ENBANC

[
G.R.No.L-
9657.
  
Nov
ember29,
1956.
]
LEOPOLDOT.BACANIandMATEOA.MATOTO,  Pl
ainti
ff
s-Appell
ees,
vs.NATI
ONALCOCONUT
CORPORATI
ON,ETAL.Def
,
  endant
s,NATIONALCOCONUTCORPORATI ONandBOARDOF
LI
QUIDATORS,
 Defendants-
Appellant
s.
 
DECISION
BAUTI J.
STAANGELO,
  :
Pl
aint
if
fs 
her
einar
ecour
tst
enogr
apher
sassi
gnedi
nBr
anchVIoft
heCour
tofFi
rstI
nst
anceof
Mani l
a.Dur ingt hependencyofCi vi
lCaseNo.2293ofsai dcourt,enti
tledFranciscoSy ci
pv s.
NationalCoconut Cor porat
ion,Assi stant Cor porat
e CounselFeder ico Ali
kpala,counsel
forDef
  endant ,requestedsaidst enographersf orcopiesoft hetr
anscr i
ptoft hest enographi
c
notest akenbyt hem dur
ingt hehear i
ng.Pl
  ai
nt i
ffs 
compliedwi t
ht her equestbydel iveri
ngto
CounselAl ikpalat heneededt ranscri
ptcontaining714pagesandt hereaf t
ersubmi tt
edt ohim
thei
rbillsfort hepay mentoft heirfees.TheNat i
onalCoconutCor porationpaidt heamountof
P564t oLeopol doT.BacaniandP150t oMateoA.Mat ot
of orsaidtranscriptatther at
eofP1
perpage.
Uponi nspectingthebooksoft hi
scor poration,theAudit
orGener aldi sallowedt hepay mentof
thesef eesandsoughtt her ecoveryoft heamount spaid.OnJanuar y19,1953,t heAudi t
or
Gener alr equi
redthe Plaintif
fs 
toreimbur sesai damountsont hest rengt hofaci r
cularoft he
Depar tmentofJust ice wher eint he opini on was expressed t hatt he Nat i
onalCoconut
Corpor ation,bei
ngagov ernmentent i
ty,wasexemptf r
om thepay mentoft hef eesinquest i
on.
On Febr uary 6,1954,t he AuditorGener alissued an orderdi recting t he Cashieroft he
Depar tmentofJust icet odeductf r
om t hesal ar
yofLeopoldoT.Bacanit heamountofP25ev er y
paydayandf rom thesal aryofMat eoA.Mat ototheamountofP10ev er
ypay daybegi nning
Mar ch30,1954.Topr ev entdeducti
onoft hesef eesfr
om t hei
rsal ariesandsecur eaj udicial
ruli
ngt hatt heNat i
onalCoconutCor porati
oni snotagov ernmentent itywi thinthepurview of
section16,Rul e130oft heRulesofCour t,thi
sacti
onwasi nsti
tutedi nt heCour tofFi r
st
InstanceofMani l
a.
Def
endant
s setupasadef
enset
hatt
heNat
ionalCoconutCor
por
ati
oni
sagov
ernmentent
it
y
wi t
hint hepur vi
ew ofsect i
on2oft heRev i
sedAdmi nist
r ativeCodeof1917and,hence,i tis
exemptf r
om pay ingt hestenographer s’feesunderRul e130oft heRulesofCour t
.Aftertr
ial,
the
courtf oundf orthe Plaint
if
fs decl
ari
ng( 1)“ t
hat Defendant  
Nat i
onalCoconutCor porati
oni snot
agov er nmentent it
ywi thi
nt hepurviewofsect ion16,Rul e130oft heRulesofCourt; ( 2)t
chan r hat
obl
esv
irt
ual
awl
i
brar
y

thepay ment salreadymadebysai d  Defendant t

o Plai
ntiffs herei
nandr ecei
vedbyt helatt
er
from t hef ormeri nt hetotalamountofP714,f orcopi esoft hestenographi
ct r
anscriptsin
question, areval
id,justandl egal;
  and(
chanr
obl
esv
i3)t
rt hat
ual
awl
i 
brPl
ai
ar
y ntif
fs areundernoobl i
gati
onwhat soeverto
makear ef undoft hesepay ment sal readyr eceivedbyt hem.”Thisi sanappealf rom said
decision.
Undersect i
on16,Rul e130oft heRul esofCour t,t
heGov ernmentoft hePhi l
ippi
nesi sexempt
fr
om pay i
ng the legalf eesprovi
ded f ortherei
n,and among t hese feesar et hose whi ch
stenographersmaychar geforthetranscri
ptofnot estakenbyt hem thatmayber equest edby
anyi nt
erestedperson( secti
on8) .Thef eesinquest i
onar efort hetranscr
iptofnot est aken
duringthehear i
ngofacasei nwhi cht heNationalCoconutCor porati
oni sinter
est ed,andt he
tr
anscriptwasr equestedbyitsassist
antcorporatecounselfortheuseofsai dcor poration.
Ontheotherhand,sect
ion2oftheRev
isedAdmini
str
ati
veCodedef
inest
hescopeoft
het
erm
“Gov
ernmentoftheRepubli
coft
hePhil
i
ppines”asf
oll
ows: chanr
obl
esv
irt
ual
l
awl
i
brar
y

“‘
The Gov ernmentoft he Phi l
ippi
ne Islands’isat er
m whi ch ref
erst othe cor porate
government alenti
tythroughwhi cht hefunctionsofgovernmentareexerci
sedt hroughoutt he
Phil
ippi
neI slands,i
ncluding,saveast hecont rar
yappearsfrom thecont
ext ,t
hev ari
ousar ms
thr
oughwhi chpol i
ti
calaut hori
tyismadeef fect
ivei
nsaidI sl
ands,whetherpertaini
ngt ot he
centralGov ernmentort ot he provi
ncialormuni cipalbranches orot herform ofl ocal
government .
”
Thequest i
onnow t obedetermi
nediswhet hert
heNat i
onalCoconutCorporat
ionmaybe
consider
edasi ncl
udedintheter
m“ Gover
nmentoft heRepubli
coft hePhil
i
ppines”fort
he
purposesoftheexempt
ionofthel
egal
feesprovi
dedfori
nRule130oftheRul
esofCour t
.
Asmaybe not ed,t he term “Gov ernmentoft he Republi
coft he Phili
ppines”refer
stoa
governmententit
yt hroughwhi cht hef uncti
onsofgov er
nmentar eexercised,i
ncludi
ngt he
var
iousarmst hroughwhi chpolit
icalaut hori
tyismadeef fect
ivei nthePhi li
ppi
nes,whether
per
taini
ngtothecent ralgovernmentort otheprovinci
alormunicipalbranchesorot herf
orm of
l
ocalgov er
nment .Thi sr equir
es a l it
tle di
gression on the nature and functi
ons ofour
governmentasinsti
tutedinourConst i
tuti
on.
Tobegi nwi th,west at
ethatt het erm“ Gov er
nment ”maybedef inedas“ thati nst
ituti
onor
aggregat eofi nst
it
utionsbywhi chani ndependentsoci etymakesandcar riesoutt hoser ulesof
acti
onwhi char enecessaryt oenablement oli
veinasoci alstate,orwhi char ei mposedupon
thepeopl ef ormingt hatsocietybyt hosewhopossesst hepoweroraut horit
yofpr escribing
them”( U.S.v s.Dor r
,2Phi l
.,332).Thi si nst i
tut
ion,whenr ef er
ringt othenat ionalgov ernment ,
hasr eferencet owhatourConst it
utionhasest abli
shedcomposedoft hreegr eatdepar t
ment s,
the legislati
v e,execut i
ve,and t he j udici al
,through whi ch the power s and f unctions of
governmentar e exerci
sed.These f unct ions aret wofold:   constit
ut e and mi nist
rant.The chanr
obl
esv
irt
ual
l
awl
i
brar
y

formerar et hosewhi chconsti

tutethev erybondsofsoci etyandar ecompul soryi nnature; t he chanr
obl
esv
irt
ual
awl
i
brar
y

l
atterar et hoset hatar eundertakenonl ybywayofadv ancingt hegener ali nterestsofsoci ety,
andar emer elyopt i
onal.Pr
esidentWi lsonenumer atestheconst ituentfunct ionsasf oll
ows: chanr
obl
esv
irt
ual
l
awl
i
brar
y

“
‘(
1) 
 Thekeepi
ngoforderandpr
ovi
dingf
ort
hepr
otect
ionofper
sonsandpr
oper
tyf
rom
v
iol
enceandrobber
y.
‘
(2)
  
Thef
ixi
ngoft
hel
egal
rel
ati
onsbet
weenmanandwi
feandbet
weenpar
ent
sandchi
l
dren.
‘
(3)
  
The r
egul
ati
on ofthe hol
ding,tr
ansmissi
on,and i
nter
change ofpr
oper
ty,and t
he
det
ermi
nat
ionofi
tsl
iabi
l
iti
esf
ordebtorforcr
ime.
‘
(4)
  
Thedet
ermi
nat
ionofcont
ractr
ight
sbet
weeni
ndi
vi
dual
s.
‘
(5)
  
Thedef
ini
ti
onandpuni
shmentofcr
ime.
‘
(6)
  
Theadmi
nist
rat
ionofj
ust
icei
nci
vi
lcases.
‘
(7)
  
Thedet
ermi
nat
ionoft
hepol
i
tical
dut
ies,
pri
vi
leges,
andr
elat
ionsofci
ti
zens.
‘
(8) 
 Deal
i
ngsoft hestat
ewithforei
gnpower s:  
thepreservat
i
chanronoft
obl
esv
irhest
t
ual
l at
awl
ief
br r
ar
yom ext
ernal
dangerorencroachmentandtheadv ancementofit
sinternati
onali
nter
est
s.’
“(Mal
colm,The
GovernmentofthePhi
li
ppi
neIsl
ands,p.19.)
Themosti mport
antofthemi ni
str
antfuncti
onsar e:  publi
cworks,publi
ceducat i
on,publ
chanr
obl
esv
ii
rc
t
ual
l
awl
i
brar
y

charit
y,heal
thandsafet
yregulati
ons,andregulati
onsoftradeandindust
ry.Theprinci
plesdet
er
miningwhetherornotagovernmentshallexercisecert
ainoftheseopti
onalfunct
ionsare:  (
1) chanr
obl
esv
irt
ual
l
awl
i
brar
y

thatagov er
nmentshoulddofort hepubl
icwelfarethosethingswhichpri
vatecapit
alwouldnot
nat
urall
yundertakeand(2)t
hatagov er
nmentshoulddot heset
hingswhichbyit
sverynat
urei
t
i
sbetterequippedtoadmini
sterfort
hepubli
cwelfarethanisanypriv
ateindi
vi
dualorgr
oupof
i
ndiv
iduals.(
Mal col
m,TheGovernmentoft
hePhil
ippineIsl
ands,
pp.19-20.)
From theabov ewemayi nferthat,str
ictl
yspeaking,therearef unct
ionswhi chourgov er
nmenti s
requir
edt oexerciset opr omot eitsobjectivesasex pressedi nourConst ituti
onandwhi char e
exerci
sedbyi tasanat tribut
eofsov ereignty
,andt hosewhi chi tmayexer ciset opromot e
mer el
yt hewel f
ar e,progressandpr osperit
yoft hepeopl e.Tot hislat
tercl assbel ongst he
organizati
onoft hosecor porati
onsownedorcont roll
edbyt hegov er
nmentt opr omotecertain
aspectsoft heeconomi cl ifeofourpeopl esuchast heNat ionalCoconutCor porati
on.Thesear e
whatwecal lgov ernment -ownedorcont roll
edcorporationswhi chmayt akeont heform ofa
pri
vate enterpri
se orone or ganized with powers and f or malcharacter i
sti
cs ofa pr ivate
corporati
onsundert heCor porati
onLaw.
The questi
on t
hatnow ari
ses i
s:  Does the f
actthatthese cor
chanr
obl
esv
ipor
rt at
ual
lion per
awl
i
brar
y for
m cer
tai
n
funct
ionsofgover
nmentmakethem apartoftheGov
ernmentofthePhil
i
ppines?
Theansweri ssi mpl e:  theydonotacqui
chanr
obl
esv
irt
ual
l
awl
i
brar
y ret hatst atusf ort hesi mpl ereasont hatt heydonot
comeundert hecl assi f
icationofmuni cipalorpubl iccor poration.Takef orinst ancet heNat ional
CoconutCor por ati
on.Whi leitwasor gani zed wi tht hepur poseof“ adjust i
ng t hecoconut
i
ndust r
yt oaposi tionindependentoft radepr eferencesi nt heUni t edStates”andofpr oviding
“Facili
tiesf ort hebet tercur i
ngofcopr apr oduct sandt hepr operut il
i
zat ionofcoconutby -
product s” ,af unct i
onwhi chourgov er nmenthaschosent oexer ci setopr omot et hecoconut
i
ndust r
y ,howev er,itwasgi v
enacor por at
epowersepar ateanddi sti
nctf rom ourgov ernment ,
fori twasmadesubj ectt othepr ov isionsofourCor porat i
onLaw i nsof arasi tscor porate
existenceandt hepower st hatitmayexer cisear econcer ned( sect i
ons2and4, Commonweal th
ActNo.518) .Itmaysueandbesuedi nt hesamemannerasanyot herpr ivatecor porations,and
i
nt hissensei ti sanent itydi ff
erentf r
om ourgov ernment .Ast hisCour thasapt lysai d,“The
mer ef actt hatt heGov ernmenthappenst obeamaj orityst ockhol derdoesnotmakei tapubl i
c
corpor ation”( Nat ionalCoalCo.v s.Col lect orofI nternalRev enue,46 Phi l
.,586- 587) .“ By
becomi ngast ockhol deri nt heNat ionalCoalCompany ,theGov ernmentdi vestedi tselfofi ts
sov ereign char acterso f aras r espect st he t ransact i
ons oft he cor por ati
on 
 
cr .Unl
al
aw i
ke t he
Gov ernment ,thecor porationmaybesuedwi thouti tsconsent ,andi ssubjectt otaxation.Yett he
Nat i
onalCoalCompanyr emai nsanagencyori nstrument alit
yofgov ernment .
”( Gov ernmentof
thePhi lippineI slandsv s.Spr inger,50Phi l.
,288. )
Tor ecapitulate,wemayment i
onthatt heterm“ Gov ernmentoft heRepubl i
coft hePhilippines”
usedi nsect i
on2oft heRev i
sedAdmi ni
st r
ati
veCoder ef er
sonl ytot hatgov ernmentent i
ty
thr
oughwhi cht hef uncti
onsofthegov ernmentar eexer cisedasanat t
ributeofsov erei
gnt y
, and
i
nt hisar eincludedt hosearmst hr
oughwhi chpoli
ticalaut horit
yi smadeef fect
ivewhet hert hey
bepr ov i
ncial,muni ci
palorotherform ofl ocalgov ernment .Thesear ewhatwecal lmuni cipal
corpor at
ions.Theydonoti ncludegov ernmentent i
tieswhi char egivenacor poratepersonal i
ty
separ ateanddi stinctfrom thegov er
nmentandwhi char egov ernedbyt heCor porat
ionLaw.
Theirpower s,dut i
esandl i
abil
it
ieshav etobedet ermi nedi nt hel i
ghtoft hatlaw andoft heir
corpor at
echar ters.Theydonott hereforecomewi thint heexempt ioncl ausepr escribedi n
section16, Rul e130ofourRul esofCour t.
“
Publ
iccor
por
ati
onsarethosefor
medororgani
zedf
ort
hegov
ernmentofapor
ti
onoft
heSt
ate.
”
(
Sect
ion3,
Republ
icActNo.1459,Cor
por
ati
onLaw).
“‘
Thegener
all
yaccepteddef ini
ti
onofamuni ci
palcorpor
ationwouldonlyincl
udeorgani
zed
ci
ti
esandtowns,andlikeorganizat
ions,wi
thpoli
ti
calandlegisl
ati
vepowersfort
helocal
,ci
vi
l
gover
nmentandpoli
cer egulati
onsoft hei
nhabit
antsofthepar t
icul
ardi
str
icti
ncl
udedinthe
boundar
iesoft
hecor
por
ati
on.
’Hel
l
erv
s.St
remmel
,52Mo.309,
312.
”
“I
ni t
smor egeneralsenset hephrase‘ muni
cipalcor
porati
on’mayi ncludebotht ownsand
counti
es,andot herpubliccorpor
ationscreat
edbygov er
nmentf orpoli
ticalpurposes.I
ni t
s
morecommonandl i
mi t
edsigni
fi
cati
on,itembracesonl
yincorpor
atedvil
l
ages, t
ownsandci t
ies.
Dunn v s.CourtofCount yRevenues,85 Ala.144,146,4 So.661. ”( McQui l
l
in,Municipal
Corporati
ons,2nded.,Vol.1,
p.385.
)
“Wemay ,t
herefor
e,defineamuni cipalcorporat
ionini tshistori
calandst ri
ctsensetobet he
i
ncorporati
on,byt heaut hori
tyoft hegov ernment,oft hei nhabit
antsofapar t
icul
arpl
aceor
dist
ri
ct,andaut hori
zi
ngt hem int heircorporat
ecapaci t
yt oexer cisesubor di
natespecif
ied
powersoflegisl
ati
onandr egul
ati
onwi threspecttotheirlocalandi nt
er nalconcer
ns.Thi
spower
oflocalgovernmenti sthedi st
inctivepurposeandt hedi sti
nguishingf eatureofamuni ci
pal
corpor
ationproper.
”(Dil
l
on, MunicipalCorporati
ons,5thed. ,Vol.I
,p.59. )
Iti
struet hatundersect i
on8,Rule130,st enographersmayonl ychargeasf eesP0.30foreach
pageoft ranscriptofnotl essthan200wor dsbef oretheappealist akenandP0. 15foreach
pageafterthef i
lingoftheappeal,butinthiscaset heNati
onalCoconutCor porati
onhasagreed
andinfacthaspai dP1.00perpagef ortheservicesrender
edbyt Pl
he  ainti
ff
s andhasnotrai
sed
anyobject i
ont ot heamountpai duntilit
spr opri
etywasdi sput
edbyt heAudi t
orGeneral
.The
paymentoft hef eesinquest i
onbecamet herefor
econt r
actualandassuchi sv al
idevenifi
t
goesbey ondt helimitpr
escribedi
nsect i
on8, Rule130oftheRul esofCour t
.
Asregardsthequest ionofpr ocedureraisedbyAppel
  lants,suf
fi
cei ttosayt hatthesamei s
i
nsubstanti
al,consi
deringthatthi
scaser efer
snottoamoneycl aim di
sapprovedbyt heAudi t
or
Generalbutt
oanact ionofpr ohi
biti
onthepurposeofwhichistorest
raintheoffi
cial
sconcer ned
fr
om deductingf r
om Plaint
if
fs’salar
iestheamountpaidtot hem asstenographers’fees.This
casedoesnotcomeundersect i
on1,Rul e45oftheRulesofCour trel
ativ
etoappeal sf r
om a
deci
si
onoft heAudi t
orGener al
.
Wher
efor
e,t
hedeci
sionappeal
edf
rom i
saf
fi
rmed,
wit
houtpr
onouncementast
ocost
s.
Par C.
as,
  J.,Bengzon,Padi
ll
a,Mont
emay
or,Labr
ador
,Concepci
on,Rey
es,J.B.L.
,Endenci
a
andFeli
x,
 JJ.,
concur.