ISSUE:

Whether or not the exemption enjoyed by herein private respondent ESSO Standard Eastern, Inc. from
customs duties granted by Republic Act No. 387, or the Petroleum Act of 1949, should embrace or
include the special import tax imposed by R.A. No. 1394, or the Special Import Tax Law.

COURT:

Court to do is to determine the intention of the legislature through interpretation of the two statutes
involved, i.e., Republic Act No. 1394 and Republic Act No. 387.

It is a well-accepted principle that where a statute is ambiguous, as Republic Act No. 1394 appears
to be, courts may examine both the printed pages of the published Act as well as those extrinsic
matters that may aid in construing the meaning of the statute, such as the history of its enactment,
the reasons for the passage of the bill and purposes to be accomplished by the measure.

In order to determine the true intent of the legislature, the particular clauses and phrases of the
statute should not be taken as detached and isolated expressions, but the whole and every part
thereof must be considered in fixing the meaning of any of its parts. In fact every statute should
receive such construction as will make it harmonize with the pre-existing body of laws. Antagonism
between the Act to be interpreted and existing or previous laws is to be avoided, unless it was
clearly the intention of the legislature that such antagonism should arise and one amends or repeals
the other, either expressly or by implication.

Another rule applied by this Court is that the courts may take judicial notice of the origin and history
of the statutes which they are called upon to construe and administer, and of facts which affect their
derivation, validity and operation.12

Applying the above stated rules and principles, let us consider the history, the purpose and
objectives of Republic Act No. 387 as it relates to Republic Act No. 1394 and other laws passed by
the Congress of the Philippines insofar as they relate to each other.

the manner in which extrinsic aids the history of the enactment of the statute and purpose of the
legislature in employing a clause or provision in the law had been applied in determining the true
intent of the lawmaking body, We are convinced that R.A. No. 387, The Petroleum Act of 1949, was
intended to encourage the exploitation, exploration and development of the petroleum resources of
the country by giving it the necessary incentive in the form of tax exemptions. This is the raison d
etre for the generous grant of tax exemptions to those who would invest their financial resources
towards the achievement of this national economic goal.

The court held that repeal by implication is not favored unless it is manifest that the legislature so
intended. As laws are presumed to be passed with deliberation and with full knowledge of all existing
ones on the subject, it is logical to conclude that in passing a statute it was not intended to interfere
with or abrogate any former law relating to the same matter, unless the repugnancy between the two
is not only irreconcilable but also clear and convincing as a result of the language used, or unless
the latter act fully embraces the subject matter of the earlier.

Congress lined up for revocation by Republic Act No. 1394 six statutes dealing with the imposition of
special imposts or levies or the granting of exemptions from special import taxes. Yet, considering
the tremendous amount of revenues it was losing under the Petroleum Law of 1949, it failed to
include the latter statute among those it chose to bury by the Special Import Taw Law. The reason
for this is very clear: The legislature wanted to continue the incentives for the continuing
development of the petroleum industry.
FILIPINAS LIFE ASSURANCE COMPANY, petitioner,
vs.
THE COURT OF TAX APPEALS

RULING

It will thus be seen that dividend exclusion has always been a dominant feature of corporate income
tax. It is a device for reducing extra or double taxation of distributed earnings. Since a corporation
cannot deduct from its gross income the amount of dividends distributed to its corporation-
shareholders during the taxable year, any distributed earnings are necessarily taxed twice; initially at
the corporate level when they are included in the corporation's taxable income, and again, at the
corporation-shareholder level when they are received as dividend. Thus, without exclusion the
successive taxation of the dividend as it passes from corporation to corporation would result in
repeated taxation of the same income and would leave very little for the ultimate individual
shareholder. At the same time the decision to tax a part (e.g., 25 per cent of such dividends reflects
the policy of discouraging complicated corporate structures as well as corporate divisions in the form
of parent-subsidiary arrangements adopted to achieve a lower effective corporate income tax rate. 14

Until 1957 there had been no question that the proviso on dividend exclusion applied to all domestic
and resident foreign life insurance companies. The question arose when, by virtue of Republic Act
1855 (1957), the original provisions of section 24, with slight modifications, were made sub-section
(A) while a new sub-section (B), entitled "Rate of Tax on Life Insurance Companies," was added.
The result is that the proviso on dividend exclusion now appears to qualify only a part of section 24,
making it doubtful whether after 1957 the income from dividends of domestic and resident foreign life
insurance companies still enjoys exemption, although, as noted in passing,15 the proviso continues to
speak of "the tax imposed by this section" (not sub-section).

However, a review of the circumstances, which prompted the amendment of section 24 in 1957
shows no intention to withdraw from life insurance companies the exemption which theretofore had
been enjoyed by them along with non-life insurance companies. To be sure, the 1957 amendment
was intended for a two-fold purpose: first, to change the tax base from premium income to
investment income and, second, to lower the tax on life insurance companies, in order to encourage
their growth as well as their investment in the development of the national economy.

Prior to 1957, life insurance companies were required, for income tax purposes, to include premium,
receipts in gross income. It became generally recognized, however, that the inclusion of premium
receipts in the gross taxable income of life insurance companies was unsound because premium
receipts do not constitute income in the sense of gain or profit. They are really savings deposits of
the individual policyholders, a large portion of which goes directly to reserve funds required by law
for the payment of their claims for death benefits, cash surrender values and maturity values.
Therefore, to tax an insurance company on account of these "deposits" or "savings" is actually to tax
the policyholder for being provident. What constitutes true income for a life insurance company is
rather its investment income from interest, dividends and rents.16

Besides, the premiums which a life insurance company receives are already subject to a tax of 3 per
cent under section 255 of the Code. To require their inclusion in gross income for purposes of
section 24 is to subject them to double taxation.17

The rate of tax was lowered in recognition of the fact that a life insurance company derives profit
from its investment income only to the extent that such income exceeds the rate of interest at which
the reserve must be maintained.18

In sum, as the then Congressman Ferdinand Marcos described the bill which became Republic Act
1855, "It is a bill which places [life] insurance companies in the same class as other companies. And
the rate is lower than in ordinary companies because it is six and one half per cent." 19

If the purpose of the 1957 amendment was to place life insurance companies at par with other
companies by taking them on their true income, then the legislature could not have intended to
withdraw from them a privilege which they had then been enjoying in common with non-life
insurance companies. Indeed, by no rule of logic can the decision to exclude premium receipts from
gross income be considered a decision to include all of dividend income in gross income.

Nor could it have been the intention of the legislature to discriminate against domestic life insurance
companies in favor of resident foreign corporations engaged in other business. And yet this is just
the implication of the interpretation urged on us by the respondents. For, indeed, to require life
insurance companies to report in full their income from dividends would be not only to treat them
differently from other companies, contrary to the first aim of the amendment, but also to impose on
them a tax burden heavier than that imposed on resident foreign companies not engaged in life
insurance. Thus, following the interpretation of the respondents, a resident foreign corporation with
an income of P100,000 from dividends would be required to return only 25 per cent of it, or P25,000
the tax on which would be P5,000 (20% under Republic Act 1855). In contrast, a domestic life
insurance company, required to report all its income from dividends, would have to pay a tax of
P6,500 (6-1/2%), or P1,500 more, despite the fact that the rate of tax on it is much lower. It seems
rather clear that these discriminatory and lopsided results could not have been intended by
Congress.

That Congress intended to accord preferential tax treatment to domestic and resident foreign life
insurance companies is abundantly clear not only from the history of the 1957 amendment but also
from the Comparative Table (supra) which shows that while the rate of tax on corporations in general
has been raised, that on domestic and resident foreign life insurance companies has remained at 6-
1/2 per cent — the lowest among those imposed on various types of corporations.

The truth is that section 24 has undergone amendments through a process which, in Cardozo's
phrase,20 is no more intellectual than the use of paste pot and scissors. Consequently, reliance
cannot be placed on its grammatical construction in order to arrive at its meaning. As the
Comparative Table shows, after the amendment of section 24 in 1957, sub-section (A) thereof did
not have a title, compared to sub-section (B), entitled "Rate of Tax on Life Insurance Companies"
which was added. It took another amendment in 1959 to correct the deficiency, only to commit
another error. Thus while the word "assessed" was deleted from sub-section (a) in consequence of
the adoption of the "pay-as-you-file" system, the same word has remained in sub-section (c) even to
this date. Again, within the same year, 1963, Section 24 was amended twice but in the process more
errors were committed. For while Republic Act 3841 was passed ostensibly to add certain words
overlooked in the amendment of the section by Republic Act 3825, the proviso on reinsurance
premium (which was the reason for the enactment of Republic Act 3825) was inadvertently omitted
in the text of section 24 (b) (1).

The reference to domestic and resident foreign life insurance companies in the excepting clause of
sub-section (a) is even more awkward because the exception relates to the coverage of the entire
section 24 and not simply to a sub-section thereof. Thus, registered general copartnerships are
excepted from the coverage of section 24 because they are not subject to tax as an entity. By
express provision of section 26 of the Code persons doing business as a general copartnership duly
registered in the mercantile registry are subject to income tax "only in their individual capacity." On
the other hand, by including domestic and resident foreign life insurance companies in the excepting
clause it was never the intention to exempt them from the payment of corporate income tax, which is
the subject of section 24 as a whole. Furthermore, the exclusion of registered general
copartnerships from the coverage of section 24 is justified because by statutory definition they are
not anyway considered "corporations." On the other hand, life insurance companies are deemed
"corporations" for purposes of the Code.21

Thus, the RANDOM amendment of section 24 by several legislative acts — as a result of which the
proviso on dividend exclusion is now found in sub-section (a) — makes reliance on its grammatical
construction highly unsafe and unsound in arriving at its meaning.22 Since nothing in the history of
the 1957 amendment or in the rationale of dividend exclusion indicates the contrary, we hold that
domestic and resident foreign life insurance companies are entitled to the benefits of dividend
exclusion, the position of the proviso allowing it notwithstanding.

ACCORDINGLY, the decision appealed from is reversed, and the respondent Commissioner of
Internal Revenue is ordered to refund to the petitioner company the amount of P2,721 as excess
income tax for 1958. No pronouncement as to costs.
NAPOLCOM VS. DE GUZMAN

In applying the provisions of Sec. 89 in favor of the local police force as established in PD 765, the
Court does not, in any manner, give any
undue preferential treatment in favor of the other group. On the contrary, the Court is merely giving
life to the real intent of the legislators based on the deliberations of the Bicameral Conference
Committee that preceded the enactment of RA 6975.

The legislative intent to classify the INP in such manner that Section 89 of RA 6975 is applicable
only to the local police force is clear. The question now is whether the classification is valid. The test
for this is reasonableness such that it must conform to the following requirements: (1) It must be
based upon substantial distinctions; (2) It must be germane to the purpose of the law; (3) It must not
be limited to existing conditions only; (4) It must apply equally to all members of the same class
(People vs. Cayat, 68 Phil. 12 [1939]).

The classification is based upon substantial distinctions. The PC, before the effectivity of the law (RA
6975), were already retirable at age 56 while the local police force were retirable at 60, and
governed by different laws
(P.D. 1184, Sec. 33 and Sec. 50). The distinction is relevant for the purpose of the statute, which is
to enable the local police force to plan for their retirement which would be earlier than usual because
of the new law. Section 89 is merely transitory, remedial in nature, and loses its force and effect
once the four-year transitory period has elapsed. Finally, it applies not only to some but to all local
police officers.

It may be appropriate to state at this point that it seems absurd that a law will grant an extension to
PC officers' retirable age from 56 to 60 and then gradually lower it back to 56 without any cogent
reason at all. Why should the retirement age of PC officers be increased during the transitory period
to the exclusion of other PC officers who would retire at age 56 after such period? Such absurdity
was never contemplated by the law and would defeat its purpose of providing a uniform retirement
age for PNP members.

WHEREFORE, the petition is GRANTED. The writ of injunction issued on January 8, 1992 is hereby
LIFTED and the assailed decision of respondent judge is REVERSED and SET ASIDE

The issue in that case was whether a resolution of both Houses of Congress proposing an
amendment to the (1935) Constitution to be appended as an ordinance thereto (the so-called parity
rights provision) had been passed by "a vote of three-fourths of all the members of the Senate and of
the House of Representatives" pursuant to Article XV of the Constitution.
 ● Astorga v. Villegas; G.R. No. L-23475; April 30, 1974

Congress devised its own system of authenticating bills duly approved by both Houses, namely, by
the signatures of their respective presiding officers and secretaries on the printed copy of the
approved bill.2 It has been held that this procedure is merely a mode of authentication, 3 to signify to
the Chief Executive that the bill being presented to him has been duly approved by Congress and is
ready for his approval or rejection.4

The function of an attestation is therefore not of approval, because a bill is considered approved
after it has passed both Houses. Even where such attestation is provided for in the Constitution
authorities are divided as to whether or not the signatures are mandatory such that their absence
would render the statute invalid.5

In one case in the United States, where the (State)Constitution required the presiding officers to sign
a bill and this provision was deemed mandatory, the duly authenticated enrolled bill was considered
as conclusive proof of its due enactment. In the case of Field vs. Clark,9 the U.S. Supreme Court
held that the signatures of the presiding officers on a bill, although not required by the Constitution,
is conclusive evidence of its passage

It may be noted that the enrolled bill theory is based mainly on "the respect due to coequal and
independent departments," which requires the judicial department "to accept, as having passed
Congress, all bills authenticated in the manner stated." Thus it has also been stated in other cases
that if the attestation is absent and the same is not required for the validity of a statute, the courts
may resort to the journals and other records of Congress for proof of its due enactment. This was the
logical conclusion reached in a number of decisions, 10 although they are silent as to whether the
journals may still be resorted to if the attestation of the presiding officers is present.

Petitioner's argument that the attestation of the presiding officers of Congress is conclusive proof of
a bill's due enactment, required, it is said, by the respect due to a co-equal department of the
government, 11 is neutralized in this case by the fact that the Senate President declared his
signature on the bill to be invalid and issued a subsequent clarification that the invalidation
of his signature meant that the bill he had signed had never been approved by the Senate.
Obviously this declaration should be accorded even greater respect than the attestation it
invalidated, which it did for a reason that is undisputed in fact and indisputable in logic.

As far as Congress itself is concerned, there is nothing sacrosanct in the certification made by the
presiding officers. It is merely a mode of authentication. The lawmaking process in Congress ends
when the bill is approved by both Houses, and the certification does not add to the validity of the bill
or cure any defect already present upon its passage. In other words it is the approval by
Congress and not the signatures of the presiding officers that is essential.

It would limit the court's inquiry to the presence or absence of the attestation and to the effect of its
absence upon the validity of the statute. The inquiry, however, goes farther. Absent such attestation
as a result of the disclaimer, and consequently there being no enrolled bill to speak of, what
evidence is there to determine whether or not the bill had been duly enacted? In such a case the
entries in the journal should be consulted.

he journal of the proceedings of each House of Congress is no ordinary record. The

Constitution requires it. While it is true that the journal is not authenticated and is subject to the risks
of misprinting and other errors, the point is irrelevant in this case. This Court is merely asked to
inquire whether the text of House Bill No. 9266 signed by the Chief Executive was the same text
passed by both Houses of Congress. Under the specific facts and circumstances of this case, this
Court can do this and resort to the Senate journal for the purpose. The journal discloses that
substantial and lengthy amendments were introduced on the floor and approved by the Senate but
were not incorporated in the printed text sent to the President and signed by him. This Court is not
asked to incorporate such amendments into the alleged law, which admittedly is a risky
undertaking, 13 but to declare that the bill was not duly enacted and therefore did not become law.
This We do, as indeed both the President of the Senate and the Chief Executive did, when they
withdrew their signatures therein. In the face of the manifest error committed and subsequently
rectified by the President of the Senate and by the Chief Executive, for this Court to perpetuate that
error by disregarding such rectification and holding that the erroneous bill has become law would be
to sacrifice truth to fiction and bring about mischievous consequences not intended by the law-
making body.
In view of the foregoing considerations, the petition is denied and the so-called Republic Act No.
4065 entitled "AN ACT DEFINING THE POWERS, RIGHTS AND DUTIES OF THE VICE-MAYOR
OF THE CITY OF MANILA, FURTHER AMENDING FOR THE PURPOSE SECTIONS TEN AND
ELEVEN OF REPUBLIC ACT NUMBERED FOUR HUNDRED NINE, AS AMENDED, OTHERWISE
KNOWN AS THE REVISED CHARTER OF THE CITY OF MANILA" is declared not to have been
duly enacted and therefore did not become law. The temporary restraining order dated April 28,
1965 is hereby made permanent. No pronouncement as to costs.

● Gaanan v. IAC; G.R. No. L-69809, October 16, 1986

We rule for the petitioner.

The main issue in the resolution of this petition, however, revolves around the meaning of the phrase
"any other device or arrangement." Is an extension of a telephone unit such a device or arrangement
as would subject the user to imprisonment ranging from six months to six years with the accessory
penalty of perpetual absolute disqualification for a public officer or deportation for an alien? Private
secretaries with extension lines to their bosses' telephones are sometimes asked to use answering
or recording devices to record business conversations between a boss and another businessman.
Would transcribing a recorded message for the use of the boss be a proscribed offense? or for that
matter, would a "party line" be a device or arrangement under the law?

Whether or not listening over a telephone party line would be punishable was discussed on the floor
of the Senate. Yet, when the bill was finalized into a statute, no mention was made of telephones in
the enumeration of devices "commonly known as a dictaphone or dictagraph, detectaphone or
walkie talkie or tape recorder or however otherwise described." The omission was not a mere
oversight. Telephone party lines were intentionally deleted from the provisions of the Act.

The respondent People argue that an extension telephone is embraced and covered by the term
"device" within the context of the aforementioned law because it is not a part or portion of a complete
set of a telephone apparatus. It is a separate device and distinct set of a movable apparatus
consisting of a wire and a set of telephone receiver not forming part of a main telephone set which
can be detached or removed and can be transferred away from one place to another and to be
plugged or attached to a main telephone line to get the desired communication corning from the
other party or end.

The law refers to a "tap" of a wire or cable or the use of a "device or arrangement" for the purpose of
secretly overhearing, intercepting, or recording the communication. There must be either a physical
interruption through a wiretap or the deliberate installation of a device or arrangement in order to
overhear, intercept, or record the spoken words.

An extension telephone cannot be placed in the same category as a dictaphone, dictagraph or the
other devices enumerated in Section 1 of RA No. 4200 as the use thereof cannot be considered as
"tapping" the wire or cable of a telephone line. The telephone extension in this case was not installed
for that purpose. It just happened to be there for ordinary office use. It is a rule in statutory
construction that in order to determine the true intent of the legislature, the particular clauses and
phrases of the statute should not be taken as detached and isolated expressions, but the whole and
every part thereof must be considered in fixing the meaning of any of its parts. (see Commissioner of
Customs v. Esso Estandard Eastern, Inc., 66 SCRA 113,120).

The phrase "device or arrangement" in Section 1 of RA No. 4200, should be clarified to comprehend
instruments of the same or similar nature, that is, instruments the use of which would be tantamount
to tapping the main line of a telephone. It refers to instruments whose installation or presence cannot
be presumed by the party or parties being overheard because, by their very nature, they are not of
common usage and their purpose is precisely for tapping, intercepting or recording a telephone
conversation.

An extension telephone is an instrument when the extended unit does not have to be connected by
wire to the main telephone but can be moved from place ' to place within a radius of a kilometer or
more. A person should safely presume that the party he is calling at the other end of the line
probably has an extension telephone and he runs the risk of a third party listening as in the case of a
party line or a telephone unit which shares its line with another. As was held in the case of Rathbun
v. United States (355, U.S. 107, 2 L Ed 2d 137-138):

Common experience tells us that a call to a particular telephone number may cause the bell to ring
in more than one ordinarily used instrument. Each party to a telephone conversation takes the risk
that the other party may have an extension telephone and may allow another to overhear the
conversation. When such takes place there has been no violation of any privacy of which the parties
may complain. Consequently, one element of 605, interception, has not occurred.

In the same case, the Court further ruled that the conduct of the party would differ in no way if
instead of repeating the message he held out his hand-set so that another could hear out of it and
that there is no distinction between that sort of action and permitting an outsider to use an extension
telephone for the same purpose.

Furthermore, it is a general rule that penal statutes must be construed strictly in favor of the
accused. Thus, in case of doubt as in the case at bar, on whether or not an extension telephone is
included in the phrase "device or arrangement", the penal statute must be construed as not including
an extension telephone. In the case of People v. Purisima, 86 SCRA 542, 562, we explained the
rationale behind the rule:

American jurisprudence sets down the reason for this rule to be the tenderness of the law of the
rights of individuals; the object is to establish a certain rule by conformity to which mankind would be
safe, and the discretion of the court limited. (United States v. Harris, 177 US 305, 44 L Ed 780, 20 S
Ct 609; Braffith v. Virgin Islands (CA3) 26 F2d 646; Caudill v. State, 224 Ind 531, 69 NE2d; Jennings
v. Commonwealth, 109 VA 821,63 SE 1080, all cited in 73 Am Jur 2d 452). The purpose is not to
enable a guilty person to escape punishment through a technicality but to provide a precise definition
of forbidden acts." (State v. Zazzaro, 20 A 2d 737, quoted in Martin's Handbook on Statutory
Construction, Rev. Ed. pp. 183-184).

It can be readily seen that our lawmakers intended to discourage, through punishment, persons such
as government authorities or representatives of organized groups from installing devices in order to
gather evidence for use in court or to intimidate, blackmail or gain some unwarranted advantage
over the telephone users. Consequently, the mere act of listening, in order to be punishable must
strictly be with the use of the enumerated devices in RA No. 4200 or others of similar nature. We are
of the view that an extension telephone is not among such devices or arrangements.

WHEREFORE, the petition is GRANTED. The decision of the then Intermediate Appellate Court
dated August 16, 1984 is ANNULLED and SET ASIDE. The petitioner is hereby ACQUITTED of the
crime of violation of Rep. Act No. 4200, otherwise known as the Anti-Wiretapping Act.

SO ORDERED.

Facts: complainant and his client were in the living room of complainant’s residence discussing the
terms for the withdrawal of the complaint for direct assault which they filed with the the City Fiscal
against Laconico. After they had decided on the proposed conditions, complainant made a
telephone call to Laconico. Laconico telephoned appellant, to advise him on the settlement of the
direct assault. When complainant called up, Laconico requested appellant to secretly listen to the
telephone conversation through a telephone extension so as to hear personally the proposed
conditions for the settlement. Appellant heard complainant enumerate the following conditions for
withdrawal of the complaint for direct assault. Twenty minutes later, complainant called up again to
ask Laconico if he was agreeable to the conditions. Laconico answered ‘Yes’. Complainant then told
Laconico to wait for instructions on where to deliver the money. Complainant called up again and
instructed Laconico to give the money to his wife at the office of the then Department of Public
Highways. Laconico who earlier alerted his friend Colonel Zulueta of the Criminal Investigation
Service of the Philippine Constabulary, insisted that complainant himself should receive the money.
When he received the money at the Igloo Restaurant, complainant was arrested by agents of the
Philippine Constabulary. Appellant executed an affidavit stating that he heard complainant demands
for the withdrawal of the case for direct assault. Laconico attached the affidavit of appellant to the
complainant for robbery/extortion which he filed against complainant. Since appellant listened to the
telephone conversation without complainant’s consent, complainant charged appellant and Laconico
with violation of the Anti-Wiretapping Act. After trial on the merits, the lower court, in a decision dated
November 22, 1982, found both Gaanan and Laconico guilty of violating Section 1 of Republic Act
No. 4200. Not satisfied with the decision, the petitioner appealed to the appellate court who affirmed
the decision of the trial court, holding that the communication between the complainant and accused
Laconico was private in nature and, therefore, covered by Rep. Act No. 4200;

Issue: Whether “any other device or arrangement” includes extension phones and listening thru it is
a violation of RA 4200.

Held: No, an extension telephone cannot be placed in the same category as a dictaphone,
dictagraph or the other devices enumerated in Section 1 of RA No. 4200 as the use thereof cannot
be considered as “tapping” the wire or cable of a telephone line. The telephone extension in this
case was not installed for that purpose. It just happened to be there for ordinary office use. It is a
rule in statutory construction that in order to determine the true intent of the legislature, the particular
clauses and phrases of the statute should not be taken as detached and isolated expressions, but
the whole and every part thereof must be considered in fixing the meaning of any of its parts.
Likewise, Article 1372 of the Civil Code stipulates that ‘however general the terms of a contract may
be, they shall not be understood to comprehend things that are distinct and cases that are different
from those upon which the parties intended to agree.’ Similarly, Article 1374 of the same Code
provides that ‘the various stipulations of a contract shall be interpreted together, attributing to the
doubtful ones that sense which may result from all of them taken jointly. The law refers to a “tap” of a
wire or cable or the use of a “device or arrangement” for the purpose of secretly overhearing,
intercepting, or recording the communication. There must be either a physical interruption through a
wiretap or the deliberate installation of a device or arrangement in order to overhear, intercept, or
record the spoken words.

Hence, the phrase “device or arrangement” in Section 1 of RA No. 4200, although not exclusive to
that enumerated therein, should be construed to comprehend instruments of the same or similar
nature, that is, instruments the use of which would be tantamount to tapping the main line of a
telephone. It refers to instruments whose installation or presence cannot be presumed by the party
or parties being overheard because, by their very nature, they are not of common usage and their
purpose is precisely for tapping, intercepting or recording a telephone conversation.

● Manila Jockey Club v. GAB; G.R. No. L-12727; February 29, 1960

Appellants' contention cannot be sustained. Section 4 Republic Act No. 309, as amended by
Republic Act No. 983, by express terms, specifically reserved 23 Sundays and 16 Saturdays for the
Philippine Anti-Tuberculosis Society, the White Cross, Inc. and the PCSO, and 12 Saturdays to the
President for other charitable, relief, or civic purposes. These days can not be disposed of by the
GAB without authority of law. As to the remaining racing days, the law provides:

SEC. 4. Racing days.—Private individuals and entities duly licensed by the Commission on Races
(now GAB) may hold horse races on Sundays not reserved under this Act, on twenty-four Saturdays
as may be determined by the said Commission (GAB), and on legal holidays, except Thursday and
Friday of Holy Week, July fourth, commonly known as Independence Day, and December thirtieth,
commonly known as Rizal Day.

It is clear from the above-quoted provision that appellants have no vested right to the unreserved
Sundays, or even to the 24 Saturdays (except, perhaps, on the holidays), because their holding of
races on these days is merely permissive, subject to the licensing and determination by the GAB.
When, therefore, Republic Act No. 1502 was enacted increasing by six (6) the sweepstakes draw
and races, but without specifying the days for holding them, the GAB had no alternative except to
make room for the additional races, as it did, form among the only available racing days unreserved
by any law — the Sundays on which the private individuals and entities have been permitted to hold
their races, subject to licensing and determination by the GAB.

The law does not authorize the holding of horse races with betting on week days (See Article 198 of
the Revised Penal Code). Secondly, sweepstakes races have always been held on Sundays.
Besides, it is not possible to hold them on Saturday afternoons as, it is claimed, a whole day is
necessary for the mixing of the sweepstakes balls, the drawing of winning sweepstakes numbers,
and the running of the sweepstakes races. Be that as it may, since the law has given certain amount
of discretion to the GAB in determining and allocating racing days not specifically reserved, and
since the court does not find that a grave abuse of this discretion has been committed, there seems
to be no reason, legal or otherwise, to set aside the resolution of the GAB.

Appellants cite legislative debates and explanatory statements by members of the legislature may be
resorted to, to throw light on the meaning of the words used in the statutes. Upon the other hand, the
appellees, likewise, quote in their briefs other authorities to the effect that statements made by the
individual members of the legislature as to the meaning of provisions in the bill subsequently
enacted into law, made during the general debate on the bill on the floor of each legislative house,
following its presentation by a standing committee, are generally held to be in admissable as an aid
in construing the statute. Legislative debates are expressive of the views and motives of individual
members and are not safe guides and, hence, may not be resorted to in ascertaining the meaning
and purpose of the lawmaking body. It is impossible to determine with certainty what construction
was put upon an act by the members of the legislative body that passed the bill, by resorting to the
speeches of the members thereof. Those who did not speak, may not have agreed with those who
did; and those who spoke, might differ from each other.1

In view of these conflicting authorities, no appreciable reliance can safely be placed on any of them.
It is to be noted in the specific case before us, that while Congressmen Marcos and Abeleda were,
admittedly, of the view that the additional sweepstakes races may be inserted in the club races, still
there is nothing in Republic Act No. 1502, as it was finally enacted, which would indicate that such
an understanding on the part of these two members of the Lower House of Congress were received
the sanction or conformity of their colleagues, for the law is absolutely devoid of any such indication.
This is, therefore, not a case where a doubtful wording is sought to be interpreted; rather, if we adopt
appellants' theory, we would be supplying something that does not appear in the statute. It is
pertinent to observe here that, as pointed out by one of appellants' own cited authorities, 2 in the
interpretation of a legal document, especially a statute, unlike in the interpretation of an ordinary
written document, it is not enough to obtain information to the intention or meaning of the author or
authors, but also to see whether the intention or meaning has been expressed in such a way as to
give it legal effect and validity. In short, the purpose of the inquiry, is not only to know what the
author meant by the language he used, but also to see that the language used sufficiently expresses
that meaning. The legal act, so to speak, is made up of two elements — an internal and an external
one; it originates in intention and is perfected by expression. Failure of the latter may defeat the
former. The following, taken from 59 Corpus Juris 1017, is in the line with this theory:

The intention of the legislature to which effect must be given is that expressed in the statute and the
courts will not inquire into the motives which influence the legislature, or individual members, in
voting for its passage; nor indeed as to the intention of the draftsman, or the legislature, so far as it
has been expressed in the act. So, in ascertaining the meaning of a statute the court will not be
governed or influenced by the views or opinions of any or all members of the legislature or its
legislative committees or any other persons.

Upon the other hand, at the time of the enactment of Republic Act No. 1502 in June, 1956, the long,
continuous, and uniform practice was that all sweepstakes draws and races were held on Sundays
and during the whole day. With this background, when Congress chose not to specify in express
terms how the additional sweepstakes draws and races would be held, it is safe to conclude that it
did not intend to disturb the then prevailing situation and practice.

"On the principle of contemporaneous exposition, common usage and practice under the statute, or
a course of conduct indicating a particular undertaking of it, will frequently be of great value in
determining its real meaning, especially where the usage has been acquired in by all parties
concerned and has extended over a long period of time; . . . (59 C. J. 1023).

Likewise, the language of Republic Act No. 1502 in authorizing the increase, clearly speaks of
regular sweepstakes draws and races. If the intention of Congress were to authorize additional
sweepstakes draws only which could, admittedly, be inserted in the club races, the law would not
have included regular races; and since regular sweepstakes races were specifically authorized, and
it would be confusing, inconvenient, if not impossible to mix these sweepstakes races with the
regular club races all on the same day (and it has never been done before), the conclusion seems
inevitable that the additional sweepstakes draws and races were intended to be held on a whole
day, separate and apart from the club races.

Appellants' contention that to compel them to permit the PCSO to use their premises and equipment
against their will would constitute deprivation of property without due process of law, deserves no
serious consideration. As the lower court has found, every time the PCSO uses appellants' premises
and equipment, they are paid rentals in accordance with the terms of separate contracts of lease
existing between them and the PCSO.

The decision appealed from, being in consonance with the above findings and considerations of this
Court, the same is hereby affirmed, with costs against the appellants. So ordered.
 ○

The issue in both cases is the same — whether a government employee compulsorily retired at the
age of 65 years under the provisions of Commonwealth Act No. 186, as amended, is entitled to the
refund of the 5% discount made by the GSIS from his five-year lump sum annuity under Section
11(a)-3 of said Act, as amended.

It is conceded that such issue has been squarely decided by this Court in Bautista vs. Auditor
General (L-10859, August 29, 1958) in which we said:

Flaviano Bautista was an Auditor in the General Auditing Office who was "automatically and
compulsorily retired on June 16, 1952, at the age of 65 years, 5 months and 21 days with a
creditable service of 46 years, 6 months and 2 days. He chose to receive a lump sum payment of
the present value of his annuity for the first five years, as provided for in Article II, Section 11,
paragraph (a), No. 3, of Commonwealth Act No. 186, as amended by Republic Act No. 660, the law
in force at the time he was retired. The Government Service Insurance System paid to the petitioner
the sum of P14,853.61, based upon the following computation:

Amount of annuity, 1st 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . P18,007.80

Less: Discount at 5% per annum computed annually . . . . . 2,060.75

Present value of annuity, 1st 5 years . . . . . . . . . . . . . . . . . . . . P15,947.05

Less: Premium account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,093.44

Net annuity paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P14,853.61

The petitioner objected to the deduction of the sum of P2,060.75 and requested that the same be
paid to him, invoking the rule laid down in Espejo vs. Auditor General, 51 Off. Gaz. 2962. The
System denied his request for the following reasons:

"... . In advancing to you your first 5 years annuity under the said Act which, otherwise, would have
been paid to you monthly for 60 months, the system paid to you only the "present value" of said first
5 years annuity. This is pursuant to section 11(a), paragraph (3) of C.A. No. 186, as inserted by
section 8 of R.A. No. 660, which was the law in force on the date of your retirement, which reads:

(3) For those who are at least sixty-five years of age, lump sum payment of present value of
annuity for first five years and future annuity to be paid monthly; or ... .

"The term "present value" as used in the law has a technical meaning. It is that amount which, if
invested now to earn a fixed rate of interest, will be equivalent to a specified amount due on a
specific date in the future. In other words, to pay the present value of the annuity for first 5 years is
synonymous to discounting said annuity. In computing the present value of annuity under C.A. No.
186, as amended, the System pursuant to Section 17(d) thereof, is authorized to charge interest at
the rate of 5% per annum, compounded annually, as was due in your case.

"With the enactment of R.A. No. 728, which was made effective on June 18, 1952, section 11(a),
paragraph (3) above-quoted, was amended to read:

(3) For those who are at least sixty-five years of age, lump sum payment of present value of annuity
for first five years and future annuity to be paid monthly: Provided, however, That there shall be no
discount from the annuity for the first five years of those who are sixty-five years of age or over on
the date of approval of Republic Act Numbered Six Hundred Sixty.
"Even granting, therefore, for the sake of argument that this law has a retroactive effect still you are
not covered by the exemption thereunder as to be paid in lump sum the annuity for first 5 years
without discount inasmuch as you did not attain the age of 65 years on June 16, 1951, the date of
approval of R.A. No. 660, your date of birth being December 24, 1986. This provision was again
further amended on June 16, 1954 by R.A. No. 1122, in which the law now stands as was originally
enacted."

He appealed to the Auditor General. The latter upheld the decision of the System. Hence this
petition.

A similar question was passed upon by this Court in Espejo vs. Auditor General, supra, in favor of
the retired employees. This Court said:

"The last issue posed by the petitioner-appellant is whether the Government Service Insurance
System has the right to subject the lump payment of the first five years of his gratuity to a discount
of 5 per cent compounded annually, amounting in this case to P1,436.18. The appellee Auditor
General defends the action of the Insurance System by invoking Section 11(a) (3), Republic Act No.
728 amendatory to Commonwealth Act 186 and Republic Act No. 660, to the effect that employees
retiring are entitled:

(3) For those who are at least sixty-five years of age, lump sum payment of present value of annuity
for first five years and future annuity to be paid monthly: Provided, however, That there shall be no
discount from the annuity for the first five years of those who are sixty-five years of age or over on
the date of approval of Republic Act Numbered Six Hundred Sixty."

and it is not denied that when Republic Act 660 was approved on June 16, 1951, petitioner Espejo
was not yet 65 years old.

"It is a fact, however, that Espejo, did reach the age of compulsory retirement before Republic Act
728 was enacted, and that at such time Republic Act 660 merely provided for lump sum payment of
the annuity for the first five years, without any mention whatsoever of discounts. When the
retirement rights of petitioner became vested, therefore, he became entitled to a full payment of the
first five years of his annuity, and the proviso inserted by Republic Act No. 728 (restricting re-
discount privileges) could not operate retroactively to the prejudice of the vested rights of petitioner
herein. Hence, this appeal from the order imposing the discount should be sustained."

There is no cogent reason for abandoning the foregoing rule. Republic Act No. 660, which took
effect on 16 June 1951, amending Commonwealth Act No. 186, the law in force at the time the
petitioner was automatically and compulsorily retired on 16 June 1952, establishing a retirement
system for officers and employees of the Government, "designed primarily to provide for old age
and disability." It sets the optional retirement age at 57 years, provided the retiring officer or
employee has rendered thirty years of service, and the automatic and compulsory retirement age of
65 years, provided the retiring officer or employee has rendered fifteen years of service. To those
who are automatically and compulsorily retired the law grants the choice of receiving a lump sum
payment of the present value of their annuity for the first five years or an annuity to be paid monthly.
The law grants this benefit only to those who are automatically and compulsorily retired, because
one who reaches that age is generally disabled and approaching the end of his natural life. If he is
disabled or sick, he needs medical care and attention. Unlike an officer or employee who is a
member of the System and retires at 57 years, he may no longer engage in another occupation to
supplement his income that has been greatly reduced by his retirement, since the monthly annuity a
retired officer or employee gets is much lower than the monthly salary he used to receive. It is
during these remaining days that the law grants to a retired officer or employee a substantial sum
which he may spend for his sustenance. To adopt the respondents' reasoning and allow the
deduction made from the petitioner's lump sum annuity for the first five years would run counter to
the spirit of the law.

Moreover, the term present value" is used in its ordinary and not in its technical and restrictive
sense. Furthermore, in the subsequent amendatory acts, Republic Act No. 1123, approved on 16
June 1954, and Republic Act No. 1573, approved on 16 June 1956, the proviso in Republic Act No.
728 relied upon by the respondents has been stricken out, thereby removing whatever doubt there
might have been in the intent and meaning of the term "present value" of the lump sum annuity for
the first five years to which the petitioner is entitled. The striking out of such provision only means
that no such deduction may be made. Finally, Commonwealth Act No. 186, as amended, has been
enacted for the benefit of the officer or employee and all doubts as to the intent of the law should be
resolved in his favor.
The decision of the Auditor General under review, sustaining that of the General Manager of the
Government Service Insurance System, is reversed, and the latter ordered to pay to the petitioner
the sum of P2,060.75, without pronouncement as to costs.

The main reason adduced by appellants in urging a reconsideration and reversal of the view taken
by this Court in the Bautista case is that, subsequently to the rendition of our decision therein,
appellants herein found some facts allegedly unknown to them before, which facts, they believe,
indicate that the intent of Congress in enacting the legal provision under consideration is other than
that set forth in said decision. These new facts are said to consist of some views expressed on the
floor of the House of Representatives, during the consideration of the bill, which, upon subsequent
approval by the two (2) Houses of Congress, became Republic Act No. 660, regarding the purpose
and effect thereof. This Court has already held, however, that such views do not necessarily reflect
the feeling of the House of Representatives, much less that of the Senate, and that, accordingly,
they are not controlling in the interpretation of the law in question (Casco Phil. Chemical Co., Inc.
vs. Gimenez, L-17931, February 28, 1963; Manila Jockey Club, Inc. vs. Games & Amusement
Board, L-12727, February 29, 1960). Inasmuch, moreover, as the other arguments of appellants
herein are a substantial reiteration of those invoked before this Court and considered by the same
in the Bautista case, we find no reason to modify or disturb the doctrine therein laid down.

WHEREFORE, the decisions appealed from must be, as they are hereby affirmed, with costs
against respondents-appellants in G.R. No. L-20503 and defendants-appellants in G.R. No. L-
20632. It is so ordered.
 ● Nestle v. CA; G.R. No. 86738; November 13, 1991

[t]he principle that the contemporaneous construction of a statute by the executive officers of the
government, whose duty is to execute it, is entitled to great respect, and should ordinarily control the
construction of the statute by the courts, is so firmly embedded in our jurisdiction that no authorities
need be cited to support it. 7

When all or part of the newly authorized capital stock is proposed to be issued as stock dividends,
the SEC requirements are even more exacting; they require, in addition to the regular audited
financial statements, the submission by the corporation of a "detailed or Long Form Report of the
certifying Auditor." Moreover, since approval of an increase in authorized capital stock by the
stockholders holding two-thirds (2/3) of the outstanding capital stock is required by Section 38 of the
Corporation Code, at a stockholders meeting held for that purpose, the directors and officers of the
corporation may be expected to take pains to inform the shareholders of the financial condition and
prospects of the corporation and of the proposed utilization of the fresh capital sought to be raised.

Upon the other hand, as already noted, issuance of previously authorized but theretofore unissued
capital stock by the corporation requires only Board of Directors approval. Neither notice to nor
approval by the shareholders or the SEC is required for such issuance. There would, accordingly,
under the view taken by petitioner Nestle, no opportunity for the SEC to see to it that shareholders
(especially the small stockholders) have a reasonable opportunity to inform themselves about the
very fact of such issuance and about the condition of the corporation and the potential value of the
shares of stock being offered.

Under the reading urged by petitioner Nestle of the reach and scope of the third clause of Section
6(a) (4), the issuance of previously authorized but unissued capital stock
would automatically constitute an exempt transaction, without regard to the length of time which may
have intervened between the last increase in authorized capital stock and the proposed issuance
during which time the condition of the corporation may have substantially changed, and without
regard to whether the existing stockholders to whom the shares are proposed to be issued are only
two giant corporations as in the instant case, or are individuals numbering in the hundreds or
thousands.

In contrast, under the ruling issued by the SEC, an issuance of previously authorized but still
unissued capital stock may, in a particular instance, be held to be an exempt transaction by the SEC
under Section 6(b) so long as the SEC finds that the requirements of registration under the Revised
Securities Act are "not necessary in the public interest and for the protection of the investors" by
reason, inter alia, of the small amount of stock that is proposed to be issued or because the potential
buyers are very limited in number and are in a position to protect themselves. In fine, petitioner
Nestle's proposed construction of Section 6(a) (4) would establish an inflexible rule of automatic
exemption of issuances of additional, previously authorized but unissued, capital stock. We must
reject an interpretation which may disable the SEC from rendering protection to investors, in the
public interest, precisely when such protection may be most needed.

Petitioner Nestle's second claim for exemption is from payment of the fee provided for in Section 6
(c) of the Revised Securities Act, a claim based upon petitioner's contention that Section 6 (a) (4)
covers both issuance of stock in the course of complying with the statutory requirements of increase
of authorized capital stock and issuance of previously authorized and unissued capital stock.
Petitioner claims that to require it now to pay one-tenth of one percent (1%) of the issued value of
the 344,500 shares of stock proposed to be issued, is to require it to pay a second time for the same
service on the part of the SEC. Since we have above rejected petitioner's reading of Section 6 (a)
(4), last clause, petitioner's claim about the additional fee of one-tenth of one percent (1%) of the
issue value of the proposed issuance of stock (amounting to P34,450 plus P344.50 for other fees or
a total of P37,794.50) need not detain us for long. We think it clear that the fee collected in 21
February 1983 by the SEC was assessed in connection with the examination and approval of the
certificate of increase of authorized capital stock then submitted by petitioner. The fee, upon the
other hand, provided for in Section 6 (c) which petitioner will be required to pay if it does file an
application for exemption under Section 6 (b), is quite different; this is a fee specifically authorized by
the Revised Securities Act, (not the Corporation Code) in connection with the grant of an exemption
from normal registration requirements imposed by that Act. We do not find such fee either
unreasonable or exorbitant.

WHEREFORE, for all the foregoing, the Petition for Review on Certiorari is hereby DENIED for lack
of merit and the Decision of the Court of Appeals dated 13 January 1989 in C.A.-G.R. No. SP-
13522, is hereby AFFIRMED. Costs against petitioner.

● Philippine Sugar Central v. Collector of Customs; G.R. No. 27761; Dec. 06,
1927

The court ruled that by a comparison, it will be seen that the law of 1909 changes the duty of
seventy-five cents ($0.75) per gross ton of 1,000 kilos to $1 per gross ton, and that the words "as a
charge for wharfage and for harbor dues" now read "as a charge for wharfage." That the words "and
for harbor dues," found in the Customs Tariff of 1901 and 1905, were omitted from the Tariff Act of
1909.

The question now before the court is the meaning of the words "as a charge for wharfage," as those
words are used in section 14 of the Tariff Act of 1909.

Wharfage is a charge or rent for the temporary use of a wharf.

Wharfage is the fee paid for tying vessels to a wharf, or for loading goods on a wharf of shipping
them therefrom.

Wharfage is money due or money actually paid for the privilege of landing goods upon or loading a
vessel, while moored, from a wharf.

Wharfage or keyage is a toll or duty for the pitching or lodging of goods upon a wharf, or pay for
taking goods into a boat and from thence.

In the instant case, we have an Act of Congress which specifically authorizes the levying of the duty
in question "as a charge for wharfage." In construing the meaning of those words as used in that
law, we must take into consideration the relative situation and the conditions existing at the time the
law was enacted. That is to say, it is the law of the land that even a municipality on a navigable river
in a State of the United States has the legal right to pass and enforce an ordinance to require a
vessel to pay wharfage tax for the use of a wharf within the city limits, and that a tax even by a city
for such a purpose does not interfere with, and is not a charge on, United States commerce.

It is vigorously contended that by reason of the fact that the sugar in question was loaded from a
private wharf and not from a Government wharf, that the Government has no legal right to levy and
collect the duty "as a charge for wharfage." In construing the law now in question, we should take
into consideration its history, relative situation and the conditions existing at the time it was enacted.

At the time of its enactment of custom tariff 1901, theGovernment of the Philippine Islands did not
have, own or operate a pier or wharf anywhere or at any place, a fact which must have been known
to the Commission which enacted the law.

The court held that we have a law which since 1901 has been construed by its officials to mean that
the Government of the Philippine Islands is entitled to levy and collect a duty of $1 per gross ton "as
a charge for wharfage" upon all articles, goods, wares and merchandise exported through the ports
of entry of the Philippine Islands, and that construction has been acquiesced in and accepted, and
the money paid without any protest or objection for twenty-six years, for many years of which the
Government never even owned or operated a wharf.

It also appears that Pulupandan, the place from which the sugar was shipped, was made a port of
entry of the Philippine Islands on March 17, 1923, and that on January 19, 1925, the Legislature
appropriated P750,000 for improvements made and to be made in that port, which were to consist
not only of the building of a wharf, but the construction of breakwaters, sea walls and the dredging of
the harbor.

This rule is well stated in Sutherland on Statutory Construction, volume 2, page 889, where it is said:

"The practical construction given to a doubtful statute by the department or officers whose duty it is
to carry it into execution is entitled to great weight and will not be disregarded or overturned except
for cogent reasons, and unless it is clear that such construction is erroneous." Citing numerous
decisions.

The purpose of the law was to authorize the Government of the Philippine Islands to levy a duty of
$1 per gross ton "as a charge for wharfage." Being an Act of Congress, the law would be valid if it
did not specify the purpose for which the duty was to be levied and collected. Without such a
provision it would then be construed as a duty on tonnage, and Congress would have a right to
enact that kind of a law. The omission from the Act of 1909 of the words "and for harbor dues" in the
previous law is very significant and would clearly indicate that it was not the intent of Congress under
the Act of 1909 that duty should be levied on tonnage.

In view of the fact that in 1901 there were no wharves or piers in the Philippine Islands, and of the
conditions then existing and the enactment of the law in 1901 under the same conditions, and its
reenactment by Congress in 1905 under similar conditions, and of the present law of 1909 and of the
continuous construction of the law placed upon it by the Government officials, and the further fact
that the duty in question has been paid without any protest or objection for twenty-six-years, during
which time the Government has expanded millions of pesos in the construction of wharves, and that
it now owns and operates large an extensive wharves in all of its principal ports of entry and that
Congress has never seen fit to repeal the law of 1909, we are forced to the conclusion that it was the
purpose and intent of the act in question to give the Government of the Philippine Islands authority to
levy and collect such a duty of $1 per gross ton, and that the money derived from such sources
should be used, deemed and treated as a trust fund, for the purpose of acquiring and constructing
wharves by the Government of the Philippine Islands. In truth and in fact, that is what has been done
in all of its principal ports of entry.

Pulupandan was made a port of entry of March 17, 1923. It further appears that in line with its policy,
the Legislature on January 19, 1925, made an appropriation of P750,000 for improvements made
and to be made in that port, which were to consist not only of the building of a wharf, but the
construction of breakwaters, sea walls and the dredging of the harbor.

Based on the conditions existing in 1901 and as they exist now, we have a legal right to assume that
the money derived from such sources has been appropriated and used by the Government for the
erection and construction of wharves and the improvement of its harbors.
 ● Bengzon v. Secretary of Justice; G.R. No. 42821; January 18, 1936

ISSUE: to test the validity of the veto by the Governor-General of section 7 of Act No. 4051, the
Retirement Gratuity Law

Act No. 4051 is entitled, "An Act to provide for the payment of retirement gratuities to officers and
employees of the Insular Government retired from the service as a result of the reorganization or
reduction of personal thereof, including the justice of the peace who must relinquish office in
accordance with the provisions of Act Numbered Thirty-eight hundred and ninety-nine, and for other
purposes." The body of the Act provides in several sections for the officers and employees who may
be granted gratuities thereunder, the rates of of gratuities to be paid, and other matters. Among
these sections, as the bill passed the Philippine Legislature, was section 7, reading: "The justices of
the peace who must relinquish office during the year nineteen hundred and thirty-three in
accordance with the provisions of Act Numbered Thirty-eight hundred and ninety-nine, shall also be
entitled to the gratuities provided for in this Act." Following this is section 10, reading: "The
necessary sum to carry out the purposes of this Act is hereby appropriated out of any funds in the
Insular Treasury not otherwise appropriated," and section 12 reading: "If, for any reason, any section
or provision of this Act is disapproved by the Governor-General or is challenged in a competent court
and is held to be unconstitutional or invalid, one of the other sections or provisions hereof shall be
affected thereby and such other sections and provisions shall continue to govern as if the section or
provision so disapproved or held invalid had never been incorporated in this Act." The Act was
"approved" by the Governor-General, section 7 excepted, February 21, 1933." The Philippine
Legislature accepted the veto.

Section 19 of the former Organic Act, the Act of Congress of August 29, 1916, established the
practice for the enactment of a law, including the sanctioning of the veto power by the Governor-
General. Specifically, it provided: "The Governor-General shall have the power to veto any particular
item or items of an appropriation bill, but the object." The Constitution of the Philippines, article VI,
section 11 (2) contains ab exactly similar provision, except that the words "The President" are
substituted for the words "The Governor-General," and except that succeeding sentences in the
constitution prescribed the procedure for vetoing one or more items of an appropriation bill in a more
explicit manner.

Within the meaning of these word, is Act No. 4051 an appropriation bill? Are there particular items in
that bill which the Governor-General could constitutionally veto? We are led to answer both question
in the affirmative.

The former Organic Act and the present Constitution of the Philippines make the Chief Executive an
integral part of the law-making power. His disapproval of a bill, commonly known as a veto, is
essentially a legislative act. The questions presented to the mind of the Chief Executive are precisely
the same as those the legislature and must determine in passing a bill, except that his will be a
broader point of view.

The Constitution is a limitation upon the power of the legislative department of the government, but
in this respect it is a grant of power to the executive department. The Legislature has the affirmative
power to enact laws; the Chief Executive has the negative power by the constitutional exercise of
which he may defeat the will of the Legislature. It follows that the Chief Executive must find his
authority in the Constitution. But in exercising that authority he may not be confined to rules of strict
construction or hampered by the unwise inference of the judiciary. The courts will indulge every
intendment in favor of the constitutionality of a veto the same as they will presume the
constitutionality of an act as originally passed by the Legislature.

While contemporaneous construction is not decisive for the courts, yet where a construction of
statutes has been adopted by the legislative department and accepted by the various agencies of
the executive department, it is entitled to great respect. It is our understanding that it has been the
practice of the Chief Executive in the interpretation of his constitutional powers to veto separate
items in bills analogous to that before us, and that this practice has been acquiesced in previously
without objection, so that it would require a clear showing or unconstitutionality for the courts to
declare against it. Since, therefore, legislative intent and executive purpose is evident, it devolves
upon the judiciary to give differential attention to the attitude assumed by the other two branches of
the Government.

There can be no doubt that Act No. 4051 is an appropriation bill. That is manifest from its provisions,
and particularly from section 10 by which the necessary sum to carry out the purposes of the Act
was "hereby appropriated out of any funds in the Insular Treasury not otherwise appropriated." It
has, however, been faintly suggested that by an appropriation bill is meant a general appropriation
bill. We are shown nothing substantial to support this allegation. Unlike in other constitutions, the
word "general" was omitted, and we presume intentionally, from the Organic Act and the
Constitution. Under such conditions, the courts would not be authorized to insert a word and by so
doing amend the law

he Chief Executive had the right to object to the expenditure of money for a specified purpose and
amount without being under the necessity of at the same time refusing to agree to other
expenditures which met with his entire approval, and that intention was unequivocably expressed.

Deciding, therefore, the main issue as requested by the petitioner and appellant, we are constrained
to rule against him and to hold that the veto by the Governor-General of section 7 of Act No. 4051
was in conformity with the legislative purpose and the provisions of the Organic Act.
 ● Philippine Global Communications v. Relova; G.R. No. L-60548;
Nov. 10, 1986

The legal issues raised in this petition are as follows: (1) Whether or not petitioner is authorized
under its legislative franchise, Republic Act No. 4617, to establish stations or substations in places
or points outside Metropolitan Manila; and (2) Whether or not the establishment of such stations or
substations constitutes "domestic service" within the terms of petitioner's legislative franchise.

However, we rule that the lower court erred in rendering the decision appealed from, inasmuch as
the same is contrary to the provisions of petitioner's legislative franchise (R.A. No. 4617) as well as
the contemporaneous construction placed upon it by the governmental agency charged with its
enforcement and the opinion of the former Secretary of Justice.

Section 1 of petitioner's franchise provides:

Section 1. — There is hereby granted to the RCA Communications Inc., hereinafter referred to as
the Grantee, the right and the privilege of constructing, maintaining and operating communications
system by radio wire, satellites, and other means now known to science or which in the future may
be developed for the reception and transmission of messages between any point in the Philippines
to points exterior thereto, including airplanes, airships or vessels even though such airplanes,
airships or vessels, may be located within the territorial limits of the Philippines.

RCA Communications, Inc. was subsequently renamed Philippine Global Communications, Inc.,
herein petitioner.

It is always timely to reiterate that: "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. "(Lizarraga Hermanos vs. Yap Tico, 24 Phil.
504, 513; Republic Flour Mills, Inc. vs. Commissioner of Customs, 39 SCRA 269)

Moreover, legislative intent must be ascertained from consideration of the statute as a whole. As the
Court reiterated in the case of Aisporna vs. Court of Appeals:

... The particular words, clauses and phrases should not be studied as detached and isolated
expressions, but the whole and every part of the statute must be considered in fixing the meaning of
any of its parts and in order to produce harmonious whole. (Araneta vs. Concepcion, 99 Phil. 709;
Tamayo vs. Gsell, 35 Phil. 953; Lopez vs. El Hogar Filipino, 47 Phil. 249; Chartered Bank vs.
Imperial, 48 Phil 931) A statute must be so construed as to harmonize and give effect to all its
provisions whenever possible. (People vs. Polmon, 86 Phil; 350) (113 SCRA 459,466; April 12,
1982)

The lower court held that the word "any" in the abovequoted Section 1 of the law means a single
point within the Philippines where petitioner at its choice, subject to approval by the proper
governmental agency, can establish and maintain a reception and communication station or system.
It also held that the establishment, maintenance and operation of franchise or stations anywhere in
the Philippines or even within Metropolitan Manila outside or apart from petitioner's principal or main
station in Makati constitute "domestic communication service" in violation of Section 17 of said law.

However, a reading of other sections of the law aside from Sections 1 and 17 cited by the lower
court would lead to no other conclusion than that said law authorizes petitioner to construct, maintain
and operate, apart from its principal station in Makati, other stations or branches within the
Philippines for purposes of its international communications operations.
Section 3 of the law provides that "for the purpose of carrying out the privilege granted herein, the
grantee may establish stations in such places in the Philippines as the grantee may select and the
Secretary of Public Works and Communications may approve.

Section 4 (a) provides that "the Secretary of Public Works and Communications shall have the
power to allot to the grantee the frequencies and wave lengths to be used thereunder and determine
the stations to and from which each such frequency and wave lengths may be used, and issue to
the grantee a license for such use. "

Section 6 provides that "a special right is reserved to the Government of the Republic of the
Philippines, in time of war, insurrection, or domestic trouble, to take over and operate the
said stations upon the order and direction of any authorized department of the Government of the
Philippines, such department to compensate the grantee for the use of said stations during the
period when they shall be so operated by the said Government. "

Section 9 provides that "the grantee shall hold the national, provincial, and municipal governments
of the Philippines, harmless from all claims, accounts, demands, or actions arising out of accidents
or injuries, whether the property or to persons, caused by the construction or operation of
the stations of the grantee."

With respect to the principle of contemporaneous construction of a statute by the executive officers
of the government whose duty it is to execute it, it is well to reiterate that:

... As far back as In re Allen, (2 Phil. 630) a 1903 decision, Justice McDonough, as ponente, cited
this excerpt from the leading American case of Pennoyer v. McConnaughy, decided in 1891: "The
principle that the contemporaneous construction of a statute by the executive officers of the
government, whose duty it is to execute it, is entitled to great respect, and should ordinarily control
the construction of the statute by the courts, is so firmly embedded in our jurisprudence that no
authorities need be cited to support it.' (Ibid, 640. Pennoyer v. McConnaughly is cited in 140 US 1.
The excerpt is on 23 thereof. Cf. Government v. Municipality of Binalonan, 32 Phil, 634 [1915])
There was a paraphrase by Justice Malcolm of such a pronouncement in Molina v. Rafferty, (37 Phil.
545) a 1918 decision:" Courts will and should respect the contemporaneous construction placed
upon a statute by the executive officers whose duty it is to enforce it, and unless such interpretation
is clearly erroneous will ordinarily be controlled thereby. (Ibid, 555) Since then, such a doctrine has
been reiterated in numerous decisions. (Cases cited) (Philippine Association of Free Labor Unions
[PAFLU] vs. Bureau of Labor Relations, August 21, 1976, 72 SCRA 396, 402)

In its decision of May 24, 1979 granting petitioner final authority to establish a branch/station in Cebu
City, the BOC construed the legislative franchise of petitioner, as follows:

It was the earlier contention of this Board when it issued Memorandum Circular No. 77-13 (See incl.
1 of said Circular) that no international record carrier could establish stations in any point of the
country, for purposes of carrying out its international record operations except in Metropolitan Manila
Area. However, a careful review and deliberation on the stand taken by the applicant herein as
discussed in position paper it submitted to the Board on February 21, 1978 and a cursory review of
the individual franchises of each international carrier as well as of an earlier opinion expressed by
the Secretary of Justice to the Chairman of the defunct Radio Control Board has convinced the
board that by virtue of applicant's franchise, Memorandum Circular No. 77-13 is not violated by
authorizing applicant to establish a branch station in Cebu City solely for its international record
operations. In view thereof and in the interest of continued efficient, adequate and satisfactory
services, the Board of Communications hereby makes final the provisional authority granted to
applicant herein on January 16, 1979 not only on the grounds stated in said Order but also for
reasons that subject to the approval of this Board, applicant may establish branch stations in any
point within the country for the purpose of receiving and transmitting messages to countries outside
the Philippines where it is authorized to render international telecommunications services in
accordance with its franchise and Memorandum Circular No. 77-13. Metropolitan Manila remains to
be the 'sole' gateway; hence, all messages received and transmitted during a carrier's international
record carrier operation, must be coursed through said gateway.

The earlier opinion of the Secretary of Justice referred to in said decision was the opinion rendered
by Secretary of Justice Pedro Tuason on June 17, 1954 (Opinion No. 146), on the interpretation to
be given to the clause found in Section 1 of the original franchise granted to the predecessor-in-
interest of Globe-Mackay Cable and Radio Corporation (Act No. 3495 approved on December 8,
1928, as amended by Act No. 3692 and Republic Act No. 4630). Globe-Mackay Cable and Radio
Corporation was originally one of the respondents in the Petition for Declaratory Judgment, but it
was subsequently dropped as a party respondent. The clause in question reads:

The sending of commercial wireless telegraphic messages from points within the Philippine Islands
to points exterior thereto, including airplanes, airships, and vessels, even though such airplanes,
airships, or vessels be located within the territorial limits of the Philippine Islands, and the receiving
of commercial wireless messages from such exterior points.

This clause is similar to that found in Section 1 of Republic Act No. 4630, approved on June 19,
1965, which is Identical to Section 1 of Republic Act No. 4617 except as to the name of the grantee.

The opinion of the Secretary of Justice states:

... In Opinion No. 76 the view taken was that a message, to fall within the purview of the franchise,
once sent by a transmitter within the Philippines, cannot be received by any station within the
Philippines even for the purpose of retransmitting such message to points outside the Philippines . I
believe that the interpretation given to the above-quoted clause was too strict and does not conform
with the spirit of said provision. I take the view that the franchise has reference to the destination of
the message and not to the manner of transmittal. Not as to whether it should be sent to the point of
destination directly or through relays. The reservation in favor of the Philippine Government under
section 4 of the franchise of "all wire- less communications between points of stations within the
Philippine Islands' is clearly intended to refer only to domestic communications.

It should be understood, however, that no extra fees or tolls could be collected for the transmittal of
messages from a relay station to the principal station in Manila. For to do so would make it a
domestic service and would bring such service in competition with the domestic radio and telegraph
service of the Bureau of Posts.

The above-quoted opinion was reiterated and reaffirmed by the Undersecretary of Justice on
November 28, 1973, in answer to the query of the Acting Chairman of the Foreign Trade Zone
Authority as to whether or not Globe-Mackay Cable and Radio Corporation is "authorized under its
franchise to set a relay station inside the Foreign Trade Zone in Mariveles, Bataan, which will
receive interstate communications for onward transmission by its main station in Manila.

The above-stated opinions of the Secretary of Justice and Undersecretary of Justice are material
because Republic Acts Nos. 4630 and 4617 are in pari materia.(" or "upon the same subject
matter." It signifies the principle that statutes or legal provisions relating to the same subject
should be interpreted together to ensure consistency and harmony in the law). As the Court
has reiterated:

Statutes are said to be in pari materia when they relate to the same person or thing, or to the same
class of persons or things, or have the same purpose or object. (Sutherland Statutory Construction,
Vol. 11, pp. 535-536) When statutes are in pari materia; the rule of statutory construction dictates
that they should be construed together. (Black on Interpretation of Laws, Sec. 106) ... (City of Naga
vs. Agna, May 31, 1976, 71 SCRA 176, 184)

Finally, on October 25, 1983, the National Telecommunications Commission, with the approval of
the Ministry of Transportation and Communications, issued Memorandum Circular No. 08-8-83
which adopted guidelines in the implementation of the government policy of designating Metropolitan
Manila as the international gateway for purposes of domestic and international communications
opera- tions. Among the provisions of said Memorandum Circular which are pertinent to the case at
bar are the following:

1.1. The International Record Carriers (IRCs) shall continue to own, construct and expand, as may
be required by the service, their own stations, inside plant, branches and terminals within the Metro
Manila Area necessary for them to conduct their business of providing international
telecommunications service in the country in accordance with their respective franchise and as
authorized by the appropriate government regulatory agency.

xxx xxx xxx

2.1 The IRCs shall not maintain public offices outside the gateway. They may, however, be allowed
to establish customer terminals with the necessary marketing and technical support outside Metro
Manila. ...

xxx xxx xxx

2.3. International telecommunications requirements of non- equipped or walk-in customers shall be

served thru the public offices of the domestic record carrier/s (DRCs). All existing public offices of
IRCs may continue operating until such time as the DRC(s) can provide the facilities required by the
IRCs or an Interconnect Agree- ment between the IRC(s) and DRC(s) shall have been duly
approved by NTC.
The last-quoted provision confirms that the existing public offices of International Record Carriers
were duly authorized by their respective legislative franchises.

WHEREFORE, the decision appealed from is reversed and judgment is hereby rendered declaring
petitioner with authority to establish, maintain and operate, in accordance with its franchise and
Memorandum Circular No. 08-8-83, any other branch or station within the Philippines apart from its
single principal station in Makati, Metro Manila.