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URBANO EUSTAQUIO, defendant-appellee. Jose Agbulos for appellant. Urbano Eustaquio in his own behalf. Imperial, J.: This is an appeal taken by the plaintiff corporation from the judgment of the Court of First Instance of Manila dismissing its complaint, without costs. The plaintiff brought the action against the defendant to obtain the possession of an automobile mortgaged by the latter, and to recover the balance owing upon a note executed by him, the interest thereon, attorney‘s fees, expenses of collection, and the costs. The defendant was duly summoned, but he failed to appear or file his answer, wherefore he was declared in default and the appealed judgment was rendered accordingly. The plaintiff sold the defendant a De Soto car, Sedan, for the price of which, P595, he executed in its favor the note of May 22, 1934. Under this note, the defendant undertook to pay the car in twelve monthly installments, with 12 percent interest per annum, and likewise agreed that, should he fail to pay any monthly installment together with interest, the remaining installment would become due and payable, and the defendant shall pay 20 per cent upon the principal owning as attorney‘s fees, expenses of collection which the plaintiff might incur, and the costs. To guarantee the performance of his obligation under the note, the defendant on the same date mortgaged the purchased car in favor of the plaintiff, and bound himself under the same conditions stipulated in the note relative to the monthly installments, interest, attorney‘s fees, expenses of collection, and costs. The mortgage deed was registered on June 11, 1934, in the office of the register of deeds of the Province of Rizal. On the 22d of the same month, the defendant paid P43.75 upon the first installment, and thereafter failed to pay any of the remaining installments. In accordance with the terms of the mortgage, the plaintiff called upon the sheriff to take possession of the car, but the defendant refused to yield possession thereof, whereupon, the plaintiff brought the replevin sought and thereby succeeded in getting possession of the car. The car was sold at public auction to the plaintiff for P250, the latter incurring legal expenses in the amount of P10.68, According to the liquidation filed by the plaintiff, the defendant was still indebted in the amount of P342.20, interest at 12 per cent from November 20, 1934, P110.25 as attorney‘s fees, and the costs. I. The plaintiff‘s first assignment of error is addressed to the appealed judgment in so far as it applied Act No. 4122 and dismissed the complaint, notwithstanding the fact that the defendant waived his rights under said law by not making any appearance, by having been declared in default, by not interposing any special defense, and not asking for any positive relief. Under section 128 of our Civil Procedure, the judgment by default against a defendant who has neither appeared nor filed his answer does not imply a waiver of right except that of being heard and of presenting evidence in his favor. It does not imply admission by the defendant of the facts and causes of action of the plaintiff, because the codal section requires the latter to adduce his evidence in support of his allegation as an indispensable condition before final judgment could be given in his favor. Nor could it be interpreted as an admission by the defendant that the plaintiff‘s causes of action find support in the law or that latter is entitled to the relief prayed for. (Chaffin vs. Mac Fadden, 41 Ark., 42; Johnson vs. Peirce, 12 Ark., 599; Mayden vs. Johnson, 59 Ga., 105; Peo. vs. Rust, 292 Ill., 412; Madison County vs. Smith, 95 Ill., 328; Keen vs. Krempel, 166 Ill. A., 253.) For these reason, we hold that the defendant did not waive the applicant by the court of Act No. 4122, and that the first assignment of error is untenable. II. The plaintiff contends in its second assignment of error that Act No. 4122 is invalid because it takes property without due process of law,
denies the equal protection of the laws, and impairs the obligations of contract, thereby violating the provisions of section 3 of the Act of the United States Congress of August 29, 1916, known as the Jones Law. This is not the first time that the constitutionality of the said law has been impugned for like reasons. In Manila Trading and Supply Co. vs. Reyes (64 Phil. 461), the validity of the said law was already passed upon when it was questioned for the same reason here advanced. In resolving the question in favor of the validity of the law, we then held: ―2. Liberty of contract, class legislation, and equal protection of the laws. – The question of the validity of an act is solely one of constitutional power. Questions of expediency, of motive or of results are irrelevant. Nevertheless it is not improper to inquire as to the occasion for the enactment of a law. The legislative purpose thus disclosed can then serve as a fit background for constitution inquiry. Judge Moran in fact instances had the following to say relative to the reason for the enactment of Act No. 4122: ―Act No. 4122 aims to correct a social and economic evil, the inordinate love for luxury of those who, without sufficient means, purchase personal effects, and the ruinous practice of some commercial houses of purchasing back the goods sold for a nominal price besides keeping a part of the price already paid and collecting the balance, with stipulated interest, costs, and attorney‘s fees. For instance, a company sells a truck for P6,500. The purchaser makes a down payment of P500, the balance to be paid in twenty-four equal installments of P250 each. Pursuant to the practice before the enactment of Act No. 4122, if the purchaser fails to pay the first two installments, the company takes possession of the truck and has it sold at public auction at which sale it purchases the truck for a nominal price, at most P500, without prejudice to its right to collect the balance of P5,500, plus interest, costs. and attorney‘s fees. As a consequence, the vendor does not only recover the goods sold, used hardly two months perhaps with only slight wear and tear, but also collects the entire stipulated purchase price, probably swelled up fifty per cent including interest, costs, and attorney‘s fees. This practice is worse than usurious in many instances. And although, of course, the purchaser must suffer the consequences of his imprudence and lack of foresight, the chastisement must not be to the extent of ruining him completely and, on the other hand, enriching the vendor in a manner which shocks the conscience. The object of the law is highly commendable. As to whether or not the means employed to do away with the evil above mentioned are arbitrary will be presently set out.‖ In a case which reached this court, Mr. Justice Goddard, interpreting Act No. 4122, made the following observations: ―Undoubtedly the principal object of the above amendment was to remedy the abuses committed in connection with the foreclosure of chattel mortgages. This amendment prevents mortgagees from seizing the mortgaged property, buying it at foreclosure sale for a low price and then bringing suit against the mortgagor for a deficiency judgment. The almost invariable result of this procedure was that the mortgagor found himself minus the property and still owing practically the full amount of his original indebtedness. Under this amendment the vendor of personal property, the purchase price of which is payable in installments, has the right to cancel the sale or foreclose the mortgage if one has been given on the property. Whichever right the vendor elects he need not return to the purchaser the amount of the full installment already paid, ―if there be an agreement to that effect.‖ Furthermore, if the vendor avails himself of the right from foreclose the mortgage this amendment prohibits him from bringing an action against the purchaser for the unpaid balance.‖ ―In other words, under this amendment, in all proceedings for the foreclosure of chattel mortgages, executed on chattels which have been sold on the installment plan, the mortgagee is limited to the property included in the mortgage‖ (Bachrach Motor Co. vs. Millan . 61 Phil. 409.). Public policy having thus had in view the objects just outlined, we should next examine the law to determine if notwithstanding that policy, it violates any of the constitutional principles dealing with the three general subjects here to be considered. In an effort to enlighten us, our attention has been directed to certain authorities, principally one coming from the state of Washington and
another from the State of Oregon. For reason which will soon appear we do not think that either decision is controlling. In 1897, an Act was passed in the State of Washington which provided ―that in all proceedings for the foreclosure of mortgages hereafter executed or on judgments rendered upon the debt thereby secured the mortgagee or assignee shall be limited to the property included in the mortgage.‖ It was held by a divided court of three to two that the statute since limiting the right to enforce a debt secured by mortgage to the property mortgaged whether realty or chattles, was an undue restraint upon the liberty of a citizen to contract with respect to his property right. But as is readily apparent, the Washington law and the Philippine law are radically different in phraseology and in effect. (Dennis vs. Moses , 40 L. R. A., 302.) In Oregon, in a decision of a later date, an Act abolishing deficiency judgment upon the foreclosure of mortgages to secure the unpaid balance of the purchase price of real property was unanimously sustained by the Supreme Court of that State. The importance of the subject matter in that jurisdiction was revealed by the fact that four separate opinions were prepared by the justices participating, in one of which Mr. Justice Johns, shortly thereafter to become a member of this court, concurred. However, it is but fair state that one of the reasons prompting the court to uphold the law was the financial depression which had prevailed in that State. While in the Philippines the court take judicial notice of the stringency of finance that presses upon the people we have no reason to believe that this was the reason which motivated the enactment of Act 4122. (Wright vs. Wimberley , 184 Pac., 740.) While we are on the subject of the authority, we may state that we have examined all of those obtainable, including some of recent date but have not been enlightened very much because as just indicated, they concerned different state of facts and different laws. We gain the most help from the case of Bronzon vs. Kinzie (, 1 How., 311), decided by the Supreme Court of the United State. It had under consideration a law passed in the State of Illinois, which provide that the equitable estate of the mortgagor should not be extinguished for twelve months after sale on decree, and which prevented any sale of the mortgaged property unless two-thirds of the amount at which the property had been valued by appraisers should be bid therefor. The court, by Mr. Chief Justice Taney declared: ―Mortgages made since the passage of these laws must undoubtedly be governed by them; for every State has power to describe the legal and equitable obligation of a contract to be made and executed within it jurisdiction. It may exempt any property it thinks proper from sale for the payment of a debt; and may imposed such conditions and restriction upon the creditor as its judgment and policy may dictate. And all future contracts would be subject to such provisions; and they would be obligatory upon the parties in the provisions; and they would be obligatory upon the parties in the courts of the United States, as well as in those of the state.‖ As we understand it, parties have no vested right in particular remedies or modes of procedure, and the legislature may change existing remedies or modes of procedure without impairing the obligation of contracts, provided an efficacious remedy for enforcement. But changes in the remedies available for the enforcement of a mortgage may not, even when public policy is invoked as an excuse, be pressed so far as to cut down the security of a mortgage without moderation or reason or in a spirit of oppression. (Brotherhood of American Yeoman vs. Manz , 206 Pac., 403; Oshkosh Waterworks Co. vs. Oshkosh , 187 U. S., 437; W. B. Worthen Co. vs. Kavanaugh , 79 U. S. Supreme Court Advance Opinions, 638.) In the Philippines, the Chattel Mortgage Law did not expressly provide for a deficiency judgment upon the foreclosure of a mortgage. Indeed, it required decisions of this court to authorize such a procedure. (Bank of the Philippine Island vs. Olutanga Lumber Co., , 47 Phil. 20; Manila Trading and Supply Co. vs. Tamaraw Plantation Co., supra.) But the practice became universal enactment regarding procedure. To a certain extent the Legislature has now disauthorized this practice, but has left a sufficient remedy remaining. Three remedies are available to the vendor who has sold personal property on the installment plan. (1) He may elect to exact the
fulfillment of the obligation. (Bachrach Motor Co. vs. Milan, supra.) (2) If the vendee shall have failed to pay two or more installments, the vendor may cancel the sale. (3) If the vendee shall have failed to pay two or more installments, the vendor may foreclose the mortgage, if one has been given on the property. The basis of the first option is the Civil Code. The basis of the last two option is Act No. 4122, amendatory of the Civil Code. And the proviso to the right to foreclose is, that if the vendor has chosen this remedy, he shall have no further action against the purchaser for the recovery of any unpaid balance owing by the same. In other words, as we see it, the Act does no more than qualify the remedy. Most constitutional issues are determined by the court‘s approach to them. The proper approach in cases of this character should be to resolve all presumptions in favor of the validity of an act in the absence of a clear conflict between it and the constitution. All doubts should be resolved in its favor. The controlling purpose of Act No. 4122 is revealed to be to close the door to abuses committed in connection with the foreclosure of chattel mortgages when sales were payable in installments. The public policy, obvious from the statute, was defined and established by legislative authority. It is for the courts to perpetuate it. We are of the opinion that the Legislative may change judicial methods and remedies for the enforcement of contracts, as it has done by the enactment of Act No. 4122, without unduly interfering with the obligation of the contract, without sanctioning class legislation, and without a denial of the equal protection of the laws. We rule that Act No. 4122 is valid and enforceable. As a consequence, the errors assigned by the appellant are overruled, and the judgment affirmed, the costs of this instance to be taxed against the losing party. In his brief counsel for the plaintiff advances no new arguments which have not already been considered in the Reyes case, and we see no reason for reaching a different conclusion now. The law seeks to remedy an evil which the Legislature wished to suppress; this legislative body has power to promulgate the law; the law does not completely deprive vendors on the installment basis of a remedy, but requires them to elect among three alternative remedies; the law, on the other hand, does not completely exonerate the purchasers, but only limits their liabilities and, finally, there is no vested right when a procedural law is involved, wherefore the Legislature could enact Act No. 4122 without violating the aforesaid organic law. III. In its last assignment of error plaintiff contends that, even granting that Act No. 4122 is valid, the court should have ordered the defendant to pay at least the stipulated interest, attorney‘s fees, and the costs. This question involves the interpretation of the pertinent portion of the law, reading: ―However, if the vendor has chosen to foreclose the mortgage he shall have no further action against the purchaser for the recovery of any unpaid balance owing by the same, and any agreement to the contrary shall be null and void.‖ This paragraph, as its language shows, refers to the mortgage contract executed by the parties, whereby the purchaser mortgages the chattel sold to him on the installment basis in order to guarantee the payment of its price, and the words ―any unpaid balance‖ should be interpreted as having reference to the deficiency judgment to which the mortgagee may be entitled where, after the mortgaged chattel is sold at public auction, the proceeds obtained therefrom are insufficient to cover the full amount of the secured obligations which, in the case at bar as shown by the note and by the mortgage deed, include interest on the principal, attorney‘s fees, expenses of collection, and the costs. The fundamental rule which should govern the interpretation of laws is to ascertain the intention and meaning of the Legislature and to give effect thereto. (Sec. 288, Code of Civil Procedure; U. S. vs. Toribio, 15 Phil. 85; U. S. vs. Navarro, 19 Phil. 134; De Jesus vs. City of Manila, 29 Phil. 73; Borromeo vs. Mariano, 41 Phil. 322; People vs. Concepcion, 44 Phil. 126.) Were it the intention of the Legislature to limit its meaning to the unpaid balance of the principal, it would have so stated. We hold, therefore, that the assignment of error is untenable. In view of the foregoing, the appealed judgment is affirmed, with the costs of this instance to the plaintiff and appellant. So ordered. LEGISLATIVE INTENT , LEGISLATIVE PURPOSE & LEGISLATIVE MEANING
2. G.R. No. L-29906 January 30, 1976 RODOLFO GENERAL and CARMEN vs. LEONCIO BARRAMEDA, respondent. Augusto A. Pardalis for petitioners. E.V. Guevarra for respondent.
ESGUERRA, J.: Petition for certiorari to review the decision of the Court of Appeals (Second Division) in CA-G.R. No. 38363-R, entitled "Leoncio Barrameda, plaintiff-appellant, vs. Development Bank of the Philippines (Naga Branch, Naga City), Rodolfo General and Carmen Gontang, defendants-appellees," which reversed the decision of the Court of First Instance of Camarines Sur in its Civil Case No. 5697, "dismissing the complaint with costs against plaintiff". Appellate Court's decision has the following dispositive portion: We therefore find that the appealed judgment should be reversed and set aside and another one entered declaring (1) null and void the sale executed on September 3, 1963, by defendant Development Bank of the Philippines in favor of its defendants Rodolfo General and Carmen Gontang, (2) T.C.T. No. 5003 cancelled and (3) the mortgaged property redeemed; and ordering the Clerk of the lower court to deliver the amount of P7,271.22 deposited to defendants Rodolfo General and Carmen Gontang and the Register of Deeds to issue a new Transfer Certificate of Title in the name of plaintiff in lieu of T.C.T. No. 5003 upon payment by him of corresponding fees; with costs against the defendants in both instances. Undisputed facts are: Plaintiff seeks to redeem the land formerly embraced in Transfer Certificate of Title No. 1418, containing an area of 59.4687 hectares, situated in barrio Taban, Minalabac Camarines Sur; to annul any and all contracts affecting said property between the Development Bank of the Philippines (DBP) and Rodolfo General and Carmen Gontang and to recover damages, attorney's fees and costs. The land in dispute was mortgaged by plaintiff to the DBP to secure a loan of P22,000.00. For failure of the mortgagor to pay in full the installments as they fall due, the mortgagee foreclosed extrajudicially pursuant to the provisions of Act 3135. On April 23, 1962, the provincial sheriff conducted an auction sale in which the mortgagee, as the highest bidder, bought the mortgaged property for P7,271.22. On May 13, 1963, the sheriff executed a final deed of sale in favor of the DBP (Exhibit 2) and the DBP executed an affidavit of consolidation of ownership (Exhibit 3). Upon registration of the sale and affidavit on September 2, 1963 (Exhibit 1), TCT No. 1418 in the name of plaintiff was cancelled and TCT No. 5003 issued to the DBP (Exhibit-5) in its stead. On September 3, 1963, defendants Rodolfo General and Carmen Gontang purchased the land from their codefendant. The sale in their favor was annotated on TCT No. 5003 on November 26, 1963 only. Prior to the date last mentioned, or on November 20, 1963, plaintiff offered to redeem the land. In view of the refusal of the DBP to allow the redemption, plaintiff commenced this suit. The original complaint was filed in court on November 23, 1963. On August 12, 1964, plaintiff deposited with the clerk of court the sum of P7,271.22, representing the repurchase price of the land. The trial court held that the one-year period of redemption began to run on April 23, 1962, when the sale at public auction was held, and ended on April 24, 1963; that the plaintiff's offer to redeem on November 20, 1963 and the deposit of the redemption price on August 12, 1964 were made beyond the redemption period; and that defendants Rodolfo General and Carmen Gontang 'are legitimate purchasers for value. Two principal issues raised are: (1) In the interpretation and application of Section 31, Commonwealth Act 459 (Law that created the Agricultural and Industrial Bank, now Development Bank of the Philippines) which provides: The Mortgagor or debtor to the Agricultural and Industrial Bank whose real property was sold at public auction, judicially or extra- judicially, for the full or partial payment of an obligation to said bank
shall, within one year from the date of' the auction sale, have the right to redeem the real property ... (Emphasis supplied), shall the period of redemption start from the date of auction sale or the date of the registration of the sale in the register of deeds as the respondent Appellate Court held? (2) Were petitioners under obligation to look beyond what appeared in the certificate of title of their vendor the Development Bank of the Philippines and investigate the validity of its title before they could be classified as purchasers in good faith? Petitioners' principal contentions are: that Section 31 of Commonwealth Act No. 459 which created the Agricultural and Industrial Bank, predecessor of the Rehabilitation Finance Corporation and the Development Bank of the Philippines, clearly provides that the right to redeem the real property sold at public auction judicially or extra-judicially may only be exercised "within one year from the date of the auction sale"; that there is no provision in Commonwealth Act No. 459 expressly stating that the redemption period of one year shall start from the registration of the certificate of sale in the register of deeds; that Sec. 31 of C. A. 459 is a specific provision of law which governs redemption of real property foreclosed by the Agricultural and Industrial Bank (now the Development Bank of the Philippines), and prescribes the redemption period for both judicial and extra-judicial foreclosures of mortgage; that insofar as foreclosures of mortgage by banking and financial institutions are concerned, the period of redemption applicable must be the one prescribed in their respective charters as, in the case at bar, Section 31, C.A. No. 459; that the ruling in the case of Agbulos vs. Alberto, G.R. No. L-17483, July 31, 1962, cited by respondent Appellate Court as a basis for its decision, is not applicable to the case at bar because this Court based its Agbulos ruling on Section 26 (now Sec. 90) of Rule 39 of the Rules of Court, wherein it is not clear when the period of redemption should start (date when execution sale was conducted, or when the certificate of sale was executed by sheriff, or when the certificate of sale was registered in the registry of deeds), and this Court ruled that as the land involved in that case is registered under the Torrens system, the date of redemption should begin to run from the date of registration, unlike in the case at bar where Section 31 of Commonwealth Act 459 specifically and clearly provides that the running of the redemption period shall start from the date of the auction sale; and that the ruling of this Court in Gonzales vs. P.N.B., 48 Phil. 824, also invoked by respondent Appellate Court as a basis for its decision, is likewise not applicable to the case at bar because the provisions on the matter of the P.N.B. Charter, Act No. 2938, are different from that of Commonwealth Act 459. Section 32 of Act 2938, which is now Section 20 of R.A. No. 1300 (PNB Charter) provides that the mortgagor shall have the right to redeem within one year the sale of the real estate. This is Identical to the provision appearing in Sec. 26, now Sec. 30, Rule 39, Rules of Court, while under Sec. 31 of Commonwealth Act 459, the period of redemption should star, on the date of the auction sale, and the latter provision is applicable specifically and expressly to the case at bar. It is also petitioners' principal argument that the ruling in Metropolitan Insurance Company, substituted by spousesLoreto Z. Marcaida and Miguel de Marcaida vs. Pigtain 101 Phil. 1111, 1115-1116, wherein this Court, in construing Sec. 6 of Act No. 3135, categorically stated that the one year redemption period shall start from the date of sale and not from the report of the sale or the registration of the sale certificate in the office of the Register of Deeds, is more applicable to the present case. The pertinent portion of the decision in the Marcaida case follows: But again the appellants claim that in this particular case, the statutory redemption period of one year should begin from December 17, 1954, when the auction sale was actually recorded in the office of the Register of Deeds of Manila and not from December 15, 1953, when the sale at public auction of the properties in question took place. We find its contention to be also untenable in view of the clear provision of the aforesaid Section 6 of Act No. 3135 to the effect that the right of redemption should be exercised within one year from the date of the sale. It should not be overlooked that the extrajudicial sale in question was for foreclosure of a mortgage and was not by virtue of an ordinary writ of execution in a civil case. ... And since the appeallants had failed to redeem the land in question within the time
allowed by Section 6 of Act 3135, the appellee has perfect right to require the cancellation of the attachment lien in question. (Emphasis supplied) Notwithstanding the impressive arguments presented by petitioners, the crucial issue to determine is the choice of what rule to apply in determining the start of the one year redemption period, whether from the date of the auction sale or from that of the registration of the sale with the registry of deeds. In other words it is whether a literal interpretation of the provision of Section 31 of Commonwealth Act 459 — that the period of redemption shall start from the date of the auction sale — shall govern, or whether the words, "auction sale" shall be considered in their ordinary meaning or in the same sense that site is used in the texts of Section 26, now 30, of Rule 39 of the Rules of Court, and Section 26 of Act 2938, now Section 20, R.A. 1300 (Charter of PNB). Stated differently, should the word "sale" used in the above indicated provisions of the Rules of Court and the PNB Charter, under whichWe ruled that the redemption period shall start from the registration of the sale in the registry of deeds be applied to foreclosure sales for the DBP and give to the words auction sale" in its charter the same meaning of "sale" as used in connection with registered land? We are of the view that a correct solution to the foregoing issue must entail not merely trying to determine the meaning of the words auction sale" and "sale" in different legislative enactments, but, more importantly, a determination of the legislative intent which is quite a task to achieve as it depends more on a determination of the purpose and objective of the law in giving mortgagors a period of redemptiom of their foreclosed properties. Mortgagors whose properties are foreclosed and are purchased by the mortgagee as highest bidder at the auction sale are decidedly at a great disadvatage because almost invariably mortgagors forfeit their properties at a great loss as they are purchased at nominal costs by the mortgagee himself who ordinarily bids in no more than his credit or the balance threof at the auction sale. That is the reason why the law gives them a chance to redeem their properties within a fixed period. It cannot be denied that in all foreclosures of mortgages and sale of property pursuan to execution, whether judicial or extrajudicial in nature, under different legislative enactments, a public auction sale is a indispensable pre-requisite to the valid disposal of properties used as collateral for the obligation. So that whether the legislators in different laws used as collateral for the obligation. So that whether the legislators in different laws used the term "sale" or "auction sale" is of no moment, since the presumption is that when they used those words "sale" and "auction sale" interchangeable in different laws they really referred to only one act — the sale at public auction indispensably necessary in the disposition of mortgaged properties and those levied upon to pay civil obligations of their owners. In the case of Ernesto Salazar, et al. vs. Flor De Lis Meneses, et al., G.R. No. L-15378, promulgated July 31, 1963, this Court stated: The issue decisive of this appeal is the one raised by appellants in their third assignment of error, which is to this effect: that the lower court erred in not holding that the period of redemption in this case, as far as appellants are concerned, started only on May 26, 1956, registered. Should We rule to this effect, it is clear that hen appellants attempted to exercise their right to redeem, as judgment creditors of the deceased mortgagor by judgment subsequent to the extrajudicial foreclosure sale, and when they initiated the present action on October 1, 1956, the period of redemption had not yer expired. We find appellants' contention to be meritorious. In the case of Agbulos vs. Alberto, G.R. No. L-17483, promulgated on July 31, 1962, We held: The property involved in the present case is registered land. It is the law in this jurisdiction that when property brought under the operation of the Land Registration Act sold, the operative act is the registration of the deed of conveyance. The deed of sale does not take effect this a conveyance or bind the land it is registered. (Section 50, Act 496; Tuason vs. Raymundo, 28 Phil. 635; Sikatuna vs. Guevara, 43 Phil. 371; Worcester vs. Ocampo, 34 Phil. 646) (Emphasis supplied)
We find no compelling reason to deviate from the aforequoted ruling and not apply the same to the present case. To Us petitioners' main contention that there is a great deal of difference in legislative intent in the use of the words 94 auction sale" in Sec. 31 of Commonwealth Act 459 and the word "sale" in See. 32 of Act 2938, and See. 30 of Rule 39 of the Rules of Court, pales into insignificance in the light of Our stand that those words used interchangeably refer to one thing, and that is the public auction sale required by law in the disposition of properties foreclosed or levied upon. Our stand in the Salazar case and in those mentioned therein (Garcia vs. Ocampo, G.R. No. L13029, June 30, 1959; Gonzales et al. vs. Philippine National Bank et al. 48 Phil. 824) is firmly planted on the premise that registration of the deed of conveyance for properties brought under the Torrens System is the operative act to transfer title to the property and registration is also the notice to the whole world that a transaction involving the same had taken place. To affirm the previous stand this Court has taken on the question of when the one year period of redemption should start (from the time of registration of the sale) would better serve the ends of justice and equity especially in this case, since to rule otherwise would result in preventing the respondent-mortgagor from redeeming his 59.4687 hectares of land which was acquired by the Development Bank of the Philippines as the highest bidder at the auction sale for the low price of only P7,271.22 which was simply the unpaid balance of the mortgage debt of P22,000.00 after the respondent-mortgagor had paid the sum of P14,728.78. As it is, affirmance of the Appellate Court's decision would not result in any loss to petitioners since the amount of P7,271.22 they paid to the Bank will be returned to 'them. What further strengthen's Our stand is the fact found by the respondent Appellate Court that respondent Barrameda has always been in possession of the disputed land. IN THE LIGHT OF THE FOREGOING, We find it no longer necessary to determine whether the petitioners are purchasers in good faith of the land involved, since the respondent Barrameda redeemed the mortgaged property within the legal period of redemption and, consequently the sale of the property executed on September 3, 1963, by the Development Bank of the Philippine in favor of the petitioners is null and void. WHEREFORE, the decision of the respondent Appellate Court is affirmed, with costs against petitioners. 3. G.R. No. L-41106 September 22, 1977 LITEX EMPLOYEES ASSOCIATION, petitioner, vs. GEORGE A. EDUVALA, in his capacity as Officer-in-Charge, BUREAU OF LABOR RELATIONS Departmentof Labor and FEDERATION OF FREE WORKERS (F.F.W.), respondents. Esteban M. Mendoza for petitioner. F. F. Bonifacio, Jr. for respondent FFW. Acting Solicitor General Hugo E. Gutierrez, Jr., Assistant Solicitor General Reynato S. Puno and Solicitor Romeo C. de la Cruz for respondent George A. Eduvala, etc. FERNANDO, J.: In this and certiorari and prohibition proceeding, what is sought to be nullified is an Order of respondent George A. Eduvala, the then Officer-in-Charge of the Bureau of Labor Relations, requiring that a memorandumm election be held among the members of the Litex Employees Association, petioner labor union, to ascertain their wishes as to their wishes as to their affiliation with respondent Federation of Free Workers. It is the contention of petitioner Union that there is no statutory authorization for the holding of such a referendum election. That is the decisive issue in this comtroversy. In support of the competence of respondent public official, Article 226 of the Present Labor Code is cited. It reads thus: "The Bureau of Labor Relations and the Labor Relations Division in the the regional offices of the Labor shall have and exclusive authority to act, at their own initiation or upon request of either or both parties, on all inter-union and intraunion conflicts, and disputes, grievances of probe arising from or affecting labor-management relations in all workplaces, whether natural or non-agricultural, except those arising from the implementation or interpretation of collective bargaining
agreements which shall be the subject of grievance Procedure and/or voluntary arbitration." 1 The comment of the then Acting Solicitor General, now Associate Justice of the Court of Appeal, Hugo E. Gutierrez, Jr., treated as the answer, 2 maintained that the wording of the above provision sustains the authority thus challenged. There is considerable persuasiveness to such a view. It would be an unduly restrictive interpretation them if a negative answer were Seven to the question posed. It would be oblivious to the basic end and aim of the pant Labor Code to confer on the Department of Labor and its bereaus the competence to pass upon and decide labor controversies and thus minimize judicial intervention. There is no legal basis for nullifying such order. This later dispute originated from a petition of respondent Federation of Free Workers filed with the Bureau of labor Relations against petitioner labor Union to hold a referendum among the members of the union for the of determining whether they desired to be affiliated with such Federation. It was alleged that a "great majority" of the members of the union desired such affiliaion, but that its President, a certain Johnny de Leon, was opposed. The contention of petitioner Union acting through its counsel was that only about 700 out of more than 2,200 employees of the company had manifested their desire to affliate with the Federation and that a substantial number of such had since then repudiated their signatures. It also raised the point that what was sought was a certification election which was not proper as there was a certified collective bargaining agreement between the union and the company. The Compulsory Arbitrator, after a careful study of the pleadings, reached the conclusion that the truth of the matter could best be assertained by a referendum election. Respondent as Officer-in-Charge of the Bureau of labor Relations affirmed. Hence this petition directed to this Court, as a jurisdictional question is raised. The petition, as noted at the outset, lacks merit. 1. Article 226 of the New Labor Code cannot be misread to signify that the authority conferred on the Secretary of labor and the officials of the Department is limited in character. On the contrary, even a cursory reading thereof readily yields the conclusion that in the interest of industrial peace and for the promotion of the salutary constitutional objectives of social justice and protection to labor, the competence of the governmental entrusted with supervision over disputes involving employers and employees as well as "inter-union and intra-union conflicts," is broad and expensive. Thereby its purpose becomes crystal-clear. As is quite readily discernible where it concerns the promotion of social and economy rights, the active participation in the implementation of the codal objective is entrusted to the executive department. There is no support for any allegation of jurisdictional infirmity, considering that the language employed is well-nigh inclusive with the stress on its "and exclusive authority to act." If it were otherwise, its policy might be rendered futile. That is to run counter to a basic postulate in the canons of statutory interpretation. Learned Hand referred to it as the proliferation of purpose. As was emphatecally asserted by Justice Frankfurter: "The generating consideration is that legislation is more than composition. It is an active instrument of government which, for purposes of interpretation, means that laws have ends to be achieved. It is in this connection that Holmes said, 'words are flexible.' Again it was Holmes, the last judge to give quarter to loose thinking or vague yearning, who said that 'the general purpose is a more is a more important aid to the meaning than any rule which grammar or formal logic may lay down.' And it was Holmes who chided courts for being apt to err by sticking too closely to the words of a law when those words import a policy that goes beyond them." 3 What is intended by the framers of code or statute is not to be frustrated. Even on the assumption that by some strained or literal reading of the employed, a doubt can be raised as to its scope, the 'immitation should not be at war with the end sought to be attained. It cannot be denied that if through an ingenious argumentation, limits may be set on a statutory power which should not be there, there would be a failure to effectuate the statutory purpose and policy. That kind of approach in statutory construction has never recommended itself. 4 2. Nor has petitioner made out a case of grave abuse of since the matter involved is a dispute as to whether or not the members of petitioner labor union had decided, contrary to the wishes of its
president, to join respondent Federation. What better way could there be of ascertaining the truth there than to hold the referendum election. The guarantee of fairness as to whether there is accuracy depends on the impartiality and neutrality of the Bureau of Labor Relations. There is nothing in petitioner's submission to indicate that such would not be the case. Under such circumstances then, petitioner labor union could not be held to allege that there was an abuse, much less a grave abuse, of the discretionary authority vested in such office. It suffices to take note of how often this Court, after a careful consideration of the issue involved, had rejected such a contention in certification cases, analogous, if not similar in character. Invariably, the imputation that the holding of an election for the purpose of determining with exactitude the wishes of the employees concerned as amounting to arbitrary exercise exercise of a power had been rejected. 5 WHEREFORE, the petition for certiorari is dismissed. This decision is immediately executory. MATTERS INQUIRED IN CONSTRUING A STATUTE 4. G.R. No. L-12727 February 29, 1960 MANILA JOCKEY CLUB, INC., petitioner-appellant, vs. GAMES AND AMUSEMENTS BOARD, ET AL., respondents-appellees. PHILIPPINE RACING CLUB, INC., petitioner-intervenor-appellant. Lichauco, Picazo and Agcaoili for appellant. First Assistant Government Corporate Counsel Simeon M. Gopengco and Attorney Pedro L. Bautista for appellee PCSO. Assistant Solicitor General Jose P. Alejandro and Solicitor Pacifico P. de Castro for the other appellees. Cesar S. de Guzman for appellant. BARRERA, J.: This is a petition for declaratory relief filed by petitioner Manila Jockey Club, Inc., in the Court of First Instance Manila (Civil Case No. 31274), in which the Philippine Racing Club, Inc., intervened as party in interest with leave of court, praying that judgment be rendered against respondents Games and Amusements Board (GAB), Philippine Charity Sweepstakes Office (PCSO), and Executive Secretary Fortunato de Leon: (a) Interpreting Republic Acts Nos. 309 and 1502 in such a manner that the 30 Sundays unreserved for charitable institutions and therefore belonging to the private racing clubs under Section 4 of Republic Act No. 309 continue to pertain to said private entities, and that the 6 additional sweepstakes races authorized under Republic Act No. 1502 should be held on 6 of the 12 Saturdays not reserved for any private entity or particular charitable institution under Section 4 of Republic Act No. 309, or on any other day of the week besides Sunday, Saturday and legal holiday; (b) Holding that respondent PCSO does not have the right or power to appropriate or use the race tracks and equipment of petitioner without its consent, nor can respondents compel petitioner to so allow such use of its race tracks and equipment under pain of having its license revoked. Respondents duly filed their respective answers to said petition and the case was heard. After hearing, the court, on July 5, 1957, rendered a decision which, in part, reads: The court does not deem it necessary to rule on the deprivation of property of the petitioner and the intervenor without due process of law, as feared by them, because as they have stated, the Philippine Charity Sweepstakes Office is using their premises and equipment under separate contracts of lease voluntarily and willingly entered into by the parties upon payment of a corresponding rental. There is therefore no deprivation of property without due process of law. Wherefore, the court is of the opinion and so holds that once a month on a Sunday not reserved for the Anti-Tuberculosis Society, the White Cross and other charitable institutions by Section 4 of Republic Act No. 309, the Philippine Charity Sweepstakes Office is authorized to hold one regular sweepstakes draw and races, pursuant to Section 9 of Republic Act No. 1502, thus reducing the number of Sundays which may be alloted to private entities by the Games and Amusements Board. . . . From this judgment, petitioner and intervenor interposed the present appeal.
The issue is the proper placement of the six (6) additional racing days given to the Philippine Charity Sweepstakes Office, in virtue of Republic Act No. 1502, approved on June 16, 1956. The authorized racing days specifically designated and distributed in Section 4 of Republic Act No. 309, the basic law on horse racing in the Philippines, as later amended by Republic Act No. 983, are as follows: A. Sundays:
permitted to hold their races, subject to licensing and determination by the GAB. It is suggested that the GAB should have chosen any week days or Saturday afternoons. In the first place, week days are out of the question. The law does not authorize the holding of horse races with betting on week days (See Article 198 of the Revised Penal Code). Secondly, sweepstakes races have always been held on Sundays. Besides, it is not possible to hold them on Saturday afternoons as, it is claimed, a whole day is necessary for the mixing of the sweepstakes (1) For the Philippine Anti-Tuberculosis Society .................. 12 Sundays balls, the drawing of winning sweepstakes numbers, and the running of the 6 sweepstakes races. Be that as it may, since the law has given (2) For the Philippine Charity Sweepstakes Office (PCSO) . Sundays certain amount of discretion to the GAB in determining and (3) For the White Cross, Inc. ............................................. 4 Sundays allocating racing days not specifically reserved, and since the court does not find that a grave abuse of this discretion has been (4) For the Grand Derby Race of the Philippine Anti-Tuberculosis committed, there seems to be no reason, legal or otherwise, to set Society ........................................................ 1 Sunday aside the resolution of the GAB. Total ................................................................ 23 Sundays Furthermore, appellants contend that even granting that the six (6) (5) For private individuals and entities duly licensed by the GAB, additional other sweepstakes races should be run on Sundays, yet if they Sundays not reserved under this Act, as may be determined by the are held on a club race day, the GAB should only insert them in the GAB ........................................... 29 Sundays club races and not given the whole day to the PCSO, to the exclusion of appellants. In support of this contention, the following or 30 for Leap years quotation from the debate in the House of Representatives before Total for the year .................... 52 Sundays voting on House Bill No. 5732, which became Republic Act No. 1502, or 53 for leap years. is cited: Mr. ABELEDA. If there are no more amendments, I move that we vote B. Saturdays: on the measure. (1) For the Philippine Anti-Tuberculosis Society ..... 12 Saturdays Mr. MARCOS. Mr. Speaker, before we proceed to vote on this bill, I want to it of record that it is the clear intention of the House to (2) For the White Cross, Inc. ....................................... 4 make Saturdays increase by two the ten regular and special Sweepstakes races (3) For private Individuals and entities duly licensed by GAB and as it all in all, twelve, and that in cases where a sweepstakes making may be determined by it .................................. 24 Saturdays race falls in a club race days the Sweepstakes races should be inserted (4) For races authorized by the President for charitable, relief, or civic in the club race. Mr. ABELEDA. The gentleman from Ilocos Norte is correct. . . . (t.s.n., purposes other than the particular charitable institutions named in House of Representatives, Congress, May 17, 1956; above, all other Saturdays not reserved for the latter ....................Proceedings 12 Saturdays emphasis supplied.) Total ................................................................ 52 Saturdays Appellants cite in their briefs a number of authorities sustaining the C. Legal Holidays: All, except Thursday and Friday of the Holy Week, view that in the interpretation of statutes susceptible of widely July 4th and December 30th, have been reserved for private differing constructions, legislative debates and explanatory individuals and entities duly licensed by the GAB. statements by members of the legislature may be resorted to, to As stated, Republic Act No. 1502 increased the sweepstakes draw throw light on the meaning of the words used in the statutes. Upon and races of the PCSO to twelve, but without specifying the days on the other hand, the appellees, likewise, quote in their briefs other which they are to be run. To accommodate these additional races, authorities to the effect that statements made by the individual the GAB resolved to reduce the number of Sundays assigned to members of the legislature as to the meaning of provisions in the bill private individuals and entities by six. Appellants protested, subsequently enacted into law, made during the general debate on contending that the said increased should be taken from the 12 the bill on the floor of each legislative house, following its Saturdays reserved to the President, for charitable, relief, or civic presentation by a standing committee, are generally held to be in purposes, or should be assigned to any other day of the week admissable as an aid in construing the statute. Legislative debates besides Sunday, Saturday, and legal holiday. are expressive of the views and motives of individual members and Appellants' contention cannot be sustained. Section 4 Republic Act are not safe guides and, hence, may not be resorted to in No. 309, as amended by Republic Act No. 983, by express terms, ascertaining the meaning and purpose of the lawmaking body. It is specifically reserved 23 Sundays and 16 Saturdays for the Philippine impossible to determine with certainty what construction was put Anti-Tuberculosis Society, the White Cross, Inc. and the PCSO, and 12 upon an act by the members of the legislative body that passed the Saturdays to the President for other charitable, relief, or civic bill, by resorting to the speeches of the members thereof. Those who purposes. These days can not be disposed of by the GAB without did not speak, may not have agreed with those who did; and those authority of law. As to the remaining racing days, the law provides: who spoke, might differ from each other.1 SEC. 4. Racing days.—Private individuals and entities duly licensed by In view of these conflicting authorities, no appreciable reliance can the Commission on Races (now GAB) may hold horse races on safely be placed on any of them. It is to be noted in the specific case Sundays not reserved under this Act, on twenty-four Saturdays as may before us, that while Congressmen Marcos and Abeleda were, be determined by the said Commission (GAB), and on legal holidays, admittedly, of the view that the additional sweepstakes races may except Thursday and Friday of Holy Week, July fourth, commonly be inserted in the club races, still there is nothing in Republic Act No. known as Independence Day, and December thirtieth, commonly 1502, as it was finally enacted, which would indicate that such an known as Rizal Day. understanding on the part of these two members of the Lower House It is clear from the above-quoted provision that appellants have no of Congress were received the sanction or conformity of their vested right to the unreserved Sundays, or even to the 24 Saturdays colleagues, for the law is absolutely devoid of any such indication. (except, perhaps, on the holidays), because their holding of races on This is, therefore, not a case where a doubtful wording is sought to be these days is merely permissive, subject to the licensing and interpreted; rather, if we adopt appellants' theory, we would be determination by the GAB. When, therefore, Republic Act No. 1502 supplying something that does not appear in the statute. It is was enacted increasing by six (6) the sweepstakes draw and races, pertinent to observe here that, as pointed out by one of appellants' but without specifying the days for holding them, the GAB had no own cited authorities,2 in the interpretation of a legal document, alternative except to make room for the additional races, as it did, especially a statute, unlike in the interpretation of an ordinary written form among the only available racing days unreserved by any law — document, it is not enough to obtain information to the intention or the Sundays on which the private individuals and entities have been meaning of the author or authors, but also to see whether the
intention or meaning has been expressed in such a way as to give it legal effect and validity. In short, the purpose of the inquiry, is not only to know what the author meant by the language he used, but also to see that the language used sufficiently expresses that meaning. The legal act, so to speak, is made up of two elements — an internal and an external one; it originates in intention and is perfected by expression. Failure of the latter may defeat the former. The following, taken from 59 Corpus Juris 1017, is in the line with this theory: The intention of the legislature to which effect must be given is that expressed in the statute and the courts will not inquire into the motives which influence the legislature, or individual members, in voting for its passage; nor indeed as to the intention of the draftsman, or the legislature, so far as it has been expressed in the act. So, in ascertaining the meaning of a statute the court will not be governed or influenced by the views or opinions of any or all members of the legislature or its legislative committees or any other persons. Upon the other hand, at the time of the enactment of Republic Act No. 1502 in June, 1956, the long, continuous, and uniform practice was that all sweepstakes draws and races were held on Sundays and during the whole day. With this background, when Congress chose not to specify in express terms how the additional sweepstakes draws and races would be held, it is safe to conclude that it did not intend to disturb the then prevailing situation and practice. "On the principle of contemporaneous exposition, common usage and practice under the statute, or a course of conduct indicating a particular undertaking of it, will frequently be of great value in determining its real meaning, especially where the usage has been acquired in by all parties concerned and has extended over a long period of time; . . . (59 C. J. 1023). Likewise, the language of Republic Act No. 1502 in authorizing the increase, clearly speaks of regular sweepstakes draws and races. If the intention of Congress were to authorize additional sweepstakes draws only which could, admittedly, be inserted in the club races, the law would not have included regular races; and since regular sweepstakes races were specifically authorized, and it would be confusing, inconvenient, if not impossible to mix these sweepstakes races with the regular club races all on the same day (and it has never been done before), the conclusion seems inevitable that the additional sweepstakes draws and races were intended to be held on a whole day, separate and apart from the club races. Appellants' contention that to compel them to permit the PCSO to use their premises and equipment against their will would constitute deprivation of property without due process of law, deserves no serious consideration. As the lower court has found, every time the PCSO uses appellants' premises and equipment, they are paid rentals in accordance with the terms of separate contracts of lease existing between them and the PCSO. The decision appealed from, being in consonance with the above findings and considerations of this Court, the same is hereby affirmed, with costs against the appellants. So ordered. LEGISLATIVE INTENT , WHERE IT ASCERTAINED 5.G. R. No. L-41001 September 30, 1976 MANILA LODGE NO. 761, BENEVOLENT AND PROTECTIVE ORDER OF THE ELKS, INC., petitioner, vs. THE HONORABLE COURT OF APPEALS, CITY OF MANILA, and TARLAC DEVELOPMENT CORPORATION,respondents. No. L-41012 September 30, 1976 TARLAC DEVELOPMENT CORPORATION, petitioner, vs. HONORABLE COURT OF APPEALS, CITY OF MANILA, LODGE NO. 761, BENEVOLENT AND PROTECTIVE ORDER OF ELKS, INC., respondents. CASTRO, C.J.:têñ.£îhqwâ£ STATEMENT OF THE CASE AND STATEMENTOF THE FACTS These two cases are petitions on certiorari to review the decision dated June 30, 1975 of the Court of Appeals in CA-G.R. No. 51590-R entitled "Tarlac Development Corporation vs. City of Manila, and Manila Lodge No. 761, Benevolent and Protective Order of Elks, Inc.," affirming the trial court's finding in Civil Case No. 83009 that the property subject of the decision a quo is a "public park or plaza."
On June 26, 1905 the Philippine Commission enacted Act No. l360 which authorized the City of Manila to reclaim a portion of Manila Bay. The reclaimed area was to form part of the Luneta extension. The Act provided that the reclaimed area "Shall be the property of the City of Manila" and that "the City of Manila is hereby authorized to set aside a tract of the reclaimed land formed by the Luneta extension x x x at the north end not to exceed five hundred feet by six hundred feet in size, for a hotel site, and to lease the same, with the approval of the Governor General, to a responsible person or corporation for a term not exceed ninety-nine years." Subsequently, the Philippine Commission passed on May 18, 1907 Act No. 1657, amending Act No. 1360, so as to authorize the City of' Manila either to lease or to sell the portion set aside as a hotel site. The total area reclaimed was a little over 25 hectares. The City of Manila applied for the registration of the reclaimed area, and on January 20, 1911, O.C.T. No. 1909 was issued in the name of the City of Manila. The title described the registered land as "un terreno conocido con el nombre de Luneta Extension, situato en el distrito de la Ermita x x x." The registration was "subject, however to such of the incumbrances mentioned in Article 39 of said law (Land Registration Act) as may be subsisting" and "sujeto a las disposiciones y condiciones impuestas en la Ley No. 1360; y sujeto tambein a los contratos de venta, celebrados y otorgados por la Ciudad de Manila a favor del Army and Navy Club y la Manila Lodge No. 761, Benevolent and Protective Order of Elks, fechados respectivamente, en 29 de Diciembre de 1908 y 16 de Enero de 1909." 1 On July 13, 1911 the City of Manila, affirming a prior sale dated January 16, 1909 cancelled 5,543.07 square meters of the reclaimed area to the Manila Lodge No. 761, Benevolent and Protective Order of Elks of the U.S.A. (BPOE, for short) on the basis of which TCT No. 2195 2 was issued to the latter over the Marcela de terreno que es parte de la Luneta Extension, Situada en el Distrito le la Ermita ... ." At the back of this title vas annotated document 4608/T-1635, which in part reads as follows: "que la citada Ciusdad de Manila tendra derecho a su opcion, de recomparar la expresada propiedad para fines publicos solamete in cualquier tiempo despues de cincuenta anos desde el 13 le Julio le 1911, precio de la misma propiedad, mas el valor que entonces tengan las mejoras." For the remainder of the Luneta Extension, that is, after segregating therefrom the portion sold to the Manila Lodge No. 761, PBOE, a new Certificate of Title No. 2196 3 was issued on July 17, 1911 to the City of Manila. Manila Lodge No. 761, BPOE, subsequently sold the said 5,543.07 square meters to the Elks Club, Inc., to which was issued TCT No. 67488. 4 The registered owner, "The Elks Club, Inc.," was later changed by court oder to "Manila Lodge No. 761, Benevolent and Protective Order of Elks, Inc." In January 1963 the BPOE. petitioned the Court of First Instance of Manila, Branch IV, for the cancellation of the right of the City of Manila to repurchase the property This petition was granted on February 15, 1963. On November 19, 1963 the BPOE sold for the sum of P4,700,000 the land together with all the improvements thereon to the Tarlac Development Corporation (TDC, for short) which paid P1,700.000 as down payment and mortgaged to the vendor the same realty to secure the payment of the balance to be paid in quarterly installments.5 At the time of the sale,, there was no annotation of any subsisting lien on the title to the property. On December 12, 1963 TCT No. 73444 was issued to TDC over the subject land still described as "UNA PARCELA DE TERRENO, que es parte de la Luneta Extension, situada en el Distrito de Ermita ... ." In June 1964 the City of Manila filed with the Court of First Instance of Manila a petition for the reannotation of its right to repurchase; the court, after haering, issued an order, dated November 19, 1964, directing the Register of Deeds of the City of Manila to reannotate in toto the entry regarind the right of the City of Manila to repurchase the property after fifty years. From this order TDC and BPOE appealed to this Court which on July 31, 1968 affirmed in G.R. Nos. L-24557 and L-24469 the trial court's order of reannotation, but reserved to TDC the right to bring another action for the clarification of its rights. As a consequence of such reservation, TDC filed on April 28, 1971 against the City of Manila and the Manila Lodge No. 761, BPOE, a
complaint, docketed as Civil Case No. 83009 of the Court of First Instance of Manila, containing three causes of action and praying a) On the first cause of action, that the plaintiff TDC be declared to have purchased the parcel of land now in question with the buildings and improvements thereon from the defendant BPOE for value and in good faith, and accordingly ordering the cancellation of Entry No. 4608/T-1635 on Transfer Certificate of Title No. 73444 in the name of the Plaintiff; b) On the second cause of action, ordering the defendant City of Manila to pay the plaintiff TDC damages in the sum of note less than one hundred thousand pesos (P100,000.00); c) On the third cause of action, reserving to the plaintiff TDC the right to recover from the defendant BPOE the amounts mentioned in par. XVI of the complaint in accordance with Art. 1555 of the Civil Code, in the remote event that the final judgment in this case should be that the parcel of land now in question is a public park; and d) For costs, and for such other and further relief as the Court may deem just and equitable. 6 Therein defendant City of Manila, in its answer dated May 19, 1971, admitted all the facts alleged in the first cause of action except the allegation that TDC purchased said property "for value and in good faith," but denied for lack of knowledge or information the allegations in the second and third causes of action. As, special and affirmative defense, the City of Manila claimed that TDC was not a purchaser in good faith for it had actual notice of the City's right to repurchase which was annotated at the back of the title prior to its cancellation, and that, assumingarguendo that TDC had no notice of the right to repurchase, it was, nevertheless, under obligation to investigate inasmuch as its title recites that the property is a part of the Luneta extension. 7 The Manila Lodge No. 761, BPOE, in its answer dated June 7, 1971, admitted having sold the land together with the improvements thereon for value to therein plaintiff which was in good faith, but denied for lack of knowledge as to their veracity the allegations under the second cause of action. It furthermore admitted that TDC had paid the quarterly installments until October l5, 1964 but claimed that the latter failed without justifiable cause to pay the subsequent installments. It also asserted that it was a seller for value in good faith without having misrepresented or concealed tacts relative to the title on the property. As counterclaim, Manila Lodge No. 761 (BPOE) sought to recover the balance of the purchase price plus interest and costs. 8 On June 15, 1971 TDC answered the aforesaid counterclaim, alleging that its refusal to make further payments was fully justified. 9 After due trial the court a quo rendered on July 14, 1972 its decision finding the subject land to be part of the "public park or plaza" and, therefore, part of the public domain. The court consequently declared that the sale of the subject land by the City of Manila to Manila Lodge No. 761, BPOE, was null and void; that plaintiff TDC was a purchaser thereof in g faith and for value from BPOE and can enforce its rights against the latter; and that BPOE is entitled to recover from the City of Manila whatever consideration it had 'paid the latter. 'The dispositive part of the decision reads: ñé+.£ªwph!1 WHEREFORE, the Court hereby declares that the parcel of land formerly covered by Transfer Certificate of Title Nos 2195 and 67488 in the name of BPOE and now by Transfer Certificate of Title No. 73444 in the name of Tarlac Development Corporation is a public' park or plaza, and, consequently, instant complaint is dimissed, without pronouncement as to costs. In view of the reservation made by plaintiff Tarlac Development Corporation to recover from defendant BPOE the amounts mentioned in paragraph XVI of the complaint in accordance with Article 1555 of the Civil Code, the Court makes no pronouncement on this point. 10 From said decision the therein plaintiff TDC as well as the defendant Manila Lodge No. 761, BPOE, appealed to the Court of Appeals. In its appeal docketed as CA-G.R. No. 51590-R, the Manila Lodge No. 761, BPOE, avers that the trial court committed the following errors, namely: 1. In holding that the property subject of the action is not patrimonial property of the City of Manila; and
2. In holding that the Tarlac Development Corporation may recover and enforce its right against the defendant BPOE. 11 The Tarlac Development Corporation, on the other hand, asserts that the trial court erred: (1) In finding that the property in question is or was a public park and in consequently nullifying the sale thereof by the City of Manila to BPOE; (2) In applying the cases of Municipality of Cavite vs. Rojas, 30 Phil. 602, and Government vs. Cabangis, 53 Phil. 112, to the case at bar; and (3) In not holding that the plaintiff-appellant is entitled to ,recover damages from the defendant City of Manila. 12 Furthermore, TDC as appellee regarding the second assignment of error raised by BPOE, maintained that it can recover and enforce its rigth against BPOE in the event that the land in question is declared a public park or part thereof. 13 In its decision promulgated on June 30, 1975, the Court of Appeals concur ed in the findings and conclusions of the lower court upon the ground that they are supported by he evidence and are in accordance with law, and accordingly affirmed the lower court's judgment. Hence, the present petitions for review on certiorari. G.R. No. L-41001 The Manila Lodge No. 761, BPOE, contends, in its petition for review on certiorari docketed as G.R. No. L-41001, that the Court of Appeals erred in (1) disregarding the very enabling acts and/or statutes according to which the subject property was, and still is, patrimonial property of the City of Manila and could therefore be sold and/or disposed of like any other private property; and (2) in departing from the accepted and usual course of judicial proceedings when it simply made a general affirmance of the court a quo's findings and conclusions without bothering to discuss or resolve several vital points stressed by the BPOE in its assigned errrors. 14 G.R. No. L-41012 The Tarlac Development Corporation, in its petition for review on certiorari docketed as G.R. No. L-41012, relies on the following grounds for the allowance of its petition: 1. that the Court of Appeals did not correctly interpret Act No. 1360, as amended by Act No. 1657, of the Philippine Commission; and 2. that the Court of Appeals has departed from the accepted and usual course of judicial proceedings in that it did not make its own findings but simply recited those of the lower court. 15 ISSUES AND ARGUMENTS FIRST ISSUE Upon the first issue, both petitioners claim that the property subject of the action, pursuant to the provisions of Act No. 1360, as amended by Act No. 1657, was patrimonial property of the City of Manila and not a park or plaza. Arguments of Petitioners In G.R. No. L-41001, the Manila Lodge No. 761, BPOE, admits that "there appears to be some logic in the conclusion" of the Court of Appeals that "neither Act No. 1360 nor Act No. 1657 could have meant to supply the City of Manila the authority to sell the subject property which is located at the south end not the north — of the reclaimed area." 16 It argues, however, that when Act No. 1360, as amended, authorized the City of Manila to undertake the construction of the Luneta extension by reclaimed land from the Manila Bay, and declared that the reclaimed land shall be the "property of the City of Manila," the State expressly granted the ownership thereof to the City of Manila which. consequently. could enter into transactions involving it; that upon the issuance of O.C.T. No. 1909, there could he no doubt that the reclaimed area owned by the City was its patrimonial property;" that the south end of the reclaimed area could not be for public use for. as argued by TDC a street, park or promenade can be property for public use pursuant to Article 344 of the Spanish Civil Code only when it has already been so constructed or laid out, and the subject land, at the time it was sold to the Elk's Club, was neither actually constructed as a street, park or promenade nor laid out as a street, park or promenade;" that even assuming that the subject property was at the beginning property of public dominion, it was subsequently converted into patrimonial property pursuant to Art. 422 of the Civil Code, inasmuch as it had
never been used, red or utilized since it was reclaimed in 1905 for purpose other than this of an ordinary real estate for sale or lease; that the subject property had never been intended for public use, is further shown by the fact that it was neither included as a part of the Luneta Park under Plan No. 30 of the National Planning Commission nor considered a part of the Luneta National Park (now Rizal Park) by Proclamation No. 234 dated December 19, 1955 of President Ramon Magsaysay or by Proclamation Order No. 274 dated October 4, 1967 of President Ferdinand E. Marcos;" 19 that, such being the case, there is no reason why the subject property should -not be considered as having been converted into patrimonial property, pursuant to the ruling in Municipality vs. Roa 7 Phil. 20, inasmuch as the City of Manila has considered it as its patrimonial property not only bringing it under the operation of the Land Registration Act but also by disposing of it; 20 and that to consider now the subject property as a public plaza or park would not only impair the obligations of the parties to the contract of sale (rated July 13, 1911, but also authorize deprivation of property without due process of law. 21 G.R. No. L-410112 In L-41012, the petitioner TDC stresses that the principal issue is the interpretation of Act No. 1360, as amended by. Act No. 1657 of the Philippine Commission, 22 and avers that inasmuch as Section 6 of Act No. 1360, as amended by Act 1657, provided that the reclamation of the Luneta extension was to be paid for out of the funds of the City of Manila which was authorized to borrow P350,000 "to be expended in the construction of Luneta Extension," the reclaimed area became "public land" belonging to the City of Manila that spent for the reclamation, conformably to the holding in Cabangis, 23 and consequently, said land was subject to sale and other disposition; that the Insular Government itself considered the reclaimed Luneta extension as patrimonial property subject to disposition as evidenced by the fact that See. 3 of Act 1360 declared that "the land hereby reclaimed shall be the property of the City of Manila;" that this property cannot be property for public use for according to Article 344 of the Civil Code, the character of property for public use can only attach to roads and squares that have already been constructed or at least laid out as such, which conditions did not obtain regarding the subject land, that Sec. 5 of Act 1360 authorized the City of Manila to lease the northern part of the reclaimed area for hotel purposes; that Act No. 1657 furthermore authorized the City of Manila to sell the same; 24 that the express statutory authority to lease or sell the northern part of the reclaimed area cannot be interpreted to mean that the remaining area could not be sold inasmuch as the purpose of the statute was not merely to confer authority to sell the northern portion but rather to limit the city's power of disposition thereof, to wit: to prevent disposition of the northern portion for any purpose other than for a hotel site that the northern and southern ends of the reclaimed area cannot be considered as extension of the Luneta for they lie beyond the sides of the original Luneta when extended in the direction of the sea, and that is the reason why the law authorized the sale of the northern portion for hotel purposes, and, for the same reason, it is implied that the southern portion could likewise be disposed of. 26 TDC argues likewise that there are several items of uncontradicted circumstantial evidence which may serve as aids in construing the legislative intent and which demonstrate that the subject property is patrimonial in nature, to wit: (1) Exhibits "J" and "J-1", or Plan No. 30 of the National Planning Commission showing the Luneta and its vicinity, do not include the subject property as part of the Luneta Park; (2) Exhibit "K", which is the plan of the subject property covered by TCT No. 67488 of BPOE, prepared on November 11, 1963, indicates that said property is not a public park; (3) Exhibit "T", which is a certified copy of Proclamation No. 234 issued on December 15, 1955 is President Magsaysay, and Exhibit "U" which is Proclamation Order No. 273 issued on October 4, 1967 by President Marcos, do not include the subject property in the Luneta Park-, (4) Exhibit "W", which is the location plan of the Luneta National Park under Proclamations Nos. 234 and 273, further confirms that the subject property is not a public park; and (5) Exhibit "Y", which is a copy of O.C.T. No. 7333 in the name of the United States of America covering the land now occupied by the America covering the land now occupied by the American Embassy, the boundaries of which were delineated by the
Philippine Legislature, states that the said land is bounded on the northwest by properties of the Army and Navy Club (Block No. 321) and the Elks Club (Block No. 321), and this circumstance shows that even the Philippine Legislature recognized the subject property as private property of the Elks Club. 27 TDC furthermore contends that the City of Manila is estopped from questioning the validity of the sale of the subject property that it executed on July 13, 1911 to the Manila Lodge No. 761, BPOE, for several reasons, namely: (1) the City's petition for the reannotation of Entry No. 4608/T-1635 was predicated on the validity of said sale; (2) when the property was bought by the petitioner TDC it was not a public plaza or park as testified to by both Pedro Cojuanco, treasurer of TDC, and the surveyor, Manuel Añoneuvo, according to whom the subject property was from all appearances private property as it was enclosed by fences; (3) the property in question was cadastrally surveyed and registered as property of the Elks Club, according to Manuel Anonuevo; (4) the property was never used as a public park, for, since the issuance of T.C.T. No. 2165 on July 17, 1911 in the name of the Manila Lodge NO. 761, the latter used it as private property, and as early as January 16, 1909 the City of Manila had already executed a deed of sale over the property in favor of the Manila Lodge No. 761; and (5) the City of Manila has not presented any evidence to show that the subject property has ever been proclaimed or used as a public park. 28 TDC, moreover, contends that Sec. 60 of Com. Act No. 141 cannot apply to the subject land, for Com. Act No. 141 took effect on December 1, 1936 and at that time the subject land was no longer part of the part of the public domain. 29 TDC also stresses that its rights as a purchaser in good faith cannot be disregarded, for the mere mention in the certificate of title that the lot it purchased was "part of the Luneta extension" was not a sufficient warning that tile title to the City of Manila was invalid; and that although the trial court, in its decision affirmed by the Court of Appeals, found the TDC -to has been an innocent purchaser for value, the court disregarded the petitioner's rights as such purchaser that relied on Torrens certificate of title. 30 The Court, continues the petitioner TDC erred in not holding that the latter is entitled to recover from the City of Manila damages in the amount of P100,000 caused by the City's petition for- reannotation of its right to repurchase. DISCUSSION AND RESOLUTION OF FIRST ISSUE It is a cardinal rule of statutory construction that courts must give effect to the general legislative intent that can be discovered from or is unraveled by the four corners of the statute, 31 and in order to discover said intent, the whole statute, and not only a particular provision thereof, should be considered. 32 It is, therefore, necessary to analyze all the provisions of Act No. 1360, as amended, in order to unravel the legislative intent. Act No. 1360 which was enacted by the Philippine Commission on June 26, 1905, as amended by Act No. 1657 enacted on May 18, 1907, authorized the "construction of such rock and timber bulkheads or sea walls as may be necessary for the making of an extension to the Luneta" (Sec. 1 [a]), and the placing of the material dredged from the harbor of Manila "inside the bulkheads constructed to inclose the Luneta extension above referred to" (Sec. 1 [a]). It likewise provided that the plan of Architect D. H. Burnham as "a general outline for the extension and improvement of the Luneta in the City of Manila" be adopted; that "the reclamation from the Bay of Manila of the land included in said projected Luneta extension... is hereby authorized and the land thereby reclaimed shall be the property of the City of Manila" (Sec. 3); that "the City of Manila is hereby authorized to set aside a tract of the reclaimed land formed by the Luneta extension authorized by this Act at the worth end of said tract, not to exceed five hundred feet by six hundred feet in size, for a hotel site, and to lease the same with the approval of the Governor General, ... for a term not exceeding ninety-nine years; that "should the Municipal Board ... deem it advisable it is hereby authorized to advertise for sale to sell said tract of land ... ;" "that said tract shall be used for hotel purposes as herein prescribed, and shall not be devoted to any other purpose or object whatever;" "that should the grantee x x x fail to maintain on said tract a first-class hotel x x x then the title to said tract of land sold, conveyed, and transferred, and
shall not be devoted to any other purpose or object whatever;" "that should the grantee x x x fail to maintain on said tract a first-class hotel x x x then the title to said tract of land sold, conveyed, and transferred to the grantee shall revert to the City of Manila, and said City of Manila shall thereupon become entitled to immediate possession of said tract of land" (Sec. 5); that the construction of the rock and timber bulkheads or sea wall "shall be paid for out of the funds of the City of Manila, but the area to be reclaimed by said proposed Luneta extension shall be filled, without cost to the City of Manila, with material dredged from Manila Bay at the expense of the Insular Government" (Sec. 6); and that "the City of Manila is hereby authorized to borrow from the Insular Government ... the sum of three hundred thousand pesos, to be expended in the construction of Luneta extension provided for by paragraph (a) of section one hereof" (Sec.7). The grant made by Act No. 1360 of the reclaimed land to the City of Manila is a grant of "public" nature, the same having been made to a local political subdivision. Such grants have always been strictly construed against the grantee. 33 One compelling reason given for the strict interpretation of a public grant is that there is in such grant a gratuitous donation of, public money or resources which results in an unfair advantage to the grantee and for that reason, the grant should be narrowly restricted in favor of the public. 34 This reason for strict interpretation obtains relative to the aforesaid grant, for, although the City of Manila was to pay for the construction of such work and timber bulkheads or sea walls as may be necessary for the making of the Luneta extension, the area to be reclaimed would be filled at the expense of the Insular Government and without cost to the City of Manila, with material dredged from Manila Bay. Hence, the letter of the statute should be narrowed to exclude maters which if included would defeat the policy of the legislation. The reclaimed area, an extension to the Luneta, is declared to be property of the City of Manila. Property, however, is either of public ownership or of private ownership. 35 What kind of property of the City is the reclaimed land? Is it of public ownership (dominion) or of private ownership? We hold that it is of public dominion, intended for public use. Firstly, if the reclaimed area was granted to the City of Manila as its patrimonial property, the City could, by virtue of its ownership, dispose of the whole reclaimed area without need of authorization to do so from the lawmaking body. Thus Article 348 of the Civil Code of Spain provides that "ownership is the right to enjoy and dispose of a thing without further limitations than those established by law." 36 The right to dispose (jus disponendi) of one's property is an attribute of ownership. Act No. 1360, as amended, however, provides by necessary implication, that the City of Manila could not dispose of the reclaimed area without being authorized by the lawmaking body. Thus the statute provides that "the City of Manila is hereby authorized to set aside a tract ... at the north end, for a hotel site, and to lease the same ... should the municipal board ... deem it advisable, it is hereby authorized ...to sell said tract of land ... " (Sec. 5). If the reclaimed area were patrimonial property of the City, the latter could dispose of it without need of the authorization provided by the statute, and the authorization to set aside ... lease ... or sell ... given by the statute would indeed be superfluous. To so construe the statute s to render the term "authorize," which is repeatedly used by the statute, superfluous would violate the elementary rule of legal hermeneutics that effect must be given to every word, clause, and sentence of the statute and that a statute should be so interpreted that no part thereof becomes inoperative or superfluous. 37 To authorize means to empower, to give a right to act.38 Act No. 1360 furthermore qualifies the verb it authorize" with the adverb "hereby," which means "by means of this statue or section," Hence without the authorization expressly given by Act No. 1360, the City of Manila could not lease or sell even the northern portion; much less could it dispose of the whole reclaimed area. Consequently, the reclaimed area was granted to the City of Manila, not as its patrimonial property. At most, only the northern portion reserved as a hotel site could be said to be patrimonial property for, by express statutory provision it could be disposed of, and the title thereto would revert to the City should the grantee fail to comply with the terms provided by the statute.
TDC however, contends that the purpose of the authorization provided in Act No. 1360 to lease or sell was really to limit the City's power of disposition. To sustain such contention is to beg the question. If the purpose of the law was to limit the City's power of disposition then it is necessarily assumed that the City had already the power to dispose, for if such power did not exist, how could it be limited? It was precisely Act 1360 that gave the City the power to dispose for it was hereby authorized by lease of sale. Hence, the City of Manila had no power to dispose of the reclaimed land had such power not been granted by Act No. 1360, and the purpose of the authorization was to empower the city to sell or lease the northern part and not, as TDC claims, to limit only the power to dispose. Moreover, it is presumed that when the lawmaking body enacted the statute, it had full knowledge of prior and existing laws and legislation on the subject of the statute and acted in accordance or with respect thereto. 39 If by another previous law, the City of Manila could already dispose of the reclaimed area, which it could do if such area were given to it as its patrimonial property, would it then not be a superfluity for Act No. 1360 to authorize the City to dispose of the reclaimed land? Neither has petitioner TDC pointed to any other law that authorized the City to do so, nor have we come across any. What we do know is that if the reclaimed land were patrimonial property, there would be no need of giving special authorization to the City to dispose of it. Said authorization was given because the reclaimed land was not intended to be patrimonial property of the City of Manila, and without the express authorization to dispose of the northern portion, the City could not dispose of even that part. Secondly, the reclaimed area is an "extension to the Luneta in the City of Manila." 40 If the reclaimed area is an extension of the Luneta, then it is of the same nature or character as the old Luneta. Anent this matter, it has been said that a power to extend (or continue an act or business) cannot authorize a transaction that is totally distinct.41 It is not disputed that the old Luneta is a public park or plaza and it is so considered by Section 859 of the Revised Ordinances of the City of Manila. 42 Hence the "extension to the Luneta" must be also a public park or plaza and for public use. TDC, however, contends that the subject property cannot be considered an extension of the old Luneta because it is outside of the limits of the old Luneta when extended to the sea. This is a strained interpretation of the term "extension," for an "extension," it has been held, "signifies enlargement in any direction — in length, breadth, or circumstance." 43 Thirdly, the reclaimed area was formerly a part of the manila Bay. A bay is nothing more than an inlet of the sea. Pursuant to Article 1 of the Law of Waters of 1866, bays, roadsteads, coast sea, inlets and shores are parts of the national domain open to public use. These are also property of public ownership devoted to public use, according to Article 339 of the Civil Code of Spain. When the shore or part of the bay is reclaimed, it does not lose its character of being property for public use, according to Government of the Philippine Islands vs. Cabangis. 44 The predecessor of the claimants in this case was the owner of a big tract of land including the lots in question. From 1896 said land began to wear away due to the action of the waters of Manila Bay. In 1901 the lots in question became completely submerged in water in ordinary tides. It remained in such a state until 1912 when the Government undertook the dredging of the Vitas estuary and dumped the Sand and - silt from estuary on the low lands completely Submerged in water thereby gradually forming the lots in question. Tomas Cabangis took possession thereof as soon as they were reclaimed hence, the claimants, his successors in interest, claimed that the lots belonged to them. The trial court found for the claimants and the Government appealed. This Court held that when the lots became a part of the shore. As they remained in that condition until reclaimed by the filling done by the Government, they belonged to the public domain. for public use .4' Hence, a part of the shore, and for that purpose a part of the bay, did not lose its character of being for public use after it was reclaimed. Fourthly, Act 1360, as amended, authorized the lease or sale of the northern portion of the reclaimed area as a hotel sites. The subject property is not that northern portion authorized to be leased or sold; the subject property is the southern portion. Hence, applying the rule
of expresio unius est exlusio alterius, the City of Manila was not authorized to sell the subject property. The application of this principle of statutory construction becomes the more imperative in the case at bar inasmuch as not only must the public grant of the reclaimed area to the City of Manila be, as above stated, strictly construed against the City of Manila, but also because a grant of power to a municipal corporation, as happens in this case where the city is author ized to lease or sell the northern portion of the Luneta extension, is strictly limited to such as are expressly or impliedly authorized or necessarily incidental to the objectives of the corporation. Fifthly, Article 344 of the Civil Code of Spain provides that to property of public use, in provinces and in towns, comprises the provincial and town roads, the squares streets fountains, and public waters the promenades, and public works of general service paid for by such towns or provinces." A park or plaza, such as the extension to the Luneta, is undoubtedly comprised in said article. The petitioners, however, argue that, according to said Article 344, in order that the character of property for public use may be so attached to a plaza, the latter must be actually constructed or at least laid out as such, and since the subject property was not yet constructed as a plaza or at least laid out as a plaza when it was sold by the City, it could not be property for public use. It should be noted, however, that properties of provinces and towns for public use are governed by the same principles as properties of the same character belonging to the public domain. 46 In order to be property of public domain an intention to devote it to public use is sufficient. 47 The, petitioners' contention is refuted by Manresa himself who said, in his comments", on Article 344, that: ñé+.£ªwph!1 Las plazas, calles y paseos publicos correspondent sin duda aiguna aldominio publico municipal ), porque se hallan establecidos sobre suelo municipal y estan destinadas al uso de todos Laurent presenta tratando de las plazas, una question relativa a si deben conceptuarse como de dominio publico los lugares vacios libres, que se encuenttan en los Municipios rurales ... Laurent opina contra Pioudhon que toda vez que estan al servicio de todos pesos lugares, deben considerable publicos y de dominion publico. Realmente, pala decidir el punto, bastara siempre fijarse en el destino real y efectivo de los citados lugares, y si este destino entraña un uso comun de todos, no hay duda que son de dominio publico municipal si no patrimoniales. It is not necessary, therefore, that a plaza be already constructed oflaid out as a plaza in order that it be considered property for public use. It is sufficient that it be intended to be such In the case at bar, it has been shown that the intention of the lawmaking body in giving to the City of Manila the extension to the Luneta was not a grant to it of patrimonial property but a grant for public use as a plaza. We have demonstrated ad satietatem that the Luneta extension as intended to be property of the City of Manila for public use. But, could not said property-later on be converted, as the petitioners contend, to patrimonial property? It could be. But this Court has already said, in Ignacio vs. The Director of Lands, 49 the executive and possibly the legislation department that has the authority and the power to make the declaration that said property, is no longer required for public use, and until such declaration i made the property must continue to form paint of the public domain. In the case at bar, there has been no such explicit or unequivocal declaration It should be noted, furthermore, anent this matter, that courts are undoubted v not. primarily called upon, and are not in a position, to determine whether any public land is still needed for the purposes specified in Article 4 of the Law of Waters . 50 Having disposed of the petitioners' principal arguments relative to the main issue, we now pass to the items of circumstantial evidence which TDC claims may serve as aids in construing the legislative intent in the enactment of Act No. 1360, as amended. It is noteworthy that all these items of alleged circumstantial evidence are acts far removed in time from the date of the enactment of Act No.1360 such that they cannot be considered contemporaneous with its enactment. Moreover, it is not farfetched that this mass of circumstantial evidence might have been influenced by the antecedent series of invalid acts, to wit: the City's having obtained over the reclaimed area OCT No. 1909 on January 20,1911; the sale
made by the City of the subject property to Manila Lodge No. 761; and the issuance to the latter of T.C.T. No. 2195. It cannot gainsaid that if the subsequent acts constituting the circumstantial evidence have been base on, or at least influenced, by those antecedent invalid acts and Torrens titles S they can hardly be indicative of the intent of the lawmaking body in enacting Act No. 1360 and its amendatory act.\ show that the subject property is not a park. Exhibits "J" and "J-1," the "Luneta and vicinity showing proposed development" dated May 14, 1949, were prepared by the National Urban Planning Commission of the Office of the President. It cannot be reasonably expected that this plan for development of the Luneta should show that the subject property occupied by the ElksClub is a public park, for it was made 38 years after the sale to the Elks, and after T.C.T. No. 2195 had been issued to Elks. It is to be assumed that the Office of the President was cognizant of the Torrens title of BPOE. That the subject property was not included as a part of the Luneta only indicated that the National Urban Planning Commission that made the plan knew that the subject property was occupied by Elks and that Elks had a Torrens title thereto. But this in no way proves that the subject property was originally intended to be patrimonial property of the City of Manila or that the sale to Elks or that the Torrens-title of the latter is valid. Exhibit "K" is the "Plan of land covered by T.C.T . No ----, as prepared for Tarlac Development Company." It was made on November 11, 1963 by Felipe F. Cruz, private land surveyor. This surveyor is admittedly a surveyor for TDC. 51 This plan cannot be expected to show that the subject property is a part of the Luneta Park, for he plan was made to show the lot that "was to be sold to petitioner." This plan must have also assumed the existence of a valid title to the land in favor of Elks. Exhibits "T" and "U" are copies of Presidential Proclamations No. 234 issued on November 15, 1955 and No. 273 issued on October 4, 1967, respectively. The purpose of the said Proclamations was to reserve certain parcels of land situated in the District of Ermita, City of Manila, for park site purposes. Assuming that the subject property is not within the boundaries of the reservation, this cannot be interpreted to mean that the subject property was not originally intended to be for public use or that it has ceased to be such. Conversely, had the subject property been included in the reservation, it would mean, if it really were private property, that the rights of the owners thereof would be extinguished, for the reservations was "subject to private rights, if any there be." That the subject property was not included in the reservation only indicates that the President knew of the existence of the Torrens titles mentioned above. The failure of the Proclamations to include the subject property in the reservation for park site could not change the character of the subject property as originally for public use and to form part of the Luneta Park. What has been said here applies to Exhibits "V", "V-1" to "V-3," and "W" which also refer to the area and location of the reservation for the Luneta Park. Exhibit "Y" is a copy of O.C.T. No. 7333 dated November 13, 1935, covering the lot where now stands the American Embassy [Chancery]. It states that the property is "bounded ... on the Northwest by properties of Army and Navy Club (Block No.321) and Elks Club (Block No. 321)." Inasmuch as the said bounderies delineated by the Philippine Legislature in Act No. 4269, the petitioners contend that the Legislature recognized and conceded the existence of the Elks Club property as a primate property (the property in question) and not as a public park or plaza. This argument is non sequitur plain and simple Said Original Certificate of Title cannot be considered as an incontrovertible declaration that the Elks Club was in truth and in fact the owner of such boundary lot. Such mention as boundary owner is not a means of acquiring title nor can it validate a title that is null and void. TDC finally claims that the City of Manila is estopped from questioning the validity of the sale it executed on July 13,'1911 conconveying the subject property to the Manila Lodge No. 761, BPOE. This contention cannot be seriously defended in the light of the doctrine repeatedly enunciated by this Court that the Government is never estopped by mistakes or errors on the pan of its agents, and estoppel does not apply to a municipal corporation to validate a contract that is prohibited by law or its against Republic policy, and the sale of July 13, 1911 executed by the City of Manila to Manila Lodge was
certainly a contract prohibited by law. Moreover, estoppel cannot be urged even if the City of Manila accepted the benefits of such contract of sale and the Manila Lodge No. 761 had performed its part of the agreement, for to apply the doctrine of estoppel against the City of Manila in this case would be tantamount to enabling it to do indirectly what it could not do directly. 52 The sale of the subject property executed by the City of Manila to the Manila Lodge No. 761, BPOE, was void and inexistent for lack of subject matter. 53 It suffered from an incurable defect that could not be ratified either by lapse of time or by express ratification. The Manila Lodge No. 761 therefore acquired no right by virtue of the said sale. Hence to consider now the contract inexistent as it always has seen, cannot be, as claimed by the Manila Lodge No. 761, an impairment of the obligations of contracts, for there was it, contemplation of law, no contract at all. The inexistence of said sale can be set up against anyone who asserts a right arising from it, not only against the first vendee, the Manila Lodge No. 761, BPOE, but also against all its suceessors, including the TDC which are not protected the doctrine of bona fide ii purchaser without notice, being claimed by the TDC does not apply where there is a total absence of title in the vendor, and the good faith of the purchaser TDC cannot create title where none exists. 55 The so-called sale of the subject property having been executed, the restoration or restitution of what has been given is order 56 SECOND ISSUE The second ground alleged in support of the instant petitions for review on certiorari is that the Court of Appeals has departed from the accepted and usual course of judicial proceedings as to call for an exercise of the power of supervision. TDC in L-41012, argues that the respondent Court did not make its own findings but simply recited those of the lower court and made a general affirmance, contrary to the requirements of the Constitution; that the respondent Court made glaring and patent mistakes in recounting even the copied findings, palpably showing lack of deliberate consideration of the matters involved, as, for example, when said court said that Act No. 1657 authorized the City of Manila to set aside a portion of the reclaimed land "formed by the Luneta Extension of- to lease or sell the same for park purposes;" and that respondent Court. further more, did not resolve or dispose of any of the assigned errors contrary to the mandate of the Judiciary Act.. 57 The Manila Lodge No. 761, in L-41001, likewise alleges, as one of the reasons warranting review, that the Court of Appeals departed from the accepted and usual course of Judicial proceedings by simply making a general affirmance of the court a quo findings without bothering to resolve several vital points mentioned by the BPOE in its assigned errors. 58 COMMENTS ON SECOND ISSUE We have shown in our discussion of the first issue that the decision of the trial court is fully in accordance with law. To follows that when such decision was affirmed by the Court of Appeals, the affirmance was likewise in accordance with law. Hence, no useful purpose will be served in further discussing the second issue. 6. G.R. No. 170633 October 17, 2007 MCC INDUSTRIAL SALES CORPORATION, petitioner, vs. SSANGYONG CORPORATION, respondents. DECISION NACHURA, J.: Before the Court is a petition for review on certiorari of the Decision1 of the Court of Appeals in CA-G.R. CV No. 82983 and its Resolution2 denying the motion for reconsideration thereof. Petitioner MCC Industrial Sales (MCC), a domestic corporation with office at Binondo, Manila, is engaged in the business of importing and wholesaling stainless steel products.3 One of its suppliers is the Ssangyong Corporation (Ssangyong),4 an international trading company5 with head office in Seoul, South Korea and regional headquarters in Makati City, Philippines.6 The two corporations conducted business through telephone calls and facsimile or telecopy transmissions.7 Ssangyong would send the pro forma invoices containing the details of the steel product order to MCC; if the latter conforms thereto, its representative affixes his
signature on the faxed copy and sends it back to Ssangyong, again by fax.8 On April 13, 2000, Ssangyong Manila Office sent, by fax, a letter9 addressed to Gregory Chan, MCC Manager [also the President10 of Sanyo Seiki Stainless Steel Corporation], to confirm MCC's and Sanyo Seiki's order of 220 metric tons (MT) of hot rolled stainless steel under a preferential rate of US$1,860.00 per MT. Chan, on behalf of the corporations, assented and affixed his signature on the conforme portion of the letter.11 On April 17, 2000, Ssangyong forwarded to MCC Pro Forma Invoice No. ST2-POSTSO40112 containing the terms and conditions of the transaction. MCC sent back by fax to Ssangyong the invoice bearing the conformity signature13 of Chan. As stated in the pro forma invoice, payment for the ordered steel products would be made through an irrevocable letter of credit (L/C) at sight in favor of Ssangyong.14 Following their usual practice, delivery of the goods was to be made after the L/C had been opened. In the meantime, because of its confirmed transaction with MCC, Ssangyong placed the order with its steel manufacturer, Pohang Iron and Steel Corporation (POSCO), in South Korea15 and paid the same in full. Because MCC could open only a partial letter of credit, the order for 220MT of steel was split into two,16 one for110MT covered by Pro Forma Invoice No. ST2-POSTS0401-117 and another for 110MT covered by ST2-POSTS0401-2,18 both dated April 17, 2000. On June 20, 2000, Ssangyong, through its Manila Office, informed Sanyo Seiki and Chan, by way of a fax transmittal, that it was ready to ship 193.597MT of stainless steel from Korea to the Philippines. It requested that the opening of the L/C be facilitated.19 Chan affixed his signature on the fax transmittal and returned the same, by fax, to Ssangyong.20 Two days later, on June 22, 2000, Ssangyong Manila Office informed Sanyo Seiki, thru Chan, that it was able to secure a US$30/MT price adjustment on the contracted price of US$1,860.00/MT for the 200MT stainless steel, and that the goods were to be shipped in two tranches, the first 100MT on that day and the second 100MT not later than June 27, 2000. Ssangyong reiterated its request for the facilitation of the L/C's opening.21 Ssangyong later, through its Manila Office, sent a letter, on June 26, 2000, to the Treasury Group of Sanyo Seiki that it was looking forward to receiving the L/C details and a cable copy thereof that day.22 Ssangyong sent a separate letter of the same date to Sanyo Seiki requesting for the opening of the L/C covering payment of the first 100MT not later than June 28, 2000.23 Similar letters were transmitted by Ssangyong Manila Office on June 27, 2000.24 On June 28, 2000, Ssangyong sent another facsimile letter to MCC stating that its principal in Korea was already in a difficult situation 25 because of the failure of Sanyo Seiki and MCC to open the L/C's. The following day, June 29, 2000, Ssangyong received, by fax, a letter signed by Chan, requesting an extension of time to open the L/C because MCC's credit line with the bank had been fully availed of in connection with another transaction, and MCC was waiting for an additional credit line.26 On the same date, Ssangyong replied, requesting that it be informed of the date when the L/C would be opened, preferably at the earliest possible time, since its Steel Team 2 in Korea was having problems and Ssangyong was incurring warehousing costs.27 To maintain their good business relationship and to support MCC in its financial predicament, Ssangyong offered to negotiate with its steel manufacturer, POSCO, another US$20/MT discount on the price of the stainless steel ordered. This was intimated in Ssangyong's June 30, 2000 letter to MCC.28 On July 6, 2000, another follow-up letter29 for the opening of the L/C was sent by Ssangyong to MCC. However, despite Ssangyong's letters, MCC failed to open a letter of credit.30 Consequently, on August 15, 2000, Ssangyong, through counsel, wrote Sanyo Seiki that if the L/C's were not opened, Ssangyong would be compelled to cancel the contract and hold MCC liable for damages for breach thereof amounting to US$96,132.18, inclusive of warehouse expenses, related interests and charges.31 Later, Pro Forma Invoice Nos. ST2-POSTS080-132 and ST2-POSTS080233 dated August 16, 2000 were issued by Ssangyong and sent via fax
to MCC. The invoices slightly varied the terms of the earlier pro forma invoices (ST2-POSTSO401, ST2-POSTS0401-1 and ST2-POSTS04012), in that the quantity was now officially 100MT per invoice and the price was reduced to US$1,700.00 per MT. As can be gleaned from the photocopies of the said August 16, 2000 invoices submitted to the court, they both bear the conformity signature of MCC Manager Chan. On August 17, 2000, MCC finally opened an L/C with PCIBank for US$170,000.00 covering payment for 100MT of stainless steel coil under Pro Forma Invoice No. ST2-POSTS080-2.34 The goods covered by the said invoice were then shipped to and received by MCC.35 MCC then faxed to Ssangyong a letter dated August 22, 2000 signed by Chan, requesting for a price adjustment of the order stated in Pro Forma Invoice No. ST2-POSTS080-1, considering that the prevailing price of steel at that time was US$1,500.00/MT, and that MCC lost a lot of money due to a recent strike.36 Ssangyong rejected the request, and, on August 23, 2000, sent a demand letter37 to Chan for the opening of the second and last L/C of US$170,000.00 with a warning that, if the said L/C was not opened by MCC on August 26, 2000, Ssangyong would be constrained to cancel the contract and hold MCC liable for US$64,066.99 (representing cost difference, warehousing expenses, interests and charges as of August 15, 2000) and other damages for breach. Chan failed to reply. Exasperated, Ssangyong through counsel wrote a letter to MCC, on September 11, 2000, canceling the sales contract under ST2POSTS0401-1 /ST2-POSTS0401-2, and demanding payment of US$97,317.37 representing losses, warehousing expenses, interests and charges.38 Ssangyong then filed, on November 16, 2001, a civil action for damages due to breach of contract against defendants MCC, Sanyo Seiki and Gregory Chan before the Regional Trial Court of Makati City. In its complaint,39Ssangyong alleged that defendants breached their contract when they refused to open the L/C in the amount of US$170,000.00 for the remaining 100MT of steel under Pro Forma Invoice Nos. ST2-POSTS0401-1 and ST2-POSTS0401-2. After Ssangyong rested its case, defendants filed a Demurrer to Evidence40 alleging that Ssangyong failed to present the original copies of the pro forma invoices on which the civil action was based. In an Order dated April 24, 2003, the court denied the demurrer, ruling that the documentary evidence presented had already been admitted in the December 16, 2002 Order41 and their admissibility finds support in Republic Act (R.A.) No. 8792, otherwise known as the Electronic Commerce Act of 2000. Considering that both testimonial and documentary evidence tended to substantiate the material allegations in the complaint, Ssangyong's evidence sufficed for purposes of a prima facie case.42 After trial on the merits, the RTC rendered its Decision 43 on March 24, 2004, in favor of Ssangyong. The trial court ruled that when plaintiff agreed to sell and defendants agreed to buy the 220MT of steel products for the price of US$1,860 per MT, the contract was perfected. The subject transaction was evidenced by Pro FormaInvoice Nos. ST2-POSTS0401-1 and ST2-POSTS0401-2, which were later amended only in terms of reduction of volume as well as the price per MT, following Pro Forma Invoice Nos. ST2-POSTS0801 and ST2-POSTS080-2. The RTC, however, excluded Sanyo Seiki from liability for lack of competent evidence. The fallo of the decision reads: WHEREFORE, premises considered, Judgment is hereby rendered ordering defendants MCC Industrial Sales Corporation and Gregory Chan, to pay plaintiff, jointly and severally the following: 1) Actual damages of US$93,493.87 representing the outstanding principal claim plus interest at the rate of 6% per annum from March 30, 2001. 2) Attorney's fees in the sum of P50,000.00 plus P2,000.00 per counsel's appearance in court, the same being deemed just and equitable considering that by reason of defendants' breach of their obligation under the subject contract, plaintiff was constrained to litigate to enforce its rights and recover for the damages it sustained, and therefore had to engage the services of a lawyer. 3) Costs of suit. No award of exemplary damages for lack of sufficient basis.
SO ORDERED.44 On April 22, 2004, MCC and Chan, through their counsel of record, Atty. Eladio B. Samson, filed their Notice of Appeal.45 On June 8, 2004, the law office of Castillo Zamora & Poblador entered its appearance as their collaborating counsel. In their Appeal Brief filed on March 9, 2005,46 MCC and Chan raised before the CA the following errors of the RTC: I. THE HONORABLE COURT A QUO PLAINLY ERRED IN FINDING THAT APPELLANTS VIOLATED THEIR CONTRACT WITH APPELLEE A. THE HONORABLE COURT A QUO PLAINLY ERRED IN FINDING THAT APPELLANTS AGREED TO PURCHASE 200 METRIC TONS OF STEEL PRODUCTS FROM APPELLEE, INSTEAD OF ONLY 100 METRIC TONS. 1. THE HONORABLE COURT A QUO PLAINLY ERRED IN ADMITTING IN EVIDENCE THE PRO FORMA INVOICES WITH REFERENCE NOS. ST2POSTS0401-1 AND ST2-POSTS0401-2. II. THE HONORABLE COURT A QUO PLAINLY ERRED IN AWARDING ACTUAL DAMAGES TO APPELLEE. III. THE HONORABLE COURT A QUO PLAINLY ERRED IN AWARDING ATTORNEY'S FEES TO APPELLEE. IV. THE HONORABLE COURT A QUO PLAINLY ERRED IN FINDING APPELLANT GREGORY CHAN JOINTLY AND SEVERALLY LIABLE WITH APPELLANT MCC.47 On August 31, 2005, the CA rendered its Decision48 affirming the ruling of the trial court, but absolving Chan of any liability. The appellate court ruled, among others, that Pro Forma Invoice Nos. ST2POSTS0401-1 and ST2-POSTS0401-2 (Exhibits "E", "E-1" and "F") were admissible in evidence, although they were mere facsimile printouts of MCC's steel orders.49 The dispositive portion of the appellate court's decision reads: WHEREFORE, premises considered, the Court holds: (1) The award of actual damages, with interest, attorney's fees and costs ordered by the lower court is hereby AFFIRMED. (2) Appellant Gregory Chan is hereby ABSOLVED from any liability. SO ORDERED.50 A copy of the said Decision was received by MCC's and Chan's principal counsel, Atty. Eladio B. Samson, on September 14, 2005.51 Their collaborating counsel, Castillo Zamora & Poblador,52 likewise, received a copy of the CA decision on September 19, 2005.53 On October 4, 2005, Castillo Zamora & Poblador, on behalf of MCC, filed a motion for reconsideration of the said decision.54 Ssangyong opposed the motion contending that the decision of the CA had become final and executory on account of the failure of MCC to file the said motion within the reglementary period. The appellate court resolved, on November 22, 2005, to deny the motion on its merits,55 without, however, ruling on the procedural issue raised. Aggrieved, MCC filed a petition for review on certiorari56 before this Court, imputing the following errors to the Court of Appeals: THE COURT OF APPEALS DECIDED A LEGAL QUESTION NOT IN ACCORDANCE WITH JURISPRUDENCE AND SANCTIONED A DEPARTURE FROM THE USUAL AND ACCEPTED COURSE OF JUDICIAL PROCEEDINGS BY REVERSING THE COURT A QUO'S DISMISSAL OF THE COMPLAINT IN CIVIL CASE NO. 02-124 CONSIDERING THAT: I. THE COURT OF APPEALS ERRED IN SUSTAINING THE ADMISSIBILITY IN EVIDENCE OF THE PRO-FORMA INVOICES WITH REFERENCE NOS. ST2POSTSO401-1 AND ST2-POSTSO401-2, DESPITE THE FACT THAT THE SAME WERE MERE PHOTOCOPIES OF FACSIMILE PRINTOUTS. II. THE COURT OF APPEALS FAILED TO APPRECIATE THE OBVIOUS FACT THAT, EVEN ASSUMING PETITIONER BREACHED THE SUPPOSED CONTRACT, THE FACT IS THAT PETITIONER FAILED TO PROVE THAT IT SUFFERED ANY DAMAGES AND THE AMOUNT THEREOF. III. THE AWARD OF ACTUAL DAMAGES IN THE AMOUNT OF US$93,493.87 IS SIMPLY UNCONSCIONABLE AND SHOULD HAVE BEEN AT LEAST REDUCED, IF NOT DELETED BY THE COURT OF APPEALS.57 In its Comment, Ssangyong sought the dismissal of the petition, raising the following arguments: that the CA decision dated 15 August 2005 is already final and executory, because MCC's motion for reconsideration was filed beyond the reglementary period of 15 days from receipt of a copy thereof, and that, in any case, it was a pro forma motion; that MCC breached the contract for the purchase of the steel products when it failed to open the required letter of credit; that the printout copies and/or photocopies of facsimile or telecopy
transmissions were properly admitted by the trial court because they are considered original documents under R.A. No. 8792; and that MCC is liable for actual damages and attorney's fees because of its breach, thus, compelling Ssangyong to litigate. The principal issues that this Court is called upon to resolve are the following: I – Whether the CA decision dated 15 August 2005 is already final and executory; II – Whether the print-out and/or photocopies of facsimile transmissions are electronic evidence and admissible as such; III – Whether there was a perfected contract of sale between MCC and Ssangyong, and, if in the affirmative, whether MCC breached the said contract; and IV – Whether the award of actual damages and attorney's fees in favor of Ssangyong is proper and justified. -IIt cannot be gainsaid that in Albano v. Court of Appeals,58 we held that receipt of a copy of the decision by one of several counsels on record is notice to all, and the period to appeal commences on such date even if the other counsel has not yet received a copy of the decision. In this case, when Atty. Samson received a copy of the CA decision on September 14, 2005, MCC had only fifteen (15) days within which to file a motion for reconsideration conformably with Section 1, Rule 52 of the Rules of Court, or to file a petition for review on certiorari in accordance with Section 2, Rule 45. The period should not be reckoned from September 29, 2005 (when Castillo Zamora & Poblador received their copy of the decision) because notice to Atty. Samson is deemed notice to collaborating counsel. We note, however, from the records of the CA, that it was Castillo Zamora & Poblador, not Atty. Samson, which filed both MCC's and Chan's Brief and Reply Brief. Apparently, the arrangement between the two counsels was for the collaborating, not the principal, counsel to file the appeal brief and subsequent pleadings in the CA. This explains why it was Castillo Zamora & Poblador which filed the motion for the reconsideration of the CA decision, and they did so on October 5, 2005, well within the 15-day period from September 29, 2005, when they received their copy of the CA decision. This could also be the reason why the CA did not find it necessary to resolve the question of the timeliness of petitioner's motion for reconsideration, even as the CA denied the same. Independent of this consideration though, this Court assiduously reviewed the records and found that strong concerns of substantial justice warrant the relaxation of this rule. In Philippine Ports Authority v. Sargasso Construction and Development Corporation,59 we ruled that: In Orata v. Intermediate Appellate Court, we held that where strong considerations of substantive justice are manifest in the petition, this Court may relax the strict application of the rules of procedure in the exercise of its legal jurisdiction. In addition to the basic merits of the main case, such a petition usually embodies justifying circumstance which warrants our heeding to the petitioner's cry for justice in spite of the earlier negligence of counsel. As we held in Obut v. Court of Appeals: [W]e cannot look with favor on a course of action which would place the administration of justice in a straight jacket for then the result would be a poor kind of justice if there would be justice at all. Verily, judicial orders, such as the one subject of this petition, are issued to be obeyed, nonetheless a non-compliance is to be dealt with as the circumstances attending the case may warrant. What should guide judicial action is the principle that a party-litigant is to be given the fullest opportunity to establish the merits of his complaint or defense rather than for him to lose life, liberty, honor or property on technicalities. The rules of procedure are used only to secure and not override or frustrate justice. A six-day delay in the perfection of the appeal, as in this case, does not warrant the outright dismissal of the appeal. InDevelopment Bank of the Philippines vs. Court of Appeals, we gave due course to the petitioner's appeal despite the late filing of its brief in the appellate court because such appeal involved public interest. We stated in the said case that the Court may exempt a particular case from a strict application of the rules of procedure where the appellant failed to perfect its appeal within the reglementary period,
resulting in the appellate court's failure to obtain jurisdiction over the case. In Republic vs. Imperial, Jr., we also held that there is more leeway to exempt a case from the strictness of procedural rules when the appellate court has already obtained jurisdiction over the appealed case. We emphasize that: [T]he rules of procedure are mere tools intended to facilitate the attainment of justice, rather than frustrate it. A strict and rigid application of the rules must always be eschewed when it would subvert the rule's primary objective of enhancing fair trials and expediting justice. Technicalities should never be used to defeat the substantive rights of the other party. Every party-litigant must be afforded the amplest opportunity for the proper and just determination of his cause, free from the constraints of technicalities.60 Moreover, it should be remembered that the Rules were promulgated to set guidelines in the orderly administration of justice, not to shackle the hand that dispenses it. Otherwise, the courts would be consigned to being mere slaves to technical rules, deprived of their judicial discretion. Technicalities must take a backseat to substantive rights. After all, it is circumspect leniency in this respect that will give the parties the fullest opportunity to ventilate the merits of their respective causes, rather than have them lose life, liberty, honor or property on sheer technicalities.61 The other technical issue posed by respondent is the alleged pro forma nature of MCC's motion for reconsideration, ostensibly because it merely restated the arguments previously raised and passed upon by the CA. In this connection, suffice it to say that the mere restatement of arguments in a motion for reconsideration does not per se result in a pro forma motion. In Security Bank and Trust Company, Inc. v. Cuenca,62 we held that a motion for reconsideration may not be necessarily pro forma even if it reiterates the arguments earlier passed upon and rejected by the appellate court. A movant may raise the same arguments precisely to convince the court that its ruling was erroneous. Furthermore, the pro forma rule will not apply if the arguments were not sufficiently passed upon and answered in the decision sought to be reconsidered. - II The second issue poses a novel question that the Court welcomes. It provides the occasion for this Court to pronounce a definitive interpretation of the equally innovative provisions of the Electronic Commerce Act of 2000 (R.A. No. 8792) vis-à-vis the Rules on Electronic Evidence. Although the parties did not raise the question whether the original facsimile transmissions are "electronic data messages" or "electronic documents" within the context of the Electronic Commerce Act (the petitioner merely assails as inadmissible evidence the photocopies of the said facsimile transmissions), we deem it appropriate to determine first whether the said fax transmissions are indeed within the coverage of R.A. No. 8792 before ruling on whether the photocopies thereof are covered by the law. In any case, this Court has ample authority to go beyond the pleadings when, in the interest of justice or for the promotion of public policy, there is a need to make its own findings in order to support its conclusions.63 Petitioner contends that the photocopies of the pro forma invoices presented by respondent Ssangyong to prove the perfection of their supposed contract of sale are inadmissible in evidence and do not fall within the ambit of R.A. No. 8792, because the law merely admits as the best evidence the original fax transmittal. On the other hand, respondent posits that, from a reading of the law and the Rules on Electronic Evidence, the original facsimile transmittal of the pro forma invoice is admissible in evidence since it is an electronic document and, therefore, the best evidence under the law and the Rules. Respondent further claims that the photocopies of these fax transmittals (specifically ST2-POSTS0401-1 and ST2-POSTS0401-2) are admissible under the Rules on Evidence because the respondent sufficiently explained the non-production of the original fax transmittals. In resolving this issue, the appellate court ruled as follows: Admissibility of Pro Forma Invoices; Breach of Contract by Appellants
Turning first to the appellants' argument against the admissibility of the Pro Forma Invoices with Reference Nos. ST2-POSTS0401-1 and ST2POSTS0401-2 (Exhibits "E", "E-1" and "F", pp. 215-218, Records), appellants argue that the said documents are inadmissible (sic) being violative of the best evidence rule. The argument is untenable. The copies of the said pro-forma invoices submitted by the appellee are admissible in evidence, although they are mere electronic facsimile printouts of appellant's orders. Such facsimile printouts are considered Electronic Documents under the New Rules on Electronic Evidence, which came into effect on August 1, 2001. (Rule 2, Section 1 [h], A.M. No. 01-7-01-SC). "(h) 'Electronic document' refers to information or the representation of information, data, figures, symbols or other modes of written expression, described or however represented, by which a right is established or an obligation extinguished, or by which a fact may be proved and affirmed, which is received, recorded, transmitted, stored, processed, retrieved or produced electronically. It includes digitally signed documents and any printout or output, readable by sight or other means, which accurately reflects the electronic data message or electronic document. For purposes of these Rules, the term 'electronic document' may be used interchangeably with 'electronic data message'. An electronic document shall be regarded as the equivalent of an original document under the Best Evidence Rule, as long as it is a printout or output readable by sight or other means, showing to reflect the data accurately. (Rule 4, Section 1, A.M. No. 01-7-01-SC) The ruling of the Appellate Court is incorrect. R.A. No. 8792,64 otherwise known as the Electronic Commerce Act of 2000, considers an electronic data message or an electronic document as the functional equivalent of a written document for evidentiary purposes.65 The Rules on Electronic Evidence66 regards an electronic document as admissible in evidence if it complies with the rules on admissibility prescribed by the Rules of Court and related laws, and is authenticated in the manner prescribed by the said Rules.67 An electronic document is also the equivalent of an original document under the Best Evidence Rule, if it is a printout or output readable by sight or other means, shown to reflect the data accurately.68 Thus, to be admissible in evidence as an electronic data message or to be considered as the functional equivalent of an original document under the Best Evidence Rule, the writing must foremost be an "electronic data message" or an "electronic document." The Electronic Commerce Act of 2000 defines electronic data message and electronic document as follows: Sec. 5. Definition of Terms. For the purposes of this Act, the following terms are defined, as follows: xxx c. "Electronic Data Message" refers to information generated, sent, received or stored by electronic, optical or similar means. xxx f. "Electronic Document" refers to information or the representation of information, data, figures, symbols or other modes of written expression, described or however represented, by which a right is established or an obligation extinguished, or by which a fact may be proved and affirmed, which is received, recorded, transmitted, stored, processed, retrieved or produced electronically. The Implementing Rules and Regulations (IRR) of R.A. No. 8792,69 which was signed on July 13, 2000 by the then Secretaries of the Department of Trade and Industry, the Department of Budget and Management, and then Governor of the Bangko Sentral ng Pilipinas, defines the terms as: Sec. 6. Definition of Terms. For the purposes of this Act and these Rules, the following terms are defined, as follows: xxx (e) "Electronic Data Message" refers to information generated, sent, received or stored by electronic, optical or similar means, but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy. Throughout these Rules, the term "electronic data message" shall be equivalent to and be used interchangeably with "electronic document." xxxx
(h) "Electronic Document" refers to information or the representation of information, data, figures, symbols or other modes of written expression, described or however represented, by which a right is established or an obligation extinguished, or by which a fact may be proved and affirmed, which is received, recorded, transmitted, stored, processed, retrieved or produced electronically. Throughout these Rules, the term "electronic document" shall be equivalent to and be used interchangeably with "electronic data message." The phrase "but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy" in the IRR's definition of "electronic data message" is copied from the Model Law on Electronic Commerce adopted by the United Nations Commission on International Trade Law (UNCITRAL),70 from which majority of the provisions of R.A. No. 8792 were taken.71 While Congress deleted this phrase in the Electronic Commerce Act of 2000, the drafters of the IRR reinstated it. The deletion by Congress of the said phrase is significant and pivotal, as discussed hereunder. The clause on the interchangeability of the terms "electronic data message" and "electronic document" was the result of the Senate of the Philippines' adoption, in Senate Bill 1902, of the phrase "electronic data message" and the House of Representative's employment, in House Bill 9971, of the term "electronic document."72 In order to expedite the reconciliation of the two versions, the technical working group of the Bicameral Conference Committee adopted both terms and intended them to be the equivalent of each one.73 Be that as it may, there is a slight difference between the two terms. While "data message" has reference to information electronically sent, stored or transmitted, it does not necessarily mean that it will give rise to a right or extinguish an obligation,74unlike an electronic document. Evident from the law, however, is the legislative intent to give the two terms the same construction. The Rules on Electronic Evidence promulgated by this Court defines the said terms in the following manner: SECTION 1. Definition of Terms. – For purposes of these Rules, the following terms are defined, as follows: xxxx (g) "Electronic data message" refers to information generated, sent, received or stored by electronic, optical or similar means. (h) "Electronic document" refers to information or the representation of information, data, figures, symbols or other modes of written expression, described or however represented, by which a right is established or an obligation extinguished, or by which a fact may be proved and affirmed, which is received, recorded, transmitted, stored, processed, retrieved or produced electronically. It includes digitally signed documents and print-out or output, readable by sight or other means, which accurately reflects the electronic data message or electronic document. For purposes of these Rules, the term "electronic document" may be used interchangeably with "electronic data message." Given these definitions, we go back to the original question: Is an original printout of a facsimile transmission an electronic data message or electronic document? The definitions under the Electronic Commerce Act of 2000, its IRR and the Rules on Electronic Evidence, at first glance, convey the impression that facsimile transmissions are electronic data messages or electronic documents because they are sent by electronic means. The expanded definition of an "electronic data message" under the IRR, consistent with the UNCITRAL Model Law, further supports this theory considering that the enumeration "xxx [is] not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy." And to telecopy isto send a document from one place to another via a fax machine.75 As further guide for the Court in its task of statutory construction, Section 37 of the Electronic Commerce Act of 2000 provides that Unless otherwise expressly provided for, the interpretation of this Act shall give due regard to its international origin and the need to promote uniformity in its application and the observance of good faith in international trade relations. The generally accepted principles of international law and convention on electronic commerce shall likewise be considered.
Obviously, the "international origin" mentioned in this section can only refer to the UNCITRAL Model Law, and the UNCITRAL's definition of "data message": "Data message" means information generated, sent, received or stored by electronic, optical or similar means including, but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy.76 is substantially the same as the IRR's characterization of an "electronic data message." However, Congress deleted the phrase, "but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy," and replaced the term "data message" (as found in the UNCITRAL Model Law ) with "electronic data message." This legislative divergence from what is assumed as the term's "international origin" has bred uncertainty and now impels the Court to make an inquiry into the true intent of the framers of the law. Indeed, in the construction or interpretation of a legislative measure, the primary rule is to search for and determine the intent and spirit of the law.77 A construction should be rejected that gives to the language used in a statute a meaning that does not accomplish the purpose for which the statute was enacted, and that tends to defeat the ends which are sought to be attained by the enactment.78 Interestingly, when Senator Ramon B. Magsaysay, Jr., the principal author of Senate Bill 1902 (the predecessor of R.A. No. 8792), sponsored the bill on second reading, he proposed to adopt the term "data message" as formulated and defined in the UNCITRAL Model Law.79 During the period of amendments, however, the term evolved into "electronic data message," and the phrase "but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy" in the UNCITRAL Model Law was deleted. Furthermore, the term "electronic data message," though maintaining its description under the UNCITRAL Model Law, except for the aforesaid deleted phrase, conveyed a different meaning, as revealed in the following proceedings: xxxx Senator Santiago. Yes, Mr. President. I will furnish a copy together with the explanation of this proposed amendment. And then finally, before I leave the Floor, may I please be allowed to go back to Section 5; the Definition of Terms. In light of the acceptance by the good Senator of my proposed amendments, it will then become necessary to add certain terms in our list of terms to be defined. I would like to add a definition on what is "data," what is "electronic record" and what is an "electronic record system." If the gentleman will give me permission, I will proceed with the proposed amendment on Definition of Terms, Section 5. Senator Magsaysay. Please go ahead, Senator Santiago. Senator Santiago. We are in Part 1, short title on the Declaration of Policy, Section 5, Definition of Terms. At the appropriate places in the listing of these terms that have to be defined since these are arranged alphabetically, Mr. President, I would like to insert the term DATA and its definition. So, the amendment will read: "DATA" MEANS REPRESENTATION, IN ANY FORM, OF INFORMATION OR CONCEPTS. The explanation is this: This definition of "data" or "data" as it is now fashionably pronounced in America - -the definition of "data" ensures that our bill applies to any form of information in an electronic record, whether these are figures, facts or ideas. So again, the proposed amendment is this: "DATA" MEANS REPRESENTATIONS, IN ANY FORM, OF INFORMATION OR CONCEPTS. Senator Magsaysay. May I know how will this affect the definition of "Data Message" which encompasses electronic records, electronic writings and electronic documents? Senator Santiago. These are completely congruent with each other. These are compatible. When we define "data," we are simply reinforcing the definition of what is a data message. Senator Magsaysay. It is accepted, Mr. President. Senator Santiago. Thank you. The next term is "ELECTRONIC RECORD." The proposed amendment is as follows: "ELECTRONIC RECORD" MEANS DATA THAT IS RECORDED OR STORED ON ANY MEDIUM IN OR BY A COMPUTER SYSTEM OR OTHER SIMILAR DEVICE, THAT CAN BE READ OR PERCEIVED BY A PERSON OR A
COMPUTER SYSTEM OR OTHER SIMILAR DEVICE. IT INCLUDES A DISPLAY, PRINTOUT OR OTHER OUTPUT OF THAT DATA. The explanation for this term and its definition is as follows: The term "ELECTRONIC RECORD" fixes the scope of our bill. The record is the data. The record may be on any medium. It is electronic because it is recorded or stored in or by a computer system or a similar device. The amendment is intended to apply, for example, to data on magnetic strips on cards or in Smart cards. As drafted, it would not apply to telexes or faxes, except computer-generated faxes, unlike the United Nations model law on electronic commerce. It would also not apply to regular digital telephone conversations since the information is not recorded. It would apply to voice mail since the information has been recorded in or by a device similar to a computer. Likewise, video records are not covered. Though when the video is transferred to a website, it would be covered because of the involvement of the computer. Music recorded by a computer system on a compact disc would be covered. In short, not all data recorded or stored in digital form is covered. A computer or a similar device has to be involved in its creation or storage. The term "similar device" does not extend to all devices that create or store data in digital form. Although things that are not recorded or preserved by or in a computer system are omitted from this bill, these may well be admissible under other rules of law. This provision focuses on replacing the search for originality proving the reliability of systems instead of that of individual records and using standards to show systems reliability. Paper records that are produced directly by a computer system such as printouts are themselves electronic records being just the means of intelligible display of the contents of the record. Photocopies of the printout would be paper record subject to the usual rules about copies, but the original printout would be subject to the rules of admissibility of this bill. However, printouts that are used only as paper records and whose computer origin is never again called on are treated as paper records. In that case, the reliability of the computer system that produces the record is irrelevant to its reliability. Senator Magsaysay. Mr. President, if my memory does not fail me, earlier, the lady Senator accepted that we use the term "Data Message" rather than "ELECTRONIC RECORD" in being consistent with the UNCITRAL term of "Data Message." So with the new amendment of defining "ELECTRONIC RECORD," will this affect her accepting of the use of "Data Message" instead of "ELECTRONIC RECORD"? Senator Santiago. No, it will not. Thank you for reminding me. The term I would like to insert is ELECTRONIC DATA MESSAGE in lieu of "ELECTRONIC RECORD." Senator Magsaysay. Then we are, in effect, amending the term of the definition of "Data Message" on page 2A, line 31, to which we have no objection. Senator Santiago. Thank you, Mr. President. xxxx Senator Santiago. Mr. President, I have proposed all the amendments that I desire to, including the amendment on the effect of error or change. I will provide the language of the amendment together with the explanation supporting that amendment to the distinguished sponsor and then he can feel free to take it up in any session without any further intervention. Senator Magsaysay. Before we end, Mr. President, I understand from the proponent of these amendments that these are based on the Canadian E-commerce Law of 1998. Is that not right? Senator Santiago. That is correct.80 Thus, when the Senate consequently voted to adopt the term "electronic data message," it was consonant with the explanation of Senator Miriam Defensor-Santiago that it would not apply "to telexes or faxes, except computer-generated faxes, unlike the United Nations model law on electronic commerce." In explaining the term "electronic record" patterned after the E-Commerce Law of Canada, Senator Defensor-Santiago had in mind the term "electronic data message." This term then, while maintaining part of the UNCITRAL Model Law's terminology of "data message," has assumed a different context, this time, consonant with the term "electronic record" in the law of Canada. It accounts for the addition of the word "electronic" and the deletion of the phrase "but not limited to, electronic data
interchange (EDI), electronic mail, telegram, telex or telecopy." Noteworthy is that the Uniform Law Conference of Canada, explains the term "electronic record," as drafted in the Uniform Electronic Evidence Act, in a manner strikingly similar to Sen. Santiago's explanation during the Senate deliberations: "Electronic record" fixes the scope of the Act. The record is the data. The record may be any medium. It is "electronic" because it is recorded or stored in or by a computer system or similar device. The Act is intended to apply, for example, to data on magnetic strips on cards, or in smart cards. As drafted, it would not apply to telexes or faxes (except computer-generated faxes), unlike the United Nations Model Law on Electronic Commerce. It would also not apply to regular digital telephone conversations, since the information is not recorded. It would apply to voice mail, since the information has been recorded in or by a device similar to a computer. Likewise video records are not covered, though when the video is transferred to a Web site it would be, because of the involvement of the computer. Music recorded by a computer system on a compact disk would be covered. In short, not all data recorded or stored in "digital" form is covered. A computer or similar device has to be involved in its creation or storage. The term "similar device" does not extend to all devices that create or store data in digital form. Although things that are not recorded or preserved by or in a computer system are omitted from this Act, they may well be admissible under other rules of law. This Act focuses on replacing the search for originality, proving the reliability of systems instead of that of individual records, and using standards to show systems reliability. Paper records that are produced directly by a computer system, such as printouts, are themselves electronic records, being just the means of intelligible display of the contents of the record. Photocopies of the printout would be paper records subject to the usual rules about copies, but the "original" printout would be subject to the rules of admissibility of this Act. However, printouts that are used only as paper records, and whose computer origin is never again called on, are treated as paper records. See subsection 4(2). In this case the reliability of the computer system that produced the record is relevant to its reliability.81 There is no question then that when Congress formulated the term "electronic data message," it intended the same meaning as the term "electronic record" in the Canada law. This construction of the term "electronic data message," which excludes telexes or faxes, except computer-generated faxes, is in harmony with the Electronic Commerce Law's focus on "paperless" communications and the "functional equivalent approach"82 that it espouses. In fact, the deliberations of the Legislature are replete with discussions on paperless and digital transactions. Facsimile transmissions are not, in this sense, "paperless," but verily are paper-based. A facsimile machine, which was first patented in 1843 by Alexander Bain,83 is a device that can send or receive pictures and text over a telephone line. It works by digitizing an image—dividing it into a grid of dots. Each dot is either on or off, depending on whether it is black or white. Electronically, each dot is represented by a bit that has a value of either 0 (off) or 1 (on). In this way, the fax machine translates a picture into a series of zeros and ones (called a bit map) that can be transmitted like normal computer data. On the receiving side, a fax machine reads the incoming data, translates the zeros and ones back into dots, and reprints the picture.84 A fax machine is essentially an image scanner, a modem and a computer printer combined into a highly specialized package. The scanner converts the content of a physical document into a digital image, the modem sends the image data over a phone line, and the printer at the other end makes a duplicate of the original document.85 Thus, in Garvida v. Sales, Jr.,86 where we explained the unacceptability of filing pleadings through fax machines, we ruled that: A facsimile or fax transmission is a process involving the transmission and reproduction of printed and graphic matter by scanning an original copy, one elemental area at a time, and representing the shade or tone of each area by a specified amount of electric current. The current is transmitted as a signal over regular telephone
lines or via microwave relay and is used by the receiver to reproduce an image of the elemental area in the proper position and the correct shade. The receiver is equipped with a stylus or other device that produces a printed record on paper referred to as a facsimile. x x x A facsimile is not a genuine and authentic pleading. It is, at best, an exact copy preserving all the marks of an original. Without the original, there is no way of determining on its face whether the facsimile pleading is genuine and authentic and was originally signed by the party and his counsel. It may, in fact, be a sham pleading.87 Accordingly, in an ordinary facsimile transmission, there exists an original paper-based information or data that is scanned, sent through a phone line, and re-printed at the receiving end. Be it noted that in enacting the Electronic Commerce Act of 2000, Congress intended virtual or paperless writings to be the functional equivalent and to have the same legal function as paper-based documents.88 Further, in a virtual or paperless environment, technically, there is no original copy to speak of, as all direct printouts of the virtual reality are the same, in all respects, and are considered as originals.89 Ineluctably, the law's definition of "electronic data message," which, as aforesaid, is interchangeable with "electronic document," could not have included facsimile transmissions, which have anoriginal paper-based copy as sent and a paper-based facsimile copy as received. These two copies are distinct from each other, and have different legal effects. While Congress anticipated future developments in communications and computer technology90 when it drafted the law, it excluded the early forms of technology, like telegraph, telex and telecopy (except computergenerated faxes, which is a newer development as compared to the ordinary fax machine to fax machine transmission), when it defined the term "electronic data message." Clearly then, the IRR went beyond the parameters of the law when it adopted verbatim the UNCITRAL Model Law's definition of "data message," without considering the intention of Congress when the latter deleted the phrase "but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy." The inclusion of this phrase in the IRR offends a basic tenet in the exercise of the rule-making power of administrative agencies. After all, the power of administrative officials to promulgate rules in the implementation of a statute is necessarily limited to what is found in the legislative enactment itself. The implementing rules and regulations of a law cannot extend the law or expand its coverage, as the power to amend or repeal a statute is vested in the Legislature.91 Thus, if a discrepancy occurs between the basic law and an implementing rule or regulation, it is the former that prevails, because the law cannot be broadened by a mere administrative issuance—an administrative agency certainly cannot amend an act of Congress.92 Had the Legislature really wanted ordinary fax transmissions to be covered by the mantle of the Electronic Commerce Act of 2000, it could have easily lifted without a bit of tatter the entire wordings of the UNCITRAL Model Law. Incidentally, the National Statistical Coordination Board Task Force on the Measurement of E-Commerce,93 on November 22, 2006, recommended a working definition of "electronic commerce," as "[a]ny commercial transaction conducted through electronic, optical and similar medium, mode, instrumentality and technology. The transaction includes the sale or purchase of goods and services, between individuals, households, businesses and governments conducted over computer-mediated networks through the Internet, mobile phones, electronic data interchange (EDI) and other channels through open and closed networks." The Task Force's proposed definition is similar to the Organization of Economic Cooperation and Development's (OECD's) broad definition as it covers transactions made over any network, and, in addition, it adopted the following provisions of the OECD definition: (1) for transactions, it covers sale or purchase of goods and services; (2) for channel/network, it considers any computer-mediated network and NOT limited to Internet alone; (3) it excludes transactions received/placed using fax, telephone or non-interactive mail; (4) it considers payments done online or offline; and (5) it considers delivery made online (like downloading of purchased books, music or software programs) or offline (deliveries of goods).94
We, therefore, conclude that the terms "electronic data message" and "electronic document," as defined under the Electronic Commerce Act of 2000, do not include a facsimile transmission . Accordingly, a facsimile transmissioncannot be considered as electronic evidence. It is not the functional equivalent of an original under the Best Evidence Rule and is not admissible as electronic evidence. Since a facsimile transmission is not an "electronic data message" or an "electronic document," and cannot be considered as electronic evidence by the Court, with greater reason is a photocopy of such a fax transmission not electronic evidence. In the present case, therefore, Pro Forma Invoice Nos. ST2-POSTS0401-1 and ST2POSTS0401-2 (Exhibits "E" and "F"), which are mere photocopies of the original fax transmittals, are not electronic evidence, contrary to the position of both the trial and the appellate courts. - III Nevertheless, despite the pro forma invoices not being electronic evidence, this Court finds that respondent has proven by preponderance of evidence the existence of a perfected contract of sale. In an action for damages due to a breach of a contract, it is essential that the claimant proves (1) the existence of a perfected contract, (2) the breach thereof by the other contracting party and (3) the damages which he/she sustained due to such breach. Actori incumbit onus probandi. The burden of proof rests on the party who advances a proposition affirmatively.95 In other words, a plaintiff in a civil action must establish his case by a preponderance of evidence, that is, evidence that has greater weight, or is more convincing than that which is offered in opposition to it.96 In general, contracts are perfected by mere consent,97 which is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute.98 They are, moreover, obligatory in whatever form they may have been entered into, provided all the essential requisites for their validity are present.99 Sale, being a consensual contract, follows the general rule that it is perfected at the moment there is a meeting of the minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts.100 The essential elements of a contract of sale are (1) consent or meeting of the minds, that is, to transfer ownership in exchange for the price, (2) object certain which is the subject matter of the contract, and (3) cause of the obligation which is established.101 In this case, to establish the existence of a perfected contract of sale between the parties, respondent Ssangyong formally offered in evidence the testimonies of its witnesses and the following exhibits: Significantly, among these documentary evidence presented by respondent, MCC, in its petition before this Court, assails the admissibility only of Pro Forma Invoice Nos. ST2-POSTS0401-1 and ST2POSTS0401-2 (Exhibits "E" and "F"). After sifting through the records, the Court found that these invoices are mere photocopies of their original fax transmittals. Ssangyong avers that these documents were prepared after MCC asked for the splitting of the original order into two, so that the latter can apply for an L/C with greater facility. It, however, failed to explain why the originals of these documents were not presented. To determine whether these documents are admissible in evidence, we apply the ordinary Rules on Evidence, for as discussed above we cannot apply the Electronic Commerce Act of 2000 and the Rules on Electronic Evidence. Because these documents are mere photocopies, they are simply secondary evidence, admissible only upon compliance with Rule 130, Section 5, which states, "[w]hen the original document has been lost or destroyed, or cannot be produced in court, the offeror, upon proof of its execution or existence and the cause of its unavailability without bad faith on his part, may prove its contents by a copy, or by a recital of its contents in some authentic document, or by the testimony of witnesses in the order stated." Furthermore, the offeror of secondary evidence must prove the predicates thereof, namely: (a) the loss or destruction of the original without bad faith on the part of
the proponent/offeror which can be shown by circumstantial evidence of routine practices of destruction of documents; (b) the proponent must prove by a fair preponderance of evidence as to raise a reasonable inference of the loss or destruction of the original copy; and (c) it must be shown that a diligent and bona fide but unsuccessful search has been made for the document in the proper place or places. It has been held that where the missing document is the foundation of the action, more strictness in proof is required than where the document is only collaterally involved.103 Given these norms, we find that respondent failed to prove the existence of the original fax transmissions of Exhibits E and F, and likewise did not sufficiently prove the loss or destruction of the originals. Thus, Exhibits E and F cannot be admitted in evidence and accorded probative weight. It is observed, however, that respondent Ssangyong did not rely merely on Exhibits E and F to prove the perfected contract. It also introduced in evidence a variety of other documents, as enumerated above, together with the testimonies of its witnesses. Notable among them are Pro Forma Invoice Nos. ST2-POSTS0801 and ST2-POSTS080-2 which were issued by Ssangyong and sent via fax to MCC. As already mentioned, these invoices slightly varied the terms of the earlier invoices such that the quantity was now officially 100MT per invoice and the price reduced to US$1,700.00 per MT. The copies of the said August 16, 2000 invoices submitted to the court bear the conformity signature of MCC Manager Chan. Pro Forma Invoice No. ST2-POSTS080-1 (Exhibit "X"), however, is a mere photocopy of its original. But then again, petitioner MCC does not assail the admissibility of this document in the instant petition. Verily, evidence not objected to is deemed admitted and may be validly considered by the court in arriving at its judgment.104 Issues not raised on appeal are deemed abandoned. As to Pro Forma Invoice No. ST2-POSTS080-2 (Exhibits "1-A" and "2-C"), which was certified by PCIBank as a true copy of its original,105 it was, in fact, petitioner MCC which introduced this document in evidence. Petitioner MCC paid for the order stated in this invoice. Its admissibility, therefore, is not open to question. These invoices (ST2-POSTS0401, ST2-POSTS080-1 and ST2-POSTS080-2), along with the other unchallenged documentary evidence of respondent Ssangyong, preponderate in favor of the claim that a contract of sale was perfected by the parties. This Court also finds merit in the following observations of the trial court: Defendants presented Letter of Credit (Exhibits "1", "1-A" to "1-R") referring to Pro Forma Invoice for Contract No. ST2POSTS080-2, in the amount of US$170,000.00, and which bears the signature of Gregory Chan, General Manager of MCC. Plaintiff, on the other hand, presented Pro Forma Invoice referring to Contract No. ST2-POSTS0801, in the amount of US$170,000.00, which likewise bears the signature of Gregory Chan, MCC. Plaintiff accounted for the notation "1/2" on the right upper portion of the Invoice, that is, that it was the first of two (2) pro forma invoices covering the subject contract between plaintiff and the defendants. Defendants, on the other hand, failed to account for the notation "2/2" in its Pro Forma Invoice (Exhibit "1-A"). Observably further, both Pro Forma Invoices bear the same date and details, which logically mean that they both apply to one and the same transaction.106 Indeed, why would petitioner open an L/C for the second half of the transaction if there was no first half to speak of? The logical chain of events, as gleaned from the evidence of both parties, started with the petitioner and the respondent agreeing on the sale and purchase of 220MT of stainless steel at US$1,860.00 per MT. This initial contract was perfected. Later, as petitioner asked for several extensions to pay, adjustments in the delivery dates, and discounts in the price as originally agreed, the parties slightly varied the terms of their contract, without necessarily novating it, to the effect that the original order was reduced to 200MT, split into two deliveries, and the price discounted to US$1,700 per MT. Petitioner, however, paid only half of its obligation and failed to open an L/C for the other 100MT. Notably, the conduct of both parties sufficiently established the existence of a contract of sale, even if the writings of the parties, because of their contested admissibility, were not as explicit in establishing a contract.107 Appropriate conduct by the
parties may be sufficient to establish an agreement, and while there may be instances where the exchange of correspondence does not disclose the exact point at which the deal was closed, the actions of the parties may indicate that a binding obligation has been undertaken.108 With our finding that there is a valid contract, it is crystal-clear that when petitioner did not open the L/C for the first half of the transaction (100MT), despite numerous demands from respondent Ssangyong, petitioner breached its contractual obligation. It is a wellentrenched rule that the failure of a buyer to furnish an agreed letter of credit is a breach of the contract between buyer and seller. Indeed, where the buyer fails to open a letter of credit as stipulated, the seller or exporter is entitled to claim damages for such breach. Damages for failure to open a commercial credit may, in appropriate cases, include the loss of profit which the seller would reasonably have made had the transaction been carried out.109 - IV This Court, however, finds that the award of actual damages is not in accord with the evidence on record. It is axiomatic that actual or compensatory damages cannot be presumed, but must be proven with a reasonable degree of certainty.110 In Villafuerte v. Court of Appeals,111 we explained that: Actual or compensatory damages are those awarded in order to compensate a party for an injury or loss he suffered. They arise out of a sense of natural justice and are aimed at repairing the wrong done. Except as provided by law or by stipulation, a party is entitled to an adequate compensation only for such pecuniary loss as he has duly proven. It is hornbook doctrine that to be able to recover actual damages, the claimant bears the onus of presenting before the court actual proof of the damages alleged to have been suffered, thus: A party is entitled to an adequate compensation for such pecuniary loss actually suffered by him as he has duly proved. Such damages, to be recoverable, must not only be capable of proof, but must actually be proved with a reasonable degree of certainty. We have emphasized that these damages cannot be presumed and courts, in making an award must point out specific facts which could afford a basis for measuring whatever compensatory or actual damages are borne.112 In the instant case, the trial court awarded to respondent Ssangyong US$93,493.87 as actual damages. On appeal, the same was affirmed by the appellate court. Noticeably, however, the trial and the appellate courts, in making the said award, relied on the following documents submitted in evidence by the respondent: (1) Exhibit "U," the Statement of Account dated March 30, 2001; (2) Exhibit "U-1," the details of the said Statement of Account); (3) Exhibit "V," the contract of the alleged resale of the goods to a Korean corporation; and (4) Exhibit "V-1," the authentication of the resale contract from the Korean Embassy and certification from the Philippine Consular Office. The statement of account and the details of the losses sustained by respondent due to the said breach are, at best, self-serving. It was respondent Ssangyong itself which prepared the said documents. The items therein are not even substantiated by official receipts. In the absence of corroborative evidence, the said statement of account is not sufficient basis to award actual damages. The court cannot simply rely on speculation, conjecture or guesswork as to the fact and amount of damages, but must depend on competent proof that the claimant had suffered, and on evidence of, the actual amount thereof.113 Furthermore, the sales contract and its authentication certificates, Exhibits "V" and "V-1," allegedly evidencing the resale at a loss of the stainless steel subject of the parties' breached contract, fail to convince this Court of the veracity of its contents. The steel items indicated in the sales contract114 with a Korean corporation are different in all respects from the items ordered by petitioner MCC, even in size and quantity. We observed the following discrepancies: List of commodities as stated in Exhibit "V": COMMODITY: Stainless Steel HR Sheet in SPEC: SUS304 NO. 1 SIZE/Q'TY: 2.8MM X 1,219MM X C 8.193MT
3.0MM X 1,219MM X C 3.0MM X 1,219MM X C 3.0MM X 1,219MM X C 4.0MM X 1,219MM X C 4.0MM X 1,219MM X C 4.5MM X 1,219MM X C 4.5MM X 1,219MM X C 5.0MM X 1,219MM X C 6.0MM X 1,219MM X C 6.0MM X 1,219MM X C 6.0MM X 1,219MM X C
7.736MT 7.885MT 8.629MT 7.307MT 7.247MT 8.450MT 8.870MT 8.391MT 6.589MT 7.878MT 8.397MT
TOTAL: 95.562MT115 List of commodities as stated in Exhibit "X" (the invoice that was not paid): DESCRIPTION: Hot Rolled Stainless Steel Coil SUS 304 SIZE AND QUANTITY: 2.6 MM X 4' X C 3.0 MM X 4' X C 4.0 MM X 4' X C 4.5 MM X 4' X C 5.0 MM X 4' X C 6.0 MM X 4' X C 10.0MT 25.0MT 15.0MT 15.0MT 10.0MT 25.0MT
TOTAL: 100MT116 From the foregoing, we find merit in the contention of MCC that Ssangyong did not adequately prove that the items resold at a loss were the same items ordered by the petitioner. Therefore, as the claim for actual damages was not proven, the Court cannot sanction the award. Nonetheless, the Court finds that petitioner knowingly breached its contractual obligation and obstinately refused to pay despite repeated demands from respondent. Petitioner even asked for several extensions of time for it to make good its obligation. But in spite of respondent's continuous accommodation, petitioner completely reneged on its contractual duty. For such inattention and insensitivity, MCC must be held liable for nominal damages. "Nominal damages are 'recoverable where a legal right is technically violated and must be vindicated against an invasion that has produced no actual present loss of any kind or where there has been a breach of contract and no substantial injury or actual damages whatsoever have been or can be shown.'"117 Accordingly, the Court awards nominal damages of P200,000.00 to respondent Ssangyong. As to the award of attorney's fees, it is well settled that no premium should be placed on the right to litigate and not every winning party is entitled to an automatic grant of attorney's fees. The party must show that he falls under one of the instances enumerated in Article 2208 of the Civil Code.118 In the instant case, however, the Court finds the award of attorney's fees proper, considering that petitioner MCC's unjustified refusal to pay has compelled respondent Ssangyong to litigate and to incur expenses to protect its rights. WHEREFORE, PREMISES CONSIDERED, the appeal is PARTIALLY GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No. 82983 is MODIFIED in that the award of actual damages is DELETED. However, petitioner is ORDERED to pay respondent NOMINAL DAMAGES in the amount of P200,000.00, and theATTORNEY'S FEES as awarded by the trial court. CONSTRUCTION, A JUDICIAL FUNCTION NATURE 7. G.R. No. 17122 February 27, 1922 THE UNITED STATES, plaintiff-appellee, Coil, Edge vs. Slit ANG TANG HO, defendant-appellant. Williams & Ferrier for appellant. Acting Attorney-General Tuason for appellee. JOHNS, J.:
At its special session of 1919, the Philippine Legislature passed Act No. 2868, entitled "An Act penalizing the monopoly and holding of, and speculation in, palay, rice, and corn under extraordinary circumstances, regulating the distribution and sale thereof, and authorizing the Governor-General, with the consent of the Council of State, to issue the necessary rules and regulations therefor, and making an appropriation for this purpose," the material provisions of which are as follows: Section 1. The Governor-General is hereby authorized, whenever, for any cause, conditions arise resulting in an extraordinary rise in the price of palay, rice or corn, to issue and promulgate, with the consent of the Council of State, temporary rules and emergency measures for carrying out the purpose of this Act, to wit: (a) To prevent the monopoly and hoarding of, and speculation in, palay, rice or corn. (b) To establish and maintain a government control of the distribution or sale of the commodities referred to or have such distribution or sale made by the Government itself. (c) To fix, from time to time the quantities of palay rice, or corn that a company or individual may acquire, and the maximum sale price that the industrial or merchant may demand. ( d) . . . SEC. 2. It shall be unlawful to destroy, limit, prevent or in any other manner obstruct the production or milling of palay, rice or corn for the purpose of raising the prices thereof; to corner or hoard said products as defined in section three of this Act; . . . Section 3 defines what shall constitute a monopoly or hoarding of palay, rice or corn within the meaning of this Act, but does not specify the price of rice or define any basic for fixing the price. SEC. 4. The violations of any of the provisions of this Act or of the regulations, orders and decrees promulgated in accordance therewith shall be punished by a fine of not more than five thousands pesos, or by imprisonment for not more than two years, or both, in the discretion of the court: Provided, That in the case of companies or corporations the manager or administrator shall be criminally liable. SEC. 7. At any time that the Governor-General, with the consent of the Council of State, shall consider that the public interest requires the application of the provisions of this Act, he shall so declare by proclamation, and any provisions of other laws inconsistent herewith shall from then on be temporarily suspended. Upon the cessation of the reasons for which such proclamation was issued, the Governor-General, with the consent of the Council of State, shall declare the application of this Act to have likewise terminated, and all laws temporarily suspended by virtue of the same shall again take effect, but such termination shall not prevent the prosecution of any proceedings or cause begun prior to such termination, nor the filing of any proceedings for an offense committed during the period covered by the Governor-General's proclamation. August 1, 1919, the Governor-General issued a proclamation fixing the price at which rice should be sold. August 8, 1919, a complaint was filed against the defendant, Ang Tang Ho, charging him with the sale of rice at an excessive price as follows: The undersigned accuses Ang Tang Ho of a violation of Executive Order No. 53 of the Governor-General of the Philippines, dated the 1st of August, 1919, in relation with the provisions of sections 1, 2 and 4 of Act No. 2868, committed as follows: That on or about the 6th day of August, 1919, in the city of Manila, Philippine Islands, the said Ang Tang Ho, voluntarily, illegally and criminally sold to Pedro Trinidad, one ganta of rice at the price of eighty centavos (P.80), which is a price greater than that fixed by Executive Order No. 53 of the Governor-General of the Philippines, dated the 1st of August, 1919, under the authority of section 1 of Act No. 2868. Contrary to law. Upon this charge, he was tried, found guilty and sentenced to five months' imprisonment and to pay a fine of P500, from which he appealed to this court, claiming that the lower court erred in finding Executive Order No. 53 of 1919, to be of any force and effect, in finding the accused guilty of the offense charged, and in imposing the sentence.
The official records show that the Act was to take effect on its approval; that it was approved July 30, 1919; that the GovernorGeneral issued his proclamation on the 1st of August, 1919; and that the law was first published on the 13th of August, 1919; and that the proclamation itself was first published on the 20th of August, 1919. The question here involves an analysis and construction of Act No. 2868, in so far as it authorizes the Governor-General to fix the price at which rice should be sold. It will be noted that section 1 authorizes the Governor-General, with the consent of the Council of State, for any cause resulting in an extraordinary rise in the price of palay, rice or corn, to issue and promulgate temporary rules and emergency measures for carrying out the purposes of the Act. By its very terms, the promulgation of temporary rules and emergency measures is left to the discretion of the Governor-General. The Legislature does not undertake to specify or define under what conditions or for what reasons the Governor-General shall issue the proclamation, but says that it may be issued "for any cause," and leaves the question as to what is "any cause" to the discretion of the Governor-General. The Act also says: "For any cause, conditions arise resulting in an extraordinary rise in the price of palay, rice or corn." The Legislature does not specify or define what is "an extraordinary rise." That is also left to the discretion of the Governor-General. The Act also says that the Governor-General, "with the consent of the Council of State," is authorized to issue and promulgate "temporary rules and emergency measures for carrying out the purposes of this Act." It does not specify or define what is a temporary rule or an emergency measure, or how long such temporary rules or emergency measures shall remain in force and effect, or when they shall take effect. That is to say, the Legislature itself has not in any manner specified or defined any basis for the order, but has left it to the sole judgement and discretion of the Governor-General to say what is or what is not "a cause," and what is or what is not "an extraordinary rise in the price of rice," and as to what is a temporary rule or an emergency measure for the carrying out the purposes of the Act. Under this state of facts, if the law is valid and the Governor-General issues a proclamation fixing the minimum price at which rice should be sold, any dealer who, with or without notice, sells rice at a higher price, is a criminal. There may not have been any cause, and the price may not have been extraordinary, and there may not have been an emergency, but, if the Governor-General found the existence of such facts and issued a proclamation, and rice is sold at any higher price, the seller commits a crime. By the organic law of the Philippine Islands and the Constitution of the United States all powers are vested in the Legislative, Executive and Judiciary. It is the duty of the Legislature to make the law; of the Executive to execute the law; and of the Judiciary to construe the law. The Legislature has no authority to execute or construe the law, the Executive has no authority to make or construe the law, and the Judiciary has no power to make or execute the law. Subject to the Constitution only, the power of each branch is supreme within its own jurisdiction, and it is for the Judiciary only to say when any Act of the Legislature is or is not constitutional. Assuming, without deciding, that the Legislature itself has the power to fix the price at which rice is to be sold, can it delegate that power to another, and, if so, was that power legally delegated by Act No. 2868? In other words, does the Act delegate legislative power to the Governor-General? By the Organic Law, all Legislative power is vested in the Legislature, and the power conferred upon the Legislature to make laws cannot be delegated to the Governor-General, or any one else. The Legislature cannot delegate the legislative power to enact any law. If Act no 2868 is a law unto itself and within itself, and it does nothing more than to authorize the Governor-General to make rules and regulations to carry the law into effect, then the Legislature itself created the law. There is no delegation of power and it is valid. On the other hand, if the Act within itself does not define crime, and is not a law, and some legislative act remains to be done to make it a law or a crime, the doing of which is vested in the Governor-General, then the Act is a delegation of legislative power, is unconstitutional and void. The Supreme Court of the United States in what is known as the Granger Cases (94 U.S., 183-187; 24 L. ed., 94), first laid down the rule:
Railroad companies are engaged in a public employment affecting the public interest and, under the decision in Munn vs. Ill., ante, 77, are subject to legislative control as to their rates of fare and freight unless protected by their charters. The Illinois statute of Mar. 23, 1874, to establish reasonable maximum rates of charges for the transportation of freights and passengers on the different railroads of the State is not void as being repugnant to the Constitution of the United States or to that of the State. It was there for the first time held in substance that a railroad was a public utility, and that, being a public utility, the State had power to establish reasonable maximum freight and passenger rates. This was followed by the State of Minnesota in enacting a similar law, providing for, and empowering, a railroad commission to hear and determine what was a just and reasonable rate. The constitutionality of this law was attacked and upheld by the Supreme Court of Minnesota in a learned and exhaustive opinion by Justice Mitchell, in the case of State vs. Chicago, Milwaukee & St. Paul ry. Co. (38 Minn., 281), in which the court held: Regulations of railway tariffs — Conclusiveness of commission's tariffs . — Under Laws 1887, c. 10, sec. 8, the determination of the railroad and warehouse commission as to what are equal and reasonable fares and rates for the transportation of persons and property by a railway company is conclusive, and, in proceedings by mandamus to compel compliance with the tariff of rates recommended and published by them, no issue can be raised or inquiry had on that question. Same — constitution — Delegation of power to commission. — The authority thus given to the commission to determine, in the exercise of their discretion and judgement, what are equal and reasonable rates, is not a delegation of legislative power. It will be noted that the law creating the railroad commission expressly provides — That all charges by any common carrier for the transportation of passengers and property shall be equal and reasonable. With that as a basis for the law, power is then given to the railroad commission to investigate all the facts, to hear and determine what is a just and reasonable rate. Even then that law does not make the violation of the order of the commission a crime. The only remedy is a civil proceeding. It was there held — That the legislative itself has the power to regulate railroad charges is now too well settled to require either argument or citation of authority. The difference between the power to say what the law shall be, and the power to adopt rules and regulations, or to investigate and determine the facts, in order to carry into effect a law already passed, is apparent. The true distinction is between the delegation of power to make the law, which necessarily involves a discretion as to what it shall be, and the conferring an authority or discretion to be exercised under and in pursuance of the law. The legislature enacts that all freights rates and passenger fares should be just and reasonable. It had the undoubted power to fix these rates at whatever it deemed equal and reasonable. They have not delegated to the commission any authority or discretion as to what the law shall be, — which would not be allowable, — but have merely conferred upon it an authority and discretion, to be exercised in the execution of the law, and under and in pursuance of it, which is entirely permissible. The legislature itself has passed upon the expediency of the law, and what is shall be. The commission is intrusted with no authority or discretion upon these questions. It can neither make nor unmake a single provision of law. It is merely charged with the administration of the law, and with no other power. The delegation of legislative power was before the Supreme Court of Wisconsin in Dowling vs. Lancoshire Ins. Co. (92 Wis., 63). The opinion says: "The true distinction is between the delegation of power to make the law, which necessarily involves a discretion as to what it shall be, and conferring authority or discretion as to its execution, to be exercised under and in pursuance of the law. The first cannot be done; to the latter no valid objection can be made." The act, in our judgment, wholly fails to provide definitely and clearly what the standard policy should contain, so that it could be put in
use as a uniform policy required to take the place of all others, without the determination of the insurance commissioner in respect to maters involving the exercise of a legislative discretion that could not be delegated, and without which the act could not possibly be put in use as an act in confirmity to which all fire insurance policies were required to be issued. The result of all the cases on this subject is that a law must be complete, in all its terms and provisions, when it leaves the legislative branch of the government, and nothing must be left to the judgement of the electors or other appointee or delegate of the legislature, so that, in form and substance, it is a law in all its details in presenti, but which may be left to take effect in futuro, if necessary, upon the ascertainment of any prescribed fact or event. The delegation of legislative power was before the Supreme Court in United States vs. Grimaud (220 U.S., 506; 55 L. ed., 563), where it was held that the rules and regulations of the Secretary of Agriculture as to a trespass on government land in a forest reserve were valid constitutional. The Act there provided that the Secretary of Agriculture ". . . may make such rules and regulations and establish such service as will insure the object of such reservations; namely, to regulate their occupancy and use, and to preserve the forests thereon from destruction;and any violation of the provisions of this act or such rules and regulations shall be punished, . . ." The brief of the United States Solicitor-General says: In refusing permits to use a forest reservation for stock grazing, except upon stated terms or in stated ways, the Secretary of Agriculture merely assert and enforces the proprietary right of the United States over land which it owns. The regulation of the Secretary, therefore, is not an exercise of legislative, or even of administrative, power; but is an ordinary and legitimate refusal of the landowner's authorized agent to allow person having no right in the land to use it as they will. The right of proprietary control is altogether different from governmental authority. The opinion says: From the beginning of the government, various acts have been passed conferring upon executive officers power to make rules and regulations, — not for the government of their departments, but for administering the laws which did govern. None of these statutes could confer legislative power. But when Congress had legislated power. But when Congress had legislated and indicated its will, it could give to those who were to act under such general provisions "power to fill up the details" by the establishment of administrative rules and regulations, the violation of which could be punished by fine or imprisonment fixed by Congress, or by penalties fixed by Congress, or measured by the injury done. That "Congress cannot delegate legislative power is a principle universally recognized as vital to the integrity and maintenance of the system of government ordained by the Constitution." If, after the passage of the act and the promulgation of the rule, the defendants drove and grazed their sheep upon the reserve, in violation of the regulations, they were making an unlawful use of the government's property. In doing so they thereby made themselves liable to the penalty imposed by Congress. The subjects as to which the Secretary can regulate are defined. The lands are set apart as a forest reserve. He is required to make provisions to protect them from depredations and from harmful uses. He is authorized 'to regulate the occupancy and use and to preserve the forests from destruction.' A violation of reasonable rules regulating the use and occupancy of the property is made a crime, not by the Secretary, but by Congress." The above are leading cases in the United States on the question of delegating legislative power. It will be noted that in the "Granger Cases," it was held that a railroad company was a public corporation, and that a railroad was a public utility, and that, for such reasons, the legislature had the power to fix and determine just and reasonable rates for freight and passengers. The Minnesota case held that, so long as the rates were just and reasonable, the legislature could delegate the power to ascertain the facts and determine from the facts what were just and reasonable rates,. and that in vesting the commission with such power was not a delegation of legislative power.
The Wisconsin case was a civil action founded upon a "Wisconsin standard policy of fire insurance," and the court held that "the act, . . . wholly fails to provide definitely and clearly what the standard policy should contain, so that it could be put in use as a uniform policy required to take the place of all others, without the determination of the insurance commissioner in respect to matters involving the exercise of a legislative discretion that could not be delegated." The case of the United States Supreme Court, supra dealt with rules and regulations which were promulgated by the Secretary of Agriculture for Government land in the forest reserve. These decisions hold that the legislative only can enact a law, and that it cannot delegate it legislative authority. The line of cleavage between what is and what is not a delegation of legislative power is pointed out and clearly defined. As the Supreme Court of Wisconsin says: That no part of the legislative power can be delegated by the legislature to any other department of the government, executive or judicial, is a fundamental principle in constitutional law, essential to the integrity and maintenance of the system of government established by the constitution. Where an act is clothed with all the forms of law, and is complete in and of itself, it may be provided that it shall become operative only upon some certain act or event, or, in like manner, that its operation shall be suspended. The legislature cannot delegate its power to make a law, but it can make a law to delegate a power to determine some fact or state of things upon which the law makes, or intends to make, its own action to depend. The Village of Little Chute enacted an ordinance which provides: All saloons in said village shall be closed at 11 o'clock P.M. each day and remain closed until 5 o'clock on the following morning, unless by special permission of the president. Construing it in 136 Wis., 526; 128 A. S. R., 1100, 1 the Supreme Court of that State says: We regard the ordinance as void for two reasons; First, because it attempts to confer arbitrary power upon an executive officer, and allows him, in executing the ordinance, to make unjust and groundless discriminations among persons similarly situated; second, because the power to regulate saloons is a law-making power vested in the village board, which cannot be delegated. A legislative body cannot delegate to a mere administrative officer power to make a law, but it can make a law with provisions that it shall go into effect or be suspended in its operations upon the ascertainment of a fact or state of facts by an administrative officer or board. In the present case the ordinance by its terms gives power to the president to decide arbitrary, and in the exercise of his own discretion, when a saloon shall close. This is an attempt to vest legislative discretion in him, and cannot be sustained. The legal principle involved there is squarely in point here. It must be conceded that, after the passage of act No. 2868, and before any rules and regulations were promulgated by the GovernorGeneral, a dealer in rice could sell it at any price, even at a peso per "ganta," and that he would not commit a crime, because there would be no law fixing the price of rice, and the sale of it at any price would not be a crime. That is to say, in the absence of a proclamation, it was not a crime to sell rice at any price. Hence, it must follow that, if the defendant committed a crime, it was because the Governor-General issued the proclamation. There was no act of the Legislature making it a crime to sell rice at any price, and without the proclamation, the sale of it at any price was to a crime. The Executive order2 provides: (5) The maximum selling price of palay, rice or corn is hereby fixed, for the time being as follows: In Manila — Palay at P6.75 per sack of 57½ kilos, or 29 centavos per ganta. Rice at P15 per sack of 57½ kilos, or 63 centavos per ganta. Corn at P8 per sack of 57½ kilos, or 34 centavos per ganta. In the provinces producing palay, rice and corn, the maximum price shall be the Manila price less the cost of transportation from the source of supply and necessary handling expenses to the place of sale, to be determined by the provincial treasurers or their deputies.
In provinces, obtaining their supplies from Manila or other producing provinces, the maximum price shall be the authorized price at the place of supply or the Manila price as the case may be, plus the transportation cost, from the place of supply and the necessary handling expenses, to the place of sale, to be determined by the provincial treasurers or their deputies. (6) Provincial treasurers and their deputies are hereby directed to communicate with, and execute all instructions emanating from the Director of Commerce and Industry, for the most effective and proper enforcement of the above regulations in their respective localities. The law says that the Governor-General may fix "the maximum sale price that the industrial or merchant may demand." The law is a general law and not a local or special law. The proclamation undertakes to fix one price for rice in Manila and other and different prices in other and different provinces in the Philippine Islands, and delegates the power to determine the other and different prices to provincial treasurers and their deputies. Here, then, you would have a delegation of legislative power to the Governor-General, and a delegation by him of that power to provincial treasurers and their deputies, who "are hereby directed to communicate with, and execute all instructions emanating from the Director of Commerce and Industry, for the most effective and proper enforcement of the above regulations in their respective localities." The issuance of the proclamation by the Governor-General was the exercise of the delegation of a delegated power, and was even a sub delegation of that power. Assuming that it is valid, Act No. 2868 is a general law and does not authorize the Governor-General to fix one price of rice in Manila and another price in Iloilo. It only purports to authorize him to fix the price of rice in the Philippine Islands under a law, which is General and uniform, and not local or special. Under the terms of the law, the price of rice fixed in the proclamation must be the same all over the Islands. There cannot be one price at Manila and another at Iloilo. Again, it is a mater of common knowledge, and of which this court will take judicial notice, that there are many kinds of rice with different and corresponding market values, and that there is a wide range in the price, which varies with the grade and quality. Act No. 2868 makes no distinction in price for the grade or quality of the rice, and the proclamation, upon which the defendant was tried and convicted, fixes the selling price of rice in Manila "at P15 per sack of 57½ kilos, or 63 centavos per ganta," and is uniform as to all grades of rice, and says nothing about grade or quality. Again, it will be noted that the law is confined to palay, rice and corn. They are products of the Philippine Islands. Hemp, tobacco, coconut, chickens, eggs, and many other things are also products. Any law which single out palay, rice or corn from the numerous other products of the Islands is not general or uniform, but is a local or special law. If such a law is valid, then by the same principle, the Governor-General could be authorized by proclamation to fix the price of meat, eggs, chickens, coconut, hemp, and tobacco, or any other product of the Islands. In the very nature of things, all of that class of laws should be general and uniform. Otherwise, there would be an unjust discrimination of property rights, which, under the law, must be equal and inform. Act No. 2868 is nothing more than a floating law, which, in the discretion and by a proclamation of the Governor-General, makes it a floating crime to sell rice at a price in excess of the proclamation, without regard to grade or quality. When Act No. 2868 is analyzed, it is the violation of the proclamation of the Governor-General which constitutes the crime. Without that proclamation, it was no crime to sell rice at any price. In other words, the Legislature left it to the sole discretion of the Governor-General to say what was and what was not "any cause" for enforcing the act, and what was and what was not "an extraordinary rise in the price of palay, rice or corn," and under certain undefined conditions to fix the price at which rice should be sold, without regard to grade or quality, also to say whether a proclamation should be issued, if so, when, and whether or not the law should be enforced, how long it should be enforced, and when the law should be suspended. The Legislature did not specify or define what was "any cause," or what was "an extraordinary rise in the price of rice, palay or corn," Neither did it specify or define the conditions upon which the proclamation should
be issued. In the absence of the proclamation no crime was committed. The alleged sale was made a crime, if at all, because the Governor-General issued the proclamation. The act or proclamation does not say anything about the different grades or qualities of rice, and the defendant is charged with the sale "of one ganta of rice at the price of eighty centavos (P0.80) which is a price greater than that fixed by Executive order No. 53." We are clearly of the opinion and hold that Act No. 2868, in so far as it undertakes to authorized the Governor-General in his discretion to issue a proclamation, fixing the price of rice, and to make the sale of rice in violation of the price of rice, and to make the sale of rice in violation of the proclamation a crime, is unconstitutional and void. It may be urged that there was an extraordinary rise in the price of rice and profiteering, which worked a severe hardship on the poorer classes, and that an emergency existed, but the question here presented is the constitutionality of a particular portion of a statute, and none of such matters is an argument for, or against, its constitutionality. The Constitution is something solid, permanent an substantial. Its stability protects the life, liberty and property rights of the rich and the poor alike, and that protection ought not to change with the wind or any emergency condition. The fundamental question involved in this case is the right of the people of the Philippine Islands to be and live under a republican form of government. We make the broad statement that no state or nation, living under republican form of government, under the terms and conditions specified in Act No. 2868, has ever enacted a law delegating the power to any one, to fix the price at which rice should be sold. That power can never be delegated under a republican form of government. In the fixing of the price at which the defendant should sell his rice, the law was not dealing with government property. It was dealing with private property and private rights, which are sacred under the Constitution. If this law should be sustained, upon the same principle and for the same reason, the Legislature could authorize the Governor-General to fix the price of every product or commodity in the Philippine Islands, and empower him to make it a crime to sell any product at any other or different price. It may be said that this was a war measure, and that for such reason the provision of the Constitution should be suspended. But the Stubborn fact remains that at all times the judicial power was in full force and effect, and that while that power was in force and effect, such a provision of the Constitution could not be, and was not, suspended even in times of war. It may be claimed that during the war, the United States Government undertook to, and did, fix the price at which wheat and flour should be bought and sold, and that is true. There, the United States had declared war, and at the time was at war with other nations, and it was a war measure, but it is also true that in doing so, and as a part of the same act, the United States commandeered all the wheat and flour, and took possession of it, either actual or constructive, and the government itself became the owner of the wheat and flour, and fixed the price to be paid for it. That is not this case. Here the rice sold was the personal and private property of the defendant, who sold it to one of his customers. The government had not bought and did not claim to own the rice, or have any interest in it, and at the time of the alleged sale, it was the personal, private property of the defendant. It may be that the law was passed in the interest of the public, but the members of this court have taken on solemn oath to uphold and defend the Constitution, and it ought not to be construed to meet the changing winds or emergency conditions. Again, we say that no state or nation under a republican form of government ever enacted a law authorizing any executive, under the conditions states, to fix the price at which a price person would sell his own rice, and make the broad statement that no decision of any court, on principle or by analogy, will ever be found which sustains the constitutionality of the particular portion of Act No. 2868 here in question. By the terms of the Organic Act, subject only to constitutional limitations, the power to legislate and enact laws is vested exclusively in the Legislative, which is elected by a direct vote of the people of the Philippine Islands. As to the question here involved, the authority of the Governor-General to fix the maximum price at which palay, rice and corn may be sold in the manner power in violation of the organic law.
This opinion is confined to the particular question here involved, which is the right of the Governor-General, upon the terms and conditions stated in the Act, to fix the price of rice and make it a crime to sell it at a higher price, and which holds that portions of the Act unconstitutional. It does not decide or undertake to construe the constitutionality of any of the remaining portions of the Act. The judgment of the lower court is reversed, and the defendant discharged. So ordered. Araullo, C.J., Johnson, Street and Ostrand, JJ., concur. Romualdez, J., concurs in the result. Separate Opinions MALCOLM, J., concurring: I concur in the result for reasons which reach both the facts and the law. In the first place, as to the facts, — one cannot be convicted ex post facto of a violation of a law and of an executive order issued pursuant to the law, when the alleged violation thereof occurred on August 6, 1919, while the Act of the Legislature in question was not published until August 13, 1919, and the order was not published until August 20, 1919. In the second place, as to the law, — one cannot be convicted of a violation of a law or of an order issued pursuant to the law when both the law and the order fail to set up an ascertainable standard of guilt. (U.S. vs. Cohen Grocery Company , 255 U.S., 81, holding section 4 of the Federal Food Control Act of August 10, 1917, as amended, invalid.) In order that there may not be any misunderstanding of our position, I would respectfully invite attention to the decision of the United States Supreme Court in German Alliance Ins. Co. vs. Lewis ([1914, 233 U.S., 389), concerning the legislative regulation of the prices charged by business affected with a public interest, and to another decision of the United States Supreme Court, that of Marshall Field & Co. vs. Clark (, 143 U.S., 649), which adopts as its own the principles laid down in the case of Locke's Appeal (, 72 Pa. St., 491), namely; "The Legislature cannot delegate its power to make a law; but it can make a law to delegate a power to determine some fact or state of things upon which the law makes, or intends to make, its own action depend. To deny this would be to stop the wheels of government. There are many things upon which wise and useful legislation must depend which cannot be known to the law-making power, and must, therefore, be a subject of inquiry and determination outside of the halls of legislation." WHEN COURT MAY CONSTRUE A STATUTE 8. Case Digest - Banawa vs. Mirano, No. L-24750, 97 SCRA 517, May 16, 1980 Case Digest for Statutory Construction FACTS: Defendants-appellants spouses Doroteo Banawa and Juliana Mendoza took care of Maria Mirano, Juliana‘s niece, since Maria is 9 years old and treated her the same way as they treated the co-appellant Gliceria Abrenica, their legally adopted child. On May 5, 1921, the spouses bought a parcel of land situated at Brgy. Iba, Taal, Batangas from Placido Punzalan and registered the said parcel of land in the name of Maria, because the said spouses wanted something for Maria after their death. On July 31, 1949, after a lingering illness, Maria Mirano died. At the time of her death she left only as her nearest relatives the herein plaintiffs-appellees, namely Primitiva, who is a surviving sister, and Gregoria, Juana and Marciano, all surnamed Mirano, who are children of the deceased‘s brother. The Miranos filed a case in court against the Banawas with regards to the possession of the Iba property as legal heirs of Maria. The court ruled in favor of the Miranos. The Banawas appealed to theCourt of Appeals stating that they are entitled to the land in question by virtue of Section 5, Rule 100 of the Old Rules of Court, the pertinent portion of which reads: In case of the death of the child, his parents and relatives by nature, and not by adoption, shall be his legal heirs, except as to property received or inherited by the adopted child from either of his parents by adoption, which shall become the property of the latter or their legitimate relatives who shall participate in the order established by the Civil Code for intestate estates. The defendant spouses died during the pendency of the case at the Court of Appealsand were substituted by their legally adopted child Gliceria Abrenica and her husband Casiano Amponin.
The Court of Appeals affirmed the decision of the lower court. The Appellants filed at the Supreme Court a petition for review by certiorari of the decision of the Court of Appeals regarding its ruling that Sec. 5, Rule 100 of the Old Rules of Court does not apply in the instant case because MariaMirano was not legally adopted. ISSUE: Whether or not, Sec. 5, Rule 100 of the Old Rules of Court applicable to the instant case? HELD: NO. It is very clear in the rule involved that specifically provides for the case of the judiciallyadopted child and does not include extrajudicial adoption. It is an elementary rule in statutory construction that when the language of the law is clear and unequivocal, the law must be taken to mean exactly what it says. 9. THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. MARIO MAPA Y MAPULONG, defendant-appellant. Francisco P. Cabigao for defendant-appellant. Office of the Solicitor General Arturo A. Alafriz, Assistant Solicitor General F. R. Rosete and Solicitor O. C. Hernandez for plaintiffappellee. 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 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 undersized 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." 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." Upon the lower court stating that the fiscal should examine the document 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 corresponding 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." 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;2the 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.1äwphï1.ñët 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." 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 specifically 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. 10. Guevara vs. Inocentes, G. R. No. L-25577, 16 SCRA 379, March 15, 1966 Case Digest for Statutory Construction FACTS: The petitioner, Onofre Guevara was extended an ad interim appointment as Undersecretary of Labor by the former Executive on November 18, 1965. Took his oath of office on November 25th same year. The incumbent Executive issued Memorandum CircularNo. 8 dated January 23, 1966 declaring that all ad interim appointments made by the former Executive lapsed with the adjournment of the special session of Congress at about midnight of January 22, 1966. The respondent, Raoul Inocentes was extended an ad interim appointment for the same position by the incumbent Executive on January 23, 1966. Guevara filed before the court an instant petition for Quo Warranto seeking to be declared person legally entitled to the said Officer of the Undersecretary of Labor under Art. VII Sec. 10 (4) of the 1935 Constitution. which states that: The president shall have the power to make appointments during the recess of the Congress, but such appointments shall be effective only until disapproval by the Commission onAppointments or until the next adjournment of Congress. Since there was no Commission on Appointments organized during the special session which commenced on January 17, 1966, the respondent contended that the petitioner‘s ad interim appointment as well as other made under similar conditions must have lapsed when the Congress adjourned its last special session. But the petitioner stated that (1) the specific provision in the Constitution which states that: ―until the nextadjournment of Congress‖ means adjournment of a regular session of Congress and not by a special session and (2) only the Senate adjourned sine die at midnight of January 22, 1966 and the House of the Representative
merely ‗suspended‘ its session and to be resumed on January 24, 1966 at 10:00 AM. The petitioner therefore concludes that Congress has been in continuous session without interruption since January 17. ISSUE/S:1. Whether or not, the petitioner‘s contention regarding ―the next adjournment of Congress specifically provides for regular session only. 2. Whether or not, the petitioner‘s contention that Congress is still in continuous session? HELD: 1. NO. The phrase ―until the next adjournment of Congress‖ does not make any reference to specific session of Congress, whether regular or special. But a well-know Latin maxim is statutory construction stated that ‗when the law does not distinguish we should not distinguish. Ubi lex non distinguit nec nos distinguere debemus. It is safe to conclude that the authors of the 1935 Constitution used the word ―adjournment‖ had in mind ei ther regular or special and not simply the regular one as the petitioner contended. 2. NO. The mere fact that the Senate adjourned sine die at midnight of January 22, 1966, the House of the Representative is only a part of the Congress and not the Congress itself. So logically, the adjournment of one of its Houses is considered adjournment of the Congress as a whole. And the petitioner‘s ad interim appointment must have been lapsed on January 22, 1966 upon adjournment of the Senate. WHEN COURT MAY NOT CONSTRUE A STATUTE ; LANGUAGE OF THE LAW IS CLEAR 11. UNITED CHRISTIAN MISSIONARY SOCIETY, UNITED CHURCH BOARD FOR WORLD MINISTERS, BOARD OF FOREIGN MISSION OF THE REFORMED CHURCH IN AMERICA, BOARD OF MISSION OF THE EVANGELICAL UNITED PRESBYTERIAN CHURCH, COMMISSION OF ECUMENICAL MISSION ON RELATIONS OF THE UNITED PRESBYTERIAN CHURCH, petitioners, vs. SOCIAL SECURITY COMMISSION and SOCIAL SECURITY SYSTEM, respondents. Sedfrey A. Ordoñez for petitioners. Office of the Solicitor General Antonio P. Barredo, Assistant Solicitor General Felicisimo R. Rosete and Solicitor Buenaventura J. Guerrero for respondents. TEEHANKEE, J.: In this appeal from an order of the Social Security Commission, we uphold the Commission's Order dismissing the petition before it, on the ground that in the absence of an express provision in the Social Security Act1 vesting in the Commission the power to condone penalties, it has no legal authority to condone, waive or relinquish the penalty for late premium remittances mandatorily imposed under the Social Security Act. The five petitioners originally filed on November 20, 1964 separate petitions with respondent Commission, contesting the social security coverage of American missionaries who perform religious missionary work in the Philippines under specific employment contracts with petitioners. After several hearings, however, petitioners commendably desisted from further contesting said coverage, manifesting that they had adopted a policy of cooperation with the Philippine authorities in its program of social amelioration, with which they are in complete accord. They instead filed their consolidated amended petition dated May 7, 1966, praying for condonation of assessed penalties against them for delayed social security premium remittances in the aggregate amount of P69,446.42 for the period from September, 1958 to September, 1963. In support of their request for condonation, petitioners alleged that they had labored under the impression that as international organizations, they were not subject to coverage under the Philippine Social Security System, but upon advice by certain Social Security System officials, they paid to the System in October, 1963, the total amount of P81,341.80, representing their back premiums for the period from September, 1958 to September, 1963. They further claimed that the penalties assessed against them appear to be inequitable, citing several resolutions of respondent Commission which in the past allegedly permitted condonation of such penalties. On May 25, 1966, respondent System filed a Motion to Dismiss on the ground that "the Social Security Commission has no power or authority to condone penalties for late premium remittance, to which
petitioners filed their opposition of June 15, 1966, and in turn, respondent filed its reply thereto of June 22, 1966. Respondent Commission set the Motion to Dismiss for hearing and oral argument on July 20, 1966. At the hearing, petitioners' counsel made no appearance but submitted their Memorandum in lieu of oral argument. Upon petition of the System's Counsel, the Commission gave the parties a further period of fifteen days to submit their Memorandum consolidating their arguments, after which the motion would be deemed submitted for decision. Petitioners stood on their original memorandum, and respondent System filed its memorandum on August 4, 1966. On September 22, 1966, respondent Commission issued its Order dismissing the petition, as follows: Considering all of the foregoing, this Commission finds, and so holds, that in the absence of an express provision in the Social Security Act vesting in the Commission the power to condone penalties, it cannot legally do so. The policy enunciated in Commission Resolution No. 536, series of 1964, cited by the parties, in their respective pleadings, has been reiterated in Commission Resolution No. 878, dated August 18, 1966, wherein the Commission adopting the recommendation of the Committee on Legal Matters and Legislation of the Social Security Commission ruled that it "has no power to condone, waive or relinquish the penalties for late premium remittances which may be imposed under the Social Security Act." WHEREFORE, the petition is hereby dismissed and petitioners are directed to pay the respondent System, within thirty (30) days from receipt of this Order, the amount of P69,446.42 representing the penalties payable by them, broken down as follows: Upon failure of the petitioners to comply with this Order within the period specified herein, a warrant shall be issued to the Sheriff of the Province of Rizal to levy and sell so much of the property of the petitioners as may be necessary to satisfy the aforestated liability of the petitioners to the System.This Court is thus confronted on appeal with this question of first impression as to whether or not respondent Commission erred in ruling that it has no authority under the Social Security Act to condone the penalty prescribed by law for late premium remittances. We find no error in the Commission's action. 1. The plain text and intent of the pertinent provisions of the Social Security Act clearly rule out petitioners' posture that the respondent Commission should assume, as against the mandatory imposition of the 3% penalty per month for late payment of premium remittances, the discretionary authority of condoning, waiving or relinquishing such penalty. The pertinent portion of Section 22 (a) of the Social Security Act peremptorily provides that: SEC 22. Remittance of premiums. — (a) The contributions imposed in the preceding sections shall be remitted to the System within the first seven days of each calendar month following the month for which they are applicable or within such time as the Commission may prescribe. "Every employer required to deduct and to remit such contribution shall be liable for their payment and if any contribution is not paid to the system, as herein prescribed, he shall pay besides the contribution a penalty thereon of three per centum per month from the date the contribution falls due until paid . . .2 No discretion or alternative is granted respondent Commission in the enforcement of the law's mandate that the employer who fails to comply with his legal obligation to remit the premiums to the System within the prescribed period shall pay a penalty of three 3% per month. The prescribed penalty is evidently of a punitive character, provided by the legislature to assure that employers do not take lightly the State's exercise of the police power in the implementation of the Republic's declared policy "to develop, establish gradually and perfect a social security system which shall be suitable to the needs of the people throughout the Philippines and (to) provide protection to employers against the hazards of disability, sickness, old age and death."3 In this concept, good faith or bad faith is rendered irrelevant, since the law makes no distinction between an employer who professes good reasons for delaying the remittance of premiums and
another who deliberately disregards the legal duty imposed upon him to make such remittance. From the moment the remittance of premiums due is delayed, the penalty immediately attaches to the delayed premium payments by force of law. 2. Petitioners contend that in the exercise of the respondent Commission's power of direction and control over the system, as provided in Section 3 of the Act, it does have the authority to condone the penalty for late payment under Section 4 (1), whereby it is empowered to "perform such other acts as it may deem appropriate for the proper enforcement of this Act." The law does not bear out this contention. Section 4 of the Social Security Act precisely enumerates the powers of the Commission. Nowhere from said powers of the Commission may it be shown that the Commission is granted expressly or by implication the authority to condone penalties imposed by the Act. 3. Moreover, the funds contributed to the System by compulsion of law have already been held by us to be "funds belonging to the members which are merely held in trust by the Government."4 Being a mere trustee of the funds of the System which actually belong to the members, respondent Commission cannot legally perform any acts affecting the same, including condonation of penalties, that would diminish the property rights of the owners and beneficiaries of such funds without an express or specific authority therefor. 4. Where the language of the law is clear and the intent of the legislature is equally plain, there is no room for interpretation and construction of the statute. The Court is therefore bound to uphold respondent Commission's refusal to arrogate unto itself the authority to condone penalties for late payment of social security premiums, for otherwise we would be sanctioning the Commission's reading into the law discretionary powers that are not actually provided therein, and hindering and defeating the plain purpose and intent of the legislature. 5. Petitioners cite fourteen instances in the past wherein respondent Commission had granted condonation of penalties on delayed premium payments. They charge the Commission with grave abuse of discretion in not having uniformly applied to their cases its former policy of granting condonation of penalties. They invoke more compelling considerations of equity in their cases, in that they are non-profit religious organizations who minister to the spiritual needs of the Filipino people, and that their delay in the payment of their premiums was not of a contumacious or deliberate defiance of the law but was prompted by a well-founded belief that the Social Security Act did not apply to their missionaries. The past instances of alleged condonation granted by the Commission are not, however, before the Court, and the unilateral conclusion asserted by petitioners that the Commission had granted such condonations would be of no avail, without a review of the pertinent records of said cases. Nevertheless, assuming such conclusion to be correct, the Commission, in its appealed Order of September 22, 1966 makes of record that since its Resolution No. 536, series of 1964, which it reiterated in another resolution dated August 18, 1966, it had definitely taken the legal stand, pursuant to the recommendation of its Committee on Legal Matters and Legislation, that in the absence of an express provision in the Social Security Act vesting in the Commission the power to condone penalties, it "has no power to condone, waive or relinquish the penalties for late premium remittances which may be imposed under the Social Security Act." 6. The Commission cannot be faulted for this correct legal position. Granting that it had erred in the past in granting condonation of penalties without legal authority, the Court has held time and again that "it is a well-known rule that erroneous application and enforcement of the law by public officers do not block subsequent correct application of the statute and that the Government is never estopped by mistake or error on the part of its agents."5 Petitioners' lack of intent to deliberately violate the law may be conceded, and was borne out by their later withdrawal in May, 1966 of their original petitions in November, 1964 contesting their social security coverage. The point, however, is that they followed the wrong procedure in questioning the applicability of the Social Security Act to them, in that they failed for five years to pay the premiums prescribed by law and thus incurred the 3% penalty thereon per month mandatorily imposed by law for late payment. The proper procedure would have been to
pay the premiums and then contest their liability therefor, thereby preventing the penalty from attaching. This would have been the prudent course, considering that the Act provides in Section 22 (b) thereof that the premiums which the employer refuses or neglects to pay may be collected by the System in the same manner as taxes under the National Internal Revenue Code, and that at the time they instituted their petitions in 1964 contesting their coverage, the Court had already ruled in effect against their contest three years earlier, when it held in Roman Catholic Archbishop vs. Social Security Commission6 that the legislature had clearly intended to include charitable and religious institutions and other non-profit institutions, such as petitioners, within the scope and coverage of the Social Security Act. 7. No grave abuse of discretion was committed, therefore, by the Commission in issuing its Order dismissing the petition for condonation of penalties for late payment of premiums, as claimed by petitioners in their second and last error assigned. Petitioners were duly heard by the Commission and were given due opportunity to adduce all their arguments, as in fact they filed their Memorandum in lieu of oral argument and waived the presentation of an additional memorandum. The mere fact that there was a pending appeal in the Court of Appeals from an identical ruling of the Commission in an earlier case as to its lack of authority to condone penalties does not mean, as petitioners contend, that the Commission was thereby shorn of its authority and discretion to dismiss their petition on the same legal ground.7 The Commission's action has thus paved the way for a final ruling of the Court on the matter.