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FIRST DIVISION

[G.R. No. 151908. August 12, 2003]

SMART COMMUNICATIONS, INC. (SMART) and PILIPINO TELEPHONE CORPORATION (PILTEL), petitioners, vs. NATIONAL TELECOMMUNICATIONS COMMISSION (NTC), respondent.
[G.R. No. 152063. August 12, 2003]

GLOBE TELECOM, INC. (GLOBE) and ISLA COMMUNICATIONS CO., INC. (ISLACOM), petitioners, vs. COURT OF APPEALS (The Former 6th Division) and the NATIONAL TELECOMMUNICATIONS COMMISSION, respondents. DECISION
YNARES-SANTIAGO, J.:

Pursuant to its rule-making and regulatory powers, the National Telecommunications Commission (NTC) issued on June 16, 2000 Memorandum Circular No. 13-6-2000, promulgating rules and regulations on the billing of telecommunications services. Among its pertinent provisions are the following: (1) The billing statements shall be received by the subscriber of the telephone service not later than 30 days from the end of each billing cycle. In case the statement is received beyond this period, the subscriber shall have a specified grace period within

which to pay the bill and the public telecommunications entity (PTEs) shall not be allowed to disconnect the service within the grace period. (2) There shall be no charge for calls that are diverted to a voice mailbox, voice prompt, recorded message or similar facility excluding the customers own equipment. (3) PTEs shall verify the identification and address of each purchaser of prepaid SIM cards. Prepaid call cards and SIM cards shall be valid for at least 2 years from the date of first use. Holders of prepaid SIM cards shall be given 45 days from the date the prepaid SIM card is fully consumed but not beyond 2 years and 45 days from date of first use to replenish the SIM card, otherwise the SIM card shall be rendered invalid. The validity of an invalid SIM card, however, shall be installed upon request of the customer at no additional charge except the presentation of a valid prepaid call card. (4) Subscribers shall be updated of the remaining value of their cards before the start of every call using the cards. (5) The unit of billing for the cellular mobile telephone service whether postpaid or prepaid shall be reduced from 1 minute per pulse to 6 seconds per pulse. The authorized rates per minute shall thus be divided by 10.[1] The Memorandum Circular provided that it shall take effect 15 days after its publication in a newspaper of general circulation and three certified true copies thereof furnished the UP Law Center. It was published in the newspaper, The Philippine Star, on June 22, 2000.[2] Meanwhile, the provisions of the Memorandum Circular pertaining to the sale and use of prepaid cards and the unit of billing for cellular mobile telephone service took effect 90 days from the effectivity of the Memorandum Circular. On August 30, 2000, the NTC issued a Memorandum

to all cellular mobile telephone service (CMTS) operators which contained measures to minimize if not totally eliminate the incidence of stealing of cellular phone units. The Memorandum directed CMTS operators to:
a. strictly comply with Section B(1) of MC 13-6-2000 requiring the presentation and verification of the identity and addresses of prepaid SIM card customers; b. require all your respective prepaid SIM cards dealers to comply with Section B(1) of MC 13-62000; c. deny acceptance to your respective networks prepaid and/or postpaid customers using stolen cellphone units or cellphone units registered to somebody other than the applicant when properly informed of all information relative to the stolen cellphone units; d. share all necessary information of stolen cellphone units to all other CMTS operators in order to prevent the use of stolen cellphone units; and e. require all your existing prepaid SIM card customers to register and present valid identification cards.[3]

This was followed by another Memorandum dated October 6, 2000 addressed to all public telecommunications entities, which reads: This is to remind you that the validity of all prepaid cards sold on 07 October 2000 and beyond shall be valid for at least two (2) years from date of first use pursuant to MC 13-6-2000. In addition, all CMTS operators are reminded that all SIM packs used by subscribers of prepaid cards sold on 07 October 2000 and beyond shall be valid for at least two (2) years from date of first use. Also, the billing unit shall be

on a six (6) seconds pulse effective 07 October 2000. For strict compliance.[4] On October 20, 2000, petitioners Isla Communications Co., Inc. and Pilipino Telephone Corporation filed against the National Telecommunications Commission, Commissioner Joseph A. Santiago, Deputy Commissioner Aurelio M. Umali and Deputy Commissioner Nestor C. Dacanay, an action for declaration of nullity of NTC Memorandum Circular No. 13-6-2000 (the Billing Circular) and the NTC Memorandum dated October 6, 2000, with prayer for the issuance of a writ of preliminary injunction and temporary restraining order. The complaint was docketed as Civil Case No. Q-00-42221 at the Regional Trial Court of Quezon City, Branch 77.[5] Petitioners Islacom and Piltel alleged, inter alia, that the NTC has no jurisdiction to regulate the sale of consumer goods such as the prepaid call cards since such jurisdiction belongs to the Department of Trade and Industry under the Consumer Act of the Philippines; that the Billing Circular is oppressive, confiscatory and violative of the constitutional prohibition against deprivation of property without due process of law; that the Circular will result in the impairment of the viability of the prepaid cellular service by unduly prolonging the validity and expiration of the prepaid SIM and call cards; and that the requirements of identification of prepaid card buyers and call balance announcement are unreasonable. Hence, they prayed that the Billing Circular be declared null and void ab initio. Soon thereafter, petitioners Globe Telecom, Inc and Smart Communications, Inc. filed a joint Motion for Leave to Intervene and to Admit Complaint-inIntervention.[6] This was granted by the trial court. On October 27, 2000, the trial court issued a

temporary restraining order enjoining the NTC from implementing Memorandum Circular No. 13-6-2000 and the Memorandum dated October 6, 2000.[7] In the meantime, respondent NTC and its codefendants filed a motion to dismiss the case on the ground of petitioners failure to exhaust administrative remedies. Subsequently, after hearing petitioners application for preliminary injunction as well as respondents motion to dismiss, the trial court issued on November 20, 2000 an Order, the dispositive portion of which reads: WHEREFORE, premises considered, the defendants motion to dismiss is hereby denied for lack of merit. The plaintiffs application for the issuance of a writ of preliminary injunction is hereby granted. Accordingly, the defendants are hereby enjoined from implementing NTC Memorandum Circular 13-62000 and the NTC Memorandum, dated October 6, 2000, pending the issuance and finality of the decision in this case. The plaintiffs and intervenors are, however, required to file a bond in the sum of FIVE HUNDRED THOUSAND PESOS (P500,000.00), Philippine currency. SO ORDERED.[8] Defendants filed a motion for reconsideration, which was denied in an Order dated February 1, 2001.[9] Respondent NTC thus filed a special civil action for certiorari and prohibition with the Court of Appeals, which was docketed as CA-G.R. SP. No. 64274. On October 9, 2001, a decision was rendered, the decretal portion of which reads: WHEREFORE, premises considered, the instant petition for certiorari and prohibition is GRANTED, in that, the order of the court a quo denying the petitioners motion to dismiss as well as the order of the court a quo granting the private respondents

prayer for a writ of preliminary injunction, and the writ of preliminary injunction issued thereby, are hereby ANNULLED and SET ASIDE. The private respondents complaint and complaint-in-intervention below are hereby DISMISSED, without prejudice to the referral of the private respondents grievances and disputes on the assailed issuances of the NTC with the said agency. SO ORDERED.[10] Petitioners motions for reconsideration were denied in a Resolution dated January 10, 2002 for lack of merit.[11] Hence, the instant petition for review filed by Smart and Piltel, which was docketed as G.R. No. 151908, anchored on the following grounds:
A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE NATIONAL TELECOMMUNICATIONS COMMISSION (NTC) AND NOT THE REGULAR COURTS HAS JURISDICTION OVER THE CASE. B. THE HONORABLE COURT OF APPEALS ALSO GRAVELY ERRED IN HOLDING THAT THE PRIVATE RESPONDENTS FAILED TO EXHAUST AN AVAILABLE ADMINISTRATIVE REMEDY. C. THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE BILLING CIRCULAR ISSUED BY THE RESPONDENT NTC IS UNCONSTITUTIONAL AND CONTRARY TO LAW AND PUBLIC POLICY. D. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PRIVATE RESPONDENTS

FAILED TO SHOW THEIR CLEAR POSITIVE RIGHT TO WARRANT THE ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION.[12]

Likewise, Globe and Islacom filed a petition for review, docketed as G.R. No. 152063, assigning the following errors:
1. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE DOCTRINES OF PRIMARY JURISDICTION AND EXHAUSTION OF ADMINISTRATIVE REMEDIES DO NOT APPLY SINCE THE INSTANT CASE IS FOR LEGAL NULLIFICATION (BECAUSE OF LEGAL INFIRMITIES AND VIOLATIONS OF LAW) OF A PURELY ADMINISTRATIVE REGULATION PROMULGATED BY AN AGENCY IN THE EXERCISE OF ITS RULE MAKING POWERS AND INVOLVES ONLY QUESTIONS OF LAW. 2. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE DOCTRINE ON EXHAUSTION OF ADMINISTRATIVE REMEDIES DOES NOT APPLY WHEN THE QUESTIONS RAISED ARE PURELY LEGAL QUESTIONS. 3. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE DOCTRINE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES DOES NOT APPLY WHERE THE ADMINISTRATIVE ACTION IS COMPLETE AND EFFECTIVE, WHEN THERE IS NO OTHER REMEDY, AND THE PETITIONER STANDS TO SUFFER GRAVE AND IRREPARABLE INJURY. 4. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE PETITIONERS IN FACT EXHAUSTED ALL ADMINISTRATIVE REMEDIES AVAILABLE TO THEM. 5. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED IN ISSUING ITS

QUESTIONED RULINGS IN THIS CASE BECAUSE GLOBE AND ISLA HAVE A CLEAR RIGHT TO AN INJUNCTION.[13]

The two petitions were consolidated in a Resolution dated February 17, 2003.[14] On March 24, 2003, the petitions were given due course and the parties were required to submit their respective memoranda.[15] We find merit in the petitions. Administrative agencies possess quasi-legislative or rule-making powers and quasi-judicial or administrative adjudicatory powers. Quasi-legislative or rule-making power is the power to make rules and regulations which results in delegated legislation that is within the confines of the granting statute and the doctrine of non-delegability and separability of powers.[16] The rules and regulations that administrative agencies promulgate, which are the product of a delegated legislative power to create new and additional legal provisions that have the effect of law, should be within the scope of the statutory authority granted by the legislature to the administrative agency. It is required that the regulation be germane to the objects and purposes of the law, and be not in contradiction to, but in conformity with, the standards prescribed by law.[17] They must conform to and be consistent with the provisions of the enabling statute in order for such rule or regulation to be valid. Constitutional and statutory provisions control with respect to what rules and regulations may be promulgated by an administrative body, as well as with respect to what fields are subject to regulation by it. It may not make rules and regulations which are inconsistent with the provisions of the Constitution or a statute, particularly the statute it is administering or which created it, or which are in derogation of, or defeat, the purpose of a statute. In case

of conflict between a statute and an administrative order, the former must prevail.[18] Not to be confused with the quasi-legislative or rulemaking power of an administrative agency is its quasijudicial or administrative adjudicatory power. This is the power to hear and determine questions of fact to which the legislative policy is to apply and to decide in accordance with the standards laid down by the law itself in enforcing and administering the same law. The administrative body exercises its quasi-judicial power when it performs in a judicial manner an act which is essentially of an executive or administrative nature, where the power to act in such manner is incidental to or reasonably necessary for the performance of the executive or administrative duty entrusted to it. In carrying out their quasi-judicial functions, the administrative officers or bodies are required to investigate facts or ascertain the existence of facts, hold hearings, weigh evidence, and draw conclusions from them as basis for their official action and exercise of discretion in a judicial nature.[19] In questioning the validity or constitutionality of a rule or regulation issued by an administrative agency, a party need not exhaust administrative remedies before going to court. This principle applies only where the act of the administrative agency concerned was performed pursuant to its quasi-judicial function, and not when the assailed act pertained to its rule-making or quasi-legislative power. In Association of Philippine Coconut Dessicators v. Philippine Coconut Authority,[20] it was held: The rule of requiring exhaustion of administrative remedies before a party may seek judicial review, so strenuously urged by the Solicitor General on behalf of respondent, has obviously no application here. The resolution in question was issued by the PCA in the exercise of its rule- making or legislative power. However, only judicial review of decisions of administrative agencies made in the exercise of their quasi-

judicial function is subject to the exhaustion doctrine. Even assuming arguendo that the principle of exhaustion of administrative remedies apply in this case, the records reveal that petitioners sufficiently complied with this requirement. Even during the drafting and deliberation stages leading to the issuance of Memorandum Circular No. 13-6-2000, petitioners were able to register their protests to the proposed billing guidelines. They submitted their respective position papers setting forth their objections and submitting proposed schemes for the billing circular.[21] After the same was issued, petitioners wrote successive letters dated July 3, 2000[22] and July 5, 2000,[23] asking for the suspension and reconsideration of the so-called Billing Circular. These letters were not acted upon until October 6, 2000, when respondent NTC issued the second assailed Memorandum implementing certain provisions of the Billing Circular. This was taken by petitioners as a clear denial of the requests contained in their previous letters, thus prompting them to seek judicial relief. In like manner, the doctrine of primary jurisdiction applies only where the administrative agency exercises its quasi-judicial or adjudicatory function. Thus, in cases involving specialized disputes, the practice has been to refer the same to an administrative agency of special competence pursuant to the doctrine of primary jurisdiction. The courts will not determine a controversy involving a question which is within the jurisdiction of the administrative tribunal prior to the resolution of that question by the administrative tribunal, where the question demands the exercise of sound administrative discretion requiring the special knowledge, experience and services of the administrative tribunal to determine technical and intricate matters of fact, and a uniformity of ruling is essential to comply with the premises of the regulatory statute administered. The objective of the doctrine of

primary jurisdiction is to guide a court in determining whether it should refrain from exercising its jurisdiction until after an administrative agency has determined some question or some aspect of some question arising in the proceeding before the court. It applies where the claim is originally cognizable in the courts and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, has been placed within the special competence of an administrative body; in such case, the judicial process is suspended pending referral of such issues to the administrative body for its view.[24] However, where what is assailed is the validity or constitutionality of a rule or regulation issued by the administrative agency in the performance of its quasilegislative function, the regular courts have jurisdiction to pass upon the same. The determination of whether a specific rule or set of rules issued by an administrative agency contravenes the law or the constitution is within the jurisdiction of the regular courts. Indeed, the Constitution vests the power of judicial review or the power to declare a law, treaty, international or executive agreement, presidential decree, order, instruction, ordinance, or regulation in the courts, including the regional trial courts.[25] This is within the scope of judicial power, which includes the authority of the courts to determine in an appropriate action the validity of the acts of the political departments.[26] Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government.[27] In the case at bar, the issuance by the NTC of Memorandum Circular No. 13-6-2000 and its

Memorandum dated October 6, 2000 was pursuant to its quasi-legislative or rule-making power. As such, petitioners were justified in invoking the judicial power of the Regional Trial Court to assail the constitutionality and validity of the said issuances. In Drilon v. Lim,[28] it was held: We stress at the outset that the lower court had jurisdiction to consider the constitutionality of Section 187, this authority being embraced in the general definition of the judicial power to determine what are the valid and binding laws by the criterion of their conformity to the fundamental law. Specifically, B.P. 129 vests in the regional trial courts jurisdiction over all civil cases in which the subject of the litigation is incapable of pecuniary estimation, even as the accused in a criminal action has the right to question in his defense the constitutionality of a law he is charged with violating and of the proceedings taken against him, particularly as they contravene the Bill of Rights. Moreover, Article X, Section 5(2), of the Constitution vests in the Supreme Court appellate jurisdiction over final judgments and orders of lower courts in all cases in which the constitutionality or validity of any treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in question.[29] In their complaint before the Regional Trial Court, petitioners averred that the Circular contravened Civil Code provisions on sales and violated the constitutional prohibition against the deprivation of property without due process of law. These are within the competence of the trial judge. Contrary to the finding of the Court of Appeals, the issues raised in the complaint do not entail highly technical matters. Rather, what is required of the judge who will resolve this issue is a basic familiarity with the workings of the cellular telephone service, including prepaid SIM and call cards and this is judicially known to be within the knowledge of a good percentage of our population and expertise in fundamental principles of

civil law and the Constitution. Hence, the Regional Trial Court has jurisdiction to hear and decide Civil Case No. Q-00-42221. The Court of Appeals erred in setting aside the orders of the trial court and in dismissing the case. WHEREFORE, in view of the foregoing, the consolidated petitions are GRANTED. The decision of the Court of Appeals in CA-G.R. SP No. 64274 dated October 9, 2001 and its Resolution dated January 10, 2002 are REVERSED and SET ASIDE. The Order dated November 20, 2000 of the Regional Trial Court of Quezon City, Branch 77, in Civil Case No. Q-00-42221 is REINSTATED. This case is REMANDED to the court a quo for continuation of the proceedings. SO ORDERED.

EN BANC G.R. No. L-75697 June 18, 1987 VALENTIN TIO doing business under the name and style of OMI ENTERPRISES, petitioner, vs. VIDEOGRAM REGULATORY BOARD, MINISTER OF FINANCE, METRO MANILA COMMISSION, CITY MAYOR and CITY TREASURER OF MANILA, respondents. Nelson Y. Ng for petitioner. The City Legal Officer for respondents City Mayor and City Treasurer.

MELENCIO-HERRERA, J.: This petition was filed on September 1, 1986 by petitioner on his own behalf and purportedly on behalf of other videogram operators adversely affected. It assails the constitutionality of Presidential Decree No. 1987 entitled "An Act Creating the Videogram Regulatory Board" with broad powers to regulate and supervise the videogram industry (hereinafter briefly referred to as the BOARD). The Decree was promulgated on October 5, 1985 and took effect on April 10, 1986, fifteen (15) days after completion of its publication in the Official Gazette. On November 5, 1985, a month after the promulgation of the abovementioned decree, Presidential Decree No. 1994 amended the National Internal Revenue Code providing, inter alia: SEC. 134. Video Tapes. There shall be collected on each processed video-tape cassette, ready for playback, regardless of length, an annual tax of five pesos; Provided, That locally manufactured or imported blank video tapes shall be subject to sales tax. On October 23, 1986, the Greater Manila Theaters Association, Integrated Movie Producers, Importers and Distributors Association of the Philippines, and Philippine Motion Pictures Producers Association, hereinafter collectively referred to as the Intervenors, were permitted by the Court to intervene in the case,

over petitioner's opposition, upon the allegations that intervention was necessary for the complete protection of their rights and that their "survival and very existence is threatened by the unregulated proliferation of film piracy." The Intervenors were thereafter allowed to file their Comment in Intervention. The rationale behind the enactment of the DECREE, is set out in its preambular clauses as follows: 1. WHEREAS, the proliferation and unregulated circulation of videograms including, among others, videotapes, discs, cassettes or any technical improvement or variation thereof, have greatly prejudiced the operations of moviehouses and theaters, and have caused a sharp decline in theatrical attendance by at least forty percent (40%) and a tremendous drop in the collection of sales, contractor's specific, amusement and other taxes, thereby resulting in substantial losses estimated at P450 Million annually in government revenues; 2. WHEREAS, videogram(s) establishments collectively earn around P600 Million per annum from rentals, sales and disposition of videograms, and such earnings have not been subjected to tax, thereby depriving the Government of approximately P180 Million in taxes each year; 3. WHEREAS, the unregulated activities of videogram establishments have also affected the viability of the movie industry, particularly the more than 1,200 movie houses and theaters throughout the country, and occasioned industry-wide displacement and unemployment due to the shutdown of numerous moviehouses and theaters; 4. "WHEREAS, in order to ensure national economic recovery, it is imperative for the Government to create an environment conducive to growth and development of all business industries, including the movie industry which has an accumulated investment of about P3 Billion; 5. WHEREAS, proper taxation of the activities of videogram establishments will not only alleviate the dire financial condition of the movie industry upon which more than 75,000 families and 500,000 workers depend for their livelihood, but also provide an additional source of revenue for the Government, and at the same time rationalize the heretofore uncontrolled distribution of

videograms; 6. WHEREAS, the rampant and unregulated showing of obscene videogram features constitutes a clear and present danger to the moral and spiritual well-being of the youth, and impairs the mandate of the Constitution for the State to support the rearing of the youth for civic efficiency and the development of moral character and promote their physical, intellectual, and social wellbeing; 7. WHEREAS, civic-minded citizens and groups have called for remedial measures to curb these blatant malpractices which have flaunted our censorship and copyright laws; 8. WHEREAS, in the face of these grave emergencies corroding the moral values of the people and betraying the national economic recovery program, bold emergency measures must be adopted with dispatch; ... (Numbering of paragraphs supplied). Petitioner's attack on the constitutionality of the DECREE rests on the following grounds: 1. Section 10 thereof, which imposes a tax of 30% on the gross receipts payable to the local government is a RIDER and the same is not germane to the subject matter thereof; 2. The tax imposed is harsh, confiscatory, oppressive and/or in unlawful restraint of trade in violation of the due process clause of the Constitution; 3. There is no factual nor legal basis for the exercise by the President of the vast powers conferred upon him by Amendment No. 6; 4. There is undue delegation of power and authority; 5. The Decree is an ex-post facto law; and 6. There is over regulation of the video industry as if it were a nuisance, which it is not. We shall consider the foregoing objections in seriatim. 1. The Constitutional requirement that "every bill shall embrace

only one subject which shall be expressed in the title thereof" 1 is sufficiently complied with if the title be comprehensive enough to include the general purpose which a statute seeks to achieve. It is not necessary that the title express each and every end that the statute wishes to accomplish. The requirement is satisfied if all the parts of the statute are related, and are germane to the subject matter expressed in the title, or as long as they are not inconsistent with or foreign to the general subject and title. 2 An act having a single general subject, indicated in the title, may contain any number of provisions, no matter how diverse they may be, so long as they are not inconsistent with or foreign to the general subject, and may be considered in furtherance of such subject by providing for the method and means of carrying out the general object." 3 The rule also is that the constitutional requirement as to the title of a bill should not be so narrowly construed as to cripple or impede the power of legislation. 4 It should be given practical rather than technical construction. 5 Tested by the foregoing criteria, petitioner's contention that the tax provision of the DECREE is a rider is without merit. That section reads, inter alia: Section 10. Tax on Sale, Lease or Disposition of Videograms. Notwithstanding any provision of law to the contrary, the province shall collect a tax of thirty percent (30%) of the purchase price or rental rate, as the case may be, for every sale, lease or disposition of a videogram containing a reproduction of any motion picture or audiovisual program. Fifty percent (50%) of the proceeds of the tax collected shall accrue to the province, and the other fifty percent (50%) shall acrrue to the municipality where the tax is collected; PROVIDED, That in Metropolitan Manila, the tax shall be shared equally by the City/Municipality and the Metropolitan Manila Commission. xxx xxx xxx The foregoing provision is allied and germane to, and is reasonably necessary for the accomplishment of, the general object of the DECREE, which is the regulation of the video industry through the Videogram Regulatory Board as expressed in its title. The tax provision is not inconsistent with, nor foreign to that general subject and title. As a tool for regulation 6 it is simply one of the regulatory and control mechanisms scattered throughout the

DECREE. The express purpose of the DECREE to include taxation of the video industry in order to regulate and rationalize the heretofore uncontrolled distribution of videograms is evident from Preambles 2 and 5, supra. Those preambles explain the motives of the lawmaker in presenting the measure. The title of the DECREE, which is the creation of the Videogram Regulatory Board, is comprehensive enough to include the purposes expressed in its Preamble and reasonably covers all its provisions. It is unnecessary to express all those objectives in the title or that the latter be an index to the body of the DECREE. 7 2. Petitioner also submits that the thirty percent (30%) tax imposed is harsh and oppressive, confiscatory, and in restraint of trade. However, it is beyond serious question that a tax does not cease to be valid merely because it regulates, discourages, or even definitely deters the activities taxed. 8 The power to impose taxes is one so unlimited in force and so searching in extent, that the courts scarcely venture to declare that it is subject to any restrictions whatever, except such as rest in the discretion of the authority which exercises it. 9 In imposing a tax, the legislature acts upon its constituents. This is, in general, a sufficient security against erroneous and oppressive taxation. 10 The tax imposed by the DECREE is not only a regulatory but also a revenue measure prompted by the realization that earnings of videogram establishments of around P600 million per annum have not been subjected to tax, thereby depriving the Government of an additional source of revenue. It is an end-user tax, imposed on retailers for every videogram they make available for public viewing. It is similar to the 30% amusement tax imposed or borne by the movie industry which the theater-owners pay to the government, but which is passed on to the entire cost of the admission ticket, thus shifting the tax burden on the buying or the viewing public. It is a tax that is imposed uniformly on all videogram operators. The levy of the 30% tax is for a public purpose. It was imposed primarily to answer the need for regulating the video industry, particularly because of the rampant film piracy, the flagrant violation of intellectual property rights, and the proliferation of pornographic video tapes. And while it was also an objective of the DECREE to protect the movie industry, the tax remains a valid imposition.

The public purpose of a tax may legally exist even if the motive which impelled the legislature to impose the tax was to favor one industry over another. 11 It is inherent in the power to tax that a state be free to select the subjects of taxation, and it has been repeatedly held that "inequities which result from a singling out of one particular class for taxation or exemption infringe no constitutional limitation". 12 Taxation has been made the implement of the state's police power. 13

At bottom, the rate of tax is a matter better addressed to the taxing legislature. 3. Petitioner argues that there was no legal nor factual basis for the promulgation of the DECREE by the former President under Amendment No. 6 of the 1973 Constitution providing that "whenever in the judgment of the President ... , there exists a grave emergency or a threat or imminence thereof, or whenever the interim Batasang Pambansa or the regular National Assembly fails or is unable to act adequately on any matter for any reason that in his judgment requires immediate action, he may, in order to meet the exigency, issue the necessary decrees, orders, or letters of instructions, which shall form part of the law of the land." In refutation, the Intervenors and the Solicitor General's Office aver that the 8th "whereas" clause sufficiently summarizes the justification in that grave emergencies corroding the moral values of the people and betraying the national economic recovery program necessitated bold emergency measures to be adopted with dispatch. Whatever the reasons "in the judgment" of the then President, considering that the issue of the validity of the exercise of legislative power under the said Amendment still pends resolution in several other cases, we reserve resolution of the question raised at the proper time. 4. Neither can it be successfully argued that the DECREE contains an undue delegation of legislative power. The grant in Section 11 of the DECREE of authority to the BOARD to "solicit the direct assistance of other agencies and units of the government and deputize, for a fixed and limited period, the heads or personnel of such agencies and units to perform enforcement functions for the Board" is not a delegation of the power to legislate but merely a conferment of authority or discretion as to its execution, enforcement, and implementation. "The true distinction is between

the delegation of power to make the law, which necessarily involves a discretion as to what it shall be, and conferring 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." 14 Besides, in the very language of the decree, the authority of the BOARD to solicit such assistance is for a "fixed and limited period" with the deputized agencies concerned being "subject to the direction and control of the BOARD." That the grant of such authority might be the source of graft and corruption would not stigmatize the DECREE as unconstitutional. Should the eventuality occur, the aggrieved parties will not be without adequate remedy in law. 5. The DECREE is not violative of the ex post facto principle. An ex post facto law is, among other categories, one which "alters the legal rules of evidence, and authorizes conviction upon less or different testimony than the law required at the time of the commission of the offense." It is petitioner's position that Section 15 of the DECREE in providing that: All videogram establishments in the Philippines are hereby given a period of forty-five (45) days after the effectivity of this Decree within which to register with and secure a permit from the BOARD to engage in the videogram business and to register with the BOARD all their inventories of videograms, including videotapes, discs, cassettes or other technical improvements or variations thereof, before they could be sold, leased, or otherwise disposed of. Thereafter any videogram found in the possession of any person engaged in the videogram business without the required proof of registration by the BOARD, shall be prima facie evidence of violation of the Decree, whether the possession of such videogram be for private showing and/or public exhibition. raises immediately a prima facie evidence of violation of the DECREE when the required proof of registration of any videogram cannot be presented and thus partakes of the nature of an ex post facto law. The argument is untenable. As this Court held in the recent case of Vallarta vs. Court of Appeals, et al. 15
... it is now well settled that "there is no constitutional objection to the passage of a law providing that the presumption of innocence may be overcome by a contrary presumption founded upon the experience of

human conduct, and enacting what evidence shall be sufficient to overcome such presumption of innocence" (People vs. Mingoa 92 Phil. 856 [1953] at 858-59, citing 1 COOLEY, A TREATISE ON THE CONSTITUTIONAL LIMITATIONS, 639-641). And the "legislature may enact that when certain facts have been proved that they shall be prima facie evidence of the existence of the guilt of the accused and shift the burden of proof provided there be a rational connection between the facts proved and the ultimate facts presumed so that the inference of the one from proof of the others is not unreasonable and arbitrary because of lack of connection between the two in common experience".
16

Applied to the challenged provision, there is no question that there is a rational connection between the fact proved, which is nonregistration, and the ultimate fact presumed which is violation of the DECREE, besides the fact that the prima facie presumption of violation of the DECREE attaches only after a forty-five-day period counted from its effectivity and is, therefore, neither retrospective in character. 6. We do not share petitioner's fears that the video industry is being over-regulated and being eased out of existence as if it were a nuisance. Being a relatively new industry, the need for its regulation was apparent. While the underlying objective of the DECREE is to protect the moribund movie industry, there is no question that public welfare is at bottom of its enactment, considering "the unfair competition posed by rampant film piracy; the erosion of the moral fiber of the viewing public brought about by the availability of unclassified and unreviewed video tapes containing pornographic films and films with brutally violent sequences; and losses in government revenues due to the drop in theatrical attendance, not to mention the fact that the activities of video establishments are virtually untaxed since mere payment of Mayor's permit and municipal license fees are required to engage in business. 17 The enactment of the Decree since April 10, 1986 has not brought about the "demise" of the video industry. On the contrary, video establishments are seen to have proliferated in many places notwithstanding the 30% tax imposed. In the last analysis, what petitioner basically questions is the necessity, wisdom and expediency of the DECREE. These considerations, however, are primarily and exclusively a matter of

legislative concern.
Only congressional power or competence, not the wisdom of the action taken, may be the basis for declaring a statute invalid. This is as it ought to be. The principle of separation of powers has in the main wisely allocated the respective authority of each department and confined its jurisdiction to such a sphere. There would then be intrusion not allowable under the Constitution if on a matter left to the discretion of a coordinate branch, the judiciary would substitute its own. If there be adherence to the rule of law, as there ought to be, the last offender should be courts of justice, to which rightly litigants submit their controversy precisely to maintain unimpaired the supremacy of legal norms and prescriptions. The attack on the validity of the challenged provision likewise insofar as there may be objections, even if valid and cogent on its wisdom cannot be sustained. 18

In fine, petitioner has not overcome the presumption of validity which attaches to a challenged statute. We find no clear violation of the Constitution which would justify us in pronouncing Presidential Decree No. 1987 as unconstitutional and void. WHEREFORE, the instant Petition is hereby dismissed. No costs. SO ORDERED.

THIRD DIVISION
[G.R. No. 144109. February 17, 2003]

ASSOCIATED COMMUNICATIONS & WIRELESS SERVICES UNITED BROADCASTING NETWORKS, petitioner, vs. NATIONAL TELECOMMUNICATIONS COMMISSION, respondent. DECISION
PUNO, J.:

For many years now, there has been a pervading confusion in the state of affairs of the broadcast industry brought about by conflicting laws, decrees, executive orders and other pronouncements promulgated during the Martial Law regime.[1] The question that has taken a long life is whether the operation of a radio or television station requires a congressional franchise. The Court shall now lay to rest the issue. This is a petition for review on certiorari of the Court of Appeals January 31, 2000 decision and February 21, 2000 resolution affirming the January 13, 1999 decision of the National Telecommunications Commission (NTC for brevity). First, the facts. On November 11, 1931, Act No. 3846, entitled An Act Providing for the Regulation of Radio Stations and Radio Communications in the Philippines and for Other Purposes, was enacted. Sec. 1 of the law reads, viz: Sec. 1. No person, firm, company, association, or corporation

shall construct, install, establish, or operate a radio transmitting station, or a radio receiving station used for commercial purposes, or a radio broadcasting station, without having first obtained a franchise therefor from the Congress of the Philippines... Pursuant to the above provision, Congress enacted in 1965 R.A. No. 4551, entitled An Act Granting Marcos J. Villaverde, Jr. and Winfred E. Villaverde a Franchise to Construct, Install, Maintain and Operate Public Radiotelephone and Radiotelegraph Coastal Stations, and Public Fixed and Public Based and Land Mobile Stations within the Philippines for the Reception and Transmission of Radiotelephone and Radiotelegraph for Domestic Communications and Provincial Telephone Systems in Certain Provinces. It gave the grantees a 50-year franchise.[2] In 1969, the franchise was transferred to petitioner Associated Communications & Wireless Services United Broadcasting Network, Inc. (ACWS for brevity) through Congress Concurrent Resolution No. 58.[3] Petitioner ACWS then engaged in the installation and operation of several radio stations around the country. In 1974, P.D. No. 576-A, Regulating the Ownership and Operation of Radio and Television Stations and for other Purposes was issued, with the following pertinent provisions on franchise of radio and television broadcasting systems: Sec. 1. No radio station or television channel may obtain a franchise unless it has sufficient capital on the basis of equity for its operation for at least one year, including purchase of equipment. xxx xxx xxx

Sec. 6. All franchises, grants, licenses, permits, certificates or other forms of authority to operate radio or television broadcasting systems shall terminate on December 31,

1981. Thereafter, irrespective of any franchise, grant, license, permit, certificate or other forms of authority to operate granted by any office, agency or person, no radio or television station shall be authorized to operate without the authority of the Board of Communications and the Secretary of Public Works and Communications or their successors who have the right and authority to assign to qualified parties frequencies, channels or other means of identifying broadcasting system; Provided, however, that any conflict over, or disagreement with a decision of the aforementioned authorities may be appealed finally to the Office of the President within fifteen days from the date the decision is received by the party in interest. A few years later or in 1979, E.O. No. 546[4] was issued. It integrated the Board of Communications and the Telecommunications Control Bureau under the Integrated Reorganization Plan of 1972 into the NTC. Among the powers vested in the NTC under Sec. 15 of E.O. No. 546 are the following: a. Issue Certificate of Public Convenience for the operation of communication utilities and services, radio communications systems, wire or wireless telephone or telegraph system, radio and television broadcasting system and other similar public utilities; xxx xxx xxx

c. Grant permits for the use of radio frequencies for wireless telephone and telegraph systems and radio communication systems including amateur radio stations and radio and television broadcasting systems; . . . Upon termination of petitioners franchise on December 31, 1981 pursuant to P.D. No. 576-A, it continued operating its radio stations under permits granted by the NTC. As these presidential issuances relating to the radio

and television broadcasting industry brought about confusion as to whether the NTC could issue permits to radio and television broadcast stations without legislative franchise, the NTC sought the opinion of the Department of Justice (DOJ) on the matter. On June 20, 1991, the DOJ rendered Opinion No. 98, Series of 1991, viz: We believe that under P.D. No. 576-A dated November 11, 1974 and prior to the issuance of E.O No. 546 dated July 23, 1979, the NTC, then Board of Communications, had no authority to issue permits or authorizations to operate radio and television broadcasting systems without a franchise first being obtained pursuant to Section 1 of Act No. 3846, as amended. A close reading of the provisions of Sections 1 and 6 of P.D. No. 576-A, supra, does not reveal any indication of a legislative intent to do away with the franchising requirement under Section 1 of Act No. 3846. In fact, a mere reading of Section 1 would readily indicate that a franchise was necessary for the operation of radio and television broadcasting systems as it expressly provided that no such franchise may be obtained unless the radio station or television channel has sufficient capital on the basis of equity for its operation for at least one year, including purchase of equipment. It is believed that the termination of all franchises granted for the operation of radio and television broadcasting systems effective December 31, 1981 and the vesting of the power to authorize the operation of any radio or television station upon the Board of Communications and the Secretary of Public Works and Communications and their successors under Section 6 of P.D. No. 576-A does not necessarily imply the abrogation of the requirement of obtaining a franchise under Section 1 of Act No. 3846, as amended, in the absence of a clear provision in P.D. No. 576-A providing to this effect. It should be noted that under Act No. 3846, as amended, a person, firm or entity desiring to operate a radio broadcasting station must obtain the following: (a) a franchise from Congress

(Sec. 1); (b) a permit to construct or install a station from the Secretary of Commerce and Industry (Sec. 2); and (c) a license to operate the station also from the Secretary of Commerce and Industry (id.). The franchise is the privilege granted by the State through its legislative body and is subject to regulation by the State itself by virtue of its police power through its administrative agencies (RCPI vs. NTC, 150 SCRA 450). The permit and license are the administrative authorizations issued by the administrative agency in the exercise of regulation. It is clear that what was transferred to the Board of Communications and the Secretary of Commerce and Industry under Section 6 of P.D. No. 576-A was merely the regulatory powers vested solely in the Secretary of Commerce and Industry under Section 2 of Act No. 3846, as amended. The franchising authority was retained by the then incumbent President as repository of legislative power under Martial Law, as is clearly indicated in the first WHEREAS clause of P.D. No. 576-A to wit: WHEREAS, the President of the Philippines is empowered under the Constitution to review and approve franchises for public utilities. Of course, under the Constitution, said power (the power to review and approve franchises), belongs to the lawmaking body (Sec. 5, Art. XIV, 1973 Constitution; Sec. 11, Art. XII, 1987 Constitution). The corollary question to be resolved is: Has E.O. No 546 (which is a law issued pursuant to P.D. No. 1416, as amended by P.D. No. 1771, granting the then President continuing authority to reorganize the administrative structure of the national government) modified the franchising and licensing arrangement for radio and television broadcasting systems under P.D. No. 576-A? We believe so. E.O. No. 546 integrated the Board of Communications and the

Telecommunications Bureau into a single entity known as the NTC (See Sec. 14), and vested the new body with broad powers, among them, the power to issue Certificates of Public Convenience for the operation of communications utilities, including radio and televisions broadcasting systems and the power to grant permits for the use of radio frequencies (Sec. 14[a] and [c], supra). Additionally, NTC was vested with broad rule making authority to encourage a larger and more effective use of communications, radio and television broadcasting facilities, and to maintain effective competition among private entities in these activities whenever the Commission finds it reasonably feasible (Sec. 15[f]). In the recent case of Albano vs. Reyes (175 SCRA 264), the Supreme Court held that franchises issued by Congress are not required before each and every public utility may operate. Administrative agencies may be empowered by law to grant licenses for or to authorize the operation of certain public utilities. The Supreme Court stated that the provision in the Constitution (Art. XII, Sec. 11) that the issuance of a franchise, certificate or other form of authorization for the operation of a public utility shall be subject to amendment, alteration or repeal by Congress, does not necessarily imply . . . that only Congress has the power to grant such authorization. Our statute books are replete with laws granting specified agencies in the Executive Branch the power to issue such authorization for certain classes of public utilities. We believe that E.O. No. 546 is one law which authorizes an administrative agency, the NTC, to issue authorizations for the operation of radio and television broadcasting systems without need of a prior franchise issued by Congress. Based on all the foregoing, we hold the view that NTC is empowered under E.O. No. 546 to issue authorization and permits to operate radio and television broadcasting system.[5] However, on May 3, 1994, the NTC, the Committee on

Legislative Franchises of Congress, and the Kapisanan ng mga Brodkaster sa Pilipinas of which petitioner is a member of good standing, entered into a Memorandum of Understanding (MOU) that requires a congressional franchise to operate radio and television stations. The MOU states, viz: WHEREAS, under the provisions of Section 1 of Act No. 3846 (Radio Laws of the Philippines, as amended), only radio and television broadcast stations with legislative franchise are authorized to operate. WHEREAS, Executive Order No. 546, which created the National Telecommunications Commission (NTC) and abolished the Board of Communications (BOC) and the Telecommunications Control Bureau (TCB), and integrated the functions and prerogative of the latter two agencies into the National Telecommunications Commission (NTC); WHEREAS, the National Telecommunications Commission (NTC) is authorized to issue certificate of public convenience for the operation of radio and television broadcast stations; WHEREAS, there is a pervading confusion in the state of affairs of the broadcast industry brought about by conflicting laws, decrees, executive orders and other pronouncements promulgated during the Martial Law regime, the parties in their common desire to rationalize the broadcast industry, promote the interest of public welfare, avoid a vacuum in the delivery of broadcast services, and foremost to better serve the ends of press freedom, the parties hereto have agreed as follows: The NTC shall continue to issue and grant permits or authorizations to operate radio and television broadcast stations within their mandate under Section 15 of Executive Order No. 546, provided that such temporary permits or authorization to operate shall be valid for two (2) years within which the permittee shall be required to file an application for legislative

franchise with Congress not later than December 31, 1994; provided finally, that if the permittee of the temporary permit or authorization to operate fails to secure the legislative franchise with Congress within this period, the NTC shall not extend or renew its permit or authorization to operate any further.[6] Prior to the December 31, 1994 deadline set by the MOU, petitioner filed with Congress an application for a franchise on December 20, 1994. Pending its approval, the NTC issued to petitioner a temporary permit dated July 7, 1995 to operate a television station via Channel 25 of the UHF Band from June 29, 1995 to June 28, 1997.[7] In 1996, the NTC authorized petitioner to increase the power output of Channel 25 from 1.0 kilowatt to 25 kilowatts after finding it financially and technically capable;[8] it also granted petitioner a permit to purchase radio transmitters/transceivers for use in its television Channel 25 broadcasting.[9] Shortly before the expiration of its temporary permit, petitioner applied for its renewal on May 14, 1997.[10] On October 28, 1997, the House Committee on Legislative Franchises of Congress replied to an inquiry of the NTCs Broadcast Division Chief regarding the franchise application of ACWS filed on December 20, 1994. The Committee certified that petitioners franchise application was not deliberated on by the 9th Congress because petitioner failed to submit the required supporting documents. In the next Congress, petitioner did not re-file its application.[11] The following month or on November 17, 1997, the NTCs Broadcast Service Department wrote to petitioner ordering it to submit a new congressional franchise for the operation of its seven radio stations and informing it that pending compliance, its application for temporary permits to operate these radio stations would be held in abeyance.[12] Petitioner failed to comply with the franchise requirement; it claims that it did not receive the November

17, 1997 letter. Despite the absence of a congressional franchise, the NTC notified petitioner on January 19, 1998 that its May 14, 1997 application for renewal of its temporary permit to operate television Channel 25 was approved and would be released upon payment of the prescribed fee of P3,600.00.[13] After paying said amount,[14] however, the NTC refused to release to petitioner its renewed permit. Instead, the NTC commenced against petitioner Administrative Case No. 98-009 based on the November 17, 1997 letter. On February 26, 1998, the NTC issued an Order directing petitioner to show cause why its assigned frequency, television Channel 25, should not be recalled for lack of the required congressional franchise. Petitioner was also directed to cease and desist from operating Channel 25 unless subsequently authorized by the NTC.[15] In compliance with the February 26, 1998 Order, petitioner filed its Answer on March 17, 1998.[16] In a hearing on April 22, 1998, petitioner presented evidence and asked for continuance of the presentation to May 20, 1998.[17] On May 4, 1998, however, petitioner filed before the Court of Appeals a Petition for Mandamus, Prohibition, and Damages to compel the NTC to release its temporary permit to operate Channel 25 which was approved in January 1998. The appellate court denied the petition on September 30, 1998. Meantime, on August 17, 1998, the NTC issued Memorandum Circular No. 14-10-98 which reads, viz: SUBJECT: Guidelines in the Renewal/Extension of Temporary Permit of Radio/TV Broadcast operators who failed to secure a legislative franchise conformably with the Memorandum of Understanding (MOU) dated May 3, 1994, entered into by and between the National Telecommunications and the Committee on Legislative Franchises, House of Representatives, and the

Kapisanan ng mga Brodkaster sa Pilipinas (KBP). In compliance with the MOU and in order to clear the ambiguity surrounding the operation of broadcast operators who were not able to have their legislative franchise approved during the last congress, the following guidelines are hereby issued: 1. Existing broadcast operators who were not able to secure a legislative franchise up to this date are given up to December 31, 1999 within which to have their application for a legislative franchise bill approved by Congress. The franchise bill must be filed immediately but not later than November 30th of this year to give both Houses time to deliberate upon and recommend approval/disapproval thereof. 2. Broadcast operators affected by this circular must file their respective applications for renewal/extension of their Temporary Permits in the prescribed form together with the certification from the Committee on Legislative Franchises, House of Representatives that a franchise bill has indeed been filed prior to 30 November 1998. 3. In the event the permittee will not be able to have its franchise bill approved within the prescribed period, the NTC will no longer renew/extend its Temporary Permit and the Commission shall initiate the recall of its assigned frequency provided that due process of law is observed. 4. Henceforth, no application/petition for Certificate of Public Convenience (CPC) to establish, maintain and operate a broadcast station in the broadcast service shall be accepted for filing without showing that the applicant has an approved Legislative Franchise. This Memorandum Circular shall be published in one (1) newspaper of general circulation in the Philippines and shall take effect thirty (30) days from its publication.

August 17, 1998, Quezon City, Philippines.[18] The Memorandum Circular was published in the Philippine Star on October 15, 1998. Well within the November 30, 1998 deadline under the Memorandum Circular, House Bill No. 3216, entitled An Act Granting the ACWS-United Broadcasting Network, Inc. a Franchise to Construct, Install, Operate and Maintain Radio and Television Broadcasting Stations within the Philippines, and for other Purposes, was filed with the Legislative Calendar Section, Bills and Index Division on September 2, 1998.[19] On January 13, 1999, the NTC rendered a decision on Administrative Case No. 98-009 against petitioner, the dispositive portion of which reads: WHEREFORE, for lack of a legal personality to justify the issuance of any permit or license to the respondent (ACWS), the respondent not having a valid legislative franchise, the Commission hereby renders judgment as follows: 1) Channel 25 assigned to herein respondent ACWS is hereby RECALLED; 2) Respondents application for renewal of its temporary permit to operate Channel 25 is hereby DENIED; and 3) Respondent is hereby ordered to CEASE and DESIST from further operating Channel 25.[20] Petitioner sought recourse at the Court of Appeals which affirmed the NTC decision. Hence, this petition for review on certiorari on the following grounds:
I.

THE COURT OF APPEALS ERRED IN UPHOLDING THE

RULING OF THE NTC THAT A CONGRESSIONAL FRANCHISE IS A CONDITION SINE QUA NON IN THE OPERATION OF A RADIO AND TELEVISION BROADCASTING SYSTEM.
II.

THE COURT OF APPEALS ERRED IN NOT CONSIDERING OPINION 98 SERIES OF 1991 DATED JUNE 20, 1991 OF THE SECRETARY OF JUSTICE HOLDING THAT THE NTC MAY ISSUE AUTHORIZATION FOR THE OPERATION OF RADIO AND TELEVISION BROADCASTING SYSTEMS, WITHOUT THE NEED OF A PRIOR FRANCHISE ISSUED BY CONGRESS, AS BINDING ON THE NTC WHO REQUESTED FOR SAID OPINION AND IS NOT MERELY ADVISORY, AS IT IS PREDICATED ON A DECISION OF THIS HONORABLE COURT.
III.

THE COURT OF APPEALS ERRED IN CONSIDERING ACT NO. 3846 AS REQUIRING A FRANCHISE FROM CONGRESS FOR THE LAWFUL OPERATION OF RADIO OR TELEVISION BROADCASTING STATIONS WHEN CLEARLY ITS PROVISIONS COVER ONLY RADIO BUT IT DOES NOT INCLUDE TELEVISION STATIONS.
IV.

THE COURT OF APPEALS ERRED IN UPHOLDING THE RECALL OF THE FREQUENCY CHANNEL 25 PREVIOUSLY ASSIGNED TO THE PETITIONER AND/OR THE CANCELLATION OF ITS PERMIT TO OPERATE WHICH IS UNREASONABLE, UNFAIR, OPPRESSIVE, WHIMSICAL AND CONFISCATORY WHEN IT PREVIOUSLY ISSUED THE SAID PERMIT WITHOUT REQUIRING A LEGISLATIVE FRANCHISE.
V.

THE COURT OF APPEALS ERRED IN NOT HOLDING THAT NTC CASE NO. 98-009 HAD BEEN RENDERED MOOT AND ACADEMIC WITH THE ADOPTION AND PROMULGATION BY THE NTC OF MEMORANDUM CIRCULAR NO. 14-10-98 DATED AUGUST 17, 1998 AS PETITIONER FILED THE APPLICATION FOR LEGISLATIVE FRANCHISE PURSUANT THERETO.[21] The petition is devoid of merit. We shall discuss together the first three assigned errors as they are interrelated. Petitioner stresses that Act. No. 3846 covers only the operation of radio and not television stations as Section 1 of the said law does not mention television stations in its coverage, viz: Sec. 1. No person, firm, company, association or corporation shall construct, install, establish, or operate a radio transmitting station, or a radio receiving station used for commercial purposes, or a radio broadcasting station, without having first obtained a franchise therefor from the Congress of the Philippines Petitioner observes that quite understandably, television stations were not included in Act No. 3846 because the law was enacted in 1931 when there was yet no television station in the Philippines. Following the rule in statutory construction that what is not included in the law is deemed excluded, petitioner avers that television stations are not covered by Act No. 3846. Petitioner notes that in fact, the NTC previously issued to it a temporary permit dated July 7, 1995 to operate Channel 25 from June 29, 1995 to June 28, 1997 without requiring a congressional franchise. Likewise, in 1996, the NTC issued to it a permit to increase its television operating power and to purchase a radio transmitter/transceiver for use in its television broadcasting, again without requiring a congressional

franchise. Petitioner thus argues that, contrary to the January 19, 1999 decision of the NTC, its application for renewal of its temporary permit to operate television Channel 25 does not require a congressional franchise. In upholding the NTC decision, the Court of Appeals held that a congressional franchise is required for the operation of radio and television broadcasting stations as this requirement under Act No. 3846 was not expressly repealed by P.D. No. 576-A nor E.O. No. 546. Citing Berces, Sr. v. Guingona,[22] it ruled that without an express repeal, a subsequent law cannot be construed as repealing a prior law unless there is an irreconcilable inconsistency and repugnancy in the language of the new and old laws, which petitioner was not able to show.[23] The appellate court correctly ruled that a congressional franchise is necessary for petitioner to operate television Channel 25. Even assuming that Act No. 3846 applies only to radio stations and not to television stations as petitioner adamantly insists, the subsequent P.D. No. 576-A clearly shows in Section 1 that a franchise is required to operate radio as well as television stations, viz: Sec. 1. No radio station or television channel may obtain a franchise unless it has sufficient capital on the basis of equity for its operation for at least one year, including purchase of equipment. (emphasis supplied) As pointed out in DOJ Opinion No. 98, there is nothing in P.D. No. 576-A that reveals any intention to do away with the requirement of a franchise for the operation of radio and television stations. Section 6 of P.D. No. 576-A merely identifies the regulatory agencies from whom authorizations, in addition to the required congressional franchise, must be secured after December 31, 1981, viz: Sec. 6. All franchises, grants, licenses, permits, certificates or other forms of authority to operate radio or television

broadcasting systems shall terminate on December 31, 1981. Thereafter, irrespective of any franchise, grant, license, permit, certificate or other forms of authority to operate granted by any office, agency or person, no radio or television station shall be authorized to operate without the authority of the Board of Communications and the Secretary of Public Works and Communications or their successors who have the right and authority to assign to qualified parties frequencies, channels or other means of identifying broadcasting system . . . (emphasis supplied) To understand why it was necessary to identify these agencies, we turn a heedful eye on the laws regarding authorizations for the operation of radio and television stations that preceded P.D. No. 576-A. Act No. 3846 of 1931 provides, viz: Sec. 1. No person, firm, company, association, or corporation shall construct, install, establish, or operate a radio transmitting station, or a radio receiving station used for commercial purposes, or a radio broadcasting station, without having first obtained a franchise therefor from the Congress of the Philippines: xxx xxx xxx

Sec. 1-A. No person, firm, company, association or corporation shall possess or own transmitters or transceivers (combination transmitter-receiver), without registering the same with the Secretary of Public Works and Communications . . . and no person, firm, company, association or corporation shall construct or manufacture, or purchase radio transmitters or transceivers without a permit issued by the Secretary of Public Works and Communications. xxx xxx xxx

Sec. 3. The Secretary of Public Works and Communications is

hereby empowered to regulate the construction or manufacture, possession, control, sale and transfer of radio transmitters or transceivers (combination transmitter-receiver) and the establishment, use, the operation of all radio stations and of all forms of radio communications and transmissions within the Philippines. In addition to the above, he shall have the following specific powers and duties: xxx xxx xxx

(c) He shall assign call letter and assign frequencies for each station licensed by him and for each station established by virtue of a franchise granted by the Congress of the Philippines and specify the stations to which each of such frequencies may be used;. . . Shortly after the declaration of Martial Law, then President Marcos issued P.D. No. 1 dated September 24, 1972, through which the Integrated Reorganization Plan for the executive branch was adopted. Under the Plan, the Public Service Commission was abolished and its functions transferred to special regulatory boards, among which was the Board of Communications with the following functions: 5a. Issue Certificates of Public Convenience for the operation of communications utilities and services, radio communications systems . . ., radio and television broadcasting systems and other similar public utilities; xxx xxx xxx

c. Grant permits for the use of radio frequencies for . . . radio and television broadcasting systems including amateur radio stations. With the creation of the Board of Communications under the Plan, it was no longer sufficient to secure authorization from the Secretary of Public Works and

Communications as provided in Act No. 3846. The Boards authorization was also necessary. Thus, P.D. No. 576-A provides in Section 6 that radio and television station operators must secure authorization from both the Secretary of Public Works and Communications and the Board of Communications. Dispensing with the requirement of a congressional franchise is not in line with the declared purposes of P.D. No. 576-A, viz: WHEREAS, it has been observed that some public utilities, especially radio and television stations, have a tendency toward monopoly in ownership and operation to such an extent that a region or section of the country may be covered by any number of such broadcast stations, all or most of which are owned, operated or managed by one person or corporation; xxx xxx xxx

WHEREAS, on account of the limited number of frequencies available for broadcasting in the Philippines, it is necessary to regulate the ownership and operation of radio and television stations and provide measures that would enhance quality and viability in broadcasting and help serve the public interests; . . . A textual interpretation of Section 6 of P.D. No. 576-A yields the same interpretation that after December 31, 1981, a franchise is still necessary to operate radio and television stations. Were it the intention of the law to do away with the requirement of a franchise after said date, then the phrase (t)hereafter, irrespective of any franchise, grant, license, permit, certificate or other forms of authority to operate granted by any office, agency or person (emphasis supplied) would not have been necessary because the first sentence of Section 6 already states that (a)ll franchises, grants, licenses, permits, certificates or other forms of authority to operate radio or television broadcasting systems shall terminate on

December 31, 1981. It is therefore already understood that these forms of authority have no more force and effect after December 31, 1981. If the intention were to do away with the franchise requirement, Section 6 would have simply laid down after the first sentence the requirements to operate radio and television stations after December 31, 1981, i.e., no radio or television station shall be authorized to operate without the authority of the Board of Communications and the Secretary of Public Works and Communications. Instead, however, the phrase irrespective of any franchise, was inserted to emphasize that a franchise or any other form of authorization from any office, agency or person does not suffice to operate radio and television stations because the authorizations of both the Board of Communications and the Secretary of Public Works and Communications are required as well. This interpretation adheres to the rule in statutory construction that words in a statute should not be construed as surplusage if a reasonable construction which will give them some force and meaning is possible.[24] Contrary to the opinion of the Secretary of Justice in DOJ Opinion No. 98, Series of 1991, the appellate court was correct in ruling that E.O. No. 546 which came after P.D. No. 576-A did not dispense with the requirement of a congressional franchise. It merely abolished the Board of Communications and the Telecommunications Control Bureau under the Reorganization Plan and transferred their functions to the NTC,[25] including the power to issue Certificates of Public Convenience (CPC) and grant permits for the use of frequencies, viz: Sec. 15. a. Issue Certificate of Public Convenience for the operation of communication utilities and services, radio communications systems, wire or wireless telephone or telegraph system, radio and television broadcasting system and other similar public utilities;

xxx

xxx

xxx

c. Grant permits for the use of radio frequencies for wireless telephone and telegraph systems and radio communication systems including amateur radio stations and radio and television broadcasting systems; . . . E.O. No. 546 defines the regulatory and technical aspect of the legal process preparatory to the full exercise of the privilege to operate radio and television stations, which is different from the grant of a franchise from Congress, viz: The statutory functions of NTC may then be given effect as Congress prerogative to grant franchises under Act No. 3846 is upheld for they are distinct forms of authority. The former covers matters dealing mostly with the technical side of radio or television broadcasting, while the latter involves the exercise by the legislature of an exclusive power resulting in a franchise or a grant under authority of government, conferring a special right to do an act or series of acts of public concern (37 C.J.S., secs. 1, 14, pp. 144, 157). In fine, there being no clear showing that the laws here involved cannot stand together, the presumption is against inconsistency or repugnance, hence, against implied repeal of the earlier law by the later statute (Agujetas v. Court of Appeals, 261 SCRA 17, 1996).[26] As we held in Radio Communication of the Philippines, Inc. v. National Telecommunications Commission,[27] a franchise is distinguished from a CPC in that the former is a grant or privilege from the sovereign power, while the latter is a form of regulation through the administrative agencies, viz: A franchise started out as a royal privilege or (a) branch of the Kings prerogative, subsisting in the hands of a subject. This definition was given by Finch, adopted by Blackstone, and accepted by every authority since (State v. Twin Village Water

Co., 98 Me 214, 56 A 763 [1903]). Today, a franchise, being merely a privilege emanating from the sovereign power of the state and owing its existence to a grant, is subject to regulation by the state itself by virtue of its police power through its administrative agencies.[28] Even prior to E.O. No. 546, the NTCs precursor, i.e., the Board of Communications, already had the function of issuing CPC under the Integrated Reorganization Plan. The CPC was required by the Board at the same time that P.D. No. 576-A required a franchise to operate radio and television stations. The function of the NTC to issue CPC under E.O. No. 546 is thus nothing new and exists alongside the requirement of a congressional franchise under P.D. No. 576-A. There is no conflict between E.O. No. 546 and P.D. No 576-A; Section 15 of the former does not dispense with the franchise requirement in the latter. We adhere to the cardinal rule in statutory construction that statutes in pare materia, although in apparent conflict, or containing apparent inconsistencies, should, as far as reasonably possible, be construed in harmony with each other, so as to give force and effect to each.[29] The ruling of this Court in Crusaders Broadcasting System, Inc. v. National Telecommunications Commission,[30] buttresses the interpretation that the requirement of a congressional franchise for the operation of radio and television stations exists alongside the requirement of a CPC. In that case, we held that under E.O. No. 546, the regulation of radio communications is a function assigned to and performed by the NTC and at the same time recognized the requirement of a congressional franchise for the operation of a radio station under Act No. 3846. We did not interpret E.O. No. 546 to have repealed the congressional franchise requirement under Act No. 3846 as these two laws are not inconsistent and can both be given effect. Likewise, in Radio Communication of the Philippines, Inc. v. National Telecommunications

Commission,[31] we recognized the necessity of both a congressional franchise under Act No. 3846 and a CPC under E.O. No. 546 to operate a radio communications system. In buttressing its position that a congressional franchise is not required to operate its television station, petitioner banks on DOJ Opinion No. 98, Series of 1991 which states that under E.O. No. 546, the NTC may issue a permit or authorization for the operation of radio and television broadcasting systems without a prior franchise issued by Congress. Petitioner argues that the opinion is binding and conclusive upon the NTC as the NTC itself requested the advisory from the Secretary of Justice who is the legal adviser of government. Petitioner claims that it was precisely because of the above DOJ Opinion No. 98 that the NTC did not previously require a congressional franchise in all of its applications for permits with the NTC. Petitioner, however, cannot rely on DOJ Opinion No. 98 as this opinion is merely persuasive and not necessarily controlling.[32] As shown above, the opinion is erroneous insofar as it holds that E.O. No. 546 dispenses with the requirement of a congressional franchise to operate radio and television stations. The case of Albano v. Reyes[33] cited in the DOJ opinion, which allegedly makes it binding upon the NTC, does not lend support to petitioners cause. In that case, we held, viz: Franchises issued by Congress are not required before each and every public utility may operate. Thus, the law has granted certain administrative agencies the power to grant licenses for or to authorize the operation of certain public utilities. (See E.O. Nos. 172 and 202) That the Constitution provides in Art. XII, Sec. 11 that the issuance of a franchise, certificate or other form of authorization for the operation of a public utility shall be subject to amendment, alteration or repeal by Congress does not

necessarily imply, as petitioner posits, that only Congress has the power to grant such authorization. Our statute books are replete with laws granting specified agencies in the Executive Branch the power to issue such authorization for certain classes of public utilities. (footnote omitted)[34] Our ruling in Albano that a congressional franchise is not required before each and every public utility may operate should be viewed in its proper light. Where there is a law such as P.D. No. 576-A which requires a franchise for the operation of radio and television stations, that law must be followed until subsequently repealed. As we have earlier shown, however, there is nothing in the subsequent E.O. No. 546 which evinces an intent to dispense with the franchise requirement. In contradistinction with the case at bar, the law applicable in Albano, i.e., E.O. No. 30, did not require a franchise for the Philippine Ports Authority to take over, manage and operate the Manila International Port Complex and undertake the providing of cargo handling and port related services thereat. Similarly, in Philippine Airlines, Inc. v. Civil Aeronautics Board, et al.,[35] we ruled that a legislative franchise is not necessary for the operation of domestic air transport because 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.[36] Thus, while it is correct to say that specified agencies in the Executive Branch have the power to issue authorization for certain classes of public utilities, this does not mean that the authorization or CPC issued by the NTC dispenses with the requirement of a franchise as this is clearly required under P.D. No. 576-A. Petitioner contends that the NTC erroneously denied its application for renewal of its temporary permit to operate Channel 25 and recalled its Channel 25 frequency based on the May 3, 1994 MOU that requires a

congressional franchise for the operation of television broadcast stations. The MOU is not an act of Congress and thus cannot amend Act No. 3846 which requires a congressional franchise for the operation of radio stations alone, and not television stations. We find no merit in petitioners contention. As we have shown, even assuming that Act No. 3846 requires only radio stations to secure a congressional franchise for its operation, P.D. No. 576-A was subsequently issued in 1974, which clearly requires a franchise for both radio and television stations. Thus, the 1994 MOU did not amend any law, but merely clarified the existing law that requires a franchise. That the legislative intent is to continue requiring a franchise for the operation of radio and television broadcasting stations is clear from the franchises granted by Congress after the effectivity of E.O. No. 546 in 1979 for the operation of radio and television stations. Among these are: (1) R.A. No. 9131 dated April 24, 2001, entitled An Act Granting the Iddes Broadcast Group, Inc., a Franchise to Construct, Install, Establish, Operate and Maintain Radio and Television Broadcasting Stations in the Philippines; (2) R.A. No. 9148 dated July 31, 2001, entitled An Act Granting the Hypersonic Broadcasting Center, Inc., a Franchise to Construct, Install, Establish, Operate and Maintain Radio Broadcasting Stations in the Philippines; and (3) R.A. No. 7678 dated February 17, 1994, entitled An Act Granting the Digital Telecommunication Philippines, Incorporated, a Franchise to Install, Operate and Maintain Telecommunications Systems Throughout the Philippines. All three franchises require the grantees to secure a CPCN/license/permit to construct and operate their stations/systems. Likewise, the Tax Reform Act of 1997 provides in Section 119 for tax on franchise of radio and/or television broadcasting companies, viz:

Sec. 119. Tax on Franchises. Any provision of general or special law to the contrary notwithstanding, there shall be levied, assessed and collected in respect to all franchises on radio and/or television broadcasting companies whose annual gross receipts of the preceding year does not exceed Ten million pesos (P10,000,000), subject to Section 236 of this Code, a tax of three percent (3%) and on electric, gas and water utilities, a tax of two percent (2%) on the gross receipts derived from the business covered by the law granting the franchise. . . (emphasis supplied) Undeniably, petitioner is aware that a congressional franchise is necessary to operate its television station Channel 25 as shown by its actuations. Shortly before the December 31, 1994 deadline set in the MOU, petitioner filed an application for a franchise with Congress. It was not, however, acted upon in the 9th Congress for petitioners failure to submit the necessary supporting documents; petitioner failed to re-file the application in the following Congress. Petitioner also filed an application for a franchise with Congress on September 2, 1998, before the November 30, 1998 deadline under Memorandum Circular No. 14-10-98.[37] We now come to the fourth assigned error. Petitioner avers that the Court of Appeals erred in upholding the recall of frequency Channel 25 previously assigned to it and the cancellation of its permit to operate which was already approved in January 1998. It claims that these acts of the NTC were unreasonable, unfair, oppressive, whimsical and confiscatory considering that the NTC previously issued petitioner a temporary permit without requiring a congressional franchise. On February 26, 1998, the NTC issued a show cause order to petitioner with the following decretal portion: IN VIEW THEREOF, respondents are hereby directed to show cause in writing within ten (10) days from receipt of this order

why their assigned frequency, more specifically Channel 25 in the UHF Band, should not be recalled for lack of the necessary Congressional Franchise as required by Section 1, Act No. 3846, as amended. Moreover, respondent is hereby directed to cease and desist from operating DWQH-TV, unless subsequently authorized by the Commission.[38] The order was supposedly based on a letter of the NTC dated November 17, 1997 informing petitioner that its application for renewal of temporary permits of its seven radio stations were being held in abeyance pending submission of its new congressional franchise. Petitioner was directed to submit the franchise within thirty days from expiration of its temporary permits to be renewed and informed that its failure to do so might constitute denial of its application. Petitioner is correct that the November 17, 1997 letter referred only to its radio stations and not to its television Channel 25. Thus, it could not serve as basis for the February 26, 1998 show cause order which referred solely to its television Channel 25. Besides, petitioner claims that it did not receive the letter. Be that as it may, the NTCs February 26, 1998 order for petitioner to cease and desist from operating Channel 25 was not unreasonable, unfair, oppressive, whimsical and confiscatory. The 1994 MOU states in unmistakable terms that petitioners temporary permit to operate Channel 25 would be valid for only two years, i.e., from June 29, 1995 to June 28, 1997. During these two years, petitioner was supposed to have secured a congressional franchise, otherwise the NTC shall not extend or renew its permit or authorization to operate any further.[39] Apparently, petitioner did not submit a congressional franchise to the NTC in applying for renewal of this temporary permit on May 14, 1997. The NTCs approval of petitioners application to

renew its temporary permit in January 1998 was thus erroneous because under the 1994 MOU, the NTC could not renew petitioners temporary permit to operate Channel 25 without a congressional franchise. In the absence of a renewed temporary permit, the NTC was correct in ordering petitioner to cease and desist from operating Channel 25, regardless of whether or not petitioner received the November 17, 1997 letter. The NTCs erroneous approval of petitioners application in January 1998 did not estop the NTC from ordering petitioner on February 26, 1998 to cease and desist from operating Channel 25 for failure to comply with the franchise requirement as estoppel does not work against the government.[40] Likewise, the NTCs denial of petitioners application for renewal of its temporary permit to operate Channel 25 and recall of its Channel 25 frequency in its January 13, 1999 decision were not unreasonable, unfair, oppressive, whimsical and confiscatory so as to offend petitioners right to due process. In Crusaders Broadcasting System, Inc. v. National Telecommunications Commission,[41] the Court ruled that although a particular ground for suspending operations of the broadcasting company was not reflected in the show cause order, the NTC could nevertheless raise said ground if any basis therefore was gleaned during the administrative proceedings. In the instant case, the lack of congressional franchise as ground for denial of petitioners application for renewal of temporary permit and recall of its Channel 25 frequency was raised not only during the administrative proceedings against it, but was even stated in the February 26, 1998 show cause order, viz: IN VIEW THEREOF, respondents are hereby directed to show cause in writing within ten (10) days from receipt of this order why their assigned frequency, more specifically Channel 25 in the UHF Band, should not be recalled for lack of the necessary

Congressional Franchise as required by Section 1, Act No. 3846, as amended. Moreover, respondent is hereby directed to cease and desist from operating DWQH-TV, unless subsequently authorized by the Commission. [42] (emphasis supplied) In Eastern Broadcasting Corporation v. Dans, Jr., et al.,[43] we held that the requirements of due process in administrative proceedings laid down by this Court in Ang Tibay v. Court of Industrial Relations[44] should be satisfied before a broadcast station may be closed or its operations curtailed. We enumerated these requirements, viz: . . . (1) the right to a hearing which includes the right to present ones case and submit evidence in support thereof; (2) the tribunal must consider the evidence presented; (3) the decision must have something to support itself; (4) the evidence must be substantial. Substantial evidence means such reasonable evidence as a reasonable mind might accept as adequate to support a conclusion; (5) the decision must be based on the evidence presented at the hearing, or at least contained in the record and disclosed to the parties affected; (6) the tribunal or body or any of its judges must act on its own independent consideration of the law and facts of the controversy and not simply accept the views of a subordinate; (7) the board or body should, in all controversial questions, render its decisions in such a manner that the parties to the proceeding can know the various issues involved, and the reasons for the decision rendered.[45] Petitioner had the opportunity to present its case and submit evidence on why its assigned frequency Channel 25 should not be recalled and its application for renewal denied. Petitioner filed its Answer to the show cause order on March 17, 1998.[46] A hearing was held on April 22, 1998 wherein petitioner presented its evidence in

compliance with the show cause order. Based on the NTCs findings that petitioner failed to comply with the requirement of a congressional franchise, the NTC denied its application for renewal of its temporary permit to operate Channel 25 and recalled its assigned Channel 25 frequency. The requirements of due process in Ang Tibay were satisfied, thus petitioner cannot say that the NTCs actions were unreasonable, unfair, oppressive, whimsical and confiscatory. Finally, petitioner contends that the Court of Appeals erred in not holding that Administrative Case No. 98-009, the administrative proceeding against it for failure to secure a congressional franchise to operate its television Channel 25, has been rendered moot and academic by the adoption and promulgation of NTC Memorandum Circular No. 14-10-98 dated August 17, 1998 which took effect on November 15, 1998. The Memorandum Circular states, viz: In compliance with the MOU and in order to clear the ambiguity surrounding the operation of broadcast operators who were not able to have their legislative franchise approved during the last Congress, the following guidelines are hereby issued: 1. Existing broadcast operators who were not able to secure a legislative franchise up to this date (August 17, 1998) are given up to December 31, 1999 within which to have their application for a legislative franchise bill approved by Congress. The franchise bill must be filed immediately but not later than November 30th of this year . . . Petitioner avers that the NTC erroneously held that this Memorandum Circular is not applicable to it because the words of the circular are clear that it covers existing broadcasting operators including petitioner. In compliance with the Memorandum Circular, petitioner filed House Bill No. 32 on September 2, 1998, well within the November 30, 1998 deadline. Thus, petitioner argues that

the NTC erred in denying its application for renewal of permit to operate Channel 25 and recalling its assigned Channel 25 frequency on January 13, 1999, long before the Memorandum Circulars December 31, 1999 deadline to secure a congressional franchise. Petitioner posits that the NTCs premature and arbitrary promulgation of its January 13, 1999 decision slammed the door for the petitioner to secure its legislative franchise. The pending application for legislative franchise of petitioner was effectively struck out by said NTC decision.[47] Whether or not the benefits of the Memorandum Circular extend to petitioner, the fact is, as correctly pointed out by the appellate court, petitioner failed to secure a legislative franchise by December 31, 1999. Consequently, the NTCs recall of petitioners assigned frequency Channel 25 and denial of its application for renewal of its permit to operate the said television channel were proper as the Memorandum Circular provides, viz: 1. Existing broadcast operators who are not able to secure a legislative franchise up to this date (August 17, 1998) are given up to December 31, 1999 within which to have their application for a legislative franchise approved by Congress. The franchise bill must be filed immediately but not later than November 30th of this year . . . xxx xxx xxx

3. In the event the permittee will not be able to have its franchise bill approved within the prescribed period, the NTC will no longer renew/extend its temporary permit and the Commission shall initiate the recall of its assigned frequency provided that due process of law is observed. 4. Henceforth, no application/petition for Certificate of Public Convenience (CPC) to establish, maintain and operate a broadcast station in the broadcast service shall be accepted for

filing without showing that the applicant has an approved legislative franchise.(emphasis supplied) Petitioners argument is flawed when it states that the January 13, 1999 decision of the NTC slammed the door on its application for a congressional franchise as the process of securing a congressional franchise is separate and distinct from the process of applying for renewal of a temporary permit with the NTC. The latter is not a prerequisite to the former. In fact, in the normal course of securing authorizations to operate a television and radio station, the application for a CPC with the NTC comes after securing a franchise from Congress.[48] The CPC is not a condition for the grant of a congressional franchise.[49] The Court is not unmindful that there is a trend towards delegating the legislative power to authorize the operation of certain public utilities to administrative agencies and dispensing with the requirement of a congressional franchise as in the Albano case which involved the provision of cargo handling and port related services at the Manila International Port Complex and the PAL case involving the operation of domestic air transport. The rationale for this trend was explained in the PAL case, viz: . . . 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. (Pangasinan Transportation Co., Inc. vs. The Public Service Commission, G.R. No. 47065, June 26, 1940, 70 Phil 221.) 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. (Dyer vs. Tuskaloosa Bridge Co., 2 Port. 296, 27 Am. D. 655; Christian-Todd Tel. Co. vs.

Commonwealth, 161 S.W. 543, 156 Ky. 557, 37 C.J.S. 158) 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. (Superior Water, Light and Power Co. vs. City of Superior, 181 N.W. 113, 174 Wis. 257, affirmed 183 N.W. 254, 37 C.J.S. 158.) 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.[50] The criticism against the requirement of a congressional franchise is incisively expressed by a public utilities lawyer, viz: As will be noted, a legislative franchise is required to install and operate a radio station before an applicant can apply for a Certificate of Public Convenience to operate a radio station based in any part of the country. Under Act No. 3846 of 1929, Sec. 1, it was provided that no one may install and operate a radio station without having first obtained a franchise therefore from the Congress of the Philippines. Since then, this has been strictly followed. And this holds true with respect to application for electric, telephone and many other telecommunications services. Before, even mere application for authority to operate an ice plant must have prior congressional franchise. But this was not strictly followed until ice plant operations were eventually deregulated. Right now, the both houses of the legislature are saddled with House Bill Nos. etc. for the grant of legislative franchise to operate this and that public utility services in various places in the Philippines. We hear during sessions in both houses the time wasted on reports and considerations of these house bills for grant of franchises. The legislature is empowered and has created respective regulatory

bodies with requisite expertise to handle franchising and regulation of such types of public utility services, why not just entrust all these functions to them? What exactly is the reason or rationale for imposing a prior congressional franchise? There seems to be no valid reason for it except to impose added burden and expenses on the part of the applicant. The justification appears to be simply because this was required in the past so it is now. We are reminded of the forceful denunciation of Justice Holmes of a stubborn adherence to an anachronistic rule of law: It is revolting to have no better reason for a rule of law that so it was laid down in the time of Henry IV. It is still more revolting if the grounds upon which it was laid down have vanished long since, and the rule simply persists from blind imitation of the past. (The Path of the Law, Collected Legal Papers [1920] 210, 212 quoted from The Justice Holmes Reader, Julius N. Marke, 1955 ed., p. 278.)[51] The call to dispense with the requisite legislative franchise must, however, be addressed to Congress as the lawmaker of the land for the Courts function is to interpret and not to rewrite the law. As long as the law remains unchanged, the requirement of a franchise to operate a television station must be upheld. WHEREFORE, the petition is DENIED and the Court of Appeals January 13, 2000 decision and February 21, 2000 resolution are AFFIRMED. No costs. SO ORDERED.

EN BANC G.R. No. 17122 February 27, 1922

THE UNITED STATES, plaintiff-appellee, vs. ANG TANG HO, defendant-appellant. Williams & Ferrier for appellant. Acting Attorney-General Tuason for appellee. JOHNS, J.: At its special session of 1919, the Philippine Legislature passed Act No. 2868, entitled "An Act penalizing the monopoly and holding of, and speculation in, palay, rice, and corn under extraordinary circumstances, regulating the distribution and sale thereof, and authorizing the Governor-General, with the consent of the Council of State, to issue the necessary rules and regulations therefor, and making an appropriation for this purpose," the material provisions of which are as follows: Section 1. The Governor-General is hereby authorized, whenever, for any cause, conditions arise resulting in an extraordinary rise in the price of palay, rice or corn, to issue and promulgate, with the consent of the Council of State, temporary rules and emergency measures for carrying out the purpose of this Act, to wit: (a) To prevent the monopoly and hoarding of, and speculation in, palay, rice or corn. (b) To establish and maintain a government control of the distribution or sale of the commodities referred to or have such distribution or sale made by the Government itself. (c) To fix, from time to time the quantities of palay rice, or corn that a company or individual may acquire, and the maximum sale price that the industrial or merchant may demand. (d) . . . SEC. 2. It shall be unlawful to destroy, limit, prevent or in any other manner obstruct the production or milling of palay, rice or corn for the purpose of raising the prices thereof; to corner or hoard said products as defined in section three of this Act; . . .

Section 3 defines what shall constitute a monopoly or hoarding of palay, rice or corn within the meaning of this Act, but does not specify the price of rice or define any basic for fixing the price. SEC. 4. The violations of any of the provisions of this Act or of the regulations, orders and decrees promulgated in accordance therewith shall be punished by a fine of not more than five thousands pesos, or by imprisonment for not more than two years, or both, in the discretion of the court: Provided, That in the case of companies or corporations the manager or administrator shall be criminally liable. SEC. 7. At any time that the Governor-General, with the consent of the Council of State, shall consider that the public interest requires the application of the provisions of this Act, he shall so declare by proclamation, and any provisions of other laws inconsistent herewith shall from then on be temporarily suspended. Upon the cessation of the reasons for which such proclamation was issued, the Governor-General, with the consent of the Council of State, shall declare the application of this Act to have likewise terminated, and all laws temporarily suspended by virtue of the same shall again take effect, but such termination shall not prevent the prosecution of any proceedings or cause begun prior to such termination, nor the filing of any proceedings for an offense committed during the period covered by the Governor-General's proclamation. August 1, 1919, the Governor-General issued a proclamation fixing the price at which rice should be sold. August 8, 1919, a complaint was filed against the defendant, Ang Tang Ho, charging him with the sale of rice at an excessive price as follows: The undersigned accuses Ang Tang Ho of a violation of Executive Order No. 53 of the Governor-General of the Philippines, dated the 1st of August, 1919, in relation with the provisions of sections 1, 2 and 4 of Act No. 2868, committed as follows: That on or about the 6th day of August, 1919, in the city of Manila, Philippine Islands, the said Ang Tang Ho, voluntarily, illegally and criminally sold to Pedro Trinidad, one ganta of rice at the price of eighty centavos (P.80), which is a price greater than that fixed by

Executive Order No. 53 of the Governor-General of the Philippines, dated the 1st of August, 1919, under the authority of section 1 of Act No. 2868. Contrary to law. Upon this charge, he was tried, found guilty and sentenced to five months' imprisonment and to pay a fine of P500, from which he appealed to this court, claiming that the lower court erred in finding Executive Order No. 53 of 1919, to be of any force and effect, in finding the accused guilty of the offense charged, and in imposing the sentence. The official records show that the Act was to take effect on its approval; that it was approved July 30, 1919; that the GovernorGeneral issued his proclamation on the 1st of August, 1919; and that the law was first published on the 13th of August, 1919; and that the proclamation itself was first published on the 20th of August, 1919. The question here involves an analysis and construction of Act No. 2868, in so far as it authorizes the Governor-General to fix the price at which rice should be sold. It will be noted that section 1 authorizes the Governor-General, with the consent of the Council of State, for any cause resulting in an extraordinary rise in the price of palay, rice or corn, to issue and promulgate temporary rules and emergency measures for carrying out the purposes of the Act. By its very terms, the promulgation of temporary rules and emergency measures is left to the discretion of the GovernorGeneral. The Legislature does not undertake to specify or define under what conditions or for what reasons the Governor-General shall issue the proclamation, but says that it may be issued "for any cause," and leaves the question as to what is "any cause" to the discretion of the Governor-General. The Act also says: "For any cause, conditions arise resulting in an extraordinary rise in the price of palay, rice or corn." The Legislature does not specify or define what is "an extraordinary rise." That is also left to the discretion of the Governor-General. The Act also says that the Governor-General, "with the consent of the Council of State," is authorized to issue and promulgate "temporary rules and emergency measures for carrying out the purposes of this Act." It does not specify or define what is a temporary rule or an emergency measure, or how long such temporary rules or emergency measures shall remain in force and effect, or when they shall take effect. That is to say, the Legislature itself has not

in any manner specified or defined any basis for the order, but has left it to the sole judgement and discretion of the Governor-General to say what is or what is not "a cause," and what is or what is not "an extraordinary rise in the price of rice," and as to what is a temporary rule or an emergency measure for the carrying out the purposes of the Act. Under this state of facts, if the law is valid and the Governor-General issues a proclamation fixing the minimum price at which rice should be sold, any dealer who, with or without notice, sells rice at a higher price, is a criminal. There may not have been any cause, and the price may not have been extraordinary, and there may not have been an emergency, but, if the Governor-General found the existence of such facts and issued a proclamation, and rice is sold at any higher price, the seller commits a crime. By the organic law of the Philippine Islands and the Constitution of the United States all powers are vested in the Legislative, Executive and Judiciary. It is the duty of the Legislature to make the law; of the Executive to execute the law; 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. 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. Assuming, without deciding, that the Legislature itself has the power to fix the price at which rice is to be sold, can it delegate that power to another, and, if so, was that power legally delegated by Act No. 2868? In other words, does the Act delegate legislative power to the Governor-General? By the Organic Law, all Legislative power is vested in the Legislature, and the power conferred upon the Legislature to make laws cannot be delegated to the Governor-General, or any one else. The Legislature cannot delegate the legislative power to enact any law. If Act no 2868 is a law unto itself and within itself, and it does nothing more than to authorize the Governor-General to make rules and regulations to carry the law into effect, then the Legislature itself 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 crime, and is not a law, 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-General, then the Act is a delegation of legislative power, is unconstitutional and void.

The Supreme Court of the United States in what is known as the Granger Cases (94 U.S., 183-187; 24 L. ed., 94), first laid down the rule: Railroad companies are engaged in a public employment affecting the public interest and, under the decision in Munn vs. Ill., ante, 77, are subject to legislative control as to their rates of fare and freight unless protected by their charters. The Illinois statute of Mar. 23, 1874, to establish reasonable maximum rates of charges for the transportation of freights and passengers on the different railroads of the State is not void as being repugnant to the Constitution of the United States or to that of the State. It was there for the first time held in substance that a railroad was a public utility, and that, being a public utility, the State had power to establish reasonable maximum freight and passenger rates. This was followed by the State of Minnesota in enacting a similar law, providing for, and empowering, a railroad commission to hear and determine what was a just and reasonable rate. The constitutionality of this law was attacked and upheld by the Supreme Court of Minnesota in a learned and exhaustive opinion by Justice Mitchell, in the case of State vs. Chicago, Milwaukee & St. Paul ry. Co. (38 Minn., 281), in which the court held: Regulations of railway tariffs Conclusiveness of commission's tariffs. Under Laws 1887, c. 10, sec. 8, the determination of the railroad and warehouse commission as to what are equal and reasonable fares and rates for the transportation of persons and property by a railway company is conclusive, and, in proceedings by mandamus to compel compliance with the tariff of rates recommended and published by them, no issue can be raised or inquiry had on that question. Same constitution Delegation of power to commission. The authority thus given to the commission to determine, in the exercise of their discretion and judgement, what are equal and reasonable rates, is not a delegation of legislative power. It will be noted that the law creating the railroad commission expressly provides That all charges by any common carrier for the transportation of

passengers and property shall be equal and reasonable. With that as a basis for the law, power is then given to the railroad commission to investigate all the facts, to hear and determine what is a just and reasonable rate. Even then that law does not make the violation of the order of the commission a crime. The only remedy is a civil proceeding. It was there held That the legislative itself has the power to regulate railroad charges is now too well settled to require either argument or citation of authority. The difference between the power to say what the law shall be, and the power to adopt rules and regulations, or to investigate and determine the facts, in order to carry into effect a law already passed, is apparent. The true distinction is between the delegation of power to make the law, which necessarily involves a discretion as to what it shall be, and the conferring an authority or discretion to be exercised under and in pursuance of the law. The legislature enacts that all freights rates and passenger fares should be just and reasonable. It had the undoubted power to fix these rates at whatever it deemed equal and reasonable. They have not delegated to the commission any authority or discretion as to what the law shall be, which would not be allowable, but have merely conferred upon it an authority and discretion, to be exercised in the execution of the law, and under and in pursuance of it, which is entirely permissible. The legislature itself has passed upon the expediency of the law, and what is shall be. The commission is intrusted with no authority or discretion upon these questions. It can neither make nor unmake a single provision of law. It is merely charged with the administration of the law, and with no other power. The delegation of legislative power was before the Supreme Court of Wisconsin in Dowling vs. Lancoshire Ins. Co. (92 Wis., 63). The opinion says: "The true distinction is between the delegation of power to make the law, which necessarily involves a discretion as to what it shall be, and conferring 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."

The act, in our judgment, wholly fails to provide definitely and clearly what the standard policy should contain, so that it could be put in use as a uniform policy required to take the place of all others, without the determination of the insurance commissioner in respect to maters involving the exercise of a legislative discretion that could not be delegated, and without which the act could not possibly be put in use as an act in confirmity to which all fire insurance policies were required to be issued. The result of all the cases on this subject is that a law must be complete, in all its terms and provisions, when it leaves the legislative branch of the government, and nothing must be left to the judgement of the electors or other appointee or delegate of the legislature, so that, in form and substance, it is a law in all its details in presenti, but which may be left to take effect in futuro, if necessary, upon the ascertainment of any prescribed fact or event. The delegation of legislative power was before the Supreme Court in United States vs. Grimaud (220 U.S., 506; 55 L. ed., 563), where it was held that the rules and regulations of the Secretary of Agriculture as to a trespass on government land in a forest reserve were valid constitutional. The Act there provided that the Secretary of Agriculture ". . . may make such rules and regulations and establish such service as will insure the object of such reservations; namely, to regulate their occupancy and use, and to preserve the forests thereon from destruction; and any violation of the provisions of this act or such rules and regulations shall be punished, . . ." The brief of the United States Solicitor-General says: In refusing permits to use a forest reservation for stock grazing, except upon stated terms or in stated ways, the Secretary of Agriculture merely assert and enforces the proprietary right of the United States over land which it owns. The regulation of the Secretary, therefore, is not an exercise of legislative, or even of administrative, power; but is an ordinary and legitimate refusal of the landowner's authorized agent to allow person having no right in the land to use it as they will. The right of proprietary control is altogether different from governmental authority. The opinion says: From the beginning of the government, various acts have been

passed conferring upon executive officers power to make rules and regulations, not for the government of their departments, but for administering the laws which did govern. None of these statutes could confer legislative power. But when Congress had legislated power. But when Congress had legislated and indicated its will, it could give to those who were to act under such general provisions "power to fill up the details" by the establishment of administrative rules and regulations, the violation of which could be punished by fine or imprisonment fixed by Congress, or by penalties fixed by Congress, or measured by the injury done. That "Congress cannot delegate legislative power is a principle universally recognized as vital to the integrity and maintenance of the system of government ordained by the Constitution." If, after the passage of the act and the promulgation of the rule, the defendants drove and grazed their sheep upon the reserve, in violation of the regulations, they were making an unlawful use of the government's property. In doing so they thereby made themselves liable to the penalty imposed by Congress. The subjects as to which the Secretary can regulate are defined. The lands are set apart as a forest reserve. He is required to make provisions to protect them from depredations and from harmful uses. He is authorized 'to regulate the occupancy and use and to preserve the forests from destruction.' A violation of reasonable rules regulating the use and occupancy of the property is made a crime, not by the Secretary, but by Congress." The above are leading cases in the United States on the question of delegating legislative power. It will be noted that in the "Granger Cases," it was held that a railroad company was a public corporation, and that a railroad was a public utility, and that, for such reasons, the legislature had the power to fix and determine just and reasonable rates for freight and passengers. The Minnesota case held that, so long as the rates were just and reasonable, the legislature could delegate the power to ascertain the facts and determine from the facts what were just and reasonable rates,. and that in vesting the commission with such power was not a delegation of legislative power. The Wisconsin case was a civil action founded upon a "Wisconsin standard policy of fire insurance," and the court held that "the act, .

. . wholly fails to provide definitely and clearly what the standard policy should contain, so that it could be put in use as a uniform policy required to take the place of all others, without the determination of the insurance commissioner in respect to matters involving the exercise of a legislative discretion that could not be delegated." The case of the United States Supreme Court, supra dealt with rules and regulations which were promulgated by the Secretary of Agriculture for Government land in the forest reserve. These decisions hold that the legislative only can enact a law, and that it cannot delegate it legislative authority. The line of cleavage between what is and what is not a delegation of legislative power is pointed out and clearly defined. As the Supreme Court of Wisconsin says: That no part of the legislative power can be delegated by the legislature to any other department of the government, executive or judicial, is a fundamental principle in constitutional law, essential to the integrity and maintenance of the system of government established by the constitution. Where an act is clothed with all the forms of law, and is complete in and of itself, it may be provided that it shall become operative only upon some certain act or event, or, in like manner, that its operation shall be suspended. The legislature cannot delegate its power to make a 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 to depend. The Village of Little Chute enacted an ordinance which provides: All saloons in said village shall be closed at 11 o'clock P.M. each day and remain closed until 5 o'clock on the following morning, unless by special permission of the president. Construing it in 136 Wis., 526; 128 A. S. R., 1100,1 the Supreme Court of that State says: We regard the ordinance as void for two reasons; First, because it

attempts to confer arbitrary power upon an executive officer, and allows him, in executing the ordinance, to make unjust and groundless discriminations among persons similarly situated; second, because the power to regulate saloons is a law-making power vested in the village board, which cannot be delegated. A legislative body cannot delegate to a mere administrative officer power to make a law, but it can make a law with provisions that it shall go into effect or be suspended in its operations upon the ascertainment of a fact or state of facts by an administrative officer or board. In the present case the ordinance by its terms gives power to the president to decide arbitrary, and in the exercise of his own discretion, when a saloon shall close. This is an attempt to vest legislative discretion in him, and cannot be sustained. The legal principle involved there is squarely in point here. It must be conceded that, after the passage of act No. 2868, and before any rules and regulations were promulgated by the Governor-General, a dealer in rice could sell it at any price, even at a peso per "ganta," and that he would not commit a crime, because there would be no law fixing the price of rice, and the sale of it at any price would not be a crime. That is to say, in the absence of a proclamation, it was not a crime to sell rice at any price. Hence, it must follow that, if the defendant committed a crime, it was because the Governor-General issued the proclamation. There was no act of the Legislature making it a crime to sell rice at any price, and without the proclamation, the sale of it at any price was to a crime. The Executive order2 provides: (5) The maximum selling price of palay, rice or corn is hereby fixed, for the time being as follows: In Manila Palay at P6.75 per sack of 57 kilos, or 29 centavos per ganta. Rice at P15 per sack of 57 kilos, or 63 centavos per ganta. Corn at P8 per sack of 57 kilos, or 34 centavos per ganta. In the provinces producing palay, rice and corn, the maximum price shall be the Manila price less the cost of transportation from

the source of supply and necessary handling expenses to the place of sale, to be determined by the provincial treasurers or their deputies. In provinces, obtaining their supplies from Manila or other producing provinces, the maximum price shall be the authorized price at the place of supply or the Manila price as the case may be, plus the transportation cost, from the place of supply and the necessary handling expenses, to the place of sale, to be determined by the provincial treasurers or their deputies. (6) Provincial treasurers and their deputies are hereby directed to communicate with, and execute all instructions emanating from the Director of Commerce and Industry, for the most effective and proper enforcement of the above regulations in their respective localities. The law says that the Governor-General may fix "the maximum sale price that the industrial or merchant may demand." The law is a general law and not a local or special law. The proclamation undertakes to fix one price for rice in Manila and other and different prices in other and different provinces in the Philippine Islands, and delegates the power to determine the other and different prices to provincial treasurers and their deputies. Here, then, you would have a delegation of legislative power to the Governor-General, and a delegation by him of that power to provincial treasurers and their deputies, who "are hereby directed to communicate with, and execute all instructions emanating from the Director of Commerce and Industry, for the most effective and proper enforcement of the above regulations in their respective localities." The issuance of the proclamation by the GovernorGeneral was the exercise of the delegation of a delegated power, and was even a sub delegation of that power. Assuming that it is valid, Act No. 2868 is a general law and does not authorize the Governor-General to fix one price of rice in Manila and another price in Iloilo. It only purports to authorize him to fix the price of rice in the Philippine Islands under a law, which is General and uniform, and not local or special. Under the terms of the law, the price of rice fixed in the proclamation must be the same all over the Islands. There cannot be one price at Manila and another at Iloilo. Again, it is a mater of common knowledge, and of which this court will take judicial notice, that there are many kinds

of rice with different and corresponding market values, and that there is a wide range in the price, which varies with the grade and quality. Act No. 2868 makes no distinction in price for the grade or quality of the rice, and the proclamation, upon which the defendant was tried and convicted, fixes the selling price of rice in Manila "at P15 per sack of 57 kilos, or 63 centavos per ganta," and is uniform as to all grades of rice, and says nothing about grade or quality. Again, it will be noted that the law is confined to palay, rice and corn. They are products of the Philippine Islands. Hemp, tobacco, coconut, chickens, eggs, and many other things are also products. Any law which single out palay, rice or corn from the numerous other products of the Islands is not general or uniform, but is a local or special law. If such a law is valid, then by the same principle, the Governor-General could be authorized by proclamation to fix the price of meat, eggs, chickens, coconut, hemp, and tobacco, or any other product of the Islands. In the very nature of things, all of that class of laws should be general and uniform. Otherwise, there would be an unjust discrimination of property rights, which, under the law, must be equal and inform. Act No. 2868 is nothing more than a floating law, which, in the discretion and by a proclamation of the Governor-General, makes it a floating crime to sell rice at a price in excess of the proclamation, without regard to grade or quality. When Act No. 2868 is analyzed, it is the violation of the proclamation of the Governor-General which constitutes the crime. Without that proclamation, it was no crime to sell rice at any price. In other words, the Legislature left it to the sole discretion of the Governor-General to say what was and what was not "any cause" for enforcing the act, and what was and what was not "an extraordinary rise in the price of palay, rice or corn," and under certain undefined conditions to fix the price at which rice should be sold, without regard to grade or quality, also to say whether a proclamation should be issued, if so, when, and whether or not the law should be enforced, how long it should be enforced, and when the law should be suspended. The Legislature did not specify or define what was "any cause," or what was "an extraordinary rise in the price of rice, palay or corn," Neither did it specify or define the conditions upon which the proclamation should be issued. In the absence of the proclamation no crime was committed. The alleged sale was made a crime, if at all, because the Governor-General issued the proclamation. The act or proclamation does not say anything about the different grades or qualities of rice, and the

defendant is charged with the sale "of one ganta of rice at the price of eighty centavos (P0.80) which is a price greater than that fixed by Executive order No. 53." We are clearly of the opinion and hold that Act No. 2868, in so far as it undertakes to authorized the Governor-General in his discretion to issue a proclamation, fixing the price of rice, and to make the sale of rice in violation of the price of rice, and to make the sale of rice in violation of the proclamation a crime, is unconstitutional and void. It may be urged that there was an extraordinary rise in the price of rice and profiteering, which worked a severe hardship on the poorer classes, and that an emergency existed, but the question here presented is the constitutionality of a particular portion of a statute, and none of such matters is an argument for, or against, its constitutionality. The Constitution is something solid, permanent an substantial. Its stability protects the life, liberty and property rights of the rich and the poor alike, and that protection ought not to change with the wind or any emergency condition. The fundamental question involved in this case is the right of the people of the Philippine Islands to be and live under a republican form of government. We make the broad statement that no state or nation, living under republican form of government, under the terms and conditions specified in Act No. 2868, has ever enacted a law delegating the power to any one, to fix the price at which rice should be sold. That power can never be delegated under a republican form of government. In the fixing of the price at which the defendant should sell his rice, the law was not dealing with government property. It was dealing with private property and private rights, which are sacred under the Constitution. If this law should be sustained, upon the same principle and for the same reason, the Legislature could authorize the Governor-General to fix the price of every product or commodity in the Philippine Islands, and empower him to make it a crime to sell any product at any other or different price. It may be said that this was a war measure, and that for such reason the provision of the Constitution should be suspended. But the Stubborn fact remains that at all times the judicial power was in full force and effect, and that while that power was in force and

effect, such a provision of the Constitution could not be, and was not, suspended even in times of war. It may be claimed that during the war, the United States Government undertook to, and did, fix the price at which wheat and flour should be bought and sold, and that is true. There, the United States had declared war, and at the time was at war with other nations, and it was a war measure, but it is also true that in doing so, and as a part of the same act, the United States commandeered all the wheat and flour, and took possession of it, either actual or constructive, and the government itself became the owner of the wheat and flour, and fixed the price to be paid for it. That is not this case. Here the rice sold was the personal and private property of the defendant, who sold it to one of his customers. The government had not bought and did not claim to own the rice, or have any interest in it, and at the time of the alleged sale, it was the personal, private property of the defendant. It may be that the law was passed in the interest of the public, but the members of this court have taken on solemn oath to uphold and defend the Constitution, and it ought not to be construed to meet the changing winds or emergency conditions. Again, we say that no state or nation under a republican form of government ever enacted a law authorizing any executive, under the conditions states, to fix the price at which a price person would sell his own rice, and make the broad statement that no decision of any court, on principle or by analogy, will ever be found which sustains the constitutionality of the particular portion of Act No. 2868 here in question. By the terms of the Organic Act, subject only to constitutional limitations, the power to legislate and enact laws is vested exclusively in the Legislative, which is elected by a direct vote of the people of the Philippine Islands. As to the question here involved, the authority of the Governor-General to fix the maximum price at which palay, rice and corn may be sold in the manner power in violation of the organic law. This opinion is confined to the particular question here involved, which is the right of the Governor-General, upon the terms and conditions stated in the Act, to fix the price of rice and make it a crime to sell it at a higher price, and which holds that portions of the Act unconstitutional. It does not decide or undertake to construe the constitutionality of any of the remaining portions of the Act. The judgment of the lower court is reversed, and the defendant discharged. So ordered.

Araullo, C.J., Johnson, Street and Ostrand, JJ., concur. Romualdez, J., concurs in the result. Separate Opinions MALCOLM, J., concurring: I concur in the result for reasons which reach both the facts and the law. In the first place, as to the facts, one cannot be convicted ex post facto of a violation of a law and of an executive order issued pursuant to the law, when the alleged violation thereof occurred on August 6, 1919, while the Act of the Legislature in question was not published until August 13, 1919, and the order was not published until August 20, 1919. In the second place, as to the law, one cannot be convicted of a violation of a law or of an order issued pursuant to the law when both the law and the order fail to set up an ascertainable standard of guilt. (U.S. vs. Cohen Grocery Company [1921], 255 U.S., 81, holding section 4 of the Federal Food Control Act of August 10, 1917, as amended, invalid.) In order that there may not be any misunderstanding of our position, I would respectfully invite attention to the decision of the United States Supreme Court in German Alliance Ins. Co. vs. Lewis ([1914, 233 U.S., 389), concerning the legislative regulation of the prices charged by business affected with a public interest, and to another decision of the United States Supreme Court, that of Marshall Field & Co. vs. Clark ([1892], 143 U.S., 649), which adopts as its own the principles laid down in the case of Locke's Appeal ([1873], 72 Pa. St., 491), namely; "The Legislature cannot delegate its power to make a 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 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."