Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-32096 October 24, 1970

ROMEO F. EDU, in his capacity as Land Transportation Commissioner, petitioner,

vs.
HON. VICENTE G. ERICTA in his capacity as Judge of the Court of First Instance of Rizal, Br. XVIII,
Quezon City, and TEDDY C. GALO respondents.

Office of the Solicitor General Felix Q. Antonio, Acting Assistant Solicitor General Hector C. Fule and
Solicitor Vicente A. Torres for petitioner.

Teddy C. Galo in his own behalf.

Judge Vicente Ericta in his own behalf.

FERNANDO, J.:.

Petitioner Romeo F. Edu, the Land Transportation Commissioner, would have us rule squarely on the
constitutionality of the Reflector Law1 in this proceeding for certiorari and prohibition against respondent
Judge, the Honorable Vicente G. Ericta of the Court of First Instance of Rizal, Quezon City Branch, to
annul and set aside his order for the issuance of a writ of preliminary injunction directed against
Administrative Order No. 2 of petitioner for the enforcement of the aforesaid statute, in a pending suit in
his court for certiorari and prohibition, filed by the other respondent Teddy C. Galo assailing; the validity of
such enactment as well as such administrative order. Respondent Judge, in his answer, would join such a
plea asking that the constitutional and legal questions raised be decided "once and for all." Respondent
Teddy C. Galo who was quite categorical in his assertion that both the challenged legislation and the
administrative order transgress the constitutional requirements of due process and non-delegation, is not
averse either to such a definitive ruling. Considering the great public interest involved and the reliance by
respondent Galo and the allegation that the repugnancy to the fundamental law could be discerned on the
face of the statute as enacted and the executive order as promulgated, this Court, sees no obstacle to the
determination in this proceeding of the constitutional questions raised. For reasons to be hereafter stated,
we sustain the validity of the Reflector Law and Administrative Order No. 2 issued in the implementation
thereof, the imputation of constitutional infirmity being at best flimsy and insubstantial.

As noted in the answer of respondent Judge, respondent Galo on his behalf and that of other motorist
filed on May 20, 1970 a suit for certiorari and prohibition with preliminary injunction assailing the validity of
the challenged Act as an invalid exercise of the police power, for being violative of the due process
clause. This he followed on May 28, 1970 with a manifestation wherein he sought as an alternative
remedy that, in the event that respondent Judge would hold said statute constitutional, Administrative
Order No. 2 of the Land Transportation Commissioner, now petitioner, implementing such legislation be
nullified as an undue exercise of legislative power. There was a hearing on the plea for the issuance of a
writ of preliminary injunction held on May 27. 1970 where both parties were duly represented, but no
evidence was presented. The next day, on May 28, 1970, respondent Judge ordered the issuance of a
preliminary injunction directed against the enforcement of such administrative order. There was the day
after, a motion for its reconsideration filed by the Solicitor General representing petitioner. In the
meanwhile, the clerk of court of respondent Judge issued, on June 1, 1970 the writ of preliminary
injunction upon the filing of the required bond. The answer before the lower court was filed by petitioner
Edu on June 4, 1970. Thereafter, on June 9, 1970, respondent Judge denied the motion for
reconsideration of the order of injunction. Hence this petition for certiorari and prohibition filed with this
court on June 18, 1970.

In a resolution of June 22, 1970, this Court required respondents to file an answer to the petition for
certiorari and prohibition. Respondent Judge, the Honorable Vicente G. Ericta, did file his answer on June
30, 1970 explaining why he restrained the enforcement of Administrative Order No. 2 and, as noted at the
outset, joining the Solicitor General in seeking that the legal questions raised namely the constitutionality
of the Reflector Law and secondly the validity of Administrative Order No. 2 alleged to be in excess of the
authority conferred on petitioner and therefore violative of the principle of non-delegation of legislative
power be definitely decided. It was on until July 6, 1970 that respondent Galo filed his answer seeking the
dismissal of this petition concentrating on what he considered to be the patent invalidity of Administrative
Order No. 2 as it went beyond the authority granted by the Reflector Law, even assuming that it is
constitutional. In the meanwhile, on July 2, 1970, the petition was called for hearing with Solicitor Vicente
Torres appearing for petitioner and respondent Galo for himself. It was made clear during the course of
such argumentation that the matter of the constitutionality of the Reflector Law was likewise under
consideration by this Court. The case is thus ripe for decision.

We repeat that we find for petitioner and sustain the Constitutionality of the Reflector Law as well as the
validity of Administrative Order No. 2.

1. The threshold question is whether on the basis of the petition, the answers, and the oral argument, it
would be proper for this Court to resolve the issue of the constitutionality of the Reflector Law. Our
answer, as indicated, is in the affirmative. It is to be noted that the main thrust of the petition before us is
to demonstrate in a rather convincing fashion that the challenged legislation does not suffer from the
alleged constitutional infirmity imputed to it by the respondent Galo. Since the special civil action for
certiorari and prohibition filed before him before respondent Judge would seek a declaration of nullity of
such enactment by the attribution of the violation the face thereof of the due process guarantee in the
deprivation of property rights, it would follow that there is sufficient basis for us to determine which view
should prevail. Moreover, any further hearing by respondent Judge would likewise to limited to a
discussion of the constitutional issues raised, no allegations of facts having made. This is one case then
where the question of validity is ripe for determination. If we do so, further effort need not be wasted and
time is saved moreover, the officials concerned as well as the public, both vitally concerned with a final
resolution of questions of validity, could know the definitive answer and could act accordingly. There is a
great public interest, as was mentioned, to be served by the final disposition of such crucial issue,
petitioner praying that respondent Galo be declared having no cause of action with respondent Judge
being accordingly directed to dismiss his suit.

There is another reinforcement to this avenue of approach. We have done so before in a suit, Climaco v.
Macadaeg, 2 involving the legality of a presidential directive. That was a petition for the review and
reversal of a writ of preliminary injunction issued by the then Judge Macadaeg. We there announced that
we "have decided to pass upon the question of the validity of the presidential directive ourselves,
believing that by doing so we would be putting an end to a dispute, a delay in the disposition of which has
caused considerable damage and injury to the Government and to the tobacco planters themselves."

There is no principle of constitutional adjudication that bars this Court from similarly passing upon the
question of the validity of a legislative enactment in a proceeding before it to test the propriety of the
issuance of a preliminary injunction. The same felt need for resolving once and for all the vexing question
as to the constitutionality of a challenged enactment and thus serve public interest exists. What we have
done in the case of an order proceeding from one of the coordinate branches, the executive, we can very
well do in the matter before us involving the alleged nullity of a legislative act. Accordingly, there is
nothing to preclude the grant of the writs prayed for, the burden of showing the constitutionality of the act
having proved to be as will now be shown too much for respondent Galo.
2. The Reflector Law reads in full: "(g) Lights and reflector when parked or disabled. — Appropriate
parking lights or flares visible one hundred meters away shall be displayed at a corner of the vehicle
whenever such vehicle is parked on highways or in places that are not well-lighted or is placed in such
manner as to endanger passing traffic. Furthermore, every motor vehicle shall be provided at all times
with built-in reflectors or other similar warning devices either pasted, painted or attached to its front and
back which shall likewise be visible at light at least one hundred meters away. No vehicle not provided
with any of the requirements mentioned in this subsection shall be registered." 3 It is thus obvious that the
challenged statute is a legislation enacted under the police power to promote public safety.

Justice Laurel, in the first leading decision after the Constitution came to force, Calalang v. Williams,4
identified police power with state authority to enact legislation that may interfere with personal liberty or
property in order to promote the general welfare. Persons and property could thus "be subjected to all
kinds of restraints and burdens in order to secure the general comfort, health and prosperity of the state."
Shortly after independence in 1948, Primicias v. Fugoso,5 reiterated the doctrine, such a competence
being referred to as "the power to prescribe regulations to promote the health, morals, peace, education,
good order or safety, and general welfare of the people." The concept was set forth in negative terms by
Justice Malcolm in a pre-Commonwealth decision as "that inherent and plenary power in the State which
enables it to prohibit all things hurtful to the comfort, safety and welfare of society." 6 In that sense it could
be hardly distinguishable as noted by this Court in Morfe v. Mutuc7 with the totality of legislative power.

It is in the above sense the greatest and most powerful attribute of government. It is to quote Justice
Malcolm anew "the most essential, insistent, and at least illimitable of powers," 8 extending as Justice
Holmes aptly pointed out "to all the great public needs." 9 Its scope, ever-expanding to meet the
exigencies of the times, even to anticipate the future where it could be done, provides enough room for an
efficient and flexible response to conditions and circumstances thus assuring the greatest benefits. In the
language of Justice Cardozo: "Needs that were narrow or parochial in the past may be interwoven in the
present with the well-being of the nation. What is critical or urgent changes with the
time." 10 The police power is thus a dynamic agency, suitably vague and far from precisely defined, rooted
in the conception that men in organizing the state and imposing upon its government limitations to
safeguard constitutional rights did not intend thereby to enable an individual citizen or a group of citizens
to obstruct unreasonably the enactment of such salutary measures calculated to insure communal peace,
safety, good order, and welfare.

It would then be to overturn a host of decisions impressive for their number and unanimity were this Court
to sustain respondent Galo. 11 That we are not disposed to do, especially so as the attack on the
challenged statute ostensibly for disregarding the due process safeguard is angularly unpersuasive. It
would be to close one's eyes to the hazards of traffic in the evening to condemn a statute of this
character. Such an attitude betrays lack of concern for public safety. How can it plausibly alleged then
that there was no observance of due process equated as it has always been with that is reasonable? The
statute assailed is not infected with arbitrariness. It is not the product of whim or caprice. It is far from
oppressive. It is a legitimate response to a felt public need. It can stand the test of the most
unsymphatetic appraisal.

Respondent Galo is of a different mind, having been unable to resist the teaching of many American
State Court decisions referred to in the secondary source, American Jurisprudence principally relied upon
by him. He ought to have been cautioned against an indiscriminate acceptance of such doctrines
predicated on what was once a fundamental postulate in American public law, laissez faire.

It is to be admitted that there was a period when such a concept did influence American court decisions
on constitutional law. As was explicitly stated by Justice Cardozo speaking of that era: "Laissez-faire was
not only a counsel of caution which would do well to heed. It was a categorical imperative which
statesmen as well as judges must obey." 12 For a long time legislation tending to reduce economic
inequality foundered on the rock that was the due process clause, enshrining as it did the liberty of
contract, based on such a basic assumption.
The New Deal administration of President Roosevelt more responsive to the social and economic forces
at work changed matters greatly. By 1937, there was a greater receptivity by the American Supreme
Court to an approach not too reverential of property rights. Even earlier, in 1935, Professor Coker of Yale,
speaking as a historian, could already discern a contrary drift. He did note the expending range of
governmental activity in the United States. 13 What is undeniable is that by 1943, laissez-faire was no
longer the dominant theory. In the language of Justice Jackson in the leading case of West Virginia State
Board of Education v. Barnette: 14 "We must, transplant these rights to a soil in which the laissez-faire
concept or non-interference has withered at least as to economic affairs, and social advancements are
increasingly sought through closer integration of society and through expanded and strengthened
governmental controls."

While authoritative precedents from the United States federal and state jurisdictions were deferred to
when the Philippines was still under American rule, it cannot be said that the laissez-faire principle was
invariably adhered to by us even then As early as 1919, in the leading case of Rubi v. Provincial Board of
Mindoro, 15 Justice Malcolm already had occasion to 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. The Courts unfortunately have sometimes seemed to trail after the other two branches of the
Government in this progressive march." People v. Pomar, 16 a 1924 decision which held invalid under the
due process clause a provision providing for maternity leave with pay thirty days before and thirty days
after confinement could be cited to show that such a principle did have its day. It is to be remembered
though that our Supreme Court had no other choice as the Philippines was then under the United States,
and only recently the year before, the American Supreme Court in Adkins v. Children's Hospital, 17 in line
with the laissez-faire theory, did hold that a statute providing for minimum wages was constitutionally
infirm.

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. No constitutional objection to regulatory
measures adversely affecting property rights, especially so when public safety is the aim, is likely to be
heeded, unless of course on the clearest and most satisfactory proof of invasion of rights guaranteed by
the Constitution. On such a showing, there may be a declaration of nullity, but not because the laissez-
faire principle was disregarded but because the due process, equal protection, or non-impairment
guarantees would call for vindication.

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. 18 He spoke thus: "My answer is that this constitution has
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 interests 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. 19

It was not expected then when in a concurring opinion, Justice Laurel, who likewise sat in the
Constitutional Convention and was one of its leading lights, explicitly affirmed in a concurring opinion,
later quoted with approval in the leading case of Antamok Goldfields Mining Co. v. Court of Industrial
Relations, 20 that the Constitution did away with the laissez-faire doctrine. In the course of such
concurring opinion and after noting the changes that have taken place calling for a more affirmative role
by the government and its undeniable power to curtail property rights, he categorically declared the
doctrine in People v. Pomar no longer retains "its virtuality as a living principle." 21

It is in the light of such rejection of the laissez-faire principle that during the Commonwealth era, no
constitutional infirmity was found to have attached to legislation covering such subjects as collective
bargaining, 22 security of tenure, 23 minimum wages, 24 compulsory arbitration, 25 the regulation of
tenancy 26 as well as the issuance of
securities, 27 and control of public services. 28 So it is likewise under the Republic this Court having
given the seal of approval to more favorable tenancy laws, 29 nationalization of the retail trade, 30
limitation of the hours of labor, 31 imposition of price control, 32 requirement of separation pay for one
month, 33 and social security scheme. 34

Respondent Galo thus could have profited by a little more diligence in the scrutiny of Philippine decisions
rendered with not unexpected regularity, during all the while our Constitution has been in force attesting
to the demise of such a shibboleth as laissez-faire. It was one of those fighting faiths that time and
circumstances had upset, to paraphrase Holmes. Yet respondent Galo would seek to vivify and resurrect
it. That, it would appear, is a vain quest, a futile undertaking. The Reflector Law is thus immune from the
attack so recklessly hurled against it. It can survive, and quite easily too, the constitutional test.

3. The same lack of success marks the effort of respondent Galo to impugn the validity of Administrative
Order No. 2 issued by petitioner in his official capacity, duly approved by the Secretary of Public Works
and Communications, for being contrary to the principle of non-delegation of legislative power. Such
administrative order, which took effect on April 17, 1970, has a provision on reflectors in effect
reproducing what was set forth in the Act. Thus: "No motor vehicles of whatever style, kind, make, class
or denomination shall be registered if not equipped with reflectors. Such reflectors shall either be factory
built-in-reflector commercial glass reflectors, reflection tape or luminous paint. The luminosity shall have
an intensity to be maintained visible and clean at all times such that if struck by a beam of light shall be
visible 100 meters away at night." 35 Then came a section on dimensions, placement and color. As to
dimensions the following is provided for: "Glass reflectors — Not less than 3 inches in diameter or not
less than 3 inches square; Reflectorized Tape — At least 3 inches wide and 12 inches long. The painted
or taped area may be bigger at the discretion of the vehicle owner." 36 Provision is then made as to how
such reflectors are to be "placed, installed, pasted or painted." 37 There is the further requirement that in
addition to such reflectors there shall be installed, pasted or painted four reflectors on each side of the
motor vehicle parallel to those installed, pasted or painted in front and those in the rear end of the body
thereof. 38 The color required of each reflectors, whether built-in, commercial glass, reflectorized tape or
reflectorized paint placed in the front part of any motor vehicle shall be amber or yellow and those placed
on the sides and in the rear shall all be red. 39

Penalties resulting from a violation thereof could be imposed. Thus: "Non-compliance with the
requirements contained in this Order shall be sufficient cause to refuse registration of the motor vehicle
affected and if already registered, its registration maybe suspended in pursuance of the provisions of
Section 16 of RA 4136; [Provided], However, that in the case of the violation of Section 1(a) and (b) and
paragraph (8) Section 3 hereof, a fine of not less than ten nor more than fifty pesos shall be imposed. 40 It
is not to be lost sight of that under Republic Act No. 4136, of which the Reflector Law is an amendment,
petitioner, as the Land Transportation Commissioner, may, with the approval of the Secretary of Public
Works and Communications, issue rules and regulations for its implementation as long as they do not
conflict with its provisions. 41 It is likewise an express provision of the above statute that for a violation of
any of its provisions or regulations promulgated pursuant thereto a fine of not less than P10 nor not less
than P50 could be imposed. 42

It is a fundamental principle flowing from the doctrine of separation of powers that Congress may not
delegate its legislative power to the two other branches of the government, subject to the exception that
local governments may over local affairs participate in its exercise. What cannot be delegated is the
authority under the Constitution to make laws and to alter and repeal them; the test is the completeness
of the statute in all its term and provisions when it leaves the hands of the legislature. To determine
whether or not there is an undue delegation of legislative power the inquiry must be directed to the scope
and definiteness of the measure enacted. The legislature does not abdicate its functions when it
describes what job must be done, who is to do it, and what is the scope of his authority. For a complex
economy, that may indeed be the only way in which the legislative process can go forward. A distinction
has rightfully been made between delegation of power to make the laws which necessarily involves a
discretion as to what it shall be, which constitutionally may not be done, and delegation of authority or
discretion as to its execution to exercised under and in pursuance of the law, to which no valid objection
call be made. The Constitution is thus not to be regarded as denying the legislature the necessary
resources of flexibility and practicability.

To avoid the taint of unlawful delegation, there must be a standard, which implies at the very least that the
legislature itself determines matters of principle and lay down fundamental policy. Otherwise, the charge
of complete abdication may be hard to repel. A standard thus defines legislative policy, marks its limits, its
maps out its boundaries and specifies the public agency to apply it. It indicates the circumstances under
which the legislative command is to be effected. It is the criterion by which legislative purpose may be
carried out. Thereafter, the executive or administrative office designated may in pursuance of the above
guidelines promulgate supplemental rules and regulations.

The standard may be either express or implied. If the former, the non-delegation objection is easily met.
The standard though does not have to be spelled out specifically. It could be implied from the policy and
purpose of the act considered as a whole. In the Reflector Law, clearly the legislative objective is public
safety. That is sought to be attained as in Calalang v. Williams is "safe transit upon the roads." 43

This is to adhere to the recognition given expression by Justice Laurel in a decision announced not long
after the Constitution came into force and effect that the principle of non-delegation "has been made to
adapt itself the complexities of modern governments, giving rise to the adoption, within certain limits, of
the principle of "subordinate legislation" not only in the United States and England but in practically all
modern governments." 44 He continued: "Accordingly, with the growing complexity of modern life, the
multiplication of the subjects of governmental regulation, and the increased difficulty of administering the
laws, there is a constantly growing tendency toward the delegation of greater powers by the legislature
and toward the approval of the practice by the courts." 45 Consistency with the conceptual approach
requires the reminder that what is delegated is authority non-legislative in character, the completeness of
the statute when it leaves the hands of Congress being assumed.

Our later decisions speak to the same effect. Thus from, Justice J. B. L. Reyes in People vs. Exconde: 46
"It is well establish in this jurisdiction that, while the making of laws is a non-delegable activity that
corresponds exclusively to Congress, nevertheless the latter may constitutionally delegate authority to
promulgate rules and regulations to implement a given legislation and effectuate its policies, for the
reason that the legislature often finds it impracticable (if not impossible) to anticipate and proved for the
multifarious and complex situations that may be met in carrying the law in effect. All that is required is that
the regulation should germane to the objects and purposes of the law; that the regulation be not in
contradiction with it; but conform to the standards that the law prescribes ... " 47

An even more explicit formulation of the controlling principle comes from the pen of the then Justice, now
Chief Justice, Concepcion: "Lastly, the legality of Circular No. 21 is assailed upon the ground that the
grant of authority to issue the same constitutes an undue delegation of legislative power. It is true that,
under our system of government, said power may not be delegated except to local governments.
However, one thing is to delegate the power to determine what the law shall be, and another thing to
delegate the authority to fix the details in the execution of enforcement of a policy set out in the law itself.
Briefly stated, the rule is that the delegated powers fall under the second category, if the law authorizing
the, delegation furnishes a reasonable standard which "sufficiently marks the field within which the
Administrator is to act so that it may be known whether he has kept within it in compliance with the
legislative will." (Yakus vs. United States, 88 L. ed.
848) ... It should be noted, furthermore, that these powers must be construed and exercised in relation to
the objectives of the law creating the Central Bank, which are, among others, "to maintain monetary
stability in the Philippines," and "to promote a rising level of production, employment and real income in
the Philippines." (Section 2, Rep. Act No. 265). These standards are sufficiently concrete and definite to
vest in the delegated authority, the character of administrative details in the enforcement of the law and to
place the grant said authority beyond the category of a delegation of legislative powers ... " 48

It bears repeating that the Reflector Law construed together with the Land Transportation Code. Republic
Act No. 4136, of which it is an amendment, leaves no doubt as to the stress and emphasis on public
safety which is the prime consideration in statutes of this character. There is likewise a categorical
affirmation Of the power of petitioner as Land Transportation Commissioner to promulgate rules and
regulations to give life to and translate into actuality such fundamental purpose. His power is clear. There
has been no abuse. His Administrative Order No. 2 can easily survive the attack, far-from-formidable,
launched against it by respondent Galo.

WHEREFORE, the writs of certiorari and prohibition prayed for are granted, the orders of May 28, 1970 of
respondent Judge for the issuance of a writ of preliminary injunction, the writ of preliminary injunction of
June 1, 1970 and his order of June 9, 1970 denying reconsideration are annulled and set aside.
Respondent Judge is likewise directed to dismiss the petition for certiorari and prohibition filed by
respondent Teddy C. Galo, there being no cause of action as the Reflector Law and Administrative Order
No. 2 of petitioner have not been shown to be tainted by invalidity. Without pronouncement as to costs.

Reyes, J.B.L., Actg. C.J., Dizon, Makalintal, Zaldivar, Castro, Teehankee, Barredo and Makasiar, JJ.,
concur.

Concepcion, C.J. and Villamor, J., took no part.

 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

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, ENRIQUE
TIANGCO, JR., JUSTINIANO TOBIAS, NYMIA TOLENTINO, CONSTANTE TOLENTINO, TEODORO
TOREBIO, FEDERICO TRINIDAD, JOVENCINTO TRINIDAD, LAZARO VALDEZ, LUDRALINA
VALDEZ, MAXIMINA VALDEZ, FRANCISCO VELASCO, JR., ROSITA VELASCO, SEVERO
VANTANILLA, VENANCIO VENTIGAN, FELICITAS VENUS, NIEVES DE VERA, ELISEO VERSOZA,
SILVESTRE VILA, GLORIA VILLAMOR, ALEJANDRO VELLANUEVA, DAVID VILLANUEVA,
CAROLINA VILLASENOR ORLANDO VILLASTIQUE, MAJELLA VILORIN, ROSARIO VILORIA, MAY
VIRATA, FEDERICO VIRAY, MELBA YAMBAO, MARIO ZAMORA, AUTENOR ABUEG, SOTERO
ACEDO, HONRADO ALBERTO, FELIPE ALIDO, VICENTE ANCHUELO, LIBERTAD APEROCHO,
MARIANO BALBAGO, MARIO BALMACEDA, DAISY BICENIO, SYLVIA BUSTAMANTE, RAYMUNDO
GEMERINO, LAZARO CAPURAS, ROGELIO CARUNGCONG, ZACARIAS CAYETANO, JR., LILY
CHUA, ANDRES CRUZ, ARTURO CRUZ, BIENVENIDO ESTEBAN, PABLO JARETA, MANUEL
JOSE, NESTORIA KINTANAR, CLEOPATRIA LAZEM. MELCHOR LAZO, JESUS LUNA, GASPAR
MARINAS, CESAR MAULSON, MANUEL MEDINA, JESUS PLURAD, LAKAMBINI RAZON, GLORIA
IBANEZ, JOSE SANTOS, ELEAZAR SQUI, JOSE TAMAYO, FELIPE TENORIO, SILVINO UMALI,
VICENTE ZARA, SATURNINO GARCIA, WILLIAM GARCIA, NORMA GARINGARAO, ROSARIO
ANTONIO, RUBEN BAUTISTA, QUIRINO PUESTO, NELIA M. GOMERI, OSCAR R. LANUZA,
AURORA M. LINDAYA, GREGORIO MOGSINO, JACRM B. PAPA, GREGORIO R. RIEGO, TERESITA
N. ROZUL, MAGTANGOL SAMALA, PORFIRIO AGOCOLIS, LEONARDO MONTE, HERMELINO
PATI, ALFREDO PAYOYO, PURIFICACION ROJAS, ODANO TEANO, RICARDO SANTIAGO, and
MARCELO MANGAHAS, respondents.

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

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

FERNANDO, J.:

The principal issue that calls for resolution in this appeal by certiorari from an order of respondent Court
of Industrial Relations is one of constitutional significance. It is concerned with the expanded role of
government necessitated by the increased responsibility to provide for the general welfare. More
specifically, it deals with the question of whether petitioner, the Philippine Virginia Tobacco
Administration, discharges governmental and not proprietary functions. The landmark opinion of the then
Justice, row Chief Justice, Makalintal in Agricultural Credit and Cooperative Financing Administration v.
Confederation of Unions in Government Corporations and offices, points the way to the right answer.1 It
interpreted the then fundamental law as hostile to the view of a limited or negative state. It is antithetical
to the laissez faire concept. For as noted in an earlier decision, the welfare state concept "is not alien to
the philosophy of [the 1935] Constitution."2 It is much more so under the present Charter, which is
impressed with an even more explicit recognition of social and economic rights. 3 There is manifest, to
recall Laski, "a definite increase in the profundity of the social conscience," resulting in "a state which
seeks to realize more fully the common good of its members."4 It does not necessarily follow, however,
just because petitioner is engaged in governmental rather than proprietary functions, that the labor
controversy was beyond the jurisdiction of the now defunct respondent Court. Nor is the objection raised
that petitioner does not come within the coverage of the Eight-Hour Labor Law persuasive.5 We cannot
then grant the reversal sought. We affirm.

The facts are undisputed. On December 20, 1966, claimants, now private respondents, filed with
respondent Court a petition wherein they alleged their employment relationship, the overtime services in
excess of the regular eight hours a day rendered by them, and the failure to pay them overtime
compensation in accordance with Commonwealth Act No. 444. Their prayer was for the differential
between the amount actually paid to them and the amount allegedly due them. 6 There was an answer
filed by petitioner Philippine Virginia Tobacco Administration denying the allegations and raising the
special defenses of lack of a cause of action and lack of jurisdiction. 7 The issues were thereafter joined,
and the case set for trial, with both parties presenting their evidence. 8 After the parties submitted the case
for decision, the then Presiding Judge Arsenio T. Martinez of respondent Court issued an order sustaining
the claims of private respondents for overtime services from December 23, 1963 up to the date the
decision was rendered on March 21, 1970, and directing petitioner to pay the same, minus what it had
already paid. 9 There was a motion for reconsideration, but respondent Court en banc denied the same.
10
Hence this petition for certiorari.

Petitioner Philippine Virginia Tobacco Administration, as had been noted, would predicate its plea for the
reversal of the order complained of on the basic proposition that it is beyond the jurisdiction of respondent
Court as it is exercising governmental functions and that it is exempt from the operation of
Commonwealth Act No. 444. 11 While, to repeat, its submission as to the governmental character of its
operation is to be given credence, it is not a necessary consequence that respondent Court is devoid of
jurisdiction. Nor could the challenged order be set aside on the additional argument that the Eight-Hour
Labor Law is not applicable to it. So it was, at the outset, made clear.

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.

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

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

3. The contention of petitioner that the Eight-Hour Labor Law 41 does not apply to it hardly deserves any
extended consideration. There is an air of casualness in the way such an argument was advanced in its
petition for review as well as in its brief. In both pleadings, it devoted less than a full page to its
discussion. There is much to be said for brevity, but not in this case. Such a terse and summary treatment
appears to be a reflection more of the inherent weakness of the plea rather than the possession of an
advocate's enviable talent for concision. It did cite Section 2 of the Act, but its very language leaves no
doubt that "it shall apply to all persons employed in any industry or occupation, whether public or private
... ." 42 Nor are private respondents included among the employees who are thereby barred from enjoying
the statutory benefits. It cited Marcelo v. Philippine National Red Cross 43 and Boy Scouts of the
Philippines v. Araos.44 Certainly, the activities to which the two above public corporations devote
themselves can easily be distinguished from that engaged in by petitioner. A reference to the pertinent
sections of both Republic Acts 2265 and 2155 on which it relies to obtain a ruling as to its governmental
character should render clear the differentiation that exists. If as a result of the appealed order, financial
burden would have to be borne by petitioner, it has only itself to blame. It need not have required private
respondents to render overtime service. It can hardly be surmised that one of its chief problems is paucity
of personnel. That would indeed be a cause for astonishment. It would appear, therefore, that such an
objection based on this ground certainly cannot suffice for a reversal. To repeat, respondent Court must
be sustained.

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

Makalintal, C.J., Castro, Barredo, Antonio, Esguerra, Aquino, Concepcion Jr. and Martin, JJ., concur.

Makasiar, Muñoz Palma, JJ., took no part.

Teehankee J., is on leave

 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 110526 February 10, 1998

ASSOCIATION OF PHILIPPINE COCONUT DESICCATORS, petitioner,

vs.
PHILIPPINE COCONUT AUTHORITY, respondent.

MENDOZA, J.:

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

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

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

On November 5, 1992, seven desiccated coconut processing companies belonging to the APCD brought
suit in the Regional Trial Court, National Capital Judicial Region in Makati, Metro Manila, to enjoin the
PCA from issuing permits to certain applicants for the establishment of new desiccated coconut
processing plants. Petitioner alleged that the issuance of licenses to the applicants would violate PCA's
Administrative Order No. 02, series of 1991, as the applicants were seeking permits to operate in areas
considered "congested" under the administrative order.1

On November 6, 1992, the trial court issued a temporary restraining order and, on November 25, 1992, a
writ of preliminary injunction, enjoining the PCA from processing and issuing licenses to Primex Products,
Inc., Coco Manila, Superstar (Candelaria) and Superstar (Davao) upon the posting of a bond in the
amount of P100,000.00.2

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

RESOLUTION NO. 018-93

POLICY DECLARATION DEREGULATING
THE ESTABLISHMENT OF NEW COCONUT
PROCESSING PLANTS
 WHEREAS, it is the policy of the State to promote free enterprise unhampered by protective
regulations and unnecessary bureaucratic red tapes;

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

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

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

NOW THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED, that, henceforth, PCA

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

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

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

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

Petitioner alleges:

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

II

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

III

IN PASSING BOARD RESOLUTION NO. 018-93, RESPONDENT PCA VIOLATED THE

PROCEDURAL DUE PROCESS REQUIREMENT OF CONSULTATION PROVIDED IN
PRESIDENTIAL DECREE NO. 1644, EXECUTIVE ORDER NO. 826 AND PCA
ADMINISTRATIVE ORDER NO. 002, SERIES OF 1991.
On the other hand, in addition to answering petitioner's arguments, respondent PCA alleges that this
petition should be denied on the ground that petitioner has a pending appeal before the Office of the
President. Respondent accuses petitioner of forum-shopping in filing this petition and of failing to exhaust
available administrative remedies before coming to this Court. Respondent anchors its argument on the
general rule that one who brings an action under Rule 65 must show that one has no appeal nor any
plain, speedy, and adequate remedy in the ordinary course of law.

I.

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

In any event, although the APCD has appealed the resolution in question to the Office of the
President, considering the fact that two months after they had sent their first letter on April 26,
1993 they still had to hear from the President's office, meanwhile respondent PCA was issuing
certificates of registration indiscriminately to new coconut millers, we hold that petitioner was
justified in filing this case on June 25, 1993.5 Indeed, after writing the Office of the President on
April 26, 19936 petitioner sent inquiries to that office not once, but twice, on May 26, 1993 7 and on
June 2, 1993,8 but petitioner did not receive any reply.

II.

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

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

Sec. 1. Prohibition. — Except as herein provided, no government agency or

instrumentality shall hereafter authorize, approve or grant any permit or license for the
establishment or operation of new desiccated coconut processing plants, including the
importation of machinery or equipment for the purpose. In the event of a need to establish
 a new plant, or expand the capacity, relocate or upgrade the efficiencies of any existing
desiccated plant, the Philippine Coconut Authority may, upon proper determination of
such need and evaluation of the condition relating to:

a. the existing market demand;

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

c. the level and flow of raw materials; and

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

authorize or grant the application for, the establishment or expansion of capacity,

relocation or upgrading of efficiencies of such desiccated coconut processing plant,
subject to the approval of the President.

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

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

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

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

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

It appears that pursuant to Executive Order No. 826 providing measures for the protection
of the Desiccated Coconut Industry, the Philippine Coconut Authority evaluated the
conditions relating to: (a) the existing market demands; (b) the production capacity
prevailing in the country or locality; (c) the level and flow of raw materials; and (d) other
circumstances which may affect the growth or viability of the industry concerned and that
the result of such evaluation favored the expansion of production and market of
desiccated coconut products.
 In view hereof and the favorable recommendation of the Secretary of Agriculture, the
deregulation of the Desiccated Coconut Industry as recommended in Resolution No. 058-
87 adopted by the PCA Governing Board on October 28, 1987 (sic) is hereby approved.14

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

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

NOW, THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED, that, henceforth, PCA

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

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

The issue is not whether the PCA has the power to adopt this resolution to carry out its mandate
under the law "to promote the accelerated growth and development of the coconut and other palm
oil industry."17 The issue rather is whether it can renounce the power to regulate implicit in the law
creating it for that is what the resolution in question actually is.

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

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

(h) To regulate the marketing and the exportation of copra and its by-products by
establishing standards for domestic trade and export and, thereafter, to conduct an
inspection of all copra and its by-products proposed for export to determine if they
conform to the standards established;
Instead of determining the qualifications of market players and preventing the entry into the field
of those who are unfit, the PCA now relies entirely on competition — with all its wastefulness and
inefficiency — to do the weeding out, in its naive belief in survival of the fittest. The result can
very well be a repeat of 1982 when free enterprise degenerated into a "free-for-all," resulting in
cut-throat competition, underselling, the production of inferior products and the like, which badly
affected the foreign trade performance of the coconut industry.

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

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

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

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

(b) Prescription of quality standards;

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

(d) Inspection and survey of export shipments through an independent international

superintendent or surveyor.

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

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

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

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

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

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

Sec. 6. . . . Individuals and private groups, including corporations, cooperatives, and

similar collective organizations, shall have the right to own, establish, and operate
economic enterprises, subject to the duty of the State to promote distributive justice and
to intervene when the common good so demands.

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

At all events, any change in policy must be made by the legislative department of the government.
The regulatory system has been set up by law. It is beyond the power of an administrative agency
to dismantle it. Indeed, petitioner charges the PCA of seeking to render moot a case filed by some
of its members questioning the grant of licenses to certain parties by adopting the resolution in
question. It is alleged that members of petitioner complained to the court that the PCA had
authorized the establishment and operation of new plants in areas which were already crowded, in
violation of its Administrative Order No. 002, series of 1991. In response, the Regional Trial Court
issued a writ of preliminary injunction, enjoining the PCA from issuing licenses to the private
respondent in that case.

These allegations of petitioner have not been denied here. It would thus seem that instead of
defending its decision to allow new entrants into the field against petitioner's claim that the PCA
decision violated the guidelines in Administrative Order No. 002, series of 1991, the PCA adopted
the resolution in question to render the case moot. In so doing, the PCA abdicated its function of
regulation and left the field to untrammeled competition that is likely to resurrect the evils of cut-
throat competition, underselling and overproduction which in 1982 required the temporary closing
of the field to new players in order to save the industry.

The PCA cannot rely on the memorandum of then President Aquino for authority to adopt the
resolution in question. As already stated, what President Aquino approved in 1988 was the
establishment and operation of new DCN plants subject to the guidelines to be drawn by the
PCA.20 In the first place, she could not have intended to amend the several laws already
mentioned, which set up the regulatory system, by a mere memoranda to the PCA. In the second
place, even if that had been her intention, her act would be without effect considering that, when
she issued the memorandum in question on February 11, 1988, she was no longer vested with
legislative authority.21
WHEREFORE, the petition is GRANTED. PCA Resolution No. 018-93 and all certificates of
registration issued under it are hereby declared NULL and VOID for having been issued in excess
of the power of the Philippine Coconut Authority to adopt or issue.

SO ORDERED.

Narvasa, C.J., Regalado, Davide, Jr., Puno, Kapunan, Francisco, Panganiban and Martinez, JJ.,
concur.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

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

THE GOVERNMENT OF THE PHILIPPINE ISLANDS, represented by the Treasurer of the Philippine
Islands, plaintiff-appellee,
vs.
EL MONTE DE PIEDAD Y CAJA DE AHORRAS DE MANILA, defendant-appellant.

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

Attorney-General Avanceña for appellee.

TRENT, J.:

About $400,000, were subscribed and paid into the treasury of the Philippine Islands by the inhabitants of
the Spanish Dominions of the relief of those damaged by the earthquake which took place in the
Philippine Islands on June 3, 1863. Subsequent thereto and on October 6 of that year, a central relief
board was appointed, by authority of the King of Spain, to distribute the moneys thus voluntarily
contributed. After a thorough investigation and consideration, the relief board allotted $365,703.50 to the
various sufferers named in its resolution, dated September 22, 1866, and, by order of the Governor-
General of the Philippine Islands, a list of these allotments, together with the names of those entitled
thereto, was published in the Official Gazette of Manila dated April 7, 1870. There was later distributed,
inaccordance with the above-mentioned allotments, the sum of $30,299.65, leaving a balance of
S365,403.85 for distribution. Upon the petition of the governing body of the Monte de Piedad, dated
February 1, 1833, the Philippine Government, by order dated the 1st of that month, directed its treasurer
to turn over to the Monte de Piedad the sum of $80,000 of the relief fund in installments of $20,000 each.
These amounts were received on the following dates: February 15, March 12, April 14, and June 2, 1883,
and are still in the possession of the Monte de Piedad. On account of various petitions of the persons,
and heirs of others to whom the above-mentioned allotments were made by the central relief board for the
payment of those amounts, the Philippine Islands to bring suit against the Monte de Piedad a recover,
"through the Attorney-General and in representation of the Government of the Philippine Islands," the
$80.000, together with interest, for the benefit of those persons or their heirs appearing in the list of
names published in the Official Gazette instituted on May 3, 1912, by the Government of the Philippine
Islands, represented by the Insular Treasurer, and after due trial, judgment was entered in favor of the
plaintiff for the sum of $80,000 gold or its equivalent in Philippine currency, together with legal interest
from February 28, 1912, and the costs of the cause. The defendant appealed and makes the following
assignment of errors:

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

2. The court erred in not having decreed that this donation had been cleared; said eighty
thousand dollars ($80,000) being at present the exclusive property of the appellant the
Monte de Piedad y Caja de Ahorros.
 3. That the court erred in stating that the Government of the Philippine Islands has
subrogated the Spanish Government in its rights, as regards an important sum of money
resulting from a national subscription opened by reason of the earthquake of June 3,
1863, in these Island.

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

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

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

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

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

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

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

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

GENERAL GOVERNMENT OF THE PHILIPPINES.

MANILA, February 1, 1883.

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

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

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

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

First. Authority is hereby given to deliver to the Monte de Piedad, out of the sum held in
the public treasury of these Islands obtained from the national subscription opened by
reason of the earthquakes of 1863, amounts up to the sum $80,000, as its needs may
require, in installments of $20,000.
 Second. The board of directors of the Monte de Piedad is solemnly bound to return,
within eight days after demand, the sums it may have so received, if H. M. Government
does not approve this resolution.

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

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

(Signed) P. DE RIVERA.

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

Intendencia General de Hacienda de Filipinas (General Treasury of the Philippines) —

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

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

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

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

MANILA, March 31, 1902.

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

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

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

Manila, November 19, 1913

(Sgd.) EMILIO LAZCANOTEGUI,
Secretary

(Sgd.) O. K. EMILIO MORETA,

Managing Director.

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

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

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

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

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

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

And in their supplemental brief counsel say:

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

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

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

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

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

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

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

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

In Fontain vs. Ravenel (17 Hw., 369, 384), Mr. Justice McLean, delivering the opinion of the court in a
charity case, said:
 When this country achieved its independence, the prerogatives of the crown devolved
upon the people of the States. And this power still remains with them except so fact as
they have delegated a portion of it to the Federal Government. The sovereign will is
made known to us by legislative enactment. The State as a sovereign, is the parens
patriae.

Chancelor Kent says:

In this country, the legislature or government of the State, as parens patriae, has the right
to enforce all charities of public nature, by virtue of its general superintending authority
over the public interests, where no other person is entrusted with it. (4 Kent Com., 508,
note.)

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

This prerogative of parens patriae is inherent in the supreme power of every State,
whether that power is lodged in a royal person or in the legislature, and has no affinity to
those arbitrary powers which are sometimes exerted by irresponsible monarchs to the
great detriment of the people and the destruction of their liberties. On the contrary, it is a
most beneficient functions, and often necessary to be exercised in the interest of
humanity, and for the prevention of injury to those who cannot protect themselves.

The court in the same case, after quoting from Sohier vs. Mass. General Hospital (3 Cush., 483, 497),
wherein the latter court held that it is deemed indispensible that there should be a power in the legislature
to authorize the same of the estates of in facts, idiots, insane persons, and persons not known, or not in
being, who cannot act for themselves, said:

These remarks in reference to in facts, insane persons and person not known, or not in
being, apply to the beneficiaries of charities, who are often in capable of vindicating their
rights, and justly look for protection to the sovereign authority, acting as parens patriae.
They show that this beneficient functions has not ceased t exist under the change of
government from a monarchy to a republic; but that it now resides in the legislative
department, ready to be called into exercise whenever required for the purposes of
justice and right, and is a clearly capable of being exercised in cases of charities as in
any other cases whatever.

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

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

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

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

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

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

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

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

The material facts relating to this question are these: The Monte de Piedad received the $80,000 in 1883
"to be held under the same conditions as at present in the treasury, to wit, at the disposal of the relief
board." In compliance with the provisions of the royal order of December 3, 1892, the Department of
Finance called upon the Monte de Piedad in June, 1893, to return the $80,000. The Monte declined to
comply with this order upon the ground that only the Governor-General of the Philippine Islands and not
the Department of Finance had the right to order the reimbursement. The amount was carried on the
books of the Monte as a returnable loan until January 1, 1899, when it was transferred to the account of
the "Sagrada Mitra." On March 31, 1902, the Monte, through its legal representative, stated in writing that
the amount in question was received as a reimbursable loan, without interest. Act No. 2109 became
effective January 30, 1912, and the action was instituted on May 3rd of that year.

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

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

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

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

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

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

In the absence of express statutory provision to the contrary, statute of limitations do not
as a general rule run against the sovereign or government, whether state or federal. But
the rule is otherwise where the mischiefs to be remedied are of such a nature that the
state must necessarily be included, where the state goes into business in concert or in
competition with her citizens, or where a party seeks to enforces his private rights by suit
in the name of the state or government, so that the latter is only a nominal party.

In the instant case the Philippine Government is not a mere nominal party because it, in bringing and
prosecuting this action, is exercising its sovereign functions or powers and is seeking to carry out a trust
developed upon it when the Philippine Islands were ceded to the United States. The United States having
in 1852, purchased as trustee for the Chickasaw Indians under treaty with that tribe, certain bonds of the
State of Tennessee, the right of action of the Government on the coupons of such bonds could not be
barred by the statute of limitations of Tennessee, either while it held them in trust for the Indians, or since
it became the owner of such coupons. (U. S. vs. Nashville, etc., R. Co., supra.) So where lands are held
in trust by the state and the beneficiaries have no right to sue, a statute does not run against the State's
right of action for trespass on the trust lands. (Greene Tp. vs. Campbell, 16 Ohio St., 11; see also Atty.-
Gen. vs. Midland R. Co., 3 Ont., 511 [following Reg. vs. Williams, 39 U. C. Q. B., 397].)

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

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

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

Torres, Johnson and Araullo, JJ., concur.

Moreland, J., did not sign.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-25843 July 25, 1974

MELCHORA CABANAS, plaintiff-appellee,

vs.
FRANCISCO PILAPIL, defendant-appellant.

Seno, Mendoza & Associates for plaintiff-appellee.

Emilio Benitez, Jr. for defendant-appellant.

FERNANDO, J.:p

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

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

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

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

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

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

2. The appealed decision is supported by another cogent consideration. It is buttressed by its adherence
to the concept that the judiciary, as an agency of the State acting as parens patriae, is called upon
whenever a pending suit of litigation affects one who is a minor to accord priority to his best interest. It
may happen, as it did occur here, that family relations may press their respective claims. It would be more
in consonance not only with the natural order of things but the tradition of the country for a parent to be
preferred. it could have been different if the conflict were between father and mother. Such is not the case
at all. It is a mother asserting priority. Certainly the judiciary as the instrumentality of the State in its role of
parens patriae, cannot remain insensible to the validity of her plea. In a recent case, 9 there is this
quotation from an opinion of the United States Supreme Court: "This prerogative of parens patriae is
inherent in the supreme power of every State, whether that power is lodged in a royal person or in the
legislature, and has no affinity to those arbitrary powers which are sometimes exerted by irresponsible
monarchs to the great detriment of the people and the destruction of their liberties." What is more, there is
this constitutional provision vitalizing this concept. It reads: "The State shall strengthen the family as a
basic social institution." 10 If, as the Constitution so wisely dictates, it is the family as a unit that has to be
strengthened, it does not admit of doubt that even if a stronger case were presented for the uncle, still
deference to a constitutional mandate would have led the lower court to decide as it did.
WHEREFORE, the decision of May 10, 1965 is affirmed. Costs against defendant-appellant.

Zaldivar (Chairman), Antonio, Fernandez and Aquino, JJ., concur.

Barredo, J., took no part.

 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 164785 March 15, 2010

ELISEO F. SORIANO, Petitioner,

vs.
MA. CONSOLIZA P. LAGUARDIA, in her capacity as Chairperson of the Movie and Television
Review and Classification Board, MOVIE AND TELEVISION REVIEW AND CLASSIFICATION
BOARD, JESSIE L. GALAPON, ANABEL M. DELA CRUZ, MANUEL M. HERNANDEZ, JOSE L.
LOPEZ, CRISANTO SORIANO, BERNABE S. YARIA, JR., MICHAEL M. SANDOVAL, and ROLDAN
A. GAVINO, Respondents.

x ----------------------------------------- x

G.R. No. 165636

ELISEO F. SORIANO, Petitioner,

vs.
MOVIE AND TELEVISION REVIEW AND CLASSIFICATION BOARD, ZOSIMO G. ALEGRE, JACKIE
AQUINO-GAVINO, NOEL R. DEL PRADO, EMMANUEL BORLAZA, JOSE E. ROMERO IV, and
FLORIMONDO C. ROUS, in their capacity as members of the Hearing and Adjudication Committee
of the MTRCB, JESSIE L. GALAPON, ANABEL M. DELA CRUZ, MANUEL M. HERNANDEZ, JOSE L.
LOPEZ, CRISANTO SORIANO, BERNABE S. YARIA, JR., MICHAEL M. SANDOVAL, and ROLDAN
A. GAVINO, in their capacity as complainants before the MTRCB, Respondents.

RESOLUTION

VELASCO, JR., J.:

Before us is this motion of petitioner Eliseo F. Soriano for reconsideration of the Decision of the Court
dated April 29, 2009, modifying that of the Movie and Television Review and Classification Board
(MTRCB) by imposing the penalty of three-month suspension on the television show Ang Dating Daan,
instead of on petitioner Soriano, as host of that program.

Petitioner seeks reconsideration on the following grounds or issues: (1) the suspension thus meted out to
the program constitutes prior restraint; (2) the Court erred in ruling that his utterances 1 did not constitute
exercise of religion; (3) the Court erred in finding the language used as offensive and obscene; (4) the
Court should have applied its policy of non-interference in cases of conflict between religious groups; and
(5) the Court erred in penalizing the television program for the acts of petitioner.

The motion has no merit.

Petitioner’s threshold posture that the suspension thus imposed constitutes prior restraint and an
abridgement of his exercise of religion and freedom of expression is a mere rehash of the position he
articulated in the underlying petitions for certiorari and expounded in his memorandum.2 So are the
supportive arguments and some of the citations of decisional law, Philippine and American, holding it
together. They have been considered, sufficiently discussed in some detail, and found to be without merit
in our Decision. It would, thus, make little sense to embark on another lengthy discussion of the same
issues and arguments.
Suffice it to reiterate that the sanction imposed on the TV program in question does not, under the factual
milieu of the case, constitute prior restraint, but partakes of the nature of subsequent punishment for past
violation committed by petitioner in the course of the broadcast of the program on August 10, 2004. To be
sure, petitioner has not contested the fact of his having made statements on the air that were contextually
violative of the program’s "G" rating. To merit a "G" rating, the program must be "suitable for all ages,"
which, in turn, means that the "material for television [does not], in the judgment of the [MTRCB], x x x
contain anything unsuitable for children and minors, and may be viewed without adult guidance or
supervision."3 As previously discussed by the Court, the vulgar language petitioner used on prime-time
television can in no way be characterized as suitable for all ages, and is wholly inappropriate for children.

Petitioner next harps on the primacy of his freedoms, referring particularly to the exercise of his religious
beliefs and profession, as presiding minister of his flock, over the right and duty of the state as parens
patriae. Petitioner’s position may be accorded some cogency, but for the fact that it fails to consider that
the medium he used to make his statements was a television broadcast, which is accessible to children of
virtually all ages. As already laid down in the Decision subject of this recourse, the interest of the
government in protecting children who may be subjected to petitioner’s invectives must take precedence
over his desire to air publicly his dirty laundry. The public soapbox that is television must be guarded by
the state, which purpose the MTRCB serves, and has served, in suspending Ang Dating Daan for
petitioner’s statements. As emphasized in Gonzalez v. Kalaw Katigbak, 4 the freedom of broadcast media
is, in terms of degree of protection it deserves, lesser in scope, especially as regards television, which
reaches every home where there is a set, and where children will likely be among the avid viewers of the
programs shown. The same case also laid the basis for the classification system of the MTRCB when it
stated, "It cannot be denied though that the State as parens patriae is called upon to manifest an attitude
of caring for the welfare of the young."5

The penalty of suspension imposed on petitioner has driven him to liken the Court to "a blind man who
was asked to describe an elephant, and by his description he stubbornly believed that an elephant is just
the same as a Meralco post after touching one if its legs."6 Petitioner makes this comparison with the view
that the factual backdrop against which his statements were made was purportedly not considered by the
Court. As he presently argues:

The Honorable Court should have rendered its decision in light of the surrounding circumstances why and
what prompted herein petitioner to utter those words. Clearly, he was provoked because of the malicious
and blatant splicing by the INC ministers of his recorded voice. Verily, Petitioner submits that the choice
of words he used has been harsh but strongly maintains that the same was consistent with his
constitutional right of freedom of speech and religion.

Contrary to petitioner’s impression, the Court has, in fact, considered the factual antecedents of and his
motive in making his utterances, and has found those circumstances wanting as defense for violating the
program’s "G" rating. Consider the following excerpts from the Court’s Decision:

There is nothing in petitioner’s statements subject of the complaints expressing any particular religious
belief, nothing furthering his avowed evangelical mission. The fact that he came out with his statements in
a televised bible exposition program does not automatically accord them the character of a religious
discourse. Plain and simple insults directed at another person cannot be elevated to the status of
religious speech. Even petitioner’s attempts to place his words in context show that he was moved by
anger and the need to seek retribution, not by any religious conviction. His claim, assuming its veracity,
that some INC ministers distorted his statements respecting amounts Ang Dating Daan owed to a TV
station does not convert the foul language used in retaliation as religious speech. We cannot accept that
petitioner made his statements in defense of his reputation and religion, as they constitute no intelligible
defense or refutation of the alleged lies being spread by a rival religious group. They simply illustrate that
petitioner had descended to the level of name-calling and foul-language discourse. Petitioner could have
chosen to contradict and disprove his detractors, but opted for the low road.

And just to set things straight, the penalty imposed is on the program, not on petitioner.
Petitioner would next have the Court adopt a hands-off approach to the conflict between him and the
Iglesia Ni Cristo. In support of his urging, he cites Iglesia ni Cristo v. Court of Appeals.7

Petitioner’s invocation of Iglesia ni Cristo to support his hands-off thesis is erroneous. Obviously, he fails
to appreciate what the Court stated in that particular case when it rejected the argument that a religious
program is beyond MTRCB’s review and regulatory authority. We reproduce what the Court pertinently
wrote in Iglesia ni Cristo:

We thus reject petitioner’s postulate that its religious program is per se beyond review by the respondent
[MTRCB]. Its public broadcast on TV of its religious program brings it out of the bosom of internal belief.
Television is a medium that reaches even the eyes and ears of children. The Court iterates the rule that
the exercise of religious freedom can be regulated by the State when it will bring about the clear and
present danger of some substantive evil which the State is duty bound to prevent, i.e. serious detriment to
the more overriding interest of public health, public morals, or public welfare. A laissez faire policy on the
exercise of religion can be seductive to the liberal mind but history counsels the Court against its blind
adoption as religion is and continues to be a volatile area of concern in our country today. Across the sea
and in our shore, the bloodiest and bitterest wars fought by men were caused by irreconcilable religious
differences. Our country is still not safe from the recurrence of this stultifying strife considering our warring
religious beliefs and the fanaticism with which some of us cling and claw to these beliefs. x x x For when
religion divides and its exercise destroys, the State should not stand still.8 (Emphasis added.)

Lastly, petitioner claims that there was violation of due process of law, alleging that the registered
producer of the program is not a party to the proceedings. Hence, the program cannot, so petitioner
asserts, be penalized.

We will let the records speak for themselves to refute that argument.

As per petitioner’s admission in his petition for certiorari filed with the Court, he is "the Executive Producer
of Ang Dating Daan, a televised bible exposition program produced by the Philippine-based religious
organization, Church of God International."9 It is unclear, then, which producer the movant is referring to
in claiming that there was no representation before the MTRCB. He was and is the representative of Ang
Dating Daan, and the claim that there was no due process of law is simply bereft of merit.

Even as the foregoing disquisitions would suffice to write finis to the instant motion, certain relevant
issues have been raised by some members of the Court that ought to be addressed if only to put things in
their proper perspective. We refer to the matter of obscenity.

As stressed at every possible turn in the challenged Court’s Decision, the defining standards to be
employed in judging the harmful effects of the statements petitioner used would be those for the average
child, not those for the average adult. We note that the ratings and regulation of television broadcasts
take into account the protection of the child, and it is from the child’s narrow viewpoint that the utterances
must be considered, if not measured. The ratings "G," "PG" (parental guidance), "PG-13," and "R"
(restricted or for adults only) suggest as much. The concern was then, as now, that the program petitioner
hosted and produced would reach an unintended audience, the average child, and so it is how this
audience would view his words that matters. The average child would not be concerned with colorful
speech, but, instead, focus on the literal, everyday meaning of words used. It was this literal approach
that rendered petitioner’s utterances obscene.1avvphi1

The Court has taken stock of Action for Children’s Television v. FCC, 10 but finds this U.S. case not to be
of governing application to this jurisdiction under the present state of things. The so-called "safe harbor"
of 10:00 p.m. to 6:00 a.m., adverted to in Action for Children’s Television as the time wherein broadcast of
indecent material may be permitted, is believed inapplicable here. As it were, there is no legislative
enactment or executive issuance setting a similar period in the Philippines wherein indecent material may
be broadcast. Rather than fix a period for allowing indecent programming, what is used in this jurisdiction
is the system of classification of television programs, which the petitioner violated. His program was rated
"G," purported to be suitable for all ages. We cannot lose sight of the violation of his program’s
classification that carried with it the producer’s implied assurance that the program did not contain
anything unsuitable for children and minors. The hour at which it was broadcasted was of little moment in
light of the guarantee that the program was safe for children’s viewing.

The suspension of the program has not been arrived at lightly. Taking into account all the factors involved
and the arguments pressed on the Court, the suspension of the program is a sufficiently limited
disciplinary action, both to address the violation and to serve as an object lesson for the future. The
likelihood is great that any disciplinary action imposed on petitioner would be met with an equally
energetic defense as has been put up here. The simple but stubborn fact is that there has been a
violation of government regulations that have been put in place with a laudable purpose, and this violation
must accordingly be dealt with. We are not unmindful of the concerns on the restriction of freedoms that
may occur in imposing sanctions upon erring individuals and institutions, but it cannot be over-
emphasized that the freedoms encased in the Bill of Rights are far from absolute. Each has its own limits,
responsibilities, and obligations. Everyone is expected to bear the burden implicit in the exercise of these
freedoms. So it must be here.

WHEREFORE, petitioner’s motion for reconsideration is hereby DENIED.

No further pleadings shall be entertained in this case. Let entry of judgment be made in due course.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-5 September 17, 1945

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

vs.
EUSEBIO VALDEZ TAN KEH and ARSENIO P. DIZON, Judge of First Instance of Manila,
respondents.1

Marcelino Lontok for petitioner.

P. A. Revilla for respondent Valdez Tan Keh.
Respondent Judge Dizon in his own behalf.

FERIA, J.:

This petition for mandamus in which petitioner prays that the respondent judge of the lower court be
ordered to continue the proceedings in civil case No. 3012 of said court, which were initiated under the
regime of the so-called Republic of the Philippines established during the Japanese military occupation of
these Islands.

The respondent judge refused to take cognizance of and continue the proceedings in said case on the
ground that the proclamation issued on October 23, 1944, by General Douglas MacArthur had the effect
of invalidating and nullifying all judicial proceedings and judgements of the court of the Philippines under
the Philippine Executive Commission and the Republic of the Philippines established during the Japanese
military occupation, and that, furthermore, the lower courts have no jurisdiction to take cognizance of and
continue judicial proceedings pending in the courts of the defunct Republic of the Philippines in the
absence of an enabling law granting such authority. And the same respondent, in his answer and
memorandum filed in this Court, contends that the government established in the Philippines during the
Japanese occupation were no de facto governments.

On January 2, 1942, the Imperial Japanese Forces occupied the City of Manila, and on the next day their
Commander in Chief proclaimed "the Military Administration under law over the districts occupied by the
Army." In said proclamation, it was also provided that "so far as the Military Administration permits, all the
laws now in force in the Commonwealth, as well as executive and judicial institutions, shall continue to be
effective for the time being as in the past," and "all public officials shall remain in their present posts and
carry on faithfully their duties as before."

A civil government or central administration organization under the name of "Philippine Executive
Commission was organized by Order No. 1 issued on January 23, 1942, by the Commander in Chief of
the Japanese Forces in the Philippines, and Jorge B. Vargas, who was appointed Chairman thereof, was
instructed to proceed to the immediate coordination of the existing central administrative organs and
judicial courts, based upon what had existed therefore, with approval of the said Commander in Chief,
who was to exercise jurisdiction over judicial courts.

The Chairman of the Executive Commission, as head of the central administrative organization, issued
Executive Orders Nos. 1 and 4, dated January 30 and February 5, 1942, respectively, in which the
Supreme Court, Court of Appeals, Courts of First Instance, and the justices of the peace and municipal
courts under the Commonwealth were continued with the same jurisdiction, in conformity with the
instructions given to the said Chairman of the Executive Commission by the Commander in Chief of
Japanese Forces in the Philippines in the latter's Order No. 3 of February 20, 1942, concerning basic
principles to be observed by the Philippine Executive Commission in exercising legislative, executive and
judicial powers. Section 1 of said Order provided that "activities of the administration organs and judicial
courts in the Philippines shall be based upon the existing statutes, orders, ordinances and customs. . . ."

On October 14, 1943, the so-called Republic of the Philippines was inaugurated, but no substantial
change was effected thereby in the organization and jurisdiction of the different courts that functioned
during the Philippine Executive Commission, and in the laws they administered and enforced.

On October 23, 1944, a few days after the historic landing in Leyte, General Douglas MacArthur issued a
proclamation to the People of the Philippines which declared:

1. That the Government of the Commonwealth of the Philippines is, subject to the supreme
authority of the Government of the United States, the sole and only government having legal and
valid jurisdiction over the people in areas of the Philippines free of enemy occupation and control;

2. That the laws now existing on the statute books of the Commonwealth of the Philippines and
the regulations promulgated pursuant thereto are in full force and effect and legally binding upon
the people in areas of the Philippines free of enemy occupation and control; and

3. That all laws, regulations and processes of any other government in the Philippines than that of
the said Commonwealth are null and void and without legal effect in areas of the Philippines free
of enemy occupation and control.

On February 3, 1945, the City of Manila was partially liberated and on February 27, 1945, General
MacArthur, on behalf of the Government of the United States, solemnly declared "the full powers and
responsibilities under the Constitution restored to the Commonwealth whose seat is here established as
provided by law."

In the light of these facts and events of contemporary history, the principal questions to be resolved in the
present case may be reduced to the following:(1) Whether the judicial acts and proceedings of the court
existing in the Philippines under the Philippine Executive Commission and the Republic of the Philippines
were good and valid and remained so even after the liberation or reoccupation of the Philippines by the
United States and Filipino forces; (2)Whether the proclamation issued on October 23, 1944, by General
Douglas MacArthur, Commander in Chief of the United States Army, in which he declared "that all laws,
regulations and processes of any of the government in the Philippines than that of the said
Commonwealth are null and void and without legal effect in areas of the Philippines free of enemy
occupation and control," has invalidated all judgements and judicial acts and proceedings of the said
courts; and (3) If the said judicial acts and proceedings have not been invalidated by said proclamation,
whether the present courts of the Commonwealth, which were the same court existing prior to, and
continued during, the Japanese military occupation of the Philippines, may continue those proceedings
pending in said courts at the time the Philippines were reoccupied and liberated by the United States and
Filipino forces, and the Commonwealth of the Philippines were reestablished in the Islands.

We shall now proceed to consider the first question, that is, whether or not under the rules of international
law the judicial acts and proceedings of the courts established in the Philippines under the Philippine
Executive Commission and the Republic of the Philippines were good and valid and remained good and
valid even after the liberation or reoccupation of the Philippines by the United States and Filipino forces.

1. It is a legal truism in political and international law that all acts and proceedings of the legislative,
executive, and judicial departments of a de facto government are good and valid. The question to be
determined is whether or not the governments established in these Islands under the names of the
Philippine Executive Commission and Republic of the Philippines during the Japanese military occupation
or regime were de facto governments. If they were, the judicial acts and proceedings of those
governments remain good and valid even after the liberation or reoccupation of the Philippines by the
American and Filipino forces.

There are several kinds of de facto governments. The first, or government de facto in a proper legal
sense, is that government that gets possession and control of, or usurps, by force or by the voice of the
majority, the rightful legal governments and maintains itself against the will of the latter, such as the
government of England under the Commonwealth, first by Parliament and later by Cromwell as Protector.
The second is that which is established and maintained by military forces who invade and occupy a
territory of the enemy in the course of war, and which is denominated a government of paramount force,
as the cases of Castine, in Maine, which was reduced to British possession in the war of 1812, and
Tampico, Mexico, occupied during the war with Mexico, by the troops of the United States. And the third
is that established as an independent government by the inhabitants of a country who rise in insurrection
against the parent state of such as the government of the Southern Confederacy in revolt not concerned
in the present case with the first kind, but only with the second and third kinds of de facto governments.

Speaking of government "de facto" of the second kind, the Supreme Court of the United States, in the
case of Thorington vs. Smith (8 Wall., 1), said: "But there is another description of government, called
also by publicists a government de facto, but which might, perhaps, be more aptly denominated a
government of paramount force. Its distinguishing characteristics are (1), that its existence is maintained
by active military power with the territories, and against the rightful authority of an established and lawful
government; and (2), that while it exists it necessarily be obeyed in civil matters by private citizens who,
by acts of obedience rendered in submission to such force, do not become responsible, or wrongdoers,
for those acts, though not warranted by the laws of the rightful government. Actual governments of this
sort are established over districts differing greatly in extent and conditions. They are usually administered
directly by military authority, but they may be administered, also, civil authority, supported more or less
directly by military force. . . . One example of this sort of government is found in the case of Castine, in
Mine, reduced to British possession in the war of 1812 . . . U. S. vs. Rice (4 Wheaton, 253). A like
example is found in the case of Tampico, occupied during the war with Mexico, by the troops of the
United States . . . Fleming vs. Page (9 Howard, 614). These were cases of temporary possessions of
territory by lawfull and regular governments at war with the country of which the territory so possessed
was part."

The powers and duties of de facto governments of this description are regulated in Section III of the
Hague Conventions of 1907, which is a revision of the provisions of the Hague Conventions of 1899 on
the same subject of said Section III provides "the authority of the legislative power having actually passed
into the hands of the occupant, the latter shall take steps in his power to reestablish and insure, as far as
possible, public order and safety, while respecting, unless absolutely prevented, the laws in force in the
country."

According to the precepts of the Hague Conventions, as the belligerent occupant has the right and is
burdened with the duty to insure public order and safety during his military occupation, he possesses all
the powers of a de facto government, and he can suspended the old laws and promulgate new ones and
make such changes in the old as he may see fit, but he is enjoined to respect, unless absolutely
prevented by the circumstances prevailing in the occupied territory, the municipal laws in force in the
country, that is, those laws which enforce public order and regulate social and commercial life of the
country. On the other hand, laws of a political nature or affecting political relations, such as, among
others, the right of assembly, the right to bear arms, the freedom of the press, and the right to travel freely
in the territory occupied, are considered as suspended or in abeyance during the military occupation.
Although the local and civil administration of justice is suspended as a matter of course as soon as a
country is militarily occupied, it is not usual for the invader to take the whole administration into his own
hands. In practice, the local ordinary tribunals are authorized to continue administering justice; and judges
and other judicial officers are kept in their posts if they accept the authority of the belligerent occupant or
are required to continue in their positions under the supervision of the military or civil authorities
appointed, by the Commander in Chief of the occupant. These principles and practice have the sanction
of all publicists who have considered the subject, and have been asserted by the Supreme Court and
applied by the President of the United States.

The doctrine upon this subject is thus summed up by Halleck, in his work on International Law (Vol. 2, p.
444): "The right of one belligerent to occupy and govern the territory of the enemy while in its military
possession, is one of the incidents of war, and flows directly from the right to conquer. We, therefore, do
not look to the Constitution or political institutions of the conqueror, for authority to establish a government
for the territory of the enemy in his possession, during its military occupation, nor for the rules by which
the powers of such government are regulated and limited. Such authority and such rules are derived
directly from the laws war, as established by the usage of the of the world, and confirmed by the writings
of publicists and decisions of courts — in fine, from the law of nations. . . . The municipal laws of a
conquered territory, or the laws which regulate private rights, continue in force during military occupation,
excepts so far as they are suspended or changed by the acts of conqueror. . . . He, nevertheless, has all
the powers of a de facto government, and can at his pleasure either change the existing laws or make
new ones."

And applying the principles for the exercise of military authority in an occupied territory, which were later
embodied in the said Hague Conventions, President McKinley, in his executive order to the Secretary of
War of May 19,1898, relating to the occupation of the Philippines by United States forces, said in part:
"Though the powers of the military occupant are absolute and supreme, and immediately operate upon
the political condition of the inhabitants, the municipal laws of the conquered territory, such as affect
private rights of person and property and provide for the punishment of crime, are considered as
continuing in force, so far as they are compatible with the new order of things, until they are suspended or
superseded by the occupying belligerent; and in practice they are not usually abrogated, but are allowed
to remain in force and to be administered by the ordinary tribunals, substantially as they were before the
occupation. This enlightened practice is, so far as possible, to be adhered to on the present occasion.
The judges and the other officials connected with the administration of justice may, if they accept the
authority of the United States, continue to administer the ordinary law of the land as between man and
man under the supervision of the American Commander in Chief." (Richardson's Messages and Papers
of President, X, p. 209.)

As to "de facto" government of the third kind, the Supreme Court of the United States, in the same case of
Thorington vs. Smith, supra, recognized the government set up by the Confederate States as a de facto
government. In that case, it was held that "the central government established for the insurgent States
differed from the temporary governments at Castine and Tampico in the circumstance that its authority did
no originate in lawful acts of regular war; but it was not, on the account, less actual or less supreme. And
we think that it must be classed among the governments of which these are examples. . . .

In the case of William vs. Bruffy (96 U. S. 176, 192), the Supreme Court of the United States, discussing
the validity of the acts of the Confederate States, said: "The same general form of government, the same
general laws for the administration of justice and protection of private rights, which had existed in the
States prior to the rebellion, remained during its continuance and afterwards. As far as the Acts of the
States do not impair or tend to impair the supremacy of the national authority, or the just rights of citizens
under the Constitution, they are, in general, to be treated as valid and binding. As we said in Horn vs.
Lockhart (17 Wall., 570; 21 Law. ed., 657): "The existence of a state of insurrection and war did not
loosen the bonds of society, or do away with civil government or the regular administration of the laws.
Order was to be preserved, police regulations maintained, crime prosecuted, property protected,
contracts enforced, marriages celebrated, estates settled, and the transfer and descent of property
regulated, precisely as in the time of peace. No one, that we are aware of, seriously questions the validity
of judicial or legislative Acts in the insurrectionary States touching these and kindered subjects, where
they were not hostile in their purpose or mode of enforcement to the authority of the National
Government, and did not impair the rights of citizens under the Constitution'. The same doctrine has been
asserted in numerous other cases."
And the same court, in the case of Baldy vs. Hunter (171 U. S., 388, 400), held: "That what occured or
was done in respect of such matters under the authority of the laws of these local de facto governments
should not be disregarded or held to be invalid merely because those governments were organized in
hostility to the Union established by the national Constitution; this, because the existence of war between
the United States and the Confederate States did not relieve those who are within the insurrectionary
lines from the necessity of civil obedience, nor destroy the bonds of society nor do away with civil
government or the regular administration of the laws, and because transactions in the ordinary course of
civil society as organized within the enemy's territory although they may have indirectly or remotely
promoted the ends of the de facto or unlawful government organized to effect a dissolution of the Union,
were without blame 'except when proved to have been entered into with actual intent to further invasion or
insurrection:'" and "That judicial and legislative acts in the respective states composing the so-called
Confederate States should be respected by the courts if they were not hostile in their purpose or mode of
enforcement to the authority of the National Government, and did not impair the rights of citizens under
the Constitution."

In view of the foregoing, it is evident that the Philippine Executive Commission, which was organized by
Order No. 1, issued on January 23, 1942, by the Commander of the Japanese forces, was a civil
government established by the military forces of occupation and therefore a de facto government of the
second kind. It was not different from the government established by the British in Castine, Maine, or by
the United States in Tampico, Mexico. As Halleck says, "The government established over an enemy's
territory during the military occupation may exercise all the powers given by the laws of war to the
conqueror over the conquered, and is subject to all restrictions which that code imposes. It is of little
consequence whether such government be called a military or civil government. Its character is the same
and the source of its authority the same. In either case it is a government imposed by the laws of war,
and so far it concerns the inhabitants of such territory or the rest of the world, those laws alone determine
the legality or illegality of its acts." (Vol. 2, p. 466.) The fact that the Philippine Executive Commission was
a civil and not a military government and was run by Filipinos and not by Japanese nationals, is of no
consequence. In 1806, when Napoleon occupied the greater part of Prussia, he retained the existing
administration under the general direction of a french official (Langfrey History of Napoleon, 1, IV, 25);
and, in the same way, the Duke of Willington, on invading France, authorized the local authorities to
continue the exercise of their functions, apparently without appointing an English superior. (Wellington
Despatches, XI, 307.). The Germans, on the other hand, when they invaded France in 1870, appointed
their own officials, at least in Alsace and Lorraine, in every department of administration and of every
rank. (Calvo, pars. 2186-93; Hall, International Law, 7th ed., p. 505, note 2.)

The so-called Republic of the Philippines, apparently established and organized as a sovereign state
independent from any other government by the Filipino people, was, in truth and reality, a government
established by the belligerent occupant or the Japanese forces of occupation. It was of the same
character as the Philippine Executive Commission, and the ultimate source of its authority was the same
— the Japanese military authority and government. As General MacArthur stated in his proclamation of
October 23, 1944, a portion of which has been already quoted, "under enemy duress, a so-called
government styled as the 'Republic of the Philippines' was established on October 14, 1943, based upon
neither the free expression of the people's will nor the sanction of the Government of the United States."
Japan had no legal power to grant independence to the Philippines or transfer the sovereignty of the
United States to, or recognize the latent sovereignty of, the Filipino people, before its military occupation
and possession of the Islands had matured into an absolute and permanent dominion or sovereignty by a
treaty of peace or other means recognized in the law of nations. For it is a well-established doctrine in
International Law, recognized in Article 45 of the Hauge Conventions of 1907 (which prohibits compulsion
of the population of the occupied territory to swear allegiance to the hostile power), the belligerent
occupation, being essentially provisional, does not serve to transfer sovereignty over the territory
controlled although the de jure government is during the period of occupancy deprived of the power to
exercise its rights as such. (Thirty Hogshead of Sugar vs. Boyle, 9 Cranch, 191; United States vs. Rice, 4
Wheat., 246; Fleming vs. Page, 9 Howard, 603; Downes vs. Bidwell, 182 U. S., 345.) The formation of the
Republic of the Philippines was a scheme contrived by Japan to delude the Filipino people into believing
in the apparent magnanimity of the Japanese gesture of transferring or turning over the rights of
government into the hands of Filipinos. It was established under the mistaken belief that by doing so,
Japan would secure the cooperation or at least the neutrality of the Filipino people in her war against the
United States and other allied nations.

Indeed, even if the Republic of the Philippines had been established by the free will of the Filipino who,
taking advantage of the withdrawal of the American forces from the Islands, and the occupation thereof
by the Japanese forces of invasion, had organized an independent government under the name with the
support and backing of Japan, such government would have been considered as one established by the
Filipinos in insurrection or rebellion against the parent state or the Unite States. And as such, it would
have been a de facto government similar to that organized by the confederate states during the war of
secession and recognized as such by the by the Supreme Court of the United States in numerous cases,
notably those of Thorington vs. Smith, Williams vs. Bruffy, and Badly vs. Hunter, above quoted; and
similar to the short-lived government established by the Filipino insurgents in the Island of Cebu during
the Spanish-American war, recognized as a de facto government by the Supreme Court of the United
States in the case of McCleod vs. United States (299 U. S., 416). According to the facts in the last-named
case, the Spanish forces evacuated the Island of Cebu on December 25, 1898, having first appointed a
provisional government, and shortly afterwards, the Filipinos, formerly in insurrection against Spain, took
possession of the Islands and established a republic, governing the Islands until possession thereof was
surrendered to the United States on February 22, 1898. And the said Supreme Court held in that case
that "such government was of the class of de facto governments described in I Moore's International Law
Digest, S 20, . . . 'called also by publicists a government de facto, but which might, perhaps, be more
aptly denominated a government of paramount force . . '." That is to say, that the government of a country
in possession of belligerent forces in insurrection or rebellion against the parent state, rests upon the
same principles as that of a territory occupied by the hostile army of an enemy at regular war with the
legitimate power.

The governments by the Philippine Executive Commission and the Republic of the Philippines during the
Japanese military occupation being de facto governments, it necessarily follows that the judicial acts and
proceedings of the courts of justice of those governments, which are not of a political complexion, were
good and valid, and, by virtue of the well-known principle of postliminy (postliminium) in international law,
remained good and valid after the liberation or reoccupation of the Philippines by the American and
Filipino forces under the leadership of General Douglas MacArthur. According to that well-known principle
in international law, the fact that a territory which has been occupied by an enemy comes again into the
power of its legitimate government of sovereignty, "does not, except in a very few cases, wipe out the
effects of acts done by an invader, which for one reason or another it is within his competence to do.
Thus judicial acts done under his control, when they are not of a political complexion, administrative acts
so done, to the extent that they take effect during the continuance of his control, and the various acts
done during the same time by private persons under the sanction of municipal law, remain good. Were it
otherwise, the whole social life of a community would be paralyzed by an invasion; and as between the
state and the individuals the evil would be scarcely less, — it would be hard for example that payment of
taxes made under duress should be ignored, and it would be contrary to the general interest that the
sentences passed upon criminals should be annulled by the disappearance of the intrusive government ."
(Hall, International Law, 7th ed., p. 518.) And when the occupation and the abandonment have been each
an incident of the same war as in the present case, postliminy applies, even though the occupant has
acted as conqueror and for the time substituted his own sovereignty as the Japanese intended to do
apparently in granting independence to the Philippines and establishing the so-called Republic of the
Philippines. (Taylor, International Law, p. 615.)

That not only judicial but also legislative acts of de facto governments, which are not of a political
complexion, are and remain valid after reoccupation of a territory occupied by a belligerent occupant, is
confirmed by the Proclamation issued by General Douglas MacArthur on October 23, 1944, which
declares null and void all laws, regulations and processes of the governments established in the
Philippines during the Japanese occupation, for it would not have been necessary for said proclamation
to abrogate them if they were invalid ab initio.
2. The second question hinges upon the interpretation of the phrase "processes of any other government"
as used in the above-quoted proclamation of General Douglas MacArthur of October 23, 1944 — that is,
whether it was the intention of the Commander in Chief of the American Forces to annul and void thereby
all judgments and judicial proceedings of the courts established in the Philippines during the Japanese
military occupation.

The phrase "processes of any other government" is broad and may refer not only to the judicial
processes, but also to administrative or legislative, as well as constitutional, processes of the Republic of
the Philippines or other governmental agencies established in the Islands during the Japanese
occupation. Taking into consideration the fact that, as above indicated, according to the well-known
principles of international law all judgements and judicial proceedings, which are not of a political
complexion, of the de facto governments during the Japanese military occupation were good and valid
before and remained so after the occupied territory had come again into the power of the titular
sovereign, it should be presumed that it was not, and could not have been, the intention of General
Douglas MacArthur, in using the phrase "processes of any other government" in said proclamation, to
refer to judicial processes, in violation of said principles of international law. The only reasonable
construction of the said phrase is that it refers to governmental processes other than judicial processes of
court proceedings, for according to a well-known rule of statutory construction, set forth in 25 R. C. L., p.
1028, "a statute ought never to be construed to violate the law of nations if any other possible
construction remains."

It is true that the commanding general of a belligerent army of occupation, as an agent of his government,
may not unlawfully suspend existing laws and promulgate new ones in the occupied territory, if and when
the exigencies of the military occupation demand such action. But even assuming that, under the law of
nations, the legislative power of a commander in chief of military forces who liberates or reoccupies his
own territory which has been occupied by an enemy, during the military and before the restoration of the
civil regime, is as broad as that of the commander in chief of the military forces of invasion and
occupation (although the exigencies of military reoccupation are evidently less than those of occupation),
it is to be presumed that General Douglas MacArthur, who was acting as an agent or a representative of
the Government and the President of the United States, constitutional commander in chief of the United
States Army, did not intend to act against the principles of the law of nations asserted by the Supreme
Court of the United States from the early period of its existence, applied by the Presidents of the United
States, and later embodied in the Hague Conventions of 1907, as above indicated. It is not to be
presumed that General Douglas MacArthur, who enjoined in the same proclamation of October 23, 1944,
"upon the loyal citizens of the Philippines full respect and obedience to the Constitution of the
Commonwealth of the Philippines," should not only reverse the international policy and practice of his
own government, but also disregard in the same breath the provisions of section 3, Article II, of our
Constitution, which provides that "The Philippines renounces war as an instrument of national policy, and
adopts the generally accepted principles of international law as part of the law of the Nation."

Moreover, from a contrary construction great inconvenience and public hardship would result, and great
public interests would be endangered and sacrificed, for disputes or suits already adjudged would have to
be again settled accrued or vested rights nullified, sentences passed on criminals set aside, and criminals
might easily become immune for evidence against them may have already disappeared or be no longer
available, especially now that almost all court records in the Philippines have been destroyed by fire as a
consequence of the war. And it is another well-established rule of statutory construction that where great
inconvenience will result from a particular construction, or great public interests would be endangered or
sacrificed, or great mischief done, such construction is to be avoided, or the court ought to presume that
such construction was not intended by the makers of the law, unless required by clear and unequivocal
words. (25 R. C. L., pp. 1025, 1027.)

The mere conception or thought of possibility that the titular sovereign or his representatives who
reoccupies a territory occupied by an enemy, may set aside or annul all the judicial acts or proceedings of
the tribunals which the belligerent occupant had the right and duty to establish in order to insure public
order and safety during military occupation, would be sufficient to paralyze the social life of the country or
occupied territory, for it would have to be expected that litigants would not willingly submit their litigation to
courts whose judgements or decisions may afterwards be annulled, and criminals would not be deterred
from committing crimes or offenses in the expectancy that they may escaped the penalty if judgments
rendered against them may be afterwards set aside.

That the proclamation has not invalidated all the judgements and proceedings of the courts of justice
during the Japanese regime, is impliedly confirmed by Executive Order No. 37, which has the force of
law, issued by the President of the Philippines on March 10, 1945, by virtue of the emergency legislative
power vested in him by the Constitution and the laws of the Commonwealth of the Philippines. Said
Executive order abolished the Court of Appeals, and provided "that all case which have heretofore been
duly appealed to the Court of Appeals shall be transmitted to the Supreme Court final decision." This
provision impliedly recognizes that the judgments and proceedings of the courts during the Japanese
military occupation have not been invalidated by the proclamation of General MacArthur of October 23,
because the said Order does not say or refer to cases which have been duly appealed to said court prior
to the Japanese occupation, but to cases which had therefore, that is, up to March 10, 1945, been duly
appealed to the Court of Appeals; and it is to be presumed that almost all, if not all, appealed cases
pending in the Court of Appeals prior to the Japanese military occupation of Manila on January 2, 1942,
had been disposed of by the latter before the restoration of the Commonwealth Government in 1945;
while almost all, if not all, appealed cases pending on March 10, 1945, in the Court of Appeals were from
judgments rendered by the Court of First Instance during the Japanese regime.

The respondent judge quotes a portion of Wheaton's International Law which say: "Moreover when it is
said that an occupier's acts are valid and under international law should not be abrogated by the
subsequent conqueror, it must be remembered that no crucial instances exist to show that if his acts
should be reversed, any international wrong would be committed. What does happen is that most matters
are allowed to stand by the restored government, but the matter can hardly be put further than this."
(Wheaton, International Law, War, 7th English edition of 1944, p. 245.) And from this quotion the
respondent judge "draws the conclusion that whether the acts of the occupant should be considered valid
or not, is a question that is up to the restored government to decide; that there is no rule of international
law that denies to the restored government to decide; that there is no rule of international law that denies
to the restored government the right of exercise its discretion on the matter, imposing upon it in its stead
the obligation of recognizing and enforcing the acts of the overthrown government."

There is doubt that the subsequent conqueror has the right to abrogate most of the acts of the occupier,
such as the laws, regulations and processes other than judicial of the government established by the
belligerent occupant. But in view of the fact that the proclamation uses the words "processes of any other
government" and not "judicial processes" prisely, it is not necessary to determine whether or not General
Douglas MacArthur had power to annul and set aside all judgments and proceedings of the courts during
the Japanese occupation. The question to be determined is whether or not it was his intention, as
representative of the President of the United States, to avoid or nullify them. If the proclamation had,
expressly or by necessary implication, declared null and void the judicial processes of any other
government, it would be necessary for this court to decide in the present case whether or not General
Douglas MacArthur had authority to declare them null and void. But the proclamation did not so provide,
undoubtedly because the author thereof was fully aware of the limitations of his powers as Commander in
Chief of Military Forces of liberation or subsequent conqueror.

Not only the Hague Regulations, but also the principles of international law, as they result from the
usages established between civilized nations, the laws of humanity and the requirements of the public of
conscience, constitute or from the law of nations. (Preamble of the Hague Conventions; Westlake,
International Law, 2d ed., Part II, p. 61.) Article 43, section III, of the Hague Regulations or Conventions
which we have already quoted in discussing the first question, imposes upon the occupant the obligation
to establish courts; and Article 23 (h), section II, of the same Conventions, which prohibits the belligerent
occupant "to declare . . . suspended . . . in a Court of Law the rights and action of the nationals of the
hostile party," forbids him to make any declaration preventing the inhabitants from using their courts to
assert or enforce their civil rights. (Decision of the Court of Appeals of England in the case of Porter vs.
Fruedenburg, L.R. [1915], 1 K.B., 857.) If a belligerent occupant is required to establish courts of justice in
the territory occupied, and forbidden to prevent the nationals thereof from asserting or enforcing therein
their civil rights, by necessary implication, the military commander of the forces of liberation or the
restored government is restrained from nullifying or setting aside the judgments rendered by said courts
in their litigation during the period of occupation. Otherwise, the purpose of these precepts of the Hague
Conventions would be thwarted, for to declare them null and void would be tantamount to suspending in
said courts the right and action of the nationals of the territory during the military occupation thereof by
the enemy. It goes without saying that a law that enjoins a person to do something will not at the same
time empower another to undo the same. Although the question whether the President or commanding
officer of the United States Army has violated restraints imposed by the constitution and laws of his
country is obviously of a domestic nature, yet, in construing and applying limitations imposed on the
executive authority, the Supreme Court of the United States, in the case of Ochoa, vs. Hernandez (230
U.S., 139), has declared that they "arise from general rules of international law and from fundamental
principles known wherever the American flag flies."

In the case of Raymond vs. Thomas (91 U.S., 712), a special order issued by the officer in command of
the forces of the United States in South Carolina after the end of the Civil War, wholly annulling a decree
rendered by a court of chancery in that state in a case within its jurisdiction, was declared void, and not
warranted by the acts approved respectively March 2, 1867 (14 Stat., 428), and July 19 of the same year
(15 id., 14), which defined the powers and duties of military officers in command of the several states then
lately in rebellion. In the course of its decision the court said; "We have looked carefully through the acts
of March 2, 1867 and July 19, 1867. They give very large governmental powers to the military
commanders designated, within the States committed respectively to their jurisdiction; but we have found
nothing to warrant the order here in question. . . . The clearest language would be necessary to satisfy us
that Congress intended that the power given by these acts should be so exercised. . . . It was an arbitrary
stretch of authority, needful to no good end that can be imagined. Whether Congress could have
conferred the power to do such an act is a question we are not called upon to consider. It is an unbending
rule of law that the exercise of military power, where the rights of the citizen are concerned, shall never be
pushed beyond what the exigency requires. (Mithell vs. Harmony, 13 How., 115; Warden vs. Bailey, 4
Taunt., 67; Fabrigas vs. Moysten, 1 Cowp., 161; s.c., 1 Smith's L.C., pt. 2, p. 934.) Viewing the subject
before us from the standpoint indicated, we hold that the order was void."

It is, therefore, evident that the proclamation of General MacArthur of October 23, 1944, which declared
that "all laws, regulations and processes of any other government in the Philippines than that of the said
Commonwealth are null and void without legal effect in areas of the Philippines free of enemy occupation
and control," has not invalidated the judicial acts and proceedings, which are not a political complexion, of
the courts of justice in the Philippines that were continued by the Philippine Executive Commission and
the Republic of the Philippines during the Japanese military occupation, and that said judicial acts and
proceedings were good and valid before and now good and valid after the reoccupation of liberation of
the Philippines by the American and Filipino forces.

3. The third and last question is whether or not the courts of the Commonwealth, which are the same as
those existing prior to, and continued during, the Japanese military occupation by the Philippine Executive
Commission and by the so-called Republic of the Philippines, have jurisdiction to continue now the
proceedings in actions pending in said courts at the time the Philippine Islands were reoccupied or
liberated by the American and Filipino forces, and the Commonwealth Government was restored.

Although in theory the authority the authority of the local civil and judicial administration is suspended as
a matter of course as soon as military occupation takes place, in practice the invader does not usually
take the administration of justice into his own hands, but continues the ordinary courts or tribunals to
administer the laws of the country which he is enjoined, unless absolutely prevented, to respect. As
stated in the above-quoted Executive Order of President McKinley to the Secretary of War on May 19,
1898, "in practice, they (the municipal laws) are not usually abrogated but are allowed to remain in force
and to be administered by the ordinary tribunals substantially as they were before the occupation. This
enlightened practice is, so far as possible, to be adhered to on the present occasion." And Taylor in this
connection says: "From a theoretical point of view it may be said that the conqueror is armed with the
right to substitute his arbitrary will for all preexisting forms of government, legislative, executive and
judicial. From the stand-point of actual practice such arbitrary will is restrained by the provision of the law
of nations which compels the conqueror to continue local laws and institution so far as military necessity
will permit." (Taylor, International Public Law, p.596.) Undoubtedly, this practice has been adopted in
order that the ordinary pursuits and business of society may not be unnecessarily deranged, inasmuch as
belligerent occupation is essentially provisional, and the government established by the occupant of
transient character.

Following these practice and precepts of the law of nations, Commander in Chief of the Japanese Forces
proclaimed on January 3, 1942, when Manila was occupied, the military administration under martial law
over the territory occupied by the army, and ordered that "all the laws now in force in the Commonwealth,
as well as executive and judicial institutions, shall continue to be affective for the time being as in the
past," and "all public officials shall remain in their present post and carry on faithfully their duties as
before." When the Philippine Executive Commission was organized by Order No. 1 of the Japanese
Commander in Chief, on January 23, 1942, the Chairman of the Executive Commission, by Executive
Orders Nos. 1 and 4 of January 30 and February 5, respectively, continued the Supreme Court, Court of
Appeals, Court of First Instance, and justices of the peace of courts, with the same jurisdiction in
conformity with the instructions given by the Commander in Chief of the Imperial Japanese Army in Order
No. 3 of February 20, 1942. And on October 14, 1943 when the so-called Republic of the Philippines was
inaugurated, the same courts were continued with no substantial change in organization and jurisdiction
thereof.

If the proceedings pending in the different courts of the Islands prior to the Japanese military occupation
had been continued during the Japanese military administration, the Philippine Executive Commission,
and the so-called Republic of the Philippines, it stands to reason that the same courts, which had become
reestablished and conceived of as having in continued existence upon the reoccupation and liberation of
the Philippines by virtue of the principle of postliminy (Hall, International Law, 7th ed., p. 516), may
continue the proceedings in cases then pending in said courts, without necessity of enacting a law
conferring jurisdiction upon them to continue said proceedings. As Taylor graphically points out in
speaking of said principles "a state or other governmental entity, upon the removal of a foreign military
force, resumes its old place with its right and duties substantially unimpaired. . . . Such political
resurrection is the result of a law analogous to that which enables elastic bodies to regain their original
shape upon removal of the external force, — and subject to the same exception in case of absolute
crushing of the whole fibre and content." (Taylor, International Public Law, p. 615.)

The argument advanced by the respondent judge in his resolution in support in his conclusion that the
Court of First Instance of Manila presided over by him "has no authority to take cognizance of, and
continue said proceedings (of this case) to final judgment until and unless the Government of the
Commonwealth of the Philippines . . . shall have provided for the transfer of the jurisdiction of the courts
of the now defunct Republic of the Philippines, and the cases commenced and the left pending therein," is
"that said courts were a government alien to the Commonwealth Government. The laws they enforced
were, true enough, laws of the Commonwealth prior to Japanese occupation, but they had become the
laws — and the courts had become the institutions — of Japan by adoption (U.S. vs. Reiter. 27 F. Cases,
No. 16146), as they became later on the laws and institutions of the Philippine Executive Commission
and the Republic of the Philippines."

The court in the said case of U.S. vs. Reiter did not and could not say that the laws and institutions of the
country occupied if continued by the conqueror or occupant, become the laws and the courts, by
adoption, of the sovereign nation that is militarily occupying the territory. Because, as already shown,
belligerent or military occupation is essentially provisional and does not serve to transfer the sovereignty
over the occupied territory to the occupant. What the court said was that, if such laws and institutions are
continued in use by the occupant, they become his and derive their force from him, in the sense that he
may continue or set them aside. The laws and institution or courts so continued remain the laws and
institutions or courts of the occupied territory. The laws and the courts of the Philippines, therefore, did
not become, by being continued as required by the law of nations, laws and courts of Japan. The
provision of Article 45, section III, of the Hague Conventions of 1907 which prohibits any compulsion of
the population of occupied territory to swear allegiance to the hostile power, "extends to prohibit
everything which would assert or imply a change made by the invader in the legitimate sovereignty. This
duty is neither to innovate in the political life of the occupied districts, nor needlessly to break the
continuity of their legal life. Hence, so far as the courts of justice are allowed to continue administering the
territorial laws, they must be allowed to give their sentences in the name of the legitimate sovereign "
(Westlake, Int. Law, Part II, second ed., p. 102). According to Wheaton, however, the victor need not
allow the use of that of the legitimate government. When in 1870, the Germans in France attempted to
violate that rule by ordering, after the fall of the Emperor Napoleon, the courts of Nancy to administer
justice in the name of the "High German Powers occupying Alsace and Lorraine," upon the ground that
the exercise of their powers in the name of French people and government was at least an implied
recognition of the Republic, the courts refused to obey and suspended their sitting. Germany originally
ordered the use of the name of "High German Powers occupying Alsace and Lorraine," but later offered
to allow use of the name of the Emperor or a compromise. (Wheaton, International Law, War, 7th English
ed. 1944, p. 244.)

Furthermore, it is a legal maxim, that excepting that of a political nature, "Law once established continues
until changed by the some competent legislative power. It is not change merely by change of
sovereignty." (Joseph H. Beale, Cases on Conflict of Laws, III, Summary Section 9, citing Commonwealth
vs. Chapman, 13 Met., 68.) As the same author says, in his Treatise on the Conflict on Laws (Cambridge,
1916, Section 131): "There can no break or interregnum in law. From the time the law comes into
existence with the first-felt corporateness of a primitive people it must last until the final disappearance of
human society. Once created, it persists until a change take place, and when changed it continues in
such changed condition until the next change, and so forever. Conquest or colonization is impotent to
bring law to an end; in spite of change of constitution, the law continues unchanged until the new
sovereign by legislative acts creates a change."

As courts are creatures of statutes and their existence defends upon that of the laws which create and
confer upon them their jurisdiction, it is evident that such laws, not being a political nature, are not
abrogated by a change of sovereignty, and continue in force "ex proprio vigore" unless and until repealed
by legislative acts. A proclamation that said laws and courts are expressly continued is not necessary in
order that they may continue in force. Such proclamation, if made, is but a declaration of the intention of
respecting and not repealing those laws. Therefore, even assuming that Japan had legally acquired
sovereignty over these Islands, which she had afterwards transferred to the so-called Republic of the
Philippines, and that the laws and the courts of these Islands had become the courts of Japan, as the
said courts of the laws creating and conferring jurisdiction upon them have continued in force until now, it
necessarily follows that the same courts may continue exercising the same jurisdiction over cases
pending therein before the restoration of the Commonwealth Government, unless and until they are
abolished or the laws creating and conferring jurisdiction upon them are repealed by the said government.
As a consequence, enabling laws or acts providing that proceedings pending in one court be continued
by or transferred to another court, are not required by the mere change of government or sovereignty.
They are necessary only in case the former courts are abolished or their jurisdiction so change that they
can no longer continue taking cognizance of the cases and proceedings commenced therein, in order that
the new courts or the courts having jurisdiction over said cases may continue the proceedings. When the
Spanish sovereignty in the Philippine Islands ceased and the Islands came into the possession of the
United States, the "Audiencia" or Supreme Court was continued and did not cease to exist, and
proceeded to take cognizance of the actions pending therein upon the cessation of the Spanish
sovereignty until the said "Audiencia" or Supreme Court was abolished, and the Supreme Court created
in Chapter II of Act No. 136 was substituted in lieu thereof. And the Courts of First Instance of the Islands
during the Spanish regime continued taking cognizance of cases pending therein upon the change of
sovereignty, until section 65 of the same Act No. 136 abolished them and created in its Chapter IV the
present Courts of First Instance in substitution of the former. Similarly, no enabling acts were enacted
during the Japanese occupation, but a mere proclamation or order that the courts in the Island were
continued.
On the other hand, during the American regime, when section 78 of Act No. 136 was enacted abolishing
the civil jurisdiction of the provost courts created by the military government of occupation in the
Philippines during the Spanish-American War of 1898, the same section 78 provided for the transfer of all
civil actions then pending in the provost courts to the proper tribunals, that is, to the justices of the peace
courts, Court of First Instance, or Supreme Court having jurisdiction over them according to law. And later
on, when the criminal jurisdiction of provost courts in the City of Manila was abolished by section 3 of Act
No. 186, the same section provided that criminal cases pending therein within the jurisdiction of the
municipal court created by Act No. 183 were transferred to the latter.

That the present courts as the same courts which had been functioning during the Japanese regime and,
therefore, can continue the proceedings in cases pending therein prior to the restoration of the
Commonwealth of the Philippines, is confirmed by Executive Order No. 37 which we have already quoted
in support of our conclusion in connection with the second question. Said Executive Order provides"(1)
that the Court of Appeals created and established under Commonwealth Act No. 3 as amended, be
abolished, as it is hereby abolished," and "(2) that all cases which have heretofore been duly appealed to
the Court of Appeals shall be transmitted to the Supreme Court for final decision. . . ." In so providing, the
said Order considers that the Court of Appeals abolished was the same that existed prior to, and
continued after, the restoration of the Commonwealth Government; for, as we have stated in discussing
the previous question, almost all, if not all, of the cases pending therein, or which had theretofore (that is,
up to March 10, 1945) been duly appealed to said court, must have been cases coming from the Courts
of First Instance during the so-called Republic of the Philippines. If the Court of Appeals abolished by the
said Executive Order was not the same one which had been functioning during the Republic, but that
which had existed up to the time of the Japanese occupation, it would have provided that all the cases
which had, prior to and up to that occupation on January 2, 1942, been dully appealed to the said Court of
Appeals shall be transmitted to the Supreme Court for final decision.

It is, therefore, obvious that the present courts have jurisdiction to continue, to final judgment, the
proceedings in cases, not of political complexion, pending therein at the time of the restoration of the
Commonwealth Government.

Having arrived at the above conclusions, it follows that the Court of First Instance of Manila has
jurisdiction to continue to final judgment the proceedings in civil case No. 3012, which involves civil rights
of the parties under the laws of the Commonwealth Government, pending in said court at the time of the
restoration of the said Government; and that the respondent judge of the court, having refused to act and
continue him does a duty resulting from his office as presiding judge of that court, mandamus is the
speedy and adequate remedy in the ordinary course of law, especially taking into consideration the fact
that the question of jurisdiction herein involved does affect not only this particular case, but many other
cases now pending in all the courts of these Islands.

In view of all the foregoing it is adjudged and decreed that a writ of mandamus issue, directed to the
respondent judge of the Court of First Instance of Manila, ordering him to take cognizance of and
continue to final judgment the proceedings in civil case No. 3012 of said court. No pronouncement as to
costs. So ordered.

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

SOVEREIGNITY
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-409 January 30, 1947

ANASTACIO LAUREL, petitioner,

vs.
ERIBERTO MISA, respondent.

Claro M. Recto and Querube C. Makalintal for petitioner.

First Assistant Solicitor General Reyes and Solicitor Hernandez, Jr., for respondent.

RESOLUTION

In G.R. No. L-409, Anastacio Laurel vs. Eriberto Misa, etc., the Court, acting on the petition for
habeas corpus filed by Anastacio Laurel and based on a theory that a Filipino citizen who
adhered to the enemy giving the latter aid and comfort during the Japanese occupation cannot be
prosecuted for the crime of treason defined and penalized by article 114 of the Revised Penal
Code, for the reason (1) that the sovereignty of the legitimate government in the Philippines and,
consequently, the correlative allegiance of Filipino citizens thereto was then suspended; and (2)
that there was a change of sovereignty over these Islands upon the proclamation of the Philippine
Republic:

(1) Considering that a citizen or subject owes, not a qualified and temporary, but an absolute and
permanent allegiance, which consists in the obligation of fidelity and obedience to his government
or sovereign; and that this absolute and permanent allegiance should not be confused with the
qualified and temporary allegiance which a foreigner owes to the government or sovereign of the
territory wherein he resides, so long as he remains there, in return for the protection he receives,
and which consists in the obedience to the laws of the government or sovereign. (Carlisle vs.
Unite States, 21 Law. ed., 429; Secretary of State Webster Report to the President of the United
States in the case of Thraser, 6 Web. Works, 526);

Considering that the absolute and permanent allegiance of the inhabitants of a territory occupied
by the enemy of their legitimate government or sovereign is not abrogated or severed by the
enemy occupation, because the sovereignty of the government or sovereign de jure is not
transferred thereby to the occupier, as we have held in the cases of Co Kim Cham vs. Valdez Tan
Keh and Dizon (75 Phil., 113) and of Peralta vs. Director of Prisons (75 Phil., 285), and if it is not
transferred to the occupant it must necessarily remain vested in the legitimate government; that
the sovereignty vested in the titular government (which is the supreme power which governs a
body politic or society which constitute the state) must be distinguished from the exercise of the
rights inherent thereto, and may be destroyed, or severed and transferred to another, but it
cannot be suspended because the existence of sovereignty cannot be suspended without putting
it out of existence or divesting the possessor thereof at least during the so-called period of
suspension; that what may be suspended is the exercise of the rights of sovereignty with the
control and government of the territory occupied by the enemy passes temporarily to the
occupant; that the subsistence of the sovereignty of the legitimate government in a territory
occupied by the military forces of the enemy during the war, "although the former is in fact
prevented from exercising the supremacy over them" is one of the "rules of international law of
our times"; (II Oppenheim, 6th Lauterpacht ed., 1944, p. 482), recognized, by necessary
implication, in articles 23, 44, 45, and 52 of Hague Regulation; and that, as a corollary of the
conclusion that the sovereignty itself is not suspended and subsists during the enemy occupation,
the allegiance of the inhabitants to their legitimate government or sovereign subsists, and
therefore there is no such thing as suspended allegiance, the basic theory on which the whole
fabric of the petitioner's contention rests;

Considering that the conclusion that the sovereignty of the United State was suspended in
Castine, set forth in the decision in the case of United States vs. Rice, 4 Wheaton, 246, 253,
decided in 1819, and quoted in our decision in the cases of Co Kim Cham vs. Valdez Tan Keh
and Dizon and Peralta vs. Director of Prisons, supra, in connection with the question, not of
sovereignty, but of the existence of a government de facto therein and its power to promulgate
rules and laws in the occupied territory, must have been based, either on the theory adopted
subsequently in the Hague Convention of 1907, that the military occupation of an enemy territory
does not transfer the sovereignty to the occupant; that, in the first case, the word "sovereignty"
used therein should be construed to mean the exercise of the rights of sovereignty, because as
this remains vested in the legitimate government and is not transferred to the occupier, it cannot
be suspended without putting it out of existence or divesting said government thereof; and that in
the second case, that is, if the said conclusion or doctrine refers to the suspension of the
sovereignty itself, it has become obsolete after the adoption of the Hague Regulations in 1907,
and therefore it can not be applied to the present case;

Considering that even adopting the words "temporarily allegiance," repudiated by Oppenheim and
other publicists, as descriptive of the relations borne by the inhabitants of the territory occupied by
the enemy toward the military government established over them, such allegiance may, at most,
be considered similar to the temporary allegiance which a foreigner owes to the government or
sovereign of the territory wherein he resides in return for the protection he receives as above
described, and does not do away with the absolute and permanent allegiance which the citizen
residing in a foreign country owes to his own government or sovereign; that just as a citizen or
subject of a government or sovereign may be prosecuted for and convicted of treason committed
in a foreign country, in the same way an inhabitant of a territory occupied by the military forces of
the enemy may commit treason against his own legitimate government or sovereign if he adheres
to the enemies of the latter by giving them aid and comfort; and that if the allegiance of a citizen
or subject to his government or sovereign is nothing more than obedience to its laws in return for
the protection he receives, it would necessarily follow that a citizen who resides in a foreign
country or state would, on one hand, ipso facto acquire the citizenship thereof since he has
enforce public order and regulate the social and commercial life, in return for the protection he
receives, and would, on the other hand, lose his original citizenship, because he would not be
bound to obey most of the laws of his own government or sovereign, and would not receive, while
in a foreign country, the protection he is entitled to in his own;

Considering that, as a corollary of the suspension of the exercise of the rights of sovereignty by
the legitimate government in the territory occupied by the enemy military forces, because the
authority of the legitimate power to govern has passed into the hands of the occupant (Article 43,
Hague Regulations), the political laws which prescribe the reciprocal rights, duties and obligation
of government and citizens, are suspended or in abeyance during military occupation (Co Kim
cham vs. Valdez Tan Keh and dizon, supra), for the only reason that as they exclusively bear
relation to the ousted legitimate government, they are inoperative or not applicable to the
government established by the occupant; that the crimes against national security, such as
treason and espionage; inciting to war, correspondence with hostile country, flight to enemy's
country, as well as those against public order, such as rebellion, sedition, and disloyalty, illegal
possession of firearms, which are of political complexion because they bear relation to, and are
penalized by our Revised Penal Code as crimes against the legitimate government, are also
suspended or become inapplicable as against the occupant, because they can not be committed
against the latter (Peralta vs. Director of Prisons, supra); and that, while the offenses against
public order to be preserved by the legitimate government were inapplicable as offenses against
the invader for the reason above stated, unless adopted by him, were also inoperative as against
the ousted government for the latter was not responsible for the preservation of the public order in
the occupied territory, yet article 114 of the said Revised Penal Code, was applicable to treason
committed against the national security of the legitimate government, because the inhabitants of
the occupied territory were still bound by their allegiance to the latter during the enemy
occupation;

Considering that, although the military occupant is enjoined to respect or continue in force, unless
absolutely prevented by the circumstances, those laws that enforce public order and regulate the
social and commercial life of the country, he has, nevertheless, all the powers of de facto
government and may, at his pleasure, either change the existing laws or make new ones when
the exigencies of the military service demand such action, that is, when it is necessary for the
occupier to do so for the control of the country and the protection of his army, subject to the
restrictions or limitations imposed by the Hague Regulations, the usages established by civilized
nations, the laws of humanity and the requirements of public conscience (Peralta vs. Director of
Prisons, supra; 1940 United States Rules of Land Warfare 76, 77); and that, consequently, all
acts of the military occupant dictated within these limitations are obligatory upon the inhabitants of
the territory, who are bound to obey them, and the laws of the legitimate government which have
not been adopted, as well and those which, though continued in force, are in conflict with such
laws and orders of the occupier, shall be considered as suspended or not in force and binding
upon said inhabitants;

Considering that, since the preservation of the allegiance or the obligation of fidelity and
obedience of a citizen or subject to his government or sovereign does not demand from him a
positive action, but only passive attitude or forbearance from adhering to the enemy by giving the
latter aid and comfort, the occupant has no power, as a corollary of the preceding consideration,
to repeal or suspend the operation of the law of treason, essential for the preservation of the
allegiance owed by the inhabitants to their legitimate government, or compel them to adhere and
give aid and comfort to him; because it is evident that such action is not demanded by the
exigencies of the military service or not necessary for the control of the inhabitants and the safety
and protection of his army, and because it is tantamount to practically transfer temporarily to the
occupant their allegiance to the titular government or sovereign; and that, therefore, if an
inhabitant of the occupied territory were compelled illegally by the military occupant, through
force, threat or intimidation, to give him aid and comfort, the former may lawfully resist and die if
necessary as a hero, or submit thereto without becoming a traitor;

Considering that adoption of the petitioner's theory of suspended allegiance would lead to
disastrous consequences for small and weak nations or states, and would be repugnant to the
laws of humanity and requirements of public conscience, for it would allow invaders to legally
recruit or enlist the Quisling inhabitants of the occupied territory to fight against their own
government without the latter incurring the risk of being prosecuted for treason, and even compel
those who are not aid them in their military operation against the resisting enemy forces in order
to completely subdue and conquer the whole nation, and thus deprive them all of their own
independence or sovereignty — such theory would sanction the action of invaders in forcing the
people of a free and sovereign country to be a party in the nefarious task of depriving themselves
of their own freedom and independence and repressing the exercise by them of their own
sovereignty; in other words, to commit a political suicide;

(2) Considering that the crime of treason against the government of the Philippines defined and
penalized in article 114 of the Penal Code, though originally intended to be a crime against said
government as then organized by authority of the sovereign people of the United States,
exercised through their authorized representative, the Congress and the President of the United
States, was made, upon the establishment of the Commonwealth Government in 1935, a crime
against the Government of the Philippines established by authority of the people of the
Philippines, in whom the sovereignty resides according to section 1, Article II, of the Constitution
of the Philippines, by virtue of the provision of section 2, Article XVI thereof, which provides that
"All laws of the Philippine Islands . . . shall remain operative, unless inconsistent with this
Constitution . . . and all references in such laws to the Government or officials of the Philippine
Islands, shall be construed, in so far as applicable, to refer to the Government and corresponding
officials under this constitution;

Considering that the Commonwealth of the Philippines was a sovereign government, though not
absolute but subject to certain limitations imposed in the Independence Act and incorporated as
Ordinance appended to our Constitution, was recognized not only by the Legislative Department
or Congress of the United States in approving the Independence Law above quoted and the
Constitution of the Philippines, which contains the declaration that "Sovereignty resides in the
people and all government authority emanates from them" (section 1, Article II), but also by the
Executive Department of the United States; that the late President Roosevelt in one of his
messages to Congress said, among others, "As I stated on August 12, 1943, the United States in
practice regards the Philippines as having now the status as a government of other independent
nations — in fact all the attributes of complete and respected nationhood" (Congressional
Record, Vol. 29, part 6, page 8173); and that it is a principle upheld by the Supreme Court of the
United States in many cases, among them in the case of Jones vs. United States (137 U.S., 202;
34 Law. ed., 691, 696) that the question of sovereignty is "a purely political question, the
determination of which by the legislative and executive departments of any government
conclusively binds the judges, as well as all other officers, citizens and subjects of the country.

Considering that section I (1) of the Ordinance appended to the Constitution which provides that
pending the final and complete withdrawal of the sovereignty of the United States "All citizens of
the Philippines shall owe allegiance to the United States", was one of the few limitations of the
sovereignty of the Filipino people retained by the United States, but these limitations do not away
or are not inconsistent with said sovereignty, in the same way that the people of each State of the
Union preserves its own sovereignty although limited by that of the United States conferred upon
the latter by the States; that just as to reason may be committed against the Federal as well as
against the State Government, in the same way treason may have been committed during the
Japanese occupation against the sovereignty of the United States as well as against the
sovereignty of the Philippine Commonwealth; and that the change of our form of government from
Commonwealth to Republic does not affect the prosecution of those charged with the crime of
treason committed during the Commonwealth, because it is an offense against the same
government and the same sovereign people, for Article XVIII of our Constitution provides that
"The government established by this constitution shall be known as the Commonwealth of the
Philippines. Upon the final and complete withdrawal of the sovereignty of the United States and
the proclamation of Philippine independence, the Commonwealth of the Philippines shall
thenceforth be known as the Republic of the Philippines";

This Court resolves, without prejudice to write later on a more extended opinion, to deny the
petitioner's petition, as it is hereby denied, for the reasons above set forth and for others to be
stated in the said opinion, without prejudice to concurring opinion therein, if any. Messrs. Justices
Paras and Hontiveros dissent in a separate opinion. Mr. justice Perfecto concurs in a separate
opinion.
75 Phil. 875

TUASON, J.:
This was a petition for prohibition, praying that the respondents, the Chief of Staff and the General Court-
Martial of the Philippine Army, be commanded to desist from further proceedings in the trial of petitioners
before that body. Preliminary injunction having been denied by us and the General Court-Martial having
gone ahead with the trial, which eventually resulted in the acquittal of one of the defendants, Ramon
Ruffy, the dismissal of the case as to another, Victoriano Dinglasan, and the conviction of Jose L. Garcia,
Prudente M. Francisco, Dominador Adeva and Andres Fortus, the last-named four petitioners now seek in
their memorandum to convert the petition into one for certiorari, with the prayer that the records of the
proceedings before the General Court-Martial be ordered certified to this Court for review.

The ground of the petition was that the petitioners were not subject to military law at the time the offense
for which they had been placed on trial was committed. In their memorandum they have raised an
additional question of law that the 93rd Article of War is unconstitutional.

An outline of the petitioners' previous connection with the Philippine Army, the Philippine Constabulary,
and/or with guerilla organizations will presently be made. This outline is based on allegations in the
pe,tition and the answer, and on exhibits attached there to 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 guerilla outfit known as Bolo Combat Team or 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, than 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, Col. 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, 66th
Infantry, 61st Division, Philippine Corps. After the recognition, 2nd Lieut. Prudente M. Francisco, by
virtue of Special Orders No. 99, dated November 2, 1943, and signed by Enrique L. Jurado, Major, OSE,
Commanding, was assigned as S-3 in the Bolo Area. Major, later Lieut. Col., Jurado, it should be noted,
had been dispatched by the 6th Military District to Mindoro to assume operational control and 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, 2nd Lieut.
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 3rd 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 16, 1943, and
signed by L. R. Relunia, Lieut. Col., CE, Chief of Staff, Jose L. Garcia and Dominador Adeva were
appointed 3rd 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, 3rd Battalion, 66th Infantry Regiment, 6lst 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, Col. Jurado on November 2, 1943, assigned Major Ruffy as Commanding Officer of the Area
with. 3rd. Lieut. Dominador Adeva and 2nd 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 Col. 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 of 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 Captain 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 petitioners' trial, the legality of which is now being
contested.

On July 26, 1941, the President of the United 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 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 Lieutenent 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 petitioners" memorandum from Winthrop's Military Law and Precedents and the
subsequent paragraph which has been omitted furnish a complete answer to petitioners'
contention. Paraphrasing the author, by the occupation 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 in 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 or paroled, be not exempt
from liability for such offenses as criminal acts or injurious conduct committed during his captivity against
other officers or soldiers in the same status."' (Winthrop's Military Law; and Precedents, 2nd Edition, pp.
91, 92.)

The rule invoked by counsel, namely, that laws of political nature or affecting political relations are
considered superseded or in abeyance during the military occupation, is intended for the governing of the
civil inhabitants of the occupied territory. It is not intended for and does not bind the enemies in
arms. This is Self-evident from the very, nature of things. The paradox of a contrary ruling should readily
manifest itself. Under the petitioners' theory the forces of resistance operating in an occupied territory
would have to abide by the outlawing of their own existence. They would be stripped of the very life-
blood of an army, the right and the ability to maintain order and discipline within the organization and to
try the men guilty of breach thereof.

The surrender by General Wainwright of the Fil-American Forces does not profit the petitioners 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 guerillas 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 2nd 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 ordered into, or
to duty or 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;

"(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 sentence 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, grafted, or ordered into, or to duty or for training 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 amenable to the Articles of War. The Bolo Area,
as has been seen, was a contingent 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 guerrillas who had been inducted
into the service of the Philippine Army from being component parts thereof, bound to obey military orders
and subject to military discipline. The official and military status of guerrillas was to be judged not by the
concept of the enemy but by their relations to the government and the army of the country for which they
fought.

The constitutionality of the 93rd Article of War is assailed. This article ordains "that any person subject to
military law who commits murder in time of war shall suffer death or imprisonment for life, as the court-
martial may direct." It is argued that since "no review is provided by that law to be made by the Supreme
Court, irrespective of whether the punishment is for life imprisonment or death," it violates Article VIII,
section 2, paragraph 4, of the Constitution of the Philippines which provides that "the National Assembly
may not deprive the Supreme Court of its original jurisdiction over all criminal cases in which the penalty
imposed is death or life imprisonment."

We think the petitioners are in error. This error arose from failure to perceive the nature of courts martial
and the sources of the authority for their creation.

Courts-martial are agencies of executive character, and one of the authorities "for the ordering of courts-
martial has been held to be attached to the constitutional functions of the President as Commander in
Chief, independently of legislation." (Winthrop's Military Law and Precedents, 2d Edition, p. 49.) Unlike
courts of law, they are not a portion of the judiciary. "The Supreme Court of the United States referring to
the provisions of the Constitution authorizing Congress to provide for the government of the army,
excepting military offences 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 offences in the manner then and now practised by civilized nations, and
that the power to do so is given without any connection between it and the 3d article of the Constitution
defining the judicial power 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., 36l, 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, Perfecto, Hilado, Bengzon, Briones, and Padilla JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-18463 October 4, 1922

THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellee,

vs.
GREGORIO PERFECTOR, defendant-appellant.

Alfonso E. Mendoza and the appellant in behalf of the latter.

Attorney-General Villa-Real for appellee.

MALCOLM, J.:

The important question is here squarely presented of whether article 256 of the Spanish Penal Code,
punishing "Any person who, by . . . writing, shall defame, abuse, or insult any Minister of the Crown or
other person in authority . . .," is still in force.

About August 20, 1920, the Secretary of the Philippine Senate, Fernando M. Guerrero, discovered that
certain documents which constituted the records of testimony given by witnesses in the investigation of oil
companies, had disappeared from his office. Shortly thereafter, the Philippine Senate, having been called
into special session by the Governor-General, the Secretary for the Senate informed that body of the loss
of the documents and of the steps taken by him to discover the guilty party. The day following the
convening of the Senate, September 7, 1920, the newspaper La Nacion, edited by Mr. Gregorio Perfecto,
published an article reading as follows:

Half a month has elapsed since the discovery, for the first time, of the scandalous robbery of
records which were kept and preserved in the iron safe of the Senate, yet up to this time there is
not the slightest indication that the author or authors of the crime will ever be discovered.

To find them, it would not, perhaps, be necessary to go out of the Sente itself, and the persons in
charge of the investigation of the case would not have to display great skill in order to succeed in
their undertaking, unless they should encounter the insuperable obstacle of offical concealment.

In that case, every investigation to be made would be but a mere comedy and nothing more.

After all, the perpetration of the robbery, especially under the circumstances that have
surrounded it, does not surprise us at all.

The execution of the crime was but the natural effect of the environment of the place in which it
was committed.

How many of the present Senators can say without remorse in their conscience and with serenity
of mind, that they do not owe their victory to electoral robbery? How may?
 The author or authors of the robbery of the records from the said iron safe of the Senate have,
perhaps, but followed the example of certain Senators who secured their election through fraud
and robbery.

The Philippine Senate, in its session of September 9, 1920, adopted a resolution authorizing its
committee on elections and privileges to report as to the action which should be taken with reference to
the article published in La Nacion. On September 15, 1920, the Senate adopted a resolution authorizing
the President of the Senate to indorse to the Attorney-General, for his study and corresponding action, all
the papers referring to the case of the newspaper La Nacion and its editor, Mr. Gregorio Perfecto. As a
result, an information was filed in the municipal court of the City of Manila by an assistant city fiscal, in
which the editorial in question was set out and in which it was alleged that the same constituted a
violation of article 256 of the Penal Code. The defendant Gregorio Perfecto was found guilty in the
municipal court and again in the Court of First Instance of Manila.

During the course of the trial in the Court of First Instance, after the prosecution had rested, the defense
moved for the dismissal of the case. On the subject of whether or not article 256 of the Penal Code, under
which the information was presented, is in force, the trial judge, the Honorable George R. Harvey, said:

This antiquated provision was doubtless incorporated into the Penal Code of Spain for the
protection of the Ministers of the Crown and other representatives of the King against free speech
and action by Spanish subjects. A severe punishment was prescribed because it was doubtless
considered a much more serious offense to insult the King's representative than to insult an
ordinary individual. This provision, with almost all the other articles of that Code, was extended to
the Philippine Islands when under the dominion of Spain because the King's subject in the
Philippines might defame, abuse or insult the Ministers of the Crown or other representatives of
His Majesty. We now have no Ministers of the Crown or other persons in authority in the
Philippines representing the King of Spain, and said provision, with other articles of the Penal
Code, had apparently passed into "innocuous desuetude," but the Supreme Corut of the
Philippine Islands has, by a majority decision, held that said article 256 is the law of the land to-
day. . . .

The Helbig case is a precedent which, by the rule of stare decisis, is binding upon this court until
otherwise determined by proper authority.

In the decision rendered by the same judge, he concluded with the following language:

In the United States such publications are usually not punishable as criminal offense, and little
importance is attached to them, because they are generally the result of political controversy and
are usually regarded as more or less colored or exaggerated. Attacks of this character upon a
legislative body are not punishable, under the Libel Law. Although such publications are
reprehensible, yet this court feels some aversion to the application of the provision of law under
which this case was filed. Our Penal Code has come to us from the Spanish regime. Article 256
of that Code prescribes punishment for persons who use insulting language about Ministers of
the Crown or other "authority." The King of Spain doubtless left the need of such protection to his
ministers and others in authority in the Philippines as well as in Spain. Hence, the article referred
to was made applicable here. Notwithstanding the change of sovereignty, our Supreme Court, in
a majority decision, has held that this provision is still in force, and that one who made an
insulting remark about the President of the United States was punishable under it. (U.S. vs.
Helbig, supra.) If it applicable in that case, it would appear to be applicable in this case. Hence,
said article 256 must be enforced, without fear or favor, until it shall be repealed or superseded by
other legislation, or until the Supreme Court shall otherwise determine.

In view of the foregoing considerations, the court finds the defendant guilty as charged in the
information and under article 256 of their Penal Code sentences him to suffer two months and
 one day of arresto mayor and the accessory penalties prescribed by law, and to pay the costs of
both instances.

The fifteen errors assigned by the defendant and appellant, reenforced by an extensive brief, and
eloquent oral argument made in his own behalf and by his learned counsel, all reduce themselves to the
pertinent and decisive question which was announced in the beginning of this decision.

It will be noted in the first place that the trial judge considered himself bound to follow the rule announced
in the case of United States vs. Helbig (R. G. No. 14705, 1 not published). In that case, the accused was
charged with having said, "To hell with the President and his proclamations, or words to that effect," in
violation of article 256 of the Penal Code. He was found guilty in a judgment rendered by the Court of
First Instance of Manila and again on appeal to the Supreme Court, with the writer of the instant decision
dissenting on two principal grounds: (1) That the accused was deprived of the constitutional right of cross-
examination, and (2) that article 256 of the Spanish Penal Code is no longer in force. Subsequently, on a
motion of reconsideration, the court, being of the opinion that the Court of First Instance had committed a
prejudicial error in depriving the accused of his right to cross-examine a principal witness, set aside the
judgment affirming the judgment appealed from and ordered the return of the record to the court of origin
for the celebration of a new trial. Whether such a trial was actually had, is not known, but at least, the
record in the Helbig case has never again been elevated to this court.

There may perchance exist some doubt as to the authority of the decision in the Helbig case, in view of
the circumstances above described. This much, however, is certain: The facts of the Helbig case and the
case before us, which we may term the Perfecto case, are different, for in the first case there was an oral
defamation, while in the second there is a written defamation. Not only this, but a new point which, under
the facts, could not have been considered in the Helbig case, is, in the Perfecto case, urged upon the
court. And, finally, as is apparent to all, the appellate court is not restrained, as was the trial court, by
strict adherence to a former decision. We much prefer to resolve the question before us unhindered by
references to the Helbig decision.

This is one of those cases on which a variety of opinions all leading to the same result can be had. A
majority of the court are of the opinion that the Philippine Libel Law, Act No. 277, has had the effect of
repealing so much of article 256 of the Penal Code as relates to written defamation, abuse, or insult, and
that under the information and the facts, the defendant is neither guilty of a violation of article 256 of the
Penal Code, nor of the Libel Law. The view of the Chief Justice is that the accused should be acquitted
for the reason that the facts alleged in the information do not constitute a violation of article 156 of the
Penal Code. Three members of the court believe that article 256 was abrogated completely by the
change from Spanish to American sovereignty over the Philippines and is inconsistent with democratic
principles of government.

Without prejudice to the right of any member of the court to explain his position, we will discuss the two
main points just mentioned.

1. Effect of the Philippine Libel Law, Act No. 277, on article 256 of the Spanish Penal Code. —
The Libel Law, Act No. 277, was enacted by the Philippine Commission shortly after organization
of this legislative body. Section 1 defines libel as a "malicious defamation, expressed either in
writing, printing, or by signs or pictures, or the like, or public theatrical exhibitions, tending to
blacken the memory of one who is dead or to impeach the honesty, virtue, or reputation, or
publish the alleged or natural deffects of one who is alive, and thereby expose him to public
hatred, contempt or ridicule." Section 13 provides that "All laws and parts of laws now in force, so
far as the same may be in conflict herewith, are hereby repealed. . . ."

That parts of laws in force in 1901 when the Libel Law took effect, were in conflict therewith, and that the
Libel Law abrogated certain portion of the Spanish Penal Code, cannot be gainsaid. Title X of Book II of
the Penal Code, covering the subjects of calumny and insults, must have been particularly affected by the
Libel Law. Indeed, in the early case of Pardo de Tavera vs. Garcia Valdez ([1902], 1. Phil., 468), the
Supreme Court spoke of the Libel Law as "reforming the preexisting Spanish law on the subject of
calumnia and injuria." Recently, specific attention was given to the effect of the Libel Law on the
provisions of the Penal Code, dealing with calumny and insults, and it was found that those provisions of
the Penal Code on the subject of calumny and insults in which the elements of writing an publicity
entered, were abrogated by the Libel Law. (People vs. Castro [1922], p. 842, ante.)

The Libel Law must have had the same result on other provisions of the Penal Code, as for instance
article 256.

The facts here are that the editor of a newspaper published an article, naturally in writing, which may
have had the tendency to impeach the honesty, virtue, or reputation of members of the Philippine Senate,
thereby possibly exposing them to public hatred, contempt, or ridicule, which is exactly libel, as defined by
the Libel Law. Sir J. F. Stephen is authority for the statement that a libel is indictable when defaming a
"body of persons definite and small enough for individual members to be recognized as such, in or by
means of anything capable of being a libel." (Digest of Criminal Law, art. 267.) But in the United States,
while it may be proper to prosecute criminally the author of a libel charging a legislator with corruption,
criticisms, no matter how severe, on a legislature, are within the range of the liberty of the press, unless
the intention and effect be seditious. (3 Wharton's Criminal Law, p. 2131.) With these facts and legal
principles in mind, recall that article 256 begins: Any person who, by . . . writing, shall defame, abuse, or
insult any Minister of the Crown or other person in authority," etc.

The Libel Law is a complete and comprehensive law on the subject of libel. The well-known rule of
statutory construction is, that where the later statute clearly covers the old subject-matter of antecedent
acts, and it plainly appears to have been the purpose of the legislature to give expression in it to the
whole law on the subject, previous laws are held to be repealed by necessary implication. (1 Lewis'
Sutherland Statutory Construction, p. 465.) For identical reasons, it is evident that Act No. 277 had the
effect so much of this article as punishes defamation, abuse, or insults by writing.

Act No. 292 of the Philippine Commission, the Treason and Sedition Law, may also have affected article
256, but as to this point, it is not necessary to make a pronouncement.

2. Effect of the change from Spanish to Amercian sevoreignty over the Philippine son article 256
of the Spanish Penal Code. — Appellant's main proposition in the lower court and again
energetically pressed in the appellate court was that article 256 of the Spanish Penal Code is not
now in force because abrogated by the change from Spanish to American sovereignty over the
Philippines and because inconsistent with democratic principles of government. This view was
indirectly favored by the trial judge, and, as before stated, is the opinion of three members of this
court.

Article 256 is found in Chapter V of title III of Book II of the Spanish Penal Code. Title I of Book II
punishes the crimes of treason, crimes that endanger the peace or independence of the state, crimes
against international law, and the crime of piracy. Title II of the same book punishes the crimes of lese
majeste, crimes against the Cortes and its members and against the council of ministers, crimes against
the form of government, and crimes committed on the occasion of the exercise of rights guaranteed by
the fundamental laws of the state, including crime against religion and worship. Title III of the same Book,
in which article 256 is found, punishes the crimes of rebellion, sedition, assaults upon persons in
authority, and their agents, and contempts, insults, injurias, and threats against persons in authority, and
insults, injurias, and threats against their agents and other public officers, the last being the title to
Chapter V. The first two articles in Chapter V define and punish the offense of contempt committed by
any one who shall be word or deed defame, abuse, insult, or threathen a minister of the crown, or any
person in authority. The with an article condemning challenges to fight duels intervening, comes article
256, now being weighed in the balance. It reads as follows: "Any person who, by word, deed, or writing,
shall defame, abuse, or insult any Minister of the Crown or other person in authority, while engaged in the
performance of official duties, or by reason of such performance, provided that the offensive minister or
person, or the offensive writing be not addressed to him, shall suffer the penalty of arresto mayor," — that
is, the defamation, abuse, or insult of any Minister of the Crown of the Monarchy of Spain (for there could
not be a Minister of the Crown in the United States of America), or other person in authority in the
Monarchy of Spain.

It cannot admit of doubt that all those provisions of the Spanish Penal Code having to do with such
subjects as treason, lese majeste, religion and worship, rebellion, sedition, and contempts of ministers of
the crown, are not longer in force. Our present task, therefore, is a determination of whether article 256
has met the same fate, or, more specifically stated, whether it is in the nature of a municipal law or
political law, and is consistent with the Constitution and laws of the United States and the characteristics
and institutions of the American Government.

It is a general principle of the public law that on acquisition of territory the previous political relations of the
ceded region are totally abrogated. "Political" is here used to denominate the laws regulating the relations
sustained by the inhabitants to the sovereign. (American Insurance Co. vs. Canter [1828], 1 Pet., 511;
Chicago, Rock Island and Pacific Railway Co. vs. McGlinn [1885], 114 U.S., 542; Roa vs. Collector of
Customs [1912], 23 Phil., 315.) Mr. Justice Field of the United States Supreme Court stated the obvious
when in the course of his opinion in the case of Chicago, Rock Island and Pacific Railway Co. vs.
McGlinn, supra, he said: "As a matter of course, all laws, ordinances and regulations in conflict with the
political character, institutions and Constitution of the new government are at once displaced. Thus, upon
a cession of political jurisdiction and legislative power — and the latter is involved in the former — to the
United States, the laws of the country in support of an established religion or abridging the freedom of the
press, or authorizing cruel and unusual punishments, and he like, would at once cease to be of obligatory
force without any declaration to that effect." To quote again from the United States Supreme Court: "It
cannot be admitted that the King of Spain could, by treaty or otherwise, impart to the United States any of
his royal prerogatives; and much less can it be admitted that they have capacity to receive or power to
exercise them. Every nation acquiring territory, by treaty or otherwise, must hold it subject to the
Constitution and laws of its own government, and not according to those of the government ceding it."
(Pollard vs. Hagan [1845], 3 Hos., 210.)

On American occupation of the Philippines, by instructions of the President to the Military Commander
dated May 28, 1898, and by proclamation of the latter, the municipal laws of the conquered territory
affecting private rights of person and property and providing for the punishment of crime were nominally
continued in force in so far as they were compatible with the new order of things. But President McKinley,
in his instructions to General Merritt, was careful to say: "The first effect of the military occupation of the
enemy's territory is the severance of the former political relation of the inhabitants and the establishment
of a new political power." From that day to this, the ordinarily it has been taken for granted that the
provisions under consideration were still effective. To paraphrase the language of the United States
Supreme Court in Weems vs. United States ([1910], 217 U. S., 349), there was not and could not be,
except as precise questions were presented, a careful consideration of the codal provisions and a
determination of the extent to which they accorded with or were repugnant to the "'great principles of
liberty and law' which had been 'made the basis of our governmental system.' " But when the question
has been squarely raised, the appellate court has been forced on occasion to hold certain portions of the
Spanish codes repugnant t democratic institutions and American constitutional principles. (U.S. vs. Sweet
[1901], 1 Phil., 18; U.S. vs. Balcorta [1913], 25 Phil., 273; U.S. vs. Balcorta [1913], 25 Phil., 533; Weems
vs. U.S., supra.)

The nature of the government which has been set up in the Philippines under American sovereignty was
outlined by President McKinley in that Magna Charta of Philippine liberty, his instructions to the
Commission, of April 7, 1900. In part, the President said:

In all the forms of government and administrative provisions which they are authorized to
prescribe, the Commission should bear in mind that he government which they are establishing is
designed not for our satisfaction or for the expression of our theoretical views, but for the
happiness, peace, and prosperity of the people of the Philippine Islands, and the measures
 adopted should be made to conform to their customs, their habits, and even their prejudices, to
the fullest extent consistent with the accomplishment of the indispensable requisites of just and
effective government. At the same time the Commission should bear in mind, and the people of
the Islands should be made plainly to understand, that there are certain great principles of
government which have been made the basis of our governmental system, which we deem
essential to the rule of law and the maintenance of individual freedom, and of which they have,
unfortunately, been denied the experience possessed by us; that there are also certain practical
rules of government which we have found to be essential to the preservation of these great
principles of liberty and law, and that these principles and these rules of government must be
established and maintained in their islands for the sake of their liberty and happiness, however
much they may conflict with the customs or laws of procedure with which they are familiar. It is
evident that the most enligthened thought of the Philippine Islands fully appreciates the
importance of these principles and rules, and they will inevitably within a short time command
universal assent.

The courts have naturally taken the same view. Mr. Justice Elliott, speaking for our Supreme Court, in the
case of United States vs. Bull ([1910], 15 Phil., 7), said: "The President and Congress framed the
government on the model with which American are familiar, and which has proven best adapted for the
advancement of the public interests and the protection of individual rights and privileges."

Therefore, it has come with somewhat of a shock to hear the statement made that the happiness, peace,
and prosperity of the people of the Philippine Islands and their customs, habits, and prejudices, to follow
the language of President McKinley, demand obeisance to authority, and royal protection for that
authority.

According to our view, article 256 of the Spanish Penal Code was enacted by the Government of Spain to
protect Spanish officials who were the representatives of the King. With the change of sovereignty, a new
government, and a new theory of government, as set up in the Philippines. It was in no sense a
continuation of the old, although merely for convenience certain of the existing institutions and laws were
continued. The demands which the new government made, and makes, on the individual citizen are
likewise different. No longer is there a Minister of the Crown or a person in authority of such exalted
position that the citizen must speak of him only with bated breath. "In the eye of our Constitution and
laws, every man is a sovereign, a ruler and a freeman, and has equal rights with every other man. We
have no rank or station, except that of respectability and intelligence as opposed to indecency and
ignorance, and the door to this rank stands open to every man to freely enter and abide therein, if he is
qualified, and whether he is qualified or not depends upon the life and character and attainments and
conduct of each person for himself. Every man may lawfully do what he will, so long as it is not malum in
se or malum prohibitum or does not infringe upon the qually sacred rights of others." (State vs. Shepherd
[1903], 177 Mo., 205; 99 A. S. R., 624.)

It is true that in England, from which so many of the laws and institutions of the United States are derived,
there were once statutes of scandalum magnatum, under which words which would not be actionable if
spoken of an ordinary subject were made actionable if spoken of a peer of the realm or of any of the great
officers of the Crown, without proof of any special damage. The Crown of England, unfortunately, took a
view less tolerant that that of other sovereigns, as for instance, the Emperors Augustus, Caesar, and
Tiberius. These English statutes have, however, long since, become obsolete, while in the United States,
the offense of scandalum magnatum is not known. In the early days of the American Republic, a sedition
law was enacted, making it an offense to libel the Government, the Congress, or the President of the
United States, but the law met with so much popular disapproval, that it was soon repealed. "In this
country no distinction as to persons is recognized, and in practice a person holding a high office is
regarded as a target at whom any person may let fly his poisonous words. High official position, instead of
affording immunity from slanderous and libelous charges, seems rather to be regarded as making his
character free plunder for any one who desires to create a senation by attacking it." (Newell, Slander and
Libel, 3d ed., p. 245; Sillars vs. Collier [1890], 151 Mass., 50; 6 L.R.A., 680.)
Article 256 of the Penal Code is contrary to the genius and fundamental principles of the American
character and system of government. The gulf which separates this article from the spirit which inspires
all penal legislation of American origin, is as wide as that which separates a monarchy from a democratic
Republic like that of the United States. This article was crowded out by implication as soon as the United
States established its authority in the Philippine Islands. Penalties out of all proportion to the gravity of the
offense, grounded in a distorted monarchical conception of the nature of political authority, as opposed to
the American conception of the protection of the interests of the public, have been obliterated by the
present system of government in the Islands. 1awph!l.net

From an entirely different point of view, it must be noted that this article punishes contempts against
executive officials, although its terms are broad enough to cover the entire official class. Punishment for
contempt of non-judicial officers has no place in a government based upon American principles. Our
official class is not, as in monarchies, an agent of some authority greater than the people but it is an
agent and servant of the people themselves. These officials are only entitled to respect and obedience
when they are acting within the scope of their authority and jurisdiction. The American system of
government is calculated to enforce respect and obedience where such respect and obedience is due,
but never does it place around the individual who happens to occupy an official position by mandate of
the people any official halo, which calls for drastic punishment for contemptuous remarks.

The crime of lese majeste disappeared in the Philippines with the ratification of the Treaty of Paris.
Ministers of the Crown have no place under the American flag.

To summarize, the result is, that all the members of the court are of the opinion, although for different
reasons, that the judgment should be reversed and the defendant and appellant acquitted, with costs de
officio. So ordered.

Ostrand and Johns, JJ., concur.

 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

A.M. No. 133-J May 31, 1982

BERNARDITA R. MACARIOLA, complainant,

vs.
HONORABLE ELIAS B. ASUNCION, Judge of the Court of First Instance of Leyte, respondent.

MAKASIAR, J:

In a verified complaint dated August 6, 1968 Bernardita R. Macariola charged respondent Judge Elias B.
Asuncion of the Court of First Instance of Leyte, now Associate Justice of the Court of Appeals, with "acts
unbecoming a judge."

The factual setting of the case is stated in the report dated May 27, 1971 of then Associate Justice Cecilia
Muñoz Palma of the Court of Appeals now retired Associate Justice of the Supreme Court, to whom this
case was referred on October 28, 1968 for investigation, thus:

Civil Case No. 3010 of the Court of First Instance of Leyte was a complaint for
partition filed by Sinforosa R. Bales, Luz R. Bakunawa, Anacorita Reyes, Ruperto
Reyes, Adela Reyes, and Priscilla Reyes, plaintiffs, against Bernardita R.
Macariola, defendant, concerning the properties left by the deceased Francisco
Reyes, the common father of the plaintiff and defendant.

In her defenses to the complaint for partition, Mrs. Macariola alleged among
other things that; a) plaintiff Sinforosa R. Bales was not a daughter of the
deceased Francisco Reyes; b) the only legal heirs of the deceased were
defendant Macariola, she being the only offspring of the first marriage of
Francisco Reyes with Felisa Espiras, and the remaining plaintiffs who were the
children of the deceased by his second marriage with Irene Ondez; c) the
properties left by the deceased were all the conjugal properties of the latter and
his first wife, Felisa Espiras, and no properties were acquired by the deceased
during his second marriage; d) if there was any partition to be made, those
conjugal properties should first be partitioned into two parts, and one part is to be
adjudicated solely to defendant it being the share of the latter's deceased mother,
Felisa Espiras, and the other half which is the share of the deceased Francisco
Reyes was to be divided equally among his children by his two marriages.

On June 8, 1963, a decision was rendered by respondent Judge Asuncion in

Civil Case 3010, the dispositive portion of which reads:

IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court,

upon a preponderance of evidence, finds and so holds, and
hereby renders judgment (1) Declaring the plaintiffs Luz R.
Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes and
Priscilla Reyes as the only children legitimated by the
subsequent marriage of Francisco Reyes Diaz to Irene Ondez;
 (2) Declaring the plaintiff Sinforosa R. Bales to have been an
illegitimate child of Francisco Reyes Diaz; (3) Declaring Lots
Nos. 4474, 4475, 4892, 5265, 4803, 4581, 4506 and 1/4 of Lot
1145 as belonging to the conjugal partnership of the spouses
Francisco Reyes Diaz and Felisa Espiras; (4) Declaring Lot No.
2304 and 1/4 of Lot No. 3416 as belonging to the spouses
Francisco Reyes Diaz and Irene Ondez in common partnership;
(5) Declaring that 1/2 of Lot No. 1184 as belonging exclusively to
the deceased Francisco Reyes Diaz; (6) Declaring the defendant
Bernardita R. Macariola, being the only legal and forced heir of
her mother Felisa Espiras, as the exclusive owner of one-half of
each of Lots Nos. 4474, 4475, 4892, 5265, 4803, 4581, 4506;
and the remaining one-half (1/2) of each of said Lots Nos. 4474,
4475, 4892, 5265, 4803, 4581, 4506 and one-half (1/2) of one-
fourth (1/4) of Lot No. 1154 as belonging to the estate of
Francisco Reyes Diaz; (7) Declaring Irene Ondez to be the
exclusive owner of one-half (1/2) of Lot No. 2304 and one-half
(1/2) of one-fourth (1/4) of Lot No. 3416; the remaining one-half
(1/2) of Lot 2304 and the remaining one-half (1/2) of one-fourth
(1/4) of Lot No. 3416 as belonging to the estate of Francisco
Reyes Diaz; (8) Directing the division or partition of the estate of
Francisco Reyes Diaz in such a manner as to give or grant to
Irene Ondez, as surviving widow of Francisco Reyes Diaz, a
hereditary share of. one-twelfth (1/12) of the whole estate of
Francisco Reyes Diaz (Art. 996 in relation to Art. 892, par 2, New
Civil Code), and the remaining portion of the estate to be divided
among the plaintiffs Sinforosa R. Bales, Luz R. Bakunawa,
Anacorita Reyes, Ruperto Reyes, Adela Reyes, Priscilla Reyes
and defendant Bernardita R. Macariola, in such a way that the
extent of the total share of plaintiff Sinforosa R. Bales in the
hereditary estate shall not exceed the equivalent of two-fifth (2/5)
of the total share of any or each of the other plaintiffs and the
defendant (Art. 983, New Civil Code), each of the latter to
receive equal shares from the hereditary estate, (Ramirez vs.
Bautista, 14 Phil. 528; Diancin vs. Bishop of Jaro, O.G. [3rd Ed.]
p. 33); (9) Directing the parties, within thirty days after this
judgment shall have become final to submit to this court, for
approval a project of partition of the hereditary estate in the
proportion above indicated, and in such manner as the parties
may, by agreement, deemed convenient and equitable to them
taking into consideration the location, kind, quality, nature and
value of the properties involved; (10) Directing the plaintiff
Sinforosa R. Bales and defendant Bernardita R. Macariola to pay
the costs of this suit, in the proportion of one-third (1/3) by the
first named and two-thirds (2/3) by the second named; and (I 1)
Dismissing all other claims of the parties [pp 27-29 of Exh. C].

The decision in civil case 3010 became final for lack of an appeal, and on
October 16, 1963, a project of partition was submitted to Judge Asuncion which
is marked Exh. A. Notwithstanding the fact that the project of partition was not
signed by the parties themselves but only by the respective counsel of plaintiffs
and defendant, Judge Asuncion approved it in his Order dated October 23, 1963,
which for convenience is quoted hereunder in full:
The parties, through their respective counsels, presented to this
Court for approval the following project of partition:

COMES NOW, the plaintiffs and the defendant in the above-

entitled case, to this Honorable Court respectfully submit the
following Project of Partition:

l. The whole of Lots Nos. 1154, 2304 and 4506 shall belong
exclusively to Bernardita Reyes Macariola;

2. A portion of Lot No. 3416 consisting of 2,373.49 square

meters along the eastern part of the lot shall be awarded likewise
to Bernardita R. Macariola;

3. Lots Nos. 4803, 4892 and 5265 shall be awarded to Sinforosa

Reyes Bales;

4. A portion of Lot No. 3416 consisting of 1,834.55 square

meters along the western part of the lot shall likewise be
awarded to Sinforosa Reyes-Bales;

5. Lots Nos. 4474 and 4475 shall be divided equally among Luz
Reyes Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela
Reyes and Priscilla Reyes in equal shares;

6. Lot No. 1184 and the remaining portion of Lot No. 3416 after
taking the portions awarded under item (2) and (4) above shall
be awarded to Luz Reyes Bakunawa, Anacorita Reyes, Ruperto
Reyes, Adela Reyes and Priscilla Reyes in equal shares,
provided, however that the remaining portion of Lot No. 3416
shall belong exclusively to Priscilla Reyes.

WHEREFORE, it is respectfully prayed that the Project of

Partition indicated above which is made in accordance with the
decision of the Honorable Court be approved.

Tacloban City, October 16, 1963.

(SGD) BONIFACIO RAMO Atty. for the Defendant Tacloban City

(SGD) ZOTICO A. TOLETE Atty. for the Plaintiff Tacloban City

While the Court thought it more desirable for all the parties to
have signed this Project of Partition, nevertheless, upon
assurance of both counsels of the respective parties to this Court
that the Project of Partition, as above- quoted, had been made
after a conference and agreement of the plaintiffs and the
defendant approving the above Project of Partition, and that both
lawyers had represented to the Court that they are given full
authority to sign by themselves the Project of Partition, the Court,
therefore, finding the above-quoted Project of Partition to be in
accordance with law, hereby approves the same. The parties,
therefore, are directed to execute such papers, documents or
 instrument sufficient in form and substance for the vesting of the
rights, interests and participations which were adjudicated to the
respective parties, as outlined in the Project of Partition and the
delivery of the respective properties adjudicated to each one in
view of said Project of Partition, and to perform such other acts
as are legal and necessary to effectuate the said Project of
Partition.

SO ORDERED.

Given in Tacloban City, this 23rd day of October, 1963.

(SGD) ELIAS B. ASUNCION Judge

EXH. B.

The above Order of October 23, 1963, was amended on November 11, 1963,
only for the purpose of giving authority to the Register of Deeds of the Province
of Leyte to issue the corresponding transfer certificates of title to the respective
adjudicatees in conformity with the project of partition (see Exh. U).

One of the properties mentioned in the project of partition was Lot 1184 or rather
one-half thereof with an area of 15,162.5 sq. meters. This lot, which according to
the decision was the exclusive property of the deceased Francisco Reyes, was
adjudicated in said project of partition to the plaintiffs Luz, Anacorita Ruperto,
Adela, and Priscilla all surnamed Reyes in equal shares, and when the project of
partition was approved by the trial court the adjudicatees caused Lot 1184 to be
subdivided into five lots denominated as Lot 1184-A to 1184-E inclusive (Exh. V).

Lot 1184-D was conveyed to Enriqueta D. Anota, a stenographer in Judge

Asuncion's court (Exhs. F, F-1 and V-1), while Lot 1184-E which had an area of
2,172.5556 sq. meters was sold on July 31, 1964 to Dr. Arcadio Galapon (Exh. 2)
who was issued transfer certificate of title No. 2338 of the Register of Deeds of
the city of Tacloban (Exh. 12).

On March 6, 1965, Dr. Arcadio Galapon and his wife Sold a portion of Lot 1184-E
with an area of around 1,306 sq. meters to Judge Asuncion and his wife, Victoria
S. Asuncion (Exh. 11), which particular portion was declared by the latter for
taxation purposes (Exh. F).

On August 31, 1966, spouses Asuncion and spouses Galapon conveyed their
respective shares and interest in Lot 1184-E to "The Traders Manufacturing and
Fishing Industries Inc." (Exit 15 & 16). At the time of said sale the stockholders of
the corporation were Dominador Arigpa Tan, Humilia Jalandoni Tan, Jaime
Arigpa Tan, Judge Asuncion, and the latter's wife, Victoria S. Asuncion, with
Judge Asuncion as the President and Mrs. Asuncion as the secretary (Exhs. E-4
to E-7). The Articles of Incorporation of "The Traders Manufacturing and Fishing
Industries, Inc." which we shall henceforth refer to as "TRADERS" were
registered with the Securities and Exchange Commission only on January 9,
1967 (Exh. E) [pp. 378-385, rec.].

Complainant Bernardita R. Macariola filed on August 9, 1968 the instant complaint dated August 6, 1968
alleging four causes of action, to wit: [1] that respondent Judge Asuncion violated Article 1491, paragraph
5, of the New Civil Code in acquiring by purchase a portion of Lot No. 1184-E which was one of those
properties involved in Civil Case No. 3010 decided by him; [2] that he likewise violated Article 14,
paragraphs I and 5 of the Code of Commerce, Section 3, paragraph H, of R.A. 3019, otherwise known as
the Anti-Graft and Corrupt Practices Act, Section 12, Rule XVIII of the Civil Service Rules, and Canon 25
of the Canons of Judicial Ethics, by associating himself with the Traders Manufacturing and Fishing
Industries, Inc., as a stockholder and a ranking officer while he was a judge of the Court of First Instance
of Leyte; [3] that respondent was guilty of coddling an impostor and acted in disregard of judicial decorum
by closely fraternizing with a certain Dominador Arigpa Tan who openly and publicly advertised himself as
a practising attorney when in truth and in fact his name does not appear in the Rolls of Attorneys and is
not a member of the Philippine Bar; and [4] that there was a culpable defiance of the law and utter
disregard for ethics by respondent Judge (pp. 1-7, rec.).

Respondent Judge Asuncion filed on September 24, 1968 his answer to which a reply was filed on
October 16, 1968 by herein complainant. In Our resolution of October 28, 1968, We referred this case to
then Justice Cecilia Muñoz Palma of the Court of Appeals, for investigation, report and recommendation.
After hearing, the said Investigating Justice submitted her report dated May 27, 1971 recommending that
respondent Judge should be reprimanded or warned in connection with the first cause of action alleged in
the complaint, and for the second cause of action, respondent should be warned in case of a finding that
he is prohibited under the law to engage in business. On the third and fourth causes of action, Justice
Palma recommended that respondent Judge be exonerated.

The records also reveal that on or about November 9 or 11, 1968 (pp. 481, 477, rec.), complainant herein
instituted an action before the Court of First Instance of Leyte, entitled "Bernardita R. Macariola, plaintiff,
versus Sinforosa R. Bales, et al., defendants," which was docketed as Civil Case No. 4235, seeking the
annulment of the project of partition made pursuant to the decision in Civil Case No. 3010 and the two
orders issued by respondent Judge approving the same, as well as the partition of the estate and the
subsequent conveyances with damages. It appears, however, that some defendants were dropped from
the civil case. For one, the case against Dr. Arcadio Galapon was dismissed because he was no longer a
real party in interest when Civil Case No. 4234 was filed, having already conveyed on March 6, 1965 a
portion of lot 1184-E to respondent Judge and on August 31, 1966 the remainder was sold to the Traders
Manufacturing and Fishing Industries, Inc. Similarly, the case against defendant Victoria Asuncion was
dismissed on the ground that she was no longer a real party in interest at the time the aforesaid Civil
Case No. 4234 was filed as the portion of Lot 1184 acquired by her and respondent Judge from Dr.
Arcadio Galapon was already sold on August 31, 1966 to the Traders Manufacturing and Fishing
industries, Inc. Likewise, the cases against defendants Serafin P. Ramento, Catalina Cabus, Ben Barraza
Go, Jesus Perez, Traders Manufacturing and Fishing Industries, Inc., Alfredo R. Celestial and Pilar P.
Celestial, Leopoldo Petilla and Remedios Petilla, Salvador Anota and Enriqueta Anota and Atty. Zotico A.
Tolete were dismissed with the conformity of complainant herein, plaintiff therein, and her counsel.

On November 2, 1970, Judge Jose D. Nepomuceno of the Court of First Instance of Leyte, who was
directed and authorized on June 2, 1969 by the then Secretary (now Minister) of Justice and now Minister
of National Defense Juan Ponce Enrile to hear and decide Civil Case No. 4234, rendered a decision, the
dispositive portion of which reads as follows:

A. IN THE CASE AGAINST JUDGE ELIAS B. ASUNCION

(1) declaring that only Branch IV of the Court of First Instance of Leyte has
jurisdiction to take cognizance of the issue of the legality and validity of the
Project of Partition [Exhibit "B"] and the two Orders [Exhibits "C" and "C- 3"]
approving the partition;

(2) dismissing the complaint against Judge Elias B. Asuncion;

(3) adjudging the plaintiff, Mrs. Bernardita R. Macariola to pay defendant Judge
Elias B. Asuncion,
 (a) the sum of FOUR HUNDRED THOUSAND PESOS
[P400,000.00] for moral damages;

(b) the sum of TWO HUNDRED THOUSAND PESOS

[P200,000.001 for exemplary damages;

(c) the sum of FIFTY THOUSAND PESOS [P50,000.00] for

nominal damages; and

(d) he sum of TEN THOUSAND PESOS [PI0,000.00] for

Attorney's Fees.

B. IN THE CASE AGAINST THE DEFENDANT MARIQUITA

VILLASIN, FOR HERSELF AND FOR THE HEIRS OF THE
DECEASED GERARDO VILLASIN —

(1) Dismissing the complaint against the defendants Mariquita Villasin and the
heirs of the deceased Gerardo Villasin;

(2) Directing the plaintiff to pay the defendants Mariquita Villasin and the heirs of
Gerardo Villasin the cost of the suit.

C. IN THE CASE AGAINST THE DEFENDANT SINFOROSA R.

BALES, ET AL., WHO WERE PLAINTIFFS IN CIVIL CASE NO.
3010 —

(1) Dismissing the complaint against defendants Sinforosa R. Bales, Adela R.

Herrer, Priscilla R. Solis, Luz R. Bakunawa, Anacorita R. Eng and Ruperto O.
Reyes.

D. IN THE CASE AGAINST DEFENDANT BONIFACIO RAMO

—

(1) Dismissing the complaint against Bonifacio Ramo;

(2) Directing the plaintiff to pay the defendant Bonifacio Ramo the cost of the suit.

SO ORDERED [pp. 531-533, rec.]

It is further disclosed by the record that the aforesaid decision was elevated to the Court of Appeals upon
perfection of the appeal on February 22, 1971.

WE find that there is no merit in the contention of complainant Bernardita R. Macariola, under her first
cause of action, that respondent Judge Elias B. Asuncion violated Article 1491, paragraph 5, of the New
Civil Code in acquiring by purchase a portion of Lot No. 1184-E which was one of those properties
involved in Civil Case No. 3010. 'That Article provides:

Article 1491. The following persons cannot acquire by purchase, even at a public
or judicial action, either in person or through the mediation of another:
 xxx xxx xxx

(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts,
and other officers and employees connected with the administration of justice,
the property and rights in litigation or levied upon an execution before the court
within whose jurisdiction or territory they exercise their respective functions; this
prohibition includes the act of acquiring by assignment and shall apply to
lawyers, with respect to the property and rights which may be the object of any
litigation in which they may take part by virtue of their profession [emphasis
supplied].

The prohibition in the aforesaid Article applies only to the sale or assignment of the property which is the
subject of litigation to the persons disqualified therein. WE have already ruled that "... for the prohibition to
operate, the sale or assignment of the property must take place during the pendency of the litigation
involving the property" (The Director of Lands vs. Ababa et al., 88 SCRA 513, 519 [1979], Rosario vda. de
Laig vs. Court of Appeals, 86 SCRA 641, 646 [1978]).

In the case at bar, when the respondent Judge purchased on March 6, 1965 a portion of Lot 1184-E, the
decision in Civil Case No. 3010 which he rendered on June 8, 1963 was already final because none of
the parties therein filed an appeal within the reglementary period; hence, the lot in question was no longer
subject of the litigation. Moreover, at the time of the sale on March 6, 1965, respondent's order dated
October 23, 1963 and the amended order dated November 11, 1963 approving the October 16, 1963
project of partition made pursuant to the June 8, 1963 decision, had long become final for there was no
appeal from said orders.

Furthermore, respondent Judge did not buy the lot in question on March 6, 1965 directly from the plaintiffs
in Civil Case No. 3010 but from Dr. Arcadio Galapon who earlier purchased on July 31, 1964 Lot 1184-E
from three of the plaintiffs, namely, Priscilla Reyes, Adela Reyes, and Luz R. Bakunawa after the finality
of the decision in Civil Case No. 3010. It may be recalled that Lot 1184 or more specifically one-half
thereof was adjudicated in equal shares to Priscilla Reyes, Adela Reyes, Luz Bakunawa, Ruperto Reyes
and Anacorita Reyes in the project of partition, and the same was subdivided into five lots denominated
as Lot 1184-A to 1184-E. As aforestated, Lot 1184-E was sold on July 31, 1964 to Dr. Galapon for which
he was issued TCT No. 2338 by the Register of Deeds of Tacloban City, and on March 6, 1965 he sold a
portion of said lot to respondent Judge and his wife who declared the same for taxation purposes only.
The subsequent sale on August 31, 1966 by spouses Asuncion and spouses Galapon of their respective
shares and interest in said Lot 1184-E to the Traders Manufacturing and Fishing Industries, Inc., in which
respondent was the president and his wife was the secretary, took place long after the finality of the
decision in Civil Case No. 3010 and of the subsequent two aforesaid orders therein approving the project
of partition.

While it appears that complainant herein filed on or about November 9 or 11, 1968 an action before the
Court of First Instance of Leyte docketed as Civil Case No. 4234, seeking to annul the project of partition
and the two orders approving the same, as well as the partition of the estate and the subsequent
conveyances, the same, however, is of no moment.

The fact remains that respondent Judge purchased on March 6, 1965 a portion of Lot 1184-E from Dr.
Arcadio Galapon; hence, after the finality of the decision which he rendered on June 8, 1963 in Civil Case
No. 3010 and his two questioned orders dated October 23, 1963 and November 11, 1963. Therefore, the
property was no longer subject of litigation.

The subsequent filing on November 9, or 11, 1968 of Civil Case No. 4234 can no longer alter, change or
affect the aforesaid facts — that the questioned sale to respondent Judge, now Court of Appeals Justice,
was effected and consummated long after the finality of the aforesaid decision or orders.
Consequently, the sale of a portion of Lot 1184-E to respondent Judge having taken place over one year
after the finality of the decision in Civil Case No. 3010 as well as the two orders approving the project of
partition, and not during the pendency of the litigation, there was no violation of paragraph 5, Article 1491
of the New Civil Code.

It is also argued by complainant herein that the sale on July 31, 1964 of Lot 1184-E to Dr. Arcadio
Galapon by Priscilla Reyes, Adela Reyes and Luz R. Bakunawa was only a mere scheme to conceal the
illegal and unethical transfer of said lot to respondent Judge as a consideration for the approval of the
project of partition. In this connection, We agree with the findings of the Investigating Justice thus:

And so we are now confronted with this all-important question whether or not the
acquisition by respondent of a portion of Lot 1184-E and the subsequent transfer
of the whole lot to "TRADERS" of which respondent was the President and his
wife the Secretary, was intimately related to the Order of respondent approving
the project of partition, Exh. A.

Respondent vehemently denies any interest or participation in the transactions

between the Reyeses and the Galapons concerning Lot 1184-E, and he insists
that there is no evidence whatsoever to show that Dr. Galapon had acted, in the
purchase of Lot 1184-E, in mediation for him and his wife. (See p. 14 of
Respondent's Memorandum).

xxx xxx xxx

On this point, I agree with respondent that there is no evidence in the record
showing that Dr. Arcadio Galapon acted as a mere "dummy" of respondent in
acquiring Lot 1184-E from the Reyeses. Dr. Galapon appeared to this
investigator as a respectable citizen, credible and sincere, and I believe him
when he testified that he bought Lot 1184-E in good faith and for valuable
consideration from the Reyeses without any intervention of, or previous
understanding with Judge Asuncion (pp. 391- 394, rec.).

On the contention of complainant herein that respondent Judge acted illegally in approving the project of
partition although it was not signed by the parties, We quote with approval the findings of the Investigating
Justice, as follows:

1. I agree with complainant that respondent should have required the signature of
the parties more particularly that of Mrs. Macariola on the project of partition
submitted to him for approval; however, whatever error was committed by
respondent in that respect was done in good faith as according to Judge
Asuncion he was assured by Atty. Bonifacio Ramo, the counsel of record of Mrs.
Macariola, That he was authorized by his client to submit said project of partition,
(See Exh. B and tsn p. 24, January 20, 1969). While it is true that such written
authority if there was any, was not presented by respondent in evidence, nor did
Atty. Ramo appear to corroborate the statement of respondent, his affidavit being
the only one that was presented as respondent's Exh. 10, certain actuations of
Mrs. Macariola lead this investigator to believe that she knew the contents of the
project of partition, Exh. A, and that she gave her conformity thereto. I refer to the
following documents:

1) Exh. 9 — Certified true copy of OCT No. 19520 covering Lot 1154 of the
Tacloban Cadastral Survey in which the deceased Francisco Reyes holds a "1/4
share" (Exh. 9-a). On tills certificate of title the Order dated November 11, 1963,
 (Exh. U) approving the project of partition was duly entered and registered on
November 26, 1963 (Exh. 9-D);

2) Exh. 7 — Certified copy of a deed of absolute sale executed by Bernardita

Reyes Macariola on October 22, 1963, conveying to Dr. Hector Decena the one-
fourth share of the late Francisco Reyes-Diaz in Lot 1154. In this deed of sale the
vendee stated that she was the absolute owner of said one-fourth share, the
same having been adjudicated to her as her share in the estate of her father
Francisco Reyes Diaz as per decision of the Court of First Instance of Leyte
under case No. 3010 (Exh. 7-A). The deed of sale was duly registered and
annotated at the back of OCT 19520 on December 3, 1963 (see Exh. 9-e).

In connection with the abovementioned documents it is to be noted that in the

project of partition dated October 16, 1963, which was approved by respondent
on October 23, 1963, followed by an amending Order on November 11, 1963, Lot
1154 or rather 1/4 thereof was adjudicated to Mrs. Macariola. It is this 1/4 share
in Lot 1154 which complainant sold to Dr. Decena on October 22, 1963, several
days after the preparation of the project of partition.

Counsel for complainant stresses the view, however, that the latter sold her one-
fourth share in Lot 1154 by virtue of the decision in Civil Case 3010 and not
because of the project of partition, Exh. A. Such contention is absurd because
from the decision, Exh. C, it is clear that one-half of one- fourth of Lot 1154
belonged to the estate of Francisco Reyes Diaz while the other half of said one-
fourth was the share of complainant's mother, Felisa Espiras; in other words, the
decision did not adjudicate the whole of the one-fourth of Lot 1154 to the herein
complainant (see Exhs. C-3 & C-4). Complainant became the owner of the entire
one-fourth of Lot 1154 only by means of the project of partition, Exh. A.
Therefore, if Mrs. Macariola sold Lot 1154 on October 22, 1963, it was for no
other reason than that she was wen aware of the distribution of the properties of
her deceased father as per Exhs. A and B. It is also significant at this point to
state that Mrs. Macariola admitted during the cross-examination that she went to
Tacloban City in connection with the sale of Lot 1154 to Dr. Decena (tsn p. 92,
November 28, 1968) from which we can deduce that she could not have been
kept ignorant of the proceedings in civil case 3010 relative to the project of
partition.

Complainant also assails the project of partition because according to her the
properties adjudicated to her were insignificant lots and the least valuable.
Complainant, however, did not present any direct and positive evidence to prove
the alleged gross inequalities in the choice and distribution of the real properties
when she could have easily done so by presenting evidence on the area,
location, kind, the assessed and market value of said properties. Without such
evidence there is nothing in the record to show that there were inequalities in the
distribution of the properties of complainant's father (pp. 386389, rec.).

Finally, while it is. true that respondent Judge did not violate paragraph 5, Article 1491 of the New Civil
Code in acquiring by purchase a portion of Lot 1184-E which was in litigation in his court, it was, however,
improper for him to have acquired the same. He should be reminded of Canon 3 of the Canons of Judicial
Ethics which requires that: "A judge's official conduct should be free from the appearance of impropriety,
and his personal behavior, not only upon the bench and in the performance of judicial duties, but also in
his everyday life, should be beyond reproach." And as aptly observed by the Investigating Justice: "... it
was unwise and indiscreet on the part of respondent to have purchased or acquired a portion of a piece
of property that was or had been in litigation in his court and caused it to be transferred to a corporation of
which he and his wife were ranking officers at the time of such transfer. One who occupies an exalted
position in the judiciary has the duty and responsibility of maintaining the faith and trust of the citizenry in
the courts of justice, so that not only must he be truly honest and just, but his actuations must be such as
not give cause for doubt and mistrust in the uprightness of his administration of justice. In this particular
case of respondent, he cannot deny that the transactions over Lot 1184-E are damaging and render his
actuations open to suspicion and distrust. Even if respondent honestly believed that Lot 1184-E was no
longer in litigation in his court and that he was purchasing it from a third person and not from the parties
to the litigation, he should nonetheless have refrained from buying it for himself and transferring it to a
corporation in which he and his wife were financially involved, to avoid possible suspicion that his
acquisition was related in one way or another to his official actuations in civil case 3010. The conduct of
respondent gave cause for the litigants in civil case 3010, the lawyers practising in his court, and the
public in general to doubt the honesty and fairness of his actuations and the integrity of our courts of
justice" (pp. 395396, rec.).

II

With respect to the second cause of action, the complainant alleged that respondent Judge violated
paragraphs 1 and 5, Article 14 of the Code of Commerce when he associated himself with the Traders
Manufacturing and Fishing Industries, Inc. as a stockholder and a ranking officer, said corporation having
been organized to engage in business. Said Article provides that:

Article 14 — The following cannot engage in commerce, either in person or by

proxy, nor can they hold any office or have any direct, administrative, or financial
intervention in commercial or industrial companies within the limits of the districts,
provinces, or towns in which they discharge their duties:

1. Justices of the Supreme Court, judges and officials of the department of public
prosecution in active service. This provision shall not be applicable to mayors,
municipal judges, and municipal prosecuting attorneys nor to those who by
chance are temporarily discharging the functions of judge or prosecuting
attorney.

xxx xxx xxx

5. Those who by virtue of laws or special provisions may not engage in

commerce in a determinate territory.

It is Our considered view that although the aforestated provision is incorporated in the Code of Commerce
which is part of the commercial laws of the Philippines, it, however, partakes of the nature of a political
law as it regulates the relationship between the government and certain public officers and employees,
like justices and judges.

Political Law has been defined as that branch of public law which deals with the organization and
operation of the governmental organs of the State and define the relations of the state with the inhabitants
of its territory (People vs. Perfecto, 43 Phil. 887, 897 [1922]). It may be recalled that political law
embraces constitutional law, law of public corporations, administrative law including the law on public
officers and elections. Specifically, Article 14 of the Code of Commerce partakes more of the nature of an
administrative law because it regulates the conduct of certain public officers and employees with respect
to engaging in business: hence, political in essence.

It is significant to note that the present Code of Commerce is the Spanish Code of Commerce of 1885,
with some modifications made by the "Commission de Codificacion de las Provincias de Ultramar," which
was extended to the Philippines by the Royal Decree of August 6, 1888, and took effect as law in this
jurisdiction on December 1, 1888.
Upon the transfer of sovereignty from Spain to the United States and later on from the United States to
the Republic of the Philippines, Article 14 of this Code of Commerce must be deemed to have been
abrogated because where there is change of sovereignty, the political laws of the former sovereign,
whether compatible or not with those of the new sovereign, are automatically abrogated, unless they are
expressly re-enacted by affirmative act of the new sovereign.

Thus, We held in Roa vs. Collector of Customs (23 Phil. 315, 330, 311 [1912]) that:

By well-settled public law, upon the cession of territory by one nation to another,
either following a conquest or otherwise, ... those laws which are political in their
nature and pertain to the prerogatives of the former government immediately
cease upon the transfer of sovereignty. (Opinion, Atty. Gen., July 10, 1899).

While municipal laws of the newly acquired territory not in conflict with the, laws
of the new sovereign continue in force without the express assent or affirmative
act of the conqueror, the political laws do not. (Halleck's Int. Law, chap. 34, par.
14). However, such political laws of the prior sovereignty as are not in conflict
with the constitution or institutions of the new sovereign, may be continued in
force if the conqueror shall so declare by affirmative act of the commander-in-
chief during the war, or by Congress in time of peace. (Ely's Administrator vs.
United States, 171 U.S. 220, 43 L. Ed. 142). In the case of American and Ocean
Ins. Cos. vs. 356 Bales of Cotton (1 Pet. [26 U.S.] 511, 542, 7 L. Ed. 242), Chief
Justice Marshall said:

On such transfer (by cession) of territory, it has never been held

that the relations of the inhabitants with each other undergo any
change. Their relations with their former sovereign are dissolved,
and new relations are created between them and the
government which has acquired their territory. The same act
which transfers their country, transfers the allegiance of those
who remain in it; and the law which may be denominated
political, is necessarily changed, although that which regulates
the intercourse and general conduct of individuals, remains in
force, until altered by the newly- created power of the State.

Likewise, in People vs. Perfecto (43 Phil. 887, 897 [1922]), this Court stated that: "It is a general principle
of the public law that on acquisition of territory the previous political relations of the ceded region are
totally abrogated. "

There appears no enabling or affirmative act that continued the effectivity of the aforestated provision of
the Code of Commerce after the change of sovereignty from Spain to the United States and then to the
Republic of the Philippines. Consequently, Article 14 of the Code of Commerce has no legal and binding
effect and cannot apply to the respondent, then Judge of the Court of First Instance, now Associate
Justice of the Court of Appeals.

It is also argued by complainant herein that respondent Judge violated paragraph H, Section 3 of
Republic Act No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act, which provides that:

Sec. 3. Corrupt practices of public officers. — In addition to acts or omissions of

public officers already penalized by existing law, the following shall constitute
corrupt practices of any public officer and are hereby declared to be unlawful:

xxx xxx xxx

 (h) Directly or indirectly having financial or pecuniary interest in
any business, contract or transaction in connection with which he
intervenes or takes part in his official capacity, or in which he is
prohibited by the Constitution or by any Iaw from having any
interest.

Respondent Judge cannot be held liable under the aforestated paragraph because there is no showing
that respondent participated or intervened in his official capacity in the business or transactions of the
Traders Manufacturing and Fishing Industries, Inc. In the case at bar, the business of the corporation in
which respondent participated has obviously no relation or connection with his judicial office. The
business of said corporation is not that kind where respondent intervenes or takes part in his capacity as
Judge of the Court of First Instance. As was held in one case involving the application of Article 216 of the
Revised Penal Code which has a similar prohibition on public officers against directly or indirectly
becoming interested in any contract or business in which it is his official duty to intervene, "(I)t is not
enough to be a public official to be subject to this crime; it is necessary that by reason of his office, he has
to intervene in said contracts or transactions; and, hence, the official who intervenes in contracts or
transactions which have no relation to his office cannot commit this crime.' (People vs. Meneses, C.A. 40
O.G. 11th Supp. 134, cited by Justice Ramon C. Aquino; Revised Penal Code, p. 1174, Vol. 11 [1976]).

It does not appear also from the records that the aforesaid corporation gained any undue advantage in its
business operations by reason of respondent's financial involvement in it, or that the corporation benefited
in one way or another in any case filed by or against it in court. It is undisputed that there was no case
filed in the different branches of the Court of First Instance of Leyte in which the corporation was either
party plaintiff or defendant except Civil Case No. 4234 entitled "Bernardita R. Macariola, plaintiff, versus
Sinforosa O. Bales, et al.," wherein the complainant herein sought to recover Lot 1184-E from the
aforesaid corporation. It must be noted, however, that Civil Case No. 4234 was filed only on November 9
or 11, 1968 and decided on November 2, 1970 by CFI Judge Jose D. Nepomuceno when respondent
Judge was no longer connected with the corporation, having disposed of his interest therein on January
31, 1967.

Furthermore, respondent is not liable under the same paragraph because there is no provision in both the
1935 and 1973 Constitutions of the Philippines, nor is there an existing law expressly prohibiting
members of the Judiciary from engaging or having interest in any lawful business.

It may be pointed out that Republic Act No. 296, as amended, also known as the Judiciary Act of 1948,
does not contain any prohibition to that effect. As a matter of fact, under Section 77 of said law, municipal
judges may engage in teaching or other vocation not involving the practice of law after office hours but
with the permission of the district judge concerned.

Likewise, Article 14 of the Code of Commerce which prohibits judges from engaging in commerce is, as
heretofore stated, deemed abrogated automatically upon the transfer of sovereignty from Spain to
America, because it is political in nature.

Moreover, the prohibition in paragraph 5, Article 1491 of the New Civil Code against the purchase by
judges of a property in litigation before the court within whose jurisdiction they perform their duties, cannot
apply to respondent Judge because the sale of the lot in question to him took place after the finality of his
decision in Civil Case No. 3010 as well as his two orders approving the project of partition; hence, the
property was no longer subject of litigation.

In addition, although Section 12, Rule XVIII of the Civil Service Rules made pursuant to the Civil Service
Act of 1959 prohibits an officer or employee in the civil service from engaging in any private business,
vocation, or profession or be connected with any commercial, credit, agricultural or industrial undertaking
without a written permission from the head of department, the same, however, may not fall within the
purview of paragraph h, Section 3 of the Anti-Graft and Corrupt Practices Act because the last portion of
said paragraph speaks of a prohibition by the Constitution or law on any public officer from having any
interest in any business and not by a mere administrative rule or regulation. Thus, a violation of the
aforesaid rule by any officer or employee in the civil service, that is, engaging in private business without
a written permission from the Department Head may not constitute graft and corrupt practice as defined
by law.

On the contention of complainant that respondent Judge violated Section 12, Rule XVIII of the Civil
Service Rules, We hold that the Civil Service Act of 1959 (R.A. No. 2260) and the Civil Service Rules
promulgated thereunder, particularly Section 12 of Rule XVIII, do not apply to the members of the
Judiciary. Under said Section 12: "No officer or employee shall engage directly in any private business,
vocation, or profession or be connected with any commercial, credit, agricultural or industrial undertaking
without a written permission from the Head of Department ..."

It must be emphasized at the outset that respondent, being a member of the Judiciary, is covered by
Republic Act No. 296, as amended, otherwise known as the Judiciary Act of 1948 and by Section 7,
Article X, 1973 Constitution.

Under Section 67 of said law, the power to remove or dismiss judges was then vested in the President of
the Philippines, not in the Commissioner of Civil Service, and only on two grounds, namely, serious
misconduct and inefficiency, and upon the recommendation of the Supreme Court, which alone is
authorized, upon its own motion, or upon information of the Secretary (now Minister) of Justice to conduct
the corresponding investigation. Clearly, the aforesaid section defines the grounds and prescribes the
special procedure for the discipline of judges.

And under Sections 5, 6 and 7, Article X of the 1973 Constitution, only the Supreme Court can discipline
judges of inferior courts as well as other personnel of the Judiciary.

It is true that under Section 33 of the Civil Service Act of 1959: "The Commissioner may, for ... violation of
the existing Civil Service Law and rules or of reasonable office regulations, or in the interest of the
service, remove any subordinate officer or employee from the service, demote him in rank, suspend him
for not more than one year without pay or fine him in an amount not exceeding six months' salary." Thus,
a violation of Section 12 of Rule XVIII is a ground for disciplinary action against civil service officers and
employees.

However, judges cannot be considered as subordinate civil service officers or employees subject to the
disciplinary authority of the Commissioner of Civil Service; for, certainly, the Commissioner is not the
head of the Judicial Department to which they belong. The Revised Administrative Code (Section 89) and
the Civil Service Law itself state that the Chief Justice is the department head of the Supreme Court (Sec.
20, R.A. No. 2260) [1959]); and under the 1973 Constitution, the Judiciary is the only other or second
branch of the government (Sec. 1, Art. X, 1973 Constitution). Besides, a violation of Section 12, Rule
XVIII cannot be considered as a ground for disciplinary action against judges because to recognize the
same as applicable to them, would be adding another ground for the discipline of judges and, as
aforestated, Section 67 of the Judiciary Act recognizes only two grounds for their removal, namely,
serious misconduct and inefficiency.

Moreover, under Section 16(i) of the Civil Service Act of 1959, it is the Commissioner of Civil Service who
has original and exclusive jurisdiction "(T)o decide, within one hundred twenty days, after submission to it,
all administrative cases against permanent officers and employees in the competitive service, and, except
as provided by law, to have final authority to pass upon their removal, separation, and suspension and
upon all matters relating to the conduct, discipline, and efficiency of such officers and employees; and
prescribe standards, guidelines and regulations governing the administration of discipline" (emphasis
supplied). There is no question that a judge belong to the non-competitive or unclassified service of the
government as a Presidential appointee and is therefore not covered by the aforesaid provision. WE have
already ruled that "... in interpreting Section 16(i) of Republic Act No. 2260, we emphasized that only
permanent officers and employees who belong to the classified service come under the exclusive
jurisdiction of the Commissioner of Civil Service" (Villaluz vs. Zaldivar, 15 SCRA 710,713 [1965], Ang-
Angco vs. Castillo, 9 SCRA 619 [1963]).

Although the actuation of respondent Judge in engaging in private business by joining the Traders
Manufacturing and Fishing Industries, Inc. as a stockholder and a ranking officer, is not violative of the
provissions of Article 14 of the Code of Commerce and Section 3(h) of the Anti-Graft and Corrupt
Practices Act as well as Section 12, Rule XVIII of the Civil Service Rules promulgated pursuant to the
Civil Service Act of 1959, the impropriety of the same is clearly unquestionable because Canon 25 of the
Canons of Judicial Ethics expressly declares that:

A judge should abstain from making personal investments in enterprises which

are apt to be involved in litigation in his court; and, after his accession to the
bench, he should not retain such investments previously made, longer than a
period sufficient to enable him to dispose of them without serious loss. It is
desirable that he should, so far as reasonably possible, refrain from all relations
which would normally tend to arouse the suspicion that such relations warp or
bias his judgment, or prevent his impartial attitude of mind in the administration of
his judicial duties. ...

WE are not, however, unmindful of the fact that respondent Judge and his wife had withdrawn on January
31, 1967 from the aforesaid corporation and sold their respective shares to third parties, and it appears
also that the aforesaid corporation did not in anyway benefit in any case filed by or against it in court as
there was no case filed in the different branches of the Court of First Instance of Leyte from the time of
the drafting of the Articles of Incorporation of the corporation on March 12, 1966, up to its incorporation on
January 9, 1967, and the eventual withdrawal of respondent on January 31, 1967 from said corporation.
Such disposal or sale by respondent and his wife of their shares in the corporation only 22 days after the
incorporation of the corporation, indicates that respondent realized that early that their interest in the
corporation contravenes the aforesaid Canon 25. Respondent Judge and his wife therefore deserve the
commendation for their immediate withdrawal from the firm after its incorporation and before it became
involved in any court litigation

III

With respect to the third and fourth causes of action, complainant alleged that respondent was guilty of
coddling an impostor and acted in disregard of judicial decorum, and that there was culpable defiance of
the law and utter disregard for ethics. WE agree, however, with the recommendation of the Investigating
Justice that respondent Judge be exonerated because the aforesaid causes of action are groundless, and
WE quote the pertinent portion of her report which reads as follows:

The basis for complainant's third cause of action is the claim that respondent
associated and closely fraternized with Dominador Arigpa Tan who openly and
publicly advertised himself as a practising attorney (see Exhs. I, I-1 and J) when
in truth and in fact said Dominador Arigpa Tan does not appear in the Roll of
Attorneys and is not a member of the Philippine Bar as certified to in Exh. K.

The "respondent denies knowing that Dominador Arigpa Tan was an "impostor"
and claims that all the time he believed that the latter was a bona fide member of
the bar. I see no reason for disbelieving this assertion of respondent. It has been
shown by complainant that Dominador Arigpa Tan represented himself publicly
as an attorney-at-law to the extent of putting up a signboard with his name and
the words "Attorney-at Law" (Exh. I and 1- 1) to indicate his office, and it was but
natural for respondent and any person for that matter to have accepted that
statement on its face value. "Now with respect to the allegation of complainant
 that respondent is guilty of fraternizing with Dominador Arigpa Tan to the extent
of permitting his wife to be a godmother of Mr. Tan's child at baptism (Exh. M &
M-1), that fact even if true did not render respondent guilty of violating any canon
of judicial ethics as long as his friendly relations with Dominador A. Tan and
family did not influence his official actuations as a judge where said persons were
concerned. There is no tangible convincing proof that herein respondent gave
any undue privileges in his court to Dominador Arigpa Tan or that the latter
benefitted in his practice of law from his personal relations with respondent, or
that he used his influence, if he had any, on the Judges of the other branches of
the Court to favor said Dominador Tan.

Of course it is highly desirable for a member of the judiciary to refrain as much as

possible from maintaining close friendly relations with practising attorneys and
litigants in his court so as to avoid suspicion 'that his social or business relations
or friendship constitute an element in determining his judicial course" (par. 30,
Canons of Judicial Ethics), but if a Judge does have social relations, that in itself
would not constitute a ground for disciplinary action unless it be clearly shown
that his social relations be clouded his official actuations with bias and partiality in
favor of his friends (pp. 403-405, rec.).

In conclusion, while respondent Judge Asuncion, now Associate Justice of the Court of Appeals, did not
violate any law in acquiring by purchase a parcel of land which was in litigation in his court and in
engaging in business by joining a private corporation during his incumbency as judge of the Court of First
Instance of Leyte, he should be reminded to be more discreet in his private and business activities,
because his conduct as a member of the Judiciary must not only be characterized with propriety but must
always be above suspicion.

WHEREFORE, THE RESPONDENT ASSOCIATE JUSTICE OF THE COURT OF APPEALS IS HEREBY

REMINDED TO BE MORE DISCREET IN HIS PRIVATE AND BUSINESS ACTIVITIES.

SO ORDERED.

Teehankee, Guerrero, De Castro, Melencio-Herrera, Plana, Vasquez, Relova and Gutierrez, JJ., concur.

Concepcion Jr., J., is on leave.

Fernando, C.J., Abad Santos and Esolin JJ., took no part

 United States Supreme Court

VILAS v. CITY OF MANILA(1911)

No. 53

Argued: Decided: April 3, 1911

[220 U.S. 345, 346] Messrs. Frederic R. Coudert, Howard Thayer Kingsbury, Paul Fuller, and Harry
Weston Van Dyke for plaintiffs in error and appellants.

[220 U.S. 345, 349] Messrs. Paul Charlton andIsaac Adams for appellee.

[220 U.S. 345, 351]

Mr. Justice Lurton delivered the opinion of the court:

The plaintiffs in error, who were plaintiffs below, are creditors of the city of Manila as it existed before the
cession of the Philippine Islands to the United States by the treaty of Paris, December 10, 1898 [30 Stat.
at L. 1754]. Upon the theory that the city, under its present charter from the government of the Philippine
Islands, is the same juristic person and liable upon the obligations of the old city, these actions were
brought against it. The supreme court of the Philippine Islands denied relief, holding that the present
municipality is a totally different corporate entity, and in no way liable for the debts of the Spanish
municipality. [220 U.S. 345, 352] The fundamental question is whether, notwithstanding the cession of
the Philippine Islands to the United States, followed by a reincorporation of the city, the present
municipality is liable for the obligations of the city incurred prior to the cession to the United States.

We shall confine ourselves to the question whether the plaintiffs in error are entitled to judgments against
the city upon their several claims. Whether there is a remedy adequate to the collection when reduced to
judgment is not presented by the record. But whether there is or is not a remedy affords no reason why
the plaintiffs in error may not reduce their claims to judgment. Mt. Pleasant v. Beckwith, 100 U.S. 514,
530 , 25 S. L. ed. 699, 703. The city confessedly may be sued under its existing charter, and that implies
at least a right to judgment if they establish their demands.

The city as now incorporated has succeeded to all of the property rights of the old city and to the right to
enforce all of its causes of action. There is identity of purpose between the Spanish and American
charters and substantial identity of municipal powers. The area and the inhabitants incorporated are
substantially the same. But for the change of sovereignty which has occurred under the treaty of Paris,
the question of the liability of the city under its new charter for the debts of the old city would seem to be
of easy solution. The principal question would therefore seem to be the legal consequence of the cession
referred to upon the property rights and civil obligations of the city incurred before the cession. And so the
question was made to turn in the court below upon the consequence of a change in sovereignty and a
reincorporation of the city by the substituted sovereignty.

This disposes of the question of the jurisdiction of this court, grounded upon the absence from the petition
of the plaintiffs of any distinct claim under the treaty of Paris, since, under 10 of the Philippine organic act
[220 U.S. 345, 353] of July 1, 1902 [32 Stat. at L. 695, chap. 1369, U. S. Comp. Stat. Supp. 1909, p.
226], this court is given jurisdiction to review any final decree or judgment of the supreme court of the
Philippine Islands where any treaty of the United States 'is involved.' That treaty was necessarily
'involved,' since neither the court below nor this court can determine the continuity of the municipality nor
the liability of the city as it now exists for the obligation of the old city, without considering the effect of the
change of sovereignty resulting from that treaty. See Reavis v. Fianza, 215 U.S. 16, 22 , 54 S. L. ed. 72,
75, 30 Sup. Ct. rep. 1.

The historical continuity of a municipality embracing the inhabitants of the territory now occupied by the
city of Manila is impressive. Before the conquest of the Philippine Islands by Spain, Manila existed. The
Spaniards found on the spot now occupied a populous and fortified community of Moros. In 1571 they
occupied what was then and is now known as Manila, and established it as a municipal corporation. In
1574 there was conferred upon it the title of 'Illustrious and ever loyal city of Manila.' From time to time
there occurred amendments, and, on January 19, 1894, there was a reorganization of the city
government under a royal decree of that date. Under that charter there was power to incur debts for
municipal purposes and power to sue and be sued. The obligations here in suit were incurred under the
charter referred to, and are obviously obligations strictly within the provision of the municipal power. To
pay judgments upon such debts it was the duty of the ayuntamiento of Manila, which was the corporate
name of the old city, to make provision in its budget.

The contention that the liability of the city upon such obligations was destroyed by a mere change of
sovereignty is obviously one which is without a shadow of moral force, and, if true, must result from
settled principles of rigid law. While the contracts from which the claims in suit resulted were in progress,
war between the United [220 U.S. 345, 354] States and Spain ensued. On August 13, 1898, the city was
occupied by the forces of this government, and its affairs conducted by military authority. On July 31,
1901, the present incorporating act was passed, and the city since that time has been an autonomous
municipality. The charter in force is act 183 of the Philippine Commission, and now may be found as
chapters 68 to 75 of the compiled acts of the Philippine Commission. The 1st section of the charter of
1901 reads as follows:

'The inhabitants of the city of Manila, residing within the territory described in 2 of this act, are hereby
constituted a municipality, which shall be known as the city of Manila, and by that name shall have
perpetual succession, and shall possess all the rights of property herein granted or heretofore enjoyed
and possessed by the city of Manila as organized under Spanish sovereignty.'

The boundaries described in 2 include substantially the area and inhabitants which had theretofore
constituted the old city.

By 4 of the same act, the government of the city was invested in a municipal board.

Section 16 grants certain legislative powers to the board, and provides that it shall 'take possession of all
lands, buildings, offices, books, papers, records, moneys, credits, securities, assets, accounts, or other
property or rights belonging to the former city of Manila, or pertaining to the business or interests thereof,
and, subject to the provisions herein set forth, shall have control of all its property except the building
known as the ayuntamiento, provision for the occupation and control of which is made in 15 of this act;
shall collect taxes and other revenues, and apply the same in accordance with appropriations, as
hereinbefore provided, to the payment of the municipal expenses; shall supervise and control the
discharge of official duties by subordinates; shall institute judicial proceedings to recover property and
[220 U.S. 345, 355] funds of the city wherever found, or otherwise to protect the interests of the city, and
shall defend all suits against the city,' etc.

Section 69 of the charter expressly preserved 'all city ordinances and orders in force at the time of the
passage of this act, and not inconsistent herewith,' until modified or repealed by ordinances passed under
this act.

Section 72 is the repealing clause, and provides for the repeal of 'all acts, orders, and regulations' which
are inconsistent with the provisions of the act.

The charter contains no reference to the obligations or contracts of the old city.
If we understand the argument against the liability here asserted, it proceeds mainly upon the theory that
inasmuch as the predecessor of the present city, the ayuntamiento of Manila, was a corporate entity
created by the Spanish government, when the sovereignty of Spain in the islands was terminated by the
treaty of cession, if not by the capitulation of August 13, 1898, the municipality ipso facto disappeared for
all purposes. This conclusion is reached upon the supposed analogy to the doctrine of principal and
agent, the death of the principal ending the agency. So complete is the supposed death and annihilation
of a municipal entity by extinction of sovereignty of the creating state that it was said in one of the
opinions below that all of the public property of Manila passed to the United States, 'for a consideration,
which was paid,' and that the United States was therefore justified in creating an absolutely new
municipality, and endowing it with all of the assets of the defunct city, free from any obligation to the
creditors of that city. And so the matter was dismissed in the Trigas Case by the court of first instance, by
the suggestion that 'the plaintiff may have a claim against the Crown of Spain, which has received from
the United States payment for that done by the plaintiff.' [220 U.S. 345, 356] We are unable to agree
with the argument. It loses sight of the dual character of municipal corporations. They exercise powers
which are governmental and powers which are of a private or business character. In the one character a
municipal corporation is a governmental subdivision, and for that purpose exercises by delegation a part
of the sovereignty of the state. In the other character it is a mere legal entity or juristic person. In the latter
character it stands for the community in the administration of local affairs wholly beyond the sphere of the
public purposes for which its governmental powers are conferred.

The distinction is observed in South Carolina v. United States, 199 U.S. 437, 461 , 50 S. L. ed. 261, 269,
26 Sup. Ct. Rep. 110, 4 A. & E. Ann. Cas. 737, where Lloyd v. New York, 5 N. Y. 369, 374, 55 Am. Dec.
347, and Western Sav. Fund Soc. v. Philadelphia, 31 Pa. 175, 72 Am. Dec. 730, are cited and approved.
In Lloyd v. New York, supra, it is said:

'The corporation of the city of New York possesses two kinds of powers: one governmental and public,
and to the extent they are held and exercised, is clothed with sovereignty; the other private, and to the
extent they are held and exercised, is a legal individual. The former are given and used for public
purposes, the latter for private purposes. While in the exercise of the former, the corporation is a
municipal government; and while in the exercise of the latter, is a corporate legal individual.'

See also Dill. Mun. Corp. 4th ed. 66; Petersburg v. Applegarth, 28 Gratt. 321, 343, 26 Am. Rep. 357, and
Oliver v. Worcester, 102 Mass. 489, 3 Am. Rep. 485.
In view of the dual character of municipal corporations there is no public reason for presuming their total
dissolution as a mere consequence of military occupation or territorial cession. The suspension of such
governmental functions as are obviously incompatible with the new political relations thus brought about
may be presumed. [220 U.S. 345, 357] But no such implication may be reasonably indulged beyond that
result.

Such a conclusion is in harmony with the settled principles of public law as declared by this and other
courts and expounded by the text-books upon the laws of war and international law. Taylor, International
Pub. Law , 578.

That there is a total abrogation of the former political relations of the inhabitants of the ceded region is
obvious. That all laws theretofore in force which are in confiict with the political character, constitution, or
institutions of the substituted sovereign, lose their force, is also plain. Alvarez y Sanchez v. United States,
216 U.S. 167 , 54 L. ed. 432, 30 Sup. Ct. Rep. 367. But it is equally settled in the same public law that
that great body of municipal law which regulates private and domestic rights continues in force until
abrogated or changed by the new ruler. In Chicago, R. I. & P. R. Co. v. McGlinn, 114 U.S. 542, 546 , 29
S. L. ed. 270, 271, 5 Sup. Ct. Rep. 1005, it was said:

'It is a general rule of public law, recognized and acted upon by the United States, that whenever
political jurisdiction and legislative power over any territory are transferred from one nation or
sovereign to another, the municipal laws of the country, that is, laws which are intended for the
protection of private rights, continue in force until abrogated or changed by the new government or
sovereign. By the cession, public property passes from one government to the other, but private
property remains as before, and with it those municipal laws which are designed to secure its peaceful
use and enjoyment. As a matter of course, all laws, ordinances, and regulations in conflict with the
political character, institutions, and constitution of the new government are at once displaced. Thus,
upon a cession of political jurisdiction and legislative power-and the latter is involved in the former-to
the United States, the laws of the country in support of an established religion, or abridging the
freedom of the [220 U.S. 345, 358] press, or authorizing cruel and unusual punishments, and the
like, would at once cease to be of obligatory force without any declaration to that effect; and the laws
of the country on other subjects would necessarily be superseded by existing laws of the new
government upon the same matters. But with respect to other laws affecting the possession, use, and
transfer of property, and designed to secure good order and peace in the community, and promote its
health and prosperity, which are strictly of a municipal character, the rule is general, that a change of
 government leaves them in force until, by direct action of the new government, they are altered or
repealed.'

The above language was quoted with approval in Downes v. Bidwell, 182 U.S. 244, 298 , 45 S. L. ed.
1088, 1110, 21 Sup. Ct. Rep. 770.

That the United States might, by virtue of its situation under a treaty ceding full title, have utterly
extinguished every municipality which it found in existence in the Philippine Islands, may be conceded.
That it did so, in view of the practice of nations to the contrary, is not to be presumed, and can only be
established by cogent evidence.

That during military occupation the affairs of the city were in a large part administered by officials put in
place by military order did not operate to dissolve the corporation, or relieve it from liability upon
obligations incurred before the occupation, nor those created for municipal purposes by the
administrators of its affairs while its old officials were displaced. New Orleans v. New York Mail S. S. Co.
20 Wall. 387, 394, 22 L. ed. 354, 358. During that occupation and military administration the business of
the city was carried on as usual. Taxes were assessed and taxes collected and expended for local
purposes, and many of the officials carrying on the government were those found in office when the city
was occupied. The continuity of the corporate city was not inconsistent with military occupation or the
constitution or institutions of the occupying power. This [220 U.S. 345, 359] is made evident by the
occurrences at the time of capitulation. Thus, the articles of capitulation concluded in these words: 'This
city, its inhabitants, . . . and its private property of all descriptions, are placed under the special safeguard
of the faith and honor of the American Army.' This was quoted in President McKinley's instructions of April
7, 1900, to the Philippine Commission, and touching this he said: 'I believe that this pledge has been
faithfully kept.' And the commission was directed to labor for the full performance of this obligation. This
instruction was in line with and in fulfilment of the 8th article of the treaty of Paris of December 10, 1898.
Under the 3d article of that treaty the archipelago known as the Philippine Islands was ceded to the
United States, the latter agreeing to pay to Spain the sum of $20,000,000. Under the first paragraph of
the 8th article, Spain relinquished to the United States 'all the buildings, wharves, barracks, forts,
structures, public highways, and other immovable property which, in conformity with law, belong to the
public domain, and as such belong to the Crown of Spain.' It is under this clause, in connection with the
clause agreeing to pay to Spain $20,000,000 for the cession of the Philippine group, that the contention
that all of the public rights of the city of Manila were acquired by the United States, which country was
therefore justified, as absolute owner, in granting the property rights so acquired to what is called the
'absolutely new corporation' created thereafter. But the qualifying words touching property rights
relinquished by Spain limit the relinquishment to 'property which, in conformity with law, belonging to the
public domain, and as such belong to the Crown of Spain.' It did not affect property which did not, in
'conformity with law, belong to the Crown of Spain.' That it was not intended to apply to property which, 'in
conformity with law,' belonged to the city of Manila as a municipal cor- [220 U.S. 345, 360] poration, is
clear. This is demonstrated by the second paragraph of the same article, which reads: 'And it is hereby
declared that the relinquishment or cession, as the case may be, to which the preceding paragraph
refers, cannot in any respect impair the property or rights which by law belong to the peaceful possession
of property of all kinds, of provinces, municipalities, public or private establishments . . . having legal
capacity to acquire and possess property in the aforesaid territories renounced or ceded, or of private
individuals.' Thus, the property and property rights of municipal corporations were protected and
safeguarded precisely as were the property and property rights of individuals.

That the cession did not operate as an extinction or dissolution of corporations is herein recognized, for
the stipulation against impairment of their property rights has this plain significance.

The conclusion we reach, that the legal entity survived both the military occupation and the cession which
followed, finds support in the cases which hold that the Pueblos of San Francisco and Los Angeles, which
existed as municipal organizations prior to the cession of California by Mexico, continued to exist with
their community and property rights intact. Cohas v. Raisin, 3 Cal. 443; Hart v. Burnett, 15 Cal. 530;
Townsend v. Greeley, 5 Wall. 326, 18 L. ed. 547; Merryman v. Bourne, 9 Wall. 592, 602, 19 L. ed. 683,
686; Moore v. Steinbach, 127 U.S. 70 , 32 L. ed. 51, 8 Sup. Ct. Rep. 1067; Los Angeles Farming & Mill.
Co. v. Los Angeles, 217 U.S. 217 , 54 L. ed. 736, 30 Sup. Ct. Rep. 452.

Were corporate identity and corporate liability extinguished as a necessary legal result of the new charter
granted in 1901 by the Philippine Commission? The inhabitants of the old city are the incorporators of the
new. There is substantially identity of area. There are some changes in the form of government and some
changes in corporate powers and methods of administration. the new corporation is endowed with all of
the property and [220 U.S. 345, 361] property rights of the old. It has the same power to sue and be
sued which the former corporation had. There is not the slightest suggestion that the new corporation
shall not succeed to the contracts and obligations of the old corporation. Laying out of view any question
of the constitutional guaranty against impairment of the obligation of contracts, there is, in the absence of
express legislative declaration of a contrary purpose, no reason for supposing that the reincorporation of
an old municipality is intended to permit an escape from the obligations of the old, to whose property and
rights it has succeeded. The juristic identity of the corporation has been in no wise affected, and, in law,
the present city is, in every legal sense, the successor of the old. As such it is entitled to the property and
property rights of the predecessor corporation, and is, in law, subject to all of its liabilities. Broughton v.
Pensacola 93 U.S. 266 , 23 L. ed. 896; Mt. Pleasant v. Beckwith, 100 U.S. 520 , 25 L. ed. 699; Mobile v.
Watson, 116 U.S. 289 , 29 L. ed. 620, 6 Sup. Ct. Rep. 398; Shapleigh v. San Angelo, 167 U.S. 646, 655 ,
42 S. L. ed. 310, 313, 17 Sup. Ct. Rep. 957; O'Connor v. Memphis, 6 Lea, 730; Colchester v. Seaber, 3
Burr. 1866, 1870, in which case, when a municipality became disabled to act and obtained a new charter,
in an action upon an obligation of the old corporation, there was judgment for the creditor, Lord Mansfield
saying:

'Many corporations, for want of legal magistrates, have lost their activity, and obtained new charters.
Maidstone, Radnor, Carmarthen, and many more are in the same case with Colchester. And yet it has
never been disputed but that the new charters revive and give activity to the old corporation; except,
perhaps, in that case in Levinz, where the corporation had a new name; and even there the court
made no doubt. Where the question has arisen upon any remarkable metamorphosis, it has always
been determined 'that they remain the same as to debts and rights."

Morris v. State, 62 Tex. 728, 730. [220 U.S. 345, 362] In Shapleigh v. San Angelo, supra, this court said
in a similar case:

'The state's plenary power over its municipal corporations to change their organization, to modify their
method of internal government, or to abolish them altogether, is not restricted by contracts entered
into by the municipality with its creditors or with private parties. An absolute repeal of a municipal
charter is therefor effectual so far as it abolishes the old corporate organization; but when the same or
substantially the same inhabitants are erected into a new corporation, whether with extended or
restricted territorial limits, such new corporation is treated as in law the successor of the old one,
entitled to its property rights, and subject to its liabilities.'

The cases of Trigas and Vilas went off upon demurrers, and no question of remedy arises here.

The appeal of Aguado is from a decree upon a final hearing denying him all relief.

That all three of the plaintiffs in error are entitled to proceed to judgment when they shall establish their
several claims is obvious from what we have said. But in the Aguado Case it is sought to establish his
claim as a charge against certain property and funds held by the city as trustee, known as the Carriedo
fund. In 1734 one Don Francisco Carriedo y Perodo bequeathed to the city a fund for the establishment of
waterworks, to be kept as a separate fund and devoted to the erection and maintenance of the works.
This fund was loyally kept and greatly increased, and was enlarged by a special tax upon meat, devoted
to that purpose. The works were finally completed in 1878, and have been since operated by the city, the
income and special tax going to maintenance. Certain securities belonging to the fund are now held by
the city, the income being applied to the operation of the works. Aguado took a contract to supply coal for
the use of the [220 U.S. 345, 363] Carriedo works, and made a deposit to guarantee the contract. When
the city was occupied by the American Army it was indebted to him for coal so supplied, as well as for the
deposit so made. That the coal was bought for and used in the operation of the Carriedo works is not
denied. But there is no evidence that the credit was given to the Carriedo fund so held in trust under the
will of Carriedo. The contract was made with the ayuntamiento of Manila, just as all other contracts for city
supplies or works were made. The contract not having been made with special reference to the liability of
the fund held in trust by the city, but apparently upon the general credit of the city, we are not disposed to
reverse the judgment of the court below, holding that the claim of Aguado did not constitute a charge
upon the Carriedo fund.

Aguado is, nevertheless, entitled to a judgment. The designation of the city in the petition as trustee may
be regarded as descriptive. The debt having been incurred by the city, it must be regarded as a city
liability. Taylor v. Davis (Taylor v. Mayo), 110 U.S. 330, 336 , 28 S. L. ed. 163, 165, 4 Sup. Ct. Rep. 147.

Our conclusion is that the decree in the Aguado Case must be reversed and the case remanded, with
direction to render judgment and such other relief as may seem in conformity with law. The judgments in
the Trigas and Vilas Cases will be reversed and the cases remanded, with direction to overrule the
respective demurrers, and for such other action as may be consistent with law, and consistent with this
opinion.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-49 November 12, 1945

WILLIAM F. PERALTA, petitioner,

vs.
THE DIRECTOR OF PRISONS, respondent.

William F. Peralta in his own behalf.

Office of the Solicitor General Tañada for respondent.
City Fiscal Mabanag as amicus curiae.

FERIA, J.:

Petitioner-defendant, a member of the Metropolitan Constabulary of Manila charged with the supervision
and control of the production, procurement and distribution of goods and other necessaries as defined in
section 1 of Act No. 9 of the National Assembly of the so-called Republic of the Philippines, was
prosecuted for the crime of robbery as defined and penalized by section 2 (a) of Act No. 65 of the same
Assembly. He was found guilty and sentenced to life imprisonment, which he commenced to serve on
August 21, 1944, by the Court of Special and Exclusive Criminal Jurisdiction, created in section 1 of
Ordinance No. 7 promulgated by the President of the so-called Republic of the Philippines, pursuant to
the authority conferred upon him by the Constitution and laws of the said Republic. And the procedure
followed in the trial was the summary one established in Chapter II of Executive Order No. 157 of the
Chairman of the Executive Commission, made applicable to the trial violations of said Act No. 65 by
section 9 thereof and section 5 of said Ordinance No. 7.

The petition for habeas corpus is based on the ground that the Court of Special and Executive Criminal
Jurisdiction created by Ordinance No. 7 "was a political instrumentality of the military forces of the
Japanese Imperial Army, the aims and purposes of which are repugnant to those aims and political
purposes of the Commonwealth of the Philippines, as well as those of the United States of America, and
therefore, null and void ab initio," that the provisions of said Ordinance No. 7 are violative of the
fundamental laws of the Commonwealth of the Philippines and "the petitioner has been deprived of his
constitutional rights"; that the petitioner herein is being punished by a law created to serve the political
purpose of the Japanese Imperial Army in the Philippines, and "that the penalties provided for are much
(more) severe than the penalties provided for in the Revised Penal Code."

The Solicitor General, in his answer in behalf of the respondent, states that, in his own opinion, for the
reasons expressed in his brief in the case of People of the Philippines, plaintiff-appellant, vs. Benedicto
Jose y Santos, defendant-appellee, G. R. No. L-22 (p. 612, post), the acts and proceedings taken and
had before the said Court of Special and Exclusive Criminal Jurisdiction which resulted in the conviction
and imprisonment of the herein petitioner, should now be denied force and efficacy, and therefore the
petition for habeas corpus should be granted. The reasons advanced by the Solicitor General in said brief
and in his reply memorandum in support of his contention are, that the Court of Special and Exclusive
Criminal Jurisdiction created, and the summary procedure prescribed therefor, by said Ordinance No. 7 in
connection with Executive Order No. 157 of the Chairman of the Executive Commission are tinged with
political complexion; that the procedure prescribed in Ordinance No. 7 does not afford a fair trial, violates
the Constitution of the Commonwealth, and impairs the Constitutional rights of accused persons under
their legitimate Constitution. And he cites, in support of this last proposition, the decisions of the Supreme
Court of the United States in the cases of Texas vs. White (7 Wall., 700, 743); Horn vs. Lockart (17 Wall.,
570, 581); United States vs. Home Insurance Co. (22 Wall., 99, 104); Sprott vs. United States (20 Wall.,
459).

The City Fiscal of Manila appeared before this Court as amicus curiae. In his memorandum he submits
that the petition for habeas corpus be denied on the following grounds: That the Court of Special and
Exclusive Criminal Jurisdiction and the Acts, Ordinances and Executive Orders, creating it are not of a
political complexion, for said Court was created, and the crimes and offenses placed under its jurisdiction
were penalized heavily, in response to an urgent necessity, according to the preamble of Ordinance No.
7; that the right to appeal in a criminal case is not a constitutional right; and that the summary procedure
established in said Ordinance No. 7 is not violative of the provision of Article III, section 1 (18) of the
Constitution of the Commonwealth, to the effect that no person shall be compelled to be a witness against
himself, nor of the provision of section 1 (1) of the same Article that no person shall be deprived of life,
liberty, or property without due process of law.

The features of the summary procedure adopted by Ordinance No. 7, assailed by the petitioner and the
Solicitor General as impairing the constitutional rights of an accused are: that court may interrogate the
accused and witnesses before trial in order to clarify the points in dispute; that the refusal of the accused
to answer the questions may be considered unfavorable to him; that if from the facts admitted at the
preliminary interrogatory it appears that the defendant is guilty, he may be immediately convicted; and
that the sentence of the sentence of the court is not appealable, except in case of death penalty which
cannot be executed unless and until reviewed and affirmed by a special division of the Supreme Court
composed of three Justices.

Before proceeding further, and in order to determine the law applicable to the questions involved in the
present case, it is necessary to bear in mind the nature and status of the government established in these
Islands by the Japanese forces of occupation under the designation of Republic of the Philippines.

In the case of Co Kim Cham vs. Valdez Tan Keh and Dizon (G. R. No. L-5, pp. 113, 127, ante), recently
decided, this Court, speaking through the Justice who pens this decision, held:

In view of the foregoing, it is evident that the Philippines Executive Commission, which was
organized by Order No. 1, issued on January 23, 1942, by the Commander of the Japanese
forces, was a civil government established by the military forces of occupation and therefore a de
facto government of the second kind. It was not different from the government established by the
British in Castine, Maine, or by the United States in Tanpico, Mexico. As Halleck says, "the
government established over an enemy's territory during the military occupation may exercise all
the powers given by the laws of war to the conqueror over the conquered, and is subject to all
restrictions which that code imposes. It is of little consequence whether such government be
called a military or civil government. Its character is the same and the source of its authority the
same. In either case it is a government imposed by the laws of war and so far as it concerns the
inhabitants of such territory or the rest of the world those laws alone determine the legality or
illegality of its acts." (vol. 2 p. 466.) The fact that the Philippine Executive Commission was a civil
and not a military government and was run by Filipinos and not by Japanese nationals is of no
consequence.

And speaking of the so-called Republic of the Philippines in the same decision, this Court said:

The so-called Republic of the Philippines, apparently established and organized as a sovereign
state independent from any other government by the Filipino people, was, in truth and reality, a
government established by the belligerent occupant or the Japanese forces of occupation. It was
of the same character as the Philippine Executive Commission, and the ultimate source of its
authority was the same — the Japanese military authority and government. As General
MacArthur stated in his proclamation of October 23, 1944, a portion of which has been already
quoted, "under enemy duress, a so-called government styled as the 'Republic of the Philippines'
 was established on October 14, 1943, based upon neither the free expression of the peoples" will
nor the sanction of the Government of the United States.' Japan had no legal power to grant
independence to the Philippines or transfer the sovereignty of the United States to, or recognize
the latent sovereignty of the Filipino people, before its military occupation and possession of the
Islands had matured into an absolute and permanent dominion or sovereignty by a treaty of
peace or other means recognized in the law of nations.

As the so-called Republic of the Philippines was a de facto government of the second kind (of paramount
force), as the government established in Castine, Maine, during its occupation by the British forces and
as that of Tampico, Mexico, occupied during the war with that the country by the United State Army, the
question involved in the present case cannot be decided in the light of the Constitution of the
Commonwealth Government; because the belligerent occupant was totally independent of the
constitution of the occupied territory in carrying out the administration over said territory; and the doctrine
laid down by the Supreme Court of the United States in the cases involving the validity of judicial and
legislative acts of the Confederate States, considered as de facto governments of the third kind, does not
apply to the acts of the so-called Republic of the Philippines which is a de facto government of paramount
force. The Constitution of the so-called Republic of the Philippines can neither be applied, since the
validity of an act of a belligerent occupant cannot be tested in the light of another act of the same
occupant, whose criminal jurisdiction is drawn entirely from the law martial as defined in the usages of
nations.

In the case of United States vs. Rice (4 Wheaton, 246), the Supreme Court of the United States held that,
by the military occupation of Castine, Maine, the sovereignty of the United States in the territory was, of
course, suspended, and the laws of the United States could no longer be rightfully enforced there or be
obligatory upon the inhabitants who remained and submitted to the belligerent occupant. By the surrender
the inhabitants passed under a temporary allegiance to the British government, and were bound by such
laws, and such only, as it chose to recognize and impose. And Oppenheim, in his Treatise on
International Law, says that, in carrying out the administration over the occupied territory and its
inhabitants, "the (belligerent) occupant is totally independent of the constitution and the laws of the
territory, since occupation is an aim of warfare, and the maintenance and safety of his forces, and the
purpose of war, stand in the foreground of his interest and must be promoted under all circumstances or
conditions. (Vol. II, Sixth Edition, Revised, 1944, p. 342.)

The doctrine laid down in the decisions of the Supreme Court of the United States (in the cases of Texas
vs. White, 7 Wall., 700; Horn vs. Lockart, 17 Wall., 570; Williams vs. Bruffy, 96 U. S., 176 United States
vs. Home Insurance Co., 20 Wall., 249; Sprott vs. United States, 20 Wall., 459, and others) that the
judicial and legislative acts of the Confederate States which impaired the rights of the citizens under the
Constitution of the United States or of the States, or were in conflict with those constitutions, were null
and void, is not applicable to the present case. Because that doctrine rests on the propositions that "the
concession (of belligerency) made to the Confederate Government . . . sanctioned no hostile legislation . .
. and it impaired in no respect the rights of loyal and citizens as they existed at the commencement of
hostilities" (Williams vs. Bruffy, supra);that the Union is perpetual and indissoluble, and the obligation of
allegiance to the to the estate and obedience to her laws and the estate constitution, subject to the
Constitution of the United States, remained unimpaired during the War of Secession (Texas vs. White,
supra) and that the Confederate States "in most, if not in all instances, merely transferred the existing
state organizations to the support of a new and different national head. the same constitution, the same
laws for the protection of the property and personal rights remained and were administered by the same
officers." (Sprott vs. United States, supra). In fine, because in the case of the Confederate States, the
constitution of each state and that of the United States or the Union continued in force in those states
during the War of Secession; while the Constitution of the Commonwealth Government was suspended
during the occupation of the Philippines by the Japanese forces of the belligerent occupant at regular war
with the United States.

The question which we have to resolve in the present case in the light of the law of nations are, first, the
validity of the creation of the Court of Special and Exclusive Criminal Jurisdiction, and of the summary
procedure adopted for that court; secondly, the validity of the sentence which imprisonment during the
Japanese military occupation; and thirdly, if they were then valid, the effect on said punitive sentence of
the reoccupation of the Philippines and the restoration therein of the Commonwealth Government.

(1) As to the validity of the creation of the Court of Special and Exclusive Criminal Jurisdiction by
Ordinance No. 7, the only factor to be considered is the authority of the legislative power which
promulgated said law or ordinance. It is well established in International Law that "The criminal jurisdiction
established by the invader in the occupied territory finds its source neither in the laws of the conquering or
conquered state, — it is drawn entirely form the law martial as defined in the usages of nations. The
authority thus derived can be asserted either through special tribunals, whose authority and procedure is
defined in the military code of the conquering state, or through the ordinary courts and authorities of the
occupied district." (Taylor, International Public Law, p. 598.) The so-called Republic of the Philippines,
being a governmental instrumentality of the belligerent occupant, had therefore the power or was
competent to create the Court of Special and Exclusive Criminal Jurisdiction. No question may arise as to
whether or not a court is of political complexion, for it is mere a governmental agency charged with the
duty of applying the law to cases falling within its jurisdiction. Its judgments and sentences may be of
political complexion, or not depending upon the nature or character of the law so applied. There is no
room for doubt, therefore, as to the validity of the creation of the court in question.

With respect to the Summary procedure adopted by Ordinance No. 7, and followed in the trial of the case
which resulted in the conviction of the herein petitioner, there is also no question as to the power or
competence of the belligerent occupant to promulgate the law providing for such procedure. For "the
invader deals freely with the relations of the inhabitants of the occupied territory towards himself . . . for
his security also, he declares certain acts, not forbidden by the ordinary laws of the country, to be
punishable; and he so far suspends the laws which guard personal liberty as is required for the summary
punishment of any one doing such acts." (Hall's International Law, seventh ed., p. 5000). A belligerent
"occupant may where necessary, set up military courts instead of the ordinary courts; and in case, and in
so far as, he admits the administration of justice by the ordinary courts, he may nevertheless, so far as is
necessary for military purposes, or for the maintenance of public order and safety temporarily alter the
laws, especially the Criminal Law, on the basis of which justice is administered as well as the laws
regarding procedure." (Oppenheim's International Law, Vol. II, sixth edition, 1944, p.349.)

No objection can be set up to the legality of its provisions in the light of the precepts of our
Commonwealth Constitution relating to the rights of accused under that Constitution, because the latter
was not in force during the period of the Japanese military occupation, as we have already stated. Nor
may said Constitution be applied upon its revival at the time of the re-occupation of the Philippines by
virtue of the principle of postliminium because "a constitution should operate prospectively only, unless
the words employed show a clear intention that it should have a retrospective effect" (Cooley's
Constitutional Limitations, seventh edition, page 97, and cases quoted and cited in the footnote),
especially as regards laws of procedure applied to cases already terminated completely.

The only restrictions or limitations imposed upon the power of a belligerent occupant to alter the laws or
promulgate new ones, especially the criminal law as well as the laws regarding procedure, so far as it is
necessary for military purposes, that is, for his control of the territory and the safety and protection of his
army, are those imposed by the Hague Regulations, the usages established by civilized nations, the laws
of humanity and the requirements of public conscience. It is obvious that the summary procedure under
consideration does not violate those precepts. It cannot be considered as violating the laws of humanity
and public conscience, for it is less objectionable, even from the point of view of those who are used to
the accusatory system of criminal procedure than the procedural laws based on the semi-inquisitorial or
mixed system prevailing in France and other countries in continental Europe.

(2) The validity of the sentence rendered by the Court of Special and Exclusive Criminal Jurisdiction
which imposes life imprisonment upon the herein petitioner, depends upon the competence or power of
the belligerent occupant to promulgate Act No. 65 which punishes the crime of which said petitioner was
convicted.
Westlake says that Article XLIII, Section III, of the Hague Conventions of 1907 "indicates that the laws to
be enforced by the occupant consist of, first, the territorial law in general, as that which stands to the
public order and social and commercial life of the district in a relation of mutual adaptation, so that any
needless displacement of it would defeat the object which the invader is enjoined to have in view, and
secondly, such variations of the territorial law as may be required by real necessity and are not expressly
prohibited by any of the rules which will come before us. Such variations will naturally be greatest in what
concerns the relation of the communities and individuals within the district to the invading army and its
followers, it being necessary for the protection of the latter, and for the unhindered prosecution of the war
by them, that acts committed to their detriment shall not only lose what justification the territorial law might
give them as committed against enemies, but shall be repressed more severely than the territorial law
would repress acts committed against fellow subjects. Indeed the entire relation between the invaders
and the invaded, so far as it may fall within the criminal department whether by the intrinsic nature of the
acts done or in consequence of the regulations made by the invaders, may be considered as taken out of
the territorial law and referred to what is called martial law." (Westlake, International Law, Part II, War, p.
96.)

According to Hyde (International Law, Vol. II, p. 386), the term "martial law," in so far as it is used to
describe any fact in relation to belligerent occupation, does not refer to a particular code or system of law,
or to a special agency entrusted with its administration. The term merely signifies that the body of law
actually applied, having the sanction of military authority, is essentially martial. All law, by whomsoever
administered, in an occupied district martial law; and it is none the less so when applied by civil courts in
matters devoid of special interest to the occupant. The words "martial law" are doubtless suggestive of
the power of the occupant to share the law as he sees fit; that is, to determine what shall be deemed
lawful or unlawful acts, to establish tests for ascertaining the guilt of offenders, to fix penalties, and
generally to administer justice through such agencies as the found expedient.

And the United States Rules of Land Warfare provide that the belligerent occupant may promulgate such
new laws and regulations as military necessity demands, and in this class will be included those laws
which come into being as a result of military rule; that is, those which establish new crimes and offenses
incident to a state of war and are necessary for the control of the country and the protection of the army,
for the principal object of the occupant is to provide for the security of the invading army and to contribute
to its support and efficiency and the success of its operations. (Pub. 1940, pp. 76, 77.)

From the above it appears clear that it was within the power and competence of the belligerent occupant
to promulgate, through the National Assembly of the so-called Republic of the Philippines, Act No. 65 of
the said Assembly, which penalizes the crimes of robbery and other offenses by imprisonment ranging
from the maximum period of the imprisonment prescribed by the laws and ordinances promulgated by the
President of the so-called Republic as minimum, to life imprisonment or death as maximum. Although
these crimes are defined in the Revised Penal Code, they were altered and penalized by said Act No. 65
with different and heavier penalties, as new crimes and offenses demanded by military necessity, incident
to a state of war, and necessary for the control of the country by the belligerent occupant, the protection
and safety of the army of occupation, its support and efficiency, and the success of its operations.

They are not the same ordinary offenses penalized by the Revised Penal Code. — The criminal acts
penalized by said Act No. 65 are those committed by persons charged or connected with the supervision
and control of the production, procurement and distribution of foods and other necessaries; and the
penalties imposed upon the violators are different from and much heavier than those provided by the
Revised Penal Code for the same ordinary crimes. The acts penalized by said Act were taken out of the
territorial law or Revised Penal Code, and referred to what is called martial law by international jurists,
defined above by Hyde, in order, not only to prevent food and other necessaries from reaching the
"guerrillas" which were harassing the belligerent occupant from every nook and corner of the country, but
also to preserve the food supply and other necessaries in order that, in case of necessity, the Imperial
Japanese forces could easily requisition them, as they did, and as they had the right to do in accordance
with the law of nations for their maintenance and subsistence (Art. LII, Sec. III, Hague Conventions of
1907). Especially taking into consideration the fact, of which this court may take judicial notice, that the
Imperial Japanese Army had depended mostly for their supply upon the produce of this country.

The crimes penalized by Act No. 65 — as well as the crimes against national security and the law of
nations, to wit: treason, espionage, inciting war, violation of neutrality, correspondence with hostile
country, flight to enemy's country, piracy; and the crimes against public order, such as rebellion, sedition
and disloyalty, illegal possession of firearms and other, penalized by Ordinance No. 7 and placed under
jurisdiction of the Court of Special and Exclusive Criminal Jurisdiction — are all of a political complexion,
because the acts constituting those offenses were punished, as are all political offenses, for public rather
than private reasons, and were acts in aid or favor of the enemy and against the welfare, safety and
security of the belligerent occupant. While it is true that these offenses, when committed against the
Commonwealth or United States Government, are defined and also penalized by the territorial law
Revised Penal Code, they became inapplicable as crimes against the occupier upon the occupation of
the Islands by the Japanese forces. And they had to be taken out of the territorial law and made
punishable by said Ordinance No. 7, for they were not penalized before under the Revised Penal Code
when committed against the belligerent occupant or the government established by him in these Island.
They are also considered by some writers as war crimes in a broad sense. In this connection Wheaton
observes the following:

"Of 'war crimes' the number is naturally indefinite, depending as they do on the acts from time to time
ordered to be done or forbidden to be done in the martial law proclamation or regulations of the invading
or occupying commander. Thus, in the Anglo-Boer war, the British military authorities proclaimed the
following to be offenses against their martial law; — Being in possession of arms, ammunition, etc.;
traveling without a permit; sending prohibited goods; holding meetings other than those allowed; using
seditious language; spreading alarmist reports; overcharging for goods; wearing uniforms without due
authority; going out of doors between certain hours; injuring military animals or stores; being in
possession, without a permit, of horses, vehicles, cycles, etc.; hindering those in execution of military
orders; trespassing on defense works. Such offenses, together with several others, were specified in the
Japanese regulations made in the Russo-Japanese war." (Wheaton's International Law, War, seventh
edition, 1944, p. 242.)

It is, therefore, evident that the sentence rendered by the Court of Special and Exclusive Criminal
Jurisdiction against the petitioner, imposing upon him the penalty of life imprisonment, was good and
valid, since it was within the admitted power or competence of the belligerent occupant to promulgate the
law penalizing the crime of which petitioner was convicted.

(3) The last question is the legal effect of the reoccupation of the Philippines and restoration of the
Commonwealth Government; that is whether or not, by the principle of postliminy, the punitive sentence
which petitioner is now serving fell through or ceased to be valid from that time.

In order to resolve this last question, it is not necessary to enter into an elaborate discussion on the
matter. It is sufficient to quote the opinion on the subject of several international jurists and our recent
decision in the case of Co Kim Cham vs. Valdez Tan Keh and Dizon, supra.

Hall, commenting on the effect of the principle of postliminy upon sentences of the tribunals continued or
created by the belligerent occupant, opines "that judicial acts done under this control, when they are not
of a political complexion, administrative acts so done, to the extent that they take effect during the
continuance of his control, and the various acts done during the same time by private persons under the
sanction of municipal law, remain good. . . . Political acts on the other hand fall through as of course,
whether they introduce any positive change into the organization of the country, or whether they only
suspend the working of that already in existence. The execution also of punitive sentences ceases as of
course when they have had reference to acts not criminal by the municipal law of the state, such for
example as acts directed against the security or control of the invader." (Hall's International Law, seventh
edition, p. 518.)
Westlake, speaking of the duration of the validity of punitive sentences for offenses such as the one in
question, which is within the admitted power or competence of the belligerent occupant to punish, says
that: "To the extent to which the legal power of the occupant is admitted he can make law for the duration
of his occupation. Like any other legislator he is morally subject to the duty of giving sufficient notice of his
enactments or regulations, not indeed so as to be debarred from carrying out his will without notice, when
required by military necessity and so far as practically carrying out his will can be distinguished from
punishment, but always remembering that to punish for breach of a regulation a person who was
justifiably ignorant of it would be outrageous. But the law made by the occupant within his admitted
power, whether morally justifiable or not, will bind any member of the occupied population as against any
other member of it, and will bind as between them all and their national government, so far as it produces
an effect during the occupation. When the occupation comes to an end the authority of the national
government is restored, either by the progress of operations during the war or by the conclusion of a
peace, no redress can be had for what has been actually carried out but nothing further can follow from
the occupant's legislation. A prisoner detained under it must be released, and no civil right conferred by it
can be further enforced. The enemy's law depends on him for enforcement as well as for enactment. The
invaded state is not subject to the indignity of being obliged to execute his commands. (Westlake,
International Law, Part II, War, pp. 97, 98.)

And Wheaton, who, as above stated, considers as war crimes such offenses as those penalized in
Ordinance No. 7 and Act No. 65, says: "In general, the cast of the occupant possess legal validity, and
under international law should not be abrogated by the subsequent government. But this rule does not
necessarily apply to acts that exceed the occupant's power (e.g., alienation of the domains of the State or
the sovereign), to sentences for 'war treason' and 'war crimes,' to acts of a political character, and to
those that beyond the period of occupation. When occupation ceases, no reparation is legally due for
what has already been carried out." (Wheaton's International Law, supra, p. 245.)

We have already held in our recent decision in the case of Co Kim Cham vs. Valdez Tan Keh and Dizon,
supra, that all judgments of political complexion of the courts during the Japanese regime, ceased to be
valid upon the reoccupation of the islands by virtue of the principle or right of postliminium. Applying that
doctrine to the present case, the sentence which convicted the petitioner of a crime of a political
complexion must be considered as having ceased to be valid ipso facto upon the reoccupation or
liberation of the Philippines by General Douglas MacArthur.

It may not be amiss to say in this connection that it is not necessary and proper to invoke the
proclamation of General Douglas MacArthur declaring null and void all laws, among them Act No. 65, of
the so-called Republic of the Philippines under which petitioner was convicted, in order to give retroactive
effect to the nullification of said penal act and invalidate sentence rendered against petitioner under said
law, a sentence which, before the proclamation, had already become null and of no effect.

We therefore hold that the punitive sentence under consideration, although good and valid during the
military occupation of the Philippines by the Japanese forces, ceased to be good and valid ipso facto
upon the reoccupation of these Island and the restoration therein of the Commonwealth Government.

In view of all the foregoing, the writ of habeas corpus prayed for is hereby granted and it is ordered that
the petitioner be released forthwith, without pronouncement as to costs. So ordered.

Jaranilla, Pablo and Bengzon, JJ., concur.

Moran, C.J., concurs in the result.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-6 November 29, 1945

ANICETO ALCANTARA, petitioner,

vs.
DIRECTOR OF PRISONS, respondent.

Buenaventura B. Martinez for petitioner.

Office of the Solicitor General Tañada for respondent.

FERIA, J.:

This is a petition for the issuance of a writ of habeas corpus and for the release of the petitioner on the
ground that the latter is unlawfully imprisoned and restrained of his liberty by the respondent Director of
Prison in the provincial jail at Vigan, Ilocos Sur.

Petitioner was convicted by the Court First Instance of Ilocos Sur (Criminal case No. 23) of the crime of
illegal discharge of firearms with less serious physical injuries. Upon appeal, the Court of Appeals of
Northern Luzon at Baguio modified said sentence (CA- G.R. No. 790)and sentence the petitioner to an
indeterminate penalty of from four months four months and twenty-one days of arresto mayor to three
years, nine months and three days of prison correccional. The sentence as modified became final on
September 12, 1944, and June 23, 1945, petitioner commenced serving his sentence.

Petitioner now questions the validity of the decision of the Court of Appeals of Northern Luzon, on the
sole ground that said court was only a creation of the so-called Republic of the Philippines during the
Japanese military occupation of the Islands; that the Court of Appeals was not authorized by
Commonwealth Act No. 3 to hold sessions in Baguio, and that only the two Justices constituted the
majority which promulgated the decision in question. The petitioner does not question the validity of said
decision on the strength of the Proclamation of General Douglas McArthur of October 23, 1944, which
according to our decision in the case of Co Kim Cham vs. Valdez Tan Keh and Dizon, G.R. No. L-5 (p.
113, ante), does not refer to judicial processes.

In the said case of Co Kim Cham vs. Valdez Tan Keh and Dizon, this Court ruled that the so-called
Republic of the Philippines and the Philippine Executive Commission established in the Philippines during
the Japanese regime were governments de facto organized by the belligerent occupant by the judicial
acts thereof were good and valid and remained good and valid after the restoration of the Commonwealth
Government, except those a political complexion. In that the same case this Court held that the Court of
Appeals which was continued throughout the Japanese occupation, was the same Court of Appeals
existed prior to the Japanese occupation and was lately abolished by Executive Order No. 37. The
division of the Court of Appeals into several District Court of Appeals, and the reduction of the number of
Justices sitting in each division, the regime of the so-called Republic effected no substantial change in its
nature and jurisdiction.

Even assuming that the Court of Appeals of Northern Luzon was a new court created by the belligerent
occupant or the de facto governments established by him, the judgments of such court, like those of the
court which were continued during the Japanese occupation, were good and valid and remain good and
valid, and therefore enforceable now after the liberation or occupation of the Philippines, provided that
such judgments do not have a political complexion, as this court held in its decision in the
abovementioned case of Co Kim Cham vs. Valdez Tan Keh and Dizon supra, in accordance with the
authorities therein cited.

Obviously, the sentence which petitioner is now serving has no political complexion. He was charged with
and convicted of an offense punishable under the municipal law of the Commonwealth, the Revised
Penal Code. Therefore, the sentence of the Court of First Instance of Ilocos Sur, as modified by the Court
of Appeals of Northern Luzon, is valid and enforceable.

A punitive or penal sentence is said to of a political complexion when it penalizes either a new act not
defined in the municipal laws, or acts already penalized by the latter as a crime against the legitimate
government, but taken out of the territorial law and penalized as a new offenses committed against
belligerent occupant, incident to a state of a war and necessary for the control of the occupied territory
and the protection of the army of the occupier. They are acts penalized for public rather than private
reasons, acts which tend, directly or indirectly, to aid or favor the enemy and are directed against the
welfare, safety and security, of the belligerent occupant. As example, the crimes against national security
, such as treason, espionage, etc., and against public order, such as rebellion, sedition, etc., were crimes
against the Commonwealth or United States Government under the Revised Penal Code, which were
made crimes against the belligerent occupant.

In view of the foregoing, the petitioner for the writ of habeas corpus is denied.

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