Persons and Family Case Digest

G.R. No. L-64279 April 30, 1984

ANSELMO L. PESIGAN and MARCELINO L. PESIGAN,petitioners,vs.JUDGE DOMINGO MEDINA ANGELES, Regional Trial Court, Caloocan City Branch 129, acting for REGIONAL TRIAL COURT of Camarines Norte, now presided over by JUDGE NICANOR ORIO, Daet Branch 40; DRA. BELLA S. MIRANDA, ARNULFO V. ZENAROSA, ET AL.,respondents.Quiazon, De Guzman Makalintal and Barot for petitioners.

The Solicitor General for respondents.AQUINO,J.:+.wph!1At issue in this case is the enforceability, before publication in the Official Gazette ofJune 14, 1982,of Presidential Executive Order No. 626-A datedOctober 25, 1980,providing for theconfiscation and forfeitureby the government of carabaos transported from one province to another.

Anselmo L. Pesigan and Marcelo L. Pesigan, carabao dealers, transported in an Isuzu ten-wheeler truck in the evening of April 2, 1982 twenty-six carabaos and a calf from Sipocot, Camarines Sur with Padre Garcia, Batangas, as the destination.

They were provided with (1) a health certificate from the provincial veterinarian of Camarines Sur, issued under the Revised Administrative Code and Presidential Decree No. 533, the Anti-Cattle Rustling Law of 1974; (2) a permit to transport large cattle issued under the authority of the provincial commander; and (3) three certificates of inspection, one from the Constabulary command attesting that the carabaos were not included in the list of lost, stolen and questionable animals; one from the LIvestock inspector, Bureau of Animal Industry of Libmanan, Camarines Sur and one from the mayor of Sipocot.

In spite of the permit to transport and the said four certificates, the carabaos, while passing at Basud, Camarines Norte, were confiscated by Lieutenant Arnulfo V. Zenarosa, the town's police station commander, and by Doctor Bella S. Miranda, provincial veterinarian. The confiscation was basis on the aforementioned Executive Order No. 626-A which provides "that henceforth, no carabao, regardless of age, sex, physical condition or purpose and no carabeefshall be transported from one province to another.The carabaos or carabeef transported in violation of this Executive Order as amended shall be subject toconfiscation and forfeitureby the government to be distributed ... to deserving farmers through dispersal as the Director of Animal Industry may see fit, in the case of carabaos" (78 OG 3144).

Doctor Miranda distributed the carabaos among twenty-five farmers of Basud, and to a farmer from the Vinzons municipal nursery (Annex 1).

The Pesigans filed against Zenarosa and Doctor Miranda an action for replevin for the recovery of the carabaos allegedly valued at P70,000 and damages of P92,000. The replevin order could not be executed by the sheriff. In his order of April 25, 1983 Judge Domingo Medina Angeles, who heard the case at Daet and who was later transferred to Caloocan City, dismissed the case for lack of cause of action.

The Pesigans appealed to this Court under Rule 45 of the Rules of Court and section 25 of the Interim Rules and pursuant to Republic Act No. 5440, a 1968 law which superseded Rule 42 of the Rules of Court.

We hold that the said executive order should not be enforced against the Pesigans onApril 2, 1982because, as already noted, itis a penal regulationpublished more than two months later in the Official Gazette datedJune 14, 1982.It became effective only fifteen days thereafter as provided in article 2 of the Civil Code and section 11 of the Revised Administrative Code.

The word "laws" in article 2 (article 1 of the old Civil Code) includes circulars and regulations which prescribe penalties. Publication is necessary to apprise the public of the contents of the regulations and make the said penalties binding on the persons affected thereby. (People vs. Que Po Lay, 94 Phil. 640; Lim Hoa Ting vs. Central Bank of the Phils., 104 Phil. 573; Balbuna vs. Secretary of Education, 110 Phil. 150.)

The Spanish Supreme Court ruled that "bajo la denominacion generica de leyes, se comprenden tambien los reglamentos, Reales decretos, Instrucciones, Circulares y Reales ordenes dictadas de conformidad con las mismas por el Gobierno en uso de su potestad (1 Manresa, Codigo Civil, 7th Ed., p. 146.)

Thus, in theQue Po Laycase, a person, convicted by the trial court of having violated Central Bank Circular No. 20 and sentenced to six months' imprisonment and to pay a fine of P1,000, wasacquittedby this Court because the circular was published in the Official Gazettethree months after his conviction.He was not bound by the circular.

That ruling applies to a violation of Executive Order No. 626-A because itsconfiscation and forfeiture provision or sanction makes it a penal statute.Justice and fairness dictate that the public must be informed of that provision by means of publication in the Gazette before violators of the executive order can be bound thereby.

The cases ofPolice Commission vs. Bello, L-29960, January 30, 1971, 37 SCRA 230 andPhilippine Blooming Mills vs. Social Security System, 124 Phil. 499, cited by the respondents, do not involve the enforcement of any penal regulation.

Commonwealth Act No. 638 requires that all Presidential executive orders having general applicability should be published in the Official Gazette. It provides that "every order or document which shag prescribe a penalty shall be deemed to have general applicability and legal effect."

Indeed, the practice has always been to publish executive orders in the Gazette. Section 551 of the Revised Administrative Code provides that even bureau "regulations and orders shall become effective only when approved by the Department Head and published in the Official Gazette or otherwise publicly promulgated". (See Commissioner of Civil Service vs. Cruz, 122 Phil. 1015.)

In the instant case, the livestock inspector and the provincial veterinarian of Camarines Norte and the head of the Public Affairs Office of the Ministry of Agriculture were unaware of Executive Order No. 626-A. The Pesigans could not have been expected to be cognizant of such an executive order.

It results that they have a cause of action for the recovery of the carabaos. The summary confiscation was not in order. The recipients of the carabaos should return them to the Pesigans. However, they cannot transport the carabaos to Batangas because they are now bound by the said executive order. Neither can they recover damages. Doctor Miranda and Zenarosa acted in good faith in ordering the forfeiture and dispersal of the carabaos.

WHEREFORE, the trial court's order of dismissal and the confiscation and dispersal of the carabaos are reversed and set aside. Respondents Miranda and Zenarosa are ordered to restore the carabaos, with the requisite documents, to the petitioners, who as owners are entitled to possess the same, with the right to dispose of them in Basud or Sipocot, Camarines Sur. No costs.

SO ORDERED.1wph1.tMakasiar, (Chairman), Concepcion, Jr., Guerrero, and Escolin, JJ., concur.

De Castro, J., took no part.Separate OpinionsABAD SANTOS,J.,concurring:

The Pesigans are entitled to the return of their carabaos or the value of each carabao which is not returned for any reason. The Pesigans are also entitled to a reasonable rental for each carabao from the twenty six farmers who used them. The farmers should not enrich themselves at the expense of the Pesigans.Pesigan v. Angeles DigestGR L-64279Civil law, when Laws take effectFacts: Petitioners Anselmo and Marcelo Pesigan, carabao dealers transported on April 2. 1982, twenty-six (26) carabaos & a calf from Camarines Norte with Batangas as its destination. They were provided with health certificates from the provincial veterinarian and three (3) other permits attesting that the cattle was not part of lose, stolen or questionable animals.

Despite this, the said cattle was confiscated by respondents Zenarosa and Miranda, who were respectively the police station commander and provincial veterianarian of Basud, Camarines Norte. The confiscation was on the basis of saidEO 626-Awhich was datedOctober 25, 1980but was published in theOfficial GazetteonJune 14, 1982.

Executive Order 626-A provides, "that henceforth, no carabao, regardless of age, sex, physical condition or purpose and no carabeefshall be transported from one province to another.The carabaos or carabeef transported in violation of this Executive Order as amended shall be subject toconfiscation and forfeitureby the government to be distributed ... to deserving farmers through dispersal as the Director of Animal Industry may see fit, in the case of carabaos".

The Pesigans filed an action for replevin against herein respondents for the recovery of the subject cattle but this could not be executed by the sheriff. Subsequently, the judge dismissed the case for lack of cause of action. Hence, the petitioners filed an appeal to the Supreme Court under Rule 45 of the Rules of Court.

Issue: Whether or notExecutive Order No. 626-A dated October 25, 1980, providing for the confiscation and forfeiture by the government of cattle transported from one province to another, can be enforced even before its actual publication in the Official Gazette ofJune 14, 1982HELD: NO

The Supreme Court held that EO 626-A is a penal regulation published more than two months after the confiscation of the cattle or in June 14, 1982. Hence, it became effective only fifteen days thereafter as provided in Article 2 of the Civil Code. It should therefore not be enforced against the petitioners.

Publication is necessary to apprise the public of the contents of the regulations and make the said penalties binding on the persons affected thereby. (People v Que Po).Justice and fairness dictate that the public must be informed of that provision by means of publication in the Gazette before violators of the executive order can be bound thereby.

Note: The word "laws" in Article 2 of the NCC also includes circulars and regulations which prescribe penalties.

Tanada vs Tuvera (136 SCRA 27)TITLE: Tanada v Tuvera

CITATION: L-63915, April 24, 1985| 136 SCRA 27

FACTS:

Petitioners seek a writ of mandamus in compelling respondent public officials to publish and/ or cause the publication in the Official Gazette of various presidential decrees, letter of instructions, general orders, proclamations, executive orders, letter of implementation and administrative orders.

The general rule in seeking writ of mandamus is that it would be granted to a private individual only in those cases where he has some private or particular interest to be subserved, or some particular right to be protected, independent of that which he holds with the public at large," and "it is for the public officers exclusively to apply for the writ when public rights are to be subserved.

The legal capacity of a private citizen was recognized by court to make the said petition for the reason that the right sought to be enforced by petitioners herein is a public right recognized by no less than the fundamental law of the land.

ISSUE: Whether publication in the Official Gazette is still required considering the clause in Article 2 unless otherwise provided.

HELD:

Unless it is otherwise provided refers to the date of effectivity and not with the publication requirement which cannot be omitted as public needs to be notified for the law to become effective. The necessity for the publication in the Official Gazette of all unpublished presidential issuances which are of general application, was affirmed by the court on April 24, 1985. This is necessary to provide the general public adequate notice of the various laws which regulate actions and conduct as citizens. Without this, there would be no basis for Art 3 of the Civil Code Ignorance of the law excuses no one from compliance therewith.

WHEREFORE, the Court hereby orders respondents to publish in the Official Gazette all unpublished presidential issuances which are of general application, and unless so published, they shall have no binding force and effect.

TAADA VS. TUVERA

136 SCRA 27 (April 24, 1985)

FACTS:

Invoking the right of the people to be informed on matters of public concern as well as the principle that laws to be valid and enforceable must be published in the Official Gazette, petitioners filed for writ of mandamus to compel respondent public officials to publish and/or cause to publish various presidential decrees, letters of instructions, general orders, proclamations, executive orders, letters of implementations and administrative orders.

The Solicitor General, representing the respondents, moved for the dismissal of the case, contending that petitioners have no legal personality to bring the instant petition.

ISSUE:

Whether or not publication in the Official Gazette is required before any law or statute becomes valid and enforceable.

HELD:

Art. 2 of the Civil Code does not preclude the requirement of publication in the Official Gazette, even if the law itself provides for the date of its effectivity. The clear object of this provision is to give the general public adequate notice of the various laws which are to regulate their actions and conduct as citizens. Without such notice and publication, there would be no basis for the application of the maxim ignoratia legis nominem excusat. It would be the height of injustive to punish or otherwise burden a citizen for the transgression of a law which he had no notice whatsoever, not even a constructive one.

The very first clause of Section 1 of CA 638 reads: there shall be published in the Official Gazette. The word shall therein imposes upon respondent officials an imperative duty. That duty must be enforced if the constitutional right of the people to be informed on matter of public concern is to be given substance and validity.

The publication of presidential issuances of public nature or of general applicability is a requirement of due process. It is a rule of law that before a person may be bound by law, he must first be officially and specifically informed of its contents. The Court declared that presidential issuances of general application which have not been published have no force and effect.TAADA VS. TUVERA146 SCRA 446 (December 29, 1986)

FACTS:

This is a motion for reconsideration of the decision promulgated on April 24, 1985. Respondent argued that while publication was necessary as a rule, it was not so when it was otherwise as when the decrees themselves declared that they were to become effective immediately upon their approval.

ISSUES:

Whether or not a distinction be made between laws of general applicability and laws which are not as to their publication;

Whether or not a publication shall be made in publications of general circulation.

HELD:

The clause unless it is otherwise provided refers to the date of effectivity and not to the requirement of publication itself, which cannot in any event be omitted. This clause does not mean that the legislature may make the law effective immediately upon approval, or in any other date, without its previous publication.

Laws should refer to all laws and not only to those of general application, for strictly speaking, all laws relate to the people in general albeit there are some that do not apply to them directly. A law without any bearing on the public would be invalid as an intrusion of privacy or as class legislation or as an ultra vires act of the legislature. To be valid, the law must invariably affect the public interest eve if it might be directly applicable only to one individual, or some of the people only, and not to the public as a whole.

All statutes, including those of local application and private laws, shall be published as a condition for their effectivity, which shall begin 15 days after publication unless a different effectivity date is fixed by the legislature.

Publication must be in full or it is no publication at all, since its purpose is to inform the public of the content of the law.

Article 2 of the Civil Code provides that publication of laws must be made in the Official Gazette, and not elsewhere, as a requirement for their effectivity. The Supreme Court is not called upon to rule upon the wisdom of a law or to repeal or modify it if it finds it impractical.

The publication must be made forthwith, or at least as soon as possible.

J. Cruz:

Laws must come out in the open in the clear light of the sun instead of skulking in the shadows with their dark, deep secrets. Mysterious pronouncements and rumored rules cannot be recognized as binding unless their existence and contents are confirmed by a valid publication intended to make full disclosure and give proper notice to the people. The furtive law is like a scabbarded saber that cannot faint, parry or cut unless the naked blade is drawn.Tanada vs. Tuvera, 136 SCRA 27 (1985)FACTS: Invoking the peoples right to be informed on matters of public concern, a right recognized in Section 6, Article IV of the 1973 constitution, petitioners seek a writ of mandamus to compel respondent public officials to publish, and/or cause the publication in the Official Gazette, of various presidential decrees, letters of instructions, general orders, proclamations, executive orders, letter of implementation and administrative orders. The respondents would have this case dismissed on the ground that petitioners have no legal personality to bring this petition. Petitioners maintain that since the subject of the petition concerns a public right and its object is to compel public duty, they need not show any specific interest. Respondents further contend that publication in the OG is not a sine qua non requirement for the effectivity of laws where the laws themselves provide for their own effectivity dates.

ISSUE: Whether or not publication in the Official Gazatte is an indispensable requirement for the effectivity of the PDs, LOIs, general orders, EOs, etc. where the laws themselves provide for

their own effectivity dates.

RULING: Yes. It is the peoples right to be informed on matters of public concern and corollarily access to official records, and to documents and papers pertaining to official acts, transactions,or decisions, shall be afforded the citizens subject to such limitation as may be provided by law (Sec. 6 Art. IV, 1973 Constitution). Laws, to be valid and enforceable, must be published in the OG or otherwise effectively promulgated. The fact that a PD or LOI states its date of effectivity does not preclude their publication in the OG as they constitute important legislative acts. The publication of presidential issuances of public nature or of general applicability is a requirement of due process. Before a person may be bound by law, he must first be officially informed of its contents.

Important Point: It illustrates how decrees and issuances issued by one manMarcosare in fact laws of general application and provide for penalties. The constitution afforded Marcos both executive and legislative powers. The generality of law (Civil Code, Art. 14) will never work without constructive notice. The ruling of this case provides the publication constitutes the necessary constructive notice and is thus the cure for ignorance as an excuse. Ignorance will not even mitigate the crime.TANADA V. TUVERA [136 S 27] F: Invoking the people's right tobe informed on matters ofpublic concern, a right recognized inthe Constitution, as well asthe principle that laws to be valid and enforceable mustbepublished in the OG or otherwise effectively promulgated, petitioners seek a writ ofmandamusto compel respondent public officials to publish, and/orcause the publication in the OG ofvarious PDs, LOIs, general orders, proclamations, EOs, letters ofimplementation andadministrative orders. Respondents contend, among others that publication in the OG is not asine qua non requirement for theeffectivity of laws where the laws themselves provide fortheirown effectivity dates. It is thussubmitted that since the presidential issuances in questioncontain special provisions as to the datethey are to take effect, publication inthe OG isindispensable for their effectivity. The point stressed is anchored onArt. 2 of NCC.HELD: The interpretation given by respondent is in accord w/this Court's construction of saidarticle. In a longline of decisions, this Court has ruled that publication in theOG is necessary inthose cases where the legislation itself doesnot provide for itseffectivity date-- for then thedate of publication is material fordetermining its date of effectivity, w/c is the 15th dayfollowing its publication-- but not when the law itself provides forthe date when it goes intoeffect. Respondent's argument, however, is logically correct only insofar as itequates theeffectivity of laws w/ the fact of publication. Considered in the light of otherstatutes applicableto the issueat hand, the conclusion is easily reached that said Art. 2 doesnot preclude therequirement of publication in the OG, even if the law itselfprovides for the date of itseffectivity. The publication of all presidential issuances "of a public nature" or "ofgeneralapplicability" is mandated by law. The clear object of the law is to give thegeneral publicadequate notice of the various laws w/c are to regulate theiractions and conduct as citizens.W/o such notice and publication, there would be no basisfor the application of the maxim"ignorantia legis non excusat." It would be the height ofinjustice to punish orotherwise burdena citizen for the transgression of a law of w/c he had no notice whatsoever, not even aconstructive one. It is needlessto say that the publication ofpresidential issuances "of a publicnature" or "of general applicability" is a requirement of due process. It isa rule of law thatbefore a personmay be bound by law, he must first be officially and specifically informed of itscontentsDE ROY VS. COURT OF APPEALS, 157SCRA 757FACTS:This is a case ofcertiorari seeking to declare null and void the resolution denying petitioners' motion forextension of time to file a motion for reconsideration and directed entry of judgment since the decision insaid case had become final;and the resolution denying thepetitioners' motion for reconsideration forhaving been filed out of time. T

he CA applied the rule laid down in

Habaluyas Enterprises,Inc. v. Japzon, [G.R. No. 70895, August 5, 1985,138 SCRA 461, that the 15-dayperiod for appealing or forfiling aMotion for Reconsideration cannot be extendedPetitioners contend that therule enunciated in theabove case should not be madeto apply to themowing to the non-publication of theHABALUYAS decision intheOfficial Gazette as of the time the subject decision of the CA was promulgated.ISSUE:Is thepetitioner's contention meritorious?HELD:There is no law requiring the publication of Supreme Court decisions in the OfficialGazette before they can be binding andas a condition to theirbecoming effective.It is the bounden duty of counsel as lawyer in active law practice to keep abreast ofdecisions of the Supreme Court particularly whereissues have been clarified,consistently reiterated, and published inthe advance reports of Supreme Courtdecisions (G. R. s) and insuch publications as the Supreme Court ReportsAnnotated (SCRA) and law journalsG.R. No. 80718 January 29, 1988FELIZA P. DE ROY andVIRGILIO RAMOS,petitioners, vs.COURT OF APPEALS and LUISBERNAL, SR., GLENIA BERNAL, LUISBERNAL, JR., HEIRS OF MARISSA BERNAL, namely, GLICERIA DELA CRUZ BERNAL and LUIS BERNAL, SR.,respondents.R E S O L U T I O NCORTES,J.:

This specialcivil actionfor certiorari seekstodeclare nulland voidtwo (2)resolutions oftheSpecial FirstDivision ofthe CourtofAppeals in the case of LuisBernal, Sr., et al. v.Felisa Perdosa De Roy, et al., CA-G.R. CV No.07286. The first resolution promulgatedon 30 September 1987 denied petitioners' motion for extension of time to file a motion for reconsideration and directed entry ofjudgment sincethedecision insaid casehadbecome final;andthesecond Resolutiondated 27October 1987denied petitioners'motion for reconsideration for having been filed out of time.At the outset, thisCourt could have denied the petition outright for not being verified as required by Rule 65 section 1of the Rules ofCourt. However, even if the instantpetition did not suffer from thisdefect, this Court, on procedural and substantive grounds, wouldstill resolve to deny it.The facts of the case are undisputed. The firewall of a burned-out building owned by petitioners collapsed and destroyed the tailoringshop occupied by the family of private respondents, resulting in injuries to private respondents and the death of Marissa Bernal, adaughter. Private respondents had been warned by petitioners to vacate their shop inview of its proximity tothe weakened wall butthe former failed to do so.On the basis ofthe foregoing facts, the Regional Trial Court. First Judicial Region, Branch XXXVIII, presidedby the Hon. Antonio M. Belen, rendered judgment finding petitioners guilty of gross negligence and awarding damages to privaterespondents. On appeal, the decision of the trial court was affirmed in toto by the Court of Appeals in a decision promulgated onAugust 17, 1987, a copy of which was received by petitioners on August 25, 1987. On September 9, 1987, the last day of thefifteen-day period to file anappeal, petitioners filed amotion for extension of time tofile a motion for reconsideration, which was eventuallydeniedbytheappellatecourtinthe Resolution ofSeptember30, 1987.Petitioners filedtheirmotionfor reconsiderationonSeptember 24, 1987 but this was denied in the Resolution of October 27, 1987.This Court finds that the Court of Appeals did not commit a grave abuse of discretion when it denied petitioners' motion for extensionof time to file a motion for reconsideration, directed entry of judgment and denied their motion for reconsideration. It correctlyapplied the rule laid down in

Habaluyas Enterprises, Inc.v. Japzon

, [G.R. No. 70895, August 5, 1985,138 SCRA 461, that the fifteen-day period for appealing or for filing a motion for reconsideration cannot be extended. In its Resolution denying the motion forreconsideration, promulgated on July 30, 1986 (142 SCRA 208), this Court

en banc

restated and clarified the rule, to wit:Beginning one monthafter the promulgation of this Resolution, the rule shall bestrictly enforced that no motion for extension oftimeto file a motion for reconsideration may be filed with the Metropolitan or Municipal Trial Courts, the Regional Trial Courts, and theIntermediate Appellate Court. Such a motion may be filed only in cases pending with the Supreme Court as the court of last resort,which may in its sound discretion either grant or deny the extension requested. (at p. 212)Lacsamana v. Second Special Cases Division of the intermediate Appellate Court,

[G.R. No. 73146-53, August 26, 1986, 143 SCRA643], reiterated the rule and went further to restate and clarify the modes and periods of appeal.Bacaya v.Intermediate AppellateCourt,

[G.R. No. 74824, Sept. 15, 1986,144 SCRA 161],stressed the prospective application of saidrule, and explained the operation of the grace period, to wit:In other words, there is a one-month grace period from the promulgation on May 30, 1986 of the Court's Resolutionin the clarificatory Habaluyas case, or up to June 30, 1986, within which the rule barring extensions of time to filemotions for new trial orreconsideration is, as yet,not strictly enforceable.Since petitioners herein filed their motion for extension on February 27, 1986, it is still within the grace period,which expired on June 30, 1986, and may still be allowed.This grace period was also applied inMission v. Intermediate Appellate Court

[G.R. No. 73669, October 28, 1986, 145 SCRA 306].]In the instant case, however, petitioners' motion for extension of time was filed on September 9, 1987, more than a year after theexpiration of the grace period on June 30, 1986. Hence, it is no longer within the coverage of the grace period. Considering the lengthof time from the expiration of the grace period to the promulgation of the decision of the Court of Appeals on August 25, 1987,petitioners cannot seek refuge in the ignorance of their counsel regarding said rule for their failure to file a motion for reconsiderationwithin the reglementary period.Petitioners contend that therule enunciated inthe

Habaluyascase should not be made to apply to the case at bar owing to the non-publicationoftheHabaluyasdecision in theOfficial Gazetteas ofthe time thesubject decisionof theCourt ofAppeals waspromulgated. Contrary to petitioners' view, there is no law requiring the publication of Supreme Court decisions in the Official Gazettebefore they can be binding and as a condition to their becoming effective. It is the bounden duty of counsel as lawyer in active lawpractice to keep abreast of decisions ofthe Supreme Court particularly where issues have been clarified, consistently reiterated, andpublished in the advance reports of Supreme Court decisions (G. R. s) and in such publications as the Supreme Court ReportsAnnotated (SCRA) and law journals.ThisCourtlikewise findsthattheCourtofAppealscommittednograveabuseofdiscretioninaffirming thetrialcourt'sdecisionholding petitioner liable under Article 2190ofthe CivilCode,whichprovides that"the proprietorof abuilding orstructure isresponsible for the damage resulting from its total or partial collapse, if it should be due to the lack of necessary repairs.Nor was there error in rejecting petitioners argument that private respondents had the "last clear chance" to avoid the accident ifonly they heeded the. warning tovacate the tailoring shop and ,therefore, petitioners prior negligence should be disregarded, sincethe doctrine of "last clear chance," which has been applied to vehicular accidents, is inapplicable to this case.WHEREFORE, in view of the foregoing, the Court Resolved to DENY the instant petition for lack of merit.

Fernan (Chairman), Gutierrez, Jr., Feliciano and Bidin, JJ., concurTAYUG RURAL BANK,plaintiff-appellee,-versus-CENTRAL BANK OF THE PHILIPPINES,defendant-appellant.Bengzon, Bengzon, Villaroman & De Vera Law Office for plaintiff-appellee.

Evangelista, Bautista & Valdehuesa Law Office for defendant-appellant.

PARAS,J.:pSubmitted on May 20, 1977 for decision by this Court is this appeal from the decision dated January 6, 1971 rendered by the Court of First Instance of Manila, Branch III in Civil Case No. 76920, the decretal portion of which states as follows:

WHEREFORE, judgment is rendered for the plaintiff on the complaint and the defendant is ordered to further credit the plaintiff the amounts collected as 10% penalty in the sum of P19,335.88 or up to July 15, 1969 and to refrain from collecting the said 10% penalty on the remaining past due loans of plaintiff with the defendant.

With respect to defendant's counterclaim, judgment is hereby rendered against the plaintiff and the defendant is ordered to pay the Central Bank of the Philippines the outstanding balance of its past overdue accounts in the sum of P444,809,45 plus accrued interest at the rate of 1/2 of 1 % per annum with respect to the promissory notes (Annexes 1 to 1-E of defendant's Answer) and 2-1/2% per annum with respect to the promissory notes (Annexes 1-f to 1-i of the Answer). From this amount shall be deducted the sum of P19,335.88 collected as 10% penalty.

The facts of the case based on the parties' stipulation of facts (Record on Appeal p. 67), are as follows:

Plaintiff-Appellee, Tayug Rural Bank, Inc., is a banking corporation in Tayug, Pangasinan. During the period from December 28, 1962 to July 30, 1963, it obtained thirteen (13) loans from Defendant-Appellant, Central Bank of the Philippines, by way of rediscounting, at the rate of 1/2 of 1% per annum from 1962 to March 28, 1963 and thereafter at the rate of 2-1/2% per anum. The loans, amounting to P813,000.00 as of July 30, 1963, were all covered by corresponding promissory notes prescribing the terms and conditions of the aforesaid loans (Record on Appea, pp. 15-53). As of July 15, 1969, the outstanding balance was P 444,809.45 (Record on Appeal, p. 56).

On December 23, 1964, Appellant, thru the Director of the Department of Loans and Credit, issued Memorandum Circular No. DLC-8, informing all rural banks that an additional penalty interest rate of ten per cent (10%) per annum would be assessed on all past due loans beginning January 4, 1965. Said Memorandum Circular was actually enforced on all rural banks effective July 4, 1965.

On June 27, 1969, Appellee Rural Bank sued Appellant in the Court of First Instance of Manila, Branch III, to recover the 10% penalty imposed by Appellant amounting to P16,874.97, as of September 27, 1968 and to restrain Appellant from continuing the imposition of the penalty. Appellant filed a counterclaim for the outstanding balance and overdue accounts of Appellee in the total amount of P444,809.45 plus accrued interest and penalty at 10% per annum on the outstanding balance until full payment. (Record on Appeal, p. 13). Appellant justified the imposition of the penalty by way of affirmative and special defenses, stating that it was legally imposed under the provisions of Section 147 and 148 of the Rules and Regulations Governing Rural Banks promulgated by the Monetary Board on September 5, 1958, under authority of Section 3 of Republic Act No. 720, as amended (Record on Appeal, p. 8, Affirmative and Special Defenses Nos. 2 and 3).

In its answer to the counterclaim, Appellee prayed for the dismissal of the counterclaim, denying Appellant's allegations stating that if Appellee has any unpaid obligations with Appellant, it was due to the latter's fault on account of its flexible and double standard policy in the granting of rediscounting privileges to Appellee and its subsequent arbitrary and illegal imposition of the 10% penalty (Record on Appeal, p. 57). In its Memorandum filed on November 11, 1970, Appellee also asserts that Appellant had no basis to impose the penalty interest inasmuch as the promissory notes covering the loans executed by Appellee in favor of Appellants do not provide for penalty interest rate of 10% per annum on just due loans beginning January 4, 1965 (Record on Appeal p. 96).

The lower court, in its Order dated March 3, 1970, stated that "only a legal question has been raised in the pleadings" and upholding the stand of plaintiff Rural Bank, decided the case in its favor. (Rollo, p. 34).

Appellant appealed the decision of the trial court to the Court of Appeals, for determination of questions of facts and of law. However, in its decision promulgated April 13, 1977, the Court of Appeals, finding no controverted facts and taking note of the statement of the lower court in its pre-trial Order dated March 3, 1970 that only a legal question has been raised in the pleadings, (Record on Appeal, p. 61), ruled that the resolution of the appeal will solely depend on the legal issue of whether or not the Monetary Board had authority to authorize Appellant Central Bank to impose a penalty rate of 10% per annum on past due loans of rural banks which had failed to pay their accounts on time and ordered the certification of this case to this Court for proper determination (Rollo, pp. 34-35).

On April 20, 1977, the entire record of the case was forwarded to this Court (Rollo, p. 36). In the resolution of May 20, 1977, the First Division of this Court, ordered the case docketed and as already stated declared the same submitted for decision (Rollo, p. 38).

In its Brief, Appellant assigns the following errors:

I. THE LOWER COURT ERRED IN HOLDING THAT IT IS BEYOND THE REACH OF THE MONETARY BOARD TO METE OUT PENALTIES ON PAST DUE LOANS OF RURAL BANKS ESPECIALLY SINCE NO PENAL CLAUSE HAS BEEN INCLUDED IN THE PROMISSORY NOTES.

II. THE LOWER COURT ERRED IN HOLDING THAT THE IMPOSITION OF THE PENALTY IS AN IMPAIRMENT OF THE OBLIGATION OF CONTRACT WITHOUT DUE PROCESS.

III. THE LOWER COURT ERRED IN NOT FINDING JUDGMENT AGAINST PLAINTIFF FOR 10% COST OF COLLECTION OF THE PROMISSORY NOTE AS PROVIDED THEREIN.

It is undisputed that no penal clause has been included in the promissory notes. For this reason, the trial court is of the view that Memorandum Circular DLC-8 issued on December 23, 1964 prescribing retroactive effect on all past due loans, impairs the obligation of contract and deprives the plaintiff of its property without due process of law. (Record on Appel, p. 40).

On the other hand appellant without opposing appellee's right against impairment of contracts, contends that when the promissory notes were signed by appellee, it was chargeable with knowledge of Sections 147 and 148 of the rules and regulations authorizing the Central Bank to impose additional reasonable penalties, which became part of the agreement. (ibid).

Accordingly, the issue is reduced to the sole question as to whether or not the Central Bank can validly impose the 10% penalty on Appellee's past overdue loans beginning July 4, 1965, by virtue of Memorandum Circular No. DLC-8 dated December 23, 1964.

The answer is in the negative.

Memorandum Circular No. DLC-8 issued by the Director of Appellant's Department of Loans and Credit on December 23, 1964, reads as follows:

Pursuant to Monetary Board Resolution No. 1813 dated December 18, 1964, and in consonance with Section 147 and 148 of the Rules and Regulations Governing Rural Banks concerning the responsibility of a rural bank to remit immediately to the Central Bank payments received on papers rediscounted with the latter including the loan value of rediscounted papers as they mature, and to liquidate fully its maturing loan obligations with the Central Bank, personal checks, for purposes of repayment, shall considered only after such personal checks shall have been honored at clearing.

In addition, rural banks which shall default in their loan obligations, thus incurring past due accounts with the Central Bank, shall be assessed an additional penalty interest rate of ten per cent (10%) per annum on such past due accounts with the Central Bank over and above the customary interest rate(s) at which such loans were originally secured from the Central Bank. (Record on Appeal, p. 135).

The above-quoted Memorandum Circular was issued on the basis of Sections 147 and 148 of the Rules and Regulations Governing Rural Banks of the Philippines approved on September 5, 1958, which provide:

Section 147. Duty of Rural Bank to turn over payment received for papers discounted or used for collateral. A Rural Bank receiving any payment on account of papers discounted or used for collateral must turn the same over to the creditor bank before the close of the banking day next following the receipt of payment, as long as the aggregate discounting on loan amount is not fully paid, unless the Rural Bank substitutes the same with another eligible paper with at least the same or earlier maturity and the same or greater value.

A Rural Bank failing to comply with the provisions of the preceding paragraph shall ipso facto lose its right to the rediscounting or loan period, without prejudice to the Central Bank imposing additional reasonable penalties, including curtailment or withdrawal of financial assistance.

Sec. 148. Default and other violations of obligation by Rural Bank, effect. A Rural Bank becomes in default upon the expiration of the maturity period of its note, or that of the papers discounted or used as collateral, without the necessity of demand.

A Rural Bank incurring default, or in any other manner, violating any of the stipulations in its note, shall suffer the consequences provided in the second paragraph of the preceding section. (Record on Appeal, p. 136.)

The "Rules and Regulations Governing Rural Banks" was published in the Official Gazette, 55 O.G., on June 13, 1959, pp. 5186-5289. It is by virtue of these same Rules that Rural Banks re-discount their loan papers with the Central Bank at 2-1/2% interest per annum and in turn lend the money to the public at 12% interest per annum (Defendant's Reply to Plaintiff's Memorandum, Record on Appeal, p. 130).

Appellant maintains that it is pursuant to Section 3 of R.A. No. 720, as amended, that the Monetary Board has adopted the set of Rules and Regulations Governing Rural Banks. It reads:

SEC. 3. In furtherance of this policy, the Monetary Board of the Central Bank of the Philippines shall formulate the necessary rules and regulations governing the establishment and operatives of Rural Banks for the purpose of providing adequate credit facilities to small farmers and merchants, or to cooperatives of such farmers or merchants and to supervise the operation of such banks.

The specific provision under the law claimed as basis for Sections 147 and 148 of the Rules and Regulations Governing Rural Banks, that is, on Appellant's authority to extend loans to Rural Banks by way of rediscounting is Section 13 of R.A. 720, as amended, which provides:

SEC. 13. In an emergency or when a financial crisis is imminent the Central Bank may give a loan to any Rural Bank against assets of the Rural Bank which may be considered acceptable by a concurrent vote of at least, five members of the Monetary Board.

In normal times, the Central Bank may re-discount against papers evidencing a loan granted by a Rural Bank to any of its customers which can be liquefied within a period of two hundred and seventy days: PROVIDED, HOWEVER, That for the purpose of implementing a nationwide program of agricultural and industrial development, Rural Banks are hereby authorized under such terms and conditions as the Central Bank shall prescribe to borrow on a medium or long term basis, funds that the Central Bank or any other government financing institutions shall borrow from the International Bank for Reconstruction and Development or other international or foreign lending institutions for the specific purpose of financing the above stated agricultural and industrial program. Repayment of loans obtained by the Central Bank of the Philippines or any other government financing institution from said foreign lending institutions under this section shall be guaranteed by the Republic of the Philippines.

As to the supervising authority of the Monetary Board of the Central Bank over Rural Banks, the same is spelled-out under Section 10 of R.A. 720, as follows:

SEC. 10. The power to supervise the operation of any Rural Bank by the Monetary Board of the Central Bank as herein indicated, shall consist in placing limits to the maximum credit allowed any individual borrower; in prescribing the interest rate; in determining the loan period and loan procedure; in indicating the manner in which technical assistance shall be extended to Rural Banks; in imposing a uniform accounting system and manner of keeping the accounts and records of the Rural Banks; in undertaking regular credit examination of the Rural Banks: in instituting periodic surveys of loan and lending procedures, audits, test check of cash and other transactions of the Rural Banks; in conducting training courses for personnel of Rural Banks; and, in general in supervising the business operation of the Rural Banks.

Nowhere in any of the above-quoted pertinent provisions of R.A. 720 nor in any other provision of R.A. 720 for that matter, is the monetary Board authorized to mete out on rural banks an additional penalty rate on their past due accounts with Appellant. As correctly stated by the trial court, while the Monetary Board possesses broad supervisory powers, nonetheless, the retroactive imposition of administrative penalties cannot be taken as a measure supervisory in character. (Record on Appeal, p. 141).

Administrative rules and regulations have the force and effect of law (Valerio v. Hon. Secretary of Agriculture and Natural Resources, 7 SCRA 719; Commissioner of Civil Service v. Cruz, 15 SCRA 638; R.B. Industrial Development Company, Ltd. v. Enage, 24 SCRA 365; Director of Forestry v. Munoz, 23 SCRA 1183; Gonzalo Sy v. Central Bank of the Philippines, 70 SCRA 570).

There are, however, limitations to the rule-making power of administrative agencies. A rule shaped out by jurisprudence is that when Congress authorizes promulgation of administrative rules and regulations to implement given legislation, all that is required is that the regulation be not in contradiction with it, but conform to the standards that the law prescribes (Director of Forestry v. Munoz, 23 SCRA 1183). The rule delineating the extent of the binding force to be given to administrative rules and regulations was explained by the Court inTeoxon v. Member of the Board of Administrators(33 SCRA 588), thus: "The recognition of the power of administrative officials to promulgate rules in the implementation of the statute, as necessarily limited to what is provided for in the legislative enactment, may be found as early as 1908 in the case ofUnited States v. Barrias(11 Phil. 327) in 1914U.S. v. Tupasi Molina(29 Phil. 119), in 1936People v. Santos(63 Phil. 300), in 1951Chinese Flour Importers Ass. v. PriceStabilization Board(89 Phil. 439), and in 1962Victorias Milling Co., Inc. v. Social Security Commission(4 SCRA 627). The Court held in the same case that "A rule is binding on the courts so long as the procedure fixed for its promulgation is followed and its scope is within the statute granted by the legislature, even if the courts are not in agreement with the policy stated therein or its innate wisdom ...." On the other hand, "administrative interpretation of the law is at best merely advisory, for it is the courts that finally determine what the law means." Indeed, it cannot be otherwise as the Constitution limits the authority of the President, in whom all executive power resides, to take care that the laws be faithfully executed. No lesser administrative, executive office, or agency then can, contrary to the express language of the Constitution, assert for itself a more extensive prerogative. Necessarily, it is bound to observe the constitutional mandate. There must be strict compliance with the legislative enactment. The rule has prevailed over the years, the latest restatement of which was made by the Court in the caseof Bautista v. Junio(L-50908, January 31, 1984, 127 SCRA 342).

In case of discrepancy between the basic law and a rule or regulation issued to implement said law, the basic law prevails because said rule or regulation cannot go beyond the terms and provisions of the basic law (People v. Lim, 108 Phil. 1091). Rules that subvert the statute cannot be sanctioned (University of St. Tomas v. Board of Tax Appeals, 93 Phil. 376; Del Mar v. Phil. Veterans Administration, 51 SCRA 340). Except for constitutional officials who can trace their competence to act to the fundamental law itself, a public official must locate in the statute relied upon a grant of power before he can exercise it. Department zeal may not be permitted to outrun the authority conferred by statute (Radio Communications of the Philippines, Inc. v. Santiago, L-29236, August 21, 1974, 58 SCRA 493).

When promulgated in pursuance of the procedure or authority conferred upon the administrative agency by law, the rules and regulations partake of the nature of a statute, and compliance therewith may be enforced by a penal sanction provided in the law (Victorias Milling Co., Inc. v. Social Security Commission, 114 Phil. 555; People v. Maceren, L-32166, October 18, 1977, 79 SCRA 462; Daza v. Republic, L-43276, September 28, 1984, 132 SCRA 267). Conversely, the rule is likewise clear. Hence an administrative agency cannot impose a penalty not so provided in the law authorizing the promulgation of the rules and regulations, much less one that is applied retroactively.

The records show that DLC Form No. 11 (Folder of Exhibits, p. 16) was revised December 23, 1964 to include the penal clause, as follows:

In the event that this note becomes past due, the undersigned shall pay a penalty at the rate of _____ per cent ( ) per annum on such past due account over and above the interest rate at which such loan was originally secured from the Central Bank.

Such clause was not a part of the promissory notes executed by Appellee to secure its loans. Appellant inserted the clause in the revised DLC Form No. 11 to make it a part of the contractual obligation of rural banks securing loans from the Central Bank, after December 23, 1964. Thus, while there is now a basis for the imposition of the 10% penalty rate on overdue accounts of rural banks, there was none during the period that Appellee contracted its loans from Appellant, the last of which loan was on July 30, 1963. Surely, the rule cannot be given retroactive effect.

Finally, on March 31, 1970, the Monetary Board in its Resolution No. 475 effective April 1, 1970, revoked its Resolution No. 1813, dated December 18, 1964 imposing the questioned 10% per annum penalty rate on past due loans of rural banks and amended sub-paragraph (a), Section 10 of the existing guidelines governing rural banks' applications for a loan or rediscount, dated May 7, 1969 (Folder of Exhibits, p. 19). As stated by the trial court, this move on the part of the Monetary Board clearly shows an admission that it has no power to impose the 10% penalty interest through its rules and regulations but only through the terms and conditions of the promissory notes executed by the borrowing rural banks. Appellant evidently hoped that the defect could be adequately accomplished by the revision of DLC Form No. 11.

The contention that Appellant is entitled to the 10% cost of collection in case of suit and should therefore, have been awarded the same by the court below, is well taken. It is provided in all the promissory notes signed by Appellee that in case of suit for the collection of the amount of the note or any unpaid balance thereof, the Appellee Rural Bank shall pay the Central Bank of the Philippines a sum equivalent to ten (10%) per cent of the amount unpaid not in any case less than five hundred (P500.00) pesos as attorney's fees and costs of suit and collection. Thus, Appellee cannot be allowed to come to Court seeking redress for an wrong done against it and then be allowed to renege on its corresponding obligations.

PREMISES CONSIDERED, the decision of the trial court is hereby AFFIRMED with modification that Appellee Rural Bank is ordered to pay a sum equivalent to 10% of the outstanding balance of its past overdue accounts, but not in any case less than P500.00 as attorney's fees and costs of suit and collection.

SO ORDERED.ABS-CBN BROADCASTING CORPORATION,petitioner,-versus-COURT OF TAX APPEALS and THE COMMISSIONER OF INTERNAL REVENUE,respondents.

MELENCIO-HERRERA,J.:This is a Petition for Review on certiorari of the Decision of the Court of Tax Appeals in C.T.A. Case No. 2809, dated November 29, 1979, which affirmed the assessment by the Commissioner of Internal Revenue, dated April 16, 1971, of a deficiency withholding income tax against petitioner, ABS-CBN Broadcasting Corporation, for the years 1965, 1966, 1967 and 1968 in the respective amounts of P75,895.24, P99,239.18, P128,502.00 and P222, 260.64, or a total of P525,897.06.

During the period pertinent to this case, petitioner corporation was engaged in the business of telecasting local as well as foreign films acquired from foreign corporations not engaged in trade or business within the Philippines. for which petitioner paid rentals after withholding income tax of 30%of one-half of the film rentals.

In so far as the income tax on non-resident corporations is concerned, section 24 (b) of the National Internal Revenue Code, as amended by Republic Act No. 2343 dated June 20, 1959, used to provide:

(b) Tax on foreign corporations.(1)Non-resident corporations. There shall be levied, collected, and paid for each taxable year, in lieu of the tax imposed by the preceding paragraph, upon the amount received by every foreign corporation not engaged in trade or business within the Philippines, from an sources within the Philippines, as interest, dividends, rents, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable annual or periodical gains, profits, and income, a tax equal to thirtyper centum of such amount. (Emphasis supplied)

On April 12, 1961, in implementation of the aforequoted provision, the Commissioner of Internal Revenue issued General Circular No. V-334 reading thus:

In connection with Section 24 (b) of Tax Code, the amendment introduced by Republic Act No. 2343, under which an income tax equal to 30% is levied upon the amount received by every foreign corporation not engaged in trade or business within the Philippines from all sources within this country as interest, dividends, rents, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable annual or periodical gains, profits, and income, it has been determined that the tax is still imposed on income derived from capital, or labor, or both combined, in accordance with the basic principle of income taxation (Sec. 39, Income Tax Regulations), and that a mere return of capital or investment is not income (Par. 5,06, 1 Mertens Law of Federal 'Taxation). Since according to the findings of the Special Team who inquired into business of the non-resident foreign film distributors, the distribution or exhibition right on a film is invariably acquired for a consideration, either for a lump sum or a percentage of the film rentals, whether from a parent company or an independent outside producer,apart of the receipts of a non-resident foreign film distributor derived from said film represents, therefore, a return of investment.xxx xxx xxx

4. The local distributor should withhold 30% of one-half of the film rentals paid to the non-resident foreign film distributor and pay the same to this office in accordance with law unless the non- resident foreign film distributor makes a prior settlement of its income tax liability. (Emphasis ours).

Pursuant to the foregoing, petitioner dutifully withheld and turned over to the Bureau of Internal Revenue the amount of 30% of one-half of the film rentals paid by it to foreign corporations not engaged in trade or business within the Philippines. The last year that petitioner withheld taxes pursuant to the foregoing Circular was in 1968.

On June 27, 1968, Republic Act No. 5431 amended Section 24 (b) of the Tax Code increasing the tax rate from 30 % to 35 % and revising the tax basis from "such amount" referring to rents, etc. to "gross income," as follows:

(b) Tax on foreign corporations.(1)Non-resident corporations.A foreign corporation not engaged in trade or business in the Philippines including a foreign life insurance company not engaged in the life insurance business in the Philippines shall pay a tax equal to thirty-five per cent of the gross income received during each taxable year from all sources within the Philippines, as interests, dividends, rents, royalties, salaries, wages, premiums, annuities, compensations, remunerations for technical services or otherwise, emoluments or other fixed or determinable annual, periodical or casual gains, profits, and income, and capital gains,Provided however, That premiums shah not include reinsurance premiums. (Emphasis supplied)

On February 8, 1971, the Commissioner of Internal Revenue issued Revenue Memorandum Circular No. 4-71, revoking General Circular No. V-334, and holding that the latter was "erroneous for lack of legal basis," because "the tax therein prescribed should be based on gross income without deduction whatever," thus:

After a restudy and analysis of Section 24 (b) of the National Internal Revenue Code, as amended by Republic Act No. 5431, and guided by the interpretation given by tax authorities to a similar provision in the Internal Revenue Code of the United States, on which the aforementioned provision of our Tax Code was patterned, this Office has come to the conclusion that the tax therein prescribedshould be based on gross income without t deduction whatever. Consequently, the ruling in General Circular No. V-334, dated April 12, 1961, allowing the deduction of the proportionate cost of production or exhibition of motion picture films from the rental income of non- resident foreign corporations, is erroneous for lack of legal basis.

In view thereof, General Circular No. V-334, dated April 12, 1961, is hereby revoked and henceforth, local films distributors and exhibitors shall deduct and withhold35% of the entire amountpayable by them to non-resident foreign corporations, as film rental or royalty, or whatever such payment may be denominated, without any deduction whatever, pursuant to Section 24 (b), and pay the withheld taxes in accordance with Section 54 of the Tax Code, as amended.

All rulings inconsistent with this Circular is likewise revoked. (Emphasis ours)

On the basis of this new Circular, respondent Commissioner of Internal Revenue issued against petitioner a letter of assessment and demand dated April 15, 1971, but allegedly released by it and received by petitioner on April 12, 1971, requiring them to pay deficiency withholding income tax on the remitted film rentals for the years 1965 through 1968 and film royalty as of the end of 1968 in the total amount of P525,897.06 computed as follows:

1965

Total amount remittedP 511,059.48

Withholding tax due thereon153,318.00

Less: Amount already assessed89,000.00

BalanceP64,318.00

Add: 1/2% mo. int. fr. 4-16-66 to 4-16-6911,577.24

Total amount due & collectibleP 75,895.24

1966

Total amount remittedP373,492.24



Balance84,101.00

Add: 11/2%mo. int. fr. 4-16-67 to 4-116-7015,138.18

Total amount due & collectibleP99,239.18

1967




Balance108,900.00

Add: 1/2% mo. int. fr. 4-16-68 to 4-16-7119,602.00


1968




BalanceP198,447.00

Add: 1/2% mo. int. fr. 4-16-69 to 4-29-7123,813.64


On May 5, 1971, petitioner requested for a reconsideration and withdrawal of the assessment. However, without acting thereon, respondent, on April 6, 1976, issued a warrant of distraint and levy over petitioner's personal as well as real properties. The petitioner then filed its Petition for Review with the Court of Tax Appeals whose Decision, dated November 29, 1979, is, in turn, the subject of this review. The Tax Court held:

For the reasons given, the Court finds the assessment issued by respondent on April 16, 1971 against petitioner in the amounts of P75,895.24, P 99,239.18, P128,502.00 and P222,260.64 or a total of P525,897.06 as deficiency withholding income tax for the years 1965, 1966, 1967 and 1968, respectively, in accordance with law. As prayed for, the petition for review filed in this case is dismissed, and petitioner ABS-CBN Broadcasting Corporation is hereby ordered to pay the sum of P525,897.06 to respondent Commissioner of Internal Revenue as deficiency withholding income tax for the taxable years 1965 thru 1968, plus the surcharge and interest which have accrued thereon incident to delinquency pursuant to Section 51 (e) of the National Internal Revenue Code, as amended.

WHEREFORE, the decision appealed from is hereby affirmed at petitioner's cost.

SO ORDERED.2The issues raised are two-fold:

I. Whether or not respondent can apply General Circular No. 4-71 retroactively and issue a deficiency assessment against petitioner in the amount of P 525,897.06 as deficiency withholding income tax for the years 1965, 1966, 1967 and 1968.

II. Whether or not the right of the Commissioner of Internal Revenue to assess the deficiency withholding income tax for the year 196,5 has prescribed.3Upon the facts and circumstances of the case, review is warranted.

In point is Sec. 338-A (now Sec. 327) of the Tax Code. As inserted by Republic Act No. 6110 on August 9, 1969, it provides:

Sec. 338-A. Non-retroactivity of rulings. Any revocation, modification, or reversal of and of the rules and regulations promulgated in accordance with the preceding section or any of the rulings or circulars promulgated by the Commissioner of Internal Revenueshall not be given retroactive application if the relocation, modification, or reversal will be prejudicial to the taxpayers, except in the following cases: (a) where the taxpayer deliberately mis-states or omits material facts from his return or any document required of him by the Bureau of Internal Revenue: (b) where the facts subsequently gathered by the Bureau of Internal Revenue are materially different from the facts on which the ruling is based; or (c) where the taxpayer acted in bad faith. (italics for emphasis)

It is clear from the foregoing that rulings or circulars promulgated by the Commissioner of Internal Revenue have no retroactive application where to so apply them would be prejudicial to taxpayers. The prejudice to petitioner of the retroactive application of Memorandum Circular No. 4-71 is beyond question. It was issued only in 1971, or three years after 1968, the last year that petitioner had withheld taxes under General Circular No. V-334. The assessment and demand on petitioner to pay deficiency withholding income tax was also made three years after 1968 for a period of time commencing in 1965. Petitioner was no longer in a position to withhold taxes due from foreign corporations because it had already remitted all film rentals and no longer had any control over them when the new Circular was issued. And in so far as the enumerated exceptions are concerned, admittedly, petitioner does not fall under any of them.

Respondent claims, however, that the provision on non-retroactivity is inapplicable in the present case in that General Circular No. V-334 is a nullity because in effect, it changed the law on the matter. The Court of Tax Appeals sustained this position holding that: "Deductions are wholly and exclusively within the power of Congress or the law-making body to grant, condition or deny; and where the statute imposes a tax equal to a specified rate or percentage of the gross or entire amount received by the taxpayer, the authority of some administrative officials to modify or change, much less reduce, the basis or measure of the tax should not be read into law."4Therefore, the Tax Court concluded, petitioner did not acquire any vested right thereunder as the same was a nullity.

The rationale behind General Circular No. V-334 was clearly stated therein, however: "It ha(d) been determined that the tax is still imposed on income derived from capital, or labor, or both combined, in accordance with the basic principle of income taxation ...and that a mere return of capital or investment is not income ... ." "A part of the receipts of a non-resident foreign film distributor derived from said film represents, therefore, a return of investment." The Circular thus fixed the return of capital at 50% to simplify the administrative chore of determining the portion of the rentals covering the return of capital."5Were the "gross income" base clear from Sec. 24 (b), perhaps, the ratiocination of the Tax Court could be upheld. It should be noted, however, that said Section was not too plain and simple to understand. The fact that the issuance of the General Circular in question was rendered necessary leads to no other conclusion than that it was not easy of comprehension and could be subjected to different interpretations.

In fact, Republic Act No. 2343, dated June 20, 1959, supra, which was the basis of General Circular No. V-334, was just one in a series of enactments regarding Sec. 24 (b) of the Tax Code. Republic Act No. 3825 came next on June 22, 1963 without changing the basis but merely adding a proviso (in bold letters).

(b) Tax on foreign corporation.(1)Non-resident corporations. There shall be levied, collected and paid for each taxable year, in lieu of the tax imposed by the preceding paragraph, upon the amount received by every foreign corporation not engaged in trade or business within the Philippines, from all sources within the Philippines, as interest, dividends, rents, salaries, wages, premiums annuities, compensations, remunerations, emoluments, or other fixed or determinable annual or periodical gains, profits, and income, a tax equal to thirtyper centum of such amount: PROVIDED, HOWEVER, THAT PREMIUMS SHALL NOT INCLUDE REINSURANCE PREMIUMS. (double emphasis ours).

Republic Act No. 3841, dated likewise on June 22, 1963, followed after, omitting the proviso and inserting some words (also in bold letters).

(b) Tax on foreign corporations.(1)Non-resident corporations.There shall be levied, collected and paid for each taxable year, in lieu of the tax imposed by the preceding paragraph, upon the amount received by every foreign corporation not engaged in trade or business within the Philippines, from all sources within the Philippines, as interest, dividends, rents, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable annual or periodical OR CASUAL gains, profits and income, AND CAPITAL GAINS, a tax equal to thirtyper centum of such amount.6(double emphasis supplied)

The principle of legislative approval of administrative interpretation by re-enactment clearly obtains in this case. It provides that "the re-enactment of a statute substantially unchanged is persuasive indication of the adoption by Congress of a prior executive construction.7Note should be taken of the fact that this case involves not a mere opinion of the Commissioner or ruling rendered on a mere query, but a Circular formally issued to "all internal revenue officials" by the then Commissioner of Internal Revenue.

It was only on June 27, 1968 under Republic Act No. 5431,supra, which became the basis of Revenue Memorandum Circular No. 4-71, that Sec. 24 (b) was amended to refer specifically to 35% of the "gross income."

This Court is not unaware of the well-entrenched principle that the Government is never estopped from collecting taxes because of mistakes or errors on the part of itsagents.8In fact, utmost caution should be taken in this regard.9But, like other principles of law, this also admits of exceptions in the interest of justice and fairplay. The insertion of Sec. 338-A into the National Internal Revenue Code, as held in the case of Tuason, Jr. vs. Lingad,10is indicative of legislative intention to support the principle of good faith. In fact, in the United States, from where Sec. 24 (b) was patterned, it has been held that the Commissioner of Collector is precluded from adopting a position inconsistent with one previously taken where injustice would result therefrom,11or where there has been a misrepresentation to the taxpayer.12We have also noted that in its Decision, the Court of Tax Appeals further required the petitioner to pay interest and surcharge as provided for in Sec. 51 (e) of the Tax Code in addition to the deficiency withholding tax of P 525,897.06. This additional requirement is much less called for because the petitioner relied in good faith and religiously complied with no less than a Circular issued "to all internal revenue officials" by the highest official of the Bureau of Internal Revenue and approved by the then Secretary of Finance.13With the foregoing conclusions arrived at, resolution of the issue of prescription becomes unnecessary.

WHEREFORE, the judgment of the Court of Tax Appeals is hereby reversed, and the questioned assessment set aside. No costs.

SO ORDERED.

G.R. No. L-43082PABLO LORENZO, as trustee of the estate of Thomas Hanley, deceased, plaintiff-appellant,vs.JUAN POSADAS, JR., Collector of Internal Revenue, defendant-appellant.Pablo Lorenzo and Delfin Joven for plaintiff-appellant.Office of the Solicitor-General Hilado for defendant-appellant.LAUREL,J.:On October 4, 1932, the plaintiff Pablo Lorenzo, in his capacity as trustee of the estate of Thomas Hanley, deceased, brought this action in the Court of First Instance of Zamboanga against the defendant, Juan Posadas, Jr., then the Collector of Internal Revenue, for the refund of the amount of P2,052.74, paid by the plaintiff as inheritance tax on the estate of the deceased, and for the collection of interst thereon at the rate of 6 per cent per annum, computed from September 15, 1932, the date when the aforesaid tax was [paid under protest. The defendant set up a counterclaim for P1,191.27 alleged to be interest due on the tax in question and which was not included in the original assessment. From the decision of the Court of First Instance of Zamboanga dismissing both the plaintiffs complaint and the defendants counterclaim, both parties appealed to this court.

It appears that on May 27, 1922, one Thomas Hanley died in Zamboanga, Zamboanga, leaving a will (Exhibit 5) and considerable amount of real and personal properties. On june 14, 1922, proceedings for the probate of his will and the settlement and distribution of his estate were begun in the Court of First Instance of Zamboanga. The will was admitted to probate. Said will provides, among other things, as follows:4. I direct that any money left by me be given to my nephew Matthew Hanley.

5. I direct that all real estate owned by me at the time of my death be not sold or otherwise disposed of for a period of ten (10) years after my death, and that the same be handled and managed by the executors, and proceeds thereof to be given to my nephew, Matthew Hanley, at Castlemore, Ballaghaderine, County of Rosecommon, Ireland, and that he be directed that the same be used only for the education of my brothers children and their descendants.

6. I direct that ten (10) years after my death my property be given to the above mentioned Matthew Hanley to be disposed of in the way he thinks most advantageous.

x x x x x x x x x

8. I state at this time I have one brother living, named Malachi Hanley, and that my nephew, Matthew Hanley, is a son of my said brother, Malachi Hanley.The Court of First Instance of Zamboanga considered it proper for the best interests of the estate to appoint a trustee to administer the real properties which, under the will, were to pass to Matthew Hanley ten years after the two executors named in the will, was, on March 8, 1924, appointed trustee. Moore took his oath of office and gave bond on March 10, 1924. He acted as trustee until February 29, 1932, when he resigned and the plaintiff herein was appointed in his stead.

During the incumbency of the plaintiff as trustee, the defendant Collector of Internal Revenue, alleging that the estate left by the deceased at the time of his death consisted of realty valued at P27,920 and personalty valued at P1,465, and allowing a deduction of P480.81, assessed against the estate an inheritance tax in the amount of P1,434.24 which, together with the penalties for delinquency in payment consisting of a 1 per cent monthly interest from July 1, 1931 to the date of payment and a surcharge of 25 per cent on the tax, amounted to P2,052.74. On March 15, 1932, the defendant filed a motion in the testamentary proceedings pending before the Court of First Instance of Zamboanga (Special proceedings No. 302) praying that the trustee, plaintiff herein, be ordered to pay to the Government the said sum of P2,052.74. The motion was granted. On September 15, 1932, the plaintiff paid said amount under protest, notifying the defendant at the same time that unless the amount was promptly refunded suit would be brought for its recovery. The defendant overruled the plaintiffs protest and refused to refund the said amount hausted, plaintiff went to court with the result herein above indicated.

In his appeal, plaintiff contends that the lower court erred:I. In holding that the real property of Thomas Hanley, deceased, passed to his instituted heir, Matthew Hanley, from the moment of the death of the former, and that from the time, the latter became the owner thereof.

II. In holding, in effect, that there was delinquency in the payment of inheritance tax due on the estate of said deceased.

III. In holding that the inheritance tax in question be based upon the value of the estate upon the death of the testator, and not, as it should have been held, upon the value thereof at the expiration of the period of ten years after which, according to the testators will, the property could be and was to be delivered to the instituted heir.

IV. In not allowing as lawful deductions, in the determination of the net amount of the estate subject to said tax, the amounts allowed by the court as compensation to the trustees and paid to them from the decedents estate.

V. In not rendering judgment in favor of the plaintiff and in denying his motion for new trial.The defendant-appellant contradicts the theories of the plaintiff and assigns the following error besides:The lower court erred in not ordering the plaintiff to pay to the defendant the sum of P1,191.27, representing part of the interest at the rate of 1 per cent per month from April 10, 1924, to June 30, 1931, which the plaintiff had failed to pay on the inheritance tax assessed by the defendant against the estate of Thomas Hanley.The following are the principal questions to be decided by this court in this appeal: (a) When does the inheritance tax accrue and when must it be satisfied? (b) Should the inheritance tax be computed on the basis of the value of the estate at the time of the testators death, or on its value ten years later? (c) In determining the net value of the estate subject to tax, is it proper to deduct the compensation due to trustees? (d) What law governs the case at bar? Should the provisions of Act No. 3606 favorable to the tax-payer be given retroactive effect? (e) Has there been delinquency in the payment of the inheritance tax? If so, should the additional interest claimed by the defendant in his appeal be paid by the estate? Other points of incidental importance, raised by the parties in their briefs, will be touched upon in the course of this opinion.

(a) The accrual of the inheritance tax is distinct from the obligation to pay the same. Section 1536 as amended, of the Administrative Code, imposes the tax upon every transmission by virtue of inheritance, devise, bequest, giftmortis causa, or advance in anticipation of inheritance,devise, or bequest. The tax therefore is upon transmission or the transfer or devolution of property of a decedent, made effective by his death. (61 C. J., p. 1592.) It is in reality an excise or privilege tax imposed on the right to succeed to, receive, or take property by or under a will or the intestacy law, or deed, grant, or gift to become operative at or after death. According to article 657 of the Civil Code, the rights to the succession of a person are transmitted from the moment of his death. In other words, said Arellano, C. J., . . . the heirs succeed immediately to all of the property of the deceased ancestor. The property belongs to the heirs at the moment of the death of the ancestor as completely as if the ancestor had executed and delivered to them a deed for the same before his death. (Bondad vs. Bondad, 34 Phil. 232. See also, Mijares vs. Nery, 3 Phil. 195; Suilong & Co., vs. Chio-Taysan, 12 Phil. 13; Lubrico vs. Arbado, 12 Phil. 391; Innocencio vs. Gat-Pandan, 14 Phil. 491; Aliasas vs.Alcantara, 16 Phil. 489; Ilustre vs. Alaras Frondosa, 17 Phil. 321; Malahacan vs. Ignacio, 19 Phil. 434; Bowa vs. Briones, 38 Phil. 27; Osario vs. Osario & Yuchausti Steamship Co., 41 Phil. 531; Fule vs. Fule, 46 Phil. 317; Dais vs. Court of First Instance of Capiz, 51 Phil. 396; Baun vs. Heirs of Baun, 53 Phil. 654.) Plaintiff, however, asserts that while article 657 of the Civil Code is applicable to testate as well as intestate succession, it operates only in so far as forced heirs are concerned. But the language of article 657 of the Civil Code is broad and makes no distinction between different classes of heirs. That article does not speak of forced heirs; it does not even use the word heir. It speaks of the rights of succession and the transmission thereof from the moment of death. The provision of section 625 of the Code of Civil Procedure regarding the authentication and probate of a will as a necessary condition to effect transmission of property does not affect the general rule laid down in article 657 of the Civil Code. The authentication of a will implies its due execution but once probated and allowed the transmission is effective as of the death of the testator in accordance with article 657 of the Civil Code. Whatever may be the time when actual transmission of the inheritance takes place, succession takes place in any event at the moment of the decedents death. The time when the heirs legally succeed to the inheritance may differ from the time when the heirs actually receive such inheritance. Poco importa, says Manresa commenting on article 657 of the Civil Code, que desde el falleimiento del causante, hasta que el heredero o legatario entre en posesion de los bienes de la herencia o del legado, transcurra mucho o poco tiempo, pues la adquisicion ha de retrotraerse al momento de la muerte, y asi lo ordena el articulo 989, que debe considerarse como complemento del presente. (5 Manresa, 305; see also, art. 440, par. 1, Civil Code.) Thomas Hanley having died on May 27, 1922, the inheritance tax accrued as of the date.

From the fact, however, that Thomas Hanley died on May 27, 1922, it does not follow that the obligation to pay the tax arose as of the date. The time for the payment on inheritance tax is clearly fixed by section 1544 of the Revised Administrative Code as amended by Act No. 3031, in relation to section 1543 of the same Code. The two sections follow:SEC. 1543.Exemption of certain acquisitions and transmissions. The following shall not be taxed:

(a) The merger of the usufruct in the owner of the naked title.

(b) The transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the trustees.

(c) The transmission from the first heir, legatee, or donee in favor of another beneficiary, in accordance with the desire of the predecessor.

In the last two cases, if the scale of taxation appropriate to the new beneficiary is greater than that paid by the first, the former must pay the difference.

SEC. 1544.When tax to be paid. The tax fixed in this article shall be paid:

(a) In the second and third cases of the next preceding section, before entrance into possession of the property.

(b) In other cases, within the six months subsequent to the death of the predecessor; but if judicial testamentary or intestate proceedings shall be instituted prior to the expiration of said period, the payment shall be made by the executor or administrator before delivering to each beneficiary his share.

If the tax is not paid within the time hereinbefore prescribed, interest at the rate of twelve per centum per annum shall be added as part of the tax; and to the tax and interest due and unpaid within ten days after the date of notice and demand thereof by the collector, there shall be further added a surcharge of twenty-five per centum.

A certified of all letters testamentary or of administration shall be furnished the Collector of Internal Revenue by the Clerk of Court within thirty days after their issuance.It should be observed in passing that the word trustee, appearing in subsection (b) of section 1543, should read fideicommissary or cestui quetrust. There was an obvious mistake in translation from the Spanish to the English version.

The instant case does fall under subsection (a), but under subsection (b), of section 1544 above-quoted, as there is here no fiduciary heirs, first heirs, legatee or donee. Under the subsection, the tax should have been paid before the delivery of the properties in question to P. J. M. Moore as trustee on March 10, 1924.

(b) The plaintiff contends that the estate of Thomas Hanley, in so far as the real properties are concerned, did not and could not legally pass to the instituted heir, Matthew Hanley, until after the expiration of ten years from the death of the testator on May 27, 1922 and, that the inheritance tax should be based on the value of the estate in 1932, or ten years after the testators death. The plaintiff introduced evidence tending to show that in 1932 the real properties in question had a reasonable value of only P5,787. This amount added to the value of the personal property left by the deceased, which the plaintiff admits is P1,465, would generate an inheritance tax which, excluding deductions, interest and surcharge, would amount only to about P169.52.

If death is the generating source from which the power of the estate to impose inheritance taxes takes its being and if, upon the death of the decedent, succession takes place and the right of the estate to tax vests instantly, the tax should be measured by the value of the estate as it stood at the time of the decedents death, regardless of any subsequent contingency value of any subsequent increase or decrease in value. (61 C. J., pp. 1692, 1693; 26 R. C. L., p. 232; Blakemore and Bancroft, Inheritance Taxes, p. 137. See also Knowlton vs. Moore, 178 U.S., 41; 20 Sup. Ct. Rep., 747; 44 Law. ed., 969.) The right of the state to an inheritance tax accrues at the moment of death, and hence is ordinarily measured as to any beneficiary by the value at that time of such property as passes to him. Subsequent appreciation or depreciation is immaterial. (Ross, Inheritance Taxation, p. 72.)

Our attention is directed to the statement of the rule in Cyclopedia of Law of and Procedure (vol. 37, pp. 1574, 1575) that, in the case of contingent remainders, taxation is postponed until the estate vests in possession or the contingency is settled. This rule was formerly followed in New York and has been adopted in Illinois, Minnesota, Massachusetts, Ohio, Pennsylvania and Wisconsin. This rule, however, is by no means entirely satisfactory either to the estate or to those interested in the property (26 R. C. L., p. 231.). Realizing, perhaps, the defects of its anterior system, we find upon examination of cases and authorities that New York has varied and now requires the immediate appraisal of the postponed estate at its clear market value and the payment forthwith of the tax on its out of the corpus of the estate transferred. (In re Vanderbilt, 172 N. Y., 69; 69 N. E., 782; In re Huber, 86 N. Y. App. Div., 458; 83 N. Y. Supp., 769; Estate of Tracy, 179 N. Y., 501; 72 N. Y., 519; Estate of Brez, 172 N. Y., 609; 64 N. E., 958; Estate of Post, 85 App. Div., 611; 82 N. Y. Supp., 1079. Vide also, Saltoun vs. Lord Advocate, 1 Peter. Sc. App., 970; 3 Macq. H. L., 659; 23 Eng. Rul. Cas., 888.) California adheres to this new rule (Stats. 1905, sec. 5, p. 343).

But whatever may be the rule in other jurisdictions, we hold that a transmission by inheritance is taxable at the time of the predecessors death, notwithstanding the postponement of the actual possession or enjoyment of the estate by the beneficiary, and the tax measured by the value of the property transmitted at that time regardless of its appreciation or depreciation.

(c) Certain items are required by law to be deducted from the appraised gross in arriving at the net value of the estate on which the inheritance tax is to be computed (sec. 1539, Revised Administrative Code). In the case at bar, the defendant and the trial court allowed a deduction of only P480.81. This sum represents the expenses and disbursements of the executors until March 10, 1924, among which were their fees and the proven debts of the deceased. The plaintiff contends that the compensation and fees of the trustees, which aggregate P1,187.28 (Exhibits C, AA, EE, PP, HH, JJ, LL, NN, OO), should also be deducted under section 1539 of the Revised Administrative Code which provides, in part, as follows: In order to determine the net sum which must bear the tax, when an inheritance is concerned, there shall be deducted, in case of a resident, . . . the judicial expenses of the testamentary or intestate proceedings, . . . .

A trustee, no doubt, is entitled to receive a fair compensation for his services (Barney vs. Saunders, 16 How., 535; 14 Law. ed., 1047). But from this it does not follow that the compensation due him may lawfully be deducted in arriving at the net value of the estate subject to tax. There is no statute in the Philippines which requires trustees commissions to be deducted in determining the net value of the estate subject to inheritance tax (61 C. J., p. 1705). Furthermore, though a testamentary trust has been created, it does not appear that the testator intended that the duties of his executors and trustees should be separated. (Ibid.; In re Vannecks Estate, 161 N. Y. Supp., 893; 175 App. Div., 363; In re Collards Estate, 161 N. Y. Supp., 455.) On the contrary, in paragraph 5 of his will, the testator expressed the desire that his real estate be handled and managed by his executors until the expiration of the period of ten years therein provided. Judicial expenses are expenses of administration (61 C. J., p. 1705) but, inState vs. Hennepin County Probate Court(112 N. W., 878; 101 Minn., 485), it was said: . . . The compensation of a trustee, earned, not in the administration of the estate, but in the management thereof for the benefit of the legatees or devises, does not come properly within the class or reason for exempting administration expenses. . . . Service rendered in that behalf have no reference to closing the estate for the purpose of a distribution thereof to those entitled to it, and are not required or essential to the perfection of the rights of the heirs or legatees. . . . Trusts . . . of the character of that here before the court, are created for the the benefit of those to whom the property ultimately passes, are of voluntary creation, and intended for the preservation of the estate. No sound reason is given to support the contention that such expenses should be taken into consideration in fixing the value of the estate for the purpose of this tax.

(d) The defendant levied and assessed the inheritance tax due from the estate of Thomas Hanley under the provisions of section 1544 of the Revised Administrative Code, as amended by section 3 of Act No. 3606. But Act No. 3606 went into effect on January 1, 1930. It, therefore, was not the law in force when the testator died on May 27, 1922. The law at the time was section 1544 above-mentioned, as amended by Act No. 3031, which took effect on March 9, 1922.

It is well-settled that inheritance taxation is governed by the statute in force at the time of the death of the decedent (26 R. C. L., p. 206; 4 Cooley on Taxation, 4th ed., p. 3461). The taxpayer can not foresee and ought not to be required to guess the outcome of pending measures. Of course, a tax statute may be made retroactive in its operation. Liability for taxes under retroactive legislation has been one of the incidents of social life. (Seattle vs. Kelleher, 195 U. S., 360; 49 Law. ed., 232 Sup. Ct. Rep., 44.) But legislative intent that a tax statute should operate retroactively should be perfectly clear. (Scwab vs. Doyle, 42 Sup. Ct. Rep., 491; Smietanka vs. First Trust & Savings Bank, 257 U. S., 602; Stockdale vs. Insurance Co., 20 Wall., 323; Lunch vs. Turrish, 247 U. S., 221.) A statute should be considered as prospective in its operation, whether it enacts, amends, or repeals an inheritance tax, unless the language of the statute clearly demands or expresses that it shall have a retroactive effect, . . . . (61 C. J., P. 1602.) Though the last paragraph of section 5 of Regulations No. 65 of the Department of Finance makes section 3 of Act No. 3606, amending section 1544 of the Revised Administrative Code, applicable to all estates the inheritance taxes due from which have not been paid, Act No. 3606 itself contains no provisions indicating legislative intent to give it retroactive effect. No such effect can begiven the statute by this court.

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Persons and Family Case Digest

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