People vs.

Purisima (Statutory Construction) Issue:

Facts:
These twenty-six (26) Petitions for Review filed by the People of the Philippines
represented, respectively, by the Office of the City Fiscal of Manila, the Office of the
Provincial Fiscal of Samar, and joined by the Solicitor General, are consolidated in this one
Decision as they involve one basic question of law.
The respondent-courts are: CFI of Manila Branches VII and XVIII and CFI of Samar
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.
9?
Held:
1. It is the constitutional right of any person who stands charged in a criminal
prosecution to be informed of the nature and cause of the accusation against him.

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
SUPREME COURT
Manila
EN BANC
G.R. No. L-42050-66 November 20, 1978
THE PEOPLE OF THE PHILIPPINES, petitioner,
vs.
HONORABLE JUDGE AMANTE P. PURISIMA, COURT OF FIRST INSTANCE OF
MANILA, BRANCH VII, and PORFIRIO CANDELOSAS, NESTOR BAES, ELIAS L.
GARCIA, SIMEON BUNDALIAN, JR., JOSEPH C. MAISO, EDUARDO A.
LIBORDO, ROMEO L. SUGAY, FEDERICO T. DIZON, GEORGE M. ALBINO,
MARIANO COTIA, JR., ARMANDO L. DIZON, ROGELIO B. PARENO, RODRIGO
V. ESTRADA, ALFREDO A. REYES, JOSE A. BACARRA, REYNALDO
BOGTONG, and EDGARDO M. MENDOZA, respondents.
G.R. No. L-46229-32 November 20, 1978
THE PEOPLE OF THE PHILIPPINES, petitioner,
vs.
JUDGE MAXIMO A. MACEREN, COURT OF FIRST INSTANCE OF MANILA,
BRANCH XVIII, and REYNALDO LAQUI Y AQUINO, ELPIDIO ARPON, VICTOR
EUGENIO Y ROQUE and ALFREDO VERSOZA, respondents.
G.R. No. L-46313-16 November 20, 1978
THE PEOPLE OF THE PHILIPPINES, petitioner,
vs.
JUDGE MAXIMO A. MACEREN, COURT OF FIRST INSTANCE OF MANILA,
BRANCH XVIII, and JUANITO DE LA CRUZ Y NUNEZ, SABINO BUENO Y
CACAL, TIRSO ISAGAN Y FRANCISCO and BEN CASTILLO Y
UBALDO, respondents.
G.R. No. L-46997 November 20, 1978
THE PEOPLE OF THE PHILIPPINES, petitioner,
vs.
THE HONORABLE WENCESLAO M. POLO, Judge of the Court of First Instance
of Samar, and PANCHITO REFUNCION, respondents.
Jose L. Gamboa, Fermin Martin, Jr. & Jose D. Cajucom, Office of the City of Fiscal of
Manila and the Office of Provincial Fiscal of Samar for petitioners.
Norberto Parto for respondents Candelosas, Baes and Garcia.
Amado C. de la Marced for respondents Simeon Bundalian Jr., et al.
Manuel F. de Jesus for all the respondents in L-46229-32 and L-46313-16.
Norberto L. Apostol for respondent Panchito Refuncion.
Hon. Amante P. Purisima for and in his own behalf.
MUÑOZ PALMA, J.:
These twenty-six (26) Petitions for Review filed by the People of the Philippines
represented, respectively, by the Office of the City Fiscal of Manila, the Office of the
Provincial Fiscal of Samar, and joined by the Solicitor General, are consolidated in
this one Decision as they involve one basic question of law.
These Petitions or appeals involve three Courts of First Instance, namely: the Court of
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.
Maximo A. Maceren (8 Petitions) and, the Court of First Instance of Samar, with Hon.
Wenceslao M. Polo, presiding, (1 Petition).
Before those courts, Informations were filed charging the respective accused with
"illegal possession of deadly weapon" in violation of Presidential Decree No. 9. On a
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
— 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
Presidential Decree No. 9 because it failed to state one essential element of the
crime.
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
Presidential Decree (PD for short) No. 9? This is the central issue which we shall
resolve and dispose of, all other corollary matters not being indispensable for the
moment.
A — The Information filed by the People —
1. In L-42050-66, one typical Information filed with the Court presided by Judge
Purisima follows:
THE PEOPLE OF THE PHILIPPINES, plaintiff, versus PORFIRIO
CANDELOSAS Y DURAN, accused.
Crim. Case No. 19639
VIOLATION OF PAR. 3, PRES. DECREE No. 9 OF PROCLAMATION
1081
INFORMATION
The undersigned accuses PORFIRIO CANDELOSAS Y DURAN of a
violation of paragraph 3, Presidential Decree No. 9 of Proclamation
1081, committed as follows:
That on or about the 14 th day of December, 1974, in the City of
Manila, Philippines, the said accused did then and there wilfully,
unlawfully, feloniously and knowingly have in his possession and under
his custody and control one (1) carving knife with a blade of 6-½
inches and a wooden handle of 5-1/4 inches, or an overall length of
11-¾ inches, which the said accused carried outside of his residence,
the said weapon not being used as a tool or implement necessary to
earn his livelihood nor being used in connection therewith.
Contrary to law. (p. 32, rollo of L-42050-66)
The other Informations are similarly worded except for the name of the accused, the
date and place of the commission of the crime, and the kind of weapon involved.
2. In L-46229-32 and L-46313-16, the Information filed with the Court presided by
Judge Maceren follows:
THE PEOPLE OF THE PHILIPPINES, plaintiff, versus REYNALDO
LAQUI Y AQUINO, accused.
CRIM. CASE NO. 29677
VIOL. OF PAR. 3,
PD 9 IN REL. TO LOI
No. 266 of the Chief
Executive dated April 1, 1975
INFORMATION
The undersigned accuses REYNALDO LAQUI Y AQUINO of a
VIOLATION OF PARAGRAPH 3, PRESIDENTIAL DECREE NO. 9 in
relation to Letter of Instruction No. 266 of the Chief Executive dated
April 1, 1975, committed as follows:
That on or about the 28 th day of January, 1977, in the City of Manila,
Philippines, the said accused did then and there wilfully, unlawfully and
knowingly carry outside of his residence a bladed and pointed weapon,
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
nor being used in connection therewith.
Contrary to law. (p. 14, rollo of L-46229-32)
The other Informations are likewise similarly worded except for the name of the
accused, the date and place of the commission of the crime, and the kind of weapon
involved.
3. In L-46997, the Information before the Court of First Instance of Samar is quoted
hereunder:
PEOPLE OF THE PHILIPPINES, complainant, versus PANCHITO
REFUNCION, accused.
CRIM. CASE NO. 933
For:
ILLEGAL POSSESSION OF
DEADLY WEAPON
(VIOLATION OF PD NO. 9)
INFORMATION
The undersigned First Assistant Provincial Fiscal of Samar, accuses
PANCHITO REFUNCION of the crime of ILLEGAL POSSESSION OF
DEADLY WEAPON or VIOLATION OF PD NO. 9 issued by the
President of the Philippines on Oct. 2, 1972, pursuant to Proclamation
No. 1081 dated Sept. 21 and 23, 1972, committed as follows:
That on or about the 6th day of October, 1976, in the evening at
Barangay Barruz, Municipality of Matuginao, Province of Samar
Philippines, and within the jurisdiction of this Honorabe Court, the
abovenamed accused, knowingly, wilfully, unlawfully and feloniously
carried with him outside of his residence a deadly weapon called
socyatan, an instrument which from its very nature is no such as could
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.
9.
CONTRARY TO LAW. (p. 8, rollo of L-46997)
B. — The Orders of dismissal —
In dismissing or quashing the Informations the trial courts concurred with the
submittal of the defense that one essential element of the offense charged is missing
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
with or related to subversion, insurrection, or rebellion, organized lawlessness or
public disorder.
1. Judge Purisima reasoned out, inter alia, in this manner:
... the Court is of the opinion that in order that possession of bladed
weapon or the like outside residence may be prosecuted and tried
under P.D. No. 9, the information must specifically allege that the
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
Proclamation No. 1081, as justification therefor. Devoid of this specific
allegation, not necessarily in the same words, the information is not
complete, as it does not allege sufficient facts to constitute the offense
contemplated in P.D. No. 9. The information in these cases under
consideration suffer from this defect.
xxx xxx xxx
And while there is no proof of it before the Court, it is not difficult to
believe the murmurings of detained persons brought to Court upon a
 charge of possession of bladed weapons under P.D. No. 9, that more
than ever before, policemen - of course not all can be so heartless —
now have in their hands P.D. No. 9 as a most convenient tool for
extortion, what with the terrifying risk of being sentenced to
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
martial law an extortion-minded peace officer had to have a stock of
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
sharp edge or pointed object, available even in trash cans, may
already serve the same purpose, and yet five to ten times more
incriminating than the infamous paltik.
For sure, P.D. No. 9 was conceived with the best of intentions and
wisely applied, its necessity can never be assailed. But it seems it is
back-firing, because it is too hot in the hands of policemen who are
inclined to backsliding.
The checkvalves against abuse of P.D. No. 9 are to be found in the
heart of the Fiscal and the conscience of the Court, and hence this
resolution, let alone technical legal basis, is prompted by the desire of
this Court to apply said checkvalves. (pp. 55-57, rollo of L-42050-66)
2. Judge Maceren in turn gave his grounds for dismissing the charges as follows:
xxx xxx xxx
As earlier noted the "desired result" sought to be attained by
Proclamation No. 1081 is the maintenance of law and order throughout
the Philippines and the prevention and suppression of all forms of
lawless violence as well as any act of insurrection or rebellion. It is
therefore reasonable to conclude from the foregoing premises that the
carrying of bladed, pointed or blunt weapons outside of one's
residence which is made unlawful and punishable by said par. 3 of
P.D. No. 9 is one that abets subversion, insurrection or rebellion,
lawless violence, criminality, chaos and public disorder or is intended
to bring about these conditions. This conclusion is further strengthened
by the fact that all previously existing laws that also made the carrying
of similar weapons punishable have not been repealed, whether
expressly or impliedly. It is noteworthy that Presidential Decree No. 9
does not contain any repealing clause or provisions.
xxx xxx xxx
The mere carrying outside of one's residence of these deadly weapons
if not concealed in one's person and if not carried in any of the
aforesaid specified places, would appear to be not unlawful and
punishable by law.
With the promulgation of Presidential Decree No. 9, however, the
prosecution, through Assistant Fiscal Hilario H. Laqui, contends in his
opposition to the motion to quash, that this act is now made unlawful
and punishable, particularly by paragraph 3 thereof, regardless of the
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
person happens to be caught while on his way home by law
enforcement officers carrying a kitchen knife that said person had just
bought from a store in order that the same may be used by one's cook
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
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
merely for use by his cook in preparing his meals.
This possibility cannot be discounted if Presidential Decree No. 9 were
to be interpreted and applied in the manner that that the prosecution
wants it to be done. The good intentions of the President in
promulgating this decree may thus be perverted by some
unscrupulous law enforcement officers. It may be used as a tool of
oppression and tyranny or of extortion.
xxx xxx xxx
 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
unlawful and the violator shall, upon conviction suffer:
(a) The mandatory penalty of death by a firing squad or electrocution
as a Military, Court/Tribunal/Commission may direct, it the firearm
involved in the violation is unlicensed and is attended by assault upon,
or resistance to persons in authority or their agents in the performance
of their official functions resulting in death to said persons in authority
or their agent; or if such unlicensed firearm is used in the commission
of crimes against persons, property or chastity causing the death of the
victim used in violation of any other General Orders and/or Letters of
Instructions promulgated under said Proclamation No. 1081:
(b) The penalty of imprisonment ranging from twenty years to life
imprisonment as a Military Court/Tribunal/commission may direct,
when the violation is not attended by any of the circumstances
enumerated under the preceding paragraph;
(c) The penalty provided for in the preceding paragraphs shall be
imposed upon the owner, president, manager, members of the board
of directors or other responsible officers of any public or private firms,
companies, corporations or entities who shall willfully or knowingly
allow any of the firearms owned by such firm, company, corporation or
entity concerned to be used in violation of said General Orders Nos. 6
and 7.
2. It is unlawful to posses deadly weapons, including hand grenades,
rifle grenades and other explosives, including, but not limited to, "pill
box bombs," "molotov cocktail bombs," "fire bombs," or other
incendiary device consisting of any chemical, chemical compound, or
detonating agents containing combustible units or other ingredients in
such proportion, quantity, packing, or bottling that ignites by fire, by
friction, by concussion, by percussion, or by detonation of all or part of
the compound or mixture which may cause such a sudden generation
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
shall be punished by imprisonment ranging from ten to fifteen years as
a Military Court/Tribunal/Commission may direct.
3. It is unlawful to carry outside of residence any bladed, pointed or
blunt weapon such as "fan knife," "spear," "dagger," "bolo," "balisong,"
"barong," "kris," or club, except where such articles are being used as
necessary tools or implements to earn a livelihood and while being
used in connection therewith; and any person found guilty thereof shall
suffer the penalty of imprisonment ranging from five to ten years as a
Military Court/Tribunal/Commission may direct.
4. When the violation penalized in the preceding paragraphs 2 and 3 is
committed during the commission of or for the purpose of committing,
any other crime, the penalty shall be imposed upon the offender in its
maximum extent, in addition to the penalty provided for the particular
offenses committed or intended to be committed.
Done in the City of Manila, this 2nd day of October in the year of Our
Lord, nineteen hundred and seventy-two.
(SGD) FERDINAND E. MARCOS
President
Republic of the Philippines
D. — The arguments of the People —
In the Comment filed in these cases by the Solicitor General who as stated earlier
joins the City Fiscal of Manila and the Provincial Fiscal of Samar in seeking the
setting aside of the questioned orders of dismissal, the main argument advanced on
the issue now under consideration is that a perusal of paragraph 3 of P.D. 9 'shows
that the prohibited acts need not be related to subversive activities; that the act
proscribed is essentially a malum prohibitum penalized for reasons of public policy.1
The City Fiscal of Manila in his brief adds further that in statutory offenses the
intention of the accused who commits the act is immaterial; that it is enough if the
prohibited act is voluntarily perpetuated; that P.D. 9 provides and condemns not only
the carrying of said weapon in connection with the commission of the crime of
subversion or the like, but also that of criminality in general, that is, to eradicate
lawless violence which characterized pre-martial law days. It is also argued that the
real nature of the criminal charge is determined not from the caption or preamble of
the information nor from the specification of the provision of law alleged to have been
violated but by the actual recital of facts in the complaint or information.2
E. — Our Ruling on the matter —
1. It is a constitutional right of any person who stands charged in a criminal
prosecution to be informed of the nature and cause of the accusation against him.3
Pursuant to the above, Section 5, Rule 110 of the Rules of Court, expressly requires
that for a complaint or information to be sufficient it must, inter alia state the
designation of the offense by the statute, and the acts or omissions complained of as
constituting the offense. This is essential to avoid surprise on the accused and to
afford him the opportunity to prepare his defense accordingly. 4
To comply with these fundamental requirements of the Constitution and the Rules on
Criminal Procedure, it is imperative for the specific statute violated to be designated
or mentioned 4 in the charge. In fact, another compelling reason exists why a
specification of the statute violated is essential in these cases. As stated in the order
of respondent Judge Maceren the carrying of so-called "deadly weapons" is the
subject of another penal statute and a Manila city ordinance. Thus, Section 26 of Act
No. 1780 provides:
Section 26. It should be unlawful for any person to carry concealed
about his person any bowie knife, dirk dagger, kris, or other deadly
weapon: ... Any person violating the provisions of this section shall,
upon conviction in a court of competent jurisdiction, be punished by a
fine not exceeding five hundred pesos, or by imprisonment for a period
not exceeding six months, or both such fine and imprisonment, in the
discretion of the court.
Ordinance No. 3820 of the City of Manila as amended by Ordinance No. 3928 which
took effect on December 4, 1957, in turn penalizes with a fine of not more than
P200.00 or imprisonment for not more than one months, or both, at the discretion of
the court, anyone who shall carry concealed in his person in any manner that would
disguise its deadly character any kind of firearm, bowie knife, or other deadly weapon
... in any public place. Consequently, it is necessary that the particular law violated be
specified as there exists a substantial difference between the statute and city
ordinance on the one hand and P.D. 9 (3) on the other regarding the circumstances of
the commission of the crime and the penalty imposed for the offense.
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
repealing clause or provision, and repeal by implication is not favored. 6 This principle
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,
Article 7 of the New Civil Code provides that laws are repealed only by subsequent
ones and their violation or non- observance shall not be excused by disuse, or
custom or practice to the contrary.
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
ordinance, or the presidential decree. That being the case, the right becomes more
compelling for an accused to be confronted with the facts constituting the essential
elements of the offense charged against him, if he is not to become an easy pawn of
oppression and harassment, or of negligent or misguided official action — a fear
understandably shared by respondent Judges who by the nature of their judicial
functions are daily exposed to such dangers.
2. In all the Informations filed by petitioner the accused are charged in the caption as
well as in the body of the Information with a violation of paragraph 3, P.D. 9. What
then are the elements of the offense treated in the presidential decree in question?
We hold that the offense carries two elements: first, the carrying outside one's
residence of any bladed, blunt, or pointed weapon, etc. not used as a necessary tool
or implement for a livelihood; and second, that the act of carrying the weapon was
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
concealed, outside of the scope of the statute or the city ordinance mentioned above.
In other words, a simple act of carrying any of the weapons described in the
presidential decree is not a criminal offense in itself. What makes the act criminal or
punishable under the decree is the motivation behind it. Without that motivation, the
act falls within the purview of the city ordinance or some statute when the
circumstances so warrant.
Respondent Judges correctly ruled that this can be the only reasonably, logical, and
valid construction given to P.D. 9(3).
3. The position taken by petitioner that P.D. 9(3) covers one and all situations where a
person carries outside his residence any of the weapons mentioned or described in
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
manifest from the conflicting views which arise from its implementation. When
ambiguity exists, it becomes a judicial task to construe and interpret the true meaning
and scope of the measure, guided by the basic principle that penal statutes are to be
construed and applied liberally in favor of the accused and strictly against the state.
4. In the construction or interpretation of a legislative measure — a presidential
decree in these cases — the primary rule is to search for and determine the intent
and spirit of the law. Legislative intent is the controlling factor, for in the words of this
Court in Hidalgo v. Hidalgo, per Mr. Justice Claudio Teehankee, whatever is within
the spirit of a statute is within the statute, and this has to be so if strict adherence to
the letter would result in absurdity, injustice and contradictions. 8
There are certain aids available to Us to ascertain the intent or reason for P.D. 9(3).
First, the presence of events which led to or precipitated the enactment of P.D. 9.
These events are clearly spelled out in the "Whereas" clauses of the presidential
decree, thus: (1) the state of martial law in the country pursuant to Proclamation 1081
dated September 21, 1972; (2) the desired result of Proclamation 1081 as well as
General Orders Nos. 6 and 7 which are particularly mentioned in P.D. 9; and (3) the
alleged fact that subversion, rebellion, insurrection, lawless violence, criminality,
chaos, aid public disorder mentioned in Proclamation 1081 are committed and
abetted by the use of firearms and explosives and other deadly weapons.
The Solicitor General however contends that a preamble of a statute usually
introduced by the word "whereas", is not an essential part of an act and cannot
enlarge or confer powers, or cure inherent defects in the statute (p. 120, rollo of L-
42050-66); that the explanatory note or enacting clause of the decree, if it indeed
limits the violation of the decree, cannot prevail over the text itself inasmuch as such
explanatory note merely states or explains the reason which prompted the issuance
of the decree. (pp. 114-115, rollo of 46997)
We disagree with these contentions. Because of the problem of determining what
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,
whereas" clauses which enumerate the facts or events which justify the promulgation
of the decree and the stiff sanctions stated therein.
A "preamble" is the key of the statute, to open the minds of the makers
as to the mischiefs which are to be remedied, and objects which are to
be accomplished, by the provisions of the statute." (West Norman
Timber v. State, 224 P. 2d 635, 639, cited in Words and Phrases,
"Preamble"; emphasis supplied)
While the preamble of a statute is not strictly a part thereof, it may,
when the statute is in itself ambiguous and difficult of interpretation, be
resorted to, but not to create a doubt or uncertainty which otherwise
does not exist." (James v. Du Bois, 16 N.J.L. (1 Har.) 285, 294, cited in
Words and Phrases, "Preamble")
In Aboitiz Shipping Corporation, et al. v. The City of Cebu, et al. this Court had
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
is a cardinal rule of statutory construction. For taken in the abstract, a word or phrase
might easily convey a meaning quite different from the one actually intended and
evident when the word or phrase is considered with those with which it is associated.
Thus, an apparently general provision may have a limited application if read together
with other provisions. 9
Second, the result or effects of the presidential decree must be within its reason or
intent.
In the paragraph immediately following the last "Whereas" clause, the presidential
decree states:
NOW, THEREFORE, I , FERDINAND E. MARCOS, Commander-in-
Chief of an the Armed Forces of the Philippines, in order to attain the
desired result of the aforesaid Proclamation No. 1081 and General
Orders Nos. 6 and 7, do hereby order and decree that:
xxx xxx xxx
From the above it is clear that the acts penalized in P.D. 9 are those
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
therefore have no relevance to P.D. 9(3) which refers to blunt or
bladed weapons. With respect to Proclamation 1081 some of the
underlying reasons for its issuance are quoted hereunder:
WHEREAS, these lawless elements having taken up arms against our
duly constituted government and against our people, and having
committed and are still committing acts of armed insurrection and
rebellion consisting of armed raids, forays, sorties, ambushes, wanton
acts of murders, spoilage, plunder, looting, arsons, destruction of
public and private buildings, and attacks against innocent and
defenseless civilian lives and property, all of which activities have
seriously endangered and continue to endanger public order and
safety and the security of the nation, ...
xxx xxx xxx
WHEREAS, it is evident that there is throughout the land a state of
anarchy and lawlessness, chaos and disorder, turmoil and destruction
of a magnitude equivalent to an actual war between the forces of our
duly constituted government and the New People's Army and their
satellite organizations because of the unmitigated forays, raids,
ambuscades, assaults, violence, murders, assassinations, acts of
terror, deceits, coercions, threats, intimidations, treachery,
machinations, arsons, plunders and depredations committed and being
committed by the aforesaid lawless elements who have pledged to the
whole nation that they will not stop their dastardly effort and scheme
until and unless they have fully attained their primary and ultimate
purpose of forcibly seizing political and state power in this country by
overthrowing our present duly constituted government, ... (See Book I,
Vital Documents on the Declaration of Martial Law in the Philippines by
the Supreme Court of the Philippines, pp. 13-39)
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
is within the intent of P.D. 9(3), and nothing else.
Statutes are to be construed in the light of purposes to be
achieved and the evils sought to be remedied. (U.S. v. American
Tracking Association, 310 U.S. 534, cited in LVN Pictures v. Philippine
Musicians Guild, 110 Phil. 725, 731; emphasis supplied)
When construing a statute, the reason for its enactment should be kept
in mind, and the statute should be construed with reference to its
intended scope and purpose. (Statutory Construction by E.T.
Crawford, pp. 604-605, cited in Commissioner of Internal Revenue v.
Filipinas Compania de Seguros, 107 Phil. 1055, 1060; emphasis
supplied)
5. In the construction of P.D. 9(3) it becomes relevant to inquire into the
consequences of the measure if a strict adherence to the letter of the paragraph is
followed.
It is a salutary principle in statutory construction that there exists a valid presumption
that undesirable consequences were never intended by a legislative measure, and
that a construction of which the statute is fairly susceptible is favored, which will avoid
all objectionable, mischievous, indefensible, wrongful, evil, and injurious
consequences.9-a
It is to be presumed that when P.D. 9 was promulgated by the President of the
Republic there was no intent to work a hardship or an oppressive result, a possible
abuse of authority or act of oppression, arming one person with a weapon to impose
hardship on another, and so on.10
At this instance We quote from the order of Judge Purisima the following:
And while there is no proof of it before the Court, it is not difficult to
believe the murmurings of detained persons brought to Court upon a
charge of possession of bladed weapons under P.D. No. 9, that more
than ever before, policemen - of course not all can be so heartless —
now have in their hands P.D. No. 9 as a most convenient tool for
extortion, what with the terrifying risk of being sentenced to
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
martial law an extortion-minded peace officer had to have a stock of
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
sharp edge or pointed object, available even in trash cans, may
already serve the same purpose, and yet five to ten times more
incriminating than the infamous paltik. (pp. 72-73, rollo L-42050-66)
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-
abiding citizen, a lawyer by profession, after gardening in his house remembers to
return the bolo used by him to his neighbor who lives about 30 meters or so away and
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.
9(3). Could the presidential decree have been conceived to produce such absurd,
unreasonable, and insensible results?
6. Penal statutes are to be construed strictly against the state and liberally in favor of
an accused.
American jurisprudence sets down the reason for this rule to be "the tenderness of
the law of the rights of individuals; the object is to establish a certain rule by
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
Our own decisions have set down the same guidelines in this manner, viz:
Criminal statutes are to be construed strictly. No person should be
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
statute. (U.S. v. Abad Santos, 36 Phil. 243, 246)
The rule that penal statutes are given a strict construction is not the
only factor controlling the interpretation of such laws, instead, the rule
merely serves as an additional, single factor to be considered as an
aid in determining the meaning of penal laws. (People v. Manantan, 5
SCRA 684, 692)
F. The Informations filed by petitioner are fatally defective.
The two elements of the offense covered by P.D. 9(3) must be alleged in the
Information in order that the latter may constitute a sufficiently valid charged. The
sufficiency of an Information is determined solely by the facts alleged
therein.13 Where the facts are incomplete and do not convey the elements of the
crime, the quashing of the accusation is in order.
Section 2(a), Rule 117 of the Rules of Court provides that the defendant may move to
quash the complaint or information when the facts charged do not constitute an
offense.
In U.S.U. Gacutan, 1914, it was held that where an accused is charged with
knowingly rendering an unjust judgment under Article 204 of the Revised Penal Code,
failure to allege in the Information that the judgment was rendered knowing it to be
unjust, is fatal. 14
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
an Information wherein the facts recited did not constitute a public offense as defined
in Section 1, Republic Act 145. 15
G. The filing of these Petitions was unnecessary because the People could have
availed itself of other available remedies below.
Pertinent provisions of the Rules of Court follow:
Rule 117, Section 7. Effect of sustaining the motion to quash. — If the
motion to quash is sustained the court may order that another
information be filed. If such order is made the defendant, if in custody,
shall remain so unless he shall be admitted to bail. If such order is not
made or if having been made another information is not filed
withuntime to be specified in the order, or within such further time as
the court may allow for good cause shown, the defendant, if in
custody, shall be discharged therefrom, unless he is in custody on
some other charge.
Rule 110, Section 13. Amendment. — The information or complaint
may be amended, in substance or form, without leave of court, at any
time before the defendant pleads; and thereafter and during the trial as
to all matters of form, by leave and at the discretion of the court, when
the same can be done without prejudice to the rights of the defendant.
xxx xxx xxx
Two courses of action were open to Petitioner upon the quashing of the Informations
in these cases, viz:
First, if the evidence on hand so warranted, the People could have filed an amended
Information to include the second element of the offense as defined in the disputed
orders of respondent Judges. We have ruled that if the facts alleged in the
Information do not constitute a punishable offense, the case should not be dismissed
but the prosecution should be given an opportunity to amend the Information.16
Second, if the facts so justified, the People could have filed a complaint either under
Section 26 of Act No. 1780, quoted earlier, or Manila City Ordinance No. 3820, as
amended by Ordinance No. 3928, especially since in most if not all of the cases, the
dismissal was made prior to arraignment of the accused and on a motion to quash.
Section 8. Rule 117 states that:
An order sustaining the motion to quash is not a bar to another
prosecution for the same offense unless the motion was based on the
grounds specified in section 2, subsections (f) and (h) of this rule.
Under the foregoing, the filing of another complaint or Information is barred only when
the criminal action or liability had been extinguished (Section 2[f]) or when the motion
to quash was granted for reasons of double jeopardy. (ibid., [h])
As to whether or not a plea of double jeopardy may be successfully invoked by the
accused in all these cases should new complaints be filed against them, is a matter
We need not resolve for the present.
H. — We conclude with high expectations that police authorities and the prosecuting
arm of the government true to the oath of office they have taken will exercise utmost
circumspection and good faith in evaluating the particular circumstances of a case so
as to reach a fair and just conclusion if a situation falls within the purview of P.D. 9(3)
and the prosecution under said decree is warranted and justified. This obligation
becomes a sacred duty in the face of the severe penalty imposed for the offense.
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
Minister of Justice, where he stated the following:
In any case, please study well each and every case of this nature so
that persons accused of carrying bladed weapons, specially those
whose purpose is not to subvert the duly constituted authorities, may
not be unduly indicted for the serious offenses falling under P.D. No.
9.17
Yes, while it is not within the power of courts of justice to inquire into the wisdom of a
law, it is however a judicial task and prerogative to determine if official action is within
the spirit and letter of the law and if basic fundamental rights of an individual
guaranteed by the Constitution are not violated in the process of its implementation.
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
an instrument of oppression and evil and leads the citizenry to lose their faith in their
government.
WHEREFORE, We DENY these 26 Petitions for Review and We AFFIRM the Orders
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
regarding the right of the State or Petitioner herein to file either an amended
Information under Presidential Decree No. 9, paragraph 3, or a new one under other
existing statute or city ordinance as the facts may warrant.
Without costs.
SO ORDERED.
Fernando, Teehankee, Santos, Fernandez and Guerrero, JJ., concur.
Castro, C.J. and Antonio, J, concur in the result.
Aquino, J, took no part.
G.R. No. L-47027 February 4, 1941
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
BENITO R. PADILLA and ALFRED VON AREND, defendants-appellants.
Ross, Lawrence, Selph and Carrascoso for appellant Alfred Von Arend.
E.A. Picazo for appellant Benito R. Padilla.
Office of the Solicitor General Ozaeta for appellee.
LAUREL, J.:
On October 27, 1938, in criminal case No. 57235 of the Court of First Instance of
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
information filed against them by the fiscal of Manila is of the following tenor:
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
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
agreement of the parties all the evidence presented by the prosecution and the
defense in the trial of Alfred Von Arend were offered and admitted in Padilla's. The
trial court, on July 25, 1939, rendered judgment finding the two accused guilty of the
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
insolvency, and to pay one-half of the costs. Both have appealed to this Court.
Counsel for Von Arend makes the following assignment of errors:
I. The trial court erred in ruling that Commonwealth Act. No. 108 had any
connection with Commonwealth Act No. 138 or that it punished any deviation
from the preferences provided by the law.
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
the Constitution of the Philippines.
III. The trial court erred in holding that Commonwealth Act No. 108 as applied
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
17 of the constitution of the Philippines.
IV. The trial court erred and acted contrary to Article III, sec. 1, subsections 15
and 17 of the Constitution of the Philippines in convicting Alfred Von Arend on
the basis of evidence not offered at the trial.
V. The trial court erred in not properly complying with the provisions of section
33 of the Code of Criminal Procedure.
VI. The trial court erred in not holding that Commonwealth Act No. 138 was
unconstitutional and void as being contrary to an act of the Congress of the
United States.
VII. The trial court erred in not dismissing the information in this case on the
ground that more than one crime is charged therein.
VIII. The trial court erred in not holding that section 4 of Commonwealth Act
No. 138 was enacted contrary to the provisions of section 1, subsection 17, of
the Ordinance Appended to the Constitution of the Philippines and is
consequently void and ineffective.
IX. The trial court erred in finding that Padilla Central Distributors and Benito
R. Padilla were mere figure-heads or dummies.
X. The trial court erred in disregarding the testimony establishing the
Government's practice of awarding contracts to the lowest bidder regardless
of whether such bidder was a domestic or a foreign entity.
XI. The trial court erred in making findings of facts contrary to the clear weight
of evidence.
Counsel for Padilla assigns the following errors:
I. In not holding that the facts charged in the information do not constitute a
public offense and that Act No. 138 is unconstitutional.
II. In holding that the "Padilla Central Distributors" was organized by the
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
provisions of Commonwealth Act No. 138.
III. In holding that the "Padilla Central Distributors" was managed and
administered by the "Insular Drug Co., Inc.,
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
permits certain pertinent information when exhibits "12" and "13" were issued.
V. In finding the accused Benito R. Padilla guilty of the crime charged in the
information.
The principal question to be determined is whether or not a violation of
Commonwealth Act No. 138, commonly known as the "Flag Law", may be prosecuted
under Commonwealth Act No. 108, entitled "An Act to punish acts of evasion of the
laws on the nationalization of certain rights, franchises or privileges." Other points
raised in the briefs will be taken up in the course of this opinion.
It appears that shortly after the approval of Commonwealth Act No. 138, or on
December 16, 1936, Benito R. Padilla resigned from the Insular Drug Company,
where he had been employed as a selling agent for seven years, and organized the
"Padilla Central Distributors" capitalized at P1,000 (Exhibit A) for the distribution and
sale of medicine, chemical products, and clinical, surgical and laboratory equipment.
At the same time, he opened with his old employer a credit account in the amount of
P5,000, secured by his own and his wife's savings deposit, to enable him to purchase
drugs and other chemicals and facilitate his business transactions. In addition, he was
allowed a small space in the offices of the Insular Drug Company, and also the use of
the latter's telephone, warehouse and delivery cars. To assist him in the venture, he
appointed Serafin Enriquez, secretary-treasurer of the Insular Drug Company, and
Bartolome Salapong, cashier of the same firm, as his attorney-in-fact and
bookkeeper, respectively. Serafin Enriquez, as attorney-in-fact, prepared and
submitted all the bids of the Padilla Central Distributor for pharmaceutical supplies
needed by the Government, and was successful in winning for it most of the contracts
as the lowest domestic bidder. The open-account agreement stipulated the amount of
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
R. Padilla's account totaled P5,692.88. As most of the government contracts were
awarded to the Padilla Central Distributors as the lowest domestic bidder under the
provisions of Commonwealth Act No. 138, and as all the requisitioned supplies were
taken from the Insular Drug Company, the sales of the latter increased in volume, and
its president and general manager, defendant Alfred Von Arend, for a period
comprised between January, 1937 and June, 1938, received dividends amounting to
P16,186, besides P1,000 as monthly salary and P200 as monthly expenses. Benito
R. Padilla, for the same period, due to the 2-5 per cent discount granted by the
Insular Drug Company, made a gross profit of P5,003.31 and a net profit of
P2,652.26. (Exhibit 25, Resume of Capitulation Statement.)
It is admitted that Commonwealth Act No. 108 does not provide for any penalty for the
violation of any of its provisions. Section 1 of Commonwealth Act No. 108, however,
provides that "in all cases in which any constitutional or legal provision requires
Philippine or United States citizenship as a requisite for the exercise of enjoyment of
a right, franchise or privilege, any citizen of the Philippines or the United States who
allows his name or citizenship to be used for the purpose of evading such evading
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
than two thousand nor more than ten thousand pesos." In Commonwealth Act No.
138, a domestic entity is defined as "any citizen of the Philippines or of the United
States habitually established in business and engaged in the manufacture or sale of
the merchandise covered by his bid, or any corporate body or commercial company
duly organized and registered under the laws of the Philippines of whose capital 75
per centum is owned by citizens of the Philippines or of the United States, or both."
Section 4 of the same Act emphasizes that "whenever several bidders shall
participate in the bidding for supplying articles, materials and equipment for any of the
dependencies mentioned in section one of this Act for public use, public buildings, or
public works, the award shall be made to the domestic entity making the lowest bid,
provided that it is not more than fifteen per centum in excess of the lowest bid made
by a bidder other than a domestic entity." We are of the opinion that any citizen of the
Philippines or of the United States who knowingly allows his name or citizenship to be
used so that a person not so qualified may enjoy the privilege granted to domestic
entities by Commonwealth Act No. 138, as well as any alien or foreigner profiting
thereby, is guilty of violation of Commonwealth Act No. 108.
The Insular Drug Company of which the appellant, Alfred Von Arend, is president and
general manager, is a foreign entity because 75 per centum of its capital is not owned
by Filipino or American citizens. On the other hand, the Padilla Central Distributors,
as organized by the appellant, Benito R. Padilla, which is a domestic entity, enjoys
the privilege afforded by Commonwealth Act No. 138. The lower court found that the
organization by the Padilla Central Distributors was but an ingenious scheme to
evade the requirements of Commonwealth Act No. 138 for the following reasons: (1)
Benito R. Padilla did not invest a single centavo in the Padilla Central Distributors for
the reason that the Insular Drug Company, through Alfred Von Arend, furnished him
all the articles ordered by the Government. Von Arend accounted for his operating
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
(Exhibit I) between Benito R. Padilla and the Insular Drug Company was but a device
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
Padilla's account over the quota therein specified. Although Benito R. Padilla and his
wife had assigned their bank passbooks to Von Arend to answer for their credit,
Padilla always indorsed the government warrants to the Insular Drug Company which
collected the face value of said warrants. (3) Benito R. Padilla opened his office in the
Insular Drug Company, and was allowed to use the latter's telephone, warehouse and
delivery truck. This disproves the pretended independence of the Padilla Central
Distributors from the Insular Drug Company. (4) Padilla's employees, Serafin
Enriquez and Bartolome Salapong, are salaried men of the Insular Drug Company,
and Padilla's claim that they were paid by him was not accepted by the lower court.
(5) Benito R. Padilla had no tangible investment in the Padilla Central Distributors,
and it was Serafin Enriquez, his attorney-in-fact, and the secretary-treasurer of the
Insular Drug Company, who supervised all the business transactions, from the formal
submission of the bids to the endorsement of the government warrants to the Insular
Drug Company. These are conclusions of facts which we are not inclined to disturb.
The lower court also found that the appellant, Alfred Von Arend, had profited by the
scheme, for the reason that under section 4 of the Flag Law, the Insular Drug
Company being a foreign entity would have had to bid 15 per cent lower to
successfully outbid a domestic entity or a domestic bidder. With the establishment of
the Padilla Central Distributors which submitted bids as a domestic entity, the Insular
Drug Company stood to lose only 2-5 per cent as a discount to Padilla. The
advantage afforded by this arrangement is proved by the fact that, as hereinabove
stated, between the period comprised between September, 1937, and June, 1938
alone, Alfred Von Arend, as president, general manager, and controlling stockholder
of the Insular Drug Company, received as dividends the sum of P16,186, in addition
to his monthly salary and expenses of P1,000 and P200, respectively; and Benito R.
Padilla, for the same period, realized a gross profit of P5,003.31.
It is contended, however, that notwithstanding the infringement of section 4 of Act No.
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
correctly extended to and applied in this case. This argument is, in our opinion,
without merit. The very title of Act No. 108 gives unmistakable notice of the legislative
intent of the laws of the nationalization of certain rights, franchises or privileges," and
section 1 of the same Act applies the punishment provided therein to "all cases in
which any constitutional or legal provision requires Philippine or United States
citizenship as a requisite for the exercise of enjoyment of a right, franchise or
privilege." Under Act No. 108 any legal provision, whether existing at the time of the
passage of said Act No. 108 or promulgated thereafter, would fall within its scope, so
long as said legal provision requires Philippine or United States citizenship as a
requisite for the enjoyment of a right, franchise or privilege. One of such legal
provisions is section 4 of Commonwealth Act No. 138. While "statutes prescribing
punishments or penalties should not be extended further than their terms reasonably
justify" (Snowden v. Brown, 60 Fla. 212, 53 So. 548, 549), this rule of strict
construction is subordinate to the rule of reasonable, sensible construction having in
view the legislative purpose and intent, and giving effect to the same. It is not to be so
unreasonably applied as to defeat the true intent and meaning of the of the enactment
found in the language actually used. (Chapman v. Lake, 151 So. 399, 402-403.)
Although not so expressly stated, Act No. 138 is cumulative of Act No. 108; and it is
no objection that one statute creates an offense and another Act provides for its
punishment.
It is also urged that Acts Nos. 108 and 138 are unconstitutional: as to the former,
because its provisions are vague and uncertain, covered more than one subject, and
deprived Alfred Von Arend of his liberty and property without due process of law; and
as to the latter, because it is contrary to Act No. 428 of the 72nd Congress of the
United States. We have examined these Commonwealth Acts and are of the opinion
that they are constitutional. Commonwealth Act No. 108 is sufficiently clear, and
prescribes with reasonable certainty the elements of the offense that it punishes. It
embraces only one general subject, to wit, the punishment of acts of evasion of the
laws on the nationalization of certain rights, franchises or privileges, which subject is
fairly suggestive of, and not foreign to, its intent and purpose. It does not deprive
Alfred Von Arend, or any person for that matter, of liberty and property without due
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.
Fundamentally, it is in harmony with the congressional enactment.
The judgment of the lower court as to Alfred Von Arend is affirmed in all respects. As
to Benito R. Padilla, the Court feels that as a Filipino citizen he has proved himself
lacking in civic consciousness and responsibility as to require censure and
punishment at once prompt and severe, in order to enliven the confidence of the
people in their Government and their institutions. The penalty, in his case, is
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
case of insolvency, both appellants to pay the costs. So ordered.
G.R. No. L-2068 October 20, 1948
DOMINADOR B. BUSTOS, Petitioner, vs. ANTONIO G. LUCERO, Judge of First Instance of
Pampanga, Respondent.
E. M. Banzali for petitioner.
Acting Provincial Fiscal Albino L. Figueroa and Assistant Provincial Fiscal Marcelo L. Mallari
for respondent
TUASON, J.:
The petitioner herein, an accused in a criminal case, filed a motion with the Court of First
Instance of Pampanga after he had been bound over to that court for trial, praying that the
record of the case be remanded to the justice of the peace court of Masantol, the court of
origin, in order that the petitioner might cross-examine the complainant and her witnesses in
connection with their testimony, on the strength of which warrant was issued for the arrest
of the accused. The motion was denied and that denial is the subject matter of this
proceeding.
According to the memorandum submitted by the petitioner's attorney to the Court of First
Instance in support of his motion, the accused, assisted by counsel, appeared at the
preliminary investigation. In that investigation, the justice of the peace informed him of the
charges and asked him if he pleaded guilty or not guilty, upon which he entered the plea of
not guilty. "Then his counsel moved that the complainant present her evidence so that she
and her witnesses could be examined and cross-examined in the manner and form provided
by law." The fiscal and the private prosecutor objected, invoking section 11 of rule 108, and
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
to the court of first instance.
Leaving aside the question whether the accused, after renouncing his right to present
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
jurisdiction or in abuse of discretion in refusing to grant the accused's motion to return the
record for the purpose set out therein. In Dequito and Saling Buhay vs. Arellano, G.R. No. L-
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
the preliminary investigation so that they might be cross-examined, we sustained the justice
of the peace's order. We said that section 11 of Rule 108 does not curtail the sound
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
nothing in it or any other law restricting the authority, inherent in a court of justice, to
pursue a course of action reasonably calculated to bring out the truth."chanrobles virtual law
library
But we made it clear that the "defendant cannot, as a matter of right, compel the complaint
and his witnesses to repeat in his presence what they had said at the preliminary
examination before the issuance of the order of arrest." We called attention to the fact that
"the constitutional right of an accused to be confronted by the witnesses against him does
not apply to preliminary hearings' nor will the absence of a preliminary examination be an
infringement of his right to confront witnesses." As a matter of fact, preliminary investigation
may be done away with entirely without infringing the constitutional right of an accused
under the due process clause to a fair trial.
The foregoing decision was rendered by a divided court. The minority went farther than the
majority and denied even any discretion on the part of the justice of the peace or judge
holding the preliminary investigation to compel the complainant and his witnesses to testify
anew.
Upon the foregoing considerations, the present petition is dismissed with costs against the
petitioner.
BUSTOS vs. LUCERO
G.R. No. L-2068 October 20, 1948/ March 8, 1949
FACTS:
Accused in this case during the preliminary investigation was informed of his charges
and asked whether he pleads guilty or not, the accused entered a plea of not guilty.
His counsel moved that the complainant present her evidence so that she and her
witnesses can be cross-examined. Fiscal and private prosecutor objected invoking
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
motion before CFI Pampanga to remand the record of the case to the justice of the
peace of Masantol, court of origin on the ground that the petitioner can cross-examine
the complainant and witnesses. SC dismissed his petition citing Dequito and Saling
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
will the absence of a preliminary examination be an infringement of his right to
confront witness. As a matter of fact, preliminary investigation may be done away with
entirely without infringing the constitutional right of an accused under the due process
clause to a fair trial." We took this ruling to be ample enough to dispose the
constitutional question pleaded in the application for certiorari. Heeding the wishes of
the petitioner, we shall enlarge upon the subject. Petitioner then filed his motion for
reconsideration.(NOTE: SEE SC’S RESOLUTION)
Petitioner’s contention:
i.
Section 11 of Rule 108 of the Rules of Court infringes section 13, Article
VIII, of the Constitution.
ii. That said deals with substantive matters and impairs substantive rights.
ISSUE: WoN said rule impairs substantive rights
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
respect may be said to be synonymous. Substantive rights is a term which includes
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
regulates rights, or which regulates the rights and duties which give rise to a cause of
action; that part of the law which courts are established to administer; as opposed to
adjective or remedial law, which prescribes the method of enforcing rights or obtains
redress for their invasion.
SUNSTANTIVE LAW PROCEDURAL LAW
- which declares what acts are crimes - law which provides or regulates the
and prescribes the punishment for steps by which one who commits a crime
committing them is to be punished.
Preliminary investigation is eminently and essentially remedial; it is the first step taken
in a criminal prosecution. As a rule of evidence, section 11 of Rule 108 is also
procedural. Evidence — which is the "the mode and manner of proving the competent
facts and circumstances on which a party relies to establish the fact in dispute in
judicial proceedings" — is identified with and forms part of the method by which, in
private law, rights are enforced and redress obtained, and, in criminal law, a law
transgressor is punished. Criminal procedure refers to pleading, evidence and
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
throwing out the whole code of evidence embodied in these Rules.
Section 11 of Rule 108. Rights of defendant after arrest. — After the arrest of the
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
testimony and evidence presented against him, and, if he desires to testify or to
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
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
not diminish, increase, or modify substantive rights. The existing laws on pleading,
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
National Assembly shall have the power to repeal, alter, or supplement the rules
concerning pleading, practice, and procedure, and the admission to the practice of
law in the Philippines.
Songco, et al. vs. National Labor Relations Commission
G.R. Nos. 50999-51000
(March 23, 1990)
FACTS: Zuelig filed an application for clearance to terminate the services of Songco, and
others, on the ground of retrenchment due to financial losses. During the hearing, the
parties agreed that the sole issue to be resolved was the basis of the separation pay
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
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
bailee, when the same is calculated as a percentage on the amount of his transactions or on
the profit to the principal. The nature of the work of a salesman and the reason for such type
of remuneration for services rendered demonstrate that commissions are part of Songco, et
al's wage or salary.
The Court takes judicial notice of the fact that some salesmen do not receive any basic salary,
but depend on commissions and allowances or commissions alone, although an employer-
employee relationships exists.
If the opposite view is adopted, i.e., that commissions do not form part of the wage or salary,
then in effect, we will be saying that this kind of salesmen do not receive any salary and,
therefore, not entitled to separation pay in the event of discharge from employment. This
narrow interpretation is not in accord with the liberal spirit of the labor laws, and considering
the purpose of separation pay which is, to alleviate the difficulties which confront a
dismissed employee thrown to the streets to face the harsh necessities of life.
In Soriano vs. NLRC (155 SCRA 124), we held that the commissions also claimed by the
employee (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 the petitioner [salesman]. Since the commissions in the present case were
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
average commission earned during their last year of employment.
G.R. No. L-50999 March 23, 1990
JOSE SONGCO, ROMEO CIPRES, and AMANCIO MANUEL, petitioners,
vs
NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), LABOR
ARBITER FLAVIO AGUAS, and F.E. ZUELLIG (M), INC., respondents.
Raul E. Espinosa for petitioners.
Lucas Emmanuel B. Canilao for petitioner A. Manuel.
Atienza, Tabora, Del Rosario & Castillo for private respondent.
MEDIALDEA, J.:
This is a petition for certiorari seeking to modify the decision of the National Labor
Relations Commission in NLRC Case No. RB-IV-20840-78-T entitled, "Jose Songco
and Romeo Cipres, Complainants-Appellants, v. F.E. Zuellig (M), Inc., Respondent-
Appellee" and NLRC Case No. RN- IV-20855-78-T entitled, "Amancio Manuel,
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
Labor Arbiter ordering private respondent to pay petitioners separation pay equivalent
to their one month salary (exclusive of commissions, allowances, etc.) for every year
of service.
The antecedent facts are as follows:
Private respondent F.E. Zuellig (M), Inc., (hereinafter referred to as Zuellig) filed with
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
sales force of Zuellig received monthly salaries of at least P40,000. In addition, they
received commissions for every sale they made.
The collective Bargaining Agreement entered into between Zuellig and F.E. Zuellig
Employees Association, of which petitioners are members, contains the following
provision (p. 71, Rollo):
ARTICLE XIV — Retirement Gratuity
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
said employee shall receive from the company a retirement gratuity in
an amount equivalent to one (1) month's salary per year of service.
One month of salary as used in this paragraph shall be deemed
equivalent to the salary at date of retirement; years of service shall be
deemed equivalent to total service credits, a fraction of at least six
months being considered one year, including probationary
employment. (Emphasis supplied)
On the other hand, Article 284 of the Labor Code then prevailing provides:
Art. 284. Reduction of personnel. — The termination of employment of
any employee due to the installation of labor saving-devices,
redundancy, retrenchment to prevent losses, and other similar causes,
shall entitle the employee affected thereby to separation pay. In case
of termination due to the installation of labor-saving devices or
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,
whichever is higher. In case of retrenchment to prevent losses and
other similar causes, the separation pay shall be equivalent to one (1)
month pay or at least one-half (1/2) month pay for every year of
service, whichever is higher. A fraction of at least six (6) months shall
be considered one (1) whole year. (Emphasis supplied)
In addition, Sections 9(b) and 10, Rule 1, Book VI of the Rules Implementing the
Labor Code provide:
xxx
Sec. 9(b). Where the termination of employment is due to retrechment
initiated by the employer to prevent losses or other similar causes, or
where the employee suffers from a disease and his continued
employment is prohibited by law or is prejudicial to his health or to the
health of his co-employees, the employee shall be entitled to
termination pay equivalent at least to his one month salary, or to one-
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.
xxx
Sec. 10. Basis of termination pay. — The computation of the
termination pay of an employee as provided herein shall be based on
his latest salary rate, unless the same was reduced by the employer to
defeat the intention of the Code, in which case the basis of
computation shall be the rate before its deduction. (Emphasis
supplied)
On June 26,1978, the Labor Arbiter rendered a decision, the dispositive portion of
which reads (p. 78, Rollo):
RESPONSIVE TO THE FOREGOING, respondent should be as it is
hereby, ordered to pay the complainants separation pay equivalent to
their one month salary (exclusive of commissions, allowances, etc.) for
every year of service that they have worked with the company.
SO ORDERED.
The appeal by petitioners to the National Labor Relations Commission was dismissed
for lack of merit.
Hence, the present petition.
On June 2, 1980, the Court, acting on the verified "Notice of Voluntary Abandonment
and Withdrawal of Petition dated April 7, 1980 filed by petitioner Romeo Cipres,
based on the ground that he wants "to abide by the decision appealed from" since he
had "received, to his full and complete satisfaction, his separation pay," resolved to
dismiss the petition as to him.
The issue is whether or not earned sales commissions and allowances should be
included in the monthly salary of petitioners for the purpose of computation of their
separation pay.
The petition is impressed with merit.
Petitioners' position was that in arriving at the correct and legal amount of separation
pay due them, whether under the Labor Code or the CBA, their basic salary, earned
sales commissions and allowances should be added together. They cited Article 97(f)
of the Labor Code which includes commission as part on one's salary, to wit;
(f) 'Wage' paid to any employee shall mean the remuneration or
earnings, however designated, capable of being expressed in terms of
money, whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the same, which is
payable by an employer to an employee under a written or unwritten
contract of employment for work done or to be done, or for services
rendered or to be rendered, and includes the fair and reasonable
value, as determined by the Secretary of Labor, of board, lodging, or
other facilities customarily furnished by the employer to the employee.
'Fair reasonable value' shall not include any profit to the employer or to
any person affiliated with the employer.
Zuellig argues that if it were really the intention of the Labor Code as well as its
implementing rules to include commission in the computation of separation pay, it
could have explicitly said so in clear and unequivocal terms. Furthermore, in the
definition of the term "wage", "commission" is used only as one of the features or
designations attached to the word remuneration or earnings.
Insofar as the issue of whether or not allowances should be included in the monthly
salary of petitioners for the purpose of computation of their separation pay is
concerned, this has been settled in the case of Santos v. NLRC, et al., G.R. No.
76721, September 21, 1987, 154 SCRA 166, where We ruled that "in the computation
of backwages and separation pay, account must be taken not only of the basic salary
of petitioner but also of her transportation and emergency living allowances." This
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.
78524, January 20, 1989.
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
computation of their separation pay.
Article 97(f) by itself is explicit that commission is included in the definition of the term
"wage". It has been repeatedly declared by the courts that where the law speaks in
clear and categorical language, there is no room for interpretation or construction;
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,
G.R.No. L-2 7455, June 28,1973, 51 SCRA 381). A plain and unambiguous statute
speaks for itself, and any attempt to make it clearer is vain labor and tends only to
obscurity. How ever, it may be argued that if We correlate Article 97(f) with Article XIV
of the Collective Bargaining Agreement, Article 284 of the Labor Code and Sections
9(b) and 10 of the Implementing Rules, there appears to be an ambiguity. In this
regard, the Labor Arbiter rationalized his decision in this manner (pp. 74-76, Rollo):
The definition of 'wage' provided in Article 96 (sic) of the Code can be
correctly be (sic) stated as a general definition. It is 'wage ' in its
generic sense. A careful perusal of the same does not show any
indication that commission is part of salary. We can say that
commission by itself may be considered a wage. This is not something
novel for it cannot be gainsaid that certain types of employees like
agents, field personnel and salesmen do not earn any regular daily,
weekly or monthly salaries, but rely mainly on commission earned.
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
the Code specifically states that the basis of the termination pay due to
 one who is sought to be legally separated from the service is 'his latest
salary rates.
x x x.
Even Articles 273 and 274 (sic) invariably use 'monthly pay or monthly
salary'.
The above terms found in those Articles and the particular Rules were
intentionally used to express the intent of the framers of the law that for
purposes of separation pay they mean to be specifically referring to
salary only.
.... Each particular benefit provided in the Code and other Decrees on
Labor has its own pecularities and nuances and should be interpreted
in that light. Thus, for a specific provision, a specific meaning is
attached to simplify matters that may arise there from. The general
guidelines in (sic) the formation of specific rules for particular purpose.
Thus, that what should be controlling in matters concerning termination
pay should be the specific provisions of both Book VI of the Code and
the Rules. At any rate, settled is the rule that in matters of conflict
between the general provision of law and that of a particular- or
specific provision, the latter should prevail.
On its part, the NLRC ruled (p. 110, Rollo):
From the aforequoted provisions of the law and the implementing
rules, it could be deduced that wage is used in its generic sense and
obviously refers to the basic wage rate to be ascertained on a time,
task, piece or commission basis or other method of calculating the
same. It does not, however, mean that commission, allowances or
analogous income necessarily forms part of the employee's salary
because to do so would lead to anomalies (sic), if not absurd,
construction of the word "salary." For what will prevent the employee
from insisting that emergency living allowance, 13th month pay,
overtime, and premium pay, and other fringe benefits should be added
to the computation of their separation pay. This situation, to our mind,
is not the real intent of the Code and its rules.
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
and Sections 9(b) and 10 of the Implementing Rules, which mention the terms "pay"
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
man's business. Whether it be derived from "salarium," or more fancifully from "sal,"
the pay of the Roman soldier, it carries with it the fundamental idea of compensation
for services rendered. Indeed, there is eminent authority for holding that the words
"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.
481; 38 Am. Jur. 496). "Salary," the etymology of which is the Latin word "salarium,"
is often used interchangeably with "wage", the etymology of which is the Middle
English word "wagen". Both words generally refer to one and the same meaning, that
is, a reward or recompense for services performed. Likewise, "pay" is the synonym of
"wages" and "salary" (Black's Law Dictionary, 5th Ed.). Inasmuch as the words
"wages", "pay" and "salary" have the same meaning, and commission is included in
the definition of "wage", the logical conclusion, therefore, is, in the computation of the
separation pay of petitioners, their salary base should include also their earned sales
commissions.
The aforequoted provisions are not the only consideration for deciding the petition in
favor of the petitioners.
We agree with the Solicitor General that granting, in gratia argumenti, that the
commissions were in the form of incentives or encouragement, so that the petitioners
would be inspired to put a little more industry on the jobs particularly assigned to
them, still these commissions are direct remuneration services rendered which
contributed to the increase of income of Zuellig . Commission is the recompense,
compensation or reward of an agent, salesman, executor, trustees, receiver, factor,
broker or bailee, when the same is calculated as a percentage on the amount of his
transactions or on the profit to the principal (Black's Law Dictionary, 5th Ed., citing
Weiner v. Swales, 217 Md. 123, 141 A.2d 749, 750). The nature of the work of a
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
SPS. FELICIDAD M. ALVENDIA and JESUS F. ALVENDIA, petitioners,
vs.
HON. INTERMEDIATE APPELLATE COURT, HON. ELSIE LIGOT-TELAN in her
capacity as Presiding Judge of the Regional Trial Court of Bulacan, Third
Judicial Region, Branch VIII, the PROVINCIAL SHERIFF OF BULACAN, and
BONIFACIO BONAMY, respondents.
G.R. No. L-72373 January 22, 1990
BONIFACIO BONAMY, petitioner,
vs.
HON. EDGARDO L. PARAS, in his capacity as Associate Appellate Justice and
Chairman, HON. VICENTE V. MENDOZA, in his capacity as Associate Appellate
Justice and Member, and HON. LUIS A. JAVELLANA, in his capacity as
Associate Appellate Justice and Member of the Fourth Special Cases Division
of the Intermediate Appellate Court; FELICIDAD M. ALVENDIA and JESUS F.
ALVENDIA, respondents.
Lesaca, Villasor, Espiritu, Orlina & Ferrer for petitioners in 72138.
De Guzman, Florentino & Associates for Bonifacio Bonamy.
FERNAN, C.J.:
In G.R. No. 72138, the spouses Felicidad M. Alvendia and Jesus F. Alvendia filed an
urgent motion for extension of time to file an appeal by certiorari from the denial of
their motion for reconsideration of the decision of the then Intermediate Appellate
Court (IAC) dismissing their petition docketed therein as AC-G.R. No. SP-04423,
entitled "Alvendia et al. v. Telan etc., et al."
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
granting the motion filed by the spouses Alvendia to pay Bonifacio Bonamy the
amount of the judgment in cash, and [b] Resolution I dated October 8, 1985 denying
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.
Although no appeal was ever filed in G.R. No. 72138, the same was ordered
consolidated with G.R. No. 72373 in the resolution of February 3, 1986 of the First
Division of this Court.
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
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
representing construction materials which the Alvendias had purchased on credit from
Bonamy.
After the Alvendias had filed a "Motion to Dismiss" dated October 31, 1977 which was
opposed by Bonamy on November 16, 1977 and an "Answer with Affirmative and
Negative Defenses and Counterclaim" dated December 1, 1977, both parties
submitted to the trial court on January 6, 1978 a "Compromise Agreement" providing,
among other things:
xxx xxx xxx
(1) That defendants do hereby acknowledge the in debtedness of their family
corporation, Dona Felisa Village and Housing Corporation, in the amount of
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
corporation, do hereby bind themselves to pay said obligation out of the first
release or releases of funds from the Government Service Insurance System
(GSIS) for housing units and lots sold by the said corporation to members of
the GSIS provided, however, that the P47,000.00 previously assigned to Wells
and Pu shall be first satisfied before applying such GSIS release to
satisfaction of said indebtedness to the herein plaintiff;
(2) That the plaintiff and defendants shall thereby join hands in asking the
GSIS to expedite the releases of the funds due to said corporation; and
 (3) That for and in consideration of this agreement the plaintiff and defendants
hereby waive any and all further claims monetary or otherwise against each
other regarding the subject matter of this case.
xxx xxx xxx
On the same date, the trial court, finding the aforesaid compromise agreement not to
be contrary to laws, morals, good customs public policy and public order, approved
and adopted the same as the decision in the case. 3
Subsequently, Bonamy moved for execution of judgment, alleging that the Alvendias
"have not submitted any finished project with the GSIS, thereby preventing the full
realization of the aforesaid decision." 4
On December 6, 1979, over the objection of the Alvendias, the court ordered the
issuance of the writ prayed for. The Alvendias did not move for reconsideration nor
did they elevate the matter to the higher courts. 5
In a motion dated April 23,1980, Bonamy sought the issuance of an alias writ of
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
January 1980 and an additional amount of P4,000.00 by way of proceeds of the sale
of the Alvendias vehicle. 6
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
no. V-1284 (EV-87) Lot I PSU-141243), located at Baluarte, Bulacan, Bulacan.
On January 15, 1981, a certificate of sale over said leasehold right was executed by
the Sheriff in favor of Bonamy.
More than a year later, or on February 2, 1982, the spouses moved for the quashal
and annulment of the writ of execution, levy and sale.
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 an order dated September 10, 1984, the trial court (now RTC of Bulacan, 3rd
Judicial Region, Br. VIII) denied the spouses' motion to quash and ordered instead
the issuance of a writ of possession in Bonamy's favor, thus:
Premises considered, the pending incidents are hereby resolved, as follows:
(1) The motion to quash or annul the writ of execution is hereby denied;
(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
thereof;
(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
declared valid, for which reason, let a writ of possession of the said premises
be issued forthwith.7
The records show that as per sheriffs return, possession of the fishpond was
delivered to Bonamy on October 8, 1984. 8
In a petition for certiorari and prohibition with prayer for preliminary injunction and
temporary restraining order filed with the Intermediate Appellate Court, (docketed as
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.
In a nutshell, the spouses argued as follows:[1] that the writ and the alias writ of
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
corporation was also supposed to be liable; [3] the writ was premature because the
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
government though leased to the Alvendias, cannot be a proper subject of a levy on
execution; and [5] the leasehold rights possessed by the Alvendias had already
expired before the issuance of the order. 9
In its Decision dated February 27, 1985, the IAC dismissed the aforesaid petition. The
pertinent portion is hereunder quoted, thus:
xxx xxx xxx
Firstly, we note that after the questioned writ of possession had been
issued, no motion for reconsideration was filed to give the respondent judge
an opportunity to correct any error that may have been committed.
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
court
Thirdly, the writ of execution could properly levy on the properties of the
Alvendias because their debt had already matured and remained unpaid
despite demands. The judgment does not have to indicate what specific
properties should be levied upon.
Fourthly, there could be no execution against the family corporation because it
was not a party to the case, was not a party or signatory to the compromise
agreement. Neither was it represented by the Alvendias.
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
condition precedent to the payment of the debt. True, there was an indication
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
give rise to the creation of their obligation. The obligation to pay was
admittedly there — even before any reference to the GSIS. Had they desired
to make the fund release a condition sine qua non words should have been
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
acknowledged indebtedness.
Sixthly, it is not the fishpond that was levied upon but the leasehold rights of
the Alvendias.
Seventhly, if it is really true that the lease had already expired before the writs
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
regarding the property.
xxx xxx xxx
WHEREFORE, the instant petition is denied due course, and is hereby
DISMISSED. The restraining order previously issued is hereby lifted. 10
The Alvendias filed an urgent motion for reconsideration. Pending action thereon, the
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
place at P 37,481.50, plus interests due and/or any amount as the court may
determine to be due (the said amount was reached by deducting from the total sum of
P107,481.50: P20,000.00, P4,000.00 representing the value of the Toyota Land
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
execution sale thereof). 11
On September 11, 1985, the IAC issued two resolutions, denominated as Resolutions
I and II.
Resolution I denied the Alvendias' motion for reconsideration for lack of merit, without
prejudice to what was stated in Resolution II hereunder.
Resolution II granted their motion to satisfy the judgment sought to be enforced in
cash thereby directing the parties to submit to the court an agreement duly signed by
both parties regarding full satisfaction of the judgment but only after the total amount
involved in said judgment had been tendered and delivered to Bonamy. 12
The Alvendias then tendered payment to Bonamy in the form of a cashier's check in
the amount of P100,000.00. 13 Bonamy refused said tender of payment, and instead
moved for a reconsideration of Resolution II.
In the meantime, the spouses moved for the issuance of a temporary restraining
order to prevent or stop the allegedly unjust enforcement of the questioned writ of
execution/possession and to prevent the sheriff and Bonamy and all persons acting
under them from entering and encroaching on the fishpond area.
On October 2, 1985, the IAC restrained Bonamy and his corespondents therein from
enforcing the questioned Writ of Execution/Possession issued in Civil Case No. 5182-
M, as well as from entering and encroaching further into the subject fishpond. 14
Bonamy moved for the lifting of that order on the averment, among others, that the
acts sought to be restrained had already been executed, Bonamy having been placed
in possession on October 8, 1984 by Deputy Sheriff Rufino I. Santiago of Bulacan by
virtue of the Writ of Possession issued in Civil Case No. 5182-M. 15
In an urgent motion for extension of time to file appeal by certiorari (from respondent
court's order denying their motion for reconsideration) spouses Alvendias elevated
their case to this Tribunal, docketed as G.R. No. 72138. Such motion was granted by
the Court. A second motion was, however, denied. Hence, no petition was filed in
G.R. No. 72138.
On October 8,1985, the IAC issued three resolutions embodied in a single document:
Resolution I—denying Bonamy's motion for reconsideration; II—ordering him to
comment on the motion for Deposit filed by the Alvendias; III—ordering the spouses
to comment on the Manifestation and Motion to lift restraining order filed by Bonamy.
Hence, this petition for certiorari and prohibition, praying for the annulment of
respondent court's Resolution II of September 11, 1985 and its Resolution I of
October 8, 1985, filed with this Court on October 21, 1985 by Bonamy and docketed
as G.R. No. 72373.
As earlier stated, on February 3, 1986, notwithstanding the Alvendias failure to file a
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
Division of this Court. 16
On February 24, 1986, Bonamy, as private respondent in G.R. No. 72138, filed a
manifestation that since the Alvendias did not file their petition in said case, the
proceeding should be ordered dismissed and that entry of the IAC judgment be
ordered.
Upon the Alvendias' failure to comply with the court's order to comment on the
aforementioned manifestation, this Court issued a "show cause" resolution to the
spouses.
Pleading absolute good faith and honesty and attributing failure to file the required
comment to the confusing circumstances engendered by the issued resolutions
(denying respondents' motion for reconsideration but granting their motion to satisfy
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
entreaty on Bonamy's petition which is also pending in this Court and which has,
anyway, opened the entire case for review. This explanation and manifestation of
counsel for private respondents was noted in the resolution of October 15, 1986 of
the Second Division of this Court where this case was eventually referred.*
The petition in G.R. No. 72373 is impressed with merit. The pivotal issue in this case
is whether or not the judgment debtors may successfully ask that they be allowed to
pay the judgment debt in cash long after they have failed to pay or redeem their
properties which have been sold in execution.
Bonamy puts forward the averment that respondent court committed grave abuse of
discretion in granting the Alvendias' motion that they be allowed to pay the judgment
debt in cash.
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
longer any money judgment to be satisfied.
He maintains the position that all the questioned writs herein as well as the
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
to the same. 17
Hence, petitioner claims that the assailed resolutions are in effect [a] an annulment of
the assailed Orders and Writs of the Bulacan Regional Trial Court, the Certificate of
Sale and the Final Deed of Sale of the Leasehold Rights over the Foreshore Lands;
[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
sale over said leasehold rights for the price of the judgment debt embodied in the
Compromise Agreement. 18
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.
The judgment which was executed was a compromise judgment, duly approved by
the court and therefore, final and immediately executory. 19 Bonamy was clearly
entitled to execution since the Alvendias failed to pay on time the judgment. Hence,
the Bulacan Court ordered the execution thereof on December 9, 1979. 20
The compromise judgment against the Alvendias had been duly and legally executed
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
leasehold rights by selling the same and paying the judgment creditor Bonamy. The
Alvendias had one year within which to redeem said property rights but they failed to
do so. Hence, the Sheriff issued the Final Deed of Sale on January 25, 1983.
As above stated, on certiorari and prohibition in CA-G.R. No. SP-04423, all these
orders and writs, taken up one by one by the Intermediate Appellate Court were found
to be legal and proper for which reason, the petition was dismissed in the decision of
February 27, 1985.
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
appeal.
In any event, it is axiomatic that there is no justification in law and in fact for the
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
judgments is grounded on fundamental consideration of public policy and sound
practice that at the risk of occasional error the judgments of courts must become final
at some definite date fixed by law. 22
On the other hand, the Alvendias invoke equity and aver that the IAC acted correctly
in granting their motion to pay the balance of the judgment indebtedness in view of
highly exceptional circumstances such as the supposedly grossly fraudulent
irregularities committed by Bonamy and the Special Sheriff of Bulacan.
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
exclusion of other courts. Accordingly, the court which rendered the judgment has a
general supervisory control over its process of execution and this power carries with it
the right to determine every question of fact and law which may be involved in the
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
of the writ of execution, nor appealed the same to the higher courts.
In any event, the Alvendias cannot invoke equity as a ground for reopening the case
and making the payment of the judgment in cash possible. The records show that
they had all the opportunity to make such payments on four occasions but failed.
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
agreed to a compromise agreement on January 6, 1978; [2] from the compromise
judgment to the time execution was ordered by the respondent court (Order dated
December 6, 1979); [3] from the Execution Order to the Execution Sale (on January
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
There is no question therefore, that the Alvendias failed to pay on time the judgment
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
Alvendias on April 23, 1985 or two months after the decision of respondent Appellate
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
improvements on the property worth one million pesos (P1,000,000.00) as evidenced
by irrefutable proof. Of course, the Alvendias claim the same amount as the value of
the fishpond presumably before execution but such claim besides having been raised
only on appeal, specifically after the promulgation of the decision of the Intermediate
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
possession of the same belie said claim of private respondents. 25
As insisted upon by petitioner, the money judgment against the Alvendias has already
been satisfied and there is no more need to pay, in cash or otherwise. Hence, as
ruled by this Court, when judgment has been satisfied, the same passes beyond
review, for satisfaction thereof is the last act and end of the proceedings. Payment
produces permanent and irrevocable discharge. 26
On the other hand, equity has been aptly described as "a justice outside legality";
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
particular remedy is given by the law and that remedy is bounded and circumscribed
by particular rules, it would be very improper, for the court to take it up where the law
leaves it and to extend it further than the law allows. 28 There may be a moral
obligation but if there is no enforceable legal duty, the action for reconveyance must
fail. 29 Courts exercising equity jurisdiction are bound by rules of law and have no
arbitrary discretion to disregard them. Equitable reasons will not control against any
well-settled rule of law or public policy. 30
Moreover, it is oft repeated that "He who comes into Equity must come with clean
hands." 31 At this stage, to allow private respondents to pay in cash the balance of the
judgment account for which they offered P100,000.00 to redeem the property on
which petitioner has spent one million pesos (P1,000,000.00) in terms of
improvements introduced would be less than fair. If equity is to be applied at all, it
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
by one who necessarily and in good faith improved the same and enhanced its value
at his own cost, should be taken into account under the familiar principle that "one
who seeks equity must do equity." 32
In resume, the Alvendias, after having allowed the period of redemption to lapse
without availing themselves of the same, and after petitioner had introduced
improvements on the property at the latter's expense, cannot now be allowed to
redeem the property sold to the latter thru the expediency of a motion or
manifestation.
As to other matters, there appears to be no cogent reason to disturb the findings and
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
contemplated petition for review on certiorari in G.R. No. 72138. It has been held that
failure to perfect an appeal renders the lower court's judgment final and executory
and a modification of such judgment by the appellate court cannot be allowed.
Furthermore, an appellee who is not also an appellant may also assign errors in his
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,
he must appeal. 33
However, where there is an ambiguity caused by an omission or mistake in the
dispositive portion of the decision, in this case in the questioned "Writ of Possession"
issued by the trial court, where the twenty-three (23) hectare foreshore land (23.467
hec.), described in the Sheriffs Certificate of Sale and Final Deed of Sale 34 became a
forty-hectare foreshore land (40.63 hec.), 35 it has been held that this Court may
clarify such ambiguity by an amendment even after the judgment had become final. 36
WHEREFORE, the assailed resolutions are hereby SET ASIDE and the decision
dismissing the Alvendias' petition is AFFIRMED save that portion upholding the
validity of the writ of possession which contained an error in property description.
Hence, the writ of possession is hereby AMENDED to conform to the description
appearing in the Certificate of Sale and the Final Deed of Sale. Let the restraining
order issued by the Intermediate Appellate Court on October 2, 1985 relative to the
enforcement of said writ be lifted accordingly.
Petitioner is hereby ordered to return to private respondents, the amount of
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
deducting P20,000.00 from the total amount of indebtedness which is P107,481.50. 37
In G.R. No. 72138, the petition for review on certiorari of Resolution I of the
Intermediate Appellate Court denying private respondents' motion for reconsideration
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.
SO ORDERED.
Gutierrez, Jr., Feliciano, Bidin and Cortés, JJ., concur.
G.R. No. 84850 June 29, 1989
RICARDO A. LLAMADO, petitioner,
vs.
HONORABLE COURT OF APPEALS and LEON GAW, respondents.
Ambrosio Padilla, Mempin & Reyes Law Offices for petitioner.
FELICIANO, J.:
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
had already been forwarded to the Court of Appeals.
Petitioner then filed with the Court of Appeals Manifestation and Petition for
Probation" dated 16 November 1987, enclosing a copy of the Petition for Probation
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
court, together with the records of the criminal case, for consideration and approval
under P.D. No. 968, as amended. At the same time, petitioner prayed that the running
of the period for the filing of his Appellant's Brief be held in abeyance until after the
Court of Appeals shall have acted on his Petition for Probation.
In a "Manifestation and Motion" dated 3 March 1988 and filed with the Court of
Appeals, petitioner formally withdrew his appeal conditioned, however, on the
approval of his Petition for Probation. 2
Complying with a Resolution of the Court of Appeals, the Office of the Solicitor
General filed a Comment stating that it had no objection to petitioner Llamado's
application for probation. Private respondent-complainant, upon the other hand,
sought and obtained leave to file a Comment on petitioner Llamado's application for
probation, to which Comment, petitioner filed a Reply. Private respondent then filed
his "Comment" on the Office of the Solicitor General's Comment of 18 March 1988.
In a Resolution dated 17 June 1988, the Court of Appeals, through Mr. Justice
Magsino, denied the Petition for Probation. A dissenting opinion was filed by Mr.
Justice Bellosillo while Mr. Justice Santiago submitted a concurring opinion. Petitioner
moved for reconsideration which Motion was denied by the Court of Appeals on 23
August 1988, with another, briefer, dissenting opinion from Mr. Justice Bellosillo.
Petitioner now asks this Court to review and reverse the opinion of the majority in the
Court of Appeals and, in effect, to accept and adopt the dissenting opinion as its own.
The issue to be resolved here is whether or not petitioner's application for probation
which was filed after a notice of appeal had been filed with the trial court, after the
records of the case had been forwarded to the Court of Appeals and the Court of
Appeals had issued the notice to file Appellant's Brief, after several extensions of time
to file Appellant's Brief had been sought from and granted by the Court of Appeals but
before actual filing of such brief, is barred under P.D. No. 968, as amended.
P.D. No. 968, known as the Probation Law of 1976, was promulgated on 24 July
1976. Section 4 of this statute provided as follows:
Sec. 4. Grant of Probation. Subject to the provisions of this Decree, the
court may, after it shall have convicted and sentenced a defendant and
upon application at any time of said defendant, suspend the execution
of said sentence and place the defendant on probation for such period
and upon such terms and conditions as it may deem best.
Probation may be granted whether the sentence imposes a term of
imprisonment or a fine only. An application for probation shall be filed
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
application shall be deemed a waiver of the right to appeal, or the
automatic withdrawal of a pending appeal.
An order granting or denying probation shall not be appealable.
(Emphasis supplied)
It will be noted that under Section 4 of P.D. No. 968, the trial court could grant an
application for probation "at any time" "after it shall have convicted and sentenced a
defendant" and certainly after "an appeal has been taken from the sentence of
conviction." Thus, the filing of the application for probation was "deemed [to
constitute] automatic withdrawal of a pending appeal."
On 1 December 1977, Section 4 of P.D. No. 968 was amended by P.D. No. 1257 so
as to read as follows:
Sec. 4. Grant of Probation. Subject to the provisions of this Decree, the
court may, senteafter it shall have convicted and sentenced a
defendant but before he begins to serve his sentence and upon his
application, suspend the execution of said sentence and place the
 defendant on probation for such period and upon such terms and
conditions as it may deem best.
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
ten days from receipt of the notification.
Probation may be granted whether the sentence imposes a term of
imprisonment or a fine with subsidiary imprisonment in case of
insolvency. An application for probation shall be filed 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 application shall be
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
on or after the date of the judgment of the appellate court, said
application shall be acted upon by the trial court on the basis of the
judgment of the appellate court. (Emphasis supplied)
Examination of Section 4, after its amendment by P.D. No. 1257, reveals that it had
established a prolonged but definite period during which an application for probation
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."
Clearly, the cut-off time-commencement of service of sentence-takes place not only
after an appeal has beentaken from the sentence of conviction, but even after
judgement has been rendered by the appellate court and after judgment has become
final. Indeed, in this last situation, Section 4, as amended by P.D. No. 1257 provides
that "the application [for probation] shall be acted upon by the trial court on the basis
of the judgment of the appellate court"; for the appellate court might have increased
or reduced the original penalty imposed by the trial court. It would seem beyond
dispute then that had the present case arisen while Section 4 of the statute as
amended by P.D. No. 1257 was still in effect, petitioner Llamado's application for
probation would have had to be granted. Mr. Llamado's application for probation was
filed well before the cut-off time established by Section 4 as then amended by P.D.
No. 1257.
On 5 October 1985, however, Section 4 of the Probation Law of 1976 was once again
amended. This time by P.D. No. 1990. As so amended and in its present form,
Section 4 reads as follows:
Sec. 4. Grant of Probation. Subject to the provisions of this Decree, the
trial court may, after it shall have convicted and sentenced a
defendant, and upon application by said defendant within the period for
perfecting an appeal, suspend the execution of the sentence and place
the defendant on probation for such period and upon such terms and
conditions as it may deem best; Provided, That no application for
probation shall be entertained or granted if the defendant has
perfected an appeal from the judgment of conviction.
Probation may be granted whether the sentence imposes a term of
imprisonment or a fine only An application for probation shall be filed
with the trial court. The filing of the application shall be deemed a
waiver of the right to appeal.
An order granting or denying probation shall not be appealable.
(Emphasis supplied)
In sharp contrast with Section 4 as amended by PD No. 1257, in its present form,
Section 4 establishes a much narrower period during which an application for
probation may be filed with the trial court: "after [the trial court] shall have convicted
and sentenced a defendant and — within the period for perfecting an appeal — ." As
if to provide emphasis, a new proviso was appended to the first paragraph of Section
4 that expressly prohibits the grant of an application for probation "if the defendant
has perfected an appeal from the judgment of conviction." It is worthy of note too that
Section 4 in its present form has dropped the phrase which said that the filing of an
application for probation means "the automatic withdrawal of a pending appeal". The
deletion is quite logical since an application for probation can no longer be filed once
an appeal is perfected; there can, therefore, be no pending appeal that would have to
be withdrawn.
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
petitioner Llamado's application was filed, he had already "perfected an appeal" from
the judgment of conviction of the Regional Trial Court of Manila.
The period for perfecting an appeal from a judgment rendered by the Regional Trial
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
Criminal Procedure, as amended, or more specifically Section 5 of Rule 122 of the
Revised Rules of Court, is fifteen (15) days from the promulgation or notice of the
judgment appealed from. It is also clear from Section 3 (a) of Rule 122 that such
appeal is taken or perfected by simply filing a notice of appeal with the Regional Trial
Court which rendered the judgment appealed from and by serving a copy thereof
upon the People of the Philippines. As noted earlier, petitioner Llamado had
manifested orally and in open court his intention to appeal at the time of promulgation
of the judgment of conviction, a manifestation at least equivalent to a written notice of
appeal and treated as such by the Regional Trial Court.
Petitioner urges, however, that the phrase "period for perfecting an appeal" and the
clause "if the defendant has perfected an appeal from the judgment of conviction"
found in Section 4 in its current form, should not be interpreted to refer to Rule 122 of
the Revised Rules of Court; and that the "whereas" or preambulatory clauses of P.D.
No. 1990 did not specify a period of fifteen (15) days for perfecting an appeal. 3 It is
also urged that "the true legislative intent of the amendment (P.D. No. 1990) should
not apply to petitioner who filed his Petition for probation at the earliest
opportunity then prevailing and withdrew his appeal." 4
Petitioner invokes the dissenting opinion rendered by Mr. Justice Bellosillo in the
Court of Appeals. Petitioner then asks us to have recourse to "the cardinal rule in
statutory construction" that "penal laws [should] be liberally construed in favor of the
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
law] was enacted-."
We find ourselves unable to accept the eloquently stated arguments of petitioner's
counsel and the dissenting opinion. We are unable to persuade ourselves that
Section 4 as it now stands, in authorizing the trial court to grant probation "upon
application by [the] defendant within the period for perfecting an appeal" and in
reiterating in the proviso that
no application for probation shall be entertained or granted if the
defendant has perfected an appeal from the judgment of conviction.
did not really mean to refer to the fifteen-day period established, as indicated above,
by B.P. Blg. 129, the Interim Rules and Guidelines Implementing B.P. Blg. 129 and
the 1985 Rules on Criminal Procedure, but rather to some vague and undefined time,
i.e., "the earliest opportunity" to withdraw the defendant's appeal.
The whereas clauses invoked by petitioner did not, of course, refer to the fifteen-day
period. There was absolutely no reason why they should have so referred to that
period for the operative words of Section 4 already do refer, in our view, to such
fifteen-day period. Whereas clauses do not form part of a statute, strictly speaking;
they are not part of the operative language of the
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
enactment which drastically but clearly changed the substantive content of Section 4
existing before the promulgation of P.D. No. 1990. Whereas clauses, however,
cannot control the specific terms of the statute; in the instant case,
the whereas clauses of P.D. No. 1990 do not purport to control or modify the terms of
Section 4 as amended. Upon the other hand, the term "period for perfecting an
appeal" used in Section 4 may be seen to furnish specification for the loose language
"first opportunity" employed in the fourth whereas clause. "Perfection of an appeal" is,
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.
"Perfecting an appeal" has no sensible meaning apart from the meaning given to
those words in our procedural law and so the law-making agency could only have
intended to refer to the meaning of those words in the context of procedural law.
Turning to petitioner's invocation of "liberal interpretation" of penal statutes, we note
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
accused in a criminal case should be given a "liberal interpretation." Courts, however,
have no authority to invoke "liberal interpretation' or "the spirit of the law" where the
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
meaning imparted to them by our procedural law. The "true legislative intent" must
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,
however, that the spirit of the law and the intent that is to be given effect are to be
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
legislature.
The Court is not here to be understood as giving a "strict interpretation rather than a
"liberal" one to Section 4 of the Probation Law of 1976 as amended by P.D. No. 1990.
"Strict" and "liberal" are adjectives which too frequently impede a disciplined and
principled search for the meaning which the law-making authority projected when it
promulgated the language which we must apply. That meaning is clearly visible in the
text of Section 4, as plain and unmistakable as the nose on a man's face. The Court
is simply reading Section 4 as it is in fact written. There is no need for the involved
process of construction that petitioner invites us to engage in, a process made
necessary only because petitioner rejects the conclusion or meaning which shines
through the words of the statute. The first duty of a judge is to take and apply a
statute as he finds it, not as he would like it to be. Otherwise, as this Court in Yangco
v. Court of First Instance of Manila warned, confusion and uncertainty in application
will surely follow, making, we might add, stability and continuity in the law much more
difficult to achieve:
. . . [w]here language is plain, subtle refinements which tinge words so
as to give them the color of a particular judicial theory are not only
unnecessary but decidedly harmful. That which has caused so much
confusion in the law, which has made it so difficult for the public to
understand and know what the law is with respect to a given
matter, is in considerable measure the unwarranted interference by
judicial tribunals with the English language as found in statutes and
contracts, cutting the words here and inserting them there, making
them fit personal ideas of what the legislature ought to have done or
what parties should have agreed upon, giving them meanings which
they do not ordinarily have cutting, trimming, fitting, changing and
coloring until lawyers themselves are unable to advise their clients as
to the meaning of a given statute or contract until it has been submitted
to some court for its interpretation and construction. 6
The point in this warning may be expected to become sharper as our people's grasp
of English is steadily attenuated.
There is another and more fundamental reason why a judge must read a statute as
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,
define and therefore limit the authority and discretion of the judges who must apply
those words. If judges may, under cover of seeking the "true spirit" and "real intent" of
the law, disregard the words in fact used by the law-giver, the judges will effectively
escape the constitutional and statutory limitations on their authority and discretion.
Once a judge goes beyond the clear and ordinary import of the words of the
legislative authority, he is essentially on uncharted seas. In a polity like ours which
enshrines the fundamental notion of limiting power through the separation and
distribution of powers, judges have to be particularly careful lest they substitute their
conceptions or preferences of policy for that actually projected by the legislative
agency. Where a judge believes passionately that he knows what the legislative
agency should have said on the particular matter dealt with by a statute, it is easy
enough for him to reach the conclusion that therefore that was what the law-making
authority was really saying or trying to say, if somewhat ineptly As Mr. Justice
Frankfurter explained:
Even within their area of choice the courts are not at large. They are
confined by the nature and scope of the judicial function in its particular
exercise in the field of interpretation. They are under the constraints
imposed by the judicial function in our democratic society. As a matter
of verbal recognition certainly, no one will gainsay that the function in
construing a statute is to ascertain the meaning of words used by the
legislature. To go beyond it is to usurp a power which our democracy
has lodged in its elected legislature. The great judges have constantly
admonished their brethren of the need for discipline in observing the
limitations A judge must not rewrite a statute, neither to enlarge nor to
contract it. Whatever temptations the statesmanship of policy-making
might wisely suggest, construction must eschew interpolation and
 evisceration He must not read in by way of creation. He must not read
out except to avoid patent nonsense of internal contradictions. ... 7
Petitioner finally argues that since under Section 4 of Probation Law as amended has
vested in the trial court the authority to grant the application for probation, the Court of
Appeals had no jurisdiction to entertain the same and should have (as he had prayed
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
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
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
conclusion that we have reached, that is, that petitioner's right to apply for probation
was lost when he perfected his appeal from the judgment of conviction.
WHEREFORE, the Decision of the Court of Appeals in CAGR No. 04678 is hereby
AFFIRMED. No pronouncement as to costs.
SO ORDERED.
Fernan (C.J.), Gutierrez, Jr., Bidin and Cortes, JJ., concur.
G.R. No. L-30644 March 9, 1987
COMMISSIONER OF INTERNAL REVENUE, petitioner,
vs.
FIREMAN'S FUND INSURANCE COMPANY and the COURT OF TAX
APPEALS, respondents.
B.V. Abela, M.C. Gutierrez & F.J. Malate, Jr., for respondents.
PARAS, J.:
This is an appeal from the decision of the respondent Court of Tax Appeals dated
May 24, 1969, in C.T.A. Case No. 1629, entitled "FIREMAN'S FUND INSURANCE
COMPANY v. COMMISSIONER OF INTERNAL REVENUE," which reversed the
decision of petitioner Commissioner of Internal Revenue holding private respondent
Fireman's Fund Insurance Company liable for the payment of the amount of
P81,406.87 as documentary stamp taxes and compromise penalties for the years
1952 to 1958.
Private respondent is a resident foreign insurance corporation organized under the
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
other paper as may be indicated by law or regulations as the proper recipient of the
stamp.' It appears from this provision that respondent has authority to allow
documentary stamps to be affixed to papers other than the documents or instruments
taxed. Although the practice adopted by petitioner in affixing the documentary stamps
to the business statements and policy register was without specific permission from
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
of petitioner, however, considering that petitioner actually purchased the documentary
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
the same tax.
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
consented thereto. A compromise implies agreement. If the offer is rejected by the
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,
Rollo, pp. 20-21).
Hence, this petition filed on June 26, 1969 (Rollo, pp. 1-8).
The petition is devoid of merit.
The principal issue in this case is whether or not respondent company may be
required to pay again the documentary stamps it has actually purchased, affixed and
cancelled.
The relevant provisions of the National Internal Revenue Code provide:
SEC. 210. Stamp taxes upon documents, instruments, and papers. — Upon
documents, instruments, and papers, and upon acceptances, assignments, sales,
and transfers of the obligation, right, or property incident thereto, there shall be levied,
collected and paid for and in respect of the transaction so had or accomplished, the
corresponding documentary stamp taxes prescribed in the following sections of this
Title, by the person making, signing, issuing, accepting, or transferring the same, and
at the same time such act is done or transaction had. (Now. Sec. 222).
SEC. 232. Stamp tax on life insurance policies. — On all policies of insurance or
other instruments by whatever name the same may be called, whereby any insurance
shall be made or renewed upon any life or lives, there shall be collected a
documentary stamp tax of thirty-five centavos on each two hundred pesos or
fractional part thereof, of the amount issued by any such policy. (220) (As amended
by PD 1457)
Insurance policies issued by a Philippine company to persons in other countries are
not subject to documentary stamp tax. (Rev. Regs. No. 26)
Medical certificate attached to an insurance policy is not a part of the said policy.
Insurance policy is subject to Section 232 of the Tax Code while medical certificate is
taxable under Section 237 of the same Code.
Insurance policies are issued in the place where delivered to the person insured. (As
amended.)
SEC. 221. Stamp tax on policies of insurance upon property. — On all policies of
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
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
part thereof, of the amount of premium charged," (Now Sec. 233.)
SEC. 237. Payment of documentary stamp tax. — Documentary stamp taxes shall be
paid by the purchase and affixture of documentary stamps to the document or
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
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,
impression, or perforation shall be on the stamp itself and part on the paper to which
it is attached; Provided, That if the cancellation is accomplished by writing or
stamping the date of cancellation, a hole sufficiently large to be visible to the naked
eye shall be punched, cut or perforated on both the stamp and the document either
by the use of a hand punch, knife, perforating machine, scissors, or any other cutting
instrument; but if the cancellation is accomplished by perforating the date of
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
affix the correct amount of documentary stamps to any taxable document, instrument,
or paper, or to cancel in the manner prescribed by section 237 any documentary
stamp affixed to any document, instrument, or paper, shall be subject to a fine of not
less than twenty pesos or more than three hundred pesos. (Emphasis supplied.)
(Now Sec. 250.)
As correctly pointed out by respondent Court of Tax Appeals, under the above-quoted
provisions of law, documentary tax is deemed paid by: (a) the purchase of
documentary stamps; (b) affixture of documentary stamps to the document or
instrument taxed or to such other paper as may be indicated by law or regulations;
and (c) cancellation of the stamps as required by law (Rollo, p. 18).
It will be observed however, that the over-riding purpose of these provisions of law is
the collection of taxes. The three steps above-mentioned are but the means to that
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
has been paid for such document while the cancellation of the stamps is to obviate
the possibility that said stamps will be reused for similar documents for similar
purposes.
In the case at bar, there appears to be no dispute on the fact that the documentary
stamps corresponding to the various policies were purchased and paid for by the
respondent Company. Neither is there any argument that the same were cancelled as
required by law. In fact such were the findings of petitioner's examiner Amando B.
Melgar who stated as follows:
Investigation disclosed that the subject insurance company is a duly organized
corporation doing business in the Philippines. It keeps the necessary books of
accounts and other accounting records needed by the business. Further verification
revealed that it has, since July, 1959, been using a "HASLER" franking machine,
Model F88, which stamps the documentary stamps on the duplicates of the policies
issued. Prior to the acquisition of the said machine, the company buys its stamps by
allowing the Manager to issue a Manager's check drawn against the National City
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
amounted to P77,837.67, while the value of the used stamps lost amounted to
P65,901.11. Verification with the files revealed that most of the monthly statements of
business and registers of documentary stamps corresponding to insurance policies
issued were missing while some where the punched documentary stamps affixed
were small in amount are still intact.
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
attached true copies of his reports) was not an "Inside Job," still the company should
be held liable for its negligence, it appearing that the said records were placed in a
bodega, where almost all patrons of the coffee shop nearby could see them. The
company also violated the provision of Section 221 of the National Internal Revenue
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
affixed on the register of documentary stamps. (pp. 35-36, BIR rec.; Emphasis
supplied.) (CTA Decision, Rollo, pp, 18-19.)
Such findings were confirmed by the Memorandum of Acting Commissioner of
Internal Revenue Jose B. Lingad, dated November 7, 1962 to the Chief, Business
Tax Division, which states:
The records show that the FIREMAN'S FUND INSURANCE COMPANY allegedly
paid P 77,837.67 in documentary stamp taxes for the policies of insurance issued by
it for the years 1952 to 1958 but could only present as proof of payment Pll,936.56 of
said taxes as the rest of the amount of P 65,901.11 were lost due to robbery. Upon
verification of this payment however it was found that the FIREMAN'S FUND
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
of documentary stamps, the use of which was not authorized by this Office. It was
claimed that the same procedure was used in the case of the lost documentary
stamps aforementioned. As this practice is irregular and the remaining records are
not conclusive proofs of the payment of the corresponding documentary stamp tax on
the policies, the FIREMAN'S FUND AND INSURANCE COMPANY is still liable for the
payment of the documentary stamp taxes on the policies found not affixed with
stamps. (Original B I R Record, p. 87).
Later, respondent Court of Tax Appeals correctly observed that the purchase of
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
clearly be gleaned from his Memorandum submitted to the respondent Court.
(Decision, CTA Rollo, pp. 4-5).
Thus, all investigations made by the petitioner show the same factual findings that
respondent company purchased documentary stamps for the various policies it has
issued for the period in question although it has attached the same on documents not
authorized by law.
There is no argument to petitioner's contention that the insurance policies with the
corresponding documentary stamps affixed are the best evidence to prove payment
of said documentary stamp tax. This rule however does not preclude the admissibility
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
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).
Be that as it may, there is no justification for the government which has already
realized the revenue which is the object of the imposition of subject stamp tax, to
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
himself at the expense of another. It goes without saying that the government is not
exempted from the application of this doctrine (Ramie Textiles, Inc. v. Mathay Sr., 89
SCRA 587 [1979]).
Under the circumstances, this court RESOLVED to DISMISS this petition and to
AFFIRM the assailed decision of the Court of Tax Appeals.
Fernan (Chairman), Gutierrez, Jr., Padilla, Bidin and Cortes, JJ., concur.
Alampay, J., is on leave.

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.
MANUEL DE LA FUENTE
G.R. No. L-2947 January 11, 1951
Facts:
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
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.
On appeal, it is upheld that the ordinance is a tax on race horses as distinct from
boarding stables.
Under Ordinance No. 3065, the tax is assessed not on the owners of the horses but
on the owners of the stables, as counsel admitted in their brief. It is ordinary that the
number of horses is used in the assessment purely as a method of fixing an equitable
and practical distribution of the burden imposed by the measure.
Issue:
Whether or not the Ordinance is constitutional and valid as has been enacted in
accordance with the powers of the Municipal Board granted by the Charter of the City
of Manila.
Held:
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
are taxed at the same rate. Thus, it was held that, the fact that some places of
amusement are not taxed while others are taxed is not argument at all against the
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
of horses were not taxed or were made to pay less or more than others.
G.R. No. 156 September 27, 1946
MILTON GREENFIELD, plaintiff-appellant,
vs.
BIBIANO L. MEER, defendant-appellee.
Francisco Dalupan for appellant.
First Assistant Solicitor General Reyes and Solicitor Arguelles for appellee.
FERIA, J.:
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;
one to recover the sum of P9,008.14 paid as income tax for the year 1939 by plaintiff
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
reclaim, in the event the first cause of action is dismissed, the sum of P475 collected
by defendant from plaintiff illegally according to the latter, because the former has
erroneously computed the tax on personal and additional exemptions.
The following are the pertinent facts stipulated and submitted by the parties to the
lower court:
2. That since the year 1933 up to the present time, the plaintiff has been continuously
engaged in the embroidery business located at 385 Cristobal, City of Manila and
carried on under his name;
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 . . .;
4. That Exhibit A attached to the complaint and made a part hereof represents
plaintiff's purchases and sales of each class of stock and security as well as the
profits and losses resulting on each class during the year 1939;
5. That the plaintiff has not been a dealer in securities as defined in section 84 (t) of
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
1939; and that the defendant disallowed said item of deduction on the ground that
said losses were sustained by the plaintiff from the sale of mining stocks and
securities which are capital assets, and that the loss arising from the sale of the same
should be allowed only to the extent of the gains from such sales, which gains were
already taken into consideration in the computation of the alleged net loss of
P67,307.80;
9. That the defendant assessed plaintiff's income tax return for the year 1939 at
P13,771.06 as shown in the following computation appearing in the audit sheet of the
defendant hereto attached and marked Exhibit C;
Net income as per return of plaintiff for 1939 P70,299.29
Add: Net Loss on sale of mining stocks and
securities disallowed in audit 67,307.80
P137,607.09
Total net income as per office audit =========
10. That the defendant computed the graduated rate of income tax due on the entire
net income as per office audit, without first deducting therefrom the amount of
personal and additional exemptions to which the plaintiff is entitled, allowing said
plaintiff a deduction from the assessed tax the amount of P50 corresponding to the
exemption of P3,500;
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
refund of P9,008.14 or in the alternative case P475, which claim of plaintiff was
overruled by the defendant;
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
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
his gains in his embroidery business and other income; or whether they are capital
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
(2) whether, under the present law, the personal and additional exemptions granted
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
be deducted from the tax on the total net income.
1. As to the first question, it is agreed in the above-quoted stipulation of facts that the
plaintiff was not a dealer in securities or share of stock as defined in section 84 (t) of
Commonwealth Act No. 466. The question for determination is whether appellant,
though not a dealer in mining securities, may be considered as engaged in the
business of buying and selling them under section 30 (d), (1) (A) of said Act No. 466.
It is evident that, taking into consideration the nature of mining securities, which may
be bought or sold either as a business or for speculation purposes only, the National
Assembly of the Philippines has deemed it necessary to define or determine
beforehand in section 84 (t) of Commonwealth Act No. 466 who may be considered
as persons engaged in the trade or business of buying and selling securities within
the meaning of the phrase "incurred in trade or business" used in section 30 (d) (1)
(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
source. The definition of dealer or merchant in securities given in said section 84 (t)
includes persons, natural or juridical, who are engaged in the purchase and sale of
securities whether for his their own account or for others, provided they have a place
of business and are regularly engaged therein. There was formerly some doubt or
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
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
for opinion. But with the inclusive definition of the term "dealer" or merchant of
securities given in section 84 (t) of Act No. 466, such doubt can no longer arise.
Said section 84 (t) reads as follows:
(t) The term "dealer in securities" means a merchant of stocks or securities, whether
an individual, partnership, or corporation, with an established place of business,
regularly engaged in the purchase of securities and their resale of customers; that is,
one who as a merchant buys securities and sells them to customers with a view to the
gains and profits that may be derived therefrom.
Appellant assumes, however, that the above-quoted definition does not cover or
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
a dealer in mining securities, he may be considered as having been engaged in the
trade or business of buying and selling securities. And in support of his contention
appellant quotes Opinion No. 1818 of the Income Tax Unit of the United States
Bureau of Internal Revenue(I.T. No. 1818, C.B. II, pp. 39-41), in which opinion the
following was said:
The taxpayer is not a member of any stock exchange, has no place of business, and
does not make purchase and sales of securities for customers. Much of his trading is
done on margin. He devotes the greater part of the time in his broker's office keeping
in touch with the market. He has no other trade or business, his income consisting
entirely of interest bonds, dividends on stocks, and profits from the sale or disposition
of securities.
Advice is requested (1) whether this taxpayer is entitled to the benefit of section 204
of the Revenue Act of 1921, with reference to a net loss incurred in 1921, from the
sale of stocks; (2) whether he is entitled to the benefit of section 206 of the Revenue
Act of 1921, with regard to gains derived in 1922 from the sale of two blocks of stock
held more than two years.
1. Section 204 (a) provides in part:
That as used in this section the term "net loss" means only net losses resulting from
the operation of any trade or business regularly carried on by the taxpayer . . .
The question is, than, whether the taxpayer was regularly engaged in the trade or
business of buying and selling securities.
The interpretation placed upon the term "business or trade" by the courts and the
department may be indicated by a few illustrative decisions. In two early cases (In
re Marson [1871], Fed. Cas. No. 9142, and In re Woodward [1876], Fed. Cas. No.
18001) it was held that a speculator in stocks was not a "merchant or tradesman"
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
is, buying and selling them, with a view to his own profit, to be made by the excess of
the selling price over the buying price . . . The fact that the bankrupt was engaged in
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."
That is, although his business was buying and selling, since this business was simply
with a view to his own profit and not for others, has was not a merchant or tradesman.
Compare In re Surety Guarantee & Trust Co. ([1902], 121 Fed., 73) and In re H.R.
Leighton & Co. ([1906], 147 Fed., 311).
With this background, the Department, in Treasury Decisions 1989, 2005, 2090, and
2135 (not published in Bulletin service), held that the provision of paragraph B of the
1913 Act, allowing as a deduction for the purpose of the normal tax "losses actually
sustained during the year, incurred in trade . . .", did not include losses from isolated
transactions; for instance, in stocks and bonds. In Mente vs. Eisner ([1920], 266 Fed.,
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
cotton on the cotton exchange for his individual account, not connected with his
manufacturing business. (Cf. Black vs. Bolen [1920], 268 Fed., 427.) Likewise, in L.O.
601 (not published in Bulletin service), it was held that "losses sustained by a person
in buying and selling securities in his own account, he not being a licensed stock and
bond broker buying and selling for others as well as for himself, are not deductible as
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
account is not technically a "trade"; (2) that isolated transactions in securities, not
connected with the tax payer's regular business do not constitute a "trade."
In the Act of September 8, 1916, the wording of the 1913 Act was slightly changed
(section 5 [a], fourth) to permit a deduction of "losses actually sustained during the
year, incurred in his business or trade . . ." Under this more liberal provision, it has
been uniformly held that where a taxpayer devoted all his time, or the major portion of
it, to buying and selling securities on his own account, this occupation was his
"business"; and therefore he was permitted to deduct losses sustained in such
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
to comprehend "all his activities for gain, profit, or livelihood, entered into with
sufficient frequency, or occupying such portion of his time or attention as to constitute
a vocation," contained in article 8 of Regulations 41, relative to the war excess-profits
tax (approved in Woods vs. Lewellyn [1921], 289 Fed., 498). . .
It is submitted that these decisions are a sound interpretation of the accepted
definition of business: "Business is a very comprehensive term and embraces
everything about which a person can be employed." Black's Law Dictionary, 158,
citing People vs. Commissioners of Taxes (23 New York, 242, 244). "That which
occupies the time, attention and labor of men for the purpose of a livelihood or profit."
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
approval in Von Baumbach vs. Sargent Land Company (1916), 242 U. S., 503, at
515. If they are sound, the facts of the instant case require a ruling that the taxpayer
was regularly engaged in the business of buying and selling securities on his own
account and was, therefore, entitled to the benefit of the provisions of section 204(a).
(I. T. No. 1818; C. B. II-2, pp. 39-41.)
But, assuming arguendo that the above-quoted opinion may be applied to the present
case, it is evident that the appellant can not be considered as having been engaged
in the business of buying and selling securities within the meaning of section 30 (d)
(1) (A) of Act No. 466 According to said opinion, in order that he may so be
considered, it is necessary that he must devote all his time or at least a major portion
thereof to said business and that the latter must be regularly carried on by him.
In the stipulation of facts presented in this case it is agreed that "since the year 1933
up to the present time, the plaintiff has been continuously engaged in the embroidery
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
that plaintiff and appellant has regularly devoted all his time or the major portion
thereof to the business of buying and selling mining securities for his own account.
On the contrary, it having been stipulated that he has been continuously engaged in
the embroidery business during the same time, it necessarily follows that he has not
and could not have devoted regularly all his time or a major portion thereof to the
buying and selling of mining securities.
Furthermore, from Exhibit A attached to the complaint and made a part of said
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
year 1939, it appears that he made purchases and sales of securities only on several
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
corporations on January 2, 3, 4, 6, 13, 19, 20, 25, 30, and sold some of them on
January 4, 10, 13 and 31. During February he made purchases on the dates 1, 8, 13,
14, 25, and 27; and sales on 6, 9, 10, 16, 22, and 30, and sold some on March 9 only.
During April he made two purchases on April 3 and 5, and one sale on April 4. During
May he purchased mining shares of stock on May 9, 10, 13, 19, 24, and 25; and sold
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
on 1, 3, 6, 19; and sales on July 24, 25, 26, and 27. During August he purchased
shares of stock on some mining corporations on 5,7, 16, and 18 and sold shares of
one mining corporation on August 10 only. During September appellant did not
purchase or sell any securities. During October he sold securities only on the 12th of
said month, and he made no purchase at all. And during November and December he
did not purchase or sell any.
Appellant contends that as from Exhibit A it appears that the mining securities were
inventoried in order to arrive at his profits and losses, they cannot be considered as
capital assets, because, according to section 34, the term capital assets does not
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
be properly included in the inventory. Section 148 of the Income Tax Regulations No.
2 of February 10, 1940 (39 Off. Gaz., 325), provides that "the securities (to be)
inventoried as here provided may include only those held for purposes of resale and
not for investment," and that "the taxpayers who buy and sell or hold securities for
investment or speculation, . . . are not dealers insecurities within the meaning of this
rule." And the General Counsel of the Federal Bureau of Internal Revenue, after
quoting Article 105 of United States Regulations 74 from which said section 148 of
our Income Tax Regulations was taken, said that a person not a dealer in securities is
precluded from the use of inventories in computing his net income."(C. B. X-2, p. 128,
G. C. M., 9656.)
The lower court has not therefore erred in dismissing appellant's first cause of action,
on the ground that the losses sustained by appellant from the buying and selling of
mining securities are not losses incurred in business or trade but are capital losses
from sales of capital assets, as contended by appellee.
2. With regard to the second point, the lower court held that, as the new law does not
provide that the personal exemptions shall be allowed in the nature of a deduction
from the net income, as prescribed in the old law, and there is a distinction between
exemption and deduction, the tax due on said exemptions must be deducted from the
tax due on the whole net income, instead of deducting the total amount of the
exemptions from the net income.
The argument of the appellee in support of the lower court's decision is that the
omission in section 23 of Act No. 466 of the phrase "in the nature of a deduction"
found in section 7 of the old law, shows that it was the intention of the National
Assembly to adopt the innovation proposed by the Tax Commission which prepared
the draft of the new law, an innovation based on what is known as the "Wisconsin
Plan" now in operation in several American states. Under said plan, the cumulative
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
law according to the status of the taxpayer and the number of his dependents as
follows: for single individuals, there is allowed a tax credit of P10; for married persons
or heads of family, P30; and for each dependent below 21 years of age, P10.
Section 7 of the old law provided: "For the purpose of the normal tax only, there shall
be allowed as an exemption in the nature of a deduction from the amount of the net
income . . ."; while section 23 of the new law provides: "For the purpose of the tax
provided for in this Title there shall be allowed the following exemptions." Now, the
question to be determined or answered is: Does this change in the phraseology of the
law show the intention of the National Assembly to change the theory or policy of the
old law so as to deduct now the tax on the personal and additional exemptions from
the tax fixed on the amount of the net income, instead of deducting the amount of
personal and additional exemptions from that of the net income, before determining
the tax due on the latter?
It is a well-settled rule of statutory construction that where a statue has been enacted
which is susceptible of several interpretations there is no better means for
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
obviously be in the negative. Section 22 of the bill entitled "An Act to revise, amend
and codify the Internal Revenue Laws of the Philippines," prepared by the Tax
Commission and submitted to the National Assembly of the Philippines, in substitution
of section 7 of the old Income Tax Law, reads as follows:
SEC. 22. Amount of tax credit allowable to individuals.—There shall be allowed as a
credit in the nature of a deduction from the amount of the tax payable by each citizen
or resident of the Philippines under section 20:
(a) Tax credit of single individuals.—The sum of P10 if the person making the return
is a single person or a married person legally separated from his or her spouse.
(b) Tax credit of a married person or head of family.—The sum of P30 if the person
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
family; Provided, That from the tax due on the aggregate income of both husband and
wife when not legally separated only one tax credit of P30 shall be deducted. For the
purpose of this section, the term "head of a family" includes an unmarried man or a
woman with one or both parents, or one or more brothers or sisters, or one or more
legitimate, recognized natural or adopted children dependent upon him or her for their
chief support where such brothers, sisters, or children are less than twenty-one years
of age.
(c) Additional tax credit for dependents.—The sum of P10 for each legitimate,
recognized natural, or adopted child wholly dependent upon the taxpayer, if such
dependents are under twenty-one years of age, or incapable of self-support because
mentally or physically defective. The additional tax credit under this paragraph shall
be allowed only if the person making the return is the head of the family.
But the National Assembly, instead of adopting or incorporating said proposed section
22 in the National Internal Revenue Code, C. A. No. 466, copied substantially in
section 23 of the latter provision of section 7 of the old law relating to personal and
additional exemptions, with the only modification that the amount of personal
exemption of single individuals has been reduced from two thousand to one thousand
pesos, and that of married persons or heads of family from four thousand to two
thousand five hundred pesos.
If it were the intention of the National Assembly to adopt the "Wisconsin plan"
proposed by the tax Commission, it would have adopted literally, or at least
substantially, the provisions of said section 22 as section 23 of Commonwealth Act
No. 466, instead of substantially incorporating section 7 of the old Income Tax Law as
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
of a deduction from the amount of the net income." This was changed in said section
23, which provides: "For the purpose of the tax provided for in this Title, there shall be
allowed the following exemptions:" From the fact that the National Assembly
discarded completely section 22 of the bill drafted in accordance with the "Wisconsin
Plan" and submitted by the Tax Commission, it is to be presumed that the National
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
is concerned.
The mere fact that the phrase "in the nature of a deduction" found in section 7 of the
old law was omitted in section 23 of the new or National Internal Revenue Code did
not and could not effect any change in the law. It is evident that said phrase was
added or inserted in said section 7 only out of extreme caution, because, even
without it, the exemption would have to be deducted from the gross income in order to
determine the net income subject to tax. Had the provision in the old law been drafted
in exactly the same term as that of said section 23, the same construction should
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.,
28; 36 N. E., 365, 369.) If the amounts of personal and additional exemptions fixed in
section 23 are exempt from taxation, they should not be included as part of the net
income, which is taxable. There is nothing in said section 23 to justify the contention
that the tax on personal exemptions (which are exempt from taxation) should first be
fixed, and then deducted from the tax on the net income.
The change of phraseology alone does not lead to the conclusion that it was the
intention of the lawmaker to amend or change the constructions of the old law as
contended by the appellee. For it is a well-established rule, recognized by the
Supreme Court of Ohio in the case of Conger vs. Barker's Adm'r (11 Ohio St., 1);
"that in the revision of statutes, neither an alteration in phraseology nor the omission
or addition of words in the latter statute, shall be held, necessarily, to alter the
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
[ G.R. No. L-8755, March 23, 1956 ]
COLLECTOR OF INTERNAL REVENUE, PETITIONER, VS. MANILA JOCKEY
CLUE, INC., RESPONDENT.
DECISION
BAUTISTA ANGELO, J.:
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
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
Charity Sweepstake Office held benefit races for charitable, relief and civic purposes
in said hippodrome for the use of which the Club was paid in the form of rentals the
sums of P107,185.02 and P122,855.47 respectively, which were included in its
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
installments and on the second the amount of P29,881.17 which was also paid in two
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
and, when the refund was denied, it filed an action in the Court of First Instance of
Manila to recover the total sum of P59.692.97 against the Collector alleging that
the same has been wrongfully collected. The case was pending trial when Republic
Act No. 1125 creating the Court of Tax Appeals was approved on June 16,
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.
After hearing, the Court of Tax Appeals rendered a decision holding that the rentals
received by the Club from the Philippine Charity Sweepstake Office for the use of its
premises were exempt from income tax under section 5 of Republic Act No. 79 and, as
a consequence, it ordered the Collector of Internal Revenue to refund to the Club the
amount of P59,692.97. From this decision, the Collector of Internal Revenue
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
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
racing. And for such use, the Club was paid for each day a flat rental and not on
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
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
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.
Because of its importance, Republic Act No. 79 is hereunder reproduced in full.
"AN ACT TO AUTHORIZE THE HOLDING BY THE PHILIPPINE CHARITY
SWEEPSTAKE OFFICE OF HORSE RACES, WITH
BETTING, ON SATURDAY AFTERNOONS, FOR CHARITABLE, BELIEF AND
CIVIC PURPOSES.
"Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:
"Section 1. The provisions of existing laws to the contrary notwithstanding, the
Board of Directors of the Philippine Charity Sweepstake Office is authorized to
hold horse races, with betting, on such Saturday afternoons as it may determine for
charitable, relief and civic purposes. Only native horses shall be allowed to run in any
of these races.
"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
prizes for the owners of the winning horses; and the necessary administration
expenses not |to exceed ten per centum of the gross receipts, shall he apportioned
and distributed by the Board of Directors of the Philippine Charity Sweepstake
Office to disabled veterans, war widows and orphans and to charitable, relief and
civic organizations in such amounts and under such rules and regulations as may be
approved, by the President of the Philippines.
"Sec. 3. The racing club holding these races shall be exempt from the payment
of any municipal or national tax.
"Sec. 4. The term 'horses' when used in this Act shall be understood to refer to
stallions and mares.
"Ssc. 5. This Act shall take effect upon its approval.
"Approved, October 21, 1946."
Note that the title of the Act says "An Act to authorize the Holding by the Philippine
Charity Sweepstake Office of Horse Races, with Betting, on Saturday Afternoons,
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-
mentioned and, under section 2, it is provided that the administration expenses for
running the races, including the prizes to be paid to the winners, shall not exceed 10
per cent of the gross receipts that may be collected, which shall be deducted from said
gross receipts before turning them over to the beneficiaries named in the law. And, in
section 3, there appears the following proviso: "The racing club holding these races
shall be exempt from the payment of any municipal or national tax." It is under
the proviso that the Club claims exemption from the payment of income tax on
the rentals in question.
From the above analysis of the law, it can clearly be inferred that what is
contemplated is the holding of horse races, not merely under its auspices, but by the
Philippine Charity Sweepstake Office itself, even if for that purpose it has to lease or
make use of race tracks belonging to private racing clubs. The purpose of the law
undoubtedly is to give to said Office full control of the horse races considering that
they involve.the handling of funds. And evidently this is also the interpretation
entertained by the officials of said Office, when, instead of employing the personnel
of the Manila Jockey Club, Inc., employed its own personnel and assumed full
control of the races. It is because of this view of the law that we believe that the
provisions of section 3 should be interpreted as conveying the meaning that the one
holding the races is not the racing club but the Philippine Charity Sweepstake Office
and that the exemption therein provided only refers to those taxes, municipal or
national, that the law requires to be. paid in connection with said races. In other
words, said section should be read to mean "the racing club where the races are
held" in order that it may be consistent with the purpose of the law.
It may be contended that if that law should be interpreted to mean that it merely
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
meaningless because, under section 6 of Act No. 4130, said Office is already exempt
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
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
are held by the club or by other entities. And such proviso was evidently inserted in
order to place the races held on said tracks by the Philippine Charity Sweepstake
Office out of the operation of said laws.
We refer to Republic. Act No. 309 which regulates the horse racing in
the Philippines and section 193 of the National Internal Revenue Code, as amended
by Republic Act No. 588. Thus, under section 26 of Republic Act No. 309, any
person, race track, racing club, or other entities holding or conducting a horse race
shall be required to pay a city or municipal license fee of P600 for each day of
racing. And under section 193 of the National Internal Revenue Code, as amended,
any owner of race tracks is required to pay a fixed tax of P500 for each, day on which
races are run on said, tracks. It should be noted that said provisions require
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
any other person or entity, it is therefore imperative that such exemption
be expressly provided for in order, to exempt the owner of the race track of such
taxes if the same is to be used by a charitable institution like the Philippine Charity
Sweepstake Office, The foregoing lead us to the conclusion that the exemption clause
provided for in section 3 of Republic Act No. 79 merely intends to exempt
the racing club in whose premises or tracks the races are held by the Philippine
Charity Sweepstake Office from the payment of the taxes we have above adverted to
because they are the only ones that have any connection with the races held by said
Office. It cannot certainly refer to any income tax that may be imposed on the rentals
that may be paid for the use of those tracks and other paraphernalia. That is an
income that the racing club has to account for income tax purposes because it is an
income that the club earned because of the use of its tracks by the Philippine Charity
Sweepstake Office. It is an income that, strictly speaking, did not coma from the horse
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
connected with those races within the purview of the exemption clause.
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
Sweepstake Office or were to. be denied the benefit of the exemption clause
under consideration, the beneficiaries of the bounty would be the ones prejudiced
because the racing club might be obliged to shift the burden to the Philippine Charity
Sweepstake Office in the form of additional rentals or by increasing their amount so
as to compensate, the club for the tax that it should otherwise pay to the Government.
Such fear can hardly be entertained not only because there are several racing clubs in
the City of Manila which may be availed of by the Philippine Charity Sweepstake
Office but also because the law itself limits the administration expenses that said
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
the adoption of an interpretation which would be contrary to the clear import and
intendment of the law.
Another factor that should be borne in mind in connection with the interpretation of
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
be created by implication. Thus, it was held that "Exemption from taxation are
highly disfavored in law; and he who claims an exemption must be able to justify his
claim by the clearest grant of organic or statute law. An exemption from the
common burden cannot be permitted to exist upon vague implication." (Asiatic
Petroleum Co. vs. Llanes, 49 Phil., 466; See also House vs. Posadas, 58 Phil., 338.) In
the present" ease, there is no clear showing that the exemption clause under
consideration exempts the racing club from its duty to pay income tax.
Wherefore, the decision appealed from is reversed. The case is dismissed with costs
against respondent.
Parás, C. J., Bengzon, Padilla, Montemayor, Reyes, A., Labrador, Concepcion,
Reyes, J. B. L., and Endencia, JJ., concur.
Diokno v. Rehabilitation Finance Corporation G.R. No. L-4712 (July 11, 1952)
FACTS:
Petitioner, the holder of a back pay certificate of indebtedness issued under RA 304,
sought to compel Respondent company to accept his back pay certificate as payment
of his loan from the latter. His basis was Sec. 2 of RA 304, which provides that
“investment funds or banks or other financial institutions owned or controlled by the
government shall subject to availability of loanable funds … accept or
discount at not more than two per centum per annum for ten years such
certificate” for certain specified purposes. Respondent company contended
however that the word “shall” used in this particular section of the law is merely
directory. The lower court sustained Respondent company.
ISSUE:W/N Petitioner can use his back pay certificate to pay for his loan to
Respondent company.
HELD:
No. It is true that in its ordinary signification, the word “shall”
is imperative. However, the rule is not absolute; it may be construed as “may” when
required by the context or by the intention of the statute. The modifier, “at not more
than two per centum per annum for ten years.”, the interest to be
charged, that the verb phrase is mandatory because not only the law uses “at not
more” but the legislative purpose and intent, to conserve the value of the back pay
certificate for the benefit of the holders, for whose benefit the same have been
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
contrary interpretation. If the acceptance or discount of the certificate is to be
“subject” to the condition of the
availability of loanable funds, it is evident the legislature intended that the
acceptance shall be allowed on the condition that there are “available loanable
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 THE MATTER OF THE PETITION FOR CITIZENSHIP OF JUSTINO DEE CU.
JUSTINO O. CU alias JUSTO DEE, petitioner-appellee,
vs.
REPUBLIC OF THE PHILIPPINES, oppositor-appellant.
Jose Castro for petitioner-appellee.
Office of the Solicitor General for oppositor-appellant.
REGALA, J.:
The Solicitor General has brought this case before Us on an appeal from a decision
of the Court of First Instance of Ilocos Norte.
On January 6, 1956, Justino O. Cu alias Justo Dee filed a petition for naturalization
with the Court of First Instance of Ilocos Norte. On October 4, 1957, that court, with
the Honorable Fidel Villanueva presiding approved the petition.
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
Filipinos; that he finished his high school education at the Northwestern College, and
took preparatory collegiate courses at the St. William's College, both schools being
located at Laoag; that he studied Medicine at the University of Santo Tomas without,
however, finishing it as he stopped to help his parents attend to their business; that
he knows how to read and write English and Ilocano, aside from Chinese; that he has
embraced the customs and traditions of the Filipinos; that he is managing the
business of his father from whom he receives P200.00 salary every month and 30%
bonus of the net income thereof; that before 1957, he was employed as manager of
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;
that he does not believe in the use of violence to attain his objectives; that he is not
suffering from any contagious disease; and that he is willing to renounce his Chinese
citizenship.
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
qualifications to be admitted to Philippine citizenship. They were also presented as
witnesses during the hearing.
The assistant provincial fiscal of Ilocos Norte, representing the Solicitor General,
appeared and cross-examined the petitioner and the witnesses presented on his
behalf. After trial, as stated above, a decision was rendered approving the application
of petitioner to become a Filipino citizen. Not satisfied, the Solicitor General has
appealed.
After a careful perusal of the record and the transcript of stenographic notes taken at
the hearing, We are convinced that petitioner had not proven that he has all the
qualifications and none of the disqualifications enumerated in the Naturalization Law.
Among the requirements for Philippine citizenship are that the petitioner must own
real estate in the Philippines worth not less than P5,000.00, Philippine currency, or
must have some known lucrative trade, profession, or lawful occupation. (Sec. 2, par.
4, Revised Naturalization Law.)
While the petitioner in this case had stated in his petition that he is the owner of a
building for residential and commercial purposes with an assessed value of
P5,000.00, he did not say so in his oral testimony. Only Atty. Jose B. Castro, one of
the character witnesses, during the cross-examination by the fiscal, made a
statement to this effect. And it is not explained why no certificate of assessment or a
declaration of real estate property, or any other piece of evidence from the treasurer's
or assessor's office was submitted. In the absence of credible proof to support the
allegation as to property ownership of the petitioner in this case, We are constrained
to conclude that petitioner has not met the requirement.
As to the question of whether or not petitioner has a lucrative trade, profession or
lawful occupation, the petitioner testified to the effect that he is employed by his father
at a monthly salary of P200.00, with bonus equivalent to 30% of the profits from his
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
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."
While it is most usual and common for applicants for naturalization to present in
evidence their income tax returns to prove their statement as to their occupation, and
at the same time to show that they are law-abiding, the record of this case reveals not
a single income tax return that petitioner had filed. To our mind, this failure would
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
case, not lucrative, judging by present standards the cost of living and the low
purchasing power of the peso. (Sy Ang Hoc v. Republic, L-12400, March 29, 1961;
Richard Velasco v. Republic, L-12214, May 25, 1960; Tan v. Republic, L-14861,
March 17, 1961; and Zacarias Tan v. Republic, supra.) In the case of Benjamin Co v.
Republic, L-12150, May 26, 1960, this Court has ruled that the failure of the applicant
to file an income tax return when his income is more than what is required by law for
one to file an income tax return, indicates that he has not conducted himself properly
in his relations with our government.
In naturalization cases, the burden is on the applicant to prove by competent and
satisfactory evidence that he has all the qualifications and none of the
disqualifications specified by law. The naturalization law should be strictly construed,
and doubts resolved, against the applicant (Pe v. Republic, L-16980, November 29,
1961, citing Yap Joco v. Com., 40 O.G. 1235; Cho v. Republic, L-12408, Dec.
28,1959; Karam Singh v. Republic, L-7567, September 29, 1955.)
The petitioner in the case at bar having failed to satisfy Us that he has not all the
qualifications to become a Filipino citizen, does not deserve the grant of his petition.
WHEREFORE, the decision appealed from is reversed, and petitioner's application
hereby dismissed. Costs against the petitioner-appellee.
Bengzon, C.J., Padilla, Labrador, Concepcion, Barrera, Paredes, Dizon and
Makalintal, JJ., concur.
Bautista Angelo and Reyes, J.B.L., JJ., took no part.
United States Supreme Court
GOULD v. GOULD, (1917)
No. 41
Argued: Decided: November 19, 1917
[245 U.S. 151, 152] Mr. Martin W. Littleton, of New York City, for plaintiff in error.
Mr. John L. McNab, of San Francisco, Cal., for defendant in error.
Mr. Justice McREYNOLDS delivered the opinion of the Court.
A decree of the Supreme Court for New York county entered in 1909 forever
separated the parties to this proceeding, then and now citizens of the United States,
from bed and board; and further ordered that plaintiff in error pay to Katherine C.
Gould during her life the sum of $3,000 every month for her support and
maintenance. The question presented is whether such monthly payments during the
years 1913 and 1914 constituted parts of Mrs. Gould's income within the intendment
of the act of Congress approved October 3, 1913 (38 Stat. 114, 166, c. 16), and were
subject as such to the tax prescribed therein. The court below answered in the
negative; and we think it reached the proper conclusion.
Pertinent portions of the act follow:
'Section II, A. Subdivision 1. That there shall be levied, assessed, collected and paid
annually upon the entire net income arising or accruing from all sources in the
preceding calendar year to every citizen of the United States, whether residing at
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
hereinafter provided. ...
'B. That, subject only to such exemptions and deductions as are hereinafter allowed,
the net income of a taxable person shall include gains, profits, and income derived
from salaries, wages, or compensation for personal service of whatever kind and in
whatever form paid, or from professions, vocations, business, trade, commerce,[245
U.S. 151, 153] or sales, or dealings in property, whether real or personal, growing
out of the ownership or use of or interest in real or personal property, also from
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,
devise, or descent. ...'
In the interpretation of statutes levying taxes it is the established rule not to extend
their provisions, by implication, beyond the clear import of the language used, or to
enlarge their operations so as to embrace matters not specifically pointed out. In case
of doubt they are construed most strongly against the government, and in favor of the
citizen. United States v. Wigglesworth, 2 Story, 369, Fed. Cas. No. 16,690; American
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.
As appears from the above quotations, the net income upon which subdivision 1
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
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.
In Audubon v. Shufeldt, 181 U.S. 575, 577 , 578 S., 21 Sup. Ct. 735, 736 ( 45 L. Ed.
1009), we said:
'Alimony does not arise from any business transaction, but from the relation of
marriage. It is not founded on a contract, express or implied, but on the natural and
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
alimony is regarded rather as a portion of the husband's estate to which the wife is
equitably entitled, than as strictly a debt; alimony from time to time may be regarded
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
under the court's order; and, on the other hand, the sum received by the wife on
account thereof cannot be regarded as income arising or accruing to her within the
enactment.
The judgment of the court below is affirmed.
G.R. No. L-24383 August 26, 1967
EQUITABLE INSURANCE and CASUALTY CO., INC., plaintiff-appellant,
vs.
SMITH, BELL and CO., (PHILIPPINES) INC., in its capacity as agents in the
Philippines for Klavenese Line, owner/operator of S/S "BONNEVILLE," and/or
THE BUREAU OF CUSTOMS, in its capacity as arrastre operator in the Port of
Manila, defendants-appellees.
San Juan, Laig and Associates for plaintiff-appellant.
Felipe T. Cuison for defendant-appellee Bureau of Customs.
Ross, Selph and Carrascoso for defendant-appellee Smith, Bell and Co., Inc.
SANCHEZ, J.:
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
carrier thereof, s/s "Bonneville", dropped anchor at the Port of Manila on June 18,
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
lost in the care and custody of the carrying vessel or the Bureau of Customs, plaintiff
now sues defendants in the alternative.1
Defendant Bureau of Customs moved to dismiss. Its ground: Non-suability. The lower
court's order of December 3, 1964 dismissed the case as against defendant Bureau
of Customs. Reconsideration failed. Plaintiff appealed.1äwphï1.ñët
By all means, the question thus raised is not untrodden ground. We have heretofore
declared that the Bureau of Customs cannot be a party defendant in a suit. Because,
it is neither a natural nor a juridical person nor an entity authorized by law to be sued.
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
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
not consented to the suit.
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
lodged with the Auditor General, upon the procedure delineated in Commonwealth
Act 327.
So it is that we have ruled, upon situations parallel to the present, that action against
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
cause or reason for us to override our previous decisions. We do not now propose to
depart from the ruling therein expressed.
For the reasons given, the order of December 3, 1964 dismissing this case as against
the Bureau of Customs, and the order of February 8, 1965 denying reconsideration
thereof, are hereby affirmed.
Without costs. So ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Castro,
Angeles and Fernando, JJ., concur.
45 Phil. 663
[ G.R. No. 21700, February 05, 1924 ]
LA COMPANIA GENERAL DE TABACOS DE FILIPINAS, PLAINTIFF AND
APPELLANT, VS. THE GOVERNMENT OP THE PHILIPPINE ISLANDS,
DEFENDANT AND APPELLEE.
DECISION
JOHNS, J.:
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,"
section 1 of which provides:
"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
from contract, express or implied, which could serve as a basis of civil action between
private parties.
"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
G.R. No. L-8639 (March 23, 1956)
FACTS:
Petitioner seeks to adopt four children which he claims to be his and Paz Vasquez’
children without the benefit of marriage. The Solicitor General opposed this stating
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
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
natural child for it will go against Art. 335.
ISSUE:
W/N the Civil Code allows for the adoption of acknowledged natural children of the
father or mother.
HELD:
The law intends to allow adoption whether the child be recognized or not. If the
intention were to allow adoption only to unrecognized children, Article 338 would be of
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 illegitimate children the chance to acquire these rights. The trend when it comes
to adoption of children tends to go toward the liberal. The law does not
prohibit the adoption of an acknowledged natural child which when compared to a
natural child is equitable. An acknowledged natural child is a natural child also and
following the words of the law, they should be allowed adoption.
95 Phil. 244
[ G.R. No. L-6294, June 28, 1954 ]
IN THE MATTER OF THE ADOPTION OF THE MINOR MARCIAL ELEUTERIO
RESABA. LUIS SANTOS-YÑIGO AND LIGIA MIGUEL DE SANTOS-YÑIGO,
PETITIONERS AND APPELLEES, VS. REPUBLIC OF THE PHILIPPINES,
OPPOSITOR AND APPELLANT.
D E C I S I O NBAUTISTA ANGELO, J.:
On June 24, 1952, a petition was filed in the Court of First Instance of Zamboanga by
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
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
own. It is likewise alleged that petitioners are financially and morally able to bring up
and educate the minor.
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
children, a boy and a girl, who are still minors, and as such they are disqualified to
adopt under the provisions of the new Civil Code.
The court granted the petition holding that, while petitioners have two legitimate
children of their own, yet said children were born after the agreement for adoption
was executed by petitioners and the parents of the minor. The court found that said
agreement was executed before the new Civil Code went into effect and while the
petition may not be granted under this new Code, it may be sanctioned under the old
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
of paragraph 1, article 335, new Civil Code.
"II"The lower court erred in giving Exhibit 'A', the agreement to adopt, a binding
effect."
There is merit in the contention that the petition should not be granted in view of the
prohibition contained in article 335, paragraph 1, of the new Civil Code. This article
provides that persons who have legitimate children cannot adopt, and there is no
doubt about its application because the petition was filed on June 24, 1952 and at
that time petitioners had two legitimate children, one a boy born on November 12,
1950 and the other, a girl born on April 13, 1952. This case therefore comes squarely
within the prohibition. This prohibition is founded on sound moral grounds. The
purpose of adoption is to afford to persons who have no child of their own the
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
adoption by persons who have children of their own, for, otherwise, conflicts, friction,
and differences may arise resulting from the infiltration of foreign element into a family
which already counts with children upon whom the parents can shower their paternal
love and affection (2 Manresa, 6th ed., 108-109). This moral consideration must have
influenced the framers of the new Civil Code when they reiterated therein this salutary
provision.
But it is contended, this prohibition in the new Civil Code cannot have application to
the present case because, to do so, as it is now attempted, would impair the acquired
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
child, since February 24, 1950, and on March 20, 1950 they and the parents of the
child executed the adoption agreement in accordance with the Rules of Court, and
since these rules do not forbid adoption to. persons who have legitimate children, that
agreement shall be given full effect in the same manner as any other contract which
is not contrary to law, morals and public order.
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
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
relation of paternity and filiation by fiction of law without the sanction of court. The
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
Spanish Civil Code on adoption. (Articles 173-180.) As was stated in one case, said
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
thereof. So. viewed, that chapter must be deemed to have repealed the provisions of
the Civil Code on the matter." (In readoption of Emiliano Guzman, 73 Phil., 51.) Now,
said rule expressly provides that a person desiring to adopt a minor shall present a
petition to the court of first instance of the province where he resides (section 1). This
means that the only valid adoption in this jurisdiction is that one made through court,
or in pursuance of the procedure laid down by the rule, which shows that the
agreement under consideration can not have the effect of adoption as now pretended
by petitioners.
Some members of the Court have advanced the opinion that, notwithstanding the
enactment of the Code of Civil Procedure or the adoption of the present Rules of
Court concerning adoption, those provisions of the Spanish Civil Code that are
substantive in nature cannot be considered as having been impliedly repealed, such
as the one providing that a person who has a legitimate child is prohibited to adopt
(article 74). But the majority is of the opinion that the repeal is complete as declared
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
adoption agreement was executed the petitioners had not yet any legitimate child.
Their children were born subsequent to that agreement.
We are sympathetic to the plea of equity of counsel considering the fact that
petitioners had taken custody of the child and had reared and educated him as their
own much prior to the approval of the new Civil Code and that all this was done with
the consent of the natural parents to promote the welfare and happiness of the child,
but the inexonerable mandate of the law forbids us from adopting a different course of
action. Our duty is to interpret and apply the law as we see it in accordance with
sound rules of statutory construction.
The order appealed from is set aside, without pronouncement as to costs.
 [ GR No. L-6359, Dec 29, 1953 ]
CARMEN CASTRO v. FRANCISCA SAGALES +
DECISION
94 Phil. 208
BENGZON, J.: Appeal from an order of Hon. Jesus Y. Perez of the Court of First
Instance of Bulacan dismissing plaintiffs' complaint for workmen's compensation on
the ground that the matter properly falls within the jurisdiction of the Workmen's
Compensation Commission.
Republic Act No. 772 effective June 20, 1952 conferred upon the Workmen's
Compensation Commissioner "exclusive jurisdiction" to hear and decide claims for
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
submitted to the regular courts.
The fatal accident which befell Dioscoro Cruz, husband of plaintiff Carmen Cruz,
having occurred in January 1952 and action having been commenced in the Court of
First Instance of Bulacan in August, 1952, the resultant issue is the proper forum:
either the courts or the Workmen's Compensation Commission.
For the appellants it is contended that the date of the accident, and not the date of
filing the complaint, should be considered because the right to compensation of the
laborer or employees or his dependents, like the obligation of the employer to pay the
same, begins from the very moment of the accident.
It is true that the right arises from the moment of the accident, but such right must be
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
petition. Republic Act No. 772 is very clear that on and after June 20, 1952 all claims
for compensation shall be decided exclusively by the Workmen's Compensation
Commissioner, subject to appeal to the Supreme Court. This claim having been
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
may be interposed to the application of the law conferring jurisdiction upon the
Commission, because the statute does not thereby operate retroactively; it is made to
operate upon claims formulated after the law's approval. As attorney for appellee
suggests, had the claim been filed before the effectivity of Republic Act No. 772 in a
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
which takes away or impairs vested rights acquired under existing laws, or creates a
new obligation and imposes a new duty, or attaches a new disability, in respect of
transactions or consideration already past. Hence, remedial statutes, or statutes
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
already existing, do not come within the legal conception of a retrospective law, or the
general rule against the retrospective operation of statutes" (50 Am. Jur. p. 505).
A parallel situation is not far to seek. The right of the heirs to the decedent's estate
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
persons who had died before its approval. The creation of the People's Court to try
treason cases arising from acts committed during the Japanese occupation is another
example of recent times.
It is argued that Republic Act No. 772 should not be enforced as to accidents
happening before its approval, because it has introduced changes affecting vested
rights of the parties. Without going into details, it might be admitted that changes as to
substantive rights will not govern such "previous" accidents. Yet here we are dealing
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
particular court's jurisdiction.
In the United States actions pending in one court maybe validly taken away by statute
and transferred to another (See 21 C. J. S., p. 148).
Wherefore, the appealed order is affirmed, without costs.
Paras, C. J., Pablo, Padilla, Tuason, Reyes, Jugo, Bautista Angelo and Labrador,
JJ., concur.
Lichauco v. Apostol, G.R. No. L-19628 (44 PHIL 138), December 4, 1922
Facts:
Petitioner, a corporation duly organized under the Phil. laws, engaged for several
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
manufacture of serum. However, respondent Director of Agriculture refused to admit
said cattle except upon condition that drafts be immunized. Petitioner however
contends that the respondent has no authority over the matter, invoking section 1762
of the Administrative Code, as amended by Act No. 3052. On the other hand, relying
upon section 1770 of the Administrative Code, Admin. Order No. 21 of the Bureau of
Agriculture, and Dept. Order No. 6 of the Secretary of Agriculture and Natural
Resources, respondent maintained its decision. Hence, the issue.
Issue: Whether or not section 1770 (and other similar acts) has been repealed by
implication by Act 3052 and hence cannot be applied with the case at bar?
Held and Reasoning: No. The Court ruled that the contention of the petitioner is
untenable for the reason that the invoked section 1762, as amended, is obviously of a
general nature while 1770 is a particular one. Section 1770 is therefore not
inconsistent with section 1762 and instead be considered a special qualification of the
latter provision. Moreover, the court emphasized that “specific legislation upon a
particular subject is not affected by a general law upon a same subject unless it
clearly appears that the provision of the two laws are so repugnant..xxx…The special
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
Administrative Code remains in effect and serves as a supplementary provision to
section 1762, as amended.
[ GR No. 19628, Dec 04, 1922 ]
LICHAUCO v. SILVERIO APOSTOL +
DECISION
44 Phil. 138
STREET, J.:
This is an original petition for the writs of mandamus and injunction, filed in this court
by Lichauco & Company against the respondents, Silverio Apostol, as Director of
Agriculture, and Rafael Corpus, as Secretary of Agriculture and Natural Resources.
An order having been issued by this court requiring the respondents to appear and
show cause why the relief prayed for should not be granted, the Attorney-General
presented a return, in the nature of a demurrer, in their behalf; and the cause is now
before us for the determination of the questions thus presented.
It is alleged in the complaint that the petitioner is a corporation duly organized under
the laws of the Philippine Islands and that it has been engaged for several years in
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
shipment of draft cattle and bovine cattle for the manufacture of serum but that the
respondent Director of Agriculture refuses to admit said cattle, except upon the
condition, stated in Administrative Order No. 21 of the Bureau of Agriculture, that said
cattle shall have been immunized from rinderpest before embarcation at Pnom-Pehn.
The petitioner therefore asks for an order requiring the respondents to admit the
contemplated importation of cattle into the Islands and enjoining them from the
enforcement of said administrative order in the future.
The petitioner asserts that under the first proviso to section 1762 of the Administrative
Code, as amended by Act No. 3052 of the Philippine Legislature, it has "an absolute
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
Agriculture and Natural Resources, as supplying authority for the action taken.
Such portions of the laws above-mentioned as are material to the present controversy
will be set out in full, preceded by section 1762 of the Administrative Code, as
originally enacted, to which will be appended the pertinent parts of the orders referred
to and the communication of the Director of Agriculture of August 31,1922.
1. First paragraph of section 1762 of Administrative Code in original form:
"SEC. 1762. Bringing of diseased animal into Islands forbidden. Except upon
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
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
liable to introduce such disease into the Philippine Islands."
2. First paragraph of section 1762 of Administrative Code, as amended by Act
No. 8052 of the Philippine Legislature:
"SEC. 1762. Bringing of animals imported from foreign countries into the Philippine
Islands. It shall be unlawful for any person or corporation to import, bring or introduce
live cattle into the Philippine Islands from any foreign country. The Director of
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
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
head per annum: Provided, however, That the Director of Agriculture shall in all cases
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
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
approval of the head of the department, prior to authorizing its transfer to other
provinces."
3. Section 1770 of Administrative Code:
"SEC. 1770. Prohibition against bringing of animals from infected foreign countries.
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
there is danger of spreading such disease by the importation of domestic animals
therefrom, it shall be unlawful for any person knowingly to ship or bring into the
Philippine Islands any such animal, animal effects, parts, or products from such place,
unless the importation thereof shall be authorized under the regulations of the Bureau
of Agriculture,"
4. Department Order No. 6, promulgated on July 28, 1922, by Secretary of
Agriculture and Natural Resources:
"DEPARTMENT ORDER No. 6 } Series of 1922
"Owing to the fact that a dangerous communicable disease known as rinderpest
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
of the Philippine Islands of 1917), that rinderpest prevails in said countries, and as
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
Philippine Islands any such animal, animal effects, parts, or products from Hongkong,
French Indo-China and British India, unless the importation thereof shall be
authorized under the regulations of the Bureau of Agriculture.
"The provisions of this order shall take effect on and after August 1, 1922."
5. Administrative Order No. 21, of the Bureau of Agriculture, promulgated July
29, 1922, by the Director of Agriculture:
"ADMINISTRATIVE ORDER NO. 21. }
"Re importation of cattle, carabaos, and pigs from French Indo-China, Hongkong
and India.
"1. Pursuant to the provisions of Department Order No. 6, series of 1922, of the
Department of Agriculture and Natural Resources, the present regulations of the
Bureau of Agriculture governing the importation of livestock from French Indo-China
and Hongkong are hereby amended to the effect that the importation of livestock of
the species named in the aforementioned Department Order is hereby prohibited from
French Indo-China, Hongkong and India. However, animals immunized against
rinderpest, for which the importer before placing his order shall have obtained from
the Director of Agriculture a written permit to import them from the above named
countries, may be allowed entrance into the Philippine Islands.
"2. This order shall take effect on and after August 1, 1922."
6. Communication of August 31, 192%, from the Acting Director of Agriculture to
Faustino Lichauco (in part):
"SIR: In reply to your application for permission to import from 300 to 400 carabaos
immunized against rinderpest from Pnom-Pehn, French Indo-China, I have the honor
to inform you that the permission is hereby granted, under the following conditions:
"1. Animals must be immunized by the simultaneous method before shipment. At
least 10 c. c, of good virulent blood must be injected at the first injection
simultaneously with the serum. Ten days after the simultaneous inoculation all non-
reactors must receive another injection of not less than 10 c. c. of virulent blood
(alone).
"2. The immunization must be done by a veterinarian designated by the French
Government for the purpose, who must issue a certificate stating the fact that the
animal has been immunized according to the requirements in number 1 and it must
not be embarked until ten days after the second injection of virulent blood.
"* * * * * * *
"Very respectfully,
"SILVERIO APOSTOL,
"Acting Director of Agriculture."
Upon glancing over the matter above collated, it will be seen at once that section
1770 of the Administrative Code on its face authorizes the action taken by the
Secretary of Agriculture and Natural Resources in closing our ports (in the manner
and to the extent indicated in Department Order No. 6) to the importation of cattle and
carabao from French Indo-China, supposing of course, as everybody knows and as
the petitioner does not deny, that the disease of rinderpest exists in that country.
It is claimed, however, that section 1762 of the Administrative Code, so far as it
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,
which is of later enactment than the Administrative Code; and in this connection
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
Agriculture shall in all cases permit the importation, bringing or introduction of draft
cattle and bovine cattle for the manufacture of serum." This then is the first and
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
manufacture of serum. We say repealed by implication, for it will be noted that that
Act No. 3052 has no repealing clause, and it contains only one section, i. e., that
amending section 1762 of the Administrative Code.
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
deals with a particular contingency not made the subject of legislation in section 1762.
Section 1770 is therefore not to be considered as inconsistent with section 1762, as
amended; on the other hand, it must be treated as a special qualification of section
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
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
Act (3052).
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
animals into the Islands at any time and from any place, section 1770 confers on the
Department Head a special power to deal with the situation which arises when a
dangerous communicable disease prevails in some defined foreign country, and the
provision is intended to operate only so long as that situation continues. Section 1770
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
administrative authorities here would be powerless to protect the agricultural industry
of the Islands from the spread of animal infection originating abroad.
We note that the argument for unrestricted importation extends only to the importation
of cattle for draft purposes and bovine cattle for the manufacture of serum, leaving
section 1770 theoretically in full effect as regards the importation of cattle for other
purposes, as where they are imported for slaughter; but the importation of cattle for
draft purposes is the principal thing, and unless that can be regulated under the
conditions and to the extent attempted by the respondents in this case, the power
given in section 1770 is obviously worthless.
In our opinion section 1762, as amended, and section 1770 must be construed in pari
materia as harmonious parts of the law dealing with animal quarantine; and section
1762, as amended, can be given effect only in so far as it is not restricted by section
1770. Here, as always, the general must yield to the particular.
If the Congress of the United States should this day repeal the Chinese Exclusion
Law so far as it affects these Islands, and should declare that all persons of Chinese
nationality shall be at liberty to enter the Philippine Islands without restriction, would
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
might hereafter be raging in epidemic form? Yet the question now before us is not
fundamentally different from the one thus supposed.
The judicial precedents are conclusive to the effect that no implied repeal of a special
provision of the character of the one now under consideration will result from the
enactment of broader provision of a general nature. In other words, a general statute
without negative words does not repeal a previous statute which is particular, even
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.)
Wherever there is a particular enactment and a general enactment in the same
statute, and the latter, taken in Its most comprehensive sense, would overrule the
former, the particular enactment must be operative, and the general enactment must
be taken /to affect only the other parts of the statute to which it may properly apply.
(Sir John Romilly, Master of the Rolls, in Pretty vs. Solly, 26 Beav., 606, 610.)
The additional words of qualification needed to harmonize a general and a prior
special provision in the same statute should be added to the general provision, rather
than to the special one. (Rodgers vs. United States, 185 U. S., 82; 46 L, ed., 816.)
Specific legislation upon a particular subject is not affected by a general law upon the
same subject unless it clearly appears that the provisions of the two laws are so
repugnant that the legislators must have intended by the later to modify or repeal the
earlier legislation. The special 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. (Ex
Parte United States, 226 U. S., 420; 57 L. ed., 281; Ex Parte Crow Dog, 109 U. S.,
556; 27 L. ed., 1030; Partee vs. St. Louis & S. F. R. Co., 204 Fed. Rep., 970.)
Where there are two acts or provisions, one of which is special and particular, and
certainly includes the matter in question, and the other general, which, if standing
alone, would include the same matter and thus conflict with the special act or
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
are contemporaneous, as the Legislature is not to be presumed to have intended a
conflict. (Crane vs. .Reeder and Reeder, 22 Mich., 322, 334; University of Utah vs.
Richards, 77 Am. St. Rep., 928.)
It is well settled that repeals by implication are not to be favored. And where two
statutes cover, in whole or in part, the same matter, and are not absolutely
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
that the Legislature intended by a later statute to repeal a prior one on the same
subject, unless the last statute is so broad in its terms and so clear and explicit in its
words as to show that it was intended to cover the whole subject, and therefore to
displace the prior statute. (Frost vs. Wenie, 157 U. S., 46; 39 L. ed., 614, 619.)
As stated in the pages of the two most authoritative legal encyclopedias, the rule is
that a prior legislative apt will not be impliedly repealed by a later act unless there is a
plain, unavoidable and irreconcilable repugnancy between the two. If both acts can by
any reasonable construction stand together, both will be sustained. (36 Cyc., 1074-
1076; 26 Am. & Eng. Encyc. Law, 2d ed., 725-726.)
A masterly analysis of the decisions of the United States Courts pertinent to the
matter now in hand will be found in the monographic article on "Statutes and
Statutory Construction," written by Chas. C. Moore and prefixed as a General
Introduction to Federal Statutes Annotated. The discussion there given is too lengthy
to be here reproduced in full, but some of the observations of the learned author are
so appropriate to the case before us that we cannot forego the temptation to include
the same in this opinion. Says the writer: "The various provisions of an act should be
read so that all may, if possible, have their due and conjoint effect without repugnancy
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
absolute harmony between parts of a statute is demonstrably non-existent, the court
must reject that one which is least in accord with the general plan of the whole, or if
there be no such ground for choice between inharmonious sections, the later section
being the last expression of the legislative mind must, in construction, vacate the
former to the extent of the repugnancy." (1 Fed. Stat. Ann., 2d ed., 49-50.)
And speaking with reference to the rule by which special provisions are held to
dominate over general provisions in the same or later laws, the author proceeds: " 'It
is an old and familiar rule said Mr. Justice Lamar, 'that where there is in the same
statute a particular enactment, and also a general one, which in its most
comprehensive sense would include what is embraced in the former, the particular
enactment must be operative, and the general enactment must be taken to affect only
such cases within its general language as are not within the provisions of the
particular enactment.' And the Justice proceeded to apply that rule in the construction
of a statute upon which there had been much ingenious argument and a decided
conflict of authority in the inferior federal courts. The statute was an act of Congress
of 1876, declaring nonmailable 'every obscene * * * book, pamphlet, paper, writing,
print, or other publication of an indecent character,' and other enumerated articles,
and making it a misdemeanor to deposit any of them for mailing. In a prosecution
under the act, the Circuit Court certified to the Supreme Court the following Question:
Is the knowingly depositing in the mails of an obscene letter, inclosed in an envelope
or wrapper upon which there is nothing but the name and address of the person to
whom the letter is written, an offense within the act?' On behalf of the government it
was contended that the word 'writing' comprehended such a letter, but the Supreme
Court held otherwise. In the course of his argument in support of the view of the court,
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
envelope of which * * * indecent, lewd, obscene, or lascivious delineations, epithets,
terms, or language may be written or printed * * * shall not be conveyed in the mails,'
and the person knowingly or willfully depositing the same in the mails 'shall be
deemed guilty of a misdemeanor,' etc. 'This distinctly additional clause/ continued the
Justice, 'specifically designating and describing the particular class of letters which
shall be nonmailable, clearly limits the inhibitions of the statute to that class of letters
alone whose indecent matter is exposed on the envelope.'" (1 Fed. Stat. Ann., 2d ed.,
50-51; also at pp. 164-166.)
The cases relating to the subject of repeal by implication all proceed on the
assumption that if the act of later date clearly reveals an intention on the part of the
law-making power to abrogate the prior law, this intention must be given effect; but
there must always be a sufficient revelation of this intention, and it has become an
unbending rule of statutory construction that the intention to repeal a former law will
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
to special. It is therefore idle to speculate whether in the case before us the Philippine
Legislature may or may not have intended to modify or abrogate section 1770 of the
Administrative Code at the time the amendment to section 1762 was enacted, for if
any such intention was entertained, it was not revealed in a way that would justify a
court in giving this intention effect. We may add, however, that, in the opinion of the
majority of the Justices participating in this decision, the Legislature in amending
section 1762 could not possibly have entertained a design to modify section 1770; for,
as we have already shown, the abrogation of that provision, even as regards draft
animals alone, would leave the animal industry of the Islands exposed to the danger
incident to the unrestricted importation of infected animals from districts where
rinderpest prevails. The unreasonableness of this interpretation of the amendatory
law alone supplies sufficient warrant for rejecting it. The Legislature could not possibly
have intended to destroy the effectiveness of quarantine as regards imported
animals.
Our conclusion then is that section 1770 of the Administrative Code remains in full
force; and the determination of this question is we think necessarily fatal to the
petitioner's case.
It is insisted, however, that even supposing section 1770 of the Administrative Code
to be in force, nevertheless, the requirement of immunization at the port of
embarcation is unreasonable, inasmuch as the immunization of the cattle at that port,
under the supervision of the Government veterinarians of French Indo-China, is not
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,
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.
Upon the whole we are of the opinion that the petition does not show sufficient ground
for granting the writs of mandamus and injunction. The demurrer interposed thereto
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
this cause, dated September 21, 1922, is dissolved; and unless within five days after
notification hereof the petitioner shall so amend his petition as to show a sufficient
cause of action, an order absolute will be entered, dismissing the same, with costs.
So ordered.
Malcolm, Avanceña, Villamor, and Ostrand, JJ., concur.

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
Facts:
Issues:
- Accused-appellant Michael Butler and the victim, Enriquita Alipo alias Gina
Barrios were together at Colonial Restaurant in Olongapo City.
- They were seen together by Lilia Paz, an entertainer and friend of the victim,
who claimed to have had a small conversation with the accused and one
Rosemarie Suarez.
- The accused left the restaurant with the victim together with Rosemarie.
- Emelita Pasco, housemaid of the victim testified that Gina came home with
Michael. They immediately went into the former’s bedroom. Shortly thereafter,
the victim left the room with a paper containing the ff. words: MICHAEL
BUTLER, 44252-8519 USS HANCOCK.
- She then rushed back to her room after instructing Pasco to wake her up in
the morning. But before retiring. Rosemarie arrived and had a small
conversation with her.
- 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
apart with a broken figurine beside her head. She immediately called the
landlord and the authorities.
- An investigation was conducted by the authorities. After being located and
identified as a crew member of USS Hancock, the accused was brought to the
legal office of the ship. The accused was searched, handcuffed and was
brought to the Naval Investigation Services Resident Agency office.
- The result of the NISRA investigation was a document taken from the accused
consisting of 3 pages signed and initialed on all pages by him and containing
a statement that he was aware of his constitutional rights and a narration of
the facts of the case.
- Dr. Roxas testified that the anal intercourse happened after the victim’s death.
He also testified that the victim died of asphyxia due to suffocation when
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
a minor at the time the offense was committed. The motion was denied. A
motion for reconsideration was subsequently filed which was also denied.
Hence, a petition for mandamus.
1. WON the trial court erred in giving full credence to the testimony of the
prosecution witness
- As a matter of established jurisprudence, the findings of the trial court on
credibility of a witness are not disturbed on appeal unless there is a showing
that it failed to consider certain facts and circumstances which would change
the same.
- There were three persons who identified the accused. the finger print
examination showed that one of the three prints lifted from the cellophane
wrapping of the figurine was identical with the accused finger; and the
accused failed to present clear and positive evidence to overcome the
scientific and specific finding and conclusion of the medico-legal officer.
2. WON the trial court erred in admitting in evidence the alleged extra-judicial
admission of the accused and appreciating it against him
- Contrary to what the counsel for the accused-appellant contends, there is no
evidence showing that the accused was roughly handed from the very start.
Neither is there any evidence to prove that he was first handcuffed and
informed that he was first handcuffed and informed that he was a suspect in a
murder case before he was warned of his rights.
- While it may be true that a considerable span of time elapsed from the
moment the accused was brought to the NISRA office to the time the
interrogation was begun and reduced to writing, there is no competent
evidence presented to support the allegation that the statement made by the
accused was a result of pressure and badgerings.
3. WON the trial court erred in finding the accused guilty of the crime of murder
qualified by abuse of superior strength
- The Court holds that there was an abuse of superior strength attending the
commission of the crime. It is not only the notorious advantage of height that
the accused had over the hapless victim, but also his strength which he
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
strength simultaneously and separately
- The evidence on record, however, is not sufficient to show clearly and prove
distinctly that treachery attended the commission of the crime since there was
no eyewitness account of the killing.
5. WON the trial court erred in accepting the testimony of Dr. Roxas, the medico-
legal Officer, that asphyxiation by suffocation was the cause of death of the
victim
- The Court sustains the finding of the lower court that the aggravating
circumstance of outraging or scoffing at the corpse of the deceased applies
against the accused since it is established that he mocked or outraged the
person or corpse of his victim by having an anal intercourse with her after she
was already dead.
- The fact that the muscles of the anus did not close and also the presence of
spermatozoa in the anal region as testified to by Dr. Roxas and confirmed to
be positive in the Laboratory Report clearly establishes the coitus after death.
6. WON the trial court erred in denying the accused the benefits of Sec. 192 of
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.
- The amendment to keep away from its beneficient provision cases of
conviction of a minor when penalty imposed is death cannot prejudice the
accused whose case was pending appeal when the amendment took effect.
Disposition: The case against the accused is DISMISSED. Civil liability imposed upon
him by the lower court shall remain.
DISSENTING OPINION
Aquino, J
- The speculations of the medico-legal officer and the trial judge that there was
posthumous sodomy are unwarranted. The prosecution is bound by Butler’s
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 victim.
- The confession also proves that Butler did not intend to commit so grave a
wrong as that which he committed and that he was intoxicated at the time the
killing was perpetrated.
- I dissent from the ponente’s opinion that Butler should have been given a
suspended sentence and that, by reason of his good behavior while confined
in the Subic Naval Base Stockade , he should now be released and
discharged.
- If at the time the case is decided by this Court, the accused is no longer a
minor with more reason, he is not entitled to a suspended sentence.
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 16475 November 8, 1921
SUN LIFE ASSURANCE COMPANY OF CANADA, plaintiff-appellee,
vs.
FRANK B. INGERSOLL, as assignee of the insolvent estate of DY POCO, and
TAN SIT, administratrix of the estate of Dy Poco, deceased, defendants.
TAN SIT, appellant.
Crossfield & O'Brien for appellant.
Ross & Lawrence for assignee.
No appearance for appellee.
STREET, J.:
This is an action of interpleader filed by the Sun Life Assurance Company, pursuant
to section 120 of the Code of Civil Procedure, in order to compel the two defendants
to interplead and litigate their claims to the proceeds of a policy of insurance which
the plaintiff had issued upon the life of one Dy Poco, now deceased. The defendants
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
Poco, and the second as the administratrix of his estate. After hearing the cause, his
Honor, Judge James A. Ostrand, declared that Frank B. Ingersoll, the assignee in
insolvency had the better right and ordered the Insurance Company to pay the money
to him. From this judgment Tan Sit appealed.
It appears in evidence that on April 16, 1918, the plaintiff, the Sun Life Assurance
Company of Canada, in consideration of the payment of a stipulated annual premium
during the period of the policy, or until the premiums had been completely paid for
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
assured or his assigns on the 21st day of February, 1938, and if he should die before
that date, then to his legal representatives. On June 23, 1919, the assured, Dy Poco,
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,
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
of his intestate estate.
By the terms of the policy it was provided that after the payment of three full
premiums, the assured could surrender the policy to the company for a "cash
surrender value," indicated in an annexed table; but inasmuch as no more than two
premiums had been paid upon the policy now in question up to the time of the death
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
concession to the assured in the event he had desired, before his death, to surrender
the policy. It must therefore be accepted that this policy had no cash surrender value,
at the time of the assured's death, either by contract or by conventional practice of the
company in such cases.
The solution of the case depends upon the interpretation to be placed by us upon
certain provisions of our Insolvency Law (Act No. 1956), but as the problem is by no
means free from difficulty, we deem it advisable to state at the outset the results
reached by the Supreme Court of the United States in dealing with a similar problem
under the provisions of the Federal Bankruptcy Act of 1898.
In the first place that court has held that the title of the trustee is determined as of the
date when the petition of bankruptcy is filed, and that the circumstance that the death
of the insolvent occurs after the petition is filed but before the adjudication of
bankruptcy does not give the trustee any additional right to the proceeds of the policy,
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
deceased is entitled to exercise the same rights that the deceased himself might have
exercised, with reference to the policy and its proceeds. (Andrews vs. Partridge 228
U. S., 479; 57 L. ed., 929.)
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.
32, Act No. 1956). This transfer, however, relates back to the commencement of the
proceedings in insolvency, and the result is the same as under the American statute.
Upon the question of the extent of the right or title, which the trustee acquires to
insurance in existence on the life of the insolvent upon the date of the filing of the
petition in bankruptcy, great diversity of opinion formerly existed in the Federal
tribunals; and great uncertainty upon this point prevailed until the case of
Burlingham vs. Crouse (228 U.S., 459; 57 L. ed., 920; 46 L.R.A. [N. S.], 148) was
decided a few years ago by the Supreme Court of the United States.
The provision of law under consideration in that case was section 70 (a) of the
Bankruptcy Act of 1898.1 In the part here material to be quoted said provision is as
follows:
The trustee of the estate of a bankrupt, upon his appointment and qualification, and
his successor or successors if he shall have one or more, upon his or their
appointment and qualification, shall in turn be vested by operation of law with the title
of the bankcrupt, as of the date he was adjudged a bankcrupt, except in so far as it is
to property which is exempt, to all (1) documents relating to his property; (2) interests
in patents, patent rights, copyrights, and trade-marks; (3) powers which he might
have exercised for his own benefit, but not those which he might have exercised for
some other person; (4) property transferred by him in fraud of his creditors; (5)
property which, prior to the filing of the petition, he could by any means have
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,
which has a cash surrender value payable to himself, his estate, or personal
representatives, he may within thirty days after the cash surrender value has been
ascertained and stated to the trustee by the company issuing the same, pay or secure
to the trustee the sum so ascertained and stated, and continue to hold, own, and
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
trustee as assets.
Upon the inspection of this provision it will be seen that by the general language used
in the part preceding the proviso, and especially by the words used in the fifth
subsection, practically everything in the nature of property pertaining to the bankcrupt
is vested in the trustee, subject — in the case of insurance policies — to the limitation
expressed in the proviso.
Now, prior to the decision in Burlingham vs. Crouse, supra, the idea more generally
prevailing in the Federal courts appears to have been to the effect that any policy of
insurance in force upon the life of the bankrupt would, under the general language
above quoted, necessarily pass to the trustee in bankruptcy but for the proviso, which
enables the bankrupt to rescue certain policies, namely, those having a "cash
surrender value" by redeeming them from the trustee upon paying to him said
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
surrender value, but not otherwise limiting the general words of the statute.
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 right to redeem policies having a cash surrender value but of limiting the general
language preceding the proviso in such manner that a policy having no surrender
value does not vest in the trustee in bankruptcy at all. In other words, the proviso itself
contains a definitive statement of the rights of the trustee in bankruptcy to the
insurance effected prior to the insolvency on the life of the insolvent; and therefore the
trustee can in no event take any insurance from the insolvent other than that which
has a cash surrender value. This result was reached by declaring that the proviso
fulfilled the office of a proviso proper, which is, to limit the general language which
precedes it.
At the same time the court accepted the proposition that a policy of insurance is
property, though admittedly of a peculiar character; and it further suggested that, but
for the limiting effect of the proviso, the general words used in the statute would
apparently have been sufficient to pass the policy there in question to the trustee in
bankruptcy.
Upon inspection of the Insolvency Law in force in these Islands (Act No. 1956), it will
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,
is not decisive of the case before us; and furthermore, as will be readily seen, its
implications are not particularly favorable to the pretensions of the appellant.
The property and interests of the insolvent which, under the law here in force,
become vested in the assignee of the insolvent are specified in section 32 of the
Insolvency Law which, in the part here material to be stated, reads as follows:
SEC. 32. As soon as an assignee is elected or appointed and qualified, the clerk of
the court shall, by an instrument under his hand and seal of the court, assign and
convey to the assignee all the real and personal property, estate, and effects of the
debtor with all his deeds, books, and papers relating thereto, and such assignment
shall relate back to the commencement of the proceedings in insolvency, and shall
relate back to the acts upon which the adjudication was founded, and by operation of
law shall vest the title to all such property, estate, and effects in the assignee,
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
debtor not exempt by law from execution.
Now, it is a well-known fact in our legislative history that the Insolvency Law (Act No.
1956) is in great part a copy of the Insolvency Act of California, enacted in 1895,
though it contains a few provisions from the American Bankruptcy Law of 1898 (see
observation of Justice Trent in Mitsui Bussan Kaisha vs. Hongkong and Shanghai
Banking Corporation, 36 Phil., 27, 37). Again, upon comparing the California
Insolvency Law of 1895 with the American Bankruptcy Act of 1867, it will be found
that the former contains much in common with the latter; and among the provisions
common to the Bankruptcy Act of 1867, the California Insolvency Law of 1895, and
the Insolvency Law in force in these Islands (Act No. 1956), is precisely the provision
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
Law of 1895, sec. 21; Philippine Insolvency Law, sec. 32.)
Under each of said laws the assignee acquires all the real and personal property,
estate, and effects of the debtor, not exempt by law from execution, with all deeds,
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
1898 in the least two particulars; for under subsection 3 of section 70 (a) of the last
mentioned law, the trustee in bankruptcy acquires the right to exercise any powers
which the insolvent might have exercised for his own benefit, and under subsection 5
the trustee acquires any property of the insolvent which the latter could by any means
have assigned to another. The Insolvency Law here in force, in common with the
predecessor laws above-mentioned, contains nothing similar to these provisions.
Having discovered the source of section 32 of our Insolvency Law to be in the
American Bankruptcy Act of 1867, we may properly look to the decisions of the courts
of the United States as instructive upon any question of interpretation arising in the
application of said section; and in this connection we find a pertinent opinion from one
of the Federal courts, dealing with the very question whether an assignee in
bankruptcy acquires the title to a policy of insurance over and above the net reserve
or cash surrender value, upon which point the decision is to the effect that he does
not.
The case to which we refer is that of In re McKinney (15 Fed., 535), which arose upon
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
assigns. The policy was continued in force until his death in October, 1882. Before
this event had occurred, however, the insured had been adjudicated a bankrupt and
had in fact secured a discharge from the court of bankruptcy.
Said policy of insurance had been mentioned in the schedule of assets submitted in
the insolvency proceedings, but the assignee took no steps in reference to it; and all
premiums accruing after the adjudication of insolvency were paid by the wife of the
insolvent out of her own funds, she supposing that the policy would inure to her
benefit.
After the death of the insured, his assignee in bankruptcy was directed to transfer to
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
approximately as of the date when the assignee obtained title to the assets of the
bankrupt.
In passing upon the facts above stated the court declared that no beneficial interest in
this policy had ever passed to the assignee over and beyond what constituted the
surrender value, and that the legal title to the policy was vested in the assignee
merely in order to make the surrender value available to him. The conclusion
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
keep the estate unsettled for an indefinite period, for the mere purpose of speculating
upon the chances of the bankrupt's death. The speedy settlement of the estates of
bankrupts, as contemplated by law, is incompatible with such course. Moreover, it
was observed that, as regards everything beyond the surrender value, the assignee
in bankruptcy would, after the discharge of the bankrupt, have no insurable interest in
the life of the bankrupt.
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
insurance, and of the manner in which such value is acquired. Upon this point it was
observed that the surrender value of a policy "arises from the fact that the fixed
annual premiums is much in excess of the annual risk during the earlier years of the
policy, an excess made necessary in order to balance the deficiency of the same
premium to meet the annual risk during the latter years of the policy. This excess in
the premium paid over the annual cost of insurance, with accumulations of interest,
constitutes the surrender value. Though this excess of premiums paid is legally the
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
premiums to cover the annual cost of insurance, instead of being retained by the
assured and paid by him to the company in the shape of greatly-increased premiums,
when the risk is greatest. It is the 'net reserve' required by law to be kept by the
company for the benefit of the assured, and to be maintained to the credit of the
policy. So long as the policy remains in force the company has not practically any
beneficial interest in it, except as its custodian, with the obligation to maintain it
unimpaired and suitably invested for the benefit of the insured. This is the practical,
though not the legal, relation of the company to this fund.
Upon the surrender of the policy before the death of the assured, the company, to be
relieved from all responsibility for the increased risk, which is represented by this
accumulating reserve, could well afford to surrender a considerable part of it to the
assured, or his representative. A return of a part in some form or other is now usually
made. (In re McKinney, 15 Fed., 535, 538.)
In this connection it may be observed that the stipulation providing for a cash
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
organizations and benefit societies — for the payment of a premium sufficient to keep
the estimated risk covered; and in case of a lapse the policy-holder received nothing.
Furthermore, the practice is common among insurance companies even now to
concede nothing in the character of cash surrender value, until three full premiums
have been paid, as in the policy now before us.
In the course of the same opinion, his Honor, Judge Brown, discussing the legal
aspects of the case then before him, said:
To the extent of its actual cash surrender value, therefore, this policy, at the time of
the bankruptcy, was "property" and "effects" of the bankrupt within sections 5044,
5046, of the Revised Statutes, and as such passed to the bankrupt's assignee. So far
as necessary to make the cash surrender value available, the title to the policy also
passed to the assignee, so that he might thereafter either surrender it to the
company, or assign it over, either to the bankrupt, or to any other person having an
insurable interest in his life, on receiving payment of the surrender value at the time,
or so much of it as the assignee might be able to obtain.
Beyond this interest in the surrender value I think nothing passed to the assignee in
bankruptcy save the naked title to the policy in order to make that interest available.
As an executory contract, aside from its surrender value, the policy had no pecuniary
value whatever. Assuming that the bankrupt had the average expectation of life, as a
mere contract for future insurance it would be a burden rather than a benefit to the
estate; for, whatever might be afterwards obtained from it, (beyond the present
surrender value), a still greater sum must presumably be paid out in the shape of
future premiums and interest in order to keep the policy alive, since these premiums,
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,
aside from its surrender value the policy was not "property" or "effects," but an
incumbrance which the assignee would be bound to reject, like leases at an
unfavorable rent. . . . In such cases the assignee has at least an election to reject the
contract; and if, knowing its terms, he does nothing to avail himself of it, and allows
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,
15 Fed., 535, 538.)
We have quoted at length from this opinion and consider it the more respectable,
because it has been cited or quoted with approval more than once by the Supreme
Court of the United States (Holden vs. Stratton, 198 U.S., 202; 49 L. ed., 1018;
Hiscock vs. Mertens, 205 U.S., 202; 51 L ed., 771; Burlingham vs. Crouse, 228 U. S.,
459, 469), — an approval which certainly would not have been given if the reasoning
along which that decision proceeds had been considered specious or unsound.
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
assets for an assignee in insolvency only to the extent of its realizable value is
corroborated by the decision of the Court of Appeal of Great Britain in Holt vs. Everall
(2 Ch. Div., 266), which arose under the English Bankrupt Act of 1869. It there
appeared that in 1870 a trader effected policies of insurance on his own life. In the
following year, wishing that his wife might have the benefit of the policies, under the
married woman's act, he surrendered them to the insurance company, and received
in substitution therefor policies at the same premiums, payable on the same day, and
entitled to the same privileges, as the former, and which provided that the sums
assured should be paid to the wife. Within two years from the date of the substitute
policies the husband liquidated, dying before the discharge. The trustee claimed the
insurance.
All of the Lords Justices were of the opinion that the old policies, having no surrender
value, could not have been available as assets to the trustee, and therefore that the
disposition made of them by the insured was not obnoxious to the Bankrupt Act.
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
husband obtained the policies in question. If the husband at that time had anything of
value, and that was given up as part of the consideration of the new policies, there
might be this question; but i am satisfied that that which was given up was not of any
value whatever; that there was, in fact, nothing taken away from the creditors, and
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 existing policies of 1870, which he might at any moment have given up or
forfeited, or dealt with as he thought fit. There is, therefore, nothing substantial arising
from the fact that the policies of 1871 were in exchange for the policies of 1870." (2
Ch. Div., 273-274.)
And Mellish, L. J., added: "In this case the old policies were really worth nothing; they
were policies which an insolvent trader, knowing that he was going to become a
bankrupt, would naturally allow to drop, as he could have no interest in keeping up a
policy and paying the premiums for the benefit of his creditors; or perhaps not even
for their benefit, because if the policy were such as these were, which had only been
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 case of Morris vs. Dodd (110 Ga., 606; 50 L. R.. A., 33) from the year 1900 is to
the same effect; and although this case was decided after the American Bankruptcy
Act of 1898 had been enacted, the reasoning proceeds along the line suggested in In
re McKinney and Holt vs. Everall, supra. The facts in Morris vs. Dodd, supra, were,
briefly, that a husband, within four months prior to the filing of his petition in
bankruptcy, had transferred to his wife an insurance policy which before such transfer
had been payable to his legal representatives. The policy had no cash surrender
value either when the transfer was made or when the petition in bankruptcy was filed.
Upon the death of the husband pending the proceedings in bankruptcy, it was held
that the wife was entitled to the proceeds of the policy. Said the court: "The purpose
of the bankruptcy act is to take the property owned by the bankrupt when the petition
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
such debts. This being true, it is apparent that the creditors represented by the
trustee, whose debts cannot continue against the bankrupt, can have no insurable
interest in his life for the purpose of indemnifying themselves against loss." (50 L. R.
A., 44.)
Numerous decisions of later date, tending to the same conclusion, could be cited from
the Federal courts of the United States, but inasmuch as these decisions have been
rendered under the regime of the Bankrupt Law of 1898, already discussed, we omit
mention of particular cases; and in this connection it suffices to refer to section 207 of
the title Bankruptcy (7 C. J., 122), under which the pertinent cases are collated.
The authorities above marshaled clearly exhibit the resolute attitude of courts, both
high and low upon the proposition that the assignee acquires no beneficial interest in
insurance effected on the life of the insolvent, except to the extent that such
insurance contains assets which can be realized upon as of the date when the
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
section 14 of the American Bankruptcy Act of 1867, or under section 70 (a) of the
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
insured and those dependent upon him, but is inimical to the interests of society.
Insurance is a species of property that should be conserved and not dissipated. As is
well known, life insurance is increasingly difficult to obtain with advancing years, and
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
mature life; and one who has gone through the process of bankruptcy usually finds
himself in his declining years with the accumulated savings of years swept away and
earning power diminished. The courts are therefore practically unanimous in refusing
to permit the assignee in insolvency to wrest from the insolvent a policy of insurance
which contains in it no present realizable assets.
Having reviewed the cases most directly pertinent to the situation before us, attention
will again be directed to section 32 of the Insolvency Law, and related provisions, in
order to exhibit an aspect of the case upon which we have not as yet commented.
That section, among other things, declares that the assignment to be made by the
clerk of the court "shall operate to vest in the assignee all of the estate of the
insolvent debtor not exempt by law from execution." Moreover, by section 24, the
court is required, upon making an order adjudicating any person insolvent, to stay any
civil proceedings pending against him; and it is declared in section 60 that no creditor
whose debt is provable under the Act shall be allowed, after the commencement of
proceedings in insolvency, to prosecute to final judgment any action therefore against
the debtor. In connection with the foregoing may be mentioned subsections 1 and 2 of
section 36, as well as the opening words of section 33, to the effect that the assignee
shall have the right and power to recover, and to take into his possession, all of the
estate, assets, and claims belonging to the insolvent, except such as are exempt by
law from execution.
These provisions clearly evince an intention to vest in the assignee, for the benefit of
all the creditors of the insolvent, such elements of property and property right as could
be reached and subjected by process of law by any single creditor suing alone. And
this is exactly as it should be: for it cannot be supposed that the Legislature would
suppress the right of action of every individual creditor upon the adjudication of
insolvency, and at the same time allow the insolvent debtor to retain anything subject
to the payment of his debts in a normal state of solvency.lawphil.net
We are thus conducted to the conclusion that "leviable assets" and "assets in
insolvency" are practically coextensive terms. Hence, in determining what elements of
value constitutes assets in insolvency, we are at liberty to consider what elements of
value are subject to be taken upon execution, and vice versa.
Accordingly, we proceed to inquire whether, under the laws prevailing in this
jurisdiction, a policy of insurance having no cash surrender value, but payable to the
insured or his legal representative, is property that may be taken upon execution
against him. In this connection it must be admitted that the laws of these Islands
declare no exemption with respect to insurance policies; and this species of property
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
declared by law to be assignable, regardless of whether the assignee has an
insurable interest in the life of theft insured or not (Insurance Act No. 2427, sec. 166)
— a circumstance which debilitates in a slight degree the reasoning upon which the
decision in the case of In re McKinney, supra, is based. Finally, this court itself has
held that insurance policies having a present cash surrender value are subject to be
taken upon execution. (Misut Garcia vs. West Coast San Francisco Life Ins. Co., 41
Phil., 258.) Upon the question whether a life insurance policy having no surrender
value can be seized upon execution, this court has not passed; but the same
consideration would apparently be controlling upon this point that have determined
the position of the courts on the question whether such a policy passes to the
assignee in insolvency. In other words, a policy devoid of a cash surrender value
cannot be either "leviable assets" or "assets in insolvency." Certainly no case has
been called to our attention from the voluminous jurisprudence of the United States or
of England where a policy of ordinary life insurance, having no surrender value, was
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
which such a policy has been declared to pass to the trustee as assets in bankruptcy,
during the life of the insured; though there are apparently cases in which, after death
of the insured, the proceeds of such policies have been declared by some of the
Federal courts of the United States to be assets in insolvency — contrary to the rule
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.