proceeds are not liable for any of the debts provable
against the insolvent in the pending proceedings, and that said proceeds should
therefore be delivered to his administratrix.

The judgment will therefore be reversed; and the plaintiff, the Sun Life Assurance
Company, will be directed to pay the proceeds of the policy to the defendant Tan Sit.
So ordered, without special pronouncement as to costs.

Johnson, Araullo, Avanceña Villamor and Romualdez, JJ., concur.