Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-28896 February 17, 1988

COMMISSIONER OF INTERNAL REVENUE, petitioner,

vs.
ALGUE, INC., and THE COURT OF TAX APPEALS, respondents.

CRUZ, J.:

Taxes are the lifeblood of the government and so should be collected without unnecessary hindrance On the other hand, such collection should be
made in accordance with law as any arbitrariness will negate the very reason for government itself. It is therefore necessary to reconcile the
apparently conflicting interests of the authorities and the taxpayers so that the real purpose of taxation, which is the promotion of the common
good, may be achieved.

The main issue in this case is whether or not the Collector of Internal Revenue correctly disallowed the
P75,000.00 deduction claimed by private respondent Algue as legitimate business expenses in its
income tax returns. The corollary issue is whether or not the appeal of the private respondent from the
decision of the Collector of Internal Revenue was made on time and in accordance with law.

We deal first with the procedural question.

The record shows that on January 14, 1965, the private respondent, a domestic corporation engaged in
engineering, construction and other allied activities, received a letter from the petitioner assessing it in
the total amount of P83,183.85 as delinquency income taxes for the years 1958 and 1959.1 On January
18, 1965, Algue flied a letter of protest or request for reconsideration, which letter was stamp received on
the same day in the office of the petitioner. 2 On March 12, 1965, a warrant of distraint and levy was
presented to the private respondent, through its counsel, Atty. Alberto Guevara, Jr., who refused to
receive it on the ground of the pending protest. 3 A search of the protest in the dockets of the case
proved fruitless. Atty. Guevara produced his file copy and gave a photostat to BIR agent Ramon Reyes,
who deferred service of the warrant. 4 On April 7, 1965, Atty. Guevara was finally informed that the BIR
was not taking any action on the protest and it was only then that he accepted the warrant of distraint
and levy earlier sought to be served.5 Sixteen days later, on April 23, 1965, Algue filed a petition for
review of the decision of the Commissioner of Internal Revenue with the Court of Tax Appeals.6

The above chronology shows that the petition was filed seasonably. According to Rep. Act No. 1125, the
appeal may be made within thirty days after receipt of the decision or ruling challenged.7 It is true that as
a rule the warrant of distraint and levy is "proof of the finality of the assessment" 8 and renders hopeless
a request for reconsideration," 9 being "tantamount to an outright denial thereof and makes the said
request deemed rejected." 10 But there is a special circumstance in the case at bar that prevents
application of this accepted doctrine.

The proven fact is that four days after the private respondent received the petitioner's notice of
assessment, it filed its letter of protest. This was apparently not taken into account before the warrant of
distraint and levy was issued; indeed, such protest could not be located in the office of the petitioner. It
was only after Atty. Guevara gave the BIR a copy of the protest that it was, if at all, considered by the tax
authorities. During the intervening period, the warrant was premature and could therefore not be served.

As the Court of Tax Appeals correctly noted," 11 the protest filed by private respondent was not pro
forma and was based on strong legal considerations. It thus had the effect of suspending on January 18,
1965, when it was filed, the reglementary period which started on the date the assessment was received,
viz., January 14, 1965. The period started running again only on April 7, 1965, when the private
respondent was definitely informed of the implied rejection of the said protest and the warrant was finally

1
served on it. Hence, when the appeal was filed on April 23, 1965, only 20 days of the reglementary
period had been consumed.

Now for the substantive question.

The petitioner contends that the claimed deduction of P75,000.00 was properly disallowed because it
was not an ordinary reasonable or necessary business expense. The Court of Tax Appeals had seen it
differently. Agreeing with Algue, it held that the said amount had been legitimately paid by the private
respondent for actual services rendered. The payment was in the form of promotional fees. These were
collected by the Payees for their work in the creation of the Vegetable Oil Investment Corporation of the
Philippines and its subsequent purchase of the properties of the Philippine Sugar Estate Development
Company.

Parenthetically, it may be observed that the petitioner had Originally claimed these promotional fees to
be personal holding company income 12 but later conformed to the decision of the respondent court
rejecting this assertion.13 In fact, as the said court found, the amount was earned through the joint efforts
of the persons among whom it was distributed It has been established that the Philippine Sugar Estate
Development Company had earlier appointed Algue as its agent, authorizing it to sell its land, factories
and oil manufacturing process. Pursuant to such authority, Alberto Guevara, Jr., Eduardo Guevara,
Isabel Guevara, Edith, O'Farell, and Pablo Sanchez, worked for the formation of the Vegetable Oil
Investment Corporation, inducing other persons to invest in it.14 Ultimately, after its incorporation largely
through the promotion of the said persons, this new corporation purchased the PSEDC properties.15 For
this sale, Algue received as agent a commission of P126,000.00, and it was from this commission that
the P75,000.00 promotional fees were paid to the aforenamed individuals.16

There is no dispute that the payees duly reported their respective shares of the fees in their income tax
returns and paid the corresponding taxes thereon.17 The Court of Tax Appeals also found, after
examining the evidence, that no distribution of dividends was involved.18

The petitioner claims that these payments are fictitious because most of the payees are members of the
same family in control of Algue. It is argued that no indication was made as to how such payments were
made, whether by check or in cash, and there is not enough substantiation of such payments. In short,
the petitioner suggests a tax dodge, an attempt to evade a legitimate assessment by involving an
imaginary deduction.

We find that these suspicions were adequately met by the private respondent when its President, Alberto
Guevara, and the accountant, Cecilia V. de Jesus, testified that the payments were not made in one
lump sum but periodically and in different amounts as each payee's need arose. 19 It should be
remembered that this was a family corporation where strict business procedures were not applied and
immediate issuance of receipts was not required. Even so, at the end of the year, when the books were
to be closed, each payee made an accounting of all of the fees received by him or her, to make up the
total of P75,000.00. 20 Admittedly, everything seemed to be informal. This arrangement was
understandable, however, in view of the close relationship among the persons in the family corporation.

We agree with the respondent court that the amount of the promotional fees was not excessive. The total
commission paid by the Philippine Sugar Estate Development Co. to the private respondent was
P125,000.00. 21After deducting the said fees, Algue still had a balance of P50,000.00 as clear profit from
the transaction. The amount of P75,000.00 was 60% of the total commission. This was a reasonable
proportion, considering that it was the payees who did practically everything, from the formation of the
Vegetable Oil Investment Corporation to the actual purchase by it of the Sugar Estate properties. This
finding of the respondent court is in accord with the following provision of the Tax Code:

SEC. 30. Deductions from gross income.--In computing net income there shall be
allowed as deductions —

(a) Expenses:

2
 (1) In general.--All the ordinary and necessary expenses paid or incurred during the
taxable year in carrying on any trade or business, including a reasonable allowance for
salaries or other compensation for personal services actually rendered; ... 22

and Revenue Regulations No. 2, Section 70 (1), reading as follows:

SEC. 70. Compensation for personal services.--Among the ordinary and necessary
expenses paid or incurred in carrying on any trade or business may be included a
reasonable allowance for salaries or other compensation for personal services actually
rendered. The test of deductibility in the case of compensation payments is whether they
are reasonable and are, in fact, payments purely for service. This test and deductibility in
the case of compensation payments is whether they are reasonable and are, in fact,
payments purely for service. This test and its practical application may be further stated
and illustrated as follows:

Any amount paid in the form of compensation, but not in fact as the purchase price of
services, is not deductible. (a) An ostensible salary paid by a corporation may be a
distribution of a dividend on stock. This is likely to occur in the case of a corporation
having few stockholders, Practically all of whom draw salaries. If in such a case the
salaries are in excess of those ordinarily paid for similar services, and the excessive
payment correspond or bear a close relationship to the stockholdings of the officers of
employees, it would seem likely that the salaries are not paid wholly for services
rendered, but the excessive payments are a distribution of earnings upon the stock. . . .
(Promulgated Feb. 11, 1931, 30 O.G. No. 18, 325.)

It is worth noting at this point that most of the payees were not in the regular employ of Algue nor were
they its controlling stockholders. 23

The Solicitor General is correct when he says that the burden is on the taxpayer to prove the validity of
the claimed deduction. In the present case, however, we find that the onus has been discharged
satisfactorily. The private respondent has proved that the payment of the fees was necessary and
reasonable in the light of the efforts exerted by the payees in inducing investors and prominent
businessmen to venture in an experimental enterprise and involve themselves in a new business
requiring millions of pesos. This was no mean feat and should be, as it was, sufficiently recompensed.

It is said that taxes are what we pay for civilization society. Without taxes, the government would be
paralyzed for lack of the motive power to activate and operate it. Hence, despite the natural reluctance to
surrender part of one's hard earned income to the taxing authorities, every person who is able to must
contribute his share in the running of the government. The government for its part, is expected to
respond in the form of tangible and intangible benefits intended to improve the lives of the people and
enhance their moral and material values. This symbiotic relationship is the rationale of taxation and
should dispel the erroneous notion that it is an arbitrary method of exaction by those in the seat of
power.

But even as we concede the inevitability and indispensability of taxation, it is a requirement in all
democratic regimes that it be exercised reasonably and in accordance with the prescribed procedure. If it
is not, then the taxpayer has a right to complain and the courts will then come to his succor. For all the
awesome power of the tax collector, he may still be stopped in his tracks if the taxpayer can
demonstrate, as it has here, that the law has not been observed.

We hold that the appeal of the private respondent from the decision of the petitioner was filed on time
with the respondent court in accordance with Rep. Act No. 1125. And we also find that the claimed
deduction by the private respondent was permitted under the Internal Revenue Code and should
therefore not have been disallowed by the petitioner.

ACCORDINGLY, the appealed decision of the Court of Tax Appeals is AFFIRMED in toto, without costs.

3
SO ORDERED.

Teehankee, C.J., Narvasa, Gancayco and Griño-Aquino, JJ., concur.

Facts:
The Philippine Sugar Estate Development Company had earlier appointed Algue Inc., as its
agent, authorizing it to sell its land, factories and oil manufacturing process.As such,the
corporation worked for the formation of the Vegetable Oil Investment Corporation, until they were
able to purchased the PSEDC properties. For this sale, Algue Inc., received as agent a
commission of P126, 000.00, and it was from this commission that the P75, 000.00 promotional
fees were paid to Alberto Guevara, Jr., Eduardo Guevara, Isabel Guevara, Edith, O'Farell, and
Pablo Sanchez.

Commissioner of Internal Revenue contends that the claimed deduction is not allowed because
it was not an ordinary reasonable or necessary business expense. The Court of Tax Appeals had
seen it differently. Agreeing with Algue Inc., it held that the said amount had been legitimately
paid by the private respondent for actual services rendered. The payment was in the form of
promotional fees.

Issue:
Whether or not the Collector of Internal Revenue correctly disallowed the P75, 000.00 deduction
claimed by private respondent Algue Inc., as legitimate business expenses in its income tax
returns.

Ruling:
No, The Supreme Court agrees with the respondent court that the amount of the promotional
fees was not excessive. The P75,000.00 was 60% of the total commission. This was a reasonable
proportion, considering that it was the payees who did practically everything, from the formation
of the Vegetable Oil Investment Corporation to the actual purchase by it of the Sugar Estate
properties.

The claimed deduction by the private respondent was permitted under the Internal Revenue
Code and should therefore not have been disallowed by the petitioner.

CALALANG VS. WILLIAMS

FIRST DIVISION

[G.R. No. 47800. December 2, 1940.]

MAXIMO CALALANG, Petitioner, v. A. D. WILLIAMS, ET AL., Respondents.

Maximo Calalang in his own behalf.

Solicitor General Ozaeta and Assistant Solicitor General Amparo for respondents Williams, Fragante
and Bayan

City Fiscal Mabanag for the other respondents.

SYLLABUS

1. CONSTITUTIONAL LAW; CONSTITUTIONALITY OF COMMONWEALTH ACT No. 648; DELEGATION OF

LEGISLATIVE POWER; AUTHORITY OF DIRECTOR OF PUBLIC WORKS AND SECRETARY OF PUBLIC WORKS AND
COMMUNICATIONS TO PROMULGATE RULES AND REGULATIONS. — The provisions of section 1 of

4
 Commonwealth Act No. 648 do not confer legislative power upon the Director of Public Works and the Secretary
of Public Works and Communications. 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 designated 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 convenience and interest." The delegated power, if at all, therefore, 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 directly 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 occasion 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 AUTHORITY. — Commonwealth Act No. 548
was passed by the National Assembly in the exercise of the paramount police power of the state. Said Act, by
virtue of which the rules and regulations 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
inspired 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 occupations. Persons and
property may be subjected to all kinds of restraints and burdens, in order to secure the general comfort, health,
and prosperity of the state (U.S. v. Gomer Jesus, 31 Phil., 218). To this fundamental aim of our Government the
rights of the individual are subordinated. Liberty is a blessing without which life is a misery, but liberty should
not be made to prevail over authority because then society 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 conferred 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 liberty 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 forces by the State so that
justice in its rational and objectively secular conception may at least be approximated. Social justice 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 equilibrium in the interrelations of the members of the community, constitutionally, through the adoption
of measures legally justifiable, or extra-constitutionally, through the exercise of powers underlying the existence
of all governments on the time-honored principle of salus populi est suprema 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 social
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."

DECISION

LAUREL, J.:

Maximo Calalang, in his capacity as a private citizen and as a taxpayer of Manila, brought before this court this
petition for a writ of prohibition against the respondents, A. D. Williams, as Chairman of the National Traffic
Commission; Vicente Fragante, as Director of Public Works; Sergio Bayan, as Acting Secretary of Public Works
and Communications; Eulogio Rodriguez, as Mayor of the City of Manila; and Juan Dominguez, as Acting Chief of
Police of Manila.

It is alleged in the petition that the National Traffic Commission, in its resolution of July 17, 1940, resolved to
recommend to the Director of Public Works and to the Secretary of Public Works and Communications that
animal-drawn vehicles be prohibited from passing along Rosario Street extending from Plaza Calderon de la
Barca to Dasmariñas Street, from 7:30 a.m. to 12:30 p.m. and from 1:30 p.m. to 5:30 p.m.; and along Rizal
Avenue extending from the railroad crossing at Antipolo Street to Echague Street, from 7 a.m. to 11 p.m., from

5
a period of one year from the date of the opening of the Colgante Bridge to traffic; that the Chairman of the
National Traffic Commission, on July 18, 1940 recommended to the Director of Public Works the adoption of the
measure proposed in the resolution aforementioned, in pursuance of the provisions of Commonwealth Act No.
548 which authorizes said Director of Public Works, with the approval of the Secretary of Public Works and
Communications, to promulgate rules and regulations to regulate and control the use of and traffic on national
roads; that on August 2, 1940, the Director of Public Works, in his first indorsement to the Secretary of Public
Works and Communications, recommended to the latter the approval of the recommendation made by the
Chairman of the National Traffic Commission as aforesaid, with the modification that the closing of Rizal Avenue
to traffic to animal-drawn vehicles be limited to the portion thereof extending from the railroad crossing at
Antipolo Street to Azcarraga Street; that on August 10, 1940, the Secretary of Public Works and
Communications, in his second indorsement addressed to the Director of Public Works, approved the
recommendation of the latter that Rosario Street and Rizal Avenue be closed to traffic of animal-drawn vehicles,
between the points and during the hours as above indicated, for a period of one year from the date of the
opening of the Colgante Bridge to traffic; that the Mayor of Manila and the Acting Chief of Police of Manila have
enforced and caused to be enforced the rules and regulations thus adopted; that as a consequence of such
enforcement, all animal-drawn vehicles are not allowed to pass and pick up passengers in the places above-
mentioned to the detriment not only of their owners but of the riding public as well.

It is contended by the petitioner that Commonwealth Act No. 548 by which the Director of Public Works, with the
approval of the Secretary of Public Works and Communications, is authorized to promulgate rules and
regulations for the regulation and control of the use of and traffic on national roads and streets is
unconstitutional because it constitutes an undue delegation of legislative power. This contention is untenable. As
was observed by this court in Rubi v. Provincial Board of Mindoro (39 Phil, 660, 700), "The rule has nowhere
been better stated than in the early Ohio case decided by Judge Ranney, and since followed in a multitude of
cases, namely: ’The true distinction therefore is between the delegation of power to make the law, which
necessarily involves a discretion as to what it shall be, and conferring an authority or discretion as to its
execution, to be exercised under and in pursuance of the law. The first cannot be done; to the latter no valid
objection can be made.’ (Cincinnati, W. & Z. R. Co. v. Comm’rs. Clinton County, 1 Ohio St., 88.) Discretion, as
held by Chief Justice Marshall in Wayman v. Southard (10 Wheat., 1) may be committed by the Legislature to an
executive department or official. The Legislature may make decisions of executive departments or subordinate
officials thereof, to whom it has committed the execution of certain acts, final on questions of fact. (U.S. v.
Kinkead, 248 Fed., 141.) The growing tendency in the decisions is to give prominence to the ’necessity’ of the
case."cralaw virtua1aw l ib rary

Section 1 of Commonwealth Act No. 548 reads as follows: jgc:chan roble s.com.p h

"SECTION 1. To promote safe transit upon, and avoid obstructions on, roads and streets designated as national
roads by acts of the National Assembly or by executive orders of the President of the Philippines, the Director of
Public Works, with the approval of the Secretary of Public Works and Communications, shall promulgate the
necessary rules and regulations to regulate and control the use of and traffic on such roads and streets. Such
rules and regulations, with the approval of the President, may contain provisions controlling or regulating the
construction of buildings or other structures within a reasonable distance from along the national roads. Such
roads may be temporarily closed to any or all classes of traffic by the Director of Public Works and his duly
authorized representatives whenever the condition of the road or the traffic thereon makes such action
necessary or advisable in the public convenience and interest, or for a specified period, with the approval of the
Secretary of Public Works and Communications." cralaw virtua 1aw lib rary

The above provisions of law do not confer legislative power upon the Director of Public Works and the Secretary
of Public Works and Communications. 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 designated 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 makes such action necessary or advisable in
the public convenience and interest." The delegated power, if at all, therefore, 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 directly
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 occasion exists for executing the law. But it cannot
be said that the exercise of such discretion is the making of the law. As was said in Locke’s Appeal (72 Pa. 491):
"To assert that a law is less than a law, because it is made to depend on a future event or act, is to rob the
Legislature of the power to act wisely for the public welfare whenever a law is passed relating to a state of affairs
not yet developed, or to things future and impossible to fully know." The proper distinction the court said was
this: "The Legislature cannot delegate its power to make the law; but it can make a law to delegate a power to
determine some fact or state of things upon which the law makes, or intends to make, its own action depend. To

6
deny this would be to stop the wheels of government. There are many things upon which wise and useful
legislation must depend which cannot be known to the law-making power, and, must, therefore, be a subject of
inquiry and determination outside of the halls of legislation." (Field v. Clark, 143 U. S. 649, 694; 36 L. Ed. 294.)

In the case of People v. Rosenthal and Osmeña, G.R. Nos. 46076 and 46077, promulgated June 12, 1939, and in
Pangasinan Transportation v. The Public Service Commission, G.R. No. 47065, promulgated June 26, 1940, this
Court had occasion to observe that the principle of separation of powers 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.
Accordingly, with the growing complexity of modern life, the multiplication of the subjects of governmental
regulations, and the increased difficulty of administering the laws, the rigidity of the theory of separation of
governmental powers has, to a large extent, been relaxed by permitting the delegation of greater powers by the
legislative and vesting a larger amount of discretion in administrative and executive officials, not only in the
execution of the laws, but also in the promulgation of certain rules and regulations calculated to promote public
interest.

The petitioner further contends that the rules and regulations promulgated by the respondents pursuant to the
provisions of Commonwealth Act No. 548 constitute an unlawful interference with legitimate business or trade
and abridge the right to personal liberty and freedom of locomotion. Commonwealth Act No. 548 was passed by
the National Assembly in the exercise of the paramount police power of the state.

Said Act, by virtue of which the rules and regulations 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 inspired 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 occupations. Persons
and property may be subjected to all kinds of restraints and burdens, in order to secure the general comfort,
health, and prosperity of the state (U.S. v. Gomez Jesus, 31 Phil., 218). To this fundamental aim of our
Government the rights of the individual are subordinated. Liberty is a blessing without which life is a misery, but
liberty should not be made to prevail over authority because then society 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 conferred 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 liberty is
precisely the very means of insuring its preservation.

The scope of police power keeps expanding as civilization advances. As was said in the case of Dobbins v. Los
Angeles (195 U.S. 223, 238; 49 L. ed. 169), "the right to exercise the police power is a continuing one, and a
business lawful today may in the future, because of the changed situation, the growth of population or other
causes, become a menace to the public health and welfare, and be required to yield to the public good." And in
People v. Pomar (46 Phil., 440), it was observed that "advancing civilization is bringing within the police power of
the state today things which were not thought of as being within such power yesterday. The development of
civilization, the rapidly increasing population, the growth of public opinion, with an increasing desire on the part
of the masses and of the government to look after and care for the interests of the individuals of the state, have
brought within the police power many questions for regulation which formerly were not so considered." cralaw virtua1aw l ibra ry

The petitioner finally avers that the rules and regulations complained of infringe upon the constitutional precept
regarding the promotion of social justice to insure the well-being and economic security of all the people. The
promotion of social justice, however, is to be achieved not through a mistaken sympathy towards any given
group. Social justice is "neither communism, nor despotism, nor atomism, nor anarchy," but the humanization of
laws and the equalization of social and economic forces by the State so that justice in its rational and objectively
secular conception may at least be approximated. Social justice 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 equilibrium in the interrelations of
the members of the community, constitutionally, through the adoption of measures legally justifiable, or extra-
constitutionally, through the exercise of powers underlying the existence of all governments on the time-honored
principle of salus populi est suprema 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 social 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." cralaw virt ua1aw lib ra ry

In view of the foregoing, the writ of prohibition prayed for is hereby denied, with costs against the petitioner. So

7
ordered.

Avanceña, C.J., Imperial, Diaz. and Horrilleno. JJ. concur.

SAMPLE DIGEST

Facts: In July 17, 1940 the National Traffic Commission recommended to the Director of
Public Works and to the Secretary of Public Works and Communications that animal-
drawn vehicles be prohibited from passing along Rosario Street extending from Plaza
Calderon de la Barca to Dasmarinas Street from 7:30 AM to 12:30 PM and from 1:30 PM
to 5:30 PM; and along Rizal Avenue extending from the railroad crossing at Antipolo
Street to Echague Street from 7 AM to 11 PM; one year from the date of opening of the
Colgante Bridge to traffic.

The Director of Public Works recommended to the Secretary of Public Works and
Communications that the closing of Rizal Avenue to traffic of animal-drawn vehicles be
limited to the portion extending from the railroad crossing at Antipolo Street to Azcarraga
Street during the same hours as indicated for a period of one year from the date of
opening of the Colgante Bridge to traffic.

Issue: Whether CA 548 is unconstitutional because it constitutes undue delegation of

legislative power and infringes upon constitutional precept regarding the promotion of
social justice to ensure the well-being and economic security of all people;

Whether there is unlawful interference with legitimate business or trade and abridging
of the right to personal liberty and freedom of locomotion.

Held: The writ of prohibition prayed for is hereby DENIED.

Ratio: According to Judge Ranney: "The true distinction therefore is between the
delegation of power to make the law, which necessarily involves discretion as to its
execution to be exercised under and in pursuance of the law. The first cannot be done
to the latter no valid objection can be made.

The Legislature cannot delegate a power to make law, but it can make a law to
delegate a power to determine some fact or state of things upon which the law makes
or intends to make, its action depend. To deny this would stop the wheels of the
government.

By consideration of public convenience and welfare the National Assembly enacted

CA 548. Persons may be subjected to all kinds of restraints and burdens in order to
secure the general comfort, health and prosperity of the State. 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 State has exercised its Police Power in this case.