Co Kim Chan v Valdez Tan Keh

Sovereignty

Facts of the case:

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

The court resolved three issues:

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

Ratio: Political and international law recognizes that all acts and proceedings of a de facto government are good and
valid. The Philippine Executive Commission and the Republic of the Philippines under the Japanese occupation may be
considered de facto governments, supported by the military force and deriving their authority from the laws of war.
Municipal laws and private laws, however, usually remain in force unless suspended or changed by the conqueror. Civil
obedience is expected even during war, for the existence of a state of insurrection and war did not loosen the bonds of
society, or do away with civil government or the regular administration of the laws. And if they were not valid, then it would
not have been necessary for MacArthur to come out with a proclamation abrogating them.
The second question, the court said, hinges on the interpretation of the phrase processes of any other government and
whether or not he intended it to annul all other judgments and judicial proceedings of courts during the Japanese military
occupation.

IF, according to international law, non-political judgments and judicial proceedings of de facto governments are valid and
remain valid even after the occupied territory has been liberated, then it could not have been MacArthurs intention to refer
to judicial processes, which would be in violation of international law.
A well-known rule of statutory construction is: A statute ought never to be construed to violate the law of nations if any
other possible construction remains.

Another is that where great inconvenience will result from a particular construction, or great mischief done, such
construction is to be avoided, or the court ought to presume that such construction was not intended by the makers of the
law, unless required by clear and unequivocal words.

Annulling judgments of courts made during the Japanese occupation would clog the dockets and violate international law,
therefore what MacArthur said should not be construed to mean that judicial proceedings are included in the phrase
processes of any other governments.
In the case of US vs Reiter, the court said that if such laws and institutions are continued in use by the occupant, they
become his and derive their force from him. The laws and courts of the Philippines did not become, by being continued as
required by the law of nations, laws and courts of Japan.
It is a legal maxim that, excepting of a political nature, law once established continues until changed by some competent
legislative power. IT IS NOT CHANGED MERELY BY CHANGE OF SOVEREIGNTY. Until, of course, the new sovereign
by legislative act creates a change.
Therefore, even assuming that Japan legally acquired sovereignty over the Philippines, and the laws and courts of the
Philippines had become courts of Japan, as the said courts and laws creating and conferring jurisdiction upon them have
continued in force until now, it follows that the same courts may continue exercising the same jurisdiction over cases
pending therein before the restoration of the Commonwealth Government, until abolished or the laws creating and
conferring jurisdiction upon them are repealed by the said government.

DECISION: Writ of mandamus issued to the judge of the Court of First Instance of Manila, ordering him to take
cognizance of and continue to final judgment the proceedings in civil case no. 3012.

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

sovereignty
G.R. No. L-49

November 12, 1945

WILLIAM F. PERALTA, petitioner,

vs.
THE DIRECTOR OF PRISONS, respondent.
FERIA, J.:
Petitioner-defendant, a member of the Metropolitan Constabulary of Manila charged with the supervision and control of
the production, procurement and distribution of goods and other necessaries as defined in section 1 of Act No. 9 of the
National Assembly of the so-called Republic of the Philippines, was prosecuted for the crime of robbery as defined and
penalized by section 2 (a) of Act No. 65 of the same Assembly. He was found guilty and sentenced to life imprisonment,
which he commenced to serve on August 21, 1944, by the Court of Special and Exclusive Criminal Jurisdiction, created in
section 1 of Ordinance No. 7 promulgated by the President of the so-called Republic of the Philippines, pursuant to the
authority conferred upon him by the Constitution and laws of the said Republic. And the procedure followed in the trial was
the summary one established in Chapter II of Executive Order No. 157 of the Chairman of the Executive Commission,
made applicable to the trial violations of said Act No. 65 by section 9 thereof and section 5 of said Ordinance No. 7.
The petition for habeas corpus is based on the ground that the Court of Special and Executive Criminal Jurisdiction
created by Ordinance No. 7 "was a political instrumentality of the military forces of the Japanese Imperial Army, the aims
and purposes of which are repugnant to those aims and political purposes of the Commonwealth of the Philippines, as
well as those of the United States of America, and therefore, null and void ab initio," that the provisions of said Ordinance
No. 7 are violative of the fundamental laws of the Commonwealth of the Philippines and "the petitioner has been deprived
of his constitutional rights"; that the petitioner herein is being punished by a law created to serve the political purpose of
the Japanese Imperial Army in the Philippines, and "that the penalties provided for are much (more) severe than the
penalties provided for in the Revised Penal Code."
The Solicitor General, in his answer in behalf of the respondent, states that, in his own opinion, for the reasons expressed
in his brief in the case of People of the Philippines, plaintiff-appellant, vs. Benedicto Jose y Santos, defendant-appellee,
G. R. No. L-22 (p. 612, post), the acts and proceedings taken and had before the said Court of Special and Exclusive
Criminal Jurisdiction which resulted in the conviction and imprisonment of the herein petitioner, should now be denied

force and efficacy, and therefore the petition for habeas corpus should be granted. The reasons advanced by the Solicitor
General in said brief and in his reply memorandum in support of his contention are, that the Court of Special and
Exclusive Criminal Jurisdiction created, and the summary procedure prescribed therefor, by said Ordinance No. 7 in
connection with Executive Order No. 157 of the Chairman of the Executive Commission are tinged with political
complexion; that the procedure prescribed in Ordinance No. 7 does not afford a fair trial, violates the Constitution of the
Commonwealth, and impairs the Constitutional rights of accused persons under their legitimate Constitution. And he cites,
in support of this last proposition, the decisions of the Supreme Court of the United States in the cases of Texas vs. White
(7 Wall., 700, 743); Horn vs. Lockart (17 Wall., 570, 581); United States vs. Home Insurance Co. (22 Wall., 99, 104);
Sprott vs.United States (20 Wall., 459).
The City Fiscal of Manila appeared before this Court as amicus curiae. In his memorandum he submits that the petition
for habeas corpus be denied on the following grounds: That the Court of Special and Exclusive Criminal Jurisdiction and
the Acts, Ordinances and Executive Orders, creating it are not of a political complexion, for said Court was created, and
the crimes and offenses placed under its jurisdiction were penalized heavily, in response to an urgent necessity, according
to the preamble of Ordinance No. 7; that the right to appeal in a criminal case is not a constitutional right; and that the
summary procedure established in said Ordinance No. 7 is not violative of the provision of Article III, section 1 (18) of the
Constitution of the Commonwealth, to the effect that no person shall be compelled to be a witness against himself, nor of
the provision of section 1 (1) of the same Article that no person shall be deprived of life, liberty, or property without due
process of law.
The features of the summary procedure adopted by Ordinance No. 7, assailed by the petitioner and the Solicitor General
as impairing the constitutional rights of an accused are: that court may interrogate the accused and witnesses before trial
in order to clarify the points in dispute; that the refusal of the accused to answer the questions may be considered
unfavorable to him; that if from the facts admitted at the preliminary interrogatory it appears that the defendant is guilty, he
may be immediately convicted; and that the sentence of the sentence of the court is not appealable, except in case of
death penalty which cannot be executed unless and until reviewed and affirmed by a special division of the Supreme
Court composed of three Justices.
Before proceeding further, and in order to determine the law applicable to the questions involved in the present case, it is
necessary to bear in mind the nature and status of the government established in these Islands by the Japanese forces of
occupation under the designation of Republic of the Philippines.
In the case of Co Kim Cham vs. Valdez Tan Keh and Dizon (G. R. No. L-5, pp. 113, 127, ante), recently decided, this
Court, speaking through the Justice who pens this decision, held:
In view of the foregoing, it is evident that the Philippines 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 Tanpico,
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 as 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.
And speaking of the so-called Republic of the Philippines in the same decision, this Court said:
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 peoples" 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.
As the so-called Republic of the Philippines was a de facto government of the second kind (of paramount force), as the
government established in Castine, Maine, during its occupation by the British forces and as that of Tampico, Mexico,
occupied during the war with that the country by the United State Army, the question involved in the present case cannot
be decided in the light of the Constitution of the Commonwealth Government; because the belligerent occupant was
totally independent of the constitution of the occupied territory in carrying out the administration over said territory; and the
doctrine laid down by the Supreme Court of the United States in the cases involving the validity of judicial and legislative
acts of the Confederate States, considered as de factogovernments of the third kind, does not apply to the acts of the socalled Republic of the Philippines which is a de facto government of paramount force. The Constitution of the so-called
Republic of the Philippines can neither be applied, since the validity of an act of a belligerent occupant cannot be tested in
the light of another act of the same occupant, whose criminal jurisdiction is drawn entirely from the law martial as defined
in the usages of nations.
In the case of United States vs. Rice (4 Wheaton, 246), the Supreme Court of the United States held that, by the military
occupation of Castine, Maine, the sovereignty of the United States in the territory was, of course, suspended, and the
laws of the United States could no longer be rightfully enforced there or be obligatory upon the inhabitants who remained
and submitted to the belligerent occupant. By the surrender the inhabitants passed under a temporary allegiance to the
British government, and were bound by such laws, and such only, as it chose to recognize and impose. And Oppenheim,
in his Treatise on International Law, says that, in carrying out the administration over the occupied territory and its
inhabitants, "the (belligerent) occupant is totally independent of the constitution and the laws of the territory , since
occupation is an aim of warfare, and the maintenance and safety of his forces, and the purpose of war, stand in the
foreground of his interest and must be promoted under all circumstances or conditions. (Vol. II, Sixth Edition, Revised,
1944, p. 342.)
The doctrine laid down in the decisions of the Supreme Court of the United States (in the cases of Texas vs.White, 7
Wall., 700; Horn vs. Lockart, 17 Wall., 570; Williams vs. Bruffy, 96 U. S., 176 United States vs. Home Insurance Co., 20
Wall., 249; Sprott vs. United States, 20 Wall., 459, and others) that the judicial and legislative acts of the Confederate
States which impaired the rights of the citizens under the Constitution of the United States or of the States, or were in
conflict with those constitutions, were null and void, is not applicable to the present case. Because that doctrine rests on
the propositions that "the concession (of belligerency) made to the Confederate Government . . . sanctioned no hostile
legislation . . . and it impaired in no respect the rights of loyal and citizens as they existed at the commencement of
hostilities" (Williams vs. Bruffy, supra);that the Union is perpetual and indissoluble, and the obligation of allegiance to the
to the estate and obedience to her laws and the estate constitution, subject to the Constitution of the United States,
remained unimpaired during the War of Secession (Texas vs. White, supra) and that the Confederate States "in most, if
not in all instances, merely transferred the existing state organizations to the support of a new and different national head.
the same constitution, the same laws for the protection of the property and personal rights remained and were
administered by the same officers." (Sprott vs. United States, supra). In fine, because in the case of the Confederate
States, the constitution of each state and that of the United States or the Union continued in force in those states during
the War of Secession; while the Constitution of the Commonwealth Government was suspended during the occupation of
the Philippines by the Japanese forces of the belligerent occupant at regular war with the United States.
The question which we have to resolve in the present case in the light of the law of nations are, first, the validity of the
creation of the Court of Special and Exclusive Criminal Jurisdiction, and of the summary procedure adopted for that court;
secondly, the validity of the sentence which imprisonment during the Japanese military occupation; and thirdly, if they
were then valid, the effect on said punitive sentence of the reoccupation of the Philippines and the restoration therein of
the Commonwealth Government.
(1) As to the validity of the creation of the Court of Special and Exclusive Criminal Jurisdiction by Ordinance No. 7, the
only factor to be considered is the authority of the legislative power which promulgated said law or ordinance. It is well
established in International Law that "The criminal jurisdiction established by the invader in the occupied territory finds its
source neither in the laws of the conquering or conquered state, it is drawn entirely form the law martial as defined in
the usages of nations. The authority thus derived can be asserted either through special tribunals, whose authority and
procedure is defined in the military code of the conquering state, or through the ordinary courts and authorities of the

occupied district." (Taylor, International Public Law, p. 598.) The so-called Republic of the Philippines, being a
governmental instrumentality of the belligerent occupant, had therefore the power or was competent to create the Court of
Special and Exclusive Criminal Jurisdiction. No question may arise as to whether or not a court is of political complexion,
for it is mere a governmental agency charged with the duty of applying the law to cases falling within its jurisdiction. Its
judgments and sentences may be of political complexion, or not depending upon the nature or character of the law so
applied. There is no room for doubt, therefore, as to the validity of the creation of the court in question.
With respect to the Summary procedure adopted by Ordinance No. 7, and followed in the trial of the case which resulted
in the conviction of the herein petitioner, there is also no question as to the power or competence of the belligerent
occupant to promulgate the law providing for such procedure. For "the invader deals freely with the relations of the
inhabitants of the occupied territory towards himself . . . for his security also, he declares certain acts, not forbidden by the
ordinary laws of the country, to be punishable; and he so far suspends the laws which guard personal liberty as is
required for the summary punishment of any one doing such acts." (Hall's International Law, seventh ed., p. 5000). A
belligerent "occupant may where necessary, set up military courts instead of the ordinary courts; and in case, and in so far
as, he admits the administration of justice by the ordinary courts, he may nevertheless, so far as is necessary for military
purposes, or for the maintenance of public order and safety temporarily alter the laws, especially the Criminal Law, on the
basis of which justice is administered as well as the laws regarding procedure." (Oppenheim's International Law, Vol. II,
sixth edition, 1944, p.349.)
No objection can be set up to the legality of its provisions in the light of the precepts of our Commonwealth Constitution
relating to the rights of accused under that Constitution, because the latter was not in force during the period of the
Japanese military occupation, as we have already stated. Nor may said Constitution be applied upon its revival at the time
of the re-occupation of the Philippines by virtue of the principle of postliminium because "a constitution should operate
prospectively only, unless the words employed show a clear intention that it should have a retrospective effect" (Cooley's
Constitutional Limitations, seventh edition, page 97, and cases quoted and cited in the footnote), especially as regards
laws of procedure applied to cases already terminated completely.
The only restrictions or limitations imposed upon the power of a belligerent occupant to alter the laws or promulgate new
ones, especially the criminal law as well as the laws regarding procedure, so far as it is necessary for military purposes,
that is, for his control of the territory and the safety and protection of his army, are those imposed by the Hague
Regulations, the usages established by civilized nations, the laws of humanity and the requirements of public conscience.
It is obvious that the summary procedure under consideration does not violate those precepts. It cannot be considered as
violating the laws of humanity and public conscience, for it is less objectionable, even from the point of view of those who
are used to the accusatory system of criminal procedure than the procedural laws based on the semi-inquisitorial or mixed
system prevailing in France and other countries in continental Europe.
(2) The validity of the sentence rendered by the Court of Special and Exclusive Criminal Jurisdiction which imposes life
imprisonment upon the herein petitioner, depends upon the competence or power of the belligerent occupant to
promulgate Act No. 65 which punishes the crime of which said petitioner was convicted.
Westlake says that Article XLIII, Section III, of the Hague Conventions of 1907 "indicates that the laws to be enforced by
the occupant consist of, first, the territorial law in general, as that which stands to the public order and social and
commercial life of the district in a relation of mutual adaptation, so that any needless displacement of it would defeat the
object which the invader is enjoined to have in view, and secondly, such variations of the territorial law as may be required
by real necessity and are not expressly prohibited by any of the rules which will come before us. Such variations will
naturally be greatest in what concerns the relation of the communities and individuals within the district to the invading
army and its followers, it being necessary for the protection of the latter, and for the unhindered prosecution of the war by
them, that acts committed to their detriment shall not only lose what justification the territorial law might give them as
committed against enemies, but shall be repressed more severely than the territorial law would repress acts committed
against fellow subjects. Indeed the entire relation between the invaders and the invaded, so far as it may fall within the
criminal department whether by the intrinsic nature of the acts done or in consequence of the regulations made by the
invaders, may be considered as taken out of the territorial law and referred to what is called martial law." (Westlake,
International Law, Part II, War, p. 96.)
According to Hyde (International Law, Vol. II, p. 386), the term "martial law," in so far as it is used to describe any fact in
relation to belligerent occupation, does not refer to a particular code or system of law, or to a special agency entrusted
with its administration. The term merely signifies that the body of law actually applied, having the sanction of military

authority, is essentially martial. All law, by whomsoever administered, in an occupied district martial law; and it is none the
less so when applied by civil courts in matters devoid of special interest to the occupant. The words "martial law" are
doubtless suggestive of the power of the occupant to share the law as he sees fit; that is, to determine what shall be
deemed lawful or unlawful acts, to establish tests for ascertaining the guilt of offenders, to fix penalties, and generally to
administer justice through such agencies as the found expedient.
And the United States Rules of Land Warfare provide that the belligerent occupant may promulgate such new laws and
regulations as military necessity demands, and in this class will be included those laws which come into being as a result
of military rule; that is, those which establish new crimes and offenses incident to a state of war and are necessary for the
control of the country and the protection of the army, for the principal object of the occupant is to provide for the security of
the invading army and to contribute to its support and efficiency and the success of its operations. (Pub. 1940, pp. 76, 77.)
From the above it appears clear that it was within the power and competence of the belligerent occupant to promulgate,
through the National Assembly of the so-called Republic of the Philippines, Act No. 65 of the said Assembly, which
penalizes the crimes of robbery and other offenses by imprisonment ranging from the maximum period of the
imprisonment prescribed by the laws and ordinances promulgated by the President of the so-called Republic as minimum,
to life imprisonment or death as maximum. Although these crimes are defined in the Revised Penal Code, they were
altered and penalized by said Act No. 65 with different and heavier penalties, as new crimes and offenses demanded by
military necessity, incident to a state of war, and necessary for the control of the country by the belligerent occupant, the
protection and safety of the army of occupation, its support and efficiency, and the success of its operations.
They are not the same ordinary offenses penalized by the Revised Penal Code. The criminal acts penalized by said Act
No. 65 are those committed by persons charged or connected with the supervision and control of the production,
procurement and distribution of foods and other necessaries; and the penalties imposed upon the violators are different
from and much heavier than those provided by the Revised Penal Code for the same ordinary crimes. The acts penalized
by said Act were taken out of the territorial law or Revised Penal Code, and referred to what is called martial law by
international jurists, defined above by Hyde, in order, not only to prevent food and other necessaries from reaching the
"guerrillas" which were harassing the belligerent occupant from every nook and corner of the country, but also to preserve
the food supply and other necessaries in order that, in case of necessity, the Imperial Japanese forces could easily
requisition them, as they did, and as they had the right to do in accordance with the law of nations for their maintenance
and subsistence (Art. LII, Sec. III, Hague Conventions of 1907). Especially taking into consideration the fact, of which this
court may take judicial notice, that the Imperial Japanese Army had depended mostly for their supply upon the produce of
this country.
The crimes penalized by Act No. 65 as well as the crimes against national security and the law of nations, to wit:
treason, espionage, inciting war, violation of neutrality, correspondence with hostile country, flight to enemy's country,
piracy; and the crimes against public order, such as rebellion, sedition and disloyalty, illegal possession of firearms and
other, penalized by Ordinance No. 7 and placed under jurisdiction of the Court of Special and Exclusive Criminal
Jurisdiction are all of a political complexion, because the acts constituting those offenses were punished, as are all
political offenses, for public rather than private reasons, and were acts in aid or favor of the enemy and against the
welfare, safety and security of the belligerent occupant. While it is true that these offenses, when committed against the
Commonwealth or United States Government, are defined and also penalized by the territorial law Revised Penal Code,
they became inapplicable as crimes against the occupier upon the occupation of the Islands by the Japanese forces. And
they had to be taken out of the territorial law and made punishable by said Ordinance No. 7, for they were not penalized
before under the Revised Penal Code when committed against the belligerent occupant or the government established by
him in these Island. They are also considered by some writers as war crimes in a broad sense. In this connection
Wheaton observes the following:
"Of 'war crimes' the number is naturally indefinite, depending as they do on the acts from time to time ordered to be done
or forbidden to be done in the martial law proclamation or regulations of the invading or occupying commander. Thus, in
the Anglo-Boer war, the British military authorities proclaimed the following to be offenses against their martial law;
Being in possession of arms, ammunition, etc.; traveling without a permit; sending prohibited goods; holding meetings
other than those allowed; using seditious language; spreading alarmist reports; overcharging for goods; wearing uniforms
without due authority; going out of doors between certain hours; injuring military animals or stores; being in possession,
without a permit, of horses, vehicles, cycles, etc.; hindering those in execution of military orders; trespassing on defense
works. Such offenses, together with several others, were specified in the Japanese regulations made in the RussoJapanese war." (Wheaton's International Law, War, seventh edition, 1944, p. 242.)

It is, therefore, evident that the sentence rendered by the Court of Special and Exclusive Criminal Jurisdiction against the
petitioner, imposing upon him the penalty of life imprisonment, was good and valid, since it was within the admitted power
or competence of the belligerent occupant to promulgate the law penalizing the crime of which petitioner was convicted.
(3) The last question is the legal effect of the reoccupation of the Philippines and restoration of the Commonwealth
Government; that is whether or not, by the principle of postliminy, the punitive sentence which petitioner is now serving fell
through or ceased to be valid from that time.
In order to resolve this last question, it is not necessary to enter into an elaborate discussion on the matter. It is sufficient
to quote the opinion on the subject of several international jurists and our recent decision in the case ofCo Kim Cham vs.
Valdez Tan Keh and Dizon, supra.
Hall, commenting on the effect of the principle of postliminy upon sentences of the tribunals continued or created by the
belligerent occupant, opines "that judicial acts done under this 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. . . . Political acts on the
other hand fall through as of course, whether they introduce any positive change into the organization of the country, or
whether they only suspend the working of that already in existence. The execution also of punitive sentences ceases as of
course when they have had reference to acts not criminal by the municipal law of the state, such for example as acts
directed against the security or control of the invader." (Hall's International Law, seventh edition, p. 518.)
Westlake, speaking of the duration of the validity of punitive sentences for offenses such as the one in question, which is
within the admitted power or competence of the belligerent occupant to punish, says that: "To the extent to which the legal
power of the occupant is admitted he can make law for the duration of his occupation. Like any other legislator he is
morally subject to the duty of giving sufficient notice of his enactments or regulations, not indeed so as to be debarred
from carrying out his will without notice, when required by military necessity and so far as practically carrying out his will
can be distinguished from punishment, but always remembering that to punish for breach of a regulation a person who
was justifiably ignorant of it would be outrageous. But the law made by the occupant within his admitted power, whether
morally justifiable or not, will bind any member of the occupied population as against any other member of it, and will bind
as between them all and their national government, so far as it produces an effect during the occupation. When the
occupation comes to an end the authority of the national government is restored, either by the progress of operations
during the war or by the conclusion of a peace, no redress can be had for what has been actually carried out but nothing
further can follow from the occupant's legislation. A prisoner detained under it must be released, and no civil right
conferred by it can be further enforced. The enemy's law depends on him for enforcement as well as for enactment. The
invaded state is not subject to the indignity of being obliged to execute his commands. (Westlake, International Law, Part
II, War, pp. 97, 98.)
And Wheaton, who, as above stated, considers as war crimes such offenses as those penalized in Ordinance No. 7 and
Act No. 65, says: "In general, the cast of the occupant possess legal validity, and under international law should not be
abrogated by the subsequent government. But this rule does not necessarily apply to acts that exceed the occupant's
power (e.g., alienation of the domains of the State or the sovereign), to sentences for 'war treason' and 'war crimes,' to
acts of a political character, and to those that beyond the period of occupation. When occupation ceases, no reparation is
legally due for what has already been carried out." (Wheaton's International Law, supra, p. 245.)
We have already held in our recent decision in the case of Co Kim Cham vs. Valdez Tan Keh and Dizon, supra, that all
judgments of political complexion of the courts during the Japanese regime, ceased to be valid upon the reoccupation of
the islands by virtue of the principle or right of postliminium. Applying that doctrine to the present case, the sentence which
convicted the petitioner of a crime of a political complexion must be considered as having ceased to be valid ipso facto
upon the reoccupation or liberation of the Philippines by General Douglas MacArthur.
It may not be amiss to say in this connection that it is not necessary and proper to invoke the proclamation of General
Douglas MacArthur declaring null and void all laws, among them Act No. 65, of the so-called Republic of the Philippines
under which petitioner was convicted, in order to give retroactive effect to the nullification of said penal act and invalidate
sentence rendered against petitioner under said law, a sentence which, before the proclamation, had already become null
and of no effect.

We therefore hold that the punitive sentence under consideration, although good and valid during the military occupation
of the Philippines by the Japanese forces, ceased to be good and valid ipso facto upon the reoccupation of these Island
and the restoration therein of the Commonwealth Government.
In view of all the foregoing, the writ of habeas corpus prayed for is hereby granted and it is ordered that the petitioner be
released forthwith, without pronouncement as to costs. So ordered.
Jaranilla,
Pablo
Moran, C.J., concurs in the result.

and

Bengzon,

JJ., concur.

Social Justice
G.R. No. 47800 December 2, 1940 A. D.
SUPREME COURT FIRST DIVISION MAXIMO CALALANG, Petitioner, -versus- WILLIAMS, ET AL., Respondents.
D E C I S I O N LAUREL, J.- Maximo Calalang, in his capacity as a private citizen and as a taxpayer of Manila, brought
before this court this petition for a writ of prohibition against the respondents, A. D. Williams, as Chairman of the National

Traffic Commission; Vicente Fragante, as Director of Public Works; Sergio Bayan, as Acting Secretary of Public Works
and Communications; Eulogio Rodriguez, as Mayor of the City of Manila; and Juan Dominguez, as Acting Chief of Police
of Manila. Chanrobles publishing company It is alleged in the petition that the National Traffic Commission, in its resolution
of July 17, 1940, resolved to recommend to the Director of Public Works and to the Secretary of Public Works and
Communications that animal-drawn vehicles be prohibited from passing along Rosario Street extending from Plaza
Calderon de la Barca to Dasmarias Street, from 7:30 a.m. to 12:30 p.m. and from 1:30 p.m. to 5:30 p.m.; and along Rizal
Avenue extending from the railroad crossing at Antipolo Street to Echague Street, from 7 a.m. to 11 p.m., from a period of
one year from the date of the opening of the Colgante Bridge to traffic; that the Chairman of the National Traffic
Commission, on July 18, 1940 recommended to the Director of Public Works the adoption of the measure proposed in the
resolution aforementioned, in pursuance of the provisions of Commonwealth Act No. 548 which authorizes said Director of
Public Works, with the approval of the Secretary of Public Works and Communications, to promulgate rules and
regulations to regulate and control the use of and traffic on national roads; that on August 2, 1940, the Director of Public
Works, in his first indorsement to the Secretary of Public Works and Communications, recommended to the latter the
approval of the recommendation made by the Chairman of the National Traffic Commission as aforesaid, with the
modification that the closing of Rizal Avenue to traffic to animal-drawn vehicles be limited to the portion thereof extending
from the railroad crossing at Antipolo Street to Azcarraga Street; that on August 10, 1940, the Secretary of Public Works
and Communications, in his second indorsement addressed to the Director of Public Works, approved the
recommendation of the latter that Rosario Street and Rizal Avenue be closed to traffic of animal-drawn vehicles, between
the points and during the hours as above indicated, for a period of one year from the date of the opening of the Colgante
Bridge to traffic; that the Mayor of Manila and the Acting Chief of Police of Manila have enforced and caused to be
enforced the rules and regulations thus adopted; that as a consequence of such enforcement, all animal-drawn vehicles
are not allowed to pass and pick up passengers in the places abovementioned to the detriment not only of their owners
but of the riding public as well. Chanrobles publishing company It is contended by the petitioner that Commonwealth Act
No. 548 by which the Director of Public Works, with the approval of the Secretary of Public Works and Communications, is
authorized to promulgate rules and regulations for the regulation and control of the use of and traffic on national roads and
streets is unconstitutional because it constitutes an undue delegation of legislative power. This contention is untenable. As
was observed by this court in Rubi vs. Provincial Board of Mindoro (39 Phil, 660, 700), The rule has nowhere been better
stated than in the early Ohio case decided by Judge Ranney, and since followed in a multitude of cases, namely: The true
distinction therefore is between the delegation of power to make the law, which necessarily involves a discretion as to
what it shall be, and conferring an authority or discretion as to its execution, to be exercised under and in pursuance of the
law. The first cannot be done; to the latter no valid objection can be made. (Cincinnati, W. & Z. R. Co. vs. Commrs.
Clinton County, 1 Ohio St., 88.) Discretion, as held by Chief Justice Marshall in Wayman vs. Southard (10 Wheat., 1) may
be committed by the Legislature to an executive department or official. The Legislature may make decisions of executive
departments or subordinate officials thereof, to whom it has committed the execution of certain acts, final on questions of
fact. (U.S. vs. Kinkead, 248 Fed., 141.) The growing tendency in the decisions is to give prominence to the necessity of
the case. chanroblespublishingcompany Section 1 of Commonwealth Act No. 548 reads as follows: SECTION 1. To
promote safe transit upon, and avoid obstructions on, roads and streets designated as national roads by acts of the
National Assembly or by executive orders of the President of the Philippines, the Director of Public Works, with the
approval of the Secretary of Public Works and Communications, shall promulgate the necessary rules and regulations to
regulate and control the use of and traffic on such roads and streets. Such rules and regulations, with the approval of the
President, may contain provisions controlling or regulating the construction of buildings or other structures within a
reasonable distance from along the national roads. Such roads may be temporarily closed to any or all classes of traffic by
the Director of Public Works and his duly authorized representatives whenever the condition of the road or the traffic
thereon makes such action necessary or advisable in the public convenience and interest, or for a specified period, with
the approval of the Secretary of Public Works and Communications. chanroblespublishingcompany The above provisions
of law do not confer legislative power upon the Director of Public Works and the Secretary of Public Works and
Communications. The authority therein conferred upon them and under which they promulgated the rules and regulations
now complained of is not to determine what public policy demands but merely to carry out the legislative policy laid down
by the National Assembly in said Act, to wit, to promote safe transit upon and avoid obstructions on, roads and streets
designated as national roads by acts of the National Assembly or by executive orders of the President of the Philippines
and to close them temporarily to any or all classes of traffic whenever the condition of the road or the traffic makes such
action necessary or advisable in the public convenience and interest. The delegated power, if at all, therefore, is not the
determination of what the law shall be, but merely the ascertainment of the facts and circumstances upon which the
application of said law is to be predicated. To promulgate rules and regulations on the use of national roads and to
determine when and how long a national road should be closed to traffic, in view of the condition of the road or the traffic
thereon and the requirements of public convenience and interest, is an administrative function which cannot be directly
discharged by the National Assembly. It must depend on the discretion of some other government official to whom is
confided the duty of determining whether the proper occasion exists for executing the law. But it cannot be said that the
exercise of such discretion is the making of the law. As was said in Lockes Appeal (72 Pa. 491): To assert that a law is
less than a law, because it is made to depend on a future event or act, is to rob the Legislature of the power to act wisely
for the public welfare whenever a law is passed relating to a state of affairs not yet developed, or to things future and
impossible to fully know. The proper distinction the court said was this: The Legislature cannot delegate its power to

make the law; but it can make a law to delegate a power to determine some fact or state of things upon which the law
makes, or intends to make, its own action depend. To deny this would be to stop the wheels of government. There are
many things upon which wise and useful legislation must depend which cannot be known to the law-making power, and,
must, therefore, be a subject of inquiry and determination outside of the halls of legislation. (Field vs. Clark, 143 U. S.
649, 694; 36 L. Ed. 294.) In the case of People vs. Rosenthal and Osmea, G.R. Nos. 46076 and 46077, promulgated
June 12, 1939, and in Pangasinan Transportation vs. The Public Service Commission, G.R. No. 47065, promulgated June
26, 1940, this Court had occasion to observe that the principle of separation of powers has been made to adapt itself to
the complexities of modern governments, giving rise to the adoption, within certain limits, of the principle of subordinate
legislation, not only in the United States and England but in practically all modern governments. Accordingly, with the
growing complexity of modern life, the multiplication of the subjects of governmental regulations, and the increased
difficulty of administering the laws, the rigidity of the theory of separation of governmental powers has, to a large extent,
been relaxed by permitting the delegation of greater powers by the legislative and vesting a larger amount of discretion in
administrative and executive officials, not only in the execution of the laws, but also in the promulgation of certain rules
and regulations calculated to promote public interest. Chanrobles publishing company The petitioner further contends that
the rules and regulations promulgated by the respondents pursuant to the provisions of Commonwealth Act No. 548
constitute an unlawful interference with legitimate business or trade and abridge the right to personal liberty and freedom
of locomotion. Commonwealth Act No. 548 was passed by the National Assembly in the exercise of the paramount police
power of the state. Chanrobles publishing company Said Act, by virtue of which the rules and regulations complained of
were promulgated, aims to promote safe transit upon and avoid obstructions on national roads, in the interest and
convenience of the public. In enacting said law, therefore, the National Assembly was prompted by considerations of
public convenience and welfare. It was inspired by a desire to relieve congestion of traffic. which is, to say the least, a
menace to public safety. Public welfare, then, lies at the bottom of the enactment of said law, and the state in order to
promote the general welfare may interfere with personal liberty, with property, and with business and occupations.
Persons and property may be subjected to all kinds of restraints and burdens, in order to secure the general comfort,
health, and prosperity of the state (U.S. vs. Gomez Jesus, 31 Phil., 218). To this fundamental aim of our Government the
rights of the individual are subordinated. Liberty is a blessing without which life is a misery, but liberty should not be made
to prevail over authority because then society will fall into anarchy. Neither should authority be made to prevail over liberty
because then the individual will fall into slavery. The citizen should achieve the required balance of liberty and authority in
his mind through education and personal discipline, so that there may be established the resultant equilibrium, which
means peace and order and happiness for all. The moment greater authority is conferred upon the government, logically
so much is withdrawn from the residuum of liberty which resides in the people. The paradox lies in the fact that the
apparent curtailment of liberty is precisely the very means of insuring its preservation. chanroblespublishingcompany The
scope of police power keeps expanding as civilization advances. As was said in the case of Dobbins vs. Los Angeles (195
U.S. 223, 238; 49 L. ed. 169), the right to exercise the police power is a continuing one, and a business lawful today may
in the future, because of the changed situation, the growth of population or other causes, become a menace to the public
health and welfare, and be required to yield to the public good. And in People vs. Pomar (46 Phil., 440), it was observed
that advancing civilization is bringing within the police power of the state today things which were not thought of as being
within such power yesterday. The development of civilization, the rapidly increasing population, the growth of public
opinion, with an increasing desire on the part of the masses and of the government to look after and care for the interests
of the individuals of the state, have brought within the police power many questions for regulation which formerly were not
so considered. chanroblespublishingcompany The petitioner finally avers that the rules and regulations complained of
infringe upon the constitutional precept regarding the promotion of social justice to insure the well-being and economic
security of all the people. The promotion of social justice, however, is to be achieved not through a mistaken sympathy
towards any given group. Social justice is neither communism, nor despotism, nor atomism, nor anarchy, but the
humanization of laws and the equalization of social and economic forces by the State so that justice in its rational and
objectively secular conception may at least be approximated. Social justice means the promotion of the welfare of all the
people, the adoption by the Government of measures calculated to insure economic stability of all the competent
elements of society, through the maintenance of a proper economic and social equilibrium in the interrelations of the
members of the community, constitutionally, through the adoption of measures legally justifiable, or extraconstitutionally,
through the exercise of powers underlying the existence of all governments on the time-honored principle of salus populi
est suprema lex. chanroblespublishingcompany Social justice, therefore, must be founded on the recognition of the
necessity of interdependence among divers and diverse units of a society and of the protection that should be equally and
evenly extended to all groups as a combined force in our social and economic life, consistent with the fundamental and
paramount objective of the state of promoting the health, comfort, and quiet of all persons, and of bringing about the
greatest good to the greatest number. chanroblespublishingcompany IN VIEW OF THE FOREGOING, the Writ of
Prohibition Prayed for is hereby denied, with costs against the petitioner. So ordered. Avancea, C.J., Imperial, Diaz and
Horrilleno, JJ., concur.

LAUREL V. MISA
Sovereignty

FACTS:
A petition for habeas corpus was filed by Anastacio Laurel. He claims 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 for the
reasons that the sovereignty of the legitimate government in the Philippines and consequently the correlative allegiance of
Filipino citizen thereto were then suspended; and that there was a change of sovereignty over these Islands upon the
proclamation of the Philippine Republic.
ISSUE: WHETHER THE ABSOLUTE ALLEGIANCE OF A FILIPINO CITIZEN TO THE GOVERNMENT BECOMES
SUSPENDED DURING OCCUPATION
HELD:
No. 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. It remains vested in the legitimate government.
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. The political laws which prescribe the reciprocal rights, duties
and obligation of government and citizens, are suspended in abeyance during military occupation.
DISSENT:
During the long period of Japanese occupation, all the political laws of the Philippines were suspended. This is full
harmony with the generally accepted principles of the international law adopted by our Constitution [ Art. II, Sec. 3 ] as
part of law of the nation.
The inhabitants of the occupied territory should necessarily be bound to the sole authority of the invading power whose
interest and requirements are naturally in conflict with those of displaced government, if it is legitimate for the military
occupant to demand and enforce from the inhabit ants such obedience as may be necessary for the security of his forces,
for the maintenance of the law and order, and for the proper administration of the country.

Doctrine of State Immunity

G.R. No. 101949 December 1, 1994

THE HOLY SEE, petitioner,

vs.
THE HON. ERIBERTO U. ROSARIO, JR., as Presiding Judge of the Regional Trial Court of Makati, Branch 61 and
STARBRIGHT SALES ENTERPRISES, INC., respondents.
Padilla Law Office for petitioner.
Siguion Reyna, Montecillo & Ongsiako for private respondent.

QUIASON, J.:
This is a petition for certiorari under Rule 65 of the Revised Rules of Court to reverse and set aside the Orders dated June
20, 1991 and September 19, 1991 of the Regional Trial Court, Branch 61, Makati, Metro Manila in Civil Case No. 90-183.
The Order dated June 20, 1991 denied the motion of petitioner to dismiss the complaint in Civil Case No. 90-183, while
the Order dated September 19, 1991 denied the motion for reconsideration of the June 20,1991 Order.
Petitioner is the Holy See who exercises sovereignty over the Vatican City in Rome, Italy, and is represented in the
Philippines by the Papal Nuncio.
Private respondent, Starbright Sales Enterprises, Inc., is a domestic corporation engaged in the real estate business.
This petition arose from a controversy over a parcel of land consisting of 6,000 square meters (Lot 5-A, Transfer
Certificate of Title No. 390440) located in the Municipality of Paraaque, Metro Manila and registered in the name of
petitioner.
Said Lot 5-A is contiguous to Lots 5-B and 5-D which are covered by Transfer Certificates of Title Nos. 271108 and
265388 respectively and registered in the name of the Philippine Realty Corporation (PRC).
The three lots were sold to Ramon Licup, through Msgr. Domingo A. Cirilos, Jr., acting as agent to the sellers. Later, Licup
assigned his rights to the sale to private respondent.
In view of the refusal of the squatters to vacate the lots sold to private respondent, a dispute arose as to who of the parties
has the responsibility of evicting and clearing the land of squatters. Complicating the relations of the parties was the sale
by petitioner of Lot 5-A to Tropicana Properties and Development Corporation (Tropicana).
I
On January 23, 1990, private respondent filed a complaint with the Regional Trial Court, Branch 61, Makati, Metro Manila
for annulment of the sale of the three parcels of land, and specific performance and damages against petitioner,
represented by the Papal Nuncio, and three other defendants: namely, Msgr. Domingo A. Cirilos, Jr., the PRC and
Tropicana (Civil Case No.
90-183).
The complaint alleged that: (1) on April 17, 1988, Msgr. Cirilos, Jr., on behalf of petitioner and the PRC, agreed to sell to
Ramon Licup Lots 5-A, 5-B and 5-D at the price of P1,240.00 per square meters; (2) the agreement to sell was made on
the condition that earnest money of P100,000.00 be paid by Licup to the sellers, and that the sellers clear the said lots of
squatters who were then occupying the same; (3) Licup paid the earnest money to Msgr. Cirilos; (4) in the same month,
Licup assigned his rights over the property to private respondent and informed the sellers of the said assignment; (5)
thereafter, private respondent demanded from Msgr. Cirilos that the sellers fulfill their undertaking and clear the property
of squatters; however, Msgr. Cirilos informed private respondent of the squatters' refusal to vacate the lots, proposing
instead either that private respondent undertake the eviction or that the earnest money be returned to the latter; (6) private
respondent counterproposed that if it would undertake the eviction of the squatters, the purchase price of the lots should
be reduced from P1,240.00 to P1,150.00 per square meter; (7) Msgr. Cirilos returned the earnest money of P100,000.00

and wrote private respondent giving it seven days from receipt of the letter to pay the original purchase price in cash; (8)
private respondent sent the earnest money back to the sellers, but later discovered that on March 30, 1989, petitioner and
the PRC, without notice to private respondent, sold the lots to Tropicana, as evidenced by two separate Deeds of Sale,
one over Lot 5-A, and another over Lots 5-B and 5-D; and that the sellers' transfer certificate of title over the lots were
cancelled, transferred and registered in the name of Tropicana; (9) Tropicana induced petitioner and the PRC to sell the
lots to it and thus enriched itself at the expense of private respondent; (10) private respondent demanded the rescission of
the sale to Tropicana and the reconveyance of the lots, to no avail; and (11) private respondent is willing and able to
comply with the terms of the contract to sell and has actually made plans to develop the lots into a townhouse project, but
in view of the sellers' breach, it lost profits of not less than P30,000.000.00.
Private respondent thus prayed for: (1) the annulment of the Deeds of Sale between petitioner and the PRC on the one
hand, and Tropicana on the other; (2) the reconveyance of the lots in question; (3) specific performance of the agreement
to sell between it and the owners of the lots; and (4) damages.
On June 8, 1990, petitioner and Msgr. Cirilos separately moved to dismiss the complaint petitioner for lack of
jurisdiction based on sovereign immunity from suit, and Msgr. Cirilos for being an improper party. An opposition to the
motion was filed by private respondent.
On June 20, 1991, the trial court issued an order denying, among others, petitioner's motion to dismiss after finding that
petitioner "shed off [its] sovereign immunity by entering into the business contract in question" (Rollo, pp. 20-21).
On July 12, 1991, petitioner moved for reconsideration of the order. On August 30, 1991, petitioner filed a "Motion for a
Hearing for the Sole Purpose of Establishing Factual Allegation for claim of Immunity as a Jurisdictional Defense." So as
to facilitate the determination of its defense of sovereign immunity, petitioner prayed that a hearing be conducted to allow
it to establish certain facts upon which the said defense is based. Private respondent opposed this motion as well as the
motion for reconsideration.
On October 1, 1991, the trial court issued an order deferring the resolution on the motion for reconsideration until after trial
on the merits and directing petitioner to file its answer (Rollo, p. 22).
Petitioner forthwith elevated the matter to us. In its petition, petitioner invokes the privilege of sovereign immunity only on
its own behalf and on behalf of its official representative, the Papal Nuncio.
On December 9, 1991, a Motion for Intervention was filed before us by the Department of Foreign Affairs, claiming that it
has a legal interest in the outcome of the case as regards the diplomatic immunity of petitioner, and that it "adopts by
reference, the allegations contained in the petition of the Holy See insofar as they refer to arguments relative to its claim
of sovereign immunity from suit" (Rollo, p. 87).
Private respondent opposed the intervention of the Department of Foreign Affairs. In compliance with the resolution of this
Court, both parties and the Department of Foreign Affairs submitted their respective memoranda.
II
A preliminary matter to be threshed out is the procedural issue of whether the petition for certiorari under Rule 65 of the
Revised Rules of Court can be availed of to question the order denying petitioner's motion to dismiss. The general rule is
that an order denying a motion to dismiss is not reviewable by the appellate courts, the remedy of the movant being to file
his answer and to proceed with the hearing before the trial court. But the general rule admits of exceptions, and one of
these is when it is very clear in the records that the trial court has no alternative but to dismiss the complaint (Philippine
National Bank v. Florendo, 206 SCRA 582 [1992]; Zagada v. Civil Service Commission, 216 SCRA 114 [1992]. In such a
case, it would be a sheer waste of time and energy to require the parties to undergo the rigors of a trial.
The other procedural question raised by private respondent is the personality or legal interest of the Department of
Foreign Affairs to intervene in the case in behalf of the Holy See (Rollo, pp. 186-190).

In Public International Law, when a state or international agency wishes to plead sovereign or diplomatic immunity in a
foreign court, it requests the Foreign Office of the state where it is sued to convey to the court that said defendant is
entitled to immunity.
In the United States, the procedure followed is the process of "suggestion," where the foreign state or the international
organization sued in an American court requests the Secretary of State to make a determination as to whether it is entitled
to immunity. If the Secretary of State finds that the defendant is immune from suit, he, in turn, asks the Attorney General to
submit to the court a "suggestion" that the defendant is entitled to immunity. In England, a similar procedure is followed,
only the Foreign Office issues a certification to that effect instead of submitting a "suggestion" (O'Connell, I International
Law 130 [1965]; Note: Immunity from Suit of Foreign Sovereign Instrumentalities and Obligations, 50 Yale Law Journal
1088 [1941]).
In the Philippines, the practice is for the foreign government or the international organization to first secure an executive
endorsement of its claim of sovereign or diplomatic immunity. But how the Philippine Foreign Office conveys its
endorsement to the courts varies. In International Catholic Migration Commission v. Calleja, 190 SCRA 130 (1990), the
Secretary of Foreign Affairs just sent a letter directly to the Secretary of Labor and Employment, informing the latter that
the respondent-employer could not be sued because it enjoyed diplomatic immunity. In World Health Organization v.
Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a telegram to that effect. In Baer v. Tizon,
57 SCRA 1 (1974), the U.S. Embassy asked the Secretary of Foreign Affairs to request the Solicitor General to make, in
behalf of the Commander of the United States Naval Base at Olongapo City, Zambales, a "suggestion" to respondent
Judge. The Solicitor General embodied the "suggestion" in a Manifestation and Memorandum as amicus curiae.
In the case at bench, the Department of Foreign Affairs, through the Office of Legal Affairs moved with this Court to be
allowed to intervene on the side of petitioner. The Court allowed the said Department to file its memorandum in support of
petitioner's claim of sovereign immunity.
In some cases, the defense of sovereign immunity was submitted directly to the local courts by the respondents through
their private counsels (Raquiza v. Bradford, 75 Phil. 50 [1945]; Miquiabas v. Philippine-Ryukyus Command, 80 Phil. 262
[1948]; United States of America v. Guinto, 182 SCRA 644 [1990] and companion cases). In cases where the foreign
states bypass the Foreign Office, the courts can inquire into the facts and make their own determination as to the nature
of the acts and transactions involved.
III
The burden of the petition is that respondent trial court has no jurisdiction over petitioner, being a foreign state enjoying
sovereign immunity. On the other hand, private respondent insists that the doctrine of non-suability is not anymore
absolute and that petitioner has divested itself of such a cloak when, of its own free will, it entered into a commercial
transaction for the sale of a parcel of land located in the Philippines.
A. The Holy See
Before we determine the issue of petitioner's non-suability, a brief look into its status as a sovereign state is in order.
Before the annexation of the Papal States by Italy in 1870, the Pope was the monarch and he, as the Holy See, was
considered a subject of International Law. With the loss of the Papal States and the limitation of the territory under the
Holy See to an area of 108.7 acres, the position of the Holy See in International Law became controversial (Salonga and
Yap, Public International Law 36-37 [1992]).
In 1929, Italy and the Holy See entered into the Lateran Treaty, where Italy recognized the exclusive dominion and
sovereign jurisdiction of the Holy See over the Vatican City. It also recognized the right of the Holy See to receive foreign
diplomats, to send its own diplomats to foreign countries, and to enter into treaties according to International Law (Garcia,
Questions and Problems In International Law, Public and Private 81 [1948]).
The Lateran Treaty established the statehood of the Vatican City "for the purpose of assuring to the Holy See absolute
and visible independence and of guaranteeing to it indisputable sovereignty also in the field of international relations"
(O'Connell, I International Law 311 [1965]).

In view of the wordings of the Lateran Treaty, it is difficult to determine whether the statehood is vested in the Holy See or
in the Vatican City. Some writers even suggested that the treaty created two international persons the Holy See and
Vatican City (Salonga and Yap, supra, 37).
The Vatican City fits into none of the established categories of states, and the attribution to it of "sovereignty" must be
made in a sense different from that in which it is applied to other states (Fenwick, International Law 124-125 [1948]; Cruz,
International Law 37 [1991]). In a community of national states, the Vatican City represents an entity organized not for
political but for ecclesiastical purposes and international objects. Despite its size and object, the Vatican City has an
independent government of its own, with the Pope, who is also head of the Roman Catholic Church, as the Holy See or
Head of State, in conformity with its traditions, and the demands of its mission in the world. Indeed, the world-wide
interests and activities of the Vatican City are such as to make it in a sense an "international state" (Fenwick, supra., 125;
Kelsen, Principles of International Law 160 [1956]).
One authority wrote that the recognition of the Vatican City as a state has significant implication that it is possible for
any entity pursuing objects essentially different from those pursued by states to be invested with international personality
(Kunz, The Status of the Holy See in International Law, 46 The American Journal of International Law 308 [1952]).
Inasmuch as the Pope prefers to conduct foreign relations and enter into transactions as the Holy See and not in the
name of the Vatican City, one can conclude that in the Pope's own view, it is the Holy See that is the international person.
The Republic of the Philippines has accorded the Holy See the status of a foreign sovereign. The Holy See, through its
Ambassador, the Papal Nuncio, has had diplomatic representations with the Philippine government since 1957 (Rollo, p.
87). This appears to be the universal practice in international relations.
B. Sovereign Immunity
As expressed in Section 2 of Article II of the 1987 Constitution, we have adopted the generally accepted principles of
International Law. Even without this affirmation, such principles of International Law are deemed incorporated as part of
the law of the land as a condition and consequence of our admission in the society of nations (United States of America v.
Guinto, 182 SCRA 644 [1990]).
There are two conflicting concepts of sovereign immunity, each widely held and firmly established. According to the
classical or absolute theory, a sovereign cannot, without its consent, be made a respondent in the courts of another
sovereign. According to the newer or restrictive theory, the immunity of the sovereign is recognized only with regard to
public acts or acts jure imperii of a state, but not with regard to private acts or acts jure gestionis
(United States of America v. Ruiz, 136 SCRA 487 [1987]; Coquia and Defensor-Santiago, Public International Law 194
[1984]).
Some states passed legislation to serve as guidelines for the executive or judicial determination when an act may be
considered as jure gestionis. The United States passed the Foreign Sovereign Immunities Act of 1976, which defines a
commercial activity as "either a regular course of commercial conduct or a particular commercial transaction or act."
Furthermore, the law declared that the "commercial character of the activity shall be determined by reference to the nature
of the course of conduct or particular transaction or act, rather than by reference to its purpose." The Canadian Parliament
enacted in 1982 an Act to Provide For State Immunity in Canadian Courts. The Act defines a "commercial activity" as any
particular transaction, act or conduct or any regular course of conduct that by reason of its nature, is of a "commercial
character."
The restrictive theory, which is intended to be a solution to the host of problems involving the issue of sovereign immunity,
has created problems of its own. Legal treatises and the decisions in countries which follow the restrictive theory have
difficulty in characterizing whether a contract of a sovereign state with a private party is an act jure gestionis or an act jure
imperii.
The restrictive theory came about because of the entry of sovereign states into purely commercial activities remotely
connected with the discharge of governmental functions. This is particularly true with respect to the Communist states
which took control of nationalized business activities and international trading.

This Court has considered the following transactions by a foreign state with private parties as acts jure imperii: (1) the
lease by a foreign government of apartment buildings for use of its military officers (Syquia v. Lopez, 84 Phil. 312 [1949];
(2) the conduct of public bidding for the repair of a wharf at a United States Naval Station (United States of America v.
Ruiz, supra.); and (3) the change of employment status of base employees (Sanders v. Veridiano, 162 SCRA 88 [1988]).
On the other hand, this Court has considered the following transactions by a foreign state with private parties as acts jure
gestionis: (1) the hiring of a cook in the recreation center, consisting of three restaurants, a cafeteria, a bakery, a store,
and a coffee and pastry shop at the John Hay Air Station in Baguio City, to cater to American servicemen and the general
public (United States of America v. Rodrigo, 182 SCRA 644 [1990]); and (2) the bidding for the operation of barber shops
in Clark Air Base in Angeles City (United States of America v. Guinto, 182 SCRA 644 [1990]). The operation of the
restaurants and other facilities open to the general public is undoubtedly for profit as a commercial and not a
governmental activity. By entering into the employment contract with the cook in the discharge of its proprietary function,
the United States government impliedly divested itself of its sovereign immunity from suit.
In the absence of legislation defining what activities and transactions shall be considered "commercial" and as constituting
acts jure gestionis, we have to come out with our own guidelines, tentative they may be.
Certainly, the mere entering into a contract by a foreign state with a private party cannot be the ultimate test. Such an act
can only be the start of the inquiry. The logical question is whether the foreign state is engaged in the activity in the regular
course of business. If the foreign state is not engaged regularly in a business or trade, the particular act or transaction
must then be tested by its nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then it is an act jure
imperii, especially when it is not undertaken for gain or profit.
As held in United States of America v. Guinto, (supra):
There is no question that the United States of America, like any other state, will be deemed to have
impliedly waived its non-suability if it has entered into a contract in its proprietary or private capacity. It is
only when the contract involves its sovereign or governmental capacity that no such waiver may be
implied.
In the case at bench, if petitioner has bought and sold lands in the ordinary course of a real estate business, surely the
said transaction can be categorized as an act jure gestionis. However, petitioner has denied that the acquisition and
subsequent disposal of Lot 5-A were made for profit but claimed that it acquired said property for the site of its mission or
the Apostolic Nunciature in the Philippines. Private respondent failed to dispute said claim.
Lot 5-A was acquired by petitioner as a donation from the Archdiocese of Manila. The donation was made not for
commercial purpose, but for the use of petitioner to construct thereon the official place of residence of the Papal Nuncio.
The right of a foreign sovereign to acquire property, real or personal, in a receiving state, necessary for the creation and
maintenance of its diplomatic mission, is recognized in the 1961 Vienna Convention on Diplomatic Relations (Arts. 20-22).
This treaty was concurred in by the Philippine Senate and entered into force in the Philippines on November 15, 1965.
In Article 31(a) of the Convention, a diplomatic envoy is granted immunity from the civil and administrative jurisdiction of
the receiving state over any real action relating to private immovable property situated in the territory of the receiving state
which the envoy holds on behalf of the sending state for the purposes of the mission. If this immunity is provided for a
diplomatic envoy, with all the more reason should immunity be recognized as regards the sovereign itself, which in this
case is the Holy See.
The decision to transfer the property and the subsequent disposal thereof are likewise clothed with a governmental
character. Petitioner did not sell Lot
5-A for profit or gain. It merely wanted to dispose off the same because the squatters living thereon made it almost
impossible for petitioner to use it for the purpose of the donation. The fact that squatters have occupied and are still
occupying the lot, and that they stubbornly refuse to leave the premises, has been admitted by private respondent in its
complaint (Rollo, pp. 26, 27).
The issue of petitioner's non-suability can be determined by the trial court without going to trial in the light of the pleadings,
particularly the admission of private respondent. Besides, the privilege of sovereign immunity in this case was sufficiently

established by the Memorandum and Certification of the Department of Foreign Affairs. As the department tasked with the
conduct of the Philippines' foreign relations (Administrative Code of 1987, Book IV, Title I, Sec. 3), the Department of
Foreign Affairs has formally intervened in this case and officially certified that the Embassy of the Holy See is a duly
accredited diplomatic mission to the Republic of the Philippines exempt from local jurisdiction and entitled to all the rights,
privileges and immunities of a diplomatic mission or embassy in this country (Rollo, pp. 156-157). The determination of the
executive arm of government that a state or instrumentality is entitled to sovereign or diplomatic immunity is a political
question that is conclusive upon the courts (International Catholic Migration Commission v. Calleja, 190 SCRA 130
[1990]). Where the plea of immunity is recognized and affirmed by the executive branch, it is the duty of the courts to
accept this claim so as not to embarrass the executive arm of the government in conducting the country's foreign relations
(World Health Organization v. Aquino, 48 SCRA 242 [1972]). As in International Catholic Migration Commission and
in World Health Organization, we abide by the certification of the Department of Foreign Affairs.
Ordinarily, the procedure would be to remand the case and order the trial court to conduct a hearing to establish the facts
alleged by petitioner in its motion. In view of said certification, such procedure would however be pointless and unduly
circuitous (Ortigas & Co. Ltd. Partnership v. Judge Tirso Velasco, G.R. No. 109645, July 25, 1994).
IV
Private respondent is not left without any legal remedy for the redress of its grievances. Under both Public International
Law and Transnational Law, a person who feels aggrieved by the acts of a foreign sovereign can ask his own government
to espouse his cause through diplomatic channels.
Private respondent can ask the Philippine government, through the Foreign Office, to espouse its claims against the Holy
See. Its first task is to persuade the Philippine government to take up with the Holy See the validity of its claims. Of
course, the Foreign Office shall first make a determination of the impact of its espousal on the relations between the
Philippine government and the Holy See (Young, Remedies of Private Claimants Against Foreign States, Selected
Readings on Protection by Law of Private Foreign Investments 905, 919 [1964]). Once the Philippine government decides
to espouse the claim, the latter ceases to be a private cause.
According to the Permanent Court of International Justice, the forerunner of the International Court of Justice:
By taking up the case of one of its subjects and by reporting to diplomatic action or international judicial
proceedings on his behalf, a State is in reality asserting its own rights its right to ensure, in the person
of its subjects, respect for the rules of international law (The Mavrommatis Palestine Concessions, 1
Hudson, World Court Reports 293, 302 [1924]).
WHEREFORE, the petition for certiorari is GRANTED and the complaint in Civil Case No. 90-183 against petitioner is
DISMISSED.
SO ORDERED

CNMEG VS. SANTAMARIA

DECISION
SERENO, J.:
This is a Petition for Review on Certiorari with Prayer for the Issuance of a Temporary Restraining Order (TRO)
and/or Preliminary Injunction assailing the 30 September 2008 Decision and 5 December 2008 Resolution of the
Court of Appeals (CA) in CAG.R. SP No. 103351. [1]
On 14 September 2002, petitioner China National Machinery & Equipment Corp. (Group) (CNMEG), represented by its
chairperson, Ren Hongbin, entered into a Memorandum of Understanding with the North Luzon Railways Corporation
(Northrail), represented by its president, Jose L. Cortes, Jr. for the conduct of a feasibility study on a possible railway line
from Manila to San Fernando, La Union (the Northrail Project). [2]
On 30 August 2003, the Export Import Bank of China (EXIM Bank) and the Department of Finance of the
Philippines (DOF) entered into a Memorandum of Understanding (Aug 30 MOU), wherein China agreed to extend
Preferential Buyers Credit to the Philippine government to finance the Northrail Project. [3] The Chinese government
designated EXIM Bank as the lender, while the Philippine government named the DOF as the borrower. [4] Under the Aug
30 MOU, EXIM Bank agreed to extend an amount not exceeding USD 400,000,000 in favor of the DOF, payable in 20
years, with a 5-year grace period, and at the rate of 3% per annum. [5]
On 1 October 2003, the Chinese Ambassador to the Philippines, Wang Chungui (Amb. Wang), wrote a letter to DOF
Secretary Jose Isidro Camacho (Sec. Camacho) informing him of CNMEGs designation as the Prime Contractor for the
Northrail Project.[6]
On 30 December 2003, Northrail and CNMEG executed a Contract Agreement for the construction of Section I, Phase I of
the North Luzon Railway System from Caloocan to Malolos on a turnkey basis (the Contract Agreement). [7] The contract
price for the Northrail Project was pegged at USD 421,050,000. [8]
On 26 February 2004, the Philippine government and EXIM Bank entered into a counterpart financial agreement
Buyer Credit Loan Agreement No. BLA 04055 (the Loan Agreement). [9] In the Loan Agreement, EXIM Bank agreed to
extend Preferential Buyers Credit in the amount of USD 400,000,000 in favor of the Philippine government in order to
finance the construction of Phase I of the Northrail Project. [10]
On 13 February 2006, respondents filed a Complaint for Annulment of Contract and Injunction with Urgent Motion
for Summary Hearing to Determine the Existence of Facts and Circumstances Justifying the Issuance of Writs of
Preliminary Prohibitory and Mandatory Injunction and/or TRO against CNMEG, the Office of the Executive Secretary, the
DOF, the Department of Budget and Management, the National Economic Development Authority and Northrail. [11] The
case was docketed as Civil Case No. 06-203 before the Regional Trial Court, National Capital Judicial Region, Makati
City, Branch 145 (RTC Br. 145). In the Complaint, respondents alleged that the Contract Agreement and the Loan
Agreement were void for being contrary to (a) the Constitution; (b) Republic Act No. 9184 (R.A. No. 9184), otherwise
known as the Government Procurement Reform Act; (c) Presidential Decree No. 1445, otherwise known as the
Government Auditing Code; and (d) Executive Order No. 292, otherwise known as the Administrative Code. [12]
RTC Br. 145 issued an Order dated 17 March 2006 setting the case for hearing on the issuance of injunctive
reliefs.[13] On 29 March 2006, CNMEG filed an Urgent Motion for Reconsideration of this Order. [14] Before RTC Br. 145
could rule thereon, CNMEG filed a Motion to Dismiss dated 12 April 2006, arguing that the trial court did not have

jurisdiction over (a) its person, as it was an agent of the Chinese government, making it immune from suit, and (b) the
subject matter, as the Northrail Project was a product of an executive agreement. [15]
On 15 May 2007, RTC Br. 145 issued an Omnibus Order denying CNMEGs Motion to Dismiss and setting the
case for summary hearing to determine whether the injunctive reliefs prayed for should be issued. [16] CNMEG then filed a
Motion for Reconsideration,[17] which was denied by the trial court in an Order dated 10 March 2008. [18] Thus, CNMEG filed
before the CA a Petition for Certiorari with Prayer for the Issuance of TRO and/or Writ of Preliminary Injunction dated 4
April 2008.[19]
In the assailed Decision dated 30 September 2008, the appellate court dismissed the Petition for Certiorari.
Subsequently, CNMEG filed a Motion for Reconsideration, [21] which was denied by the CA in a Resolution dated 5
December 2008.[22] Thus, CNMEG filed the instant Petition for Review on Certiorari dated 21 January 2009, raising the
following issues: [23]
[20]

Whether or not petitioner CNMEG is an agent of the sovereign Peoples Republic of China.
Whether or not the Northrail contracts are products of an executive agreement between two
sovereign states.
Whether or not the certification from the Department of Foreign Affairs is necessary under the
foregoing circumstances.
Whether or not the act being undertaken by petitioner CNMEG is an act jure imperii.
Whether or not the Court of Appeals failed to avoid a procedural limbo in the lower court.
Whether or not the Northrail Project is subject to competitive public bidding.
Whether or not the Court of Appeals ignored the ruling of this Honorable Court in the Neri
case.
CNMEG prays for the dismissal of Civil Case No. 06-203 before RTC Br. 145 for lack of jurisdiction. It likewise
requests this Court for the issuance of a TRO and, later on, a writ of preliminary injunction to restrain public respondent from
proceeding with the disposition of Civil Case No. 06-203.
The crux of this case boils down to two main issues, namely:
1.
2.

Whether CNMEG is entitled to immunity, precluding it from being sued before a local court.
Whether the Contract Agreement is an executive agreement, such that it cannot be questioned by or
before a local court.

First issue: Whether CNMEG is entitled to immunity

This Court explained the doctrine of sovereign immunity in Holy See v. Rosario,[24] to wit:
There are two conflicting concepts of sovereign immunity, each widely held and firmly established.
According to the classical or absolute theory, a sovereign cannot, without its consent, be made a
respondent in the courts of another sovereign. According to the newer or restrictive theory, the
immunity of the sovereign is recognized only with regard to public acts or acts jure imperii of a
state, but not with regard to private acts or acts jure gestionis. (Emphasis supplied; citations
omitted.)
xxx xxx xxx
The restrictive theory came about because of the entry of sovereign states into purely commercial
activities remotely connected with the discharge of governmental functions. This is particularly true with
respect to the Communist states which took control of nationalized business activities and international
trading.

In JUSMAG v. National Labor Relations Commission,[25] this Court affirmed the Philippines adherence to the
restrictive theory as follows:
The doctrine of state immunity from suit has undergone further metamorphosis. The view evolved
that the existence of a contract does not, per se, mean that sovereign states may, at all times, be sued in
local courts. The complexity of relationships between sovereign states, brought about by their increasing
commercial activities, mothered a more restrictive application of the doctrine.
xxx xxx xxx
As it stands now, the application of the doctrine of immunity from suit has
been restricted to sovereign or governmental
activities (jure
imperii). The
mantle
of
state
immunity cannot be extended to commercial, private and proprietary acts (jure gestionis).[26] (Emphasis
supplied.)
Since the Philippines adheres to the restrictive theory, it is crucial to ascertain the legal nature of the act involved
whether the entity claiming immunity performs governmental, as opposed to proprietary, functions. As held in United States
of America v. Ruiz [27]
The restrictive application of State immunity is proper only when the proceedings arise out of
commercial transactions of the foreign sovereign, its commercial activities or economic affairs. Stated
differently, a State may be said to have descended to the level of an individual and can thus be deemed
to have tacitly given its consent to be sued only when it enters into business contracts. It does not apply
where the contract relates to the exercise of its sovereign functions. [28]

A.

CNMEG is engaged in a proprietary activity.

A threshold question that must be answered is whether CNMEG performs governmental or proprietary functions. A
thorough examination of the basic facts of the case would show that CNMEG is engaged in a proprietary activity.
The parties executed the Contract Agreement for the purpose of constructing the Luzon Railways, viz:[29]
WHEREAS the Employer (Northrail) desired to construct the railways form Caloocan to Malolos,
section I, Phase I of Philippine North Luzon Railways Project (hereinafter referred to as THE PROJECT);
AND WHEREAS the Contractor has offered to provide the Project on Turnkey basis, including
design, manufacturing, supply, construction, commissioning, and training of the Employers personnel;
AND WHEREAS the Loan Agreement of the Preferential Buyers Credit between Export-Import Bank
of China and Department of Finance of Republic of the Philippines;
NOW, THEREFORE, the parties agree to sign this Contract for the Implementation of the Project.
The above-cited portion of the Contract Agreement, however, does not on its own reveal whether the construction
of the Luzon railways was meant to be a proprietary endeavor. In order to fully understand the intention behind and the
purpose of the entire undertaking, the Contract Agreement must not be read in isolation. Instead, it must be construed in
conjunction with three other documents executed in relation to the Northrail Project, namely: (a) the Memorandum of
Understanding dated 14 September 2002 between Northrail and CNMEG; [30] (b) the letter of Amb. Wang dated 1 October
2003 addressed to Sec. Camacho;[31] and (c) the Loan Agreement.[32]
1.

Memorandum of Understanding dated 14 September 2002

The Memorandum of Understanding dated 14 September 2002 shows that CNMEG sought the construction of the
Luzon Railways as a proprietary venture. The relevant parts thereof read:

WHEREAS, CNMEG has the financial capability, professional competence and technical
expertise to assess the state of the [Main Line North (MLN)] and recommend implementation plans as
well as undertake its rehabilitation and/or modernization;
WHEREAS, CNMEG has expressed interest in the rehabilitation and/or modernization of
the MLN from Metro Manila to San Fernando, La Union passing through the provinces of Bulacan,
Pampanga, Tarlac, Pangasinan and La Union (the Project);
WHEREAS, the NORTHRAIL CORP. welcomes CNMEGs proposal to undertake a Feasibility
Study (the Study) at no cost to NORTHRAIL CORP.;
WHEREAS, the NORTHRAIL CORP. also welcomes CNMEGs interest in undertaking the
Project with Suppliers Credit and intends to employ CNMEG as the Contractor for the Project
subject to compliance with Philippine and Chinese laws, rules and regulations for the selection
of a contractor;
WHEREAS, the NORTHRAIL CORP. considers CNMEGs proposal advantageous to the
Government of the Republic of the Philippines and has therefore agreed to assist CNMEG in the
conduct of the aforesaid Study;
xxx xxx xxx
II. APPROVAL PROCESS
2.1

As soon as possible after completion and presentation of the Study in accordance with
Paragraphs 1.3 and 1.4 above and in compliance with necessary governmental laws, rules,
regulations and procedures required from both parties, the parties shall commence the
preparation and negotiation of the terms and conditions of the Contract (the Contract) to be
entered into between them on the implementation of the Project. The parties shall use their
best endeavors to formulate and finalize a Contract with a view to signing the Contract
within one hundred twenty (120) days from CNMEGs presentation of the Study.
[33]
(Emphasis supplied)

Clearly, it was CNMEG that initiated the undertaking, and not the Chinese government. The Feasibility Study was
conducted not because of any diplomatic gratuity from or exercise of sovereign functions by the Chinese government, but
was plainly a business strategy employed by CNMEG with a view to securing this commercial enterprise.

2.

Letter dated 1 October 2003

That CNMEG, and not the Chinese government, initiated the Northrail Project was confirmed by Amb. Wang in his
letter dated 1 October 2003, thus:
1.
CNMEG has the proven competence and capability to undertake the Project as
evidenced by the ranking of 42 given by the ENR among 225 global construction companies.
2.
CNMEG already signed an MOU with the North Luzon Railways Corporation last
September 14, 2000 during the visit of Chairman Li Peng. Such being the case, they have already
established an initial working relationship with your North Luzon Railways Corporation. This would
categorize CNMEG as the state corporation within the Peoples Republic of China which
initiated our Governments involvement in the Project.
3.
Among the various state corporations of the Peoples Republic of China, only
CNMEG has the advantage of being fully familiar with the current requirements of the Northrail Project
having already accomplished a Feasibility Study which was used as inputs by the North Luzon
Railways Corporation in the approvals (sic) process required by the Republic of thePhilippines.
[34]
(Emphasis supplied.)

Thus, the desire of CNMEG to secure the Northrail Project was in the ordinary or regular course of its business as
a global construction company. The implementation of the Northrail Project was intended to generate profit for CNMEG, with
the Contract Agreement placing a contract price of USD 421,050,000 for the venture.[35] The use of the term state
corporation to refer to CNMEG was only descriptive of its nature as a government-owned and/or -controlled corporation,
and its assignment as the Primary Contractor did not imply that it was acting on behalf of China in the performance of the
latters sovereign functions. To imply otherwise would result in an absurd situation, in which all Chinese corporations
owned by the state would be automatically considered as performing governmental activities, even if they are clearly
engaged in commercial or proprietary pursuits.

3.

The Loan Agreement

CNMEG claims immunity on the ground that the Aug 30 MOU on the financing of the Northrail Project was signed by
the Philippine and Chinese governments, and its assignment as the Primary Contractor meant that it was bound to perform a
governmental function on behalf of China. However, the Loan Agreement, which originated from the same Aug 30 MOU,
belies this reasoning, viz:
Article 11. xxx (j) Commercial Activity The execution and delivery of this Agreement by the Borrower
constitute, and the Borrowers performance of and compliance with its obligations under this Agreement will
constitute, private and commercial acts done and performed for commercial purposes under the laws
of the Republic of the Philippines and neither the Borrower nor any of its assets is entitled to any
immunity or privilege (sovereign or otherwise) from suit, execution or any other legal process with
respect to its obligations under this Agreement, as the case may be, in any
jurisdiction. Notwithstanding the foregoing, the Borrower does not waive any immunity with respect of its
assets which are (i) used by a diplomatic or consular mission of the Borrower and (ii) assets of a military
character and under control of a military authority or defense agency and (iii) located in the Philippines and
dedicated to public or governmental use (as distinguished from patrimonial assets or assets dedicated to
commercial use). (Emphasis supplied.)
(k) Proceedings to Enforce Agreement In any proceeding in the Republic of the Philippines to
enforce this Agreement, the choice of the laws of the Peoples Republic of China as the governing law
hereof will be recognized and such law will be applied. The waiver of immunity by the Borrower, the
irrevocable submissions of the Borrower to the non-exclusive jurisdiction of the courts of the Peoples
Republic of China and the appointment of the Borrowers Chinese Process Agent is legal, valid, binding and
enforceable and any judgment obtained in the Peoples Republic of China will be if introduced, evidence for
enforcement in any proceedings against the Borrower and its assets in the Republic of the Philippines
provided that (a) the court rendering judgment had jurisdiction over the subject matter of the action in
accordance with its jurisdictional rules, (b) the Republic had notice of the proceedings, (c) the judgment of
the court was not obtained through collusion or fraud, and (d) such judgment was not based on a clear
mistake of fact or law.[36]
Further, the Loan Agreement likewise contains this express waiver of immunity:
15.5 Waiver of Immunity The Borrower irrevocably and unconditionally waives, any immunity to
which it or its property may at any time be or become entitled, whether characterized as sovereign immunity
or otherwise, from any suit, judgment, service of process upon it or any agent, execution on judgment, setoff, attachment prior to judgment, attachment in aid of execution to which it or its assets may be entitled in
any legal action or proceedings with respect to this Agreement or any of the transactions contemplated
hereby or hereunder. Notwithstanding the foregoing, the Borrower does not waive any immunity in respect
of its assets which are (i) used by a diplomatic or consular mission of the Borrower, (ii) assets of a military
character and under control of a military authority or defense agency and (iii) located in the Philippines and
dedicated to a public or governmental use (as distinguished from patrimonial assets or assets dedicated to
commercial use).[37]

Thus, despite petitioners claim that the EXIM Bank extended financial assistance to Northrail because the bank was
mandated by the Chinese government, and not because of any motivation to do business in the Philippines, [38] it is clear from
the foregoing provisions that the Northrail Project was a purely commercial transaction.
Admittedly, the Loan Agreement was entered into between EXIM Bank and the Philippine government, while the
Contract Agreement was between Northrail and CNMEG. Although the Contract Agreement is silent on the classification of
the legal nature of the transaction, the foregoing provisions of the Loan Agreement, which is an inextricable part of the entire
undertaking, nonetheless reveal the intention of the parties to the Northrail Project to classify the whole venture as
commercial or proprietary in character.
Thus, piecing together the content and tenor of the Contract Agreement, the Memorandum of Understanding
dated 14 September 2002, Amb. Wangs letter dated 1 October 2003, and the Loan Agreement would reveal the desire of
CNMEG to construct the Luzon Railways in pursuit of a purely commercial activity performed in the ordinary course of its
business.
B.
CNMEG failed to adduce evidence that it is immune from
suit under Chinese law.
Even assuming arguendo that CNMEG performs governmental functions, such claim does not automatically vest it
with immunity. This view finds support in Malong v. Philippine National Railways, in which this Court held that (i)mmunity from
suit is determined by the character of the objects for which the entity was organized.[39]
In this regard, this Courts ruling in Deutsche Gesellschaft Fr Technische Zusammenarbeit (GTZ) v. CA [40] must be
examined. In Deutsche Gesellschaft, Germany and thePhilippines entered into a Technical Cooperation Agreement,
pursuant to which both signed an arrangement promoting the Social Health InsuranceNetworking and Empowerment
(SHINE) project. The two governments named their respective implementing organizations: the Department of Health (DOH)
and the Philippine Health Insurance Corporation (PHIC) for the Philippines, and GTZ for the implementation of Germanys
contributions. In ruling that GTZ was not immune from suit, this Court held:
The arguments raised by GTZ and the [Office of the Solicitor General (OSG)] are rooted in
several indisputable facts. The SHINE project was implemented pursuant to the bilateral agreements
between the Philippine and German governments. GTZ was tasked, under the 1991 agreement,
with the implementation of the contributions of the German government. The activities performed
by GTZ pertaining to the SHINE project are governmental in nature, related as they are to the
promotion of health insurance in the Philippines. The fact that GTZ entered into employment contracts
with the private respondents did not disqualify it from invoking immunity from suit, as held in cases such
as Holy See v. Rosario, Jr., which set forth what remains valid doctrine:
Certainly, the mere entering into a contract by a foreign state with a private party
cannot be the ultimate test. Such an act can only be the start of the inquiry. The logical
question is whether the foreign state is engaged in the activity in the regular course of
business. If the foreign state is not engaged regularly in a business or trade, the
particular act or transaction must then be tested by its nature. If the act is in pursuit of a
sovereign activity, or an incident thereof, then it is an act jure imperii, especially when it is
not undertaken for gain or profit.
Beyond dispute is the tenability of the comment points (sic) raised by GTZ and the OSG that GTZ
was not performing proprietary functions notwithstanding its entry into the particular employment
contracts. Yet there is an equally fundamental premise which GTZ and the OSG fail to address, namely: Is
GTZ, by conception, able to enjoy the Federal Republics immunity from suit?
The principle of state immunity from suit, whether a local state or a foreign state, is reflected in
Section 9, Article XVI of the Constitution, which states that the State may not be sued without its consent.
Who or what consists of the State? For one, the doctrine is available to foreign States insofar as they are
sought to be sued in the courts of the local State, necessary as it is to avoid unduly vexing the peace of
nations.
If the instant suit had been brought directly against the Federal Republic of Germany, there would
be no doubt that it is a suit brought against a State, and the only necessary inquiry is whether said State

had consented to be sued. However, the present suit was brought against GTZ. It is necessary for us to
understand what precisely are the parameters of the legal personality of GTZ.
Counsel for GTZ characterizes GTZ as the implementing agency of the Government of the
Federal Republic of Germany, a depiction similarly adopted by the OSG. Assuming that the
characterization is correct, it does not automatically invest GTZ with the ability to invoke State
immunity from suit. The distinction lies in whether the agency is incorporated or unincorporated.
xxx xxx xxx
State immunity from suit may be waived by general or special law. The special law can take the
form of the original charter of the incorporated government agency. Jurisprudence is replete with
examples of incorporated government agencies which were ruled not entitled to invoke immunity from
suit, owing to provisions in their charters manifesting their consent to be sued.
xxx xxx xxx
It is useful to note that on the part of the Philippine government, it had designated two entities, the
Department of Health and the Philippine Health Insurance Corporation (PHIC), as the implementing agencies
in behalf of the Philippines. The PHIC was established under Republic Act No. 7875, Section 16 (g) of which
grants the corporation the power to sue and be sued in court. Applying the previously cited jurisprudence,
PHIC would not enjoy immunity from suit even in the performance of its functions connected with SHINE,
however, (sic) governmental in nature as (sic) they may be.
Is GTZ an incorporated agency of the German government? There is some mystery
surrounding that question. Neither GTZ nor the OSG go beyond the claim that petitioner is the
implementing agency of the Government of the Federal Republic of Germany. On the other hand,
private respondents asserted before the Labor Arbiter that GTZ was a private corporation engaged in the
implementation of development projects. The Labor Arbiter accepted that claim in his Order denying the
Motion to Dismiss, though he was silent on that point in his Decision. Nevertheless, private respondents
argue in their Comment that the finding that GTZ was a private corporation was never controverted, and
is therefore deemed admitted. In its Reply, GTZ controverts that finding, saying that it is a matter of
public knowledge that the status of petitioner GTZ is that of the implementing agency, and not that of a
private corporation.
In truth, private respondents were unable to adduce any evidence to substantiate their claim that
GTZ was a private corporation, and the Labor Arbiter acted rashly in accepting such claim without
explanation. But neither has GTZ supplied any evidence defining its legal nature beyond that of the
bare descriptive implementing agency. There is no doubt that the 1991 Agreement designated GTZ
as the implementing agency in behalf of the German government. Yet the catch is that such term
has no precise definition that is responsive to our concerns. Inherently, an agent acts in behalf of a
principal, and the GTZ can be said to act in behalf of the German state. But that is as far as
implementing agency could take us. The term by itself does not supply whether GTZ is
incorporated or unincorporated, whether it is owned by the German state or by private interests,
whether it has juridical personality independent of the German government or none at all.
xxx xxx xxx
Again, we are uncertain of the corresponding legal implications under German law
surrounding a private company owned by the Federal Republic of Germany. Yet taking the
description on face value, the apparent equivalent under Philippine law is that of a corporation
organized under the Corporation Code but owned by the Philippine government, or a governmentowned or controlled corporation without original charter. And it bears notice that Section 36 of the
Corporate Code states that [e]very corporation incorporated under this Code has the power and
capacity x x x to sue and be sued in its corporate name.
It is entirely possible that under German law, an entity such as GTZ or particularly GTZ itself has
not been vested or has been specifically deprived the power and capacity to sue and/or be sued. Yet in the
proceedings below and before this Court, GTZ has failed to establish that under German law, it has not
consented to be sued despite it being owned by the Federal Republic of Germany. We adhere to the
rule that in the absence of evidence to the contrary, foreign laws on a particular subject are
presumed to be the same as those of the Philippines, and following the most intelligent

assumption we can gather, GTZ is akin to a governmental owned or controlled corporation without
original charter which, by virtue of the Corporation Code, has expressly consented to be sued. At
the very least, like the Labor Arbiter and the Court of Appeals, this Court has no basis in fact to conclude or
presume that GTZ enjoys immunity from suit.[41] (Emphasis supplied.)
Applying the foregoing ruling to the case at bar, it is readily apparent that CNMEG cannot claim immunity from suit,
even if it contends that it performs governmental functions. Its designation as the Primary Contractor does not automatically
grant it immunity, just as the term implementing agency has no precise definition for purposes of ascertaining whether GTZ
was immune from suit. Although CNMEG claims to be a government-owned corporation, it failed to adduce evidence that it
has not consented to be sued under Chinese law. Thus, following this Courts ruling in Deutsche Gesellschaft, in the absence
of evidence to the contrary, CNMEG is to be presumed to be a government-owned and -controlled corporation without an
original charter. As a result, it has the capacity to sue and be sued under Section 36 of the Corporation Code.
C.
CNMEG failed to present a certification from the
Department of Foreign Affairs.
In Holy See,[42] this Court reiterated the oft-cited doctrine that the determination by the Executive that an entity is
entitled to sovereign or diplomatic immunity is a political question conclusive upon the courts, to wit:
In Public International Law, when a state or international agency wishes to plead sovereign or
diplomatic immunity in a foreign court, it requests the Foreign Office of the state where it is sued to
convey to the court that said defendant is entitled to immunity.
xxx xxx xxx
In the Philippines, the practice is for the foreign government or the international
organization to first secure an executive endorsement of its claim of sovereign or diplomatic
immunity. But how the Philippine Foreign Office conveys its endorsement to the courts varies.
In International Catholic Migration Commission v. Calleja, 190 SCRA 130 (1990), the Secretary of Foreign
Affairs just sent a letter directly to the Secretary of Labor and Employment, informing the latter that the
respondent-employer could not be sued because it enjoyed diplomatic immunity. In World Health
Organization v. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a
telegram to that effect. In Baer v. Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked the Secretary of
Foreign Affairs to request the Solicitor General to make, in behalf of the Commander of the United States
Naval Base at Olongapo City, Zambales, a suggestion to respondent Judge. The Solicitor General
embodied the suggestion in a Manifestation and Memorandum as amicus curiae.
In the case at bench, the Department of Foreign Affairs, through the Office of Legal Affairs moved
with this Court to be allowed to intervene on the side of petitioner. The Court allowed the said Department
to file its memorandum in support of petitioners claim of sovereign immunity.
In some cases, the defense of sovereign immunity was submitted directly to the local courts by
the respondents through their private counsels (Raquiza v. Bradford, 75 Phil. 50 [1945]; Miquiabas v.
Philippine-Ryukyus Command, 80 Phil. 262 [1948]; United States of America v. Guinto, 182 SCRA 644
[1990] and companion cases). In cases where the foreign states bypass the Foreign Office, the courts
can inquire into the facts and make their own determination as to the nature of the acts and transactions
involved.[43] (Emphasis supplied.)
The question now is whether any agency of the Executive Branch can make a determination of immunity from suit, which
may be considered as conclusive upon the courts. This Court, in Department of Foreign Affairs (DFA) v. National Labor Relations
Commission (NLRC),[44] emphasized the DFAs competence and authority to provide such necessary determination, to wit:
The DFAs function includes, among its other mandates, the determination of persons and
institutions covered by diplomatic immunities, a determination which, when challenge, (sic)
entitles it to seek relief from the court so as not to seriously impair the conduct of the country's
foreign relations. The DFA must be allowed to plead its case whenever necessary or advisable to enable
it to help keep the credibility of the Philippine government before the international community. When
international agreements are concluded, the parties thereto are deemed to have likewise accepted

the responsibility of seeing to it that their agreements are duly regarded. In our country, this task
falls principally of (sic) the DFA as being the highest executive department with the competence
and authority to so act in this aspect of the international arena. [45] (Emphasis supplied.)
Further, the fact that this authority is exclusive to the DFA was also emphasized in this Courts ruling in Deutsche
Gesellschaft:
It is to be recalled that the Labor Arbiter, in both of his rulings, noted that it was imperative for
petitioners to secure from the Department of Foreign Affairs a certification of respondents diplomatic status
and entitlement to diplomatic privileges including immunity from suits. The requirement might not
necessarily be imperative. However, had GTZ obtained such certification from the DFA, it would have
provided factual basis for its claim of immunity that would, at the very least, establish a disputable
evidentiary presumption that the foreign party is indeed immune which the opposing party will
have to overcome with its own factual evidence. We do not see why GTZ could not have secured
such certification or endorsement from the DFA for purposes of this case. Certainly, it would have
been highly prudential for GTZ to obtain the same after the Labor Arbiter had denied the motion to dismiss.
Still, even at this juncture,we do not see any evidence that the DFA, the office of the executive branch
in charge of our diplomatic relations, has indeed endorsed GTZs claim of immunity. It may be
possible that GTZ tried, but failed to secure such certification, due to the same concerns that we have
discussed herein.
Would the fact that the Solicitor General has endorsed GTZs claim of States immunity
from suit before this Court sufficiently substitute for the DFA certification? Note that the rule in
public international law quoted in Holy See referred to endorsement by the Foreign Office of the
State where the suit is filed, such foreign office in the Philippines being the Department of
Foreign Affairs. Nowhere in the Comment of the OSG is it manifested that the DFA has endorsed
GTZs claim, or that the OSG had solicited the DFAs views on the issue. The arguments raised by
the OSG are virtually the same as the arguments raised by GTZ without any indication of any special
and distinct perspective maintained by the Philippine government on the issue. The Comment filed by
the OSG does not inspire the same degree of confidence as a certification from the DFA would
have elicited.[46] (Emphasis supplied.)

In the case at bar, CNMEG offers the Certification executed by the Economic and Commercial Office of the Embassy
of the Peoples Republic of China, stating that the Northrail Project is in pursuit of a sovereign activity.[47] Surely, this is not the
kind of certification that can establish CNMEGs entitlement to immunity from suit, as Holy Seeunequivocally refers to the
determination of the Foreign Office of the state where it is sued.
Further, CNMEG also claims that its immunity from suit has the executive endorsement of both the OSG and the
Office of the Government Corporate Counsel (OGCC), which must be respected by the courts. However, as expressly
enunciated in Deutsche Gesellschaft, this determination by the OSG, or by the OGCC for that matter, does not inspire the
same degree of confidence as a DFA certification. Even with a DFA certification, however, it must be remembered that this
Court is not precluded from making an inquiry into the intrinsic correctness of such certification.
D.
An agreement to submit any dispute to arbitration may be
construed as an implicit waiver of immunity from suit.
In the United States, the Foreign Sovereign Immunities Act of 1976 provides for a waiver by implication of state
immunity. In the said law, the agreement to submit disputes to arbitration in a foreign country is construed as an implicit
waiver of immunity from suit. Although there is no similar law in the Philippines, there is reason to apply the legal reasoning
behind the waiver in this case.
The Conditions of Contract,[48] which is an integral part of the Contract Agreement,[49] states:
33. SETTLEMENT OF DISPUTES AND ARBITRATION
33.1. Amicable Settlement
Both parties shall attempt to amicably settle all disputes or controversies arising from this Contract
before the commencement of arbitration.

33.2. Arbitration
All disputes or controversies arising from this Contract which cannot be settled between the
Employer and the Contractor shall be submitted to arbitration in accordance with the UNCITRAL Arbitration
Rules at present in force and as may be amended by the rest of this Clause. The appointing authority shall
be Hong Kong International Arbitration Center. The place of arbitration shall be in Hong Kong at Hong Kong
International Arbitration Center (HKIAC).
Under the above provisions, if any dispute arises between Northrail and CNMEG, both parties are bound to submit
the matter to the HKIAC for arbitration. In case the HKIAC makes an arbitral award in favor of Northrail, its enforcement in
the Philippines would be subject to the Special Rules on Alternative Dispute Resolution (Special Rules). Rule 13 thereof
provides for the Recognition and Enforcement of a Foreign Arbitral Award. Under Rules 13.2 and 13.3 of the Special Rules,
the party to arbitration wishing to have an arbitral award recognized and enforced in the Philippines must petition the proper
regional trial court (a) where the assets to be attached or levied upon is located; (b) where the acts to be enjoined are being
performed; (c) in the principal place of business in the Philippines of any of the parties; (d) if any of the parties is an
individual, where any of those individuals resides; or (e) in the National Capital Judicial Region.
From all the foregoing, it is clear that CNMEG has agreed that it will not be afforded immunity from suit. Thus, the
courts have the competence and jurisdiction to ascertain the validity of the Contract Agreement.
Second issue: Whether the Contract Agreement is an executive
agreement
Article 2(1) of the Vienna Convention on the Law of Treaties (Vienna Convention) defines a treaty as follows:
[A]n international agreement concluded between States in written form and governed by
international law, whether embodied in a single instrument or in two or more related instruments and
whatever its particular designation.
In Bayan Muna v. Romulo, this Court held that an executive agreement is similar to a treaty, except that the former
(a) does not require legislative concurrence; (b) is usually less formal; and (c) deals with a narrower range of subject matters.
[50]

Despite these differences, to be considered an executive agreement, the following three requisites provided under
the Vienna Convention must nevertheless concur: (a) the agreement must be between states; (b) it must be written; and (c) it
must governed by international law. The first and the third requisites do not obtain in the case at bar.
A.

CNMEG is neither a government nor a government agency.

The Contract Agreement was not concluded between the Philippines and China, but between Northrail and CNMEG.
By the terms of the Contract Agreement, Northrail is a government-owned or -controlled corporation, while CNMEG is a
corporation duly organized and created under the laws of the Peoples Republic of China. [52] Thus, both Northrail and
CNMEG entered into the Contract Agreement as entities with personalities distinct and separate from the Philippine and
Chinese governments, respectively.
[51]

Neither can it be said that CNMEG acted as agent of the Chinese government. As previously discussed, the fact that
Amb. Wang, in his letter dated 1 October 2003,[53]described CNMEG as a state corporation and declared its designation as
the Primary Contractor in the Northrail Project did not mean it was to perform sovereign functions on behalf of China. That
label was only descriptive of its nature as a state-owned corporation, and did not preclude it from engaging in purely
commercial or proprietary ventures.
B.

The Contract Agreement is to be governed by Philippine law.

Article 2 of the Conditions of Contract,[54] which under Article 1.1 of the Contract Agreement is an integral part of the
latter, states:
APPLICABLE LAW AND GOVERNING LANGUAGE
The contract shall in all respects be read and construed in accordance with the laws of
the Philippines.
The contract shall be written in English language. All correspondence and other documents
pertaining to the Contract which are exchanged by the parties shall be written in English language.
Since the Contract Agreement explicitly provides that Philippine law shall be applicable, the parties have effectively
conceded that their rights and obligations thereunder are not governed by international law.
It is therefore clear from the foregoing reasons that the Contract Agreement does not partake of the nature of an
executive agreement. It is merely an ordinary commercial contract that can be questioned before the local courts.
WHEREFORE, the instant Petition is DENIED. Petitioner China National Machinery & Equipment Corp. (Group) is
not entitled to immunity from suit, and the Contract Agreement is not an executive agreement. CNMEGs prayer for the
issuance of a TRO and/or Writ of Preliminary Injunction is DENIED for being moot and academic. This case is
REMANDED to the Regional Trial Court of Makati, Branch 145, for further proceedings as regards the validity of the
contracts subject of Civil Case No. 06-203.
No pronouncement on costs of suit.
SO ORDERED.

The Case

This original action for the writs of certiorari and prohibition assails the constitutionality of Republic Act No. 9522 1 (RA
9522) adjusting the countrys archipelagic baselines and classifying the baseline regime of nearby territories.

The Antecedents

In 1961, Congress passed Republic Act No. 3046 (RA 3046)2 demarcating the maritime baselines of the Philippines as an
archipelagic State.3 This law followed the framing of the Convention on the Territorial Sea and the Contiguous Zone in
1958 (UNCLOS I),4 codifying, among others, the sovereign right of States parties over their territorial sea, the breadth of
which, however, was left undetermined. Attempts to fill this void during the second round of negotiations in Geneva in
1960 (UNCLOS II) proved futile. Thus, domestically, RA 3046 remained unchanged for nearly five decades, save for
legislation passed in 1968 (Republic Act No. 5446 [RA 5446]) correcting typographical errors and reserving the drawing of
baselines around Sabah in North Borneo.
In March 2009, Congress amended RA 3046 by enacting RA 9522, the statute now under scrutiny. The change was
prompted by the need to make RA 3046 compliant with the terms of the United Nations Convention on the Law of the Sea
(UNCLOS III),5 which the Philippines ratified on 27 February 1984. 6 Among others, UNCLOS III prescribes the water-land
ratio, length, and contour of baselines of archipelagic States like the Philippines 7 and sets the deadline for the filing of
application for the extended continental shelf.8 Complying with these requirements, RA 9522 shortened one baseline,
optimized the location of some basepoints around the Philippine archipelago and classified adjacent territories, namely,

the Kalayaan Island Group (KIG) and the Scarborough Shoal, as regimes of islands whose islands generate their own
applicable maritime zones.
Pettioners, professors of law, law students and a legislator, in their respective capacities as citizens, taxpayers or x x x
legislators,9 as the case may be, assail the constitutionality of RA 9522 on two principal grounds, namely: (1) RA 9522
reduces Philippine maritime territory, and logically, the reach of the Philippine states sovereign power, in violation of Article
1 of the 1987 Constitution,10 embodying the terms of the Treaty of Paris11 and ancillary treaties,12 and (2) RA 9522 opens
the countrys waters landward of the baselines to maritime passage by all vessels and aircrafts, undermining Philippine
sovereignty and national security, contravening the countrys nuclear-free policy, and damaging marine resources, in
violation of relevant constitutional provisions.13
In addition, petitioners contend that RA 9522s treatment of the KIG as regime of islands not only results in the loss of a
large maritime area but also prejudices the livelihood of subsistence fishermen. 14 To buttress their argument of territorial
diminution, petitioners facially attack RA 9522 for what it excluded and included its failure to reference either the Treaty of
Paris or Sabah and its use of UNCLOS IIIs framework of regime of islands to determine the maritime zones of the KIG
and the Scarborough Shoal.

Commenting on the petition, respondent officials raised threshold issues questioning (1) the petitions compliance with the
case or controversy requirement for judicial review grounded on petitioners alleged lack of locus standi and (2) the
propriety of the writs of certiorari and prohibition to assail the constitutionality of RA 9522. On the merits, respondents
defended RA 9522 as the countrys compliance with the terms of UNCLOS III, preserving Philippine territory over the KIG
or Scarborough Shoal. Respondents add that RA 9522 does not undermine the countrys security, environment and
economic interests or relinquish the Philippines claim over Sabah.
Respondents also question the normative force, under international law, of petitioners assertion that what Spain ceded to
the United States under the Treaty of Paris were the islands and all the waters found within the boundaries of the
rectangular area drawn under the Treaty of Paris.

We left unacted petitioners prayer for an injunctive writ.

The Issues

The petition raises the following issues:

1.

Preliminarily

1.

Whether petitioners possess locus standi to bring this suit; and

2.

Whether the writs of certiorari and prohibition are the proper remedies to assail the constitutionality of RA 9522.

2.

On the merits, whether RA 9522 is unconstitutional.

The Ruling of the Court

On the threshold issues, we hold that (1) petitioners possess locus standi to bring this suit as citizens and (2) the writs of
certiorari and prohibition are proper remedies to test the constitutionality of RA 9522. On the merits, we find no basis to
declare RA 9522 unconstitutional.

On the Threshold Issues

Petitioners Possess Locus

Standi as Citizens

Petitioners themselves undermine their assertion of locus standi as legislators and taxpayers because the petition alleges
neither infringement of legislative prerogative 15 nor misuse of public funds,16 occasioned by the passage and
implementation of RA 9522. Nonetheless, we recognize petitioners locus standi as citizens with constitutionally sufficient
interest in the resolution of the merits of the case which undoubtedly raises issues of national significance necessitating
urgent resolution. Indeed, owing to the peculiar nature of RA 9522, it is understandably difficult to find other litigants
possessing a more direct and specific interest to bring the suit, thus satisfying one of the requirements for granting
citizenship standing.17

The Writs of Certiorari and Prohibition

Are Proper Remedies to Test
the Constitutionality of Statutes

In praying for the dismissal of the petition on preliminary grounds, respondents seek a strict observance of the offices of
the writs of certiorari and prohibition, noting that the writs cannot issue absent any showing of grave abuse of discretion in
the exercise of judicial, quasi-judicial or ministerial powers on the part of respondents and resulting prejudice on the part
of petitioners.18

Respondents submission holds true in ordinary civil proceedings. When this Court exercises its constitutional power of
judicial review, however, we have, by tradition, viewed the writs of certiorari and prohibition as proper remedial vehicles to
test the constitutionality of statutes,19 and indeed, of acts of other branches of government.20 Issues of constitutional
import are sometimes crafted out of statutes which, while having no bearing on the personal interests of the petitioners,
carry such relevance in the life of this nation that the Court inevitably finds itself constrained to take cognizance of the
case and pass upon the issues raised, non-compliance with the letter of procedural rules notwithstanding. The statute
sought to be reviewed here is one such law.
RA 9522 is Not Unconstitutional
RA 9522 is a Statutory Tool to Demarcate the Countrys Maritime Zones and Continental Shelf Under UNCLOS III,
not to Delineate Philippine Territory

Petitioners submit that RA 9522 dismembers a large portion of the national territory 21 because it discards the pre-UNCLOS
III demarcation of Philippine territory under the Treaty of Paris and related treaties, successively encoded in the definition
of national territory under the 1935, 1973 and 1987 Constitutions. Petitioners theorize that this constitutional definition
trumps any treaty or statutory provision denying the Philippines sovereign control over waters, beyond the territorial sea
recognized at the time of the Treaty of Paris, that Spain supposedly ceded to the United States. Petitioners argue that
from the Treaty of Paris technical description, Philippine sovereignty over territorial waters extends hundreds of nautical
miles around the Philippine archipelago, embracing the rectangular area delineated in the Treaty of Paris. 22
Petitioners theory fails to persuade us.
UNCLOS III has nothing to do with the acquisition (or loss) of territory. It is a multilateral treaty regulating, among others,
sea-use rights over maritime zones (i.e., the territorial waters [12 nautical miles from the baselines], contiguous zone [24
nautical miles from the baselines], exclusive economic zone [200 nautical miles from the baselines]), and continental
shelves that UNCLOS III delimits.23 UNCLOS III was the culmination of decades-long negotiations among United Nations
members to codify norms regulating the conduct of States in the worlds oceans and submarine areas, recognizing coastal
and archipelagic States graduated authority over a limited span of waters and submarine lands along their coasts.

On the other hand, baselines laws such as RA 9522 are enacted by UNCLOS III States parties to mark-out
specific basepoints along their coasts from which baselines are drawn, either straight or contoured, to serve as
geographic starting points to measure the breadth of the maritime zones and continental shelf. Article 48 of UNCLOS III
on archipelagic States like ours could not be any clearer:
Article 48. Measurement of the breadth of the territorial sea, the contiguous zone, the exclusive
economic zone and the continental shelf. The breadth of the territorial sea, the contiguous zone, the
exclusive economic zone and the continental shelf shall be measured from archipelagic
baselines drawn in accordance with article 47. (Emphasis supplied)
Thus, baselines laws are nothing but statutory mechanisms for UNCLOS III States parties to delimit with precision
the extent of their maritime zones and continental shelves. In turn, this gives notice to the rest of the international
community of the scope of the maritime space and submarine areas within which States parties exercise treaty-based
rights, namely, the exercise of sovereignty over territorial waters (Article 2), the jurisdiction to enforce customs, fiscal,
immigration, and sanitation laws in the contiguous zone (Article 33), and the right to exploit the living and non-living
resources in the exclusive economic zone (Article 56) and continental shelf (Article 77).
Even under petitioners theory that the Philippine territory embraces the islands and all the waters within the
rectangular area delimited in the Treaty of Paris, the baselines of the Philippines would still have to be drawn in
accordance with RA 9522 because this is the only way to draw the baselines in conformity with UNCLOS III. The
baselines cannot be drawn from the boundaries or other portions of the rectangular area delineated in the Treaty of Paris,
but from the outermost islands and drying reefs of the archipelago. 24
UNCLOS III and its ancillary baselines laws play no role in the acquisition, enlargement or, as petitioners claim,
diminution of territory. Under traditional international law typology, States acquire (or conversely, lose) territory through
occupation, accretion, cession and prescription,25 not by executing multilateral treaties on the regulations of sea-use rights
or enacting statutes to comply with the treatys terms to delimit maritime zones and continental shelves. Territorial claims to
land features are outside UNCLOS III, and are instead governed by the rules on general international law. 26

RA 9522s Use of the Framework of Regime of Islands to Determine the Maritime Zones of the KIG and the
Scarborough Shoal, not Inconsistent with the Philippines Claim of Sovereignty Over these Areas
Petitioners next submit that RA 9522s use of UNCLOS IIIs regime of islands framework to draw the baselines, and to
measure the breadth of the applicable maritime zones of the KIG, weakens our territorial claim over that area. 27 Petitioners
add that the KIGs (and Scarborough Shoals) exclusion from the Philippine archipelagic baselines results in the loss of
about 15,000 square nautical miles of territorial waters, prejudicing the livelihood of subsistence fishermen. 28 A
comparison of the configuration of the baselines drawn under RA 3046 and RA 9522 and the extent of maritime space
encompassed by each law, coupled with a reading of the text of RA 9522 and its congressional deliberations, vis--vis the
Philippines obligations under UNCLOS III, belie this view.

The configuration of the baselines drawn under RA 3046 and RA 9522 shows that RA 9522 merely followed the
basepoints mapped by RA 3046, save for at least nine basepoints that RA 9522 skipped to optimize the location of
basepoints and adjust the length of one baseline (and thus comply with UNCLOS IIIs limitation on the maximum length of
baselines). Under RA 3046, as under RA 9522, the KIG and the Scarborough Shoal lie outside of the baselines drawn
around the Philippine archipelago. This undeniable cartographic fact takes the wind out of petitioners argument branding
RA 9522 as a statutory renunciation of the Philippines claim over the KIG, assuming that baselines are relevant for this
purpose.
Petitioners assertion of loss of about 15,000 square nautical miles of territorial waters under RA 9522 is similarly
unfounded both in fact and law. On the contrary, RA 9522, by optimizing the location of basepoints, increased the
Philippines total maritime space (covering its internal waters, territorial sea and exclusive economic zone) by 145,216
square nautical miles, as shown in the table below: 29

Internal or
archipelagic
waters

Territorial
Sea

Extent of maritime area using

RA 3046, as amended, taking
into account the Treaty of Paris
delimitation (in square nautical
miles)

Extent of maritime area

using RA 9522, taking
into account UNCLOS
III (in square nautical
miles)

166,858

171,435

274,136

32,106

Exclusive
Economic
Zone

TOTAL

382,669

440,994

586,210

Thus, as the map below shows, the reach of the exclusive economic zone drawn under RA 9522 even extends way
beyond the waters covered by the rectangular demarcation under the Treaty of Paris. Of course, where there are
overlapping exclusive economic zones of opposite or adjacent States, there will have to be a delineation of maritime
boundaries in accordance with UNCLOS III.30
Further, petitioners argument that the KIG now lies outside Philippine territory because the baselines that RA 9522 draws
do not enclose the KIG is negated by RA 9522 itself. Section 2 of the law commits to text the Philippines continued claim
of sovereignty and jurisdiction over the KIG and the Scarborough Shoal:
SEC. 2. The baselines in the following areas over which the Philippines likewise exercises
sovereignty and jurisdiction shall be determined as Regime of Islands under the Republic of the
Philippines consistent with Article 121 of the United Nations Convention on the Law of the Sea
(UNCLOS):
a) The Kalayaan Island Group as constituted under Presidential Decree No. 1596 and

b) Bajo de Masinloc, also known as Scarborough Shoal. (Emphasis supplied)

Had Congress in RA 9522 enclosed the KIG and the Scarborough Shoal as part of the Philippine archipelago, adverse
legal effects would have ensued. The Philippines would have committed a breach of two provisions of UNCLOS III. First,
Article 47 (3) of UNCLOS III requires that [t]he drawing of such baselines shall not depart to any appreciable extent from
the general configuration of the archipelago. Second, Article 47 (2) of UNCLOS III requires that the length of the baselines
shall not exceed 100 nautical miles, save for three per cent (3%) of the total number of baselines which can reach up to
125 nautical miles.31
Although the Philippines has consistently claimed sovereignty over the KIG 32 and the Scarborough Shoal for
several decades, these outlying areas are located at an appreciable distance from the nearest shoreline of the Philippine
archipelago,33 such that any straight baseline loped around them from the nearest basepoint will inevitably depart to an
appreciable extent from the general configuration of the archipelago.
The principal sponsor of RA 9522 in the Senate, Senator Miriam Defensor-Santiago, took pains to emphasize the
foregoing during the Senate deliberations:

What we call the Kalayaan Island Group or what the rest of the world call[] the Spratlys and the
Scarborough Shoal are outside our archipelagic baseline because if we put them inside our baselines we
might be accused of violating the provision of international law which states: The drawing of such
baseline shall not depart to any appreciable extent from the general configuration of the archipelago. So
sa loob ng ating baseline, dapat magkalapit ang mga islands. Dahil malayo ang Scarborough Shoal, hindi
natin masasabing malapit sila sa atin although we are still allowed by international law to claim them as
our own.
This is called contested islands outside our configuration. We see that our archipelago is defined by the
orange line which [we] call[] archipelagic baseline. Ngayon, tingnan ninyo ang maliit na circle doon sa
itaas, that is Scarborough Shoal, itong malaking circle sa ibaba, that is Kalayaan Group or the
Spratlys. Malayo na sila sa ating archipelago kaya kung ilihis pa natin ang dating archipelagic baselines
para lamang masama itong dalawang circles, hindi na sila magkalapit at baka hindi na tatanggapin ng
United Nations because of the rule that it should follow the natural configuration of the
archipelago.34 (Emphasis supplied)
Similarly, the length of one baseline that RA 3046 drew exceeded UNCLOS IIIs limits. The need to shorten this
baseline, and in addition, to optimize the location of basepoints using current maps, became imperative as discussed by
respondents:
[T]he amendment of the baselines law was necessary to enable the Philippines to draw the outer
limits of its maritime zones including the extended continental shelf in the manner provided by Article 47
of [UNCLOS III]. As defined by R.A. 3046, as amended by R.A. 5446, the baselines suffer from some
technical deficiencies, to wit:
1.

The length of the baseline across Moro Gulf (from Middle of 3 Rock Awash to Tongquil Point) is 140.06
nautical miles x x x. This exceeds the maximum length allowed under Article 47(2) of the [UNCLOS III],
which states that The length of such baselines shall not exceed 100 nautical miles, except that up to 3 per
cent of the total number of baselines enclosing any archipelago may exceed that length, up to a maximum
length of 125 nautical miles.

2.

The selection of basepoints is not optimal. At least 9 basepoints can be skipped or deleted from the
baselines system. This will enclose an additional 2,195 nautical miles of water.

3.

Finally, the basepoints were drawn from maps existing in 1968, and not established by geodetic survey
methods. Accordingly, some of the points, particularly along the west coasts of Luzon down to Palawan
were later found to be located either inland or on water, not on low-water line and drying reefs as
prescribed by Article 47.35

Hence, far from surrendering the Philippines claim over the KIG and the Scarborough Shoal, Congress decision to
classify the KIG and the Scarborough Shoal as Regime[s] of Islands under the Republic of the Philippines consistent with
Article 12136 of UNCLOS III manifests the Philippine States responsible observance of its pacta sunt servanda obligation

under UNCLOS III. Under Article 121 of UNCLOS III, any naturally formed area of land, surrounded by water, which is
above water at high tide, such as portions of the KIG, qualifies under the category of regime of islands, whose islands
generate their own applicable maritime zones.37
Statutory Claim Over Sabah under RA 5446 Retained
Petitioners argument for the invalidity of RA 9522 for its failure to textualize the Philippines claim over Sabah in North
Borneo is also untenable. Section 2 of RA 5446, which RA 9522 did not repeal, keeps open the door for drawing the
baselines of Sabah:
Section 2. The definition of the baselines of the territorial sea of the Philippine Archipelago as
provided in this Act is without prejudice to the delineation of the baselines of the territorial sea
around the territory of Sabah, situated in North Borneo, over which the Republic of the Philippines
has acquired dominion and sovereignty. (Emphasis supplied)
UNCLOS III and RA 9522 not Incompatible with the Constitutions Delineation of Internal Waters
As their final argument against the validity of RA 9522, petitioners contend that the law unconstitutionally converts internal
waters into archipelagic waters, hence subjecting these waters to the right of innocent and sea lanes passage under
UNCLOS III, including overflight. Petitioners extrapolate that these passage rights indubitably expose Philippine internal
waters to nuclear and maritime pollution hazards, in violation of the Constitution. 38

Whether referred to as Philippine internal waters under Article I of the Constitution 39 or as archipelagic waters under
UNCLOS III (Article 49 [1]), the Philippines exercises sovereignty over the body of water lying landward of the baselines,
including the air space over it and the submarine areas underneath. UNCLOS III affirms this:
Article 49. Legal status of archipelagic waters, of the air space over archipelagic waters and of
their bed and subsoil.
1.

The sovereignty of an archipelagic State extends to the waters enclosed by the

archipelagic baselines drawn in accordance with article 47, described as archipelagic
waters, regardless of their depth or distance from the coast.

2.

This sovereignty extends to the air space over the archipelagic waters, as well as
to their bed and subsoil, and the resources contained therein.

4. The regime of archipelagic sea lanes passage established in this Part shall not in other respects
affect the status of the archipelagic waters, including the sea lanes, or the exercise by the
archipelagic State of its sovereignty over such waters and their air space, bed and subsoil, and
the resources contained therein. (Emphasis supplied)
The fact of sovereignty, however, does not preclude the operation of municipal and international law norms subjecting the
territorial sea or archipelagic waters to necessary, if not marginal, burdens in the interest of maintaining unimpeded,
expeditious international navigation, consistent with the international law principle of freedom of navigation. Thus,
domestically, the political branches of the Philippine government, in the competent discharge of their constitutional
powers, may pass legislation designating routes within the archipelagic waters to regulate innocent and sea lanes
passage.40 Indeed, bills drawing nautical highways for sea lanes passage are now pending in Congress. 41 In the absence
of municipal legislation, international law norms, now codified in UNCLOS III, operate to grant innocent passage rights
over the territorial sea or archipelagic waters, subject to the treatys limitations and conditions for their
exercise.42 Significantly, the right of innocent passage is a customary international law,43 thus automatically incorporated in
the corpus of Philippine law.44 No modern State can validly invoke its sovereignty to absolutely forbid innocent passage
that is exercised in accordance with customary international law without risking retaliatory measures from the international
community.The fact that for archipelagic States, their archipelagic waters are subject to both the right of innocent passage
and sea lanes passage45 does not place them in lesser footing vis--vis continental coastal States which are subject, in
their territorial sea, to the right of innocent passage and the right of transit passage through international straits. The
imposition of these passage rights through archipelagic waters under UNCLOS III was a concession by archipelagic
States, in exchange for their right to claim all the waters landward of their baselines, regardless of their depth or distance
from the coast, as archipelagic waters subject to their territorial sovereignty. More importantly, the recognition of
archipelagic States archipelago and the waters enclosed by their baselines as one cohesive entity prevents the treatment
of their islands as separate islands under UNCLOS III.46 Separate islands generate their own maritime zones, placing the
waters between islands separated by more than 24 nautical miles beyond the States territorial sovereignty, subjecting

these waters to the rights of other States under UNCLOS III. 47Petitioners invocation of non-executory constitutional
provisions in Article II (Declaration of Principles and State Policies) 48 must also fail. Our present state of jurisprudence
considers the provisions in Article II as mere legislative guides, which, absent enabling legislation, do not embody
judicially enforceable constitutional rights x x x.49 Article II provisions serve as guides in formulating and interpreting
implementing legislation, as well as in interpreting executory provisions of the Constitution. Although Oposa v.
Factoran50treated the right to a healthful and balanced ecology under Section 16 of Article II as an exception, the present
petition lacks factual basis to substantiate the claimed constitutional violation. The other provisions petitioners cite, relating
to the protection of marine wealth (Article XII, Section 2, paragraph 2 51) and subsistence fishermen (Article XIII, Section
752), are not violated by RA 9522.
In fact, the demarcation of the baselines enables the Philippines to delimit its exclusive economic zone, reserving solely to
the Philippines the exploitation of all living and non-living resources within such zone. Such a maritime delineation binds
the international community since the delineation is in strict observance of UNCLOS III. If the maritime delineation is
contrary to UNCLOS III, the international community will of course reject it and will refuse to be bound by it.UNCLOS III
favors States with a long coastline like the Philippines. UNCLOS III creates a sui generis maritime space the exclusive
economic zone in waters previously part of the high seas. UNCLOS III grants new rights to coastal States to exclusively
exploit the resources found within this zone up to 200 nautical miles. 53 UNCLOS III, however, preserves the traditional
freedom of navigation of other States that attached to this zone beyond the territorial sea before UNCLOS III.
RA 9522 and the Philippines Maritime Zones

Petitioners hold the view that, based on the permissive text of UNCLOS III, Congress was not bound to pass RA
9522.54 We have looked at the relevant provision of UNCLOS III 55 and we find petitioners reading plausible. Nevertheless,
the prerogative of choosing this option belongs to Congress, not to this Court. Moreover, the luxury of choosing this option
comes at a very steep price. Absent an UNCLOS III compliant baselines law, an archipelagic State like the Philippines will
find itself devoid of internationally acceptable baselines from where the breadth of its maritime zones and continental shelf
is measured. This is recipe for a two-fronted disaster: first, it sends an open invitation to the seafaring powers to freely
enter and exploit the resources in the waters and submarine areas around our archipelago; and second, it weakens the
countrys case in any international dispute over Philippine maritime space. These are consequences Congress wisely
avoided. The enactment of UNCLOS III compliant baselines law for the Philippine archipelago and adjacent areas, as
embodied in RA 9522, allows an internationally-recognized delimitation of the breadth of the Philippines maritime zones
and continental shelf. RA 9522 is therefore a most vital step on the part of the Philippines in safeguarding its maritime
zones, consistent with the Constitution and our national interest.
WHEREFORE, we DISMISS the petition.

SO ORDERED.

G.R. No. L-18463

October 4, 1922

THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellee,

vs.
GREGORIO PERFECTOR, defendant-appellant.
MALCOLM, J.:
The important question is here squarely presented of whether article 256 of the Spanish Penal Code, punishing "Any
person who, by . . . writing, shall defame, abuse, or insult any Minister of the Crown or other person in authority . . .," is
still in force.
About August 20, 1920, the Secretary of the Philippine Senate, Fernando M. Guerrero, discovered that certain documents
which constituted the records of testimony given by witnesses in the investigation of oil companies, had disappeared from
his office. Shortly thereafter, the Philippine Senate, having been called into special session by the Governor-General, the
Secretary for the Senate informed that body of the loss of the documents and of the steps taken by him to discover the

guilty party. The day following the convening of the Senate, September 7, 1920, the newspaper La Nacion, edited by Mr.
Gregorio Perfecto, published an article reading as follows:
Half a month has elapsed since the discovery, for the first time, of the scandalous robbery of records which were
kept and preserved in the iron safe of the Senate, yet up to this time there is not the slightest indication that the
author or authors of the crime will ever be discovered.
To find them, it would not, perhaps, be necessary to go out of the Sente itself, and the persons in charge of the
investigation of the case would not have to display great skill in order to succeed in their undertaking, unless they
should encounter the insuperable obstacle of offical concealment.
In that case, every investigation to be made would be but a mere comedy and nothing more.
After all, the perpetration of the robbery, especially under the circumstances that have surrounded it, does not
surprise us at all.
The execution of the crime was but the natural effect of the environment of the place in which it was committed.
How many of the present Senators can say without remorse in their conscience and with serenity of mind, that
they do not owe their victory to electoral robbery? How may?
The author or authors of the robbery of the records from the said iron safe of the Senate have, perhaps, but
followed the example of certain Senators who secured their election through fraud and robbery.
The Philippine Senate, in its session of September 9, 1920, adopted a resolution authorizing its committee on elections
and privileges to report as to the action which should be taken with reference to the article published inLa Nacion. On
September 15, 1920, the Senate adopted a resolution authorizing the President of the Senate to indorse to the AttorneyGeneral, for his study and corresponding action, all the papers referring to the case of the newspaper La Nacion and its
editor, Mr. Gregorio Perfecto. As a result, an information was filed in the municipal court of the City of Manila by an
assistant city fiscal, in which the editorial in question was set out and in which it was alleged that the same constituted a
violation of article 256 of the Penal Code. The defendant Gregorio Perfecto was found guilty in the municipal court and
again in the Court of First Instance of Manila.
During the course of the trial in the Court of First Instance, after the prosecution had rested, the defense moved for the
dismissal of the case. On the subject of whether or not article 256 of the Penal Code, under which the information was
presented, is in force, the trial judge, the Honorable George R. Harvey, said:
This antiquated provision was doubtless incorporated into the Penal Code of Spain for the protection of the
Ministers of the Crown and other representatives of the King against free speech and action by Spanish subjects.
A severe punishment was prescribed because it was doubtless considered a much more serious offense to insult
the King's representative than to insult an ordinary individual. This provision, with almost all the other articles of
that Code, was extended to the Philippine Islands when under the dominion of Spain because the King's subject
in the Philippines might defame, abuse or insult the Ministers of the Crown or other representatives of His
Majesty. We now have no Ministers of the Crown or other persons in authority in the Philippines representing the
King of Spain, and said provision, with other articles of the Penal Code, had apparently passed into "innocuous
desuetude," but the Supreme Corut of the Philippine Islands has, by a majority decision, held that said article 256
is the law of the land to-day. . . .
The Helbig case is a precedent which, by the rule of stare decisis, is binding upon this court until otherwise
determined by proper authority.
In the decision rendered by the same judge, he concluded with the following language:
In the United States such publications are usually not punishable as criminal offense, and little importance is
attached to them, because they are generally the result of political controversy and are usually regarded as more
or less colored or exaggerated. Attacks of this character upon a legislative body are not punishable, under the

Libel Law. Although such publications are reprehensible, yet this court feels some aversion to the application of
the provision of law under which this case was filed. Our Penal Code has come to us from the Spanish regime.
Article 256 of that Code prescribes punishment for persons who use insulting language about Ministers of the
Crown or other "authority." The King of Spain doubtless left the need of such protection to his ministers and others
in authority in the Philippines as well as in Spain. Hence, the article referred to was made applicable here.
Notwithstanding the change of sovereignty, our Supreme Court, in a majority decision, has held that this provision
is still in force, and that one who made an insulting remark about the President of the United States was
punishable under it. (U.S. vs. Helbig, supra.) If it applicable in that case, it would appear to be applicable in this
case. Hence, said article 256 must be enforced, without fear or favor, until it shall be repealed or superseded by
other legislation, or until the Supreme Court shall otherwise determine.
In view of the foregoing considerations, the court finds the defendant guilty as charged in the information and
under article 256 of their Penal Code sentences him to suffer two months and one day of arresto mayor and the
accessory penalties prescribed by law, and to pay the costs of both instances.
The fifteen errors assigned by the defendant and appellant, reenforced by an extensive brief, and eloquent oral argument
made in his own behalf and by his learned counsel, all reduce themselves to the pertinent and decisive question which
was announced in the beginning of this decision.
It will be noted in the first place that the trial judge considered himself bound to follow the rule announced in the case of
United States vs. Helbig (R. G. No. 14705, 1 not published). In that case, the accused was charged with having said, "To
hell with the President and his proclamations, or words to that effect," in violation of article 256 of the Penal Code. He was
found guilty in a judgment rendered by the Court of First Instance of Manila and again on appeal to the Supreme Court,
with the writer of the instant decision dissenting on two principal grounds: (1) That the accused was deprived of the
constitutional right of cross-examination, and (2) that article 256 of the Spanish Penal Code is no longer in force.
Subsequently, on a motion of reconsideration, the court, being of the opinion that the Court of First Instance had
committed a prejudicial error in depriving the accused of his right to cross-examine a principal witness, set aside the
judgment affirming the judgment appealed from and ordered the return of the record to the court of origin for the
celebration of a new trial. Whether such a trial was actually had, is not known, but at least, the record in the Helbig case
has never again been elevated to this court.
There may perchance exist some doubt as to the authority of the decision in the Helbig case, in view of the circumstances
above described. This much, however, is certain: The facts of the Helbig case and the case before us, which we may term
the Perfecto case, are different, for in the first case there was an oral defamation, while in the second there is a written
defamation. Not only this, but a new point which, under the facts, could not have been considered in the Helbig case, is, in
the Perfecto case, urged upon the court. And, finally, as is apparent to all, the appellate court is not restrained, as was the
trial court, by strict adherence to a former decision. We much prefer to resolve the question before us unhindered by
references to the Helbig decision.
This is one of those cases on which a variety of opinions all leading to the same result can be had. A majority of the court
are of the opinion that the Philippine Libel Law, Act No. 277, has had the effect of repealing so much of article 256 of the
Penal Code as relates to written defamation, abuse, or insult, and that under the information and the facts, the defendant
is neither guilty of a violation of article 256 of the Penal Code, nor of the Libel Law. The view of the Chief Justice is that the
accused should be acquitted for the reason that the facts alleged in the information do not constitute a violation of article
156 of the Penal Code. Three members of the court believe that article 256 was abrogated completely by the change from
Spanish to American sovereignty over the Philippines and is inconsistent with democratic principles of government.
Without prejudice to the right of any member of the court to explain his position, we will discuss the two main points just
mentioned.
1. Effect of the Philippine Libel Law, Act No. 277, on article 256 of the Spanish Penal Code. The Libel Law, Act
No. 277, was enacted by the Philippine Commission shortly after organization of this legislative body. Section 1
defines libel as a "malicious defamation, expressed either in writing, printing, or by signs or pictures, or the like, or
public theatrical exhibitions, tending to blacken the memory of one who is dead or to impeach the honesty, virtue,
or reputation, or publish the alleged or natural deffects of one who is alive, and thereby expose him to public
hatred, contempt or ridicule." Section 13 provides that "All laws and parts of laws now in force, so far as the same
may be in conflict herewith, are hereby repealed. . . ."

That parts of laws in force in 1901 when the Libel Law took effect, were in conflict therewith, and that the Libel Law
abrogated certain portion of the Spanish Penal Code, cannot be gainsaid. Title X of Book II of the Penal Code, covering
the subjects of calumny and insults, must have been particularly affected by the Libel Law. Indeed, in the early case of
Pardo de Tavera vs. Garcia Valdez ([1902], 1. Phil., 468), the Supreme Court spoke of the Libel Law as "reforming the
preexisting Spanish law on the subject of calumnia and injuria." Recently, specific attention was given to the effect of the
Libel Law on the provisions of the Penal Code, dealing with calumny and insults, and it was found that those provisions of
the Penal Code on the subject of calumny and insults in which the elements of writing an publicity entered, were
abrogated by the Libel Law. (People vs. Castro [1922], p. 842, ante.)
The Libel Law must have had the same result on other provisions of the Penal Code, as for instance article 256.
The facts here are that the editor of a newspaper published an article, naturally in writing, which may have had the
tendency to impeach the honesty, virtue, or reputation of members of the Philippine Senate, thereby possibly exposing
them to public hatred, contempt, or ridicule, which is exactly libel, as defined by the Libel Law. Sir J. F. Stephen is
authority for the statement that a libel is indictable when defaming a "body of persons definite and small enough for
individual members to be recognized as such, in or by means of anything capable of being a libel." (Digest of Criminal
Law, art. 267.) But in the United States, while it may be proper to prosecute criminally the author of a libel charging a
legislator with corruption, criticisms, no matter how severe, on a legislature, are within the range of the liberty of the press,
unless the intention and effect be seditious. (3 Wharton's Criminal Law, p. 2131.) With these facts and legal principles in
mind, recall that article 256 begins: Any person who, by . . .writing, shall defame, abuse, or insult any Minister of the
Crown or other person in authority," etc.
The Libel Law is a complete and comprehensive law on the subject of libel. The well-known rule of statutory construction
is, that where the later statute clearly covers the old subject-matter of antecedent acts, and it plainly appears to have been
the purpose of the legislature to give expression in it to the whole law on the subject, previous laws are held to be
repealed by necessary implication. (1 Lewis' Sutherland Statutory Construction, p. 465.) For identical reasons, it is evident
that Act No. 277 had the effect so much of this article as punishes defamation, abuse, or insults by writing.
Act No. 292 of the Philippine Commission, the Treason and Sedition Law, may also have affected article 256, but as to
this point, it is not necessary to make a pronouncement.
2. Effect of the change from Spanish to Amercian sevoreignty over the Philippine son article 256 of the Spanish
Penal Code. Appellant's main proposition in the lower court and again energetically pressed in the appellate
court was that article 256 of the Spanish Penal Code is not now in force because abrogated by the change from
Spanish to American sovereignty over the Philippines and because inconsistent with democratic principles of
government. This view was indirectly favored by the trial judge, and, as before stated, is the opinion of three
members of this court.
Article 256 is found in Chapter V of title III of Book II of the Spanish Penal Code. Title I of Book II punishes the crimes of
treason, crimes that endanger the peace or independence of the state, crimes against international law, and the crime of
piracy. Title II of the same book punishes the crimes of lese majeste, crimes against the Cortesand its members and
against the council of ministers, crimes against the form of government, and crimes committed on the occasion of the
exercise of rights guaranteed by the fundamental laws of the state, including crime against religion and worship. Title III of
the same Book, in which article 256 is found, punishes the crimes of rebellion, sedition, assaults upon persons in
authority, and their agents, and contempts, insults, injurias, and threats against persons in authority, and insults, injurias,
and threats against their agents and other public officers, the last being the title to Chapter V. The first two articles in
Chapter V define and punish the offense of contempt committed by any one who shall be word or deed defame, abuse,
insult, or threathen a minister of the crown, or any person in authority. The with an article condemning challenges to fight
duels intervening, comes article 256, now being weighed in the balance. It reads as follows: "Any person who, by word,
deed, or writing, shall defame, abuse, or insult any Minister of the Crown or other person in authority, while engaged in the
performance of official duties, or by reason of such performance, provided that the offensive minister or person, or the
offensive writing be not addressed to him, shall suffer the penalty of arresto mayor," that is, the defamation, abuse, or
insult of any Minister of the Crown of the Monarchy of Spain (for there could not be a Minister of the Crown in the United
States of America), or other person in authority in the Monarchy of Spain.
It cannot admit of doubt that all those provisions of the Spanish Penal Code having to do with such subjects as
treason, lese majeste, religion and worship, rebellion, sedition, and contempts of ministers of the crown, are not longer in

force. Our present task, therefore, is a determination of whether article 256 has met the same fate, or, more specifically
stated, whether it is in the nature of a municipal law or political law, and is consistent with the Constitution and laws of the
United States and the characteristics and institutions of the American Government.
It is a general principle of the public law that on acquisition of territory the previous political relations of the ceded region
are totally abrogated. "Political" is here used to denominate the laws regulating the relations sustained by the inhabitants
to the sovereign. (American Insurance Co. vs. Canter [1828], 1 Pet., 511; Chicago, Rock Island and Pacific Railway
Co. vs. McGlinn [1885], 114 U.S., 542; Roa vs. Collector of Customs [1912], 23 Phil., 315.) Mr. Justice Field of the United
States Supreme Court stated the obvious when in the course of his opinion in the case of Chicago, Rock Island and
Pacific Railway Co. vs. McGlinn, supra, he said: "As a matter of course, all laws, ordinances and regulations in conflict
with the political character, institutions and Constitution of the new government are at once displaced. Thus, upon a
cession of political jurisdiction and legislative power and the latter is involved in the former to the United States, the
laws of the country in support of an established religion or abridging the freedom of the press, or authorizing cruel and
unusual punishments, and he like, would at once cease to be of obligatory force without any declaration to that effect." To
quote again from the United States Supreme Court: "It cannot be admitted that the King of Spain could, by treaty or
otherwise, impart to the United States any of his royal prerogatives; and much less can it be admitted that they have
capacity to receive or power to exercise them. Every nation acquiring territory, by treaty or otherwise, must hold it subject
to the Constitution and laws of its own government, and not according to those of the government ceding it."
(Pollard vs. Hagan [1845], 3 Hos., 210.)
On American occupation of the Philippines, by instructions of the President to the Military Commander dated May 28,
1898, and by proclamation of the latter, the municipal laws of the conquered territory affecting private rights of person and
property and providing for the punishment of crime were nominally continued in force in so far as they were compatible
with the new order of things. But President McKinley, in his instructions to General Merritt, was careful to say: "The first
effect of the military occupation of the enemy's territory is the severance of the former political relation of the inhabitants
and the establishment of a new political power." From that day to this, the ordinarily it has been taken for granted that the
provisions under consideration were still effective. To paraphrase the language of the United States Supreme Court in
Weems vs. United States ([1910], 217 U. S., 349), there was not and could not be, except as precise questions were
presented, a careful consideration of the codal provisions and a determination of the extent to which they accorded with or
were repugnant to the "'great principles of liberty and law' which had been 'made the basis of our governmental system.' "
But when the question has been squarely raised, the appellate court has been forced on occasion to hold certain portions
of the Spanish codes repugnant t democratic institutions and American constitutional principles. (U.S. vs. Sweet [1901], 1
Phil., 18; U.S.vs. Balcorta [1913], 25 Phil., 273; U.S. vs. Balcorta [1913], 25 Phil., 533; Weems vs. U.S., supra.)
The nature of the government which has been set up in the Philippines under American sovereignty was outlined by
President McKinley in that Magna Charta of Philippine liberty, his instructions to the Commission, of April 7, 1900. In part,
the President said:
In all the forms of government and administrative provisions which they are authorized to prescribe, the
Commission should bear in mind that he government which they are establishing is designed not for our
satisfaction or for the expression of our theoretical views, but for the happiness, peace, and prosperity of the
people of the Philippine Islands, and the measures adopted should be made to conform to their customs, their
habits, and even their prejudices, to the fullest extent consistent with the accomplishment of the indispensable
requisites of just and effective government. At the same time the Commission should bear in mind, and the
people of the Islands should be made plainly to understand, that there are certain great principles of government
which have been made the basis of our governmental system, which we deem essential to the rule of law and the
maintenance of individual freedom, and of which they have, unfortunately, been denied the experience possessed
by us; that there are also certain practical rules of government which we have found to be essential to the
preservation of these great principles of liberty and law, and that these principles and these rules of government
must be established and maintained in their islands for the sake of their liberty and happiness, however much
they may conflict with the customs or laws of procedure with which they are familiar. It is evident that the most
enligthened thought of the Philippine Islands fully appreciates the importance of these principles and rules, and
they will inevitably within a short time command universal assent.
The courts have naturally taken the same view. Mr. Justice Elliott, speaking for our Supreme Court, in the case of United
States vs. Bull ([1910], 15 Phil., 7), said: "The President and Congress framed the government on the model with which

American are familiar, and which has proven best adapted for the advancement of the public interests and the protection
of individual rights and privileges."
Therefore, it has come with somewhat of a shock to hear the statement made that the happiness, peace, and prosperity of
the people of the Philippine Islands and their customs, habits, and prejudices, to follow the language of President
McKinley, demand obeisance to authority, and royal protection for that authority.
According to our view, article 256 of the Spanish Penal Code was enacted by the Government of Spain to protect Spanish
officials who were the representatives of the King. With the change of sovereignty, a new government, and a new theory
of government, as set up in the Philippines. It was in no sense a continuation of the old, although merely for convenience
certain of the existing institutions and laws were continued. The demands which the new government made, and makes,
on the individual citizen are likewise different. No longer is there a Minister of the Crown or a person in authority of such
exalted position that the citizen must speak of him only with bated breath. "In the eye of our Constitution and laws, every
man is a sovereign, a ruler and a freeman, and has equal rights with every other man. We have no rank or station, except
that of respectability and intelligence as opposed to indecency and ignorance, and the door to this rank stands open to
every man to freely enter and abide therein, if he is qualified, and whether he is qualified or not depends upon the life and
character and attainments and conduct of each person for himself. Every man may lawfully do what he will, so long as it is
notmalum in se or malum prohibitum or does not infringe upon the qually sacred rights of others." (State vs.Shepherd
[1903], 177 Mo., 205; 99 A. S. R., 624.)
It is true that in England, from which so many of the laws and institutions of the United States are derived, there were
once statutes of scandalum magnatum, under which words which would not be actionable if spoken of an ordinary subject
were made actionable if spoken of a peer of the realm or of any of the great officers of the Crown, without proof of any
special damage. The Crown of England, unfortunately, took a view less tolerant that that of other sovereigns, as for
instance, the Emperors Augustus, Caesar, and Tiberius. These English statutes have, however, long since, become
obsolete, while in the United States, the offense of scandalum magnatum is not known. In the early days of the American
Republic, a sedition law was enacted, making it an offense to libel the Government, the Congress, or the President of the
United States, but the law met with so much popular disapproval, that it was soon repealed. "In this country no distinction
as to persons is recognized, and in practice a person holding a high office is regarded as a target at whom any person
may let fly his poisonous words. High official position, instead of affording immunity from slanderous and libelous charges,
seems rather to be regarded as making his character free plunder for any one who desires to create a senation by
attacking it." (Newell, Slander and Libel, 3d ed., p. 245; Sillars vs. Collier [1890], 151 Mass., 50; 6 L.R.A., 680.)
Article 256 of the Penal Code is contrary to the genius and fundamental principles of the American character and system
of government. The gulf which separates this article from the spirit which inspires all penal legislation of American origin, is
as wide as that which separates a monarchy from a democratic Republic like that of the United States. This article was
crowded out by implication as soon as the United States established its authority in the Philippine Islands. Penalties out of
all proportion to the gravity of the offense, grounded in a distorted monarchical conception of the nature of political
authority, as opposed to the American conception of the protection of the interests of the public, have been obliterated by
the present system of government in the Islands. 1awph!l.net
From an entirely different point of view, it must be noted that this article punishes contempts against executive officials,
although its terms are broad enough to cover the entire official class. Punishment for contempt of non-judicial officers has
no place in a government based upon American principles. Our official class is not, as in monarchies, an agent of some
authority greater than the people but it is an agent and servant of the people themselves. These officials are only entitled
to respect and obedience when they are acting within the scope of their authority and jurisdiction. The American system of
government is calculated to enforce respect and obedience where such respect and obedience is due, but never does it
place around the individual who happens to occupy an official position by mandate of the people any official halo, which
calls for drastic punishment for contemptuous remarks.
The crime of lese majeste disappeared in the Philippines with the ratification of the Treaty of Paris. Ministers of the Crown
have no place under the American flag.
To summarize, the result is, that all the members of the court are of the opinion, although for different reasons, that the
judgment should be reversed and the defendant and appellant acquitted, with costs de officio. So ordered

YQUIA v. ALMEDA LOPEZ

FACTS: Plaintiffs Syquia leased their apartment buildings in favor of the US for the duration of the war and six
months after, unless sooner terminated by the US. These were used for billeting and quartering officers of the US
armed forces. Six months after Japan surrendered, Syquia requested the return of the buildings but were
advised that the US wanted to continue occupying the premises. They requested for a renegotiation of the lease. US
officers refused but advised them that they would vacate in a few months time. But because the US did not vacate
within the given period, Syquia filed an action for unlawful detainer with the MTC against the US officers. US said
that the court had no jurisdiction over the 1 assessing and collecting lawful revenues from imported articles and all
other tariff and customs duties, fees, charges, fines and penalties defendants and of the subject matter because the
real party in interest was the US government and not the individual officers named in the complaint.
HELD: Since the action was against the US government, Philippine courts have no jurisdiction over the case. The US has
not given its consent to the filing of the suit which is essentially against her, though not in name . This is not only a case
of a citizen filing a suit against his own Government without the latters consent, but it is of a citizen filing an
action against a foreign government without the said governments consent, which renders more obvious the lack
of jurisdiction of the courts of his country.ANGEL MINISTERIO VS CFI
THE HOLY SEE VS ROSARIO

Facts: National Government took physical and material possession of a land and used it for road widening
purposes. No expropriation proceedings were commenced and just compensation remained to be unpaid. Ministerio et al,
filed a complaint against the Public Highway Commissioner and the Auditor General in their official capacity to
collect just compensation.
Issue: Whether the complaint violates the principle of governmental immunity from suit?
Held: No! The government is immune from suit without its consent. Even if the defendant named was not the
government itself but public officials, the doctrine would still find application because it is possible that the litigation
will result in a financial liability of the government. However, it is a different matter if the public official was made to
account in his capacity for acts contrary to law and injurious to the plaintiff. This is because unauthorized acts of
public officials are not acts of the state. Thus, a suit against an official by one whose rights have been violated by the acts
of an official is not a suit against the state. The doctrine of governmental immunity from suit cannot serve as an instrument
for perpetrating an injustice on a citizen. Had the government followed the procedure provided by law, then it would have
filed an expropriation complaint and only upon payment of the compensation fixed by the judgment, may it have the
right to enter in and upon the land so condemned to appropriate the same to the public use defined in the judgment.
PROVINCE OF NORTH COTABATO V. GOVERNMENT
OF THE PHILIPPINES PEACE PANEL
FACTS: The Philippines and the MILF, through the Chairpersons of their respective peace negotiating panels, were
scheduled to sign a Memorandum of Agreement on the Ancestral Domain (MOA-AD) Aspect of the GRP-MILF Tripoli
Agreement on Peace of 2001 in Kuala Lumpur, Malaysia.The signing of the MOA-AD between the GRP and the
MILF did not push through because upon motion of petitioners, specifically those who filed their cases before the
scheduled signing of the MOA-AD, this Court issued a Temporary Restraining Order enjoining the GRP from signing
the same.The MOA-AD was preceded by a long process of negotiation and the concluding of several prior
agreements between the two parties beginning in 1996, when the GRP-MILF peace negotiations began. The Solicitor
General, who represents respondents, summarizes the MOA-AD by stating that the same contained, among others,
the commitment of the parties to pursue peace negotiations, protect and respect human rights, negotiate with sincerity
in the resolution and pacific settlement of the conflict, and refrain from the use of threat or force to attain undue
advantage while the peace negotiations on the substantive agenda are on-going.On July 23, 2008, the Province of
North Cotabato and Vice-Governor Emmanuel filed a petition for Mandamus and Prohibition with Prayer for the
Issuance of Writ of Preliminary Injunction and Temporary Restraining Order. Invoking the right to information on
matters of public concern, petitioners seek to compel respondents to disclose and furnish them the complete and
official copies of the MOA-AD including its attachments, and to prohibit the slated signing of the MOA-AD, pending the
disclosure of the contents of the MOA-AD and the holding of a public consultation thereon. Supplementarily, petitioners

pray that the MOA-AD be declared unconstitutional insofar as by creating and recognizing the Bangsamoro
Juridicial Entity as a separate state or a juridical, territorial or political subdivision, it would conflict with Article X,
Section 20 of the Constitution, among others.
ISSUE: W/N the MOA-AD is constitutional? NO, IT IS NOT BECAUSE ITS ADOPTION WOULD ENTAIL THE
AMENDMENT OF ARTICLE 10, SECTION 20 OF THE CONSTITUTION, AMONG OTHERS. THE BJE IS NOT
JUST AN AUTONOMOUS REGION, IT IS ALMOST LIKE A STATE.
HELD: The MOA-AD is inconsistent with the Constitution and laws as presently worded. In general,tthe objections
against the MOA-AD center on the extent of the powers conceded therein to the BJE. Petitioners assert that the
powers granted to the BJE exceed those granted to any local government under present laws, and even go beyond
those of the present ARMM. Before assessing some of the specific powers that would have been vested in the
BJE, however, it would be useful to turn first to a general idea that serves as a unifying link to the different provisions
of the MOA-AD, namely, the international law concept of association. Firstly, what is an association? [a]n
association is formed when two states of unequal power voluntarily establish durable links. In the basic model, one
state, the associate, delegates certain responsibilities to the other, the principal, while maintaining its international
status as a state. Free associations represent a middle ground between integration and independence. The MOA-AD
it contains many provisions which are consistent with the international legal concept of association, specifically
the following: the BJE's capacity to enter into economic and trade relations with foreign countries, the commitment of
the Central Government to ensure the BJE's participation in meetings and events in the ASEAN and the specialized
UN agencies, and the continuing responsibility of the Central Government over external defense. BJE was also granted
the right to participate in Philippine official missions bearing on negotiation of border agreements, environmental
protection, and sharing of revenues pertaining to the bodies of water adjacent to or between the islands forming
part of the ancestral domain. These provisions of the MOA indicate, among other things, that the Parties aimed to
vest in the BJE the status of an associated state or, at any rate, a status closely approximating it.The concept of
association is not recognized under the present Constitution.No province, city, or municipality, not even the ARMM,
is recognized under our laws as having an "associative" relationship with the national government. Indeed, the
concept implies powers that go beyond anything ever granted by the Constitution to any local or regional government.
It also implies the recognition of the associated entity as a state. The Constitution, however, does not contemplate
any state in this jurisdiction other than the Philippine State, much less does it provide for a transitory status that aims to
prepare any part of Philippine territory for independence.Even the mere concept animating many of the MOA-AD's
provisions, therefore, already requires for its validity the amendment of constitutional provisions, specifically the
following provisions of Article X:
SECTION 1. The territorial and political subdivisions of the Republic of the Philippines are the provinces, cities,
municipalities, and barangays. There shall be autonomous regions in Muslim Mindanao and the Cordilleras as
hereinafter provided.
SECTION 15. There shall be created autonomous regions in Muslim Mindanao and in the Cordilleras consisting of
provinces, cities, municipalities, and geographical areas sharing common and distinctive historical and cultural
heritage, economic and social structures, and other relevant characteristics within the framework of this
Constitution and the national sovereignty as well as territorial integrity of the Republic of the Philippines .These
amendments would be necessary because the BJE is a far more powerful entity than the autonomous region
recognized in the Constitution. It is not merely an expanded version of the ARMM, the status of its relationship with the
national government being fundamentally different from that of the ARMM. Indeed, BJE is a state in all but name as
it meets the criteria of a state laid down in the Montevideo Convention, namely, a permanent population, a defined
territory, a government, and a capacity to enter into relations with other states.Even assuming arguendo that the
MOA-AD would not necessarily sever any portion of Philippine territory, the spirit animating it - which has betrayed
itself by its use of the concept of association - runs counter to the national sovereignty and territorial integrity of the
Republic.
The MOA-AD, moreover, would not comply with Article X, Section 20 of the Constitution since that provision
defines the powers of autonomous regions as follows:
SECTION 20. Within its territorial jurisdiction andsubject to the provisions of this Constitution and national laws, the
organic act of autonomous regions shall provide for legislative powers over:
9. Such other matters as may be authorized by law for the promotion of the general welfare of the people of the
region. (Underscoring supplied)Again on the premise that the BJE may be regarded as an autonomous region,
the MOA-AD would require an amendment that would expand the above quoted provision. The mere passage of
new legislation pursuant to sub-paragraph No. 9 of said constitutional provision would not suffice, since any new law
that might vest in the BJE the powers found in the MOA-AD must, itself, comply with other provisions of the
Constitution. It would not do, for instance, to merely pass legislation vesting the BJE with treaty-making power in
order to accommodate paragraph 4 of the strand on RESOURCES which states: "The BJE is free to enter into any

economic cooperation and trade relations with foreign countries: provided, however, that such relationships and
understandings do not include aggression against the Government of the Republic of the Philippines x x x."
Under our constitutional system, it is only the President who has that power.

NITAFAN V. CIR
FACTS: Nitafan et al. were duly appointed RTC Judges (Manila). Previously, the Chief Justice issued a directive to
the Fiscal Management and Budget Office to continue the deduction of withholding taxes from salaries of the Justices
of the Supreme Court and other members of the judiciary. This was affirmed by the Supreme Court en banc. They
seek to prohibit and/or perpetually enjoin the Commissioner of Internal Revenue and the Financial Officer of the
Supreme Court, from making any deduction of withholding taxes from their salaries. They contend that this constitutes
diminution of salary contrary to Section 10, Article VIII of the 1987 Constitution, which provides that the salary of
the members of the Supreme Court and judges of lower courts shall be fixed by law and that during their
continuance in office, their salary shall not be decreased.
ISSUE: W/N the salaries of judges are subject to tax. YES.
RATIO: The salaries of members of the Judiciary are subject to the general income tax applied to all taxpayers.
Although such intent was somehow and inadvertently not clearly set forth in the final text of the 1987 Constitution, the
deliberations of the 1986 Constitutional Commission negate the contention that the intent of the framers is to
revert to the original concept of non-diminution of salaries of judicial officers. Hence, the doctrine in Perfecto v.
Meer and Endencia vs. David (declared the salaries of members of the Judiciary exempt from payment of the income
tax and considered such payment as a diminution of their salaries during their continuance in office) do not apply
anymore. Justices and judges are not only the citizens whose income has been reduced in accepting service in
government and yet subject to income tax. Such is true also of Cabinet members and all other employees.
SECTION 11
The Members of the Supreme Court and judges of lower courts shall hold office during good behavior until they
reach the age of seventy years or become incapacitated to discharge the duties of their office. The Supreme Court en
banc shall have the power to discipline judges of lower courts, or order their dismissal by a vote of a majority of the
Members who actually took part in the deliberations on the issues in the case and voted thereon.
MANILA PRINCE HOTEL V. GSIS
Pursuant to the privatization policy of the government, GSIS sold the majority shares (51%) of the Manila Hotel
Corporation in a public bidding. Only two companies participated: Manila Prince, a Filipino company, and Renong
Berhad, a Malaysian company. Manila Princes offer was P41.58/share, and Renongs was P44/share. Pending the
award of the bid to the Malaysian firm, petitioner submitted its matching bid with the same amount. However,
GSIS ignored it. Apprehensive that the award be given to the Malaysian competitor, Manla Prince instituted the instant
suit. It contends the bid should be awarded to them pursuant to the Constitutions Filipino First Policy.Petitioner
banks their argument on Art. 12 Sec. 10 of the Constitution. They contend that Manila Hotel is part of the countrys
national patrimony because it has been a symbol and reflection of Philippine heritage. They argue that Manila Hotel
is indispensable to the national economy for it is part of the countrys tourism industry. For this reasons, petitioner
contends that Manila Hotel should be given to them for they are a Filipino company. Respondent, on the other hand,
contend that Art. 12 Sec. 10 is not self-executing. Even grating that it is, the same cannot fall within the national
patrimony clause because the latter only refers to public domain, waters, mineral, coal, petroleum, and other mineral
oil, etc.Issue: Whether or not the shares of Manila Hotel should be awarded to Manila Prince
Ruling: Yes, by virtue of the Constitutions Filipino First policy.Sec. 10, second par., Art. XII of the 1987 Constitution is
a mandatory, positive command. From its very words the provision does not require any legislation to put it in
operation. It is per se judicially enforceable. When our Constitution mandates that [i]n the grant of rights,
privileges, and concessions covering national economy and patrimony, the State shall give preference to qualified
Filipinos, it means just that - qualified Filipinos shall be preferred. Furthermore, in its plain and ordinary meaning,
the term patrimony pertains to heritage. When the Constitution speaks of national patrimony, it refers not only to the
natural resources of the Philippines, as the Constitution could have very well used the term natural resources, but
also to the cultural heritage of the Filipinos. Manila Hotel has become a living testimony of Philippine heritage. It should
be stressed that while the Malaysian firm offered the higher bid it is not yet the winning bidder. The bidding rules
provide that the highest bidder shall only be declared the winning bidder after it has negotiated and executed the
necessary contracts, and secured the requisite approvals. Since the Filipino First Policy provision of the Constitution
bestows preference on qualified Filipinos, the mere tender of the highest bid is not an assurance that the highest bidder
will be declared the winning bidder. Respondents are not bound to make the award yet, nor are they under
obligation to enter into one with the highest bidder. For in choosing the awardee respondents are mandated to abide by

the dictates of the 1987 Constitution. Where a foreign firm submits the highest bid in a public bidding concerning the
grant of rights, privileges and concessions covering the national economy and patrimony, thereby exceeding the bid
of a Filipino, there is no question that the Filipino will have to be allowed to match the bid of the foreign entity. And
if the Filipino matches the bid of a foreign firm the award should go to the Filipino. This Court does not discount the
apprehension that this policy may discourage foreign investors. But the Constitution and laws of the Philippines are
understood to be always open to public scrutiny. These are given factors which investors must consider when
venturing into business in a foreign jurisdiction. Any person therefore desiring to do business in the Philippines or
with any of its agencies or instrumentalities is presumed to know his rights and obligations under the Constitution and
the laws of the forum.Undoubtedly, Filipinos and foreigners were invited to the bidding. But foreigners may be awarded
the sale only if no Filipino qualifies, or if the qualified Filipino fails to match the highest bid tendered by the foreign
entity. Since petitioner has already matched the bid price tendered by Renong Berhad, GSIS is left with no alternative
but to award to petitioner the shares of MHC and to execute the necessary agreements and documents to effect the
sale. The refusal of respondent GSIS to execute the corresponding documents with petitioner as provided in the
bidding rules after the latter has matched the bid of the Malaysian firm clearly constitutes grave abuse of
discretion.Privatization of a business asset for purposes of enhancing its business viability and preventing further
losses should not take precedence over non -material values. A commercial objective should not be pursued at the
expense of national pride and dignity. Protection of foreign investments, while laudible, is merely a policy. It
cannot override the demands of nationalism.
SECTION 11.
No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to
citizens of the Philippines or to corporations or associations organized under the laws of the Philippines, at least
sixty per centum of whose capital is owned by such citizens; nor shall such franchise, certificate, or authorization
be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted
except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the
common good so requires. The State shall encourage equity participation in public utilities by the general public. The
participation of foreign investors in the governing body of any public utility enterprise shall be limited to their
proportionate share in its capital, and all the executive and managing officers of such corporation or association must
be citizens of the Philippines.

MACARIOLA VS. ASUNCION, 114 SCRA 77

Facts:
On June 8, 1963, respondent Judge Elias Asuncion rendered a decision in Civil Case 3010 final for lack of an appeal.
On October 16, 1963, a project of partition was submitted to Judge Asuncion. The project of partition of lots was not
signed by the parties themselves but only by the respective counsel of plaintiffs and petitioner Bernardita R. Macariola.
The Judge approved it in his order dated October 23, 1963.
One of the lots in the project of partition was Lot 1184, which was subdivided into 5 lots denominated as Lot 1184 A E.
Dr. Arcadio Galapon bought Lot 1184-E on July 31, 1964, who was issued transfer of certificate of Title No, 2338 of the
Register of Deeds of Tacloban City. On March 6, 1965, Galapon sold a portion of the lot to Judge Asuncion and his wife.
On August 31, 1966, spouses Asuncion and Galapon conveyed their respective shares and interest inn Lot 1184-E to the
Traders Manufacturing & Fishing Industries Inc. Judge Asuncion was the President and his wife Victoria was the
Secretary. The Asuncions and Galapons were also the stockholder of the corporation.
Respondent Macariola charged Judge Asuncion with "Acts unbecoming a Judge" for violating the following provisions:
Article 1491, par. 5 of the New Civil Code, Article 14, par. 1 & 5 of the Code of Commerce, Sec. 3 par H of RA 3019 also
known as the Anti-Graft & Corrupt Practice Act., Sec. 12, Rule XVIII of the Civil Service Rules and Canon 25 of the

Canons of Judicial EthicsOn November 2, 1970 a certain Judge Jose D. Nepomuceno dismissed the complaints filed
against Asuncion.

Issue:
Whether or Not the respondent Judge violated the mentioned provisions.

Ruling:
No. Judge Asuncion did not violate the mentioned provisions constituting of "Acts unbecoming a Judge" but was reminded
to be more discreet in his private and business activities.

Respondent Judge did not buy the lot 1184-E directly on the plaintiffs in Civil Case No. 3010 but from Dr. Galapon who
earlier purchased the lot from 3 of the plaintiffs. When the Asuncion bought the lot on March 6, 1965 from Dr. Galapon
after the finality of the decision which he rendered on June 8, 1963 in Civil Case No 3010 and his two orders dated
October and November, 1963. The said property was no longer the subject of litigation.

In the case at bar, Article 14 of Code of Commerce has no legal and binding effect and cannot apply to the respondent.
Upon the sovereignty from the Spain to the US and to the Republic of the Philippines, Art. 14 of this Code of Commerce,
which sourced from the Spanish Code of Commerce, appears to have been abrogated because whenever there is a
change in the sovereignty, political laws of the former sovereign are automatically abrogated, unless they are reenacted
by Affirmative Act of the New Sovereign.

Asuncion cannot also be held liable under the par. H, Sec. 3 of RA 3019, citing that the public officers cannot partake in
any business in connection with this office, or intervened or take part in his official capacity. The Judge and his wife had
withdrawn on January 31, 1967 from the corporation and sold their respective shares to 3rd parties, and it appears that
the corporation did not benefit in any case filed by or against it in court as there was no case filed in the different branches
of the Court of First Instance from the time of the drafting of the Articles of Incorporation of the corporation on March 12,
1966 up to its incorporation on January 9, 1967. The Judge realized early that their interest in the corporation contravenes
against Canon 25.

G.R. No. L-6355-56

August 31, 1953
FACTS
Collector of Internal Revenue Saturnino David ordered the taxing of Justice Pastor Endencias and Justice Fernando
Jugos compensation pursuant to Sec 13 of RA 590 which states that SEC. 13. No salary wherever received by
any public officer of the Republic of the Philippines shall be considered as exempt from the income tax, payment of
which is hereby declared not to be a diminution of his compensation fixed by the Constitution or by law. According to
Solicitor General Juan R. Liwanag and Solicitor Jose P. Alejandro on behalf of appellant Collector of Internal

Revenue, our decision in the case of Perfecto vs. Meer, supra, was not received favorably by Congress, because
immediately after its promulgation, Congress enacted Republic Act No. 590. The Solicitor General also reproduces
what he considers the pertinent discussion in the Lower House of House Bill No. 1127 which became Republic Act
No. 590.
ISSUE
Whether Sec 13 of RA 590 is constitutional or not.
HELD
By legislative fiat as enunciated in section 13, RA No. 590, Congress says that taxing the salary of a judicial officer is
not a decrease of compensation. This is a clear example of interpretation or ascertainment of the meaning of the
phrase which shall not be diminished during their continuance in office, found in section 9, Article VIII of the
Constitution, referring to the salaries of judicial officers. This act of interpreting the Constitution or any part thereof by
the Legislature is an invasion of the well-defined and established province and jurisdiction of the Judiciary. The rule
is recognized elsewhere that the legislature cannot pass any declaratory act, or act declaratory of what the law was
before its passage, so as to give it any binding weight with the courts. A legislative definition of a word as used in a
statute is not conclusive of its meaning as used elsewhere; otherwise, the legislature would be usurping a judicial
function in defining a term. The reason behind the exemption in the Constitution, as interpreted by the United States
Federal Supreme Court and this Court, is to preserve the independence of the Judiciary, not only of this High
Tribunal but of the other courts, whose present membership number more than 990 judicial officials. The
independence of the judges is of far greater importance than any revenue that could come from taxing their salaries.
In conclusion we reiterate the doctrine laid down in the case of Perfecto vs. Meer, supra, to the effect that the
collection of income tax on the salary of a judicial officer is a diminution thereof and so violates the Constitution. We
further hold that the interpretation and application of the Constitution and of statutes is within the exclusive province
and jurisdiction of the judicial department, and that in enacting a law, the Legislature may not legally provide therein
that it be interpreted in such a way that it may not violate a Constitutional prohibition, thereby tying the hands of the
courts in their task of later interpreting said statute, especially when the interpretation sought and provided in said
statute runs counter to a previous interpretation already given in a case by the highest court of the land.

Perfecto v Meer 85 Phil 552

GREGORIO PERFECTO vs. BIBIANO L. MEER[G.R. No. L-2348. February 27, 1950.]Facts:In April, 1947 the Collector of
Internal Revenue required Mr. Justice Gregorio Perfecto to pay income tax upon hissalary as member of this Court during
the year 1946. After paying the amount (P802), he instituted this action inthe Manila Court of First Instance contending
that the assessment was illegal, his salary not being taxable for thereason that imposition of taxes thereon would reduce it
in violation of the Constitution.Issue:Does the imposition of an income tax upon this salary amount to a diminution
thereof?Held:Yes. As in the United States during the second period, we must hold that salaries of judges are not included
in theword "income" taxed by the Income Tax Law. Two paramount circumstances may additionally be indicated, to
wit:First, when the Income Tax Law was first applied to the Philippines 1913, taxable "income" did not include salariesof
judicial officers when these are protected from diminution. That was the prevailing official belief in the UnitedStates, which
must be deemed to have been transplanted here ; and second, when the Philippine ConstitutionalConvention approved

(in 1935) the prohibition against diminution of the judges' compensation, the Federalprinciple was known that income tax
on judicial salaries really impairs them.This is not proclaiming a general tax immunity for men on the bench. These pay
taxes. Upon buying gasoline, orcars or other commodities, they pay the corresponding duties. Owning real property, they
pay taxes thereon. Andon incomes other than their judicial salary, assessments are levied. It is only when the tax is
charged directly ontheir salary and the effect of the tax is to diminish their official stipend

that the taxation must be resisted as aninfringement of the fundamental charter.Judges would indeed be hapless
guardians of the Constitution if they did not perceive and block encroachmentsupon their prerogatives in whatever form.
The undiminishable character of judicial salaries is not a mere privilegeof judges

personal and therefore waivable

but a basic limitation upon legislative or executive action imposedin the public interest (Evans vs. Gore

Republic of the Philippines

SUPREME COURT
Manila
G.R. No. 76180 October 24, 1986
IN RE: SATURNINO V. BERMUDEZ, petitioner.
R E S O L U T IO N

PER CURIAM:
In a petition for declaratory relief impleading no respondents, petitioner, as a lawyer, quotes the first paragraph of Section
5 (not Section 7 as erroneously stated) of Article XVIII of the proposed 1986 Constitution, which provides in full as follows:
Sec. 5. The six-year term of the incumbent President and Vice-President elected in the February 7, 1986 election is, for
purposes of synchronization of elections, hereby extended to noon of June 30, 1992.
The first regular elections for the President and Vice-President under this Constitution shall be held on the second
Monday of May, 1992.
Claiming that the said provision "is not clear" as to whom it refers, he then asks the Court "to declare and answer the
question of the construction and definiteness as to who, among the present incumbent President Corazon Aquino and
Vice-President Salvador Laurel and the elected President Ferdinand E. Marcos and Vice-President Arturo M. Tolentino
being referred to under the said Section 7 (sic) of ARTICLE XVIII of the TRANSITORY PROVISIONS of the proposed
1986 Constitution refers to, . ...
The petition is dismissed outright for lack of jurisdiction and for lack for cause of action.
Prescinding from petitioner's lack of personality to sue or to bring this action, (Tan vs. Macapagal, 43 SCRA 677), it is
elementary that this Court assumes no jurisdiction over petitions for declaratory relief. More importantly, the petition
amounts in effect to a suit against the incumbent President of the Republic, President Corazon C. Aquino, and it is equally
elementary that incumbent Presidents are immune from suit or from being brought to court during the period of their
incumbency and tenure.
The petition furthermore states no cause of action. Petitioner's allegation of ambiguity or vagueness of the aforequoted
provision is manifestly gratuitous, it being a matter of public record and common public knowledge that the Constitutional
Commission refers therein to incumbent President Corazon C. Aquino and Vice-President Salvador H. Laurel, and to no
other persons, and provides for the extension of their term to noon of June 30, 1992 for purposes of synchronization of

elections. Hence, the second paragraph of the cited section provides for the holding on the second Monday of May, 1992
of the first regular elections for the President and Vice-President under said 1986 Constitution. In previous cases, the
legitimacy of the government of President Corazon C. Aquino was likewise sought to be questioned with the claim that it
was not established pursuant to the 1973 Constitution. The said cases were dismissed outright by this court which held
that:
Petitioners have no personality to sue and their petitions state no cause of action. For the legitimacy of the Aquino
government is not a justiciable matter. It belongs to the realm of politics where only the people of the Philippines are the
judge. And the people have made the judgment; they have accepted the government of President Corazon C. Aquino
which is in effective control of the entire country so that it is not merely a de facto government but in fact and law a de jure
government. Moreover, the community of nations has recognized the legitimacy of tlie present government. All the eleven
members of this Court, as reorganized, have sworn to uphold the fundamental law of the Republic under her government.
(Joint Resolution of May 22, 1986 in G.R. No. 73748 [Lawyers League for a Better Philippines, etc. vs. President Corazon
C. Aquino, et al.]; G.R. No. 73972 [People's Crusade for Supremacy of the Constitution. etc. vs. Mrs. Cory Aquino, et al.];
and G.R. No. 73990 [Councilor Clifton U. Ganay vs. Corazon C. Aquino, et al.])
For the above-quoted reason, which are fully applicable to the petition at bar, mutatis mutandis, there can be no question
that President Corazon C. Aquino and Vice-President Salvador H. Laurel are the incumbent and legitimate President and
Vice-President of the Republic of the Philippines.or the above-quoted reasons, which are fully applicable to the petition at
bar,
ACCORDINGLY, the petition is hereby dismissed.
Teehankee, C.J., Feria, Yap, Fernan, Narvasa, Alampay and Paras, JJ., concur.
MELENCIO-HERRERA, J., concurring:
GUTIERREZ, Jr., J., concurring:
FELICIANO, JJ., concurring.
The petitioner asks the Court to declare who are "the incumbent President and Vice President elected in the February 7,
1986 elections" as stated in Article XVIII, Section 5 of the Draft Constitution adopted by the Constitutional Commission of
1986.
We agree that the petition deserves outright dismissal as this Court has no original jurisdiction over petitions for
declaratory relief.
As to lack of cause of action, the petitioner's prayer for a declaration as to who were elected President and Vice President
in the February 7, 1986 elections should be addressed not to this Court but to other departments of government
constitutionally burdened with the task of making that declaration.
The 1935 Constitution, the 1913 Constitution as amended, and the 1986 Draft Constitution uniformly provide 'that boards
of canvassers in each province and city shall certified who were elected President and Vice President in their respective
areas. The certified returns are transmitted to the legislature which proclaims, through the designated Presiding Head,
who were duty elected.
Copies of the certified returns from the provincial and city boards of canvassers have not been furnished this Court nor is
there any need to do so. In the absence of a legislature, we cannot assume the function of stating, and neither do we
have any factual or legal capacity to officially declare, who were elected President and Vice President in the February 7,
1986 elections.
As to who are the incumbent President and Vice President referred to in the 1986 Draft Constitution, we agree that there
is no doubt the 1986 Constitutional Commission referred to President Corazon C. Aquino and Vice President Salvador H.
Laurel.

Finally, we agree with the Resolution of the Court in G.R. Nos. 73748, 73972, and 73990.
For the foregoing reasons, we vote to DISMISS the instant petition.
CRUZ, J., concurring:
I vote to dismiss this petition on the ground that the Constitution we are asked to interpret has not yet been ratified and is
therefore not yet effective. I see here no actual conflict of legal rights susceptible of judicial determination at this time.
(Aetna Life Insurance Co. vs. Haworth, 300 U.S. 227; PACU vs. Secretary of Education, 97 Phil. 806.)
ALFREDO M. DE LEON vs. HON. BENHAMIN B. ESGUERRA (153 SCRA 602) Case Digest

Facts:
In 1982, Alfredo M. De Leon was elected as Baranggay Captain along with the other petitioners as Barangay Councilmen
of Baranggay Dolores, Taytay, Rizal. On February 9, 1987, he received a Memorandum antedated December 1, 1986,
signed on February 8, 1987 by OIC Gov. Benhamin B. Esguerra designating Florentino Magno as new Barangay Captain.
A separate Memorandum with the same dates was also issued by Hon. Esguerra replacing the Barangay Councilmen. De
Leon along with the other petitioners filed a petition to declare the subject Memorandum null and void and prevent the
respondents from taking over their positions in the Barangay. The petitioners maintained that OIC Gov. Esguerra no
longer have the authority to replace them under the 1987 Constitution and that they shall serve a term of six (6) years in
pursuant to Section 3 of the Barangay Election Act of 1982.

Issue:

Was the designation of the new Barangay Officials valid?

Ruling:

The effectivity of the Memorandum should be based on the date when it was signed, February 8, 1987. By that time, the
1987 Constitution was already in effect, thus superseding all previous constitution as provided in Section 27 of its
Transitory Provisions. Respondent OIC Governor could no longer rely on Section 2, Article III of the Provisional
Constitution to designate respondents to the elective positions occupied by petitioners.

Barangay Election Act of 1982 should still govern since it is not inconsistent with the 1987 Constitution.

Wherefore, the designation by the OIC Governor of new Barangay Officials was declared NO LEGAL FORCE AND
EFFECT and the Writ for Prohibition is GRANTED enjoining respondents perpetually from ouster/take-over of petitioners
position subject of this petition.
LAWYERS LEAGUE V AQUINO G.R. No. 73748 - May 22, 1986
LAWYERS LEAGUE FOR A BETTER PHILIPPINES vs. AQUINO
(G.R. No. 73748 - May 22, 1986)
-----------------------(There is no "Full-Text" of this case. This is a Minute Resolution made by the SC.)

Minute Resolutions

EN BANC
[G.R. No. 73748, May 22, 1986]
LAWYERS LEAGUE FOR A BETTER PHILIPPINES AND/OR OLIVER A. LOZANO VS. PRESIDENT CORAZON C.
AQUINO, ET AL.
SIRS/MESDAMES:
Quoted hereunder, for your information, is a resolution of this Court MAY 22, 1986.
In G.R. No. 73748, Lawyers League for a Better Philippines vs. President Corazon C. Aquino, et al.; G.R. No. 73972,
People's Crusade for Supremacy of the Constitution vs. Mrs. Cory Aquino, et al., and G.R. No. 73990, Councilor Clifton U.
Ganay vs. Corazon C. Aquino, et al., the legitimacy of the government of President Aquino is questioned. It is claimed that
her government is illegal because it was not established pursuant to the 1973 Constitution.
As early as April 10, 1986, this Court* had already voted to dismiss the petitions for the reasons to be stated
below. On April 17, 1986, Atty. Lozano as counsel for the petitioners in G.R. Nos. 73748 and 73972 withdrew the
petitions and manifested that they would pursue the question by extra-judicial methods. The withdrawal is
functus oficio.
The three petitions obviously are not impressed with merit. Petitioners have no personality to sue and their petitions state
no cause of action. For the legitimacy of the Aquino government is not a justiciable matter. It belongs to the realm of
politics where only the people of the Philippines are the judge. And the people have made the judgment; they have
accepted the government of President Corazon C. Aquino which is in effective control of the entire country so that it is not
merely a de factogovernment but is in fact and law a de jure government. Moreover, the community of nations has
recognized the legitimacy of the present government. All the eleven members of this Court, as reorganized, have sworn to
uphold the fundamental law of the Republic under her government.
In view of the foregoing, the petitions are hereby dismissed.

Very truly yours,

(Sgd.) GLORIA C. PARAS
Clerk of Court

* The Court was then composed of Teehankee, C.J. and Abad Santos., Melencio-Herrera, Plana, Escolin, Gutierrez, Jr.,
Cuevas, Alampay and Patajo, JJ.-----------------------------------------DIGEST
FACTS:
On February 25, 1986, President Corazon Aquino issued Proclamation No. 1 announcing that she and Vice President
Laurel were taking power.
On March 25, 1986, proclamation No.3 was issued providing the basis of the Aquino government assumption of power by
stating that the "new government was installed through a direct exercise of the power of the Filipino people assisted by
units of the New Armed Forces of the Philippines."
ISSUE:
Whether or not the government of Corazon Aquino is legitimate.
HELD:

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

The Court further held that:

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

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

The community of nations has recognized the legitimacy of the new government
In Re Letter of Associate Justice Reynato Puno
Facts:
Petitioner Assoc. Justice Puno, a member of the Court of Appeals (CA), wrote a letter dated Nov. 14, 1990
addressed to the Supreme Court about the correction of his seniority ranking in the CA. It appears from the records that
petitioner was first appointed as associate justice of the CA on June 20, 1980 but took his oath of office on Nov. 29, 1982.
The CA was reorganized and became the Intermediate Appellate Court (IAC) pursuant to Batas Pambansa Blg. 129, "An
Act Reorganizing the Judiciary Appropriating Funds Therefor and For Other Purposes." He was then appointed as
appellate justice and later accepted an appointment to be a deputy minister of Justice in the Ministry of Justice. In Edsa
Revolution in Feb. 1986 brought about reorganization of the entire government including the judiciary. A Screening
Committee was created. When Pres. Cory Aquino issued Executive Order No. 33, as an exercise of her legislative power,
the Screening Committee assigned the petitioner to rank no. 11 from being the assoc. justice of the NEW CA. However,
the petitioner's ranking changed from no. 11, he now ranked as no. 26. He alleges that the change in his seniority ranking
would be contrary to the provisions of issued order of Pres. Aquino. The court en banc ranted Justice Puno's request. A
motion for consideration was later filed by Campos and Javelliano who were affected by the change of ranking. They
contend that the petitioner cannot claim such reappointment because the court he had previously been appointed ceased
to exist at the date of his last appointment.

Issue:
Whether the present CA is a new court or merely a continuation of the CA and IAC that would negate any claim to
seniority enjoyed by the petitioner existing prior to said EO No. 33.

Held:
The present CA is a new entity, different and distinct from the CA or the IAC, for it was created in the wake of the
massive reorganization launched by the revolutionary government of Corazon Aquino in the people power. A revolution
has been defined as the complete overthrow of the established government in any country or state by those who were
previously subject to it as as sudden, radical, and fundamental change in the government or political system, usually
effected with violence. A government as a result of people's revolution is considered de jure if it is already accepted by
the family of nations or countries like the US, Great Britain, Germany, Japan, and others. In the new government under

Pres. Aquino, it was installed through direct exercise of the Filipino power. Therefore, it is the present CA that would
negate the claims of Justice Puno concerning his seniority ranking.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. L-13250 October 29, 1971

THE COLLECTOR OF INTERNAL REVENUE, petitioner,
vs.
ANTONIO CAMPOS RUEDA, respondent..
Assistant Solicitor General Jose P. Alejandro and Special Attorney Jose G. Azurin, (O.S.G.) for petitioner.
Ramirez and Ortigas for respondent.

FERNANDO, J.:
The basic issue posed by petitioner Collector of Internal Revenue in this appeal from a decision of the Court of Tax
Appeals as to whether or not the requisites of statehood, or at least so much thereof as may be necessary for the
acquisition of an international personality, must be satisfied for a "foreign country" to fall within the exemption of Section
122 of the National Internal Revenue Code 1 is now ripe for adjudication. The Court of Tax Appeals answered the question
in the negative, and thus reversed the action taken by petitioner Collector, who would hold respondent Antonio Campos
Rueda, as administrator of the estate of the late Estrella Soriano Vda. de Cerdeira, liable for the sum of P161,874.95 as
deficiency estate and inheritance taxes for the transfer of intangible personal properties in the Philippines, the deceased,
a Spanish national having been a resident of Tangier, Morocco from 1931 up to the time of her death in 1955. In an earlier
resolution promulgated May 30, 1962, this Court on the assumption that the need for resolving the principal question
would be obviated, referred the matter back to the Court of Tax Appeals to determine whether the alleged law of Tangier
did grant the reciprocal tax exemption required by the aforesaid Section 122. Then came an order from the Court of Tax
Appeals submitting copies of legislation of Tangier that would manifest that the element of reciprocity was not lacking. It
was not until July 29, 1969 that the case was deemed submitted for decision. When the petition for review was filed on
January 2, 1958, the basic issue raised was impressed with an element of novelty. Four days thereafter, however, on
January 6, 1958, it was held by this Court that the aforesaid provision does not require that the "foreign country" possess
an international personality to come within its terms. 2 Accordingly, we have to affirm.
The decision of the Court of Tax Appeals, now under review, sets forth the background facts as follows: "This is an appeal
interposed by petitioner Antonio Campos Rueda as administrator of the estate of the deceased Doa Maria de la Estrella
Soriano Vda. de Cerdeira, from the decision of the respondent Collector of Internal Revenue, assessing against and
demanding from the former the sum P161,874.95 as deficiency estate and inheritance taxes, including interest and
penalties, on the transfer of intangible personal properties situated in the Philippines and belonging to said Maria de la
Estrella Soriano Vda. de Cerdeira. Maria de la Estrella Soriano Vda. de Cerdeira (Maria Cerdeira for short) is a Spanish
national, by reason of her marriage to a Spanish citizen and was a resident of Tangier, Morocco from 1931 up to her death
on January 2, 1955. At the time of her demise she left, among others, intangible personal properties in the
Philippines." 3 Then came this portion: "On September 29, 1955, petitioner filed a provisional estate and inheritance tax
return on all the properties of the late Maria Cerdeira. On the same date, respondent, pending investigation, issued an
assessment for state and inheritance taxes in the respective amounts of P111,592.48 and P157,791.48, or a total of
P369,383.96 which tax liabilities were paid by petitioner ... . On November 17, 1955, an amended return was filed ...
wherein intangible personal properties with the value of P396,308.90 were claimed as exempted from taxes. On
November 23, 1955, respondent, pending investigation, issued another assessment for estate and inheritance taxes in the
amounts of P202,262.40 and P267,402.84, respectively, or a total of P469,665.24 ... . In a letter dated January 11, 1956,
respondent denied the request for exemption on the ground that the law of Tangier is not reciprocal to Section 122 of the

National Internal Revenue Code. Hence, respondent demanded the payment of the sums of P239,439.49 representing
deficiency estate and inheritance taxes including ad valorem penalties, surcharges, interests and compromise penalties ...
. In a letter dated February 8, 1956, and received by respondent on the following day, petitioner requested for the
reconsideration of the decision denying the claim for tax exemption of the intangible personal properties and the
imposition of the 25% and 5% ad valorem penalties ... . However, respondent denied request, in his letter dated May 5,
1956 ... and received by petitioner on May 21, 1956. Respondent premised the denial on the grounds that there was no
reciprocity [with Tangier, which was moreover] a mere principality, not a foreign country. Consequently, respondent
demanded the payment of the sums of P73,851.21 and P88,023.74 respectively, or a total of P161,874.95 as deficiency
estate and inheritance taxes including surcharges, interests and compromise penalties." 4
The matter was then elevated to the Court of Tax Appeals. As there was no dispute between the parties regarding the
values of the properties and the mathematical correctness of the deficiency assessments, the principal question as noted
dealt with the reciprocity aspect as well as the insisting by the Collector of Internal Revenue that Tangier was not a foreign
country within the meaning of Section 122. In ruling against the contention of the Collector of Internal Revenue, the
appealed decision states: "In fine, we believe, and so hold, that the expression "foreign country", used in the last proviso
of Section 122 of the National Internal Revenue Code, refers to a government of that foreign power which, although not an
international person in the sense of international law, does not impose transfer or death upon intangible person properties
of our citizens not residing therein, or whose law allows a similar exemption from such taxes. It is, therefore, not
necessary that Tangier should have been recognized by our Government order to entitle the petitioner to the exemption
benefits of the proviso of Section 122 of our Tax. Code." 5
Hence appeal to this court by petitioner. The respective briefs of the parties duly submitted, but as above indicated,
instead of ruling definitely on the question, this Court, on May 30, 1962, resolve to inquire further into the question of
reciprocity and sent back the case to the Court of Tax Appeals for the motion of evidence thereon. The dispositive portion
of such resolution reads as follows: "While section 122 of the Philippine Tax Code aforequoted speaks of 'intangible
personal property' in both subdivisions (a) and (b); the alleged laws of Tangier refer to 'bienes muebles situados en
Tanger', 'bienes muebles radicantes en Tanger', 'movables' and 'movable property'. In order that this Court may be able to
determine whether the alleged laws of Tangier grant the reciprocal tax exemptions required by Section 122 of the Tax
Code, and without, for the time being, going into the merits of the issues raised by the petitioner-appellant, the case is
[remanded] to the Court of Tax Appeals for the reception of evidence or proof on whether or not the words `bienes
muebles', 'movables' and 'movable properties as used in the Tangier laws, include or embrace 'intangible person property',
as used in the Tax Code." 6 In line with the above resolution, the Court of Tax Appeals admitted evidence submitted by the
administrator petitioner Antonio Campos Rueda, consisting of exhibits of laws of Tangier to the effect that "the transfers by
reason of death of movable properties, corporeal or incorporeal, including furniture and personal effects as well as of
securities, bonds, shares, ..., were not subject, on that date and in said zone, to the payment of any death tax, whatever
might have been the nationality of the deceased or his heirs and legatees." It was further noted in an order of such Court
referring the matter back to us that such were duly admitted in evidence during the hearing of the case on September 9,
1963. Respondent presented no evidence." 7
The controlling legal provision as noted is a proviso in Section 122 of the National Internal Revenue Code. It reads thus:
"That no tax shall be collected under this Title in respect of intangible personal property (a) if the decedent at the time of
his death was a resident of a foreign country which at the time of his death did not impose a transfer tax or death tax of
any character in respect of intangible person property of the Philippines not residing in that foreign country, or (b) if the
laws of the foreign country of which the decedent was a resident at the time of his death allow a similar exemption from
transfer taxes or death taxes of every character in respect of intangible personal property owned by citizens of the
Philippines not residing in that foreign country." 8 The only obstacle therefore to a definitive ruling is whether or not as
vigorously insisted upon by petitioner the acquisition of internal personality is a condition sine qua non to Tangier being
considered a "foreign country". Deference to the De Lara ruling, as was made clear in the opening paragraph of this
opinion, calls for an affirmance of the decision of the Court of Tax Appeals.
It does not admit of doubt that if a foreign country is to be identified with a state, it is required in line with Pound's
formulation that it be a politically organized sovereign community independent of outside control bound by penalties of
nationhood, legally supreme within its territory, acting through a government functioning under a regime of
law. 9 It is thus a sovereign person with the people composing it viewed as an organized corporate society under a
government with the legal competence to exact obedience to its commands. 10 It has been referred to as a body-politic
organized by common consent for mutual defense and mutual safety and to promote the general welfare. 11 Correctly has
it been described by Esmein as "the juridical personification of the nation." 12 This is to view it in the light of its historical
development. The stress is on its being a nation, its people occupying a definite territory, politically organized, exercising
by means of its government its sovereign will over the individuals within it and maintaining its separate international
personality. Laski could speak of it then as a territorial society divided into government and subjects, claiming within its
allotted area a supremacy over all other institutions. 13 McIver similarly would point to the power entrusted to its

government to maintain within its territory the conditions of a legal order and to enter into international relations. 14 With
the latter requisite satisfied, international law do not exact independence as a condition of statehood. So Hyde did
opine. 15
Even on the assumption then that Tangier is bereft of international personality, petitioner has not successfully made out a
case. It bears repeating that four days after the filing of this petition on January 6, 1958 in Collector of Internal Revenue v.
De Lara, 16 it was specifically held by us: "Considering the State of California as a foreign country in relation to section 122
of our Tax Code we believe and hold, as did the Tax Court, that the Ancilliary Administrator is entitled the exemption from
the inheritance tax on the intangible personal property found in the Philippines." 17 There can be no doubt that California
as a state in the American Union was in the alleged requisite of international personality. Nonetheless, it was held to be a
foreign country within the meaning of Section 122 of the National Internal Revenue Code. 18
What is undeniable is that even prior to the De Lara ruling, this Court did commit itself to the doctrine that even a tiny
principality, that of Liechtenstein, hardly an international personality in the sense, did fall under this exempt category. So it
appears in an opinion of the Court by the then Acting Chief Justicem Bengson who thereafter assumed that position in a
permanent capacity, in Kiene v. Collector of Internal Revenue. 19 As was therein noted: 'The Board found from the
documents submitted to it proof of the laws of Liechtenstein that said country does not impose estate, inheritance
and gift taxes on intangible property of Filipino citizens not residing in that country. Wherefore, the Board declared that
pursuant to the exemption above established, no estate or inheritance taxes were collectible, Ludwig Kiene being a
resident of Liechtestein when he passed away." 20 Then came this definitive ruling: "The Collector hereafter named the
respondent cites decisions of the United States Supreme Court and of this Court, holding that intangible personal
property in the Philippines belonging to a non-resident foreigner, who died outside of this country is subject to the estate
tax, in disregard of the principle 'mobilia sequuntur personam'. Such property is admittedly taxable here. Without the
proviso above quoted, the shares of stock owned here by the Ludwig Kiene would be concededly subject to estate and
inheritance taxes. Nevertheless our Congress chose to make an exemption where conditions are such that demand
reciprocity as in this case. And the exemption must be honored." 21
WHEREFORE, the decision of the respondent Court of Tax Appeals of October 30, 1957 is affirmed. Without
pronouncement as to costs.
Concepcion, C.J., Makalintal, Zaldivar, Castro, Villamor and Makasiar, JJ., concur.
Reyes, J.B.L., J., concurs in the result.
Teehankee and Barredo, JJ., took no part.