8/10/2019 PHILIPPINE REPORTS ANNOTATED VOLUME 100

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

LEOPOLDO T. BACANI and MATEO A. MATOTO,

plaintiffs and appellees, vs. NATIONAL COCONUT
CORPORATION, ET AL., defendants, NATIONAL
COCONUT CORPORATION and BOARD OF
LIQUIDATORS, defendants-appellants.

1. POLITICAL LAW; TERM “GOVERNMENT OF THE

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

2. STENOGRAPHERS; TRANSCRIPT FEES; PAYMENT

OF FEES BEYOND THE LIMIT PRESCRIBED BY THE
RULES OF COURT, VALID.—It is

469

VOL. 100, NOVEMBER 29, 1956 469

Bacani and Matoto vs. Nat’l. Coconut Corp., et al.

true that in section 8, Rule 130, stenographers may only

charge as fees P0.30 for each page of transcript of not less
than 200 words before the appeal is taken and P0.15 for
file:///C:/Users/Acer/Desktop/CASES/CentralBooks_Reader BACANI VS NACOCO_files/saved_resource.html 1/8
8/10/2019 PHILIPPINE REPORTS ANNOTATED VOLUME 100

each page after the filing of the appeal, but where, as in

the case at bar, the party has agreed and in fact has paid
P1 per page for the services rendered by the stenographers
and has not raised any objection to the amount paid until
its propriety was disputed by the Auditor General, the
payment of the fees became contractual and as such is
valid even if it goes beyond the limit prescribed by the
Rules of Court.

APPEAL from a judgment of the Court of First Instance of

Manila. Bayona, J.
The facts are stated in the opinion of the Court.
Valentin C. Gutierrez for appellees.
First Corporate Counsel Simeon M. Gopengco and
Lorenzo Mosqueda for appellants National Coconut
Corporation and Board of Liquidators.
Solicitor General Ambrosio Padilla and Solicitor Jorge
R. Coquia for appellants.

BAUTISTA ANGELO, J.:

Plaintiffs herein are court stenographers assigned in

Branch VI of the Court of First Instance of Manila. During
the pendency of Civil Case No. 2293 of said court, entitled
Francisco Sycip vs. National Coconut Corporation,
Assistant Corporate Counsel Federico Alikpala, coun-sel for
defendant, requested said stenographers for copies of the
transcript of the stenographic notes taken by them during
the hearing. Plaintiffs complied with the request by
delivering to Counsel Alikpala the needed transcript
containing 714 pages and thereafter submitted to him their
bills for the payment of their fees. The National Coconut
Corporation paid the amount of P564 to Leopoldo T. Bacani
and P150 to Mateo A. Matoto for said transcript at the rate
of P1 per page.
Upon inspecting the books of this corporation, the
Auditor General disallowed the payment of these fees and
sought the recovery of the amounts paid. On January 19,
470

470 PHILIPPINE REPORTS ANNOTATED

Bacani and Matoto vs. Nat’l. Coconut Corp., et al.

1953, the Auditor General required the plaintiffs to

reimburse said amounts on the strength of a circular of the
Department of Justice wherein the opinion was expressed
that the National Coconut Corporation, being a

file:///C:/Users/Acer/Desktop/CASES/CentralBooks_Reader BACANI VS NACOCO_files/saved_resource.html 2/8

8/10/2019 PHILIPPINE REPORTS ANNOTATED VOLUME 100

government entity, was exempt from the payment of the

fees in question. On February 6, 1954, the Auditor General
issued an order directing the Cashier of the Department of
Justice to deduct from the salary of Leopoldo T. Bacani the
amount of P25 every payday and from the salary of Mateo
A. Matoto the amount of P10 every payday beginning
March 30, 1954. To prevent deduction of these fees from
their salaries and secure a judicial ruling that the National
Coconut Corporation is not a government entity within the
purview of section 16, Rule 130 of the Rules of Court, this
action was instituted in the Court of First Instance of
Manila.
Defendants set up as a defense that the National
Coconut Corporation is a government entity within the
purview of section 2 of the Revised Administrative Code of
1917 and, hence, it is exempt from paying the
stenographers’ fees under Rule 130 of the Rules of Court.
After trial, the court found for the plaintiffs declaring (1)
“that defendant National Coconut Corporation is not a
government entity within the purview of section 16, Rule
130 of the Rules of Court; (2) that the payments already
made by said defendant to plaintiffs herein and received by
the latter from the former in the total amount of P714, for
copies of the stenographic transcripts in question, are valid,
just and legal; and (3) that plaintiffs are under no
obligation whatsoever to make a refund of these payments
already received by them.” This is an appeal from said
decision.
Under section 16, Rule 130 of the Rules of Court, the
Government of the Philippines is exempt from paying the
legal fees provided for therein, and among these fees are
those which stenographers may charge for the transcript of
notes taken by them that may be requested by
471

VOL. 100, NOVEMBER 29, 1956 471

Bacani and Matoto vs. Nat’l. Coconut Corp., et al.

any interested person (section 8) The fees in question are

for the transcript of notes taken during the hearing of a
case in which the National Coconut Corporation is
interested, and the transcript was requested by its
assistant corporate counsel for the use of said corporation.
On the other hand, section 2 of the Revised
Administrative Code defines the scope of the term
“Government of the Republic of the Philippines” as follows:

file:///C:/Users/Acer/Desktop/CASES/CentralBooks_Reader BACANI VS NACOCO_files/saved_resource.html 3/8

8/10/2019 PHILIPPINE REPORTS ANNOTATED VOLUME 100

“‘The Government of the Philippine Islands’ is a term which refers

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

The question now to be determined is whether the National

Coconut Corporation may be considered as included in the
term “Government of the Republic of the Philippines” for
the purposes of the exemption of the legal fees provided for
in Rule 130 of the Rules of Court.
As may be noted, the term “Government of the Republic
of the Philippines” refers to a government entity through
which the functions of government are exercised, including
the various arms through which political authority is made
effective in the Philippines, whether pertaining to the
central government or to the provincial or municipal
branches or other form of local government. This requires a
little digression on the nature and functions of our
government as instituted in our Constitution.
To begin with, we state that the term “Government” may
be defined as “that institution or aggregate of institutions
by which an independent society makes and carries out
those rules of action which are necessary to enable men to
live in a social state, or which are imposed upon the people
forming that society by those who possess the power or
authority of prescribing them” (U.S. vs. Dorr, 2 Phil., 332).
This institution, when referring to the

472

472 PHILIPPINE REPORTS ANNOTATED

Bacani and Matoto vs. Nat’l. Coconut Corp., et al.

national government, has reference to what our

Constitution has established composed of three great
departments, the legislative, executive, and the judicial,
through which the powers and functions of government are
exercised. These functions are twofold: constitute and
ministrant. The former are those which constitute the very
bonds of society and are compulsory in nature; the latter
are those that are undertaken only by way of advancing the
general interests of society, and are merely optional.
President Wilson enumerates the constituent functions as
ex ollows:
file:///C:/Users/Acer/Desktop/CASES/CentralBooks_Reader BACANI VS NACOCO_files/saved_resource.html 4/8
8/10/2019 PHILIPPINE REPORTS ANNOTATED VOLUME 100

“'(1) The keeping of order and providing for the

protection of persons and property from violence
and robbery.
'(2) The fixing of the legal relations between man and
wife and between parents and children.
'(3) The regulation of the holding, transmission, and
interchange of property, and the determination of
its liabilities for debt or for crime.
'(4) The determination of contract rights between
individuals.
'(5) The definition and punishment of crime.
'(6) The administration of justice in civil cases.
'(7) The determination of the political duties, privileges,
and relations of citizens.
'(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.’ " (Malcolm, The
Government of the Philippine Islands, p. 19.)

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 determining 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. (Malcom, The Government of the Philippine
Islands, pp. 19–20.)
473

VOL. 100, NOVEMBER 29, 1956 473

Bacani and Matoto vs. Nat’l. Coconut Corp., et al.

From the above we may infer that, strictly speaking, there

are functions which our government is required to exercise
to promote its objectives as expressed in our Constitution
and which are exercised by it as an attribute of
sovereignty, and those which it may exercise to promote
merely the welfare, progress and prosperity of the people
To this latter class belongs the organization of those
corporations owned or controlled by the government to

file:///C:/Users/Acer/Desktop/CASES/CentralBooks_Reader BACANI VS NACOCO_files/saved_resource.html 5/8

8/10/2019 PHILIPPINE REPORTS ANNOTATED VOLUME 100

promote certain aspects of the economic life of our people

such as the National Coconut Corporation. These are what
we call government-owned or controlled corporations which
may take on the form of a private enterprise or one
organized with powers and formal characteristics of a
private corporations under the Corporation Law.
The question that now arises is: Does the fact that these
corporation perform certain functions of government make
them a part of the Government of the Philippines?
The answer is simple: they do not acquire that status for
the simple reason that they do not come under the
classification of municipal or public corporation. Take for
instance the National Coconut Corporation. While it was
organized with the purpose of “adjusting the coconut
industry to a position independent of trade preferences in
the United States” and of providing “Facilities for the
better curing of copra products and the proper utilization of
coconut by-products”, a function which our government has
chosen to exercise to promote the coconut industry,
however, it was given a corporate power separate and
distinct from our government, for it was made subject to
the provisions of our Corporation Law in so far as its
corporate existence and the powers that it may exercise are
concerned (sections 2 and 4, Commonwealth Act No. 518).
It may sue and be sued in the same manner as any other
private corporations, and in this sense it is an entity
different from our government. As this Court has aptly
said, “The mere fact that the Government happens to be a
majority stockholder does
474

474 PHILIPPINE REPORTS ANNOTATED

Bacani and Matoto vs. Nat’l. Coconut Corp., et al.

not make it a public corporation” (National Coal Co. vs.

Collector of Internal Revenue, 46 Phil., 586–587). “By
becoming a stockholder in the National Coal Company, the
Government divested itself of its sovereign character so far
as respects the transactions of the corporation. * * * Unlike
the Government, the corporation may be sued without its
consent, and is subject to taxation. Yet the National Coal
Company remains an agency or instrumentality of
government.” (Government of the Philippine Islands vs.
Springer, 50 Phil., 288.)
To recapitulate, we may mention that the term
“Government of the Republic of the Philippines” used in
section 2 of the Revised Administrative Code refers only to
file:///C:/Users/Acer/Desktop/CASES/CentralBooks_Reader BACANI VS NACOCO_files/saved_resource.html 6/8
8/10/2019 PHILIPPINE REPORTS ANNOTATED VOLUME 100

that government entity through which the functions of the

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

“Public corporations are those formed or organized for the

government of a portion of the State.” (Section 3, Republic Act No.
1459, Corporation Law)
“‘The generally accepted definition of a municipal corporation
would only include organized cities and towns, and like
organizations, with political and legislative powers for the local,
civil government and police regulations of the inhabitants of the
particular district included in the boundaries of the corporation.’
Heller vs. Stremmel 52 Mo. 309, 312."
“In its more general sense the phrase ‘municipal corporation’
may include both towns and counties, and other public
corporations created by government for political purposes. In its
more common and limited signification, it embraces only
incorporated villages,

475

VOL. 100, NOVEMBER 29, 1956 475

Bacani and Matoto vs. Nat’l. Coconut Corp., et al.

towns and cities. Dunn vs. Court of County Revenues, 85 Ala. 144,
146, 4 So. 661." (McQuillin, Municipal Corporations, 2nd ed., Vol.
I, p. 385.)
“We may, therefore, define a municipal corporation in its
historical and strict sense to be the incorporation, by the
authority of the government, of the inhabitants of a particular
place or district, and authorizing them in their corporate capacity
to exercise subordinate specified powers of legislation and
regulation with respect to their local and internal concerns. This
power of local government is the distinctive purpose and the
distinguishing feature of a municipal corporation proper.” (Dillon,
Municipal Corporations, 5th ed., Vol. I, p. 59.)

file:///C:/Users/Acer/Desktop/CASES/CentralBooks_Reader BACANI VS NACOCO_files/saved_resource.html 7/8

8/10/2019 PHILIPPINE REPORTS ANNOTATED VOLUME 100

It is true that under section 8, Rule 130, stenographers

may only charge as fees P0.30 for each page of transcript of
not less than 200 words before the appeal is taken and
P0.15 for each page after the filing of the appeal, but in this
case the National Coconut Corporation has agreed and in
fact has paid P1.00 per page for the services rendered by
the plaintiffs and has not raised any objection to the
amount paid until its propriety was disputed by the
Auditor General. The payment of the fees in question
became therefore contractual and as such is valid even if it
goes beyond the limit prescribed in section 8, Rule 130 of
the Rules of Court.
As regards the question of procedure raised by
appellants, suffice it to say that the same is insubstantial,
considering that this case refers not to a money claim
disapproved by the Auditor General but to an action of
prohibition the purpose of which is to restrain the officials
concerned from deducting from plaintiffs’ salaries the
amount paid to them as stenographers’ fees. This case does
not come under section 1, Rule 45 of the Rules of Court
relative to appeals from a decision of the Auditor General.
Wherefore, the decision appealed from is affirmed,
without pronouncement as to costs.

Parás, C.J., Bengzon, Padilla, Montemayor, Labrador,

Concepcion, Reyes, J.B. L., Endencia and Felix, JJ., concur.

Judgment affirmed.
476

476 PHILIPPINE REPORTS ANNOTATED

Claravall vs. Paraan, et al.

© Copyright 2019 Central Book Supply, Inc. All rights reserved.

file:///C:/Users/Acer/Desktop/CASES/CentralBooks_Reader BACANI VS NACOCO_files/saved_resource.html 8/8