White vs Roughton
His need to concentrate upon finding the means for
Eugene M. Thirolf, Champaign, Ill., for plaintiffs-appellants.
James L. Capel, Jr., Champaign, Ill., Frederic M. Grosser, Asst. State's Atty.,
Urbana, Ill., for defendants-appellees.
Before CUMMINGS and BAUER, Circuit Judges, and McLAREN, District Judge.*
This appeal is from the denial of a preliminary injunction to prevent the
termination of general assistance grants1 to plaintiffs Leon White and Elester
Walker and to require defendants to provide general assistance to plaintiff
Beatrice Silagy. The actions of the defendants in administering township
general assistance grants are alleged to violate plaintiffs' procedural due
process rights under the Fourteenth Amendment.2For the reasons stated
below, the order of the district court denying a preliminary injunction is
reversed and remanded with directions.
Defendant C. Vaughn Roughton is supervisor of the town of the City of
Champaign Township. In this capacity he administers the general township
assistance program which provides locally collected taxes for distribution as
welfare to needy township residents. (T10--11);3Ill.Rev.Stat. ch. 23, § 6--1 et
seq.
Plaintiffs claim that defendant Roughton (1) operates the general assistance
welfare program without published standards for eligibility or the amount of
aid given; (2) terminates general assistance without giving the recipient
notice and a hearing prior to that termination; (3) denies applications for
general assistance welfare without giving the applicant notice and a hearing
after the denial of the application; (4) fails adequately to inform recipients
and applicants of their right to appeal. Roughton terminated the assistance
being received by plaintiffs White and Walker and denied the application for
assistance of plaintiff Silagy.
Defendant Wesley M. Schwengel is Chairman of the Champaign County
Board of Supervisors. He has assumed the responsibility of the County Board
in receiving appeals from decisions of the township supervisors granting or
denying general assistance (T18, 32); Ill.Rev.Stat., ch. 23, § 11--8. Plaintiffs
allege that Schwengel, once having assumed the responsibility for appeals,
has failed to establish a consistent and orderly appeal procedure.
Plaintiff White received general assistance in the form of 'food orders' for
five periods of one week each in 1974.4 He received this last allotment of
assistance on October 8, 1974 (T21, 22). Subsequent to that, his assistance
was terminated. He was given neither a written notice of his termination nor
any explanation as to the reason for the termination.5 White was not
informed of his right to appeal or provided with information as to how he
might appeal.
Plaintiff Walker was provided assistance in the form of a food order for $14
on August 23, 1974. Defendant Roughton also paid $65 for Walker's rent
from October 1 to November 1, 1974. Subsequent to that payment, Walker's
assistance was terminated without written notice and without informing him
of his right to appeal.6 (T28, 88).
Plaintiff Silagy applied for township general assistance on at least three
occasions in 1974. She was denied assistance but was never informed of the
reasons supporting the rejection of her application nor informed of her right
to appeal (T57--80).7
In Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970), the
Supreme Court held that procedural due process requires that welfare
recipients must be provided with adequate notice and an evidentiary hearing
before benefits may be discontinued. 397 U.S. at 260--68, 90 S.Ct. at 1016, 25
L.Ed.2d at 295. In Goldberg, the plaintiffs alleged that certain New York State
and New York City officials, who administered federal and state welfare
programs, had terminated or were about to terminate assistance without
prior notice and a hearing. 397 U.S. at 255--56, 90 S.Ct. at 1012, 25 L.Ed.2d at
289. In discussing the constitutional rights of welfare recipients, the Court
noted:
'. . . termination of aid pending resolution of a controversy over eligibility
may deprive an eligible recipient of the very means by which to live while he
waits. Since he lacks independent resources, his situation becomes
immediately desperate.
daily subsistence, in turn, adversely affects his ability to seek redress from
the welfare bureaucracy.' 397 U.S. at 264, 90 S.Ct. at 1018, 25 L.Ed.2d at 297.
The Court further reasoned that:
"The fundamental requisite of due process of law is the opportunity to be
heard.' . . . The hearing must be 'at a meaningful time and in a meaningful
manner.' . . . In the present context these principles require that a recipient
have timely and adequate notice detailing the reasons for a proposed
termination, and an effective opportunity to defend by confronting any
adverse witnesses and by presenting his own arguments and evidence orally.'
397 U.S. at 267--68, 90 S.Ct. at 1020, 25 L.Ed.2d at 299.
The Goldberg requirements have been applied in numerous cases similar to
the one now before the court. In Mothers' & Children's Rights Organization v.
Sterrett, 467 F.2d 797, 798 (7th Cir. 1972), this Court affirmed a permanent
injunction, restraining Indiana's Administrator of Public Welfare and Welfare
Board members from terminating or reducing Public Assistance Benefits
unless the recipients were given a prior hearing.
Similarly, in Brooks v. Center Township, 485 F.2d 383 (7th Cir. 1973), cert.
denied, 415 U.S. 911, 94 S.Ct. 1455, 39 L.Ed.2d 496 (1974), the plaintiff began
receiving rent and food assistance from the defendants in February 1969
pursuant to the Indiana 'poor relief' statute. Ind.Code § 12--2--1--1 et seq.
(1973). In May 1970, his rent and in February 1971 his food benefits were
terminated without prior notice or hearing or notice of his right to an
administrative appeal. Citing Goldberg, the Court held the termination to be
unconstitutional for failure to provide a pretermination hearing, an
opportunity for plaintiff to be heard and notice of the reasons for
termination. 485 F.2d 385, 386. Accord Freitag v. Carter, 489 F.2d 1377,
1383--84 (7th Cir. 1973). The Court specifically dispelled the notion that any
lesser due process standards applied to state as opposed to federal
programs:'The Goldberg v. Kelly case involved a federally assisted program,
not a completely state funded program. It is of no consequence
constitutionally that Indiana's 'township poor relief program . . . is not a
federally governed or directed program under the Social Security Act of 1935
or any other federal act of welfare or relief assistance' but is supported solely
by the state. Indiana is required by the Fourteenth Amendment to provide
due process in its laws.' 485 F.2d at 385.8
In Vargas v. Trainor, 508 F.2d 485 (7th Cir. 1974), cert. denied, 420 U.S. 1008,
95 S.Ct. 1454, 43 L.Ed.2d 767 (1975), the Court held that the Illinois
Department of Public Aid's notice procedures to recipients were inadequate
to pass the constitutional muster. The Department sent certain aged, blind
and disabled recipients a written notice indicating that their assistance would
be reduced 'because of changes in (their) needs or living arrangements . . ..'
508 F.2d at 487. The Court held that such notice was inadequate to satisfy
due process requirements because it failed to inform the recipients of the
specific reasons why their benefits were being reduced or terminated. The
Court noted:
'Government agencies do make mistakes. Yet there is a human tendency . . .
to assume that an action taken by a government agency in a pecuniary
transaction is correct.' 508 F.2d at 490.9
In addition, due process requires that welfare assistance be administered to
ensure fairness and freedom from arbitrary decision-making as to eligibility.
Federally subsidized public assistance is governed by statute and extensive
regulations. 42 U.S.C. §§ 301 et seq. 45 C.F.R. 205, 206. The Illinois Public Aid
Department maintains specific regulations governing procedures and
standards to determine eligibility. Cf. Ill.Rev.Stat., ch. 23, § 12--4.11; § 12--13;
Illinois Public Aid Department Manual For General Assistance. Defendant
Roughton is apparently not bound by the regulations of the Illinois Public Aid
Department. Ill.Rev.Stat., ch. 23, § 12--3. Certain basic eligibility
requirements, however, are provided in the General Assistance statute itself.
Ill.Rev.Stat., ch. 23, §§ 6--1 et seq. Defendant Roughton as administrator of
the general assistance program has the responsibility to administer the
program to ensure the fair and consistent application of eligibility
requirements. Fair and consistent application of such requirements requires
that Roughton establish written standards and regulations. At the hearing in
the district court on the preliminary injunction, defendant Roughton
admitted that he and his staff determine eligibility based upon their own
unwritten personal standards (T10). Such a procedure, vesting virtually
unfettered discretion in Roughton and his staff, is clearly violative of due
process. See Welfare Fighters Organization v. Center Township, 2 CCH
Pov.L.Rep. P18,964 (S.D.Ind. April 30, 1974), also reported at 8 Clearinghouse
Review 131 (June 1974); Holmes v. New York City Housing Authority, 398
F.2d 262, 265 (2d Cir. 1968); Hornsby v. Allen,326 F.2d 605, 610 (5th Cir.
1964); United States v. Atkins, 323 F.2d 733, 742 (5th Cir. 1963).
III. The district court erred by failing to consider the relevant evidence
presented at the hearing on the preliminary injunction. Rather than directing
its attention to the issue of whether plaintiffs' procedural due process rights
were violated, the court made an independent determination as to whether
plaintiffs were entitled to general assistance.10 Since defendant Roughton
admitted that his standards for granting relief were unwritten and arbitrary,
the district court clearly based its decision as to plaintiffs' eligibility on the
court's own personal standards (T107--109). The role of the district court in
this instance is not to determine plaintiffs' eligibility for general assistance
but rather it is to review the standards and actions of defendant Roughton to
insure that they pass the constitutional test. Hornsby v. Allen, supra at 612.
Apparently the preliminary injunction was denied specifically because the
district court did not believe that plaintiffs would prevail on the merits as to
their eligibility. See 11 Wright & Miller, Fed. Practice & Procedure, § 2948, at
431 (1973). At issue, however, was whether plaintiffs' procedural due
process rights were violated by the method by which they were denied
general assistance. Overwhelming evidence was presented--sufficient to
support a preliminary injunction--that plaintiffs would ultimately succeed on
the merits of this issue. Milsen Co. v. Southland Corp., 454 F.2d 363, 369 (7th
Cir. 1971); Henry v. Greenville Airport Comm'n, 284 F.2d 631, 633 (4th Cir.
1960); Clemons v. Board of Education, 228 F.2d 853, 857 (6th Cir.), cert.
denied, 350 U.S. 1006, 76 S.Ct. 651, 100 L.Ed. 868 (1956).
We cannot agree with the defendants that the hearing in the district court
provided plaintiffs with sufficient due process. The requirements of due
process include a determination of the issues according to articulated
standards. The lack of such standards in this case deprives any hearing,
whether before an agency or a court, of its meaning and value as an
opportunity for the plaintiffs to prove their qualifications for assistance.
Holmes v. New York City Housing Authority, supra, 398 F.2d at 265; Hornsby
v. Allen, supra, 326 F.2d at 610.
The district court's order is reversed as to plaintiffs White and Walker and
their claims are remanded to the district court with directions to enter a
preliminary injunction ordering the defendant Roughton to continue paying
general assistance benefits to plaintiffs White and Walker. As to plaintiff
Silagy, the denial of the preliminary injunction is reversed and her claim is
remanded to the district court to reconsider, in light of this opinion, the issue
of whether she was denied due process in her application for general
assistance.11
Because of the significant constitutional rights involved, we are confident
that Judge Wise will expedite this matter on his calendar. The district court
should focus upon the development of written standards for eligibility and
for the amount of general assistance which may be given. Further proper
notice, hearing and appeal mechanisms12 should be established.
Reversed and remanded with directions.13
* determine eligibility, part of the District Judge's reasoning regarding Walker
District Judge Richard W. McLaren of the Northern District of Illinois, sitting
by designation. This decision was completed before the death of Judge
McLaren. CH PER CURIAM
1Illinois Public Aid Code, Article VI General Assistance, Ill.Rev.Stat., ch. 23 §§
6--1 et seq
2The issue of class relief is not properly before this court for final resolution
because the district court has not yet made a determination as to whether a
class action may be maintained. Fed.R.Civ.P. 23
3'T' is used in this opinion to designate the transcript page numbers of the
hearing on the petition for preliminary injunction held on December 20, 1974
4Beginning on the following dates: 4--16--74; 9--5--74; 9--12--74; 9--23--74;
10--1--74
5At the hearing on the preliminary injunction Roughton testified that his
records did not show the reason for White's termination. Roughton
suggested, however, that White had failed to bring in a statement from his
doctor (T24--25)
6Roughton testified at the hearing on the preliminary injunction that Walker
was terminated because Roughton never received a statement from Walker's
doctor confirming that he was still disabled from a work injury (T28)
7Roughton testified that Silagy was denied general assistance in July 1974
because he and his staff could not understand her application and because
she received assistance elsewhere. On a subsequent occasion when Silagy
visited Roughton's office she was not given assistance. Roughton testified
that she did not ask for assistance and that she had $80 in her pocket (T29--
33)
8The General Assistance welfare grants are clearly state action under
Ill.Rev.Stat., ch. 23, §§ 6--1, et seq. Appellees argue that general assistance
grants are on a single grant basis for a specific period of time and as such
applicants and recipients do not have a sufficient interest to require that
procedural due process be afforded to them. The principles of Goldberg v.
Kelly are not, however, limited by the duration of the welfare grants. See
Pregent v. New Hampshire Dept. of Employment Sec., 361 F.Supp. 782, 793--
94 (D.N.H.1973), vacated and remanded on other grounds, 417 U.S. 903, 94
S.Ct. 2595, 41 L.Ed.2d 207 (1974). In any event, Article VI General Assistance
under the Public Aid Code is not limited to grants on a single grant basis:
' § 6--1 Eligibility Requirements
'Financial aid in meeting basic maintenance requirements for a livelihood
compatible with health and well-being, plus any necessary treatment, care
and supplies required because of illness or disability, shall be given under this
Article . . ..
' § 6--2 Amount of Aid
'The amount and nature of General Assistance for basic maintenance
requirements shall be determined in accordance with local budget standards.
Due regard shall be given to the requirements and the conditions existing in
each case, and to the income, money contributions and other support and
resources available, from whatever source. The grant shall be sufficient when
added to all other income, money contributions and support in excess of any
excluded income or resources, to provide the person with a livelihood
compatible with health and well-being.
9The court also stated:
'We are not unmindful of the state's interest in making welfare payments
only to those who are eligible to receive them and only in the proper
amounts. The state has every right to terminate or reduce benefits when
warranted by a change in a recipient's situation or discovery of an error of
fact. We hold only that in making these adjustments the state must observe
the requirements of due process.' 508 F.2d at 490.
10The District Judge stated at the hearing that: (1) plaintiff White was
receiving other aid, lived in a two-bedroom apartment by himself and had
not shown anything demanding immediate relief; (2) plaintiff Silagy '. . . looks
like a person that could go out and get a job most anytime she desired'; (3)
plaintiff Walker had moved from Champaign township to Urbana and that
from the Judge's own observation he looked as if he had recovered from a
hand injury (T107--109). Even if the district court were the proper forum to
was faulty. Ill.Rev.Stat. ch. 23, § 6--1.1 provides that if a person who is a
resident of the state moves from one governmental unit to another:
'. . . the governmental unit in which he last so resided shall be charged with
providing the necessary aid until the person has resided in the governmental
unit to which he has moved for a continuous period of 6 months.'
11The district court should determine what sort of procedures due process
requires be afforded to applicants. Such procedures might include requiring
written reasons for denial, applied under written standards of eligibility, as
well as requiring a mechanism for orderly appeal. See Alexander v.
Silverman, 356 F.Supp. 1179 (E.D.Wis.1973)
12The district court should eventually formulate any necessary injunctive
relief to assure that defendant Schwengel administers appeals in keeping
with the requirements of procedural due process
13The district court is directed to determine, according to Fed.R.Civ.P. 23,
whether the case can properly proceed as a class action
G.R. No. L-5612 October 31, 1953
SY MAN, doing business under the name and style of "United China Import
Trading", petitioner-appellee,
vs.
ALFREDO JACINTO, Commissioner of Customs, and MELECIO FABROS,
Collector of Customs for the Port of Manila, respondents-appellants.
This is an appeal by respondents Alfredo Jacinto, Commissioner of Customs
and Melecio Fabros, Collector of Customs for the Port of Manila (hereafter to
be referred to as Commissioner and Collector, respectively), from a decision
of the Court of First Instance of Manila, granting a petition for a writ
of certiorari, prohibition and mandamus against them. The appeal involves
only questions of law. The facts of the case are contained in a portion of the
decision appealed from, which we quote:
On January 2, 1951, the Collector of Customs for the Port of Manila ordered
the seizure of two shipments of textile and a number of sewing machines,
consigned to this petitioner.
On June 4, 1951, the Collector of Customs for the Port of Manila, after due
hearing, rendered a decision, the dispositive part of which reads as follows:
Wherefore, for all the foregoing, it is ordered and decreed that the articles
covered by Seizure Identification No. 1006 be, as they are hereby delivered
to the importer after payment of the necessary customs duty, sales tax and
other charges due thereon, in addition to a fine of One hundred fifty-five
pesos(P155) representing five (5) times the difference in duty of the printed
paper in sheets, except the sewing machines which are hereby declared
forfeited to the Government of the Republic of the Philippines to be sold at
public auction in conformity with law if found saleable, otherwise, to be
destroyed.
The Surveyor of the Port shall return the original of this decision showing
action taken.
On June 27, 1951, the herein petitioner (appellee) received a copy of the
aforesaid decision of the Collector of Customs for the Port of Manila.
On July 12, 1951, counsel for the petitioner (appellee) sent a letter to the
Collector of Customs for the Port of Manila, asking for the execution of the
decision, in view of the fact that it had become final and could no longer be
reviewed by the Commissioner of Customs after the lapse of fifteen days
from the date of notification thereof was given to the herein petitioner who
did not appeal from said decision to the Commissioner of Customs within the
aforesaid period of time.
On August 21, 1951, counsel for the petitioner sent another letter to the
Collector of Customs, reiterating the request contained in his letter of July
12, 1951, and urging that the goods which were found not to have been
imported in violation of law, be released to the petitioner under the terms
and conditions of the aforementioned decision of June 4, 1951.
On August 24, 1951, the Collector of Customs for the Port of Manila sent a
letter to petitioner's attorneys, informing them that their letter of July 12,
1951, was endorsed to the Commissioner of Customs on July 13, 1951,
"requesting information whether the merchandise covered by Seizure
Identification No. 1006 may now be delivered to the owner upon showing
that the decision has become final and executory after fifteen (15) days from
the receipt of a copy of the same by the claimant," to which no reply had
been received from the Commissioner of Customs. (pp. 64-66, rec.)
The petition of Sy Man above mentioned sought (1) to declare null and void
that portion of the Memorandum Order promulgated by the Insular Collector
of Customs dated August 18, 1947, which provides that as in protected cases,
decisions of the Collector of Customs in seizure cases, whether appealed or
not, are subject to review by the Insular Collector (now commissioner); that
such decisions and their supporting papers be submitted to his office, and
that pending action by him on such decisions, final disposal of the goods
involved shall not be made; and (2) to order the Collector to deliver to the
petitioner the shipment of textiles covered by Seizure Identification No. 1006
pursuant to its decision of June 4, 1951, claimed to be final and executory.
As already said, the trial court granted the petition and ordered the
Commissioner and the Collector to execute the decision of the latter dated
June 4, 1951, on the ground that said decision had already become final.
For the purposes of clarification, it should be stated that before the year
1947, the Bureau of Customs had one chief and one assistant chief, known
respectively as Insular Collector of Customs and Insular Deputy Collector of
Customs (section 1138, Revised Administrative Code).The Insular Collector
and the Insular Deputy Collector acted as the Collector of Customs and
Deputy Collector of Customs for the Port of Manila (section 1152, Revised
Administrative Code). Pursuant to Republic Act No. 51, authorizing the Chief
Executive to reorganize the different executive departments, bureaus and
offices, the President issued Executive Order No. 94 signed on October 4,
1947.
Under sections 51 and 52 of said order, the designation of Insular Collector of
Customs, and the position of Deputy Collector of Customs was changed to
that of Collector of Customs for the Port of Manila.
It is the contention of the applicants that the Commissioner as head of the
Bureau of Customs and the chief executive and administrative officer thereof
under section 550, Revised Administrative Code, and also by virtue of section
1152 of the same Code has supervision and control over the Collector, and
that by reason of said supervision and control, he may motu propio review
and revise decisions of the Collector in seizure cases even when not appealed
by the importer. Under that theory, the Commissioner of Customs
promulgated his Memorandum Order of August 18, 1947. For reference, we
reproduce said order.
DEPARTMENT OF FINANCE
BUREAU OF CUSTOMS
MANILA
August 18,1947
MEMORANDUM ORDER
To all Collectors of Customs at Sub-Ports:
It has been observed that in seizure cases some Collectors of Customs merely
submit to this Office reports of their seizures and the subsequent final
disposition they made of the articles seized. They do not transmit the records
of the proceedings and their decisions thereon in due form, as required by
Sections 1380 and 1381 of the Revised Administrative Code.
As in protest cases, decisions of Collectors of Customs in seizure cases,
whether appealed or not, are subject to review by the Insular Collector. To
this end, it is necessary that such decisions and their supporting papers be
submitted to this Office. Pending action by the Insular Collector on such
decisions, final disposition of the goods involved shall not be made, except
upon previous authority from this Office, or except in cases where such
goods are perishable in nature or liable to deterioration in which case the
same may be disposed of Section 1399 of the Revised Administrative Code.
Where the articles seized are subject to forfeiture under section 1363 of the
Revised Administrative Code and a fine is imposed in lieu of forfeiture under
Section 1365 of the same code, the decision thereon in due form and all the
supporting papers shall be transmitted to this office for confirmation or such
other action as may be deemed proper. Pending receipt of such confirmation
the decision shall not be given effect.
All concerned shall be guided accordingly.
ALFREDO DE LEON
Insular Collector of Customs
The petitioner-appellee, however, equally claims that when a decision of the
Collector in a seizure case is not appealed by the importer to the
Commissioner within 15 days as provided for in Section 1380, Revised
Administrative Code, then said decision becomes final not only as to said
importer but as to the Government as well, so that thereafter nothing
remains to be done except the execution of the decision of the Collector,
that is to say, the release of the goods seized, if not forfeited to the
Government and the payment of the amounts mentioned and ordered in the
decision.
We are given the impression and we realize that this is the first time that the
Courts have been called upon to interpret the law on this point and to
determine whether or not this supposed power of revision by the
Commissioner of unappealed decisions of the Collector in seizure cases, is
supported by law, and for this reason we have exerted and exercised extra
effort and care in examining the law on the subject.
As we understand it, when merchandise or goods are imported through any
of the ports of the Philippines, under normal circumstances, said goods are
assessed for purposes of payment of custom duties, fees and other money
charges. If the importer is satisfied with the assessment he pays the amount
assessed and withdraws the goods. Failure to protest renders the action of
the Collector conclusive against the importer. (See sections 1370 and 1371,
Revised Administrative Code). If dissatisfied he pays the amount of the
assessment anyhow and then files a protest under section 1372, Revised
Administrative Code, and the Collector re-examines the matter thus
presented. (Section 1379, Revised Administrative Code.)
However, when property imported is subject to forfeiture under the customs
laws (section 1363, Revised Administrative Code), the goods are seized, a
warrant for their detention is issued, the owner or his agent is notified in
writing and after giving a hearing with reference to the offense or
delinquency which gave rise to the seizure, the Collector in writing makes a
declaration of forfeiture or fixes the amount of the fine to be imposed or
takes such other appropriate steps he may deem proper. (Sections 1374,
1375, 1379 [paragraph 2], Revised Administrative Code.)
Both under protest and seizure cases the person aggrieved by the decision of
the Collector may appeal to the Commissioner within 15 days. (Section 1380,
Revised Administrative Code.) Because of its importance to this case, and for
purposes of reference, we are reproducing said section.
SEC. 1380. Review by Commissioner. — The person aggrieved by the decision
of the collector of customs in any matter presented upon protest or by his
action in any case of seizure may, within fifteen days after notification in
writing by the collector of his action or decision, give written notice to the
collector signifying his desire to have the matter reviewed by the
Commissioner.
Thereupon, the collector of customs shall forthwith transmit all the papers in
the cause to the Commissioner, who shall approve, modify, or reverse the
action of his subordinate and shall take such steps and make such order or
orders as may be necessary to give effect to his decision.
If the person aggrieved by the decision of the Collector in a seizure case does
not make such appeal, the decision evidently becomes final, at least as to
him. That was the reason why petitioner-appellee, in the belief that because
he failed or did not choose to appeal from the decision of June 4, 1951, the
same had become final, asked the court that the same be executed, that is to
say, that he be allowed to pay the amounts fixed in the decision and that the
merchandise be released, with the exception of the sewing machines which
were declared subject to forfeiture. The Commissioner, however, as already
stated, believes that the decision of the Collector in a seizure case the
unappealed does not become final as against the Government as long as it
has not been reviewed and acted upon by him. He does not state the period
if any within which he may or has to make such revision. In other words, the
appellants' claim seems to be that he (the Commissioner) may hold without
action an appealed seizure case, the decision of which is already final as to
the importer, indefinitely, for months if not for years, as for instance, when
there are too may such cases to study and decide, or there are other matters
that have preference to this attention and action, a period of time without
limit.
From the standpoint of the importer, such a rule or theory is decidedly
unsatisfactory and even unjust, if not oppressive. He is willing to abide by the
decision of the Collector; he wants to pay the amounts fixed and stated in
the decision, including the fines, and desires to get the goods released so as
to be able to dispose of them. The Commissioner, however, relying
exclusively on his power of supervision and control, as head of the Bureau of
Customs, over Collectors of Customs as his subordinates in that bureau, and
presumably on his Memorandum Order of August 18, 1947, contends that
the seizure case involving goods seized way back on January 2, 1951, and
decided by the Collector on June 4,1 951, tho unappealed by the importer
and thereby binding on him, is still unfinished business as far as the
Government is concerned, because he(the Commissioner) has not yet gotten
around to act upon it. For that matter, we understand that up to the present,
the latter part of 1953, the Commissioner has not yet taken any action,
approving, reversing or modifying the decision of the Collector of Customs.
As we have already had occasion to pay, said rule or procedure claimed for
the Government would appear to be unsatisfactory, intolerable if not
oppressive to importers.
As regards the Memorandum Order of August 18, 1947, by the Insular
Collector of Customs to Collectors of Customs, we are afraid that appellants
cannot find support and comfort therein. We are given to understand by the
parties or at least appellants do not deny appellee's assertion that said
memorandum order was never approved by the department head and was
never published in the Official Gazette. Section 551 of the Revised
Administrative Code provides that every chief of bureau shall prescribe forms
and make regulations or general orders not inconsistent with law to carry
into full effect the laws relating to matters within the bureau's jurisdiction.
But to become effective said forms and regulations must be approved by the
Department head and published in the Official Gazette or otherwise publicly
promulgated. Because of this failure of approval by the department head and
of publication, the memorandum order of August 18, 1947 has therefore no
legal effect. Moreover, a form or regulation promulgated by a Bureau Chief
must not be inconsistent with law. Therefore, if the law does not give the
Commissioner the power to review and revise unappealed decisions of the
Collector of Customs in seizure cases, then the memorandum order even if
duly approved and published in the Official Gazette, would equally have no
effect for being inconsistent with law.
Let us now see if there is any law giving authority to the Commissioner of
Customs to review and revise unappealed decisions in seizure cases. In cases
involving assessment of duties, even when the importer fails to protest the
decision of the Collector of Customs, the Commissioner may order a
reliquidation if he believes that the decision of the Collector was erroneous
and unfavorable to the Government; and the Department Head in his turn if
he believes that the decision of the Commissioner in any unprotested case of
assessment of duties is erroneous and unfavorable to the Government, may
require the Commissioner to order a reliquidation or he may direct the
Commissioner to certify the case to the Court of First Instance of Manila. We
are reproducing said section 1393..
SEC. 1393. Supervisory authority of Commissioner and of Department Head in
certain cases. — If in any case involving the assessment of duties the
importer shall fail to protest the decision of the collector of customs and the
Commissioner shall be of the opinion that the decision was erroneous and
unfavorable to the Government, the latter may order a reliquidation; and if
the decision of the Commissioner in any unprotested case should, in the
opinion of the Department Head, be erroneous and unfavorable to the
Government, the Department Head may require the Commissioner to order
a reliquidation or he may, if in his opinion the public interest requires, direct
the Commissioner to certify the cause to the Court of First Instance of
Manila, in the manner provided in section one thousand three hundred and
eighty-six hereof, there to be reviewed by the court as other customs cases
removed thereto.
Except as in the preceding paragraph provided, the supervisory authority of
the Department Head over the Bureau of Customs shall not extend to the
administrative revisal of the decisions of the Commissioner in matters
removable into court.
It will be noticed that the section is entitled "supervisory authority of the
Commissioner and of the Department Head in certain cases." We find no
similar legal provision in seizure cases. The logical inference is that the
lawmakers did not deem it necessary or advisable to provide for this
supervisory authority or power of revision by the Commissioner and the
Department Head on unappealed seizure cases; and it is highly possible that
up to and until 1947, when the memorandum order of August 18th of that
year was issued, it was not the practice of the Bureau of Customs to have
unappealed seizure cases sent up by Collectors to the Commissioner's office
for review and revision. This we may gather from the memorandum order
itself, where the Commissioner observes that in seizure cases some
collectors of customs merely submit to him their reports of their seizure and
the subsequent final disposition thereof without transmitting the records of
their proceedings, and he therein asserts the right of the Commissioner of
Customs to review decisions of Collector of Customs in seizure cases though
unappealed. If that right and that practice had existed from the beginning, it
is not likely that Collectors would disregard and ignore it, to the extent that it
was necessary to remind them of it by means of a memorandum order.
Moreover, under section 1380 of the Revised Administrative Code above
reproduced, it would seem that in a seizure case, the Collector transmits all
the papers in the cause to the Commissioner only when and after the
importer notifies him in writing signifying his desire to have the matter
reviewed by the Commissioner. The section does not say that without the
notice of appeal, the Collector is called upon to submit the papers of the case
to the Commissioner. If this be true, then legally, a case of seizure
unappealed ends right in the office of the Collector, with-out prejudice of
course to the Collector subsequently making a report of his action to the
Commissioner. Furthermore, section 1388 of the Revised Administrative
Code provides thus:
SEC. 1388. Settlement of cause by payment of fine or redemption of forfeited
property. — If, in any seizure case, the owner or agent shall, while the cause
is yet before the collector of the district of seizure, pay to such collector the
fine imposed by him or, in case of forfeiture, shall pay the appraised value of
the property, or if, after removal of the cause, he shall pay to the
Commissioner the amount of the fine as finally determined by him, or, in
case of forfeiture, shall pay the appraised value of the property, such
property shall be forthwith surrendered, and all liability which may or might
attach to the property by virtue of the offense which was the occasion of the
seizure and all liability which might have been incurred under any bond given
by the owner or agent in respect to such property shall thereupon be
deemed to be discharged.
Redemption of forfeited property shall not be allowed in any case where the
importation is absolutely prohibited or where the surrender of the property
to the person offering to redeem the same would be contrary to law.
If under the above provisions, in a seizure case the owner or agent may,
while the cause is yet before the collector, pay the fine imposed, or in case of
forfeiture, pay the appraised value of the property, and thereafter such
properties shall be surrendered and all liability which may attach to said
property by virtue of the offense causing the seizure is to be deemed
discharged, the conclusion to be drawn is that it is within the power and right
of an importer, owner or agent to end the case in the office of the Collector,
thereby precluding any intervention by the Commissioner in the way of
reviewing and revising the decision of the Collector. Again, under section
1389 immediately following which reads —
SEC. 1389. Right of protest in such cases. — Where payment is made or
redemption effected as allowed under the preceding section, the party
making payment or effecting the redemption may, if he desires to test the
validity of the proceedings, make formal protest at the time of making such
payment or affecting such redemption, or within fifteen days thereafter, and
make claim for the repayment of the whole or any part of the sum so paid by
him, whereupon the proceedings shall take the same course as in ordinary
cases of protest against customs duties and charges generally.
the importer or owner of goods seized, after payment is made or redemption
effected, is allowed if he desires to test the validity or correctness of the
decision of the Collector, to appeal the same to the Commissioner of
Customs presumably, to decrease the amount of his liability or annul the
seizure altogether and have all the amounts paid by him refunded. The
inference follows that by making payment and redeeming the property
seized under the decision of the Collector of Customs, the owner may
terminate the case right there, altho notwithstanding his payment he still has
the right to have the case elevated to the Office of the Commissioner of
Customs. It would seem that the elevation of the case and the transmittal of
the papers thereof to the Commissioner lies within the owner's exclusive
power and discretion. This argues against the pre-tended power of the
Commissioner of automatic review and revision of decisions of Collectors in
unappealed seizure cases.
It is argued that if this power of review and revision by the Commissioner of
unappealed seizure cases is not conceded, then in cases where the Collector
in his decision commits a blunder prejudicial to the interests of the
Government, or renders a decision through fraud or in collusion with the
importer, the Government cannot protect itself. The argument is not without
merit; but we must bear in mind that the law is promulgated to operate on
ordinary, common, routine cases. The rule is and the law presumes that in
seizure cases Collector of Customs act honestly and correctly and as
Government officials, always with an eye to the protection of the interests of
the Government employing them. If mistakes are committed at all more
often than not they are in favor of the Government and not against it, and
that is the reason why when the importer feels aggrieved by their decision,
he is given every chance and facility to protest the decision and appeal to the
Commissioner. Cases of erroneous decisions against the interest of the
Government of decisions rendered in collusion and connivance with
importers are the exception. To protect the Government in such exceptional
cases, we find that in every seizure case, section 1378 of the Revised
Administrative Code requires the Collector to immediately notify the
Commissioner and the Auditor General. It maybe that this requirement has
for its main purpose the recording of and accounting for the articles seized so
that in case of confiscation the Commissioner and the Auditor General will
know what articles have become government property. But the notice will
also inform the Commissioner and the Auditor General of the seizure. If the
seizure is important or unusual, the Commissioner may, if he so desires,
order the Collector as his subordinate to withhold action on the seizure, or
hold in abeyance, within a reasonable time, the promulgation of his decision
until after he had conferred with the Commissioner or the latter had studied
the case and given suggestions. At that stage of the proceedings before
definite action is taken by the Collector, and a decision rendered by him, it
would seem that any action by him as a subordinate is still subject to the
supervisory authority and control of the Commissioner as his Chief, and the
latter may still influence and direct the Collector's action if he finds occasion
for doing so.
But if the Government deems it necessary to provide for review and revision
by the Commissioner or even by the Department Head of the decisions of the
Collector of Customs in unappealed seizure cases, the Legislature may be
requested to insert a section in the Revised Administrative Code similar to
Section 1393 which applies to unprotested cases of assessment duties. The
defect in said section however is that it does not fix the period within which
the automatic review and revision or reliquidation to be ordered by the
Commission and the Secretary of Finance must be effected. This defect
should be remedied.
In conclusion, we find and hold that under the present law governing the
Bureau of Customs, the decision of the Collector of Customs in a seizure case
if not protested and appealed by the importer to the Commissioner of
Customs on time, becomes final not only as to him but against the
Government as well, and neither the Commissioner nor the Department
Head has the power to review, revise or modify such unappealed decision.
We also find and hold that the memorandum order of the Insular Collector of
Customs of August 18, 1947, is void and of no effect, not only because it has
not been duly approved by the Department Head and duly published as
required by section 551 of the Revised Administrative Code but also because
it is inconsistent with law. For the foregoing reasons, the decision appealed
from is hereby affirmed. No pronouncement as to costs.
G.R. No. L-12426 February 16, 1959
PHILIPPINE LAWYER'S ASSOCIATION, petitioner,
vs.
CELEDONIO AGRAVA, in his capacity as Director of the Philippines Patent
Office, respondent.
MONTEMAYOR, J.:
This is the petition filed by the Philippine Lawyer's Association for prohibition
and injunction against Celedonio Agrava, in his capacity as Director of the
Philippines Patent Office.
On may 27, 1957, respondent Director issued a circular announcing that he
had scheduled for June 27, 1957 an examination for the purpose of
determining who are qualified to practice as patent attorneys before the
Philippines Patent Office, the said examination to cover patent law and
jurisprudence and the rules of practice before said office. According to the
circular, members of the Philippine Bar, engineers and other persons with
sufficient scientific and technical training are qualified to take the said
examination. It would appear that heretofore, respondent Director has been
holding similar examinations.
It is the contention of the petitioner Philippine Lawyer's Association that one
who has passed the bar examinations and is licensed by the Supreme Court
to practice law in the Philippines and who is in good standing, is duly
qualified to practice before the Philippines Patent Office, and that
consequently, the cat of the respondent Director requiring members of the
Philippine Bar in good standing to take and pass an examination given by the
Patent Office as a condition precedent to their being allowed to practice
before said office, such as representing applicants in the preparation and
prosecution of applications for patent, is in excess of his jurisdiction and is in
violation of the law.
In his answer, respondent Director, through the Solicitor General, maintains
that the prosecution of patent cases "does not involve entirely or purely the
practice of law but includes the application of scientific and technical
knowledge and training, so much so that, as a matter of actual practice, the
prosecution of patent cases may be handled not only by lawyers, but also
engineers and other persons with sufficient scientific and technical training
who pass the prescribed examinations as given by the Patent Office; . . . that
the Rules of Court do not prohibit the Patent Office, or any other quasi-
judicial body from requiring further condition or qualification from those
who would wish to handle cases before the Patent Office which, as stated in
the preceding paragraph, requires more of an application of scientific and
technical knowledge than the mere application of provisions of law; . . . that
the action taken by the respondent is in accordance with Republic Act No.
165, otherwise known as the Patent Law of the Philippines, which similar to
the United States Patent Law, in accordance with which the United States
Patent Office has also prescribed a similar examination as that prescribed by
respondent. . . .
Respondent further contends that just as the Patent law of the United States
of America authorizes the Commissioner of Patents to prescribe
examinations to determine as to who practice before the United States
Patent Office, the respondent, is similarly authorized to do so by our Patent
Law, Republic Act No. 165.
Although as already stated, the Director of Patents, in the past, would appear
to have been holding tests or examinations the passing of which was
imposed as a required qualification to practice before the Patent Office, to
our knowledge, this is the first time that the right of the Director of Patents
to do so, specially as regards members of the bar, has been questioned
formally, or otherwise put in issue. And we have given it careful thought and
consideration.
The Supreme Court has the exclusive and constitutional power with respect
to admission to the practice of law in the Philippines1 and to any member of
the Philippine Bar in good standing may practice law anywhere and before
any entity, whether judicial or quasi-judicial or administrative, in the
Philippines. Naturally, the question arises as to whether or not appearance
before the patent Office and the preparation and the prosecution of patent
applications, etc., constitutes or is included in the practice of law.
The practice of law is not limited to the conduct of cases or litigation in court;
it embraces the preparation of pleadings and other papers incident to actions
and social proceedings, the management of such actions and proceedings on
behalf of clients before judges and courts, and in addition, conveying. In
general, all advice to clients, and all action taken for them in
matters connected with the law corporation services, assessment and
condemnation services contemplating an appearance before a judicial body,
the foreclosure of a mortgage, enforcement of a creditor's claim in
bankruptcy and insolvency proceedings, and conducting proceedings in
attachment, and in matters of estate and guardianship have been held to
constitute law practice as do the preparation and drafting of legal
instruments, where the work done involves the determination by the trained
legal mind of the legal effect of facts and conditions. (5 Am. Jur. p. 262, 263).
(Emphasis supplied).
Practice of law under modern conditions consists in no small part of work
performed outside of any court and having no immediate relation to
proceedings in court. It embraces conveyancing, the giving of legal advice on
a large variety of subjects, and the preparation and execution of legal
instruments covering an extensive field of business and trust relations and
other affairs. Although these transactions may have no direct connection with
court proceedings, they are always subject to become involved in litigation.
They require in many aspects a high degree of legal skill, a wide experience
with men and affairs, and great capacity for adaptation to difficult and
complex situations. These customary functions of an attorney or counselor at
law bear an intimate relation to the administration of justice by the courts.
No valid distinction, so far as concerns the question set forth in the order,
can be drawn between that part which involves advice and drafting of
instruments in his office. It is of importance to the welfare of the public that
these manifold customary functions be performed by persons possessed of
adequate learning and skill, of sound moral character, and acting at all times
under the heavy trust obligations to clients which rests upon all attorneys.
(Moran, Comments on the Rules of Court, Vol. 3 (1953 ed.), p. 665-666, citing
In re Opinion of the Justices (Mass.), 194 N.E. 313, quoted in Rhode Is. Bar
Assoc. vs. Automobile Service Assoc. (R. I. ) 179 A. 139, 144). (Emphasis ours).
In our opinion, the practice of law includes such appearance before the
Patent Office, the representation of applicants, oppositors, and other
persons, and the prosecution of their applications for patent, their
oppositions thereto, or the enforcement of their rights in patent cases. In the
first place, although the transaction of business in the Patent Office involves
the use and application of technical and scientific knowledge and training,
still, all such business has to be rendered in accordance with the Patent Law,
as well as other laws, including the Rules and Regulations promulgated by
the Patent Office in accordance with law. Not only this, but practice before
the Patent Office involves the interpretation and application of other laws
and legal principles, as well as the existence of facts to be established in
accordance with the law of evidence and procedure. For instance: Section 8
of our Patent Law provides that an invention shall not be patentable if it is
contrary to public order or morals, or to public health or welfare. Section 9
says that an invention shall not be considered new or patentable if it was
known or used by others in the Philippines before the invention thereof by
the inventor named in any printed publication in the Philippines or any
foreign country more than one year before the application for a patent
therefor, or if it had been in public use or on sale in the Philippines for more
than one year before the application for the patent therefor. Section 10
provides that the right to patent belongs to the true and actual inventor, his
heirs, legal representatives or assigns. Section 25 and 26 refer to connection
of any mistake in a patent. Section 28 enumerates the grounds for
cancellation of a patent; that although any person may apply for such
cancellation, under Section 29, the Solicitor General is authorized to petition
for the cancellation of a patent. Section 30 mentions the requirements of a
petition for cancellation. Section 31 and 32 provide for a notice of hearing of
the petition for cancellation of the patent by the Director of Patents in case
the said cancellation is warranted. Under Section 34, at any time after the
expiration of three years from the day the patent was granted, any person
patent on several grounds, such as, if the patented invention is not being
worked in the Philippines on a commercial scale, or if the demand for the
patented article in the Philippines on a commercial scale, or if the demand
for the patented article in the Philippines is not being met to an adequate
extent and reasonable terms, or if by reason of the patentee's refusal to
grant a license on reasonable terms or by reason of the condition attached
by him to the license, purchase or use of the patented article or working of
the patented process or machine of production, the establishment of a new
trade or industry in the Philippines is prevented; or if the patent or invention
relates to food or medicine or is necessary to public health or public safety.
All these things involve the applications of laws, legal principles, practice and
procedure. They call for legal knowledge, training and experience for which a
member of the bar has been prepared.
In support of the proposition that much of the business and many of the act,
orders and decisions of the Patent Director involve questions of law or a
reasonable and correct evaluation of facts, the very Patent Law, Republic Act
No. 165, Section 61, provides that:
. . . . The applicant for a patent or for the registration of a design, any party to
a proceeding to cancel a patent or to obtain a compulsory license, and any
party to any other proceeding in the Office may appeal to the Supreme Court
from any final order or decision of the director.
In other words, the appeal is taken to this Tribunal. If the transaction of
business in the Patent Office and the acts, orders and decisions of the Patent
Director involved exclusively or mostly technical and scientific knowledge
and training, then logically, the appeal should be taken not to a court or
judicial body, but rather to a board of scientists, engineers or technical men,
which is not the case.
Another aspect of the question involves the consideration of the nature of
the functions and acts of the Head of the Patent Office.
. . . . The Commissioner, in issuing or withholding patents, in reissues,
interferences, and extensions, exercises quasi-judicial functions. Patents are
public records, and it is the duty of the Commissioner to give authenticated
copies to any person, on payment of the legal fees. (40 Am. Jur. 537).
(Emphasis supplied).
. . . . The Commissioner has the only original initiatory jurisdiction that exists
up to the granting and delivering of a patent, and it is his duty to decide
whether the patent is new and whether it is the proper subject of a patent;
and his action in awarding or refusing a patent is a judicial function. In
passing on an application the commissioner should decide not only questions
of law, but also questions of fact, as whether there has been a prior public
use or sale of the article invented. . . . (60 C.J.S. 460). (Emphasis supplied).
The Director of Patents, exercising as he does judicial or quasi-judicial
functions, it is reasonable to hold that a member of the bar, because of his
legal knowledge and training, should be allowed to practice before the
Patent Office, without further examination or other qualification. Of course,
the Director of Patents, if he deems it advisable or necessary, may require
that members of the bar practising before him enlist the assistance of
technical men and scientist in the preparation of papers and documents,
such as, the drawing or technical description of an invention or machine
sought to be patented, in the same way that a lawyer filing an application for
the registration of a parcel of land on behalf of his clients, is required to
submit a plan and technical description of said land, prepared by a licensed
surveyor.
But respondent Director claims that he is expressly authorized by the law to
require persons desiring to practice or to do business before him to submit
an examination, even if they are already members of the bar. He contends
that our Patent Law, Republic Act No. 165, is patterned after the United
States Patent Law; and of the United States Patent Office in Patent Cases
prescribes an examination similar to that which he (respondent) has
prescribed and scheduled. He invites our attention to the following
provisions of said Rules of Practice:
Registration of attorneys and agents. — A register of an attorneys and a
register agents are kept in the Patent Office on which are entered the names
of all persons recognized as entitled to represent applicants before the
Patent Office in the preparation and prosecution of applicants for patent.
Registration in the Patent Office under the provisions of these rules shall only
entitle the person registered to practice before the Patent Office.
(a) Attorney at law. — Any attorney at law in good standing admitted to
practice before any United States Court or the highest court of any State or
Territory of the United States who fulfills the requirements and complied
with the provisions of these rules may be admitted to practice before the
Patent Office and have his name entered on the register of attorneys.
xxx xxx xxx
(c) Requirement for registration. — No person will be admitted to practice
and register unless he shall apply to the Commissioner of Patents in writing
on a prescribed form supplied by the Commissioner and furnish all requested
information and material; and shall establish to the satisfaction of the
Commissioner that he is of good moral character and of good repute and
possessed of the legal and scientific and technical qualifications necessary to
enable him to render applicants for patent valuable service, and is otherwise
competent to advise and assist him in the presentation and prosecution of
their application before the Patent Office. In order that the Commissioner
may determine whether a person seeking to have his name placed upon
either of the registers has the qualifications specified, satisfactory proof of
good moral character and repute, and of sufficient basic training in scientific
and technical matters must be submitted and an examination which is held
from time to time must be taken and passed. The taking of an examination
may be waived in the case of any person who has served for three years in
the examining corps of the Patent Office.
Respondent states that the promulgation of the Rules of Practice of the
United States Patent Office in Patent Cases is authorized by the United States
Patent Law itself, which reads as follows:
The Commissioner of Patents, subject to the approval of the Secretary of
Commerce may prescribe rules and regulations governing the recognition of
agents, attorneys, or other persons representing applicants or other
parties before his office, and may require of such persons, agents,
or attorneys, before being recognized as representatives of applicants or
other persons, that they shall show they are of good moral character and in
good repute, are possessed of the necessary qualifications to enable them to
render to applicants or other persons valuable service, and are likewise to
competent to advise and assist applicants or other persons in the
presentation or prosecution of their applications or other business before the
Office. The Commissioner of Patents may, after notice and opportunity for a
hearing, suspend or exclude, either generally or in any particular case from
further practice before his office any person, agent or attorney shown to be
incompetent or disreputable, or guilty of gross misconduct, or who refuses to
comply with the said rules and regulations, or who shall, with intent to
defraud in any matter, deceive, mislead, or threaten any applicant or
prospective applicant, or other person having immediate or prospective
applicant, or other person having immediate or prospective business before
the office, by word, circular, letter, or by advertising. The reasons for any
such suspension or exclusion shall be duly recorded. The action of the
Commissioner may be reviewed upon the petition of the person so refused
recognition or so suspended by the district court of the United States for the
District of Columbia under such conditions and upon such proceedings as the
said court may by its rules determine. (Emphasis supplied)
Respondent Director concludes that Section 78 of Republic Act No. 165 being
similar to the provisions of law just reproduced, then he is authorized to
prescribe the rules and regulations requiring that persons desiring to practice
before him should submit to and pass an examination. We reproduce said
Section 78, Republic Act No. 165, for purposes of comparison:
SEC. 78. Rules and regulations. — The Director subject to the approval of the
Secretary of Justice, shall promulgate the necessary rules and regulations,
not inconsistent with law, for the conduct of all business in the Patent Office.
The above provisions of Section 78 certainly and by far, are different from
the provisions of the United States Patent Law as regards authority to hold
examinations to determine the qualifications of those allowed to practice
before the Patent Office. While the U.S. Patent Law authorizes the
Commissioner of Patents to require attorneys to show that they possess the
necessary qualifications and competence to render valuable service to and
advise and assist their clients in patent cases, which showing may take the
form of a test or examination to be held by the Commissioner, our Patent
Law, Section 78, is silent on this important point. Our attention has not been
called to any express provision of our Patent Law, giving such authority to
determine the qualifications of persons allowed to practice before the Patent
Office.
Section 551 of the Revised Administrative Code authorizes every chief of
bureau to prescribe forms and make regulations or general orders not
inconsistent with law, to secure the harmonious and efficient administration
of his branch of the service and to carry into full effect the laws relating to
matters within the jurisdiction of his bureau. Section 608 of Republic Act
1937, known as the Tariff and Customs Code of the Philippines, provides that
the Commissioner of Customs shall, subject to the approval of the
Department Head, makes all rules and regulations necessary to enforce the
provisions of said code. Section 338 of the National Internal Revenue Code,
Commonwealth Act No. 466 as amended, states that the Secretary of
Finance, upon recommendation of the Collector of Internal Revenue, shall
promulgate all needful rules and regulations for the effective enforcement of
the provisions of the code. We understand that rules and regulations have
been promulgated not only for the Bureau of Customs and Internal Revenue,
but also for other bureaus of the Government, to govern the transaction of
business in and to enforce the law for said bureaus.
Were we to allow the Patent Office, in the absence of an express and clear
provision of law giving the necessary sanction, to require lawyers to submit
to and pass on examination prescribed by it before they are allowed to
practice before said Patent Office, then there would be no reason why other
bureaus specially the Bureau of Internal Revenue and Customs, where the
business in the same area are more or less complicated, such as the
presentation of books of accounts, balance sheets, etc., assessments
exemptions, depreciation, these as regards the Bureau of Internal Revenue,
and the classification of goods, imposition of customs duties, seizures,
confiscation, etc., as regards the Bureau of Customs, may not also require
that any lawyer practising before them or otherwise transacting business
with them on behalf of clients, shall first pass an examination to qualify.
In conclusion, we hold that under the present law, members of the Philippine
Bar authorized by this Tribunal to practice law, and in good standing, may
practice their profession before the Patent Office, for the reason that much
of the business in said office involves the interpretation and determination of
the scope and application of the Patent Law and other laws applicable, as
well as the presentation of evidence to establish facts involved; that part of
the functions of the Patent director are judicial or quasi-judicial, so much so
that appeals from his orders and decisions are, under the law, taken to the
Supreme Court.
For the foregoing reasons, the petition for prohibition is granted and the
respondent Director is hereby prohibited from requiring members of the
Philippine Bar to submit to an examination or tests and pass the same before
being permitted to appear and practice before the Patent Office. No costs.
G.R. No. L-32166 October 18, 1977
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellant,
vs.
HON. MAXIMO A. MACEREN CFI, Sta. Cruz, Laguna, JOSE BUENAVENTURA,
GODOFREDO REYES, BENJAMIN REYES, NAZARIO AQUINO and CARLO DEL
ROSARIO, accused-appellees.
AQUINO, J.:
This is a case involving the validity of a 1967 regulation, penalizing electro
fishing in fresh water fisheries, promulgated by the Secretary of Agriculture
and Natural Resources and the Commissioner of Fisheries under the old
Fisheries Law and the law creating the Fisheries Commission.
On March 7, 1969 Jose Buenaventura, Godofredo Reyes, Benjamin Reyes,
Nazario Aquino and Carlito del Rosario were charged by a Constabulary
investigator in the municipal court of Sta. Cruz, Laguna with having violated
Fisheries Administrative Order No. 84-1.
It was alleged in the complaint that the five accused in the morning of March
1, 1969 resorted to electro fishing in the waters of Barrio San Pablo Norte,
Sta. Cruz by "using their own motor banca, equipped with motor; with a
generator colored green with attached dynamo colored gray or somewhat
white; and electrocuting device locally known as sensored with a somewhat
webbed copper wire on the tip or other end of a bamboo pole with electric
wire attachment which was attached to the dynamo direct and with the use
of these devices or equipments catches fish thru electric current, which
destroy any aquatic animals within its cuffed reach, to the detriment and
prejudice of the populace" (Criminal Case No. 5429).
Upon motion of the accused, the municipal court quashed the complaint. The
prosecution appealed. The Court of First Instance of Laguna affirmed the
order of dismissal (Civil Case No. SC-36). The case is now before this Court on
appeal by the prosecution under Republic Act No. 5440.
The lower court held that electro fishing cannot be penalize because electric
current is not an obnoxious or poisonous substance as contemplated in
section I I of the Fisheries Law and that it is not a substance at all but a form
of energy conducted or transmitted by substances. The lower court further
held that, since the law does not clearly prohibit electro fishing, the
executive and judicial departments cannot consider it unlawful.
As legal background, it should be stated that section 11 of the Fisheries Law
prohibits "the use of any obnoxious or poisonous substance" in fishing.
Section 76 of the same law punishes any person who uses an obnoxious or
poisonous substance in fishing with a fine of not more than five hundred
pesos nor more than five thousand, and by imprisonment for not less than
six months nor more than five years.
It is noteworthy that the Fisheries Law does not expressly punish .electro
fishing." Notwithstanding the silence of the law, the Secretary of Agriculture
and Natural Resources, upon the recommendation of the Commissioner of
Fisheries, promulgated Fisheries Administrative Order No. 84 (62 O.G. 1224),
prohibiting electro fishing in all Philippine waters. The order is quoted
below: ñé+.£ªwph!1
SUBJECT: PROHIBITING ELECTRO FISHING IN ALL WATERS ñé+.£ªwph!1
OF THE PHILIPPINES.
Pursuant to Section 4 of Act No. 4003, as amended, and Section 4 of R.A. No.
3512, the following rules and regulations regarding the prohibition of electro
fishing in all waters of the Philippines are promulgated for the information
and guidance of all concerned.ñé+.£ªwph!1
SECTION 1. — Definition. — Words and terms used in this Order 11
construed as follows:
(a) Philippine waters or territorial waters of the Philippines' includes all
waters of the Philippine Archipelago, as defined in the t between the United
States and Spain, dated respectively the tenth of December, eighteen
hundred ninety eight and the seventh of November, nineteen hundred. For
the purpose of this order, rivers, lakes and other bodies of fresh waters are
included.
(b) Electro Fishing. — Electro fishing is the catching of fish with the use of
electric current. The equipment used are of many electrical devices which
may be battery or generator-operated and from and available source of
electric current.
(c) 'Persons' includes firm, corporation, association, agent or employee.
(d) 'Fish' includes other aquatic products.
SEC. 2. — Prohibition. — It shall be unlawful for any person to engage in
electro fishing or to catch fish by the use of electric current in any portion of
the Philippine waters except for research, educational and scientific purposes
which must be covered by a permit issued by the Secretary of Agriculture
and Natural Resources which shall be carried at all times.
SEC. 3. — Penalty. — Any violation of the provisions of this Administrative
Order shall subject the offender to a fine of not exceeding five hundred
pesos (P500.00) or imprisonment of not extending six (6) months or both at
the discretion of the Court.
SEC. 4. — Repealing Provisions. — All administrative orders or parts thereof
inconsistent with the provisions of this Administrative Order are hereby
revoked.
SEC. 5. — Effectivity. — This Administrative Order shall take effect six (60)
days after its publication in the Office Gazette.
On June 28, 1967 the Secretary of Agriculture and Natural Resources, upon
the recommendation of the Fisheries Commission, issued Fisheries
Administrative Order No. 84-1, amending section 2 of Administrative Order
No. 84, by restricting the ban against electro fishing to fresh water
fisheries (63 O.G. 9963).
Thus, the phrase "in any portion of the Philippine waters" found in section 2,
was changed by the amendatory order to read as follows: "in fresh water
fisheries in the Philippines, such as rivers, lakes, swamps, dams, irrigation
canals and other bodies of fresh water."
The Court of First Instance and the prosecution (p. 11 of brief) assumed that
electro fishing is punishable under section 83 of the Fisheries Law (not under
section 76 thereof), which provides that any other violation of that law "or of
any rules and regulations promulgated thereunder shall subject the offender
to a fine of not more than two hundred pesos (P200), or in t for not more
than six months, or both, in the discretion of the court."
That assumption is incorrect because 3 of the aforequoted Administrative
Order No. 84 imposes a fm of not exceeding P500 on a person engaged in
electro fishing, which amount the 83. It seems that the Department of
Fisheries prescribed their own penalty for swift fishing which penalty is less
than the severe penalty imposed in section 76 and which is not Identified to
the at penalty imposed in section 83.
Had Administrative Order No. 84 adopted the fighter penalty prescribed in
on 83, then the crime of electro fishing would be within the exclusive original
jurisdiction of the inferior court (Sec. 44 [f], Judiciary Law; People vs. Ragasi,
L-28663, September 22,
We have discussed this pre point, not raised in the briefs, because it is
obvious that the crime of electro fishing which is punishable with a sum up to
P500, falls within the concurrent original jurisdiction of the inferior courts
and the Court of First instance (People vs. Nazareno, L-40037, April 30, 1976,
70 SCRA 531 and the cases cited therein).
And since the instant case was filed in the municipal court of Sta. Cruz,
Laguna, a provincial capital, the order of d rendered by that municipal court
was directly appealable to the Court, not to the Court of First Instance of
Laguna (Sec. 45 and last par. of section 87 of the Judiciary Law; Esperat vs.
Avila, L-25992, June 30, 1967, 20 SCRA 596).
It results that the Court of First Instance of Laguna had no appellate
jurisdiction over the case. Its order affirming the municipal court's order of
dismissal is void for lack of motion. This appeal shall be treated as a direct
appeal from the municipal court to this Court. (See People vs. Del Rosario, 97
Phil. 67).
In this appeal, the prosecution argues that Administrative Orders Nos. 84 and
84-1 were not issued under section 11 of the Fisheries Law which, as
indicated above, punishes fishing by means of an obnoxious or poisonous
substance. This contention is not well-taken because, as already stated, the
Penal provision of Administrative Order No. 84 implies that electro fishing is
penalized as a form of fishing by means of an obnoxious or poisonous
substance under section 11.
The prosecution cites as the legal sanctions for the prohibition against
electro fishing in fresh water fisheries (1) the rule-making power of the
Department Secretary under section 4 of the Fisheries Law; (2) the function
of the Commissioner of Fisheries to enforce the provisions of the Fisheries
Law and the regulations Promulgated thereunder and to execute the rules
and regulations consistent with the purpose for the creation of the Fisheries
Commission and for the development of fisheries (Sec. 4[c] and [h] Republic
Act No. 3512; (3) the declared national policy to encourage, Promote and
conserve our fishing resources (Sec. 1, Republic Act No. 3512), and (4)
section 83 of the Fisheries Law which provides that "any other violation of"
the Fisheries Law or of any rules and regulations promulgated thereunder
"shall subject the offender to a fine of not more than two hundred pesos, or
imprisonment for not more than six months, or both, in the discretion of the
court."
As already pointed out above, the prosecution's reference to section 83 is
out of place because the penalty for electro fishing under Administrative
order No. 84 is not the same as the penalty fixed in section 83.
We are of the opinion that the Secretary of Agriculture and Natural
Resources and the Commissioner of Fisheries exceeded their authority in
issuing Fisheries Administrative Orders Nos. 84 and 84-1 and that those
orders are not warranted under the Fisheries Commission, Republic Act No.
3512.
The reason is that the Fisheries Law does not expressly prohibit electro
fishing. As electro fishing is not banned under that law, the Secretary of
Agriculture and Natural Resources and the Commissioner of Fisheries are
powerless to penalize it. In other words, Administrative Orders Nos. 84 and
84-1, in penalizing electro fishing, are devoid of any legal basis.
Had the lawmaking body intended to punish electro fishing, a penal provision
to that effect could have been easily embodied in the old Fisheries Law.
That law punishes (1) the use of obnoxious or poisonous substance, or
explosive in fishing; (2) unlawful fishing in deepsea fisheries; (3) unlawful
taking of marine molusca, (4) illegal taking of sponges; (5) failure of licensed
fishermen to report the kind and quantity of fish caught, and (6) other
violations.
Nowhere in that law is electro fishing specifically punished. Administrative
Order No. 84, in punishing electro fishing, does not contemplate that such an
offense fails within the category of "other violations" because, as already
shown, the penalty for electro fishing is the penalty next lower to the penalty
for fishing with the use of obnoxious or poisonous substances, fixed in
section 76, and is not the same as the penalty for "other violations" of the
law and regulations fixed in section 83 of the Fisheries Law.
The lawmaking body cannot delegate to an executive official the power to
declare what acts should constitute an offense. It can authorize the issuance
of regulations and the imposition of the penalty provided for in the law itself.
(People vs. Exconde 101 Phil. 11 25, citing 11 Am. Jur. 965 on p. 11 32).
Originally, Administrative Order No. 84 punished electro fishing in all waters.
Later, the ban against electro fishing was confined to fresh water fisheries.
The amendment created the impression that electro fishing is not
condemnable per se. It could be tolerated in marine waters. That
circumstances strengthens the view that the old law does not eschew all
forms of electro fishing.
However, at present, there is no more doubt that electro fishing is
punishable under the Fisheries Law and that it cannot be penalized merely by
executive revolution because Presidential Decree No. 704, which is a revision
and consolidation of all laws and decrees affecting fishing and fisheries and
which was promulgated on May 16, 1975 (71 O.G. 4269), expressly punishes
electro fishing in fresh water and salt water areas.
That decree provides: ñé+.£ªwph!1
SEC. 33. — Illegal fishing, dealing in illegally caught fish or fishery/aquatic
products. — It shall he unlawful for any person to catch, take or gather or
cause to be caught, taken or gathered fish or fishery/aquatic products in
Philippine waters with the use of explosives, obnoxious or poisonous
substance, or by the use of electricity as defined in paragraphs (1), (m) and
(d), respectively, of Section 3 hereof: ...
The decree Act No. 4003, as amended, Republic Acts Nos. 428, 3048, 3512
and 3586, Presidential Decrees Nos. 43, 534 and 553, and all , Acts, Executive
Orders, rules and regulations or parts thereof inconsistent with it (Sec. 49, P.
D. No. 704).
The inclusion in that decree of provisions defining and penalizing electro
fishing is a clear recognition of the deficiency or silence on that point of the
old Fisheries Law. It is an admission that a mere executive regulation is not
legally adequate to penalize electro fishing.
Note that the definition of electro fishing, which is found in section 1 (c) of
Fisheries Administrative Order No. 84 and which is not provided for the old
Fisheries Law, is now found in section 3(d) of the decree. Note further that
the decree penalty electro fishing by "imprisonment from two (2) to four (4)
years", a punishment which is more severe than the penalty of a time of not
excluding P500 or imprisonment of not more than six months or both fixed in
section 3 of Fisheries Administrative Order No. 84.
An examination of the rule-making power of executive officials and
administrative agencies and, in particular, of the Secretary of Agriculture and
Natural Resources (now Secretary of Natural Resources) under the Fisheries
Law sustains the view that he ex his authority in penalizing electro fishing by
means of an administrative order.
Administrative agent are clothed with rule-making powers because the
lawmaking body finds it impracticable, if not impossible, to anticipate and
provide for the multifarious and complex situations that may be encountered
in enforcing the law. All that is required is that the regulation should be
germane to the defects and purposes of the law and that it should conform
to the standards that the law prescribes (People vs. Exconde 101 Phil. 1125;
Director of Forestry vs. Muñ;oz, L-24796, June 28, 1968, 23 SCRA 1183, 1198;
Geukeko vs. Araneta, 102 Phil. 706, 712).
The lawmaking body cannot possibly provide for all the details in the
enforcement of a particular statute (U.S. vs. Tupasi Molina, 29 Phil. 119, 125,
citing U.S. vs. Grimaud 220 U.S. 506; Interprovincial Autobus Co., Inc. vs. Coll.
of Internal Revenue, 98 Phil. 290, 295-6).
The grant of the rule-making power to administrative agencies is a relaxation
of the principle of separation of powers and is an exception to the
nondeleption of legislative, powers. Administrative regulations or
"subordinate legislation calculated to promote the public interest are
necessary because of "the growing complexity of modem life, the
multiplication of the subjects of governmental regulations, and the increased
difficulty of administering the law" Calalang vs. Williams, 70 Phil. 726; People
vs. Rosenthal and Osmeñ;a, 68 Phil. 328).
Administrative regulations adopted under legislative authority by a particular
department must be in harmony with the provisions of the law, and should
be for the sole purpose of carrying into effect its general provisions. By such
regulations, of course, the law itself cannot be extended. (U.S. vs. Tupasi
Molina, supra). An administrative agency cannot amend an act of Congress
(Santos vs. Estenzo, 109 Phil. 419, 422; Teoxon vs. Members of the d of
Administrators, L-25619, June 30, 1970, 33 SCRA 585; Manuel vs. General
Auditing Office, L-28952, December 29, 1971, 42 SCRA 660; Deluao vs.
Casteel, L-21906, August 29, 1969, 29 SCRA 350).
The rule-making power must be confined to details for regulating the mode
or proceeding to carry into effect the law as it his been enacted. The power
cannot be extended to amending or expanding the statutory requirements or
to embrace matters not covered by the statute. Rules that subvert the
statute cannot be sanctioned. (University of Santo Tomas vs. Board of Tax A
93 Phil. 376, 382, citing 12 C.J. 845-46. As to invalid regulations, see of
Internal Revenue vs. Villaflor 69 Phil. 319, Wise & Co. vs. Meer, 78 Phil. 655,
676; Del March vs. Phil. Veterans Administrative, L-27299, June 27, 1973, 51
SCRA 340, 349).
There is no question that the Secretary of Agriculture and Natural Resources
has rule-making powers. Section 4 of the Fisheries law provides that the
Secretary "shall from time to time issue instructions, orders, and regulations
consistent" with that law, "as may be and proper to carry into effect the
provisions thereof." That power is now vested in the Secretary of Natural
Resources by on 7 of the Revised Fisheries law, Presidential December No.
704.
Section 4(h) of Republic Act No. 3512 empower the Co of Fisheries "to
prepare and execute upon the approval of the Secretary of Agriculture and
Natural Resources, forms instructions, rules and regulations consistent with
the purpose" of that enactment "and for the development of fisheries."
Section 79(B) of the Revised Administrative Code provides that "the
Department Head shall have the power to promulgate, whenever he may see
fit do so, all rules, regulates, orders, memorandums, and other
instructions, not contrary to law, to regulate the proper working and
harmonious and efficient administration of each and all of the offices and
dependencies of his Department, and for the strict enforcement and proper
execution of the laws relative to matters under the jurisdiction of said
Department; but none of said rules or orders shall prescribe penalties for the
violation thereof, except as expressly authorized by law."
Administrative regulations issued by a Department Head in conformity with
law have the force of law (Valerie vs. Secretary of culture and Natural
Resources, 117 Phil. 729, 733; Antique Sawmills, Inc. vs. Zayco, L- 20051, May
30, 1966, 17 SCRA 316). As he exercises the rule-making power by delegation
of the lawmaking body, it is a requisite that he should not transcend the
bound demarcated by the statute for the exercise of that power; otherwise,
he would be improperly exercising legislative power in his own right and not
as a surrogate of the lawmaking body.
Article 7 of the Civil Code embodies the basic principle that administrative or
executive acts, orders and regulations shall be valid only when they are not
contrary to the laws or the Constitution."
As noted by Justice Fernando, "except for constitutional officials who can
trace their competence to act to the fundamental law itself, a public office
must be in the statute relied upon a grant of power before he can exercise
it." "department zeal may not be permitted to outrun the authority
conferred by statute." (Radio Communications of the Philippines, Inc. vs.
Santiago, L-29236, August 21, 1974, 58 SCRA 493, 496-8).
"Rules and regulations when promulgated in pursuance of the procedure or
authority conferred upon the administrative agency by law, partake of the
nature of a statute, and compliance therewith may be enforced by a penal
sanction provided in the law. This is so because statutes are usually couched
in general terms, after expressing the policy, purposes, objectives, remedies
and sanctions intended by the legislature. The details and the manner of
carrying out the law are oftentimes left to the administrative agency
entrusted with its enforcement. In this sense, it has been said that rules and
regulations are the product of a delegated power to create new or additional
legal provisions that have the effect of law." The rule or regulation should be
within the scope of the statutory authority granted by the legislature to the
administrative agency. (Davis, Administrative Law, p. 194, 197, cited in
Victories Milling Co., Inc. vs. Social Security Commission, 114 Phil. 555, 558).
In case of discrepancy between the basic law and a rule or regulation issued
to implement said law, the basic law prevails because said rule or regulation
cannot go beyond the terms and provisions of the basic law (People vs. Lim,
108 Phil. 1091).
This Court in its decision in the Lim case, supra, promulgated on July 26,
1960, called the attention of technical men in the executive departments,
who draft rules and regulations, to the importance and necessity of closely
following the legal provisions which they intend to implement so as to avoid
any possible misunderstanding or confusion.
The rule is that the violation of a regulation prescribed by an executive
officer of the government in conformity with and based upon a statute
authorizing such regulation constitutes an offense and renders the offender
liable to punishment in accordance with the provisions of the law (U.S. vs.
Tupasi Molina, 29 Phil. 119, 124).
In other words, a violation or infringement of a rule or regulation validly
issued can constitute a crime punishable as provided in the authorizing
statute and by virtue of the latter (People vs. Exconde 101 Phil. 1125, 1132).
It has been held that "to declare what shall constitute a crime and how it
shall be punished is a power vested exclusively in the legislature, and it may
not be delegated to any other body or agency" (1 Am. Jur. 2nd, sec. 127, p.
938; Texas Co. vs. Montgomery, 73 F. Supp. 527).
In the instant case the regulation penalizing electro fishing is not strictly in
accordance with the Fisheries Law, under which the regulation was
issued, because the law itself does not expressly punish electro fishing.
The instant case is similar to People vs. Santos, 63 Phil. 300. The Santos case
involves section 28 of Fish and Game Administrative Order No. 2 issued by
the Secretary of Agriculture and Natural Resources pursuant to the
aforementioned section 4 of the Fisheries Law.
Section 28 contains the proviso that a fishing boat not licensed under the
Fisheries Law and under the said administrative order may fish within three
kilometers of the shoreline of islands and reservations over which jurisdiction
is exercised by naval and military reservations authorities of the United
States only upon receiving written permission therefor, which permission
may be granted by the Secretary upon recommendation of the military or
naval authorities concerned. A violation of the proviso may be proceeded
against under section 45 of the Federal Penal Code.
Augusto A. Santos was prosecuted under that provision in the Court of First
Instance of Cavite for having caused his two fishing boats to fish, loiter and
anchor without permission from the Secretary within three kilometers from
the shoreline of Corrigidor Island.
This Court held that the Fisheries Law does not prohibit boats not subject to
license from fishing within three kilometers of the shoreline of islands and
reservations over which jurisdiction is exercised by naval and military
authorities of the United States, without permission from the Secretary of
Agriculture and Natural Resources upon recommendation of the military and
naval authorities concerned.
As the said law does not penalize the act mentioned in section 28 of the
administrative order, the promulgation of that provision by the Secretary "is
equivalent to legislating on the matter, a power which has not been and
cannot be delegated to him, it being expressly reserved" to the lawmaking
body. "Such an act constitutes not only an excess of the regulatory power
conferred upon the Secretary but also an exercise of a legislative power
which he does not have, and therefore" the said provision "is null and void
and without effect". Hence, the charge against Santos was dismiss.
A penal statute is strictly construed. While an administrative agency has the
right to make ranks and regulations to carry into effect a law already
enacted, that power should not be confused with the power to enact a
criminal statute. An administrative agency can have only the administrative
or policing powers expressly or by necessary implication conferred upon it.
(Glustrom vs. State, 206 Ga. 734, 58 Second 2d 534; See 2 Am. Jr. 2nd 129-
130).
Where the legislature has delegated to executive or administrative officers
and boards authority to promulgate rules to carry out an express legislative
purpose, the rules of administrative officers and boards, which have the
effect of extending, or which conflict with the authority granting statute, do
not represent a valid precise of the rule-making power but constitute an
attempt by an administrative body to legislate (State vs. Miles, Wash. 2nd
322, 105 Pac. 2nd 51).
In a prosecution for a violation of an administrative order, it must clearly
appear that the order is one which falls within the scope of the authority
conferred upon the administrative body, and the order will be scrutinized
with special care. (State vs. Miles supra).
The Miles case involved a statute which authorized the State Game
Commission "to adopt, promulgate, amend and/or repeal, and enforce
reasonable rules and regulations governing and/or prohibiting the taking of
the various classes of game.
Under that statute, the Game Commission promulgated a rule that "it shall
be unlawful to offer, pay or receive any reward, prize or compensation for
the hunting, pursuing, taking, killing or displaying of any game animal, game
bird or game fish or any part thereof."
Beryl S. Miles, the owner of a sporting goods store, regularly offered a ten-
down cash prize to the person displaying the largest deer in his store during
the open for hunting such game animals. For that act, he was charged with a
violation of the rule Promulgated by the State Game Commission.
It was held that there was no statute penalizing the display of game. What
the statute penalized was the taking of game. If the lawmaking body desired
to prohibit the display of game, it could have readily said so. It was not lawful
for the administrative board to extend or modify the statute. Hence, the
indictment against Miles was quashed. The Miles case is similar to this case.
WHEREFORE, the lower court's decision of June 9, 1970 is set aside for lack of
appellate jurisdiction and the order of dismissal rendered by the municipal
court of Sta. Cruz, Laguna in Criminal Case No. 5429 is affirmed. Costs de
oficio.
G.R. No. 92646-47 October 4, 1991
AUGUSTO TOLEDO, petitioner,
vs.
CIVIL SERVICE COMMISSION and COMMISSION ON
ELECTIONS, respondents.
PARAS, J.:
Petitioner Atty. Augusto Toledo was appointed by then Comelec Chairman
Ramon Felipe as Manager of the Education and Information Department of
the Comelec, on May 21, 1986. At the time of his appointment, petitioner,
having been born on July 8, 1927 was already more than fifty-seven (57)
years old. It was the first time petitioner joined the government service as he
was then engaged in active private practice prior to said appointment.
Petitioner's appointment papers, particularly Civil Service Form No. 333 and
his oath of office were endorsed by the Comelec to the Civil Service
Commission (CSC, for brevity) on June 11, 1986, for approval and attestation.
However, no prior request for exemption from the provisions of Section 22,
Rule III of the Civil Service Rules on Personnel Action and Policies (CSRPAP,
for brevity) was secured. Said provision prohibits the appointment of persons
57 years old or above into the government service without prior approval by
the Civil Service Commission (CSC Memorandum Circular No. 5, Series of
1983).
Petitioner officially reported for work and assumed the functions of his office
on June 16, 1986.
On January 29, 1989, public respondent Comelec, upon discovery of the lack
of authority required under Section 22, Rule III of the CSRPAP, and CSC
Memorandum Circular No. 5, Series of 1983 issued Resolution No. 2066, the
pertinent portion of which is hereinbelow quoted, to wit:
WHEREAS, for the validity then of the appointment of Atty. Toledo as
Manager of the Education and Information Department it was necessary that
not only must prior authority from the Civil Service Commission be obtained
considering that he was more than fifty-seven (57) years old at the time, it
must as well be shown that (a) the exigencies of the service so required, (b)
Atty. Toledo possesses special qualification not possessed by other officers or
employees in the Commission, and (c) the vacancy cannot be filled by
promotion of qualified officers or employees in the Commission;
WHEREAS, there is nothing in the 120 File of Atty. Toledo that indicates that
such authority was even obtained from the Civil Service Commission or from
the President of the Philippines; moreover, conditions (a), (b) and (c) stated
in the immediately preceding clause did not then exist;
WHEREAS, the appointment then of Atty. Toledo was made in violation of
law and pursuant to Section 7, Rule III of the Civil Service Rules on Personnel
Action, the appointment was void from the beginning.
NOW, THEREFORE, be it resolved, as it is hereby resolved, to DECLARE as
VOID from the beginning the appointment of Atty. Augusto Toledo as
Manager of the Education and Information Department of this Commission.
(pp. 49-50, Rollo)
Petitioner appealed the foregoing Comelec Resolution No. 2066 to public
respondent CSC on February 4, 1989.
On July 12, 1989, public respondent CSC promulgated Resolution No. 89-468
which disposed of the appeal, thus:
WHEREFORE, foregoing premises considered, the Commission resolved to
declare, as it hereby declares the appointment of Augusto V. Toledo as
Manager, Information and Education Department, Commission on Elections,
there being no basis in law, merely voidable and not void ab initio. Hence,
Atty. Toledo is considered a de facto officer from the time he assumed office
on June 16, 1986, until and up to the promulgation of COMELEC Resolution
No. 2066 on January 29, 1989. (pp. 35-36, Rollo)
Unable to obtain a reconsideration from the aforesaid Resolution, petitioner
filed the present petition for certiorari.
It is first contended by petitioner that CSC Resolution No. 89-468 is without
legal basis because the CSRPAP is invalid and unenforceable for not having
been published in the Official Gazette or in any newspaper of general
circulation as required under Section 9(b) of P.D. 807. This being the case,
petitioner argues that the requirement of prior CSC authority to appoint
persons 57 years or older under Section 22, Rule III of the CSRPAP has not
"become effective" and cannot be invoked against him.
It will be recalled that the Civil Service Act of 1959 (Republic Act No. 2260)
took effect on June 19, 1959. That act, among other things, established a Civil
Service Commission one of the functions of which was, "with the approval by
the President, to prescribe, amend, and enforce suitable rules and
regulations for carrying into effect the provisions of ... the Civil Service Law,"
said rules "to become effective thirty days after publication in the Official
Gazette" [Sec. 16 (e)].
The Commission subsequently adopted and promulgated rules intended to
carry the law into effect, known as the Revised Civil Service Rules. Those
rules were published in the supplement to Vol. 58, No. 49 of the Official
Gazette, dated December 3, 1962.
Section 5, Rule VI of those Revised Civil Service Rules provided that:
SEC. 5. No person shall be appointed or reinstated in the service if he is
already 57 years old, unless the President of the Philippines, President of the
Senate, Speaker of the House of Representatives, or the Chief Justice of the
Supreme Court, as the case may be, determines that he possesses special
qualifications and his services are needed.
It is worthy of note, however, that the statute itself (RA 2260) contained no
provision prohibiting appointment or reinstatement in the Government
service of any person who was already 57 years old, or otherwise requiring
that some limitation as regards to age be placed on employment in the
Government service. This prohibition was purely a creation of the Civil
Service Commission.
On October 6, 1975, pursuant to the 1973 Constitution, Presidential Decree
No. 807 was issued by President Marcos, establishing "an independent Civil
Service Commission." The decree, known as the "Civil Service Decree of the
Philippines," repealed or accordingly modified all laws, rules, and regulations
or parts thereof inconsistent" with its provisions (Sec. 59), although it
declared that "the former Civil Service Commission created under Republic
Act No. 2260, as amended, and as organized under the Integrated
Reorganization Plan may serve as the nucleus of the Civil Service
Commission" (Fourth Whereas Clause, Preamble). Like RA 2260 which it
superseded, PD 807 empowered the Commission to "prescribe, amend, and
enforce suitable rules and regulations for carrying into effect the provisions
of the Decree," and also provided that said "rules and regulations shall
become effective thirty (30) days after publication in the Official Gazette or
in any newspaper of general circulation."
The new Civil Service Commission adopted "rules and regulations for carrying
into effect the provisions" of the Civil Service Decree on November 20, 1983.
The rules were named, "Civil Service Rules on Personnel Actions and Policies"
(CSRPAP). Section 22, Rule III of the CSRPAP is substantially the same as
Section 5, Rule VI of the quondam "Revised Civil Service Rules" and it reads
as follows:
SEC. 22. No person shall be appointed, reinstated, or re-employed in the
service if he is already 57 years old, unless the President, or the Chief Justice
of the Supreme Court, in the case of employees in the judiciary, determines
that he possesses special qualifications urgently needed by the hiring agency.
Omitted, it will be observed, was reference to the "President of the Senate"
and the "Speaker of the House of Representatives," both of whom were
expressly mentioned in the counterpart provision in the former rules (Section
5, Rule VI, supra).
Noteworthy, too, is that there is no provision at all in PD 807 dealing in any
manner with the appointment, reinstatement or re-employment in the
Government service of any person already 57 years or any particular age, for
that matter. Again, the provision regarding persons 57 years of age was
purely a creation of the Commission, having no reference to any provision in
the decree intended to be implemented.
It was this provision of the CSRPAP (Sec. 22, Rule III) which was applied to
Toledo. According to the CSC, since prior authority for Toledo's appointment
had never been obtained — indeed, it would appear that the appointment
papers were not transmitted by the COMELEC to the CSC until February,
1989 at which time Toledo's appointment was "approved as permanent" by
the Executive Director of said CSC—the appointment had to be struck down.
Now, these rules and regulations (CSRPAP) were never published either in
the Official Gazette or any newspaper of general circulation, at least as of the
time that Section 22, Rule III thereof was applied to Toledo to the latter's
prejudice. As much was admitted by the Chairman of the Commission, Hon.
Patricia A. Sto. Tomas in a letter written by her to Toledo dated February 2,
1989. In that letter, the Chairman stated that (a) the Commission had "no
record of the publication of said Rules ("Rules on Personnel Actions and
Policies") in newspapers of general circulation" although said Rules were
"published and distributed by the National Media Production Center in
1975," and that (b) only "the Rule on Promotion embodied in CSC Resolution
No. 83-343 repealing Rule V of the said Rules was published on August 15,
1983 in Volume 79 No. 33 of the Official Gazette" (Annex I, petition). The lack
of publication is also attested by the Director of the National Printing Office
who, in a Certification issued by him on January 30, 1989, stated that "the
RULES ON PERSONNEL ACTIONS AND POLICIES' promulgated on November
20, 1975 by the Civil Service Commission implementing Presidential Decree
No. 807 was not submitted to this office for publication" (Annex J, petition).
The Revised Civil Service Rules implementing R.A. No. 2260 cannot be
considered valid and effective after RA 2260 was repealed and superseded by
PD 807. PD 807 was obviously intended to take the place of RA 2260. In all
matters dealt with by both laws, the provisions of PD 807 were obviously
intended to be controlling. So, also, the rules promulgated by the Civil
Service Commission to carry the provisions of PD 807 into effect were meant
to supersede or take the place of the rules implementing RA 2260. In other
words, PD 807 and the CSRPAP were intended to make RA 2260 and its
implementing rules functus officio, render them without force and effect
except only as regards any provision, if at all, not dealt with by PD 807 or the
CSRPAP.
Now, it may reasonably be assumed that the law-making authority at the
time, the President, was aware of the provision on 57-year old persons in the
Revised Civil Service Rules promulgated under RA 2260. Yet when he
promulgated PD 807 the President did not see fit to incorporate therein any
provision regarding 57-year old persons or for that matter, to prescribe any
age beyond which persons could become ineligible for appointment,
reintatement or re-employment. This surely is an indication of an intention
not to continue the provision in effect.
In any event, the provision on 57-year old persons in the Revised Civil Service
Rules (under said RA 2260) cannot be accorded validity. As already pointed
out, it is entirely a creation of the Civil Service Commission, having no basis in
the law itself which it was meant to implement. It cannot be related to or
connected with any specific provision of the law which it is meant to carry
into effect, such as a requirement, for instance, that age should be reckoned
as a factor in the employment or reinstatement of an individual, or a
direction that there be a determination of some point in a person's life at
which he becomes unemployable, or employable only under specific
conditions. It was therefore an unauthorized act of legislation on the part of
the Civil Service Commission. It cannot be justified as a valid exercise of its
function of promulgating rules and regulations for that function, to repeat,
may legitimately be exercised only for the purpose of carrying the provisions
of the law into effect; and since there is no prohibition or restriction on the
employment of 57-year old persons in the statute—or any provision
respecting age as a factor in employment—there was nothing to carry into
effect through an implementing rule on the matter.
The power vested in the Civil Service Commission was to implement the law
or put it into effect, not to add to it; to carry the law into effect or execution,
not to supply perceived omissions in it. "By its administrative regulations, of
course, the law itself can not be extended; said regulations 'cannot amend an
act of Congress.' " (Teoxon v. Members of the Board of Administrators,
Philippine Veterans Administration, 33 SCRA 585, 589 [1970], citing Santos v.
Estenzo, 109 Phil. 419 [1960]; see also, Animos v. Philippine Veterans Affairs
Office, 174 SCRA 214, 223-224 [1989] in turn citing Teoxon).
The considerations just expounded also conduce to the conclusion of the
invalidity of Section 22, Rule III of the CSRPAP. The enactment of said section,
relative to 57-year old persons, was also an act of supererogation on the part
of the Civil Service Commission since the rule has no relation to or
connection with any provision of the law supposed to be carried into effect.
The section was an addition to or extension of the law, not merely a mode of
carrying it into effect.
Apart from this, the CSRPAP cannot be considered effective as of the time of
the application to Toledo of a provision thereof, for the reason that said rules
were never published, as is admitted on all sides. The argument that the
CSRPAP need not be published, because they were "a mere reiteration of
existing law" and had been "circularized," flies in the teeth of the explicit and
categorical requirement of PD 807 that rules and regulations for carrying into
effect the provisions of the Decree shall become effective thirty (30) days
after publication in the Official Gazette or in any newspaper of general
circulation. Moreover, the CSRPAP cannot properly be considered a mere
reiteration of existing law, for as already discussed, the implementing rule
governing 57-year old persons is invalid and cannot in any sense be
considered "existing law."
Assuming without conceding that the rule regarding employment of 57-year
old persons is valid and enforceable, it can only apply, according to its
express terms, to employees under the supervision of the Chief Justice of the
Supreme Court, or of the President of the Philippines, these two being the
only officials mentioned as having to give consent to the employment of said
persons. It cannot be construed as applying to employees over whom neither
the President nor the Chief Justice exercises supervision, such as the Senate
or the House of Representatives, or the COMELEC or other Constitutional
Commissions.
One last word. There is absolutely no question about the fact that the only
reason for Toledo's separation from the service was the fact that he was
already more than 57 years old when he was invited to work in the COMELEC
by its former Chairman, but through no fault of his own, not all the
conditions for his employment appear to have been satisfied. There is no
question that it was not Toledo's fault that his papers were tardily submitted
to the Civil Service Commission and approval of his appointment was made
only by the Executive Director of the Commission and not by the Chairman
thereof (to whom the function of the President of approving appointments
like those of Toledo had been delegated under LOI 47, CSC Memo Circular
No. 5, Series of 1983). There is no question, too, that he was actively
engaged in law practice when taken into the COMELEC. There is absolutely
no question about the fact that he was otherwise a competent and efficient
officer of the COMELEC and had not given the remotest cause for dismissal.
These are equitable considerations proscribing application to him of the
provision in question, assuming its validity, or impelling at least a restrictive
application thereof so that it may not work to his prejudice.
Premises considered, the petition is hereby GRANTED.
G.R. No. 108358 January 20, 1995
COMMISSIONER OF INTERNAL REVENUE, petitioner,
vs.
THE HON. COURT OF APPEALS, R.O.H. AUTO PRODUCTS PHILIPPINES, INC.
and THE HON. COURT OF TAX APPEALS, respondents.
VITUG, J.:
On 22 August 1986, during the period when the President of the Republic still
wielded legislative powers, Executive Order No. 41 was promulgated
declaring a one-time tax amnesty on unpaid income taxes, later amended to
include estate and donor's taxes and taxes on business, for the taxable years
1981 to 1985.
Availing itself of the amnesty, respondent R.O.H. Auto Products Philippines,
Inc., filed, in October 1986 and November 1986, its Tax Amnesty Return No.
34-F-00146-41 and Supplemental Tax Amnesty Return No. 34-F-00146-64-B,
respectively, and paid the corresponding amnesty taxes due.
Prior to this availment, petitioner Commissioner of Internal Revenue, in a
communication received by private respondent on 13 August 1986, assessed
the latter deficiency income and business taxes for its fiscal years ended 30
September 1981 and 30 September 1982 in an aggregate amount of
P1,410,157.71. The taxpayer wrote back to state that since it had been able
to avail itself of the tax amnesty, the deficiency tax notice should forthwith
be cancelled and withdrawn. The request was denied by the Commissioner,
in his letter of 22 November 1988, on the ground that Revenue
Memorandum Order No. 4-87, dated 09 February 1987, implementing
Executive Order No. 41, had construed the amnesty coverage to include only
assessments issued by the Bureau of Internal Revenue after the
promulgation of the executive order on 22 August 1986 and not to
assessments theretofore made. The invoked provisions of the memorandum
order read:
TO: All Internal Revenue Officers and Others Concerned:
1.0. To give effect and substance to the immunity provisions of the tax
amnesty under Executive Order No. 41, as expanded by Executive Order No.
64, the following instructions are hereby issued:
xxx xxx xxx
1.02. A certification by the Tax Amnesty Implementation Officer of the fact of
availment of the said tax amnesty shall be a sufficient basis for:
xxx xxx xxx
1.02.3. In appropriate cases, the cancellation/withdrawal of assessment
notices and letters of demand issued after August 21, 1986 for the collection
of income, business, estate or donor's taxes due during the same taxable
years.1 (Emphasis supplied)
Private respondent appealed the Commissioner's denial to the Court of Tax
Appeals. Ruling for the taxpayer, the tax court said:
Respondent (herein petitioner Commissioner) failed to present any case or
law which proves that an assessment can withstand or negate the force and
effects of a tax amnesty. This burden of proof on the petitioner (herein
respondent taxpayer) was created by the clear and express terms of the
executive order's intention — qualified availers of the amnesty may pay an
amnesty tax in lieu of said unpaid taxes which are forgiven (Section 2, Section
5, Executive Order No. 41, as amended). More specifically, the plain
provisions in the statute granting tax amnesty for unpaid taxes for the period
January 1, 1981 to December 31, 1985 shifted the burden of proof on
respondent to show how the issuance of an assessment before the date of
the promulgation of the executive order could have a reasonable relation
with the objective periods of the amnesty, so as to make petitioner still
answerable for a tax liability which, through the statute, should have been
erased with the proper availment of the amnesty.
Additionally, the exceptions enumerated in Section 4 of Executive Order No.
41, as amended, do not indicate any reference to an assessment or pending
investigation aside from one arising from information furnished by an
informer. . . . Thus, we deem that the rule in Revenue Memorandum Order
No. 4-87 promulgating that only assessments issued after August 21, 1986
shall be abated by the amnesty is beyond the contemplation of Executive
Order No. 41, as amended.2
On appeal by the Commissioner to the Court of Appeals, the decision of the
tax court was affirmed. The appellate court further observed:
In the instant case, examining carefully the words used in Executive Order
No. 41, as amended, we find nothing which justifies petitioner
Commissioner's ground for denying respondent taxpayer's claim to the
benefits of the amnesty law. Section 4 of the subject law enumerates, in no
uncertain terms, taxpayers who may not avail of the amnesty granted,. . . .
Admittedly, respondent taxpayer does not fall under any of the . . .
exceptions. The added exception urged by petitioner Commissioner based on
Revenue Memorandum Order No. 4-87, further restricting the scope of the
amnesty clearly amounts to an act of administrative legislation quite contrary
to the mandate of the law which the regulation ought to implement.
xxx xxx xxx
Lastly, by its very nature, a tax amnesty, being a general pardon or
intentional overlooking by the State of its authority to impose penalties on
persons otherwise guilty of evasion or violation of a revenue or tax law,
partakes of an absolute forgiveness or waiver by the Government of its right
to collect what otherwise would be due it, and in this sense, prejudicial
thereto, particularly to give tax evaders, who wish to relent and are willing to
reform a chance to do so and thereby become a part of the new society with
a clean slate. (Republic vs. Intermediate Appellate Court. 196 SCRA 335, 340
[1991] citing Commissioner of Internal Revenue vs. Botelho Shipping Corp.,
20 SCRA 487) To follow [the restrictive application of Revenue Memorandum
Order No. 4-87 pressed by petitioner Commissioner would be to work against
the raison d'etre of E.O. 41, as amended, i.e., to raise government revenues
by encouraging taxpayers to declare their untaxed income and pay the tax
due thereon. (E.O. 41, first paragraph)]3
In this petition for review, the Commissioner raises these related issues:
1. WHETHER OR NOT REVENUE MEMORANDUM ORDER NO. 4-87,
PROMULGATED TO IMPLEMENT E.O. NO. 41, IS VALID;
2. WHETHER OR NOT SAID DEFICIENCY ASSESSMENTS IN QUESTION WERE
EXTINGUISHED BY REASON OR PRIVATE RESPONDENT'S AVAILMENT OF
EXECUTIVE ORDER NO. 41 AS AMENDED BY EXECUTIVE ORDER NO. 64;
3. WHETHER OR NOT PRIVATE RESPONDENT HAS OVERCOME THE
PRESUMPTION OF VALIDITY OF ASSESSMENTS.4
The authority of the Minister of Finance (now the Secretary of Finance), in
conjunction with the Commissioner of Internal Revenue, to promulgate all
needful rules and regulations for the effective enforcement of internal
revenue laws cannot be controverted. Neither can it be disputed that such
rules and regulations, as well as administrative opinions and rulings,
ordinarily should deserve weight and respect by the courts. Much more
fundamental than either of the above, however, is that all such issuances
must not override, but must remain consistent and in harmony with, the law
they seek to apply and implement. Administrative rules and regulations are
intended to carry out, neither to supplant nor to modify, the law.
The real and only issue is whether or not the position taken by the
Commissioner coincides with the meaning and intent of executive Order No.
41.
We agree with both the court of Appeals and court of Tax Appeals that
Executive Order No. 41 is quite explicit and requires hardly anything beyond
a simple application of its provisions. It reads:
Sec. 1. Scope of Amnesty. — A one-time tax amnesty covering unpaid income
taxes for the years 1981 to 1985 is hereby declared.
Sec. 2. Conditions of the Amnesty. — A taxpayer who wishes to avail himself
of the tax amnesty shall, on or before October 31, 1986;
a) file a sworn statement declaring his net worth as of December 31, 1985;
b) file a certified true copy of his statement declaring his net worth as of
December 31, 1980 on record with the Bureau of Internal Revenue, or if no
such record exists, file a statement of said net worth therewith, subject to
verification by the Bureau of Internal Revenue;
c) file a return and pay a tax equivalent to ten per cent (10%) of the increase
in net worth from December 31, 1980 to December 31, 1985: Provided, That
in no case shall the tax be less than P5,000.00 for individuals and P10,000.00
for judicial persons.
Sec. 3. Computation of Net Worth. — In computing the net worths referred
to in Section 2 hereof, the following rules shall govern:
a) Non-cash assets shall be valued at acquisition cost.
b) Foreign currencies shall be valued at the rates of exchange prevailing as of
the date of the net worth statement.
Sec. 4. Exceptions. — The following taxpayers may not avail themselves of
the amnesty herein granted:
a) Those falling under the provisions of Executive Order Nos. 1, 2 and 14;
b) Those with income tax cases already filed in Court as of the effectivity
hereof;
c) Those with criminal cases involving violations of the income tax already
filed in court as of the effectivity filed in court as of the effectivity hereof;
d) Those that have withholding tax liabilities under the National Internal
Revenue Code, as amended, insofar as the said liabilities are concerned;
e) Those with tax cases pending investigation by the Bureau of Internal
Revenue as of the effectivity hereof as a result of information furnished
under Section 316 of the National Internal Revenue Code, as amended;
f) Those with pending cases involving unexplained or unlawfully acquired
wealth before the Sandiganbayan;
g) Those liable under Title Seven, Chapter Three (Frauds, Illegal Exactions and
Transactions) and Chapter Four (Malversation of Public Funds and Property)
of the Revised Penal Code, as amended.
xxx xxx xxx
Sec. 9. The Minister of finance, upon the recommendation of the
Commissioner of Internal Revenue, shall promulgate the necessary rules and
regulations to implement this Executive Order.
xxx xxx xxx
Sec. 11. This Executive Order shall take effect immediately.
DONE in the City of Manila, this 22nd day of August in the year of Our Lord,
nineteen hundred and eighty-six.
The period of the amnesty was later extended to 05 December 1986 from 31
October 1986 by Executive Order No. 54, dated 04 November 1986, and, its
coverage expanded, under Executive Order No. 64, dated 17 November
1986, to include estate and honors taxes and taxes on business.
If, as the Commissioner argues, Executive Order No. 41 had not been
intended to include 1981-1985 tax liabilities already assessed
(administratively) prior to 22 August 1986, the law could have simply so
provided in its exclusionary clauses. It did not. The conclusion is unavoidable,
and it is that the executive order has been designed to be in the nature of a
general grant of tax amnesty subject only to the cases specifically excepted
by it.
It might not be amiss to recall that the taxable periods covered by the
amnesty include the years immediately preceding the 1986 revolution during
which time there had been persistent calls, all too vivid to be easily
forgotten, for civil disobedience, most particularly in the payment of taxes, to
the martial law regime. It should be understandable then that those who
ultimately took over the reigns of government following the successful
revolution would promptly provide for abroad, and not a confined, tax
amnesty.
Relative to the two other issued raised by the Commissioner, we need only
quote from Executive Order No. 41 itself; thus:
Sec. 6. Immunities and Privileges. — Upon full compliance with the
conditions of the tax amnesty and the rules and regulations issued pursuant
to this Executive order, the taxpayer shall enjoy the following immunities and
privileges:
a) The taxpayer shall be relieved of any income tax liability on any untaxed
income from January 1, 1981 to December 31, 1985, including increments
thereto and penalties on account of the non-payment of the said tax. Civil,
criminal or administrative liability arising from the non-payment of the said
tax, which are actionable under the National Internal Revenue Code, as
amended, are likewise deemed extinguished.
b) The taxpayer's tax amnesty declaration shall not be admissible in evidence
in all proceedings before judicial, quasi-judicial or administrative bodies, in
which he is a defendant or respondent, and the same shall not be examined,
inquired or looked into by any person, government official, bureau or office.
c) The books of account and other records of the taxpayer for the period
from January 1, 1981 to December 31, 1985 shall not be examined for
income tax purposes: Provided, That the Commissioner of Internal Revenue
may authorize in writing the examination of the said books of accounts and
other records to verify the validity or correctness of a claim for grant of any
tax refund, tax credit (other than refund on credit of withheld taxes on
wages), tax incentives, and/or exemptions under existing laws.
There is no pretension that the tax amnesty returns and due payments made
by the taxpayer did not conform with the conditions expressed in the
amnesty order.
WHEREFORE, the decision of the court of Appeals, sustaining that of the
court of Tax Appeals, is hereby AFFIRMED in toto. No costs.
SO ORDERED.
G.R. No. 118712 October 6, 1995
LAND BANK OF THE PHILIPPINES, petitioner,
vs.
COURT OF APPEALS, PEDRO L. YAP, HEIRS OF EMILIANO F. SANTIAGO,
AGRICULTURAL MANAGEMENT & DEVELOPMENT CORP., respondents.
G.R. No. 118745 October 6, 1995
DEPARTMENT OF AGRARIAN REFORM, represented by the Secretary of
Agrarian Reform, petitioner,
vs.
COURT OF APPEALS, PEDRO L. YAP, HEIRS OF EMILIANO F. SANTIAGO,
AGRICULTURAL MANAGEMENT & DEVELOPMENT CORP., ET
AL., respondents.
FRANCISCO, R., J.:
It has been declared that the duty of the court to protect the weak and the
underprivileged should not be carried out to such an extent as deny justice to
the landowner whenever truth and justice happen to be on his side.1 As
eloquently stated by Justice Isagani Cruz:
. . . social justice — or any justice for that matter — is for the deserving,
whether he be a millionaire in his mansion or a pauper in his hovel. It is true
that, in case of reasonable doubt, we are called upon to tilt the balance in
favor of the poor, to whom the Constitution fittingly extends its sympathy
and compassion. But never is it justified to prefer the poor simply because
they are poor, or to reject the rich simply because they are rich, for justice
must always be served, for poor and rich alike, according to the mandate of
the law.2
In this agrarian dispute, it is once more imperative that the aforestated
principles be applied in its resolution.
Separate petitions for review were filed by petitioners Department of
Agrarian Reform (DAR) (G.R. No. 118745) and Land Bank of the Philippines
(G.R. No. 118712) following the adverse ruling by the Court of Appeals in CA-
G.R. SP No. 33465. However, upon motion filed by private respondents, the
petitions were ordered consolidated.3
Petitioners assail the decision of the Court of Appeals promulgated on
October 20, 1994, which granted private respondents' Petition
for Certiorari and Mandamus and ruled as follows:
WHEREFORE, premises considered, the Petition
for Certiorari and Mandamus is hereby GRANTED:
a) DAR Administrative Order No. 9, Series of 1990 is
declared null and void insofar as it provides for the opening of trust accounts
in lieu of deposits in cash or bonds;
b) Respondent Landbank is ordered to immediately deposit — not merely
"earmark", "reserve" or "deposit in trust" — with an accessible bank
designated by respondent DAR in the names of the following petitioners the
following amounts in cash and in government financial instruments — within
the parameters of Sec. 18 (1) of RA 6657:
P 1,455,207.31 Pedro L. Yap
P 135,482.12 Heirs of Emiliano Santiago
P 15,914,127.77 AMADCOR;
c) The DAR-designated bank is ordered to allow the petitioners to
withdraw the above-deposited amounts without prejudice to the final
determination of just compensation by the proper authorities; and
d) Respondent DAR is ordered to
1) immediately conduct summary administrative proceedings to determine
the just compensation for the lands of the petitioners giving the
petitioners 15 days from notice within which to submit evidence and to 2)
decide the cases within 30 days after they are submitted for decision.4
Likewise, petitioners seek the reversal of the Resolution dated January 18,
1995,5 denying their motion for reconsideration.
Private respondents are landowners whose landholdings were acquired by
the DAR and subjected to transfer schemes to qualified beneficiaries under
the Comprehensive Agrarian Reform Law (CARL, Republic Act No. 6657).
Aggrieved by the alleged lapses of the DAR and the Landbank with respect to
the valuation and payment of compensation for their land pursuant to the
provisions of RA 6657, private respondents filed with this Court a Petition
for Certiorari and Mandamus with prayer for preliminary mandatory
injunction. Private respondents questioned the validity of DAR Administrative
Order No. 6, Series of 19926 and DAR Administrative Order No. 9, Series of
1990,7 and sought to compel the DAR to expedite the pending summary
administrative proceedings to finally determine the just compensation of
their properties, and the Landbank to deposit in cash and bonds the amounts
respectively "earmarked", "reserved" and "deposited in trust accounts" for
private respondents, and to allow them to withdraw the same.
Through a Resolution of the Second Division dated February 9, 1994, this
Court referred the petition to respondent Court of Appeals for proper
determination and disposition.
As found by respondent court , the following are undisputed:
Petitioner Pedro Yap alleges that "(o)n 4 September 1992 the transfer
certificates of title (TCTs) of petitioner Yap were totally cancelled by the
Registrar of Deeds of Leyte and were transferred in the names of farmer
beneficiaries collectively, based on the request of the DAR together with a
certification of the Landbank that the sum of P735,337.77 and P719,869.54
have been earmarked for Landowner Pedro L. Yap for the parcels of lands
covered by TCT Nos. 6282 and 6283, respectively, and issued in lieu thereof
TC-563 and TC-562, respectively, in the names of listed beneficiaries
(ANNEXES "C" & "D") without notice to petitioner Yap and without complying
with the requirement of Section 16 (e) of RA 6657 to deposit the
compensation in cash and Landbank bonds in an accessible bank. (Rollo, p.
6).
The above allegations are not disputed by any of the respondents.
Petitioner Heirs of Emiliano Santiago allege that the heirs of Emiliano F.
Santiago are the owners of a parcel of land located at Laur, NUEVA ECIJA
with an area of 18.5615 hectares covered by TCT No. NT-60359 of the
registry of Deeds of Nueva Ecija, registered in the name of the late Emiliano
F. Santiago; that in November and December 1990, without notice to the
petitioners, the Landbank required and the beneficiaries executed Actual
tillers Deed of Undertaking (ANNEX "B") to pay rentals to the LandBank for
the use of their farmlots equivalent to at least 25% of the net harvest; that
on 24 October 1991 the DAR Regional Director issued an order directing the
Landbank to pay the landowner directly or through the establishment of a
trust fund in the amount of P135,482.12, that on 24 February 1992, the
Landbank reserved in trust P135,482.12 in the name of Emiliano F. Santiago.
(ANNEX "E"; Rollo,
p. 7); that the beneficiaries stopped paying rentals to the landowners after
they signed the Actual Tiller's Deed of Undertaking committing themselves to
pay rentals to the LandBank (Rollo, p. 133).
The above allegations are not disputed by the respondents except that
respondent Landbank claims 1) that it was respondent DAR, not Landbank
which required the execution of Actual Tillers Deed of Undertaking (ATDU,
for brevity); and 2) that respondent Landbank, although armed with the
ATDU, did not collect any amount as rental from the substituting
beneficiaries (Rollo, p. 99).
Petitioner Agricultural Management and Development Corporation
(AMADCOR, for brevity) alleges — with respect to its properties located in
San Francisco, Quezon — that the properties of AMADCOR in San Francisco,
Quezon consist of a parcel of land covered by TCT No. 34314 with an area of
209.9215 hectares and another parcel covered by TCT No. 10832 with an
area of 163.6189 hectares; that a summary administrative proceeding to
determine compensation of the property covered by TCT No. 34314 was
conducted by the DARAB in Quezon City without notice to the landowner;
that a decision was rendered on 24 November 1992 (ANNEX "F") fixing the
compensation for the parcel of land covered by TCT No. 34314 with an area
of 209.9215 hectares at P2,768,326.34 and ordering the Landbank to pay or
establish a trust account for said amount in the name of AMADCOR; and that
the trust account in the amount of P2,768,326.34 fixed in the decision was
established by adding P1,986,489.73 to the first trust account established on
19 December 1991 (ANNEX "G"). With respect to petitioner AMADCOR's
property in Tabaco, Albay, it is alleged that the property of AMADCOR in
Tabaco, Albay is covered by TCT No. T-2466 of the Register of Deeds of Albay
with an area of 1,629.4578 hectares'; that emancipation patents were issued
covering an area of 701.8999 hectares which were registered on 15 February
1988 but no action was taken thereafter by the DAR to fix the compensation
for said land; that on 21 April 1993, a trust account in the name of AMADCOR
was established in the amount of P12,247,217.83', three notices of
acquisition having been previously rejected by AMADCOR. (Rollo, pp. 8-9)
The above allegations are not disputed by the respondents except that
respondent Landbank claims that petitioner failed to participate in the
DARAB proceedings (land valuation case) despite due notice to it (Rollo, p.
100).8
Private respondents argued that Administrative Order No. 9, Series of 1990
was issued without jurisdiction and with grave abuse of discretion because it
permits the opening of trust accounts by the Landbank, in lieu of depositing
in cash or bonds in an accessible bank designated by the DAR, the
compensation for the land before it is taken and the titles are cancelled as
provided under Section 16(e) of RA 6657.9 Private respondents also assail the
fact that the DAR and the Landbank merely "earmarked", "deposited in trust"
or "reserved" the compensation in their names as landowners despite the
clear mandate that before taking possession of the property, the
compensation must be deposited in cash or in bonds. 10
Petitioner DAR, however, maintained that Administrative Order No. 9 is a
valid exercise of its rule-making power pursuant to Section 49 of RA
6657.11 Moreover, the DAR maintained that the issuance of the "Certificate
of Deposit" by the Landbank was a substantial compliance with Section 16(e)
of RA 6657 and the ruling in the case of Association of Small Landowners in
the Philippines, Inc., et al. vs. Hon. Secretary of Agrarian Reform, G.R. No.
78742, July 14, 1989 (175 SCRA 343).12
For its part, petitioner Landbank declared that the issuance of the
Certificates of Deposits was in consonance with Circular Nos. 29, 29-A and 54
of the Land Registration Authority where the words "reserved/deposited"
were also used.13
On October 20, 1994, the respondent court rendered the assailed decision in
favor of private respondents.14Petitioners filed a motion for reconsideration
but respondent court denied the same.15
Hence, the instant petitions.
On March 20, 1995, private respondents filed a motion to dismiss the
petition in G.R. No. 118745 alleging that the appeal has no merit and is
merely intended to delay the finality of the appealed decision.16 The Court,
however, denied the motion and instead required the respondents to file
their comments.17
Petitioners submit that respondent court erred in (1) declaring as null and
void DAR Administrative Order No. 9, Series of 1990, insofar as it provides for
the opening of trust accounts in lieu of deposit in cash or in bonds, and (2) in
holding that private respondents are entitled as a matter of right to the
immediate and provisional release of the amounts deposited in trust pending
the final resolution of the cases it has filed for just compensation.
Anent the first assignment of error, petitioners maintain that the word
"deposit" as used in Section 16(e) of RA 6657 referred merely to the act of
depositing and in no way excluded the opening of a trust account as a form
of deposit. Thus, in opting for the opening of a trust account as the
acceptable form of deposit through Administrative Circular No. 9, petitioner
DAR did not commit any grave abuse of discretion since it merely exercised
its power to promulgate rules and regulations in implementing the declared
policies of RA 6657.
The contention is untenable. Section 16(e) of RA 6657 provides as follows:
Sec. 16. Procedure for Acquisition of Private Lands —
xxx xxx xxx
(e) Upon receipt by the landowner of the corresponding payment or, in case
of rejection or no response from the landowner, upon the deposit with an
accessible bank designated by the DAR of the compensation in cash or in LBP
bonds in accordance with this Act, the DAR shall take immediate possession
of the land and shall request the proper Register of Deeds to issue a Transfer
Certificate of Title (TCT) in the name of the Republic of the Philippines. . . .
(emphasis supplied)
It is very explicit therefrom that the deposit must be made only in "cash" or
in "LBP bonds". Nowhere does it appear nor can it be inferred that the
deposit can be made in any other form. If it were the intention to include a
"trust account" among the valid modes of deposit, that should have been
made express, or at least, qualifying words ought to have appeared from
which it can be fairly deduced that a "trust account" is allowed. In sum, there
is no ambiguity in Section 16(e) of RA 6657 to warrant an expanded
construction of the term "deposit".
The conclusive effect of administrative construction is not absolute. Action of
an administrative agency may be disturbed or set aside by the judicial
department if there is an error of law, a grave abuse of power or lack of
jurisdiction or grave abuse of discretion clearly conflicting with either the
letter or the spirit of a legislative enactment.18 In this regard, it must be
stressed that the function of promulgating rules and regulations may be
legitimately exercised only for the purpose of carrying the provisions of the
law into effect. The power of administrative agencies is thus confined to
implementing the law or putting it into effect. Corollary to this is that
administrative regulations cannot extend
the law and amend a legislative enactment,19 for settled is the rule that
administrative regulations must be in harmony with the provisions of the
law. And in case there is a discrepancy between the basic law and an
implementing rule or regulation, it is the former that prevails.20
In the present suit, the DAR clearly overstepped the limits of its power to
enact rules and regulations when it issued Administrative Circular No. 9.
There is no basis in allowing the opening of a trust account in behalf of the
landowner as compensation for his property because, as heretofore
discussed, Section 16(e) of RA 6657 is very specific that the deposit must be
made only in "cash" or in "LBP bonds". In the same vein, petitioners cannot
invoke LRA Circular Nos. 29, 29-A and 54 because these implementing
regulations cannot outweigh the clear provision of the law. Respondent court
therefore did not commit any error in striking down Administrative Circular
No. 9 for being null and void.
Proceeding to the crucial issue of whether or not private respondents are
entitled to withdraw the amounts deposited in trust in their behalf pending
the final resolution of the cases involving the final valuation of their
properties, petitioners assert the negative.
The contention is premised on the alleged distinction between the deposit of
compensation under Section 16(e) of RA 6657 and payment of final
compensation as provided under Section 1821 of the same law. According to
petitioners, the right of the landowner to withdraw the amount deposited in
his behalf pertains only to the final valuation as agreed upon by the
landowner, the DAR and the LBP or that adjudged by the court. It has no
reference to amount deposited in the trust account pursuant to Section 16(e)
in case of rejection by the landowner because the latter amount is only
provisional and intended merely to secure possession of the property
pending final valuation. To further bolster the contention petitioners cite the
following pronouncements in the case of "Association of Small Landowners
in the Phil. Inc. vs. Secretary of Agrarian Reform".22
for their properties simply because they rejected the DAR's valuation, and
notwithstanding that they have already been deprived of the possession and
use of such properties, is an oppressive exercise of eminent domain. The
irresistible expropriation of private respondents' properties was painful
enough for them. But petitioner DAR rubbed it in all the more by withholding
that which rightfully belongs to private respondents in exchange for the
taking, under an authority (the "Association" case) that is, however,
misplaced. This is misery twice bestowed on private respondents, which the
Court must rectify.
Hence, we find it unnecessary to distinguish between provisional
compensation under Section 16(e) and final compensation under Section 18
for purposes of exercising the landowners' right to appropriate the same.
The immediate effect in both situations is the same, the landowner is
deprived of the use and possession of his property for which he should be
fairly and immediately compensated. Fittingly, we reiterate the cardinal rule
that:
. . . within the context of the State's inherent power of eminent domain, just
compensation means not only the correct determination of the amount to be
paid to the owner of the land but also the payment of the land within a
reasonable time from its taking. Without prompt payment, compensation
cannot be considered "just" for the property owner is made to suffer the
consequence of being immediately deprived of his land while being made to
wait for a decade or more before actually receiving the amount necessary to
cope with his loss. 24 (Emphasis supplied)

The last major challenge to CARP is that the landowner is divested of his The promulgation of the "Association" decision endeavored to remove all
property even before actual payment to him in full of just compensation, in legal obstacles in the implementation of the Comprehensive Agrarian Reform
contravention of a well-accepted principle of eminent domain. Program and clear the way for the true freedom of the farmer.25 But despite
this, cases involving its implementation continue to multiply and clog the
xxx xxx xxx courts' dockets. Nevertheless, we are still optimistic that the goal of totally
emancipating the farmers from their bondage will be attained in due time. It
The CARP Law, for its part conditions the transfer of possession and
must be stressed, however, that in the pursuit of this objective, vigilance
ownership of the land to the government on receipt by the landowner of the
over the rights of the landowners is equally important because social justice
corresponding payment or the deposit by the DAR of the compensation in
cannot be invoked to trample on the rights of property owners, who under
cash or LBP bonds with an accessible bank. Until then, title also remains with
our Constitution and laws are also entitled to protection.26
the landowner. No outright change of ownership is contemplated either.
WHEREFORE, the foregoing premises considered, the petition is hereby
xxx xxx xxx
DENIED for lack of merit and the appealed decision is AFFIRMED in toto.
Hence the argument that the assailed measures violate due process by
SO ORDERED.
arbitrarily transferring title before the land is fully paid for must also be
rejected.

Notably, however, the aforecited case was used by respondent court in

discarding petitioners' assertion as it found that:

. . . despite the "revolutionary" character of the expropriation envisioned

under RA 6657 which led the Supreme Court, in the case of Association of
Small Landowners in the Phil. Inc. vs. Secretary of Agrarian Reform (175 SCRA
343), to conclude that "payments of the just compensation is not always
required to be made fully in money" — even as the Supreme Court admits in
the same case "that the traditional medium for the payment of just
compensation is money and no other" — the Supreme Court in said case did
not abandon the "recognized rule . . . that title to the property expropriated
shall pass from the owner to the expropriator only upon full payment of the
just compensation." 23 (Emphasis supplied)

We agree with the observations of respondent court. The ruling in the

"Association" case merely recognized the extraordinary nature of the
expropriation to be undertaken under RA 6657 thereby allowing a deviation
from the traditional mode of payment of compensation and recognized
payment other than in cash. It did not, however, dispense with the settled
rule that there must be full payment of just compensation before the title to
the expropriated property is transferred.

The attempt to make a distinction between the deposit of compensation

under Section 16(e) of RA 6657 and determination of just compensation
under Section 18 is unacceptable. To withhold the right of the landowners to
appropriate the amounts already deposited in their behalf as compensation