G.R. No.

L-52306 October 12, 1981 compensations, remunerations, emoluments, or other

fixed or determinable annual or periodical gains,
ABS-CBN BROADCASTING profits, and income, it has been determined that the
CORPORATION, petitioner, tax is still imposed on income derived from capital, or
vs. labor, or both combined, in accordance with the basic
COURT OF TAX APPEALS and THE principle of income taxation (Sec. 39, Income Tax
COMMISSIONER OF INTERNAL Regulations), and that a mere return of capital or
REVENUE, respondents. investment is not income (Par. 5,06, 1 Mertens Law of
Federal 'Taxation). Since according to the findings of
the Special Team who inquired into business of the
non-resident foreign film distributors, the distribution
or exhibition right on a film is invariably acquired for a
MELENCIO-HERRERA, J.: consideration, either for a lump sum or a percentage of
the film rentals, whether from a parent company or an
This is a Petition for Review on certiorari of the independent outside producer, apart of the receipts of
Decision of the Court of Tax Appeals in C.T.A. Case No. a non-resident foreign film distributor derived from
2809, dated November 29, 1979, which affirmed the said film represents, therefore, a return of investment.
assessment by the Commissioner of Internal Revenue,
dated April 16, 1971, of a deficiency withholding 4. The local distributor should withhold 30% of one-
income tax against petitioner, ABS-CBN Broadcasting half of the film rentals paid to the non-resident foreign
Corporation, for the years 1965, 1966, 1967 and 1968 film distributor and pay the same to this office in
in the respective amounts of P75,895.24, P99,239.18, accordance with law unless the non- resident foreign
P128,502.00 and P222, 260.64, or a total of film distributor makes a prior settlement of its income
P525,897.06. tax liability. (Emphasis ours).

During the period pertinent to this case, petitioner Pursuant to the foregoing, petitioner dutifully withheld
corporation was engaged in the business of telecasting and turned over to the Bureau of Internal Revenue the
local as well as foreign films acquired from foreign amount of 30% of one-half of the film rentals paid by
corporations not engaged in trade or business within it to foreign corporations not engaged in trade or
the Philippines. for which petitioner paid rentals after business within the Philippines. The last year that
withholding income tax of 30%of one-half of the film petitioner withheld taxes pursuant to the foregoing
rentals. Circular was in 1968.

In so far as the income tax on non-resident On June 27, 1968, Republic Act No. 5431 amended
corporations is concerned, section 24 (b) of the Section 24 (b) of the Tax Code increasing the tax rate
National Internal Revenue Code, as amended by from 30 % to 35 % and revising the tax basis from
Republic Act No. 2343 dated June 20, 1959, used to "such amount" referring to rents, etc. to "gross
provide: income," as follows:

(b) Tax on foreign corporations.—(1) Non-resident (b) Tax on foreign corporations.—(1) Non-resident

corporations.— There shall be levied, collected, and corporations.—A foreign corporation not engaged in
paid for each taxable year, in lieu of the tax imposed trade or business in the Philippines including a foreign
by the preceding paragraph, upon the amount received life insurance company not engaged in the life
by every foreign corporation not engaged in trade or insurance business in the Philippines shall pay a tax
business within the Philippines, from an sources within equal to thirty-five per cent of the gross income
the Philippines, as interest, dividends, rents, salaries, received during each taxable year from all sources
wages, premiums, annuities, compensations, within the Philippines, as interests, dividends, rents,
remunerations, emoluments, or other fixed or royalties, salaries, wages, premiums, annuities,
determinable annual or periodical gains, profits, and compensations, remunerations for technical services or
income, a tax equal to thirty per centum of such otherwise, emoluments or other fixed or determinable
amount. (Emphasis supplied) annual, periodical or casual gains, profits, and income,
and capital gains, Provided however, That premiums
On April 12, 1961, in implementation of the shah not include reinsurance premiums. (Emphasis
aforequoted provision, the Commissioner of Internal supplied)
Revenue issued General Circular No. V-334 reading
thus: On February 8, 1971, the Commissioner of Internal
Revenue issued Revenue Memorandum Circular No. 4-
In connection with Section 24 (b) of Tax Code, the 71, revoking General Circular No. V-334, and holding
amendment introduced by Republic Act No. 2343, that the latter was "erroneous for lack of legal basis,"
under which an income tax equal to 30% is levied because "the tax therein prescribed should be based
upon the amount received by every foreign corporation on gross income without deduction whatever," thus:
not engaged in trade or business within the Philippines
from all sources within this country as interest, After a restudy and analysis of Section 24 (b) of the
dividends, rents, salaries, wages, premiums, annuities, National Internal Revenue Code, as amended by
Republic Act No. 5431, and guided by the WHEREFORE, the decision appealed from is hereby
interpretation given by tax authorities to a similar affirmed at petitioner's cost.
provision in the Internal Revenue Code of the United
States, on which the aforementioned provision of our SO ORDERED. 2
Tax Code was patterned, this Office has come to the
conclusion that the tax therein prescribed should be
The issues raised are two-fold:
based on gross income without t deduction whatever.
Consequently, the ruling in General Circular No. V-334,
dated April 12, 1961, allowing the deduction of the I. Whether or not respondent can apply General
proportionate cost of production or exhibition of motion Circular No. 4-71 retroactively and issue a deficiency
picture films from the rental income of non- resident assessment against petitioner in the amount of P
foreign corporations, is erroneous for lack of legal 525,897.06 as deficiency withholding income tax for
basis. the years 1965, 1966, 1967 and 1968.

In view thereof, General Circular No. V-334, dated II. Whether or not the right of the Commissioner of
April 12, 1961, is hereby revoked and henceforth, local Internal Revenue to assess the deficiency withholding
films distributors and exhibitors shall deduct and income tax for the year 196,5 has prescribed. 3
withhold 35% of the entire amount  payable by them to
non-resident foreign corporations, as film rental or Upon the facts and circumstances of the case, review
royalty, or whatever such payment may be is warranted.
denominated, without any deduction whatever,
pursuant to Section 24 (b), and pay the withheld taxes In point is Sec. 338-A (now Sec. 327) of the Tax Code.
in accordance with Section 54 of the Tax Code, as As inserted by Republic Act No. 6110 on August 9,
amended. 1969, it provides:

All rulings inconsistent with this Circular is likewise Sec. 338-A. Non-retroactivity of rulings. — Any
revoked. (Emphasis ours) revocation, modification, or reversal of and of the rules
and regulations promulgated in accordance with the
On the basis of this new Circular, respondent preceding section or any of the rulings or circulars
Commissioner of Internal Revenue issued against promulgated by the Commissioner of Internal
petitioner a letter of assessment and demand dated Revenue shall not be given retroactive application if
April 15, 1971, but allegedly released by it and the relocation, modification, or reversal will be
received by petitioner on April 12, 1971, requiring prejudicial to the taxpayers, except in the following
them to pay deficiency withholding income tax on the cases: (a) where the taxpayer deliberately mis-states
remitted film rentals for the years 1965 through 1968 or omits material facts from his return or any
and film royalty as of the end of 1968 in the total document required of him by the Bureau of Internal
amount of P525,897.06 computed as follows: Revenue: (b) where the facts subsequently gathered
by the Bureau of Internal Revenue are materially
On May 5, 1971, petitioner requested for a different from the facts on which the ruling is based; or
reconsideration and withdrawal of the assessment. (c) where the taxpayer acted in bad faith. (italics for
However, without acting thereon, respondent, on April emphasis)
6, 1976, issued a warrant of distraint and levy over
petitioner's personal as well as real properties. The It is clear from the foregoing that rulings or circulars
petitioner then filed its Petition for Review with the promulgated by the Commissioner of Internal Revenue
Court of Tax Appeals whose Decision, dated November have no retroactive application where to so apply them
29, 1979, is, in turn, the subject of this review. The would be prejudicial to taxpayers. The prejudice to
Tax Court held: petitioner of the retroactive application of
Memorandum Circular No. 4-71 is beyond question. It
For the reasons given, the Court finds the assessment was issued only in 1971, or three years after 1968, the
issued by respondent on April 16, 1971 against last year that petitioner had withheld taxes under
petitioner in the amounts of P75,895.24, P 99,239.18, General Circular No. V-334. The assessment and
P128,502.00 and P222,260.64 or a total of demand on petitioner to pay deficiency withholding
P525,897.06 as deficiency withholding income tax for income tax was also made three years after 1968 for a
the years 1965, 1966, 1967 and 1968, respectively, in period of time commencing in 1965. Petitioner was no
accordance with law. As prayed for, the petition for longer in a position to withhold taxes due from foreign
review filed in this case is dismissed, and petitioner corporations because it had already remitted all film
ABS-CBN Broadcasting Corporation is hereby ordered rentals and no longer had any control over them when
to pay the sum of P525,897.06 to respondent the new Circular was issued. And in so far as the
Commissioner of Internal Revenue as deficiency enumerated exceptions are concerned, admittedly,
withholding income tax for the taxable years 1965 thru petitioner does not fall under any of them.
1968, plus the surcharge and interest which have
accrued thereon incident to delinquency pursuant to Respondent claims, however, that the provision on
Section 51 (e) of the National Internal Revenue Code, non-retroactivity is inapplicable in the present case in
as amended. that General Circular No. V-334 is a nullity because in
effect, it changed the law on the matter. The Court of for each taxable year, in lieu of the tax imposed by the
Tax Appeals sustained this position holding that: preceding paragraph, upon the amount received by
"Deductions are wholly and exclusively within the every foreign corporation not engaged in trade or
power of Congress or the law-making body to grant, business within the Philippines, from all sources within
condition or deny; and where the statute imposes a the Philippines, as interest, dividends, rents, salaries,
tax equal to a specified rate or percentage of the gross wages, premiums, annuities, compensations,
or entire amount received by the taxpayer, the remunerations, emoluments, or other fixed or
authority of some administrative officials to modify or determinable annual or periodical OR CASUAL gains,
change, much less reduce, the basis or measure of the profits and income, AND CAPITAL GAINS, a tax equal
tax should not be read into law." 4 Therefore, the Tax to thirty per centum of such amount. 6 (double
Court concluded, petitioner did not acquire any vested emphasis supplied)
right thereunder as the same was a nullity.
The principle of legislative approval of administrative
The rationale behind General Circular No. V-334 was interpretation by re-enactment clearly obtains in this
clearly stated therein, however: "It ha(d) been case. It provides that "the re-enactment of a statute
determined that the tax is still imposed on income substantially unchanged is persuasive indication of the
derived from capital, or labor, or both combined, in adoption by Congress of a prior executive
accordance with the basic principle of income construction. 7 Note should be taken of the fact that
taxation ...and that a mere return of capital or this case involves not a mere opinion of the
investment is not income ... ." "A part of the receipts Commissioner or ruling rendered on a mere query, but
of a non-resident foreign film distributor derived from a Circular formally issued to "all internal revenue
said film represents, therefore, a return of officials" by the then Commissioner of Internal
investment." The Circular thus fixed the return of Revenue.
capital at 50% to simplify the administrative chore of
determining the portion of the rentals covering the It was only on June 27, 1968 under Republic Act No.
return of capital." 5 5431, supra, which became the basis of Revenue
Memorandum Circular No. 4-71, that Sec. 24 (b) was
Were the "gross income" base clear from Sec. 24 (b), amended to refer specifically to 35% of the "gross
perhaps, the ratiocination of the Tax Court could be income."
upheld. It should be noted, however, that said Section
was not too plain and simple to understand. The fact This Court is not unaware of the well-entrenched
that the issuance of the General Circular in question principle that the Government is never estopped from
was rendered necessary leads to no other conclusion collecting taxes because of mistakes or errors on the
than that it was not easy of comprehension and could part of its
be subjected to different interpretations. agents. 8 In fact, utmost caution should be taken in
this regard. 9 But, like other principles of law, this also
In fact, Republic Act No. 2343, dated June 20, 1959, admits of exceptions in the interest of justice and
supra, which was the basis of General Circular No. V- fairplay. The insertion of Sec. 338-A into the National
334, was just one in a series of enactments regarding Internal Revenue Code, as held in the case of Tuason,
Sec. 24 (b) of the Tax Code. Republic Act No. 3825 Jr. vs. Lingad, 10 is indicative of legislative intention to
came next on June 22, 1963 without changing the support the principle of good faith. In fact, in the
basis but merely adding a proviso (in bold letters). United States, from where Sec. 24 (b) was patterned,
it has been held that the Commissioner of Collector is
(b) Tax on foreign corporation.—(1) Non-resident precluded from adopting a position inconsistent with
corporations. — There shall be levied, collected and one previously taken where injustice would result
paid for each taxable year, in lieu of the tax imposed therefrom, 11 or where there has been a
by the preceding paragraph, upon the amount received misrepresentation to the taxpayer. 12
by every foreign corporation not engaged in trade or
business within the Philippines, from all sources within We have also noted that in its Decision, the Court of
the Philippines, as interest, dividends, rents, salaries, Tax Appeals further required the petitioner to pay
wages, premiums annuities, compensations, interest and surcharge as provided for in Sec. 51 (e) of
remunerations, emoluments, or other fixed or the Tax Code in addition to the deficiency withholding
determinable annual or periodical gains, profits, and tax of P 525,897.06. This additional requirement is
income, a tax equal to thirty  per centum of such much less called for because the petitioner relied in
amount: PROVIDED, HOWEVER, THAT PREMIUMS good faith and religiously complied with no less than a
SHALL NOT INCLUDE REINSURANCE PREMIUMS. Circular issued "to all internal revenue officials" by the
(double emphasis ours). highest official of the Bureau of Internal Revenue and
approved by the then Secretary of Finance. 13
Republic Act No. 3841, dated likewise on June 22,
1963, followed after, omitting the proviso and inserting With the foregoing conclusions arrived at, resolution of
some words (also in bold letters). the issue of prescription becomes unnecessary.

(b) Tax on foreign corporations.—(1) Non-resident

corporations.—There shall be levied, collected and paid
WHEREFORE, the judgment of the Court of Tax It should be understandable, then, that this Court
Appeals is hereby reversed, and the questioned should be doubly reluctant to consider petitioner's
assessment set aside. No costs. demand for avoidance of the law aforesaid, specially
where, as respondents assert, petitioners suffered no
wrong—nor allege any—from the enforcement of the
criticized statute.

It must be evident to any one that the power to

declare a legislative enactment void is one which the
judge, conscious of the fallability of the human
judgment, will shrink from exercising in any case
G.R. No. L-5279           October 31, 1955 where he can conscientiously and with due regard to
duty and official oath decline the responsibility.
PHILIPPINE ASSOCIATION OF COLLEGES AND (Cooley Constitutional Limitations, 8th Ed., Vol. I, p.
UNIVERSITIES, ETC., petitioner, 332.)
vs.
SECRETARY OF EDUCATION and the BOARD OF When a law has been long treated as constitutional
TEXTBOOKS, respondents. and important rights have become dependent thereon,
the Court may refuse to consider an attack on its
Manuel C. Briones, Vicente G. Sinco, Manuel V. Gallego validity. (C. J. S. 16, p. 204.)
and Enrique M. Fernando for petitioner.
Office of the Solicitor General Pompeyo Diaz and As a general rule, the constitutionality of a statute will
Assistant Solicitor General Francisco Carreon for be passed on only if, and to the extent that, it is
respondents. directly and necessarily involved in a justiciable
controversy and is essential to the protection of the
BENGZON, J.: rights of the parties concerned. (16 C. J. S., p. 207.)

The petitioning colleges and universities request that In support of their first proposition petitioners contend
Act No. 2706 as amended by Act No. 3075 and that the right of a citizen to own and operate a school
Commonwealth Act No. 180 be declared is guaranteed by the Constitution, and any law
unconstitutional, because: A. They deprive owners of requiring previous governmental approval or permit
schools and colleges as well as teachers and parents of before such person could exercise said right, amounts
liberty and property without due process of law; B. to censorship of previous restraint, a practice abhorent
They deprive parents of their natural rights and duty to to our system of law and government. Petitioners
rear their children for civic efficiency; and C. Their obviously refer to section 3 of Act No. 2706 as
provisions conferring on the Secretary of Education amended which provides that before a private school
unlimited power and discretion to prescribe rules and may be opened to the public it must first obtain a
standards constitute an unlawful delegation of permit from the Secretary of Education. The Solicitor
legislative power. General on the other hand points out that none of the
petitioners has cause to present this issue, because all
A printed memorandum explaining their position in of them have permits to operate and
extenso is attached to the record. are  actually operating by virtue of their permits. 1 And
they do not assert that the respondent Secretary of
Education has threatened to revoke their permits. They
The Government's legal representative submitted a have suffered no wrong under the terms of law—and,
mimeographed memorandum contending that, (1) the naturally need no relief in the form they now seek to
matter constitutes no justiciable controversy exhibiting obtain.
unavoidable necessity of deciding the constitutional
questions; (2) petitioners are in estoppel to challenge
the validity of the said acts; and (3) the Acts are It is an established principle that to entitle a private
constitutionally valid. individual immediately in danger of sustaining a direct
injury as the result of that action and it is not sufficient
that he has merely a general to invoke the judicial
Petitioners submitted a lengthy reply to the above power to determine the validity of executive or
arguments. legislative action he must show that he has sustained
or is interest common to all members of the public.
Act No. 2706 approved in 1917 is entitled, "An Act (Ex parte Levitt, 302 U. S. 633 82 L. Ed. 493.)
making the inspection and recognition of private
schools and colleges obligatory for the Secretary of Courts will not pass upon the constitutionality of a law
Public Instruction." Under its provisions, the upon the complaint of one who fails to show that he is
Department of Education has, for the past 37 years, injured by its operation. (Tyler  vs. Judges, 179 U. S.
supervised and regulated all private schools in this 405; Hendrick vs.  Maryland, 235 U. S. 610;
country apparently without audible protest, nay, with Coffman vs.  Breeze Corp., 323 U. S. 316-325.)
the general acquiescence of the general public and the
parties concerned.
The power of courts to declare a law unconstitutional PRIVATE-ADVENTURE SCHOOLS There is no law or
arises only when the interests of litigant require the regulation in the Philippine Islands today to prevent a
use of that judicial authority for their protection person, however disqualified by ignorance, greed, or
against actual interference, a hypothetical threat being even immoral character, from opening a school to
insufficient. (United Public Works vs.  Mitchell, 330 U teach the young. It it true that in order to post over
.S. 75; 91 L. Ed. 754.) the door "Recognized by the Government," a private
adventure school must first be inspected by the proper
Bona fide suit.—Judicial power is limited to the decision Government official, but a refusal to grant such
of actual cases and controversies. The authority to recognition does not by any means result in such a
pass on the validity of statutes is incidental to the school ceasing to exist. As a matter of fact, there are
decision of such cases where conflicting claims under more such unrecognized private schools than of the
the Constitution and under a legislative act assailed as recognized variety. How many, no one knows, as the
contrary to the Constitution are raised. It is legitimate Division of Private Schools keeps records only of the
only in the last resort, and as necessity in the recognized type.
determination of real, earnest, and vital controversy
between litigants. (Tañada and Fernando, Constitution Conclusion.—An unprejudiced consideration of the fact
of the Philippines, p. 1138.) presented under the caption Private Adventure Schools
leads but to one conclusion, viz.: the great majority of
Mere apprehension that the Secretary of Education them from primary grade to university are money-
might under the law withdraw the permit of one of making devices for the profit of those who organize
petitioners does not constitute a justiciable and administer them. The people whose children and
controversy. (Cf. Com.  ex rel  Watkins  vs. Winchester youth attend them are not getting what they pay for.
Waterworks (Ky.) 197 S. W. 2d. 771.) It is obvious that the system constitutes a great evil.
That it should be permitted to exist with almost no
supervision is indefensible. The suggestion has been
And action, like this, is brought for a positive purpose,
made with the reference to the private institutions of
nay, to obtain actual and positive relief.
university grade that some board of control be
(Salonga  vs. Warner Barnes, L-2245, January, 1951.)
organized under legislative control to supervise their
Courts do not sit to adjudicate mere academic
administration. The Commission believes that the
questions to satisfy scholarly interest therein, however
recommendations it offers at the end of this chapter
intellectually solid the problem may be. This is
are more likely to bring about the needed reforms.
specially true where the issues "reach constitutional
dimensions, for then there comes into play regard for
the court's duty to avoid decision of constitutional Recommendations.—The Commission recommends
issues unless avoidance becomes evasion." that legislation be enacted to prohibit the opening of
(Rice vs.  Sioux City, U. S. Sup. Ct. Adv. Rep., May 23, any school by an individual or organization without the
1995, Law Ed., Vol. 99, p. 511.) permission of the Secretary of Public Instruction. That
before granting such permission the Secretary assure
himself that such school measures up to proper
The above notwithstanding, in view of the several
standards in the following respects, and that the
decisions of the United States Supreme Court quoted
continued existence of the school be dependent upon
by petitioners, apparently outlawing censorship of the
its continuing to conform to these conditions:
kind objected to by them, we have decided to look into
the matter, lest they may allege we refuse to act even
in the face of clear violation of fundamental personal (1) The location and construction of the buildings, the
rights of liberty and property. lighting and ventilation of the rooms, the nature of the
lavatories, closets, water supply, school furniture and
apparatus, and methods of cleaning shall be such as to
Petitioners complain that before opening  a school the
insure hygienic conditions for both pupils and teachers.
owner must secure a permit from the Secretary of
Education. Such requirement was not originally
included in Act No. 2706. It was introduced by (2) The library and laboratory facilities shall be
Commonwealth Act No. 180 approved in 1936. Why? adequate to the needs of instruction in the subjects
taught.
In March 1924 the Philippine Legislature approved Act
No. 3162 creating a Board of Educational Survey to (3) The classes shall not show an excessive number of
make a study and survey of education in the pupils per teacher. The Commission recommends 40 as
Philippines and of all educational institutions, facilities a maximum.
and agencies thereof. A Board chairmaned by Dr. Paul
Munroe, Columbia University, assisted by a staff of (4) The teachers shall meet qualifications equal to
carefully selected technical members performed the those of teachers in the public schools of the same
task, made a five-month thorough and impartial grade.
examination of the local educational system, and
submitted a report with recommendations, printed as a In view of these findings and recommendations, can
book of 671 pages. The following paragraphs are taken there be any doubt that the Government in the
from such report: exercise of its police power to correct "a great evil"
could validly establish the "previous permit" system Education is given the power to fix the standard. In
objected to by petitioners? This is what differentiates plain language, the statute turns over to the Secretary
our law from the other statutes declared invalid in of Education the exclusive authority of the legislature
other jurisdictions. And if any doubt still exists, to formulate standard. . . .."
recourse may now be had to the provision of our
Constitution that "All educational institutions shall be It is quite clear the two sections empower and require
under the supervision and subject to regulation by the the Secretary of Education to prescribe rules fixing
State." (Art. XIV, sec. 5.) The power to regulate minimum standards of adequate and efficient
establishments or business occupations implies the instruction to be observed by all such private schools
power to require a permit or license. (53 C. J. S. 4.) and colleges as may be permitted to operate. The
petitioners contend that as the legislature has not fixed
What goes for the "previous permit" naturally goes for the standards, "the provision is extremely vague,
the power to revoke such permit on account of indefinite and uncertain"—and for that reason
violation of rules or regulations of the Department. constitutionality objectionable. The best answer is that
despite such alleged vagueness the Secretary of
II. This brings us to the petitioners' third proposition Education has fixed standards to ensure adequate and
that the questioned statutes "conferring on the efficient instruction, as shown by the memoranda
Secretary of Education unlimited power and discretion fixing or revising curricula, the school calendars,
to prescribe rules and standards constitute an unlawful entrance and final examinations, admission and
delegation of legislative power." accreditation of students etc.; and the system of
private education has, in general, been satisfactorily in
operation for 37 years. Which only shows that the
This attack is specifically aimed at section 1 of Act No.
Legislature did and could, validly rely upon the
2706 which, as amended, provides:
educational experience and training of those in charge
of the Department of Education to ascertain and
It shall be the duty of the Secretary of Public formulate minimum requirements of adequate
Instruction to maintain a general standard of efficiency instruction as the basis of government recognition of
in all private schools and colleges of the Philippines so any private school.
that the same shall furnish adequate instruction to the
public, in accordance with the class and grade of
At any rate, petitioners do not show how these
instruction given in them, and for this purpose said
standards have injured any of them or interfered with
Secretary or his duly authorized representative shall
their operation. Wherefore, no reason exists for them
have authority to advise, inspect, and regulate said
to assail the validity of the power nor the exercise of
schools and colleges in order to determine the
the power by the Secretary of Education.
efficiency of instruction given in the same,

True, the petitioners assert that, the Secretary has

"Nowhere in this Act" petitioners argue "can one find
issued rules and regulations "whimsical and capricious"
any description, either general or specific, of what
and that such discretionary power has produced
constitutes a 'general standard of efficiency.' Nowhere
arrogant inspectors who "bully heads and teachers of
in this Act is there any indication of any basis or
private schools." Nevertheless, their remedy is to
condition to ascertain what is 'adequate instruction to
challenge those regulations specifically, and/or to ring
the public.' Nowhere in this Act is there any statement
those inspectors to book, in proper administrative or
of conditions, acts, or factors, which the Secretary of
judicial proceedings—not to invalidate the law. For it
Education must take into account to determine the
needs no argument, to show that abuse by the officials
'efficiency of instruction.'"
entrusted with the execution of a statute does not  per
se demonstrate the unconstitutionality of such statute.
The attack on this score is also extended to section 6
which provides:
Anyway, we find the defendants' position to be
sufficiently sustained by the decision in Alegra vs.
The Department of Education shall from time to time Collector of Customs,  53 Phil., 394 upon holding the
prepare and publish in pamphlet form the minimum statute that authorized the Director of Agriculture
standards required of primary, intermediate, and high to  "designate standards for the commercial grades of
schools, and colleges granting the degrees of Bachelor abaca, maguey and sisal" against vigorous attacks on
of Arts, Bachelor of Science, or any other academic the ground of invalid delegation of legislative power.
degree. It shall also from time to time prepare and
publish in pamphlet form the minimum standards
Indeed "adequate and efficient instruction" should be
required of law, medical, dental, pharmaceutical,
considered sufficient, in the same way as "public
engineering, agricultural and other medical or
welfare" "necessary in the interest of law and order"
vocational schools or colleges giving instruction of a
"public interest" and "justice and equity and
technical, vocational or professional character.
substantial merits of the case" have been held
sufficient as legislative standards justifying delegation
Petitioners reason out, "this section leaves everything of authority to regulate. (See Tañada and Fernando,
to the uncontrolled discretion of the Secretary of Constitution of the Philippines, p. 793, citing Philippine
Education or his department. The Secretary of cases.)
On this phase of the litigation we conclude that there The Solicitor General cities many authorities to show
has been no undue delegation of legislative power. that the power to regulate means power to control,
and quotes from the proceedings of the Constitutional
In this connection, and to support their position that Convention to prove that State control of private
the law and the Secretary of Education have education was intended by the organic law. It is
transcended the governmental power of supervision significant to note that the Constitution grants power
and regulation, the petitioners appended a list of to supervise and to regulate. Which may mean greater
circulars and memoranda issued by the said power than mere regulation.
Department. However they failed to indicate which of
such official documents was constitutionally III. Another grievance of petitioners—probably the
objectionable for being "capricious," or pain most significant—is the assessment of 1 per cent
"nuisance"; and it is one of our decisional practices levied on gross receipts of all private schools for
that unless a constitutional point is specifically raised, additional Government expenses in connection with
insisted upon and adequately argued, the court will not their supervision and regulation. The statute is section
consider it. (Santiago vs.  Far Eastern, 73 Phil., 408.) 11-A of Act No. 2706 as amended by Republic Act No.
74 which reads as follows:
We are told that such list will give an idea of how the
statute has placed in the hands of the Secretary of SEC. 11-A. The total annual expense of the Office of
Education complete control of the various activities of Private Education shall be met by the regular amount
private schools, and why the statute should be struck appropriated in the annual Appropriation
down as unconstitutional. It is clear in our opinion that Act:  Provided, however,  That for additional expenses
the statute does not in express terms give the in the supervision and regulation of private schools,
Secretary complete control. It gives him powers to colleges and universities and in the purchase of
inspect private schools, to regulate their activities, to textbook to be sold to student of said schools, colleges
give them official permits to operate under certain and universities and President of the Philippines may
conditions, and to revoke such permits for cause. This authorize the Secretary of Instruction to levy an
does not amount to complete control. If any of such equitable assessment from each private educational
Department circulars or memoranda issued by the institution equivalent to one percent of the total
Secretary go beyond the bounds of regulation and amount accruing from tuition and other fees: . . . and
seeks to establish  complete  control, it would surely be non-payment of the assessment herein provided by
invalid. Conceivably some of them are of this nature, any private school, college or university shall be
but besides not having before us the text of such sufficient cause for the cancellation by the Secretary of
circulars, the petitioners have omitted to specify. In Instruction of the permit for recognition granted to it.
any event with the recent approval of Republic Act No.
1124 creating the National Board of Education, Petitioners maintain that this is a tax on the exercise of
opportunity for administrative correction of the a constitutional right—the right to open a school, the
supposed anomalies or encroachments is amply liberty to teach etc. They claim this is unconstitutional,
afforded herein petitioners. A more expeditious and in the same way that taxes on the privilege of selling
perhaps more technically competent forum exists, religious literature or of publishing a newspaper—both
wherein to discuss the necessity, convenience or constitutional privileges—have been held, in the United
relevancy of the measures criticized by them. (See States, to be invalid as taxes on the exercise of a
also Republic Act No. 176.) constitutional right.

If however the statutes in question actually give the The Solicitor General on the other hand argues that
Secretary control over private schools, the question insofar as petitioners' action attempts to restrain the
arises whether the power of supervision and regulation further collection of the assessment, courts have no
granted to the State by section 5 Article XIV was jurisdiction to restrain the collection of taxes by
meant to include control of private educational injunction, and in so far as they seek to recover fees
institutions. It is enough to point out that local already paid the suit, it is one against the State
educators and writers think the Constitution provides without its consent. Anyway he concludes, the action
for control of Education by the State. (See Tolentino, involving "the legality of any tax impost or
Government of the Philippine Constitution, Vol. II, p. assessment" falls within the original jurisdiction of
615; Benitez, Philippine Social Life and Progress, p. Courts of First Instance.
335.)
There are good grounds in support of Government's
The Constitution (it) "provides for state control of all position. If this levy of 1 per cent is truly a mere fee—
educational institutions" even as it enumerates certain and not a tax—to finance the cost of the Department's
fundamental objectives of all education to wit, the duty and power to regulate and supervise private
development of moral character, personal discipline, schools, the exaction may be upheld; but such point
civic conscience and vocational efficiency, and involves investigation and examination of relevant
instruction in the duties of citizenship. (Malcolm & data, which should best be carried out in the lower
Laurel, Philippine Constitutional Law, 1936.) courts. If on the other hand it is a tax, petitioners'
issue would still be within the original jurisdiction of
the Courts of First Instance.
The last grievance of petitioners relates to the validity effects. But if the Board on Textbooks in its actuations
of Republic Act No. 139 which in its section 1 provides: strictly adheres to the letter of the section and wisely
steers a middle course between the Scylla of
The textbooks to be used in the private schools "dictatorship" and the Charybdis of "thought control",
recognized or authorized by the government shall be no cause for complaint will arise and no occasion for
submitted to the Board (Board of Textbooks) which judicial review will develop. Anyway, and again,
shall have the power to prohibit the use of any of said petitioners now have a more expeditious remedy thru
textbooks which it may find to be against the law or to an administrative appeal to the National Board of
offend the dignity and honor of the government and Education created by Republic Act 1124.
people of the Philippines, or which it may find to be
against the general policies of the government, or Of course it is necessary to assure herein petitioners,
which it may deem pedagogically unsuitable. that when and if, the dangers they apprehend
materialize and judicial intervention is suitably
This power of the Board, petitioners aver, is censorship invoked, after all administrative remedies are
in "its baldest form". They cite two U. S. cases (Miss. exhausted, the courts will not shrink from their duty to
and Minnesota) outlawing statutes that impose delimit constitutional boundaries and protect individual
previous restraints upon publication of newspapers, or liberties.
curtail the right of individuals to disseminate teachings
critical of government institutions or policies. IV. For all the foregoing considerations, reserving to
the petitioners the right to institute in the proper court,
Herein lies another important issue submitted in the and at the proper time, such actions as may call for
cause. The question is really whether the law may be decision of the issue herein presented by them, this
enacted in the exercise of the State's constitutional petition for prohibition will be denied. So ordered.
power (Art. XIV, sec. 5) to supervise and regulate
private schools. If that power amounts to control of G.R. No. 155344               January 20, 2004
private schools, as some think it is, maybe the law is
valid. In this connection we do not share the belief that ROLANDO N. CANET, Petitioner,
section 5 has added new power to what the State vs.
inherently possesses by virtue of the police power. An MAYOR JULIETA A. DECENA, Respondent.
express power is necessarily more extensive than a
mere implied power. For instance, if there is conflict
DECISION
between an express individual right and the express
power to control private education it cannot off-hand
be said that the latter must yield to the former— YNARES-SANTIAGO, J.:
conflict of two express powers. But if the power to
control education is merely implied  from the police On July 27, 1998, the Sangguniang Bayan of Bula,
power, it is feasible to uphold the express individual Camarines Sur, passed Resolution No. 049, Series of
right, as was probably the situation in the two 1998,1 authorizing petitioner Rolando N. Canet to
decisions brought to our attention, of Mississippi and establish, operate and maintain a cockpit in Sitio,
Minnesota, states where constitutional control of Cabaya, San Roque, Bula, Camarines Sur.
private schools is not expressly produced.
Subsequently, the Sangguniang Bayan passed
However, as herein previously noted, no justiciable Ordinance No. 001, Series of 1999, entitled "An
controversy has been presented to us. We are not Ordinance Regulating the Operation of Cockpits and
informed that the Board on Textbooks has prohibited Other Related Game-Fowl Activities in the Municipality
this or that text, or that the petitioners refused or of Bula, Camarines Sur and Providing Penalties for any
intend to refuse to submit some textbooks, and are in Violation to (sic) the Provisions Thereof." 2 Upon
danger of losing substantial privileges or rights for so transmittal to respondent Mayor Julieta A. Decena of
refusing. the said municipality, it was noted that the Ordinance
does not contain rules and regulations on cockfighting
The average lawyer who reads the above quoted and other related game fowl activities and a
section of Republic Act 139 will fail to perceive separability clause. The Ordinance was returned to
anything objectionable. Why should not the State the Sangguniang Bayan. In Resolution No. 078, Series
prohibit the use of textbooks that are illegal, or of 1999, Sangguniang Bayan resolved to withdraw, set
offensive to the Filipinos or adverse to governmental aside and shelf indefinitely Ordinance No. 001, Series
policies or educationally improper? What's the power of of 1999.3
regulation and supervision for? But those trained to the
investigation of constitutional issues are likely to Meanwhile, petitioner, relying on Resolution No. 049,
apprehend the danger to civil liberties, of possible Series of 1998, of the Sangguniang Bayan, filed an
educational dictatorship or thought control, as application for a mayor’s permit to operate, establish
petitioners' counsel foresee with obvious alarm. Much and maintain a cockpit in Sitio Cabuya, San Roque,
depends, however, upon the execution and Bula, Camarines Sur. Respondent Mayor Julieta
implementation of the statute. Not that Decena denied the application on the ground, among
constitutionality depends necessarily upon the law's others, that under the Local Government Code of
1991, the authority to give licenses for the SO ORDERED.10
establishment, operation and maintenance of cockpits
as well as the regulation of cockfighting and Petitioner filed a Motion for Reconsideration which was
commercial breeding of gamecocks is vested in the denied for lack of merit in a Resolution dated August
Sangguniang Bayan.4 2002.11

Therefore, she cannot issue the said permit inasmuch Hence, this petition for review.
as there was no ordinance passed by the Sangguniang
Bayan authorizing the same.
The core issue in this petition is whether or not
respondent, in her capacity as Municipal Mayor, can be
On July 26, 1999, petitioner filed a complaint 5 against compelled to issue the necessary business permit to
respondent Mayor with the Regional Trial Court of Pili, petitioner absent a municipal ordinance which would
Camarines Sur, Branch XXXI, which was docketed as empower her to do so.
Special Civil Action No. P-84-99, for Mandamus and
Damages with Application for Preliminary Mandatory
The pertinent provision of law in contention is Section
Injunction. Respondent moved for the dismissal of the
447 (a) (3) (v) of the Local Government Code of 1991
complaint.
(Republic Act No. 7160), which reads:

A Resolution was issued by the trial court on January

SEC. 447. Powers, Functions and Compensation. (a)
27, 2000, the dispositive portion of which reads:
The Sangguniang Bayan as the legislative body of the
municipality shall enact ordinances, approve
WHEREFORE, in view of the foregoing, the motion to resolutions and appropriate funds for the general
dismiss is hereby denied. Let a writ of preliminary welfare of the municipality and its inhabitants pursuant
mandatory injunction issue upon the posting of an to Section 16 of this Code and in the proper exercise of
injunction bond by the plaintiff in the amount of FIFTY the corporate powers of the municipality as provided
THOUSAND PESOS (P50,000.00) executed to for under Section 22, and shall:
defendant to stand for all the damages which she may
sustain if it should be finally found that plaintiff is not
x x x           x x x          x x x
entitled thereto, said mandatory injunction ordering
and commanding herein defendant, incumbent Mayor
of the Municipality of Bula, Camarines Sur to approve (3) Subject to the provisions of Book II of this Code,
and issue forthwith the Mayor’s Permit and to accept grant franchises, enact ordinances levying taxes, fees
the fees therefor for plaintiff to establish, maintain and and charges upon such conditions and for such
operate a cockpit in Cabaya, San Roque, Bula, purposes intended to promote the general welfare of
Camarines Sur. Upon finality of this resolution, let the the inhabitants of the municipality, and pursuant to
main case be set for further proceedings. this legislative authority shall:

SO ORDERED.6 x x x           x x x          x x x

The writ of preliminary mandatory injunction was (v) Any law to the contrary notwithstanding, authorize
issued on February 1, 2000. 7 and license the establishment, operation and
maintenance of cockpits and regulate cockfighting and
commercial breeding of gamecocks: Provided, That
Respondent filed a petition for certiorari and
existing rights should not be prejudiced.
prohibition with the Court of Appeals, docketed as CA-
G.R. SP No. 57797.8 On April 3, 2000, the Court of
Appeals issued a temporary restraining Petitioner admits that there is no ordinance in Bula,
order,9 directing petitioner and the presiding judge to Camarines Sur which authorizes the grant of a mayor’s
temporarily cease and desist from enforcing the writ of permit to operate and maintain a cockfighting arena.
preliminary mandatory injunction issued on February However, he invokes Resolution No. 049, S. 1998,
1, 2000 in Special Civil Action No. P-84-99. wherein the Sangguniang Bayan authorized him to
operate a cockpit. Furthermore, he cites Municipal Tax
Ordinances Nos. 01, S. 1989, and 05, S. 1993, which
On June 3, 2002, the Court of Appeals rendered the
generally provide for the issuance of a mayor’s permit
assailed Decision, the dispositive portion of which
for the operation of businesses.
reads:

Municipal Tax Ordinances Nos. 01, S. 1989 and 05, S.

WHEREFORE, the petition is granted and the
1993 contain general provisions for the issuance of
questioned January 27, 2000 Resolution and February
business permits but do not contain specific provisions
1, 2000 writ of preliminary mandatory injunction
prescribing the reasonable fees to be paid in the
issued by respondent Judge are ANNULLED AND SET
operation of cockpits and other game fowl activities.
ASIDE while the writ of preliminary injunction
heretofore issued by this Court on July 10, 2000 is
made permanent. No costs. It was Ordinance No. 001, S. 1999 which provided for
the collection of application filing fees, ocular
inspection fees, mayor’s permit fees, filing fees for the It should, furthermore, be borne in mind that
institution of complaints, entrance fees and special cockfighting although authorized by law is still a form
derby assessments for the operation of cockpits. 12 This of gambling. Gambling is essentially antagonistic to the
Ordinance, however, was withdrawn by the aims of enhancing national productivity and self-
Sangguniang Bayan. reliance.24 As has been previously said, a statute which
authorizes a gambling activity or business should be
Hence, there being in effect no ordinance allowing the strictly construed, and every reasonable doubt
operation of a cockpit, Resolution No. 049, S. 1998, resolved so as to limit rather than expand the powers
authorizing petitioner to establish, operate and and rights claimed by franchise holders under its
maintain a cockpit in Bula, Camarines Sur cannot be authority.25
implemented. Suffice it to state in this regard that to
compel respondent to issue the mayor’s permit would WHEREFORE, in view of all the foregoing, the petition
not only be a violation of the explicit provisions of is hereby DENIED for lack of merit. The Decision of the
Section 447 of the Local Government Code of 1991, Court of Appeals dated June 3, 2002 in CA-G.R. SP No.
but would also be an undue encroachment on 57797 is AFFIRMED in toto.
respondent’s administrative prerogatives.

Along the same vein, to read into the ordinances relied

upon by petitioner objects which were neither
specifically mentioned nor enumerated would be to run
afoul of the dictum that where a statute, by its terms,
is expressly limited to certain matters, it may not, by
interpretation or construction, be extended to other
matters.13 In other words, it is a basic precept of
statutory construction that the express mention of one
person, thing, act, or consequence excludes all others,
as expressed in the oft-repeated maxim expression
unius est exlusio alterius. 14 Elsewise stated, expressium
facit cessare tacitum – what is expressed puts an end
to what is implied.15 The rule proceeds from the
premise that the legislative body would not have made
specific enumerations in a statute, if it had the
intention not to restrict its meaning and confine its
terms to those expressly mentioned.

Even on the assumption that there is in fact a

legislative gap caused by such an omission, neither
could the Court presume otherwise and supply the
details thereof, because a legislative lacuna cannot be
filled by judicial fiat.16 Indeed, courts may not, in the
guise of interpretation, enlarge the scope of a statute
and include therein situations not provided nor
intended by the lawmakers. An omission at the time of
the enactment, whether careless or calculated, cannot
be judicially supplied however after later wisdom may
recommend the inclusion.17 Courts are not authorized
to insert into the law what they think should be in it or
to supply what they think the legislature would have
supplied if its attention has been called to the
omission.18 1âwphi1

Courts should not, by construction, revise even the

most arbitrary and unfair action of the legislature, nor
rewrite the law to conform with what they think should
be the law.19 Nor may they interpret into the law a
requirement which the law does not prescribe. 20 Where
a statute contains no limitations in its operation or
scope, courts should not engraft any. 21 And where a
provision of law expressly limits its application to
certain transactions, it cannot be extended to other
transactions by interpretation. 22 To do any of such
things would be to do violence to the language of the
law and to invade the legislative sphere.23