Molina v Rafferty (1918)

Molina v Rafferty

April 4, 1918

Jacinto Molina- Plaintiff-Appellee

Rafferty, Collector of Internal Revenue- Defendant- Appellant
Appeal from a judgment of the CFI of Manila
J. Abreu

I. Definition, Concept, and purpose of Statutory Construction

1. Judge Cooley- The underlying principle of all construction is that the intent of the
legislature should be sought in the words employed to express it, and that when
found, it should be made to govern. If the words of the law seem to be doubtful
import, it may then perhaps become necessary to look beyond them in order to
ascertain what was in the legislative mind at the time the law was enacted; what
evil, is any, was meant to be redressed;

2. And where the law was contemporaneously been put upon it, this construction,
especially if followed for some considerable period, is entitled to great respect, as
being very probably a true expression of the legislative purpose, & is not lightly to
be overruled, although it isnt conclusive.

II. Facts:

1. The present case was a rehearing granted to the appellee for a trail court
decision on Feb 1, 1918. The petition was granted and oral argument of the motion
was permitted.

2. Jacinto Molina was the owner of various fish ponds in Bulacan. He was required
to pay the merchants tax required by the Bureau of Internal Revenue.

3. Molina protested that he was an agriculturist and not a merchant and therefore
exempt from the taxes imposed by the Internal Revenue Law upon the gross sales
of merchants.

4. Point of contention- Plaintiff contends that the fish produced by him are to be
regarded as an agricultural product within the meaning of the term used in
paragraph (c) of Section 41 of Act No. 2339 (Now section 1460 of the Administrative
Code of 1917), enforced when the disputed tax was levied and that he is exempt
from the percentage tax on merchants sales established by section 40 of Act No.
2339.
5. Paragraph (c) of Act No. 2339 sec. 41 reads:

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 the land where
grown, whether in their original state or not

6. In the Trial Court, the Honorable Jose Abreu in a carefully prepared decision
ordered defendant to refund the P71.81 paid by plaintiff as internal-revenue taxes
and penalties under protest, with legal interest thereon from November 26, 1915,
the date of such payment under protest.

III. Issue:

1. WON fish produced as were those upon which the tax in question was levied are
an agricultural product

IV Decision:

Decision set aside. Judgment of lower court affirmed.

IV. Ruling:

1. Purpose of legislative in establishing the exemption

exempting agricultural products from the tax the farming industry would be favored
and the development of the resources of the country encouraged.

2. As a consequence, it is fairly to be inferred from the statute that the object and
purpose of the Legislature was to levy the tax in question (merchants tax) upon all
persons engaged in making a profit upon goods produced by others but to exempt
from the tax all persons directly producing goods from the land. Products were
grouped under agricultural products.

3. It is also the public interest to encourage the artificial propagation of food.

However, if the artificial production of fish is held not to be included within the
exemption of the statute this conclusion must be based upon the inadequacy of the
language used by the Legislature to express its purpose, rather than the assumption
that it was actually intended to exclude producers of artificially grown fish from the
benefits conferred upon producers of other substances brought into the store of
national wealth by the arts of husbandry and animal industry.

4. Court held that the ponds where the fish were grown is agricultural land within
the definitions set by the Acts of Congress, the Philippine Commission, and the
Mapa vs. Insular Govt case.
5. With regard to the question that that the fish artificially grown and fed in a
confined area are agricultural products and therefore exempt, the Court looked
deeper. It said that a man might cultivate the surface of a tract of land patented to
him under the mining law, but the products of such soil would not for that reason be
any the less "agricultural products." Conversely, the admission that the land upon
which these fishponds are constructed is not to be classified as mineral or forest
land, does not lead of necessity to the conclusion that everything produced upon
them is for that reason alone to be deemed an "agricultural product" within the
meaning of the statute under consideration.

3. Courts and lexicographers are in accord in holding that the

term agricultural products is not limited in its meaning to vegetable growth but
includes everything which serves to satisfy human needs which is grown upon the
land, whether it pertains to the vegetable kingdom or to the animal kingdom.

4. Purpose of agriculture obtain from the land the products to which it is best
adapted and through it will yield the greatest return upon the expenditure of a given
amount of labor and capital. This is similar to the process of enclosing an area for
fish production and one of the diets of the products are marine plants rooted at the
bottom of the pond.

5. Another distinction was made between fishermen and the people artificially
growing fish in ponds so as to delineate the scope of the occupation tax. Fishermen
were made liable to the occupation tax. The ones growing fish in ponds were not
included.

5. As the present case related to US vs Laxa, the court held that Laxa
wasnt controlling due to evidence that the fish subsisted solely upon free floating
algae in Laxa while in Molina, the fish subsisted through plants which grow from
roots which attach themselves to the bottom of the pond, thereby making Molinas
fish in the real sense a product of the land!

Dissent:

J. Malcolm:

1. illustrates how on the same facts, same law, and the same authorities, judges
can arrive at diametrically opposed conclusions

2. Take the Facts where distinction of marine plants rooted to soil of ponds and
floating algae make a small difference, or

3. Take the Laws the small difference in the meaning of agricultural products
needs to be ascertained. Primary duty of the court is to ascertain legislative
intention. The decision of the majority on reconsideration in a laudable endeavor
would make this the purpose of the law and would follow this idea consistently to
the end.
On the other hand, the original decision would start with the same presumption but
finding that to so construe the law would result in judicial amendment must then
necessarily reach a different result; if the Legislature had intended to exempt all
classes of domestic products which would include fish, it would undoubtedly have
done so in plain language.

4. When it came to the Authorities with regard to the limits of the term
agricultural products, another court could very well instead of prolonging the
examples ad infinitum merely judicially repeal the word agricultural and include
everything which would fall under the word products.

Suffice it to say that the argument on motion for reconsideration and the decision of
the majority have failed to convince me that fish or to accede to the critical
suggestion of the majority that fish produced as were those upon which the tax in
question was levied, are an agricultural product. The administrative ruling of the
Attorney-General, the decision of this court in United States vs. Laxa and the
original decision in the instant case should not be overturned by granting this
motion.

Disposition: Judgment of the lower court affirmed

Definitions:

Agriculture science and art of the production of plants and animal useful to man

Product anything that is produced whether as the result of generation, growth ,

labor or thought. Grow raise, cultivate

Agricultural products included animals which derived their sustenance from

vegetable growths and are therefore indirectly the product of the land
ENDENCIA vs DAVID, GR No L-6355-56, August 31, 1953

93 Phil. 699 Political Law The Judiciary Te Legislature Separation of Powers

Statutory Construction Who May Interpret Laws

Saturnino David, the then Collector of Internal Revenue, ordered the taxing of
Justice Pastor Endencias and Justice Fernando Jugos (and other judges) salary
pursuant to Sec. 13 of Republic Act No. 590 which provides that

No salary wherever received by any public officer of the Republic of the Philippines
shall be considered as exempt from the income tax, payment of which is hereby
declared not to be a diminution of his compensation fixed by the
Constitution or by law.

The judges however argued that under the case of Perfecto vs Meer, judges are
exempt from taxation this is also in observance of the doctrine of separation of
powers, i.e., the executive, to which the Internal Revenue reports, is separate from
the judiciary; that under the Constitution, the judiciary is independent and the
salaries of judges may not be diminished by the other branches of government; that
taxing their salaries is already a diminution of their benefits/salaries (see Section 9,
Art. VIII, Constitution).

The Solicitor General, arguing in behalf of the CIR, states that the decision in
Perfecto vs Meer was rendered ineffective when Congress enacted Republic Act No.
590.

ISSUE: Whether or not Sec 13 of RA 590 is constitutional.

HELD: No. The said provision is a violation of the separation of powers. Only courts
have the power to interpret laws. Congress makes laws but courts interpret them. In
Sec. 13, R.A. 590, Congress is already encroaching upon the functions of the courts
when it inserted the phrase: payment of which [tax] is hereby declared not to be a
diminution of his compensation fixed by the Constitution or by law.

Here, Congress is already saying that imposing taxes upon judges is not a
diminution of their salary. This is a clear example of interpretation or ascertainment
of the meaning of the phrase which shall not be diminished during their
continuance in office, found in Section 9, Article VIII of the Constitution, referring to
the salaries of judicial officers. This act of interpreting the Constitution or any part
thereof by the Legislature is an invasion of the well-defined and established
province and jurisdiction of the Judiciary.

The rule is recognized elsewhere that the legislature cannot pass any declaratory
act, or act declaratory of what the law was before its passage, so as to give it any
binding weight with the courts. A legislative definition of a word as used in a statute
is not conclusive of its meaning as used elsewhere; otherwise, the legislature would
be usurping a judicial function in defining a term.

The interpretation and application of the Constitution and of statutes is within the
exclusive province and jurisdiction of the judicial department, and that in enacting a
law, the Legislature may not legally provide therein that it be interpreted in such a
way that it may not violate a Constitutional prohibition, thereby tying the hands of
the courts in their task of later interpreting said statute, especially when the
interpretation sought and provided in said statute runs counter to a previous
interpretation already given in a case by the highest court of the land.
General v. Barrameda

January 30, 1976

Rodolfo General and Carmen Gontang- Petitioners Leoncio Barrameda- Repsondent

Petition for certiorari to review the decision of the CAI.

Facts:

1. Plaintiff seeks to redeem the land formerly embraced by Transfer Certificate Title
(TCT) No. 1418, containing an area of 59 hectares in Minabalac Camarines Sur, and
to annul all contracts affecting the property between the Development Bank of the
Philippines and Rodolfo General.

2. The land in dispute was mortgaged by plaintiff (General) to DBP for P22,000. For
failure to pay, the mortgagee (DBP) foreclosed the property.

3. On April 23, 1962, provincial sheriff conducted auction sale in which the highest
bidder, the said mortgagee, bought the mortgaged property for P7,271.22

4. On September 2, 1963, the registration of the sale and affidavit wherein TCT No.
1418 in the name of plaintiff was canceled and TCT No. 5003 was issued to the DBP.

5. On Sept 3, 1963 defendants General and Gontang purchased land from DBP. Their
sale was annotated in TCT 5003 on Nov. 26. 1963 only.

6. On Nov. 20 -1963 plaintiff offered to redeem the land. When DBP refused, then
plaintiff filed suit. The original complaint was filed on Nov. 20, 1963 while on August
12, 1964, plaintiff deposited with the clerk of court the sum of P7,271.22
representing the purchase price of the land.

7. In the trial court, the judge asserted that the one-year period of redemption
began to run on April 23,1962, when the sale at public auction was held, and ended
on April 24, 1963 and the deposit of redemption price on August 12, 1964 were
made beyond the redemption period and that defendants Rodolfo General and
Carmen Gontang were legitimate purchasers.

8. In the appellate court, the appealed judgment was reversed and the other one
entered declaring 1. Nuland void the sale executed on September 3, 1963, by
defendant DBP to Gontang and General 2. TCT 5003cancelled and 3. Mortgaged
property redeemed and ordering the clerk of court to deliver to General and
Gontang and the Register of Deeds to issue a new transfer certificate of title in the
name of plaintiff in lieu of TCT 5003 upon payment of fees.

II. Issue/s:
1. WoN the interpretation of Section 31,Commonwealth Act 459 (law that created
the DBP),which provides that mortgager has right to redeem the real property upon
full or partial payment within one year from the date of the auction sale, shall start
from the date of the auction sale or the date of the registration of sale in the
register of deeds. (Start from the registration of sale)
2. Were petitioners under obligation to look beyond what appeared in the certificate
of title of their vendor the Development Bank of the Philippines and investigate the
validity of its title before they could be classified as purchasers in good faith?

III. Decision

Decision of Appellate Court affirmed with costs against petitioners. No longer

necessary to determine WON the petitioners were purchasers in good faith of the
land involved since Barrameda redeemed the mortgaged property within the legal
period of redemption

Ratio:1. Petitioner originally contended that Sec 31 of Commonwealth Act 459

clearly states that the right to redeem the real property sold at
public auction judicially or extra-judicially may only be exercised within one year
from the date of the auction sale and that there was no provision in the same act
that expressly stated that the redemption period of one year shall start from the
registration of the certificate of sale in the registration of deeds. Also, he contended
that the same provision governs redemption of real property foreclosed by the DBP
and prescribes the redemption period for judicial foreclosures of mortgage.

The Algubos v Alberto ruling cited by respondent appellate court wasnt applicable
to the case at bar because it was not clear when the period of redemption should
start (date when execution sale was conducted, or when the certificate of sale was
executed 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 that case is registered
under the Torrens system, the date of redemption should begin to run from the date
of registration, unlike in the case at bar where Section 31of Commonwealth Act 459
specifically and clearly provides that the running of the redemption period shall
start from the date of the auction sale.

Moreover, the petitioners rebuffed Gonzales vs.P.N.B.s applicability to the case at

bar because the provisions on the matter of the P.N.B. Charter, Act No.2938, are
different from that of Commonwealth Act 459. Section 32 of Act 2938, wherein it
provided mortgagor shall have the right to redeem within one year the sale of the
real estate. This was Identical to the provision appearing in Sec. 26, now Sec.
30, Rule 39, Rules of Court, while under Sec. 31 of Commonwealth Act 459, the
period of redemption should start, on the date of the auction sale, and the latter
provision is applicable specifically and expressly to the case at bar.

The petitioners, on the other hand, asserted the applicability of the Marcaide v
Pigtain case where it categorically stated that the one year redemption period shall
start from the date of sale and not from the report of the sale or the registration
of the sale certificate in the office of the Register of Deeds, is more applicable to the
present case.

2. The court was of the view that a correct solution to the foregoing issue must
entail not merely trying to determine the meaning of the words auction sale and
"sale" in different legislative enactments, but, more importantly, a determination of
the legislative intent which is quite a task to achieve as it depends more on a
determination of the purpose and objective of the law in giving mortgagors a period
of redemption of their foreclosed properties.

A public auction sale is an indispensable prerequisite to the valid disposal of

properties used as collateral forth obligation.

So that whether the legislators in different laws used the term "sale" or "auction
sale" is of no moment, since the presumption is that when they used those words
"sale" and "auction sale" interchangeable indifferent laws they really referred to
only one act the sale at public auction indispensably necessary in the disposition
of mortgaged properties and those levied upon to pay civil obligations of their
owners.

3. The court adhered to Salazar v. Meneses, where the period of redemption was
held as started on the date when the certificate of sale issued was registered. The
deed of sale does not take effect until it is registered.

They found no compelling reason to deviate from the ruling and not apply the same
to the present case. Because, to the court, the important issue was whether
auction sale shall be considered in its ordinary meaning or in the same meaning
of sale used in the texts of Sec 26 of Rules of Court and Act 2938 (PNB Charter)
and Sec 30 And Rule 39 of the Rules of Court. To them these words used
interchangeably refer to one thing and that is the public auction sale required by
law in the disposition of properties foreclosed or levied upon. This view was contrary
to the petitioners main contention that there was a great deal of difference in
legislative intent in the two words.

The stands mentioned by the Court in the mentioned cases and other ones (Garcia
vs. Ocampo and Gonzales et al. vs. Philippine National Bank et al.) were firmly
planted on the premise that registration of the deed of conveyance for properties
brought under the Torrens System is the operative act to transfer title to the
property and registration is also the notice to the whole world that a transaction
involving the same had taken place.

To affirm the previous stand this Court has taken on the question of when the one
year period of redemption should start (from the time of registration of the sale)
would better serve the ends of justice and equity especially in this case, since to
rule otherwise would result in preventing the respondent-mortgagor from redeeming
his 59.4687 hectares of land which was acquired by the Development Bank of the
Philippines as the highest bidder at the auction sale forth low price of only
P7,271.22 -the unpaid balance of the mortgage debt of P22,000.00 after the
respondent-mortgagor had paid the sum of P14,728.78.

No answer on 2nd question posted by plaintiffs.

Morales vs. Subido
GR No. 1-29658
27 February 1969

FACTS

In the Senate, the Committee on Government Reorganization, to which House Bill

No. 6951 was referred, reported a substitute measure. It is to this substitute bill that
section 10 of the Act owes its present form and substance. The provision of the
substitute bill reads:

No person may be appointed chief of the city police agency unless he holds a
bachelors degree and has served either in the Armed Forces of the Philippines or
the National Bureau of Investigation or police department of any city and has held
the rank of captain or its equivalent therein for at least three years or any high
school graduate who has served the police department of a city for at least 8 years
with the rank of captain or higher.

The petitioner asserted that there were various changes made in House Bill 6951
and according to the Petitioner the House bill division deleted an entire provision
and substituted what is now section 10 of the Police Act of 1966, which section
reads:

Minimum qualification for appointment as Chief of Police Agency. No person may

be appointed chief of a city police agency unless he holds a bachelors degree from
a recognized institution of learning and has served as chief of police with exemplary
record or has served in the police department of any city with the rank of captain or
its equivalent therein for at least three years; or any high school graduate who has
served as officer in the Armed Forces for at least eight years with the rank of
captain and/higher.

Petitioner even submitted documents that would appear that the omission of the
phrase who served the police department of a city was made not at any stage of
the legislative proceedings but only in the course of engrossment of the bill, more
specifically in the proofreading stage and that the change was not made by
Congress but only by an employee.

It is for this reason that the Petitioner would have the court look searchingly into the
matter.

ISSUE

Whether the Judiciary can assail the validity of an enrolled bill by investigating the
legislative process.

RULING
Negative, the Judiciary cannot be a sleuth trying to determine what actually
happen in the process of lawmaking without jeopardizing the principle of separation
of powers and undermining one of the cornerstone of our democratic system. The
investigation which the Petitioner would like the Court to make can be better done
in Congress.

The enrolled bill prevails in any discrepancy.

REPUBLIC FLOUR MILLS INC., petitioner, vs.THE COMMISSIONER OF CUSTOMS and

THE COURT OF TAX APPEALS, respondents.

FACTS:

Petitioner, Republic Flour Mills, Inc., is a domestic corporation, primarily engaged in

the manufacture of wheat flour, and produces pollard (darak) and bran (ipa) in the
process of milling.

During the period from December, 1963 to July, 1964, inclusive, petitioner exported
Pollard and/or bran which was loaded from lighters alongside vessels engaged in
foreign trade while anchored near the breakwater

The respondent assessed the petitioner by way of wharfage dues on the said
exportations in the sum of P7,948.00, which assessment was paid by petitioner
under protest.

According to the petitioner, products of the Philippines found in Section 2802 of

the Tariff and Custom Code, excludes bran (ipa) and pollard (darak) because they
are merely waste from the production of flour.

The main contention before respondent Court of petitioner was "that in as much as
no government or private wharves or government facilities were utilized in
exporting the pollard and/or bran, the collection of wharfage dues is contrary to law.

Respondent Commissioner of Customs said that petitioner was liable for wharfage
dues upon receipt or discharge of the exported goods by a vessel engaged in
foreign trade regardless of the non-use of government-owned or private wharves.

ISSUE:

Whether or not such collection of wharfage dues was in accordance with law.

RULING:

The language of Section 2802 appears to be quite explicit: "There shall be levied,
collected and paid on all articles imported or brought into the Philippines, and on
products of the Philippines except coal, lumber, creosoted and other pressure
treated materials as well as other minor forest products, cement, guano natural rock
asphalt, the minerals and ores of base metals (e.g., copper, lead, zinc, iron,
chromite manganese, magnesite and steel), and sugar molasses exported from the
Philippines, a charge of two pesos per gross metric ton as a fee for wharfage xxx"

One category refers to what is imported. The other mentions products of the
Philippines that are exported. Even without undue scrutiny, it does appear quite
obvious that as long as the goods are produced in the country, they fall within the
terms of the above section.

The first and fundamental duty of courts, in our judgment, is to apply the law.
Construction and interpretation come only after it has been demonstrated that
application is impossible or inadequate without them. The law is clear; it must be
obeyed.

The objective of the act must be carried out. Even if there be doubt as to the
meaning of the language employed, the interpretation should not be at war with the
end sought to be attained. If petitioner were to prevail, subsequent pleas motivated
by the same desire to be excluded from the operation of the Tariff and Customs
Code would likewise be entitled to sympathetic consideration. It is desirable then
that the gates to such efforts at undue restriction of the coverage of the Act be kept
closed. Otherwise, the end result would be not respect for, but defiance of, a clear
legislative mandate.

The decision of respondent Court of Tax Appeals of November 27, 1967 is affirmed.
With costs against petitioner.
RCBC vs IAC
GR. No. 28463
May 31, 1971

Facts: On September 28, 1984, BF Homes filed a Petition for Rehabilitation and for
Declaration of Suspension of Payments with the SEC.

RCBC, one of the creditors listed in BF Homes inventory of creditors and liabilities,
on October 26, 1984, requested the Provincial Sheriff of Rizal to extra-judicially
foreclose its real estate mortgage on some properties of BF Homes. BF Homes
opposed the auction sale and the SEC ordered the issuance of a writ of preliminary
injunction upon petitioners filing of a bond. Presumably unaware of the filing of the
bond on the very day of the auction sale, the sheriff proceeded with the public
auction sale in which RCBC was the highest bidder for the properties auctioned. But
because of the proceedings in the SEC, the sheriff withheld the delivery to RCBC of
the certificate of sale covering the auctioned properties.

On March 13, 1985, despite the SEC case, RCBC filed with RTC an action for
mandamus against the provincial sheriff of Rizal to compel him to execute in its
favor a certificate of sale of the auctioned properties.

On March 18, 1985, the SEC appointed a Management Committee for BF Homes.

Consequently, the trial court granted RCBCs motion for judgment on the pleading
ordering respondents to execute and deliver to petitioner the Certificate of Auction
Sale.

On appeal, the SC affirmed CAs decision (setting aside RTCs decision dismissing
the mandamus case and suspending issuance to RCBC of new land titles until the
resolution of the SEC case) ruling that whenever a distressed corporation asks the
SEC for rehabilitation and suspension of payments, preferred creditors may no
longer assert such preference but stand on equal footing with other creditors.
Hence, this Motion for Reconsideration.

Issue: When should the suspension of actions for claims against BF Homes take
effect?

Held: The issue of whether or not preferred creditors of distressedcorporations

stand on equal footing with all other creditors gains relevance and materiality only
upon the appointment of a management committee, rehabilitation receiver, board
or body.

Upon cursory reading of Section 6, par (c) of PD 902-A, it is adequately clear that
suspension of claims against a corporation under rehabilitation is counted or figured
up only upon the appointment of a management committee or a rehabilitation takes
effect as soon as the application or a petition for rehabilitation is filed with the SEC
may to some, be more logical and wise but unfortunately, such is incongruent with
the clear language of the law. To insist on such ruling, no matter how practical and
noble would be to encroach upon legislative prerogative to define the wisdom of the
law --- plainly judicial legislation.

Once a management committee, rehabilitation receiver, board or body is appointed

pursuant to PD 902-A, all actions for claims against a distressed corporation pending
before any court, tribunal, board or body shall be suspended accordingly;
Suspension shall not prejudice or render ineffective the status of a secured creditor
as compared to a totally unsecured creditor. What it merely provides is that all
actions for claims against the corporation, partnership or association shall be
suspended. This should give the receiver a chance to rehabilitate the corporation if
there should still be a possibility for doing so. In the event that rehabilitation is no
longer feasible and claims against the distressed corporation would eventually have
to be settled, the secured creditors shall enjoy preference over the unsecured
creditors subject only to the provisions of the Civil Code on Concurrence and
Preferences of Credit.