THE CONCEPT OF THE STATE 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. G.R No. 187167 August 16, 2011

BERNARDO, VALERIE PAGASA BUENAVENTURA, EDAN MARRI CAETE, VANN ALLEN DELA CRUZ, RENE DELORINO, PAULYN MAY DUMAN, SHARON ESCOTO, RODRIGO FAJARDO III, GIRLIE FERRER, RAOULLE OSEN FERRER, CARLA REGINA GREPO, ANNA MARIE CECILIA GO, IRISH KAY KALAW, MARY ANN JOY LEE, MARIA LUISA MANALAYSAY, MIGUEL RAFAEL MUSNGI, MICHAEL OCAMPO, JAKLYN HANNA PINEDA, WILLIAM RAGAMAT, MARICAR RAMOS, ENRIK FORT REVILLAS, JAMES MARK TERRY RIDON, JOHANN FRANTZ RIVERA IV, CHRISTIAN RIVERO, DIANNE MARIE ROA, NICHOLAS SANTIZO, MELISSA CHRISTINA SANTOS, CRISTINE MAE TABING, VANESSA ANNE TORNO, MARIA ESTER VANGUARDIA, and MARCELINO VELOSO III, Petitioners, vs. HON. EDUARDO ERMITA, IN HIS CAPACITY AS EXECUTIVE SECRETARY, HON. ALBERTO ROMULO, IN HIS CAPACITY AS SECRETARY OF THE DEPARTMENT OF FOREIGN AFFAIRS, HON. ROLANDO ANDAYA, IN HIS CAPACITY AS SECRETARY OF THE DEPARTMENT OF BUDGET AND MANAGEMENT, HON. DIONY VENTURA, IN HIS CAPACITY AS ADMINISTRATOR OF THE NATIONAL MAPPING & RESOURCE INFORMATION AUTHORITY, and HON. HILARIO DAVIDE, JR., IN HIS CAPACITY AS REPRESENTATIVE OF THE PERMANENT MISSION OF THE REPUBLIC OF THE PHILIPPINES TO THE UNITED NATIONS, Respondents. DECISION CARPIO, J.: The Case This original action for the writs of certiorari and prohibition assails the constitutionality of Republic Act No. 95221 (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

PROF. MERLIN M. MAGALLONA, AKBAYAN PARTY-LIST REP. RISA HONTIVEROS, PROF. HARRY C. ROQUE, JR., AND UNIVERSITY OF THE PHILIPPINES COLLEGE OF LAW STUDENTS, ALITHEA BARBARA ACAS, VOLTAIRE ALFERES, CZARINA MAY ALTEZ, FRANCIS ALVIN ASILO, SHERYL BALOT, RUBY AMOR BARRACA, JOSE JAVIER BAUTISTA, ROMINA

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 Philippines7 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. Petitioners, 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 prerogative15 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, noncompliance 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.1avvphi1 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 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)

Internal or archipelagic waters 166,858 171,435 Territorial Sea 274,136 32,106 Exclusive Economic Zone 382,669 TOTAL 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 KIG32 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 DefensorSantiago, 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.1avvphi1 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 121"36 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 Constitution39 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. xxxx

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.47

Petitioners 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. Factoran50 treated 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 251 ) 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 III55 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 twofronted 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 internationallyrecognized 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-9657. November 29, 1956.] LEOPOLDO T. BACANI and MATEO A. MATOTO, Plaintiffs-Appellees, vs. NATIONAL COCONUT CORPORATION, ET AL., Defendants, NATIONAL COCONUT CORPORATION and BOARD OF LIQUIDATORS, DefendantsAppellants.

DECISION BAUTISTA ANGELO, J.: Plaintiffs herein are court stenographers assigned in Branch VI of the Court of First Instance of Manila. During the pendency of Civil Case No. 2293 of said court, entitled Francisco Sycip vs. National Coconut Corporation, Assistant Corporate Counsel Federico Alikpala, counsel for Defendant, requested said stenographers for copies of the transcript of the stenographic notes taken by them during the hearing. Plaintiffs complied with the request by delivering to Counsel Alikpala the needed transcript containing 714 pages and thereafter submitted to him their bills for the payment of their fees. The National Coconut Corporation paid the amount of P564 to Leopoldo T. Bacani and P150 to Mateo A. Matoto for said transcript at the rate of P1 per page. Upon inspecting the books of this corporation, the Auditor General disallowed the payment of these fees and sought the recovery of the amounts paid. On January 19, 1953, the Auditor General required the Plaintiffs to reimburse said amounts on the strength of a circular of the Department of Justice wherein the opinion was expressed that the National Coconut Corporation, being a government entity, was

exempt from the payment of the fees in question. On February 6, 1954, the Auditor General issued an order directing the Cashier of the Department of Justice to deduct from the salary of Leopoldo T. Bacani the amount of P25 every payday and from the salary of Mateo A. Matoto the amount of P10 every payday beginning March 30, 1954. To prevent deduction of these fees from their salaries and secure a judicial ruling that the National Coconut Corporation is not a government entity within the purview of section 16, Rule 130 of the Rules of Court, this action was instituted in the Court of First Instance of Manila. Defendants set up as a defense that the National Coconut Corporation is a government entity within the purview of section 2 of the Revised Administrative Code of 1917 and, hence, it is exempt from paying the stenographers fees under Rule 130 of the Rules of Court. After trial, the court found for the Plaintiffs declaring (1) that Defendant National Coconut Corporation is not a government entity within the purview of section 16, Rule 130 of the Rules of Court; chan roblesvirtualawlibrary(2) that the payments already made by said Defendant to Plaintiffs herein and received by the latter from the former in the total amount of P714, for copies of the stenographic transcripts in question, are valid, just and legal; chan roblesvirtualawlibraryand (3) that Plaintiffs are under no obligation whatsoever to make a refund of these payments already received by them. This is an appeal from said decision. Under section 16, Rule 130 of the Rules of Court, the Government of the Philippines is exempt from paying the legal fees provided for therein, and among these fees are those which stenographers may charge for the transcript of notes taken by them that may be requested by any interested person (section 8). The fees in question are for the transcript of notes taken during the hearing of a case in which the National Coconut Corporation is interested, and the transcript was requested by its assistant corporate counsel for the use of said corporation. On the other hand, section 2 of the Revised Administrative Code defines the scope of the term Government of the Republic of the Philippines as follows:chanroblesvirtuallawlibrary The Government of the Philippine Islands is a term which refers to the corporate governmental entity through which the functions of government are exercised throughout the Philippine Islands, including, save as the contrary appears from the context, the various arms through which political authority is made effective in said Islands, whether pertaining to the central Government or to the provincial or municipal branches or other form of local government. The question now to be determined is whether the National Coconut Corporation

may be considered as included in the term Government of the Republic of the Philippines for the purposes of the exemption of the legal fees provided for in Rule 130 of the Rules of Court. As may be noted, the term Government of the Republic of the Philippines refers to a government entity through which the functions of government are exercised, including the various arms through which political authority is made effective in the Philippines, whether pertaining to the central government or to the provincial or municipal branches or other form of local government. This requires a little digression on the nature and functions of our government as instituted in our Constitution. To begin with, we state that the term Government may be defined as that institution or aggregate of institutions by which an independent society makes and carries out those rules of action which are necessary to enable men to live in a social state, or which are imposed upon the people forming that society by those who possess the power or authority of prescribing them (U.S. vs. Dorr, 2 Phil., 332). This institution, when referring to the national government, has reference to what our Constitution has established composed of three great departments, the legislative, executive, and the judicial, through which the powers and functions of government are exercised. These functions are twofold:chanroblesvirtuallawlibrary constitute and ministrant. The former are those which constitute the very bonds of society and are compulsory in nature; chan roblesvirtualawlibrarythe latter are those that are undertaken only by way of advancing the general interests of society, and are merely optional. President Wilson enumerates the constituent functions as follows:chanroblesvirtuallawlibrary (1) The keeping of order and providing for the protection of persons and property from violence and robbery. (2) The fixing of the legal relations between man and wife and between parents and children. (3) The regulation of the holding, transmission, and interchange of property, and the determination of its liabilities for debt or for crime. (4) The determination of contract rights between individuals. (5) The definition and punishment of crime. (6) The administration of justice in civil cases. (7) The determination of the political duties, privileges, and relations of citizens.

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(8) Dealings of the state with foreign powers:chanroblesvirtuallawlibrary the preservation of the state from external danger or encroachment and the advancement of its international interests. (Malcolm, The Government of the Philippine Islands, p. 19.) The most important of the ministrant functions are:chanroblesvirtuallawlibrary public works, public education, public charity, health and safety regulations, and regulations of trade and industry. The principles deter mining whether or not a government shall exercise certain of these optional functions are:chanroblesvirtuallawlibrary (1) that a government should do for the public welfare those things which private capital would not naturally undertake and (2) that a government should do these things which by its very nature it is better equipped to administer for the public welfare than is any private individual or group of individuals. (Malcolm, The Government of the Philippine Islands, pp. 19-20.) From the above we may infer that, strictly speaking, there are functions which our government is required to exercise to promote its objectives as expressed in our Constitution and which are exercised by it as an attribute of sovereignty, and those which it may exercise to promote merely the welfare, progress and prosperity of the people. To this latter class belongs the organization of those corporations owned or controlled by the government to promote certain aspects of the economic life of our people such as the National Coconut Corporation. These are what we call government-owned or controlled corporations which may take on the form of a private enterprise or one organized with powers and formal characteristics of a private corporations under the Corporation Law. The question that now arises is:chanroblesvirtuallawlibrary Does the fact that these corporation perform certain functions of government make them a part of the Government of the Philippines? The answer is simple:chanroblesvirtuallawlibrary they do not acquire that status for the simple reason that they do not come under the classification of municipal or public corporation. Take for instance the National Coconut Corporation. While it was organized with the purpose of adjusting the coconut industry to a position independent of trade preferences in the United States and of providing Facilities for the better curing of copra products and the proper utilization of coconut byproducts, a function which our government has chosen to exercise to promote the coconut industry, however, it was given a corporate power separate and distinct from our government, for it was made subject to the provisions of our Corporation Law in so far as its corporate existence and the powers that it may exercise are concerned (sections 2 and 4, Commonwealth Act No. 518). It may sue and be sued in the same manner as any other private corporations, and in this sense it is an

entity different from our government. As this Court has aptly said, The mere fact that the Government happens to be a majority stockholder does not make it a public corporation (National Coal Co. vs. Collector of Internal Revenue, 46 Phil., 586-587). By becoming a stockholder in the National Coal Company, the Government divested itself of its sovereign character so far as respects the transactions of the corporation cralaw . Unlike the Government, the corporation may be sued without its consent, and is subject to taxation. Yet the National Coal Company remains an agency or instrumentality of government. (Government of the Philippine Islands vs. Springer, 50 Phil., 288.) To recapitulate, we may mention that the term Government of the Republic of the Philippines used in section 2 of the Revised Administrative Code refers only to that government entity through which the functions of the government are exercised as an attribute of sovereignty, and in this are included those arms through which political authority is made effective whether they be provincial, municipal or other form of local government. These are what we call municipal corporations. They do not include government entities which are given a corporate personality separate and distinct from the government and which are governed by the Corporation Law. Their powers, duties and liabilities have to be determined in the light of that law and of their corporate charters. They do not therefore come within the exemption clause prescribed in section 16, Rule 130 of our Rules of Court. Public corporations are those formed or organized for the government of a portion of the State. (Section 3, Republic Act No. 1459, Corporation Law). The generally accepted definition of a municipal corporation would only include organized cities and towns, and like organizations, with political and legislative powers for the local, civil government and police regulations of the inhabitants of the particular district included in the boundaries of the corporation. Heller vs. Stremmel, 52 Mo. 309, 312. In its more general sense the phrase municipal corporation may include both towns and counties, and other public corporations created by government for political purposes. In its more common and limited signification, it embraces only incorporated villages, towns and cities. Dunn vs. Court of County Revenues, 85 Ala. 144, 146, 4 So. 661. (McQuillin, Municipal Corporations, 2nd ed., Vol. 1, p. 385.) We may, therefore, define a municipal corporation in its historical and strict sense to be the incorporation, by the authority of the government, of the inhabitants of a particular place or district, and authorizing them in their corporate capacity to exercise subordinate specified powers of legislation and regulation with respect to

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their local and internal concerns. This power of local government is the distinctive purpose and the distinguishing feature of a municipal corporation proper. (Dillon, Municipal Corporations, 5th ed., Vol. I, p. 59.) It is true that under section 8, Rule 130, stenographers may only charge as fees P0.30 for each page of transcript of not less than 200 words before the appeal is taken and P0.15 for each page after the filing of the appeal, but in this case the National Coconut Corporation has agreed and in fact has paid P1.00 per page for the services rendered by the Plaintiffs and has not raised any objection to the amount paid until its propriety was disputed by the Auditor General. The payment of the fees in question became therefore contractual and as such is valid even if it goes beyond the limit prescribed in section 8, Rule 130 of the Rules of Court. As regards the question of procedure raised by Appellants, suffice it to say that the same is insubstantial, considering that this case refers not to a money claim disapproved by the Auditor General but to an action of prohibition the purpose of which is to restrain the officials concerned from deducting from Plaintiffs salaries the amount paid to them as stenographers fees. This case does not come under section 1, Rule 45 of the Rules of Court relative to appeals from a decision of the Auditor General. Wherefore, the decision appealed from is affirmed, without pronouncement as to costs. Paras, C.J., Bengzon, Padilla, Montemayor, Labrador, Concepcion, Reyes, J. B. L., Endencia and Felix, JJ., concur. G.R. No. L-32052 July 25, 1975 PHILIPPINE VIRGINIA TOBACCO ADMINISTRATION, petitioner, vs. COURT OF INDUSTRIAL RELATIONS, REUEL ABRAHAM, MILAGROS ABUEG, AVELINO ACOSTA, CAROLINA ACOSTA, MARTIN AGSALUD, JOSEFINA AGUINALDO, GLORIA ALBANO, ANTONIO ALUNING, COSME ALVAREZ, ISABEL ALZATE, AURORA APUSEN, TOMAS ARCANGEL, LOURDES ARJONELLO, MANUEL AROMIN, DIONISIO ASISTIN, JOSE AURE, NICASIO AZNAR, EUGENIO AZURIN, CLARITA BACUGAN, PIO BALAGOT, HEREDIO BALMACEDA, ESTHER BANAAG, JOVENCIO BARBERO, MONICO BARBADILLO, HERNANDO BARROZO, FILIPINA BARROZO, REMEDIO BARTOLOME, ANGELINA BASCOS, JOSE BATALLA, ALMARIO BAUTISTA, EUGENIO BAUTISTA, JR., HERMALO BAUTISTA, JUANITO BAUTISTA, SEVERINO BARBANO, CAPPIA BARGONIA, ESMERALDA BERNARDEZ,

RUBEN BERNARDEZ, ALFREDO BONGER, TOMAS BOQUIREN, ANGELINA BRAVO, VIRGINIA BRINGA, ALBERTO BUNEO, SIMEON CABANAYAN, LUCRECIA CACATIAN, LEONIDES CADAY, ANGELINA CADOTTE, IGNACIO CALAYCAY, PACIFICO CALUB, RUFINO CALUZA, CALVIN CAMBA, ALFREDO CAMPOSENO, BAGUILITA CANTO, ALFREDO CARRERA, PEDRO CASES, CRESCENTE CASIS, ERNESTO CASTANEDA, HERMINIO CASTILLO, JOSE CASTRO, LEONOR CASTRO, MADEO CASTRO, MARIA PINZON CASTRO, PABLO CATURA, RESTITUTO CESPADES, FLORA CHACON, EDMUNDO CORPUZ, ESTHER CRUZ, CELIA CUARESMA, AQUILINO DACAYO, DIONISIA DASALLA, SOCORRO DELFIN, ABELARDO DIAZ, ARTHUR DIAZ, CYNTHIA DIZON, MARCIA DIZON, ISABELO DOMINGO, HONORATA DOZA, CAROLINA DUAD, JUSTINIANO EPISTOLA, ROMEO ENCARNACION, PRIMITIVO ESCANO, ELSA ESPEJO, JUAN ESPEJO, RIZALINA ESQUILLO, YSMAEL FARINAS, LORNA FAVIS, DAN FERNANDEZ, JAIME FERNANDEZ, ALFREDO FERRER, MODESTO FERRER, JR., EUGENIO FLANDEZ, GUILLERMO FLORENDO, ALFREDO FLORES, DOMINGA FLORES, ROMEO FLORES, LIGAYA FONTANILLA, MELCHOR GASMEN, LEILA GASMENA, CONSUELO GAROLAGA, ALFONSO GOROSPE, CESAR GOROSPE, RICARDO GOROSPE, JR., CARLITO GUZMAN, ERNESTO DE GUZMAN, THELMA DE GUZMAN, FELIX HERNANDEZ, SOLIVEN HERNANDO, FRANCISCO HIDALGO, LEONILO INES, SIXTO JAQUIES, TRINIDAD JAVIER, FERMIN LAGUA, GUALBERTO LAMBINO, ROMAN LANTING, OSCAR LAZO, ROSARIO LAZO, JOSEFINA DE LARA, AMBROSIO LAZOL, NALIE LIBATIQUE, LAMBERTO LLAMAS, ANTONIO LLANES, ROMULA LOPEZ, ADRIANO LORENZANA, ANTONIO MACARAEG, ILDEFONSO MAGAT, CECILIO MAGHANOY, ALFONSO MAGSANOC, AVELINA MALLARE, AUGUSTO MANALO, DOMINADOR MANASAN, BENITO MANECLANG, JR., TIRSO MANGUMAY, EVELIA MANZANO, HONORANTE MARIANO, DOMINGO MEDINA, MARTIN MENDOZA, PERFECTO MILANA, EMILIO MILLAN, GREGORIO MONEGAS, CONSOLACION NAVALTA, NOLI OCAMPO, VICENTE CLEGARIO, ELPIDIO PALMONES, ARACELI PANGALANGAN, ISIDORO PANLASIGUI, JR., ARTEMIO PARIS, JR., FEDERICO PAYUMO, JR., NELIA PAYUMO, BITUEN PAZ, FRANCISCO PENGSON, OSCAR PERALTA, PROCORRO PERALTA, RAMON PERALTA, MINDA PICHAY, MAURO PIMENTEL, PRUDENCIO PIMENTEL, LEOPOLDO PUNO, REYNALDO RABE, ROLANDO REA, CONSTANTINO REA, CECILIA RICO, CECILIO RILLORAZA, AURORA ROMAN, MERCEDES RUBIO, URSULA RUPISAN, OLIVIA SABADO, BERNARDO SACRAMENTO, LUZ SALVADOR, JOSE SAMSON, JR., ROMULA DE LOS SANTOS, ANTONIO SAYSON, JR., FLORANTE SERIL, MARIO SISON, RUDY SISON, PROCEDIO TABIN, LUCENA TABISULA, HANNIBAL TAJANO,

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ENRIQUE TIANGCO, JR., JUSTINIANO TOBIAS, NYMIA TOLENTINO, CONSTANTE TOLENTINO, TEODORO TOREBIO, FEDERICO TRINIDAD, JOVENCINTO TRINIDAD, LAZARO VALDEZ, LUDRALINA VALDEZ, MAXIMINA VALDEZ, FRANCISCO VELASCO, JR., ROSITA VELASCO, SEVERO VANTANILLA, VENANCIO VENTIGAN, FELICITAS VENUS, NIEVES DE VERA, ELISEO VERSOZA, SILVESTRE VILA, GLORIA VILLAMOR, ALEJANDRO VELLANUEVA, DAVID VILLANUEVA, CAROLINA VILLASENOR ORLANDO VILLASTIQUE, MAJELLA VILORIN, ROSARIO VILORIA, MAY VIRATA, FEDERICO VIRAY, MELBA YAMBAO, MARIO ZAMORA, AUTENOR ABUEG, SOTERO ACEDO, HONRADO ALBERTO, FELIPE ALIDO, VICENTE ANCHUELO, LIBERTAD APEROCHO, MARIANO BALBAGO, MARIO BALMACEDA, DAISY BICENIO, SYLVIA BUSTAMANTE, RAYMUNDO GEMERINO, LAZARO CAPURAS, ROGELIO CARUNGCONG, ZACARIAS CAYETANO, JR., LILY CHUA, ANDRES CRUZ, ARTURO CRUZ, BIENVENIDO ESTEBAN, PABLO JARETA, MANUEL JOSE, NESTORIA KINTANAR, CLEOPATRIA LAZEM. MELCHOR LAZO, JESUS LUNA, GASPAR MARINAS, CESAR MAULSON, MANUEL MEDINA, JESUS PLURAD, LAKAMBINI RAZON, GLORIA IBANEZ, JOSE SANTOS, ELEAZAR SQUI, JOSE TAMAYO, FELIPE TENORIO, SILVINO UMALI, VICENTE ZARA, SATURNINO GARCIA, WILLIAM GARCIA, NORMA GARINGARAO, ROSARIO ANTONIO, RUBEN BAUTISTA, QUIRINO PUESTO, NELIA M. GOMERI, OSCAR R. LANUZA, AURORA M. LINDAYA, GREGORIO MOGSINO, JACRM B. PAPA, GREGORIO R. RIEGO, TERESITA N. ROZUL, MAGTANGOL SAMALA, PORFIRIO AGOCOLIS, LEONARDO MONTE, HERMELINO PATI, ALFREDO PAYOYO, PURIFICACION ROJAS, ODANO TEANO, RICARDO SANTIAGO, and MARCELO MANGAHAS, respondents. Gov't. Corp. Counsel Leopoldo M. Abellera, Trial Attorneys Manuel M. Lazaro and Vicente Constantine, Jr., for petitioner. Renato B. Kare and Simeon C. Sato for private respondents.

question of whether petitioner, the Philippine Virginia Tobacco Administration, discharges governmental and not proprietary functions. The landmark opinion of the then Justice, row Chief Justice, Makalintal in Agricultural Credit and Cooperative Financing Administration v. Confederation of Unions in Government Corporations and offices, points the way to the right answer. 1 It interpreted the then fundamental law as hostile to the view of a limited or negative state. It is antithetical to the laissez faire concept. For as noted in an earlier decision, the welfare state concept "is not alien to the philosophy of [the 1935] Constitution." 2 It is much more so under the present Charter, which is impressed with an even more explicit recognition of social and economic rights. 3 There is manifest, to recall Laski, "a definite increase in the profundity of the social conscience," resulting in "a state which seeks to realize more fully the common good of its members." 4 It does not necessarily follow, however, just because petitioner is engaged in governmental rather than proprietary functions, that the labor controversy was beyond the jurisdiction of the now defunct respondent Court. Nor is the objection raised that petitioner does not come within the coverage of the Eight-Hour Labor Law persuasive. 5 We cannot then grant the reversal sought. We affirm. The facts are undisputed. On December 20, 1966, claimants, now private respondents, filed with respondent Court a petition wherein they alleged their employment relationship, the overtime services in excess of the regular eight hours a day rendered by them, and the failure to pay them overtime compensation in accordance with Commonwealth Act No. 444. Their prayer was for the differential between the amount actually paid to them and the amount allegedly due them. 6 There was an answer filed by petitioner Philippine Virginia Tobacco Administration denying the allegations and raising the special defenses of lack of a cause of action and lack of jurisdiction. 7 The issues were thereafter joined, and the case set for trial, with both parties presenting their evidence. 8 After the parties submitted the case for decision, the then Presiding Judge Arsenio T. Martinez of respondent Court issued an order sustaining the claims of private respondents for overtime services from December 23, 1963 up to the date the decision was rendered on March 21, 1970, and directing petitioner to pay the same, minus what it had already paid. 9 There was a motion for reconsideration, but respondent Court en banc denied the same. 10 Hence this petition for certiorari. Petitioner Philippine Virginia Tobacco Administration, as had been noted, would predicate its plea for the reversal of the order complained of on the basic proposition that it is beyond the jurisdiction of respondent Court as it is exercising governmental functions and that it is exempt from the operation of Commonwealth Act No. 444. 11 While, to repeat, its submission as to the governmental character of

FERNANDO, J.: The principal issue that calls for resolution in this appeal by certiorari from an order of respondent Court of Industrial Relations is one of constitutional significance. It is concerned with the expanded role of government necessitated by the increased responsibility to provide for the general welfare. More specifically, it deals with the

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its operation is to be given credence, it is not a necessary consequence that respondent Court is devoid of jurisdiction. Nor could the challenged order be set aside on the additional argument that the Eight-Hour Labor Law is not applicable to it. So it was, at the outset, made clear. 1. A reference to the enactments creating petitioner corporation suffices to demonstrate the merit of petitioner's plea that it performs governmental and not proprietary functions. As originally established by Republic Act No. 2265, 12 its purposes and objectives were set forth thus: "(a) To promote the effective merchandising of Virginia tobacco in the domestic and foreign markets so that those engaged in the industry will be placed on a basis of economic security; (b) To establish and maintain balanced production and consumption of Virginia tobacco and its manufactured products, and such marketing conditions as will insure and stabilize the price of a level sufficient to cover the cost of production plus reasonable profit both in the local as well as in the foreign market; (c) To create, establish, maintain, and operate processing, warehousing and marketing facilities in suitable centers and supervise the selling and buying of Virginia tobacco so that the farmers will enjoy reasonable prices that secure a fair return of their investments; (d) To prescribe rules and regulations governing the grading, classifying, and inspecting of Virginia tobacco; and (e) To improve the living and economic conditions of the people engaged in the tobacco industry." 13 The amendatory statute, Republic Act No. 4155, 14 renders even more evident its nature as a governmental agency. Its first section on the declaration of policy reads: "It is declared to be the national policy, with respect to the local Virginia tobacco industry, to encourage the production of local Virginia tobacco of the qualities needed and in quantities marketable in both domestic and foreign markets, to establish this industry on an efficient and economic basis, and, to create a climate conducive to local cigarette manufacture of the qualities desired by the consuming public, blending imported and native Virginia leaf tobacco to improve the quality of locally manufactured cigarettes." 15 The objectives are set forth thus: "To attain this national policy the following objectives are hereby adopted: 1. Financing; 2. Marketing; 3. The disposal of stocks of the Agricultural Credit Administration (ACA) and the Philippine Virginia Tobacco Administration (PVTA) at the best obtainable prices and conditions in order that a reinvigorated Virginia tobacco industry may be established on a sound basis; and 4. Improving the quality of locally manufactured cigarettes through blending of imported and native Virginia leaf tobacco; such importation with corresponding exportation at a ratio of one kilo of imported to four kilos of exported Virginia tobacco, purchased by the importer-exporter from the Philippine Virginia Tobacco Administration." 16

It is thus readily apparent from a cursory perusal of such statutory provisions why petitioner can rightfully invoke the doctrine announced in the leading Agricultural Credit and Cooperative Financing Administration decision 17 and why the objection of private respondents with its overtones of the distinction between constituent and ministrant functions of governments as set forth in Bacani v. National Coconut Corporation 18 if futile. The irrelevance of such a distinction considering the needs of the times was clearly pointed out by the present Chief Justice, who took note, speaking of the reconstituted Agricultural Credit Administration, that functions of that sort "may not be strictly what President Wilson described as "constituent" (as distinguished from "ministrant"),such as those relating to the maintenance of peace and the prevention of crime, those regulating property and property rights, those relating to the administration of justice and the determination of political duties of citizens, and those relating to national defense and foreign relations. Under this traditional classification, such constituent functions are exercised by the State as attributes of sovereignty, and not merely to promote the welfare, progress and prosperity of the people these latter functions being ministrant, the exercise of which is optional on the part of the government." 19 Nonetheless, as he explained so persuasively: "The growing complexities of modern society, however, have rendered this traditional classification of the functions of government quite unrealistic, not to say obsolete. The areas which used to be left to private enterprise and initiative and which the government was called upon to enter optionally, and only "because it was better equipped to administer for the public welfare than is any private individual or group of individuals", continue to lose their well-defined boundaries and to be absorbed within activities that the government must undertake in its sovereign capacity if it is to meet the increasing social challenges of the times. Here as almost everywhere else the tendency is undoubtedly towards a greater socialization of economic forces. Here of course this development was envisioned, indeed adopted as a national policy, by the Constitution itself in its declaration of principle concerning the promotion of social justice." 20 Thus was laid to rest the doctrine in Bacani v. National Coconut Corporation, 21 based on the Wilsonian classification of the tasks incumbent on government into constituent and ministrant in accordance with the laissez faire principle. That concept, then dominant in economics, was carried into the governmental sphere, as noted in a textbook on political science, 22 the first edition of which was published in 1898, its author being the then Professor, later American President, Woodrow Wilson. He took pains to emphasize that what was categorized by him as constituent functions had its basis in a recognition of what was demanded by the "strictest [concept of] laissez faire, [as they] are indeed the very bonds of society." 23 The other functions he would minimize as ministrant or optional.

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It is a matter of law that in the Philippines, the laissez faire principle hardly commanded the authoritative position which at one time it held in the United States. As early as 1919, Justice Malcolm in Rubi v. Provincial Board 24 could affirm: "The doctrines of laissez faire and of unrestricted freedom of the individual, as axioms of economic and political theory, are of the past. The modern period has shown a widespread belief in the amplest possible demonstration of government activity." 25 The 1935 Constitution, as was indicated earlier, continued that approach. As noted in Edu v. Ericta: 26 "What is more, to erase any doubts, the Constitutional Convention saw to it that the concept of laissez-faire was rejected. It entrusted to our government the responsibility of coping with social and economic problems with the commensurate power of control over economic affairs. Thereby it could live up to its commitment to promote the general welfare through state action." 27 Nor did the opinion in Edu stop there: "To repeat, our Constitution which took effect in 1935 erased whatever doubts there might be on that score. Its philosophy is a repudiation of laissez-faire. One of the leading members of the Constitutional Convention, Manuel A. Roxas, later the first President of the Republic, made it clear when he disposed of the objection of Delegate Jose Reyes of Sorsogon, who noted the "vast extensions in the sphere of governmental functions" and the "almost unlimited power to interfere in the affairs of industry and agriculture as well as to compete with existing business" as "reflections of the fascination exerted by [the then] current tendencies' in other jurisdictions. He spoke thus: "My answer is that this constitution has a definite and well defined philosophy, not only political but social and economic.... If in this Constitution the gentlemen will find declarations of economic policy they are there because they are necessary to safeguard the interest and welfare of the Filipino people because we believe that the days have come when in self-defense, a nation may provide in its constitution those safeguards, the patrimony, the freedom to grow, the freedom to develop national aspirations and national interests, not to be hampered by the artificial boundaries which a constitutional provision automatically imposes." 28 It would be then to reject what was so emphatically stressed in the Agricultural Credit Administration decision about which the observation was earlier made that it reflected the philosophy of the 1935 Constitution and is even more in consonance with the expanded role of government accorded recognition in the present Charter if the plea of petitioner that it discharges governmental function were not heeded. That path this Court is not prepared to take. That would be to go backward, to retreat rather than to advance. Nothing can thus be clearer than that there is no constitutional obstacle to a government pursuing lines of endeavor, formerly reserved for private enterprise. This is one way, in the language of Laski, by which through such activities, "the harsh contract which [does] obtain between the levels

of the rich and the poor" may be minimized. 29 It is a response to a trend noted by Justice Laurel in Calalang v. Williams 30 for the humanization of laws and the promotion of the interest of all component elements of society so that man's innate aspirations, in what was so felicitously termed by the First Lady as "a compassionate society" be attained. 31 2. The success that attended the efforts of petitioner to be adjudged as performing governmental rather than proprietary functions cannot militate against respondent Court assuming jurisdiction over this labor dispute. So it was mentioned earlier. As far back as Tabora v. Montelibano, 32 this Court, speaking through Justice Padilla, declared: The NARIC was established by the Government to protect the people against excessive or unreasonable rise in the price of cereals by unscrupulous dealers. With that main objective there is no reason why its function should not be deemed governmental. The Government owes its very existence to that aim and purpose to protect the people." 33 In a subsequent case, Naric Worker's Union v. Hon. Alvendia, 34 decided four years later, this Court, relying on Philippine Association of Free Labor Unions v. Tan, 35 which specified the cases within the exclusive jurisdiction of the Court of Industrial Relations, included among which is one that involves hours of employment under the Eight-Hour Labor Law, ruled that it is precisely respondent Court and not ordinary courts that should pass upon that particular labor controversy. For Justice J. B. L. Reyes, the ponente, the fact that there were judicial as well as administrative and executive pronouncements to the effect that the Naric was performing governmental functions did not suffice to confer competence on the then respondent Judge to issue a preliminary injunction and to entertain a complaint for damages, which as pointed out by the labor union, was connected with an unfair labor practice. This is emphasized by the dispositive portion of the decision: "Wherefore, the restraining orders complained of, dated May 19, 1958 and May 27, 1958, are set aside, and the complaint is ordered dismissed, without prejudice to the National Rice and Corn Corporation's seeking whatever remedy it is entitled to in the Court of Industrial Relations." 36 Then, too, in a case involving petitioner itself, Philippine Virginia Tobacco Administration, 37 where the point in dispute was whether it was respondent Court or a court of first instance that is possessed of competence in a declaratory relief petition for the interpretation of a collective bargaining agreement, one that could readily be thought of as pertaining to the judiciary, the answer was that "unless the law speaks clearly and unequivocally, the choice should fall on the Court of Industrial Relations." 38 Reference to a number of decisions which recognized in the then respondent Court the jurisdiction to determine labor controversies by governmentowned or controlled corporations lends to support to such an approach. 39 Nor could it be explained only on the assumption that proprietary rather than governmental

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functions did call for such a conclusion. It is to be admitted that such a view was not previously bereft of plausibility. With the aforecited Agricultural Credit and Cooperative Financing Administration decision rendering obsolete the Bacani doctrine, it has, to use a Wilsonian phrase, now lapsed into "innocuous desuetude." 40 Respondent Court clearly was vested with jurisdiction. 3. The contention of petitioner that the Eight-Hour Labor Law 41 does not apply to it hardly deserves any extended consideration. There is an air of casualness in the way such an argument was advanced in its petition for review as well as in its brief. In both pleadings, it devoted less than a full page to its discussion. There is much to be said for brevity, but not in this case. Such a terse and summary treatment appears to be a reflection more of the inherent weakness of the plea rather than the possession of an advocate's enviable talent for concision. It did cite Section 2 of the Act, but its very language leaves no doubt that "it shall apply to all persons employed in any industry or occupation, whether public or private ... ." 42 Nor are private respondents included among the employees who are thereby barred from enjoying the statutory benefits. It cited Marcelo v. Philippine National Red Cross 43 and Boy Scouts of the Philippines v. Araos. 44 Certainly, the activities to which the two above public corporations devote themselves can easily be distinguished from that engaged in by petitioner. A reference to the pertinent sections of both Republic Acts 2265 and 2155 on which it relies to obtain a ruling as to its governmental character should render clear the differentiation that exists. If as a result of the appealed order, financial burden would have to be borne by petitioner, it has only itself to blame. It need not have required private respondents to render overtime service. It can hardly be surmised that one of its chief problems is paucity of personnel. That would indeed be a cause for astonishment. It would appear, therefore, that such an objection based on this ground certainly cannot suffice for a reversal. To repeat, respondent Court must be sustained. WHEREFORE, the appealed Order of March 21, 1970 and the Resolution of respondent Court en banc of May 8, 1970 denying a motion for reconsideration are hereby affirmed. The last sentence of the Order of March 21, 1970 reads as follows: "To find how much each of them [private respondents] is entitled under this judgment, the Chief of the Examining Division, or any of his authorized representative, is hereby directed to make a reexamination of records, papers and documents in the possession of respondent PVTA pertinent and proper under the premises and to submit his report of his findings to the Court for further disposition thereof." Accordingly, as provided by the New Labor Code, this case is referred to the National Labor Relations Commission for further proceedings conformably to law. No costs.

Makalintal, C.J., Castro, Barredo, Antonio, Esguerra, Aquino, Concepcion Jr. and Martin, JJ., concur. G.R. No. L-11524 October 12, 1916

THE GOVERNMENT OF THE PHILIPPINE ISLANDS, plaintiff-appellee, vs. EL MONTE DE PIEDAD Y CAJA DE AHORROS DE MANILA, defendant-appellant. William A. Kincaid and Thomas L. Hartigan for appellant. Attorney-General Avacea for appellee.

MORELAND, J.: This is an appeal from a judgment of the Court of First Instance of the city of Manila in favor of the plaintiff and against the defendant for the sum of P138,790.12, with interest at 6 per cent per annum from the 4th day of March 1915. The action is to recover internal revenue taxes assessed on the monthly deposits and the capital employed by the defendant bank in the business of banking from the first day of August, 1904, to June 30, 1914, together with the statutory penalties for refusing to pay the taxes as required by law. The case is before us on a stipulation of facts. Some evidence, both oral and documentary, was introduced. From the agreed facts it appears that the Monte de Piedad y Caja de Ahorros de Manila is an institution organized in accordance with the canon law, having been created by the the royal order of the King of Spain of July 8, 1880, made under the royal patronate powers then existing in the Crown of Spain. Various decrees affecting the organization of the defendant had been promulgated by the GovernorGeneral of the Philippine Islands, as vice royal patron prior to the royal order of the 8th of July 1880, which decrees were referred to and continued in said royal order. The royal order referred to created, according to the purpose expressed therein, an institution for the safe investment of the savings of the poor classes and to assist the needy in time of need by loaning such savings to them at a low rate of interest. Its statutes and by-laws are subject to the will of the Catholic Archbishop of

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Manila, and may be changed by him at his pleasure. They provide for an annual interest of 4 per cent to the depositors, which is the limit to which the depositors are entitled to participate in the profits or earnings of the institution. During the entire period for which the taxes in litigation are assessed, defendant had a place of business in the city of Manila where credits were opened by the deposit or collection of money or currency subject to be paid by order. The theory on which the tax involved in this suit is assessed and sought to be collected is that the defendant institution is a bank within the definition of section 110 of Act No. 1189, known as the Internal Revenue Law, and that, as such, it is subject to a tax of one-eighteenth of one per centum each month upon the average amount of deposits of money, subject to payment by check or draft, or represented by certificates of deposit or otherwise, whether payable on demand or at some future day, imposed by section 111 of said Act, and to a further tax of one-twentyfourth of one per centum each month upon the capital employed by the defendant in the business of banking, imposed by paragraph 2 of said section 111. The defendant seeks to escape the payment of the tax on its deposits by a claim that it is a savings bank as denied by the exception contained in paragraph 4 of section 111 which provides that: The deposits in associations or companies known as provident institutions, savings banks, savings funds, or savings institutions, having no capital stock and which do no other business than receiving deposits to be loaned or invested for the sole benefit of the parties making such deposits and without profit or compensation to the association or company, shall be exempt from this tax on so much of their deposits as such institutions have invested in securities satisfactory to the Insular Treasurer, and on all deposits, not exceeding four thousand pesos, made in the name of any person. The particular reason urged why there should be no tax on the capital employed by the defendant is that it has none. There is no real denial of the fact that defendant is engaged in banking business. Neither is there any contention as to the amount of the tax or the penalties imposed provided the right to tax be established. The amount of the deposits is admitted, as is also the amount of the accrued profits, surplus or capital of the defendant.

It stands substantially conceded, therefore, that the decision of the lower court is correct in every particular, except those wherein it holds that the defendant does not fall within the exception contained in paragraph 4 of section 111 of Act No. 1189, and that the so called accrued profits or surplus falls within the definition of capital found in the Internal Revenue Law referred to. It being undenied that the defendant is engaged in the banking business and, therefore, presumptively, at least, liable to the payment of the taxes imposed on banks, the burden is on the defendant to show clearly that it falls within the exception created by the statute imposing the taxes. In the performance of this obligation an attempt was made to demonstrate that the defendant is a savings bank as denied by the exception referred to. The trial court held that it was not a savings bank for the reason that its deposits were not "to be loaned or invested for the sole benefit of the parties making such deposits and without profit or compensation to the association or company." We are of the opinion that no successful attacks can be made on this finding. It is undisputed in this case that the defendant is a profit making institution, although it may not have been designed as such, and that the profits derived from the investment or the deposits go and belong to the institution itself. The only participation of the depositors in the results of the business of the institution is the right to a return of the deposits with interest at 4 per cent. In this particular respect the defendant is not different from any other banking institution. Whatever profit is made belongs, as in the case of an ordinary bank, to the bank itself. In that profit the depositor has no interest or participation; and it is conceded that, if the defendant institution were wound up today , the so-called surplus, or reserve, or accrued profits of P549,912.52, on which one of the taxes imposed in this case was assessed, would belong and be turned over to the defendant institution. That being the case, the defendant bank is a profit making institution and has been such during the period for which the taxes involved in this case were imposed. As a necessary result the finding of the trial court that it did not fall within the exception of the statute was correct. The appellant argues that, inasmuch as various persons holding the office of Collector of Internal Revenue during the ten years for which the taxes in suit were imposed failed to levy and assess them against the defendant, such failure is a practical construction of the statute by officials charged with its execution, and that that construction should be followed in this case. That would be a strong argument if the statute alleged to be so construed

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needed construction. The statute itself is perfectly clear as to what is and what is not a savings bank; and, accordingly, needs no construction to determine whether a given institution is or is not a savings bank. The constitution of the bank itself, its by-laws and its method of doing business, together with the destination of the profits made in the conduct of its business, determine whether it falls within the definition of the exception. In making that determination a construction of the statute is unnecessary. The elements which an institution must possess to be savings bank are set out with perfect clearness in the statute. The difficulty in the case is not that resulting from an ambiguity in the statute but is met in determining whether a given institution has those elements. The question is in one aspect a question of fact. The statute clearly and distinctly specifies all of the requisites of a savings bank. Whether or not an institution has those requisites does not depend upon an interpretation of the statute. If, in stating those elements, the Legislature had fallen into ambiguity of expression, or had used language the import of which is doubtful, there would then be presented an opportunity for interpretation or construction, or both. But where the language of the statute is clear and unambiguous no interpretation or construction is necessary; for, the determination of whether a given institution has the requisites named by the statute, does not involve, primarily, an interpretation or a construction of the statute. Even giving this contention all the weight that is claimed for it we still would hesitate to apply it with all its force in the present case. The conditions under which the tax laws of the Philippine Islands were administered and executed during the first years of American civil government, immediately following the change of sovereignty brought about by force of arms, were such as to relieve the government, in a measure at least, from the burden of a presumption which, under ordinary conditions, arises from the practical construction of a statute given by the officials charged with its execution. Everything was new and strange; the officials were confronted with a system of laws theretofore unknown to them;they were met by institutions they had never seen before; a strange country, a strange people, and strange laws left them, in some instances embarrassed, in others uncertain. The fact that they did not meet all of their obligations with that fullness required should not be urged too strongly against either them or the Government. lawphil.net It might be added, in this connection, that there was never a direct or press ruling on the question by any official. The mere fact that no tax was levied or assessed is the main reliance. The appellant also complains of the finding of the trial court to the effect that:

The estimate and the assessment of the Collector of Internal Revenue carries with it a presumption, not only of the correctness of the taxes, but also of other matters affecting defendant's liability, thereby making it necessary for it to assume the burden of showing any illegal defect or grounds of non-liability upon which it relies to defeat the action. Even though the complaint in this regard were well founded, it would have little bearing on the result of the litigation when we take into consideration the universal rule that he who claims an exemption from his share of the common burden of taxation must justify his claim by showing that the Legislature intended to exempt him by words too plain to be mistaken. It being undisputed in this case that the defendant is a bank engaged in the banking business it immediately falls within the imposing clause of the statute placing certain taxes on banks and institutions doing a banking business. To escape that imposition the defendant must produce an Act of the Legislature showing an intention to exempt it from the operation of the imposing clause by words too plain to be mistaken. That being the case it matters little whether we say that the assessment and levy of the tax carries with it a presumption of liability, or whether we say that the admission of the defendant that it is engaged in banking business carries with it the presumption that it is liable to pay the taxes which the law imposes on all persons engaged in that business which the defendant must overcome. The argument of counsel for appellant based on the fact that certain savings banks in the United States have enormous reserve or accrued profits and that it would be a practical impossibility to distribute those profits among the depositors, we regard as without merit. The essential point is that, in those cases, the ownership of the depositors of the reserve funds or accrued profits is admitted; and their right to share in the distribution thereof is undisputed. Here the ownership of the fund is claimed by the defendant and the right of the depositors to participate therein is denied. The question whether the P549,912.52 is capital and taxable as such is one which presents some difficulties. The word "capital" seems to have been used and understood by the Legislature of the Philippine Islands in a nontechnical sense. It is not "capital stock," or any other stated or fixed sum. It is, rather, the amount of money which the bank uses in its business; and this seems to be the sense in which the word is used in the Internal Revenue Law imposing a tax on the capital employed by a banking institution. The tax is levied by that Act "upon the capital employed by any bank . . . engaged in the business of banking." It is worthy of note that the proviso immediately following the phrase imposing the tax speaks of what

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is not capital, and provides that money borrowed and received from time to time in the usual course of business from any person not a partner of or interested in the bank shall not be considered as capital employed. This proviso may be viewed in two aspects. In the first place, giving a definition of what is not capital, it might, perhaps, be legitimate to assume that everything else used by the bank in the usual course of business was capital. n the second place, the phraseology would indicate that the Legislature, in speaking of capital, did not refer to a fixed sum which should be paid by the incorporators or stockholders in cash to the bank before or after it began business. If it were not for that proviso it would seem that in the word "capital" would be included "money borrowed or received from time to time in the usual course of business from any person not a partner of or interested in said bank." In other words, by the exclusion of money so borrowed the Legislature indicated that the capital upon which the tax was imposed was broad enough to cover whatever money, from whatever source except deposits, the bank used in the usual course of business. The third proviso is also not without significance in determining what the Legislature had in mind when it used the word "capital." It deals with what shall be considered capital for the purpose of taxation of banks which are branches of banks incorporated and located in foreign countries and in the United States. In the case of such branches the Legislature, by virtue of this proviso, gives no importance or significance to the actual capital of the branch bank at any given moment in levying tax upon the capital employed in the Philippine Islands; and it provides that the "capital employed" by any branch bank shall be determined by a comparison between the total amount of the earnings of the parent bank during a given period and also the total amount of the earnings of the branch bank on its business conducted in the Philippine Islands during the same period, and such a part of the total capital of the bank shall be deemed to have been employed in the Philippine Islands as the earnings in the Philippine Islands bear to the total earnings of the parent bank. Under this proviso a branch bank having an actual capital or a capital stock of one million pesos would not pay a tax on the one million. It might pay a tax on one-half million or it might pay a tax on two millions, the precise amount depending on the relation which the business of the branch bank in the Philippine Islands bore to the total business of the parent bank. If the capital of the parent bank was twenty millions and the branch bank did a business in the Philippine Islands of 50 per cent of the total business of the parent bank, the branch bank would pay a tax on capital of ten million. This would seem to indicate that the word "capital" has not so strict and definite a meaning as is given to the words "capital stock," actual capital, or fixed capital. It seems to have the wider signification of the word which, popularly speaking, means the amount of money which one uses in his

business. Upon the whole we are satisfied that the P549,912.52 involved in this litigation was money which the defendant institution used in its banking business, although it may have been held for the time being, or for a considerable length of time, for the payment of depositors in times of extraordinary withdrawals from the bank or to meet unusual demands upon its loan department. The mere fact that it is for the time being inactive is not conclusive in the determination of its nature.. The judgement appealed from is affirmed, with costs against the appellant. So ordered. Torres, Carson and Araullo, JJ., concur. G.R. No. L-51 November 16, 1945

CO KIM CHAM (alias CO CHAM), Petitioner, vs. EUSEBIO VALDEZ TAN KEH and ARSENIO P. DIZON, Judge of First Instance of Manila, Respondents. R E S O L U T I O N chanrobles virtual law library FERIA, J.: chanrobles virtual law library This is a motion for reconsideration of our decision rendered in this case filed by the respondent. Two attorneys at law, who were allowed to appear as amici curiae, have also presented memoranda to discuss certain points on which the dissenting opinions rely.chanroblesvirtualawlibrary chanrobles virtual law library (1) It is contended that the military occupation of the Philippine Islands by the Japanese was not actual and effective because of the existence of guerrilla bands in barrios and mountains and even towns and villages; and consequently, no government de facto could have been validly established by the Japanese military forces in the Philippines under the precepts of the Hague Conventions and the law of nations.chanroblesvirtualawlibrary chanrobles virtual law library The presence of guerrilla bands in barrios and mountains, and even in towns of the Philippines whenever these towns were left by Japanese garrisons or by the detachments of troops sent on patrol to these places, was not sufficient to make the military occupation ineffective, nor did it cause that occupation to cease, or prevent the constitution or establishment of a de facto government in the Islands. The

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belligerent occupation of the Philippines by the Japanese invaders became an accomplished fact from the time General Wainwright, Commander of the American and Filipino forces in Luzon, and General Sharp, Commander of the forces in Visayas and Mindanao, surrendered and ordered the surrender of their forces to the Japanese invaders, and the Commonwealth Government had become incapable of publicly exercising its authority, and the invader had substituted his own authority for that of the legitimate government in Luzon, Visayas and Mindanao.chanroblesvirtualawlibrary chanrobles virtual law library "According to the rules of Land Warfare of the United States Army, belligerent or so-called military occupation is a question of fact. It presupposes a hostile invasion as a result of which the invader has rendered the invaded government incapable of publicly exercising its authority, and that the invader is in position to substitute and has substituted his own authority for that of the legitimate government of the territory invaded." (International Law Chiefly as Interpreted and Applied by the United States, by Hyde Vol. II, pp. 361, 362.) " Belligerent occupation must be both actual and effective. Organized resistance must be overcome and the forces in possession must have taken measures to establish law and order. It doubtless suffices if the occupying army can, within a reasonable time, send detachments of troops to make its authority felt within the occupied district." (Id., p. 364.) "Occupation once acquired must be maintained . . . . It does not cease, however, . . . Nor does the existence of a rebellion or the operations of guerrilla bands cause it to cease, unless the legitimate government is re-established and the occupant fails promptly to suppress such rebellion or guerrilla operations." (Id., p. 365.) chanrobles virtual law library But supposing arguendo that there were provinces or districts in these Islands not actually and effectively occupied by the invader, or in which the latter, consequently, had not substituted his own authority for that of the invaded government, and the Commonwealth Government had continued publicly exercising its authority, there is no question as to the validity of the judicial acts and proceedings of the courts functioning in said territory, under the municipal law, just as there can be no question as to the validity of the judgments and proceedings of the courts continued in the territory occupied by the belligerent occupant, under the law of nations.chanroblesvirtualawlibrary chanrobles virtual law library (2) It is submitted that the renunciation in our Constitution and in the Kellog-Briand Pact of war as an instrument of national policy, rendered inapplicable the rules of international law authorizing the belligerent Japanese army of occupation to set up a provisional or de facto government in the Philippines, because Japan started war

treacherously and emphasized was as an instrument of national policy; and that to give validity to the judicial acts of courts sponsored by the Japanese would be tantamount to giving validity to the acts of these invaders, and would be nothing short of legalizing the Japanese invasion of the Philippines.chanroblesvirtualawlibrary chanrobles virtual law library In reply to this contention, suffice it to say that the provisions of the Hague Conventions which impose upon a belligerent occupant the duty to continue the courts as well as the municipal laws in force in the country unless absolutely prevented, in order to reestablish and insure "I" ordre et al vie publice," that is, the public order and safety, and the entire social and commercial life of the country, were inserted, not for the benefit of the invader, but for the protection and benefit of the people or inhabitants of the occupied territory and of those not in the military service, in order that the ordinary pursuits and business of society may not be unnecessarily deranged.chanroblesvirtualawlibrary chanrobles virtual law library This is the opinion of all writers on international law up to date, among then Wheaton (Vol. II, p. 236) and Oppenheim (Vol. II, p. 338) in their recently revised Treatises on International Law, edited in the year 1944, and the Interpretation of the Supreme Court of the United States in many cases, specially in the case of Dow vs. Johnson (106 U. S., 158), in which that Court said: "As a necessary consequence of such occupation and domination, the political relations of its people to their former government are, for the time being, severed. But for their protection and benefit, and the protection and benefit of others not in the military service, or, in other words, in order that the ordinary pursuits and business of society may not be unnecessarily deranged, the municipal laws, that is, such as affect private rights of persons and property and provide for the punishment of crime, are generally allowed to continue in force, and to be administered by the ordinary tribunals as they were administered before the occupation. They are considered as continuing, unless suspended or superseded by the occupying belligerent." (Dow vs. Johnson, 100 U. S., 158; 25 U. S. [Law, ed.], 632).chanroblesvirtualawlibrary chanrobles virtual law library The fact that the belligerent occupant is a treacherous aggressor, as Japan was, does not, therefore, exempt him from complying with the said precepts of the Hague Conventions, nor does it make null and void the judicial acts of the courts continued by the occupant in the territory occupied. To deny validity to such judicial acts would benefit the invader or aggressor, who is presumed to be intent upon causing as much harm as possible to the inhabitants or nationals of the enemy's territory, and prejudice the latter; it would cause more suffering to the conquered

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and assist the conqueror or invader in realizing his nefarious design; in fine, it would result in penalizing the nationals of the occupied territory, and rewarding the invader or occupant for his acts of treachery and aggression.chanroblesvirtualawlibrary chanrobles virtual law library (3) We held in our decision that the word "processes," as used in the proclamation of General Douglas MacArthur of October 23, 1944, cannot be interpreted to mean judicial processes; and because of the cogent reasons therein set forth, we did not deem it necessary to specify the processes to which said proclamation should be construed to refer. As some doubt still lingers in the minds of persons interested is sustaining a contrary interpretation or construction, we are now constrained to say that term as used in the proclamation should be construed to mean legislative and constitutional processes, by virtue of the maxim "noscitur a sociis." According to this maxim, where a particular word or phrase is ambiguous in itself or is equally susceptible of various meanings, its meaning may be made clear and specific by considering the company in which it is found. (Black on Interpretation of Laws, 2d ed., pp. 194-196.) Since the proclamation provides that "all laws, regulations and processes of any other government in the Philippines than that of the said Commonwealth are null and void," the word "processes" must be interpreted or construed to refer to the Executive Orders of the Chairman of the Philippine Executive Commission, Ordinances promulgated by the President of the so-called Republic of the Philippines, and the Constitution itself of said Republic, and others that are of the same class as the laws and regulations with which the word "processes" is associated.chanroblesvirtualawlibrary chanrobles virtual law library To illustrate, "an English act required licenses for "houses, rooms, shops, or buildings, kept open for public refreshment, resort, and entertainment." It was adjudged that the word "entertainment," in this connection, did not necessarily mean a concert, dramatic performance, or other divertissement, nor did it necessarily imply the furnishing of food or drink, but that, judged from its associations, it meant the reception and accommodation of the public. So where a policy of marine insurance is specified to protect the assured against "arrests, restraints, and detainments of all kings, princes, and people," the word "people" means the ruling or governing power of the country, this signification being impressed upon it by its association with the words "kings" and "princes." Again, in a statute relating to imprisonment for debt, which speaks of debtors who shall be charged with "fraud" or undue preference to one creditor to the prejudice of another, the word "undue" means fraudulent. A statute of bankruptcy, declaring that any fraudulent "gift, transfer or delivery" of property shall constitute an act of bankruptcy, applies only to such deliveries as are in the nature of a gift - such as

change the ownership of the property, to the prejudice of creditors; it does not include a delivery to a bailee for safekeeping." (Black on Interpretation of Laws, supra.) chanrobles virtual law library (4) The state of Wheaton (International Law), 7th ed., p. 245) that "when it is said that an occupier's acts are valid, it must be remembered that no crucial instances exist to show that if his acts should all be reversed (by the restored government or its representatives) no international wrong would be committed," evidently does not mean that the restored government or its representatives may reverse the judicial acts and proceedings of the courts during the belligerent occupation without violating the law of nations and doing any wrong at all. A violation of the law of nations does not always and necessarily cause an international wrong. As the said judicial acts which apply the municipal laws, that is, such as affect private rights of persons and property, and provide for the punishment of crimes, are good and valid even after occupation has ceased, although it is true that no crucial instances exist to show that, were they reversed or invalidated by the restored or legitimate government, international wrong would be committed, it is nonetheless true and evident that by such abrogation national wrong would be caused to the inhabitants or citizens of the legitimate government. According to the law of nations and Wheaton himself, said judicial acts are legal and valid before and after the occupation has ceased and the legitimate government has been restored. As there are vested rights which have been acquired by he parties by virtue of such judgments, the restored government or its representative cannot reverse or abrogate them without causing wrong or injury to the interested parties, because such reversal would deprive them of their properties without due process of law.chanroblesvirtualawlibrary chanrobles virtual law library In this connection, it may not be amiss to refer to the decision of the Supreme Court of the United States in the case of Raymond vs. Thomas (91 U. S., 712), quoted in our decision as applicable by analogy. In said case, the Commander in Chief of the United States forces in South Carolina, after the end of the Civil War and while the territory was still under Military Government, issued a special order annulling a decree rendered by a court of chancery in a case within its jurisdiction, on the wrong assumption that he had authority to do so under the acts of Congress approved March 2, and July 19, 1867, which defined his powers and duties. That Supreme Court declared void the said special order on the ground "that it was an arbitrary stretch of authority needful to no good end that can be imagined. Whether Congress could have conferred power to do such an act is a question we are not called upon to consider. It is an unbending rule of law that the exercise of military power where the rights of the citizen are concerned, shall never be pushed beyond

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what the exigency requires." chanrobles virtual law library (5) It is argued with insistence that the courts of the Commonwealth continued in the Philippines by the belligerent occupant became also courts of Japan, and their judgments and proceedings being acts of foreign courts cannot now be considered valid and continued by the courts of the Commonwealth Government after the restoration of the latter. As we have already stated in our decision the fundamental reasons why said courts, while functioning during the Japanese regime, could not be considered as courts of Japan, it is sufficient now to invite attention to the decision of the Supreme Court of the United States in the case of The Admittance, Jecker vs. Montgomery (13 How., 498; 14 Law. ed., 240), which we did not deem necessary to quote in our decision, in which it was held that "the courts, established or sanctioned in Mexico during the war by the commanders of the American forces, were nothing more than the agents of the military power, to assist it in preserving order in the conquered territory, and to protect the inhabitants in their persons and property while it was occupied by the American arms. They were subject to the military power, and their decisions under its control, whenever the commanding officer thought proper to interfere. They were not courts of the United States, and had no right to adjudicate upon a question of prize or no prize." (The Admittance, Jecker vs. Montgomery, 13 How., 498; 14 Law. ed., 240.).chanroblesvirtualawlibrary chanrobles virtual law library (6) The petition for mandamus in the present case is the plain, speedy and adequate remedy. The mandamus applied for is not to compel the respondent judge to order the reconstitution of the record of the case, because the record had already been reconstituted by order of the court. It is sought to compel the respondent judge to continue the proceedings in said case. As the judge refused to act on the ground that he had no power or jurisdiction to continue taking cognizance of the case, mandamus and not appeal is the plain, speedy and adequate remedy. For it is a well established rule that "if a a court has erroneously decided some question of law or of practice, presented as a preliminary objection, and upon such erroneous construction has refused to go into the merits of the case, mandamus will lie to compel it to proceed." (High on Extraordinary Legal Remedies, section 151; Castro Revilla vs. Garduo, 53 Phil., 934.) chanrobles virtual law library In view of the foregoing, the motion for reconsideration filed by the respondents is denied. The petition for oral argument on said motion for reconsideration, based on the resolution of division of this Court dated July 3, 1945, amendatory of section 2, Rule 54, of the Rules of Court, is also denied, since said resolution has not yet

been adopted by this Court in banc, and the respondents and amici curiae were allowed to file, and they filed, their arguments in writing.chanroblesvirtualawlibrary chanrobles virtual law library Moran, C. J., Ozaeta, Paras, Jaranilla, De Joya, and Pablo, JJ., concur. G.R. No. L-36409 October 26, 1973 THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. LORETA GOZO, defendant-appellant. Office of the Solicitor General Felix Q. Antonio, Assistant Solicitor General Jaime M. Lantin and Solicitor Norberto P. Eduardo for plaintiff-appellee. Jose T. Nery for defendant-appellant.

FERNANDO, J.: Appellant seeks to set aside a judgment of the Court of First Instance of Zambales, convicting her of a violation of an ordinance of Olongapo, Zambales, requiring a permit from the municipal mayor for the construction or erection of a building, as well as any modification, alteration, repair or demolition thereof. She questions its validity, or at the very least, its applicability to her, by invoking due process, 1 a contention she would premise on what for her is the teaching of People v. Fajardo. 2 If such a ground were far from being impressed with solidity, she stands on quicksand when she would deny the applicability of the ordinance to her, on the pretext that her house was constructed within the naval base leased to the American armed forces. While yielding to the well-settled doctrine that it does not thereby cease to be Philippine territory, she would, in effect, seek to emasculate our sovereign rights by the assertion that we cannot exercise therein administrative jurisdiction. To state the proposition is to make patent how much it is tinged with unorthodoxy. Clearly then, the lower court decision must be affirmed with the sole modification that she is given thirty days from the finality of a judgment to obtain a permit, failing which, she is required to demolish the same. The facts are undisputed. As set forth in the decision of the lower court: "The accused bought a house and lot located inside the United States Naval Reservation

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within the territorial jurisdiction of Olongapo City. She demolished the house and built another one in its place, without a building permit from the City Mayor of Olongapo City, because she was told by one Ernesto Evalle, an assistant in the City Mayor's office, as well as by her neighbors in the area, that such building permit was not necessary for the construction of the house. On December 29, 1966, Juan Malones, a building and lot inspector of the City Engineer's Office, Olongapo City, together with Patrolman Ramon Macahilas of the Olongapo City police force apprehended four carpenters working on the house of the accused and they brought the carpenters to the Olongapo City police headquarters for interrogation. ... After due investigation, Loreta Gozo was charged with violation of Municipal Ordinance No. 14, S. of 1964 with the City Fiscal's Office." 3 The City Court of Olongapo City found her guilty of violating Municipal Ordinance No. 14, Series of 1964 and sentenced her to an imprisonment of one month as well as to pay the costs. The Court of Instance of Zambales, on appeal, found her guilty on the above facts of violating such municipal ordinance but would sentence her merely to pay a fine of P200.00 and to demolish the house thus erected. She elevated the case to the Court of Appeals but in her brief, she would put in issue the validity of such an ordinance on constitutional ground or at the very least its applicability to her in view of the location of her dwelling within the naval base. Accordingly, the Court of Appeals, in a resolution of January 29, 1973, noting the constitutional question raised, certified the case to this Court. There is, as mentioned in the opening paragraph of this petition, no support in law for the stand taken by appellant. 1. It would be fruitless for her to assert that local government units are devoid of authority to require building permits. This Court, from Switzer v. Municipality of Cebu, 4 decided in 1911, has sanctioned the validity of such measures. It is much too late in the day to contend that such a requirement cannot be validly imposed. Even appellant, justifiably concerned about the unfavorable impression that could be created if she were to deny that such competence is vested in municipal corporations and chartered cities, had to concede in her brief: "If, at all; the questioned ordinance may be predicated under the general welfare clause ... ." 5 Its scope is wide, well-nigh all embracing, covering every aspect of public health, public morals, public safety, and the well being and good order of the community. 6 It goes without saying that such a power is subject to limitations. Certainly, if its exercise is violative of any constitutional right, then its validity could be impugned, or at the very least, its applicability to the person adversely affected could be questioned. So much is settled law. Apparently, appellant has adopted the view that

a due process question may indeed be raised in view of what for her is its oppressive character. She is led to such a conclusion, relying on People v. Fajardo. 7 A more careful scrutiny of such a decision would not have led her astray, for that case is easily distinguishable. The facts as set forth in the opinion follow: "It appears that on August 15, 1950, during the incumbency of defendant-appellant Juan F. Fajardo as mayor of the municipality of Baao, Camarines Sur, the municipal council passed the ordinance in question providing as follows: "... 1. Any person or persons who will construct or repair a building should, before constructing or repairing, obtain a written permit from the Municipal Mayor. ... 2. A fee of not less than P2.00 should be charged for each building permit and P1.00 for each repair permit issued. ... 3. [Penalty]-Any violation of the provisions of the above, this ordinance, shall make the violator liable to pay a fine of not less than P25 nor more than P50 or imprisonment of not less than 12 days nor more than 24 days or both, at the discretion of the court. If said building destroys the view of the Public Plaza or occupies any public property, it shall be removed at the expense of the owner of the building or house. ... ." Four years later, after the term of appellant Fajardo as mayor had expired, he and his son-in-law, appellant Babilonia, filed a written request with the incumbent municipal mayor for a permit to construct a building adjacent to their gasoline station on a parcel of land registered in Fajardo's name, located along the national highway and separated from the public plaza by a creek ... . On January 16, 1954, the request was denied, for the reason among others that the proposed building would destroy the view or beauty of the public plaza ... . On January 18, 1954, defendants reiterated their request for a building permit ..., but again the request was turned down by the mayor. Whereupon, appellants proceeded with the construction of the building without a permit, because they needed a place of residence very badly, their former house having been destroyed by a typhoon and hitherto they had been living on leased property." 8 Clearly then, the application of such an ordinance to Fajardo was oppressive. A conviction therefore for a violation thereof both in the justice of the peace court of Baao, Camarines Sur as well as in the Court of First Instance could not be sustained. In this case, on the contrary, appellant never bothered to comply with the ordinance. Perhaps aware of such a crucial distinction, she would assert in her brief: "The evidence showed that even if the accused were to secure a permit from the Mayor, the same would not have been granted. To require the accused to obtain a permit before constructing her house would be an exercise in futility. The law will not require anyone to perform an impossibility, neither in law or in fact: ... ." 9 It would be from her own version, at the very least then, premature to anticipate such an adverse result, and thus to condemn an ordinance which certainly lends itself to an interpretation that is neither oppressive, unfair, or unreasonable. That

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kind of interpretation suffices to remove any possible question of its validity, as was expressly announced in Primicias v. Fugoso. 10 So it appears from this portion of the opinion of Justice Feria, speaking for the Court: "Said provision is susceptible of two constructions: one is that the Mayor of the City of Manila is vested with unregulated discretion to grant or refuse to grant permit for the holding of a lawful assembly or meeting, parade, or procession in the streets and other public places of the City of Manila; and the other is that the applicant has the right to a permit which shall be granted by the Mayor, subject only to the latter's reasonable discretion to determine or specify the streets or public places to be used for the purpose, with a view to prevent confusion by overlapping, to secure convenient use of the streets and public places by others, and to provide adequate and proper policing to minimize the risk of disorder. After a mature deliberation, we have arrived at the conclusion that we must adopt the second construction, that is, construe the provisions of the said ordinance to mean that it does not confer upon the Mayor the power to refuse to grant the permit, but only the discretion, in issuing the permit, to determine or specify the streets or public places where the parade or procession may pass or the meeting may be held." 11 If, in a case affecting such a preferred freedom as the right to assembly, this Court could construe an ordinance of the City of Manila so as to avoid offending against a constitutional provision, there is nothing to preclude it from a similar mode of approach in order to show the lack of merit of an attack against an ordinance requiring a permit. Appellant cannot therefore take comfort from any broad statement in the Fajardo opinion, which incidentally is taken out of context, considering the admitted oppressive application of the challenged measure in that litigation. So much then for the contention that she could not have been validly convicted for a violation of such ordinance. Nor should it be forgotten that she did suffer the same fate twice, once from the City Court and thereafter from the Court of First Instance. The reason is obvious.Such ordinance applies to her. 2. Much less is a reversal indicated because of the alleged absence of the rather novel concept of administrative jurisdiction on the part of Olongapo City. Nor is novelty the only thing that may be said against it. Far worse is the assumption at war with controlling and authoritative doctrines that the mere existence of military or naval bases of a foreign country cuts deeply into the power to govern. Two leading cases may be cited to show how offensive is such thinking to the juristic concept of sovereignty, People v. Acierto, 12 and Reagan v. Commissioner of Internal Revenue. 13 As was so emphatically set forth by Justice Tuason in Acierto: "By the Agreement, it should be noted, the Philippine Government merely consents that the United States exercise jurisdiction in certain cases. The consent was given purely as a matter of comity, courtesy, or expediency. The Philippine Government has not

abdicated its sovereignty over the bases as part of the Philippine territory or divested itself completely of jurisdiction over offenses committed therein. Under the terms of the treaty, the United States Government has prior or preferential but not exclusive jurisdiction of such offenses. The Philippine Government retains not only jurisdictional rights not granted, but also all such ceded rights as the United States Military authorities for reasons of their own decline to make use of. The first proposition is implied from the fact of Philippine sovereignty over the bases; the second from the express provisions of the treaty." 14 There was a reiteration of such a view in Reagan. Thus: "Nothing is better settled than that the Philippines being independent and sovereign, its authority may be exercised over its entire domain. There is no portion thereof that is beyond its power. Within its limits, its decrees are supreme, its commands paramount. Its laws govern therein, and everyone to whom it applies must submit to its terms. That is the extent of its jurisdiction, both territorial and personal. Necessarily, likewise, it has to be exclusive. If it were not thus, there is a diminution of sovereignty." 15 Then came this paragraph dealing with the principle of auto-limitation: "It is to be admitted any state may, by its consent, express or implied, submit to a restriction of its sovereign rights. There may thus be a curtailment of what otherwise is a power plenary in character. That is the concept of sovereignty as auto-limitation, which, in the succinct language of Jellinek, "is the property of a state-force due to which it has the exclusive capacity of legal selfdetermination and self-restriction." A state then, if it chooses to, may refrain from the exercise of what otherwise is illimitable competence." 16 The opinion was at pains to point out though that even then, there is at the most diminution of jurisdictional rights, not its disappearance. The words employed follow: "Its laws may as to some persons found within its territory no longer control. Nor does the matter end there. It is not precluded from allowing another power to participate in the exercise of jurisdictional right over certain portions of its territory. If it does so, it by no means follows that such areas become impressed with an alien character. They retain their status as native soil. They are still subject to its authority. Its jurisdiction may be diminished, but it does not disappear. So it is with the bases under lease to the American armed forces by virtue of the military bases agreement of 1947. They are not and cannot be foreign territory." 17 Can there be anything clearer, therefore, than that only a turnabout, unwarranted and unjustified, from what is settled and orthodox law can lend the slightest degree of plausibility to the contention of absence of administrative jurisdiction. If it were otherwise, what was aptly referred to by Justice Tuason "as a matter of comity, courtesy, or expediency" becomes one of obeisance and submission. If on a concern purely domestic in its implications, devoid of any connection with national security, the Military-Bases Agreement could be thus interpreted, then sovereignty

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indeed becomes a mockery and an illusion. Nor does appellant's thesis rest on less shaky foundation by the mere fact that Acierto and Reagan dealt with the competence of the national government, while what is sought to be emasculated in this case is the so-called administrative jurisdiction of a municipal corporation. Within the limits of its territory, whatever statutory powers are vested upon it may be validly exercised. Any residual authority and therein conferred, whether expressly or impliedly, belongs to the national government, not to an alien country. What is even more to be deplored in this stand of appellant is that no such claim is made by the American naval authorities, not that it would do them any good if it were so asserted. To quote from Acierto anew: "The carrying out of the provisions of the Bases Agreement is the concern of the contracting parties alone. Whether, therefore, a given case which by the treaty comes within the United States jurisdiction should be transferred to the Philippine authorities is a matter about which the accused has nothing to do or say. In other words, the rights granted to the United States by the treaty insure solely to that country and can not be raised by the offender." 18 If an accused would suffer from such disability, even if the American armed forces were the beneficiary of a treaty privilege, what is there for appellant to take hold of when there is absolutely no showing of any alleged grant of what is quaintly referred to as administrative jurisdiction? That is all, and it is more than enough, to make manifest the futility of seeking a reversal. WHEREFORE, the appealed decision of November 11, 1969 is affirmed insofar as it found the accused, Loreta Gozo, guilty beyond reasonable doubt of a violation of Municipal Ordinance No. 14, series of 1964 and sentencing her to pay a fine of P200.00 with subsidiary imprisonment in case of insolvency, and modified insofar as she is required to demolish the house that is the subject matter of the case, she being given a period of thirty days from the finality of this decision within which to obtain the required permit. Only upon her failure to do so will that portion of the appealed decision requiringdemolition be enforced. Costs against the accused. Makalintal, C.J., Zaldivar, Castro, Teehankee, Makasiar, Antonio and Esguerra, JJ., concur. G.R. No. L-409 January 30, 1947

RESOLUTION In G.R. No. L-409, Anastacio Laurel vs. Eriberto Misa, etc., the Court, acting on the petition for habeas corpus filed by Anastacio Laurel and based on a theory that a Filipino citizen who adhered to the enemy giving the latter aid and comfort during the Japanese occupation cannot be prosecuted for the crime of treason defined and penalized by article 114 of the Revised Penal Code, for the reason (1) that the sovereignty of the legitimate government in the Philippines and, consequently, the correlative allegiance of Filipino citizens thereto was then suspended; and (2) that there was a change of sovereignty over these Islands upon the proclamation of the Philippine Republic: (1) Considering that a citizen or subject owes, not a qualified and temporary, but an absolute and permanent allegiance, which consists in the obligation of fidelity and obedience to his government or sovereign; and that this absolute and permanent allegiance should not be confused with the qualified and temporary allegiance which a foreigner owes to the government or sovereign of the territory wherein he resides, so long as he remains there, in return for the protection he receives, and which consists in the obedience to the laws of the government or sovereign. (Carlisle vs. Unite States, 21 Law. ed., 429; Secretary of State Webster Report to the President of the United States in the case of Thraser, 6 Web. Works, 526); Considering that the absolute and permanent allegiance of the inhabitants of a territory occupied by the enemy of their legitimate government or sovereign is not abrogated or severed by the enemy occupation, because the sovereignty of the government or sovereign de jure is not transferred thereby to the occupier, as we have held in the cases of Co Kim Cham vs. Valdez Tan Keh and Dizon (75 Phil., 113) and of Peralta vs. Director of Prisons (75 Phil., 285), and if it is not transferred to the occupant it must necessarily remain vested in the legitimate government; that the sovereignty vested in the titular government (which is the supreme power which governs a body politic or society which constitute the state) must be distinguished from the exercise of the rights inherent thereto, and may be destroyed, or severed and transferred to another, but it cannot be suspended because the existence of sovereignty cannot be suspended without putting it out of existence or divesting the possessor thereof at least during the so-called period of suspension; that what may be suspended is the exercise of the rights of sovereignty with the control and government of the territory occupied by the enemy passes temporarily to the occupant; that the subsistence of the sovereignty of the legitimate government in a territory occupied by the military forces of the enemy during the war, "although the former is in fact prevented from exercising the supremacy over them" is one of the

ANASTACIO LAUREL, petitioner, vs. ERIBERTO MISA, respondent. Claro M. Recto and Querube C. Makalintal for petitioner. First Assistant Solicitor General Reyes and Solicitor Hernandez, Jr., for respondent.

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"rules of international law of our times"; (II Oppenheim, 6th Lauterpacht ed., 1944, p. 482), recognized, by necessary implication, in articles 23, 44, 45, and 52 of Hague Regulation; and that, as a corollary of the conclusion that the sovereignty itself is not suspended and subsists during the enemy occupation, the allegiance of the inhabitants to their legitimate government or sovereign subsists, and therefore there is no such thing as suspended allegiance, the basic theory on which the whole fabric of the petitioner's contention rests; Considering that the conclusion that the sovereignty of the United State was suspended in Castine, set forth in the decision in the case of United States vs. Rice, 4 Wheaton, 246, 253, decided in 1819, and quoted in our decision in the cases of Co Kim Cham vs. Valdez Tan Keh and Dizon and Peralta vs. Director of Prisons, supra, in connection with the question, not of sovereignty, but of the existence of a government de facto therein and its power to promulgate rules and laws in the occupied territory, must have been based, either on the theory adopted subsequently in the Hague Convention of 1907, that the military occupation of an enemy territory does not transfer the sovereignty to the occupant; that, in the first case, the word "sovereignty" used therein should be construed to mean the exercise of the rights of sovereignty, because as this remains vested in the legitimate government and is not transferred to the occupier, it cannot be suspended without putting it out of existence or divesting said government thereof; and that in the second case, that is, if the said conclusion or doctrine refers to the suspension of the sovereignty itself, it has become obsolete after the adoption of the Hague Regulations in 1907, and therefore it can not be applied to the present case; Considering that even adopting the words "temporarily allegiance," repudiated by Oppenheim and other publicists, as descriptive of the relations borne by the inhabitants of the territory occupied by the enemy toward the military government established over them, such allegiance may, at most, be considered similar to the temporary allegiance which a foreigner owes to the government or sovereign of the territory wherein he resides in return for the protection he receives as above described, and does not do away with the absolute and permanent allegiance which the citizen residing in a foreign country owes to his own government or sovereign; that just as a citizen or subject of a government or sovereign may be prosecuted for and convicted of treason committed in a foreign country, in the same way an inhabitant of a territory occupied by the military forces of the enemy may commit treason against his own legitimate government or sovereign if he adheres to the enemies of the latter by giving them aid and comfort; and that if the allegiance of a citizen or subject to his government or sovereign is nothing more

than obedience to its laws in return for the protection he receives, it would necessarily follow that a citizen who resides in a foreign country or state would, on one hand, ipso facto acquire the citizenship thereof since he has enforce public order and regulate the social and commercial life, in return for the protection he receives, and would, on the other hand, lose his original citizenship, because he would not be bound to obey most of the laws of his own government or sovereign, and would not receive, while in a foreign country, the protection he is entitled to in his own; Considering that, as a corollary of the suspension of the exercise of the rights of sovereignty by the legitimate government in the territory occupied by the enemy military forces, because the authority of the legitimate power to govern has passed into the hands of the occupant (Article 43, Hague Regulations), the political laws which prescribe the reciprocal rights, duties and obligation of government and citizens, are suspended or in abeyance during military occupation (Co Kim cham vs. Valdez Tan Keh and dizon, supra), for the only reason that as they exclusively bear relation to the ousted legitimate government, they are inoperative or not applicable to the government established by the occupant; that the crimes against national security, such as treason and espionage; inciting to war, correspondence with hostile country, flight to enemy's country, as well as those against public order, such as rebellion, sedition, and disloyalty, illegal possession of firearms, which are of political complexion because they bear relation to, and are penalized by our Revised Penal Code as crimes against the legitimate government, are also suspended or become inapplicable as against the occupant, because they can not be committed against the latter (Peralta vs. Director of Prisons, supra); and that, while the offenses against public order to be preserved by the legitimate government were inapplicable as offenses against the invader for the reason above stated, unless adopted by him, were also inoperative as against the ousted government for the latter was not responsible for the preservation of the public order in the occupied territory, yet article 114 of the said Revised Penal Code, was applicable to treason committed against the national security of the legitimate government, because the inhabitants of the occupied territory were still bound by their allegiance to the latter during the enemy occupation; Considering that, although the military occupant is enjoined to respect or continue in force, unless absolutely prevented by the circumstances, those laws that enforce public order and regulate the social and commercial life of the country, he has, nevertheless, all the powers of de facto government and may, at his pleasure, either change the existing laws or make new ones when the exigencies of the military service demand such action, that is, when it is necessary for the occupier to

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do so for the control of the country and the protection of his army, subject to the restrictions or limitations imposed by the Hague Regulations, the usages established by civilized nations, the laws of humanity and the requirements of public conscience (Peralta vs. Director of Prisons, supra; 1940 United States Rules of Land Warfare 76, 77); and that, consequently, all acts of the military occupant dictated within these limitations are obligatory upon the inhabitants of the territory, who are bound to obey them, and the laws of the legitimate government which have not been adopted, as well and those which, though continued in force, are in conflict with such laws and orders of the occupier, shall be considered as suspended or not in force and binding upon said inhabitants; Considering that, since the preservation of the allegiance or the obligation of fidelity and obedience of a citizen or subject to his government or sovereign does not demand from him a positive action, but only passive attitude or forbearance from adhering to the enemy by giving the latter aid and comfort, the occupant has no power, as a corollary of the preceding consideration, to repeal or suspend the operation of the law of treason, essential for the preservation of the allegiance owed by the inhabitants to their legitimate government, or compel them to adhere and give aid and comfort to him; because it is evident that such action is not demanded by the exigencies of the military service or not necessary for the control of the inhabitants and the safety and protection of his army, and because it is tantamount to practically transfer temporarily to the occupant their allegiance to the titular government or sovereign; and that, therefore, if an inhabitant of the occupied territory were compelled illegally by the military occupant, through force, threat or intimidation, to give him aid and comfort, the former may lawfully resist and die if necessary as a hero, or submit thereto without becoming a traitor; Considering that adoption of the petitioner's theory of suspended allegiance would lead to disastrous consequences for small and weak nations or states, and would be repugnant to the laws of humanity and requirements of public conscience, for it would allow invaders to legally recruit or enlist the Quisling inhabitants of the occupied territory to fight against their own government without the latter incurring the risk of being prosecuted for treason, and even compel those who are not aid them in their military operation against the resisting enemy forces in order to completely subdue and conquer the whole nation, and thus deprive them all of their own independence or sovereignty such theory would sanction the action of invaders in forcing the people of a free and sovereign country to be a party in the nefarious task of depriving themselves of their own freedom and independence and repressing the exercise by them of their own sovereignty; in other words, to commit a political suicide;

(2) Considering that the crime of treason against the government of the Philippines defined and penalized in article 114 of the Penal Code, though originally intended to be a crime against said government as then organized by authority of the sovereign people of the United States, exercised through their authorized representative, the Congress and the President of the United States, was made, upon the establishment of the Commonwealth Government in 1935, a crime against the Government of the Philippines established by authority of the people of the Philippines, in whom the sovereignty resides according to section 1, Article II, of the Constitution of the Philippines, by virtue of the provision of section 2, Article XVI thereof, which provides that "All laws of the Philippine Islands . . . shall remain operative, unless inconsistent with this Constitution . . . and all references in such laws to the Government or officials of the Philippine Islands, shall be construed, in so far as applicable, to refer to the Government and corresponding officials under this constitution; Considering that the Commonwealth of the Philippines was a sovereign government, though not absolute but subject to certain limitations imposed in the Independence Act and incorporated as Ordinance appended to our Constitution, was recognized not only by the Legislative Department or Congress of the United States in approving the Independence Law above quoted and the Constitution of the Philippines, which contains the declaration that "Sovereignty resides in the people and all government authority emanates from them" (section 1, Article II), but also by the Executive Department of the United States; that the late President Roosevelt in one of his messages to Congress said, among others, "As I stated on August 12, 1943, the United States in practice regards the Philippines as having now the status as a government of other independent nations in fact all the attributes of complete and respected nationhood" (Congressional Record, Vol. 29, part 6, page 8173); and that it is a principle upheld by the Supreme Court of the United States in many cases, among them in the case of Jones vs. United States (137 U.S., 202; 34 Law. ed., 691, 696) that the question of sovereignty is "a purely political question, the determination of which by the legislative and executive departments of any government conclusively binds the judges, as well as all other officers, citizens and subjects of the country. Considering that section I (1) of the Ordinance appended to the Constitution which provides that pending the final and complete withdrawal of the sovereignty of the United States "All citizens of the Philippines shall owe allegiance to the United States", was one of the few limitations of the sovereignty of the Filipino people retained by the United States, but these limitations do not away or are not inconsistent with said sovereignty, in the same way that the people of each State of

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the Union preserves its own sovereignty although limited by that of the United States conferred upon the latter by the States; that just as to reason may be committed against the Federal as well as against the State Government, in the same way treason may have been committed during the Japanese occupation against the sovereignty of the United States as well as against the sovereignty of the Philippine Commonwealth; and that the change of our form of government from Commonwealth to Republic does not affect the prosecution of those charged with the crime of treason committed during the Commonwealth, because it is an offense against the same government and the same sovereign people, for Article XVIII of our Constitution provides that "The government established by this constitution shall be known as the Commonwealth of the Philippines. Upon the final and complete withdrawal of the sovereignty of the United States and the proclamation of Philippine independence, the Commonwealth of the Philippines shall thenceforth be known as the Republic of the Philippines"; This Court resolves, without prejudice to write later on a more extended opinion, to deny the petitioner's petition, as it is hereby denied, for the reasons above set forth and for others to be stated in the said opinion, without prejudice to concurring opinion therein, if any. Messrs. Justices Paras and Hontiveros dissent in a separate opinion. Mr. justice Perfecto concurs in a separate opinion. G.R. No. L-533 August 20, 1946

proceedings before the General Court Martial be ordered certified to this court for review. The ground of the petition was that the petitioners were not subject to military law at the time the offense for which they had been placed on trial was committed. In their memorandum they have raised an additional question of law that the 93d Article of War is unconstitutional. An outline of the petitioner's previous connection with the Philippine Army, the Philippine Constabulary, and/or with guerrilla organizations will presently be made. This outline is based on allegations in the petition and the answer, and on exhibits attached thereto and to the parties' memoranda, exhibits which were offered in the course of the oral argument and admitted without objection. The said exhibits are public documents certified by the officials who had them in custody in their official capacity. They are presumed to be authentic, as we have no doubt they are. It appears that at the outbreak of war on December 8, 1941, Ramon Ruffy was the Provincial Commander, Prudente M. Francisco, a junior officer, and Andres Fortus, a corporal, all of the Philippine Constabulary garrison stationed in Mindoro. When, on February 27, 1942, the Japanese forces landed in Mindoro, Major Ruffy retreated to the mountains instead of surrendering to the enemy, disbanded his company, and organized and led a guerrilla outfit known as Bolo Combat team of Bolo Area. Lieutenant Francisco, Corporal Fortus and Jose L. Garcia, the last then a civilian joined Major Ruffy's organization towards the latter part of 1942, while Dominador Adeva and Victoriano Dinglasan, then likewise civilians, became its members some time in 1943.. Meanwhile, Brigadier General Macario Peralta, Jr., then a lieutenant colonel of the Philippine Army, also took to the hills of Panay and led the operation of the 6th Military District, one of the districts into which the Philippine Army had been divided before the war. About November, 1942, Colonel Peralta succeeded in contacting the General Headquarters of General MacArthur in Australia as the result of which on February 13, 1943, the 6th Military District was recognized by the Headquarters of the Southwest Pacific Area as a military unit and part of its command. Even before General MacArthur's recognition of the 6th Military District Colonel Peralta had extended its sphere of operation to comprise Mindoro and Marinduque, and had, on January 2, 1943, named Major Ruffy as Acting Commander for those two provinces and Commanding Officer of the 3rd Battalion, 66 Infantry 61st Division, Philippine Corps. After the recognition, 2d Lieut. Prudente M. Francisco,

RAMON RUFFY, ET AL., petitioners, vs. THE CHIEF OF STAFF, PHILIPPINE ARMY, ET AL., respondents. Placido C. Ramos for petitioners. Lt. Col. Fred Ruiz Castro and Capt. Ramon V. Diaz, JAGS, PA., for respondents. TUASON, J.: This was a petition for prohibition, praying that the respondents, the Chief of Staff and the General Court Martial of the Philippine Army, be commanded to desist from further proceedings in the trial of petitioners before that body. Preliminary injunction having been denied by us and the General Court Martial having gone ahead with the trial, which eventually resulted in the acquittal of one of the defendants, Ramon Ruffy, the dismissal of the case as to another, Victoriano Dinglasan, and the conviction of Jose L. Garcia, Prudente M. Francisco, Dominador Adeva and Andres Fortus, the last-named four petitioners now seek in their memorandum to convert the petition into one for certiorari, with the prayer that the records of the

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by virtue of Special Orders No. 99, dated November 2, 1943, and signed by Enrique L. Jurado, Major, OSE, Commanding, was assigned as S-3 in the Bolo Area. Major, later Lieut. Col., Jurado, it should be noted, had been dispatched by the 6th Military District to Mindoro to assume operational control supervision over the Bolo Area unit and to make and direct the necessary report to the Headquarters, 6th Military District, in Panay. On April 26, 1944, by General Orders No. 40 of the 6th Military District, 2d Lieutenant Francisco was promoted to the rank of 1st Lieutenant (Brevet), effective April 15, 1944, subject to approval by the President of the Philippines, and was re-assigned to the Bolo Area. As to Andres Fortus he was assigned to the same Bolo Area as probationary 3d lieutenant for two-month probationary training, by the Headquarters of the 6th Military District, as per Special Orders No. 70, dated May 15, 1944. According to a memorandum of the Chief of Staff, 6th Military District, dated January 1943, and signed by L.R. Relunia, Lieut. Col., CE, Chief of Staff, Jose L. Garcia and Dominador Adeva were appointed 3d lieutenants, infantry as of December 31, 1942. Garcia later was promoted to the rank of captain, effective March 15, 1943, as per Special Orders No. 82, issued in the field, 6th Military District, and dated August 28, 1943. On May 24, 1943, Jose L. Garcia took his oath before Captain Esteban P. Beloncio, then Acting Commanding Officer, 3d Battalion, 66th Infantry Regiment, 61st Division, 6th Military District. As has been said, the 6th Military District sent Lieut. Col. Enrique L. Jurado to be Commanding Officer of the Bolo Combat Team in Mindoro and to undertake other missions of Military character. Pursuant to instructions, Colonel Jurado on November 2, 1943, assigned Major Ruffy as Commanding Officer of the Bolo Area with 3d Lieut. Dominador Adeva and 2d Lieut. Prudente M. Francisco as members of his staff and Victoriano Dinglasan as Finance Officer, as per Special Orders No. 99 dated November 2, 1943. In a memorandum of Colonel Jurado for Major Ruffy bearing date 25 June, 1944, it was stated that Captain Garcia had been given P5,000 for palay and Lieut. Francisco P9,000, P5,000 for palay and P4,000 for salary of the personnel B. Company. A change in the command of the Bolo Area was effected by Colonel Jurado on June 8, 1944: Major Ruffy was relieved of his assignment as Commanding Officer, Bolo Battalion, and Capt. Esteban P. Beloncio was put in Ruffy's place. On October 19, 1944, Lieut. Col. Jurado was slain allegedly by the petitioners. After the commission of this crime, the petitioners, it is alleged, seceded from the 6th Military District. It was this murder which gave rise to petitioner's trial, the legality of which is now being contested.

On July 26, 1941, the President of the Untied States issued a military order the pertinent paragraph of which stated: ". . . as Commander in Chief of the Army and Navy of the United States, I hereby call and order into the service of the armed forces of the United States Army, for the period of the existing emergency, and place under the command of the general officer, United States Army, to be designated by the Secretary of War, from time to time, all of the organized military forces of the Government of the Commonwealth." Following the issuance of President Roosevelt's order General Douglas MacArthur was appointed Commanding General of the United States Armed Forces in the Far East. It is contended, in behalf of Captain Francisco and Lieutenant Fortus, that "by the enemy occupation of the Philippines, the National Defense Act and all laws and regulations creating and governing the existence of the Philippine Army including the Articles of War, were suspended and in abeyance during such belligerent occupation." The paragraph quoted in the petitioner's memorandum from Winthrop's Military Law and Precedents and the subsequent paragraph which has been omitted furnish a complete answer to petitioner's contention of the Philippines by Japanese forces, the officers and men of the Philippine Army did not cease to be fully in the service, though in a measure,' only in a measure, they were not subject to the military jurisdiction, if they were not active duty. In the latter case, like officers and soldiers on leave of absence or held as prisoners of war, they could not be held guilty of a breach of the discipline of the command or of a neglect of duty, or disobedience of orders, or mutiny, or subject to a military trial therefor; but for an act unbecoming an officer and a gentleman, or an act which constitutes an offense of the class specified in the 95th Article of War, they may in general be legally held subject to military jurisdiction and trial. "So a prisoner of war, though not subject, while held by the enemy, to the discipline of his own army, would, when exchanged of paroled, be not exempt from liability for such offenses as criminal acts or injuriuos conduct committed during his captivity against other officers or soldiers in the same status." (Winthrop's Military Law and Precedents, 2d Edition, pp. 91, 92.) The rule invoked by counsel, namely, that laws of political nature or affecting political relations are considered superseded or in abeyance during the military occupation, is intended for the governing of the civil inhabitants of the occupied territory. It is not intended for and does not bind the enemies in arms. This is selfevident from the very nature of things. The paradox of a contrary ruling should readily manifest itself. Under the petitioner's theory the forces of resistance operating in an occupied territory would have to abide by the outlawing of their own

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existence. They would be stripped of the very life-blood of an army, the right and the ability to maintain order and discipline within the organization and to try the men guilty of breach thereof. The surrender by General Wainright of the Fil-American Forces does not profit the petitioner's who were former members of the Philippine Constabulary any more than does the rule of war or international law they cite. The fall of Bataan and Corregidor did not end the war. It did not, legally or otherwise, keep the United States and the Commonwealth of the Philippines from organizing a new army, regular or irregular, out of new men and men in the old service who had refused to surrender or who having surrendered, had decided to carry on the fight through other diverse means and methods. The fall of Corregidor and Bataan just marked the beginning of the gigantic preparation for the gigantic drive that was to fight its way to and beyond the Philippines in fulfillment of General MacArthur's classic promise, "I shall return." The heroic role which the guerrillas played in that preparation and in the subsequent liberation of the Philippines is now history. Independently of their previous connection with the Philippine Army and the Philippine Constabulary, Captain Francisco and Lieutenant Fortus as well as Major Garcia and Lieutenant Adeva were subject to military jurisdiction. The 2d Article of War defines and enumerates the persons subject to military law as follows: Art. 2. Persons Subject to Military Law. The following persons are subject to these articles and shall be understood as included in the term "any person subject to military law" or "persons subject to military law," whenever used in these articles: (a) All officers, members of the Nurse Corps and soldiers belonging to the Regular Force of the Philippine Army; all reservists, from the dates of their call to active duty and while on such active duty; all trainees undergoing military instructions; and all other persons lawfully called, drafted, or order to obey the same; (b) Cadets, flying cadets, and probationary third lieutenants; (c) All retainers to the camp and all persons accompanying or serving with the Army of the Philippines in the field in time of war or when martial law is declared though not otherwise subject to these articles;

(d) All persons under sentences adjudged by courts-martial. It is our opinion that the petitioners come within the general application of the clause in sub-paragraph (a); "and all other persons lawfully called, drafted, or ordered into, or to duty for training in, the said service, from the dates they are required by the terms of the call, draft, or order to obey the same." By their acceptance of appointments as officers in the Bolo Area from the General Headquarters of the 6th Military District, they became members of the Philippine Army amendable to the Articles of War. The Bolo Area, as has been seen, was a contigent of the 6th Military District which, as has also been pointed out, had been recognized by and placed under the operational control of the United States Army in the Southwest Pacific. The Bolo Area received supplies and funds for the salaries of its officers and men from the Southwest Pacific Command. As officers in the Bolo Area and the 6th Military District, the petitioners operated under the orders of duly established and duly appointed commanders of the United States Army. The attitude of the enemy toward underground movements did not affect the military status of guerrillas who had been called into the service of the Philippine Army. If the invaders refused to look upon guerrillas, without distinctions, as legitimate troops, that did not stop the guerillas who had been inducted into the service of the Philippine Army from being component parts thereof, bound to obey military status of guerrillas was to be judged not by the concept of the army of the country for which they fought. The constitutionality of the 93d Article of War is assailed. This article ordains "that any person subject to military law who commits murder in time of was shall suffer death or imprisonment for life, as the court martial may direct." It is argued that since "no review is provided by that law to be made by the Supreme Court, irrespective of whether the punishment is for life imprisonment or death", it violates Article VIII, section 2, paragraph 4, of the Constitution of the Philippines which provides that "the National Assembly may not deprive the Supreme Court of its original jurisdiction over all criminal cases in which the penalty imposed is death or life imprisonment." We think the petitioners are in error. This error arose from failure to perceive the nature of courts martial and the sources of the authority for their creation. Courts martial are agencies of executive character, and one of the authorities "for the ordering of courts martial has been held to be attached to the constitutional functions of the President as Commander in Chief, independently of legislation."

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(Winthrop's Military Law and Precedents, 2d Edition, p. 49.) Unlike courts of law, they are not a portion of the judiciary. "The Supreme Court of the United States referring to the provisions of the Constitution authorizing Congress to provide for the government of the army, excepting military offenses from the civil jurisdiction, and making the President Commander in Chief, observes as follows: "These provisions show that Congress has the power to provide for the trial and punishment of military and naval offenses in the manner then and now practiced by civilized nations, and that the power to do so is given without any connection between it and the 3d Article of the United States; indeed that the two powers are entirely independent of each other." "Not belonging to the judicial branch of the government, it follows that courts-martial must pertain to the executive department; and they are in fact simply instrumentalities of the executive power, provided by Congress for the President as Commander in Chief, to aid him in properly commanding the army and navy and enforcing discipline therein, and utilized under his orders or those of his authorized military representatives." (Winthrop's Military Law and Precedents, 2d Edition, p. 49.) Of equal interest Clode, 2 M. F., 361, says of these courts in the British law: "It must never be lost sight of that the only legitimate object of military tribunals is to aid the Crown to maintain the discipline and government of the Army." (Footnote No. 24, p. 49, Winthrop's Military Law and Precedents, 2d Edition.) Our conclusion, therefore, is that the petition has no merit and that it should be dismissed with costs. It is so ordered. Moran, C.J., Paras, Feria, Pablo, Hilado, Bengzon, Briones and Padilla, JJ., concur.

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