PHILIPPINE COCONUT G.R. No. 163088
AUTHORITY,
Petitioner, Present:
PANGANIBAN,
C.J., Chairperson,
YNARES-SANTIAGO,
- versus - AUSTRIA-MARTINEZ,
CALLEJO,
SR., and
CHICO-NAZARIO,
JJ.
PRIMEX
PRODUCTS, INC.,
Respondent.
X----------------------------------------------------------------------------------------x
CALLEJO, SR., J.:
This is a
petition for review on certiorari of
the Decision[1] of
the Court of Appeals (CA) dated
The Antecedents
On
Section 1. Prohibition. Except as herein provided, no government
agency or instrumentality shall hereafter authorize, approve, or grant any
permit or license for the establishment or operations of new desiccated coconut
processing plants, including the importation of machinery or equipment for the
purpose. In the event of a need to establish a new plant, or expand the
capacity, relocate or upgrade the efficiencies of any existing desiccated
plant, the Philippine Coconut Authority
may, upon proper determination of such need and evaluation of the condition
relating to:
a. the existing market demand;
b. the production capacity prevailing in the country or
locality;
c. the level and flow of raw materials; and
d. other circumstances which may affect the growth or viability
of the industry concerned.
may authorize or grant the application for the
establishment or expansion of capacity, relocation or upgrading of efficiencies
of such desiccated coconut processing plant, subject to the approval of the
President.[2]
(Emphasis supplied)
On
Primex Coco
Products, Inc. (Primex, for brevity) is a domestic corporation engaged in the
manufacture of desiccated coconut. On P600.00 as registration fee. However, PCA did not immediately
issue the corresponding certificate of registration. This prompted Primex to file a petition for
mandamus against the PCA and its then Administrator Charles Avila before the
Regional Trial Court (RTC) of
On
Governing Board held a meeting on
RESOLVED, that upon recommendation of Management, the
grant of permit to PRIMEX COCO PRODUCTS, INC. to operate a desiccated coconut
processing plant in Barrio Mangilag, Candelaria, Quezon, pursuant to Board Resolution No.
058-87 and Presidential Memorandum dated February 11, 1988, and under existing
Administrative Order No. 002, Series of 1991, be and is hereby authorized and
approved, subject to compliance with the necessary requirement and pertinent
regulations of the Authority.
RESOLVED FINALLY, that the opening of the new
desiccated coconut processing of PRIMEX COCO PRODUCTS, INC. shall be subject to
the final approval of the President of the
However, on
On
I
RESPONDENT PCA’S BOARD RESOLUTION NO. 018-93 IS NULL
AND VOID FOR BEING AN UNDUE EXERCISE OF LEGISLATIVE POWER BY AN ADMINISTRATIVE
BODY.
II
ASIDE FROM BEING ULTRA-VIRES, BOARD RESOLUTION NO.
018-93 IS WITHOUT ANY BASIS, ARBITRARY, UNREASONABLE AND THEREFORE IN VIOLATION OF SUBSTANTIVE DUE
PROCESS OF LAW.
III
IN PASSING BOARD RESOLUTION NO. 018-93, RESPONDENT PCA
VIOLATED THE PROCEDURAL DUE PROCESS REQUIREMENT OF CONSULTATION PROVIDED IN
PRESIDENTIAL DECREE NO. 1644, EXECUTIVE ORDER NO. 826 AND PCA ADMINISTRATIVE
ORDER NO. 002, SERIES OF 1991.[6]
The case was docketed as G.R. No. 110526. While the case was pending in this court, the PCA renewed the registration of Primex as a coconut product processor every year from 1994 until 1998.
WHEREFORE, the petition is GRANTED. PCA Resolution No. 018-93 and all
certificates of registration issued under it are hereby declared NULL and VOID
for having been issued in excess of the power of the Philippine Coconut
Authority to adopt or issue.
SO ORDERED.[7]
The Court ruled that,
by approving Resolution No. 018-93, the PCA “allow[ed] not only the indiscriminate opening of new coconut
processing plants but the virtual dismantling of the regulatory infrastructure
whereby, forsaking controls theretofore placed in its keeping, the PCA limit[ed]
its function to the innocuous one of ‘monitoring’ compliance by coconut millers
with quality standards and volumes of production. In effect, the PCA would simply be compiling
statistical data on these matters, but in case of violations of standards there
would be nothing much it would do. The
field would be left without an umpire who would retire to the bleachers to
become a mere spectator.”[8] The Court ruled that the PCA cannot renounce
its power to regulate that which has been set up by the very law creating it.
With the
nullification of all certificates of registration issued by the PCA, the latter
was thus impelled to call for consultations with the APCD and all the parties
affected by the decision, including Primex.
The PCA required them to submit their respective position papers on how
to implement the Court’s decision. On
On
resolution by the PCA of the issues regarding the implementation of the
Decision in G.R. No. 110526, and (2) whether Primex falls under paragraph (a)
of the said memorandum circular in which it would be entitled to renew the certificate of registration valid
for the calendar year 1999.
On February 15, 1999, the
PCA wrote Primex and informed the latter that Memorandum Circular No. 01,
Series of 1999 and the issuance of provisional certificate of registration in
its favor are equitable interim measures to enable the parties affected by the
Supreme Court Decision to comply with subsisting PCA rules and regulations
governing the establishment and operation of DCN plants, and that said measures
were adopted after the consultation meetings conducted by PCA with the desiccators
and after the submission of their position papers. On its second query, the PCA replied that the
records of its registration office do not show that Primex has been issued any
valid certificate of registration for 1990, nor any renewal thereof despite the
alleged official receipt purportedly representing the registration fee. Primex was issued
a certificate of registration only on
On
On
the RTC of Quezon City. Primex alleged, inter
alia, that it has
established beyond doubt that there was a final and executory decision issued
by the RTC of Lucena City, Branch 69 ordering the PCA to take action on its application
for registration dated September 25, 1990, and that the said application has
been approved by the PCA Governing Board on October 20, 1992, per Resolution No.
044-92. There is also no doubt that the
certificate of registration was issued not by virtue of Resolution No. 018-93
which was declared null and void by the Supreme Court but by virtue of
Resolution No. 044-92. PCA had
absolutely no reason to issue only a provisional certificate of registration
valid only for six (6) months or until P5 million per month starting
Primex prayed that PCA be ordered to issue a renewal
registration certificate valid for
calendar year 1999 under Section 3, paragraph (a) of Memorandum Circular No.
01, Series of 1999, and yearly thereafter; and, in the event of failure to issue
renewal certificate for calendar year 1999 not later than June 30, 1999, that
PCA be ordered to pay at least P5 million per month for damages to be
sustained by it, P500,000.00 as attorney’s fees, P3,000.00 by way
of litigation expenses, plus cost of suit.[13]
Meanwhile, the PCA issued an Order dated
Acting on the requests for reconsideration by
concerned desiccated coconut plants and manufacturers whose provisional
registrations issued pursuant to Memorandum Circular No. 01, Series of 1999
(Interim Guidelines for the Renewal of Registration Certificates for Year 1999)
will expire on June 30, 1999, the said provisional registrations of the
concerned DCN plants are hereby extended for another six (6) months, counted
from June 30, 1999.
Except for the above extension period, the
requirements for registration in accordance with the interim Guidelines shall
remain in full force and effect and should, therefore, be complied with within
the extended six (6) month period ending
The concerned DCN plants affected by this Order,
including oil mills and other processors which were given provisional
registrations may, therefore, file their corresponding application for renewal
of Registration Certificates within five (5) days from receipt hereof.
For DCN plants, they shall further submit a sworn
statement of the responsible officer of the said DCN plants on the status of
their compliance with the provisions of the Interim Guidelines, PCA
Administrative Order No. 002, Series of 1991 on Guided Deregulation, and such
other issuances of the PCA pursuant thereto.
So Ordered.[14]
In its Answer to the petition, the PCA claimed that
it had already acted on the motion for reconsideration of Primex
on
On January 18, 2000, the RTC rendered a Decision in favor of the petitioner and ordered the PCA to issue to Primex a regular certificate of registration not only for the calendar year 1999 but also annually thereafter upon its compliance with all the legal requirements for registration. The fallo of the decision reads:
WHEREFORE, this Court
resolves to give DUE COURSE to the petition and to GRANT the same. Respondents
Philippine Coconut Authority and its Administrator, Eduardo U. Escueta, are
hereby ordered to issue to petitioner Primex Coco Products, Inc. a regular
certificate of registration valid for the
calendar year 1999, renewable yearly thereafter upon petitioner’s
compliance with all the legal requirements for registration.
Petitioner’s claims for
damages and attorney’s fees are hereby denied.
Respondents’ counterclaim
for attorney’s fees is, likewise, hereby denied for lack of merit.
SO ORDERED.[17]
(Emphasis supplied)
The court a
quo ratiocinated that
the PCA may be compelled by mandamus to renew the certificate of registration of
Primex valid for one year. The trial court declared that while it is true
that Primex is not entitled to a certificate of
registration as a matter of right, the PCA is mandated by law, specifically E.O.
No. 826, to determine if there is a need for a new desiccated coconut plant and
evaluate the circumstances prevailing in the locality. The fact that the grant
of a permit to Primex was authorized and approved by
the PCA Governing Board on October 20, 1992 per Resolution No. 044-92 is a
clear indication that the PCA has already made such a determination so that the
subsequent issuance of a certificate of registration becomes purely ministerial
on its part and which, therefore, may be compelled by mandamus.[18]
PCA appealed the decision to the Court
of Appeals (CA). The CA rendered a decision dismissing the appeal and affirming
the RTC decision.[19]
The CA affirmed the ruling of the court a quo that Primex
was able to establish its legal right to a permit as
exporter/trader/manufacturer of desiccated coconut by virtue of PCA Resolution
No. 044-92.
The appellate
court ruled that the PCA cannot invoke its failure to make the necessary
recommendation to the President under Section 1, E.O. No. 826 as a legal
justification for the non-issuance of a license to Primex.
It agreed with the RTC that the fact
that Primex had been issued certificates of
registration for 1993 up to 1998 presupposes that the required approval of the
President had been obtained. The
appellate court pointed out that what was declared null and void by the Court
in Association of Philippine Coconut
Desiccators v. Philippine Coconut Authority[20]
was PCA Resolution No. 018-93.[21]
PCA filed a
motion for reconsideration of the said decision but the appellate court denied the
motion for lack of merit on
Dissatisfied,
PCA, now petitioner, elevated the case to this Court, through a petition for
review on certiorari against Primex with a sole assignment of error:
THE COURT A QUO GRAVELY
ERRED IN DISMISSING THE APPEAL AND IN FINDING THAT THE ACT OF THE PETITIONER TO
ISSUE A CERTIFICATE OF REGISTRATION IN FAVOR OF RESPONDENT HEREIN MAY BE COMPELLED
BY MANDAMUS.[23]
Petitioner contends that the issuance of a certificate of registration to the respondent is a discretionary, not a ministerial act that may be compelled by mandamus. It points out that under E.O. No. 826 the petitioner is given the authority to determine whether or not there is a need to establish a new plant upon the evaluation of conditions laid down therein. It insists that the certificate of registration was issued to respondent pursuant to Resolution No. 018-93 and that the decision of the Court in Association of Philippine Coconut Desiccators v. Philippine Coconut Authority[24] rendered such certificate of registration void.[25]
Petitioner avers that, as held in a long line of cases, there can be no vested right in a license that is issued upon satisfactory showing of all requirements. Further, it points out that respondent failed to prove that it has satisfactorily complied with all the requirements for the renewal of its certificate of registration.[26]
For its part, respondent asserts that the issue in this case is factual, that is, whether or not the permit to operate as a desiccator was granted to it by virtue of Resolution No. 044-92 or Resolution No. 018-93. It posits that the trial court’s finding that the certificate of registration was issued pursuant to Resolution No. 044-92, as affirmed by the Court of Appeals, is final and conclusive upon this Court, particularly since it is borne by the records and supported by substantial evidence. In a petition for review on certiorari under Rule 45, the Court is limited to reviewing errors of law only.[27]
Further, respondent contends that when petitioner approved its application for registration under Resolution No. 044-92, it is presumed that petitioner has already made the proper evaluation pursuant to Section 1 of E.O. No. 826, so that its renewal becomes purely ministerial. It posits that petitioner’s discretion lies only in applications relating to the four situations enumerated in the said Section 1: (1) establishing a new plant; (2) expanding the capacity of any existing desiccated plant; (3) relocating any existing desiccated plant; and (4) upgrading the efficiencies of any existing desiccated plant. Petitioner will no longer exercise discretion in the subsequent renewal of its certificate of registration.[28]
Respondent avers that petitioner’s contention that it has not complied with all the requirements provided by law is a bare allegation. Petitioner did not even specify what requirement has not been complied with. Moreover, that respondent has complied with all the requirements for the renewal of its registration is a finding of fact which had already been settled in the affirmative by trial court and the CA, hence, final and conclusive upon this Court.[29]
SEC.
3. Petition for mandamus.— When any
tribunal, corporation, board, officer or person unlawfully neglects the
performance of an act which the law specifically enjoins as a duty resulting
from an office, trust, or station, or unlawfully excludes another from the use
and enjoyment of a right or office to which such other is entitled, and there
is no other plain, speedy and adequate remedy in the ordinary course of law,
the person aggrieved thereby may file a verified petition in the proper court,
alleging the facts with certainty and praying that judgment be rendered
commanding the respondent, immediately or at some other time to be specified by
the court, to do the act required to be done to protect the rights of the
petitioner, and to pay the damages sustained by the petitioner by reason of the
wrongful acts of the respondent.
Mandamus
lies to compel the performance, when refused, of a ministerial duty, but not to
compel the performance of a discretionary duty.[30]
A purely ministerial act or duty is one which an officer or tribunal performs
in a given state of facts, in a prescribed manner, in obedience to the mandate
of a legal authority, without regard to or the exercise of his own judgment
upon the propriety or impropriety of the act done. The duty is ministerial only
when the discharge of the same requires neither the exercise of official
discretion or judgment.[31]
When an official is required and
authorized to do a prescribed act upon a prescribed contingency, his functions
are ministerial only, and mandamus may be issued to control his action upon the
happening of the contingency.[32]
For a writ
of mandamus to be issued, it is essential that petitioner should have a clear
legal right to the thing demanded and it must be the
imperative duty of the respondent to perform the act required. The writ neither
confers powers nor imposes duties. It is simply a command to exercise a power
already possessed and to perform a duty already imposed.[33]
Mandamus applies as a remedy only where petitioner’s right is founded clearly
in law and not when it is doubtful.[34]
The writ will not be granted where its issuance would be unavailing, nugatory,
or useless.[35]
If the law
imposes a duty upon a public officer and gives him the right to decide how or
when the duty shall be performed, such duty is discretionary and not
ministerial.
There is no
doubt that under E.O. No. 826, Administrative Order No. 003, Series of 1981,
and Administrative Order No. 002, Series of 1991, petitioner is vested with
discretion on whether or not to grant an application for the establishment of a
new plant, the expansion of capacity, the relocation or upgrading of
efficiencies of such desiccated coconut processing plant. Relative to the renewal of a certificate of registration,
petitioner may refuse a registration unless the applicant has complied with the
procedural and substantive requirements for renewal. However, once the requirements are complied
with, the renewal of registration becomes a ministerial function of petitioner.
Under Section
3.8 of Administrative Order No. 003, Series of 1981,[36]
the PCA may refuse the registration or renewal thereof, if after investigation, the applicant is found to have been convicted of any crime involving
moral turpitude and in connection with the operation of its business or an act violative of existing laws, rules and regulations
administered by the PCA, or of unfair trade practices, as defined in said
rules. Juridical persons whose owners, presidents,
managers or other executive officers have been convicted may likewise be denied
registration or renewal thereof. Section
3.7 of the same administrative order also provides that a certificate of
registration may be renewed by filing an applications for renewal not later
than December 31 of each calendar year, and paying the renewal fee of P200.00.
Under
Administrative Order No. 002(B), Series of 1991, all existing and duly registered
DCN plants shall renew the registration by filing their application with
petitioner under the following guidelines:
1.1
In addition to
the basic registration requirements under Administrative Order No. 003, Series
of 1981, all applications shall contain the exact rated capacity applied for
and the actual production capacity and utilization of the plant for the year
immediately following the date and year of the application;
1.2
The rated
capacity applied for and approved by PCA shall not be changed nor shall any
improvement, upgrading of or addition of equipment be made by the plant except
upon prior application with PCA.
Aforesaid application shall be made at least three (3) months before the
expiration of the current registration for purposes of evaluation and approval
by PCA;
1.3
Firms found to be operating below sixty
percent (60%) of rated capacity for the past five years shall be reduced to its
utilization capacity accordingly by PCA motu propio except upon
declaration by the Authority of the presence of extraordinary
disadvantageous climate in the industry as defined in item C. causing such
drop in utilization capacity;
1.4
Firms which are operating only within 50%
utilization capacity for the past five years due to raw material inadequacy
shall be advised by PCA to relocate to any non-congested area as determined in
these guidelines;
1.5
Firms falling
below the 50% utilization for the past five years without the PCA declaration
of extraordinary disadvantageous climate for DCN industry set forth in item
C. hereof shall be required to reduce the rated capacity to raise the
capacity utilization to such level above 50%.
Should this option fail to raise utilization levels within a period of
one (1) year, the firm shall be given the option to relocate to any
non-congested area, otherwise, PCA shall shorten its permit to operate to a
period not more than 1 year from the
date of advice;
1.6
Firms which have stopped operating for 2-3
years and which would wish to resume operation must reapply for a new license
and new rated capacity; they should be treated as new entrants;
1.7
Any cessation of production covering a period
of one month or more should be reported to the PCA stating the reasons
therein. Failure to report such
cessation of production shall be considered a violation of these guidelines.[37]
Administrative
Order No. 002 also requires that DCN firms applying for registration shall comply
with the following conditions:
2.1 New DCN firms upon the effectivity of these
guidelines, shall be issued permits to operate in non-congested areas only as
declared by PCA, in consultation with the private sector, provided that new
applicants shall comply with all procedures and requirements for registration
under Administrative Order No. 003, Series of 1981 and this Order except the
provisions in item 1.5 hereof;
Target Market
In addition to the regular documentary requirements
for registration, new entrants to the DCN industry shall submit a sworn
statement stating the names and addresses of all new tentative foreign buyers
with their respective volume of DCN products as evidenced by the purchase
orders or instruments evidencing the same.
The PCA should require and ensure new entrants to the industry to target
new markets and buyers. All documents
and data to be submitted to PCA in accordance hereof shall be treated with
utmost confidentiality.
2.2 Unless otherwise declared by the PCA, the rated
capacities and supply production in the regions, for purposes of determining a
congested and non-congested area shall be guided by the schedule of estimated
nut production, crushing capacities and utilization rates as stated in ANNEX
“A” which forms part of these guidelines.[38]
Administrative Order No. 002 (G)
provides that all permits issued shall be valid for one year and renewable
yearly thereafter only upon compliance of all requirements.[39]
Petitioner
is not mandated to approve an original application for a certificate of registration
or a renewal thereof on an annual basis merely based on the allegations
contained in the application and the payment of the registration fees therefor.
The PCA is tasked to first inquire into and ascertain, after an investigation,
whether the applicant has complied with the a
priori procedural and substantive conditions to the approval of said
application as provided in E.O. No. 826; Administrative Order No. 003, Series
of 1981; and Administrative Order No. 002, Series of 1991. As emphasized by the Court in Association of Philippine Coconut
Desiccators v. Philippine Coconut Authority:[40]
It was only on
The guidelines promulgated by the PCA, as embodied in
Administrative Order No. 002, series of 1991, inter alia authorized the
opening of new plants in “non-congested areas only as declared by the PCA” and
subject to compliance by applicants with “all procedures and requirements for
registration under Administrative Order No. 003, series of 1981 and this
Order.” In addition, as the opening of
new plants was premised on the increased global demand for desiccated coconut
products, the new entrants were required to submit sworn statements of the
names and addresses of prospective foreign buyers.[41]
Respondent
is not entitled as a matter of right to an annual registration or renewal of
its certificate of registration merely and solely based on Resolution No. 044-92
which the PCA Governing Board approved on
Respondent,
or any applicant for that matter, may be qualified to a license or renewal
thereof for a particular year but it does not follow that it would thenceforth be
entitled to such certificate or to a yearly renewal thereof because, in the
interim, facts and circumstances may occur which may disqualify the applicant
to a certificate or the renewal of its existing registration.
Prescinding
from the foregoing, we find that the petition has been mooted. The records disclose that, three days after
respondent had filed its petition for mandamus, petitioner had extended its provisional certificate of registration until
December 1999. In effect, respondent has been able to operate as an exporter/trader/manufacturer
of DCN for the whole year of 1999. As correctly observed by the court a quo, no damage was actually suffered
by respondent since it has continued to operate for the whole period of 1999
although under provisional certificates of registration. Mandamus is an
extraordinary writ and discretionary remedy and should not be granted when it
will achieve no beneficial result such as when act sought to be compelled has
been performed.[42]
Moreover, when
the RTC rendered judgment on
On its
face, the petition of respondent for mandamus does not state a cause of action
for a writ of mandamus. The rule is that
a cause of action has the following elements: (a) the legal right of the
plaintiff; (b) the correlative obligation of the defendant to respect that
legal right; and (c) an act or omission of the defendant that violates such
right.[46]
The cause of action does not accrue until the party obligated refuses,
expressly or impliedly, to comply with its duty.[47]
In this case,
respondent had no cause of action to compel petitioner to issue a renewal
certificate of registration for every year from 1999 at the time it filed the
petition for mandamus. At that time, respondent had no right to demand and the
petitioner had no correlative duty, to issue a renewal certificate for the years
following the filing of the petition, hence, there could not have been any
default on the part of petitioner. Where a person or entity has not yet failed
to perform a duty, action for mandamus is premature.[48]
Mandamus is
never granted to compel the performance of an act until there has been an
actual, as distinguished from an anticipated, refusal to act.[49]
This is true even if there is a strong presumption that the persons whom it is
sought to coerce by the writ will refuse to perform their duty when the proper
time arrives.[50]
Its function is to compel the performance of a present existing duty as to
which there is default. It is not granted to take effect prospectively, and it
contemplates the performance of an act which is incumbent on respondent when
the application for a writ is made.[51]
WHEREFORE, premises considered, the petition
is GRANTED. The Decision of the
Court of Appeals dated
SO ORDERED.
ROMEO J. CALLEJO, SR.
Associate Justice
WE
CONCUR:
Chief
Justice
Chairperson
CONSUELO
YNARES-
Associate Justice Associate Justice
Associate
Justice
Pursuant to Section 13, Article VIII of the
Constitution, it is hereby certified that the conclusions in the above decision
were reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
ARTEMIO V. PANGANIBAN
Chief Justice
[1]
Penned by Associate Justice Elvi John S. Asuncion with Associate Justices
Portia Aliño-Hormachuelos and Juan Q. Enriquez, Jr. concurring; rollo, pp. 42-48.
[2] CA rollo, pp. 18-19.
[3]
[4]
[5]
[6] Association of Philippine Desiccators v. Philippine Coconut Authority, 349 Phil. 782, 787 (1998).
[7]
[8]
[9] CA rollo, p. 30.
[10]
[11]
[12]
[13]
[14]
[15]
[16]
[17]
[18]
[19] Rollo, p. 48.
[20] Supra note 6.
[21] Rollo, p. 46.
[22]
[23]
[24] Supra note 6.
[25] Rollo, pp. 89-91.
[26]
[27]
[28]
[29]
[30] Paloma v. Mora, G.R. No. 157783,
[31] Codilla, Sr. v. De Venecia, 442 Phil. 139, 189 (2002).
[32] Palmer v. Fox, 118
[33] Pefianco v. Moral , 379 Phil. 468, 479 (2000).
[34] JG Summit Holdings, Inc. v. Court of Appeals, 398 Phil. 955, 970-971 (2000).
[35] State ex rel. Schwartz v. Jones, 61 Wyo.350, 157 P.2d 993 (1945).
[36] Rules and Regulations Governing the Export and Export Pricing, Marketing, Trading and Distribution of Copra, Coconut Oil and Other Coconut Products.
[37] CA rollo, pp. 85-86.
[38]
[39]
[40] Supra note 6.
[41]
[42] City of
[43] Jacks v.
[44] State ex rel.
Donahue v. Holbrook, 136
[45] State ex rel. Whitehead v. Gage, 377 P.2d 299 (1963).
[46] Jimenez, Jr. v. Jordana,
G.R. No. 152526,
[47] Texon Manufacturing v. Millena,
G.R. No. 141380,
[48] Limits v. President of the Senate, 414
[49] Palmer v. Fox, supra note 32.
[50] State ex rel.
[51] State ex rel.
Federal Homes Properties, Inc. v. Singer, 9