G.R. No. 26979 , April 1, 1927
THE GOVERNMENT OF THE PHILIPPINE ISLANDS, plaintiff, vs. MILTON E. SPRINGER, DALMACIO COSTAS, and ANSELMO HILARIO, defendants.

FACTS

The Philippine Legislature enacted Acts Nos. 2705 and 2822, creating the National Coal Company. The government subscribed to over 99% of its capital stock. Section 4 of Act No. 2705, as amended, vested the voting power of all government-owned stock exclusively in a committee composed of the Governor-General, the President of the Senate, and the Speaker of the House of Representatives (the “voting committee”).

On November 9, 1926, the Governor-General issued Executive Order No. 37, declaring the provisions creating the voting committee null and void based on opinions from U.S. officials. He announced he would thereafter exercise the voting power exclusively. When a special stockholders’ meeting was called to elect directors, the President of the Senate and the Speaker of the House convened as the voting committee (without the Governor-General) and resolved to vote the government shares for a specific slate of directors, including the defendants. At the meeting, the Governor-General’s representative claimed the exclusive right to vote the shares. The chair recognized the legislative members’ vote, which resulted in the election of the defendants. The government then filed this quo warranto action to test the validity of the statutory provision creating the voting committee and to oust the defendants.

ISSUE

Is Section 4 of Act No. 2705, as amended by Act No. 2822which vests the voting power of government-owned stock in the National Coal Company in a committee consisting of the Governor-General, the President of the Senate, and the Speaker of the House of Representativesvalid, or does it violate the principle of separation of powers under the Organic Act?

RULING

The statute is VALID. The demurrer is sustained, and the complaint is dismissed.

The Supreme Court, through Justice Malcolm, held that the provision did not violate the separation of powers. The key reasoning was as follows:

1. The National Coal Company is not a government agency or instrumentality. It is a private corporation organized under the Corporation Law, in which the government is merely a majority stockholder.

2. Voting the government’s shares is a private, proprietary act, not a sovereign or executive function. When the government acts as a corporator, it does so in the same capacity as a private citizen. Therefore, the function of voting the stock is private in nature.

3. Consequently, membership on the voting committee is a private position, not a public office. Since the act performed is private, designating the President of the Senate and the Speaker of the House as *ex-officio* members of the committee does not constitute a legislative usurpation of executive power. The legislature was merely specifying how its property (the shares) would be voted.

4. Even if considered a public function, the legislature had the residual power to make the designation. The Organic Act did not exhaust all legislative power, and Congress of the United States had vested the residual powers of government in the Philippine Legislature. Furthermore, Congress’s silence and failure to annul the law implied its ratification.

5. The Governor-General cannot exercise the voting power alone. The delegated power requires the exercise of discretion and judgment. Under principles governing committees, such an act requires a majority to concur after all members have been notified. The Governor-General’s attempt to act unilaterally was improper.

In conclusion, the statutory scheme for the voting committee was a valid exercise of legislative power pertaining to the management of government property and did not offend the separation of powers doctrine.