Arcega vs Court of Appleals

G.R. No.
L-20869 August 28, 1975

ALICIA O. ARCEGA, assisted by her husband RAF.

L. ARCEGA, doing business under the firm name of FAIRMONT ICE CREAM
CO., petitioner,
vs.
THE COURT OF APPEALS, THE
CENTRAL BANK OF THE PHILIPPINES, and THE PHILIPPINE NATIONAL BANK, respondents.

FACT:

The petitioner Alicia O. Arcega, doing business under the firm name Fairmont Ice Cream Company, filed a
complaint before the court against the respondents Central Bank of the Philippines and Philippine National Bank, for
the refund from allegedly unauthorized payments made by her of the 17% special excise tax on foreign exchange.

The Central Bank moved to dismiss the complaint on the grounds, among others, that the trial court has no
jurisdiction over the subject-matter of the action, because the judgment sought will constitute a financial charge
against the Government, and therefore the suit is one against the Government, which cannot prosper without its
consent, and in this case no such consent has been given.

The petitioner appealed, but the court dismissed the complaint on the ground set forth in the Central Banks motion
to dismiss.

The petitioner Arcega filed a motion for reconsideration of the resolution to which an opposition was filed by the
Central Bank. This time, the Central Bank submitted a certification that the balance of the collected special excise
tax on sales of foreign exchange was turned over to the Treasurer of the Philippines. Then the court denied the
petitioners motion for reconsideration as a result Arcega appealed to the Court of Appeals.

Holding that the suit is indirectly against the Republic of the Philippines which cannot be sued without its consent,
the Court of Appeals affirmed the dismissal of the complaint.

Finally the petitioner filed an appeal before the Supreme Court.

Issue: Whether a suit against the Central Bank for refund a suit against the State?

Held:

It is not a suit against the state. The charted of the Central Bank of the Philippines authorize that it can to sue and be
sued. The consent of the State to be sued, therefore, has been given.

ARCEGA vs. COURT OF APPEALS

ALICIA O. ARCEGA, assisted by her husband RAF. L. ARCEGA, doing business under the firm name of
FAIRMONT ICE CREAM CO., petitioner,
Vs.THE COURT OF APPEALS, THE CENTRAL BANK OF THE PHILIPPINES, and THE PHILIPPINE
NATIONAL BANK, respondents.
Facts:
The petitioner Alicia O. Arcega, doing business under the firm name Fairmont Ice Cream Company, filed a
complaint with the Court of First Instance of Manila, Branch I, against the respondents Central Bank of the
Philippines and Philippine National Bank, for the refund from allegedly unauthorized payments made by her in the
concept of the 17% special excise tax on foreign exchange. The refund prayed for involves purchases of foreign
exchange from the Philippine National Bank to cover the costs and transportation and other charges incident to the
importation into the Philippines. The Central Bank moved to dismiss the complaint on the grounds, among others,
that the trial court has no jurisdiction over the subject-matter of the action, because the judgment sought will
constitute a financial charge against the Government, and therefore the suit is one against the Government, which
cannot prosper without its consent, and in this case no such consent has been given.
The petitioner Arcega filed a motion for reconsideration of the resolution to which an opposition was filed by the
Central Bank. Then, the Central Banks Chief Accountant submitted a certification that the balance of the collected
special excise tax on sales of foreign exchange was turned over to the Treasurer of the Philippines. The court denied
the petitioners motion for reconsideration. As a result, Arcega appealed to the Court of Appeals.
Holding that the suit is indirectly against the Republic of the Philippines, which cannot be sued without its consent,
the Court of Appeals affirmed the dismissal of the complaint.
The petitioner interposed the present appeal by certiorari.
Issue:
Whether a suit against the Central Bank a suit against the State.
Held:
The suit is brought against the Central Bank of the Philippines, an entity authorized by its charter to sue and be sued.
The consent of the State to thus be sued, therefore, has been given.

Notes:
Suability of Central Bank in civil cases only
- The Central Bank is a government corporation created principally to administer the monetary and banking system
of the Republic. It is not a prosecution agency like the fiscals office. The Central Bank is limited to its statutory
powers. Its power to sue and be sued refers to civil cases only.
GAUDENCIO RAYO vs. COURT OF FIRST INSTANCE OF BULACAN G.R. No. L-55273-83 December
19, 1981
FACTS: At the height of the infamous typhoon "Kading", the respondent opened simultaneously all the three
floodgates of the Angat Dam which resulted in a sudden, precipitate and simultaneous opening of said floodgates
several towns in Bulacan were inundated. The petitioners filed for damages against the respondent corporation.

Petitioners opposed the prayer of the respondents forn dismissal of the case and contended that the respondent
corporation is merely performing a propriety functions and that under its own organic act, it can sue and be sued in
court.

ISSUE: W/N the respondent performs governmental functions with respect to the management and operation of the
Angat Dam.

W/N the power of the respondent to sue and be sued under its organic charter includes the power to be sued for tort.

HELD: The government has organized a private corporation, put money in it and has allowed it to sue and be sued
in any court under its charter.

As a government owned and controlled corporation, it has a personality of its own, distinct and separate from that of
the government. Moreover, the charter provision that it can sue and be sued in any court.
RAYO vs. CFI of BULACAN
Facts:
1. During the height of typhoon Kading, the National Power Corporations plant superintendent Chavez
opened simultaneously all the three floodgates of the Angat Dam.
2. As a direct and immediate result, several towns in Bulacan were flooded (particularly Norzagaray). About
a hundred of its residents died and properties worth million of pesos were destroyed.
3. The petitioners, who are among the unfortunate victims of the man-caused flood, filed several complaints
for damages against NPC and the plant superintendent.
4. NPC claimed, as its defense, that in the operation of the Angat Dam, it is performing a purely governmental
function. Thus, it cannot be sued without the express consent of the State.
5. The petitioners opposed the claim of NPC and claimed that it is performing not governmental but merely
proprietary functions and that based on the organic charter (charter - a legal document that provides for the
creation of a corporate entity) of NPC, it can be sued and be sued in any court.
Issue: Whether or not the power of NPC to sue and be sued under its organic charter includes the power to be sued
for tort.

Held: The government has organized a private corporation, put money in it and has allowed it to sue and be sued in
any court under its charter. NPC, as a government owned and controlled corporation, has a personality of its own,
distinct and separate from that of the Government. In any court, NPC can sue and be sued for tort. The petition of
the petitioners was granted.

Notes:
Government-owned and controlled corporations have a personality of their own, separate and distinct from the
government. Therefore, although they are considered to be public in character, they are not exempt from
garnishment (legal proceedings).
PNR v. IAC
GR No. 70547; January 22, 1993

FACTS:
The passenger express train of Philippine National Railways (PNR) and a passenger bus of Baliwag Transit Inc.
collided at the railroad crossing at Barrio Balungao, Calumpit Bulacan at 1:30 in the afternoon of August 10, 1947
causing damage to the bus and its passengers, 18 of whom died and 53 suffered physical injuries. Plaintiff alleges
that the collision was due to the negligence and imprudence of PNR and its engineer Honorio Cirbado in operating
in a busy intersection without any bars, semaphores, signal lights, flagman or switchman.

ISSUE:
1) Who between the petitioner and respondent was negligent?
2) Is PNR immune from suit?

HELD:
There is no admissible evidence to show that the bus driver did not take necessary precaution in traversing the track.
Contributory negligence may not be ascribed to the bus driver for he had taken necessary precautions before passing
over the railway track. The failure of PNR, on the other hand, to put a cross bar, or signal light, flagman, or
switchman or semaphores is evidence of negligence on their part.
By the doctrine of implied powers, the power to sue and be sued is implicit from the faculty to transact private
business. PNR is not exercising governmental powers, as such it is not immune from suit.
Philippine National Railways (PNR) vs. CA (GR L-55347, 4 October 1985)

Facts:
On 10 September 1972, at about 9:00 p.m., Winifredo Tupang, husband of Rosario Tupang, boarded Train 516 of
the Philippine National Railways at Libmanan, Camarines Sur, as a paying passenger bound for Manila. Due to
some mechanical defect, the train stopped at Sipocot, Camarines Sur, for repairs, taking some two hours before the
train could resume its trip to Manila. Unfortunately, upon passing Iyam Bridge at Lucena, Quezon, Winifredo
Tupang fell off the train resulting in his death. The train did not stop despite the alarm raised by the other passengers
that somebody fell from the train. Instead, the train conductor, Perfecto Abrazado, called the station agent at
Candelaria, Quezon, and requested for verification of the information. Police authorities of Lucena City were
dispatched to the Iyam Bridge where they found the lifeless body of Winifredo Tupang. As shown by the autopsy
report, Winifredo Tupang died of cardio-respiratory failure due to massive cerebral hemorrhage due to traumatic
injury. Tupang was later buried in the public cemetery of Lucena City by the local police authorities.

Upon complaint filed by the deceaseds widow, Rosario Tupang, the then CFI Rizal, after trial, held the PNR liable
for damages for breach of contract of carriage and ordered it to pay Rosario Tupang the sum of P12,000.00 for the
death of Winifredo Tupang, plus P20,000.00 for loss of his earning capacity, and the further sum of P10,000.00 as
moral damages, and P2,000.00 as attorneys fees, and cost.
On appeal, the Appellate Court sustained the holding of the trial court that the PNR did not exercise the utmost
diligence required by law of a common carrier. It further increased the amount adjudicated by the trial court by
ordering PNR to pay the Rosario Tupang an additional sum of P5,000,00 as exemplary damages. Moving for
reconsideration of the above decision, the PNR raised for the first time, as a defense, the doctrine of state immunity
from suit. The motion was denied. Hence the petition for review.

Issue: WON there was contributory negligence on the part of Tupang.

Held:
PNR has the obligation to transport its passengers to their destinations and to observe extraordinary diligence in
doing so. Death or any injury suffered by any of its passengers gives rise to the presumption that it was negligent in
the performance of its obligation under the contract of carriage. PNR failed to overthrow such presumption of
negligence with clear and convincing evidence, inasmuch as PNR does not deny, (1) that the train boarded by the
deceased Winifredo Tupang was so overcrowded that he and many other passengers had no choice but to sit on the
open platforms between the coaches of the train, (2) that the train did not even slow down when it approached the
Iyam Bridge which was under repair at the time, and (3) that neither did the train stop, despite the alarm raised by
other passengers that a person had fallen off the train at Iyam Bridge.

While PNR failed to exercise extraordinary diligence as required by law, it appears that the deceased was chargeable
with contributory negligence. Since he opted to sit on the open platform between the coaches of the train, he should
have held tightly and tenaciously on the upright metal bar found at the side of said platform to avoid falling off from
the speeding train. Such contributory negligence, while not exempting the PNR from liability, nevertheless justified
the deletion of the amount adjudicated as moral damages.
The Supreme Court modified the decision of the appellate court by eliminating therefrom the amounts of P10,000.00
and P5,000.00 adjudicated as moral and exemplary damages, respectively; without costs

NATIONAL AIRPORTS CORP VS TEODORO

G.R. No. L-5122 91 Phil 203 April 30, 1952
NATIONAL AIRPORTS CORPORATION, petitioner,
vs.
JOSE TEODORO, SR., as Judge of the Court of First Instance of Negros Occidental and PHILIPPINE AIRLINES,
INC., respondents.

Facts:
The National Airports Corporation was organized under Republic Act No. 224, which expressly made the provisions
of the Corporation Law applicable to the said corporation. It was abolished by Executive Order No. 365 and to take
its place the Civil Aeronautics Administration was created.

Before the abolition, the Philippine Airlines, Inc. paid to the National Airports Corporation P65,245 as fees for
landing and parking for the period up to and including July 31, 1948. These fees are said to have been due and
payable to the Capitol Subdivision, Inc., who owned the land used by the National Airports Corporation as airport.
The owner commenced an action in the court against the Philippine Airlines, Inc.

The Philippine Airlines, Inc. countered with a third-party complaint against the National Airports Corporation,
which by that time had been dissolved, and served summons on the Civil Aeronautics Administration. The third
party plaintiff alleged that it had paid to the National Airports Corporation the fees claimed by the Capitol
Subdivision, Inc. on the belief and assumption that the third party defendant was the lessee of the lands subject of
the complaint and that the third party defendant and its predecessors in interest were the operators and maintainers
of said airport and, further, that the third party defendant would pay to the landowners, particularly the Capitol
Subdivision, Inc., the reasonable rentals for the use of their lands.
The Solicitor General, after answering the third party complaint, filed a motion to dismiss on the ground that the
court lacks jurisdiction to entertain the third- party complaint, first, because the National Airports Corporation has
lost its juridical personality, and, second, because agency of the Republic of the Philippines, unincorporated and
not possessing juridical personality under the law, is incapable of suing and being sued

Issues:
Whether or not the Civil Aeronautics Administration should be regarded as engaged in private functions and
therefore subject to suit.
Discussions:
Not all government entities, whether corporate or non corporate, are immune from suits. The power to sue and be
sued is implied from the power to transact private business. And if it has the power to sue and be sued on its behalf,
the Civil Aeronautics Administration with greater reason should have the power to prosecute and defend suits for
and against the National Airports Corporation, having acquired all the properties, funds and choses in action and
assumed all the liabilities of the latter. The rule is thus stated in Corpus Juris:
Suits against state agencies with relation to matters in which they have assumed to act in private or nongovernment
capacity, and various suits against certain corporations created by the state for public purposes, but to engage in
matters partaking more of the nature of ordinary business rather than functions of a governmental or political
character, are not regarded as suits against the state. The Latter is true, although the state may own stock or property
of such a corporation for by engaging in business operations through a corporation the state divests itself so far of its
sovereign character, and by implication consents to suits against the corporation.

Rulings:
Yes. The Supreme Court ruled that the Civil Aeronautics Administration comes under the category of a private
entity. Although not a body corporate it was created, like the National Airports Corporation, not to maintain a
necessary function of government, but to run what is essentially a business, even if revenues be not its prime
objective but rather the promotion of travel and the convenience of the traveling public. It is engaged in an
enterprise which, far from being the exclusive prerogative of state, may, more than the construction of public roads,
be undertaken by private concerns.

In the light of a well-established precedents, and as a matter of simple justice to the parties who dealt with the
National Airports Corporation on the faith of equality in the enforcement of their mutual commitments, the Civil
Aeronautics Administration may not, and should not, claim for itself the privileges and immunities of the sovereign
state.
91 Phil. 203

TUASON, J.:
The National Airports Corporation was organized under Republic Act No. 224, which expressly made the provisions
of the Corporation Law applicable to the said corporation. On November 10, 1950, the National Airports
Corporation was abolished by Executive Order No. 365 and to take its place the Civil Aeronautics Administration
was created. Before the abolition, the Philippine Airlines, Inc. paid to the National Airports Corporation P65,245.00
as fees for landing and parking on Bacolod Airport No. 2 for the period up to and including July 31, 1948. These
fees are said to have been due and payable to the Capitol Subdivision, Inc. which owned the land used by the
National Airports Corporation as airport, and the owner commenced an action in the Court of First Instance of
Negros Occidental against the Philippine Airlines, Inc., in 1951 to recover the above amount. The Philippine
Airlines, Inc. countered with a third-party complaint against the National Airports Corporation, which by that time
had been dissolved, and served summons on the Civil Aeronautics Administration. The third-party plaintiff alleged
that it had paid to the National Airports Corporation the fees claimed by the Capitol Subdivision, Inc. "on the belief
and assumption that the third-party defendant was the lessee of the lands subject of the complaint and that the third-
party defendant and its predecessors in interest were the operators and maintalners of said Bacolod Airport No. 2
and, farther, that the third-party defendant would pay to the land owners, particularly the Capitol Subdivision, Inc.,
the reasonable rentals for the use of their lands."

The Solicitor General, after answering the third-party complaint, filed a motion to dismiss on the grounds that the
court lacks jurisdiction to entertain the third-party complaint, first, because the National Airports Corporation "has
lost its juridical personality," and, second, because the Civil Aeronautics Administration "being an office or agency
of the Republic of the Philippines, unincorporated and not possessing juridical personality under the law, is
incapable of suing and being sued."
Section 7 of Executive Order No. 365 reads:

"All records, properties, equipment, assets, rights, choses in action, obligations, liabilities and contracts of the
National Airports Corporation abolished under this Order, are hereby transferred to, vested in, and assumed by, the
Civil Aeronautics Administration. All works, construction, and improvements made by the National Airports
Corporation or any agency of the National Government in or upon government airfields, including all appropriations
or the unreleased and unexpended balances thereof, shall likewise be transferred to the Civil Aeronautics
Administration."
Among the general powers of the Civil Aeronautics Administration are, under Section 3, to execute contracts of any
kind, to purchase property, and to grant concession rights, and under Section 4, to charge landing fees, royalties on
sales to aircraft of aviation gasoline, accessories and supplies, and rentals for the use of any property under its
management.

These provisions confer upon the Civil Aeronautics Administration, in our opinion, the power to sue and be sued.
The power to sue and be sued is implied from the power to transact private business. And if it has the power to sue
and be sued on its behalf, the Civil Aeronautics Administration with greater reason should have the power to
prosecute and defend suits for and against the National Airports Corporation, having acquired all the properties,
funds and ehoses in action and assumed all the liabilities of the latter. To deny the National Airports Corporation's
creditors access to the courts of justice against the Civil Aeronautics Administration is to say that the government
could impair the obligations of its corporations by the simple expedient of converting them into unincorporated
agencies.

But repudiation of the National Airports Corporation's obligations was far from the intention in its dissolution and
the setting up of the Civil Aeronautics Administration. Nor would such scheme work even if the executive order had
so expressly provided.

Not all government entitles, whether corporate or non-corporate, are immune from suits. Immunity from suits is
determined by the character of the objects for which the entity was organized. The rule is thus stated in Corpus Juris:

"Suits against state agencies with relation to matters in which they have assumed to act in a private or
nongovernmental capacity, and various suits against certain corporations created by the state for public purposes, but
to engage in matters partaking more of the nature of ordinary business rather than functions of a governmental or
political character, are not regarded as suits against the state. The latter is true, although the state may own the stock
or property of such a corporation for by engaging in business operations through a corporation the state divests itself
so far of its sovereign character, and by implication consents to suits against the corporation." (59 C. J., 313.)
This rule has been applied to such government agencies as State Dock Commissions carrying on business relating to
pilots, terminals and transportation (Standard Oil Co. of New Jersey vs. U. S., 26 Fed. (2d) 480), and State Highway
Commissions created to build public roads, and given appropriations in advance to discharge obligations incurred in
that behalf (Arkansas State Highway Commission vs. Dodge, 26 S W (2d) 879; State Highway Commission of
Missouri vs. Bates, 269 S W 418.)

The Civil Aeronautics Administration comes under the category of a private entity. Although not a body corporate it
was created, like the National Airports Corporation, not to maintain a necessary function of government, but to run
what is essentially a business, even if revenues be not its prime objective but rather the promotion of travel and the
convenience of the travelling public. It is engaged in an enterprise which, far from being the exclusive prerogative of
the state, may, more than the construction of public roads, be undertaken by private concerns.

In the light of well-established precedents, and as a matter of simple justice to the parties who dealt with the
National Airports Corporation on the faith of equality in the enforcement of their mutual commitments, the Civil
Aeronautics Administration may not, and should not, claim for itself the privileges and immunities of the sovereign
state.

The case of National Airports Corporation vs. Hon. V. Jimenez Yanson et al., (89 Phil. 745), relied upon by counsel,
is not controlling. That was a labor dispute and can be distinguished from the case at bar in at least one fundamental
respect.
Involving labor demands and labor-management relations, any decision in that case would, if given force and effect,
operate prospectively and for an indefinite period against the Civil Aeronautics Administration whose rights and
obligations with respect to its officers and employees were regulated by the general lav on civil service. Moreover,
some of the petitioners might already have ceased. By Sections 5 and 8 of Executive Order No. 365 all employees of
the National Airports Corporation were, upon the latter's dissolution, automatically separated from the service, and
the part of the personnel whose employment was "necessary and convenient" to the Civil Aeronautics
Administration would have to be reappointed and, what was more important, "in accordance with the Civil Service
rules and regulations." If the petitioners in that case had been absorbed into the Civil Aeronautics Administration,
the matters raised in their petition were outside the jurisdiction of the Court of Industrial Relations, and of this Court
on appeal, to entertain. Their rights, privileges, hours of work, and rates of compensation were already governed by
the Civil Service Law.

The Philippine Airlines' third-party complaint is premised on the assumption that the National Airports Corporation
is still In existence, at least for the limited object of winding up its affairs under Section 77 of the Corporation Law.
Our opinion is that by its abolition that corporation stands abolished for all purposes. No trustees, assignees or
receivers have been designated to make a liquidation and, what is more, there is nothing to liquidate. Everything the
National Airports Corporation had, has been taken over by the Civil Aeronautics Administration. To All legal
intents and practical purposes, the National Airports Corporation is dead and the Civil Aeronautics Administration is
its heir or legal representative, acting by the lav of its creation upon its own rights and in its own name. The better
practice then should have been to make the Civil Aeronautics Administration the third-party defendant instead of the
National Airports Corporation. The error, however, is purely procedural, not put in issue, and may be corrected by
amendment of the pleadings if deemed necessary.

Wherefore, the petition is denied with costs against the Civil Aeronautics Administration

Mobil Phil Inc vs Custom Arrastre Service

Immunity from Suit

MOBIL PHIL INC VS CUSTOM ARRASTRE SERVICE

G.R. No. L-23139 18 SCRA 1120 December 17, 1966
MOBIL PHILIPPINES EXPLORATION, INC., plaintiff-appellant,
vs.
CUSTOMS ARRASTRE SERVICE and BUREAU of CUSTOMS, defendants-appellees

Facts:
This case was filed by Mobil Phil Exploration Inc. against the Customs Arrastre Service and the Bureau of Customs
to recover the value of the undelivered case of rotary drill parts.

Four cases of rotary drill parts were shipped from abroad, consigned to Mobil Philippines Exploration, Inc. The
shipment was discharged to the custody of the Customs Arrastre Service, the unit of the Bureau of Customs then
handling arrastre operations therein. The Customs Arrastre Service later delivered to the broker of the consignee
three cases only of the shipment. Mobil Philippines Exploration, Inc filed suit in the Court of First Instance of
Manila against the Customs Arrastre Service and the Bureau of Customs to recover the value of the undelivered case
plus other damages.

Defendants filed a motion to dismiss the complaint on the ground that not being persons under the law, defendants
cannot be sued. Appellant contends that not all government entities are immune from suit; that defendant Bureau
of Customs as operator of the arrastre service at the Port of Manila, is discharging proprietary functions and as such,
can be sued by private individuals.

Issues:
Whether or not both Customs Arrastre Service and the Bureau of Customs can invoke state immunity.
Discussions:
The Bureau of Custom, is a part of Department of Finance. It does not have a separate juridical personality of its
own apart from that of the national government. Its primary function is governmental, that of assessing and
collecting lawful revenues from imported articles and all other tariff and customs duties, fees, charges, fines and
penalties (Sec. 602, R.A. 1937). To this function, arrastre service is a necessary incident. As stated in the law,
agencies of the government is not suable if it is performing governmental functions and if it an unincorporated
government entity without a separate juridical personality.

Rulings:
Yes. The Supreme Court ruled that the Bureau of Customs cannot be sued for recovery of money and damages
involving arrastre services, considering that said arrastre function may be deemed proprietary, because it is a
necessary incident of the primary and governmental function of the Bureau of Customs. The Court ruled that the fact
that a non-corporate government entity performs a function proprietary in nature does not necessarily result in its
being suable. If said non-governmental function is undertaken as an incident to its governmental function, there is no
waiver thereby of the sovereign immunity from suit extended to such government entity. The Supreme Court ruled
that the plaintiff should have filed its present claim to the General Auditing Office, it being for money under the
provisions of Commonwealth Act 327, which state the conditions under which money claims against the
Government may be filed.
MOBIL PHILIPPINES EXPLORATION VS. CUSTOMS ARRASTRE SERVICE
18 SCRA 1120

FACTS: Four cases of rotary drill parts were shipped from abroad on S.S. "Leoville", consigned to Mobil
Philippines Exploration, Inc., Manila. The shipment was discharged to the custody of the Customs Arrastre Service,
the unit of the Bureau of Customs then handling arrastre operations therein. The Customs Arrastre Service later
delivered to the broker of the consignee three cases only of the shipment.
Mobil Philippines Exploration, Inc., filed suit in the Court of First Instance of Manila against the Customs Arrastre
Service and the Bureau of Customs to recover the value of the undelivered case in the amount of P18,493.37 plus
other damages.
Defendants filed a motion to dismiss the complaint on the ground that not being persons under the law, defendants
cannot be sued.
Appellant contends that not all government entities are immune from suit; that defendant Bureau of Customs as
operator of the arrastre service at the Port of Manila, is discharging proprietary functions and as such, can be sued by
private individuals.
ISSUE: Whether or not the defendants can invoke state immunity.
HELD: Now, the fact that a non-corporate government entity performs a function proprietary in nature does not
necessarily result in its being suable. If said non-governmental function is undertaken as an incident to its
governmental function, there is no waiver thereby of the sovereign immunity from suit extended to such government
entity.
The Bureau of Customs, to repeat, is part of the Department of Finance, with no personality of its own apart from
that of the national government. Its primary function is governmental, that of assessing and collecting lawful
revenues from imported articles and all other tariff and customs duties, fees, charges, fines and penalties (Sec. 602,
R.A. 1937). To this function, arrastre service is a necessary incident.
Clearly, therefore, although said arrastre function may be deemed proprietary, it is a necessary incident of the
primary and governmental function of the Bureau of Customs, so that engaging in the same does not necessarily
render said Bureau liable to suit. For otherwise, it could not perform its governmental function without necessarily
exposing itself to suit. Sovereign immunity, granted as to the end, should not be denied as to the necessary means to
that end.

Mobil Philippines Exploration Inc vs Customs Arrastre Service

18 SCRA 1120

FACTS:
 Four cases of rotary drill parts were shipped from abroad on S.S. "Leoville" sometime in November of
1962, consigned to Mobil Philippines Exploration, Inc., Manila. The shipment arrived at the Port of Manila on April
10, 1963, and was discharged to the custody of the Customs Arrastre Service, the unit of the Bureau of Customs then
handling arrastre operations therein. The Customs Arrastre Service later delivered to the broker of the consignee
three cases only of the shipment.
On April 4, 1964 Mobil Philippines Exploration, Inc., filed suit in the Court of First Instance of Manila
against the Customs Arrastre Service and the Bureau of Customs to recover the value of the undelivered case in the
amount of P18, 493.37 plus other damages.
On April 20, 1964 the defendants filed a motion to dismiss the complaint on the ground that not being
persons under the law, defendants cannot be sued.
On April 25, 1964, after plaintiff opposed the motion, the court, dismissed the complaint on the ground that
neither the Customs Arrastre Service nor the Bureau of Customs is suable.
Four cases of rotary drill parts were shipped from abroad on S.S. Leoville, consigned to Mobile
Philippines Exploration, Inc. Manila. The shipment was discharged to the custody of the Customs Arrastre Service,
the unit of the Bureau of Customs then handling arrastre operations therein. The Customs Arrastre Service later
delivered to the broker of the consignee three cases only of the shipment.

ISSUE:
1. Whether or not State immunity applies in this case

HELD:
1. The court stated that a being non-corporate government entity in performing a proprietary function in
nature does not always result to be sued. If said non-governmental function is undertaken as an incident to
its governmental function, there is no waiver thereby of the sovereign immunity from suit extended to such
government entity.
The Bureau of Customs is part of the Department of Finance with no personality of its own apart from that
of the national government. Its primary function is governmental, that of assessing and collecting lawful
revenues from imported articles and all other tariff and customs duties, fees, charges, fines and penalties.
To this function, arrastre service is a necessary incident. For practical reasons said revenues and customs
duties cannot be assessed and collected by simply receiving the importer's or ship agent's or consignee's
declaration of merchandise being imported and imposing the duty provided in the Tariff law. Customs
authorities and officers must see to it that the declaration tallies with the merchandise actually landed. And
this checking up requires that the landed merchandise be hauled from the ship's side to a suitable place in
the customs premises to enable said customs officers to make it, that is, it requires arrastre operations.
According to the court, Bureau of Customs, acting as part of the machinery of the national government in
the operation of the arrastre service, pursuant to express legislative mandate and as a necessary incident of
its prime governmental function, is immune from suit, there being no statute to the contrary.

Santiago v Republic, 87 SCRA 294

Facts: On August 9, 1976, Ildefonso Santiago through his counsel filed an action for revocation of a Deed of
Donation executed by him and his spouse in January of 1971, with the Bureau of Plant Industry as the Donee, in the
Court of First Instance of Zamboanga City. Mr. Santiago alleged that the Bureau, contrary to the terms of donation,
failed to install lighting facilities and water system on the property and to build an office building and parking lot
thereon which should have been constructed and ready for occupancy on before December7, 1974. That because of
the circumstances, Mr. Santiago concluded that he was exempt from compliance with an explicit constitutional
command, as invoked in the Santos v Santos case, a 1952 decision which is similar. The Court of First Instance
dismissed the action in favor of the respondent on the ground that the state cannot be sued without its consent,
and Santos v Santos case is discernible. The Solicitor General, Estelito P. Mendoza affirmed the dismissal on
ground of constitutional mandate. Ildefonso Santiago filed a petition for certiorari to the Supreme Court.

Issue: Whether or not the state can be sued without its consent.

Held: The Supreme Court rules, that the constitutional provision shows a waiver. Where there is consent, a suit may
be filed. Consent need not to be express. It can be implied. In this case it must be emphasized, goes no further than a
rule that a donor, with the Republic or any of its agency being a Donee, is entitle to go to court in case of an alleged
breach of the conditions of such donation.
The writ of Certiorari prayed is granted and the order of dismissal of October 20, 1977 is nullified, set aside and
declare to be without force and effect. The Court of First Instance of Zamboanga City, Branch II, is hereby directed
to proceed with this case, observing the procedure set forth in the rules of court. No cost.

Santiago vs. Republic (Consti1)

Ildefonso Santiago, represented by his Attorney-in-Fact, Alfredo T. Santiago, petitioner, vs. The Government of the
Republic of the Philippines, represented by Director, Bureau of Plant Industry, and the Regional Director, Region
IX, Zamboanga City, repondent.

December 19, 1978

Fernando, J:

Facts:
Petitioner Ildefonso Santiago donated a parcel of land to the Bureau of Plant Industry on the terms that the
Bureau should construct a building and install lighting facilities on the said lot.
When time passed and there were still no improvements on the lot, Santiago filed a case pleading for the
revocation of such contract of donation but the trial court dismissed the petition claiming that it is a suit against the
government and should not prosper without the consent of the government.

Issue:
Whether or not the respondent government has waived its immunity from suit.
Held:
Yes.
Ratio:

The government's waiver of immunity was implied by virtue of the terms provided in the deed of
donation. The government is a beneficiary of the terms of the donation but it did not comply with such terms. Thus,
the donor Santiago has the right to be heard in the court. Also, to not allow the donor to be heard would be unethical
and contrary to equity which the government so advances. The Court of First Instance is hereby directed to proceed
with the case.

In January 1971, Ildefonso Santiago gratuitously donated a parcel of land to the Bureau of Plant Industry. The terms
of the donation are; that the Bureau should construct a building on the said lot and that the building should be
finished by December 7, 1974, that the Bureau should install lighting facilities on the said lot. However, come 1976
there were still no improvements on the lot. This prompted Santiago to file a case pleading for the revocation of such
contract of donation. The trial court dismissed the petition claiming that it is a suit against the government and
should not prosper without the consent of the government.
ISSUE: Whether or not the state has not waived its immunity from suit.
HELD: No. The government has waived its immunity and such waiver is implied by virtue of the terms provided in
the deed of donation. The government is a beneficiary of the terms of the donation. But the government through the
Bureau of Plant Industry has breached the terms of the deed by not complying with such, therefore, the donor
Santiago has the right to have his day in court and be heard. Further, to not allow the donor to be heard would be
unethical and contrary to equity which the government so advances. Case should prosper.
Republic of the Philippines
SUPREME COURT
Baguio City
2nd Division

G.R. No. L-48214, 1978 Dec 19

ILDEFONSO SANTIAGO, represented by his Attorney-in-Fact, ALFREDO T. SANTIAGO, petitioner,
vs.
THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES, represented by the Director, Bureau of
Plant Industry, and the Regional Director, Region IX, Zamboanga City, respondents,
Digest

Constitutional Law Immunity of the State from Suit

On 20 Jan 1971, Santiago gratuitously donated a parcel of land to the Bureau of Plant Industry. The terms of the
donation are; that the Bureau should construct a building on the said lot and that the building should be finished by
December 7, 1974, that the Bureau should install lighting facilities on the said lot. However, come 1976 there were
still no improvements on the lot. This prompted Santiago to file a case pleading for the revocation of such contract
of donation. The trial court dismissed the petition claiming that it is a suit against the government and should not
prosper without the consent of the government.
ISSUE: Whether or not the state has not waived its immunity from suit.
HELD: The government has waived its immunity and such waiver is implied by virtue of the terms provided in the
deed of donation. The government is a beneficiary of the terms of the donation. But the government through the
Bureau has breached the terms of the deed by not complying with such, therefore, the donor Santiago has the right to
have his day in court and be heard. Further, to not allow the donor to be heard would be unethical and contrary to
equity which the government so advances. Case should prosper.

Full Text

DECISION

FERNANDO, J:

The first impression yielded by a perusal of this petition for certiorari is its inherent weakness considering the
explicit provision in the present Constitution prohibiting a suit against the Republic without its consent. 1 Here,
petitioner Ildefonso Santiago 2 filed on August 9, 1976 an action in the Court of First Instance of Zamboanga City
naming as defendant the government of the Republic of the Philippines represented by the Director of the Bureau of
Plant Industry. 3 His plea was for the revocation of a deed of donation executed by him and his spouse in January of
1971, 4 with the Bureau of Plant Industry as the donee. As alleged in such complaint, such Bureau, contrary to the
terms of the donation, failed to install lighting facilities and water system on the property donated and to build an
office building and parking [lot] thereon which should have been constructed and ready for occupancy on or before
December 7, 1974. 5 That led him to conclude that under the circumstances, he was exempt from compliance with
such an explicit constitutional command. The lower court, in the order challenged in this petition, was of a different
view. It sustained a motion to dismiss on the part of the defendant Republic of the Philippines, now named as one of
the respondents, the other respondent being the Court of First Instance of Zamboanga City, Branch II. It premised
such an order on the settled rule that the state cannot be sued without its consent. This is so, because the New
Constitution of the Philippines expressly provides that the state may not be sued without its consent. 6 Solicitor
General Estelito P. Mendoza, 7 in the comment on the petition filed with this Court, is for the affirmance of the
order of dismissal of respondent Court precisely to accord deference to the above categorical constitutional mandate.

On its face, such a submission carries persuasion. Upon further reflection, this Tribunal is impressed with the unique
aspect of this petition for certiorari, dealing as it does with a suit for the revocation of a donation to the Republic,
which allegedly failed to conform with what was agreed to by the donee. If an order of dismissal would suffice, then
the element of unfairness enters, the facts alleged being hypothetically admitted. It is the considered opinion of this
Court then that to conform to the high dictates of equity and justice, the presumption of consent could be indulged in
safely. That would serve to accord to petitioner as plaintiff, at the very least, the right to be heard. Certiorari lies.

1. This is not to deny the obstacle posed by the constitutional provision. It is expressed in language plain and
unmistakable: The State may not be sued without its consent. 8 The Republic cannot be proceeded against unless
it allows itself to be sued. Neither can a department, bureau, agency, office, or instrumentality of the government
where the suit, according to the then Justice, now Chief Justice, Castro in Del Mar v. Philippine Veterans
Administration, 9 may result in adverse consequences to the public treasury, whether in the disbursements of funds
or loss of property. 10 Such a doctrine was reiterated in the following cases: Republic v. Villasor, 11Sayson v.
Singson, 12 Director of the Bureau of Printing v. Francisco, 13 and Republic v. Purisima. 14

2. It is contended by counsel for petitioner that the above constitutional provision would be given a retroactive
application in this case if the suit for the revocation of donation were dismissed. That is not the case at all. In
Republic v. Purisima, this Court made clear that such a basic postulate is part and parcel of the system of
government implanted in the Philippines from the time of the acquisition of sovereignty by the United States, and
therefore, was implicit in the 1935 Constitution even in the absence of any explicit language to that effect. This it
did in a citation from Switzerland General Insurance Co., Ltd. v. Republic of the Philippines: 15 The doctrine of
non-suability recognized in this jurisdiction even prior to the effectivity of the [1935] Constitution is a logical
corollary of the positivist concept of law which, to paraphrase Holmes, negates the assertion of any legal right as
against the state, in itself the source of the law on which such a right may be predicated. Nor is this all. Even if such
a principle does give rise to problems, considering the vastly expanded role of government enabling it to engage in
business pursuits to promote the general welfare, it is not obeisance to the analytical school of thought alone that
calls for its continued applicability. 16 That is the teaching of the leading case of Mobil Philippines Exploration,
Inc. v. Customs Arrastre Service, 17 promulgated in December of 1966. As a matter of fact, the Switzerland
General Insurance Co. decision was the thirty-seventh of its kind after Mobil. Clearly, then, the contention that to
dismiss the suit would be to give the applicable constitutional provision a retroactive effect is, to put it at its mildest,
untenable.

3. Petitioners counsel invoked Santos v. Santos, 18 a 1952 decision. A more thorough analysis ought to have
cautioned him against reliance on such a case. It was therein clearly pointed out that the government entity involved
was originally the National Airports Corporation. Thereafter, it was abolished by Executive Order No. 365, series
of 1950, and in its place and stead the Civil Aeronautics Administration was created and took over all the assets and
assumed all the liabilities of the abolished corporation. The Civil Aeronautics Administration, even if it is not a
juridical entity, cannot legally prevent a party or parties from enforcing their proprietary rights under the cloak or
shield of lack of juridical personality, because to took over all the powers and assumed all the obligations of the
defunct corporation which had entered into the contract in question. 19 Then came National Shipyard and Steel
Corporation v. Court of Industrial Relations, 20 a 1963 decision, where the then Justice, later Chief Justice,
Concepcion, as ponente, stated that a government-owned and controlled corporation has a personality of its own
distinct and separate from that of the government.. . . Accordingly, it may sue and be sued and may be subjected to
court processes just like any other corporation. (Section 13, Act 1459, as amended). 21 In three recent decisions,
Philippine National Bank v. Court of Industrial Relations, 22 Philippine National Bank v. Honorable Judge
Pabalan, 23 and Philippine National Railways v. Union de Maquinistas, 24 this constitutional provision on non-
suability was unavailing in view of the suit being against a government-owned or controlled corporation. That point
apparently escaped the attention of counsel for petitioner. Hence Santos v. Santos is hardly controlling.

4. It is to be noted further that the trend against the interpretation sought to be fastened in the broad language of
Santos v. Santos is quite discernible. Not long after, in Araneta v. Hon. M. Gatmaitan, 25 decided in 1957, it was
held that an action [against] Government officials, is essentially one against the Government, . . .. 26 In the same
year, this Court, in Angat River Irrigation System v. Angat River Workers Union, 27 after referring to the basic
and fundamental principle of the law that the Government cannot be sued before courts of justice without its
consent, pointed out that this privilege of non-suability of the Government covers with the mantle of its
protection an entity, in this case, the Angat River Irrigation System. 28 Then, in 1960, came Lim v. Brownell, Jr.,
29 where there was a reaffirmation of the doctrine that a claim [constituting] a charge against, or financial liability
to, the Government cannot be entertained by the courts except with the consent of said government. 30 Bureau of
Printing v. Bureau of Printing Employees Association 31 came a year later; it reiterated such a doctrine. It was not
surprising therefore that in 1966, Mobil Philippines Exploration, Inc. was decided the way it was. The remedy,
where the liability is based on contract, according to this Court, speaking through Justice J. P. Bengzon, is for
plaintiff to file a claim with the general office in accordance with the controlling statute, Commonwealth Act No.
327. 32 To repeat, that doctrine has been adhered to ever since. The latest case in point is Travelers Indemnity
Company v. Barber Steamship Lines, Inc. 33 Justice Aquinos opinion concluded with this paragraph: It is settled
that the Bureau of Customs, acting as part of the machinery of the national government in the operation of the
arrastre service, is immune from suit under the doctrine of non-suability of the State. The claimants remedy to
recover the loss or damage to the goods under the custody of the customs arrastre service is to file a claim with the
Commission in Audit as contemplated in Act No. 3083 and Commonwealth Act No. 327. 34 With the explicit
provision found in the present Constitution, the fundamental principle of non-suability becomes even more exigent
in its command.

5. The reliance on Santos v. Santos as a prop for this petition having failed, it would ordinarily follow that this suit
cannot prosper. Nonetheless, as set forth at the outset, there is a novel aspect that suffices to call for a contrary
conclusion. It would be manifestly unfair for the Republic, as donee, alleged to have violated the conditions under
which it received gratuitously certain property, thereafter to put as a barrier the concept of non-suitability. That
would be a purely one-sided arrangement offensive to ones sense of justice. Such conduct, whether proceeding
from an individual or governmental agency, is to be condemned. As a matter of fact, in case it is the latter that is
culpable, the affront to decency is even more manifest. The government, to paraphrase Justice Brandeis, should set
the example. If it is susceptible to the charge of having acted dishonorably, then it forfeits public trust and rightly
so.

6. Fortunately, the constitutional provision itself allows a waiver. Where there is consent, a suit may be filed.
Consent need not be express. It can be implied. So it was more than implied in Ministerio v. Court of First Instance
of Cebu: 35 The doctrine of governmental immunity from suit cannot serve as an instrument for perpetrating an
injustice on a citizen. 36 The fact that this decision arose from a suit against the Public Highways Commissioner
and the Auditor General for failure of the government to pay for land necessary to widen a national highway, the
defense of immunity without the consent proving unavailing, is not material. The analogy is quite obvious. Where
the government ordinarily benefited by the taking of the land, the failure to institute the necessary condemnation
proceedings should not be a bar to an ordinary action for the collection of the just compensation due. Here, the
alleged failure to abide by the conditions under which a donation was given should not prove an insuperable
obstacle to a civil action, the consent likewise being presumed. This conclusion is strengthened by the fact that while
a donation partakes of a contract, there is no money claim, and therefore reliance on Commonwealth Act No. 327
would be futile.

7. Our decision, it must be emphasized, goes no further than to rule that a donor, with the Republic or any of its
agency being the donee, is entitled to go to court in case of an alleged breach of the conditions of such donation. He
has the right to be heard. Under the circumstances, the fundamental postulate of non-suability cannot stand in the
way. It is made to accommodate itself to the demands of procedural due process, which is the negation of
arbitrariness and inequity. The government, in the final analysis, is the beneficiary. It thereby manifests its
adherence to the highest ethical standards, which can only be ignored at the risk of losing the confidence of the
people, the repository of the sovereign power. The judiciary under this circumstance has the grave responsibility of
living up to the ideal of objectivity and impartiality, the very essence of the rule of law. Only by displaying the
neutrality expected of an arbiter, even if it happens to be one of the departments of a litigant, can the decision
arrived at, whatever it may be, command respect and be entitled to acceptance.

WHEREFORE, the writ of certiorari prayed for is granted and the order of dismissal of October 20, 1977 is
nullified, set aside and declared to be without force and effect. The Court of First Instance of Zamboanga City,
Branch II, is hereby directed to proceed with this case, observing the procedure set forth in the Rules of Court. No
costs.

AMIGABLE VS. CUENCA [43 SCRA 360; G.R. No. L-26400; 29 Feb. 1972]
Facts: Victoria Amigable is the registered owner of a particular lot. At the back of her Transfer Certificate of Title
(1924), there was no annotation in favor of the government of any right or interest in the property. Without prior
expropriation or negotiated sale, the government used a portion of the lot for the construction of the Mango and
Gorordo Avenues. On 1958, Amigables counsel wrote the President of the Philippines, requesting payment of the
portion of the said lot. It was disallowed by the Auditor General in his 9th Endorsement. Petitioner then filed in the
court a quo a complaint against the Republic of the Philippines and Nicolas Cuenca, in his capacity as
Commissioner of Public Highways for the recovery of ownership and possession of the lot. According to the
defendants, the action was premature because it was not filed first at the Office of the Auditor General. According to
them, the right of action for the recovery of any amount had already prescribed, that the Government had not given
its consent to be sued, and that plaintiff had no cause of action against the defendants.
Issue: Whether or Not, under the facts of the case, appellant may properly sue the government.

Held: In the case of Ministerio v. Court of First Instance of Cebu, it was held that when the government takes away
property from a private landowner for public use without going through the legal process of expropriation or
negotiated sale, the aggrieved party may properly maintain a suit against the government without violating the
doctrine of governmental immunity from suit without its consent. In the case at bar, since no annotation in favor of
the government appears at the back of the certificate of title and plaintiff has not executed any deed of conveyance
of any portion of the lot to the government, then she remains the owner of the lot. She could then bring an action to
recover possession of the land anytime, because possession is one of the attributes of ownership. However, since
such action is not feasible at this time since the lot has been used for other purposes, the only relief left is for the
government to make due compensationprice or value of the lot at the time of the taking.
VICTORIA AMIGABLE vs. NICOLAS CUENCA G.R. No. L-26400 February 29, 1972
FACTS: Victoria Amigable is the is the registered owner of a lot which, without prior expropriation proceedings or
negotiated sale, was used by the government. Amigable's counsel wrote the President of the Philippines requesting
payment of the portion of her lot which had been expropriated by the government.

Amigable later filed a case against Cuenca, the Commissioner of Public Highways, for recovery of ownership and
possession of the said lot. She also sought payment for comlensatory damages, moral damages and attorney's fees.

The defendant said that the case was premature, barred by prescription, and the government did not give its consent
to be sued.

ISSUE: W/N the appellant may properly sue the government.

HELD: Where the government takes away property from a private landowner for public use without going through
the legal process of expropriation or negotiated sale, the aggrieved party may properly maintain a suit against the
government without violating the doctrine of governmental immunity from suit.

The doctrine of immunity from suit cannot serve as an instrument for perpetrating an injustice to a citizen. The only
relief available is for the government to make due compensation which it could and should have done years ago. To
determine just compensation of the land, the basis should be the price or value at the time of the taking.
G.R. No. L-26400 February 29, 1972
VICTORIA AMIGABLE, plaintiff-appellant,
vs.
NICOLAS CUENCA, as Commissioner of Pub. Highways and REP. OF THE PHIL, defendants-appellees.
This is an appeal from the decision of the Court of First Instance of Cebu dismissing the plaintiff's complaint.
FACTS:
Victoria Amigable, is the registered owner of a lot in Cebu City. Without prior expropriation or negotiated sale, the
government used a portion of said lot for the construction of the Mango and Gorordo Avenues.
On March 27, 1958 Amigable's counsel wrote the President of the Philippines, requesting payment of the portion of
her lot which had been appropriated by the government. The claim was indorsed to the Auditor General, who
disallowed it in his 9th Endorsement. Thus, Amigable filed in the court a quo a complaint, against the Republic of
the Philippines and Nicolas Cuenca (Commissioner of Public Highways) for the recovery of ownership and
possession of her lot.
The defendants denied the plaintiffs allegations stating: (1) that the action was premature, the claim not having been
filed first with the Office of the Auditor General; (2) that the right of action for the recovery had already prescribed;
(3) that the action being a suit against the Government, the claim for moral damages, attorney's fees and costs had no
valid basis since the Government had not given its consent to be sued; and (4) that inasmuch as it was the province
of Cebu that appropriated and used the area involved in the construction of Mango Avenue, plaintiff had no cause of
action against the defendants.
On July 29, 1959, the court rendered its decision holding that it had no jurisdiction over the plaintiff's cause of
action for the recovery of possession and ownership of the lot on the ground that the government cannot be sued
without its consent; that it had neither original nor appellate jurisdiction to hear and decide plaintiff's claim for
compensatory damages, being a money claim against the government; and that it had long prescribed, nor did it have
jurisdiction over said claim because the government had not given its consent to be sued. Accordingly, the complaint
was dismissed.
ISSUE: W/N the appellant may properly sue the government
RULING:
Yes. Considering that no annotation in favor of the government appears at the back of her certificate of title and that
she has not executed any deed of conveyance of any portion of her lot to the government, the appellant remains the
owner of the whole lot. As registered owner, she could bring an action to recover possession of the portion of land in
question at anytime because possession is one of the attributes of ownership. However, since restoration of
possession of said portion by the government is neither convenient nor feasible at this time because it is now and has
been used for road purposes, the only relief available is for the government to make due compensation which it
could and should have done years ago. To determine the due compensation for the land, the basis should be the price
or value thereof at the time of the taking.
As regards the claim for damages, the plaintiff is entitled thereto in the form of legal interest on the price of the land
from the time it was taken up to the time that payment is made by the government. In addition, the government
should pay for attorney's fees, the amount of which should be fixed by the trial court after hearing. WHEREFORE,
the decision appealed from is hereby set aside and the case remanded to the court a quo for the determination of
compensation, including attorney's fees, to which the appellant is entitled as above indicated
PEOPLE v. PERFECTO
277 SCRA 268

FACTS:
About August 20, 1920 Fernando Guerrero, the Secretary of the Philippine Sentae discovered that certain documents
which constituted the records of testimony by witnesses in the investigation of oil companies had disappeared from
his office. On September 7, 1920, the newspaper La Nacion, edited by Mr. Gregorio Perfecto published an article
criticizing the Senate and its members in general. As a result, he was charged guilty of violating Article 256 of the
Penal Code by the CFI of Manila. Petitioner filed an appeal to the Supreme Court praying for the dismissal of the
case on the ground that said Article is no longer in force.

ISSUE:
Is Article 256 of the Penal Code still in force despite the change of Spanish sovereignty to American sovereignty
over the Philippines?

HELD:
It is a general principle of the public law that the previous political relations of the ceded region are totally
abrogated. All laws, ordinances and regulations in conflict with the political character, institutions and constitution
of the new government are at once displaced. Article 256 was enacted to protect Spanish officials which were
representatives of the King. Such intent is contradictory to the ideology of the new government where In the eye of
our (American) Constitution and laws, every man is a sovereign, a ruler and a freeman, and has equal rights with
every other man. As such, Article 256 is deemed abrogated and the case is consequently dismissed and judgment
reversed.
People v. Perfecto, G.R. No. L-18463, October 4, 1922

FACTS: The issue started when the Secretary of the Philippine Senate, Fernando Guerrero, discovered that the
documents regarding the testimony of the witnesses in an investigation of oil companies had disappeared from his
office. Then, the day following the convening of Senate, the newspaper La Nacion edited by herein respondent
Gregorio Perfecto published an article against the Philippine Senate. Here, Mr. Perfecto was alleged to have
violated Article 256 of the Spanish Penal Code provision that punishes those who insults the Ministers of the
Crown. Hence, the issue.

ISSUE: Whether or not Article 256 of the Spanish Penal Code (SPC) is still in force and can be applied in the case
at bar?

HELD: No.

REASONING: The Court stated that during the Spanish Government, Article 256 of the SPC was enacted to
protect Spanish officials as representatives of the King. However, the Court explains that in the present case, we no
longer have Kings nor its representatives for the provision to protect. Also,with the change of sovereignty over the
Philippines from Spanish to American, it means that the invoked provision of the SPC had been automatically
abrogated. The Court determined Article 256 of the SPC to be political in nature for it is about the relation of the
State to its inhabitants, thus, the Court emphasized that it is a general principle of the public law that on acquisition
of territory, the previous political relations of the ceded region are totally abrogated. Hence, Article 256 of the
SPC is considered no longer in force and cannot be applied to the present case. Therefore, respondent was acquitted.

MACARIOLA VS. ASUNCION 114 SCRA 77

FACTS: 1. Judge Elias Asuncion was the presiding Judge in Civil Case No. 3010 for partition. 2. Among the parties
thereto was Bernardita R. Macariola. 3. On June 8, 1863 respondent Judge rendered a decision, which became final
for lack of an appeal. 4. On October 16, 1963 a project of partition was submitted to Judge Asuncion which he
approved in an Order dated October 23, 1963, later amended on November 11, 1963. 5. On March 6, 1965, a portion
of lot 1184-E, one of the properties subject to partition under Civil Case No. 3010, was acquired by purchase by
respondent Macariola and his wife, who were major stockholders of Traders Manufacturing and Fishing Industries
Inc., 6. Bernardita Macariola thus charged Judge Asuncion of the CFI of Leyte, now Associate Justice of the Court
of Appeals with acts unbecoming of a judge. 7. Macariola alleged that Asuncion violated , among others, Art.
1491, par. 5 of the New Civil Code and Article 14 of the Code of Commerce.
ISSUE: Is the actuation of Judge Asuncion in acquiring by purchase a portion of property in a Civil Case previously
handled by him an act unbecoming of a Judge?
HELD: Article 1491 , par. 5 of the New Civil Code applies only to the sale or assignment of the property which is
the subject of litigation to the persons disqualified therein. The Supreme Court held that for the prohibition to
operate, the sale or assignment must take place during the pendency of the litigation involving the property. In the
case at bar, when respondent Judge purchased on March 6, 1965 a portion of lot 1184-E, the decision in Civil Case
No. 3010 which he rendered on June 8, 1963 was already final because none of the parties filed an appeal within the
reglementary period hence, the lot in question was no longer subject of litigation. Moreover at the time of the sale on
March 6, 1965, respondents order date October 23, 1963 and the amended order dated November 11, 1963
approving the October 16, 1963 project of partition made pursuant to the June 8, 1963 decision, had long been final
for there was no appeal from said orders. Furthermore, respondent Judge did not buy the lot in question on March 6,
1965 directly from the plaintiffs in Civil Case No. 3010 but from Dr. Arcadio Galapon who earlier purchased on
July 31, 1964 Lot 1184-E from three of the plaintiffs after the finality of the decision in Civil Case No. 3010.
Consequently, the sale of a portion of Lot 1184-E to respondent Judge having taken place over one year after the
finality of the decision in Civil Case No. 3010 as well as the two orders approving the project of partition, and not
during the pendency of the litigation, there was no violation of paragraph 5, Article 1491 of the New Civil Code.
Upon the transfer of sovereignty from Spain to the United States and later on from the United States to the Republic
of the Philippines, Art. 14 of the Code of Commerce must be deemed to have been abrogated because where there is
a change of sovereignty , the political laws of the former sovereign , whether compatible or not with those of the
new sovereign, are automatically abrogated, unless they are expressly re-enacted by affirmative act of the new
sovereign.
Macariola Vs. Asuncion 114 SCRA 77

Facts:
On June 8, 1963, respondent Judge Elias Asuncion rendered a decision in Civil Case 3010 final for lack of an
appeal.

On October 16, 1963, a project of partition was submitted to Judge Asuncion. The project of partition of lots was not
signed by the parties themselves but only by the respective counsel of plaintiffs and petitioner Bernardita R.
Macariola. The Judge approved it in his order dated October 23, 1963.

One of the lots in the project of partition was Lot 1184, which was subdivided into 5 lots denominated as Lot 1184
A E. Dr. Arcadio Galapon bought Lot 1184-E on July 31, 1964, who was issued transfer of certificate of Title No,
2338 of the Register of Deeds of Tacloban City. On March 6, 1965, Galapon sold a portion of the lot to Judge
Asuncion and his wife.
On August 31, 1966, spouses Asuncion and Galapon conveyed their respective shares and interest inn Lot 1184-E to
the Traders Manufacturing & Fishing Industries Inc. Judge Asuncion was the President and his wife Victoria was
the Secretary. The Asuncions and Galapons were also the stockholder of the corporation.

Respondent Macariola charged Judge Asuncion with "Acts unbecoming a Judge" for violating the following
provisions: Article 1491, par. 5 of the New Civil Code, Article 14, par. 1 & 5 of the Code of Commerce, Sec. 3 par
H of RA 3019 also known as the Anti-Graft & Corrupt Practice Act., Sec. 12, Rule XVIII of the Civil Service Rules
and Canon 25 of the Canons of Judicial Ethics.

On November 2, 1970 a certain Judge Jose D. Nepomuceno dismissed the complaints filed against Asuncion.

Issue:
Whether or Not the respondent Judge violated the mentioned provisions.

Ruling:
No. Judge Asuncion did not violate the mentioned provisions constituting of "Acts unbecoming a Judge" but was
reminded to be more discreet in his private and business activities.

Respondent Judge did not buy the lot 1184-E directly on the plaintiffs in Civil Case No. 3010 but from Dr. Galapon
who earlier purchased the lot from 3 of the plaintiffs. When the Asuncion bought the lot on March 6, 1965 from Dr.
Galapon after the finality of the decision which he rendered on June 8, 1963 in Civil Case No 3010 and his two
orders dated October and November, 1963. The said property was no longer the subject of litigation.

In the case at bar, Article 14 of Code of Commerce has no legal and binding effect and cannot apply to the
respondent. Upon the sovereignty from the Spain to the US and to the Republic of the Philippines, Art. 14 of this
Code of Commerce, which sourced from the Spanish Code of Commerce, appears to have been abrogated because
whenever there is a change in the sovereignty, political laws of the former sovereign are automatically abrogated,
unless they are reenacted by Affirmative Act of the New Sovereign.

Asuncion cannot also be held liable under the par. H, Sec. 3 of RA 3019, citing that the public officers cannot
partake in any business in connection with this office, or intervened or take part in his official capacity. The Judge
and his wife had withdrawn on January 31, 1967 from the corporation and sold their respective shares to 3rd parties,
and it appears that the corporation did not benefit in any case filed by or against it in court as there was no case filed
in the different branches of the Court of First Instance from the time of the drafting of the Articles of Incorporation
of the corporation on March 12, 1966 up to its incorporation on January 9, 1967. The Judge realized early that their
interest in the corporation contravenes against Canon 25.
Macariola v. Asuncion, 114 SCRA 77, May 31, 1982
(En Banc), J. Makasiar

Facts: When the decision in Civil Case No. 3010 rendered by respondent Hon. Judge Elias B. Asuncion of
Court of First Instance of Leyte became final on June 8, 1863 for lack of an appeal, a project of partition was
submitted to him which he later approved in an Order dated October 23, 1963. Among the parties thereto
was complainant Bernardita R. Macariola.
One of the properties mentioned in the project of partition was Lot 1184. This lot according to the decision
rendered by Judge Asuncion was adjudicated to the plaintiffs Reyes in equal shares subdividing Lot 1184 into
five lots denominated as Lot 1184-A to 1184-E.

On July 31, 1964 Lot 1184-E was sold to Dr. Arcadio Galapon who later sold a portion of Lot 1184-E to Judge
Asuncion and his wife Victoria Asuncion. Thereafter spouses Asuncion and spouses Galapon conveyed their
respective shares and interests in Lot 1184-E to the Traders Manufacturing and Fishing Industries Inc.
wherein Judge Asuncion was the president.

Macariola then filed an instant complaint on August 9, 1968 docketed as Civil Case No. 4234 in the CFI of
Leyte against Judge Asuncion with "acts unbecoming a judge" alleging that Judge Asuncion in acquiring by
purchase a portion of Lot 1184-E violated Article 1491 par. 5 of the New Civil Code, Art. 14, pars. 1 and 5 of
the Code of Commerce, Sec. 3 par. H of R.A. 3019, Sec. 12 Rule XVIII of the Civil Service Rules and Canon
25 of the Canons of Judicial Ethics.

On November 2, 1970, Judge Jose Nepomuceno of the CFI of Leyte rendered a decision dismissing the
complaints against Judge Asuncion.

After the investigation, report and recommendation conducted by Justice Cecilia Munoz Palma of the Court
of Appeals, she recommended on her decision dated March 27, 1971 that Judge Asuncion be exonerated.

Issue: Does Judge Asuncion, now Associate Justice of Court of Appeals violated any law in acquiring by
purchase a parcel of Lot 1184-E which he previously decided in a Civil Case No. 3010 and his engagement in
business by joining a private corporation during his incumbency as a judge of the CFI of Leyte constitute an
"act unbecoming of a judge"?

Ruling: No. The respondent Judge Asuncion's actuation does not constitute of an "act unbecoming of a
judge." But he is reminded to be more discreet in his private and business activities.

SC ruled that the prohibition in Article 1491 par. 5 of the New Civil Code applies only to operate, the sale or
assignment of the property during the pendency of the litigation involving the property. Respondent judge
purchased a portion of Lot 1184-E on March 6, 1965, the in Civil Case No. 3010 which he rendered on June 8,
1963 was already final because none of the parties therein filed an appeal within the reglementary period.
Hence, the lot in question was no longer subject to litigation. Furthermore, Judge Asuncion did not buy the
lot in question directly from the plaintiffs in Civil Case No. 3010 but from Dr. Arcadio Galapon who earlier
purchased Lot1184-E from the plaintiffs Reyes after the finality of the decision in Civil Case No. 3010.

SC stated that upon the transfer of sovereignty from Spain to the US and later on from the US to the
Republic of the Philippines, Article 14 of Code of Commerce must be deemed to have been abrogated because
where there is change of sovereignty, the political laws of the former sovereign, whether compatible or not
with those of the new sovereign, are automatically abrogated, unless they are expressly re-enacted by
affirmative act of the new sovereign. There appears no enabling or affirmative act that continued the
effectivity of the aforestated provision of the Code of Commerce, consequently, Art. 14 of the Code of
Commerce has no legal and binding effect and cannot apply to the respondent Judge Asuncion.

Respondent Judge cannot also be held liable to par. H, Section 3 of R.A. 3019 because the business of the
corporation in which respondent participated had obviously no relation or connection with his judicial office.

SC stated that respondent judge and his wife deserve the commendation for their immediate withdrawal
from the firm 22 days after its incorporation realizing that their interest contravenes the Canon 25 of the
Canons of Judicial Ethics.
MACARIOLA v. ASUNCION
114 SCRA 77
FACTS:
On August 6, 1968, petitioner, Bernadita Macariola charged respondent Judge Elias Asuncion of CFI of Leyte, now
Associate Justice of CA, with acts unbecoming of a judge when the latter purchased a property which was
previously the subject of litigation on which he rendered decision. Respondent and his wife were also members of
Traders Manufacturing and Fishing Industries Inc. to which their shares and interests in said property were
conveyed. According to the petitioner, respondent allegedly violated Article 1491 (5) of the New Civil Code and
Article 14 (1) and (5) of Code of Commerce, Sec. 3 of Anti-Graft and Corrupt Practices Act, Sec. 12 XVIII of the
Civil Service Rules and Canon 25 of Canons of Judicial Ethics.

ISSUE:
Is Article 14 of the Code of Commerce still in force?

HELD:
Article 14 partakes of the nature of a political law as it regulates the relationship between the government and
certain public officers and employees like justices and judges. Said provision must be deemed to have been
abrogated because where there is change of sovereignty, the political laws of the former sovereign are automatically
abrogated. As such, Article 14 is not in force. The respondent is not found to have violated the articles invoked by
the petitioner but he was advised by the Court to be more discreet in his private and business activities.
Manila Prince Hotel vs. GSIS
267 SCRA 402
February 1997 En Banc

FACTS:

Pursuant to the privatization program of the government, GSIS chose to award during bidding in September 1995
the 51% outstanding shares of the respondent Manila Hotel Corp. (MHC) to the Renong Berhad, a Malaysian firm,
for the amount of Php 44.00 per share against herein petitioner which is a Filipino corporation who offered Php
41.58 per share. Pending the declaration of Renong Berhad as the winning bidder/strategic partner of MHC,
petitioner matched the formers bid prize also with Php 44.00 per share followed by a managers check worth Php
33 million as Bid Security, but the GSIS refused to accept both the bid match and the managers check.

One day after the filing of the petition in October 1995, the Court issued a TRO enjoining the respondents from
perfecting and consummating the sale to the Renong Berhad. In September 1996, the Supreme Court En Banc
accepted the instant case.

ISSUE:

Whether or not the GSIS violated Section 10, second paragraph, Article 11 of the 1987 Constitution

COURT RULING:

The Supreme Court directed the GSIS and other respondents to cease and desist from selling the 51% shares of the
MHC to the Malaysian firm Renong Berhad, and instead to accept the matching bid of the petitioner Manila Prince
Hotel.

According to Justice Bellosillo, ponente of the case at bar, Section 10, second paragraph, Article 11 of the 1987
Constitution is a mandatory provision, a positive command which is complete in itself and needs no further
guidelines or implementing laws to enforce it. The Court En Banc emphasized that qualified Filipinos shall be
preferred over foreigners, as mandated by the provision in question.

The Manila Hotel had long been a landmark, therefore, making the 51% of the equity of said hotel to fall within the
purview of the constitutional shelter for it emprises the majority and controlling stock. The Court also reiterated how
much of national pride will vanish if the nations cultural heritage will fall on the hands of foreigners.

In his dissenting opinion, Justice Puno said that the provision in question should be interpreted as pro-Filipino and,
at the same time, not anti-alien in itself because it does not prohibit the State from granting rights, privileges and
concessions to foreigners in the absence of qualified Filipinos. He also argued that the petitioner is estopped from
assailing the winning bid of Renong Berhad because the former knew the rules of the bidding and that the foreigners
are qualified, too.
Manila Prince Hotel v. GSIS, G.R. No. 122156, February 3, 1997

DECISION
(En Banc)

BELLOSILLO, J.:

I. THE FACTS

Pursuant to the privatization program of the Philippine Government, the GSIS sold in public auction its stake in
Manila Hotel Corporation (MHC). Only 2 bidders participated: petitioner Manila Prince Hotel Corporation, a
Filipino corporation, which offered to buy 51% of the MHC or 15,300,000 shares at P41.58 per share, and Renong
Berhad, a Malaysian firm, with ITT-Sheraton as its hotel operator, which bid for the same number of shares
at P44.00 per share, or P2.42 more than the bid of petitioner.

Petitioner filed a petition before the Supreme Court to compel the GSIS to allow it to match the bid of Renong
Berhad. It invoked the Filipino First Policy enshrined in 10, paragraph 2, Article XII of the 1987
Constitution, which provides that in the grant of rights, privileges, and concessions covering the national economy
and patrimony, the State shall give preference to qualified Filipinos.

II. THE ISSUES

1. Whether 10, paragraph 2, Article XII of the 1987 Constitution is a self-executing provision and does not need
implementing legislation to carry it into effect;
2. Assuming 10, paragraph 2, Article XII is self-executing, whether the controlling shares of the Manila Hotel
Corporation form part of our patrimony as a nation;
3. Whether GSIS is included in the term State, hence, mandated to implement 10, paragraph 2, Article XII of
the Constitution; and
4. Assuming GSIS is part of the State, whether it should give preference to the petitioner, a Filipino corporation,
over Renong Berhad, a foreign corporation, in the sale of the controlling shares of the Manila Hotel Corporation.

III. THE RULING

[The Court, voting 11-4, DISMISSED the petition.]

1. YES, 10, paragraph 2, Article XII of the 1987 Constitution is a self-executing provision and does not need
implementing legislation to carry it into effect.

Sec. 10, second par., of Art XII is couched in such a way as not to make it appear that it is non-self-executing but
simply for purposes of style. But, certainly, the legislature is not precluded from enacting further laws to enforce the
constitutional provision so long as the contemplated statute squares with the Constitution. Minor details may be left
to the legislature without impairing the self-executing nature of constitutional provisions.

xxx xxx xxx

Respondents . . . argue that the non-self-executing nature of Sec. 10, second par., of Art. XII is implied from the
tenor of the first and third paragraphs of the same section which undoubtedly are not self-executing. The argument is
flawed. If the first and third paragraphs are not self-executing because Congress is still to enact measures to
encourage the formation and operation of enterprises fully owned by Filipinos, as in the first paragraph, and the
State still needs legislation to regulate and exercise authority over foreign investments within its national
jurisdiction, as in the third paragraph, then a fortiori, by the same logic, the second paragraph can only be self-
executing as it does not by its language require any legislation in order to give preference to qualified Filipinos in
the grant of rights, privileges and concessions covering the national economy and patrimony. A constitutional
provision may be self-executing in one part and non-self-executing in another.

xxx. Sec. 10, second par., Art. XII of the 1987 Constitution is a mandatory, positive command which is complete in
itself and which needs no further guidelines or implementing laws or rules for its enforcement. From its very words
the provision does not require any legislation to put it in operation. It is per se judicially enforceable. When our
Constitution mandates that [i]n the grant of rights, privileges, and concessions covering national economy and
patrimony, the State shall give preference to qualified Filipinos, it means just that - qualified Filipinos shall be
preferred. And when our Constitution declares that a right exists in certain specified circumstances an action may be
maintained to enforce such right notwithstanding the absence of any legislation on the subject; consequently, if there
is no statute especially enacted to enforce such constitutional right, such right enforces itself by its own inherent
potency and puissance, and from which all legislations must take their bearings. Where there is a right there is a
remedy. Ubi jus ibi remedium.

2. YES, the controlling shares of the Manila Hotel Corporation form part of our patrimony as a nation.

In its plain and ordinary meaning, the term patrimony pertains to heritage. When the Constitution speaks of national
patrimony, it refers not only to the natural resources of the Philippines, as the Constitution could have very well used
the term natural resources, but also to the cultural heritage of the Filipinos.

xxx xxx xxx

For more than eight (8) decades Manila Hotel has bore mute witness to the triumphs and failures, loves and
frustrations of the Filipinos; its existence is impressed with public interest; its own historicity associated with our
struggle for sovereignty, independence and nationhood. Verily, Manila Hotel has become part of our national
economy and patrimony. For sure, 51% of the equity of the MHC comes within the purview of the constitutional
shelter for it comprises the majority and controlling stock, so that anyone who acquires or owns the 51% will have
actual control and management of the hotel. In this instance, 51% of the MHC cannot be disassociated from the
hotel and the land on which the hotel edifice stands. Consequently, we cannot sustain respondents claim that
the Filipino First Policy provision is not applicable since what is being sold is only 51% of the outstanding shares of
the corporation, not the Hotel building nor the land upon which the building stands.

3. YES, GSIS is included in the term State, hence, it is mandated to implement 10, paragraph 2, Article XII of
the Constitution.

It is undisputed that the sale of 51% of the MHC could only be carried out with the prior approval of the State acting
through respondent Committee on Privatization. [T]his fact alone makes the sale of the assets of respondents GSIS
and MHC a state action. In constitutional jurisprudence, the acts of persons distinct from the government are
considered state action covered by the Constitution (1) when the activity it engages in is a public function; (2)
when the government is so significantly involved with the private actor as to make the government responsible for
his action; and, (3) when the government has approved or authorized the action. It is evident that the act of
respondent GSIS in selling 51% of its share in respondent MHC comes under the second and third categories of
state action. Without doubt therefore the transaction, although entered into by respondent GSIS, is in fact a
transaction of the State and therefore subject to the constitutional command.

When the Constitution addresses the State it refers not only to the people but also to the government as elements of
the State. After all, government is composed of three (3) divisions of power - legislative, executive and
judicial. Accordingly, a constitutional mandate directed to the State is correspondingly directed to the three (3)
branches of government. It is undeniable that in this case the subject constitutional injunction is addressed among
others to the Executive Department and respondent GSIS, a government instrumentality deriving its authority from
the State.

4. YES, GSIS should give preference to the petitioner in the sale of the controlling shares of the Manila Hotel
Corporation.
It should be stressed that while the Malaysian firm offered the higher bid it is not yet the winning bidder. The
bidding rules expressly provide that the highest bidder shall only be declared the winning bidder after it has
negotiated and executed the necessary contracts, and secured the requisite approvals. Since the Filipino First
Policy provision of the Constitution bestows preference on qualified Filipinos the mere tending of the highest bid is
not an assurance that the highest bidder will be declared the winning bidder. Resultantly, respondents are not bound
to make the award yet, nor are they under obligation to enter into one with the highest bidder. For in choosing the
awardee respondents are mandated to abide by the dictates of the 1987 Constitution the provisions of which are
presumed to be known to all the bidders and other interested parties.

xxx xxx xxx

Paragraph V. J. 1 of the bidding rules provides that [i]f for any reason the Highest Bidder cannot be awarded the
Block of Shares, GSIS may offer this to other Qualified Bidders that have validly submitted bids provided that these
Qualified Bidders are willing to match the highest bid in terms of price per share. Certainly, the constitutional
mandate itself is reason enough not to award the block of shares immediately to the foreign bidder notwithstanding
its submission of a higher, or even the highest, bid. In fact, we cannot conceive of a stronger reason than the
constitutional injunction itself.

In the instant case, where a foreign firm submits the highest bid in a public bidding concerning the grant of rights,
privileges and concessions covering the national economy and patrimony, thereby exceeding the bid of a Filipino,
there is no question that the Filipino will have to be allowed to match the bid of the foreign entity. And if the
Filipino matches the bid of a foreign firm the award should go to the Filipino. It must be so if we are to give life and
meaning to the Filipino First Policy provision of the 1987 Constitution. For, while this may neither be expressly
stated nor contemplated in the bidding rules, the constitutional fiat is omnipresent to be simply disregarded. To
ignore it would be to sanction a perilous skirting of the basic law.
Manila Prince Hotel vs GSIS
Self Executing Statutes

MANILA PRINCE HOTEL VS. GSIS

G.R. NO. 122156. February 3, 1997
MANILA PRINCE HOTEL petitioner,
vs.
GOVERNMENT SERVICE INSURANCE SYSTEM, MANILA HOTEL CORPORATION, COMMITTEE ON
PRIVATIZATION and OFFICE OF THE GOVERNMENT CORPORATE COUNSEL, respondents.

Facts:
The controversy arose when respondent Government Service Insurance System (GSIS), pursuant to the privatization
program of the Philippine Government, decided to sell through public bidding 30% to 51% of the issued and
outstanding shares of respondent Manila Hotel Corporation (MHC). The winning bidder, or the eventual strategic
partner, will provide management expertise or an international marketing/reservation system, and financial support
to strengthen the profitability and performance of the Manila Hotel.
In a close bidding held on 18 September 1995 only two (2) bidders participated: petitioner Manila Prince Hotel
Corporation, a Filipino corporation, which offered to buy 51% of the MHC or 15,300,000 shares at P41.58 per
share, and Renong Berhad, a Malaysian firm, with ITT-Sheraton as its hotel operator, which bid for the same
number of shares at P44.00 per share, or P2.42 more than the bid of petitioner. Prior to the declaration of Renong
Berhard as the winning bidder, petitioner Manila Prince Hotel matched the bid price and sent a managers check as
bid security, which GSIS refused to accept.
Apprehensive that GSIS has disregarded the tender of the matching bid and that the sale may be consummated with
Renong Berhad, petitioner filed a petition before the Court.

Issues:
1. Whether or not Sec. 10, second par., Art. XII, of the 1987 Constitution is a self-executing provision.
2. Whether or not the Manila Hotel forms part of the national patrimony.
3. Whether or not the submission of matching bid is premature
4. Whether or not there was grave abuse of discretion on the part of the respondents in refusing the matching bid
of the petitioner.

Rulings:
In the resolution of the case, the Court held that:
1. It is a self-executing provision.
1. Since the Constitution is the fundamental, paramount and supreme law of the nation, it is deemed written
in every statute and contract. A provision which lays down a general principle, such as those found in Art.
II of the 1987 Constitution, is usually not self-executing. But a provision which is complete in itself and
becomes operative without the aid of supplementary or enabling legislation, or that which supplies
sufficient rule by means of which the right it grants may be enjoyed or protected, is self-executing.
2. A constitutional provision is self-executing if the nature and extent of the right conferred and the liability
imposed are fixed by the constitution itself, so that they can be determined by an examination and
construction of its terms, and there is no language indicating that the subject is referred to the legislature
for action. Unless it is expressly provided that a legislative act is necessary to enforce a constitutional
mandate, the presumption now is that all provisions of the constitution are self-executing. If the
constitutional provisions are treated as requiring legislation instead of self-executing, the legislature would
have the power to ignore and practically nullify the mandate of the fundamental law.
3. 10, second par., Art. XII of the 1987 Constitution is a mandatory, positive command which is complete in
itself and which needs no further guidelines or implementing laws or rules for its enforcement. From its
very words the provision does not require any legislation to put it in operation. It is per sejudicially
enforceable. When our Constitution mandates that in the grant of rights, privileges, and concessions
covering national economy and patrimony, the State shall give preference to qualified Filipinos, it means
just that qualified Filipinos shall be preferred. And when our Constitution declares that a right exists in
certain specified circumstances an action may be maintained to enforce such right notwithstanding the
absence of any legislation on the subject; consequently, if there is no statute especially enacted to enforce
such constitutional right, such right enforces itself by its own inherent potency and puissance, and from
which all legislations must take their bearings. Where there is a right there is a remedy. Ubi jus ibi
remedium.
2. The Court agree.
1. In its plain and ordinary meaning, the term patrimony pertains to heritage. When the Constitution speaks of
national patrimony, it refers not only to the natural resources of the Philippines, as the Constitution could
have very well used the term natural resources, but also to the cultural heritage of the Filipinos.
2. It also refers to Filipinos intelligence in arts, sciences and letters. In the present case, Manila Hotel has
become a landmark, a living testimonial of Philippine heritage. While it was restrictively an American
hotel when it first opened in 1912, a concourse for the elite, it has since then become the venue of various
significant events which have shaped Philippine history.
3. Verily, Manila Hotel has become part of our national economy and patrimony. For sure, 51% of the equity
of the MHC comes within the purview of the constitutional shelter for it comprises the majority and
controlling stock, so that anyone who acquires or owns the 51% will have actual control and management
of the hotel. In this instance, 51% of the MHC cannot be disassociated from the hotel and the land on
which the hotel edifice stands.
3. It is not premature.
1. In the instant case, where a foreign firm submits the highest bid in a public bidding concerning the grant of
rights, privileges and concessions covering the national economy and patrimony, thereby exceeding the bid
of a Filipino, there is no question that the Filipino will have to be allowed to match the bid of the foreign
entity. And if the Filipino matches the bid of a foreign firm the award should go to the Filipino. It must be
so if the Court is to give life and meaning to the Filipino First Policy provision of the 1987 Constitution.
For, while this may neither be expressly stated nor contemplated in the bidding rules, the constitutional fiat
is omnipresent to be simply disregarded. To ignore it would be to sanction a perilous skirting of the basic
law.
2. The Court does not discount the apprehension that this policy may discourage foreign investors. But the
Constitution and laws of the Philippines are understood to be always open to public scrutiny. These are
given factors which investors must consider when venturing into business in a foreign jurisdiction. Any
 person therefore desiring to do business in the Philippines or with any of its agencies or instrumentalities is
presumed to know his rights and obligations under the Constitution and the laws of the forum.
4. There was grave abuse of discretion.
1. To insist on selling the Manila Hotel to foreigners when there is a Filipino group willing to match the bid
of the foreign group is to insist that government be treated as any other ordinary market player, and bound
by its mistakes or gross errors of judgement, regardless of the consequences to the Filipino people. The
miscomprehension of the Constitution is regrettable. Thus, the Court would rather remedy the indiscretion
while there is still an opportunity to do so than let the government develop the habit of forgetting that the
Constitution lays down the basic conditions and parameters for its actions.
2. Since petitioner has already matched the bid price tendered by Renong Berhad pursuant to the bidding
rules, respondent GSIS is left with no alternative but to award to petitioner the block of shares of MHC and
to execute the necessary agreements and documents to effect the sale in accordance not only with the
bidding guidelines and procedures but with the Constitution as well. The refusal of respondent GSIS to
execute the corresponding documents with petitioner as provided in the bidding rules after the latter has
matched the bid of the Malaysian firm clearly constitutes grave abuse of discretion.

Hence, respondents GOVERNMENT SERVICE INSURANCE SYSTEM, MANILA HOTEL CORPORATION,

COMMITTEE ON PRIVATIZATION and OFFICE OF THE GOVERNMENT CORPORATE COUNSEL are
directed to CEASE and DESIST from selling 51% of the shares of the Manila Hotel Corporation to RENONG
BERHAD, and to ACCEPT the matching bid of petitioner MANILA PRINCE HOTEL CORPORATION to
purchase the subject 51% of the shares of the Manila Hotel Corporation at P44.00 per share and thereafter to execute
the necessary agreements and documents to effect the sale, to issue the necessary clearances and to do such other
acts and deeds as may be necessary for the purpose.
TONDO MEDICAL CENTER EMPLOYEES ASSOCIATION v THE COURT OF APPEALS
527 SCRA 746 G.R. No. 167324
Facts:
1. In 1999, the DOH launched the Health Sector Reform Agenda (HSRA). It provided for five general areas of
reform:
A. To provide fiscal autonomy to government hospitals;
B. Secure funding for priority public health programs;
C. Promote the development of local health systems and ensure its effective performance;
D. Strengthen the capacities of health regulatory agencies;
E. Expand the coverage of the National Health Insurance Program (NHIP)
F. On 24 May 1999, then President Joseph Ejercito Estrada issued Executive Order No. 102, entitled
Redirecting the Functions and Operations of the Department of Health, which provided for the changes
in the roles, functions, and organizational processes of the DOH. Under the assailed executive order, the
DOH refocused its mandate from being the sole provider of health services to being a provider of specific
health services and technical assistance, as a result of the devolution of basic services to local
government units.
G. A petition for the nullification of the Health Sector Reform Agenda (HSRA) Philippines 1999-2004 of
the Department of Health (DOH); and Executive Order No. 102, Redirecting the Functions and
Operations of the Department of Health,
H. The Court of Appeals ruled that the HSRA cannot be declared void for violating Sections 5, 9, 10, 11, 13,
15, 18 of Article II; Section 1 of Article III; Sections 11 and 14 of Article XIII; and Sections 1 and 3(2)
of Article XV, all of the 1987 Constitution, which directly or indirectly pertain to the duty of the State to
protect and promote the peoples right to health and well-being. It reasoned that the aforementioned
provisions of the Constitution are not self-executing; they are not judicially enforceable constitutional
rights and can only provide guidelines for legislation.
I. 5. The Court of Appeals held that Executive Order No. 102 is detrimental to the health of the people
cannot be made a justiciable issue. The question of whether the HSRA will bring about the development
or disintegration of the health sector is within the realm of the political department.
Issue:
Whether or not the HSRA and EO NO. 102 violates the constitution?
Held:
The Court finds the present petition to be without merit.
 1. As a general rule, the provisions of the Constitution are considered self-executing, and do not require future
legislation for their enforcement. For if they are not treated as self-executing, the mandate of the fundamental
law can be easily nullified by the inaction of Congress. However, some provisions have already been
categorically declared by this Court as non self-executing. Some of the constitutional provisions invoked in the
present case were taken from Article II of the Constitution specifically, Sections 5, 9, 10, 11, 13, 15 and 18
the provisions of which the Court categorically ruled to be non self-executing in the aforecited case
of Taada v. Angara, wherein the Court specifically set apart the sections as non self-executing and ruled that
such broad principles need legislative enactments before they can be implemented. Moreover, the records are
devoid of any explanation of how the HSRA supposedly violated the equal protection and due process clauses
that are embodied in Section 1 of Article III of the Constitution. There were no allegations of discrimination or
of the lack of due process in connection with the HSRA. Since they failed to substantiate how these
constitutional guarantees were breached, petitioners are unsuccessful in establishing the relevance of this
provision to the petition, and consequently, in annulling the HSRA.
2. Even granting that these alleged errors were adequately proven by the petitioners, they would still not
invalidate Executive Order No. 102. Any serious legal errors in laying down the compensation of the DOH
employees concerned can only invalidate the pertinent provisions of Department Circular No. 312, Series of
2000. Likewise, any questionable appointments or transfers are properly addressed by an appeal process
provided under Administrative Order No. 94, series of 2000; and if the appeal is meritorious, such appointment
or transfer may be invalidated. The validity of Executive Order No. 102 would, nevertheless, remain
unaffected. Settled is the rule that courts are not at liberty to declare statutes invalid, although they may be
abused or disabused, and may afford an opportunity for abuse in the manner of application. The validity of a
statute or ordinance is to be determined from its general purpose and its efficiency to accomplish the end
desired, not from its effects in a particular case. Section 17, Article VII of the 1987 Constitution, clearly states:
[T]he president shall have control of all executive departments, bureaus and offices. Section 31, Book III,
Chapter 10 of Executive Order No. 292, also known as the Administrative Code of 1987. It is an exercise of
the Presidents constitutional power of control over the executive department, supported by the provisions of
the Administrative Code, recognized by other statutes, and consistently affirmed by this Court.

G.R. No. 167324 July 17, 2007

TONDO MEDICAL CENTER EMPLOYEES ASSOCIATION, RESEARCH INSTITUTE FOR TROPICAL
MEDICINE EMPLOYEES ASSOCIATION, NATIONAL ORTHOPEDIC WORKERS UNION, DR. JOSE
R. REYES MEMORIAL HOSPITAL EMPLOYEES UNION, SAN LAZARO HOSPITAL EMPLOYEES
ASSOCIATION, ALLIANCE OF HEALTH WORKERS, INC., HEALTH ALLIANCE FOR
DEMOCRACY, COUNCIL FOR HEALTH DEVELOPMENT, NETWORK OPPOSED TO
PRIVATIZATION, COMMUNITY MEDICINE DEVELOPMENT FOUNDATION INC., PHILIPPINE
SOCIETY OF SANITARY ENGINEERS INC., KILUSANG MAYO UNO, GABRIELA, KILUSANG
MAGBUBUKID NG PILIPINAS, KALIPUNAN NG DAMAYAN NG MGA MARALITA, ELSA O.
GUEVARRA, ARCADIO B. GONZALES, JOSE G. GALANG, DOMINGO P. MANAY, TITO P.
ESTEVES, EDUARDO P. GALOPE, REMEDIOS M. YSMAEL, ALFREDO BACUATA, EDGARDO J.
DAMICOG, REMEDIOS M. MALTU AND REMEGIO S. MERCADO, Petitioners,
vs.
THE COURT OF APPEALS, EXECUTIVE SECRETARY ALBERTO G. ROMULO, SECRETARY OF
HEALTH MANUEL M. DAYRIT, SECRETARY OF BUDGET AND MANAGEMENT EMILIA T.
BONCODIN, Respondents.
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari, under Rule 45 of the Rules of Court, assailing the Decision, 1promulgated
by the Court of Appeals on 26 November 2004, denying a petition for the nullification of the Health Sector Reform
Agenda (HSRA) Philippines 1999-2004 of the Department of Health (DOH); and Executive Order No. 102,
"Redirecting the Functions and Operations of the Department of Health," which was issued by then President Joseph
Ejercito Estrada on 24 May 1999.
Prior hereto, petitioners originally filed a Petition for Certiorari, Prohibition and Mandamus under Rule 65 of the
1997 Revised Rules of Civil Procedure before the Supreme Court on 15 August 2001. However, the Supreme Court,
in a Resolution dated 29 August 2001, referred the petition to the Court of Appeals for appropriate action.
FACT:
HEALTH SECTOR REFORM AGENDA (HSRA)
In 1999, the DOH launched the HSRA, a reform agenda developed by the HSRA Technical Working Group after a
series of workshops and analyses with inputs from several consultants, program managers and technical staff
possessing the adequate expertise and experience in the health sector. It provided for five general areas of reform:
(1) to provide fiscal autonomy to government hospitals; (2) secure funding for priority public health programs; (3)
promote the development of local health systems and ensure its effective performance; (4) strengthen the capacities
of health regulatory agencies; and (5) expand the coverage of the National Health Insurance Program (NHIP).
However, some provisions of the Health Sector Reform Agenda are challenged on the ground that they violate 15,
18 of Article II; Section 1 of Article III; Sections 11 and 14 of Article XIII; and Sections 1 and 3(2) of Article XV,
all of the 1987 Constitution, which directly or indirectly pertain to the duty of the State to protect and promote the
peoples right to health and well-being. However, these provisions are not self-executory.
Petitioners challenged:
First reform agenda involving the fiscal autonomy of government hospitals, particularly the collection of
socialized user fees and the corporate restructuring of government hospitals.
Petitioners also assailed the issuance of a draft administrative order issued by the DOH, dated 5 January
2001, entitled "Guidelines and Procedure in the Implementation of the Corporate Restructuring of Selected
DOH Hospitals to Achieve Fiscal Autonomy, and Managerial Flexibility to Start by January 2001;" and
Administrative Order No. 172 of the DOH, entitled "Policies and Guidelines on the Private Practice of
Medical and Paramedical Professionals in Government Health Facilities," dated 9 January 2001, for
imposing an added burden to indigent Filipinos, who cannot afford to pay for medicine and medical
services.
They alsoalleged that the implementation of the aforementioned reforms had resulted in making free
medicine and free medical services inaccessible to economically disadvantaged Filipinos.
EXECUTIVE ORDER NO. 102
On 24 May 1999, then President Joseph Ejercito Estrada issued Executive Order No. 102, entitled "Redirecting the
Functions and Operations of the Department of Health," which provided for the changes in the roles, functions, and
organizational processes of the DOH. Under the assailed executive order, the DOH refocused its mandate from
being the sole provider of health services to being a provider of specific health services and technical assistance, as a
result of the devolution of basic services to local government units.
There are certain provisions for the streamlining of the DOH and the deployment of DOH personnel to regional
offices and hospitals.
Executive Order No. 102 was enacted pursuant to Section 17 of the Local Government Code (Republic Act No.
7160), which provided for the devolution to the local government units of basic services and facilities, as well as
specific health-related functions and responsibilities.7
Petitioners contended that:
Executive Order No. 102, which effects the reorganization of the DOH, should be enacted by Congress in
the exercise of its legislative function. They argued that Executive Order No. 102 is void, having been
issued in excess of the Presidents authority.
Implementation of the Rationalization and Streamlining Plan (RSP) was not in accordance with law. The
RSP was allegedly implemented even before the Department of Budget and Management (DBM)
approved it. They also maintained that the Office of the President should have issued an administrative
order to carry out the streamlining, but that it failed to do so.
The validity of Executive Order No. 102 will be the reason of losing their jobs, and that some of them
were suffering from the inconvenience of having to travel a longer distance to get to their new place of
work, while other DOH employees had to relocate to far-flung areas.
The Court of Appeals denied the petition due to a number of procedural defects, which proved fatal: 1) Petitioners
failed to show capacity or authority to sign the certification of non-forum shopping and the verification; 2)
Petitioners failed to show any particularized interest for bringing the suit, nor any direct or personal injury sustained
or were in the immediate danger of sustaining; 3) the Petition, brought before the Supreme Court on 15 August
1999, was filed out of time, or beyond 60 days from the time the reorganization methods were implemented in 2000;
and 4) certiorari, Prohibition and Mandamus will not lie where the President, in issuing the assailed Executive
Order, was not acting as a tribunal, board or officer exercising judicial or quasi-judicial functions.
Court of Appeals also ruled that the HSRA cannot be declared void for violating Sections 5, 9, 10, 11, 13, 15, 18 of
Article II; Section 1 of Article III; Sections 11 and 14 of Article XIII; and Sections 1 and 3(2) of Article XV, all of
the 1987 Constitution, which directly or indirectly pertain to the duty of the State to protect and promote the
peoples right to health and well-being. It reasoned that the aforementioned provisions of the Constitution are not
self-executing; they are not judicially enforceable constitutional rights and can only provide guidelines for
legislation.
Petitioners filed with the Court of Appeals a Motion for Reconsideration of the Decision rendered on 26 November
2004, but the same was denied in a Resolution dated 7 March 2005.
ISSUE:
Whether or not EO102 is constitutional?
RULING:
YES. Petitioners allege that the HSRA should be declaredvoid, since it runs counter to the aspiration and ideals of
theFilipino people as embodied in the Constitution. They claim thatthe HSRAs policies of fiscal autonomy, income
generation, andrevenue enhancement violate Sections 5, 9, 10, 11, 13, 15 and18 of Article II, Section 1 of Article
III; Sections 11 and 14 of Article XIII; and Sections 1 and 3 of Article XV of the 1987Constitution. Such
policies allegedly resulted in makinginaccessible free medicine and free medical services. Thiscontention is
unfounded.As a general rule, the provisions of the Constitution areconsidered self-executing, and do not require
future legislation for their enforcement. If they are not treated as self-executing, the mandate of the fundamental law
can be easilynullified by the inaction of Congress. However, some provisionshave already been categorically
declared by this Court as non-self-executing.In Basco v. Philippine Amusement and Gaming Corporation,this Court
declared that Sections 11, 12, and 13 of Article II;Section 13 of Article XIII; and Section 2 of Article XIV of
the1987 Constitution are not self-executing provisions. In Tolentinov. Secretary of Finance, the Court referred to
Section 1 of ArticleXIII and Section 2 of Article XIV of the Constitution as moralincentives to legislation, not as
judicially enforceable rights.These provisions, which merely lay down a general principle,are distinguished from
other constitutional provisions as non-self-executing and, therefore, cannot give rise to a cause of action in the
courts; they do not embody judicially enforceableconstitutional rights.Some of the constitutional provisions invoked
in the presentcase were taken from Article II of the Constitution -- specifically,Sections 5, 9, 10, 11, 13, 15 and 18 --
the provisions of whichthe Court categorically ruled to be non-self-executing in theaforecited case of Taada v.
Angara.Moreover, the records are devoid of any explanation of how theHSRA supposedly violated the equal
protection and dueprocess clauses that are embodied in Section 1 of Article III of the Constitution. There were no
allegations of discrimination or of the lack of due process in connection with the HSRA. Sincethey failed to
substantiate how these constitutional guaranteeswere breached, petitioners are unsuccessful in establishing
therelevance of this provision to the petition, and consequently, inannulling the HSRA.In the remaining provisions,
Sections 11 and 14 of Article XIIIand Sections 1 and 3 of Article XV, the State accordsrecognition to the protection
of working women and theprovision for safe and healthful working conditions; to theadoption of an integrated and
comprehensive approach tohealth; to the Filipino family; and to the right of children toassistance and special
protection, including proper care andnutrition. Like the provisions that were declared as non-self-executory in the
cases of Basco v. Philippine Amusement andGaming Corporation and Tolentino v. Secretary of Finance, theyare
mere statements of principles and policies. As such, theyare mere directives addressed to the executive and
thelegislative departments. If unheeded, the remedy will not lie withthe courts; but rather, the electorates
displeasure may bemanifested in their votes
DISPOSITIVE:
IN VIEW OF THE FOREGOING, the instant Petition is DENIED. This Court AFFIRMS the assailed Decision of
the Court of Appeals, promulgated on 26 November 2004, declaring both the HSRA and Executive Order No. 102
as valid. No costs.
Aglipay v. Ruiz, GR No. L-45459, March 13, 1937
Facts:
Petitioner Aglipay, the head of Phil. Independent Church, filed a writ of prohibition against respondent Ruiz, the
Director of Post, enjoining the latter from issuing and selling postage stamps commemorative of the 33rd Intl
Eucharistic Congress organized by the Roman Catholic. The petitioner invokes that such issuance and selling, as
authorized by Act 4052 by the Phil. Legislature, contemplates religious purpose for the benefit of a particular sect
or church. Hence, this petition.
Issue:
Whether or not the issuing and selling of commemorative stamps is constitutional?
Held/Reason:
The Court said YES, the issuing and selling of commemorative stamps by the respondent does not contemplate any
favor upon a particular sect or church, but the purpose was only to advertise the Philippines and attract more
tourist and the government just took advantage of an event considered of international importance, thus, not
violating the Constitution on its provision on the separation of the Church and State. Moreover, the Court stressed
that Religious freedom, as a constitutional mandate is not inhibition of profound reverence for religion and is not
denial of its influence in human affairs. Emphasizing that, when the Filipino people implored the aid of Divine
Providence, they thereby manifested reliance upon Him who guides the destinies of men and nations. The elevating
influence of religion in human society is recognized here as elsewhere. In fact, certain general concessions are
indiscriminately accorded to religious sects and denominations.

Case DIgest: Aglipay vs Ruiz

Facts of the Case:

The Director of Posts announced on May 1936 in Manila newspapers that he would order the issuance of postage
stamps for the commemoration of the 33rd International Eucharistic Congress celebration in the City of Manila. The
said event was organized by the Roman Catholic Church. Monsignor Gregorio Aglipay, the petitioner, is the
Supreme Head of the Philippine Independent Church, requested Vicente Sotto who is a member of the Philippine
Bar to raise the matter to the President. The said stamps in consideration were actually issued already and sold
though the greater part thereof remained unsold. The further sale of the stamps was sought to be prevented by the
petitioner.

Issue:

Whether or not the respondent violated the Constitution in issuing and selling postage stamps commemorative of the
Thirty-third International Eucharistic Congress

Held:

No, the respondent did not violate the Constitution by issuing and selling the commemorative postage stamps. Ruiz
acted under the provision of Act No. 4052, which contemplates no religious purpose in view, giving the Director of
Posts the discretion to determine when the issuance of new postage stamps would be advantageous to the
Government. Of course, the phrase advantageous to the Government does not authorize the violation of the
Constitution. In the case at bar, the issuance of the postage stamps was not intended by Ruiz to favor a particular
church or denomination. The stamps did not benefit the Roman Catholic Church, nor were money derived from the
sale of the stamps given to that church. The purpose of issuing of the stamps was to actually take advantage of an
international event considered to be a great opportunity to give publicity to the Philippines and as a result attract
more tourists to the country. In evaluating the design made for the stamp, it showed the map of the Philippines
instead of showing a Catholic chalice. The focus was on the location of the City of Manila, and it also bore the
inscription that reads Seat XXXIII International Eucharistic Congress, Feb. 3-7, 1937. In considering these, it is
evident that there is no violation of the Constitution therefore the act of the issuing of the stamps is constitutional.

The Supreme Court denied the petition for a writ of prohibition, without pronouncement as to costs.
Aglipay v. Ruiz GR 45459, 13 March 1937 (64 Phil 201) First Division, Laurel (p): 5 concur.
Facts: In May 1936, the Director of Posts announced in the dailies of Manila that he would order the issuance of
postage stamps commemorating the celebration in the City of Manila of the 33rd International Eucharistic Congress,
organized by the Roman Catholic Church. The petitioner, Mons. Gregorio Aglipay, Supreme Head of the Philippine
Independent Church, in the fulfillment of what he considers to be a civic duty, requested Vicente Sotto, Esq.,
member of the Philippine Bar, to denounce the matter to the President of the Philippines. In spite of the protest of
the petitioners attorney, the Director of Posts publicly announced having sent to the United States the designs of the
postage for printing. The said stamps were actually issued and sold though the greater part thereof remained unsold.
The further sale of the stamps was sought to be prevented by the petitioner.
Issue: Whether the issuance of the postage stamps was in violation of the Constitution.
Held: Religious freedom as a constitutional mandate is not inhibition of profound reverence for religion and is not a
denial of its influence in human affairs. Religion as a profession of faith to an active power that binds and elevates
man to his Creator is recognized. And, in so far as it instills into the minds the purest principles of morality, its
influence is deeply felt and highly appreciated. When the Filipino people, in the preamble of their Constitution,
implored the aid of Divine Providence, in order to establish a government that shall embody their ideals, conserve
and develop the patrimony of the nation, promote the general welfare, and secure to themselves and their posterity
the blessings of independence under a regime of justice, liberty and democracy, they thereby manifested their
intense religious nature and placed unfaltering reliance upon Him who guides the destinies of men and nations. The
elevating influence of religion in human society is recognized here as elsewhere. Act 4052 contemplates no religious
purpose in view. What it gives the Director of Posts is the discretionary power to determine when the issuance of
special postage stamps would be advantageous to the Government. Of course, the phrase advantageous to the
Government does not authorize the violation of the Constitution; i.e. to appropriate, use or apply of public money
or property for the use, benefit or support of a particular sect or church. In the case at bar, the issuance of the postage
stamps was not inspired by any sectarian feeling to favor a particular church or religious denominations. The stamps
were not issued and sold for the benefit of the Roman Catholic Church, nor were money derived from the sale of the
stamps given to that church. The purpose of the issuing of the stamps was to take advantage of an event considered
of international importance to give publicity to the Philippines and its people and attract more tourists to the country.
Thus, instead of showing a Catholic chalice, the stamp contained a map of the Philippines, the location of the City of
Manila, and an inscription that reads Seat XXXIII International Eucharistic Congress, Feb. 3-7, 1937. The
Supreme Court denied the petition for a writ of prohibition, without pronouncement as to costs.
Leopoldo Bacani vs National Coconut Corporation
100 Phil. 468 Political Law Two-fold Function of the Government Constituent vs Ministrant Functions
Leopoldo Bacani and Mateo Matoto were court stenographers assigned in a court in Manila. During the pendency of
a particular case in said court, counsel for one of the parties, National Coconut Corporation or NACOCO, requested
said stenographers for copies of the transcript of the stenographic notes taken by them during the hearing. Bacani et
al complied with the request and sent 714 pages and thereafter submitted to said counsel their bills for the payment
of their fees. The National Coconut Corporation paid the amount of P564 to Bacani and P150 to Matoto for said
transcripts at the rate of P1 per page.
However, in January 1953, the Auditor General required Bacani et al to reimburse said amounts on the strength of a
circular of the Department of Justice. It was expressed that NACOCO, being a government entity, was exempt
from the payment of the fees in question. Bacani et al counter that NACOCO is not a government entity within the
purview of section 16, Rule 130 of the Rules of Court. NACOCO set up as a defense that the NACOCO is a
government entity within the purview of section 2 of the Revised Administrative Code of 1917 and, hence, it is
exempt from paying the stenographers fees under Rule 130 of the Rules of Court.
ISSUE: Whether or not NACOCO is a government entity.
HELD: No. Government owned and controlled corporations (GOCCs) do not acquire the status of being part of the
government because they do not come under the classification of municipal or public corporation. Take for instance
the NACOCO. While it was organized with the purpose of adjusting the coconut industry to a position independent
of trade preferences in the United States and of providing Facilities for the better curing of copra products and
the proper utilization of coconut by-products, a function which our government has chosen to exercise to promote
the coconut industry, it was, however, given a corporate power separate and distinct from our government, for it
was made subject to the provisions of our Corporation Law in so far as its corporate existence and the powers that it
may exercise are concerned (sections 2 and 4, Commonwealth Act No. 518 the law creating NACOCO). It may
sue and be sued in the same manner as any other private corporations, and in this sense it is an entity different from
our government.
The Supreme Court also noted the constituent functions of the government. Constituent functions are those which
constitute the very bonds of society and are compulsory in nature. According to U.S. President Woodrow Wilson,
they are as follows:
1. The keeping of order and providing for the protection of persons and property from violence and robbery.
2. The fixing of the legal relations between man and wife and between parents and children.
3. The regulation of the holding, transmission, and interchange of property, and the determination of its liabilities for
debt or for crime.
4. The determination of contract rights between individuals.
5. The definition and punishment of crime.
6. The administration of justice in civil cases.
7. The determination of the political duties, privileges, and relations of citizens.
8. Dealings of the state with foreign powers: the preservation of the state from external danger or encroachment and
the advancement of its international interests.
On the other hand, ministrant functions are those that are undertaken only by way of advancing the general
interests of society, and are merely optional. The most important of the ministrant functions are: public works,
public education, public charity, health and safety regulations, and regulations of trade and industry. The principles
to consider whether or not a government shall exercise certain of these optional functions are: (1) that a government
should do for the public welfare those things which private capital would not naturally undertake and (2) that a
government should do these things which by its very nature it is better equipped to administer for the public welfare
than is any private individual or group of individuals.
BACANI V NACOCO G.R. No. L-6957, November 29, 1956

FACTS:
Herein petitioners are stenographers in Branch VI of the CIF Manila.
In a pending civil case where the public respondents are involved, they requested for the services of the
stenographers and thereby paid them for the said transcript at the rate of P1 per page, amounting to P714 in total.
However, upon inspecting the books of the corporation, the Auditor General disallowed the payment of such fees
and sought for the recovery of the amounts paid. Consequently, the AG required the petitioners to reimburse the
amounts invoking that the National Coconut Corporation is a government entity within the purview of section 2 of
the Revised Administrative Code of 1917 which states that: The Government of the Philippine Islands is a term
which refers to the corporate governmental entity through which the functions of government are exercised
throughout the Philippine Islands, including, save as the contrary appears from the context, the various arms
through which political authority is made effective in said Islands, whether pertaining to the central Government or
to the provincial or municipal branches or other form of local government., hence, exempted from the payment of
the fees in question.
ISSUE: Whether the NCC is a government entity and is exempted from the payments in question?

RULING: The Court held No. Discussing, there are two-fold functions of the government namely: constituent and
ministrant. The constituent function refers to the bonds of society and are compulsory in nature, while ministrant is
more on public welfare like public works, education, charity, health and safety. From such, we may infer that there
are functions which our government is required to exercise to promote its objectives as expressed in our Constitution
and which are exercised by it as an attribute of sovereignty, and those which it may exercise to promote merely the
welfare, progress and prosperity of the people.
The NCC has that function because the corporation promotes certain aspects of the economic life of the people. In
short, NCC belongs to what we call the government-owned and controlled corporation which is governed by
Corporation Law.
Albeit the NCC performs governmental functions for the peoples welfare, however, it was given a corporate power
separate and distinct from our government, for it was made subject to the provisions of our Corporation Law in so
far as its corporate existence and the powers that it may exercise are concerned.
To recapitulate, we may mention that the term Government of the Republic of the Philippines used in section 2 of
the Revised Administrative Code refers only to that government entity through which the functions of the
government are exercised as an attribute of sovereignty, and in this are included those arms through which political
authority is made effective whether they be provincial, municipal or other form of local government.
Therefore, NCC is not a government entity and is not exempted from the payment of fees in question; petitioners are
not subject to reimbursement.

Petition GRANTED.

Bacani vs Nacoco
Nonsuability doctrine

BACANI VS NACOCO
G.R. No. L-9657 100 Phil 471 November 29, 1956
LEOPOLDO T. BACANI and MATEO A. MATOTO, PlaintiffsAppellees,
NATIONAL COCONUT CORPORATION, ET AL., Defendants, NATIONAL COCONUT CORPORATION and
BOARD OF LIQUIDATORS, DefendantsAppellants.

Facts:
Plaintiffs Bacani and Matto are both court stenographers assigned in Branch VI of the Court of First Instance of
Manila.

During the pendency of a civil case in the said court, Francisco Sycip vs. National Coconut Corporation, Assistant
Corporate Counsel Federico Alikpala, counsel for Defendant, requested said stenographers for copies of the
transcript of the stenographic notes taken by them during the hearing. Plaintiffs complied with the request by
delivering to Counsel Alikpala the needed transcript containing 714 pages and thereafter submitted to him their bills
for the payment of their fees.

The National Coconut Corporation (NACOCO) paid the amount of P564 to Leopoldo T. Bacani and P150 to Mateo
A. Matoto for said transcript at the rate of P1 per page. But the Auditor General required the plaintiffs to reimburse
said amounts by virtue of a Department of Justice circular which stated that NACOCO, being a government entity,
was exempt from the payment of the fees in question. For reimbursement to take place, it was further ordered that
the amount of P25 per payday be deducted from the salary of Bacani and P10 from the salary of Matoto.

Petitioners filed an action in Court countering that NACOCO is not a government entity within the purview of
section 16, Rule 130 of the Rules of Court. On the other hand, the defendants set up a defense that NACOCO is a
government entity within the purview of section 2 of the Revised Administrative Code of 1917 hence, it is exempted
from paying the stenographers fees under Rule 130 of the Rules of Court.

Issues:
Whether or not National Coconut Corporation (NACOCO), which performs certain functions of government, make
them a part of the Government of the Philippines.

Discussions:
NACOCO is not considered a government entity and is not exempted from paying the stenographers fees under
Rule 130 of the Rules of Court.

Sec. 2 of the Revised Administrative Code defines the scope of the term Government of the Republic of the
Philippines. The term Government may be defined as that institution or aggregate of institutions by which an
independent society makes and carries out those rules of action which are necessary to enable men to live in a social
state, or which are imposed upon the people forming that society by those who possess the power or authority of
prescribing them (U.S. vs. Dorr, 2 Phil., 332). This institution, when referring to the national government, has
reference to what our Constitution has established composed of three great departments, the legislative, executive,
and the judicial, through which the powers and functions of government are exercised. These functions are
twofold: constitute and ministrant. The former are those which constitute the very bonds of society and are
compulsory in nature; the latter are those that are undertaken only by way of advancing the general interests of
society, and are merely optional.

Rulings:
No. NACOCO do not acquire that status for the simple reason that they do not come under the classification of
municipal or public corporation. While NACOCO was organized for the purpose of adjusting the coconut industry
to a position independent of trade preferences in the United States and of providing Facilities for the better curing
of copra products and the proper utilization of coconut by-products, a function which our government has chosen to
exercise to promote the coconut industry. It was given a corporate power separate and distinct from the government,
as it was made subject to the provisions of the Corporation Law in so far as its corporate existence and the powers
that it may exercise are concerned (sections 2 and 4, Commonwealth Act No. 518). It may sue and be sued in the
same manner as any other private corporations, and in this sense it is an entity different from our government.
ACCFA v CUGCO G.R. No. L-21484. November 29, 1969.
J. Makalintal
Certiorari
Facts:

(ACCFA) was a government agency created under Republic Act No. 821, as amended. Its administrative machinery
was reorganized and its name changed to Agricultural Credit Administration (ACA) under the Land Reform Code
(Republic Act No. 3844). On the other hand, the ACCFA Supervisors' Association (ASA) and the ACCFA Workers'
Association (AWA), referred to as the Unions, are labor organizations composed of the supervisors and the rank-
and-file employees, respectively, in the ACCFA (now ACA).
On October 30, 1962 the Unions, together with its mother union, the Confederation of Unions in
Government Corporationsand Offices (CUGCO), filed a complaint with the Court of Industrial Relations against the
ACCFA for having allegedly committed acts of unfair labor practice, namely: violation of
the collective bargaining agreement in order to discourage the members of the Unions in the exercise of their right to
self-organization, discrimination against said members in the matter of promotions, and refusal to bargain.

The ACCFA moved to reconsider but was turned down in a resolution dated April 25, 1963 of the CIR en banc.
Hence this appeal.

During the pendency of the case, the union filed a petition for certification election with the Court of Industrial
Relations praying that they be certified as the exclusive bargaining agents for the supervisors and rank-and-file
employees, respectively, in the ACA.Trial court agreed with this move.

However, the ACA filed for a stay of execution which the trial court granted.

Issue: WON the CIR has jurisdiction to entertain the petition of the Unions for certification election given that the
mother company (ACA) is engaged in governmental functions

Held: The Unions are not entitled. Decision modified

Ratio:
Under Section 3 of the Agricultural Land Reform Code the ACA was established, among other governmental
agencies, to extend credit and similar assistance to agriculture.
According to the Land Reform Code, the administrative machinery of the ACCFA shall be reorganized to enable it
to align its activities with the requirements and objective of this Code and shall be known as the Agricultural Credit
Administration. These include powers non really accorded to non-government entities such as tax exemptions,
registration of deeds, notarial services, and prosecution of officials.

The power to audit the operations of farmers' cooperatives and otherwise inquire into their affairs, as given by
Section 113, is in the nature of the visitorial power of the sovereign, which only a government agency specially
delegated to do so by the Congress may legally exercise.

Moreover, the ACA was delegated under the Land Reform Project Administration , a government agency tasked t
implement land reform.

Moreover, the appointing authority for officials was the President himself.

The considerations set forth above militate quite strongly against the recognition of collective bargaining powers in
the respondent Unions within the context of Republic Act No. 875, and hence against the grant of their basic petition
for certification election as proper bargaining units. The ACA is a government office or agency engaged in
governmental, not proprietary functions.

These functions may not be strictly what President Wilson described as "constituent" (as distinguished from
"ministrant"), such as those relating to the maintenance of peace and the prevention of crime, those regulating
property and property rights, those relating to the administration of justice and the determination of political duties
of citizens, and those relating to national defense and foreign relations. Under this traditional classification, such
constituent functions are exercised by the State as attributes of sovereignty, and not merely to promote the welfare,
progress and prosperity of the people these letter functions being ministrant, he exercise of which is optional on
the part of the government.

The growing complexities of modern society, however, have rendered this traditional classification of the functions
of government quite unrealistic, not to say obsolete. The areas which used to be left to private enterprise and
initiative and which the government was called upon to enter optionally, and only "because it was better equipped to
administer for the public welfare than is any private individual or group of individuals." continue to lose their well-
defined boundaries and to be absorbed within activities that the government must undertake in its sovereign capacity
if it is to meet the increasing social challenges of the times.
It was in furtherance of such policy that the Land Reform Code was enacted and the various agencies, the ACA
among them, established to carry out its purposes. There can be no dispute as to the fact that the land reform
program contemplated in the said Code is beyond the capabilities of any private enterprise to translate into reality. It
is a purely governmental function, no less than, say, the establishment and maintenance of public schools and public
hospitals.

Given these, the respondent Unions are not entitled to the certification election sought in the Court below.
Such certification is admittedly for purposes of bargaining in behalf of the employees with respect to terms and
conditions of employment, including the right to strike as a coercive economic weapon, as in fact the said unions did
strike in 1962 against the ACCFA.

This is contrary to Section 11 of Republic Act No. 875, which provides:

"SEC. 11. Prohibition Against Strike in the Government. The terms and conditions of employment in the
Government, including any political subdivision or instrumentality thereof, are governed by law and it is declared to
be the policy of this Act that employees therein shall not strike for the purposes of securing changes or modification
in their terms and conditions of employment. Such employees may belong to any labor organization which does not
impose the obligation to strike or to join in strike: Provided, However, that this section shall apply only to
employees employed in governmental functions of the Government including but not limited to
governmental corporations."
G.R. No. L-21484 November 29, 1969

FACTS:
ACCFA was a government agency created under RA No. 821, as amended. Its administrative machinery was
reorganized and its named changed to Agricultural Credit Administration under the Land Reform Code or RA 3844.
ACCFA Supervisors' Association and the ACCFA Workers' Association were referred to as Union in the ACCFA.

The Unions and ACCFA entered into a collective bargaining agreement effective for a period of one year. Few
months have passed, however,The Unions, together with the CUGCO, filed a complaint against the ACCFA for
having allegedly committed acts of unfair labor practices and non implementation of said agreement. Court of
Industrial Relations ordered ACCFA to cease from committing further acts tending to discourage the Union
members in the exercise of their right to self-organizatoin, to comply with and implement the provisions of the
CBA, and to bargain with good faith with the complainants. ACCFA moved to reconsider but it was turned down in
a resolution. ACCFA appealed by certiorari.

ISSUE:
Whether or not ACCFA exercised governmental functions.

RULING:
Yes. The implementation of the land reform program of the government according to Republic Act No. 3844 is most
certainly a governmental, not a proprietary, function; and for that purpose Executive Order No. 75 has placed the
ACA under the Land Reform Project Administration.

The law itself declares that the ACA is a government office, with the formulation of policies, plans and programs
vested no longer in a Board of Governors, as in the case of the ACCFA, but in the National Land Reform Council,
itself a government instrumentality; and that its personnel are subject to Civil Service laws and to rules of
standardization with respect to positions and salaries, any vestige of doubt as to the governmental character of its
functions disappears.
Summary: ACCFA vs. CUGCO (GR L-21484, 29 November 1969)

The Agricultural Credit and Cooperative Financing Administration (ACCFA) vs. Confederation of Unions in
Government Corporations and Offices (CUGCO), etc.
[GR L-21484, 29 November 1969]; also The Agricultural Credit Administration (ACA) vs. ACCFA Supervisors'
Association (ASA), etc. [GR L-23605]
En Banc, Makalintal (J): 7 concur, 1 concurs in result, 1 concurs in separate opinion
Facts: On 4 September 1961 a collective bargaining agreement (CBA), which was to be effective for a period of 1
year from 1 July 1961, was entered into by and between the Unions and the Agricultural Credit and Cooperative
Financing Administration (ACCFA). A few months thereafter, the Unions started protesting against alleged
violations and non-implementation of said agreement. Finally, on 25 October 1962 the Unions declared a strike,
which was ended when the strikers voluntarily returned to work on 26 November 1962. On 30 October 1962 the
Unions, together with its mother union, the Confederation of Unions in Government Corporations and Offices
(CUGCO), filed a complaint with the Court of Industrial Relations against the ACCFA (Case 3450-ULP) for having
allegedly committed acts of unfair labor practice, namely: violation of the CBA in order to discourage the members
of the Unions in the exercise of their right to self-organization, discrimination against said members in the matter of
promotions, and refusal to bargain. The ACCFA denied the charges and interposed as affirmative and special
defenses lack of jurisdiction of the CIR over the case, illegality of the bargaining contract, expiration of said
Contract and lack of approval by the office of the President of the fringe benefits provided for therein. Brushing
aside the foregoing defenses, the CIR in its decision dated 25 March 1963 ordered the ACCFA (1) to cease and
desist from committing further acts tending to discourage the members of complainant unions in the exercise of their
right to self organization; (2) to comply with and implement the provision of the collective bargaining contract
executed on 4 September 1961, including the payment of P30.00 a month living allowance; and (3) to bargain in
good faith and expeditiously with the herein complainants. ACCFA moved to reconsider but was turned down in a
resolution dated 25 April 1963 of the CIR en banc. Thereupon it brought the appeal by certiorari to the Supreme
Court (GR L-21484). During the pendency of the ACCFA's case, specifically on 8 August 1963, the President of the
Philippines signed into law the Agricultural Land Reform Code (Republic Act 3844), which among other things
required the reorganization of the administrative machinery of the Agricultural Credit and Cooperative Financing
Administration (ACCFA) and changed its name to Agricultural Credit Administration (ACA). On 17 March 1964
the ACCFA Supervisors' Association and the ACCFA Workers' Association filed a petition for certification election
with the Court of Industrial Relations (Case 1327-MC) praying that they be certified as the exclusive bargaining
agents for the supervisors and rank-and-file employees, respectively, in the ACA. The trial Court in its order dated
30 March 1964 directed the Manager or Officer-in-Charge of the ACA to allow the posting of said order "for the
information of all employees and workers thereof," and to answer the petition. In compliance therewith, the ACA,
while admitting most of the allegations in the petition, denied that the Unions represented the majority of the
supervisors and rank-and-file workers, respectively, in the ACA. It further alleged that the petition was premature,
that the ACA was not the proper party to be notified and to answer the petition, and that the employees and
supervisors could not lawfully become members of the Unions, nor be represented by them. However, in a joint
manifestation of the Unions dated 7 May 1964, with the conformity of the ACA Administrator and of the Agrarian
Counsel in his capacity as such and as counsel for the National Land Reform Council, it was agreed "that the union
in this case represent the majority of the employees in their respective bargaining units" and that only the legal
issues raised would be submitted for the resolution of the trial Court. Finding the remaining grounds for ACA's
opposition to the petition to be without merit, the trial Court in its order dated 21 May 1964 certified the ACCFA
Workers' Association and the ACCFA Supervisors' Association as the sole and exclusive bargaining representatives
of the rank-and-file employees and supervisors, respectively, of ACA. Said order was affirmed by the CIR en banc
in its resolution dated 24 August 1964. On 2 October 1964 the ACA filed in the Supreme Court a petition for
certiorari with urgent motion to stay the CIR order (GR L-23605). In a resolution dated 6 October 1964, the
Supreme Court dismissed the petition for 'lack of adequate allegations," but the dismissal was later reconsidered
when the ACA complied with the formal requirement stated in said resolution. As prayed for, the Court ordered the
CIR to stay the execution of its order of 21 May 1964.

Issue: Whether the ACA is engaged in governmental or proprietary functions.

Held: The ACA is a government office or agency engaged in governmental, not proprietary functions. These
functions may not be strictly what President Wilson described as "constituent" (as distinguished from "ministrant"),
such as those relating to the maintenance of peace and the prevention of crime, those regulating property and
property rights, those relating to the administration of justice and the determination of political duties of citizens,
and those relating to national defense and foreign relations. Under this traditional classification, such constituent
functions are exercised by the State as attributes of sovereignty, and not merely to promote the welfare, progress and
prosperity of the people these latter functions being ministrant, the exercise of which is optional on the part of the
government. The growing complexities of modern society, however, have rendered this traditional classification of
the functions of government quite unrealistic, not to say obsolete. The areas which used to be left to private
enterprise and initiative and which the government was called upon to enter optionally, and only "because it was
better equipped to administer for the public welfare than is any private individual or group of individuals" continue
to lose their well-defined boundaries and to be absorbed within activities that the government must undertake in its
sovereign capacity if it is to meet the increasing social challenges of the times. Here as almost everywhere else the
tendency is undoubtedly towards a greater socialization of economic forces. Here of course this development was
envisioned, indeed adopted as a national policy, by the Constitution itself in its declaration of principle concerning
the promotion of social justice. It was in furtherance of such policy that the Land Reform Code was enacted and the
various agencies, the ACA among them, established to carry out its purposes. There can be no dispute as to the fact
that the land reform program contemplated in the said Code is beyond the capabilities of any private enterprise to
translate into reality. It is a purely governmental function, no less than, say, the establishment and maintenance of
public schools and public hospitals. And when, aside from the governmental objectives of the ACA, geared as they
are to the implementation of the land reform program of the State, the law itself declares that the ACA is a
government office, with the formulation of policies, plans and programs vested no longer in a Board of Governors,
as in the case of the ACCFA, but in the National Land Reform Council, itself a government instrumentality; and that
its personnel are subject to Civil Service laws and to rules of standardization with respect to positions and salaries,
any vestige of doubt as to the governmental character of its functions disappears. In view of the foregoing premises,
the Unions are not entitled to the certification election sought in the lower Court. Such certification is admittedly for
purposes of bargaining in behalf of the employees with respect to terms and conditions of employment, including
the right to strike as a coercive economic weapon, as in fact the said unions did strike in 1962 against the ACCFA
(GR L-21824). This is contrary to Section 11 of Republic Act 875. With the reorganization of the ACCFA and its
conversion into the ACA under the Land Reform Code and in view of the Court's ruling as to the governmental
character of the functions of the ACA, the decision of the lower Court, and the resolution en banc affirming it, in the
unfair labor practice case filed by the ACCFA, which decision is the subject of the present review in GR L-21484,
has become moot and academic, particularly insofar as the order to bargain collectively with the Unions is
concerned.
PVTA v CIR Digest
Facts:
This case involves the expanded role of the government necessitated by the increased responsibility to
provide for the general welfare.
1. In 1966 private respondents filed a petition seeking relief for their alleged overtime services and
the petitioners failure to pay for said compensation in accordance with CA No. 444.
2. Petitioner denied the allegations for lack of a cause of cause of action and lack of
jurisdiction. Judge Martinez issued an order, directing petitioner to pay. Hence, this petition for certiorari
on grounds that the corporation is exercising governmental functions and is therefore exempt from
Commonwealth Act No. 444.
3. PVTA contended it is beyond the jurisdiction of respondent Court as it is exercising governmental
functions and that it is exempt from the operation of Commonwealth Act No. 444.

Issue: Whether or not PVTA discharges governmental and not proprietary functions.

YES. But the distinction between the constituent and ministrant functions of the government has become obsolete.
The government has to provide for the welfare of its people. RA No. 2265 providing
for a distinction between constituent and the ministrant functions is irrelevant considering the needs of the present
time: The growing complexities of modern society have rendered this traditional classification of the functions of
government obsolete.

The contention of petitioner that the Labor Code does not apply to them deserve scant consideration.
There is no question based on RA 4155, that petitioner is a governmental agency. As such, the petitioner can
rightfully invoke the doctrine announced in the leading ACCFA case. The objection of private respondents with its
overtones of the distinction between constituent and ministrant functions of governments as set forth in Bacani v.
Nacoco, is futile. It does not necessarily follow, that just because petitioner is engaged in governmental rather than
proprietary functions, that the labor controversy was beyond the jurisdiction of the now defunct respondent Court.
Nor is the objection raised that petitioner does not come within the coverage of the Eight-Hour Labor Law
persuasive.
A reference to the pertinent sections of both Republic Acts 2265 and 2155 renders clear the differentiation that
exists. If as a result of the appealed order, financial burden would have to be borne by petitioner, it has only itself to
blame. It need not have required private respondents to render overtime service. It can hardly be surmised that one
of its chief problems is paucity of personnel. That would indeed be a cause for astonishment. It would appear,
therefore, that such an objection based on this ground certainly cannot suffice for a reversal. To repeat, respondent
Court must be sustained.
PVTA v. CIR
65 SCRA 416

FACTS:
On December 20, 1966, private respondents filed a petition to seek relief for their alleged overtime services in
accordance with the Commonwealth Act No. 444. Respondent court sustained the claims of private respondents
hence the petition of certiorari and plea for reversal from PVTA. Petitioner contends that they are exercising
governmental functions thus they are exempt from the Eight-Hour Labor Law and respondent court have no
jurisdiction over them.

ISSUE:
Is the PVTA discharging governmental functions and not proprietary functions thus exempting it from
Commonwealth Act. No. 444?

HELD:
There is no constitutional obstacle to a government pursuing lines of endeavor formerly reserved for private
enterprise. Just because the petitioner is engaged in governmental rather than proprietary function, it does not follow
that the labor controversy is beyond the jurisdiction of the respondent court. The growing complexities of modern
society have rendered the traditional classification of the functions of the government (constituent and ministrant),
unrealistic, not to say, obsolete. The contention that the Eight-Hour Labor Law did not apply to the petitioner,
moreover, lacked merit on the grounds of the casualness in the way such argument was advanced in the petition.
Philippine Virginia Tobacco Administration, petitioner,
vs. Court of Industrial Relations, et al., respondents.
G.R. No. L-32052 July 25, 1975

Facts:
Private respondents alleged their employment relationship, the overtime services in excess of the regular
eight hours a day rendered by them, and the failure to pay them overtime compensation in accordance with
Commonwealth Act No. 444. Philippine Virginia Tobacco Administration denied the allegations and raising the
special defenses of lack of a cause of action and lack of jurisdiction. The respondent Court issued an order
sustaining the claims of private respondents for overtime services and directing petitioner to pay the same, minus
what it had already paid. There was a motion for reconsideration but it was denied by the respondent Court.
Petitioner Philippine Virginia Tobacco Administration contends that it is beyond the jurisdiction of respondent
Court as it is exercising governmental functions and that it is exempt from the operation of Commonwealth Act No.
444.

Issue: Whether or not petitioner discharges governmental and not proprietary functions.
Held:
Yes, the Petitioner discharges governmental and not proprietary functions.
The Supreme Court ruled that a reference to the enactments creating Petitioner Corporation suffices to
demonstrate the merit of petitioners plea that it performs governmental and not proprietary functions. Under
Republic Act No. 2265, its purposes and objectives are: "(a) To promote the effective merchandising of Virginia
tobacco in the domestic and foreign markets so that those engaged in the industry will be placed on a basis of
economic security; (b) To establish and maintain balanced production and consumption of Virginia tobacco and its
manufactured products, and such marketing conditions as will insure and stabilize the price of a level sufficient to
cover the cost of production plus reasonable profit both in the local as well as in the foreign market; (c) To create,
establish, maintain, and operate processing, warehousing and marketing facilities in suitable centers and supervise
the selling and buying of Virginia tobacco so that the farmers will enjoy reasonable prices that secure a fair return of
their investments; (d) To prescribe rules and regulations governing the grading, classifying, and inspecting of
 Virginia tobacco; and (e) To improve the living and economic conditions of the people engaged in the tobacco
industry."

The amendatory statute, Republic Act No. 4155, renders even more evident its nature as a governmental agency. Its
first section on the declaration of policy reads: "It is declared to be the national policy, with respect to the local
Virginia tobacco industry, to encourage the production of local Virginia tobacco of the qualities needed and in
quantities marketable in both domestic and foreign markets, to establish this industry on an efficient and economic
basis, and, to create a climate conducive to local cigarette manufacture of the qualities desired by the consuming
public, blending imported and native Virginia leaf tobacco to improve the quality of locally manufactured
cigarettes."

It is thus readily apparent from a cursory perusal of such statutory provisions why petitioner can rightfully
invoke the doctrine announced in the leading Agricultural Credit and Cooperative Financing Administration
decision and why the objection of private respondents with its overtones of the distinction between constituent and
ministrant functions of governments. Under this traditional classification, such constituent functions are exercised by
the State as attributes of sovereignty, and not merely to promote the welfare, progress and prosperity of the people -
these latter functions being ministrant, the exercise of which is optional on the part of the government.

Government v. Monte De Piedad Digest

Facts:

1. Spain paid $400,000 into the treasury of the Philippine Islands for the relief of those damaged by an earthquake.
2. Upon the petition of Monte de Piedad, an institution under the control of the church, the Philippine Government
directed its treasurer to give $80,000 of the relief fund in Four (4)4 installments. As a result, various petitions were
filed, including the heirs of those entitled to the allotments. All prayed for the State to bring suit against Monte de
Piedad, and for it to pay with interest.
3. The Defendant appealed since all its funds have been exhausted already on various jewelry loans.

Issue: Whether the government is the proper authority to the cause of action

YES.

The Philippine government, as a trustee towards the funds could maintain the action since there has been no change
of sovereignty. The state, as a sovereign, is the parens patriae of the people. These principles are based upon public
policy. The Philippine Government is not a mere nominal party because it was exercising its sovereign functions or
powers and was merely seeking to carry out a trust developed upon it when the Philippine Islands was ceded to the
United States. Finally, if said loan was for ecclesiastical pious work, then Spain would not exercise its civil
capacities.
35 Phil. 728 Political Law Parens Patriae
In June 1863 a devastating earthquake occurred in the Philippines. The Spanish Government then provided
$400,000.00 as aid for the victims and it was received by the Philippine Treasury. Out of the said amount,
$80,000.00 was left untouched; it was then invested in the Monte de Piedad Bank which in turn invested the amount
in jewelries. But when the Philippine government later tried to withdraw the said amount, the bank cannot provide
for the amount. The government then filed a complaint. The bank argued that the Philippine government is not an
affected party hence has no right to institute a complaint. The bank argues that the government was not the intended
beneficiary of the said amount.
ISSUE: Whether or not the Philippine government is competent to file a complaint against the respondent bank.
HELD: Yes. The Philippine government is competent to institute action against Monte de Piedad, this is in
accordance with the doctrine of Parens Patriae. The government being the protector of the rights of the people has
the inherent supreme power to enforce such laws that will promote the public interest. No other party has been
entrusted with such right hence as parents of the people the government has the right to take back the money
intended for the people.

Government of the Philippine Islands vs Monte de Piedad

G.R. No. 9959
 35 PH 728, 751-753
December 13, 1916

Petitioner: Government of the Philippine Islands, represented by Executive Treasurer

Respondent: El Monte de Piedad Y Caja de Ajorras de Manila

FACTS: On June 3, 1863, a devastating earthquake in the Philippines took place. The Spanish dominions provided
$400,000 aid as received by the National Treasury as relief of the victims of the earthquake. The government used
the money as such but $80,000 was left untouched and was thus invested to Monte de Piedad bank, which was in
turn invested as jewelries, equivalent to the same amount.

In June 1983, the Department of Finance called upon the same bank to return the $80,000 deposited from before.
The Monte de Piedad declined to comply with this order on the ground that the Governor-General of the Philippine
Islands and not the Department of Finance had the right to order the reimbursement because the Philippine
government is not the affected party. On account of various petitions of the persons, the Philippine Islands brought a
suit against Monte de Piedad for a recovery of the $80,000 together with interest, for the benefit of those persons
and their heirs. Respondent refuse to provide the money, hence, this appeal.

ISSUE: Whether or not the Philippine government is authorized to file a reimbursement of the money of the people
deposited in respondent bank.

HELD: The Court held that the Philippine government is competent to file a complaint/reimbursement against
respondent bank in accordance to the Doctrine of Parens Patriae. The government is the sole protector of the rights
of the people thus, it holds an inherent supreme power to enforce laws which promote public interest. The
government has the right to "take back" the money intended fro people. The government has the right to enforce all
charities of public nature, by virtue of its general superintending authority over the public interests, where no other
person is entrusted with it.

Appellate court decision was affirmed. Petition was thereby GRANTED. The Court ordered that respondent bank
return the amount to the rightful heirs with interest in gold or coin in Philippine peso.
CABANAS v. PILAPIL
58 SCRA 94

FACTS:
Florentino Pilapil, the insured, had a child, Millian Pilapil, with a married woman, Melchora Cabanas. The
complaint was filed on October 10, 1964. The defendant Francisco Pilapil, the brother of the deceased is the one
designated by the latter to act as his daughters trustee during her minority. Thus, upon Florentinos death, the
proceeds were paid to his brother hence the complaint of the mother whom the child lives with. Petitioner contends
that she should be entitled to act as the trustee of the insurance policy of her child.

ISSUE:
Does the State have the authority to interfere with the terms of the insurance policy by virtue of parens patriae?

HELD:
The appealed decision adheres to the concept that the judiciary, as an agent of the State, acts as parens patriae. As
such, the judiciary cannot remain insensible to the validity of the petitioners plea. The State shall strengthen the
family as a basic social institution. The Constitution, moreover, dictates that it is the family as a unit that has to be
strengthened. As such, the decision of the lower courts, entitling the mother as the trustee, is affirmed.
Cabanas v Pilapil Digest
Facts:
1. Florentino Pilapil insured himself and indicated his child to be his sole beneficiary. He likewise indicated that if
he dies while the child is still a minor, the proceeds shall be administered by his brother Francisco. Florentino died
when the child was only ten years old hence, Francisco took charge of Florentinos benefits for the child.
Meanwhile, the mother of the child Melchora Cabaas filed a complaint seeking the delivery of the sum of money in
her favor and allow herself to be the childs trustee. Francisco asserted the terms of the insurance policy and
contended that as a private contract its terms and obligations must be binding only to the parties and
intended beneficiaries.

ISSUE: Whether or not the state may interfere by virtue of parens patriae to the terms
of the insurance policy?

YES.

The Constitution provides for the strengthening of the family as the basic social unit, and that whenever
any member thereof such as in the case at bar would be prejudiced and his interest be affected then the judiciary if a
litigation has been filed should resolve according to the best interest of that person.

The uncle here should not be the trustee, it should be the mother as she was the immediate relative of the minor child
and it is assumed that the mother shows more care towards the child than an uncle.

It is buttressed by its adherence to the concept that the judiciary, as an agency of the State acting as parens patriae,
is called upon whenever a pending suit of litigation affects one who is a minor to accord priority to his best interest.
It may happen, family relations may press their respective claims. It would be more in consonance not only with the
natural order of things but the tradition of the country for a parent to be preferred. it could have been different if the
conflict were between father and mother. Such is not the case at all. It is a mother asserting priority. Certainly the
judiciary as the instrumentality of the State in its role of parens patriae, cannot remain insensible to the validity of
her plea.
58 SCRA 94 Political Law Parens Patriae Strengthening the Family
Florentino Pilapil insured himself and he indicated in his insurance plan that his child will be his beneficiary. He
also indicated that if upon his death the child is still a minor; the proceeds of his benefits shall be administered by
his brother, Francisco Pilapil. The child was only ten years of age when Florentino died and so Francisco then took
charge of Florentinos insurance proceeds for the benefit of the child.
On the other hand, the mother of the child Melchora Cabanas filed a complaint seeking the delivery of the insurance
proceeds in favor and for her to be declared as the childs trustee. Francisco asserted the terms of the insurance
policy and that as a private contract its terms and obligations must be binding only to the parties and intended
beneficiaries.
ISSUE: Whether or not the state may interfere by virtue of parens patriae to the terms of the insurance policy.
HELD: Yes. The Constitution provides for the strengthening of the family as the basic social unit, and that
whenever any member thereof such as in the case at bar would be prejudiced and his interest be affected then the
judiciary if a litigation has been filed should resolve that case according to the best interest of that person. The uncle
here should not be the trustee, it should be the mother as she was the immediate relative of the minor child and it is
assumed that the mother shall show more care towards the child than the uncle will. The application of parens
patriae here is in consonance with this countrys tradition of favoring conflicts in favor of the family hence
preference to the parent (mother) is observed.
Co Kim Chan v Valdez Tan Keh
Facts of the case: Co Kim Chan had a pending civil case, initiated during the Japanese occupation, with the Court of
First Instance of Manila. After the Liberation of the Manila and the American occupation, Judge Arsenio Dizon
refused to continue hearings on the case, saying that a proclamation issued by General Douglas MacArthur had
invalidated and nullified all judicial proceedings and judgments of the courts of the Philippines and, without an
enabling law, lower courts have no jurisdiction to take cognizance of and continue judicial proceedings pending in
the courts of the defunct Republic of the Philippines (the Philippine government under the Japanese).
The court resolved three issues:
1. Whether or not judicial proceedings and decisions made during the Japanese occupation were valid and remained
valid even after the American occupation;
2. Whether or not the October 23, 1944 proclamation MacArthur issued in which he declared that all laws,
regulations and processes of any other government in the Philippines than that of the said Commonwealth are null
and void and without legal effect in areas of the Philippines free of enemy occupation and control invalidated all
judgments and judicial acts and proceedings of the courts;
3. And whether or not if they were not invalidated by MacArthurs proclamation, those courts could continue
hearing the cases pending before them.
Ratio: Political and international law recognizes that all acts and proceedings of a de facto government are good and
valid. The Philippine Executive Commission and the Republic of the Philippines under the Japanese occupation may
be considered de facto governments, supported by the military force and deriving their authority from the laws of
war.
Municipal laws and private laws, however, usually remain in force unless suspended or changed by the conqueror.
Civil obedience is expected even during war, for the existence of a state of insurrection and war did not loosen the
bonds of society, or do away with civil government or the regular administration of the laws. And if they were not
valid, then it would not have been necessary for MacArthur to come out with a proclamation abrogating them.
The second question, the court said, hinges on the interpretation of the phrase processes of any other government
and whether or not he intended it to annul all other judgments and judicial proceedings of courts during the Japanese
military occupation.
IF, according to international law, non-political judgments and judicial proceedings of de facto governments are
valid and remain valid even after the occupied territory has been liberated, then it could not have been MacArthurs
intention to refer to judicial processes, which would be in violation of international law.
A well-known rule of statutory construction is: A statute ought never to be construed to violate the law of nations if
any other possible construction remains.
Another is that where great inconvenience will result from a particular construction, or great mischief done, such
construction is to be avoided, or the court ought to presume that such construction was not intended by the makers of
the law, unless required by clear and unequivocal words.
Annulling judgments of courts made during the Japanese occupation would clog the dockets and violate
international law, therefore what MacArthur said should not be construed to mean that judicial proceedings are
included in the phrase processes of any other governments.
In the case of US vs Reiter, the court said that if such laws and institutions are continued in use by the occupant,
they become his and derive their force from him. The laws and courts of the Philippines did not become, by being
continued as required by the law of nations, laws and courts of Japan.
It is a legal maxim that, excepting of a political nature, law once established continues until changed by some
competent legislative power. IT IS NOT CHANGED MERELY BY CHANGE OF SOVEREIGNTY. Until, of
course, the new sovereign by legislative act creates a change.
Therefore, even assuming that Japan legally acquired sovereignty over the Philippines, and the laws and courts of
the Philippines had become courts of Japan, as the said courts and laws creating and conferring jurisdiction upon
them have continued in force until now, it follows that the same courts may continue exercising the same
jurisdiction over cases pending therein before the restoration of the Commonwealth Government, until abolished or
the laws creating and conferring jurisdiction upon them are repealed by the said government.
DECISION: Writ of mandamus issued to the judge of the Court of First Instance of Manila, ordering him to take
cognizance of and continue to final judgment the proceedings in civil case no. 3012.
Summary of ratio:
1. International law says the acts of a de facto government are valid and civil laws continue even during occupation
unless repealed.
2. MacArthur annulled proceedings of other governments, but this cannot be applied on judicial proceedings because
such a construction would violate the law of nations.
3. Since the laws remain valid, the court must continue hearing the case pending before it.
***3 kinds of de facto government: one established through rebellion (govt gets possession and control through
force or the voice of the majority and maintains itself against the will of the rightful government)
through occupation (established and maintained by military forces who invade and occupy a territory of the enemy
in the course of war; denoted as a government of paramount force)
through insurrection (established as an independent government by the inhabitants of a country who rise in
insurrection against the parent state)

CO KIM CHAM VS VALDEZ TAN KEH

G.R. No. L-5 75 Phil 113, 122 September 17, 1945
CO KIM CHAM (alias CO KIM CHAM), petitioner,
vs.
EUSEBIO VALDEZ TAN KEH and ARSENIO P. DIZON, Judge of First Instance of Manila, respondents.
Facts:
Petitioner Co Kim Cham had a pending Civil Case with the Court of First Instance of Manila initiated during the
time of the Japanese occupation.
The respondent judge, Judge Arsenio Dizon, refused to continue hearings on the case which were initiated during
the Japanese military occupation on the ground that the proclamation issued by General MacArthur that all laws,
regulations and processes of any other government in the Philippines than that of the said Commonwealth are null
and void and without legal effect in areas of the Philippines free of enemy occupation and control had the effect of
invalidating and nullifying all judicial proceedings and judgments of the court of the Philippines during the Japanese
military occupation, and that the lower courts have no jurisdiction to take cognizance of and continue judicial
proceedings pending in the courts of the defunct Republic of the Philippines in the absence of an enabling law
granting such authority.

Respondent, additionally contends that the government established during the Japanese occupation were no de facto
government.

Issues:
1. Whether or not judicial acts and proceedings of the court made during the Japanese occupation were valid and
remained valid even after the liberation or reoccupation of the Philippines by the United States and Filipino
forces.
2. Whether or not the October 23, 1944 proclamation issued by General MacArthur declaring that all laws,
regulations and processes of any other government in the Philippines than that of the said Commonwealth are
null and void and without legal effect in areas of the Philippines free of enemy occupation and control has
invalidated all judgments and judicial acts and proceedings of the courts.
3. Whether or not those courts could continue hearing the cases pending before them, if the said judicial acts and
proceedings were not invalidated by MacArthurs proclamation.

Discussions:
Political and international law recognizes that all acts and proceedings of a de facto government are good and
valid. The Philippine Executive Commission and the Republic of the Philippines under the Japanese occupation
may be considered de facto governments, supported by the military force and deriving their authority from the
laws of war. The doctrine upon this subject is thus summed up by Halleck, in his work on International Law
(Vol. 2, p. 444): The right of one belligerent to occupy and govern the territory of the enemy while in its
military possession, is one of the incidents of war, and flows directly from the right to conquer. We, therefore,
do not look to the Constitution or political institutions of the conqueror, for authority to establish a government
for the territory of the enemy in his possession, during its military occupation, nor for the rules by which the
powers of such government are regulated and limited. Such authority and such rules are derived directly from
the laws war, as established by the usage of the world, and confirmed by the writings of publicists and decisions
of courts in fine, from the law of nations. . . . The municipal laws of a conquered territory, or the laws which
regulate private rights, continue in force during military occupation, excepts so far as they are suspended or
changed by the acts of conqueror. . . . He, nevertheless, has all the powers of a de facto government, and can at
his pleasure either change the existing laws or make new ones.
General MacArthur annulled proceedings of other governments in his proclamation October 23, 1944, but this
cannot be applied on judicial proceedings because such a construction would violate the law of nations.
If the proceedings pending in the different courts of the Islands prior to the Japanese military occupation had
been continued during the Japanese military administration, the Philippine Executive Commission, and the so-
called Republic of the Philippines, it stands to reason that the same courts, which had become re-established
and conceived of as having in continued existence upon the reoccupation and liberation of the Philippines by
virtue of the principle of postliminy (Hall, International Law, 7th ed., p. 516), may continue the proceedings in
cases then pending in said courts, without necessity of enacting a law conferring jurisdiction upon them to
continue said proceedings. As Taylor graphically points out in speaking of said principles a state or other
governmental entity, upon the removal of a foreign military force, resumes its old place with its right and duties
substantially unimpaired. . . . Such political resurrection is the result of a law analogous to that which enables
elastic bodies to regain their original shape upon removal of the external force, and subject to the same
exception in case of absolute crushing of the whole fibre and content.

Rulings:
1. The judicial acts and proceedings of the court were good and valid. The governments by the Philippine
Executive Commission and the Republic of the Philippines during the Japanese military occupation being de
facto governments, it necessarily follows that the judicial acts and proceedings of the court of justice of those
governments, which are not of a political complexion, were good and valid. Those not only judicial but also
legislative acts of de facto government, which are not of a political complexion, remained good and valid after
the liberation or reoccupation of the Philippines by the American and Filipino forces under the leadership of
General Douglas MacArthur.
2. The phrase processes of any other government is broad and may refer not only to the judicial processes, but
also to administrative or legislative, as well as constitutional, processes of the Republic of the Philippines or
other governmental agencies established in the Islands during the Japanese occupation. Taking into
consideration the fact that, as above indicated, according to the well-known principles of international law all
judgements and judicial proceedings, which are not of a political complexion, of the de facto governments
during the Japanese military occupation were good and valid before and remained so after the occupied territory
had come again into the power of the titular sovereign, it should be presumed that it was not, and could not have
been, the intention of General Douglas MacArthur, in using the phrase processes of any other government in
said proclamation, to refer to judicial processes, in violation of said principles of international law.
3. Although in theory the authority of the local civil and judicial administration is suspended as a matter of course
as soon as military occupation takes place, in practice the invader does not usually take the administration of
justice into his own hands, but continues the ordinary courts or tribunals to administer the laws of the country
which he is enjoined, unless absolutely prevented, to respect. An Executive Order of President McKinley to the
Secretary of War states that in practice, they (the municipal laws) are not usually abrogated but are allowed to
remain in force and to be administered by the ordinary tribunals substantially as they were before the
occupation. This enlightened practice is, so far as possible, to be adhered to on the present occasion. And
Taylor in this connection says: From a theoretical point of view it may be said that the conqueror is armed
with the right to substitute his arbitrary will for all pre-existing forms of government, legislative, executive and
judicial. From the stand-point of actual practice such arbitrary will is restrained by the provision of the law of
nations which compels the conqueror to continue local laws and institution so far as military necessity will
permit. Undoubtedly, this practice has been adopted in order that the ordinary pursuits and business of society
may not be unnecessarily deranged, inasmuch as belligerent occupation is essentially provisional, and the
government established by the occupant of transient character.

Co Kim Cham vs. Valdez Tan Keh and Dizon

75 Phil 113
Feria, J.

Facts

The respondent judge of the lower court refused to take cognizance of and continue the proceeding of civil case No.
3012 of said court which was initiated under the regime of the so-called Republic of the Philippines established
during the Japanese military occupation of the Philippines. He argued that the proclamation issued by Gen. Douglas
MacArthur had the effect of invalidating and nullifying all judicial proceedings and judgements of the courts of the
said governments. He also argued that the said governments during the Japanese occupation were not de facto
governments.

Issue

Whether or not the governments established in the Philippines under the names of Philippines Executive
Commission and Republic of the Philippines during the Japanese military occupation or regime were de facto
governments.

Held

The Supreme Court held that the Philippine Executive Commission which was organized by Order No. 1 by the
Commander of the Japanese forces, was a civil government established by the military forces of occupation and
therefore a de facto government of the second kind. The source of its authority comes from the Japanese military, it
is a government imposed by the laws of war. The same is true with the Republic of the Philippines. Apparently
established and organized as a sovereign state independent from any other government by the Filipino people, was,
in truth and reality, a government established by the Japanese forces of occupation.
PERALTA v. DIRECTOR OF PRISONS
75 PHIL 285

FACTS:
William Peralta was prosecuted for the crime of robbery and was sentenced to life imprisonment as defined and
penalized by Act No. 65 of the National Assembly of the Republic of the Philippines. The petition for habeas corpus
is based on the contention that the Court of Special and Exclusive Criminal Jurisdiction created by Ordinance No. 7
was a political instrumentality of the military forces of Japan and which is repugnant to the aims of the
Commonwealth of the Philippines for it does not afford fair trial and impairs the constitutional rights of the accused.

ISSUE:
1. Is the creation of court by Ordinance No. 7 valid?
2. Is the sentence of life imprisonment valid?
3. By principle of postliminy, did the punitive sentence cease to be valid from the time of the restoration of the
Commonwealth?

HELD:
There is no room for doubt to the validity of Ordinance No. 7 since the criminal jurisdiction established by the
invader is drawn entirely from the law martial as defined in the usages of nations. It is merely a governmental
agency. The sentence rendered, likewise, is good and valid since it was within the power and competence of the
belligerent occupant to promulgate Act No. 65. All judgments of political complexion of the courts during Japanese
regime ceased to be valid upon reoccupation of the Islands, as such, the sentence which convicted the petitioner of a
crime of a political complexion must be considered as having ceased to be valid.
WILLIAM F. PERALTA v. THE DIRECTOR OF PRISONS
75 Phil 285 | November 12, 1945
Ponente: Feria, J.
FACTS:
William Peralta was prosecuted for the crime of robbery and was sentenced to life imprisonment as defined and
penalized by Act No. 65 of the National Assembly of the Republic of the Philippines. The petition for habeas
corpus is based on the contention that the Court of Special and Exclusive Criminal Jurisdiction created by Ordinance
No. 7 was a political instrumentality of the military forces of Japan and which is repugnant to the aims of the
Commonwealth of the Philippines for it does not afford fair trial and impairs the constitutional rights of the accused.
ISSUE:
Whether the creation of court by Ordinance No. 7 is constitutional.
HELD:
Yes, it is constitutional. There is no room for doubt to the validity of Ordinance No. 7 since the criminal jurisdiction
established by the invader is drawn entirely from the law martial as defined in the usages of nations. It is merely a
governmental agency. The sentence rendered, likewise, is good and valid since it was within the power and
competence of the belligerent occupant to promulgate Act No. 65. All judgments of political complexion of the
courts during Japanese regime ceased to be valid upon reoccupation of the Islands, as such, the sentence which
convicted the petitioner of a crime of a political complexion must be considered as having ceased to be valid.

Peralta v. Director of Prisons

(1945)

Petitioner, a member of the Metropolitan Constabulary, was prosecuted for the crime of robbery as defined by the
National Assembly of the so-called Republic of the Philippines. He was found guilty and sentenced to serve time by
the Court of Special and Exclusive Criminal Jurisdiction created in sec. 1 of Ordinance no. 7 promulgated by the
President of the Republic. The petition for habeas corpus is based on the ground that the Courts existence was void
ab initio because it was created as a political instrumentality under the command of the Japanese Imperial Army;
that the provisions of said ordinance violate his constitutional rights; that the penalties provided for are much more
severe than the RPC. SolGen is of the opinion that the petition should be granted because the Ordinance mentioned
in creating said court is tinged with political complexion, that the procedure does not afford a fair trial and violates
constitutional right of accused persons under a legitimate Constitution. The court is of the opinion that:
As to the validity of the creation of the Court of Special and Exclusive Criminal Jurisdiction by Ordinance No. 7, the
only factor to be considered is the authority of the legislative power which promulgated said law or ordinance. It is
well established in International Law that "The criminal jurisdiction established by the invader in the occupied
territory finds its source neither in the laws of the conquering or conquered state, it is drawn entirely from the law
martial as defined in the usages of nations. The authority thus derived can be asserted either through special
tribunals, whose authority and procedure is defined in the military code of the conquering state, or through the
ordinary courts and authorities of the occupied district." (Taylor, International Public Law, p. 598.)

The so-called Republic of the Philippines, being a governmental instrumentality of the belligerent occupant, had
therefore the power or was competent to create the Court of Special and Exclusive Criminal Jurisdiction. No
question may arise as to whether or not a court is of a political complexion, for it is mere governmental agency
charged with the duty of applying the law to cases falling within its jurisdiction. Its judgments and sentences may be
of a political complexion or not depending upon the nature or character of the law so applied. There is no room for
doubt, therefore, as to the validity of the creation of the court in question.

The validity of the sentence rendered by the Court of Special and Exclusive Criminal Jurisdiction which imposes life
imprisonment upon the herein petitioner, depends upon the competence or power of the belligerent occupant to
promulgate Act No. 65 which punishes the crime of which said petitioner was convicted.

It appears clear that it was within the power and competence of the belligerent occupant to promulgate, through the
National Assembly of the so-called Republic of the Philippines, Act No. 65 of the said Assembly, which penalizes
the crimes of robbery and other offenses by imprisonment ranging from the maximum period of the imprisonment
prescribed by the laws and ordinances promulgated by the President of the so-called Republic as minimum, to life
imprisonment or death as maximum. Although these crimes are defined in the Revised Penal Code, they were
altered and penalized by said Act No. 65 with different and heavier penalties, as new crimes and offenses demanded
by military necessity, incident to a state of war, and necessary for the control of the country by the belligerent
occupant, the protection and safety of the army of occupation, its support and efficiency, and the success of its
operations.

The last question is the legal effect of the reoccupation of the Philippines and restoration of the Commonwealth
Government; that is, whether or not, by the principle of postliminy, the punitive sentence which petitioner is now
serving fell through or ceased to be valid from that time.

We have already held in our recent decision in the case of Co Kim Cham vs. Valdez Tan Keh and Dizon, supra, that
all judgment of political complexion of the courts during the Japanese regime, ceased to be valid upon reoccupation
of the islands by virtue of the principle or right of postliminium. Applying that doctrine to the present case, the
sentence which convicted the petitioner of a crime of a political complexion must be considered as having ceased to
be valid ipso facto upon the reoccupation or liberation of the Philippines by General Douglas MacArthur
Alcantara v. Director of Prisons

Petitioner was convicted of the crime of illegal discharge of firearms. The CA modified the sentence from arresto
mayor to prision correccional. Petitioner questions the validity of the CA on the sole ground that the court was a
creation of the so-called Republic of the Philippines during the Japanese military occupation. In Co Kim Cham v.
Valdez Tan Keh and Dizon, the court ruled that the RP and the PEC were governments de facto and that judicial acts
were good and valid and remained good and valid after the restoration of the Commonwealth Government. The CA
that existing during Japanese occupation was the CA after the restoration. And even if the CA was a new court, its
judgments would still remain good and valid provided that they do not have a political complexion.

A punitive or penal sentence is said to be of a political complexion when it penalizes either a new act not defined in
the municipal laws, or acts already penalized by the latter as a crime against the legitimate government, but taken
out of the territorial law and penalized as new offenses committed against the belligerent occupant, incident to a
state of war and necessary for the control of the occupied territory and the protection of the army of the occupier.
They are acts penalized for public rather than private reasons, acts which tend, directly or indirectly, to aid or favor
the enemy and are directed against the welfare, safety and security of the belligerent occupant. As examples, the
crimes against national security, such as treason, espionage, etc., and against public order, such as rebellion,
sedition, etc., were crimes against the Commonwealth or United States Government under the Revised Penal Code,
which were made crimes against the belligerent occupant
ALCANTARA v. DIRECTOR OF PRISONS
75 PHIL 749

FACTS:
Petitioner Aniceto Alcantara was convicted of the crime of illegal discharge of firearms with less serious physical
injuries. The Court of Appeals modified the sentence to an indeterminate penalty from arresto mayor to prison
correccional. Petitioner now questions the validity of the decision on the sole ground that said court was only a
creation of the so-called Republic of the Philippines during Japanese military occupation, thus, a petition for the
issuance of writ of habeas corpus from petitioner.

ISSUE:
Is the judgment of Court of Appeals good and valid?

HELD:
Judgments of such court were good and valid and remain good and valid for the sentence which petitioner is now
serving has no political complexion. A penal sentence is said to be of a political complexion when it penalizes a new
act not defined in the municipal laws, or acts already penalized by the latter as a crime against the legitimate
government but taken out of territorial law and penalized as new offenses committed against the belligerent
occupant which is necessary for the control of the occupied territory and the protection of the army of the occupier.
Such is the case at hand, the petition for writ of habeas corpus is denied.
Aniceto Alcantara vs. Director of Prisons (G.R. No. L-6, 29 November 1945, 75 Phil 494)
Ponente: Justice Feria
Doctrine A punitive or penal sentence becomes that of a political complexion when it penalizes either a new act
not defined in the municipal laws or acts already penalized by the latter as a crime against the legitimate
government, but taken out of the territorial law and penalized as new offense committed against the belligerent
occupant.
Type of Action/Appeal: Petition for writ of habeas corpus by Alcantara on the ground that he was unduly deprived
of liberty due to rendition of the judgment against him for felony of illegal discharge of firearms with less serious
physical injuries by CFI Ilocos Sur, which was affirmed with modification by Court of Appeals of Northern Luzon.
Facts Aniceto Alcantara was convicted in the CFI Ilocos Sur in Criminal Case 23 for the felony of illegal
discharge of firearms with less serious physical injuries. Upon his appeal, the Court of Appeals of Northern Luzon
in Baguio City modified his sentence to an indeterminate sentence ranging from 4 mos. and 21 days of arresto
mayor to 3 years, 9 mos. and 3 days of prision correctional.
Issues W/N the Court of Appeals of Northern Luzon had jurisdiction over the case of Alcantara, on the ground that
it was a validly-created court (Court of Appeals of Northern Luzon was created during the Japanese occupation) and
that it has authority to hold sessions in Baguio City, in relation to Commonwealth Act No. 3?
Verdict Petition for writ of habeas corpus by Alcantara was DENIED.
Held The Court held that the sentence served by Alcantara (illegal discharge of firearms with less serious physical
injuries) is an criminal act that has no political complexion. A punitive or penal sentence becomes that of a political
complexion when it penalizes either a new act not defined in the municipal laws or acts already penalized by the
latter as a crime against the legitimate government, but taken out of the territorial law and penalized as new offense
committed against the belligerent occupant. It cited the case of Co Kim Cham vs Valdez, where the Japanese
Republic (of the Philippines) and the Phil. Executive Commission were governments de facto and the judicial acts of
the courts thereof were good and valid and remained as such even after the Commonwealth Government was
restored, except those crimes with political complexion (political crimes) Also, there was no substantial change in
the jurisdiction and structure of the Court of Appeals when the Japanese-initiated Republic abolished the pre-World
War II Court of Appeals, and reorganized it into several courts