G.R. No.
L-52306 October 12, 1981 compensations, remunerations, emoluments, or other
ABS-CBN BROADCASTING
CORPORATION, petitioner,
vs.
COURT OF TAX APPEALS and THE
COMMISSIONER OF INTERNAL
REVENUE, respondents.
MELENCIO-HERRERA, J.:
This is a Petition for Review on certiorari of the
Decision of the Court of Tax Appeals in C.T.A. Case No.
2809, dated November 29, 1979, which affirmed the
assessment by the Commissioner of Internal Revenue,
dated April 16, 1971, of a deficiency withholding
income tax against petitioner, ABS-CBN Broadcasting
Corporation, for the years 1965, 1966, 1967 and 1968
in the respective amounts of P75,895.24, P99,239.18,
P128,502.00 and P222, 260.64, or a total of
P525,897.06.
During the period pertinent to this case, petitioner
corporation was engaged in the business of telecasting
local as well as foreign films acquired from foreign
corporations not engaged in trade or business within
the Philippines. for which petitioner paid rentals after
withholding income tax of 30%of one-half of the film
rentals.
In so far as the income tax on non-resident
corporations is concerned, section 24 (b) of the
National Internal Revenue Code, as amended by
Republic Act No. 2343 dated June 20, 1959, used to
provide:
(b) Tax on foreign corporations.—(1) Non-resident
corporations.— There shall be levied, collected, and
paid for each taxable year, in lieu of the tax imposed
by the preceding paragraph, upon the amount received
by every foreign corporation not engaged in trade or
business within the Philippines, from an sources within
the Philippines, as interest, dividends, rents, salaries,
wages, premiums, annuities, compensations,
remunerations, emoluments, or other fixed or
determinable annual or periodical gains, profits, and
income, a tax equal to thirty per centum of such
amount. (Emphasis supplied)
On April 12, 1961, in implementation of the
aforequoted provision, the Commissioner of Internal
Revenue issued General Circular No. V-334 reading
thus:
In connection with Section 24 (b) of Tax Code, the
amendment introduced by Republic Act No. 2343,
under which an income tax equal to 30% is levied
upon the amount received by every foreign corporation
not engaged in trade or business within the Philippines
from all sources within this country as interest,
dividends, rents, salaries, wages, premiums, annuities,
fixed or determinable annual or periodical gains,
profits, and income, it has been determined that the
tax is still imposed on income derived from capital, or
labor, or both combined, in accordance with the basic
principle of income taxation (Sec. 39, Income Tax
Regulations), and that a mere return of capital or
investment is not income (Par. 5,06, 1 Mertens Law of
Federal 'Taxation). Since according to the findings of
the Special Team who inquired into business of the
non-resident foreign film distributors, the distribution
or exhibition right on a film is invariably acquired for a
consideration, either for a lump sum or a percentage of
the film rentals, whether from a parent company or an
independent outside producer, apart of the receipts of
a non-resident foreign film distributor derived from
said film represents, therefore, a return of investment.
4. The local distributor should withhold 30% of one-
half of the film rentals paid to the non-resident foreign
film distributor and pay the same to this office in
accordance with law unless the non- resident foreign
film distributor makes a prior settlement of its income
tax liability. (Emphasis ours).
Pursuant to the foregoing, petitioner dutifully withheld
and turned over to the Bureau of Internal Revenue the
amount of 30% of one-half of the film rentals paid by
it to foreign corporations not engaged in trade or
business within the Philippines. The last year that
petitioner withheld taxes pursuant to the foregoing
Circular was in 1968.
On June 27, 1968, Republic Act No. 5431 amended
Section 24 (b) of the Tax Code increasing the tax rate
from 30 % to 35 % and revising the tax basis from
"such amount" referring to rents, etc. to "gross
income," as follows:
(b) Tax on foreign corporations.—(1) Non-resident
corporations.—A foreign corporation not engaged in
trade or business in the Philippines including a foreign
life insurance company not engaged in the life
insurance business in the Philippines shall pay a tax
equal to thirty-five per cent of the gross income
received during each taxable year from all sources
within the Philippines, as interests, dividends, rents,
royalties, salaries, wages, premiums, annuities,
compensations, remunerations for technical services or
otherwise, emoluments or other fixed or determinable
annual, periodical or casual gains, profits, and income,
and capital gains, Provided however, That premiums
shah not include reinsurance premiums. (Emphasis
supplied)
On February 8, 1971, the Commissioner of Internal
Revenue issued Revenue Memorandum Circular No. 4-
71, revoking General Circular No. V-334, and holding
that the latter was "erroneous for lack of legal basis,"
because "the tax therein prescribed should be based
on gross income without deduction whatever," thus:
After a restudy and analysis of Section 24 (b) of the
National Internal Revenue Code, as amended by
Republic Act No. 5431, and guided by the
interpretation given by tax authorities to a similar
provision in the Internal Revenue Code of the United
States, on which the aforementioned provision of our
Tax Code was patterned, this Office has come to the
conclusion that the tax therein prescribed should be
based on gross income without t deduction whatever.
Consequently, the ruling in General Circular No. V-334,
dated April 12, 1961, allowing the deduction of the
proportionate cost of production or exhibition of motion
picture films from the rental income of non- resident
foreign corporations, is erroneous for lack of legal
basis.
In view thereof, General Circular No. V-334, dated
April 12, 1961, is hereby revoked and henceforth, local
films distributors and exhibitors shall deduct and
withhold 35% of the entire amount  payable by them to
non-resident foreign corporations, as film rental or
royalty, or whatever such payment may be
denominated, without any deduction whatever,
pursuant to Section 24 (b), and pay the withheld taxes
in accordance with Section 54 of the Tax Code, as
amended.
All rulings inconsistent with this Circular is likewise
revoked. (Emphasis ours)
On the basis of this new Circular, respondent
Commissioner of Internal Revenue issued against
petitioner a letter of assessment and demand dated
April 15, 1971, but allegedly released by it and
received by petitioner on April 12, 1971, requiring
them to pay deficiency withholding income tax on the
remitted film rentals for the years 1965 through 1968
and film royalty as of the end of 1968 in the total
amount of P525,897.06 computed as follows:
On May 5, 1971, petitioner requested for a
reconsideration and withdrawal of the assessment.
However, without acting thereon, respondent, on April
6, 1976, issued a warrant of distraint and levy over
petitioner's personal as well as real properties. The
petitioner then filed its Petition for Review with the
Court of Tax Appeals whose Decision, dated November
29, 1979, is, in turn, the subject of this review. The
Tax Court held:
For the reasons given, the Court finds the assessment
issued by respondent on April 16, 1971 against
petitioner in the amounts of P75,895.24, P 99,239.18,
P128,502.00 and P222,260.64 or a total of
P525,897.06 as deficiency withholding income tax for
the years 1965, 1966, 1967 and 1968, respectively, in
accordance with law. As prayed for, the petition for
review filed in this case is dismissed, and petitioner
ABS-CBN Broadcasting Corporation is hereby ordered
to pay the sum of P525,897.06 to respondent
Commissioner of Internal Revenue as deficiency
withholding income tax for the taxable years 1965 thru
1968, plus the surcharge and interest which have
accrued thereon incident to delinquency pursuant to
Section 51 (e) of the National Internal Revenue Code,
as amended.
WHEREFORE, the decision appealed from is hereby
affirmed at petitioner's cost.
SO ORDERED. 2
The issues raised are two-fold:
I. Whether or not respondent can apply General
Circular No. 4-71 retroactively and issue a deficiency
assessment against petitioner in the amount of P
525,897.06 as deficiency withholding income tax for
the years 1965, 1966, 1967 and 1968.
II. Whether or not the right of the Commissioner of
Internal Revenue to assess the deficiency withholding
income tax for the year 196,5 has prescribed. 3
Upon the facts and circumstances of the case, review
is warranted.
In point is Sec. 338-A (now Sec. 327) of the Tax Code.
As inserted by Republic Act No. 6110 on August 9,
1969, it provides:
Sec. 338-A. Non-retroactivity of rulings. — Any
revocation, modification, or reversal of and of the rules
and regulations promulgated in accordance with the
preceding section or any of the rulings or circulars
promulgated by the Commissioner of Internal
Revenue shall not be given retroactive application if
the relocation, modification, or reversal will be
prejudicial to the taxpayers, except in the following
cases: (a) where the taxpayer deliberately mis-states
or omits material facts from his return or any
document required of him by the Bureau of Internal
Revenue: (b) where the facts subsequently gathered
by the Bureau of Internal Revenue are materially
different from the facts on which the ruling is based; or
(c) where the taxpayer acted in bad faith. (italics for
emphasis)
It is clear from the foregoing that rulings or circulars
promulgated by the Commissioner of Internal Revenue
have no retroactive application where to so apply them
would be prejudicial to taxpayers. The prejudice to
petitioner of the retroactive application of
Memorandum Circular No. 4-71 is beyond question. It
was issued only in 1971, or three years after 1968, the
last year that petitioner had withheld taxes under
General Circular No. V-334. The assessment and
demand on petitioner to pay deficiency withholding
income tax was also made three years after 1968 for a
period of time commencing in 1965. Petitioner was no
longer in a position to withhold taxes due from foreign
corporations because it had already remitted all film
rentals and no longer had any control over them when
the new Circular was issued. And in so far as the
enumerated exceptions are concerned, admittedly,
petitioner does not fall under any of them.
Respondent claims, however, that the provision on
non-retroactivity is inapplicable in the present case in
that General Circular No. V-334 is a nullity because in
effect, it changed the law on the matter. The Court of
Tax Appeals sustained this position holding that:
"Deductions are wholly and exclusively within the
power of Congress or the law-making body to grant,
condition or deny; and where the statute imposes a
tax equal to a specified rate or percentage of the gross
or entire amount received by the taxpayer, the
authority of some administrative officials to modify or
change, much less reduce, the basis or measure of the
tax should not be read into law." 4 Therefore, the Tax
Court concluded, petitioner did not acquire any vested
right thereunder as the same was a nullity.
The rationale behind General Circular No. V-334 was
clearly stated therein, however: "It ha(d) been
determined that the tax is still imposed on income
derived from capital, or labor, or both combined, in
accordance with the basic principle of income
taxation ...and that a mere return of capital or
investment is not income ... ." "A part of the receipts
of a non-resident foreign film distributor derived from
said film represents, therefore, a return of
investment." The Circular thus fixed the return of
capital at 50% to simplify the administrative chore of
determining the portion of the rentals covering the
return of capital." 5
Were the "gross income" base clear from Sec. 24 (b),
perhaps, the ratiocination of the Tax Court could be
upheld. It should be noted, however, that said Section
was not too plain and simple to understand. The fact
that the issuance of the General Circular in question
was rendered necessary leads to no other conclusion
than that it was not easy of comprehension and could
be subjected to different interpretations.
In fact, Republic Act No. 2343, dated June 20, 1959,
supra, which was the basis of General Circular No. V-
334, was just one in a series of enactments regarding
Sec. 24 (b) of the Tax Code. Republic Act No. 3825
came next on June 22, 1963 without changing the
basis but merely adding a proviso (in bold letters).
(b) Tax on foreign corporation.—(1) Non-resident
corporations. — There shall be levied, collected and
paid for each taxable year, in lieu of the tax imposed
by the preceding paragraph, upon the amount received
by every foreign corporation not engaged in trade or
business within the Philippines, from all sources within
the Philippines, as interest, dividends, rents, salaries,
wages, premiums annuities, compensations,
remunerations, emoluments, or other fixed or
determinable annual or periodical gains, profits, and
income, a tax equal to thirty  per centum of such
amount: PROVIDED, HOWEVER, THAT PREMIUMS
SHALL NOT INCLUDE REINSURANCE PREMIUMS.
(double emphasis ours).
Republic Act No. 3841, dated likewise on June 22,
1963, followed after, omitting the proviso and inserting
some words (also in bold letters).
(b) Tax on foreign corporations.—(1) Non-resident
corporations.—There shall be levied, collected and paid
for each taxable year, in lieu of the tax imposed by the
preceding paragraph, upon the amount received by
every foreign corporation not engaged in trade or
business within the Philippines, from all sources within
the Philippines, as interest, dividends, rents, salaries,
wages, premiums, annuities, compensations,
remunerations, emoluments, or other fixed or
determinable annual or periodical OR CASUAL gains,
profits and income, AND CAPITAL GAINS, a tax equal
to thirty per centum of such amount. 6 (double
emphasis supplied)
The principle of legislative approval of administrative
interpretation by re-enactment clearly obtains in this
case. It provides that "the re-enactment of a statute
substantially unchanged is persuasive indication of the
adoption by Congress of a prior executive
construction. 7 Note should be taken of the fact that
this case involves not a mere opinion of the
Commissioner or ruling rendered on a mere query, but
a Circular formally issued to "all internal revenue
officials" by the then Commissioner of Internal
Revenue.
It was only on June 27, 1968 under Republic Act No.
5431, supra, which became the basis of Revenue
Memorandum Circular No. 4-71, that Sec. 24 (b) was
amended to refer specifically to 35% of the "gross
income."
This Court is not unaware of the well-entrenched
principle that the Government is never estopped from
collecting taxes because of mistakes or errors on the
part of its
agents. 8 In fact, utmost caution should be taken in
this regard. 9 But, like other principles of law, this also
admits of exceptions in the interest of justice and
fairplay. The insertion of Sec. 338-A into the National
Internal Revenue Code, as held in the case of Tuason,
Jr. vs. Lingad, 10 is indicative of legislative intention to
support the principle of good faith. In fact, in the
United States, from where Sec. 24 (b) was patterned,
it has been held that the Commissioner of Collector is
precluded from adopting a position inconsistent with
one previously taken where injustice would result
therefrom, 11 or where there has been a
misrepresentation to the taxpayer. 12
We have also noted that in its Decision, the Court of
Tax Appeals further required the petitioner to pay
interest and surcharge as provided for in Sec. 51 (e) of
the Tax Code in addition to the deficiency withholding
tax of P 525,897.06. This additional requirement is
much less called for because the petitioner relied in
good faith and religiously complied with no less than a
Circular issued "to all internal revenue officials" by the
highest official of the Bureau of Internal Revenue and
approved by the then Secretary of Finance. 13
With the foregoing conclusions arrived at, resolution of
the issue of prescription becomes unnecessary.
WHEREFORE, the judgment of the Court of Tax
Appeals is hereby reversed, and the questioned
assessment set aside. No costs.
G.R. No. L-5279           October 31, 1955
PHILIPPINE ASSOCIATION OF COLLEGES AND
UNIVERSITIES, ETC., petitioner,
vs.
SECRETARY OF EDUCATION and the BOARD OF
TEXTBOOKS, respondents.
Manuel C. Briones, Vicente G. Sinco, Manuel V. Gallego
and Enrique M. Fernando for petitioner.
Office of the Solicitor General Pompeyo Diaz and
Assistant Solicitor General Francisco Carreon for
respondents.
BENGZON, J.:
The petitioning colleges and universities request that
Act No. 2706 as amended by Act No. 3075 and
Commonwealth Act No. 180 be declared
unconstitutional, because: A. They deprive owners of
schools and colleges as well as teachers and parents of
liberty and property without due process of law; B.
They deprive parents of their natural rights and duty to
rear their children for civic efficiency; and C. Their
provisions conferring on the Secretary of Education
unlimited power and discretion to prescribe rules and
standards constitute an unlawful delegation of
legislative power.
A printed memorandum explaining their position in
extenso is attached to the record.
The Government's legal representative submitted a
mimeographed memorandum contending that, (1) the
matter constitutes no justiciable controversy exhibiting
unavoidable necessity of deciding the constitutional
questions; (2) petitioners are in estoppel to challenge
the validity of the said acts; and (3) the Acts are
constitutionally valid.
Petitioners submitted a lengthy reply to the above
arguments.
Act No. 2706 approved in 1917 is entitled, "An Act
making the inspection and recognition of private
schools and colleges obligatory for the Secretary of
Public Instruction." Under its provisions, the
Department of Education has, for the past 37 years,
supervised and regulated all private schools in this
country apparently without audible protest, nay, with
the general acquiescence of the general public and the
parties concerned.
It should be understandable, then, that this Court
should be doubly reluctant to consider petitioner's
demand for avoidance of the law aforesaid, specially
where, as respondents assert, petitioners suffered no
wrong—nor allege any—from the enforcement of the
criticized statute.
It must be evident to any one that the power to
declare a legislative enactment void is one which the
judge, conscious of the fallability of the human
judgment, will shrink from exercising in any case
where he can conscientiously and with due regard to
duty and official oath decline the responsibility.
(Cooley Constitutional Limitations, 8th Ed., Vol. I, p.
332.)
When a law has been long treated as constitutional
and important rights have become dependent thereon,
the Court may refuse to consider an attack on its
validity. (C. J. S. 16, p. 204.)
As a general rule, the constitutionality of a statute will
be passed on only if, and to the extent that, it is
directly and necessarily involved in a justiciable
controversy and is essential to the protection of the
rights of the parties concerned. (16 C. J. S., p. 207.)
In support of their first proposition petitioners contend
that the right of a citizen to own and operate a school
is guaranteed by the Constitution, and any law
requiring previous governmental approval or permit
before such person could exercise said right, amounts
to censorship of previous restraint, a practice abhorent
to our system of law and government. Petitioners
obviously refer to section 3 of Act No. 2706 as
amended which provides that before a private school
may be opened to the public it must first obtain a
permit from the Secretary of Education. The Solicitor
General on the other hand points out that none of the
petitioners has cause to present this issue, because all
of them have permits to operate and
are  actually operating by virtue of their permits. 1 And
they do not assert that the respondent Secretary of
Education has threatened to revoke their permits. They
have suffered no wrong under the terms of law—and,
naturally need no relief in the form they now seek to
obtain.
It is an established principle that to entitle a private
individual immediately in danger of sustaining a direct
injury as the result of that action and it is not sufficient
that he has merely a general to invoke the judicial
power to determine the validity of executive or
legislative action he must show that he has sustained
or is interest common to all members of the public.
(Ex parte Levitt, 302 U. S. 633 82 L. Ed. 493.)
Courts will not pass upon the constitutionality of a law
upon the complaint of one who fails to show that he is
injured by its operation. (Tyler  vs. Judges, 179 U. S.
405; Hendrick vs.  Maryland, 235 U. S. 610;
Coffman vs.  Breeze Corp., 323 U. S. 316-325.)
The power of courts to declare a law unconstitutional
arises only when the interests of litigant require the
use of that judicial authority for their protection
against actual interference, a hypothetical threat being
insufficient. (United Public Works vs.  Mitchell, 330 U
.S. 75; 91 L. Ed. 754.)
Bona fide suit.—Judicial power is limited to the decision
of actual cases and controversies. The authority to
pass on the validity of statutes is incidental to the
decision of such cases where conflicting claims under
the Constitution and under a legislative act assailed as
contrary to the Constitution are raised. It is legitimate
only in the last resort, and as necessity in the
determination of real, earnest, and vital controversy
between litigants. (Tañada and Fernando, Constitution
of the Philippines, p. 1138.)
Mere apprehension that the Secretary of Education
might under the law withdraw the permit of one of
petitioners does not constitute a justiciable
controversy. (Cf. Com.  ex rel  Watkins  vs. Winchester
Waterworks (Ky.) 197 S. W. 2d. 771.)
And action, like this, is brought for a positive purpose,
nay, to obtain actual and positive relief.
(Salonga  vs. Warner Barnes, L-2245, January, 1951.)
Courts do not sit to adjudicate mere academic
questions to satisfy scholarly interest therein, however
intellectually solid the problem may be. This is
specially true where the issues "reach constitutional
dimensions, for then there comes into play regard for
the court's duty to avoid decision of constitutional
issues unless avoidance becomes evasion."
(Rice vs.  Sioux City, U. S. Sup. Ct. Adv. Rep., May 23,
1995, Law Ed., Vol. 99, p. 511.)
The above notwithstanding, in view of the several
decisions of the United States Supreme Court quoted
by petitioners, apparently outlawing censorship of the
kind objected to by them, we have decided to look into
the matter, lest they may allege we refuse to act even
in the face of clear violation of fundamental personal
rights of liberty and property.
Petitioners complain that before opening  a school the
owner must secure a permit from the Secretary of
Education. Such requirement was not originally
included in Act No. 2706. It was introduced by
Commonwealth Act No. 180 approved in 1936. Why?
In March 1924 the Philippine Legislature approved Act
No. 3162 creating a Board of Educational Survey to
make a study and survey of education in the
Philippines and of all educational institutions, facilities
and agencies thereof. A Board chairmaned by Dr. Paul
Munroe, Columbia University, assisted by a staff of
carefully selected technical members performed the
task, made a five-month thorough and impartial
examination of the local educational system, and
submitted a report with recommendations, printed as a
book of 671 pages. The following paragraphs are taken
from such report:
PRIVATE-ADVENTURE SCHOOLS There is no law or
regulation in the Philippine Islands today to prevent a
person, however disqualified by ignorance, greed, or
even immoral character, from opening a school to
teach the young. It it true that in order to post over
the door "Recognized by the Government," a private
adventure school must first be inspected by the proper
Government official, but a refusal to grant such
recognition does not by any means result in such a
school ceasing to exist. As a matter of fact, there are
more such unrecognized private schools than of the
recognized variety. How many, no one knows, as the
Division of Private Schools keeps records only of the
recognized type.
Conclusion.—An unprejudiced consideration of the fact
presented under the caption Private Adventure Schools
leads but to one conclusion, viz.: the great majority of
them from primary grade to university are money-
making devices for the profit of those who organize
and administer them. The people whose children and
youth attend them are not getting what they pay for.
It is obvious that the system constitutes a great evil.
That it should be permitted to exist with almost no
supervision is indefensible. The suggestion has been
made with the reference to the private institutions of
university grade that some board of control be
organized under legislative control to supervise their
administration. The Commission believes that the
recommendations it offers at the end of this chapter
are more likely to bring about the needed reforms.
Recommendations.—The Commission recommends
that legislation be enacted to prohibit the opening of
any school by an individual or organization without the
permission of the Secretary of Public Instruction. That
before granting such permission the Secretary assure
himself that such school measures up to proper
standards in the following respects, and that the
continued existence of the school be dependent upon
its continuing to conform to these conditions:
(1) The location and construction of the buildings, the
lighting and ventilation of the rooms, the nature of the
lavatories, closets, water supply, school furniture and
apparatus, and methods of cleaning shall be such as to
insure hygienic conditions for both pupils and teachers.
(2) The library and laboratory facilities shall be
adequate to the needs of instruction in the subjects
taught.
(3) The classes shall not show an excessive number of
pupils per teacher. The Commission recommends 40 as
a maximum.
(4) The teachers shall meet qualifications equal to
those of teachers in the public schools of the same
grade.
In view of these findings and recommendations, can
there be any doubt that the Government in the
exercise of its police power to correct "a great evil"
could validly establish the "previous permit" system
objected to by petitioners? This is what differentiates
our law from the other statutes declared invalid in
other jurisdictions. And if any doubt still exists,
recourse may now be had to the provision of our
Constitution that "All educational institutions shall be
under the supervision and subject to regulation by the
State." (Art. XIV, sec. 5.) The power to regulate
establishments or business occupations implies the
power to require a permit or license. (53 C. J. S. 4.)
What goes for the "previous permit" naturally goes for
the power to revoke such permit on account of
violation of rules or regulations of the Department.
II. This brings us to the petitioners' third proposition
that the questioned statutes "conferring on the
Secretary of Education unlimited power and discretion
to prescribe rules and standards constitute an unlawful
delegation of legislative power."
This attack is specifically aimed at section 1 of Act No.
2706 which, as amended, provides:
It shall be the duty of the Secretary of Public
Instruction to maintain a general standard of efficiency
in all private schools and colleges of the Philippines so
that the same shall furnish adequate instruction to the
public, in accordance with the class and grade of
instruction given in them, and for this purpose said
Secretary or his duly authorized representative shall
have authority to advise, inspect, and regulate said
schools and colleges in order to determine the
efficiency of instruction given in the same,
"Nowhere in this Act" petitioners argue "can one find
any description, either general or specific, of what
constitutes a 'general standard of efficiency.' Nowhere
in this Act is there any indication of any basis or
condition to ascertain what is 'adequate instruction to
the public.' Nowhere in this Act is there any statement
of conditions, acts, or factors, which the Secretary of
Education must take into account to determine the
'efficiency of instruction.'"
The attack on this score is also extended to section 6
which provides:
The Department of Education shall from time to time
prepare and publish in pamphlet form the minimum
standards required of primary, intermediate, and high
schools, and colleges granting the degrees of Bachelor
of Arts, Bachelor of Science, or any other academic
degree. It shall also from time to time prepare and
publish in pamphlet form the minimum standards
required of law, medical, dental, pharmaceutical,
engineering, agricultural and other medical or
vocational schools or colleges giving instruction of a
technical, vocational or professional character.
Petitioners reason out, "this section leaves everything
to the uncontrolled discretion of the Secretary of
Education or his department. The Secretary of
Education is given the power to fix the standard. In
plain language, the statute turns over to the Secretary
of Education the exclusive authority of the legislature
to formulate standard. . . .."
It is quite clear the two sections empower and require
the Secretary of Education to prescribe rules fixing
minimum standards of adequate and efficient
instruction to be observed by all such private schools
and colleges as may be permitted to operate. The
petitioners contend that as the legislature has not fixed
the standards, "the provision is extremely vague,
indefinite and uncertain"—and for that reason
constitutionality objectionable. The best answer is that
despite such alleged vagueness the Secretary of
Education has fixed standards to ensure adequate and
efficient instruction, as shown by the memoranda
fixing or revising curricula, the school calendars,
entrance and final examinations, admission and
accreditation of students etc.; and the system of
private education has, in general, been satisfactorily in
operation for 37 years. Which only shows that the
Legislature did and could, validly rely upon the
educational experience and training of those in charge
of the Department of Education to ascertain and
formulate minimum requirements of adequate
instruction as the basis of government recognition of
any private school.
At any rate, petitioners do not show how these
standards have injured any of them or interfered with
their operation. Wherefore, no reason exists for them
to assail the validity of the power nor the exercise of
the power by the Secretary of Education.
True, the petitioners assert that, the Secretary has
issued rules and regulations "whimsical and capricious"
and that such discretionary power has produced
arrogant inspectors who "bully heads and teachers of
private schools." Nevertheless, their remedy is to
challenge those regulations specifically, and/or to ring
those inspectors to book, in proper administrative or
judicial proceedings—not to invalidate the law. For it
needs no argument, to show that abuse by the officials
entrusted with the execution of a statute does not  per
se demonstrate the unconstitutionality of such statute.
Anyway, we find the defendants' position to be
sufficiently sustained by the decision in Alegra vs.
Collector of Customs,  53 Phil., 394 upon holding the
statute that authorized the Director of Agriculture
to  "designate standards for the commercial grades of
abaca, maguey and sisal" against vigorous attacks on
the ground of invalid delegation of legislative power.
Indeed "adequate and efficient instruction" should be
considered sufficient, in the same way as "public
welfare" "necessary in the interest of law and order"
"public interest" and "justice and equity and
substantial merits of the case" have been held
sufficient as legislative standards justifying delegation
of authority to regulate. (See Tañada and Fernando,
Constitution of the Philippines, p. 793, citing Philippine
cases.)
On this phase of the litigation we conclude that there
has been no undue delegation of legislative power.
In this connection, and to support their position that
the law and the Secretary of Education have
transcended the governmental power of supervision
and regulation, the petitioners appended a list of
circulars and memoranda issued by the said
Department. However they failed to indicate which of
such official documents was constitutionally
objectionable for being "capricious," or pain
"nuisance"; and it is one of our decisional practices
that unless a constitutional point is specifically raised,
insisted upon and adequately argued, the court will not
consider it. (Santiago vs.  Far Eastern, 73 Phil., 408.)
We are told that such list will give an idea of how the
statute has placed in the hands of the Secretary of
Education complete control of the various activities of
private schools, and why the statute should be struck
down as unconstitutional. It is clear in our opinion that
the statute does not in express terms give the
Secretary complete control. It gives him powers to
inspect private schools, to regulate their activities, to
give them official permits to operate under certain
conditions, and to revoke such permits for cause. This
does not amount to complete control. If any of such
Department circulars or memoranda issued by the
Secretary go beyond the bounds of regulation and
seeks to establish  complete  control, it would surely be
invalid. Conceivably some of them are of this nature,
but besides not having before us the text of such
circulars, the petitioners have omitted to specify. In
any event with the recent approval of Republic Act No.
1124 creating the National Board of Education,
opportunity for administrative correction of the
supposed anomalies or encroachments is amply
afforded herein petitioners. A more expeditious and
perhaps more technically competent forum exists,
wherein to discuss the necessity, convenience or
relevancy of the measures criticized by them. (See
also Republic Act No. 176.)
If however the statutes in question actually give the
Secretary control over private schools, the question
arises whether the power of supervision and regulation
granted to the State by section 5 Article XIV was
meant to include control of private educational
institutions. It is enough to point out that local
educators and writers think the Constitution provides
for control of Education by the State. (See Tolentino,
Government of the Philippine Constitution, Vol. II, p.
615; Benitez, Philippine Social Life and Progress, p.
335.)
The Constitution (it) "provides for state control of all
educational institutions" even as it enumerates certain
fundamental objectives of all education to wit, the
development of moral character, personal discipline,
civic conscience and vocational efficiency, and
instruction in the duties of citizenship. (Malcolm &
Laurel, Philippine Constitutional Law, 1936.)
The Solicitor General cities many authorities to show
that the power to regulate means power to control,
and quotes from the proceedings of the Constitutional
Convention to prove that State control of private
education was intended by the organic law. It is
significant to note that the Constitution grants power
to supervise and to regulate. Which may mean greater
power than mere regulation.
III. Another grievance of petitioners—probably the
most significant—is the assessment of 1 per cent
levied on gross receipts of all private schools for
additional Government expenses in connection with
their supervision and regulation. The statute is section
11-A of Act No. 2706 as amended by Republic Act No.
74 which reads as follows:
SEC. 11-A. The total annual expense of the Office of
Private Education shall be met by the regular amount
appropriated in the annual Appropriation
Act:  Provided, however,  That for additional expenses
in the supervision and regulation of private schools,
colleges and universities and in the purchase of
textbook to be sold to student of said schools, colleges
and universities and President of the Philippines may
authorize the Secretary of Instruction to levy an
equitable assessment from each private educational
institution equivalent to one percent of the total
amount accruing from tuition and other fees: . . . and
non-payment of the assessment herein provided by
any private school, college or university shall be
sufficient cause for the cancellation by the Secretary of
Instruction of the permit for recognition granted to it.
Petitioners maintain that this is a tax on the exercise of
a constitutional right—the right to open a school, the
liberty to teach etc. They claim this is unconstitutional,
in the same way that taxes on the privilege of selling
religious literature or of publishing a newspaper—both
constitutional privileges—have been held, in the United
States, to be invalid as taxes on the exercise of a
constitutional right.
The Solicitor General on the other hand argues that
insofar as petitioners' action attempts to restrain the
further collection of the assessment, courts have no
jurisdiction to restrain the collection of taxes by
injunction, and in so far as they seek to recover fees
already paid the suit, it is one against the State
without its consent. Anyway he concludes, the action
involving "the legality of any tax impost or
assessment" falls within the original jurisdiction of
Courts of First Instance.
There are good grounds in support of Government's
position. If this levy of 1 per cent is truly a mere fee—
and not a tax—to finance the cost of the Department's
duty and power to regulate and supervise private
schools, the exaction may be upheld; but such point
involves investigation and examination of relevant
data, which should best be carried out in the lower
courts. If on the other hand it is a tax, petitioners'
issue would still be within the original jurisdiction of
the Courts of First Instance.
The last grievance of petitioners relates to the validity
of Republic Act No. 139 which in its section 1 provides:
The textbooks to be used in the private schools
recognized or authorized by the government shall be
submitted to the Board (Board of Textbooks) which
shall have the power to prohibit the use of any of said
textbooks which it may find to be against the law or to
offend the dignity and honor of the government and
people of the Philippines, or which it may find to be
against the general policies of the government, or
which it may deem pedagogically unsuitable.
This power of the Board, petitioners aver, is censorship
in "its baldest form". They cite two U. S. cases (Miss.
and Minnesota) outlawing statutes that impose
previous restraints upon publication of newspapers, or
curtail the right of individuals to disseminate teachings
critical of government institutions or policies.
Herein lies another important issue submitted in the
cause. The question is really whether the law may be
enacted in the exercise of the State's constitutional
power (Art. XIV, sec. 5) to supervise and regulate
private schools. If that power amounts to control of
private schools, as some think it is, maybe the law is
valid. In this connection we do not share the belief that
section 5 has added new power to what the State
inherently possesses by virtue of the police power. An
express power is necessarily more extensive than a
mere implied power. For instance, if there is conflict
between an express individual right and the express
power to control private education it cannot off-hand
be said that the latter must yield to the former—
conflict of two express powers. But if the power to
control education is merely implied  from the police
power, it is feasible to uphold the express individual
right, as was probably the situation in the two
decisions brought to our attention, of Mississippi and
Minnesota, states where constitutional control of
private schools is not expressly produced.
However, as herein previously noted, no justiciable
controversy has been presented to us. We are not
informed that the Board on Textbooks has prohibited
this or that text, or that the petitioners refused or
intend to refuse to submit some textbooks, and are in
danger of losing substantial privileges or rights for so
refusing.
The average lawyer who reads the above quoted
section of Republic Act 139 will fail to perceive
anything objectionable. Why should not the State
prohibit the use of textbooks that are illegal, or
offensive to the Filipinos or adverse to governmental
policies or educationally improper? What's the power of
regulation and supervision for? But those trained to the
investigation of constitutional issues are likely to
apprehend the danger to civil liberties, of possible
educational dictatorship or thought control, as
petitioners' counsel foresee with obvious alarm. Much
depends, however, upon the execution and
implementation of the statute. Not that
constitutionality depends necessarily upon the law's
effects. But if the Board on Textbooks in its actuations
strictly adheres to the letter of the section and wisely
steers a middle course between the Scylla of
"dictatorship" and the Charybdis of "thought control",
no cause for complaint will arise and no occasion for
judicial review will develop. Anyway, and again,
petitioners now have a more expeditious remedy thru
an administrative appeal to the National Board of
Education created by Republic Act 1124.
Of course it is necessary to assure herein petitioners,
that when and if, the dangers they apprehend
materialize and judicial intervention is suitably
invoked, after all administrative remedies are
exhausted, the courts will not shrink from their duty to
delimit constitutional boundaries and protect individual
liberties.
IV. For all the foregoing considerations, reserving to
the petitioners the right to institute in the proper court,
and at the proper time, such actions as may call for
decision of the issue herein presented by them, this
petition for prohibition will be denied. So ordered.
G.R. No. 155344               January 20, 2004
ROLANDO N. CANET, Petitioner,
vs.
MAYOR JULIETA A. DECENA, Respondent.
DECISION
YNARES-SANTIAGO, J.:
On July 27, 1998, the Sangguniang Bayan of Bula,
Camarines Sur, passed Resolution No. 049, Series of
1998,1 authorizing petitioner Rolando N. Canet to
establish, operate and maintain a cockpit in Sitio,
Cabaya, San Roque, Bula, Camarines Sur.
Subsequently, the Sangguniang Bayan passed
Ordinance No. 001, Series of 1999, entitled "An
Ordinance Regulating the Operation of Cockpits and
Other Related Game-Fowl Activities in the Municipality
of Bula, Camarines Sur and Providing Penalties for any
Violation to (sic) the Provisions Thereof." 2 Upon
transmittal to respondent Mayor Julieta A. Decena of
the said municipality, it was noted that the Ordinance
does not contain rules and regulations on cockfighting
and other related game fowl activities and a
separability clause. The Ordinance was returned to
the Sangguniang Bayan. In Resolution No. 078, Series
of 1999, Sangguniang Bayan resolved to withdraw, set
aside and shelf indefinitely Ordinance No. 001, Series
of 1999.3
Meanwhile, petitioner, relying on Resolution No. 049,
Series of 1998, of the Sangguniang Bayan, filed an
application for a mayor’s permit to operate, establish
and maintain a cockpit in Sitio Cabuya, San Roque,
Bula, Camarines Sur. Respondent Mayor Julieta
Decena denied the application on the ground, among
others, that under the Local Government Code of
1991, the authority to give licenses for the
establishment, operation and maintenance of cockpits
as well as the regulation of cockfighting and
commercial breeding of gamecocks is vested in the
Sangguniang Bayan.4
Therefore, she cannot issue the said permit inasmuch
as there was no ordinance passed by the Sangguniang
Bayan authorizing the same.
On July 26, 1999, petitioner filed a complaint 5 against
respondent Mayor with the Regional Trial Court of Pili,
Camarines Sur, Branch XXXI, which was docketed as
Special Civil Action No. P-84-99, for Mandamus and
Damages with Application for Preliminary Mandatory
Injunction. Respondent moved for the dismissal of the
complaint.
A Resolution was issued by the trial court on January
27, 2000, the dispositive portion of which reads:
WHEREFORE, in view of the foregoing, the motion to
dismiss is hereby denied. Let a writ of preliminary
mandatory injunction issue upon the posting of an
injunction bond by the plaintiff in the amount of FIFTY
THOUSAND PESOS (P50,000.00) executed to
defendant to stand for all the damages which she may
sustain if it should be finally found that plaintiff is not
entitled thereto, said mandatory injunction ordering
and commanding herein defendant, incumbent Mayor
of the Municipality of Bula, Camarines Sur to approve
and issue forthwith the Mayor’s Permit and to accept
the fees therefor for plaintiff to establish, maintain and
operate a cockpit in Cabaya, San Roque, Bula,
Camarines Sur. Upon finality of this resolution, let the
main case be set for further proceedings.
SO ORDERED.6
The writ of preliminary mandatory injunction was
issued on February 1, 2000. 7
Respondent filed a petition for certiorari and
prohibition with the Court of Appeals, docketed as CA-
G.R. SP No. 57797.8 On April 3, 2000, the Court of
Appeals issued a temporary restraining
order,9 directing petitioner and the presiding judge to
temporarily cease and desist from enforcing the writ of
preliminary mandatory injunction issued on February
1, 2000 in Special Civil Action No. P-84-99.
On June 3, 2002, the Court of Appeals rendered the
assailed Decision, the dispositive portion of which
reads:
WHEREFORE, the petition is granted and the
questioned January 27, 2000 Resolution and February
1, 2000 writ of preliminary mandatory injunction
issued by respondent Judge are ANNULLED AND SET
ASIDE while the writ of preliminary injunction
heretofore issued by this Court on July 10, 2000 is
made permanent. No costs.
SO ORDERED.10
Petitioner filed a Motion for Reconsideration which was
denied for lack of merit in a Resolution dated August
2002.11
Hence, this petition for review.
The core issue in this petition is whether or not
respondent, in her capacity as Municipal Mayor, can be
compelled to issue the necessary business permit to
petitioner absent a municipal ordinance which would
empower her to do so.
The pertinent provision of law in contention is Section
447 (a) (3) (v) of the Local Government Code of 1991
(Republic Act No. 7160), which reads:
SEC. 447. Powers, Functions and Compensation. (a)
The Sangguniang Bayan as the legislative body of the
municipality shall enact ordinances, approve
resolutions and appropriate funds for the general
welfare of the municipality and its inhabitants pursuant
to Section 16 of this Code and in the proper exercise of
the corporate powers of the municipality as provided
for under Section 22, and shall:
x x x           x x x          x x x
(3) Subject to the provisions of Book II of this Code,
grant franchises, enact ordinances levying taxes, fees
and charges upon such conditions and for such
purposes intended to promote the general welfare of
the inhabitants of the municipality, and pursuant to
this legislative authority shall:
x x x           x x x          x x x
(v) Any law to the contrary notwithstanding, authorize
and license the establishment, operation and
maintenance of cockpits and regulate cockfighting and
commercial breeding of gamecocks: Provided, That
existing rights should not be prejudiced.
Petitioner admits that there is no ordinance in Bula,
Camarines Sur which authorizes the grant of a mayor’s
permit to operate and maintain a cockfighting arena.
However, he invokes Resolution No. 049, S. 1998,
wherein the Sangguniang Bayan authorized him to
operate a cockpit. Furthermore, he cites Municipal Tax
Ordinances Nos. 01, S. 1989, and 05, S. 1993, which
generally provide for the issuance of a mayor’s permit
for the operation of businesses.
Municipal Tax Ordinances Nos. 01, S. 1989 and 05, S.
1993 contain general provisions for the issuance of
business permits but do not contain specific provisions
prescribing the reasonable fees to be paid in the
operation of cockpits and other game fowl activities.
It was Ordinance No. 001, S. 1999 which provided for
the collection of application filing fees, ocular
inspection fees, mayor’s permit fees, filing fees for the
institution of complaints, entrance fees and special
derby assessments for the operation of cockpits. 12 This
Ordinance, however, was withdrawn by the
Sangguniang Bayan.
Hence, there being in effect no ordinance allowing the
operation of a cockpit, Resolution No. 049, S. 1998,
authorizing petitioner to establish, operate and
maintain a cockpit in Bula, Camarines Sur cannot be
implemented. Suffice it to state in this regard that to
compel respondent to issue the mayor’s permit would
not only be a violation of the explicit provisions of
Section 447 of the Local Government Code of 1991,
but would also be an undue encroachment on
respondent’s administrative prerogatives.
It should, furthermore, be borne in mind that
cockfighting although authorized by law is still a form
of gambling. Gambling is essentially antagonistic to the
aims of enhancing national productivity and self-
reliance.24 As has been previously said, a statute which
authorizes a gambling activity or business should be
strictly construed, and every reasonable doubt
resolved so as to limit rather than expand the powers
and rights claimed by franchise holders under its
authority.25
WHEREFORE, in view of all the foregoing, the petition
is hereby DENIED for lack of merit. The Decision of the
Court of Appeals dated June 3, 2002 in CA-G.R. SP No.
57797 is AFFIRMED in toto.

Along the same vein, to read into the ordinances relied

upon by petitioner objects which were neither
specifically mentioned nor enumerated would be to run
afoul of the dictum that where a statute, by its terms,
is expressly limited to certain matters, it may not, by
interpretation or construction, be extended to other
matters.13 In other words, it is a basic precept of
statutory construction that the express mention of one
person, thing, act, or consequence excludes all others,
as expressed in the oft-repeated maxim expression
unius est exlusio alterius. 14 Elsewise stated, expressium
facit cessare tacitum – what is expressed puts an end
to what is implied.15 The rule proceeds from the
premise that the legislative body would not have made
specific enumerations in a statute, if it had the
intention not to restrict its meaning and confine its
terms to those expressly mentioned.

Even on the assumption that there is in fact a

legislative gap caused by such an omission, neither
could the Court presume otherwise and supply the
details thereof, because a legislative lacuna cannot be
filled by judicial fiat.16 Indeed, courts may not, in the
guise of interpretation, enlarge the scope of a statute
and include therein situations not provided nor
intended by the lawmakers. An omission at the time of
the enactment, whether careless or calculated, cannot
be judicially supplied however after later wisdom may
recommend the inclusion.17 Courts are not authorized
to insert into the law what they think should be in it or
to supply what they think the legislature would have
supplied if its attention has been called to the
omission.18 1âwphi1

Courts should not, by construction, revise even the

most arbitrary and unfair action of the legislature, nor
rewrite the law to conform with what they think should
be the law.19 Nor may they interpret into the law a
requirement which the law does not prescribe. 20 Where
a statute contains no limitations in its operation or
scope, courts should not engraft any. 21 And where a
provision of law expressly limits its application to
certain transactions, it cannot be extended to other
transactions by interpretation. 22 To do any of such
things would be to do violence to the language of the
law and to invade the legislative sphere.23