CALTEX V.

PALOMAR
Facts:
In the year 1960 the Caltex (Philippines) Inc. (hereinafter referred to as Caltex) conceived and
laid the ground-work for a promotional scheme calculated to drum up patronage for its oil
products.
Denominated "Caltex Hooded Pump Contest", it calls for... participants therein to estimate the
actual number of liters a hooded gas pump at each Caltex station will dispense during a specified
period.
Foreseeing the extensive use of the mails not only as amongst the media for publicizing the
contest but also for the transmission of communications relative thereto, representations were
made by Caltex with the postal authorities for the contest to be cleared in advance for... mailing
The overtures were later formalized in a letter to the Postmaster General, dated October 31,
1960, in which the Caltex, thru counsel, enclosed a copy of the contest rules and endeavored to
justify its position that the contest does not violate the anti-lottery provisions of... the Postal Law.
Unimpressed, the then Acting Postmaster General opined that the scheme falls within the
purview of the provisions aforesaid and declined to grant the requested clearance
Issues:
whether the petition states a sufficient cause of action for declaratory relief;... whether the
petition states a sufficient cause of action for declaratory relief... whether the proposed "Caltex
Hooded Pump Contest" violates the
Postal Law
Ruling:
By express mandate of section 1 of Rule 66 of the old Rules of Court, which was the applicable
legal basis for the remedy at the time it was invoked, declaratory relief is available to any person
"whose rights are affected by a statute * * * to determine any question of... construction or
validity arising under the * * * statute and for a declaration of his rights or duties thereunder"
(now section 1, Rule 64, Revised Rules of Court).
We cannot hospitably entertain the appellant's pretense that there is here no question of
construction because the said appellant "simply applied the clear provisions of the law to a given
set of facts as embodied in the rules of the contest", hence, there is no room for... declaratory
relief. The infirmity of this pose lies in the fact that it proceeds from the assumption that, in the
circumstances here presented, the construction of the legal provisions can be divorced from the
matter of their application to the appellee's contest. This is not... feasible. Construction, verily, is
the art or process of discovering and expounding the meaning and intention of the authors of the
law with respect to its application to a given case, where that intention is rendered doubtful,
amongst others, by reason of the... fact that the given case is not explicitly provided for in the
law (Black, Interpretation of Laws, p. 1). This is precisely the case here. Whether or not the
scheme proposed by the appellee is within the coverage of the prohibitive provisions of the
Postal Law inescapably... requires an inquiry into the intended meaning of the words used
therein. To our mind, this is as much a question of construction or interpretation as any other.

epublic of the Philippines

SUPREME COURT
Manila
 EN BANC

G.R. No. L-19650 September 29, 1966

CALTEX (PHILIPPINES), INC., petitioner-appellee,

vs.
ENRICO PALOMAR, in his capacity as THE POSTMASTER GENERAL, respondent-appellant.

Office of the Solicitor General for respondent and appellant.

Ross, Selph and Carrascoso for petitioner and appellee.

CASTRO, J.:

In the year 1960 the Caltex (Philippines) Inc. (hereinafter referred to as Caltex) conceived and laid the groundwork for a promotional scheme calculated
to drum up patronage for its oil products. Denominated "Caltex Hooded Pump Contest", it calls for participants therein to estimate the actual number of
liters a hooded gas pump at each Caltex station will dispense during a specified period. Employees of the Caltex (Philippines) Inc., its dealers and its
advertising agency, and their immediate families excepted, participation is to be open indiscriminately to all "motor vehicle owners and/or licensed
drivers". For the privilege to participate, no fee or consideration is required to be paid, no purchase of Caltex products required to be made. Entry forms
are to be made available upon request at each Caltex station where a sealed can will be provided for the deposit of accomplished entry stubs.

A three-staged winner selection system is envisioned. At the station level, called "Dealer Contest", the contestant whose estimate is closest to the
actual number of liters dispensed by the hooded pump thereat is to be awarded the first prize; the next closest, the second; and the next, the third.
Prizes at this level consist of a 3-burner kerosene stove for first; a thermos bottle and a Ray-O-Vac hunter lantern for second; and an Everready
Magnet-lite flashlight with batteries and a screwdriver set for third. The first-prize winner in each station will then be qualified to join in the "Regional
Contest" in seven different regions. The winning stubs of the qualified contestants in each region will be deposited in a sealed can from which the first-
prize, second-prize and third-prize winners of that region will be drawn. The regional first-prize winners will be entitled to make a three-day all-
expenses-paid round trip to Manila, accompanied by their respective Caltex dealers, in order to take part in the "National Contest". The regional
second-prize and third-prize winners will receive cash prizes of P500 and P300, respectively. At the national level, the stubs of the seven regional first-
prize winners will be placed inside a sealed can from which the drawing for the final first-prize, second-prize and third-prize winners will be made. Cash
prizes in store for winners at this final stage are: P3,000 for first; P2,000 for second; Pl,500 for third; and P650 as consolation prize for each of the
remaining four participants.

Foreseeing the extensive use of the mails not only as amongst the media for publicizing the contest but also for the transmission of communications
relative thereto, representations were made by Caltex with the postal authorities for the contest to be cleared in advance for mailing, having in view
sections 1954(a), 1982 and 1983 of the Revised Administrative Code, the pertinent provisions of which read as follows:

SECTION 1954. Absolutely non-mailable matter. — No matter belonging to any of the following classes, whether sealed as first-class
matter or not, shall be imported into the Philippines through the mails, or to be deposited in or carried by the mails of the Philippines, or be
delivered to its addressee by any officer or employee of the Bureau of Posts:

Written or printed matter in any form advertising, describing, or in any manner pertaining to, or conveying or purporting to convey any
information concerning any lottery, gift enterprise, or similar scheme depending in whole or in part upon lot or chance, or any scheme,
device, or enterprise for obtaining any money or property of any kind by means of false or fraudulent pretenses, representations, or
promises.

"SECTION 1982. Fraud orders.—Upon satisfactory evidence that any person or company is engaged in conducting any lottery, gift
enterprise, or scheme for the distribution of money, or of any real or personal property by lot, chance, or drawing of any kind, or that any
person or company is conducting any scheme, device, or enterprise for obtaining money or property of any kind through the mails by
means of false or fraudulent pretenses, representations, or promises, the Director of Posts may instruct any postmaster or other officer or
employee of the Bureau to return to the person, depositing the same in the mails, with the word "fraudulent" plainly written or stamped upon
the outside cover thereof, any mail matter of whatever class mailed by or addressed to such person or company or the representative or
agent of such person or company.

SECTION 1983. Deprivation of use of money order system and telegraphic transfer service.—The Director of Posts may, upon evidence
satisfactory to him that any person or company is engaged in conducting any lottery, gift enterprise or scheme for the distribution of money,
or of any real or personal property by lot, chance, or drawing of any kind, or that any person or company is conducting any scheme, device,
or enterprise for obtaining money or property of any kind through the mails by means of false or fraudulent pretenses, representations, or
promise, forbid the issue or payment by any postmaster of any postal money order or telegraphic transfer to said person or company or to
the agent of any such person or company, whether such agent is acting as an individual or as a firm, bank, corporation, or association of
any kind, and may provide by regulation for the return to the remitters of the sums named in money orders or telegraphic transfers drawn in
favor of such person or company or its agent.

The overtures were later formalized in a letter to the Postmaster General, dated October 31, 1960, in which the Caltex, thru counsel, enclosed a copy
of the contest rules and endeavored to justify its position that the contest does not violate the anti-lottery provisions of the Postal Law. Unimpressed,
the then Acting Postmaster General opined that the scheme falls within the purview of the provisions aforesaid and declined to grant the requested
clearance. In its counsel's letter of December 7, 1960, Caltex sought a reconsideration of the foregoing stand, stressing that there being involved no
consideration in the part of any contestant, the contest was not, under controlling authorities, condemnable as a lottery. Relying, however, on an
opinion rendered by the Secretary of Justice on an unrelated case seven years before (Opinion 217, Series of 1953), the Postmaster General
maintained his view that the contest involves consideration, or that, if it does not, it is nevertheless a "gift enterprise" which is equally banned by the
Postal Law, and in his letter of December 10, 1960 not only denied the use of the mails for purposes of the proposed contest but as well threatened
that if the contest was conducted, "a fraud order will have to be issued against it (Caltex) and all its representatives".

Caltex thereupon invoked judicial intervention by filing the present petition for declaratory relief against Postmaster General Enrico Palomar, praying
"that judgment be rendered declaring its 'Caltex Hooded Pump Contest' not to be violative of the Postal Law, and ordering respondent to allow
petitioner the use of the mails to bring the contest to the attention of the public". After issues were joined and upon the respective memoranda of the
parties, the trial court rendered judgment as follows:

In view of the foregoing considerations, the Court holds that the proposed 'Caltex Hooded Pump Contest' announced to be conducted by
the petitioner under the rules marked as Annex B of the petitioner does not violate the Postal Law and the respondent has no right to bar
the public distribution of said rules by the mails.

The respondent appealed.

The parties are now before us, arrayed against each other upon two basic issues: first, whether the petition states a sufficient cause of action for
declaratory relief; and second, whether the proposed "Caltex Hooded Pump Contest" violates the Postal Law. We shall take these up in seriatim.

1. By express mandate of section 1 of Rule 66 of the old Rules of Court, which was the applicable legal basis for the remedy at the time it was invoked,
declaratory relief is available to any person "whose rights are affected by a statute . . . to determine any question of construction or validity arising
under the . . . statute and for a declaration of his rights thereunder" (now section 1, Rule 64, Revised Rules of Court). In amplification, this Court,
conformably to established jurisprudence on the matter, laid down certain conditions sine qua non therefor, to wit: (1) there must be a justiciable
controversy; (2) the controversy must be between persons whose interests are adverse; (3) the party seeking declaratory relief must have a legal
interest in the controversy; and (4) the issue involved must be ripe for judicial determination (Tolentino vs. The Board of Accountancy, et al., G.R. No.
L-3062, September 28, 1951; Delumen, et al. vs. Republic of the Philippines, 50 O.G., No. 2, pp. 576, 578-579; Edades vs. Edades, et al., G.R. No. L-
8964, July 31, 1956). The gravamen of the appellant's stand being that the petition herein states no sufficient cause of action for declaratory relief, our
duty is to assay the factual bases thereof upon the foregoing crucible.

As we look in retrospect at the incidents that generated the present controversy, a number of significant points stand out in bold relief. The appellee
(Caltex), as a business enterprise of some consequence, concededly has the unquestioned right to exploit every legitimate means, and to avail of all
appropriate media to advertise and stimulate increased patronage for its products. In contrast, the appellant, as the authority charged with the
enforcement of the Postal Law, admittedly has the power and the duty to suppress transgressions thereof — particularly thru the issuance of fraud
orders, under Sections 1982 and 1983 of the Revised Administrative Code, against legally non-mailable schemes. Obviously pursuing its right
aforesaid, the appellee laid out plans for the sales promotion scheme hereinbefore detailed. To forestall possible difficulties in the dissemination of
information thereon thru the mails, amongst other media, it was found expedient to request the appellant for an advance clearance therefor. However,
likewise by virtue of his jurisdiction in the premises and construing the pertinent provisions of the Postal Law, the appellant saw a violation thereof in
the proposed scheme and accordingly declined the request. A point of difference as to the correct construction to be given to the applicable statute was
thus reached. Communications in which the parties expounded on their respective theories were exchanged. The confidence with which the appellee
insisted upon its position was matched only by the obstinacy with which the appellant stood his ground. And this impasse was climaxed by the
appellant's open warning to the appellee that if the proposed contest was "conducted, a fraud order will have to be issued against it and all its
representatives."

Against this backdrop, the stage was indeed set for the remedy prayed for. The appellee's insistent assertion of its claim to the use of the mails for its
proposed contest, and the challenge thereto and consequent denial by the appellant of the privilege demanded, undoubtedly spawned a live
controversy. The justiciability of the dispute cannot be gainsaid. There is an active antagonistic assertion of a legal right on one side and a denial
thereof on the other, concerning a real — not a mere theoretical — question or issue. The contenders are as real as their interests are substantial. To
the appellee, the uncertainty occasioned by the divergence of views on the issue of construction hampers or disturbs its freedom to enhance its
business. To the appellant, the suppression of the appellee's proposed contest believed to transgress a law he has sworn to uphold and enforce is an
unavoidable duty. With the appellee's bent to hold the contest and the appellant's threat to issue a fraud order therefor if carried out, the contenders are
confronted by the ominous shadow of an imminent and inevitable litigation unless their differences are settled and stabilized by a tranquilizing
declaration (Pablo y Sen, et al. vs. Republic of the Philippines, G.R. No. L-6868, April 30, 1955). And, contrary to the insinuation of the appellant, the
time is long past when it can rightly be said that merely the appellee's "desires are thwarted by its own doubts, or by the fears of others" — which
admittedly does not confer a cause of action. Doubt, if any there was, has ripened into a justiciable controversy when, as in the case at bar, it was
translated into a positive claim of right which is actually contested (III Moran, Comments on the Rules of Court, 1963 ed., pp. 132-133, citing:
Woodward vs. Fox West Coast Theaters, 36 Ariz., 251, 284 Pac. 350).

We cannot hospitably entertain the appellant's pretense that there is here no question of construction because the said appellant "simply applied the
clear provisions of the law to a given set of facts as embodied in the rules of the contest", hence, there is no room for declaratory relief. The infirmity of
this pose lies in the fact that it proceeds from the assumption that, if the circumstances here presented, the construction of the legal provisions can be
divorced from the matter of their application to the appellee's contest. This is not feasible. Construction, verily, is the art or process of discovering and
expounding the meaning and intention of the authors of the law with respect to its application to a given case, where that intention is rendered doubtful,
amongst others, by reason of the fact that the given case is not explicitly provided for in the law (Black, Interpretation of Laws, p. 1). This is precisely
the case here. Whether or not the scheme proposed by the appellee is within the coverage of the prohibitive provisions of the Postal Law inescapably
requires an inquiry into the intended meaning of the words used therein. To our mind, this is as much a question of construction or interpretation as any
other.

Nor is it accurate to say, as the appellant intimates, that a pronouncement on the matter at hand can amount to nothing more than an advisory opinion
the handing down of which is anathema to a declaratory relief action. Of course, no breach of the Postal Law has as yet been committed. Yet, the
disagreement over the construction thereof is no longer nebulous or contingent. It has taken a fixed and final shape, presenting clearly defined legal
issues susceptible of immediate resolution. With the battle lines drawn, in a manner of speaking, the propriety — nay, the necessity — of setting the
dispute at rest before it accumulates the asperity distemper, animosity, passion and violence of a full-blown battle which looms ahead (III Moran,
Comments on the Rules of Court, 1963 ed., p. 132 and cases cited), cannot but be conceded. Paraphrasing the language in Zeitlin vs. Arnebergh 59
Cal., 2d., 901, 31 Cal. Rptr., 800, 383 P. 2d., 152, cited in 22 Am. Jur., 2d., p. 869, to deny declaratory relief to the appellee in the situation into which it
has been cast, would be to force it to choose between undesirable alternatives. If it cannot obtain a final and definitive pronouncement as to whether
the anti-lottery provisions of the Postal Law apply to its proposed contest, it would be faced with these choices: If it launches the contest and uses the
mails for purposes thereof, it not only incurs the risk, but is also actually threatened with the certain imposition, of a fraud order with its concomitant
stigma which may attach even if the appellee will eventually be vindicated; if it abandons the contest, it becomes a self-appointed censor, or permits
the appellant to put into effect a virtual fiat of previous censorship which is constitutionally unwarranted. As we weigh these considerations in one
equation and in the spirit of liberality with which the Rules of Court are to be interpreted in order to promote their object (section 1, Rule 1, Revised
Rules of Court) — which, in the instant case, is to settle, and afford relief from uncertainty and insecurity with respect to, rights and duties under a law
— we can see in the present case any imposition upon our jurisdiction or any futility or prematurity in our intervention.

The appellant, we apprehend, underrates the force and binding effect of the ruling we hand down in this case if he believes that it will not have the final
and pacifying function that a declaratory judgment is calculated to subserve. At the very least, the appellant will be bound. But more than this, he
obviously overlooks that in this jurisdiction, "Judicial decisions applying or interpreting the law shall form a part of the legal system" (Article 8, Civil
Code of the Philippines). In effect, judicial decisions assume the same authority as the statute itself and, until authoritatively abandoned, necessarily
become, to the extent that they are applicable, the criteria which must control the actuations not only of those called upon to abide thereby but also of
those in duty bound to enforce obedience thereto. Accordingly, we entertain no misgivings that our resolution of this case will terminate the controversy
at hand.

It is not amiss to point out at this juncture that the conclusion we have herein just reached is not without precedent. In Liberty Calendar Co. vs. Cohen,
19 N.J., 399, 117 A. 2d., 487, where a corporation engaged in promotional advertising was advised by the county prosecutor that its proposed sales
promotion plan had the characteristics of a lottery, and that if such sales promotion were conducted, the corporation would be subject to criminal
prosecution, it was held that the corporation was entitled to maintain a declaratory relief action against the county prosecutor to determine the legality
of its sales promotion plan. In pari materia, see also: Bunis vs. Conway, 17 App. Div. 2d., 207, 234 N.Y.S. 2d., 435; Zeitlin vs. Arnebergh,
supra; Thrillo, Inc. vs. Scott, 15 N.J. Super. 124, 82 A. 2d., 903.

In fine, we hold that the appellee has made out a case for declaratory relief.

2. The Postal Law, chapter 52 of the Revised Administrative Code, using almost identical terminology in sections 1954(a), 1982 and 1983
thereof, supra, condemns as absolutely non-mailable, and empowers the Postmaster General to issue fraud orders against, or otherwise deny the use
of the facilities of the postal service to, any information concerning "any lottery, gift enterprise, or scheme for the distribution of money, or of any real or
personal property by lot, chance, or drawing of any kind". Upon these words hinges the resolution of the second issue posed in this appeal.

Happily, this is not an altogether untrodden judicial path. As early as in 1922, in "El Debate", Inc. vs. Topacio, 44 Phil., 278, 283-284, which significantly
dwelt on the power of the postal authorities under the abovementioned provisions of the Postal Law, this Court declared that —

While countless definitions of lottery have been attempted, the authoritative one for this jurisdiction is that of the United States Supreme
Court, in analogous cases having to do with the power of the United States Postmaster General, viz.: The term "lottery" extends to all
schemes for the distribution of prizes by chance, such as policy playing, gift exhibitions, prize concerts, raffles at fairs, etc., and various
forms of gambling. The three essential elements of a lottery are: First, consideration; second, prize; and third, chance. (Horner vs. States
[1892], 147 U.S. 449; Public Clearing House vs. Coyne [1903], 194 U.S., 497; U.S. vs. Filart and Singson [1915], 30 Phil., 80; U.S. vs.
Olsen and Marker [1917], 36 Phil., 395; U.S. vs. Baguio [1919], 39 Phil., 962; Valhalla Hotel Construction Company vs. Carmona, p.
233, ante.)

Unanimity there is in all quarters, and we agree, that the elements of prize and chance are too obvious in the disputed scheme to be the subject of
contention. Consequently as the appellant himself concedes, the field of inquiry is narrowed down to the existence of the element of consideration
therein. Respecting this matter, our task is considerably lightened inasmuch as in the same case just cited, this Court has laid down a definitive yard-
stick in the following terms —

In respect to the last element of consideration, the law does not condemn the gratuitous distribution of property by chance, if no
consideration is derived directly or indirectly from the party receiving the chance, but does condemn as criminal schemes in which a
valuable consideration of some kind is paid directly or indirectly for the chance to draw a prize.

Reverting to the rules of the proposed contest, we are struck by the clarity of the language in which the invitation to participate therein is couched. Thus
—

No puzzles, no rhymes? You don't need wrappers, labels or boxtops? You don't have to buy anything? Simply estimate the actual number
of liter the Caltex gas pump with the hood at your favorite Caltex dealer will dispense from — to —, and win valuable prizes . . . ." .

Nowhere in the said rules is any requirement that any fee be paid, any merchandise be bought, any service be rendered, or any value whatsoever be
given for the privilege to participate. A prospective contestant has but to go to a Caltex station, request for the entry form which is available on demand,
and accomplish and submit the same for the drawing of the winner. Viewed from all angles or turned inside out, the contest fails to exhibit any
discernible consideration which would brand it as a lottery. Indeed, even as we head the stern injunction, "look beyond the fair exterior, to the
substance, in order to unmask the real element and pernicious tendencies which the law is seeking to prevent" ("El Debate", Inc. vs. Topacio, supra, p.
291), we find none. In our appraisal, the scheme does not only appear to be, but actually is, a gratuitous distribution of property by chance.

There is no point to the appellant's insistence that non-Caltex customers who may buy Caltex products simply to win a prize would actually be indirectly
paying a consideration for the privilege to join the contest. Perhaps this would be tenable if the purchase of any Caltex product or the use of any Caltex
service were a pre-requisite to participation. But it is not. A contestant, it hardly needs reiterating, does not have to buy anything or to give anything of
value.1awphîl.nèt
Off-tangent, too, is the suggestion that the scheme, being admittedly for sales promotion, would naturally benefit the sponsor in the way of increased
patronage by those who will be encouraged to prefer Caltex products "if only to get the chance to draw a prize by securing entry blanks". The required
element of consideration does not consist of the benefit derived by the proponent of the contest. The true test, as laid down in People vs. Cardas, 28 P.
2d., 99, 137 Cal. App. (Supp.) 788, is whether the participant pays a valuable consideration for the chance, and not whether those conducting the
enterprise receive something of value in return for the distribution of the prize. Perspective properly oriented, the standpoint of the contestant is all that
matters, not that of the sponsor. The following, culled from Corpus Juris Secundum, should set the matter at rest:

The fact that the holder of the drawing expects thereby to receive, or in fact does receive, some benefit in the way of patronage or
otherwise, as a result of the drawing; does not supply the element of consideration. Griffith Amusement Co. vs. Morgan, Tex. Civ. App., 98
S.W., 2d., 844" (54 C.J.S., p. 849).

Thus enlightened, we join the trial court in declaring that the "Caltex Hooded Pump Contest" proposed by the appellee is not a lottery that may be
administratively and adversely dealt with under the Postal Law.

But it may be asked: Is it not at least a "gift enterprise, or scheme for the distribution of money, or of any real or personal property by lot, chance, or
drawing of any kind", which is equally prescribed? Incidentally, while the appellant's brief appears to have concentrated on the issue of consideration,
this aspect of the case cannot be avoided if the remedy here invoked is to achieve its tranquilizing effect as an instrument of both curative and
preventive justice. Recalling that the appellant's action was predicated, amongst other bases, upon Opinion 217, Series 1953, of the Secretary of
Justice, which opined in effect that a scheme, though not a lottery for want of consideration, may nevertheless be a gift enterprise in which that element
is not essential, the determination of whether or not the proposed contest — wanting in consideration as we have found it to be — is a prohibited gift
enterprise, cannot be passed over sub silencio.

While an all-embracing concept of the term "gift enterprise" is yet to be spelled out in explicit words, there appears to be a consensus among
lexicographers and standard authorities that the term is commonly applied to a sporting artifice of under which goods are sold for their market value but
by way of inducement each purchaser is given a chance to win a prize (54 C.J.S., 850; 34 Am. Jur., 654; Black, Law Dictionary, 4th ed., p. 817;
Ballantine, Law Dictionary with Pronunciations, 2nd ed., p. 55; Retail Section of Chamber of Commerce of Plattsmouth vs. Kieck, 257 N.W., 493, 128
Neb. 13; Barker vs. State, 193 S.E., 605, 56 Ga. App., 705; Bell vs. State, 37 Tenn. 507, 509, 5 Sneed, 507, 509). As thus conceived, the term clearly
cannot embrace the scheme at bar. As already noted, there is no sale of anything to which the chance offered is attached as an inducement to the
purchaser. The contest is open to all qualified contestants irrespective of whether or not they buy the appellee's products.

Going a step farther, however, and assuming that the appellee's contest can be encompassed within the broadest sweep that the term "gift enterprise"
is capable of being extended, we think that the appellant's pose will gain no added comfort. As stated in the opinion relied upon, rulings there are
indeed holding that a gift enterprise involving an award by chance, even in default of the element of consideration necessary to constitute a lottery, is
prohibited (E.g.: Crimes vs. States, 235 Ala 192, 178 So. 73; Russell vs. Equitable Loan & Sec. Co., 129 Ga. 154, 58 S.E., 88; State ex rel. Stafford vs.
Fox-Great Falls Theater Corporation, 132 P. 2d., 689, 694, 698, 114 Mont. 52). But this is only one side of the coin. Equally impressive authorities
declare that, like a lottery, a gift enterprise comes within the prohibitive statutes only if it exhibits the tripartite elements of prize, chance and
consideration (E.g.: Bills vs. People, 157 P. 2d., 139, 142, 113 Colo., 326; D'Orio vs. Jacobs, 275 P. 563, 565, 151 Wash., 297; People vs. Psallis, 12
N.Y.S., 2d., 796; City and County of Denver vs. Frueauff, 88 P., 389, 394, 39 Colo., 20, 7 L.R.A., N.S., 1131, 12 Ann. Cas., 521; 54 C.J.S., 851, citing:
Barker vs. State, 193 S.E., 605, 607, 56 Ga. App., 705; 18 Words and Phrases, perm. ed., pp. 590-594). The apparent conflict of opinions is explained
by the fact that the specific statutory provisions relied upon are not identical. In some cases, as pointed out in 54 C.J.S., 851, the terms "lottery" and
"gift enterprise" are used interchangeably (Bills vs. People, supra); in others, the necessity for the element of consideration or chance has been
specifically eliminated by statute. (54 C.J.S., 351-352, citing Barker vs. State, supra; State ex rel. Stafford vs. Fox-Great Falls Theater
Corporation, supra). The lesson that we derive from this state of the pertinent jurisprudence is, therefore, that every case must be resolved upon the
particular phraseology of the applicable statutory provision.

Taking this cue, we note that in the Postal Law, the term in question is used in association with the word "lottery". With the meaning of lottery settled,
and consonant to the well-known principle of legal hermeneutics noscitur a sociis — which Opinion 217 aforesaid also relied upon although only insofar
as the element of chance is concerned — it is only logical that the term under a construction should be accorded no other meaning than that which is
consistent with the nature of the word associated therewith. Hence, if lottery is prohibited only if it involves a consideration, so also must the term "gift
enterprise" be so construed. Significantly, there is not in the law the slightest indicium of any intent to eliminate that element of consideration from the
"gift enterprise" therein included.

This conclusion firms up in the light of the mischief sought to be remedied by the law, resort to the determination thereof being an accepted extrinsic
aid in statutory construction. Mail fraud orders, it is axiomatic, are designed to prevent the use of the mails as a medium for disseminating printed
matters which on grounds of public policy are declared non-mailable. As applied to lotteries, gift enterprises and similar schemes, justification lies in the
recognized necessity to suppress their tendency to inflame the gambling spirit and to corrupt public morals (Com. vs. Lund, 15 A. 2d., 839, 143 Pa.
Super. 208). Since in gambling it is inherent that something of value be hazarded for a chance to gain a larger amount, it follows ineluctably that where
no consideration is paid by the contestant to participate, the reason behind the law can hardly be said to obtain. If, as it has been held —

Gratuitous distribution of property by lot or chance does not constitute "lottery", if it is not resorted to as a device to evade the law and no
consideration is derived, directly or indirectly, from the party receiving the chance, gambling spirit not being cultivated or stimulated thereby.
City of Roswell vs. Jones, 67 P. 2d., 286, 41 N.M., 258." (25 Words and Phrases, perm. ed., p. 695, emphasis supplied).

we find no obstacle in saying the same respecting a gift enterprise. In the end, we are persuaded to hold that, under the prohibitive provisions of the
Postal Law which we have heretofore examined, gift enterprises and similar schemes therein contemplated are condemnable only if, like lotteries, they
involve the element of consideration. Finding none in the contest here in question, we rule that the appellee may not be denied the use of the mails for
purposes thereof.

Recapitulating, we hold that the petition herein states a sufficient cause of action for declaratory relief, and that the "Caltex Hooded Pump Contest" as
described in the rules submitted by the appellee does not transgress the provisions of the Postal Law.

ACCORDINGLY, the judgment appealed from is affirmed. No costs.

Concepcion, C.J., Reyes, J.B.L., Barrera, Dizon, Regala, Makalintal, Bengzon, J.P., Zaldivar and Sanchez, JJ., concur.

PEOPLE VS. MAPA

Facts:

August 14, 1962 reading as follows: "The undersigned accuses MARIO MAPA Y MAPULONG of a violation of
Section 878 in connection with Section 2692 of the Revised Administrative Code,... as amended by
Commonwealth Act No. 56 and as further amended by Republic Act No. 4, committed as follows: That on or
about the 13th day of August, 1962, in the City of Manila, Philippines, the said accused did then and there...
wilfully and unlawfully have in his possession and under his custody and control one home-made revolver (Paltik),
Cal. 22, without serial number, with six (6) rounds of ammunition, without first having secured the necessary
license or permit... therefor from the corresponding authorities. Contrary to law."

Issues:

whether or not the appointment to and the holding of the position of a secret agent to the provincial governor
would constitute a sufficient defense to a prosecution... for the crime of illegal possession of firearm and
ammunition.

Ruling:

We hold that it does not.

The law cannot be any clearer. No provision is made for a secret agent. As such he is not exempt. Our task is
equally clear. The first and fundamental duty of courts is... to apply the law. "Construction and interpretation
come only after it has been demonstrated that application is impossible or inadequate without them."[7] The
conviction of the accused must... stand. It cannot be set aside.

WHEREFORE, the judgment appealed from is affirmed.

EN BANC

[G.R. No. L-22301. August 30, 1967.]

THE PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. MARIO MAPA Y MAPULONG, Defendant-Appellant.

Francisco P. Cabigao for defendant and Appellant.

Solicitor General Arturo A. Alafriz, Asst. Solicitor General F .R. Rosete and Solicitor O. C . Hernandez for plaintiff and
appellee.

SYLLABUS

1. STATUTORY CONSTRUCTION; DUTY OF COURTS TO APPLY THE LAW; WHEN A LAW SHOULD BE CONSTRUED AND INTERPRETED.
— The first and fundamental duty of courts is to apply the law. Construction and interpretation come only after it has been
demonstrated that application is impossible or inadequate without them.

2. ILLEGAL POSSESSION OF FIREARMS; LICENSE REQUIREMENT; SECRET AGENT NOT EXEMPT; CASE AT BAR. — As secret agent
is not included in the enumeration in Section 897 of the Revised Administrative Code of persons who are not prohibited in Section
878, Revised Administrative Code, as amended by Republic Act No. 4, from possessing "any firearm, detached parts of firearms or
ammunition therefor, or any instrument or implement used or intended to be used in the manufacture of firearms, parts of
firearms, or ammunition," appellant is not exempt from the requirement of license.

3. ID.; ID.; DOCTRINE IN PEOPLE V. MACARANDANG OVERRULED. — Reliance of the accused in the case at bar on People v.
Macarandang, 106 Phil. 713, where a secret agent was acquitted on appeal on the assumption that the appointment "of the accused
as a secret agent to assist in the maintenance of peace and order campaigns and detection of crimes, sufficiently put him within the
category of a `peace officer’ equivalent even to a member of the municipal police expressly covered by section 897," is misplaced.
It is not within the power of the Supreme Court to set aside the clear and explicit mandate of a statutory provision.
 DECISION

FERNANDO, J.:

The sole question in this appeal from a judgment of conviction by the lower court is whether or not the appointment to and the
holding of the position of a secret agent to the provincial governor would constitute a sufficient defense to a prosecution for the
crime of illegal possession of firearm and ammunition. We hold that it does not.

The accused in this case was indicted for the above offense in an information dated August 14, 1962 reading as follows: "The
undersigned accuses MARIO MAPA Y MAPULONG of a violation of Section 878 in connection with Section 2692 of the Revised
Administrative Code, as amended by Commonwealth Act No. 56 and as further amended by Republic Act No. 4, committed as
follows: That on or about the 13th day of August, 1962, in the City of Manila, Philippines, the said accused did then and there
wilfully and unlawfully have in his possession and under his custody and control one home-made revolver (Paltik), Cal. 22, without
serial number, with six (6) rounds of ammunition, without first having secured the necessary license or permit therefor from the
corresponding authorities. Contrary to law." cralaw virtua1aw library

When the case was called for hearing on September 3, 1963, the lower court at the outset asked the counsel for the accused: "May
counsel stipulate that the accused was found in possession of the gun involved in this case, that he has neither a permit or license
to possess the same and that we can submit the same on a question of law whether or not an agent of the governor can hold a
firearm without a permit issued by the Philippine Constabulary." After counsel sought from the fiscal an assurance that he would not
question the authenticity of his exhibits, the understanding being that only a question of law would be submitted for decision, he
explicitly specified such question to be "whether or not a secret agent is not required to get a license for his firearm."
cralaw virtua1aw library

Upon the lower court stating that the fiscal should examine the documents so that he could pass on their authenticity, the fiscal
asked the following question: "Does the accused admit that this pistol cal. 22 revolver with six rounds of ammunition mentioned in
the information was found in his possession on August 13, 1962, in the City of Manila without first having secured the necessary
license or permit thereof from the correspondent authority?" The accused now the appellant, answered categorically: "Yes, Your
Honor." Upon which, the lower court made a statement: "The accused admits, Yes, and his counsel Atty. Cabigao also affirms that
the accused admits." cralaw virtua1aw library

Forthwith, the fiscal announced that he was "willing to submit the same for decision." Counsel for the accused on his part presented
four (4) exhibits consisting of his appointment ‘as secret agent of the Hon. Feliciano Leviste, then Governor of Batangas, dated June
2, 1962; 1 another document likewise issued by Gov. Leviste also addressed to the accused directing him to proceed to Manila,
Pasay and Quezon City on a confidential mission; 2 the oath of office of the accused as such secret agent; 3 a certificate dated
March 11, 1963, to the effect that the accused "is a secret agent" of Gov. Leviste. 4 Counsel for the accused then stated that with
the presentation of the above exhibits he was "willing to submit the case on the question of whether or not a secret agent duly
appointed and qualified as such of the provincial governor is exempt from the requirement of having a license of firearm." The
exhibits were admitted and the parties were given time to file their respective memoranda.

Thereafter on November 27, 1963, the lower court rendered a decision convicting the accused "of the crime of illegal possession of
firearms and sentenced to an indeterminate penalty of from one year and one day to two years and to pay the costs. The firearm
and ammunition confiscated from him are forfeited in favor of the Government." cralaw virtua1aw library

The only question being one of law, the appeal was taken to this Court. The decision must be affirmed.

The law is explicit that except as thereafter specially allowed, "it shall be unlawful for any person to . . . possess any firearm,
detached parts of firearms or ammunition therefor, or any instrument or implement used or intended to be used in the manufacture
of firearms, parts of firearms, or ammunition." 5 The next section provides that "firearms and ammunition regularly and lawfully
issued to officers, soldiers, sailors, or marines [of the Armed Forces of the Philippines, the Philippine Constabulary, guards in the
employment of the Bureau of Prisons, municipal police, provincial governors, lieutenant governors, provincial treasurers, municipal
treasurers, municipal mayors, and guards of provincial prisoners and jails," are not covered" when such firearms are in possession
of such officials and public servants for use in the performance of their official duties." 6

The law cannot be any clearer. No provision is made for a secret agent. As such he is not exempt. Our task is equally clear. The
first and fundamental duty of courts is to apply the law. "Construction and interpretation come only after it has been demonstrated
that application is impossible or inadequate without them." 7 The conviction of the accused must stand. It cannot be set aside.
Accused however would rely on People v. Macarandang, 8 where a secret agent was acquitted on appeal on the assumption that the
appointment "of the accused as a secret agent to assist in the maintenance of peace and order campaigns and detection of crimes,
sufficiently put him within the category of a ‘peace officer’ equivalent even to a member of the municipal police expressly covered
by section 879." Such reliance is misplaced. It is not within the power of this Court to set aside the clear and explicit mandate of a
statutory provision. To the extent therefore that this decision conflicts with what was held in People v. Macarandang, it no longer
speaks with authority.

Wherefore, the judgment appealed from is affirmed.

Concepcion, C.J., Reyes, J .B.L., Dizon, Makalintal, Bengzon, J .P., Zaldivar, Sanchez, Castro and Angeles, JJ., concur.
DAONG V. MUNICIPAL JUDGE OF SAN NICOLAS

Facts:

On 23 March 1971, the respondent spouses Antero and Amanda Agonoy filed a petition with the Municipal Court
of San Nicolas, Ilocos Norte, seeking the adoption of the minors Quirino Bonilla and Wilson Marcos.

The petition was set for hearing on 24 April 1971 and notices thereof were caused to be served upon the Office of
the Solicitor General and ordered published in the ILOCOS TIMES, a weekly nespaper of general circulation in the
province of Ilocos Norte, with editorial offices in

Laoag City

On 22 April 1971, the minors Roderick and Romel Daoang, assisted by their father and guardian ad litem, the
petitioners herein, filed an opposition to the aforementioned petition for adoption, claiming that the spouses
Antero and Amanda Agonoy had a legitimate daughter... named Estrella Agonoy, oppositors' mother, who died on
1 March 1971, and therefore, said spouses were disqualified to adopt under Art. 335 of the Civil Code

After the required publication of notice had been accomplished, evidence was presented. Thereafter, the
Municipal Court of San Nicolas, Ilocos Norte rendered its decision, granting the petition for adoption

Hence, the present recourse by the petitioners (oppositors in the lower court).

Issues:

whether or not the respondent spouses Antero Agonoy and Amanda Ramos-Agonoy are disqualified to adopt
under paragraph (1), Art. 335 of the Civil Code.

Ruling:

"Art. 335. The following cannot adopt:

(1) Those who have legitimate, legitimated, acknowledged natural children, or children by legal fiction;

We find, however, that the words used in paragraph (1) of Art. 335 of the Civil Code, in enumerating the persons
who cannot adopt, are clear and unambiguous. The children mentioned therein have a clearly defined meaning in
law and, as pointed out by the respondent judge, do not... include grandchildren.

We find, however, that the words used in paragraph (1) of Art. 335 of the Civil Code, in enumerating the persons
who cannot adopt, are clear and unambiguous. The children mentioned therein have a clearly defined meaning in
law and, as pointed out by the respondent judge, do not... include grandchildren.

Well known is the rule of statutory construction to the effect that a statute clear and unambiguous on its face
need not be interpreted; stated otherwise, the rule is that only statutes with an ambiguous or doubtful meaning
may be the subject of statutory construction[7].

The Civil Code of Spain, which was once in force in the Philippines, and which... served as the pattern for the
Civil Code of the Philippines, in its Article 174, disqualified persons who have legitimate or legitimated
descendants from adopting. Under this article, the spouses Antero and Amanda Agonoy would have been
disqualified to adopt as they have... legitimate grandchildren, the petitioners herein. But, when the Civil Code of
the Philippines was adopted, the word "descendants" was changed to "children", in paragraph (1) of Article 335.

Adoption used to be for the benefit of the adaptor. It was intended 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[8]. The present tendency, however, is geared more towards the promotion of
the welfare of the child and the enhancement of his opportunities for a useful and happy life, and every intend-
ment is sustained to promote that objective[9]. Under the... law now in force, having legitimate, legitimated,
acknowledged natural children, or children by legal fiction, is no longer a ground for disqualification to adopt[10].

Principles:

Well known is the rule of statutory construction to the effect that a statute clear and unambiguous on its face
need not be interpreted; stated otherwise, the rule is that only statutes with an ambiguous or doubtful meaning
may be the subject of statutory construction

Well known is the rule of statutory construction to the effect that a statute clear and unambiguous on its face
need not be interpreted; stated otherwise, the rule is that only statutes with an ambiguous or doubtful meaning
may be the subject of statutory construction[7].
 SECOND DIVISION

[G.R. No. L-34568. March 28, 1988.]

RODERICK DAOANG and ROMMEL DAOANG, assisted by their father, ROMEO DAOANG, Petitioners, v. THE MUNICIPAL
JUDGE, SAN NICOLAS, ILOCOS NORTE, ANTERO AGONOY and AMANDA RAMOS-AGONOY, Respondents.

SYLLABUS

1. STATUTORY CONSTRUCTION AND INTERPRETATION; ART. 335, (par. 1), CIVIL CODE; WORDS USED IN ENUMERATING
DISQUALIFIED TO ADOPT; CLEAR AND UNAMBIGUOUS. — We find, that the words used in paragraph (1) of Art. 335 of the Civil
Code, in enumerating the persons who cannot adopt, are clear and unambiguous. The children mentioned therein have a clearly
defined meaning in law and, as pointed out by the respondent judge, do not include grandchildren.

2. ID.; A STATUTE CLEAR AND UNAMBIGUOUS NEED NOT BE INTERPRETED. — Well known is the rule of statutory construction to
the effect that a statute clear and unambiguous on its face need not be interpreted; stated otherwise, the rule is that only statutes
with an ambiguous or doubtful meaning may be the subject of statutory construction.

3. CIVIL LAW; ADOPTION; OBJECT. — Adoption used to be for the benefit of the adoptor. It was intended 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. The present tendency, however, is geared more towards the promotion of the welfare of
the child and the enhancement of his opportunities for a useful and happy life, and every intendment is sustained to promote that
objective.

4. ID.; CHILD AND YOUTH WELFARE CLUB; ADOPTION; HAVING A CHILD, NO LONGER A DISQUALIFICATION TO ADOPT. — Under
the law now in force, having legitimate, legitimated, acknowledged natural children, or children by legal fiction, is no longer a
ground for disqualification to adopt.

DECISION

PADILLA, J.:

This is a petition for review on certiorari of the decision, dated 30 June 1971, rendered by the respondent judge * in Spec. Proc.
No. 37 of the Municipal Court of San Nicolas, Ilocos Norte, entitled: "In re Adoption of the Minors Quirino Bonilla and Wilson Marcos;
Antero Agonoy and Amanda R. Agonoy, petitioners", the dispositive part of which reads, as follows: jgc:chanrobles.com.ph

"Wherefore, Court renders judgment declaring that henceforth Quirino Bonilla and Wilson Marcos be, to all legitimate intents and
purposes, the children by adoption of the joint petitioners Antero Agonoy and Amanda R. Agonoy and that the former be freed from
legal obedience and maintenance by their respective parents, Miguel Bonilla and Laureana Agonoy for Quirino Bonilla and Modesto
Marcos and Benjamina Gonzales for Wilson Marcos and their family names ‘Bonilla’ and ‘Marcos’ be changed with ‘Agonoy’, which is
the family name of the petitioners.

"Successional rights of the children and that of their adopting parents shall be governed by the pertinent provisions of the New Civil
Code.

"Let copy of this decision be furnished and entered into the records of the Local Civil Registry of San Nicolas, Ilocos Norte, for its
legal effects at the expense of the petitioners." 1

The undisputed facts of the case are as follows: chanrob1es virtual 1aw library

On 23 March 1971, the respondent spouses Antero and Amanda Agonoy filed a petition with the Municipal Court of San Nicolas,
Ilocos Norte, seeking the adoption of the minors Quirino Bonilla and Wilson Marcos. The case, entitled: In re Adoption of the Minors
Quirino Bonilla and Wilson Marcos, Antero Agonoy and Amanda Ramos-Agonoy, petitioners", was docketed therein as Spec. Proc.
No. 37. 2

The petition was set for hearing on 24 April 1971 and notices thereof were caused to be served upon the Office of the Solicitor
General and ordered published in the ILOCOS TIMES, a weekly newspaper of general circulation in the province of Ilocos Norte, with
editorial offices in Laoag City. 3

On 22 April 1971, the minors Roderick and Rommel Daoang, assisted by their father and guardian ad litem, the petitioners herein,
filed an opposition to the aforementioned petition for adoption, claiming that the spouses Antero and Amanda Agonoy had a
legitimate daughter named Estrella Agonoy, oppositors’ mother, who died on 1 March 1971, and therefore, said spouses were
disqualified to adopt under Art. 335 of the Civil Code. 4

After the required publication of notice had been accomplished, evidence was presented. Thereafter, the Municipal Court of San
Nicolas, Ilocos Norte rendered its decision, granting the petition for adoption. 5
Hence, the present recourse by the petitioners (oppositors in the lower court).

The sole issue for consideration is one of law and it is whether or not the respondent spouses Antero Agonoy and Amanda Ramos-
Agonoy are disqualified to adopt under paragraph (1), Art. 335 of the Civil Code. cralawnad

The pertinent provision of law reads, as follows: jgc:chanrobles.com.ph

"Art. 335. The following cannot adopt: chanrob1es virtual 1aw library

(1) Those who have legitimate, legitimated, acknowledged natural children, or children by legal fiction;

x x x"

In overruling the opposition of the herein petitioners, the respondent judge held that "to add grandchild or grandchildren in this
article where no grandchild is included would violate to (sic) the legal maxim that what is expressly included would naturally
exclude what is not included."

But, it is contended by the petitioners, citing the case of In re Adoption of Millendez, 6 that the adoption of Quirino Bonilla and
Wilson Marcos would not only introduce a foreign element into the family unit, but would result in the reduction of their legitimes. It
would also produce an indirect, permanent and irrevocable disinheritance which is contrary to the policy of the law that a
subsequent reconciliation between the offender and the offended person deprives the latter of the right to disinherit and renders
ineffectual any disinheritance that may have been made.

We find, however, that the words used in paragraph (1) of Art. 335 of the Civil Code, in enumerating the persons who cannot
adopt, are clear and unambiguous. The children mentioned therein have a clearly defined meaning in law and, as pointed out by the
respondent judge, do not include grandchildren. cralawnad

Well known is the rule of statutory construction to the effect that a statute clear and unambiguous on its face need not be
interpreted; stated otherwise, the rule is that only statutes with an ambiguous or doubtful meaning may be the subject of statutory
construction. 7

Besides, it appears that the legislator, in enacting the Civil Code of the Philippines, obviously intended that only those persons who
have certain classes of children, are disqualified to adopt. The Civil Code of Spain, which was once in force in the Philippines, and
which served as the pattern for the Civil Code of the Philippines, in its Article 174, disqualified persons who have legitimate or
legitimated descendants from adopting. Under this article, the spouses Antero and Amanda Agonoy would have been disqualified to
adopt as they have legitimate grandchildren, the petitioners herein. But, when the Civil Code of the Philippines was adopted, the
word "descendants" was changed to "children", in paragraph (1) of Article 335. chanrobles.com:cralaw:red

Adoption used to be for the benefit of the adoptor. It was intended 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. 8 The present tendency, however, is geared more towards the promotion of the welfare of the child and the
enhancement of his opportunities for a useful and happy life, and every intendment is sustained to promote that objective. 9 Under
the law now in force, having legitimate, legitimated, acknowledged natural children, or children by legal fiction, is no longer a
ground for disqualification to adopt. 10

WHEREFORE, the petition is DENIED. The judgment of the Municipal Court of San Nicolas, Ilocos Norte in Spec. Proc. No. 37 is
AFFIRMED. Without pronouncement as to costs in this instance.

SO ORDERED.

Yap, Melencio-Herrera, Paras and Sarmiento, JJ., concur.

The salary of the Chief Justice and of the Associate

Justices of the Supreme Court, and of judges of lower
courts shall be fixed by law. During their continuance in
office, their salary shall not be decreased. (Sec. 10, Art.
VIII, 1987 Constitution)
Facts:

The Chief Justice directed the Fiscal Management and Budget Office of the Supreme Court to discontinue the withholding of taxes from the
salaries of the Justices of the Supreme Court as well as from the salaries of all other members of the judiciary. This was affirmed by the
Supreme Court en banc.

Judges Nitafan, Polo and Savellano from RTC Manila filed a petition to prohibit and/or perpetually enjoin the Commissioner of Internal
Revenue and the Financial Officer of the Supreme Court, from making any deduction of withholding taxes from their salaries. They submit
that "any tax withheld from their emoluments or compensation as judicial officers constitutes a decrease or diminution of their salaries,
contrary to the provision of Section 10, Article VIII of the 1987 Constitution mandating that during their continuance in office, their salary
shall not be decreased," even as it is anathema to the Ideal of an independent judiciary envisioned in and by said Constitution."

Issue:

Are the members of the Judiciary exempt from income taxes?

No. The salaries of members of the Judiciary are subject to the general income tax applied to all taxpayers. Although such intent was
somehow and inadvertently not clearly set forth in the final text of the 1987 Constitution, the deliberations of the 1986 Constitutional
Commission regarding the constitutional provision in question until it was finally approved by the Commission disclosed that the true intent
of the framers was to make the salaries of members of the Judiciary taxable. The ascertainment of that intent is but in keeping with the
fundamental principle of constitutional construction that the intent of the framers of the organic law and of the people adopting it should be
given effect. The primary task in constitutional construction is to ascertain and thereafter assure the realization of the purpose of the framers
and of the people in the adoption of the Constitution. It may also be safely assumed that the people in ratifying the Constitution were guided
mainly by the explanation offered by the framers.

Hence, the doctrine in Perfecto v. Meer and Endencia vs. David (declared the salaries of members of the Judiciary exempt from payment of
the income tax and considered such payment as a diminution of their salaries during their continuance in office) do not apply anymore. The
framers of the fundamental law, as the alter ego of the people, have expressed in clear and unmistakable terms the meaning and import of
Section 10, Article VIII, of the 1987 Constitution that they have adopted.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 78780 July 23, 1987

DAVID G. NITAFAN, WENCESLAO M. POLO, and MAXIMO A. SAVELLANO, JR., petitioners,

vs.
COMMISSIONER OF INTERNAL REVENUE and THE FINANCIAL OFFICER, SUPREME COURT OF THE PHILIPPINES, respondents.

RESOLUTION

MELENCIO-HERRERA, J.:

Petitioners, the duly appointed and qualified Judges presiding over Branches 52, 19 and 53, respectively, of the Regional Trial Court, National Capital
Judicial Region, all with stations in Manila, seek to prohibit and/or perpetually enjoin respondents, the Commissioner of Internal Revenue and the
Financial Officer of the Supreme Court, from making any deduction of withholding taxes from their salaries.

In a nutshell, they submit that "any tax withheld from their emoluments or compensation as judicial officers constitutes a decrease or diminution of their
salaries, contrary to the provision of Section 10, Article VIII of the 1987 Constitution mandating that "(d)uring their continuance in office, their salary
shall not be decreased," even as it is anathema to the Ideal of an independent judiciary envisioned in and by said Constitution."

It may be pointed out that, early on, the Court had dealt with the matter administratively in response to representations that the Court direct its Finance
Officer to discontinue the withholding of taxes from salaries of members of the Bench. Thus, on June 4, 1987, the Court en banc had reaffirmed the
Chief Justice's directive as follows:

RE: Question of exemption from income taxation. — The Court REAFFIRMED the Chief Justice's previous and standing directive to the
Fiscal Management and Budget Office of this Court to continue with the deduction of the withholding taxes from the salaries of the Justices
of the Supreme Court as well as from the salaries of all other members of the judiciary.

That should have resolved the question. However, with the filing of this petition, the Court has deemed it best to settle the legal issue raised through
this judicial pronouncement. As will be shown hereinafter, the clear intent of the Constitutional Commission was to delete the proposed express grant of
exemption from payment of income tax to members of the Judiciary, so as to "give substance to equality among the three branches of Government" in
the words of Commissioner Rigos. In the course of the deliberations, it was further expressly made clear, specially with regard to Commissioner
Joaquin F. Bernas' accepted amendment to the amendment of Commissioner Rigos, that the salaries of members of the Judiciary would be subject to
the general income tax applied to all taxpayers.

This intent was somehow and inadvertently not clearly set forth in the final text of the Constitution as approved and ratified in February, 1987 (infra, pp.
7-8). Although the intent may have been obscured by the failure to include in the General Provisions a proscription against exemption of any public
officer or employee, including constitutional officers, from payment of income tax, the Court since then has authorized the continuation of the deduction
of the withholding tax from the salaries of the members of the Supreme Court, as well as from the salaries of all other members of the Judiciary. The
Court hereby makes of record that it had then discarded the ruling in Perfecto vs. Meer and Endencia vs. David, infra, that declared the salaries of
members of the Judiciary exempt from payment of the income tax and considered such payment as a diminution of their salaries during their
continuance in office. The Court hereby reiterates that the salaries of Justices and Judges are properly subject to a general income tax law applicable
to all income earners and that the payment of such income tax by Justices and Judges does not fall within the constitutional protection against
decrease of their salaries during their continuance in office.

A comparison of the Constitutional provisions involved is called for. The 1935 Constitution provided:

... (The members of the Supreme Court and all judges of inferior courts) shall receive such compensation as may be fixed by law, which
shall not be diminished during their continuance in office ... (Emphasis supplied).
1

Under the 1973 Constitution, the same provision read:

The salary of the Chief Justice and of the Associate Justices of the Supreme court, and of judges of inferior courts shall be fixed by law,
which shall not be decreased during their continuance in office. ... (Emphasis ours).
2

And in respect of income tax exemption, another provision in the same 1973 Constitution specifically stipulated:

No salary or any form of emolument of any public officer or employee, including constitutional officers, shall be exempt from payment of
income tax. 3

The provision in the 1987 Constitution, which petitioners rely on, reads:

The salary of the Chief Justice and of the Associate Justices of the Supreme Court, and of judges of lower courts shall be fixed by law.
During their continuance in office, their salary shall not be decreased. (Emphasis supplied).
4

The 1987 Constitution does not contain a provision similar to Section 6, Article XV of the 1973 Constitution, for which reason, petitioners claim that the
intent of the framers is to revert to the original concept of "non-diminution "of salaries of judicial officers.

The deliberations of the 1986 Constitutional Commission relevant to Section 10, Article VIII, negate such contention.

The draft proposal of Section 10, Article VIII, of the 1987 Constitution read:

Section 13. The salary of the Chief Justice and the Associate Justices of the Supreme Court and of judges of the lower courts shall be fixed
by law. During their continuance in office, their salary shall not be diminished nor subjected to income tax. Until the National Assembly shall
provide otherwise, the Chief Justice shall receive an annual salary of _____________ and each Associate Justice ______________
pesos. (Emphasis ours)
5

During the debates on the draft Article (Committee Report No. 18), two Commissioners presented their objections to the provision on tax exemption,
thus:

MS. AQUINO. Finally, on the matter of exemption from tax of the salary of justices, does this not violate the principle of the uniformity of
taxation and the principle of equal protection of the law? After all, tax is levied not on the salary but on the combined income, such that
when the judge receives a salary and it is comingled with the other income, we tax the income, not the salary. Why do we have to give
special privileges to the salary of justices?

MR. CONCEPCION. It is the independence of the judiciary. We prohibit the increase or decrease of their salary during their term. This is an
indirect way of decreasing their salary and affecting the independence of the judges.

MS. AQUINO. I appreciate that to be in the nature of a clause to respect tenure, but the special privilege on taxation might, in effect, be a
violation of the principle of uniformity in taxation and the equal protection clause. 6

xxx xxx xxx

MR. OPLE. x x x

Of course, we share deeply the concern expressed by the sponsor, Commissioner Roberto Concepcion, for whom we have the highest
respect, to surround the Supreme Court and the judicial system as a whole with the whole armor of defense against the executive and
legislative invasion of their independence. But in so doing, some of the citizens outside, especially the humble government employees,
might say that in trying to erect a bastion of justice, we might end up with the fortress of privileges, an island of extra territoriality under the
Republic of the Philippines, because a good number of powers and rights accorded to the Judiciary here may not be enjoyed in the
remotest degree by other employees of the government.

An example is the exception from income tax, which is a kind of economic immunity, which is, of course, denied to the entire executive
department and the legislative. 7
And during the period of amendments on the draft Article, on July 14, 1986, Commissioner Cirilo A. Rigos proposed that the term "diminished" be
changed to "decreased" and that the words "nor subjected to income tax" be deleted so as to "give substance to equality among the three branches in
the government.

Commissioner Florenz D. Regalado, on behalf of the Committee on the Judiciary, defended the original draft and referred to the ruling of this Court
in Perfecto vs. Meer that "the independence of the judges is of far greater importance than any revenue that could come from taxing their salaries."
8

Commissioner Rigos then moved that the matter be put to a vote. Commissioner Joaquin G. Bernas stood up "in support of an amendment to the
amendment with the request for a modification of the amendment," as follows:

FR. BERNAS. Yes. I am going to propose an amendment to the amendment saying that it is not enough to drop the phrase "shall not be
subjected to income tax," because if that is all that the Gentleman will do, then he will just fall back on the decision in Perfecto vs. Meer and
in Dencia vs. David [should be Endencia and Jugo vs. David, etc., 93 Phil. 696[ which excludes them from income tax, but rather I would
propose that the statement will read: "During their continuance in office, their salary shall not be diminished BUT MAY BE SUBJECT TO
GENERAL INCOME TAX."IN support of this position, I would say that the argument seems to be that the justice and judges should not be
subjected to income tax because they already gave up the income from their practice. That is true also of Cabinet members and all other
employees. And I know right now, for instance, there are many people who have accepted employment in the government involving a
reduction of income and yet are still subject to income tax. So, they are not the only citizens whose income is reduced by accepting service
in government.

Commissioner Rigos accepted the proposed amendment to the amendment. Commissioner Rustico F. de los Reyes, Jr. then moved for a suspension
of the session. Upon resumption, Commissioner Bernas announced:

During the suspension, we came to an understanding with the original proponent, Commissioner Rigos, that his amendment on page 6,.
line 4 would read: "During their continuance in office, their salary shall not be DECREASED."But this is on the understanding that there will
be a provision in the Constitution similar to Section 6 of Article XV, the General Provisions of the 1973 Constitution, which says:

No salary or any form of emolument of any public officer or employee, including constitutional officers, shall be exempt from
payment of income tax.

So, we put a period (.) after "DECREASED" on the understanding that the salary of justices is subject to tax.

When queried about the specific Article in the General Provisions on non-exemption from tax of salaries of public officers, Commissioner Bernas
replied:

FR BERNAS. Yes, I do not know if such an article will be found in the General Provisions. But at any rate, when we put a period (.) after
"DECREASED," it is on the understanding that the doctrine in Perfecto vs. Meer and Dencia vs. David will not apply anymore.

The amendment to the original draft, as discussed and understood, was finally approved without objection.

THE PRESIDING OFFICER (Mr. Bengzon). The understanding, therefore, is that there will be a provision under the Article on General
Provisions. Could Commissioner Rosario Braid kindly take note that the salaries of officials of the government including constitutional
officers shall not be exempt from income tax? The amendment proposed herein and accepted by the Committee now reads as follows:
"During their continuance in office, their salary shall not be DECREASED"; and the phrase "nor subjected to income tax" is deleted. 9

The debates, interpellations and opinions expressed regarding the constitutional provision in question until it was finally approved by the Commission
disclosed that the true intent of the framers of the 1987 Constitution, in adopting it, was to make the salaries of members of the Judiciary taxable. The
ascertainment of that intent is but in keeping with the fundamental principle of constitutional construction that the intent of the framers of the organic law
and of the people adopting it should be given effect. The primary task in constitutional construction is to ascertain and thereafter assure the realization
10

of the purpose of the framers and of the people in the adoption of the Constitution. it may also be safely assumed that the people in ratifying the
11

Constitution were guided mainly by the explanation offered by the framers. 12

1avvphi1

Besides, construing Section 10, Articles VIII, of the 1987 Constitution, which, for clarity, is again reproduced hereunder:

The salary of the Chief Justice and of the Associate Justices of the Supreme Court, and of judges of lower courts shall be fixed by law.
During their continuance in office, their salary shall not be decreased. (Emphasis supplied).

it is plain that the Constitution authorizes Congress to pass a law fixing another rate of compensation of Justices and Judges but such rate must be
higher than that which they are receiving at the time of enactment, or if lower, it would be applicable only to those appointed after its approval. It would
be a strained construction to read into the provision an exemption from taxation in the light of the discussion in the Constitutional Commission.

With the foregoing interpretation, and as stated heretofore, the ruling that "the imposition of income tax upon the salary of judges is a dimunition
thereof, and so violates the Constitution" in Perfecto vs. Meer, as affirmed in Endencia vs. David must be declared discarded. The framers of the
13 14

fundamental law, as the alter ego of the people, have expressed in clear and unmistakable terms the meaning and import of Section 10, Article VIII, of
the 1987 Constitution that they have adopted

Stated otherwise, we accord due respect to the intent of the people, through the discussions and deliberations of their representatives, in the spirit that
all citizens should bear their aliquot part of the cost of maintaining the government and should share the burden of general income taxation equitably.
WHEREFORE, the instant petition for Prohibition is hereby dismissed.

Teehankee, C.J., Fernan, Narvasa, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Sarmiento and Cortes, JJ., concur.
Yap, J., is on leave.

EN BANC

G.R. No. L-18535 August 15, 1922

THE PEOPLE OF THE PHILIPPINE ISLANDS, Plaintiff-Appellee, vs. VENANCIO CONCEPCION, Defendant-Appellant.

Hartigan and Welch, and Recaredo M.a Calvo for appellant.

Attorney-General Villa-Real for appellee.

STATEMENT chanrobles virtual law library

February 4, 1916, the Legislature of the Philippine Islands passed Act No. 2612, known as the charter of the Philippine National
Bank, under which it was organized with plenary powers and a capital stock of P20,000,000 divided into 200,000 shares of the par
value of P100 each, 101,000 of which to be subscribed, owned and held by the Government, and the remainder by private persons.

Section 37 provides:

The National Bank shall never at any time, under any circumstances, directly or indirectly grant to any individual, company of
individuals, firm, corporation, Insular, provincial or municipal government any real estate mortgage loan exceeding the sum of fifty
thousand pesos, or any other loan exceeding the sum of three hundred thousand pesos.

Section 38 provides:

The National Bank shall not directly or indirectly grant loans to any of the members of the board of directors of the bank nor to
agents of the branch banks. Said National Bank is hereby prohibited from making any loan directly or indirectly in excess of one
thousand pesos to any member of the Philippine Legislature or to any official or employee of the Insular, provincial, or municipal
governments except upon satisfactory real estate security.

Section 53:

Any person who shall violate any of the provisions of this Act shall be punished by a fine not to exceed ten thousand pesos, or by
imprisonment not to exceed five years, or by both such fine and imprisonment.

February 20, 1918, the Legislature passed Act No. 2747, entitled "An Act to amend in certain particulars Act Numbered Twenty-six
hundred and twelve, entitled 'An Act creating the Philippine National Bank,' which provides:"

In order to explain certain provisions, increase the stability of the institution, and extend its powers, Act Numbered Twenty-six
hundred and twelve, entitled "An Act creating the Philippine National Bank," is hereby amended in certain particulars, so that
hereafter the said Act shall read as follows:

Section 35 of which provides:

The National Bank shall not, directly or indirectly, grant loans to any of the members of the board of directors of the bank nor to
agents of the branch banks.

Section 49:

Any person who shall violate any of the provisions of this Act shall be punished by a fine not to exceed ten thousand pesos, or by
imprisonment not to exceed five years, or by both such fine and imprisonment.

January 30, 1921, the Legislature passed Act No. 2938 entitled "An Act to amend Act Numbered Twenty-six hundred and twelve,
entitled 'An Act creating the Philippine National Bank,' as amended by Act Numbered Twenty-seven hundred and forty-seven."

It also provides:
Act Numbered Twenty-six hundred and twelve, entitled "An Act creating the Philippine National Bank, as amended by Act Numbered
Twenty-seven hundred and forty-seven, is hereby amended in certain particulars, so that hereafter the said Act shall read as
follows:
chanrobles virtual law library

The National Bank shall not, directly or indirectly, grant loans to any of the members of the board of directors, the general
manager, assistant general manager, and employees of the bank, nor to agents or employees of the branch banks, and no loan
shall be granted to a corporation, partnership or company wherein any member of the board of directors is a shareholder, agent or
employee in any manner, except by the unanimous vote of the members of the board, excluding the member interested: Provided,
That the total liabilities to the Bank of any corporation wherein any of the members of the board of directors is a shareholder, agent
or employee in any manner, shall at no time exceed ten per centum of the surplus and paid-up capital of the Bank. chanroblesvirtualawlibrary chanrobles virtual law library

All Acts or parts of Acts inconsistent or incompatible with the provisions of this Act are hereby repealed.

Section 43:

Any member of the board of directors of the National Bank who knowingly violates or knowingly permits any of the officers, agents,
or servants of the Bank to violate any of the provisions of this Act, and any officer, employee, agent, or servant of the Bank who
violates any of the provisions of this Act and any person aiding and abetting the violations of any of the provisions of this Act, shall
be punished by a fine not to exceed ten thousand pesos or by imprisonment not to exceed five years or by both such fine and
imprisonment.

At all of the material times hereinafter stated, the defendant, Venancio Concepcion, was the duly elected, qualified and acting
President of the Philippine National Bank, which was organized and continued to exist under the respective legislative acts. chanroblesvirtualawlibrary chanrobles virtual law library

June, 1918, what is known in the record as the Binalbagan Estate, Inc., was organized by the agriculturists in the provinces of
Occidental Negros and Iloilo, with a capital stock of P10,000. Its primary purpose was to foster the manufacture and refinement of
centrifugal sugar and its by-products. Only P2,500 of the capital stock was paid, and, for a long time, little, if anything, was done.
In 1920 its corporate interests were acquired by Phil. C. Whitaker and the defendant, who reorganized the company with a capital
stock of P500,000 divided into 5,000 shares of the par value of P100 each, out of which Whitaker was issued a certificate for 1,865
shares and the defendant 1,615 shares, and the firm of Puno, Concepcion and Co. a certificate for 250 shares, and the remainder to
other and different persons. In the month of November, 1910, the capital stock was increased to P1,500,000, and 6,053 shares of
stock were issued to the defendant, portions of which he transferred to other persons, among whom were his immediate relatives.
Notwithstanding the fact that the original capital stock was for P10,000, and that it was increased to P500,000 and again to
P1,500,000, there is no registered document in the Bureau of Commerce and Industry in either case showing the increase of the
capital stock of the estate. chanroblesvirtualawlibrary chanrobles virtual law library

January 30, 1920, Whitaker, Luzuriaga, and the defendant entered into an agreement as partners to acquire and operate what is
known as the "Palma" sugar central and hacienda in the municipality of Ilog, Occidental Negros, a short distance from the property
of the Binalbagan Estate. Under this agreement, Whitaker and the defendant were to each have 40 per cent and Luzuriaga 20 per
cent. Concurrent therewith, the three entered into another agreement with Salvador Serra for the sale and purchase of his business
known as central and hacienda "Palma" at an agreed price of P1,500,000, P150,000 of which was to be paid on or before June 30,
1920, when the property was to be actually conveyed, and to assume a mortgage on the property for P600,000, the remainder to
be paid in three installments of P250,000 each, respectively, on or before June 30, 1921, 1922, and 1923. January 29, 1920, this
contract was duly signed by all of the respective parties, and was duly witnessed and acknowledged before a notary public. chanroblesvirtualawlibrary chanrobles virtual law library

On January 10, 1919, Salvador Serra executed a mortgage upon all of this property in favor of the Philippine National Bank for
P600,000, which was then owned and held by the bank, and in full force and effect. chanroblesvirtualawlibrary chanrobles virtual law library

On July 17, 1920, in the office of the Philippine National Bank and in the presence of the defendant and Whitaker, and in accord
with the terms and provisions of the instrument of January 29, 1920, Salvador Serra made, executed and delivered a deed of
conveyance of the property described in the contract of January 29, 1920, and at the same time and place, and as a part of the
transaction, Whitaker delivered to Salvador Serra the check of the Binalbagan Estate drawn upon the Philippine National Bank for
P750,000, which was honored and paid by the bank, and out of which it satisfied the mortgage, which it then held on the
"Palma" hacienda, for P600,000 with accrued interest amounting to P26,218.66, and gave Salvador Serra credit in his current
account in its branch at Iloilo for P123,781.34, making a total of P750,000, which the defendant and his associates had agreed to
pay under the contract of January 29, 1920, thus consummating the deal. chanroblesvirtualawlibrary chanrobles virtual law library

On July 17, 1920, the Binalbagan Estate was indebted to the Philippine National Bank more than P3,000,000, and did not have the
money with which to pay the check of P750,000. To provide the necessary funds, it executed its promissory note payable on sight
for that amount to the Philippine National Bank, which was presented to Vicente Gaskell, then in charge of loans and discounts, who
in turn presented the note to the defendant for his approval, and the defendant then and there approved the loan to the estate, and
initialed the note "V. C." which was his customary and usual method of approving loans, and after the defendant approved the loan,
the check of the Binalbagan Estate for P750,000 was honored by the bank, and the account of the Binalbagan Estate was then
credited with the amount of P750,000. chanroblesvirtualawlibrary chanrobles virtual law library

In his weekly report of July 22, it appears that Gaskell made a report of the P750,000 loan to the Binalbagan Estate, but that no
specific mention was made of the loan by the defendant in his report, and that no record of the loan was made in the corporate
minutes of the Board of Directors as of July 23, 1920. chanroblesvirtualawlibrary chanrobles virtual law library
By the provisions of Act No. 2938, the capital stock of the bank was increased from P20,000,000 to P50,000,000. chanroblesvirtualawlibrary chanrobles virtual law library

Following an investigation, an information was filed in the Court of First Instance against the defendant, which was later amended,
charging him, as President of the Bank, with a violation of the provisions of section 35 as it relates to section 49 of Act No. 2747 of
the Philippine Legislature above quoted. In substance, and to the effect that, through the commission of such acts and in the
making of the loan of P750,000 to the Binalbagan Estate, the defendant was guilty of a violation of section 35, and should be
punished under section 49 of Act No. 2747. Upon this charge, he was arraigned, tried, convicted and sentenced to two years of
imprisonment and to pay a fine of P5,000 and costs, from which the defendant appeals and assigns the following errors:

I. The trial court erred in overruling the demurrer interposed by the defense on the ground that the facts alleged in the complaint
do not constitute a violation of Act No. 2747. chanroblesvirtualawlibrary chanrobles virtual law library

II. The trial court likewise erred in overruling the motion for dismissal, interposed by the defense, on the ground that the
prosecution has not proved the essential facts alleged in the complaint. chanroblesvirtualawlibrary chanrobles virtual law library

III. The trial court likewise erred in not ordering the striking out of the hearsay testimony of the witnesses for the prosecution,
notwithstanding the petition of the defense, as well as in permitting the fiscal to ask leading questions on incompetent, immaterial
and irrelevant facts, to the witnesses for the prosecution, and the latter to answer said questions which were objected to by the
defense. chanroblesvirtualawlibrary chanrobles virtual law library

IV. The court likewise erred in admitting as proof Exhibits B, C, D, E, F, F-1, G, H, K, L, P, V-15, X, Y, Y-1, AA, BB, CC, DD, FF, GG,
GG-1, HH, HH-1 to HH-12, JJ, JJ-1, and JJ-2 of the prosecution, notwithstanding that they were objected to by the defense as being
incompetent, irrelevant, and immaterial, for they are not the best proof and not having been duly authenticated. chanroblesvirtualawlibrary chanrobles virtual law library

V. The trial court likewise erred in declaring that about the first months of the year, 1920, a great portion of the interests of the
Binalbagan Estate, Inc., was acquired by Phil. C. Whitaker and the accused, V. Concepcion. chanroblesvirtualawlibrary chanrobles virtual law library

VI. The lower court likewise erred in declaring that the firm of Puno, Concepcion and Co., Ltd., is exclusively composed of the
accused and the members of his family. chanroblesvirtualawlibrary chanrobles virtual law library

VII. The lower court also erred in declaring that the writing executed on January 29, 1920, by Salvador Serran, the owner of
the hacienda and the central "Palma" in favor of Whitaker, Concepcion, and Luzuriaga was an option and not a purchase and
sale.
chanroblesvirtualawlibrary chanrobles virtual law library

VII. The lower court likewise erred in declaring that at the time in which the Binalbagan Estate, Inc., drew the check for P750,000
in favor of Salvador Serran, the same had obtained from the National Bank, under the signature and authorization of its president,
the accused herein, several credits, overdrafts and loans, which amounted to several millions of pesos. chanroblesvirtualawlibrary chanrobles virtual law library

IX. The lower court likewise erred in declaring that the limit of the credit allowed by the National Bank to the Binalbagan Estates,
Inc., in the week which terminated on the 22d of July, 1920, was P3,660,000. chanroblesvirtualawlibrary chanrobles virtual law library

X. The lower court likewise erred in declaring that the Binalbagan Estate, Inc., had been obtaining credits from the Philippine
National Bank for various amounts, against which it was obtaining loans for amounts which at times were included in the total sum
of the credit allowed, and at times exceeded the limit of said credit. chanroblesvirtualawlibrary chanrobles virtual law library

XI. The lower court likewise erred in not declaring that the concession by the Philippine National Bank to the Binalbagan Estate,
Inc., of P750,000 on July 17, 1920, has been made with the unanimous consent of the members of the Board of Directors of the
bank. chanroblesvirtualawlibrary chanrobles virtual law library

XII. The lower court likewise erred in declaring contrary to section 10 of Act No. 2612, as amended by Act No. 2938, that the
obligations contracted with the National Bank by virtue of the discount of negotiable papers, bills of exchange, and promissory
notes, are loans. chanroblesvirtualawlibrary chanrobles virtual law library

XIII. The lower court also erred in declaring that the opinion of the Insular Auditor, the ex-officio Auditor of the Bank, cannot in any
manner serve as a standard of conduct for the officers of the bank. chanroblesvirtualawlibrary chanrobles virtual law library

XIV. The lower court likewise erred in declaring that the sum of P750,000 given to the Binalbagan Estate, Inc., by the National Bank
on July 17, 1920, was a loan granted on said date and not on the date on which the credit contract was perfected. chanroblesvirtualawlibrary chanrobles virtual law library

XV. The lower court lastly erred in finding the accused guilty of the violation with which he is charged in the complaint, sentencing
him to two years of imprisonment, and to pay a fine of P5,000 and costs of the action.
JOHNS, J.:

There is a clear and correct analysis of the facts in the exhaustive opinion of the trial court, and there is but little, if any, dispute
about any of the material facts. The testimony is conclusive that the defendant either owned or controlled about 40 per cent of the
capital stock of the Binalbagan Estate, which, at the time of the above transaction, was indebted to the Philippine National Bank
more than P3,000,000. That the bank then owned and held a first mortgage lien upon the "Palma" property for P600,000, which it
satisfied and discharged out of the proceeds of the check of Binalbagan Estate for P750,00. That is to say, as a result of the
transaction, the bank satisfied its mortgage lien for P600,000 with accrued interest, and in lieu thereof took and accepted the
unsecured promissory note of Binalbagan Estate for P750,000, and, including the amount of that note, the total indebtedness to the
bank then amounted to P3,952,672.77. chanroblesvirtualawlibrary chanrobles virtual law library

The testimony is also conclusive that the P750,00 loan was personally approved by the defendant, and was made upon his personal
responsibility, and that, so far as it appears in the record, no other officer or director was ever consulted about the transaction or
the making of the loan at any time prior to its consummation. chanroblesvirtualawlibrary chanrobles virtual law library

The testimony is also conclusive that on the very day that the note was presented to the bank by the Binalbagan Estate, the loan
was consummated, and the amount of it was placed to the credit of the Binalbagan Estate, which in turn drew its check for the full
amount of the loan, which was honored by the bank when presented. chanroblesvirtualawlibrary chanrobles virtual law library

In this connection, it will be noted that the capital stock of the bank was then P20,000,00, and the total amount of the
indebtedness of Binalbagan Estate to the bank was P3,952,672.77. chanroblesvirtualawlibrary chanrobles virtual law library

Section 35 of Act No. 2747 provides:

The National Bank shall not, directly or indirectly, grant loans to any of the members of the board of directors of the bank nor to
agents of the branch banks.

Section 37 of Act No. 2612, above quoted, limits the amount of any real estate mortgage loan to P50,000 or any other loan to
P300,000. There is no such limitation in Act No. 2747, and in so far as it is material to this opinion, section 38 of Act No. 2612 is
identical with section 35 of Act No. 2747. chanroblesvirtualawlibrary chanrobles virtual law library

Defendant's counsel ably and adroitly contend that the limitation provided for in the act is upon the bank itself, and that it does not
apply to the defendant, as President of the Bank. chanroblesvirtualawlibrary chanrobles virtual law library

The bank is a corporation organized by special act of the Legislature, and it could only act or operate through its officers and board
of directors. While the corporation itself might be made subject to a fine for a criminal offense, it could not be imprisoned, and it
will be noted that section 53 of the original Act, which is identical with the other two Acts, says:

Any person who shall violate any of the provisions of this Act shall be punished by a fine not to exceed ten thousand pesos, or by
imprisonment not to exceed five years, or by both such fine and imprisonment.

The limitation in Section 35 of Act No. 2747 says:

The National Bank shall not, directly or indirectly, grant loans to any of the members of the board of directors of the bank not to
agents of the branch banks.

And section 53 of Act No. 2612 says:

Any person who shall violate any of the provisions of this Act, etc.," and provides for a fine or imprisonment or both, and it must be
conceded that the bank itself could not be imprisoned for a violation of section 35.

It is very apparent that section 35 was intended to prohibit the making of any loan by the bank to an officer or director of the
bank.chanroblesvirtualawlibrary chanrobles virtual law library

It is also claimed that the loan to the defendant within the meaning of section 35. He was the President and active Manager of the
Bank, and was the owner and had under his control about 40 per cent of the capital stock of the Binalbagan Estate, which was also
a corporation, which was then indebted to the bank more than 15 per cent of the capital stock of the bank. With P750,000 loan, its
idebtedness to the bank amounted to very little less than 20 per cent of the capital stock of the bank. chanroblesvirtualawlibrary chanrobles virtual law library

Upon that question, the case of People vs. Knapp (132 N.Y. Supp., 747), is square in point. There, third count of the indictment
charged the defendant with violating subdivision 11 of section 186 of the banking law in the making of a loan to him as director by
a loaning of the money to the copartnership of which he was a member, and that it was done through the direction, permission,
advice, and procurement of the defendant. chanroblesvirtualawlibrary chanrobles virtual law library
The court said:

We are of opinion the statute forbade the loan to his copartnership firm as well as to himself directly. The loan was made indirectly
to him through his firm. . . .

An appeal was taken, and the lower court was affirmed in (206 N. Y. 373), and the case is reported in 11 Am. Ann. Cases, p. 243,
in which the syllabus says:

The prohibition in a statute forbidding a corporation to do an act extends to the board of directors and to each director separately
and individually.

And the opinion says:

As to the remaining counts the defendant insists that the command that a corporation shall not do a certain act is not a command
that he directors shall not do the act. A corporation, however, is a mere conception of the legislative mind. It exists only on paper
through the command of the legislature that its mental conception shall be clothed with power. All its power resides in the directors.
Inanimate and incapable of thought, action or neglect, it cannot hear or obey the voice of the legislature except through its
directors. It can neither act nor omit to act except through them. Hence a command addressed to a corporation would be idle and
vain unless the legislature in directing the corporate body, acting wholly by its directors, to do a thing required or not to do a thing
prohibited, meant that the directors should not make or cause the corporation to do what was forbidden, or omit to do what was
directed. We think, as the appellate division held, that when the corporation itself is forbidden to do an act, the prohibitions extends
to the board of directors and to each director, separately and individually. chanroblesvirtualawlibrary chanrobles virtual law library

. . . The Banking Law should be construed in accordance with the obvious intention of the legislature so as to permit flexibility and
to prevent looseness in doing business. The prime object is to protect the public, including depositors, and after that to enable the
stockholders to secure a fair return from their investment. Banking institutions are not created for the benefit of the directors. While
directors have great powers as directors, they have no special privileges as individuals. They cannot use the assets of the bank for
their own benefit except as permitted by law. Stringent restrictions are placed about them so that when acting both for the bank
and for one of themselves at the same time, they must keep within certain prescribed lines regarded by the legislature as essential
to safety in the banking business.

The only difference as to the facts is that, there, the money was loaned to a copartnership of which the defendant was a member,
and, here it is loaned to a corporation of which the defendant was one of the heaviest stockholders. Here, good faith on the part of
the defendant and sound banking would not permit the personal satisfaction by him, as President of the Bank, of a first mortgage
loan of P600,000, and the taking in lieu thereof, and as a substitute therefor, of the unsecured promissory note of the Binalbagan
Estate in which he owned and controlled at least 40 per cent of its capital stock and it is very apparent that the defendant would
never have authorized the loan of P750,000, or satisfied the mortgage of P600,000, if he had not been a heavy stockholder in the
Binalbagan Estate. The fact that he was such a stockholder was one of the main inducements and the primary consideration for his
approval of the transaction.chanroblesvirtualawlibrary chanrobles virtual law library

It will be noted that section 35 of Act No. 2747 does not contain any exception or proviso, and that section 29 of Act No. 2938,
which was enacted in 1921, says:

The National Bank shall not, directly or indirectly, grant loans to any of the members of the board of directors, the general
manager, assistant general manager, and employees of the Bank, nor to agents or employees of the branch banks, and no loan
shall be granted to a corporation, partnership or company wherein any member of the board of directors is a shareholder, agent or
employee in any manner, except by the unanimous vote of the members of the board, excluding the member interested: Provided,
That the total liabilities to the Bank of any corporation wherein any of the members of other board of directors is a shareholder,
agent or employee in any manner, shall at no time exceed ten per centum of the surplus and paid-up capital of the bank.

This section was enacted in 1921, and section 35 above quoted was enacted in 1918, and section 42 of Act No. 2938 expressly
provides that:

All Acts or parts of Acts inconsistent or incompatible with the provisions of this Act are hereby repealed.

Defendant's counsel vigorously contend that the P750,000 loan to Banalbagan Estate was reported to, and approved by, the Board
of Directors; that section 35 of Act No. 2747 was repealed, and that section 29 of Act No. 2939 is the law under which the
defendant should be prosecuted. chanroblesvirtualawlibrary chanrobles virtual law library

Construing section 29, the record here is conclusive that the defendant, acting and representing the bank, personally made and
consummated the loan, and that upon his personal advice and instructions, the check was paid, and that personally, as President,
he satisfied the mortgage for P600,000. He not only authorized the making of the loan, but made the loan himself without the
consent or the authority of the Board of Directors, and the loan was consummated, and the bank parted with the money without
the knowledge of the Board of Directors. It was a completed transaction. There is a marked difference between the authority of the
president of the bank to promise or negotiate a loan and the making of the loan itself. chanroblesvirtualawlibrary chanrobles virtual law library
Section 29 of Act No. 2938 contemplates that no loan shall ever be made to any officer o the bank until such time as it is submitted
to, and approved by, the unanimous vote of the Board of Directors, excluding the applicant for the loan. But, here, the loan was
consummated and the transaction was completed several days before it was ever brought to the knowledge or attention of the
directors, and, even assuming that they did ratify a loan of that character, it would not constitute a defense. The law was violated
in the making and consummation of the loan without the knowledge or consent of the Board of Directors. If the Binalbagan Estate
had applied to the defendant, as President of the Bank, for the loan in question, and if, upon its receipt, he had submitted the
application to the Board of Directors recommending the loan, and acting upon his advice the Board had approved the loan, and the
loan had been made after such approval by the board, another and different question would have been presented, and there would
have been merit in such a defense, but that is not this case. chanroblesvirtualawlibrary chanrobles virtual law library

Even under section 29, the consent and approval of the Board of Directors was a condition precedent to the making of the loan in
question, and the fact that the Board of Directors a few days after the offense was committed may have approved it would not be a
defense to the commission of the crime. In other words, assuming that the Board of Directors did approve of a violation of the law,
it would not aid the defendant. He was occupying a position of special trust and confidence, and was the president and head of the
most important financial institution in the whole Philippine Islands. His powers and duties were defined and described in the
corporate charter of the bank. It was organized under a special act, and the Government itself subscribed for, and was the owner
of, the majority of its capital stock. It was the purpose and intent to make it a conservative, strong and safe bank, and numerous
provisions were made in the Act for its safety an stability, among which was section 35 of Act No. 2747. chanroblesvirtualawlibrary chanrobles virtual law library

Here, you have the President of the Bank upon his own initiative and his sole approval authorizing, making and perfecting a loan of
P750,000 to a corporation in which he owned and controlled 40 per cent of its capital stock. It was never the purpose or intent of
the corporate charter that any officer of the bank should have, assume or exercise any such arbitrary or autocratic power. chanroblesvirtualawlibrary chanrobles virtual law library

It is worthy of note that the material provisions of the law prohibiting a loan to an officer of the bank are almost identical in each
legislative act. Also, that the punishment for a violation is the same in each Act. chanroblesvirtualawlibrary chanrobles virtual law library

Hence, we must assume that at all times, it was the purpose and intent of the Legislature that no loan should ever be made by the
bank to any officer or director, except under the express provisions of the law. chanroblesvirtualawlibrary chanrobles virtual law library

The loan was maid while Act No. 2747 was in force and effect and before the passage of Act No. 2938, and appellant's counsel
vigorously contend that Act No. 2747 was repealed by Act No. 2938, and appellant's counsel vigorously contend that Act No. 2747
was repealed by Act No. 2938, and that the repeal of the one and the enactment of the other operated as a release and discharge
of all crime which were committed prior to the passage of Act No. 2938. In other words, that the Act of the Legislature released the
defendant of any crime which he may have committed prior to January, 1921. chanroblesvirtualawlibrary chanrobles virtual law library

We do not believe that it was ever the purpose or intention of the Legislature to release anyone from a crime committed under
either one of the Acts, and, in particular, as to the offense described in the information. As stated upon the question here involved,
each one of the legislative acts expressly prohibits the bank from loaning any of its money to an officer or director, and the only
difference is found in the latter portion of section 29 of Act No. 2938, which, upon the undisputed facts, is not material to the
question involved here. chanroblesvirtualawlibrary chanrobles virtual law library

Section 42 of Act No. 2938 says:

All Acts or parts of Acts inconsistent or incompatible with the � provisions of this Act are hereby repealed.

Upon the disputed facts, there is nothing inconsistent or incompatible with either section 37 of Act No. 2612, or section 35 of Act
No. 2747, as construed with section 29 of Act No. 2938. Each section expressly prohibits the making of a loan by the Bank to an
officer, and the only difference is the proviso in section 29, which does not apply to the facts here. There is nothing in section 37 or
in section 35 which is inconsistent or incompatible with section 29. Each of them was intended to prohibit the Bank from loaning
money to an officer of the bank. chanroblesvirtualawlibrary chanrobles virtual law library

Much stress is laid upon article 22 of the Penal Code, which says:

Penal laws shall have a retroactive effect in so far as they favor the person guilty of a felony or misdemeanor, although at the time
of the publication of such laws a final sentence has been pronounced and the convict is serving same.

For the reason that the bank here was incorporated under a special Act, that article should be construed as it relates to article 7,
which says:

Offenses punishable under special laws are not subject to the provisions of this code.

This was construed in United States vs. Cuna (12 Phil., 241), in which this court held:

Where an Act of the Commission or of the Philippine Legislature which penalizes an offense repeals a former Act which penalizes the
same offense, such repeal does not have the effect of thereafter depriving the courts of jurisdiction to try, convict, and sentence
offenders charged with violations of the old law prior to its repeal.
Article 22 was further construed and applied in United States vs. Parrone (24 Phil., 29). chanroblesvirtualawlibrary chanrobles virtual law library

But, in the instant case, there is no change in the law for the punishment of the crime, and section 42 of Act No. 2938 limits the
repeal to such portions only of the previous law as are inconsistent or incompatible with Act No. 2938. chanroblesvirtualawlibrary chanrobles virtual law library

Section 35 says:

The National Bank shall not, directly or indirectly, grant loans to any of the members, etc.

Appellant contends that the transaction involved here was a discount of the note of the estate as distinguished from a loan, and,
hence, that it was not a violation of the law. Suffice it to say that, in enacting the law, the Legislature was not dealing with, and
knew but very little, if anything, of, the subtle distinction between loans and discounts. Section 35 was intended to prohibit any
officer of the bank from borrowing or using any money of the bank for any purpose. Again, an analysis of the facts clearly shows
that the transaction was a loan, and that it did not have any of the elements of a discount. chanroblesvirtualawlibrary chanrobles virtual law library

The face value of the original mortgage, which the bank held on the "Palma" hacienda, was P600,000, and the accrued interest was
P26,218.66, and the amount of the check, which the bank gave to Salvador Serra was P123,781.34, the amount of the check,
which the bank gave to Salvador Serra was P123,781.34, the total amount of which was P750,000, which is the identical amount of
the note which was executed by the Binalbagan Estate to the bank at the time the deal was closed, hence, the evidence is
conclusive that it was a loan as distinguished from a discount. chanroblesvirtualawlibrary chanrobles virtual law library

In August, 1916, a question arose as to the construction which should be placed upon sections 37 and 38 of Act No. 2612, and an
opinion of the then Insular Auditor was rendered, which apparently gave color to the legal right of the Bank to defeat � the purpose
and intent of those sections, and the defendant claims that he was justified in his conduct through the previous acts and the
established custom of the bank, and it is true that, in the ordinary course of business, but little attention was paid to the provisions
of those sections. The Auditor was not the legal adviser of the Bank. chanroblesvirtualawlibrary chanrobles virtual law library

Section 25 of the original act expressly provides that:

The Attorney-General of the Philippine Islands shall be attorney for said National Bank: Provided, however, That the Board of
Directors of said bank shall have power to employ other attorneys in special cases.

Hence, it must follow that the Attorney-General was the legal adviser of the bank, and there is nothing to show that he was ever
requested to, or that he ever did, render a legal opinion upon the construction which should be placed upon sections 37 and 38 of
Act No. 2612. But giving the Auditor's opinion its broadest construction, it would not justify the commission by the defendant of the
acts shown in the record. It might tend to mitigate, but it would not legalize the offense. chanroblesvirtualawlibrary chanrobles virtual law library

The record further shows that on September 15, 1916, Mr. Ferguson, as Acting President of the Bank, addressed a letter to Mr.
Dexter, as Acting Insular Auditor, in which he says:

We can readily see where loans directly made to Directors would be very harmful, and it is a wise provision in the Act which makes
this impossible, but there is a wide difference between loaning money to a Director, and discounting the single name paper or Bills
receivable of a business house, with whom such a Director might be interested.

As we have pointed out, the transaction here was a loan and not a discount. chanroblesvirtualawlibrary chanrobles virtual law library

Again, any mitigation of the offense is more than offset by the subsequent conduct of the defendant. chanroblesvirtualawlibrary chanrobles virtual law library

August 3, 1920, the defendant wrote a letter to the Governor-General in which he complains of official treatment, and clearly points
out the serious financial condition of the Bank, in which, among other things, he says:

If this Bank is compelled to adopt drastic measures as to the liquidation of its loans we would be placed in the position of having to
shirk the responsibility for any serious consequences that may arise, and to point to the Department of Finance for insisting on such
a policy.
chanroblesvirtualawlibrary chanrobles virtual law library

The policy of contraction which is now in force in the operations � of the Bank and with the party payments on our loans to sugar
central, our cash reserve will be up to the requirements next year aside from our ability to replenish our cash reserve in substantial
amounts.

The whole tenor of the letter clearly reveals that the defendant realized and was very uneasy about the condition of the bank, and
yet seventeen days before that letter was written, he personally made an unsecured loan to the Binalbagan Estate for P750,000,
because of the very apparent reason that he was one of its heaviest stockholders. chanroblesvirtualawlibrary chanrobles virtual law library
We have given this case the careful consideration which its importance demands, and have examined each of the numerous
assignments of error. chanroblesvirtualawlibrary chanrobles virtual law library

Defendant's case was skillfully presented in an exhaustive brief by able counsel, but in the final analysis, the stubborn, undisputed
fact remains that the defendant did personally make a large unsecured loan to a corporation in which he was one of its heaviest
stockholders, and that the loan was consummated and the money paid over without the knowledge of the Board of Directors, and
that it was made to the prejudice and injury of the bank, and to further and promote his own personal interests, and that, as
President of the Bank, he personally released the mortgage of the bank upon the property which his corporation acquired through
the deal, and that upon the undisputed facts, it was done in violation not only of section 35 of Act No. 2747, but also of section 38
of Act No. 2612, and of section 29 of Act No. 2938. chanroblesvirtualawlibrary chanrobles virtual law library

Criticism is made of the penal clause, and its validity is attacked. It will be noted that it is the same in each act, and that a large
discretion is given to the trial court, varying from a minimum fine to P10,000, or imprisonment not to exceed five years, or both
fine and imprisonment. Its purpose was to prohibit a violation of any provision of the bank's charter, and to make the penalty
correspond to the gravity of the offense, and that question was left to the discretion of the court. chanroblesvirtualawlibrary chanrobles virtual law library

The judgement of the lower court is affirmed, with costs. So ordered.

Araullo, C.J., Johnsons, Street, Malcolm, Avanceña, Villamor, Ostrand and Romualdez, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-43575 May 31, 1935

JUAN TAÑADA, petitioner,

vs.
JOSE YULO, Secretary of Justice,
EDUARDO GUTIERREZ DAVID, Judge of First Instance of the Thirteenth Judicial District,
and SANTIAGO TAÑADA, Justice of the Peace of Alabat, Tayabas, respondents.

Pedro Ynsua for petitioner.

Office of the Solicitor-General Hilado for respondents.

MALCOLM, J.:

For the second time the court is called upon to determine the right of a justice of the peace appointed prior to the approval of Act No. 3899, but who
completed sixty-five years of age subsequent to the approval of the Act and to the date, January 1, 1933, specified in the Act, to continue in office. The
answer of the Solicitor-General presents two questions, the first predicated on the contention that Act No. 3899 applies to all justices of the peace who
reach the age of sixty-five years, and the second on the acceptance of a transfer by the petitioner as denoting a new appointment bringing him within
the purview of the cited law.

Juan Tañada, the petitioner, was appointed justice of the peace of Alabat, Tayabas, by the Governor-General with the advice and consent of the
Philippine Commission on December 4, 1911. He continued in that position until September 8, 1934, when at his own request, "Pursuant to the
provisions of section 206 of the Revised Administrative Code", he was "transferred from the position of justice of the peace for the municipality of
Alabat, Province of Tayabas, of the same position in the municipality of Perez, same province", by a communication signed by the Governor-General
from which the foregoing is quoted. Tañada completed the age of sixty-five years on October 5, 1934. Thereupon the Judge of First Instance of
Tayabas, acting in accordance with instructions from the Department of Justice, directed Tañada to cease to act as justice of the peace of Perez,
Tayabas. Tañada surrendered his office under protest, and thereafter instituted this original action of quo warranto.

The applicable law is found in the last proviso to section 203 of the Administrative Code, as inserted by Act No. 3899, and in the proviso to section 206
of the same Code as last amended by Act No. 2768, which read as follows:

SEC. 203. Appointment and distribution of justices of the peace. — * * * Provided, further, That the present justice and auxiliary justice of
the peace who shall, at the time this Act takes effect, have completed sixty-five years of age, shall cease to hold office on January first,
nineteen hundred and thirty-three; and the Governor-General, with the advise and consent of the Philippine Senate, shall make new
appointments to cover the vacancies occurring by operation of this Act.
 SEC 206. Tenure of office — Transfer from one municipality of another. — A justice of the peace having the requisite legal qualifications
shall hold office during good behavior unless his office be lawfully abolished or merged in the jurisdiction of some other justice: Provided,
That in case the public interest requires it, a justice of the peace of one municipality may be transferred to another.

The first question raised by the Solicitor-General was considered in the recent case of Felipe Regalado, petitioner, vs. Jose Yulo, Secretary of Justice,
Juan G. Lesaca, Judge of First Instance of Albay, and Esteban T. Villar, respondents (page 173, ante). It was there decided that the natural and
reasonable meaning of the language used in Act No. 3899, leaves room for no other deducting than that a justice of the peace appointed prior to the
approval of the Act and who completed sixty-five years of age on September 13, 1934, subsequent to the approval of the Act, which was on November
16, 1931, and to the date fixed for cessation from office which was on January 1, 1933, is not affected by the said Act. The law officer of the
Government has indicated that the above cited decision came from a Division of Five and has requested a reconsideration of the issue therein
resolved.

Acceding to this petition, we have again examined microscopically word for word the terminology used in Act No. 3899. Having done so, all of us are
agreed that a justice of the peace like the petitioner who became sixty-five years of age on October 5, 1934, was not included in a law which required
justice of the peace sixty-five years of age to cease to hold office on January 1, 1933. That result is now arrived at in banc.

In substantiation of what has just been said, it is of course fundamental that the determination of the legislative intent is the primary consideration.
However, it is equally fundamental that that legislative intent must be determined from the language of the statute itself. This principle must be adhered
to even though the court be convinced by extraneous circumstances that the Legislature intended to enact something very different from that which it
did enact. An obscurity cannot be created to be cleared up by construction and hidden meanings at variance with the language used cannot be sought
out. To attempt to do so is a perilous undertaking, and is quite apt to lead to an amendment of a law by judicial construction. To depart from the
meaning expressed by the words is to alter the statute, is to legislate not to interpret.

As corroborative authority it is only necessary to advert to a decision coming from the United States Supreme Court, in which the court was asked to
insert the word "lawfully", but the court declined to do so, saying that there is no authority to import a word into a statute in order to change its meaning.
(Newhall vs. Sanger, 92, U.S., 761.) The thought was expressed by the same court in another case, when it said that court are bound to follow the
plain words of a statute as to which there is no room for construction regardless of the consequences. (Commissioner of Immigration vs. Gottlieb, 265
U.S., 310; see 25 R.C.L., 961 et seq.)

Counsel in effect urges us to adopt a liberal construction of the statute. That in this instance, as in the past, we aim to do. But counsel in his
memorandum concedes "that the language of the proviso in question is somewhat defective and does not clearly convey the legislative intent", and at
the hearing in response to questions was finally forced to admit that what the Government desired was for the court to insert words and phrases in the
law in order to supply an intention for the legislature. That we cannot do. By liberal construction of statutes, courts from the language use, the subject
matter, and the purposes of those framing them are able to find their true meaning. There is a sharp distinction, however, between construction of this
nature and the act of a court in engrafting upon a law something that has been omitted which someone believes ought to have been embraced. The
former is liberal construction and is a legitimate exercise of judicial power. The latter is judicial legislation forbidden by the tripartite division of powers
among the three departments of government, the executive, the legislative, and the judicial.

We give application to the decision of this court in Regalado vs. Yulo, supra, and as a result overrule the first defense of the Government.

Passing to the second phase of the case, counsel has endeavoured to draw a distinction between the Regalado case above cited and the present
case. On the facts there is admittedly one difference. In the Regalado case the petitioner had not been transferred from one municipality to another,
while in the present case, Tañada accepted a transfer from one municipality to another. Did the transfer amount to a new appointment bringing Tañada
under the purview of the law relating to relinquishment of office on attaining the age of sixty-five?

The effect of the Organic Act is that an appointment of a justice of the peace by the Governor-General must be consented to by the Philippine Senate.
In consonance with this provision, the method of appointment and distribution of justices of the peace are outlined in section 203 of the Administrative
Code, a portion of which is hereinbefore quoted. The transfer from one municipality to another, however, is accomplished by the Governor-General
without the advise and consent of the Philippine Senate, in accordance with codal section 206.

In the case of Nicolas vs. Alberto (51 Phil., 370), the issue was the legal right of the Governor-General to transfer a justice of the peace from one
municipality to another, without the consent of the Philippine Senate. This court held that the consent of the Philippine Senate was a necessary
attribute of the transfer. As the basis for this holding, it was stated that the appointing power consists of the Governor-General acting in conjunction with
the Philippine Senate. But that case was taken to the United States Supreme Court, and there is was held that the consent of the Senate was
unnecessary to make the transfer legal. (Alberto vs. Nicolas, 279 U.S., 139.) The holding of the higher court, to follow the language of the syllabus, was
that in view of the plenary legislative powers of the Philippine Legislature regarding justice of the peace, Act No. 2768 of the Philippine Legislature is
valid as applied to justice of the peace whose appointment was made by the Governor-General, and confirmed by the Senate, after its enactment. In
the body of the decision appeared the following:

. . . When the Senate confirmed Severino Alberto to be a justice of the peace for San Jose del Monte, sec. 206, with the proviso, was in
force; and when the Senate confirmed him, it confirmed him with the knowledge of the possibility declared in the law that his power and his
functions as a justice of the peace upon designation of the Governor-General might be performed and exercised in another jurisdiction, if
the Governor-General should think it wise in the public interest in his regulation of the conduct of justice of the peace. There is no such
necessary difference between the duties of a justice of the peace in one part of the Islands and those to be performed in another part as to
make such enlargement or change of his jurisdiction already provided for in existing law unreasonably beyond the scope of the consent to
the original appointment.

It is to be deduced from what has been stated above that according to the United States Supreme Court, the transfer simply amounted to an
enlargement or change of jurisdiction grounded on the original appointment and thus did not require a new appointment. Whatever our view s might
have been to the contrary, it now becomes out duty to follow the decision of the higher court. It also seems evident that a transfer as applied to officers
amounts merely to a change of position or to another grade of service. (Cliff vs. Wentworth, 220 Mass., 393.)
We give application to the decision of the Supreme Court of the United States in Nicolas vs. Alberto, supra, and as a result overrule the second
defense of the Government.

Before closing it is incumbent upon us to observe that this case was heard in banc because of the suggestion of the Solicitor-General that the principal
issue raised by the pleadings is the validity of Act No. 3899 of the Philippine Legislature. Our review of the case has convinced us that this allegation
overstates the matter. It is unnecessary to discuss petitioner's contention that Act No. 3899 is unconstitutional because of a defective title. On the other
hand, the allegation in the answer that the law is discriminatory and class legislation, and, consequently, unconstitutional has apparently been
abandoned. Finally it is to be observed that the fear of disorder in the affairs of the Department of Justice and the Office of the Governor-General on
account of the displacement of incumbent justices of the peace, is unfounded, for as is well known, acquiescence or voluntary surrender of an office
precludes the maintenance of a quo warranto proceeding.

Giving effect to the decisions of this court in the Regalado case and of the Supreme Court of the United States in the Alberto vs. Nicolas case, and as a
consequence ruling that Act No. 3899 does not apply to a justice of the peace appointed prior to the approval of the Act who completed sixty-five years
of age after January 1, 1933, and that a transfer of a justice of the peace does not amount to an appointment, we reach the conclusion that the special
defenses interposed by the Solicitor-General must be overruled. Accordingly, the writ will be granted and the petitioner Juan Tañada will be placed in
possession of the office of justice of the peace of Perez, Tayabas. So ordered, without special pronouncement as to the costs.

Abad Santos, Hull, Vickers, Butte, Goddard, and Diaz, JJ., concur.

FLORESCA V. PHIL
Facts:

the complaint alleges that Philex, in violation of government rules and regulations, negligently and deliberately
failed to take the required precautions for the protection of the lives of its men working underground.

There are divergent opinions in this case. Justice Lazaro is of the opinion mat an injured employee or worker, or
the heirs in case of his death, may initiate a complaint to recover damages (not compensation under the
Workmen's Compensation Act) with the regular court on the... basis of negligence of an employer pursuant to the
Civil Code provisions. Arty. Angara believes otherwise. He submits that the remedy of an injured employee for
work-connected injury or accident is exclusive in accordance with Section 5 of the Workmen's Compensation
Act, while

Arty. Bacungan's position is that the action is selective. He opines that the heirs of the employee in case of his
death have a right of choice to avail themselves of the benefits provided under the Workmen's Compensation Act
or to sue in the regular court under the Civil Code... for higher damages from the employer by virtue of negligence
of the latter. Atty. Bocobo's stand is the same as that of Arty. Bacungan and adds that once the heirs elect the
remedy provided for under the Act, they are no longer entitled to avail themselves of the remedy provided... for
under the Civil Code by filing an action for higher damages in the regular court, and vice versa.

Issues:

whether or not the cause of... action is in the nature of workmen's compensation claim or a claim for damages
pursuant to the provisions of the Civil Code

Ruling:

The complaint instead alleges gross... and reckless negligence and deliberate failure on the part of Philex to
protect the lives of its workers as a consequence of which a cave-in occurred resulting in the death of the
employees working underground.

In the present case, there exists between Philex and the deceased employees a contractual relationship. The
alleged gross and reckless negligence and deliberate failure that amount to bad faith on the part of Philex,
constitute a breach of contract for which it may be held... liable for damages. The provisions of the Civil Code on
cases of breach of contract when there is fraud or bad faith, read:

"Art. 2232. In contracts and quasi-con tracts, the court may award exemplary damages if the defendant acted in
a wanton, fraudulent, reckless, oppressive or malevolent manner.

"Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is liable
shall be those that are the natural and probable consequences of the breach of the obligation, and which the
parties have foreseen or could have reasonably foreseen... at the time the obligation was constituted.

"In cases of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which
may be reasonably attributed to the non-performance of the obligation."

Contrary to the perception of the dissenting opinion, the Court does not legislate in the instant case. The Court
merely applies and gives effect to the constitutional guarantees of social justice then secured by Section 5 of
Article II and Section 6 of Article XIV of the 1935
Constitution, and now by Sections 6, 7, and 9 of Article II of the DECLARATION OF PRINCIPLES AND STATE
POLICIES of the 1973 Constitution, as amended, and as implemented by Articles 2176, 2177, 2178, 1173, 2201.
2216, 2231, and 2232 of the New Civil Code of 1950.

Principles:

Article 10 of the New Civil Code states: "In case of doubt in the interpretation or application of laws, it is
presumed that the law-making body intended right and justice to prevail."

More specifically, Article 1702 of the New Civil Code likewise directs that: "In case of doubt, all labor legislation
and all labor contracts shall be construed in favor of the safety and decent living of the laborer."

ALONZO V. IACS
Facts:

Five brothers and sisters inherited in equal pro indiviso shares a parcel of land registered in the name of their
deceased parents under OCT No. 10977 of the Registry of Deeds of Tarla

On March 15, 1963, one of them, Celestino Padua, transferred his undivided share to the herein petitioners for the
sum of P550.00 by way of absolute sale.[2] One year later, on April 22, 1964, Eustaquia Padua, his sister, sold...
her own share to the same vendees, in an instrument denominated "Con Pacto de Retro Sale," for the sum of
P440.00.

By virtue of such agreements, the petitioners occupied, after the said sales, an area corresponding to two?fifths
of the said lot, representing the portions sold to them. The vendees subsequently enclosed the same with a
fence. In 1975, with their consent, their son Eduardo

Alonzo and his wife built a semi-concrete house on a part of the enclosed area.

On February 25, 1976, Mariano Padua, one of the five co-heirs, sought to redeem the area sold to the spouses
Alonzo, but his complaint was dismissed when it appeared that he was an American citizen.[5] On May 27,
1977,... however, Tecla Padua, another co-heir, filed her own complaint invoking the same right of redemption
claimed by her brother

The trial court* also dismisses this complaint, now on the ground that the right had lapsed, not having been
exercised within thirty days from notice of the sales in 1963 and 1964. Although there was no written notice, it
was held that actual... knowledge of the sales by the co-heirs satisfied the requirement of the law

It is highly improbable that the other co-heirs were unaware of the sales and that they thought, as they alleged,
that the area occupied by the petitioners had merely been mortgaged by Celestino and Eustaquia. In the
circumstances just narrated, it was impossible for

Tecla not to know that the area occupied by the petitioners had been purchased by them from the other co-heirs.
Especially significant was the erection thereon of the permanent semi-concrete structure by the petitioners' son,
which was done without objection on her part or of... any of the other co-heirs.

Issues:

is the correct interpretation and application of the pertinent law as invoked, interestingly enough, by both the
petitioners and the private respondents. This is Article 1088 of the Civil Code, providing as follows:

"Art. 1088. Should any of the heirs sell his hereditary rights to a stranger before the partition, any or all of the co--
heirs may be subrogated to the rights of the purchaser by reimbursing him for the price of the sale, provided they
do so within the... period of one month from the time they were notified in writing of the sale by the vendor."

In reversing the trial court, the respondent court* declared that the notice required by the said article was
written notice and that actual notice would not suffice as a substitute. Citing the same case of De Conejero v.
Court of

Appeals[11] applied by the trial court, the respondent court held that that decision, interpreting a like rule in
Article 1623, stressed the need for... written notice although no particular form was required.

Ruling:

Thus, according to Justice J.B.L. Reyes, who was the ponente of the Court, furnishing the co-heirs with a copy of
the deed of sale of the property subject to redemption would satisfy the requirement for written notice. "So long,
therefore, as the latter (i.e., the... redemptioner) is informed in writing of the sale and the particulars thereof," he
declared, "the thirty days for redemption start running."
In the earlier decision of Butte v. Uy,[12] the Court, speaking through the same learned jurist, emphasized that
the written notice should be given by the vendor and not the vendees, conformably... to a similar requirement
under Article 1623, reading as follows:

"Art. 1623. The right of legal pre-emption or redemption shall not be exercised except within thirty days from the
notice in writing by the prospective vendor, or by the vendors, as the case may be. The deed of sale shall not be
recorded in the Registry of Property,... unless accompanied by an affidavit of the vendor that he has given written
notice thereof to all possible redemptioners.

"The right of redemption of co?owners excludes that of the adjoining owners."

As "it is thus apparent that the Philippine legislature in Article 1623 deliberately selected a particular method of
giving notice, and that notice must be deemed exclusive," the Court held that notice given by the vendees and
not the vendor would not toll the... running of the 30-day period.

The petition before us appears to be an illustration of the Holmes dictum that "hard cases make bad laws" as the
petitioners obviously cannot argue against the fact that there was really no written notice given by the vendors
to their co-heirs. Strictly applied and... interpreted, Article 1088 can lead to only one conclusion, to wit, that in
view of such deficiency, the 30-day period for redemption had not begun to run, much less expired in 1977.

But as has also been aptly observed, we test a law by its results; and likewise, we may add, by its purposes. It is
a cardinal rule that, in seeking the meaning of the law, the first concern of the judge should be to discover in its
provisions the intent of the... lawmaker. Unquestionably, the law should never be interpreted in such a way as to
cause injustice as this is never within the legislative intent. An indispensable part of that intent, in fact, for we
presume the good motives of the legislature, is to render... justice.

Thus, we interpret and apply the law not independently of but in consonance with justice. Law and justice are
inseparable, and we must keep them so. To be sure, there are some laws that, while generally valid, may seem
arbitrary when applied in a particular case because of... its peculiar circumstances. In such a situation, we are
not bound, because only of our nature and functions, to apply them just the same, in slavish obedience to their
language. What we do instead is find a balance between the word and the will, that justice may be done even
as... the law is obeyed.

As judges, we are not automatons. We do not and must not unfeelingly apply the law as it is worded, yielding like
robots to the literal command without regard to its cause and consequence. "Courts are apt to err by sticking too
closely to the words of a law," so we are... warned, by Justice Holmes again, "where these words import a policy
that goes beyond them."[13] While we admittedly may not legislate, we nevertheless have the power to interpret
the law in such a way as to reflect the will... of the legislature. While we may not read into the law a purpose that
is not there, we nevertheless have the right to read out of it the reason for its enactment. In doing so, we defer
not to "the letter that killeth" but to "the spirit that vivifieth," to give... effect to the lawmaker's will.

"The spirit, rather than the letter of a statute determines its construction, hence, a statute must be read
according to its spirit or intent. For what is within the spirit is within the statute although it is not within the
letter thereof, and that which is... within the letter but not within the spirit is not within the statute. Stated
differently, a thing which is within the intent of the lawmaker is as much within the statute as if within the letter;
and a thing which is within the letter of the statute is not within the statute... unless within the intent of the
lawmakers."[14]

In requiring written notice, Article 1088 seeks to ensure that the redemptioner is properly notified of the sale and
to indicate the date of such notice as the starting time of the 30-day period of redemption. Considering the
shortness of the period, it is really... necessary, as a general rule, to pinpoint the precise date it is supposed to
begin, to obviate any problem of alleged delays, sometimes consisting of only a day or two.

The instant case presents no such problem because the right of redemption was invoked not days but years after
the sales were made in 1963 and 1964. The complaint was filed by Tecla Padua in 1977, thirteen years after the
first sale and fourteen years... after the second sale. The delay invoked by the petitioners extends to more than a
decade, assuming of course that there was a valid notice that tolled the running of the period of redemption.

Was there a valid notice? Granting that the law requires the notice to be written, would such notice be necessary
in this case? Assuming there was a valid notice although it was not in writing, would there be any question that
the 30-day period for redemption had expired... long before the complaint was filed in 1977?

In the face of the established facts, we cannot accept the private respondents' pretense that they were unaware
of the sales made by their brother and sister in 1963 and 1964. By requiring written proof of such notice, we
would be closing our eyes to the obvious truth in... favor of their palpably false claim of ignorance, thus exalting
the letter of the law over its purpose. The purpose is clear enough: to make sure that the redemptioners are duly
notified. We are satisfied that in this case the other brothers and sisters were actually... informed, although not in
writing, of the sales made in 1963 and 1964, and that such notice was sufficient.

Now, when did the 30-day period of redemption begin?

While we do not here declare that this period started from the dates of such sales in 1963 and 1964, we do say
that sometime between those years and 1976, when the first complaint for redemption was filed, the other co-
heirs were actually informed of the sale and that... thereafter the 30-day period started running and ultimately
expired. This could have happened any time during the interval of thirteen years, when none of the co-heirs made
a move to redeem the properties sold. By 1977, in other words, when Tecla Padua filed her complaint, the... right
of redemption had already been extinguished because the period for its exercise had already expired.

The following doctrine is also worth noting:

"While the general rule is, that to charge a party with laches in the assertion of an alleged right it is essential
that he should have knowledge of the facts upon which he bases his claim, yet if the circumstances were such as
should have induced... inquiry, and the means of ascertaining the truth were readily available upon inquiry, but
the party neglects to make it, he will be chargeable with laches, the same as if he had known the facts."[15]

It was the perfectly natural thing for the co-heirs to wonder why the spouses Alonzo, who were not among them,
should enclose a portion of the inherited lot and build thereon a house of strong materials. This definitely was not
the act of a temporary possessor or a mere... mortgagee. This certainly looked like an act of ownership. Yet,
given this unseemly situation, none of the co-heirs saw fit to object or at least inquire, to ascertain the facts,
which were readily available. It took all of thirteen years before one of them... chose to claim the right of
redemption, but then it was already too late.

We realize that in arriving at our conclusion today, we are deviating from the strict letter of the law, which the
respondent court understandably applied pursuant to existing jurisprudence. The said court acted properly as it
had no competence to reverse the doctrines laid... down by this Court in the above-cited cases. In fact, and this
should be clearly stressed, we ourselves are not abandoning the De Conejero and Butte doctrines. What we are
doing simply is adopting an exception to the general rule, in view of the peculiar circumstances of... this case.

The co-heirs in this case were undeniably informed of the sales although no notice in writing was given them.
And there is no doubt either that the 30-day period began and ended during the 14 years between the sales in
question and the filing of the complaint for redemption... in 1977, without the co-heirs exercising their right of
redemption. These are the justifications for this exception.

More than twenty centuries ago, Justinian defined justice "as the constant and perpetual wish to render every
one his due."[16] That wish continues to motivate this Court when it assesses the facts and the law... in every
case brought to it for decision. Justice is always an essential ingredient of its decisions. Thus when the facts
warrant, we interpret the law in a way that will render justice, presuming that it was the intention of the
lawmaker, to begin with, that the law be... dispensed with justice. So we have done in this case.

WHEREFORE, the petition is granted. The decision of the respondent court is REVERSED and that of the trial
court is reinstated, without any pronouncement as to costs. It is so ordered.

Facts:
This is a joint appeal from the decision of the Court of First Instance of Manila declaring section
13 of Republic Act No. 590 unconstitutional, and ordering the appellant Saturnino David as
collector of Internal Revenue to refund to Justice Pastor M.
Endencia the sum of P1,744.45 representing the income tax collected on his salary as Associate
Justice of the Court of Appeals in 1951, and to Justice Fernando Jugo the amount of P2,345.46,
representing the income tax collected on his salary from January 1, 1950 to October 19,... 1950,
as Presiding Justice of the Court of Appeals, and from October 20, 1950 to December 31, 1950,
as Associate Justice of the Supreme Court, without special pronouncement as to costs.
Issues:
May the Legislature lawfully declare the collection of income tax on the salary of a public
official, specially... a judicial officer, not a decrease of his salary, after the Supreme Court has
found and decided otherwise?
Ruling:
In view of the foregoing considerations, the decision appealed from is hereby affirmed, with no
pronouncement as to costs.
Principles:
"SEC. 9. The members of the Supreme Court and all judges of inferior courts shall hold office
during good behavior, until they reach the age of seventy years, or become incapacitated to
discharge the duties of their office. They shall receive such compensation... as may fixed by law,
which shall not be diminished during their continuance in office. Until the Congress shall
provide otherwise, the Chief Justice of the Supreme Court shall receive an annual compensation
of sixteen thousand pesos, and each Associate Justice,... fifteen thousand pesos."
As already stated construing and applying the above constitutional provision, we held in the
Perfecto case that judicial officers are exempt from the payment of income tax on their salaries,
because the collection thereof by the Government was a decrease or diminution of their... salaries
during their continuance in office, a thing which is expressly prohibited by the Constitution.
section 13 of Republic Act No. 590:
"SEC. 13. No salary wherever received by any public officer of the Republic of the Philippines
shall be considered as exempt from the income tax, payment of which is hereby declared not to
be a diminution of his compensation fixed by the Constitution or by... law."
By legislative fiat as enunciated in section 13, Republic Act No. 590, Congress says that taxing
the salary of a judicial officer is not a decrease of compensation. This is a clear example of
interpretation or ascertainment of the meaning of the phrase "which shall not be... diminished
during their continuance in office," found in section 9, Article VIII of the Constitution, referring
to the salaries of judicial officers. This act of interpreting the Constitution or any part thereof by
the Legislature is an invasion of the well-defined and... established province and jurisdiction of
the Judiciary.
Considering the practical side thereof, we believe that the collection of income tax on a salary is
an actual and evident diminution thereof.
The reason behind the exemption in the Constitution, as interpreted by the United States
Federal Supreme Court and this Court, is to preserve the independence of the Judiciary, not only
of this High Tribunal but of the other courts, whose present membership number more than 990
judicial officials.
the collection of income tax on the salary of a judicial officer is a diminution thereof and so
violates the Constitution. We further hold that the... interpretation and application of the
Constitution and of statutes is within the exclusive province and jurisdiction of the Judicial
department, and that in enacting a law, the Legislature may not legally provide therein that it be
interpreted in such a way that it may not... violate a Constitutional prohibition, thereby tying the
hands of the courts in their task of later interpreting said statute, specially when the interpretation
sought and provided in said statute runs counter to a previous interpretation already given in a
case by the highest... court of the land.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC
G.R. No. L-6355-56 August 31, 1953

PASTOR M. ENDENCIA and FERNANDO JUGO, plaintiffs-appellees,

vs.
SATURNINO DAVID, as Collector of Internal Revenue, defendant-appellant.

Office of the Solicitor General Juan R. Liwag and Solicitor Jose P. Alejandro for appellant.
Manuel O. Chan for appellees.

MONTEMAYOR, J.:

This is a joint appeal from the decision of the Court of First Instance of Manila declaring section 13 of Republic Act No. 590 unconstitutional, and
ordering the appellant Saturnino David as Collector of Internal Revenue to re-fund to Justice Pastor M. Endencia the sum of P1,744.45, representing
the income tax collected on his salary as Associate Justice of the Court of Appeals in 1951, and to Justice Fernando Jugo the amount of P2,345.46,
representing the income tax collected on his salary from January 1,1950 to October 19, 1950, as Presiding Justice of the Court of Appeals, and from
October 20, 1950 to December 31,1950, as Associate Justice of the Supreme Court, without special pronouncement as to costs.

Because of the similarity of the two cases, involving as they do the same question of law, they were jointly submitted for determination in the lower
court. Judge Higinio B. Macadaeg presiding, in a rather exhaustive and well considered decision found and held that under the doctrine laid down by
this Court in the case of Perfecto vs. Meer, 85 Phil., 552, the collection of income taxes from the salaries of Justice Jugo and Justice Endencia was a
diminution of their compensation and therefore was in violation of the Constitution of the Philippines, and so ordered the refund of said taxes.

We see no profit and necessity in again discussing and considering the proposition and the arguments pro and cons involved in the case of Perfecto
vs. Meer, supra, which are raised, brought up and presented here. In that case, we have held despite the ruling enunciated by the United States
Federal Supreme Court in the case of O 'Malley vs. Woodrought 307 U. S., 277, that taxing the salary of a judicial officer in the Philippines is a
diminution of such salary and so violates the Constitution. We shall now confine our-selves to a discussion and determination of the remaining question
of whether or not Republic Act No. 590, particularly section 13, can justify and legalize the collection of income tax on the salary of judicial officers.

According to the brief of the Solicitor General on behalf of appellant Collector of Internal Revenue, our decision in the case of Perfecto vs. Meer, supra,
was not received favorably by Congress, because immediately after its promulgation, Congress enacted Republic Act No. 590. To bring home his
point, the Solicitor General reproduced what he considers the pertinent discussion in the Lower House of House Bill No. 1127 which became Republic
Act No. 590.

For purposes of reference, we are reproducing section 9, Article VIII of our Constitution:.

SEC. 9. The members of the Supreme Court and all judges of inferior courts shall hold office during good behavior, until they reach the age
of seventy years, or become incapacitated to discharge the duties of their office. They shall receive such compensation as may be fixed by
law, which shall not be diminished during their continuance in office. Until the Congress shall provide otherwise, the Chief Justice of the
Supreme Court shall receive an annual compensation of sixteen thousand pesos, and each Associate Justice, fifteen thousand pesos.

As already stated construing and applying the above constitutional provision, we held in the Perfecto case that judicial officers are exempt from the
payment of income tax on their salaries, because the collection thereof by the Government was a decrease or diminution of their salaries during their
continuance in office, a thing which is expressly prohibited by the Constitution. Thereafter, according to the Solicitor General, because Congress did
not favorably receive the decision in the Perfecto case, Congress promulgated Republic Act No. 590, if not to counteract the ruling in that decision, at
least now to authorize and legalize the collection of income tax on the salaries of judicial officers. We quote section 13 of Republic Act No. 590:

SEC 13. No salary wherever received by any public officer of the Republic of the Philippines shall be considered as exempt from the
income tax, payment of which is hereby declared not to be dimunition of his compensation fixed by the Constitution or by law.

So we have this situation. The Supreme Court in a decision interpreting the Constitution, particularly section 9, Article VIII, has held that judicial officers
are exempt from payment of income tax on their salaries, because the collection thereof was a diminution of such salaries, specifically prohibited by the
Constitution. Now comes the Legislature and in section 13, Republic Act No. 590, says that "no salary wherever received by any public officer of the
Republic (naturally including a judicial officer) shall be considered as exempt from the income tax," and proceeds to declare that payment of said
income tax is not a diminution of his compensation. Can the Legislature validly do this? May the Legislature lawfully declare the collection of income tax
on the salary of a public official, specially a judicial officer, not a decrease of his salary, after the Supreme Court has found and decided otherwise? To
determine this question, we shall have to go back to the fundamental principles regarding separation of powers.

Under our system of constitutional government, the Legislative department is assigned the power to make and enact laws. The Executive department
is charged with the execution of carrying out of the provisions of said laws. But the interpretation and application of said laws belong exclusively to the
Judicial department. And this authority to interpret and apply the laws extends to the Constitution. Before the courts can determine whether a law is
constitutional or not, it will have to interpret and ascertain the meaning not only of said law, but also of the pertinent portion of the Constitution in order
to decide whether there is a conflict between the two, because if there is, then the law will have to give way and has to be declared invalid and
unconstitutional.

Defining and interpreting the law is a judicial function and the legislative branch may not limit or restrict the power granted to the courts by
the Constitution. (Bandy vs. Mickelson et al., 44N. W., 2nd 341, 342.)

When it is clear that a statute transgresses the authority vested in the legislature by the Constitution, it is the duty of the courts to declare
the act unconstitutional because they cannot shrink from it without violating their oaths of office. This duty of the courts to maintain the
 Constitution as the fundamental law of the state is imperative and unceasing; and, as Chief Justice Marshall said, whenever a statute is in
violation of the fundamental law, the courts must so adjudge and thereby give effect to the Constitution. Any other course would lead to the
destruction of the Constitution. Since the question as to the constitutionality of a statute is a judicial matter, the courts will not decline the
exercise of jurisdiction upon the suggestion that action might be taken by political agencies in disregard of the judgment of the judicial
tribunals. (11 Am. Jur., 714-715.)

Under the American system of constitutional government, among the most important functions in trusted to the judiciary are the interpreting
of Constitutions and, as a closely connected power, the determination of whether laws and acts of the legislature are or are not contrary to
the provisions of the Federal and State Constitutions. (11 Am. Jur., 905.).

By legislative fiat as enunciated in section 13, Republic Act NO. 590, Congress says that taxing the salary of a judicial officer is not a decrease of
compensation. This is a clear example of interpretation or ascertainment of the meaning of the phrase "which shall not be diminished during their
continuance in office," found in section 9, Article VIII of the Constitution, referring to the salaries of judicial officers. This act of interpreting the
Constitution or any part thereof by the Legislature is an invasion of the well-defined and established province and jurisdiction of the Judiciary.

The rule is recognized elsewhere that the legislature cannot pass any declaratory act, or act declaratory of what the law was before its
passage, so as to give it any binding weight with the courts. A legislative definition of a word as used in a statute is not conclusive of its
meaning as used elsewhere; otherwise, the legislature would be usurping a judicial function in defining a term. (11 Am. Jur., 914, emphasis
supplied)

The legislature cannot, upon passing a law which violates a constitutional provision, validate it so as to prevent an attack thereon in the
courts, by a declaration that it shall be so construed as not to violate the constitutional inhibition. (11 Am. Jur., 919, emphasis supplied)

We have already said that the Legislature under our form of government is assigned the task and the power to make and enact laws, but not to
interpret them. This is more true with regard to the interpretation of the basic law, the Constitution, which is not within the sphere of the Legislative
department. If the Legislature may declare what a law means, or what a specific portion of the Constitution means, especially after the courts have in
actual case ascertain its meaning by interpretation and applied it in a decision, this would surely cause confusion and instability in judicial processes
and court decisions. Under such a system, a final court determination of a case based on a judicial interpretation of the law of the Constitution may be
undermined or even annulled by a subsequent and different interpretation of the law or of the Constitution by the Legislative department. That would be
neither wise nor desirable, besides being clearly violative of the fundamental, principles of our constitutional system of government, particularly those
governing the separation of powers.

So much for the constitutional aspect of the case. Considering the practical side thereof, we believe that the collection of income tax on a salary is an
actual and evident diminution thereof. Under the old system where the in-come tax was paid at the end of the year or sometime thereafter, the
decrease may not be so apparent and clear. All that the official who had previously received his full salary was called upon to do, was to fulfill his
obligation and to exercise his privilege of paying his income tax on his salary. His salary fixed by law was received by him in the amount of said tax
comes from his other sources of income, he may not fully realize the fact that his salary had been decreased in the amount of said income tax. But
under the present system of withholding the income tax at the source, where the full amount of the income tax corresponding to his salary is computed
in advance and divided into equal portions corresponding to the number of pay-days during the year and actually deducted from his salary
corresponding to each payday, said official actually does not receive his salary in full, because the income tax is deducted therefrom every payday, that
is to say, twice a month. Let us take the case of Justice Endencia. As Associate Justice of the Court of Appeals, his salary is fixed at p12,000 a year,
that is to say, he should receive P1,000 a month or P500 every payday, — fifteenth and end of month. In the present case, the amount collected by the
Collector of Internal Revenue on said salary is P1,744.45 for one year. Divided by twelve (months) we shall have P145.37 a month. And further dividing
it by two paydays will bring it down to P72.685, which is the income tax deducted form the collected on his salary each half month. So, if Justice
Endencia's salary as a judicial officer were not exempt from payment of the income tax, instead of receiving P500 every payday, he would be actually
receiving P427.31 only, and instead of receiving P12,000 a year, he would be receiving but P10,255.55. Is it not therefor clear that every payday, his
salary is actually decreased by P72.685 and every year is decreased by P1,744.45?

Reading the discussion in the lower House in connection with House Bill No. 1127, which became Republic Act No. 590, it would seem that one of the
main reasons behind the enactment of the law was the feeling among certain legislators that members of the Supreme Court should not enjoy any
exemption and that as citizens, out of patriotism and love for their country, they should pay income tax on their salaries. It might be stated in this
connection that the exemption is not enjoyed by the members of the Supreme Court alone but also by all judicial officers including Justices of the Court
of Appeals and judges of inferior courts. The exemption also extends to other constitutional officers, like the President of the Republic, the Auditor
General, the members of the Commission on Elections, and possibly members of the Board of Tax Appeals, commissioners of the Public Service
Commission, and judges of the Court of Industrial Relations. Compares to the number of all these officials, that of the Supreme Court Justices is
relatively insignificant. There are more than 990 other judicial officers enjoying the exemption, including 15 Justices of the Court of Appeals, about 107
Judges of First Instance, 38 Municipal Judges and about 830 Justices of the Peace. The reason behind the exemption in the Constitution, as
interpreted by the United States Federal Supreme Court and this Court, is to preserve the independence of the Judiciary, not only of this High Tribunal
but of the other courts, whose present membership number more than 990 judicial officials.

The exemption was not primarily intended to benefit judicial officers, but was grounded on public policy. As said by Justice Van Devanter of the United
States Supreme Court in the case of Evans vs. Gore (253 U. S., 245):

The primary purpose of the prohibition against diminution was not to benefit the judges, but, like the clause in respect of tenure, to attract
good and competent men to the bench and to promote that independence of action and judgment which is essential to the maintenance of
the guaranties, limitations and pervading principles of the Constitution and to the administration of justice without respect to person and with
equal concern for the poor and the rich. Such being its purpose, it is to be construed, not as a private grant, but as a limitation imposed in
the public interest; in other words, not restrictively, but in accord with its spirit and the principle on which it proceeds.

Having in mind the limited number of judicial officers in the Philippines enjoying this exemption, especially when the great bulk thereof are justices of
the peace, many of them receiving as low as P200 a month, and considering further the other exemptions allowed by the income tax law, such as
P3,000 for a married person and P600 for each dependent, the amount of national revenue to be derived from income tax on the salaries of judicial
officers, were if not for the constitutional exemption, could not be large or substantial. But even if it were otherwise, it should not affect, much less
outweigh the purpose and the considerations that prompted the establishment of the constitutional exemption. In the same case of Evans vs. Gore,
supra, the Federal Supreme Court declared "that they (fathers of the Constitution) regarded the independence of the judges as far as greater
importance than any revenue that could come from taxing their salaries.

When a judicial officer assumed office, he does not exactly ask for exemption from payment of income tax on his salary, as a privilege . It is already
attached to his office, provided and secured by the fundamental law, not primarily for his benefit, but based on public interest, to secure and preserve
his independence of judicial thought and action. When we come to the members of the Supreme Court, this excemption to them is relatively of short
duration. Because of the limited membership in this High Tribunal, eleven, and due to the high standards of experience, practice and training required,
one generally enters its portals and comes to join its membership quite late in life, on the aver-age, around his sixtieth year, and being required to retire
at seventy, assuming that he does not die or become incapacitated earlier, naturally he is not in a position to receive the benefit of exemption for long.
It is rather to the justices of the peace that the exemption can give more benefit. They are relatively more numerous, and because of the meager salary
they receive, they can less afford to pay the income tax on it and its diminution by the amount of the income tax if paid would be real, substantial and
onerous.

Considering exemption in the abstract, there is nothing unusual or abhorrent in it, as long as it is based on public policy or public interest. While all
other citizens are subject to arrest when charged with the commission of a crime, members of the Senate and House of Representatives except in
cases of treason, felony and breach of the peace are exempt from arrest, during their attendance in the session of the Legislature; and while all other
citizens are generally liable for any speech, remark or statement, oral or written, tending to cause the dishonor, discredit or contempt of a natural or
juridical person or to blacken the memory of one who is dead, Senators and Congressmen in making such statements during their sessions are
extended immunity and exemption.

And as to tax exemption, there are not a few citizens who enjoy this exemption. Persons, natural and juridical, are exempt from taxes on their lands,
buildings and improvements thereon when used exclusively for educational purposes, even if they derive income therefrom. (Art. VI, Sec. 22 [3].)
Holders of government bonds are exempted from the payment of taxes on the income or interest they receive therefrom (sec. 29 (b) [4], National
Internal Revenue Code as amended by Republic Act No. 566). Payments or income received by any person residing in the Philippines under the laws
of the United States administered by the United States Veterans Administration are exempt from taxation. (Republic Act No. 360). Funds received by
officers and enlisted men of the Philippine Army who served in the Armed Forces of the United States, allowances earned by virtue of such services
corresponding to the taxable years 1942 to 1945, inclusive, are exempted from income tax. (Republic Act No. 210). The payment of wages and
allowances of officers and enlisted men of the Army Forces of the Philippines sent to Korea are also exempted from taxation. (Republic Act No. 35). In
other words, for reasons of public policy and public interest, a citizen may justifiably by constitutional provision or statute be exempted from his ordinary
obligation of paying taxes on his income. Under the same public policy and perhaps for the same it not higher considerations, the framers of the
Constitution deemed it wise and necessary to exempt judicial officers from paying taxes on their salaries so as not to decrease their compensation,
thereby insuring the independence of the Judiciary.

In conclusion we reiterate the doctrine laid down in the case of Perfecto vs. Meer, supra, to the effect that the collection of income tax on the salary of a
judicial officer is a diminution thereof and so violates the Constitution. We further hold that the interpretation and application of the Constitution and of
statutes is within the exclusive province and jurisdiction of the Judicial department, and that in enacting a law, the Legislature may not legally provide
therein that it be interpreted in such a way that it may not violate a Constitutional prohibition, thereby tying the hands of the courts in their task of later
interpreting said statute, specially when the interpretation sought and provided in said statute runs counter to a previous interpretation already given in
a case by the highest court of the land.

In the views of the foregoing considerations, the decision appealed from is hereby affirmed, with no pronouncement as to costs.

Pablo, Bengzon, Padilla, Tuason, Reyes, and Labrador, JJ., concur.

Separate Opinions

BAUTISTA ANGELO, J., concurring:

Without expressing any opinion on the doctrine laid down by this Court in the case of Perfecto vs. Meer, G. R. No. L-2314, in view of the part I had in
that case as former Solicitor General, I wish however to state that I concur in the opinion of the majority to the effect that section 13, Republic Act No.
590, in so far as it provides that taxing of the salary of a judicial officer shall be considered "not to be a diminution of his compensation fixed by the
Constitution or by law", constitutes an invasion of the province and jurisdiction of the judiciary. In this sense, I am of the opinion that said section is null
and void, it being a transgression of the fundamental principle underlying the separation of powers.

PARAS, C.J., concurring and dissenting:

I dissent for the same reasons stated in the dissenting opinion of Mr. Justice Ozaeta in Perfecto vs. Meer, 85 Phil., 552, in which I concurred. But I
disagree with the majority in ruling that no legislation may provide that it be held valid although against a provision of the Constitution.