G.R. No.
L- 24548 October 27, 1983
WENCESLAO VlNZONS TAN, THE DIRECTOR OF FORESTRY, APOLONIO THE
SECRETARY OF AGRICULTURE AND NATURAL RESOURCES JOSE Y.
FELICIANO, respondents-appellees,
vs.
THE DIRECTOR OF FORESTRY, APOLONIO RIVERA, THE SECRETARY OF
AGRICULTURE AND NATURAL RESOURCES JOSE Y. FELICIANO,
respondents-appellants, RAVAGO COMMERCIAL CO., JORGE LAO HAPPICK and
ATANACIO MALLARI, intervenors,
FACTS:
Sometime in April 1961, the Bureau of Forestry issued notice advertising for public
bidding a certain tract of public forest land situated in Olongapo, Zambales consisting
of 6,420 hectares, within the former U.S. Naval Reservation comprising 7,252 hectares
of timberland, which was turned over by the US Government to the Philippine
Government. Wenceslao Tan with nine others submitted their application in due form.
The area was granted to the petitioner. On May 30, 1963, Secretary Gozon of
Agriculture and Natural Resources issued a general memorandum order authorizing
Dir. Of Forestry to grant new Ordinary Timber Licenses (OTL) subject to some
conditions stated therein (not exceeding 3000 hectares for new OTL and not exceeding
5000 hectares for extension) Thereafter, Acting Secretary of Agriculture and Natural
Resources Feliciano (replacing Gozon) promulgated on December 19, 1963 a
memorandum revoking the authority delegated to the Director of Forestry to grant
ordinary timber licenses. On the same date, OTL in the name of Tan, was signed by
then Acting Director of Forestry, without the approval of the Secretary of Agriculture
and Natural Resources. On January 6, 1964, the license was released by the Director
of Forestry . Ravago Commercial Company wrote a letter to the Secretary of ANR
praying that the OTL of Tan be revoked. On March 9, 1964, The Secretary of ANR
declared Tan’s OTL null and void (but the same was not granted to Ravago).
Petitioner-appellant moved for a reconsideration of the order, but the Secretary of
Agriculture and Natural Resources denied the motion.
ISSUES:
I. Whether or not petitioner’s timber license is valid (No)
II. Whether or not petitioner had exhausted administrative remedies available (No)
RULING:
The petitioner's timber license was signed and released without authority and is
therefore void ab initio. In the general memorandum dated May 30, 1963, the Director
of Forestry was authorized to grant a new ordinary timber license only where the area
covered thereby was not more than 3,000 hectares; the tract of public forest awarded
to the petitioner contained 6,420 hectares. At the time it was released to the petitioner,
the Acting Director of Forestry had no more authority to grant any license. The date of
the release or issuance is of greatest importance as before its release, no right is
acquired by the licensee. Respondents-appellees can validly revoke the license..
Petitioner did not exhaust administrative remedy in this case. He did not appeal the
order of the respondent Secretary of Agriculture and Natural Resources to the
President of the Philippines. Considering that the President has the power to review on
appeal the orders or acts of the respondents, the failure of the petitioner-appellant to
take that appeal is failure on his part to exhaust his administrative remedies.
The petitioner-appellant failed to exhaust his administrative remedies and failed to note
that his action is a suit against the State, which, under the doctrine of State immunity
from suit, cannot prosper unless the State gives its consent to be sued. The
respondents-appellees, in revoking the petitioner-appellant's timber license, were
acting within the scope of their authority. The petitioner-appellant contends that this
case is not a suit against the State, but an application of a sound principle of law
whereby administrative decisions or actuations may be reviewed by the courts as a
protection afforded to the citizens against oppression. However, the court found that
the petitioner-appellant's action is just an attempt to circumvent the rule establishing
State exemption from suits, and cannot use that principle of law to profit at the expense
and prejudice of the State and its citizens.
The most important details in this text are that a timber license is an instrument by
which the State regulates the utilization and disposition of forest resources to the end
that public welfare is promoted, and that it is not a contract within the purview of the
due process clause. It is only a license or privilege, which can be validly withdrawn
whenever dictated by public interest or public welfare. This Court has held that the
granting of license does not create irrevocable rights, neither is it property or property
rights, nor does it create a vested right or taxation. The welfare of the people is the
supreme law, and the State has inherent power enabling it to prohibit all things hurtful
to the comfort, safety, and welfare of society.
The Director of Forestry has the authority to issue timber licenses, but he is also
subject to the control of the Department Head or the Secretary of Agriculture and
Natural Resources. The Department Head has the power to modify, reverse or set
aside acts of subordinate officials, so the Secretary of Agriculture and Natural
Resources has the authority to revoke timber licenses issued by the Director of
Forestry. This is a wise exercise of the power of the respondent-appellee (Secretary of
Agriculture and Natural Resources) and therefore valid.
Application:
Thus, "this Court had rigorously adhered to the principle of conserving forest
resources, as corollary to which the alleged right to them of private individuals or
entities was meticulously inquired into and more often than not rejected. We do so
again" (Director of Forestry vs. Benedicto, supra). WE reiterate Our fidelity to the basic
policy of conserving national patrimony as ordained by the Constitution.
Conclusion:
WHEREFORE, IN VIEW OF ALL THE FOREGOING, THE ORDER APPEALED FROM
IS HEREBY .AFFIRMED IN TOTO. COSTS AGAINST PETITIONER-APPELLANT. SO
ORDERED
[G.R. No. L-27940. June 10, 1971.]
FRANCISCO MILITANTE, III, Plaintiff-Appellant, v. ANTERO EDROSOLANO and
MANUEL BELLOSILO, Defendants-Appellees.
Facts:
Appellee Antero Edrosolano, who was thus afforded a means of escape from satisfying
whatever liability might be imposed on him in a then pending case filed by plaintiff for
damages for a breach of contract of carriage. A lawsuit is intended precisely to assure
that a right may be vindicated. Thereby the party to whom is imputed the correlative
duty could, if indeed called for, be made to comply with what is incumbent upon him or
to respond in damages. The aggrieved party is thus entitled to be heard by a court of
justice. There is greater need for adherence to this principle if, as must be assumed in
this case for a motion to dismiss presupposes the hypothetical admission of the facts
alleged, defendants did make a mockery of the solemn processes of the law,
converting a judicial proceeding into an instrument of injustice against the plaintiff. At
the very least then, he should not be denied the opportunity to prove that such a
deplorable turn of events did transpire. The lower court was of a different mind. It
sustained the motion to dismiss, unable to discern a cause of action in his favor. What
it did lacks justification. We reverse.
Plaintiff, in his complaint dated January 3, 1967, after setting forth the jurisdictional
facts, alleged that in a pending case filed on September 6, 1965, he sued for damages
arising from a breach of contract of carriage defendant Antero Edrosolano. He was
able to secure an order of preliminary attachment on the property of such defendant on
January 18, 1966. When the Provincial Sheriff of Iloilo, however, sought to attach
equipment used by him as a public service operator, defendant Bellosillo filed a
third-party claim asserting that he had previously bought, on February 28, 1966, all of
the former's the TPU equipment. Upon inquiry, plaintiff learned that on or about
January 22, 1963, defendant Bollosillo filed a case for collection against defendant
Edrosolano in the sum of Forty Five Thousand Pesos (P45, 000.00), purportedly
arising from a promissory note dated February 1, 1960, executed by the latter.
Issue:
Whether or not the defendant has a cause of action to move for appropriate
proceeding?
Ruling:
The maintenance of the rights under any legal system calls for the appropriate remedy
in the event of their disregard. The party who is thereby injured is entitled to redress.
The courts exist for that purpose. He has, in the technical language of the law, a cause
of action if by what the defendant does or fails to do there is disrespect shown for any
of his legal claims. The judiciary is expected then to exercise the utmost care and
circumspection in passing upon a motion to dismiss on the ground of the absence
thereof lest, by its failure to manifest a correct appreciation of the facts alleged and
deemed hypothetically admitted, what the law grants or recognizes is effectively
nullified. If that happens, there is a blot on the legal order. The law itself stands in
disrepute.
There is need, therefore, for a judicious appraisal of the circumstances which,
according to the plaintiff's complaint, provided the basis for his suit. It would be a plain
departure from what has been so consistently held by this Court if, as was done by the
lower court, the response to the assertion of a legal right violated was one of
indifference. Nor could it find justification in the pretext that his complaint would be
proper only if he would be successful in a pending suit for damages. By then it may be
too late, his victory good only on paper. What cannot be denied in the face of his
complaint is that if the judgment based on collusion between the defendants would not
be set aside, then any hope of recovery, not only on the part of plaintiff, but of any
other creditor similarly situated, would indeed be futile.
Application:
No decision has been cited; and ko none can be found which, on the above facts,
would justify a holding that no cause of action was shown. For the doctrine
consistently adhered to is to avoid the likelihood of plaintiff's recourse to the courts for
the satisfaction of his just claims being rendered nugatory. While not precisely in point,
what was set forth in Adamos v. J.M. Tuason and Co. bears repeating. In the language
of Justice Makalintal, who penned the decision: "It is a well-settled rule that in a motion
to dismiss based on the ground that the complaint fails to state a cause of action, the
question submitted to the court for determination is the sufficiency of the allegations in
the complaint itself. Whether those allegations are true or not is beside the point, for
their truth is hypothetically admitted by the motion. * * * So rigid is the norm prescribed
that if the court should doubt the truth of the facts averred it must not dismiss the
complaint but require an answer and proceed to hear the case on the merits.
(Republic Bank v. Cuaderno, L-22399, March 30, 1967)." Such a doctrine goes back to
a 1914 decision, Paminsan v. Costales, where it was held: "The test of the sufficiency
of the facts found in a petition to constitute a cause of action is whether or not,
admitting the facts alleged, the court could render a valid judgment upon the same, in
accordance with the prayer of the petition." Certainly on the facts alleged in the
complaint, a valid judgment in favor of the plaintiff could be rendered.
Conclusion:
The view entertained by the lower court in its order of dismissal that an action for
annulment of judgment can be availed of only by those principally or secondarily bound
is contrary to what had been so clearly declared by this Court in the leading case of
Anuran v. Aquino decided in 1918. It was emphatically announced therein: "There can
be no question as to the right of any person adversely affected by a judgment to
maintain an action to enjoin its enforcement and to have it declared a nullity on the
ground of fraud and collusion practiced in the very matter of obtaining the judgment
when such fraud is extrinsic or collateral to the matters involved in the issues raised at
the trial which resulted in such judgment; Such a principle was further fortified by an
observation made by this Court through Justice Ozaeta in Garchitorena v. Sotelo.
These are his words: "The collusive conduct of the parties in the foreclosure suit
constituted an extrinsic or collateral fraud by reason of which the judgment rendered
therein may be annulled in this separate action. (Anuran v. Aquino and Ortiz, 38 Phil.,
29) Aside from the Anuran-Aquino case, innumerable authorities from other
jurisdictions may be cited in support of the annulment. But were there not any
precedent to guide us, reason and justice would compel us to lay down such doctrine
for the first time."
WHEREFORE, the order of dismissal of February 10, 1967 by Judge Valerio V. Rovira
is set aside and this case is remanded to the lower court for appropriate proceedings in
accordance with this opinion. With costs against defendants.
Facts:
G.R. Nos. L-14785 and L-14923 February 27, 1961
FELIX ABE, ET AL., plaintiffs-appellees,
vs.
FOSTER WHEELER CORPORATION and CALTEX (PHIL.), INC.,
defendants-appellants.
Facts:
The defendants-appellants filed separate motions for reconsideration of the decision
herein rendered, on the ground that the employment of the workers involved in this
case was for a definite period and Republic Act No. 1052 should not be given
retroactive effect.
But the workers entered a contract that binds their duration of employment as
indefinite. The contract provides:
The refinery construction is a project of temporary duration and hence, your
employment term shall also be temporarily dependent upon the needs and
requirements, as determined by this Company, of the particular phase of the
construction work to which you may be presently or hereafter be assigned.
Issue:
Whether or not the duration of the employment of a worker assigned to a particular
kind of work is not necessarily coexistent with the duration of such work?
Ruling:
Under the aforequoted provision of the contract, the worker's term of employment is
made subject to two conditions: (1) upon the needs and requirements (not duration) of
the particular work to which he (the worker) is assigned; and (2) that such needs and
requirements are to be as so determined by the employer.
Application:
In accordance with the contract presented, the decision of the employer shall
determine whether the service of the appellant is needed or not. Likewise, the
employer could, even after the termination of a particular work, assign the employee to
another phase of the construction work, if the employer determines that the needs of
the work are so require. Clearly, the worker is without any means to know when his
services would be considered by his employer still necessary or not.
Conclusion:
Plaintiffs-appellants in case G.R. No. L-14923 (Abe, et al. v. Foster Wheeler Corp., et
al.) also filed a motion for reconsideration raising issues which are already fully
considered in the decision.
The motions filed in both cases are, therefore, denied for lack of merit.
G.R. No. L-10067 April 28, 1958
THE PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, vs. ONG TIN,
Defendant-Appellant.
Facts:
Ong Tin applied for a permit and license to open and operate a "sari-sari" store in
Kamuning, Quezon City on May 27, 1954. On August 8, 1954, Pedro S. Piolano, Chief
of the Licenses, Taxes Division, Office of the City Treasurer, Quezon City, went to the
store and informed Ong Tin that he was required to surrender the permit. Ong Tin then
asked for a week to decide whether or not to surrender his license. On October 12,
1954, Ong Tin was charged in the Court of First Instance Rizal with violation of Sec. 1
of Republic Act No. 1180 and sentenced him to three years of prision correccional and
a fine of P3,000 and upon defendant's failure to pay the same, for him to suffer the
corresponding subsidiary imprisonment which shall not exceed 1/3 of the principal
penalty; and to pay the costs. After the service of the sentence, Ong Tin was ordered
deported to the country of his origin.
Issue:
Whether or not the Court of First Instance Rizal erred in finding the defendant guilty?
Ruling:
The defendant argued that the lower court's decision to convict him without passing
upon the constitutionality of Republic Act 1180, which the defendant stated was
unconstitutional and should be null and void, The defendant also argued that the court
decided that even assuming Republic Act 1180 was constitutional, it did not apply to
the accused as he obtained his permit to engage in the retail trade before it was
approved and became effective. The Court also failed to take into account the
confusion that reigned in the mind of the accused due to divergent views held by the
City Mayor and the City Attorney regarding his continuance in the retail business and
thus erred in finding the accused guilty beyond a reasonable doubt of the violation of
the provisions of Republic Act 1180. The Court decided as follows:
● It is claimed, however, that the decision appealed by the trial court failed to
pass upon the constitutionality of Republic Act No. 1180, an issue squarely
raised by the accused as a defense during the trial of the case. We consider,
however, that this alleged error is of no moment because laws passed by
Congress are presumed to be constitutional until they are otherwise declared
by a final decision of this Court.
● We find no merit in this contention because the acts constituting the crime for
which the appellant has been convicted in the case at bar were all executed
after the effectivity of Republic Act No. 1180, and by no means can we consider
the appellant's conviction as the result of the application to him of an ex post
facto law. In this connection, defense counsel further argues that the appellant
cannot be convicted of a violation of Republic Act No. 1180 since he had
secured a license to operate a sari-sari store prior to the date when said law
became effective on June 19, 1954. In other words, counsel contends that the
license will not be taken away from him, and much less can he be held
criminally liable for making use of the said license. But, as pointed out by the
Solicitor General, it has already been held that the granting of a license does
not create irrevocable rights, nor does it create property rights.
Application:
As appellant himself admitted in the instant case that he continued to operate his
sari-sari store even after the passage of Republic Act No. 1180, and that tip to the
present he continues to operate the same, it can not be denied that he has incurred the
liability prescribed by law, because under its provisions his continued operation of the
store was in violation of the context thereof.
The Court notice that the convict was sentenced to three (3) years of prision
correccional, a punishment which does not come within the classification of
imprisonment penalties provided by special penal laws, but of the Revised Penal Code.
The Solicitor General also points out that the provisions of the Indeterminate Sentence
Act have not been applied in his case.
Conclusion:
Wherefore, and in so far as the penalty of imprisonment is concerned, the decision
appealed from shall be, as it is hereby modified by sentencing appellant to an
indeterminate penalty of from three (3) years to three (3) years and three (3) months of
imprisonment. With the modifications just stated, the decision appealed from is hereby
affirmed in all other respects, with costs against appellant. So ordered.chanrobles.
Nebbia v. New York, 291 U.S. 502 (1934)
Nebbia v. New York
No. 531
Argued December 4, 5, 1933
Decided March 5, 1934
291 U.S. 502
Facts:
As part of a plan to remedy evils in the milk industry which reduced the income of the
producer below cost of production and threatened to deprive the community of an
assured supply of milk, a New York statute sought to prevent destructive price-cutting
by stores which, under the peculiar circumstances, were able to buy at much lower
prices than the larger distributors and to sell without incurring delivery costs, and, to
that end, an order of a state board acting under the statute fixed a minimum price of
ten cents per quart for sales by distributors to consumers and of nine cents per quart
for sales by stores to consumers. Held that, as applied to a storekeeper, the regulation
could not be adjudged in conflict with the due process clause of the Fourteenth
Amendment, since, in view of the facts set forth in the opinion, it appeared not to be
unreasonable or arbitrary or without relation to the purpose of the legislation.
Issue:
Did the regulation violate the Due Process Clause of the Fourteenth Amendment?
Ruling:
Following a lengthy discussion of the Due Process Clause, the Court held that since
the price controls were not "arbitrary, discriminatory, or demonstrably irrelevant" to the
policy adopted by the legislature to promote the general welfare, the regulation was
constitutional. In an opinion authored by Justice Owen Roberts, the Court reasoned
that regulations are not an inappropriate way to serve the public interest. When
industry is particularly tied into a public interest, it is more subject to the state police
powers. Courts may not override policy decisions by states in this area on the grounds
of due process unless rational basis review is not satisfied. Rational basis review,
which is used for economic regulations, requires that the law is not unreasonable or
arbitrary and also that there is a reasonable relationship between the law and the
interest that it serves. Price regulations are not per se beyond the framework of due
process.
Application:
This is especially clear where the economic maladjustment is one of price, which
threatens harm to the producer at one end of the series, and the consumer, at the
other.
The Constitution does not secure to anyone liberty to conduct his business in such
fashion as to inflict injury upon the public at large, or upon any substantial group of
people.
Price control, like any other form of regulation, is unconstitutional only if arbitrary,
discriminatory, or demonstrably irrelevant to the policy the legislature is free to adopt,
and hence an unnecessary and unwarranted interference with individual liberty
Conclusion:
The New York Court of Appeals affirmed the conviction of a storekeeper for selling milk
at a price below that allowed by an order promulgated by a state board pursuant to
statutory authority. The appeal here is from the judgment of the County Court entered
on remittitur.
G.R. No. 79538 October 18, 1990
FELIPE YSMAEL, JR. & CO., INC., petitioner,
vs.
THE DEPUTY EXECUTIVE SECRETARY, THE SECRETARY OF ENVIRONMENT
AND NATURAL RESOURCES, THE DIRECTOR OF THE BUREAU OF FOREST
DEVELOPMENT and TWIN PEAKS DEVELOPMENT AND REALTY
CORPORATION, respondents.
Facts:
Soon after the change of government, in 1986, petitioner sent letters to the Office of
the President and to the Ministry of Natural Resources (MNR) seeking (1) the
reinstatement of its timber license agreement (TLA No. 87), which was cancelled along
with nine other concessions, during the Marcos administration; (2) the revocation of
TLA NO. 356 which was issued to Twin Peaks Development and Realty Corporation
without public bidding and in violation of forestry laws, rules and regulations; and (3)
the issuance of an order allowing petitioner to take possession of all logs found in the
concession area. It alleged that after the its TLA was cancelled without being given the
opportunity to be heard, its logging area was re-awarded to other logging
concessionaires without a formal award or license, as these entities were controlled or
owned by relatives or cronies of deposed President Marcos. The Ministry denied the
request and ruled that a timber license was not a contract within the due process
clause of the Constitution, but only a privilege which could be withdrawn whenever
public interest or welfare so demands, and that petitioner was not discriminated against
in view of the fact that it was among ten concessionaires whose licenses were revoked
in 1983. It also emphasized the fact that there was currently a total log ban being
imposed on the subject areas. After the logging ban was lifted, petitioner appealed to
the Office of the President, but the petition was denied on the ground that the appeal
was prematurely filed, the matter not having been terminated in the MNR. Hence,
petitioner filed with the Supreme Court a petition for certiorari.
ISSUE:
Whether public respondents acted with grave abuse of discretion amounting to lack or
excess of jurisdiction in refusing to overturn administrative orders issued by their
predecessors in the past regime.
HELD:
The refusal of public respondents to reverse final and executory administrative orders
does not constitute grave abuse of discretion amounting to lack or excess of
jurisdiction. It is an established doctrine in this jurisdiction that the decisions and orders
of administrative agencies have, upon their finality, the force and binding effect of a
final judgment within the purview of the doctrine of res judicata. These decisions and
orders are as conclusive upon the rights of the affected parties as though the same
had been rendered by a court of general jurisdiction. The rule of res judicata thus
forbids the reopening of a matter once determined by competent authority acting within
their exclusive jurisdiction Petitioner did not avail of its remedies under the law for
attacking the validity of these administrative actions until after 1986. By the time
petitioner sent its letter to the newly appointed Minister of the MNR requesting for
reconsideration, these were already settled matters as far as petitioner was concerned.
The fact that petitioner failed to seasonably take judicial recourse to have the earlier
administrative actions reviewed by the courts through a petition for certiorari is
prejudicial to its cause. Although there is no specific time frame fixed for the institution
of a special civil action for certiorari under Rule 65 of the ROC, the same must
nevertheless be done within a “reasonable time”. Failure to file the petition for certiorari
within a reasonable period of time renders the petitioner susceptible to the adverse
legal consequences of the laches. Laches is defined as the failure or neglect for an
unreasonable and unexplained length of time to do that which by exercising due
diligence, could or should have been done earlier, or to assert a right within a
reasonable time, warranting a presumption that the party entitle thereto has either
abandoned it or declined to assert it. The laws aid those who are vigilant, not those
who sleep upon their rights. In the case at bar, petitioner waited at least 3 years before
it finally filed a petition for certiorari with the Court attacking the validity of the assailed
Bureau actions. Its delay constitutes unreasonable and inexcusable neglect
tantamount to laches. The writ of certiorari requiring the reversal of these orders will
not lie.
More importantly, the assailed orders of the MNR disclose public policy consideration,
which effectively forestall judicial interference. Public respondents, upon whose
shoulders rests the task of implementing the policy to develop and conserve the
country's natural resources, have indicated an ongoing department evaluation of all
timber license agreements entered into, and permits or licenses issued, under the
previous dispensation.
Application:
A long line of cases establish the basic rule that the courts will not interfere in matters
which are addressed to the sound discretion of government agencies entrusted with
the regulation of activities coming under their special technical knowledge and training.
Timber licenses, permits and license agreements are the principal instruments by
which the State regulates the utilization and disposition of forest resources to the end
that public welfare is promoted. And it can hardly be gainsaid that they merely
evidence a privilege granted by the State to qualified entities, and do not vest in the
latter a permanent or irrevocable right to the particular concession area and the forest
products therein. They may be validly amended, modified, replaced or rescinded by the
Chief Executive when national interests so require. Thus, they are not deemed
contracts within the purview of the due process of law clause.
Conclusion:
The Court expresses its concern regarding alleged irregularities in the issuance of
timber license agreements to a number of logging concessionaires. Should the
appropriate case be brought showing a clear grave abuse of discretion on the part of
concerned officials with respect to the implementation of this public policy, the Court
will not hesitate to step in. However, in this case, the Court finds no basis to issue a
writ of certiorari and to grant any of the affirmative reliefs sought. Petition is dismissed.
[G.R. No. L-19255. January 18, 1968.]
THE PHILIPPINE AMERICAN LIFE INSURANCE COMPANY, Petitioner, v. THE
AUDITOR GENERAL, Respondent.
Facts:
Issue:
Ruling:
To maintain domestic and international stability in currency is a primary concern of the
State; it is in pursuance of the constitutional mandate, in the preamble ordained, to
"promote the general welfare"; it is a Matter of public policy. This could mean action to
forestall a currency debacle, to improve the low international reserve, or to conserve
and even increase such reserve.
The Margin Law, Republic Act 2609, it is well to remember, is a remedial currency
measure. It was thus passed to reduce as far as is practicable the excessive demand
for foreign exchange. Petitioner's stand that because it had a continuing - though
revocable reinsurance treaty with Airco, all remittances of reinsurance premia made by
it to its foreign reinsurer should be withdrawn from the operation of the Margin Law, we
are constrained to state, is at war with the State's economic policy of preserving the
stability of our currency. Petitioner may not, in the words of the Solicitor General, "tie
the hands of the State and render it powerless to impose certain margin or cost
restrictions on its remittances of reinsurance premia in foreign exchange to fall due as
policies become reinsurable under said treaty, whenever such remittances would
constitute an excessive demand on our international reserves."
Viewed from this focal point, there cannot be an impairment of the obligation of
contracts. For, the State may, through its police power, adopt whatever economic
policy may reasonably be deemed to promote public welfare, and to enforce that policy
by legislation adapted to its purpose. We have, in Abe vs. Foster Wheeler Corporation
declared that: "The freedom of contract, under our system of government, is not meant
to be absolute. The same is understood to be subject to reasonable legislative
regulation aimed at the promotion of public health, morals, safety and welfare. In other
words, the constitutional guarantee of non-impairment of obligations of contract is
limited by the exercise of the police power of the State, in the interest of public health,
safety, morals and general welfare." It has been said, and we believe correctly, that
"the economic interests of the State may justify the exercise of its continuing and
dominant protective power notwithstanding interference with contracts." It bears
repetition to state at this point that the Margin Law is part of the economic "Stabilization
Program" of the country.
Application:
Obligation of contract provision does not bar a proper exercise of the state's police
power. Nebbia vs. New York reasons out that: "Under our form of government the use
of property and the making of contracts are normally matters of private and not of
public concern. The general rule is that both shall be free of governmental interference.
But neither property rights nor contract rights are absolute; for the government cannot
exist if the citizen may at will use his property to the detriment of his fellows, or
exercise his freedom of contract to work them harmfully. Equally fundamental with the
private right is that of the public to regulate it in the common interest." As emphatic, if
not more, is the following from Norman vs. Baltimore & Ohio Railroad Company, thus:
"Contracts, however express, cannot fetter the constitutional authority of the Congress.
Contracts may create rights of property, but when contracts deal with a subject matter
which lies within the control of the Congress, they have a congenital infirmity. Parties
cannot remove their transactions from the reach of dominant constitutional power by
making contracts about them." More. In another case, a pronouncement was made
that: "Not only are existing laws read into contracts in order to fix obligations as
between the parties, but the reservation of essential attributes of sovereign power is
also read into contracts as a postulate of the legal order. The policy of protecting
contracts against impairment presupposes the maintenance of a government by virtue
of which contractual relations are worthwhile, - a government which retains adequate
authority to secure the peace and good order of society."
Conclusion:
For the reasons given, the petition for review is hereby denied, and the ruling of the
Auditor General of October 24, 1961 denying refund is hereby affirmed. Costs against
petitioner. SO ORDERED.
