Constitutional Law 1 Lecture

Introduction
Extra Introduction
Pre-colonial Law
 Baranganic Societies
 Datu is the head of the Baranganic Society who performs as administrative leader with discharged
executive, judicial and military duties, however, his authority is limited by traditional body of
customs and procedures.
 Social Rank are as follows: Maharlika-assisted the chief in military, naval, and agricultural tasks for
the barangay. Timawa- majority of “commoners” and Alipin are the dependents ‘ debt peons” (
captives of war, who failed to pay debts or legal fines.
Sources of known Legal Codes during Pre-colonial Law

 Maragtas Code by Datu Sumakwel (1250 AD)

 Code of Kalantiaw- contains prescriptions against deprivation of life, liberty and property.
 Moro/Islamic Code (Muslim Code of Luwaran)-guide for proper execution of the duties of office in
accordance with the law and rules of the country.
Spanish Colonial Law

 1521, Spanish arrived in the Philippines and ruled about 350 years.
 Spanish Colonial Administration- “Centralized Colonial Authority” which left the countryside to
encomenderos who were given encomienda ( parcel of land). They collected tribute and enforced
corvee labor and arbitrary usurped of land later gave way to Provincias, Pueblos, and Cabildos (cities)
 1896 – Filipinos idea of government were Kartilla of Katipunan, Provisional Constitution of Biak-na –
Bato, Provisional Constitution of Mariano Ponce, The Constitution of Makabulos and Constitutional
Program of Republic of the Philippines prepared by Apolinario Mabini.
 12 June 1898, Independence of Phils was proclaimed. Sept 15, 1898- Revolutionary Congress
convened. Jan 20, 1899, the Malolos Constitution was approved.
3 Constitutional Plans were:
1. Pedro Paterno’s Pact Biak-na-Bato ( Autonomous Philippine government under sovereignty of Spain
which was influenced of Spanish Constitution of 1868. Propaganda movement were: equality of
rights for Spanish subjects resident in Spain and in the Islands, extension to the Philippines of the
guarantees of the Spanish Constitution protecting freedom of the press and of association, the right
of petition, freedom of religion, academic freedom, freedom to pursue any profession, and security
of property and of domicile.
2. Programa Constitutional of Apolinario Mabini which was influenced by Spanish Constitution and
General Statutes of Universal Masonry. Contained a very detailed Bill of Rights. It covered the
protection of property from arbitrary confiscation, reserving to the government the power of
eminent domain; freedom of religious belief and worship, limited by the requirement of a license for
public manifestations of religion; freedom of speech and of the press; right of peaceful petition for
the redress of grievances; freedom to form associations but requiring official approval of their
statutes and prohibiting the existence of religious orders whose Superiors General were under the
immediate authority of the Pope; due process in criminal prosecutions; freedom from arbitrary
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 arrests and imprisonments, supported by an equivalent of the right to a writ of habeas corpus;
security of the domicile and of papers and effects from arbitrary searches and seizures.
3. Calderon’s Revolutionary Congress (Malolos Constitution) Bill of Rights of this constitution is literally
copy of Spanish Constitution of 1869.

American Colonial Law

1899 Malolos Constitution was only in effect for two months when Spain signed Treaty of Paris on April 11,
1899 “ ceding” its sovereignty over Philippines to the USA for $20Million.
Treaty of Paris

The first three articles provided Spain’s relinquishment of her claims over its former colonies including Cuba,
Puerto Rico and other islands in the West Indies, and the Philippine Islands. Article III stated that an amount
of $20, 000,000 will be paid by the US to Spain after the treaty’s ratification. Meanwhile, In Article IV, US
maintained that in a period of ten years after the treaty’s ratification, it would admit Spanish ships and
merchandises with the same terms as that of American goods and vessels.

Through Articles V, the American government, in its own costs, assured Spain that all Spanish soldiers
taken as prisoners of war will be freed and sent back to their country. It also provided that Spain would
vacate the ceded territories in accordance with the Protocol of Peace signed on 12 August 1898, after the
treaty’s ratification. The same article also confirmed that properties belonging to the naval forces of Spain
in the ceded territories shall remain property of Spain. Article VI held assurance that the two governments
by their own respective costs, would release prisoners of war, particularly insurgents of Cuba and the
Philippines.

While claims for all kinds of indemnity were relinquished by both governments in Article VII, Article VIII
made clear, however, that relinquishment could not impair the rights belonging to the peaceful possessions
of provinces, municipalities, public and private establishments in the ceded territories. Spain’s
relinquishment was also extended on documents and archival materials that may be found in the ceded
territories or in Spain.

Article IX emphasized that Spanish subjects and natives residing in the ceded territories may remain in
the territories and preserve their allegiance to Spain but before a record of court. Failure to do so in a year
after the treaty’s ratification would make them adopt the nationality of the territories where they reside.
Freedom of religion was given weight in Article X while Article XI upheld that Spaniards residing in the ceded
territories would be subject to the jurisdiction of the courts of the country/territory where they reside in
accordance to the judicial procedures and implementations incorporated in article XII.

It was also agreed upon by the Peace Commission panel that Spanish academic and literary works
would be admitted in the ceded territories free from dues, only in a period of ten years. This provision was
included in Article XIII of the treaty. Spain’s right to establish consular offices and officers in the ports and
some areas of the ceded territories was provided in Article XIV. Meanwhile, Article XV stated terms similar
to that of Article III only that it emphasized that free dues and charges would only be honored for ten years.
The US Government in Article XVI cleared that its obligation to Cuba is limited only during its occupancy and
upon its termination; the created government in the said country should assume responsibility. Lastly,
Article XVII pronounced that the treaty would be subject to ratification by the US President with the aid of

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the US Senate and by the Queen Regent of Spain. Ratification was expected to be exchanged six months
from the date of the treaty’s conclusion.

The treaty did not go on effect until after its ratification. Initially, many American senators did not favor
it for they thought of it as unfair to the Filipinos and a manifestation of imperialism. Unfortunately, the
Filipino-American hostilities that erupted on 4 February 1899 in the Philippines (known as the “First Shot”)
changed the course of the tide. American propaganda made it appear that the Filipinos instigated the
hostility causing the breach of alliance and trust. Two days after, the treaty was ratified with two thirds of
the majority in the US Senate.

The American and Spanish government reckoned the Treaty of Paris as an instrument of Peace, but the
Filipinos resented its conclusion and ratification for they were not consulted and considered in its making.
Further, the provisions of the treaty were not for the benefit of the Filipinos but for the imperialists,
instead. With the signing and ratification of the Treaty of Paris, the bitter relations between the Americans
and the Filipinos turned bitterer and eventually lead to another episode that was known as Filipino-
American War.

McKinley’s Instruction to the 2nd Philippine Commission

McKinley’s Instructions accordingly mandated the Second Philippine Commission under William Howard Taft
to establish civil government in the Philippines “for the happiness, peace, and prosperity of the people of
the Philippine Islands, and the measures adopted should be made to conform to their customs, their habits,
and even their prejudices, to the fullest extent consistent with the accomplishment of the indispensable
requisites of just and effective government”.

The Philippine Bill 1902

Temporarily provide for the administration of civil government (continuing the existing government
organized under McKinley’s Instructions and executive orders), and make a formal commitment to the
Filipino people that a Philippine Assembly (a legislative body composed of Filipinos’ own representatives)
would be convened after the establishment of complete peace in the archipelago. The Philippine Assembly
would be organized on October 16, 1907, and with the Philippine Commission as its upper house, formed
the Philippine Legislature invested with authority to legislate for all parts of the Philippines except non-
Christian provinces.

The Philippine Autonomy Act of 1916

(The “Jones Law”) would constitute the principal organic act of the Philippines, containing a preamble, a bill
of rights, provisions on the organization and powers of government and corresponding limitations, the
electorate, and other administrative matters.

Tydings-McDuffie Act,

also called Philippine Commonwealth and Independence Act, (1934), the U.S. statute that provided for
Philippine independence, to take effect on July 4, 1946, after a 10-year transitional period of
Commonwealth government. The bill was signed by U.S. Pres. Franklin D. Roosevelt on March 24, 1934, and
was sent to the Philippine Senate for approval. Although that body had previously rejected the similar Hare-
Hawes-Cutting Act, (indefinite retention of US Miltary Base in the Island) it approved the Tydings-McDuffie
Act on May 1. Authorizing the Philippine Legislature to call a constitutional convention to draft a constitution
for the Philippines.

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Post Independence Law and Political Structures

1935 Constitution

 8 Presidential Administrations (35 years)

 Amended 3 times
 The instrument was adopted before the Philippines became a sovereign state.
 The constitution failed to truly reflect the highest ideals and aspirations of an Independent Filipino
Nation
 Weaknesses

1. Presidential Tenure (permit the president to run for Re-Election)

2. Presidential Disability ( defects on procedure to be followed in the event of presidential
disability
3. Vice-Presidency ( should also serve as the member of the cabinet)
4. Establishment of Electoral Tribunal (pass upon protested elections of constitutional Officers)
5. The President’s power of certification of urgency of bills (allowing president to bypass the
requirement in printing in final form three calendar days before the congressional vote)
additional leverage for executive.
6. Presidential supervision over local government
7. Power over habeas corpus and martial law ( greatly threatened the guaranteed individual
rights)
8. Emergency Powers ( Vague terminology which became basis for virtual surrender of
legislative power to the executive in times of emergency)

1973 Constitution

 Republic Act No. 6132 a resolution for proposes amendments of 1935 Constitution approved Aug 24
1970.
 Proclamation No.1081 –Sept 21 1972, Martial Law
 November 29,1972, the 1971 Constitutional Convention approved its Proposed Constitution of the
Republic of the Phils. The next day, PD No. 73 as issued by the president, for ratification or rejection
of the Proposed Constitution.
 Several cases were filed because there was no proper submission to the people of the contents
thereof.
 However on Jan 17,1973, the President issued Proclamation No 1102 announced the ratification of
proposed constitution through PD No.86, creation of Citizens Assemblies. (Javellana VS Executive
Secretary)
 Majority of the SC concurred that challenged ratification complied with requirements.

JAVELLANA VS THE EXECUTIVE SECRETARY

In 1973, Marcos ordered the immediate implementation of the new 1973 Constitution. Javellana, a Filipino
and a registered voter sought to enjoin the Exec Sec and other cabinet secretaries from implementing the
said constitution. Javellana averred that the said constitution is void because the same was initiated by the
president. He argued that the President is w/o power to proclaim the ratification by the Filipino people of
the proposed constitution. Further, the election held to ratify such constitution is not a free election there
being intimidation and fraud.
ISSUE: Whether or not the SC must give due course to the petition.

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HELD: The SC ruled that they cannot rule upon the case at bar. Majority of the SC justices expressed the
view that they were concluded by the ascertainment made by the president of the Philippines, in the
exercise of his political prerogatives. Further, there being no competent evidence to show such fraud and
intimidation during the election, it is to be assumed that the people had acquiesced in or accepted the 1973
Constitution. The question of the validity of the 1973 Constitution is a political question which was left to
the people in their sovereign capacity to answer. Their ratification of the same had shown such
acquiescence.

PLANAS VS COMELEC
FACTS:
While the 1971 Constitution Convention was in session on September 21, 1972, the president issued
Proclamation No. 1081 placing the Philippines under martial law. On November 29, 1972, the Convention
approved its proposed constitution. The next day the president issued PD No. 73 submitting to the people
for ratification or rejection the proposed constitution as well as setting the plebiscite for said ratification. On
December 7, 1972, Charito Planas filed a petition to enjoin respondents from implemented PD No. 73
because the calling of the plebiscite among others is lodged exclusively in the Congress. On December 17,
1972, the president issued an order temporarily suspending the effects of PD 1081 for the purpose of the
free and open debate on the proposed constitution. On December 23, the president announced the
postponement of the plebiscite, as such, the Court refrained from deciding the cases. On January 12, the
petitioners filed for an “urgent motion” praying that the case be decided “as soon as possible”.

ISSUES:
1. Isthe validity of PD 73 justiciable?
2. Is PD 73 valid?
3. Does the 1971 Constitutional Convention have the authority to pass the proposed constitution?

HELD:
The Court may pass upon the constitutionality of PD 73 not only because of a long list of cases decided by
the Court but also of subdivision (1) of Section 2, Article VIII of the 1935 Constitution which expressly
provides for the authority of the Court to review cases revolving such issue. The validity of the decree itself
was declared moot and academic by the Court. The convention is free to postulate any amendment as long
as it is not inconsistent with what is known as Jus Cogen

SANIDAD VS. COMELEC

G.R. NO. L-446640
OCTOBER 12, 1976

FACTS: On September 2, 1976, President Ferdinand E. Marcos issued Presidential Decree No. 991 calling for
a national referendum on October 16, 1976 for the Citizens Assemblies ("barangays") to resolve, among
other things, the issues of martial law, the national assembly, its replacement, the powers of such
replacement, the period of its existence, the length of the period for tile exercise by the President of his
present powers.

Twenty days after or on September 22, 1976, the President issued another related decree, Presidential
Decree No. 1031, amending the previous Presidential Decree No. 991, by declaring the provisions of
presidential Decree No. 229 providing for the manner of voting and canvassing of votes in "barangays"
applicable to the national referendum-plebiscite of October 16, 1976. Quite relevantly, Presidential Decree

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No. 1031 repealed Section 4, of Presidential Decree No. 991, the full text of which is quoted in the footnote
below.

On the same date of September 22, 1976, the President issued Presidential Decree No. 1033, stating the
questions to be submitted to the people in the referendum-plebiscite on October 16, 1976. The Decree
recites in its "whereas" clauses that the people's continued opposition to the convening of the National
Assembly evinces their desire to have such body abolished and replaced thru a constitutional amendment,
providing for a legislative body, which will be submitted directly to the people in the referendum-plebiscite
of October 16.

The questions ask, to wit:

(1) Do you want martial law to be continued?

(2) Whether or not you want martial law to be continued, do you approve the following amendments to the
Constitution? For the purpose of the second question, the referendum shall have the effect of a plebiscite
within the contemplation of Section 2 of Article XVI of the Constitution.

On September 27, 1976, PABLO C. SANIDAD and PABLITO V. SANIDAD, commenced Prohibition with
Preliminary Injunction seeking to enjoin the Commission on Elections from holding and conducting the
Referendum Plebiscite on October 16; to declare without force and effect Presidential Decree Nos. 991 and
1033, insofar as they propose amendments to the Constitution, as well as Presidential Decree No. 1031,
insofar as it directs the Commission on Elections to supervise, control, hold, and conduct the Referendum-
Plebiscite scheduled on October 16, 1976.

Petitioners contend that under the 1935 and 1973 Constitutions there is no grant to the incumbent
President to exercise the constituent power to propose amendments to the new Constitution. As a
consequence, the Referendum-Plebiscite on October 16 has no constitutional or legal basis.

ISSUES:

1. Whether or not the court has jurisdiction over the case?

2. Whether or not the president has the authority to propose amendments to the Constitution?

3. Is the submission to the people of the proposed amendments within the time frame allowed therefor a
sufficient and proper submission?

HELD:

Issue 1 – Justiciability of the courts

We cannot accept the view of the Solicitor General, in pursuing his theory of non-justiciability, that the
question of the President's authority to propose amendments and the regularity of the procedure adopted
for submission of the proposal to the people ultimately lie in the judgment of the clear Descartes fallacy of
vicious circle. Is it not that the people themselves, by their sovereign act, provided for the authority and
procedure for the amending process when they ratified the present Constitution in 1973? Whether,
therefore, the constitutional provision has been followed or not is the proper subject of inquiry, not by the
people themselves of course who exercise no power of judicial but by the Supreme Court in whom the
people themselves vested that power, a power which includes the competence to determine whether the

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constitutional norms for amendments have been observed or not. And, this inquiry must be done a prior not
a posterior i.e., before the submission to and ratification by the people.

Issue 2 – Whether or not the president has the authority to propose amendments to the Constitution?

As earlier pointed out, the power to legislate is constitutionally consigned to the interim National Assembly
during the transition period. However, the initial convening of that Assembly is a matter fully addressed to
the judgment of the incumbent President. And, in the exercise of that judgment, the President opted to
defer convening of that body in utter recognition of the people's preference. Likewise, in the period of
transition, the power to propose amendments to the Constitution lies in the interim National Assembly
upon special call by the President. Again, harking to the dictates of the sovereign will, the President decided
not to call the interim National Assembly. Would it then be within the bounds of the Constitution and of law
for the President to assume that constituent power of the interim Assembly vis-a-vis his assumption of that
body's legislative functions? The answer is yes. If the President has been legitimately discharging the
legislative functions of the interim Assembly, there is no reason why he cannot validly discharge the function
of that Assembly to propose amendments to the Constitution, which is but adjunct, although peculiar, to its
gross legislative power. This, of course, is not to say that the President has converted his office into a
constituent assembly of that nature normally constituted by the legislature. Rather, with the interim
National Assembly not convened and only the Presidency and the Supreme Court in operation, the urges of
absolute necessity render it imperative upon the President to act as agent for and in behalf of the people to
propose amendments to the Constitution.

Issue 3 - Is the submission to the people of the proposed amendments within the time frame allowed therefor a
sufficient and proper submission?

It is worthy to note that Article XVI of the Constitution makes no provision as to the specific date when the
plebiscite shall be held, but simply states that it "shall be held not later than three months after the approval
of such amendment or revision."

G.R. No. L-56350 April 2, 1981

Samuel C. Occena, Petitioners vs.COMELEC, Respondent
FACTS:

The petitioners argued regarding the validity of3 Batasang Pambansa Resolutions proposing constitutional
amendment. Both petitioners, Samuel Occena and Ramon Gonzales, claimed on the case that the 1971
Constitution was not the fundamental law of the land because the 3 resolutions were void. Further, the
petitioners also stated that amendments proposed are so extensive that they go beyond the limits of the
Interim Batasang Pambansa.

Both petitioners are member of the Philippine Bar and delegates to the 1971 Constitutional Convention that
framed the constitution. It is therefore unorthodox that both petitioners are questioning the present
constitution. The court however, is duty-bound to uphold and apply the 1971 Constitution.

ISSUE/S NOTED:

The following issues are noted:

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 1. If the 1973 Constitution was already enforceable;
2. If the Interim Batasang Pambansa has the power to propose amendments and how it may be
exercised (including the extent of the changes that may be introduced, the number of voted
necessary, and the standard required for a proper submission). And whether the resolutions are valid
or not.
3. Whether the constitution is valid and ratified accordingly

HELD/DECISION:

The following decisions were carried by the court:

1. That the petitioners’ argument regarding the enforceability and application of the 1973 Constitution
was already too late. Per reference to Javellana vs. The Executive Secretary, dismissing petitions for
prohibition and mandamus to declare its ratification, the court stated that “This being the vote of the
majority, there is no further judicial obstacle to the new constitution being considered in force and
effect.” The Court stand firm on its pronouncement that the Constitution came into force and effect,
and therefore the decision is not only entitled to respect but also be obeyed. The 1973 Constitution
was declared and ratified and therefore is the fundamental law of the land.
2. It is the view of the court that the power of the Interim Batasang Pambansa cannot be questioned. In
the 1976 Amendments explicitly reads that “the Interim Batasang Pambansa shall have the same
power and its members shall have the same functions, responsibilities, rights, privileges, and
disqualification as the interim National Assembly and the regular National Assembly and the Members
thereof.” One of the powers is precisely that of proposing amendments. The Interim National
Assembly has the power to propose amendments upon special call of the Prime Minister by a vote of
the majority. Therefore, when President Marcos and the Interim Batasang Pambansa, met as a
constituent body, it acted by virtue of such impotence its authority to do so is clearly beyond doubt. It
could and did propose the amendments embodied in the resolutions now being assailed.
3. It is argued by the petitioners that amendments proposed are so extensive that it is already beyond
the limits for the authority conferred on the Interim Batasang Pambansa. However, Justice Makasiar
reasoned that “whether the constitutional convention will only propose amendments to the
constitution or to entirely overhaul the present constitution is of no moment; because the same will
be submitted to the people for ratification. Once ratified by the sovereign people, there can be no
debate about the validity of the new constitution. To sum up, whether the constitution is to be revised
or amended would become immaterial the moment the same is ratified by the people.

 Parliamentary Government
 Includes merger Executive and Legislative Power
 Headed by Prime Minister ( could dissolve National Assembly and call for general election)
 Ad interim Batasang Pambansa/ Regular National Assembly
 Executive rules by Decree, there is no legislature, no election, very little judicial review. People are
not allowed to choose representatives. Citizen languish in jails without charge.

The Freedom Constitution (Proclamation No. 3 March 25, 1986)

Proclamation No. 3 also promulgated the Provisional (‘Freedom’) Constitution, which repealed and
abrogated all existing laws, decrees, executive orders, proclamations, letters of instructions, and previous
executive issuances of the former administration until the establishment of a new Constitution.
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Proclamation No. 3 declared that the Aquino government, pending the establishment of a new Constitution,
would guarantee that “the government will respect basic human rights and fundamental freedoms”. Both
the Incorporation Clause in the Declaration of State Principles and Policies and the Bill of Rights in the 1973
Constitution would be adopted as part of the Freedom Constitution
1987 Constitution
Aquino then created a Constitutional Commission 1986 to draft the new Constitution. After one hundred
and thirty-two days (132) of work by the forty-eight (48) member Commission, the final draft of the
proposed new constitution consisted of a Preamble, eighteen (18) articles, and three hundred and twenty-
one (321) sections.
Proclamation No. 58- February 11, 1987, the constitution came into full force and effect.
Ratification- Proclamation No. 211 s, 1988, which moved the commemoration of the Constitution Day from
January 17 to February 2 of every year.

ARTICLE 2
DECLARATION OF PRINCIPLES AND STATE POLICIES
PRINCIPLES
Section 1. The Philippines is a Democratic and Republican state. Sovereignty resides in the people and all
government authority emanates from them.
42 SCRA 23 – Political Law – Definition of “State”
Campos Rueda vs CIR
In January 1955, Maria Cerdeira died in Tangier, Morocco (an international zone [foreign country] in North
Africa). At the time of her death, she was a Spanish citizen and was a resident of Tangier. She however left
some personal properties (shares of stocks and other intangibles) in the Philippines. The designated
administrator of her estate here is Antonio Campos Rueda.
In the same year, the Collector of Internal Revenue (CIR) assessed the estate for deficiency tax amounting to
about P161k. Campos Rueda refused to pay the assessed tax as he claimed that the estate is exempt from
the payment of said taxes pursuant to section 122 of the Tax Code which provides:
That no tax shall be collected under this Title in respect of intangible personal property (a) if the decedent at
the time of his death was a resident of a foreign country which at the time of his death did not impose a
transfer tax or death tax of any character in respect of intangible person property of the Philippines not
residing in that foreign country, or (b) if the laws of the foreign country of which the decedent was a resident
at the time of his death allow a similar exemption from transfer taxes or death taxes of every character in
respect of intangible personal property owned by citizens of the Philippines not residing in that foreign
country.
Campos Rueda was able to prove that there is reciprocity between Tangier and the Philippines.
However, the CIR still denied any tax exemption in favor of the estate as it averred that Tangier is not a
“state” as contemplated by Section 22 of the Tax Code and that the Philippines does not recognize Tangier
as a foreign country.
ISSUE: Whether or not Tangier is a state.
HELD: Yes. For purposes of the Tax Code, Tangier is a foreign country.

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A foreign country to be identified as a state must be a politically organized sovereign community
independent of outside control bound by penalties of nationhood, legally supreme within its territory, acting
through a government functioning under a regime of law. The stress is on its being a nation, its people
occupying a definite territory, politically organized, exercising by means of its government its sovereign will
over the individuals within it and maintaining its separate international personality.
Further, the Supreme Court noted that there is already an existing jurisprudence (Collector vs De Lara)
which provides that even a tiny principality, that of Liechtenstein, hardly an international personality in the
sense, did fall under the exempt category provided for in Section 22 of the Tax Code. Thus, recognition is not
necessary. Hence, since it was proven that Tangier provides such exemption to personal properties of
Filipinos found therein so must the Philippines honor the exemption as provided for by our tax law with
respect to the doctrine of reciprocity.
Raegan Vs. Commissioner of Internal Revenue.

Facts: William Reagan is a US citizen assigned at Clark Air Base to help provide technical assistance to the US
Air Force (USAF). In April 1960 Reagan imported a 1960 Cadillac car valued at $6,443.83. Two months later,
he got permission to sell the same car provided that he would sell the car to a US citizen or a member of the
USAF. He sold it to Willie Johnson, Jr. for $6,600.00 as shown by a Bill of Sale. The sale took place within
Clark Air Base. As a result of this transaction, the Commissioner of Internal Revenue calculated the net
taxable income of Reagan to be at P17,912.34 and that his income tax would be P2,797.00. Reagan paid the
assessed tax but at the same time he sought for a refund because he claims that he is exempt. Reagan
claims that the sale took place in “foreign soil” since Clark Air Base, in legal contemplation is a base outside
the Philippines. Reagan also cited that under the Military Bases Agreement, he, by nature of his
employment, is exempt from Philippine taxation.
ISSUE: Is the sale considered done in a foreign soil not subject to Philippine income tax?
HELD: No. The Philippines is independent and sovereign, its authority may be exercised over its entire
domain. There is no portion thereof that is beyond its power. Within its limits, its decrees are supreme, its
commands paramount. Its laws govern therein, and everyone to whom it applies must submit to its terms.
That is the extent of its jurisdiction, both territorial and personal. On the other hand, there is nothing in the
Military Bases Agreement that lends support to Reagan’s assertion. The Base has not become foreign soil or
territory. This country’s jurisdictional rights therein, certainly not excluding the power to tax, have been
preserved, the Philippines merely consents that the US exercise jurisdiction in certain cases – this is just a
matter of comity, courtesy and expediency. It is likewise noted that he indeed is employed by the USAF and
his income is derived from US source but the income derived from the sale is not of US source hence
taxable.
Chief Justice Taney, in an 1857 decision, affirmed the fundamental principle of everyone within the
territorial domain of a state being subject to its commands: "For undoubtedly every person who is found
within the limits of a government, whether for temporary purposes or as a resident, is bound by its laws." It
is no exaggeration then for Justice Brewer to stress that the United States government "is one having
jurisdiction over every foot of soil within territory, and acting directly upon each [individual found therein]

People vs Loreta Gozo

53 SCRA 476 – Political Law – Sovereignty
Loreta Gozo bought a house and lot which was located inside the US Naval Reservation which is within the
territorial jurisdiction of Olongapo City. Upon the advice of an assistant in the Mayor’s Office and some
neighbors, she demolished the house standing thereon without acquiring the necessary permits and then
later on erected another house. She was then charged by the City Engineer’s Office for violating a municipal
order which requires her to secure permits for any demolition and/or construction within the City. She was

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convicted in violation thereof by the lower court. She appealed and countered that the City of Olongapo has
no administrative jurisdiction over the said lot because it is within a Naval Base of a foreign country.
ISSUE: Is the Municipal Ordinance enforceable within the US Naval Base?
HELD: Yes. 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
(Military Bases Agreement). Hence, in the exercise of its sovereignty, the State through the City of Olongapo
does have administrative jurisdiction over the lot located within the US Naval Base.

Government- the agency or instrumentality, through which the will of the state is formulated, expressed and
realized. Its constituent functions constitutes the bonds of society and are compulsory in nature

US vs DORR 2 Phil 332

Administration as an Organization Distinguished from Government

FACTS: The defendants have been convicted upon a complaint charging them with the offense of writing,
publishing, and circulating a scurrilous libel against the Government of the United States and the Insular
Government of the Philippine Islands. The complaint is based upon section 8 of Act No. 292 of the
Commission, which is as follows:

"Every person who shall utter seditious words or speeches, write, publish, or circulate scurrilous libels
against the Government of the United States or the Insular Government of the Philippine Islands, or which
tend to disturb or obstruct any lawful officer in executing his office, or which tend to instigate others to
cabal or meet together for unlawful purposes, or which suggest or incite rebellious conspiracies or riots, or
which tend to stir up the people against the lawful authorities, or to disturb the peace of the community,
the safety and order of the Government, or who shall knowingly conceal such evil practices, shall be
punished by a fine not exceeding two thousand dollars or by imprisonment not exceeding two years, or
both, in the discretion of the court." The alleged libel was published as an editorial in the issue of the
"Manila Freedom" of April 6, 1902, under the caption of" A few hard facts."

ISSUE: Whether or not the article be regarded as embraced within the description of "scurrilous libels
against the Government of the United States or the Insular Government of the Philippine Islands"

RULING: No. The important question is to determine what is meant in section 8 of Act No. 292 by the
expression "the Insular Government of the Philippine Islands." Does it mean in a general and abstract sense
the existing laws and institutions of the Islands, or does it mean the aggregate of the individuals by whom
the Government of the Islands is, for the time being, administered? Either sense would doubtless be
admissible. We understand, in modern political science, by the term "government", 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. Government is the aggregate of
authorities which rule a society. By "administration" again, we understand in modern times, and especially in
more or less free countries, the aggregate of those persons in whose hands the reins of government are for
the time being (the chief ministers or heads of departments)." (Bouvier, Law Dictionary, 89l.) But the writer
adds that the terms "government and ’’administration" are not always used in their strictness, and that
"government" is often used for ’’administration.’’ The article in question contains no attack upon the
governmental system of the United States, and it is quite apparent that, though grossly abusive as respects
11
both the Commission as a body and some of its individual members, it contains no attack upon the
governmental system by which the authority of the United States is enforced in these Islands. The form of
government by a Civil Commission and a Civil Governor is not assailed. It is the character of the men who are
intrusted with the administration of the government that the writer is seeking to bring into disrepute by
impugning the purity of their motives, their public integrity, and their private morals, and the wisdom of
their policy. The publication of the article, therefore, no seditious tendency being apparent, constitutes no
offense under Act No. 292, section 8.

RATIO: Government is the aggregate of authorities which rule a society. By "administration" again, we
understand in modern times, and especially in more or less free countries, the aggregate of those persons in
whose hands the reins of government are for the time being (the chief ministers or heads of departments).
The terms "government and ’’administration" are not always used in their strictness, and that "government" is
often used for ’’administration.’’

Leopoldo Bacani vs National Coconut Corporation

November 6, 2011
100 Phil. 468 – Political Law – Two-fold Function of the Government – Constituent vs Ministrant Functions
Leopoldo Bacani and Mateo Matoto were court stenographers assigned in a court in Manila. During the
pendency of a particular case in said court, counsel for one of the parties, National Coconut Corporation or
NACOCO, requested said stenographers for copies of the transcript of the stenographic notes taken by them
during the hearing. Bacani et al complied with the request and sent 714 pages and thereafter submitted to
said counsel their bills for the payment of their fees. The National Coconut Corporation paid the amount of
P564 to Bacani and P150 to Matoto for said transcripts at the rate of P1 per page.
However, in January 1953, the Auditor General required Bacani et al to reimburse said amounts on the
strength of a circular of the Department of Justice. It was expressed that NACOCO, being a government
entity, was exempt from the payment of the fees in question. Bacani et al counter that NACOCO is not a
government entity within the purview of section 16, Rule 130 of the Rules of Court. NACOCO set up as a
defense that the NACOCO 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.
ISSUE: Whether or not NACOCO is a government entity.
HELD: No. Government owned and controlled corporations (GOCCs) do not acquire the status of being part
of the government because they do not come under the classification of municipal or public corporation.
Take for instance the NACOCO. 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, it was, however, 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 – the law creating NACOCO). It may sue and be sued in the
same manner as any other private corporations, and in this sense it is an entity different from our
government.
The Supreme Court also noted the constituent functions of the government. Constituent functions are those
which constitute the very bonds of society and are compulsory in nature. According to U.S. President
Woodrow Wilson, they are as follows:
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.
12
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: the preservation of the state from external danger or
encroachment and the advancement of its international interests.
On the other hand, ministrant functions are those that are undertaken only by way of advancing the general
interests of society, and are merely optional. The most important of the ministrant functions are: public
works, public education, public charity, health and safety regulations, and regulations of trade and industry.
The principles to consider whether or not a government shall exercise certain of these optional functions
are: (1) that a government should do for the public welfare those things which private capital would not
naturally undertake and (2) that a government should do 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.

ADMINISTRATIVE CODE OF 1987 CONSTITUTION (EXECUTIVE ORDER 292) SEC 2 (1)

“Government of the republic of the Philippines”
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.
On

G.R. No. 145951 August 12, 2003

PEOPLE OF THE PHILIPPINES, petitioner,
vs.
SANDIGANBAYAN (2ND DIV.), and JOSE S. RAMISCAL, JR., JULIAN ALZAGA, ATTY. MANUEL SATUITO, ELIZABETH
LIANG and JESUS GARCIA, respondents.
YNARES-SANTIAGO, J.:
Facts : Respondents Jose S. Ramiscal, Jr., Julian Alzaga, Manuel Satuito, Elizabeth Liang and Jesus Garcia
were all charged with Malversation through Falsification of Public Documents before the Sandiganbayan in
Criminal Case No. 25741. The Information alleged that respondents misappropriated and converted for their
personal use the amount of P250,318,200.00 from the funds of the Armed Forces of the Philippines
Retirement and Separation Benefits System (AFP-RSBS).1
On November 12, 1999, respondent Ramiscal filed with the Sandiganbayan an "Urgent Motion to Declare
Nullity of Information and to Defer Issuance of Warrant of Arrest."2 He argued, inter alia, that the
Sandiganbayan had no jurisdiction over the case because the AFP-RSBS is a private entity. The said Urgent
Motion was later adopted by respondents Alzaga and Satuito.
The Urgent Motion was denied by the Sandiganbayan in a Resolution promulgated on January 6,
2000.3Respondents filed a Motion for Reconsideration. In a Resolution issued on May 12, 2000, the
Sandiganbayan sustained respondents' contention that the AFP-RSBS is a private entity. Hence, it
reconsidered its earlier Resolution and ordered the dismissal of Criminal Case No. 25741. Upon denial of its
Motion for Reconsideration, the prosecution filed the instant special civil action for certiorari anchored on
the following grounds:
I

13
 RESPONDENT COURT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF
JURISDICTION IN ISSUING THE RESOLUTION DATED MAY 9, 2000 INSOFAR AS IT DISMISSED THE CASE FOR
LACK OF JURISDICTION.
II
RESPONDENT COURT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF EXCESS OF
JURISDICTION IN DENYING PROSECUTION'S MOTION FOR RECONSIDERATION DATED JUNE 1, 2000,
SUPPLEMENTAL MOTION FOR RECONSIDERATION DATED JULY 10, 2000 AND SECOND SUPPLEMENTAL
MOTION FOR RECONSIDERATION DATED MAY 12, 2000.

Considering that the Resolution of the Sandiganbayan which dismissed Criminal Case No. 25741 was a final
order which finally disposed of the case, the proper remedy therefrom is a petition for review under Rule 45
of the 1997 Rules of Civil Procedure.5 Section 1 of said Rule 45 explicitly provides:
Filing of petition with Supreme Court. – A party desiring to appeal by certiorari from a judgment or final
order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts
whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari.
The petition shall raise only questions of law which must be distinctly set forth.
Moreover, Section 7 of Presidential Decree No. 1606, as amended by Section 3 of Republic Act No. 7975,
states:
Form, Finality and Enforcement of Decisions. –

Decisions and final orders of the Sandiganbayan shall be appealable to the Supreme Court by petition for
review on certiorari raising pure questions of law in accordance with Rule 45 of the Rules of Court.
Basic is the rule that a special civil action for certiorari under Rule 65 of the Rules may be availed of only
where there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of
law.6 Certiorari cannot be availed of as a substitute for the lost remedy of an ordinary appeal.7
The foregoing rule, however, may be relaxed where the issue raised is one purely of law, where public
interest is involved, and in case of urgency. In such cases, certiorari is allowed notwithstanding the existence
and availability of the remedy of appeal. Certiorari may also be availed of where an appeal would be slow,
inadequate and insufficient.8 If the strict application of the Rules will tend to frustrate rather than promote
justice, it is always within our power to suspend the rules, or except a particular case from its operation.9
We now come to the substantive issue of whether the AFP-RSBS is a government-owned or controlled
corporation or a private corporation and, corollarily, whether its funds are public or private. The
Sandiganbayan based its ruling that the AFP-RSBS is a private entity on its findings that the Government
does not provide counterpart contribution to the System; that the employees of the AFP-RSBS do not
receive any salary from the Government and are not covered by the salary standardization law; that their
remittances and contributions were made to the Social Security System and not to the Government Service
Insurance System; and that the contribution to the System of the sum of P200,000,000.00 under
Presidential Decree 361 can not be deemed as equity of the government in the System but rather, a
donation or "seed money" which was never increased thereafter.10
Generally, factual findings of the Sandiganbayan are conclusive on us. This rule, however, admits of
exceptions, such as where: (1) the conclusion is a finding grounded entirely on speculation, surmise and
conjectures; (2) the inference made is manifestly mistaken; (3) there is grave abuse of discretion; (4) the
judgment is based on misapprehension of facts; and (5) the findings of fact of the Sandiganbayan are
premised on a want of evidence and are contradicted by evidence on record.11
The AFP-RSBS was created by Presidential Decree No. 361. Its purpose and functions are akin to those of the
GSIS and the SSS, as in fact it is the system that manages the retirement and pension funds of those in the
military service. Members of the Armed Forces of the Philippines and the Philippine National Police are
expressly excluded from the coverage of The GSIS Act of 1997.12 Therefore, soldiers and military personnel,
who are incidentally employees of the Government, rely on the administration of the AFP-RSBS for their

14
retirement, pension and separation benefits. For this purpose, the law provides that the contribution by
military officers and enlisted personnel to the System shall be compulsory, thus:
Officers and enlisted personnel in the active service shall contribute to the System an amount equivalent to
four per cent (4%) of their monthly base and longevity pay, which contribution shall be deducted from their
pay from the Armed Forces of the Philippines and paid to the System: Provided, however, That any officer or
enlisted person who is due for compulsory retirement or is optionally retirable and actually elects to retire
within one year from the approval of this Act, shall no longer be required to contribute to the System:
Provided, further, That any officer or enlisted person who is separated through no fault of his own and is not
eligible for either retirement or separation benefits shall upon his separation, be refunded in one lump sum
all his actual contributions to the System plus interest at the rate of four per cent (4%).13
Its enabling law further mandates that the System shall be administered by the Chief of Staff of the Armed
Forces of the Philippines through an agency, group, committee or board, which may be created and
organized by him and subject to such rules and regulations governing the same as he may, subject to the
approval of the Secretary of National Defense, promulgate from time to time. Moreover, the investment of
funds of the System shall be decided by the Chief of Staff of the Armed Forces of the Philippines with the
approval of the Secretary of National Defense.14
In connection with the Sandiganbayan's finding that the funds of the AFP-RSBS, except for the initial seed
money, come entirely from contributions and that no part thereof come from appropriations, Section 2 of
P.D. 361 states:
SECTION 2. The System shall be funded as follows:
(a) Appropriations and contributions;
(b) Donations, gift, legacies, bequest and others to the System;
(c) All earnings of the System which shall not be subject to any tax whatsoever.
Indeed, the clear import of the above-quoted provision is that, while it may be true that there have been no
appropriations for the contribution of funds to the AFP-RSBS, the Government is not precluded from later
on adding to the funds in order to provide additional benefits to the men in uniform.
The above considerations indicate that the character and operations of the AFP-RSBS are imbued with public
interest. As such, we hold that the same is a government entity and its funds are in the nature of public
funds.
WHEREFORE, in view of the foregoing, the instant petition for certiorari is GRANTED. The assailed Resolution
of the Sandiganbayan dated May 12, 2000 is ANNULLED and SET ASIDE. Criminal Case No. 25741 is ordered
REINSTATED, and the Sandiganbayan is DIRECTED to resume proceedings thereon with dispatch.
SO ORDERED.
Davide, Jr., C.J., Vitug, Carpio and Azcuna, JJ., concur.

Manila International Airport Authority vs CA

GR No. 155650, July 20, 2006, 495 SCRA 591
Facts:
Manila International Airport Authority (MIAA) is the operator of the Ninoy International Airport
located at Paranaque City. The Officers of Paranaque City sent notices to MIAA due to real estate tax
delinquency. MIAA then settled some of the amount. When MIAA failed to settle the entire amount, the
officers of Paranaque city threatened to levy and subject to auction the land and buildings of MIAA, which
they did. MIAA sought for a Temporary Restraining Order from the CA but failed to do so within the 60 days
reglementary period, so the petition was dismissed. MIAA then sought for the TRO with the Supreme Court
a day before the public auction, MIAA was granted with the TRO but unfortunately the TRO was received by
the Paranaque City officers 3 hours after the public auction.

15
 MIAA claims that although the charter provides that the title of the land and building are with MIAA
still the ownership is with the Republic of the Philippines. MIAA also contends that it is an instrumentality of
the government and as such exempted from real estate tax. That the land and buildings of MIAA are of
public dominion therefore cannot be subjected to levy and auction sale. On the other hand, the officers of
Paranaque City claim that MIAA is a government owned and controlled corporation therefore not exempted
to real estate tax.

Issues:
Whether or not MIAA is an instrumentality of the government and not a government owned and
controlled corporation and as such exempted from tax.
Whether or not the land and buildings of MIAA are part of the public dominion and thus cannot be
the subject of levy and auction sale.

Ruling:
Under the Local government code, government owned and controlled corporations are not
exempted from real estate tax. MIAA is not a government owned and controlled corporation, for to become
one MIAA should either be a stock or non stock corporation. MIAA is not a stock corporation for its capital is
not divided into shares. It is not a non stock corporation since it has no members. MIAA is an instrumentality
of the government vested with corporate powers and government functions.

Under the civil code, property may either be under public dominion or private ownership. Those
under public dominion are owned by the State and are utilized for public use, public service and for the
development of national wealth. The ports included in the public dominion pertain either to seaports or
airports. When properties under public dominion cease to be for public use and service, they form part of
the patrimonial property of the State.

The court held that the land and buildings of MIAA are part of the public dominion. Since the airport
is devoted for public use, for the domestic and international travel and transportation. Even if MIAA charge
fees, this is for support of its operation and for regulation and does not change the character of the land and
buildings of MIAA as part of the public dominion. As part of the public dominion the land and buildings of
MIAA are outside the commerce of man. To subject them to levy and public auction is contrary to public
policy. Unless the President issues a proclamation withdrawing the airport land and buildings from public
use, these properties remain to be of public dominion and are inalienable. As long as the land and buildings
are for public use the ownership is with the Republic of the Philippines.

16
ACCFA V. CUGCO 30 SCRA 649
G.R. No. L-21484 November 29, 1969

FACTS:
ACCFA was a government agency created under RA No. 821, as amended. Its administrative machinery was
reorganized and its named changed to Agricultural Credit Administration under the Land Reform Code or RA
3844. ACCFA Supervisors' Association and the ACCFA Workers' Association were referred to as Union in the
ACCFA.

The Unions and ACCFA entered into a collective bargaining agreement effective for a period of one year.
Few months have passed, however,The Unions, together with the CUGCO, filed a complaint against the
ACCFA for having allegedly committed acts of unfair labor practices and non implementation of said
agreement. Court of Industrial Relations ordered ACCFA to cease from committing further acts tending to
discourage the Union members in the exercise of their right to self-organizatoin, to comply with and
implement the provisions of the CBA, and to bargain with good faith with the complainants. ACCFA moved
to reconsider but it was turned down in a resolution. ACCFA appealed by certiorari.

ISSUE:
Whether or not ACCFA exercised governmental functions.

RULING:
Yes. The implementation of the land reform program of the government according to Republic Act No. 3844
is most certainly a governmental, not a proprietary, function; and for that purpose Executive Order No. 75
has placed the ACA under the Land Reform Project Administration.

The law itself declares that the ACA is a government office, with the formulation of policies, plans and
programs vested no longer in a Board of Governors, as in the case of the ACCFA, but in the National Land
Reform Council, itself a government instrumentality; and that its personnel are subject to Civil Service laws
and to rules of standardization with respect to positions and salaries, any vestige of doubt as to the
governmental character of its functions disappears.

30 SCRA 649 – Political Law – Two-fold Function of the Government – Free Enterprise – Ministrant vs
Constituent Functions
In September 1961 a Collective Bargaining Agreement (CBA) was agreed upon by labor unions (ASA and
AWA) and ACCFA (Agricultural Credit and Cooperative Financing Administration). The said CBA was
supposed to be effective on July 1, 1962. Due to non-implementation of the CBA the unions held a strike on
October 25, 1962. And 5 days later CUGCO (Confederation of Unions in Government Corporations and
Offices), the mother union of ASA and AWA filed a complaint against ACCFA due to unfair labor practices,
among others, which CUGCO was able to win in court.
In April 1963, ACCFA appealed the decision and while the appeal was pending, Republic Act No. 3844 was
passed which effectively turned ACCFA to ACA (Agricultural Credit Administration). In March 1964, ASA and
AWA then petitioned that they may have sole bargaining rights with ACA. While this petition was not yet
decided upon, in the same month of March 1964, Executive Order No. 75 was also passed which placed ACA
under the Land Reform Project Administration (LRPA). Notwithstanding the latest legislation passed, the trial
court and the appellate court ruled in favor of ASA and AWA and ruled that they have bargaining rights with
ACA..
ISSUE: Whether or not ASA and AWA can be given sole bargaining rights with ACA.

17
HELD: No. The Unions have no bargaining rights with ACA. EO 75 placed ACA under the LRPA and by virtue of
RA 3844 the implementation of the Land Reform Program of the government is a governmental function
NOT a proprietary function. Being such, ACA can no longer step down to deal privately with said unions as it
may have been doing when it was still ACCFA.
The Supreme Court also made a pronouncement which recognized the growing complexities of modern
society which have rendered the classification of the governmental functions (ministrant and constituent) as
unrealistic, if not obsolete. Ministerial and governmental functions continue to lose their well-defined
boundaries and are absorbed within the activities that the government must undertake in its sovereign
capacity if it to meet the increasing social challenges of the times and move towards a greater socialization
of economic forces. Hence, gone are the days where constituent functions are exclusively performed by the
government and not delegated to private institutions. In this case, a constituent function is left to be
performed by a private entity like ACA (formerly ACCFA).
Separate Opinion on the Free Enterprise System
J. Fernando – This country never practiced the free enterprise system and it has abandoned the concept
of laissez faire. It is the welfare state concept which is being followed as shown by the constitutional
provision on agrarian reform, housing, protection to labor and others that provide for the social welfare.

VALMONTE V. BELMONTE 170 SCRA 256

G.R. No. 74930 February 13, 1989 RICARDO VALMONTE, OSWALDO CARBONELL, DOY DEL CASTILLO,
ROLANDO BARTOLOME, LEO OBLIGAR, JUN GUTIERREZ, REYNALDO BAGATSING, JUN "NINOY" ALBA, PERCY
LAPID, ROMMEL CORRO and ROLANDO FADUL, petitioners, vs. FELICIANO BELMONTE, JR., respondent.

FACTS : Petitioners in this special civil action for mandamus with preliminary injunction invoke their right to
information and pray that respondent be directed: (a) to furnish petitioners the list of the names of the
Batasang Pambansa members belonging to the UNIDO and PDP-Laban who were able to secure clean loans
immediately before the February 7 election thru the intercession/marginal note of the then First Lady
Imelda Marcos; and/or (b) to furnish petitioners with certified true copies of the documents evidencing their
respective loans; and/or (c) to allow petitioners access to the public records for the subject information On
June 20, 1986, apparently not having yet received the reply of the Government Service and Insurance
System (GSIS) Deputy General Counsel, petitioner Valmonte wrote respondent another letter, saying that
for failure to receive a reply, "(W)e are now considering ourselves free to do whatever action necessary
within the premises to pursue our desired objective in pursuance of public interest."

ISSUE : WON Valmonte, et. al. are entitled as citizens and taxpayers to inquire upon GSIS records on behest
loans given by the former First Lady Imelda Marcos to Batasang Pambansa members belonging to the
UNIDO and PDP-Laban political parties.

HELD : Respondent has failed to cite any law granting the GSIS the privilege of confidentiality as regards the
documents subject of this petition. His position is apparently based merely on considerations of policy. The
judiciary does not settle policy issues. The Court can only declare what the law is, and not what the law
should be. Under our system of government, policy issues are within the domain of the political branches of
the government, and of the people themselves as the repository of all State power. The concerned
borrowers themselves may not succeed if they choose to invoke their right to privacy, considering the public
offices they were holding at the time the loans were alleged to have been granted. It cannot be denied that
because of the interest they generate and their newsworthiness, public figures, most especially those
holding responsible positions in government, enjoy a more limited right to privacy as compared to ordinary
individuals, their actions being subject to closer public scrutiny The "transactions" used here I suppose is
generic and, therefore, it can cover both steps leading to a contract, and already a consummated contract,
18
Considering the intent of the framers of the Constitution which, though not binding upon the Court, are
nevertheless persuasive, and considering further that government-owned and controlled corporations,
whether performing proprietary or governmental functions are accountable to the people, the Court is
convinced that transactions entered into by the GSIS, a government-controlled corporation created by
special legislation are within the ambit of the people's right to be informed pursuant to the constitutional
policy of transparency in government dealings. Although citizens are afforded the right to information and,
pursuant thereto, are entitled to "access to official records," the Constitution does not accord them a right
to compel custodians of official records to prepare lists, abstracts, summaries and the like in their desire to
acquire information on matters of public concern

CO KIM CHAN V. VALDEZ TAN KEH 75 PHIL 113B

G.R. No. L-5 75 Phil 113, 122 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.
Facts:
Petitioner Co Kim Cham had a pending Civil Case with the Court of First Instance of Manila initiated during
the time of the Japanese occupation.
The respondent judge, Judge Arsenio Dizon, refused to continue hearings on the case which were initiated
during the Japanese military occupation on the ground that the proclamation issued by General MacArthur
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” had the effect of invalidating and nullifying all judicial proceedings and judgments
of the court of the Philippines during the Japanese military occupation, and that 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.

Respondent, additionally contends that the government established during the Japanese occupation were
no de facto government.
Issues:

1. Whether or not judicial acts and proceedings of the court made during the Japanese occupation were
valid and remained valid even after the liberation or reoccupation of the Philippines by the United States
and Filipino forces.
2. Whether or not the October 23, 1944 proclamation issued by General MacArthur declaring 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” has invalidated all judgments and judicial acts and proceedings of the courts.
3. Whether or not those courts could continue hearing the cases pending before them, if the said judicial
acts and proceedings were not invalidated by MacArthur’s proclamation.

Discussions:

19
 Political and international law recognizes that all acts and proceedings of a de facto government are
good and valid. The Philippine Executive Commission and the Republic of the Philippines under the
Japanese occupation may be considered de facto governments, supported by the military force and
deriving their authority from the laws of war. 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 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.”
 General MacArthur annulled proceedings of other governments in his proclamation October 23, 1944,
but this cannot be applied on judicial proceedings because such a construction would violate the law of
nations.
 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 re-established 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.”

Rulings:

1. The judicial acts and proceedings of the court were good and valid. 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 court of
justice of those governments, which are not of a political complexion, were good and valid. Those not
only judicial but also legislative acts of de facto government, which are not of a political complexion,
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.
2. 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
20
 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.
3. Although in theory 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. An Executive
Order of President McKinley to the Secretary of War states that “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 pre-existing 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.”
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.

LAWYER’S LEAGUE V. AQUINO GR NO. 73748 MAY 22 1986 ( De Jure Government)

G.R. No. 73748 73972 May 22, 1986
Lawyers’ League for Better Philippines and/or Oliver A. Lozano, petitioner vs.
President Corazon Aquino, et al, defendant
Facts:
On February 25, 1986, President Corazon Aquino issued Proclamation No. 1 announcing that she and Vice
President Laurel were taking power.
On March 25, 1986, proclamation No.3 was issued providing the basis of the Aquino government
assumption of power by stating that the “new government was installed through a direct exercise of the
power of the Filipino people assisted by units of the New Armed Forces of the Philippines.”
Petitioners alleged that the Aquino government is illegal because it was not established pursuant to the
1973 Constitution.
Issues:

1. Whether or not the petitioners have a personality to sue.

2. Whether or not the government of Corazon Aquino is legitimate.

Discussions:

 In order that the citizen’s actions may be allowed a party must show that he personally has suffered
some actual or threatened injury as a result of the allegedly illegal conduct of the government; the injury
is fairly traceable to the challenged action; and the injury is likely to be redressed by a favourable action.
21
 The community of nations has recognized the legitimacy of the provisional It was the people that made
the judgement and accepted the new government. Thus, the Supreme Court held its legitimacy.

Rulings:

1. Petitioners have no personality to sue and their petitions state no cause of action. The holding that
petitioners did not have standing followed from the finding that they did not have a cause of action.
2. The legitimacy of the Aquino government is not a justiciable matter but belongs to the realm of politics
where only the people are the judge. And the people have made the judgment; they have accepted the
government of President Corazon C. Aquino which is in effective control of the entire country so that it
is not merely a de facto government but is in fact and law a de jure government. Moreover, the
community of nations has recognized the legitimacy of the present government.

HARVEY V. COMMISSION 162 SCRA 840

NO. 82544; 28 JUN 1988]
Wednesday, February 04, 2009 Posted by Coffeeholic Writes
Labels: Case Digests, Political Law

Facts: This is a petition for Habeas Corpus. Petitioners are the following: American nationals Andrew Harvey,
52 and Jonh Sherman 72.Dutch Citizen Adriaan Van Den Elshout, 58. All reside at Pagsanjan Laguna
respondent Commissioner Miriam Defensor Santiago issued Mission Orders to the Commission of
Immigration and Deportation (CID) to apprehended petitioners at their residences. The “Operation Report”
read that Andrew Harvey was found together with two young boys. Richard Sherman was found with two
naked boys inside his room. While Van Den Elshout in the “after Mission Report” read that two children of
ages 14 and 16 has been under his care and subjects confirmed being live-in for sometime now.

Seized during the petitioner’s apprehension were rolls of photo negatives and photos of suspected child
prostitutes shown in scandalous poses as well as boys and girls engaged in sex. Posters and other literature
advertising the child prostitutes were also found.

Petitioners were among the 22 suspected alien pedophiles. They were apprehended 17 February1988 after
close surveillance for 3 month of the CID in Pagsanjan, Laguna. 17 of the arrested aliens opted for self-
deportation. One released for lack of evidence, another charged not for pedophile but working with NO
VISA, the 3 petitioners chose to face deportation proceedings. On 4 March1988, deportation proceedings
were instituted against aliens for being undesirable aliens under Sec.69 of Revised Administrative Code.

Warrants of Arrest were issued 7March1988 against petitioners for violation of Sec37, 45 and 46 of
Immigration Act and sec69 of Revised Administrative Code. Trial by the Board of Special Inquiry III
commenced the same date. Petition for bail was filed 11March 1988 but was not granted by the
Commissioner of Immigration. 4 April1988 Petitioners filed a petition for Writ of Habeas Corpus. The court
heard the case on oral argument on 20 April 1988.

Issues:

22
(1) Whether or Not the Commissioner has the power to arrest and detain petitioners pending determination
of existence of probable cause.

(2) Whether or Not there was unreasonable searches and seizures by CID agents.

(3) Whether or Not the writ of Habeas Corpus may be granted to petitioners.

Held: While pedophilia is not a crime under the Revised Penal Code, it violates the declared policy of the
state to promote and protect the physical, moral, spiritual and social well being of the youth. The arrest of
petitioners was based on the probable cause determined after close surveillance of 3 months. The existence
of probable cause justified the arrest and seizure of articles linked to the offense. The articles were seized as
an incident to a lawful arrest; therefore the articles are admissible evidences (Rule 126, Section12 of Rules
on Criminal Procedure).

The rule that search and seizures must be supported by a valid warrant of arrest is not an absolute rule.
There are at least three exceptions to this rule. 1.) Search is incidental to the arrest. 2.) Search in a moving
vehicle. 3.) Seizure of evidence in plain view. In view of the foregoing, the search done was incidental to the
arrest.

The filing of the petitioners for bail is considered as a waiver of any irregularity attending their arrest and
estops them from questioning its validity. Furthermore, the deportation charges and the hearing presently
conducted by the Board of Special Inquiry made their detention legal. It is a fundamental rule that habeas
corpus will not be granted when confinement is or has become legal, although such confinement was illegal
at the beginning.

The deportation charges instituted by the Commissioner of Immigration are in accordance with Sec37 (a) of
the Philippine Immigration Act of 1940 in relation to sec69 of the Revised Administrative code. Section 37
(a) provides that aliens shall be arrested and deported upon warrant of the Commissioner of Immigration
and Deportation after a determination by the Board of Commissioners of the existence of a ground for
deportation against them. Deportation proceedings are administrative in character and never construed as a
punishment but a preventive measure. Therefore, it need not be conducted strictly in accordance with
ordinary Court proceedings. What is essential is that there should be a specific charge against the alien
intended to be arrested and deported. A fair hearing must also be conducted with assistance of a counsel if
desired.

Lastly, the power to deport aliens is an act of the State and done under the authority of the sovereign
power. It a police measure against the undesirable aliens whose continued presence in the country is found
to be injurious to the public good and tranquility of the people.

STATE IMMUNITY
MUNICIPALITY OF HAGONOY ULACAN V. HON. SIMEON DUMDUM JR. GR 168289 MARCH 22, 2010
G.R. No. 168289, March 22, 2010,
Peralta,J:P
FACTS: A complaint was filed by Lim Chao against the Municipality of Hagonoy, Bulacan for collection of sum
of money and damages. The complaint alleged that a contract was entered into by Lim Chao and the
Municipality for the delivery of motor vehicles, which supposedly were needed to carry out certain
23
developmental undertakings in the municipality. Lim Chao then delivered to the Municipality of Hagonoy 21
motor vehicles amounting to P5,820,000.00. However, despite having made several deliveries, the
Municipality allegedly did not heed Lim Chao’s claim for payment. Thus, she filed a complaint for full
payment of the said amount, with interest and damages and prayed for the issuance of a writ of preliminary
attachment against the Municipality. The trial court issued the Writ of Preliminary Attachment directing the
sheriff "to attach the estate, real and personal properties" of the Municipality. The Municipality filed a
Motion to Dismiss on the ground that the claim on which the action had been brought was unenforceable
under the statute of frauds, pointing out that there was no written contract or document that would evince
the supposed agreement they entered into with respondent. It also filed a Motion to Dissolve and/or
Discharge the Writ of Preliminary Attachment already issued, invoking, among others, immunity of the state
from suit. The Municipality argued that as a municipal corporation, it is immune from suit, and that its
properties are by law exempt from execution and garnishment. Lim Chao on her part, counters that, the
Municipality’s claim of immunity from suit is negated by the Local Government Code, which vests municipal
corporations with the power to sue and be sued. The Court of Appeals affirmed the trial court’s order.
ISSUE: W/N the issuance of the Writ of Preliminary Attachment against the Municipality of Hagonoy is valid.
HELD: No. The universal rule is that where the State gives its consent to be sued by private parties either by
general or special law, it may limit claimant’s action "only up to the completion of proceedings anterior to
the stage of execution" and that the power of the Courts ends when the judgment is rendered. Since
government funds and properties may not be seized under writs of execution or garnishment to satisfy such
judgments, is based on obvious considerations of public policy. Disbursements of public funds must be
covered by the corresponding appropriations as required by law. The functions and public services rendered
by the State cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their
legitimate and specific objects
AIR TRANSPORTATION OFFICE V. DAVID FEB 23, 2011 GR NO.159402
Facts

Sps. Ramos discovered that a portion of their land (somewhere in Baguio) was being used as part of the
runway and running shoulder of the Loakan Airport which is operated by ATO. Sometime in 1995,
respondents agreed to convey the subject portion by deed of sale to ATO in consideration of the amount of
Php778,150.00. However, ATO failed to pay despite repeated verbal and written demands. Thus, an action
for collection against ATO was filed by the respondents before the RTC. ATO’s primary contention was that
the deed of sale was entered into the performance of governmental functions. RTC ruled in favor of the
respondents. CA affirmed RTC. Hence, the petition.

Issue/s: Whether ATO could be sued without the State’s consent.

Ruling/s
SC dismissed the petition for lack of merit.
The State’s immunity from suit does not extend to the petitioner (ATO) because it is an agency of the State
engaged in an enterprise that is far from being the State’s exclusive prerogative. The CA thereby correctly
appreciated the juridical character of the ATO as an agency of the Government not performing a purely
governmental or sovereign function, but was instead involved in the management and maintenance of the
Loakan Airport, an activity that was not the exclusive prerogative of the State in its sovereign capacity.
Hence, the ATO had no claim to the State’s immunity from suit. The SC further observes that the doctrine of
sovereign immunity cannot be successfully invoked to defeat a valid claim for compensation arising from the

24
taking without just compensation and without the proper expropriation proceedings being first resorted to
of the plaintiff’s property.

Lastly, the issue of whether or not the ATO could be sued without the States consent has been rendered
moot by the passage of Republic Act No. 9497, otherwise known as the Civil Aviation Authority Act of 2008.
R.A. No. 9497 abolished the ATO and under its Transitory Provisions, R.A. No. 9497 established in place of
the ATO the Civil Aviation Authority of the Philippines (CAAP), which thereby assumed all of the ATOs
powers, duties and rights, assets, real and personal properties, funds, and revenues. Section 23 of R.A. No.
9497 enumerates the corporate powers vested in the CAAP, including the power to sue and be sued, to
enter into contracts of every class, kind and description, to construct, acquire, own, hold, operate, maintain,
administer and lease personal and real properties, and to settle, under such terms and conditions most
advantageous to it, any claim by or against it. With the CAAP having legally succeeded the ATO pursuant to
R.A. No. 9497, the obligations that the ATO had incurred by virtue of the deed of sale with the Ramos
spouses might now be enforced against the CAAP.

Sovereign Immunity; expropriation. The doctrine of sovereign immunity cannot be successfully invoked to
defeat a valid claim for compensation arising from the taking without just compensation and without the
proper expropriation proceedings being first resorted to of the plaintiffs’ property. The SC cited the previous
case of De los Santos v. Intermediate Appellate Court where it ruled that the doctrine of sovereign immunity
was not an instrument for perpetrating any injustice on a citizen. In exercising the right of eminent domain,
the State exercised its jus imperii, as distinguished from its proprietary rights, or jus gestionis; yet, even in
that area, where private property had been taken in expropriation without just compensation being paid,
the defense of immunity from suit could not be set up by the State against an action for payment by the
owners.

CHINA NATIONAL MACHINERY AND EQUIPMENT CORP. V. Hon Cesar Stamaria GR NO. 185872 FEB 7,2012
 Whether or not petitioner CNMEG is an agent of the sovereign Peoples Republic of China.
 Whether or not the Northrail contracts are products of an executive agreement between two sovereign
states.
 Whether or not the certification from the Department of Foreign Affairs is necessary under the foregoing
circumstances.
 Whether or not the act being undertaken by petitioner CNMEG is an act jure imperii.
 Whether or not the Court of Appeals failed to avoid a procedural limbo in the lower court.
 Whether or not the Northrail Project is subject to competitive public bidding.
 Whether or not the Court of Appeals ignored the ruling of this Honorable Court in the Neri case.

CNMEG prays for the dismissal of Civil Case No. 06-203 before RTC Br. 145 for lack of jurisdiction. It likewise
requests this Court for the issuance of a TRO and, later on, a writ of preliminary injunction to restrain public
respondent from proceeding with the disposition of Civil Case No. 06-203.
The crux of this case boils down to two main issues, namely:
 Whether CNMEG is entitled to immunity, precluding it from being sued before a local court.
 Whether the Contract Agreement is an executive agreement, such that it cannot be questioned by or
before a local court.

First issue: Whether CNMEG is entitled to immunity

This Court explained the doctrine of sovereign immunity in Holy See v. Rosario,[24] to wit:
There are two conflicting concepts of sovereign immunity, each widely held and firmly established.
According to the classical or absolute theory, a sovereign cannot, without its consent, be made a respondent
in the courts of another sovereign. According to the newer or restrictive theory, the immunity of the
25
sovereign is recognized only with regard to public acts or acts jure imperii of a state, but not with regard to
private acts or acts jure gestionis. (Emphasis supplied; citations omitted.)

xxx xxx xxx

The restrictive theory came about because of the entry of sovereign states into purely commercial activities
remotely connected with the discharge of governmental functions. This is particularly true with respect to
the Communist states which took control of nationalized business activities and international trading.

The doctrine of state immunity from suit has undergone further metamorphosis. The view evolved that the
existence of a contract does not, per se, mean that sovereign states may, at all times, be sued in local courts.
The complexity of relationships between sovereign states, brought about by their increasing commercial
activities, mothered a more restrictive application of the doctrine.

As it stands now, the application of the doctrine of immunity from suit has
been restricted to sovereign or governmental activities (jure imperii). The mantle of state immunity cannot be
extended to commercial, private and proprietary acts (jure gestionis.

A. CNMEG is engaged in a proprietary activity.

A threshold question that must be answered is whether CNMEG performs governmental or proprietary
functions. A thorough examination of the basic facts of the case would show that CNMEG is engaged in a
proprietary activity.
The parties executed the Contract Agreement for the purpose of constructing the Luzon Railways, viz:[29]
WHEREAS the Employer (Northrail) desired to construct the railways form Caloocan to Malolos, section I,
Phase I of Philippine North Luzon Railways Project (hereinafter referred to as THE PROJECT);

AND WHEREAS the Contractor has offered to provide the Project on Turnkey basis, including design,
manufacturing, supply, construction, commissioning, and training of the Employers personnel;

AND WHEREAS the Loan Agreement of the Preferential Buyers Credit between Export-Import Bank
of China and Department of Finance of Republic of the Philippines;

NOW, THEREFORE, the parties agree to sign this Contract for the Implementation of the Project.

The above-cited portion of the Contract Agreement, however, does not on its own reveal whether the
construction of the Luzon railways was meant to be a proprietary endeavor. In order to fully understand the
intention behind and the purpose of the entire undertaking, the Contract Agreement must not be read in
isolation. Instead, it must be construed in conjunction with three other documents executed in relation to
the Northrail Project, namely: (a) the Memorandum of Understanding dated 14 September 2002 between
Northrail and CNMEG;[30] (b) the letter of Amb. Wang dated 1 October 2003 addressed to Sec.
Camacho;[31] and (c) the Loan Agreement.[32]

1. Memorandum of Understanding dated 14 September 2002

2. Letter dated 1 October 2003
That CNMEG, and not the Chinese government, initiated the Northrail Project was confirmed by Amb. Wang in
his letter dated 1 October 2003,
Thus, the desire of CNMEG to secure the Northrail Project was in the ordinary or regular course of its
business as a global construction company. The implementation of the Northrail Project was intended to

26
generate profit for CNMEG, with the Contract Agreement placing a contract price of USD 421,050,000 for the
venture.[35] The use of the term state corporation to refer to CNMEG was only descriptive of its nature as a
government-owned and/or -controlled corporation, and its assignment as the Primary Contractor did not
imply that it was acting on behalf of China in the performance of the latters sovereign functions. To imply
otherwise would result in an absurd situation, in which all Chinese corporations owned by the state would
be automatically considered as performing governmental activities, even if they are clearly engaged in
commercial or proprietary pursuits.
3. The Loan Agreement
CNMEG claims immunity on the ground that the Aug 30 MOU on the financing of the Northrail Project was
signed by the Philippine and Chinese governments, and its assignment as the Primary Contractor meant that it
was bound to perform a governmental function on behalf of China. However, the Loan Agreement, which
originated from the same Aug 30 MOU, belies this reasoning, viz:
Article 11. xxx (j) Commercial Activity The execution and delivery of this Agreement by the Borrower
constitute, and the Borrowers performance of and compliance with its obligations under this Agreement will
constitute, private and commercial acts done and performed for commercial purposes under the laws of the
Republic of the Philippines and neither the Borrower nor any of its assets is entitled to any immunity or
privilege (sovereign or otherwise) from suit, execution or any other legal process with respect to its obligations
under this Agreement, as the case may be, in any jurisdiction. Notwithstanding the foregoing, the Borrower
does not waive any immunity with respect of its assets which are (i) used by a diplomatic or consular mission
of the Borrower and (ii) assets of a military character and under control of a military authority or defense
agency and (iii) located in the Philippines and dedicated to public or governmental use (as distinguished from
patrimonial assets or assets dedicated to commercial use). (Emphasis supplied.)

State immunity from suit may be waived by general or special law. The special law can take the form of the
original charter of the incorporated government agency. Jurisprudence is replete with examples of
incorporated government agencies which were ruled not entitled to invoke immunity from suit, owing to
provisions in their charters manifesting their consent to be sued.

It is useful to note that on the part of the Philippine government, it had designated two entities, the Department
of Health and the Philippine Health Insurance Corporation (PHIC), as the implementing agencies in behalf of the
Philippines. The PHIC was established under Republic Act No. 7875, Section 16 (g) of which grants the
corporation the power to sue and be sued in court. Applying the previously cited jurisprudence, PHIC would not
enjoy immunity from suit even in the performance of its functions connected with SHINE, however, (sic)
governmental in nature as (sic) they may be.

C. CNMEG failed to present a certification from the Department of Foreign Affairs.

In the Philippines, the practice is for the foreign government or the international organization to first secure
an executive endorsement of its claim of sovereign or diplomatic immunity. But how the Philippine Foreign
Office conveys its endorsement to the courts varies.
In the case at bench, the Department of Foreign Affairs, through the Office of Legal Affairs moved with this
Court to be allowed to intervene on the side of petitioner. The Court allowed the said Department to file its
memorandum in support of petitioners claim of sovereign immunity.

In some cases, the defense of sovereign immunity was submitted directly to the local courts by the
respondents through their private counsels (Raquiza v. Bradford, 75 Phil. 50 [1945]; Miquiabas v. Philippine-
Ryukyus Command, 80 Phil. 262 [1948]; United States of America v. Guinto, 182 SCRA 644 [1990] and
companion cases). In cases where the foreign states bypass the Foreign Office, the courts can inquire into

27
the facts and make their own determination as to the nature of the acts and transactions
involved.[43] (Emphasis supplied.)

D. An agreement to submit any dispute to arbitration may be construed as an implicit waiver of

immunity from suit.

In the United States, the Foreign Sovereign Immunities Act of 1976 provides for a waiver by implication of
state immunity. In the said law, the agreement to submit disputes to arbitration in a foreign country is
construed as an implicit waiver of immunity from suit. Although there is no similar law in the Philippines, there
is reason to apply the legal reasoning behind the waiver in this case.
The Conditions of Contract,[48] which is an integral part of the Contract Agreement,[49] states:
33. SETTLEMENT OF DISPUTES AND ARBITRATION

Second issue: Whether the Contract Agreement is an executive agreement

A. CNMEG is neither a government nor a government agency.

The Contract Agreement was not concluded between the Philippines and China, but between Northrail and
CNMEG.[51] By the terms of the Contract Agreement, Northrail is a government-owned or -controlled
corporation, while CNMEG is a corporation duly organized and created under the laws of the Peoples Republic
of China.[52] Thus, both Northrail and CNMEG entered into the Contract Agreement as entities with
personalities distinct and separate from the Philippine and Chinese governments, respectively.
Neither can it be said that CNMEG acted as agent of the Chinese government. As previously discussed, the fact
that Amb. Wang, in his letter dated 1 October 2003,[53]described CNMEG as a state corporation and declared
its designation as the Primary Contractor in the Northrail Project did not mean it was to perform sovereign
functions on behalf of China. That label was only descriptive of its nature as a state-owned corporation, and
did not preclude it from engaging in purely commercial or proprietary ventures.

B. The Contract Agreement is to be governed by Philippine law.

Article 2 of the Conditions of Contract,[54] which under Article 1.1 of the Contract Agreement is an integral part
of the latter, states:
APPLICABLE LAW AND GOVERNING LANGUAGE

The contract shall in all respects be read and construed in accordance with the laws of the Philippines.

The contract shall be written in English language. All correspondence and other documents pertaining to the
Contract which are exchanged by the parties shall be written in English language.

Since the Contract Agreement explicitly provides that Philippine law shall be applicable, the parties have
effectively conceded that their rights and obligations thereunder are not governed by international law.
It is therefore clear from the foregoing reasons that the Contract Agreement does not partake of the nature of
an executive agreement. It is merely an ordinary commercial contract that can be questioned before the local
courts.
WHEREFORE, the instant Petition is DENIED. Petitioner China National Machinery & Equipment Corp.
(Group) is not entitled to immunity from suit, and the Contract Agreement is not an executive
agreement. CNMEGs prayer for the issuance of a TRO and/or Writ of Preliminary Injunction is DENIED for being

28
moot and academic. This case is REMANDED to the Regional Trial Court of Makati, Branch 145, for further
proceedings as regards the validity of the contracts subject of Civil Case No. 06-203.
No pronouncement on costs of suit.

METRAN VS. PAREDES 79 PHIL 819

ANGAT IRRIGATION SYSTEM V. ANGAT RIVER WORKER’S UNION 102 PHIL 789

BUREAU OF PRINTING V. BUREAU OF RPINTING EMPLOYEES ASSOCIATION 1 SCRA 340

29
MOBIL PHILS. V. CUSTOMS ARRASTRE SERVICE 18 SCRA 1120

SYQUIA V. ALMEDA LOPEZ84 PHIL 312

RUIZ V. CABAHUG 102 PHIL 110

30
FESTEJO V. FERNANDO 94 PHIL 504

MANILA HOTEL EMPLOYEES ASSN V. MANILA HOTEL 73 PHIL 374

REPUBLIC V. VILLASOR 54 SCRA 83

31
PROVIDENCE WASHINGTON INSURANCE CO. V. REPUBLIC OF THE PHILIPPINES 29 SCRA 598

REPUBLIC V. PURISIMA 78 SCRA 470

VETERANS MANPOWER AND PROTECTIVE SERVICES INC. V. CA 214 SCRA 286

32
CALUB AND VALENCIA V. COURT OF APPEALS GR NO. 115634 APRIL 27, 2000

MINESTERIO V. CFI 40 SCRA 464

33