POLITICAL REVIEW 1 CASE DIGEST FOR AUGUST 28, 2019

Republic v. Villasor

November 28, 1973 | Fernand, J. | Suits against Chartered Agencies

PETITIONER: REPUBLIC OF THE PHILIPPINES

RESPONDENTS: HON. GUILLERMO P. VILLASOR et al.

SUMMARY: On July 3, 1961, a decision was rendered in favor of respondents P. J. Kiener Co.,
Ltd., Gavino Unchuan, and International Construction Corporation, and against the petitioner
Republic, confirming the arbitration award in the amount of P1,712,396.40, subject of Special
Proceedings. 8. On June 24, 1969, respondent Honorable Guillermo P. Villasor, issued an Order
directing the Sheriffs to execute the said decision. The Provincial Sheriff of Rizal (respondent
herein) served notices of garnishment dated June 28, 1969 with several Banks, specially on the
"monies due the Armed Forces of the Philippines in the form of deposits sufficient to cover the
amount mentioned in the said Writ of Execution". The Republic questioned the Writ of Execution
issued by the respondent Judge alleging that he acted in excess of jurisdiction [or] with grave
abuse of discretion amounting to lack of jurisdiction in granting the issuance of an alias writ of
execution against the properties of the Armed Forces of the Philippines. The SC held that what
was done by respondent Judge is not in conformity with the dictates of the Constitution. "The
State may not be sued without its consent." A corollary, both dictated by logic and sound sense
from a basic concept is that public funds cannot be the object of a garnishment proceeding even
if the consent to be sued had been previously granted and the state liability adjudged.

DOCTRINE:
The universal rule that where the State gives its consent to be sued by private parties either by
general or special law, it may limit claimant's action 'only up to the completion of proceedings
anterior to the stage of execution' and that the power of the Courts ends when the judgment is
rendered, since government funds and properties may not be seized under writs of execution or
garnishment to satisfy such judgments, is based on obvious considerations of public policy.
Disbursements of public funds must be covered by the corresponding appropriation as required
by law.

Facts:
The case was filed by the Republic of the Philippines requesting to nullify the ruling of The Court
of First Instance in Cebu in garnishing the public funds allocated for the Arm Forces of the
Philippines.

A decision was rendered in Special Proceedings in favor of respondents P. J. Kiener Co., Ltd.,
Gavino Unchuan, and International Construction Corporation, and against the petitioner herein,
confirming the arbitration award in the amount of P1,712,396.40, subject of Special Proceedings.
The respondent Honorable Guillermo P. Villasor, issued an Order declaring the said decision final
and executory, directing the Sheriffs of Rizal Province, Quezon City and Manila to execute the
said decision. The corresponding Alia Writ of Execution was issued. On the strength of the
aforementioned Alias Writ of Execution, the Provincial Sheriff of Rizal served Notices of
Garnishment with several Banks. The funds of the Armed Forces of the Philippines on deposit
with Philippine Veterans Bank and PNB are public funds duly appropriated and allocated for the
payment of pensions of retirees, pay and allowances of military and civilian personnel and for
maintenance and operations of the AFP.

Petitioner, filed prohibition proceedings against respondent Judge Villasor for acting in excess of
jurisdiction with grave abuse of discretion amounting to lack of jurisdiction in granting the issuance
of a Writ of Execution against the properties of the AFP, hence the notices and garnishment are
null and void.

Issues:
1. Whether or not the state can be sued without its consent.
2. Whether or not the notice of garnishment issued by Judge Villasor is valid.

Discussions:
1. The provision of Sec 3 Article XVI declares that “the State may not be sued without its
consent”. This provision is merely a recognition of the sovereign character of the State and
express an affirmation of the unwritten rule insulating it from the jurisdiction of the courts of
justice. Another justification is the practical consideration that the demands and
inconveniences of litigation will divert time and resources of the State from the more
pressing matters demanding its attention, to the prejudice of the public welfare.
2. As a general rule, whether the money is deposited by way of general or special deposit,
they remain government funds and are not subject to garnishment. An exception of the rule
is a law or ordinance that has been enacted appropriating a specific amount to pay a valid
government obligation.

Rulings:
1. It is a fundamental postulate of constitutionalism flowing from the juristic concept of
sovereignty that the state as well as its government is immune from suit unless it gives its consent.
A sovereign is exempt from suit, not because of any formal conception or obsolete theory, but on
the logical and practical ground that there can be no legal right as against the authority that makes
the law on which the right depends. A continued adherence to the doctrine of non-suability is not
to be deplored for as against the inconvenience that may cause private parties, the loss of
government efficiency and the obstacle to the performance of its multifarious functions are far
greater is such a fundamental principle were abandoned and the availability of judicial remedy
were not thus restricted.
2. What was done by respondent Judge is not in conformity with the dictates of the
Constitution. From a logical and sound sense from the basic concept of the non-suability of the
State, public funds cannot be the object of a garnishment proceeding even if the consent to be
sued had been previously granted and the state liability adjudged. Disbursements of public funds
must be covered by the corresponding appropriation as required by law. The functions and public
 services rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion
of public funds from their legitimate and specific objects, as appropriated by law.

PNB v. Pabalan
Arcega vs CA

ARCEGA v. COURT OF APPEALS

August 28, 1975 | Castro, J. | Suits against Chartered Agencies

PETITIONER: Alicia O. Arcega

RESPONDENTS: Court Of Appeals
SUMMARY: Arcega filed a complaint against CB and PNB for the refund of taxes as unauthorized
payments she made in the concept of 17% special excise tax on foreign exchange levied. However,
CB argued that as chartered agency of the government, it is also immune from suit without its consent.

DOCTRINE: The suability of the Central Bank for the refund of taxes collected by it under Republic Act
601, as amended, was upheld in Central Azucarera Don Pedro vs. Central Bank of the Philippines,
which ruling merited elaboration in Olizon vs. Central Bank. In the case at bar, we cannot agree to the
proposition. This suit is brought against the Central Bank of the Philippines, an entity authorized by its
charter to sue and be sued. The consent of the State to thus be sued, therefore, has been given.

FACTS:
1. August 17, 1956, Arcega, under the firm name “Fairmont Ice Cream Company,” filed
a complaint with CFI of Manila Brach I against Central Bank of the Philippines (CB) and
Philippine National Bank (PNB) for the refund (under four causes of action), of the total
sum of Php. 18,030.13 – as unauthorized payment she made in the concept of 17%
special excise tax on foreign exchange levied. This refund involves purchases of foreign
exchange from PNB to cover the costs and transportation amd other charges incident to
the importation into the Philippines under:
● first cause of action - coffee roasted, vanilla, fruit cocktail, peaches, butter and
pecan nuts which were used as "flavors" for the petitioner's ice cream product;
● second cause of action- paper containers and corresponding covers, specially
manufactured by her supplier Sealright Pacific, Ltd., which were utilized as
containers in the manufacture and distribution of ice cream;
 ● third cause of action - ice cream wooden spoons individually wrapped used as
accessories to or inseparable articles in the manufacture, sale and distribution in
retail of ice cream; and
● fourth cause of action - machineries, equipment and spare parts which were used
by the petitioner in her factory.

2. PNB moved to dismiss the complaint on the ground that it does not state a
sufficient cause of action because, although the PNB is being sued as an agent of the
Central Bank, there is no allegation in the complaint that it had contracted in its own name
or exceeded its authority as such agent, hence, even assuming that the averments of the
complaint could be established, it cannot be held liable for the amount of the special
excise tax it had collected from the petitioner. Trial court denied the motion.

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

4. The Trial Court dismissed the complaint. CA affirmed.

ISSUE/s: Whether or not the Central Bank as chartered agency also possesses
immunity from suit.

RULING: The judgment appealed from is set aside. The Trial Court and Cout of Appeals
erred in dismissing the complaint on the ground that Central Bank was non-suable for the
refund of taxes it had collected under the statute.

RATIO: The suability of the Central Bank for the refund of taxes collected by it under
Republic Act 601, as amended, was upheld in Central Azucarera Don Pedro vs. Central
Bank of the Philippines, which ruling merited elaboration in Olizon vs. Central Bank. In
the case at bar, we cannot agree to the proposition. This suit is brought against the
Central Bank of the Philippines, an entity authorized by its charter to sue and be sued.
The consent of the State to thus be sued, therefore, has been given. This doctrine was
reiterated in Philippines Acetylene Co. vs. Central Bank of the Philippines where it was
pointedly stated that "sec. 5 of Republic Act No. 601 (as amended) directs that refund of
taxes be made by the Central Bank."
 Rayo vs CFI of Bulacan - lagyan ko muna habang wala pa gawa ung assigned
Rayo v CFI

Facts:
During the height of that infamous typhoon "KADING" the respondent corporation, acting through
its plant superintendent, Benjamin Chavez, opened or caused to be opened simultaneously all the
three floodgates of the Angat Dam. several towns in Bulacan were inundated

About a hundred of its residents died or were reported to have died and properties worth million of
pesos destroyed or washed away.

Petitioners, who were among the many unfortunate victims of that man-caused flood, filed with the
respondent Court eleven complaints for damages against the respondent corporation and the plant
superintendent of Angat Dam, Benjamin Chavez

in each answer a special and affirmative defense that "in the operation of the Angat Dam," it is
"performing a purely governmental function", hence it "can not be sued without the express consent
of the State.

respondent Court dated December 21, 1979 dismissing all their complaints as against the respondent
corporation thereby leaving the superintendent of the Angat Dam, Benjamin Chavez, as the sole
party-defendant.
Issue
Whether the power of respondent National Power Corporation to sue and be sued under its organic
charter includes the power to be sued for tort
Ruling:
As a government owned and controlled corporation, it has a personality of its own, distinct and
separate from that of the Government. (See National Shipyards and Steel Corp. vs. CIR, et al., L-
17874, August 31, 1963, 8 SCRA 781.) Moreover, the charter provision that the NPC can "sue and
be sued in any court" is without qualification on the cause of action and accordingly it can include a
tort claim such as the one instituted by the petitioners.

PNR vs Intermidiate-Apellate Court

NATIONAL AIRPORTS CORPORATION V TEODORO

April 30, 1952 | TUASON, J. | Uncharted or Unincorporated Agencies

PETITIONER: National Airports Corporation (NAC)

RESPONDENTS: Jose Teodoro, Sr., as Judge of the CFI of Negros Occidental; and
Philippine Airlines, Inc. (PAL)

SUMMARY: PAL is being sued by the Capitol Division, Inc., as owner of the land used by
NAC as airport, for landing and parking fees. PAL countered with a third-party complaint
against NAC, which by that time had been dissolved and served summons on the CAA. PAL
alleged that it had paid to the National Airports Corporation the fees claimed by the Capitol
Subdivision, Inc. The Solicitor General filed a motion to dismiss on the ground that the court
lacks jurisdiction to entertain the third- party complaint, first, because NAC “has lost its
juridical personality,” and, second, because agency of the Republic of the Philippines,
unincorporated and not possessing juridical personality under the law, is incapable of suing
and being sued.

DOCTRINE: Not all government entities, whether corporate or non-corporate, are immune
from suits. Immunity from suits is determined by the character of the obligations for which
the entity was organized. CAA comes under the category of a private entity. Although not
a body corporate it was created, like the NAC, not to maintain a necessary function of
government, but to run what is essentially a business, even if revenues be not its prime
objective but rather the promotion of travel and the convenience of the traveling public. It
is engaged in an enterprise which, far from being the exclusive prerogative of state, may,
more than the construction of public roads, be undertaken by private concerns. The CAA
may not, and should not, claim for itself the privileges and immunities of the sovereign state.

FACTS:

The National Airports Corporation was organized under Republic Act No. 224, which expressly
made the provisions of the Corporation Law applicable to the said corporation. It was abolished
by Executive Order No. 365 and to take its place, the Civil Aeronautics Administration was
created. Before the abolition, the Philippine Airlines, Inc. paid to the National Airports Corporation
P65,245 as fees for landing and parking for the period up to and including July 31, 1948. These
fees are said to have been due and payable to the Capitol Subdivision, Inc., who owned the land
used by the National Airports Corporation as airport. The owner commenced an action in the court
against the Philippine Airlines, Inc.

The Philippine Airlines, Inc. countered with a third-party complaint against the National Airports
Corporation, which by that time had been dissolved, and served summons on the Civil Aeronautics
Administration. PAL alleged that it had paid to the National Airports Corporation the fees claimed
by the Capitol Subdivision, Inc. “on the belief and assumption that the NAC was the lessee of the
lands subject of the complaint and that NAC and its predecessors in interest were the operators
and maintainers of said airport and, further, that NAC would pay to the landowners, particularly
the Capitol Subdivision, Inc., the reasonable rentals for the use of their lands.”

The Solicitor General, after answering the third party complaint, filed a motion to dismiss on the
ground that the court lacks jurisdiction to entertain the third- party complaint, first, because the
National Airports Corporation “has lost its juridical personality,” and, second, because agency of
the Republic of the Philippines, unincorporated and not possessing juridical personality under the
law, is incapable of suing and being sued.

ISSUE:

WON the Civil Aeronautics Administration should be regarded as engaged in private functions
and therefore subject to suit? YES

RULING: SC denied the petition.

RATIO:

Not all government entities, whether corporate or non-corporate, are immune from suits.
Immunity from suits is determined by the character of the obligations for which the entity
was organized. The power to sue and be sued is implied from the power to transact private
business. And if it has the power to sue and be sued on its behalf, the Civil Aeronautics
Administration with greater reason should have the power to prosecute and defend suits for and
against the National Airports Corporation, having acquired all the properties, funds and choses in
action and assumed all the liabilities of the latter.

The rule is thus stated in Corpus Juris: Suits against state agencies with relation to matters in which
they have assumed to act in private or nongovernment capacity, and various suits against certain
corporations created by the state for public purposes, but to engage in matters partaking more of
the nature of ordinary business rather than functions of a governmental or political character, are
not regarded as suits against the state. The latter is true, although the state may own stock or
property of such a corporation for by engaging in business operations through a corporation the
state divests itself so far of its sovereign character, and by implication consents to suits against the
corporation.

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

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

Bureau of Printing vs Bureau of Printing Employees Ass.

January 28, 1961 |GUTIERREZ DAVID, J. | Unchartered or Unincorporated Agencies
PETITIONER: BUREAU OF PRINTING, SERAFIN SALVADOR and MARIANO LEDESMA

RESPONDENTS: THE BUREAU OF PRINTING EMPLOYEES ASSOCIATION (NLU), PACIFICO

ADVINCULA, ROBERTO MENDOZA, PONCIANO ARGANDA and TEODULO TOLERAN

SUMMARY:
This is a petition for certiorari and prohibition with preliminary injunction to annul orders of the CIR and
to restrain it from further proceeding in the action for unfair labor practice pending before it on the
ground of lack of jurisdiction. Giving due course to the petition, the Court ordered the issuance of the
writ of preliminary injunction prayed for without bond.

DOCTRINE:
The Bureau of Printing is an office of the Government created by the Administrative Code of 1916 (Act
No. 2657). As instrumentality of the Government, it operates under the direct supervision of the
Executive Secretary, Office of the President, and is "charged with the execution of all printing and
binding, including work incidental to those processes, required by the National Government and such
other work of the same character as said Bureau may, by law or by order of the (Secretary of Finance)
Executive Secretary, be authorized to undertake . . .." (See. 1644, Rev. Adm. Code). It has no corporate
existence, and its appropriations are provided for in the General Appropriations Act. Designed to meet
the printing needs of the Government, it is primarily a service bureau not engaged in business or
occupation for pecuniary profit.

Indeed, as an office of the Government, without any corporate or juridical personality, the Bureau of
Printing cannot be sued. (Sec. 1, Rule 3, Rules of Court). Any suit, action or proceeding against it, if it
were to produce any effect, would actually be a suit, action or proceeding against the Government itself,
and the rule is settled that the Government cannot be sued without its consent, much less over its
objection.

FACTS:
1. Upon complaint of the Bureau of Printing Employees Association (NLU) Pacifico Advincula, Roberto
Mendoza, Ponciano Arganda and Teodulo Toleran — filed by an acting prosecutor of the Industrial
Court against Bureau of Printing, Serafin Salvador, the Acting Secretary of the Department of General
Services, and Mariano Ledesma the Director of the Bureau of Printing.

2. The complaint alleged that Serafin Salvador and Mariano Ledesma have been engaging in unfair labor
practices by interfering with, or coercing the employees of the Bureau of Printing particularly the
members of the complaining association petition, in the exercise of their right to self-organization and
discriminating in regard to hire and tenure of their employment in order to discourage them from
pursuing the union activities.

3. Petitioners Bureau of Printing, Serafin Salvador and Mariano Ledesma denied the charges of unfair
labor practices attributed to the and, by way of affirmative defenses, alleged, among other things, that
respondents Pacifico Advincula, Roberto Mendoza Ponciano Arganda and Teodulo Toleran were
suspended pending result of an administrative investigation against them for breach of Civil Service
rules and regulations petitions; that the Bureau of Printing has no juridical personality to sue and be
sued; that said Bureau of Printing is not an industrial concern engaged for the purpose of gain but is an
agency of the Republic performing government functions.

4. For relief, they prayed that the case be dismissed for lack of jurisdiction.

5. Before the case could be heard, petitioners filed an "Omnibus Motion" asking for a preliminary hearing
on the question of jurisdiction raised by them in their answer and for suspension of the trial of the case
on the merits pending the determination of such jurisdictional question.
6. The motion was granted, but after hearing, the trial judge of the Industrial Court in an order sustained
the jurisdiction of the court on the theory that the functions of the Bureau of Printing are "exclusively
proprietary in nature," and, consequently, denied the prayer for dismissal.

7. Reconsideration of this order having been also denied by the court in banc, the petitioners brought the
case to this Court through the present petition for certiorari and prohibition.

ISSUE/s:
W/N the Bureau of Printing is functioning in exclusively proprietary character that would amount to Unfair
Labor Practice. - NO

RULING:
The Court finds the petition to be meritorious. WHEREFORE, the petition for a writ of prohibition is granted.
The orders complained of are set aside and the complaint for unfair labor practice against the petitioners is
dismissed.

RATIO:
1. It is true, as stated in the order complained of, that the Bureau of Printing receives outside jobs and that
many of its employees are paid for overtime work on regular working days and on holidays, but these
facts do not justify the conclusion that its functions are "exclusively proprietary in nature." Overtime
work in the Bureau of Printing is done only when the interest of the service so requires (sec. 566, Rev.
Adm. Code). As a matter of administrative policy, the overtime compensation may be paid, but such
payment is discretionary with the head of the Bureau depending upon its current appropriations, so that
it cannot be the basis for holding that the functions of said Bureau are wholly proprietary in character.
Anent the additional work it executes for private persons, we find that such work is done upon request,
as distinguished from those solicited, and only "as the requirements of Government work will permit"
(sec. 1654, Rev. Adm. Code), and "upon terms fixed by the Director of Printing, with the approval of
the Department Head" (sec. 1655, id.). As shown by the uncontradicted evidence of the petitioners,
most of these works consist of orders for greeting cards during Christmas from government officials,
and for printing of checks of private banking institutions. On those greeting cards, the Government seal,
of which only the Bureau of Printing is authorized to use, is embossed, and on the bank cheeks, only
the Bureau of Printing can print the reproduction of the official documentary stamps appearing thereon.
The volume of private jobs done, in comparison with government jobs, is only one-half of 1 per cent,
and in computing the costs for work done for private parties, the Bureau does not include profit because
it is not allowed to make any. Clearly, while the Bureau of Printing is allowed to undertake private
printing jobs, it cannot be pretended that it is thereby an industrial or business concern. The additional
work it executes for private parties is merely incidental to its function, and although such work may be
deemed proprietary in character, there is no showing that the employees performing said proprietary
function are separate and distinct from those employed in its general governmental functions.

2. From what has been stated, it is obvious that the Court of Industrial Relations did not acquire jurisdiction
over the Bureau of Printing, and is thus devoid of any authority to take cognizance of the case. This
Court has already held in a long line of decisions that the Industrial Court has no jurisdiction to hear
and determine the complaint for unfair labor practice filed against institutions or corporations not
organized for profit and, consequently, not an industrial or business organization. This is so because
the Industrial Peace Act was intended to apply only to industrial employment, and to govern the
relations between employers engaged in industry and occupations for purposes of gain, and their
industrial employees.

Mobil Philippines Exploration, Inc. vs Customs Arrastre Service

Santiago vs Republic

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

ILDEFONSO SANTIAGO, represented by his Attorney-in-Fact, ALFREDO T. SANTIAGO, petitioner,

vs.

THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES, represented by the Director, Bureau of
Plant Industry, and the Regional Director, Region IX, Zamboanga City, respondent,

FERNANDO, J.:

PETITIONER: ILDEFONSO SANTIAGO, represented by his Attorney-in-Fact, ALFREDO T.

SANTIAGO, petitioner,

RESPONDENTS: THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES, represented by the

Director, Bureau of Plant Industry, and the Regional Director, Region IX, Zamboanga City, respondent,

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

DOCTRINE: It must be emphasized, goes no further than to rule that a donor, with the Republic or any of its
agency being the donee, is entitled to go to court in case of an alleged breach of the conditions of such donation.
He has the right to be heard. Under the circumstances, the fundamental postulate of non-suability cannot stand
in the way. It is made to accommodate itself to the demands of procedural due process, which is the negation
of arbitrariness and inequity.

FACTS:

On August 9, 1976, Ildefonso Santiago through his counsel filed an action for revocation of a Deed of Donation
executed by him and his spouse in January of 1971, with the Bureau of Plant Industry as the Donee, in the Court of
First Instance of Zamboanga City. Mr. Santiago alleged that the Bureau, contrary to the terms of donation, failed to
install lighting facilities and water system on the property and to build an office building and parking lot thereon which
should have been constructed and ready for occupancy on before December7, 1974. That because of the circumstances,
Mr. Santiago concluded that he was exempt from compliance with an explicit constitutional command, as invoked in
the Santos v Santos case, a 1952 decision which is similar.

The Court of First Instance dismissed the action in favor of the respondent on the ground that the state cannot be sued
without its consent, and Santos v Santos case is discernible. The Solicitor General, Estelito P.
Mendoza affirmed the dismissal on ground of constitutional mandate. Ildefonso Santiago filed a
petition for certiorari to the Supreme Court.
ISSUE/s:

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

RULING: The Supreme Court rules, that the constitutional provision shows a waiver. Where there is consent, a suit
may be filed. Consent need not to be express. It can be implied. In this case it must be emphasized, goes no further
than a rule that a donor, with the Republic or any of its agency being a Donee, is entitle to go to court in case of an
alleged breach of the conditions of such donation.

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

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

Amigable vs. Cuenca

 People v. Perfecto

PEOPLE v. PERFECTO
October 4, 1922 | Malcolm, J. | Nature of the Philippine Government

PETITIONER: The People of the Philippine Islands

RESPONDENT: Gregorio Perfecto

SUMMARY: The accused was charged with having published an article reflecting on the Philippine Senate and its
members in violation of Article 256 of the Penal Code. In this Court, Mr. Perfecto was acquitted by unanimous vote,
with three members of the court holding that Article 256 was abrogated completely by the change of Spanish to
American sovereignty over the Philippines, and with six members holding that the Libel Law had the effect of
repealing so much of Article 256 as relates to written defamation, abuse, or insult, and that under the information
and the facts. The defendant was neither guilty of a violation of Article 256 of the Penal Code nor or the Libel Law.

DOCTRINE: The nature of the government which has been set up in the Philippines under American sovereignty
was outlined by President McKinley in that Magna Charta of Philippine liberty, his instructions to the Commission,
of April 7, 1900. The President and Congress framed the government on the model with which Americans are
familiar and which has proven best adapted for the advancement of the public interest and the protection of
individual rights and privileges.

Article 256 of the Penal Code punishes "Any person who, by * * * writing, shall defame, abuse, or insult any
Minister of the Crown or other person in authority." The Philippine Libel Law, Act No. 277, has had the effect of
repealing so much of article 256 of the Penal Code as relates to written defamation, abuse, or insult.

FACTS:
1. The Secretary of the Philippine Senate, Fernando M. Guerrero, discovered that certain documents
which constituted the records of testimony given by witnesses in the investigation of oil companies, had
disappeared from his office.
2. The Secretary for the Senate informed that body of the loss of the documents and of the steps taken
by him to discover the guilty party.
3. The day following, the newspaper La Nacion, edited by Mr. Gregorio Perfecto, published an article
reading as follows:
Half a month has elapsed since the discovery, for the first time, of the scandalous robbery of records which were kept and preserved in
the iron safe of the Senate, yet up to this time there is not the slightest indication that the author or authors of the crime will ever be
discovered.
To find them, it would not, perhaps, be necessary to go out of the Sente itself, and the persons in charge of the investigation of the case
would not have to display great skill in order to succeed in their undertaking, unless they should encounter the insuperable obstacle of
offical concealment.
In that case, every investigation to be made would be but a mere comedy and nothing more.
After all, the perpetration of the robbery, especially under the circumstances that have surrounded it, does not surprise us at all.
The execution of the crime was but the natural effect of the environment of the place in which it was committed.
How many of the present Senators can say without remorse in their conscience and with serenity of mind, that they do not owe their
victory to electoral robbery? How may?
4. The Senate adopted a resolution authorizing the President of the Senate to indorse to the Attorney-
General, for his study and corresponding action, all the papers referring to the case of the newspaper La
Nacion and its editor, Mr. Gregorio Perfecto. As a result, an information was filed in the municipal court
of the City of Manila by an assistant city fiscal, in which the editorial in question was set out and in
which it was alleged that the same constituted a violation of article 256 of the Penal Code.
 5. The defendant Gregorio Perfecto was found guilty in the municipal court and again in the Court of
First Instance of Manila.
6. During the course of the trial in the Court of First Instance, after the prosecution had rested, the defense
moved for the dismissal of the case. On the subject of whether or not article 256 of the Penal Code, under
which the information was presented, is in force, the trial judge, the Honorable George R. Harvey, said:
This antiquated provision was doubtless incorporated into the Penal Code of Spain for the protection of the
Ministers of the Crown and other representatives of the King against free speech and action by Spanish
subjects. This provision, with almost all the other articles of that Code, was extended to the Philippine Islands
when under the dominion of Spain because the King's subject in the Philippines might defame, abuse or insult
the Ministers of the Crown or other representatives of His Majesty.
7. This is one of those cases on which a variety of opinions all leading to the same result can be had. A
majority of the court are of the opinion that the Philippine Libel Law, Act No. 277, has had the effect of
repealing so much of Article 256 of the Penal Code as relates to written defamation, abuse, or insult, and
that under the information and the facts, the defendant is neither guilty of a violation of article 256 of
the Penal Code, nor of the Libel Law.
8. The view of the Chief Justice is that the accused should be acquitted for the reason that the facts alleged
in the information do not constitute a violation of article 156 of the Penal Code. Three members of the
court believe that article 256 was abrogated completely by the change from Spanish to American
sovereignty over the Philippines and is inconsistent with democratic principles of government.
ISSUE/s:
1. WoN Article 256 of the Spanish Penal Code, punishing "Any person who, by . . . writing, shall defame,
abuse, or insult any Minister of the Crown or other person in authority . . .," is still in force.

RULING: The judgment should be reversed and the defendant and appellant acquitted.

RATIO:
1. Effect of the Philippine Libel Law, Act No. 277, on article 256 of the Spanish Penal Code. — The
Libel Law, Act No. 277, was enacted by the Philippine Commission shortly after organization of this
legislative body. Section 1 defines libel as a "malicious defamation, expressed either in writing, printing,
or by signs or pictures, or the like, or public theatrical exhibitions, tending to blacken the memory of one
who is dead or to impeach the honesty, virtue, or reputation, or publish the alleged or natural deffects of
one who is alive, and thereby expose him to public hatred, contempt or ridicule." Section 13 provides
that "All laws and parts of laws now in force, so far as the same may be in conflict herewith, are hereby
repealed. . . ."
2. The Libel Law must have had the same result on other provisions of the Penal Code, as for instance
article 256.
3. The facts here are that the editor of a newspaper published an article, naturally in writing, which may
have had the tendency to impeach the honesty, virtue, or reputation of members of the Philippine Senate,
thereby possibly exposing them to public hatred, contempt, or ridicule, which is exactly libel, as defined
by the Libel Law. Sir J. F. Stephen is authority for the statement that a libel is indictable when defaming
a "body of persons definite and small enough for individual members to be recognized as such, in or by
means of anything capable of being a libel." But in the United States, while it may be proper to prosecute
criminally the author of a libel charging a legislator with corruption, criticisms, no matter how severe,
on a legislature, are within the range of the liberty of the press, unless the intention and effect be
seditious. With these facts and legal principles in mind, recall that article 256 begins: Any person who,
by . . . writing, shall defame, abuse, or insult any Minister of the Crown or other person in authority,"
etc.
4. The Libel Law is a complete and comprehensive law on the subject of libel. The well-known rule of
statutory construction is, that where the later statute clearly covers the old subject-matter of antecedent
 acts, and it plainly appears to have been the purpose of the legislature to give expression in it to the
whole law on the subject, previous laws are held to be repealed by necessary implication. For identical
reasons, it is evident that Act No. 277 had the effect so much of this article as punishes defamation,
abuse, or insults by writing.
5. Act No. 292 of the Philippine Commission, the Treason and Sedition Law, may also have affected
article 256, but as to this point, it is not necessary to make a pronouncement.
6. Effect of the change from Spanish to Amercian sevoreignty over the Philippine son article 256 of the
Spanish Penal Code. — Appellant's main proposition in the lower court and again energetically pressed
in the appellate court was that article 256 of the Spanish Penal Code is not now in force because
abrogated by the change from Spanish to American sovereignty over the Philippines and because
inconsistent with democratic principles of government. This view was indirectly favored by the trial
judge, and, as before stated, is the opinion of three members of this court.
7. It is a general principle of the public law that on acquisition of territory the previous political relations
of the ceded region are totally abrogated. "Political" is here used to denominate the laws regulating the
relations sustained by the inhabitants to the sovereign. Mr. Justice Field of the United States Supreme
Court stated the obvious when in the course of his opinion in the case of Chicago, Rock Island and
Pacific Railway Co. vs. McGlinn, supra, he said: "As a matter of course, all laws, ordinances and
regulations in conflict with the political character, institutions and Constitution of the new government
are at once displaced. Thus, upon a cession of political jurisdiction and legislative power — and the latter
is involved in the former — to the United States, the laws of the country in support of an established
religion or abridging the freedom of the press, or authorizing cruel and unusual punishments, and he
like, would at once cease to be of obligatory force without any declaration to that effect." To quote again
from the United States Supreme Court: "It cannot be admitted that the King of Spain could, by treaty or
otherwise, impart to the United States any of his royal prerogatives; and much less can it be admitted
that they have capacity to receive or power to exercise them. Every nation acquiring territory, by treaty
or otherwise, must hold it subject to the Constitution and laws of its own government, and not according
to those of the government ceding it."
8. On American occupation of the Philippines, by instructions of the President to the Military Commander
dated May 28, 1898, and by proclamation of the latter, the municipal laws of the conquered territory
affecting private rights of person and property and providing for the punishment of crime were nominally
continued in force in so far as they were compatible with the new order of things. But President
McKinley, in his instructions to General Merritt, was careful to say: "The first effect of the military
occupation of the enemy's territory is the severance of the former political relation of the inhabitants and
the establishment of a new political power." From that day to this, the ordinarily it has been taken for
granted that the provisions under consideration were still effective.
9. In all the forms of government and administrative provisions which they are authorized to prescribe,
the Commission should bear in mind that he government which they are establishing is designed not for
our satisfaction or for the expression of our theoretical views, but for the happiness, peace, and prosperity
of the people of the Philippine Islands, and the measures adopted should be made to conform to their
customs, their habits, and even their prejudices, to the fullest extent consistent with the accomplishment
of the indispensable requisites of just and effective government. At the same time the Commission should
bear in mind, and the people of the Islands should be made plainly to understand, that there are certain
great principles of government which have been made the basis of our governmental system, which we
deem essential to the rule of law and the maintenance of individual freedom, and of which they have,
unfortunately, been denied the experience possessed by us; that there are also certain practical rules of
government which we have found to be essential to the preservation of these great principles of liberty
and law, and that these principles and these rules of government must be established and maintained in
their islands for the sake of their liberty and happiness, however much they may conflict with the
customs or laws of procedure with which they are familiar. It is evident that the most enligthened thought
 of the Philippine Islands fully appreciates the importance of these principles and rules, and they will
inevitably within a short time command universal assent.

According to our view, article 256 of the Spanish Penal Code was enacted by the Government of Spain to protect
Spanish officials who were the representatives of the King. With the change of sovereignty, a new government, and a
new theory of government, as set up in the Philippines. It was in no sense a continuation of the old, although merely
for convenience certain of the existing institutions and laws were continued. The demands which the new government
made, and makes, on the individual citizen are likewise different. No longer is there a Minister of the Crown or a
person in authority of such exalted position that the citizen must speak of him only with bated breath. "In the eye of
our Constitution and laws, every man is a sovereign, a ruler and a freeman, and has equal rights with every other
man. We have no rank or station, except that of respectability and intelligence as opposed to indecency and ignorance,
and the door to this rank stands open to every man to freely enter and abide therein, if he is qualified, and whether he
is qualified or not depends upon the life and character and attainments and conduct of each person for himself. Every
man may lawfully do what he will, so long as it is not malum in se or malum prohibitum or does not infringe upon the
qually sacred rights of others."

Separate Opinions
ARAULLO, C.J., concurring:
I concur with the dispositive part of the foregoing decision, that is, with the acquittal of the accused, for the sole reason
that the facts alleged in the information do not constitute a violation of article 256 of the Penal Code; for although that
article is in force with respect to calumny, injuria, or insult, by deed or word, against an authority in the performance
of his duties or by reason thereof, outside of his presence, it is repealed by the Libel Law in so far as it refers to
calumny, injuria, or insult committed against an authority by writing or printing, as was that inserted in the said
information.
ROMUALDEZ, J., concurring:
I concur with the result. I believe that the responsibility of the accused has not been shown either under article 256 of
the Penal Code or under the Libel Law.
I am of the opinion that article 256 of the Penal Code is still in force, except as it refers to "Ministers of the Crown,"
whom we do not have in our Government, and to calumny, injuria, or insult, by writing or printing, committed against
an authority in the performance of his duties or by reason thereof, which portion was repealed by the Libel Law.
 Macariola v. Judge Asuncion

PETITIONER-APPELLEES: Bernardita Macariola

DEFENDANTS-APPELLANTS: Hon. Elias B. Asuncion

SUMMARY: Macariola charged respondent Judge Asuncion with acts unbecoming of a lawyer after he
purchased a property which was previously the subject of litigation where he rendered his decision.
Petitioner also alleged that this is violative of Code of Commerce

DOCTRINE: The prohibition in the aforesaid Article applies only to the sale or assignment of the property
which is the subject of litigation to the persons disqualified therein (referring to the purchase of land).
Upon the transfer of sovereignty from Spain to the United States and later on from the United States to
the Republic of the Philippines, Article 14 of this Code of Commerce must be deemed to have been
abrogated because where there is a change of sovereignty, the political laws of the former sovereign,
whether compatible or not with those of the new sovereign, are automatically abrogated, unless they are
expressly re-enacted by affirmative act of the new sovereign.

Facts:

● Civil Case No. 3010 of the Court of First Instance of Leyte was a complaint for partition filed by
Sinforosa R. Bales, Luz R. Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes, and Priscilla
Reyes, plaintiffs, against Bernardita R. Macariola, defendant, concerning the properties left by the
deceased Francisco Reyes, the common father of the plaintiff and defendant.
● In her defenses to the complaint for partition, Mrs. Macariola alleged among other things that; a)
plaintiff Sinforosa R. Bales was not a daughter of the deceased Francisco Reyes; b) the only legal
heirs of the deceased were defendant Macariola, she being the only offspring of the first marriage
of Francisco Reyes with Felisa Espiras, and the remaining plaintiffs who were the children of the
deceased by his second marriage with Irene Ondez; c) the properties left by the deceased were all
the conjugal properties of the latter and his first wife, Felisa Espiras, and no properties were
acquired by the deceased during his second marriage; d) if there was any partition to be made,
those conjugal properties should first be partitioned into two parts, and one part is to be adjudicated
solely to defendant it being the share of the latter's deceased mother, Felisa Espiras, and the other
half which is the share of the deceased Francisco Reyes was to be divided equally among his
children by his two marriages.
● The decision in civil case 3010 became final for lack of an appeal, and on October 16, 1963, a
project of partition was submitted to Judge Asuncion which is marked Exh. A. Notwithstanding the
fact that the project of partition was not signed by the parties themselves but only by the respective
counsel of plaintiffs and defendant, Judge Asuncion approved it in his Order dated October 23,
1963
● On March 6, 1965, Dr. Arcadio Galapon and his wife Sold a portion of Lot 1184-E with an area of
around 1,306 sq. meters to Judge Asuncion and his wife. On August 31, 1966, spouses Asuncion
and spouses Galapon conveyed their respective shares and interest in Lot 1184-E to "The Traders
 Manufacturing and Fishing Industries Inc." The spouses are also said to be the stockholders of
Traders Manufacturing.
● Complainant Bernardita R. Macariola filed against the Judge for his acts are deemed to be
unbecoming of a lawyer.

Issue:

Whether or not respondent Judge violated Article 1491, paragraph 5, of the New Civil Code in acquiring by
purchase a portion of Lot No. 1184-E.

Held:

No

Ruling:

● There is no merit in the contention of complainant.

● In the case at bar, when the respondent Judge purchased on March 6, 1965 a portion of Lot 1184-
E, the decision in Civil Case No. 3010 which he rendered on June 8, 1963 was already final
because none of the parties therein filed an appeal within the reglementary period; hence, the lot
in question was no longer subject of the litigation.
● The prohibition in the aforesaid Article applies only to the sale or assignment of the property which
is the subject of litigation to the persons disqualified therein.
● Furthermore, respondent Judge did not buy the lot in question on March 6, 1965 directly from the
plaintiffs in Civil Case No. 3010 but from Dr. Arcadio Galapon who earlier purchased on July 31,
1964 Lot 1184-E from three of the plaintiffs, namely, Priscilla Reyes, Adela Reyes, and Luz R.
Bakunawa after the finality of the decision in Civil Case No. 3010.
● Finally, while it is true that respondent Judge did not violate paragraph 5, Article 1491 of the New
Civil Code in acquiring by purchase a portion of Lot 1184-E which was in litigation in his court, it
was, however, improper for him to have acquired the same.
● It was unwise and indiscreet on the part of respondent to have purchased or acquired a portion of
a piece of property that was or had been in litigation in his court and caused it to be transferred to
a corporation of which he and his wife were ranking officers at the time of such transfer.
● The complainant alleged that respondent Judge violated paragraphs 1 and 5, Article 14 of the Code
of Commerce when he associated himself with the Traders Manufacturing and Fishing Industries,
Inc. as a stockholder and a ranking officer, said corporation having been organized to engage in
business.
● It partakes of the nature of a political law as it regulates the relationship between the
government and certain public officers and employees, like justices and judges.
● Political Law has been defined as that branch of public law which deals with the organization
and operation of the governmental organs of the State and define the relations of the state
with the inhabitants of its territory (People vs. Perfecto, 43 Phil. 887, 897 [1922]). It may be
recalled that political law embraces constitutional law, law of public corporations, administrative law
including the law on public officers and elections. Specifically, Article 14 of the Code of Commerce
partakes more of the nature of an administrative law because it regulates the conduct of certain
public officers and employees with respect to engaging in business: hence, political in essence.
● It is significant to note that the present Code of Commerce is the Spanish Code of Commerce of
1885, with some modifications made by the "Commission de Codificacion de las Provincias de
Ultramar," which was extended to the Philippines by the Royal Decree of August 6, 1888, and took
effect as law in this jurisdiction on December 1, 1888.
● Upon the transfer of sovereignty from Spain to the United States and later on from the United States
to the Republic of the Philippines, Article 14 of this Code of Commerce must be deemed to have
been abrogated because where there is a change of sovereignty, the political laws of the former
sovereign, whether compatible or not with those of the new sovereign, are automatically abrogated,
unless they are expressly re-enacted by affirmative act of the new sovereign.
● Respondent Judge cannot be held liable under the aforestated paragraph because there is no
showing that respondent participated or intervened in his official capacity in the business or
transactions of the Traders Manufacturing and Fishing Industries, Inc. In the case at bar, the
business of the corporation in which respondent participated has obviously no relation or
connection with his judicial office. The business of said corporation is not that kind where
respondent intervenes or takes part in his capacity as Judge of the Court of First Instance
● Likewise, Article 14 of the Code of Commerce which prohibits judges from engaging in commerce
is, as heretofore stated, deemed abrogated automatically upon the transfer of sovereignty from
Spain to America, because it is political in nature.
 Mutuc v. COMELEC

Manila Prince Hotel v. GSIS

Facts:

The controversy arose when respondent Government Service Insurance System (GSIS),
pursuant to the privatization program of the Philippine Government, decided to sell through public
bidding 30% to 51% of the issued and outstanding shares of respondent Manila Hotel Corporation
(MHC). The winning bidder, or the eventual “strategic partner,” will provide management expertise
or an international marketing/reservation system, and financial support to strengthen the
profitability and performance of the Manila Hotel.

In a close bidding held on 18 September 1995 only two (2) bidders participated: petitioner Manila
Prince Hotel Corporation, a Filipino corporation, which offered to buy 51% of the MHC or
15,300,000 shares at P41.58 per share, and Renong Berhad, a Malaysian firm, with ITT-Sheraton
as its hotel operator, which bid for the same number of shares at P44.00 per share, or P2.42 more
than the bid of petitioner. Prior to the declaration of Renong Berhard as the winning bidder,
petitioner Manila Prince Hotel matched the bid price and sent a manager’s check as bid security,
which GSIS refused to accept.

Apprehensive that GSIS has disregarded the tender of the matching bid and that the sale may be
consummated with Renong Berhad, petitioner filed a petition before the Court.

Issues:

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

Rulings:
In the resolution of the case, the Court held that:

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

Hence, respondents GOVERNMENT SERVICE INSURANCE SYSTEM, MANILA HOTEL

CORPORATION, COMMITTEE ON PRIVATIZATION and OFFICE OF THE GOVERNMENT
CORPORATE COUNSEL are directed to CEASE and DESIST from selling 51% of the shares of
the Manila Hotel Corporation to RENONG BERHAD, and to ACCEPT the matching bid of
petitioner MANILA PRINCE HOTEL CORPORATION to purchase the subject 51% of the shares
of the Manila Hotel Corporation at P44.00 per share and thereafter to execute the necessary
agreements and documents to effect the sale, to issue the necessary clearances and to do such
other acts and deeds as may be necessary for the purpose.

Aglipay v. Ruiz
March, 13, 1937 | Laurel, J. | Purpose and Effect of a Preamble, Ratio legis est anima
PETITIONER: Gregorio Aglipay, head of Philippine Independent Church

RESPONDENTS: Juan Ruiz, Director of Posts

SUMMARY: Petitioner Aglipay, the head of Phil. Independent Church, filed a writ of prohibition
against respondent Ruiz, the Director of Post, enjoining the latter from issuing and selling postage
stamps commemorative of the 33rd Intl Eucharistic Congress organized by the Roman Catholic.
The petitioner invokes that such issuance and selling, as authorized by Act 4052 by the Phil.
Legislature, contemplates religious purpose – for the benefit of a particular sect or church. Hence,
this petition.

DOCTRINE: Ratio legis est anima – ‘the reason or principle behind the law’, which means that the
Constitution should be interpreted in accordance with the intent of its framers.

Preamble means “to walk before” (Praeambulus: Walking in front). It establishes certain basic
principles upon which the government is founded. Preamble is a source of light - it is a useful aid
in the construction and interpretation of the text of the Constitution.

FACTS:

1. On May 1936, the Director of Posts announced in the dailies of Manila that he would order the
issuance of postage stamps commemorating the celebration in the City of Manila of the 33rd
International Eucharistic Congress, organized by the Roman Catholic Church.

2. The petitioner, Mons. Gregorio Aglipay, Supreme Head of the Philippine Independent Church,
in the fulfilment of what he considers to be a civic duty, requested Vicente Sotto, a member of the
Philippine Bar, to denounce the matter to the President. In spite of the protest of the petitioner’s
attorney, the Director of Posts publicly announced having sent to the United States the designs of
the postage for printing. The said stamps were actually issued and sold though the greater part
remained unsold.

3. The further sale was sought to be prevented by the petitioner. He alleged that the provisions
of Section 23, Subsection 3, Article VI, of the Constitution were violated in the issuance and selling
of the commemorative postage stamps. It was provided therein that, ‘No public money or property
shall ever be appropriated, applied, or used, directly or indirectly, for the use, benefit, or support
of any sect, church, denomination, sectarian, institution, or system of religion, or for the use,
benefit, or support of any priest, preacher, minister, or other religious teacher or dignitary as such,
except when such priest, preacher, minister, or dignitary is assigned to the armed forces or to any
penal institution, orphanage, or leprosarium.’

4. The petitioner invokes that such issuance and selling, as authorized by Act 4052 by the Phil.
Legislature, contemplates religious purpose. Hence, this petition.

ISSUE/s:
 1. WoN the issuance of stamps was constitutional / not in congruence with the preamble – NO

RULING: SC denied the petition for the writ of prohibition, without pronouncement as to costs.

RATIO:

1. Religious freedom, as a constitutional mandate, is not inhibition of profound reverence for

religion and is not denial of its influence in human affairs. Religion as a profession of faith to an
active power that binds and elevates man to his Creator is recognized. In so far as it instills into
the minds the purest principles of morality, its influence is deeply felt and highly appreciated.

2. There has been no constitutional infraction in this case. Act No. 4052 granted the Director of
Posts, with the approval of the Sec. of Public Works and Communications, discretion to issue
postage stamps with new designs. Even if we were to assume that these officials made use of a
poor judgment in issuing and selling the postage stamps in question, still, the case of the petitioner
would fail to take in weight. Between the exercise of a poor judgment and the unconstitutionality
of the step taken, a gap exists which is yet to be filled to justify the court in setting aside the official
act assailed as coming within a constitutional inhibition. The court resolved to deny the petition for
a writ of prohibition.

3. When the Filipino people, in the preamble of the Constitution, implored "the aid of Divine
Providence, in order to establish a government that shall embody their ideals, conserve and
develop the patrimony of the nation, promote the general welfare, and secure to themselves
and their posterity the blessings of independence under a regime of justice, liberty and
democracy," they thereby manifested reliance upon Him who guides the destinies of men
and nations. The elevating influence of religion in human society is recognized here as
elsewhere. In fact, certain general concessions are indiscriminately accorded to religious sects
and denominations. It is obvious that while the issuance and sale of the stamps in question may be
said to be inseparably linked with an event of a religious character, the resulting propaganda, if any,
received by the Roman Catholic Church, was not the aim and purpose of the Government.

4. Avanceña, C.J., Villa-Real, Abad Santos, Imperial, Diaz and Concepcion, JJ., concur.
 BACANI vs. NACOCO

G.R. No. L-9657, November 29, 1956| Bautista Angelo, J.:| Meaning of the term “Government of the
Republic of the Philippines” in Administrative Code of 1987, Section 2(1)

PETITIONER-APPELLEES: Leopoldo T. Bacani and Mateo A. Matoto

DEFENDANTS-APPELLANTS: National Coconut Corporation (NACOCO) and Board of Liquidators

SUMMARY: Plaintiffs here were court stenographers. During the hearing of a case in which NACOCO is
interested, counsel for defendant requested said stenographers for copies of the transcript of the notes
taken by them. The plaintiffs then charged NACOCO of transcript fees. The Auditor General sought the
recovery of the amounts paid contending that NACOCO is a government entity exempt from transcript
fees. The AG issued an order directing the deduction from the salary of plaintiffs the amount they charged
NACOCO. To prevent deduction of these fees from their salaries and secure a judicial ruling that the
NACOCO is not a government entity plaintiffs instituted this action to the CFI. The CFI found for the
plaintiffs declaring that NACOCO is not a government entity. The defendants appealed the said decision
to the Supreme Court. The Supreme Court affirmed the decision of the CFI. NACOCO is a mere
government-owned or controlled corporation which is not included in the definition of the term
"Government of the Republic of the Philippines" as used in Sec. 2 of the RAC.

DOCTRINE: The term "Government of the Republic of the Philippines" used in section 2 of the Revised
Administrative Code refers to that government entity through which functions of the government are
exercised as an attribute of sovereignty, and in this are included those arms through which political
authority is made effective whether they be provincial, municipal or other form of local government. These
are what we call municipal corporations. They do not include government entities which are given a
corporate personality separate and distinct from the government and which are governed by the
Corporation Law, such as the National Coconut Corporation. Their powers, duties and liabilities have to
determined in the light of that law and of their corporate charters. They do not therefore come within the
exemption clause prescribed in section 16, Rule 130 of our Rules of Court.

FACTS:

Plaintiffs herein are court stenographers assigned in Branch VI of the CFI of Manila. During the pendency
of a case which involves NACOCO, its counsel requested said stenographers for copies of the transcript of
the stenographic notes taken by them during the hearing. Plaintiffs delivered the needed transcript
containing 714 pages and thereafter submitted their bills for the payment of their fees. The National Coconut
Corporation paid the amount of P564 to Bacani and P150 to Matoto for said transcript at the rate of P1 per
page.

The Auditor General disallowed the payment of these fees and sought the recovery of the amounts paid by
issuing an order directing the Cashier of the Department of Justice to deduct from the salary of Bacani the
amount of P25 every payday and from the salary of Matoto the amount of P10 every payday beginning
March 30, 1954. The AG contends that NACOCO is a government entity based on Section 2 of the Revised
Administrative Code.
To prevent deduction of these fees from their salaries and secure a judicial ruling that NACOCO is not a
government entity within the purview of section 16, Rule 130 of the Rules of Court, this action was instituted
by plaintiffs in the CFI.

CFI: The court found for the plaintiffs declaring (1) that NACOCO is not a government entity within the
purview of section 16, Rule 130 of the RoC; (2) that the payments already made by said defendant to
plaintiffs herein and received by the latter from the former for the copies of the stenographic transcripts in
question, are valid, just and legal; and (3) that plaintiffs are under no obligation whatsoever to make a refund
of these payments already received by them.

Hence, this appeal.

ISSUE: WoN National Coconut Corporation may be considered as included in the term "Government of
the Republic of the Philippines" for the purposes of the exemption of the legal fees provided for in Rule 130
of the Rules of Court. – NO

RULING: SC affirmed the lower court’s decision.

RATIO: As may be noted, the term "Government of the Republic of the Philippines" refers to a government
entity through which the functions of government are exercised, including the various arms through which
political authority is made effective in the Philippines, whether pertaining to the central government or to
the provincial or municipal branches or other form of local government.

Government owned or controlled corporations do not acquire that status as in Section 2 of the RAC for the
simple reason that they do not come under the classification of municipal or public corporation. Take for
instance the National Coconut Corporation. While it was organized with the purpose of "adjusting the
coconut industry to a position independent of trade preferences in the United States" and of providing
"Facilities for the better curing of copra products and the proper utilization of coconut by-products", a
function which our government has chosen to exercise to promote the coconut industry, however, it was
given a corporate power separate and distinct from our government, for it was made subject to the
provisions of our Corporation Law in so far as its corporate existence and the powers that it may exercise
are concerned (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. Their
powers, duties and liabilities have to be determined in the light of that law and of their corporate charters.
They do not therefore come within the exemption clause prescribed in section 16, Rule 130 of our Rules of
Court.

Wherefore, the decision appealed from is affirmed, without pronouncement as to costs.

 ACCFA v. Cugco

PETITIONER-APPELLEES: Agricultural Credit and Cooperative Financing Administration

DEFENDANTS-APPELLANTS: Confederation of Unions in Government Corporations and Offices
(CUGCO)

SUMMARY: ACCFA was a government agency created under RA No. 821, as amended. Its
administrative machinery was reorganized and its named changed to Agricultural Credit Administration
under the Land Reform Code or RA 3844. The Unions and ACCFA entered into a collective bargaining
agreement effective for a period of one year. Few months have passed, however,The Unions, together
with the CUGCO, filed a complaint against the ACCFA for having allegedly committed acts of unfair labor
practices and non implementation of said agreement

DOCTRINE: The implementation of the land reform program of the government according to Republic
Act No. 3844 is most certainly a governmental, not a proprietary, function; and for that purpose Executive
Order No. 75 has placed the ACA under the Land Reform Project Administration. The law itself declares
that the ACA is a government office, with the formulation of policies, plans and programs vested no longer
in a Board of Governors, as in the case of the ACCFA, but in the National Land Reform Council, itself a
government instrumentality; and that its personnel are subject to Civil Service laws and to rules of
standardization with respect to positions and salaries, any vestige of doubt as to the governmental
character of its functions disappears.

Facts:

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

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

Held:

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

PVTA v. CIR

65 SCRA 416 (Two-fold functions of the Government)

PETITIONER: PHILIPPINE VIRGINIA TOBACCO ADMINISTRATION
RESPONDENTS: COURT OF INDUSTRIAL RELATIONS, ET. AL.

FACTS:
-On December 20, 1966, claimants, now private respondents, filed a petition wherein they alleged
their employment relationship, the overtime services in excess of the regular eight hours a day
rendered by them, and the failure to pay them overtime compensation.
- Philippine Virginia Tobacco Administration (PVTA) denied the allegations and raised special
defenses of lack of a cause of action and lack of jurisdiction.
- After the parties submitted the case for decision, the then Presiding Judge Arsenio T. Martinez
of CIR issued an order sustaining the claims of private respondents for overtime services from
December 23, 1963 up to the date the decision was rendered on March 21, 1970, and directing
petitioner to pay the same, minus what it had already paid.
- PVTA appealed alleging that it is beyond the jurisdiction of the CIR as it is exercising
governmental functions

ISSUE: Whether PVTA discharges governmental and not proprietary function

RULING: YES.

-That functions of that sort "may not be strictly what President Wilson described as "constituent"
(as distinguished from "ministrant"),such as those relating to the maintenance of peace and the
prevention of crime, those regulating property and property rights, those relating to the
administration of justice and the determination of political duties of citizens, and those relating to
national defense and foreign relations. Under this traditional classification, such constituent
functions are exercised by the State as attributes of sovereignty, and not merely to promote the
welfare, progress and prosperity of the people — these latter functions being ministrant, the
exercise of which is optional on the part of the government."
-The growing complexities of modern society, however, have rendered this traditional
classification of the functions of government quite unrealistic, not to say obsolete.
-The success that attended the efforts of petitioner to be adjudged as performing governmental
rather than proprietary functions cannot militate against respondent Court assuming jurisdiction
over this labor dispute.

Government v. Monte de Piedad

THE GOVERNMENT OF THE PHILIPPINE ISLANDS v. MONTE DE PIEDAD RESPONDENT

(NAME)

December 13, 1916 | Trent, J. | Parens Patriae

PETITIONER: THE GOVERNMENT OF THE PHILIPPINE ISLANDS

RESPONDENTS: EL MONTE DE PIEDAD Y CAJA DE AHORROS DE MANILA

SUMMARY: A devastating earthquake took place in the Philippines in 1863. Contributions amounting to
$400,000 were collected during the Spanish regime for the relief of the victims of an earthquake. Out of the
aid, $80,000 was left untouched. The Monte de Piedad, a charitable institution is in need for more working
capital. It petitioned the Governor-General for the transfer of $80,000 as a loan.

In June 1893, the Department of Finance called upon Monte de Piedad to return the $80,000. The respondent
bank declined to comply with this order upon the ground that only the Governor General of the Philippine
Islands and not the Department of Finance had the right to order the reimbursement.

The Philippine Islands, through the Attorney-General, bring suit against the Monte de Piedad for the recovery
of the $80,000 together with interest, for the benefit of those persons or their heirs. After due trial, judgment
was entered in favor of the plaintiff for the sum of $80,000 gold or its equivalent in Philippine currency,
together with legal interest from February 28, 1912, and the costs of the cause. The defendant appealed.

DOCTRINE: Parens Patriae

FACTS:

A devastating earthquake took place in the Philippines in 1863. Contributions amounting to $400,000 were collected
during the Spanish regime for the relief of the victims of an earthquake. Out of the aid, $80,000 was left untouched.
The Monte de Piedad, a charitable institution is in need for more working capital. It petitioned the Governor-
General for the transfer of $80,000 as a loan.

In June 1893, the Department of Finance called upon Monte de Piedad to return the $80,000. The respondent bank
declined to comply with this order upon the ground that only the Governor General of the Philippine Islands and not
the Department of Finance had the right to order the reimbursement.

The Philippine Islands, through the Attorney-General, bring suit against the Monte de Piedad for the revovery of the
$80,000 together with interest, for the benefit of those persons or their heirs. After due trial, judgment was entered in
favor of the plaintiff for the sum of $80,000 gold or its equivalent in Philippine currency, together with legal interest
from February 28, 1912, and the costs of the cause. The defendant appealed.
Hence, this petition. One of the assigned errors made by the defendant was to question the competence of the Plaintiff
(government) to bring the action contending that the suit could be instituted only by the intended beneficiaries
themselves or by their heirs. Hence, this petition”.

ISSUE:

WoN the Philippine government is competent to file a complaint against the respondent bank for the reimbursement
of the money of the intended beneficiaries.

RULING:

The SC upheld the right of the Government to file the case as parens patriae in representation of the legitimate
claimants. The Philippine Government is the proper party to maintain an action to funds thus loaned or deposited for
the purpose of carrying out the intention of the contributors. The legislature or Government of the State, as parens
patriae, has the right to endorse all charities of public nature, by virtue of its general superintending authority over the
public interests when no other person is entrusted with it.

The prerogative of parens patriae is inherent in the supreme power of every State, whether that power is lodged in a
royal person or in the legislature. It is a most beneficient functions and often necessary to be exercised in the interest
of humanity and for the prevention of injury to those who cannot protect themselves. The beneficiaries of charities,
who are often incapable of vindicating their rights, and justly look for the protection of the sovereign authority, acting
as parens patriae. They show that this beneficient functions has not ceased to exist under the change of government
from a monarchy to a republic, but that it now resides in the legislative department, ready to be called into exercise
wherever required for the purpose of justice and right, and is clearly capable of being exercised in cases of charities
in any other cases whatever.

Cabañas v. Pilapil
Co Kim Chan v. Valdez Tan Ket
CO KIM CHAM v. TAN KEH
September, 17, 1945 | FERIA, J. | De Facto Government
PETITIONER: CO KIM CHAM (alias CO KIM CHAM)

RESPONDENTS: EUSEBIO VALDEZ TAN KEH and ARSENIO P. DIZON

SUMMARY: This petition for mandamus in which petitioner prays that the respondent judge
of the lower court be ordered to continue the proceedings in civil case No. 3012 of said
court, which were initiated under the regime of the so-called Republic of the Philippines
established during the Japanese military occupation of these Islands.

DOCTRINE: There are several kinds of de facto governments. The first, or government de
facto in a proper legal sense, is that government that gets possession and control of, or
usurps, by force or by the voice of the majority, the rightful legal governments and
maintains itself against the will of the latter. The second is that which is established and
maintained by military forces who invade and occupy a territory of the enemy in the
course of war, and which is denominated a government of paramount force. Third is that
established as an independent government by the inhabitants of a country who rise in
insurrection against the parent state.

In view of the foregoing, it is evident that the Philippine Executive Commission, which
was organized by Order No. 1, issued on January 23, 1942, by the Commander of the
Japanese forces, was a civil government established by the military forces of occupation
and therefore a de facto government of the second kind.

FACTS:
Facts: The respondent judge refused to take cognizance of and continue the proceedings in
said case on the ground that the proclamation issued on October 23, 1944, by General
Douglas MacArthur had the effect of invalidating and nullifying all judicial proceedings and
judgements of the court of the Philippines under the Philippine Executive Commission and
the Republic of the Philippines established during the Japanese military occupation.

On January 2, 1942, the Imperial Japanese Forces occupied the City of Manila, and on the
next day their Commander in Chief proclaimed "the Military Administration under law
over the districts occupied by the Army." In said proclamation, it was also provided that "so
far as the Military Administration permits, all the laws now in force in the Commonwealth,
as well as executive and judicial institutions, shall continue to be effective for the time being
as in the past," and "all public officials shall remain in their present posts and carry on
faithfully their duties as before."
On October 23, 1944, a few days after the historic landing in Leyte, General Douglas MacArthur
issued a proclamation to the People of the Philippines which declared:

1. That the Government of the Commonwealth of the Philippines is, subject to the supreme
authority of the Government of the United States, the sole and only government having legal
and valid jurisdiction over the people in areas of the Philippines free of enemy occupation
and control;

2. That the laws now existing on the statute books of the Commonwealth of the Philippines
and the regulations promulgated pursuant thereto are in full force and effect and legally
binding upon the people in areas of the Philippines free of enemy occupation and control; and

3. 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.

Hence this case.

ISSUE/s: Whether or not under the rules of international law the judicial acts and proceedings
of the courts established in the Philippines under the Philippine Executive Commission and
the Republic of the Philippines were good and valid and remained good and valid even after
the liberation or reoccupation of the Philippines by the United States and Filipino forces

RULING: In view of all the foregoing it is adjudged and decreed that a writ of mandamus
issue, directed to the respondent 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.

RATIO: It is a legal truism in political and international law that all acts and proceedings of
the legislative, executive, and judicial departments of a de facto government are good and
valid.

There are several kinds of de facto governments. The first, or government de facto in a proper
legal sense, is that government that gets possession and control of, or usurps, by force or by
the voice of the majority, the rightful legal governments and maintains itself against the will
of the latter. The second is that which is established and maintained by military forces who
invade and occupy a territory of the enemy in the course of war, and which is denominated
a government of paramount force. Third is that established as an independent government
by the inhabitants of a country who rise in insurrection against the parent state.

In view of the foregoing, it is evident that the Philippine Executive Commission, which was
organized by Order No. 1, issued on January 23, 1942, by the Commander of the Japanese
forces, was a civil government established by the military forces of occupation and therefore
a de facto government of the second kind.

The governments by the Philippine Executive Commission and the Republic of the
Philippines during the Japanese military occupation being de facto governments, it
necessarily follows that the judicial acts and proceedings of the courts of justice of those
governments, which are not of a political complexion, were good and valid, and, by virtue of
the well-known principle of postliminy (postliminium) in international law, remained good
and valid after the liberation or reoccupation of the Philippines by the American and Filipino
forces under the leadership of General Douglas MacArthur.

Peralta v. Directors of Prisons

Alcantara v. Director of Prisons
Tañada v. Angara

Reagan v. Comm. Of Internal Revenue

December 27, 1969 | FERNANDO, J. | Sovereignty as Auto-Limitation
PETITIONER: WILLIAM C. REAGAN, ETC.
RESPONDENTS: COMMISSIONER OF INTERNAL REVENUE

SUMMARY:
William C. Reagan, a civilian employee of an American corporation providing technical assistance to
the United States Air Force in the Philippines dispute the payment of the income tax assessed by
respondent Commissioner of Internal Revenue on sale of his automobile to a member of the United
States Marine Corps at the Clark Field Air Base at Pampanga. It is his contention, seriously and
earnestly expressed, that in legal contemplation the sale was made outside Philippine territory and
therefore beyond our jurisdictional power to tax. The sale having taken place indisputably is Philippine
territory, liability for the income tax due was unavoidable. As the Court of Tax Appeals reached a similar
conclusion, the Court sustain its decision on appeal.

DOCTRINE:
The Philippines being independent and sovereign, its authority may be exercised over its entire domain.
There is no portion thereof that is beyond its power. Within its limits, its decrees are supreme, its
commands paramount. Its laws govern therein, and everyone to whom it applies must submit to its
terms. That is the extent of its jurisdiction, both territorial and personal. Necessarily, likewise, it has to
be exclusive. If it were not thus, there is a diminution of its sovereignty.

Any state may, by its consent, express or implied, submit to a restriction of its sovereign rights. There
may thus be a curtailment of what otherwise is a power plenary in character. That is the concept of
sovereignty as auto-limitation, which, "is the property of a state-force due to which it has the exclusive
capacity of legal self-determination and self-restriction." A state then, if it chooses to, may refrain from
the exercise of what otherwise is illimitable competence.

FACTS:
1. Petitioner, a citizen of the United States and an employee of Bendix Radio, Division of Bendix Aviation
Corporation, which provides technical assistance to the United States Air Force, was assigned at Clark
Air Base, Philippines. Nine (9) months thereafter and before his tour of duty expired, petitioner imported
a tax-free 1960 Cadillac car with accessories valued at $6,443.83, including freight, insurance and other
charges.
2. More than two (2) months after the 1960 Cadillac car was imported into the Philippines, petitioner
requested the Base Commander, Clark Air Base, for a permit to sell the car, which was granted
provided that the sale was made to a member of the United States Armed Forces or a citizen of the
United States employed in the U.S. military bases in the Philippines.
3. Petitioner sold his car for $6,600.00 to a certain Willie Johnson, Jr. (Private first class), United States
Marine Corps, Sangley Point, Cavite, Philippines, a Bill of Sale executed at Clark Air Base.
4. Johnson, Jr. sold the car to Fred Meneses for P32,000.00 as evidenced by a deed of sale executed in
Manila."5
5. Commissioner of Internal Revenue, after deducting the landed cost of the car as well as the personal
exemption to which petitioner was entitled, fixed as his net taxable income arising from such transaction
the amount of P17,912.34, rendering him liable for income tax in the sum of P2,979.00.
6. After paying the sum, he sought a refund claiming that he was exempt, but pending action on his request,
he filed the case with the Court of Tax Appeals seeking recovery of the sum of P2,979.00 plus the legal
rate of interest.
7. Court of Tax Appeals found nothing objectionable in the assessment and payment of P2,979.00 as
income tax, so denied the refund.
8. Hence, this appeal.
ISSUE/s:
W/N income tax of P2,979.00 was legally collected.-Yes

RULING:
WHEREFORE, the decision of the Court of Tax Appeals denying the refund of P2,979.00 as the income
tax paid is affirmed.

RATIO:
1. Its laws may as to some persons found within its territory no longer control. Nor does the matter end
there. It is not precluded from allowing another power to participate in the exercise of jurisdictional right
over certain portions of its territory. If it does so, it by no means follows that such areas become
impressed with an alien character. They retain their status as native soil. They are still subject to its
authority. Its jurisdiction may be diminished, but it does not disappear. So it is with the bases under
lease to the American armed forces by virtue of the military bases agreement of 1947. They are not
and cannot be foreign territory.
2. Decisions coming from petitioner's native land, announced in the leading case of Schooner Exchange
v. M'Faddon, "The jurisdiction of the nation within its own territory is necessarily exclusive and absolute.
It is susceptible of no limitation not imposed by itself. Any restriction upon it, deriving validity from an
external source, would imply a diminution of its sovereignty to the extent of the restriction, and an
investment of that sovereignty to the same extent in that power which could impose such restriction."
After which came this paragraph: "All exceptions, therefore, to the full and complete power of a nation
within its own territories, must be traced up to the consent of the nation itself. They can flow from no
other legitimate source."
3. In a decision, it affirmed the fundamental principle of everyone within the territorial domain of a state
being subject to its commands: "For undoubtedly every person who is found within the limits of a
government, whether the temporary purposes or as a resident, is bound by its laws."
4. Not too long ago, there was a reiteration of such a view, this time from the pen of Justice Van Devanter.
Thus: "It now is settled in the United States and recognized elsewhere that the territory subject to its
jurisdiction includes the land areas under its dominion and control the ports, harbors, bays, and other
in closed arms of the sea along its coast, and a marginal belt of the sea extending from the coast line
outward a marine league, or 3 geographic miles."
5. As interpreted and applied by the United States, it is made clear that not even the embassy premises
of a foreign power are to be considered outside the territorial domain of the host state. Thus: "The
ground occupied by an embassy is not in fact the territory of the foreign State to which the premises
belong through possession or ownership. The lawfulness or unlawfulness of acts there committed is
determined by the territorial sovereign. If an attache commits an offense within the precincts of an
embassy, his immunity from prosecution is not because he has not violated the local law, but rather for
the reason that the individual is exempt from prosecution. If a person not so exempt, or whose immunity
is waived, similarly commits a crime therein, the territorial sovereign, if it secures custody of the
offender, may subject him to prosecution, even though its criminal code normally does not contemplate
the punishment of one who commits an offense outside of the national domain. It is not believed,
therefore, that an ambassador himself possesses the right to exercise jurisdiction, contrary to the will
of the State of his sojourn, even within his embassy with respect to acts there committed. Nor is there
apparent at the present time any tendency on the part of States to acquiesce in his exercise of it."
6. In the light of the above, the first and crucial error imputed to the Court of Tax Appeals to the effect that
it should have held that the Clark Air Force is foreign soil or territory for purposes of income tax
legislation is clearly without support in law. As thus correctly viewed, petitioner's hope for the reversal
of the decision completely fades away. There is nothing in the Military Bases Agreement that lends
support to such an assertion. It has not become foreign soil or territory. This country's jurisdictional
rights therein, certainly not excluding the power to tax, have been preserved. As to certain tax matters,
an appropriate exemption was provided for.