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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.

PHILIPPINE VIRGINIA TOBACCO ADMINISTRATION, petitioner,


vs.
COURT OF INDUSTRIAL RELATIONS, REUEL ABRAHAM, MILAGROS ABUEG, AVELINO ACOSTA,
CAROLINA ACOSTA, MARTIN AGSALUD, JOSEFINA AGUINALDO, GLORIA ALBANO, ANTONIO ALUNING,
COSME ALVAREZ, ISABEL ALZATE, AURORA APUSEN, TOMAS ARCANGEL, LOURDES ARJONELLO,
MANUEL AROMIN, DIONISIO ASISTIN, JOSE AURE, NICASIO AZNAR, EUGENIO AZURIN, CLARITA
BACUGAN, PIO BALAGOT, HEREDIO BALMACEDA, ESTHER BANAAG, JOVENCIO BARBERO, MONICO
BARBADILLO, HERNANDO BARROZO, FILIPINA BARROZO, REMEDIO BARTOLOME, ANGELINA BASCOS,
JOSE BATALLA, ALMARIO BAUTISTA, EUGENIO BAUTISTA, JR., HERMALO BAUTISTA, JUANITO
BAUTISTA, SEVERINO BARBANO, CAPPIA BARGONIA, ESMERALDA BERNARDEZ, RUBEN BERNARDEZ,
ALFREDO BONGER, TOMAS BOQUIREN, ANGELINA BRAVO, VIRGINIA BRINGA, ALBERTO BUNEO,
SIMEON CABANAYAN, LUCRECIA CACATIAN, LEONIDES CADAY, ANGELINA CADOTTE, IGNACIO
CALAYCAY, PACIFICO CALUB, RUFINO CALUZA, CALVIN CAMBA, ALFREDO CAMPOSENO, BAGUILITA
CANTO, ALFREDO CARRERA, PEDRO CASES, CRESCENTE CASIS, ERNESTO CASTANEDA, HERMINIO
CASTILLO, JOSE CASTRO, LEONOR CASTRO, MADEO CASTRO, MARIA PINZON CASTRO, PABLO
CATURA, RESTITUTO CESPADES, FLORA CHACON, EDMUNDO CORPUZ, ESTHER CRUZ, CELIA
CUARESMA, AQUILINO DACAYO, DIONISIA DASALLA, SOCORRO DELFIN, ABELARDO DIAZ, ARTHUR
DIAZ, CYNTHIA DIZON, MARCIA DIZON, ISABELO DOMINGO, HONORATA DOZA, CAROLINA DUAD,
JUSTINIANO EPISTOLA, ROMEO ENCARNACION, PRIMITIVO ESCANO, ELSA ESPEJO, JUAN ESPEJO,
RIZALINA ESQUILLO, YSMAEL FARINAS, LORNA FAVIS, DAN FERNANDEZ, JAIME FERNANDEZ,
ALFREDO FERRER, MODESTO FERRER, JR., EUGENIO FLANDEZ, GUILLERMO FLORENDO, ALFREDO
FLORES, DOMINGA FLORES, ROMEO FLORES, LIGAYA FONTANILLA, MELCHOR GASMEN, LEILA
GASMENA, CONSUELO GAROLAGA, ALFONSO GOROSPE, CESAR GOROSPE, RICARDO GOROSPE, JR.,
CARLITO GUZMAN, ERNESTO DE GUZMAN, THELMA DE GUZMAN, FELIX HERNANDEZ, SOLIVEN
HERNANDO, FRANCISCO HIDALGO, LEONILO INES, SIXTO JAQUIES, TRINIDAD JAVIER, FERMIN LAGUA,
GUALBERTO LAMBINO, ROMAN LANTING, OSCAR LAZO, ROSARIO LAZO, JOSEFINA DE LARA,
AMBROSIO LAZOL, NALIE LIBATIQUE, LAMBERTO LLAMAS, ANTONIO LLANES, ROMULA LOPEZ,
ADRIANO LORENZANA, ANTONIO MACARAEG, ILDEFONSO MAGAT, CECILIO MAGHANOY, ALFONSO
MAGSANOC, AVELINA MALLARE, AUGUSTO MANALO, DOMINADOR MANASAN, BENITO MANECLANG,
JR., TIRSO MANGUMAY, EVELIA MANZANO, HONORANTE MARIANO, DOMINGO MEDINA, MARTIN
MENDOZA, PERFECTO MILANA, EMILIO MILLAN, GREGORIO MONEGAS, CONSOLACION NAVALTA, NOLI
OCAMPO, VICENTE CLEGARIO, ELPIDIO PALMONES, ARACELI PANGALANGAN, ISIDORO PANLASIGUI,
JR., ARTEMIO PARIS, JR., FEDERICO PAYUMO, JR., NELIA PAYUMO, BITUEN PAZ, FRANCISCO
PENGSON, OSCAR PERALTA, PROCORRO PERALTA, RAMON PERALTA, MINDA PICHAY, MAURO
PIMENTEL, PRUDENCIO PIMENTEL, LEOPOLDO PUNO, REYNALDO RABE, ROLANDO REA,
CONSTANTINO REA, CECILIA RICO, CECILIO RILLORAZA, AURORA ROMAN, MERCEDES RUBIO, URSULA
RUPISAN, OLIVIA SABADO, BERNARDO SACRAMENTO, LUZ SALVADOR, JOSE SAMSON, JR., ROMULA
DE LOS SANTOS, ANTONIO SAYSON, JR., FLORANTE SERIL, MARIO SISON, RUDY SISON, PROCEDIO
TABIN, LUCENA TABISULA, HANNIBAL TAJANO, ENRIQUE TIANGCO, JR., JUSTINIANO TOBIAS, NYMIA
TOLENTINO, CONSTANTE TOLENTINO, TEODORO TOREBIO, FEDERICO TRINIDAD, JOVENCINTO
TRINIDAD, LAZARO VALDEZ, LUDRALINA VALDEZ, MAXIMINA VALDEZ, FRANCISCO VELASCO, JR.,
ROSITA VELASCO, SEVERO VANTANILLA, VENANCIO VENTIGAN, FELICITAS VENUS, NIEVES DE VERA,
ELISEO VERSOZA, SILVESTRE VILA, GLORIA VILLAMOR, ALEJANDRO VELLANUEVA, DAVID
VILLANUEVA, CAROLINA VILLASENOR ORLANDO VILLASTIQUE, MAJELLA VILORIN, ROSARIO VILORIA,
MAY VIRATA, FEDERICO VIRAY, MELBA YAMBAO, MARIO ZAMORA, AUTENOR ABUEG, SOTERO ACEDO,
HONRADO ALBERTO, FELIPE ALIDO, VICENTE ANCHUELO, LIBERTAD APEROCHO, MARIANO BALBAGO,
MARIO BALMACEDA, DAISY BICENIO, SYLVIA BUSTAMANTE, RAYMUNDO GEMERINO, LAZARO
CAPURAS, ROGELIO CARUNGCONG, ZACARIAS CAYETANO, JR., LILY CHUA, ANDRES CRUZ, ARTURO
CRUZ, BIENVENIDO ESTEBAN, PABLO JARETA, MANUEL JOSE, NESTORIA KINTANAR, CLEOPATRIA
LAZEM. MELCHOR LAZO, JESUS LUNA, GASPAR MARINAS, CESAR MAULSON, MANUEL MEDINA, JESUS
PLURAD, LAKAMBINI RAZON, GLORIA IBANEZ, JOSE SANTOS, ELEAZAR SQUI, JOSE TAMAYO, FELIPE
TENORIO, SILVINO UMALI, VICENTE ZARA, SATURNINO GARCIA, WILLIAM GARCIA, NORMA
GARINGARAO, ROSARIO ANTONIO, RUBEN BAUTISTA, QUIRINO PUESTO, NELIA M. GOMERI, OSCAR R.
LANUZA, AURORA M. LINDAYA, GREGORIO MOGSINO, JACRM B. PAPA, GREGORIO R. RIEGO, TERESITA
N. ROZUL, MAGTANGOL SAMALA, PORFIRIO AGOCOLIS, LEONARDO MONTE, HERMELINO PATI,
ALFREDO PAYOYO, PURIFICACION ROJAS, ODANO TEANO, RICARDO SANTIAGO, and MARCELO
MANGAHAS, respondents.
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 EightHour 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.
1. 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 importerexporter 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 governmentowned 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.

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 complete 4 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, 1993 6 petitioner sent inquiries to that office not once, but twice, on May 26, 1993
7
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.

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,


vs.
GUILLERMO CASIPIT y RADAM, accused-appellant.
The Solicitor General for plaintiff-appellee.
Public Attorney's Office for accused-appellant.

BELLOSILLO, J.:
FOUND GUILTY OF RAPE and sentenced to reclusion perpetua as well as to indemnify the offended party
P30,000.00 for moral damages, 1 the accused GUILLERMO CASIPIT y RADAM appeals to us insisting on his
innocence.
The victim, Myra Reynaldo, was then 14 years old and a sixth grader, while appellant was 22. They were neighbors
in Victoria, Alaminos, Pangasinan.
On 19 September 1986, before going to Manila for a medical checkup, the father of Myra entrusted her to the
parents of Guillermo. On the same day, Guillermo invited Myra to go to the town proper of Alaminos to buy rice and
bananas. When they reached the poblacion, he told her that they should buy in Dagupan instead because the prices
were cheaper. She agreed. Upon arriving in the poblacion, Guillermo invited Myra to watch a Movie. They watched
the movie until six o'clock in the evening, after which, they took a ride for Alaminos arriving there at eight o'clock.
They took their dinner in Alaminos before proceeding home to Barangay Victoria. On their way home it rained hard
that they had to take shelter in a hut in the open field of Barangay Talbang. Inside the hut, Myra sat on the floor
while Guillermo laid down. After a few minutes, he told her to lie down with him and rest. Then he went near her. He
removed her panties, poked a knife at her neck and warned her not to shout. She resisted appellant, kicked him
twice, but was helpless to subdue him as he tied her hands behind her nape. Moreover, he opened her legs, went
on top of her, and the inevitable had to come. He mounted an assault on her chastity until he succeeded in having
sexual intercourse with her. She could not stop him as he was big and strong. After the sexual encounter, she felt
pain and could not
sleep. 2
After waking up the following morning, they proceeded home. On their way, he told her to proceed ahead. When she
reached home, she was observed to be walking abnormally (bull-legged) by Rogelio Casipit, her cousin-in-law.
When her aunt, Nenita Rabadon, learned about it, she called for her and asked her what happened. She then
narrated everything to her. Her aunt took her to the house of their barangay captain, Bruno Carambas, and reported
the incident to him. The barangay official then called for Guillermo but he denied having raped Myra.
While inside the house of the barangay captain, the victim was examined by her sister-in-law Susan Cabigas and
Elsa Carambas, wife of the barangay captain, who both found the victim's private part reddish and her panties
stained with blood. 3
The following afternoon, Myra, accompanied by an uncle, went to the police station of Alaminos to report the rape
and then to the Western Pangasinan General Hospital where she was examined by Dr. Fideliz Ochave. The medical
findings of Dr. Ochave showed no external sign of physical injuries but noted the presence of first degree fresh
healing laceration at the perineum and of
the hymen at six o'clock position. The laboratory result was negative for spermatozoa. 4 On 26 September 1986,
Myra gave her statement to the police and later filed a criminal complaint against Guillermo. 5
The version of Guillermo, on the other hand, is that long before the incident, he and Myra were sweethearts. On 19
September 1986, they agreed to watch the movie "Cabarlo" so they went to Dagupan City. They entered the
moviehouse at noon and left at six o'clock in the evening. While watching the show, he placed his arm on the
shoulder of Myra and she did not object. He kissed her several times; she kissed him as many times. They talked
about their love for each other. After the movie, they went home. However, when they reached Alaminos, it rained
hard so they sought shelter in a hut. They removed their wet clothes. He embraced her and she liked it. Then he
lowered her panties and she did not resist. He laid her down on the floor and she consented. He joined her on the
floor. He placed himself on top of her and sexual intercourse followed as a matter of course. They stayed inside the
hut the whole night. They went home together the following morning. After the love tryst, he went to look for a job in
San Juan, Metro Manila. He was arrested in July 1987. He contended that the victim was probably induced by her
aunt Nenita Rabadon to file the case. 6
After the trial, the court a quo sustained the prosecution and found appellant guilty of raping Myra by means of force
and intimidation.
Appellant now assails the trial court for giving credence to the testimonies of the prosecution witnesses while
disregarding his and worse, for finding him guilty instead. He maintains that the victim's story contained many flaws:
firstly, even as she had testified that she struggled with him and kicked him twice, the doctor who examined her

found no external physical injuries on her body; secondly, the fact that the victim agreed to have a movie date with
him shows that she liked him and was attracted to him; and, thirdly, the victim did not leave the hut but slept with
him until morning, which is an unnatural behavior of one who had been raped.
We cannot sustain the accused; hence, we affirm his conviction. We cannot argue against the trial court for giving
full faith and credit to the testimony of Myra that appellant poked a knife at her neck and sexually abused her despite
her resistance as he was stronger and bigger than she who was only 14 years old. Considering the physical
condition of the victim and the place where the crime was perpetrated, which was in an isolated hut in an open field,
it was not difficult for the accused to subdue the victim and coerce her into submission.
These factual findings of the trial court appear to be borne by the records, and we cannot have any justification to
hold otherwise. When the question of credence arises between the conflicting versions of the prosecution and the
defense on the commission of rape, the answer of the trial court is generally viewed as correct, hence entitled to the
highest respect, because it is more competent to so conclude having closely observed the witnesses when they
testified, their deportment, and the peculiar manner in which they gave their testimonies and other evidence in court.
7

The argument that the absence of external injuries on the body of the victim belies her claim that she struggled with
appellant to prevent him from raping her is devoid of merit. The absence of external signs or physical injuries does
not negate the commission of rape. Proof of injuries is not necessary because this is not an essential element of the
crime. 8 This does not mean however that no force or intimidation was used on the victim to consummate the act.
The force or intimidation required in rape is relative. It is viewed in the light of the victim's perception and not by any
hard and fast rule. It need not be overpowering or irresistible but necessary only to achieve its purpose. Aside from
applying force, the appellant used intimidation by threatening the victim with a knife.
The fact that Myra went with appellant to a movie is no indication that she already agreed to have sex with him. Her
actuation is understandable as she is a close relative of appellant, according to his grandfather. 9 Hence, it is not
improbable that the victim placed her trust on appellant by letting him accompany her to the movie. It should be
emphasized that she was then only fourteen years old, an innocent barrio lass. Records are bereft of evidence that
she was a woman of ill-repute, or of a flirtatious nature to incite or provoke appellant to have sex with her.
The principal defense of appellant that he and Myra were sweethearts cannot be given weight. For, if that was true,
she would not have immediately disclosed to her family and to the authorities the sexual assault done to her. 10 After
all, nobody else but the two of them knew what happened between them in the loneliness of an isolated hut in an
open field. The fact that Myra lost no time in immediately reporting the violation of her honor and submitting herself
to medical examination bolsters her credibility and reflects the truthfulness and spontaneity of her account of the
incident. If she had voluntarily consented to the sexual act with appellant, her most natural reaction would have
been to conceal it or keep silent as this would bring disgrace to her honor and reputation as well as to her family.
Her unwavering and firm denunciation of appellant negates consent. 11
Worth noting is the marked receptively of our courts to lend credence to the testimonies of victims who are of tender
years regarding their versions of what transpired since the State, as parens patriae, is under obligation to minimize
the risk of harm to those who, because of their minority, are not yet able to fully protect themselves. 12
WHEREFORE, the appealed decision finding accused-appellant GUILLERMO CASIPIT y RADAM guilty of rape and
sentencing him to reclusion perpetua is AFFIRMED, with the modification that the indemnity in favor of MYRA
REYNALDO is increased to P50,000.00.
Costs against accused-appellant.
SO ORDERED.

CO KIM CHAM (alias CO KIM CHAM), petitioner,


vs.
EUSEBIO VALDEZ TAN KEH and ARSENIO P. DIZON, Judge of First Instance of Manila, respondents.1
Marcelino Lontok for petitioner.
P. A. Revilla for respondent Valdez Tan Keh.
Respondent Judge Dizon in his own behalf.
FERIA, J.:
This petition for mandamus in which petitioner prays that the respondent judge of the lower court be ordered to
continue the proceedings in civil case No. 3012 of said court, which were initiated under the regime of the so-called
Republic of the Philippines established during the Japanese military occupation of these Islands.
The respondent judge refused to take cognizance of and continue the proceedings in said case on the ground that
the proclamation issued on October 23, 1944, by General Douglas MacArthur had the effect of invalidating and
nullifying all judicial proceedings and judgements of the court of the Philippines under the Philippine Executive
Commission and the Republic of the Philippines established during the Japanese military occupation, and that,
furthermore, the lower courts have no jurisdiction to take cognizance of and continue judicial proceedings pending in
the courts of the defunct Republic of the Philippines in the absence of an enabling law granting such authority. And
the same respondent, in his answer and memorandum filed in this Court, contends that the government established
in the Philippines during the Japanese occupation were no de facto governments.
On January 2, 1942, the Imperial Japanese Forces occupied the City of Manila, and on the next day their
Commander in Chief proclaimed "the Military Administration under law over the districts occupied by the Army." In
said proclamation, it was also provided that "so far as the Military Administration permits, all the laws now in force in
the Commonwealth, as well as executive and judicial institutions, shall continue to be effective for the time being as
in the past," and "all public officials shall remain in their present posts and carry on faithfully their duties as before."
A civil government or central administration organization under the name of "Philippine Executive Commission was
organized by Order No. 1 issued on January 23, 1942, by the Commander in Chief of the Japanese Forces in the
Philippines, and Jorge B. Vargas, who was appointed Chairman thereof, was instructed to proceed to the immediate
coordination of the existing central administrative organs and judicial courts, based upon what had existed therefore,
with approval of the said Commander in Chief, who was to exercise jurisdiction over judicial courts.
The Chairman of the Executive Commission, as head of the central administrative organization, issued Executive
Orders Nos. 1 and 4, dated January 30 and February 5, 1942, respectively, in which the Supreme Court, Court of
Appeals, Courts of First Instance, and the justices of the peace and municipal courts under the Commonwealth were
continued with the same jurisdiction, in conformity with the instructions given to the said Chairman of the Executive
Commission by the Commander in Chief of Japanese Forces in the Philippines in the latter's Order No. 3 of
February 20, 1942, concerning basic principles to be observed by the Philippine Executive Commission in
exercising legislative, executive and judicial powers. Section 1 of said Order provided that "activities of the
administration organs and judicial courts in the Philippines shall be based upon the existing statutes, orders,
ordinances and customs. . . ."
On October 14, 1943, the so-called Republic of the Philippines was inaugurated, but no substantial change was
effected thereby in the organization and jurisdiction of the different courts that functioned during the Philippine
Executive Commission, and in the laws they administered and enforced.
On October 23, 1944, a few days after the historic landing in Leyte, General Douglas MacArthur issued a
proclamation to the People of the Philippines which declared:
1. That the Government of the Commonwealth of the Philippines is, subject to the supreme authority of the
Government of the United States, the sole and only government having legal and valid jurisdiction over the
people in areas of the Philippines free of enemy occupation and control;
2. That the laws now existing on the statute books of the Commonwealth of the Philippines and the
regulations promulgated pursuant thereto are in full force and effect and legally binding upon the people in
areas of the Philippines free of enemy occupation and control; and
3. That all laws, regulations and processes of any other government in the Philippines than that of the said
Commonwealth are null and void and without legal effect in areas of the Philippines free of enemy
occupation and control.
On February 3, 1945, the City of Manila was partially liberated and on February 27, 1945, General MacArthur, on
behalf of the Government of the United States, solemnly declared "the full powers and responsibilities under the
Constitution restored to the Commonwealth whose seat is here established as provided by law."

In the light of these facts and events of contemporary history, the principal questions to be resolved in the present
case may be reduced to the following:(1) Whether the judicial acts and proceedings of the court existing in the
Philippines under the Philippine Executive Commission and the Republic of the Philippines were good and valid and
remained so even after the liberation or reoccupation of the Philippines by the United States and Filipino forces;
(2)Whether the proclamation issued on October 23, 1944, by General Douglas MacArthur, Commander in Chief of
the United States Army, in which he declared "that all laws, regulations and processes of any of the government in
the Philippines than that of the said Commonwealth are null and void and without legal effect in areas of the
Philippines free of enemy occupation and control," has invalidated all judgements and judicial acts and proceedings
of the said courts; and (3) If the said judicial acts and proceedings have not been invalidated by said proclamation,
whether the present courts of the Commonwealth, which were the same court existing prior to, and continued
during, the Japanese military occupation of the Philippines, may continue those proceedings pending in said courts
at the time the Philippines were reoccupied and liberated by the United States and Filipino forces, and the
Commonwealth of the Philippines were reestablished in the Islands.
We shall now proceed to consider the first question, that is, whether or not under the rules of international law the
judicial acts and proceedings of the courts established in the Philippines under the Philippine Executive Commission
and the Republic of the Philippines were good and valid and remained good and valid even after the liberation or
reoccupation of the Philippines by the United States and Filipino forces.
1. It is a legal truism in political and international law that all acts and proceedings of the legislative, executive, and
judicial departments of a de facto government are good and valid. The question to be determined is whether or not
the governments established in these Islands under the names of the Philippine Executive Commission and
Republic of the Philippines during the Japanese military occupation or regime were de facto governments. If they
were, the judicial acts and proceedings of those governments remain good and valid even after the liberation or
reoccupation of the Philippines by the American and Filipino forces.
There are several kinds of de facto governments. The first, or government de facto in a proper legal sense, is that
government that gets possession and control of, or usurps, by force or by the voice of the majority, the rightful legal
governments and maintains itself against the will of the latter, such as the government of England under the
Commonwealth, first by Parliament and later by Cromwell as Protector. The second is that which is established and
maintained by military forces who invade and occupy a territory of the enemy in the course of war, and which is
denominated a government of paramount force, as the cases of Castine, in Maine, which was reduced to British
possession in the war of 1812, and Tampico, Mexico, occupied during the war with Mexico, by the troops of the
United States. And the third is that established as an independent government by the inhabitants of a country who
rise in insurrection against the parent state of such as the government of the Southern Confederacy in revolt not
concerned in the present case with the first kind, but only with the second and third kinds of de facto governments.
Speaking of government "de facto" of the second kind, the Supreme Court of the United States, in the case of
Thorington vs. Smith (8 Wall., 1), said: "But there is another description of government, called also by publicists a
government de facto, but which might, perhaps, be more aptly denominated a government of paramount force. Its
distinguishing characteristics are (1), that its existence is maintained by active military power with the territories, and
against the rightful authority of an established and lawful government; and (2), that while it exists it necessarily be
obeyed in civil matters by private citizens who, by acts of obedience rendered in submission to such force, do not
become responsible, or wrongdoers, for those acts, though not warranted by the laws of the rightful government.
Actual governments of this sort are established over districts differing greatly in extent and conditions. They are
usually administered directly by military authority, but they may be administered, also, civil authority, supported more
or less directly by military force. . . . One example of this sort of government is found in the case of Castine, in Mine,
reduced to British possession in the war of 1812 . . . U. S. vs. Rice (4 Wheaton, 253). A like example is found in the
case of Tampico, occupied during the war with Mexico, by the troops of the United States . . . Fleming vs. Page (9
Howard, 614). These were cases of temporary possessions of territory by lawfull and regular governments at war
with the country of which the territory so possessed was part."
The powers and duties of de facto governments of this description are regulated in Section III of the Hague
Conventions of 1907, which is a revision of the provisions of the Hague Conventions of 1899 on the same subject of
said Section III provides "the authority of the legislative power having actually passed into the hands of the
occupant, the latter shall take steps in his power to reestablish and insure, as far as possible, public order and
safety, while respecting, unless absolutely prevented, the laws in force in the country."
According to the precepts of the Hague Conventions, as the belligerent occupant has the right and is burdened with
the duty to insure public order and safety during his military occupation, he possesses all the powers of a de facto
government, and he can suspended the old laws and promulgate new ones and make such changes in the old as
he may see fit, but he is enjoined to respect, unless absolutely prevented by the circumstances prevailing in the
occupied territory, the municipal laws in force in the country, that is, those laws which enforce public order and
regulate social and commercial life of the country. On the other hand, laws of a political nature or affecting political
relations, such as, among others, the right of assembly, the right to bear arms, the freedom of the press, and the
right to travel freely in the territory occupied, are considered as suspended or in abeyance during the military
occupation. Although the local and civil administration of justice is suspended as a matter of course as soon as a
country is militarily occupied, it is not usual for the invader to take the whole administration into his own hands. In
practice, the local ordinary tribunals are authorized to continue administering justice; and judges and other judicial
officers are kept in their posts if they accept the authority of the belligerent occupant or are required to continue in

their positions under the supervision of the military or civil authorities appointed, by the Commander in Chief of the
occupant. These principles and practice have the sanction of all publicists who have considered the subject, and
have been asserted by the Supreme Court and applied by the President of the United States.
The doctrine upon this subject is thus summed up by Halleck, in his work on International Law (Vol. 2, p. 444): "The
right of one belligerent to occupy and govern the territory of the enemy while in its military possession, is one of the
incidents of war, and flows directly from the right to conquer. We, therefore, do not look to the Constitution or
political institutions of the conqueror, for authority to establish a government for the territory of the enemy in his
possession, during its military occupation, nor for the rules by which the powers of such government are regulated
and limited. Such authority and such rules are derived directly from the laws war, as established by the usage of the
of the world, and confirmed by the writings of publicists and decisions of courts in fine, from the law of nations. . .
. The municipal laws of a conquered territory, or the laws which regulate private rights, continue in force during
military occupation, excepts so far as they are suspended or changed by the acts of conqueror. . . . He,
nevertheless, has all the powers of a de facto government, and can at his pleasure either change the existing laws
or make new ones."
And applying the principles for the exercise of military authority in an occupied territory, which were later embodied
in the said Hague Conventions, President McKinley, in his executive order to the Secretary of War of May 19,1898,
relating to the occupation of the Philippines by United States forces, said in part: "Though the powers of the military
occupant are absolute and supreme, and immediately operate upon the political condition of the inhabitants, the
municipal laws of the conquered territory, such as affect private rights of person and property and provide for the
punishment of crime, are considered as continuing in force, so far as they are compatible with the new order of
things, until they are suspended or superseded by the occupying belligerent; and in practice they are not usually
abrogated, but are allowed to remain in force and to be administered by the ordinary tribunals, substantially as they
were before the occupation. This enlightened practice is, so far as possible, to be adhered to on the present
occasion. The judges and the other officials connected with the administration of justice may, if they accept the
authority of the United States, continue to administer the ordinary law of the land as between man and man under
the supervision of the American Commander in Chief." (Richardson's Messages and Papers of President, X, p.
209.)
As to "de facto" government of the third kind, the Supreme Court of the United States, in the same case of
Thorington vs. Smith, supra, recognized the government set up by the Confederate States as a de facto
government. In that case, it was held that "the central government established for the insurgent States differed from
the temporary governments at Castine and Tampico in the circumstance that its authority did no originate in lawful
acts of regular war; but it was not, on the account, less actual or less supreme. And we think that it must be classed
among the governments of which these are examples. . . .
In the case of William vs. Bruffy (96 U. S. 176, 192), the Supreme Court of the United States, discussing the validity
of the acts of the Confederate States, said: "The same general form of government, the same general laws for the
administration of justice and protection of private rights, which had existed in the States prior to the rebellion,
remained during its continuance and afterwards. As far as the Acts of the States do not impair or tend to impair the
supremacy of the national authority, or the just rights of citizens under the Constitution, they are, in general, to be
treated as valid and binding. As we said in Horn vs. Lockhart (17 Wall., 570; 21 Law. ed., 657): "The existence of a
state of insurrection and war did not loosen the bonds of society, or do away with civil government or the regular
administration of the laws. Order was to be preserved, police regulations maintained, crime prosecuted, property
protected, contracts enforced, marriages celebrated, estates settled, and the transfer and descent of property
regulated, precisely as in the time of peace. No one, that we are aware of, seriously questions the validity of judicial
or legislative Acts in the insurrectionary States touching these and kindered subjects, where they were not hostile in
their purpose or mode of enforcement to the authority of the National Government, and did not impair the rights of
citizens under the Constitution'. The same doctrine has been asserted in numerous other cases."
And the same court, in the case of Baldy vs. Hunter (171 U. S., 388, 400), held: "That what occured or was done in
respect of such matters under the authority of the laws of these local de facto governments should not be
disregarded or held to be invalid merely because those governments were organized in hostility to the Union
established by the national Constitution; this, because the existence of war between the United States and the
Confederate States did not relieve those who are within the insurrectionary lines from the necessity of civil
obedience, nor destroy the bonds of society nor do away with civil government or the regular administration of the
laws, and because transactions in the ordinary course of civil society as organized within the enemy's territory
although they may have indirectly or remotely promoted the ends of the de facto or unlawful government organized
to effect a dissolution of the Union, were without blame 'except when proved to have been entered into with actual
intent to further invasion or insurrection:'" and "That judicial and legislative acts in the respective states composing
the so-called Confederate States should be respected by the courts if they were not hostile in their purpose or mode
of enforcement to the authority of the National Government, and did not impair the rights of citizens under the
Constitution."
In view of the foregoing, it is evident that the Philippine Executive Commission, which was organized by Order No.
1, issued on January 23, 1942, by the Commander of the Japanese forces, was a civil government established by
the military forces of occupation and therefore a de facto government of the second kind. It was not different from
the government established by the British in Castine, Maine, or by the United States in Tampico, Mexico. As Halleck
says, "The government established over an enemy's territory during the military occupation may exercise all the

powers given by the laws of war to the conqueror over the conquered, and is subject to all restrictions which that
code imposes. It is of little consequence whether such government be called a military or civil government. Its
character is the same and the source of its authority the same. In either case it is a government imposed by the laws
of war, and so far it concerns the inhabitants of such territory or the rest of the world, those laws alone determine the
legality or illegality of its acts." (Vol. 2, p. 466.) The fact that the Philippine Executive Commission was a civil and not
a military government and was run by Filipinos and not by Japanese nationals, is of no consequence. In 1806, when
Napoleon occupied the greater part of Prussia, he retained the existing administration under the general direction of
a french official (Langfrey History of Napoleon, 1, IV, 25); and, in the same way, the Duke of Willington, on invading
France, authorized the local authorities to continue the exercise of their functions, apparently without appointing an
English superior. (Wellington Despatches, XI, 307.). The Germans, on the other hand, when they invaded France in
1870, appointed their own officials, at least in Alsace and Lorraine, in every department of administration and of
every rank. (Calvo, pars. 2186-93; Hall, International Law, 7th ed., p. 505, note 2.)
The so-called Republic of the Philippines, apparently established and organized as a sovereign state independent
from any other government by the Filipino people, was, in truth and reality, a government established by the
belligerent occupant or the Japanese forces of occupation. It was of the same character as the Philippine Executive
Commission, and the ultimate source of its authority was the same the Japanese military authority and
government. As General MacArthur stated in his proclamation of October 23, 1944, a portion of which has been
already quoted, "under enemy duress, a so-called government styled as the 'Republic of the Philippines' was
established on October 14, 1943, based upon neither the free expression of the people's will nor the sanction of the
Government of the United States." Japan had no legal power to grant independence to the Philippines or transfer
the sovereignty of the United States to, or recognize the latent sovereignty of, the Filipino people, before its military
occupation and possession of the Islands had matured into an absolute and permanent dominion or sovereignty by
a treaty of peace or other means recognized in the law of nations. For it is a well-established doctrine in
International Law, recognized in Article 45 of the Hauge Conventions of 1907 (which prohibits compulsion of the
population of the occupied territory to swear allegiance to the hostile power), the belligerent occupation, being
essentially provisional, does not serve to transfer sovereignty over the territory controlled although the de jure
government is during the period of occupancy deprived of the power to exercise its rights as such. (Thirty Hogshead
of Sugar vs. Boyle, 9 Cranch, 191; United States vs. Rice, 4 Wheat., 246; Fleming vs. Page, 9 Howard, 603;
Downes vs. Bidwell, 182 U. S., 345.) The formation of the Republic of the Philippines was a scheme contrived by
Japan to delude the Filipino people into believing in the apparent magnanimity of the Japanese gesture of
transferring or turning over the rights of government into the hands of Filipinos. It was established under the
mistaken belief that by doing so, Japan would secure the cooperation or at least the neutrality of the Filipino people
in her war against the United States and other allied nations.
Indeed, even if the Republic of the Philippines had been established by the free will of the Filipino who, taking
advantage of the withdrawal of the American forces from the Islands, and the occupation thereof by the Japanese
forces of invasion, had organized an independent government under the name with the support and backing of
Japan, such government would have been considered as one established by the Filipinos in insurrection or rebellion
against the parent state or the Unite States. And as such, it would have been a de facto government similar to that
organized by the confederate states during the war of secession and recognized as such by the by the Supreme
Court of the United States in numerous cases, notably those of Thorington vs. Smith, Williams vs. Bruffy, and Badly
vs. Hunter, above quoted; and similar to the short-lived government established by the Filipino insurgents in the
Island of Cebu during the Spanish-American war, recognized as a de facto government by the Supreme Court of the
United States in the case of McCleod vs. United States (299 U. S., 416). According to the facts in the last-named
case, the Spanish forces evacuated the Island of Cebu on December 25, 1898, having first appointed a provisional
government, and shortly afterwards, the Filipinos, formerly in insurrection against Spain, took possession of the
Islands and established a republic, governing the Islands until possession thereof was surrendered to the United
States on February 22, 1898. And the said Supreme Court held in that case that "such government was of the class
of de facto governments described in I Moore's International Law Digest, S 20, . . . 'called also by publicists a
government de facto, but which might, perhaps, be more aptly denominated a government of paramount force . . '."
That is to say, that the government of a country in possession of belligerent forces in insurrection or rebellion
against the parent state, rests upon the same principles as that of a territory occupied by the hostile army of an
enemy at regular war with the legitimate power.
The governments by the Philippine Executive Commission and the Republic of the Philippines during the Japanese
military occupation being de facto governments, it necessarily follows that the judicial acts and proceedings of the
courts of justice of those governments, which are not of a political complexion, were good and valid, and, by virtue of
the well-known principle of postliminy (postliminium) in international law, remained good and valid after the liberation
or reoccupation of the Philippines by the American and Filipino forces under the leadership of General Douglas
MacArthur. According to that well-known principle in international law, the fact that a territory which has been
occupied by an enemy comes again into the power of its legitimate government of sovereignty, "does not, except in
a very few cases, wipe out the effects of acts done by an invader, which for one reason or another it is within his
competence to do. Thus judicial acts done under his control, when they are not of a political complexion,
administrative acts so done, to the extent that they take effect during the continuance of his control, and the various
acts done during the same time by private persons under the sanction of municipal law, remain good. Were it
otherwise, the whole social life of a community would be paralyzed by an invasion; and as between the state and
the individuals the evil would be scarcely less, it would be hard for example that payment of taxes made under
duress should be ignored, and it would be contrary to the general interest that the sentences passed upon criminals
should be annulled by the disappearance of the intrusive government ." (Hall, International Law, 7th ed., p. 518.)
And when the occupation and the abandonment have been each an incident of the same war as in the present

case, postliminy applies, even though the occupant has acted as conqueror and for the time substituted his own
sovereignty as the Japanese intended to do apparently in granting independence to the Philippines and establishing
the so-called Republic of the Philippines. (Taylor, International Law, p. 615.)
That not only judicial but also legislative acts of de facto governments, which are not of a political complexion, are
and remain valid after reoccupation of a territory occupied by a belligerent occupant, is confirmed by the
Proclamation issued by General Douglas MacArthur on October 23, 1944, which declares null and void all laws,
regulations and processes of the governments established in the Philippines during the Japanese occupation, for it
would not have been necessary for said proclamation to abrogate them if they were invalid ab initio.
2. The second question hinges upon the interpretation of the phrase "processes of any other government" as used
in the above-quoted proclamation of General Douglas MacArthur of October 23, 1944 that is, whether it was the
intention of the Commander in Chief of the American Forces to annul and void thereby all judgments and judicial
proceedings of the courts established in the Philippines during the Japanese military occupation.
The phrase "processes of any other government" is broad and may refer not only to the judicial processes, but also
to administrative or legislative, as well as constitutional, processes of the Republic of the Philippines or other
governmental agencies established in the Islands during the Japanese occupation. Taking into consideration the
fact that, as above indicated, according to the well-known principles of international law all judgements and judicial
proceedings, which are not of a political complexion, of the de facto governments during the Japanese military
occupation were good and valid before and remained so after the occupied territory had come again into the power
of the titular sovereign, it should be presumed that it was not, and could not have been, the intention of General
Douglas MacArthur, in using the phrase "processes of any other government" in said proclamation, to refer to
judicial processes, in violation of said principles of international law. The only reasonable construction of the said
phrase is that it refers to governmental processes other than judicial processes of court proceedings, for according
to a well-known rule of statutory construction, set forth in 25 R. C. L., p. 1028, "a statute ought never to be construed
to violate the law of nations if any other possible construction remains."
It is true that the commanding general of a belligerent army of occupation, as an agent of his government, may not
unlawfully suspend existing laws and promulgate new ones in the occupied territory, if and when the exigencies of
the military occupation demand such action. But even assuming that, under the law of nations, the legislative power
of a commander in chief of military forces who liberates or reoccupies his own territory which has been occupied by
an enemy, during the military and before the restoration of the civil regime, is as broad as that of the commander in
chief of the military forces of invasion and occupation (although the exigencies of military reoccupation are evidently
less than those of occupation), it is to be presumed that General Douglas MacArthur, who was acting as an agent or
a representative of the Government and the President of the United States, constitutional commander in chief of the
United States Army, did not intend to act against the principles of the law of nations asserted by the Supreme Court
of the United States from the early period of its existence, applied by the Presidents of the United States, and later
embodied in the Hague Conventions of 1907, as above indicated. It is not to be presumed that General Douglas
MacArthur, who enjoined in the same proclamation of October 23, 1944, "upon the loyal citizens of the Philippines
full respect and obedience to the Constitution of the Commonwealth of the Philippines," should not only reverse the
international policy and practice of his own government, but also disregard in the same breath the provisions of
section 3, Article II, of our Constitution, which provides that "The Philippines renounces war as an instrument of
national policy, and adopts the generally accepted principles of international law as part of the law of the Nation."
Moreover, from a contrary construction great inconvenience and public hardship would result, and great public
interests would be endangered and sacrificed, for disputes or suits already adjudged would have to be again settled
accrued or vested rights nullified, sentences passed on criminals set aside, and criminals might easily become
immune for evidence against them may have already disappeared or be no longer available, especially now that
almost all court records in the Philippines have been destroyed by fire as a consequence of the war. And it is
another well-established rule of statutory construction that where great inconvenience will result from a particular
construction, or great public interests would be endangered or sacrificed, or great mischief done, such construction
is to be avoided, or the court ought to presume that such construction was not intended by the makers of the law,
unless required by clear and unequivocal words. (25 R. C. L., pp. 1025, 1027.)
The mere conception or thought of possibility that the titular sovereign or his representatives who reoccupies a
territory occupied by an enemy, may set aside or annul all the judicial acts or proceedings of the tribunals which the
belligerent occupant had the right and duty to establish in order to insure public order and safety during military
occupation, would be sufficient to paralyze the social life of the country or occupied territory, for it would have to be
expected that litigants would not willingly submit their litigation to courts whose judgements or decisions may
afterwards be annulled, and criminals would not be deterred from committing crimes or offenses in the expectancy
that they may escaped the penalty if judgments rendered against them may be afterwards set aside.
That the proclamation has not invalidated all the judgements and proceedings of the courts of justice during the
Japanese regime, is impliedly confirmed by Executive Order No. 37, which has the force of law, issued by the
President of the Philippines on March 10, 1945, by virtue of the emergency legislative power vested in him by the
Constitution and the laws of the Commonwealth of the Philippines. Said Executive order abolished the Court of
Appeals, and provided "that all case which have heretofore been duly appealed to the Court of Appeals shall be
transmitted to the Supreme Court final decision." This provision impliedly recognizes that the judgments and
proceedings of the courts during the Japanese military occupation have not been invalidated by the proclamation of

General MacArthur of October 23, because the said Order does not say or refer to cases which have been duly
appealed to said court prior to the Japanese occupation, but to cases which had therefore, that is, up to March 10,
1945, been duly appealed to the Court of Appeals; and it is to be presumed that almost all, if not all, appealed cases
pending in the Court of Appeals prior to the Japanese military occupation of Manila on January 2, 1942, had been
disposed of by the latter before the restoration of the Commonwealth Government in 1945; while almost all, if not all,
appealed cases pending on March 10, 1945, in the Court of Appeals were from judgments rendered by the Court of
First Instance during the Japanese regime.
The respondent judge quotes a portion of Wheaton's International Law which say: "Moreover when it is said that an
occupier's acts are valid and under international law should not be abrogated by the subsequent conqueror, it must
be remembered that no crucial instances exist to show that if his acts should be reversed, any international wrong
would be committed. What does happen is that most matters are allowed to stand by the restored government, but
the matter can hardly be put further than this." (Wheaton, International Law, War, 7th English edition of 1944, p.
245.) And from this quotion the respondent judge "draws the conclusion that whether the acts of the occupant
should be considered valid or not, is a question that is up to the restored government to decide; that there is no rule
of international law that denies to the restored government to decide; that there is no rule of international law that
denies to the restored government the right of exercise its discretion on the matter, imposing upon it in its stead the
obligation of recognizing and enforcing the acts of the overthrown government."
There is doubt that the subsequent conqueror has the right to abrogate most of the acts of the occupier, such as the
laws, regulations and processes other than judicial of the government established by the belligerent occupant. But in
view of the fact that the proclamation uses the words "processes of any other government" and not "judicial
processes" prisely, it is not necessary to determine whether or not General Douglas MacArthur had power to annul
and set aside all judgments and proceedings of the courts during the Japanese occupation. The question to be
determined is whether or not it was his intention, as representative of the President of the United States, to avoid or
nullify them. If the proclamation had, expressly or by necessary implication, declared null and void the judicial
processes of any other government, it would be necessary for this court to decide in the present case whether or not
General Douglas MacArthur had authority to declare them null and void. But the proclamation did not so provide,
undoubtedly because the author thereof was fully aware of the limitations of his powers as Commander in Chief of
Military Forces of liberation or subsequent conqueror.
Not only the Hague Regulations, but also the principles of international law, as they result from the usages
established between civilized nations, the laws of humanity and the requirements of the public of conscience,
constitute or from the law of nations. (Preamble of the Hague Conventions; Westlake, International Law, 2d ed., Part
II, p. 61.) Article 43, section III, of the Hague Regulations or Conventions which we have already quoted in
discussing the first question, imposes upon the occupant the obligation to establish courts; and Article 23 (h),
section II, of the same Conventions, which prohibits the belligerent occupant "to declare . . . suspended . . . in a
Court of Law the rights and action of the nationals of the hostile party," forbids him to make any declaration
preventing the inhabitants from using their courts to assert or enforce their civil rights. (Decision of the Court of
Appeals of England in the case of Porter vs. Fruedenburg, L.R. [1915], 1 K.B., 857.) If a belligerent occupant is
required to establish courts of justice in the territory occupied, and forbidden to prevent the nationals thereof from
asserting or enforcing therein their civil rights, by necessary implication, the military commander of the forces of
liberation or the restored government is restrained from nullifying or setting aside the judgments rendered by said
courts in their litigation during the period of occupation. Otherwise, the purpose of these precepts of the Hague
Conventions would be thwarted, for to declare them null and void would be tantamount to suspending in said courts
the right and action of the nationals of the territory during the military occupation thereof by the enemy. It goes
without saying that a law that enjoins a person to do something will not at the same time empower another to undo
the same. Although the question whether the President or commanding officer of the United States Army has
violated restraints imposed by the constitution and laws of his country is obviously of a domestic nature, yet, in
construing and applying limitations imposed on the executive authority, the Supreme Court of the United States, in
the case of Ochoa, vs. Hernandez (230 U.S., 139), has declared that they "arise from general rules of international
law and from fundamental principles known wherever the American flag flies."
In the case of Raymond vs. Thomas (91 U.S., 712), a special order issued by the officer in command of the forces of
the United States in South Carolina after the end of the Civil War, wholly annulling a decree rendered by a court of
chancery in that state in a case within its jurisdiction, was declared void, and not warranted by the acts approved
respectively March 2, 1867 (14 Stat., 428), and July 19 of the same year (15 id., 14), which defined the powers and
duties of military officers in command of the several states then lately in rebellion. In the course of its decision the
court said; "We have looked carefully through the acts of March 2, 1867 and July 19, 1867. They give very large
governmental powers to the military commanders designated, within the States committed respectively to their
jurisdiction; but we have found nothing to warrant the order here in question. . . . The clearest language would be
necessary to satisfy us that Congress intended that the power given by these acts should be so exercised. . . . It
was an arbitrary stretch of authority, needful to no good end that can be imagined. Whether Congress could have
conferred the 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 citizen are concerned, shall never be pushed beyond
what the exigency requires. (Mithell vs. Harmony, 13 How., 115; Warden vs. Bailey, 4 Taunt., 67; Fabrigas vs.
Moysten, 1 Cowp., 161; s.c., 1 Smith's L.C., pt. 2, p. 934.) Viewing the subject before us from the standpoint
indicated, we hold that the order was void."

It is, therefore, evident that the proclamation of General MacArthur of October 23, 1944, which declared that "all
laws, regulations and processes of any other government in the Philippines than that of the said Commonwealth are
null and void without legal effect in areas of the Philippines free of enemy occupation and control," has not
invalidated the judicial acts and proceedings, which are not a political complexion, of the courts of justice in the
Philippines that were continued by the Philippine Executive Commission and the Republic of the Philippines during
the Japanese military occupation, and that said judicial acts and proceedings were good and valid before and now
good and valid after the reoccupation of liberation of the Philippines by the American and Filipino forces.
3. The third and last question is whether or not the courts of the Commonwealth, which are the same as those
existing prior to, and continued during, the Japanese military occupation by the Philippine Executive Commission
and by the so-called Republic of the Philippines, have jurisdiction to continue now the proceedings in actions
pending in said courts at the time the Philippine Islands were reoccupied or liberated by the American and Filipino
forces, and the Commonwealth Government was restored.
Although in theory the authority the authority of the local civil and judicial administration is suspended as a matter of
course as soon as military occupation takes place, in practice the invader does not usually take the administration of
justice into his own hands, but continues the ordinary courts or tribunals to administer the laws of the country which
he is enjoined, unless absolutely prevented, to respect. As stated in the above-quoted Executive Order of President
McKinley to the Secretary of War on May 19, 1898, "in practice, they (the municipal laws) are not usually abrogated
but are allowed to remain in force and to be administered by the ordinary tribunals substantially as they were before
the occupation. This enlightened practice is, so far as possible, to be adhered to on the present occasion." And
Taylor in this connection says: "From a theoretical point of view it may be said that the conqueror is armed with the
right to substitute his arbitrary will for all preexisting forms of government, legislative, executive and judicial. From
the stand-point of actual practice such arbitrary will is restrained by the provision of the law of nations which
compels the conqueror to continue local laws and institution so far as military necessity will permit." (Taylor,
International Public Law, p.596.) Undoubtedly, this practice has been adopted in order that the ordinary pursuits and
business of society may not be unnecessarily deranged, inasmuch as belligerent occupation is essentially
provisional, and the government established by the occupant of transient character.
Following these practice and precepts of the law of nations, Commander in Chief of the Japanese Forces
proclaimed on January 3, 1942, when Manila was occupied, the military administration under martial law over the
territory occupied by the army, and ordered that "all the laws now in force in the Commonwealth, as well as
executive and judicial institutions, shall continue to be affective for the time being as in the past," and "all public
officials shall remain in their present post and carry on faithfully their duties as before." When the Philippine
Executive Commission was organized by Order No. 1 of the Japanese Commander in Chief, on January 23, 1942,
the Chairman of the Executive Commission, by Executive Orders Nos. 1 and 4 of January 30 and February 5,
respectively, continued the Supreme Court, Court of Appeals, Court of First Instance, and justices of the peace of
courts, with the same jurisdiction in conformity with the instructions given by the Commander in Chief of the Imperial
Japanese Army in Order No. 3 of February 20, 1942. And on October 14, 1943 when the so-called Republic of the
Philippines was inaugurated, the same courts were continued with no substantial change in organization and
jurisdiction thereof.
If the proceedings pending in the different courts of the Islands prior to the Japanese military occupation had been
continued during the Japanese military administration, the Philippine Executive Commission, and the so-called
Republic of the Philippines, it stands to reason that the same courts, which had become reestablished and
conceived of as having in continued existence upon the reoccupation and liberation of the Philippines by virtue of
the principle of postliminy (Hall, International Law, 7th ed., p. 516), may continue the proceedings in cases then
pending in said courts, without necessity of enacting a law conferring jurisdiction upon them to continue said
proceedings. As Taylor graphically points out in speaking of said principles "a state or other governmental entity,
upon the removal of a foreign military force, resumes its old place with its right and duties substantially unimpaired. .
. . Such political resurrection is the result of a law analogous to that which enables elastic bodies to regain their
original shape upon removal of the external force, and subject to the same exception in case of absolute crushing
of the whole fibre and content." (Taylor, International Public Law, p. 615.)
The argument advanced by the respondent judge in his resolution in support in his conclusion that the Court of First
Instance of Manila presided over by him "has no authority to take cognizance of, and continue said proceedings (of
this case) to final judgment until and unless the Government of the Commonwealth of the Philippines . . . shall have
provided for the transfer of the jurisdiction of the courts of the now defunct Republic of the Philippines, and the
cases commenced and the left pending therein," is "that said courts were a government alien to the Commonwealth
Government. The laws they enforced were, true enough, laws of the Commonwealth prior to Japanese occupation,
but they had become the laws and the courts had become the institutions of Japan by adoption (U.S. vs.
Reiter. 27 F. Cases, No. 16146), as they became later on the laws and institutions of the Philippine Executive
Commission and the Republic of the Philippines."
The court in the said case of U.S. vs. Reiter did not and could not say that the laws and institutions of the country
occupied if continued by the conqueror or occupant, become the laws and the courts, by adoption, of the sovereign
nation that is militarily occupying the territory. Because, as already shown, belligerent or military occupation is
essentially provisional and does not serve to transfer the sovereignty over the occupied territory to the occupant.
What the court said was that, if such laws and institutions are continued in use by the occupant, they become his
and derive their force from him, in the sense that he may continue or set them aside. The laws and institution or

courts so continued remain the laws and institutions or courts of the occupied territory. The laws and the courts of
the Philippines, therefore, did not become, by being continued as required by the law of nations, laws and courts of
Japan. The provision of Article 45, section III, of the Hague Conventions of 1907 which prohibits any compulsion of
the population of occupied territory to swear allegiance to the hostile power, "extends to prohibit everything which
would assert or imply a change made by the invader in the legitimate sovereignty. This duty is neither to innovate in
the political life of the occupied districts, nor needlessly to break the continuity of their legal life. Hence, so far as the
courts of justice are allowed to continue administering the territorial laws, they must be allowed to give their
sentences in the name of the legitimate sovereign " (Westlake, Int. Law, Part II, second ed., p. 102). According to
Wheaton, however, the victor need not allow the use of that of the legitimate government. When in 1870, the
Germans in France attempted to violate that rule by ordering, after the fall of the Emperor Napoleon, the courts of
Nancy to administer justice in the name of the "High German Powers occupying Alsace and Lorraine," upon the
ground that the exercise of their powers in the name of French people and government was at least an implied
recognition of the Republic, the courts refused to obey and suspended their sitting. Germany originally ordered the
use of the name of "High German Powers occupying Alsace and Lorraine," but later offered to allow use of the
name of the Emperor or a compromise. (Wheaton, International Law, War, 7th English ed. 1944, p. 244.)
Furthermore, it is a legal maxim, that excepting that of a political nature, "Law once established continues until
changed by the some competent legislative power. It is not change merely by change of sovereignty." (Joseph H.
Beale, Cases on Conflict of Laws, III, Summary Section 9, citing Commonwealth vs. Chapman, 13 Met., 68.) As the
same author says, in his Treatise on the Conflict on Laws (Cambridge, 1916, Section 131): "There can no break or
interregnum in law. From the time the law comes into existence with the first-felt corporateness of a primitive people
it must last until the final disappearance of human society. Once created, it persists until a change take place, and
when changed it continues in such changed condition until the next change, and so forever. Conquest or
colonization is impotent to bring law to an end; in spite of change of constitution, the law continues unchanged until
the new sovereign by legislative acts creates a change."
As courts are creatures of statutes and their existence defends upon that of the laws which create and confer upon
them their jurisdiction, it is evident that such laws, not being a political nature, are not abrogated by a change of
sovereignty, and continue in force "ex proprio vigore" unless and until repealed by legislative acts. A proclamation
that said laws and courts are expressly continued is not necessary in order that they may continue in force. Such
proclamation, if made, is but a declaration of the intention of respecting and not repealing those laws. Therefore,
even assuming that Japan had legally acquired sovereignty over these Islands, which she had afterwards
transferred to the so-called Republic of the Philippines, and that the laws and the courts of these Islands had
become the courts of Japan, as the said courts of the laws creating and conferring jurisdiction upon them have
continued in force until now, it necessarily follows that the same courts may continue exercising the same
jurisdiction over cases pending therein before the restoration of the Commonwealth Government, unless and until
they are abolished or the laws creating and conferring jurisdiction upon them are repealed by the said government.
As a consequence, enabling laws or acts providing that proceedings pending in one court be continued by or
transferred to another court, are not required by the mere change of government or sovereignty. They are necessary
only in case the former courts are abolished or their jurisdiction so change that they can no longer continue taking
cognizance of the cases and proceedings commenced therein, in order that the new courts or the courts having
jurisdiction over said cases may continue the proceedings. When the Spanish sovereignty in the Philippine Islands
ceased and the Islands came into the possession of the United States, the "Audiencia" or Supreme Court was
continued and did not cease to exist, and proceeded to take cognizance of the actions pending therein upon the
cessation of the Spanish sovereignty until the said "Audiencia" or Supreme Court was abolished, and the Supreme
Court created in Chapter II of Act No. 136 was substituted in lieu thereof. And the Courts of First Instance of the
Islands during the Spanish regime continued taking cognizance of cases pending therein upon the change of
sovereignty, until section 65 of the same Act No. 136 abolished them and created in its Chapter IV the present
Courts of First Instance in substitution of the former. Similarly, no enabling acts were enacted during the Japanese
occupation, but a mere proclamation or order that the courts in the Island were continued.
On the other hand, during the American regime, when section 78 of Act No. 136 was enacted abolishing the civil
jurisdiction of the provost courts created by the military government of occupation in the Philippines during the
Spanish-American War of 1898, the same section 78 provided for the transfer of all civil actions then pending in the
provost courts to the proper tribunals, that is, to the justices of the peace courts, Court of First Instance, or Supreme
Court having jurisdiction over them according to law. And later on, when the criminal jurisdiction of provost courts in
the City of Manila was abolished by section 3 of Act No. 186, the same section provided that criminal cases pending
therein within the jurisdiction of the municipal court created by Act No. 183 were transferred to the latter.
That the present courts as the same courts which had been functioning during the Japanese regime and, therefore,
can continue the proceedings in cases pending therein prior to the restoration of the Commonwealth of the
Philippines, is confirmed by Executive Order No. 37 which we have already quoted in support of our conclusion in
connection with the second question. Said Executive Order provides"(1) that the Court of Appeals created and
established under Commonwealth Act No. 3 as amended, be abolished, as it is hereby abolished," and "(2) that all
cases which have heretofore been duly appealed to the Court of Appeals shall be transmitted to the Supreme Court
for final decision. . . ." In so providing, the said Order considers that the Court of Appeals abolished was the same
that existed prior to, and continued after, the restoration of the Commonwealth Government; for, as we have stated
in discussing the previous question, almost all, if not all, of the cases pending therein, or which had theretofore (that
is, up to March 10, 1945) been duly appealed to said court, must have been cases coming from the Courts of First
Instance during the so-called Republic of the Philippines. If the Court of Appeals abolished by the said Executive

Order was not the same one which had been functioning during the Republic, but that which had existed up to the
time of the Japanese occupation, it would have provided that all the cases which had, prior to and up to that
occupation on January 2, 1942, been dully appealed to the said Court of Appeals shall be transmitted to the
Supreme Court for final decision.
It is, therefore, obvious that the present courts have jurisdiction to continue, to final judgment, the proceedings in
cases, not of political complexion, pending therein at the time of the restoration of the Commonwealth Government.
Having arrived at the above conclusions, it follows that the Court of First Instance of Manila has jurisdiction to
continue to final judgment the proceedings in civil case No. 3012, which involves civil rights of the parties under the
laws of the Commonwealth Government, pending in said court at the time of the restoration of the said Government;
and that the respondent judge of the court, having refused to act and continue him does a duty resulting from his
office as presiding judge of that court, mandamus is the speedy and adequate remedy in the ordinary course of law,
especially taking into consideration the fact that the question of jurisdiction herein involved does affect not only this
particular case, but many other cases now pending in all the courts of these Islands.
In view of all the foregoing it is adjudged and decreed that a writ of mandamus issue, directed to the respondent
judge of the Court of First Instance of Manila, ordering him to take cognizance of and continue to final judgment the
proceedings in civil case No. 3012 of said court. No pronouncement as to costs. So ordered.

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.

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.

CONCHITA ROMUALDEZ-YAP, petitioner,


vs.
THE CIVIL SERVICE COMMISSION and THE PHILIPPINE NATIONAL BANK, respondents.
Estelito P. Mendoza for petitioner.
The Solicitor General for the Civil Service Commission.
Domingo A. Santiago, Jr. for Philippine National Bank.

PADILLA, J.:
This is a special civil action for certiorari under Rule 65 of the Rules of Court, assailing Resolution No. 92-201 of the
respondent Civil Service Commission, which upheld the petitioner's separation from the Philippine National
Bank(PNB) as a result of the abolition of the Fund Transfer Department pursuant to a reorganization under
Executive Order No. 80, dated 3 December 1986.
Petitioner Conchita Romualdez-Yap started working with the Philippine National Bank on 20 September 1972 as
special assistant with the rank of Second Assistant Manager assigned to the office of the PNB President. After
several promotions, she was appointed in 1983 Senior Vice President assigned to the Fund Transfer Department.
Starting 1 April 1986 up to 20 February 1987, petitioner filed several applications for leave of absence (due to
medical reasons) which were duly approved. While she was on leave, Executive Order No. 80 (Revised Charter of
the PNB) was approved on 3 December 1986. Said executive order authorized the restructure/reorganization and
rehabilitation of PNB. Pursuant to the reorganization plan, the Fund Transfer Department was abolished and its
functions transferred to the International Department.
Consequently, petitioner was notified of her separation from the service in a letter dated 30 January 1987, thus:
Pursuant to the Transitory Provision of the 1986 Revised Charter of the Bank, please be informed
that Management has approved your separation from the service effective February 16, 1986. You
shall be entitled to the regular benefits allowed under existing law. (emphasis supplied)
Please be informed further that under Sec. 37 of the Bank's 1986 Revised Charter, any officer or
employee who feels aggrieved by any matter treated above may submit his case to the Civil Service
Commission. 1
This letter was received by petitioner's secretary at the PNB head office on 16 February 1987.
Petitioner's first recorded appeal to the Civil Service Commission questioning her separation is a letter dated 4
August 1989. Then CSC Chairman Samilo N. Barlongay upheld the validity of her separation from the service in a
letter/opinion dated 30 August 1989 (this was allegedly received by petitioner only on 26 February 1990) stating
thus:
xxx xxx xxx
It may be mentioned in this connection, that inasmuch as you did not avail of the
ERIP/Supplementary Retirement Plans adopted by the PNB in 1986, you have therefore lost your
right thereto. Moreover, since you lack the required number of years of service to entitle you to
retirement benefits under existing laws, you may be entitled to the return of your GSIS personal
contributions. Considering further that you have exhausted all your accumulated leave credits as you
went on leave of absence for the period from April 1, 1986 to February 20, 1987, there is no legal or
valid basis to entitle you to payment of terminal leave.
Finally, pursuant to Section 16, Article XVIII of the Transitory Provisions of the 1987 Philippine
Constitution, you may be entitled to payment of separation subject to auditing rules and regulations. 2
In her motion for reconsideration with the Civil Service Commission, dated 5 March 1990, questioning Chairman
Barlongay's ruling, petitioner claimed:
1. The opinion/ruling was not fully supported by the evidence on record;
2. Errors of law prejudicial to the interest of the movant have been committed. She argued:
. . . that her separation from the service was illegal and was done in bad faith considering that her
termination on February 16, 1986 was made effective prior to the effectivity of Executive Order No.

80 on December 3, 1986, which law authorized the reorganization of the PNB, and even before
February 25, 1986, when President Corazon C. Aquino came into power. She further claims that
although the notice of termination was dated January 30, 1987 it was only served upon her on
February 16, 1987 when the new Constitution which guarantees security of tenure to public
employees was already in effect. 3
xxx xxx xxx
. . . the bad faith in her separation from the service in 1987 was evident from the recent restoration of
the Fund Transfer Department as a separate and distinct unit from the International Department . . . 4
Denying the motion for reconsideration, the Civil Service Commission in its aforecited Resolution No. 92-201, dated
30 January, 1992, ruled:
Sec. 33 of EO 80 (1986 Revised Charter of the PNB) provides:
Sec. 33. Authority to Reorganize. In view of reduced operations contemplated under this charter
in pursuance of the national policy expressed in the "Whereas" clause hereof, a reorganization of the
Bank and a reduction in force are hereby authorized to achieve greater efficiency and economy in
operations, including the adoption of a new staffing pattern to suit the reduced operations
envisioned. The program of reorganization shall begin immediately after the approval of this Order,
and shall be completed within six (6) months and shall be fully implemented within eighteen (18)
months thereafter." Clearly; as aforequoted, PNB was authorized to undergo reorganization and to
effect a reduction in force to "achieve greater efficiency and economy in operations". It cannot, be
disputed that reduction in force necessitates, among others, the abolition of positions/offices. The
records show that prior to its reorganization, PNB originally had 7,537 positions which were reduced
to 5,405 after the reorganization. Indeed, 2,132 positions were abolished, that is, the original
positions in PNB were reduced by 28%. This reduction in force likewise included the senior officer
positions, in PNB, which were reduced, thus:
Positions Incumbents Proposed Position
President 1 1 1
Sr. Exec. VP 1 1 0
Exec. VP 3 2 2
Senior VP 12 11 7
Vice Pres. 33 27 15
The position of movant Yap (SVP) was one among the original twelve (12) SVP positions. It was one
among the five (5) SVP positions which were abolished. In fact, the FTD of which she was then the
incumbent SVP, was merged with the International Department to which its functions were closedly
related.
It should be noted that as ruled by the Supreme Court in Dario vs. Mison (G.R. NO. 81954):
Reorganizations in this jurisdiction have been regarded as valid provided they are
pursued in good faith. As a general rule, a reorganization is carried out in "good faith"
if it is for the purpose of economy or to make bureaucracy more efficient. In that
event, no dismissal or separation actually occurs because the position itself ceases
to exist. And in that case, security of tenure would not be a Chinese Wall. . . . .
. . . Good faith, as a component of a reorganization under a constitutional regime is
judged from the facts of each case.
In the instant case, therefore, this Commission is inclined to believe that the reorganization of PNB
was done in good faith. For indeed, the reorganization was pursued to achieve economy. It
undertook reduction in force as a means to streamline the numbers of the workforce. It was
incidental that movant Yap's position was one among those abolished. Movant Yap failed to
substantiate her claim by clear and convincing evidence that the abolition of her position was a result
of her close identification with the previous regime, being a sister of former First Lady Imelda
Romualdez Marcos. This being so, and pursuant to the presumption of regularity in the performance
of official functions, the abolition of movant Yap's position should be upheld. PNB, in the instant
case, has clearly proved by substantial evidence that its act in terminating the services of some of its
employees was done in good faith. 5
Overruling her imputation of bad faith, i.e. her separation was illegal because it took effect on 16 February 1986 or
even before the promulgation of EO No. 80 on 3 December 1986, the CSC noted that the year "1986" stated in the
notice of her separation from the service was a typographical error. PNB submitted documents (p. 6 of Resolution
No. 92-201) supporting its stand that the separation actually took effect on 16 February 1987.

On the issue of bad faith as related to the later restoration of the Fund Transfer Department, the subject CSC
resolution adds:
xxx xxx xxx
It may be mentioned that the recent restoration of the Fund Transfer Department, actually was a
merger of the Fund Transfer Group, the Foreign Remittance Development and Coordinating Unit
based on board Resolution No. 60 of March 12, 1991, or after the lapse of over four (4) years from
the date it was abolished in 1987. Moreover, the restoration of the Fund Transfer Department and
other offices in the PNB was primarily caused by the improved financial capability and present needs
of the Bank. This improved financial condition of the PNB is evident from the 1990 Annual Report it
submitted. It may be further stated that the re-established FTD is headed by a Vice President, a
position much lower in rank than the former department headed by a Senior Vice President.
Furthermore, it should be noted that granting arguendo that movant Yap's termination from the
service was tainted with bad faith, she however, is now barred from assailing the same as she did
not seasonably assert her right thereto. Records show that she was separated from PNB on
February 16, 1987 and it was only in 1989 or about 2 years thereafter when she brought this matter
to this Commission. By her inaction in questioning her termination within a period of one year, she is
considered to have acquiesced to her separation from the service and abandoned her right to the
position. 6
In the present petition before the Court, the following issues are raised:
1. Existence of bad faith in the reorganization of the Philippine National Bank resulting in the separation from the
service of petitioner.
2. Erroneous application of the Dario v. Mison doctrine vis-a-vis PNB's reorganization.
3. Erroneous application of the one (1) year prescriptive period for quo warranto proceedings in petitioner's case.
Dario v. Mison 7 laid down the requirement of good faith in the reorganization of a government bureau wherein
offices are abolished. It says:
. . . Reorganizations in this jurisdiction have been regarded as valid provided they are pursued in
good faith. As a general rule, a reorganization is carried out in "good faith" if it is for the purpose of
economy or to make bureaucracy more efficient. In that event, no dismissal (in case of dismissal) or
separation actually occurs because the position itself ceases to exist. And in that case, security of
tenure would not be a Chinese wall. Be that as it may, if the "abolition," which is nothing else but a
separation or removal, is done for political reasons or purposely to defeat security of tenure, or
otherwise not in good faith, no valid "abolition" takes place and whatever "abolition" is done, is void
ab initio. There is an invalid "abolition" as where there is merely a change of nomenclature of
positions, or where claims of economy are belied by the existence of ample funds. It is to be
stressed that by predisposing a reorganization to the yardstick of good faith, we are not, as a
consequence, imposing a "cause" for restructuring. Retrenchment in the course of a reorganization
in good faith is still removal "not for cause" if by "cause" we refer to "grounds" or conditions that call
for disciplinary action. Good faith, as a component of a reorganization under a constitutional regime,
is judged from the facts of each case.
In Petitioner's case, the following instances are cited by her as indicia of bad faith:
1. The abolished department was later restored and the number of senior vice presidents was
increased.
2. PNB did not follow the prescribed sequence of separation of employees from the service
contained in Rep. Act No. 6656 which is:
Sec. 3. In the separation of personnel pursuant to reorganization, the following order
of removal shall be followed:
(a) Casual employees with less than five (5) years of government
service;
(b) Casual employees with five (5) years or more of government
service;
(c) Employees holding temporary appointments; and

(d) Employees holding permanent appointments: Provided, That


those in the same category as enumerated above, who are least
qualified in terms of performance and merit shall be laid off first,
length of service notwithstanding.
3. Petitioner was not extended preference in appointment to the positions in the new staffing pattern
as mandated by Sec. 4 of Rep. Act 6656, her qualification and fitness for new positions were never
evaluated or considered in violation of Sec. 27 of P.D. 807 which was incorporated as Sec. 29 Ch. 5
Subtitle A, Book V of the Administrative Code of 1987.
4. Lack of notice and bearing before separation from the service.
5. Petitioner was forced to take a leave of absence and prevented from reporting for work.
6. There is a discrepancy in the date of her separation from the service and the effectivity thereof.
7. PNB employees in the Fund Transfer Department identified with her were reassigned or frozen.
8. She is listed as having resigned instead of being separated or dismissed which was what actually
happened.
9. The dismissal was politically motivated, she being a sister of Mrs. Imelda Romualdez Marcos, wife
of deposed President Ferdinand Marcos.
Executive Order No. 80 conferred upon the PNB the authority to reorganize. The order was issued by then Pres.
Corazon Aquino on 3 December 1986 while she was exercising the powers vested in the President of the
Philippines by the Freedom Constitution. After 3 December 1986, what remained to be done was the
implementation of the reorganization. There is no doubt as to the legal basis for PNB's reorganization. The real
question is: was it done in good faith, tested by the Dario v. Mison doctrine?
To start with it is almost absurd for petitioner to insist that her termination from the service was antedated to 16
February 1986. At that time, the reorganization of PNB had not even been conceived. In most of PNB's pleadings, it
has documented and supported its stand that the year of petitioner's separation is 1987 not 1986. The antedating of
the termination date, aside from being clearly a typographical error, is a periphernal issue. The real issue is
existence of bad faith consisting of tangible bureaucratic/management pressures exerted to ease her out of office.
Bad faith has been defined as a state of mind affirmatively operating with furtive design or with some motive of self
interest or ill will or for an ulterior purpose. 8 It is the performance of an act with the knowledge that the actor is
violating the fundamental law or right, even without willful intent to injure or purposive malice to perpetrate a
damnifying harm. 9
PNB's reorganization, to repeat, was by virtue of a valid law. At the time of reorganization, due to the critical
financial situation of the bank, departments, positions and functions were abolished or merged. The abolition of the
Fund Transfer Department (FTD) was deemed necessary. This, to the Court's mind, was a management prerogative
exercised pursuant to a business judgment. At this point, a distinction can be made in ruling on the validity of a
reorganization between a government bureau or office performing constituent functions (like the Customs) and a
government-owned or controlled corporation performing ministrant functions (like the PNB).
Constituent function are those which constitute the very bonds of society and are compulsory in nature; ministrant
functions are those undertaken by way of advancing the general interests of society, and are merely optional.
Commercial or universal banking is, ideally, not a governmental but a private sector, endeavor. It is an optional
function of government.
. . . The principles determining whether or not a government shall exercise certain of these optional
functions are: (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 those 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 corporation under the Corporation Law. (Bacani vs.
Nacoco, No, L-9657, November 29, 1956, 100 Phil. 468)

But a reorganization whether in a government bureau performing constituent functions or in a government-owned or


controlled corporation performing ministrant functions must meet a common test, the test of good faith. In this
connection, the philosophy behind PNB's reorganization is spelled out in the whereas clauses of Executive Order
No. 80:
WHEREAS, within the context of the general policy there nevertheless exists a clear role for direct
government-participation in the banking system, particularly in servicing the requirements of
agriculture, small and medium scale industry, export development, and the government sector.
WHEREAS, in pursuit of this national policy there is need to restructure the government financial
institutions, particularly the Philippine National Bank, to achieve a more efficient and effective use of
available scarce resources, to improve its viability, and to avoid unfair competition with the private
sector, and
WHEREAS, the reorganization and rehabilitation of the Philippine National Bank into a similar but
stronger and more operationally viable bank is an important component of the nationalization
programs for both the financial system and the government corporation sector; . . . .
Whether there was a hidden political agenda to persecute petitioner due to her consanguinial relation to Mrs. Imelda
Romualdez Marcos, the widow of former President Marcos, is not clearly shown. On the other hand, it is entirely
possible that, precisely because of such consanguinial relation, petitioner may have been the object of deferential, if
not special treatment under the Marcos regime. It is part of the Filipino culture to extend such deferential, if not
special treatment to close relatives of persons in power. Many times this is carried to unwholesome extremes. But a
discontinuance of such deferential or special treatment in the wake of a change in government or administration is
not bad faith per se. It may be merely putting things in their proper places.
Due to the restructuring and this is empirically verifiable PNB became once more a viable banking institution.
The restoration of the FTD four years after it was abolished and its functions transferred to the International
Department, can be attributed to the bank's growth after reorganizations, thereby negating malice or bad faith in that
reorganization. The essence of good faith lies in an honest belief in the validity of one's right. 10 It consists of an
honest intention to abstain from taking an unconscionable and unscrupulous advantage of another, its absence
should be established by convincing evidence. 11
The records also clearly indicate that starting April 1986 to February 1987, petitioner went on leave of absence for
medical reasons. While she was not reporting to the office, the bank's reorganization got underway. She continued,
however, receiving her salaries, allowances, emoluments, honoraria and fees up to March 1987. Employees who
were affected by the reorganization had the option to avail of the bank's Separation Benefits Plan/Early Retirement
Plan (SBP/ERIP). Petitioner opted not to avail of such plan and instead submitted to the result of the bank's ongoing
reorganization and management's discretion. If petitioner had the desire for continued employment with the bank,
she could have asserted it for management's consideration. There is no proof on record that she affirmatively
expressed willingness to be employed. Since she cannot rebut the CSC finding that her earliest appeal was made
on 4 August 1989, there is no reason for this Court to hold that she did not sleep on her rights. On the contrary, her
present argument that bad faith existed at the time of the abolition of the FTD because it was restored four years
later is a little too late. Who could have predicted in 1986 or 1987 that PNB would be able to rise from its financial
crisis and become a viable commercial bank again? The decision to abolish the FTD at the time it was abolished, to
repeat, was a business judgment made in good faith.
PNB for its part submits that its reorganization was effected in good faith
because
a) There was not only a perceptible but substantial restructuring of the PNB hierarchy showing
reduction of personnel, consolidation of offices and abolition of positions.
b) Two thousand one hundred thirty two (2,132) positions were abolished during the period from
February 16, 1986 to January 14, 1987 leaving a lean workforce of five thousand four hundred five
(5,405) as of latter date per B.R. No. 34 hereto attached as Annex "R".
c) The number of senior officers, including Senior Vice Presidents, was accordingly reduced.
Another issue raised by petitioner is PNB's alleged non-compliance with the mandate of Sections 2 and 4 of Rep.
Act No. 6656. These Sections provide:
Sec. 2. No officer or employee in the career service shall be removed except for a valid cause and
after due notice and hearing. A valid cause for removal exists when, pursuant to a bona fide
reorganization, a position has been abolished or rendered redundant or there is a need to merge,
divide, or consolidate positions in order to meet the exigencies of the service, or other lawful causes
allowed by the Civil Service Law. The existence of any or some of the following circumstances may
be considered as evidence of bad faith in the removals made as a result of reorganization, giving to
a claim for reinstatement or reappointment by an aggrieved party.

(a) Where there is a significant increase in the number of positions in the new staffing pattern of the
department or agency concerned;
(b) Where an office is abolished and another performing substantially the same functions is created;
(c) Where incumbents are replaced by those less qualified in terms of status of appointment,
performance and merit;
(d) Where there is a reclassification of offices in the department or agency concerned and the
reclassified offices perform substantially the same functions as the original offices;
(e) Where the removal violates the order of separation provided in Section 3 hereof.
xxx xxx xxx
Sec. 4. Officers and employees holding permanent, appointments shall be given preference for
appointment to the new position in the approved staffing pattern comparable to their former positions
or in case there are not enough comparable positions, to positions next lower in rank.
No new employees shall be taken in until all permanent officers and employees have been
appointed, including temporary and casual employees who possess the necessary qualification
requirements, among which is the appropriate civil service eligibility, for permanent appointment to
positions in the approved staffing pattern, in case there are still positions to be filled, unless such
positions are policy-determining, primarily confidential or highly technical in nature.
In the first place, Rep. Act No. 6656 cannot be invoked by petitioner because it took effect on 15 June 1987, or after
PNB's reorganization had already been implemented. But assuming, ex gratia argumenti, that it is applicable here
and petitioner must be accorded preferential right to appointment in the bank, PNB in its rejoinder impressively
asserts:
Needless to say, there were various committees that were created in the implementation of the
organizational restructuring of the Bank based on the foregoing policy guidelines. Each personnel to
be retained was evaluated in terms of relative fitness and merit along with the other personnel of the
Bank. Thus, when then SVP Federico Pascual was chosen to head the International Department
from among other officers of the Bank, including Ms. Yap, his qualifications far exceeded those of
the other candidates for the position.
We attach hereto as Annexes "G-1" and "G-2" the service records of Mr. Federico Pascual and
Petitioner Ms. Yap, respectively, which clearly show that the qualifications of Mr. Pascual far exceed
those of Petitioner Yap. Aside from being a lawyer having been a law graduate from the University of
the Philippines, he is also a Bachelor of Arts degree holder from Ateneo de Manila and a Master of
Laws graduate o Columbia Law School. He had studied Masteral Arts in Public Administration at the
London School of Economics and had undergone extensive seminars since 1974 at the International
Department and had been assigned in several foreign branches of the Bank. Before he resigned
from the Bank, he held the second highest position of Executive Vice President and served as Acting
President of the Bank before the incumbent president, President Gabriel Singson assumed his
position.
On the other hand, the service record of Petitioner Yap will show that she only holds a Bachelor of
Science in Commerce Degree from Assumption Convent and has undergone only one seminar on
Management and Leadersbip Training Program. She entered the Bank service in 1972. (Rollo at pp.
312 to 313)
xxx xxx xxx
The prayer in the petition at bar seeks petitioner's immediate reinstatement to her former position as senior vice
president and head of the Fund Transfer Department, or reappointment to a position of comparable or equivalent
rank without loss of seniority rights and pay, etc., under the bank's new staffing pattern.
A person claiming to be entitled to a public office or position usurped or unlawfully held or exercised by another may
bring an action for quo warranto (Rule 66, Sec. 6, Rules of Court). The petitioner therein must show a clear legal
right to the office allegedly held unlawfully by another. 12
An action for quo warranto should be brought within one (1) year after ouster from office; 13 the failure to institute the
same within the reglementary period constitutes more than a sufficient basis for its dismissal 14 since it is not proper
that the title to a public office be subjected to continued
uncertainty . . . 15 An exception to this prescriptive period lies only if the failure to file the action can be attributed to
the acts of a responsible government officer and not of the dismissed employee. 16

Measured by the above jurisprudence, petitioner's action may be said to be one for quo warranto, seeking
reinstatement to her former position which at present is occupied by another. She cannot invoke De Tavera v. Phil.
Tuberculosis Society, Inc., et. al. 17 and contend that there is no claim of usurpation of office, and that quo warranto
may be availed of to assert one's right to an office in the situation obtaining in the case at bar.
Santos v. CA, et. al. 18 and Magno v. PNNC Corp. 19 are invoked by petitioner to illustrate that this action is one for
separation without just cause, hence, the prescriptive period is allegedly four (4) years in accordance with Article
1146 of the Civil Code. 20 We do not agree. Petitioner's separation from the service was due to the abolition of her
office in implementation of a valid reorganization. This is not the unjustifiable cause which results in injury to the
rights of a person contemplated by Article 1146. The abolition of the office was not a whimsical, thoughtless move. It
was a thoroughly evaluated action for streamlining functions based on a rehabilitation plan. 21 At the time of the
abolition of the Fund Transfer Department in 1986, foreign exchange losses of the bank amounted to P81.1 Million.
22
The head of office was a Senior Vice President. At the time of restoration of the department in 1991, it was
headed by a vice president (lower in rank) and showed earnings of P2,620.0 Million. 23 Other departments abolished
in 1986 were also subsequently restored.
Restoring petitioner to her previous position with backwages would be unjust enrichment to her, considering that she
had abandoned or showed lack of interest in reclaiming the same position when the bank was not yet fully
rehabilitated and she only insisted on reinstatement in August 1989 or two (2) years after her alleged unjustified
separation.
To those who feel that their unjustified separation from the service is for a cause beyond their control, the aforecited
Magno case teaches:
. . . while We fully recognize the special protection which the Constitution, labor laws, and social
legislation accord the workingman, We cannot, however, alter or amend the law on prescription to
relieve him of the consequences of his inaction. Vigilantibus, non dormientibus, jura subveniunt
(Laws come to the assistance of the vigilant, not of the sleeping). His explanation that he could not
have filed the complaint earlier because "he was prevented to do so beyond his control for the
simple reason that private respondent have (sic) tried to circumvent the law by merely floating" him
is very flimsy and does not even evoke sympathetic consideration, if at all it is proper and necessary.
We note that petitioner herein is not an unlettered man; he seems to be educated and assertive of
his rights and appears to be familiar with judicial procedures. He filed a motion for extension of time
to file the petition and the petition itself without the assistance of counsel. We cannot believe that if
indeed he had a valid grievance against PNCC he would not have taken immediate positive steps for
its redress.
WHEREFORE, premises considered, the assailed CSC resolution is AFFIRMED. The petition is DISMISSED for
failure to show grave abuse of discretion on the part of said CSC in rendering the questioned resolution. No
pronouncement as to costs.

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