Philippine Airlines, Inc. vs. Civil Aeronautics Board, 270 SCRA 538, G.R. No.

119528
March 26, 1997

Public Utilities; Transportation; Air Transportation; Franchises; Civil Aeronautics Board; The Civil
Aeronautics Board is expressly authorized by Republic Act No. 776 to issue a temporary operating permit
or Certificate of Public Convenience and Necessity, and nothing contained in the said law negates the power
to issue said permit before the completion of the applicant’s evidence and that of the oppositor thereto on the
main petition.—The Civil Aeronautics Board has jurisdiction over GrandAir’s Application for a
Temporary Operating Permit. This rule has been established in the case of Philippine Air Lines
Inc., vs. Civil Aeronautics Board, promulgated on June 13, 1968. The Board is expressly
authorized by Republic Act No. 776 to issue a temporary operating permit or Certificate of
Public Convenience and Necessity, and nothing contained in the said law negates the power to
issue said permit before the completion of the applicant’s evidence and that of the oppositor
thereto on the main petition. Indeed, the CAB’s authority to grant a temporary permit “upon its
own initiative” strongly suggests the power to exercise said authority, even before the
presentation of said evidence has begun. Assuming arguendo that a legislative franchise is
prerequisite to the issuance of a permit, the absence of the same does not affect the jurisdiction
of the Board to hear the application, but tolls only upon the ultimate issuance of the requested
permit.

Same; Same; Same; Same; Words and Phrases; “Franchise,” Explained; The power to authorize and
control the operation of a public utility is admittedly a prerogative of the legislature, since Congress is that
branch of government vested with plenary powers of legislation.—The power to authorize and control
the operation of a public utility is admittedly a prerogative of the legislature, since Congress is
that branch of government vested with plenary powers of legislation. “The franchise is a
legislative grant, whether made directly by the legislature itself, or by any one of its properly
constituted instrumentalities. The grant, when made, binds the public, and is, directly or
indirectly, the act of the state.”

Same; Same; Same; Same; Delegation of Powers; Administrative Law; It is generally recognized that a
franchise may be derived indirectly from the state through a duly designated agency, and to this extent, the
power to grant franchises has frequently been delegated, even to agencies other than those of a legislative
nature.—Congress has granted certain administrative agencies the power to grant licenses for, or
to authorize the operation of, certain public utilities. With the growing complexity of modern
life, the multiplication of the subjects of governmental regulation, and the increased difficulty of
administering the laws, there is a constantly growing tendency towards the delegation of greater
powers by the legislature, and towards the approval of the practice by the courts. It is generally
recognized that a franchise may be derived indirectly from the state through a duly designated
agency, and to this extent, the power to grant franchises has frequently been delegated, even to
agencies other than those of a legislative nature. In pursuance of this, it has been held that
privileges conferred by grant by local authorities as agents for the state constitute as much a
legislative franchise as though the grant had been made by an act of the Legislature.

Same; Same; Same; Same; Same; The trend of modern legislation is to vest the Public Service
Commissioner with the power to regulate and control the operation of public services under reasonable rules
and regulations.—The trend of modern legislation is to vest the Public Service Commissioner
with the power to regulate and control the operation of public services under reasonable rules
and regulations, and as a general rule, courts will not interfere with the exercise of that
discretion when it is just and reasonable and founded upon a legal right.

Same; Same; Same; Same; Same; The Civil Aeronautics Board has the authority to issue a Certificate of
Public Convenience and Necessity, or Temporary Operating Permit to a domestic air transport operator,
who, though not possessing a legislative franchise, meets all the other requirements prescribed by law.—
Given the foregoing postulates, we find that the Civil Aeronautics Board has the authority to
issue a Certificate of Public Convenience and Necessity, or Temporary Operating Permit to a
domestic air transport operator, who, though not possessing a legislative franchise, meets all the
other requirements prescribed by the law. Such requirements were enumerated in Section 21 of
R.A. No. 776.

Same; Same; Same; Same; Same; There is nothing in the law nor in the Constitution, which indicates that
a legislative franchise is an indispensable requirement for an entity to operate as a domestic air transport
operator.—There is nothing in the law nor in the Constitution, which indicates that a legislative
franchise is an indispensable requirement for an entity to operate as a domestic air transport
operator. Although Section 11 of Article XII recognizes Congress’ control over any franchise,
certificate or authority to operate a public utility, it does not mean Congress has exclusive
authority to issue the same. Franchises issued by Congress are not required before each and
every public utility may operate. In many instances, Congress has seen it fit to delegate this
function to government agencies, specialized particularly in their respective areas of public
service.

Same; Same; Same; Same; Same; Words and Phrases; “Convenience and Necessity,” Explained; The
terms “convenience and necessity,” if used together in a statute, are usually held not to be separable, but are
construed together—both words modify each other.—Many and varied are the definitions of
certificates of public convenience which courts and legal writers have drafted. Some statutes use
the terms “convenience and necessity” while others use only the words “public convenience.”
The terms “convenience and necessity,” if used together in a statute, are usually held not to be
separable, but are construed together. Both words modify each other and must be construed
together. The word ‘necessity’ is so connected, not as an additional requirement but to modify
and qualify what might otherwise be taken as the strict significance of the word necessity. Public
convenience and necessity exists when the proposed facility will meet a reasonable want of the
public and supply a need which the existing facilities do not adequately afford. It does not mean
or require an actual physical necessity or an indispensable thing. “The terms ‘convenience’ and
‘necessity’ are to be construed together, although they are not synonymous, and effect must be
given both. The convenience of the public must not be circumscribed by according to the word
‘necessity’ its strict meaning or an essential requisites.”

Same; Same; Same; Same; Same; Congress, by giving the CAB the power to issue permits for the operation
of domestic transport services, has delegated to the said body the authority to determine the capability and
competence of a prospective domestic air transport operator to engage in such venture.—Congress, by
giving the respondent Board the power to issue permits for the operation of domestic transport
services, has delegated to the said body the authority to determine the capability and
competence of a prospective domestic air transport operator to engage in such venture. This is
not an instance of transforming the respondent Board into a minilegislative body, with
unbridled authority to choose who should be given authority to operate domestic air transport
services. Philippine Airlines, Inc. vs. Civil Aeronautics Board, 270 SCRA 538, G.R. No.
119528 March 26, 1997

United States vs. Ang Tang Ho, 43 Phil. 1, No. 17122 February 27, 1922

1.ORGANIC LAW.—By the organic law of the Philippine Islands and the Constitution of the
United States, all powers are. vested in the Legislature, Executive, and Judiciary. It is the duty
of the Legislature to make the law; of the Executive to execute; and of the Judiciary to construe
the law. The Legislature has no authority to execute or construe the law; the Executive has no
authority to make or construe the law; and the Judiciary has no power to make or execute the
law.

2.POWER.—Subject to the Constitution only, the power of each branch is supreme within its
own jurisdiction, and it is for the Judiciary only to say when any Act of the Legislature is or is
not constitutional.

3.THE POWER TO DELEGATE.—The Legislature cannot delegate legislative power to enact

any law. If Act No. 2868 is a law unto itself and within itself, and it does nothing mor£ than to
authorize the Governor-General to make rules and regulations to carry it into effect, then the
Legislature created the law. There is no delegation of power and it is valid. On the other hand,
if the act within itself does not define a crime and is not complete, and some legislative act
remains to be done to make it a law or a crime, the doing of which is vested in the Governor-
Geheral, the act is a delegation of legislative power, is unconstitutional and void.

4.No CRIME TO SELL.—After the passage of Act No. 2868, and without any rules and
regulations of the Governor-General, a dealer in rice could sell it at, any price and he would not
commit a crime. There was no legislative act which made it a crime to sell rice at any price.
5.CRIME BY PROCLAMATION.—When Act No. 2868 is analyzed, it is the violation of the
Proclamatlon of the Governor-General which constitutes the crime. The alleged sale was made
a crime, if at all, because of the Proclamation by the Governor-General.

6.UNCONSTITUTIONAL.—In so far as Act No. 2868 undertakes to authorize the Governor-

General, in his discretion, to issue a proclamation fixing the price of rice and to make the sale of
it in violation of the proclamation a crime, it is unconstitutional and void.

7.CONSTITUTION.—The Constitution is something solid, permanent and substantial. Its

stability protects the rights, liberty, and property rights of the rich and the poor alike, and its
construction ought not to change with emergencies or conditions.

8.PRIVATE RIGHTS.—In the instant case, the law was not dealing with Government
property. It was dealing with private property and private rights which are sacred under the
Constitution.

9.PRIVATE PROPERTY.—In the instant case, the rice was the personal, private property of
the defendant. The Government had not bought it, did not claim to own it, or have any interest
in it at the time the defendant sold it to one of his customers.

10.POWER VESTED IN THE LEGISLATURE.—By the organic act and subject only to
constitutional limitations, the power to legislate and enact laws is vested exclusively in the
Legislature, which is elected by a direct vote of the people of the Philippine Islands.

11.OPINION LIMITED.—This opinion is confined to the right of the Governor-General to

issue a proclamation fixing the maximum price at which rice should be sold, and to make it a
crime to sell it at a higher price, and to that extent holds that it is an unconstitutional delegation
of legislative power. It does not decide or undertake to construe the constitutionality of any of
the remaining portions of Act No. 2868. United States vs. Ang Tang Ho, 43 Phil. 1, No. 17122
February 27, 1922
 People vs. Rosenthal, 68 Phil. 328, Nos. 46076, 46077 June 12, 1939

1.CONSTITUTIONAL LAW; CONSTITUTIONALITY OF ACT No. 2581, COMMONLY

KNOWN AS THE BLUE SKY LAW; DELEGATION OF LEGISLATIVE POWERS;
POWERS AND DUTIES OF INSULAR TREASURER UNDER BLUE SKY LAW;
PURPOSE OF BLUE SKY LAW; MEANING OF "PUBLIC INTEREST".—Appellants argue
that, while Act No. 2581 empowers the Insular Treasurer to issue and cancel certificates or
permits for the sale of speculative securities, no standard or rule is fixed in the Act which can
guide said .official in determining the cases in which a certificate or permit ought to be issued,
thereby making his opinion the sole criterion in the matter of its issuance, with the result that,
legislative powers being unduly delegated to the Insular Treasurer, Act No. 2581 is
unconstitutional. We are of the opinion that the Act furnishes a sufficient standard for the
Insular Treasurer to follow in reaching a decision regarding the issuance or cancellation of a
certificate or permit. The certificate or permit to be issued under the Act must recite that the
person, partnership, association or corporation applying therefor "has complied with the
provisions of this Act", and this requirement, construed in relation to the other provisions of the
law, means that a certificate or permit shall be issued by the Insular Treasurer when the
provisions of Act No. 2581 have been complied with. Upon the other hand, the authority of the
Insular Treasurer to cancel a certificate or permit is expressly conditioned upon a finding that
such cancellation "is in the public interest." In view of the intention and purpose of Act No.
2581—to protect the public against "speculative schemes which have no more basis than so
many feet of blue sky" and against the "sale of stock in fly-by-night concerns, visionary oil wells,
distant gold mines, and other like fraudulent exploitations",—we incline to hold that "public
interest" in this case is a sufficient standard to guide the Insular Treasurer in reaching a decision
on a matter pertaining to the issuance or cancellation of certificates or permits. As observed in
the case of People vs. Fernandez and Trinidad (G. R. No. 45655, June 15, 1938), "siendo el
objeto de !a ley el' evitar especulaciones ruinosas, es claro que el interés público, es, y debe ser la
razón en que el Tesorero Insular deba basar sus resoluciones." And the term "public interest" is
not without a settled meaning. "Appellant. insists that the delegation of authority to the
Commission is invalid because the stated criterion is uncertain. That criterion is the public
interest. It is a mistaken assumption that this is a mere general reference to public welfare
without any standard to guide determinations, The purpose of the Act, the requirement it
imposes, and the context of the provision in question show the contrary. * * *" (New York
Central Securities Corporation vs. U. S. A., 287 U. S., 12, 24, 25; 77 Law. ed., 138, 145, 146.)
(See also Schenchter Poultry Corporation vs. U. S., 295 U. S., 495, 540; 79 Law. ed., 1570,
1585; Ferrazzini vs. Gsell, 34 Phil., 697, 711, 712.) In this connection, we cannot overlook the
fact that Act No. 2581 allows an appeal from the decision of the Insular Treasurer to the
Secretary of Finance. Hence, it cannot be contended that the Insular Treasurer can act and
decide without any restraining influence.

2.ID.; ID.; ID.; ID.; SEPARATION OF POWERS.—The theory of the separation of powers is
designed by its originators to secure action and at the same time to forestall overaction which
necessarily results from undue concentration of powers, and thereby obtain efficiency and
prevent despotism. Thereby, the "rule of law" was established which narrows the range of
governmental action and makes it subject to control by certain legal devices. As a corollary, we
find the rule prohibiting delegation of legislative authority, and from the earliest time American
legal authorities have proceeded on the theory that legislative power must be exercised by the
legislature alone. It is frankness, however to confess that as one delves into the mass of judicial
pronouncements, -, ements, he finds a great deal of confusion. One things, however is apparent
in the development of the principle of separation of powers and that is that the maximum of
delegatus non potest delegare, or delegate potestas non potest delegare, attributed to Bracton
(De Legibus et Consuetudinious Angliæ, edited by G, E. Woodbine, Yale University Press
[1922], vol 2, p. 167) 'but which is also recognized in principle in the Roman Law (D.17.18.3),
has been made to adapt itself to the complexities of modern governments, giving rise to the
adoption, within certain limits, of the principle of "subordinate legislation", not only in the
United States and England but in practically all modern governments. The difficulty lies in the
fixing of the limit and extent of the authority. While courts have undertaken to. lay down
general principles, the safest is to decide each case according to its peculiar environment, having
in mind the wholesome legislative purpose intended to be achieved.

3.ID.; ID.; ID.; ID.—Counsel for appellant J. R. also argues that the Insular Treasurer
possesses "the discretionary power to determine when a security is a speculative security and'
when it is not" because "he is given the power to compel any corporation, association or
partnership already functioning, to surrender to him for examination its books and accounts
enumerated in section 2, 'whenever he has reasonable ground to believe that the securities being
sold or offered for sale are of a speculative character."' It should be observed, however, that
section 1 of Act No. 2581 defines and enumerates what are "speculative securities" and all the
other provisions of the Act must be read and construed in conjunction and harmony with said
section.

4.ID. ; ID. ; EQUAL PROTECTION OF THE LAWS.—Another ground' relied upon by

appellants in contending that Act No. 2581 is unconstitutional is that it denies equal protection
of the laws because the law discriminates between an owner who sells his securities in a single
transaction and one who disposes of them. in repeated and successive transactions. In disposing
of this contention we need only refer to the case of Hall vs. Geiger-Jones Co. (242 U. S., 539),
wherein the Supreme Court of the United States held: "Discriminations are asserted against the
statute which extend, it is contended, to denying appellees the equal protection of the laws.
Counsel enumerates them as follows: 'Prominent' among such discriminations are * * * between
an owner who sells his securities in a single transaction and one who disposes of them in
successive transactions; * * *.' We cannot give separate attention to the asserted discriminations.
It is enough to say that they are within the power of classification which a state has. A state
'may direct its law against what it deems the evil as it actually exists without covering the whole
field of possible abuses, and it may do so none the less that the forbidden act does not differ in
kind from those that are allowed * * *.' If a class is deemed to present a conspicuous example of
what the legislature seeks to prevent, the 14th Amendment allows it to be dealt with although
otherwise and merely logically not distinguishable from others not embraced in the law'."

5.ID.; ID.; VAGUENESS AND UNCERTAINTY.—Counsel for appellant N. O. further

alleges that Act No. 2581 is .unconstitutional on the ground that it is vague and uncertain. A
similar contention has already been overruled by this court in the case of People vs. Fernandez
and Trinidad, supra, An Act will be declared void and inoperative on the ground of vagueness
and uncertainty only upon a showing that the defect is such that the courts are unable to
determine, with any reasonable degree of certainty, what the legislature intended. The
circumstance that this court has an more than one occasion given effect and application to Act
No. 2581 (Valhalla Hotel Construction Co. vs. Carmona, 44 Phil., 233; People vs. Nimrod
McKinney, 47 Phil., 792; People vs. Fernandez and Trinidad, supra) decisively argues against
the position taken by appellant O. In this connection we cannot pretermit reference to the rule
that "legislation should not be held invalid on the ground of uncertainty if susceptible of any
reasonable construction that will support and give it effect. An Act will not be declared
inoperative and inneffectual on the ground that it furnishes no adequate means to secure the
purpose for which it is passed, if men of common sense and reason can devise and provide the
means, and all the instrumentalities necessary for its execution are within the reach of those
intrusted therewith." (25 R. C. L., pp. 810, 811.)
6.In.; ID.—Reaffirming the view in People vs. Fernandez and Trinidad, supra. Held: That Act
No. 2581 is valid and constitutional. Laws of the different states of the American Union similar
in' nature to Act No. 2581 were assailed on constitutional grounds somewhat analogous to
those involved in the case at bar, but the decisions of both the state courts and the Supreme
Court of the United States have upheld their constitutionality.

7.WORDS AND PHRASES; "SPECULATIVE SECURITIES".—Taking up now the question

raised with reference to the speculative nature of the shares of the O. R. O. Oil Co. and the
South Cebu Oil Co., we find that section 1, paragraph (b) of Act No. 2581, in defining
speculative securities, provides: "* * * The term 'speculative securities' as used in this Act shall
be deemed to mean and include: * * * (b) All securities the value of which materially depend
upon proposed or promised future promotion or development rather than on present tangible
assets and conditions." At the beginning, and at the time of the issuance of the shares of the O.
R. O. Oil Co. and the South Cebu Oil Co., all that these companies had were their exploration
leases. Beyond this, there was nothing tangible. The value of those shares depended upon future
development and the uncertainty of "striking" oil. The shares issued under these circumstances
are clearly speculative because they depended upon proposed or promised future promotion or
development rather than on present tangible assets and conditions.

8.ACT No. 2581; EFFECT OF REPEAL UPON CRIMINAL LIABILITY.—Appellants next

contend that in view of the repeal of Act No. 2581 by Commonwealth Act No. 83, they have
been relieved of criminal responsibility. Assuming that the former Act has been entirely and
completely abrogated by the latter Act—a point we do not have to decide—this fact does not
relieve appellants from criminal responsibility. It has been the holding, and it must again be the
holding, that where an Act of the Legislature which penalizes an offense repeals a former Act
which penalized the same offense, such repeal does not have the effect of thereafter depriving
the courts of jurisdiction to try, convict and sentence offenders charged with violations of the
old law.

9.ID.; SECTION 8, CONSTRUED; FINDINGS OF TRIAL COURT; GOOD FAITH.—

Appellants further contend that they come under the exception provided in section 8 of Act No.
2581. Under this section, there are clearly two classes of persons to whom the law is not
applicable: (1) Persons who hold speculative securities but who are not the issuers thereof; and
(2) persons who have acquired the same for their own account in the usual and ordinary course
of business and not for the direct or indirect promotion of any enterprise or scheme within the
purview of this Act, provided (the law uses the term "unless") such possession is in good faith.
Even if we could, we do not feel justified in disturbing the findings of fact of -the trial court
necessarily involved in the application of section 8 of Act No. 2581. The good faith set up by
appellant R for having acted on the advice of one G, an officer of the Insular Treasury, and the
subsequent devolution by him of amounts collected from some of the purchasers of the shares
may be considered as a circumstance in his favor in the imposition of the penalty prescribed. by
law but does not exempt him from criminal responsibility. People vs. Rosenthal, 68 Phil. 328,
Nos. 46076, 46077 June 12, 1939

Abcede vs. Hon. Imperial, et at., 103 Phil. 136, No. L-13001 March 18, 1958

1.COMMISSION ON ELECTIONS; MINISTERIAL DUTY TO RECEIVE CERTIFICATES

OF CANDIDACY; MANDATORY DUTY TO GlVE DUE COURSE TO THE SAME.—
When the Revised Election Code imposes upon the Commission on Elections the ministerial
duty to receive certificates of candidacy, it implies thereby that said certificates should be given
due course.
2.ID.; ID.; ID.; POWER OF DECISION LIMITED TO PURELY ADMINISTRATIVE
QUESTIONS.—While the Constitution has given the Commission on Elections the "exclusive
charge'' of the enforcement and administration of all laws relative to the conduct of elections,"
the power of decision of the Commission is limited to purely "administrative questions." (Art.
X, Sec. 2, Constitution.) It has no authority to decide matters "involving the right to vote." It
may not even pass upon the legality of a given vote (Nacionalista Party vs. Commission on
Elections, 47 Off. Gaz., 2851). For more reason, it cannot determine who among those
possessing the qualifications prescribed by the Constitution, who have complied with the
procedural requirements relative to the filing of certificates of candidacy—should be allowed to
enjoy the full benefits intended by law therefor. This is a matter of policy, not of administration
and enforcement of the law, which policy must be determined by Congress in the exercise of its
legislative functions.

3.ID.; ID.; ID.; DUTY TO PREPARE AND DISTRIBUTE COPIES OF CERTIFICATES

OF CANDIDACY LIKEWISE MINISTERIAL.—Whether or not the Commission on
Elections should incur the expenses incident to the preparation and distribution of copies of the
certificates of candidacy of those who, in its opinion, do not have a chance to get a substantial
number of votes, is another question of policy for Congress, not the Commission, to settle.
Compliance with the provision of law requiring the preparation and immediate distribution of
copies of the certificates of candidacy is, likewise ministerial. If the Commission believes,
however, that the effect thereof is to unnecessarily impose a useless burden upon the
Government, then the remedy is to call the attention of Congress thereto, coupled with the
corresponding proposals, recommendations, or suggestions for such amendments as may be
deemed best. Abcede vs. Hon. Imperial, et at., 103 Phil. 136, No. L-13001 March 18, 1958

. Seton vs. Rodriguez, 110 Phil. 548, No. L-16285 December 29, 1960

1.APPEAL AND ERROR; ANNOTATION OF ATTACHMENT, LIEN OR ADVERSE

CLAIMS; ORDER OF REGISTRATION COURT APPEALABLE.—An order of the
registration court requiring the holder of a duplicate certificate of title to surrender the same for
the purpose of annotating an attachment, lien, or adverse claim under section 72 of Act 496 is
appealable because it resolves important questtions as to the respective rights of the parties

2.REGISTRATION OF LAND TITLES; REGISTRATION DEFINED; PURPOSE.—

Registration is a ministerial act by which a deed, contract, or instrument is sought to be
inscribed in the records of the Office of the Register of Deeds and annotated at the back of the
certificate of title covering the land subject of the deed, contract or instrument. Its purpose is to
give notice thereof to all persons (section 51, Act No. 496)" and does not declare that the
recorded instrument is a valid and subsisting interest in the land. This is so because the effect or
validity of the instrument can only be determined in an ordinary case before the courts, not
before a court acting merely as a registration court which has no jurisdiction over the same.

3.ID.; PENDENCY OF PARTITION PROCEEDINGS; REGISTRATION OF SALE NOT

PRECLUDED BY QUESTION OF VALIDITY.—The pendency of partition proceedings,
wherein the validity of the sale of registered land is in issue, does not preclude the registration of
the sale at the back of the certificate of title covering the land. Both cases may proceed
independently of each other.

4.ID.; ID.; ID.; WHEN ANNOTATION MAY BE CANCELLED.—Where the claim or sale
is adjudged to be invalid, the annotation may be cancelled, and if found by the court to be
frivolous or vexatious, the court may tax the adverse claimant double or treble costs in its
discretion. Seton vs. Rodriguez, 110 Phil. 548, No. L-16285 December 29, 1960
 Pelaez vs. Auditor General, 15 SCRA 569, No. L-23825 December 24, 1965

Administrative law; Power of President to create municipalities.—Since January 1, 1960, when

Republic Act No. 2370 became effective, barrios may "not be created or their boundaries altered
nor their names changed" except by Act of Congress or of the corresponding" provincial board
"upon petition of a majority of the voters in the areas affected" and the "recommendation of the
council of the municipality or municipalities in which the proposed barrio is situated." This
statutory denial of the presidential authority to create a new barrio implies a negation of the
bigger power to create municipalities, each of which consists of several barrios.

Same; Same; Nature of power to create municipalities.—Whereas the power to f ix a common

boundary, in order to avoid or settle conflicts of jurisdiction between adjoining municipalities,
may partake of an administrative nature—involving, as it does, the adoption of means and ways
to carry into effect the law creating" said municipalities—the authority to create municipal
corporations is essentially legislative in nature,

Same; Same; Same; Requisites for valid delegation of power.—Although Congress may delegate to
another branch of the government the power to fill in the details in the execution, enforcement
or administration of a law, it is essential that said law: (a) be complete in itself, setting forth
therein the policy to be executed, carried out or implemented by the delegate; and (b) fix a
standard—the limits of which are sufficiently determinate or determinable—to which the
delegate must conform in the performance of his functions.

Same; Same; Same; Same; Requirements of due delegation of power not met by Section 68 of Revised
Administrative Code.—Section 68 of the Revised Administrative Code, insofar as it grants to the
President the power to create municipalities, does not meet the well-settled requirements for a
valid delegation of the power to fix the details in the enforcement of a law. It does not enunciate
any policy to be carried out or implemented by the President.

Same; Same; Same; Same; Same; Abdication of powers of Congress in favor of the
Executive.—If the validity of said delegation of powers, made in Section 68 of the Revised
Administrative Code, were upheld. there would no longer be any legal impediment to a
statutory grant of authority to the President to do anything which, in his opinion, may be
required by public welfare or public interest. Such grant of authority would be a virtual
abdication of the powers of Congress in favor of the Executive, and would bring about a total
collapse of the democratic system established by the Constitution.

Same; Same; Same; Nature of powers dealt with in Section 68 of the Revised Administrative Code.—It is
true that in Calalang vs. WiIliams (70 Phil. 726) and People vs. Rosenthal (68 Phil. 328), this
Court had upheld "public welfare" and "public interest," respectively, as sufficient standards for
a valid delegation of the authority to execute the law. But the doctrine laid down in these cases
must be construed in relation to the specific facts and Issues involved therein, outside of which
they do not constitute precedents and have no binding effect. Both cases involved grants to
administrative officers of powers related to the exercise of their administrative functions, calling
for the determination of questions of fact. Such is not the nature of the powers dealt with in
Section 68 of the Revised Administrative Code. The creation of municipalities being essentially
and eminently legislative in character, the question whether or not "public interest" demands the
exercise of such power is not one of fact It is purely a legislative question (Carolina-Virginia
Coastal Highway vs. Coastal Turnpike Authority, 74 S.E. 2d. 310-313, 315-318), or a political
question (Udall vs. Severn, 79 P. 2d. 347-349).
Same; Same; Same; Same; Proof that issuance of Executive Orders in question enteils exercise of purely
legislative functions.—The fact that Executive Orders Nos. 93 to 121, 124 and 128 to 129, creating
thirty-three municipalities, were issued after the legislative bills for the creation of the said
municipalities had failed to pass Congress, is the best proof that their issuance entails the
exercise of purely legislative functions.

Same; Same; Same; Power of control over local governments.—The power of control under Section 10
(a) of Article X of the Constitution implies the right of the President to interfere in the exercise
of such discretion as may be vested by law in the officers of the executive departments, bureaus
or offices of the national government, as well as to act in lieu of such officers. This power is
denied by the Constitution to the Executive, insofar as local governments are concerned. With
respect to the latter, the fundamental law permits him to wield no more authority than that of
checking whether said local governments or the officers thereof perform their duties as provided
by statutory enactments. Hence, the President cannot interfere with local governments, so long
as the same or its officers act within the scope of their authority. He may not, for instance,
suspend an elective official of a regular municipality or take any disciplinary action against him,
'except on appeal from a decision of the corresponding provincial board. If, on the other hand,
the President could create a municipality, he could, in effect, remove any of' its officials, by
creating a new municipality and including therein the barrio in which the official concerned
resides, for his office would thereby become vacant (Section 2179, Revised Administrative
Code). Thus, by merely brandishing the power to create a new municipality, without actually
creating it, he could compel local officials to submit to his dictation; thereby, in effect,
exercising over them the power of control denied to him by the Constitution.

Same; Same; Same; Same; Section 68, Revised Administrative Code repealed by the Constitution.—The
power of control of the President over executive departments, bureaus or offices under Section
10(a) of Article X of the Constitution implies no more than the authority to assume directly the
functions thereof or to interfere in the exercise of discretion by its officials. Manifestly, such
control does not include the authority either to abolish an executive department or bureau, or to
create a new one. As a consequence, the alleged power of the President to create municipal
corporations would necessarily connote the 'exercise by him of an authority even greater than
that of control which he has over the executive departments, bureaus or offices, Instead of
giving the President less power over local governments than that vested in him over the
executive departments, bureaus or offices, it reverses the process and does the exact opposite, by
conferring upon him more power over municipal corporations than that which he has over
executive departments, bureaus or offices. Even if, therefore, it did not entail an undue
delegation of legislative powers, as it certainly does, said Section 68, as part of the Revised
Administrative Code, approved on March 10, 1967, must be deemed repealed by the subsequent
adoption of the Constitution in 1935, which is utterly incompatible and inconsistent with said
statutory enactment. (De los Santos vs. Mallare, 87 Phil. 289, 298299.)

Same; Same; Same; Municipal officials concerned duly represented in present case.—lt is contended that
not all the proper parties have been impleaded in the present case. Suffice it to say that the
records do not show, and the parties do not claim, that the officers of any of the municipalities
concerned have been appointed or elected and have assumed office. At any rate, the Solicitor
General, who has appeared on behalf of respondent Auditor General, is the officer authorized
by law "to act and represent the Government of the Philippines, its offices and agents, in any
official investigation, proceeding or matter requiring the services of a lawyer" (Section 1661,
Revised Administrative Code), and, in connection with the creation of the municipalities
involved in this case, which involves a political, not proprietary function. said local officials, if
any, are mere agents or representatives of the national government. Their interest in the case
has accordingly been duly represented. (Mangubat vs. Osmeña, Jr., G.R. No. L-12837, April
30, 1959; City of Cebu vs. Judge Piccio, G.R. Nos L-13012 & 14876. December 81, 1960.)

Same; Same; Action not premature.—The present action cannot be said to be premature simply
because respondent Auditor General has not yet acted on any of the executive orders in
question and has not intimated how he would act in connection therewith. It is a matter of
common knowledge that the President has for many years issued executive orders creating
municipal corporations and that the same have been organized and are in actual operation, thus
indicating without peradventure or doubt, that the expenditures incidental thereto have been
sanctioned, approved or passed in audit by the General Auditing Office and its officials. There
is no reason to believe that respondent would adopt a different policy as regards the new
municipalities involved in this case, in the absence of an allegation to such effect, and none has
been made by him. Pelaez vs. Auditor General, 15 SCRA 569, No. L-23825 December 24, 1965

Ynot vs. Intermediate Appellate Court, 148 SCRA 659, No. L-74457 March 20, 1987

Constitutional Law; Jurisdiction; Lower courts have authority to resolve the issue of constitutionality of
legislative measures.—This Court has declared that while lower courts should observe a becoming
modesty in examining constitutional questions, they are nonetheless not prevented from
resolving the same whenever warranted, subject only to review by the highest tribunal. We have
jurisdiction under the Constitution to "review, revise, reverse, modify or affirm on appeal or
certiorari, as the law or rules of court may provide," final judgments and orders of lower courts
in, among others, all cases involving the constitutionality of certain measures. This simply
means that the resolution of such cases may be made in the first instance by these lower courts.

Same; Due Process; Judgments must be based on the sporting idea of fair play.—The closed mind has no
place in the open society. It is part of the sporting idea of fair play to hear "the other side" before
an opinion is formed or a decision is made by those who sit in judgment. Obviously, one side is
only one-half of the question; the other half must also be considered if an impartial verdict is to
be reached based on an informed appreciation of the issues in contention. It is indispensable
that the two sides complement each other, as unto the bow the arrow, in leading to the correct
ruling after examination of the problem not from one or the other perspective only but in its
totality. A judgment based on less that this full appraisal, on the pretext that a hearing is
unnecessary or useless, is tainted with the vice of bias or intolerance or ignorance, or worst of
all, in repressive regimes, the insolence of power.

Same; Same; The ban on slaughter of carabaos is directly related to public welfare.—In the light of the
tests mentioned above, we hold with the Toribio Case that the carabao, as the poor man's
tractor, so to speak, has a direct relevance to the public welfare and so is a lawful subject of
Executive Order No. 626. The method chosen in the basic measure is also reasonably necessary
for the purpose sought to be achieved and not unduly oppressive upon individuals, again
following the above-cited doctrine. There is no doubt that by banning the slaughter of these
animals except where they are at least seven years old if male and eleven years old if female
upon issuance of the necessary permit, the executive order will be conserving those still fit for
farm work or breeding and preventing their improvident depletion.

Same; Same; The ban on the transportation of carabaos from one province to another (E.O. 626-A), their
confiscation and disposal without a prior court hearing is violative of due process for lack of reasonable
connection between the means employed and the purpose to be achieved and for being confiscatory.—But
while conceding that the amendatory measure has the same lawful subject as the original
executive order, we cannot say with equal certainty that it complies with the second
requirement, viz., that there be a lawful method. We note that to strengthen the original
measure, Executive Order No. 626-A imposes an absolute ban not on the slaughter of the
carabaos but on their movement, providing that "no carabao regardless of age, sex, physical
condition or purpose (sic) and no carabeef shall be transported from one province to another."
The object of the prohibition escapes us. The reasonable connection between the means
employed and the purpose sought to be achieved by the questioned measure is missing.

Same; Same; Same.—Even if a reasonable relation between the means and the end were to be
assumed, we would still have to reckon with the sanction that the measure applies for violation
of the prohibition. The penalty is outright confiscation of the carabao or carabeef being
transported, to be meted out by the executive authorities, usually the police only. In the Toribio
Case, the statute was sustained because the penalty prescribed was fine and imprisonment, to be
imposed by the court after trial and conviction of the accused. Under the challenged measure,
significantly, no such trial is prescribed, and the property being transported is immediately
impounded by the police and declared, by the measure itself, as forfeited to the government.

Same; Same; Same.—We also mark, on top of all this, the questionable manner of the disposition
of the confiscated property as prescribed in the questioned executive order. It is there authorized
that the seized property shall "be distributed to charitable institutions and other similar
institutions as the Chairman of the National Meat Inspection Commission may see fit, in the
case of carabeef, and to deserving farmers through dispersal as the Director of Animal Industry
may see fit, in the case of carabaos." (Emphasis supplied.) The phrase "may see fit" is an
extremely generous and dangerous condition, if condition it is. It is laden with perilous
opportunities for partiality and abuse, and even corruption. One searches in vain for the usual
standard and the reasonable guidelines, or better still, the limitations that the said officers must
observe when they make their distribution. There is none. Their options are apparently
boundless. Who shall be the fortunate beneficiaries of their generosity and by what criteria shall
they be chosen? Only the officers named can supply the answer, they and they alone may
choose the grantee as they see fit, and in their own exclusive discretion. Definitely, there is here
a "roving commission," a wide and sweeping authority that is not "canalized within banks that
keep it from overflowing," in short, a clearly profligate and therefore invalid delegation of
legislative powers.

Same; Same; Same.—To sum up then, we find that the challenged measure is an invalid exercise
of the police power because the method employed to conserve the carabaos is not reasonably
necessary to the purpose of the law and, worse, is unduly oppressive. Due process is violated
because the owner of the property conf iscated is denied the right to be heard in his defense and
is immediately condemned and punished. The conferment on the administrative authorities of
the power to adjudge the guilt of the supposed offender is a clear encroachment on judicial
functions and militates against the doctrine of separation of powers. There is, finally, also an
invalid delegation of legislative powers to the of ficers mentioned therein who are granted
unlimited discretion in the distribution of the properties arbitrarily taken.

Same; Same; Omission of right to a prior hearing can be justified only where a problem needs immediate
and urgent correction.—It has already been remarked that there are occasions when notice and
hearing may be validly dispensed with notwithstanding the usual requirement for these
minimum guarantees of due process. It is also conceded that summary action may be validly
taken in administrative proceedings as procedural due process is not necessarily judicial only. In
the exceptional cases accepted, however, there is a justification for the omission of the right to a
previous hearing, to wit, the immediacy of the problem sought to be corrected and the urgency
of the need to correct it. In the case before us, there was no such pressure of time or action
calling for the petitioner's peremptory treatment. The properties involved were not even inimical
per se as to require their instant destruction. There certainly was no reason why the offense
prohibited by the executive order should not have been proved first in a court of justice, with the
accused being accorded all the rights safeguarded to him under the Constitution. Considering
that, as we held in Pesigan v. Angeles, Executive Order No. 626-A is penal in nature, the
violation thereof should have been pronounced not by the police only but by a court of justice,
which alone would have had the authority to impose the prescribed penalty, and only after trial
and conviction of the accused.

Same; Same; Damages; A police officer who confiscated carabaos being transported in violation of E.O.
626-A is not liable for damages even if said Executive Order were later declared unconstitutional.—We
agree with the respondent court, however, that the police station commander who confiscated
the petitioner's carabaos is not liable in damages for enforcing the executive order in accordance
with its mandate. The law was at that time presumptively valid, and it was his obligation, as a
member of the police, to enforce it. It would have been impertinent of him, being a mere
subordinate of the President, to declare the executive order unconstitutional and, on his own
responsibility alone, refuse to execute it. Even the trial court, in fact, and the Court of Appeals
itself did not feel they had the competence, for all their superior authority, to question the order
we now annul. Ynot vs. Intermediate Appellate Court, 148 SCRA 659, No. L-74457 March 20, 1987

Maximo Calalang, petitioner, vs. A. D. Williams, et al., respondents. [No. 47800.

December 2, 1940]

1.Constitutional Law; Constitutionality of Commonwealth Act No. 548; Delegation op

Legislative Power; Authority of Director of Public Works and Secretary of Public Works and
Communications to Promulgate Rules and Reg-ulations.—The provisions of section 1 of
Commonwealth Act No. 548 do not confer legislative power upon the Director of Public Works
and the Secretary of Public Works and Com-munications. The authority therein conferred upon
them and under which they promulgated the rules and regulations now complained of is not to
determine what public policy demands but merely to carry out the legislative policy laid down
by the National Assembly in said Act, to wit, "to promote safe transit upon, and avoid
obstructions on, roads and streets de-signated as national roads by acts of the National
Assembly or by executive orders of the President of the Philippines" and to close them
temporarily to any or all classes of traffic "whenever the condition of the road or the traffic
thereon makes such action necessary or advisable in the public con-venience and interest." The
delegated power, if at all, there-fore, is not the determination of what the law shall be, but
merely the ascertainment of the facts and circumstances upon which the application of said law
is to be predicated. To promulgate rules and regulations on the use of national roads and to
determine when and how long a national road should be closed to traffic, in view of the
condition of the road or the traffic thereon and the requirements of public convenience and
interest, is an administrative function which cannot be di-rectly discharged by the National
Assembly. It must depend on the discretion of some other government official to whom is
confided the duty of determining whether the proper occa-sion exists for executing the law. But
it cannot be said that the exercise of such discretion is the making of the law.

2.Id.; Id.; Police Power; Personal Liberty; Governmental Au-thority.—Commonwealth Act No.
548 was passed by the Na-tional Assembly in the exercise of the paramount police power of the
state. Said Act, by virtue of which the rules and reg-ulations complained of were promulgated,
aims to promote safe transit upon and avoid obstructions on national roads, in the interest and
convenience of the public. In enacting said law, therefore, the National Assembly was prompted
by considerations of public convenience and welfare. It was in-spired by a desire to relieve
congestion of traffic, which is, to say the least, a menace to public safety. Public welfare, then,
lies at the bottom of the enactment of said law, and the state in order to promote the general
welfare may interfere with personal liberty, with property, and with business and occu-pations.
Persons and property may be subjected to all kinds of restraints and burdens, in order to secure
the general com-fort, health, and prosperity of the state (U. S. vs. Gomez Jesus, 31 Phil., 218).
To this fundamental aim of our Gov-ernment the rights of the individual are subordinated.
Liber-ty is a blessing without which life is a misery, but liberty should not be made to prevail
over authority because then so-ciety will fall into anarchy. Neither should authority be made to
prevail over liberty because then the individual will fall into slavery. The citizen should achieve
the required balance of liberty and authority in his mind through education and, personal
discipline, so that there may be established the resultant equilibrium, which means peace and
order and happiness for all. The moment greater authority is con-ferred upon the government,
logically so much is withdrawn from the residuum of liberty which resides in the people. The
paradox lies in the fact that the apparent curtailment of lib-erty is precisely the very means of
insuring its preservation.

3.Id.; Id.; Social Justice.—Social justice is "neither communism, nor despotism, nor atomism,
nor anarchy," but the humanization of laws and the equalization of social and economic for-ces
by the State so that justice in its rational and objectively secular conception may at least be
approximated. Social jus-tice means the promotion of the welfare of all the people, the adoption
by the Government of measures calculated to insure economic stability of all the competent
elements of society, through the maintenance of a proper economic and social equi-librium in
the interrelations of the members of the commun-ity, constitutionally, through the adoption of
measures legal-ly justifiable, or extra-constitutionally, through the exercise of powers underlying
the existence of all governments on the time-honored principle of salus populi est supremo, lex.
Social justice, therefore, must be founded on the recognition of the necessity of interdependence
among divers and diverse units of a society and of the protection that should be equally and
evenly extended to all groups as a combined force in our so-cial and economic life, consistent
with the fundamental and paramount objective of the state of promoting the health, comfort,
and quiet of all persons, and of bringing about "the greatest good to the greatest number."
Calalang vs. Williams et al., 70 Phil., 726, No. 47800 December 2, 1940

Cervantes vs. Auditor General, 91 Phil. 359, No. L4043 May 26, 1952

1.CORPORATIONS; GOVERNMENT CONTROLLED CORPORATION.—With its

controlling stock owned by the Government and the power of appointing its directors vested in
the President of the Philippines there can be no question that the National Abaca and other
Fibers Corporation, otherwise known as the NAFCO, is a government controlled corporation
subject to the provisions of Republic Act No. 51 and the executive order (No. 93) promulgated
in accordance therewith.

2.ID.; ID.; OFFICERS; SALARY; QUARTERS ALLOWANCE; POWER OF CONTROL

COMMITTEE TO APPROVE OR DlSAPPROVE RESOLUTION OF NAFCO BOARD OF
DIRECTORS.—The National Abaca and other Fibers Corporation (NAFCO) was subject to
the powers of the Control Committee, created in Executive Order No. 93 promulgated in
accordance with the provisions of Republic Act No. 61, among which is the power of
supervision for the purpose of insuring efficiency and economy in the operations of the
corporation and also the power to pass upon the program of activities and the yearly budget of
expenditures approved by its board of directors. Under these powers the Control Committee
had the right to pass upon, and consequently. to approve or disapprove, the resolution of the
NAFCO board of directors granting quarters allowance to the manager of the NAFCO as such
allowance necessarily constituted an item of expenditure in the corporation's budget. The
granting of the allowance amounted to an illegal increase of the Manager's salary beyond the
limit fixed in the Corporate Charter.
3.STATUTE; TIME, COMPUTATION OF.—In the computation of the time for doing an act,
the first day is excluded and the last day included (Section 13, Rev. Ad. Code.) As the act was
approved on October 4, 1946, and the President was given a period of one year within which to
promulgate his executive order and that order was in fact promulgated on October 4, 1947, it is
obvious that under the above rule the said executive order was promulgated within the period
given.

4.CONSTITUTIONAL LAW; DELEGATION OF LEGISLATIVE POWER.—The rule is

that so long as the Legislature "lays down a policy and a standard is established by the statute"
there is no undue delegation. (11 Am. Jur. 957). Republic Act No. 51, in authorizing the
President of the Philippines to make reforms and changes in government-controlled
corporations, lays down a standard and policy that the purpose shall be to meet the exigencies
attendant upon the establishment of the free and independent Government of the Philippines
and to promote simplicity, economy and efficiency in their operations. The standard was set
and the policy fixed. The President had to carry out the mandate, and this he did by
promulgating Executive Order (No. 93) in accordance with Republic Act No. 51, which, tested
by the said rule, does not constitute an undue delegation of legislative power.

5.PUBLIC OFFICER; SALARY; QUARTERS ALLOWANCE CONSIDERED

ADDITIONAL COMPENSATION.—Executive Order No. 332 of 1941, which prohibits the
payment of additional compensation to those working for the Government and its
instrumentalities, including government-controlled corporations, was, in 1945, amended by
Executive Order No. 77 by expressly exempting from the prohibition the- payment of quarters
allowance "in favor of local government officials and employees entitled to this under existing
law." The amendment is a clear indication that quarters allowance was meant to be included in
the term "additional compensation", for otherwise the amendment would not have expressly
excepted it from the prohibition, For the purposes of the executive order just mentioned,
quarters allowance is considered additional compensation and, therefore, prohibited.
Cervantes vs. Auditor General, 91 Phil. 359, No. L4043 May 26, 1952

Abcede vs. Hon. Imperial, et at., 103 Phil. 136, No. L-13001 March 18, 1958

1.COMMISSION ON ELECTIONS; MINISTERIAL DUTY TO RECEIVE CERTIFICATES

OF CANDIDACY; MANDATORY DUTY TO GlVE DUE COURSE TO THE SAME.—
When the Revised Election Code imposes upon the Commission on Elections the ministerial
duty to receive certificates of candidacy, it implies thereby that said certificates should be given
due course.

2.ID.; ID.; ID.; POWER OF DECISION LIMITED TO PURELY ADMINISTRATIVE

QUESTIONS.—While the Constitution has given the Commission on Elections the "exclusive
charge'' of the enforcement and administration of all laws relative to the conduct of elections,"
the power of decision of the Commission is limited to purely "administrative questions." (Art.
X, Sec. 2, Constitution.) It has no authority to decide matters "involving the right to vote." It
may not even pass upon the legality of a given vote (Nacionalista Party vs. Commission on
Elections, 47 Off. Gaz., 2851). For more reason, it cannot determine who among those
possessing the qualifications prescribed by the Constitution, who have complied with the
procedural requirements relative to the filing of certificates of candidacy—should be allowed to
enjoy the full benefits intended by law therefor. This is a matter of policy, not of administration
and enforcement of the law, which policy must be determined by Congress in the exercise of its
legislative functions.
3.ID.; ID.; ID.; DUTY TO PREPARE AND DISTRIBUTE COPIES OF CERTIFICATES
OF CANDIDACY LIKEWISE MINISTERIAL.—Whether or not the Commission on
Elections should incur the expenses incident to the preparation and distribution of copies of the
certificates of candidacy of those who, in its opinion, do not have a chance to get a substantial
number of votes, is another question of policy for Congress, not the Commission, to settle.
Compliance with the provision of law requiring the preparation and immediate distribution of
copies of the certificates of candidacy is, likewise ministerial. If the Commission believes,
however, that the effect thereof is to unnecessarily impose a useless burden upon the
Government, then the remedy is to call the attention of Congress thereto, coupled with the
corresponding proposals, recommendations, or suggestions for such amendments as may be
deemed best. Abcede vs. Hon. Imperial, et at., 103 Phil. 136, No. L-13001 March 18, 1958

Radio Communications of the Philippines, Inc. vs.National Telecommunications

Commission, 215 SCRA 455, G.R. No. 93237 November 6, 1992

Administrative Law; National Telecommunications Commission; NTC has no jurisdiction to impose a

fine.—E.O. 546, it will be observed, is couched in general terms. The NTC stepped “into the
shoes” of the Board of Communications which exercised powers pursuant to the Public Service
Act. The power to impose fines should therefore be read in the light of the Francisco Santiago
case because subsequent legislation did not grant additional powers to the Board of
Communications. The Board in other words, did not possess the power to impose
administrative fines on public services rendering deficient service to customers,ergo its successor
cannot arrogate unto itself such power, in the absence of legislation. It is true that the decision
in RCPI vs. Board of Communications seems to have modified the Santiago ruling in that the
later case held that the Board of Communications can impose fines if the public service entity
violates or fails to comply with the terms and conditions of any certificate or any order, decision
or regulation of the Commission. But can private respondent’s complaint be similarly treated
when the complaint seeks redress of a grievance against the company? NTC has no jurisdiction
to impose a fine.

Same; Same; Same; Executive Order No. 546 is not an explicit grant of power to impose administrative
fines on public service utilities including telegraphic agencies which have failed to render adequate service to
customers.—No substantial change has been brought about by Executive Order No. 546 invoked
by the Solicitor General’s Office to bolster NTC’s jurisdiction. The Executive Order is not an
explicit grant of power to impose administrative fines on public service utilities, including
telegraphic agencies, which have failed to render adequate service to customers. Neither has it
expanded the coverage of the supervisory and regulatory power of the agency.

Same; Same; Same; Same; Doctrine is settled that jurisdiction and powers of administrative agencies, like
respondent commission, are limited to those expressly granted or necessarily implied from those granted in
the legislation creating such body.—“Too basic in administrative law to need citation of
jurisprudence is the rule that jurisdiction and powers of administrative agencies, like respondent
Commission, are limited to those expressly granted or necessarily implied from those granted in
the legislation creating such body; and any order without or beyond such jurisdiction is void
and ineffective.” Radio Communications of the Philippines, Inc. vs.National Telecommunications
Commission, 215 SCRA 455, G.R. No. 93237 November 6, 1992
Ang Tibay vs. Court oh Industrial Relations etc., 69 Phil. 635, No. 46496 February 27, 1940

1.COURT OF INDUSTRIAL RELATIONS; POWER.—The nature of the Court of Industrial

Relations and of its power is extensively discussed in the decision.

2.ID.; ID.; TECHNICAL RULES OF PROCEDURE; DUE PROCESS OF LAW.—The

Court of Industrial Relations is not narrowly constrained by technical rules of procedure, and
Commonwealth Act No. 103 requires it to act according to justice and equity and substantial
merits of the case, without regard to technicalities or legal evidence but may inform its mind in
such manner as it may deem just and equitable (Goseco vs. Court of Industrial Relations et al.,
G. R. No. 46673). 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 justiciable
cases coming before it, entirely ignore or disregard the fundamental and essential requirements
of due process in trials and investigations of an administrative character.

3.ID.; ID.; ID.; ID.; CARDINAL PRIMARY RIGHTS.—There are cardinal primary rights
which must be respected even in proceedings of this character. 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. 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. 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 its decision. Not only must there be some evidence to support a
finding or conclusion, but the evidence must be substantial. 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. 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. The Court of Industrial Relations
should, in all controvercial 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 decisions rendered.
The performance of this duty is inseparable from the authority conferred upon it.

4.ID.; ID.; ID.; ID.; ID.; CASE AT BAR; NEW TRIAL GRANTED.—In the light 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 Workers' Brotherhood (appendix A), the
record is barren and does not satisfy the thirst for a factual basis upon which to predicate, in a
rational way, a conclusion of law. This result, however, does not now preclude the concession
of a new trial prayed for by the respondent National Labor Union, Inc. 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 re-open the case, receive all such evidence
as may be relevant, and otherwise proceed in accordance with the requirements set forth in the
decision. Ang Tibay vs. Court oh Industrial Relations etc., 69 Phil. 635, No. 46496 February 27,
1940
Bacani and Matoto vs. Natl. Coconut Corp., et al., 100 Phil. 468, No. L-9657 November 29,
1956

1.POLITICAL LAW; TERM “GOVERNMENT OF THE REPUBLIC OF THE

PHILIPPINES" CONSTRUED.—The term “Government of the Republic of the Philippines”
used in section 2 of the Revised Administrative Code refers to that government entity through
which the functions of the government are exercised as an attribute of sovereignty, and in this
are included those arms through which political authority is made effective whether they be
provincial, municipal or other ex orm of local government. These are what we call municipal
corporations. They do not include government entitles which are given a corporate personality
separate and distinct from the government and which are governed by the Corporation Law,
such as the National Coconut Corporation. Their powers, duties and liabilities have to be
determined in the light of that law and of their corporate charters. They do not therefore come
within the exemption clause prescribed in section 16, Rule 130 of our Rules of Court.

2.STENOGRAPHERS; TRANSCRIPT FEES; PAYMENT OF FEES BEYOND THE LIMIT

PRESCRIBED BY THE RULES OF COURT, VALID.—It is true that in section 8, Rule 130,
stenographers may only charge as fees P0.30 for each page of transcript of not less than 200
words before the appeal is taken and P0.15 for each page after the filing of the appeal, but
where, as in the case at bar, the party has agreed and in fact has paid P1 per page for the services
rendered by the stenographers and has not raised any objection to the amount paid until its
propriety was disputed by the Auditor General, the payment of the fees became contractual and
as such is valid even if it goes beyond the limit prescribed by the Rules of Court. Bacani and
Matoto vs. Natl. Coconut Corp., et al., 100 Phil. 468, No. L-9657 November 29, 1956

Central Bank of the Phil. vs. Court of Appeals, 63 SCRA 431, No. L-33022 April 22, 1975

Appeals; A defense not pleaded in the answer may not be raised far the first time on appeal.—Under its
first assigned error, petitioner devotes the major part of its effort to the discussion of its
proposition that there could be no perfected contract in this case because there is no showing of
compliance, and in fact, there has been no compliance with the requirement that there must be a
certification of the availability of funds by the Auditor General pursuant to Section 607 of the
Revised Administrative Code. x x x. The contention is without merit. x x x It is a familiar rule
in procedure that defenses not pleaded in the answer may not be raised for the first time on
appeal x x x. Indeed, in the Court of Appeals, petitioner could only bring up such questions as
are related to the issues ma de by the parties in their pleadings, particularly where factual
matters may be involved, because to permit a party to change his theory on appeal would be
unfair to the adverse party.

Central Bank; Contracts; Administrative law; Words and Phrases; The term “National Government” in
Section 607 of the Revised Administrative Code does not include the Central Bank of the Philippines.—It is
Our considered view that contracts entered into by petitioner Central Bank are not within the
contemplation of Sections 607 specifically refers to “ex penditure(s) of the National
Government” and that the term “National Government” may not be deemed to include the
Central Bank. Under the Administrative Code itself, the term “National Government” refers
only to the central government, consisting of the legislative, executive and judicial departments
of the government, as distinguished from local governments and other government entities and
is not sy nony mous, therefore, with the terms “The Government of the Republic of the
Philippines” or “Philippine Government”, which are the expressions broad enough to include
not only the central government but also the provincial and municipal governments, chartered
cities and other government-controlled corporations or agencies, like the Central Bank. To be
sure the Central Bank is a government instrumentality . But it was created as an autonomous
body corporate to be governed by the provisions of its charter, Republic Act 265, “to administer
the monetary and banking sy stem of the Republic.” (Sec. 1). As such, it is authorized “to
adopt, alter, and use a corporate seal which shall be judicially noticed; to make contracts; to
lease or own real and personal property ; to sell or otherwise dispose of the same; to sue and be
sued; and otherwise to do and perform any and all things that may be necessary or proper to
carry out the purposes of this Act. The Central Bank may acquire and hold such assets and
incur such liabilities as result directly from operations authorized by the provisions of this Act,
or as are essential to the proper conduct of such operations.” (Sec. 4). It has a capital of its own
and operates under a budget prepared by its own Monetary Board and otherwise appropriates
money for its operations and other expenditures independently of the national budget. It does
not depend on the National Government for the financing of its operations; it is the National
Government that occasional resorts to it for needed budgetary accommodations. Under Section
14 of the Bank’s charter, the Monetary Board may authorize such expenditures by the Central
Bank as are in the interest of the effective administration and operation of the Bank’ Its
prerogati ve to incur such liabilities and expenditures is not subject to any prerequisite found in
any statute or regulation not expressly applicable to it. Relevantly to the issues in this case, it is
not subject, like the Social Security Commission, to Section 1901 and related provisions of the
Revised Administrative Code which require national government constructions to be done by or
under the supervision of the Bureau of Public Works. For these reasons, the provisions of the
Revised Administrative Code invoked by the Bank do not apply to it.

Same; Same; Same; The Central Bank as a chartered entity may enter into contracts with private persons
without need of prior certification of availability of funds under Section 607 of Revised Administrative
Code.—We perceive no valid reason why the Court should not follow the same view now in
respect to the first paragraph of the Section (607) by confirming its application only to the
offices comprised within the term National Government as above defined, particularly insofar
as government-owned or created corporations or entities having powers to make expenditures
and to incur liability by virtue of their own corporate authority independently of the national or
local legislative bodies, as in the case of the petitioner herein, are concerned. Whenever
necessary , the Monetary Board, like any other corporate board, makes all required
appropriations directly from the funds of the Bank and does not need any official statement of
availability from its treasurer or auditor and without submitting any papers to, much less
securing the approval of the Auditor General or any outside authority before doing so.

Same; Same; Central Bank’s acceptance of the bid to construct a building effects an actionable agreement
between it and contractor notwithstanding provision in instruction to bidders that “acceptance of a Proposal
shall bind the successful bidder to execute the Contract”.—The other main contention of petitioner is
that the purported or alleged contract being relied upon by respondent never reached the stage
of perfection which would make it binding upon the parties and entitle either of them to sue for
specific performance in case of breach thereof. In this connection, since the transaction herein
involved arose from the a ward of a construction contract by a government corporation and the
attempt on its part to discontinue with the construction several months after such award had
been accepted by the contractor and after the latter had already commenced the work without
any objection on the part of the corporation, so much so that entry into the side for the purpose
was upon express permission from it, but be fore any written contract has been executed, it is
preferable that certain pertinent points be clarified for the proper guidance of all who might be
similarly situated, x x x We are not persuaded that petitioner’s posture conforms with law and
equity . Accord ing to Paragraph IB 114.1 of the Instructions to Bidders, Ablaza was “required
to appear in the office of the Owner (the Bank) in person, or, if a firm or corporation, a duly
authorized representative (thereof), and to execute the contract within five (5) day s after notice
that the contract has been awarded to him. Failure or neglect to do so shall constitute a breach
of agreement effected by the acceptance of the Proposal.” There can be no other meaning of this
provision than that the Bank’s acceptance of the bid of respondent Ablaza effected an actionable
agreement between them. We cannot read in it the unilateral sense suggested by petitioner that
it bound only the contractor, without any corresponding responsibility or obligation at all on the
part of the Bank. An agreement presupposes a meeting of minds and when that point is reached
in the negotiations between two parties intending to enter into a contract, the purported contract
is deemed perfected and none of them may thereafter disengage himself therefrom without
being liable to the other in an action for specific performance.

Same; Same; Same; Central Bank cannot avoid effect of its acceptance of a bid in the absence of justifiable
reasons.—The unfairness of such a view is too evident to be justified by the invocation of the
principle that every party to a contract who is sui juris and who has entered into it voluntarily
and with full knowledge of its unfavorable provisions may not subsequently complain about
them when they are being enforced, if only because there are other portions of the Instruction to
Bidders which indicate the contrary . Certainly , We cannot sanction that in the absence of
unavoidable just reasons, the Bank could simply refuse to execute the contract and thereby
avoid it. Even a government-owned corporation may not
disregard contractual commitments to the prejudice of the other party . Otherwise, the door
would be wide open to abuses and anomalies more detrimental to public interest, x x x Thus,
after the Proposal of respondent was accepted by the Bank thru its telegram and letter both
dated December 10, 1965 and respondent in turn accepted the award by its letter of December
15, 1965 , both parties became bound to proceed with the subsequent steps needed to formalize
and consummate their agreement. Failure on the part of either of them to do so, entitles the
other to compensation for the resulting damages. To such effect was the ruling of this Court in
Valencia vs. RFC, 103 Phil. 444.

Same; Same; Same; Requirement of Treasurer’s certification of availability of funds waivable.—

Considering all these facts, it is quite obvious that the Bank’s insistence now regarding the need
for the execution of the formal contract becomes a little too late to be believable. Even assuming
arguendo that the Revised Manual of Instructions to Treasurers were applicable to the Central
Bank, which is doubted, considering that under the provisions of its charter already referred to
earlier, disbursements and expenditures of the Bank are supposed to be governed by rules and
regulations promulgated by the Monetary Board, in this particular case, the attitude and
actuations then of the Bank in relation to the work being done by Ablaza prior to May 20, 1966
clearly indicate that both parties assumed that the actual execution of the written contract is a
mere formality which could not materially affect their respective contractual rights and
obligations. In legal effect, therefore, the Bank must be considered as having waived such
requirement.

Same; Same; Same; Constitutional law; Impairment of contracts; A government circular calling for
economic restraint may not be enforced in such a manner as to re sult in impairment of obligations of
contract.—Petitioner contends next that its withdrawal from the contract is justified by the policy
of economic restraint ordained by Memorandum Circular No. 1. We do not see it that way .
Inasmuch as the contract here in question was perfected before the issuance of said
Memorandum Circular, it is elementary that the same may not be enforced in such a manner as
to result in the impairment of the obligations of the contract, for that is not constitutionally
permissible. Not even by means of a statute, which is much more weighty than a mere
declaration of policy, may the government issue any regulation relieving itself or any person
from the binding effects of a contract.

Same; Same; Same; Damages; A party who fails to perform its contractual duty is liable for actual damages
and for unrealized profits.—Upon the other hand, the legal question of whether or not the Bank is
liable for unrealized profits presents no difficulty . In Arrieta vs. Naris, G. R. No. L-15645,
January 31, 1964, 10 SCRA 79, this Court sustained as a matter of law the award of damages in
the amount of U. S. $286,000, pay able in Philippine Currency , measured in the rate of
exchange prevailing at the time the obligation was incurred comprising of unrealized profits of
the plaintiff.

Attorneys; A fee of 10% of the award is reasonable.—With respect to the award for attorney ’s
fees, We believe that in line with the amount fixed in Llanga, supra, an award of ten per centum
(10%) of the amount of the total recovery should be enough. Central Bank of the Phil. vs. Court of
Appeals, 63 SCRA 431, No. L-33022 April 22, 1975

Manila Electric Co. vs. Pasay Transportation Co., 57 Phil,. 600, No. 37878 November 25,
1932

1.Constitutional Law; Act No. 1446, Section 11, Validity of; Members of the Supreme Court
Sitting as a Board of Ar-bitrators; Division of Powers.—The Supreme Court of the Philippine
Islands represents one of the three divisions of power in the Philippine Government. It is
judicial power and judicial power only which is exercised by the Supreme Court. The Supreme
Court and its members should not and cannot be required to exercise any power or to perform
any trust or to assume any duty not pertaining to or connected with the administering of judicial
functions.

2.Id.; Id.; Id.; Id.; Jurisdiction of the Supreme Court.—The Supreme Court exercises
jurisdiction as a court and this juris-diction does not include the exercise of jurisdiction by the
members of the Supreme Court sitting as a board of arbitrators.

3.Id.; Id.; Id.; Id.; Id.—A board of arbitrators is not a "court" in any proper sense of the term
and possesses none of the ju-risdiction which the Organic Act contemplates shall be exer-cised
by the Supreme Court.

4.Id.; Id.; Id.; Id.; Id.; Arbitration and Award.—Arbitration represents a method of the parties'
own choice. A submission to arbitration is a contract. A clause in a contract providing that all
matters in dispute between the parties shall be referred to arbitrators and to them alone is
contrary to public policy and cannot oust the courts of jurisdiction. However, unless the
ar-bitration agreement is such as absolutely to close the doors of the courts against the parties,
the courts should look with favor upon such amicable arrangements.

5.Id.; Id.; Id.; Id.; Id.; Id.; Case at Bar.—Section 11 of Act No. 1446 contravenes the maxims
which guide the operation of a demo-cratic government constitutionally established.

6.Id.; Id,; Id.; Id.; Id.; Id.; Id.—It would be improper and illegal for the members of the
Supreme Court, to sit as a board of arbi-trators the decision of a majority of whom shall be final.
Manila Electric Co. vs. Pasay Transportation Co., 57 Phil,. 600, No. 37878 November 25, 1932

Noblejas vs. Teehankee, 23 SCRA 405, No. L-28790 April 29, 1968

Constitutional law; System of separation of powers; Concept of.—If Congress had really intended to
include in the general grant of “privileges” or “rank and privileges of Judges of the Court of
First Instance” the right to be investigated only by the Supreme Court and to be suspended or
removed upon its recommendation, then such grant of privileges would be unconstitutional,
since it would violate the fundamental doctrine of separation of powers, by charging this court
with the administrative function of supervisory control over executive officials, and
simultaneously reducing pro tanto the control of the Chief Executive over such officials. In this
spirit, it has been held that the Supreme Court of the Philippines and its members should not
and cannot be required to exercise any power or to perform trust or to assume any duty not
pertaining to or connected with the administration of judicial function.

Same; Same; Statutory construction; Intention of the law should not conflict with the Constitution.—
Conformably to the well-known principle of statutory construction that statutes should be given
whenever possible, a meaning that will not bring them in conflict with the Constitution,
consequently. the grant by Republic Act 1151 to the Commissioner of Land Registration of the
“same privileges as those of a Judge of the Court of First Instance” did not include, and was not
intended to include, the right to demand investigation by the Supreme Court, and to be
suspended or removed only upon that Court’s recommendation; for otherwise, the said grant of
privileges would be violative, of the Constitution and be null and void. Noblejas vs. Teehankee,
23 SCRA 405, No. L-28790 April 29, 1968

Garcia vs. Macaraig, Jr., 39 SCRA 106, Adm. Case No. 198-J May 31, 1971

Judges of First Instance; Department of Justice Circular 10 dated February 6, 1952 and Sections 5, 55 and
58 of the Judiciary Act, as amended, apply only to judges actually holding trials and hearings and making
decisions and orders.—Circular No. 10 dated February 6, 1952 of the Department of Justice and
Sections 5, 55 and 58 of the Judiciary Act, as amended, apply to, and contemplate of, judges
who are actually holding trials and hearings and making decisions and orders. They do not
apply to a judge who. although has taken his oath. has not started performing any judicial
functions.

Constitutional law; Separation of powers; Supreme Court looks with disfavor at practice of detailing a
Judge of First Instance at Department of Justice, performing non-judicial functions.—The Supreme
Court does not look with favor at the practice of long standing, to be sure of judges being
detailed in the Department of Justice to assist the Secretary even if it were only in connection
with his work of exercising administrative authority over the courts. The line between what a
judge may do and what he may not do in collaborating or working with other offices or officers
under the other great departments of the government must always be kept clear and jealously
observed, lest the principle of separation of powers on which our government rests by mandate
of the people thru the Constitution be gradually eroded by practices purportedly motivated by
good intentions in the interest of public service.

FERNANDO, J., concurring:

Constitutional law; Separation of powers; Judges performing non-judicial function cannot be justified,
under separation of powers.—While the doctrine of separation of powers is a relative theory not to
be enforced with pedantic vigor, the practical demands of government precluding its doctrinaire
application, it cannot justify a member of the judiciary being required to assume a position or
perform a duty non-judicial in character. That is implicit in the principle. Otherwise there is a
plain departure from its command. The essence of the trust reposed in him is to decide. Only a
higher court, as was emphasized by Justice Barredo, can pass on his actuation. He is not a
subordinate of an executive or legislative official, however eminent. It is indispensable that there
be no exception to the rigidity of such norm if he is, as expected, to be confined to the task of
adjudication. Garcia vs. Macaraig, Jr., 39 SCRA 106, Adm. Case No. 198-J May 31, 1971
 Macariola vs. Asuncion, 114 SCRA 77, Adm. Case No. 133-J May 31, 1982

Judges; Sales; The prohibition to judges from acquiring properties in litigation applies only where the sale
takes place during the pendency of the litigation.—The prohibition in the aforesaid Article applies
only to the sale or assignment of the property which is the subject of litigation to the persons
disqualified therein. WE have already ruled that “x x x for the prohibition to operate, the sale or
assignment of the property must take place during the pendency of the litigation involving the
property”

Same; Same; Respondent judge did not acquire property at bar during the prohibited period.—In the case
at bar, when the respondent Judge purchased on March 6, 1965 a portion of Lot 1184-E, the
decision in Civil Case No. 3010 which he rendered on June 8, 1963 was already final because
none of the parties therein filed an appeal within the reglementary period; hence, the lot in
question was no longer subject of the litigation. Moreover, at the time of the sale on March 6,
1965, respondent’s order dated October 23, 1963 and the amended order dated November 11,
1963 approving the October 16, 1963 project of partition made pursuant to the June 8, 1963
decision, had long become final for there was no appeal from said orders.

Same; Same; Incapacity of judges to acquire property involved in cases before their sala does not apply
where property was not acquired from any of the parties to the case.—Furthermore, respondent Judge
did not buy the lot in question on March 6, 1965 directly from the plaintiffs in Civil Case No.
3010 but from Dr. Arcadio Galapon who earlier purchased on July 31, 1964 Lot 1184-E from
three of the plaintiffs, namely, Priscilla Reyes, Adela Reyes, and Luz R. Bakunawa after the
finality of the decision in Civil Case No. 3010. It may be recalled that Lot 1184 or more
specifically one-half thereof was adjudicated in equal shares to Priscilla Reyes, Adela Reyes.
Luz Bakunawa, Ruperto Reyes and Anacorita Reyes in the project of partition, and the same
was subdivided into five lots denominated as Lot 1184-A to 1184-E.

Same; Same; Same.—The fact remains that respondent Judge purchased on March 6, 1965 a
portion of Lot 1184-E from Dr. Arcadio Galapon; hence, after the finality of the decision which
he rendered on June 8, 1963 in Civil Case No. 3010 and his two ques tioned orders dated
October 23, 1963 and November 11, 1963. Therefore, the property was no longer subject of
litigation.

Same; Respondent acted in good faith in approving project of partition without the signature of the parties
where the lawyers manifested that they were authorized to sign the same by the clients.—I agree with
complainant that respondent should have required the signature of the parties more particularly
that of Mrs. Macariola on the project of partition submitted to him for approval; however,
whatever error was committed by respondent in that respect was done in good faith as
according to Judge Asuncion he was assured by Atty. Bonifacio Ramo, the counsel of record of
Mrs. Macariola, that he was authorized by his client to submit said project of partition, (See
Exh. B and tsn p. 24, January 20, 1969). While it is true that such, written authority if there was
any, was not presented by respondent in evidence, nor did Atty. Ramo appear to corroborate
the statement of respondent, his affidavit being the only one that was presented as respondent’s
Exh. 10, certain actuations of Mrs. Macariola lead this investigator to believe that she knew the
contents of the project of partition, Exh. A, and that she gave her conformity thereto.

Same; While a judge may not have acquired property in litigation before him in the technical sense, it was,
however, improper for him to have done so under the Canons of Judicial Ethics.—Finally, while it is true
that respondent Judge did not violate paragraph 5, Article 1491 of the New Civil Code in
acquiring by purchase a portion of Lot 1184-E which was in litigation in his court, it was,
however, improper for him to have acquired the same. He should be reminded of Canon 3 of
the Canons of Judicial Ethics which requires that: “A judge’s official conduct should be free
from the appearance of impropriety, and his personal behavior, not only upon the bench and in
the performance of judicial duties, but also in his everyday life, should be beyond reproach.”
And as aptly observed by the imvestigating Justice: “x x it was unwise and indiscreet on the part
of respondent to have purchased or acquired a portion of a piece of property that was or had
been in litigation in his court and caused it to be transferred to a corporation of which he and
his wife were ranking officers at the time of such transfer. One who occupies an exalted position
in the judiciary has the duty and responsibility of maintaining the faith and trust of the citizenry
in the courts of justice, so that not only must he be truly honest and just, but his actuations must
be such as not give cause for doubt and mistrust in the uprightness of his administration of
justice. In this particular case of respondent, he cannot deny that the transactions over Lot 1184-
E are damaging and render his actuations open to suspicion and distrust.

Same; Administrative Law; Public Officers; Constitutional Law; The provision of the Code of Commerce
incapacitating judges and justices and other public officers from engaging in business is part of Political
Law.—It is Our considered view that although the aforestated provision is incorporated in the
Code of Commerce which is part of the commercial laws of the Philippines, it, however,
partakes of the nature of a political law as it regulates the relationship between the government
and certain public officers and employees, like justices and judges.

Same; Same; Same; Same; “Political Law” defined.—Political Law has been defined as that branch
of public law which deals with the organization and operation of the governmental organs of
the State and defined the relations of the state with the inhabitants of its territory (People vs.
Perfecto, 43 Phil. 887, 897 [1922]). It may be recalled that political law embraces constitutional
law, law of public corporations, administrative law including the law on public officers and
elections. Specifically, Article 14 of the Code of Commerce partakes more of the nature of an
administrative law because it regulates the conduct of certain public officers and employees with
respect to engaging in business; hence, political in essence.

Same; Same; Same; Same; Statutes; Art. 14 of the Code of Commerce prohibiting certain public officers
from engaging in business activities is political in nature and has already been abrogated with the transfer of
sovereignty from Spain, to the United States and later to the Republic of the Philippines.—Upon the
transfer of sovereignty from Spain to the United States and later on from the United States to
the Republic of the Philippines, Article 14 of this Code of Commerce must be deemed to have
been abrogated because where there is change of sovereignty, the political laws of the former
sovereign, whether compatible or not with those of the new sovereign, are automatically
abrogated, unless they are expressly re-enacted by affirmative act of the new sovereign.

Same; Same; Same; Same; Same; Same.—There appears no enabling or affirmative act that
continued the effectivity of the aforestated provision of the Code of Commerce after the change
of sovereignty from Spain to the United States and then to the Republic of the Philippines.
Consequently, Article 14 of the Code of Commerce has no legal and binding effect and cannot
apply to the respondent, then Judge of the Court of First Instance, now Associate Justice of the
Court of Appeals.

Same; Anti-Graft Law; A judge cannot be held guilty of violating the Anti-Graft Law where there is no
showing that he intervened in the business or transactions of a commercial firm.—Respondent Judge
cannot be held liable under the aforestated paragraph because there is no showing that
respondent participated or intervened in his official capacity in the business or transactions of
the Traders Manufacturing and Fishing Industries, Inc. In the case at bar, the. business of the
corporation in which respondent participated has obviously no relation or connection with his
judicial office. The business of said corporation is not that kind where respondent intervenes or
takes part in his capacity as Judge of the Court of First Instance. As was held in one case
involving the application of Article 216 of the Revised Penal Code which has a similar
prohibition on public officers against directly or indirectly becoming interested in any contract
or business in which it is his official duty to intervene. “(I)t is not enough to be a public official
to be subject to this crime; it is necessary that by reason of his office, he has to intervene in said
contracts or transactions; and, hence, the official who intervenes in contracts or transactions
which have no relation to his office cannot commit this crime.”

Same; Same; Same.—It does not appear also from the records that the aforesaid corporation
gained any undue advantage in its business operations by reason of respondent’s financial
involvement in it, or that the corporation benefited in one way or another in any case filed by or
against it in court. It is undisputed that there was no case filed in the different branches of the
Court of First Instance of Leyte in which the corporation was either party plaintiff or defendant
except Civil Case No. 4234 entitled “Bernardita R. Macariola, plaintiff, versus Sinforosa O.
Bales, et. al., “wherein the complainant herein sought to recover Lot 1184-E from the aforesaid
corporation. It must be noted, however, that Civil Case No. 4234 was filed only on November 9
or 11, 1968 and decided on November 2, 1970 by CFI Judge Jose D. Nepomuceno when
respondent Judge was no longer connected with the corporation, having disposed of his interest
therein on January 31, 1967.

Same; Constitutional Law; Judges are not prohibited from engaging or having any interest in any lawful
business.—Furthermore, respondent is not liable under the same paragraph because there is no
provision in both the 1935 and 1973 Constitutions of the Philippines, nor is there an existing
law expressly prohibiting members of the Judiciary from engaging or having interest in any
lawful business.

Same; Same; Same.—It may be pointed out that Republic Act No. 296, as amended, also known
as the Judiciary Act of 1948, does not contain any prohibition to that effect. As a matter of fact,
under Section 77 of said law, municipal judges may engage in teaching or other vocation not
involving the practice of law after office hours but with the permission of the district judge
concerned.

Same; Administrative Law; Public Officers; Anti-Graft Law; Civil Service; Although Civil Service
regulations prohibit public officers from engaging in business without prior authority of his department
head, violation of such administrative rule does not constitute violation of the Anti-Graft Law.—In
addition, although Section 12, Rule XVIII of the Civil Service Rules made pursuant to the Civil
Service Act of 1959 prohibits an officer or employee in the civil service from engaging in any
private business, vocation, or profession or be connected with any commercial, credit,
agricultural or industrial undertaking without a written permission from the head of
department, the same, however, may not fall within the purview of paragraph h, Section 3 of
the Anti-Graft and Corrupt Practices Act because the last portion of said paragraph speaks of a
prohibition by the Constitution or law on any public officer from having any interest in any
business and not by a mere administrative rule or regulation. Thus, a violation of the aforesaid
rule by any officer or employee in the civil service, that is, engaging in private business without
a written permission from the Department Head may not constitute graft and corrupt practice as
defined by law.

Same; Same; Same; Same; The Section 12 of the Civil Service Act and RA. 2260, of the Civil Service Rules
and Regulations do not apply to members of the Judiciary.—On the contention of complainant that
respondent Judge violated Section 12, Rule XVIII of the Civil Service Rules, We hold that the
Civil Service Act of 1959 (R.A. No. 2260) and the Civil Service Rules promulgated thereunder,
particularly Section 12 of Rule XVIII, do not apply to the members of the Judiciary. Under said
Section 12: “No officer or employee shall engaged directly in any private business, vocation, or
profession or be connected with any commercial credit, agricultural or industrial undertaking
without a written permission from the Head of Department x x.” It must be emphasized at the
outset that respondent, being a member of the Judiciary, is covered by Republic Act No. 296, as
amended, otherwise known as the Judiciary Act of 1948 and by Section 7, Article X, 1973
Constitution.

Same; Same; Same; Same; Judges are not officers or employees subject to the disciplinary authority of the
Civil Service Commission.—However, judges cannot be considered us subordinate civil service
officers or employees subject to the disciplinary authority of the Commissioner of Civil Service;
for, certainly, the Commissioner is not the head of the Judicial Department to which they
belong. The Revised Administrative Code (Section 89) and the Civil Service Law itself state that
the Chief Justice is the department head of the Supreme Court (Sec. 20, R.A. No. 2260 [1959]);
and under the 1973 Constitution, the Judiciary is the only other or second branch of the
government (Sec. 1, Art X, 1973 Constitution). Besides, a violation of Section 12, Rule XVIII
cannot be considered as a ground for disciplinary action against judges because to recognize the
same as applicable to them, would be adding another ground for the discipline of judges and, as
aforestated, Section 67 of the Judiciary Act recognizes only two grounds for their removal,
namely, serious misconduct and inefficiency.

Same; Same; Same; Same; Only permanent officers in the classified service are subject to the jurisdiction of
the Civil Service Commissioner. Judges do not fall under this category.—There is no question that a
judge belong to the non-competitive or unclassified service of the government as a Presidential
appointee and is therefore not covered by the aforesaid provision. We have already ruled that “x
x in interpreting Section 16(i) of Republic Act No. 2260, we emphasized that only permanent
officers and employees who belong to the classified service come under the exclusive
jurisdiction of the Commissioner of Civil Service.”

Same; Being an officer of a business corporation is violative of the Canons of Judicial Ethics. However, in
the case at bar respondent judge and his wife sold their shares already without a short time after
acquisition—a commendable act.—WE are not, however, unmindful of the fact that respondent
Judge and his wife had withdrawn on January 31, 1967 from the aforesaid corporation and sold
their respective shares to third parties, and it appears also that the aforesaid corporation did not
in anyway benefit in any case filed by or against it in court as there was no case filed in the
different branches of the Court of First Instance of Leyte from the time of the drafting of the
Articles of Incorporation of the corporation on March 12, 1966, up to its incorporation on
January 9, 1967, and the eventual withdrawal of respondent on January 31, 1967 from said
corporation. Such disposal or sale by respondent and his wife of their shares in the corporation
only 22 days after the incorporation of the corporation, indicates that respondent realized that
early that their interest in the corporation contravenes the aforesaid Canon 25. Respondent
Judge and his wife therefore deserve commendation for their immediate withdrawal from the
firm after its incorporation and before it became involved in any court litigation.

Same; It is but natural for a judge to believe that a person who publicly holds himself out as an “Attorney-
at-Law” is a bona fide member of the Bar.—“The respondent denies knowing that Dominador
Arigpa Tan was an ‘impostor’ and claims that all the time he believed that the latter was a bona
fide member of the bar. I see no reason for disbelieving this assertion of respondent. It has been
shown by complainant that Dominador Arigpa Tan represented himself publicly as an attorney-
at-law to the extent of putting up a signboard with his name and the words ‘Attorney-at-Law’
(Exh. I and I-1) to indicate his office, and it was but natural for respondent and any person for
that matter to have accepted that statement on its face value. Macariola vs. Asuncion, 114 SCRA
77, Adm. Case No. 133-J May 31, 1982