CONTEMPORARY

CONSTRUCTION
Statutory Construction
GENERAL.
• Contemporary or Practical Construction
 
 Construction is placed upon statutes at the time of, or after, enactment by the Executive, Legislature, or Judicial authority.
 
 As well as the Draftsmen and Bill sponsors, who are considered to be knowledgeable of the intent and purpose of the law.
 
 Invaluable aid in construction of ambiguous and doubtful provisions of the law.
 
• Contemporanea Expositio Est Optima Et Fortissima in Lege.
 
 Contemporary construction is strongest in law.
 EXECUTIVE CONSTRUCTION,
GENERALLY; KINDS OF.
Contemporaneous construction.
 
 Construction placed upon the statute by Executive or Administrative officer called upon to execute or administer such statute.

Rule:
 
 Duty of Enforcing the law, which is devolved upon the Executive branch, necessarily calls for interpretation of its ambiguous
provisions. Accordingly, Executive and Administrative Officers are generally the first to interpret the law, preparatory to its enforcement
— Rules and Regulations, Circulars, Directives, Opinions and Rulings.

Construction by an Executive or
Administrative officer directly called to
implement the law.
- May be EXPRESSED (embodied in a
circular, directive or regulation) or IMPLIED
(Practice of enforcement of not applying the
statute to certain situations or applying it in a
particular manner— Interpretation by usage
or manner).
THREE (3) TYPES OF EXECUTIVE
INTERPRETATIONS OF LAW:
Construction by the Secretary of Justice, in
his capacity as Chief Legal Adviser of the
Government.
- In the form of opinions issued upon request of
administrative or executive officials who enforce
the law
- In the absence of Judicial ruling on the matter
and unless reprobated by the President, opinions
of Secretary of Justice are generally controlling
among administrative and executive officials of
the government.
 
Note: However, President and Executive
Secretary, by authority of the President, has power
to modify, alter or reverse the construction of a
statute by a department secretary.
Interpretation handed down in an adversary
proceeding in the form of a ruling by an
executive officer exercising quasi-judicial
power.
- There is a distinction between an
interpretation by an executive officer charged
with the enforcement of a law and that
handed down by an executive official in an
adversary proceeding because position of a
public officer, charged with the enforcement
of a law, is different from the one who must
decide a dispute.
- Such rulings need not have the detachment
of a judicial, or semi-judicial decision, and
may properly carry bias.
  
WEIGHT ACCORDED TO CONTEMPORANEOUS
CONSTRUCTION.

General Rule :

• When there is doubt in interpreting a statute, the uniform construction placed by the executive or administrative officer will be
adopted, if necessary to resolve the doubt.
 
 Thus, entitled to Great Weight and Respect by the courts in the interpretation of ambiguous provisions of the law;

 And if there is absence of error, contemporaneous construction will control the interpretation and that the action of the
agency will not be disturbed by the courts.
 
“The principle that the contemporaneous construction of a statute by the executive officers of the government, whose duty is to execute
it, is entitled to great respect, and should ordinarily control the construction of the statute by the courts, is so firmly embedded in our
jurisdiction that no authorities need be cited to support it.”
 
Note: The weight that may be given to a contemporaneous construction increases as the period on which it is followed and observed
lengthens and its acceptability widens.
 WEIGHT ACCORDED TO USAGE AND PRACTICE.

• The principle of contemporaneous exposition, usage and practice under a statute, or a course of conduct
indicating a particular undertaking of it is of great value in determining its real meaning, especially when usage
has been over a long period of time.

• Optimus interpres rerum usus.

 
 Best interpreter of the law is usage.
 
• It does not intend to disturb the then prevailing practice and the statute should be construed as not to change the
practice.
 CONSTRUCTION OF RULES AND REGULATIONS.

• Rules and regulations issued by executive or administrative officers have the force and effect of laws
and is entitled to great weight by the court in the former’s construction of such rules and regulations.
 
 An administrative agency has the power to interpret its own rules and such interpretations
becomes part of the rules.

Reason why contemporaneous construction is given much weight.

• Executive officials are presumed to have familiarized themselves with all the
considerations pertinent to the meaning and purpose of the law, and to have formed
an independent, conscientious and competent expert opinion thereon.
CEMCO HOLDINGS,
INC. VS. NATIONAL
LIFE INSURANCE CO.
Issue:
• Whether or not the rule on Mandatory
Tender Offer applies to the indirect
acquisition of shares in a listed company, in
this case, the indirect acquisition by Cemco
of 36% of UCC, a publicly-listed company,
through its purchase of the shares in UCHC,
a non-listed company.
FACTS:
Union Cement Corp (UCC) had 2 principal stock-holders: UCHC
(60.51%) and Cemco (17.03%). Majority of UCHCs stocks were owned
by BCI (21.63%) and ACC (29.61%); whereas, Cemco only owned 9%
of UCHCs stocks. BCI informed PSE that it and ACC passed resolutions
to sell to Cemco their stocks. Due to petitioner’s acquisition of shares,
PSE Circular for Brokers No. 3146-2004 stated that petitioner’s total
beneficial ownership, direct and indirect, in UCC has increased by 36%
and amounted to at least 53% of the shares of UCC. PSE then inquired
SEC as to whether Tender Offer Rule under Rule 19 of Implementing
Rules of Securities Regulation Code is not applicable to the purchase of
petitioner. Director Callangan confirmed that the SEC en banc had
resolved that the transaction was not covered by the Tender Offer Rule.
Aggrieved, respondent demanded petitioner to comply with the rule but
refused to do so; which led respondent to file a complaint with SEC,
asking it to reverse the Resolution, declare Purchase Agreement null
and void, and prayed that the Mandatory Tender Offer rule be applied to
its UCC shares. SEC then rules in favor respondent and directed
petitioner to make a tender offer for UCC shares to respondent and other
holders of UCC shares pursuant to Sec. 9(E), rule 19 of the Securities
Regulation Code.
 • Manner of Making Tender Offer
SEC. 9(E), RULE 19
If the tender offer is for less than all of the
OF SECURITIES outstanding equity securities of a class, and if a
REGULATION CODE greater number of securities is tendered pursuant
thereto than the bidder is bound or willing to take up
and pay for, the securities taken up and paid for
shall be taken up and paid for as nearly as may be
pro rata, disregarding fractions, according to the
number of securities tendered by each security
holder during the period such offer remains open.
 • The construction given to a statute by an
HELD:
Yes. The contention of petitioner asserting that
the Mandatory Tender Offer Rule applies only
to direct acquisition of shares in a public
company is not meritorious. “Under existing
SEC Rules, x x x It is further provided therein
that Mandatory tender offer is still applicable
even if the acquisition is less than 35% when
the purchase would result in ownership of over
51% of the total outstanding equity securities of
the public company.
SEC and CA ruled that the indirect acquisition
by petitioner of 36% of UCC shares through
acquisition of the non-listed UCHC shares is
covered by the mandatory tender offer rule.
Interpretation given by the SEC and CA must
be sustained."
administrative agency charged with the interpretation
and application of such statute is entitled to great
weight by the courts, unless such construction is
clearly shown to be in sharp contrast with the
governing law or statute. The rationale for this rule
relates not only to the emergence of the multifarious
needs of a modern or modernizing society and the
establishment of diverse administrative agencies for
addressing and satisfying those needs it also relates to
accumulation of experience and growth of specialized
capabilities by the administrative agency charged with
implementing a particular statute.
 • Petitioner de Tan filed with the CFI of Manila a
MARIA NATIVIDAD verified petition for Mandamus seeking an order to
compel respondent-appellant to 1. Declare deceased
VDA. DE TAN VS. Lt. Tan Chiat Bee alias Tan Lian Lay, entitled to
VETERANS BACKPAY backpay rights, privileges, and prerogative under
COMMISSION R.A. No. 304, amended by R.A. No. 897 and 2. Give
due course to the claim of petitioner, as widow of
said veteran, by issuing to her the corresponding
Issue: backpay certificate of indebtedness. Respondent
• Whether or not the Petitioner failed to filed its answer ascertaining its defenses, but failed to
exhaust available administrative remedies.
move for dismissal of petition. Parties submitted a
stipulation of facts. (Important to note 12. Annex F —
Minutes of Resolution of VBPC regarding the opinion
of Secretary of Justice). Petition was granted and
ordered respondent to give the backpay petitioner’s
husband was entitled to as a member of a duly
recognized guerilla organization; hence, the instant
motion for reconsideration.
R.A. NO. 897,
AMENDING R.A. 304
Extending the Benefits of the Law to Members
of the Philippine Army and of Recognized
Guerrilla Forces and Officers of the Philippines
Scouts and by Allowing the Use of Certificates
of Indebtedness for the Purchase of Public
Lands and Government Properties, and for
Payment of Obligations Subsisting at the Time
of Approval of This Act.
• Sec. 1 — “Except as herein provided, the right of all
officers, employees, and persons under contract with
the Government of the Commonwealth of the
Philippines, including officers and enlisted men of the
Philippine Army and officers of the Philippine Scouts
given assimilated x x x and those of guerrilla forces
duly recognized by the Army of the United States x x
x”
 Stipulation of Facts
1. Petitioner is of legal age, widow x x x; respondent is a government instrumentality or agency, with offices in Manila,
Philippines, duly vested with authority to implement the provisions of the Backpay Law, otherwise known as R.A. No.
897, further amending R.A. No. 304;
2. x x x
3. United State—Chinese Volunteers in the Philippines is a guerrilla organization duly recognized by the Army of the
United States and forming part and parcel of the Philippine Army;
4. x x x
5. Secretary and Chief of Office Staff of Veterans Back Pay Commission sent a letter to General Vicente Lopez of the
United State-Chinese Volunteers in the Philippines apprising the latter that the Commission has reaffirmed its resolution
granting the back pay to alien members;
6. x x x
7. That after due liberation respondent revoked its previous stands and ruled that aliens are not entitled to back pay;
8. x x x
9. 12 Annex F — Minutes of the Resolution of the Back Pay Commission regarding the opinion of the Secretary of Justice;
10. x x x
11. 12 Annex H — Opinion No. 213, series of 1956 of the Secretary of Justice;
12. x x x

HELD:
No. Appeal and the contention of
Respondent-appellant is not meritorious.
Commission’s assertion is that Petitioner
should have first exhausted her
administrative remedies by appealing to the
President of the Philippines; and that her
failure to do so is a bar to her action in court.
Respondent, however, is in estoppel to
invoke this rule, considering that in its
resolution (Annex F) reiterating its obstinate
refusal to abide by the opinion of the
Secretary of Justice, who is the legal adviser
of the Executive Department.
Opinion No. 213, Series of 1956, of the Secretary of
Justice:
“Sec. 1 of R.A. No. 304, amended by R.A. No. 897,
otherwise known as the Back Pay Law, recognizes the
rights to the backpay of members of ‘guerilla forces duly
recognized by the Army of the United States. A perusal of
its provisions reveals nothing which may be construed to
mean that only Filipino citizens are entitled to back pay
thereunder x x x’
As regards, it seems clear that all the law requires is that
they be ‘duly recognized by the Army of the United
States.’ Sec. 1 of the Back Pay Law, also, enumerates
those who are not entitled to the benefits; recognized
guerrillas who were not Filipino citizens are not among
those expressly mentioned. Maxim Expressio Unius Est
Exclusio Alterius, I think, finds application here.
x x x”
 WHEN CONTEMPORANEOUS CONSTRUCTION
DISREGARDED.

• Construction of a statute is neither CONTROLLING nor BINDING upon the court

since the duty to interpret the law primarily belongs to the judiciary.

• Court may disregard contemporaneous construction when:

 
1. There is no ambiguity in the law;
2. Clearly erroneous;
3. There is strong reason to the contrary exists;
4. The court has previously given the statute a different interpretation.

Upon such instances, contemporaneous construction must be declared null and void.
 ERRONEOUS CONTEMPORANEOUS CONSTRUCTION DOES
NOT PRECLUDE CORRECTION NOR CREATE RIGHTS;
EXCEPTION.

• When there is a misapprehension of a law and was implemented erroneously, the error may be corrected WHEN TRUE
CONSTRUCTION IS ASCERTAINED.

• Doctrine of Estoppel does not preclude correction of erroneous construction by:

 
• Officer himself,
• His successor in offices,
• Court in an appropriate case.
 
• Rule:

  Erroneous contemporaneous construction creates no vested right on the part of those who relied upon and followed such interpretation.
 
o Because a vested right may not arise from a wrong interpretation by an administrative or executive officer, whose primary duty is to enforce the law, not to
construe it.
 ERRONEOUS CONTEMPORANEOUS CONSTRUCTION DOES
NOT PRECLUDE CORRECTION NOR CREATE RIGHTS;
EXCEPTION.

• Exception:

 Admits exception in the interest of justice and fair play (particularly true in tax cases).
 
• Interpretative Circulars addressed to internal revenue officers by Commissioner of Internal Revenue
are necessary because tax statues are not too plain and simple to understand.

o Thus, a taxpayer who relied upon such circular has faithfully complied with the obligation of paying the tax
required by it.