Statcon (Aids to Construction)

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G.R. No. L-19650 September 29, 1966CALTEX(PHILIPPINES), INC., petitioner-appellee,vs.ENRICO PALOMAR, in his capacity as THE POSTMASTERGENERAL, respondent-appellant.

In the year 1960 the Caltex (Philippines) Inc. (hereinafterreferred to as Caltex) conceived and laid the groundwork for apromotional scheme calculated to drum up patronage for its oilproducts. Denominated "Caltex Hooded Pump Contest", it calls forparticipants therein to estimate the actual number of liters a hoodedgas pump at each Caltex station will dispense during a specified period.

Employees of the Caltex (Philippines) Inc., its dealers and itsadvertising agency, and their immediate families excepted,participation is to be open indiscriminately to all "motor vehicleowners and/or licensed drivers". For the privilege to participate, no feeor consideration is required to be paid, no purchase of Caltex productsrequired to be made. Entry forms are to be made available uponrequest at each Caltex station where a sealed can will be provided forthe deposit of accomplished entry stubs.

A three-staged winner selection system is envisioned. At thestation level, called "Dealer Contest", the contestant whose estimate isclosest to the actual number of liters dispensed by the hooded pumpthereat is to be awarded the first prize; the next closest, the second; andthe next, the third. Prizes at this level consist of a 3-burner kerosenestove for first; a thermos bottle and a Ray-O-Vac hunter lantern forsecond; and an Everready Magnet-lite flashlight with batteries and a

screwdriver set for third. The first-prize winner in each station willthen be qualified to join in the "Regional Contest" in seven differentregions. The winning stubs of the qualified contestants in each regionwill be deposited in a sealed can from which the first-prize, second-prize and third-prize winners of that region will be drawn. The regionalfirst-prize winners will be entitled to make a three-day all-expenses-paid round trip to Manila, accompanied by their respective Caltexdealers, in order to take part in the "National Contest". The regionalsecond-prize and third-prize winners will receive cash prizes of P500and P300, respectively. At the national level, the stubs of the sevenregional first-prize winners will be placed inside a sealed can fromwhich the drawing for the final first-prize, second-prize and third-prizewinners will be made. Cash prizes in store for winners at this finalstage are: P3,000 for first; P2,000 for second; Pl,500 for third; andP650 as consolation prize for each of the remaining four participants.

Foreseeing the extensive use of the mails not only as amongst themedia for publicizing the contest but also for the transmission ofcommunications relative thereto, representations were made by Caltexwith the postal authorities for the contest to be cleared in advance formailing, having in view sections 1954(a), 1982 and 1983 of the RevisedAdministrative Code, the pertinent provisions of which read as follows:

SECTION 1954.Absolutely non-mailable matter. Nomatter belonging to any of the following classes, whethersealed as first-class matter or not, shall be imported into thePhilippines through the mails, or to be deposited in orcarried by the mails of the Philippines, or be delivered to itsaddressee by any officer or employee of the Bureau of Posts:

Written or printed matter in any form advertising,describing, or in any manner pertaining to, or conveying or

purporting to convey any information concerning anylottery, gift enterprise, or similar scheme depending in wholeor in part upon lot or chance, or any scheme, device, orenterprise for obtaining any money or property of any kindby means of false or fraudulent pretenses, representations,or promises.

"SECTION 1982.Fraud orders.Upon satisfactory evidence thatany person or company is engaged in conducting any lottery, giftenterprise, or scheme for the distribution of money, or of any real orpersonal property by lot, chance, or drawing of any kind, or that anyperson or company is conducting any scheme, device, or enterprise forobtaining money or property of any kind through the mails by means offalse or fraudulent pretenses, representations, or promises, theDirector of Posts may instruct any postmaster or other officer or

employee of the Bureau to return to the person, depositing the same inthe mails, with the word "fraudulent" plainly written or stamped uponthe outside cover thereof, any mail matter of whatever class mailed byor addressed to such person or company or the representative or agentof such person or company.

SECTION 1983.Deprivation of use of money order system andtelegraphic transfer service.The Director of Posts may, uponevidence satisfactory to him that any person or company is engaged inconducting any lottery, gift enterprise or scheme for the distribution ofmoney, or of any real or personal property by lot, chance, or drawing ofany kind, or that any person or company is conducting any scheme,

device, or enterprise for obtaining money or property of any kindthrough the mails by means of false or fraudulent pretenses,representations, or promise, forbid the issue or payment by anypostmaster of any postal money order or telegraphic transfer to saidperson or company or to the agent of any such person or company,whether such agent is acting as an individual or as a firm, bank,corporation, or association of any kind, and may provide by regulationfor the return to the remitters of the sums named in money orders ortelegraphic transfers drawn in favor of such person or company or itsagent.

The overtures were later formalized in a letter to the PostmasterGeneral, dated October 31, 1960, in which the Caltex, thru counsel,enclosed a copy of the contest rules and endeavored to justify itsposition that the contest does not violate the anti-lottery provisions ofthe Postal Law. Unimpressed, the then Acting Postmaster General

opined that the scheme falls within the purview of the provisionsaforesaid and declined to grant the requested clearance. In its counsel'sletter of December 7, 1960, Caltex sought a reconsideration of theforegoing stand, stressing that there being involved no consideration inthe part of any contestant, the contest was not, under controllingauthorities, condemnable as a lottery. Relying, however, on an opinionrendered by the Secretary of Justice on an unrelated case seven yearsbefore (Opinion 217, Series of 1953), the Postmaster Generalmaintained his view that the contest involves consideration, or that, ifit does not, it is nevertheless a "gift enterprise" which is equally bannedby the Postal Law, and in his letter of December 10, 1960 not onlydenied the use of the mails for purposes of the proposed contest but aswell threatened that if the contest was conducted, "a fraud order willhave to be issued against it (Caltex) and all its representatives".

Caltex thereupon invoked judicial intervention by filing the

present petition for declaratory relief against Postmaster GeneralEnrico Palomar, praying "that judgment be rendered declaring its'Caltex Hooded Pump Contest' not to be violative of the Postal Law,and ordering respondent to allow petitioner the use of the mails tobring the contest to the attention of the public". After issues werejoined and upon the respective memoranda of the parties, the trialcourt rendered judgment as follows:

In view of the foregoing considerations, the Court holdsthat the proposed 'Caltex Hooded Pump Contest' announcedto be conducted by the petitioner under the rules marked asAnnex B of the petitioner does not violate the Postal Law andthe respondent has no right to bar the public distribution ofsaid rules by the mails.

The respondent appealed.

The parties are now before us, arrayed against each other upontwo basic issues:first, whether the petition states a sufficient cause ofaction for declaratory relief; and second, whether the proposed "CaltexHooded Pump Contest" violates the Postal Law. We shall take theseup in seriatim.

1. By express mandate of section 1 of Rule 66 of the old Rules ofCourt, which was the applicable legal basis for the remedy at the time itwas invoked, declaratory relief is available to any person "whose rightsare affected by a statute . . . to determine any question of constructionor validity arising under the . . . statute and for a declaration of hisrights thereunder" (now section 1, Rule 64, Revised Rules of Court). Inamplification, this Court, conformably to established jurisprudence onthe matter, laid down certain conditions sine qua nontherefor, to wit:


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(1) there must be a justiciable controversy; (2) the controversy must bebetween persons whose interests are adverse; (3) the party seekingdeclaratory relief must have a legal interest in the controversy; and (4)the issue involved must be ripe for judicial determination (Tolentinovs. The Board of Accountancy, et al., G.R. No. L-3062, September 28,1951; Delumen, et al. vs. Republic of the Philippines, 50 O.G., No. 2,pp. 576, 578-579; Edades vs. Edades, et al., G.R. No. L-8964, July 31,1956). The gravamen of the appellant's stand being that the petitionherein states no sufficient cause of action for declaratory relief, ourduty is to assay the factual bases thereof upon the foregoing crucible.

As we look in retrospect at the incidents that generated the

present controversy, a number of significant points stand out in boldrelief. The appellee (Caltex), as a business enterprise of someconsequence, concededly has the unquestioned right to exploit everylegitimate means, and to avail of all appropriate media to advertise andstimulate increased patronage for its products. In contrast, theappellant, as the authority charged with the enforcement of the PostalLaw, admittedly has the power and the duty to suppress transgressionsthereof particularly thru the issuance of fraud orders, under Sections1982 and 1983 of the Revised Administrative Code, against legally non-mailable schemes. Obviously pursuing its right aforesaid, the appelleelaid out plans for the sales promotion scheme hereinbefore detailed. Toforestall possible difficulties in the dissemination of informationthereon thru the mails, amongst other media, it was found expedient torequest the appellant for an advance clearance therefor. However,likewise by virtue of his jurisdiction in the premises and construing thepertinent provisions of the Postal Law, the appellant saw a violationthereof in the proposed scheme and accordingly declined the request. Apoint of difference as to the correct construction to be given to theapplicable statute was thus reached. Communications in which theparties expounded on their respective theories were exchanged. Theconfidence with which the appellee insisted upon its position wasmatched only by the obstinacy with which the appellant stood hisground. And this impasse was climaxed by the appellant's openwarning to the appellee that if the proposed contest was "conducted, afraud order will have to be issued against it and all its representatives."

Against this backdrop, the stage was indeed set for the remedyprayed for. The appellee's insistent assertion of its claim to the use ofthe mails for its proposed contest, and the challenge thereto andconsequent denial by the appellant of the privilege demanded,undoubtedly spawned a live controversy. The justiciability of thedispute cannot be gainsaid. There is an active antagonistic assertion ofa legal right on one side and a denial thereof on the other, concerning a

real not a mere theoretical question or issue. The contenders areas real as their interests are substantial. To the appellee, theuncertainty occasioned by the divergence of views on the issue ofconstruction hampers or disturbs its freedom to enhance its business.To the appellant, the suppression of the appellee's proposed contestbelieved to transgress a law he has sworn to uphold and enforce is anunavoidable duty. With the appellee's bent to hold the contest and theappellant's threat to issue a fraud order therefor if carried out, thecontenders are confronted by the ominous shadow of an imminent andinevitable litigation unless their differences are settled and stabilizedby a tranquilizing declaration (Pablo y Sen, et al. vs. Republic of thePhilippines, G.R. No. L-6868, April 30, 1955). And, contrary to theinsinuation of the appellant, the time is long past when it can rightly besaid that merely the appellee's "desires are thwarted by its own doubts,or by the fears of others" which admittedly does not confer a cause ofaction. Doubt, if any there was, has ripened into a justiciablecontroversy when, as in the case at bar, it was translated into a positiveclaim of right which is actually contested (III Moran, Comments on theRules of Court, 1963 ed., pp. 132-133, citing: Woodward vs. Fox WestCoast Theaters, 36 Ariz., 251, 284 Pac. 350).

We cannot hospitably entertain the appellant's pretense thatthere is here no question of construction because the said appellant"simply applied the clear provisions of the law to a given set of facts asembodied in the rules of the contest", hence, there is no room fordeclaratory relief. The infirmity of this pose lies in the fact that itproceeds from the assumption that, if the circumstances herepresented, the construction of the legal provisions can be divorcedfrom the matter of their application to the appellee's contest. This isnot feasible. Construction, verily, is the art or process of discoveringand expounding the meaning and intention of the authors of thelawwith respect to its application to a given case, where that intention

is rendered doubtful, amongst others, by reason of the fact that thegiven case is not explicitly provided for in the law (Black,Interpretation of Laws, p. 1). This is precisely the case here. Whether ornot the scheme proposed by the appellee is within the coverage of theprohibitive provisions of the Postal Law inescapably requires aninquiry into the intended meaning of the words used therein. To ourmind, this is as much a question of construction or interpretation asany other.

Nor is it accurate to say, as the appellant intimates, that apronouncement on the matter at hand can amount to nothing morethan an advisory opinion the handing down of which is anathema to a

declaratory relief action. Of course, no breach of the Postal Law has asyet been committed. Yet, the disagreement over the constructionthereof is no longer nebulous or contingent. It has taken a fixed andfinal shape, presenting clearly defined legal issues susceptible ofimmediate resolution. With the battle lines drawn, in a manner ofspeaking, the propriety nay, the necessity of setting the dispute atrest before it accumulates the asperity distemper, animosity, passionand violence of a full-blown battle which looms ahead (III Moran,Comments on the Rules of Court, 1963 ed., p. 132 and cases cited),cannot but be conceded. Paraphrasing the language in Zeitlin vs.Arnebergh 59 Cal., 2d., 901, 31 Cal. Rptr., 800, 383 P. 2d., 152, cited in22 Am. Jur., 2d., p. 869, to deny declaratory relief to the appellee in thesituation into which it has been cast, would be to force it to choosebetween undesirable alternatives. If it cannot obtain a final anddefinitive pronouncement as to whether the anti-lottery provisions ofthe Postal Law apply to its proposed contest, it would be faced withthese choices: If it launches the contest and uses the mails for purposesthereof, it not only incurs the risk, but is also actually threatened withthe certain imposition, of a fraud order with its concomitant stigmawhich may attach even if the appellee will eventually be vindicated; if itabandons the contest, it becomes a self-appointed censor, or permitsthe appellant to put into effect a virtual fiat of previous censorshipwhich is constitutionally unwarranted. As we weigh theseconsiderations in one equation and in the spirit of liberality with whichthe Rules of Court are to be interpreted in order to promote their objec(section 1, Rule 1, Revised Rules of Court) which, in the instant case,is to settle, and afford relief from uncertainty and insecurity withrespect to, rights and duties under a law we can see in the presentcase any imposition upon our jurisdiction or any futility or prematurityin our intervention.

The appellant, we apprehend, underrates the force and bindingeffect of the ruling we hand down in this case if he believes that it will

not have the final and pacifying function that a declaratory judgment iscalculated to subserve. At the very least, the appellant will be bound.But more than this, he obviously overlooks that in this jurisdiction,"Judicial decisions applying or interpreting the law shall form a part ofthe legal system" (Article 8, Civil Code of the Philippines). In effect,judicial decisions assume the same authority as the statute itself and,until authoritatively abandoned, necessarily become, to the extent thatthey are applicable, the criteria which must control the actuations notonly of those called upon to abide thereby but also of those in dutybound to enforce obedience thereto. Accordingly, we entertain nomisgivings that our resolution of this case will terminate thecontroversy at hand.

It is not amiss to point out at this juncture that the conclusion wehave herein just reached is not without precedent. InLiberty CalendarCo. vs. Cohen, 19 N.J., 399, 117 A. 2d., 487, where a corporation

engaged in promotional advertising was advised by the countyprosecutor that its proposed sales promotion plan had thecharacteristics of a lottery, and that if such sales promotion wereconducted, the corporation would be subject to criminal prosecution, itwas held that the corporation was entitled to maintain a declaratoryrelief action against the county prosecutor to determine the legality ofits sales promotion plan.In pari materia, see also:Bunis vs. Conway,17 App. Div. 2d., 207, 234 N.Y.S. 2d., 435;Zeitlin vs. Arnebergh,supra; Thrillo, Inc. vs. Scott, 15 N.J. Super. 124, 82 A. 2d., 903.

In fine, we hold that the appellee has made out a case fordeclaratory relief.

2. The Postal Law, chapter 52 of the Revised Administrative Codeusing almost identical terminology in sections 1954(a), 1982 and 1983


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113 Colo., 326; D'Orio vs. Jacobs, 275 P. 563, 565, 151 Wash., 297;People vs. Psallis, 12 N.Y.S., 2d., 796; City and County of Denver vs.Frueauff, 88 P., 389, 394, 39 Colo., 20, 7 L.R.A., N.S., 1131, 12 Ann.Cas., 521; 54 C.J.S., 851, citing: Barker vs. State, 193 S.E., 605, 607, 56Ga. App., 705; 18 Words and Phrases, perm. ed., pp. 590-594). Theapparent conflict of opinions is explained by the fact that the specificstatutory provisions relied upon are not identical. In some cases, aspointed out in 54 C.J.S., 851, the terms "lottery" and "gift enterprise"are used interchangeably (Bills vs. People, supra); in others, thenecessity for the element of consideration or chance has beenspecifically eliminated by statute. (54 C.J.S., 351-352, citing Barker vs.State, supra; State ex rel. Stafford vs. Fox-Great Falls Theater

Corporation, supra). The lesson that we derive from this state of thepertinent jurisprudence is, therefore, that every case must be resolvedupon the particular phraseology of the applicable statutory provision.

Taking this cue, we note that in the Postal Law, the term inquestion is used in association with the word "lottery". With themeaning of lottery settled, and consonant to the well-known principleof legal hermeneuticsnoscitur a sociiswhich Opinion 217 aforesaidalso relied upon although only insofar as the element of chance isconcerned it is only logical that the term under a construction shouldbe accorded no other meaning than that which is consistent with thenature of the word associated therewith. Hence, if lottery is prohibitedonly if it involves a consideration, so also must the term "giftenterprise" be so construed. Significantly, there is not in the law theslightest indicium of any intent to eliminate that element ofconsideration from the "gift enterprise" therein included.

This conclusion firms up in the light of the mischief sought to beremedied by the law, resort to the determination thereof being anaccepted extrinsic aid in statutory construction. Mail fraud orders, it isaxiomatic, are designed to prevent the use of the mails as a medium fordisseminating printed matters which on grounds of public policy aredeclared non-mailable. As applied to lotteries, gift enterprises andsimilar schemes, justification lies in the recognized necessity tosuppress their tendency to inflame the gambling spirit and to corruptpublic morals (Com. vs. Lund, 15 A. 2d., 839, 143 Pa. Super. 208).Since in gambling it is inherent that something of value be hazarded fora chance to gain a larger amount, it follows ineluctably that where noconsideration is paid by the contestant to participate, the reasonbehind the law can hardly be said to obtain. If, as it has been held

Gratuitous distribution of property by lot or chance

does not constitute "lottery", if it is not resorted to as adevice to evade the law and no consideration is derived,directly or indirectly, from the party receiving thechance, gambling spirit not being cultivated or stimulatedthereby. City of Roswell vs. Jones, 67 P. 2d., 286, 41 N.M.,258." (25 Words and Phrases, perm. ed., p. 695, emphasissupplied).

we find no obstacle in saying the same respecting a giftenterprise. In the end, we are persuaded to hold that, under theprohibitive provisions of the Postal Law which we have heretoforeexamined, gift enterprises and similar schemes therein contemplatedare condemnable only if, like lotteries, they involve the element ofconsideration. Finding none in the contest here in question, we rulethat the appellee may not be denied the use of the mails for purposesthereof.

Recapitulating, we hold that the petition herein states a sufficientcause of action for declaratory relief, and that the "Caltex HoodedPump Contest" as described in the rules submitted by the appellee doesnot transgress the provisions of the Postal Law.

ACCORDINGLY, the judgment appealed from is affirmed.Nocosts.

G.R. No. L-29906 January 30, 1976RODOLFO GENERAL and CARMEN GONTANG, petitioners,vs.LEONCIO BARRAMEDA, respondent.

Petition for certiorari to review the decision of the Court of Appeals(Second Division) in CA-G.R. No. 38363-R, entitled "LeoncioBarrameda, plaintiff-appellant, vs. Development Bank of thePhilippines (Naga Branch, Naga City), Rodolfo General and CarmenGontang, defendants-appellees," which reversed the decision of theCourt of First Instance of Camarines Sur in its Civil Case No. 5697,"dismissing the complaint with costs against plaintiff".

Appellate Court's decision has the following dispositive portion:

We therefore find that the appealed judgment should be reversed andset aside and another one entered declaring (1) null and void the sale

executed on September 3, 1963, by defendant Development Bank of thePhilippines in favor of its defendants Rodolfo General and CarmenGontang, (2) T.C.T. No. 5003 cancelled and (3) the mortgaged propertyredeemed; and ordering the Clerk of the lower court to deliver theamount of P7,271.22 deposited to defendants Rodolfo General andCarmen Gontang and the Register of Deeds to issue a new TransferCertificate of Title in the name of plaintiff in lieu of T.C.T. No. 5003upon payment by him of corresponding fees; with costs against thedefendants in both instances.

Undisputed facts are:

Plaintiff seeks to redeem the land formerly embraced in TransferCertificate of Title No. 1418, containing an area of 59.4687 hectares,situated in barrio Taban, Minalabac Camarines Sur; to annul any andall contracts affecting said property between the Development Bank ofthe Philippines (DBP) and Rodolfo General and Carmen Gontang and

to recover damages, attorney's fees and costs.

The land in dispute was mortgaged by plaintiff to the DBP to secure aloan of P22,000.00. For failure of the mortgagor to pay in full theinstallments as they fall due, the mortgagee foreclosed extrajudiciallypursuant to the provisions of Act 3135. On April 23, 1962, theprovincial sheriff conducted an auction sale in which the mortgagee, asthe highest bidder, bought the mortgaged property for P7,271.22. OnMay 13, 1963, the sheriff executed a final deed of sale in favor of theDBP (Exhibit 2) and the DBP executed an affidavit of consolidation ofownership (Exhibit 3). Upon registration of the sale and affidavit onSeptember 2, 1963 (Exhibit 1), TCT No. 1418 in the name of plaintiffwas cancelled and TCT No. 5003 issued to the DBP (Exhibit-5) in itsstead. On September 3, 1963, defendants Rodolfo General and CarmenGontang purchased the land from their codefendant. The sale in theirfavor was annotated on TCT No. 5003 on November 26, 1963 only.

Prior to the date last mentioned, or on November 20, 1963, plaintiffoffered to redeem the land. In view of the refusal of the DBP to allowthe redemption, plaintiff commenced this suit. The original complaintwas filed in court on November 23, 1963. On August 12, 1964, plaintiffdeposited with the clerk of court the sum of P7,271.22, representing therepurchase price of the land.

The trial court held that the one-year period of redemption began torun on April 23, 1962, when the sale at public auction was held, andended on April 24, 1963; that the plaintiff's offer to redeem onNovember 20, 1963 and the deposit of the redemption price on August12, 1964 were made beyond the redemption period; and thatdefendants Rodolfo General and Carmen Gontang 'are legitimatepurchasers for value.

Two principal issues raised are:

(1) In the interpretation and application of Section 31,Commonwealth Act 459 (Law that created the Agricultural andIndustrial Bank, now Development Bank of the Philippines) whichprovides:

The Mortgagor or debtor to the Agricultural and Industrial Bank whosereal property was sold at public auction, judicially or extra- judicially,for the full or partial payment of an obligation to said bank shall,within one year from the date of' the auction sale, have the right toredeem the real property ... (Emphasis supplied),

shall the period of redemption start from the date of auction sale or thedate of the registration of the sale in the register of deeds as therespondent Appellate Court held?


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(2) Were petitioners under obligation to look beyond whatappeared in the certificate of title of their vendor the DevelopmentBank of the Philippines and investigate the validity of its title beforethey could be classified as purchasers in good faith?

Petitioners' principal contentions are: that Section 31 ofCommonwealth Act No. 459 which created the Agricultural andIndustrial Bank, predecessor of the Rehabilitation Finance Corporationand the Development Bank of the Philippines, clearly provides that theright to redeem the real property sold at public auction judicially orextra-judicially may only be exercised "within one year from the date ofthe auction sale"; that there is no provision in Commonwealth Act No.

459 expressly stating that the redemption period of one year shall startfrom the registration of the certificate of sale in the register of deeds;that Sec. 31 of C. A. 459 is a specific provision of law which governsredemption of real property foreclosed by the Agricultural andIndustrial Bank (now the Development Bank of the Philippines), andprescribes the redemption period for both judicial and extra-judicialforeclosures of mortgage; that insofar as foreclosures of mortgage bybanking and financial institutions are concerned, the period ofredemption applicable must be the one prescribed in their respectivecharters as, in the case at bar, Section 31, C.A. No. 459; that the rulingin the case of Agbulos vs. Alberto, G.R. No. L-17483, July 31, 1962,cited by respondent Appellate Court as a basis for its decision, is notapplicable to the case at bar because this Court based its Agbulos rulingon Section 26 (now Sec. 90) of Rule 39 of the Rules of Court, wherein itis not clear when the period of redemption should start (date whenexecution sale was conducted, or when the certificate of sale wasexecuted by sheriff, or when the certificate of sale was registered in the

registry of deeds), and this Court ruled that as the land involved in thatcase is registered under the Torrens system, the date of redemptionshould begin to run from the date of registration, unlike in the case atbar where Section 31 of Commonwealth Act 459 specifically and clearlyprovides that the running of the redemption period shall start from thedate of the auction sale; and that the ruling of this Court in Gonzalesvs. P.N.B., 48 Phil. 824, also invoked by respondent Appellate Court asa basis for its decision, is likewise not applicable to the case at barbecause the provisions on the matter of the P.N.B. Charter, Act No.2938, are different from that of Commonwealth Act 459. Section 32 ofAct 2938, which is now Section 20 of R.A. No. 1300 (PNB Charter)provides that the mortgagor shall have the right to redeem within oneyear the sale of the real estate. This is Identical to the provisionappearing in Sec. 26, now Sec. 30, Rule 39, Rules of Court, while underSec. 31 of Commonwealth Act 459, the period of redemption shouldstar, on the date of the auction sale, and the latter provision isapplicable specifically and expressly to the case at bar.

It is also petitioners' principal argument that the ruling in MetropolitanInsurance Company, substituted by spouses Loreto Z. Marcaida andMiguel de Marcaida vs. Pigtain 101 Phil. 1111, 1115-1116, wherein thisCourt, in construing Sec. 6 of Act No. 3135, categorically stated that theone year redemption period shall start from the date of sale and notfrom the report of the sale or the registration of the sale certificate inthe office of the Register of Deeds, is more applicable to the presentcase. The pertinent portion of the decision in the Marcaida casefollows:

But again the appellants claim that in this particular case, the statutoryredemption period of one year should begin from December 17, 1954,when the auction sale was actually recorded in the office of the Registerof Deeds of Manila and not from December 15, 1953, when the sale atpublic auction of the properties in question took place. We find itscontention to be also untenable in view of the clear provision of the

aforesaid Section 6 of Act No. 3135 to the effect that the right ofredemption should be exercised within one year from the date of thesale. It should not be overlooked that the extrajudicial sale in questionwas for foreclosure of a mortgage and was not by virtue of an ordinarywrit of execution in a civil case. ... And since the appeallants had failedto redeem the land in question within the time allowed by Section 6 ofAct 3135, the appellee has perfect right to require the cancellation ofthe attachment lien in question. (Emphasis supplied)

Notwithstanding the impressive arguments presented by petitioners,the crucial issue to determine is the choice of what rule to apply indetermining the start of the one year redemption period, whether fromthe date of the auction sale or from that of the registration of the salewith the registry of deeds. In other words it is whether a literalinterpretation of the provision of Section 31 of Commonwealth Act 459 that the period of redemption shall start from the date of the auction

sale shall govern, or whether the words, "auction sale" shall beconsidered in their ordinary meaning or in the same sense that site isused in the texts of Section 26, now 30, of Rule 39 of the Rules ofCourt, and Section 26 of Act 2938, now Section 20, R.A. 1300 (Charterof PNB). Stated differently, should the word "sale" used in the aboveindicated provisions of the Rules of Court and the PNB Charter, underwhichWe ruled that the redemption period shall start from theregistration of the sale in the registry of deeds be applied to foreclosuresales for the DBP and give to the words auction sale" in its charter thesame meaning of "sale" as used in connection with registered land?

We are of the view that a correct solution to the foregoing issue must

entail not merely trying to determine the meaning of the words auctionsale" and "sale" in different legislative enactments, but, moreimportantly, a determination of the legislative intent which is quite atask to achieve as it depends more on a determination of the purposeand objective of the law in giving mortgagors a period of redemptiomof their foreclosed properties. Mortgagors whose properties areforeclosed and are purchased by the mortgagee as highest bidder at theauction sale are decidedly at a great disadvatage because almostinvariably mortgagors forfeit their properties at a great loss as they arepurchased at nominal costs by the mortgagee himself who ordinarilybids in no more than his credit or the balance threof at the auction saleThat is the reason why the law gives them a chance to redeem theirproperties within a fixed period. It cannot be denied that in allforeclosures of mortgages and sale of property pursuan to execution,whether judicial or extrajudicial in nature, under different legislativeenactments, a public auction sale is a indispensable pre-requisite to thevalid disposal of properties used as collateral for the obligation. So that

whether the legislators in different laws used as collateral for theobligation. So that whether the legislators in different laws used theterm "sale" or "auction sale" is of no moment, since the presumption isthat when they used those words "sale" and "auction sale"interchangeable in different laws they really referred to only one act the sale at public auction indispensably necessary in the disposition ofmortgaged properties and those levied upon to pay civil obligations oftheir owners.

In the case of Ernesto Salazar, et al. vs. Flor De Lis Meneses, et al.,G.R.No.L-15378, promulgated July 31, 1963, this Court stated:

The issue decisive of this appeal is the one raised by appellants in theirthird assignment of error, which is to this effect: that the lower courterred in not holding that the period of redemption in this case, as far asappellants are concerned, started only on May 26, 1956, registered.

Should We rule to this effect, it is clear that hen appellants attemptedto exercise their right to redeem, as judgment creditors of the deceasedmortgagor by judgment subsequent to the extrajudicial foreclosuresale, and when they initiated the present action on October 1, 1956, theperiod of redemption had not yer expired.

We find appellants' contention to be meritorious. In the case ofAgbulos vs. Alberto, G.R. No. L-17483, promulgated on July 31, 1962,We held:

The property involved in the present case is registered land. It is thelaw in this jurisdiction that when property brought under the operationof the Land Registration Act sold, the operative act is the registration othe deed of conveyance. The deed of sale does not take effect this aconveyance or bind the land it is registered. (Section 50, Act 496;Tuason vs. Raymundo, 28 Phil. 635; Sikatuna vs. Guevara, 43 Phil. 371Worcester vs. Ocampo, 34 Phil. 646) (Emphasis supplied)

We find no compelling reason to deviate from the aforequoted rulingand not apply the same to the present case. To Us petitioners' maincontention that there is a great deal of difference in legislative intent inthe use of the words 94 auction sale" in Sec. 31 of Commonwealth Act459 and the word "sale" in See. 32 of Act 2938, and See. 30 of Rule 39of the Rules of Court, pales into insignificance in the light of Our standthat those words used interchangeably refer to one thing, and that isthe public auction sale required by law in the disposition of propertiesforeclosed or levied upon. Our stand in the Salazar case and in thosementioned therein (Garcia vs. Ocampo, G.R. No. L-13029, June 30,1959; Gonzales et al. vs. Philippine National Bank et al. 48 Phil. 824) isfirmly planted on the premise that registration of the deed ofconveyance for properties brought under the Torrens System is theoperative act to transfer title to the property and registration is also the


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notice to the whole world that a transaction involving the same hadtaken place.

To affirm the previous stand this Court has taken on the question ofwhen the one year period of redemption should start (from the time ofregistration of the sale) would better serve the ends of justice andequity especially in this case, since to rule otherwise would result inpreventing the respondent-mortgagor from redeeming his 59.4687hectares of land which was acquired by the Development Bank of thePhilippines as the highest bidder at the auction sale for the low price ofonly P7,271.22 which was simply the unpaid balance of the mortgagedebt of P22,000.00 after the respondent-mortgagor had paid the sum

of P14,728.78. As it is, affirmance of the Appellate Court's decisionwould not result in any loss to petitioners since the amount ofP7,271.22 they paid to the Bank will be returned to 'them. What furtherstrengthen's Our stand is the fact found by the respondent AppellateCourt that respondent Barrameda has always been in possession of thedisputed land.

IN THE LIGHT OF THE FOREGOING, We find it no longer necessaryto determine whether the petitioners are purchasers in good faith ofthe land involved, since the respondent Barrameda redeemed themortgaged property within the legal period of redemption and,consequently the sale of the property executed on September 3, 1963,by the Development Bank of the Philippine in favor of the petitioners isnull and void.

WHEREFORE, the decision of the respondent Appellate Court isaffirmed, with costs against petitioners.

April 4, 1918G.R. No. L-11988JACINTO MOLINA, plaintiff-appellee,vs.JAMES J. RAFFERTY, as Collector of Internal Revenue,defendant-appellant.

The facts are not in dispute. Plaintiff is the owner of various fish ponds(pesquerias) in the municipality of Bulacan, Province of Bulacan.Between January 1 and September 30, 1915, plaintiff consigned to acommission merchant in Manila quantities of fish which sold forP5,264.89. The commission merchant paid the merchants percentageand fixed taxes due under the Internal Revenue Law. Plaintiff,however, had not previously paid the merchants tax, although fromAugust 1. 1904, the date when the first Internal Revenue Law becameeffective, until October 26, 1915, plaintiff had been engaged in thisbusiness, Plaintiff had been paid the real estate tax on the land uponwhich the fishponds are located. On the date last mentioned, ondemand of a representative of the Bureau of Internal revenue, plaintiffpaid under protest P71.81, the total internal-revenue tax on the grosssum received for the first three-quarters of the year 1915. The ground ofthe protest was that plaintiff is an agriculturist and not a merchant andtherefore exempt from the taxes imposed by the Internal Revenue Lawupon the gross sales of merchants. The protest was denied by theCollector of Internal Revenue, who held that the plaintiff was amerchant. Suit to recover this amount of P71.81 was thereuponinstituted in the Court of First Instance of the city of Manila against thedefendant as collector of internal revenue. After trial on an agreedstatement of facts, the Honorable Jose Abreu in a carefully prepareddecision ordered defendant to refund the P71.81 paid by plaintiff asinternal-revenue taxes and penalties under protest, with legal interestthereon from November 26, 1915, the date of such payment underprotest. Defendant appealed making four assignments of error, all ofwhich, however, with the exception of the last, which need not beconsidered, center around the question which we set out in thebeginning of this decision. Both appellee and appellant have furtherfavored the court with an exceptionally able presentation of theirrespective contentions. We are given to understand that this is in thenature of a test case, concerning not alone the comparatively smallamount involved but affecting the taxes of numerous other persons inan amount which will run up into thousands of pesos.In addition to the foregoing statement of the case, we must note thenature of the fishponds and of the fish. As to the first, before the landsare suitable for use as fishponds, it is necessary for the land to beprepared by the erection of dikes and cleaning out and deepening thebottom. The presence of caretakers is necessary to see that thefishponds do not become damaged and to regulate the entrance andexit of water through the floodgates. The fish are of the species knownbagus. These fish are obtained from small fishes (semillas), which are

placed in the fishponds. These small fishes are first put in acomparatively small compartment, surrounded by walls of earth, whichis found within the fishery itself. Afterwards when they get to be aboutthe size of a cigarette, they are let loose into the other compartments ofthe same fishery. This compartment for semillas is allowed to dry andis cleaned well before the semillas are placed therein; it is even plowedto kill all the bugs that may eat up the fish. In order to make marineplants grow, a small amount of sea water is allowed to enter. When thefish have become large an endeavor is made to fill the fishery withwater. From time to time the water contained in the fishery is renewedto avoid the killing of the fish. The walls of a fishery are constructed topreserve and to retain the water and the fishes inside the fishery. These

walls are constructed on a swampy lands and in some cases on ricefields bounded by a river or the sea.The food of the bagus includes marine plants. These algae are of sevenclasses, their scientific names being cladophora, chaetomorpha,oscillatoria, oedogonium, lyngbya, enteromorpha, and najas. One ofthese plants is rooted. Some of the others are very loosely attached tothe ground, but not rooted. Generally the algae float in the water.LAW.The provisions of the law which it is necessary to construe are notextensive. The different internal-revenue laws have provided for amerchants tax. Merchant, as used in the law, means a personengaged in the sale, barter, or exchange of personal property ofwhatever character. (Act No. 2339, sec. 40; Administrative Code[1917] sec. 1459.) The succeeding section (Act no. 2339, sec. 41;Administrative Code [1917], sec. 1460) is entitled Sales not subject tomerchants tax. The section provides:In computing the tax above imposed transactions in the following

commodities shall be excluded: . . . .(c) Agricultural products when sold by the producer or owner of theland where grown, whether in their original state or not.With the facts and the law before us, we return to the question firstsuggested.QUESTION.Are fish an agricultural product within the meaning of the exemptionprovisions of the Internal revenue Law?OPINION.Different methods of approach to this question are possible. Forexample, all argument could disposed of peremptorily with the baldstatement that in accordance with the rule of stare decisis, the decisionof this court in The United States vs. Laxa ([1917], 36 Phil. Rep., 670) isdecisive. Justice Araullo, in his opinion, held that fish are not anagricultural product, that the owner of a fishpond who sells the fish atthe fishpond is a merchant, that such a merchant is not entitled to theexemption provided by the Internal Revenue Law, and that the said

owner is guilty of violation of the Internal Revenue Law. We prefer notto take such a stand, although we are confident that it could bedefended, because of the vigorous objection to a decision in a criminalprosecution becoming a precedent in a civil action for the recovery oftaxes.As opposed to the Laxa decision, counsel for plaintiff invites specialattention to the cases of Mapa vs. Insular Government ([1908] 10 Phil.,175) and Mercado vs. Collector of Internal Revenue ([1915] 32 Phil.Rep., 271). In the first case, the Supreme Court said -The question before us is not what is agricultural land, but whatdefinition has been given to that phrase by the Act of Congress.The Philippine Bill, it was found, classified land as agricultural publicland in order to distinguish such land from timber or mineral land.Neither Congress nor the court gave any definition of agricultural landas such or of the products of the land. Moreover, the court made theobservation that, The land in question in this case, which is used as afishery, could be filled up and any kind of crops raised thereon. If the

case can be considered as an authority, it must be that the courtrecognizes that agricultural land, as the term is used in the Act ofCongress, may be devoted to other than agricultural purposes, and thatusing agricultural land for a fishpond is a use other than agricultural.In the second case of Mercado vs. Collector of Internal Revenue,following Mapa vs. Insular Government (supra), the Court said -It is, then unquestionable that bakawan firewood is an agriculturalproduct, differing from other kinds of firewood obtained from theforest trees because the bakawan plant grows only on land subject tooverflow, which require clearing and care by workers skilled inagricultural pursuits, in order that it may thrive. It is also to be notedthat up to the present time mangrove swamps have been found suitablefor no other useful crop.But it is plainly a far cry from holding that bakawan, planted andgrown through the culture of the soil, is an agricultural product, tofinding that fish are in similar sense planted and grown as a result of


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the culture of the soil. Whatever comfort can be derived from thesedecisions are persuasive authority is more than nullified by the latercase of The United States vs. Laxa ([1917] 36 Phil. Rep., 670).Just, therefore, as the facts and the law are indisputable, so do weprefer to forget these three cases for the time being and to rest ourdecision on the plain and ordinary meaning of the law disclosed by theelementary rules of statutory construction.And first, in order to dispose of the question, is the owner of afishpond, such as the plaintiff, who sells fish taken from a fishpond, amerchant as defined in the Internal revenue Law? Recalling thisdefinition of a merchant, it would appear undeniable that theplaintiff is properly included in such classification. To paraphrase the

law, he is a person engaged in the sale of fish. Under our law, whatevermay be the usual conception of a merchant, buying and selling are notessential; to sell only is sufficient. (See also In re Cameron Town Mut.Fire, Lightning and Windstorm Ins. Co. [1899], 96 Fed., 756.)If such a man is a merchant, does his sale of fish place him under theexemption of the Internal Revenue Law? We know the meaning offish. In the authoritative work by Dr. C. L. G. Gunther on the Study ofFishes, we find the following:According to the views generally adopted at present, all thosevertebrate animals are referred to the class of fishes, which, living inwater, breathe air dissolved in water by means of gills or branchiae;whose heart consists of a single ventricle and single atrium; whoselimbs, if present, are modified into fins, supplemented by unpairedmedian fins; and whose skin is either naked, or covered with scales orosseous plates or bucklers . . . .We then have left to define merely the words agriculturalproducts.Agriculture is defined by Webster as the art or science of cultivating

the ground, including the preparation of the soil, the planting of seeds,the raising and harvesting of crops, and the rearing, feeding, andmanagement of live stock. Let us test our facts by this definition. Theground of the fishpond is cultivated. The soil is prepared. We, however,greatly doubt that seeds (of fish) are planted or that crops (of fish) areraised and harvested. Certainly, the seeds of fish are not sown in theground as one would sow corn, while as distinguished from the rearing,feeding, and management of live stock, which consumes the productsof the farm, the fish living in water depending upon water for life, onlyreceive nourishment from marine plants most of which have little or noconnection with the land.To proceed. The equivalent of agriculture in husbandry. Andhusbandry is defined by Webster as the business of a farmer,comprehending agriculture or tillage of the ground, the raising,managing, and fattening of cattle and other domestic animals, themanagement of the dairy and whatever the land produces. Again, weare far from confident that a farmer is generally understood to be a

fisherman, and that the land can be said to produce fish. In a case inwhich these definitions were considered, the supreme court ofTennessee said that agriculture means in its original sense, thecultivation of the ground for the purpose of procuring vegetables andfruits for the use of man and beast, or the act of preparing the soil,sowing and planting seeds, dressing the plants, and removing thecrops. In this sense of the word includes gardening or horticulture, andalso the raising and feeding of cattle or stock; but in a more commonand appropriate sense is used to signify that specie of cultivation whichis intended to raise grain and other field crops for a man and beast.(Simons vs. Lovell [1872], 54 Tenn. [7 Heisk.], 510; see also In re Drake[1902], 114 Fed., 229.)To proceed. Agricultural products, the supreme court of Georgia hasheld, in ordinary usage, is confined to the yield of the soil, as corn,wheat, rye, hay, etc. (Davis and Co. vs. Mayor and Council of Macon[1879], 64 Ga., 128.) The court had here to determine if beef cattle wereexempt from taxation as an agricultural product. The court asked -And when it is thought of closely, would it not be rather an unusualapplication of the phrase agricultural products to make it comprehendbeef cattle? In ordinary usage, is not the phrase confined to the yield ofthe soil, as corn, wheat, rye. oats, hay, etc., in its primary form? Whenthere has been conversion of the fruits of the soil into animal tissuesare still to apply the phrase? And suppose we are to disregard thechange in its first stage, and call a cow or a steer an agriculturalproduct, must we carry the name forward to the steak or roast whichthe butcher sells us from the slaughter animal? If cattle fall under thedenomination, so do hogs; and if beef, so does bacon. (See also Statevs. Patterson [1887], 4 S. E., 47.)Another case, coming from the supreme court of the District ofColumbia, gives a much broader meaning to the phrase. (District ofColumbia vs. Oyster [1885], 4 Am. Rep., 275.) The court said -The common parlance of the country, and the common practice of thecounty, have been to consider all those things as farming products or

agricultural products which had the situs of their production upon thefarm, and which were brought into condition for the uses of society bythe labor of those engaged in agricultural pursuits, as contra-distinguished from manufacturing or other industrial pursuits. Theproduct of the dairy or the product of the poultry yard, while it does nocome directly out of the soil, is necessarily connected with the soil andwith those who are engaged in the culture of the soil. It is, in everysense of the word, a part of the farm product. It is depended upon andlooked upon as one of the results and one of the means of income of thefarm, and in a just sense, therefore, it may be considered produce.To indicate further the wide sweep of the term agricultural products,and to show how such terminology influences those who disagree with

us, agricultural products has been held to include swine, horses, meacattle, sheep, manure, cordwood, hay, poultry, vegetables, fruit, eggs,milk, butter, and lard. (See Mayor vs. Davis, 6 W. and S., 279.) Butnever by any court to include fish.Like everything else in the world, it must be that there is a limit to thethings which can be included in the term agricultural products. TheDistrict of Columbia case, much relied upon by the plaintiff, gives theclue. Agriculture is but one pursuit. Agriculture and what it includes iscontradistinguished from other occupations and professions, asmanufacturing and we believe, fishing. Thus, of fisheries theEncyclopedia Britannica (p. 429) says -For the most part the operations of fishing have been comparable withthose of primitive hunting rather than with agriculture.Fisheries, while possibly in concomitance with the soil, are even morecertainly concerned with the water in which the fish live and have theirbeing, If fishing is farming, then conversely farming must be fishing.Waiving all the technical definitions, does the ordinary man when he

speaks of agriculture and farming think of a farmer as a fisherman, andwhen he speaks of fisheries does he think of a fisherman as a farmer?One other word in the law, grown is necessarily included and must beconsidered in finding the proper meaning. The law provides thatagricultural products must be grown. Again referring to Webster,grown means to cause to grow; to cultivate; to produce; as, to grow acrop; to grow wheat, hops, or tobacco. The fish taken from thefishponds and sold are certainly not the natural products of such land.They are retained therein by the construction of artificial dykes. Theyare animals farae nature, They have none of the characteristics of thenatural products of the soil. Fish are not grown as wheat, hops, ortobacco are grown.The question as to whether or not a similar exemption in favor ofagriculturists contained in the Internal Revenue Law of 1904 operatedto exclude from the merchants tax, receipts from the sale of fish, aroseshortly after the passage of that Act. The Attorney-General in anopinion rendered on March 14, 1906 (3 Op. Atty. gen., 65), held in

effect that the culture of the soil was determining factor in consideringwhat products are or are not agricultural products. As to quarrymenand fishermen. the Attorney-General observed -The occupation of the lumberman and the stockman, in the historicaldevelopment of these industries, as well as in present day practice, hasnever been confused with that of the agriculturist; while as toquarrymen and fishermen it may be observed that tillers of the soil arenot wont to plow the fields in quest of rock or in anticipation of a cropof fishes or of pearls.This opinion of the Attorney-General was concurred in by the thenGovernor-General and Acting Secretary of Finance Justice, who hadhelped draft the law. The Collector of the Internal Revenue thereuponpublished the opinion in full in Bureau of Internal Revenue Circular,No. 106. This official ruling of the executive officials is now entitled toconsideration by the courts. Courts will and should respect thecontemporaneous construction placed upon a statue by the executiveofficers whose duty it is to enforce it, and unless such interpretation is

clearly erroneous will ordinarily be controlled thereby. (In re Allen[1903], 2 Phil., 630, following Pennoyer vs. McConnaughy [1890], 140U. S., 363; Government of the Philippine Islands Ex Rel. Municipalityof Cardona vs. Municipality of Binangonan [1916], 34 Phil. Rep., 518.)We have thus far considered the etymology of the words. We franklyadmit to a slight doubt of exact interpretation by this method. We,however, believe that viewed from the standpoint of the mostelementary of all rules of statutory construction there is but onepossible result. In other words, our sole duty is to ascertain and giveeffect to the intention of the lawmaking body. We can best discover thisintention through the medium of the action taken by the Legislature inthe enactment of other laws.The first Internal revenue law (Act No. 1189) was enacted by thePhilippine Commission. It is plain that the Commissioners must havehad in mind agriculture as known to them in the United States. Theorganization of the American Government includes a Department of


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Agriculture, the Bureau of Fisheries is under the Department ofCommerce. Agriculture and fishing are therefore separate and distinct.In Great Britain there is a Board of Agriculture and Fisheries.Moreover, the same Philippine Legislature which provided anexemption from taxation for agricultural products was also interestedin establishing a Bureau of Agriculture. In enumerating the functionsof this Bureau, not one word is said of fish or fisheries. We rather doubtif the experts in agronomy in the Bureau of Agriculture would considerthemselves competent to advise as to piscatology. On the contrary, youfind a section of fisheries established not in the Bureau of Agriculturebut in the Bureau of Science. Instead, also, you find special lawsunrelated to agriculture dealing with the granting of fishery privileges.

The purpose of the Legislature in exempting agricultural products fromtaxation under the Internal Revenue Law was to encourage farmingand not fishing. This court has herefore held, and we reiterate, thatwhere language is plain, subtle refinements which tinge words so as togive them the color of a particular judicial theory are not onlyunnecessary but decidedly harmful. (Yangco vs. Court of FirstInstance of Manila and Yangco [1915], 29 Phil., 183.) Chief JusticeMarshall in the historic case of Gibbons vs. Ogden, ([1824], 9 Wheat.,1) said:As men, whose intentions require no concealment, generally employthe words which most directly and aptly express the ideas they intendto convey, the enlightened patriots who framed our Constitution, andthe people who adopted it must be understood to have employed wordsin their natural sense, and to have intended what they have said.The answer to our question are A person engaged in the sale of fish isa merchant. Fish are not an agriculture product. This merchant is notentitled to exemption under the Internal Revenue Law.

The further objection is made that the particular tax would constitutedouble taxation. It is sufficient to note in this respect that this court inGil Hermanos vs. Hord ([1908] 10 Phil., 218) said:It is very apparent that tax under discussion is not a tax upon property.It is rather a tax upon the occupation or industry in which a person isengaged.The internal-revenue tax is also uniform for all of a class. In oppositionto such a contention, it could be advanced if necessary that the burdenis on plaintiff to establish that the surrender of the taxing power ismanifested by words too plain to be mistaken. When exemption isclaimed, it must be shown indubitably to exist. (Farrington vs.Tennessee [1877], 95 U. S., 697, 686.) The presumption is alwaysagainst any surrender of the taxing power. (Tennessee vs. Whitworth[1885], 117 U. S., 129, 136.)We have permitted our discussion of the question raised by this appealto proceed much farther than is really necessary for the decision of thecase. If we have fallen into the mire of proximity, it has been because

we approached the subject with a desire to accede, if possible, to therequest of the plaintiff. We are as much interested in upholdinglegislation which will assist in the commercial development of theIslands as any one. We cannot, however, step outside the settled andordinary meaning of the law and by judicial legislation give to the law ameaning not intended. If redress is proper, under these circumstances,complainants must look to the Legislature and not to the courts.The judgment of the lower court is reversed and the defendant isabsolved of the complaint, with the costs of the first instance againstthe plaintiff, and without special finding as to costs of this instance. Soordered.Carson, Araullo and Street, JJ., concur.Separate OpinionsJONHSON, J., with whom concurs ARELLANO, C.J., dissenting:The only important question presented by this appeal is whether or notthe products of a vivero de peces should be considered as anagricultural product and as such relieved from the internal-revenue tax

in accordance with paragraph (c) of article 41 of Act No. 2339.The Court of First Instance, in a very well-reasoned opinion, held thatsaid products were exempt from the internal-revenue tax under saidAct. This court, by a majority opinion, held that said products were notexempt from the payment of the internal-revenue tax and reversed thejudgment of the lower court.We think the majority opinion misses both the spirit and purposes ofthe law, and woks a great imjustice and a severe hardship uponthousands of the inhabitants of the Philippine Islands who are engagedin purely agricultural pursuits. Said decision places a great burdenupon those who are least able to bear it. By reason of the very smallprofits of the agriculturist, earned by the hardest of labor, everyintendment of the law should be, at least, liberally construed in hisfavor.Paragraph (c) of section 41 of Act No. 2339 provides that the taximposed under said law shall not be imposed upon agricultural

products when sold by the producer or owner of the land where grown,whether in their original state or not. Under the interpretation givenin the majority opinion, the Collector of Internal Revenue may collecttaxes upon every grain of rice produced by the farmers of thePhilippine Islands, unless he sells the same where grown. Such aninterpretation, in our opinion, was never intended by the lawmaker.The majority opinion has fallen into error, in our opinion, in notdistinguishing a pesqueria from a vivero de peces. no contention ismade that the products of a pesquera, as the terms is generally used,should be relieved from the internal-revenue tax. Our contention issimply that the products of a vivero de peces should be relieved fromthe internal-revenue tax, upon the theory that they are as much of an

agricultural product as any other product of the farm by reason of themethod employed in producing them. The majority opinion admits[that] whether a particular product is or is not an agricultural productdepends upon the methods used in producing it.A pesqueria, as distinguished from a vivero de peces, may bedefined as a specie of trap placed upon the farm in which fish arecaught from time to time. While a vivero de peces may be defined asapart of the same as is done in the production of corn, sugar cane, rice,bananas, coconuts, ducks, chickens, eggs, milk, butter, lard, hay, wood,cattle, horses, sheep, or any other great variety of products produced bythe farmers in the Philippine Islands, the only difference being one ofdegree of the care and labor necessary for production.The error which the majority opinion has fallen into may bestillustrated by an example:A is the owner of a farm. A portion of the same is dry land capable ofproducing sugar cane, or corn, or other varieties of farm productswhich can only be produced upon dry land. A portion of said farm, by

virtue of its location with reference to water, sunlight, and air may beused for the production of abaca, bananas, or some of the variousclasses of fruits. Another portion of the farm is low land, upon whichrice or certain classes of vegetables only can be produced profitably.Still another portion of the farm is swamp land, covered by water andincapable of being properly drained. Another portion of the farm ismountainous so that it cannot be cultivated at all. Upon themountainous portion of said farm the owner raises cattle, sheep, goats,horses, hogs, chickens, turkeys, eggs, lard, butter, wool and hides.Another portion of the farm can most profitably be devoted to theproduction of bacauan which was held to be an agricultural product.(Mercado vs. Collector of Internal Revenue, 32 Phil. Rep., 271.) Theswamp land of his farm is of such a character that it can not profitablybe devoted to the production of rice or any of the cereals, and is tooswampy upon which to raise cattle, sheep, horses, goats, etc. Thefarmer, therefore, utilizes that portion for the production of geese,ducks, and other domestic fowls, as well as for the production of eggs.

There comes a time when the swamp land ceases to be profitable forthe production of rice as well as for the production of said fowls andeggs. All of said farm, including the various classes of land as abovedescribed, is taxed as agricultural land; and it is a matter of commonknowledge that the vivero de peces are taxed as agricultural land, andequally as high, if not higher, than other lands devoted to theproduction of rice, corn or sugar cane, etc.A great demand may arise for fish in the country. The farmer, in orderto reap the advantage of said demand, ceases to produce eggs, or ducksor geese upon the swamp lands of his farm and turn the same into avevero de peces. He, thus, wisely utilizing the different portions of thefarm for the production of all of the products which farmers generallyproduce, is greatly increasing the wealth of the State.The majority opinion admits that domestic fowls chickens, ducks,geese, turkeys and eggs, butter, lard, milk, vegetables, fruit, etc., areagricultural products, but argues that nothing is, or may be consideredan agricultural product which does not result from a cultivation of the

soil. To admit that eggs, butter, lard and milk are agricultural productsand to argue that nothing is an agricultural product which does notresult from a cultivation of the soil presents a consistency in argumentand conclusion which we are unable to understand. It is admitted thatthe land for the vevero de peces is specially prepared. A certaincultivation and preparation is necessary for the creation of a vivero depeces. It is difficult to understand what special preparation of the soilis necessary for the production of hens eggs, butter, lard, milk, orcattle, or sheep or horses or hogs, or goats which makes those productsagricultural products. It is a matter of common knowledge that landmay be specially prepared for the production of rice this year and thenchanged into a vivero de peces next year and vice versa. Under whatinterpretation of the law and under what definition of agriculturalproducts may we conclude that the year in which the same parcel ofland produces rice produces an agricultural product while in the year itis producing fish is not also producing an agricultural products? Of


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course, as we stated above, a vivero de peces must not be confusedwith a pesqueria which is used as a trap for the purpose of catchingfish. No contention is made that the products of the latter is in anysense an agricultural product any more than the product of a trapplaced in the fields for the purpose of catching wild animals, whichfrom time to time pass upon the land, is an agricultural product.It is admitted in the majority opinion that the land for a vivero depeces must be specially prepared by first building dykes andcultivating the land preparatory to the planting of the fish. the onlydifference, therefore, between the preparation of a vivero de pecesand the preparation of a rice paddy is one in extent of labor employed.In both cases the land is specially prepared for the particular purpose

to which the farmer desires to devote it. Forgetting for a moment thestereotyped and the lexicographers definition of agricultural products,and forgetting for a moment that there is no more difference, so far asthe method of production is concerned, between the production of cornand the production of ducks and eggs, we will find ourselves driven tothe conclusion that from the standpoint of method of production thereis no difference between the production of fish in a vivero de pecesand the production of ducks upon land which is recognized asagricultural lands. The majority opinion has fallen into error by tryingto make a 15th century definition apply to 20th century conditions. Thejudgment of the lower court should be affirmed with costs.

G.R. No. L-6355-56 August 31, 1953PASTOR M. ENDENCIA and FERNANDO JUGO, plaintiffs-appellees,vs.SATURNINO DAVID, as Collector of Internal Revenue,defendant-appellant.

This is a joint appeal from the decision of the Court of First Instance ofManila declaring section 13 of Republic Act No. 590 unconstitutional,and ordering the appellant Saturnino David as Collector of InternalRevenue to re-fund to Justice Pastor M. Endencia the sum ofP1,744.45, representing the income tax collected on his salary asAssociate Justice of the Court of Appeals in 1951, and to JusticeFernando Jugo the amount of P2,345.46, representing the income taxcollected on his salary from January 1,1950 to October 19, 1950, asPresiding Justice of the Court of Appeals, and from October 20, 1950 toDecember 31,1950, as Associate Justice of the Supreme Court, withoutspecial pronouncement as to costs.

Because of the similarity of the two cases, involving as they do the samequestion of law, they were jointly submitted for determination in thelower court. Judge Higinio B. Macadaeg presiding, in a ratherexhaustive and well considered decision found and held that under thedoctrine laid down by this Court in the case of Perfecto vs. Meer, 85Phil., 552, the collection of income taxes from the salaries of JusticeJugo and Justice Endencia was a diminution of their compensation andtherefore was in violation of the Constitution of the Philippines, and soordered the refund of said taxes.

We see no profit and necessity in again discussing and considering theproposition and the arguments pro and cons involved in the case ofPerfecto vs. Meer, supra, which are raised, brought up and presentedhere. In that case, we have held despite the ruling enunciated by theUnited States Federal Supreme Court in the case of O 'Malley vs.Woodrought 307 U. S., 277, that taxing the salary of a judicial officer inthe Philippines is a diminution of such salary and so violates theConstitution. We shall now confine our-selves to a discussion anddetermination of the remaining question of whether or not RepublicAct No. 590, particularly section 13, can justify and legalize thecollection of income tax on the salary of judicial officers.

According to the brief of the Solicitor General on behalf of appellantCollector of Internal Revenue, our decision in the case of Perfecto vs.Meer, supra, was not received favorably by Congress, becauseimmediately after its promulgation, Congress enacted Republic Act No.590. To bring home his point, the Solicitor General reproduced what heconsiders the pertinent discussion in the Lower House of House BillNo. 1127 which became Republic Act No. 590.

For purposes of reference, we are reproducing section 9, Article VIII ofour Constitution:.

SEC. 9. The members of the Supreme Court and all judges of inferiorcourts shall hold office during good behavior, until they reach the ageof seventy years, or become incapacitated to discharge the duties of

their office. They shall receive such compensation as may be fixed bylaw, which shall not be diminished during their continuance in office.Until the Congress shall provide otherwise, the Chief Justice of theSupreme Court shall receive an annual compensation of sixteenthousand pesos, and each Associate Justice, fifteen thousand pesos.

As already stated construing and applying the above constitutionalprovision, we held in the Perfecto case that judicial officers are exemptfrom the payment of income tax on their salaries, because thecollection thereof by the Government was a decrease or diminution oftheir salaries during their continuance in office, a thing which isexpressly prohibited by the Constitution. Thereafter, according to the

Solicitor General, because Congress did not favorably receive thedecision in the Perfecto case, Congress promulgated Republic Act No.590, if not to counteract the ruling in that decision, at least now toauthorize and legalize the collection of income tax on the salaries ofjudicial officers. We quote section 13 of Republic Act No. 590:

SEC 13. No salary wherever received by any public officer of theRepublic of the Philippines shall be considered as exempt from theincome tax, payment of which is hereby declared not to be dimunitionof his compensation fixed by the Constitution or by law.

So we have this situation. The Supreme Court in a decision interpretingthe Constitution, particularly section 9, Article VIII, has held thatjudicial officers are exempt from payment of income tax on theirsalaries, because the collection thereof was a diminution of suchsalaries, specifically prohibited by the Constitution. Now comes theLegislature and in section 13, Republic Act No. 590, says that "no

salary wherever received by any public officer of the Republic(naturally including a judicial officer) shall be considered as exemptfrom the income tax," and proceeds to declare that payment of saidincome tax is not a diminution of his compensation. Can theLegislature validly do this? May the Legislature lawfully declare thecollection of income tax on the salary of a public official, specially ajudicial officer, not a decrease of his salary, after the Supreme Courthas found and decided otherwise? To determine this question, we shallhave to go back to the fundamental principles regarding separation ofpowers.

Under our system of constitutional government, the Legislativedepartment is assigned the power to make and enact laws. TheExecutive department is charged with the execution of carrying out ofthe provisions of said laws. But the interpretation and application ofsaid laws belong exclusively to the Judicial department. And thisauthority to interpret and apply the laws extends to the Constitution.

Before the courts can determine whether a law is constitutional or not,it will have to interpret and ascertain the meaning not only of said law,but also of the pertinent portion of the Constitution in order to decidewhether there is a conflict between the two, because if there is, then thelaw will have to give way and has to be declared invalid andunconstitutional.

Defining and interpreting the law is a judicial function and thelegislative branch may not limit or restrict the power granted to thecourts by the Constitution. (Bandy vs. Mickelson et al., 44N. W., 2nd341, 342.)

When it is clear that a statute transgresses the authority vested in thelegislature by the Constitution, it is the duty of the courts to declare theact unconstitutional because they cannot shrink from it withoutviolating their oaths of office. This duty of the courts to maintain theConstitution as the fundamental law of the state is imperative and

unceasing; and, as Chief Justice Marshall said, whenever a statute is inviolation of the fundamental law, the courts must so adjudge andthereby give effect to the Constitution. Any other course would lead tothe destruction of the Constitution. Since the question as to theconstitutionality of a statute is a judicial matter, the courts will notdecline the exercise of jurisdiction upon the suggestion that actionmight be taken by political agencies in disregard of the judgment of thejudicial tribunals. (11 Am. Jur., 714-715.)

Under the American system of constitutional government, among themost important functions in trusted to the judiciary are theinterpreting of Constitutions and, as a closely connected power, thedetermination of whether laws and acts of the legislature are or are notcontrary to the provisions of the Federal and State Constitutions. (11Am. Jur., 905.).


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By legislative fiat as enunciated in section 13, Republic Act NO. 590,Congress says that taxing the salary of a judicial officer is not adecrease of compensation. This is a clear example of interpretation orascertainment of the meaning of the phrase "which shall not bediminished during their continuance in office," found in section 9,Article VIII of the Constitution, referring to the salaries of judicialofficers. This act of interpreting the Constitution or any part thereof bythe Legislature is an invasion of the well-defined and establishedprovince and jurisdiction of the Judiciary.

The rule is recognized elsewhere that the legislature cannot pass anydeclaratory act, or act declaratory of what the law was before its

passage, so as to give it any binding weight with the courts. A legislativedefinition of a word as used in a statute is not conclusive of its meaningas used elsewhere; otherwise, the legislature would be usurping ajudicial function in defining a term. (11 Am. Jur., 914, emphasissupplied)

The legislature cannot, upon passing a law which violates aconstitutional provision, validate it so as to prevent an attack thereonin the courts, by a declaration that it shall be so construed as not toviolate the constitutional inhibition. (11 Am. Jur., 919, emphasissupplied)

We have already said that the Legislature under our form ofgovernment is assigned the task and the power to make and enact laws,but not to interpret them. This is more true with regard to theinterpretation of the basic law, the Constitution, which is not within thesphere of the Legislative department. If the Legislature may declare

what a law means, or what a specific portion of the Constitution means,especially after the courts have in actual case ascertain its meaning byinterpretation and applied it in a decision, this would surely causeconfusion and instability in judicial processes and court decisions.Under such a system, a final court determination of a case based on ajudicial interpretation of the law of the Constitution may beundermined or even annulled by a subsequent and differentinterpretation of the law or of the Constitution by the Legislativedepartment. That would be neither wise nor desirable, besides beingclearly violative of the fundamental, principles of our constitutionalsystem of government, particularly those governing the separation ofpowers.

So much for the constitutional aspect of the case. Considering thepractical side thereof, we believe that the collection of income tax on asalary is an actual and evident diminution thereof. Under the oldsystem where the in-come tax was paid at the end of the year or

sometime thereafter, the decrease may not be so apparent and clear.All that the official who had previously received his full salary wascalled upon to do, was to fulfill his obligation and to exercise hisprivilege of paying his income tax on his salary. His salary fixed by lawwas received by him in the amount of said tax comes from his othersources of income, he may not fully realize the fact that his salary hadbeen decreased in the amount of said income tax. But under thepresent system of withholding the income tax at the source, where thefull amount of the income tax corresponding to his salary is computedin advance and divided into equal portions corresponding to thenumber of pay-days during the year and actually deducted from hissalary corresponding to each payday, said official actually does notreceive his salary in full, because the income tax is deducted therefromevery payday, that is to say, twice a month. Let us take the case ofJustice Endencia. As Associate Justice of the Court of Appeals, hissalary is fixed at p12,000 a year, that is to say, he should receive P1,000a month or P500 every payday, fifteenth and end of month. In the

present case, the amount collected by the Collector of Internal Revenueon said salary is P1,744.45 for one year. Divided by twelve (months) weshall have P145.37 a month. And further dividing it by two paydays willbring it down to P72.685, which is the income tax deducted form thecollected on his salary each half month. So, if Justice Endencia's salaryas a judicial officer were not exempt from payment of the income tax,instead of receiving P500 every payday, he would be actually receivingP427.31 only, and instead of receiving P12,000 a year, he would bereceiving but P10,255.55. Is it not therefor clear that every payday, hissalary is actually decreased by P72.685 and every year is decreased byP1,744.45?

Reading the discussion in the lower House in connection with HouseBill No. 1127, which became Republic Act No. 590, it would seem thatone of the main reasons behind the enactment of the law was thefeeling among certain legislators that members of the Supreme Court

should not enjoy any exemption and that as citizens, out of patriotismand love for their country, they should pay income tax on their salariesIt might be stated in this connection that the exemption is not enjoyedby the members of the Supreme Court alone but also by all judicialofficers including Justices of the Court of Appeals and judges ofinferior courts. The exemption also extends to other constitutionalofficers, like the President of the Republic, the Auditor General, themembers of the Commission on Elections, and possibly members of theBoard of Tax Appeals, commissioners of the Public ServiceCommission, and judges of the Court of Industrial Relations. Comparesto the number of all these officials, that of the Supreme Court Justicesis relatively insignificant. There are more than 990 other judicial

officers enjoying the exemption, including 15 Justices of the Court ofAppeals, about 107 Judges of First Instance, 38 Municipal Judges andabout 830 Justices of the Peace. The reason behind the exemption inthe Constitution, as interpreted by the United States Federal SupremeCourt and this Court, is to preserve the independence of the Judiciary,not only of this High Tribunal but of the other courts, whose presentmembership number more than 990 judicial officials.

The exemption was not primarily intended to benefit judicial officers,but was grounded on public policy. As said by Justice Van Devanter ofthe United States Supreme Court in the case of Evans vs. Gore (253 U.S., 245):

The primary purpose of the prohibition against diminution was not tobenefit the judges, but, like the clause in respect of tenure, to attractgood and competent men to the bench and to promote thatindependence of action and judgment which is essential to the

maintenance of the guaranties, limitations and pervading principles ofthe Constitution and to the administration of justice without respect toperson and with equal concern for the poor and the rich. Such being itspurpose, it is to be construed, not as a private grant, but as a limitationimposed in the public interest; in other words, not restrictively, but inaccord with its spirit and the principle on which it proceeds.

Having in mind the limited number of judicial officers in thePhilippines enjoying this exemption, especially when the great bulkthereof are justices of the peace, many of them receiving as low asP200 a month, and considering further the other exemptions allowedby the income tax law, such as P3,000 for a married person and P600for each dependent, the amount of national revenue to be derived fromincome tax on the salaries of judicial officers, were if not for theconstitutional exemption, could not be large or substantial. But even ifit were otherwise, it should not affect, much less outweigh the purposeand the considerations that prompted the establishment of the

constitutional exemption. In the same case of Evans vs. Gore, supra,the Federal Supreme Court declared "that they (fathers of theConstitution) regarded the independence of the judges as far as greaterimportance than any revenue that could come from taxing theirsalaries.

When a judicial officer assumed office, he does not exactly ask forexemption from payment of income tax on his salary, as a privilege . Itis already attached to his office, provided and secured by thefundamental law, not primarily for his benefit, but based on publicinterest, to secure and preserve his independence of judicial thoughtand action. When we come to the members of the Supreme Court, thisexcemption to them is relatively of short duration. Because of thelimited membership in this High Tribunal, eleven, and due to the highstandards of experience, practice and training required, one generallyenters its portals and comes to join its membership quite late in life, onthe aver-age, around his sixtieth year, and being required to retire at

seventy, assuming that he does not die or become incapacitated earliernaturally he is not in a position to receive the benefit of exemption forlong. It is rather to the justices of the peace that the exemption can givemore benefit. They are relatively more numerous, and because of themeager salary they receive, they can less afford to pay the income taxon it and its diminution by the amount of the income tax if paid wouldbe real, substantial and onerous.

Considering exemption in the abstract, there is nothing unusual orabhorrent in it, as long as it is based on public policy or public interest.While all other citizens are subject to arrest when charged with thecommission of a crime, members of the Senate and House ofRepresentatives except in cases of treason, felony and breach of thepeace are exempt from arrest, during their attendance in the session ofthe Legislature; and while all other citizens are generally liable for anyspeech, remark or statement, oral or written, tending to cause the


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dishonor, discredit or contempt of a natural or juridical person or toblacken the memory of one who is dead, Senators and Congressmen inmaking such statements during their sessions are extended immunityand exemption.

And as to tax exemption, there are not a few citizens who enjoy thisexemption. Persons, natural and juridical, are exempt from taxes ontheir lands, buildings and improvements thereon when usedexclusively for educational purposes, even if they derive incometherefrom. (Art. VI, Sec. 22 [3].) Holders of government bonds areexempted from the payment of taxes on the income or interest theyreceive therefrom (sec. 29 (b) [4], National Internal Revenue Code as

amended by Republic Act No. 566). Payments or income received byany person residing in the Philippines under the laws of the UnitedStates administered by the United States Veterans Administration areexempt from taxation. (Republic Act No. 360). Funds received byofficers and enlisted men of the Philippine Army who served in theArmed Forces of the United States, allowances earned by virtue of suchservices corresponding to the taxable years 1942 to 1945, inclusive, areexempted from income tax. (Republic Act No. 210). The payment ofwages and allowances of officers and enlisted men of the Army Forcesof the Philippines sent to Korea are also exempted from taxation.(Republic Act No. 35). In other words, for reasons of public policy andpublic interest, a citizen may justifiably by constitutional provision orstatute be exempted from his ordinary obligation of paying taxes on hisincome. Under the same public policy and perhaps for the same it nothigher considerations, the framers of the Constitution deemed it wiseand necessary to exempt judicial officers from paying taxes on theirsalaries so as not to decrease their compensation, thereby insuring the

independence of the Judiciary.

In conclusion we reiterate the doctrine laid down in the case of Perfectovs. Meer, supra, to the effect that the collection of income tax on thesalary of a judicial officer is a diminution thereof and so violates theConstitution. We further hold that the interpretation and application ofthe Constitution and of statutes is within the exclusive province andjurisdiction of the Judicial department, and that in enacting a law, theLegislature may not legally provide therein that it be interpreted insuch a way that it may not violate a Constitutional prohibition, therebytying the hands of the courts in their task of later interpreting saidstatute, specially when the interpretation sought and provided in saidstatute runs counter to a previous interpretation already given in a caseby the highest court of the land.

In the views of the foregoing considerations, the decision appealedfrom is hereby affirmed, with no pronouncement as to costs.

G.R. No. L-45081 July 15, 1936

JOSE A. ANGARA, petitioner,vs.THE ELECTORAL COMMISSION, PEDRO YNSUA, MIGUELCASTILLO, and DIONISIO C. MAYOR, respondents.

Godofredo Reyes for petitioner.Office of the Solicitor General Hilado for respondentElectoral Commission.Pedro Ynsua in his own behalf.No appearance for other respondents.

LAUREL, J.:

This is an original action instituted in this court by the petitioner, JoseA. Angara, for the issuance of a writ of prohibition to restrain andprohibit the Electoral Commission, one of the respondents, from takingfurther cognizance of the protest filed by Pedro Ynsua, anotherrespondent, against the electio

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