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TodayisMonday,July27,2015

RepublicofthePhilippinesSUPREMECOURT

Manila

ENBANC

G.R.Nos.L46076andL46077June12,1939

THEPEOPLEOFTHEPHILIPPINES,plaintifffappellee,vs.JACOBROSENTHALandNICASIOOSMEA,defendantsappellants.

ClaroM.RectoandHilado,LorenzoandHiladoforappellantRosenthal.JoseM.CasalforappellantOsmea.OfficeoftheSolicitorGeneralTuasonforappellee.

LAUREL,J.:

Appellants, JacobRosenthal andNicasioOsmea,were charged in theCourt of First Instance ofManilawithhavingviolatedActNo.2581,commonlyknownastheBlueSkyLaw,underthefollowinginformations:

CASENO.52365

That inoraboutandduring theperiodcomprisedbetweenOctober1,1935andJanuary22,1936,bothdates inclusive, in theCity ofManila,Philippine Islands, andwithin the jurisdiction of this court, the saidNicasioOsmeaandJacobRosenthal,twooftenpromoters,organizers,foundersandincorporatorsof,theformer being, in addition, one of the members of the board of directors of, the O.R.O. Oil Co., Inc., adomesticcorporationorganizedunderthelawsofthePhilippinesandregisteredinthemercantileregistryof theBureauofCommerce,with central office in the said city, themainobjects andpurposesofwhichwere"tomine,digfor,orotherwiseobtainfromearth,petroleum,rockandcarbonoils,naturalgas,othervolatilemineralsubstancesandsalt,andtomanufacture,refine,prepareformarket,buy,sellandtransportthesameincrudeorrefinedcondition",andthecapitalthereofintheirarticlesofincorporation,theaccusedhereinincluded,consistingof3,000shareswithoutparvalue,400sharesofwhichhavingbeensubscribedby the said accused at 200 shares each and paid partly by them at the price of only P5 per share,according to the said agreement which shares were speculative securities, because the value thereofmaterially depended upon proposed promise for future promotion and development of the oil businessabovementioned rather than on actual tangible assets and conditions thereof, did then and there, withdeliberateintentofevadingtheprovisionsofsections2and5ofthesaidActNo.2581,andconspiringandconfederating togetherandhelpingeachother,willfully,unlawfullyand feloniously trade in,negotiateandspeculatewith, their shares aforesaid, bymaking personally or through brokers or agents repeated andsuccessivesalesofthesaidsharesatapricerangingfromP100toP300pershare,asfollows:

TheaccusedNicasioOsmeasold163sharestoninedifferentparties,andtheaccusedJacobRosenthalsold21sharestosevenothers,withoutfirstobtainingthecorrespondingwrittenpermitorlicensefromtheInsularTreasureroftheCommonwealthofthePhilippines,asbylawrequired.

CASENO.52366

That inoraboutandduringtheperiodcomprisedbetweenOctober1,1935,andJanuary22,1936,bothdates inclusive, in theCity ofManila,Philippine Islands, andwithin the jurisdiction of this court, the saidNicasioOsmeaandJacobRosenthal,twoofthetenpromoters,organizers,foundersandincorporatorsof,theformerbeing,inaddition,oneofthemembersoftheboardofdirectorsof,theSouthCebuOilCo.,Inc.,adomesticcorporationorganizedunderthelawsofthePhilippinesandregisteredinthemercantileregistryof theBureauofCommerce,with central office in the said city, themainobjects andpurposesofwhichwere "tomine,dig for, orotherwiseobtain fromearth,petroleum, rockor carbonoils, naturalgas,othervolatilemineralsubstancesandsalt,andtomanufacture,refine,prepareformarket,buy,sellandtransportthe same in crude and refined condition", and the capital stock of which, as per agreement of all theincorporators thereof in their articles of incorporation, the accused herein included, consisting of 2,800shareswithoutparvalue,200sharesofwhichhavingbeensubscribedby theaccusedNicasioOsmea,

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and100sharesofwhichhavingbeensubscribedbytheaccusedJacobRosenthalandpaidbybothattheprice of only P5 per share, according to the said agreement, which shares were speculative securities,because the value thereof materially depended upon proposed promise of future promotion anddevelopment of the oil business above mentioned rather than on actual tangible assets and conditionsthereof,didthenandthere,withdeliberateintentofevadingtheprovisionsofsections2and5ofActNo.2581, and conspiring and confederating together and helping one another, willfully, unlawfully andfeloniouslytradein,negotiateandspeculatewith,theirsharesaforesaid,bymakingpersonallyorthroughbrokersoragentsrepeatedandsuccessivesalesofthesaidsharesatapricerangingfromP100toP300pershare,asfollows:

TheaccusedNicasioOsmeasold185sharestoninedifferentparties,andtheaccusedJacobRosenthalsold12sharestosevenothers,withoutfirstobtainingthecorrespondingwrittenpermitorlicenseformtheInsularTreasureroftheCommonwealthofthePhilippines,asbylawprovided.

UponmotionofJacobRosenthal,theCourtofFirstInstanceofManilagrantedhimseparatetrialalthough,whenthecaseswerecalledforhearing,thecourtaccededtothemotionoftheprosecutionthatthetwocasesbetriedjointly inasmuchas theevidence tobeadducedby thegovernment thereinwas thesame,withoutprejudice toallowing the defendants to present their proof separately. After trial, the lower court, on March 22, 1937, inseparate decisions, found the defendants guilty as charged in the informations. In case No. 52365 JacobRosenthalwassentencedtopayafineofP500,withsubsidiary imprisonment incaseof insolvency,andtopayonehalfof thecostsNicasioOsmeawassentenced topaya fineofP1,000,withsubsidiary imprisonment incaseofinsolvency,andtopayonehalfofthecosts.IncaseNo.52366JacobRosenthalwassentencedtopayafine of P500, with subsidiary imprisonment in case of insolvency, and to pay onehalf of the costs NicasioOsmeawassentencedtopayafineofP2,000,withsubsidiaryimprisonmentincaseof insolvency,andtopayonehalf of the costs. The defendants duly perfected their appeal from these judgments and the cases wereoriginallyelevatedtotheCourtofAppealsbut,uponmotionoftheSolicitorGeneral,thesamewereforwardedtothiscourt inviewof the fact that theconstitutionalityofActNo.2581hasbeenput in issuebyappellants.TwoseparatebriefshavebeenfiledbyRosenthalandOsmea.InthebriefforappellantRosenthalthefollowing"jointassignmentoferrors"ismade:

1. Indeclaring thataccording to thereportof thegeologistcontractedby theO.R.OilCo.and theSouthCebuOil Co. to explore the properties leased to said companies, "no habia ninguna indicacion de quehubiese petroleo en aquellos terrenos", when in truth what the report stated was that in so far as theO.R.O.OilCo.landwasconcerned,theterritorycoveredbytheleaseiffullofpossibilitiesandwithrespectto theSouthCebuOilCo. lease, thatno further investigationsandexpensesbemade "unless favorabletestresultsareobtainedonthenorthernlease."

2. Indeclaring that theexploration leaseswere,subsequent to the findingsof thegeologist,cancelledbythegovernment,implyingtherebythatasnooilwasfoundinsaidlands,theleaseswerecancelledwhenintruththecancellationwasbasedonsupposedviolationofthoseprovisionsofthecorporationlawprohibitingthesettingupofinterlockingdirectorates.

3.Indeclaringthatthedefendant,ofhis200sharesofstockintheO.R.O.OilCo.,soldtwentyonesharestodifferentpersonsandondifferentdates,onesharehavingbeensolddirectly tooneE.F.Pimley five,thru a firm of brokers known as Mackay & McCormick, to Arthur Hoyer, Wm. Scheunig, and ModestoBautista,intheproportionoftwo,twoandone,respectivelyandfifteensharesdirectlytoHenryJ.Belden,R.T.FitzimmonsandD.P.O'Brien,intheproportionoffivesharestoeachofthemwhenintruthonlythattoE.F.Pimleywassoldtothelatterbythedefendant,whilethoseeventuallytransferredtoHoyer,ScheunigandBautistaweresolddirectly to thesaid firmMackay&McCormick,whichbought themon itsownriskand account, and the remaining fifteen transferred to Belden, O'Brien, and Fitzimmons were loaned byRosenthaltoNicasioOsmea,whowasnotuntilnoweitherreturnedthosesharesorpaidtheirvalue.

4.Inalsodeclaringthatofhis100sharesofstockintheSouthCebuOilCo.,thedefendantsoldtwelvetovariouspersonsandondifferentdates,whenintruthonlyoneoftheseshareswassoldbythedefendanttoE.F. Pimley, and the remaining eleven, two of which were transferred to Arthur Hoyer, two to WilliamScheunig,onetoJosedelaFuente,onetoCrispinLlamado,onetoA.M.Opisso,andfourtoInesGalano,weresoldandtransferred,inonesingletransaction,tothesaidfirmofbrokersdirectly,whichfirmboughtsaidsharesonitsownriskandaccount.

5. Indeclaring that thesharessold toMackay&McCormickwerebroughtby the latteroncreditatP250each, to be resold by it at P300 each, and that out of the proceeds of the sale of these shares thedefendant received thepriceagreeduponbetweenhimand thesaidbrokerage firm,orP250pershare,whenintruthandinfacttherewasnoagreementbetweenthepartiesastowhetherthesaidfirmwastosellsaidsharestoothersorwhether thosesharesweretobekeptandretainedby iton itsownriskandaccount.

6. In declaring that the corporations had not begun exploration work on the territory covered by their

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leases,andthattheyhadnotangibleproperties.

7.Indeclaringthatwhilethedefendantneedednopermittosellhisownstock,thecorporationsasissuerbeingtheonesboundtoobtainthepermitrequiredbytheBlueSkyLaw,neverthelesshe(thedefendant)wasguiltyofaviolationofsaidlawbecausethepossessionofthesharesheldandsoldbyhimwasnotingoodfaith,inthathisacquisitionthereofwasnotmadeintheordinaryandnormalcourseofthebusinessofthe corporations, but that said shareswerepurchased to indirectly promote theenterprise forwhich thecorporations were formed the said defendant having paid in full to the corporations the value of saidsharesofstock.

8.Inholdingasproventhatthepossessionofthedefendantofhisownstock,whichhepaidforinfull,wasnot a possession in good faith, because he, as an incorporator (fundador), should have known that nopermitinwritinghadbeenissuedthecorporationsbytheInsularTreasurerforthesaleofsaidstock.

9. In overruling the objection to the admission ofExhibit 1b, and in holding that a permit hadnot beenissuedbytheInsularTreasurerforthesaleofthestocksofthecorporations.

10.InholdingthattherewererepeatedandsuccessivesalesmadebythedefendantRosenthalofhisownsharesofstock.

11.Inholdingthatalthoughthedefendantwastheabsoluteownerofthestockhesold,hisrepeatedandsuccessivesalesofsuchstockprovethatthisclaimofownership(estapretensiondepropriedad)wasbutameansemployedbyhimtosellsaidstockatpricesverymuchhigherthanthosehepaidforthem.

12.InholdingthatsaidstockwassoldbythedefendantwithouttherequiredpermithavingbeenfirstissuedbytheInsularTreasurer,andthatthesalewaseffectedasifsuchpermithadbeenactuallyissued(comosienrealidadpudieranvenderseporhaberseexpedidotalpermiso).

13. Inholdingthatasaresultofan investigationconductedbytheCityFiscal, thedefendantrefundedtoBelden,O'BrienandFitzimmonsandotherstheamounttheypaidforthestocktheypurchased.

14. In holding that the opinion given by the Chief of the Insurance Division of the Office of the InsularTreasurer to the effect that the defendant could sell the said stockwithout a permit as longas no falserepresentationsweremadeby thesaiddefendant, cannotanddoesnotexempt the latter fromcriminalresponsibilityeventhoughnofalserepresentationswhatsoeverweremadebytheaforesaiddefendant.

15. In holding that the prima facie presumption in section 8 of the law to the effect that the claim ofownershipisnotbonafidewhenrepeatedandsuccessivesalesofsuchstockareeffected,hasbeentotallydestroyedby the fact thatsaidstockabsolutelybelongs to thedefendant,and innot furtherholding thatbecauseofsuchabsoluteownershipthedefendantcouldhavelegallydisposedofsuchstock inasmanysalesashesawfitwithoutanypermitfromtheInsularTreasurer.

16.InnotholdingthattheBlueSkyLawcontravenestheconstitutionalprovisionsoftheJonesActinsofarassuchlawconstitutesanunduedelegationoflegislativepowerstotheInsularTreasurer,andinsofarasitdoesnotaffordequalprotectionbeforethelaw.

17.Innotabsolvingthedefendant.

InthebriefforappellantOsmeathefollowing"relacionconjuntadeerrores"isinturnsubmitted:

1. Al no sobreseer esta causa despues de promulgada la Ley No. 83 del Commonwealth, no obstantehabersellamadosuatencionalhechodequeestaLeyderogabalaLeyNo.2581delaLegislaturaFilipina,bajocuyasdisposicioneshasidoprocesadoelacusado.

2.Alcondenaralacusadoporinfracciondela"BlueSkyLaw",noobstantereconocerseenladecisionqueconstaenlaspruebasqueelacusadoOsmeanohaofrecidoenventaningunadeaquellasacciones,nihahechomanifestacionesfalsasanadieparapodervenderlas,yquelamayorparte,sinotodoslosquelascompraron,estabansatisfechosdelainversiondesudineroenlaadquisiciondetalesacciones.

3.Alcondenaralacusadoporhabervendidoaccionesespeculativassinlicencia,cuandonoseprobo:(a)que lasaccionesde laO.R.O.OilCo., Inc., yde laSouthCebuOilCo., Inc., eranespeculativaspor sunaturaleza,y(b)queelacusadoOsmeacareciadelicenciaparavenderlas.

4.AldeclararquelaposesionporelacusadoOsmeadesusaccionesdelaO.R.O.OilCo.,Inc.,ydelaSouthCebuOilCo.,Inc.,noeradebuenafeyquenolashabiaadquiridoporsupropiacuentasinoparalapromocionindirectadeunprovectodenegociooempresaespeculativa.

5.Alnodeclararquela"BlueSkyLaw"escontrariaalasnormasconstitucionalesquegozabaaltiempode

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su promulgacion : (1) porque contiene en sus disposiciones una delegacion indebida de facultadeslegislativas(2)porqueesvagae incierteensusdisposicionesy,por tanto,nulay(3)porque infringeelderecho de igual proteccion ante la ley, viola la libertad de contratacion y contraviene el derecho deadquirir,gozarydisponerlibrementedelapropriedadprivada,siendosupromulgacion,portanto,unactodeopresionydeverdaderatirania.

6.AlnoabsolveralacusadoNicasioOsmea..

Tomeettheforegoingerrorsassignedbytheappellants,plaintiffappelleecontends:

(a)That theenactmentofCommonwealthActNo.83didnothave theeffectof relievingappellants fromcriminalliability.

(b)ThattheappellantsactedaspromotersoftheO.R.O.OilCo.andtheSouthCebuOilCo.

(c)Thatthesharesofthetwocorporationsarespeculativeinnature.

(d)That theappellantssold theirshares insaidcorporationswithoutpermitorknowingthat the latterdidnothavethepermitrequiredbylaw.

(e)Thattheappellantsarenotentitledtotheexemptionprovidedinsection8oftheBlueSkyLaw(ActNo.2581).

(f)ThattheBlueSkyLawisvalidandconstitutional.

Mostoftheerrorsassignedbytheappellantsdealwithquestionsoffact.Thisisparticularlytruewithreferencetoerrors one, two, three, four, five, six, seven, eight, nine, ten, eleven, twelve and thirteen of appellant JacobRosenthal,anderrorfourofappellantNicasioOsmea.Thereisnomaterialdiscrepancyregardingthefacts,andwe shall proceed to consider the legal questions propounded,which are in themain set forth by theSolicitorGeneralinhisbrief.

ItiscontendedbytheappellantsthatActNo.2581isunconstitutionalonthreegrounds.(1)Thatitconstitutesanundue delegation of legislative authority to the Insular Treasurer: (2) that it does not afford equal protectionbeforethelawand(3)thatitisvagueandambiguous.

Undersection2ofActNo.2581,everyperson,partnership,association,orcorporationattemptingtooffertosellinthePhilippinesspeculativesecuritiesofanykindorcharacterwhatsoever,isunderobligationtofilepreviouslywiththeInsularTreasurerthevariousdocumentsandpapersenumeratedthereinandtopaytherequiredtaxoftwentypesos.Certainsecuritieslistedinsection3areexemptedfromtheoperationoftheAct.Section5imposesupon the Insular Treasurer themandatory duty to examine the statements and documents thus filed and theadditionaldutytomakeorcausetobemade,ifdeemedadvisablebyhim,adetailedexaminationoftheaffairsoftheapplicant.Section5alsoprovidesthat"whateverthesaidTreasurerofthePhilippineIslandsissatisfied,eitherwith or without the examination herein provided, that any person, partnership, association or corporation isentitledtotherighttoofferitssecuritiesasabovedefinedandprovidedforsaleinthePhilippineIslands,heshallissue to such person, partnership, association or corporation a certificate or permit reciting that such person,partnership, association or corporation has complied with the provisions of this Act, and that such person,partnership, association or corporation, its brokers or agents are entitled to offer the securities named in saidcertificateorpermitforsale"that"saidTreasurershallfurthermorehaveauthority,wheneverinhisjudgmentitisin thepublic interest, to cancel said certificate or permit", and that "anappeal from thedecisionof the InsularTreasurermaybehadwithintheperiodofthirtydaystotheSecretaryofFinance."

Appellants argue that, while Act No. 2581 empowers the Insular Treasurer to issue and cancel certificates orpermitsforthesaleofspeculativesecurities,nostandardorruleisfixedintheActwhichcanguidesaidofficialindetermining the cases inwhich a certificate or permit ought to be issued, therebymaking his opinion the solecriterioninthematterofitsissuance,withtheresultthat,legislativepowersbeingundulydelegatedtotheInsularTreasurer,ActNo.2581isunconstitutional.WeareoftheopinionthattheActfurnishesasufficientstandardforthe Insular Treasurer to follow in reaching a decision regarding the issuance or cancellation of a certificate orpermit.ThecertificateorpermittobeissuedundertheActmustrecitethattheperson,partnership,associationorcorporationapplying therefor "has compliedwith theprovisionsof thisAct", and this requirement, construed inrelation to the other provisions of the law, means that a certificate or permit shall be issued by the InsularTreasurerwhentheprovisionsofActNo.2581havebeencompliedwith.Upontheotherhand, theauthorityofthe Insular Treasurer to cancel a certificate or permit is expressly conditioned upon a finding that suchcancellation"isinthepublicinterest."InviewoftheintentionandpurposeofActNo.2581toprotectthepublicagainst"speculativeschemeswhichhavenomorebasisthansomanyfeetofbluesky"andagainstthe"saleofstockinflybynightconcerns,visionaryoilwells,distantgoldmines,andotherlikefraudulentexploitations",weinclinetoholdthat"publicinterest"inthiscaseisasufficientstandardtoguidetheInsularTreasurerinreachingadecisiononamatterpertaining to the issuanceorcancellationofcertificatesorpermits.Asweobserved in the

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caseofPeoplevs.FernandezandTrinidad(G.R.No.45655,June15,1938),"siendoelobjectodelaleyelevitarespeculacionesruinosas,esclaroqueelinterespublico,es,ydebeserlarazonenqueelTesoreroInsulardebabasarsusresoluciones."Andtheterm"publicinterest"isnotwithoutasettledmeaning.

AppellantinsiststhatthedelegationofauthoritytotheCommissionisinvalidbecausethestatedcriterionisuncertain. That criterion is the public interest. It is a mistaken assumption that this is a mere generalreference to public welfare without any standard to guide determinations. The purpose of the Act, therequirement it imposes, and the context of the provision in question show the contrary. . . . (NewYorkCentral SecuritiesCorporation vs. U.S.A., 287U.S., 12, 24, 25 77 Law. ed., 138, 145, 146.) (See alsoSchenchterPoultryCorporationvs.U.S.,295U.S.,49554079Law.ed.,1570,1585Ferrazzinivs.Gsell,34Phil.,697,711,712.)

In thisconnection,wecannotoverlook the fact that theActNo.2581allowsanappeal fromthedecisionof theInsularTreasurertotheSecretaryofFinance.Hence,itcannotbecontendedthattheInsularTreasurercanactanddecidewithoutanyrestraininginfluence.

The theoryof theseparationofpowers isdesignedby itsoriginators tosecureactionandat thesame time toforestalloveractionwhichnecessarilyresultsfromundueconcentrationofpowers,andtherebyobtainefficiencyand prevent despotism. Thereby, the "rule of law" was established which narrows the range of governmentalaction and makes it subject to control by certain legal devices. As a corollary, we find the rule prohibitingdelegationof legislativeauthority,and from theearliest timeAmerican legalauthoritieshaveproceededon thetheorythatlegislativepowermustbeexercisedbythelegislativealone.Itisfrankness,however,toconfessthatasonedelvesintothemassofjudicialpronouncements,hefindsagreatdealofconfusion.Onething,however,isapparentinthedevelopmentoftheprincipleofseparationofpowersandthatisthatthemaximumofdelegatusnon potest delegare or delegata potestas non potest delegare, attributed to Bracton (De Legibus etConsuetudiniousAngliae,editedbyG.E.Woodbine,YaleUniversityPress[1922],vol.2,p.167)butwhichisalsorecognized in principle in the Roman Law (D.17.18.3), has been made to adapt itself to the complexities ofmoderngovernments,givingrisetotheadoption,withincertainlimits,oftheprincipleof"subordinatelegislation",notonlyintheUnitedStatesandEnglandbutinpracticallyallmoderngovernments.Thedifficultyliesinthefixingofthelimitandextentoftheauthority.Whilecourtshaveundertakentolaydowngeneralprinciples,thesafestisto decide each case according to its peculiar environment, having inmind the wholesome legislative purposeintendedtobeachieved.

CounselforappellantJacobRosenthalalsoarguesthattheInsularTreasurerpossesses"thediscretionarypowerto determine when a security is a speculative security andwhen it is not" because "he is given the power tocompel any corporation, associationor partnership already functioning, to surrender to him for examination itsbooksandaccountsenumeratedinsection2,'wheneverhehasreasonablegroundtobelievethatthesecuritiesbeingsoldorofferedforsaleareofaspeculativecharacter.'" Itshouldbeobserved,however, thatsection1ofActNo. 2581 defines and enumerateswhat are "speculative securities" and all the other provisions of theActmustbereadandconstruedinconjunctionandharmonywithsaidsection.

Laws of the different states of the American Union similar in nature to Act No. 2581 were assailed onconstitutional groundssomewhatanalogous to those involved in the caseat bar, but thedecisionsof both thestatecourtsandtheSupremeCourtoftheUnitedStateshaveupheldtheirconstitutionality.InthecaseofHallvs.GeigerJonesCo. (242U.S.,539), thecontentionwasmade that theBlueSkyLawofOhio,whichrequires thecommissioner before granting a license to "be satisfied of the good repute in business of such applicant andnamed agents", and which empowers said commissioner to revoke the license or refuse to renew it uponascertainingthatthelicensee"isofbadbusinessreputehasviolatedanyprovisionsofthisactorhasengaged,or is about to engage, under favor of such license, in illegitimate business or in fraudulent transactions", isunconstitutional because the law has failed to give a standard to guide or determine the decision of thecommissioner leaves "room for the play and action of purely personal and arbitrary power", but the SupremeCourtoftheUnitedStatesoverruledthecontentionandheld:

Besidesit iscertainlyapparentthatiftheconditionsarewithinthepoweroftheStatetoimpose,theycanonly be ascertained by an executive officer. Reputation and character are quite tangible attributes, butthere can be no legislative definition of them that can automatically attach to or identify individualspossessing them,andnecessarily theaidofsomeexecutiveagencymustbe invoked.Thecontentionofappellees would take from government one of its most essential instrumentalities, of which the variousnational and state commissions are instances. But the contention may be answered by authority. InGundlingvs.Chicago(177U.S.,183),anordinanceoftheCityofChicagowaspassedonwhichrequiredalicenseofdealersincigarettesandasaconditionofthelicensethattheapplicant,ifasingleindividual,allofthemembersofthefirm,ifacopartnership,andanypersonorpersonsinchargeofthebusiness,ifacorporation,shouldbeofgoodcharacterandreputation,andthedutywasdelegatedtothemayorofthecitytodeterminetheexistenceoftheconditions.Theordinancewassustained.TothiscasemaybeaddedRed "C" Oil Manufacturing Co. vs. North Carolina (222 U.S., 380, 394, and cases cited) Mutual FilmCorporationvs.IndustrialCommissionofOhio(236U.S.,230)Brazeevs.Michigan(241U.S.,340,341).

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SeealsoReetzvs.Michigan,(188U.S.,505)Liebermanvs.VandeCarr(199U.S.,552).(Pp.553,554.)

In the case of Leach vs. Daugherty (238 P., 160), where the contention was advanced that section 6 of theCorporateSecuritiesActofCaliforniawhichauthorizedthecorporationcommissionertorefusetograntabroker'scertificate,ifheisnotsatisfiedofthe"goodbusinessreputationoftheapplicant",isunconstitutionalbecause"norules,regulations,orspecificationsaresetforthinthesaidCorporateSecuritiesActdefiningwhatshallconstitute'goodbusinessreputation,'"itwasruledthat"Consideringsuchobjection,itwouldappearthattheleadingcaseofHall vs.GeigerJonesCo. (242U.S., 539 37Sup.Ct., 217 61 Law. ed., 480 L.R.A., 1917F, 514 Ann.Cas.1917C,643),issoconclusivelyagainstthepetitioner'scontentionthatlittleroomisleftforargument",andthat"itiswellsettledprincipleof law in thisstate thatby legislativeactacommissionorboardmaybeempowered toascertaintheexistenceof facts,uponthefindingofwhichmaydependtheright tocontinue inthepracticeofaprofessionoraregulatedbusiness."

InthecaseofG.F.Redmond&Co.vs.MichiganSecuritiesCommission(222Mich.,1192N.W.,688),inwhichitwas argued that the provision in section 11955 of the Compiled Laws of 1915 (Michigan Blue Sky Law),authorizing thecommission to revokea license for "goodcause"uponnotice to thedealerandahearingdulyhad,isunconstitutionalbecausetheterm"goodcause"issovagueandindefinitethatthelawpracticallyvesteduponthecommissionarbitrarypowers,thecourtsaid:

Theterm"goodcause"forrevocation,asemployedinthestatute,relatessoclearlytotheconductofthelicensed business, within the limits fixed by law, as to negative any arbitrary official action, and is socomprehensiveofunlawful, irregular, fraudulent,unauthorized,and forbiddenbusinessmanagementandtransactionsconductedastodemandnomoreparticularspecificationofitsmeaninganditsapplication.

Mustthelawmapout,fortheguidanceofthelicensee,acodeofethicsandpostdangersignalsagainstinhibitedanddishonestpractices?Thedefendanthadnorighttohavetheconductofitsbusinesschartedby specifications of forbidden practices involving revocation of the license. The general scope andexpressedpurposeofthelaw,togetherwithopenandfairdealing,enteredthelicense,andtransgressionthereofconstitutedgoodcauseforrevocationthereof.(P.689.)

InthecaseofStateexrel.CentralSteamHeat&PowerCo.vs.Gettle(Wis.[1928],220N.W.,201),whereitwasarguedthattherequirementoftheWisconsinBlueSkyLaw(St.1925,sec.184.09[3]Law1927,c.444)thattheRailroadCommissionshallfindthatthe"financialcondition,planofoperation,andtheproposedundertakingsofthecorporationaresuchas toaffordreasonableprotection to thepurchasersof thesecurities tobe issued", isunconstitutionalforthereasonthat(1)theLegislaturehasnopowertoregulatetheissuanceofsecuritiesinordertoprotecttheinvestingpublic(2)theLegislaturedoesnotprovideastandardtocontrolthecommission(3)thestatute is so indefinite and uncertain in its meaning as to be incapable of administration and (4) the statutedelegatestotherailroadcommissionlegislativepower,thecourtsaid:

This isbutausualprovision found in themanysocalledBlueSyLaws, theconstitutionalityofwhichhasbeen upheld by the courts generally. The constitutionality of similar provisions has been so thoroughlyconsidered by this court that further discussion thereof is unnecessary. The following cases abundantlyestablish the constitutionality of this provision. (State ex rel. Minneapolis, St. Paul & Sault Ste. MarieRailwayCompany vs. RailroadCommission ofWisconsin, 137Wis., 80 117N.W., 846 AppletonWaterWorksCo.vs.RailroadCommissionofWisconsin,154Wis.,121142N.E.,47647L.R.A.[N.S.],770Ann.Cas.1915B,1160Stateexrel.CityofMilwaukeevs.MilwaukeeElectricRailway&LightCo., 169Wis.,183172N.W.,230CityofMilwaukeevs.RailroadCommissionofWisconsin, 183Wis., 498 196N.W.,853WisconsinSouthernRy.Co.vs.RailroadCommission ofWisconsin, 185Wis., 313 201N.W., 244Kretuzervs.Westfahl,187Wis.,463204N.W.,595.)

AnothergroundrelieduponbyappellantsincontendingthatActNo.2581isunconstitutionalisthatitdeniesequalprotection of the laws because the law discriminates between an owner who sells his securities in a singletransaction and one who disposes of them in repeated and successive transactions. In disposing of thiscontentionweneedonlyrefertothecaseofHallvs.GeigerJonesCo.,supra,whereintheSupremeCourtoftheUnitedStatesheld:

"Discriminationsareassertedagainst thestatutewhichextend, it is contended, todenyingappellees theequalprotectionofthelaws.Counselenumeratesthemasfollows:

"Prominent among such discriminations are . . . between an owner who sells his securities in a singletransactionandonewhodisposesoftheminsuccessivetransactions..."

Wecannotgiveseparateattentiontotheasserteddiscriminations.It isenoughtosaythattheyarewithinthepowerofclassificationwhichastatehas.Astate"aydirect its lawagainstwhat itdeemstheevilas itactuallyexistswithoutcoveringthewholefieldofpossibleabuses,anditmaydosononethelessthattheforbiddenact does not differ in kind from those that are allowed . . .. If a class is deemed to present aconspicuousexampleofwhat the legislatureseeks toprevent, the14thAmendmentallows it tobedealt

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withalthoughotherwiseandmerelylogicallynotdistinguishablefromothersnotembracedinthelaw.

CounselforappellantNicasioOsmeafurtherallegesthatActNo.2581isunconstitutionalonthegroundthatitisvague and uncertain. A similar contention has already been overruled by this court in the case of People vs.FernandezandTrinidad, supra.AnActwill bedeclared voidand inoperativeon thegroundof vaguenessanduncertainty only upon a showing that the defect is such that the courts are unable to determine, with anyreasonabledegreeofcertainty,whatthelegislatureintended.ThecircumstancethatthiscourthasnomorethanoneoccasiongiveneffectandapplicationtoAct.No.2581(ValhallaHotelConstructionCo.vs.Carmona,44Phil.,233Peoplevs.NimrodMcKinney,47Phil., 792Peoplevs.FernandezandTrinidad,supra) decisively arguesagainstthepositiontakenbyappellantOsmea.Inthisconnectionwecannotpretermitreferencetotherulethat"legislationshouldnotbeheld invalidonthegroundofuncertainty ifsusceptibleofanyreasonableconstructionthatwill support andgive it effect.AnActwill not bedeclared inoperativeand ineffectual on theground that itfurnishesnoadequatemeanstosecurethepurposeforwhichitispassed,ifmenofcommonsenseandreasoncandeviseandprovidethemeans,andalltheinstrumentalitiesnecessaryforitsexecutionarewithinthereachofthoseintrustedtherewith."(25R.C.L.,pp.810,811.)

Reaffirming our view in People vs. Fernandez and Trinidad, supra, we hold that Act No. 2581 is valid andconstitutional.

Takingupnowthequestionraisedwithreferencetothespeculativenatureofthesharesofthe).O.R.O.OilCo.and the South Cebu Oil Co., we find that section 1, paragraph (b) of Act No. 2581, in defining speculativesecurities,provides:

...Theterm"speculativesecurities"asusedinthisActshallbedeemedtomeanandinclude:

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(b) All securities the value of which materially depend upon proposed or promised future promotion ordevelopmentratherthanonpresenttangibleassetsandconditions.

Atthebeginning,andatthetimeoftheissuanceofthesharesoftheO.R.O.OilCo.andtheSouthCebuOilCo.,allthatthesecompanieshadweretheirexplorationleases.Beyondthis,therewasnothingtangible.Thevalueofthosesharesdependedupon futuredevelopmentand theuncertaintyof "striking"oil.Theshares issuedunderthese circumstances are clearly speculative because they depended upon proposed or promised futurepromotionordevelopmentratherthanonpresenttangibleassetsandconditions.

AppellantsnextcontendthatinviewoftherepealofActNo.2581byCommonwealthAct.No.83,theyhavebeenrelievedofcriminal responsibility.Assuming that the formerActhasbeenentirelyandcompletelyabrogatedbythe latter Act a point we do not have to decide this fact does not relieve appellants from criminalresponsibility. "It has been the holding, and itmust again be the holding, thatwhere anAct of the LegislaturewhichpenalizesanoffenserepealsaformerActwhichpenalizedthesameoffense,suchrepealdoesnothavethe effect of thereafter depriving the courts of jurisdiction to try, convict and sentence offenders chargedwithviolationsoftheoldlaw."(Peoplevs.Concepcion,44Phil.,126,132OngChangWingandKwongFokvs.U.S.,218U.S.,27240Phil.,1046U.S.vs.Cuna,12Phil.,241U.S.vs.Aron,12Phil.,778U.S.vs.Tonga,15Phil.,43U.S.vs.Molina,17Phil.,582.)

Appellantsfurthercontendthattheycomeundertheexceptionprovidedinsection8ofActNo.2581.Thissectionprovides:

ThisActshallnotapply to theholderofanyspeculativesecuritywho isnot the issuer thereof,nor to thepersonwhohasacquiredthesameforhisownaccountintheusualandordinarycourseofbusinessandnot for thedirector indirectpromotionofanyenterpriseorschemewithin thepurviewof thisAct,unlesssuch possession is in good faith. Repeated and successive sales of any speculative securities shall beprimafacieevidencethattheclaimofownershipisnotbonafide,butisamereshift,deviceorplottoevadetheprovisionsofthisAct.SuchspeculatorsshallincurthepenaltyprovidedforinsectionsevenofthisAct.

Underthissection,thereareclearlytwoclassesofpersonstowhomthelawisnotapplicable:(1)Personswhoholdspeculativesecuritiesbutwhoarenottheissuersthereofand(2)personswhohaveacquiredthesamefortheirownaccountintheusualandordinarycourseofbusinessandnotforthedirectorindirectpromotionofanyenterpriseorschemewithinthepurviewofthisAct,provided(thelawusestheterm"unless")suchpossessionisingoodfaith.

Passingupon thequestionsof factnecessarily involved in theapplicationofsection8ofActNo.2581, the trialcourtincaseNo.52365makesthefollowingfindingswithreferencetoNicasioOsmea:

. . . El acusadoOsmea no ha adquirido por su propia cuenta en el curso ordinario y corriente de losnegociosenlaO.R.O.OilCo.Lasaccionesporelvendidas,pueslasadquiriomediantesuscripcioncomo

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unodelosfundadoresdedichacorporacion,perosiparalapromocionindirectadeunproyectodenegocioo empresa para el cual se habia organizado le corporacion, habiendo pagado totalmente el importe dedichasaccionesalamismacorporacionnitampocolasposeiadebuenafe,puestoquecomofundadorymiembrodelajuntadirectivadedichacorporaciondebiasaberquenosehabiaexpedidoporelTesoreroInsular ningun permiso por escrito a al corporacion para la venta de dichas acciones. Y las ventassucesivasy repetidasdeesasaccionesque teniaen lamismacorporacion,aunque talesaccioneseransuyasporhaberlaselobtenidodelacorporacionmediantesuscripcionypagodelimportecorrespondientepruebanqueestapretensiondepropiedadhasidosolamenteunmediodequesehavalidoparavendertalesaccionesapreciosmuchomayoresqueelimporteporporhaberseexpedidotalpermiso.

Thesamefindings,mutatismutandis,aremadeincaseNo.52366againstthesameappellant,andagainstJacobRosenthal inthetwocases.Evenifwecould,wedonot feel justified indisturbingthefindingsof thetrialcourt.The good faith set up by appellant Rosenthal for having acted on the advice of oneGarcia, an officer in theInsularTreasury,andthesubsequentdevolutionbyhimofamountscollectedfromsomeofthepurchasersofthesharesmaybeconsideredasacircumstance inhis favor in the impositionof thepenaltyprescribedby lawbutdoesnotexempthimfromcriminalresponsibility.(Peoplevs.McCalla,63Cal.App.,783220Pac.,436367U.S.,58569Law.ed.,79945Sup.Ct.,461Peoplevs.FernandezandTrinidad,supra.)

The judgments of the lower court are affirmed,with themodification that the fines are reducedas to accusedJacobRosenthalfromP500toP200ineachcase,andastoaccusedNicasioOsmea,fromP1,000toP500incaseNo.52365andfromP2,000toP1,000incaseNo.52366,withsubsidiaryimprisonmentforbothincaseofinsolvency,andcosts.Soordered.

Avancea,C.J.,VillaReal,Imperial,Diaz,Concepcion,andMoran,JJ.,concur.

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