RCBC vs.

IAC and BF Homes

Rizal Commercial Banking Corporation vs. Intermediate Appellate Court and BF Homes
G.R. No. 74851 (December 9, 1999)
Facts:
Petitioner RCBC is a mortgagor-creditor of the party respondent BF Homes. BF Homes, being a distressed firm,
filed before the Securities and Exchange Commission a Petition for Rehabilitation and for Declaration of Suspension
of Payments. Consequently, RCBC requested the sheriff of Rizal to levy on execution the properties of party
respondent, and consequently obtained favorable judgment. RCBC being the highest bidder during the public
auction is now seeking for the transfer certificate of titles from the Register of Deeds issued in its name. It is worthy
to note that it was on October 26, 1984 that RCBC obtained favor over the execution of the respondents properties,
and it was only on March 18, 1985 that a Management Committee was organized by the SEC for BF Homes.
Issue:
Whether or not the Court may depart from the words of the law which clearly provides that a creditor may levy
execution on a firms properties when such execution precedes SECs organization of a Management Committee to
act as its receiver.
Held:
PD 209-A states 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 receiver. The holding that suspension of
actions for claims against a corporation under 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. Suspension of actions for claims commences only from the time a management
committee or receiver is appointed by the SEC. Petitioner RCBC rightfully moved for the extrajudicial foreclosure
of its mortgage on October 26, 1984 because a management committee was not appointed by the SEC until March
18, 1985.
Reasoning:
No matter how practical and noble a reason would be, in order to depart from the words of the law stated in clear
and unambiguous manner, would be to encroach upon legislative prerogative to define the wisdom of the law. Such
is plainly judicial legislation.
Policy:
Paragraph C Section 6 of PD 209-A states that upon appointment of a management committee rehabilitation
receiver, board or body, pursuant to this Decree, all actions for claims against corporations, partnerships or
associations under management or receivership, pending before any court, tribunal, board or body shall be
suspended accordingly.

Case Digest
PASTOR M. ENDENCIA and FERNANDO JUGO vs. SATURNINO DAVID
G.R. No. L-6355-56
August 31, 1953
Facts
Saturnino David, then Collector of Internal Revenue, ordered the taxing of Justice Pastor Endencias and
Justice Fernando Jugos salary pursuant to Sec 13 of RA 590 which provides that SEC. 13. 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. According to the brief of the Solicitor General on behalf of appellant
Collector of Internal Revenue, the decision in the case of Perfecto vs. Meer, supra, was not received
favorably by Congress, because immediately after its promulgation, Congress enacted Republic Act No.
590. To bring home his point, the Solicitor General reproduces what he considers the pertinent discussion
in the Lower House of House Bill No. 1127 which became Republic Act No. 590.
Issue(s)
Does the imposition of an income tax upon the salaries of Justice Endencia and Justice Jugo and other
members of the Supreme Court and all judges of inferior courts amount to a diminution? Is Section 13 of
Republic Act No. 590 constitutional?
Ratio Decidendi
On the issue of imposition of income tax upon the salaries of the judges, in a rather exhaustive and well
considered decision found and held under the doctrine laid down by the court in the case of Perfecto vs.
Meer, 85 Phil 552, Judge Higinio B. Macadaeg held that the collection of income taxes from the salaries of
Justice Jugo and Justice Endencia was in violation of the Constitution of the Philippines, and so ordered the
refund of said taxes. On the issue of whether Section 13 of Republic Act No. 590 is constitutional, the court
believes that 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. By legislative fiat as enunciated in section 13,
Republic Act No. 590, Congress says that taxing the salary of a judicial officer is not a decrease of
compensation. 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 court reiterates the doctrine laid down in the case of Perfecto vs.
Meer, supra, to the effect that the collection of income tax on the salary of a judicial officer is a diminution
thereof and so violates the Constitution. Further, the court holds that 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. Thus the court
holds that judgment is affirmed, that Section 13, Republic Act 590 in so far as it provides that taxing of the
salary of a judicial officer shall be considered not to be a diminution of his compensation fixed by the
Constitution or by law, constitutes and invasion of the province and jurisdiction of the judiciary. In this
sense, the court is of the opinion that said section is null and void, it being a transgression of the fundamental
principles underlying the separation of powers. In the light of the issue on imposing income tax on judges
salaries, dissenting opinion of court cited that judges are also citizens and thus their salaries are subjected
to the Income Tax Law prevailing. The debates, interpellations and opinions expressed regarding the

constitutional provision in question until it was finally approved by the Commission disclosed that the true
intent of the framers of the 1987 Constitution, in adopting it, was to make the salaries of members of the
Judiciary taxable. The ascertainment of that intent is but in keeping with the fundamental principle of
constitutional construction that the intent of the framers of the organic law and of the people adopting it
should be given effect. Hence, court affirms judgment as in Perfecto vs. Meer on the issue of imposing
income tax on judges salaries.

CALTEX (PHILIPPINES), INC. vs.

ENRICO PALOMAR, in his capacity as THE POSTMASTER GENERAL,
G.R. No. L-19650, September 29, 1966
CASTRO, J., En Banc
Construction, verily, is the art or process of discovering and expounding the meaning and intention of the
authors of the law with respect to its application to a given case, where that intention is rendered doubtful,
amongst others, by reason of the fact that the given case is not explicitly provided for in the law (Black,
Interpretation of Laws, p. 1).
FACTS: In 1960, Caltex (Philippines) conceived a promotional scheme to drum up patronage for its oil products
i.e. "Caltex Hooded Pump Contest." It calls for participants therein to estimate the actual number of liters a
hooded gas pump at each Caltex station will dispense during a specified period. Participation is to be open
indiscriminately to all "motor vehicle owners and/or licensed drivers". No fee or consideration is required to
be paid, no purchase of Caltex products required to be made.
Foreseeing the extensive use of the mails for the said contest, Caltex made a letter to the postal authorities to
justify its position that the contest does not violate the anti-lottery provisions of the Postal Law. Unimpressed,
the then Acting Postmaster General, Enrico Palomar, opined that the scheme falls within the purview of the
provisions of The Postal Law i.e. Chapter 52 of the Revised Administrative Code, sections 1954(a), 1982 and
1983, which prohibits the non-mailable matter of any information regarding "any lottery, gift enterprise, or
scheme for the distribution of money, or of any real or personal property by lot, chance, or drawing of any
kind".
Caltex thereupon invoked judicial intervention by filing a petition for declaratory relief against the Postmaster
General, 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 to bring the contest to the
attention of the public. The trial court ruled that the contest does not violate the Postal Code and that the
Postmaster General has no right to bar the public distribution of the contest rules by the mails. The Postmaster
General appealed to the Supreme Court.
ISSUE: Whether or not the scheme proposed by Caltex is within the coverage of the prohibitive provisions of
the Postal Law inescapably requires an inquiry into the intended meaning of the words used therein?
HELD: No. "Caltex Hooded Pump Contest" proposed by Caltex is not a lottery that may be administratively
and adversely dealt with under the Postal Law. The term in question is used in association with the word
"lottery".

"Lottery" extends to all schemes for the distribution of prizes by chance, such as policy playing, gift exhibitions,
prize concerts, raffles at fairs, etc., and various forms of gambling. The three essential elements of a lottery
are: First, consideration; second, prize; and third, chance (El Debate", Inc. vs. Topacio). In the present case,
the elements of prize and chance are too obvious in the disputed Caltexs scheme. However, with regards to
the third element i.e. consideration, SC found nowhere in the said rules of any requirement that any fee be
paid, any merchandise be bought, any service be rendered, or any value whatsoever be given for the privilege
to participate. The scheme does not only appear to be, but actually is, a gratuitous distribution of property by
chance. Like a lottery, a gift enterprise comes also within the prohibitive statutes only if it exhibits the
tripartite elements of prize, chance and consideration. The apparent conflict of opinions is explained by the
fact that the specific statutory provisions relied upon are not identical, the terms "lottery" and "gift enterprise"
are used interchangeably; every case must be resolved upon the particular phraseology of the applicable
statutory provision.
With the meaning of lottery settled, and consonant to the well-known principle of legal hermeneutics noscitur
a sociis it is only logical that the term under a construction should be accorded no other meaning than that
which is consistent with the nature of the word associated therewith. Hence, if lottery is prohibited only if it
involves a consideration, so also must the term "gift enterprise" be so construed. Significantly, there is not in
the law the slightest indicium of any intent to eliminate that element of consideration from the "gift
enterprise" therein included. Gratuitous distribution of property by lot or chance does not constitute
"lottery", if it is not resorted to as a device to evade the law and no consideration is derived, directly or
indirectly, from the party receiving the chance, gambling spirit not being cultivated or stimulated thereby.
Under the prohibitive provisions of the Postal Law, gift enterprises and similar schemes therein contemplated
are condemnable only if, like lotteries, they involve the element of consideration.

People vs. Jabinal

February 27, 1974
Facts:
On September 5, 1964, the accused was found to be in possession of a revolver without the requisite license
or permit. He claimed to be entitled to exoneration because, although he had no license or permit, he had
appointments as Secret Agent from the Provincial Governor of Batangas and as Confidential Agent from the PC
Provincial Commander, and the said appointments expressly carried with them the authority to possess and carry
the said firearm. The accused further contended that in view of his appointments, he was entitled to acquittal on
the basis of the Supreme Courts decisions in People vs. Macarandang and in People vs. Lucero.
The trial court found the accused criminally liable for illegal possession of firearm and ammunition on the
ground that the rulings in Macarandang* and in Lucero* were reversed and abandoned in People vs. Mapa**.
The case was elevated to the Supreme Court.
Issue:
Whether or not the appellant should be acquitted on the basis of the Supreme Courts rulings in the cases
of Macarandang and of Lucero.
Ruling:
The appellant was acquitted.
Decisions of the Supreme Court, although in themselves not laws, are nevertheless evidence of what the
law means; this is the reason why Article 8 of the New Civil Code provides that, Judicial decisions applying and

interpreting the laws or the constitution shall form part of the legal system. The interpretation upon a law by the
Supreme Court constitutes in a way a part of the law as of the date the law was originally passed, since the courts
construction merely establishes the contemporaneous legislative intent that the law thus construed intends to
effectuate. The settled rule supported by numerous authorities is a restatement of the legal maxim legis
interpretatio legis vim obtinetthe interpretation placed upon the written law by a competent court has the force
of law. The doctrine laid down in Lucero and in Macarandang was part of the jurisprudence, hence, of the law of the
land, at the time appellant was found in possession of the firearm and when he was arraigned by the trial court. It is
true that the doctrine was overruled in Mapa case in 1967, but when a doctrine of the Supreme Court is overruled
and a different view is adopted, the new doctrine should be applied prospectively, and should not apply to parties
who had relied on the old doctrine and acted on the faith thereof.
Considering that the appellant possessed a firearm pursuant to the prevailing doctrine enunciated in
Macarandang and in Lucero, under which no criminal liability would attach to his possession of said firearm, the
appellant should be absolved. The appellant may not be punished for an act which at the time it was done was held
not to be punishable.

_____________________
*The accused were acquitted for through their appointment as confidential/secret agent they were deemed to be
peace officers. Peace officers had the privilege of carrying firearms without license.
**Mapa was convicted although he was a secret/confidential agent. The court ruled that the law did not explicitly
provide that secret/confidential agents are among those who are exempted from acquiring a license to carry a
firearm.

RAOUL B. DEL MAR, petitioner,

vs.PHILIPPINE AMUSEMENT AND GAMING CORPORATION, ET. AL., respondent.
Facts: The Philippine Amusement and Gaming Corporation is a government owned and controlled corporation
organized and existing under PD No. 1869. Pursuant to Section 1 and 10 of the said decree, PAGCOR requested for
legal advice from the Secretary of Justice as to whether or not it is authorized by its Charter to operate and manage
jai-alai frontons in the country. Favorable opinions were received by PAGCOR and thus, PAGCOR started the
operation of jai-alai frontons.
On May 6, 1999, petitioner Raoul del Mar filed a petition for Prohibition to prevent PAGCOR from managing and/or
operating jai-alai or Basque pelota games on the ground that the controverted act is patently illegal and devoid of
any basis either from the Constitution or PAGCORs own charter.
Issue: Whether or not the franchise granted to PAGCOR includes the right to manage and operate jai-alai.
Held: PUNO, J:
Justice Puno finds that the charter of PAGCOR does not give it any franchise to operate and manage jai-alai.
A franchise is a privilege of public concern which cannot be exercised at will and pleasure, but should be reserved
for the public control and administration, either by the government directly, or by public agents, under such
conditions and regulations as the government may impose on them in the interest of the public. It may, however,
be derived indirectly from the state through an agency to which the power has been clearly and validly delegated.

A historical study of the creation, growth and development of PAGCOR will readily show that it was never given a
legislative franchise to operate jai-alai. And in light of its legal history, PAGCOR cannot maintain that Sec 10 of PD
No. 1869 grants it a franchise to operate jai-alai.
"SEC. 10. Nature and terms of purchase.- Subjects to the terms and conditions established in this Decree, the Corporation is hereby
granted for a period of twenty-five (25) years, renewable for another twenty-five (25) years, the rights, privilege and authority to operate and
maintain gambling casinos, clubs, and other recreation or amusement places, sports, gaming pools, i.e., basketball, football, lotteries, etc.,
whether on land or areas sea, within the territorial jurisdiction of the Republic of the Philippines.

Under P.D. No. 1869, PAGCOR's franchise is only to operate gambling casinos and not jai-alai. This conclusion
is compelled by a plain reading of its various provisions, vis.:
"SECTION 1. Declaration of policy.- It is hereby declared to be the policy of the State to centralize and integrate all games of
chance not heretofore authorized by existing franchises or permitted by law in order to attain the following objectives:
(b) To establish and operate clubs and casinos, for amusement and recreation, including sports, gaming pools
(basketball, football, lotteries, etc.) and such other forms if amusement and recreation including games of chance, which may be
allowed by law within the territorial jurisdiction of the Philippines and which will (3) minimize, if not totally prevalent in the
conduct and operation of gambling clubs and casinos without direct government involvement.

The term jai-alai was never used and is nowhere to be found in the law. The conclusion that it is included in the
franchise granted to PAGCOR cannot be based on a mere cursory perusal of and a blind reliance on the ordinary and
plain meaning of the statutory terms such as gaming pools and lotteries. A statute is ambiguous, and so open
to explanation by extrinsic aids, not only when its abstract meaning or the connotation of its terms is uncertain, but
also when it is uncertain in its application to, or effect upon, the fact-situation of the case at bar.
Separate Opinion: Melo, J:
Justice Melo granted the motion for reconsideration. PAGCORs charter states that it is allowed to establish and
operateclubsandcasinos,foramusementand recreation, including sports, gaming pools (basketball, football, lotteries, etc) and
such other forms of amusement and recreation including games of chance, which may be allowed by law within
the territorial jurisdiction of the Philippines. In construing a statute, courts have to take the thought conveyed by
the statute as a whole; construe the constituent parts together, ascertain the legislative intent from the whole act,
consider each and every provision thereof in the light of the general purpose of the statute; and endeavorto make every
parteffective, harmonious and sensible.