THE CONCEPT OF THE STATE

EN BANC

[G.R. No. L-9657. November 29, 1956.]

LEOPOLDO T. BACANI and MATEO A. MATOTO, Plaintiffs-Appellees, vs. NATIONAL

COCONUT CORPORATION, ET AL., Defendants, NATIONAL COCONUT CORPORATION
and BOARD OF LIQUIDATORS, Defendants-Appellants.

DECISION

BAUTISTA ANGELO, J.:

Plaintiffs herein are court stenographers assigned in Branch VI of the Court of First Instance of Manila.
During the pendency of Civil Case No. 2293 of said court, entitled Francisco Sycip vs. National Coconut
Corporation, Assistant Corporate Counsel Federico Alikpala, counsel for Defendant, requested said
stenographers for copies of the transcript of the stenographic notes taken by them during the hearing.
Plaintiffs complied with the request by delivering to Counsel Alikpala the needed transcript containing
714 pages and thereafter submitted to him their bills for the payment of their fees. The National Coconut
Corporation paid the amount of P564 to Leopoldo T. Bacani and P150 to Mateo A. Matoto for said
transcript at the rate of P1 per page.

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

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

1
Under section 16, Rule 130 of the Rules of Court, the Government of the Philippines is exempt from
paying the legal fees provided for therein, and among these fees are those which stenographers may
charge for the transcript of notes taken by them that may be requested by any interested person (section
8). The fees in question are for the transcript of notes taken during the hearing of a case in which the
National Coconut Corporation is interested, and the transcript was requested by its assistant corporate
counsel for the use of said corporation.

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

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

The question now to be determined is whether the National Coconut Corporation may be considered as
included in the term “Government of the Republic of the Philippines” for the purposes of the exemption
of the legal fees provided for in Rule 130 of the Rules of Court.

As may be noted, the term “Government of the Republic of the Philippines” refers to a government entity
through which the functions of government are exercised, including the various arms through which
political authority is made effective in the Philippines, whether pertaining to the central government or to
the provincial or municipal branches or other form of local government. This requires a little digression
on the nature and functions of our government as instituted in our Constitution.

To begin with, we state that the term “Government” may be defined as “that institution or aggregate of
institutions by which an independent society makes and carries out those rules of action which are
necessary to enable men to live in a social state, or which are imposed upon the people forming that
society by those who possess the power or authority of prescribing them” (U.S. vs. Dorr, 2 Phil., 332).
This institution, when referring to the national government, has reference to what our Constitution has
established composed of three great departments, the legislative, executive, and the judicial, through
which the powers and functions of government are exercised. These functions are
twofold:chanroblesvirtuallawlibrary constitute and ministrant. The former are those which constitute the
very bonds of society and are compulsory in nature; chan roblesvirtualawlibrarythe latter are those that
are undertaken only by way of advancing the general interests of society, and are merely optional.
President Wilson enumerates the constituent functions as follows:chanroblesvirtuallawlibrary

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

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

2
‘(3) The regulation of the holding, transmission, and interchange of property, and the determination of its
liabilities for debt or for crime.

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

‘(5) The definition and punishment of crime.

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

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

‘(8) Dealings of the state with foreign powers:chanroblesvirtuallawlibrary the preservation of the state
from external danger or encroachment and the advancement of its international interests.’“ (Malcolm, The
Government of the Philippine Islands, p. 19.)

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

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

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

The answer is simple:chanroblesvirtuallawlibrary they do not acquire that status for the simple reason that
they do not come under the classification of municipal or public corporation. Take for instance the
National Coconut Corporation. While it was organized with the purpose of “adjusting the coconut
industry to a position independent of trade preferences in the United States” and of providing “Facilities
for the better curing of copra products and the proper utilization of coconut by-products”, a function
which our government has chosen to exercise to promote the coconut industry, however, it was given a
corporate power separate and distinct from our government, for it was made subject to the provisions of
our Corporation Law in so far as its corporate existence and the powers that it may exercise are concerned
(sections 2 and 4, Commonwealth Act No. 518). It may sue and be sued in the same manner as any other

3
private corporations, and in this sense it is an entity different from our government. As this Court has
aptly said, “The mere fact that the Government happens to be a majority stockholder does not make it a
public corporation” (National Coal Co. vs. Collector of Internal Revenue, 46 Phil., 586-587). “By
becoming a stockholder in the National Coal Company, the Government divested itself of its sovereign
character so far as respects the transactions of the corporation cralaw . Unlike the Government, the
corporation may be sued without its consent, and is subject to taxation. Yet the National Coal Company
remains an agency or instrumentality of government.” (Government of the Philippine Islands vs. Springer,
50 Phil., 288.)

To recapitulate, we may mention that the term “Government of the Republic of the Philippines” used in
section 2 of the Revised Administrative Code refers only to that government entity through which the
functions of the government are exercised as an attribute of sovereignty, and in this are included those
arms through which political authority is made effective whether they be provincial, municipal or other
form of local government. These are what we call municipal corporations. They do not include
government entities which are given a corporate personality separate and distinct from the government
and which are governed by the Corporation Law. Their powers, duties and liabilities have to be
determined in the light of that law and of their corporate charters. They do not therefore come within the
exemption clause prescribed in section 16, Rule 130 of our Rules of Court.

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

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

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

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

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

4
contractual and as such is valid even if it goes beyond the limit prescribed in section 8, Rule 130 of the
Rules of Court.

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

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

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

5
 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

6
 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

7
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

8
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.

9
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

10
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

11
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.

12
 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.

13
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:

14
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.

15
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

16
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

17
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

18
"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,

19
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

20
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

21
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

22
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-

23
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

24
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.

25
 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

26
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

27
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

28
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

29
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.)

30
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.

31
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

32
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

33
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

34
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

35
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

36
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

37
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.

38
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.

39
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. L-36409 October 26, 1973

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
LORETA GOZO, defendant-appellant.
Office of the Solicitor General Felix Q. Antonio, Assistant Solicitor General Jaime M. Lantin and
Solicitor Norberto P. Eduardo for plaintiff-appellee.
Jose T. Nery for defendant-appellant.

FERNANDO, J.:
Appellant seeks to set aside a judgment of the Court of First Instance of Zambales, convicting her of a
violation of an ordinance of Olongapo, Zambales, requiring a permit from the municipal mayor for the
construction or erection of a building, as well as any modification, alteration, repair or demolition thereof.
She questions its validity, or at the very least, its applicability to her, by invoking due process, 1 a
contention she would premise on what for her is the teaching of People v. Fajardo.2 If such a ground were
far from being impressed with solidity, she stands on quicksand when she would deny the applicability of
the ordinance to her, on the pretext that her house was constructed within the naval base leased to the
American armed forces. While yielding to the well-settled doctrine that it does not thereby cease to be
Philippine territory, she would, in effect, seek to emasculate our sovereign rights by the assertion that we
cannot exercise therein administrative jurisdiction. To state the proposition is to make patent how much it
is tinged with unorthodoxy. Clearly then, the lower court decision must be affirmed with the sole
modification that she is given thirty days from the finality of a judgment to obtain a permit, failing which,
she is required to demolish the same.
The facts are undisputed. As set forth in the decision of the lower court: "The accused bought a house and
lot located inside the United States Naval Reservation within the territorial jurisdiction of Olongapo City.
She demolished the house and built another one in its place, without a building permit from the City
Mayor of Olongapo City, because she was told by one Ernesto Evalle, an assistant in the City Mayor's
office, as well as by her neighbors in the area, that such building permit was not necessary for the
construction of the house. On December 29, 1966, Juan Malones, a building and lot inspector of the City
Engineer's Office, Olongapo City, together with Patrolman Ramon Macahilas of the Olongapo City police
force apprehended four carpenters working on the house of the accused and they brought the carpenters to
the Olongapo City police headquarters for interrogation. ... After due investigation, Loreta Gozo was
charged with violation of Municipal Ordinance No. 14, S. of 1964 with the City Fiscal's Office." 3 The
City Court of Olongapo City found her guilty of violating Municipal Ordinance No. 14, Series of 1964
and sentenced her to an imprisonment of one month as well as to pay the costs. The Court of Instance of
Zambales, on appeal, found her guilty on the above facts of violating such municipal ordinance but would
sentence her merely to pay a fine of P200.00 and to demolish the house thus erected. She elevated the
case to the Court of Appeals but in her brief, she would put in issue the validity of such an ordinance on
constitutional ground or at the very least its applicability to her in view of the location of her dwelling

40
within the naval base. Accordingly, the Court of Appeals, in a resolution of January 29, 1973, noting the
constitutional question raised, certified the case to this Court.
There is, as mentioned in the opening paragraph of this petition, no support in law for the stand taken by
appellant.
1. It would be fruitless for her to assert that local government units are devoid of authority to require
building permits. This Court, from Switzer v. Municipality of
Cebu,4 decided in 1911, has sanctioned the validity of such measures. It is much too late in the day to
contend that such a requirement cannot be validly imposed. Even appellant, justifiably concerned about
the unfavorable impression that could be created if she were to deny that such competence is vested in
municipal corporations and chartered cities, had to concede in her brief: "If, at all; the questioned
ordinance may be predicated under the general welfare clause ... ." 5 Its scope is wide, well-nigh all
embracing, covering every aspect of public health, public morals, public safety, and the well being and
good order of the community.6
It goes without saying that such a power is subject to limitations. Certainly, if its exercise is violative of
any constitutional right, then its validity could be impugned, or at the very least, its applicability to the
person adversely affected could be questioned. So much is settled law. Apparently, appellant has adopted
the view that a due process question may indeed be raised in view of what for her is its oppressive
character. She is led to such a conclusion, relying on People v. Fajardo.7 A more careful scrutiny of such
a decision would not have led her astray, for that case is easily distinguishable. The facts as set forth in
the opinion follow: "It appears that on August 15, 1950, during the incumbency of defendant-appellant
Juan F. Fajardo as mayor of the municipality of Baao, Camarines Sur, the municipal council passed the
ordinance in question providing as follows: "... 1. Any person or persons who will construct or repair a
building should, before constructing or repairing, obtain a written permit from the Municipal Mayor. ... 2.
A fee of not less than P2.00 should be charged for each building permit and P1.00 for each repair permit
issued. ... 3. [Penalty]-Any violation of the provisions of the above, this ordinance, shall make the violator
liable to pay a fine of not less than P25 nor more than P50 or imprisonment of not less than 12 days nor
more than 24 days or both, at the discretion of the court. If said building destroys the view of the Public
Plaza or occupies any public property, it shall be removed at the expense of the owner of the building or
house. ... ." Four years later, after the term of appellant Fajardo as mayor had expired, he and his son-in-
law, appellant Babilonia, filed a written request with the incumbent municipal mayor for a permit to
construct a building adjacent to their gasoline station on a parcel of land registered in Fajardo's name,
located along the national highway and separated from the public plaza by a creek ... . On January 16,
1954, the request was denied, for the reason among others that the proposed building would destroy the
view or beauty of the public plaza ... . On January 18, 1954, defendants reiterated their request for a
building permit ..., but again the request was turned down by the mayor. Whereupon, appellants
proceeded with the construction of the building without a permit, because they needed a place of
residence very badly, their former house having been destroyed by a typhoon and hitherto they had been
living on leased property."8
Clearly then, the application of such an ordinance to Fajardo was oppressive. A conviction therefore for a
violation thereof both in the justice of the peace court of Baao, Camarines Sur as well as in the Court of
First Instance could not be sustained. In this case, on the contrary, appellant never bothered to comply
with the ordinance. Perhaps aware of such a crucial distinction, she would assert in her brief: "The
evidence showed that even if the accused were to secure a permit from the Mayor, the same would not
have been granted. To require the accused to obtain a permit before constructing her house would be an

41
exercise in futility. The law will not require anyone to perform an impossibility, neither in law or in fact:
... ."9 It would be from her own version, at the very least then, premature to anticipate such an adverse
result, and thus to condemn an ordinance which certainly lends itself to an interpretation that is neither
oppressive, unfair, or unreasonable. That kind of interpretation suffices to remove any possible question
of its validity, as was expressly announced in Primicias v. Fugoso. 10 So it appears from this portion of
the opinion of Justice Feria, speaking for the Court: "Said provision is susceptible of two constructions:
one is that the Mayor of the City of Manila is vested with unregulated discretion to grant or refuse to grant
permit for the holding of a lawful assembly or meeting, parade, or procession in the streets and other
public places of the City of Manila; and the other is that the applicant has the right to a permit which shall
be granted by the Mayor, subject only to the latter's reasonable discretion to determine or specify the
streets or public places to be used for the purpose, with a view to prevent confusion by overlapping, to
secure convenient use of the streets and public places by others, and to provide adequate and proper
policing to minimize the risk of disorder. After a mature deliberation, we have arrived at the conclusion
that we must adopt the second construction, that is, construe the provisions of the said ordinance to mean
that it does not confer upon the Mayor the power to refuse to grant the permit, but only the discretion, in
issuing the permit, to determine or specify the streets or public places where the parade or procession may
pass or the meeting may be held." 11 If, in a case affecting such a preferred freedom as the right to
assembly, this Court could construe an ordinance of the City of Manila so as to avoid offending against a
constitutional provision, there is nothing to preclude it from a similar mode of approach in order to show
the lack of merit of an attack against an ordinance requiring a permit. Appellant cannot therefore take
comfort from any broad statement in the Fajardo opinion, which incidentally is taken out of context,
considering the admitted oppressive application of the challenged measure in that litigation. So much then
for the contention that she could not have been validly convicted for a violation of such ordinance. Nor
should it be forgotten that she did suffer the same fate twice, once from the City Court and thereafter from
the Court of First Instance. The reason is obvious.Such ordinance applies to her.
2. Much less is a reversal indicated because of the alleged absence of the rather novel concept of
administrative jurisdiction on the part of Olongapo City. Nor is novelty the only thing that may be said
against it. Far worse is the assumption at war with controlling and authoritative doctrines that the mere
existence of military or naval bases of a foreign country cuts deeply into the power to govern. Two
leading cases may be cited to show how offensive is such thinking to the juristic concept of
sovereignty, People v. Acierto, 12 and Reagan v. Commissioner of Internal Revenue. 13 As was so
emphatically set forth by Justice Tuason in Acierto: "By the Agreement, it should be noted, the Philippine
Government merely consents that the United States exercise jurisdiction in certain cases. The consent was
given purely as a matter of comity, courtesy, or expediency. The Philippine Government has not
abdicated its sovereignty over the bases as part of the Philippine territory or divested itself completely of
jurisdiction over offenses committed therein. Under the terms of the treaty, the United States Government
has prior or preferential but not exclusive jurisdiction of such offenses. The Philippine Government
retains not only jurisdictional rights not granted, but also all such ceded rights as the United States
Military authorities for reasons of their own decline to make use of. The first proposition is implied from
the fact of Philippine sovereignty over the bases; the second from the express provisions of the
treaty." 14 There was a reiteration of such a view in Reagan. Thus: "Nothing is better settled than that the
Philippines being independent and sovereign, its authority may be exercised over its entire domain. There
is no portion thereof that is beyond its power. Within its limits, its decrees are supreme, its commands
paramount. Its laws govern therein, and everyone to whom it applies must submit to its terms. That is the

42
extent of its jurisdiction, both territorial and personal. Necessarily, likewise, it has to be exclusive. If it
were not thus, there is a diminution of sovereignty." 15 Then came this paragraph dealing with the
principle of auto-limitation: "It is to be admitted any state may, by its consent, express or implied, submit
to a restriction of its sovereign rights. There may thus be a curtailment of what otherwise is a power
plenary in character. That is the concept of sovereignty as auto-limitation, which, in the succinct language
of Jellinek, "is the property of a state-force due to which it has the exclusive capacity of legal self-
determination and self-restriction." A state then, if it chooses to, may refrain from the exercise of what
otherwise is illimitable competence." 16 The opinion was at pains to point out though that even then, there
is at the most diminution of jurisdictional rights, not its disappearance. The words employed follow: "Its
laws may as to some persons found within its territory no longer control. Nor does the matter end there. It
is not precluded from allowing another power to participate in the exercise of jurisdictional right over
certain portions of its territory. If it does so, it by no means follows that such areas become impressed
with an alien character. They retain their status as native soil. They are still subject to its authority. Its
jurisdiction may be diminished, but it does not disappear. So it is with the bases under lease to the
American armed forces by virtue of the military bases agreement of 1947. They are not and cannot be
foreign territory." 17
Can there be anything clearer, therefore, than that only a turnabout, unwarranted and unjustified, from
what is settled and orthodox law can lend the slightest degree of plausibility to the contention of absence
of administrative jurisdiction. If it were otherwise, what was aptly referred to by Justice Tuason "as a
matter of comity, courtesy, or expediency" becomes one of obeisance and submission. If on a concern
purely domestic in its implications, devoid of any connection with national security, the Military-Bases
Agreement could be thus interpreted, then sovereignty indeed becomes a mockery and an illusion. Nor
does appellant's thesis rest on less shaky foundation by the mere fact that Acierto and Reagan dealt with
the competence of the national government, while what is sought to be emasculated in this case is the so-
called administrative jurisdiction of a municipal corporation. Within the limits of its territory, whatever
statutory powers are vested upon it may be validly exercised. Any residual authority and therein
conferred, whether expressly or impliedly, belongs to the national government, not to an alien country.
What is even more to be deplored in this stand of appellant is that no such claim is made by the American
naval authorities, not that it would do them any good if it were so asserted. To quote from Acierto anew:
"The carrying out of the provisions of the Bases Agreement is the concern of the contracting parties
alone. Whether, therefore, a given case which by the treaty comes within the United States jurisdiction
should be transferred to the Philippine authorities is a matter about which the accused has nothing to do or
say. In other words, the rights granted to the United States by the treaty insure solely to that country and
can not be raised by the offender." 18 If an accused would suffer from such disability, even if the
American armed forces were the beneficiary of a treaty privilege, what is there for appellant to take hold
of when there is absolutely no showing of any alleged grant of what is quaintly referred to as
administrative jurisdiction? That is all, and it is more than enough, to make manifest the futility of
seeking a reversal.
WHEREFORE, the appealed decision of November 11, 1969 is affirmed insofar as it found the accused,
Loreta Gozo, guilty beyond reasonable doubt of a violation of Municipal Ordinance No. 14, series of
1964 and sentencing her to pay a fine of P200.00 with subsidiary imprisonment in case of insolvency, and
modified insofar as she is required to demolish the house that is the subject matter of the case, she being
given a period of thirty days from the finality of this decision within which to obtain the required permit.

43
Only upon her failure to do so will that portion of the appealed decision requiringdemolition be enforced.
Costs against the accused.
Makalintal, C.J., Zaldivar, Castro, Teehankee, Makasiar, Antonio and Esguerra, JJ., concur.
Barredo, J., took no part.

44
 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

45
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

46
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

47
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.

48
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-533 August 20, 1946
RAMON RUFFY, ET AL., petitioners,
vs.
THE CHIEF OF STAFF, PHILIPPINE ARMY, ET AL., respondents.
Placido C. Ramos for petitioners.
Lt. Col. Fred Ruiz Castro and Capt. Ramon V. Diaz, JAGS, PA., for respondents.
TUASON, J.:
This was a petition for prohibition, praying that the respondents, the Chief of Staff and the General Court
Martial of the Philippine Army, be commanded to desist from further proceedings in the trial of
petitioners before that body. Preliminary injunction having been denied by us and the General Court
Martial having gone ahead with the trial, which eventually resulted in the acquittal of one of the
defendants, Ramon Ruffy, the dismissal of the case as to another, Victoriano Dinglasan, and the
conviction of Jose L. Garcia, Prudente M. Francisco, Dominador Adeva and Andres Fortus, the last-
named four petitioners now seek in their memorandum to convert the petition into one for certiorari, with
the prayer that the records of the proceedings before the General Court Martial be ordered certified to this
court for review.
The ground of the petition was that the petitioners were not subject to military law at the time the offense
for which they had been placed on trial was committed. In their memorandum they have raised an
additional question of law — that the 93d Article of War is unconstitutional.
An outline of the petitioner's previous connection with the Philippine Army, the Philippine Constabulary,
and/or with guerrilla organizations will presently be made. This outline is based on allegations in the
petition and the answer, and on exhibits attached thereto and to the parties' memoranda, exhibits which
were offered in the course of the oral argument and admitted without objection. The said exhibits are
public documents certified by the officials who had them in custody in their official capacity. They are
presumed to be authentic, as we have no doubt they are.
It appears that at the outbreak of war on December 8, 1941, Ramon Ruffy was the Provincial
Commander, Prudente M. Francisco, a junior officer, and Andres Fortus, a corporal, all of the Philippine
Constabulary garrison stationed in Mindoro. When, on February 27, 1942, the Japanese forces landed in
Mindoro, Major Ruffy retreated to the mountains instead of surrendering to the enemy, disbanded his
company, and organized and led a guerrilla outfit known as Bolo Combat team of Bolo Area. Lieutenant
Francisco, Corporal Fortus and Jose L. Garcia, the last then a civilian joined Major Ruffy's organization
towards the latter part of 1942, while Dominador Adeva and Victoriano Dinglasan, then likewise
civilians, became its members some time in 1943..
Meanwhile, Brigadier General Macario Peralta, Jr., then a lieutenant colonel of the Philippine Army, also
took to the hills of Panay and led the operation of the 6th Military District, one of the districts into which
the Philippine Army had been divided before the war. About November, 1942, Colonel Peralta succeeded
in contacting the General Headquarters of General MacArthur in Australia as the result of which on
February 13, 1943, the 6th Military District was recognized by the Headquarters of the Southwest Pacific
Area as a military unit and part of its command.

49
Even before General MacArthur's recognition of the 6th Military District Colonel Peralta had extended its
sphere of operation to comprise Mindoro and Marinduque, and had, on January 2, 1943, named Major
Ruffy as Acting Commander for those two provinces and Commanding Officer of the 3rd Battalion, 66
Infantry 61st Division, Philippine Corps. After the recognition, 2d Lieut. Prudente M. Francisco, by virtue
of Special Orders No. 99, dated November 2, 1943, and signed by Enrique L. Jurado, Major, OSE,
Commanding, was assigned as S-3 in the Bolo Area. Major, later Lieut. Col., Jurado, it should be noted,
had been dispatched by the 6th Military District to Mindoro to assume operational control supervision
over the Bolo Area unit and to make and direct the necessary report to the Headquarters, 6th Military
District, in Panay. On April 26, 1944, by General Orders No. 40 of the 6th Military District, 2d
Lieutenant Francisco was promoted to the rank of 1st Lieutenant (Brevet), effective April 15, 1944,
subject to approval by the President of the Philippines, and was re-assigned to the Bolo Area. As to
Andres Fortus he was assigned to the same Bolo Area as probationary 3d lieutenant for two-month
probationary training, by the Headquarters of the 6th Military District, as per Special Orders No. 70, dated
May 15, 1944.
According to a memorandum of the Chief of Staff, 6th Military District, dated January 1943, and signed
by L.R. Relunia, Lieut. Col., CE, Chief of Staff, Jose L. Garcia and Dominador Adeva were appointed 3d
lieutenants, infantry as of December 31, 1942. Garcia later was promoted to the rank of captain, effective
March 15, 1943, as per Special Orders No. 82, issued in the field, 6th Military District, and dated August
28, 1943. On May 24, 1943, Jose L. Garcia took his oath before Captain Esteban P. Beloncio, then Acting
Commanding Officer, 3d Battalion, 66th Infantry Regiment, 61st Division, 6th Military District.
As has been said, the 6th Military District sent Lieut. Col. Enrique L. Jurado to be Commanding Officer
of the Bolo Combat Team in Mindoro and to undertake other missions of Military character. Pursuant to
instructions, Colonel Jurado on November 2, 1943, assigned Major Ruffy as Commanding Officer of the
Bolo Area with 3d Lieut. Dominador Adeva and 2d Lieut. Prudente M. Francisco as members of his staff
and Victoriano Dinglasan as Finance Officer, as per Special Orders No. 99 dated November 2, 1943. In a
memorandum of Colonel Jurado for Major Ruffy bearing date 25 June, 1944, it was stated that Captain
Garcia had been given P5,000 for palay and Lieut. Francisco P9,000, P5,000 for palay and P4,000 for
salary of the personnel B. Company.
A change in the command of the Bolo Area was effected by Colonel Jurado on June 8, 1944: Major Ruffy
was relieved of his assignment as Commanding Officer, Bolo Battalion, and Capt. Esteban P. Beloncio
was put in Ruffy's place. On October 19, 1944, Lieut. Col. Jurado was slain allegedly by the petitioners.
After the commission of this crime, the petitioners, it is alleged, seceded from the 6th Military District. It
was this murder which gave rise to petitioner's trial, the legality of which is now being contested.
On July 26, 1941, the President of the Untied States issued a military order the pertinent paragraph of
which stated: ". . . as Commander in Chief of the Army and Navy of the United States, I hereby call and
order into the service of the armed forces of the United States Army, for the period of the existing
emergency, and place under the command of the general officer, United States Army, to be designated by
the Secretary of War, from time to time, all of the organized military forces of the Government of the
Commonwealth." Following the issuance of President Roosevelt's order General Douglas MacArthur was
appointed Commanding General of the United States Armed Forces in the Far East.
It is contended, in behalf of Captain Francisco and Lieutenant Fortus, that "by the enemy occupation of
the Philippines, the National Defense Act and all laws and regulations creating and governing the
existence of the Philippine Army including the Articles of War, were suspended and in abeyance during
such belligerent occupation."

50
The paragraph quoted in the petitioner's memorandum from Winthrop's Military Law and Precedents and
the subsequent paragraph which has been omitted furnish a complete answer to petitioner's contention of
the Philippines by Japanese forces, the officers and men of the Philippine Army did not cease to be fully
in the service, though in a measure,' only in a measure, they were not subject to the military jurisdiction, if
they were not active duty. In the latter case, like officers and soldiers on leave of absence or held as
prisoners of war, they could not be held guilty of a breach of the discipline of the command or of a
neglect of duty, or disobedience of orders, or mutiny, or subject to a military trial therefor; but for an act
unbecoming an officer and a gentleman, or an act which constitutes an offense of the class specified in the
95th Article of War, they may in general be legally held subject to military jurisdiction and trial. "So a
prisoner of war, though not subject, while held by the enemy, to the discipline of his own army, would,
when exchanged of paroled, be not exempt from liability for such offenses as criminal acts or injuriuos
conduct committed during his captivity against other officers or soldiers in the same status." (Winthrop's
Military Law and Precedents, 2d Edition, pp. 91, 92.)
The rule invoked by counsel, namely, that laws of political nature or affecting political relations are
considered superseded or in abeyance during the military occupation, is intended for the governing of the
civil inhabitants of the occupied territory. It is not intended for and does not bind the enemies in arms.
This is self-evident from the very nature of things. The paradox of a contrary ruling should readily
manifest itself. Under the petitioner's theory the forces of resistance operating in an occupied territory
would have to abide by the outlawing of their own existence. They would be stripped of the very life-
blood of an army, the right and the ability to maintain order and discipline within the organization and to
try the men guilty of breach thereof.
The surrender by General Wainright of the Fil-American Forces does not profit the petitioner's who were
former members of the Philippine Constabulary any more than does the rule of war or international law
they cite. The fall of Bataan and Corregidor did not end the war. It did not, legally or otherwise, keep the
United States and the Commonwealth of the Philippines from organizing a new army, regular or irregular,
out of new men and men in the old service who had refused to surrender or who having surrendered, had
decided to carry on the fight through other diverse means and methods. The fall of Corregidor and Bataan
just marked the beginning of the gigantic preparation for the gigantic drive that was to fight its way to and
beyond the Philippines in fulfillment of General MacArthur's classic promise, "I shall return." The heroic
role which the guerrillas played in that preparation and in the subsequent liberation of the Philippines is
now history.
Independently of their previous connection with the Philippine Army and the Philippine Constabulary,
Captain Francisco and Lieutenant Fortus as well as Major Garcia and Lieutenant Adeva were subject to
military jurisdiction.
The 2d Article of War defines and enumerates the persons subject to military law as follows:
Art. 2. Persons Subject to Military Law. — The following persons are subject to these articles and shall
be understood as included in the term "any person subject to military law" or "persons subject to military
law," whenever used in these articles:
(a) All officers, members of the Nurse Corps and soldiers belonging to the Regular Force of the
Philippine Army; all reservists, from the dates of their call to active duty and while on such active duty;
all trainees undergoing military instructions; and all other persons lawfully called, drafted, or order to
obey the same;
(b) Cadets, flying cadets, and probationary third lieutenants;

51
(c) All retainers to the camp and all persons accompanying or serving with the Army of the Philippines in
the field in time of war or when martial law is declared though not otherwise subject to these articles;
(d) All persons under sentences adjudged by courts-martial.
It is our opinion that the petitioners come within the general application of the clause in sub-paragraph
(a); "and all other persons lawfully called, drafted, or ordered into, or to duty for training in, the said
service, from the dates they are required by the terms of the call, draft, or order to obey the same." By
their acceptance of appointments as officers in the Bolo Area from the General Headquarters of the 6th
Military District, they became members of the Philippine Army amendable to the Articles of War. The
Bolo Area, as has been seen, was a contigent of the 6th Military District which, as has also been pointed
out, had been recognized by and placed under the operational control of the United States Army in the
Southwest Pacific. The Bolo Area received supplies and funds for the salaries of its officers and men from
the Southwest Pacific Command. As officers in the Bolo Area and the 6th Military District, the
petitioners operated under the orders of duly established and duly appointed commanders of the United
States Army.
The attitude of the enemy toward underground movements did not affect the military status of guerrillas
who had been called into the service of the Philippine Army. If the invaders refused to look upon
guerrillas, without distinctions, as legitimate troops, that did not stop the guerillas who had been inducted
into the service of the Philippine Army from being component parts thereof, bound to obey military status
of guerrillas was to be judged not by the concept of the army of the country for which they fought.
The constitutionality of the 93d Article of War is assailed. This article ordains "that any person subject to
military law who commits murder in time of was shall suffer death or imprisonment for life, as the court
martial may direct." It is argued that since "no review is provided by that law to be made by the Supreme
Court, irrespective of whether the punishment is for life imprisonment or death", it violates Article VIII,
section 2, paragraph 4, of the Constitution of the Philippines which provides that "the National Assembly
may not deprive the Supreme Court of its original jurisdiction over all criminal cases in which the penalty
imposed is death or life imprisonment."
We think the petitioners are in error. This error arose from failure to perceive the nature of courts martial
and the sources of the authority for their creation.
Courts martial are agencies of executive character, and one of the authorities "for the ordering of courts
martial has been held to be attached to the constitutional functions of the President as Commander in
Chief, independently of legislation." (Winthrop's Military Law and Precedents, 2d Edition, p. 49.) Unlike
courts of law, they are not a portion of the judiciary. "The Supreme Court of the United States referring to
the provisions of the Constitution authorizing Congress to provide for the government of the army,
excepting military offenses from the civil jurisdiction, and making the President Commander in Chief,
observes as follows: "These provisions show that Congress has the power to provide for the trial and
punishment of military and naval offenses in the manner then and now practiced by civilized nations, and
that the power to do so is given without any connection between it and the 3d Article of the United States;
indeed that the two powers are entirely independent of each other."
"Not belonging to the judicial branch of the government, it follows that courts-martial must pertain to the
executive department; and they are in fact simply instrumentalities of the executive power, provided by
Congress for the President as Commander in Chief, to aid him in properly commanding the army and
navy and enforcing discipline therein, and utilized under his orders or those of his authorized military
representatives." (Winthrop's Military Law and Precedents, 2d Edition, p. 49.) Of equal interest Clode, 2
M. F., 361, says of these courts in the British law: "It must never be lost sight of that the only legitimate

52
object of military tribunals is to aid the Crown to maintain the discipline and government of the Army."
(Footnote No. 24, p. 49, Winthrop's Military Law and Precedents, 2d Edition.)
Our conclusion, therefore, is that the petition has no merit and that it should be dismissed with costs. It is
so ordered.
Moran, C.J., Paras, Feria, Pablo, Hilado, Bengzon, Briones and Padilla, JJ., concur.

53