B.

CONCEPT OF THE STATE

BACANI VS NACOCO

G.R. No. L-9657 100 Phil 471 November 29, 1956

LEOPOLDO T. BACANI and MATEO A. MATOTO, Plaintiffs–Appellees,

NATIONAL COCONUT CORPORATION, ET AL., Defendants, NATIONAL COCONUT CORPORATION and

BOARD OF LIQUIDATORS, Defendants–Appellants.

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

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

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

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

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

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

Rulings: No. NACOCO do not acquire that status for the simple reason that they do not come under the
classification of municipal or public corporation. While NACOCO was organized for the purpose of
“adjusting the coconut industry to a position independent of trade preferences in the United States” and
of providing “Facilities for the better curing of copra products and the proper utilization of coconut by-
products”, a function which our government has chosen to exercise to promote the coconut industry. It
was given a corporate power separate and distinct from the government, as it was made subject to the

provisions of the Corporation Law in so far as its corporate existence and the powers that it may
exercise are concerned (sections 2 and 4, Commonwealth Act No. 518). It may sue and be sued in the
same manner as any other private corporations, and in this sense it is an entity different from our
government.
PVTA v CIR Digest

Facts: This case involves the expanded role of the

government necessitated by the increased responsibility to provide for the general welfare. In 1966
private respondents filed a petition seeking relief for their alleged overtime services and the petitioner’s
failure to pay for said compensation in accordance with CA No. 444. Petitioner denied the allegations for
lack of a cause of cause of action and lack of jurisdiction. Judge Martinez issued an order, directing
petitioner to pay. Hence, this petition for certiorari on grounds that the corporation is exercising
governmental functions and is therefore exempt from Commonwealth Act No. 444. PVTA contended it is
beyond the jurisdiction of respondent Court as it is exercising governmental functions and that it is
exempt from the operation of Commonwealth Act No. 444.

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

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

The contention of petitioner that the Labor Code does not apply to them deserve scant consideration.

There is no question based on RA 4155, that petitioner is a governmental agency. As such, the petitioner
can rightfully invoke the doctrine announced in the leading ACCFA case. The objection of private
respondents with its overtones of the distinction between constituent and ministrant functions of
governments as set forth in Bacani v. Nacoco, is futile. It does not necessarily follow, that just because
petitioner is engaged in governmental rather than proprietary functions, that the labor controversy was
beyond the jurisdiction of the now defunct respondent Court. Nor is the objection raised that petitioner
does not come within the coverage of the Eight-Hour Labor Law persuasive.

A reference to the pertinent sections of both Republic Acts 2265 and 2155 renders clear the
differentiation that exists. If as a result of the appealed order, financial burden would have to be borne
by petitioner, it has only itself to blame. It need not have required private respondents to render
overtime service. It can hardly be surmised that one of its chief problems is paucity of personnel. That
would indeed be a cause for astonishment. It would appear, therefore, that such an objection based on
this ground certainly cannot suffice for a reversal. To repeat, respondent Court must be sustained.

Government of the Phil. V. Monte de Piedad

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

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

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

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

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

Co Kim Chan v. Valdez Tan Keh

Facts of the case: Co Kim Chan had a pending civil case, initiated during the Japanese occupation, with
the Court of First Instance of Manila. After the Liberation of the Manila and the American occupation,
Judge Arsenio Dizon refused to continue hearings on the case, saying that a proclamation issued by
General Douglas MacArthur had invalidated and nullified all judicial proceedings and judgments of the
courts of the Philippines and, without an enabling law, lower courts have no jurisdiction to take
cognizance of and continue judicial proceedings pending in the courts of the defunct Republic of the
Philippines (the Philippine government under the Japanese).

The court resolved three issues:

1. Whether or not judicial proceedings and decisions made during the Japanese occupation were valid
and remained valid even after the American occupation;
2. Whether or not the October 23, 1944 proclamation MacArthur issued in which he declared that “all
laws, regulations and processes of any other government in the Philippines than that of the said
Commonwealth are null and void and without legal effect in areas of the Philippines free of enemy
occupation and control” invalidated all judgments and judicial acts and proceedings of the courts;
3. And whether or not if they were not invalidated by MacArthur’s proclamation, those courts could
continue hearing the cases pending before them.

Ratio: Political and international law recognizes that all acts and proceedings of a de facto government
are good and valid. The Philippine Executive Commission and the Republic of the Philippines under the
Japanese occupation may be considered de facto governments, supported by the military force and
deriving their authority from the laws of war.
Municipal laws and private laws, however, usually remain in force unless suspended or changed by the
conqueror. Civil obedience is expected even during war, for “the existence of a state of insurrection and
war did not loosen the bonds of society, or do away with civil government or the regular administration
of the laws. And if they were not valid, then it would not have been necessary for MacArthur to come
out with a proclamation abrogating them.
The second question, the court said, hinges on the interpretation of the phrase “processes of any other
government” and whether or not he intended it to annul all other judgments and judicial proceedings of
courts during the Japanese military occupation.
IF, according to international law, non-political judgments and judicial proceedings of de facto
governments are valid and remain valid even after the occupied territory has been liberated, then it
could not have been MacArthur’s intention to refer to judicial processes, which would be in violation of
international law.
A well-known rule of statutory construction is: “A statute ought never to be construed to violate the law
of nations if any other possible construction remains.”
Another is that “where great inconvenience will result from a particular construction, or great mischief
done, such construction is to be avoided, or the court ought to presume that such construction was not
intended by the makers of the law, unless required by clear and unequivocal words.”
Annulling judgments of courts made during the Japanese occupation would clog the dockets and violate
international law, therefore what MacArthur said should not be construed to mean that judicial
proceedings are included in the phrase “processes of any other governments.”
In the case of US vs Reiter, the court said that if such laws and institutions are continued in use by the
occupant, they become his and derive their force from him. The laws and courts of the Philippines did
not become, by being continued as required by the law of nations, laws and courts of Japan.
It is a legal maxim that, excepting of a political nature, “law once established continues until changed by
some competent legislative power. IT IS NOT CHANGED MERELY BY CHANGE OF SOVEREIGNTY.” Until, of
course, the new sovereign by legislative act creates a change.
Therefore, even assuming that Japan legally acquired sovereignty over the Philippines, and the laws and
courts of the Philippines had become courts of Japan, as the said courts and laws creating and
conferring jurisdiction upon them have continued in force until now, it follows that the same courts may
continue exercising the same jurisdiction over cases pending therein before the restoration of the
Commonwealth Government, until abolished or the laws creating and conferring jurisdiction upon them
are repealed by the said government.
DECISION: Writ of mandamus issued to the judge of the Court of First Instance of Manila, ordering him
to take cognizance of and continue to final judgment the proceedings in civil case no. 3012.

Summary of ratio:
1. International law says the acts of a de facto government are valid and civil laws continue even during
occupation unless repealed.
2. MacArthur annulled proceedings of other governments, but this cannot be applied on judicial
proceedings because such a construction would violate the law of nations.
3. Since the laws remain valid, the court must continue hearing the case pending before it.
***3 kinds of de facto government: one established through rebellion (govt gets possession and control
through force or the voice of the majority and maintains itself against the will of the rightful
government)
through occupation (established and maintained by military forces who invade and occupy a territory of
the enemy in the course of war; denoted as a government of paramount force)
through insurrection (established as an independent government by the inhabitants of a country who
rise in insurrection against the parent state)

People v. Gozo

Loreta Gozo bought a house and lot which was located inside the US Naval Reservation which is within
the territorial jurisdiction of Olongapo City. Upon the advice of an assistant in the Mayor’s Office and
some neighbors, she demolished the house standing thereon without acquiring the necessary permits
and then later on erected another house. She was then charged by the City Engineer’s Office for
violating a municipal order which requires her to secure permits for any demolition and/or construction
within the City. She was convicted in violation thereof by the lower court. She appealed and countered
that the City of Olongapo has no administrative jurisdiction over the said lot because it is within a Naval
Base of a foreign country.

ISSUE: Is the Municipal Ordinance enforceable within the US Naval Base?

HELD: Yes. The Philippine Government has not abdicated its sovereignty over the bases as part of the
Philippine territory or divested itself completely of jurisdiction over offenses committed therein. Under
the terms of the treaty, the United States Government has prior or preferential but not exclusive
jurisdiction of such offenses. The Philippine Government retains not only jurisdictional rights not
granted, but also all such ceded rights as the United States Military authorities for reasons of their own
decline to make use of (Military Bases Agreement). Hence, in the exercise of its sovereignty, the State
through the City of Olongapo does have administrative jurisdiction over the lot located within the US
Naval Base.

Laurel v. Misa

FACTS: The accused was charged with treason. During the Japanese occupation, the accused adhered to
the enemy by giving the latter aid and comfort. He claims that he cannot be tried for treason since his
allegiance to the Philippines was suspended at that time. Also, he claims that he cannot be tried under a
change of sovereignty over the country since his acts were against the Commonwealth which was
replaced already by the Republic.
HELD/RATIO: The accused was found guilty. A citizen owes absolute and permanent allegiance tohis
government or sovereign. No transfer of sovereignty was made; hence, it is presumed that the
Philippine government still had the power. Moreover, sovereignty cannot be suspended; it is either
subsisting or eliminated and replaced. Sovereignty per se wasn’t suspended; rather, it was the exercise
of sovereignty that was suspended. Thus, there is no suspended allegiance. Regarding the change of
government, there is no such change since the sovereign – the Filipino people – is still the same. What
happened was a mere change of name of government, from Commonwealth to the Republic of the
Philippines.

DISSENT: During the long period of Japanese occupation, all the political laws of the Philippines were
suspended. Thus, treason under the Revised Penal Code cannot be punishable where the laws of the
land are momentarily halted. Regarding the change of sovereignty, it is true that the Philippines wasn’t
sovereign at the time of the Commonwealth since it was under the United States. Hence, the acts of
treason done cannot carry over to the new Republic where the Philippines is now indeed sovereign.

Ruffy v. Chief of Staff

FACTS: During the Japanese insurrection in the Philippines, military men were assigned at designated
camps or military bases all over the country. Japanese forces went to Mindoro thus forcing petitioner
and his band move up the mountains and organize a guerilla outfit and call it the "Bolo area". A certain
Capt. Beloncio relieved Ruffy and fellow petitioners of their position and duties in the "Bolo area" by the
new authority vested upon him because of the recent change of command. Capt. Beloncio was thus
allegedly slain by Ruffy and his fellow petitioners.

ISSUE: Whether or not the petitioners were subject to military law at the time the offense was
committed, which was at the time of war and the Japanese occupancy.

HELD: The Court held that the petitioners were still subject to military law since members of the Armed
Forces were still covered by the National Defense Act, Articles of War and other laws even during an
occupation. The act of unbecoming of an officer and a gentleman is considered as a defiance of 95th
Article of War held petitioners liable to military jurisdiction and trial. Moreover, they were operating
officers, which makes them even more eligible for the military court's jurisdiction.
In consideration of the foregoing, the petition has no merit and should be dismissed. Thus, the petition
is hereby DENIED.