G.R. No.

L-21484

November 29, 1969

THE AGRICULTURAL CREDIT and

COOPERATIVE FINANCING ADMINISTRATION
(ACCFA), petitioner,
vs.
ACCFA SUPERVISORS' ASSOCIATION, ACCFA
WORKERS' ASSOCIATION, and THE COURT OF
INDUSTRIAL RELATIONS, respondents.
Deogracias E. Lerma and Esmeraldo U. Guloy for
petitioner Agricultural Credit and Cooperative
Financing Administration.
Office of the Agrarian Counsel, Department of
Justice for petitioner Agricultural Credit
Administration
J. C. Espinas and Associates for respendents
Confederation of Unions in Government
Corporations Offices, et al. Mariano B. Tuason for
respondent Court of Industrial Relations.
MAKALINTAL, J.:
These are two separate appeals by certiorari from
the decision dated March 25, 1963 (G.R. No. L21484) and the order dated May 21, 1964 (G.R. No.
L-23605) as affirmed by the resolutions en banc, of
the Court of Industrial Relations, in Cases Nos.
3450-ULP and 1327-MC, respectively. The parties,
except the Confederation of Unions in Government
Corporations and Offices (CUGCO), being
practically the same and the principal issues
involved related, only one decision is now rendered
in these two cases.
The Agricultural Credit and Cooperative Financing
Administration (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), hereinafter
referred to as the Unions, are labor organizations
composed of the supervisors and the rank-and-file
employees, respectively, in the ACCFA (now ACA).
G.R. No. L-21484
On September 4, 1961 a collective bargaining
agreement, which was to be effective for a period of
one (1) year from July 1, 1961, was entered into by
and between the Unions and the ACCFA. A few
months thereafter, the Unions started protesting
against alleged violations and non-implementation
of said agreement. Finally, on October 25, 1962 the
Unions declared a strike, which was ended when
the strikers voluntarily returned to work on
November 26, 1962.

On October 30, 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 No. 3450-ULP)
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 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 March 25, 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 September 4, 1961,
including the payment of P30.00 a month
living allowance;
3. To bargain in good faith and
expeditiously with the herein complainants.
The ACCFA moved to reconsider but was turned
down in a resolution dated April 25, 1963 of the
CIR en banc. Thereupon it brought this appeal by
certiorari.
The ACCFA raises the following issues in its
petition, to wit:
1. Whether or not the respondent court has
jurisdiction over this case, which in turn
depends on whether or not ACCFA
exercised governmental or proprietary
functions.
2. Whether or not the collective bargaining
agreement between the petitioner and the
respondent union is valid; if valid, whether
or not it has already lapsed; and if not,
whether or not its (sic) fringe benefits are
already enforceable.
3. Whether or not there is a legal and/or
factual basis for the finding of the
respondent court that the petitioner had
committed acts of unfair labor practice.

4. Whether or not it is within the

competence of the court to enforce the
collective bargaining agreement between the
petitioner and the respondent unions, the
same having already expired.
G.R. No. L-23605
During the pendency of the above mentioned case
(G.R. No. L-21484), specifically on August 8, 1963,
the President of the Philippines signed into law the
Agricultural Land Reform Code (Republic Act No.
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
March 17, 1964 the ACCFA Supervisors'
Association and the ACCFA Workers' Association
filed a petition for certification election with the
Court of Industrial Relations (Case No. 1327-MC)
praying that they be certified as the exclusive
bargaining agents for the supervisors and rankand-file employees, respectively, in the ACA. The
trial Court in its order dated March 30, 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 May 7, 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 petitioners 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 May 21, 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 the
Agricultural Credit Administration." Said order was
affirmed by the CIR en banc in its resolution dated
August 24, 1964.
On October 2, 1964 the ACA filed in this Court a
petition for certiorari with urgent motion to stay

the CIR order of May 21, 1964. In a resolution

dated October 6, 1964, this 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, this Court ordered
the CIR to stay the execution of its order of May 21,
1964.
In this appeal, the ACA in effect challenges the
jurisdiction of the CIR to entertain the petition of
the Unions for certification election on the ground
that it (ACA) is engaged in governmental functions.
The Unions join the issue on this single point,
contending that the ACA forms proprietary
functions.
Under Section 3 of the Agricultural Land Reform
Code the ACA was established, among other
governmental agencies,1 to extend credit and
similar assistance to agriculture, in pursuance of
the policy enunciated in Section 2 as follows:
SEC. 2. Declaration of Policy. It is the
policy of the State:
(1) To establish owner-cultivatorships and
the economic family-size farm as the basis
of Philippine agriculture and, as a
consequence, divert landlord capital in
agriculture to industrial development;
(2) To achieve a dignified existence for the
small farmers free from pernicious
institutional restraints and practices;
(3) To create a truly viable social and
economic structure in agriculture
conducive to greater productivity and
higher farm incomes;
(4) To apply all labor laws equally and
without discrimination to both industrial
and agricultural wage earners;
(5) To provide a more vigorous and
systematic land resettlement program and
public land distribution; and
(6) To make the small farmers more
independent, self-reliant and responsible
citizens, and a source of genuine strength
in our democratic society.
The implementation of the policy thus enunciated,
insofar as the role of the ACA therein is concerned,
is spelled out in Sections 110 to 118, inclusive, of
the Land Reform Code. Section 110 provides that
"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." Under Section 112 the sum of

P150,000,000 was appropriated out of national
funds to finance the additional credit functions of
the ACA as a result of the land reform program laid
down in the Code. Section 103 grants the ACA the
privilege of rediscounting with the Central Bank,
the Development Bank of the Philippines and the
Philippine National Bank. Section 105 directs the
loaning activities of the ACA "to stimulate the
development of farmers' cooperatives," including
those "relating to the production and marketing of
agricultural products and those formed to manage
and/or own, on a cooperative basis, services and
facilities, such as irrigation and transport systems,
established to support production and/or
marketing of agricultural products." Section 106
deals with the extension by ACA of credit to small
farmers in order to stimulate agricultural
production. Sections 107 to 112 lay down certain
guidelines to be followed in connection with the
granting of loans, such as security, interest and
supervision of credit. Sections 113 to 118,
inclusive, invest the ACA with certain rights and
powers not accorded to non-governmental entities,
thus:
SEC. 113. Auditing of Operations. For the
effective supervision of farmers'
cooperatives, the head of the Agricultural
Credit Administration shall have the power
to audit their operations, records and books
of account and to issue subpoena and
subpoena duces tecum to compel the
attendance of witnesses and the production
of books, documents and records in the
conduct of such audit or of any inquiry into
their affairs. Any person who, without
lawful cause, fails to obey such subpoena or
subpoena duces tecum shall, upon
application of the head of Agricultural
Credit Administration with the proper
court, be liable to punishment for contempt
in the manner provided by law and if he is
an officer of the Association, to suspension
or removal from office.
SEC. 114. Prosecution of officials. The
Agricultural Credit Administration, through
the appropriate provincial or city fiscal,
shall have the power to file and prosecute
any and all actions which it may have
against any and all officials or employees of
farmers' cooperatives arising from
misfeasance or malfeasance in office.
SEC. 115. Free Notarial Service. Any
justice of the peace, in his capacity as
notary ex-officio, shall render service free of
charge to any person applying for a loan
under this Code either in administering the
oath or in the acknowledgment of
instruments relating to such loan.

SEC. 116. Free Registration of Deeds.

Any register of deeds shall accept for
registration, free of charge any instrument
relative to a loan made under this Code.
SEC. 117. Writing-off Unsecured and
Outstanding Loans. Subject to the
approval of the President upon
recommendation of the Auditor General,
the Agricultural Credit Administration may
write-off from its books, unsecured and
outstanding loans and accounts receivable
which may become uncollectible by reason
of the death or disappearance of the debtor,
should there be no visible means of
collecting the same in the foreseeable
future, or where the debtor has been
verified to have no income or property
whatsoever with which to effect payment. In
all cases, the writing-off shall be after five
years from the date the debtor defaults.
SEC. 118. Exemption from Duties, Taxes
and Levies. The Agricultural Credit
Administration is hereby exempted from the
payment of all duties, taxes, levies, and
fees, including docket and sheriff's fees, of
whatever nature or kind, in the
performance of its functions and in the
exercise of its powers hereunder.
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.
On March 19, 1964 Executive Order No. 75 was
promulgated. It is entitled: "Rendering in Full Force
and Effect the Plan of Reorganization Proposed by
the Special Committee on Reorganization of
Agencies for Land Reform for the Administrative
Machinery of the Agricultural Land Reform Code,"
and contains the following pertinent provisions:
Section 3. The Land Reform Project
Administration2 shall be considered a single
organization and the personnel complement
of the member agencies including the legal
officers of the Office of the Agrarian
Counsel which shall provide legal services
to the LRPA shall be regarded as one
personnel pool from which the
requirements of the operations shall be
drawn and subject only to the civil service
laws, rules and regulations, persons from
one agency may be freely assigned to
positions in another agency within the
LRPA when the interest of the service so
demands.

Section 4. The Land Reform Project

Administration shall be considered as one
organization with respect to the
standardization of job descriptions position
classification and wage and salary
structures to the end that positions
involving the same or equivalent
qualifications and equal responsibilities and
effort shall have the same remuneration.
Section 5. The Civil Service laws, rules and
regulations with respect to promotions,
particularly in the consideration of person
next in rank, shall be made applicable to
the Land Reform Project Administration as
a single agency so that qualified individuals
in one member agency must be considered
in considering promotion to higher
positions in another member agency.
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 together with the other
member agencies, the personnel complement of all
of which are placed in one single pool and made
available for assignment from one agency to
another, subject only to Civil Service laws, rules
and regulations, position classification and wage
structures.
The appointing authority in respect of the officials
and employees of the ACA is the President of the
Philippines, as stated in a 1st indorsement by his
office to the Chairman of the National Reform
Council dated May 22, 1964, as follows:
Appointments of officials and employees of
the National Land Reform Council and its
agencies may be made only by the
President, pursuant to the provisions of
Section 79(D) of the Revised Administrative
Code. In accordance with the policy and
practice, such appointments should be
prepared for the signature of the Executive
Secretary, "By Authority ofthe President".3
When the Agricultural Reform Code was being
considered by the Congress, the nature of the ACA
was the subject of the following exposition on the
Senate floor:
Senator Tolentino: . . . . "The ACA is not
going to be a profit making institution. It is
supposed to be a public service of the
government to the lessees and farmerowners of the lands that may be bought
after expropriation from owners. It is the
government here that is the lender. The
government should not exact a higher

interest than what we are telling a private

landowner now in his relation to his tenants
if we give to their farmers a higher rate of
interest . . . ." (pp. 17 & 18, Senate Journal
No. 16, July 3, 1963)
The reason is obvious, to pinpoint responsibility for
many losses in the government, in order to avoid
irresponsible lending of government money to
pinpoint responsibility for many losses . . . .
Senator Manglapus: ". . . But assuming
that hypothesis, that is the reason why we
are appropriating P150,000,000.00 for the
Agricultural Credit Administration which
will go to intensified credit operations on
the barrio level . . ." (p. 3, Senate Journal
No. 7).
That it is the reason why we are providing for the
expansion of the ACCFA and the weeding out of the
cooperative activity of the ACCFA and turning this
over to the Agricultural Productivity Commission,
so that the Agricultural Credit Administration will
concentrate entirely on the facilitation of credit on
the barrio level with the massive support of 150
million provided by the government. . . . (pp. 4 & 5
of Senate Journal No. 7, July 3, 1963)
. . . But by releasing them from this situation, we
feel that we are putting them in a much better
condition than that in which they are found by
providing them with a business-like way of
obtaining credit, not depending on a paternalistic
system but one which is business-like that is to
say, a government office, which on the barrio level
will provide them that credit directly . . . . (p. 40,
Senate Journal No. 7, July 3, 1963) (emphasis
supplied).
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"),4 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,"5
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, we hold that 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 (G.R. No. L-21824).6 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.7
With the reorganization of the ACCFA and its
conversion into the ACA under the Land Reform
Code and in view of our ruling as to the
governmental character of the functions of the
ACA, the decision of the respondent Court dated
March 25, 1963, 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 G. R. No. L-21484, has become
moot and academic, particularly insofar as the
order to bargain collectively with the respondent
Unions is concerned.
What remains to be resolved is the question of
fringe benefits provided for in the collective
bargaining contract of September 4, 1961. The
position of the ACCFA in this regard is that the
said fringe benefits have not become enforceable
because the condition that they should first be
approved by the Office of the President has not
been complied with. The Unions, on the other
hand, contend that no such condition existed in
the bargaining contract, and the respondent Court
upheld this contention in its decision.
It is to be listed that under Section 3, Article XIV,
of the agreement, the same "shall not become
effective unless and until the same is duly ratified
by the Board of Governors of the Administration."
Such approval was given even before the formal
execution of the agreement, by virtue of
"Resolution No. 67, Regular Meeting No. 7, FY
1960-61, held on August 17, 1961," but with the
proviso that "the fringe benefits contained therein
shall take effect only if approved by the office of the
President." The condition is, therefore, deemed to
be incorporated into the agreement by reference.
On October 23, 1962 the Office of the President, in
a letter signed by the Executive Secretary,
expressed its approval of the bargaining contract
"provided the salaries and benefits therein fixed are
not in conflict with applicable laws and
regulations, are believed to be reasonable
considering the exigencies of the service and the
welfare of the employees, and are well within the

financial ability of the particular corporation to

bear."
On July 1, 1963 the ACCFA management and the
Unions entered into an agreement for the
implementation of the decision of the respondent
Court concerning the fringe benefits, thus:
In the meantime, only Cost of Living
Adjustment, Longevity Pay, and Night
Differential Benefits accruing from July 1,
1961 to June 30, 1963 shall be paid to all
employees entitled thereto, in the following
manner:

reason to set aside the decision of the respondent

Court, but that since the respondent Unions have
no right to the certification election sought by
them nor, consequently, to bargain collectively with
the petitioner, no further fringe benefits may be
demanded on the basis of any collective bargaining
agreement.
The decisions and orders appealed from are set
aside and/or modified in accordance with the
foregoing pronouncements. No costs.
Concepcion, C.J., Reyes, J.B.L., Dizon, Sanchez,
Castro, Teehankee and Barredo, JJ., concur.
Zaldivar, J., concurs in the result.

A) The sum of P180,000 shall be set aside

for the payment of:
1) Night differential benefits for Security
Guards.
2) Cost of Living Adjustment and Longevity
Pay.
3) The unpaid balance due employees on
Item A (1) and (2) this paragraph shall be
paid in monthly installments as finances
permit but not beyond December 20, 1963.
3. All benefits accruing after July 1, 1963,
shall be allowed to accumulate but payable
only after all benefits accruing up to June
30, 1963, as per CIR decision hereinabove
referred to shall have been settled in full;
provided, however, that commencing July 1,
1963 and for a period of only two (2)
months thereafter (during which period the
ACCFA and the Unions shall negotiate a
new Collective Bargaining Agreement) the
provisions of the September 4, 1961
Collective Bargaining Agreement shall be
temporarily suspended, except as to Cost of
Living Adjustment and "political" or noneconomic privileges and benefits
thereunder.
On July 24, 1963 the ACCFA Board of Governors
ratified the agreement thus entered into, pursuant
to the provision thereof requiring such ratification,
but with the express qualification that the same
was "without prejudice to the pending appeal in
the Supreme Court . . . in Case No. 3450-ULP." The
payment of the fringe benefits agreed upon, to our
mind, shows that the same were within the
financial capability of the ACCFA then, and hence
justifies the conclusion that this particular
condition imposed by the Office of the President in
its approval of the bargaining contract was
satisfied.
We hold, therefore, that insofar as the fringe
benefits already paid are concerned, there is no

Separate Opinions
FERNANDO, J., concurring:
The decision reached by this Court so ably given
expression in the opinion of Justice Makalintal,
characterized with vigor, clarity and precision,
represents what for me is a clear tendency not to
be necessarily bound by our previous
pronouncements on what activities partake of a
nature that is governmental.1 Of even greater
significance, there is a definite rejection of the
"constituent-ministrant" criterion of governmental
functions, followed in Bacani v. National Coconut
Corporation.2 That indeed is cause for gratification.
For me at least, there is again full adherence to the
basic philosophy of the Constitution as to the
extensive and vast power lodged in our government
to cope with the social and economic problems that
even now sorely beset us. There is therefore full
concurrence on my part to the opinion of the
Court, distinguished by its high quality of juristic
craftsmanship. I feel however that the matter is of
such vital importance that a separate concurring
opinion is not inappropriate. It will also serve to
give expression to my view, which is that of the
Court likewise, that our decision today does not
pass upon the rights of labor employed in
instrumentalities of the state discharging
governmental functions.
1. In the above Bacani decision, governmental
functions are classified into constituent 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. President Wilson
enumerates the constituent functions 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.'
"3
The ministrant functions were then enumerated,
followed by a statement of the basis that would
justify engaging in such activities. Thus: "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 determining 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."4
Reference is made in the Bacani decision to the
first of the many publications of Justice Malcolm
on the Philippine government, which appeared in
1916,5 adopting the formulation of the then
Professor, later President, Woodrow Wilson of the
United States, in a textbook on political science the
first edition of which was published in 1898. The
Wilson classification reflected the primacy of the
dominant laissez-faire concept carried into the
sphere of government.
A most spirited defense of such a view was given by
former President Hadley of Yale in a series of three
lectures delivered at Oxford University in 1914.
According to President Hadley: "I shall begin with a
proposition which may sound somewhat startling,
but which I believe to be literally true. The whole
American political and social system is based on
industrial property right, far more completely than
has ever been the case in any European country.
In every nation of Europe there has been a certain
amount of traditional opposition between the
government and the industrial classes. In the
United States no such tradition exists. In the
public law of European communities industrial
freeholding is a comparatively recent development.
In the United States, on the contrary, industrial
freeholding is the foundation on which the whole
social order has been established and built up."6
The view is widely accepted that such a
fundamental postulate did influence American
court decisions on constitutional law. As was
explicitly stated by Justice Cardozo, speaking of

that era: "Laissez-faire was not only a counsel of

caution which statesmen would do well to heed. It
was a categorical imperative which statesmen as
well as judges, must obey."7 For a long time,
legislation tending to reduce economic inequality
foundered on the rock that was the due process
clause, enshrining as it did the liberty of contract.
To cite only one instance, the limitation of
employment in bakeries to sixty hours a week and
ten hours a day under a New York statute was
stricken down for being tainted with a due process
objection in Lochner v. New York.8 It provoked one
of the most vigorous dissents of Justice Holmes,
who was opposed to the view that the United
States Constitution did embody laissez-faire. Thus:
"General propositions do not decide concrete cases.
The decision will depend on a judgment or
intuition more subtle than any articulate major
premise. But I think that the proposition just
stated, if it is accepted, will carry us far toward the
end. Every opinion tends to become a law. I think
that the word 'liberty,' in the 14th Amendment, is
perverted when it is held to prevent the natural
outcome of a dominant opinion, unless it can be
said that a rational and fair man necessarily would
admit that the statute proposed would infringe
fundamental principles as they have been
understood by the traditions of our people and our
law. It does not need research to show that no such
sweeping condemnation can be passed upon the
statute before us. A reasonable man might think it
a proper measure on the score of health. Men
whom I certainly could not pronounce
unreasonable would uphold it as a first installment
of a general regulation of the hours of work.
Whether in the latter aspect it would be open to
the charge of inequality I think it unnecessary to
discuss." It was not until 1908, in Muller v.
Oregon,9 that the American Supreme Court held
valid a ten-hour maximum for women workers in
laundries and not until 1917 in Bunting v. Oregon10
that such a regulatory ten-hour law applied to men
and women passed the constitutional test.
Similarly, state legislation fixing minimum wages
was deemed offensive to the due process clause in
a 1923 decision in Adkins v. Children's Hospital.11
Only in 1937, in the leading case of West Coast
Hotel v. Parrish,12 was the Adkins case overruled
and a minimum wage law New York statute upheld.
The same unsympathetic attitude arising from the
laissez-faire concept was manifest in decisions
during such period, there being the finely-spun
distinctions in the Wolff Packing Co. v. Court of
Industrial Relations13 decision, as to when certain
businesses could be classified as affected with
public interest to justify state regulation as to
prices. After eleven years, in 1934, in Nebbia v.
New York,14 the air of unreality was swept away by
this explicit pronouncement from the United States
Supreme Court: "The phrase 'affected with a public
interest' can, in the nature of things, mean no

more than that an industry, for adequate reason, is

subject to control for the public good."
It is thus apparent that until the administration of
President Roosevelt, the laissez-faire principle
resulted in the contraction of the sphere where
governmental entry was permissible. The object
was to protect property even if thereby the needs of
the general public would be left unsatisfied. This
was emphatically put forth in a work of former
Attorney General, later Justice, Jackson, citing an
opinion of Judge Van Orsdel. Thus: "It should be
remembered that of the three fundamental
principles which underlie government, and for
which government exists, the protection of life,
liberty, and property, the chief of these is
property . . . ."15 The above excerpt from Judge Van
Orsdel forms part of his opinion in Children's
Hospital v. Adkins, when decided by the Circuit
Court of Appeals.16
Nonetheless, the social and economic forces at
work in the United States to which the new deal
administration of President Roosevelt was most
responsive did occasion, as of 1937, greater
receptivity by the American Supreme Court to a
philosophy less rigid in its obeisance to property
rights. Earlier legislation deemed offensive to the
laissez-faire concept had met a dismal fate. Their
nullity during his first term could, more often than
not, be expected.17
As a matter of fact, even earlier, in 1935, Professor
Coker of Yale, speaking as a historian, could
already discern a contrary drift. Even then he
could assert that the range of governmental
activity in the United States had indeed expanded.
According to him: "Thus both liberals and
conservatives approve wide and varied
governmental intervention; the latter condemning
it, it is true, when the former propose it, but
endorsing it, after it has become a fixed part of the
status quo, as so beneficial in its effects that no
more of it is needed. Our history for the last halfcentury shows that each important governmental
intervention we have adopted has been called
socialistic or communistic by contemporary
conservatives, and has later been approved by
equally conservative men who now accept it both
for its proved benefits and for the worthy traditions
it has come to represent. Both liberal and
conservative supporters of our large-scale business
under private ownership advocate or concede the
amounts and kinds of governmental limitation and
aid which they regard as necessary to make the
system work efficiently and humanely. Sooner or
later, they are willing to have government intervene
for the purpose of preventing the system from
being too oppressive to the masses of the people,
protecting it from its self-destructive errors, and
coming to its help in other ways when it appears
not to be able to take care of itself."18

At any rate, by 1943, the United States was

reconciled to laissez-faire having lost its
dominance. In the language of Justice Jackson in
the leading case of West Virginia State Board of
Education v. Barnette:19 "We must transplant these
rights to a soil in which the laissez-faire concept or
principle of non-interference has withered at least
as to economic affairs, and social advancements
are increasingly sought through closer integration
of society and through expanded and strengthened
governmental controls."
2. The influence exerted by American
constitutional doctrines unavoidable when the
Philippines was still under American rule
notwithstanding, an influence that has not
altogether vanished even after independence, the
laissez-faire principle never found full acceptance
in this jurisdiction, even during the period of its
full flowering in the United States. Moreover, to
erase any doubts, the Constitutional Convention
saw to it that our fundamental law embodies a
policy of the responsibility thrust on government to
cope with social and economic problems and an
earnest and sincere commitment to the promotion
of the general welfare through state action. It
would thus follow that the force of any legal
objection to regulatory measures adversely
affecting property rights or to statutes organizing
public corporations that may engage in competition
with private enterprise has been blunted. Unless
there be a clear showing of any invasion of rights
guaranteed by the Constitution, their validity is a
foregone conclusion. No fear need be entertained
that thereby spheres hitherto deemed outside
government domain have been enchroached upon.
With our explicit disavowal of the "constituentministrant" test, the ghost of the laissez-faire
concept no longer stalks the juridical stage.
As early as 1919, in the leading case of Rubi V.
Provincial Board of Mindoro,20 Justice Malcolm
already had occasion to affirm: "The doctrines of
laissez-faire and of unrestricted freedom of the
individual, as axioms of economic and political
theory, are of the past. The modern period has
shown a widespread belief in the amplest possible
demonstration of governmental activity. The Courts
unfortunately have sometimes seemed to trail after
the other two branches of the Government in this
progressive march."
It was to be expected then that when he spoke for
the Court in Government of the Philippine Islands v.
Springer,21 a 1927 decision, he found nothing
objectionable in the government itself organizing
and investing public funds in such corporations as
the National Coal Co., the Phil. National Bank, the
National Petroleum Co., the National Development
Co., the National Cement Co. and the National Iron
Co. There was not even a hint that thereby the
laissez-faire concept was not honored at all. It is

true that Justice Malcolm concurred with the

majority in People v. Pomar,22 a 1924 opinion,
which held invalid under the due process clause a
provision providing for maternity leave with pay
thirty days before and thirty days after
confinement. It could be that he had no other
choice as the Philippines was then under the
United States, and only recently the year before,
the above-cited case of Adkins v. Children's
Hospital,23 in line with the laissez-faire principle,
did hold that a statute providing for minimum
wages was constitutionally infirm on the same
ground.
Our constitution which took effect in 1935, upon
the inauguration of the Commonwealth of the
Philippines, erased whatever doubts there might be
on that score. Its philosophy is antithetical to the
laissez-faire concept. Delegate, later President,
Manuel Roxas, one of the leading members of the
Constitutional Convention, in answer precisely to
an objection of Delegate Jose Reyes of Sorsogon,
who noted the "vast extensions in the sphere of
governmental functions" and the "almost unlimited
power to interfere in the affairs of industry and
agriculture as well as to compete with existing
business" as "reflections of the fascination exerted
by [the then] current tendencies" in other
jurisdictions,24 spoke thus: "My answer is that this
constitution has a definite and well defined
philosophy, not only political but social and
economic. A constitution that in 1776 or in 1789
was sufficient in the United States, considering the
problems they had at that time, may not now be
sufficient with the growing and ever-widening
complexities of social and economic problems and
relations. If the United States of America were to
call a constitutional convention today to draft a
constitution for the United States, does any one
doubt that in the provisions of that constitution
there will be found definite declarations of policy as
to economic tendencies; that there will be matters
which are necessary in accordance with the
experience of the American people during these
years when vast organizations of capital and trade
have succeeded to a certain degree to control the
life and destiny of the American people? If in this
constitution the gentleman will find declarations of
economic policy, they are there because they are
necessary to safeguard the interests and welfare of
the Filipino people because we believe that the
days have come when in self-defense, a nation may
provide in its constitution those safeguards, the
patrimony, the freedom to grow, the freedom to
develop national aspirations and national interests,
not to be hampered by the artificial boundaries
which a constitutional provision automatically
imposes."25
Delegate Roxas continued further: "The
government is the creature of the people and the
government exercises its powers and functions in

accordance with the will and purposes of the

people. That is the first principle, the most
important one underlying this document. Second,
the government established in this document is, in
its form, in our opinion, the most adapted to
prevailing conditions, circumstances and the
political outlook of the Filipino people. Rizal said,
'Every people has the kind of government that they
deserve.' That is just another form of expressing
the principle in politics enunciated by the French
philosophers when they said: 'Every people has the
right to establish the form of government which
they believe is most conducive to their welfare and
their liberty.' Why have we preferred the
government that is established in this draft?
Because it is the government with which we are
familiar. It is the form of government
fundamentally such as it exists today; because it is
the only kind of government that our people
understand; it is the kind of government we have
found to be in consonance with our experience,
with the necessary modification, capable of
permitting a fair play of social forces and allowing
the people to conduct the affairs of that
government."26
One of the most prominent delegates, a leading
intellectual, former President Rafael Palma of the
University of the Philippines, stressed as a
fundamental principle in the draft of the
Constitution the limitation on the right to property.
He pointed out that the then prevailing view
allowed the accumulation of wealth in one family
down to the last remote descendant, resulting in a
grave disequilibrium and bringing in its wake
extreme misery side by side with conspicuous
luxury. He did invite attention to the few
millionaires at one extreme with the vast masses of
Filipinos deprived of the necessities of life at the
other. He asked the Convention whether the
Filipino people could long remain indifferent to
such a deplorable situation. For him to speak of a
democracy under such circumstances would be
nothing but an illusion. He would thus emphasize
the urgent need to remedy the grave social
injustice that had produced such widespread
impoverishment, thus recognizing the vital role of
government in this sphere.27
Another delegate, Tomas Confesor of Iloilo, was
quite emphatic in his assertion for the need of a
social justice provision which is a departure from
the laissez-faire principle. Thus: "Take the case of
the tenancy system in the Philippines. You have a
tenant. There are hundreds of thousands of
tenants working day in and day out, cultivating the
fields of their landlords. He puts all his time, all his
energy, the labor and the assistance of his wife and
children, in cultivating a piece of ground for his
landlord but when the time comes for the partition
of the products of his toil what happens? If he
produces 25 cavanes of rice, he gets only perhaps

five and the twenty goes to the landlord. Now can

he go to court? Has he a chance to go to court in
order to secure his just share of the products of his
toil? No. Under our present regime of law, under
our present regime of justice, you do not give that
to the poor tenant. Gentlemen, you go to the
Cagayan Valley and see the condition under which
those poor farmers are being exploited day in and
day out. Can they go to court under our present
regime of justice, of liberty, or democracy? The
other day, workmen were shot by the police just
because they wanted to increase or they desired
that their wages be increased from thirty centavos
a day to forty or fifty centavos. Is it necessary to
spill human blood just to secure an increase of ten
centavos in the daily wages of an ordinary laborer?
And yet under our present regime of social justice,
liberty and democracy, these things are happening;
these things, I say, are happening. Are those
people getting any justice? No. They cannot get
justice now from our courts. For this reason, I say
it is necessary that we insert 'social justice' here
and that social justice must be established by law.
Proper legal provisions, proper legal facilities must
be provided in order that there be a regime not of
justice alone, because we have that now and we are
seeing the oppression arising from such a regime.
Consequently, we must emphasize the term 'social
justice'."28
Delegate Ventenilla of Pangasinan reflected the
attitude of the Convention as to why laissez-faire
was no longer acceptable. After speaking of times
having changed, he proceeded: "Since then new
problems have arisen. The spiritual mission of
government has descended to the level of the
material. Then its function was primarily to soothe
the aching spirit. Now, it appears, it must also
appease hunger. Now that we may read history
backwards, we know for instance, that the old
theory of 'laissez-faire' has degenerated into 'big
business affairs' which are gradually devouring the
rights of the people the same rights intended to
be guarded and protected by the system of
constitutional guaranties. Oh, if the Fathers were
now alive to see the changes that the centuries
have wrought in our life! They might contemplate
the sad spectacle of organized exploitation greedily
devouring the previous rights of the individual.
They might also behold the gradual disintegration
of society, the fast disappearance of the bourgeois
the middle class, the backbone of the nation
and the consequent drifting of the classes toward
the opposite extremes the very rich and the very
poor."29
Shortly after the establishment of the
Commonwealth, the then Justice Jose P. Laurel,
himself one of the foremost delegates of the
Constitutional Convention, in a concurring
opinion, later quoted with approval in the leading
case of Antamok Goldfields Mining Co. v. Court of

10

Industrial Relations,30 decided in 1940, explained

clearly the need for the repudiation of the laissezfaire doctrine. Thus: "It should be observed at the
outset that our Constitution was adopted in the
midst of surging unrest and dissatisfaction
resulting from economic and social distress which
was threatening the stability of governments the
world over. Alive to the social and economic forces
at work, the framers of our Constitution boldly met
the problems and difficulties which faced them and
endeavored to crystallize, with more or less fidelity,
the political, social and economic propositions of
their age, and this they did, with the
consciousness that the political and philosophical
aphorism of their generation will, in the language
of a great jurist, 'be doubted by the next and
perhaps entirely discarded by the third.' . . .
Embodying the spirit of the present epoch, general
provisions were inserted in the Constitution which
are intended to bring about the needed social and
economic equilibrium between component
elements of society through the application of what
may be termed as the justitia communis advocated
by Grotius and Leibnits many years ago to be
secured through the counterbalancing of economic
and social forces and opportunities which should
be regulated, if not controlled, by the State or
placed, as it were, in custodia societatis. 'The
promotion of social justice to insure the well-being
and economic security of all the people' was thus
inserted as vital principle in our
Constitution. ... ."31 In the course of such
concurring opinion and after noting the changes
that have taken place stressing that the policy of
laissez-faire had indeed given way to the
assumption by the government of the right to
intervene although qualified by the phrase "to
some extent", he made clear that the doctrine in
People v. Pomar no longer retain, "its virtuality as a
living principle."32
3. It must be made clear that the objection to the
"constituent-ministrant" classification of
governmental functions is not to its formulation as
such. From the standpoint of law as logic, it is not
without merit. It has neatness and symmetry.
There are hardly any loose ends. It has the virtue
of clarity. It may be said in its favor likewise that it
reflects all-too-faithfully the laissez-faire notion
that government cannot extend its operation
outside the maintenance of peace and order,
protection against external security, and the
administration of justice, with private rights,
especially so in the case of property, being
safeguarded and a hint that the general welfare is
not to be entirely ignored.
It must not be lost sight of though that logic and
jural symmetry while undoubtedly desirable are
not the prime consideration. This is especially so in
the field of public law. What was said by Holmes,
almost nine decades ago, carry greater conviction

now. "The life of the law has not been logic; it has
been experience. The felt necessities of the time,
the prevalent moral and political theories,
intuitions of public policy avowed or unconscious,
even the prejudices which judges share with their
fellow-men, have had a good deal more to do than
the syllogism in determining the rules by which
men should be governed."33 Then too, there was
the warning of Geny cited by Cardozo that undue
stress or logic may result in confining the entire
system of positive law, "within a limited number of
logical categories, predetermined in essence,
immovable in basis, governed by inflexible
dogmas," thus rendering it incapable of responding
to the ever varied and changing exigencies of life.34,
It is cause enough for concern if the objection to
the Bacani decision were to be premised on the
score alone that perhaps there was fidelity to the
requirements of logic and jural symmetry carried
to excess. What appears to me much more
deplorable is that it did fail to recognize that there
was a repudiation of the laissez-faire concept in the
Constitution. As was set forth in the preceding
pages, the Constitution is distinguished precisely
by a contrary philosophy. The regime of liberty if
provided for, with the realization that under the
then prevalent social and economic conditions, it
may be attained only through a government with
its sphere of activity ranging far and wide, not
excluding matters hitherto left to the operation of
free enterprise. As rightfully stressed in our
decision today in line with what was earlier
expressed by Justice Laurel, the government that
we have established has as a fundamental
principle the promotion of social justice.35 The
same jurist gave it a comprehensive and enduring
definition as the "promotion of the welfare of all the
people, the adoption by the government of
measures calculated to insure economic stability of
all the component elements of society, through the
maintenance of a proper economic and social
equilibrium in the interrelations of the members of
the community, constitutionally, through the
adoption of measures legally justifiable, or extraconstitutionally, through the exercise of powers
underlying the existence of all governments in the
time honored principle of salus populi estsuprema
lex."36
There is thus from the same distinguished pen,
this time writing for the Court, a reiteration of the
view of the laissez-faire doctrine being repugnant
to the fundamental law. It must be added though
that the reference to extra-constitutional measures
being allowable must be understood in the sense
that there is no infringement of specific
constitutional guarantees. Otherwise, the judiciary
will be hard put to sustain their validity if
challenged in an appropriate legal proceeding.

11

The regime of liberty contemplated in the

Constitution with social justice as a fundamental
principle to reinforce the pledge in the preamble of
promoting the general welfare reflects traditional
concepts of a democratic policy infused with an
awareness of the vital and pressing need for the
government to assume a much more active and
vigorous role in the conduct of public affairs. The
framers of our fundamental law were as one in
their strongly-held belief that thereby the grave
and serious infirmity then confronting our bodypolitic, on the whole still with us now, of great
inequality of wealth and mass poverty, with the
great bulk of our people ill-clad, ill-housed, ill-fed,
could be remedied. Nothing else than communal
effort, massive in extent and earnestly engaged in,
would suffice.
To paraphrase Laski, with the necessary
modification in line with such worthy
constitutional ends, we look upon the state as an
organization to promote the happiness of
individuals, its authority as a power bound by
subordination to that purpose, liberty while to be
viewed negatively as absence of restraint impressed
with a positive aspect as well to assure individual
self-fulfillment in the attainment of which greater
responsibility is thrust on government; and rights
as boundary marks defining areas outside its
domain.37 From which it would follow as Laski so
aptly stated that it is the individual's "happiness
and not its well-being [that is] the criterion by
which its behavior [is] to be judged. His interests,
and not its power, set the limits to the authority it
[is] entitled to exercise."38 We have under such a
test enlarged its field of competence. 4. With the
decision reached by us today, the government is
freed from the compulsion exerted by the Bacani
doctrine of the "constituent-ministrant" test as a
criterion for the type of activity in which it may
engage. Its constricting effect is consigned to
oblivion. No doubts or misgivings need assail us
that governmental efforts to promote the public
weal, whether through regulatory legislation of vast
scope and amplitude or through the undertaking of
business activities, would have to face a searching
and rigorous scrutiny. It is clear that their
legitimacy cannot be challenged on the ground
alone of their being offensive to the implications of
the laissez-faire concept. Unless there be a
repugnancy then to the limitations expressly set
forth in the Constitution to protect individual
rights, the government enjoys a much wider
latitude of action as to the means it chooses to
cope with grave social and economic problems that
urgently press for solution. For me, at least, that is
to manifest deference to the philosophy of our
fundamental law. Hence my full concurrence, as
announced at the outset.
5. The opinion of Justice Makalintal contains this
footnote: "It must be stated, however, that we do

not here decide the question not at issue in this

case of whether or not a labor organization
composed employees discharging governmental
functions, which is allowed under the legal
provision just quoted, provided such organization
does not impose the obligation to strike or to join in
strike, may petition for a certification election and
compel the employer to bargain collectively with it
for purposes other than to secure changes or
conditions in the terms and conditions of
employment."
With such an affirmation as to the scope of our
decision there being no holding on the vexing
question of the effects on the rights of labor in view
of the conclusion reached that the function
engaged in is governmental in character, I am in
full agreement. The answer to such a vital query
must await another day.

G.R. No. L-31890 May 29, 1987

PEOPLE'S HOMESITE AND HOUSING
CORPORATION, petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS,
FELICIDAD ALICE, BERGIDA APOSTLE, LUZ
ALCORAN, SOLICIDAD ANDRADE, AUREA ABAS,
GENEROSA ABONGAN, MACARIA ABERION,
ARCADIA ABAJAC, ANTONIA ARNIBAL,
PACENCIA ACODESIN, ESPERANZA ALVAREZ,
DEMETRIA ALVAREZ, JUSTINA AQUINO,
TRINIDAD AGUIRRE, FRANCIA ABOGADO,
CRETALINA AUDENCIAL, NAZARIA ANTARAN,
LELIA AGUIRRE, OLIMPIA ADONES, ELPIDIA
AMOR, IREANA ANDA, ADIA ABDOL, FLORA
AMOLINO, RICARDO ALBA, CANOTO
ARGUELLES, FEDERICO AQUINO, RODOLFO
AUDENCIAL, TEOFILO ABAWAG, LORENZO
ALMORPE, DENETRIO AMITA, JULIAN ADAR,
EFREN ANCHETA, ENIEGO ASPA, HENRY
ABONG, GABRIEL ABALOS, GENEROSO AMARA
JR., FRANCISCO ANSELMO, DOMINGO
ALVAREZ, LEONARDO AGBAY, FRANCISCO
AREDENCIAL, MACARIA ABERIO, LEONILA
ARAGON, FLORENCIO ABELLA, FAUSTINA
ARGUELLES, MAXIMA BALLOS, ANGELINA
BONDOC, ADELA BAUTISTA, LEA BAUTISTA,
TERESITA BENITEZ, BENEDICTA BALINO,
VICTORIA BALUYA, VIOLETA BANANA, FELISA
BOSE, FELISA BALDONADA, CORAZON
BAUTISTA, ANTONIA BACQUIAL, PLACIDA
BADAL, NENITA BELARMINO, MAXIMA
BATOGAN, LEONORA BURGOS, AMADA
BERTOS, SOCORRO BENJAMIN, VIRGINIA
BALUYA, MARCELA BATASLAC, LORENZO
BARTOLOME, ORLANDO LOITA, PAQUITO

12

BALDONADO, RAMOS BENIDO, ODAINO

BALDOMER, SATURNINO BALIBALOS, DIONISIO
BALDONADO, ROLANDO BON, CRISANTO
BORBON, ANASTACIO BOLANTE, MERCEDES
BUEN, ASUNCION BACONAWA, CELSO BADOL,
RODOLFO BAYRON, VICTORIA CABOBOY,
CLEMENTINA CAPUNGCOL, BONIFACIA
CABOBOY, GLORIA CABRALES, VICTORIA
CARILLO, FLORENTINA CONDE, MARCIANA
CABUGAYAN, VEROMINCA CENON, FLORA
CASTILLO, ASUZENA COQUIA, ENES
CATAYONG, CARMELITA CONDES, ADELA
GACHARO, SEMIONA COTEJAR, DIOSDADA
CADORNA, REMEDIOS CATALAN, MARIA CHUA,
VIRGINIA CAJEPE, ROSITA CANGAS,
ADORACION CALMANTE, MARIVIC CHAVEZ,
ENECITO CAPALARAN, RICARDO COLLADO,
VIRGILIO CAJEPE, ISIDRO COBER, MARCELINO
CATARA, ANECITO COMPIO, NECASIO
CAPUNGGOL, MAXIMO CANALES, CRESENCIO
CASAUL, DOMINADOR CASAUL, CALIXTO
CARDOVA, BERNARDO CASIGURAN, JUANITO
CAZATE, GIL CORDOVA, ROQUE CONDE, JR.,
TONY CRUZ, ERNESTO CAPIZ, ERNESTO
CANIZA, DOMINADOR COQUIA, ELPIDIO
CANONIGO, ISIDRO CASTILLO, DOMINADOR
CASTRO, ANDRES CARETO, VALENTINA
CORDERO, BOY CINEZA, ZENAIDA DIZON,
AURORA DAEP, EUNES DE DIOS, PAULINA DE
PAZ, MILAGROS DEMATERA, LORNA DURAN,
GIMINE DE LA CRUZ, LOURDES DELANTAR,
JUANITA DAZO, CRISTITA DERPO, MONSUERTA
DALISAY, TERESE DE LOS SANTOS, MARTA
DELFIN, REMEDIOS DELA ROSA, CONCEPCION
DEL MONTE, LOURDES DELA CRUZ,
DOMINADOR DELA CRUZ, MARIA DE VERA,
GREGORIA DIOLA, SILVINA DE VERA,
FLORENTINA DELA CRUZ, ELADIA DALMACIO,
FLORENTINA DAVID, REYMUNDO DE VERA,
ELPIDIO DIACLES, RICARDO DELA CRUZ,
CERILO DADO, JERMINIAS DOBLE, DELFIN
DIACLES, LAURA DE LEON, JESUS DE VERA,
MAXIMO DIOCSON, CESAR DE JESUS, MIGUEL
DE GUZMAN, PRUDENCIO DUCABO, TOMAS
DESABELLE, ILUMINADO DE VERA, NARCISO
DANTES, MARGARITA DE GUZMAN, REBECCA
DECORO, JESUS DE LA TORRE, FILOMENA
ENCENARES, GREGORIA ESPALGO, SALVACION
ESCOLIN, MAGDALENA EVANGELISTA,
ROBERTO ENCENARES, ENRICO ELLEN,
ELBERTO ESPATERO, SEMEON ESPERAME,
SEMEON IGNACIO, ABRAHAM ESPERITO,
ALFONSO EVASCO DOROTEO ELIYAY,
TERESITA EUGENIO, JOSE ENRIQUEZ,
FORTUNATA FURNES, JACINTA FLORES,
NORMA FRANCISCO, CARLITO FERNANDEZ,
REYMUNDO FONTANILLA, SANTIAGO

FEGOROA, NAPOLEON FERNANDEZ, CRESTETA

GOTEB, LEONCIA GARCIA, AQUILINA
GLORIOSO, ROBERTA GABRINO, JULIANA
GAGALANG, ANTONINA GALLETES, NELLY
GELOGO CORAZON, GILDOC ENCARNACION,
GOJE CRUZ, ROBERTO GALLARDO, LUCIO
GONZALES, TARCILA GONZAGA, ROSALINA
GARCIA, VICTORIO GUBAT, CARLITO
GADORES, MARCELINO GREFIEL, CRISTINA
HAWAC, JOSEFA IGLESIA, FELOMINA ISIDRO,
ELENITA INVETADO, ALICIA JAIME, RAFAEL
JAIME, DOMINGO JADOC, JESUS JINAYON,
ELEUTERIO JADOC ,ANTERO JAMERO,
CONSTANCIA LERIOS, SAMUEL LERIOS,
VICENTE LERIOS, PRICELA LAGIJNSAD,
CELERINA LACHEGA, FILOMENA LECHAUCO,
EULALIA LEON, ASUNCION LESABA,
EXALTACION LUBA, NATIVIDAD LOTO, SEVERA
LEPATA, MARCIANA LOGARTO, CARIDAD
LANIOHAN, FELISA LABRADOR, ALBERTO
LARENIO, DANILO LABRADOR, FE TRAQUINA,
NATIVIDAD LOLA, RICARDO LEGASPI,
ASUNCION MAGBUHOS, MAXIMA MOSCARE,
MEDELINA KANDAL, LEONILA
MERGAL,SILVERIA MESIAS, LOURDES
MURILLO, NATIVIDAD MANIANO SOLIDAD,
MELLANA, FELISIDAD MENDOZA, FRANCISCO
MONTILLA, CORNELIO MONTILLA, VICTORIA
MALO, MARCIANA MEJENIO, ESTELITA
MISLOS, SUSANA MAGAYONES, CORAZON
MEITALPIS, RODORA MANUEL, VIRGINIA
MENDOZA, ERLINDA MORALES, TERESITA
MENDOZA, CERELINA MINERVA,
CONSOLACION MALLIO, GODOFREDO
IABUHAY, PERFECTO MARTINEZ, VICENTE
MARAVILLA, MANUEL MARAVILLA, ARTURO
MERGAL, SEGUNDO MERLAPIS, VICTOR
MENDEZ, RODOLFO MIRANDA, GENEROSO
MACALLA, FLORENDO MEDELO, JAIME
MANALAC, OLIMPIO MONTILLA, ESTEBAN
MENDIOLA, ANTONIO MENDOZA, RAMON
MARALIT, DOMINGO MARQUEZ, ENGRACIA
MOLATO, VICTORIA MARALIT, INCINCIA
MONTECLARO, WILLIE MURCIA, LEONARDO
MARIANO, AMELIA NABUA, AMELIA
NATIVIDAD, FILOMENA NOVILLA, EFIPANIA
NOTARTE, ROLANDO NATALIO, LEONARDO
NABUA, VICTORIANO NAVAJAS, FLORENTINO
NAVARETTE, FEDERICO NOBLE, CARMELITA
OMEGA, ANDREA OBIEN, FARESTA OLAS,
ARCADIA OMEGA, VICENTE OQRIENDO,
MATEO ORTEGA, CARMEN PARANAS, SOLEDAD
PALOMARES, FELICIDAD PENAFLOR, CERIACA
PREMARIYAS, LADISLAO PERALTA, LUCRECIO
PECORRO, FRANCISCO PLAZA, ROBERTO
PANGANOS, GONZALO PORE, CALIXTO
PAGARA, PAREDES PASCUAL, RAUL PACADAR,

13

ANICETO PACADOR, GUADALUPE PEREZ,

RODRIGO, PANGANOD, CRISANTO PRINCIPE,
JUANITO PEGULAYAN, GALICANO QUIJADA,
BARTOLOME QUIJADA, JULILIE QUIZON,
PEREMIA RESULTA, SEGUNDINA REDONIA,
JUANITA REGODOS, WAHINE ROLON,
SERVIDAD ROSA, RUFINA RECARTE, SUZANA
REYNA, ANACORETA REFORZADA, MARTE
RANELLE, RODRIGO ROMA, ANTONIO ROCE
MACARIO REYES, ANTONIO RIVERA, HONORIO
ROMAMALE, MARCELINO REBOSO, MARIANITO
RUMITMAN, CIPRIANO REGAJAL, JOSE
ROBESENCIO, JOSE SYCHANCO, ROSITA
SANTOS, PELAGIA SANTOS, MIGUELA
SINGSON, JUANA SIMANES, LUX SUAREZ,
LEONARDO SALVADO, DEMETRIA SILVERIANO,
DOMINGA SALAZAR, EXELSA SAIMOREN,
MARTA SAN ANDRES, MARINA SALCEDO,
OFELIA SANCHEZ, MARIA SEMON, LUZ
SUMAYA, LOURDES SERRANO, YASOL
SOSTENES, BENJAMIN SAIMORIN, FILES
SALVADO, EDGARDO SALVADO, SOZIMO
SALARDA, MARCELINO SATOL, RICARDO
SETOSIA, ANTONIO SAN JUAN, JACINTO
SORIANO, LEONILA SELFA, AMPARO SAN JUAN,
AMADO SANTOS, GONZALO SALVO, REYNALDO
SIMBOLAN, MARTIN SAMSON, ZOSIMA
TABONARES, SALVADORA TABULOG,
LEOCADIA TARCE, INCENCIA TIBOS,
ADORACION TUGBE, EMERGENCIA TIBOS,
ULDARICA TANGOG, GLORIA TARQUATOR,
ROSA TORRES, ANGEL TALAGAY, MANOLITO
TEVES, MEGUEL TALVO, BASILIO TOBIAS,
RAMON TURQUATOR, PACIFICO TALA, ISAGANI
TESORO, DONATO TRELIPAT, FEDERICO
TIPANAO, ROLANDO TALBO, MIGUEL TESORO,
ROLANDO TIPANAO, ROBERTO TUPAS,
VICTORIA TIBOS, EUFRACIO TUBIAS, SOLIDAD
URSULA, ROSENDA VELLAREAL, ANASTACIA
VILLANUEVA, TERESE VELLERUZ, PELLAR
VILLEGAS, AURELIA VILLAVER, ESTELITA
VILLAFRANCIA, FELIPA VELASQUEZ,
GENEROSA VILLENA, GORGONIA VERSOSA,
SATURNINO VARONA, ROLANDO VILLANUEVA,
CRISENCIA YAP, CECILIA YUMAG, AGAPITA
VENTOROSA, SOLIDAD ALBERTO, FE BANANA,
REYNALDO CONDE, FE DELA CRUZ, SEVERA
DOMINGUEZ, JOSEF DONATO, JOVITA EBANEZ
DOLORES ENRIQUEZ, MARCELA ESTOPEREZ,
SALVACION FEGUROA, FLORANTE GUMATAY,
EUDECIA JATICO, GUILLERMA LAGUNSAD,
TITA LADO, SALVACION MAQUIRANG, JUANITA
MUTANEZ, MEDINA NABUA, NINETA PUNDIDO,
DIONISIO PARANAS, ROSA ROMAGAS,
BENEDICTO NAAGAS, PRIMITIVA ABAS, ROSA
ABELLOS, EDIZA ABADILLOS, JUANITA
ABARECIO, ESTELITA ABRILLO, GREGORIA

ABADE, PROSERFINA ALBANO, FERNANDO

ACAL, CRESTETA ADONA, AGAPITA ANPON,
SULFECIA ARES, ESPERANZA ACRIESCADO,
BELINA ALCANTARA, SUZANA ARENSOL,
DEMETRIA ANTONIO, FELOMINA AGANA,
WILFREDO ANDICOY, JOSE ALBA, BETY
ARCELI, VALERIANA ABADIANO, ALBERT
BANDOY, GREGORIA BANDOY, CLEOTILDE
BAAFDE, BABIANA BANGA, RICARDO BAARDE,
HERMOGENES BOCO, GREGORIO BAYAN,
PABLO BATAN, MARTINA BARTIDO, ROSARIO
BAYADOG, T T MANUEL BOTE, ROSALIA
BULACAN, GUADALUPE BALALA, NORMA
BAUMUNDO, ERLINDA BUEZA, WILFREDO
BALALA, RODOLFO BALITACION, VIRGILIO
BANES, AGUINALDO BERSAMINA, NENITA
BANADO, LEONIDES BACLO, LEONILA
BENAVEDEZ, EVANGELINA BEROL, LUCIANA
BONQUA, MARCELINO BUEZA, RICARDO
BALTAR, TRINIDAD BELMONTE, ADELAIDA
BAUTISTA, LUIS CABALLERO, SALVADOR
CABALES, PACIENSIA CAMELON, MELANIA
CABALE, FELISA CABALE, TERESITA
CASINGAL, CESARIA CALASTE, ANTONIO
CAMARA, JOSE DELA CRUZ, NATIVIDAD CAMA,
FELISIDAD CANBO, FELIO COLASTE,
FLORENTINO CRUZ, ONASIMA COLLANTES,
IRIBERTA CANTEL, MELCHOR CEBRIANO,
OFELIZ CEPRIANO, DAMIANA DOMINGUEZ,
ROSALINA DIZON, FLORENCIA DOBLE,
DIONICIA DULA, VIOLETA DOMINGO, PILAR
DOMINGO, RAMON DEMASUNID, PACENCIA
DECOTON, MARCELINO DIEGO, JR., VICTOR
DOMINGO, RICARDO DOMINGO, JUANITO
ESTEBAN, ADORACION ESPINA, WILFREDO
ESPINA, DIOMICIA ENERES, ROMEO ESPINA,
JUANITA ESTIPONA, LEONA ELAYA, BENITO
ELPA, ADILA FRANCISCO, BEATRIZ FLORES,
NENITA FELIZARDO, EMILIO FERNANDO,
MARGARITA FLORES, MAGDALENA DE
GUZMAN, LOLITA GABOSA, CONDEDA GABON,
LOLITA GUADIANO, DAYLINDA GONZALES,
PRECILA GABITAN, ESPERANZA GARCIA,
AVELINA GRIEGO, LAUREANO GABITAN,
EDUARDO GODOY, ESCA GAHE, SEVERINA
GIPAGA, GERARDA GARDUQUE, MONICO
GILARDO, FLORENTINO GALINO, NORA
GATBONTON, DIONICIA GELLAMERA,
BONIFACIO UBAN, SANTIAGO HIBAQUE,
CRESTETA HILARIO, JUELY HILARIO,
ALFONSO HERMANOS, REMEDIOS HERMIAS,
WILMER INABORE, SUSANA ISIDRO, JULIO
JACOB, MELY LOBO, GODOFREDO LUSANTA,
ROGELIO LUSANTA, PACIFICO LIGO, LUIS
LEON, DOMINGO LAO, LEONARDO MARIANO,
MATILDE MACALALAG, SEVERINA MANGUERA,
CIFREANA MADI, RONCLO MAMING,

14

LEONARDO MUSADA, ANA MARCELO,

ESTELITA MERCAIDA, GAVINO MACABENTA,
ANGELITA MAMENG, ADELINA MARZAN,
ALBINO MELGAR, MARTA MOLAR, PIO
MALAQUENO, HONORIO MOCONI, CEZAR
NAVARRO, FRANCISCO NAVALES, LETICIA
NAVARRO, VITO NAVALES, FELISA OBIERNE,
ADORACION OCAMPO, FELISA ORAYANE,
PEDRO ONTAYEN, EGRACIA ODTTORAN,
CONSTANCIA PILAPIL, APOLONIA PUDASAS,
MARINA PAQUET, ADRIANO PORTEZ, MARIA
PALLE, DOLORES PARIENTE, EUSTAQUIO
PALLE, CARMELITA PELANO, GREGORIA
PELANTE, VICITACION PERDEZ, MARIO
PASCUAL, AUREA PALMA, LUCILA DE LA PEA,
ERIBERTO PORTUGAL, ALFONSA QUIMADA,
LIBERTAD RIVERO, TOMAS RENYS, VICENTE
RAPORNA, JOSEFINA RUES, CRESENCIO
RIVERO, SANTOS RELATA, FLORENCIA
REBOSE, LUCIO ROSALIE, EMERITA RESARDE,
ELY DEL ROMO, GENEROSO RICARDE,
DOUGLAS REYES, CONCEPCION ROSALES,
FELOMINA SEPANA, SALVADOR SALAZAR,
JOSEFINA SALEBIO, FEDILA SEVERINO,
VALENTIN DE LOS SANTOS, EDGARDO
SARTORIO, FRANCISCO SOLIDOR,
PURIFICACION SONORA, ERLINDA SANEZ,
ANICETA SEROY, OFELIA SUFINA, SELVINA
SIAPNO, FELOMINA SEDAN, VALENTINA
SALIDA, GLORIA SARCILLA, ERLINDA TIBULE,
LEONIDES TRIYO, FELIPA TAYCO, ALFREDO
TAMBONG, IGNACIO TABOR, JOVITO
TABORDA, FLORDELISA TOMBOKON,
DEMETRIO VIPINASO, MARIA YERRO, BENITO
ELFA, RODOLFO ARELLANO, TEOTIMO ADAY,
ROBERTO ADAY, PATRICIA BAUTISTA, PAULINA
BOHOL, FELICISIMO BAUTISTA, RODRIGO
BANDOY, NATIVIDAD CABAOBAO, GERUNDIO
CONAL, ADELA CACHARO, ANGELINA DELFIN,
LUCITA DELFIN, JOSE DAINO, HAMPRELIO
DOMINGO, VICTORIA ELMEDO, ADELA
FRANCISCO, LEON GALOSO, ARSENIO GUELAS,
CONCHITA GUERERO, VICENTE HANDOMON,
ERNESTO LACINIA, GIL IBIT, RODRIGO
MANAHAN, RENATO GONZALO, ANGELA
MUPAL, GLORIA MALIHAN, ALFONSO
MACALALAD, ALFONSO MONTALLA, JOSEFA
MENCOTE, ESTELITA MALIHAN, ASUNCION
RAMONS, ALEJANDRO RESURRECCION,
AURORA ROEL, DAVID SAMOPEZ, ALEJANDRO
SOLIS, JR., PANTALEON ABRANO, FELIPA
PASCUAL, VERERO CRISTINA, TERESA
VELLAROS, NATIVIDAD ALBINA, MENECIA
ARUTA, ROSARIO BUSA, DOLORES BONDOY,
ANGELINA BARRIENTOS, SEVERA BANICO,
SOFRONIA BACSAL, FELISA BELARMINO,
FLORENTINA BANDOY, ANACITA CANOSA,

GLECERIA CANDOG, ABADISA COLANGOY,

PRIMITIVA CASTILLO, ANACLITA CANIJOS,
MARIA DUINOG, GREGORIA DIANAN, CARINA
ESQUERA, MARIA FRANCISCO, REMEDIOS
FERNANDEZ, LOURDES FEGUEROA,
FRANCISCO JIMENEZ, MARIA ESPERAGOZA,
DOLORES GALLARDO, MAMERTA LAZARO,
MAURECIA LINDAYA, LEONCIA LOPEZ, TERESA
LACADANGDANG, LETECIA MAGNO, FELISA
PEDRO, CORAZON PABILLARE, TERESA QUINA,
NELIA QUIRINO, EMILDA REYES, ROSALICA
SALAZAR, MARIETA SOLIDOR, JUAN DELA
PEA, MARIA TOLENTINO, VIOLETA TOLIBAS,
LEVITAS TOMAS, ELENA TABARNILLO,
ADELAIDA TAYCO, SEGUNDINA FACIAL,
VIRGINIA VILLA, ERLINDA VELOSO, ISABEL
PRESADO, ALICIA VECINAS and VICITACION
YAYAFRANCA.
The Government Corporate counsel for petitioner.
Armando V. Ampil for private respondents.

CORTES, J.:
In this petition for certiorari, the People's Homesite
and Housing Corporation (PHHC) seeks a reversal
of the Resolution of the Court of Industrial
Relations (CIR) en banc dated February 23, 1970
ordering the PHHC to pay private respondents *
wage differentials for work rendered from July 25,
1967 to February, 1968.
In 1967, the Philippine government and the World
Food program WFP entered into an agreement
which provided that
xxx xxx xxx
Until the efforts of the various
Government Agencies concerned
have been successful in developing
and executing the overall plan for
the Sapang Palay resettlement area,
substantial employment must be
found for the majority of the
squatter families at present living
there. The People's Homesite and
Housing Corporation, hereafter
referred to as PHHC is proposing a
self-help project to be undertaken by
the squatter families for the
construction of two earth dams
(which will involve the moving of
44,165 cu. meters of earth roads of
850 meters long . . . and 17
kilometers of associate drainage and
irrigation channels; at the same

15

time a number of existing roads in

the area will be improved by the
construction of 42 kilometers of
dams and ditches which will involve
the removal of 75,600 cu. meters of
earth.
The undertaking will provide water
for the irrigation of more than 100
hectares of land to be used for
additional food production, the
reservoir will provide non-drinking
water for domestic purposes and will
be stocked with fish.
WFP has been asked to supply the
food for a basic ration for the 500
settlers participating in this scheme,
and for their 2,000 dependents for a
period of 560 days. The food ration
will supplement a cash incentive of
One Half Peso (0.50) per participant
per day. (Exh. "1").
In recruiting participants to the program,
application forms entitled WFP Self Help
Community Project Information Sheet," (Exh. "2")
were issued, mentioning the voluntary nature of
the work to be rendered.
Although the participants were assigned to work
on canals and roads, the projects agreed upon
between the PHHC and the World Food Program
were never fully implemented.
The PHHC ordered the participants to accomplish
a time sheet which formed the basis for the
payment of P0.50 per day and the weekly food
ration. A division chief was also assigned to
administer and manage the Sapang Palay project.
The agency provided the participants with work
tools and equipment such as spades, rakes,
shovels, picks and axes. A PHHC employee acted as
"work supervisor:" he designated the area to be
worked on by the participants pursuant to a
predetermined program made by the PHHC; and he
also conducted ocular inspection in the area.
Complaining about their work and compensation,
the participants went to the Department of Labor.
After investigation, Secretary Ople sent to the
PHHC General Manager the following message:
FINDINGS ON WORKERS SAPANG PALAY
PROJECT REVEAL VIOLATIONS OF LABOR LAWS
STOP SUGGEST LABORERS BE PAID IN
ACCORDANCE WITH MINIMUM WAGELAW
PHHC thereafter suspended work. And the
participants instituted the present action in the
Court of Industrial Relations against the PHHC
praying for the payment of the difference between

the minimum wage (which was P6.00 at that time)

and the P0.50 paid to them, overtime
compensation, and also for reinstatement.
In its answer, PHHC claimed, among others, that it
was exercising governmental functions; that it did
not employ private respondents herein; and that
the CIR had no jurisdiction over PHHC, and over
the subject matter of the action.
After trial, the Court a quo ruled that since there
was no evidence that private respondents rendered
overtime work, their claim was reduced to a mere
money claim over which the regular courts, not the
CIR, had jurisdiction. It thus dismissed the action.
On motion for reconsideration, the Court of
Industrial Relations en banc reversed the order of
dismissal and ordered the PHHC to pay wage
differentials to the claimants; but denied the
claims for reinstatement and overtime
compensation. From that resolution, PHHC
brought the case to Us on certiorari, raising the
following issues:
I
WHETHER OR NOT THE CIR HAS JURISDICTION
OVER PHHC, A GOVERNMENT OWNED AND/OR
CONTROLLED CORPORATION PERFORMING
GOVERNMENTAL FUNCTIONS
II
WHETHER OR NOT (THE) CIR HAS JURISDICTION
OVER THOSE CASES WHERE THERE EXIST(S)
NO EMPLOYER- EMPLOYEE RELATIONSHIP
III
WHETHER OR NOT (THE) CIR HAS JURISDICTION
OVER CASES FOR MERE MONEY CLAIMS
WHERE NO REINSTATEMENT IS SOUGHT
IV
WHETHER OR NOT THERE EXISTS (AN)
EMPLOYER EMPLOYEE (RELATIONSHIP)
CONSIDERING THE FACTUAL CIRCUMSTANCES
We vote to grant the petition.
The jurisdiction of the then Court of Industrial
Relations is set forth in Section I of Commonwealth
Act No. 103, as amended. Construing this
provision of law, We have ruled that the CIR has
jurisdiction over labor disputes involving
government-owned or controlled corporations
performing basically proprietary functions, (GSIS v.
Castillo, 98 Phil. 876 [1956]; GSIS v. GSIS
Employees Assn., 119 Phil. 524 [1964]; SSS

16

Employees Assn. v. Soriano, 117 Phil. 1038 [1963])

but not those performing governmental functions
(University of the Philippines and Anonas v. CIR,
107 Phil. 848 [1960]).
It has not always been easy determining which
functions are governmental in nature and which
are proprietary. The characterization of functions
performed by the government has evolved from the
traditional "constituent- administrant"
classification (as enunciated in the case of Bacani
v. National Coconut Corporation (100 Phil. 468
[1956]) to its disavowal in the case of ACCFA v.
CUGCO et. al (No. L-221484, November 29, 1969,
30 SCRA 649) where, considering the social justice
provision of the 1935 Constitution, We said that
the "constituent-ministrant" classification had
become unrealistic, if not obsolete. There, We gave
our assent to a socio-political philosophy
espousing a greater socialization of economic
forces. We found nothing objectionable in
government undertaking in its sovereign capacity
activities which, by the constituent-ministrant test
would have been considered as merely optional.
We, thus, ruled in said case that the Agricultural
Credit Administration, tasked as it was with the
implementation of the land reform program of the
government was an agency performing
governmental functions.
Coming now to the case at bar. We note that since
1941 when the National Housing Commission
(predecessor of PHHC, which is now known as the
National housing Authority [NHA]) was created, the
Philippine government has pursued a mass
housing and resettlement program to meet the
needs of Filipinos for decent housing. The agency
tasked with implementing such governmental
program was the PHHC. These can be gleaned from
the provisions of Commonwealth Act 648, the
charter of said agency.
We rule that the PHHC is a governmental
institution performing governmental functions.
This is not the first time We are ruling on the
proper characterization of housing as an activity of
government, In the 1985 case of National Housing
Corporation v. Juco and the NLRC (No. L-64313,
January 17, 1985, 134 SCRA 172), We ruled that
housing is a governmental function.
A perusal of the functions of the PHHC and the
NHC indicates that both perform substantially the
same functions.
Commonwealth Act No. 648, as amended, provides:
Section 2. The purposes for which
the (People's Homesite and Housing
Corporation) is created are:

a) The acquisition, development,

improvement, construction, leasing
and selling of lands and buildings or
any interest therein in the cities and
populous towns of the Philippines,
with the object of providing decent
housing for those who may be found
unable otherwise to provide
themselves therewith;
b) The promotion of the physical,
social and economic betterment of
the inhabitants of the cities and
populous towns of the Philippines,
by eliminating therefrom slums and
dwelling places which are
unhygienic or unsanitary and by
providing homes at low cost to
replace those which may be so
eliminated; and,
c) The provision of community and
institutional housing for destitute
individuals and families and for
paupers.
On the other hand, the articles of incorporation of
the NHC provide:
SECOND. That the purpose for which the
corporation is organized is to assist and carry out
the coordinated massive housing program of the
government, principally but not limited to low-cost
housing with the integration, cooperation and
assistance of all governmental agencies concerned,
through the carrying on of any or all the following
activities:

and construction, distribution, assembly and

construction and of applying advanced housing
and building technology.
5) Construction and installation in these projects
of low-cost housing privately or cooperatively
owned water and sewerage system or waste
disposal facilities, and the formulation of a unified
or officially coordinated urban transportation
system as a part of a comprehensive development
plan in these areas.
In the Juco case, We ruled that the NHC, as it was
established as an "instrumentality of government
to accomplish governmental policies and objectives
and extend essential services to the people,"
performs governmental and not proprietary
functions. It thus comes under the jurisdiction of
the Civil Service Commission and not the Ministry
of Labor and Employment (supra, 134 SCRA 172,
180, 181). We see no reason for departing from
that ruling now. The Court of Industrial Relations
had no jurisdiction over the dispute involving the
PHHC and the private respondents.
In view of the foregoing, We deem it unnecessary to
pass upon the other issues raised.
WHEREFORE, the petition is granted. The assailed
resolution of the Court of Industrial Relations is
SET ASIDE.
Fernan (Chairman), Gutierrez, Jr., Paras, Padilla
and Bidin JJ., concur.

1) The acquisition, development or reclamation of

lands for the purpose of construction and building
therein preferably low-cost housing so as to provide
decent and durable dwelling for the greatest
number of inhabitants in the country;
2) The promotion and development of physical
social and economic community growth through
the establishment of general physical plans for
urban, suburban and metropolitan areas to be
characterized by efficient land use patterns;
3) The coordination and implementation of an
projects of the government for the establishment of
nationwide and massive low-cost housing;
4) The undertaking and conducting of research
and technical studies of the development and
promotion of construction of houses and buildings
of sound standards of design liability, durability,
safety, comfort and size for improvement of the
architectural and engineering designs and utility of
houses and buildings with the utilization of new
and) or native materials economics (sic) in material

17

G.R. No. L-55963 December 1, 1989

SPOUSES JOSE FONTANILLA AND VIRGINIA
FONTANILLA, petitioners,
vs.
HONORABLE INOCENCIO D. MALIAMAN and

NATIONAL IRRIGATION ADMINISTRATION,

respondents.
G.R. No. L-61045 December 1, 1989
NATIONAL IRRIGATION ADMINISTRATION,
appellant,
vs.
SPOUSES JOSE FONTANILLA and VIRGINIA
FONTANILLA, appellees
PARAS, J.:
In G.R. No. L-55963, the petition for review on
certiorari seeks the affirmance of the decision
dated March 20, 1980 of the then Court of First
Instance of Nueva Ecija, Branch VIII, at San Jose
City and its modification with respect to the denial
of petitioner's claim for moral and exemplary
damages and attorneys fees.
In G.R. No. 61045, respondent National Irrigation
Administration seeks the reversal of the aforesaid
decision of the lower court. The original appeal of
this case before the Court of Appeals was certified
to this Court and in the resolution of July 7, 1982,
it was docketed with the aforecited number. And in
the resolution of April 3, this case was
consolidated with G.R. No. 55963.
It appears that on August 21, 1976 at about 6:30
P.M., a pickup owned and operated by respondent
National Irrigation Administration, a government
agency bearing Plate No. IN-651, then driven
officially by Hugo Garcia, an employee of said
agency as its regular driver, bumped a bicycle
ridden by Francisco Fontanilla, son of herein
petitioners, and Restituto Deligo, at Maasin, San
Jose City along the Maharlika Highway. As a result
of the impact, Francisco Fontanilla and Restituto
Deligo were injured and brought to the San Jose
City Emergency Hospital for treatment. Fontanilla
was later transferred to the Cabanatuan Provincial
Hospital where he died.
Garcia was then a regular driver of respondent
National Irrigation Administration who, at the time
of the accident, was a licensed professional driver
and who qualified for employment as such regular
driver of respondent after having passed the
written and oral examinations on traffic rules and
maintenance of vehicles given by National
Irrigation Administration authorities.
The within petition is thus an off-shot of the action
(Civil Case No. SJC-56) instituted by petitionersspouses on April 17, 1978 against respondent NIA
before the then Court of First Instance of Nueva
Ecija, Branch VIII at San Jose City, for damages in
connection with the death of their son resulting
from the aforestated accident.

18

After trial, the trial court rendered judgment on

March 20, 1980 which directed respondent
National Irrigation Administration to pay damages
(death benefits) and actual expenses to petitioners.
The dispositive portion of the decision reads thus:
. . . . . Judgment is here rendered
ordering the defendant National
Irrigation Administration to pay to
the heirs of the deceased
P12,000.00 for the death of
Francisco Fontanilla; P3,389.00
which the parents of the deceased
had spent for the hospitalization
and burial of the deceased
Francisco Fontanilla; and to pay the
costs. (Brief for the petitioners
spouses Fontanilla, p. 4; Rollo, p.
132)
Respondent National Irrigation Administration filed
on April 21, 1980, its motion for reconsideration of
the aforesaid decision which respondent trial court
denied in its Order of June 13, 1980. Respondent
National Irrigation Administration thus appealed
said decision to the Court of Appeals (C.A.-G.R. No.
67237- R) where it filed its brief for appellant in
support of its position.
Instead of filing the required brief in the aforecited
Court of Appeals case, petitioners filed the instant
petition with this Court.
The sole issue for the resolution of the Court is:
Whether or not the award of moral damages,
exemplary damages and attorney's fees is legally
proper in a complaint for damages based on quasidelict which resulted in the death of the son of
herein petitioners.
Petitioners allege:
1. The award of moral damages is
specifically allowable. under
paragraph 3 of Article 2206 of the
New Civil Code which provides that
the spouse, legitimate and
illegitimate descendants and
ascendants of the deceased may
demand moral damages for mental
anguish by reason of the death of
the deceased. Should moral
damages be granted, the award
should be made to each of
petitioners-spouses individually and
in varying amounts depending upon
proof of mental and depth of
intensity of the same, which should
not be less than P50,000.00 for each
of them.

2. The decision of the trial court had

made an impression that
respondent National Irrigation
Administration acted with gross
negligence because of the accident
and the subsequent failure of the
National Irrigation Administration
personnel including the driver to
stop in order to give assistance to
the, victims. Thus, by reason of the
gross negligence of respondent,
petitioners become entitled to
exemplary damages under Arts.
2231 and 2229 of the New Civil
Code.

December 28, 1981 by petitioners in

the appeal (CA-G.R. No. 67237-R;
and G. R. No.61045) of the
respondent National Irrigation
Administration before the Court of
Appeals, is an explicit admission of
said petitioners that the herein
petition, is not proper. Inconsistent
procedures are manifest because
while petitioners question the
findings of fact in the Court of
Appeals, they present only the
questions of law before this Court
which posture confirms their
admission of the facts.

3. Petitioners are entitled to an

award of attorney's fees, the amount
of which (20%) had been sufficiently
established in the hearing of May
23, 1979.

3. The fact that the parties failed to

agree on whether or not negligence
caused the vehicular accident
involves a question of fact which
petitioners should have brought to
the Court of Appeals within the
reglementary period. Hence, the
decision of the trial court has
become final as to the petitioners
and for this reason alone, the
petition should be dismissed.

4. This petition has been filed only

for the purpose of reviewing the
findings of the lower court upon
which the disallowance of moral
damages, exemplary damages and
attorney's fees was based and not
for the purpose of disturbing the
other findings of fact and
conclusions of law.
The Solicitor General, taking up the cudgels for
public respondent National Irrigation
Administration, contends thus:
1. The filing of the instant petition is
rot proper in view of the appeal
taken by respondent National
Irrigation Administration to the
Court of Appeals against the
judgment sought to be reviewed. The
focal issue raised in respondent's
appeal to the Court of Appeals
involves the question as to whether
or not the driver of the vehicle that
bumped the victims was negligent in
his operation of said vehicle. It thus
becomes necessary that before
petitioners' claim for moral and
exemplary damages could be
resolved, there should first be a
finding of negligence on the part of
respondent's employee-driver. In
this regard, the Solicitor General
alleges that the trial court decision
does not categorically contain such
finding.
2. The filing of the "Appearance and
Urgent Motion For Leave to File
Plaintiff-Appellee's Brief" dated

19

4. Respondent Judge acted within

his jurisdiction, sound discretion
and in conformity with the law.
5. Respondents do not assail
petitioners' claim to moral and
exemplary damages by reason of the
shock and subsequent illness they
suffered because of the death of
their son. Respondent National
Irrigation Administration, however,
avers that it cannot be held liable for
the damages because it is an agency
of the State performing
governmental functions and driver
Hugo Garcia was a regular driver of
the vehicle, not a special agent who
was performing a job or act foreign
to his usual duties. Hence, the
liability for the tortious act should.
not be borne by respondent
government agency but by driver
Garcia who should answer for the
consequences of his act.
6. Even as the trial court touched
on the failure or laxity of respondent
National Irrigation Administration in
exercising due diligence in the
selection and supervision of its
employee, the matter of due
diligence is not an issue in this case
since driver Garcia was not its

special agent but a regular driver of

the vehicle.
The sole legal question on whether or not
petitioners may be entitled to an award of moral
and exemplary damages and attorney's fees can
very well be answered with the application of Arts.
2176 and 2180 of theNew Civil Code.
Art. 2176 thus provides:
Whoever by act omission causes
damage to another, there being fault
or negligence, is obliged to pay for
damage done. Such fault or
negligence, if there is no pre-existing
cotractual relation between the
parties, is called a quasi-delict and
is governed by the provisions of this
Chapter
Paragraphs 5 and 6 of Art. 21 80 read as follows:
Employers shall be liable for the
damages caused by their employees
and household helpers acting within
the scope of their assigned tasks,
even the though the former are not
engaged in any business or
industry.
The State is responsible in like
manner when it acts through a
special agent.; but not when the
damage has been caused by the
official to whom the task done
properly pertains, in which case
what is provided in Art. 2176 shall
be applicable.
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. (p. 961,
Civil Code of the Philippines;
Annotated, Paras; 1986 Ed. ).
In this jurisdiction, the State assumes a limited
liability for the damage caused by the tortious acts
or conduct of its special agent.
Under the aforequoted paragrah 6 of Art. 2180, the
State has voluntarily assumed liability for acts
done through special agents. The State's agent, if a
public official, must not only be specially
commissioned to do a particular task but that

20

such task must be foreign to said official's usual

governmental functions. If the State's agent is not
a public official, and is commissioned to perform
non-governmental functions, then the State
assumes the role of an ordinary employer and will
be held liable as such for its agent's tort. Where the
government commissions a private individual for a
special governmental task, it is acting through a
special agent within the meaning of the provision.
(Torts and Damages, Sangco, p. 347, 1984 Ed.)
Certain functions and activities, which can be
performed only by the government, are more or
less generally agreed to be "governmental" in
character, and so the State is immune from tort
liability. On the other hand, a service which might
as well be provided by a private corporation, and
particularly when it collects revenues from it, the
function is considered a "proprietary" one, as to
which there may be liability for the torts of agents
within the scope of their employment.
The National Irrigation Administration is an agency
of the government exercising proprietary functions,
by express provision of Rep. Act No. 3601. Section
1 of said Act provides:
Section 1. Name and domicile.-A
body corporate is hereby created
which shall be known as the
National Irrigation Administration,
hereinafter called the NIA for short,
which shall be organized
immediately after the approval of
this Act. It shall have its principal
seat of business in the City of
Manila and shall have
representatives in all provinces for
the proper conduct of its business.
Section 2 of said law spells out some of the NIA's
proprietary functions. ThusSec. 2. Powers and objectives.-The
NIA shall have the following powers
and objectives:
(a) x x x x x x x x x x x x x x x x x x
(b) x x x x x x x x x x x x x x x x x x
(c) To collect from the users of each
irrigation system constructed by it
such fees as may be necessary to
finance the continuous operation of
the system and reimburse within a
certain period not less than twentyfive years cost of construction
thereof; and
(d) To do all such other tthings and
to transact all such business as are

directly or indirectly necessary,

incidental or conducive to the
attainment of the above objectives.
Indubitably, the NIA is a government corporation
with juridical personality and not a mere agency of
the government. Since it is a corporate body
performing non-governmental functions, it now
becomes liable for the damage caused by the
accident resulting from the tortious act of its
driver-employee. In this particular case, the NIA
assumes the responsibility of an ordinary employer
and as such, it becomes answerable for damages.
This assumption of liability, however, is predicated
upon the existence of negligence on the part of
respondent NIA. The negligence referred to here is
the negligence of supervision.
At this juncture, the matter of due diligence on the
part of respondent NIA becomes a crucial issue in
determining its liability since it has been
established that respondent is a government
agency performing proprietary functions and as
such, it assumes the posture of an ordinary
employer which, under Par. 5 of Art. 2180, is
responsible for the damages caused by its
employees provided that it has failed to observe or
exercise due diligence in the selection and
supervision of the driver.
It will be noted from the assailed decision of the
trial court that "as a result of the impact,
Francisco Fontanilla was thrown to a distance 50
meters away from the point of impact while
Restituto Deligo was thrown a little bit further
away. The impact took place almost at the edge of
the cemented portion of the road." (Emphasis
supplied,) [page 26, Rollo]
The lower court further declared that "a speeding
vehicle coming in contact with a person causes
force and impact upon the vehicle that anyone in
the vehicle cannot fail to notice. As a matter of fact,
the impact was so strong as shown by the fact that
the vehicle suffered dents on the right side of the
radiator guard, the hood, the fender and a crack on
the radiator as shown by the investigation report
(Exhibit "E"). (Emphasis supplied) [page 29, Rollo]
It should be emphasized that the accident
happened along the Maharlika National Road
within the city limits of San Jose City, an urban
area. Considering the fact that the victim was
thrown 50 meters away from the point of impact,
there is a strong indication that driver Garcia was
driving at a high speed. This is confirmed by the
fact that the pick-up suffered substantial and
heavy damage as above-described and the fact that
the NIA group was then "in a hurry to reach the
campsite as early as possible", as shown by their

21

not stopping to find out what they bumped as

would have been their normal and initial reaction.
Evidently, there was negligence in the supervision
of the driver for the reason that they were travelling
at a high speed within the city limits and yet the
supervisor of the group, Ely Salonga, failed to
caution and make the driver observe the proper
and allowed speed limit within the city. Under the
situation, such negligence is further aggravated by
their desire to reach their destination without even
checking whether or not the vehicle suffered
damage from the object it bumped, thus showing
imprudence and reckelessness on the part of both
the driver and the supervisor in the group.
Significantly, this Court has ruled that even if the
employer can prove the diligence in the selection
and supervision (the latter aspect has not been
established herein) of the employee, still if he
ratifies the wrongful acts, or take no step to avert
further damage, the employer would still be liable.
(Maxion vs. Manila Railroad Co., 44 Phil. 597).
Thus, too, in the case of Vda. de Bonifacio vs.
B.L.T. Bus Co. (L-26810, August 31, 1970, 34
SCRA 618), this Court held that a driver should be
especially watchful in anticipation of others who
may be using the highway, and his failure to keep a
proper look out for reasons and objects in the line
to be traversed constitutes negligence.
Considering the foregoing, respondent NIA is
hereby directed to pay herein petitioners-spouses
the amounts of P12,000.00 for the death of
Francisco Fontanilla; P3,389.00 for hospitalization
and burial expenses of the aforenamed deceased;
P30,000.00 as moral damages; P8,000.00 as
exemplary damages and attorney's fees of 20% of
the total award.
SO ORDERED.
Padilla, Sarmiento and Regalado, JJ., concur.
Melencio- Herrera (Chairperson,), J., is on leave.

G.R. No. 161872

April 13, 2004

REV. ELLY CHAVEZ PAMATONG, ESQUIRE,

petitioner,
vs.
COMMISSION ON ELECTIONS, respondent.
RESOLUTION
TINGA, J.:

Petitioner Rev. Elly Velez Pamatong filed his

Certificate of Candidacy for President on December
17, 2003. Respondent Commission on Elections
(COMELEC) refused to give due course to
petitioners Certificate of Candidacy in its
Resolution No. 6558 dated January 17, 2004. The
decision, however, was not unanimous since
Commissioners Luzviminda G. Tancangco and
Mehol K. Sadain voted to include petitioner as they
believed he had parties or movements to back up
his candidacy.
On January 15, 2004, petitioner moved for
reconsideration of Resolution No. 6558. Petitioners
Motion for Reconsideration was docketed as SPP
(MP) No. 04-001. The COMELEC, acting on
petitioners Motion for Reconsideration and on
similar motions filed by other aspirants for national
elective positions, denied the same under the aegis
of Omnibus Resolution No. 6604 dated February 11,
2004. The COMELEC declared petitioner and
thirty-five (35) others nuisance candidates who
could not wage a nationwide campaign and/or are
not nominated by a political party or are not
supported by a registered political party with a
national constituency. Commissioner Sadain
maintained his vote for petitioner. By then,
Commissioner Tancangco had retired.
In this Petition For Writ of Certiorari, petitioner
seeks to reverse the resolutions which were
allegedly rendered in violation of his right to "equal
access to opportunities for public service" under
Section 26, Article II of the 1987
Constitution,1 by limiting the number of qualified
candidates only to those who can afford to wage a
nationwide campaign and/or are nominated by
political parties. In so doing, petitioner argues that
the COMELEC indirectly amended the
constitutional provisions on the electoral process
and limited the power of the sovereign people to
choose their leaders. The COMELEC supposedly
erred in disqualifying him since he is the most
qualified among all the presidential candidates,
i.e., he possesses all the constitutional and legal
qualifications for the office of the president, he is
capable of waging a national campaign since he
has numerous national organizations under his
leadership, he also has the capacity to wage an
international campaign since he has practiced law
in other countries, and he has a platform of
government. Petitioner likewise attacks the validity
of the form for the Certificate of Candidacy
prepared by the COMELEC. Petitioner claims that
the form does not provide clear and reasonable
guidelines for determining the qualifications of
candidates since it does not ask for the candidates
bio-data and his program of government.
First, the constitutional and legal dimensions
involved.

22

Implicit in the petitioners invocation of the

constitutional provision ensuring "equal access to
opportunities for public office" is the claim that
there is a constitutional right to run for or hold
public office and, particularly in his case, to seek
the presidency. There is none. What is recognized
is merely a privilege subject to limitations imposed
by law. Section 26, Article II of the Constitution
neither bestows such a right nor elevates the
privilege to the level of an enforceable right. There
is nothing in the plain language of the provision
which suggests such a thrust or justifies an
interpretation of the sort.
The "equal access" provision is a subsumed part of
Article II of the Constitution, entitled "Declaration
of Principles and State Policies." The provisions
under the Article are generally considered not selfexecuting,2 and there is no plausible reason for
according a different treatment to the "equal
access" provision. Like the rest of the policies
enumerated in Article II, the provision does not
contain any judicially enforceable constitutional
right but merely specifies a guideline for legislative
or executive action.3 The disregard of the provision
does not give rise to any cause of action before the
courts.4
An inquiry into the intent of the framers5 produces
the same determination that the provision is not
self-executory. The original wording of the present
Section 26, Article II had read, "The State shall
broaden opportunities to public office and prohibit
public dynasties."6 Commissioner (now Chief
Justice) Hilario Davide, Jr. successfully brought
forth an amendment that changed the word
"broaden" to the phrase "ensure equal access," and
the substitution of the word "office" to "service." He
explained his proposal in this wise:
I changed the word "broaden" to "ENSURE
EQUAL ACCESS TO" because what is
important would be equal access to the
opportunity. If you broaden, it would
necessarily mean that the government
would be mandated to create as many
offices as are possible to accommodate
as many people as are also possible. That
is the meaning of broadening opportunities
to public service. So, in order that we
should not mandate the State to make
the government the number one
employer and to limit offices only to
what may be necessary and expedient
yet offering equal opportunities to
access to it, I change the word
"broaden."7 (emphasis supplied)
Obviously, the provision is not intended to compel
the State to enact positive measures that would
accommodate as many people as possible into

public office. The approval of the "Davide

amendment" indicates the design of the framers to
cast the provision as simply enunciatory of a
desired policy objective and not reflective of the
imposition of a clear State burden.
Moreover, the provision as written leaves much to
be desired if it is to be regarded as the source of
positive rights. It is difficult to interpret the clause
as operative in the absence of legislation since its
effective means and reach are not properly defined.
Broadly written, the myriad of claims that can be
subsumed under this rubric appear to be entirely
open-ended.8 Words and phrases such as "equal
access," "opportunities," and "public service" are
susceptible to countless interpretations owing to
their inherent impreciseness. Certainly, it was not
the intention of the framers to inflict on the people
an operative but amorphous foundation from
which innately unenforceable rights may be
sourced.
As earlier noted, the privilege of equal access to
opportunities to public office may be subjected to
limitations. Some valid limitations specifically on
the privilege to seek elective office are found in the
provisions9 of the Omnibus Election Code on
"Nuisance Candidates" and COMELEC Resolution
No. 645210 dated December 10, 2002 outlining the
instances wherein the COMELEC may motu proprio
refuse to give due course to or cancel a Certificate
of Candidacy.
As long as the limitations apply to everybody
equally without discrimination, however, the equal
access clause is not violated. Equality is not
sacrificed as long as the burdens engendered by
the limitations are meant to be borne by any one
who is minded to file a certificate of candidacy. In
the case at bar, there is no showing that any
person is exempt from the limitations or the
burdens which they create.
Significantly, petitioner does not challenge the
constitutionality or validity of Section 69 of the
Omnibus Election Code and COMELEC Resolution
No. 6452 dated 10 December 2003. Thus, their
presumed validity stands and has to be accorded
due weight.
Clearly, therefore, petitioners reliance on the equal
access clause in Section 26, Article II of the
Constitution is misplaced.
The rationale behind the prohibition against
nuisance candidates and the disqualification of
candidates who have not evinced a bona fide
intention to run for office is easy to divine. The
State has a compelling interest to ensure that its
electoral exercises are rational, objective, and
orderly. Towards this end, the State takes into
account the practical considerations in conducting

23

elections. Inevitably, the greater the number of

candidates, the greater the opportunities for
logistical confusion, not to mention the increased
allocation of time and resources in preparation for
the election. These practical difficulties should, of
course, never exempt the State from the conduct of
a mandated electoral exercise. At the same time,
remedial actions should be available to alleviate
these logistical hardships, whenever necessary and
proper. Ultimately, a disorderly election is not
merely a textbook example of inefficiency, but a rot
that erodes faith in our democratic institutions. As
the United States Supreme Court held:
[T]here is surely an important state interest
in requiring some preliminary showing of a
significant modicum of support before
printing the name of a political organization
and its candidates on the ballot the
interest, if no other, in avoiding confusion,
deception and even frustration of the
democratic [process].11
The COMELEC itself recognized these practical
considerations when it promulgated Resolution No.
6558 on 17 January 2004, adopting the study
Memorandum of its Law Department dated 11
January 2004. As observed in the COMELECs
Comment:
There is a need to limit the number of
candidates especially in the case of
candidates for national positions because
the election process becomes a mockery
even if those who cannot clearly wage a
national campaign are allowed to run. Their
names would have to be printed in the
Certified List of Candidates, Voters
Information Sheet and the Official Ballots.
These would entail additional costs to the
government. For the official ballots in
automated counting and canvassing of
votes, an additional page would amount to
more or less FOUR HUNDRED FIFTY
MILLION PESOS (P450,000,000.00).
xxx[I]t serves no practical purpose to allow
those candidates to continue if they cannot
wage a decent campaign enough to project
the prospect of winning, no matter how
slim.12
The preparation of ballots is but one aspect that
would be affected by allowance of "nuisance
candidates" to run in the elections. Our election
laws provide various entitlements for candidates
for public office, such as watchers in every polling
place,13 watchers in the board of canvassers,14 or
even the receipt of electoral contributions.15
Moreover, there are election rules and regulations
the formulations of which are dependent on the
number of candidates in a given election.

Given these considerations, the ignominious

nature of a nuisance candidacy becomes even more
galling. The organization of an election with bona
fide candidates standing is onerous enough. To
add into the mix candidates with no serious
intentions or capabilities to run a viable campaign
would actually impair the electoral process. This is
not to mention the candidacies which are palpably
ridiculous so as to constitute a one-note joke. The
poll body would be bogged by irrelevant minutiae
covering every step of the electoral process, most
probably posed at the instance of these nuisance
candidates. It would be a senseless sacrifice on the
part of the State.
Owing to the superior interest in ensuring a
credible and orderly election, the State could
exclude nuisance candidates and need not indulge
in, as the song goes, "their trips to the moon on
gossamer wings."
The Omnibus Election Code and COMELEC
Resolution No. 6452 are cognizant of the
compelling State interest to ensure orderly and
credible elections by excising impediments thereto,
such as nuisance candidacies that distract and
detract from the larger purpose. The COMELEC is
mandated by the Constitution with the
administration of elections16 and endowed with
considerable latitude in adopting means and
methods that will ensure the promotion of free,
orderly and honest elections.17 Moreover, the
Constitution guarantees that only bona fide
candidates for public office shall be free from any
form of harassment and discrimination.18 The
determination of bona fide candidates is governed
by the statutes, and the concept, to our mind is,
satisfactorily defined in the Omnibus Election
Code.
Now, the needed factual premises.
However valid the law and the COMELEC issuance
involved are, their proper application in the case of
the petitioner cannot be tested and reviewed by
this Court on the basis of what is now before it.
The assailed resolutions of the COMELEC do not
direct the Court to the evidence which it
considered in determining that petitioner was a
nuisance candidate. This precludes the Court from
reviewing at this instance whether the COMELEC
committed grave abuse of discretion in
disqualifying petitioner, since such a review would
necessarily take into account the matters which
the COMELEC considered in arriving at its
decisions.
Petitioner has submitted to this Court mere
photocopies of various documents purportedly
evincing his credentials as an eligible candidate for
the presidency. Yet this Court, not being a trier of
facts, can not properly pass upon the

24

reproductions as evidence at this level. Neither the

COMELEC nor the Solicitor General appended any
document to their respective Comments.
The question of whether a candidate is a nuisance
candidate or not is both legal and factual. The
basis of the factual determination is not before this
Court. Thus, the remand of this case for the
reception of further evidence is in order.
A word of caution is in order. What is at stake is
petitioners aspiration and offer to serve in the
government. It deserves not a cursory treatment
but a hearing which conforms to the requirements
of due process.
As to petitioners attacks on the validity of the form
for the certificate of candidacy, suffice it to say that
the form strictly complies with Section 74 of the
Omnibus Election Code.This provision specifically
enumerates what a certificate of candidacy should
contain, with the required information tending to
show that the candidate possesses the minimum
qualifications for the position aspired for as
established by the Constitution and other election
laws.
IN VIEW OF THE FOREGOING, COMELEC Case
No. SPP (MP) No. 04-001 is hereby remanded to the
COMELEC for the reception of further evidence, to
determine the question on whether petitioner Elly
Velez Lao Pamatong is a nuisance candidate as
contemplated in Section 69 of the Omnibus
Election Code.
The COMELEC is directed to hold and complete the
reception of evidence and report its findings to this
Court with deliberate dispatch.
SO ORDERED.
Davide, Jr., Puno, Vitug*, Panganiban, Quisumbing,
Ynares-Santiago, Sandoval-Gutierrez, Carpio,
Austria-Martinez, Corona, Carpio-Morales, Callejo,
Sr., and Azcuna, JJ., concur.

G.R. No. L-26386

September 30, 1969

PROVIDENCE WASHINGTON INSURANCE CO.,

plaintiff-appellant,
vs.
REPUBLIC OF THE PHILIPPINES and BUREAU
OF CUSTOMS, defendants-appellees.
FERNANDO, J.:

Providence Washington Insurance Co. filed,

on October 21, 1966, its brief as appellant against
an order of the lower court dismissing its suit for
the non-delivery of thirty cases of steel files, which
cargo was insured by it against loss and damage,
naming as defendants the Republic of the
Philippines and the Bureau of Customs as the
operator of the arrastre service, thus rendering
unavoidable the invocation of the well-settled
doctrine of non-suability of the government. Less
than two months later, on December 17, 1966, our
decision in Mobil Philippines Exploration, Inc. v.
Customs Arrastre Service was promulgated. 1 We
there explicitly held: "The 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."
As of this date, thirty-six subsequent cases,
certainly a figure far from unimpressive, have been
similarly decided expressly reaffirming the above
ruling of governmental immunity from suit without
its consent. 2 The futility of this appeal is quite
apparent. We affirm the lower court order of
dismissal.
The doctrine of non-suability thus holds
undisputed sway. Its primacy appears to be
undeniable. For a suit of this character to prosper,
there must be a showing of consent either in
express terms or by implication through the use of
statutory language too plain to be misinterpreted.
Its absence being obvious, the lower court acted
correctly.
Nor did the Mobil decision blaze a new trail.
So it has been from the time the Constitution took
effect in 1935. Bull v. Yatco, a 1939 decision during
the Commonwealth, spoke to that effect. 3
Adherence to such a view is reflected in the various
cases decided after independence before the Mobil
Exploration case. 4 The classic formulation of
Holmes of this doctrine of non-suability thus bears
restatement: "A sovereign is exempt from suit, not
because of any formal conception or obsolete
theory, but on the logical and practical round that
there can be no legal right as against the authority
that makes the law on which the right depends." 5
This is not to deny that while indeed logical
and far from impractical the doctrine does give rise
to problems considering how widely immersed in
matters hitherto deemed outside its sphere the
government is at present. Nor is it likely
considering its expanding role, demanded by the
times and warranted by the Constitution, that a
halt would be called to many of its activities, at
times unavoidably adversely affecting private
rights. Nonetheless, a continued adherence to the

25

doctrine of non-suability is not to be deplored for

as against the inconvenience that may be caused
private parties, the loss of governmental efficiency
and the obstacle to the performance of its
multifarious functions are far greater if such a
fundamental principle were abandoned and the
availability of judicial remedy were not thus
restricted. With the well known propensity on the
part of our people to go to court, at the least
provocation, the loss of time and energy required to
defend against law suits, in the absence of such a
basic principle that constitutes such an effective
obstacle could very well be imagined.1awphl.nt
At any rate, in case of a money claim arising
from contract, express or implied, which could
serve as a basis for civil action between private,
parties, such a consent has been given by a statute
enacted by the Philippine legislature, even before
the Constitution took effect and still applicable at
present. 6 The procedure provided for in such a
statute 7 was made more expeditious by a
Commonwealth Act, enabling the party or entity,
who feels aggrieved by the final decision of the
Auditor General required to decide the claim within
sixty days, having the right to go to this Court for
final adjudication. 8 It is worthy of note likewise
that in the pursuit of its activities affecting
business, the government has increasingly relied
on private corporations possessing the power to
sue and be sued. 9
Thus the doctrine of non-suability of the
government without its consent, as it has operated
in practice, hardly lends itself to the charge that it
could be the fruitful parent of injustice,
considering the vast and ever-widening scope of
state activities at present being undertaken.
Whatever difficulties for private claimants may still
exist, is, from an objective appraisal of all factors,
minimal. In the balancing of interests, so
unavoidable in the determination of what.
principles must prevail if government is to satisfy
the public weal, the verdict must be, as it has been
these so many years, for its continuing recognition
as a fundamental postulate of constitutional law.
WHEREFORE, the order of dismissal of the
lower court of May 23, 1966 is affirmed. With costs
against plaintiff-appellant.
Concepcion, C.J., Dizon, Makalintal,
Zaldivar, Sanchez, Castro, Capistrano and
Teehankee, JJ., concur.
Barredo, J., took no part.
Reyes, J.B.L., J., is on leave.