Bacani Vs Nacoco [G.R. No. L-9657. November 29, 1956 (sections 2 and 4, Commonwealth Act No. 518).

wealth Act No. 518). It may sue and be

sued in the same manner as any other private corporations, and in
Facts: Plaintiffs herein are court stenographers assigned in Branch
this sense it is an entity different from our government. As this
VI of the Court of First Instance of Manila. During the pendency of
Court hasaptly said, The mere fact that the Government happens
Civil Case No. 2293 of said court, entitled Francisco Sycip vs.
to be a majority stockholder does not make it a public. the term
National Coconut Corporation, AssistantCorporate Counsel Federico
Government of the Republic of the Philippines used in section 2 of
Alikpala, counsel for Defendant ,requested said stenographers for
the Revised Administrative Code refers only to that government
copies of thetranscript of the stenographic notes taken by them
entity through which the functions of thegovernment are exercised
during the hearing. Plaintiffs complied with the request by
as an attribute of sovereignty, and in this are included those arms
delivering to Counsel Alikpala the needed transcript containing 714
through which political authority is made effective whether they be
pages and thereafter submitted to him their billsfor the payment of
provincial, municipal or other form of local government. These are
their fees. The National Coconut Corporation paid the amount of
whatwe call municipal corporations. They do not include
P564 to Leopoldo T. Bacaniand P150 to Mateo A. Matoto for said
government entities which are given a corporate personality
transcript at the rate of P1 per page the Auditor General required
separate and distinct from the government and which are governed
the Plaintiffs to reimburse said amounts on the strength of a circular
by the Corporation Law. Their powers, dutiesand liabilities have to
of the Department of Justice wherein the opinion was expressed
be determined in the light of that law and of their corporate
that the National Coconut Corporation, being a government entity,
charters. They do not thereforecome within the exemption clause
was exempt from the payment of the fees in question.
prescribed in section 16, Rule 130 of our Rules of Court
Issue : WON NACOCO is a Government Entity
Central Bank of the Philippines v. CA (1985)
Held: They do not acquire that status for the simple reason that
Facts:
they donot come under the classification of municipal or public
corporation. Take for instance the National CoconutCorporation. April 28, 1965 - Island Savings Bank (ISB) approved the loan
While it was organized with the purpose of adjusting the coconut application for P80,000 of Sulpicio Tolentino, who, as a security for
industry to a position independent of trade preferences in the the loan, also executed a real estate mortgage over his 100-ha land.
United States and of providing Facilities for the better curing of The approved loan application called for P80,000 loan, repayable in
copra products and the proper utilization of coconut by-products, a semi-annual installments for a period of 3 years, with 12% interest.
function which our government has chosen to exercise to promote
May 22, 1965 a mere P17,000 partial release of the loan was
thecoconut industry, however, it was given a corporate power
made by ISB, and Tolentino and his wife Edita signed a promissory
separate and distinct from our government, for it wasmade subject
note for P17,000 at 12% annual interest, payable within 3 years
to the provisions of our Corporation Law in so far as its corporate
from the date of execution of the contract at semi-annual
existence and the powers that it mayexercise are concerned
installments of P3,459.
An advance interest for the P80,000 loan covering a 6-mo period
amounting to P4,800was deducted from the partial release of
CA, on appeal by Tolentino, modified CFIs decision by affirming
P17,000, but this was refunded to Tolentino on July 23, 1965, after
dismissal of Tolentinos petition for specific performance, but ruled
being informed by ISB that there was no fund yet available for the
that ISB can neither foreclose the mortgage nor collect the P17,000
release of the P63,000 balance.
loan.
Aug. 13, 1965 the Monetary Board of the Central Bank issued
Resolution No. 1049, which prohibited ISB from making new loans
and investments, after finding that it was suffering liquidity SC: The parties, in the P80,000 loan agreement, undertook
problems. reciprocal obligations, wherein the obligation/promise of each party
is the consideration for that of the other; and when one party has
June 14, 1968 the Monetary Board issued Resolution No. 967,
performed or is ready and willing to perform his part of the
which prohibited ISB from doing business in the Philippines, after
contract, the other party who has not performed or is not ready and
finding that it failed to put up the required capital to restore its
willing to perform incurs in delay (Art. 1169, CC).
solvency.
When Tolentino executed a real estate mortgage, he signified his
Aug. 1, 1968 ISB, in view of non-payment of the P17,000 covered
willingness to pay the P80,000 loan, and from such date, the
by the promissory note, filed an application for the extra-judicial
obligation of ISB to furnish the loan accrued. Thus, ISBs delay
foreclosure of the real estate mortgage covering the 100-ha land;
started on April 28, 1965 and lasted 3 years or when Resolution No.
and the sheriff scheduled auction.
967 was issued prohibiting ISB from doing further business, which
Tolentino filed a petition with the CFI for injunction, specific made it legally impossible from ISB to furnish the P63,000 of the
performance or rescission and damages with preliminary injunction, loan.
alleging that since ISB failed to deliver the P63,000 remaining
Resolution No. 1049 cannot interrupt the default of ISB in complying
balance of the loan, he is entitled to specific performance by
with its obligation to release the P63,000 balance because it merely
ordering ISB to deliver it with interest of 12% per annum from April
prohibited ISB from making new loans and investments, not from
28, 1965, and if said balance cannot be delivered, to rescind the real
releasing the balance of loan agreements previously contracted.
estate mortgage.
The mere pecuniary inability to fulfill an engagement does not
CFI issued a TRO enjoining ISB from continuing with the foreclosure
discharge the obligation of the contract, nor does it constitute any
of the mortgage, however, after finding Tolentinos petition
defense to a decree of specific performance; and the mere fact of
unmeritorious, ordered the latter to pay ISB P17,000 plus legal
insolvency of a debtor is never an excuse for the nonfulfillment of
interest and legal charges and lifting the TRO so the sheriff may
an obligation, but instead, is taken as a breach of contract.
proceed with the foreclosure.
The fact that Tolentino demanded and accepted the refund of the
pre-deducted interest cannot be taken as a waiver of his right to
collect the P63,000 balance. The act of ISB in asking for the advance
interest was improper considering that only P17,000 out of the
P80,000 loan was released.
The alleged discovery by ISB of the overvaluation of the loan
collateral cannot exempt it from complying with its obligation to
furnish the entire P80,000 loan because bank officials/employees
have the obligation to investigate the existence and valuation of the
properties being offered as a loan security before approving the
loan application.
Issues/Held/Ratio
1) WON the action of Tolenitno for specific performance can
prosper. NO.
Since ISB was in default under the agreement, Tolentino may
choose between specific performance or rescission, but since ISB is
now prohibited from doing further business, the only remedy left is
Rescission only for the P63,000 balance of the loan.
2) WON Tolentino is liable to pay the P17,000 debt covered by
the promissory note. YES.
The bank was deemed to have complied with its reciprocal
obligation to furnish a P17,000 loan. The promissory note gave rise
to Tolentinos reciprocal obligation to pay such loan when it falls
due and his failure to pay the overdue amortizations under the
promissory note made him a party in default, hence not entitled to
rescission (Art. 1191, CC). ISB has the right to rescind the promissory
note, being the aggrieved party.
Since both parties were in default in the performance of their
reciprocal obligations, both are liable for damages. In case both
parties have committed a breach of their reciprocal obligations, the
liability of the first infractor shall be equirably tempered by the
courts (Art. 1192, CC). The liability of ISB for damages in not
furnishing the entire loan is offset by the liability of Tolentino for
damages (penalties and surcharges) for not paying his overdue
P17,000 debt. Since Tolentino derived some benefit for his use of
the P17,000, he should account for the interest thereon (interest
was not included in the offsetting).
3) WON Tolentinos real estate mortgage can be foreclosed to
satisfy the P17,000 if his liability to pay therefor subsists.
NO.
The fact that when Tolentino executed his real estate mortgage, no
consideration was then in existence, as there was no debt yet
because ISB had not made any release on the loan, does not make
the real estate mortgage void for lack of consideration.
It is not necessary that any consideration should pass at the time of
the execution of the contract of real mortgage. When the
consideration is subsequent to the mortgage, the latter can take
effect only when the debt secured by it is created as a binding
contract to pay. And when there is partial failure of consideration,
the mortgage becomes unenforceable to the extent of such failure.
Where the indebtedness actually owing to the holder of the
mortgage is less than the sum named in the mortgage, the
mortgage cannot be enforced for more than the actual sum due.
Since ISB failed to furnish the P63,000 balance, the real estate
mortgage of Tolentino became unenforceable to such extent.
P63,000 is 78.75% of P80,000, hence the mortgage covering 100 ha
is unenforceable to the extent of 78.75 ha. The mortgage covering
the remainder of 21.25 ha subsists as a security for the P17,000
debt.
Judgment:
1) Tolentino is ordered to pay ISB P17,000 plus P41, 210 (12%
interest per annum)
2) In case Tolentino fails to pay, his real estate mortgage
covering 21.25 ha shall be foreclosed to satisfy his total
indebtedness
3) The real estate mortgage covering 78.75 ha is
unenforceable and ordered released in favor of Tolentino
IRON STEEL AUTHORITY vs COURT OF APPEALS, G.R. No. 102976
October 25, 1995
Facts
Petitioner Iron Steel Authority (ISA) was created by PD No.
272 in order, generally, to develop and promote the iron and steel
industry. PD No. 272 initially created ISA for a term of 5 years
counting from August 9, 1973. When ISAs original term expired on
October 10, 1978, its term was extended for another 10 years by EO
No. 555 dated August 31, 1979.
The National Steel Corporation (NSC) then a wholly owned
subsidiary of the National Development Corporation which is itself an
entity wholly owned by the National Government, embarked on an
expansion program embracing, among other things, the construction
of an integrated steel mill in Iligan City. The construction of such steel
mill was considered a priority and major industrial project of the
government. Pursuant to the expansion program of the NSC,
Proclamation No. 2239 was issued by the President of the Philippines
on November 16, 1982 withdrawing from sale or settlement a large
tract of public land located in Iligan City, and reserving that land for
the use and immediate occupancy of NSC.
Since certain portions of the aforesaid public land were
occupied by a non-operational chemical fertilizer plant and related
facilities owned by Maria Cristina Fertilizer Corporation (MCFC), LOI
No. 1277, also dated November 16, 1982, was issued directing the
NSC to negotiate with the owners of MCFC, for and on behalf of the
Government, for the compensation of MCFCs present occupancy
rights on the subject land.
Issue :
Whether or not the Government is entitled to be substituted
for ISA in view of the expiration of ISAs term.
Held :
 Yes. Clearly, ISA was vested with some of the powers or
attributed normally associated with juridical personality. There is,
however, no provision in PD No. 272 recognizing ISA as possessing
general or comprehensive juridical personality separate and distinct
from that of the government. The ISA in fact appears to the Court to
be a non-incorporated agency or instrumentality of the RP, or more
precisely of the Government of the Philippines. It is common
knowledge that other agencies or instrumentalities of the
Government of the Republic are cast in corporate form, that is to say,
are incorporated agencies or instrumentalities, sometimes with and
at other times without capital stock, and accordingly vested with a
juridical personality distinct from the personality of the Republic.
We consider that the ISA is properly regarded as an agent or
delegate of the RP. The Republic itself is a body corporate and
juridical person vested with the full panoply of powers and attributes
which are compendiously described as legal personality.
When the statutory term of non-incorporated agency
expires, the powers, duties and functions as well as the assets and
liabilities of that agency revert back to, and are reassumed by the RP,
in the absence of special provisions of law specifying some other
disposition thereof, e.g., devolution or transmission of such powers,
duties and functions, etc. to some other identified successor agency
or instrumentality of the RP.
When the expiring agency is an incorporated one, the
consequence of such expiry must be looked for, in the first instance,
in the charters and, by way of supplementation, the provisions of the
Corporation Code. Since in the instant case, ISA is a non-incorporated
agency or instrumentality of the Republic, its powers, duties and
functions, assets and liabilities are properly regarded as folded back
into the Government and hence assumed once again by the Republic,
no special statutory provision having been shown to have mandated
succession thereto by some other entity or agency of the Republic.
In the instant case, ISA substituted the expropriation proceedings in
its capacity as an agent or delegate or representative of the Republic
of the Philippines pursuant to its authority under PD 272.
The principal or the real party in interest is thus the Republic of the
Philippines and not the NSC, even though the latter may be an
ultimate user of the properties involved.
From the foregoing premises, it follows that the Republic is
entitled to be substituted in the expropriation proceedings in lieu of
ISA, the statutory term of ISA having expired. Put a little differently,
the expiration of ISAs statutory term did not by itself require or
justify the dismissal of the eminent domain proceedings.
Fontanilla vs Maliaman
FACTS: A pick up owned by the National Irrigation Administration
and driven officially by its regular driver, Hugo Garcia, bumped a
bicycle ridden by Francisco Fontanilla, which resulted in the latter's
death. The parents of Francisco filed a suit for damages against
Garcia and the NIA, as Garcia's employer. After trial, the court
awarded actual, moral and exemplary damages to Spouses
Fontanilla. NIA appealed. The Solicitor General contends that the
NIA does not perform solely and primarily proprietary functions but
is an agency of the government tasked with governmental
functions, and is therefore not liable for the tortious act of its driver
Hugo Garcia, who was not its special agent.
ISSUE:
May NIA, a government agency, be held liable for the damages
caused by the negligent act of its driver who was not its special
agent?
HELD:
Yes. NIA is a government agency with a juridical
personality separate and distinct from the government. It is not a
mere agency of the government but a corporate body
performing proprietary functions. Therefore, it may be held liable
for the damages caused by the negligent act of its driver who was
not its special agent. (Fontanilla vs. Maliaman, G.R. Nos. L-55963 &
61045, February 27, 1991)
RATIO:
Section 1 of RA No. 3601 tells us that NIA is a government agency
invested with a corporate personality separate and distinct from the
government, thus is governed by the Corporation Law. Section 2,
subsection f of PD 552 provides that NIA also has its own assets and
liabilities and has corporate powers to be exercised by a Board of
Directors. Section 2, subsection b of PD 552 provides that NIA may
sue and be sued in court.
Of equal importance is the case of National Waterworks and
Sewerage Authority (NAWASA) vs. NWSA Consolidated Unions, 11
SCRA 766, which propounds the thesis that "the NAWASA is not an
agency performing governmental functions; rather it performs
proprietary functions . . . ." The functions of providing water supply
and sewerage service are regarded as mere optional functions of
government even though the service rendered caters to the
community as a whole and the goal is for the general interest of
society.
Like the NAWASA, the National Irrigation Administration was not
created for purposes of local government. While it may be true that
the NIA was essentially a service agency of the government aimed
at promoting public interest and public welfare, such fact does not
make the NIA essentially and purely a "government-function"
corporation. NIA was created for the purpose of "constructing,
improving, rehabilitating, and administering all national irrigation
systems in the Philippines, including all communal and pump
irrigation projects." Certainly, the state and the community as a
whole are largely benefited by the services the agency renders, but
these functions are only incidental to the principal aim of the
agency, which is the irrigation of lands.
NOTES:
The liability of the State has two aspects. namely:
1. Its public or governmental aspects where it is liable for the
tortious acts of special agents only.
2. Its private or business aspects (as when it engages in private
enterprises) where it becomes liable as an ordinary
employer. Fontanilla vs. Maliaman, G.R. Nos. L-55963 & 61045,
December 1, 1989)
BIRAOGO V. PHILIPPINE TRUTH COMMISSION 2010, G. R. No.
192935. December 7, 2010 (CASE DIGEST)
TOPIC: POWERS OF THE EXECUTIVE
LOUIS "BAROK" C. BIRAOGO, petitioner, v. THE PHILIPPINE TRUTH
COMMISSION OF 2010, respondent.
G.R No. 192935. December 7, 2010 determine for such facts if probable cause exist as to warrant the
filing of an information in our courts of law.

REP. EDCEL C. LAGMAN, REP. RODOLFO B. ALBANO, RR., REP.

SIMEON A. DATUMANONG, and REP. ORLANDO B. FUA, SR., Petitioners contends the Constitutionality of the E.O. on the
petitioner, v. EXECUTIVE SECRETARY AND MANAGEMENT grounds that.
SECRETARY FLORENCIO B. ABAD, respondent.

It violates separation of powers as it arrogates the power of

G.R. No. 193036. December 7, 2010 Congress to create a public office and appropriate funds for
its operation;

The provisions of Book III, Chapter 10, Section 31 of the

MENDOZA, J.:
Administrative Code of 1987 cannot legitimize E.O. No. 1
because the delegated authority of the President to
structurally reorganize the Office of the President to
achieve economy, simplicity, and efficiency does not include
FACT: the power to create an entirely new office was inexistent
like the Truth Commission;

The E.O illegally amended the Constitution when it made

E.O No. 1 establishing the Philippine Truth Commission (PTC) of the Truth Commission and vesting it the power duplicating
2010 was signed by President Aquino. The said PTC is a mere branch and even exceeding those of the Office of the Ombudsman
formed under the Office of the President tasked to investigate and the DOJ.
reports of graft and corruption committed by third-level public
officers and employees, their co-principals, accomplices and It violates the equal protection clause
accessories during the previous administration and submit their
findings and recommendations to the President, Congress and the
Ombudsman. However, PTC is not a quasi-judicial body, it cannot ISSUE:
adjudicate, arbitrate, resolve, settle or render awards in disputes
between parties. Its job is to investigate, collect and asses evidences
gathered and make recommendations. It has subpoena powers but WHETHER OR NOT the said E.O is unconstitutional.
it has no power to cite people in contempt or even arrest. It cannot
RULING:

Yes, E.O No. 1 should be struck down as it is violative of the equal

protection clause. The Chief Executives power to create the Ad hoc
Investigating Committee cannot be doubted. Having been
constitutionally granted full control of the Executive Department, to
which respondents belong, the President has the obligation to
ensure that all executive officials and employees faithfully comply
with the law. With AO 298 as mandate, the legality of the
investigation is sustained. Such validity is not affected by the fact
that the investigating team and the PCAGC had the same
composition, or that the former used the offices and facilities of the
latter in conducting the inquiry.