1.

1
DEFINITION OF
STATE
CASE:
G.R. No. L-13250 October 29, 1971
THE COLLECTOR OF INTERNAL REVENUE, petitioner, vs. ANTONIO
CAMPOS RUEDA, respondent.
G.R. No. L-13250 October 29, 1971

THE COLLECTOR OF INTERNAL REVENUE, petitioner, vs. ANTONIO CAMPOS RUEDA, respondent.

Assistant Solicitor General Jose P. Alejandro and Special Attorney Jose G. Azurin, (O.S.G.) for petitioner.
Ramirez and Ortigas for respondent.
FERNANDO, J.:

The basic issue posed by petitioner Collector of Internal Revenue in this appeal from a decision of the Court of Tax Appeals as to whether or not the
requisites of statehood, or at least so much thereof as may be necessary for the acquisition of an international personality, must be satisfied for a "foreign
country" to fall within the exemption of Section 122 of the National Internal Revenue Code 1 is now ripe for adjudication. The Court of Tax Appeals
answered the question in the negative, and thus reversed the action taken by petitioner Collector, who would hold respondent Antonio Campos Rueda, as
administrator of the estate of the late Estrella Soriano Vda. de Cerdeira, liable for the sum of P161,874.95 as deficiency estate and inheritance taxes for
the transfer of intangible personal properties in the Philippines, the deceased, a Spanish national having been a resident of Tangier, Morocco from 1931
up to the time of her death in 1955. In an earlier resolution promulgated May 30, 1962, this Court on the assumption that the need for resolving the
principal question would be obviated, referred the matter back to the Court of Tax Appeals to determine whether the alleged law of Tangier did grant the
reciprocal tax exemption required by the aforesaid Section 122. Then came an order from the Court of Tax Appeals submitting copies of legislation of
Tangier that would manifest that the element of reciprocity was not lacking. It was not until July 29, 1969 that the case was deemed submitted for
decision. When the petition for review was filed on January 2, 1958, the basic issue raised was impressed with an element of novelty. Four days
thereafter, however, on January 6, 1958, it was held by this Court that the aforesaid provision does not require that the "foreign country" possess an
international personality to come within its terms. 2 Accordingly, we have to affirm.

The decision of the Court of Tax Appeals, now under review, sets forth the background facts as follows: "This is an appeal interposed by petitioner
Antonio Campos Rueda as administrator of the estate of the deceased Doña Maria de la Estrella Soriano Vda. de Cerdeira, from the decision of the
respondent Collector of Internal Revenue, assessing against and demanding from the former the sum P161,874.95 as deficiency estate and inheritance
taxes, including interest and penalties, on the transfer of intangible personal properties situated in the Philippines and belonging to said Maria de la
Estrella Soriano Vda. de Cerdeira. Maria de la Estrella Soriano Vda. de Cerdeira (Maria Cerdeira for short) is a Spanish national, by reason of her
marriage to a Spanish citizen and was a resident of Tangier, Morocco from 1931 up to her death on January 2, 1955. At the time of her demise she left,
among others, intangible personal properties in the Philippines." 3 Then came this portion: "On September 29, 1955, petitioner filed a provisional estate
and inheritance tax return on all the properties of the late Maria Cerdeira. On the same date, respondent, pending investigation, issued an assessment for
state and inheritance taxes in the respective amounts of P111,592.48 and P157,791.48, or a total of P369,383.96 which tax liabilities were paid by
petitioner ... . On November 17, 1955, an amended return was filed ... wherein intangible personal properties with the value of P396,308.90 were claimed
as exempted from taxes. On November 23, 1955, respondent, pending investigation, issued another assessment for estate and inheritance taxes in the
amounts of P202,262.40 and P267,402.84, respectively, or a total of P469,665.24 ... . In a letter dated January 11, 1956, respondent denied the request for
exemption on the ground that the law of Tangier is not reciprocal to Section 122 of the National Internal Revenue Code. Hence, respondent demanded
the payment of the sums of P239,439.49 representing deficiency estate and inheritance taxes including ad valorem penalties, surcharges, interests and
compromise penalties ... . In a letter dated February 8, 1956, and received by respondent on the following day, petitioner requested for the
reconsideration of the decision denying the claim for tax exemption of the intangible personal properties and the imposition of the 25% and 5% ad
valorem penalties ... . However, respondent denied request, in his letter dated May 5, 1956 ... and received by petitioner on May 21, 1956. Respondent
premised the denial on the grounds that there was no reciprocity [with Tangier, which was moreover] a mere principality, not a foreign country.
Consequently, respondent demanded the payment of the sums of P73,851.21 and P88,023.74 respectively, or a total of P161,874.95 as deficiency estate
and inheritance taxes including surcharges, interests and compromise penalties." 4

The matter was then elevated to the Court of Tax Appeals. As there was no dispute between the parties regarding the values of the properties and the
mathematical correctness of the deficiency assessments, the principal question as noted dealt with the reciprocity aspect as well as the insisting by the
Collector of Internal Revenue that Tangier was not a foreign country within the meaning of Section 122. In ruling against the contention of the Collector
of Internal Revenue, the appealed decision states: "In fine, we believe, and so hold, that the expression "foreign country", used in the last proviso of
Section 122 of the National Internal Revenue Code, refers to a government of that foreign power which, although not an international person in the sense
of international law, does not impose transfer or death upon intangible person properties of our citizens not residing therein, or whose law allows a
similar exemption from such taxes. It is, therefore, not necessary that Tangier should have been recognized by our Government order to entitle the
petitioner to the exemption benefits of the proviso of Section 122 of our Tax. Code." 5

Hence appeal to this court by petitioner. The respective briefs of the parties duly submitted, but as above indicated, instead of ruling definitely on the
question, this Court, on May 30, 1962, resolve to inquire further into the question of reciprocity and sent back the case to the Court of Tax Appeals for
the motion of evidence thereon. The dispositive portion of such resolution reads as follows: "While section 122 of the Philippine Tax Code aforequoted
speaks of 'intangible personal property' in both subdivisions (a) and (b); the alleged laws of Tangier refer to 'bienes muebles situados en Tanger', 'bienes
muebles radicantes en Tanger', 'movables' and 'movable property'. In order that this Court may be able to determine whether the alleged laws of Tangier
grant the reciprocal tax exemptions required by Section 122 of the Tax Code, and without, for the time being, going into the merits of the issues raised by
the petitioner-appellant, the case is [remanded] to the Court of Tax Appeals for the reception of evidence or proof on whether or not the words `bienes
muebles', 'movables' and 'movable properties as used in the Tangier laws, include or embrace 'intangible person property', as used in the Tax Code." 6 In
line with the above resolution, the Court of Tax Appeals admitted evidence submitted by the administrator petitioner Antonio Campos Rueda, consisting
of exhibits of laws of Tangier to the effect that "the transfers by reason of death of movable properties, corporeal or incorporeal, including furniture and
personal effects as well as of securities, bonds, shares, ..., were not subject, on that date and in said zone, to the payment of any death tax, whatever might
have been the nationality of the deceased or his heirs and legatees." It was further noted in an order of such Court referring the matter back to us that such
were duly admitted in evidence during the hearing of the case on September 9, 1963. Respondent presented no evidence." 7

The controlling legal provision as noted is a proviso in Section 122 of the National Internal Revenue Code. It reads thus: "That no tax shall be collected
under this Title in respect of intangible personal property (a) if the decedent at the time of his death was a resident of a foreign country which at the time
of his death did not impose a transfer tax or death tax of any character in respect of intangible person property of the Philippines not residing in that
foreign country, or (b) if the laws of the foreign country of which the decedent was a resident at the time of his death allow a similar exemption from
transfer taxes or death taxes of every character in respect of intangible personal property owned by citizens of the Philippines not residing in that foreign
country."8 The only obstacle therefore to a definitive ruling is whether or not as vigorously insisted upon by petitioner the acquisition of internal
personality is a condition sine qua non to Tangier being considered a "foreign country". Deference to the De Lara ruling, as was made clear in the
opening paragraph of this opinion, calls for an affirmance of the decision of the Court of Tax Appeals.
It does not admit of doubt that if a foreign country is to be identified with a state, it is required in line with Pound's formulation that it be a politically
organized sovereign community independent of outside control bound by penalties of nationhood, legally supreme within its territory, acting through a
government functioning under a regime oflaw. 9 It is thus a sovereign person with the people composing it viewed as an organized corporate society under
a government with the legal competence to exact obedience to its commands. 10 It has been referred to as a body-politic organized by common consent
for mutual defense and mutual safety and to promote the general welfare. 11 Correctly has it been described by Esmein as "the juridical personification of
the nation." 12 This is to view it in the light of its historical development. The stress is on its being a nation, its people occupying a definite territory,
politically organized, exercising by means of its government its sovereign will over the individuals within it and maintaining its separate international
personality. Laski could speak of it then as a territorial society divided into government and subjects, claiming within its allotted area a supremacy over
all other institutions.13 McIver similarly would point to the power entrusted to its government to maintain within its territory the conditions of a legal
order and to enter into international relations. 14 With the latter requisite satisfied, international law do not exact independence as a condition of
statehood. So Hyde did opine. 15

Even on the assumption then that Tangier is bereft of international personality, petitioner has not successfully made out a case. It bears repeating that four
days after the filing of this petition on January 6, 1958 in Collector of Internal Revenue v. De Lara, 16 it was specifically held by us: "Considering the
State of California as a foreign country in relation to section 122 of our Tax Code we believe and hold, as did the Tax Court, that the Ancilliary
Administrator is entitled the exemption from the inheritance tax on the intangible personal property found in the Philippines." 17 There can be no doubt
that California as a state in the American Union was in the alleged requisite of international personality. Nonetheless, it was held to be a foreign country
within the meaning of Section 122 of the National Internal Revenue Code. 18

What is undeniable is that even prior to the De Lara ruling, this Court did commit itself to the doctrine that even a tiny principality, that of Liechtenstein,
hardly an international personality in the sense, did fall under this exempt category. So it appears in an opinion of the Court by the then Acting Chief
Justicem Bengson who thereafter assumed that position in a permanent capacity, in Kiene v. Collector of Internal Revenue. 19 As was therein noted: 'The
Board found from the documents submitted to it — proof of the laws of Liechtenstein — that said country does not impose estate, inheritance and gift
taxes on intangible property of Filipino citizens not residing in that country. Wherefore, the Board declared that pursuant to the exemption above
established, no estate or inheritance taxes were collectible, Ludwig Kiene being a resident of Liechtestein when he passed away." 20 Then came this
definitive ruling: "The Collector — hereafter named the respondent — cites decisions of the United States Supreme Court and of this Court, holding that
intangible personal property in the Philippines belonging to a non-resident foreigner, who died outside of this country is subject to the estate tax, in
disregard of the principle 'mobilia sequuntur personam'. Such property is admittedly taxable here. Without the proviso above quoted, the shares of stock
owned here by the Ludwig Kiene would be concededly subject to estate and inheritance taxes. Nevertheless, our Congress chose to make an exemption
where conditions are such that demand reciprocity — as in this case. And the exemption must be honored." 21
WHEREFORE, the decision of the respondent Court of Tax Appeals of October 30, 1957 is affirmed. Without pronouncement as to costs.

CASE DIGEST

THE COLLECTOR OF INTERNAL REVENUE VS ANTONIO CAMPOS RUEDA G.R. NO. L-13250 October 29, 1971

FACTS:
Respondent Antonio Campos Rueda is an administrator of the estate of the late Estrella Soriano Vda. De Cerdeira by reason of her marriage to a Spanish
citizen and was a resident of Tangier, Morocco from 1931 up to her death on January 2, 1955. At the time of her demise she left, among others,
intangible personal properties in the Philippines.

Respondent Campos Rueda file a provisional estate and inheritance tax return on all the properties of the late Maria Cerdeira. On the same date,
respondent, pending investigation, issued an assessment for estate and inheritance taxes in the respective amounts of P111,592.48 and P157,791.48, or a
total of P369,383.96 which tax liabilities were paid by petitioner. Rueda filed an amended return stating that intangible personal properties worth
P396,308.90 should be exempted from taxes. The CIR denied the request on the ground that the law of Tangier is not reciprocal to Section 122 of the
National Internal Revenue Code.

The matter was then elevated to the Court of Tax Appeals which ruled in favor of the respondent. The principal question as noted dealt with the
reciprocity aspect as well as the insistence by the Collector of Internal Revenue that Tangier was not a foreign country within the meaning of Section
122.

ISSUE: Whether or not Tangier is a state.

HELD:
YES. A foreign country is to be identified with a state, it is required in line with Pound’s formulation that it be a politically organized sovereign
community independent of outside control bound by ties of nationhood, legally supreme within its territory, acting through a government functioning
under a regime of law. It is thus a sovereign person with the people composing it viewed as an organized corporate society under a government with the
legal competence to exact obedience its commands. It has been referred to as a body-politic organized by common consent for mutual defense and
mutual safety and to promote the general welfare

Further, the Supreme Court noted that there is already an existing jurisprudence (Collector vs De Lara) which provides that even a tiny principality, that
of Liechtenstein, hardly an international personality in the sense, did fall under the exempt category provided for in Section 22 of the Tax Code. Thus,
recognition is not necessary. Hence, since it was proven that Tangier provides such exemption to personal properties of Filipinos found therein so must
the Philippines honor the exemption as provided for by our tax law with respect to the doctrine of reciprocity.
 1.2.2
PEOPLE
CASE:
G.R. No. L-44640 October 12, 1976
PABLO C. SANIDAD and PABLITO V. SANIDAD, petitioner, vs.
HONORABLE COMMISSION ON ELECTIONS and HONORABLE
NATIONAL TREASURER, respondents.
G.R. No. L-44640 October 12, 1976 PABLO C. SANIDAD and PABLITO V. SANIDAD, petitioner, vs. HONORABLE COMMISSION ON
ELECTIONS and HONORABLE NATIONAL TREASURER, respondents.

165 Phil. 303

MARTIN, J.:

The capital question raised in these prohibition suits with preliminary injunction relates to the power of the incumbent President of the Philippines to
propose amendments to the present Constitution in the absence of the interim National Assembly which has not been convened.

On September 2, 1976, President Ferdinand E. Marcos issued Presidential Decree No. 991 calling for a national referendum on October 16, 1976 for the
Citizens Assemblies ("barangays") to resolve, among other things, the issues of martial law, the interim assembly, its replacement, the powers of such
replacement, the period of its existence, the length of the period for the exercise by the President of his present powers.[1]

Twenty days after or on September 22, 1976, the President issued another related decree, Presidential Decree No. 1031, amending the previous
Presidential Decree No. 991, by declaring the provisions of Presidential Decree No. 229 providing for the mariner of voting and canvass of votes in
"barangays" (Citizens Assemblies) applicable to the national referendum-plebiscite of October 16, 1976. Quite relevantly, Presidential Decree No. 1031
repealed inter alia, Section 4, of Presidential Decree No. 991, the full text of which (Section 4) is quoted in the footnote below.[2]

On the same date of September 22, 1976, the President issued Presidential Decree No. 1033, stating the questions to be submitted to the people in the
referendum-plebiscite on October 16, 1976. The Decree recites in its "whereas" clauses that the people's continued opposition to the convening of the
interim National Assembly evinces their desire to have such body abolished and replaced thru a constitutional amendment, providing for a new interim
legislative body, which will be submitted directly to the people in the referendum-plebiscite of October 16.

The questions ask, to wit:

"(1) Do you want martial law to be continued?

(2) Whether or not you want martial law to be continued, do you approve the following amendments to the Constitution? For the purpose of the
second question, the referendum shall have the effect of a plebiscite within the contemplation of Section 2 of Article XVI of the Constitution.

PROPOSED AMENDMENTS:

1. There shall be, in lieu of the interim National Assembly, an interim Batasang Pambansa. Members of the interim Batasang Pambansa which shall
not be more than 120, unless otherwise provided by law, shall include the incumbent President of the Philippines, representatives elected from the
different regions of the nation, those who shall not be less than eighteen years of age elected by their respective sectors, and those chosen by the
incumbent President from the members of the Cabinets Regional representatives shall be apportioned among the regions in accordance with the number
of their respective inhabitants and on the basis of a uniform and progressive ratio while the sectors shall be determined by law. The number of
representatives from each region or sector and the manner of their election shall be prescribed and regulated by law.

2. The interim Batasang Pambansa shall have the same powers and its members shall have the same functions, responsibilities, rights, privileges, and
disqualifications as the interim National Assembly and the regular National Assembly and the members thereof. However, it shall not exercise the power
provided in Article VIII, Section 14 (1) of the Constitution.

3. The incumbent President of the Philippines shall, within 30 days from the election and selection of the members, convene the interim Batasang
Pambansa and preside over its sessions until the Speaker shall have been elected. The incumbent President of the Philippines shall be the Prime Minister
and he shall continue to exercise all his powers even after the interim Batasang Pambansa is organized and ready to discharge its functions and likewise
he shall continue to exercise his powers and prerogatives under the nineteen hundred and thirty five Constitution and the powers vested in the President
and the Prime Minister under this Constitution.

4. The President (Prime Minister) and his Cabinet shall exercise all the powers and functions, and discharge the responsibilities of the regular
President (Prime Minister) and his Cabinet, and shall be subject only to such disqualifications as the President (Prime Minister) may prescribe. The
President (Prime Minister) if he so desires may appoint a Deputy Prime Minister or as many Deputy Prime Ministers as he may deem necessary.

5. The incumbent President shall continue to exercise legislative powers until martial law shall have been lifted.

6. Whenever in the judgment of the President (Prime Minister), there exists a grave emergency or a threat or imminence thereof, or whenever the
interim Batasang Pambansa or the regular National Assembly fails or is unable to act adequately on any matter for any reason that in his judgment
requires immediate action, he may, in order to meet the exigency, issue the necessary decrees, orders or letters of instructions, which shall form part of
the law of the land.

7. The barangays and sanggunians shall continue as presently constituted but their functions, powers, and composition may be altered by law.

Referenda conducted thru the barangays and under the supervision of the Commission on Elections may be called at any time the government deems it
necessary to ascertain the will of the people regarding any important matter whether of national or local interest.

8. All provisions of this Constitution not inconsistent with any of these amendments shall continue in full force and effect.

9. These amendments shall take effect after the incumbent President shall have proclaimed that they have been ratified by a majority of the votes cast
in the referendum-plebiscite."

The Commission on Elections was vested with the exclusive supervision and control of the October 1976 National Referendum-Plebiscite.

On September 27, 1976, PABLO C. SANIDAD and PABLITO V. SANIDAD, father and son, commenced L-44640 for Prohibition with Preliminary
Injunction seeking to enjoin the Commission on Elections from holding and conducting the Referendum-Plebiscite on October 16; to declare without
force and effect Presidential Decree Nos. 991 and 1033, insofar as they propose amendments to the Constitution, as well as Presidential Decree No. 1031,
insofar as it directs the Commission on Elections to supervise, control, hold, and conduct the Referendum-Plebiscite scheduled on October 16, 1976.
Petitioners contend that under the 1935 and 1973 Constitutions there is no grant to the incumbent President to exercise the constituent power to propose
amendments to the new Constitution. As a consequence, the Referendum-Plebiscite on October 16 has no constitutional or legal basis.

On October 5, 1976, the Solicitor General filed the comment for respondent Commission on Elections. The Solicitor General principally maintains that
petitioners have no standing to sue; the issue raised is political in nature, beyond judicial cognizance of this Court; at this state of the transition period,
only the incumbent President has the authority to exercise constituent power; the referendum-plebiscite is a step towards normalization.

On September 30, 1976, another action for Prohibition with Preliminary Injunction, docketed as L-44684, was instituted by V ICENT M. GUZMAN, a
delegate to the 1971 Constitutional Convention, asserting that the power to propose amendments to, or revision of, the Constitution during the transition
period is expressly conferred on the interim National Assembly under Section 16, Article XVII of the Constitution.[3]

Still another petition for Prohibition with Preliminary Injunction was filed on October 5, 1976 by RAUL M. GONZALES, his son RAUL, JR., and
ALFREDO SALAPANTAN, docketed as L-44714, to restrain the implementation of Presidential Decrees relative to the forthcoming Referendum-
Plebiscite of October 16.

These last petitioners argue that even granting him legislative powers under Martial Law, the incumbent President cannot act as a constituent assembly to
propose amendments to the Constitution; a referendum-plebiscite is untenable under the Constitutions of 1935 and 1973; the submission of the proposed
amendments in such a short period of time for deliberation renders the plebiscite a nullity; to lift Martial Law, the President need not consult the people
via referendum; and allowing 15-year olds to vote would amount to an amendment of the Constitution, which confines the right of suffrage to those
citizens of the Philippines 18 years of age and above.

We find the petitions in the three entitled cases to be devoid of merit.

I Justiciability of question raised.

1. As a preliminary resolution, We rule that the petitioners in L-44640 (Pablo C. Sanidad and Pablito V. Sanidad) possess locus standi to challenge
the constitutional premise of Presidential Decree Nos. 991, 1031, and 1033. It is now an ancient rule that the valid source of a statute - Presidential
Decrees are of such nature - may be contested by one who will sustain a direct injury as a result of its enforcement. At the instance of taxpayers, laws
providing for the disbursement of public funds may be enjoined, upon the theory that the expenditure of public funds by an officer of the State for the
purpose of executing an unconstitutional act constitutes a misapplication of such funds.[4] The breadth of Presidential Decree No. 991 carries an
appropriation of Five Million Pesos for the effective implementation of its purposes.[5] Presidential Decree No. 1031 appropriates the sum of Eight
Million Pesos to carry out its provisions.[6] The interest of the aforenamed petitioners as taxpayers in the lawful expenditure of these amounts of public
money sufficiently clothes them with that personality to litigate the validity of the Decrees appropriating said funds. Moreover, as regards taxpayer's
suits, this Court enjoys that open discretion to entertain the same or not.[7] For the present case, We deem it sound to exercise that discretion
affirmatively so that the authority upon which the disputed Decrees are predicated may be inquired into.

2. The Solicitor General would consider the question at bar as a pure political one, lying outside the domain of judicial review. We disagree. The
amending process, both as to proposal and ratification, raises a judicial question.[8] This is especially true in cases where the power of the Presidency to
initiate the amending process by proposals of amendments, a function normally exercised by the legislature, is seriously doubted. Under the terms of the
1973 Constitution, the power to propose amendments to the Constitution resides in the interim National Assembly during the period of transition (Sec.
15, Transitory Provisions). After that period, and the regular National Assembly in its active session, the power to propose amendments becomes ipso
facto the prerogative of the regular National Assembly (Sec. 1, pars. 1 and 2 of Art. XV I, 1973 Constitution). The normal course has not been followed.
Rather than calling the interim National Assembly to constitute itself into a constituent assembly, the incumbent President undertook the proposal of
amendments and submitted the proposed amendments thru Presidential Decree 1033 to the people in a Referendum-Plebiscite on October 16.
Unavoidably, the regularity of the procedure for amendments, written in lambent words in the very Constitution sought to be amended, raises a
contestable issue. The implementing Presidential Decree Nos. 991, 1031, and 1033, which commonly purport to have the force and effect of legislation
are assailed as invalid, thus the issue of the validity of said Decrees is plainly a justiciable one, within the competence of this Court to pass upon. Section
2 (2), Article X of the new Constitution provides: "All cases involving the constitutionality of a treaty, executive agreement, or law shall be heard and
decided by the Supreme Court en banc, and no treaty, executive agreement, or law may be declared unconstitutional without the concurrence of at least
ten Members. * * *." The Supreme Court has the last word in the construction not only of treaties and statutes, but also of the Constitution itself.[9] The
amending, like all other powers organized in the Constitution, is in form a delegated and hence a limited power, so that the Supreme Court is vested with
that authority to determine whether that power has been discharged within its limits.

Political questions are neatly associated with the wisdom, not the legality of a particular act. Where the vortex of the controversy refers to the legality or
validity of the contested act, that matter is definitely justiciable or non-political. What is in the heels of the Court is not the wisdom of the act of the
incumbent President in proposing amendments to the Constitution, but his constitutional authority to perform such act or to assume the power of a
constituent assembly. Whether the amending process confers on the President that power to propose amendments is therefore a downright justiciable
question. Should the contrary be found, the actuation of the President would merely be a brutum fulmen. If the Constitution provides how it may be
amended, the judiciary as the interpreter of that Constitution, can declare whether the procedure followed or the authority assumed was valid or not.[10]

We cannot accept the view of the Solicitor General, in pursuing his theory of non-justiciability, that the question of the President's authority to propose
amendments and the regularity of the procedure adopted for submission of the proposals to the people ultimately lie in the judgment of the latter. A clear
Descartes fallacy of vicious circle. Is it not that the people themselves, by their sovereign act, provided for the authority and procedure for the amending
process when they ratified the present Constitution in 1973? Whether, therefore, that constitutional provision has been followed or not is indisputably a
proper subject of inquiry, not by the people themselves - of course - who exercise no power of judicial review, but by the Supreme Court in whom the
people themselves vested that power, a power which includes the competence to determine whether the constitutional norms for amendments have been
observed or not. And, this inquiry must be done a priori not a posteriori, i.e., before the submission to and ratification by the people.

Indeed, the precedents evolved by the Court on prior constitutional cases underline the preference of the Court's majority to treat such issue of
Presidential role in the amending process as one of non-political impression. In the Plebiscite Cases,[11] the contention of the Solicitor General that the
issue on the legality of Presidential Decree No. 73 "submitting to the Filipino people (on January 15, 1973) for ratification or rejection the Constitution of
the Republic of the Philippines proposed by the 1971 Constitutional Convention and appropriating funds therefor, " is a political one, was rejected and
the Court unanimously considered the issue as justiciable in nature. Subsequently, in the Ratification Cases[12] involving the issue of whether or not the
validity of Presidential Proclamation No. 1102, "announcing the Ratification by the Filipino people of the Constitution proposed by the 1971
Constitutional Convention," partakes of the nature of a political question, the affirmative stand of the Solicitor General was dismissed, the Court ruled
that the question raised is justiciable. Chief Justice Concepcion, expressing the majority view, said, "(T)hus, in the aforementioned plebiscite cases, We
rejected the theory of the respondents therein that the question whether Presidential Decree No. 73 calling a plebiscite to be held on January 15, 1973, for
the ratification or rejection of the proposed new Constitution, was valid or not, was not a proper subject of judicial inquiry because, they claimed, it
partook of a political nature, and We unanimously declared that the issue was a justiciable one. With identical unanimity, We overruled the respondents'
contention in the 1971 habeas corpus cases, questioning Our authority to determine the constitutional sufficiency of the factual bases of the Presidential
proclamation suspending the privilege of the writ of habeas corpus on August 21, 1971, despite the opposite

view taken by this Court in Barcelon vs. Baker and Montenegro vs. Castañeda, insofar as it adhered to the former case, which view We, accordingly,
abandoned and refused to apply. For the same reason, We did not apply and expressly modified, in Gonzales vs. Commission on Elections, the political-
question theory adopted in Mabanag vs. Lopez Vito."[13] The return to Barcelon vs. Baker and Mabanagvs. Lopez Vito, urged by the Solicitor General,
was decisively refused by the Court. Chief Justice Concepcion continued: "The reasons adduced in support thereof are, however, substantially the same
as those given in support of the political question theory advanced in said habeas corpus and plebiscite cases, which were carefully considered by this
Court and found by it to be legally unsound and constitutionally untenable. As a consequence, Our decisions in the aforementioned habeas corpus cases
partakes of the nature and effect of a stare decisis which gained added weight by its virtual reiteration."

II The amending process as laid out in the new Constitution.

1. Article XVI of the 1973 Constitution on Amendments ordains:

"SECTION 1. (1) Any amendment to, or revision of, this Constitution may be proposed by the National Assembly upon a vote of three-fourths of all its
Members, or by a constitutional convention.

(2) The National Assembly may, by a vote of two-thirds of all its Members, call a constitutional convention or, by a majority vote of all its Members,
submit the question of calling such a convention to the electorate in an election.

SECTION 2. Any amendment to, or revision of, this Constitution shall be valid when ratified by a majority of the votes cast in a plebiscite which shall be
held not later than three months after the approval of such amendment or revision."

In the present period of transition, the interim National Assembly instituted in the Transitory Provisions is conferred with that amending power. Section
15 of the Transitory Provisions reads:

"SECTION 15. The interim National Assembly, upon special call by the interim Prime Minister, may, by a majority vote of all its Members, propose
amendments to this Constitution. Such amendments shall take effect when ratified in accordance with Article Sixteen hereof."

There are, therefore, two periods contemplated in the constitutional life of the nation, i.e., period of normalcy and period of transition. In times of
normalcy, the amending process may be initiated by the proposals of the (1) regular National Assembly upon a vote of three-fourths of all its members;
or (2) by a Constitutional Convention called by a vote of two-thirds of all the Members of the National Assembly. However the calling of a
Constitutional Convention may be submitted to the electorate in an election voted upon by a majority vote of all the members of the National Assembly.
In times of transition, amendments may be proposed by a majority vote of all the Members of the interim National Assembly upon special call by the
interim Prime Minister.

2. This Court in Aquino v. COMELEC,[14] had already settled that the incumbent President is vested with that prerogative of discretion as to when
he shall initially convene the interim National Assembly. Speaking for the majority opinion in that case, Justice Makasiar said: "The Constitutional
Convention intended to leave to the President the determination of the time when he shall initially convene the interim National Assembly, consistent
with the prevailing conditions of peace and order in the country." Concurring, Justice Fernandez, himself a member of that Constitutional Convention,
revealed: "(W)hen the Delegates to the Constitutional Convention voted on the Transitory Provisions, they were aware of the fact that under the same,
the incumbent President was given the discretion as to when he could convene the interim National Assembly; it was so stated plainly by the sponsor,
Delegate Yaneza; as a matter of fact, the propose that it be convened 'immediately', made by Delegate Pimentel (V), was rejected."[15] The President's
decision to defer the convening of the interim National Assembly soon found support from the people themselves. In the plebiscite of January 10-15,
1973, at which the ratification of the 1973 Constitution was submitted, the people voted against the convening of the interim National Assembly. In the
referendum of July 24, 1973, the Citizens Assemblies ("barangays") reiterated their sovereign will to withhold the convening of the interim National
Assembly. Again, in the referendum of February 27, 1975, the proposed question of whether the interim National Assembly shall be initially convened
was eliminated, because some of the members of Congress and delegates of the Constitutional Convention, who were deemed automatically members of
the interim National Assembly, were against its inclusion since in that referendum of January, 1973, the people had already resolved against it.

3. In sensu strictiore, when the legislative arm of the state undertakes the proposals of amendment to a Constitution, that body is not in the usual
function of lawmaking. It is not legislating when engaged in the amending process.[16] Rather, it is exercising a peculiar power bestowed upon it by the
fundamental charter itself. In the Philippines, that power is provided for in Article XVI of the 1973 Constitution (for the regular National Assembly) or
in Section 15 of the Transitory Provisions (for the interim National Assembly). While ordinarily it is the business of the legislating body to legislate for
the nation by virtue of constitutional conferment, amending of the Constitution is not legislative in character. In political science a distinction is made
between constitutional content of an organic character and that of a legislative character. The distinction, however, is one of policy, not of law.[17] Such
being the case, approval of the President of any proposed amendment is a misnomer.[18] The prerogative of the President to approve or disapprove
applies only to the ordinary cases of legislation. The President has nothing to do with proposition or adoption of amendments to the Constitution.[19]

III Concentration of Powers in the President during crisis government.

1. In general, the governmental powers in crisis government - the Philippines is a crisis government today - are more or less concentrated in the
President.[20] According to Rossiter, "(t)he concentration of government power in a democracy faced by an emergency is a corrective to the crisis
inefficiencies inherent in the doctrine of the separation of powers. In most free states it has generally been regarded as imperative that the total power of
the government be parceled out among three mutually independent branches - executive, legislature, and judiciary. It is believed to be destructive of
constitutionalism if any one branch should exercise any two or more types of power, and certainly a total disregard of the separation of powers is, as
Madison wrote in the Federalist, No. 47, 'the very definition of tyranny.' In normal times the separation of powers forms a distinct obstruction to arbitrary
governmental action. By this same token, in abnormal times it may form an insurmountable barrier to a decisive emergency action in behalf of the state
and its independent existence. There are moments in the life of any government when all powers must work together in unanimity of purpose and action,
even if this means the temporary union of executive, legislative, and judicial power in the hands of one man. The more complete the separation of
powers in a constitutional system, the more difficult and yet the more necessary will be their fusion in time of crisis. This is evident in a comparison of
the crisis potentialities of the cabinet and presidential systems of government. In the former the all-important harmony of legislature and executive is
taken for granted; in the latter it is neither guaranteed nor to be to confidently expected. As a result, cabinet is more easily established and more
trustworthy than presidential dictatorship. The power of the state in crisis must not only be concentrated and expanded; it must also be freed from the
normal system of constitutional and legal limitations.[21] John Locke, on the other hand, claims for the executive in its own right a broad discretion
capable even of setting aside the ordinary laws in the meeting of special exigencies for which the legislative power had not provided.[22] The rationale
behind such broad emergency powers of the Executive is the release of the government from "the paralysis of constitutional restraints" so that the crisis
may be ended and normal times restored.

2. The presidential exercise of legislative powers in times of martial law is now a conceded valid act. That sun clear authority of the President is
saddled on Section 3 (pars. 1 and 2) of the Transitory Provisions, thus:[23]

"The incumbent President of the Philippines shall initially convene the interim National Assembly and shall preside over its sessions until the interim
Speaker shall have been elected. He shall continue to exercise his powers and prerogatives under the nineteen hundred and thirty-five Constitution and
the powers vested in the President and the Prime Minister under this Constitution until he calls upon the interim National Assembly to elect the interim
President and the interim Prime Minister, who shall then exercise their respective powers vested by this Constitution.

All proclamations, orders, decrees, instructions, and acts promulgated, issued, or done by the incumbent President shall be part of the law of the land, and
shall remain valid, binding, and effective even after lifting of martial law or the ratification of this Constitution, unless modified, revoked, or superseded
by subsequent proclamations, orders, decrees, instructions, or other acts of the incumbent President, or unless expressly and explicitly modified or
repealed by the regular National Assembly."

"It is unthinkable," said Justice Fernandez, a 1971 Constitutional Convention delegate, "that the Constitutional Convention, while giving to the President
the discretion when to call the interim National Assembly to session, and knowing that it may not be convened soon, would create a vacuum in the
exercise of legislative powers. Otherwise, with no one to exercise the lawmaking powers, there would be paralyzation of the entire governmental
machinery."[24] Paraphrasing Rossiter, this is an extremely important factor in any constitutional dictatorship which extends over a period of time. The
separation of executive and legislature ordained in the Constitution presents a distinct obstruction to efficient crisis government. The steady increase in
executive power is not too much a cause for worry as the steady increase in the magnitude and complexity of the problems the President has been called
upon by the Filipino people to solve in their behalf, which involve rebellion, subversion, secession, recession, inflation, and economic crisis - a crisis
greater than war. In short, while conventional constitutional law just confines the President's power as Commander-in-Chief to the direction of the
operation of the national forces, yet the facts of our political, social, and economic disturbances had convincingly shown that in meeting the same,
indefinite power should be attributed to the President to take emergency measures.[25]

IV Authority of the incumbent President to propose amendments to the Constitution.

1. As earlier pointed out, the power to legislate is constitutionally consigned to the interim National Assembly during the transition period. However,
the initial convening of that Assembly is a matter fully addressed to the judgment of the incumbent President. And, in the exercise of that judgment, the
President opted to defer the convening of that body in utter recognition of the people's preference. Likewise, in the period of transition, the power to
propose amendments to the Constitution lies in the interim National Assembly upon special call by the President (Sec. 15 of the Transitory Provisions).
Again, harking to the dictates of the sovereign will, the President decided not to call the interim National Assembly. Would it then be within the bounds
of the Constitution and of law for the President to assume that constituent power of the interim Assembly vis-a-vis his assumption of that body's
legislative functions? The answer is yes. If the President has been legitimately discharging the legislative functions of the interim Assembly, there is no
reason why he cannot validly discharge the function of that Assembly to propose amendments to the Constitution, which is but adjunct, although
peculiar, to it s gross legislative power. This, of course, is not to say that the President has converted his office into a constituent assembly of that nature
normally constituted by the legislature. Rather, with the interim National Assembly not convened and only the Presidency and the Supreme Court in
operation, the urges of absolute necessity render it imperative upon the President to act as agent for and in behalf of the people to propose amendments to
the Constitution. Parenthetically, by its very constitution, the Supreme Court possesses no capacity to propose amendments without constitutional
infractions. For the President to shy away from that actuality and decline to undertake the amending process would leave the governmental machinery at
a stalmate or create in the powers of the State a destructive vacuum, thereby impeding the objective of a crisis government "to end the crisis and restore
normal times." In these parlous times, that Presidential initiative to reduce into concrete forms the constant voices of the people reigns supreme. After
all, constituent assemblies or constitutional conventions, like the President now, are mere agents of the people.[26]

2. The President's action is not a unilateral move. As early as the referendums of January 1973 and February 1975, the people had already rejected
the calling of the interim National Assembly. The LupongTagapagpaganap of the Katipunan ng mga Sanggunian, the Pambansang Katipunan ng mga
Barangay, and the Pambansang Katipunan ng mga Kabataang Barangay, representing 42,000 barangays, about the same number of Kabataang Barangay
organizations, Sanggunians in 1,458 municipalities, 72 provinces, 3 sub-provinces, and 60 cities had informed the President that the prevailing sentiment
of the people is for the abolition of the interim National Assembly. Other issues concerned the lifting of martial law and amendments to the Constitution.
[27] The national organizations of Sangguniang Bayan presently proposed to settle the issues of martial law, the interim Assembly, its replacement, the
period of its existence, the length of the period for the exercise by the President of its present powers in a referendum to be held on October 16.[28] The
Batasang Bayan (legislative council) created under Presidential Decree 995 of September 10, 1976, composed of 19 cabinet members, 9 officials with
cabinet rank, 91 members of the Lupong Tagapagpaganap (executive committee) of the Katipunan ng mga Sangguniang Bayan voted in session to
submit directly to the people in a plebiscite on October 16, the previously quoted proposed amendments to the Constitution, including the issue of martial
law.[29] Similarly, the "barangays" and the "sanggunians" endorsed to the President the submission of the proposed amendments to the people on
October 16. All the foregoing led the President to initiate the proposal of amendments to the Constitution and the subsequent issuance of Presidential
Decree No. 1033 on September 22, 1976 submitting the questions (proposed amendments) to the people in the National Referendum-Plebiscite on
October 16.

V The People as Sovereign.

1. Unlike in a federal state, the location of sovereignty in a unitary state is easily seen. In the Philippines, a republican and unitary state, sovereignty
''resides in the people and all government authority emanates from them.[30] In its fourth meaning, Savigny would treat "people" as "that particular
organized assembly of individuals in which, according to the Constitution, the highest power exists."[31] This is the concept of popular sovereignty. It
means that the constitutional legislator, namely, the people, is sovereign.[32] In consequence, the people may thus write into the Constitution their
convictions on any subject they choose in the absence of express constitutional prohibition.[33] This is because, as Holmes said, the Constitutions an
experiment, as all life is an experiment."[34] "The necessities of orderly government," wrote Rottschaefer, "do not require that one generation should be
permitted to permanently fetter all future generations." A constitution is based, therefore, upon a self-limiting decision of the people when they adopt it.
[35]
12. The October 16 referendum-plebiscite is a resounding call to the people to exercise their sovereign power as constitutional legislator. The
proposed amendments, as earlier discussed, proceed not from the thinking of a single man. Rather, they are the collated thoughts of the sovereign will
reduced only into enabling forms by the authority who can presently exercise the powers of government. In equal vein, the submission of those proposed
amendments and the question of martial law in a referendum-plebiscite expresses but the option of the people themselves implemented only by the
authority of the President. Indeed, it may well be said that the amending process is a sovereign act, although the authority to initiate the same and the
procedure to be followed reside somehow in a particular body.

VI Referendum-Plebiscite not rendered nugatory by the participation of the 15 year olds.

1. October 16 is in parts a referendum and a plebiscite. The question - (1) Do you want martial law to be continued? - is a referendum question,
wherein the 15-year olds may participate. This was prompted by the desire of the Government to reach the larger mass of the people so that their true
pulse may be felt to guide the President in pursuing his program for a New Order. For the succeeding question on the proposed amendments, only those
of voting age of 18 years may participate. This is the plebiscite aspect, as contemplated in Section 2, Article XVI of the new Constitution.[36] On this
second question, it would only be the votes of those 18 years old and above which will have valid bearing on the results. The fact that the voting
populace are simultaneously asked to answer the referendum question and the plebiscite question does not infirm the referendum-plebiscite. There is
nothing objectionable in consulting the people on a given issue, which is of current one and submitting to them for ratification of proposed constitutional
amendments. The fear of conmingled votes (15 -year olds and 18-year olds above) is readily dispelled by the provision of two ballot boxes for every
barangay center, one containing the ballots of voters fifteen years of age and under eighteen, and another containing the ballots of voters eighteen years
of age and above.[37] The ballots in the ballot box for voters fifteen years of age and under eighteen shall be counted ahead of the ballots of voters
eighteen years and above contained in another ballot box. And, the results of the referendum-plebiscite shall be separately prepared for the age
groupings, i.e., ballots contained in each of the two boxes.[38]

2. It is apt to distinguish here between a "referendum" and a "plebiscite." A "referendum" is merely consultative in charact er. It is simply a means of
assessing public reaction to the given issues submitted to the people for their consideration, the calling of which is derived from or within the totality of
the executive power of the President.[39] It is participated in by all citizens from the age of fifteen, regardless of whether or not they are illiterates,
feeble-minded, or ex-convicts.[40] A "plebiscite," on the other hand, involves the constituent act of those "citizens of the Philippines not otherwise
disqualified by law, who are eighteen years of age or over, and who shall have resided in the Philippines for at least one year and in the place wherein
they propose to vote for at least six months preceding the election."[41] Literacy, property, or any other substantive requirement is not imposed. It is
generally associated with the amending process of the Constitution, more particularly, the ratification aspect.

VII Freedoms of expression and assembly not disturbed.

1. There appears to be no valid basis for the claim that the regime of martial law stultifies in main the freedom to dissent. That speaks of a bygone
fear. The martial law regime which, in the observation of Justice Fernando, "is impressed with a mild character" recorded no State imposition for a
muffled voice. To be sure, there are restraints of the individual liberty, but on certain grounds no total suppression of that liberty is aimed at. The
machinery for the referendum-plebiscite on October 16 recognizes all the embracing freedoms of expression and assembly. The President himself had
announced that he would not countenance any suppression of dissenting views on the issues, as he is not interested in winning a "yes" or "no" vote, but
on the genuine sentiment of the people on the issues at hand.[42] Thus, the dissenters soon found their way to the public forums, voicing out loud and
clear their adverse views on the proposed amendments and even on the valid ratification of the 1973 Constitution, which is already a settled matter.[43]
Even government employees have been held by the Civil Service Commission free to participate in public discussion and even campaign for their stand
on the referendum-plebiscite issues.[44]

VIII Time for deliberation is not short.

1. The period from September 21 to October 16 or a period of 3 weeks is not too short for free debates or discussions on the referendum-plebiscite
issues. The questions are not new. They are the issues of the day. The people have been living with them since the proclamation of martial law four
years ago. The referendums of 1973 and 1975 carried the same issue of martial law. That notwithstanding, the contested brief period for discussion is
not without counterparts in previous plebiscites for constitutional amendments. Justice Makasiar, in the Referendum Case, recalls: 'Under the old
Society, 15 days were allotted for the publication in three consecutive issues of the Official Gazette of the women's suffrage amendment to the
Constitution before the scheduled plebiscite on April 30, 1937 (Corn. Act No. 34). The constitutional amendment to append as ordinance the
complicated Tydings -Kocials - kowski was published in only three consecutive issues of the Official Gazette for 10 days prior to the scheduled
plebiscite (Corn. Act 492). For the 1940 Constitutional amendments providing for the bicameral Congress, the reelection of the President and Vice-
President, and the creation of the Commission on Elections, 20 days of publication in three consecutive issues of the Official Gazette was fixed (Com.
Act No. 517). And the Parity Amendment, an involved constitutional amendment affecting the economy as well as the independence of the Republic
was publicized in three consecutive issues of the Official Gazette for 20 days prior to the plebiscite (Rep. Act No. 73)."[45]

2. It is worthy to note that Article XVI of the Constitution makes no provision as to the specific date when the plebiscite shall be held, but simply
states that it "shall be held not later than three months after the approval of such amendment or revision." In Coleman v. Miller,[46] the United States
Supreme Court held that this matter of submission involves "an appraisal of a great variety of relevant conditions, political, social and economic," which
"are essentially political and not justiciable." The constituent body or in the instant cases, the President, may fix the time within which the people may
act. This is because, first, proposal and ratification are not treated as unrelated acts, but as succeeding steps in a single endeavor, the natural inference
being that they are not to be widely separated in time; second, it is only when there is deemed to be a necessity therefor that amendments are to be
proposed, the reasonable implication being that when proposed, they are to be considered and disposed of presently; and third, ratification is but the
expression of the approbation of the people, hence, it must be done contemporaneously.[47] In the words of Jameson, "(a)n alteration of the Constitution
proposed today has relation to the sentiment and the felt needs of today, and that, if not ratified early while that sentiment may fairly be supposed to exist,
it ought to be regarded as waived, and not again to be voted upon, unless a second time proposed by [proper body]."[48]

IN RESUME

The three issues are:

1. Is the question of the constitutionality of Presidential Decrees Nos. 991, 1031 and 1033 political or justiciable?

2. During the present stage of the transition period, and under the environmental circumstances now obtaining, does the President possess power to
propose amendments to the Constitution as well as set up the required machinery and prescribe the procedure for the ratification of his proposals by the
people?
3. Is the submission to the people of the proposed amendments within the time frame allowed therefor a sufficient and proper submission?

Upon the first issue, Chief Justice Fred Ruiz Castro and Associate Justices Enrique M. Fernando, Claudio Teehankee, Antonio P. Barredo, Cecilia
Muñoz Palma, Hermogenes Concepcion Jr. and Ruperto G. Martin are of the view that the question posed is justiciable, while Associate Justices Felix V.
Makasiar, Felix Q. Antonio and Ramon C. Aquino hold the view that the question is political.

Upon the second issue, Chief Justice Castro and Associate Justices Barredo, Makasiar, Antonio, Aquino, Concepcion Jr. and Martin voted in the
affirmative, while Associate Justices Teehankee and Muñoz Palma voted in the negative. Associate Justice Fernando, conformably to his concurring and
dissenting opinion in Aquino vs. Enrile (59 SCRA 183), specifically dissents from the proposition that there is concentration of powers in the Executive
during periods of crisis, thus raising serious doubts as to the power of the President to propose amendments.

Upon the third issue, Chief Justice Castro and Associate Justices Barredo, Makasiar, Aquino, Concepcion Jr. and Martin are of the view that there is a
sufficient and proper submission of the proposed amendments for ratification by the people. Associate Justices Barredo and Makasiar expressed the
hope, however, that the period of time may be extended. Associate Justices Fernando, Makasiar and Antonio are of the view that the question is political
and therefore beyond the competence and cognizance of this Court. Associate Justice Fernando adheres to his concurrence in the opinion of Chief
Justice Concepcion in Gonzales vs. COMELEC (21 SCRA 774). Associate Justices Teehankee and Muñoz Palma hold that prescinding from the
President's lack of authority to exercise the constituent power to propose the amendments, etc., as above stated, there is no fair and proper submission
with sufficient information and time to assure intelligent consent or rejection under the standards set by this Court in the controlling cases of Gonzales,
supra. and Tolentino vs. COMELEC (41 SCRA 702).

Chief Justice Castro and Associate Justices Barredo, Makasiar, Antonio, Aquino, Concepcion Jr. and Martin voted to dismiss the three petitions at bar.
For reasons as expressed in his separate opinion, Associate Justice Fernando concurs in the result. Associate Justices Teehankee and Muñoz Palma voted
to grant the petitions.

ACCORDINGLY, the vote being 8 to 2 to dismiss, the said petitions are hereby dismissed. This decision is immediately executory.

SO ORDERED.

CASE DIGEST

PABLO C. SANIDAD and PABLITO C. SANIDAD vs HONORABLE COMMISSION ON ELECTIONS & HONORABLE NATIONAL
TREASURER

G.R. No. L-44640 October 12, 1976

FACTS: On September 2, 1976, President Ferdinand E. Marcos issued Presidential Decree No. 991 to call for a national referendum on October 16, 1976
through the so-called Citizens Assemblies (“barangays”). Its primary purpose is to resolve the issues of martial law (as to its existence and length of
effectivity).

On September 22, the president issued another proclamation (P.D. 1033) to specify the questions that are to be asked during the referendum on October
16. The first question is whether or not the citizen wants martial law to continue, and the second one asks for the approval on several proposed
amendments to the existing Constitution.

The COMELEC was vested with the exclusive supervision and control of the national referendum in October 16.

Father and son, Pablo and Pablito Sanidad filed for prohibition with preliminary injunction to enjoin the COMELEC from holding and conducting the
Referendum Plebiscite on October 16, and to declare without force and effect Presidential Decree Nos. 991 and 1033, insofar as they propose
amendments to the Constitution.

Another petitioner, Vicente Guzman filed for prohibition with preliminary injunction, asserting that the power to propose amendments or revisions of the
Constitution during the transition period is expressly conferred to the interim National Assembly under Section 16, Article XVII of the Constitution.

Another set of petitioners, Raul Gonzales and Alfredo Salapantan sought to restrain the implementation of Presidential Decrees relative to the
forthcoming Referendum-Plebiscite of October 16. They assert that the incumbent President cannot act as a constituent assembly to propose amendments
to the Constitution and a referendum-plebiscite is untenable under the Constitutions of 1935 and 1973.

The submission of the proposed amendments in such a short period of time for deliberation renders the plebiscite a nullity. To lift Martial Law, the
President need not consult the people via referendum; and allowing 15-.year olds to vote would amount to an amendment of the Constitution, which
confines the right of suffrage to those citizens of the Philippines 18 years of age and above.

The Solicitor General contends that petitioners have no standing to sue, and that the issue raised is political in nature – and thus it cannot be reviewed by
the court. The Solicitor General also asserts that at this state of the transition period, only the incumbent President has the authority to exercise
constituent power; the referendum-plebiscite is a step towards normalization.

ISSUE: WON the issue poses a justiciable question (specifically on the constitutionality of PDs 991 and 1033).

HELD: YES. 7 Justices of the Court held that the issue is a justiciable question, while only 3 maintained it was of political nature and thus not justiciable.

The Court did not agree with the Solicitor General’s contention that the issue is a political one. This is because the 1973 Constitution expressly provided
that the power to propose amendments to the constitution resides in the interim National Assembly in the period of transition.

After that transition period, and when the regular National Assembly is in its active session, the power to propose amendments becomes ipso facto the
prerogative of the regular National Assembly. The normal course has not been followed.

Rather than calling the National Assembly to constitute itself into a constituent assembly, the president undertook the proposal of amendments through
Presidential Decree 1033 and in effect, through a Referendum-Plebiscite on October 16. Unavoidably, the irregularity of the amendment procedure raises
a contestable issue.
 1.2.3
GOVERNMENT
CASES:
a. Definition
 U.S. vs. Dorr (2 Phil 33)
c. Doctrine of Parens Patriae
 Gov. of the Philippine Islands vs. Monte de Piedad (G.R. No. 9959,
December 13, 1916)
 Cabanas vs. Pilapil (58 SCRA 94)

d. Functions of the Government

 Shipside, Inc. vs. Court of Appeals (G.R. No. 143377, February 20, 2001)
 Association of Philippine Coconut Dessicators vs. Philippine Coconut
Authority (G.R. No. 110526, February 10, 1998)
 Philippine Virginia Tobacco Adm. vs. CIR (G.R. No. L-32052, July 25,
1975)
 Bacani vs. NACOCO (G.R. No. L-9657, November 29, 1956)
 People vs. Sandiganbayan (G.R. No. 145951, August 12, 2003)
 MIAA vs. Court of Appeals (G.R. No. 155650, July 20, 2006)
G.R. No. 1051 May 19, 1903

THE UNITED STATES, complainant-appellee,vs. FRED L. DORR, ET AL., defendants-appellants.

F. G. Waite for appellants.

Solicitor-General Araneta for appellee.

LADD, J.:

The defendants have been convicted upon a complaint charging them with the offense of writing, publishing, and circulating a scurrilous libel against the
Government of the United States and the Insular Government of the Philippine Islands. The complaint is based upon section 8 of Act No. 292 of the
Commission, which is as follows:

Every person who shall utter seditious words or speeches, write, publish, or circulate scurrilous libels against the Government of the United States or the
Insular Government of the Philippine Islands, or which tend to disturb or obstruct any lawful officer in executing his office, or which tend to instigate
others to cabal or meet together for unlawful purposes, or which suggest or incite rebellious conspiracies or riots, or which tend to stir up the people
against the lawful authorities, or to disturb the peace of the community, the safety and order of the Government, or who shall knowingly conceal such
evil practices, shall be punished by a fine not exceeding two thousand dollars or by imprisonment not exceeding two years, or both, in the discretion of
the court.

The alleged libel was published as an editorial in the issue of the "Manila Freedom" of April 6, 1902, under the caption of "A few hard facts."

The Attorney-General in his brief indicates the following passages of the article as those upon which he relies to sustain the conviction:

Sidney Adamson, in a late letter in "Leslie's Weekly," has the following to say of the action of the Civil Commission in appointing rascally natives to
important Government positions:

"It is a strong thing to say, but nevertheless true, that the Civil Commission, through its ex-insurgent office holders, and by its continual disregard for the
records of natives obtained during the military rule of the Islands, has, in its distribution of offices, constituted a protectorate over a set of men who
should be in jail or deported. . . . [Reference is then made to the appointment of one Tecson as justice of the peace.] This is the kind of foolish work that
the Commission is doing all over the Islands, reinstating insurgents and rogues and turning down the men who have during the struggle, at the risk of
their lives, aided the Americans."

There is no doubt but that the Filipino office holders of the Islands are in a good many instances rascals.

The commission has exalted to the highest positions in the Islands Filipinos who are alleged to be notoriously corrupt and rascally, and men of no
personal character.

Editor Valdez, of "Miau," made serious charges against two of the native Commissioners — charges against Trinidad H. Pardo de Tavera, which, if true,
would brand the man as a coward and a rascal, and with what result? . . . [Reference is then made to the prosecution and conviction of Valdez for libel
"under a law which specifies that the greater the truth the greater the libel."] Is it the desire of the people of the United States that the natives against
whom these charges have been made (which, if true, absolutely vilify their personal characters) be permitted to retain their seats on the Civil
Commission, the executive body of the Philippine Government, without an investigation?

It is a notorious fact that many branches of the Government organized by the Civil Commission are rotten and corrupt. The fiscal system, upon which
life, liberty, and justice depends, is admitted by the Attorney-General himself to be most unsatisfactory. It is a fact that the Philippine judiciary is far from
being what it should. Neither fiscals nor judges can be persuaded to convict insurgents when they wish to protect them.

Now we hear all sorts of reports as to rottenness existing in the province [of Tayabas], and especially the northern end of it; it is said that it is impossible
to secure the conviction of lawbreakers and outlaws by the native justices, or a prosecution by the native fiscals.

The long and short of it is that Americans will not stand for an arbitrary government, especially when evidences of carpetbagging and rumors of graft are
too thick to be pleasant.

We do not understand that it is claimed that the defendants succeeded in establishing at the trial the truth of any of the foregoing statements. The only
question which we have considered is whether their publication constitutes an offense under section 8 of Act No. 292, above cited.

Several allied offenses or modes of committing the same offense are defined in that section, viz: (1) The uttering of seditious words or speeches; (2) the
writing, publishing, or circulating of scurrilous libels against the Government of the United States or the Insular Government of the Philippine Islands;
(3) the writing, publishing, or circulating of libels which tend to disturb or obstruct any lawful officer in executing his office; (4) or which tend to
instigate others to cabal or meet together for unlawful purposes; (5) or which suggest or incite rebellious conspiracies or riots; (6) or which tend to stir up
the people against the lawful authorities or to disturb the peace of the community, the safety and order of the Government; (7) knowingly concealing
such evil practices.

The complaint appears to be framed upon the theory that a writing, in order to be punishable as a libel under this section, must be of a scurrilous nature
and directed against the Government of the United States or the Insular Government of the Philippine Islands, and must, in addition, tend to some one of
the results enumerated in the section. The article in question is described in the complaint as "a scurrilous libel against the Government of the United
States and the Insular Government of the Philippine Islands, which tends to obstruct the lawful officers of the United States and the Insular Government
of the Philippine Islands in the execution of their offices, and which tends to instigate others to cabal and meet together for unlawful purposes, and which
suggests and incites rebellious conspiracies, and which tends to stir up the people against the lawful authorities, and which disturbs the safety and order
of the Government of the United States and the Insular Government of the Philippine Islands." But it is "a well-settled rule in considering indictments
that where an offense may be committed in any of several different modes, and the offense, in any particular instance, is alleged to have been committed
in two or more modes specified, it is sufficient to prove the offense committed in any one of them, provided that it be such as to constitute the substantive
offense" (Com. vs. Kneeland, 20 Pick., Mass., 206, 215), and the defendants may, therefore, be convicted if any one of the substantive charges into
which the complaint may be separated has been made out.
We are all, however, agreed upon the proposition that the article in question has no appreciable tendency to "disturb or obstruct any lawful officer in
executing his office," or to "instigate" any person or class of persons "to cabal or meet together for unlawful purposes," or to "suggest or incite rebellious
conspiracies or riots," or to "stir up the people against the lawful authorities or to disturb the peace of the community, the safety and order of the
Government." All these various tendencies, which are described in section 8 of Act No. 292, each one of which is made an element of a certain form of
libel, may be characterized in general terms as seditious tendencies. This is recognized in the description of the offenses punished by this section, which
is found in the title of the act, where they are defined as the crimes of the "seditious utterances, whether written or spoken."

Excluding from consideration the offense of publishing "scurrilous libels against the Government of the United States or the Insular Government of the
Philippine Islands," which may conceivably stand on a somewhat different footing, the offenses punished by this section all consist in inciting, orally or
in writing, to acts of disloyalty or disobedience to the lawfully constituted authorities in these Islands. And while the article in question, which is, in the
main, a virulent attack against the policy of the Civil Commission in appointing natives to office, may have had the effect of exciting among certain
classes dissatisfaction with the Commission and its measures, we are unable to discover anything in it which can be regarded as having a tendency to
produce anything like what may be called disaffection, or, in other words, a state of feeling incompatible with a disposition to remain loyal to the
Government and obedient to the laws. There can be no conviction, therefore, for any of the offenses described in the section on which the complaint is
based, unless it is for the offense of publishing a scurrilous libel against the Government of the of the United States or the Insular Government of the
Philippine Islands.

Can the article be regarded as embraced within the description of "scurrilous libels against the Government of the United States or the Insular
Government of the Philippine Islands?" In the determination of this question we have encountered great difficulty, by reason of the almost entire lack of
American precedents which might serve as a guide in the construction of the law. There are, indeed, numerous English decisions, most of them of the
eighteenth century, on the subject of libelous attacks upon the "Government, the constitution, or the law generally," attacks upon the Houses of
Parliament, the Cabinet, the Established Church, and other governmental organisms, but these decisions are not now accessible to us, and, if they were,
they were made under such different conditions from those which prevail at the present day, and are founded upon theories of government so foreign to
those which have inspired the legislation of which the enactment in question forms a part, that they would probably afford but little light in the present
inquiry. In England, in the latter part of the eighteenth century, any "written censure upon public men for their conduct as such," as well as any written
censure "upon the laws or upon the institutions of the country," would probably have been regarded as a libel upon the Government. (2 Stephen, History
of the Criminal Law of England, 348.) This has ceased to be the law in England, and it is doubtful whether it was ever the common law of any American
State. "It is true that there are ancient dicta to the effect that any publication tending to "possess the people with an ill opinion of the Government" is a
seditious libel ( per Holt, C. J., in R. vs. Tuchin, 1704, 5 St. Tr., 532, and Ellenborough, C. J., in R. vs. Cobbett, 1804, 29 How. St. Tr., 49), but no one
would accept that doctrine now. Unless the words used directly tend to foment riot or rebellion or otherwise to disturb the peace and tranquility of the
Kingdom, the utmost latitude is allowed in the discussion of all public affairs." (11 Enc. of the Laws of England, 450.) Judge Cooley says (Const. Lim.,
528): "The English common law rule which made libels on the constitution or the government indictable, as it was administered by the courts, seems to
us unsuited to the condition and circumstances of the people of America, and therefore never to have been adopted in the several States."

We find no decisions construing the Tennessee statute (Code, sec. 6663), which is apparently the only existing American statute of a similar character to
that in question, and from which much of the phraseology of then latter appears to have been taken, though with some essential modifications.

The important question is to determine what is meant in section 8 of Act No. 292 by the expression "the Insular Government of the Philippine Islands."
Does it mean in a general and abstract sense the existing laws and institutions of the Islands, or does it mean the aggregate of the individuals by whom
the government of the Islands is, for the time being, administered? Either sense would doubtless be admissible.

We understand, in modern political science, . . . by the term government, that institution or aggregate of institutions by which an independent society
makes and carries out those rules of action which are unnecessary 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. Government is the aggregate of authorities which rule a society. By
"dministration, again, we understand in modern times, and especially in more or less free countries, the aggregate of those persons in whose hands the
reins of government are for the time being (the chief ministers or heads of departments)." (Bouvier, Law Dictionary, 891.) But the writer adds that the
terms "government" and "administration" are not always used in their strictness, and that "government" is often used for "administration."

In the act of Congress of July 14, 1798, commonly known as the "Sedition Act," it is made an offense to "write, print, utter, or published," or to
"knowingly and willingly assist or aid in writing, printing, uttering, or publishing any false, scandalous, and malicious writing or writings against the
Government of the United States, or either House of the Congress of the United States, or the President of the United States, with intent to defame the
said Government, or either House of the said Congress, or the said President, or to bring them, or either of them, into contempt or disrepute, or to excite
against them or either or any of them the hatred of the good people of the United States," etc. The term "government" would appear to be used here in the
abstract sense of the existing political system, as distinguished from the concrete organisms of the Government — the Houses of Congress and the
Executive — which are also specially mentioned.

Upon the whole, we are of the opinion that this is the sense in which the term is used in the enactment under consideration.

It may be said that there can be no such thing as a scurrilous libel, or any sort of a libel, upon an abstraction like the Government in the sense of the laws
and institutions of a country, but we think an answer to this suggestion is that the expression "scurrilous libel" is not used in section 8 of Act No. 292 in
the sense in which it is used in the general libel law (Act No. 277) — that is, in the sense of written defamation of individuals — but in the wider sense,
in which it is applied in the common law to blasphemous, obscene, or seditious publications in which there may be no element of defamation whatever.
"The word 'libel' as popularly used, seems to mean only defamatory words; but words written, if obscene, blasphemous, or seditious, are technically
called libels, and the publication of them is, by the law of England, an indictable offense." (Bradlaugh vs. The Queen, 3 Q. B. D., 607, 627, per Bramwell
L. J. See Com. vs. Kneeland, 20 Pick., 206, 211.)

While libels upon forms of government, unconnected with defamation of individuals, must in the nature of things be of uncommon occurrence, the
offense is by no means an imaginary one. An instance of a prosecution for an offense essentially of this nature is Republica vs. Dennie, 4 Yeates (Pa.),
267, where the defendant was indicted "as a factious and seditious person of a wicked mind and unquiet and turbulent disposition and conversation,
seditiously, maliciously, and willfully intending, as much as in him lay, to bring into contempt and hatred the independence of the United States, the
constitution of this Commonwealth and of the United States, to excite popular discontent and dissatisfaction against the scheme of polity instituted, and
upon trial in the said United States and in the said Commonwealth, to molest, disturb, and destroy the peace and tranquility of the said United States and
of the said Commonwealth, to condemn the principles of the Revolution, and revile, depreciate, and scandalize the characters of the Revolutionary
patriots and statesmen, to endanger, subvert, and totally destroy the republican constitutions and free governments of the said United States and this
Commonwealth, to involve the said United States and this Commonwealth in civil war, desolation, and anarchy, and to procure by art and force a radical
change and alteration in the principles and forms of the said constitutions and governments, without the free will, wish, and concurrence of the people of
the said United States and this Commonwealth, respectively," the charge being that "to fulfill, perfect, and bring to effect his wicked, seditious, and
detestable intentions aforesaid he . . . falsely, maliciously, factiously, and seditiously did make, compose, write, and publish the following libel, to wit; 'A
democracy is scarcely tolerable at any period of national history. Its omens are always sinister and its powers are unpropitious. With all the lights or
experience blazing before our eyes, it is impossible not to discover the futility of this form of government. It was weak and wicked at Athens, it was bad
in Sparta, and worse in Rome. It has been tried in France and terminated in despotism. it was tried in England and rejected with the utmost loathing and
abhorrence. It is on its trial here and its issue will be civil war, desolation, and anarchy. No wise man but discerns its imperfections; no good man but
shudders at its miseries; no honest man but proclaims its fraud, and no brave man but draws his sword against its force. The institution of a scheme of
polity so radically contemptible and vicious is a memorable example of what the villainy of some men can devise, the folly of others receive, and both
establish, in despite of reason, reflection, and sensation.'"

An attack upon the lawfully established system of civil government in the Philippine Islands, like that which Dennie was accused of making upon the
republican form of government lawfully established in the United States and in the State of Pennsylvania would, we think, if couched in scandalous
language, constitute the precise offense described in section 8 of Act No. 292 as a scurrilous libel against the Insular Government of the Philippine
Islands.

Defamation of individuals, whether holding official positions or not, and whether directed to their public conduct or to their private life, may always be
adequately punished under the general libel law. Defamation of the Civil Commission as an aggregation, it being "a body of persons definite and small
enough for its individual members to be recognized as such" (Stephen, Digest of the Criminal Law, art. 277), as well as defamation of any of the
individual members of the Commission or of the Civil Governor, either in his public capacity or as a private individual, may be so punished. The general
libel law enacted by the Commission was in force when Act No. 292, was passed. There was no occasion for any further legislation on the subject of
libels against the individuals by whom the Insular Government is administered — against the Insular Government in the sense of the aggregate of such
individuals. There was occasion for stringent legislation against seditious words or libels, and that is the main if not the sole purpose of the section under
consideration. It is not unreasonable to suppose that the Commission, in enacting this section, may have conceived of attacks of a malignant or scurrilous
nature upon the existing political system of the United States, or the political system established in these Islands by the authority of the United States, as
necessarily of a seditious tendency, but it is not so reasonable to suppose that they conceived of attacks upon the personnel of the government as
necessarily tending to sedition. Had this been their view it seems probable that they would, like the framers of the Sedition Act of 1798, have expressly
and specifically mentioned the various public officials and collegiate governmental bodies defamation of which they meant to punish as sedition.

The article in question contains no attack upon the governmental system of the United States, and it is quite apparent that, though grossly abusive as
respects both the Commission as a body and some of its individual members, it contains no attack upon the governmental system by which the authority
of the United States is enforced in these Islands. The form of government by a Civil Commission and a Civil Governor is not assailed. It is the character
of the men who are intrusted with the administration of the government that the writer is seeking to bring into disrepute by impugning the purity of their
motives, their public integrity, and their private morals, and the wisdom of their policy. The publication of the article, therefore, no seditious tendency
being apparent, constitutes no offense under Act No. 292, section 8.

The judgment of conviction is reversed and the defendants are acquitted, with costs de oficio.

Arellano, C.J. Torres, Willard and Mapa, JJ., concur.

CASE DIGEST

G.R. 1051 May 19, 1903 U.S. v. Dorr

FACTS:

Herein respondents were alleged to have committed an offense of writing, publishing and circulating scurrilous libel against the Government of the U.S.
and the Insular Government of the Philippine Islands in violation of Section 8, Act 292 of the Commission.

The alleged libel was published in “Manila Freedom” issue dated 06 April 1902 as an editorial issue.

The editorial is about the appointment of rascal natives (Filipinos) to important Government positions by the Civil Commission (CC for brevity).

The following are part of the article:

“…the Civil Commission has, in its distribution of offices, constituted a protectorate over a set of men who should be in jail or deported…xxx…this kind
of foolish work that the Commission is doing all over the Island, reinstating insurgents and rogues and turning down the men who have during struggle,
at the risk of their lives, aided the Americans.”

“The commission has exalted to the highest position in the Islands Filipinos who are alleged to be notoriously corrupt and rascally, and men of no
personal character”.

“it is a notorious fact that many branches of the Government organized by the Civil Commission are rotten and corrupt…xxx”.

Article 292, section 8 has provided modes for committing an offense against it. However, albeit the article has a virulent attack against the policy of the
CC, the complaint in question cannot be regarded as having a tendency to produce anything like what may be called disaffection or a state of feeling
incompatible with a disposition to remain loyal to the Government and obedient to the laws.

There is a question as how the term “the Insular Government of the Phil. Islands”, is used in Section 8, Art. 292. Is it defined as “the existing law and
institutions of the Islands” or “the aggregate of the individuals by whom the government of the Islands is administered”?

ISSUE: Whether the Article published by the respondents is in violation of the Art. 292 for it directly attacks the U.S. government and the Insular
Government of the Phil. Island?
RULING:

In modern political science, the term government is defined as “the institution or aggregate of institutions by which an independent society makes and
carries out those rules…xxx…the government is the aggregation of authorities which rule a society (administration)”.[1]

On the other hand, the Sedition Act of 1798, the term ‘government’ is used in an abstract sense (e.q. President, Congress), meaning the existing political
system, its laws and institutions. The Court opines that it is in this sense that the term is used in the enactment (Art. 292) under consideration.

Hence, in Art. 292, the meaning of “Insular of the Government of the Phil. Islands” is the government as a system, however, the article in questions
attacks the ‘government’ as the aggregate of public officials who run it.

The Court ruled that the article in question contains no attack upon the governmental system of the U.S., by which the authority of the U.S. is enforced in
these Islands per se. In this case, it is the character of men who are entrusted with the administration of the government which the writer wants to bring
disrepute due to their motives, public integrity, and private morals and wisdoms of their policy. The publication does not constitute any seditious
tendency being apparent to be in violation of Art. 292.

Respondents are acquitted.

[1] ADMINISTRATION – the aggregate of persons in whose hands the reins of government are for the time being.
G.R. No. L-9959 December 13, 1916

THE GOVERNMENT OF THE PHILIPPINE ISLANDS, represented by the Treasurer of the Philippine Islands, plaintiff-appellee, vs.

EL MONTE DE PIEDAD Y CAJA DE AHORRAS DE MANILA, defendant-appellant.

William A. Kincaid and Thomas L. Hartigan for appellant.

Attorney-General Avanceña for appellee.

TRENT, J.:

About $400,000, were subscribed and paid into the treasury of the Philippine Islands by the inhabitants of the Spanish Dominions of the relief of those
damaged by the earthquake which took place in the Philippine Islands on June 3, 1863. Subsequent thereto and on October 6 of that year, a central relief
board was appointed, by authority of the King of Spain, to distribute the moneys thus voluntarily contributed. After a thorough investigation and
consideration, the relief board allotted $365,703.50 to the various sufferers named in its resolution, dated September 22, 1866, and, by order of the
Governor-General of the Philippine Islands, a list of these allotments, together with the names of those entitled thereto, was published in the Official
Gazette of Manila dated April 7, 1870. There was later distributed, inaccordance with the above-mentioned allotments, the sum of $30,299.65, leaving a
balance of S365,403.85 for distribution. Upon the petition of the governing body of the Monte de Piedad, dated February 1, 1833, the Philippine
Government, by order dated the 1st of that month, directed its treasurer to turn over to the Monte de Piedad the sum of $80,000 of the relief fund in
installments of $20,000 each. These amounts were received on the following dates: February 15, March 12, April 14, and June 2, 1883, and are still in
the possession of the Monte de Piedad. On account of various petitions of the persons, and heirs of others to whom the above-mentioned allotments were
made by the central relief board for the payment of those amounts, the Philippine Islands to bring suit against the Monte de Piedad a recover, "through
the Attorney-General and in representation of the Government of the Philippine Islands," the $80.000, together with interest, for the benefit of those
persons or their heirs appearing in the list of names published in the Official Gazette instituted on May 3, 1912, by the Government of the Philippine
Islands, represented by the Insular Treasurer, and 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 and makes the
following assignment of errors:

1. The court erred in not finding that the eighty thousand dollars ($80,000), give to the Monte de Piedad y Caja de Ahorros, were so given as a donation
subject to one condition, to wit: the return of such sum of money to the Spanish Government of these Islands, within eight days following the day when
claimed, in case the Supreme Government of Spain should not approve the action taken by the former government.

2. The court erred in not having decreed that this donation had been cleared; said eighty thousand dollars ($80,000) being at present the exclusive
property of the appellant the Monte de Piedad y Caja de Ahorros.

3. That the court erred in stating that the Government of the Philippine Islands has subrogated the Spanish Government in its rights, as regards an
important sum of money resulting from a national subscription opened by reason of the earthquake of June 3, 1863, in these Island.

4. That the court erred in not declaring that Act Numbered 2109, passed by the Philippine Legislature on January 30, 1912, is unconstitutional.

5. That the court erred in holding in its decision that there is no title for the prescription of this suit brought by the Insular Government against the Monte
de Piedad y Caja de Ahorros for the reimbursement of the eighty thousand dollars ($80,000) given to it by the late Spanish Government of these Islands.

6. That the court erred in sentencing the Monte de Piedad y Caja de Ahorros to reimburse the Philippine Government in the sum of eighty thousand
dollars ($80,000) gold coin, or the equivalent thereof in the present legal tender currency in circulation, with legal interest thereon from February 28th,
1912, and the costs of this suit.

In the royal order of June 29, 1879, the Governor-General of the Philippine Islands was directed to inform the home Government in what manner the
indemnity might be paid to which, by virtue of the resolutions of the relief board, the persons who suffered damage by the earthquake might be entitled,
in order to perform the sacred obligation which the Government of Spain had assumed toward the donors.

The next pertinent document in order is the defendant's petition, dated February 1, 1883, addressed to the Governor-General of the Philippine Islands,
which reads:

Board of Directors of the Monte de Piedad of Manila Presidencia.

Excellency: The Board of Directors of the Monte de Piedad y Caja de Ahorros of Manila informs your Excellency, First: That the funds which it has up
to the present been able to dispose of have been exhausted in loans on jewelry, and there only remains the sum of one thousand and odd pesos, which will
be expended between to-day and day after tomorrow. Second: That, to maintain the credit of the establishment, which would be greatly injured were its
operations suspended, it is necessary to procure money. Third: That your Excellency has proposed to His Majesty's Government to apply to the funds of
the Monte de Piedad a part of the funds held in the treasury derived form the national subscription for the relief of the distress caused by the earthquake
of 1863. Fourth: That in the public treasury there is held at the disposal of the central earthquake relief board over $1090,000 which was deposited in the
said treasury by order of your general Government, it having been transferred thereto from the Spanish-Filipino Bank where it had been held. fifth: That
in the straightened circumstances of the moment, your Excellency can, to avert impending disaster to the Monte de Piedad, order that, out of that sum of
one hundred thousand pesos held in the Treasury at the disposal of the central relief board, there be transferred to the Monte de Piedad the sum of
$80,000, there to be held under the same conditions as at present in the Treasury, to wit, at the disposal of the Relief Board. Sixth: That should this
transfer not be approved for any reason, either because of the failure of His Majesty's Government to approve the proposal made by your Excellency
relative to the application to the needs of the Monte de Piedad of a pat of the subscription intended to believe the distress caused by the earthquake of
1863, or for any other reason, the board of directors of the Monte de Piedad obligates itself to return any sums which it may have received on account of
the eighty thousand pesos, or the whole thereof, should it have received the same, by securing a loan from whichever bank or banks may lend it the
money at the cheapest rate upon the security of pawned jewelry. — This is an urgent measure to save the Monte de Piedad in the present crisis and the
board of directors trusts to secure your Excellency's entire cooperation and that of the other officials who have take part in the transaction.

The Governor-General's resolution on the foregoing petition is as follows:

GENERAL GOVERNMENT OF THE PHILIPPINES.

MANILA, February 1, 1883.

In view of the foregoing petition addressed to me by the board of directors of the Monte de Piedad of this city, in which it is stated that the funds which
the said institution counted upon are nearly all invested in loans on jewelry and that the small account remaining will scarcely suffice to cover the
transactions of the next two days, for which reason it entreats the general Government that, in pursuance of its telegraphic advice to H. M. Government,
the latter direct that there be turned over to said Monte de Piedad $80,000 out of the funds in the public treasury obtained from the national subscription
for the relief of the distress caused by the earthquake of 1863, said board obligating itself to return this sum should H. M. Government, for any reason,
not approve the said proposal, and for this purpose it will procure funds by means of loans raised on pawned jewelry; it stated further that if the aid so
solicited is not furnished, it will be compelled to suspend operations, which would seriously injure the credit of so beneficient an institution; and in view
of the report upon the matter made by the Intendencia General de Hacienda; and considering the fact that the public treasury has on hand a much greater
sum from the source mentioned than that solicited; and considering that this general Government has submitted for the determination of H. M.
Government that the balance which, after strictly applying the proceeds obtained from the subscription referred to, may remain as a surplus should be
delivered to the Monte de Piedad, either as a donation, or as a loan upon the security of the credit of the institution, believing that in so doing the wishes
of the donors would be faithfully interpreted inasmuch as those wishes were no other than to relieve distress, an act of charity which is exercised in the
highest degree by the Monte de Piedad, for it liberates needy person from the pernicious effects of usury; and

Considering that the lofty purposes that brought about the creation of the pious institution referred to would be frustrated, and that the great and laudable
work of its establishment, and that the great and laudable and valuable if the aid it urgently seeks is not granted, since the suspension of its operations
would seriously and regrettably damage the ever-growing credit of the Monte de Piedad; and

Considering that if such a thing would at any time cause deep distress in the public mind, it might be said that at the present juncture it would assume the
nature of a disturbance of public order because of the extreme poverty of the poorer classes resulting from the late calamities, and because it is the only
institution which can mitigate the effects of such poverty; and

Considering that no reasonable objection can be made to granting the request herein contained, for the funds in question are sufficiently secured in the
unlikely event that H> M. Government does not approve the recommendation mentioned, this general Government, in the exercise of the extraordinary
powers conferred upon it and in conformity with the report of the Intendencia de Hacienda, resolves as follows:

First. Authority is hereby given to deliver to the Monte de Piedad, out of the sum held in the public treasury of these Islands obtained from the national
subscription opened by reason of the earthquakes of 1863, amounts up to the sum $80,000, as its needs may require, in installments of $20,000.

Second. The board of directors of the Monte de Piedad is solemnly bound to return, within eight days after demand, the sums it may have so received, if
H. M. Government does not approve this resolution.

Third. The Intendencia General de Hacienda shall forthwith, and in preference to all other work, proceed to prepare the necessary papers so that with the
least possible delay the payment referred to may be made and the danger that menaces the Monte de Piedad of having to suspend its operations may be
averted.

H. M. Government shall be advised hereof.lawphi1.net

(Signed) P. DE RIVERA.

By the royal order of December 3, 1892, the Governor-General of the Philippine Islands was ordered to "inform this ministerio what is the total sum
available at the present time, taking into consideration the sums delivered to the Monte de Piedad pursuant to the decree issued by your general
Government on February 1, 1883," and after the rights of the claimants, whose names were published in the Official Gazette of Manila on April 7, 1870,
and their heirs had been established, as therein provided, as such persons "have an unquestionable right to be paid the donations assigned to them therein,
your general Government shall convoke them all within a reasonable period and shall pay their shares to such as shall identify themselves, without regard
to their financial status," and finally "that when all the proceedings and operations herein mentioned have been concluded and the Government can
consider itself free from all kinds of claims on the part of those interested in the distribution of the funds deposited in the vaults of the Treasury, such
action may be taken as the circumstances shall require, after first consulting the relief board and your general Government and taking account of what
sums have been delivered to the Monte de Piedad and those that were expended in 1888 to relieve public calamities," and "in order that all the points in
connection with the proceedings had as a result of the earthquake be clearly understood, it is indispensable that the offices hereinbefore mentioned
comply with the provisions contained in paragraphs 2 and 3 of the royal order of June 25, 1879." On receipt of this Finance order by the Governor-
General, the Department of Finance was called upon for a report in reference to the $80,000 turned over to the defendant, and that Department's report to
the Governor-General dated June 28, 1893, reads:

Intendencia General de Hacienda de Filipinas (General Treasury of the Philippines) — Excellency. — By Royal Order No. 1044 of December 3, last, it is
provided that the persons who sustained losses by the earthquakes that occurred in your capital in the year 1863 shall be paid the amounts allotted to
them out of the sums sent from Spain for this purpose, with observance of the rules specified in the said royal order, one of them being that before
making the payment to the interested parties the assets shall be reduced to money. These assets, during the long period of time that has elapsed since they
were turned over to the Treasury of the Philippine Islands, were used to cover the general needs of the appropriation, a part besides being invested in the
relief of charitable institutions and another part to meet pressing needs occasioned by public calamities. On January 30, last, your Excellency was please
to order the fulfillment of that sovereign mandate and referred the same to this Intendencia for its information and the purposes desired (that is, for
compliance with its directions and, as aforesaid, one of these being the liquidation, recovery, and deposit with the Treasury of the sums paid out of that
fund and which were expended in a different way from that intended by the donors) and this Intendencia believed the moment had arrived to claim from
the board of directors of the Monte de Piedad y Caja de Ahorros the sum of 80,000 pesos which, by decree of your general Government of the date of
February 1, 1883, was loaned to it out of the said funds, the (Monte de Piedad) obligating itself to return the same within the period of eight days if H. M.
Government did not approve the delivery. On this Intendencia's demanding from the Monte de Piedad the eighty thousand pesos, thus complying with the
provisions of the Royal Order, it was to be supposed that no objection to its return would be made by the Monte de Piedad for, when it received the loan,
it formally engaged itself to return it; and, besides, it was indisputable that the moment to do so had arrived, inasmuch as H. M. Government, in ordering
that the assets of the earthquake relief fund should he collected, makes express mention of the 80,000 pesos loaned to the Monte de Piedad, without doubt
considering as sufficient the period of ten years during which it has been using this large sum which lawfully belongs to their persons. This Intendencia
also supposed that the Monte de Piedad no longer needed the amount of that loan, inasmuch as, far from investing it in beneficient transactions, it had
turned the whole amount into the voluntary deposit funds bearing 5 per cent interests, the result of this operation being that the debtor loaned to the
creditor on interest what the former had gratuitously received. But the Monte de Piedad, instead of fulfilling the promise it made on receiving the sum,
after repeated demands refused to return the money on the ground that only your Excellency, and not the Intendencia (Treasury), is entitled to order the
reimbursement, taking no account of the fact that this Intendencia was acting in the discharge of a sovereign command, the fulfillment of which your
Excellency was pleased to order; and on the further ground that the sum of 80,000 pesos which it received from the fund intended for the earthquake
victims was not received as a loan, but as a donation, this in the opinion of this Intendencia, erroneously interpreting both the last royal order which
directed the apportionment of the amount of the subscription raised in the year 1863 and the superior decree which granted the loan, inasmuch as in this
letter no donation is made to the Monte de Piedad of the 80,000 pesos, but simply a loan; besides, no donation whatever could be made of funds derived
from a private subscription raised for a specific purpose, which funds are already distributed and the names of the beneficiaries have been published in
the Gaceta, there being lacking only the mere material act of the delivery, which has been unduly delayed. In view of the unexpected reply made by the
Monte de Piedad, and believing it useless to insist further in the matter of the claim for the aforementioned loan, or to argue in support thereof, this
Intendencia believes the intervention of your Excellency necessary in this matter, if the royal Order No. 1044 of December 3, last, is to be complied with,
and for this purpose I beg your Excellency kindly to order the Monte de Piedad to reimburse within the period of eight days the 80,000 which it owes,
and that you give this Intendencia power to carry out the provisions of the said royal order. I must call to the attention of your Excellency that the said
pious establishment, during the last few days and after demand was made upon it, has endorsed to the Spanish-Filipino Bank nearly the whole of the sum
which it had on deposit in the general deposit funds.

The record in the case under consideration fails to disclose any further definite action taken by either the Philippine Government or the Spanish
Government in regard to the $80,000 turned over to the Monte de Piedad.

In the defendant's general ledger the following entries appear: "Public Treasury: February 15, 1883, $20,000; March 12, 1883, $20,000; April 14, 1883,
$20,000; June 2, 1883, $20,000, total $80,000." The book entry for this total is as follows: "To the public Treasury derived from the subscription for the
earthquake of 1863, $80,000 received from general Treasury as a returnable loan, and without interest." The account was carried in this manner until
January 1, 1899, when it was closed by transferring the amount to an account called "Sagrada Mitra," which latter account was a loan of $15,000 made to
the defendant by the Archbishop of Manila, without interest, thereby placing the "Sagrada Mitra" account at $95,000 instead of $15,000. The above-
mentioned journal entry for January 1, 1899, reads: "Sagrada Mitra and subscription, balance of these two account which on this date are united in
accordance with an order of the Exmo. Sr. Presidente of the Council transmitted verbally to the Presidente Gerente of these institutions, $95,000."

On March 16, 1902, the Philippine government called upon the defendant for information concerning the status of the $80,000 and received the
following reply:

MANILA, March 31, 1902.

To the Attorney-General of the Department of Justice of the Philippine Islands.

SIR: In reply to your courteous letter of the 16th inst., in which you request information from this office as to when and for what purpose the Spanish
Government delivered to the Monte de Piedad eighty thousand pesos obtained from the subscription opened in connection with the earthquake of 1863,
as well as any other information that might be useful for the report which your office is called upon to furnish, I must state to your department that the
books kept in these Pious Institutions, and which have been consulted for the purpose, show that on the 15th of February, 1883, they received as a
reimbursable loan and without interest, twenty thousand pesos, which they deposited with their own funds. On the same account and on each of the dates
of March 12, April 14 and June 2 of the said year, 1883, they also received and turned into their funds a like sum of twenty thousand pesos, making a
total of eighty thousand pesos. — (Signed) Emilio Moreta.

I hereby certify that the foregoing is a literal copy of that found in the letter book No. 2 of those Pious Institutions.

Manila, November 19, 1913

(Sgd.) EMILIO LAZCANOTEGUI,

Secretary

(Sgd.) O. K. EMILIO MORETA,

Managing Director.

The foregoing documentary evidence shows the nature of the transactions which took place between the Government of Spain and the Philippine
Government on the one side and the Monte de Piedad on the other, concerning the $80,000. The Monte de Piedad, after setting forth in its petition to the
Governor-General its financial condition and its absolute necessity for more working capital, asked that out of the sum of $100,000 held in the Treasury
of the Philippine Islands, at the disposal of the central relief board, there be transferred to it the sum of $80,000 to be held under the same conditions, to
wit, "at the disposal of the relief board." The Monte de Piedad agreed that if the transfer of these funds should not be approved by the Government of
Spain, the same would be returned forthwith. It did not ask that the $80,000 be given to it as a donation. The Governor-General, after reciting the
substance of the petition, stated that "this general Government has submitted for the determination of H. M. Government that the balance which, after
strictly applying the proceeds obtained from the subscription referred to, may remain as a surplus, should be delivered to the Monte de Piedad, either as a
donation, or as a loan upon the security of the credit of the institution," and "considering that no reasonable objection can be made to granting the request
herein contained," directed the transfer of the $80,000 to be made with the understanding that "the Board of Directors of the Monte de Piedad is solemnly
bound to return, within eight days after demand, the sums it may have so received, if H. M. Government does not approve this resolution." It will be
noted that the first and only time the word "donation" was used in connection with the $80,000 appears in this resolution of the Governor-General. It may
be inferred from the royal orders that the Madrid Government did tacitly approve of the transfer of the $80,000 to the Monte de Piedad as a loan without
interest, but that Government certainly did not approve such transfer as a donation for the reason that the Governor-General was directed by the royal
order of December 3, 1892, to inform the Madrid Government of the total available sum of the earthquake fund, "taking into consideration the sums
delivered to the Monte de Piedad pursuant to the decree issued by your general Government on February 1, 1883." This language, nothing else appearing,
might admit of the interpretation that the Madrid Government did not intend that the Governor-General of the Philippine Islands should include the
$80,000 in the total available sum, but when considered in connection with the report of the Department of Finance there can be no doubt that it was so
intended. That report refers expressly to the royal order of December 3d, and sets forth in detail the action taken in order to secure the return of the
$80,000. The Department of Finance, acting under the orders of the Governor-General, understood that the $80,000 was transferred to the Monte de
Piedad well knew that it received this sum as a loan interest." The amount was thus carried in its books until January, 1899, when it was transferred to the
account of the "Sagrada Mitra" and was thereafter known as the "Sagrada Mitra and subscription account." Furthermore, the Monte de Piedad recognized
and considered as late as March 31, 1902, that it received the $80,000 "as a returnable loan, and without interest." Therefore, there cannot be the slightest
doubt the fact that the Monte de Piedad received the $80,000 as a mere loan or deposit and not as a donation. Consequently, the first alleged error is
entirely without foundation.

Counsel for the defendant, in support of their third assignment of error, say in their principal brief that:

The Spanish nation was professedly Roman Catholic and its King enjoyed the distinction of being deputy ex officio of the Holy See and Apostolic Vicar-
General of the Indies, and as such it was his duty to protect all pious works and charitable institutions in his kingdoms, especially those of the Indies;
among the latter was the Monte de Piedad of the Philippines, of which said King and his deputy the Governor-General of the Philippines, as royal vice-
patron, were, in a special and peculiar manner, the protectors; the latter, as a result of the cession of the Philippine Islands, Implicitly renounced this high
office and tacitly returned it to the Holy See, now represented by the Archbishop of Manila; the national subscription in question was a kind of
foundation or pious work, for a charitable purpose in these Islands; and the entire subscription not being needed for its original purpose, the royal vice-
patron, with the consent of the King, gave the surplus thereof to an analogous purpose; the fulfillment of all these things involved, in the majority, if not
in all cases, faithful compliance with the duty imposed upon him by the Holy See, when it conferred upon him the royal patronage of the Indies, a thing
that touched him very closely in his conscience and religion; the cessionary Government though Christian, was not Roman Catholic and prided itself on
its policy of non-interference in religious matters, and inveterately maintained a complete separation between the ecclesiastical and civil powers.

In view of these circumstances, it must be quite clear that, even without the express provisions of the Treaty of Paris, which apparently expressly exclude
such an idea, it did not befit the honor of either of the contracting parties to subrogate to the American Government in lieu of the Spanish Government
anything respecting the disposition of the funds delivered by the latter to the Monte de Piedad. The same reasons that induced the Spanish Government to
take over such things would result in great inconvenience to the American Government in attempting to do so. The question was such a delicate one, for
the reason that it affected the conscience, deeply religious, of the King of Spain, that it cannot be believed that it was ever his intention to confide the
exercise thereof to a Government like the American. (U. S. vs. Arredondo, 6 Pet. [U. S.], 711.)

It is thus seen that the American Government did not subrogate the Spanish Government or rather, the King of Spain, in this regard; and as the condition
annexed to the donation was lawful and possible of fulfillment at the time the contract was made, but became impossible of fulfillment by the cession
made by the Spanish Government in these Islands, compliance therewith is excused and the contract has been cleared thereof.

The contention of counsel, as thus stated, in untenable for two reason, (1) because such contention is based upon the erroneous theory that the sum in
question was a donation to the Monte de Piedad and not a loan, and (2) because the charity founded by the donations for the earthquake sufferers is not
and never was intended to be an ecclesiastical pious work. The first proposition has already been decided adversely to the defendant's contention. As to
the second, the record shows clearly that the fund was given by the donors for a specific and definite purpose — the relief of the earthquake sufferers —
and for no other purpose. The money was turned over to the Spanish Government to be devoted to that purpose. The Spanish Government remitted the
money to the Philippine Government to be distributed among the suffers. All officials, including the King of Spain and the Governor-General of the
Philippine Islands, who took part in the disposal of the fund, acted in their purely civil, official capacity, and the fact that they might have belonged to a
certain church had nothing to do with their acts in this matter. The church, as such, had nothing to do with the fund in any way whatever until the
$80,000 reached the coffers of the Monte de Piedad (an institution under the control of the church) as a loan or deposit. If the charity in question had
been founded as an ecclesiastical pious work, the King of Spain and the Governor-General, in their capacities as vicar-general of the Indies and as royal
vice-patron, respectively, would have disposed of the fund as such and not in their civil capacities, and such functions could not have been transferred to
the present Philippine Government, because the right to so act would have arisen out of the special agreement between the Government of Spain and the
Holy See, based on the union of the church and state which was completely separated with the change of sovereignty.

And in their supplemental brief counsel say:

By the conceded facts the money in question is part of a charitable subscription. The donors were persons in Spain, the trustee was the Spanish
Government, the donees, the cestuis que trustent, were certain persons in the Philippine Islands. The whole matter is one of trusteeship. This is
undisputed and indisputable. It follows that the Spanish Government at no time was the owner of the fund. Not being the owner of the fund it could not
transfer the ownership. Whether or not it could transfer its trusteeship it certainly never has expressly done so and the general terms of property transfer
in the Treaty of Paris are wholly insufficient for such a purpose even could Spain have transferred its trusteeship without the consent of the donors and
even could the United States, as a Government, have accepted such a trust under any power granted to it by the thirteen original States in the
Constitution, which is more than doubtful. It follows further that this Government is not a proper party to the action. The only persons who could claim
to be damaged by this payment to the Monte, if it was unlawful, are the donors or the cestuis que trustent, and this Government is neither.

If "the whole matter is one of trusteeship," and it being true that the Spanish Government could not, as counsel say, transfer the ownership of the fund to
the Monte de Piedad, the question arises, who may sue to recover this loan? It needs no argument to show that the Spanish or Philippine Government, as
trustee, could maintain an action for this purpose had there been no change of sovereignty and if the right of action has not prescribed. But those
governments were something more than mere common law trustees of the fund. In order to determine their exact status with reference to this fund, it is
necessary to examine the law in force at the time there transactions took place, which are the law of June 20, 1894, the royal decree of April 27. 1875,
and the instructions promulgated on the latter date. These legal provisions were applicable to the Philippine Islands (Benedicto vs. De la Rama, 3 Phil.
Rep., 34)

The funds collected as a result of the national subscription opened in Spain by royal order of the Spanish Government and which were remitted to the
Philippine Government to be distributed among the earthquake sufferers by the Central Relief Board constituted, under article 1 of the law of June 20,
1894, and article 2 of the instructions of April 27, 1875, a special charity of a temporary nature as distinguished from a permanent public charitable
institution. As the Spanish Government initiated the creation of the fund and as the donors turned their contributions over to that Government, it became
the duty of the latter, under article 7 of the instructions, to exercise supervision and control over the moneys thus collected to the end that the will of the
donors should be carried out. The relief board had no power whatever to dispose of the funds confided to its charge for other purposes than to distribute
them among the sufferers, because paragraph 3 of article 11 of the instructions conferred the power upon the secretary of the interior of Spain, and no
other, to dispose of the surplus funds, should there be any, by assigning them to some other charitable purpose or institution. The secretary could not
dispose of any of the funds in this manner so long as they were necessary for the specific purpose for which they were contributed. The secretary had the
power, under the law above mentioned to appoint and totally or partially change the personnel of the relief board and to authorize the board to defend the
rights of the charity in the courts. The authority of the board consisted only in carrying out the will of the donors as directed by the Government whose
duty it was to watch over the acts of the board and to see that the funds were applied to the purposes for which they were contributed .The secretary of
the interior, as the representative of His Majesty's Government, exercised these powers and duties through the Governor-General of the Philippine
Islands. The Governments of Spain and of the Philippine Islands in complying with their duties conferred upon them by law, acted in their governmental
capacities in attempting to carry out the intention of the contributors. It will this be seen that those governments were something more, as we have said,
than mere trustees of the fund.

It is further contended that the obligation on the part of the Monte de Piedad to return the $80,000 to the Government, even considering it a loan, was
wiped out on the change of sovereignty, or inn other words, the present Philippine Government cannot maintain this action for that reason. This
contention, if true, "must result from settled principles of rigid law," as it cannot rest upon any title to the fund in the Monte de Piedad acquired prior to
such change. While the obligation to return the $80,000 to the Spanish Government was still pending, war between the United States and Spain ensued.
Under the Treaty of Paris of December 10, 1898, the Archipelago, known as the Philippine Islands, was ceded to the United States, the latter agreeing to
pay Spain the sum of $20,000,000. Under the first paragraph of the eighth article, Spain relinquished to the United States "all buildings, wharves,
barracks, forts, structures, public highways, and other immovable property which, in conformity with law, belonged to the public domain, and as such
belonged to the crown of Spain." As the $80,000 were not included therein, it is said that the right to recover this amount did not, therefore, pass to the
present sovereign. This, in our opinion, does not follow as a necessary consequence, as the right to recover does not rest upon the proposition that the
$80,000 must be "other immovable property" mentioned in article 8 of the treaty, but upon contractual obligations incurred before the Philippine Islands
were ceded to the United States. We will not inquire what effect his cession had upon the law of June 20, 1849, the royal decree of April 27, 1875, and
the instructions promulgated on the latter date. In Vilas vs. Manila (220 U. S., 345), the court said:

That there is a total abrogation of the former political relations of the inhabitants of the ceded region is obvious. That all laws theretofore in force which
are in conflict with the political character, constitution, or institutions of the substituted sovereign, lose their force, is also plain. (Alvarez y Sanchez vs.
United States, 216 U. S., 167.) But it is equally settled in the same public law that the great body of municipal law which regulates private and domestic
rights continues in force until abrogated or changed by the new ruler.

If the above-mentioned legal provisions are in conflict with the political character, constitution or institutions of the new sovereign, they became
inoperative or lost their force upon the cession of the Philippine Islands to the United States, but if they are among "that great body of municipal law
which regulates private and domestic rights," they continued in force and are still in force unless they have been repealed by the present Government.
That they fall within the latter class is clear from their very nature and character. They are laws which are not political in any sense of the word. They
conferred upon the Spanish Government the right and duty to supervise, regulate, and to some extent control charities and charitable institutions. The
present sovereign, in exempting "provident institutions, savings banks, etc.," all of which are in the nature of charitable institutions, from taxation, placed
such institutions, in so far as the investment in securities are concerned, under the general supervision of the Insular Treasurer (paragraph 4 of section
111 of Act No. 1189; see also Act No. 701).

Furthermore, upon the cession of the Philippine Islands the prerogatives of he crown of Spain devolved upon he United States. In Magill vs. Brown (16
Fed. Cas., 408), quoted with approval in Mormon Charch vs. United States (136 U. S.,1, 57), the court said:

The Revolution devolved on the State all the transcendent power of Parliament, and the prerogative of the crown, and gave their Acts the same force and
effect.

In Fontain vs. Ravenel (17 Hw., 369, 384), Mr. Justice McLean, delivering the opinion of the court in a charity case, said:

When this country achieved its independence, the prerogatives of the crown devolved upon the people of the States. And this power still remains with
them except so fact as they have delegated a portion of it to the Federal Government. The sovereign will is made known to us by legislative enactment.
The State as a sovereign, is the parens patriae.

Chancelor Kent says:

In this country, the legislature or government of the State, as parens patriae, 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. (4 Kent Com., 508, note.)

The Supreme Court of the United States in Mormon Church vs. United States, supra, after approving also the last quotations, said:

This 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,
and has no affinity to those arbitrary powers which are sometimes exerted by irresponsible monarchs to the great detriment of the people and the
destruction of their liberties. On the contrary, 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 court in the same case, after quoting from Sohier vs. Mass. General Hospital (3 Cush., 483, 497), wherein the latter court held that it is deemed
indispensible that there should be a power in the legislature to authorize the same of the estates of in facts, idiots, insane persons, and persons not known,
or not in being, who cannot act for themselves, said:

These remarks in reference to in facts, insane persons and person not known, or not in being, apply to the beneficiaries of charities, who are often in
capable of vindicating their rights, and justly look for protection to the sovereign authority, acting as parens patriae. They show that this beneficient
functions has not ceased t 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 whenever required for the purposes of justice and right, and is a clearly capable of being exercised in cases of charities as
in any other cases whatever.

In People vs. Cogswell (113 Cal. 129, 130), it was urged that the plaintiff was not the real party in interest; that the Attorney-General had no power to
institute the action; and that there must be an allegation and proof of a distinct right of the people as a whole, as distinguished from the rights of
individuals, before an action could be brought by the Attorney-General in the name of the people. The court, in overruling these contentions, held that it
was not only the right but the duty of the Attorney-General to prosecute the action, which related to charities, and approved the following quotation from
Attorney-General vs. Compton (1 Younge & C. C., 417):

Where property affected by a trust for public purposes is in the hands of those who hold it devoted to that trust, it is the privilege of the public that the
crown should be entitled to intervene by its officers for the purpose of asserting, on behalf on the public generally, the public interest and the public right,
which, probably, no individual could be found effectually to assert, even if the interest were such as to allow it. (2 Knet's Commentaries, 10th ed., 359;
Lewin on Trusts, sec. 732.)

It is further urged, as above indicated, that "the only persons who could claim to be damaged by this payment to the Monte, if it was unlawful, are the
donors or the cestuis que trustent, and this Government is neither. Consequently, the plaintiff is not the proper party to bring the action." The earthquake
fund was the result or the accumulation of a great number of small contributions. The names of the contributors do not appear in the record. Their
whereabouts are unknown. They parted with the title to their respective contributions. The beneficiaries, consisting of the original sufferers and their
heirs, could have been ascertained. They are quite numerous also. And no doubt a large number of the original sufferers have died, leaving various heirs.
It would be impracticable for them to institute an action or actions either individually or collectively to recover the $80,000. The only course that can be
satisfactorily pursued is for the Government to again assume control of the fund and devote it to the object for which it was originally destined.

The impracticability of pursuing a different course, however, is not the true ground upon which the right of the Government to maintain the action rests.
The true ground is that the money being given to a charity became, in a measure, public property, only applicable, it is true, to the specific purposes to
which it was intended to be devoted, but within those limits consecrated to the public use, and became part of the public resources for promoting the
happiness and welfare of the Philippine Government. (Mormon Church vs. U. S., supra.) To deny the Government's right to maintain this action would
be contrary to sound public policy, as tending to discourage the prompt exercise of similar acts of humanity and Christian benevolence in like instances
in the future.

As to the question raised in the fourth assignment of error relating to the constitutionality of Act No. 2109, little need be said for the reason that we have
just held that the present Philippine Government is the proper party to the action. The Act is only a manifestation on the part of the Philippine
Government to exercise the power or right which it undoubtedly had. The Act is not, as contended by counsel, in conflict with the fifth section of the Act
of Congress of July 1, 1902, because it does not take property without due process of law. In fact, the defendant is not the owner of the $80,000, but
holds it as a loan subject to the disposal of the central relief board. Therefor, there can be nothing in the Act which transcends the power of the Philippine
Legislature.

In Vilas vs. Manila, supra, the plaintiff was a creditor of the city of Manila as it existed before the cession of the Philippine Islands to the United States
by the Treaty of Paris of December 10, 1898. The action was brought upon the theory that the city, under its present charter from the Government of the
Philippine Islands, was the same juristic person, and liable upon the obligations of the old city. This court held that the present municipality is a totally
different corporate entity and in no way liable for the debts of the Spanish municipality. The Supreme Court of the United States, in reversing this
judgment and in holding the city liable for the old debt, said:

The juristic identity of the corporation has been in no wise affected, and, in law, the present city is, in every legal sense, the successor of the old. As such
it is entitled to the property and property rights of the predecessor corporation, and is, in law, subject to all of its liabilities.

In support of the fifth assignment of error counsel for the defendant argue that as the Monte de Piedad declined to return the $80,000 when ordered to do
so by the Department of Finance in June, 1893, the plaintiff's right of action had prescribed at the time this suit was instituted on May 3, 1912, citing and
relying upon article 1961, 1964 and 1969 of the Civil Code. While on the other hand, the Attorney-General contends that the right of action had not
prescribed (a) because the defense of prescription cannot be set up against the Philippine Government, (b) because the right of action to recover a deposit
or trust funds does not prescribe, and (c) even if the defense of prescription could be interposed against the Government and if the action had, in fact,
prescribed, the same was revived by Act No. 2109.

The material facts relating to this question are these: The Monte de Piedad received the $80,000 in 1883 "to be held under the same conditions as at
present in the treasury, to wit, at the disposal of the relief board." In compliance with the provisions of the royal order of December 3, 1892, the
Department of Finance called upon the Monte de Piedad in June, 1893, to return the $80,000. The Monte 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 amount
was carried on the books of the Monte as a returnable loan until January 1, 1899, when it was transferred to the account of the "Sagrada Mitra." On
March 31, 1902, the Monte, through its legal representative, stated in writing that the amount in question was received as a reimbursable loan, without
interest. Act No. 2109 became effective January 30, 1912, and the action was instituted on May 3rd of that year.

Counsel for the defendant treat the question of prescription as if the action was one between individuals or corporations wherein the plaintiff is seeking to
recover an ordinary loan. Upon this theory June, 1893, cannot be taken as the date when the statute of limitations began to run, for the reason that the
defendant acknowledged in writing on March 31, 1902, that the $80,000 were received as a loan, thereby in effect admitting that it still owed the amount.
(Section 50, Code of Civil Procedure.) But if counsels' theory is the correct one the action may have prescribed on May 3, 1912, because more than ten
full years had elapsed after March 31, 1902. (Sections 38 and 43, Code of Civil Procedure.)

Is the Philippine Government bound by the statute of limitations? The Supreme Court of the United States in U. S. vs. Nashville, Chattanooga & St.
Louis Railway Co. (118 U. S., 120, 125), said:

It is settled beyond doubt or controversy — upon the foundation of the great principle of public policy, applicable to all governments alike, which forbids
that the public interests should be prejudiced by the negligence of the officers or agents to whose care they are confided — that the United States,
asserting rights vested in it as a sovereign government, is not bound by any statute of limitations, unless Congress has clearly manifested its intention that
it should be so bound. (Lindsey vs. Miller, 6 Pet. 666; U. S. vs. Knight, 14 Pet., 301; Gibson vs. Chouteau, 13 Wall., 92; U. S. vs. Thompson, 98 U. S.,
486; Fink vs. O'Neil, 106 U. S., 272, 281.)

In Gibson vs. Choteau, supra, the court said:

It is a matter of common knowledge that statutes of limitation do not run against the State. That no laches can be imputed to the King, and that no time
can bar his rights, was the maxim of the common laws, and was founded on the principle of public policy, that as he was occupied with the cares of
government he ought not to suffer from the negligence of his officer and servants. The principle is applicable to all governments, which must necessarily
act through numerous agents, and is essential to a preservation of the interests and property of the public. It is upon this principle that in this country the
statutes of a State prescribing periods within which rights must be prosecuted are not held to embrace the State itself, unless it is expressly designated or
the mischiefs to be remedied are of such a nature that it must necessarily be included. As legislation of a State can only apply to persons and thing over
which the State has jurisdiction, the United States are also necessarily excluded from the operation of such statutes.

In 25 Cyc., 1006, the rule, supported by numerous authorities, is stated as follows:

In the absence of express statutory provision to the contrary, statute of limitations do not as a general rule run against the sovereign or government,
whether state or federal. But the rule is otherwise where the mischiefs to be remedied are of such a nature that the state must necessarily be included,
where the state goes into business in concert or in competition with her citizens, or where a party seeks to enforces his private rights by suit in the name
of the state or government, so that the latter is only a nominal party.
In the instant case the Philippine Government is not a mere nominal party because it, in bringing and prosecuting this action, is exercising its sovereign
functions or powers and is seeking to carry out a trust developed upon it when the Philippine Islands were ceded to the United States. The United States
having in 1852, purchased as trustee for the Chickasaw Indians under treaty with that tribe, certain bonds of the State of Tennessee, the right of action of
the Government on the coupons of such bonds could not be barred by the statute of limitations of Tennessee, either while it held them in trust for the
Indians, or since it became the owner of such coupons. (U. S. vs. Nashville, etc., R. Co., supra.) So where lands are held in trust by the state and the
beneficiaries have no right to sue, a statute does not run against the State's right of action for trespass on the trust lands. (Greene Tp. vs. Campbell, 16
Ohio St., 11; see also Atty.-Gen. vs. Midland R. Co., 3 Ont., 511 [following Reg. vs. Williams, 39 U. C. Q. B., 397].)

These principles being based "upon the foundation of the great principle of public policy" are, in the very nature of things, applicable to the Philippine
Government.

Counsel in their argument in support of the sixth and last assignments of error do not question the amount of the judgment nor do they question the
correctness of the judgment in so far as it allows interest, and directs its payment in gold coin or in the equivalent in Philippine currency.

For the foregoing reasons the judgment appealed from is affirmed, with costs against the appellant. So ordered.

Torres, Johnson and Araullo, JJ., concur.

Moreland, J., did not sign.

CASE DIGEST

The Government of Philippine Islands vs El Monte de Piedad Y Caja de Ahorras de Manila

G.R. No. L-9959 December 13, 1916

Facts:

On June 3, 1863, an Earthquake took place in the Philippine Islands, which was then under the Spanish Crown, that devastated lot of civilians. Therefore
n Oct. 6 of that year, a central relief board was appointed, by authority of the King of Spain, to distribute the money voluntarily contributed by donors.
After a thorough investigation and consideration, the relief board allotted $365703.50 to the various sufferers name in its resolution.

These were later distributed in accordance with the above mentioned allotments, the sum of $30,299.65, leaving a balance of $365.403.85 for
distribution. Upon the petition of the governing body of the Monte de Piedad, dated February 1, 1833, the Philippine Government, by order dated the first
month, directed its treasured to turn over Monte de Piedad the sum of $80,000 of relief fund in its installment of 20,000 each. These amounts received on
the following dates: February 15, March 12, April 14, and June 2, 1883, and are still in the possession of Monte de Piedad.

The Attorney General in representation of the Philippine Islands, a file of claim for the $80000 together with interest, for the benefit of those persons or
their heirs appearing in the list of names published in the Official Gazette instituted on May, 3, 1912 by the Government of the Philippine Islands,
represented by the Insular Treasurer, and after due trial in the lower court, judgment was entered in honor of the plaintiff currency, together with legal
interest from February 28, 1912, and cost of cause. The Monte de Piedad then contended that the present Philippine Government cannot file suit on the
ground that the obligation of the former was wiped out when there was a change of sovereignty.

Issue:

Whether or not the government of the Philippine Islands has capacity to file a suit against the Monte de Piedad for the recovery of the said amount.

Ruling:

Under the Principle of Parens Patriae, the Philippine Government being the guardian of the “rights of the people” can represent the legitimate claimants
of the beneficiary and therefore has the capacity to file a suit against the appellant. The Philippine Government is not merely a nominal party that’s why
it can bring and prosecute this action by exercising its sovereign powers. The supreme court then held the right of the government to file the case.
G.R. No. L-25843 July 25, 1974

MELCHORA CABANAS, plaintiff-appellee, vs. FRANCISCO PILAPIL, defendant-appellant.

Seno, Mendoza & Associates for plaintiff-appellee.

Emilio Benitez, Jr. for defendant-appellant.

FERNANDO, J.:p

The disputants in this appeal from a question of law from a lower court decision are the mother and the uncle of a minor beneficiary of the proceeds of an
insurance policy issued on the life of her deceased father. The dispute centers as to who of them should be entitled to act as trustee thereof. The lower
court applying the appropriate Civil Code provisions decided in favor of the mother, the plaintiff in this case. Defendant uncle appealed. As noted, the
lower court acted the way it did following the specific mandate of the law. In addition, it must have taken into account the principle that in cases of this
nature the welfare of the child is the paramount consideration. It is not an unreasonable assumption that between a mother and an uncle, the former is
likely to lavish more care on and pay greater attention to her. This is all the more likely considering that the child is with the mother. There are no
circumstances then that did militate against what conforms to the natural order of things, even if the language of the law were not as clear. It is not to be
lost sight of either that the judiciary pursuant to its role as an agency of the State as parens patriae, with an even greater stress on family unity under the
present Constitution, did weigh in the balance the opposing claims and did come to the conclusion that the welfare of the child called for the mother to be
entrusted with such responsibility. We have to affirm.

The appealed decision made clear: "There is no controversy as to the facts. "1 The insured, Florentino Pilapil had a child, Millian Pilapil, with a married
woman, the plaintiff, Melchora Cabanas. She was ten years old at the time the complaint was filed on October 10, 1964. The defendant, Francisco
Pilapil, is the brother of the deceased. The deceased insured himself and instituted as beneficiary, his child, with his brother to act as trustee during her
minority. Upon his death, the proceeds were paid to him. Hence this complaint by the mother, with whom the child is living, seeking the delivery of such
sum. She filed the bond required by the Civil Code. Defendant would justify his claim to the retention of the amount in question by invoking the terms of
the insurance policy.2

After trial duly had, the lower court in a decision of May 10, 1965, rendered judgment ordering the defendant to deliver the proceeds of the policy in
question to plaintiff. Its main reliance was on Articles 320 and 321 of the Civil Code. The former provides: "The father, or in his absence the mother, is
the legal administrator of the property pertaining to the child under parental authority. If the property is worth more than two thousand pesos, the father
or mother shall give a bond subject to the approval of the Court of First Instance."3 The latter states: "The property which the unemancipated child has
acquired or may acquire with his work or industry, or by any lucrative title, belongs to the child in ownership, and in usufruct to the father or mother
under whom he is under parental authority and whose company he lives; ...4

Conformity to such explicit codal norm is apparent in this portion of the appealed decision: "The insurance proceeds belong to the beneficiary. The
beneficiary is a minor under the custody and parental authority of the plaintiff, her mother. The said minor lives with plaintiff or lives in the company of
the plaintiff. The said minor acquired this property by lucrative title. Said property, therefore, belongs to the minor child in ownership, and in usufruct to
the plaintiff, her mother. Since under our law the usufructuary is entitled to possession, the plaintiff is entitled to possession of the insurance proceeds.
The trust, insofar as it is in conflict with the above quoted provision of law, is pro tanto null and void. In order, however, to protect the rights of the
minor, Millian Pilapil, the plaintiff should file an additional bond in the guardianship proceedings, Sp. Proc. No. 2418-R of this Court to raise her bond
therein to the total amount of P5,000.00."5

It is very clear, therefore, considering the above, that unless the applicability of the two cited Civil Code provisions can be disputed, the decision must
stand. There is no ambiguity in the language employed. The words are rather clear. Their meaning is unequivocal. Time and time again, this Court has
left no doubt that where codal or statutory norms are cast in categorical language, the task before it is not one of interpretation but of application.6 So it
must be in this case. So it was in the appealed decision.

1. It would take more than just two paragraphs as found in the brief for the defendant-appellant7 to blunt the force of legal commands that speak so
plainly and so unqualifiedly. Even if it were a question of policy, the conclusion will remain unaltered. What is paramount, as mentioned at the outset, is
the welfare of the child. It is in consonance with such primordial end that Articles 320 and 321 have been worded. There is recognition in the law of the
deep ties that bind parent and child. In the event that there is less than full measure of concern for the offspring, the protection is supplied by the bond
required. With the added circumstance that the child stays with the mother, not the uncle, without any evidence of lack of maternal care, the decision
arrived at can stand the test of the strictest scrutiny. It is further fortified by the assumption, both logical and natural, that infidelity to the trust imposed
by the deceased is much less in the case of a mother than in the case of an uncle. Manresa, commenting on Article 159 of the Civil Code of Spain, the
source of Article 320 of the Civil Code, was of that view: Thus "El derecho y la obligacion de administrar el Patrimonio de los hijos es una consecuencia
natural y lógica de la patria potestad y de la presunción de que nadie cuidará de los bienes de acquéllos con mas cariño y solicitude que los padres. En
nuestro Derecho antiguo puede decirse que se hallaba reconocida de una manera indirecta aquelia doctrina, y asi se desprende de la sentencia del
Tribunal Supremeo de 30 de diciembre de 1864, que se refiere a la ley 24, tit. XIII de la Partida 5. De la propia suerte aceptan en general dicho principio
los Codigos extranjeros, con las limitaciones y requisitos de que trataremos mis adelante."8

2. The appealed decision is supported by another cogent consideration. It is buttressed by its adherence to the concept that the judiciary, as an agency of
the State acting as parens patriae, is called upon whenever a pending suit of litigation affects one who is a minor to accord priority to his best interest. It
may happen, as it did occur here, that family relations may press their respective claims. It would be more in consonance not only with the natural order
of things but the tradition of the country for a parent to be preferred. it could have been different if the conflict were between father and mother. Such is
not the case at all. It is a mother asserting priority. Certainly, the judiciary as the instrumentality of the State in its role of parens patriae, cannot remain
insensible to the validity of her plea. In a recent case,9 there is this quotation from an opinion of the United States Supreme Court: "This 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, and has no affinity to
those arbitrary powers which are sometimes exerted by irresponsible monarchs to the great detriment of the people and the destruction of their liberties."
What is more, there is this constitutional provision vitalizing this concept. It reads: "The State shall strengthen the family as a basic social institution." 10
If, as the Constitution so wisely dictates, it is the family as a unit that has to be strengthened, it does not admit of doubt that even if a stronger case were
presented for the uncle, still deference to a constitutional mandate would have led the lower court to decide as it did.

WHEREFORE, the decision of May 10, 1965 is affirmed. Costs against defendant-appellant.

CASE DIGEST
CABANAS v. PILAPIL

58 SCRA 94

FACTS:

Florentino Pilapil, the insured, had a child, Millian Pilapil, with a married woman, Melchora Cabanas. The complaint was filed on October 10, 1964. The
defendant Francisco Pilapil, the brother of the deceased is the one designated by the latter to act as his daughter’s trustee during her minority. Thus, upon
Florentino’s death, the proceeds were paid to his brother hence the complaint of the mother whom the child lives with. Petitioner contends that she
should be entitled to act as the trustee of the insurance policy of her child.

ISSUE:

Does the State have the authority to interfere with the terms of the insurance policy by virtue of parens patriae?HELD:

The appealed decision adheres to the concept that the judiciary, as an agent of the State, acts as parens patriae. As such, the judiciary cannot remain
insensible to the validity of the petitioner’s plea. “The State shall strengthen the family as a basic social institution”. The Constitution, moreover, dictates
that it is the family as a unit that has to be strengthened. As such, the decision of the lower courts, entitling the mother as the trustee, is affirmed.
G.R. No. 143377 February 20, 2001

SHIPSIDE INCORPORATED, petitioner, vs. THE HON. COURT OF APPEALS [Special Former Twelfth Division], HON. REGIONAL
TRIAL COURT, BRANCH 26 (San Fernando City, La Union) & The REPUBLIC OF THE PHILIPPINES, respondents.

MELO, J.:

Before the Court is a petition for certiorari filed by Shipside Incorporated under Rule 65 of the 1997 Rules on Civil Procedure against the resolutions of
the Court of Appeals promulgated on November 4, 1999 and May 23, 2000, which respectively, dismissed a petition for certiorari and prohibition and
thereafter denied a motion for reconsideration.

The antecedent facts are, undisputed:

On October 29, 1958, Original Certificate of Title No. 0-381 was issued in favor of Rafael Galvez, over four parcels of land - Lot 1 with 6,571 square
meters; Lot 2, with 16,777 square meters; Lot 3 with 1,583 square meters; and Lot 4, with 508 square meters.

On April 11, 1960, Lots No. 1 and 4 were conveyed by Rafael Galvez in favor of Filipina Mamaril, Cleopatra Llana, Regina Bustos, and Erlinda Balatbat
in a deed of sale which was inscribed as Entry No. 9115 OCT No.0-381 on August 10, 1960. Consequently, Transfer Certificate No. T-4304 was issued
in favor of the buyers covering Lots No. 1 and 4.

Lot No. 1 is described as:

A parcel of land (Lot 1, Plan PSU-159621, L.R. Case No. N-361; L.R.C. Record No. N-14012, situated in the Barrio of Poro, Municipality of San
Fernando, Province of La Union, bounded on the NE, by the Foreshore; on the SE, by Public Land and property of the Benguet Consolidated Mining
Company; on the SW, by properties of Rafael Galvez (US Military Reservation Camp Wallace) and Policarpio Munar; and on the NW, by an old Barrio
Road. Beginning at a point marked "1" on plan, being S. 74 deg. 11'W., 2670.36 from B.L.L.M. 1, San Fernando, thence

S. 66 deg. 19'E., 134.95 m. to point 2; S.14 deg. 57'W., 11.79 m. to point 3;

S. 12 deg. 45'W., 27.00 m. to point 4; S. 12 deg. 45'W, 6.90 m. to point 5;

N. 69 deg., 32'W., 106.00 m. to point 6; N. 52 deg., 21'W., 36.85 m. to point 7;

N. 21 deg. 31'E., 42.01 m. to the point of beginning; containing an area of SIX THOUSAND FIVE HUNDRED AND SEVENTY - ONE (6,571)
SQUARE METERS, more or less. All points referred to are indicated on the plan; and marked on the ground; bearings true, date of survey, February 4-
21, 1957.

Lot No. 4 has the following technical description:

A parcel of land (Lot 4, Plan PSU-159621, L.R. Case No. N-361 L.R.C. Record No. N-14012), situated in the Barrio of Poro, Municipality of San
Fernando, La Union. Bounded on the SE by the property of the Benguet Consolidated Mining Company; on the S. by property of Pelagia Carino; and on
the NW by the property of Rafael Galvez (US Military Reservation, Camp Wallace). Beginning at a point marked "1" on plan, being S. deg. 24'W.
2591.69 m. from B.L.L.M. 1, San Fernando, thence S. 12 deg. 45'W., 73.03 m. to point 2; N. 79 deg. 59'W., 13.92 m. to point 3; N. 23 deg. 26'E., 75.00
m. to the point of beginning; containing an area of FIVE HUNDED AND EIGHT (508) SQUARE METERS, more or less. All points referred to are
indicated in the plan and marked on the ground; bearings true, date of survey, February 4-21, 1957.

On August 16, 1960, Mamaril, et al. sold Lots No. 1 and 4 to Lepanto Consolidated Mining Company. The deed of sale covering the aforesaid property
was inscribed as Entry No. 9173 on TCT No. T-4304. Subsequently, Transfer Certificate No. T-4314 was issued in the name of Lepanto Consolidated
Mining Company as owner of Lots No. 1 and 4.

On February 1, 1963, unknown to Lepanto Consolidated Mining Company, the Court of First Instance of La Union, Second Judicial District, issued an
Order in Land Registration Case No. N- 361 (LRC Record No. N-14012) entitled "Rafael Galvez, Applicant, Eliza Bustos, et al., Parties-In-Interest;
Republic of the Philippines, Movant" declaring OCT No. 0-381 of the Registry of Deeds for the Province of La Union issued in the name of Rafael
Galvez, null and void, and ordered the cancellation thereof.

The Order pertinently provided: Accordingly, with the foregoing, and without prejudice on the rights of incidental parties concerned herein to institute
their respective appropriate actions compatible with whatever cause they may have, it is hereby declared and this court so holds that both proceedings in
Land Registration Case No. N-361 and Original Certificate No. 0-381 of the Registry of Deeds for the province of La Union issued in virtue thereof and
registered in the name of Rafael Galvez, are null and void; the Register of Deeds for the Province of La Union is hereby ordered to cancel the said
original certificate and/or such other certificates of title issued subsequent thereto having reference to the same parcels of land; without pronouncement as
to costs.

On October 28, 1963, Lepanto Consolidated Mining Company sold to herein petitioner Lots No. 1 and 4, with the deed being entered in TCT No. 4314
as entry No. 12381. Transfer Certificate of Title No. T-5710 was thus issued in favor of the petitioner which starting since then exercised proprietary
rights over Lots No. 1 and 4.

In the meantime, Rafael Galvez filed his motion for reconsideration against the order issued by the trial court declaring OCT No. 0-381 null and void.
The motion was denied on January 25, 1965. On appeal, the Court of Appeals ruled in favor of the Republic of the Philippines in a Resolution
promulgated on August 14, 1973 in CA-G.R. No. 36061-R. 1âwphi1.nêt

Thereafter, the Court of Appeals issued an Entry of Judgment, certifying that its decision dated August 14, 1973 became final and executory on October
23, 1973.

On April 22, 1974, the trial court in L.R.C. Case No. N-361 issued a writ of execution of the judgment which was served on the Register of Deeds, San
Fernando, La Union on April 29, 1974.
Twenty four long years, thereafter, on January 14, 1999, the Office of the Solicitor General received a letter dated January 11, 1999 from Mr. Victor G.
Floresca, Vice-President, John Hay Poro Point Development Corporation, stating that the aforementioned orders and decision of the trial court in L.R.C.
No. N-361 have not been executed by the Register of Deeds, San Fernando, La Union despite receipt of the writ of execution.

On April 21, 1999, the Office of the Solicitor General filed a complaint for revival of judgment and cancellation of titles before the Regional Trial Court
of the First Judicial Region (Branch 26, San Fernando, La Union) docketed therein as Civil Case No. 6346 entitled, "Republic of the Philippines,
Plaintiff, versus Heirs of Rafael Galvez, represented by Teresita Tan, Reynaldo Mamaril, Elisa Bustos, Erlinda Balatbat, Regina Bustos, Shipside
Incorporated and the Register of Deeds of La Union, Defendants."

The evidence shows that the impleaded defendants (except the Register of Deeds of the province of La Union) are the successors-in- interest of Rafael
Galvez (not Reynaldo Galvez as alleged by the Solicitor General) over the property covered by OCT No. 0-381, namely: (a) Shipside Inc. which is
presently the registered owner in fee simple of Lots No. 1 and 4 covered by TCT No. T -5710, with a total area of 7,079 square meters; (b) Elisa Bustos,
Jesusito Galvez, and Teresita Tan who are the registered owners of Lot No. 2 of OCT No. 0-381; and (c) Elisa Bustos, Filipina Mamaril, Regina Bustos
and Erlinda Balatbat who are the registered owners of Lot No. 3 of OCT No. 0-381, now covered by TCT No. T-4916, with an area of 1,583 square
meters.

In its complaint in Civil Case No.6346, the Solicitor General argued that since the trial court in LRC Case No. 361 had ruled and declared OCT No. 0-
381 to be null and void, which ruling was subsequently affirmed by the Court of Appeals, the defendants-successors-in-interest of Rafael Galvez have no
valid title over the property covered by OCT No. 0-381, and the subsequent Torrens titles issued in their names should be consequently cancelled.

On July 22, 1999, petitioner Shipside, Inc. filed its Motion to Dismiss, based on the following grounds: (1) the complaint stated no cause of action
because only final and executory judgments may be subject of an action for revival of judgment; (2) .the plaintiff is not the real party-in-interest because
the real property covered by the Torrens titles sought to be cancelled, allegedly part of Camp Wallace (Wallace Air Station), were under the ownership
and administration of the Bases Conversion Development Authority (BCDA) under Republic Act No. 7227; (3) plaintiff's cause of action is barred by
prescription; {4) twenty-five years having lapsed since the issuance of the writ of execution, no action for revival of judgment may be instituted because
under Paragraph 3 of Article 1144 of the Civil Code, such action may be brought only within ten (10) years from the time the judgment had been
rendered.

An opposition to the motion to dismiss was filed by the Solicitor General on August 23, 1999, alleging among others, that: (1) the real party-in-interest is
the Republic of the Philippines; and (2) prescription does not run against the State.

On August 31, 1999, the trial court denied petitioner's motion to dismiss and on October 14, 1999, its motion for reconsideration was likewise turned
down.

On October 21, 1999, petitioner instituted a petition for certiorari and prohibition with the Court of Appeals, docketed therein as CA-G.R. SP No. 55535,
on the ground that the orders of the trial court denying its motion to dismiss and its subsequent motion for reconsideration were issued in excess of
jurisdiction.

On November 4, 1999, the Court of Appeals dismissed the petition in CA-G.R. SP No. 55535 on the ground that the verification and certification in the
petition, tinder the signature of Lorenzo Balbin, Jr., was made without authority, there being no proof therein that Balbin was authorized to institute the
petition for and in behalf and of petitioner.

On May 23, 2000, the Court of Appeals denied petitioner's, motion for reconsideration on the grounds that: (1) a complaint filed on behalf of a
corporation can be made only if authorized by its Board of Directors, and in the absence thereof, the petition cannot prosper and be granted due course;
and (2) petitioner was unable to show that it had substantially complied with the rule requiring proof of authority to institute an action or proceeding.

Hence, the instant petition.

In support of its petition, Shipside, Inc. asseverates that:

1. The Honorable Court of Appeals gravely abused its discretion in dismissing the petition when it made a conclusive legal presumption that Mr. Balbin
had no authority to sign the petition despite the clarity of laws, jurisprudence and Secretary's certificate to the contrary;

2. The Honorable Court of Appeals abused its discretion when it dismissed the petition, in effect affirming the grave abuse of discretion committed by
the lower court when it refused to dismiss the 1999 Complaint for Revival of a 1973 judgment, in violation of clear laws and jurisprudence.

Petitioner likewise adopted the arguments it raised in the petition' and comment/reply it filed with the Court of Appeals, attached to its petition as Exhibit
"L" and "N", respectively.

In his Comment, the Solicitor General moved for the dismissal of the instant petition based on the following considerations: (1) Lorenzo Balbin, who
signed for and in behalf of petitioner in the verification and certification of non-forum shopping portion of the petition, failed to show proof of his
authorization to institute the petition for certiorari and prohibition with the Court of Appeals, thus the latter court acted correctly in dismissing the same;
(2) the real party-in-interest in the case at bar being the Republic of the Philippines, its claims are imprescriptible.

In order to preserve the rights of herein parties, the Court issued a temporary restraining order on June 26, 2000 enjoining the trial court from conducting
further proceedings in Civil Case No. 6346.

The issues posited in this case are: (1) whether or not an authorization from petitioner's Board of Directors is still required in order for its resident
manager to institute or commence a legal action for and in behalf of the corporation; and (2) whether or not the Republic of the Philippines can maintain
the action for revival of judgment herein.

We find for petitioner.

Anent the first issue:

The Court of Appeals dismissed the petition for certiorari on the ground that Lorenzo Balbin, the resident manager for petitioner, who was the signatory
in the verification and certification on non-forum shopping, failed to show proof that he was authorized by petitioner's board of directors to file such a
petition.
A corporation, such as petitioner, has no power except those expressly conferred on it by the Corporation Code and those that are implied or incidental to
its existence. In turn, a corporation exercises said powers through its board of directors and/or its duly authorized officers and agents. Thus, it has been
observed that the power of a corporation to sue and be sued in any court is lodged with the board of directors that exercises its corporate powers
(Premium Marble Resources, Inc. v. CA, 264 SCRA 11 [1996]). In turn, physical acts of the corporation, like the signing of documents, can be
performed only by natural persons duly authorized for the purpose by corporate by-laws or by a specific act of the board of directors.

It is undisputed that on October 21, 1999, the time petitioner's Resident Manager Balbin filed the petition, there was no proof attached thereto that Balbin
was authorized to sign the verification and non-forum shopping certification therein, as a consequence of which the petition was dismissed by the Court
of Appeals. However, subsequent to such dismissal, petitioner filed a motion for reconsideration, attaching to said motion a certificate issued by its
"board secretary stating that on October 11, 1999, or ten days prior to the filing of the petition, Balbin had been authorized by petitioner's board of
directors to file said petition.

The Court has consistently held that the requirement regarding verification of a pleading is formal, not jurisdictional (Uy v. LandBank, G.R. No. 136100,
July 24, 2000). Such requirement is simply a condition affecting the form of the pleading, non-compliance with which does not necessarily render the
pleading fatally defective. Verification is simply intended to secure an assurance that the allegations in the pleading are true and correct and not the
product of the imagination or a matter of speculation, and that the pleading is filed in good faith. The court may order the correction of the pleading if
verification is lacking or act on the pleading although it is not verified, if the attending circumstances are such that strict compliance with the rules may
be dispensed with in order that the ends of justice may thereby be served.

On the other hand, the lack of certification, against forum shopping is generally not curable by the submission thereof after the filing of the petition.
Section 5, Rule 45 of the 1997 Rules of civil Procedure provides that the failure of the petitioner to submit the required documents that should
accompany the petition, including the certification against forum shopping, shall be sufficient ground for the dismissal thereof. The same rule applies to
certifications against forum shopping signed by a person on behalf of a corporation which are unaccompanied by proof that said signatory is authorized
to file a petition on behalf of the corporation.

In certain exceptional circumstances, however, the Court has allowed the belated filing of the certification. In Loyola v. Court of Appeals, et. al. (245
SCRA 477 [1995]), the Court considered the filing of the certification one day after the filing of an election protest as substantial compliance with the
requirement. In Roadway Express, Inc. v. Court of Appeals, et. al. (264 SCRA 696 [1996]), the Court allowed the filing of the certification 14 days
before the dismissal of the petition. In "Uy v. LandBank, supra, the Court had dismissed Uy's petition for lack of verification and certification against
non-forum shopping. However, it subsequently reinstated the petition after Uy submitted a motion to admit certification and non-forum shopping
certification. In all these cases, there were special circumstances or compelling "reasons that justified the relaxation of the rule requiring verification and
certification on non-forum shopping.

In the instant case, the merits of petitioner' case should be considered special circumstances or compelling reasons that justify tempering the requirement
in regard to the certificate of non-forum shopping. Moreover, in Loyola, Roadway, and Uy, the Court excused non-compliance with the requirement as to
the certificate of non-forum shopping. With more reason should we allow the instant petition since petitioner herein did submit a certification on non-
forum shopping, failing only to show proof that the signatory was authorized to do so. That petitioner subsequently submitted a secretary's certificate
attesting that Balbin was authorized to file an action on behalf of petitioner likewise, mitigates this oversight.

It must also be kept in mind that while the requirement of the certificate of non-forum shopping is mandatory, nonetheless the requirements must not be
interpreted too literally and thus defeat the objective of preventing the undesirable practice of forum-shopping (Bernardo v. NLRC, .255 SCRA 108
[1996]). Lastly, technical rules of procedure should be used to promote, not frustrate justice. While the swift unclogging of court dockets is a laudable
objective, the granting of substantial justice is an even more urgent ideal.

Now to the second issue:

The action instituted by the Solicitor General in the trial court is one for revival of judgment which is governed by Article 1144(3) of the Civil Code and
Section 6, Rule 39 of the 1997 Rules on Civil Procedure. Article 1144(3) provides that an action upon a judgment "must be brought within 10 years from
the time the right of action accrues." On the other hand, Section 6, Rule 39 provides that a final and executory judgment or order may be executed on
motion within five (5) years from the date of its entry, but that after the lapse of such time, and before it is barred by the statute of limitations, a judgment
may be enforced by action. Taking these two provisions into consideration, it is plain that an action for revival of judgment must be brought within ten
years from the time said judgment becomes final.

From the records of this, case, it is clear that the judgment sought to be revived became final on October 23, 1973. On the other hand, the action for
revival of judgment was instituted only in 1999, or more than twenty-five (25) years after the judgment had become final. Hence, the action is barred by
extinctive prescription considering that 'such an action can be instituted only within ten (10) years from the time the cause of action accrues.

The Solicitor General, nonetheless, argues that the State's cause , of action in the cancellation of the land title issued to petitioner's predecessor-in-interest
is imprescriptible because it is included in Camp Wallace, which belongs to the government.

The argument is misleading.

While it is true that prescription does not run against the State, the same may not be invoked by the government in this case since it is no longer
interested in the subject matter. While Camp Wallace may have belonged to the government at the time Rafael Galvez's title was ordered cancelled in
Land Registration Case No. N-361, the same no longer holds true today.

Republic Act No. 7227, otherwise known as the Bases Conversion and Development Act of 1992, created the Bases Conversion and Development
Authority Section 4 pertinently provides:

Section 4. Purposes of the Conversion Authority. - The Conversion Authority shall have the following purposes:

(a) To own, hold and/or administer the military reservations of John Hay Air Station, Wallace Air Station, O'Donnell Transmitter Station, San Miguel
Naval Communications Station, Mt. Sta. Rita Station (Hermosa, Bataan) and those portions of Metro Manila military camps which may be transferred to
it by the President;

Section 2 of Proclamation No. 216, issued on July 27, 1993, also provides:
Section 2. Transfer of Wallace Air Station Areas to the Bases Conversion and Development Authority. - All areas covered by the Wallace Air Station as
embraced and defined by the 1947 Military Bases Agreement between the Philippines and the United States of America, as amended, excluding those
covered by Presidential Proclamations and some 25-hectare area for the radar and communication station of the Philippine Air Force, are hereby
transferred to the Bases Conversion Development Authority ...

With the transfer of Camp Wallace to the BCDA, the government no longer has a right or interest to protect. Consequently, the Republic is not a real
party in interest and it may not institute the instant action. Nor may it raise the defense of imprescriptibility, the same being applicable only in cases
where the government is a party in interest. Under Section 2 of Rule 3 of the 1997 Rules of Civil Procedure, "every action must be prosecuted or
defended in the name of the real party in interest." To qualify a person to be a real party in interest in whose name an action must be prosecuted, he must
appear to be the present real owner of the right sought to enforced (Pioneer Insurance v. CA, 175 SCRA 668 [1989]). A real party in interest is the party
who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. And by real interest is meant a present
substantial interest, as distinguished from a mere expectancy, or a future, contingent, subordinate or consequential interest (Ibonilla v. Province of Cebu,
210 SCRA 526 [1992]). Being the owner of the areas covered by Camp Wallace, it is the Bases Conversion and Development Authority, not the
Government, which stands to be benefited if the land covered by TCT No. T-5710 issued in the name of petitioner is cancelled.

Nonetheless, it has been posited that the transfer of military reservations and their extensions to the BCDA is basically for the purpose of accelerating the
sound and balanced conversion of these military reservations into alternative productive uses and to enhance the benefits to be derived from such
property as a measure of promoting the economic and social development, particularly of Central Luzon and, in general, the country's goal for
enhancement (Section 2, Republic Act No. 7227). It is contended that the transfer of these military reservations to the Conversion Authority does not
amount to an abdication on the part of the Republic of its interests, but simply a recognition of the need to create a body corporate which will act as its
agent for the realization of its program. It is consequently asserted that the Republic remains to be the real party in interest and the Conversion Authority
merely its agent.

We, however, must not lose sight of the fact that the BCDA is an entity invested with a personality separate and distinct from the government. Section 3
of Republic Act No. 7227 reads:

Section 3. Creation of the Bases Conversion and Development Authority. - There is hereby created a body corporate to be known as the Conversion
Authority which shall have the attribute of perpetual succession and shall be vested with the powers of a corporation.

It may not be amiss to state at this point that the functions of government have been classified into governmental or constituent and proprietary or
ministrant. While public benefit and public welfare, particularly, the promotion of the economic and social development of Central Luzon, may be
attributable to the operation of the BCDA, yet it is certain that the functions performed by the BCDA are basically proprietary in nature. The promotion
of economic and social development of Central Luzon, in particular, and the country's goal for enhancement, in general, do not make the BCDA
equivalent to the Government. Other corporations have been created by government to act as its agents for the realization of its programs, the SSS, GSIS,
NAWASA arid the NIA, to count a few, and yet, the Court has ruled that these entities, although performing functions aimed at promoting public interest
and public welfare, are not government-function corporations invested with governmental attributes. It may thus be said that the BCDA is not a mere
agency of the Government but a corporate body performing proprietary functions.

Moreover, Section 5 of Republic Act No. 7227 provides:

Section 5. Powers of the Conversion Authority. - To carry out its objectives under this Act, the Conversion Authority is hereby vested with the following
powers:

(a) To succeed in its corporate name, to sue and be sued in such corporate name and to adopt, alter and use a corporate seal which shall be judicially
noticed;

Having the capacity to sue or be sued, it should thus be the BCDA which may file an action to cancel petitioner's title, not the Republic, the former being
the real party in interest. One having no right or interest to protect cannot invoke the jurisdiction of the court as a party plaintiff in an action (Ralla v.
Ralla, 199 SCRA 495 [1991]). A suit may be dismissed if the plaintiff or the defendant is not a real party in interest. If the suit is not brought in the name
of the real party in interest, a motion to dismiss may be filed, as was done by petitioner in this case, on the ground that the complaint states no cause of
action (Tanpingco v. IAC, 207 SCRA 652 [1992]).

However, E.B. Marcha Transport Co., Inc. v. IAC (147 SCRA 276 [1987]) is cited as authority that the Republic is the proper party to sue for the
recovery of possession of property which at the time of the institution of the suit was no longer held by the national government but by the Philippine
Ports Authority .In E.B. Marcha, the Court ruled:

It can be said that in suing for the recovery of the rentals, the Republic of the Philippines, acted as principal of the Philippine Ports Authority, directly
exercising the commission it had earlier conferred on the latter as its agent. We may presume that, by doing so, the Republic of the Philippines did not
intend .to retain the said rentals for its own use, considering that by its voluntary act it had transferred the land in question to the Philippine Ports
Authority effective July 11, 1974. The Republic of the Philippines had simply sought to assist, not supplant, the Philippine Ports Authority, whose title to
the disputed property it continues to recognize, We may expect then that the said rentals, once collected by the Republic of the Philippines, shall be
turned over by it to the Philippine Ports Authority conformably to the purposes of P.D. No. 857.

E.B. Marcha is, however, not on all fours with the case at bar. In the former, the Court considered the Republic a proper party to sue since the claims of
the Republic and the Philippine Ports Authority against the petitioner therein were the same. To dismiss the complaint in E.B. Marcha would have
brought needless delay in the settlement of the matter since the PPA would have to refile the case on the same claim already litigated upon. Such is not
the case here since to allow the government to sue herein enables it to raise the issue of imprescriptibility, a claim which is not available to the BCDA.
The rule that prescription does not run against the State does not apply to corporations or artificial bodies created by the State for special purposes, it
being said that when the title of the Republic has been divested, its grantees, although artificial bodies of its own creation, are in the same category as
ordinary persons (Kingston v. LeHigh Valley Coal Co., 241 Pa 469). By raising the claim of imprescriptibility, a claim which cannot be raised by the
BCDA, the Government not only assists the BCDA, as it did in E.B. Marcha, it even supplants the latter, a course of action proscribed by said case.

Moreover, to recognize the Government as a proper party to sue in this case would set a bad precedent as it would allow the Republic to prosecute, on
behalf of government-owned or controlled corporations, causes of action which have already prescribed, on the pretext that the Government is the real
party in interest against whom prescription does not run, said corporations having been created merely as agents for the realization of government
programs.
Parenthetically, petitioner was not a party to the original suit for cancellation of title commenced by the Republic twenty-seven years for which it is now
being made to answer, nay, being made to suffer financial losses.

It should also be noted that petitioner is unquestionably a buyer in good faith and for value, having acquired the property in 1963, or 5 years after the
issuance of the original certificate of title, as a third transferee. If only not to do violence and to give some measure of respect to the Torrens System,
petitioner must be afforded some measure of protection.

One more point.

Since the portion in dispute now forms part of the property owned and administered by the Bases Conversion and Development Authority, it is alienable
and registerable real property.

We find it unnecessary to rule on the other matters raised by the herein parties.

WHEREFORE, the petition is hereby granted and the orders dated August 31, 1999 and October 4, 1999 of the Regional Trial, Court of the First
National Judicial Region (Branch 26, San Fernando, La Union) in Civil Case No. 6346 entitled "Republic of the Philippines, Plaintiff, versus Heirs of
Rafael Galvez, et. al., Defendants" as well as the resolutions promulgated on November 4, 1999 and May 23, 2000 by the Court of Appeals (Twelfth
Division) in

CA-G.R. SP No. 55535 entitled "Shipside, Inc., Petitioner versus Ron. Alfredo Cajigal, as Judge, RTC, San Fernando, La Union, Branch 26, and the
Republic of the Philippines, Respondents" are hereby reversed and set aside. The complaint in Civil Case No. 6346, Regional Trial Court, Branch 26,
San Fernando City, La Union entitled "Republic of the Philippines, Plaintiff, versus Heirs of Rafael Galvez, et al." is ordered dismissed, without
prejudice to the filing of an appropriate action by the Bases Development and Conversion Authority.

SO ORDERED.

Vitug, Panganiban, Gonzaga-Reyes, and Sandoval-Gutierrez, JJ., concur.

G.R. No. 143377 February 20, 2001

(Shipside Incorporated vs. Court of Appeals and Republic of the Philippines)

CASE DIGEST

SHIPSIDE INCORPORATED v. CA, GR No. 143377, 2001-02-20

Facts:

On October 29, 1958, Original Certificate of Title No. 0-381 was issued in favor of Rafael Galvez, over four parcels of land - Lot 1 with 6,571 square
meters; Lot 2, with 16,777 square meters; Lot 3 with 1,583 square meters; and Lot 4, with 508 square meters.

On April 11, 1960, Lots No. 1 and 4 were conveyed by Rafael Galvez in favor of Filipina Mamaril, Cleopatra Llana, Regina Bustos, and Erlinda Balatbat
in a deed of sale which was inscribed as Entry No. 9115 OCT No. 0-381 on August 10, 1960. Consequently, Transfer Certificate No.

T-4304 was issued in favor of the buyers covering Lots No. 1 and 4.

Mamaril, et al. sold Lots No. 1 and 4 to Lepanto Consolidated Mining Company

Transfer Certificate No. T-4314 was issued in the name of Lepanto

Consolidated Mining Company as owner of Lots No. 1 and 4.

Order in Land Registration Case No. N-361 (LRC Record No. N-14012) entitled "Rafael Galvez, Applicant, Eliza Bustos, et al.,... Parties-In-Interest;
Republic of the Philippines, Movant" declaring OCT No. 0-381 of the Registry of Deeds for the Province of La Union issued in the name of Rafael
Galvez, null and void, and ordered the cancellation thereof.

Transfer Certificate of Title No. T-5710 was thus issued in favor of the petitioner which starting since then... exercised proprietary rights over Lots No. 1
and 4. The trial court in L. R. C. Case No. N-361 issued a writ of execution of the judgment which was served on the Register of Deeds, San Fernando,
La Union on April 29, 1974.

Twenty four long years thereafter, on January 14, 1999, the Office of the Solicitor General received a letter dated January 11, 1999 from Mr. Victor G.
Floresca, Vice-President, John Hay Poro Point Development Corporation, stating that the aforementioned orders and decision of... the trial court in L. R.
C. No. N-361 have not been executed by the Register of Deeds, San Fernando, La Union despite receipt of the writ of execution.

Office of the Solicitor General filed a complaint for revival of judgment and cancellation of titles before the Regional Trial Court of the First Judicial
Region (Branch 26, San Fernando, La Union) docketed therein as Civil Case No. 6346 entitled,... "Republic of the Philippines, Plaintiff, versus Heirs of
Rafael Galvez, represented by Teresita Tan, Reynaldo Mamaril, Elisa Bustos, Erlinda Balatbat, Regina Bustos, Shipside Incorporated and the Register of
Deeds of La Union, Defendants."

(a) Shipside Inc. which is presently the registered owner in fee simple of Lots No. 1 and 4 covered by TCT No. T-5710, with a total area of 7,079 square
meters; (b) Elisa Bustos, Jesusito Galvez, and Teresita Tan who are the registered owners of Lot No. 2 of OCT No. 0-381;and (c) Elisa

Bustos, Filipina Mamaril, Regina Bustos and Erlinda Balatbat who are the registered owners of Lot No. 3 of OCT No. 0-381, now covered by TCT No.
T-4916, with an area of 1,583 square meters.

the defendants-successors-in-interest of

Rafael Galvez have no valid title over the property covered by OCT No. 0-381, and the subsequent Torrens titles issued in their names should be
consequently cancelled.
Shipside, Inc. filed its Motion to Dismiss

(1) the real party-in-interest is the Republic of the Philippines;and (2) prescription does not run against the State.

trial court denied petitioner's motion to dismiss... etitioner instituted a petition for certiorari and prohibition with the Court of Appeals

Issues:

The issues posited in this case are: (1) whether or not an authorization from petitioner's Board of Directors is still required in order for its resident
manager to institute or commence a legal action for and in behalf of the corporation; and (2) whether or not the Republic of... the Philippines can
maintain the action for revival of judgment herein.

Ruling:

signing of documents, can be performed only by natural persons duly authorized for the purpose by corporate by-laws or by a specific act of the board of
directors.

However, subsequent to such dismissal, petitioner filed a motion for reconsideration, attaching to said motion a certificate issued by its board secretary
stating that on October 11, 1999, or ten days prior to the filing of the... petition, Balbin had been authorized by petitioner's board of directors to file said
petition.

Verification is simply intended to secure an assurance that the allegations in the pleading are true and correct and not the product of the imagination or a
matter of speculation, and that the pleading is filed in good... faith. The court may order the correction of the pleading if verification is lacking or act on
the pleading although it is not verified, if the attending circumstances are such that strict compliance with the rules may be dispensed with in order that
the ends of justice may... thereby be served.

With more reason should we allow the instant petition since petitioner herein did submit a certification on non-forum shopping, failing only to show
proof that the signatory... was authorized to do so. That petitioner subsequently submitted a secretary's certificate attesting that Balbin was authorized to
file an action on behalf of petitioner likewise mitigates this oversight.

Section 6, Rule 39 provides that a final and executory judgment or order may be executed on motion within five (5) years from the date of its entry, but
that after the... lapse of such time, and before it is barred by the statute of limitations, a judgment may be enforced by action. Taking these two provisions
into consideration, it is plain that an action for revival of judgment must be brought within ten years from the time said judgment... becomes final.

action is barred by extinctive prescription considering that such an action can be instituted only within ten (10) years from the time the cause of action
accrues.

While Camp Wallace may have belonged to the government at the time Rafael Galvez's title was... ordered cancelled in Land Registration Case No. N-
361, the same no longer holds true today.

With the transfer of Camp Wallace to the BCDA, the government no longer has a right or interest to protect. Consequently, the Republic is not a real
party in interest and it may not institute the instant action. Nor may it raise the defense of imprescriptibility, the same being... applicable only in cases
where the government is a party in interest.

Section 5. Powers of the Conversion Authority. -- To carry out its objectives under this Act, the Conversion Authority is hereby vested with the
following powers:

(a) To succeed in its corporate name, to sue and be sued in such corporate name and to adopt, alter and use a corporate seal which shall be judicially
noticed;

BCDA which may file an action to cancel petitioner's title, not the Republic, the former being the real party in interest.

Principles:

governed by Article 1144(3) of the Civil Code and Section 6, Rule 39 of the 1997 Rules on Civil Procedure. Article 1144(3) provides that an action upon
a judgment

"must be brought within 10 years from the time the right of action accrues."

G.R. No. 110526 February 10, 1998

ASSOCIATION OF PHILIPPINE COCONUT DESICCATORS, petitioner, vs. PHILIPPINE COCONUT AUTHORITY, respondent.

MENDOZA, J.:

At issue in this case is the validity of a resolution, dated March 24, 1993, of the Philippine Coconut Authority in which it declares that it will no longer
require those wishing to engage in coconut processing to apply to it for a license or permit as a condition for engaging in such business.

Petitioner Association of Philippine Coconut Desiccators (hereafter referred to as APCD) brought this suit for certiorari and mandamus against
respondent Philippine Coconut Authority (PCA) to invalidate the latter's Board Resolution No. 018-93 and the certificates of registration issued under it
on the ground that the resolution in question is beyond the power of the PCA to adopt, and to compel said administrative agency to comply instead with
the mandatory provisions of statutes regulating the desiccated coconut industry, in particular, and the coconut industry, in general.

As disclosed by the parties' pleadings, the facts are as follows:

On November 5, 1992, seven desiccated coconut processing companies belonging to the APCD brought suit in the Regional Trial Court, National Capital
Judicial Region in Makati, Metro Manila, to enjoin the PCA from issuing permits to certain applicants for the establishment of new desiccated coconut
processing plants. Petitioner alleged that the issuance of licenses to the applicants would violate PCA's Administrative Order No. 02, series of 1991, as
the applicants were seeking permits to operate in areas considered "congested" under the administrative order.1
On November 6, 1992, the trial court issued a temporary restraining order and, on November 25, 1992, a writ of preliminary injunction, enjoining the
PCA from processing and issuing licenses to Primex Products, Inc., Coco Manila, Superstar (Candelaria) and Superstar (Davao) upon the posting of a
bond in the amount of P100,000.00.2

Subsequently and while the case was pending in the Regional Trial Court, the Governing Board of the PCA issued on March 24, 1993 Resolution No.
018-93, providing for the withdrawal of the Philippine Coconut Authority from all regulation of the coconut product processing industry. While it
continues the registration of coconut product processors, the registration would be limited to the "monitoring" of their volumes of production and
administration of quality standards. The full text of the resolution reads:

RESOLUTION NO. 018-93

POLICY DECLARATION DEREGULATING

THE ESTABLISHMENT OF NEW COCONUT

PROCESSING PLANTS

WHEREAS, it is the policy of the State to promote free enterprise unhampered by protective regulations and unnecessary bureaucratic red tapes;

WHEREAS, the deregulation of certain sectors of the coconut industry, such as marketing of coconut oils pursuant to Presidential Decree No. 1960, the
lifting of export and commodity clearances under Executive Order No. 1016, and relaxation of regulated capacity for the desiccated coconut sector
pursuant to Presidential Memorandum of February 11, 1988, has become a centerpiece of the present dispensation;

WHEREAS, the issuance of permits or licenses prior to business operation is a form of regulation which is not provided in the charter of nor included
among the powers of the PCA;

WHEREAS, the Governing Board of PCA has determined to follow and further support the deregulation policy and effort of the government to promote
free enterprise;

NOW THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED, that, henceforth, PCA shall no longer require any coconut oil mill, coconut
oil refinery, coconut desiccator, coconut product processor/factory, coconut fiber plant or any similar coconut processing plant to apply with PCA and the
latter shall no longer issue any form of license or permit as condition prior to establishment or operation of such mills or plants;

RESOLVED, FURTHER, that the PCA shall limit itself only to simply registering the aforementioned coconut product processors for the purpose of
monitoring their volumes of production, administration of quality standards with the corresponding service fees/charges.

ADOPTED this 24th day of March 1993, at Quezon City.3

The PCA then proceeded to issue "certificates of registration" to those wishing to operate desiccated coconut processing plants, prompting petitioner to
appeal to the Office of the President of the Philippines on April 26, 1993 not to approve the resolution in question. Despite follow-up letters sent on May
25 and June 2, 1993, petitioner received no reply from the Office of the President. The "certificates of registration" issued in the meantime by the PCA
has enabled a number of new coconut mills to operate. Hence this petition.

Petitioner alleges:

I RESPONDENT PCA'S BOARD RESOLUTION NO. 018-93 IS NULL AND VOID FOR BEING AN UNDUE EXERCISE OF LEGISLATIVE
POWER BY AN ADMINISTRATIVE BODY.

II ASIDE FROM BEING ULTRA-VIRES, BOARD RESOLUTION NO. 018-93 IS WITHOUT ANY BASIS, ARBITRARY, UNREASONABLE AND
THEREFORE IN VIOLATION OF SUBSTANTIVE DUE PROCESS OF LAW.

III IN PASSING BOARD RESOLUTION NO. 018-93, RESPONDENT PCA VIOLATED THE PROCEDURAL DUE PROCESS REQUIREMENT OF
CONSULTATION PROVIDED IN PRESIDENTIAL DECREE NO. 1644, EXECUTIVE ORDER NO. 826 AND PCA ADMINISTRATIVE ORDER
NO. 002, SERIES OF 1991.

On the other hand, in addition to answering petitioner's arguments, respondent PCA alleges that this petition should be denied on the ground that
petitioner has a pending appeal before the Office of the President. Respondent accuses petitioner of forum-shopping in filing this petition and of failing to
exhaust available administrative remedies before coming to this Court. Respondent anchors its argument on the general rule that one who brings an
action under Rule 65 must show that one has no appeal nor any plain, speedy, and adequate remedy in the ordinary course of law.

I.The rule of requiring exhaustion of administrative remedies before a party may seek judicial review, so strenuously urged by the Solicitor General on
behalf of respondent, has obviously no application here. The resolution in question was issued by the PCA in the exercise of its rule-making or legislative
power. However, only judicial review of decisions of administrative agencies made in the exercise of their quasi-judicial function is subject to the
exhaustion doctrine. The exhaustion doctrine stands as a bar to an action which is not yet complete4 and it is clear, in the case at bar, that after its
promulgation the resolution of the PCA abandoning regulation of the desiccated coconut industry became effective. To be sure, the PCA is under the
direct supervision of the President of the Philippines but there is nothing in P.D. No. 232, P.D. No. 961, P.D. No. 1468 and P.D. No. 1644 defining the
powers and functions of the PCA which requires rules and regulations issued by it to be approved by the President before they become effective.

In any event, although the APCD has appealed the resolution in question to the Office of the President, considering the fact that two months after they
had sent their first letter on April 26, 1993 they still had to hear from the President's office, meanwhile respondent PCA was issuing certificates of
registration indiscriminately to new coconut millers, we hold that petitioner was justified in filing this case on June 25, 1993.5 Indeed, after writing the
Office of the President on April 26, 19936 petitioner sent inquiries to that office not once, but twice, on May 26, 19937 and on June 2, 1993,8 but
petitioner did not receive any reply.

II. We now turn to the merit of the present petition. The Philippine Coconut Authority was originally created by P.D. 232 on June 30, 1973, to take over
the powers and functions of the Coconut Coordinating Council, the Philippine Coconut Administration and the Philippine Coconut Research Institute. On
June 11, 1978, by P.D. No. 1468, it was made "an independent public corporation . . . directly reporting to, and supervised by, the President of the
Philippines,"9 and charged with carrying out the State's policy "to promote the rapid integrated development and growth of the coconut and other palm
oil industry in all its aspects and to ensure that the coconut farmers become direct participants in, and beneficiaries of, such development and growth."10
through a regulatory scheme set up by law.11

Through this scheme, the government, on August 28, 1982, temporarily prohibited the opening of new coconut processing plants and, four months later,
phased out some of the existing ones in view of overproduction in the coconut industry which resulted in cut-throat competition, underselling and
smuggling of poor quality products and ultimately in the decline of the export performance of coconut-based commodities. The establishment of new
plants could be authorized only upon determination by the PCA of the existence of certain economic conditions and the approval of the President of the
Philippines. Thus, Executive Order No. 826, dated August 28, 1982, provided:

Sec. 1. Prohibition. — Except as herein provided, no government agency or instrumentality shall hereafter authorize, approve or grant any permit or
license for the establishment or operation of new desiccated coconut processing plants, including the importation of machinery or equipment for the
purpose. In the event of a need to establish a new plant, or expand the capacity, relocate or upgrade the efficiencies of any existing desiccated plant, the
Philippine Coconut Authority may, upon proper determination of such need and evaluation of the condition relating to:

a. the existing market demand;

b. the production capacity prevailing in the country or locality;

c. the level and flow of raw materials; and

d. other circumstances which may affect the growth or viability of the industry concerned,

authorize or grant the application for, the establishment or expansion of capacity, relocation or upgrading of efficiencies of such desiccated coconut
processing plant, subject to the approval of the President.

On December 6, 1982, a phase-out of some of the existing plants was ordered by the government after finding that "a mere freeze in the present capacity
of existing plants will not afford a viable solution to the problem considering that the total available limited market is not adequate to support all the
existing processing plants, making it imperative to reduce the number of existing processing plants."12 Accordingly, it was ordered:13

Sec. 1. The Philippine Coconut Authority is hereby ordered to take such action as may be necessary to reduce the number of existing desiccated coconut
processing plants to a level which will insure the survival of the remaining plants. The Authority is hereby directed to determine which of the existing
processing plants should be phased out and to enter into appropriate contracts with such plants for the above purpose.

It was only on October 23, 1987 when the PCA adopted Resolution No. 058-87, authorizing the establishment and operation of additional DCN plants, in
view of the increased demand for desiccated coconut products in the world's markets, particularly in Germany, the Netherlands and Australia. Even then,
the opening of new plants was made subject to "such implementing guidelines to be set forth by the Authority" and "subject to the final approval of the
President."

The guidelines promulgated by the PCA, as embodied in Administrative Order No. 002, series of 1991, inter alia authorized the opening of new plants in
"non-congested areas only as declared by the PCA" and subject to compliance by applicants with "all procedures and requirements for registration under
Administrative Order No. 003, series of 1981 and this Order." In addition, as the opening of new plants was premised on the increased global demand for
desiccated coconut products, the new entrants were required to submit sworn statements of the names and addresses of prospective foreign buyers.

This form of "deregulation" was approved by President Aquino in her memorandum, dated February 11, 1988, to the PCA. Affirming the regulatory
scheme, the President stated in her memorandum:

It appears that pursuant to Executive Order No. 826 providing measures for the protection of the Desiccated Coconut Industry, the Philippine Coconut
Authority evaluated the conditions relating to: (a) the existing market demands; (b) the production capacity prevailing in the country or locality; (c) the
level and flow of raw materials; and (d) other circumstances which may affect the growth or viability of the industry concerned and that the result of such
evaluation favored the expansion of production and market of desiccated coconut products.

In view hereof and the favorable recommendation of the Secretary of Agriculture, the deregulation of the Desiccated Coconut Industry as recommended
in Resolution No. 058-87 adopted by the PCA Governing Board on October 28, 1987 (sic) is hereby approved.14

These measures — the restriction in 1982 on entry into the field, the reduction the same year of the number of the existing coconut mills and then the
lifting of the restrictions in 1987 — were adopted within the framework of regulation as established by law "to promote the rapid integrated development
and growth of the coconut and other palm oil industry in all its aspects and to ensure that the coconut farmers become direct participants in, and
beneficiaries of, such development and growth." 15 Contrary to the assertion in the dissent, the power given to the Philippine Coconut Authority — and
before it to the Philippine Coconut Administration — "to formulate and adopt a general program of development for the coconut and other palm oils
industry"16 is not a roving commission to adopt any program deemed necessary to promote the development of the coconut and other palm oils industry,
but one to be exercised in the context of this regulatory structure.

In plain disregard of this legislative purpose, the PCA adopted on March 24, 1993 the questioned resolution which allows not only the indiscriminate
opening of new coconut processing plants but the virtual dismantling of the regulatory infrastructure whereby, forsaking controls theretofore placed in its
keeping, the PCA limits its function to the innocuous one of "monitoring" compliance by coconut millers with quality standards and volumes of
production. In effect, the PCA would simply be compiling statistical data on these matters, but in case of violations of standards there would be nothing
much it would do. The field would be left without an umpire who would retire to the bleachers to become a mere spectator. As the PCA provided in its
Resolution No. 018-93:

NOW, THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED, that, henceforth, PCA shall no longer require any coconut oil mill, coconut
oil refinery, coconut desiccator, coconut product processor/factory, coconut fiber plant or any similar coconut processing plant to apply with PCA and the
latter shall no longer issue any form of license or permit as condition prior to establishment or operation of such mills or plants;

RESOLVED, FURTHER, that the PCA shall limit itself only to simply registering the aforementioned coconut product processors for the purpose of
monitoring their volumes of production, administration of quality standards with the corresponding service fees/charges.
The issue is not whether the PCA has the power to adopt this resolution to carry out its mandate under the law "to promote the accelerated growth and
development of the coconut and other palm oil industry."17 The issue rather is whether it can renounce the power to regulate implicit in the law creating
it for that is what the resolution in question actually is.

Under Art. II, § 3(a) of the Revised Coconut Code (P.D. No. 1468), the role of the PCA is "To formulate and adopt a general program of development for
the coconut and other palm oil industry in all its aspects." By limiting the purpose of registration to merely "monitoring volumes of production [and]
administration of quality standards" of coconut processing plants, the PCA in effect abdicates its role and leaves it almost completely to market forces
how the coconut industry will develop.

Art. II, § 3 of P.D. No. 1468 further requires the PCA:

(h) To regulate the marketing and the exportation of copra and its by-products by establishing standards for domestic trade and export and, thereafter, to
conduct an inspection of all copra and its by-products proposed for export to determine if they conform to the standards established;

Instead of determining the qualifications of market players and preventing the entry into the field of those who are unfit, the PCA now relies entirely on
competition — with all its wastefulness and inefficiency — to do the weeding out, in its naive belief in survival of the fittest. The result can very well be
a repeat of 1982 when free enterprise degenerated into a "free-for-all," resulting in cut-throat competition, underselling, the production of inferior
products and the like, which badly affected the foreign trade performance of the coconut industry.

Indeed, by repudiating its role in the regulatory scheme, the PCA has put at risk other statutory provisions, particularly those of P.D. No. 1644, to wit:

Sec. 1. The Philippine Coconut Authority shall have full power and authority to regulate the marketing and export of copra, coconut oil and their by-
products, in furtherance of the steps being taken to rationalize the coconut oil milling industry.

Sec. 2. In the exercise of its powers under Section 1 hereof, the Philippine Coconut Authority may initiate and implement such measures as may be
necessary to attain the rationalization of the coconut oil milling industry, including, but not limited to, the following measures:

(a) Imposition of floor and/or ceiling prices for all exports of copra, coconut oil and their by-products;

(b) Prescription of quality standards;

(c) Establishment of maximum quantities for particular periods and particular markets;

(d) Inspection and survey of export shipments through an independent international superintendent or surveyor.

In the exercise of its powers hereunder, the Philippine Coconut Authority shall consult with, and be guided by, the recommendation of the coconut
farmers, through corporations owned or controlled by them through the Coconut Industry Investment Fund and the private corporation authorized to be
organized under Letter of Instructions No. 926.

and the Revised Coconut Code (P.D. No. 1468), Art. II, § 3, to wit:

(m) Except in respect of entities owned or controlled by the Government or by the coconut farmers under Sections 9 and 10, Article III hereof, the
Authority shall have full power and authority to regulate the production, distribution and utilization of all subsidized coconut-based products, and to
require the submission of such reports or documents as may be deemed necessary by the Authority to ascertain whether the levy payments and/or subsidy
claims are due and correct and whether the subsidized products are distributed among, and utilized by, the consumers authorized by the Authority.

The dissent seems to be saying that in the same way that restrictions on entry into the field were imposed in 1982 and then relaxed in 1987, they can be
totally lifted now without prejudice to reimposing them in the future should it become necessary to do so. There is really no renunciation of the power to
regulate, it is claimed. Trimming down of PCA's function to registration is not an abdication of the power to regulate but is regulation itself. But how can
this be done when, under Resolution No. 018-93, the PCA no longer requires a license as condition for the establishment or operation of a plant? If a
number of processing firms go to areas which are already congested, the PCA cannot stop them from doing so. If there is overproduction, the PCA
cannot order a cut back in their production. This is because the licensing system is the mechanism for regulation. Without it the PCA will not be able to
regulate coconut plants or mills.

In the first "whereas" clause of the questioned resolution as set out above, the PCA invokes a policy of free enterprise that is "unhampered by protective
regulations and unnecessary bureaucratic red tape" as justification for abolishing the licensing system. There can be no quarrel with the elimination of
"unnecessary red tape." That is within the power of the PCA to do and indeed it should eliminate red tape. Its success in doing so will be applauded. But
free enterprise does not call for removal of "protective regulations."

Our Constitutions, beginning with the 1935 document, have repudiated laissez-faire as an economic principle.18 Although the present Constitution
enshrines free enterprise as a policy,19 it nonetheless reserves to the government the power to intervene whenever necessary to promote the general
welfare. This is clear from the following provisions of Art. XII of the Constitution which, so far as pertinent, state:

Sec. 6. . . . Individuals and private groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own,
establish, and operate economic enterprises, subject to the duty of the State to promote distributive justice and to intervene when the common good so
demands.

Sec. 19. The State shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or unfair competition
shall be allowed. (Emphasis added).

At all events, any change in policy must be made by the legislative department of the government. The regulatory system has been set up by law. It is
beyond the power of an administrative agency to dismantle it. Indeed, petitioner charges the PCA of seeking to render moot a case filed by some of its
members questioning the grant of licenses to certain parties by adopting the resolution in question. It is alleged that members of petitioner complained to
the court that the PCA had authorized the establishment and operation of new plants in areas which were already crowded, in violation of its
Administrative Order No. 002, series of 1991. In response, the Regional Trial Court issued a writ of preliminary injunction, enjoining the PCA from
issuing licenses to the private respondent in that case.
These allegations of petitioner have not been denied here. It would thus seem that instead of defending its decision to allow new entrants into the field
against petitioner's claim that the PCA decision violated the guidelines in Administrative Order No. 002, series of 1991, the PCA adopted the resolution
in question to render the case moot. In so doing, the PCA abdicated its function of regulation and left the field to untrammeled competition that is likely
to resurrect the evils of cut-throat competition, underselling and overproduction which in 1982 required the temporary closing of the field to new players
in order to save the industry.

The PCA cannot rely on the memorandum of then President Aquino for authority to adopt the resolution in question. As already stated, what President
Aquino approved in 1988 was the establishment and operation of new DCN plants subject to the guidelines to be drawn by the PCA.20 In the first place,
she could not have intended to amend the several laws already mentioned, which set up the regulatory system, by a mere memoranda to the PCA. In the
second place, even if that had been her intention, her act would be without effect considering that, when she issued the memorandum in question on
February 11, 1988, she was no longer vested with legislative authority.21

WHEREFORE, the petition is GRANTED. PCA Resolution No. 018-93 and all certificates of registration issued under it are hereby declared NULL and
VOID for having been issued in excess of the power of the Philippine Coconut Authority to adopt or issue.

SO ORDERED.

Narvasa, C.J., Regalado, Davide, Jr., Puno, Kapunan, Francisco, Panganiban and Martinez, JJ., concur.

CASE DIGEST

Association of Philippine Coconut Desiccators v. PCA

G.R. No. 110526 February 10, 1998

Mendoza, J.

Facts: PCA was created by PD 232 as independent public corporation to promote the rapid integrated development and growth of the coconut and other
palm oil industry in all its aspects and to ensure that coconut farmers become direct participants in, and beneficiaries of, such development and growth
through a regulatory scheme set up by law. PCA is also in charge of the issuing of licenses to would-be coconut plant operators. On 24 March 1993,
however, PCA issued Board Resolution No. 018-93 which no longer require those wishing to engage in coconut processing to apply for licenses as a
condition for engaging in such business. The purpose of which is to promote free enterprise unhampered by protective regulations and unnecessary
bureaucratic red tapes. But this caused cut-throat competition among operators specifically in congested areas, underselling, smuggling, and the decline
of coconut-based commodities. The APCD then filed a petition for mandamus to compel PCA to revoke BR No. 018-93.

Issue: whether or not PCA ran in conflict against the very nature of its creation

Held: Yes. Our Constitutions, beginning with the 1935 document, have repudiated laissez-faire as an economic principle. Although the present
Constitution enshrines free enterprise as a policy, it nonetheless reserves to the government the power to intervene whenever necessary to promote the
general welfare. As such, free enterprise does not call for the removal of “protective regulations” for the benefit of the general public. This is so because
under Art 12, Sec 6 and 9, it is very clear that the government reserves the power to intervene whenever necessary to promote the general welfare and
when the public interest so requires

G.R. No. L-32052 July 25, 1975

PHILIPPINE VIRGINIA TOBACCO ADMINISTRATION, petitioner, vs. COURT OF INDUSTRIAL RELATIONS

Gov’t. Corp. Counsel Leopoldo M. Abellera, Trial Attorneys Manuel M. Lazaro and Vicente Constantine, Jr., for petitioner.

Renato B. Kare and Simeon C. Sato for private respondents.

FERNANDO, J.:

The principal issue that calls for resolution in this appeal by certiorari from an order of respondent Court of Industrial Relations is one of constitutional
significance. It is concerned with the expanded role of government necessitated by the increased responsibility to provide for the general welfare. More
specifically, it deals with the question of whether petitioner, the Philippine Virginia Tobacco Administration, discharges governmental and not
proprietary functions. The landmark opinion of the then Justice, row Chief Justice, Makalintal in Agricultural Credit and Cooperative Financing
Administration v. Confederation of Unions in Government Corporations and offices, points the way to the right answer.1 It interpreted the then
fundamental law as hostile to the view of a limited or negative state. It is antithetical to the laissez faire concept. For as noted in an earlier decision, the
welfare state concept “is not alien to the philosophy of [the 1935] Constitution.”2 It is much more so under the present Charter, which is impressed with
an even more explicit recognition of social and economic rights.3 There is manifest, to recall Laski, “a definite increase in the profundity of the social
conscience,” resulting in “a state which seeks to realize more fully the common good of its members.”4 It does not necessarily follow, however, 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.5 We cannot
then grant the reversal sought. We affirm.

The facts are undisputed. On December 20, 1966, claimants, now private respondents, filed with respondent Court 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 in accordance with Commonwealth Act No. 444. Their prayer was for the differential between the amount actually paid to them and the
amount allegedly due them.6 There was an answer filed by petitioner Philippine Virginia Tobacco Administration denying the allegations and raising the
special defenses of lack of a cause of action and lack of jurisdiction.7 The issues were thereafter joined, and the case set for trial, with both parties
presenting their evidence.8 After the parties submitted the case for decision, the then Presiding Judge Arsenio T. Martinez of respondent Court 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. 9 There was a motion for reconsideration, but respondent Court en banc
denied the same. 10 Hence this petition for certiorari.
Petitioner Philippine Virginia Tobacco Administration, as had been noted, would predicate its plea for the reversal of the order complained of on the
basic proposition that 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. 11 While, to repeat, its submission as to the governmental character of its operation is to be given credence, it is not a
necessary consequence that respondent Court is devoid of jurisdiction. Nor could the challenged order be set aside on the additional argument that the
Eight-Hour Labor Law is not applicable to it. So it was, at the outset, made clear.

3. A reference to the enactments creating petitioner corporation suffices to demonstrate the merit of petitioner’s plea that it performs
governmental and not proprietary functions. As originally established by Republic Act No. 2265, 12 its purposes and objectives were set forth
thus: “(a) To promote the effective merchandising of Virginia tobacco in the domestic and foreign markets so that those engaged in the
industry will be placed on a basis of economic security; (b) To establish and maintain balanced production and consumption of Virginia
tobacco and its manufactured products, and such marketing conditions as will insure and stabilize the price of a level sufficient to cover the
cost of production plus reasonable profit both in the local as well as in the foreign market; (c) To create, establish, maintain, and operate
processing, warehousing and marketing facilities in suitable centers and supervise the selling and buying of Virginia tobacco so that the
farmers will enjoy reasonable prices that secure a fair return of their investments; (d) To prescribe rules and regulations governing the grading,
classifying, and inspecting of Virginia tobacco; and (e) To improve the living and economic conditions of the people engaged in the tobacco
industry.” 13 The amendatory statute, Republic Act No. 4155, 14 renders even more evident its nature as a governmental agency. Its first
section on the declaration of policy reads: “It is declared to be the national policy, with respect to the local Virginia tobacco industry, to
encourage the production of local Virginia tobacco of the qualities needed and in quantities marketable in both domestic and foreign markets,
to establish this industry on an efficient and economic basis, and, to create a climate conducive to local cigarette manufacture of the qualities
desired by the consuming public, blending imported and native Virginia leaf tobacco to improve the quality of locally manufactured
cigarettes.” 15 The objectives are set forth thus: “To attain this national policy the following objectives are hereby adopted: 1. Financing; 2.
Marketing; 3. The disposal of stocks of the Agricultural Credit Administration (ACA) and the Philippine Virginia Tobacco Administration
(PVTA) at the best obtainable prices and conditions in order that a reinvigorated Virginia tobacco industry may be established on a sound
basis; and 4. Improving the quality of locally manufactured cigarettes through blending of imported and native Virginia leaf tobacco; such
importation with corresponding exportation at a ratio of one kilo of imported to four kilos of exported Virginia tobacco, purchased by the
importer-exporter from the Philippine Virginia Tobacco Administration.” 16

It is thus readily apparent from a cursory perusal of such statutory provisions why petitioner can rightfully invoke the doctrine announced in the leading
Agricultural Credit and Cooperative Financing Administration decision 17 and why the objection of private respondents with its overtones of the
distinction between constituent and ministrant functions of governments as set forth in Bacani v. National Coconut Corporation 18 if futile. The
irrelevance of such a distinction considering the needs of the times was clearly pointed out by the present Chief Justice, who took note, speaking of the
reconstituted Agricultural Credit Administration, 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.” 19 Nonetheless, as he explained so persuasively: “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.” 20 Thus was laid to rest the doctrine in Bacani v.
National Coconut Corporation, 21 based on the Wilsonian classification of the tasks incumbent on government into constituent and ministrant in
accordance with the laissez faire principle. That concept, then dominant in economics, was carried into the governmental sphere, as noted in a textbook
on political science, 22 the first edition of which was published in 1898, its author being the then Professor, later American President, Woodrow Wilson.
He took pains to emphasize that what was categorized by him as constituent functions had its basis in a recognition of what was demanded by the
“strictest [concept of] laissez faire, [as they] are indeed the very bonds of society.” 23 The other functions he would minimize as ministrant or optional.

It is a matter of law that in the Philippines, the laissez faire principle hardly commanded the authoritative position which at one time it held in the United
States. As early as 1919, Justice Malcolm in Rubi v. Provincial Board 24 could affirm: “The doctrines of laissez faire and of unrestricted freedom of the
individual, as axioms of economic and political theory, are of the past. The modern period has shown a widespread belief in the amplest possible
demonstration of government activity.” 25 The 1935 Constitution, as was indicated earlier, continued that approach. As noted in Edu v. Ericta:26 “What
is more, to erase any doubts, the Constitutional Convention saw to it that the concept of laissez-faire was rejected. It entrusted to our government the
responsibility of coping with social and economic problems with the commensurate power of control over economic affairs. Thereby it could live up to
its commitment to promote the general welfare through state action.” 27 Nor did the opinion in Edu stop there: “To repeat, our Constitution which took
effect in 1935 erased whatever doubts there might be on that score. Its philosophy is a repudiation of laissez-faire. One of the leading members of the
Constitutional Convention, Manuel A. Roxas, later the first President of the Republic, made it clear when he disposed of the objection of Delegate Jose
Reyes of Sorsogon, who noted the “vast extensions in the sphere of governmental functions” and the “almost unlimited power to interfere in the affairs of
industry and agriculture as well as to compete with existing business” as “reflections of the fascination exerted by [the then] current tendencies’ in other
jurisdictions. He spoke thus: “My answer is that this constitution has a definite and well defined philosophy, not only political but social and
economic…. If in this Constitution the gentlemen will find declarations of economic policy they are there because they are necessary to safeguard the
interest and welfare of the Filipino people because we believe that the days have come when in self-defense, a nation may provide in its constitution
those safeguards, the patrimony, the freedom to grow, the freedom to develop national aspirations and national interests, not to be hampered by the
artificial boundaries which a constitutional provision automatically imposes.” 28

It would be then to reject what was so emphatically stressed in the Agricultural Credit Administration decision about which the observation was earlier
made that it reflected the philosophy of the 1935 Constitution and is even more in consonance with the expanded role of government accorded
recognition in the present Charter if the plea of petitioner that it discharges governmental function were not heeded. That path this Court is not prepared
to take. That would be to go backward, to retreat rather than to advance. Nothing can thus be clearer than that there is no constitutional obstacle to a
government pursuing lines of endeavor, formerly reserved for private enterprise. This is one way, in the language of Laski, by which through such
activities, “the harsh contract which [does] obtain between the levels of the rich and the poor” may be minimized. 29 It is a response to a trend noted by
Justice Laurel in Calalang v. Williams 30 for the humanization of laws and the promotion of the interest of all component elements of society so that
man’s innate aspirations, in what was so felicitously termed by the First Lady as “a compassionate society” be attained. 31
2. 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. So it was mentioned earlier. As far back as Tabora v. Montelibano, 32 this Court,
speaking through Justice Padilla, declared: The NARIC was established by the Government to protect the people against excessive or unreasonable rise
in the price of cereals by unscrupulous dealers. With that main objective there is no reason why its function should not be deemed governmental. The
Government owes its very existence to that aim and purpose — to protect the people.” 33 In a subsequent case, Naric Worker’s Union v. Hon. Alvendia,
34 decided four years later, this Court, relying on Philippine Association of Free Labor Unions v. Tan, 35 which specified the cases within the exclusive
jurisdiction of the Court of Industrial Relations, included among which is one that involves hours of employment under the Eight-Hour Labor Law, ruled
that it is precisely respondent Court and not ordinary courts that should pass upon that particular labor controversy. For Justice J. B. L. Reyes, the
ponente, the fact that there were judicial as well as administrative and executive pronouncements to the effect that the Naric was performing
governmental functions did not suffice to confer competence on the then respondent Judge to issue a preliminary injunction and to entertain a complaint
for damages, which as pointed out by the labor union, was connected with an unfair labor practice. This is emphasized by the dispositive portion of the
decision: “Wherefore, the restraining orders complained of, dated May 19, 1958 and May 27, 1958, are set aside, and the complaint is ordered dismissed,
without prejudice to the National Rice and Corn Corporation’s seeking whatever remedy it is entitled to in the Court of Industrial Relations.” 36 Then,
too, in a case involving petitioner itself, Philippine Virginia Tobacco Administration, 37 where the point in dispute was whether it was respondent Court
or a court of first instance that is possessed of competence in a declaratory relief petition for the interpretation of a collective bargaining agreement, one
that could readily be thought of as pertaining to the judiciary, the answer was that “unless the law speaks clearly and unequivocally, the choice should
fall on the Court of Industrial Relations.” 38 Reference to a number of decisions which recognized in the then respondent Court the jurisdiction to
determine labor controversies by government-owned or controlled corporations lends to support to such an approach. 39 Nor could it be explained only
on the assumption that proprietary rather than governmental functions did call for such a conclusion. It is to be admitted that such a view was not
previously bereft of plausibility. With the aforecited Agricultural Credit and Cooperative Financing Administration decision rendering obsolete the
Bacani doctrine, it has, to use a Wilsonian phrase, now lapsed into “innocuous desuetude.” 40 Respondent Court clearly was vested with jurisdiction.

3. The contention of petitioner that the Eight-Hour Labor Law 41 does not apply to it hardly deserves any extended consideration. There is an air of
casualness in the way such an argument was advanced in its petition for review as well as in its brief. In both pleadings, it devoted less than a full page to
its discussion. There is much to be said for brevity, but not in this case. Such a terse and summary treatment appears to be a reflection more of the
inherent weakness of the plea rather than the possession of an advocate’s enviable talent for concision. It did cite Section 2 of the Act, but its very
language leaves no doubt that “it shall apply to all persons employed in any industry or occupation, whether public or private … .” 42 Nor are private
respondents included among the employees who are thereby barred from enjoying the statutory benefits. It cited Marcelo v. Philippine National Red
Cross 43 and Boy Scouts of the Philippines v. Araos.44 Certainly, the activities to which the two above public corporations devote themselves can easily
be distinguished from that engaged in by petitioner. A reference to the pertinent sections of both Republic Acts 2265 and 2155 on which it relies to
obtain a ruling as to its governmental character should render 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.

WHEREFORE, the appealed Order of March 21, 1970 and the Resolution of respondent Court en banc of May 8, 1970 denying a motion for
reconsideration are hereby affirmed. The last sentence of the Order of March 21, 1970 reads as follows: “To find how much each of them [private
respondents] is entitled under this judgment, the Chief of the Examining Division, or any of his authorized representative, is hereby directed to make a
reexamination of records, papers and documents in the possession of respondent PVTA pertinent and proper under the premises and to submit his report
of his findings to the Court for further disposition thereof.” Accordingly, as provided by the New Labor Code, this case is referred to the National Labor
Relations Commission for further proceedings conformably to law. No costs.

CASE DIGEST

PHILIPPINE VIRGINIA TOBACCO ADMINISTRATION, petitioner, vs. COURT OF INDUSTRIAL RELATIONS, et al., respondents.

G.R. No L-32052

JULY 25, 1975

FACTS: Private respondents filed with the CIR a petition, alleging 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 in accordance with Commonwealth Act No. 444. Their prayer was for
the differential between the amount actually paid to them and the amount allegedly due them. Petitioner Philippine Virginia Tobacco Administration
denied the allegations. The then Presiding Judge Arsenio T. Martinez of respondent Court sustained 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. Petitioner claims that the matter is beyond the jurisdiction of the CIR as it is exercising governmental functions and that it is exempt
from the operation of C.A. 444, invoking the doctrine announced in the leading Agricultural Credit and Cooperative Financing Administration decision,
and the distinction between constituent and ministrant functions of governments as set forth in Bacani v. National Coconut Corporation.

ISSUE: WON the traditional classification of function of government as ministrant and constituent applicable in the case at bar.

HELD: No. The irrelevance of such a distinction considering the needs of the times was clearly pointed out by the present Chief Justice. 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.”

Nonetheless, as he explained so persuasively: “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.”

Thus was laid to rest the doctrine in Bacani v. National Coconut Corporation, based on the Wilsonian classification of the tasks incumbent on
government into constituent and ministrant in accordance with the laissez faire principle.
WHEREFORE, the appealed Order of March 21, 1970 and the Resolution of respondent Court, denying a motion for reconsideration are hereby
affirmed.
[G.R. No. L-9657. November 29, 1956.]

LEOPOLDO T. BACANI and MATEO A. MATOTO, Plaintiffs-Appellees, vs. NATIONAL COCONUT CORPORATION, ET AL.,
Defendants, NATIONAL COCONUT CORPORATION and BOARD OF LIQUIDATORS, Defendants-Appellants.

DECISION

BAUTISTA ANGELO, J.:

Plaintiffs herein are court stenographers assigned in Branch VI of the Court of First Instance of Manila. During the pendency of Civil Case No. 2293 of
said court, entitled 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 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.

Upon inspecting the books of this corporation, the Auditor General disallowed the payment of these fees and sought the recovery of the amounts paid. On
January 19, 1953, the Auditor General required the Plaintiffs to reimburse said amounts on the strength of a circular of the Department of Justice wherein
the opinion was expressed that the National Coconut Corporation, being a government entity, was exempt from the payment of the fees in question. On
February 6, 1954, the Auditor General issued an order directing the Cashier of the Department of Justice to deduct from the salary of Leopoldo T. Bacani
the amount of P25 every payday and from the salary of Mateo A. Matoto the amount of P10 every payday beginning March 30, 1954. To prevent
deduction of these fees from their salaries and secure a judicial ruling that the National Coconut Corporation is not a government entity within the
purview of section 16, Rule 130 of the Rules of Court, this action was instituted in the Court of First Instance of Manila.

Defendants set up as a defense that the National Coconut Corporation is a government entity within the purview of section 2 of the Revised
Administrative Code of 1917 and, hence, it is exempt from paying the stenographers’ fees under Rule 130 of the Rules of Court. After trial, the court
found for the Plaintiffs declaring (1) “that Defendant National Coconut Corporation is not a government entity within the purview of section 16, Rule
130 of the Rules of Court; chan roblesvirtualawlibrary(2) that the payments already made by said Defendant to Plaintiffs herein and received by the latter
from the former in the total amount of P714, for copies of the stenographic transcripts in question, are valid, just and legal; chan
roblesvirtualawlibraryand (3) that Plaintiffs are under no obligation whatsoever to make a refund of these payments already received by them.” This is an
appeal from said decision.

Under section 16, Rule 130 of the Rules of Court, the Government of the Philippines is exempt from paying the legal fees provided for therein, and
among these fees are those which stenographers may charge for the transcript of notes taken by them that may be requested by any interested person
(section 8). The fees in question are for the transcript of notes taken during the hearing of a case in which the National Coconut Corporation is interested,
and the transcript was requested by its assistant corporate counsel for the use of said corporation.

On the other hand, section 2 of the Revised Administrative Code defines the scope of the term “Government of the Republic of the Philippines” as
follows:chanroblesvirtuallawlibrary

“‘The Government of the Philippine Islands’ is a term which refers to the corporate governmental entity through which the functions of government are
exercised throughout the Philippine Islands, including, save as the contrary appears from the context, the various arms through which political authority
is made effective in said Islands, whether pertaining to the central Government or to the provincial or municipal branches or other form of local
government.”

The question now to be determined is whether the 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.

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. This requires a little digression on the nature and functions of our
government as instituted in our Constitution.

To begin with, we state that 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:chanroblesvirtuallawlibrary constitute and ministrant.
The former are those which constitute the very bonds of society and are compulsory in nature; chan roblesvirtualawlibrarythe latter are those that are
undertaken only by way of advancing the general interests of society, and are merely optional. President Wilson enumerates the constituent functions as
follows:chanroblesvirtuallawlibrary

“‘(1) The keeping of order and providing for the protection of persons and property from violence and robbery.

‘(2) The fixing of the legal relations between man and wife and between parents and children.

‘(3) The regulation of the holding, transmission, and interchange of property, and the determination of its liabilities for debt or for crime.

‘(4) The determination of contract rights between individuals.

‘(5) The definition and punishment of crime.

‘(6) The administration of justice in civil cases.

‘(7) The determination of the political duties, privileges, and relations of citizens.

‘(8) Dealings of the state with foreign powers:chanroblesvirtuallawlibrary the preservation of the state from external danger or encroachment and the
advancement of its international interests.’“ (Malcolm, The Government of the Philippine Islands, p. 19.)
The most important of the ministrant functions are:chanroblesvirtuallawlibrary public works, public education, public charity, health and safety
regulations, and regulations of trade and industry. The principles deter mining whether or not a government shall exercise certain of these optional
functions are:chanroblesvirtuallawlibrary (1) that a government should do for the public welfare those things which private capital would not naturally
undertake and (2) that a government should do these things which by its very nature it is better equipped to administer for the public welfare than is any
private individual or group of individuals. (Malcolm, The Government of the Philippine Islands, pp. 19-20.)

From the above we may infer that, strictly speaking, there are functions which our government is required to exercise to promote its objectives as
expressed in our Constitution and which are exercised by it as an attribute of sovereignty, and those which it may exercise to promote merely the welfare,
progress and prosperity of the people. To this latter class belongs the organization of those corporations owned or controlled by the government to
promote certain aspects of the economic life of our people such as the National Coconut Corporation. These are what we call government-owned or
controlled corporations which may take on the form of a private enterprise or one organized with powers and formal characteristics of a private
corporations under the Corporation Law.

The question that now arises is:chanroblesvirtuallawlibrary Does the fact that these corporation perform certain functions of government make them a
part of the Government of the Philippines?

The answer is simple:chanroblesvirtuallawlibrary they do not acquire that status 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. As this Court has aptly said, “The mere
fact that the Government happens to be a majority stockholder does not make it a public corporation” (National Coal Co. vs. Collector of Internal
Revenue, 46 Phil., 586-587). “By becoming a stockholder in the National Coal Company, the Government divested itself of its sovereign character so far
as respects the transactions of the corporation cralaw . Unlike the Government, the corporation may be sued without its consent, and is subject to
taxation. Yet the National Coal Company remains an agency or instrumentality of government.” (Government of the Philippine Islands vs. Springer, 50
Phil., 288.)

To recapitulate, we may mention that the term “Government of the Republic of the Philippines” used in section 2 of the Revised Administrative Code
refers only to that government entity through which the 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. 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.

“Public corporations are those formed or organized for the government of a portion of the State.” (Section 3, Republic Act No. 1459, Corporation Law).

“‘The generally accepted definition of a municipal corporation would only include organized cities and towns, and like organizations, with political and
legislative powers for the local, civil government and police regulations of the inhabitants of the particular district included in the boundaries of the
corporation.’ Heller vs. Stremmel, 52 Mo. 309, 312.”

“In its more general sense the phrase ‘municipal corporation’ may include both towns and counties, and other public corporations created by government
for political purposes. In its more common and limited signification, it embraces only incorporated villages, towns and cities. Dunn vs. Court of County
Revenues, 85 Ala. 144, 146, 4 So. 661.” (McQuillin, Municipal Corporations, 2nd ed., Vol. 1, p. 385.)

“We may, therefore, define a municipal corporation in its historical and strict sense to be the incorporation, by the authority of the government, of the
inhabitants of a particular place or district, and authorizing them in their corporate capacity to exercise subordinate specified powers of legislation and
regulation with respect to their local and internal concerns. This power of local government is the distinctive purpose and the distinguishing feature of a
municipal corporation proper.” (Dillon, Municipal Corporations, 5th ed., Vol. I, p. 59.)

It is true that under section 8, Rule 130, stenographers may only charge as fees P0.30 for each page of transcript of not less than 200 words before the
appeal is taken and P0.15 for each page after the filing of the appeal, but in this case the National Coconut Corporation has agreed and in fact has paid
P1.00 per page for the services rendered by the Plaintiffs and has not raised any objection to the amount paid until its propriety was disputed by the
Auditor General. The payment of the fees in question became therefore contractual and as such is valid even if it goes beyond the limit prescribed in
section 8, Rule 130 of the Rules of Court.

As regards the question of procedure raised by Appellants, suffice it to say that the same is insubstantial, considering that this case refers not to a money
claim disapproved by the Auditor General but to an action of prohibition the purpose of which is to restrain the officials concerned from deducting from
Plaintiffs’ salaries the amount paid to them as stenographers’ fees. This case does not come under section 1, Rule 45 of the Rules of Court relative to
appeals from a decision of the Auditor General.

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

Paras, C.J., Bengzon, Padilla, Montemayor, Labrador, Concepcion, Reyes, J. B. L., Endencia and Felix, JJ., concur.

CASE DIGEST

BACANI V NACOCO G.R. No. L-6957, November 29, 1956

FACTS: Herein petitioners are stenographers in Branch VI of the CIF Manila.

In a pending civil case where the public respondents are involved, they requested for the services of the stenographers and thereby paid them for the said
transcript at the rate of P1 per page, amounting to P714 in total.

However, upon inspecting the books of the corporation, the Auditor General disallowed the payment of such fees and sought for the recovery of the
amounts paid. Consequently, the AG required the petitioners to reimburse the amounts invoking that the National Coconut Corporation is a government
entity within the purview of section 2 of the Revised Administrative Code of 1917 which states that: “‘The Government of the Philippine Islands’ is a
term which refers to the corporate governmental entity through which the functions of government are exercised throughout the Philippine Islands,
including, save as the contrary appears from the context, the various arms through which political authority is made effective in said Islands, whether
pertaining to the central Government or to the provincial or municipal branches or other form of local government.”, hence, exempted from the payment
of the fees in question.

ISSUE: Whether the NCC is a government entity and is exempted from the payments in question?

RULING: The Court held No. Discussing, there are two-fold functions of the government namely: constituent and ministrant. The constituent function
refers to the bonds of society and are compulsory in nature, while ministrant is more on public welfare like public works, education, charity, health and
safety. From such, we may infer that there are functions which our government is required to exercise to promote its objectives as expressed in our
Constitution and which are exercised by it as an attribute of sovereignty, and those which it may exercise to promote merely the welfare, progress and
prosperity of the people.

The NCC has that function because the corporation promotes certain aspects of the economic life of the people. In short, NCC belongs to what we call
the government-owned and controlled corporation which is governed by Corporation Law.

Albeit the NCC performs governmental functions for the people’s welfare, 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.

To recapitulate, we may mention that the term “Government of the Republic of the Philippines” used in section 2 of the Revised Administrative Code
refers only to that government entity through which the 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.

Therefore, NCC is not a government entity and is not exempted from the payment of fees in question; petitioners are not subject to reimbursement.

Petition GRANTED.
G.R. No. 145951 August 12, 2003

PEOPLE OF THE PHILIPPINES, petitioner, vs. SANDIGANBAYAN (2ND DIV.), and JOSE S. RAMISCAL, JR., JULIAN ALZAGA, ATTY.
MANUEL SATUITO, ELIZABETH LIANG and JESUS GARCIA, respondents.

YNARES-SANTIAGO, J.:

Respondents Jose S. Ramiscal, Jr., Julian Alzaga, Manuel Satuito, Elizabeth Liang and Jesus Garcia were all charged with Malversation through
Falsification of Public Documents before the Sandiganbayan in Criminal Case No. 25741. The Information alleged that respondents misappropriated and
converted for their personal use the amount of P250,318,200.00 from the funds of the Armed Forces of the Philippines Retirement and Separation
Benefits System (AFP-RSBS).1

On November 12, 1999, respondent Ramiscal filed with the Sandiganbayan an "Urgent Motion to Declare Nullity of Information and to Defer Issuance
of Warrant of Arrest."2 He argued, inter alia, that the Sandiganbayan had no jurisdiction over the case because the AFP-RSBS is a private entity. The
said Urgent Motion was later adopted by respondents Alzaga and Satuito.

The Urgent Motion was denied by the Sandiganbayan in a Resolution promulgated on January 6, 2000.3 Respondents filed a Motion for Reconsideration.
In a Resolution issued on May 12, 2000, the Sandiganbayan sustained respondents' contention that the AFP-RSBS is a private entity. Hence, it
reconsidered its earlier Resolution and ordered the dismissal of Criminal Case No. 25741. Upon denial of its Motion for Reconsideration, the prosecution
filed the instant special civil action for certiorari anchored on the following grounds:

I RESPONDENT COURT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN
ISSUING THE RESOLUTION DATED MAY 9, 2000 INSOFAR AS IT DISMISSED THE CASE FOR LACK OF JURISDICTION.

II RESPONDENT COURT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF EXCESS OF JURISDICTION IN
DENYING PROSECUTION'S MOTION FOR RECONSIDERATION DATED JUNE 1, 2000, SUPPLEMENTAL MOTION FOR
RECONSIDERATION DATED JULY 10, 2000 AND SECOND SUPPLEMENTAL MOTION FOR RECONSIDERATION DATED MAY 12, 2000.4

Considering that the Resolution of the Sandiganbayan which dismissed Criminal Case No. 25741 was a final order which finally disposed of the case, the
proper remedy therefrom is a petition for review under Rule 45 of the 1997 Rules of Civil Procedure.5 Section 1 of said Rule 45 explicitly provides:

Filing of petition with Supreme Court. – A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the
Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review on
certiorari. The petition shall raise only questions of law which must be distinctly set forth.

Moreover, Section 7 of Presidential Decree No. 1606, as amended by Section 3 of Republic Act No. 7975, states:

Form, Finality and Enforcement of Decisions. –

Decisions and final orders of the Sandiganbayan shall be appealable to the Supreme Court by petition for review on certiorari raising pure questions of
law in accordance with Rule 45 of the Rules of Court.

Basic is the rule that a special civil action for certiorari under Rule 65 of the Rules may be availed of only where there is no appeal, or any plain, speedy,
and adequate remedy in the ordinary course of law.6 Certiorari cannot be availed of as a substitute for the lost remedy of an ordinary appeal.7

The foregoing rule, however, may be relaxed where the issue raised is one purely of law, where public interest is involved, and in case of urgency. In
such cases, certiorari is allowed notwithstanding the existence and availability of the remedy of appeal. Certiorari may also be availed of where an appeal
would be slow, inadequate and insufficient.8 If the strict application of the Rules will tend to frustrate rather than promote justice, it is always within our
power to suspend the rules, or except a particular case from its operation.9

We now come to the substantive issue of whether the AFP-RSBS is a government-owned or controlled corporation or a private corporation and,
corollarily, whether its funds are public or private. The Sandiganbayan based its ruling that the AFP-RSBS is a private entity on its findings that the
Government does not provide counterpart contribution to the System; that the employees of the AFP-RSBS do not receive any salary from the
Government and are not covered by the salary standardization law; that their remittances and contributions were made to the Social Security System and
not to the Government Service Insurance System; and that the contribution to the System of the sum of P200,000,000.00 under Presidential Decree 361
can not be deemed as equity of the government in the System but rather, a donation or "seed money" which was never increased thereafter.10

Generally, factual findings of the Sandiganbayan are conclusive on us. This rule, however, admits of exceptions, such as where: (1) the conclusion is a
finding grounded entirely on speculation, surmise and conjectures; (2) the inference made is manifestly mistaken; (3) there is grave abuse of discretion;
(4) the judgment is based on misapprehension of facts; and (5) the findings of fact of the Sandiganbayan are premised on a want of evidence and are
contradicted by evidence on record.11

The AFP-RSBS was created by Presidential Decree No. 361. Its purpose and functions are akin to those of the GSIS and the SSS, as in fact it is the
system that manages the retirement and pension funds of those in the military service. Members of the Armed Forces of the Philippines and the
Philippine National Police are expressly excluded from the coverage of The GSIS Act of 1997.12 Therefore, soldiers and military personnel, who are
incidentally employees of the Government, rely on the administration of the AFP-RSBS for their retirement, pension and separation benefits. For this
purpose, the law provides that the contribution by military officers and enlisted personnel to the System shall be compulsory, thus:

Officers and enlisted personnel in the active service shall contribute to the System an amount equivalent to four per cent (4%) of their monthly base and
longevity pay, which contribution shall be deducted from their pay from the Armed Forces of the Philippines and paid to the System: Provided, however,
That any officer or enlisted person who is due for compulsory retirement or is optionally retirable and actually elects to retire within one year from the
approval of this Act, shall no longer be required to contribute to the System: Provided, further, That any officer or enlisted person who is separated
through no fault of his own and is not eligible for either retirement or separation benefits shall upon his separation, be refunded in one lump sum all his
actual contributions to the System plus interest at the rate of four per cent (4%).13

Its enabling law further mandates that the System shall be administered by the Chief of Staff of the Armed Forces of the Philippines through an agency,
group, committee or board, which may be created and organized by him and subject to such rules and regulations governing the same as he may, subject
to the approval of the Secretary of National Defense, promulgate from time to time. Moreover, the investment of funds of the System shall be decided by
the Chief of Staff of the Armed Forces of the Philippines with the approval of the Secretary of National Defense.14

In connection with the Sandiganbayan's finding that the funds of the AFP-RSBS, except for the initial seed money, come entirely from contributions and
that no part thereof come from appropriations, Section 2 of P.D. 361 states:

SECTION 2. The System shall be funded as follows:

(a) Appropriations and contributions;

(b) Donations, gift, legacies, bequest and others to the System;

(c) All earnings of the System which shall not be subject to any tax whatsoever.

Indeed, the clear import of the above-quoted provision is that, while it may be true that there have been no appropriations for the contribution of funds to
the AFP-RSBS, the Government is not precluded from later on adding to the funds in order to provide additional benefits to the men in uniform.

The above considerations indicate that the character and operations of the AFP-RSBS are imbued with public interest. As such, we hold that the same is a
government entity and its funds are in the nature of public funds.

WHEREFORE, in view of the foregoing, the instant petition for certiorari is GRANTED. The assailed Resolution of the Sandiganbayan dated May 12,
2000 is ANNULLED and SET ASIDE. Criminal Case No. 25741 is ordered REINSTATED, and the Sandiganbayan is DIRECTED to resume
proceedings thereon with dispatch.

SO ORDERED.

Davide, Jr., C.J., Vitug, Carpio and Azcuna, JJ., concur.

CASE DIGEST

PEOPLE v. SANDIGANBAYAN, GR No. 145951, 2003-08-12

Facts: The Urgent Motion was denied by the Sandiganbayan in a Resolution promulgated on January 6, 2000.[3] Respondents filed a Motion for
Reconsideration. In a Resolution issued on May 12, 2000, the Sandiganbayan sustained respondents' contention that the

AFP-RSBS is a private entity. Hence, it reconsidered its earlier Resolution and ordered the dismissal of Criminal Case No. 25741. Upon denial of its
Motion for Reconsideration, the prosecution filed the instant special civil action for certiorari anchored on the following... grounds:

II SIDERATION DATED JUNE 1, 2000, SUPPLEMENTAL MOTION FOR RECONSIDERATION DATED JULY 10, 2000 AND SECOND SU

Filing of petition with Supreme Court. - A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the
Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the

Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth.

whether the AFP-RSBS is a government-owned or controlled corporation or a private corporation and, corollarily, whether its funds are public or private.

AFP-RSBS is a government-owned or controlled corporation or a private corporation and, corollarily, whether its funds are public or private.

Issues: whether the AFP-RSBS is a government-owned or controlled corporation or a private corporation and, corollarily, whether its funds are public or
private... whether the AFP-RSBS is a government-owned or controlled corporation or a private corporation and, corollarily, whether its funds are public
or private.

Ruling: Filing of petition with Supreme Court. - A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of
Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the

Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth.
G.R. No. 155650 July 20, 2006

MANILA INTERNATIONAL AIRPORT AUTHORITY, petitioner, vs. COURT OF APPEALS, CITY OF PARAÑAQUE, CITY MAYOR OF
PARAÑAQUE, SANGGUNIANG PANGLUNGSOD NG PARAÑAQUE, CITY ASSESSOR OF PARAÑAQUE, and CITY TREASURER OF
PARAÑAQUE, respondents.

DECISION

CARPIO, J.:

The Antecedents

Petitioner Manila International Airport Authority (MIAA) operates the Ninoy Aquino International Airport (NAIA) Complex in Parañaque City under
Executive Order No. 903, otherwise known as the Revised Charter of the Manila International Airport Authority ("MIAA Charter"). Executive Order No.
903 was issued on 21 July 1983 by then President Ferdinand E. Marcos. Subsequently, Executive Order Nos. 9091 and 2982 amended the MIAA
Charter.

As operator of the international airport, MIAA administers the land, improvements and equipment within the NAIA Complex. The MIAA Charter
transferred to MIAA approximately 600 hectares of land,3 including the runways and buildings ("Airport Lands and Buildings") then under the Bureau
of Air Transportation.4 The MIAA Charter further provides that no portion of the land transferred to MIAA shall be disposed of through sale or any other
mode unless specifically approved by the President of the Philippines.5

On 21 March 1997, the Office of the Government Corporate Counsel (OGCC) issued Opinion No. 061. The OGCC opined that the Local Government
Code of 1991 withdrew the exemption from real estate tax granted to MIAA under Section 21 of the MIAA Charter. Thus, MIAA negotiated with
respondent City of Parañaque to pay the real estate tax imposed by the City. MIAA then paid some of the real estate tax already due.

On 28 June 2001, MIAA received Final Notices of Real Estate Tax Delinquency from the City of Parañaque for the taxable years 1992 to 2001. MIAA's
real estate tax delinquency is broken down as follows:

TAX DECLARATION TAXABLE YEAR TAX DUE PENALTY TOTAL

E-016-01370 1992-2001 19,558,160.00 11,201,083.20 30,789,243.20
E-016-01374 1992-2001 111,689,424.90 68,149,479.59 179,838,904.49
E-016-01375 1992-2001 20,276,058.00 12,371,832.00 32,647,890.00
E-016-01376 1992-2001 58,144,028.00 35,477,712.00 93,621,740.00
E-016-01377 1992-2001 18,134,614.65 11,065,188.59 29,199,803.24
E-016-01378 1992-2001 111,107,950.40 67,794,681.59 178,902,631.99
E-016-01379 1992-2001 4,322,340.00 2,637,360.00 6,959,700.00
E-016-01380 1992-2001 7,776,436.00 4,744,944.00 12,521,380.00
*E-016-013-85 1998-2001 6,444,810.00 2,900,164.50 9,344,974.50
*E-016-01387 1998-2001 34,876,800.00 5,694,560.00 50,571,360.00
*E-016-01396 1998-2001 75,240.00 33,858.00 109,098.00
GRAND TOTAL P392,435,861.95 P232,070,863.47 P 624,506,725.42

On 17 July 2001, the City of Parañaque, through its City Treasurer, issued notices of levy and warrants of levy on the Airport Lands and Buildings. The
Mayor of the City of Parañaque threatened to sell at public auction the Airport Lands and Buildings should MIAA fail to pay the real estate tax
delinquency. MIAA thus sought a clarification of OGCC Opinion No. 061.

On 9 August 2001, the OGCC issued Opinion No. 147 clarifying OGCC Opinion No. 061. The OGCC pointed out that Section 206 of the Local
Government Code requires persons exempt from real estate tax to show proof of exemption. The OGCC opined that Section 21 of the MIAA Charter is
the proof that MIAA is exempt from real estate tax.

On 1 October 2001, MIAA filed with the Court of Appeals an original petition for prohibition and injunction, with prayer for preliminary injunction or
temporary restraining order. The petition sought to restrain the City of Parañaque from imposing real estate tax on, levying against, and auctioning for
public sale the Airport Lands and Buildings. The petition was docketed as CA-G.R. SP No. 66878.

On 5 October 2001, the Court of Appeals dismissed the petition because MIAA filed it beyond the 60-day reglementary period. The Court of Appeals
also denied on 27 September 2002 MIAA's motion for reconsideration and supplemental motion for reconsideration. Hence, MIAA filed on 5 December
2002 the present petition for review.7

Meanwhile, in January 2003, the City of Parañaque posted notices of auction sale at the Barangay Halls of Barangays Vitalez, Sto. Niño, and Tambo,
Parañaque City; in the public market of Barangay La Huerta; and in the main lobby of the Parañaque City Hall. The City of Parañaque published the
notices in the 3 and 10 January 2003 issues of the Philippine Daily Inquirer, a newspaper of general circulation in the Philippines. The notices announced
the public auction sale of the Airport Lands and Buildings to the highest bidder on 7 February 2003, 10:00 a.m., at the Legislative Session Hall Building
of Parañaque City.

A day before the public auction, or on 6 February 2003, at 5:10 p.m., MIAA filed before this Court an Urgent Ex-Parte and Reiteratory Motion for the
Issuance of a Temporary Restraining Order. The motion sought to restrain respondents — the City of Parañaque, City Mayor of Parañaque, Sangguniang
Panglungsod ng Parañaque, City Treasurer of Parañaque, and the City Assessor of Parañaque ("respondents") — from auctioning the Airport Lands and
Buildings.

On 7 February 2003, this Court issued a temporary restraining order (TRO) effective immediately. The Court ordered respondents to cease and desist
from selling at public auction the Airport Lands and Buildings. Respondents received the TRO on the same day that the Court issued it. However,
respondents received the TRO only at 1:25 p.m. or three hours after the conclusion of the public auction.

On 10 February 2003, this Court issued a Resolution confirming nunc pro tunc the TRO.

On 29 March 2005, the Court heard the parties in oral arguments. In compliance with the directive issued during the hearing, MIAA, respondent City of
Parañaque, and the Solicitor General subsequently submitted their respective Memoranda.

MIAA admits that the MIAA Charter has placed the title to the Airport Lands and Buildings in the name of MIAA. However, MIAA points out that it
cannot claim ownership over these properties since the real owner of the Airport Lands and Buildings is the Republic of the Philippines. The MIAA
Charter mandates MIAA to devote the Airport Lands and Buildings for the benefit of the general public. Since the Airport Lands and Buildings are
devoted to public use and public service, the ownership of these properties remains with the State. The Airport Lands and Buildings are thus inalienable
and are not subject to real estate tax by local governments.

MIAA also points out that Section 21 of the MIAA Charter specifically exempts MIAA from the payment of real estate tax. MIAA insists that it is also
exempt from real estate tax under Section 234 of the Local Government Code because the Airport Lands and Buildings are owned by the Republic. To
justify the exemption, MIAA invokes the principle that the government cannot tax itself. MIAA points out that the reason for tax exemption of public
property is that its taxation would not inure to any public advantage, since in such a case the tax debtor is also the tax creditor.

Respondents invoke Section 193 of the Local Government Code, which expressly withdrew the tax exemption privileges of "government-owned and-
controlled corporations" upon the effectivity of the Local Government Code. Respondents also argue that a basic rule of statutory construction is that the
express mention of one person, thing, or act excludes all others. An international airport is not among the exceptions mentioned in Section 193 of the
Local Government Code. Thus, respondents assert that MIAA cannot claim that the Airport Lands and Buildings are exempt from real estate tax.

Respondents also cite the ruling of this Court in Mactan International Airport v. Marcos8 where we held that the Local Government Code has withdrawn
the exemption from real estate tax granted to international airports. Respondents further argue that since MIAA has already paid some of the real estate
tax assessments, it is now estopped from claiming that the Airport Lands and Buildings are exempt from real estate tax.

The Issue

This petition raises the threshold issue of whether the Airport Lands and Buildings of MIAA are exempt from real estate tax under existing laws. If so
exempt, then the real estate tax assessments issued by the City of Parañaque, and all proceedings taken pursuant to such assessments, are void. In such
event, the other issues raised in this petition become moot.

The Court's Ruling

We rule that MIAA's Airport Lands and Buildings are exempt from real estate tax imposed by local governments.

First, MIAA is not a government-owned or controlled corporation but an instrumentality of the National Government and thus exempt from local
taxation. Second, the real properties of MIAA are owned by the Republic of the Philippines and thus exempt from real estate tax.

1. MIAA is Not a Government-Owned or Controlled Corporation

Respondents argue that MIAA, being a government-owned or controlled corporation, is not exempt from real estate tax. Respondents claim that the
deletion of the phrase "any government-owned or controlled so exempt by its charter" in Section 234(e) of the Local Government Code withdrew the real
estate tax exemption of government-owned or controlled corporations. The deleted phrase appeared in Section 40(a) of the 1974 Real Property Tax Code
enumerating the entities exempt from real estate tax.

There is no dispute that a government-owned or controlled corporation is not exempt from real estate tax. However, MIAA is not a government-owned or
controlled corporation. Section 2(13) of the Introductory Provisions of the Administrative Code of 1987 defines a government-owned or controlled
corporation as follows:

SEC. 2. General Terms Defined. – x x x x

(13) Government-owned or controlled corporation refers to any agency organized as a stock or non-stock corporation, vested with functions relating to
public needs whether governmental or proprietary in nature, and owned by the Government directly or through its instrumentalities either wholly, or,
where applicable as in the case of stock corporations, to the extent of at least fifty-one (51) percent of its capital stock: x x x. (Emphasis supplied)

A government-owned or controlled corporation must be "organized as a stock or non-stock corporation." MIAA is not organized as a stock or non-stock
corporation. MIAA is not a stock corporation because it has no capital stock divided into shares. MIAA has no stockholders or voting shares. Section 10
of the MIAA Charter9 provides:

SECTION 10. Capital. — The capital of the Authority to be contributed by the National Government shall be increased from Two and One-half Billion
(P2,500,000,000.00) Pesos to Ten Billion (P10,000,000,000.00) Pesos to consist of:

(a) The value of fixed assets including airport facilities, runways and equipment and such other properties, movable and immovable[,] which may be
contributed by the National Government or transferred by it from any of its agencies, the valuation of which shall be determined jointly with the
Department of Budget and Management and the Commission on Audit on the date of such contribution or transfer after making due allowances for
depreciation and other deductions taking into account the loans and other liabilities of the Authority at the time of the takeover of the assets and other
properties;

(b) That the amount of P605 million as of December 31, 1986 representing about seventy percentum (70%) of the unremitted share of the National
Government from 1983 to 1986 to be remitted to the National Treasury as provided for in Section 11 of E. O. No. 903 as amended, shall be converted
into the equity of the National Government in the Authority. Thereafter, the Government contribution to the capital of the Authority shall be provided in
the General Appropriations Act.

Clearly, under its Charter, MIAA does not have capital stock that is divided into shares.

Section 3 of the Corporation Code10 defines a stock corporation as one whose "capital stock is divided into shares and x x x authorized to distribute to
the holders of such shares dividends x x x." MIAA has capital but it is not divided into shares of stock. MIAA has no stockholders or voting shares.
Hence, MIAA is not a stock corporation.

MIAA is also not a non-stock corporation because it has no members. Section 87 of the Corporation Code defines a non-stock corporation as "one where
no part of its income is distributable as dividends to its members, trustees or officers." A non-stock corporation must have members. Even if we assume
that the Government is considered as the sole member of MIAA, this will not make MIAA a non-stock corporation. Non-stock corporations cannot
distribute any part of their income to their members. Section 11 of the MIAA Charter mandates MIAA to remit 20% of its annual gross operating income
to the National Treasury.11 This prevents MIAA from qualifying as a non-stock corporation.

Section 88 of the Corporation Code provides that non-stock corporations are "organized for charitable, religious, educational, professional, cultural,
recreational, fraternal, literary, scientific, social, civil service, or similar purposes, like trade, industry, agriculture and like chambers." MIAA is not
organized for any of these purposes. MIAA, a public utility, is organized to operate an international and domestic airport for public use.

Since MIAA is neither a stock nor a non-stock corporation, MIAA does not qualify as a government-owned or controlled corporation. What then is the
legal status of MIAA within the National Government?

MIAA is a government instrumentality vested with corporate powers to perform efficiently its governmental functions. MIAA is like any other
government instrumentality, the only difference is that MIAA is vested with corporate powers. Section 2(10) of the Introductory Provisions of the
Administrative Code defines a government "instrumentality" as follows:

SEC. 2. General Terms Defined. –– x x x x

(10) Instrumentality refers to any agency of the National Government, not integrated within the department framework, vested with special functions or
jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy, usually through a
charter. x x x (Emphasis supplied)

When the law vests in a government instrumentality corporate powers, the instrumentality does not become a corporation. Unless the government
instrumentality is organized as a stock or non-stock corporation, it remains a government instrumentality exercising not only governmental but also
corporate powers. Thus, MIAA exercises the governmental powers of eminent domain,12 police authority13 and the levying of fees and charges.14 At
the same time, MIAA exercises "all the powers of a corporation under the Corporation Law, insofar as these powers are not inconsistent with the
provisions of this Executive Order."15

Likewise, when the law makes a government instrumentality operationally autonomous, the instrumentality remains part of the National Government
machinery although not integrated with the department framework. The MIAA Charter expressly states that transforming MIAA into a "separate and
autonomous body"16 will make its operation more "financially viable."17

Many government instrumentalities are vested with corporate powers but they do not become stock or non-stock corporations, which is a necessary
condition before an agency or instrumentality is deemed a government-owned or controlled corporation. Examples are the Mactan International Airport
Authority, the Philippine Ports Authority, the University of the Philippines and Bangko Sentral ng Pilipinas. All these government instrumentalities
exercise corporate powers but they are not organized as stock or non-stock corporations as required by Section 2(13) of the Introductory Provisions of the
Administrative Code. These government instrumentalities are sometimes loosely called government corporate entities. However, they are not
government-owned or controlled corporations in the strict sense as understood under the Administrative Code, which is the governing law defining the
legal relationship and status of government entities.

A government instrumentality like MIAA falls under Section 133(o) of the Local Government Code, which states:

SEC. 133. Common Limitations on the Taxing Powers of Local Government Units. – Unless otherwise provided herein, the exercise of the taxing powers
of provinces, cities, municipalities, and barangays shall not extend to the levy of the following:

xxxx

(o) Taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities and local government units.(Emphasis and
underscoring supplied)

Section 133(o) recognizes the basic principle that local governments cannot tax the national government, which historically merely delegated to local
governments the power to tax. While the 1987 Constitution now includes taxation as one of the powers of local governments, local governments may
only exercise such power "subject to such guidelines and limitations as the Congress may provide."18

When local governments invoke the power to tax on national government instrumentalities, such power is construed strictly against local governments.
The rule is that a tax is never presumed and there must be clear language in the law imposing the tax. Any doubt whether a person, article or activity is
taxable is resolved against taxation. This rule applies with greater force when local governments seek to tax national government instrumentalities.

Another rule is that a tax exemption is strictly construed against the taxpayer claiming the exemption. However, when Congress grants an exemption to a
national government instrumentality from local taxation, such exemption is construed liberally in favor of the national government instrumentality. As
this Court declared in Maceda v. Macaraig, Jr.:
The reason for the rule does not apply in the case of exemptions running to the benefit of the government itself or its agencies. In such case the practical
effect of an exemption is merely to reduce the amount of money that has to be handled by government in the course of its operations. For these reasons,
provisions granting exemptions to government agencies may be construed liberally, in favor of non tax-liability of such agencies.19

There is, moreover, no point in national and local governments taxing each other, unless a sound and compelling policy requires such transfer of public
funds from one government pocket to another.

There is also no reason for local governments to tax national government instrumentalities for rendering essential public services to inhabitants of local
governments. The only exception is when the legislature clearly intended to tax government instrumentalities for the delivery of essential public services
for sound and compelling policy considerations. There must be express language in the law empowering local governments to tax national government
instrumentalities. Any doubt whether such power exists is resolved against local governments.

Thus, Section 133 of the Local Government Code states that "unless otherwise provided" in the Code, local governments cannot tax national government
instrumentalities. As this Court held in Basco v. Philippine Amusements and Gaming Corporation:

The states have no power by taxation or otherwise, to retard, impede, burden or in any manner control the operation of constitutional laws enacted by
Congress to carry into execution the powers vested in the federal government. (MC Culloch v. Maryland, 4 Wheat 316, 4 L Ed. 579)

This doctrine emanates from the "supremacy" of the National Government over local governments.

"Justice Holmes, speaking for the Supreme Court, made reference to the entire absence of power on the part of the States to touch, in that way (taxation)
at least, the instrumentalities of the United States (Johnson v. Maryland, 254 US 51) and it can be agreed that no state or political subdivision can
regulate a federal instrumentality in such a way as to prevent it from consummating its federal responsibilities, or even to seriously burden it in the
accomplishment of them." (Antieau, Modern Constitutional Law, Vol. 2, p. 140, emphasis supplied)

Otherwise, mere creatures of the State can defeat National policies thru extermination of what local authorities may perceive to be undesirable activities
or enterprise using the power to tax as "a tool for regulation" (U.S. v. Sanchez, 340 US 42).

The power to tax which was called by Justice Marshall as the "power to destroy" (Mc Culloch v. Maryland, supra) cannot be allowed to defeat an
instrumentality or creation of the very entity which has the inherent power to wield it. 20

2. Airport Lands and Buildings of MIAA are Owned by the Republic

a. Airport Lands and Buildings are of Public Dominion

The Airport Lands and Buildings of MIAA are property of public dominion and therefore owned by the State or the Republic of the Philippines. The
Civil Code provides:

ARTICLE 419. Property is either of public dominion or of private ownership.

ARTICLE 420. The following things are property of public dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads, and others
of similar character;

(2) Those which belong to the State, without being for public use, and are intended for some public service or for the development of the national wealth.
(Emphasis supplied)

ARTICLE 421. All other property of the State, which is not of the character stated in the preceding article, is patrimonial property.

ARTICLE 422. Property of public dominion, when no longer intended for public use or for public service, shall form part of the patrimonial property of
the State.

No one can dispute that properties of public dominion mentioned in Article 420 of the Civil Code, like "roads, canals, rivers, torrents, ports and bridges
constructed by the State," are owned by the State. The term "ports" includes seaports and airports. The MIAA Airport Lands and Buildings constitute a
"port" constructed by the State. Under Article 420 of the Civil Code, the MIAA Airport Lands and Buildings are properties of public dominion and thus
owned by the State or the Republic of the Philippines.

The Airport Lands and Buildings are devoted to public use because they are used by the public for international and domestic travel and transportation.
The fact that the MIAA collects terminal fees and other charges from the public does not remove the character of the Airport Lands and Buildings as
properties for public use. The operation by the government of a tollway does not change the character of the road as one for public use. Someone must
pay for the maintenance of the road, either the public indirectly through the taxes they pay the government, or only those among the public who actually
use the road through the toll fees they pay upon using the road. The tollway system is even a more efficient and equitable manner of taxing the public for
the maintenance of public roads.

The charging of fees to the public does not determine the character of the property whether it is of public dominion or not. Article 420 of the Civil Code
defines property of public dominion as one "intended for public use." Even if the government collects toll fees, the road is still "intended for public use"
if anyone can use the road under the same terms and conditions as the rest of the public. The charging of fees, the limitation on the kind of vehicles that
can use the road, the speed restrictions and other conditions for the use of the road do not affect the public character of the road.

The terminal fees MIAA charges to passengers, as well as the landing fees MIAA charges to airlines, constitute the bulk of the income that maintains the
operations of MIAA. The collection of such fees does not change the character of MIAA as an airport for public use. Such fees are often termed user's
tax. This means taxing those among the public who actually use a public facility instead of taxing all the public including those who never use the
particular public facility. A user's tax is more equitable — a principle of taxation mandated in the 1987 Constitution.21

The Airport Lands and Buildings of MIAA, which its Charter calls the "principal airport of the Philippines for both international and domestic air
traffic,"22 are properties of public dominion because they are intended for public use. As properties of public dominion, they indisputably belong to the
State or the Republic of the Philippines.
b. Airport Lands and Buildings are Outside the Commerce of Man

The Airport Lands and Buildings of MIAA are devoted to public use and thus are properties of public dominion. As properties of public dominion, the
Airport Lands and Buildings are outside the commerce of man. The Court has ruled repeatedly that properties of public dominion are outside the
commerce of man. As early as 1915, this Court already ruled in Municipality of Cavite v. Rojas that properties devoted to public use are outside the
commerce of man, thus:

According to article 344 of the Civil Code: "Property for public use in provinces and in towns comprises the provincial and town roads, the squares,
streets, fountains, and public waters, the promenades, and public works of general service supported by said towns or provinces."

The said Plaza Soledad being a promenade for public use, the municipal council of Cavite could not in 1907 withdraw or exclude from public use a
portion thereof in order to lease it for the sole benefit of the defendant Hilaria Rojas. In leasing a portion of said plaza or public place to the defendant for
private use the plaintiff municipality exceeded its authority in the exercise of its powers by executing a contract over a thing of which it could not
dispose, nor is it empowered so to do.

The Civil Code, article 1271, prescribes that everything which is not outside the commerce of man may be the object of a contract, and plazas and streets
are outside of this commerce, as was decided by the supreme court of Spain in its decision of February 12, 1895, which says: "Communal things that
cannot be sold because they are by their very nature outside of commerce are those for public use, such as the plazas, streets, common lands, rivers,
fountains, etc." (Emphasis supplied) 23

Again in Espiritu v. Municipal Council, the Court declared that properties of public dominion are outside the commerce of man:

xxx Town plazas are properties of public dominion, to be devoted to public use and to be made available to the public in general. They are outside the
commerce of man and cannot be disposed of or even leased by the municipality to private parties. While in case of war or during an emergency, town
plazas may be occupied temporarily by private individuals, as was done and as was tolerated by the Municipality of Pozorrubio, when the emergency has
ceased, said temporary occupation or use must also cease, and the town officials should see to it that the town plazas should ever be kept open to the
public and free from encumbrances or illegal private constructions.24 (Emphasis supplied)

The Court has also ruled that property of public dominion, being outside the commerce of man, cannot be the subject of an auction sale.25

Properties of public dominion, being for public use, are not subject to levy, encumbrance or disposition through public or private sale. Any encumbrance,
levy on execution or auction sale of any property of public dominion is void for being contrary to public policy. Essential public services will stop if
properties of public dominion are subject to encumbrances, foreclosures and auction sale. This will happen if the City of Parañaque can foreclose and
compel the auction sale of the 600-hectare runway of the MIAA for non-payment of real estate tax.

Before MIAA can encumber26 the Airport Lands and Buildings, the President must first withdraw from public use the Airport Lands and Buildings.
Sections 83 and 88 of the Public Land Law or Commonwealth Act No. 141, which "remains to this day the existing general law governing the
classification and disposition of lands of the public domain other than timber and mineral lands,"27 provide:

SECTION 83. Upon the recommendation of the Secretary of Agriculture and Natural Resources, the President may designate by proclamation any tract
or tracts of land of the public domain as reservations for the use of the Republic of the Philippines or of any of its branches, or of the inhabitants thereof,
in accordance with regulations prescribed for this purposes, or for quasi-public uses or purposes when the public interest requires it, including
reservations for highways, rights of way for railroads, hydraulic power sites, irrigation systems, communal pastures or lequas communales, public parks,
public quarries, public fishponds, working men's village and other improvements for the public benefit.

SECTION 88. The tract or tracts of land reserved under the provisions of Section eighty-three shall be non-alienable and shall not be subject to
occupation, entry, sale, lease, or other disposition until again declared alienable under the provisions of this Act or by proclamation of the President.
(Emphasis and underscoring supplied)

Thus, unless the President issues a proclamation withdrawing the Airport Lands and Buildings from public use, these properties remain properties of
public dominion and are inalienable. Since the Airport Lands and Buildings are inalienable in their present status as properties of public dominion, they
are not subject to levy on execution or foreclosure sale. As long as the Airport Lands and Buildings are reserved for public use, their ownership remains
with the State or the Republic of the Philippines.

The authority of the President to reserve lands of the public domain for public use, and to withdraw such public use, is reiterated in Section 14, Chapter
4, Title I, Book III of the Administrative Code of 1987, which states:

SEC. 14. Power to Reserve Lands of the Public and Private Domain of the Government. — (1) The President shall have the power to reserve for
settlement or public use, and for specific public purposes, any of the lands of the public domain, the use of which is not otherwise directed by law. The
reserved land shall thereafter remain subject to the specific public purpose indicated until otherwise provided by law or proclamation;

x x x x. (Emphasis supplied)

There is no question, therefore, that unless the Airport Lands and Buildings are withdrawn by law or presidential proclamation from public use, they are
properties of public dominion, owned by the Republic and outside the commerce of man.

c. MIAA is a Mere Trustee of the Republic

MIAA is merely holding title to the Airport Lands and Buildings in trust for the Republic. Section 48, Chapter 12, Book I of the Administrative Code
allows instrumentalities like MIAA to hold title to real properties owned by the Republic, thus:

SEC. 48. Official Authorized to Convey Real Property. — Whenever real property of the Government is authorized by law to be conveyed, the deed of
conveyance shall be executed in behalf of the government by the following:

(1) For property belonging to and titled in the name of the Republic of the Philippines, by the President, unless the authority therefor is expressly vested
by law in another officer.
(2) For property belonging to the Republic of the Philippines but titled in the name of any political subdivision or of any corporate agency or
instrumentality, by the executive head of the agency or instrumentality. (Emphasis supplied)

In MIAA's case, its status as a mere trustee of the Airport Lands and Buildings is clearer because even its executive head cannot sign the deed of
conveyance on behalf of the Republic. Only the President of the Republic can sign such deed of conveyance.28

d. Transfer to MIAA was Meant to Implement a Reorganization

The MIAA Charter, which is a law, transferred to MIAA the title to the Airport Lands and Buildings from the Bureau of Air Transportation of the
Department of Transportation and Communications. The MIAA Charter provides:

SECTION 3. Creation of the Manila International Airport Authority. — x x x x

The land where the Airport is presently located as well as the surrounding land area of approximately six hundred hectares, are hereby transferred,
conveyed and assigned to the ownership and administration of the Authority, subject to existing rights, if any. The Bureau of Lands and other appropriate
government agencies shall undertake an actual survey of the area transferred within one year from the promulgation of this Executive Order and the
corresponding title to be issued in the name of the Authority. Any portion thereof shall not be disposed through sale or through any other mode unless
specifically approved by the President of the Philippines. (Emphasis supplied)

SECTION 22. Transfer of Existing Facilities and Intangible Assets. — All existing public airport facilities, runways, lands, buildings and other property,
movable or immovable, belonging to the Airport, and all assets, powers, rights, interests and privileges belonging to the Bureau of Air Transportation
relating to airport works or air operations, including all equipment which are necessary for the operation of crash fire and rescue facilities, are hereby
transferred to the Authority. (Emphasis supplied)

SECTION 25. Abolition of the Manila International Airport as a Division in the Bureau of Air Transportation and Transitory Provisions. — The Manila
International Airport including the Manila Domestic Airport as a division under the Bureau of Air Transportation is hereby abolished.

x x x x.

The MIAA Charter transferred the Airport Lands and Buildings to MIAA without the Republic receiving cash, promissory notes or even stock since
MIAA is not a stock corporation.

The whereas clauses of the MIAA Charter explain the rationale for the transfer of the Airport Lands and Buildings to MIAA, thus:

WHEREAS, the Manila International Airport as the principal airport of the Philippines for both international and domestic air traffic, is required to
provide standards of airport accommodation and service comparable with the best airports in the world;

WHEREAS, domestic and other terminals, general aviation and other facilities, have to be upgraded to meet the current and future air traffic and other
demands of aviation in Metro Manila;

WHEREAS, a management and organization study has indicated that the objectives of providing high standards of accommodation and service within
the context of a financially viable operation, will best be achieved by a separate and autonomous body; and

WHEREAS, under Presidential Decree No. 1416, as amended by Presidential Decree No. 1772, the President of the Philippines is given continuing
authority to reorganize the National Government, which authority includes the creation of new entities, agencies and instrumentalities of the
Government[.] (Emphasis supplied)

The transfer of the Airport Lands and Buildings from the Bureau of Air Transportation to MIAA was not meant to transfer beneficial ownership of these
assets from the Republic to MIAA. The purpose was merely to reorganize a division in the Bureau of Air Transportation into a separate and autonomous
body. The Republic remains the beneficial owner of the Airport Lands and Buildings. MIAA itself is owned solely by the Republic. No party claims any
ownership rights over MIAA's assets adverse to the Republic.

The MIAA Charter expressly provides that the Airport Lands and Buildings "shall not be disposed through sale or through any other mode unless
specifically approved by the President of the Philippines." This only means that the Republic retained the beneficial ownership of the Airport Lands and
Buildings because under Article 428 of the Civil Code, only the "owner has the right to x x x dispose of a thing." Since MIAA cannot dispose of the
Airport Lands and Buildings, MIAA does not own the Airport Lands and Buildings.

At any time, the President can transfer back to the Republic title to the Airport Lands and Buildings without the Republic paying MIAA any
consideration. Under Section 3 of the MIAA Charter, the President is the only one who can authorize the sale or disposition of the Airport Lands and
Buildings. This only confirms that the Airport Lands and Buildings belong to the Republic.

e. Real Property Owned by the Republic is Not Taxable

Section 234(a) of the Local Government Code exempts from real estate tax any "[r]eal property owned by the Republic of the Philippines." Section
234(a) provides:

SEC. 234. Exemptions from Real Property Tax. — The following are exempted from payment of the real property tax:

(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted,
for consideration or otherwise, to a taxable person;

x x x. (Emphasis supplied)

This exemption should be read in relation with Section 133(o) of the same Code, which prohibits local governments from imposing "[t]axes, fees or
charges of any kind on the National Government, its agencies and instrumentalities x x x." The real properties owned by the Republic are titled either in
the name of the Republic itself or in the name of agencies or instrumentalities of the National Government. The Administrative Code allows real property
owned by the Republic to be titled in the name of agencies or instrumentalities of the national government. Such real properties remain owned by the
Republic and continue to be exempt from real estate tax.
The Republic may grant the beneficial use of its real property to an agency or instrumentality of the national government. This happens when title of the
real property is transferred to an agency or instrumentality even as the Republic remains the owner of the real property. Such arrangement does not result
in the loss of the tax exemption. Section 234(a) of the Local Government Code states that real property owned by the Republic loses its tax exemption
only if the "beneficial use thereof has been granted, for consideration or otherwise, to a taxable person." MIAA, as a government instrumentality, is not a
taxable person under Section 133(o) of the Local Government Code. Thus, even if we assume that the Republic has granted to MIAA the beneficial use
of the Airport Lands and Buildings, such fact does not make these real properties subject to real estate tax.

However, portions of the Airport Lands and Buildings that MIAA leases to private entities are not exempt from real estate tax. For example, the land area
occupied by hangars that MIAA leases to private corporations is subject to real estate tax. In such a case, MIAA has granted the beneficial use of such
land area for a consideration to a taxable person and therefore such land area is subject to real estate tax. In Lung Center of the Philippines v. Quezon
City, the Court ruled:

Accordingly, we hold that the portions of the land leased to private entities as well as those parts of the hospital leased to private individuals are not
exempt from such taxes. On the other hand, the portions of the land occupied by the hospital and portions of the hospital used for its patients, whether
paying or non-paying, are exempt from real property taxes.29

3. Refutation of Arguments of Minority

The minority asserts that the MIAA is not exempt from real estate tax because Section 193 of the Local Government Code of 1991 withdrew the tax
exemption of "all persons, whether natural or juridical" upon the effectivity of the Code. Section 193 provides:

SEC. 193. Withdrawal of Tax Exemption Privileges – Unless otherwise provided in this Code, tax exemptions or incentives granted to, or presently
enjoyed by all persons, whether natural or juridical, including government-owned or controlled corporations, except local water districts, cooperatives
duly registered under R.A. No. 6938, non-stock and non-profit hospitals and educational institutions are hereby withdrawn upon effectivity of this Code.
(Emphasis supplied)

The minority states that MIAA is indisputably a juridical person. The minority argues that since the Local Government Code withdrew the tax exemption
of all juridical persons, then MIAA is not exempt from real estate tax. Thus, the minority declares:

It is evident from the quoted provisions of the Local Government Code that the withdrawn exemptions from realty tax cover not just GOCCs, but all
persons. To repeat, the provisions lay down the explicit proposition that the withdrawal of realty tax exemption applies to all persons. The reference to or
the inclusion of GOCCs is only clarificatory or illustrative of the explicit provision.

The term "All persons" encompasses the two classes of persons recognized under our laws, natural and juridical persons. Obviously, MIAA is not a
natural person. Thus, the determinative test is not just whether MIAA is a GOCC, but whether MIAA is a juridical person at all. (Emphasis and
underscoring in the original)

The minority posits that the "determinative test" whether MIAA is exempt from local taxation is its status — whether MIAA is a juridical person or not.
The minority also insists that "Sections 193 and 234 may be examined in isolation from Section 133(o) to ascertain MIAA's claim of exemption."

The argument of the minority is fatally flawed. Section 193 of the Local Government Code expressly withdrew the tax exemption of all juridical persons
"[u]nless otherwise provided in this Code." Now, Section 133(o) of the Local Government Code expressly provides otherwise, specifically prohibiting
local governments from imposing any kind of tax on national government instrumentalities. Section 133(o) states:

SEC. 133. Common Limitations on the Taxing Powers of Local Government Units. – Unless otherwise provided herein, the exercise of the taxing powers
of provinces, cities, municipalities, and barangays shall not extend to the levy of the following:

xxxx

(o) Taxes, fees or charges of any kinds on the National Government, its agencies and instrumentalities, and local government units. (Emphasis and
underscoring supplied)

By express mandate of the Local Government Code, local governments cannot impose any kind of tax on national government instrumentalities like the
MIAA. Local governments are devoid of power to tax the national government, its agencies and instrumentalities. The taxing powers of local
governments do not extend to the national government, its agencies and instrumentalities, "[u]nless otherwise provided in this Code" as stated in the
saving clause of Section 133. The saving clause refers to Section 234(a) on the exception to the exemption from real estate tax of real property owned by
the Republic.

The minority, however, theorizes that unless exempted in Section 193 itself, all juridical persons are subject to tax by local governments. The minority
insists that the juridical persons exempt from local taxation are limited to the three classes of entities specifically enumerated as exempt in Section 193.
Thus, the minority states:

x x x Under Section 193, the exemption is limited to (a) local water districts; (b) cooperatives duly registered under Republic Act No. 6938; and (c) non-
stock and non-profit hospitals and educational institutions. It would be belaboring the obvious why the MIAA does not fall within any of the exempt
entities under Section 193. (Emphasis supplied)

The minority's theory directly contradicts and completely negates Section 133(o) of the Local Government Code. This theory will result in gross
absurdities. It will make the national government, which itself is a juridical person, subject to tax by local governments since the national government is
not included in the enumeration of exempt entities in Section 193. Under this theory, local governments can impose any kind of local tax, and not only
real estate tax, on the national government.

Under the minority's theory, many national government instrumentalities with juridical personalities will also be subject to any kind of local tax, and not
only real estate tax. Some of the national government instrumentalities vested by law with juridical personalities are: Bangko Sentral ng Pilipinas,30
Philippine Rice Research Institute,31 Laguna Lake
Development Authority,32 Fisheries Development Authority,33 Bases Conversion Development Authority,34 Philippine Ports Authority,35 Cagayan de
Oro Port Authority,36 San Fernando Port Authority,37 Cebu Port Authority,38 and Philippine National Railways.39

The minority's theory violates Section 133(o) of the Local Government Code which expressly prohibits local governments from imposing any kind of tax
on national government instrumentalities. Section 133(o) does not distinguish between national government instrumentalities with or without juridical
personalities. Where the law does not distinguish, courts should not distinguish. Thus, Section 133(o) applies to all national government
instrumentalities, with or without juridical personalities. The determinative test whether MIAA is exempt from local taxation is not whether MIAA is a
juridical person, but whether it is a national government instrumentality under Section 133(o) of the Local Government Code. Section 133(o) is the
specific provision of law prohibiting local governments from imposing any kind of tax on the national government, its agencies and instrumentalities.

Section 133 of the Local Government Code starts with the saving clause "[u]nless otherwise provided in this Code." This means that unless the Local
Government Code grants an express authorization, local governments have no power to tax the national government, its agencies and instrumentalities.
Clearly, the rule is local governments have no power to tax the national government, its agencies and instrumentalities. As an exception to this rule, local
governments may tax the national government, its agencies and instrumentalities only if the Local Government Code expressly so provides.

The saving clause in Section 133 refers to the exception to the exemption in Section 234(a) of the Code, which makes the national government subject to
real estate tax when it gives the beneficial use of its real properties to a taxable entity. Section 234(a) of the Local Government Code provides:

SEC. 234. Exemptions from Real Property Tax – The following are exempted from payment of the real property tax:

(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted,
for consideration or otherwise, to a taxable person.

x x x. (Emphasis supplied)

Under Section 234(a), real property owned by the Republic is exempt from real estate tax. The exception to this exemption is when the government gives
the beneficial use of the real property to a taxable entity.

The exception to the exemption in Section 234(a) is the only instance when the national government, its agencies and instrumentalities are subject to any
kind of tax by local governments. The exception to the exemption applies only to real estate tax and not to any other tax. The justification for the
exception to the exemption is that the real property, although owned by the Republic, is not devoted to public use or public service but devoted to the
private gain of a taxable person.

The minority also argues that since Section 133 precedes Section 193 and 234 of the Local Government Code, the later provisions prevail over Section
133. Thus, the minority asserts:

x x x Moreover, sequentially Section 133 antecedes Section 193 and 234. Following an accepted rule of construction, in case of conflict the subsequent
provisions should prevail. Therefore, MIAA, as a juridical person, is subject to real property taxes, the general exemptions attaching to instrumentalities
under Section 133(o) of the Local Government Code being qualified by Sections 193 and 234 of the same law. (Emphasis supplied)

The minority assumes that there is an irreconcilable conflict between Section 133 on one hand, and Sections 193 and 234 on the other. No one has urged
that there is such a conflict, much less has any one presenteda persuasive argument that there is such a conflict. The minority's assumption of an
irreconcilable conflict in the statutory provisions is an egregious error for two reasons.

First, there is no conflict whatsoever between Sections 133 and 193 because Section 193 expressly admits its subordination to other provisions of the
Code when Section 193 states "[u]nless otherwise provided in this Code." By its own words, Section 193 admits the superiority of other provisions of the
Local Government Code that limit the exercise of the taxing power in Section 193. When a provision of law grants a power but withholds such power on
certain matters, there is no conflict between the grant of power and the withholding of power. The grantee of the power simply cannot exercise the power
on matters withheld from its power.

Second, Section 133 is entitled "Common Limitations on the Taxing Powers of Local Government Units." Section 133 limits the grant to local
governments of the power to tax, and not merely the exercise of a delegated power to tax. Section 133 states that the taxing powers of local governments
"shall not extend to the levy" of any kind of tax on the national government, its agencies and instrumentalities. There is no clearer limitation on the taxing
power than this.

Since Section 133 prescribes the "common limitations" on the taxing powers of local governments, Section 133 logically prevails over Section 193 which
grants local governments such taxing powers. By their very meaning and purpose, the "common limitations" on the taxing power prevail over the grant or
exercise of the taxing power. If the taxing power of local governments in Section 193 prevails over the limitations on such taxing power in Section 133,
then local governments can impose any kind of tax on the national government, its agencies and instrumentalities — a gross absurdity.

Local governments have no power to tax the national government, its agencies and instrumentalities, except as otherwise provided in the Local
Government Code pursuant to the saving clause in Section 133 stating "[u]nless otherwise provided in this Code." This exception — which is an
exception to the exemption of the Republic from real estate tax imposed by local governments — refers to Section 234(a) of the Code. The exception to
the exemption in Section 234(a) subjects real property owned by the Republic, whether titled in the name of the national government, its agencies or
instrumentalities, to real estate tax if the beneficial use of such property is given to a taxable entity.

The minority also claims that the definition in the Administrative Code of the phrase "government-owned or controlled corporation" is not controlling.
The minority points out that Section 2 of the Introductory Provisions of the Administrative Code admits that its definitions are not controlling when it
provides:

SEC. 2. General Terms Defined. — Unless the specific words of the text, or the context as a whole, or a particular statute, shall require a different
meaning:

xxxx

The minority then concludes that reliance on the Administrative Code definition is "flawed."
The minority's argument is a non sequitur. True, Section 2 of the Administrative Code recognizes that a statute may require a different meaning than that
defined in the Administrative Code. However, this does not automatically mean that the definition in the Administrative Code does not apply to the Local
Government Code. Section 2 of the Administrative Code clearly states that "unless the specific words x x x of a particular statute shall require a different
meaning," the definition in Section 2 of the Administrative Code shall apply. Thus, unless there is specific language in the Local Government Code
defining the phrase "government-owned or controlled corporation" differently from the definition in the Administrative Code, the definition in the
Administrative Code prevails.

The minority does not point to any provision in the Local Government Code defining the phrase "government-owned or controlled corporation"
differently from the definition in the Administrative Code. Indeed, there is none. The Local Government Code is silent on the definition of the phrase
"government-owned or controlled corporation." The Administrative Code, however, expressly defines the phrase "government-owned or controlled
corporation." The inescapable conclusion is that the Administrative Code definition of the phrase "government-owned or controlled corporation" applies
to the Local Government Code.

The third whereas clause of the Administrative Code states that the Code "incorporates in a unified document the major structural, functional and
procedural principles and rules of governance." Thus, the Administrative Code is the governing law defining the status and relationship of government
departments, bureaus, offices, agencies and instrumentalities. Unless a statute expressly provides for a different status and relationship for a specific
government unit or entity, the provisions of the Administrative Code prevail.

The minority also contends that the phrase "government-owned or controlled corporation" should apply only to corporations organized under the
Corporation Code, the general incorporation law, and not to corporations created by special charters. The minority sees no reason why government
corporations with special charters should have a capital stock. Thus, the minority declares:

I submit that the definition of "government-owned or controlled corporations" under the Administrative Code refer to those corporations owned by the
government or its instrumentalities which are created not by legislative enactment, but formed and organized under the Corporation Code through
registration with the Securities and Exchange Commission. In short, these are GOCCs without original charters.

xxxx

It might as well be worth pointing out that there is no point in requiring a capital structure for GOCCs whose full ownership is limited by its charter to
the State or Republic. Such GOCCs are not empowered to declare dividends or alienate their capital shares.

The contention of the minority is seriously flawed. It is not in accord with the Constitution and existing legislations. It will also result in gross
absurdities.

First, the Administrative Code definition of the phrase "government-owned or controlled corporation" does not distinguish between one incorporated
under the Corporation Code or under a special charter. Where the law does not distinguish, courts should not distinguish.

Second, Congress has created through special charters several government-owned corporations organized as stock corporations. Prime examples are the
Land Bank of the Philippines and the Development Bank of the Philippines. The special charter40 of the Land Bank of the Philippines provides:

SECTION 81. Capital. — The authorized capital stock of the Bank shall be nine billion pesos, divided into seven hundred and eighty million common
shares with a par value of ten pesos each, which shall be fully subscribed by the Government, and one hundred and twenty million preferred shares with a
par value of ten pesos each, which shall be issued in accordance with the provisions of Sections seventy-seven and eighty-three of this Code. (Emphasis
supplied)

Likewise, the special charter41 of the Development Bank of the Philippines provides:

SECTION 7. Authorized Capital Stock – Par value. — The capital stock of the Bank shall be Five Billion Pesos to be divided into Fifty Million common
shares with par value of P100 per share. These shares are available for subscription by the National Government. Upon the effectivity of this Charter, the
National Government shall subscribe to Twenty-Five Million common shares of stock worth Two Billion Five Hundred Million which shall be deemed
paid for by the Government with the net asset values of the Bank remaining after the transfer of assets and liabilities as provided in Section 30 hereof.
(Emphasis supplied)

Other government-owned corporations organized as stock corporations under their special charters are the Philippine Crop Insurance Corporation,42
Philippine International Trading Corporation,43 and the Philippine National Bank44 before it was reorganized as a stock corporation under the
Corporation Code. All these government-owned corporations organized under special charters as stock corporations are subject to real estate tax on real
properties owned by them. To rule that they are not government-owned or controlled corporations because they are not registered with the Securities and
Exchange Commission would remove them from the reach of Section 234 of the Local Government Code, thus exempting them from real estate tax.

Third, the government-owned or controlled corporations created through special charters are those that meet the two conditions prescribed in Section 16,
Article XII of the Constitution. The first condition is that the government-owned or controlled corporation must be established for the common good. The
second condition is that the government-owned or controlled corporation must meet the test of economic viability. Section 16, Article XII of the 1987
Constitution provides:

SEC. 16. The Congress shall not, except by general law, provide for the formation, organization, or regulation of private corporations. Government-
owned or controlled corporations may be created or established by special charters in the interest of the common good and subject to the test of economic
viability. (Emphasis and underscoring supplied)

The Constitution expressly authorizes the legislature to create "government-owned or controlled corporations" through special charters only if these
entities are required to meet the twin conditions of common good and economic viability. In other words, Congress has no power to create government-
owned or controlled corporations with special charters unless they are made to comply with the two conditions of common good and economic viability.
The test of economic viability applies only to government-owned or controlled corporations that perform economic or commercial activities and need to
compete in the market place. Being essentially economic vehicles of the State for the common good — meaning for economic development purposes —
these government-owned or controlled corporations with special charters are usually organized as stock corporations just like ordinary private
corporations.
In contrast, government instrumentalities vested with corporate powers and performing governmental or public functions need not meet the test of
economic viability. These instrumentalities perform essential public services for the common good, services that every modern State must provide its
citizens. These instrumentalities need not be economically viable since the government may even subsidize their entire operations. These
instrumentalities are not the "government-owned or controlled corporations" referred to in Section 16, Article XII of the 1987 Constitution.

Thus, the Constitution imposes no limitation when the legislature creates government instrumentalities vested with corporate powers but performing
essential governmental or public functions. Congress has plenary authority to create government instrumentalities vested with corporate powers provided
these instrumentalities perform essential government functions or public services. However, when the legislature creates through special charters
corporations that perform economic or commercial activities, such entities — known as "government-owned or controlled corporations" — must meet
the test of economic viability because they compete in the market place.

This is the situation of the Land Bank of the Philippines and the Development Bank of the Philippines and similar government-owned or controlled
corporations, which derive their income to meet operating expenses solely from commercial transactions in competition with the private sector. The
intent of the Constitution is to prevent the creation of government-owned or controlled corporations that cannot survive on their own in the market place
and thus merely drain the public coffers.

Commissioner Blas F. Ople, proponent of the test of economic viability, explained to the Constitutional Commission the purpose of this test, as follows:

MR. OPLE: Madam President, the reason for this concern is really that when the government creates a corporation, there is a sense in which this
corporation becomes exempt from the test of economic performance. We know what happened in the past. If a government corporation loses, then it
makes its claim upon the taxpayers' money through new equity infusions from the government and what is always invoked is the common good. That is
the reason why this year, out of a budget of P115 billion for the entire government, about P28 billion of this will go into equity infusions to support a few
government financial institutions. And this is all taxpayers' money which could have been relocated to agrarian reform, to social services like health and
education, to augment the salaries of grossly underpaid public employees. And yet this is all going down the drain.

Therefore, when we insert the phrase "ECONOMIC VIABILITY" together with the "common good," this becomes a restraint on future enthusiasts for
state capitalism to excuse themselves from the responsibility of meeting the market test so that they become viable. And so, Madam President, I reiterate,
for the committee's consideration and I am glad that I am joined in this proposal by Commissioner Foz, the insertion of the standard of "ECONOMIC
VIABILITY OR THE ECONOMIC TEST," together with the common good.45

Father Joaquin G. Bernas, a leading member of the Constitutional Commission, explains in his textbook The 1987 Constitution of the Republic of the
Philippines: A Commentary:

The second sentence was added by the 1986 Constitutional Commission. The significant addition, however, is the phrase "in the interest of the common
good and subject to the test of economic viability." The addition includes the ideas that they must show capacity to function efficiently in business and
that they should not go into activities which the private sector can do better. Moreover, economic viability is more than financial viability but also
includes capability to make profit and generate benefits not quantifiable in financial terms.46 (Emphasis supplied)

Clearly, the test of economic viability does not apply to government entities vested with corporate powers and performing essential public services. The
State is obligated to render essential public services regardless of the economic viability of providing such service. The non-economic viability of
rendering such essential public service does not excuse the State from withholding such essential services from the public.

However, government-owned or controlled corporations with special charters, organized essentially for economic or commercial objectives, must meet
the test of economic viability. These are the government-owned or controlled corporations that are usually organized under their special charters as stock
corporations, like the Land Bank of the Philippines and the Development Bank of the Philippines. These are the government-owned or controlled
corporations, along with government-owned or controlled corporations organized under the Corporation Code, that fall under the definition of
"government-owned or controlled corporations" in Section 2(10) of the Administrative Code.

The MIAA need not meet the test of economic viability because the legislature did not create MIAA to compete in the market place. MIAA does not
compete in the market place because there is no competing international airport operated by the private sector. MIAA performs an essential public
service as the primary domestic and international airport of the Philippines. The operation of an international airport requires the presence of personnel
from the following government agencies:

1. The Bureau of Immigration and Deportation, to document the arrival and departure of passengers, screening out those without visas or travel
documents, or those with hold departure orders;

2. The Bureau of Customs, to collect import duties or enforce the ban on prohibited importations;

3. The quarantine office of the Department of Health, to enforce health measures against the spread of infectious diseases into the country;

4. The Department of Agriculture, to enforce measures against the spread of plant and animal diseases into the country;

5. The Aviation Security Command of the Philippine National Police, to prevent the entry of terrorists and the escape of criminals, as well as to secure
the airport premises from terrorist attack or seizure;

6. The Air Traffic Office of the Department of Transportation and Communications, to authorize aircraft to enter or leave Philippine airspace, as well as
to land on, or take off from, the airport; and

7. The MIAA, to provide the proper premises — such as runway and buildings — for the government personnel, passengers, and airlines, and to manage
the airport operations.

All these agencies of government perform government functions essential to the operation of an international airport.

MIAA performs an essential public service that every modern State must provide its citizens. MIAA derives its revenues principally from the mandatory
fees and charges MIAA imposes on passengers and airlines. The terminal fees that MIAA charges every passenger are regulatory or administrative
fees47 and not income from commercial transactions.
MIAA falls under the definition of a government instrumentality under Section 2(10) of the Introductory Provisions of the Administrative Code, which
provides:

SEC. 2. General Terms Defined. – x x x x

(10) Instrumentality refers to any agency of the National Government, not integrated within the department framework, vested with special functions or
jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy, usually through a
charter. x x x (Emphasis supplied)

The fact alone that MIAA is endowed with corporate powers does not make MIAA a government-owned or controlled corporation. Without a change in
its capital structure, MIAA remains a government instrumentality under Section 2(10) of the Introductory Provisions of the Administrative Code. More
importantly, as long as MIAA renders essential public services, it need not comply with the test of economic viability. Thus, MIAA is outside the scope
of the phrase "government-owned or controlled corporations" under Section 16, Article XII of the 1987 Constitution.

The minority belittles the use in the Local Government Code of the phrase "government-owned or controlled corporation" as merely "clarificatory or
illustrative." This is fatal. The 1987 Constitution prescribes explicit conditions for the creation of "government-owned or controlled corporations." The
Administrative Code defines what constitutes a "government-owned or controlled corporation." To belittle this phrase as "clarificatory or illustrative" is
grave error.

To summarize, MIAA is not a government-owned or controlled corporation under Section 2(13) of the Introductory Provisions of the Administrative
Code because it is not organized as a stock or non-stock corporation. Neither is MIAA a government-owned or controlled corporation under Section 16,
Article XII of the 1987 Constitution because MIAA is not required to meet the test of economic viability. MIAA is a government instrumentality vested
with corporate powers and performing essential public services pursuant to Section 2(10) of the Introductory Provisions of the Administrative Code. As a
government instrumentality, MIAA is not subject to any kind of tax by local governments under Section 133(o) of the Local Government Code. The
exception to the exemption in Section 234(a) does not apply to MIAA because MIAA is not a taxable entity under the Local Government Code. Such
exception applies only if the beneficial use of real property owned by the Republic is given to a taxable entity.

Finally, the Airport Lands and Buildings of MIAA are properties devoted to public use and thus are properties of public dominion. Properties of public
dominion are owned by the State or the Republic. Article 420 of the Civil Code provides:

Art. 420. The following things are property of public dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads, and others
of similar character;

(2) Those which belong to the State, without being for public use, and are intended for some public service or for the development of the national wealth.
(Emphasis supplied)

The term "ports x x x constructed by the State" includes airports and seaports. The Airport Lands and Buildings of MIAA are intended for public use, and
at the very least intended for public service. Whether intended for public use or public service, the Airport Lands and Buildings are properties of public
dominion. As properties of public dominion, the Airport Lands and Buildings are owned by the Republic and thus exempt from real estate tax under
Section 234(a) of the Local Government Code.

4. Conclusion

Under Section 2(10) and (13) of the Introductory Provisions of the Administrative Code, which governs the legal relation and status of government units,
agencies and offices within the entire government machinery, MIAA is a government instrumentality and not a government-owned or controlled
corporation. Under Section 133(o) of the Local Government Code, MIAA as a government instrumentality is not a taxable person because it is not
subject to "[t]axes, fees or charges of any kind" by local governments. The only exception is when MIAA leases its real property to a "taxable person" as
provided in Section 234(a) of the Local Government Code, in which case the specific real property leased becomes subject to real estate tax. Thus, only
portions of the Airport Lands and Buildings leased to taxable persons like private parties are subject to real estate tax by the City of Parañaque.

Under Article 420 of the Civil Code, the Airport Lands and Buildings of MIAA, being devoted to public use, are properties of public dominion and thus
owned by the State or the Republic of the Philippines. Article 420 specifically mentions "ports x x x constructed by the State," which includes public
airports and seaports, as properties of public dominion and owned by the Republic. As properties of public dominion owned by the Republic, there is no
doubt whatsoever that the Airport Lands and Buildings are expressly exempt from real estate tax under Section 234(a) of the Local Government Code.
This Court has also repeatedly ruled that properties of public dominion are not subject to execution or foreclosure sale.

WHEREFORE, we GRANT the petition. We SET ASIDE the assailed Resolutions of the Court of Appeals of 5 October 2001 and 27 September 2002 in
CA-G.R. SP No. 66878. We DECLARE the Airport Lands and Buildings of the Manila International Airport Authority EXEMPT from the real estate tax
imposed by the City of Parañaque. We declare VOID all the real estate tax assessments, including the final notices of real estate tax delinquencies, issued
by the City of Parañaque on the Airport Lands and Buildings of the Manila International Airport Authority, except for the portions that the Manila
International Airport Authority has leased to private parties. We also declare VOID the assailed auction sale, and all its effects, of the Airport Lands and
Buildings of the Manila International Airport Authority.

No costs.

SO ORDERED.

CASE DIGEST

Manila International Airport Authority vs. Court of Appeals, Paranque City G.R. No. 155650 July 20, 2006

OCTOBER 6, 2017
FACTS: MIAA received Final Notices of Real Estate Tax Delinquency from the City of Parañaque for the taxable years 1992 to 2001. MIAA’s real
estate tax delinquency was estimated at P624 million.

The City of Parañaque, through its City Treasurer, issued notices of levy and warrants of levy on the Airport Lands and Buildings. The Mayor of the City
of Parañaque threatened to sell at public auction the Airport Lands and Buildings should MIAA fail to pay the real estate tax delinquency.

MIAA filed with the Court of Appeals an original petition for prohibition and injunction, with prayer for preliminary injunction or temporary restraining
order. The petition sought to restrain the City of Parañaque from imposing real estate tax on, levying against, and auctioning for public sale the Airport
Lands and Buildings.

Paranaque’s Contention: Section 193 of the Local Government Code expressly withdrew the tax exemption privileges of “government-owned and-
controlled corporations” upon the effectivity of the Local Government Code. Respondents also argue that a basic rule of statutory construction is that the
express mention of one person, thing, or act excludes all others. An international airport is not among the exceptions mentioned in Section 193 of the
Local Government Code. Thus, respondents assert that MIAA cannot claim that the Airport Lands and Buildings are exempt from real estate tax.

MIAA’s contention: Airport Lands and Buildings are owned by the Republic. The government cannot tax itself. The reason for tax exemption of public
property is that its taxation would not inure to any public advantage, since in such a case the tax debtor is also the tax creditor.

ISSUE:

Whether Airport Lands and Buildings of MIAA are exempt from real estate tax under existing laws?

RULING:

Yes. Ergo, the real estate tax assessments issued by the City of Parañaque, and all proceedings taken pursuant to such assessments, are void.

1. MIAA is Not a Government-Owned or Controlled Corporation

MIAA is not a government-owned or controlled corporation but an instrumentality of the National Government and thus exempt from local taxation.

MIAA is not a stock corporation because it has no capital stock divided into shares. MIAA has no stockholders or voting shares.

MIAA is also not a non-stock corporation because it has no members. A non-stock corporation must have members.

MIAA is a government instrumentality vested with corporate powers to perform efficiently its governmental functions. MIAA is like any other
government instrumentality, the only difference is that MIAA is vested with corporate powers.

When the law vests in a government instrumentality corporate powers, the instrumentality does not become a corporation. Unless the government
instrumentality is organized as a stock or non-stock corporation, it remains a government instrumentality exercising not only governmental but also
corporate powers. Thus, MIAA exercises the governmental powers of eminent domain, police authority and the levying of fees and charges. At the same
time, MIAA exercises “all the powers of a corporation under the Corporation Law, insofar as these powers are not inconsistent with the provisions of this
Executive Order.”

2. Airport Lands and Buildings of MIAA are Owned by the Republic

a. Airport Lands and Buildings are of Public Dominion

The Airport Lands and Buildings of MIAA are property of public dominion and therefore owned by the State or the Republic of the Philippines.

No one can dispute that properties of public dominion mentioned in Article 420 of the Civil Code, like “roads, canals, rivers, torrents, ports and bridges
constructed by the State,” are owned by the State. The term “ports” includes seaports and airports. The MIAA Airport Lands and Buildings constitute a
“port” constructed by the State. Under Article 420 of the Civil Code, the MIAA Airport Lands and Buildings are properties of public dominion and thus
owned by the State or the Republic of the Philippines.

The Airport Lands and Buildings are devoted to public use because they are used by the public for international and domestic travel and transportation.
The fact that the MIAA collects terminal fees and other charges from the public does not remove the character of the Airport Lands and Buildings as
properties for public use.

The charging of fees to the public does not determine the character of the property whether it is of public dominion or not. Article 420 of the Civil Code
defines property of public dominion as one “intended for public use.” The terminal fees MIAA charges to passengers, as well as the landing fees MIAA
charges to airlines, constitute the bulk of the income that maintains the operations of MIAA. The collection of such fees does not change the character of
MIAA as an airport for public use. Such fees are often termed user’s tax. This means taxing those among the public who actually use a public facility
instead of taxing all the public including those who never use the particular public facility.

b. Airport Lands and Buildings are Outside the Commerce of Man

The Court has also ruled that property of public dominion, being outside the commerce of man, cannot be the subject of an auction sale.

Properties of public dominion, being for public use, are not subject to levy, encumbrance or disposition through public or private sale. Any encumbrance,
levy on execution or auction sale of any property of public dominion is void for being contrary to public policy. Essential public services will stop if
properties of public dominion are subject to encumbrances, foreclosures and auction sale. This will happen if the City of Parañaque can foreclose and
compel the auction sale of the 600-hectare runway of the MIAA for non-payment of real estate tax.

c. MIAA is a Mere Trustee of the Republic

MIAA is merely holding title to the Airport Lands and Buildings in trust for the Republic. Section 48, Chapter 12, Book I of the Administrative Code
allows instrumentalities like MIAA to hold title to real properties owned by the Republic. n MIAA’s case, its status as a mere trustee of the Airport Lands
and Buildings is clearer because even its executive head cannot sign the deed of conveyance on behalf of the Republic. Only the President of the
Republic can sign such deed of conveyance.
d. Transfer to MIAA was Meant to Implement a Reorganization

The transfer of the Airport Lands and Buildings from the Bureau of Air Transportation to MIAA was not meant to transfer beneficial ownership of these
assets from the Republic to MIAA. The purpose was merely to reorganize a division in the Bureau of Air Transportation into a separate and autonomous
body. The Republic remains the beneficial owner of the Airport Lands and Buildings. MIAA itself is owned solely by the Republic. No party claims any
ownership rights over MIAA’s assets adverse to the Republic.

e. Real Property Owned by the Republic is Not Taxable

Sec 234 of the LGC provides that real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial
use thereof has been granted, for consideration or otherwise, to a taxable person following are exempted from payment of the real property tax.

However, portions of the Airport Lands and Buildings that MIAA leases to private entities are not exempt from real estate tax. For example, the land area
occupied by hangars that MIAA leases to private corporations is subject to real estate tax.
 1.2.3
GOVERNMENT
CASES:
e. Classifications of Government (legitimacy)
 Co Kim Chan vs. Valdez Tan Keh (75 Phil. 113)
 Lawyer's League vs. Aquino (G.R. no. 73748, May 22, 1986)
 Aquino vs. COMELEC (62 SCRA 275)
 Estrada vs. Desierto (G.R. No. 146710-15, March 2, 2001) and
 Estrada vs. Macapagal-Arroyo (G.R. No. 146738, March 2,
2001)
 In Re: Saturnino Bermudez (145 SCRA 160)
[G.R. No. L-5a 1 . November 16, 1945.]

CO KIM CHAM (alias CO CHAM), Petitioner, v. EUSEBIO VALDEZ TAN KEH and ARSENIO P. DIZON, Judge of First Instance of Manila,
Respondents.

Marcelino Lontok for Petitioner.

Revilla & Palma for respondent Valdez Tan Keh.

Respondent Judge Dizon in his own behalf.

SYLLABUS

1. INTERNATIONAL LAW; "DE FACTO" GOVERNMENT; PRESENCE OF GUERRILLA BANDS. — The presence of guerrilla bands in barrios
and mountains, and even in towns of the Philippines whenever these towns left by Japanese garrisons or by the detachments of troops sent on patrol to
these places, was not sufficient to make the military occupation ineffective, nor did it cause that occupation to cease, or prevent the constitution or
establishment of a de facto government in the Islands. The belligerent occupation of the Philippines by the Japanese invaders became an accomplished
fact from the time General Wainwright, Commander of the American and Filipino forces in Luzon, and General Sharp, Commander of the forces in
Visayas and Mindanao, surrendered and ordered the surrender of their forces to the Japanese invaders, and the Commonwealth Government had become
incapable of publicity exercising its authority, and the invader had substituted his own authority for that of the legitimate government in Luzon, Visayas
and Mindanao.

2. ID.; ID.; HAGUE CONVENTIONS; DUTY OF BELLIGERENT OCCUPANT TO CONTINUE COURTS AND MUNICIPAL LAWS IN FORCE,
FOR BENEFIT OF INHABITANTS OF OCCUPIED TERRITORY. — The provisions of the Hague Conventions which impose upon in belligerent
occupant the duty to continue the courts as well as the municipal laws in force in the country unless absolutely prevented, in order to reestablish and
insure :Pordre et al vie publice," that is, the public order and safety, and the entire social and commercial life of the country, were inserted, not for the
benefit of the invader, but for the protection and benefit of the people or inhabitants of the occupied territory and of those not in the military service, in
order that the ordinary pursuits and business of society may not be unnecessarily deranged.

3. STATUTORY CONSTRUCTION; MEANING OF "PROCESSES" USED IN PROCLAMATION OF GENERAL DOUGLAS MACARTHUR OF

OCTOBER 23, 1944; MAXIM OF "NOSCITUR A SOCIIS." — The word "processes," as used in the proclamation of General Douglas MacArthur of
October 23, 1944, cannot be interpreted to mean judicial processes; that term should be construed to mean legislative and constitutional processes, by
virtue of the maxim "noscitur a sociis." According to this maxim, where a particular word or phrase is ambiguous in itself or is equally susceptible of
various meanings, its meaning may be made clear and specific by considering the company in which it is found. (Black on Interpretation of Laws, 2d.,
pp. 194-196.) Since the proclamation provides that "all laws, regulations and processes of any other government in the Philippines than that of the said
Commonwealth are null and void," the word "processes" must be interpreted or construed to refer to the Executive Orders of the Chairman of the
Philippine Executive Commission, ordinances promulgated by the President of the so-called Republic of the Philippines, and the Constitution itself of
said Republic, and others that are of the same class as the laws and regulations with which the word "processes" is a associated.

DECISION

FERIA, J.:

This is a motion for reconsideration of our decision rendered in this case filed by the Respondent. Two attorneys at law, who were allowed to appear as
amici curiae, have also presented memoranda to discuss certain points on which the dissenting opinion rely.

(1) It is contended that the military occupation of the Philippine Islands by the Japanese was not actual and effective because of the existence of guerrilla
bands in barrios and mountains and even towns and villages; and consequently, no government de facto could have been validly established by the
Japanese military forces in the Philippines under the precepts of the Hague Conventions and the law of nations.

The presence of guerrilla bands in barrios and mountains, and even in towns of the Philippines whenever these towns were left by Japanese garrisons or
by the detachments of troops sent on patrol to these places, was not sufficient to make the military occupation ineffective nor did it cause that occupation
to cease, or prevent the constitution or establishment of a de facto government in the Islands. The belligerent occupation of the Philippines by the
Japanese invaders became as accomplished fact from the time General Wainwright, Commander of the American and Filipino forces in Luzon, and
General Sharp, Commander of the forces in Visayas and Mindanao, surrendered and ordered the surrender of their forces to the Japanese invaders, and
the Commonwealth Government had become incapable of publicly exercising its authority, and the invader had substituted his own authority for that of
the legitimate government in Luzon, Visayas and Mindanao.

"According to the rules of Land Welfare of the United States Army, belligerent or so-called military occupation is a question of fact. It presupposes a
hostile invasion as a result of which has rendered the invaded government incapable of publicly exercising its authority, and that the invader is in position
to substitute and has substituted his own authority for that of the legitimate government of the territory invaded." (International Law Chiefly as
Interpreted and Applied by the United States, by Hyde, Vol. II, pp. 361, 362.) "Belligerent occupation must be both actual and effective. Organized
resistance must be overcome and the forces in possession must have taken measures to establish law and order. It doubtless suffices if the occupying
army can, within a reasonable time, send detachments of troops to make its authority felt within the occupied district." (Id., p. 364.) "Occupation once
acquired must be maintained . . . . It does not cease, however, . . . . Nor does the existence of a rebellion or the operations of guerrilla bands cause it to
cease, unless the legitimate government is reestablished and the occupant fails promptly to suppress such rebellion or guerrilla operations." (Id., p. 365.)

But supposing arguendo that there were provinces or district in these Islands not actually and effectively occupied by the invader, or in which the latter,
consequently, had not substituted his own authority for that of the invaded government, and the Commonwealth Government had continued publicly
exercising its authority, there is no question as to the validity of the judicial acts and proceedings of the court functioning in said territory, under the
municipal law, just as there can be no question as to the validity of the judgments and proceedings of the courts continued in the territory occupied by the
belligerent occupant, under the law of nations.

(2) It is submitted that the renunciation in our Constitution and in the Kellog-Briand Pact of war as an instrument of national policy, rendered
inapplicable the rules of international law authorizing the belligerent Japanese army of occupation to set up a provisional or de facto government in the
Philippines, because Japan started was treacherously and emphasized war as an instrument of national policy; and that to give validity to the judicial acts
of court sponsored by the Japanese would be tantamount to giving validity to the acts of these invaders, and would be nothing short of legalizing the
Japanese invasion of the Philippines.

In reply to this contention, suffice it to say that the provisions of the Hague Conventions which imposes upon a belligerent occupant the duty to continue
the courts as well as the municipal laws in force in the country unless absolutely prevented, in order to reestablish and insure "I’ordre et la vie publice,"
that is, the public order and safety, and the entire social and commercial life of the country, were inserted, not for the benefit of the invader, but for the
protection and benefit of the people or inhabitants of the occupied territory and of those not in the military service, in order that the ordinary pursuits and
business of society may not be unnecessarily deranged.

This is the opinion of all writers on international law up to date, among them Wheaton (Vol. II, p. 236) and Oppenheim (Vol. II, p. 338) in their recently
revised Treatises on International Law, edited in the year 1944, and the interpretation of the Supreme Court of the United States in many cases, specially
in the case of Dow v. Johnson (106 U. S., 158), in which that Court said: "As a necessary consequence of such occupation and domination, the political
relations of its people to their former government are, for the time being, severed. But for their protection and benefit, and the protection and benefit of
others not in the ordinary pursuits and business of society may not be unnecessarily deranged, the municipal laws, that is, such as affect private rights of
persons and property and provide for the punishment of crime, are generally allowed to continue in force, and to be administered by the ordinary
tribunals as they were administered before the occupation. They are considered as continuing, unless suspended or superseded by the occupying
belligerent." (Dow v. Johnson, 100 U. S., 158; 25 U. S. [Law, ed. ], 632).

The fact that the belligerent occupant is a treacherous aggressor, as Japan was, does not, therefore, exempt him from complying with said precepts of the
Hague Conventions, nor does it make null and void the judicial acts of the courts continued by the occupant in the territory occupied. To deny validity to
such judicial acts would benefit the invader or aggressor, who is presumed to be intent upon causing as much harm as possible to the inhabitants or
nationals of the enemy’s territory, and prejudice the latter; it would cause more suffering to the conquered and assist the conqueror or invader in realizing
his nefarious design; in fine, it would result in penalizing the nationals of the occupied territory, and rewarding the invader or occupant for his acts of
treachery and aggression.

(3) We held in our decision that the world "processes," as used in the proclamation of General Douglas MacArthur of October 23, 1944, cannot be
interpreted to mean judicial processes; and because of the cogent reasons therein set forth, we did not deem it necessary to specify the processes to which
said proclamation should be construed to refer. As some doubt still lingers in the minds of person interested in sustaining a contrary interpretation or
construction, we are now constrained to say that the term as used in the proclamation should be construed to mean legislative and constitutional
processes, by virtue of the maxim "noscitur a sociis." According to this maxim, where a particular word or phrase is ambiguous in itself or is equally
susceptible of various meaning, its meaning may be made clear and specific by considering the company in which it is found. (Black on Interpretation of
Laws, 2d ed., pp. 194-196.) Since the proclamation provides that "all laws, regulations and processes of any other government in the Philippines than that
of the said Commonwealth are null and void," the word "processes" must be interpreted or construed to refer to the Executive Commission, Ordinances
promulgated by the President of the so-called Republic of the Philippines, and the Constitution itself of said Republic, and others that are of the same
class as the laws and regulations with which the world "processes" is associated.

To illustrate, "an English act required licenses for ’houses, rooms, shops, or buildings, kept open for public refreshment, resort, and entertainment.’ It was
adjudged that the word ’entertainment,’ in this connection, did not necessarily mean a concert, dramatic performance, or other divertisement, nor did it
necessarily imply the furnishing of food or drink, but that, judged from its associations, it meant the reception and accommodation of the public. So
where a policy of marine insurance is specified to protect the assured against ’arrests, restraints, and detainments of all kinds, princes, and people,’ the
word ’people’ means the ruling or governing power of the country, this signification being impressed upon it by its association with the words ’kings’
and ’princes.’ Again, in a statute relating to imprisonment for debt, which speaks of debtors who shall be charged with ’fraud, or undue preference to one
creditor to the prejudice of another,’ the word ’undue’ means fraudulent. A statute of bankruptcy, declaring that any fraudulent ’gift, transfer or delivery’
of property shall constitute an act of bankruptcy, applies only to such deliveries as ore in the nature of a gift — such as change the ownership of the
property, to the prejudice of creditors; it does not include a delivery to a bailee for safekeeping." (Black on Interpretation of Laws, supra.)

(4) The statement of Wheaton (International Law, 7th ed., p. 245) that "when it is said that an occupier’s acts are valid, it must be remembered that no
crucial instances exist to show that if his acts should all be reversed (by the restored government or its representatives) no international wrong would be
committed," evidently does not mean that the restored government or its representatives may reverse the judicial acts and proceedings of the courts
during the belligerent occupation without violation of the law of nations does not always and necessarily cause an international wrong. As the said
judicial acts which apply the municipal laws, that is, such as affect private rights or persons and property and provide for the punishment of crimes, are
good and valid even after occupation has ceased, although it is true that no crucial instances exist to show that, were they reversed or invalidated by the
restored or legitimate government, international wrong would be committed, it is nonetheless true and evident that by such abrogation national wrong
would be caused to the inhabitants or citizens of the legitimate government. According to the law of nations and Wheaton himself, said judicial acts are
legal and valid before and after the occupation has ceased and the legitimate government has been restored. As there are vested rights which have been
acquired by the parties by virtue of such judgments, the restored government or its representative cannot reverse or abrogate them without causing wrong
or injury to the interested parties, because such reversal would deprive them of their properties without due process of law.

In this connection, it may not be amiss to refer to the decision of the Supreme Court of the United States in the case of Raymond v. Thomas (91 U. S.,
712), quoted in our decision as applicable by analogy. In said case, the Commander in Chief of the United States forces in South Carolina, after the end
of the Civil War and while the territory was still under Military Government, issued a special order annulling a decree rendered by a court of chancery in
a case within its jurisdiction, on the wrong assumption that he had authority to do so under the acts of Congress approved March 2, and July 19, 1867,
which defined his powers and duties. That Supreme Court declared void the said special order on the ground "that it was an arbitrary stretch of authority
needful to no good end that can be imagined. Whether Congress could have conferred power to do such an act is a question we are not called upon to
consider. It is an unbending rule of law that the exercise of military power where the rights of the citizens are concerned, shall never be pushed beyond
what the exigency requires."cralaw virtua1aw library

(5) It is argued with insistence that the courts of the Commonwealth continued in the Philippines by the belligerent occupant became also courts of Japan,
and their judgments and proceedings being acts of foreign courts cannot now be considered valid and continued by the courts of the Commonwealth
Government after the restoration of the latter. As we have already stated in our decision the fundamental reasons why said courts, functioning during the
Japanese regime, could not be considered as courts of Japan, it is sufficient now to invite attention to the decision of the Supreme Court of the United
States in the case of the Admittance, Jecker v. Montgomery (13 How., 498; 14 Law. ed., 240), which we did not deem necessary to quote in our decision,
in which it was held that "the courts, established or sanctioned in Mexico during the war by the commanders of the American forces, were nothing more
than the agents of the military power, to assist it in preserving order in the conquered territory, and to protect the inhabitants in their persons and property
while it was occupied by the American arms. They were subject to the military power, and their decision under its control, whenever the commanding
officer though proper to interfere. They were not courts of the United States, and had no right to adjudicate upon a question of prize or no prize." (The
Admittance, Jecker v. Montgomery, 13 How., 498; 14 Law. ed., 240.)

(6) The petition for mandamus in the present case is the plain, speedy and adequate remedy. The mandamus applied for is not to compel the respondent
judge to order the reconstitution of the record of the case, because the record had already been reconstituted by order of the court. It is sought to compel
the respondent judge to continue the proceedings in said case. As the judge refused to act on the ground that he had no power or jurisdiction to continue
taking cognizance of the case, mandamus and not appeal is the plain, speedy and adequate remedy. For it is well established rule that "if a court has
erroneously decided some question of law or of practice, presented as a preliminary objection, and upon such erroneous construction has refused to go
into the merits of the case, mandamus will lie to compel it to proceed." (High on Extraordinary Legal Remedies, section 151; Castro Revilla v. Garduño,
53 Phil., 934.)

In view of the foregoing, the motion for reconsideration filed by the respondents is denied. The petition for oral argument on said motions for
reconsideration, based on the resolution of division of this Court dated July 3, 2945, amendatory of section 2, Rule 54, of the Rules of Court, is also
denied, since said resolution has not yet been adopted by this Court in banc, and the respondents and amici curiae were allowed to file, and they filed,
their arguments in writing.

Moran, C.J., Ozaeta, Paras, Jaranilla, De Joya and Pablo, JJ., concur.

CASE DIGEST

CO KIM CHAN v. VALDEZ TAN KEH

75 PHIL 113

FACTS:

The respondent judge refused to take cognizance of the case and to continue the proceedings in petitioner’s case on the ground that the proclamation,
issued on October 23, 1944, by General Douglas MacArthur had invalidated and nullified all judicial proceedings and judgments of the court during the
Japanese occupation. Respondent contends that the lower courts have no jurisdiction to continue pending judicial proceedings and that the government
established during the Japanese occupation was no de facto government.

ISSUES:

1. Do the judicial acts and proceedings of the court during the Japanese occupation remain good and valid?

2. Did the proclamation of MacArthur invalidate all judgments and judicial acts and proceedings of said court?

3. May the present courts continue those proceedings pending in said courts?

HELD:

It is evident that the Philippine Executive Commission was a civil government established by military forces and thus a de facto government of the
second kind. Legislative, as well as judicial, acts of de facto governments, which are not of political complexion, remain valid after reoccupation. It is
presumed that the proclamation of General MacArthur did not specifically refer to judicial processes thus it has not invalidated all the judgments and
proceedings of the courts during the Japanese regime. The existence of the courts depends upon the laws which create and confer upon them their
jurisdiction. Such laws, not political in nature, are not abrogated by a change of sovereignty and continue in force until repealed by legislative acts. It is
thus obvious that the present courts have jurisdiction to continue proceedings in cases, not of political complexion.
G.R. No. 73748 - May 22, 1986)

(There is no "Full-Text" of this case. This is a Minute Resolution made by the SC.)

Minute Resolutions

LAWYERS LEAGUE FOR A BETTERPHILIPPINES AND/OR OLIVER A. LOZANO VS. PRESIDENT CORAZON C. AQUINO, ET AL.

SIRS/MADAMS:

Quoted hereunder, for your information, is a resolution of this Court MAY 22, 1986.

In G.R. No. 73748, Lawyers League for a Better Philippines vs. President Corazon C. Aquino, et al.; G.R. No. 73972, People's Crusade for Supremacy of
the Constitution vs. Mrs. Cory Aquino, et al., and G.R. No. 73990, Councilor Clifton U. Ganay vs. Corazon C. Aquino, et al., the legitimacy of the
government of President Aquino is questioned. It is claimed that her government is illegal because it was not established pursuant to the 1973
Constitution.

As early as April 10, 1986, this Court* had already voted to dismiss the petitions for the reasons to be stated below. On April 17, 1986, Atty. Lozano as
counsel for the petitioners in G.R. Nos. 73748 and 73972 withdrew the petitions and manifested that they would pursue the question by extra-judicial
methods. The withdrawal is functus oficio.

The three petitions obviously are not impressed with merit. Petitioners have no personality to sue and their petitions state no cause of action. For the
legitimacy of the Aquino government is not a justiciable matter. It belongs to the realm of politics where only the people of the Philippines are the judge.
And the people have made the judgment; they have accepted the government of President Corazon C. Aquino which is in effective control of the entire
country so that it is not merely a de factogovernment but is in fact and law a de jure government. Moreover, the community of nations has recognized the
legitimacy of the present government. All the eleven members of this Court, as reorganized, have sworn to uphold the fundamental law of the Republic
under her government.

In view of the foregoing, the petitions are hereby dismissed.

Very truly yours,

(Sgd.) GLORIA C. PARAS

Clerk of Court

* The Court was then composed of Teehankee, C.J. and Abad Santos., Melencio-Herrera, Plana, Escolin, Gutierrez, Jr., Cuevas, Alampay and Patajo, JJ.

CASE DIGEST

G.R. No. 73748 - May 22, 1986)

LAWYERS LEAGUE FOR A BETTERPHILIPPINES AND/OR OLIVER A. LOZANO VS. PRESIDENT CORAZON C. AQUINO, ET AL.

FACTS:

On February 25, 1986, President Corazon Aquino issued Proclamation No. 1 announcing that she and Vice President Laurel were taking power

.On March 25, 1986, proclamation No.3 was issued providing the basis of the Aquino government assumption of power by stating that the "new
government was installed through a direct exercise of the power of the Filipino people assisted by units of the New Armed Forces of the Philippines."

ISSUE:Whether or not the government of Corazon Aquino is legitimate.

HELD: Yes. The legitimacy of the Aquino government is not a justiciable matter but belongs to the realm of politics where only the people are the judge.

The Court further held that:

The people have accepted the Aquino government which is in effective control of the entire country;

It is not merely a de facto government but in fact and law a de jure government; and

The community of nations has recognized the legitimacy of the new government
G.R. No. L-40004 January 31, 1975

BENIGNO S. AQUINO, JR., TRINIDAD HERRERA, BISHOP FRANCISCO CLAVER, S.J., BISHOP ANTONIO NEPOMUCENO, BISHOP
JESUS VALERA, BISHOP FELIX ZAFRA, BISHOP TEOTIMO PACIS, EUGENIO LOPEZ, JR., SERGIO OSMEÑA, III, ANTONIO
ARANETA, ANTONIO MIRANDA, RAUL GONZALES, JOKER ARROYO, and EMILIO DE PERALTA, petitioners,

vs. COMMISSION ON ELECTIONS, and NATIONAL TREASURER, respondents.

Lorenzo M. Tañada, Renato E. Tañada and Wigberto E. Tañada for petitioners

Office of the Solicitor General Estelito P Mendoza, Assistant Solicitor General Hugo E. Gutierrez, Jr., Assistant Solicitor General Vicente V. Mendoza &
Assistant Solicitor General Reynato S. Puno for respondents.

MAKASIAR, J.:p

I This petition for prohibition, which was filed on January 21, 1975, seeks the nullification of Presidential Decrees Nos. 1366, 1366-A, calling a
referendum for February 27, 1975, Presidential Decrees Nos. 629 and 630 appropriating funds therefor, and Presidential Decrees Nos. 637 and 637-A
specifying the referendum questions, as well as other presidential decrees, orders and instructions relative to the said referendum.

The respondents, through the Solicitor General, filed their comment on January 28, 1975. After the oral argument of over 7 hours on January 30, 1975,
the Court resolved to consider the comment as answer and the case submitted for decision.

The first ground upon which the petition is predicated states that President Ferdinand E. Marcos does not hold any legal office nor possess any lawful
authority under either the 1935 Constitution or the 1973 Constitution and therefore has no authority to issue the questioned proclamations, decrees and
orders. This challenges the title of the incumbent President to the office of the Presidency and therefore is in the nature of a quo warranto proceedings,
the appropriate action by which the title of a public officer can be questioned before the courts. Only the Solicitor General or the person who asserts title
to the same office can legally file such a quo warranto petition. The petitioners do not claim such right to the office and not one of them is the incumbent
Solicitor General. Hence, they have no personality to file the suit (Castro vs. Del Rosario, Jan. 30, 1967, 19 SCRA 197; City of Manila & Antonio
Villegas vs. Abelardo Subido, et. al., May 20, 1966, 17 SCRA 231-232, 235-236; Nacionalista Party vs. Bautista, 85 Phil. 101; and Nacionalista Party vs.
Vera, 85 Phil. 127). It is established jurisprudence that the legality of the appointment or election of a public officer cannot be questioned collaterally
through a petition for prohibition which assails the validity of his official acts.

The foregoing governing legal principles on public officers are re-stated in order to avert any misapprehension that they have been eroded by Our
resolution in the instant petition.

Because of the far-reaching implications of the herein petition, the Court resolved to pass upon the issues raised.

II This Court already ruled in the Ratification Cases "that there is no further judicial obstacle to the new Constitution being considered in force and
effect." As Chief Justice Makalintal stressed in the Habeas Corpus cases, the issue as to its effectivity "has been laid to rest by Our decision in Javellana
versus Executive Secretary (L-36142, March 31, 1973, 50 SCRA 30, 141), and of course by the existing political realities both in the conduct of national
affairs and in our relation with countries" (Aquino, Jr. vs. Enrile and 8 companion cases, L-35546, L-35538-40, L-35538-40, L-35547, L-35556, L-35571
and

L-35573, Sept. 17, 1971, 59 SCRA 183, 241).

III In the aforesaid Habeas Corpus cases, We affirmed the validity of Martial Law Proclamation No. 1081 issued on September 22, 1972 by President
Marcos because there was no arbitrariness in the issuance of said proclamation pursuant to the 1935 Constitution that the factual bases had not
disappeared but had even been exacerbated; that the question is to the validity of the Martial Law proclamation has been foreclosed by Section 3(2) of
Article XVII of the 1973 Constitution, which provides that "all proclamations, orders, decrees, instructions and acts promulgated, issued or done by the
incumbent President shall be part of the law of the land and shall remain valid, legal, binding and effective even after the lifting of Martial Law or the
ratification of this Constitution ..."; and that "any inquiry by this Court in the present cases into the constitutional sufficiency of the factual bases for the
proclamation of Martial Law, has become moot and purposeless as a consequence of the general referendum of July 27-28, 1973. The question
propounded to the voters was: "Under the (1973) Constitution, the President, if he so desires, can continue in office beyond 1973. Do you want President
Marcos to continue beyond 1973 and finish the reforms be initiated under Martial Law?" The overwhelming majority of those who cast their ballots,
including citizens beyond 15 and 18 years, voted affirmatively on the proposal. The question was thereby removed from the area of presidential power
under the Constitution and transferred to the seat of sovereignty itself. Whatever may be the nature of the exercise of that power by the President in the
beginning — whether or not purely political and therefore non-justiciable — this Court is precluded from applying its judicial yardstick to the act of the
sovereign." (Aquino, Jr. vs. Enrile, supra, 59 SCRA 183,

240-242).

Under the 1935 Constitution, President Ferdinand E. Marcos was duly reelected by the vote of the sovereign people in the Presidential elections of 1969
by an overwhelming vote of over 5,000,000 electors as against 3,000,000 votes for his rival, garnering a majority of from about 896,498 to 1,436,118
(Osmeña vs. Marcos, Presidential Election Contest No. 3, Jan. 8, 1973). While his term of office under the 1935 Constitution should have terminated on
December 30, 1973, by the general referendum of July 27-28, 1973, the sovereign people expressly authorized him to continue in office even beyond
1973 under the 1973 Constitution (which was validly ratified on January 17, 1973 by the sovereign people) in order to finish the reforms he initiated
under Martial Law; and as aforestated, as this was the decision of the people, in whom "sovereignty resides ... and all government authority emanates ...,"
it is therefore beyond the scope of judicial inquiry (Aquino, Jr. vs. Enrile, et. al., supra, p. 242).

The logical consequence therefore is that President Marcos is a de jure President of the Republic of the Philippines.

IV The next issue is whether he is the incumbent President of the Philippines within the purview of Section 3 of Article XVII on the transitory provisions
of the new or 1973 Constitution. As heretofore stated, by virtue of his reelection in 1969, the term of President Marcos tinder the 1935 Constitution was
to terminate on December 30, 1973. The new Constitution was approved by the Constitutional Convention on November 30, 1972, still during his
incumbency. Being the only incumbent President of the Philippines at the time of the approval of the new Constitution by the Constitutional Convention,
the Constitutional Convention had nobody in mind except President Ferdinand E. Marcos who shall initially convene the interim Assembly. It was the
incumbent President Marcos alone who issued Martial Law Proclamation No. 1081 on September 22, 1972 and issued orders and decrees as well as
instructions and performed other acts as President prior to the approval on November 30, 1972 of the new Constitution by the Constitutional Convention
and prior to its ratification on January 17, 1973 by the people. Consequently, since President Marcos was the only incumbent President at the time,
because his term under the 1935 Constitution has yet to expire on December 30, 1973, the Constitutional Convention, in approving the new Constitution,
had in mind only him when in Section 3(2) of Article XVII of the new Constitution it provided "that all the proclamations, orders, decrees, instructions
and acts promulgated, issued or done by the incumbent President shall be part of the law of the land, and shall remain valid, legal, binding and effective
even after lifting of Martial Law or the ratification of this Constitution, unless modified, revoked or superseded by subsequent proclamations, orders,
decrees, instructions or other acts of the incumbent President, or unless expressly and explicitly modified or repealed by the regular National Assembly."

The term incumbent President of the Philippines employed in Section 9 of the same Article XVII likewise could only refer to President Ferdinand E.
Marcos. .

This conclusion is further buttressed by Section 10 of the same Article XVII which provides that "the incumbent members of the Judiciary may continue
in office until they reach the age of 70 years unless sooner replaced in accordance with the preceding section hereof." There can be no dispute that the
phrase "incumbent members of the Judiciary" can only refer to those members of the Judiciary who were already Justices and Judges of the various
courts of the country at the time the Constitutional Convention approved the new Constitution on November 30, 1972 and when it was ratified.

Because President Ferdinand E. Marcos is the incumbent President referred to in Article XVII of the transitory provisions of the 1973 Constitution, he
can "continue to exercise the powers and prerogatives under the nineteen hundred and thirty five Constitution and the powers vested in the President and
the Prime Minister under this Constitution until he calls upon the interim National Assembly to elect the interim President and the interim Prime
Minister, who shall then exercise their legislative powers vested by this Constitution (Sec. 3[l], Art. XVII, 1973 Constitution).

Under the 1935 Constitution, the President is empowered to proclaim martial law. Under the 1973 Constitution, it is the Prime Minister who is vested
with such authority (Sec. 12, Art. IX, 1973 Constitution).

WE affirm the proposition that as Commander-in-Chief and enforcer or administrator of martial law, the incumbent President of the Philippines can
promulgate proclamations, orders and decrees during the period of Martial Law essential to the security and preservation of the Republic, to the defense
of the political and social liberties of the people and to the institution of reforms to prevent the resurgence of rebellion or insurrection or secession or the
threat thereof as well as to meet the impact of a worldwide recession, inflation or economic crisis which presently threatens all nations including highly
developed countries (Rossiter, Constitutional Dictatorship, 1948 Ed., pp. 7, 303; see also Chief Justice Stone's Concurring Opinion in Duncan vs.
Kahanamoku, 327 US 304).

To dissipate all doubts as to the legality of such law-making authority by the President during the period of Martial Law, Section 3(2) of Article XVII of
the New Constitution expressly affirms that all the proclamations, orders, decrees, instructions and acts he promulgated, issued or did prior to the
approval by the Constitutional Convention on November 30, 1972 and prior to the ratification by the people on January 17, 1973 of the new Constitution,
are "part of the law of the land, and shall remain valid, legal, binding and effective even after the lifting of Martial Law or the ratification of this
Constitution, unless modified, revoked or superseded by subsequent proclamations, orders, decrees, instructions or other acts of the incumbent President,
or unless expressly and specifically modified or repealed by the regular National Assembly."

The entire paragraph of Section 3(2) is not a grant of authority to legislate, but a recognition of such power as already existing in favor of the incumbent
President during the period of Martial Law.

Dr. Jose M. Aruego, noted authority in Constitutional Law as well as delegate to the 1935 and 1971 Constitutional Conventions, shares this view, when
he states thus:

108. ... — These Presidential Proclamations, order, decrees, instructions, etc. had been issued by the incumbent President in the exercise of what he
consider to be his powers under martial law, in the same manner that the lawmaking body had enacted several thousand statutes in the exercise of what it
consider to be its power under the Organic Laws. Both these classes of rules of law — by the President and by the lawmaking body — were, under
general principles of constitutional law, presumed to be constitutional until declared unconstitutional by the agency charged with the power and function
to pass upon constitutional law question — the Judiciary, at the apex of which is the Supreme Court. Hence, the inclusion of both group of rules —
President rules and legislative rules — in the new Constitution for the people to approve or disapprove in the scheduled plebiscite. (Aruego, The New
Constitution, 1973 Ed., p. 230).

Delegate Arturo Pacificador, a Floor Leader of the 1971 Constitutional Convention, in explaining Section 3(2) of Article XVII, underscores this
recognition of the legislative power of the incumbent President as Commander-in-Chief during martial Law, thus:

The second paragraph sets forth the understanding of the Convention of the nature, extent and scope of the powers of the incumbent President of the
Philippines, under martial law. It expressly recognizes that the commander-in-chief, under martial law, can exercise all necessary powers to meet the
perils of invasion, insurrection, rebellion or imminent danger thereof. This provision complements Section 7, Article XVII of the Constitution that "all
existing laws not inconsistent with this Constitution shall remain operative until amended, modified, or repealed by the National Assembly."

The second paragraph is an express recognition on the part of the framers of the new Constitution of the wisdom of the proclamations, orders, decrees
and instructions by the incumbent President in the light of the prevailing conditions obtaining in the country. (Montejo, New Constitution, 1973 Ed., p.
314, emphasis supplied).

The power under the second clause of Section 3(2) is not limited merely to modifying, revoking or superseding all his proclamations, orders, decrees,
instructions or other acts promulgated, issued or done prior to the ratification of the 1973 Constitution. But even if the scope of his legislative authority
thereunder is to be limited to the subject matter of his previous proclamations, orders, decrees or instructions or acts, the challenged Proclamations Nos.
1366 and 1366-A, as well as Presidential Decrees Nos. 629, 630, 637 and 637-A are analogous to the referenda of January, 1973 and July 27-28, 1973.

The actions of the incumbent President are not without historical precedents. It should be recalled that the American Federal Constitution, unlike the
1935 or 1973 Constitution of the Philippines, does not confer expressly on the American President the power to proclaim Martial Law or to suspend the
writ of habeas corpus. And yet President Abraham Lincoln during the Civil War, and President Roosevelt during the Second World War, without express
constitutional or statutory authority, created agencies and offices and appropriated public funds therefor in connection with the prosecution of the war.
Nobody raised a finger to oppose the same. In the case of President Roosevelt, the theater of war was not in the United States. It was thousands of miles
away, in the continents of Europe and Africa and in the Far East. In the Philippines, military engagements between the government forces and the rebels
and secessionists are going on, emphasizing the immediacy of the peril to the safety of the Republic itself. There is therefore greater reason to affirm this
law-making authority in favor of the incumbent President during the period of Martial Law.

Petitioners further argue that the President should call the interim National Assembly as required of him by Section 3(1) of Article XVII, which National
Assembly alone can exercise legislative powers during the period of transition.

It should be stressed that there is a distinction between the existence of the interim Assembly and its organization as well as its functioning. The interim
Assembly already existed from the time the new Constitution was ratified; because Section 1 of Article XVII states that "there shall be an interim
National Assembly which shall exist immediately upon the ratification of this Constitution and shall continue until the members of the regular National
Assembly shall have been elected and shall have assumed office ..." However, it cannot function until it is convened and thereafter duly organized with
the election of its interim speaker and other officials. This distinction was clearly delineated in the case of Mejia, et. al. vs. Balolong, et. al. where We
held that from the phrase "the City of Dagupan, which is hereby created, ...," Dagupan City came into existence as a legal entity upon the approval of its
Charter; but the date of the organization of the city government was to be fixed by the President of the Philippines, and necessarily was subsequent to the
approval of its organic law (81 Phil. 486, 490-492).

Petitioners likewise urge that the President should have convened the interim Assembly before the expiration of his term on December 30, 1973. The
Constitutional Convention intended to leave to the President the determination of the time when he shall initially convene the interim National Assembly,
consistent with the prevailing conditions of peace and order in the country. This was revealed by no less than Delegate Jose M. Aruego himself, who
stated:

109. Convening the interim National Assembly. — The Constitutional Convention could have fixed the date when the interim National Assembly should
convene itself as it did with respect to the regular National Assembly. There would not have been any need for any Presidential call as there is none, with
respect to the regular National Assembly.

But considering that the country had been already placed under martial law rule the success of which was conditioned upon the unity not only of
planning but also in the execution of plans, many delegates felt that the incumbent President should be given the discretion to decide when the interim
National Assembly should be convened because he would need its counsel and help in the administration of the affairs of the country.

And in the event that it should convene, why did the interim National Assembly not fix its tenure, and state expressly when the election of the members
of the regular National Assembly should be called? Many of the delegates felt that they could not be sure even of the proximate date when the general
conditions of peace and order would make possible orderly elections, ... (The New Philippine Constitution by Aruego, 1973 Ed., p. 230).

This was also disclosed by Delegate Arturo F. Pacificador, who affirmed:

Under the first paragraph of this section, the incumbent President is mandated to initially convene the interim National Assembly.

Note that the word used is "shall" to indicate the mandatory nature of the desire of the Constitutional Convention that the interim National Assembly
shall be convened by the incumbent President. The Constitutional Convention, however, did not fix any definite time at which the incumbent President
shall initially convene the interim National Assembly. This decision was deliberate to allow the incumbent President enough latitude of discretion to
decide whether in the light of the emergency situation now prevailing, conditions have already normalized to permit the convening of the interim
National Assembly. (Montejo, The New Constitution, 1973 Ed., p. 314).

It is thus patent that the President is given the discretion as to when he shall convene the interim National Assembly after determining whether the
conditions warrant the same.

His decision to defer the initial convocation of the interim National Assembly was supported by the sovereign people at the referendum in January, 1973
when the people voted to postpone the convening of the interim National Assembly until after at least seven (7) years from the approval of the new
Constitution. And the reason why the same question was eliminated from the questions to be submitted at the referendum on February 27, 1975, is that
even some members of the Congress and delegates of the Constitutional Convention, who are already ipso facto members of the interim National
Assembly, are against such inclusion; because the issue was already decided in the January, 1973 referendum by the sovereign people indicating thereby
their disenchantment with any Assembly as the former Congress failed to institutionalize the reforms they demanded and had wasted public funds
through the endless debates without relieving the suffering of the general mass of citizenry.

Petitioners likewise impugn the scheduled referendum on the ground that there can be no true expression of the people's will due to the climate of fear
generated by Martial Law and that the period of free discussion and debate is limited to two weeks from February 7 to 21, without right of rebuttal from
February 22 until the day of the referendum.

The first objection is not tenable because during the senatorial elections in 1951 and 1971, the privilege of the writ of habeas corpus was suspended,
during which period of suspension there was fear of arrest and detention. Yet the election was so free that a majority of the senatorial candidates of the
opposition party were elected and there was no reprisal against or harrassment of any voter thereafter. The same thing was true in the referendum of July
27-28, 1973, which was done also through secret ballot. There was no Army, PC, or police truck, bus or other mode of transportation utilized to transport
the voters to the various precincts of the country. There was no PC, Army or police personnel assigned to each election precinct or voting booth. And
such assignment would be impossible; because the combined membership of the police, PC, and Army was then as now very much less than the number
of precincts, let alone the number of voting booths. And no one would be left to fight the rebels or to maintain peace and order. And as heretofore stated,
the voting was done in secrecy. Only one voter at a time entered the voting booth. The voting was orderly. There was no buying of votes or buying the
right not to vote. And as opined by the Solicitor General, every qualified voter who fails to register or go to the polling place on referendum day is
subject to prosecution; but failure to fill up the ballot is not penalized.

In the Habeas Corpus cases, We declared that the result of the referendum on July 27-28, 1973 was a decision by the sovereign people which cannot be
reviewed by this Court. Then again, it is too late now for petitioners to challenge the validity of said referendum.

Moreover, as stressed by the Solicitor General, the previous referenda of January and July, 1973, were a lot more free than the elections under the Old
Society previous to the proclamation of Martial Law, where the will of the voter was subverted through "guns, goons and gold", as well as through fraud.
All modes of transportation were utilized by the candidates and their leaders to transport the voters to the precinct. The voters were likewise wined and
dined and so prostituted that they refused to vote until the required monetary persuasion was proffered, if they were not being subjected to various forms
of intimidation. In some areas, the ballots were filled up and the election returns were accomplished before election day. Even animals and dead persons
voted. The decisions in the electoral contests filed after every election under the Old Society attest to this very unflattering fact in our history.

The second objection that the two-week period for free debate is too short, is addressed to the wisdom of the President who may still amend the
proclamation to extend the period of free discussion.

At any rate, such a brief period of discussion has its counterpart in previous plebiscites for constitutional amendments. Under the Old Society, 15 days
were allotted for the publication in three consecutive issues of the Official Gazette of the women's suffrage amendment to the Constitution before the
scheduled plebiscite on April 30, 1937 (Com. Act No. 34). The constitutional amendment to append as ordinance the complicated Tydings-
Kocialskowski Act of the US Federal Congress to the 1935 Constitution was published in only three consecutive issues of the Official Gazette for 10
days prior to the scheduled plebiscite (Com. Act No. 492). For the 1940 constitutional amendments providing for the bicameral Congress, the reelection
of the President and Vice-President, and the creation of the Commission on Elections, 20 days of publication in three consecutive issues of the Official
Gazette was fixed (Com. Act No. 517).And the Parity Amendment, an involved constitutional amendment affecting the economy as well as the
independence of the Republic was publicized in three consecutive issues of the Official Gazette for 20 days prior to the plebiscite (Rep. Act No. 73).

The period of 14 days for free discussion can compare favorably with the period required for publication of the proposed amendments under the Old
Society.

WHEREFORE, PRESIDENT FERDINAND E. MARCOS IS HEREBY DECLARED DE JURE PRESIDENT OF THE REPUBLIC, PRESIDENTIAL
PROCLAMATIONS NOS. 1366 AND 1366-A AND PRESIDENTIAL DECREES NOS. 629,630, 637 AND 637-A ARE HEREBY DECLARED
VALID, AND THE PETITION IS HEREBY DISMISSED. WITHOUT COSTS.

Aquino, J, concurs.

Makatintal, C.J., concurs in the result.

CASE DIGEST

62 SCRA 275 􀀀 Political Law 􀀀 De Jure vs De Facto Government 􀀀 Marcos as a De Jure President Under the 1973 Constitution

AQUINO v COMELEC

In January 1975, a petition for prohibition was filed to seek the nullification of some Presidential Decrees issued by then President Ferdinand Marcos. It
was alleged that Marcos does not hold any legal office nor possess any lawful authority under either the 1935 Constitution or the 1973 Constitution and
therefore has no authority to issue the questioned proclamations, decrees and orders.

ISSUE: Whether or not the Marcos government is a lawful government.

HELD: Yes. First off, this is actually a quo warranto proceedings and Benigno Aquino, Jr. et al, have no legal personality to sue because they have no
claim to the office of the president. Only the Solicitor General or the person who asserts title to the same office can legally file such a quo warranto
petition.

On the issue at bar, the Supreme Court affirmed the validity of Martial Law Proclamation No. 1081 issued on September 22, 1972 by President Marcos
because there was no arbitrariness in the issuance of said proclamation pursuant to the 1935 Constitution; that the factual bases (the circumstances of
lawlessness then present) had not disappeared but had even been exacerbated; that the question as to the validity of the Martial Law proclamation has
been foreclosed by Section 3(2) of Article XVII of the 1973 Constitution.

Under the (1973) Constitution, the President, if he so desires; can continue in office beyond 1973. While his term of office under the 1935 Constitution
should have terminated on December 30, 1973, by the general referendum of July 27-28, 1973, the sovereign people expressly authorized him to
continue in office even beyond 1973 under the 1973 Constitution (which was validly ratified on January 17,1973 by the sovereign people) in order to
finish the reforms he initiated under Martial Law; and as aforestated, as this was the decision of the people, in whom sovereignty resides . . . and all
government authority emanates . . .,􀀀 it is therefore beyond the scope of judicial inquiry. The logical consequence therefore is that President Marcos is a
de jure President of the Republic of the Philippines.
G.R. No. 146710-15      March 2, 2001

JOSEPH E. ESTRADA, petitioner,
vs.
ANIANO DESIERTO, in his capacity as Ombudsman, RAMON GONZALES, VOLUNTEERS AGAINST CRIME AND CORRUPTION,
GRAFT FREE PHILIPPINES FOUNDATION, INC., LEONARD DE VERA, DENNIS FUNA, ROMEO CAPULONG and ERNESTO B.
FRANCISCO, JR., respondent.

----------------------------------------

G.R. No. 146738      March 2, 2001

JOSEPH E. ESTRADA, petitioner,
vs.
GLORIA MACAPAGAL-ARROYO, respondent.

PUNO, J.:

On the line in the cases at bar is the office of the President. Petitioner Joseph Ejercito Estrada alleges that he is the President on leave while respondent
Gloria Macapagal-Arroyo claims she is the President. The warring personalities are important enough but more transcendental are the constitutional
issues embedded on the parties' dispute. While the significant issues are many, the jugular issue involves the relationship between the ruler and the ruled
in a democracy, Philippine style.

First, we take a view of the panorama of events that precipitated the crisis in the office of the President.

In the May 11, 1998 elections, petitioner Joseph Ejercito Estrada was elected President while respondent Gloria Macapagal-Arroyo was elected Vice-
President. Some ten (10) million Filipinos voted for the petitioner believing he would rescue them from life's adversity. Both petitioner and the
respondent were to serve a six-year term commencing on June 30, 1998.

From the beginning of his term, however, petitioner was plagued by a plethora of problems that slowly but surely eroded his popularity. His sharp
descent from power started on October 4, 2000. Ilocos Sur Governor, Luis "Chavit" Singson, a longtime friend of the petitioner, went on air and accused
the petitioner, his family and friends of receiving millions of pesos from jueteng lords.1

The exposẻ immediately ignited reactions of rage. The next day, October 5, 2000, Senator Teofisto Guingona, Jr., then the Senate Minority Leader, took
the floor and delivered a fiery privilege speech entitled "I Accuse." He accused the petitioner of receiving some P220 million in jueteng money from
Governor Singson from November 1998 to August 2000. He also charged that the petitioner took from Governor Singson P70 million on excise tax on
cigarettes intended for Ilocos Sur. The privilege speech was referred by then Senate President Franklin Drilon, to the Blue Ribbon Committee (then
headed by Senator Aquilino Pimentel) and the Committee on Justice (then headed by Senator Renato Cayetano) for joint investigation. 2

The House of Representatives did no less. The House Committee on Public Order and Security, then headed by Representative Roilo Golez, decided to
investigate the exposẻ of Governor Singson. On the other hand, Representatives Heherson Alvarez, Ernesto Herrera and Michael Defensor spearheaded
the move to impeach the petitioner.

Calls for the resignation of the petitioner filled the air. On October 11, Archbishop Jaime Cardinal Sin issued a pastoral statement in behalf of the
Presbyteral Council of the Archdiocese of Manila, asking petitioner to step down from the presidency as he had lost the moral authority to govern. 3 Two
days later or on October 13, the Catholic Bishops Conference of the Philippines joined the cry for the resignation of the petitioner. 4 Four days later, or on
October 17, former President Corazon C. Aquino also demanded that the petitioner take the "supreme self-sacrifice" of resignation. 5 Former President
Fidel Ramos also joined the chorus. Early on, or on October 12, respondent Arroyo resigned as Secretary of the Department of Social Welfare and
Services6 and later asked for petitioner's resignation.7 However, petitioner strenuously held on to his office and refused to resign.

The heat was on. On November 1, four (4) senior economic advisers, members of the Council of Senior Economic Advisers, resigned. They were Jaime
Augusto Zobel de Ayala, former Prime Minister Cesar Virata, former Senator Vicente Paterno and Washington Sycip. 8 On November 2, Secretary Mar
Roxas II also resigned from the Department of Trade and Industry. 9 On November 3, Senate President Franklin Drilon, and House Speaker Manuel
Villar, together with some 47 representatives defected from the ruling coalition, Lapian ng Masang Pilipino. 10

The month of November ended with a big bang. In a tumultuous session on November 13, House Speaker Villar transmitted the Articles of
Impeachment11 signed by 115 representatives, or more than 1/3 of all the members of the House of Representatives to the Senate. This caused political
convulsions in both houses of Congress. Senator Drilon was replaced by Senator Pimentel as Senate President. Speaker Villar was unseated by
Representative Fuentebella.12 On November 20, the Senate formally opened the impeachment trial of the petitioner. Twenty-one (21) senators took their
oath as judges with Supreme Court Chief Justice Hilario G. Davide, Jr., presiding. 13

The political temperature rose despite the cold December. On December 7, the impeachment trial started. 14 The battle royale was fought by some of the
marquee names in the legal profession. Standing as prosecutors were then House Minority Floor Leader Feliciano Belmonte and Representatives Joker
Arroyo, Wigberto Tañada, Sergio Apostol, Raul Gonzales, Oscar Moreno, Salacnib Baterina, Roan Libarios, Oscar Rodriguez, Clavel Martinez and
Antonio Nachura. They were assisted by a battery of private prosecutors led by now Secretary of Justice Hernando Perez and now Solicitor General
Simeon Marcelo. Serving as defense counsel were former Chief Justice Andres Narvasa, former Solicitor General and Secretary of Justice Estelito P.
Mendoza, former City Fiscal of Manila Jose Flaminiano, former Deputy Speaker of the House Raul Daza, Atty. Siegfried Fortun and his brother, Atty.
Raymund Fortun. The day to day trial was covered by live TV and during its course enjoyed the highest viewing rating. Its high and low points were the
constant conversational piece of the chattering classes. The dramatic point of the December hearings was the testimony of Clarissa Ocampo, senior vice
president of Equitable-PCI Bank. She testified that she was one foot away from petitioner Estrada when he affixed the signature "Jose Velarde" on
documents involving a P500 million investment agreement with their bank on February 4, 2000. 15

After the testimony of Ocampo, the impeachment trial was adjourned in the spirit of Christmas. When it resumed on January 2, 2001, more bombshells
were exploded by the prosecution. On January 11, Atty. Edgardo Espiritu who served as petitioner's Secretary of Finance took the witness stand. He
alleged that the petitioner jointly owned BW Resources Corporation with Mr. Dante Tan who was facing charges of insider trading. 16 Then came the
fateful day of January 16, when by a vote of 11-1017 the senator-judges ruled against the opening of the second envelope which allegedly contained
evidence showing that petitioner held P3.3 billion in a secret bank account under the name "Jose Velarde." The public and private prosecutors walked out
in protest of the ruling. In disgust, Senator Pimentel resigned as Senate President. 18 The ruling made at 10:00 p.m. was met by a spontaneous outburst of
anger that hit the streets of the metropolis. By midnight, thousands had assembled at the EDSA Shrine and speeches full of sulphur were delivered
against the petitioner and the eleven (11) senators.

On January 17, the public prosecutors submitted a letter to Speaker Fuentebella tendering their collective resignation. They also filed their Manifestation
of Withdrawal of Appearance with the impeachment tribunal.19 Senator Raul Roco quickly moved for the indefinite postponement of the impeachment
proceedings until the House of Representatives shall have resolved the issue of resignation of the public prosecutors. Chief Justice Davide granted the
motion.20

January 18 saw the high velocity intensification of the call for petitioner's resignation. A 10-kilometer line of people holding lighted candles formed a
human chain from the Ninoy Aquino Monument on Ayala Avenue in Makati City to the EDSA Shrine to symbolize the people's solidarity in demanding
petitioner's resignation. Students and teachers walked out of their classes in Metro Manila to show their concordance. Speakers in the continuing rallies at
the EDSA Shrine, all masters of the physics of persuasion, attracted more and more people. 21

On January 19, the fall from power of the petitioner appeared inevitable. At 1:20 p.m., the petitioner informed Executive Secretary Edgardo Angara that
General Angelo Reyes, Chief of Staff of the Armed Forces of the Philippines, had defected. At 2:30 p.m., petitioner agreed to the holding of a snap
election for President where he would not be a candidate. It did not diffuse the growing crisis. At 3:00 p.m., Secretary of National Defense Orlando
Mercado and General Reyes, together with the chiefs of all the armed services went to the EDSA Shrine. 22 In the presence of former Presidents Aquino
and Ramos and hundreds of thousands of cheering demonstrators, General Reyes declared that "on behalf of Your Armed Forces, the 130,000 strong
members of the Armed Forces, we wish to announce that we are withdrawing our support to this government." 23 A little later, PNP Chief, Director
General Panfilo Lacson and the major service commanders gave a similar stunning announcement. 24 Some Cabinet secretaries, undersecretaries, assistant
secretaries, and bureau chiefs quickly resigned from their posts. 25 Rallies for the resignation of the petitioner exploded in various parts of the country. To
stem the tide of rage, petitioner announced he was ordering his lawyers to agree to the opening of the highly controversial second envelope. 26 There was
no turning back the tide. The tide had become a tsunami.

January 20 turned to be the day of surrender. At 12:20 a.m., the first round of negotiations for the peaceful and orderly transfer of power started at
Malacañang'' Mabini Hall, Office of the Executive Secretary. Secretary Edgardo Angara, Senior Deputy Executive Secretary Ramon Bagatsing, Political
Adviser Angelito Banayo, Asst. Secretary Boying Remulla, and Atty. Macel Fernandez, head of the Presidential Management Staff, negotiated for the
petitioner. Respondent Arroyo was represented by now Executive Secretary Renato de Villa, now Secretary of Finance Alberto Romulo and now
Secretary of Justice Hernando Perez.27 Outside the palace, there was a brief encounter at Mendiola between pro and anti-Estrada protesters which resulted
in stone-throwing and caused minor injuries. The negotiations consumed all morning until the news broke out that Chief Justice Davide would administer
the oath to respondent Arroyo at high noon at the EDSA Shrine.

At about 12:00 noon, Chief Justice Davide administered the oath to respondent Arroyo as President of the Philippines. 28 At 2:30 p.m., petitioner and his
family hurriedly left Malacañang Palace.29 He issued the following press statement: 30

"20 January 2001

STATEMENT FROM

PRESIDENT JOSEPH EJERCITO ESTRADA

At twelve o'clock noon today, Vice President Gloria Macapagal-Arroyo took her oath as President of the Republic of the Philippines. While
along with many other legal minds of our country, I have strong and serious doubts about the legality and constitutionality of her proclamation
as President, I do not wish to be a factor that will prevent the restoration of unity and order in our civil society.

It is for this reason that I now leave Malacañang Palace, the seat of the presidency of this country, for the sake of peace and in order to begin
the healing process of our nation. I leave the Palace of our people with gratitude for the opportunities given to me for service to our people. I
will not shirk from any future challenges that may come ahead in the same service of our country.

I call on all my supporters and followers to join me in to promotion of a constructive national spirit of reconciliation and solidarity.

May the Almighty bless our country and beloved people.

MABUHAY!

(Sgd.) JOSEPH EJERCITO ESTRADA"

It also appears that on the same day, January 20, 2001, he signed the following letter: 31

"Sir:
 By virtue of the provisions of Section 11, Article VII of the Constitution, I am hereby transmitting this declaration that I am unable to exercise
the powers and duties of my office. By operation of law and the Constitution, the Vice-President shall be the Acting President.

(Sgd.) JOSEPH EJERCITO ESTRADA"

A copy of the letter was sent to former Speaker Fuentebella at 8:30 a.m. on January 20. 23 Another copy was transmitted to Senate President Pimentel on
the same day although it was received only at 9:00 p.m.33

On January 22, the Monday after taking her oath, respondent Arroyo immediately discharged the powers the duties of the Presidency. On the same day,
this Court issued the following Resolution in Administrative Matter No. 01-1-05-SC, to wit:

"A.M. No. 01-1-05-SC — In re: Request of Vice President Gloria Macapagal-Arroyo to Take her Oath of Office as President of the Republic
of the Philippines before the Chief Justice — Acting on the urgent request of Vice President Gloria Macapagal-Arroyo to be sworn in as
President of the Republic of the Philippines, addressed to the Chief Justice and confirmed by a letter to the Court, dated January 20, 2001,
which request was treated as an administrative matter, the court Resolve unanimously to confirm the authority given by the twelve (12)
members of the Court then present to the Chief Justice on January 20, 2001 to administer the oath of office of Vice President Gloria
Macapagal-Arroyo as President of the Philippines, at noon of January 20, 2001.1âwphi1.nêt

This resolution is without prejudice to the disposition of any justiciable case that may be filed by a proper party."

Respondent Arroyo appointed members of her Cabinet as well as ambassadors and special envoys. 34 Recognition of respondent Arroyo's government by
foreign governments swiftly followed. On January 23, in a reception or vin d' honneur at Malacañang, led by the Dean of the Diplomatic Corps, Papal
Nuncio Antonio Franco, more than a hundred foreign diplomats recognized the government of respondent Arroyo. 35 US President George W. Bush gave
the respondent a telephone call from the White House conveying US recognition of her government. 36

On January 24, Representative Feliciano Belmonte was elected new Speaker of the House of Representatives. 37 The House then passed Resolution No.
175 "expressing the full support of the House of Representatives to the administration of Her Excellency, Gloria Macapagal-Arroyo, President of the
Philippines."38 It also approved Resolution No. 176 "expressing the support of the House of Representatives to the assumption into office by Vice
President Gloria Macapagal-Arroyo as President of the Republic of the Philippines, extending its congratulations and expressing its support for her
administration as a partner in the attainment of the nation's goals under the Constitution." 39

On January 26, the respondent signed into law the Solid Waste Management Act. 40 A few days later, she also signed into law the Political Advertising
ban and Fair Election Practices Act.41

On February 6, respondent Arroyo nominated Senator Teofisto Guingona, Jr., as her Vice President. 42 The next day, February 7, the Senate adopted
Resolution No. 82 confirming the nomination of Senator Guingona, Jr. 43 Senators Miriam Defensor-Santiago, Juan Ponce Enrile, and John Osmena voted
"yes" with reservations, citing as reason therefor the pending challenge on the legitimacy of respondent Arroyo's presidency before the Supreme Court.
Senators Teresa Aquino-Oreta and Robert Barbers were absent. 44 The House of Representatives also approved Senator Guingona's nomination in
Resolution No. 178.45 Senator Guingona, Jr. took his oath as Vice President two (2) days later. 46

On February 7, the Senate passed Resolution No. 83 declaring that the impeachment court is functus officio and has been terminated.47 Senator Miriam
Defensor-Santiago stated "for the record" that she voted against the closure of the impeachment court on the grounds that the Senate had failed to decide
on the impeachment case and that the resolution left open the question of whether Estrada was still qualified to run for another elective post. 48

Meanwhile, in a survey conducted by Pulse Asia, President Arroyo's public acceptance rating jacked up from 16% on January 20, 2001 to 38% on
January 26, 2001.49 In another survey conducted by the ABS-CBN/SWS from February 2-7, 2001, results showed that 61% of the Filipinos nationwide
accepted President Arroyo as replacement of petitioner Estrada. The survey also revealed that President Arroyo is accepted by 60% in Metro Manila, by
also 60% in the balance of Luzon, by 71% in the Visayas, and 55% in Mindanao. Her trust rating increased to 52%. Her presidency is accepted by
majorities in all social classes: 58% in the ABC or middle-to-upper classes, 64% in the D or mass class, and 54% among the E's or very poor class. 50

After his fall from the pedestal of power, the petitioner's legal problems appeared in clusters. Several cases previously filed against him in the Office of
the Ombudsman were set in motion. These are: (1) OMB Case No. 0-00-1629, filed by Ramon A. Gonzales on October 23, 2000 for bribery and graft
and corruption; (2) OMB Case No. 0-00-1754 filed by the Volunteers Against Crime and Corruption on November 17, 2000 for plunder, forfeiture, graft
and corruption, bribery, perjury, serious misconduct, violation of the Code of Conduct for Government Employees, etc; (3) OMB Case No. 0-00-1755
filed by the Graft Free Philippines Foundation, Inc. on November 24, 2000 for plunder, forfeiture, graft and corruption, bribery, perjury, serious
misconduct; (4) OMB Case No. 0-00-1756 filed by Romeo Capulong, et al., on November 28, 2000 for malversation of public funds, illegal use of public
funds and property, plunder, etc.; (5) OMB Case No. 0-00-1757 filed by Leonard de Vera, et al., on November 28, 2000 for bribery, plunder, indirect
bribery, violation of PD 1602, PD 1829, PD 46, and RA 7080; and (6) OMB Case No. 0-00-1758 filed by Ernesto B. Francisco, Jr. on December 4, 2000
for plunder, graft and corruption.

A special panel of investigators was forthwith created by the respondent Ombudsman to investigate the charges against the petitioner. It is chaired by
Overall Deputy Ombudsman Margarito P. Gervasio with the following as members, viz: Director Andrew Amuyutan, Prosecutor Pelayo Apostol, Atty.
Jose de Jesus and Atty. Emmanuel Laureso. On January 22, the panel issued an Order directing the petitioner to file his counter-affidavit and the
affidavits of his witnesses as well as other supporting documents in answer to the aforementioned complaints against him.

Thus, the stage for the cases at bar was set. On February 5, petitioner filed with this Court GR No. 146710-15, a petition for prohibition with a prayer for
a writ of preliminary injunction. It sought to enjoin the respondent Ombudsman from "conducting any further proceedings in Case Nos. OMB 0-00-1629,
1754, 1755, 1756, 1757 and 1758 or in any other criminal complaint that may be filed in his office, until after the term of petitioner as President is over
and only if legally warranted." Thru another counsel, petitioner, on February 6, filed GR No. 146738 for Quo Warranto. He prayed for judgment
"confirming petitioner to be the lawful and incumbent President of the Republic of the Philippines temporarily unable to discharge the duties of his
office, and declaring respondent to have taken her oath as and to be holding the Office of the President, only in an acting capacity pursuant to the
provisions of the Constitution." Acting on GR Nos. 146710-15, the Court, on the same day, February 6, required the respondents "to comment thereon
within a non-extendible period expiring on 12 February 2001." On February 13, the Court ordered the consolidation of GR Nos. 146710-15 and GR No.
146738 and the filing of the respondents' comments "on or before 8:00 a.m. of February 15."

On February 15, the consolidated cases were orally argued in a four-hour hearing. Before the hearing, Chief Justice Davide, Jr. 51 and Associate Justice
Artemio Panganiban52 recused themselves on motion of petitioner's counsel, former Senator Rene A. Saguisag. They debunked the charge of counsel
Saguisag that they have "compromised themselves by indicating that they have thrown their weight on one side" but nonetheless inhibited themselves.
Thereafter, the parties were given the short period of five (5) days to file their memoranda and two (2) days to submit their simultaneous replies.

In a resolution dated February 20, acting on the urgent motion for copies of resolution and press statement for "Gag Order" on respondent Ombudsman
filed by counsel for petitioner in G.R. No. 146738, the Court resolved:

"(1) to inform the parties that the Court did not issue a resolution on January 20, 2001 declaring the office of the President vacant and that
neither did the Chief Justice issue a press statement justifying the alleged resolution;

(2) to order the parties and especially their counsel who are officers of the Court under pain of being cited for contempt to refrain from making
any comment or discussing in public the merits of the cases at bar while they are still pending decision by the Court, and

(3) to issue a 30-day status quo order effective immediately enjoining the respondent Ombudsman from resolving or deciding the criminal
cases pending investigation in his office against petitioner, Joseph E. Estrada and subject of the cases at bar, it appearing from news reports
that the respondent Ombudsman may immediately resolve the cases against petitioner Joseph E. Estrada seven (7) days after the hearing held
on February 15, 2001, which action will make the cases at bar moot and academic." 53

The parties filed their replies on February 24. On this date, the cases at bar were deemed submitted for decision.

The bedrock issues for resolution of this Court are:

Whether the petitions present a justiciable controversy.

II

Assuming that the petitions present a justiciable controversy, whether petitioner Estrada is a President on leave while respondent Arroyo is an
Acting President.

III

Whether conviction in the impeachment proceedings is a condition precedent for the criminal prosecution of petitioner Estrada. In the negative
and on the assumption that petitioner is still President, whether he is immune from criminal prosecution.

IV

Whether the prosecution of petitioner Estrada should be enjoined on the ground of prejudicial publicity.

We shall discuss the issues in seriatim.

Whether or not the cases

At bar involve a political question

Private respondents54 raise the threshold issue that the cases at bar pose a political question, and hence, are beyond the jurisdiction of this Court to decide.
They contend that shorn of its embroideries, the cases at bar assail the "legitimacy of the Arroyo administration." They stress that respondent Arroyo
ascended the presidency through people power; that she has already taken her oath as the 14 th President of the Republic; that she has exercised the powers
of the presidency and that she has been recognized by foreign governments. They submit that these realities on ground constitute the political thicket,
which the Court cannot enter.

We reject private respondents' submission. To be sure, courts here and abroad, have tried to lift the shroud on political question but its exact latitude still
splits the best of legal minds. Developed by the courts in the 20th century, the political question doctrine which rests on the principle of separation of
powers and on prudential considerations, continue to be refined in the mills of constitutional law. 55 In the United States, the most authoritative guidelines
to determine whether a question is political were spelled out by Mr. Justice Brennan in the 1962 case or Baker v. Carr,56 viz:

"x x x Prominent on the surface of any case held to involve a political question is found a textually demonstrable constitutional commitment of
the issue to a coordinate political department or a lack of judicially discoverable and manageable standards for resolving it, or the impossibility
of deciding without an initial policy determination of a kind clearly for non-judicial discretion; or the impossibility of a court's undertaking
independent resolution without expressing lack of the respect due coordinate branches of government; or an unusual need for unquestioning
adherence to a political decision already made; or the potentiality of embarrassment from multifarious pronouncements by various departments
 on question. Unless one of these formulations is inextricable from the case at bar, there should be no dismissal for non justiciability on the
ground of a political question's presence. The doctrine of which we treat is one of 'political questions', not of 'political cases'."

In the Philippine setting, this Court has been continuously confronted with cases calling for a firmer delineation of the inner and outer perimeters of a
political question.57 Our leading case is Tanada v. Cuenco,58 where this Court, through former Chief Justice Roberto Concepcion, held that political
questions refer "to those questions which, under the Constitution, are to be decided by the people in their sovereign capacity, or in regard to which full
discretionary authority has been delegated to the legislative or executive branch of the government. It is concerned with issues dependent upon
the wisdom, not legality of a particular measure." To a great degree, the 1987 Constitution has narrowed the reach of the political question doctrine when
it expanded the power of judicial review of this court not only to settle actual controversies involving rights which are legally demandable and
enforceable but also to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the
part of any branch or instrumentality of government.59 Heretofore, the judiciary has focused on the "thou shalt not's" of the Constitution directed
against the exercise of its jurisdiction.60 With the new provision, however, courts are given a greater prerogative to determine what it can do to prevent
grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of government. Clearly, the new
provision did not just grant the Court power of doing nothing. In sync and symmetry with this intent are other provisions of the 1987 Constitution
trimming the so called political thicket. Prominent of these provisions is section 18 of Article VII which empowers this Court in limpid language to "x x
x review, in an appropriate proceeding filed by any citizen, the sufficiency of the factual basis of the proclamation of martial law or the suspension of the
privilege of the writ (of habeas corpus) or the extension thereof x x x."

Respondents rely on the case of Lawyers League for a Better Philippines and/or Oliver A. Lozano v. President Corazon C. Aquino, et al. 61 and
related cases62 to support their thesis that since the cases at bar involve the legitimacy of the government of respondent Arroyo, ergo, they present a
political question. A more cerebral reading of the cited cases will show that they are inapplicable. In the cited cases, we held that the government of
former President Aquino was the result of a successful revolution by the sovereign people, albeit a peaceful one. No less than the Freedom
Constitution63 declared that the Aquino government was installed through a direct exercise of the power of the Filipino people "in defiance of the
provisions of the 1973 Constitution, as amended." In is familiar learning that the legitimacy of a government sired by a successful revolution by
people power is beyond judicial scrutiny for that government automatically orbits out of the constitutional loop. In checkered contrast, the government
of respondent Arroyo is not revolutionary in character. The oath that she took at the EDSA Shrine is the oath under the 1987 Constitution. 64 In her
oath, she categorically swore to preserve and defend the 1987 Constitution. Indeed, she has stressed that she is discharging the powers of the
presidency under the authority of the 1987 Constitution.

In fine, the legal distinction between EDSA People Power I EDSA People Power II is clear. EDSA I involves the exercise of the people power of
revolution which overthrew the whole government. EDSA II is an exercise of people power of freedom of speech and freedom of assembly to
petition the government for redress of grievances which only affected the office of the President. EDSA I is extra constitutional and the legitimacy
of the new government that resulted from it cannot be the subject of judicial review, but EDSA II is intra constitutional and the resignation of the
sitting President that it caused and the succession of the Vice President as President are subject to judicial review. EDSA I presented a political
question; EDSA II involves legal questions. A brief discourse on freedom of speech and of the freedom of assembly to petition the government for
redress of grievance which are the cutting edge of EDSA People Power II is not inappropriate.

Freedom of speech and the right of assembly are treasured by Filipinos. Denial of these rights was one of the reasons of our 1898 revolution against
Spain. Our national hero, Jose P. Rizal, raised the clarion call for the recognition of freedom of the press of the Filipinos and included it as among "the
reforms sine quibus non."65 The Malolos Constitution, which is the work of the revolutionary Congress in 1898, provided in its Bill of Rights that
Filipinos shall not be deprived (1) of the right to freely express his ideas or opinions, orally or in writing, through the use of the press or other similar
means; (2) of the right of association for purposes of human life and which are not contrary to public means; and (3) of the right to send petitions to the
authorities, individually or collectively." These fundamental rights were preserved when the United States acquired jurisdiction over the
Philippines. In the Instruction to the Second Philippine Commission of April 7, 1900 issued by President McKinley, it is specifically provided "that no
law shall be passed abridging the freedom of speech or of the press or of the rights of the people to peaceably assemble and petition the Government for
redress of grievances." The guaranty was carried over in the Philippine Bill, the Act of Congress of July 1, 1902 and the Jones Law, the Act of Congress
of August 29, 1966.66

Thence on, the guaranty was set in stone in our 1935 Constitution,67 and the 197368 Constitution. These rights are now safely ensconced in section 4,
Article III of the 1987 Constitution, viz:

"Sec. 4. No law shall be passed abridging the freedom of speech, of expression, or of the press, or the right of the people peaceably to
assemble and petition the government for redress of grievances."

The indispensability of the people's freedom of speech and of assembly to democracy is now self-evident. The reasons are well put by Emerson: first,
freedom of expression is essential as a means of assuring individual fulfillment; second, it is an essential process for advancing knowledge and
discovering truth; third, it is essential to provide for participation in decision-making by all members of society; and fourth, it is a method of achieving a
more adaptable and hence, a more stable community of maintaining the precarious balance between healthy cleavage and necessary consensus." 69 In this
sense, freedom of speech and of assembly provides a framework in which the "conflict necessary to the progress of a society can take place
without destroying the society."70 In Hague v. Committee for Industrial Organization, 71 this function of free speech and assembly was echoed in
the amicus curiae filed by the Bill of Rights Committee of the American Bar Association which emphasized that "the basis of the right of assembly is the
substitution of the expression of opinion and belief by talk rather than force; and this means talk for all and by all."72 In the relatively recent case
of Subayco v. Sandiganbayan,73 this Court similar stressed that "… it should be clear even to those with intellectual deficits that when the sovereign
people assemble to petition for redress of grievances, all should listen. For in a democracy, it is the people who count; those who are deaf to their
grievances are ciphers."

Needless to state, the cases at bar pose legal and not political questions. The principal issues for resolution require the proper interpretation of certain
provisions in the 1987 Constitution, notably section 1 of Article II, 74 and section 875 of Article VII, and the allocation of governmental powers under
section 1176 of Article VII. The issues likewise call for a ruling on the scope of presidential immunity from suit. They also involve the correct calibration
of the right of petitioner against prejudicial publicity. As early as the 1803 case of Marbury v. Madison,77 the doctrine has been laid down that "it is
emphatically the province and duty of the judicial department to say what the law is . . ." Thus, respondent's in vocation of the doctrine of political
question is but a foray in the dark.

II
 Whether or not the petitioner
Resigned as President

We now slide to the second issue. None of the parties considered this issue as posing a political question. Indeed, it involves a legal question whose
factual ingredient is determinable from the records of the case and by resort to judicial notice. Petitioner denies he resigned as President or that he suffers
from a permanent disability. Hence, he submits that the office of the President was not vacant when respondent Arroyo took her oath as President.

The issue brings under the microscope the meaning of section 8, Article VII of the Constitution which provides:

"Sec. 8. In case of death, permanent disability, removal from office or resignation of the President, the Vice President shall become the
President to serve the unexpired term. In case of death, permanent disability, removal from office, or resignation of both the President and
Vice President, the President of the Senate or, in case of his inability, the Speaker of the House of Representatives, shall then act as President
until the President or Vice President shall have been elected and qualified.

x x x."

The issue then is whether the petitioner resigned as President or should be considered resigned as of January 20, 2001 when respondent took her oath as
the 14th President of the Public. Resignation is not a high level legal abstraction. It is a factual question and its elements are beyond quibble: there must
be an intent to resign and the intent must be coupled by acts of relinquishment. 78 The validity of a resignation is not government by any formal
requirement as to form. It can be oral. It can be written. It can be express. It can be implied. As long as the resignation is clear, it must be given legal
effect.

In the cases at bar, the facts show that petitioner did not write any formal letter of resignation before he evacuated Malacañang Palace in the afternoon of
January 20, 2001 after the oath-taking of respondent Arroyo. Consequently, whether or not petitioner resigned has to be determined from his act and
omissions before, during and after January 20, 2001 or by the totality of prior, contemporaneous and posterior facts and circumstantial evidence
bearing a material relevance on the issue.

Using this totality test, we hold that petitioner resigned as President.

To appreciate the public pressure that led to the resignation of the petitioner, it is important to follow the succession of events after the exposẻ of
Governor Singson. The Senate Blue Ribbon Committee investigated. The more detailed revelations of petitioner's alleged misgovernance in the Blue
Ribbon investigation spiked the hate against him. The Articles of Impeachment filed in the House of Representatives which initially was given a near
cipher chance of succeeding snowballed. In express speed, it gained the signatures of 115 representatives or more than 1/3 of the House of
Representatives. Soon, petitioner's powerful political allies began deserting him. Respondent Arroyo quit as Secretary of Social Welfare. Senate
President Drilon and former Speaker Villar defected with 47 representatives in tow. Then, his respected senior economic advisers resigned together with
his Secretary of Trade and Industry.

As the political isolation of the petitioner worsened, the people's call for his resignation intensified. The call reached a new crescendo when the eleven
(11) members of the impeachment tribunal refused to open the second envelope. It sent the people to paroxysms of outrage. Before the night of January
16 was over, the EDSA Shrine was swarming with people crying for redress of their grievance. Their number grew exponentially. Rallies and
demonstration quickly spread to the countryside like a brush fire.

As events approached January 20, we can have an authoritative window on the state of mind of the petitioner. The window is provided in the "Final
Days of Joseph Ejercito Estrada," the diary of Executive Secretary Angara serialized in the Philippine Daily Inquirer.79 The Angara Diary reveals that
in the morning of January 19, petitioner's loyal advisers were worried about the swelling of the crowd at EDSA, hence, they decided to create an ad hoc
committee to handle it. Their worry would worsen. At 1:20 p.m., petitioner pulled Secretary Angara into his small office at the presidential residence and
exclaimed: "Ed, seryoso na ito. Kumalas na si Angelo (Reyes) (Ed, this is serious. Angelo has defected.)" 80 An hour later or at 2:30 p.m., the petitioner
decided to call for a snap presidential election and stressed he would not be a candidate. The proposal for a snap election for president in May
where he would not be a candidate is an indicium that petitioner had intended to give up the presidency even at that time. At 3:00 p.m., General
Reyes joined the sea of EDSA demonstrators demanding the resignation of the petitioner and dramatically announced the AFP's withdrawal of support
from the petitioner and their pledge of support to respondent Arroyo. The seismic shift of support left petitioner weak as a president. According to
Secretary Angara, he asked Senator Pimentel to advise petitioner to consider the option of "dignified exit or resignation."81 Petitioner did not disagree
but listened intently.82 The sky was falling fast on the petitioner. At 9:30 p.m., Senator Pimentel repeated to the petitioner the urgency of making a
graceful and dignified exit. He gave the proposal a sweetener by saying that petitioner would be allowed to go abroad with enough funds to support him
and his family.83 Significantly, the petitioner expressed no objection to the suggestion for a graceful and dignified exit but said he would never
leave the country.84 At 10:00 p.m., petitioner revealed to Secretary Angara, "Ed, Angie (Reyes) guaranteed that I would have five days to a week in the
palace."85 This is proof that petitioner had reconciled himself to the reality that he had to resign. His mind was already concerned with the five-
day grace period he could stay in the palace. It was a matter of time.

The pressure continued piling up. By 11:00 p.m., former President Ramos called up Secretary Angara and requested, "Ed, magtulungan tayo para
magkaroon tayo ng (let's cooperate to ensure a) peaceful and orderly transfer of power."86 There was no defiance to the request. Secretary Angara
readily agreed. Again, we note that at this stage, the problem was already about a peaceful and orderly transfer of power. The resignation of the
petitioner was implied.

The first negotiation for a peaceful and orderly transfer of power immediately started at 12:20 a.m. of January 20, that fateful Saturday. The negotiation
was limited to three (3) points: (1) the transition period of five days after the petitioner's resignation; (2) the guarantee of the safety of the petitioner and
his family, and (3) the agreement to open the second envelope to vindicate the name of the petitioner. 87 Again, we note that the resignation of
petitioner was not a disputed point. The petitioner cannot feign ignorance of this fact. According to Secretary Angara, at 2:30 a.m., he briefed the
petitioner on the three points and the following entry in the Angara Diary shows the reaction of the petitioner, viz:

"x x x
 I explain what happened during the first round of negotiations. The President immediately stresses that he just wants the five-day period
promised by Reyes, as well as to open the second envelope to clear his name.

If the envelope is opened, on Monday, he says, he will leave by Monday.

The President says. "Pagod na pagod na ako. Ayoko na masyado nang masakit. Pagod na ako sa red tape, bureaucracy, intriga. (I am
very tired. I don't want any more of this – it's too painful. I'm tired of the red tape, the bureaucracy, the intrigue.)

I just want to clear my name, then I will go."88

Again, this is high grade evidence that the petitioner has resigned. The intent to resign is clear when he said "x x x Ayoko na masyado nang
masakit." "Ayoko na" are words of resignation.

The second round of negotiation resumed at 7:30 a.m. According to the Angara Diary, the following happened:

"Opposition's deal

7:30 a.m. – Rene arrives with Bert Romulo and (Ms. Macapagal's spokesperson) Rene Corona. For this round, I am accompanied by Dondon
Bagatsing and Macel.

Rene pulls out a document titled "Negotiating Points." It reads:

'1. The President shall sign a resignation document within the day, 20 January 2001, that will be effective on Wednesday, 24 January 2001, on
which day the Vice President will assume the Presidency of the Republic of the Philippines.

2. Beginning to day, 20 January 2001, the transition process for the assumption of the new administration shall commence, and persons
designated by the Vice President to various positions and offices of the government shall start their orientation activities in coordination with
the incumbent officials concerned.

3. The Armed Forces of the Philippines and the Philippine National Police shall function under the Vice President as national military and
police authority effective immediately.

4. The Armed Forced of the Philippines, through its Chief of Staff, shall guarantee the security of the President and his family as approved by
the national military and police authority (Vice President).

5. It is to be noted that the Senate will open the second envelope in connection with the alleged savings account of the President in the
Equitable PCI Bank in accordance with the rules of the Senate, pursuant to the request to the Senate President.

Our deal

We bring out, too, our discussion draft which reads:

The undersigned parties, for and in behalf of their respective principals, agree and undertake as follows:

'1. A transition will occur and take place on Wednesday, 24 January 2001, at which time President Joseph Ejercito Estrada will turn over the
presidency to Vice President Gloria Macapagal-Arroyo.

'2. In return, President Estrada and his families are guaranteed security and safety of their person and property throughout their natural
lifetimes. Likewise, President Estrada and his families are guarantee freedom from persecution or retaliation from government and the private
sector throughout their natural lifetimes.

This commitment shall be guaranteed by the Armed Forces of the Philippines (AFP) through the Chief of Staff, as approved by the national
military and police authorities – Vice President (Macapagal).

'3. Both parties shall endeavor to ensure that the Senate sitting as an impeachment court will authorize the opening of the second envelope in
the impeachment trial as proof that the subject savings account does not belong to President Estrada.

'4. During the five-day transition period between 20 January 2001 and 24 January 2001 (the 'Transition Period"), the incoming Cabinet
members shall receive an appropriate briefing from the outgoing Cabinet officials as part of the orientation program.

During the Transition Period, the AFP and the Philippine National Police (PNP) shall function Vice President (Macapagal) as national military
and police authorities.

Both parties hereto agree that the AFP chief of staff and PNP director general shall obtain all the necessary signatures as affixed to this
agreement and insure faithful implementation and observance thereof.

Vice President Gloria Macapagal-Arroyo shall issue a public statement in the form and tenor provided for in "Annex A" heretofore attached to
this agreement."89
The second round of negotiation cements the reading that the petitioner has resigned. It will be noted that during this second round of negotiation, the
resignation of the petitioner was again treated as a given fact. The only unsettled points at that time were the measures to be undertaken by the parties
during and after the transition period.

According to Secretary Angara, the draft agreement, which was premised on the resignation of the petitioner was further refined. It was then, signed by
their side and he was ready to fax it to General Reyes and Senator Pimentel to await the signature of the United Opposition. However, the signing by the
party of the respondent Arroyo was aborted by her oath-taking. The Angara diary narrates the fateful events, viz;90

"xxx

11:00 a.m. – Between General Reyes and myself, there is a firm agreement on the five points to effect a peaceful transition. I can hear the
general clearing all these points with a group he is with. I hear voices in the background.

Agreement.

The agreement starts: 1. The President shall resign today, 20 January 2001, which resignation shall be effective on 24 January 2001, on which
day the Vice President will assume the presidency of the Republic of the Philippines.

xxx

The rest of the agreement follows:

2. The transition process for the assumption of the new administration shall commence on 20 January 2001, wherein persons designated by the
Vice President to various government positions shall start orientation activities with incumbent officials.

'3. The Armed Forces of the Philippines through its Chief of Staff, shall guarantee the safety and security of the President and his families
throughout their natural lifetimes as approved by the national military and police authority – Vice President.

'4. The AFP and the Philippine National Police (PNP) shall function under the Vice President as national military and police authorities.

'5. Both parties request the impeachment court to open the second envelope in the impeachment trial, the contents of which shall be offered as
proof that the subject savings account does not belong to the President.

The Vice President shall issue a public statement in the form and tenor provided for in Annex "B" heretofore attached to this agreement.

11:20 a.m. – I am all set to fax General Reyes and Nene Pimentel our agreement, signed by our side and awaiting the signature of the United
opposition.

And then it happens. General Reyes calls me to say that the Supreme Court has decided that Gloria Macapagal-Arroyo is President and will be
sworn in at 12 noon.

'Bakit hindi naman kayo nakahintay? Paano na ang agreement (why couldn't you wait? What about the agreement)?'  I asked.

Reyes answered: 'Wala na, sir (it's over, sir).'

I ask him: Di yung  transition period, moot and academic na?'

And General Reyes answers: '  Oo nga, I  delete na natin,  sir (yes, we're deleting the part).'

Contrary to subsequent reports, I do not react and say that there was a double cross.

But I immediately instruct Macel to delete the first provision on resignation since this matter is already moot and academic. Within moments,
Macel erases the first provision and faxes the documents, which have been signed by myself, Dondon and Macel, to Nene Pimentel and
General Reyes.

I direct Demaree Ravel to rush the original document to General Reyes for the signatures of the other side, as it is important that the provisions
on security, at least, should be respected.

I then advise the President that the Supreme Court has ruled that Chief Justice Davide will administer the oath to Gloria at 12 noon.

The President is too stunned for words:

Final meal

12 noon – Gloria takes her oath as president of the Republic of the Philippines.

12:20 p.m. – The PSG distributes firearms to some people inside the compound.
 The president is having his final meal at the presidential Residence with the few friends and Cabinet members who have gathered.

By this time, demonstrators have already broken down the first line of defense at Mendiola. Only the PSG is there to protect the Palace, since
the police and military have already withdrawn their support for the President.

1 p.m. – The President's personal staff is rushing to pack as many of the Estrada family's personal possessions as they can.

During lunch, Ronnie Puno mentions that the president needs to release a final statement before leaving Malacañang.

The statement reads: At twelve o'clock noon today, Vice President Gloria Macapagal-Arroyo took her oath as President of the Republic of the
Philippines. While along with many other legal minds of our country, I have strong and serious doubts about the legality and constitutionality
of her proclamation as President, I do not wish to be a factor that will prevent the restoration of unity and order in our civil society.

It is for this reason that I now leave Malacañang Palace, the seat of the presidency of this country, for the sake of peace and in order to begin
the healing process of our nation. I leave the Palace of our people with gratitude for the opportunities given to me for service to our people. I
will not shirk from any future challenges that may come ahead in the same service of our country.

I call on all my supporters and followers to join me in the promotion of a constructive national spirit of reconciliation and solidarity.

May the Almighty bless our country and our beloved people.

MABUHAY!"'

It was curtain time for the petitioner.

In sum, we hold that the resignation of the petitioner cannot be doubted. It was confirmed by his leaving Malacañang. In the press release containing his
final statement, (1) he acknowledged the oath-taking of the respondent as President of the Republic albeit with reservation about its legality; (2) he
emphasized he was leaving the Palace, the seat of the presidency, for the sake of peace and in order to begin the healing process of our nation. He did not
say he was leaving the Palace due to any kind inability and that he was going to re-assume the presidency as soon as the disability disappears: (3) he
expressed his gratitude to the people for the opportunity to serve them. Without doubt, he was referring to the past opportunity given him to serve the
people as President (4) he assured that he will not shirk from any future challenge that may come ahead in the same service of our country. Petitioner's
reference is to a future challenge after occupying the office of the president which he has given up; and (5) he called on his supporters to join him in the
promotion of a constructive national spirit of reconciliation and solidarity. Certainly, the national spirit of reconciliation and solidarity could not be
attained if he did not give up the presidency. The press release was petitioner's valedictory, his final act of farewell. His presidency is now in the part
tense.

It is, however, urged that the petitioner did not resign but only took a temporary leave dated January 20, 2001 of the petitioner sent to Senate President
Pimentel and Speaker Fuentebella is cited. Again, we refer to the said letter, viz:

"Sir.

By virtue of the provisions of Section II, Article VII of the Constitution, I am hereby transmitting this declaration that I am unable to exercise
the powers and duties of my office. By operation of law and the Constitution, the Vice President shall be the Acting president.

(Sgd.) Joseph Ejercito Estrada"

To say the least, the above letter is wrapped in mystery.91 The pleadings filed by the petitioner in the cases at bar did not discuss, may even intimate, the
circumstances that led to its preparation. Neither did the counsel of the petitioner reveal to the Court these circumstances during the oral argument. It
strikes the Court as strange that the letter, despite its legal value, was never referred to by the petitioner during the week-long crisis. To be sure, there was
not the slightest hint of its existence when he issued his final press release. It was all too easy for him to tell the Filipino people in his press release that
he was temporarily unable to govern and that he was leaving the reins of government to respondent Arroyo for the time bearing. Under any circumstance,
however, the mysterious letter cannot negate the resignation of the petitioner. If it was prepared before the press release of the petitioner clearly as a later
act. If, however, it was prepared after the press released, still, it commands scant legal significance. Petitioner's resignation from the presidency cannot be
the subject of a changing caprice nor of a whimsical will especially if the resignation is the result of his reputation by the people. There is another reason
why this Court cannot given any legal significance to petitioner's letter and this shall be discussed in issue number III of this Decision.

After petitioner contended that as a matter of fact he did not resign, he also argues that he could not resign as a matter of law. He relies on section 12 of
RA No. 3019, otherwise known as the Anti-graft and Corrupt Practices Act, which allegedly prohibits his resignation, viz:

"Sec. 12. No public officer shall be allowed to resign or retire pending an investigation, criminals or administrative, or pending a prosecution
against him, for any offense under this Act or under the provisions of the Revised Penal Code on bribery."

A reading of the legislative history of RA No. 3019 will hardly provide any comfort to the petitioner. RA No. 3019 originated form Senate Bill No. 293.
The original draft of the bill, when it was submitted to the Senate, did not contain a provision similar to section 12 of the law as it now stands. However,
in his sponsorship speech, Senator Arturo Tolentino, the author of the bill, "reserved to propose during the period of amendments the inclusion of a
provision to the effect that no public official who is under prosecution for any act of graft or corruption, or is under administrative investigation, shall be
allowed to voluntarily resign or retire."92 During the period of amendments, the following provision was inserted as section 15:

"Sec. 15. Termination of office – No public official shall be allowed to resign or retire pending an investigation, criminal or administrative, or
pending a prosecution against him, for any offense under the Act or under the provisions of the Revised Penal Code on bribery.
 The separation or cessation of a public official form office shall not be a bar to his prosecution under this Act for an offense committed during
his incumbency."93

The bill was vetoed by then President Carlos P. Garcia who questioned the legality of the second paragraph of the provision and insisted that the
President's immunity should extend after his tenure.

Senate Bill No. 571, which was substantially similar Senate Bill No. 293, was thereafter passed. Section 15 above became section 13 under the new bill,
but the deliberations on this particular provision mainly focused on the immunity of the President, which was one of the reasons for the veto of the
original bill. There was hardly any debate on the prohibition against the resignation or retirement of a public official with pending criminal and
administrative cases against him. Be that as it may, the intent of the law ought to be obvious. It is to prevent the act of resignation or retirement from
being used by a public official as a protective shield to stop the investigation of a pending criminal or administrative case against him and to prevent his
prosecution under the Anti-Graft Law or prosecution for bribery under the Revised Penal Code. To be sure, no person can be compelled to render service
for that would be a violation of his constitutional right.94 A public official has the right not to serve if he really wants to retire or resign. Nevertheless, if
at the time he resigns or retires, a public official is facing administrative or criminal investigation or prosecution, such resignation or retirement will not
cause the dismissal of the criminal or administrative proceedings against him. He cannot use his resignation or retirement to avoid prosecution.

There is another reason why petitioner's contention should be rejected. In the cases at bar, the records show that when petitioner resigned on January 20,
2001, the cases filed against him before the Ombudsman were OMB Case Nos. 0-00-1629, 0-00-1755, 0-00-1756, 0-00-1757 and 0-00-1758. While these
cases have been filed, the respondent Ombudsman refrained from conducting the preliminary investigation of the petitioner for the reason that as the
sitting President then, petitioner was immune from suit. Technically, the said cases cannot be considered as pending for the Ombudsman lacked
jurisdiction to act on them. Section 12 of RA No. 3019 cannot therefore be invoked by the petitioner for it contemplates of cases whose investigation or
prosecution do not suffer from any insuperable legal obstacle like the immunity from suit of a sitting President.

Petitioner contends that the impeachment proceeding is an administrative investigation that, under section 12 of RA 3019, bars him from resigning. We
hold otherwise. The exact nature of an impeachment proceeding is debatable. But even assuming arguendo that it is an administrative proceeding, it can
not be considered pending at the time petitioner resigned because the process already broke down when a majority of the senator-judges voted against the
opening of the second envelope, the public and private prosecutors walked out, the public prosecutors filed their Manifestation of Withdrawal of
Appearance, and the proceedings were postponed indefinitely. There was, in effect, no impeachment case pending against petitioner when he resigned.

III

Whether or not the petitioner Is only temporarily unable to Act as President.

We shall now tackle the contention of the petitioner that he is merely temporarily unable to perform the powers and duties of the presidency, and hence is
a President on leave. As aforestated, the inability claim is contained in the January 20, 2001 letter of petitioner sent on the same day to Senate President
Pimentel and Speaker Fuentebella.

Petitioner postulates that respondent Arroyo as Vice President has no power to adjudge the inability of the petitioner to discharge the powers and duties
of the presidency. His significant submittal is that "Congress has the ultimate authority under the Constitution to determine whether the President is
incapable of performing his functions in the manner provided for in section 11 of article VII." 95 This contention is the centerpiece of petitioner's
stance that he is a President on leave and respondent Arroyo is only an Acting President.

An examination of section 11, Article VII is in order. It provides:

"SEC. 11. Whenever the President transmits to the President of the Senate and the Speaker of the House of Representatives his written
declaration that he is unable to discharge the powers and duties of his office, and until he transmits to them a written declaration to the
contrary, such powers and duties shall be discharged by the Vice-President as Acting President.

Whenever a majority of all the Members of the Cabinet transmit to the President of the Senate and to the Speaker of the House of
Representatives their written declaration that the President is unable to discharge the powers and duties of his office, the Vice-President shall
immediately assume the powers and duties of the office as Acting President.

Thereafter, when the President transmits to the President of the Senate and to the Speaker of the House of Representatives his written
declaration that no inability exists, he shall reassume the powers and duties of his office. Meanwhile, should a majority of all the Members of
the Cabinet transmit within five days to the President of the Senate and to the Speaker of the House of Representatives their written declaration
that the President is unable to discharge the powers and duties of his office, the Congress shall decide the issue. For that purpose, the Congress
shall convene, if it is not in session, within forty-eight hours, in accordance with its rules and without need of call.

If the Congress, within ten days after receipt of the last written declaration, or, if not in session, within twelve days after it is required to
assemble, determines by a two-thirds vote of both Houses, voting separately, that the President is unable to discharge the powers and duties of
his office, the Vice-President shall act as President; otherwise, the President shall continue exercising the powers and duties of his office."

That is the law. Now, the operative facts:

1. Petitioner, on January 20, 2001, sent the above letter claiming inability to the Senate President and Speaker of the House;
2. Unaware of the letter, respondent Arroyo took her oath of office as President on January 20, 2001 at about 12:30 p.m.;
3. Despite receipt of the letter, the House of Representatives passed on January 24, 2001 House Resolution No. 175; 96

On the same date, the House of the Representatives passed House Resolution No. 17697 which states:
 "RESOLUTION EXPRESSING THE SUPPORT OF THE HOUSE OF REPRESENTATIVES TO THE ASSUMPTION INTO OFFICE BY
VICE PRESIDENT GLORIA MACAPAGAL-ARROYO AS PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES, EXTENDING ITS
CONGRATULATIONS AND EXPRESSING ITS SUPPORT FOR HER ADMINISTRATION AS A PARTNER IN THE ATTAINMENT
OF THE NATION'S GOALS UNDER THE CONSTITUTION

WHEREAS, as a consequence of the people's loss of confidence on the ability of former President Joseph Ejercito Estrada to effectively
govern, the Armed Forces of the Philippines, the Philippine National Police and majority of his cabinet had withdrawn support from him;

WHEREAS, upon authority of an en banc resolution of the Supreme Court, Vice President Gloria Macapagal-Arroyo was sworn in as
President of the Philippines on 20 January 2001 before Chief Justice Hilario G. Davide, Jr.;

WHEREAS, immediately thereafter, members of the international community had extended their recognition to Her Excellency, Gloria
Macapagal-Arroyo as President of the Republic of the Philippines;

WHEREAS, Her Excellency, President Gloria Macapagal-Arroyo has espoused a policy of national healing and reconciliation with justice for
the purpose of national unity and development;

WHEREAS, it is axiomatic that the obligations of the government cannot be achieved if it is divided, thus by reason of the constitutional duty
of the House of Representatives as an institution and that of the individual members thereof of fealty to the supreme will of the people, the
House of Representatives must ensure to the people a stable, continuing government and therefore must remove all obstacles to the attainment
thereof;

WHEREAS, it is a concomitant duty of the House of Representatives to exert all efforts to unify the nation, to eliminate fractious tension, to
heal social and political wounds, and to be an instrument of national reconciliation and solidarity as it is a direct representative of the various
segments of the whole nation;

WHEREAS, without surrending its independence, it is vital for the attainment of all the foregoing, for the House of Representatives to extend
its support and collaboration to the administration of Her Excellency, President Gloria Macapagal-Arroyo, and to be a constructive partner in
nation-building, the national interest demanding no less: Now, therefore, be it

Resolved by the House of Representatives, To express its support to the assumption into office by Vice President Gloria Macapagal-Arroyo as
President of the Republic of the Philippines, to extend its congratulations and to express its support for her administration as a partner in the
attainment of the Nation's goals under the Constitution.

Adopted,

(Sgd.) FELICIANO BELMONTE JR.

Speaker

This Resolution was adopted by the House of Representatives on January 24, 2001.

(Sgd.) ROBERTO P. NAZARENO

Secretary General"

On February 7, 2001, the House of the Representatives passed House Resolution No. 17898 which states:

"RESOLUTION CONFIRMING PRESIDENT GLORIA MACAPAGAL-ARROYO'S NOMINATION OF SENATOR TEOFISTO T.

GUINGONA, JR. AS VICE PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES

WHEREAS, there is a vacancy in the Office of the Vice President due to the assumption to the Presidency of Vice President Gloria
Macapagal-Arroyo;

WHEREAS, pursuant to Section 9, Article VII of the Constitution, the President in the event of such vacancy shall nominate a Vice President
from among the members of the Senate and the House of Representatives who shall assume office upon confirmation by a majority vote of all
members of both Houses voting separately;

WHEREAS, Her Excellency, President Gloria Macapagal-Arroyo has nominated Senate Minority Leader Teofisto T. Guingona Jr., to the
position of Vice President of the Republic of the Philippines;

WHEREAS, Senator Teofisto T. Guingona Jr., is a public servant endowed with integrity, competence and courage; who has served the
Filipino people with dedicated responsibility and patriotism;

WHEREAS, Senator Teofisto T. Guingona, Jr. possesses sterling qualities of true statesmanship, having served the government in various
capacities, among others, as Delegate to the Constitutional Convention, Chairman of the Commission on Audit, Executive Secretary, Secretary
of Justice, Senator of the Philippines – qualities which merit his nomination to the position of Vice President of the Republic: Now, therefore,
be it

Resolved as it is hereby resolved by the House of Representatives, That the House of Representatives confirms the nomination of Senator
Teofisto T. Guingona, Jr. as the Vice President of the Republic of the Philippines.
Adopted,

(Sgd.) FELICIANO BELMONTE JR.

Speaker

This Resolution was adopted by the House of Representatives on February 7, 2001.

(Sgd.) ROBERTO P. NAZARENO

Secretary General"

(4) Also, despite receipt of petitioner's letter claiming inability, some twelve (12) members of the Senate signed the following:

"RESOLUTION

WHEREAS, the recent transition in government offers the nation an opportunity for meaningful change and challenge;

WHEREAS, to attain desired changes and overcome awesome challenges the nation needs unity of purpose and resolve cohesive resolute (sic)
will;

WHEREAS, the Senate of the Philippines has been the forum for vital legislative measures in unity despite diversities in perspectives;

WHEREFORE, we recognize and express support to the new government of President Gloria Macapagal-Arroyo and resolve to discharge and
overcome the nation's challenges." 99

On February 7, the Senate also passed Senate Resolution No. 82100 which states:

"RESOLUTION CONFIRMING PRESIDENT GLORIA MACAPAGAL ARROYO'S NOMINATION OF SEM. TEOFISTO T.

GUINGONA, JR. AS VICE PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES

WHEREAS, there is vacancy in the Office of the Vice President due to the assumption to the Presidency of Vice President Gloria Macapagal-
Arroyo;

WHEREAS, pursuant to Section 9 Article VII of the Constitution, the President in the event of such vacancy shall nominate a Vice President
from among the members of the Senate and the House of Representatives who shall assume office upon confirmation by a majority vote of all
members of both Houses voting separately;

WHEREAS, Her Excellency, President Gloria Macapagal-Arroyo has nominated Senate Minority Leader Teofisto T. Guingona, Jr. to the
position of Vice President of the Republic of the Philippines;

WHEREAS, Sen. Teofisto T. Guingona, Jr. is a public servant endowed with integrity, competence and courage; who has served the Filipino
people with dedicated responsibility and patriotism;

WHEREAS, Sen. Teofisto T. Guingona, Jr. possesses sterling qualities of true statemanship, having served the government in various
capacities, among others, as Delegate to the Constitutional Convention, Chairman of the Commission on Audit, Executive Secretary, Secretary
of Justice, Senator of the land - which qualities merit his nomination to the position of Vice President of the Republic: Now, therefore, be it

Resolved, as it is hereby resolved, That the Senate confirm the nomination of Sen. Teofisto T. Guingona, Jr. as Vice President of the Republic
of the Philippines.

Adopted,

(Sgd.) AQUILINO Q. PIMENTEL JR.

President of the Senate

This Resolution was adopted by the Senate on February 7, 2001.

(Sgd.) LUTGARDO B. BARBO

Secretary of the Senate"

On the same date, February 7, the Senate likewise passed Senate Resolution No. 83101 which states:

"RESOLUTION RECOGNIZING THAT THE IMPEACHMENT COURT IS FUNCTUS OFFICIO

Resolved, as it is hereby resolved. That the Senate recognize that the Impeachment Court is functus officio and has been terminated.

Resolved, further, That the Journals of the Impeachment Court on Monday, January 15, Tuesday, January 16 and Wednesday, January 17,
2001 be considered approved.
 Resolved, further, That the records of the Impeachment Court including the "second envelope" be transferred to the Archives of the Senate for
proper safekeeping and preservation in accordance with the Rules of the Senate. Disposition and retrieval thereof shall be made only upon
written approval of the Senate president.

Resolved, finally. That all parties concerned be furnished copies of this Resolution.

Adopted,

(Sgd.) AQUILINO Q. PIMENTEL, JR.

President of the Senate

This Resolution was adopted by the Senate on February 7, 2001.

(Sgd.) LUTGARDO B. BARBO

Secretary of the Senate"

(5) On February 8, the Senate also passed Resolution No. 84 "certifying to the existence of vacancy in the Senate and calling on the COMELEC to fill
up such vacancy through election to be held simultaneously with the regular election on May 14, 2001 and the Senatorial candidate garnering the
thirteenth (13th) highest number of votes shall serve only for the unexpired term of Senator Teofisto T. Guingona, Jr.'

(6) Both houses of Congress started sending bills to be signed into law by respondent Arroyo as President.

(7) Despite the lapse of time and still without any functioning Cabinet, without any recognition from any sector of government, and without any support
from the Armed Forces of the Philippines and the Philippine National Police, the petitioner continues to claim that his inability to govern is only
momentary.

What leaps to the eye from these irrefutable facts is that both houses of Congress have recognized respondent Arroyo as the President.
Implicitly clear in that recognition is the premise that the inability of petitioner Estrada. Is no longer temporary. Congress has clearly rejected
petitioner's claim of inability.

The question is whether this Court has jurisdiction to review the claim of temporary inability of petitioner Estrada and thereafter revise the
decision of both Houses of Congress recognizing respondent Arroyo as president of the Philippines. Following Tañada v. Cuenco,102 we hold that this
Court cannot exercise its judicial power or this is an issue "in regard to which full discretionary authority has been delegated to the Legislative xxx
branch of the government." Or to use the language in Baker vs. Carr,103 there is a "textually demonstrable or a lack of judicially discoverable and
manageable standards for resolving it." Clearly, the Court cannot pass upon petitioner's claim of inability to discharge the power and duties of the
presidency. The question is political in nature and addressed solely to Congress by constitutional fiat. It is a political issue, which cannot be decided
by this Court without transgressing the principle of separation of powers.

In fine, even if the petitioner can prove that he did not resign, still, he cannot successfully claim that he is a President on leave on the ground
that he is merely unable to govern temporarily. That claim has been laid to rest by Congress and the decision that respondent Arroyo is the de
jure, president made by a co-equal branch of government cannot be reviewed by this Court.

IV

Whether or not the petitioner enjoys immunity from suit.

Assuming he enjoys immunity, the extent of the immunity

Petitioner Estrada makes two submissions: first, the cases filed against him before the respondent Ombudsman should be prohibited because he has not
been convicted in the impeachment proceedings against him; and second, he enjoys immunity from all kinds of suit, whether criminal or civil.

Before resolving petitioner's contentions, a revisit of our legal history executive immunity will be most enlightening. The doctrine of executive immunity
in this jurisdiction emerged as a case law. In the 1910 case of Forbes, etc. vs. Chuoco Tiaco and Crosfield,104 the respondent Tiaco, a Chinese citizen,
sued petitioner W. Cameron Forbes, Governor-General of the Philippine Islands. J.E. Harding and C.R. Trowbridge, Chief of Police and Chief of the
Secret Service of the City of Manila, respectively, for damages for allegedly conspiring to deport him to China. In granting a writ of prohibition, this
Court, speaking thru Mr. Justice Johnson, held:

" The principle of nonliability, as herein enunciated, does not mean that the judiciary has no authority to touch the acts of the Governor-
General; that he may, under cover of his office, do what he will, unimpeded and unrestrained. Such a construction would mean that tyranny,
under the guise of the execution of the law, could walk defiantly abroad, destroying rights of person and of property, wholly free from
interference of courts or legislatures. This does not mean, either that a person injured by the executive authority by an act unjustifiable under
the law has n remedy, but must submit in silence. On the contrary, it means, simply, that the governors-general, like the judges if the courts
and the members of the Legislature, may not be personally mulcted in civil damages for the consequences of an act executed in the
performance of his official duties. The judiciary has full power to, and will, when the mater is properly presented to it and the occasion justly
warrants it, declare an act of the Governor-General illegal and void and place as nearly as possible in status quo any person who has been
deprived his liberty or his property by such act. This remedy is assured to every person, however humble or of whatever country, when his
personal or property rights have been invaded, even by the highest authority of the state. The thing which the judiciary can not do is mulct the
Governor-General personally in damages which result from the performance of his official duty, any more than it can a member of the
Philippine Commission of the Philippine Assembly. Public policy forbids it.
 Neither does this principle of nonliability mean that the chief executive may not be personally sued at all in relation to acts which he claims to
perform as such official. On the contrary, it clearly appears from the discussion heretofore had, particularly that portion which touched the
liability of judges and drew an analogy between such liability and that of the Governor-General, that the latter is liable when he acts in a case
so plainly outside of his power and authority that he can not be said to have exercised discretion in determining whether or not he had the right
to act. What is held here is that he will be protected from personal liability for damages not only when he acts within his authority, but also
when he is without authority, provided he actually used discretion and judgement, that is, the judicial faculty, in determining whether he had
authority to act or not. In other words, in determining the question of his authority. If he decide wrongly, he is still protected provided the
question of his authority was one over which two men, reasonably qualified for that position, might honestly differ; but he s not protected if
the lack of authority to act is so plain that two such men could not honestly differ over its determination. In such case, be acts, not as
Governor-General but as a private individual, and as such must answer for the consequences of his act."

Mr. Justice Johnson underscored the consequences if the Chief Executive was not granted immunity from suit, viz "xxx. Action upon important matters
of state delayed; the time and substance of the chief executive spent in wrangling litigation; disrespect engendered for the person of one of the highest
officials of the state and for the office he occupies; a tendency to unrest and disorder resulting in a way, in distrust as to the integrity of government
itself."105

Our 1935 Constitution took effect but it did not contain any specific provision on executive immunity. Then came the tumult of the martial law years
under the late President Ferdinand E. Marcos and the 1973 Constitution was born. In 1981, it was amended and one of the amendments involved
executive immunity. Section 17, Article VII stated:

"The President shall be immune from suit during his tenure. Thereafter, no suit whatsoever shall lie for official acts done by him or by others
pursuant to his specific orders during his tenure.

The immunities herein provided shall apply to the incumbent President referred to in Article XVII of this Constitution.

In his second Vicente G. Sinco professional Chair lecture entitled, "Presidential Immunity and All The King's Men: The Law of Privilege As a Defense
To Actions For Damages,"106 petitioner's learned counsel, former Dean of the UP College of Law, Atty. Pacificao Agabin, brightened the modifications
effected by this constitutional amendment on the existing law on executive privilege. To quote his disquisition:

"In the Philippines, though, we sought to do the Americans one better by enlarging and fortifying the absolute immunity concept. First, we
extended it to shield the President not only form civil claims but also from criminal cases and other claims. Second, we enlarged its scope so
that it would cover even acts of the President outside the scope of official duties. And third, we broadened its coverage so as to include not
only the President but also other persons, be they government officials or private individuals, who acted upon orders of the President. It can be
said that at that point most of us were suffering from AIDS (or absolute immunity defense syndrome)."

The Opposition in the then Batasan Pambansa sought the repeal of this Marcosian concept of executive immunity in the 1973 Constitution. The move
was led by them Member of Parliament, now Secretary of Finance, Alberto Romulo, who argued that the after incumbency immunity granted to
President Marcos violated the principle that a public office is a public trust. He denounced the immunity as a return to the anachronism "the king can do
no wrong."107 The effort failed.

The 1973 Constitution ceased to exist when President Marcos was ousted from office by the People Power revolution in 1986. When the 1987
Constitution was crafted, its framers did not reenact the executive immunity provision of the 1973 Constitution. The following explanation was given by
delegate J. Bernas vis:108

"Mr. Suarez. Thank you.

The last question is with reference to the Committee's omitting in the draft proposal the immunity provision for the President. I agree with
Commissioner Nolledo that the Committee did very well in striking out second sentence, at the very least, of the original provision on
immunity from suit under the 1973 Constitution. But would the Committee members not agree to a restoration of at least the first sentence that
the President shall be immune from suit during his tenure, considering that if we do not provide him that kind of an immunity, he might be
spending all his time facing litigation's, as the President-in-exile in Hawaii is now facing litigation's almost daily?

Fr. Bernas. The reason for the omission is that we consider it understood in present jurisprudence that during his tenure he is immune from
suit.

Mr. Suarez. So there is no need to express it here.

Fr. Bernas. There is no need. It was that way before. The only innovation made by the 1973 Constitution was to make that explicit and to add
other things.

Mr. Suarez. On that understanding, I will not press for any more query, Madam President.

I think the Commissioner for the clarifications."

We shall now rule on the contentions of petitioner in the light of this history. We reject his argument that he cannot be prosecuted for the reason that he
must first be convicted in the impeachment proceedings. The impeachment trial of petitioner Estrada was aborted by the walkout of the prosecutors and
by the events that led to his loss of the presidency. Indeed, on February 7, 2001, the Senate passed Senate Resolution No. 83 "Recognizing that the
Impeachment Court is Functus Officio."109 Since, the Impeachment Court is now functus officio, it is untenable for petitioner to demand that he should
first be impeached and then convicted before he can be prosecuted. The plea if granted, would put a perpetual bar against his prosecution. Such a
submission has nothing to commend itself for it will place him in a better situation than a non-sitting President who has not been subjected to
impeachment proceedings and yet can be the object of a criminal prosecution. To be sure, the debates in the Constitutional Commission make it clear that
when impeachment proceedings have become moot due to the resignation of the President, the proper criminal and civil cases may already be filed
against him, viz:110

"xxx

Mr. Aquino. On another point, if an impeachment proceeding has been filed against the President, for example, and the President resigns
before judgement of conviction has been rendered by the impeachment court or by the body, how does it affect the impeachment proceeding?
Will it be necessarily dropped?

Mr. Romulo. If we decide the purpose of impeachment to remove one from office, then his resignation would render the case moot and
academic. However, as the provision says, the criminal and civil aspects of it may continue in the ordinary courts."

This is in accord with our ruling In Re: Saturnino Bermudez 111 that 'incumbent Presidents are immune from suit or from being brought to court during the
period of their incumbency and tenure" but not beyond. Considering the peculiar circumstance that the impeachment process against the petitioner has
been aborted and thereafter he lost the presidency, petitioner Estrada cannot demand as a condition sine qua non to his criminal prosecution before the
Ombudsman that he be convicted in the impeachment proceedings. His reliance on the case of Lecaroz vs. Sandiganbayan 112 and related cases113 are
inapropos for they have a different factual milieu.

We now come to the scope of immunity that can be claimed by petitioner as a non-sitting President. The cases filed against petitioner Estrada are
criminal in character. They involve plunder, bribery and graft and corruption. By no stretch of the imagination can these crimes, especially plunder which
carries the death penalty, be covered by the alleged mantle of immunity of a non-sitting president. Petitioner cannot cite any decision of this Court
licensing the President to commit criminal acts and wrapping him with post-tenure immunity from liability. It will be anomalous to hold that immunity is
an inoculation from liability for unlawful acts and conditions. The rule is that unlawful acts of public officials are not acts of the State and the officer who
acts illegally is not acting as such but stands in the same footing as any trespasser. 114

Indeed, critical reading of current literature on executive immunity will reveal a judicial disinclination to expand the privilege especially when it impedes
the search for truth or impairs the vindication of a right. In the 1974 case of US v. Nixon, 115 US President Richard Nixon, a sitting President, was
subpoenaed to produce certain recordings and documents relating to his conversations with aids and advisers. Seven advisers of President Nixon's
associates were facing charges of conspiracy to obstruct Justice and other offenses, which were committed in a burglary of the Democratic National
Headquarters in Washington's Watergate Hotel during the 972 presidential campaign. President Nixon himself was named an unindicted co-conspirator.
President Nixon moved to quash the subpoena on the ground, among others, that the President was not subject to judicial process and that he should first
be impeached and removed from office before he could be made amenable to judicial proceedings. The claim was rejected by the US Supreme Court. It
concluded that "when the ground for asserting privilege as to subpoenaed materials sought for use in a criminal trial is based only on the generalized
interest in confidentiality, it cannot prevail over the fundamental demands of due process of law in the fair administration of criminal justice." In the 1982
case of Nixon v. Fitzgerald,116 the US Supreme Court further held that the immunity of the president from civil damages covers only "official acts."
Recently, the US Supreme Court had the occasion to reiterate this doctrine in the case of Clinton v. Jones 117 where it held that the US President's
immunity from suits for money damages arising out of their official acts is inapplicable to unofficial conduct.

There are more reasons not to be sympathetic to appeals to stretch the scope of executive immunity in our jurisdiction. One of the great themes of the
1987 Constitution is that a public office is a public trust. 118 It declared as a state policy that "the State shall maintain honesty and integrity in the public
service and take positive and effective measures against graft and corruptio." 119 it ordained that "public officers and employees must at all times be
accountable to the people, serve them with utmost responsibility, integrity, loyalty, and efficiency act with patriotism and justice, and lead modest
lives."120 It set the rule that 'the right of the State to recover properties unlawfully acquired by public officials or employees, from them or from their
nominees or transferees, shall not be barred by prescription, latches or estoppel." 121 It maintained the Sandiganbayan as an anti-graft court. 122 It created
the office of the Ombudsman and endowed it with enormous powers, among which is to "investigate on its own, or on complaint by any person, any act
or omission of any public official, employee, office or agency, when such act or omission appears to be illegal, unjust improper or inefficient." 123 The
Office of the Ombudsman was also given fiscal autonomy.124 These constitutional policies will be devalued if we sustain petitioner's claim that a non-
sitting president enjoys immunity from suit for criminal acts committed during his incumbency.

Whether or not the prosecution of petitioner

Estrada should be enjoined due to prejudicial publicity

Petitioner also contends that the respondent Ombudsman should be stopped from conducting the investigation of the cases filed against him due to the
barrage of prejudicial publicity on his guilt. He submits that the respondent Ombudsman has developed bias and is all set file the criminal cases violation
of his right to due process.

There are two (2) principal legal and philosophical schools of thought on how to deal with the rain of unrestrained publicity during the investigation and
trial of high profile cases.125 The British approach the problem with the presumption that publicity will prejudice a jury. Thus, English courts readily stay
and stop criminal trials when the right of an accused to fair trial suffers a threat. 126 The American approach is different. US courts assume a skeptical
approach about the potential effect of pervasive publicity on the right of an accused to a fair trial. They have developed different strains of tests to resolve
this issue, i.e., substantial; probability of irreparable harm, strong likelihood, clear and present danger, etc.

This is not the first time the issue of trial by publicity has been raised in this Court to stop the trials or annul convictions in high profile criminal
cases.127 In People vs. Teehankee, Jr.,128 later reiterated in the case of Larranaga vs. court of Appeals, et al., 129 we laid down the doctrine that:

"We cannot sustain appellant's claim that he was denied the right to impartial trial due to prejudicial publicity. It is true that the print and
broadcast media gave the case at bar pervasive publicity, just like all high profile and high stake criminal trials. Then and now, we rule that the
right of an accused to a fair trial is not incompatible to a free press. To be sure, responsible reporting enhances accused's right to a fair trial for,
as well pointed out, a responsible press has always been regarded as the criminal field xxx. The press does not simply publish information
 about trials but guards against the miscarriage of justice by subjecting the police, prosecutors, and judicial processes to extensive public
scrutiny and criticism.

Pervasive publicity is not per se prejudicial to the right of an accused to fair trial. The mere fact that the trial of appellant was given a day-to-
day, gavel-to-gavel coverage does not by itself prove that the publicity so permeated the mind of the trial judge and impaired his impartiality.
For one, it is impossible to seal the minds of members of the bench from pre-trial and other off-court publicity of sensational criminal cases.
The state of the art of our communication system brings news as they happen straight to our breakfast tables and right to our bedrooms. These
news form part of our everyday menu of the facts and fictions of life. For another, our idea of a fair and impartial judge is not that of a hermit
who is out of touch with the world. We have not installed the jury system whose members are overly protected from publicity lest they lose
there impartially. xxx xxx xxx. Our judges are learned in the law and trained to disregard off-court evidence and on-camera performances of
parties to litigation. Their mere exposure to publications and publicity stunts does not per se fatally infect their impartiality.

At best, appellant can only conjure possibility of prejudice on the part of the trial judge due to the barrage of publicity that characterized the
investigation and trial of the case. In Martelino, et al. v. Alejandro, et al., we rejected this standard of possibility of prejudice and adopted the
test of actual prejudice as we ruled that to warrant a finding of prejudicial publicity, there must be allegation and proof that the judges have
been unduly influenced, not simply that they might be, by the barrage of publicity. In the case at a bar, the records do not show that the trial
judge developed actual bias against appellants as a consequence of the extensive media coverage of the pre-trial and trial of his case. The
totality of circumstances of the case does not prove that the trial judge acquired a fixed opinion as a result of prejudicial publicity, which is
incapable of change even by evidence presented during the trial. Appellant has the burden to prove this actual bias and he has not discharged
the burden.'

We expounded further on this doctrine in the subsequent case of Webb vs. Hon. Raul de Leon, etc. 130 and its companion cases, viz:

"Again petitioners raise the effect of prejudicial publicity on their right to due process while undergoing preliminary investigation. We find no
procedural impediment to its early invocation considering the substantial risk to their liberty while undergoing a preliminary investigation.

xxx

The democratic settings, media coverage of trials of sensational cases cannot be avoided and oftentimes, its excessiveness has been aggravated
by kinetic developments in the telecommunications industry. For sure, few cases can match the high volume and high velocity of publicity that
attended the preliminary investigation of the case at bar. Our daily diet of facts and fiction about the case continues unabated even today.
Commentators still bombard the public with views not too many of which are sober and sublime. Indeed, even the principal actors in the case –
the NBI, the respondents, their lawyers and their sympathizers have participated in this media blitz. The possibility of media abuses and their
threat to a fair trial notwithstanding, criminal trials cannot be completely closed to the press and public. In the seminal case of Richmond
Newspapers, Inc. v. Virginia, it was

xxx

a. The historical evidence of the evolution of the criminal trial in Anglo-American justice demonstrates conclusively that at the time
this Nation's organic laws were adopted, criminal trials both here and in England had long been presumptively open, thus giving
assurance that the proceedings were conducted fairly to all concerned and discouraging perjury, the misconduct of participants, or
decisions based on secret bias or partiality. In addition, the significant community therapeutic value of public trials was recognized
when a shocking crime occurs a community reaction of outrage and public protest often follows, and thereafter the open processes
of justice serve an important prophylactic purpose, providing an outlet for community concern, hostility and emotion. To work
effectively, it is important that society's criminal process satisfy the appearance of justice,' Offutt v. United States, 348 US 11, 14,
99 L ED 11, 75 S Ct 11, which can best be provided by allowing people to observe such process. From this unbroken,
uncontradicted history, supported by reasons as valid today as in centuries past, it must be concluded that a presumption of openness
inheres in the very nature of a criminal trial under this Nation's system of justice, Cf., e,g., Levine v. United States, 362 US 610, 4 L
Ed 2d 989, 80 S Ct 1038.
b. The freedoms of speech. Press and assembly, expressly guaranteed by the First Amendment, share a common core purpose of
assuring freedom of communication on matters relating to the functioning of government. In guaranteeing freedom such as those of
speech and press, the First Amendment can be read as protecting the right of everyone to attend trials so as give meaning to those
explicit guarantees; the First Amendment right to receive information and ideas means, in the context of trials, that the guarantees of
speech and press, standing alone, prohibit government from summarily closing courtroom doors which had long been open to the
public at the time the First Amendment was adopted. Moreover, the right of assembly is also relevant, having been regarded not
only as an independent right but also as a catalyst to augment the free exercise of the other First Amendment rights with which the
draftsmen deliberately linked it. A trial courtroom is a public place where the people generally and representatives of the media
have a right to be present, and where their presence historically has been thought to enhance the integrity and quality of what takes
place.
c. Even though the Constitution contains no provision which be its terms guarantees to the public the right to attend criminal trials,
various fundamental rights, not expressly guaranteed, have been recognized as indispensable to the enjoyment of enumerated rights.
The right to attend criminal trial is implicit in the guarantees of the First Amendment: without the freedom to attend such trials,
which people have exercised for centuries, important aspects of freedom of speech and of the press be eviscerated.

Be that as it may, we recognize that pervasive and prejudicial publicity under certain circumstances can deprive an accused of his due process
right to fair trial. Thus, in Martelino, et al. vs. Alejandro, et al., we held that to warrant a finding of prejudicial publicity there must
be allegation and proof that the judges have been unduly influenced, not simply that they might be, by the barrage of publicity. In the case at
bar, we find nothing in the records that will prove that the tone and content of the publicity that attended the investigation of petitioners fatally
infected the fairness and impartiality of the DOJ Panel. Petitioners cannot just rely on the subliminal effects of publicity on the sense of
fairness of the DOJ Panel, for these are basically unbeknown and beyond knowing. To be sure, the DOJ Panel is composed of an Assistant
Chief State Prosecutor and Senior State Prosecutors. Their long experience in criminal investigation is a factor to consider in determining
whether they can easily be blinded by the klieg lights of publicity. Indeed, their 26-page Resolution carries no indubitable indicia of bias for it
does not appear that they considered any extra-record evidence except evidence properly adduced by the parties. The length of time the
investigation was conducted despite its summary nature and the generosity with which they accommodated the discovery motions of
 petitioners speak well of their fairness. At no instance, we note, did petitioners seek the disqualification of any member of the DOJ Panel on
the ground of bias resulting from their bombardment of prejudicial publicity." (emphasis supplied)

Applying the above ruling, we hold that there is not enough evidence to warrant this Court to enjoin the preliminary investigation of the petitioner
by the respondent Ombudsman. Petitioner needs to offer more than hostile headlines to discharge his burden of proof. 131 He needs to show more
weighty social science evidence to successfully prove the impaired capacity of a judge to render a bias-free decision. Well to note, the cases against the
petitioner are still undergoing preliminary investigation by a special panel of prosecutors in the office of the respondent Ombudsman. No allegation
whatsoever has been made by the petitioner that the minds of the members of this special panel have already been infected by bias because of the
pervasive prejudicial publicity against him. Indeed, the special panel has yet to come out with its findings and the Court cannot second guess whether its
recommendation will be unfavorable to the petitioner.1âwphi1.nêt

The records show that petitioner has instead charged respondent Ombudsman himself with bias. To quote petitioner's submission, the respondent
Ombudsman "has been influenced by the barrage of slanted news reports, and he has buckled to the threats and pressures directed at him by the
mobs."132 News reports have also been quoted to establish that the respondent Ombudsman has already prejudged the cases of the petitioner 133 and it is
postulated that the prosecutors investigating the petitioner will be influenced by this bias of their superior.

Again, we hold that the evidence proffered by the petitioner is insubstantial. The accuracy of the news reports referred to by the petitioner cannot be the
subject of judicial notice by this Court especially in light of the denials of the respondent Ombudsman as to his alleged prejudice and the presumption of
good faith and regularity in the performance of official duty to which he is entitled. Nor can we adopt the theory of derivative prejudice of petitioner,
i.e., that the prejudice of respondent Ombudsman flows to his subordinates. In truth, our Revised Rules of Criminal Procedure, give investigation
prosecutors the independence to make their own findings and recommendations albeit they are reviewable by their superiors. 134 They can be reversed but
they can not be compelled cases which they believe deserve dismissal. In other words, investigating prosecutors should not be treated like unthinking slot
machines. Moreover, if the respondent Ombudsman resolves to file the cases against the petitioner and the latter believes that the findings of probable
cause against him is the result of bias, he still has the remedy of assailing it before the proper court.

VI.

Epilogue

A word of caution to the "hooting throng." The cases against the petitioner will now acquire a different dimension and then move to a new stage - - - the
Office of the Ombudsman. Predictably, the call from the majority for instant justice will hit a higher decibel while the gnashing of teeth of the minority
will be more threatening. It is the sacred duty of the respondent Ombudsman to balance the right of the State to prosecute the guilty and the right of an
accused to a fair investigation and trial which has been categorized as the "most fundamental of all freedoms." 135 To be sure, the duty of a prosecutor is
more to do justice and less to prosecute. His is the obligation to insure that the preliminary investigation of the petitioner shall have a circus-free
atmosphere. He has to provide the restraint against what Lord Bryce calls "the impatient vehemence of the majority." Rights in a democracy are not
decided by the mob whose judgment is dictated by rage and not by reason. Nor are rights necessarily resolved by the power of number for in a
democracy, the dogmatism of the majority is not and should never be the definition of the rule of law. If democracy has proved to be the best form of
government, it is because it has respected the right of the minority to convince the majority that it is wrong. Tolerance of multiformity of thoughts,
however offensive they may be, is the key to man's progress from the cave to civilization. Let us not throw away that key just to pander to some people's
prejudice.

IN VIEW WHEREOF, the petitions of Joseph Ejercito Estrada challenging the respondent Gloria Macapagal-Arroyo as the de jure 14th President of the
Republic are DISMISSED.

SO ORDERED.

CASE DIGEST

ESTRADA VS DESIERTO (GR NO. 146710-15 MARCH 2, 2001)

Estrada vs Desierto

G.R. No. 146710-15 March 2, 2001

Facts: In the May 11, 1998 elections, petitioner Joseph Ejercito Estrada was elected President while respondent Gloria Macapagal-Arroyo was elected
Vice-President. Some ten (10) million Filipinos voted for the petitioner believing he would rescue them from life’s adversity. Both petitioner and the
respondent were to serve a six-year term commencing on June 30, 1998. From the beginning of his term, however, petitioner was plagued by a plethora
of problems that slowly but surely eroded his popularity. His sharp descent from power started on October 4, 2000. Ilocos Sur Governor, Luis “Chavit”
Singson, a longtime friend of the petitioner, went on air and accused the petitioner, his family and friends of receiving millions of pesos from jueteng
lords. The exposẻ immediately ignited reactions of rage. The next day, October 5, 2000, Senator Teofisto Guingona, Jr., then the Senate Minority Leader,
took the floor and delivered a fiery privilege speech entitled “I Accuse.” He accused the petitioner of receiving some P220 million in jueteng money from
Governor Singson from November 1998 to August 2000. He also charged that the petitioner took from Governor Singson P70 million on excise tax on
cigarettes intended for Ilocos Sur. The privilege speech was referred by then Senate President Franklin Drilon, to the Blue Ribbon Committee (then
headed by Senator Aquilino Pimentel) and the Committee on Justice (then headed by Senator Renato Cayetano) for joint investigation. The House of
Representatives did no less. The House Committee on Public Order and Security, then headed by Representative Roilo Golez, decided to investigate the
exposẻ of Governor Singson. On the other hand, Representatives Heherson Alvarez, Ernesto Herrera and Michael Defensor spearheaded the move to
impeach the petitioner. Calls for the resignation of the petitioner filled the air. Petitioner’s allies started to cut connections with him. The political
temperature rose despite the cold December. On December 7, the impeachment trial started. The battle royale was fought by some of the marquee names
in the legal profession. The dramatic point of the December hearings was the testimony of Clarissa Ocampo, senior vice president of Equitable-PCI
Bank. She testified that she was one foot away from petitioner Estrada when he affixed the signature “Jose Velarde” on documents involving a P500
million investment agreement with their bank on February 4, 2000. After the testimony of Ocampo, the impeachment trial was adjourned in the spirit of
Christmas. When it resumed on January 2, 2001, more bombshells were exploded by the prosecution. On January 11, Atty. Edgardo Espiritu who served
as petitioner’s Secretary of Finance took the witness stand. He alleged that the petitioner jointly owned BW Resources Corporation with Mr. Dante Tan
who was facing charges of insider trading. Then came the fateful day of January 16, when by a vote of 11-10 the senator-judges ruled against the opening
of the second envelope which allegedly contained evidence showing that petitioner held P3.3 billion in a secret bank account under the name “Jose
Velarde.” The public and private prosecutors walked out in protest of the ruling. In disgust, Senator Pimentel resigned as Senate President. The ruling
made at 10:00 p.m. was met by a spontaneous outburst of anger that hit the streets of the metropolis. By midnight, thousands had assembled at the EDSA
Shrine and speeches full of sulphur were delivered against the petitioner and the eleven (11) senators. At about 12:00 noon, Chief Justice Davide
administered the oath to respondent Arroyo as President of the Philippines. At 2:30 p.m., petitioner and his family hurriedly left Malacañang Palace.
After his fall from the pedestal of power, the petitioner’s legal problems appeared in clusters. Several cases previously filed against him in the Office of
the Ombudsman were set in motion. These are: (1) OMB Case No. 0-00-1629, filed by Ramon A. Gonzales on October 23, 2000 for bribery and graft
and corruption; (2) OMB Case No. 0-00-1754 filed by the Volunteers Against Crime and Corruption on November 17, 2000 for plunder, forfeiture, graft
and corruption, bribery, perjury, serious misconduct, violation of the Code of Conduct for Government Employees, etc; (3) OMB Case No. 0-001755
filed by the Graft Free Philippines Foundation, Inc. on November 24, 2000 for plunder, forfeiture, graft and corruption, bribery, perjury, serious
misconduct; (4) OMB Case No. 0-00-1756 filed by Romeo Capulong, et al., on November 28, 2000 for malversation of public funds, illegal use of public
funds and property, plunder, etc.; (5) OMB Case No. 0-00-1757 filed by Leonard de Vera, et al., on November 28, 2000 for bribery, plunder, indirect
bribery, violation of PD 1602, PD 1829, PD 46, and RA 7080; and (6) OMB Case No. 0-00-1758 filed by Ernesto B. Francisco, Jr. on December 4, 2000
for plunder, graft and corruption.

Issue: Whether or not petitioner’s allegation against respondent Ombudsman is meritorious.

Held: No. The evidence proffered by the petitioner is insubstantial. The accuracy of the news reports referred to by the petitioner cannot be the subject of
judicial notice by this Court especially in light of the denials of the respondent Ombudsman as to his alleged prejudice and the presumption of good faith
and regularity in the performance of official duty to which he is entitled. Nor can we adopt the theory of derivative prejudice of petitioner, i.e., that the
prejudice of respondent Ombudsman flows to his subordinates. In truth, our Revised Rules of Criminal Procedure, give investigation prosecutors the
independence to make their own findings and recommendations albeit they are reviewable by their superiors. They can be reversed but they can not be
compelled cases which they believe deserve dismissal. In other words, investigating prosecutors should not be treated like unthinking slot machines.
Moreover, if the respondent Ombudsman resolves to file the cases against the petitioner and the latter believes that the findings of probable cause against
him is the result of bias, he still has the remedy of assailing it before the proper court.

There is not enough evidence to warrant this Court to enjoin the preliminary investigation of the petitioner by the respondent Ombudsman. Petitioner
needs to offer more than hostile headlines to discharge his burden of proof. He needs to show more weighty social science evidence to successfully prove
the impaired capacity of a judge to render a bias-free decision. Well to note, the cases against the petitioner are still undergoing preliminary investigation
by a special panel of prosecutors in the office of the respondent Ombudsman. No allegation whatsoever has been made by the petitioner that the minds of
the members of this special panel have already been infected by bias because of the pervasive prejudicial publicity against him. Indeed, the special panel
has yet to come out with its findings and the Court cannot second guess whether its recommendation will be unfavorable to the petitioner.

The question is whether this Court has jurisdiction to review the claim of temporary inability of petitioner Estrada and thereafter revise the decision of
both Houses of Congress recognizing respondent Arroyo as president of the Philippines. Following Tañada v. Cuenco, we hold that this Court cannot
exercise its judicial power or this is an issue “in regard to which full discretionary authority has been delegated to the Legislative xxx branch of the
government.” Or to use the language in Baker vs. Carr, there is a “textually demonstrable or a lack of judicially discoverable and manageable standards
for resolving it.” Clearly, the Court cannot pass upon petitioner’s claim of inability to discharge the power and duties of the presidency. The question is
political in nature and addressed solely to Congress by constitutional fiat. It is a political issue, which cannot be decided by this Court without
transgressing the principle of separation of powers.

In fine, even if the petitioner can prove that he did not resign, still, he cannot successfully claim that he is a President on leave on the ground that he is
merely unable to govern temporarily. That claim has been laid to rest by Congress and the decision that respondent Arroyo is the de jure, president made
by a coequal branch of government cannot be reviewed by this Court.
G.R. No. 76180 October 24, 1986

IN RE: SATURNINO V. BERMUDEZ, petitioner.

R E S O L U T IO N

PER CURIAM:

In a petition for declaratory relief impleading no respondents, petitioner, as a lawyer, quotes the first paragraph of Section 5 (not Section 7 as erroneously
stated) of Article XVIII of the proposed 1986 Constitution, which provides in full as follows:

Sec. 5. The six-year term of the incumbent President and Vice-President elected in the February 7, 1986 election is, for purposes of synchronization of
elections, hereby extended to noon of June 30, 1992.

The first regular elections for the President and Vice-President under this Constitution shall be held on the second Monday of May, 1992.

Claiming that the said provision "is not clear" as to whom it refers, he then asks the Court "to declare and answer the question of the construction and
definiteness as to who, among the present incumbent President Corazon Aquino and Vice-President Salvador Laurel and the elected President Ferdinand
E. Marcos and Vice-President Arturo M. Tolentino being referred to under the said Section 7 (sic) of ARTICLE XVIII of the TRANSITORY
PROVISIONS of the proposed 1986 Constitution refers to, . ...

The petition is dismissed outright for lack of jurisdiction and for lack for cause of action.

Prescinding from petitioner's lack of personality to sue or to bring this action, (Tan vs. Macapagal, 43 SCRA 677), it is elementary that this Court
assumes no jurisdiction over petitions for declaratory relief. More importantly, the petition amounts in effect to a suit against the incumbent President of
the Republic, President Corazon C. Aquino, and it is equally elementary that incumbent Presidents are immune from suit or from being brought to court
during the period of their incumbency and tenure.

The petition furthermore states no cause of action. Petitioner's allegation of ambiguity or vagueness of the aforequoted provision is manifestly gratuitous,
it being a matter of public record and common public knowledge that the Constitutional Commission refers therein to incumbent President Corazon C.
Aquino and Vice-President Salvador H. Laurel, and to no other persons, and provides for the extension of their term to noon of June 30, 1992 for
purposes of synchronization of elections. Hence, the second paragraph of the cited section provides for the holding on the second Monday of May, 1992
of the first regular elections for the President and Vice-President under said 1986 Constitution. In previous cases, the legitimacy of the government of
President Corazon C. Aquino was likewise sought to be questioned with the claim that it was not established pursuant to the 1973 Constitution. The said
cases were dismissed outright by this court which held that:

Petitioners have no personality to sue and their petitions state no cause of action. For the legitimacy of the Aquino government is not a justiciable matter.
It belongs to the realm of politics where only the people of the Philippines are the judge. And the people have made the judgment; they have accepted the
government of President Corazon C. Aquino which is in effective control of the entire country so that it is not merely a de facto government but in fact
and law a de jure government. Moreover, the community of nations has recognized the legitimacy of tlie present government. All the eleven members of
this Court, as reorganized, have sworn to uphold the fundamental law of the Republic under her government. (Joint Resolution of May 22, 1986 in G.R.
No. 73748 [Lawyers League for a Better Philippines, etc. vs. President Corazon C. Aquino, et al.]; G.R. No. 73972 [People's Crusade for Supremacy of
the Constitution. etc. vs. Mrs. Cory Aquino, et al.]; and G.R. No. 73990 [Councilor Clifton U. Ganay vs. Corazon C. Aquino, et al.])

For the above-quoted reason, which are fully applicable to the petition at bar, mutatis mutandis, there can be no question that President Corazon C.
Aquino and Vice-President Salvador H. Laurel are the incumbent and legitimate President and Vice-President of the Republic of the Philippines.or the
above-quoted reasons, which are fully applicable to the petition at bar,

ACCORDINGLY, the petition is hereby dismissed.

Teehankee, C.J., Feria, Yap, Fernan, Narvasa, Alampay and Paras, JJ., concur.

MELENCIO-HERRERA, J., concurring:

GUTIERREZ, Jr., J., concurring:

FELICIANO, JJ., concurring.

The petitioner asks the Court to declare who are "the incumbent President and Vice President elected in the February 7, 1986 elections" as stated in
Article XVIII, Section 5 of the Draft Constitution adopted by the Constitutional Commission of 1986.

We agree that the petition deserves outright dismissal as this Court has no original jurisdiction over petitions for declaratory relief.

As to lack of cause of action, the petitioner's prayer for a declaration as to who were elected President and Vice President in the February 7, 1986
elections should be addressed not to this Court but to other departments of government constitutionally burdened with the task of making that
declaration.
The 1935 Constitution, the 1913 Constitution as amended, and the 1986 Draft Constitution uniformly provide 'that boards of canvassers in each province
and city shall certified who were elected President and Vice President in their respective areas. The certified returns are transmitted to the legislature
which proclaims, through the designated Presiding Head, who were duty elected.

Copies of the certified returns from the provincial and city boards of canvassers have not been furnished this Court nor is there any need to do so. In the
absence of a legislature, we cannot assume the function of stating, and neither do we have any factual or legal capacity to officially declare, who were
elected President and Vice President in the February 7, 1986 elections.

As to who are the incumbent  President and Vice President referred to in the 1986 Draft Constitution, we agree that there is no doubt the 1986
Constitutional Commission referred to President Corazon C. Aquino and Vice President Salvador H. Laurel.

Finally, we agree with the Resolution of the Court in G.R. Nos. 73748, 73972, and 73990.

For the foregoing reasons, we vote to DISMISS the instant petition.

CRUZ, J.,  concurring:

I vote to dismiss this petition on the ground that the Constitution we are asked to interpret has not yet been ratified and is therefore not yet effective. I see
here no actual conflict of legal rights susceptible of judicial determination at this time. (Aetna Life Insurance Co. vs. Haworth, 300 U.S. 227; PACU vs.
Secretary of Education, 97 Phil. 806.)

CASE DIGEST

In re: Saturnino Bermudez (G.R. No. 76180)

October 24, 1986 | G.R. No. 76180

Saturnino Bermudez, petitioner

FACTS:

Bermudez filed a petition for declaratory relief before the SC, asking the same Court to clarify exactly who were being referred to in Section 5, Art.
XVIII of the proposed 1986 Constitution. Said provision reads in part: "The six-year term of the incumbent President and Vice-President elected in the
February 7, 1986 election is, for the purposes of synchronization of elections, hereby extended to noon of June 30, 1992."

ISSUE:

Does Section 5, Art. XVIII of the proposed 1986 Constitution pertain to incumbent President Corazon Aquino and Vice-President Salvador Laurel or to
elected President Ferdinand Marcos and Vice-President Arturo Tolentino?

HELD:

Petition has no merit and should be dismissed outright for the following reasons:
 1.2.4
SOVEREIGNTY
CASES:
 Laurel vs. Misa (G.R. No. L-409, January 30, 1947)
 Macariola vs. Asuncion (114 SCRA 77)
 Ruffy vs. Chief of Staff (G.R. No. L-533, August 20, 1946)
 Commissioner vs. Robertson (143 SCRA 397)
 Reagan vs. Commissioner of Internal Revenue (30 SCRA 968)
 People vs. Gozo (G.R. No. L-36409, October 26, 1973)
G.R. No. L-409             January 30, 1947

ANASTACIO LAUREL, petitioner,
vs.
ERIBERTO MISA, respondent.

Claro M. Recto and Querube C. Makalintal for petitioner.

First Assistant Solicitor General Reyes and Solicitor Hernandez, Jr., for respondent.

RESOLUTION

In G.R. No. L-409, Anastacio Laurel vs. Eriberto Misa, etc.,  the Court, acting on the petition for habeas corpus filed by Anastacio Laurel and
based on a theory that a Filipino citizen who adhered to the enemy giving the latter aid and comfort during the Japanese occupation cannot be
prosecuted for the crime of treason defined and penalized by article 114 of the Revised Penal Code, for the reason (1) that the sovereignty of
the legitimate government in the Philippines and, consequently, the correlative allegiance of Filipino citizens thereto was then suspended; and
(2) that there was a change of sovereignty over these Islands upon the proclamation of the Philippine Republic:

(1) Considering that a citizen or subject owes, not a qualified and temporary, but an absolute and permanent allegiance, which consists in the
obligation of fidelity and obedience to his government or sovereign; and that this absolute and permanent allegiance should not be confused
with the qualified and temporary allegiance which a foreigner owes to the government or sovereign of the territory wherein he resides, so long
as he remains there, in return for the protection he receives, and which consists in the obedience to the laws of the government or sovereign.
(Carlisle vs. Unite States, 21 Law. ed., 429; Secretary of State Webster Report to the President of the United States in the case of Thraser, 6
Web. Works, 526);

Considering that the absolute and permanent allegiance of the inhabitants of a territory occupied by the enemy of their legitimate government
or sovereign is not abrogated or severed by the enemy occupation, because the sovereignty of the government or sovereign de jure  is not
transferred thereby to the occupier, as we have held in the cases of Co Kim Cham vs. Valdez Tan Keh and Dizon (75 Phil., 113) and of Peralta
vs. Director of Prisons (75 Phil., 285), and if it is not transferred to the occupant it must necessarily remain vested in the legitimate
government; that the sovereignty vested in the titular government (which is the supreme power which governs a body politic or society which
constitute the state) must be distinguished from the exercise of the rights inherent thereto, and may be destroyed, or severed and transferred to
another, but it cannot be suspended because the existence of sovereignty cannot be suspended without putting it out of existence or divesting
the possessor thereof at least during the so-called period of suspension; that what may be suspended is the exercise of the rights of sovereignty
with the control and government of the territory occupied by the enemy passes temporarily to the occupant; that the subsistence of the
sovereignty of the legitimate government in a territory occupied by the military forces of the enemy during the war, "although the former is in
fact prevented from exercising the supremacy over them" is one of the "rules of international law of our times"; (II Oppenheim, 6th
Lauterpacht ed., 1944, p. 482), recognized, by necessary implication, in articles 23, 44, 45, and 52 of Hague Regulation; and that, as a
corollary of the conclusion that the sovereignty itself is not suspended and subsists during the enemy occupation, the allegiance of the
inhabitants to their legitimate government or sovereign subsists, and therefore there is no such thing as suspended allegiance, the basic theory
on which the whole fabric of the petitioner's contention rests;

Considering that the conclusion that the sovereignty of the United State was suspended in Castine, set forth in the decision in the case of
United States vs. Rice, 4 Wheaton, 246, 253, decided in 1819, and quoted in our decision in the cases of Co Kim Cham vs. Valdez Tan Keh
and Dizon  and Peralta vs. Director of Prisons, supra,  in connection with the question, not of sovereignty, but of the existence of a
government de facto therein and its power to promulgate rules and laws in the occupied territory, must have been based, either on the theory
adopted subsequently in the Hague Convention of 1907, that the military occupation of an enemy territory does not transfer the sovereignty to
the occupant; that, in the first case, the word "sovereignty" used therein should be construed to mean the exercise of the rights of sovereignty,
because as this remains vested in the legitimate government and is not transferred to the occupier, it cannot be suspended without putting it out
of existence or divesting said government thereof; and that in the second case, that is, if the said conclusion or doctrine refers to the suspension
of the sovereignty itself, it has become obsolete after the adoption of the Hague Regulations in 1907, and therefore it can not be applied to the
present case;

Considering that even adopting the words "temporarily allegiance," repudiated by Oppenheim and other publicists, as descriptive of the
relations borne by the inhabitants of the territory occupied by the enemy toward the military government established over them, such
allegiance may, at most, be considered similar to the temporary allegiance which a foreigner owes to the government or sovereign of the
territory wherein he resides in return for the protection he receives as above described, and does not do away with the absolute and permanent
allegiance which the citizen residing in a foreign country owes to his own government or sovereign; that just as a citizen or subject of a
government or sovereign may be prosecuted for and convicted of treason committed in a foreign country, in the same way an inhabitant of a
territory occupied by the military forces of the enemy may commit treason against his own legitimate government or sovereign if he adheres to
the enemies of the latter by giving them aid and comfort; and that if the allegiance of a citizen or subject to his government or sovereign is
nothing more than obedience to its laws in return for the protection he receives, it would necessarily follow that a citizen who resides in a
foreign country or state would, on one hand, ipso facto acquire the citizenship thereof since he has enforce public order and regulate the social
and commercial life, in return for the protection he receives, and would, on the other hand, lose his original citizenship, because he would not
be bound to obey most of the laws of his own government or sovereign, and would not receive, while in a foreign country, the protection he is
entitled to in his own;

Considering that, as a corollary of the suspension of the exercise of the rights of sovereignty by the legitimate government in the territory
occupied by the enemy military forces, because the authority of the legitimate power to govern has passed into the hands of the occupant
(Article 43, Hague Regulations), the political laws which prescribe the reciprocal rights, duties and obligation of government and citizens, are
suspended or in abeyance during military occupation (Co Kim cham vs. Valdez Tan Keh and dizon, supra), for the only reason that as they
exclusively bear relation to the ousted legitimate government, they are inoperative or not applicable to the government established by the
occupant; that the crimes against national security, such as treason and espionage; inciting to war, correspondence with hostile country, flight
to enemy's country, as well as those against public order, such as rebellion, sedition, and disloyalty, illegal possession of firearms, which are of
political complexion because they bear relation to, and are penalized by our Revised Penal Code as crimes against the legitimate government,
are also suspended or become inapplicable as against the occupant, because they can not be committed against the latter (Peralta vs. Director of
Prisons, supra); and that, while the offenses against public order to be preserved by the legitimate government were inapplicable as offenses
against the invader for the reason above stated, unless adopted by him, were also inoperative as against the ousted government for the latter
was not responsible for the preservation of the public order in the occupied territory, yet article 114 of the said Revised Penal Code, was
applicable to treason committed against the national security of the legitimate government, because the inhabitants of the occupied territory
were still bound by their allegiance to the latter during the enemy occupation;

Considering that, although the military occupant is enjoined to respect or continue in force, unless absolutely prevented by the circumstances,
those laws that enforce public order and regulate the social and commercial life of the country, he has, nevertheless, all the powers of de
facto government and may, at his pleasure, either change the existing laws or make new ones when the exigencies of the military service
demand such action, that is, when it is necessary for the occupier to do so for the control of the country and the protection of his army, subject
to the restrictions or limitations imposed by the Hague Regulations, the usages established by civilized nations, the laws of humanity and the
requirements of public conscience (Peralta vs. Director of Prisons, supra; 1940 United States Rules of Land Warfare 76, 77); and that,
consequently, all acts of the military occupant dictated within these limitations are obligatory upon the inhabitants of the territory, who are
bound to obey them, and the laws of the legitimate government which have not been adopted, as well and those which, though continued in
force, are in conflict with such laws and orders of the occupier, shall be considered as suspended or not in force and binding upon said
inhabitants;

Considering that, since the preservation of the allegiance or the obligation of fidelity and obedience of a citizen or subject to his government or
sovereign does not demand from him a positive action, but only passive attitude or forbearance from adhering to the enemy by giving the latter
aid and comfort, the occupant has no power, as a corollary of the preceding consideration, to repeal or suspend the operation of the law of
treason, essential for the preservation of the allegiance owed by the inhabitants to their legitimate government, or compel them to adhere and
give aid and comfort to him; because it is evident that such action is not demanded by the exigencies of the military service or not necessary
for the control of the inhabitants and the safety and protection of his army, and because it is tantamount to practically transfer temporarily to
the occupant their allegiance to the titular government or sovereign; and that, therefore, if an inhabitant of the occupied territory were
compelled illegally by the military occupant, through force, threat or intimidation, to give him aid and comfort, the former may lawfully resist
and die if necessary as a hero, or submit thereto without becoming a traitor;

Considering that adoption of the petitioner's theory of suspended allegiance would lead to disastrous consequences for small and weak nations
or states, and would be repugnant to the laws of humanity and requirements of public conscience, for it would allow invaders to legally recruit
or enlist the Quisling inhabitants of the occupied territory to fight against their own government without the latter incurring the risk of being
prosecuted for treason, and even compel those who are not aid them in their military operation against the resisting enemy forces in order to
completely subdue and conquer the whole nation, and thus deprive them all of their own independence or sovereignty — such theory would
sanction the action of invaders in forcing the people of a free and sovereign country to be a party in the nefarious task of depriving themselves
of their own freedom and independence and repressing the exercise by them of their own sovereignty; in other words, to commit a political
suicide;

(2) Considering that the crime of treason against the government of the Philippines defined and penalized in article 114 of the Penal Code,
though originally intended to be a crime against said government as then organized by authority of the sovereign people of the United States,
exercised through their authorized representative, the Congress and the President of the United States, was made, upon the establishment of the
Commonwealth Government in 1935, a crime against the Government of the Philippines established by authority of the people of the
Philippines, in whom the sovereignty resides according to section 1, Article II, of the Constitution of the Philippines, by virtue of the provision
of section 2, Article XVI thereof, which provides that "All laws of the Philippine Islands . . . shall remain operative, unless inconsistent with
this Constitution . . . and all references in such laws to the Government or officials of the Philippine Islands, shall be construed, in so far as
applicable, to refer to the Government and corresponding officials under this constitution;

Considering that the Commonwealth of the Philippines was a sovereign government, though not absolute but subject to certain limitations
imposed in the Independence Act and incorporated as Ordinance appended to our Constitution, was recognized not only by the Legislative
Department or Congress of the United States in approving the Independence Law above quoted and the Constitution of the Philippines, which
contains the declaration that "Sovereignty resides in the people and all government authority emanates from them" (section 1, Article II), but
also by the Executive Department of the United States; that the late President Roosevelt in one of his messages to Congress said, among
others, "As I stated on August 12, 1943, the United States in practice regards the Philippines as having now the status as a government of other
independent nations — in fact all the attributes of complete and respected nationhood" (Congressional Record, Vol. 29, part 6, page 8173); and
that it is a principle upheld by the Supreme Court of the United States in many cases, among them in the case of Jones vs. United States (137
U.S., 202; 34 Law. ed., 691, 696) that the question of sovereignty is "a purely political question, the determination of which by the legislative
and executive departments of any government conclusively binds the judges, as well as all other officers, citizens and subjects of the country.

Considering that section I (1) of the Ordinance appended to the Constitution which provides that pending the final and complete withdrawal of
the sovereignty of the United States "All citizens of the Philippines shall owe allegiance to the United States", was one of the few limitations
of the sovereignty of the Filipino people retained by the United States, but these limitations do not away or are not inconsistent with said
sovereignty, in the same way that the people of each State of the Union preserves its own sovereignty although limited by that of the United
States conferred upon the latter by the States; that just as to reason may be committed against the Federal as well as against the State
Government, in the same way treason may have been committed during the Japanese occupation against the sovereignty of the United States
as well as against the sovereignty of the Philippine Commonwealth; and that the change of our form of government from Commonwealth to
Republic does not affect the prosecution of those charged with the crime of treason committed during the Commonwealth, because it is an
offense against the same government and the same sovereign people, for Article XVIII of our Constitution provides that "The government
established by this constitution shall be known as the Commonwealth of the Philippines. Upon the final and complete withdrawal of the
sovereignty of the United States and the proclamation of Philippine independence, the Commonwealth of the Philippines shall thenceforth be
known as the Republic of the Philippines";

This Court resolves, without prejudice to write later on a more extended opinion, to deny the petitioner's petition, as it is hereby denied, for the
reasons above set forth and for others to be stated in the said opinion, without prejudice to concurring opinion therein, if any. Messrs. Justices
Paras and Hontiveros dissent in a separate opinion. Mr. justice Perfecto concurs in a separate opinion.

CASE DIGEST
G.R. No. L-409, January 30, 1947

FACTS:

Anastacio Laurel filed a petition for habeas corpus based on a theory that a Filipino citizen who adhered to the enemy giving the latter aid and comfort
during the Japanese occupation cannot be prosecuted for the crime of treason defined and penalized by article 114 of the Revised Penal Code, for the
reason (1) that the sovereignty of the legitimate government in the Philippines and, consequently, the correlative allegiance of Filipino citizens thereto
was then suspended; and (2) that there was a change of sovereignty over these Islands upon the proclamation of the Philippine Republic.

ISSUE:

Whether or not Anastacio Laurel can be prosecuted for the crime of treason?

RULING:

Yes, Anastacio Laurel can be prosecuted for the crime of treason.

Laurel’s contentions are without merit because (1) the absolute and permanent allegiance of the inhabitants of a territory occupied by the enemy of their
legitimate government or sovereign is not abrogated or severed by the enemy occupation, because the sovereignty of the government or sovereign de jure
is not transferred thereby to the occupier; and (2) the change of form of government does not affect the prosecution of those charged with the crime of
treason because it is an offense to the same government and same sovereign people.
A.M. No. 133-J May 31, 1982

BERNARDITA R. MACARIOLA, complainant,
vs.
HONORABLE ELIAS B. ASUNCION, Judge of the Court of First Instance of Leyte, respondent.

MAKASIAR, J:

In a verified complaint dated August 6, 1968 Bernardita R. Macariola charged respondent Judge Elias B. Asuncion of the Court of First Instance of
Leyte, now Associate Justice of the Court of Appeals, with "acts unbecoming a judge."

The factual setting of the case is stated in the report dated May 27, 1971 of then Associate Justice Cecilia Muñoz Palma of the Court of Appeals now
retired Associate Justice of the Supreme Court, to whom this case was referred on October 28, 1968 for investigation, thus:

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.

On June 8, 1963, a decision was rendered by respondent Judge Asuncion in Civil Case 3010, the dispositive portion of which reads:

IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court, upon a preponderance of evidence, finds and so holds, and hereby renders judgment
(1) Declaring the plaintiffs Luz R. Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes and Priscilla Reyes as the only children legitimated by the
subsequent marriage of Francisco Reyes Diaz to Irene Ondez; (2) Declaring the plaintiff Sinforosa R. Bales to have been an illegitimate child of
Francisco Reyes Diaz; (3) Declaring Lots Nos. 4474, 4475, 4892, 5265, 4803, 4581, 4506 and 1/4 of Lot 1145 as belonging to the conjugal partnership of
the spouses Francisco Reyes Diaz and Felisa Espiras; (4) Declaring Lot No. 2304 and 1/4 of Lot No. 3416 as belonging to the spouses Francisco Reyes
Diaz and Irene Ondez in common partnership; (5) Declaring that 1/2 of Lot No. 1184 as belonging exclusively to the deceased Francisco Reyes Diaz; (6)
Declaring the defendant Bernardita R. Macariola, being the only legal and forced heir of her mother Felisa Espiras, as the exclusive owner of one-half of
each of Lots Nos. 4474, 4475, 4892, 5265, 4803, 4581, 4506; and the remaining one-half (1/2) of each of said Lots Nos. 4474, 4475, 4892, 5265, 4803,
4581, 4506 and one-half (1/2) of one-fourth (1/4) of Lot No. 1154 as belonging to the estate of Francisco Reyes Diaz; (7) Declaring Irene Ondez to be
the exclusive owner of one-half (1/2) of Lot No. 2304 and one-half (1/2) of one-fourth (1/4) of Lot No. 3416; the remaining one-half (1/2) of Lot 2304
and the remaining one-half (1/2) of one-fourth (1/4) of Lot No. 3416 as belonging to the estate of Francisco Reyes Diaz; (8) Directing the division or
partition of the estate of Francisco Reyes Diaz in such a manner as to give or grant to Irene Ondez, as surviving widow of Francisco Reyes Diaz, a
hereditary share of. one-twelfth (1/12) of the whole estate of Francisco Reyes Diaz (Art. 996 in relation to Art. 892, par 2, New Civil Code), and the
remaining portion of the estate to be divided among the plaintiffs Sinforosa R. Bales, Luz R. Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes,
Priscilla Reyes and defendant Bernardita R. Macariola, in such a way that the extent of the total share of plaintiff Sinforosa R. Bales in the hereditary
estate shall not exceed the equivalent of two-fifth (2/5) of the total share of any or each of the other plaintiffs and the defendant (Art. 983, New Civil
Code), each of the latter to receive equal shares from the hereditary estate, (Ramirez vs. Bautista, 14 Phil. 528; Diancin vs. Bishop of Jaro, O.G. [3rd Ed.]
p. 33); (9) Directing the parties, within thirty days after this judgment shall have become final to submit to this court, for approval a project of partition of
the hereditary estate in the proportion above indicated, and in such manner as the parties may, by agreement, deemed convenient and equitable to them
taking into consideration the location, kind, quality, nature and value of the properties involved; (10) Directing the plaintiff Sinforosa R. Bales and
defendant Bernardita R. Macariola to pay the costs of this suit, in the proportion of one-third (1/3) by the first named and two-thirds (2/3) by the second
named; and (I 1) Dismissing all other claims of the parties [pp 27-29 of Exh. C].

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, which for convenience is quoted hereunder in full:

The parties, through their respective counsels, presented to this Court for approval the following project of partition:

COMES NOW, the plaintiffs and the defendant in the above-entitled case, to this Honorable Court respectfully submit the following Project of Partition:

l. The whole of Lots Nos. 1154, 2304 and 4506 shall belong exclusively to Bernardita Reyes Macariola;

2. A portion of Lot No. 3416 consisting of 2,373.49 square meters along the eastern part of the lot shall be awarded likewise to Bernardita R. Macariola;

3. Lots Nos. 4803, 4892 and 5265 shall be awarded to Sinforosa Reyes Bales;

4. A portion of Lot No. 3416 consisting of 1,834.55 square meters along the western part of the lot shall likewise be awarded to Sinforosa Reyes-Bales;
5. Lots Nos. 4474 and 4475 shall be divided equally among Luz Reyes Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes and Priscilla Reyes in
equal shares;

6. Lot No. 1184 and the remaining portion of Lot No. 3416 after taking the portions awarded under item (2) and (4) above shall be awarded to Luz Reyes
Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes and Priscilla Reyes in equal shares, provided, however that the remaining portion of Lot No.
3416 shall belong exclusively to Priscilla Reyes.

WHEREFORE, it is respectfully prayed that the Project of Partition indicated above which is made in accordance with the decision of the Honorable
Court be approved.

Tacloban City, October 16, 1963.

(SGD) BONIFACIO RAMO Atty. for the Defendant Tacloban City

(SGD) ZOTICO A. TOLETE Atty. for the Plaintiff Tacloban City

While the Court thought it more desirable for all the parties to have signed this Project of Partition, nevertheless, upon assurance of both counsels of the
respective parties to this Court that the Project of Partition, as above- quoted, had been made after a conference and agreement of the plaintiffs and the
defendant approving the above Project of Partition, and that both lawyers had represented to the Court that they are given full authority to sign by
themselves the Project of Partition, the Court, therefore, finding the above-quoted Project of Partition to be in accordance with law, hereby approves the
same. The parties, therefore, are directed to execute such papers, documents or instrument sufficient in form and substance for the vesting of the rights,
interests and participations which were adjudicated to the respective parties, as outlined in the Project of Partition and the delivery of the respective
properties adjudicated to each one in view of said Project of Partition, and to perform such other acts as are legal and necessary to effectuate the said
Project of Partition.

SO ORDERED.

Given in Tacloban City, this 23rd day of October, 1963.

(SGD) ELIAS B. ASUNCION Judge

EXH. B.

The above Order of October 23, 1963, was amended on November 11, 1963, only for the purpose of giving authority to the Register of Deeds of the
Province of Leyte to issue the corresponding transfer certificates of title to the respective adjudicatees in conformity with the project of partition (see
Exh. U).

One of the properties mentioned in the project of partition was Lot 1184 or rather one-half thereof with an area of 15,162.5 sq. meters. This lot, which
according to the decision was the exclusive property of the deceased Francisco Reyes, was adjudicated in said project of partition to the plaintiffs Luz,
Anacorita Ruperto, Adela, and Priscilla all surnamed Reyes in equal shares, and when the project of partition was approved by the trial court the
adjudicatees caused Lot 1184 to be subdivided into five lots denominated as Lot 1184-A to 1184-E inclusive (Exh. V).

Lot 1184-D was conveyed to Enriqueta D. Anota, a stenographer in Judge Asuncion's court (Exhs. F, F-1 and V-1), while Lot 1184-E which had an area
of 2,172.5556 sq. meters was sold on July 31, 1964 to Dr. Arcadio Galapon (Exh. 2) who was issued transfer certificate of title No. 2338 of the Register
of Deeds of the city of Tacloban (Exh. 12).

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, Victoria S. Asuncion (Exh. 11), which particular portion was declared by the latter for taxation purposes (Exh. F).

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." (Exit 15 & 16). At the time of said sale the stockholders of the corporation were Dominador Arigpa Tan, Humilia Jalandoni
Tan, Jaime Arigpa Tan, Judge Asuncion, and the latter's wife, Victoria S. Asuncion, with Judge Asuncion as the President and Mrs. Asuncion as the
secretary (Exhs. E-4 to E-7). The Articles of Incorporation of "The Traders Manufacturing and Fishing Industries, Inc." which we shall henceforth refer
to as "TRADERS" were registered with the Securities and Exchange Commission only on January 9, 1967 (Exh. E) [pp. 378-385, rec.].

Complainant Bernardita R. Macariola filed on August 9, 1968 the instant complaint dated August 6, 1968 alleging four causes of action, to wit: [1] that
respondent Judge Asuncion violated Article 1491, paragraph 5, of the New Civil Code in acquiring by purchase a portion of Lot No. 1184-E which was
one of those properties involved in Civil Case No. 3010 decided by him; [2] that he likewise violated Article 14, paragraphs I and 5 of the Code of
Commerce, Section 3, paragraph H, of R.A. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act, Section 12, Rule XVIII of the Civil
Service Rules, and Canon 25 of the Canons of Judicial Ethics, by associating himself with the Traders Manufacturing and Fishing Industries, Inc., as a
stockholder and a ranking officer while he was a judge of the Court of First Instance of Leyte; [3] that respondent was guilty of coddling an impostor and
acted in disregard of judicial decorum by closely fraternizing with a certain Dominador Arigpa Tan who openly and publicly advertised himself as a
practising attorney when in truth and in fact his name does not appear in the Rolls of Attorneys and is not a member of the Philippine Bar; and [4] that
there was a culpable defiance of the law and utter disregard for ethics by respondent Judge (pp. 1-7, rec.).

Respondent Judge Asuncion filed on September 24, 1968 his answer to which a reply was filed on October 16, 1968 by herein complainant. In Our
resolution of October 28, 1968, We referred this case to then Justice Cecilia Muñoz Palma of the Court of Appeals, for investigation, report and
recommendation. After hearing, the said Investigating Justice submitted her report dated May 27, 1971 recommending that respondent Judge should be
reprimanded or warned in connection with the first cause of action alleged in the complaint, and for the second cause of action, respondent should be
warned in case of a finding that he is prohibited under the law to engage in business. On the third and fourth causes of action, Justice Palma
recommended that respondent Judge be exonerated.
The records also reveal that on or about November 9 or 11, 1968 (pp. 481, 477, rec.), complainant herein instituted an action before the Court of First
Instance of Leyte, entitled "Bernardita R. Macariola, plaintiff, versus Sinforosa R. Bales, et al., defendants," which was docketed as Civil Case No. 4235,
seeking the annulment of the project of partition made pursuant to the decision in Civil Case No. 3010 and the two orders issued by respondent Judge
approving the same, as well as the partition of the estate and the subsequent conveyances with damages. It appears, however, that some defendants were
dropped from the civil case. For one, the case against Dr. Arcadio Galapon was dismissed because he was no longer a real party in interest when Civil
Case No. 4234 was filed, having already conveyed on March 6, 1965 a portion of lot 1184-E to respondent Judge and on August 31, 1966 the remainder
was sold to the Traders Manufacturing and Fishing Industries, Inc. Similarly, the case against defendant Victoria Asuncion was dismissed on the ground
that she was no longer a real party in interest at the time the aforesaid Civil Case No. 4234 was filed as the portion of Lot 1184 acquired by her and
respondent Judge from Dr. Arcadio Galapon was already sold on August 31, 1966 to the Traders Manufacturing and Fishing industries, Inc. Likewise,
the cases against defendants Serafin P. Ramento, Catalina Cabus, Ben Barraza Go, Jesus Perez, Traders Manufacturing and Fishing Industries, Inc.,
Alfredo R. Celestial and Pilar P. Celestial, Leopoldo Petilla and Remedios Petilla, Salvador Anota and Enriqueta Anota and Atty. Zotico A. Tolete were
dismissed with the conformity of complainant herein, plaintiff therein, and her counsel.

On November 2, 1970, Judge Jose D. Nepomuceno of the Court of First Instance of Leyte, who was directed and authorized on June 2, 1969 by the then
Secretary (now Minister) of Justice and now Minister of National Defense Juan Ponce Enrile to hear and decide Civil Case No. 4234, rendered a
decision, the dispositive portion of which reads as follows:

A. IN THE CASE AGAINST JUDGE ELIAS B. ASUNCION

(1) declaring that only Branch IV of the Court of First Instance of Leyte has jurisdiction to take cognizance of the issue of the legality and validity of the
Project of Partition [Exhibit "B"] and the two Orders [Exhibits "C" and "C- 3"] approving the partition;

(2) dismissing the complaint against Judge Elias B. Asuncion;

(3) adjudging the plaintiff, Mrs. Bernardita R. Macariola to pay defendant Judge Elias B. Asuncion,

(a) the sum of FOUR HUNDRED THOUSAND PESOS [P400,000.00] for moral damages;

(b) the sum of TWO HUNDRED THOUSAND PESOS [P200,000.001 for exemplary damages;

(c) the sum of FIFTY THOUSAND PESOS [P50,000.00] for nominal damages; and

(d) he sum of TEN THOUSAND PESOS [PI0,000.00] for Attorney's Fees.

B. IN THE CASE AGAINST THE DEFENDANT MARIQUITA VILLASIN, FOR HERSELF AND FOR THE HEIRS OF THE DECEASED
GERARDO VILLASIN —

(1) Dismissing the complaint against the defendants Mariquita Villasin and the heirs of the deceased Gerardo Villasin;

(2) Directing the plaintiff to pay the defendants Mariquita Villasin and the heirs of Gerardo Villasin the cost of the suit.

C. IN THE CASE AGAINST THE DEFENDANT SINFOROSA R. BALES, ET AL., WHO WERE PLAINTIFFS IN CIVIL CASE NO. 3010 —

(1) Dismissing the complaint against defendants Sinforosa R. Bales, Adela R. Herrer, Priscilla R. Solis, Luz R. Bakunawa, Anacorita R. Eng and Ruperto
O. Reyes.

D. IN THE CASE AGAINST DEFENDANT BONIFACIO RAMO —

(1) Dismissing the complaint against Bonifacio Ramo;

(2) Directing the plaintiff to pay the defendant Bonifacio Ramo the cost of the suit.

SO ORDERED [pp. 531-533, rec.]

It is further disclosed by the record that the aforesaid decision was elevated to the Court of Appeals upon perfection of the appeal on February 22, 1971.

I WE find that there is no merit in the contention of complainant Bernardita R. Macariola, under her first cause of action, that respondent Judge Elias B.
Asuncion violated Article 1491, paragraph 5, of the New Civil Code in acquiring by purchase a portion of Lot No. 1184-E which was one of those
properties involved in Civil Case No. 3010. 'That Article provides:

Article 1491. The following persons cannot acquire by purchase, even at a public or judicial action, either in person or through the mediation of another:

xxx xxx xxx

(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees connected with the administration of
justice, the property and rights in litigation or levied upon an execution before the court within whose jurisdiction or territory they exercise their
respective functions; this prohibition includes the act of acquiring by assignment and shall apply to lawyers, with respect to the property and rights which
may be the object of any litigation in which they may take part by virtue of their profession [emphasis supplied].
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. WE have already ruled that "... for the prohibition to operate, the sale or assignment of the property must take place during the pendency of the
litigation involving the property" (The Director of Lands vs. Ababa et al., 88 SCRA 513, 519 [1979], Rosario vda. de Laig vs. Court of Appeals, 86
SCRA 641, 646 [1978]).

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. Moreover, at the time of the sale on March 6, 1965, respondent's order dated October 23, 1963  and the amended
order dated November 11, 1963 approving the October 16, 1963 project of partition made pursuant to the June 8, 1963 decision, had long become final
for there was no appeal from said orders.

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. It may be recalled that Lot 1184 or more specifically one-half thereof was adjudicated in equal
shares to Priscilla Reyes, Adela Reyes, Luz Bakunawa, Ruperto Reyes and Anacorita Reyes in the project of partition, and the same was subdivided into
five lots denominated as Lot 1184-A to 1184-E. As aforestated, Lot 1184-E was sold on July 31, 1964 to Dr. Galapon for which he was issued TCT No.
2338 by the Register of Deeds of Tacloban City, and on March 6, 1965 he sold a portion of said lot to respondent Judge and his wife who declared the
same for taxation purposes only. The subsequent sale on August 31, 1966  by spouses Asuncion and spouses Galapon of their respective shares and
interest in said Lot 1184-E to the Traders Manufacturing and Fishing Industries, Inc., in which respondent was the president and his wife was the
secretary, took place long after the finality of the decision in Civil Case No. 3010 and of the subsequent two aforesaid orders therein approving the
project of partition.

While it appears that complainant herein filed on or about November 9 or 11, 1968 an action before the Court of First Instance of Leyte docketed as Civil
Case No. 4234, seeking to annul the project of partition and the two orders approving the same, as well as the partition of the estate and the subsequent
conveyances, the same, however, is of no moment.

The fact remains that respondent Judge purchased on March 6, 1965 a portion of Lot 1184-E from Dr. Arcadio Galapon; hence, after the finality of the
decision which he rendered on June 8, 1963  in Civil Case No. 3010 and his two questioned orders dated October 23, 1963 and November 11, 1963.
Therefore, the property was no longer subject of litigation.

The subsequent filing on November 9, or 11, 1968 of Civil Case No. 4234 can no longer alter, change or affect the aforesaid facts — that the questioned
sale to respondent Judge, now Court of Appeals Justice, was effected and consummated long after the finality of the aforesaid decision or orders.

Consequently, the sale of a portion of Lot 1184-E to respondent Judge having taken place over one year after the finality of the decision in Civil Case
No. 3010 as well as the two orders approving the project of partition, and not during the pendency of the litigation, there was no violation of paragraph 5,
Article 1491 of the New Civil Code.

It is also argued by complainant herein that the sale on July 31, 1964 of Lot 1184-E to Dr. Arcadio Galapon by Priscilla Reyes, Adela Reyes and Luz R.
Bakunawa was only a mere scheme to conceal the illegal and unethical transfer of said lot to respondent Judge as a consideration for the approval of the
project of partition. In this connection, We agree with the findings of the Investigating Justice thus:

And so we are now confronted with this all-important question whether or not the acquisition by respondent of a portion of Lot 1184-E and the
subsequent transfer of the whole lot to "TRADERS" of which respondent was the President and his wife the Secretary, was intimately related to the
Order of respondent approving the project of partition, Exh. A.

Respondent vehemently denies any interest or participation in the transactions between the Reyeses and the Galapons concerning Lot 1184-E, and he
insists that there is no evidence whatsoever to show that Dr. Galapon had acted, in the purchase of Lot 1184-E, in mediation for him and his wife. (See p.
14 of Respondent's Memorandum).

xxx xxx xxx

On this point, I agree with respondent that there is no evidence in the record showing that Dr. Arcadio Galapon acted as a mere "dummy" of respondent
in acquiring Lot 1184-E from the Reyeses. Dr. Galapon appeared to this investigator as a respectable citizen, credible and sincere, and I believe him
when he testified that he bought Lot 1184-E in good faith and for valuable consideration from the Reyeses without any intervention of, or previous
understanding with Judge Asuncion (pp. 391- 394, rec.).

On the contention of complainant herein that respondent Judge acted illegally in approving the project of partition although it was not signed by the
parties, We quote with approval the findings of the Investigating Justice, as follows:

1. I agree with complainant that respondent should have required the signature of the parties more particularly that of Mrs. Macariola on the project of
partition submitted to him for approval; however, whatever error was committed by respondent in that respect was done in good faith as according to
Judge Asuncion he was assured by Atty. Bonifacio Ramo, the counsel of record of Mrs. Macariola, That he was authorized by his client to submit said
project of partition, (See Exh. B and tsn p. 24, January 20, 1969). While it is true that such written authority if there was any, was not presented by
respondent in evidence, nor did Atty. Ramo appear to corroborate the statement of respondent, his affidavit being the only one that was presented as
respondent's Exh. 10, certain actuations of Mrs. Macariola lead this investigator to believe that she knew the contents of the project of partition, Exh. A,
and that she gave her conformity thereto. I refer to the following documents:

1) Exh. 9 — Certified true copy of OCT No. 19520 covering Lot 1154 of the Tacloban Cadastral Survey in which the deceased Francisco Reyes holds a
"1/4 share" (Exh. 9-a). On tills certificate of title the Order dated November 11, 1963, (Exh. U) approving the project of partition was duly entered and
registered on November 26, 1963 (Exh. 9-D);
2) Exh. 7 — Certified copy of a deed of absolute sale executed by Bernardita Reyes Macariola on October 22, 1963, conveying to Dr. Hector Decena the
one-fourth share of the late Francisco Reyes-Diaz in Lot 1154. In this deed of sale the vendee stated that she was the absolute owner of said one-fourth
share, the same having been adjudicated to her as her share in the estate of her father Francisco Reyes Diaz as per decision of the Court of First Instance
of Leyte under case No. 3010 (Exh. 7-A). The deed of sale was duly registered and annotated at the back of OCT 19520 on December 3, 1963 (see Exh.
9-e).

In connection with the abovementioned documents it is to be noted that in the project of partition dated October 16, 1963, which was approved by
respondent on October 23, 1963, followed by an amending Order on November 11, 1963, Lot 1154 or rather 1/4 thereof was adjudicated to Mrs.
Macariola. It is this 1/4 share in Lot 1154 which complainant sold to Dr. Decena on October 22, 1963, several days after the preparation of the project of
partition.

Counsel for complainant stresses the view, however, that the latter sold her one-fourth share in Lot 1154 by virtue of the decision in Civil Case 3010 and
not because of the project of partition, Exh. A. Such contention is absurd because from the decision, Exh. C, it is clear that one-half of one- fourth of Lot
1154 belonged to the estate of Francisco Reyes Diaz while the other half of said one-fourth was the share of complainant's mother, Felisa Espiras; in
other words, the decision did not adjudicate the whole of the one-fourth of Lot 1154 to the herein complainant (see Exhs. C-3 & C-4). Complainant
became the owner of the entire one-fourth of Lot 1154 only by means of the project of partition, Exh. A. Therefore, if Mrs. Macariola sold Lot 1154 on
October 22, 1963, it was for no other reason than that she was wen aware of the distribution of the properties of her deceased father as per Exhs. A and B.
It is also significant at this point to state that Mrs. Macariola admitted during the cross-examination that she went to Tacloban City in connection with the
sale of Lot 1154 to Dr. Decena (tsn p. 92, November 28, 1968) from which we can deduce that she could not have been kept ignorant of the proceedings
in civil case 3010 relative to the project of partition.

Complainant also assails the project of partition because according to her the properties adjudicated to her were insignificant lots and the least valuable.
Complainant, however, did not present any direct and positive evidence to prove the alleged gross inequalities in the choice and distribution of the real
properties when she could have easily done so by presenting evidence on the area, location, kind, the assessed and market value of said properties.
Without such evidence there is nothing in the record to show that there were inequalities in the distribution of the properties of complainant's father (pp.
386389, rec.).

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. He should be reminded of Canon 3 of the
Canons of Judicial Ethics which requires that: "A judge's official conduct should be free from the appearance of impropriety, and his personal behavior,
not only upon the bench and in the performance of judicial duties, but also in his everyday life, should be beyond reproach." And as aptly observed by the
Investigating Justice: "... 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. One who occupies an exalted position in the judiciary has the duty and responsibility of maintaining the faith and trust of the citizenry in the
courts of justice, so that not only must he be truly honest and just, but his actuations must be such as not give cause for doubt and mistrust in the
uprightness of his administration of justice. In this particular case of respondent, he cannot deny that the transactions over Lot 1184-E are damaging and
render his actuations open to suspicion and distrust. Even if respondent honestly believed that Lot 1184-E was no longer in litigation in his court and that
he was purchasing it from a third person and not from the parties to the litigation, he should nonetheless have refrained from buying it for himself and
transferring it to a corporation in which he and his wife were financially involved, to avoid possible suspicion that his acquisition was related in one way
or another to his official actuations in civil case 3010. The conduct of respondent gave cause for the litigants in civil case 3010, the lawyers practising in
his court, and the public in general to doubt the honesty and fairness of his actuations and the integrity of our courts of justice" (pp. 395396, rec.).

II With respect to the second cause of action, 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. Said Article provides that:

Article 14 — The following cannot engage in commerce, either in person or by proxy, nor can they hold any office or have any direct, administrative, or
financial intervention in commercial or industrial companies within the limits of the districts, provinces, or towns in which they discharge their duties:

1. Justices of the Supreme Court, judges and officials of the department of public prosecution in active service. This provision shall not be applicable to
mayors, municipal judges, and municipal prosecuting attorneys nor to those who by chance are temporarily discharging the functions of judge or
prosecuting attorney.

xxx xxx xxx

5. Those who by virtue of laws or special provisions may not engage in commerce in a determinate territory.

It is Our considered view that although the aforestated provision is incorporated in the Code of Commerce which is part of the commercial laws of the
Philippines, it, however, 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 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.

Thus, We held in Roa vs. Collector of Customs  (23 Phil. 315, 330, 311 [1912]) that:

By well-settled public law, upon the cession of territory by one nation to another, either following a conquest or otherwise, ... those laws which are
political in their nature and pertain to the prerogatives of the former government immediately cease upon the transfer of sovereignty. (Opinion, Atty.
Gen., July 10, 1899).

While municipal laws of the newly acquired territory not in conflict with the, laws of the new sovereign continue in force without the express assent or
affirmative act of the conqueror, the political laws do not. (Halleck's Int. Law, chap. 34, par. 14). However, such political laws of the prior sovereignty as
are not in conflict with the constitution or institutions of the new sovereign, may be continued in force if the conqueror shall so declare by affirmative act
of the commander-in-chief during the war, or by Congress in time of peace. (Ely's Administrator vs. United States, 171 U.S. 220, 43 L. Ed. 142). In the
case of American and Ocean Ins. Cos. vs. 356 Bales of Cotton (1 Pet. [26 U.S.] 511, 542, 7 L. Ed. 242), Chief Justice Marshall said:

On such transfer (by cession) of territory, it has never been held that the relations of the inhabitants with each other undergo any change. Their relations
with their former sovereign are dissolved, and new relations are created between them and the government which has acquired their territory. The same
act which transfers their country, transfers the allegiance of those who remain in it; and the law which may be denominated political, is necessarily
changed, although that which regulates the intercourse and general conduct of individuals, remains in force, until altered by the newly- created power of
the State.

Likewise, in People vs. Perfecto  (43 Phil. 887, 897 [1922]), this Court stated that: "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. "

There appears no enabling or affirmative act that continued the effectivity of the aforestated provision of the Code of Commerce after the change of
sovereignty from Spain to the United States and then to the Republic of the Philippines. Consequently, Article 14 of the Code of Commerce has no legal
and binding effect and cannot apply to the respondent, then Judge of the Court of First Instance, now Associate Justice of the Court of Appeals.

It is also argued by complainant herein that respondent Judge violated paragraph H, Section 3 of Republic Act No. 3019, otherwise known as the Anti-
Graft and Corrupt Practices Act, which provides that:

Sec. 3. Corrupt practices of public officers. — In addition to acts or omissions of public officers already penalized by existing law, the following shall
constitute corrupt practices of any public officer and are hereby declared to be unlawful:

x x x           x x x          x x x

(h) Directly or indirectly having financial or pecuniary interest in any business, contract or transaction in connection with which he intervenes or takes
part in his official capacity, or in which he is prohibited by the Constitution or by any Iaw from having any interest.

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. As was held in one case involving the application
of Article 216 of the Revised Penal Code which has a similar prohibition on public officers against directly or indirectly becoming interested in any
contract or business in which it is his official duty to intervene, "(I)t is not enough to be a public official to be subject to this crime; it is necessary that by
reason of his office, he has to intervene in said contracts or transactions; and, hence, the official who intervenes in contracts or transactions which have
no relation to his office cannot commit this crime.' (People vs. Meneses, C.A. 40 O.G. 11th Supp. 134, cited by Justice Ramon C. Aquino; Revised Penal
Code, p. 1174, Vol. 11 [1976]).

It does not appear also from the records that the aforesaid corporation gained any undue advantage in its business operations by reason of respondent's
financial involvement in it, or that the corporation benefited in one way or another in any case filed by or against it in court. It is undisputed that there
was no case filed in the different branches of the Court of First Instance of Leyte in which the corporation was either party plaintiff or defendant except
Civil Case No. 4234 entitled "Bernardita R. Macariola, plaintiff, versus Sinforosa O. Bales, et al.,"  wherein the complainant herein sought to recover Lot
1184-E from the aforesaid corporation. It must be noted, however, that Civil Case No. 4234 was filed only on November 9 or 11, 1968 and decided on
November 2, 1970 by CFI Judge Jose D. Nepomuceno when respondent Judge was no longer connected with the corporation, having disposed of his
interest therein on January 31, 1967.

Furthermore, respondent is not liable under the same paragraph because there is no provision in both the 1935 and 1973 Constitutions of the Philippines,
nor is there an existing law expressly prohibiting members of the Judiciary from engaging or having interest in any lawful business.

It may be pointed out that Republic Act No. 296, as amended, also known as the Judiciary Act of 1948, does not contain any prohibition to that effect. As
a matter of fact, under Section 77 of said law, municipal judges may engage in teaching or other vocation not involving the practice of law after office
hours but with the permission of the district judge concerned.

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.

Moreover, the prohibition in paragraph 5, Article 1491 of the New Civil Code against the purchase by judges of a property in litigation before the court
within whose jurisdiction they perform their duties, cannot apply to respondent Judge because the sale of the lot in question to him took place after the
finality of his decision in Civil Case No. 3010 as well as his two orders approving the project of partition; hence, the property was no longer subject of
litigation.
In addition, although Section 12, Rule XVIII of the Civil Service Rules made pursuant to the Civil Service Act of 1959 prohibits an officer or employee
in the civil service from engaging in any private business, vocation, or profession or be connected with any commercial, credit, agricultural or industrial
undertaking without a written permission from the head of department, the same, however, may not fall within the purview of paragraph h, Section 3 of
the Anti-Graft and Corrupt Practices Act because the last portion of said paragraph speaks of a prohibition by the Constitution or law on any public
officer from having any interest in any business and not by a mere administrative rule or regulation. Thus, a violation of the aforesaid rule by any officer
or employee in the civil service, that is, engaging in private business without a written permission from the Department Head may not constitute graft and
corrupt practice as defined by law.

On the contention of complainant that respondent Judge violated Section 12, Rule XVIII of the Civil Service Rules, We hold that the Civil Service Act of
1959 (R.A. No. 2260) and the Civil Service Rules promulgated thereunder, particularly Section 12 of Rule XVIII, do not apply to the members of the
Judiciary. Under said Section 12: "No officer or employee shall engage directly in any private business, vocation, or profession or be connected with any
commercial, credit, agricultural or industrial undertaking without a written permission from the Head of Department ..."

It must be emphasized at the outset that respondent, being a member of the Judiciary, is covered by Republic Act No. 296, as amended, otherwise known
as the Judiciary Act of 1948 and by Section 7, Article X, 1973 Constitution.

Under Section 67 of said law, the power to remove or dismiss judges was then vested in the President of the Philippines, not in the Commissioner of
Civil Service, and only on two grounds, namely, serious misconduct and inefficiency, and upon the recommendation of the Supreme Court, which alone
is authorized, upon its own motion, or upon information of the Secretary (now Minister) of Justice to conduct the corresponding investigation. Clearly,
the aforesaid section defines the grounds and prescribes the special procedure for the discipline of judges.

And under Sections 5, 6 and 7, Article X of the 1973 Constitution, only the Supreme Court can discipline judges of inferior courts as well as other
personnel of the Judiciary.

It is true that under Section 33 of the Civil Service Act of 1959: "The Commissioner may, for ... violation of the existing Civil Service Law and rules or
of reasonable office regulations, or in the interest of the service, remove any subordinate officer or employee from the service, demote him in rank,
suspend him for not more than one year without pay or fine him in an amount not exceeding six months' salary." Thus, a violation of Section 12 of Rule
XVIII is a ground for disciplinary action against civil service officers and employees.

However, judges cannot be considered as subordinate civil service officers or employees subject to the disciplinary authority of the Commissioner of
Civil Service; for, certainly, the Commissioner is not the head of the Judicial Department to which they belong. The Revised Administrative Code
(Section 89) and the Civil Service Law itself state that the Chief Justice is the department head of the Supreme Court (Sec. 20, R.A. No. 2260) [1959]);
and under the 1973 Constitution, the Judiciary is the only other or second branch of the government (Sec. 1, Art. X, 1973 Constitution). Besides, a
violation of Section 12, Rule XVIII cannot be considered as a ground for disciplinary action against judges because to recognize the same as applicable
to them, would be adding another ground for the discipline of judges and, as aforestated, Section 67 of the Judiciary Act recognizes only two grounds for
their removal, namely, serious misconduct and inefficiency.

Moreover, under Section 16(i) of the Civil Service Act of 1959, it is the Commissioner of Civil Service who has original and exclusive jurisdiction "(T)o
decide, within one hundred twenty days, after submission to it, all administrative cases against permanent officers and employees in the competitive
service, and, except as provided by law, to have final authority to pass upon their removal, separation, and suspension and upon all matters relating to the
conduct, discipline, and efficiency of such officers and employees; and prescribe standards, guidelines and regulations governing the administration of
discipline" (emphasis supplied). There is no question that a judge belong to the non-competitive or unclassified service of the government as a
Presidential appointee and is therefore not covered by the aforesaid provision. WE have already ruled that "... in interpreting Section 16(i) of Republic
Act No. 2260, we emphasized that only permanent officers and employees who belong to the classified service come under the exclusive jurisdiction of
the Commissioner of Civil Service" (Villaluz vs. Zaldivar, 15 SCRA 710,713 [1965], Ang-Angco vs. Castillo, 9 SCRA 619 [1963]).

Although the actuation of respondent Judge in engaging in private business by joining the Traders Manufacturing and Fishing Industries, Inc. as a
stockholder and a ranking officer, is not violative of the provissions of Article 14 of the Code of Commerce and Section 3(h) of the Anti-Graft and
Corrupt Practices Act as well as Section 12, Rule XVIII of the Civil Service Rules promulgated pursuant to the Civil Service Act of 1959, the
impropriety of the same is clearly unquestionable because Canon 25 of the Canons of Judicial Ethics expressly declares that:

A judge should abstain from making personal investments in enterprises which are apt to be involved in litigation in his court; and, after his accession to
the bench, he should not retain such investments previously made, longer than a period sufficient to enable him to dispose of them without serious loss. It
is desirable that he should, so far as reasonably possible, refrain from all relations which would normally tend to arouse the suspicion that such relations
warp or bias his judgment, or prevent his impartial attitude of mind in the administration of his judicial duties. ...

WE are not, however, unmindful of the fact that respondent Judge and his wife had withdrawn on January 31, 1967 from the aforesaid corporation and
sold their respective shares to third parties, and it appears also that the aforesaid corporation did not in anyway benefit in any case filed by or against it in
court as there was no case filed in the different branches of the Court of First Instance of Leyte from the time of the drafting of the Articles of
Incorporation of the corporation on March 12, 1966, up to its incorporation on January 9, 1967, and the eventual withdrawal of respondent on January
31, 1967 from said corporation. Such disposal or sale by respondent and his wife of their shares in the corporation only 22 days after the incorporation of
the corporation, indicates that respondent realized that early that their interest in the corporation contravenes the aforesaid Canon 25. Respondent Judge
and his wife therefore deserve the commendation for their immediate withdrawal from the firm after its incorporation and before it became involved in
any court litigation

III With respect to the third and fourth causes of action, complainant alleged that respondent was guilty of coddling an impostor and acted in disregard of
judicial decorum, and that there was culpable defiance of the law and utter disregard for ethics. WE agree, however, with the recommendation of the
Investigating Justice that respondent Judge be exonerated because the aforesaid causes of action are groundless, and WE quote the pertinent portion of
her report which reads as follows:

The basis for complainant's third cause of action is the claim that respondent associated and closely fraternized with Dominador Arigpa Tan who openly
and publicly advertised himself as a practising attorney (see Exhs. I, I-1 and J) when in truth and in fact said Dominador Arigpa Tan does not appear in
the Roll of Attorneys and is not a member of the Philippine Bar as certified to in Exh. K.
The "respondent denies knowing that Dominador Arigpa Tan was an "impostor" and claims that all the time he believed that the latter was a bona
fide member of the bar. I see no reason for disbelieving this assertion of respondent. It has been shown by complainant that Dominador Arigpa Tan
represented himself publicly as an attorney-at-law to the extent of putting up a signboard with his name and the words "Attorney-at Law" (Exh. I and 1-
1) to indicate his office, and it was but natural for respondent and any person for that matter to have accepted that statement on its face value. "Now with
respect to the allegation of complainant that respondent is guilty of fraternizing with Dominador Arigpa Tan to the extent of permitting his wife to be a
godmother of Mr. Tan's child at baptism (Exh. M & M-1), that fact even if true did not render respondent guilty of violating any canon of judicial ethics
as long as his friendly relations with Dominador A. Tan and family did not influence his official actuations as a judge where said persons were
concerned. There is no tangible convincing proof that herein respondent gave any undue privileges in his court to Dominador Arigpa Tan or that the
latter benefitted in his practice of law from his personal relations with respondent, or that he used his influence, if he had any, on the Judges of the other
branches of the Court to favor said Dominador Tan.

Of course it is highly desirable for a member of the judiciary to refrain as much as possible from maintaining close friendly relations with practising
attorneys and litigants in his court so as to avoid suspicion 'that his social or business relations or friendship constitute an element in determining his
judicial course" (par. 30, Canons of Judicial Ethics), but if a Judge does have social relations, that in itself would not constitute a ground for disciplinary
action unless it be clearly shown that his social relations be clouded his official actuations with bias and partiality in favor of his friends (pp. 403-405,
rec.).

In conclusion, while respondent Judge Asuncion, now Associate Justice of the Court of Appeals, did not violate any law in acquiring by purchase a
parcel of land which was in litigation in his court and in engaging in business by joining a private corporation during his incumbency as judge of the
Court of First Instance of Leyte, he should be reminded to be more discreet in his private and business activities, because his conduct as a member of the
Judiciary must not only be characterized with propriety but must always be above suspicion.

WHEREFORE, THE RESPONDENT ASSOCIATE JUSTICE OF THE COURT OF APPEALS IS HEREBY REMINDED TO BE MORE DISCREET
IN HIS PRIVATE AND BUSINESS ACTIVITIES.

SO ORDERED.

CASE DIGEST

MACARIOLA v. ASUNCION

114 SCRA 77

FACTS: On August 6, 1968, petitioner, Bernadita Macariola charged respondent Judge Elias Asuncion of CFI of Leyte, now Associate Justice of CA,
with “acts unbecoming of a judge” when the latter purchased a property which was previously the subject of litigation on which he rendered the decision.
Respondent and his wife were also members of Traders Manufacturing and Fishing Industries Inc. to which their shares and interests in said property
were conveyed. According to the petitioner, respondent allegedly violated Article 1491 (5) of the New Civil Code and Article 14 (1) and (5) of Code of
Commerce, Sec. 3 of Anti-Graft and Corrupt Practices Act, Sec. 12 XVIII of the Civil Service Rules and Canon 25 of Canons of Judicial Ethics.

ISSUE: Is Article 14 of the Code of Commerce still in force?

HELD: Article 14 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. Said provision must be deemed to have been abrogated because where there is a change of sovereignty, the political
laws of the former sovereign are automatically abrogated. As such, Article 14 is not in force. The respondent is not found to have violated the articles
invoked by the petitioner but he was advised by the Court to be more discreet in his private and business activities.
G.R. No. L-533 August 20, 1946

RAMON RUFFY, ET AL., petitioners, vs. THE CHIEF OF STAFF, PHILIPPINE ARMY, ET AL., respondents.

Placido C. Ramos for petitioners.

Lt. Col. Fred Ruiz Castro and Capt. Ramon V. Diaz, JAGS, PA., for respondents.

TUASON, J.:

This was a petition for prohibition, praying that the respondents, the Chief of Staff and the General Court Martial of the Philippine Army, be commanded
to desist from further proceedings in the trial of petitioners before that body. Preliminary injunction having been denied by us and the General Court
Martial having gone ahead with the trial, which eventually resulted in the acquittal of one of the defendants, Ramon Ruffy, the dismissal of the case as to
another, Victoriano Dinglasan, and the conviction of Jose L. Garcia, Prudente M. Francisco, Dominador Adeva and Andres Fortus, the last-named four
petitioners now seek in their memorandum to convert the petition into one for certiorari, with the prayer that the records of the proceedings before the
General Court Martial be ordered certified to this court for review.

The ground of the petition was that the petitioners were not subject to military law at the time the offense for which they had been placed on trial was
committed. In their memorandum they have raised an additional question of law — that the 93d Article of War is unconstitutional.

An outline of the petitioner's previous connection with the Philippine Army, the Philippine Constabulary, and/or with guerrilla organizations will
presently be made. This outline is based on allegations in the petition and the answer, and on exhibits attached thereto and to the parties' memoranda,
exhibits which were offered in the course of the oral argument and admitted without objection. The said exhibits are public documents certified by the
officials who had them in custody in their official capacity. They are presumed to be authentic, as we have no doubt they are.

It appears that at the outbreak of war on December 8, 1941, Ramon Ruffy was the Provincial Commander, Prudente M. Francisco, a junior officer, and
Andres Fortus, a corporal, all of the Philippine Constabulary garrison stationed in Mindoro. When, on February 27, 1942, the Japanese forces landed in
Mindoro, Major Ruffy retreated to the mountains instead of surrendering to the enemy, disbanded his company, and organized and led a guerrilla outfit
known as Bolo Combat team of Bolo Area. Lieutenant Francisco, Corporal Fortus and Jose L. Garcia, the last then a civilian joined Major Ruffy's
organization towards the latter part of 1942, while Dominador Adeva and Victoriano Dinglasan, then likewise civilians, became its members some time
in 1943..

Meanwhile, Brigadier General Macario Peralta, Jr., then a lieutenant colonel of the Philippine Army, also took to the hills of Panay and led the operation
of the 6th Military District, one of the districts into which the Philippine Army had been divided before the war. About November, 1942, Colonel Peralta
succeeded in contacting the General Headquarters of General MacArthur in Australia as the result of which on February 13, 1943, the 6th Military
District was recognized by the Headquarters of the Southwest Pacific Area as a military unit and part of its command.

Even before General MacArthur's recognition of the 6th Military District Colonel Peralta had extended its sphere of operation to comprise Mindoro and
Marinduque, and had, on January 2, 1943, named Major Ruffy as Acting Commander for those two provinces and Commanding Officer of the 3rd
Battalion, 66 Infantry 61st Division, Philippine Corps. After the recognition, 2d Lieut. Prudente M. Francisco, by virtue of Special Orders No. 99, dated
November 2, 1943, and signed by Enrique L. Jurado, Major, OSE, Commanding, was assigned as S-3 in the Bolo Area. Major, later Lieut. Col., Jurado,
it should be noted, had been dispatched by the 6th Military District to Mindoro to assume operational control supervision over the Bolo Area unit and to
make and direct the necessary report to the Headquarters, 6th Military District, in Panay. On April 26, 1944, by General Orders No. 40 of the 6th Military
District, 2d Lieutenant Francisco was promoted to the rank of 1st Lieutenant (Brevet), effective April 15, 1944, subject to approval by the President of
the Philippines, and was re-assigned to the Bolo Area. As to Andres Fortus he was assigned to the same Bolo Area as probationary 3d lieutenant for two-
month probationary training, by the Headquarters of the 6th Military District, as per Special Orders No. 70, dated May 15, 1944.

According to a memorandum of the Chief of Staff, 6th Military District, dated January 1943, and signed by L.R. Relunia, Lieut. Col., CE, Chief of Staff,
Jose L. Garcia and Dominador Adeva were appointed 3d lieutenants, infantry as of December 31, 1942. Garcia later was promoted to the rank of captain,
effective March 15, 1943, as per Special Orders No. 82, issued in the field, 6th Military District, and dated August 28, 1943. On May 24, 1943, Jose L.
Garcia took his oath before Captain Esteban P. Beloncio, then Acting Commanding Officer, 3d Battalion, 66th Infantry Regiment, 61st Division, 6th
Military District.

As has been said, the 6th Military District sent Lieut. Col. Enrique L. Jurado to be Commanding Officer of the Bolo Combat Team in Mindoro and to
undertake other missions of Military character. Pursuant to instructions, Colonel Jurado on November 2, 1943, assigned Major Ruffy as Commanding
Officer of the Bolo Area with 3d Lieut. Dominador Adeva and 2d Lieut. Prudente M. Francisco as members of his staff and Victoriano Dinglasan as
Finance Officer, as per Special Orders No. 99 dated November 2, 1943. In a memorandum of Colonel Jurado for Major Ruffy bearing date 25 June,
1944, it was stated that Captain Garcia had been given P5,000 for palay and Lieut. Francisco P9,000, P5,000 for palay and P4,000 for salary of the
personnel B. Company.

A change in the command of the Bolo Area was effected by Colonel Jurado on June 8, 1944: Major Ruffy was relieved of his assignment as
Commanding Officer, Bolo Battalion, and Capt. Esteban P. Beloncio was put in Ruffy's place. On October 19, 1944, Lieut. Col. Jurado was slain
allegedly by the petitioners. After the commission of this crime, the petitioners, it is alleged, seceded from the 6th Military District. It was this murder
which gave rise to petitioner's trial, the legality of which is now being contested.

On July 26, 1941, the President of the Untied States issued a military order the pertinent paragraph of which stated: ". . . as Commander in Chief of the
Army and Navy of the United States, I hereby call and order into the service of the armed forces of the United States Army, for the period of the existing
emergency, and place under the command of the general officer, United States Army, to be designated by the Secretary of War, from time to time, all of
the organized military forces of the Government of the Commonwealth." Following the issuance of President Roosevelt's order General Douglas
MacArthur was appointed Commanding General of the United States Armed Forces in the Far East.
It is contended, in behalf of Captain Francisco and Lieutenant Fortus, that "by the enemy occupation of the Philippines, the National Defense Act and all
laws and regulations creating and governing the existence of the Philippine Army including the Articles of War, were suspended and in abeyance during
such belligerent occupation."

The paragraph quoted in the petitioner's memorandum from Winthrop's Military Law and Precedents and the subsequent paragraph which has been
omitted furnish a complete answer to petitioner's contention of the Philippines by Japanese forces, the officers and men of the Philippine Army did not
cease to be fully in the service, though in a measure,' only in a measure, they were not subject to the military jurisdiction, if they were not active duty. In
the latter case, like officers and soldiers on leave of absence or held as prisoners of war, they could not be held guilty of a breach of the discipline of the
command or of a neglect of duty, or disobedience of orders, or mutiny, or subject to a military trial therefor; but for an act unbecoming an officer and a
gentleman, or an act which constitutes an offense of the class specified in the 95th Article of War, they may in general be legally held subject to military
jurisdiction and trial. "So a prisoner of war, though not subject, while held by the enemy, to the discipline of his own army, would, when exchanged of
paroled, be not exempt from liability for such offenses as criminal acts or injuriuos conduct committed during his captivity against other officers or
soldiers in the same status." (Winthrop's Military Law and Precedents, 2d Edition, pp. 91, 92.)

The rule invoked by counsel, namely, that laws of political nature or affecting political relations are considered superseded or in abeyance during the
military occupation, is intended for the governing of the civil inhabitants of the occupied territory. It is not intended for and does not bind the enemies in
arms. This is self-evident from the very nature of things. The paradox of a contrary ruling should readily manifest itself. Under the petitioner's theory the
forces of resistance operating in an occupied territory would have to abide by the outlawing of their own existence. They would be stripped of the very
life-blood of an army, the right and the ability to maintain order and discipline within the organization and to try the men guilty of breach thereof.

The surrender by General Wainright of the Fil-American Forces does not profit the petitioner's who were former members of the Philippine Constabulary
any more than does the rule of war or international law they cite. The fall of Bataan and Corregidor did not end the war. It did not, legally or otherwise,
keep the United States and the Commonwealth of the Philippines from organizing a new army, regular or irregular, out of new men and men in the old
service who had refused to surrender or who having surrendered, had decided to carry on the fight through other diverse means and methods. The fall of
Corregidor and Bataan just marked the beginning of the gigantic preparation for the gigantic drive that was to fight its way to and beyond the Philippines
in fulfillment of General MacArthur's classic promise, "I shall return." The heroic role which the guerrillas played in that preparation and in the
subsequent liberation of the Philippines is now history.

Independently of their previous connection with the Philippine Army and the Philippine Constabulary, Captain Francisco and Lieutenant Fortus as well
as Major Garcia and Lieutenant Adeva were subject to military jurisdiction.

The 2d Article of War defines and enumerates the persons subject to military law as follows:

Art. 2. Persons Subject to Military Law. — The following persons are subject to these articles and shall be understood as included in the term "any
person subject to military law" or "persons subject to military law," whenever used in these articles:

(a) All officers, members of the Nurse Corps and soldiers belonging to the Regular Force of the Philippine Army; all reservists, from the dates of their
call to active duty and while on such active duty; all trainees undergoing military instructions; and all other persons lawfully called, drafted, or order to
obey the same;

(b) Cadets, flying cadets, and probationary third lieutenants;

(c) All retainers to the camp and all persons accompanying or serving with the Army of the Philippines in the field in time of war or when martial law is
declared though not otherwise subject to these articles;

(d) All persons under sentences adjudged by courts-martial.

It is our opinion that the petitioners come within the general application of the clause in sub-paragraph (a); "and all other persons lawfully called, drafted,
or ordered into, or to duty for training in, the said service, from the dates they are required by the terms of the call, draft, or order to obey the same." By
their acceptance of appointments as officers in the Bolo Area from the General Headquarters of the 6th Military District, they became members of the
Philippine Army amendable to the Articles of War. The Bolo Area, as has been seen, was a contigent of the 6th Military District which, as has also been
pointed out, had been recognized by and placed under the operational control of the United States Army in the Southwest Pacific. The Bolo Area
received supplies and funds for the salaries of its officers and men from the Southwest Pacific Command. As officers in the Bolo Area and the 6th
Military District, the petitioners operated under the orders of duly established and duly appointed commanders of the United States Army.

The attitude of the enemy toward underground movements did not affect the military status of guerrillas who had been called into the service of the
Philippine Army. If the invaders refused to look upon guerrillas, without distinctions, as legitimate troops, that did not stop the guerillas who had been
inducted into the service of the Philippine Army from being component parts thereof, bound to obey military status of guerrillas was to be judged not by
the concept of the army of the country for which they fought.

The constitutionality of the 93d Article of War is assailed. This article ordains "that any person subject to military law who commits murder in time of
was shall suffer death or imprisonment for life, as the court martial may direct." It is argued that since "no review is provided by that law to be made by
the Supreme Court, irrespective of whether the punishment is for life imprisonment or death", it violates Article VIII, section 2, paragraph 4, of the
Constitution of the Philippines which provides that "the National Assembly may not deprive the Supreme Court of its original jurisdiction over all
criminal cases in which the penalty imposed is death or life imprisonment."

We think the petitioners are in error. This error arose from failure to perceive the nature of courts martial and the sources of the authority for their
creation.

Courts martial are agencies of executive character, and one of the authorities "for the ordering of courts martial has been held to be attached to the
constitutional functions of the President as Commander in Chief, independently of legislation." (Winthrop's Military Law and Precedents, 2d Edition, p.
49.) Unlike courts of law, they are not a portion of the judiciary. "The Supreme Court of the United States referring to the provisions of the Constitution
authorizing Congress to provide for the government of the army, excepting military offenses from the civil jurisdiction, and making the President
Commander in Chief, observes as follows: "These provisions show that Congress has the power to provide for the trial and punishment of military and
naval offenses in the manner then and now practiced by civilized nations, and that the power to do so is given without any connection between it and the
3d Article of the United States; indeed that the two powers are entirely independent of each other."

"Not belonging to the judicial branch of the government, it follows that courts-martial must pertain to the executive department; and they are in fact
simply instrumentalities of the executive power, provided by Congress for the President as Commander in Chief, to aid him in properly commanding the
army and navy and enforcing discipline therein, and utilized under his orders or those of his authorized military representatives." (Winthrop's Military
Law and Precedents, 2d Edition, p. 49.) Of equal interest Clode, 2 M. F., 361, says of these courts in the British law: "It must never be lost sight of that
the only legitimate object of military tribunals is to aid the Crown to maintain the discipline and government of the Army." (Footnote No. 24, p. 49,
Winthrop's Military Law and Precedents, 2d Edition.)

Our conclusion, therefore, is that the petition has no merit and that it should be dismissed with costs. It is so ordered.

Moran, C.J., Paras, Feria, Pablo, Hilado, Bengzon, Briones and Padilla, JJ., concur.

CASE DIGEST

RAMON RUFFY, ET AL., petitioners, vs. THE CHIEF OF STAFF, PHILIPPINE ARMY, ET AL., respondents.

G.R. No. L-533 August 20, 1946

Nature of the Action: Petition for prohibition, praying that respondents be commanded to desist from further proceedings in the trial of petitioners before
the military court

Facts: During the Japanese insurrection in the Philippines, military men were assigned at designated camps or military bases all over the country. When
the Japanese forces reached Mindoro, Ruffy and his band were forced to retreat to the mountains. A guerilla outfit was then organized, called as the
“Bolo Area”. However, a certain Capt. Esteban Beloncio relieved petitioners of their positions and duties in the “Bolo Area”, after Lieut. Col. Enrique
Jurado effected a change of command. The latter, however, was slain allegedly by petitioners, and it was this murder which gave rise to petitioners’ trial,
the legality of which is now being contested.

Issue: Were the petitioners subject to the military law at the time of war and Japanese occupation?

Ruling: Our conclusion, therefore, is that the petition has no merit and that it should be dismissed with costs.

Ratio Decidendi: Yes, the petitioners were subject to military law. By their acceptance of appointments as officers in the Bolo Area, they became
members of the Philippine Army—the Bolo Area being a contingent of the 6th military district which is recognized by the United States army. Thus,
petitioners are covered by the National Defense Act, Articles of War, and other pertinent laws during an occupation.
G.R. Nos. 70116-19 August 12, 1986
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. FRANK ROBERTSON, JAMES W. ROBERTSON, ROBERT H. CATHEY,
JOHN L. GARRISON AND THE COURT OF TAX APPEALS, respondents.

PARAS, J.:

This is a Petition for Review of the consolidated decision dated 14 December 1984 of the Court of Tax Appeals (C.T.A.) in C.T.A. Case No. 2735,
entitled "Frank Robertson vs. Coconut commissioner of Internal Revenue,"  C.T.A. Case No. 2736, entitled "James W. Robertson vs. Commissioner of
Internal Revenue;"  C.T.A. Case No. 2738, entitled "Robert H. Cathey vs. Commissioner of Internal Revenue" and C.T.A. Case No. 2739, entitled "John
L. Garrison vs. Commissioner of Internal Revenue,"  cancelling the assessments for deficiency income tax for taxable years 1969-1972, inclusive of
interests and penalties against:

Frank Robertson (CTA Case No. 2735)-P l32,750.65

James W. Robertson (CTA Case No. 2736)-190,433.17

Robert H. Cathey (CTA Case No. 2738)-92,013.17

John L. Garrison (CTA Case No. 2739)-196,754.32

The above-entitled cases are consolidated as these involve similar or Identical fact situations on a question involving the scope of the tax exemption
provision in Article XII, Par. 2, of the RP-US Military Bases Agreement of 1947, quoted as follows:

2. No national of the United States serving in or employed in the Philippines in connection with the construction, maintenance, operation or defense of
the bases and residing in the Philippines by reason only of such employment, or his spouse and minor children and dependent parents of either spouse,
shall be liable to pay income tax in the Philippines except in respect of income derived from Philippine sources or sources other than the United States
sources.

The Court of Tax Appeals found the following undisputed antecedent facts:

Petitioner Frank Robertson (CTA Case No. 2735) is an American citizen born in the Philippines on July 8, 1924. He resided in the Philippines until
repatriated to the United States in 1945 and took residence at Long Beach, California. Soon after he was employed by the U.S. Federal Government with
a job at the U.S. Navy. His work brought him to the U.S. Navy's various installations overseas with eventual assignment at the U.S. Naval Ship Repair
Facility at Subic Bay, Olongapo, Philippines, in 1962.

Like his brother Frank Robertson, petitioner James Robertson (CTA Case No. 2736) was born in the Philippines on December 22, 1918 and had since
resided in this country until repatriated to the United States in 1945 and there, established his domicile. He landed a job with the U.S. Navy Shipyard at
Long Beach, California as a U.S. Federal Civil Service employee. He returned to the Philippines in 1958 with assignment at the U.S. Naval Base at Subic
Bay, Olongapo, and has since remained thru 1972.

In CTA Case No. 2738, petitioner Robert H. Cathey is a United States born citizen who first came to the Philippines with the U.S. liberation force in
1944, and upon discharge from the military service in 1946 turned a U.S. Navy's civilian employee with station at Makati, Metro Manila.

Petitioner John Garrison (CTA Case No. 2739) is a Philippine born American citizen also repatriated to the United States in 1945 establishing his
domicile at San Francisco, California. Soon after he was employed by the U.S. Federal Government in its military installations. He returned to the
Philippines in 1952 assigned at the U.S. Naval Base, Subic Bay, Philippines.

All told, the petitioners are citizens of the United States; holders of American passports and admitted as Special Temporary Visitors under Section 9 (a)
visa of the Philippine Immigration Act of 1940, as amended; civilian employees in the U.S. Military Base in the Philippines in connection with its
construction, maintenance, operation, and defense; and incomes are solely derived from salaries from the U.S. government by reason of their
employment in the U.S. Bases in the Philippines." (pp. 76-78, Record)

The Court a quo after due hearing, rendered its judgment in favor of respondents cancelling and setting aside the assessments for deficiency income taxes
of respondents for the taxable years 1969-1972, inclusive of interests and penalties.

Petitioner Commissioner of Internal Revenue now comes before Us assigning one alleged error, to wit:

The Court of Tax Appeals erred in holding that private respondents are, by virtue of Article XII, Par 2 of the RP-US Military Bases Agreement of 1947,
exempt from Philippine income tax.

Petitioner, to support his contentions, argues that the laws granting tax exemptions must be construed in strictissimi juris against the taxpayer, and that
the burden of proof is on private respondents, Frank Robertson, James W. Robertson, Robert J. Cathey and John L. Garrison to establish that their
residence in the country is by reason only of their employment in connection with the construction, maintenance, operation or defense of the U.S. Bases
in the Philippines as provided for under Article XII, Par. 2 of the RP-US Military Bases Agreement of 1947 (supra). Petitioner avers in his Brief, dated
February 4, 1986, filed before this Court, that private respondents have failed to discharge this burden, alleging, among other things, (1) that both
respondents Frank Robertson and James Robertson, who are brothers, own residential properties respectively declared in the name of James Robertson
and in the name of Frank Robertson's wife for taxation purposes; (2) that James Robertson is now a retired Federal Civil Service employee and presently
living with his family in Olongapo City, which circumstance indicate that respondents' residence in this country is not by reason only of his employment
in the U.S. naval base; (4) that respondent Robert H. Cathey owns the house at Quezon City where he presently resides; (5) that the stay of respondent
John Garrison who returned to the Philippines in the year 1948 is uninterrupted except for a two-year stint in Okinawa in the years 1950 to 1952; (6) that
the issuance in San Francisco, California of a Voter's Certificate to respondent John Garrison in 1945 does not in any way indicate that he was a U.S.
resident, in the years 1969 to 1972.

The aforegoing facts were the main argument of petitioner in support of his contentions against respondents. Such contentions do not impress Us as
meritorious.

The law and the facts of the case are so clear that there is no room left for Us to doubt the validity of private respondents' defense. In order to avail
oneself of the tax exemption under the RP-US Military Bases Agreement: he must be a national of the United States employed in connection with the
construction, maintenance, operation or defense, of the bases, residing in the Philippines by reason of such employment, and the income derived is from
the U.S. Government (Art. XII par. 2 of PI-US Military Bases Agreement of 1947). Said circumstances are all present in the case at bar. Likewise, We
find no justifiable reason to disturb the findings and rulings of the lower court in its decision reading as follows:

We find nothing in the said treaty provision that justified the lifting of the tax exemption privilege of the petitioners (private respondents herein).
Respondent (petitioner herein) has grafted a meaning other than that conveyed by the plain and clear tenor of the Agreement. An examination of the
words used and the circumstances in which they were used, shows the basic intendment "to exempt all U.S. citizens working in the Military Bases from
the burden of paying Philippine Income Tax without distinction as to whether born locally or born in their country of origin." Ubi lex non distinguit nec
nos distinguere debemos (one must not distinguish where the law does not distinguish) (Emphasis supplied). Moreover, the ruling has altered a
satisfactorily settled application of the exemption clause and has fallen short of measuring up to the familiar principle of International Law that, "The
obligation to fulfill in good faith a treaty engagement requires that the stipulations be observed in their spirit as well as according to their letter and that
what has been promised be performed without evasion, or subterfuge, honestly and to the best of the ability of the party which made the promise." (Kunz,
The Meaning and Range of the Norm (Pacta Sunt Servanda, 29 A.J.I.L. 180 (1945); cited in Freidmann, Lisstzyn, Pugh, International Law (1969) 329).
Somehow, the ruling becomes an anacoluthon and a persiflage.

It bears repeating as so disclosed in the records that the petitioners together with families upon repatriation in 1945 had since acquired domicile and
residency in the United States. And, obtained employment with the United States Federal Service. Not until after several years of a hiatus, petitioners did
return to the Philippines not so much of honoring a pledge nor of sentimental journey but by reason of taking up assigned duties with the United States
military bases in the Philippines where they were gainfully employed by the U.S. Federal Government. The situation of the petitioners is of no different
mold as of the rest of the U.S. civilian employees who continued to enjoy the benefits of tax exemption under the Agreement, Petitioners' circumstances
before the questioned ruling remained obtaining thru the taxable years 1969-1972. It appears too much of a stretch to hold petitioners straight-jacketed to
an irreversible situs of birth constraint and by reason thereof deny altogether any opportunity to a serendipitous enjoyment of a tax relief accorded in the
Agreement. Such a random quirk of pirouette in the tax treatment fags sharply at odds with the shared expectations of the high contracting parties. This
Court will not deem itself authorized to depart from the plain meaning of the tax exemption provision so explicit in terms and so searching in
extent.  (Emphasis supplied) This does not however foreclose the possibility of petitioners' coming to roost in the country contingent upon the termination
of their tour of duty, but only then may the bridge be crossed for tax purposes. (pp. 82-84, Record)

The circumstances in the case of Reagan vs. Commissioner of Internal Revenue (30 SCRA 968) relied upon by petitioner in support of the government's
claim are different from the circumstances of the case herein and the ruling obtained in the former case cannot be invoked or applied in support of
petitioner's contention. A cursory reading of said case shows that William Reagan was at one time a civilian employee of an American corporation
providing technical assistance to the U.S. Air Force in the Philippines. He questioned the payment of the income tax assessed on him by respondent
Commissioner of Internal Revenue on an amount realized by him on a sale of his automobile to a member of the US Marine Corps., the transaction
having taken place at the Clark Field Air Base in Pampanga. It was his contention that in legal contemplation the sale was made outside Philippine
territory and therefore beyond our jurisdictional power to tax. Clearly, the facts in said case are different from those obtaining in the present suit.

WHEREFORE, premises considered, the appealed decision of the Court of Tax Appeals is AFFIRMED and the petition for review is hereby
DISMISSED. No costs.

SO ORDERED.

CASE DIGEST

143 SCRA 397 – Political Law – Sovereignty

Frank and James Robertson (brothers) were American citizens born in the Philippines. They stayed here in the Philippines until they were repatriated by
the US in 1945. Thereafter they established their domicile in California. Soon after they were employed by the US Federal Government as workers in the
US Navy. They were later assigned at the US Naval Base in Olongapo City in 1962. They hold American passports and are admitted as special
temporary visitors under the Philippine Immigration Act of 1940. On the other hand, the Commissioner of Internal Revenue (CIR) contends that the
American brothers are subject to taxation because their residence here in the Philippines is not by reason of their employment in connection with the
construction, maintenance, operation or defense of the US Bases here as provided by the Military Bases Agreement. Further, the burden of proof of such
exemption to taxation shall be upon the respondents.

ISSUE: Whether or not the American brothers are exempt from taxation?

HELD: Yes. The law and the facts of the case are so clear that there is no room left for doubt the validity of the brothers’ defense. In order to avail
oneself of the tax exemption under the RP-US Military Bases Agreement: he must be a national of the United States employed in connection with the
construction, maintenance, operation or defense, of the bases, residing in the Philippines by reason of such employment, and the income derived is from
the U.S. Government (Art. XII par. 2 of PI-US Military Bases Agreement of 1947). Said circumstances are all present in the case at bar

G.R. No. L-26379      December 27, 1969

WILLIAM C. REAGAN, ETC., petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, respondent.
Quasha, Asperilla, Blanco, Zafra and Tayag for petitioner.
Office of the Solicitor General Antonio P. Barredo, Assistant Solicitor General Felicisimo R. Rosete, Solicitor Lolita O. Gal-lang and Special Attorney
Gamaliel H. Mantolino for respondent.
FERNANDO, J.:

A question novel in character, the answer to which has far-reaching implications, is raised by petitioner William C. Reagan, at one time a civilian
employee of an American corporation providing technical assistance to the United States Air Force in the Philippines. He would dispute the payment of
the income tax assessed on him by respondent Commissioner of Internal Revenue on an amount realized by him on a sale of his automobile to a member
of the United States Marine Corps, the transaction having taken place 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.

Such a plea, far-fetched and implausible, on its face betraying no kinship with reality, he would justify by invoking, mistakenly as will hereafter be more
fully shown an observation to that effect in a 1951 opinion, 1 petitioner ignoring that such utterance was made purely as a flourish of rhetoric and by way
of emphasizing the decision reached, that the trading firm as purchaser of army goods must respond for the sales taxes due from an importer, as the
American armed forces being exempt could not be taxed as such under the National Internal Revenue Code. 2 Such an assumption, inspired by the
commendable aim to render unavailing any attempt at tax evasion on the part of such vendee, found expression anew in a 1962 decision, 3 coupled with
the reminder however, to render the truth unmistakable, that "the areas covered by the United States Military Bases are not foreign territories both in the
political and geographical sense."

As thus clarified, it is manifest that such a view amounts at most to a legal fiction and is moreover obiter. It certainly cannot control the resolution of the
specific question that confronts us. We declare our stand in an unequivocal manner. The sale having taken place on what indisputably is Philippine
territory, petitioner's liability for the income tax due as a result thereof was unavoidable. As the Court of Tax Appeals reached a similar conclusion, we
sustain its decision now before us on appeal.

In the decision appealed from, the Court of Tax Appeals, after stating the nature of the case, started the recital of facts thus: "It appears that 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, on or about July 7, 1959 ... . Nine (9) months thereafter and before his tour of duty
expired, petitioner imported on April 22, 1960 a tax-free 1960 Cadillac car with accessories valued at $6,443.83, including freight, insurance and other
charges."4 Then came the following: "On July 11, 1960, 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. On the same date, July 11, 1960,
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,
as shown by a Bill of Sale . . . executed at Clark Air Base. On the same date, Pfc. Willie (William) Johnson, Jr. sold the car to Fred Meneses for
P32,000.00 as evidenced by a deed of sale executed in Manila." 5

As a result of the transaction thus made, respondent 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. After paying the sum, he sought a refund from respondent claiming that he was exempt, but pending action on
his request for refund, 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.

As noted in the appealed decision: "The only issue submitted for our resolution is whether or not the said income tax of P2,979.00 was legally collected
by respondent for petitioner."6 After discussing the legal issues raised, primarily the contention that the Clark Air Base "in legal contemplation, is a base
outside the Philippines" the sale therefore having taken place on "foreign soil", the Court of Tax Appeals found nothing objectionable in the assessment
and thereafter the payment of P2,979.00 as income tax and denied the refund on the same. Hence, this appeal predicated on a legal theory we cannot
accept. Petitioner cannot make out a case for reversal.

1. Resort to fundamentals is unavoidable to place things in their proper perspective, petitioner apparently feeling justified in his refusal to defer to basic
postulates of constitutional and international law, induced no doubt by the weight he would accord to the observation made by this Court in the two
opinions earlier referred to. To repeat, scant comfort, if at all is to be derived from such an obiter dictum, one which is likewise far from reflecting the
fact as it is.

Nothing is better settled than that 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.

It is to be admitted that 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, in the succinct language of Jellinek, "is
the property of a state-force due to which it has the exclusive capacity of legal self-determination and self-restriction." 7 A state then, if it chooses to, may
refrain from the exercise of what otherwise is illimitable competence.

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.

Decisions coming from petitioner's native land, penned by jurists of repute, speak to that effect with impressive unanimity. We start with the citation
from Chief Justice Marshall, announced in the leading case of Schooner Exchange v. M'Faddon,8 an 1812 decision: "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."

Chief Justice Taney, in an 1857 decision,9 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." It is no exaggeration then for Justice Brewer to stress that the United States government "is one having jurisdiction over every foot of soil
within its territory, and acting directly upon each [individual found therein]; . . ." 10

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."11 He could cite moreover, in addition to many American decisions, such eminent treatise-writers as Kent, Moore, Hyde, Wilson, Westlake,
Wheaton and Oppenheim.

As a matter of fact, the eminent commentator Hyde in his three-volume work on International Law, as interpreted and applied by the United States, 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."12

2. 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.

Petitioner could not have been unaware that to maintain the contrary would be to defy reality and would be an affront to the law. While his first assigned
error is thus worded, he would seek to impart plausibility to his claim by the ostensible invocation of the exemption clause in the Agreement by virtue of
which a "national of the United States serving in or employed in the Philippines in connection with the construction, maintenance, operation or defense
of the bases and residing in the Philippines only by reason of such employment" is not to be taxed on his income unless "derived from Philippine source
or sources other than the United States sources."13 The reliance, to repeat, is more apparent than real for as noted at the outset of this opinion, petitioner
places more faith not on the language of the provision on exemption but on a sentiment given expression in a 1951 opinion of this Court, which would be
made to yield such an unwarranted interpretation at war with the controlling constitutional and international law principles. At any rate, even if such a
contention were more adequately pressed and insisted upon, it is on its face devoid of merit as the source clearly was Philippine.

In Saura Import and Export Co. v. Meer,14 the case above referred to, this Court affirmed a decision rendered about seven months previously, 15 holding
liable as an importer, within the contemplation of the National Internal Revenue Code provision, the trading firm that purchased army goods from a
United States government agency in the Philippines. It is easily understandable why. If it were not thus, tax evasion would have been facilitated. The
United States forces that brought in such equipment later disposed of as surplus, when no longer needed for military purposes, was beyond the reach of
our tax statutes.

Justice Tuason, who spoke for the Court, adhered to such a rationale, quoting extensively from the earlier opinion. He could have stopped there. He
chose not to do so. The transaction having occurred in 1946, not so long after the liberation of the Philippines, he proceeded to discuss the role of the
American military contingent in the Philippines as a belligerent occupant. In the course of such a dissertion, drawing on his well-known gift for rhetoric
and cognizant that he was making an as if statement, he did say: "While in army bases or installations within the Philippines those goods were in
contemplation of law on foreign soil."

It is thus evident that the first, and thereafter the controlling, decision as to the liability for sales taxes as an importer by the purchaser, could have been
reached without any need for such expression as that given utterance by Justice Tuason. Its value then as an authoritative doctrine cannot be as much as
petitioner would mistakenly attach to it. It was clearly obiter not being necessary for the resolution of the issue before this Court. 16 It was an opinion
"uttered by the way."17 It could not then be controlling on the question before us now, the liability of the petitioner for income tax which, as announced at
the opening of this opinion, is squarely raised for the first time. 18

On this point, Chief Justice Marshall could again be listened to with profit. Thus: "It is a maxim, not to be disregarded, that general expressions, in every
opinion, are to be taken in connection with the case in which those expressions are used. If they go beyond the case, they may be respected, but ought not
to control the judgment in a subsequent suit when the very point is presented for decision." 19

Nor did the fact that such utterance of Justice Tuason was cited in Co Po v. Collector of Internal Revenue,20 a 1962 decision relied upon by petitioner, put
a different complexion on the matter. Again, it was by way of pure embellishment, there being no need to repeat it, to reach the conclusion that it was the
purchaser of army goods, this time from military bases, that must respond for the advance sales taxes as importer. Again, the purpose that animated the
reiteration of such a view was clearly to emphasize that through the employment of such a fiction, tax evasion is precluded. What is more, how far
divorced from the truth was such statement was emphasized by Justice Barrera, who penned the Co Po opinion, thus: "It is true that the areas covered by
the United States Military Bases are not foreign territories both in the political and geographical sense." 21

Justice Tuason moreover made explicit that rather than corresponding with reality, what was said by him was in the way of a legal fiction. Note his stress
on "in contemplation of law." To lend further support to a conclusion already announced, being at that a confirmation of what had been arrived at in the
earlier case, distinguished by its sound appreciation of the issue then before this Court and to preclude any tax evasion, an observation certainly not to be
taken literally was thus given utterance.

This is not to say that it should have been ignored altogether afterwards. It could be utilized again, as it undoubtedly was, especially so for the purpose
intended, namely to stigmatize as without support in law any attempt on the part of a taxpayer to escape an obligation incumbent upon him. So it was
quoted with that end in view in the Co Po case. It certainly does not justify any effort to render futile the collection of a tax legally due, as here. That was
farthest from the thought of Justice Tuason.
What is more, the statement on its face is, to repeat, a legal fiction. This is not to discount the uses of a fictio juris in the science of the law. It was
Cardozo who pointed out its value as a device "to advance the ends of justice" although at times it could be "clumsy" and even "offensive". 22 Certainly,
then, while far from objectionable as thus enunciated, this observation of Justice Tuason could be misused or misconstrued in a clumsy manner to reach
an offensive result. To repeat, properly used, a legal fiction could be relied upon by the law, as Frankfurter noted, in the pursuit of legitimate
ends.23 Petitioner then would be well-advised to take to heart such counsel of care and circumspection before invoking not a legal fiction that would
avoid a mockery of the law by avoiding tax evasion but what clearly is a misinterpretation thereof, leading to results that would have shocked its
originator.

The conclusion is thus irresistible that the crucial error assigned, the only one that calls for discussion to the effect that for income tax purposes the Clark
Air Force Base is outside Philippine territory, is utterly without merit. So we have said earlier.

3. To impute then to the statement of Justice Tuason the meaning that petitioner would fasten on it is, to paraphrase Frankfurter, to be guilty of
succumbing to the vice of literalness. To so conclude is, whether by design or inadvertence, to misread it. It certainly is not susceptible of the
mischievous consequences now sought to be fastened on it by petitioner.

That it would be fraught with such peril to the enforcement of our tax statutes on the military bases under lease to the American armed forces could not
have been within the contemplation of Justice Tuason. To so attribute such a bizarre consequence is to be guilty of a grave disservice to the memory of a
great jurist. For his real and genuine sentiment on the matter in consonance with the imperative mandate of controlling constitutional and international
law concepts was categorically set forth by him, not as an obiter but as the rationale of the decision, in People v. Acierto24 thus: "By the [Military Bases]
Agreement, it should be noted, the Philippine Government merely consents that the United States exercise jurisdiction in certain cases. The consent was
given purely as a matter of comity, courtesy, or expediency over the bases as part of the Philippine territory or divested itself completely of jurisdiction
over offenses committed therein."

Nor did he stop there. He did stress further the full extent of our territorial jurisdiction in words that do not admit of doubt. Thus: "This provision is not
and cannot on principle or authority be construed as a limitation upon the rights of the Philippine Government. If anything, it is an emphatic recognition
and reaffirmation of Philippine sovereignty over the bases and of the truth that all jurisdictional rights granted to the United States and not exercised by
the latter are reserved by the Philippines for itself." 25

It is in the same spirit that we approach the specific question confronting us in this litigation. We hold, as announced at the outset, that petitioner was
liable for the income tax arising from a sale of his automobile in the Clark Field Air Base, which clearly is and cannot otherwise be other than, within our
territorial jurisdiction to tax.

4. With the mist thus lifted from the situation as it truly presents itself, there is nothing that stands in the way of an affirmance of the Court of Tax
Appeals decision. No useful purpose would be served by discussing the other assigned errors, petitioner himself being fully aware that if the Clark Air
Force Base is to be considered, as it ought to be and as it is, Philippine soil or territory, his claim for exemption from the income tax due was
distinguished only by its futility.

There is further satisfaction in finding ourselves unable to indulge petitioner in his plea for reversal. We thus manifest fealty to a pronouncement made
time and time again that the law does not look with favor on tax exemptions and that he who would seek to be thus privileged must justify it by words too
plain to be mistaken and too categorical to be misinterpreted. 26 Petitioner had not done so. Petitioner cannot do so.

WHEREFORE, the decision of the Court of Tax Appeals of May 12, 1966 denying the refund of P2,979.00 as the income tax paid by petitioner is
affirmed. With costs against petitioner.

CASE DIGEST

G.R. No. L-26379 December 27, 1969 WILLIAM C. REAGAN, ET. AL vs. COMMISSIONER OF INTERNAL REVENUE

FACTS:
Petitioner Reagan, a civilian employee of an American corporation providing technical assistance to the US Air Force in the Philippines, questioned the
payment of the income tax assessed on him by respondent CIR on an amount realized by him on a sale of his automobile to a member of the US Marine
Corps, the transaction having taken place at the Clark Field Air Base at Pampanga. It is his contention, that in legal contemplation the sale was made
outside Philippine territory and therefore beyond our jurisdictional power to tax. He seeks that an amount of P2,979.00 as the income tax paid by him be
refunded.

ISSUE: WON the Clark Field Air Base is a foreign property therefore excluded from the power of Philippine taxation.

HELD: NO.

By the [Military Bases] Agreement, it should be noted, the Philippine Government merely consents that the United States exercise jurisdiction in certain
cases. The consent was given purely as a matter of comity, courtesy, or expediency over the bases as part of the Philippine territory or divested itself
completely of jurisdiction over offenses committed therein. This provision is not and cannot on principle or authority be construed as a limitation upon
the rights of the Philippine Government.

The State 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.
G.R. No. L-36409 October 26, 1973

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. LORETA GOZO, defendant-appellant.

Office of the Solicitor General Felix Q. Antonio, Assistant Solicitor General Jaime M. Lantin and Solicitor Norberto P. Eduardo for plaintiff-
appellee.

Jose T. Nery for defendant-appellant.

FERNANDO, J.:

Appellant seeks to set aside a judgment of the Court of First Instance of Zambales, convicting her of a violation of an ordinance of Olongapo, Zambales,
requiring a permit from the municipal mayor for the construction or erection of a building, as well as any modification, alteration, repair or demolition
thereof. She questions its validity, or at the very least, its applicability to her, by invoking due process,1 a contention she would premise on what for her
is the teaching of People v. Fajardo.2 If such a ground were far from being impressed with solidity, she stands on quicksand when she would deny the
applicability of the ordinance to her, on the pretext that her house was constructed within the naval base leased to the American armed forces. While
yielding to the well-settled doctrine that it does not thereby cease to be Philippine territory, she would, in effect, seek to emasculate our sovereign rights
by the assertion that we cannot exercise therein administrative jurisdiction. To state the proposition is to make patent how much it is tinged with
unorthodoxy. Clearly then, the lower court decision must be affirmed with the sole modification that she is given thirty days from the finality of a
judgment to obtain a permit, failing which, she is required to demolish the same.

The facts are undisputed. As set forth in the decision of the lower court: "The accused bought a house and lot located inside the United States Naval
Reservation within the territorial jurisdiction of Olongapo City. She demolished the house and built another one in its place, without a building permit
from the City Mayor of Olongapo City, because she was told by one Ernesto Evalle, an assistant in the City Mayor's office, as well as by her neighbors in
the area, that such building permit was not necessary for the construction of the house. On December 29, 1966, Juan Malones, a building and lot
inspector of the City Engineer's Office, Olongapo City, together with Patrolman Ramon Macahilas of the Olongapo City police force apprehended four
carpenters working on the house of the accused and they brought the carpenters to the Olongapo City police headquarters for interrogation. ... After due
investigation, Loreta Gozo was charged with violation of Municipal Ordinance No. 14, S. of 1964 with the City Fiscal's Office."3 The City Court of
Olongapo City found her guilty of violating Municipal Ordinance No. 14, Series of 1964 and sentenced her to an imprisonment of one month as well as
to pay the costs. The Court of Instance of Zambales, on appeal, found her guilty on the above facts of violating such municipal ordinance but would
sentence her merely to pay a fine of P200.00 and to demolish the house thus erected. She elevated the case to the Court of Appeals but in her brief, she
would put in issue the validity of such an ordinance on constitutional ground or at the very least its applicability to her in view of the location of her
dwelling within the naval base. Accordingly, the Court of Appeals, in a resolution of January 29, 1973, noting the constitutional question raised, certified
the case to this Court.

There is, as mentioned in the opening paragraph of this petition, no support in law for the stand taken by appellant.

1. It would be fruitless for her to assert that local government units are devoid of authority to require building permits. This Court, from Switzer v.
Municipality of

Cebu,4 decided in 1911, has sanctioned the validity of such measures. It is much too late in the day to contend that such a requirement cannot be validly
imposed. Even appellant, justifiably concerned about the unfavorable impression that could be created if she were to deny that such competence is vested
in municipal corporations and chartered cities, had to concede in her brief: "If, at all; the questioned ordinance may be predicated under the general
welfare clause ... ."5 Its scope is wide, well-nigh all embracing, covering every aspect of public health, public morals, public safety, and the well being
and good order of the community.6

It goes without saying that such a power is subject to limitations. Certainly, if its exercise is violative of any constitutional right, then its validity could be
impugned, or at the very least, its applicability to the person adversely affected could be questioned. So much is settled law. Apparently, appellant has
adopted the view that a due process question may indeed be raised in view of what for her is its oppressive character. She is led to such a conclusion,
relying on People v. Fajardo.7 A more careful scrutiny of such a decision would not have led her astray, for that case is easily distinguishable. The facts
as set forth in the opinion follow: "It appears that on August 15, 1950, during the incumbency of defendant-appellant Juan F. Fajardo as mayor of the
municipality of Baao, Camarines Sur, the municipal council passed the ordinance in question providing as follows: "... 1. Any person or persons who will
construct or repair a building should, before constructing or repairing, obtain a written permit from the Municipal Mayor. ... 2. A fee of not less than
P2.00 should be charged for each building permit and P1.00 for each repair permit issued. ... 3. [Penalty]-Any violation of the provisions of the above,
this ordinance, shall make the violator liable to pay a fine of not less than P25 nor more than P50 or imprisonment of not less than 12 days nor more than
24 days or both, at the discretion of the court. If said building destroys the view of the Public Plaza or occupies any public property, it shall be removed
at the expense of the owner of the building or house. ... ." Four years later, after the term of appellant Fajardo as mayor had expired, he and his son-in-
law, appellant Babilonia, filed a written request with the incumbent municipal mayor for a permit to construct a building adjacent to their gasoline station
on a parcel of land registered in Fajardo's name, located along the national highway and separated from the public plaza by a creek ... . On January 16,
1954, the request was denied, for the reason among others that the proposed building would destroy the view or beauty of the public plaza ... . On
January 18, 1954, defendants reiterated their request for a building permit ..., but again the request was turned down by the mayor. Whereupon,
appellants proceeded with the construction of the building without a permit, because they needed a place of residence very badly, their former house
having been destroyed by a typhoon and hitherto they had been living on leased property."8

Clearly then, the application of such an ordinance to Fajardo was oppressive. A conviction therefore for a violation thereof both in the justice of the
peace court of Baao, Camarines Sur as well as in the Court of First Instance could not be sustained. In this case, on the contrary, appellant never bothered
to comply with the ordinance. Perhaps aware of such a crucial distinction, she would assert in her brief: "The evidence showed that even if the accused
were to secure a permit from the Mayor, the same would not have been granted. To require the accused to obtain a permit before constructing her house
would be an exercise in futility. The law will not require anyone to perform an impossibility, neither in law or in fact: ... ."9 It would be from her own
version, at the very least then, premature to anticipate such an adverse result, and thus to condemn an ordinance which certainly lends itself to an
interpretation that is neither oppressive, unfair, or unreasonable. That kind of interpretation suffices to remove any possible question of its validity, as
was expressly announced in Primicias v. Fugoso. 10 So it appears from this portion of the opinion of Justice Feria, speaking for the Court: "Said
provision is susceptible of two constructions: one is that the Mayor of the City of Manila is vested with unregulated discretion to grant or refuse to grant
permit for the holding of a lawful assembly or meeting, parade, or procession in the streets and other public places of the City of Manila; and the other is
that the applicant has the right to a permit which shall be granted by the Mayor, subject only to the latter's reasonable discretion to determine or specify
the streets or public places to be used for the purpose, with a view to prevent confusion by overlapping, to secure convenient use of the streets and public
places by others, and to provide adequate and proper policing to minimize the risk of disorder. After a mature deliberation, we have arrived at the
conclusion that we must adopt the second construction, that is, construe the provisions of the said ordinance to mean that it does not confer upon the
Mayor the power to refuse to grant the permit, but only the discretion, in issuing the permit, to determine or specify the streets or public places where the
parade or procession may pass or the meeting may be held." 11 If, in a case affecting such a preferred freedom as the right to assembly, this Court could
construe an ordinance of the City of Manila so as to avoid offending against a constitutional provision, there is nothing to preclude it from a similar mode
of approach in order to show the lack of merit of an attack against an ordinance requiring a permit. Appellant cannot therefore take comfort from any
broad statement in the Fajardo opinion, which incidentally is taken out of context, considering the admitted oppressive application of the challenged
measure in that litigation. So much then for the contention that she could not have been validly convicted for a violation of such ordinance. Nor should it
be forgotten that she did suffer the same fate twice, once from the City Court and thereafter from the Court of First Instance. The reason is obvious.Such
ordinance applies to her.

2. Much less is a reversal indicated because of the alleged absence of the rather novel concept of administrative jurisdiction on the part of Olongapo City.
Nor is novelty the only thing that may be said against it. Far worse is the assumption at war with controlling and authoritative doctrines that the mere
existence of military or naval bases of a foreign country cuts deeply into the power to govern. Two leading cases may be cited to show how offensive is
such thinking to the juristic concept of sovereignty, People v. Acierto, 12 and Reagan v. Commissioner of Internal Revenue. 13 As was so emphatically
set forth by Justice Tuason in Acierto: "By the Agreement, it should be noted, the Philippine Government merely consents that the United States exercise
jurisdiction in certain cases. The consent was given purely as a matter of comity, courtesy, or expediency. 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. The first proposition is implied from the fact of Philippine sovereignty over the bases; the second from the express provisions of the treaty."
14 There was a reiteration of such a view in Reagan. Thus: "Nothing is better settled than that 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 sovereignty." 15 Then came this
paragraph dealing with the principle of auto-limitation: "It is to be admitted 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, in the succinct language of Jellinek, "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." 16 The opinion was at pains to
point out though that even then, there is at the most diminution of jurisdictional rights, not its disappearance. The words employed follow: "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." 17

Can there be anything clearer, therefore, than that only a turnabout, unwarranted and unjustified, from what is settled and orthodox law can lend the
slightest degree of plausibility to the contention of absence of administrative jurisdiction. If it were otherwise, what was aptly referred to by Justice
Tuason "as a matter of comity, courtesy, or expediency" becomes one of obeisance and submission. If on a concern purely domestic in its implications,
devoid of any connection with national security, the Military-Bases Agreement could be thus interpreted, then sovereignty indeed becomes a mockery
and an illusion. Nor does appellant's thesis rest on less shaky foundation by the mere fact that Acierto and Reagan dealt with the competence of the
national government, while what is sought to be emasculated in this case is the so-called administrative jurisdiction of a municipal corporation. Within
the limits of its territory, whatever statutory powers are vested upon it may be validly exercised. Any residual authority and therein conferred, whether
expressly or impliedly, belongs to the national government, not to an alien country. What is even more to be deplored in this stand of appellant is that no
such claim is made by the American naval authorities, not that it would do them any good if it were so asserted. To quote from Acierto anew: "The
carrying out of the provisions of the Bases Agreement is the concern of the contracting parties alone. Whether, therefore, a given case which by the treaty
comes within the United States jurisdiction should be transferred to the Philippine authorities is a matter about which the accused has nothing to do or
say. In other words, the rights granted to the United States by the treaty insure solely to that country and can not be raised by the offender." 18 If an
accused would suffer from such disability, even if the American armed forces were the beneficiary of a treaty privilege, what is there for appellant to take
hold of when there is absolutely no showing of any alleged grant of what is quaintly referred to as administrative jurisdiction? That is all, and it is more
than enough, to make manifest the futility of seeking a reversal.

WHEREFORE, the appealed decision of November 11, 1969 is affirmed insofar as it found the accused, Loreta Gozo, guilty beyond reasonable doubt of
a violation of Municipal Ordinance No. 14, series of 1964 and sentencing her to pay a fine of P200.00 with subsidiary imprisonment in case of
insolvency, and modified insofar as she is required to demolish the house that is the subject matter of the case, she being given a period of thirty days
from the finality of this decision within which to obtain the required permit. Only upon her failure to do so will that portion of the appealed decision
requiringdemolition be enforced. Costs against the accused.

CASE DIGEST

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. LORETA GOZO, defendant-appellant. 53 SCRA 476 OCTOBER 26, 1973

FACTS:

Loreta Gozo bought a house and lot located inside the US Naval Reservation within the territorial jurisdiction of Olangapo City. She demolished the
house and built another one in its place without securing a building permit from the City Mayor of Olangapo City. The City Court of Olangapo found her
guilty of violating a municipal ordinance that requires permit from the municipal mayor for construction of building as well as any modification, repairs
or demolition thereof.
On appeal with the Court of Appeals, Gozo put in issue the validity of such ordinance by invoking due process. She likewise questioned the applicability
of the ordinance to her in view of the location of her dwelling within the naval base leased to the American Armed Forces; she contended that the
municipal government could not exercise therein-administrative jurisdiction.

ISSUES:

Whether municipal ordinance is valid?

Whether the municipal corporation retains its administrative jurisdiction over the area where Gozo‘s house was located?

HELD:

YES, the municipal ordinance is valid. The authority to require building permits is predicated upon the general welfare clause. Its scope is wide, well-
nigh all embracing, covering every aspect of public health, public morals, public safety, and the well-being and good order of the community.

YES, the municipal corporation retains its administrative jurisdiction over the said area. By the agreement, the Philippine Government merely consents
that the United States exercise jurisdiction in certain cases. This consent was given purely as a matter of comity, courtesy or expediency. 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 jurisdiction retains not only jurisdictional rights not granted, but also such ceded rights as the United States Military authorities for
reasons of their own decline to make use of.

Moreover, the concept of sovereignty as auto-limitation is the property of a state force due to which it has the exclusive capacity of legal self-
determination and self-restriction. x x x A state 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 dismissed, but it does not disappear. Therefore, 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.