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G.R. No.

L-46496 February 27, 1940

ANG TIBAY, represented by TORIBIO TEODORO, manager and propietor, and


NATIONAL WORKERS BROTHERHOOD, petitioners,
vs.
THE COURT OF INDUSTRIAL RELATIONS and NATIONAL LABOR UNION,
INC., respondents.

Office of the Solicitor-General Ozaeta and Assistant Attorney Barcelona for the Court of
Industrial Relations.
Antonio D. Paguia for National Labor Unon.
Claro M. Recto for petitioner "Ang Tibay".
Jose M. Casal for National Workers' Brotherhood.

LAUREL, J.:

The Solicitor-General in behalf of the respondent Court of Industrial Relations in the above-
entitled case has filed a motion for reconsideration and moves that, for the reasons stated in
his motion, we reconsider the following legal conclusions of the majority opinion of this
Court:

1. Que un contrato de trabajo, asi individual como colectivo, sin termino fijo de
duracion o que no sea para una determinada, termina o bien por voluntad de
cualquiera de las partes o cada vez que ilega el plazo fijado para el pago de los
salarios segun costumbre en la localidad o cunado se termine la obra;

2. Que los obreros de una empresa fabril, que han celebrado contrato, ya individual
ya colectivamente, con ell, sin tiempo fijo, y que se han visto obligados a cesar en
sus tarbajos por haberse declarando paro forzoso en la fabrica en la cual tarbajan,
dejan de ser empleados u obreros de la misma;

3. Que un patrono o sociedad que ha celebrado un contrato colectivo de trabajo con


sus osbreros sin tiempo fijo de duracion y sin ser para una obra determiminada y
que se niega a readmitir a dichos obreros que cesaron como consecuencia de un
paro forzoso, no es culpable de practica injusta in incurre en la sancion penal del
articulo 5 de la Ley No. 213 del Commonwealth, aunque su negativa a readmitir se
deba a que dichos obreros pertenecen a un determinado organismo obrero, puesto
que tales ya han dejado deser empleados suyos por terminacion del contrato en
virtud del paro.

The respondent National Labor Union, Inc., on the other hand, prays for the vacation of the
judgement rendered by the majority of this Court and the remanding of the case to the Court
of Industrial Relations for a new trial, and avers:

1. That Toribio Teodoro's claim that on September 26, 1938, there was shortage of
leather soles in ANG TIBAY making it necessary for him to temporarily lay off the
members of the National Labor Union Inc., is entirely false and unsupported by the
records of the Bureau of Customs and the Books of Accounts of native dealers in
leather.

2. That the supposed lack of leather materials claimed by Toribio Teodoro was but a
scheme to systematically prevent the forfeiture of this bond despite the breach of his
CONTRACT with the Philippine Army.

3. That Toribio Teodoro's letter to the Philippine Army dated September 29, 1938, (re
supposed delay of leather soles from the States) was but a scheme to systematically
prevent the forfeiture of this bond despite the breach of his CONTRACT with the
Philippine Army.

4. That the National Worker's Brotherhood of ANG TIBAY is a company or employer


union dominated by Toribio Teodoro, the existence and functions of which are illegal.
(281 U.S., 548, petitioner's printed memorandum, p. 25.)

5. That in the exercise by the laborers of their rights to collective bargaining, majority
rule and elective representation are highly essential and indispensable. (Sections 2
and 5, Commonwealth Act No. 213.)

6. That the century provisions of the Civil Code which had been (the) principal
source of dissensions and continuous civil war in Spain cannot and should not be
made applicable in interpreting and applying the salutary provisions of a modern
labor legislation of American origin where the industrial peace has always been the
rule.

7. That the employer Toribio Teodoro was guilty of unfair labor practice for
discriminating against the National Labor Union, Inc., and unjustly favoring the
National Workers' Brotherhood.

8. That the exhibits hereto attached are so inaccessible to the respondents that even
with the exercise of due diligence they could not be expected to have obtained them
and offered as evidence in the Court of Industrial Relations.

9. That the attached documents and exhibits are of such far-reaching importance
and effect that their admission would necessarily mean the modification and reversal
of the judgment rendered herein.

The petitioner, Ang Tibay, has filed an opposition both to the motion for reconsideration of
the respondent National Labor Union, Inc.

In view of the conclusion reached by us and to be herein after stead with reference to the
motion for a new trial of the respondent National Labor Union, Inc., we are of the opinion
that it is not necessary to pass upon the motion for reconsideration of the Solicitor-General.
We shall proceed to dispose of the motion for new trial of the respondent labor union.
Before doing this, however, we deem it necessary, in the interest of orderly procedure in
cases of this nature, in interest of orderly procedure in cases of this nature, to make several
observations regarding the nature of the powers of the Court of Industrial Relations and
emphasize certain guiding principles which should be observed in the trial of cases brought
before it. We have re-examined the entire record of the proceedings had before the Court of
Industrial Relations in this case, and we have found no substantial evidence that the
exclusion of the 89 laborers here was due to their union affiliation or activity. The whole
transcript taken contains what transpired during the hearing and is more of a record of
contradictory and conflicting statements of opposing counsel, with sporadic conclusion
drawn to suit their own views. It is evident that these statements and expressions of views
of counsel have no evidentiary value.

The Court of Industrial Relations is a special court whose functions are specifically stated in
the law of its creation (Commonwealth Act No. 103). It is more an administrative than a
part of the integrated judicial system of the nation. It is not intended to be a mere receptive
organ of the Government. Unlike a court of justice which is essentially passive, acting only
when its jurisdiction is invoked and deciding only cases that are presented to it by the
parties litigant, the function of the Court of Industrial Relations, as will appear from perusal
of its organic law, is more active, affirmative and dynamic. It not only exercises judicial or
quasi-judicial functions in the determination of disputes between employers and employees
but its functions in the determination of disputes between employers and employees but its
functions are far more comprehensive and expensive. It has jurisdiction over the entire
Philippines, to consider, investigate, decide, and settle any question, matter
controversy or dispute arising between, and/or affecting employers and employees
or laborers, and regulate the relations between them, subject to, and in accordance
with, the provisions of Commonwealth Act No. 103 (section 1). It shall take cognizance
or purposes of prevention, arbitration, decision and settlement, of any industrial or
agricultural dispute causing or likely to cause a strike or lockout, arising from differences as
regards wages, shares or compensation, hours of labor or conditions of tenancy or
employment, between landlords and tenants or farm-laborers, provided that the number of
employees, laborers or tenants of farm-laborers involved exceeds thirty, and such industrial
or agricultural dispute is submitted to the Court by the Secretary of Labor or by any or both
of the parties to the controversy and certified by the Secretary of labor as existing and
proper to be by the Secretary of Labor as existing and proper to be dealth with by the Court
for the sake of public interest. (Section 4, ibid.) It shall, before hearing the dispute and in the
course of such hearing, endeavor to reconcile the parties and induce them to settle the
dispute by amicable agreement. (Paragraph 2, section 4, ibid.) When directed by the
President of the Philippines, it shall investigate and study all industries established in a
designated locality, with a view to determinating the necessity and fairness of fixing and
adopting for such industry or locality a minimum wage or share of laborers or tenants, or a
maximum "canon" or rental to be paid by the "inquilinos" or tenants or less to landowners.
(Section 5, ibid.) In fine, it may appeal to voluntary arbitration in the settlement of industrial
disputes; may employ mediation or conciliation for that purpose, or recur to the more
effective system of official investigation and compulsory arbitration in order to determine
specific controversies between labor and capital industry and in agriculture. There is in
reality here a mingling of executive and judicial functions, which is a departure from
the rigid doctrine of the separation of governmental powers.

In the case of Goseco vs. Court of Industrial Relations et al., G.R. No. 46673, promulgated
September 13, 1939, we had occasion to joint out that the Court of Industrial Relations et
al., G. R. No. 46673, promulgated September 13, 1939, we had occasion to point out that
the Court of Industrial Relations is not narrowly constrained by technical rules of procedure,
and the Act requires it to "act according to justice and equity and substantial merits of the
case, without regard to technicalities or legal forms and shall not be bound by any
technicalities or legal forms and shall not be bound by any technical rules of legal evidence
but may inform its mind in such manner as it may deem just and equitable." (Section 20,
Commonwealth Act No. 103.) It shall not be restricted to the specific relief claimed or
demands made by the parties to the industrial or agricultural dispute, but may include in the
award, order or decision any matter or determination which may be deemed necessary or
expedient for the purpose of settling the dispute or of preventing further industrial or
agricultural disputes. (section 13, ibid.) And in the light of this legislative policy, appeals to
this Court have been especially regulated by the rules recently promulgated by the rules
recently promulgated by this Court to carry into the effect the avowed legislative purpose.
The fact, however, that the Court of Industrial Relations may be said to be free from the
rigidity of certain procedural requirements does not mean that it can, in justifiable cases
before it, entirely ignore or disregard the fundamental and essential requirements of due
process in trials and investigations of an administrative character. There are primary rights
which must be respected even in proceedings of this character:

(1) The first of these rights is the right to a hearing, which includes the right of the
party interested or affected to present his own case and submit evidence in support
thereof. In the language of Chief Hughes, in Morgan v. U.S., 304 U.S. 1, 58 S. Ct.
773, 999, 82 Law. ed. 1129, "the liberty and property of the citizen shall be protected
by the rudimentary requirements of fair play.

(2) Not only must the party be given an opportunity to present his case and to
adduce evidence tending to establish the rights which he asserts but the
tribunal must consider the evidence presented. (Chief Justice Hughes in Morgan v.
U.S. 298 U.S. 468, 56 S. Ct. 906, 80 law. ed. 1288.) In the language of this court
in Edwards vs. McCoy, 22 Phil., 598, "the right to adduce evidence, without the
corresponding duty on the part of the board to consider it, is vain. Such right is
conspicuously futile if the person or persons to whom the evidence is presented can
thrust it aside without notice or consideration."

(3) "While the duty to deliberate does not impose the obligation to decide right, it
does imply a necessity which cannot be disregarded, namely, that of having
something to support it is a nullity, a place when directly attached." (Edwards vs.
McCoy, supra.) This principle emanates from the more fundamental is contrary to
the vesting of unlimited power anywhere. Law is both a grant and a limitation upon
power.

(4) Not only must there be some evidence to support a finding or conclusion (City of
Manila vs. Agustin, G.R. No. 45844, promulgated November 29, 1937, XXXVI O. G.
1335), but the evidence must be "substantial." (Washington, Virginia and Maryland
Coach Co. v. national labor Relations Board, 301 U.S. 142, 147, 57 S. Ct. 648, 650,
81 Law. ed. 965.) It means such relevant evidence as a reasonable mind accept as
adequate to support a conclusion." (Appalachian Electric Power v. National Labor
Relations Board, 4 Cir., 93 F. 2d 985, 989; National Labor Relations Board v.
Thompson Products, 6 Cir., 97 F. 2d 13, 15; Ballston-Stillwater Knitting Co. v.
National Labor Relations Board, 2 Cir., 98 F. 2d 758, 760.) . . . The statute provides
that "the rules of evidence prevailing in courts of law and equity shall not be
controlling.' The obvious purpose of this and similar provisions is to free
administrative boards from the compulsion of technical rules so that the mere
admission of matter which would be deemed incompetent inn judicial proceedings
would not invalidate the administrative order. (Interstate Commerce Commission v.
Baird, 194 U.S. 25, 44, 24 S. Ct. 563, 568, 48 Law. ed. 860; Interstate Commerce
Commission v. Louisville and Nashville R. Co., 227 U.S. 88, 93 33 S. Ct. 185, 187,
57 Law. ed. 431; United States v. Abilene and Southern Ry. Co. S. Ct. 220, 225, 74
Law. ed. 624.) But this assurance of a desirable flexibility in administrative procedure
does not go far as to justify orders without a basis in evidence having rational
probative force. Mere uncorroborated hearsay or rumor does not constitute
substantial evidence. (Consolidated Edison Co. v. National Labor Relations Board,
59 S. Ct. 206, 83 Law. ed. No. 4, Adv. Op., p. 131.)"

(5) The decision must be rendered on the evidence presented at the hearing, or at
least contained in the record and disclosed to the parties affected. (Interstate
Commence Commission vs. L. & N. R. Co., 227 U.S. 88, 33 S. Ct. 185, 57 Law. ed.
431.) Only by confining the administrative tribunal to the evidence disclosed to the
parties, can the latter be protected in their right to know and meet the case against
them. It should not, however, detract from their duty actively to see that the law is
enforced, and for that purpose, to use the authorized legal methods of securing
evidence and informing itself of facts material and relevant to the controversy.
Boards of inquiry may be appointed for the purpose of investigating and determining
the facts in any given case, but their report and decision are only advisory. (Section
9, Commonwealth Act No. 103.) The Court of Industrial Relations may refer any
industrial or agricultural dispute or any matter under its consideration or advisement
to a local board of inquiry, a provincial fiscal. a justice of the peace or any public
official in any part of the Philippines for investigation, report and recommendation,
and may delegate to such board or public official such powers and functions as the
said Court of Industrial Relations may deem necessary, but such delegation shall not
affect the exercise of the Court itself of any of its powers. (Section 10, ibid.)

(6) The Court of Industrial Relations or any of its judges, therefore, must act on its or
his own independent consideration of the law and facts of the controversy, and not
simply accept the views of a subordinate in arriving at a decision. It may be that the
volume of work is such that it is literally Relations personally to decide all
controversies coming before them. In the United States the difficulty is solved with
the enactment of statutory authority authorizing examiners or other subordinates to
render final decision, with the right to appeal to board or commission, but in our case
there is no such statutory authority.

(7) The Court of Industrial Relations should, in all controversial questions, render its
decision in such a manner that the parties to the proceeding can know the various
issues involved, and the reasons for the decision rendered. The performance of this
duty is inseparable from the authority conferred upon it.
In the right of the foregoing fundamental principles, it is sufficient to observe here that,
except as to the alleged agreement between the Ang Tibay and the National Worker's
Brotherhood (appendix A), the record is barren and does not satisfy the thirst for a factual
basis upon which to predicate, in a national way, a conclusion of law.

This result, however, does not now preclude the concession of a new trial prayed for the by
respondent National Labor Union, Inc., it is alleged that "the supposed lack of material
claimed by Toribio Teodoro was but a scheme adopted to systematically discharged all the
members of the National Labor Union Inc., from work" and this avernment is desired to be
proved by the petitioner with the "records of the Bureau of Customs and the Books of
Accounts of native dealers in leather"; that "the National Workers Brotherhood Union of Ang
Tibay is a company or employer union dominated by Toribio Teodoro, the existence and
functions of which are illegal." Petitioner further alleges under oath that the exhibits
attached to the petition to prove his substantial avernments" are so inaccessible to the
respondents that even within the exercise of due diligence they could not be expected to
have obtained them and offered as evidence in the Court of Industrial Relations", and that
the documents attached to the petition "are of such far reaching importance and effect that
their admission would necessarily mean the modification and reversal of the judgment
rendered herein." We have considered the reply of Ang Tibay and its arguments against the
petition. By and large, after considerable discussions, we have come to the conclusion that
the interest of justice would be better served if the movant is given opportunity to present at
the hearing the documents referred to in his motion and such other evidence as may be
relevant to the main issue involved. The legislation which created the Court of Industrial
Relations and under which it acts is new. The failure to grasp the fundamental issue
involved is not entirely attributable to the parties adversely affected by the result.
Accordingly, the motion for a new trial should be and the same is hereby granted, and the
entire record of this case shall be remanded to the Court of Industrial Relations, with
instruction that it reopen the case, receive all such evidence as may be relevant and
otherwise proceed in accordance with the requirements set forth hereinabove. So ordered.
G.R. No. L-26803 October 14, 1975

AMERICAN TOBACCO COMPANY, CARNATION COMPANY, CURTISS CANDY


COMPANY, CUDAHY PACKING CO., CLUETT, PEABODY & CO., INC., CANNONMILLS
COMPANY, FORMICA CORPORATION, GENERALMOTORS CORPORATION,
INTERNATIONAL LATEX CORPORATION, KAYSER-ROTH CORPORATION, M and R
DIETETIC LABORATORIES, INC., OLIN MATHIESON, PARFUM CIRO, INC., PROCTER
and GAMBLE COMPANY, PROCTER and GAMBLE PHILIPPINE MANUFACTURING
CORPORATION, PARFUMS PORVIL DENTRIFICES DU DOCTEUR PIERRE REUNIS
SOCIETE ANONYME, R.J. REYNOLDS TOBACCO COMPANY, SWIFT AND COMPANY,
STERLING PRODUCTS INTERNATIONAL, THE CLOROX COMPANY, WARNER
LAMBERT PHARMACEUTICALS COMPANY and ZENITH RADIO
CORPORATION, petitioners,
vs.
THE DIRECTOR OF PATENTS, ATTYS. AMANDO L. MARQUEZ, TEOFILO P.
VELASCO, RUSTICO A. CASIA and HECTOR D. BUENALUZ, respondents.

Lichauco, Picazo and Agcaoili for petitioners.

Office of the Solicitor General for respondents.

ANTONIO, J.:

In this petition for mandamus with preliminary injunction, petitioners challenge the validity of
Rule 168 of the "Revised Rules of Practice before the Philippine Patent Office in Trademark
Cases" as amended, authorizing the Director of Patents to designate any ranking official of
said office to hear "inter partes" proceedings. Said Rule likewise provides that "all
judgments determining the merits of the case shall be personally and directly prepared by
the Director and signed by him." These proceedings refer to the hearing of opposition to the
registration of a mark or trade name, interference proceeding instituted for the purpose of
determining the question of priority of adoption and use of a trade-mark, trade name or
service-mark, and cancellation of registration of a trade-mark or trade name pending at the
Patent Office.

Petitioners are parties, respectively, in the following opposition, interference and


cancellation proceedings in said Office: Inter Partes Cases Nos. 157, 392, 896, 282, 247,
354, 246,332, 398, 325, 374, 175, 297, 256, 267, 111, 400, 324, 114, 159, 346, and 404.

Under the Trade-mark Law (Republic Act No. 166 ), the Director of Patents is vested with
jurisdiction over the above-mentioned cases. Likewise, the Rules of Practice in Trade-mark
Cases contains a similar provision, thus:

168. Original jurisdiction over inter partes proceeding. — the Director of


Patents shall have original jurisdiction over inter partes proceedings. In the
event that the Patent Office should be provided with an Examiner of
Interferences, this Examiner shall have the original jurisdiction over these
cases, instead of the Director. In the case that the Examiner of Interferences
takes over the original jurisdiction over inter partes proceedings, his final
decision subject to appeal to the Director of Patents within three months of
the receipt of notice of decisions. Such appeals shall be governed by sections
2, 3, 4, 6, 7, 8, 10, 11, 12, 13, 14, 15 and 22 of Rule 41 of the Rules of Court
insofar as said sections are applicable and appropriate, and the appeal fee
shall be P25.00.

The Rules of Practice in Trade-mark Cases were drafted and promulgated by the Director of
Patents and approved by the then Secretary of Agriculture and Commerce.. 1

Subsequently, the Director of Patents, with the approval of the Secretary of Agriculture and Commerce, amended the afore-quoted Rule 168
to read as follows:

168. Original Jurisdiction over inter partes proceedings. — The Director of


Patents shall have original jurisdiction over inter partes proceedings, [In the
event that the Patent Office is provided with an Examiner of Interferences,
this Examiner shall then have the original jurisdiction over these cases,
instead of the Director. In the case that the Examiner of Interferences takes
over the original jurisdiction over inter partes proceedings, his final decisions
shall be subject to appeal to the Director of Patents within three months of the
receipt of notice decision. Such appeals shall be governed by Sections 2, 3,
4, 6, 7, 8,10, 11, 12, 13, 14, 15, and 22 of Rule 41 of the Rules of Court
insofar as said sections are applicable and appropriate, and the appeal fee
shall be [P25.00.] Such inter partes proceedings in the Philippine Patent
Office under this Title shall be heard before the Director of Patents, any
hearing officer, or any ranking official designated by the Director, but all
judgments determining the merits of the case shall be personally and directly
prepared by the Director and signed by him. (Emphasis supplied.)

In accordance with the amended Rule, the Director of Patents delegated the hearing of
petitioners' cases to hearing officers, specifically, Attys. Amando Marquez, Teofilo Velasco,
Rustico Casia and Hector Buenaluz, the other respondents herein.

Petitioners filed their objections to the authority of the hearing officers to hear their cases,
alleging that the amendment of the Rule is illegal and void because under the law the
Director must personally hear and decide inter partes cases. Said objections were overruled
by the Director of Patents, hence, the present petition for mandamus, to compel The
Director of Patents to personally hear the cases of petitioners, in lieu of the hearing
officers.

It would take an extremely narrow reading of the powers of the Director of Patents under the
general law2 and Republic Acts Nos. 1653 and 166 3 * to sustain the contention of petitioners.
Under section 3 of RA 165, the Director of Patents is "empowered to obtain the assistance
of technical, scientific or other qualified officers or employees of other departments,
bureaus, offices, agencies and instrumentalities of the Government, including corporations
owned, controlled or operated by the Government, when deemed necessary in the
consideration of any matter submitted to the Office relative to the enforcement of the
provisions" of said Act. Section 78 of the same Act also empowers "the Director, subject to
the approval of the Department Head," to "promulgate the necessary rules and regulations,
not inconsistent with law, for the conduct of all business in the Patent Office." The aforecited
statutory authority undoubtedly also applies to the administration and enforcement of the
Trade-mark Law (Republic Act No. 166).

It has been held that power-conferred upon an administrative agency to which the
administration of a statute is entrusted to issue such regulations and orders as may
be deemed necessary or proper in order to carry out its purposes and provisions
maybe an adequate source of authority to delegate a particular function, unless by
express provisions of the Act or by implication it has been withheld.4 There is no
provision either in Republic Act No. 165 or 166 negativing the existence of such authority,
so far as the designation of hearing examiners is concerned. Nor can the absence of such
authority be fairly inferred from contemporaneous and consistent Executive interpretation of
the Act.

The nature of the power and authority entrusted to The Director of Patents suggests that the
aforecited laws (Republic Act No. 166, in relation to Republic Act No. 165) should be
construed so as to give the aforesaid official the administrative flexibility necessary for the
prompt and expeditious discharge of his duties in the administration of said laws. As such
officer, he is required, among others, to determine the question of priority in patent
interference proceedings,5 decide applications for reinstatement of a lapsed
patent,6 cancellations of patents under Republic Act No. 165,7 inter partes proceedings such
as oppositions,8 claims of interference, 9 cancellation cases under the Trade-mark Law 10and other matters in connection
with the enforcement of the aforesaid laws. It could hardly be expected, in view of the magnitude of his responsibility, to require him to hear
personally each and every case pending in his Office. This would leave him little time to attend to his other duties. 11 For him to do so and at
the same time attend personally to the discharge of every other duty or responsibility imposed upon his Office by law would not further the
development of orderly and responsible administration. The reduction of existing delays in regulating agencies requires the elimination of
needless work at top levels. Unnecessary and unimportant details often occupy far too much of the time and energy of the heads of these
agencies and prevent full and expeditious consideration of the more important issues. the remedy is a far wider range of delegations to
subordinate officers. This sub-delegation of power has been justified by "sound principles of organization" which demand that "those at the
top be able to concentrate their attention upon the larger and more important questions of policy and practice, and their time be freed, so far
as possible, from the consideration of the smaller and far less important matters of detail." 12

Thus, it is well-settled that while the power to decide resides solely in the
administrative agency vested by law, this does not preclude a delegation of the
power to hold a hearing on the basis of which the decision of the administrative
agency will be made. 13

The rule that requires an administrative officer to exercise his own judgment and discretion
does not preclude him from utilizing, as a matter of practical administrative procedure, the
aid of subordinates to investigate and report to him the facts, on the basis of which the
officer makes his decisions. 14 It is sufficient that the judgment and discretion finally
exercised are those of the officer authorized by law. Neither does due process of law nor
the requirements of fair hearing require that the actual taking of testimony be before the
same officer who will make the decision in the case. As long as a party is not deprived of his
right to present his own case and submit evidence in support thereof, and the decision is
supported by the evidence in the record, there is no question that the requirements of due
process and fair trial are fully met. 15 In short, there is no abnegation of responsibility on the
part of the officer concerned as the actual decision remains with and is made by said
officer. 16 It is, however, required that to "give the substance of a hearing, which is for the
purpose of making determinations upon evidence the officer who makes the determinations
must consider and appraise the evidence which justifies them." 17

In the case at bar, while the hearing officer may make preliminary rulings on the myriad of
questions raised at the hearings of these cases, the ultimate decision on the merits of all the
issues and questions involved is left to the Director of Patents. Apart from the circumstance
that the point involved is procedural and not jurisdictional, petitioners have not shown in
what manner they have been prejudiced by the proceedings.

Moreover, as the Solicitor General Antonio P. Barredo, now a Member of this Court has
correctly pointed out, the repeated appropriations by Congress for hearing officers of the
Philippine Patent Office form 1963 to 1968 18 not only confirms the departmental
construction of the statute, but also constitutes a ratification of the act of the Director of
Patents and the Department Head as agents of Congress in the administration of the law. 19

WHEREFORE, the instant petition is hereby dismissed, with costs against petitioners.
G.R. No. L-8811 October 31, 1957

THE ACTING COLLECTOR OF CUSTOMS, petitioner,


vs.
THE COURT OF TAX APPEALS, and THE COMMISSIONER OF
CUSTOMS, respondents.
PHILIPPINE EDUCATION CO., INC., intervenor-respondent.

Office of the Solicitor General Ambrosio Padilla and Solicitor Eriberto D. Ignacio for
petitioner.
Marcial Esposo for intervenor and respondent.

FELIX, J.:

This is a petition to review a resolution of the Court of Tax Appeals dated January 22, 1955,
dismissing C.T.A. Case No. 17, entitled The Acting Collector of Customs vs. The Acting
Commissioner of Customs, upon motion of intervenor Philippine Education Co., Inc. The
facts of the case may be briefly stated as follows:

In October, 1953, The Philippine Education Co., Inc., imported by mail from the Hillman
Periodicals, Inc. of New York, New York U.S.A., 1,463 copies of the October, 1953, issue of
the magazine "Pageant" which carried on pages 16-25 thereof an article by one Laura
Berquist entitled "Check Your Sex-Life Against the New Kinsey Report". After hearing upon
the recommendation of the Board of Censors of the Bureau of Customs, herein petitioner
Collector of Customs rendered decision dated March 4, 1954, Manila Seizure Identification
Case No. 1307, holding that the article in question appearing in said issue of the "Pageant"
magazine, which contained quotations and excerpts from the treatise of Dr. Alfred Kinsey,
"The Sexual Behavior of the Human Female", violated the provisions of Section 3-(b) of the
Philippine Tariff Act of 1909 which prohibits the entry of obscene and indecent reading
materials in the Philippines and consequently ordered the seizure, forfeiture and burning of
the 1,463 copies of the magazine. The importer of the seized article, Philippine Education
Co., Inc., appealed the decision in due time to the Commissioner of Customs in conformity
with the procedure established by Section 1380 of the Administrative Code, and on August
28, 1954, the Commissioner rendered judgment reversing the Collector of Customs' view by
holding that the magazine "Pageant" did not contain obscene or indecent article. The
Collector of Customs was, therefore, ordered to release the magazine covered by Manila
Seizure Identification No. 1307 to the claimant Philippine Education Co., Inc., Upon receipt
of a copy of the respondent Commissioner's decision, the Secretary of Finance directed
said official to transmit the original record of the seizure case to the Court of Tax Appeals
for review which directive was complied with by the Commissioner on September 15, 1954.
On September 24, 1954, the Court of Tax Appeals returned to records to the Commissioner
of Customs informing him that the under Republic Act No. 1125, said Court is not
empowered nor under legal obligation to review motu proprio decisions of the Collector of
Internal Revenue, Commissioner of Customs or the provincial or city Boards of Assessment
Appeals, unlike the defunct Board of Tax Appeals which was conferred that prerogative. It
was further explained by said Court that jurisdiction to review on appeal decisions of the
aforementioned officials can only be acquired by the Court upon the filing of a formal
petition for review within the reglementary period of the person, association or corporation
adversely affected by the decision sought to be reviewed.

On September 27, 1954, the Acting Collector of Customs filed a notice of appeal from the
decision of the Commissioner of Customs to the Court of Tax Appeals, allegedly in
accordance with the provisions of Section 11 of Republic Act. No. 1125 in resolution to
Section 7 (2) of the same Act, and a petition for review was actually filed on the same day,
docketed as C.T.A. Case No. 17. Petitioner alleged, among other things, that the
Commissioner of Customs erred (1) in finding that the magazine "Pageant" did not come
under the category of obscene or indecent reading material within the purview of Section 3-
(b) of the Philippine Tariff Act of 1909; (2) In declaring that the admission of the magazine
"Pageant" was moral, practical and legal; (3) In holding that the spontaneous protest of the
citizenry was directed against the admission of the "Kinsey Report" and not against the
issue of the "Pageant" objected to; (4) In adopting the criterion that to determine whether a
book is obscene or indecent, it must be considered as a whole and not judged from
paragraphs alone which are vulgar and indecent. It was prayed that after hearing and
consideration, the decision of respondent Commissioner of Customs be set aside and the
copies of the aforesaid magazine be forfeited and burned pursuant to Section 1379 of the
Revised Administration Code.

The Commissioner of Customs, represented by an attorney in the Office of the Legal


Counsel, Bureau of Customs, filed his answer on October 14, 1954, contending that the
Collector of Customs of Manila was without authority or legal capacity to appeal under
Section 11 of Republic Act No. 1125; that the Court of Tax Appeals had no jurisdiction over
the subject matter because the case at bar did not involve collection of taxes; that this case,
if decided in favor of petitioner, would encourage insubordination among subordinates
against their superiors, and prayed that the petition denied.

With leave of Court, intervenor Philippine Education Co., Inc., filed on November 19, 1954,,
a motion to dismiss petition for review on the ground that the Acting Collector of Customs
who filed the notice of appeals and the petition for review lacks legal capacity to prosecute
the action; and that the petition states no cause of action and that the Court of Tax Appeals
has no jurisdiction over the subject matter to the action as the same did not involve disputed
assessment or refund of internal revenue taxes, customs duties, fees or charges. The
Solicitor General who took sides with the Collector of Customs in the controversy, filed an
opposition to the motion to dismiss presented by intervenor, refuting the arguments
adduced therein.

On January 22, 1955, the Court of Tax Appeals issued a resolution dismissing the petition
of the Collector of Customs, holding that in accordance with Section 7 of Republic Act No.
1125, the Court of Tax Appeals was conferred exclusive jurisdiction to review decisions of
the Commissioner of Customs in cases involving duties, fees, seizures, fines, forfeitures or
other penalties; that only persons, associations or corporations whose pecuniary and
proprietary interests are adversely affected by a decision of said official may appeal to said
Court; that the Commissioner of Customs is empowered under Section 1380 of the Revised
Administrative Code to approve, modify, or reverse decisions of the collectors of customs in
seizure cases brought under protest, and once this is done, the decision of the former
becomes executory unless the owner of the seized articles appeals to the Court within the
reglementary period for the review of the said decision. It further stated that with the
enactment of Republic Act No. 1125 creating the Court of Tax Appeals, the provisions of
Section 1386 of the Revised Administrative Code authorizing the Secretary of Finance to
order the removal of the records of the case to the courts for review was in effect abrogated.

From this resolution the Acting Collector of Customs, through the Solicitor General,
appealed the matter to this Court maintaining that the Court of Tax Appeals erred;

1. In holding that petitioner-appellant Collector of Customs may not appeal from or


petition for review decisions of the Commissioner of Customs even when expressly
directed to do so by the Secretary of Finance;

2. In holding that only the importer or consignee of the seized or detained article and
no other may appeal or petition for review to said Court the adverse ruling of the
Commissioner of Customs under Republic Act No. 1125;

3. In holding that its jurisdiction is limited only to cases involving disputed


assessments and payments of duties and charges of imported articles subject to
detention or seizure proceedings in the Bureau of Customs;

4. In holding that Republic Act. No. 1125 impliedly repealed the provisions of Section
1336 of the Revised Administrative Code empowering the Secretary of Finance to
remove and certify to the Court of First Instance (now Court of Tax Appeals) any
matter arising out the administration of customs laws which in opinion should be
passed upon by said Court, and in holding that the said prerogative is no longer
available to said Secretary of Finance;

5. In dismissing the appeal by petitioner-appellant in said C.T.A. Case No. 17; and.

6. In failing to decide and pass upon a question of substance and transcendental


importance; that the "Kinsey Report" on the Sexual Behavior of the Human Female"
contained in the seized magazine in question is indeed immoral, indecent, obscene
and is consequently among the literature or printed article banned by the provisions
of Section 3-(b) of the Philippine Tariff Act of 1909.

ISSUE
Consolidating the interrelated questions raised by petitioner-appellant, the issues left for our
determination are: (a) whether the jurisdiction of the Court of Tax Appeals to take
cognizance of appeals from decisions of the Commissioner of Customs is only limited to
cases involving disputed assessments and payments of duties and charges subject to
detention or seizure proceedings in the Bureau of Customs; and (b) whether the Collector of
Customs, in his official capacity, can institute an appeal from a decision of the
Commissioner of Customs of the Court of Tax Appeals, even granting that he (the Collector)
was directed to do so by the Secretary of Finance.
I. The explanatory note of House Bill No. 175, that became Republic Act No. 1125, which
created the Court of Tax Appeals, contains the following manifestation:

Cognizant of the necessity of having an agency which will review tax cases and at
the same time expedite the collection of taxes which is badly needed by our
government, the undersigned proposes the organization by legislation of the Court of
Tax Appeals.

From this manifestation, there seems to be no room for doubt as to the legislative intent in
creating said Court, which We must have in mind in passing upon its jurisdiction. That is
probably the reason why the respondent Court of Tax Appeals itself dismissed the appeal of
the Collector of Customs holding that: only persons, associations or corporations whose
pecuniary and proprietary interests are adversely affected by a decision of the Collector of
Internal Revenue. Commissioner of Customs or provincial or city Board of Assessments
Appeals may appeal to said Court".

It is not disputed that the decision of the Commissioner of Customs appealed from arose
from the judgment reached by the Collector of Customs of the port of Manila, upon
recommendation of the Board of Censors of that Bureau, declaring that the article of Miss
Berquist appearing in the October 1953 issue of the magazine "Pageant" as violative of the
prohibition contained in Section 3-(b) of the Philippine Tariff Act of 1909.

It is not questioned either that the case at bar does not involve liability for customs, duties,
fees, of other money charges, and if We consider this case in the light of the part of the
explanatory note of said Act 1125 aforequoted, We might find the proper and logical
foundation for the inference that this case may not come within the purview of the
provisions thereof. Section 7 of Republic Act No. 1125 conferring jurisdiction on the Court of
Tax Appeals, contains the following:

SEC. 7. Jurisdiction.—The Court of Tax Appeals shall exercise exclusive appellate


jurisdiction to review by appeal, as herein provided —

(1) . . .

(2) Decisions of the Commissioner of Customs in cases involving liability for customs
duties, fees other money charges; seizures, detention or release of property
affected; fines, forfeitures or other penalties in relation thereto or other matters
arising under the Customs Law or other or part of law administered by the Bureau of
Customs; and

(3) . . .

It will be noted that the final sentence of paragraph 2 of this Section 7, "or other matters
arising under the Customs Law or part of law administered by the Bureau of Customs",
comes after an enumeration of the class of cases cognizable by the Court of Tax Appeals,
namely, those involving liability for customs duties, fees or other money charges, and as
contended by respondent intervenor, by the doctrine of ejusdem generis in order that the
"other matters arising under the Customs Law or other law or part of law administered by
the Bureau of Customs" may come within the jurisdiction of the Court, they should involve
also liability for payment of money to the Government (see Ollada vs. Court of Tax Appeals
et al., (99 Phil., 604), penned by Mr. Justice Felix Bautista Angelo, squarely interpreting the
provisions of the aforequoted Section 7-(2) of Rep. Act. No. 1125).

The rule of ejusdem generis requires that words of general description following
words of particular description be interpreted as applying to things of similar
character (Words and Phrases Vol. 14, p. 193-194.

The administrative Code itself in defining the meaning and scope of the phrase "seized
property" as used in Chapter 39 on the Bureau of Customs, says that:

SEIZED PROPERTY means any property seized or held for the satisfaction of any
administrative fine or for the enforcement of any forfeiture under the Customs Law.
(Sec. 1419 of the R.A.C.).

a definition which is in consonance with the aforementioned doctrine of ejusdem generis.


And this interpretation cannot be otherwise. Let us suppose, for example, that the
Commissioner of Customs, against the findings of the Board of Marine Inquiry would
exonerate a licensed marine officer form any responsibility incurred, according to the
charges, on account of professional misconduct, intemperate habits, negligence or
incapacity of the officer concerned (Sec. 1198 of the Revised Administrative Code), can the
provisions of Section 1384 of the Revise Administrative Code (indicating the person who
may cause the removal of a customs case into court which provides that "if the decision of
the Commissioner is adverse to the Government the case may also be removed in the
manner hereinafter specified, by order of the department Head"), be applicable to that case
as counsel for the petitioner sweepingly make them applicable to the case at bar? Certainly,
the answer is too obvious to deserve any denial. In said Section 1198 it is said that the
appeal is to be taken to the Secretary of Finance, the Department Head, and if by reason of
this provision the case of the example could not be taken to the Court of Tax Appeals, then
as a corollary thereof it should be held also that there are cases wherein decisions of the
Commissioner of Customs arising under the Customs Law or other law or part of law
administered by the Bureau of Customs, cannot be taken for review to the Court o Tax
Appeals which may not have the required qualifications to pass upon such matter as those
involved in the case at bar.

On the other hand and as stated before, the action of the petitioner Collector of Customs
was predicated on the provision of Section 3-(b) of the Philippine Tariff Act of 1909, as
amended, which as follows:

SEC. 3. That importation or shipment into the Philippine Islands of the following articles is
prohibited:

(a) . . .;

(b) Articles, books, pamphlets, printed matter manuscripts typewritten matter,


paintings, illustrations, figures or objects of obscene or indecent character or
subversive of public order.
This section 3 merely prohibits the importation of printed matter of obscene or
indecent character and does not provide for the seizure and destructions of such
printed matter as ordered by the Collector of Customs though he was in that reversed by
the Commissioner of Customs who ordered the release of the copies of the magazine to the
intervenor Philippine Education Co., Inc. As regards such seizure, Section 1363 of the
Revised Administrative Code enumerates the merchandise or properties subject to seizure
under the Customs Law, but it contains no specific provision for the seizure of the
merchandise (granting that the copies of said magazine come within the general concept of
the word merchandise) containing obscene or indecent reading matter. The provision of
said Section 1363 that comes most near to the point in controversy or that might have a
bearing on the premises, is paragraph (f) thereof, which reads as follows:

(f) Any merchandise of prohibited importation or exportation the importation or


exportation of which is effected or attempted contrary to law, and all other
merchandise which, in the opinion of the Collector have been used or intended to be
used as instrument in the importation or exportation of the former. (As amended by
Sec. 1, R.A. No. 454).

But nothing of record indicates that the importation of the 1,463 copies of the "Pageant"
magazine in question was effected contrary to law, for said copies were brought to the
Philippines in accordance with the procedure provided for cases of importation of
magazines.

In support of his connection that seizures of any kind made by the Bureau of Customs come
within the exclusive appellate jurisdiction of the Court of Tax Appeals, the dissenting Justice
gives us an example the case of illegal importation of opium and says: "Let us suppose that
opium is imported, and being of prohibited importation, the Collector of Custom seized and
confiscates the same and the seizure and confiscation is approved by the Commissioner of
Customs, and the importer, dissatisfied with said decision of the Commissioner, claiming
that the article found by the customs authorities to be opium was not really opium, but
something else or that although it is opium, nevertheless, it would be used for a legitimate
purpose, where would he go or appeal for relief? Frankly, We believe this example to be
absolutely beside the point of everyone knows that the seizure in question not only comes
under the provision of Section 1363, paragraph (f) just quoted, but also that the unlicensed
importation opium into this country is criminal offense penalized and covered by article 192
of the Revised Penal Code and that in addition to the penalty prescribed therein for those
found guilty of said offense, the same Penal Code prescribes, as accessory penalty, the
forfeiture of the prohibiting drug, and it is of common knowledge that said accessory penalty
is usually imposed by Judges of Courts of First Instance where the case is originally tried.
(Article 25, R.P.C.).

The dissenting justice further cites our decisions in the three cases of Millarez, as Acting
Collector of Customs for the port of Manila, et al. vs. Judge Rafael Amparo et al., 1 G. R.
Nos. L-8364, L-8365, and L-8351, June 30, 1955; the case of Kho Kum Commercial vs.
Commissioner of Customs et al., G.R. No. L-9778, Resolution of October 11, 1955, and
NAMARCO vs. Judge Higinio Macadaeg et al.,2 G.R. No. L-10030, January 18, 1956, all of
which refer to seizures in connection with prohibited importation of garlic, and naturally the
seizures thereof made by the Bureau of Customs not only come under the aforementioned
Section 1363, paragraph (f) of the Revised Administrative Code, but also involved the
determination of the proprietary rights of the persons concerned. It is, therefore, evident that
none of these cases have any bearing on the case at bar.

Moreover, if, as will be later shown, appeals from the decision of the Commissioner can
only be taken to the Court of Tax Appeals by any "person, association and corporation
adversely affected by a decision or ruling of said Commissioner" (Sec. 11, R.A. No. 1125), it
would seem obvious that the appeal taken by the Collector Customs would be a matter that
falls beyond the jurisdiction of the Court of Tax Appeals to entertain. Of course, We do not
maintain that the copies of the magazine objected to, if really containing indecent or
obscene literature, cannot be forfeited and destroyed, but We hold that this cannot be done
or authorized by an order, resolution or decision of the respondent Court of Tax Appeals, a
Court that according to the explanatory note of Republic Act No. 1125, was created to
review tax cases and to expedite the collection of taxes.

Finally, the title of Republic Act No. 1125 reads as follows: "An Act Creating the Court of
Tax Appeals", and this law might may be rendered unconstitutional if it is interpreted as
including within the jurisdiction of said Court appeals from decisions of the Commissioner
wherein no tax is involved, thus amplifying its jurisdiction to cases not covered by the title of
the law creating the same.

We, therefore, conclude that under the terms of Section 7 of Republic Act No. 1125,
the present case which does not involve disputed assessments or payment of duties
and charges subject of detention or seizure proceedings in the Bureau of Customs
does not come within the appellate jurisdiction of the Court of Tax Appeals.

II. Having arrived at the foregoing conclusion concerning issue No. I, We really need not
pass upon issue No. II. Yet, as it involves an important legal questions which affects a
matter of Government policy, We prefer to say a few words on the same.

The records show that the Secretary of Finance took a hand in the removal of the case to
the Court of Tax Appeals and which that tribunal returned to the Commissioner of Customs.
As the Solicitor General asserted, it was the Secretary of Finance, sanctioned by the
Revised Administrative Code, who directed the Collector of Customs to appeal from the
decision of respondent Commissioner. The provisions of the Revised Administrative Code
material to the instant case are the following:

SEC. 1384. BY WHOM CAUSE MAY BE REMOVED INTO COURT. — The removal
of a cause into court may be had the instance of the protesting part or, in case of
seizure, at the instance of the seized property. If the decision of the Commissioner is
adversed to the Government, the cause may also be removed in the manner
hereinafter specified, by order of the Department Head.

SEC. 1386. REMOVAL UPON ORDER OF DEPARTMENT HEAD. — Upon making


any decision which may be removed upon order of the Department Head, the
Commissioner shall immediately transmit a copy of such decision to him and also to
the Auditor General; and if within fifteen days thereafter the Department shall certify
that in his opinion the decision ought to be revised by the Court of First Instance in
the City of Manila, it shall be the duty of the Commissioner, upon notification thereof
to transmit the original record to said court in the same manner as upon removal by
a party other than the Government.

Undoubtedly relying on the foregoing, the Secretary of Finance, apparently dissatisfied with
the ruling made by the Commissioner of Customs, directed the latter to remove the case to
the Court of Tax Appeals for revision, and later sanctioned the appeal made by the
Collector of Customs from the said decision. But the Secretary of Finance forgot that in the
present case no liability for customs duties, fees, or other money charges is involved; that
the Court of Tax Appeals was created because of the need of having an agency which will
review tax cases and at the same time expedite the collection of taxes; and that Republic
Act No. 1125 creating the Court of Tax Appeals provides the following:

SEC 11. WHO MAY APPEAL; EFFECT OF APPEAL. — Any person, association or
corporation adversely affected by a decision or ruling of the Collector of Internal
Revenue, the Collector of Customs (Commissioner) or any provincial or city Board of
Assessment Appeals may file an appeal in the Court of Tax Appeals within thirty
days after the receipt of such decision or ruling.

Republic Act No. 1125, which was approved on June 16, 1954, became very specific when
it gave an enumeration of those who may appeal from a decision or ruling of the Collector of
Internal Revenue, the Commissioner of Customs or Board of Assessment Appeals. Under
this law, the right to appeal from decisions or rulings of said officials is allowed only
to persons, associations or corporations adversely affected by the same, and as well
knowing the notation of the legal maxim "inclusio unius est exclusio alterius", the
Government is certainly not one of them.

From another angle, it is to be noted that the appeal was brought in the name of the Acting
Collector of Customs, presumably in his official capacity as he was even represented by the
Office of the Solicitor General, against his superior the Acting Commissioner of Customs,
also in such capacity as a Government official and who was represented by the legal
Counsel of the Bureau of Customs. As suits brought for or against Government officials in
their capacities as such public officials are suits for or against the Government (See
Salvador Araneta et al vs. Hon. Magno Gatmaitan et al.,3 G.R. Nos. L-8895 and L-9191,
prom. April 30, 1957). We, therefore, Ourselves confronted with a precarious situation and
the fallacy of an appeal by the Government against its own ruling. It may be argued,
however, that the Collector of Customs was directed by the Secretary of Finance, the
overall superior in said Department, to prosecute the case pursuant to Sections 1384 and
1386 of the Revised Administrative Code. But as Republic Act. No. 1125 made no mention
of revision of decisions or rulings adverse to the Government upon order of Department
Heads, as contemplated by said sections of the Administrative Code, and as the procedure
of appeals to the Court of Tax Appeals as provided by the later legislation (Rep. Act No.
1125) cannot stand side by side with the former, the provisions of the Administrative Code
appertaining to removal of cases to the court for revision may be deemed repealed in so far
as they may refer to cases that come within the jurisdiction of the Court of Tax Appeals.

At the deliberation of this case, the legal maxim of Ubi jus remedium was invoked and one
of the members of this Court raised the question that in cases like the one at bar which no
tax or pecuniary liability is involved, the Government must have a remedy if it is not satisfied
with the decision of the Commissioner of Customs. We certainly have no quarrel on this
point with the said dissenting Justice and are ready to agree with him, although We may
add that in this case, the Commissioner of Customs is part of the Government and that the
remedy against his decision should be sought administratively rather than in the Judiciary.
Anyway, if the provisions of the Customs Laws admittedly cover a greater field and include
in their embrace not only cases in which taxes and other pecuniary liabilities are dealt with,
but also others that have nothing to do with such liabilities, and if as shown before the latter
cases cannot be taken to the Court of Tax Appeals, it would seem reasonable to conclude
that appeals from decisions or orders of the Commissioner of Customs must be in
accordance with and follow the procedure outlined in the Customs Laws that were
applicable before the creation of said Court of Tax Appeals, because for all intents and
purposes, the provisions of said Customs Laws shall be considered still in force and effect.
Such being the case and as the popular saying goes, "there is no use of barking at the
wrong tree" or better still, "of praying at the wrong altar".

In virtue of the foregoing conclusions, i.e., that the Court of Tax Appeals has no jurisdiction
to entertain the appeal of the Acting Collector of Customs in this matter and of the
procedural defect just pointed out, there is no need for us to pass upon the merits of the
question regarding the nature of the article contained in the issue of the magazine
"Pageant" objected to.

Wherefore, the Resolution of the Court of Tax Appeals dated January 22, 1955, is hereby
affirmed and the therein petition dismissed, without pronouncement as to costs.

It is so ordered.

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