People vs.

Jacob Rosenthal and Nicasio Osmea

12 June 1939
J. Laurel

Facts:
- Rosenthal and Osmea were two of the ten promoters, organizers, founders and
incorporators, the former being, in addition, one of the members of the board of
directors, of the O. R. O. Oil Co., Inc., a domestic corporation engaged in the mining,
digging, or otherwise obtaining from the earth, petroleum, rock or carbon oils,
natural gas, other volatile mineral substances and salt, and manufacturing, refining,
preparing for market, buying, selling and transporting the same in crude or refined
condition.
- They were charged in CFI Manila with violation of Act No. 2581 (Blue Sky Law):
Case No. 52365
In or about 1 October 1935 to 22 January 1936, Respondents did then and there,
with deliberate intent of evading the provisions of sections 2 and 5 of the said Act
No. 2581, and conspiring and confederating together and helping each other,
willfully, unlawfully and feloniously trade in, negotiate and speculate with their
shares, by making personally or through brokers or agents repeated and successive
sales of the said shares at a price ranging from P100 to P300 per share, with
Osmea selling 163 shares to 9 different parties, and Rosenthal selling 21 shares to
7 others, without first obtaining the corresponding written permit or license from the
Insular Treasurer of the Commonwealth of the Philippines, as by law required.
Case No. 52366
Within the same time frame as mention in Case No. 52365, Osmea sold 185 shares
to 9 different parties, and Rosenthal sold 12 shares to 7 others, without first
obtaining the corresponding written permit or license from the Insular Treasurer of
the Commonwealth of the Philippines, as by law provided.
- Upon Rosenthals motion, CFI granted him separate trial. However, when the cases
were called for hearing, CFI granted prosecutions motion that the 2 cases be tried
jointly, without prejudice to allow Respondents to present their proof separately, as
the evidence to be adduced by the government was the same.
- 22 March 1937: In separate decisions, CFI found Respondents guilty, sentencing
Osmea to pay a total of 3 000, and Rosenthal a total of 500.
- Respondents appealed to the CA but the case was forwarded to the SC upon
motion of the Solicitor General as the constitutionality of Act No. 2581 was
questioned by Respondents.

Issues:
Whether or not Act No. 2581 constitutes undue delegation of legislative authority to
the Insular Treasurer

Held:
No.

Ratio:
- Under section 2 of Act No. 2581, every person, partnership, association, or
corporation attempting to offer to sell in the Philippines speculative securities of any
kind or character whatsoever, is under obligation to file previously with the Insular
Treasurer the various documents and papers enumerated therein and to pay the
required tax of twenty-pesos.
- Section 5 imposes upon the Insular Treasurer the mandatory duty to examine the
statements and documents thus filed and the additional duty to make or cause to
be made, if deemed advisable by him, a detailed examination of the affairs of the
applicant. Section 5 also provides that "whenever the said Treasurer of the
Philippine Islands is satisfied, either with or without the examination herein
provided, that any person, partnership, association or corporation is entitled to the
right to offer its securities as above defined and provided for sale in the Philippine
Islands, he shall issue to such person, partnership, association or corporation a
certificate or permit reciting that such person, partnership, association or
corporation has complied with the provisions of this act, and that such person,
partnership, association or corporation, its brokers or agents are entitled to order
the securities named in said certificate or permit for sale"; that "said Treasurer shall
furthermore have authority, whenever in his judgment it is in the public interest, to
cancel said certificate or permit", and that "an appeal from the decision of the
Insular Treasurer may be had within the period of thirty days to the Secretary of
Finance."
- Respondents argue that Act No. 2581 sets no standard or rule which can guide the
Insular Treasurer in determining whether a permit should be issued or not, thereby
making his opinion the sole criterion in the matter of its issuance. According to
Respondents, this constitutes undue delegation of legislative power.
- The Court held that the Act furnishes a sufficient standard for the Insular Treasurer
to follow. The certificate or permit to be issued under the Act must recite that the
person, partnership, association or corporation applying therefor "has complied with
the provisions of this Act", and this requirement, construed in relation to the other
provisions of the law, means that a certificate or permit shall be issued by the
Insular Treasurer when the provisions of Act No. 2581 have been complied with.
- As regards the authority to cancel a certificate or permit, the Insular Treasurer may
only exercise this power upon a finding that such cancellation is in the public
interest. In view of the intention and purpose of Act No. 2581 to protect the

public against speculative schemes which have no more basis than so many feet of
blue sky and against the sale of stock in fly-by-night concerns, visionary oil wells,
distant gold mines, and other like fraudulent exploitations we incline to hold that
public interest in this case is a sufficient standard to guide the Insular Treasurer in
reaching a decision on a matter pertaining to the issuance or cancellation of
certificates or permits.
- Moreover, Act No. 2581 allows an appeal to the Secretary of Finance. Hence, it
cannot be contended that the Insular Treasurer can act and decide without any
restraining influence.
- New York Central Securities Corp. v. USA: "Appellant insists that the delegation of
authority to the Commission is invalid because the stated criterion is uncertain. That
criterion is the public interest. It is a mistaken assumption that this is a mere
general reference to public welfare without any standard to guide determinations.
The purpose of the Act, the requirement it imposes, and the context of the provision
in question show the contrary. . . "
- Counsel for Rosenthal argues that the Insular Treasurer possesses the
discretionary power to determine when a security is a speculative security and
when it is not because he is given the power to compel any corporation,
association or partnership already functioning, to surrender to him for examination
its books and accounts enumerated in section 2, 'whenever he has reasonable
ground to believe that the securities being sold or offered for sale are of a
speculative character. It must be pointed out, however, that Sec. 1 of the Act
explicitly defines and enumerates what speculative securities are. Sec. 1(b)
defines speculative securities as: [a]ll securities the value of which materially
depend upon proposed or promised future promotion or development rather than on
present tangible assets and conditions.
Dispositive:
CFI affirmed, with the modification of the fines. Osmea is sentenced to pay a total
of 1 500, while Rosenthal is sentenced to pay a total of 400.

The International Hardwood and Veneer Co. vs. The Pangil Federation of Labor
25 November 1940
J. Laurel

Nature:
This is a petition for a writ of certiorari to review the resolution, dated December 23,
1939, of the Court of Industrial Relations entered in its Case No. 103, entitled
"Pangil Federation of Labor vs. International Hardwood and Veneer Company."

Facts:
- 2 June 1939: SOLE certified to CIR that an internal dispute existed between
Petitioner and some of its employees who are members of Respondent, and that
This is a petition for a writ of certiorari to review the resolution, dated December 23,
1939, of the Court of Industrial Relations entered in its Case No. 103, entitled
"Pangil Federation of Labor vs. International Hardwood and Veneer Company."
- The industrial dispute mentioned above referred to certain demands made by the
respondent on the petitioner, among which were: set the minimum daily wages of
common laborers at one peso; devise a proper schedule of rate of wages for all
laborers; the rate of wages for the mountain camps should be higher by 20 per cent
over those given in the town. (Demand Nos. 2-4)
- As of 2 June 1939, the minimum wage paid by Petitioner was 0.70 a day
regardless of whether the laborer was employed in the poblaciones of the
towns of Pangil and Famy, or in the mountain camps.
- 19 September 1939: Judge Leopoldo Rovira of the CIR rendered the following
adjudication in his decision adicional:
In these circumstances, the Court finds justified in part the demands on the
numbers 2 and 4 that affect the type of wages, and accordingly directs the
company's appeal to pay their workers as fair and reasonable pay an amount
of not less than P1 for the daily work in the mountains, and those who
perform their jobs in the plains a sum of not less than P0.90 per day, based
on eight (8) hours per day, excluding the "overtime," no less than twenty-five
(25) percent of their wages as is fixed . . . (according to Google Translate)
- 17 October 1939: Petitioner filed MR of the decision adicional
- 28 November 1939: While MR was pending, Petitioner filed a motion praying that
the CIR hold itself without jurisdiction to decide the question relating to demands
Nos. 2 and 4, alleging (1) that the Court of Industrial Relations has no authority to
determine minimum wages for an individual employer in connection with a
particular and specific industrial dispute under the provisions of section 4 of
Commonwealth Act No. 103; (2) that such authority would constitute an undue
delegation of legislative power to the Court of Industrial Relations and would deny
the petitioner the equal protection of the laws, thus rendering said section
unconstitutional and void.
- 23 December 1939: CIR denied MR and the 28 November motion. Hence, the
instant petition for certiorari.

Issue:
Whether or not CIR has the power to decide minimum wages for an individual
employer in connection with an industrial dispute which said court might take
cognizance of under the provisions of section 4 of Commonwealth Act No. 103, and
if it has, whether or not such grant of power is unconstitutional and void.

Held:
Yes. The power is also constitutional.

Ratio:
- Petitioner contends that the National Assembly, in granting the Court of Industrial
Relations general power to decide any industrial dispute under section 4 of
Commonwealth Act No. 103, could not have granted, within such general power,
authority to decide a matter which has been made determinable in another specific
manner [Sec. 5 of CA No. 103]. It also argues that if an industrial dispute between
an employer and its employees causing or likely to cause a strike or lockout arises
from differences as regards a minimum wage, the Court of Industrial Relations
would be without authority to take cognizance of the dispute for arbitration and
settlement unless the President of the Philippines, under section 5 of
Commonwealth Act No. 103, directs it to investigate and study all pertinent facts
related to the industry concerned, with a view to determining the necessity and
fairness of fixing a minimum wage which shall apply generally to all the employers
engaged in such industry.
- The Court held that to adopt Petitioners narrow construction would frustrate the
very objective of law to create an instrumentality through which the intervention
of the Government could be made effective in order to prevent non-pacific methods
in the determination of industrial or agricultural disputes. It is fundamental that the
intention and policy of the National Assembly, as expressed in the enactment,
should be effectuated, and the Act should receive a construction that will lead to
this result.
- Petitioner also claims that if Sec. 4 empowers CIR to determine minimum wages in
connection with an internal dispute, the same would be unconstitutional as it unduly
delegates legislative power to the court and deprives Petitioner of equal protection
of the laws. In support of this claim, petitioner argues that the determination of
minimum wages is a legislative function, and that section 4 of Commonwealth Act
No. 103 does not indicate in what manner, by what standards, or in accordance
with what rules, the Court of Industrial Relations shall determine minimum wages
under said section.
- The Court held that the National Assembly has furnished a sufficient standard to
guide CIR in exercising its discretion in the determination of any question or
controversy before it. Sec. 20 of CA No. 103 prescribes that in the hearing,
investigation and determination of any question or controversy and in exercising
any duties and power under this Act, the court shall act according to justice and
equity and substantial merits of the case, without regard to technicalities or legal
forms. Moreover, the Court has already ruled in Antamok Gold Fields Mining Co. v.
CIR that: the discretionary power thus conferred is judicial in character and does
not infringe upon the principle of separation of powers, the prohibition against the
delegation of legislative function, and the equal protection clause of the
Constitution.

Dispositive:
Petition for certiorari denied. Costs against Petitioner.

For reference:
CA No. 103, Sec. 5. Minimum wage and maximum 'canon' or rental. Whenever
conditions in a given industry or in a given locality so warrant, and in the interest of
public welfare and for the promotion of industrial peace and progress, the President
of the Philippines shall direct the Court of Industrial Relations to investigate and
study all pertinent facts related to the industry concerned or to the industries
established in a designated locality, with a view to determining the necessity and
fairness of fixing and adopting for such industry or locality a minimum wage or
share of laborers or tenants, or a maximum 'canon' or rental to be paid by the
'inquilinos,' or tenants or lessees to landowners.
In order to determine the necessity and fairness of adopting such measures, and in
order to arrive at a proper, just, and reasonable minimum wage or share or
maximum 'canon' or rental, the court shall make a careful examination of the
amount of capital invested in the industry or industries concerned, the number of
laborers employed, the costs of production, insurance and transportation, market
prices, benefits or gains derived or losses suffered or expected, wages and shares
as well as other income of laborers and tenants, minimum cost of living and labor
conditions in general, and such other factors and circumstances as may, in its
opinion, be necessary to fairly and adequately accomplish the purpose of the
investigation.
After such an examination, and after the Court is satisfied of the necessity and
fairness of fixing and adopting a minimum wage or share or maximum 'canon' or
rental, for such locality or industry, it shall tentatively fix such minimum wage or
share or maximum 'canon' or rental as would give the workingmen a just
compensation for their labor and an adequate income to meet the essential
necessities of civilized life, and at the same time allow the capital a fair return on its
investment.
When determining a minimum wage or share for laborers and tenants engaged in a
given industry, the Court may, in its discretion, taking into account the conditions
prevailing in the different localities where such industry is carried on, fix different
minimum wages or shares, according to localities or fix different minimum wages or
shares according to the industries existing in that locality.
A minimum wage or share shall be determined and fixed for laborers working by the
hours, day or month, or by piece work, and for tenants sharing in the crop or paid
by measurement unit. Unless otherwise expressly provided in the order fixing a
minimum wage, a minimum wage in industrial or manufacturing enterprises shall be
understood to be fixed on the basis of eight hour daily labor, and employees and
laborer working in excess of such number of hours shall be entitled to a
proportionate increase in their wages.

The Court may, by so specifically providing in its order fixing a minimum wage,
exclude apprentices from the provisions thereof, but the number of such
apprentices in an industrial firm, or labor establishment shall not exceed twenty per
centum of the total number of laborers employed therein.
Insofar as possible, and when deemed necessary to better carry out the provisions
of this Act, the Court may classify or group the laborers according to the kind and
importance of the work and the amount or degree of skill, training, experience and
knowledge required and shall fix for each class or group a minimum wage or
compensation. In like manner, it may classify or group the tenants or lessees
according to the kind of work they perform, the terms of the contract with the
landowners and the productivity of the lands they occupy, and shall fix their
minimum share in the crop or the maximum "canon" or rental to be paid to the
landowners.
After such minimum wage or share or maximum 'canon' or rental has been
tentatively fixed by the court, the court shall order the publication of such tentative
decision in three successive issues of two newspapers of general circulation in the
locality or localities affected, one published in English and another in Spanish. All
parties not agreeing to such tentative decision may, within forty-five days after the
first publication submit to the court their written objections. With due consideration
to such objections, and after the expiration of the period given to question such
tentative decision, the Court shall adopt a final minimum wage or share or
maximum 'canon' or rental, which shall, with the approval of the President of the
Philippines, be binding upon everyone concerned and shall have the force and effect
of law thirty days after the approval by the President duly promulgated in an
executive proclamation.