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A. CONCEPT OF THE STATE

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

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

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

CORPORATION and BOARD OF LIQUIDATORS, Defendants–Appellants.

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

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

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

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

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

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

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

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

Facts: This case involves the expanded role of the

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

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

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

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

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

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

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

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

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

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

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

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

The court resolved three issues:

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

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

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

People v. Gozo

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

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

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

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

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

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

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

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