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36.

DFA cv NLRC
FIRST DIVISION
[G.R. No. 113191. September 18, 1996.]
DEPARTMENT OF FOREIGN AFFAIRS, petitioner, vs. NATIONAL LAB
OR RELATIONS COMMISSION, HON.LABOR ARBITER NIEVES V. DE
CASTRO and JOSE C. MAGNAYI, respondents.
DFA Office of Legal Affairs for petitioner.
The Solicitor General for public respondent.
Ronald E. Javier for private respondent.
SYLLABUS
1. POLITICAL LAW; PUBLIC INTERNATIONAL LAW; SOVEREIGN IMMUNITY;
EXTENDED TO ASIAN DEVELOPMENT BANK AS WELL AS TO ITS OFFICERS
WITH RESPECT TO ALL ACTS PERFORMED BY THEM IN THEIR OFFICIAL
CAPACITY; EXCEPTIONS. The above stipulations of both the Charter and
Headquarters Agreement should be able, nay well enough, to establish that, except in
the specified cases of borrowing and guarantee operations, as well as the purchase,
sale and underwriting ofsecurities, the ADB enjoys immunity from legal
process of every form. The Bank's officers, on their part, enjoy immunity in
respect of all acts performed by them in their official capacity. The Charter and the
Headquarters Agreement granting these immunities and privileges are treaty
covenants and commitments voluntarily assumed by the Philippine government which
must be respected.
2. ID.; ID.; ID.; THE COURTS ARE DUTY BOUND TO ACCEPT
PLEA OF DIPLOMATIC IMMUNITY BY AN INTERNATIONAL ORGANIZATION;
RECOGNIZED AND AFFIRMED BY THE EXECUTIVE BRANCH OF THE

GOVERNMENT. In World Health Organization vs. Aquino, we have declared: "It is a


recognized principle of international law and under our system ofseparation of powers
that diplomatic immunity is essentially a political question and courts should refuse to
look beyond a determination by the executive branch of the government, and where the
plea of diplomatic immunity is recognized and affirmed by the executive branch of the
government . . . it is then the duty of the courts to accept the claim of immunity upon
appropriate suggestion by the principal law officer of the government, . . . or other
officer acting under his direction. Hence, in adherence to the settled principle that
courts may not so exercise their jurisdiction . . . as to embarrass the executive
armof the government in conducting foreign relations, it is accepted doctrine that 'in
such cases the judicial department ofgovernment follows the action of the political
branch and will not embarrass the latter by assuming an antagonistic jurisdiction."' To
the
same
effect
is
the
decision
in International
Catholic
Migration Commission vs. Calleja, which has similarly deemed the Memoranda of the
Legal Adviser of the Department of Foreign Affairs to be "a categorical recognition by
the Executive Branch of Government that ICMC . . . enjoy(s) immunities accorded to
international organizations" and which determination must be held "conclusive upon the
Courts in order not to embarrass a political department of Government." In the instant
case, the filing of the petition by the DFA, in behalf of ADB, is itself an affirmance of the
government's own recognition of ADB's immunity.
3. ID.; ID.; ID.; REASON FOR GRANTING THEREOF TO INTERNATIONAL
ORGANIZATIONS. Being an international organization that has been extended a
diplomatic status, the ADB is independent of the municipal law. In Southeast Asian
Fisheries Development Center vs. Acosta, the Court has cited with approval the
opinion of the then Minister of Justice; thus "One of the basic immunities of an
international organization is immunity from local jurisdiction, i.e., that it is immune from
the legal writs and processes issued by the tribunals of the country where it is found.
The obvious reason for this is that the subjection of such an organization to the
authority of the local courts would afford a convenient medium thru which the host
government may interfere in their operations or even influence or control its policies
and decisions of the organization; besides, such subjection to local jurisdiction would
impair the capacity of such body to discharge its responsibilities impartially on
behalf of its member-states.

4. ID.; ID.; ID.; ACTS JURE IMPERII AND JURE GESTIONIS, DISTINGUISHED.
"There are two conflicting concepts ofsovereign 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 sovereign is recognized only with regard
to public acts or acts jure imperii of a state, but not with regard to private act or
acts jure gestionis. . . . Certainly, the mere entering into a contract by a foreign state
with a private party cannot be the ultimate test. Such an act can only be the start of the
inquiry. The logical question is whether the foreignstate is engaged in the activity in the
regular course of business. If the foreign state is not engaged regularly in a business or
trade, the particular act or transaction must then be tested by its nature. If the act is in
pursuit of a sovereign activity, or an incident thereof, then it is an act jure imperii,
especially when it is not undertaken for gain or profit." The service contracts referred to
by private respondent have not been intended by the ADB for profit or gain but are
official acts over which a waiver of immunity would not attach.
5. ID.; ID.; ID.; THE DEPARTMENT OF FOREIGN AFFAIRS IS IN CHARGE WITH
THE DETERMINATION OF PERSONS AND INSTITUTIONS COVERED BY
DIPLOMATIC IMMUNITIES. The DFA's function includes, among its other mandates
the determination of persons and institutions covered by diplomatic immunities, a
determination which, when challenged, entitles it to seek relief from the court so as not
to seriously impair the conduct of the country's foreign relations. The DFAmust be
allowed to plead its case whenever necessary or advisable to enable it to help keep the
credibility of the Philippine government before the international community. When
international agreements are concluded, the parties thereto are deemed to have
likewise accepted the responsibility of seeing to it that their agreements are duly
regarded. In our country, this task falls principally on the DFA as being the highest
executive department with the competence and authority to so act in this aspect of the
international arena.
6. ID.; ID.; ID.; PROCEDURE IN INVOLVING IT. In Holy See vs. Hon. Rosario, Jr.,
this Court has explained the matter in good detail; viz: "In Public International Law,
when a state or international agency wishes to plead sovereign or diplomatic immunity
in a foreign court, it requests the Foreign Office of the state where it is sued to convey
to the court that said defendant is entitled to immunity. "In the United States, the

procedure followed is the process of 'suggestion,' where theforeign state or the


international organization sued in an American court requests the Secretary of State to
make a determination as to whether it is entitled to immunity. If the Secretary of State
finds that the defendant is immune from suit, he, in turn, asks the Attorney General to
submit to the court a 'suggestion' that the defendant is entitled to immunity. In England,
a similar procedure is followed, only the Foreign Office issues a certification to that
effect instead of submitting a 'suggestion' (O'Connell, I International Law 130 [1965];
Note: Immunity from Suit of Foreign Sovereign Instrumentalities and Obligations, 50
Yale Law Journal 1088 [1941]). 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 International
Catholic
Migration Commission vs.Calleja,
190
SCRA
130
(1990),
the
Secretary of Foreign Affairs just sent a letter directly to the Secretary of Labor and
Employment, informing the latter that the respondent-employer could not be sued
because it enjoyed diplomatic immunity. In World Health Organization vs. Aquino, 48
SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a telegram to that
effect. In Baer vs. Tizon, 57 SCRA 1 (1974), the U. S. Embassy asked the
Secretary of Foreign Affairs to request the Solicitor General to make, in behalf of the
Commander of the United States Naval Base at Olongapo City, Zambales, a
'suggestion' to respondent Judge. The Solicitor General embodied the 'suggestion' in a
manifestation and memorandum asamicus curiae. 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 petitioner's 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 vs. Bradford, 75 Phil. 50 [1945]; Miquiabas vs.Philippine-Ryukyus Command,
80 Phil. 262 [1948]; United States of America vs. Guinto, 182 SCRA 644 [1990] and
companion cases). In cases where the foreign states bypass the Foreign Office, the
courts can inquire into the facts and make their own determination as to the
nature of the acts and transactions involved.

7. REMEDIAL LAW; SPECIAL CIVIL ACTIONS; CERTIORARI; CAN BE


AVAILED OF ONLY WHEN THERE IS NO APPEAL NOR PLAIN, SPEEDY AND
ADEQUATE REMEDY IN ORDINARY COURSE OF LAW. Relative to the
propriety of the extraordinary remedy of certiorari, the Court has, under special
circumstances, so allowed and entertained such a petition when (a) the questioned
order or decision is issued in excess of or without jurisdiction, or (b) where the order or
decision is a patent nullity, which, verily, are the circumstances that can be said to
obtain in the present case. When an adjudicator is devoid ofjurisdiction on a matter
before him, his action that assumes otherwise would be a clear nullity.

DECISION
VITUG, J p:
The questions raised in the petition for certiorari are a few coincidental matters relative
to the diplomatic immunity extended to the Asian Development Bank ("ADB").
On 27 January 1993, private respondent initiated NLRC-NCR Case No. 00-01-0690-93
for his alleged illegal dismissal by ADB and the latter's violation of the "labor-only"
contracting law. Two summonses were served, one sent directly to the ADB and the
other through the Department of Foreign Affairs ("DFA"), both with a copy of the
complainant. Forthwith, the ADB and theDFA notified respondent Labor Arbiter that the
ADB, as well as its President and Officers, were covered by an immunity from legal
process except for borrowings, guaranties or the sale of securities pursuant to Article
50(1) and Article 55 of theAgreement Establishing the Asian Development Bank (the
"Charter") in relation to Section 5 and Section 44 of the Agreement Between The Bank
And The Government Of The Philippines Regarding The Bank's Headquarters (the
"Headquarters Agreement").
The Labor Arbiter took cognizance of the complaint on the impression that the ADB
had waived its diplomatic immunity from suit. In time, the Labor Arbiter rendered his
decision, dated 31 August 1993, that concluded:

"WHEREFORE, above premises considered, judgment is hereby


rendered declaring the complainant as a regular employee of respondent
ADB, and the termination of his services as illegal. Accordingly,
respondent Bank is hereby ordered:
"1. To immediately reinstate the complainant to his former position
effective September 16, 1993;
"2. To pay complainant full backwages from December 1, 1992 to
September 15, 1993 in the amount of P42,750.00 (P4,500.00 x 9
months);
"3. And to pay complainants other benefits and without loss of seniority
rights and other privileges and benefits due a regular employee of Asian
Development Bank from the time he was terminated on December 31,
1992;
"4. To pay 10% attorney's fees of the total entitlements." 1
The ADB did not appeal the decision. Instead, on 03 November 1993, the DFA referred
the matter to the National LaborRelations Commission ("NLRC"); in its referral,
the DFA sought a "formal vacation of the void judgment." Replying to the letter,
the NLRC Chairman, wrote:
"The
undersigned
submits
that
the
request
for
the
'investigation' of Labor Arbiter
Nieves
de
Castro,
by
the National LaborRelations Commission, has been erroneously premised
on Art. 218(c) of the Labor Code, as cited in the letter of Secretary Padilla,
considering that the provision deals with 'a question, matter or
controversy within its (the Commission) jurisdiction' obviously referring
to a labor dispute within
the
ambit of Art.
217
(on
jurisdiction of Labor Arbiters and theCommission over labor cases).
"The
procedure,
in
the
adjudication of labor cases,
including
raising of defenses, is prescribed by law. The defense ofimmunity could
have been raised before the Labor Arbiter by a special appearance which,
naturally, may not be considered as a waiver of the very defense being
raised. Any decision thereafter is subject to legal remedies, including
appeals to the appropriate division of the Commission and/or a petition

for certiorari with the Supreme Court, under Rule 65 of the Rules of Court.
Except where an appeal is seasonably and properly made, neither
the Commission nor the undersigned may review, or even question, the
propriety of any
decision
by
a Labor Arbiter.
Incidentally,
the Commissionsits en banc (all fifteen Commissioners) only to
promulgate rules of procedure or to formulate policies (Art.
213, LaborCode).
"On the other hand, while the undersigned exercises 'administrative
supervision over the Commission and its regional branches and all its
personnel, including the Executive Labor Arbiters and Labor Arbiters'
(penultimate paragraph, Art. 213, Labor Code), he does not have the
competence to investigate or review any decision of a Labor Arbiter.
However, on the purely administrative aspect of the decision-making
process, he may cause that an investigation be made of any misconduct,
malfeasance or misfeasance, upon complaint properly made.
"If the Department of Foreign Affairs feels that the action of Labor Arbiter
Nieves de Castro constitutes misconduct, malfeasance or misfeasance, it
is suggested that an appropriate complaint be lodged with the
Office of the Ombudsman.
"Thank you for your kind attention." 2
Dissatisfied, the DFA lodged the instant petition for certiorari. In this Court's
resolution of 31 January 1994, respondents were required to comment. Petitioner was
later constrained to make an application for a restraining order and/or writ ofpreliminary
injunction following the issuance, on 16 March 1994, by the Labor Arbiter of a
writ of execution. In a resolution, dated 07 April 1994, the Court issued the temporary
restraining order prayed for.
The Office of the Solicitor General ("OSG"), in its comment of 26 May 1994, initially
assailed the claim of immunity by the ADB. Subsequently, however, it submitted a
Manifestation (dated 20 June 1994) stating, among other things, that "after a thorough
review of the case and the records," it became convinced that ADB, indeed, was
correct in invoking its immunity from suit under the Charter and the Headquarters
Agreement.

The Court is of the same view.


Article 50(1) of the Charter provides:
"The Bank shall enjoy immunity from every form of legal
process, except in cases arising out of or in connection with the
exercise of its powers to borrow money, to guarantee obligations, or to buy
and sell or underwrite the sale of securities."3
Under Article 55 thereof
"All Governors, Directors, alternates, officers and employees of the Bank,
including experts performing missions for the Bank:
"(1) shall be immune from legal process with respect of acts performed by
them in their official capacity, except when the Bank waives the
immunity." 4
Like provisions are found in the Headquarters Agreement. Thus, its Section 5 reads:
"The Bank shall enjoy immunity from every form of legal process, except
in cases arising out of, or in connection with, the exercise of its powers to
borrow money, to guarantee obligations, or to buy and sell or underwrite
the sale of securities."5
And, with respect to certain officials of the bank, Section 44 of the agreement states:
"Governors, other representatives of Members, Directors, the President,
Vice-President and executive officers as may be agreed upon between
the Government and the Bank shall enjoy, during their stay in the
Republic of the Philippines in connection with their official duties with the
Bank:
"xxx xxx xxx
"(b) Immunity from legal process of every kind in respect of words spoken
or written and all acts done by them in their official capacity." 6
The above stipulations of both the Charter and Headquarters Agreement should be
able, nay well enough, to establish that, except in the specified cases of borrowing
and guarantee operations, as well as the purchase, sale and
underwritingof securities, the ADB enjoys immunity from legal process of every

form. The Bank's officers, on their part, enjoy immunity in respect of all acts
performed by them in their official capacity. The Charter and the Headquarters
Agreement granting these immunities and privileges are treaty covenants and
commitments voluntarily assumed by the Philippine government which must be
respected.
In World Health Organization vs. Aquino, 7 we have declared:
"It is a recognized principle of international law and under our
system of separation of powers that diplomatic immunity is essentially a
political question and courts should refuse to look beyond a determination
by the executive branch of the government, and where the
plea of diplomatic immunity is recognized and affirmed by the executive
branch of the government. . . it is then the duty of the courts to accept the
claim of immunity upon appropriate suggestion by the principal law
officer of the government, . . . or other officer acting under his direction.
Hence, in adherence to the settled principle that courts may not so
exercise their jurisdiction . . . as to embarrass the executive arm of the
government in conducting foreign relations, it is accepted doctrine that 'in
such cases the judicial department of government follows the action of the
political branch and will not embarrass the latter by assuming an
antagonistic jurisdiction." 8
To
the
same
effect
is
the
decision
in International
Catholic
Migration Commission vs. Calleja, 9 which has similarly deemed the Memoranda of the
Legal Adviser of the Department of Foreign Affairs to be "a categorical recognition by
the Executive Branch of Government that ICMC . . . enjoy(s) immunities accorded to
international organizations" and which determination must be held "conclusive upon the
Courts in order not to embarrass a political department of Government." In the instant
case, the filing of the petition by the DFA, in behalf of ADB, is itself an affirmance of the
government's own recognition ofADB's immunity.
Being an international organization that has been extended a diplomatic status, the
ADB is independent of the municipal law.10 In Southeast Asian Fisheries
Development Center vs. Acosta, 11 the Court has cited with approval the
opinion 12 of the then Minister of Justice; thus

"One of the basic immunities of an international organization is immunity


from local jurisdiction, i.e., that it is immune from the legal writs and
processes issued by the tribunals of the country where it is found. (See
Jenks, Id., pp. 3744). The obvious reason for this is that the
subjection of such an organization to the authority of the local courts
would afford a convenient medium thru which the host government may
interfere in their operations or even influence or control its policies and
decisions of the organization; besides, such subjection to local jurisdiction
would impair the capacity of such body to discharge its responsibilities
impartially on behalf of its member-states." 13
Contrary to private respondent's assertion, the claim of immunity is not here being
raised for the first time; it has been invoked before the forum of origin through
communications sent by petitioner and the ADB to the Labor Arbiter, as well as before
the NLRC following the rendition of the questioned judgment by the Labor Arbiter, but
evidently to no avail.
In its communication of 27 May 1993, the DFA, through the Office of Legal Affairs, has
advised the NLRC:
"Respectfully
returned
to
the
Honorable
Domingo
B.
Mabazza, Labor Arbitration
Associate, National Labor RelationsCommission, National Capital Judicial
Region, Arbitration Branch, Associated bank Bldg., T.M. Kalaw St.,
Ermita, Manila, the attached Notice of Hearing addressed to the Asian
Development Bank, in connection with the aforestated case, for the
reason stated in the Department's 1st Indorsement dated 23 March 1993,
copy attached, which is self-explanatory.
"In view of the fact that the Asian Development Bank (ADB) invokes its
immunity which is sustained by the Department ofForeign Affairs, a
continuous hearing of this case erodes the credibility of the Philippine
government before the international community, let alone the negative
implication of such a suit on the official relationship of the Philippine
government with the ADB.

"For the Secretary of Foreign Affairs.


(Sgd.)
"SIME D. HIDALGO
Assistant Secretary" 14
The Office of the President, likewise, has issued on 18 May 1993 a letter to the
Secretary of Labor, viz:
"Dear Secretary Confesor,
"I am writing to draw your attention to a case filed by a certain Jose C.
Magnayi against the Asian Development Bank and its President,
Kimimasa
Tarumizu,
before
the National Labor Relations Commission, National Capital
Region
Arbitration Board (NLRC NCR Case No. 00-01690-93).
"Last March 8, the Labor Arbiter charged with the case, Ms. Nieves V. de
Castro, addressed a Notice of Resolution/Order to the Bank which
brought it to the attention of the Department of Foreign Affairs on the
ground that the service of such notice was in violation of the RP-ADB
Headquarters Agreement which provided, inter-alia, for the
immunity of the Bank, its President and officers from every form of legal
process, except only, in cases of borrowings, guarantees or the
sale ofsecurities.
"The Department of Foreign Affairs, in turn, informed Labor Arbiter
Nieves V. de Castro of this fact by letter dated March 22, copied to you.
"Despite this, the labor arbiter in question persisted to send summons, the
latest dated May 4, herewith attached, regarding the Magnayi case.
"The Supreme Court has long settled the matter of diplomatic immunities.
In WHO vs. Aquino, SCRA 48, it ruled that courts should respect
diplomatic immunities of foreign officials recognized by the Philippine
government. Such decision by the Supreme Court forms part of the
law of the land.

"Perhaps you should point out to Labor Arbiter Nieves V. de Castro that
ignorance of the law is a ground for dismissal.
"Very truly yours,
(Sgd.)
JOSE B. ALEJANDRINO
Chairman, PCC-ADB" 15
Private respondent argues that, by entering into service contracts with different private
companies, ADB has descended to the level of an ordinary party to a commercial
transaction giving rise to a waiver of its immunity from suit. In the case of Holy
See vs. Hon. Rosario, Jr., 16 the Court has held:
"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 sovereign is recognized only with regard to public acts
or acts jure imperii of a state, but not with regard to private act or acts jure
gestionis.
"xxx xxx xxx
"Certainly, the mere entering into a contract by a foreign state with a
private party cannot be the ultimate test. Such an act can only be the
start of the inquiry. The logical question is whether the foreign state is
engaged in the activity in the regular course of business. If
the foreign state is not engaged regularly in a business or trade, the
particular act or transaction must then be tested by its nature. If the act is
in pursuit of a sovereign activity, or an incident thereof, then it is an
act jure imperii, especially when it is not undertaken for gain or profit." 17
The service contracts referred to by private respondent have not been intended by the
ADB for profit or gain but are official acts over which a waiver of immunity would not
attach.
With regard to the issue of whether or not the DFA has the legal standing to
file the present petition, and whether or not petitioner has regarded the basic rule

that certiorari can be availed of only when there is no appeal nor plain, speedy and
adequate remedy in the ordinary course of law, we hold both in the affirmative.
The DFA's function includes, among its other mandates, the determination of persons
and institutions covered by diplomatic immunities, a determination which, when
challenged, entitles it to seek relief from the court so as not to seriously impair the
conduct of the country's foreign relations. The DFA must be allowed to plead its case
whenever necessary or advisable to enable it to help keep the credibility of the
Philippine government before the international community. When international
agreements are concluded, the parties thereto are deemed to have likewise accepted
the responsibility of seeing to it that their agreements are duly regarded. In our country,
this task falls principally on the DFA as being the highest executivedepartment with the
competence and authority to so act in this aspect of the international arena. 18 In Holy
See vs. Hon.Rosario, Jr., 19 this Court has explained the matter in good detail; viz:
"In Public International Law, when a state or international agency wishes
to plead sovereign or diplomatic immunity in aforeign court, it requests
the Foreign Office of the state where it is sued to convey to the court that
said defendant is entitled to immunity.
"In
the
United
States,
the
procedure
followed
is
the
process of 'suggestion,' where the foreign state or the international
organization sued in an American court requests the Secretary of State to
make a determination as to whether it is entitled to immunity. If the
Secretary of State finds that the defendant is immune from suit, he, in
turn, asks the Attorney General to submit to the court a 'suggestion' that
the defendant is entitled to immunity. In England, a similar procedure is
followed, only the Foreign Office issues a certification to that effect
instead of submitting a 'suggestion' (O'Connell, I International Law 130
[1965]; Note: Immunity from Suit of Foreign Sovereign Instrumentalities
and Obligations, 50 Yale Law Journal 1088 [1941]).
"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 International Catholic Migration Commission vs. Calleja, 190 SCRA 130

(1990), the Secretary of Foreign Affairs just sent a letter directly to the
Secretary of Labor and Employment, informing the latter that the
respondent-employer could not be sued because it enjoyed diplomatic
immunity. In World Health Organization vs.Aquino, 48 SCRA 242 (1972),
the Secretary of Foreign Affairs sent the trial court a telegram to that
effect. In Baer vs. Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked the
Secretary of Foreign Affairs to request the Solicitor General to make, in
behalf of the Commander of the United States Naval Base at Olongapo
City, Zambales, a 'suggestion' to respondent Judge. The Solicitor General
embodied the 'suggestion' in a manifestation and memorandum
as amicus curiae.
"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 supportof petitioner's 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 vs. Bradford, 75 Phil. 50 [1945]; Miquiabas vs. PhilippineRyukyus
Command,
80
Phil.
262
[1948]; United
States of America vs. Guinto, 182 SCRA 644 [1990] and companion
cases). In cases where the foreign states bypass the Foreign Office, the
courts can inquire into the facts and make their own determination as to
the nature of the acts and transactions involved." 20
Relative to the propriety of the extraordinary remedy of certiorari, the Court has, under
special circumstances, so allowed and entertained such a petition when (a) the
questioned order or decision is issued in excess of or without jurisdiction, 21 or (b)
where the order or decision is a patent nullity, 22 which, verily, are the circumstances
that can be said to obtain in the present case. When an adjudicator is
devoid of jurisdiction on a matter before him, his action that assumes otherwise would
be a clear nullity.
WHEREFORE,
the
petition
for certiorari is
GRANTED,
and
the
decision of the Labor Arbiter, dated 31 August 1993 is VACATED for being NULL AND

VOID. The temporary restraining order issued by this Court on 07 April 1994 is hereby
made permanent. No costs.
SO ORDERED.
||| (Department of Foreign Affairs v. National Labor Relations Commission, G.R. No.
113191, [September 18, 1996], 330 PHIL 573-590)

37. Mun of San Fernando v Firme


FIRST DIVISION
[G.R. No. 52179. April 8, 1991.]
MUNICIPALITY OF SAN FERNANDO, LA UNION, petitioner, vs. HON.
JUDGE ROMEO N. FIRME, JUANA RIMANDO-BANIA, LAUREANO
BANIA, JR., SOR MARIETA BANIA, MONTANO BANIA ORJA
BANIA AND LYDIA R. BANIA, respondents.
Mauro C . Cabading, Jr. for petitioner.
Simeon G. Hipol for private respondent.
DECISION
MEDIALDEA, J p:
This is a petition for certiorari with prayer for the issuance of a
writ of preliminary mandatory injunction seeking the nullification or
modification of the proceedings and the orders issued by the respondent
Judge Romeo N. Firme, in his capacity as the presiding judge of the
Court of First Instance of La Union, Second Judicial District, Branch IV,
Bauang, La Union in Civil Case No. 107-BG, entitled "Juana Rimando Bania,
et al. vs. Macario Nieveras, et al." dated November 4, 1975; July 13, 1976;
August 23, 1976; February 23, 1977; March 16, 1977; July 26, 1979;
September 7, 1979; November 7, 1979 and December 3, 1979 and the
decision
dated
October
10,
1979
ordering
defendants Municipality of San Fernando, La Union and Alfredo Bislig to pay,
jointly and severally, the plaintiffs for funeral expenses, actual damages
consisting of the loss of earning capacity of the deceased, attorney's fees
and costs of suit and dismissing the complaint against the Estate of Macario
Nieveras and Bernardo Balagot.

The antecedent facts are as follows:


Petitioner Municipality of San Fernando, La Union is a municipal corporation
existing under and in accordance with the lawsof the Republic of the
Philippines. Respondent Honorable Judge Romeo N. Firme is impleaded in his
official capacity as the presiding judge of the Court of First Instance of La
Union, Branch IV, Bauang, La Union. While private respondents Juana
Rimando-Bania, Laureano Bania, Jr., Sor Marietta Bania, Montano Bania,
Orja Bania and Lydia R. Bania are heirs ofthe deceased Laureano Bania
Sr. and plaintiffs in Civil Case No. 107-Bg before the aforesaid court.
At about 7 o'clock in the morning of December 16, 1965, a collision occurred
involving a passenger jeepney driven by Bernardo Balagot and owned by
the Estate of Macario Nieveras, a gravel and sand truck driven by Jose
Manandeg and owned by Tanquilino Velasquez and a dump
truck of the Municipality of San Fernando, La Union and driven by Alfredo
Bislig. Due to the impact, several passengers of the jeepney including
Laureano Bania Sr. died as a result of the injuries they sustained and four
(4) others suffered varying degrees of physical injuries.
On December 11, 1966, the private respondents instituted a complaint for
damages against the Estate of Macario Nieveras and Bernardo Balagot,
owner and driver, respectively, of the passenger jeepney, which was
docketed Civil Case No. 2183 in the Court of First Instance of La Union,
Branch I, San Fernando, La Union. However, the aforesaid defendants filed a
Third Party Complaint against the petitioner and the driver of a dump
truck of petitioner. llcd
Thereafter, the case was subsequently transferred to Branch IV, presided
over by respondent judge and was subsequently docketed as Civil Case No.
107-Bg. By virtue of a court order dated May 7, 1975, the private
respondents amended the complaint wherein the petitioner and its regular
employee, Alfredo Bislig were impleaded for the first time as defendants.
Petitioner filed its answer and raised affirmative defenses such as
lack of cause of action,
non-suability of the
State,
prescription of cause of action and the negligence of the owner and
driver of the passenger jeepney as the proximate causeof the collision. cdll
In the course of the proceedings, the respondent judge issued the following
questioned orders, to wit:
(1) Order dated November 4, 1975 dismissing the cross-claim against
Bernardo Balagot;

(2) Order
dated
July
13,
1976
admitting
the
Amended
Answer of the Municipality of San Fernando, La Union and Bislig and setting
the hearing on the affirmative defenses only with respect to the supposed
lack of jurisdiction;
(3) Order dated August 23, 1976 deferring the resolution of the grounds for
the Motion to Dismiss until the trial;
(4) Order
dated February
23,
1977 denying the motion
for
reconsideration of the order of July 13, 1976 filed by theMunicipality and
Bislig for having been filed out of time;
(5) Order dated March 16, 1977 reiterating the denial of the motion for
reconsideration of the order of July 13, 1976;
(6) Order dated July 26, 1979 declaring the case deemed submitted for
decision it appearing that parties have not yet submitted their respective
memoranda despite the court's direction; and
(7) Order dated September 7, 1979 denying the petitioner's motion for
reconsideration and or order to recall prosecution witnesses for cross
examination.
On October 10, 1979 the trial court rendered a decision, the dispositive
portion is hereunder quoted as follows:
"IN VIEW OF ALL OF (sic) THE FOREGOING, judgment is hereby rendered for
the plaintiffs, and defendants Municipality ofSan Fernando, La Union and
Alfredo Bislig are ordered to pay jointly and severally, plaintiffs Juana
Rimando-Bania, Mrs. Priscilla B. Surell, Laureano Bania, Jr., Sor Marietta
Bania, Mrs. Fe B. Soriano, Montano Bania, Orja Bania and Lydia B.
Bania the sums of P1,500.00 as funeral expenses and P24,744.24 as the
lost expected earnings of the late Laureano Bania Sr., P30,000.00 as moral
damages, and P2,500.00 as attorney's fees. Costs against said
defendants. cdasia
"The Complaint is dismissed as to defendants Estate of Macario Nieveras
and Bernardo Balagot.
"SO ORDERED." (Rollo, p. 30)
Petitioner filed a motion for reconsideration and for a new trial without
prejudice to another motion which was then pending. However, respondent
judge issued another order dated November 7, 1979 denying the motion for
reconsideration of the order of September 7, 1979 for having been filed
out of time.

Finally, the respondent judge issued an order dated December 3, 1979


providing that if defendants municipality and Bislig further wish to pursue
the matter disposed of in the order of July 26, 1979, such should be
elevated to a higher court in accordance with the Rules of Court. Hence, this
petition.
Petitioner maintains that the respondent judge committed grave
abuse of discretion amounting to excess of jurisdiction in issuing the
aforesaid orders and in rendering a decision. Furthermore, petitioner asserts
that while appeal of the decision may be available, the same is not the
speedy and adequate remedy in the ordinary course of law.
On the other hand, private respondents controvert the position of the
petitioner and allege that the petition is devoid ofmerit, utterly lacking the
good faith which is indispensable in a petition for certiorari and prohibition.
(Rollo, p. 42.) In addition, the private respondents stress that petitioner has
not considered that every court, including respondent court, has the
inherent power to amend and control its process and orders so as to make
them conformable to law and justice. (Rollo, p. 43.)
The controversy boils down to the main issue of whether or not the
respondent court committed grave abuse of discretion when it deferred and
failed to resolve the defense of non-suability of the State amounting to
lack of jurisdiction in a motion to dismiss.
In the case at bar, the respondent judge deferred the resolution of the
defense of non-suability of the State amounting to lack of jurisdiction until
trial. However, said respondent judge failed to resolve such defense,
proceeded with the trial and thereafter rendered a decision against
the municipality and its driver.
The respondent judge did not commit grave abuse of discretion when in the
exercise of its judgment it arbitrarily failed to resolve the vital issue of nonsuability of the State in the guise of the municipality. However, said judge
acted in excess of his jurisdiction when in his decision dated October 10,
1979 he held the municipality liable for the quasi-delict committed by its
regular employee. cdll
The doctrine of non-suability of the State is expressly provided for in Article
XVI, Section 3 of the Constitution, to wit: "the State may not be sued
without its consent."

Stated in simple parlance, the general rule is that the State may not be
sued except when it gives consent to be sued. Consent takes the
form of express or implied consent.
Express consent may be embodied in a general law or a special law. The
standing consent of the State to be sued in case ofmoney claims involving
liability arising from contracts is found in Act No. 3083. A special law may be
passed to enable a person to sue the government for an alleged quasidelict, as in Merritt v. Government of the Philippine Islands (34 Phil 311).
(see United States of America v. Guinto, G.R. No. 76607, February 26, 1990,
182 SCRA 644, 654.)
Consent is implied when the government enters into business contracts,
thereby descending to the level of the other contracting party, and also
when the State files a complaint, thus opening itself to a counterclaim. (Ibid)
Municipal corporations, for example, like provinces and cities, are
agencies of the State when they are engaged in governmental functions and
therefore should enjoy the sovereign immunity from suit. Nevertheless, they
are subject to suit even in the performance of such functions because their
charter provided that they can sue and be sued. (Cruz, Philippine Political
Law, 1987 Edition, p. 39)
A distinction should first be made between suability and liability. "Suability
depends on the consent of the state to be sued, liability on the applicable
law and the established facts. The circumstance that a state is suable does
not necessarily mean that it is liable; on the other hand, it can never be held
liable if it does not first consent to be sued. Liability is not conceded by the
mere fact that the state has allowed itself to be sued. When the state does
waive its sovereign immunity, it is only giving the plaintiff the chance to
prove, if it can, that the defendant is liable." (United States of America v.
Guinto, supra, p. 659-660).
Anent the issue of whether or not the municipality is liable for the torts
committed by its employee, the test of liability of themunicipality depends
on whether or not the driver, acting in behalf of the municipality, is
performing governmental or proprietary functions. As emphasized in the
case of Torio v. Fontanilla (G.R. No. L-29993, October 23, 1978. 85 SCRA
599,
606),
the
distinction of powers
becomes
important
for
purposes of determining the liability of the municipality for the acts of its
agents which result in an injury to third persons.
Another statement of the test is given in City of Kokomo v. Loy, decided by
the Supreme Court of Indiana in 1916, thus:

"Municipal corporations exist in a dual capacity, and their functions are


twofold. In one they exercise the right springing from sovereignty, and while
in the performance of the duties pertaining thereto, their acts are political
and governmental. Their officers and agents in such capacity, though
elected or appointed by them, are nevertheless public functionaries
performing a public service, and as such they are officers, agents, and
servants of the state. In the other capacity the municipalities exercise a
private, proprietary or corporate right, arising from their existence as legal
persons and not as public agencies. Their officers and agents in the
performance of such functions act in behalf of the municipalities in their
corporate or individual capacity, and not for the state or sovereign power."
(112 N.E., 994-995) (Ibid, pp. 605-606.)
It has already been remarked that municipal corporations are suable
because their charters grant them the competence to sue and be sued.
Nevertheless, they are generally not liable for torts committed by them in
the discharge of governmental functions and can be held answerable only if
it can be shown that they were acting in a proprietary capacity. In permitting
such entities to be sued, the State merely gives the claimant the right to
show that the defendant was not acting in its governmental capacity when
the injury was committed or that the case comes under the exceptions
recognized by law. Failing this, the claimant cannot recover. (Cruz, supra, p.
44.)
In the case at bar, the driver of the dump truck of the municipality insists
that "he was on his way to the Naguilian river to get a load of sand and
gravel for the repair of San Fernando's municipal streets." (Rollo, p. 29.)
In the absence of any evidence to the contrary, the regularity of the
performance of official duty is presumed pursuant toSection 3(m) of Rule
131 of the Revised Rules of Court. Hence, We rule that the driver of the
dump truck was performing duties or tasks pertaining to his office. LexLib
We already stressed in the case of Palafox, et al. v. Province of Ilocos Norte,
the District Engineer, and the Provincial Treasurer(102 Phil 1186) that "the
construction or maintenance of roads in which the truck and the driver
worked at the time of the accident are admittedly governmental activities."
After a careful examination of existing laws and jurisprudence, We arrive at
the conclusion that the municipality cannot be held liable for the torts
committed by its regular employee, who was then engaged in the
discharge of governmental functions. Hence, the death of the passenger

tragic and deplorable though it may be imposed on the municipality no duty


to pay monetary compensation.
All premises considered, the Court is convinced that the respondent judge's
dereliction in failing to resolve the issue of non-suability did not amount to
grave abuse of discretion. But said judge exceeded his jurisdiction when it
ruled on the issue ofliability. ACCORDINGLY, the petition is GRANTED and the
decision of the respondent court is hereby modified, absolving the
petitionermunicipality of any liability in favor of private respondents.
SO ORDERED.
||| (Municipality of San Fernando, La Union v. Firme, G.R. No. 52179, [April 8,
1991], 273 PHIL 56-65)

38. Bureau of Printing v Bureau of Printing


EN BANC
[G.R. No. L-15751. January 28, 1961.]
BUREAU OF PRINTING,
SERAFIN
SALVADOR
and
MARIANO
LEDESMA, petitioners, vs. THE BUREAU OFPRINTING EMPLOYEES
ASSOCIATION (NLU), PACIFICO ADVINCULA, ROBERTO MENDOZA,
PONCIANO ARGANDA and TEODULO TOLERAN, respondents.
Solicitor General for petitioner.
Eulogio Lerum for respondents.
SYLLABUS
1. JURISDICTION; FUNCTIONS OF BUREAU OF PRINTING NOT EXCLUSIVELY
PROPRIETARY IN NATURE; COURT OFINDUSTRIAL RELATIONS WITHOUT
JURISDICTION OVER UNFAIR LABOR PRACTICE BROUGHT AGAINST
THE BUREAU. TheBureau of Printing is primarily a service bureau and is
not engaged in business or occupation for pecuniary benefit. Although it
receives outside jobs and many of its employees are paid for overtime work
on regular working days and on holidays, these facts do not justify the
conclusion that its functions are "exclusively proprietary in nature." Hence,
the Court of Industrial Relations is without jurisdiction to hear and determine
complaints for unfair labor practice filed against the Bureau ofPrinting.

2. ADMINISTRATIVE
LAW;
SUITS
AGAINST
THE
STATE; BUREAU OF PRINTING NOT SUBJECT TO SUIT WITHOUT ITS CONSENT.
As an office of the Government, without any corporate or juridical
personality, the Bureau of Printing cannot be sued without its consent, much
less over its objection. (Angat River Irrigation System, et. al. vs. Angat River
Workers' Union, et. al., 102 Phil., 789.)
DECISION
GUTIERREZ DAVID, J p:
This is a petition for certiorari and prohibition with preliminary injunction to
annul certain orders of the respondent Court ofIndustrial Relations and to
restrain it from further proceeding in the action for unfair labor practice
pending before it on the ground of lack of jurisdiction. Giving due course to
the petition, this Court ordered the issuance of the writ of preliminary
injunction prayed for without bond.
The
action
in
question
was

upon
complaint of the
respondent Bureau of Printing Employees
Association
(NLU),
Pacifico
Advincula, Roberto Mendoza, Ponciano Arganda and Teodulo Toleran filed
by an acting prosecutor of the Industrial Court against herein
petitioners Bureau of Printing, Serafin Salvador, the Acting Secretary of the
Department of General
Services,
and
Mariano
Ledesma,
the
Director of the Bureau of Printing. The complaint alleged that Serafin
Salvador and Mariano Ledesma have been engaging in unfair labor practice
by interfering with, or coercing the employees of the Bureau of Printing,
particularly the members of the complaining association, in the
exercise of their right to self-organization and discriminating in regard to
hire and tenure of their employment in order to discourage them from
pursuing their union activities.
Answering the complaint, the petitioners Bureau of Printing, Serafin
Salvador and Mariano Ledesma denied the charges ofunfair labor practices
attributed to them and, by way of affirmative defenses, alleged, among
other things, that respondents Pacifico Advincula, Roberto Mendoza,
Ponciano Arganda and Teodulo Toleran were suspended pending result of an
administrative investigation against them for breach of Civil Service rules
and regulations; that the Bureau of Printing has no juridical personality to
sue and be sued; that said Bureau of Printing is not an industrial concern
engaged for the purpose ofgain but is an agency of the Republic performing
governmental functions. For relief, they prayed that the case be dismissed
for lack of jurisdiction. Thereafter, before the case could be heard,

petitioners filed an "Omnibus Motion" asking for a preliminary hearing on


the question of jurisdiction raised by them in their answer and for
suspension of the trial of the case on the merits pending the
determination of such jurisdictional question. The motion was granted, but
after hearing, the trial judge of the Industrial Court in an order dated
January 27, 1959 sustained the jurisdiction of the court on the theory that
the functions of the Bureau of Printing are "exclusively proprietary in
nature,"
and,
consequently,
denied
the
prayer
for
dismissal.
Reconsideration of this order having been also denied by the court en banc,
the petitioners brought the case to this court through the present petition
for certiorari and prohibition.
We find the petition to be meritorious.
The Bureau of Printing is
an
office of the
Government
created
by
the Administrative
Code of 1916
(Act
No.
2657).
As
such
instrumentality of the Government, it operates under the direct
supervision of the Executive Secretary, Office of the President, and is
"charged with the execution of all printing and binding, including work
incidental to those processes, required by the National Government and
such other work of the same character as said Bureau may, by law or by
order ofthe (Secretary of Finance) Executive Secretary, be authorized to
undertake . . .." (Sec. 1644, Rev. Adm. Code.) It has no corporate existence,
and its appropriations are provided for in the General Appropriations Act.
Designed to meet the printingneeds of the Government, it is primarily a
service bureau and is obviously, not engaged in business or occupation for
pecuniary profit.
It
is
true,
as
stated
in
the
order
complained of,
that
the Bureau of Printing receives outside jobs and that many of its employees
are paid for overtime work on regular working days and on holidays, but
these facts do not justify the conclusion that its functions are "exclusively
proprietary in nature." Overtime work in the Bureau of Printing is done only
when the interest of the service so requires (sec. 566, Rev. Adm. Code). As a
matter of administrative policy, the overtime compensation may be paid,
but such payment is discretionary with the head of the Bureau depending
upon its current appropriations, so that it cannot be the basis for holding
that the functions of said Bureau are wholly proprietary in character. Anent
the additional work it executes for private persons, we find that such work is
done upon request, as distinguished from those solicited, and only "as the
requirements of Government work will permit" (sec. 1654, Rev. Adm. Code),
and "upon terms fixed by the Director of Printing, with the approval of the
Department Head" (sec. 1665, id.). As shown by the uncontradicted

evidence of the petitioners, most of these works consist of orders for


greeting cards during Christmas from government officials, and
for printing of checks of private banking institutions. On those greeting
cards, the Government seal, of which only the Bureau of Printing is
authorized to use, is embossed, and on the bank checks, only
the Bureau of Printing can print the reproduction of the official documentary
stamps appearing thereon. The volume of private jobs done, in comparison
with government jobs, is only one-half of 1 per cent, and in computing the
costs for work done for private parties, the Bureau does not include profit,
because
it
is
not
allowed
to
make
any.
Clearly,
while
the Bureau of Printing is allowed to undertake privateprinting jobs, it cannot
be pretended that it is thereby an industrial or business concern. The
additional work it executes for private parties is merely incidental to its
function, and although such work may be deemed proprietary in character,
there is no showing that the employees performing said proprietary function
are separate and distinct from those employed in its general governmental
functions.
From what has been stated, it is obvious that the Court of Industrial
Relations did not acquire jurisdiction over the respondent Bureau of Printing,
and is thus devoid of any authority to take cognizance of the case. This
Court has already held in a long line of decisions that the Industrial Court
has no jurisdiction to hear and determine the complaint for unfair labor
practice filed against institutions or corporations not organized for profit
and, consequently, not an industrial or business organization. This is so
because the Industrial Peace Act was intended to apply only to industrial
employment, and to govern the relations between employers engaged in
industry and occupations for purposes of gain, and their industrial
employees. (University of the Philippines, et al. vs. CIR, et al., G.R No. L15416, April 28, 1960; University of Sto. Tomas vs. Villanueva, et al., G.R No.
L-13282, April 22, 1960; See also the cases cited therein.)
Indeed, as an office of the Government, without any corporate or juridical
personality, the Bureau of Printing cannot be sued. (Sec. 1, Rule 3,
Rules of Court.) Any suit, action or proceeding against it, if it were to
produce any effect, would actually be a suit, action or proceeding against
the Government itself, and the rule is settled that the Government cannot
be sued without its consent, much less over its objection. (See
Metran vs. Paredes, 45 Off. Gaz., 2835; Angat River Irrigation System, et
al. vs.Angat River Workers' Union, et al., G.R. Nos. L-10943-44, December
28, 1957).

The record also discloses that the instant case arose from the
filing of administrative
charges
against
some
officers of the
respondent Bureau of Printing Employees' Association by the Acting
Secretary of General Services. Said administrative charges are for
insubordination, grave misconduct and acts prejudicial to public service
committed by inciting the employeesof the Bureau of Printing to walk
out of their jobs against the order of the duly constituted officials. Under the
law, the Headsof Departments and Bureaus are authorized to institute and
investigate administrative charges against erring subordinates. For the
Industrial Court now to take cognizance of the case filed before it, which is
in effect a review of the acts of executive officials having to do with the
discipline of government employees under them, would be to interfere with
the discharge ofsuch functions by said officials.
WHEREFORE, the petition for a writ of prohibition is granted. The orders
complained of are set aside and the complaint for unfair labor practice
against the petitioners is dismissed, with costs against respondents other
than the respondent court.

||| (Bureau of Printing v. Bureau of Printing Employees Association, G.R. No.


L-15751, [January 28, 1961], 110 PHIL 952-958)

39. Farolan v CTA


THIRD DIVISION
[G.R. No. L-42204. January 21, 1993.]
HON.
RAMON
J. FAROLAN,
JR.,
in
his
capacity
as
Commissioner of Customs, petitioner, vs. COURT OF TAXAPPEALS and
BAGONG BUHAY TRADING, respondents.
The Solicitor General for petitioner.
Jorge G. Macapagal counsel for respondent.
Aurea Aragon-Casiano for Bagong Buhay Trading.
SYLLABUS

1. ADMINISTRATIVE LAW; TARIFF AND CUSTOMS CODE; FORFEITURE UNDER


SECTION 2530, PARAGRAPH M, SUBPARAGRAPHS 3, 4 AND 5; REQUISITES
FOR FORFEITURE UNDER SUBPARAGRAPHS 3 AND 4; CASE AT BAR. SEC.
2530.Property Subject to Forfeiture Under Tariff and Customs Law. Any
vehicle, vessel or aircraft, cargo, article and other objects shall, under the
following conditions be subjected to forfeiture. m. Any article sought to be
imported or exported. (3) On the strength of a false declaration or affidavit
or affidavit executed by the owner, importer, exporter or consignee
concerning
the
importation of such
article;
(4)
On
the
strength of a false invoice or other document executed by the owner,
importer, exporter or consignee concerning the importation or
exportation of such article; and (5) Through any other practice or device
contrary to law by means of which such articles were entered through a
customhouse to the prejudice of government. Under Section 2530,
paragraph m, subparagraphs (3) and (4), the requisites for forfeiture are: (1)
the wrongful making by the owner, importer, exporter or consignee of any
declaration or affidavit, or the wrongful making or delivery by the same
persons ofany invoice, letter or paper all touching on the importation or
exportation of merchandise; and (2) that such declaration, affidavit, invoice,
letter or paper is false. In the case at bar, although it cannot be denied that
private respondent caused to be prepared through its customs broker a
false import entry or declaration, it cannot be charged with the wrongful
making thereof because such entry or declaration merely restated faithfully
the
data
found
in
the
corresponding
certificate of origin,
certificate of manager of the shipper, the packing lists and the bill of lading
which were all prepared by its suppliers abroad. If, at all, the wrongful
making or falsity of the documents above-mentioned can only be attributed
to Bagong Buhay's foreign suppliers or shippers. With regard to the second
requirement on falsity, it bears mentioning that the evidence on record,
specifically,
the
decisions of the
Collector of Customs
and
the
Commissioner of Customs, do not reveal that the importer or consignee,
Bagong Buhay Trading had any knowledge of any falsity on the subject
importation. Since private respondent's misdeclaration can be traced
directly to its foreign suppliers, Section 2530, paragraph m, subparagraphs
(3) and (4) cannot find application.
2. ID.; ID.; ID.; FRAUD UNDER SUBPARAGRAPH 5 MUST BE INTENTIONAL;
ACTUAL AND NOT CONSTRUCTIVE, AND COMMITTED BY IMPORTER OR
CONSIGNEE TO EVADE PAYMENT OF DUTIES DUE. Applying subparagraph
(5), fraud must be committed by an importer/consignee to evade
payment of the
duties
due.
We
support
the
stance of the Court of TaxAppeals that the Commissioner of Customs failed

to show that fraud had been committed by the private respondent. The
fraud contemplated by law must be actual and not constructive. It must be
intentional fraud, consisting of deception willfully and deliberately done or
resorted to in order to induce another to give up some right. As explained
earlier, the import entry was prepared on the basis of the shipping
documents provided by the foreign supplier or shipper. Hence, Bagong
Buhay Trading can be considered to have acted in good faith when it relied
on these documents.
3. POLITICAL LAW; STATE IMMUNITY FROM SUIT; BUREAU OF CUSTOMS
ENJOYS IMMUNITY FROM SUIT; CASE AT BAR. We opine that the
Bureau of Customs cannot be held liable for actual damages that the private
respondent sustained with regard to its goods. Otherwise, to permit private
respondent's claim to prosper would violate the doctrine of sovereign
immunity. Since it demands that the Commissioner of Customs be ordered
to pay for actual damages it sustained, for which ultimately liability will fall
on the government, it is obvious that this case has been converted
technically into a suit against the state.
DECISION
ROMERO, J p:
This is a petition for review on certiorari which seeks to annul and set aside
the decision of the Court of Tax Appeals dated December 27, 1974 (CTA
Case No. 2490) reversing the decision of the Commissioner of Customs
which affirmed the decisionof the Collector of Customs. 1
The undisputed facts are as follows:
On January 30, 1972, the vessel S/S "Pacific Hawk" with Registry No. 170
arrived at the Port of Manila carrying, among others, 80 bales of screen net
consigned to Bagong Buhay Trading (Bagong Buhay). Said importation was
declared through a customs broker under Entry No. 8651-72 as 80
bales of screen net of 500 rolls with a gross weight of 12,777 kilograms
valued at $3,750.00 and classified under Tariff Heading No. 39.06-B of the
Tariff and Customs Code 2 at 35% ad valorem. Since the customs examiner
found the subject shipment reflective of the declaration, Bagong Buhay paid
the duties and taxes due in the amount of P11,350.00 which was paid
through the Bank of Asia under Official Receipt No. 042787 dated February
1, 1972. Thereafter, the customs appraiser made a return of duty. llcd
Acting
on
the
strength of an
information
that
the
shipment
consisted of "mosquito net" made of nylon dutiable under Tariff Heading No.

62.02 of the Tariff and Customs Code, the Office of the Collector of Customs
ordered a re-examination of the shipment. A report on the re-examination
revealed that the shipment consisted of 80 bales of screen net, each bale
containing 20 rolls or a total of 1,600 rolls. 3 Re-appraised, the shipment
was valued at $37,560.00 or $0.15 per yard insteadof $.075 per yard as
previously declared. Furthermore, the Collector of Customs determined the
subject shipment as made ofsynthetic (polyethylene) woven fabric
classifiable under Tariff Heading No. 51.04-B at 100% ad valorem. Thus,
Bagong Buhay Trading was assessed P272,600.00 as duties and taxes due
on the shipment in question. 4 Since the shipment was also misdeclared as
to quantity and value, the Collector of Customs forfeited the subject
shipment in favor of the government. 5
Private respondent then appealed the decision of the Collector of Customs
by filing a petition for review with the Commissioner of Customs. On
November 25, 1972 the Commissioner affirmed the Collector of Customs. 6
Private respondent moved for reconsideration but the same was denied on
January 22, 1973. 7
From the Commissioner of Customs, private respondent elevated his case
before
the Court of Tax Appeals.
Upon
review,
theCourt of Tax Appeals reversed
the
decision of the
Commissioner of Customs. It ruled that the Commissioner erred in imputing
fraud upon private respondent because fraud is never presumed and thus
concluded that the forfeiture of the articles in question was not in
accordance with law. Moreover, the appellate court stated that the imported
articles in question should be classified as "polyethylene plastic" at the
rate of 35% ad valorem instead of "synthetic (polyethylene) woven fabric"
at the rate of 100% ad valorem based upon the results conducted by the
Bureau of Customs
Laboratory.
Consequently,
the Court of Tax Appeals ordered the release of the said article upon
payment of the corresponding duties and taxes.(C.T.A. Case No. 2490) 8
Thereafter, the Commissioner of Customs moved for reconsideration. On
November 19, 1975, the Court of Tax Appealsdenied said motion for
reconsideration. 9
On August 20, 1976, private respondent filed a petition asking for the
release of the questioned goods which this Courtdenied. After several
motions for the early resolution of this case and for the release of goods and
in view of the fact that the goods were being exposed to the natural
elements, we ordered the release of the goods on June 2, 1986.
Consequently, on July 26, 1986, private respondent posted a cash

bond of P149,443.36 to secure the release of 64 bales 10 out of the 80 bales


11 originally delivered on January 30, 1972. Sixteen bales 12 remain
missing. LLphil
Private respondent alleges that of the 143,454 yards (64 bales) released to
Bagong Buhay, only 116,950 yards were in good condition and the 26,504
yards were in bad condition. Consequently, private respondent demands
that the Bureau ofCustoms be ordered to pay for damages for the 43,050
yards 13 it actually lost. 14
Hence, this petition, the issues being: a) whether or not the shipment in
question is subject to forfeiture under Section 2530-M subparagraphs (3),
(4) and (5) of the Tariff and Customs Code; b) whether or not the shipment
in question falls under Tariff Heading No. 39.06-B (should be 39.02-B) of the
Tariff and Customs Code subject to ad valorem duty of 35% instead of Tariff
Heading No. 51.04-B with ad valorem of 100% and c) whether or not the
Collector of Customs may be held liable for the 43,050 yards actually lost by
private respondent.
Section 2530, paragraph m, subparagraphs(3), (4) and (5) states:
"SECTION 2530. Property Subject to Forfeiture Under Tariff and Customs
Law. Any vehicle, vessel or aircraft, cargo, article and other objects shall,
under the following conditions be subjected to forfeiture.
xxx xxx xxx
m. Any article sought to be imported or exported.
xxx xxx xxx
(3) On the strength of a false declaration or affidavit or affidavit executed by
the
owner,
importer,
exporter
or
consignee
concerning
the
importation of such article;
(4) On the strength of a false invoice or other document executed by the
owner, importer, exporter or consignee concerning the importation or
exportation of such article; and

(5) Through any other practice or device contrary to law by means of which
such
articles
was
entered
through
a
customhouse
to
the
prejudice of government. (Emphasis supplied).

Petitioner contends that there has been a misdeclaration as to the quantity


in rolls of the shipment in question, the undisputed fact being that the said
shipment consisted of 1,600 rolls and not 500 rolls as declared in the import
entry. We agree with the contention of the petitioner. In declaring the
weight of its shipment in an import entry, through its customs broker as
12,777 kilograms when in truth and in fact the actual weight is 13,600
kilograms, an apparent misdeclaration as to the weight of the questioned
goods was committed by private respondent. Had it not been for a reexamination and re-appraisal of the shipment by the Collector of Customs
which yielded a difference of 823 kilograms, the government would have
lost revenue derived from customs duties.
Although it is admitted that indeed there was a misdeclaration, such
violation, however, does not warrant forfeiture for suchact was not
committed directly by the owner, importer, exporter or consignee as set
forth in Section 2530, paragraph m, subparagraph (3), and/or (4).
In defense of its position denying the commission of misdeclaration, private
respondent contends that its import entry was based solely on the shipping
documents and that it had no knowledge of any flaw in the said documents
at the time the entry was filed. For this reason, private respondent believes
that if there was any discrepancy in the quantity of the goods as declared
and as examined, such discrepancy should not be attributed to Bagong
Buhay. 15
Private respondent's argument is persuasive. Under Section 2530,
paragraph m, subparagraphs (3) and (4), the requisites for forfeiture are: (1)
the wrongful making by the owner, importer, exporter or consignee of any
declaration or affidavit, or the wrongful making or delivery by the same
persons of any invoice, letter or paper all touching on the importation or
exportation of merchandise; and (2) that such declaration, affidavit, invoice,
letter or paper is false. 16
In the case at bar, although it cannot be denied that private respondent
caused to be prepared through its customs broker a false import entry or
declaration, it cannot be charged with the wrongful making thereof because
such entry or declaration merely restated faithfully the data found in the
corresponding certificate of origin, 17 certificate of manager of the shipper,
18 the packing lists 19 and the bill of lading 20 which were all prepared by
its suppliers abroad. If, at all, the wrongful making or falsity of the
documents above-mentioned can only be attributed to Bagong Buhay's
foreign suppliers or shippers.

With regard to the second requirement on falsity, it bears mentioning that


the
evidence
on
record,
specifically,
the
decisionsof the
Collector of Customs and the Commissioner of Customs, do not reveal that
the importer or consignee, Bagong Buhay Trading had any knowledge of any
falsity on the subject importation.
Since private respondent's misdeclaration can be traced directly to its
foreign suppliers, Section 2530, paragraph m, subparagraphs (3) and (4)
cannot find application.
Applying subparagraph (5), fraud must be committed by an
importer/consignee to evade payment of the duties due. 21 We support the
stance of the Court of Tax Appeals that the Commissioner of Customs failed
to show that fraud had been committed by the private respondent. The
fraud contemplated by law must be actual and not constructive. It must be
intentional fraud, consisting of deception willfully and deliberately done or
resorted to in order to induce another to give up some right. 22 As explained
earlier, the import entry was prepared on the basis of the shipping
documents provided by the foreign supplier or shipper. Hence, Bagong
Buhay Trading can be considered to have acted in good faith when it relied
on these documents.
Proceeding now to the question of the correct classification of the
questioned shipments, petitioner contends that the same falls under Tariff
Heading No. 51.04 being a "synthetic (polyethylene) woven fabric." On the
other hand, private respondent contends that these fall under Tariff Heading
No. 39.06 (should be 39.02), having been found to be made of polyethylene
plastic. LexLib
Heading No. 39.02 of the Tariff and Customs Code provides:
"39.02 Polymerisation and copolymerisation products (for example,
polyethylene, polytetrahaloethylene, polyisobutylene, polystyrene, polyvinyl
chloride, polyvinyl acetate, polyvinyl chloroacetate and other polyvinyl
derivatives, polyacrylic and polymethacrylic derivatives, coumaroneindene
resins).
The principal products included in this heading are:
(1) Polymerization products of ethylene
particularly the halogen derivatives.

or

its

substitution

derivatives,

Examples of these
are
polyethylene,
polytetrafluro-ethylene
and
polychlorotrifluro-ethylene. Their characteristic is that they are transluscent,

flexible and light in weight. They are used largely for insulating electric
wire." 23
On the other hand, Tariff Heading No. 51.04 provides:
"51.04 Woven fabrics of man-made fibers (continuous) including woven
fabrics of monofil or strip of heading No. 51.01 or 51.02"
"This heading covers woven fabrics (as described in Part [I] [C] of the
General Explanatory Note on Section XI) made ofyarns of continuous manmade fibers, or of monofil or strip of heading 51.01 and 51.02; it includes a
very large variety ofdress fabrics, linings, curtain materials, furnishing
fabrics, tyre fabrics, tent fabrics, parachute fabrics, etc. 24 (Emphasis
supplied)
To correctly classify the subject importation, we need to refer to chemical
analysis submitted before the Court of Tax Appeals. Mr. Norberto Z. Manuel,
an Analytical Chemist of the Bureau of Customs and an Assistant to the
Chief of the Customs Laboratory, testified that a chemical test was
conducted on the sample 25 and "the result is that the attached sample
submitted
under
Entry
No.
8651
was
found
to
be
made wholly of polyethylene plastic." 26
A similar result conducted by the Adamson University Testing Laboratories
provides as follows:
"The submitted sample, being insoluble in 10% sodium carbonate;
hydrochloric acid, glacial acetic acid, toluene, acetone, formic acid, and
nitric acid, does not belong to the man-made fibers, i.e., cellulosic and
alginate rayons, poly (vinyl chloride), polyacrylonitrile, copolymer or
polyester silicones including Dolan, Dralon, Orlin, PAN, Redon, Courtelle,
etc., Tarylene, Dacron; but it is a type of plastic not possessing the
properties of the man-made fibers. 27 (Emphasis supplied)LibLex
Consequently, the Court of Tax Appeals, relying on the laboratory
findings of the Bureau of Customs and Adamson University correctly
classified the questioned shipment as polyethylene plastic taxable under
Tariff Heading No. 39.02 instead ofsynthetic (polyethylene) woven fabric
under Tariff Heading 51.04, to wit:
"While it is true that the finding and conclusion of the Collector of Customs
with respect to classification of imported articles are presumptively correct,
yet as matters that require laboratory tests or analysis to arrive at the
proper classification, the opinion of the Collector must yield to the
finding of an expert whose opinion is based on such laboratory test or

analysis unless such laboratory analysis is shown to be erroneous. And this


is especially so in this case where the test and analysis were made in the
laboratory of the Bureau of Customs itself. It has not been shown why such
laboratory finding was disregarded. There is no claim or pretense that an
error was committed by the laboratory technician. Significantly, the said
finding of the Chief, Customs Laboratory finds support in the
'REPORT OF ANALYSIS' submitted by the Adamson University Testing
Laboratories, dated September 21, 1966." 28
On the third issue, we opine that the Bureau of Customs cannot be held
liable for actual damages that the private respondent sustained with regard
to its goods. Otherwise, to permit private respondent's claim to prosper
would violate the doctrine of sovereign immunity. Since it demands that the
Commissioner of Customs be ordered to pay for actual damages it
sustained, for which ultimately liability will fall on the government, it is
obvious that this case has been converted technically into a suit against the
state. 29
On this point, the political doctrine that "the state may not be sued without
its consent," categorically applies. 30 As an unincorporated government
agency without any separate juridical personality of its own, the
Bureau of Customs enjoys immunity from suit. Along with the
Bureau of Internal
Revenue,
it
is
invested
with
an
inherent
power of sovereignty,
namely,
taxation.
As
an
agency,
the
Bureau of Customs performs the governmental function of collecting
revenues which is definitely not a proprietary function. Thus, private
respondent's claim for damages against the Commissioner of Customs must
fail. prLL
WHEREFORE,
the
decision of the
respondent Court of Tax Appeals is
AFFIRMED. The Collector of Customs is directed to expeditiously re-compute
the customs duties applying Tariff Heading 39.02 at the rate of 35% ad
valorem on the 13,600 kilograms of polyethylene plastic imported by
private respondent.
SO ORDERED.
||| (Farolan v. Court of Tax Appeals, G.R. No. L-42204, [January 21, 1993])

40. PTA v Phil GOlf Devt & Equipment

SECOND DIVISION
[G.R. No. 176628. March 19, 2012.]
PHILIPPINE TOURISM AUTHORITY, petitioner, vs. PHILIPPINE GOLF
DEVELOPMENT & EQUIPMENT, INC.,respondent.
RESOLUTION
BRION, J p:
Before this Court is a petition for certiorari, under Rule 65 of the 1997 Rules
of Civil Procedure, to annul the decision 1 dated December 13, 2006 of the
Court of Appeals (CA) in CA G.R. SP No. 90402. This CA decision dismissed
the petition for annulment of judgment which sought to set aside the
decision 2 of the Regional Trial Court (RTC) of Muntinlupa City, Branch 203,
in Civil Case No. 03-212. The RTC held the Philippine Tourism
Authority (PTA) liable for its unpaid obligation to Philippine Golf
Development & Equipment, Inc. (PHILGOLF). HAICET
FACTUAL BACKGROUND
On April 3, 1996, PTA, an agency of the Department of Tourism, whose main
function is to bolster and promote tourism, entered into a contract with
Atlantic Erectors, Inc. (AEI) for the construction of the Intramuros Golf
Course Expansion Projects (PAR 60-66) for a contract price of Fifty-Seven
Million Nine Hundred Fifty-Four Thousand Six Hundred Forty-Seven and
94/100 Pesos (P57,954,647.94).
The civil works of the project commenced. Since AEI was incapable of
constructing the golf course aspect of the project, it entered into a subcontract agreement with PHILGOLF, a duly organized domestic corporation,
to build the golf course amounting to Twenty-Seven Million Pesos
(P27,000,000.00). The sub-contract agreement also provides that PHILGOLF
shall submit its progress billings directly to PTA and, in turn, PTA shall
directly pay PHILGOLF. 3
On October 2, 2003, PHILGOLF filed a collection suit against PTA amounting
to Eleven Million Eight Hundred Twenty Thousand Five Hundred Fifty and
53/100 Pesos (P11,820,550.53), plus interest, for the construction of the golf
course. Within the period to file a responsive pleading, PTA filed a motion for
extension of time to file an answer.

On October 30, 2003, the RTC granted the motion for extension of time. PTA
filed another motion for extension of time to file an answer. The RTC again
granted the motion.
Despite the RTC's liberality of granting two successive motions for extension
of time, PTA failed to answer the complaint. Hence, on April 6, 2004, the RTC
rendered a judgment of default, ruling as follows:
WHEREFORE, judgment is hereby rendered, ordering the defendant to pay
plaintiff:
1. The amount of Eleven Million, Eight Hundred Twenty Thousand, Five
Hundred Fifty Pesos and Fifty Three Centavos (P11,820,550.53),
representing defendant's outstanding obligation, plus interest thereon of
twelve percent (12%) per annum from the time the unpaid billings of
plaintiff were due for payment by the defendant, until they are fully paid.
2. The amount of Two Hundred Thousand Pesos (P200,000.00), as attorney's
fees. CacEIS
3. The amount of One Hundred Twenty Eight Thousand, Five Hundred Twenty
Nine Pesos and Fourteen Centavos (P128,529.14), as filing fees and other
costs of litigation.
4. The amount of Three Hundred Thousand Pesos (P300,000.00), as moral
damages.
5. The amount of One Hundred Fifty Thousand Pesos (P150,000.00), as
nominal damages, and
6. The amount of Two Hundred Fifty Thousand Pesos (P250,000.00), as
exemplary damages.
SO ORDERED. 4
On July 11, 2005, PTA seasonably appealed the case to the CA. But before
the appeal of PTA could be perfected, PHILGOLF already filed a motion for
execution pending appeal with the RTC. The RTC, in an Order dated June 2,
2004, granted the motion and a writ of execution pending appeal was
issued against PTA. On June 3, 2004, a notice of garnishment was issued
against PTA's bank account at the Land Bank of the Philippines, NAIA-BOC
Branch to fully satisfy the judgment.
PTA filed a petition for certiorari with the CA, imputing grave abuse of
discretion on the part of the RTC for granting the motion for execution

pending appeal. The CA ruled in favor of PTA and set aside the order
granting the motion for execution pending appeal.
On July 11, 2005, PTA withdrew its appeal of the RTC decision and, instead,
filed a petition 5 for annulment of judgment under Rule 47 of the Rules of
Court. The petition for annulment of judgment was premised on the
argument that the gross negligence of PTA's counsel prevented the
presentation of evidence before the RTC.
On December 13, 2006, the CA dismissed the petition for annulment of
judgment for lack of merit. PTA questions this CA action in the present
petition for certiorari. ASaTCE
THE PETITION
The petition cites three arguments: first, that the negligence of PTA's
counsel amounted to an extrinsic fraud warranting an annulment of
judgment; second, that since PTA is a government entity, it should not be
bound by the inactions or negligence of its counsel; and third, that there
were no other available remedies left for PTA but a petition for annulment of
judgment.
OUR RULING
We find the petition unmeritorious.
The Rules of Court specifically provides for deadlines in actions before the
court to ensure an orderly disposition of cases. PTA cannot escape these
legal technicalities by simply invoking the negligence of its counsel. This
practice, if allowed, would defeat the purpose of the Rules on periods since
every party would merely lay the blame on its counsel to avoid any liability.
The rule is that "a client is bound by the acts, even mistakes, of his counsel
in the realm of procedural technique[,] and unless such acts involve gross
negligence that the claiming party can prove, the acts of a counsel bind the
client as if it had been the latter's acts." 6
In LBC Express Metro Manila, Inc. v. Mateo, 7 the Court held that "[g]ross
negligence is characterized by want of even slight care, acting or omitting
to act in a situation where there is a duty to act, not inadvertently but
willfully and intentionally with a conscious indifference to consequences
insofar as other persons may be affected." This cannot be invoked in cases
where the counsel is merely negligent in submitting his required pleadings
within the period that the rules mandate.

It is not disputed that the summons together with a copy of the complaint
was personally served upon, and received by PTA through its Corporate
Legal Services Department, on October 10, 2003. 8 Thus, in failing to submit
a responsive pleading within the required time despite sufficient notice, the
RTC was correct in declaring PTA in default.
There was no extrinsic fraud
"Extrinsic fraud refers to any fraudulent act of the prevailing party in the
litigation which is committed outside of the trial of the case, whereby the
unsuccessful party has been prevented from exhibiting fully his case, by
fraud or deception practiced on him by his opponent." 9 Under the doctrine
of this cited case, we do not see the acts of PTA's counsel to be constitutive
of extrinsic fraud. aHCSTD
The records reveal that the judgment of default 10 was sent via registered
mail to PTA's counsel. However, PTA never availed of the remedy of a
motion to lift the order of default. 11 Since the failure of PTA to present its
evidence was not a product of any fraudulent acts committed outside trial,
the RTC did not err in declaring PTA in default.
Annulment
the proper remedy

of

judgment

is

not

PTA's appropriate remedy was only to appeal the RTC decision. "Annulment
of Judgment under Rule 47 of the Rules of Court is a recourse equitable in
character and allowed only in exceptional cases where the ordinary
remedies of new trial, appeal, petition for relief or other appropriate
remedies are no longer available through no fault of petitioner." 12
In this case, appeal was an available remedy. There was also no
extraordinary reason for a petition for annulment of judgment, nor was
there any adequate explanation on why the remedy for new trial or petition
for relief could not be used. The Court is actually at a loss why PTA had
withdrawn a properly filed appeal and substituted it with another petition,
when PTA could have merely raised the same issues through an ordinary
appeal.
PTA
character

was

acting

in

proprietary

PTA also erred in invoking state immunity simply because it is a government


entity. The application of state immunity is proper only when the
proceedings arise out of sovereign transactions and not in cases of
commercial activities or economic affairs. The State, in entering into a

business contract, descends to the level of an individual and is deemed to


have tacitly given its consent to be sued. 13
Since the Intramuros Golf Course Expansion Projects partakes of a
proprietary character entered into between PTA and PHILGOLF, PTA cannot
avoid its financial liability by merely invoking immunity from suit.
A
special
civil
action
under
Rule
65
is
proper
there
is
no
other
plain,
adequate remedy

for

certiorari
only
when
speedy,
and

Lastly, a special civil action under Rule 65 of the Rules of Court is only
available in cases when a tribunal, board or officer exercising judicial or
quasi-judicial functions has acted without or in excess of its or his
jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal, or any plain, speedy, and adequate
remedy in the ordinary course of law. It is not a mode of appeal, and cannot
also be made as a substitute for appeal. It will not lie in cases where other
remedies are available under the law. EaScHT
In Land Bank of the Philippines v. Court of Appeals, 14 the Court had the
occasion to state:
The general rule is that a [certiorari] will not issue where the remedy of
appeal is available to the aggrieved party. The remedies of appeal in the
ordinary course of law and that of certiorari under Rule 65 of the Revised
Rules of Court are mutually exclusive and not alternative or cumulative.
Hence, the special civil action for certiorari under Rule 65 is not and cannot
be a substitute for an appeal, where the latter remedy is available. . . .
xxx xxx xxx
The proper recourse of the aggrieved party from a decision of the CA is a
petition for review on certiorari under Rule 45 of the Revised Rules of Court.
On the other hand, if the error subject of the recourse is one of jurisdiction,
or the act complained of was perpetrated by a quasi-judicial officer or
agency with grave abuse of discretion amounting to lack or excess of
jurisdiction, the proper remedy available to the aggrieved party is a petition
for certiorari under Rule 65 of the said Rules. [emphases supplied; citations
omitted]
In sum, PTA had the remedy of appealing the RTC decision to the CA and,
thereafter, to us. Under the circumstances, we find no adequate reason to

justify the elevation of this case to the CA and then to us, under Rule 65 of
the Rules of Court. IHCSTE
WHEREFORE, premises
for certiorari. No costs.

considered,

we

hereby DISMISS the

petition

SO ORDERED.
Carpio, Perez, Sereno and Reyes, JJ., concur.
||| (Philippine Tourism Authority v. Philippine Golf Development &
Equipment, Inc., G.R. No. 176628 (Resolution), [March 19, 2012], 684 PHIL
429-437)

41. City of Angeles v CA


THIRD DIVISION
[G.R. No. 97882. August 28, 1996.]
THE CITY OF ANGELES, Hon. ANTONIO ABAD SANTOS, in his
capacity as MAYOR of Angeles City, and the SANGGUNIANG
PANLUNGSOD OF THE CITY OF ANGELES, petitioners, vs. COURT OF A
PPEALS and
TIMOG
SILANGAN
DEVELOPMENT
CORPORATION, respondents.
Quiason Makalintal Barot Torres Ibarra & Sison for petitioners.
Angara Abello Concepcion Regala & Cruz for private respondent.
SYLLABUS

1. CIVIL LAW; PROPERTY; [PD 957 AS AMENDED BY PD 1216] SUBDIVISION


DEVELOPERS ARE LEGALLY BOUND TO DONATE OPEN SPACE TO THE LOCAL
GOVERNMENT. Pursuant to the wording of Sec. 31 of P.D. 957 as
amended by P.D. No. 1216, private respondent is under legal obligation to
donate the open space exclusively allocated for parks, playgrounds, and
recreational use to the petitioner. This can be clearly established by
referring to the original provision of Sec. 31 of P.D. 957. It will be noted that
under the original provision, it was optional on the part of the owner or
developer to donate the roads and open spaces found within the project to
the city or municipality where the project is located. Elsewise stated, there
was no legal obligation to make the donation. However, said Sec. 31 as
amended now states in its last paragraph that it is no longer optional on the
part of the subdivision owner/developer to donate the open space for parks
and playgrounds, rather there is now a legal obligation to donate the same.
Although there is a proviso that the donation of the parks and playgrounds
may be made to the homeowners association of the project with the
consent of the city or
municipality
concerned,
nonetheless,
the
owner/developer is still obligated under the law to donate. Such option does
not change the mandatory character of the provision. The donation has to
be made regardless of which donee is picked by the owner/developer. The
consent requirement before the same can be donated to the homeowners'
association emphasizes this point. ADEHTS
2. ID.; ID.; ID.; ID.; THE PERCENTAGE OF AREA FOR PARKS AND
PLAYGROUND IS TO BE BASED ON THE GROSS AREA OFTHE SUBDIVISION.
The language of Section 31 of P.D. 957 as amended by Section 2 of P.D.
1216 is wanting in clarity and exactitude, but it can be easily inferred that
the phrase "gross area" refers to the entire subdivision area. The said
phrase was used four times in the same section in two sentences, the
first of which reads: ". . . For subdivision projects one (1) hectare or more,
the owner or developer shall reserve thirty per cent (30%) of the gross
area for open space. . . . ." Here, the phrase "30% of the gross area" refers
to the total area of the subdivision, not of the open space. Otherwise, the
definition of "open space" would be circular. Thus, logic dictates that the
same basis be applied in the succeeding instances where the phrase "open
space" is used, i.e., "9% of the gross area. . . 7% of gross area. . .
3.5% of gross area. . ." Moreover, we agree with petitioners that construing
the 3.5% to 9% as applying to the totality of the open space would result in
far too small an area being devoted for parks, playgrounds, etc., thus
rendering meaningless and defeating the purpose of the statute. This
becomes clear when viewed in the light of the original requirement of P.D.
953 ("Requiring the Planting of Trees in Certain Places, etc."). To our mind, it

is clear that P.D. 1216 was an attempt to achieve a happy compromise and
a realistic balance between the imperatives of environmental planning and
the need to maintain economic feasibility in subdivision and housing
development, by reducing the required area for parks, playgrounds and
recreational uses from thirty percent (30%) to only 3.5% - 9% of the entire
area of the subdivision.
3. ID.; ID.; ID.; ID.; THE DONEE IS BARRED FROM CONSTRUCTING A
BUILDING THEREON; EXCEPTION. In the case at bar, one of the conditions
imposed in the Amended Deed of Donation is that the donee should build a
sports complex on the donated land. Since P.D. 1216 clearly requires that
the 3.5% to 9% of the gross area allotted for parks and playgrounds is "nonbuildable", then the obvious question arises whether or not such condition
was validly imposed and is binding on the donee. It is clear that the "nonbuildable" character applies only to the 3.5% to 9% area set by law. If there
is any excess land over and above the 3.5% to 9% required by the decree,
which is also used or allocated for parks, playgrounds and recreational
purposes, it is obvious that such excess area is not covered by the nonbuildability restriction. In the instant case, if there be an excess, then the
donee would not be barred from developing and operating a sports complex
thereon, and the condition in the amended deed would then be considered
valid and binding. To determine if the over 50,000 square meter area
donated pursuant to the amended deed would yield an excess over the area
required by the decree, it is necessary to determine under which density
category the Timog Park subdivision falls. If the subdivision falls under
the low density or open market housing category, with 20 family lots or
below per gross hectare, the developer will need to allot only 3.5% ofgross
area for parks and playgrounds, and since the donated land constitutes
"more than five (5) percent of the total land area of the subdivision, there
would therefore be an excess of over 1.5% of gross area which would not be
non-buildable. Petitioners, on the other hand, alleged (and private
respondent did not controvert) that the subdivision in question is a
"medium-density or economic housing" subdivision based on the
sizes of the family lots donated in the amended deed, for which category
the decree mandates that not less than 7% of gross area be set aside. Since
the donated land constitutes only a little more than 5% of the gross
area of the subdivision, which is less than the area required to be allocated
for non-buildable open space, therefore there is no "excess land" to
speak of. This then means that the condition to build a sports complex on
the donated land is contrary to law and should be considered as not
imposed. HCaIDS

4. ID.; ID.; MODES OF ACQUIRING OWNERSHIP; DONATION; CONDITIONS


MAY BE IMPOSED THEREON PROVIDED THAT THE SAME IS NOT CONTRARY
TO LAW, MORALS, GOOD CUSTOMS, PUBLIC ORDER OR PUBLIC POLICY.
The general law on donations does not prohibit the imposition of conditions
on a donation so long as the conditions are not illegal or impossible. In
regard to donations of open spaces, P.D. 1216 itself requires among other
things that the recreational areas to be donated be based, is
aforementioned, on a percentage (3.5%, 7%, or 9%) of the total area of the
subdivision depending on whether the subdivision is low-, medium-, or highdensity. It further declares that such open space devoted to parks,
playgrounds and recreational areas are non-alienable public land and nonbuildable. However, there is no prohibition in either P.D. 957 or P.D.
1216 against imposing conditions on such donation. We hold that any
condition may be imposed in the donation, so long as the same is not
contrary to law, morals, good customs, public order or public policy. The
contention of petitioners that the donation should be unconditional because
it is mandatory has no basis in law. P.D. 1216 does not provide that the
donation should be unconditional. To rule that it should be so is tantamount
to unlawfully expanding the provisions of the decree.
5. ID., CONTRACTS; VOID OR INEXISTENT; EFFECT OF PARI-DELICTO.
Article 1412 of the Civil Code which provides that: "If the act in which the
unlawful or forbidden cause consists does not constitute a criminal offense,
the following rules shall be observed: "(1) When the fault is on the
part of both contracting parties, neither may recover what he has given by
virtue ofthe contract, or demand the performance of the other's
undertaking" comes into play here. Both petitioners and private
respondents are in violation of P.D. 957 as amended, for donating and
accepting a donation of open space less than that required by law, and for
agreeing to build and operate a sports complex on the non-buildable open
space so donated, and petitioners, for constructing a drug rehabilitation
center on the same non-buildable area. Moreover, since the condition to
construct a sports complex on the donated land has previously been shown
to be contrary to law, therefore, stipulation no. 8of the amended deed
cannot be implemented because (1) no valid stipulation of the amended
deed had been breached, and (2) it is highly improbable that the decree
would have allowed the return of the donated land for open space under
any circumstance, considering the non-alienable character of such open
space, in the light of the second Whereas clause of P.D. 1216 which declares
that ". . . such open spaces, roads, alleys and sidewalks in residential
subdivisions are for public use and are, therefore, beyond the
commerce of men." Further, as a matter of public policy, private respondent

cannot be allowed to evade its statutory obligation to donate the required


open space through the expediency of invoking petitioners' breach ofthe
aforesaid condition. It is a familiar principle that the courts will not aid either
party to enforce an illegal contract, but will leave them both where they find
them. Neither party can recover damages from the other arising from
the act contrary to law, or plead the same as a cause of action or as a
defense. Each must bear the consequences of his own acts.
6. REMEDIAL LAW; CIVIL PROCEDURE; EXECUTION OF JUDGMENT; A
JUDGMENT RESTRAINING A PARTY FROM DOING A CERTAIN ACT IS
ENFORCEABLE AND SHALL REMAIN IN FULL FORCE AND EFFECT EVEN
PENDING APPEAL. ". . . When a writof preliminary injunction was sought
for by the appellee [private respondent] to enjoin the appellants [petitioners
herein] from further continuing with the construction of the said center, the
latter resisted and took refuge under the provisions ofPresidential Decree
No. 1818 (which prohibits writs of preliminary injunction) to continue with
the
construction of the
building.
Yet,
the
appellants
also
presented City Council Resolution No. 227, which allegedly repealed the
previous Resolution authorizing the City Government to construct a Drug
Rehabilitation Center on the donated property, by 'changing the purpose
and usage of the Drug Rehabilitation Center to Sports Development and
Youth Center to make it conform to the Sports Complex Project therein.'
Under this Resolution No. 227, the appellants claimed that they have
abandoned all plans for the construction of the Drug Rehabilitation Center.
Nonetheless, when judgment was finally rendered on February 15, 1989, the
appellants were quick to state that they have not after all abandoned their
plans for the center as they have in fact inaugurated the same on April 15,
1989. In plain and simple terms, this act is a mockery of our judicial system
perperated by the appellants. For them to argue that the court cannot deal,
on their Drug Rehabilitation Center is not only preposterous but also
ridiculous. It is interesting to observe that under the appealed decision the
appellants and their officers, employees and all other persons acting on
their behalf were perpetually enjoined to cease and desist from constructing
a Drug Rehabilitation Center on the donated property. Under Section
4 of Rule 39 of the Rules of Court, it is provided that: "Section 4 A
judgment in an action for injunction shall not be stayed after its rendition
and before an appeal is taken or during the pendency of an appeal."
Accordingly, a judgment restraining a party from doing a certain act is
enforceable and shall remain in full force and effect even pending appeal. In
the case at bar, the cease and desist order therefore still stands. Appellants'
persistence and continued construction and, subsequent, operation of the

Drug Rehabilitation Center violate the express terms of the writ ofinjunction
lawfully issued by the lower court."

7. ADMINISTRATIVE LAW; LOCAL GOVERNMENT CODE; A PUBLIC OFFICIAL IS


LIABLE FOR DAMAGES CAUSED BY HIS ACTDONE WITH MALICE AND IN BAD
FAITH OR BEYOND THE SCOPE OF HIS AUTHORITY OR JURISDICTION. In
theory, the costof such demolition, and the reimbursement of the public
funds expended in the construction thereof, should be borne by the
officials of the City of Angeles who ordered and directed such construction.
This Court has time and again ruled that public officials are not immune
from damages in their personal capacities arising from acts done in bad
faith. Otherwise stated, a public official may be liable in his personal
capacity for whatever damage he may have caused by his act done with
malice and in bad faith or beyond the scope of his authority or jurisdiction.
In the instant case, the public officials concerned deliberately violated the
law and persisted in their violations, going so far as attempting to deceive
the courts by their pretended change of purpose and usage for the center,
and "making a mockery of the judicial system." Indisputably, said public
officials acted beyond the scope of their authority and jurisdiction and with
evident bad faith. However, as noted by the trial court, the petitioners
mayor and members of the Sangguniang Panlungsod of Angeles City were
sued only in theirofficial capacities, hence, they could not be held personally
liable without first giving them their day in court. Prevailing jurisprudence
holding that public officials are personally liable for damages arising from
illegal acts done in bad faith are premised on said officials having been sued
both in their official and personal capacities. STIcEA
DECISION
PANGANIBAN, J p:
In resolving this petition, the Court addressed the questions of whether a
donor of open spaces in a residential subdivision can validly impose
conditions on the said donation; whether the city government as donee can
build and operate a drug rehabilitation center on the donated land intended
for open space; and whether the said donation may be validly rescinded by
the donor.
Petitioners claim they have the right to construct and operate a drug
rehabilitation center on the donated land in question, contrary to the
provisions stated in the amended Deed of Donation.

On the other hand, private respondent, owner/developer of the Timog Park


residential subdivision in Angeles City, opposed the construction and now,
the operation of the said center on the donated land, which is located within
said residential subdivision.
Before us is a petition for review on certiorari assailing the
Decision 1 of the Court of Appeals 2 dated October 31, 1990, which affirmed
the decision 3 of the Regional Trial Court of Angeles City Branch 56, 4 dated
February 15, 1989.
The Antecedents
In a Deed of Donation dated March 9, 1984, subsequently superseded by a
Deed of Donation dated September 27, 1984, which in turn was superseded
by an Amended Deed of Donation dated November 26, 1984, private
respondent donated to the City of Angeles, 51 parcels of land situated in
Barrio Pampang, City of Angeles, with an aggregate area of 50,676 square
meters, more or less, part of a bigger area also belonging to private
respondent. The amended deed 5 provided, among others, that:
"2. The properties donated shall be devoted and utilized solely for the
site of the Angeles City Sports Center (which excludes cockfighting)
pursuant to the plans to be submitted within six (6) months by the DONEE
to the DONOR for the latter's approval, which approval shall not be
unreasonably withheld as long as entire properties donated are developed
as a Sports Complex. Any change or modification in the basic design or
concept of said Sports Center must have the prior written consent of the
DONOR.
3. No commercial building, commercial complex, market or any other similar
complex, mass or tenement (sic) housing/buildings(s) shall be constructed
in the properties donated nor shall cockfighting, be allowed in the premises.
4. The construction of the Sports Center shall commence within a
period of one (1) year from 09 March 1984 and shall be completed within a
period of five (5) years from 09 March 1984.
xxx xxx xxx
6. The properties donated (which is more than five (5) percent of the total
land area of the DONOR's subdivision) shall constitute the entire open space
for DONOR's subdivision and all other lands or areas previously reserved or
designated, including Lot 1 and Lot 2A of Block 72 and the whole Block 29
are dispensed with, and rendered free, as open spaces, and the DONEE

hereby agrees to execute and deliver all necessary consents, approvals,


endorsements, and authorizations to effect the foregoing.
7. The properties donated are devoted and described as 'open
spaces' of the DONOR's subdivision, and to this effect, the DONEE, upon
acceptance of this donation, releases the DONOR and/or assumes any and
all obligations and liabilities appertaining to the properties donated.
8. Any substantial breach of the foregoing provisos shall entitle the DONOR
to revoke or rescind this Deed ofDonation, and in such eventuality, the
DONEE agrees to vacate and return the premises, together with all
improvements, to the DONOR peacefully without necessity of judicial
action."
On July 19, 1988, petitioners started the construction of a drug rehabilitation
center on a portion of the donated land. Upon learning thereof, private
respondent protested such action for being violative of the terms and
conditions of the amended deed and prejudicial to its interest and to
those of its clients and residents. Private respondent also offered another
site for the rehabilitation center. However, petitioners ignored the protest,
maintaining that the construction was not violative of the terms of the
donation. The alternative site was rejected because, according to
petitioners, the site was too isolated and had no electric and water facilities.
On August 8, 1988, private respondent filed a complaint with the Regional
Trial Court, Branch 56, in Angeles City against the petitioners, alleging
breach of the conditions imposed in the amended deed of donation and
seeking the revocation of the donation and damages, with preliminary
injunction and/or temporary restraining order to halt the construction of the
said center.
On August 10, 1988, the trial court issued a temporary restraining order to
enjoin the petitioners from further proceeding with the construction of the
center, which at that time was already 40% complete.
However, the trial court denied the prayer for preliminary injunction based
on the prohibition in Presidential Decree No. 1818.
In
their
Answer
with
counterclaim,
petitioners
admitted
the
commencement of the construction but alleged inter alia that the conditions
imposed in the amended deed were contrary to Municipal Ordinance No. 1,
Series of 1962, otherwise known as the Subdivision Ordinance of the
Municipality of Angeles. 6

On October 15, 1988, private respondent filed a Motion for Partial Summary
Judgment on the ground that the main defenseof the petitioners was
anchored on a pure question of law and that their legal position was
untenable.
The petitioners opposed, contending that they had a meritorious defense as
(1) private respondents had no right to dictate upon petitioners what to do
with the donated land and how to do it so long as the purpose remains for
public use; and (2) the cause of action of the private respondent became
moot and academic when the Angeles City Council repealed the resolution
providing for the construction of said drug rehabilitation center and adopted
a new resolution changing thepurpose and usage of said center to a 'sports
development and youth center' in order to conform with the sports complex
project constructed on the donated land.
On February 15, 1989, the trial court rendered its decision, in relevant part
reading as follows:
". . . the Court finds no inconsistency between the conditions imposed in the
Deeds of Donation
and
the
provision of the
Subdivision
Ordinance of the City of Angeles requiring subdivisions in Angeles City to
reserve at least one (1) hectare in the subdivision as suitable sites known as
open spaces for parks, playgrounds, playlots and/or other areas to be
dedicated to public use. On the contrary, the condition requiring the
defendant city of Angeles to devote and utilize the properties donated to it
by the plaintiff for the site of the Angeles City Sports Center conforms with
the requirement in the Subdivision Ordinance that the subdivision of the
plaintiff shall be provided with a playground or playlot, among others.
On the other hand the term "public use" in the Subdivision Ordinance should
not be construed to include a Drug Rehabilitation Center as that would be
contrary to the primary purpose of the Subdivision Ordinance requiring the
setting aside of a portion known as "Open Space" for park, playground and
playlots, since these are intended primarily for the benefit of the
residents of the subdivision. While laudable to the general public, a Drug
Rehabilitation Center in a subdivision will be a cause of concern and
constant worry to its residents.
As to the third issue in paragraph (3), the passage of the Ordinance
changing the purpose of the building constructed in the donated properties
from a Drug Rehabilitation Center to a Sports Center comes too late. It
should have been passed upon the demand of the plaintiff to the

defendant City of Angeles to stop the construction of the Drug Rehabilitation


Center, not after the complaint was filed.
Besides, in seeking the revocation of the Amended Deed of Donation,
plaintiff also relies on the failure of the defendantCity of Angeles to submit
the plan of the proposed Sports Center within six (6) months and
construction of the same within five years from March 9, 1984, which are
substantial violations of the conditions imposed in the Amended
Deed ofDonation."

The dispositive portion of the RTC decision reads:


"WHEREFORE, judgment is hereby rendered:
(1) Enjoining defendants, its officers, employees and all persons acting on
their behalf to perpetually cease and desist from constructing a Drug
Rehabilitation Center or any other building or improvement on the Donated
Land.
(2) Declaring the amended Deed of Donation revoked and rescinded and
ordering defendants to peacefully vacate and return the Donated Land to
plaintiff, together with all the improvements existing thereon. And,
(3) Denying the award of compensatory or actual and exemplary damages
including attorney's fees.
NO PRONOUNCEMENT AS TO COST."
In March 1989, petitioners filed their Notice of Appeal. On April 15, 1989,
while the appeal was pending, petitioners inaugurated the Drug
Rehabilitation Center. 7
On April 26, 1991, the respondent Court rendered the assailed Decision
affirming the ruling of the trial court. Subsequently, the petitioners' motion
for reconsideration was also denied for lack of merit.
Consequently, this Petition for Review.
The Issues
The key issues 8 raised by petitioners may be restated as follows:
I. Whether a subdivision owner/developer is legally bound under Presidential
Decree No. 1216 to donate to the cityor municipality the "open space"
allocated exclusively for parks, playground and recreational use.

II. Whether the percentage of the "open space" allocated exclusively for
parks, playgrounds and recreational use is to be based on the "gross
area" of the subdivision or on the total area reserved for "open space".
III. Whether private respondent as subdivision owner/developer may validly
impose conditions in the Amended Deedof Donation regarding the
use of the "open space" allocated exclusively for parks and playgrounds.
IV. Whether or not the construction of the Drug Rehabilitation Center on the
donated "open space" may be enjoined.
V. Whether
the
donation
by
respondent
as
subdivision
owner/developer of the
"open
space" of its
subdivision
in
favor of petitioner City of Angeles may
be
revoked
for
alleged
violation of the Amended Deed of Donation.
Central to this entire controversy is the question of whether
donation of the open space may be revoked at all.

the

First Issue: Developer Legally Bound to Donate Open Space


The law involved in the instant case is Presidential Decree No. 1216, dated
October 14, 1977, 9 which reads:
"PRESIDENTIAL DECREE NO. 1216
Defining 'Open Space' In Residential Subdivisions And Amending Section
31 Of Presidential Decree No. 957 Requiring Subdivision Owners To Provide
Roads, Alleys, Sidewalks And Reserve Open Space For Parks Or Recreational
Use.
WHEREAS, there is a compelling need to create and maintain a healthy
environment in human settlements by providing open spaces, roads, alleys
and sidewalks as may be deemed suitable to enhance the
quality of life of the residents therein;
WHEREAS, such open spaces, roads, alleys and sidewalks in residential
subdivisions are for public use and are, therefore, beyond the
commerce of men;
WHEREAS, pursuant to Presidential Decree No. 953 at least thirty per cent
(30%) of the total area of a subdivision must be reserved, developed and
maintained as open space for parks and recreational areas, the
cost of which will ultimately be borne by the lot buyers which thereby
increase the acquisition price of subdivision lots beyond the reach of the
common mass;

WHEREAS, thirty percent (30%) required open space can be reduced to a


level that will make the subdivision industry viable and the
price of residential lots within the means of the low income group at the
same time preserve the environmental and ecological balance through
rational control of land use and proper design of space and facilities;
WHEREAS, pursuant to Presidential Decree No. 757, government efforts in
housing, including resources, functions and activities to maximize results
have been concentrated into one single agency, namely, the National
Housing Authority;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers vested in me by the Constitution, do hereby order
and decree:
SECTION 1. For purposes of this Decree, the term 'open space' shall mean
an area reserved exclusively for parks, playgrounds, recreational uses,
schools, roads, places of worship, hospitals, health centers, barangay
centers and other similar facilities and amenities.
SECTION 2. Section 31 of Presidential Decree No. 957 is hereby amended to
read as follows:
'Section 31. Roads, Alleys, Sidewalks and Open Spaces. The owner as
developer of a subdivision shall provide adequate roads, alleys and
sidewalks. For subdivision projects one (1) hectare or more, the owner or
developer shall reserve thirty per cent (30%) of the gross area for open
space. Such open space shall have the following standards allocated
exclusively for parks, playgrounds and recreational use:
a. 9% of gross area for high density or social housing (66 to 100 family lots
per gross hectare).
b. 7% of gross area for medium-density or economic housing (21 to 65
family lots per gross hectare).
c. 3.5% of gross area for low-density or open market housing (20 family lots
and below per gross hectare).
These areas reserved for parks, playgrounds and recreational use shall be
non-alienable public lands, and non-buildable. The plans of the subdivision
project shall include tree planting on such parts of the subdivision as may
be designated by the Authority.

Upon their completion certified to by the Authority, the roads, alleys,


sidewalks and playgrounds shall be donated by the owner or developer to
the city or municipality and it shall be mandatory for the local governments
to accept provided, however, that the parks and playgrounds may be
donated to the Homeowners Association ofthe project with the
consent of the city or municipality concerned. No portion of the parks and
playgrounds donated thereafter shall be converted to any other purpose or
purposes.'
SECTION 3. Sections 2 and 5 of Presidential Decree No. 953 are hereby
repealed and other laws, decrees, executive orders, institutions, rules and
regulations or parts thereof inconsistent with these provisions are also
repealed or amended accordingly.
SECTION 4. This Decree shall take effect immediately."
Pursuant to the wording of Sec. 31 of P.D. 957 as above amended by the
aforequoted P.D. No. 1216, private respondent is under legal obligation to
donate the open space exclusively allocated for parks, playgrounds and
recreational use to the petitioner.
This can be clearly established by referring to the original provision of Sec.
31 of P.D. 957, which reads as follows:
"SECTION 31. Donation of roads and open spaces to local government.
The registered owner or developer of the subdivision or condominium
project, upon completion of the development of said project may, at his
option, convey by way of donation the roads and open spaces found within
the project to the city or municipality wherein the project is located. Upon
acceptance of the donation by the city or municipality concerned, no
portion of the area donated shall thereafter be converted to any other
purpose or purposes unless after hearing, the proposed conversion is
approved by the Authority." (Emphasis supplied)
It will be noted that under the aforequoted original provision, it
was optional on the part of the owner or developer to donate the roads and
open spaces found within the project to the city or municipality where the
project is located. Elsewise stated, there was no legal obligation to make the
donation.
However, said Sec. 31 as amended now states in its last paragraph:
"Upon their completion . . ., the roads, alleys, sidewalks and
playgrounds shall be donated by the owner or developer to the city or
municipality and it shall be mandatory for the local government to accept;

provided, however, that the parks and playgrounds may be donated to the
Homeowners Association of the project with the consent of the city or
municipality concerned. . . ."
It is clear from the aforequoted amendment that it is no longer optional on
the part of the subdivision owner/developer to donate the open space for
parks and playgrounds; rather there is now a legal obligation to donate the
same. Although there is a proviso that the donation of the parks and
playgrounds may be made to the homeowners association of the project
with the consent of the city of municipality concerned, nonetheless, the
owner/developer is still obligated under the law to donate. Such option does
not change the mandatory character of the provision. The donation has to
be made regardless of which donee is picked by the owner/developer. The
consent requirement before the same can be donated to the homeowners'
association emphasizes this point.
Second Issue: Percentage of Area for Parks and Playgrounds
Petitioners contend that the 3.5% to 9% allotted by Sec. 31 for parks,
playgrounds and recreational uses should be based on the gross area of the
entire subdivision, and not merely on the area of the open space alone, as
contended
by
private
respondent
and
as
decided
by
the
respondent Court. 10
The petitioners are correct. The language of Section 31 of P.D. 957 as
amended by Section 2 of P.D. 1216 is wanting in clarity and exactitude, but
it can be easily inferred that the phrase "gross area" refers to
the entire subdivision area. The said phrase was used four times in the
same section in two sentences, the first of which reads:
". . . For subdivision projects one (1) hectare or more, the owner or
developer shall reserve thirty per cent (30%) of thegross area for open
space. . . ."
Here, the phrase "30% of the gross area" refers to the total area of the
subdivision, not of the open space. Otherwise, the definition of "open space"
would be circular. Thus, logic dictates that the same basis be applied in the
succeeding instances where the phrase "open space" is used, i.e.,
"9% of gross area . . . 7% of gross area . . . 3.5% of gross area . . ."
Moreover, we agree with petitioners that construing the 3.5% to 9% as
applying to the totality of the open spacewould result in far too small an
area being devoted for parks, playgrounds, etc., thus rendering meaningless
and defeating the purpose of the statute. This becomes clear when viewed

in the light of the original requirement of P.D. 953 ("Requiring


Planting of Trees in Certain Places, etc."), section 2 of which reads:

the

"Sec.
2. Every
owner of land
subdivided
into
residential/commercial/industrial lots after the effectivity of this Decree shall
reserve, develop and maintain not less than thirty percent (30%) of the total
area of the subdivision, exclusive ofroads, service streets and alleys, as
open space for parks and recreational areas.
No plan for a subdivision shall be approved by the Land Registration
Commission or any office or agency of the government unless at least thirty
percent (30%) of the total area of the subdivision, exclusive of roads,
service streets and alleys, is reserved as open space for parks and
recreational areas . . ."
To our mind, it is clear that P.D 1216 was an attempt to achieve a happy
compromise
and
a
realistic
balance
between
the
imperatives of environmental planning and the need to maintain economic
feasibility in subdivision and housing development, by reducing the required
area for parks, playgrounds and recreational uses from thirty percent (30%)
to only 3.5% - 9% of the entire area of the subdivision.
Third Issue: Imposition of Conditions in Donation of Open Space
Petitioners argue that since the private respondent is required by law to
donate the parks and playgrounds, it has no right to impose the condition in
the Amended Deed of Donation that "the properties donated shall be
devoted and utilized solely for the site of the Angeles City Sports Center." It
cannot prescribe any condition as to the use of the area donated because
the use of the open spaces is already governed by P.D. 1216. In other words,
the donation should be absolute. Consequently, the conditions in the
amended deed which were allegedly violated are deemed not written. Such
being the case, petitioners cannot be considered to have committed any
violation of the terms and conditions of the said amended deed, as the
donation is deemed unconditional, and it follows that there is no basis for
revocation of the donation.
However, the general law on donations does not prohibit the
imposition of conditions on a donation so long as the conditions are not
illegal or impossible. 11
In regard to donations of open spaces, P.D. 1216 itself requires among other
things that the recreational areas to be donated be based, as

aforementioned, on a percentage (3.5%, 7%, or 9%) of the total area of the


subdivision depending on whether the subdivision is low-, medium-, or highdensity. It further declares that such open space devoted to parks,
playgrounds and recreational areas are non-alienable public land and nonbuildable. However, there is no prohibition in either P.D. 957 or P.D.
1216 against imposing conditions on such donation.
We hold that any condition may be imposed in the donation, so long as the
same is not contrary to law, morals, good customs, public order or public
policy. The contention of petitioners that the donation should be
unconditional because it is mandatory has no basis in law. P.D. 1216 does
not provide that the donation of the open space for parks and playgrounds
should be unconditional. To rule that it should be so is tantamount to
unlawfully expanding the provisions of the decree. 12
In the case at bar, one of the conditions imposed in the Amended
Deed of Donation is that the donee should build a sports complex on the
donated land. Since P.D. 1216 clearly requires that the 3.5% to 9% of the
gross area allotted for parks and playgrounds is "non-buildable", then the
obvious question arises whether or not such condition was validly imposed
and is binding on the donee. It is clear that the "non-buildable" character
applies only to the 3.5% to 9% area set by law. If there is any excess land
over and above the 3.5% to 9% required by the decree, which is also used
or allocated for parks, playgrounds and recreational purposes, it is obvious
that such excess area is not covered by the non-buildability restriction. In
the instant case, if there be an excess, then the donee would not be barred
from developing and operating a sports complex thereon, and the condition
in the amended deed would then be considered valid and binding.
To determine if the over 50,000 square meter area donated pursuant to the
amended deed would yield an excess over the area required by the decree,
it is necessary to determine under which density category the Timog Park
subdivision falls.
If the subdivision falls under the low density or open market housing
category, with 20 family lots or below per gross hectare, the developer will
need to allot only 3.5% of gross area for parks and playgrounds, and since
the donated land constitutes "more than five (5) percent of the total land
area of the subdivision, 13 there would therefore be an excess of over
1.5% ofgross area which would not be non-buildable. Petitioners, on the
other hand, alleged (and private respondent did not controvert) that the
subdivision in question is a "medium-density or economic housing"
subdivision based on the sizes of the family lots donated in the amended

deed, 14 for which category the decree mandates that not less than
7% of gross area be set aside. Since the donated land constitutes only a
little more than 5% of the gross area of the subdivision, which is less than
the area required to be allocated for non-buildable open space, therefore
there is no "excess land" to speak of. This then means that the condition to
build a sports complex on the donated land is contrary to law and should be
considered as not imposed.
Fourth Issue: Injunction vs. Construction of the Drug Rehabilitation Center
Petitioners argue that the court cannot enjoin the construction of the drug
rehabilitation center because the decision of the trial court came only after
the construction of the center was completed and, based on jurisprudence,
there can be no injunction of events that have already transpired. 15
Private respondent, on the other hand, counters that the operation of the
center is a continuing act which would clearly cause injury to private
respondent, its clients, and residents of the subdivision, and thus, a proper
subject of injunction. 16Equity should move in to warrant the granting of the
injunctive relief if persistent repetition of the wrong is threatened. 17
In light of Sec. 31 of P.D. 957, as amended, declaring the open space for
parks, playgrounds and recreational area as non-buildable, it appears
indubitable that the construction and operation of a drug rehabilitation
center on the land in question is a continuing violation of the law and thus
should be enjoined.
Furthermore, the factual background of this case warrants that
this Court rule against petitioners on this issue. We agree with and affirm
the respondent Court's finding that petitioners committed acts mocking the
judicial system. 18
". . . When a writ of preliminary injunction was sought for by the appellee
[private respondent] to enjoin the appellants [petitioners herein] from
further continuing with the construction of the said center, the latter
resisted and took refuge under the provisions of Presidential Decree No.
1818 (which prohibits writs of preliminary injunction) to continue with the
construction of the building. Yet, the appellants also presented 'City Council
Resolution No. 227 which allegedly repealed the previous Resolution
authorizing the City Government to construct a Drug Rehabilitation Center
on the donated property, by 'changing the purpose and usage of the Drug
Rehabilitation Center to Sports Development and Youth Center to make it
conform to the Sports Complex Project therein'. Under this Resolution No.
227, the appellants claimed that they have abandoned all plans for the

construction of the Drug Rehabilitation Center. Nonetheless, when judgment


was finally rendered on February 15, 1989, the appellants were quick to
state that they have not after all abandoned their plans for the center as
they have in fact inaugurated the same on April 15, 1989. In plain and
simple terms, this act is a mockery of our judicial system perpetrated by the
appellants. For them to argue that the court cannot deal on their Drug
Rehabilitation Center is not only preposterous but also ridiculous.
It is interesting to observe that under the appealed decision the appellants
and their officers, employees and all other persons acting on their behalf
were perpetually enjoined to cease and desist from constructing a Drug
Rehabilitation Center on the donated property. Under Section 4 of Rule
39 of the Rules of Court, it is provided that:
"Section 4 A judgment in an action for injunction shall not be stayed after
its rendition and before an appeal is taken or during the pendency of an
appeal."
Accordingly, a judgment restraining a party from doing a certain act is
enforceable and shall remain in full force and effect even pending appeal. In
the case at bar, the cease and desist order therefore still stands. Appellants'
persistence and continued construction and, subsequent, operation of the
Drug Rehabilitation Center violate the express terms ofthe writ of injunction
lawfully issued by the lower court."
This Court finds no cogent reason to reverse the above mentioned
findings of the respondent court. The allegation of the petitioners that the
construction of the center was finished before the judgment of the
trial court was rendered deserves scant consideration because it is selfserving and is completely unsupported by other evidence.
The fact remains that the trial court rendered judgment enjoining the
construction of the drug rehabilitation center, revoking the donation and
ordering the return of the donated land. In spite of such injunction,
petitioners publicly flaunted their disregard thereof with the subsequent
inauguration of the center on August 15, 1989. The operation of the center,
after inauguration, is even more censurable.
Fifth
Issue:
Revocation of a
Mandatory
Because of Non-compliance With an Illegal Condition

Donation

The private respondent contends that the building of said drug rehabilitation
center is violative of the Amended Deed ofDonation. Therefore, under
Article 764 of the New Civil Code and stipulation no. 8 of the amended deed,

private respondent is empowered to revoke the donation when the donee


has failed to comply with any of the conditions imposed in the deed.

We disagree. Article 1412 of the Civil Code which provides that:


"If the act in which the unlawful or forbidden cause consists does not
constitute a criminal offense, the following rules shall be observed:
"(1) When the fault is on the part of both contracting parties, neither may
recover what he has given by virtueof the contract, or demand the
performance of the other's undertaking;"
comes into play here. Both petitioners and private respondents are in
violation of P.D. 957 as amended, for donating and accepting a
donation of open space less than that required by law, and for agreeing to
build and operate a sports complex on the non-buildable open space so
donated; and petitioners, for constructing a drug rehabilitation center on the
same non-buildable area.
Moreover, since the condition to construct a sports complex on the donated
land has previously been shown to be contrary to law, therefore, stipulation
no. 8 of the amended deed cannot be implemented because (1)
no valid stipulation of the amended deed had been breached, and (2) it is
highly improbable that the decree would have allowed the return of the
donated land for open space under any circumstance, considering the nonalienable character of such open space, in the light of the second Whereas
clause of P.D. 1216 which declares that ". . . such open spaces, roads, alleys
and sidewalks in residential subdivisions are for public use and
are, therefore, beyond the commerce of men."
Further, as a matter of public policy, private respondent cannot be allowed
to evade its statutory obligation to donate the required open space through
the expediency of invoking petitioners' breach of the aforesaid condition. It
is a familiar principle that the courts will not aid either party to enforce an
illegal contract, but will leave them both where they find them. Neither
party can recover damages from the other arising from the act contrary to
law, or plead the same as a cause ofaction or as a defense. Each must bear
the consequences of his own acts. 19
There is therefore no legal basis whatsoever to revoke the donation of the
subject open space and to return the donated land to private respondent.
The donated land should remain with the donee as the law clearly intended
such open spaces to be perpetually part of the public domain, non-alienable

and permanently devoted to public use as such parks, playgrounds or


recreation areas.
Removal/Demolition of Drug Rehabilitation Center
Inasmuch as the construction and operation of the drug rehabilitation center
has been established to be contrary to law, the said center should be
removed or demolished. At this juncture, we hasten to add that this Court is
and has always been four-square behind the government's efforts to
eradicate the drug scourge in this country. But the end never justifies the
means, and however laudable the purpose of the construction in question,
this Court cannot and will not countenance an outright and continuing
violation of the laws of the land, especially when committed by public
officials.
In theory, the cost of such demolition, and the reimbursement of the public
funds expended in the construction thereof, should be borne by the
officials of the City of Angeles who ordered and directed such construction.
This Court has time and again ruled that public officials are not immune
from damages in their personal capacities arising from acts done in bad
faith. Otherwise stated, a public official may be liable in his personal
capacity for whatever damage he may have caused by his actdone with
malice and in bad faith or beyond the scope of his authority or
jurisdiction. 20 In the instant case, the public officials concerned deliberately
violated the law and persisted in their violations, going so far as attempting
to deceive the courts by their pretended change of purpose and usage for
the center, and "making a mockery of the judicial system". Indisputably,
said public officials acted beyond the scope of their authority and
jurisdiction and with evident bad faith. However, as noted by the
trial court, 21 the petitioners mayor and members of the Sangguniang
Panlungsod of Angeles City were sued only in their official capacities, hence,
they could not be held personally liable without first giving them their day
in court. Prevailing jurisprudence 22 holding that public officials are
personally liable for damages arising from illegal acts done in bad faith are
premised on said officials having been sued both in their official and
personal capacities.
After due consideration of the circumstances, we believe that the fairest and
most equitable solution is to have the City ofAngeles, donee of the subject
open space and, ostensibly, the main beneficiary of the construction and
operation of the proposed drug rehabilitation center, undertake the
demolition and removal of said center, and if feasible, recover the cost
thereof from the city officials concerned.

WHEREFORE, the assailed


MODIFIED as follows:

Decision of the Court of Appeals is

hereby

(1) Petitioners are hereby ENJOINED perpetually from operating the drug
rehabilitation center or any other such facility on the donated open space.
(2) Petitioner City of Angeles is ORDERED to undertake the demolition and
removal of said drug rehabilitation center within a period of three (3)
months from finality of this Decision, and thereafter, to devote the said open
space for public use as a park, playground or other recreational use.
(3) The Amended Deed of Donation dated November 26, 1984 is hereby
declared valid and subsisting, except that the stipulations or conditions
therein concerning the construction of the Sports Center or Complex are
hereby declared void and as if not imposed, and therefore of no force and
effect.
No costs.
SO ORDERED.
||| (City of Angeles v. Court of Appeals, G.R. No. 97882, [August 28, 1996],
329 PHIL 812-840)

42. Veterans Manpower and Protective Services Inc. V CA


FIRST DIVISION
[G.R. No. 91359. September 25, 1992.]
VETERANS MANPOWER AND PROTECTIVE SERVICES, INC., petitioner,
vs. THE COURT OF APPEALS,
THE
CHIEFOF PHILIPPINE
CONSTABULARY and PHILIPPINE CONSTABULARY SUPERVISORY
UNIT FOR SECURITY AND INVESTIGATION AGENCIES (PCSUSIA), respondents.
Franciso A. Lava, Jr. and Andresito X. Fornier for petitioner.
SYLLABUS
1. POLITICAL LAW; IMMUNITY FROM SUIT; THE PHILIPPINE CONSTABULARY
CHIEF AND THE PC-SUSIA MAY NOT BE SUED WITHOUT THE

CONSENT OF THE STATE. The State may not be sued without its consent
(Article XVI, Section 3, of the 1987 Constitution). Invoking this rule, the PC
Chief and PC-SUSIA contend that, being instrumentalities of the national
government exercising a primarily governmental function of regulating the
organization and operation of private detective, watchmen, or security
guard agencies, said official (the PC Chief) and agency (PC-SUSIA) may not
be sued without the Government's consent, especially in this case because
VMPSI's complaint seeks not only to compel the public respondents to act in
a certain way, but worse, because VMPSI seeks actual and compensatory
damages in the sum of P1,000,000.00, exemplary damages in the same
amount, and P200,000.00 as attorney's fees from said public respondents.
Even if its action prospers, the paymentof its monetary claims may not be
enforced because the State did not consent to appropriate the necessary
funds for that purpose.
2. ID.; ID.; PUBLIC OFFICIAL MAY BE SUED IN HIS PERSONAL CAPACITY IF HE
ACTS, AMONG OTHERS BEYOND THE SCOPEOF HIS AUTHORITY; CASE AT
BAR. A public official may sometimes be held liable in his personal or
private capacity if he acts in bad faith, or beyond the scope of his authority
or jurisdiction (Shauf vs. Court of Appeals, supra), however, since the acts
for which the PC Chief and PC-SUSIA are being called to account in this case,
were performed by them as part of their official duties, without malice,
gross negligence, or bad faith, no recovery may be had against them in
their private capacities.
3. ID.; ID.; CONSENT TO BE SUED MUST EMANATE FROM A LEGISLATIVE ACT.

Waiver of the
State's
immunity
from
suit,
being
a
derogation of sovereignty, will not be lightly inferred, but must be
construed strictissimi juris (Republic vs. Feliciano, 148 SCRA 424). The
consent of the State to be sued must emanate from statutory authority,
hence, from a legislative act, not from a mere memorandum. Without such
consent, the trial court did not acquire jurisdiction over the public
respondents.
4. ID.; ID.; REASONS BEHIND. The state immunity doctrine rests upon
reasons of public policy and the inconvenience and danger which would flow
from a different rule. "It is obvious that public service would be hindered,
and public safety endangered, if the supreme authority could be subjected
to suits at the instance of every citizen, and, consequently, controlled in the
use
and
disposition of the
means
required
for
the
proper
administration of the government" (Siren vs. U.S. Wall, 152, 19 L. ed. 129,
as cited in 78 SCRA 477).

DECISION
GRIO-AQUINO, J p:
This is a petition for review on certiorari of the decision dated August 11,
1989, of the Court of Appeals in CA-G.R. SP No. 15990, entitled "The
Chief of Philippine Constabulary (PC) and Philippine Constabulary Supervisor
Unit for Security and Investigation Agencies (PC-SUSIA) vs. Hon. Omar U.
Amin and Veterans Manpower and Protective Services, Inc. (VMPSI)," lifting
the writ of preliminary injunction which the Regional Trial Court had issued
to the PC-SUSIA enjoining them from committing acts that would result in
the cancellation or non-renewal of the license of VMPSI to operate as a
security agency. Cdpr
On March 28, 1988, VMPSI filed a complaint in the Regional Trial Court at
Makati, Metro Manila, praying the court to:
"A. Forthwith issue a temporary restraining order to preserve the status quo,
enjoining the defendants, or any one acting in their place or stead, to refrain
from committing acts that would result in the cancellation or nonrenewal ofVMPSI's license;
"B. In due time, issue a writ of preliminary injunction to the same effect;
"C. Render decision and judgment declaring null and void the
amendment of Section 4 of R.A. No. 5487, by PD No. 11exempting
organizations like PADPAO from the prohibition that no person shall organize
or have an interest in more than one agency, declaring PADPAO as an illegal
organization existing in violation of said prohibition, without the illegal
exemption provided in PD No. 11; declaring null and void Section 17 of R.A.
No. 5487 which provides for the issuance ofrules and regulations in
consultation with PADPAO, declaring null and void the February 1, 1982
directive of Col. Sabas V. Edadas, in the name of the then PC Chief, requiring
all private security agencies/security forces such as VMPSI to join PADPAO as
a prerequisite to secure/renew their licenses, declaring that VMPSI did not
engage in 'cut-throat competition' in its contract with MWSS, ordering
defendants PC Chief and PC-SUSIA to renew the license of VMPSI; ordering
the defendants to refrain from further harassing VMPSI and from threatening
VMPSI with cancellations or non-renewal oflicense, without legal and
justifiable cause; ordering the defendants to pay to VMPSI the
sum of P1,000,000.00 as actual and compensatory damages, P1,000,000.00
as exemplary damages, and P200,000.00 as attorney's fees and
expenses oflitigation; and granting such further or other reliefs to VMPSI as
may be deemed lawful, equitable and just." (pp. 55-56, Rollo.)

The constitutionality of the following provisions of R.A. 5487 (otherwise


known as the "Private Security Agency Law"), as amended, is questioned by
VMPSI in its complaint: prLL
"SECTION 4. Who may Organize a Security or Watchman Agency. Any
Filipino citizen or a corporation, partnership, or association, with a minimum
capital of five thousand pesos, one hundred per cent of which is owned and
controlled by Filipino citizens may organize a security or watchman
agency: Provided, That no person shall organize or have an interest in, more
than one such agency except those which are already existing at the
promulgation of this Decree: . . ." (As amended by P.D. Nos. 11 and 100.)
"SECTION 17. Rules and Regulations by Chief, Philippine Constabulary.
The Chief of the Philippine Constabulary, in consultation with the
Philippine
Association of Detective
and Protective Agency
Operators, Inc. and subject to the provision of existing laws, is hereby
authorized to issue the rules and regulations necessary to carry out the
purpose ofthis Act."
VMPSI alleges that the above provisions of R.A. No. 5487 violate the
provisions of the 1987 Constitution against monopolies, unfair competition
and combinations in restraint of trade, and tend to favor and institutionalize
the Philippine Association ofDetective and Protective Agency Operators, Inc.
(PADPAO) which is monopolistic because it has an interest in more than one
security agency.
Respondent VMPSI likewise questions the validity of paragraph 3,
subparagraph (g) of the Modifying Regulations on the Issuance of License to
Operate and Private Security Licenses and Specifying Regulations for the
Operation of PADPAO issued by then PC Chief Lt. Gen. Fidel V. Ramos,
through Col. Sabas V. Edades, requiring that "all private security
agencies/company security forces must register as members of any PADPAO
Chapter organized within the Region where their main offices are
located . . ." (pp. 5-6, Complaint in Civil Case No. 88-471). As such
membership requirement in PADPAO is compulsory in nature, it allegedly
violates legal and constitutional provisions against monopolies, unfair
competition and combinations in restraint of trade. prcd
On May 12, 1986, a Memorandum of Agreement was executed by PADPAO
and the PC Chief, which fixed the minimum monthly contract rate per guard
for eight (8) hours of security service per day at P2,255.00 within Metro
Manila and P2,215.00 outside of Metro Manila (Annex B, Petition).

On June 29, 1987, Odin Security Agency (Odin) filed a complaint with
PADPAO accusing VMPSI of cut-throat competition by undercutting its
contract rate for security services rendered to the Metropolitan Waterworks
and Sewerage System (MWSS), charging said customer lower than the
standard minimum rates provided in the Memorandum of Agreement dated
May 12, 1986.
PADPAO found VMPSI guilty of cut-throat competition, hence, the PADPAO
Committee on Discipline recommended the expulsion of VMPSI from PADPAO
and the cancellation of its license to operate a security agency (Annex D,
Petition).
The PC-SUSIA made similar findings and likewise recommended the
cancellation of VMPSI's license (Annex E, Petition).
As a result, PADPAO refused to issue a clearance/certificate of membership
to VMPSI when it requested one.
VMPSI wrote the PC Chief on March 10, 1988, requesting him to set aside or
disregard the findings of PADPAO and consider VMPSI's application for
renewal of its license, even without a certificate of membership from
PADPAO (Annex F, Petition).
As the PC Chief did not reply, and VMPSI's license was expiring on March 31,
1988, VMPSI filed Civil Case No. 88-471 in the RTC-Makati, Branch 135, on
March 28, 1988 against the PC Chief and PC-SUSIA. On the same date,
the court issued a restraining order enjoining the PC Chief and PC-SUSIA
"from committing acts that would result in the cancellation or nonrenewal of VMPSI's license" (Annex G, Petition).
The PC chief and PC-SUSIA filed a "Motion to Dismiss, Opposition to the
Issuance of Writ of Preliminary Injunction, and Motion to Quash the
Temporary Restraining Order," on the grounds that the case is against the
State which had not given consent thereto and that VMPSI's license
already expired on March 31, 1988, hence, the restraining order or
preliminary injunction would not serve any purpose because there was no
more license to be cancelled (Annex H, Petition). Respondent VMPSI
opposed the motion.

On April 18, 1988, the lower court denied VMPSI's application for a
writ of preliminary injunction for being premature because it "has up to May
31, 1988 within which to file its application for renewal pursuant to Section
2 (e) of Presidential Decree No. 199, . . ." (p. 140, Rollo.). prcd

On May 23, 1988, VMPSI reiterated its application for the issuance of a
writ of preliminary injunction because PC-SUSIA had rejected payment of the
penalty for its failure to submit its application for renewal of its license and
the requirements therefor within the prescribed period in Section 2(e) of the
Revised Rules and Regulations Implementing R.A. 5487, as amended by P.D.
1919 (Annex M, Petition).
On June 10, 1998, the RTC-Makati issued a writ of preliminary injunction
upon a bond of P100,000.00, restraining the defendants, or any one acting
in their behalf, from cancelling or denying renewal of VMPSI's license, until
further orders from the court.
The PC Chief and PC-SUSIA filed a Motion for Reconsideration of the above
order, but it was denied by the court in its Orderof August 10, 1988 (Annex
R, Petition).
On November 3, 1988, the PC Chief and PC-SUSIA sought relief by a petition
for certiorari in the Court of Appeals.
On August 11, 1989, the Court of Appeals granted the petition.
dispositive portion of its decision reads:

The

"WHEREFORE, the petition for certiorari filed by petitioners PC Chief and PCSUSIA is hereby GRANTED, and the RTC-Makati, Branch 135, is ordered to
dismiss the complaint filed by respondent VMPSI in Civil Case No. 88-471,
insofar as petitioners PC Chief and PC-SUSIA are concerned, for
lack of jurisdiction. The writ of preliminary injunction issued on June 10,
1988, is dissolved." (pp. 295-296, Rollo.)
VMPSI came to us with this petition for review.
The primary issue in this case is whether or not VMPSI's complaint against
the PC Chief and PC-SUSIA is a suit against the State without its consent.
The answer is yes.
The State may not be sued without its consent (Article XVI, Section
3, of the 1987 Constitution). Invoking this rule, the PC Chief and PC-SUSIA
contend that, being instrumentalities of the national government exercising
a primarily governmental functionof regulating the organization and
operation of private detective, watchmen, or security guard agencies, said
official (the PC Chief) and agency (PC-SUSIA) may not be sued without the
Government's consent, especially in this case because VMPSI's complaint
seeks not only to compel the public respondents to act in a certain way, but
worse, because VMPSI seeks actual and compensatory damages in the

sum of P1,000,000.00, exemplary damages in the same amount, and


P200,000.00 as attorney's fees from said public respondents. Even if its
action prospers, the payment of its monetary claims may not be enforced
because the State did not consent to appropriate the necessary funds for
that purpose. cdll
Thus did we hold in Shauf vs. Court of Appeals, 191 SCRA 713:
"While the doctrine appears to prohibit only suits against the state without
its consent, it is also applicable to complaints filed against officials of the
state for acts allegedly performed by them in the discharge of their duties.
The rule is that if the judgment against such officials will require the state
itself to perform an affirmative act to satisfy the same, such as the
appropriation of the amount needed to pay the damages awarded against
them, the suit must be regarded as against the state itself although it has
not been formally impleaded." (Emphasis supplied.)
A public official may sometimes be held liable in his personal or private
capacity if he acts in bad faith, or beyond the scope ofhis authority or
jurisdiction (Shauf vs. Court of Appeals, supra), however, since the acts for
which the PC Chief and PC-SUSIA are being called to account in this case,
were performed by them as part of their official duties, without malice,
gross negligence, or bad faith, no recovery may be had against them in
their private capacities.
We
agree
with
the
observation of the Court of Appeals that
the
Memorandum of Agreement dated May 12, 1986 does not constitute an
implied consent by the State to be sued:
"The Memorandum of Agreement dated May 12, 1986 was entered into by
the PC Chief in relation to the exercise of a function sovereign in nature.
The correct test for the application of state immunity is not the
conclusion of a contract by the State but the legal nature of the act. This
was clearly enunciated in the case of United States of America vs. Ruiz
where the Hon. Supreme Court held:
"'The restrictive application of State immunity is proper only when the
proceedings arise out of commercial transactions of the foreign sovereign,
its commercial activities or economic affairs. Stated differently, a State may
be said to have descended to the level of an individual and can thus be
deemed to have tacitly given its consent to be sued only when it enters into
a business contract. It does not apply where the contract relates to the
exercise ofits functions.' (136 SCRA 487, 492.)

"In the instant case, the Memorandum of Agreement entered into by the PC
Chief and PADPAO was intended to professionalize the industry and to
standardize the salaries of security guards as well as the current
rates of securityservices,
clearly,
a
governmental
function.
The
execution of the said agreement is incidental to the purpose of R.A. 5487, as
amended, which is to regulate the organization and operation of private
detective, watchmen or security guard agencies. (Emphasis Ours.)" (pp.
258-259, Rollo.)
Waiver of the State's immunity from suit, being a derogation of sovereignty,
will not be lightly inferred, but must be construedstrictissimi
juris (Republic vs. Feliciano, 148 SCRA 424). The consent of the State to be
sued must emanate from statutory authority, hence, from a legislative act,
not from a mere memorandum. Without such consent, the trial court did not
acquire jurisdiction over the public respondents.
The state immunity doctrine rests upon reasons of public policy and the
inconvenience and danger which would flow from a different rule. "It is
obvious that public service would be hindered, and public safety
endangered, if the supreme authority could be subjected to suits at the
instance of every citizen, and, consequently, controlled in the use and
disposition of the means required for the proper administration of the
government" (Siren vs. U.S. Wall, 152, 19 L. ed. 129, as cited in 78 SCRA
477). In the same vein, this Court in Republic vs. Purisima (78 SCRA 470,
473) rationalized:
"Nonetheless, a continued adherence to the doctrine of nonsuability is not
to be deplored for as against the inconvenience that may be cause [by]
private parties, the loss of governmental efficiency and the obstacle to the
performance of its multifarious functions are far greater if such a
fundamental principle were abandoned and the availability of judicial
remedy were not thus restricted. With the well known propensity on the
part of our people to go tocourt, at the least provocation, the loss of time
and energy required to defend against law suits, in the absence of such a
basic principle that constitutes such an effective obstacles, could very well
be imagined." (citing Providence Washington Insurance Co. vs. Republic, 29
SCRA 598.) LexLib
WHEREFORE, the petition for review is DENIED and the judgment appealed
from is AFFIRMED in toto. No costs.
SO ORDERED

||| (Veterans Manpower and Protective Services, Inc. v. Court of Appeals,


G.R. No. 91359, [September 25, 1992], 288 PHIL 1067-1075)

43.Wylie v Rarang
THIRD DIVISION
[G.R. No. 74135. May 28, 1992.]
M. H. WYLIE and CAPT. JAMES WILLIAMS, petitioners, vs. AURORA
I. RARANG and
THE
HONORABLE
INTERMEDIATE
APPELLATE
COURT, respondents.
SYLLABUS
1. POLITICAL LAW; STATE IMMUNITY FROM SUIT; BASIS AND JUSTIFICATION
FOR ENFORCEMENT OF DOCTRINE. In the case of United States
of America v. Guinto (182 SCRA 644 [1990]), we discussed the principle of
the state immunity from suit as follows: "The rule that a state may not be
sued without its consent, now expressed in Article XVI, Section 3, of
the 1987 Constitution, is one of the generally accepted principles of
international law that we have adopted as part of the law of our land under
Article II, Section 2. . . . Even without such affirmation, we would still be
bound by the generally accepted principles of international law under the
doctrine of incorporation. Under this doctrine, as accepted by the majority
of states, such principles are deemed incorporated in the law of every
civilized state as a condition and consequence of its membership in the
society of nations. Upon its admission to such society, the state is
automatically obligated to comply with these principles in its relations with
other states. As applied to the local state, the doctrine of state immunity is
based on the justification given by Justice Holmes that 'there can be no legal
right against the authority which makes the law on which the right
depends.' (Kawanakoa v. Polybank, 205 U.S. 349) There are other practical
reasons for the enforcement of the doctrine. In the case of the foreign state
sought to be impleaded in the local jurisdiction, the added inhibition is
expressed in the maxim par in parem, non habet imperium. All states are
sovereign equals and cannot assert jurisdiction over one another. A contrary
disposition would, in the language of a celebrated case, 'unduly vex the
peace of nations.' (Da Haber v. Queen of Portugal, 17 Q.B. 171)

2. ID.; ID.; PROHIBITED SUITS; GENERAL RULE; EXCEPTIONS; QUALIFICATION


OF RULES. While the doctrine appears to prohibit only suits against the
state without its consent, it is also applicable to complaints filed against
officials of the state for acts allegedly performed by them in the discharge of
their duties. The rule is that if the judgment against such officials will
require the state itself to perform an affirmative act to satisfy the same,
such as the appropriation of the amount needed to pay the damages
awarded against them, the suit must be regarded as against the state itself
although it has not been formally impleaded. (Garcia v. Chief of Staff, 16
SCRA 120) In such a situation, the state may move to dismiss the complaint
on the ground that it has been filed without its consent. The doctrine is
sometimes derisively called 'the royal prerogative of dishonesty' because of
the privilege it grants the state to defeat any legitimate claim against it by
simply invoking its non-suability. That is hardly fair, at least in democratic
societies, for the state is not an unfeeling tyrant unmoved by the valid
claims of its citizens. In fact, the doctrine is not absolute and does not say
the state may not be sued under any circumstance. On the contrary, the
rule says that the state may not be sued without its consent, which clearly
imports that it may be sued if it consents. The consent of the state to be
sued may be manifested expressly or impliedly. Express consent may be
embodied in a general law or a special law. Consent is implied when the
state enters into a contract it itself commences litigation. . . . The above
rules are subject to qualification. Express consent is effected only by the will
of the legislature through the medium of a duly enacted statute.
(Republic v. Purisima, 78 SCRA 470) We have held that not all contracts
entered into by the government will operate as a waiver of its non-suability;
distinction must be made between its sovereign and proprietary acts.
(United States of America v. Ruiz, 136 SCRA 487) As for the filing of a
complaint by the government, suability will result only where the
government is claiming affirmative relief from the defendant.
(Lim v. Brownell, 107 Phil. 345)"
3. ID.; ID.; IMMUNITY FROM SUIT OF UNITED STATES AND ITS PERSONNEL
STATIONED IN PHILIPPINE TERRITORY; NATURE AND EXTENT; WAIVER OF
IMMUNITY. "In the case of the United States of America, the customary
rule of international law on state immunity is expressed with more
specificity in the RP-US Bases Treaty. Article III thereof provides as follows: 'It
is mutually agreed that the United States shall have the rights, power and
authority within the bases which are necessary for the establishment, use,
operation and defense thereof or appropriate for the control thereof and all
the rights, power and authority within the limits of the territorial waters and
air space adjacent to, or in the vicinity of, the bases which are necessary to

provide access to them or appropriate for their control.'" . . . It bears


stressing at this point that the above observations do not confer on the
United States of America a blanket immunity for all acts done by it or its
agents in the Philippines. Neither may the other petitioners claim that they
are also insulated from suit in this country merely because they have acted
as agents of the United States in the discharge of their official functions.
There is no question that the United States of America, like any other state,
will be deemed to have impliedly waived its non-suability if it has entered
into a contract in its proprietary or private capacity. It is only when the
contract involves its sovereign or governmental capacity that no such
waiver may be implied. This was our ruling in United States of
America v. Ruiz, (136 SCRA 487) where the transaction in question dealt
with the improvement of the wharves in the naval installation at Subic Bay.
As this was a clearly governmental function, we held that the contract did
not operate to divest the United States of its sovereign immunity from suit.
4. ID.; ID.; ID.; MERE ASSERTION OF NON-SUABILITY NOT GROUND FOR
SUMMARY DISMISSAL OF CHARGES. The other petitioners in the cases
before us all aver they have acted in the discharge of their official functions
as officers or agents of the United States. However, this is a matter of
evidence. The charges against them may not be summarily dismissed on
their mere assertion that their acts are imputable to the United States of
America, which has not given its consent to be sued. In fact, the defendants
are sought to be held answerable for personal torts in which the United
States itself is not involved. If found liable, they and they alone must satisfy
the judgment."
5. ID.; ID.; ID.; TORTS AND CRIMES NOT COVERED BY IMMUNITY
AGREEMENT. Pursuing the question further, does the grant of rights,
power, and authority to the United States under the RP-US Bases Treaty
cover immunity of its officers from crimes and torts? Our answer is No.
Killing a person in cold blood while on patrol duty, running over a child while
driving with reckless imprudence on an official trip, or slandering a person
during office hours could not possibly be covered by the immunity
agreement. Our laws and, we presume, those of the United States do not
allow the commission of crimes in the name of official duty.
6. ID.; ID.; PUBLIC OFFICIALS PERSONALLY ACCOUNTABLE FOR ULTRA
VIRES ACTS; IMMUNITY FROM SUIT NOT GRANT OF PRIVILEGED STATUS.
The case of Chavez v. Sandiganbayan, 193 SCRA 282 [1991] gives the law
on immunity from suit of public officials: "The general rule is that public
officials can be held personally accountable for acts claimed to have been
performed in connection with official duties where they have acted ultra

vires or where there is showing of bad faith. . . . "Moreover, the petitioner's


argument that the immunity proviso under Section 4(a) of Executive Order
No. 1 also extends to him is not well-taken. A mere invocation of the
immunity clause does not ipso facto result in the charges being
automatically dropped. . . . . "Immunity from suit cannot institutionalize
irresponsibility and non-accountability nor grant a privileged status not
claimed by any other official of the Republic. "Where the petitioner exceeds
his authority as Solicitor General, acts in bad faith, or, as contended by the
private respondent, 'maliciously conspir(es) with the PCGG commissioners in
persecuting respondent Enrile by filing against him an evidently baseless
suit in derogation of the latter's constitutional rights and liberties,' there can
be no question that a complaint for damages does not confer a license to
persecute or recklessly injure another. The actions governed by Articles 19,
20, 21, and 32 of the Civil Code on Human Relations may be taken against
public officers or private citizens alike. . . ."
7. CIVIL LAW; DAMAGES; "FAULT" OR NEGLIGENCE INCLUDES CRIMINAL
ACTS. Article 2176 of the Civil Code prescribes a civil liability for damages
caused by a person's act or omission constituting fault or negligence, to wit:
"Article 2176. Whoever by act or omission, causes damage to another, there
being fault or negligence is obliged to pay for the damage done. Such fault
or negligence, if there is no pre-existing contractual relation between the
parties, is called a quasi-delict and is governed by the provisions of this
Chapter." "Fault" or "negligence" in this Article covers not only acts "not
punishable by law" but also acts criminal in character, whether intentional
or voluntary or negligent." (Andamo v. Intermediate Appellate Court, 191
SCRA 195 [1990]).
8. ID.; ID.; MORAL DAMAGES RECOVERABLE IN CASE OF LIBEL, SLANDER OR
OTHER DEFAMATION; ALLEGATION OF FORGERY A DEFAMATION. Article
2219(7) of the Civil Code provides that moral damages may be recovered in
case of libel, slander or any other form of defamation. In effect, the offended
party in these cases is given the right to receive from the guilty party moral
damages for injury to his feelings and reputation in addition to punitive or
exemplary damages. (Occena v.Icamina, 181 SCRA 328 [1990]. In another
case, Heirs of Basilisa Justiva v. Gustilo, 7 SCRA 72 [1963], we ruled that the
allegation of forgery of documents could be a defamation, which in the light
of Article 2219(7) of the Civil Code could by analogy be ground for payment
of moral damages, considering the wounded feelings and besmirched
reputation of the defendants.

9. ID.; ID.; DEFAMATION ESTABLISHED IN CASE AT BAR. Indeed the


imputation of theft contained in the POD dated February 3, 1978 is a
defamation against the character and reputation of the private respondent.
Petitioner Wylie himself admitted that the Office of the Provost Marshal
explicitly recommended the deletion of the name Auring if the article were
published. The petitioners, however, were negligent because under their
direction they issued the publication without deleting the name "Auring."
Such act or omission is ultra vires and cannot be part of official duty. It was
a tortious act which ridiculed the private respondent.
DECISION
GUTIERREZ, JR., J p:
The pivotal issue in this petition centers on the extent of the "immunity from
suit" of the officials of a United States Naval Base inside Philippine territory.
In February, 1978, petitioner M. H. Wylie was the assistant administrative
officer while petitioner Capt. James Williams was the commanding officer of
the U. S. Naval Base in Subic Bay, Olongapo City. Private respondent Aurora
I. Rarang was an employee in the Office of the Provost Marshal assigned as
merchandise control guard.
M. H. Wylie, in his capacity as assistant administrative officer of the U.S.
Naval Station supervised the publication of the "Plan of the Day" (POD)
which was published daily at the US Naval Base station. The POD featured
important announcements, necessary precautions, and general matters of
interest to military personnel. One of the regular features of the POD was
the "action line inquiry." On February 3, 1978, the POD published, under the
"NAVSTA ACTION LINE INQUIRY" the following:
"Question: I have observed that Merchandise Control inspector/inspectress
are (sic) consuming for their own benefit things they have confiscated from
Base Personnel. The observation is even more aggravated by consuming
such confiscated items as cigarettes and food stuffs PUBLICLY. This is not to
mention 'Auring' who is in herself, a disgrace to her division and to the
Office of the Provost Marshal. In lieu of this observation, may I therefore, ask
if the head of the Merchandise Control Division is aware of this
malpractice? prcd
Answer: Merchandise Control Guards and all other personnel are prohibited
from appropriating confiscated items for their own consumption or use. Two
locked containers are installed at the Main Gate area for deposit of

confiscated items and the OPM evidence custodian controls access to these
containers.
Merchandise Control Guards are permitted to eat their meals at their
worksite due to heavy workload. Complaints regarding merchandise control
guards procedure or actions may be made directly at the Office of the
Provost Marshal for immediate and necessary action. Specific dates and
time along with details of suspected violations would be most appreciated.
Telephone 4-3430/4-3234 for further information or to report noted or
suspected irregularities. Exhibits E & E-1." (Rollo, pp. 11-12)
The private respondent was the only one who was named "Auring" in the
Office of the Provost Marshal. That the private respondent was the same
"Auring" referred to in the POD was conclusively proven when on February
7, 1978, petitioner M. H. Wylie wrote her a letter of apology for the
"inadvertent" publication. The private respondent then commenced an
action for damages in the Court of First Instance of Zambales (now Regional
Trial Court) against M. H. Wylie, Capt. James Williams and the U. S. Naval
Base. She alleged that the article constituted false, injurious, and malicious
defamation and libel tending to impeach her honesty, virtue and reputation
exposing her to public hatred, contempt and ridicule; and that the libel was
published and circulated in the English language and read by almost all the
U.S. Naval Base personnel. She prayed that she be awarded P300,000.00 as
moral damages exemplary damages which the court may find proper; and
P50,000.00 as attorney's fees.
In response to the complaint, the defendants filed a motion to dismiss
anchored on three grounds: prcd
"1. Defendants M. H. Wylie and Capt. James Williams acted in the
performance of their official functions as officers of the United States Navy
and are, therefore, immune from suit;
2. The United States Naval Base is an instrumentality of the US government
which cannot be sued without its consent; and
3. This Court has no jurisdiction over the subject matter as well as the
parties in this case." (Record on Appeal, pp. 133-134)
The motion was, however, denied.
In their answer, the defendants reiterated the lack of jurisdiction of the
court over the case.

In its decision, the trial court ruled that the acts of defendants M.
H. Wylie and Capt. James Williams were not official acts of the government
of the United States of America in the operation and control of the Base but
personal and tortious acts which are exceptions to the general rule that a
sovereign country cannot be sued in the court of another country without its
consent. In short, the trial court ruled that the acts and omissions of the two
US officials were not imputable against the US government but were done in
the individual and personal capacities of the said officials. The trial court
dismissed the suit against the US Naval Base. The dispositive portion of the
decision reads as follows:
"WHEREFORE, judgment is hereby rendered in favor of the plaintiff and
against the defendants jointly and severally, as follows:
1) Ordering defendants M. H. Wylie and Capt. James Williams to pay the
plaintiff Aurora Rarang the sum of one hundred thousand (100,000.00)
pesos by way of moral and exemplary damages;
2) Ordering defendants M. H. Wylie and Capt. James Williams to pay the
plaintiff the sum of thirty thousand (P30,000.00) pesos by way of attorney's
fees and expenses of litigation; and
3) To pay the costs of this suit.
Counterclaims are dismissed.
Likewise, the suit against the U. S. Naval Base is ordered dismissed."
(Record on Appeal, p. 154)
On appeal, the petitioners reiterated their stance that they are immune
from suit since the subject publication was made in their official capacities
as officers of the U.S. Navy. They also maintained that they did not
intentionally and maliciously cause the questioned publication. LexLib
The private respondent, not satisfied with the amount of damages awarded
to her, also appealed the trial court's decision.
Acting on these appeals, the Intermediate Appellate Court, now Court of
Appeals, modified the trial court's decision, to wit:
"WHEREFORE, the judgment of the court below is modified so that the
defendants are ordered to pay the plaintiff, jointly and severally, the sum of
P175,000.00 as moral damages and the sum of P60,000.00 as exemplary
damages. The rest of the judgment appealed from is hereby affirmed in
toto. Costs against the defendants-appellants." (Rollo, p. 44)

The appellate court denied a motion for reconsideration filed by the


petitioners.
Hence, this petition.
In a resolution dated March 9, 1987, we gave due course to the petition.
The petitioners persist that they made the questioned publication in the
performance of their official functions as administrative assistant, in the
case of M. H. Wylie, and commanding officer, in the case of Capt. James
Williams of the US Navy assigned to the U. S. Naval Station, Subic Bay,
Olongapo City and were, therefore, immune from suit for their official
actions.
In the case of United States of America v. Guinto (182 SCRA 644 [1990]), we
discussed the principle of the state immunity from suit as follows:
"The rule that a state may not be sued without its consent, now expressed
in Article XVI, Section 3, of the 1987 Constitution, is one of the generally
accepted principles of international law that we have adopted as part of the
law of our land under Article II, Section 2."
xxx xxx xxx
Even without such affirmation, we would still be bound by the generally
accepted principles of international law under the doctrine of incorporation.
Under this doctrine, as accepted by the majority of states, such principles
are deemed incorporated in the law of every civilized state as a condition
and consequence of its membership in the society of nations. Upon its
admission to such society, the state is automatically obligated to comply
with these principles in its relations with other states.
As applied to the local state, the doctrine of state immunity is based on the
justification given by Justice Holmes that 'there can be no legal right against
the authority which makes the law on which the right depends.'
(Kawanakoa v. Polybank, 205 U.S. 349) There are other practical reasons for
the enforcement of the doctrine. In the case of the foreign state sought to
be impleaded in the local jurisdiction, the added inhibition is expressed in
the maxim par in parem, non habet imperium. All states are sovereign
equals and cannot assert jurisdiction over one another. a contrary
disposition would, in the language of a celebrated case, 'unduly vex the
peace of nations.' (Da Haber v. Queen of Portugal, 17 Q. B. 171)
While the doctrine appears to prohibit only suits against the state without its
consent, it is also applicable to complaints filed against officials of the state

for acts allegedly performed by them in the discharge of their duties. The
rule is that if the judgment against such officials will require the state itself
to perform an affirmative act to satisfy the same, such as the appropriation
of the amount needed to pay the damages awarded against them, the suit
must be regarded as against the state itself although it has not been
formally impleaded. (Garcia v. Chief of Staff, 16 SCRA 120) In such a
situation, the state may move to dismiss the complaint on the ground that it
has been filed without its consent.
The doctrine is sometimes derisively called 'the royal prerogative of
dishonesty' because of the privilege it grants the state to defeat any
legitimate claim against it by simply invoking its non-suability. That is hardly
fair, at least in democratic societies, for the state is not an unfeeling tyrant
unmoved by the valid claims of its citizens. In fact, the doctrine is not
absolute and does not say the state may not be sued under any
circumstance. On the contrary, the rule says that the state may not be sued
without its consent, which clearly imports that it may be sued if it
consents. LLjur

The consent of the state to be sued may be manifested expressly or


impliedly. Express consent may be embodied in a general law or a special
law. Consent is implied when the state enters into a contract it itself
commences litigation.
xxx xxx xxx
The above rules are subject to qualification. Express consent is effected only
by the will of the legislature through the medium of a duly enacted statute.
(Republic v. Purisima, 78 SCRA 470) We have held that not all contracts
entered into by the government will operate as a waiver of its non-suability;
distinction must be made between its sovereign and proprietary acts.
(United States of America v. Ruiz, 136 SCRA 487) As for the filing of a
complaint by the government, suability will result only where the
government is claiming affirmative relief from the defendant. (Lim v.
Brownell, 107 Phil. 345)" (at pp. 652-655).
In the same case we had opportunity to discuss extensively the nature and
extent of immunity from suit of United States personnel who are assigned
and stationed in Philippine territory, to wit:

"In the case of the United States of America, the customary rule of
international law on state immunity is expressed with more specificity in the
RP-US Bases Treaty. Article III thereof provides as follows:
'It is mutually agreed that the United States shall have the rights, power and
authority within the bases which are necessary for the establishment, use,
operation and defense thereof or appropriate for the control thereof and all
the rights, power and authority within the limits of the territorial waters and
air space adjacent to, or in the vicinity of, the bases which are necessary to
provide access to them or appropriate for their control.'
The petitioners also rely heavily on Baer v. Tizon, (57 SCRA 1) along with
several other decisions, to support their position that they are not suable in
the cases below, the United States not having waived its sovereign
immunity from suit. It is emphasized that in Baer, the Court held:
'The invocation of the doctrine of immunity from suit of a foreign state
without its consent is appropriate. More specifically, insofar as alien armed
forces is concerned, the starting point is Raquiza v. Bradford, a 1945
decision. In dismissing a habeas corpus petition for the release of
petitioners confined by American army authorities, Justice Hilado, speaking
for the Court, cited Coleman v. Tennessee, where it was explicitly declared:
'It is well settled that a foreign army, permitted to march through a friendly
country or to be stationed in it, by permission of its government or
sovereign, is exempt from the civil and criminal jurisdiction of the place.'
Two years later, in Tubb and Tedrow v. Griess, this Court relied on the ruling
in Raquiza v. Bradford and cited in support thereof excepts from the works
of the following authoritative writers: Vattel, Wheaton, Hall, Lawrence,
Oppenheim, Westlake, Hyde, and McNair and Lauterpacht. Accuracy
demands the clarification that after the conclusion of the PhilippineAmerican Military Bases Agreement, the treaty provisions should control on
such matter, the assumption being that there was a manifestation of the
submission to jurisdiction on the part of the foreign power whenever
appropriate. More to the point is Syquia v. Almeda Lopez, where plaintiffs as
lessors sued the Commanding General of the United States Army in the
Philippines, seeking the restoration to them of the apartment buildings they
owned leased to the United States armed forces station in the Manila area. a
motion to dismiss on the ground of non-suability was filed and upheld by
respondent Judge. The matter was taken to this Court in a mandamus
proceeding. It failed. It was the ruling that respondent Judge acted correctly
considering that the 'action must be considered as one against the U.S.
Government.' The opinion of Justice Montemayor continued: 'It is clear that
the courts of the Philippines including the Municipal Court of Manila have no

jurisdiction over the present case for unlawful detainer. The question of lack
of jurisdiction was raised and interposed at the very beginning of the action.
The U.S. Government has not given its consent to the filing of this suit which
is essentially against her, though not in name. Moreover, this is not only a
case of a citizen filing a suit against his own Government without the latter's
consent but it is of a citizen filing an action against a foreign government
without said government's consent, which renders more obvious the lack of
jurisdiction of the courts of his country. The principles of law behind this rule
are so elementary and of such general acceptance that we deem it
unnecessary to cite authorities in support thereof.'
xxx xxx xxx
It bears stressing at this point that the above observations do not confer on
the United States of America a blanket immunity for all acts done by it or its
agents in the Philippines. Neither may the other petitioners claim that they
are also insulated from suit in this country merely because they have acted
as agents of the United States in the discharge of their official
functions. LLjur
There is no question that the United States of America, like any other state,
will be deemed to have impliedly waived its non-suability if it has entered
into a contract in its proprietary or private capacity. It is only when the
contract involves its sovereign or governmental capacity that no such
waiver may be implied. This was our ruling in United States of Americav.
Ruiz, (136 SCRA 487) where the transaction in question dealt with the
improvement of the wharves in the naval installation at Subic Bay. As this
was a clearly governmental function, we held that the contract did not
operate to divest the United States of its sovereign immunity from suit. In
the words of Justice Vicente Abad Santos:
'The traditional rule of immunity excepts a State from being sued in the
courts of another State without its consent or waiver. This rule is a
necessary consequence of the principles of independence and equality of
States. However, the rules of International Law are not petrified; they are
constantly developing and evolving. And because the activities of states
have multiplied, it has been necessary to distinguish them - between
sovereign and governmental acts (jure imperii) and private, commercial and
proprietary acts (jure gestionis). The result is that State immunity now
extends only to acts jure imperii. The restrictive application of State
immunity is now the rule in the United States, the United Kingdom and other
states in Western Europe.

xxx xxx xxx


The restrictive application of State immunity is proper only when the
proceedings arise out of commercial transactions of the foreign sovereign,
its commercial activities or economic affairs. Stated differently, a State may
be said to have descended to the level of an individual and can thus be
deemed to have tacitly given its consent to be sued only when it enters into
business contracts. It does not apply where the contract relates to the
exercise of its sovereign functions. In this case the projects are integral part
of the naval base which is devoted to the defense of both the United States
and the Philippines, indisputably a function of the government of the highest
order; they are not utilized for nor dedicated to commercial or business
purposes.'
The other petitioners in the cases before us all aver they have acted in the
discharge of their official functions as officers or agents of the United States.
However, this is a matter of evidence. The charges against them may not be
summarily dismissed on their mere assertion that their acts are imputable
to the United States of America, which has not given its consent to be sued.
In fact, the defendants are sought to be held answerable for personal torts
in which the United States itself is not involved. If found liable, they and
they alone must satisfy the judgment." (At pp. 655-658)
In the light of these precedents, we proceed to resolve the present case.
The POD was published under the direction and authority of the
commanding officer, U.S. Naval Station Subic Bay. The administrative
assistant, among his other duties, is tasked to prepare and distribute the
POD. On February 3, 1978, when the questioned article was published in the
POD, petitioner Capt. James Williams was the commanding officer while
petitioner M.H. Wylie was the administrative assistant of the US Naval
Station of Subic bay.
The NAVSTA ACTION LINE INQUIRY is a regular feature of the POD. It is a
telephone answering device in the office of the Administrative Assistant. The
Action Line is intended to provide personnel access to the Commanding
Officer on matters they feel should be brought to his attention for correction
or investigation. The matter of inquiry may be phoned in or mailed to the
POD. (TSN, September 9, 1980, pp. 12-13, Jerry Poblon) According to M.
H. Wylie, the action line naming "Auring" was received about three (3)
weeks prior to its being published in the POD on February 3, 1978. It was
forwarded to Rarang's office of employment, the Provost Marshal, for
comment. The Provost Marshal office's response ". . . included a short note

stating that if the article was published, to remove the name." (Exhibit 8-A,
p. 5) The Provost Marshal's response was then forwarded to the executive
officer and to the commanding officer for approval. The approval of the
commanding officer was forwarded to the office of the Administrative
Assistant for inclusion in the POD. A certain Mrs. Dologmodin, a clerk typist
in the office of the Administrative Assistant prepared the smooth copy of the
POD. Finally, M. H. Wylie, the administrative assistant signed the smooth
copy of the POD but failed to notice the reference to "Auring" in the action
line inquiry. (Exh. 8-A, pp. 4-5, Questions Nos. 14-15)

There is no question, therefore, that the two (2) petitioners actively


participated in screening the features and articles in the POD as part of their
official functions. Under the rule that U.S. officials in the performance of
their official functions are immune from suit, then it should follow that the
petitioners may not be held liable for the questioned publication.
It is to be noted, however, that the petitioners were sued in their personal
capacities for their alleged tortious acts in publishing a libelous article.
The question, therefore, arises are American naval officers who commit a
crime or tortious act while discharging official functions still covered by the
principle of state immunity from suit? Pursuing the question further, does
the grant of rights, power, and authority to the United States under the RPUS Bases Treaty cover immunity of its officers from crimes and torts? Our
answer is No.
Killing a person in cold blood while on patrol duty, running over a child while
driving with reckless imprudence on an official trip, or slandering a person
during office hours could not possibly be covered by the immunity
agreement. Our laws and, we presume, those of the United States do not
allow the commission of crimes in the name of official duty.
The case of Chavez v. Sandiganbayan, 193 SCRA 282 [1991] gives the law
on immunity from suit of public officials:
"The general rule is that public officials can be held personally accountable
for acts claimed to have been performed in connection with official duties
where they have acted ultra vires or where there is showing of bad
faith. LLphil
xxx xxx xxx

"Moreover, the petitioner's argument that the immunity proviso under


Section 4(a) of Executive Order No. 1 also extends to him is not well-taken.
A mere invocation of the immunity clause does not ipso facto result in the
charges being automatically dropped.
"In the case of Presidential Commission on Good Government v. Pea (159
SCRA 556 [1988] then Chief Justice Claudio Teehankee, added a clarification
of the immunity accorded PCGG officials under Section 4(a) of Executive
Order No. 1 as follows:
"'With respect to the qualifications expressed by Mr. Justice Feliciano in his
separate opinion, I just wish to point out two things: First, the main opinion
does not claim absolute immunity for he members of the Commission. The
cited section of Executive Order No. 1 provides the Commission's members
immunity from suit thus: 'No civil action shall lie against the Commission or
any member thereof for anything done or omitted in the discharge of the
task contemplated by this order.' No absolute immunity like that sought by
Mr. Marcos in hisConstitution for himself and his subordinates is herein
involved. It is understood that the immunity granted the members of the
Commission by virtue of the unimaginable magnitude of its task to recover
the plundered wealth and the State's exercise of police power was immunity
from liability for damages in the official discharge of the task granted the
members of the Commission much in the same manner that judges are
immune from suit in the official discharge of the functions of their office. . . .
(at pp. 581-582).
xxx xxx xxx
"Immunity from suit cannot institutionalize irresponsibility and nonaccountability nor grant a privileged status not claimed by any other official
of the Republic. (id., at page 586)
"Where the petitioner exceeds his authority as Solicitor General, acts in bad
faith, or, as contended by the private respondent, 'maliciously conspir(es)
with the PCGG commissioners in persecuting respondent Enrile by filing
against him an evidently baseless suit in derogation of the latter's
constitutional rights and liberties' (Rollo, p. 417), there can be no question
that a complaint for damages does not confer a license to persecute or
recklessly injure another. The actions governed by Articles 19, 20, 21 and 32
of the Civil Code on Human Relations may be taken against public officers or
private citizens alike. . . ." (pp. 289-291).
We apply the same ruling to this case.

The subject article in US Newsletter POD dated February 3, 1978 mentions a


certain "Auring" as ". . . a disgrace to her division and to the Office of the
Provost Marshal." The same article explicitly implies that Auring was
consuming and appropriating for herself confiscated items like cigarettes
and foodstuffs. There is no question that the Auring alluded to in the Article
was the private respondent as she was the only Auring in the Office of the
Provost Marshal. Moreover, as a result of this article, the private respondent
was investigated by her supervisor. Before the article came out, the private
respondent had been the recipient of commendations by her superiors for
honesty in the performance of her duties.
It may be argued that Captain James Williams as commanding officer of the
naval base is far removed in the chain of command from the offensive
publication and it would be asking too much to hold him responsible for
everything which goes wrong on the base. This may be true as a general
rule. In this particular case, however, the records show that the offensive
publication was sent to the commanding officer for approval and he
approved it. The factual findings of the two courts below are based on the
records. The petitioners have shown no convincing reasons why our usual
respect for the findings of the trial court and the respondent court should be
withheld in this particular case and why their decisions should be reversed.
Article 2176 of the Civil Code prescribes a civil liability for damages caused
by a person's act or omission constituting fault or negligence, to wit:
"Article 2176. Whoever by act or omission, causes damage to another, there
being fault or negligence is obliged to pay for the damage done. Such fault
or negligence, if there is no pre-existing contractual relation between the
parties, is called a quasi-delict and is governed by the provisions of this
Chapter."
"Fault" or "negligence" in this Article covers not only acts "not punishable by
law" but also acts criminal in character, whether intentional or voluntary or
negligent." (Andamo v. Intermediate Appellate Court, 191 SCRA 195 [1990]).
Moreover, Article 2219(7) of the Civil Code provides that moral damages
may be recovered in case of libel, slander or any other form of defamation.
In effect, the offended party in these cases is given the right to receive from
the guilty party moral damages for injury to his feeling and reputation in
addition to punitive or exemplary damages. (Occena v. Icamina, 181 SCRA
328 [1990]. In another case, Heirs of Basilisa Justiva v. Gustilo, 7 SCRA 72
[1963], we ruled that the allegation of forgery of documents could be a
defamation, which in the light of Article 2219(7) of the Civil Code could by

analogy be ground for payment of moral damages, considering the


wounded feelings and besmirched reputation of the defendants. LLjur
Indeed the imputation of theft contained in the POD dated February 3, 1978
is a defamation against the character and reputation of the private
respondent. Petitioner Wylie himself admitted that the Office of the Provost
Marshal explicitly recommended the deletion of the name Auring if the
article were to be published. The petitioners, however, were negligent
because under their direction they issued the publication without deleting
the name "Auring". Such act or omission is ultra vires and cannot be part of
official duty. it was a tortious act which ridiculed the private respondent. As
a result of the petitioner's act, the private respondent, according to the
record, suffered besmirched reputation, serious anxiety, wounded feeling
and social humiliation, specially so, since the article was baseless and false.
The petitioners, alone, in their personal capacities are liable for the
damages they caused the private respondent.
WHEREFORE, the petition is hereby DISMISSED. The questioned decision
and resolution of the then Intermediate Appellate Court, now Court of
Appeals, are AFFIRMED.
Bidin, Davide, Jr. and Romero, JJ., concur.
||| (Wylie v. Rarang, G.R. No. 74135, [May 28, 1992])

44. Republic v Sandoval


EN BANC
[G.R. No. 84607. March 19, 1993.]
REPUBLIC OF THE PHILIPPINES, GEN. RAMON MONTANO, GEN.
ALFREDO LIM, GEN. ALEXANDER AGUIRRE, COL. EDGAR DULA
TORRES, COL. CEZAR NAZARENO, MAJ. FILEMON GASMEN, PAT.
NICANOR ABANDO, PFC SERAPIN CEBU, JR., GEN. BRIGIDO PAREDES,
COL. ROGELIO MONFORTE, PFC ANTONIO LUCERO, PAT. JOSE
MENDIOLA, PAT. NELSON TUAZON, POLICE CORPORAL PANFILO
ROGOS, POLICE LT. JUAN B. BELTRAN, PAT. NOEL MANAGBAO,
MARINE THIRD CLASS TRAINEE (3CT) NOLITO NOGATO, 3CT
ALEJANDRO B. NAGUIO, JR., EFREN ARCILLAS, 3CT AGERICO LUNA,
3CT BASILIO BORJA, 3CT MANOLITO LUSPO, 3CT CRISTITUTO
GERVACIO, 3CT MANUEL DELA CRUZ, JR., MARINE (CDC) BN., (CIVIL
DISTURBANCE CONTROL), MOBILE DISPERSAL TEAM (MDT), LT.

ROMEO PAQUINTO, LT. LAONGLAANG GOCE, MAJ. DEMETRIO DE LA


CRUZ, POLICE CAPTAIN RODOLFO NAVAL, JOHN DOE, RICHARD DOE,
ROBERTO DOE AND OTHER DOES,petitioners, vs. HON. EDILBERTO
G. SANDOVAL, Regional Trial Court of Manila, Branch IX, ERLINDA C.
CAYLAO, ANATALIA ANGELES PEREZ, MYRNA BAUTISTA, CIPRIANA
EVANGELIO, ELMA GRAMPA,
AMELIA
GUTIERREZ, NEMESIO
LAKINDANUM, PURITA YUMUL, MIGUEL ARABE, TERESITA ARJONA,
RONALDO CAMPOMANES AND CARMENCITA ARDONI VDA. DE
CAMPOMANES, ROGELIO DOMUNICO, in their capacity as heirs of
the deceased (ROBERTO C. CAYLAO, SONNY "BOY" PEREZ, DIONESIO
BAUTISTA, DANTE EVANGELIO, ADELFA ARIBE, DANILO ARJONA,
VICENTE CAMPOMANES, RONILO DOMUNICO) respectively; and
(names of sixty-two injured victims) EDDIE AGUINALDO, FELICISIMO
ALBASIA, NAPOLEON BAUTISTA, DANILO CRUZ, EDDIE MENSOLA,
ALBERT PITALBO, VICENTE ROSEL, RUBEN CARRIEDO, JOY CRUZ,
HONORIO LABAMBA, JR., EFREN MACARAIG, SOLOMON MANALOTO,
ROMEO DURAN, NILO TAGUBAT, JUN CARSELLAR, JOEY CLEMENTE,
GERARDO COYOCA, LUISITO DACO, BENJAMIN DELA CRUZ, ARTHUR
FONTANILLA, WILSON GARCIA, CARLOS SIRAY, JOSE PERRAS, TOMAS
VALLOS, ARNOLD ENAJE, MARIANITA DIMAPILIS, FRANCISCO
ANGELES, MARCELO ESGUERRA, JOSE FERRER, RODEL DE GUIA,
ELVIS MENDOZA, VICTORINO QUIJANO, JOEY ADIME, RESIENO ADUL,
ALBERTO TARSONA, CARLOS ALCANTARA, MAMERTO ALIAS,
EMELITO ALMONTE, BENILDA ALONUEVO, EMMA ABADILLO,
REYNALDO CABALLES, JR., JAIME CALDETO, FABIAN CANTELEJO,
RODRIGO CARABARA, ENRIQUE DELGADO, JUN DELOS SANTOS,
MARIO DEMASACA, FRANCISCO GONZALES, ERNESTO GONZALES,
RAMIRO JAMIL, JUAN LUCENA, PERLITO SALAYSAY, JOHNNY SANTOS,
MARCELO SANTOS, EMIL SAYAO, BAYANI UMALI, REMIGIO MAHALIN,
BONG MANLULO, ARMANDO MATIENZO, CARLO MEDINA, LITO
NOVENARIO, and ROSELLA ROBALE, respondents.
[G.R. No. 84645. March 19, 1993.]
ERLINDA C. CAYLAO, ANATALIA ANGELES PEREZ, MYRNA BAUTISTA,
CIPRIANA EVANGELIO, ELMA GRAMPA, AMELIA GUTIERREZ, NEMESIO
LAKINDANUM, PURITA YUMUL, MIGUEL ARABE, TERESITA ARJONA,
RONALDO CAMPOMANES AND CARMENCITA ARDONI VDA. DE
CAMPOMANES, ROGELIO DOMUNICO, in their capacity as heirs of
the deceased (ROBERTO C. CAYLAO, SONNY "BOY" PEREZ, DIONESIO
BAUTISTA, DANTE EVANGELIO, RODRIGO GRAMPA, ANGELITO
GUTIERREZ, BERNABE LAKINDANUM, ROBERTO YUMUL, LEOPOLDO

ALONZO, ADELFA ARIBE, DANILO ARJONA, VICENTE CAMPOMANES,


RONILO DOMUNICO) respectively; and (names of sixty-two injured
victims) EDDIE AGUINALDO, FELICISIMO ALBASIA, NAPOLEON
BAUTISTA, DANILO CRUZ, EDDIE MENSOLA, ALBERT PITALBO,
VICENTE ROSEL, RUBEN CARRIEDO, JOY CRUZ, HONORIO LABAMBA,
JR. EFREN MACARAIG, SOLOMON MANALOTO, ROMEO DURAN, NILO
TAGUBAT, JUN CARSELLAR, JOEY CLEMENTE, GERARDO COYOCA,
LUISITO DACO, BENJAMIN DELA CRUZ, ARTHUR FONTANILLA,
WILSON GARCIA, CARLOS SIRAY, JOSE PERRAS, TOMAS VALLOS,
ARNOLD ENAJE, MARIANITA DIMAPILIS, FRANCISCO ANGELES,
MARCELO ESGUERRA, JOSE FERRER, RODEL DE GUIA, ELVIS
MENDOZA, VICTORINO QUIJANO, JOEY ADIME, RESIENO ADUL,
ALBERTO TARSONA, CARLOS ALCANTARA, MAMERTO ALIAS,
EMELITO ALMONTE, BENILDA ALONUEVO, EMMA ABADILLO,
REYNALDO CABALLES, JR., JAIME CALDETO, FABIAN CANTELEJO,
RODRIGO CARABARA, ENRIQUE DELGADO, JUN DELOS SANTOS,
MARIO DEMASACA, FRANCISCO GONZALES, ERNESTO GONZALES,
RAMIRO JAMIL, JUAN LUCENA, PERLITO SALAYSAY, JOHNNY SANTOS,
MARCELO SANTOS, EMIL SAYAO, BAYANI UMALI, REMIGIO MAHALIN,
BONG MANLULO, ARMANDO MATIENZO, CARLO MEDINA, LITO
NOVENARIO, ROSELLA ROBALE, petitioners, vs. REPUBLIC OF THE
PHILIPPINES, and HONORABLE EDILBERTO G. SANDOVAL, Regional
Trial Court of Manila, Branch 9, respondents.
SYLLABUS
1. POLITICAL LAW; PRINCIPLE OF STATE'S IMMUNITY FROM SUIT;
CONSTRUED. Under our Constitution the principle of immunity of the
government from suit is expressly provided in Article XVI, Section 3. The
principle is based on the very essence of sovereignty, and on the practical
ground that there can be no legal right as against the authority that makes
the law on which the right depends. It also rests on reasons of public policy
that public service would be hindered, and the public endangered, if the
sovereign authority could be subjected to law suits at the instance of every
citizen and consequently controlled in the uses and dispositions of the
means required for the proper administration of the government.
2. ID.; ID.; NOT DEEMED WAIVED WHEN THE GOVERNMENT AUTHORIZES
THE INDEMNIFICATION FOR THE VICTIM OR THROUGH PUBLIC ADDRESSES
MADE BY THE PRESIDENT. Petitioners (Caylao group) advance the
argument that the State has impliedly waived its sovereign immunity from
suit. It is their considered view that by the recommendation made by the
Commission for the government to indemnity the heirs and victims of the

Mendiola incident and by the public addresses made by then President


Aquino in the aftermath of the killings, the State has consented to be sued.
This is not a suit against the State with its consent. Firstly, the
recommendation made by the Commission regarding indemnification of the
heirs of the deceased and the victims of the incident by the government
does not in any way mean that liability automatically attaches to the State.
It is important to note that A.O. 11 expressly states that the purpose of
creating the Commission was to have a body that will conduct an
"investigation of the disorder, deaths and casualties that took place." In the
exercise of its functions, A.O. 11 provides guidelines, and what is relevant to
Our discussion reads: "1. Its conclusions regarding the existence of probable
cause for the commission of any offense and of the persons probably guilty
of the same shall be sufficient compliance with the rules on preliminary
investigation and the charges arising therefrom may be filed directly with
the proper court." In effect, whatever may be the findings of the
Commission, the same shall only serve as the cause of action in the event
that any party decides to litigate his/her claim. Therefore, the Commission is
merely a preliminary venue. The Commission is not the end in itself.
Whatever recommendation it makes cannot in any way bind the State
immediately, such recommendation not having become final and executory.
This is precisely the essence of it being a fact-finding body.Secondly,
whatever acts or utterances that then President Aquino may have done or
said, the same are not tantamount to the State having waived its immunity
from suit. The President's act of joining the marchers, days after the
incident, does not mean that there was an admission by the State of any
liability. In fact to borrow the words of petitioners (Caylao group), "it was an
act of solidarity by the government with the people." Moreover, petitioners
rely on President Aquino's speech promising that the government would
address the grievances of the rallyists. By this alone, it cannot be inferred
that the State has admitted any liability, much less can it be inferred that it
has consented to the suit.
3. ID.; ID.; WHEN AVAILABLE; RULE; CASE AT BAR. Some instances when a
suit against the State is proper are" (1) When the Republic is sued by name;
(2) When the suit is against an unincorporated government agency; (3)
When the suit is on its face against a government officer but the case is
such that ultimate liability will belong not to the officer but to the
government. While the Republic in this case is sued by name, the ultimate
liability does not pertain to the government. Although the military officers
and personnel, then party defendants, were discharging their official
functions when the incident occurred, their functions ceased to be official
the moment they exceeded their authority. Based on the Commission

findings, there was lack of justification by the government forces in the use
of firearms. Moreover, the members of the police and military crowd
dispersal units committed a prohibited act under B.P. Blg. 880 as there was
unnecessary firing by them in dispersing the marchers.
4. ID.; ID.; CANNOT INSTITUTIONALIZE IRRESPONSIBILITY AND NONACCOUNTABILITY NOR GRANT A PRIVILEGE STATUS NOT CLAIMED BY ANY
OTHER OFFICIAL OF THE REPUBLIC. As early as 1954, this Court has
pronounced that an officer cannot shelter himself by the plea that he is a
public agent acting under the color of his office when his acts are wholly
without authority. Until recently in 1991, this doctrine still found application,
this Court saying that immunity from suit cannot institutionalize
irresponsibility and non-accountability nor grant a privileged status not
claimed by any other official of theRepublic. The military and police forces
were deployed to ensure that the rally would be peaceful and orderly as well
as to guarantee the safety of the very people that they are duty-bound to
protect. However, the facts as found by the trial court showed that they
fired at the unruly crowd to disperse the latter.
5. ID.; ID.; DOES NOT APPLY WHEN THE RELIEF DEMANDED BY THE SUIT
REQUIRES NO AFFIRMATIVE OFFICIAL ACTION ON THE PART OF THE STATE
NOR THE AFFIRMATIVE DISCHARGE OF ANY OBLIGATION WHICH BELONGS
TO THE STATE IN ITS POLITICAL CAPACITY. While it is true that nothing is
better settled than the general rule that a sovereign state and its political
subdivisions cannot be sued in the courts except when it has given its
consent, it cannot be invoked by both the military officers to release them
from any liability, and by the heirs and victims to demand indemnification
from the government. The principle of state immunity from suit does not
apply, as in this case, when the relief demanded by the suit requires no
affirmative official action on the part of the State nor the affirmative
discharge of any obligation which belongs to the State in its political
capacity, even though the officers or agents who are made defendants
claim to hold or act only by virtue of a title of the state and as its agents
and servants. This Court has made it quite clear that even a "high position
in the government does not confer a license to persecute or recklessly injure
another."

DECISION
CAMPOS, JR., J p:

People may have already forgotten the tragedy that transpired on January
22, 1987. It is quite ironic that then, some journalists called it a Black
Thursday, as a grim reminder to the nation of the misfortune that befell
twelve (12) rallyists. But for most Filipinos now, the Mendiola massacre may
now just as well be a chapter in our history books. For those however, who
have become widows and orphans, certainly they would not settle for just
that. They seek retribution for the lives taken that will never be brought
back to life again. LLjur
Hence, the heirs of the deceased, together with those injured(Caylao group),
instituted this petition, docketed as G.R. No. 84645, under Section 1 of Rule
65 of the Rules of Court, seeking the reversal and setting aside of the
Orders of respondent Judge Sandoval, 1 dated May 31 and August 8, 1988,
dismissing the complaint for damages of herein petitioners against
theRepublic of the Philippines in Civil Case. No. 88-43351.
Petitioner, the Republic of the Philippines, through a similar remedy,
docketed as G.R. No. 84607, seeks to set aside the Order of respondent
Judge dated May 31, 1988, in Civil Case No. 88-43351 entitled "Erlinda
Caylao, et al. vs. Republic of the Philippines, et al."
The pertinent portion of the questioned Order 2 dated May 31, 1988, reads
as follows:
"With respect however to the other defendants, the impleaded Military
Officers, since they are being charged in their personal and official capacity,
and holding them liable, if at all, would not result in financial responsibility
of the government, the principle of immunity from suit can not conveniently
and correspondingly be applied to them.
WHEREFORE, the case as against the defendant Republic of the Philippines
is hereby dismissed. As against the rest of the defendants the motion to
dismiss is denied. They are given a period of ten (10) days from receipt of
this order within which to file their respective pleadings."
On the other hand, the Order 3 , dated August 8, 1988, denied the motions
filed by both parties, for a reconsideration of the abovecited Order,
respondent Judge finding no cogent reason to disturb the said order.
The massacre was the culmination of eight days and seven nights of
encampment by members of the militant Kilusang Magbubukid sa Pilipinas
(KMP) at the then Ministry (now Department) of Agrarian Reform (MAR) at
the Philippine Tobacco Administration Building along Elliptical Road in
Diliman, Quezon City.

The farmers and their sympathizers presented their demands for what they
called "genuine agrarian reform". The KMP, led by its national president,
Jaime Tadeo, presented their problems and demands, among which were:
(a) giving lands for free to farmers; (b) zero retention of lands by landlords;
and (c) stop amortizations of land payments.
The dialogue between the farmers and the MAR officials began on January
15, 1987. The two days that followed saw a marked increase in people at
the encampment. It was only on January 19, 1987 that Jaime Tadeo arrived
to meet with then Minister Heherson Alvarez, only to be informed that the
Minister can only meet with him the following day. On January 20, 1987, the
meeting was held at the MAR conference room. Tadeo demanded that the
minimum comprehensive land reform program be granted immediately.
Minister Alvarez, for his part, can only promise to do his best to bring the
matter to the attention of then President Aquino, during the cabinet meeting
on January 21, 1987.
Tension mounted the following day. The farmers, now on their seventh day
of encampment, barricaded the MAR premises and prevented the
employees from going inside their offices. They hoisted the KMP flag
together with the Philippine flag.
At around 6:30 p.m. of the same day, Minister Alvarez, in a meeting with
Tadeo and his leaders, advised the latter to instead wait for the ratification
of the 1987 Constitution and just allow the government to implement its
comprehensive land reform program. Tadeo, however, countered by saying
that he did not believe in the Constitution and that a genuine land reform
cannot be realized under a landlord-controlled Congress. A heated
discussion
ensued
between
Tadeo
and
Minister
Alvarez.
This
notwithstanding, Minister Alvarez suggested a negotiating panel from each
side to meet again the following day.
On January 22, 1987, Tadeo's group instead decided to march to
Malacaang to air their demands. Before the march started, Tadeo talked to
the press and TV media. He uttered fiery words, the most telling of which
were: ". . . inalis namin ang barikada bilang kahilingan ng ating Presidente,
pero kinakailangan alisin din niya ang barikada sa Mendiola sapagkat
bubutasin din namin iyon at dadanak ang dugo . . ." 4
The farmers then proceeded to march to Malacaang, from Quezon
Memorial Circle, at 10:00 a.m. They were later joined by members of other
sectoral organizations such as the Kilusang Mayo Uno (KMU), Bagong

Alyansang Makabayan (BAYAN), League of Filipino Students (LFS) and


Kongreso ng Pagkakaisa ng Maralitang Lungsod (KPML).
At around 1:00 p.m., the marchers reached Liwasang Bonifacio where they
held a brief program. It was at this point that some of the marchers entered
the eastern side of the Post Office Building, and removed the steel bars
surrounding the garden. Thereafter, they joined the march to Malacaang.
At about 4:30 p.m., they reached C.M. Recto Avenue.
In anticipation of a civil disturbance, and acting upon reports received by
the Capital Regional Command (CAPCOM) that the rallyists would proceed to
Mendiola to break through the police lines and rush towards Malacaang,
CAPCOM Commander General Ramon E. Montao inspected the
preparations and adequacy of the government forces to quell impending
attacks.
OPLAN YELLOW (Revised) was put into effect. Task Force Nazareno under
the command of Col. Cesar Nazareno was deployed at the vicinity of
Malacaang. The civil disturbance control units of the Western Police District
under Police Brigadier General Alfredo S. Lim were also activated.
Intelligence reports were also received that the KMP was heavily infiltrated
by CPP/NPA elements and that an insurrection was impending. The threat
seemed grave as there were also reports that San Beda College and Centro
Escolar University would be forcibly occupied.
In its report, the Citizens' Mendiola Commission (a body specifically tasked
to investigate the facts surrounding the incident, Commission for short)
stated that the government anti-riot forces were assembled at Mendiola in a
formation of three phalanges, in the following manner:
"(1) The first line was composed of policemen from police stations Nos. 3, 4,
6, 7, 8, 9 and 10 and the Chinatown detachment of the Western Police
District. Police Colonel Edgar Dula Torres, Deputy Superintendent of the
Western Police District, was designated as ground commander of the CDC
first line of defense. The WPD CDC elements were positioned at the
intersection of Mendiola and Legarda Streets after they were ordered to
move forward from the top of Mendiola bridge. The WPD forces were in
khaki uniform and carried the standard CDC equipment aluminum
shields, truncheons and gas masks.
(2) At the second line of defense about ten (10) yards behind the WPD
policemen were the elements of the Integrated National Police (INP) Field
Force stationed at Fort Bonifacio from the 61st and 62nd INP Field Force,

who carried also the standard CDC equipment truncheons, shields and
gas masks. The INP Field Force was under the command of Police Major
Demetrio dela Cruz.
(3) Forming the third line was the Marine Civil Disturbance Control Battalion
composed of the first and second companies of the Philippine Marines
stationed at Fort Bonifacio. The marines were all equipped with shields,
truncheons and M-16 rifles (armalites) slung at their backs, under the
command of Major Felimon B. Gasmin. The Marine CDC Battalion was
positioned in line formation ten (10) yards farther behind the INP Field Force.
At the back of the marines were four (4) 6 x 6 army trucks, occupying the
entire width of Mendiola street, followed immediately by two water cannons,
one on each side of the street and eight fire trucks, four trucks on each side
of the street. The eight fire trucks from Fire District I of Manila under Fire
Superintendent Mario C. Tanchanco, were to supply water to the two water
cannons.
Stationed farther behind the CDC forces were the two Mobile Dispersal
Teams (MDT) each composed of two tear gas grenadiers, two spotters, an
assistant grenadier, a driver and the team leader.
In front of the College of the Holy Spirit near Gate 4 of Malacaang stood
the VOLVO Mobile Communications Van of theCommanding General of
CAPCOM/INP, General Ramon E. Montao. At this command post, after
General Montao had conferred with TF Nazareno Commander, Colonel
Cezar Nazareno, about the adequacy and readiness of his forces, it was
agreed that Police General Alfredo S. Lim would designate Police Colonel
Edgar Dula Torres and Police Major Conrado Francisco as negotiators with
the marchers. Police General Lim then proceeded to the WPD CDC elements
already positioned at the foot of Mendiola bridge to relay to Police Colonel
Torres and Police Major Francisco the instructions that the latter would
negotiate with the marchers." 5 (Emphasis supplied)
The marchers, at around 4:30 p.m., numbered about 10,000 to 15,000. From
C.M. Recto Avenue, they proceeded toward the police lines. No dialogue
took place between the marchers and the anti-riot squad. It was at this
moment that a clash occurred and, borrowing the words of the Commission
"pandemonium broke loose". The Commission stated in its findings, to wit:
". . . There was an explosion followed by throwing of pillboxes, stones and
bottles. Steel bars, wooden clubs and lead pipes were used against the
police. The police fought back with their shields and truncheons. The police
line was breached. Suddenly shots were heard. The demonstrators

disengaged from the government forces and retreated towards C.M. Recto
Avenue. But sporadic firing continued from the government forces.

After the firing ceased, two MDTs headed by Lt. Romeo Paguinto and Lt.
Laonglaan Goce sped towards Legarda Street and lobbed tear gas at the
remaining rallyist still grouped in the vicinity of Mendiola. After dispersing
the crowd, the two MDTs, together with the two WPD MDTs, proceeded to
Liwasang Bonifacio upon order of General Montao to disperse the rallyists
assembled thereat. Assisting the MDTs were a number of policemen from
the WPD, attired in civilian clothes with white head bands, who were armed
with long firearms." 6 (Emphasis ours)
After the clash, twelve (12) marchers were officially confirmed dead,
although according to Tadeo, there were thirteen (13) dead, but he was not
able to give the name and address of said victim. Thirty-nine (39) were
wounded by gunshots and twelve (12) sustained minor injuries, all
belonging to the group of the marchers.
Of the police and military personnel, three (3) sustained gunshot wounds
and twenty (20) suffered minor physical injuries such as abrasions,
contusions and the like.
In the aftermath of the confrontation, then President Corazon C. Aquino
issued Administrative Order No. 11, 7 (A.O. 11, for brevity) dated January 22,
1987, which created the Citizens' Mendiola Commission. The body was
composed of retired Supreme Court Justice Vicente Abad Santos as
Chairman, retired Supreme Court Justice Jose Y. Feria and Mr. Antonio U.
Miranda, both as members. A.O. 11 stated that the Commission was created
precisely for the "purpose of conducting an investigation of the disorder,
deaths, and casualties that took place in the vicinity of Mendiola Bridge and
Mendiola Street and Claro M. Recto Avenue, Manila, in the afternoon of
January 22, 1987". The Commission was expected to have submitted its
findings not later than February 6, 1987. But it failed to do so.
Consequently, the deadline was moved to February 16, 1987
byAdministrative Order No. 13. Again, the Commission was unable to meet
this deadline. Finally, on February 27, 1987, it submitted its report, in
accordance with Administrative Order No. 17, issued on February 11, 1987.
In its report, the Commission recapitulated its findings, to wit:
"(1) The march to Mendiola of the KMP led by Jaime Tadeo, together with the
other sectoral groups, was not covered by any permit as required under

Batas Pambansa Blg. 880, the Public Assembly Act of 1985, in violation of
paragraph (a) Section 13, punishable under paragraph (a), Section 14 of
said law.
(2) The crowd dispersal control units of the police and the military were
armed with .38 and .45 caliber handguns, and M-16 armalites, which is a
prohibited act under paragraph 4(g), Section 13, and punishable under
paragraph (b), Section 14 of Batas Pambansa Blg. 880.
(3) The security men assigned to protect the WPD, INP Field Force, the
Marines and supporting military units, as well as the security officers of the
police and military commanders were in civilian attire in violation of
paragraph (a), Section 10, Batas Pambansa 880.
(4) There was unnecessary firing by the police and military crowd dispersal
control units in dispersing the marchers, a prohibited act under paragraph
(e), Section 13, and punishable under paragraph (b), Section 14, Batas
Pambansa Blg. 880.
(5) The carrying and use of steel bars, pillboxes, darts, lead pipe, wooden
clubs with spikes, and guns by the marchers as offensive weapons are
prohibited acts punishable under paragraph (g), Section 13, and punishable
under paragraph (e), Section 14 of Batas Pambansa Blg. 880.
(6) The KMP farmers broke off further negotiations with the MAR officials and
were determined to march to Malacaang, emboldened as they are, by the
inflammatory and incendiary utterances of their leader, Jaime Tadeo
"bubutasin namin ang barikada. Dadanak and dugo . . . Ang nagugutom na
magsasaka ay gagawa ng sariling butas . . ."
(7) There was no dialogue between the rallyists and the government forces.
Upon approaching the intersections of Legarda and Mendiola, the marchers
began pushing the police lines and penetrated and broke through the first
line of the CDC contingent.
(8) The police fought back with their truncheons and shields. They stood
their ground but the CDC line was breached. There ensued gunfire from both
sides. It is not clear who started the firing.
(9) At the onset of the disturbance and violence, the water cannons and tear
gas were not put into effective use to disperse the rioting crowd.
(10) The water cannons and fire trucks were not put into operation because
(a) there was no order to use them; (b) they were incorrectly prepositioned;
and (c) they were out of range of the marchers.

(11) Tear gas was not used at the start of the disturbance to disperse the
rioters. After the crowd had dispersed and the wounded and dead were
being carried away, the MDTs of the police and the military with their tear
gas equipment and components conducted dispersal operations in the
Mendiola area and proceeded to Liwasang Bonifacio to disperse the
remnants of the marchers.
(12) No barbed wire barricade was used in Mendiola but no official reason
was given for its absence." 8
From the results of the probe, the Commission recommended 9 the criminal
prosecution of four unidentified, uniformed individuals, shown either on tape
or in pictures, firing at the direction of the marchers. In connection with this,
it was the Commission's recommendation that the National Bureau of
Investigation (NBI) be tasked to undertake investigations regarding the
identities of those who actually fired their guns that resulted in the death of
or injury to the victims of the incident. The Commission also suggested that
all the commissioned officers of both the Western Police District and the INP
Field Force, who were armed during the incident, be prosecuted for violation
of paragraph 4(g) of Section 13, Batas Pambansa Blg. 880, the Public
Assembly Act of 1985. The Commission's recommendation also included the
prosecution of the marchers, for carrying deadly or offensive weapons, but
whose identities have yet to be established. As for Jaime Tadeo, the
Commission said that he should be prosecuted both for violation of
paragraph (a), Section 13, Batas Pambansa Blg. 880 for holding the rally
without a permit and for violation of Article 142, as amended, of the Revised
Penal Code for inciting to sedition. As for the following officers, namely: (1)
Gen. Ramon E. Montao; (2) Police Gen. Alfredo S. Lim; (3) Police Gen. Edgar
Dula Torres; (4) Police Maj. Demetrio dela Cruz; (5) Col. Cezar Nazareno; and
(5) Maj. Felimon Gasmin, for their failure to make effective use of their skill
and experience in directing the dispersal operations in Mendiola,
administrative sanctions were recommended to be imposed. LLpr
The last and the most significant recommendation of the Commission was
for the deceased and wounded victims of the Mendiola incident to be
compensated by the government. It was this portion that petitioners (Caylao
group) invoke in their claim for damages from the government.
Notwithstanding such recommendation, no concrete form of compensation
was received by the victims. Thus, on July 27, 1987, herein petitioners,
(Caylao group) filed a formal letter of demand for compensation from the
Government. 10 This formal demand was indorsed by the office of the
Executive Secretary to the Department of Budget and Management (DBM)

on August 13, 1987. The House Committee on Human Rights, on February


10, 1988, recommended the expeditious payment of compensation to the
Mendiola victims. 11
After almost a year, on January 20, 1988, petitioners (Caylao group) were
constrained to institute an action for damages against the Republic of the
Philippines, together with the military officers, and personnel involved in the
Mendiola incident, before the trial court. The complaint was docketed as
Civil Case No. 88-43351.
On February 23, 1988, the Solicitor General filed a Motion to Dismiss on the
ground that the State cannot be sued without its consent. Petitioners
opposed said motion on March 16, 1988, maintaining that the State has
waived its immunity from suit and that the dismissal of the instant action is
contrary to both the Constitution and the International Law on Human
Rights.
Respondent Judge Sandoval, in his first questioned Order, dismissed the
complaint as against the Republic of the Philippines on the ground that
there was no waiver by the State. Petitioners (Caylao group) filed a Motion
for Reconsideration therefrom, but the same was denied by respondent
judge in his Order dated August 8, 1988. Consequently, Caylao and her copetitioners filed the instant petition.
On the other hand, the Republic of the Philippines, together with the military
officers and personnel impleaded as defendants in the court below, filed its
petition for certiorari.
Having arisen from the same factual beginnings and raising practically
identical issues, the two (2) petitions were consolidated and will therefore
be jointly dealt with and resolved in this Decision.
The resolution of both petitions revolves around the main issue of whether
or not the State has waived its immunity from suit.
Petitioners (Caylao group) advance the argument that the State has
impliedly waived its sovereign immunity from suit. It is their considered view
that by the recommendation made by the Commission for the government
to indemnify the heirs and victims of the Mendiola incident and by the
public addresses made by then President Aquino in the aftermath of the
killings, the State has consented to be sued.
Under our Constitution the principle of immunity of the government from
suit is expressly provided in Article XVI, Section 3. The principle is based on
the very essence of sovereignty, and on the practical ground that there can

be no legal right as against the authority that makes the law on which the
right depends. 12 It also rests on reasons of public policy that public
service would be hindered, and the public endangered, if the sovereign
authority could be subjected to law suits at the instance of every citizen and
consequently controlled in the uses and dispositions of the means required
for the proper administration of the government. 13

This is not a suit against the State with its consent.


Firstly, the recommendation made by the Commission regarding
indemnification of the heirs of the deceased and the victims of the incident
by the government does not in any way mean that liability automatically
attaches to the State. It is important to note that A.O. 11 expressly states
that the purpose of creating the Commission was to have a body that will
conduct an "investigation of the disorder, deaths and casualties that took
place." 14 In the exercise of its functions, A.O. 11 provides guidelines, and
what is relevant to Our discussion reads:
"1. Its conclusions regarding the existence of probable cause for the
commission of any offense and of the persons probably guilty of the same
shall be sufficient compliance with the rules on preliminary investigation
and the charges arising therefrom may be filed directly with the proper
court." 15
In effect, whatever may be the findings of the Commission, the same shall
only serve as the cause of action in the event that any party decides to
litigate his/her claim. Therefore, the Commission is merely a preliminary
venue. The Commission is not the end in itself. Whatever recommendation it
makes cannot in any way bind the State immediately, such recommendation
not having become final and executory. This is precisely the essence of it
being a fact-finding body.
Secondly, whatever acts or utterances that then President Aquino may have
done or said, the same are not tantamount to the State having waived its
immunity from suit. The President's act of joining the marchers, days after
the incident, does not mean that there was an admission by the State of any
liability. In fact to borrow the words of petitioners (Caylao group), "it was an
act of solidarity by the government with the people". Moreover, petitioners
rely on President Aquino's speech promising that the government would
address the grievances of the rallyists. By this alone, it cannot be inferred
that the State has admitted any liability, much less can it be inferred that it
has consented to the suit.

Although consent to be sued may be given impliedly, still it cannot be


maintained that such consent was given considering the circumstances
obtaining in the instant case.
Thirdly, the case does not qualify as a suit against the State.
Some instances when a suit against the State is proper are: 16
(1) When the Republic is sued by name;
(2) When the suit is against an unincorporated government agency;
(3) When the suit is on its face against a government officer but the case is
such that ultimate liability will belong not to the officer but to the
government.
While the Republic in this case is sued by name, the ultimate liability does
not pertain to the government. Although the military officers and personnel,
then party defendants, were discharging their official functions when the
incident occurred, their functions ceased to be official the moment they
exceeded their authority. Based on the Commission findings, there was lack
of justification by the government forces in the use of firearms. 17 Moreover,
the members of the police and military crowd dispersal units committed a
prohibited act under B.P. Blg. 880 18 as there was unnecessary firing by
them in dispersing the marchers. 19
As early as 1954, this Court has pronounced that an officer cannot shelter
himself by the plea that he is a public agent acting under the color of his
office when his acts are wholly without authority. 20 Until recently in
1991, 21 this doctrine still found application, this Court saying that immunity
from suit cannot institutionalize irresponsibility and non-accountability nor
grant a privileged status not claimed by any other official of the Republic.
The military and police forces were deployed to ensure that the rally would
be peaceful and orderly as well as to guarantee the safety of the very
people that they are duty-bound to protect. However, the facts as found by
the trial court showed that they fired at the unruly crowd to disperse the
latter.
While it is true that nothing is better settled than the general rule that a
sovereign state and its political subdivisions cannot be sued in the courts
except when it has given its consent, it cannot be invoked by both the
military officers to release them from any liability, and by the heirs and
victims to demand indemnification from the government. The principle of
state immunity from suit does not apply, as in this case, when the relief
demanded by the suit requires no affirmative official action on the part of

the State nor the affirmative discharge of any obligation which belongs to
the State in its political capacity, even though the officers or agents who are
made defendants claim to hold or act only by virtue of a title of the state
and as its agents and servants. 22 This Court has made it quite clear that
even a "high position in the government does not confer a license to
persecute or recklessly injure another." 23
The inescapable conclusion is that the State cannot be held civilly liable for
the deaths that followed the incident. Instead, the liability should fall on the
named defendants in the lower court. In line with the ruling of this court
in Shauf vs. Court of Appeals, 24 herein public officials, having been found
to have acted beyond the scope of their authority, may be held liable for
damages.
WHEREFORE, finding no reversible error and no grave abuse of discretion
committed by respondent Judge in issuing the questioned orders, the instant
petitions are hereby DISMISSED.
SO ORDERED.
||| (Republic v. Sandoval, G.R. No. 84607, 84645, [March 19, 1993])

45. Syquia v Almeda Lopez


FIRST DIVISION
[G.R. No. L-1648. August 17, 1949.]
PEDRO SYQUIA,
GONZALO SYQUIA,
and
LEOPOLDO SYQUIA, petitioners, vs. NATIVIDAD ALMEDA LOPEZ, Judge
of Municipal Court of Manila, CONRADO V. SANCHEZ, Judge of Court
of First Instance of Manila, GEORGE F. MOORE ET AL., respondents.
Gibbs, Gibbs, Chuidian & Quasha for petitioners.
J. A. Wolfson for respondent.
SYLLABUS
1. COURTS; JURISDICTIONS; CLAIM OF TITLE AND POSSESSION OF PROPERTY
BY PRIVATE CITIZEN; AGAINST OFFICERS AND AGENTS OF THE
GOVERNMENT. A private citizen claiming title and right of possession of a
certain property may, to recover possession of said property, sue as

individuals, officers and agents of the Government who are said to be


illegally withholding the same from him, though in doing so, said officers
and agents claim that they are acting for the Government, and the courts
may entertain such a suit although the Government itself is not included as
a party-defendant.
2. ID.; ID.; ID.; IF JUDGMENT WILL INVOLVE FINANCIAL LIABILITY OF
GOVERNMENT, SUIT CANNOT PROSPER OR BE ENTERTAINED EXCEPT WITH
GOVERNMENT'S CONSENT. But where the judgment in the suit by the
private citizen against the officers and agents of the government would
result not only in the recovery of possession of property in favor of said
citizen but also in a charge against or financial liability to the Government,
then the suit should be regarded as one against the Government itself, and,
consequently, it cannot prosper or be entertained by courts except with the
consent of said government
3. ID.; ID.; SUIT BY CITIZEN AGAINST FOREIGN GOVERNMENT WITHOUT
LATTER'S CONSENT; COURTS LACK OF JURISDICTION. This is not only a
case of a citizen filing a suit against his own Government without the latter's
consent but it is of citizen filing an action against a foreign government
without said government's consent, which renders more obvious the lack of
jurisdiction of the courts of his country.
DECISION
MONTEMAYOR, J p:
For the purposes of this decision, the following facts gathered from and
based on the pleadings, may be stated. The plaintiffs named Pedro,
Gonzalo, and Leopoldo, all surnamed Syquia, are the undivided joint owners
of three apartment buildings situated in the City of Manila known as the
North Syquia Apartments, South Syquia Apartments and Michel Apartments
located at 1131 M. H. del Pilar, 1151 M. H. del Pilar and 1188 A. Mabini
Streets, respectively.
About the middle of the year 1945, said plaintiffs executed three lease
contracts, one for each of the three apartments, in favor of the United
States of America at a monthly rental of P1,775 for the
North Syquia Apartments, P1,890 for the South Syquia Apartments, and
P3,335 for the Michel Apartments. The term or period for the three leases
was to be "for the duration of the war and six months thereafter, unless
sooner terminated by the United States of America." The apartment
buildings were used for billeting and quartering officers of the U. S. armed
forces stationed in the Manila area.

In March, 1947, when these court proceedings were commenced, George F.


Moore was the Commanding General, United States Army, Philippine Ryukus
Command, Manila, and as Commanding General of the U. S. Army in the
Manila Theatre, was said to control the occupancy of the said apartment
houses and had authority in the name of the United States Government to
assign officers of the U. S. Army to said apartments or to order said officers
to vacate the same. Erland A. Tillman was the Chief, Real Estate Division,
Office of the District Engineers, U. S. Army, Manila, who, under the
command of defendant Moore was in direct charge and control of the lease
and occupancy of said three apartment buildings. Defendant Moore and
Tillman themselves did not occupy any part of the premises in question.
Under the theory that said leases terminated six months after September 2,
1945, when Japan surrendered, plaintiffs sometime in March, 1946,
approached the predecessors in office of defendants Moore and Tillman and
requested the return of the apartment buildings to them, but they were
advised that the U. S. Army wanted to continue occupying the premises. On
May 11, 1946, said plaintiffs requested the predecessors in office of Moore
and Tillman to renegotiate said leases, execute lease contracts for a period
of three years and to pay a reasonable rental higher than those payable
under the old contracts. The predecessor in office of Moore in a letter dated
June 6, 1946, refused to execute new leases but advised that "it is
contemplated that the United States Army will vacate subject properties
prior to 1 February 1947." Not being in conformity with the continuance of
the old leases because of the alleged comparatively low rentals being paid
thereunder, plaintiffs formally requested Tillman to cancel said three leases
and to release the apartment buildings on June 28, 1946. Tillman refused to
comply with the request. Because of the alleged representation and
assurance that the U. S. Government would vacate the premises before
February 1, 1947, the plaintiffs took no further steps to secure possession of
the buildings and accepted the monthly rentals tendered by the
predecessors in office of Moore and Tillman on the basis of a month to
month lease subject to cancellation upon thirty days notice. Because of the
failure to comply with the alleged representation and assurance that the
three apartment buildings will be vacated prior to February 1, 1947,
plaintiffs on February 17, 1947, served formal notice upon defendants
Moore and Tillman and 64 other army officers or members of the United
States Armed Forces who were then occupying apartments in said three
buildings, demanding (a) cancellation of said leases; (b) increase in rentals
to P300 per month per apartment effective thirty days from notice; (c)
execution of new leases for the three or any one or two of the said
apartment buildings for a definite term, otherwise, (d) release of said

apartment buildings within thirty days of said notice in the event of the
failure to comply with the foregoing demands. The thirty-day period having
expired without any of the defendants having complied with plaintiffs'
demands, the plaintiffs commenced the present action in the Municipal
Court of Manila in the form of an action for unlawful detainer (desahucio)
against Moore and Tillman and the 64 persons occupying apartments in the
three buildings for the purpose of having them vacate the apartments, each
occupant to pay P300 a month for his particular apartment from January 1,
1947 until each of said particular defendant had vacated said apartment; to
permit plaintiffs access to said apartment buildings for the purpose of
appraising the damages sustained as the result of the occupancy by
defendants; that defendants be ordered to pay plaintiffs whatever damages
may have been actually caused on said property; and that in the event said
occupants are unable to pay said P300 a month and/or the damages
sustained by said property, the defendants Moore and Tillman jointly and
severally be made to pay said monthly rentals of P300 per month per
apartment from January 1, 1947 to March 19, 1947, inclusive, and/or the
damages sustained by said apartments, and that defendants Moore and
Tillman be permanently enjoined against ordering any additional parties in
the future from entering and occupying said premises.
Acting upon a motion to dismiss filed through the Special Assistant of the
Judge Advocate, Philippine Ryukus Command on the ground that the court
had no jurisdiction over the defendants and over the subject matter of the
action, because the real party in interest was the U. S. Government and not
the individual defendants named in the complaint, and that the complaint
did not state a cause of action, the municipal court of Manila in an order
dated April 29, 1947, found that the war between the United States of
America and her allies on one side and Germany and Japan on the other,
had not yet terminated and, consequently, the period or term of the three
leases had not yet expired; that under the well settled rule of International
Law, a foreign government like the United States Government cannot be
sued in the courts of another state without its consent; that it was clear
from the allegations of the complaint that although the United States of
America has not been named therein as defendant, it is nevertheless the
real defendant in this case, as the parties named as defendants are officers
of the United States Army and were occupying the buildings in question as
such and pursuant to orders received from that Government. The municipal
court dismissed the action with costs against the plaintiffs with the
suggestion or opinion that a citizen of the Philippines, who feels aggrieved
by the acts of the Government of a foreign country has the right to demand
that the Philippine Government study his claim and if found meritorious,

take such diplomatic steps as may be necessary for the vindication of the
rights of that citizen, and that the matter included or involved in the action
should be a proper subject matter of representations between the
Government of the United States of America and the Philippines. Not being
satisfied with the order, plaintiffs appealed to the Court of First Instance of
Manila, where the motion to dismiss was renewed.
The Court of First Instance of Manila in an order dated July 12, 1947,
affirmed the order of the municipal court dismissing plaintiffs' complaint. It
conceded that under the doctrine laid down in the case of U. S. vs. Lee, 106
U. S., 196 and affirmed in the case of Tindal vs. Wesley, 167 U. S., 204,
ordinarily, courts have jurisdiction over cases where private parties sue to
recover possession of property being held by officers or agents acting in the
name of the U. S. Government even though no suit can be brought against
the Government itself, but inasmuch as the plaintiffs in the present case are
bringing this action against officers and agents of the U. S. Government not
only to recover the possession of the three apartment houses supposedly
being held illegally by them in the name of their government, but also to
collect back rents, not only at the rate agreed upon in the lease contracts
entered into by the United States of America but in excess of said rate, to
say nothing of the damages claimed, as a result of which, a judgment in
these proceedings may become a charge against the U. S. Treasury, then
under the rule laid down in the case of Land vs. Dollar, 91 Law. ed., 1209,
the present suit must be regarded as one against the United States
Government itself, which cannot be sued without its consent, specially by
citizens of another country.

The plaintiffs as petitioners have brought this case before us on a petition


for a writ of mandamus seeking to order the Municipal Court of Manila to
take jurisdiction over the case. On October 30, 1947, counsel for
respondents AlmedaLopez, Sanchez, Moore and Tillman filed a motion to
dismiss on several grounds. The case was orally argued on November 26,
1947. On March 4, 1948, petitioners filed a petition which, among other
things, informed this Court that the NorthSyquia Apartments, the
South Syquia Apartments and Michel Apartments would be vacated by their
occupants on February 29, March 31, and May 31, 1948, respectively. As a
matter of fact, said apartments were actually vacated on the dates already
mentioned and were received by the plaintiffs-owners.
On the basis of this petition and because of the return of the three
apartment houses to the owners, counsel for respondents Almeda Lopez,

Sanchez, Moore and Tillman filed a petition to dismiss the present case on
the ground that it is moot. Counsel for the petitioners answering the motion,
claimed that the plaintiffs and petitioners accepted possession of the three
apartment houses, reserving all of their rights against respondents including
the right to collect rents and damages; that they have not been paid rents
since January 1, 1947; that respondents admitted that there is a total of
P109,895 in rentals due and owing to petitioners; that should this case be
now dismissed, the petitioners will be unable to enforce collection; that the
question of law involved in this case may again come up before the courts
when conflicts arise between Filipino civilian property owners and the U. S.
Army authorities concerning contracts entered into in the Philippines
between said Filipinos and the U. S. Government. Consequently, this Court,
according to the petitioners, far from dismissing the case, should decide it,
particularly the question of jurisdiction.
On June 18, 1949, through a "petition to amend complaint" counsel for the
petitioners informed this court that petitioners had already received from
the U. S. Army Forces in the Western Pacific the sum of P109,895 as rentals
for the three apartments, but with the reservation that said acceptance
should not be construed as jeopardizing the rights of the petitioners in the
case now pending in the courts of the Philippines or their rights against the
U. S. Government with respect to the three apartment houses. In view of
this last petition, counsel for respondents alleging that both respondents
Moore and Tillman had long left the Islands for other Army assignments, and
now that both the possession of the three apartments in question as well as
the rentals for their occupation have already been received by the
petitioners renew their motion for dismissal on the ground that this case has
now become moot.
The main purpose of the original action in the municipal court was to
recover the possession of the three apartment houses in question. The
recovery of rentals as submitted by the very counsel for the petitioners was
merely incidental to the main action. Because the prime purpose of the
action had been achieved, namely, the recovery of the possession of the
premises, apart from the fact that the rentals amounting to P109,895 had
been paid to the petitioners and accepted by them though under
reservations, this Court may now well dismiss the present proceedings on
the ground that the questions involved therein have become academic and
moot. Counsel for the petitioners however, insists that a decision be
rendered on the merits, particularly on the question of jurisdiction of the
municipal court over the original action, not only for the satisfaction of the
parties involved but also to serve as a guide in future cases involving cases

of similar nature such as contracts of lease entered into between the


Government of the United States of America on one side and Filipino citizens
on the other regarding properties of the latter. We accept the suggestion of
petitioners and shall proceed to discuss the facts and law involved and rule
upon them.
We shall concede as correctly did the Court of First Instance, that following
the doctrine laid down in the cases of U. S. vs. Lee and U.
S. vs. Tindal, supra, a private citizen claiming title and right of possession of
a certain property may, to recover possession of said property, sue as
individuals, officers and agents of the Government who are said to be
illegally withholding the same from him, though in doing so, said officers
and agents claim that they are acting for the Government, and the courts
may entertain such a suit altho the Government itself is not included as a
party-defendant. Of course, the Government is not bound or concluded by
the decision. The philosophy of this ruling is that unless the courts are
permitted to take cognizance and to assume jurisdiction over such a case, a
private citizen would be helpless and without redress and protection of his
rights which may have been invaded by the officers of the government
professing to act in its name. In such a case the officials or agents asserting
rightful possession must prove and justify their claim before the courts,
when it is made to appear in the suit against them that the title and right of
possession is in the private citizen. However, and this is important, where
the judgment in such a case would result not only in the recovery of
possession of the property in favor of said citizen but also in a charge
against or financial liability to the Government, then the suit should be
regarded as one against the government itself, and, consequently, it cannot
prosper or be validly entertained by the courts except with the consent of
said Government. (See case of Land vs. Dollar, 91 Law. ed., 1209.)
From a careful study of this case, considering the facts involved therein as
well as those of public knowledge of which we take judicial cognizance, we
are convinced that the real party in interest as defendant in the original
case is the United States of America. The lessee in each of the three lease
agreements was the United States of America and the lease agreements
themselves were executed in her name by her officials acting as her agents.
The consideration or rentals was always paid by the U. S. Government. The
original action in the municipal court was brought on the basis of these
three lease contracts and it is obvious in the opinion of this court that any
back rentals or increased rentals will have to be paid by the U. S.
Government not only because, as already stated, the contracts of lease
were entered into by such Government but also because the premises were

used by officers of her armed forces during the war and immediately after
the termination of hostilities.
We cannot see how the defendants and respondents Moore and Tillman
could be held individually responsible for the payment of rentals or
damages in relation to the occupancy of the apartment houses in question.
Both of these army officials had no intervention whatsoever in the execution
of the lease agreements nor in the initial occupancy of the premises both of
which were effected thru the intervention of and at the instance of their
predecessors in office. The original request made by the petitioners for the
return of the apartment buildings after the supposed termination of the
leases, was made to, and denied not by Moore and Tillman but by their
predecessors in office. The notice and decision that the U. S. Army wanted
and in fact continued to occupy the premises was made not by Moore and
Tillman but by their predecessors in office. The refusal to renegotiate the
leases as requested by the petitioners was made not by Moore but by his
predecessors in office according to the very complaint filed in the municipal
court. The assurance that the U. S. Army will vacate the premises prior to
February 29, 1947, was also made by the predecessors in office of Moore.
As to the defendant Tillman, according to the complaint he was Chief, Real
Estate Division, Office of the District Engineer, U.S. Army, and was in direct
charge and control of the leases and occupancy of the apartment buildings,
but he was under the command of defendant Moore, his superior officer. We
cannot see how said defendant Tillman in assigning new officers to occupy
apartments in the three buildings, in obedience to order or direction from
his superior, defendant Moore, could be held personally liable for the
payment of rentals or increase thereof, or damages said to have been
suffered by the plaintiffs.
With respect to defendant General Moore, when he assumed his command
in Manila, these lease agreements had already been negotiated and
executed and were in actual operation. The three apartment buildings were
occupied by army officers assigned thereto by his predecessors in office. All
that he must have done was to assign or billet incoming army officers to
apartments as they were vacated by outgoing officers due to changes in
station. He found these apartment buildings occupied by his government
and devoted to the use and occupancy of army officers stationed in Manila
under his command, and he had reason to believe that he could continue
holding and using the premises theretofore assigned for that purpose and
under contracts previously entered into by his government, as long as and
until orders to the contrary were received by him. It is even to be presumed
that when demand was made by the plaintiffs for the payment of increased

rentals or for vacating the three apartment buildings, defendant Moore, not
a lawyer by profession but a soldier, must have consulted and sought the
advise of his legal department, and that his action in declining to pay the
increased rentals or to eject all his army officers from the three buildings
must have been in pursuance to the advice and counsel of his legal division.
At least, he was not in a position to pay increased rentals above those set
and stipulated in the lease agreements, without the approval of his
government, unless he personally assumed financial responsibility therefor.
Under these circumstances, neither do we believe nor find that defendant
Moore can be held personally liable for the payment of back or increased
rentals and alleged damages.

As to the army officers who actually occupied the apartments involved,


there is less reason for holding them personally liable for rentals and
supposed damages as sought by the plaintiffs. It must be remembered that
these army officers when coming to their station in Manila were not given
the choice of their dwellings. They were merely assigned quarters in the
apartment buildings in question. Said assignments or billets may well be
regarded as orders, and all that those officers did was to obey them, and,
accordingly, occupied the rooms assigned to them. Under such
circumstances, can it be supposed or conceived that such army officers
would first inquire whether the rental being paid by their government for the
rooms or apartments assigned to them by order of their superior officer was
fair and reasonable or not, and whether the period of lease between their
government and the owners of the premises had expired, and whether their
occupancy of their rooms or apartments was legal or illegal? And if they
dismissed these seemingly idle speculations, assuming that they ever
entered their minds, and continued to live in their apartments unless and
until orders to the contrary were received by them, could they later be held
personally liable for any back rentals which their government may have
failed to pay to the owners of the buildings, or for any damages to the
premises incident to all leases of property, specially in the absence of proof
that such damages to property had been caused by them and not by the
previous occupants, also army officers who are not now parties defendant to
this suit? Incidentally it may be stated that both defendants Moore and
Tillman have long left these Islands to assume other commands or
assignments and in all probability none of their 64 co-defendants is still
within this jurisdiction.
On the basis of the foregoing considerations we are of the belief and we
hold that the real party defendant in interest is the Government of the

United States of America; that any judgment for back or increased rentals or
damages will have to be paid not by defendants Moore and Tillman and
their 64 co-defendants but by the said U.S. Government. On the basis of the
ruling in the case of Land vs. Dollar already cited, and on what we have
already stated, the present action must be considered as one against the
U.S. Government. It is clear that the courts of the Philippines including the
Municipal Court of Manila have no jurisdiction over the present case for
unlawful detainer. The question of lack of jurisdiction was raised and
interposed at the very beginning of the action. The U.S. Government has
not given its consent to the filing of this suit which is essentially against her,
though not in name. Moreover, this is not only a case of a citizen filing a suit
against his own Government without the latter's consent but it is of citizen
filing an action against a foreign government without said government's
consent, which renders more obvious the lack of jurisdiction of the courts of
his country. The principles of law behind this rule are so elementary and of
such general acceptance that we deem it unnecessary to cite authorities in
support thereof.
In conclusion we find that the Municipal Court of Manila committed no error
in dismissing the case for lack of jurisdiction and that the Court of First
Instance acted correctly in affirming the municipal court's order of dismissal.
Case dismissed, without pronouncements as to costs.
Moran, C.J., Paras, Feria, Bengzon, Tuason and Reyes, JJ., concur.
||| (Syquia v. Lopez, G.R. No. L-1648, [August 17, 1949], 84 PHIL 312-326)

46. SANDERS V VERIDIANO


FIRST DIVISION
[G.R. No. L-46930. June 10, 1988.]
DALE SANDERS, and A.S. MOREAU, JR., petitioners, vs. HON. REGINO T.
VERIDIANO II, as Presiding Judge, Branch I, Court of First Instance of
Zambales, Olongapo City, ANTHONY M. ROSSI and RALPH L.
WYERS,respondents.
DECISION

CRUZ, J p:
The basic issue to be resolved in this case is whether or not the petitioners
were performing their official duties when they did the acts for which they
have been sued for damages by the private respondents. Once this question
is decided, the other answers will fall into place and this petition need not
detain us any longer than it already has.
Petitioner Sanders was, at the time the incident in question occurred, the
special services director of the U.S. Naval Station (NAVSTA) in Olongapo City.
1 Petitioner Moreau was the commanding officer of the Subic Naval Base,
which includes the said station. 2 Private respondent Rossi is an American
citizen with permanent residence in the Philippines, 3 as so was private
respondent Wyer, who died two years ago. 4 They were both employed as
gameroom attendants in the special services department of the NAVSTA,
the former having been hired in 1971 and the latter in 1969. 5
On October 3, 1975, the private respondents were advised that their
employment had been converted from permanent full-time to permanent
part-time, effective October 18, 1975. 6 Their reaction was to protest this
conversion and to institute grievance proceedings conformably to the
pertinent rules and regulations of the U.S. Department of Defense. The
result was a recommendation from the hearing officer who conducted the
proceedings for the reinstatement of the private respondents to permanent
full-time status plus backwages. The report on the hearing contained the
observation that "Special Services management practices an autocratic
form of supervision." 7
In a letter addressed to petitioner Moreau on May 17, 1976 (Annex "A" of
the complaint), Sanders disagreed with the hearing officer's report and
asked for the rejection of the abovestated recommendation. The letter
contained the statements that: a) "Mr. Rossi tends to alienate most coworkers and supervisors;" b) "Messrs. Rossi and Wyers have proven,
according to their immediate supervisors, to be difficult employees to
supervise;" and c) "even though the grievants were under oath not to
discuss the case with anyone, (they) placed the records in public places
where others not involved in the case could hear."
On November 7, 1975, before the start of the grievance hearings, a letter
(Annex "B" of the complaint) purportedly coming from petitioner Moreau as
the commanding general of the U.S. Naval Station in Subic Bay was sent to
the Chief of Naval Personnel explaining the change of the private
respondent's employment status and requesting concurrence therewith. The

letter did not carry his signature but was signed by W.B. Moore, Jr. "by
direction," presumably of Moreau.
On the basis of these antecedent facts, the private respondent filed in the
Court of First Instance of Olongapo City a complaint for damages against the
herein petitioners on November 8, 1976. 8 The plaintiffs claimed that the
letters contained libelous imputations that had exposed them to ridicule and
caused them mental anguish and that the prejudgment of the grievance
proceedings was an invasion of their personal and proprietary rights.
The private respondents made it clear that the petitioners were being sued
in their private or personal capacity. However, in a motion to dismiss filed
under a special appearance, the petitioners argued that the acts
complained of were performed by them in the discharge of their official
duties and that, consequently, the court had no jurisdiction over them under
the doctrine of state immunity.
After extensive written arguments between the parties, the motion was
denied in an order dated March 8, 1977, 9 on the main ground that the
petitioners had not presented any evidence that their acts were official in
nature and not personal torts, moreover, the allegation in the complaint was
that the defendants had acted maliciously and in bad faith. The same order
issued a writ of preliminary attachment, conditioned upon the filing of a
P10,000.00 bond by the plaintiffs, against the properties of petitioner
Moreau, who allegedly was then about to leave the Philippines.
Subsequently, to make matters worse for the defendants, petitioner Moreau
was declared in default by the trial court in its order dated August 9, 1977.
The motion to lift the default order on the ground that Moreau's failure to
appear at the pre-trial conference was the result of some misunderstanding,
and the motion for reconsideration of the denial of the motion to dismiss,
which was filed by the petitioner's new lawyers, were denied by the
respondent court on September 7, 1977.
This petition for certiorari, prohibition and preliminary injunction was
thereafter filed before this Court, on the contention that the above-narrated
acts of the respondent court are tainted with grave abuse of discretion
amounting to lack of jurisdiction.
We return now to the basic question of whether the petitioners were acting
officially or only in their private capacities when they did the acts for which
the private respondents have sued them for damages.
It is stressed at the outset that the mere allegation that a government
functionary is being sued in his personal capacity will not automatically

remove him from the protection of the law of public officers and, if
appropriate, the doctrine of state immunity. By the same token, the mere
invocation of official character will not suffice to insulate him from suability
and liability for an act imputed to him as a personal tort committed without
or in excess of his authority. These well-settled principles are applicable not
only to the officers of the local state but also where the person sued in its
courts pertains to the government of a foreign state, as in the present case.
The respondent judge, apparently finding that the complained acts were
prima facie personal and tortious, decided to proceed to trial to determine
inter alia their precise character on the strength of the evidence to be
submitted by the parties. The petitioners have objected, arguing that no
such evidence was needed to substantiate their claim of jurisdictional
immunity. Pending resolution of this question, we issued a temporary
restraining order on September 26, 1977, that has since then suspended the
proceedings in this case in the court a quo. LLjur
In past cases, this Court has held that where the character of the act
complained of can be determined from the pleadings exchanged between
the parties before the trial, it is not necessary for the court to require them
to belabor the point at a trial still to be conducted. Such a proceeding would
be superfluous, not to say unfair to the defendant who is subjected to
unnecessary and avoidable inconvenience.
Thus, in Baer v. Tizon, 10 we held that a motion to dismiss a complaint
against the commanding general of the Olongapo Naval Base should not
have been denied because it had been sufficiently shown that the act for
which he was being sued was done in his official capacity on behalf of the
American government. The United States had not given its consent to be
sued. It was the reverse situation in Syquia v. Almeda Lopez, 11 where we
sustained the order of the lower court granting a motion to dismiss a
complaint against certain officers of the U.S. armed forces also shown to be
acting officially in the name of the American government. The United States
had also not waived its immunity from suit. Only three years ago, in United
States of America v. Ruiz, 12 we set aside the denial by the lower court of a
motion to dismiss a complaint for damages filed against the United States
and several of its officials, it appearing that the act complained of was
governmental rather than proprietary, and certainly not personal. In these
and several other cases, 13 the Court found it redundant to prolong the
proceedings after it had become clear that the suit could not prosper
because the acts complained of were covered by the doctrine of state
immunity.

It is abundantly clear in the present case that the acts for which the
petitioners are being called to account were performed by them in the
discharge of their official duties. Sanders, as director of the special services
department of NAVSTA, undoubtedly had supervision over its personnel,
including the private respondents, and had a hand in their employment,
work assignments, discipline, dismissal and other related matters. It is not
disputed that the letter he had written was in fact a reply to a request from
his superior, the other petitioner, for more information regarding the case of
the private respondents. 14 Moreover, even in the absence of such request,
he still was within his rights in reacting to the hearing officer's criticism in
effect a direct attack against him that Special Services was practicing "an
autocratic form of supervision."
As for Moreau, what he is claimed to have done was write the Chief of Naval
Personnel for concurrence with the conversion of the private respondents'
type of employment even before the grievance proceedings had even
commenced. Disregarding for the nonce the question of its timeliness, this
act is clearly official in nature, performed by Moreau as the immediate
superior of Sanders and directly answerable to Naval Personnel in matters
involving the special services department of NAVSTA. In fact, the letter dealt
with the financial and budgetary problems of the department and contained
recommendations for their solution, including the re-designation of the
private respondents. There was nothing personal or private about it.
Given the official character of the above-described letters, we have to
conclude that the petitioners were, legally speaking, being sued as officers
of the United States government. As they have acted on behalf of that
government, and within the scope of their authority, it is that government,
and not the petitioners personally, that is responsible for their acts.
Assuming that the trial can proceed and it is proved that the claimants have
a right to the payment of damages, such award will have to be satisfied not
by the petitioners in their personal capacities but by the United States
government as their principal. This will require that government to perform
an affirmative act to satisfy the judgment, viz., the appropriation of the
necessary amount to cover the damages awarded, thus making the action a
suit against that government without its consent. cdrep
There should be no question by now that such complaint cannot prosper
unless the government sought to be held ultimately liable has given its
consent to be sued. So we have ruled not only in Baer but in many other
decisions where we upheld the doctrine of state immumity as applicable not

only to our own government but also to foreign states sought to be


subjected to the jurisdiction of our courts. 15
The practical justification for the doctrine, as Holmes put it, is that "there
can be no legal right against the authority which makes the law on which
the right depends." 16 In the case of foreign states, the rule is derived from
the principle of the sovereign equality of states which wisely admonishes
that par in parem non habet imperium and that a contrary attitude would
"unduly vex the peace of nations." 17 Our adherence to this precept is
formally expressed in Article II, Section 2, of our Constitution, where we
reiterate from our previous charters that the Philippines "adopts the
generally accepted principles of international law as part of the law of the
land."
All this is not to say that in no case may a public officer be sued as such
without the previous consent of the state. To be sure, there are a number of
well-recognized exceptions. It is clear that a public officer may be sued as
such to compel him to do an act required by law, as where, say, a register of
deeds refuses to record a deed of sale; 18 or to restrain a Cabinet member,
for example, from enforcing a law claimed to be unconstitutional; 19 or to
compel the national treasurer to pay damages from an already appropriated
assurance fund; 20 or the commissioner of internal revenue to refund tax
overpayments from a fund already available for the purpose; 21 or, in
general, to secure a judgment that the officer impleaded may satisfy by
himself without the government itself having to do a positive act to assist
him. We have also held that where the government itself has violated its
own laws, the aggrieved party may directly implead the government even
without first filing his claim with the Commission on Audit as normally
required, as the doctrine of state immunity "cannot be used as an
instrument for perpetrating an injustice." 22
This case must also be distinguished from such decisions as Festejo v.
Fernando, 23 where the Court held that a bureau director could be sued for
damages on a personal tort committed by him when he acted without or in
excess of authority in forcibly taking private property without paying just
compensation therefor although he did convert it into a public irrigation
canal. It was not necessary to secure the previous consent of the state, nor
could it be validly impleaded as a party defendant, as it was not responsible
for the defendant's unauthorized act.
The case at bar, to repeat, comes under the rule and not under any of the
recognized exceptions. The government of the United States has not given
its consent to be sued for the official acts of the petitioners, who cannot

satisfy any judgment that may be rendered against them. As it is the


American government itself that will have to perform the affirmative act of
appropriating the amount that may be adjudged for the private
respondents, the complaint must be dismissed for lack of jurisdiction.
The Court finds that, even under the law of public officers, the acts of the
petitioners are protected by the presumption of good faith, which has not
been overturned by the private respondents. Even mistakes concededly
committed by such public officers are not actionable as long as it is not
shown that they were motivated by malice or gross negligence amounting
to bad faith. 24 This, too, is well-settled. 25 Furthermore, applying now our
own penal laws, the letters come under the concept of privileged
communications and are not punishable, 26 let alone the fact that the
resented remarks are not defamatory by our standards. It seems the private
respondents have overstated their case.
A final consideration is that since the questioned acts were done in the
Olongapo Naval Base by the petitioners in the performance of their official
duties and the private respondents are themselves American citizens, it
would seem only proper for the courts of this country to refrain from taking
cognizance of this matter and to treat it as coming under the internal
administration of the said base.
The petitioners' counsel have submitted a memorandum replete with
citations of American cases, as if they were arguing before a court of the
United States. The Court is bemused by such attitude. While these decisions
do have persuasive effect upon us, they can at best be invoked only to
support our own jurisprudence, which we have developed and enriched on
the basis of our own persuasions as a people, particularly since we became
independent in 1946. LLjur
We appreciate the assistance foreign decisions offer us, and not only from
the United States but also from Spain and other countries from which we
have derived some if not most of our own laws. But we should not place
undue and fawning reliance upon them and regard them as indispensable
mental crutches without which we cannot come to our own decisions
through the employment of our own endowments. We live in a different
ambience and must decide our own problems in the light of our own
interests and needs, and of our qualities and even idiosyncrasies as a
people, and always with our own concept of law and justice.
The private respondents must, if they are still so minded, pursue their claim
against the petitioners in accordance with the laws of the United States, of

which they are all citizens and under whose jurisdiction the alleged offenses
were committed. Even assuming that our own laws are applicable, the
United States government has not decided to give its consent to be sued in
our courts, which therefore has not acquired the competence to act on the
said claim.
WHEREFORE, the petition is GRANTED. The challenged orders dated March
8, 1977, August 9, 1977, and September 7, 1977, are SET ASIDE. The
respondent court is directed to DISMISS Civil Case No. 2077-O. Our
Temporary restraining order of September 26, 1977, is made PERMANENT.
No costs.
SO ORDERED||| (Sanders v. Veridiano II, G.R. No. L-46930, [June 10, 1988],
245 PHIL 63-76)

47. TAN V DIRECTOR OF FORESTRY


[G.R. No. L-24548. October 27, 1983.]
WENCESLAO VINZONS TAN, petitioner-appellant, vs. THE DIRECTOR OF
FORESTRY, APOLONIO RIVERA, THE SECRETARY OF AGRICULTURE AND
NATURAL RESOURCES JOSE Y. FELICIANO, respondents-appellees,RAVAGO
COMMERCIAL CO., JORGE LAO HAPPICK and ATANACIO MALLARI, intervenors.
Camito V. Pefianco, Jr. for petitioner-appellant.
Solicitor General for respondent Director.

Estelito P. Mendoza for respondent Ravago Comm'l Co.


Anacleto Badoy for respondent Atanacio Mallari.
Mariano de Joya, Jr. for respondent Jorge Lao Happick, Jr.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; MOTION TO DISMISS; WHEN TRIAL
COURT CAN PROPERLY DISMISS A COMPLAINT THEREON DUE TO LACK OF
CAUSE OF ACTION EVEN WITHOUT A HEARING. In Llanto vs. Ali Dimaporo,
et al. (16 SCRA 601, March 31, 1966), this Court, thru Justice Conrado V.
Sanchez, held that the trial court can properly dismiss a complaint on a
motion to dismiss due to lack of cause of action even without a hearing, by
taking into consideration the discussion in said motion and the opposition
thereto.
2. ID.; ID.; APPEAL; ISSUES NOT RAISED IN THE TRIAL COURT CANNOT BE
RAISED FOR THE FIRST TIME ON APPEAL. Petitioner appellant did not
interpose any objection thereto, nor presented new arguments in his motion
for reconsideration. This omission means conformity to said observation,
and a waiver of his right to object, estopping him from raising this question
for the first tune on appeal. "Issues not raised in the trial court cannot be
raised for the first time on appeal" (Matienzo vs. Servidad, Sept. 10, 1981,
107 SCRA 276).
3. ID.; RULES OF PROCEDURE; NOT TO BE APPLIED IN A VERY RIGID,
TECHNICAL SENSE. Petitioner-appellant cannot invoke the rule that, when
the ground for asking dismissal is that the complaint states no cause of
action, its sufficiency must be determined only from the allegations in the
complaint. "The rules of procedure are not to be applied in a very rigid,
technical sense; rules of procedure are used only to help secure substantial
justice. If a technical and rigid enforcement of the rules is made, their aim
would be defeated. Where the rules are merely secondary in importance are
made to override the ends of justice; the technical rules had been
misapplied to the prejudice of the substantial right of a party, said rigid
application cannot be countenanced."
4. ADMINISTRATIVE LAW; EXHAUSTION OF ADMINISTRATIVE REMEDIES;
FAILURE TO APPEAL ORDER OF SECRETARY OFAGRICULTURE AND NATURAL
RESOURCES TO THE PRESIDENT OF THE PHILIPPINES, A FAILURE TO
EXHAUST ADMINISTRATIVE REMEDIES. Petitioner-appellant did not appeal
the order of the respondent Secretary of Agriculture and Natural Resources
to the President of the Philippines, who issued Executive Proclamation No.

238 withdrawing the area from private exploitation, and establishing it as


the Olongapo Watershed Forest Reserve. Considering that the President has
the power to review on appeal the orders or acts of the respondentsappellees, the failure of the petitioner-appellant to take that appeal is failure
on his part to exhaust his administrative remedies.
5. REMEDIAL LAW; SPECIAL CIVIL ACTION; CERTIORARI; NOT A SUBSTITUTE
FOR APPEAL. This being a special civil action, petitioner-appellant must
allege and prove that he has no other speedy and adequate remedy (Diego
vs. The Court ofAppeals, et al., 54 Off. Gaz., No. 4, 956). In the case at bar,
petitioner-appellant's speedy and adequate remedy is an appeal to the
President of the Philippines. Certiorari is not a substitute for appeal as held
time and again by this Court (People vs. Villanueva, 110 SCRA 463), "it
being a time honored and well known principle that before seeking judicial
redress, a party must first exhaust the administrative remedies available''
(Garcia vs. Teehankee, 27 SCRA 944, April 18, 1969).
6. POLITICAL LAW; STATE; IMMUNITY FROM SUIT; WHEN STATE'S IMMUNITY
MAY BE VALIDLY INVOKED. "The rule establishing State exemption from
suits may not be circumvented by directing the action against the officers of
the State instead of against the State itself. In such cases the State's
immunity may be validly invoked against the action as long as it can be
shown that the suit really affects the property, rights, or interests of the
State and not merely those of the officer nominally made party defendant"
(SINCO, Phil. Politicial Law, 10th ed., p. 35; Salgado vs. Ramos, 64 Phil. 724
and other cases cited).
7. MUNICIPAL CORPORATIONS; TIMBER LICENSE; CON- STRUED. A timber
license is an instrument by which the State regulates the utilization and
disposition of forest resources to the end that public welfare is promoted. A
timber license is not a contract within the purview of the due process
clause; it is only a license or privilege, which can be validly withdrawn
whenever dictated by public interest or public welfare as in this case.
8. ID.; LICENSE; GRANT THEREOF DOES NOT CREATE IRREVOCABLE RIGHT,
NEITHER IS IT PROPERTY OR A PROPERTY RIGHT. "A license is merely a
permit or privilege to do what otherwise would be unlawful, and is not a
contract between the authority, federal, state, or municipal, granting it and
the person to whom it is granted; neither is it property or a property right
nor, does it create a vested right; nor is it taxation" (37 C.J., 168). Thus, this
Court held that the granting of license does not create irrevocable rights,
neither is it property or property rights (People vs. Ong Tin, 54 O.G. 7576).

9. POLITICAL LAW; POLICE POWER; PROPER EXERCISE THEREOF CANNOT BE


DEFEATED BY ANY FRANCHISE OR RIGHT. The welfare of the people is the
supreme law. Thus, no franchise or right can be availed of to defeat the
proper exercise ofpolice power (Surigao Electric Co., Inc. vs. Municipality of
Surigao, 24 SCRA 898, Aug. 30, 1968). The State has inherent power
enabling it to prohibit all things hurtful to comfort, safety, and welfare of
society (Edu vs. Ericta, 35 SCRA 481, Oct. 24, 1970).
10. ID.; EXECUTIVE DEPARTMENT; POWER OF CONTROL; SECRETARY OF
AGRICULTURE AND NATURAL RESOURCES HAS AUTHORITY TO REVOKE, ON
VALID GROUNDS, TIMBER LICENSES ISSUED BY DIRECTOR OF FORESTRY.
The utilization and disposition of forest resources is directly under the
control and supervision of the Director of Forestry. However, "while Section
1831 of the Revised Administrative Code provides that forest products shall
be cut, gathered and removed from any forest only upon license from the
Director of Forestry, it is no less true that as a subordinate officer, the
Director of Forestry is subject to the control of the Department Head or the
Secretary of Agriculture and Natural Resources (Sec, 79 [c], Rev. Adm.
Code), who, therefore, may impose reasonable regulations in the exercise of
the powers of the subordinate officer" (Directorof Forestry vs. Benedicto,
104 SCRA 309, May 3, 1981). The power of control of the Department Head
over bureaus and offices includes the power to modify, reverse or set aside
acts of subordinate officials (Province of Pangasinan vs. Secretary ofPublic
Works and Communications, 30 SCRA 134, Oct. 31, 1969; Montano vs.
Silvosa, 97 Phil. 143, 144, 147-148). Accordingly, respondent-appellant
Secretary of Agriculture and Natural Resources has the authority to revoke,
on valid grounds, timber licenses issued by the Director of Forestry. There
being supporting evidence, the revocation of petitioner-appellant's timber
license was a wise exercise of the power of the respondent-appellee
(Secretary of Agriculture and Natural Resources) and therefore, valid.
DECISION
MAKASIAR, J p:
This is an appeal from the order dated January 20, 1965 of the then Court of
First Instance of Manila, Branch VII, in Civil Case No. 56813, a petition for
certiorari, prohibition and mandamus with preliminary prohibitory injunction
(p. 2, rec.), which dismissed the petition of petitioner-appellant Wenceslao
Vinzons Tan on the ground that it does not state a sufficient causeof action,
and upon the respondents-appellees' (Secretary of Agriculture and Natural
Resources and the Director of Forestry) motion to dismiss (p. 28, rec.).

Sometime in April 1961, the Bureau of Forestry issued Notice No. 2087,
advertising for public bidding a certain tract of public forest land situated in
Olongapo, Zambales, provided tenders were received on or before May 22,
1961 (p. 15, CFI rec.). This public forest land, consisting of 6,420 hectares, is
located within the former U.S. Naval Reservation comprising 7,252
hectaresof timberland, which was turned over by the United States
Government to the Philippine Government (p. 99, CFI rec.).
On May 5, 1961, petitioner-appellant Wenceslao Vinzons Tan submitted his
application in due form after paying the necessary fees and posting the
required bond therefor. Nine other applicants submitted their offers before
the deadline (p. 29, rec.).
Thereafter, questions arose as to the wisdom of having the area declared as
a forest reserve or allow the same to be awarded to the most qualified
bidder. On June 7, 1961, then President Carlos P. Garcia issued a directive to
the Director ofthe Bureau of Forestry, which read as follows:
"It is desired that the area formerly covered by the Naval Reservation be
made a forest reserve for watershed purposes. Prepare and submit
immediately a draft of a proclamation establishing the said area as a
watershed forest reserve for Olongapo, Zambales. It is also desired that the
bids received by the Bureau of Forestry for the issuance of the timber
license in the area during the public bidding conducted last May 22, 1961 be
rejected in order that the area may be reserved as above stated . . .
(SGD.) CARLOS P. GARCIA"
(p. 98, CFI rec.)
On August 3, 1961, Secretary Cesar M. Fortich of Agriculture and Natural
Resources sustained the findings and recommendations of the Director of
Forestry who concluded that "it would be beneficial to the public interest if
the area is made available for exploitation under certain conditions," and
We quote:
"Respectfully forwarded to the Honorable, the Executive Secretary,
Malacaang, Manila, inviting particular attention to the comment and
recommendation of the Director of Forestry in the preceding indorsement in
which this Office fully concurs.
"The observations of responsible forest officials are most revealing of their
zeal to promote forest conservation and watershed protection especially in

Olongapo, Zambales area. In convincing fashion, they have demonstrated


that to declare the forest area involved as a forest reserve rather than open
it for timber exploitation under license and regulation would do more harm
than good to the public interest. To convert the area into a forest reserve
without an adequate forest protection force, would make of it a 'Free Zone
and Logging Paradise,' to the ever 'Problem Loggers' ofDinalupihan, Bataan .
. . an open target of timber smugglers, kaingineros and other forms of forest
vandals and despoilers. On the other hand, to award the area, as planned,
to a reputable and responsible licensee who shall conduct logging
operations therein under the selective logging method and who shall be
obliged to employ a sufficient number offorest guards to patrol and protect
the forest conservation and watershed protection.
"Worthy of mention is the fact that the Bureau of Forestry had already
conducted a public bidding to determine the most qualified bidder to whom
the area advertised should be awarded. Needless to stress, the decision of
the Director ofForestry to dispose of the area thusly, was arrived at after
much thought and deliberation and after having been convinced that to do
so would not adversely affect the watershed in that sector. The result of the
bidding only have to be announced. To be sure, some of the participating
bidders like Mr. Edgardo Pascual, went to much expense in the hope
ofwinning a virgin forest concession. To suddenly make a turn about of this
decision without strong justifiable grounds, would cause the Bureau of
Forestry and this Office no end of embarrassment.
"In view of the foregoing, it is earnestly urged that the Director of Forestry
be allowed to proceed with the announcementof the results of the bidding
for the subject forest area" (p. 13, CFI rec.)
The Office of the President in its 4th Indorsement dated February 2, 1962,
signed by Atty. Juan Cancio, Acting Legal Officer, "respectfully returned to
the Honorable Secretary of the Department of Agriculture and Natural
Resources for appropriate action," the papers subject of Forestry Notice No.
2087 which was referred to the Bureau of Forestry for decision (p. 14, CFI
rec.)
Finally, of the ten persons who submitted proposals, the area was awarded
to herein petitioner-appellant Wenceslao VinzonsTan, on April 15, 1963 by
the Bureau of Forestry (p. 17, CFI rec.). Against this award, bidders Ravago
Commercial Company and Jorge Lao Happick filed motions for
reconsideration which were denied by the Director of Forestry on December
6, 1963.

On May 30, 1963, the Secretary of Agriculture and Natural Resources


Benjamin M. Gozon who succeeded Secretary Cesar M. Fortich in office
issued General Memorandum Order No. 46, series of 1963, pertinent
portions of which state:
xxx xxx xxx
"SUBJECT: . . .
(D)elegation of authority to the Director of Forestry to grant ordinary timber
licenses.
"1. . . .
"2. The Director of Forestry is hereby authorized to grant (a) new ordinary
timber licenses where the area covered thereby is not more than 3,000
hectares each; and (b) the extension of ordinary timber licenses for areas
not exceeding 5,000 hectares each;
"3. This Order shall take effect immediately" (p. 267, CFI rec.)
Thereafter, Jose Y. Feliciano was appointed as Acting Secretary of Agriculture
and Natural Resources, replacing Secretary Benjamin M. Gozon. Upon
assumption of office, he immediately promulgated on December 19, 1963
General Memorandum Order No. 60, revoking the authority delegated to the
Director of Forestry, under General Memorandum Order No. 46, to grant
ordinary timber licenses, which order took effect on the same day,
December 19, 1963. Pertinent portions of the said Order read as follows:
xxx xxx xxx
"SUBJECT: Revocation of General Memorandum Order No. 46 dated May 30,
1963
"1. In order to acquaint the undersigned with the volume and nature of the
work of the Department, the authority delegated to the Director of Forestry
under General Memorandum Order No. 46, dated May 30, 1963, to grant (a)
new ordinary timber licenses where the area covered thereby is not more
than 3,000 hectares each; and (b) the extension ofordinary timber licenses
for areas not exceeding 5,000 hectares each is hereby revoked. Until further
notice, the issuanceof new licenses and renewals of licenses, including
amendments thereto, shall be signed by the Secretary of Agriculture and
Natural Resources.

"2. This Order shall take effect immediately and all other previous orders,
directives, circulars, memoranda, rules and regulations inconsistent with
this Order are hereby revoked" (p. 268, CFI rec.; italics supplied).
On the same date that the above-quoted memorandum took effect,
December 19, 1963, Ordinary Timber License No. 20-'64 (NEW) dated April
22, 1963, in the name of Wenceslao Vinzons Tan, was signed by then Acting
Director of Forestry Estanislao R. Bernal without the approval of the
Secretary of Agriculture and Natural Resources. On January 6, 1964, the
license was released by the Office of the Director of Forestry (p. 30, CFI rec.;
p. 77, rec.). It was not signed by the Secretary of Agriculture and Natural
Resources as required by Order No. 60 aforequoted.
On February 12, 1964, Ravago Commercial Company wrote a letter to the
Secretary of Agriculture and Natural Resources praying that, pending
resolution of the appeal filed by Ravago Commercial Company and Jorge Lao
Happick from the order ofthe Director of Forestry denying their motion for
reconsideration, O.T.L. No. 20-'64 in the name of Wenceslao V. Tan be
cancelled or revoked on the ground that the grant thereof was irregular,
anomalous and contrary to existing forestry laws, rules and regulations.
On March 9, 1964, acting on the said representation made by Ravago
Commercial Company, the Secretary of Agriculture and Natural Resources
promulgated an order declaring Ordinary Timber License No. 20-'64 issued
in the name of Wenceslao Vinzons Tan, as having been issued by the
Director of Forestry without authority, and is therefore void ab initio. The
dispositive portion of said order reads as follows:
"WHEREFORE, premises considered, this Office is of the opinion and so holds
that O.T. License No. 20-'64 in the name ofWenceslao Vinzons Tan should be,
as hereby it is, REVOKED AND DECLARED without force and effect
whatsoever from the issuance thereof.
"The Director of Forestry is hereby directed to stop the logging operations of
Wenceslao Vinzons Tan, if there be any, in the area in question and shall see
to it that the appellee shall not introduce any further improvements thereon
pending the disposition of the appeals filed by Ravago Commercial
Company and Jorge Lao Happick in this case" (pp. 30-31, CFI rec.)
Petitioner-appellant moved for a reconsideration of the order, but the
Secretary of Agriculture and Natural Resources denied the motion in an
Order dated March 25, 1964, wherein this paragraph appears:

"In this connection, it has been observed by the Acting Director of Forestry
in his 2nd indorsement of February 12, 1964, that the area in question
composes of water basin overlooking Olongapo, including the proposed
Olongapo Watershed Reservation; and that the United States as well as the
Bureau of Forestry has earmarked this entire watershed for a watershed
pilot forest for experiment treatment concerning erosion and water
conservation and flood control in relation to wise utilization of the forest,
denudation, shifting cultivation, increase or decrease of crop harvest of
agricultural areas influenced by the watershed, etc . . ." (pp. 38-39, CFI rec.;
p. 78, rec.)
On April 11, 1964, the Secretary of Agriculture and Natural Resources,
acting on the separate appeals filed by Jorge Lao Happick and Ravago
Commercial Company, from the order of the Director of Forestry dated April
15, 1963, awarding to Wenceslao Vinzons Tan the area under Notive No.
2087, and rejecting the proposals of the other applicants covering the same
area, promulgated an order commenting that in view of the observations of
the Director of Forestry just quoted, "to grant the area in question to any of
the parties herein, would undoubtedly adversely affect public interest which
is paramount to private interests," and concluding that, "for this reason, this
Office is of the opinion and so holds, that without the necessity of discussing
the appeals of the herein appellants, the said appeals should be, as hereby
they are, dismissed and this case is considered a closed matter insofar as
this Office is concerned" (p. 78, rec.)
On April 18, 1964, on the basis of the denial of his motion for
reconsideration by the Secretary of Agriculture and Natural Resources,
petitioner-appellant filed the instant case before the court a quo (Court of
First Instance, Manila), Special Civil Action No. 56813, a petition for
certiorari, prohibition and mandamus with preliminary prohibitory injunction
(pp. 1-12, CFI rec.). Petitioner-appellant claims that the respondentsappellees "unlawfully, illegally, whimsically, capriciously and arbitrarily
acted without or in excess of their jurisdiction, and/or with grave abuse of
discretion by revoking a valid and existing timber license without just cause,
by denying petitioner-appellant of the equal protection of the laws, by
depriving him of his constitutional right to property without due process of
law, and in effect, by impairing the obligation of contracts" (p. 6, CFI rec.).
Petitioner-appellant prayed for judgment making permanent the writ of
preliminary injunction against the respondents-appellees; declaring the
orders of the Secretary of Agriculture and Natural Resources dated March 9,
March 25, and April 11, 1964, as well as all his acts and those of the Director
of Forestry implementing said orders, and all the proceedings in connection

therewith, null and void, unlawful and of no force and effect; ordering the
Director of Forestry to renew O.T.L. No. 20-'64 upon expiration, and
sentencing the respondents, jointly and severally, to pay the petitionerappellant the sum of Two Hundred Thousand Pesos (P200,000.000) by way
of pecuniary damage, One Hundred Thousand Pesos (P100,000.00) by wayof
moral and exemplary damages, and Thirty Thousand Pesos (P30,000,00) as
attorney's fees and costs. The respondents-appellees separately filed
oppositions to the issuance of the writ of preliminary injunction, Ravago
Commercial Company, Jorge Lao Happick and Atanacio Mallari, presented
petitions for intervention which were granted, and they too opposed the
writ.
The Director of Forestry in his motion to dismiss dated April 24, 1964,
alleges the following grounds: (1) that the court has no jurisdiction; (2) that
the respondents may not be sued without their consent; (3) that the
petitioner has not exhausted all available administrative remedies; (4) that
the petition does not state a cause of action; and (5) that purely
administrative and discretionary functions of administrative officials may
not be interfered with by the courts. The Secretary of Agriculture and
Natural Resources joined the motion to dismiss when in his answer of May
18, 1964, he avers the following special and affirmative defenses: (1) that
the court has no jurisdiction to entertain the action for certiorari, prohibition
and mandamus; (2) that the petitioner has no cause of action; (3) that
venue is improperly laid; (4) that the State is immune from suit without its
consent; (5) that the court has no power to interfere in purely administrative
functions; and (6) that the cancellation ofpetitioner's license was dictated by
public policy (pp. 172-177, rec.). Intervenors also filed their respective
answers in intervention with special and affirmative defenses (pp. 78-79,
rec.). A hearing was held on the petition for the issuance of writof
preliminary injunction, wherein evidence was submitted by all the parties
including the intervenors, and extensive discussion was held both orally and
in writing.
After the said hearing, on January 20, 1965, the court a quo, from the
evidence received, resolved not only the question on the issuance of a writ
of preliminary injunction but also the motion to dismiss, declared that the
petition did not state a sufficient cause of action, and dismissed the same
accordingly. To justify such action, the trial court, in its order dismissing the
petition, stated that "the court feels that the evidence presented and the
extensive discussion on the issuance of the writof preliminary mandatory
and prohibitory injunction should also be taken into consideration in

resolving not only this question but also the motion to dismiss, because
there is no reason to believe that the parties will change their stand,
arguments and evidence" (p. 478, CFI rec.). His motion for reconsideration
having been denied (p. 488, CFI rec.), petitioner-appellant Wenceslao
Vinzons Tan appealed directly to this Court.
I.
Petitioner-appellant now comes before this Court, claiming that the trial
court erred in:
(1) holding that the petition does not state a sufficient cause of action; and
(2) dismissing the petition [p. 27, rec.]
He argues that the sole issue in the present case is, whether or not the facts
in the petition constitute a sufficient cause ofaction (p. 31, rec.). Petitionerappellant, in his brief, presented a lengthy discussion on the definition of
the term cause ofaction wherein he contended that the three essential
elements thereof namely, the legal right of the plaintiff, the correlative
obligation of the defendants and the act or omission of the defendant in
violation of that right are satisfied in the averments of this petition (pp.
31-32, rec.). He invoked the rule that when the ground for dismissal is that
the complaint states no cause of action, such fact can be determined only
from the facts alleged in the complaint and from no other, and the court
cannot consider other matters aliunde. He further invoked the rule that in a
motion to dismiss based on insufficiency of cause of action, the facts alleged
in the complaint are deemed hypothetically admitted for the purpose of the
motion (pp. 32-33, rec.)
A perusal of the records of the case shows that petitioner-appellant's
contentions are untenable. As already observed, this case was presented to
the trial court upon a motion to dismiss for failure of the petition to state a
claim upon which relief could be granted (Rule 16 [g], Revised Rules of
Court), on the ground that the timber license relied upon by the petitionerappellant in his petition was issued by the Director of Forestry without
authority and is therefore void ab initio. This motion supplanted the general
demurrer in an action at law and, as a rule admits, for the purpose of the
motion, all facts which are well pleaded. However, while the court must
accept as true all well pleaded facts, the motion does not admit allegations
ofwhich the court will take judicial notice are not true, nor does the rule
apply to legally impossible facts, nor to facts inadmissible in evidence, nor
to facts which appear by record or document included in the pleadings to be

unfounded (Vol. 1, Moran's Comments on the Rules of Court, 1970 ed., p.


505, citing cases).
It must be noted that there was a hearing held in the instant case wherein
answers were interposed and evidence introduced. In the course of the
hearing, petitioner-appellant had the opportunity to introduce evidence in
support of the allegations in his petition, which he readily availed of.
Consequently, he is estopped from invoking the rule that to determine the
sufficiency of a cause of action on a motion to dismiss, only the facts
alleged in the complaint must be considered. If there were no hearing held,
as in the case of Cohen vs. U.S. (C.C.A. Minn., 1942, 129 F. 2d 733), "where
the case was presented to District Court upon a motion to dismiss because
of alleged failure of complaint to state a claim upon which relief could be
granted, and no answer was interposed and no evidence introduced, the
only facts which the court could properly consider in passing upon the
motion were those facts appearing in the complaint, supplemented by such
facts as the court judicially knew.
In Llanto vs. Ali Dimaporo, et al. (16 SCRA 601, March 31, 1966), this Court,
thru Justice Conrado V. Sanchez, held that the trial court can properly
dismiss a complaint on a motion to dismiss due to lack of cause of action
even without a hearing, by taking into consideration the discussion in said
motion and the opposition thereto. Pertinent portion of said decision is
hereby quoted:
"Respondents moved to dismiss. Ground therefor is lack of cause of action.
The Court below granted the motion, dismissed the petition. The motion to
reconsider failed. Offshoot is this appeal.
"1. The threshold questions are these: Was the dismissal order issued
'without any hearing on the motion to dismiss'? Is it void?
"WE go to the record. The motion to dismiss was filed on February 1, 1961
and set for hearing on February 10 following. On February 8, 1961
petitioner's counsel telegraphed the court, '(r)equest postponement motion
dismissal till written opposition filed.' He did not appear at the scheduled
hearing. But on March 4, 1961, he followed up his wire, with his written
opposition to the motion to dismiss. Adverting to the 5-page motion to
dismiss and the 6-page opposition thereto, we find that the arguments pro
and con on the question of the board's power to abolish petitioner's position
minutely discussed the problem and profusely cited authorities. The May 15,
1961 8-page court order recited at length the said arguments and
concluded that petitioner made no case.

"One good reason for the statutory requirement of hearing on a motion as to


enable the suitors to adduce evidence in support of their opposing claims.
But here the motion to dismiss is grounded on lack of cause of action.
Existence of a cause of action or lack of it is determined by a reference to
the facts averred in the challenged pleading. The question raised in the
motion is purely one of law. This legal issue was fully discussed in said
motion and the opposition thereto. In this posture, oral arguments on the
motion are reduced to an unnecessary ceremony and should be overlooked.
And, correctly so, because the other intendment of the law in requiring
hearing on a motion, i.e., `to avoid surprises upon the opposite party and to
give to the latter time to study and meet the arguments of the motion,' has
been sufficiently met. And then, courts do not exalt form over substance"
(emphasis supplied).
Furthermore, "even if the complaint stated a valid cause of action, a motion
to dismiss for insufficiency of cause of action will be granted if documentary
evidence admitted by stipulation disclosing facts sufficient to defeat the
claim enabled the court to go beyond disclosure in the complaint" (LOCALS
No. 1470, No. 1469, and No. 1512 of the International Longshoremen's
Association vs. Southern Pacific Co., 6 Fed. Rules Service, p. 107; U.S. Circuit
Court of Appeals, Fifth Circuit, Dec. 7, 1952; 131 F. 2d 605). Thus, although
the evidence of the parties were presented on the question of granting or
denying petitioner-appellant's application for a writ of preliminary injunction,
the trial court correctly applied said evidence in the resolution ofthe motion
to dismiss. Moreover, in applying said evidence in the resolution of the
motion to dismiss, the trial court, in its order dismissing the petition, pointed
out that, "there is no reason to believe that the parties will change their
stand, arguments and evidence" (p. 478, CFI rec.). Petitioner-appellant did
not interpose any objection thereto, nor presented new arguments in his
motion for reconsideration (pp. 482-484, CFI rec.). This omission means
conformity to said observation, and a waiver of his right to object, estopping
him from raising this question for the first time on appeal. "Issues not raised
in the trial court cannot be raised for the first time on appeal" (Matienzo vs.
Servidad, Sept. 10, 1981, 107 SCRA 276).
Moreover, petitioner-appellant cannot invoke the rule that, when the ground
for asking dismissal is that the complaint states no cause of action, its
sufficiency must be determined only from the allegations in the complaint.
"The rules of procedure are not to be applied in a very rigid, technical sense;
rules of procedure are used only to help secure substantial justice. If a
technical and rigid enforcement of the rules is made, their aim would be
defeated. Where the rules are merely secondary in importance are made to

override the ends of justice; the technical rules had been misapplied to the
prejudice of the substantial right of a party, said rigid application cannot be
countenanced" (Vol. 1, Francisco, Civil Procedure, 2 ed., 1973, p. 157, citing
cases)
What more can be of greater importance than the interest of the public at
large, more particularly the welfare of the inhabitants of Olongapo City and
Zambales province, whose lives and properties are directly and immediately
imperilled by forest denudation. LLphil
The are covered by petitioner-appellant's timber license practically
comprises the entire Olongapo watershed (p. 265, CFI rec.). It is of public
knowledge the watersheds serves as a defense against soil erosion and
guarantees the steady supply ofwater. As a matter of general policy, the
Philippine Constitution expressly mandated the conservation and proper
utilizationof natural resources, which includes the country's watershed.
Watersheds in the Philippines had been subjected to rampant abusive
treatment due to various unscientific and destructive land use practices.
Once lush watersheds were wantonly deforested due to uncontrolled timer
cutting by licensed concessionaries and illegal loggers. This is one reason
why, in paragraph 27 of the rules and regulations included in the ordinary
timer license it is stated:
"The terms and conditions of this license are subject to change at the
discretion of the Director of Forestry, and that this license may be made to
expire at an earlier date, when public interests so require" (Exh. D, p. 22,
CFI rec.)
Considering the overriding public interest involved in the instant case, We
therefore take judicial notice of the fact that, on April 30, 1964, the area
covered by petitioner-appellant's timber license has been established as the
Olongapo Watershed Forest Reserve by virtue of Executive Proclamation No.
238 by then President Diosdado Macapagal which in parts read as follows:
"Pursuant to the provisions of Section 1824 of the Revised Administrative
Code, as amended, I, Diosdado Macapagal, President of the Philippines do
hereby withdraw from entry, sale, or settlement and establish as Olongapo
Watershed Forest Reserve for watershed, soil protection, and timber
production purposes, subject to private rights, if any there be, under the
administration and control of the Director of Forestry, . . . the following
parcels of land of the public domain situated in the municipality of

Olongapo, province of Zambales, described in the Bureau of Forestry map


No. FR-132, to wit: . . ." (60 O.G. No. 23, 3198)
Petitioner-appellant relies on Ordinary Timber License No. 20-'64 (NEW) for
his alleged right over the timber concession in question. He argues thus:
"The facts alleged in the petition show: (1) the legal right of the petitioner to
log in the area covered by his timber license; (2) the legal or corresponding
obligation on the part of the respondents to give effect, recognize and
respect the very timber license they issued to the petitioner; and (3) the act
of the respondents in arbitrarily revoking the timber license of the petitioner
without giving him his day in court and in preventing him from using and
enjoying the timber license issued to him in the regular course of official
business" (p. 32, rec.).
In the light of petitioner-appellant's arguments, it is readily seen that the
whole controversy hinges on the validity or invalidityof his timber license.
WE fully concur with the findings of the trial court that petitioner-appellant's
timber license was signed and released without authority by then Acting
Director Estanislao R. Bernal of Forestry, and is therefore void ab initio. WE
hereby quote such findings: cdphil
"In the first place, in general memorandum order No. 46 dated May 30,
1963, the Director of Forestry was authorized to grant a new ordinary timber
license only where the area covered thereby was not more than 3,000
hectares; the tract ofpublic forest awarded to the petitioner contained 6,420
hectares (Exhs. 2-A and 2-B Ravago, embodied in Annex B; Exh. B). The
petitioner contends that only 1,756 hectares of the said area contain
commercial and operable forest; the authority given to the Director of
Forestry to grant a new ordinary timber license of not more than 3,000
hectares does not state that the whole area should be commercial and
operable forest. It should be taken into consideration that the 1,756
hectares containing commercial and operable forest must have been
distributed in the whole area of 6,420 hectares. Besides the license states,
'Please see attached sketch and technical description,' gives an area of
6,420 hectares and does not state what is the area covered of commercial
and operable forest (Exh. 1-Ravago). Also Annex B ofthe petition, which was
marked as Exhibit B, states:
" 'Under Notice No. 2087, a tract of public forest containing 6,420 hectares
located in Olongapo, Zambales was declared available for timber utilization
and development. Pursuant to this Notice, there were received bid proposals
from the following persons: . . .

" 'Wherefore, confirming the findings of said Committee, the area described
in Notice No. 2087 shall be awarded, as it is hereby awarded to Wenceslao
Vinzons Tan, subject to the following conditions: . . .'
"In the second place, at the time it was released to the petitioner, the Acting
Director of Forestry had no more authority to grant any license. The license
was signed by the Acting Director of Forestry on December 19, 1963, and
released to the petitioner on January 6, 1964 (Exh. 1-Ravago). The authority
delegated to the Director of Forestry to grant a new ordinary timber license
was contained in general memorandum order No. 46 dated May 30, 1963.
This was revoked by general memorandum order No. 60, which was
promulgated on December 19, 1963. In view thereof, the Director of
Forestry had no longer any authority to release the license on January 6,
1964, and said license is therefore void ab initio" (pp. 479-480, CFI rec.)
The release of the license on January 6, 1964, gives rise to the impression
that it was ante-dated to December 19, 1963 on which date the authority of
the Director of Forestry was revoked. But, what is of greatest importance is
the date of the release or issuance, and not the date of the signing of the
license. While petitioner-appellant's timber license might have been signed
on December 19, 1963 it was released only on January 6, 1964. Before its
release, no right is acquired by the licensee. As pointed out by the trial
court, the Director of Forestry had no longer any authority to release the
license on January 6, 1964. Therefore, petitioner-appellant had not acquired
any legal right under such void license. This is evident on the face of his
petition as supplemented by its annexes which includes Ordinary Timber
License No. 20-'64 (NEW). Thus, in the case of World Wide Insurance &
Surety Co., Inc. vs. Macrohon, et al. (105 Phil. 250, Feb. 28, 1959), this Court
held that if from the face of the complaint, as supplemented by its annexes,
plaintiff is not the owner, or entitled to the properties it claims to have been
levied upon and sold at public auction by the defendants and for which it
now seeks indemnity, the said complaint does not give plaintiff any right of
action against the defendants. In the same case, this Court further held
that, in acting on a motion to dismiss, the court cannot separate the
complaint from its annexes where it clearly appears that the claim of the
plaintiff to be the owner of the properties in question is predicated on said
annexes. Accordingly, petitioner-appellant's petition must be dismissed due
to lack of cause of action.
II.
Petitioner-appellant, in his petition, alleged that he has exhausted all his
administrative remedies to no avail as respondents-appellees have failed,

neglected, refused and continue to refuse to allow petitioner-appellant to


continue operation in the area covered by his timber license. He further
alleged that he has neither recourse by way of appeal, nor any plain, speedy
and adequate remedy in the ordinary course of law except thru this special
civil action, as the last official act of the respondent-appellee Secretary of
Agriculture and Natural Resources in declaring void the timber license
referred to above after denying petitioner-appellant's motion for
reconsideration, is the last administrative act. Petitioner-appellant relies on
the case of Demaisip vs. The Court of Appeals, et al. (106 Phil. 237, Sept.
24, 1959), wherein it was held that the failure of the plaintiff to appeal from
the adverse decision of the Secretary to the President cannot preclude the
plaintiff from taking court action in view of the theory that the Secretary of a
department is merely an alter-ego of the President. The presumption is that
the action of the Secretary bears the implied sanction of the President
unless the same is disapproved by the latter (Villena vs. the Secretary of
Interior, 67 Phil. 451; p. 7, CFI rec.)
To this We cannot agree. Petitioner-appellant did not appeal the order of the
respondent Secretary of Agriculture and Natural Resources to the President
of the Philippines, who issued Executive Proclamation No. 238 withdrawing
the area from private exploitation, and establishing it as the Olongapo
Watershed Forest Reserve. Considering that the President has the power to
review on appeal the orders or acts of the respondents-appellees, the failure
of the petitioner-appellant to take that appeal is failure on his part to
exhaust his administrative remedies. Thus, this Court, in the case of Calo vs.
Fuertes (5 SCRA 399, 400, June 29, 1962), held that:
"At any rate, the appellant's contention that, as the Secretary of Agriculture
and Natural Resources is the alter ego of the President and his acts or
decisions are also those of the latter, he need not appeal from the decision
or opinion of the former to the latter, and that, such being the case, after he
had appealed to the Secretary of Agriculture and Natural Resources from
the decision or opinion of the Director of Lands he had exhausted all the
administrative remedies, is untenable.
"The withdrawal of the appeal taken to the President of the Philippines is
tantamount to not appealing all thereto. Such withdrawal is fatal, because
the appeal to the President is the last step he should take in an
administrative case."
In 1912, in the case of Lamb vs. Phipps (22 Phil. 491-92, July 22, 1912), this
Court stressed the doctrine of exhaustion ofadministrative remedies, thus:

"When a plain, adequate and speedy remedy is afforded by and within the
executive department of the government the courts will not interfere until at
least that remedy has been exhausted. (Jao Igco vs. Shuster, 10 Phil. Rep.
448; Ekiu vs. U.S., 142 U.S. 651; U.S. vs. Sing Tuck, 194 U.S. 161; U.S. vs. Ju
Toy, 198 U.S. 253; Chiu Yow vs. U.S., 28 Sup. Ct. Rep. 201).The
administrative remedies afforded by law must first be exhausted before
resort can be had to the courts, especially when the administrative
remedies are by law exclusive and final. Some matters and some questions
are by law delegated entirely and absolutely to the discretion of particular
branches of the executive department of the government. When the law
confers exclusive and final jurisdiction upon the executive department of the
government to dispose of particular questions, their judgments or the
judgments of that particular department are no more reviewable by the
courts than the final judgment or decisions of the courts are subject to be
reviewed and modified by them" (emphasis supplied)
Moreover, this being a special civil action, petitioner-appellant must allege
and prove that he has no other speedy and adequate remedy (Diego vs. The
Court of Appeals, et al., 54 Off. Gaz., No. 4, 956). In the case at bar,
petitioner-appellant's speedy and adequate remedy is an appeal to the
President of the Philippines. prcd
Accordingly, "it is settled to the point of being elementary that the only
question involved in certiorari is jurisdiction, either want of jurisdiction or
excess thereof, and abuse of discretion shall warrant the issuance of the
extraordinary remedy ofcertiorari when the same is so grave as when the
power is exercised in an arbitrary or despotic manner by reason of passion,
prejudice or personal hostility, and it must be so patent and gross as to
amount to an evasion of positive duty, or to a virtual refusal to perform a
duty enjoined, or to act at all in contemplation of law" (F.S. Divinagracia
Agro-Commercial Inc. vs. Courtof Appeals, 104 SCRA 191 [April 21, 1981]).
The foregoing is on the assumption that there is any irregularity, albeit there
is none in the acts or omissions of the respondents-appellees. Certiorari is
not a substitute for appeal as held time and again by this Court (People vs.
Villanueva, 110 SCRA 465), "it being a time honored and well known
principle that before seeking judicial redress, a party must first exhaust the
administrative remedies available" (Garcia vs. Teehankee, 27 SCRA 944,
April 18, 1969).
"Moreover, from the decision of the Secretary of Agriculture and Natural
Resources complained of, petitioners had a plain, speedy and adequate
remedy by appealing therefrom to the Chief Executive. In other words,
before filing the present action for certiorari in the court below, they should

have availed of this administrative remedy and their failure to do so must


be deemed fatal to their case [Calo vs. Fuertes, et al., G.R. No. L-16537, June
29, 1962]. To place petitioners' case beyond the paleof this rule, they must
show that their case falls which it does not within the cases where, in
accordance with our decisions, the aggrieved party need not exhaust
administrative remedies within his reach in the ordinary course of the law
[Tapales vs. The President and the Board of Regents of the U.P., G.R. No. L17532, March 30, 1963; Mangubat vs. Osmea, G.R. No. L-12837, April 30,
1959; Baguio vs. Hon. Jose Rodriguez, G.R. No. L-11078, May 27, 1959;
Pascual vs. Provincial Board, G.R. No. L-11959, Oct. 31, 1959; Marinduque
Iron Mines, etc. vs. Secretary of Public Works, G.R. No. L-15982, May 31,
1963; Alzate vs. Aldaba, G.R. No. L-14407, Feb. 29, 1960 and Demaisip vs.
Court of Appeals, G.R. No. L-13000, Sept. 25, 1959]" (Ganob vs. Ramas, 27
SCRA 1178, April 28, 1969).
III.
Petitioner-appellant not only failed to exhaust his administrative remedies,
but also failed to note that his action is a suit against the State which, under
the doctrine of State immunity from suit, cannot prosper unless the State
gives its consent to be sued (Kawananakoa vs. Polybank, 205 U.S. 349; Siren
vs. U.S., 7 Wall. 152; Sec. 16, Art. XV, 1973 Constitution)
The respondents-appellees, in revoking the petitioner-appellant's timber
license, were acting within the scope of their authority. Petitioner-appellant
contends that "this case is not a suit against the State but an application of
a sound principleof law whereby administrative decisions or actuations may
be reviewed by the courts as a protection afforded the citizens against
oppression" (p. 122, CFI rec.). But, piercing the shard of his contention, We
find that petitioner-appellant's action is just an attempt to circumvent the
rule establishing State exemption from suits. He cannot use that principle of
law to profit at the expense and prejudice of the State and its citizens. The
promotion of public welfare and the protection of the inhabitants near the
public forest are property, rights and interest of the State. Accordingly, "the
rule establishing State exemption from suits may not be circumvented by
directing the action against the officers of the State instead of against the
State itself. In such cases the State's immunity may be validly invoked
against the action as long as it can be shown that the suit really affects the
property, rights, or interests of the State and not merely those of the officer
nominally made party defendant" (SINCO, Phil. Political Law, 10th ed., p. 35;
Salgado vs. Ramos, 64 Phil. 724; see also Angat River Irrigation System vs.
Angat River Workers' Union, G.R. No. L-10943-44, Dec. 28, 1957, 102 Phil.
789, 800-802; Mobil Phil. vs. Customs Arrastre Service, 18 SCRA 1120, 1121-

1125; Bureau of Printing vs. Bureau of Printing Employees' Association, 1


SCRA 340, 341, 343).
Both the Secretary of Agriculture and Natural Resources and the Director of
Forestry acted in their capacity as officers of the State, representatives of
the sovereign authority discharging governmental powers. A private
individual cannot issue a timber license. cdll
Consequently, a favorable judgment for the petitioner-appellant would result
in the government losing a substantial part ofits timber resources. This
being the case, petitioner-appellant's action cannot prosper unless the State
gives its consent to be sued.
IV.
Granting arguendo, that petitioner-appellant's timber license is valid, still
respondents-appellees can validly revoke his timber license. As pointed out
earlier, paragraph 27 of the rules and regulations included in the ordinary
timber license states: "The terms and conditions of this license are subject
to change at the discretion of the Director of Forestry, and that this license
may be made to expire at an earlier date, when public interests so require"
(Exh. D, p. 22, CFI rec.). A timber license is an instrument by which the State
regulates the utilization and disposition of forest resources to the end that
public welfare is promoted. A timber license is not a contract, within the
purview of the due process clause; it is only a license or privilege, which can
be validly withdrawn whenever dictated by public interest or public welfare
as in this case.
"A license is merely a permit or privilege to do what otherwise would be
unlawful, and is not a contract between the authority, federal, state, or
municipal, granting it and the person to whom it is granted; neither is it
property or a property right, nor does it create a vested right; nor is it
taxation" (37 C.J. 168). Thus, this Court held that the granting of license
does not create irrevocable rights, neither is it property or property rights
(People vs. Ong Tin, 54 O.G. 7576). In the case of Pedrovs. Provincial Board
of Rizal (56 Phil. 123), it was held that:
"A license authorizing the operation and exploitation of a cockpit is not
property of which the holder may not be deprived without due process of
law, but a mere privilege which may be revoked when public interests so
require."
The welfare of the people is the supreme law. Thus, no franchise or right can
be availed of to defeat the proper exercise ofpolice power (Surigao Electric

Co., Inc. vs. Municipality of Surigao, 24 SCRA 898, Aug. 30, 1968). The State
has inherent power enabling it to prohibit all things hurtful to comfort,
safety, and welfare of society (Edu vs. Ericta, 35 SCRA 481, Oct. 24, 1970)
V.
As provided in the aforecited provision, timber licenses are subject to the
authority of the Director of Forestry. The utilization and disposition of forest
resources is directly under the control and supervision of the Director of
Forestry. However, "while Section 1831 of the Revised Administrative Code
provides that forest products shall be cut, gathered and removed from any
forest only upon license from the Director of Forestry, it is no less true that
as a subordinate officer, the Director of Forestry is subject to the control of
the Department Head or the Secretary of Agriculture and Natural Resources
(Sec. 79[c], Rev. Adm. Code), who, therefore, may impose reasonable
regulations in the exercise of the powers of the subordinate officer"
(Directorof Forestry vs. Benedicto, 104 SCRA 309, May 5, 1981). The power
of control of the Department Head over bureaus and offices includes the
power to modify, reverse or set aside acts of subordinate officials (Province
of Pangasinan vs. Secretary ofPublic Works and Communications, 30 SCRA
134, Oct. 31, 1969; Montano vs. Silvosa, 97 Phil. 143, 144, 147-148).
Accordingly, respondent-appellee Secretary of Agriculture and Natural
Resources has the authority to revoke, on valid grounds, timber licenses
issued by the Director of Forestry. There being supporting evidence, the
revocation of petitioner-appellant's timber license was a wise exercise of the
power of the respondent-appellee (Secretary of Agriculture and Natural
Resources) and therefore, valid. prLL
Thus, "this Court had rigorously adhered to the principle of conserving forest
resources, as corollary to which the alleged right to them of private
individuals or entities was meticulously inquired into and more often than
not rejected. We do so again" (Director of Forestry vs. Benedicto, supra). WE
reiterate Our fidelity to the basic policy of conserving the national patrimony
as ordained by the Constitution.
WHEREFORE, IN VIEW OF ALL THE FOREGOING, THE ORDER APPEALED
FROM IS HEREBY AFFIRMED IN TOTO. COSTS AGAINST PETITIONERAPPELLANT.
SO ORDERED.
Concepcion Jr., Guerrero, Abad Santos and Escolin, JJ., concur.

Aquino, J., concurs in the result.


De Castro, J., is on leave.
||| (Tan v. Director of Forestry, G.R. No. L-24548, [October 27, 1983], 210
PHIL 244-267)

48. UP V DIZON
[G.R. No. 171182. August 23, 2012.]
UNIVERSITY OF THE PHILIPPINES, JOSE V. ABUEVA, RAUL P. DE GUZMAN,
RUBEN P. ASPIRAS, EMMANUEL P. BELLO, WILFREDO P. DAVID, CASIANO S.
ABRIGO, and JOSEFINA R. LICUANAN, petitioners, vs. HON. AGUSTIN S.
DIZON, in his capacity as Presiding Judge of the Regional Trial Court of
Quezon City, Branch 80, STERN BUILDERS, INC., and SERVILLANO DELA
CRUZ, respondents.
DECISION
BERSAMIN, J p:
Trial judges should not immediately issue writs of execution or garnishment
against the Government or any of its subdivisions, agencies and
instrumentalities to enforce money judgments. 1 They should bear in mind
that the primary jurisdiction to examine, audit and settle all claims of any
sort due from the Government or any of its subdivisions, agencies and
instrumentalities pertains to the Commission on Audit (COA) pursuant to
Presidential Decree No. 1445 (Government Auditing Code of the Philippines).
The Case
On appeal by the University of the Philippines and its then incumbent
officials (collectively, the UP) is the decision promulgated on September 16,
2005, 2 whereby the Court of Appeals (CA) upheld the order of the Regional
Trial Court (RTC), Branch 80, in Quezon City that directed the garnishment of
public funds amounting to P16,370,191.74 belonging to the UP to satisfy the
writ of execution issued to enforce the already final and executory judgment
against the UP.
Antecedents

On August 30, 1990, the UP, through its then President Jose V. Abueva,
entered into a General Construction Agreement with respondent Stern
Builders Corporation (Stern Builders), represented by its President and
General Manager Servillano dela Cruz, for the construction of the extension
building and the renovation of the College of Arts and Sciences Building in
the campus of the University of the Philippines in Los Baos (UPLB). 3
IASTDE
In the course of the implementation of the contract, Stern Builders
submitted three progress billings corresponding to the work accomplished,
but the UP paid only two of the billings. The third billing worth P273,729.47
was not paid due to its disallowance by the Commission on Audit (COA).
Despite the lifting of the disallowance, the UP failed to pay the billing,
prompting Stern Builders and dela Cruz to sue the UP and its co-respondent
officials to collect the unpaid billing and to recover various damages. The
suit, entitled Stern Builders Corporation and Servillano R. Dela Cruz v.
University of thePhilippines Systems, Jose V. Abueva, Raul P. de Guzman,
Ruben P. Aspiras, Emmanuel P. Bello, Wilfredo P. David, Casiano S. Abrigo,
and Josefina R. Licuanan, was docketed as Civil Case No. Q-93-14971 of the
Regional Trial Court in Quezon City (RTC). 4
After trial, on November 28, 2001, the RTC rendered its decision in favor of
the plaintiffs, 5 viz.:
Wherefore, in the light of the foregoing, judgment is hereby rendered in
favor of the plaintiff and against the defendants ordering the latter to pay
plaintiff, jointly and severally, the following, to wit:
1. P503,462.74 amount of the third billing, additional accomplished work
and retention money
2. P5,716,729.00 in actual damages
3. P10,000,000.00 in moral damages
4. P150,000.00 and P1,500.00 per appearance as attorney's fees; and
5. Costs of suit.
SO ORDERED.
Following the RTC's denial of its motion for reconsideration on May 7, 2002,
6 the UP filed a notice of appeal on June 3, 2002. 7Stern Builders and dela
Cruz opposed the notice of appeal on the ground of its filing being belated,
and moved for the execution of the decision. The UP countered that the

notice of appeal was filed within the reglementary period because the UP's
Office of Legal Affairs (OLS) in Diliman, Quezon City received the order of
denial only on May 31, 2002. On September 26, 2002, the RTC denied due
course to the notice of appeal for having been filed out of time and granted
the private respondents' motion for execution. 8 CDESIA
The RTC issued the writ of execution on October 4, 2002, 9 and the sheriff of
the RTC served the writ of execution and noticeof demand upon the UP,
through its counsel, on October 9, 2002. 10 The UP filed an urgent motion to
reconsider the order dated September 26, 2002, to quash the writ of
execution dated October 4, 2002, and to restrain the proceedings.
11However, the RTC denied the urgent motion on April 1, 2003. 12
On June 24, 2003, the UP assailed the denial of due course to its appeal
through a petition for certiorari in the Court ofAppeals (CA), docketed as CAG.R. No. 77395. 13
On February 24, 2004, the CA dismissed the petition for certiorari upon
finding that the UP's notice of appeal had been filed late, 14 stating:
Records clearly show that petitioners received a copy of the Decision dated
November 28, 2001 and January 7, 2002, thus, they had until January 22,
2002 within which to file their appeal. On January 16, 2002 or after the lapse
of nine (9) days, petitioners through their counsel Atty. Nolasco filed a
Motion for Reconsideration of the aforesaid decision, hence, pursuant to the
rules, petitioners still had six (6) remaining days to file their appeal. As
admitted by the petitioners in their petition (Rollo, p. 25), Atty. Nolasco
received a copy of the Order denying their motion for reconsideration on
May 17, 2002, thus, petitioners still has until May 23, 2002 (the remaining
six (6) days) within which to file their appeal. Obviously, petitioners were
not able to file their Notice of Appeal on May 23, 2002 as it was only filed on
June 3, 2002.
In view of the said circumstances, We are of the belief and so holds that the
Notice of Appeal filed by the petitioners was really filed out of time, the
same having been filed seventeen (17) days late of the reglementary
period. By reason ofwhich, the decision dated November 28, 2001 had
already become final and executory. "Settled is the rule that the perfection
of an appeal in the manner and within the period permitted by law is not
only mandatory but jurisdictional, and failure to perfect that appeal renders
the challenged judgment final and executory. This is not an empty
procedural rule but is grounded on fundamental considerations of public
policy and sound practice." (Ram's Studio and Photographic Equipment, Inc.

vs. Court of Appeals, 346 SCRA 691, 696). Indeed, Atty. Nolasco received the
order of denialof the Motion for Reconsideration on May 17, 2002 but filed a
Notice of Appeal only on June 3, 3003. As such, the decisionof the lower
court ipso facto became final when no appeal was perfected after the lapse
of the reglementary period. This procedural caveat cannot be trifled with,
not even by the High Court. 15 TDEASC
The UP sought a reconsideration, but the CA denied the UP's motion for
reconsideration on April 19, 2004. 16
On May 11, 2004, the UP appealed to the Court by petition for review on
certiorari (G.R. No. 163501).
On June 23, 2004, the Court denied the petition for review. 17 The UP
moved for the reconsideration of the denial of its petition for review on
August 29, 2004, 18 but the Court denied the motion on October 6, 2004.
19 The denial became final and executory on November 12, 2004. 20
In the meanwhile that the UP was exhausting the available remedies to
overturn the denial of due course to the appeal and the issuance of the writ
of execution, Stern Builders and dela Cruz filed in the RTC their motions for
execution despite their previous motion having already been granted and
despite the writ of execution having already issued. On June 11, 2003, the
RTC granted another motion for execution filed on May 9, 2003 (although
the RTC had already issued the writ of execution on October 4, 2002). 21
On June 23, 2003 and July 25, 2003, respectively, the sheriff served notices
of garnishment on the UP's depository banks, namely: Land Bank of the
Philippines (Buendia Branch) and the Development Bank of the Philippines
(DBP), Commonwealth Branch. 22 The UP assailed the garnishment through
an urgent motion to quash the notices of garnishment; 23 and a motion to
quash the writ of execution dated May 9, 2003. 24
On their part, Stern Builders and dela Cruz filed their ex parte motion for
issuance of a release order. 25
On October 14, 2003, the RTC denied the UP's urgent motion to quash, and
granted Stern Builders and dela Cruz's ex partemotion for issuance of a
release order. 26
The UP moved for the reconsideration of the order of October 14, 2003, but
the RTC denied the motion on November 7, 2003. 27
On January 12, 2004, Stern Builders and dela Cruz again sought the release
of the garnished funds. 28 Despite the UP's opposition, 29 the RTC granted

the motion to release the garnished funds on March 16, 2004. 30 On April
20, 2004, however, the RTC held in abeyance the enforcement of the writs
of execution issued on October 4, 2002 and June 3, 2003 and all the ensuing
notices of garnishment, citing Section 4, Rule 52, Rules of Court, which
provided that the pendency of a timely motion for reconsideration stayed
the execution of the judgment. 31 cDCIHT
On December 21, 2004, the RTC, through respondent Judge Agustin S.
Dizon, authorized the release of the garnished funds ofthe UP, 32 to wit:
WHEREFORE, premises considered, there being no more legal impediment
for the release of the garnished amount in satisfaction of the judgment
award in the instant case, let the amount garnished be immediately
released by the Development Bank of the Philippines, Commonwealth
Branch, Quezon City in favor of the plaintiff.
SO ORDERED.
The UP was served on January 3, 2005 with the order of December 21, 2004
directing DBP to release the garnished funds. 33
On January 6, 2005, Stern Builders and dela Cruz moved to cite DBP in
direct contempt of court for its non-compliance with the order of release. 34
Thereupon, on January 10, 2005, the UP brought a petition for certiorari in
the CA to challenge the jurisdiction of the RTC in issuing the order of
December 21, 2004 (CA-G.R. CV No. 88125). 35 Aside from raising the
denial of due process, the UP averred that the RTC committed grave abuse
of discretion amounting to lack or excess of jurisdiction in ruling that there
was no longer any legal impediment to the release of the garnished funds.
The UP argued that government funds and properties could not be seized by
virtue of writs of execution or garnishment, as held in Department of
Agriculture v. National Labor Relations Commission, 36 and citing Section 84
of Presidential Decree No. 1445 to the effect that "[r]evenue funds shall not
be paid out of any public treasury or depository except in pursuance of an
appropriation law or other specific statutory authority;" and that the order of
garnishment clashed with the ruling in University of the Philippines Board of
Regents v. Ligot-Telan 37 to the effect that the funds belonging to the UP
were public funds.
On January 19, 2005, the CA issued a temporary restraining order (TRO)
upon application by the UP. 38
On March 22, 2005, Stern Builders and dela Cruz filed in the RTC their
amended motion for sheriff's assistance to implement the release order

dated December 21, 2004, stating that the 60-day period of the TRO of the
CA had already lapsed. 39 The UP opposed the amended motion and
countered that the implementation of the release order be suspended. 40
On May 3, 2005, the RTC granted the amended motion for sheriff's
assistance and directed the sheriff to proceed to the DBP to receive the
check in satisfaction of the judgment. 41
The UP sought the reconsideration of the order of May 3, 2005. 42
On May 16, 2005, DBP filed a motion to consign the check representing the
judgment award and to dismiss the motion to cite its officials in contempt of
court. 43
On May 23, 2005, the UP presented a motion to withhold the release of the
payment of the judgment award. 44 HSDIaC
On July 8, 2005, the RTC resolved all the pending matters, 45 noting that the
DBP had already delivered to the sheriff Manager's Check No. 811941 for
P16,370,191.74 representing the garnished funds payable to the order of
Stern Builders and dela Cruz as its compliance with the RTC's order dated
December 21, 2004. 46 However, the RTC directed in the same order that
Stern Builders and dela Cruz should not encash the check or withdraw its
amount pending the final resolution of the UP's petition for certiorari, to wit:
47
To enable the money represented in the check in question (No.
00008119411) to earn interest during the pendency ofthe defendant
University of the Philippines application for a writ of injunction with the
Court of Appeals the same may now be deposited by the plaintiff at the
garnishee Bank (Development Bank of the Philippines), the disposition of
the amount represented therein being subject to the final outcome of the
case of the University of the Philippines, et al. vs. Hon. Agustin S. Dizon, et
al., (CA G.R. 88125) before the Court of Appeals.
Let it be stated herein that the plaintiff is not authorized to encash and
withdraw the amount represented in the check in question and enjoy the
same in the fashion of an owner during the pendency of the case between
the parties before the Court of Appeals which may or may not be resolved in
plaintiff's favor.
With the end in view of seeing to it that the check in question is deposited
by the plaintiff at the Development Bank of thePhilippines (garnishee bank),
Branch Sheriff Herlan Velasco is directed to accompany and/or escort the
plaintiff in making the deposit of the check in question.

SO ORDERED.
On September 16, 2005, the CA promulgated its assailed decision
dismissing the UP's petition for certiorari, ruling that the UP had been given
ample opportunity to contest the motion to direct the DBP to deposit the
check in the name of Stern Builders and dela Cruz; and that the garnished
funds could be the proper subject of garnishment because they had been
already earmarked for the project, with the UP holding the funds only in a
fiduciary capacity, 48 viz.:
Petitioners next argue that the UP funds may not be seized for execution or
garnishment to satisfy the judgment award. Citing Department of
Agriculture vs. NLRC, University of the Philippines Board of Regents vs. Hon.
Ligot-Telan, petitioners contend that UP deposits at Land Bank and the
Development Bank of the Philippines, being government funds, may not be
released absent an appropriations bill from Congress. TcIAHS
The argument is specious. UP entered into a contract with private
respondents for the expansion and renovation of the Arts and Sciences
Building of its campus in Los Baos, Laguna. Decidedly, there was already
an appropriations earmarked for the said project. The said funds are
retained by UP, in a fiduciary capacity, pending completion of the
construction project.
We agree with the trial Court [sic] observation on this score:
"4. Executive Order No. 109 (Directing all National Government Agencies to
Revert Certain Accounts Payable to the Cumulative Result of Operations of
the National Government and for Other Purposes) Section 9. Reversion
ofAccounts Payable, provides that, all 1995 and prior years documented
accounts payable and all undocumented accounts regardless of the year
they were incurred shall be reverted to the Cumulative Result of Operations
of the National Government (CROU). This shall apply to accounts payable of
all funds, except fiduciary funds, as long as the purpose for which the funds
were created have not been accomplished and accounts payable under
foreign assisted projects for the duration of the said project. In this regard,
the Department of Budget and Management issued Joint-Circular No. 99-6
4.0 (4.3) Procedural Guidelines which provides that all accounts payable
that reverted to the CROU may be considered for payment upon
determination thru administrative process, of the existence, validity and
legality of the claim. Thus, the allegation of the defendants that considering
no appropriation for the payment of any amount awarded to plaintiffs
appellee the funds of defendant-appellants may not be seized pursuant to a

writ of execution issued by the regular court is misplaced. Surely when the
defendants and the plaintiff entered into the General Construction of
Agreement there is an amount already allocated by the latter for the said
project which is no longer subject of future appropriation." 49
After the CA denied their motion for reconsideration on December 23, 2005,
the petitioners appealed by petition for review.
Matters Arising During the Pendency of the Petition
On January 30, 2006, Judge Dizon of the RTC (Branch 80) denied Stern
Builders and dela Cruz's motion to withdraw the deposit, in consideration of
the UP's intention to appeal to the CA, 50 stating:
Since it appears that the defendants are intending to file a petition for
review of the Court of Appeals resolution in CA-G.R. No. 88125 within the
reglementary period of fifteen (15) days from receipt of resolution, the Court
agrees with the defendants stand that the granting of plaintiffs' subject
motion is premature.
Let it be stated that what the Court meant by its Order dated July 8, 2005
which states in part that the "disposition of the amount represented therein
being subject to the final outcome of the case of the University of the
Philippines, et al. vs. Hon. Agustin S. Dizon, et al., (CA G.R. No. 88125 before
the Court of Appeals) is that the judgment or resolution of said court has to
be final and executory, for if the same will still be elevated to the Supreme
Court, it will not attain finality yet until the highest court has rendered its
own final judgment or resolution. 51 CAScIH
However, on January 22, 2007, the UP filed an Urgent Application for A
Temporary Restraining Order and/or A Writ ofPreliminary Injunction, 52
averring that on January 3, 2007, Judge Maria Theresa dela Torre-Yadao (who
had meanwhile replaced Judge Dizon upon the latter's appointment to the
CA) had issued another order allowing Stern Builders and dela Cruz to
withdraw the deposit, 53 to wit:
It bears stressing that defendants' liability for the payment of the judgment
obligation has become indubitable due to the final and executory nature of
the Decision dated November 28, 2001. Insofar as the payment of the [sic]
judgment obligation is concerned, the Court believes that there is nothing
more the defendant can do to escape liability. It is observed that there is
nothing more the defendant can do to escape liability. It is observed that
defendant U.P. System had already exhausted all its legal remedies to
overturn, set aside or modify the decision (dated November 28, 2001

(rendered against it. The way the Court sees it, defendant U.P. System's
petition before the Supreme Court concerns only with the manner by which
said judgment award should be satisfied. It has nothing to do with the
legality or propriety thereof, although it prays for the deletion of [sic]
reduction of the award of moral damages.
It must be emphasized that this Court's finding, i.e., that there was sufficient
appropriation earmarked for the project, was upheld by the Court of Appeals
in its decision dated September 16, 2005. Being a finding of fact, the
Supreme Court will, ordinarily, not disturb the same was said Court is not a
trier of fact. Such being the case, defendants' arguments that there was no
sufficient appropriation for the payment of the judgment obligation must
fail.
While it is true that the former Presiding Judge of this Court in its Order
dated January 30, 2006 had stated that:
Let it be stated that what the Court meant by its Order dated July 8, 2005
which states in part that the "dispositionof the amount represented therein
being subject to the final outcome of the case of the University of
thePhilippines, et al. vs. Hon. Agustin S. Dizon, et al., (CA G.R. No. 88125
before the Court of Appeals) is that the judgment or resolution of said court
has to be final and executory, for if the same will still be elevated to the
Supreme Court, it will not attain finality yet until the highest court has
rendered its own final judgment or resolution. ITDHcA
it should be noted that neither the Court of Appeals nor the Supreme Court
issued a preliminary injunction enjoining the release or withdrawal of the
garnished amount. In fact, in its present petition for review before the
Supreme Court, U.P. System has not prayed for the issuance of a writ of
preliminary injunction. Thus, the Court doubts whether such writ is
forthcoming.
The Court honestly believes that if defendants' petition assailing the Order
of this Court dated December 31, 2004 granting the motion for the release
of the garnished amount was meritorious, the Court of Appeals would have
issued a writ of injunction enjoining the same. Instead, said appellate [c]ourt
not only refused to issue a wit of preliminary injunction prayed for by U.P.
System but denied the petition, as well. 54
The UP contended that Judge Yadao thereby effectively reversed the January
30, 2006 order of Judge Dizon disallowing the withdrawal of the garnished
amount until after the decision in the case would have become final and
executory.

Although the Court issued a TRO on January 24, 2007 to enjoin Judge Yadao
and all persons acting pursuant to her authority from enforcing her order of
January 3, 2007, 55 it appears that on January 16, 2007, or prior to the
issuance of the TRO, she had already directed the DBP to forthwith release
the garnished amount to Stern Builders and dela Cruz; 56 and that DBP had
forthwith complied with the order on January 17, 2007 upon the sheriff's
service of the order of Judge Yadao. 57
These intervening developments impelled the UP to file in this Court a
supplemental petition on January 26, 2007, 58 alleging that the RTC (Judge
Yadao) gravely erred in ordering the immediate release of the garnished
amount despite the pendency ofthe petition for review in this Court.
The UP filed a second supplemental petition 59 after the RTC (Judge Yadao)
denied the UP's motion for the redeposit of the withdrawn amount on April
10, 2007, 60 to wit:
This resolves defendant U.P. System's Urgent Motion to Redeposit Judgment
Award praying that plaintiffs be directed to redeposit the judgment award to
DBP pursuant to the Temporary Restraining Order issued by the Supreme
Court. Plaintiffs opposed the motion and countered that the Temporary
Restraining Order issued by the Supreme Court has become moot and
academic considering that the act sought to be restrained by it has already
been performed. They also alleged that the redeposit of the judgment award
was no longer feasible as they have already spent the same.
It bears stressing, if only to set the record straight, that this Court did not
in its Order dated January 3, 2007 (the implementation of which was
restrained by the Supreme Court in its Resolution dated January 24, 2002)
direct that that garnished amount "be deposited with the garnishee bank
(Development Bank of the Philippines)". In the first place, there was no need
to order DBP to make such deposit, as the garnished amount was already
deposited in the account ofplaintiffs with the DBP as early as May 13, 2005.
What the Court granted in its Order dated January 3, 2007 was plaintiff's
motion to allow the release of said deposit. It must be recalled that the
Court found plaintiff's motion meritorious and, at that time, there was no
restraining order or preliminary injunction from either the Court of Appeals
or the Supreme Court which could have enjoined the release of plaintiffs'
deposit. The Court also took into account the following factors:DCASIT
a) the Decision in this case had long been final and executory after it was
rendered on November 28, 2001;

b) the propriety of the dismissal of U.P. System's appeal was upheld by the
Supreme Court;
c) a writ of execution had been issued;
d) defendant U.P. System's deposit with DBP was garnished pursuant to a
lawful writ of execution issued by the Court; and
e) the garnished amount had already been turned over to the plaintiffs and
deposited in their account with DBP.
The garnished amount, as discussed in the Order dated January 16, 2007,
was already owned by the plaintiffs, having been delivered to them by the
Deputy Sheriff of this Court pursuant to par. (c), Section 9, Rule 39 of the
1997 Rules ofCivil Procedure. Moreover, the judgment obligation has already
been fully satisfied as per Report of the Deputy Sheriff.
Anent the Temporary Restraining Order issued by the Supreme Court, the
same has become functus oficio, having been issued after the garnished
amount had been released to the plaintiffs. The judgment debt was released
to the plaintiffs on January 17, 2007, while the Temporary Restraining Order
issued by the Supreme Court was received by this Court on February 2,
2007. At the time of the issuance of the Restraining Order, the act sought to
be restrained had already been done, thereby rendering the said Order
ineffectual.
After a careful and thorough study of the arguments advanced by the
parties, the Court is of the considered opinion that there is no legal basis to
grant defendant U.P. System's motion to redeposit the judgment amount.
Granting said motion is not only contrary to law, but it will also render this
Court's final executory judgment nugatory. Litigation must end and
terminate sometime and somewhere, and it is essential to an effective
administration of justice that once a judgment has become final the issue or
cause involved therein should be laid to rest. This doctrine of finality of
judgment is grounded on fundamental considerations of public policy and
sound practice. In fact, nothing is more settled in law than that once a
judgment attains finality it thereby becomes immutable and unalterable. It
may no longer be modified in any respect, even if the modification is meant
to correct what is perceived to be an erroneous conclusion of fact or law,
and regardless of whether the modification is attempted to be made by the
court rendering it or by the highest court of the land.

WHEREFORE, premises considered, finding defendant U.P. System's Urgent


Motion to Redeposit Judgment Award devoidof merit, the same is hereby
DENIED. AScHCD
SO ORDERED.
Issues
The UP now submits that:
I
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN DISMISSING THE
PETITION, ALLOWING IN EFFECT THE GARNISHMENT OF UP FUNDS, WHEN IT
RULED THAT FUNDS HAVE ALREADY BEEN EARMARKED FOR THE
CONSTRUCTION PROJECT; AND THUS, THERE IS NO NEED FOR FURTHER
APPROPRIATIONS.
II
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN ALLOWING
GARNISHMENT OF A STATE UNIVERSITY'S FUNDS IN VIOLATION OF ARTICLE
XIV, SECTION 5(5) OF THE CONSTITUTION.
III
IN THE ALTERNATIVE, THE UNIVERSITY INVOKES EQUITY AND THE REVIEW
POWERS OF THIS HONORABLE COURT TO MODIFY, IF NOT TOTALLY DELETE
THE AWARD OF P10 MILLION AS MORAL DAMAGES TO RESPONDENTS.
IV
THE RTC-BRANCH 80 COMMITTED GRAVE ERROR IN ORDERING THE
IMMEDIATE RELEASE OF THE JUDGMENT AWARD IN ITS ORDER DATED 3
JANUARY 2007 ON THE GROUND OF EQUITY AND JUDICIAL COURTESY.
IHDCcT
V
THE RTC-BRANCH 80 COMMITTED GRAVE ERROR IN ORDERING THE
IMMEDIATE RELEASE OF THE JUDGMENT AWARD IN ITS ORDER DATED 16
JANUARY 2007 ON THE GROUND THAT PETITIONER UNIVERSITY STILL HAS A
PENDING MOTION FOR RECONSIDERATION OF THE ORDER DATED 3 JANUARY
2007.
VI

THE RTC-BRANCH 80 COMMITTED GRAVE ERROR IN NOT ORDERING THE


REDEPOSIT OF THE GARNISHED AMOUNT TO THE DBP IN VIOLATION OF THE
CLEAR LANGUAGE OF THE SUPREME COURT RESOLUTION DATED 24
JANUARY 2007.
The UP argues that the amount earmarked for the construction project had
been purposely set aside only for the aborted project and did not include
incidental matters like the awards of actual damages, moral damages and
attorney's fees. In support of its argument, the UP cited Article 12.2 of the
General Construction Agreement, which stipulated that no deductions would
be allowed for the payment of claims, damages, losses and expenses,
including attorney's fees, in case ofany litigation arising out of the
performance of the work. The UP insists that the CA decision was
inconsistent with the rulings in Commissioner of Public Highways v. San
Diego 61 and Department of Agriculture v. NLRC 62 to the effect that
government funds and properties could not be seized under writs of
execution or garnishment to satisfy judgment awards.
Furthermore, the UP contends that the CA contravened Section 5, Article XIV
of the Constitution by allowing the garnishmentof UP funds, because the
garnishment resulted in a substantial reduction of the UP's limited budget
allocated for the remuneration, job satisfaction and fulfillment of the best
available teachers; that Judge Yadao should have exhibited judicial courtesy
towards the Court due to the pendency of the UP's petition for review; and
that she should have also desisted from declaring that the TRO issued by
this Court had become functus officio.
Lastly, the UP states that the awards of actual damages of P5,716,729.00
and moral damages of P10 million should be reduced, if not entirely deleted,
due to its being unconscionable, inequitable and detrimental to public
service. aECSHI
In contrast, Stern Builders and dela Cruz aver that the petition for review
was fatally defective for its failure to mention the other cases upon the
same issues pending between the parties (i.e., CA-G.R. No. 77395 and G.R.
No. 163501); that the UP was evidently resorting to forum shopping, and to
delaying the satisfaction of the final judgment by the filing of its petition for
review; that the ruling in Commissioner of Public Works v. San Diego had no
application because there was an appropriation for the project; that the UP
retained the funds allotted for the project only in a fiduciary capacity; that
the contract price had been meanwhile adjusted to P22,338,553.25, an
amount already more than sufficient to cover the judgment award; that the
UP's prayer to reduce or delete the award of damages had no factual basis,

because they had been gravely wronged, had been deprived of their source
of income, and had suffered untold miseries, discomfort, humiliation and
sleepless years; that dela Cruz had even been constrained to sell his house,
his equipment and the implements of his trade, and together with his family
had been forced to live miserably because of the wrongful actuations of the
UP; and that the RTC correctly declared the Court's TRO to be already
functus officio by reason of the withdrawal of the garnished amount from
the DBP.
The decisive issues to be considered and passed upon are, therefore: (a)
whether the funds of the UP were the proper subject of garnishment in order
to satisfy the judgment award; and (b) whether the UP's prayer for the
deletion of the awardsof actual damages of P5,716,729.00, moral damages
of P10,000,000.00 and attorney's fees of P150,000.00 plus P1,500.00 per
appearance could be granted despite the finality of the judgment of the
RTC.
Ruling
The petition for review is meritorious.
I.
UP's funds, being government funds,
are not subject to garnishment
The UP was founded on June 18, 1908 through Act 1870 to provide
advanced instruction in literature, philosophy, the sciences, and arts, and to
give professional and technical training to deserving students. 63 Despite its
establishment as a body corporate, 64 the UP remains to be a "chartered
institution" 65 performing a legitimate government function. It is an
institution of higher learning, not a corporation established for profit and
declaring any dividends. 66 In enacting Republic Act No. 9500 (The
University of the Philippines Charter of 2008), Congress has declared the UP
as the national university 67"dedicated to the search for truth and
knowledge as well as the development of future leaders." 68 ASIDTa
Irrefragably, the UP is a government instrumentality, 69 performing the
State's constitutional mandate of promoting quality and accessible
education. 70 As a government instrumentality, the UP administers special
funds sourced from the fees and income enumerated under Act No. 1870
and Section 1 of Executive Order No. 714, 71 and from the yearly
appropriations, to achieve the purposes laid down by Section 2 of Act 1870,
as expanded in Republic Act No. 9500. 72 All the funds going into the

possession of the UP, including any interest accruing from the deposit of
such funds in any banking institution, constitute a "special trust fund," the
disbursement of which should always be aligned with the UP's mission and
purpose, 73 and should always be subject to auditing by the COA. 74
Presidential Decree No. 1445 defines a "trust fund" as a fund that officially
comes in the possession of an agency of the government or of a public
officer as trustee, agent or administrator, or that is received for the
fulfillment of some obligation.75 A trust fund may be utilized only for the
"specific purpose for which the trust was created or the funds received." 76
The funds of the UP are government funds that are public in character. They
include the income accruing from the use of real property ceded to the UP
that may be spent only for the attainment of its institutional objectives. 77
Hence, the funds subjectof this action could not be validly made the subject
of the RTC's writ of execution or garnishment. The adverse judgment
rendered against the UP in a suit to which it had impliedly consented was
not immediately enforceable by execution against the UP, 78 because
suability of the State did not necessarily mean its liability. 79
A marked distinction exists between suability of the State and its liability. As
the Court succinctly stated in Municipality of San Fernando, La Union v.
Firme: 80
A distinction should first be made between suability and liability. "Suability
depends on the consent of the state to be sued, liability on the applicable
law and the established facts. The circumstance that a state is suable does
not necessarily mean that it is liable; on the other hand, it can never be held
liable if it does not first consent to be sued. Liability is not conceded by the
mere fact that the state has allowed itself to be sued. When the state does
waive its sovereign immunity, it is only giving the plaintiff the chance to
prove, if it can, that the defendant is liable.
Also, in Republic v. Villasor, 81 where the issuance of an alias writ of
execution directed against the funds of the Armed Forcesof the Philippines
to satisfy a final and executory judgment was nullified, the Court said:
CDaTAI
. . . The universal rule 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 appropriation as required by law. The
functions and public services rendered by the State cannot be allowed to be
paralyzed or disrupted by the diversion ofpublic funds from their legitimate
and specific objects, as appropriated by law.
The UP correctly submits here that the garnishment of its funds to satisfy
the judgment awards of actual and moral damages (including attorney's
fees) was not validly made if there was no special appropriation by Congress
to cover the liability. It was, therefore, legally unwarranted for the CA to
agree with the RTC's holding in the order issued on April 1, 2003 that no
appropriation by Congress to allocate and set aside the payment of the
judgment awards was necessary because "there (were) already an
appropriations (sic) earmarked for the said project." 82 The CA and the RTC
thereby unjustifiably ignored the legal restriction imposed on the trust funds
of the Government and its agencies and instrumentalities to be used
exclusivelyto fulfill the purposes for which the trusts were created or for
which the funds were received except upon express authorization by
Congress or by the head of a government agency in control of the funds,
and subject to pertinent budgetary laws, rules and regulations. 83
Indeed, an appropriation by Congress was required before the judgment
that rendered the UP liable for moral and actual damages (including
attorney's fees) would be satisfied considering that such monetary liabilities
were not covered by the "appropriations earmarked for the said project."
The Constitution strictly mandated that "(n)o money shall be paid out of the
Treasury except in pursuance of an appropriation made by law." 84 TEacSA
II
COA must adjudicate private respondents' claim
before execution should proceed
The execution of the monetary judgment against the UP was within the
primary jurisdiction of the COA. This was expressly provided in Section 26 of
Presidential Decree No. 1445, to wit:
Section 26. General jurisdiction. The authority and powers of the
Commission shall extend to and comprehend all matters relating to auditing
procedures, systems and controls, the keeping of the general accounts ofthe
Government, the preservation of vouchers pertaining thereto for a period of
ten years, the examination and inspection of the books, records, and papers
relating to those accounts; and the audit and settlement of the accounts

ofall persons respecting funds or property received or held by them in an


accountable capacity, as well as the examination, audit, and settlement of
all debts and claims of any sort due from or owing to the Government or any
of its subdivisions, agencies and instrumentalities. The said jurisdiction
extends to all government-owned or controlled corporations, including their
subsidiaries, and other self-governing boards, commissions, or agenciesof
the Government, and as herein prescribed, including non-governmental
entities subsidized by the government, those funded by donations through
the government, those required to pay levies or government share, and
those for which the government has put up a counterpart fund or those
partly funded by the government.
It was of no moment that a final and executory decision already validated
the claim against the UP. The settlement of the monetary claim was still
subject to the primary jurisdiction of the COA despite the final decision of
the RTC having already validated the claim. 85 As such, Stern Builders and
dela Cruz as the claimants had no alternative except to first seek the
approval of the COA of their monetary claim.
On its part, the RTC should have exercised utmost caution, prudence and
judiciousness in dealing with the motions for execution against the UP and
the garnishment of the UP's funds. The RTC had no authority to direct the
immediate withdrawal of any portion of the garnished funds from the
depository banks of the UP. By eschewing utmost caution, prudence and
judiciousness in dealing with the execution and garnishment, and by
authorizing the withdrawal of the garnished funds of the UP, the RTC acted
beyond its jurisdiction, and all its orders and issuances thereon were void
and of no legal effect, specifically: (a) the order Judge Yadao issued on
January 3, 2007 allowing Stern Builders and dela Cruz to withdraw the
deposited garnished amount; (b) the order Judge Yadao issued on January
16, 2007 directing DBP to forthwith release the garnish amount to Stern
Builders and dela Cruz; (c) the sheriff's report of January 17, 2007
manifesting the full satisfaction of the writ of execution; and (d) the order of
April 10, 2007 deying the UP's motion for the redeposit of the withdrawn
amount. Hence, such orders and issuances should be struck down without
exception. ScHADI
Nothing extenuated Judge Yadao's successive violations of Presidential
Decree No. 1445. She was aware of Presidential Decree No. 1445,
considering that the Court circulated to all judges its Administrative Circular
No. 10-2000, 86 issued on October 25, 2000, enjoining them "to observe
utmost caution, prudence and judiciousness in the issuance of writs
ofexecution to satisfy money judgments against government agencies and

local government units" precisely in order to prevent the circumvention of


Presidential Decree No. 1445, as well as of the rules and procedures of the
COA, to wit:
In order to prevent possible circumvention of the rules and procedures of
the Commission on Audit, judges are hereby enjoined to observe utmost
caution, prudence and judiciousness in the issuance of writs of execution to
satisfy money judgments against government agencies and local
government units.
Judges should bear in mind that in Commissioner of Public Highways v. San
Diego (31 SCRA 617, 625 [1970]), this Court explicitly stated:
"The universal rule 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 Court 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 considerationsof public policy. Disbursements of public funds must
be covered by the corresponding appropriation 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, as appropriated by law. IaHSCc
Moreover, it is settled jurisprudence that upon determination of State
liability, the prosecution, enforcement or satisfaction thereof must still be
pursued in accordance with the rules and procedures laid down in P.D. No.
1445, otherwise known as the Government Auditing Code of the Philippines
(Department of Agriculture v. NLRC, 227 SCRA 693, 701-02 [1993] citing
Republic vs. Villasor, 54 SCRA 84 [1973]). All money claims against the
Government must first be filed with the Commission on Audit which must
act upon it within sixty days. Rejection of the claim will authorize the
claimant to elevate the matter to the Supreme Court on certiorari and in
effect, sue the State thereby (P.D. 1445, Sections 49-50).
However, notwithstanding the rule that government properties are not
subject to levy and execution unless otherwise provided for by statute
(Republic v. Palacio, 23 SCRA 899 [1968]; Commissioner of Public Highways
v. San Diego, supra) or municipal ordinance (Municipality of Makati v. Court
of Appeals, 190 SCRA 206 [1990]), the Court has, in various instances,
distinguished between government funds and properties for public use and
those not held for public use. Thus, in Viuda de Tan Toco v. Municipal Council

of Iloilo (49 Phil. 52 [1926]), the Court ruled that "[w]here property of a
municipal or other public corporation is sought to be subjected to execution
to satisfy judgments recovered against such corporation, the question as to
whether such property is leviable or not is to be determined by the usage
and purposes for which it is held." The following can be culled from Viuda de
Tan Toco v. Municipal Council of Iloilo:
1. Properties held for public uses and generally everything held for
governmental purposes are not subject to levy and sale under execution
against such corporation. The same rule applies to funds in the hands ofa
public officer and taxes due to a municipal corporation.
2. Where a municipal corporation owns in its proprietary capacity, as
distinguished from its public or government capacity, property not used or
used for a public purpose but for quasi-private purposes, it is the general
rule that such property may be seized and sold under execution against the
corporation.
3. Property held for public purposes is not subject to execution merely
because it is temporarily used for private purposes. If the public use is
wholly abandoned, such property becomes subject to execution.
This Administrative Circular shall take effect immediately and the Court
Administrator shall see to it that it is faithfully implemented.
Although Judge Yadao pointed out that neither the CA nor the Court had
issued as of then any writ of preliminary injunction to enjoin the release or
withdrawal of the garnished amount, she did not need any writ of injunction
from a superior court to compel her obedience to the law. The Court is
disturbed that an experienced judge like her should look at public laws
likePresidential Decree No. 1445 dismissively instead of loyally following and
unquestioningly implementing them. That she did so turned her court into
an oppressive bastion of mindless tyranny instead of having it as a true
haven for the seekers ofjustice like the UP. TaCDIc
III
Period of appeal did not start without effective
service of decision upon counsel of record;
Fresh period rule announced in
Neypes v. Court of Appeals
can be given retroactive application

The UP next pleads that the Court gives due course to its petition for review
in the name of equity in order to reverse or modify the adverse judgment
against it despite its finality. At stake in the UP's plea for equity was the
return of the amount ofP16,370,191.74 illegally garnished from its trust
funds. Obstructing the plea is the finality of the judgment based on the
supposed tardiness of UP's appeal, which the RTC declared on September
26, 2002. The CA upheld the declaration of finality on February 24, 2004,
and the Court itself denied the UP's petition for review on that issue on May
11, 2004 (G.R. No. 163501). The denial became final on November 12, 2004.
It is true that a decision that has attained finality becomes immutable and
unalterable, and cannot be modified in any respect, 87 even if the
modification is meant to correct erroneous conclusions of fact and law, and
whether the modification is made by the court that rendered it or by this
Court as the highest court of the land. 88 Public policy dictates that once a
judgment becomes final, executory and unappealable, the prevailing party
should not be deprived of the fruits of victory by some subterfuge devised
by the losing party. Unjustified delay in the enforcement of such judgment
sets at naught the role and purpose of the courts to resolve justiciable
controversies with finality. 89 Indeed, all litigations must at some time end,
even at the risk of occasional errors.
But the doctrine of immutability of a final judgment has not been absolute,
and has admitted several exceptions, among them: (a) the correction of
clerical errors; (b) the so-called nunc pro tunc entries that cause no
prejudice to any party; (c) void judgments; and (d) whenever circumstances
transpire after the finality of the decision that render its execution unjust
and inequitable. 90 Moreover, in Heirs of Maura So v. Obliosca, 91 we stated
that despite the absence of the preceding circumstances, the Court is not
precluded from brushing aside procedural norms if only to serve the higher
interests ofjustice and equity. Also, in Gumaru v. Quirino State College, 92
the Court nullified the proceedings and the writ of execution issued by the
RTC for the reason that respondent state college had not been represented
in the litigation by the Office of the Solicitor General.
We rule that the UP's plea for equity warrants the Court's exercise of the
exceptional power to disregard the declaration offinality of the judgment of
the RTC for being in clear violation of the UP's right to due process. aAcHCT
Both the CA and the RTC found the filing on June 3, 2002 by the UP of the
notice of appeal to be tardy. They based their finding on the fact that only
six days remained of the UP's reglementary 15-day period within which to
file the notice ofappeal because the UP had filed a motion for

reconsideration on January 16, 2002 vis- -vis the RTC's decision the UP
received on January 7, 2002; and that because the denial of the motion for
reconsideration had been served upon Atty. Felimon D. Nolasco of the UPLB
Legal Office on May 17, 2002, the UP had only until May 23, 2002 within
which to file the notice of appeal.
The UP counters that the service of the denial of the motion for
reconsideration upon Atty. Nolasco was defective considering that its
counsel of record was not Atty. Nolasco of the UPLB Legal Office but the OLS
in Diliman, Quezon City; and that the period of appeal should be reckoned
from May 31, 2002, the date when the OLS received the order. The UP
submits that the filing of the notice of appeal on June 3, 2002 was well
within the reglementary period to appeal.
We agree with the submission of the UP.
Firstly, the service of the denial of the motion for reconsideration upon Atty.
Nolasco of the UPLB Legal Office was invalid and ineffectual because he was
admittedly not the counsel of record of the UP. The rule is that it is on the
counsel and not the client that the service should be made. 93 That counsel
was the OLS in Diliman, Quezon City, which was served with the denial only
on May 31, 2002. As such, the running of the remaining period of six days
resumed only on June 1, 2002, 94 rendering the filing of the UP's notice of
appeal on June 3, 2002 timely and well within the remaining days of the
UP's period to appeal.
Verily, the service of the denial of the motion for reconsideration could only
be validly made upon the OLS in Diliman, and no other. The fact that Atty.
Nolasco was in the employ of the UP at the UPLB Legal Office did not render
the service upon him effective. It is settled that where a party has appeared
by counsel, service must be made upon such counsel. 95 Service on the
party or the party's employee is not effective because such notice is not
notice in law. 96 This is clear enough from Section 2, second paragraph, of
Rule 13, Rules of Court, which explicitly states that: "If any party has
appeared by counsel, service upon him shall be made upon his counsel or
one of them, unless service upon the party himself is ordered by the court.
Where one counsel appears for several parties, he shall only be entitled to
one copy of any paper served upon him by the opposite side." As such, the
period to appeal resumed only on June 1, 2002, the date following the
service on May 31, 2002 upon the OLS in Diliman of the copy of the decision
of the RTC, not from the date when the UP was notified. 97 TaEIcS

Accordingly, the declaration of finality of the judgment of the RTC, being


devoid of factual and legal bases, is set aside.
Secondly, even assuming that the service upon Atty. Nolasco was valid and
effective, such that the remaining period for the UP to take a timely appeal
would end by May 23, 2002, it would still not be correct to find that the
judgment of the RTC became final and immutable thereafter due to the
notice of appeal being filed too late on June 3, 2002.
In so declaring the judgment of the RTC as final against the UP, the CA and
the RTC applied the rule contained in the second paragraph of Section 3,
Rule 41 of the Rules of Court to the effect that the filing of a motion for
reconsideration interrupted the running of the period for filing the appeal;
and that the period resumed upon notice of the denial of the motion for
reconsideration. For that reason, the CA and the RTC might not be taken to
task for strictly adhering to the rule then prevailing.
However, equity calls for the retroactive application in the UP's favor of the
fresh-period rule that the Court first announced in mid-September of 2005
through its ruling in Neypes v. Court of Appeals, 98 viz.:
To standardize the appeal periods provided in the Rules and to afford
litigants fair opportunity to appeal their cases, the Court deems it practical
to allow a fresh period of 15 days within which to file the notice of appeal in
the Regional Trial Court, counted from receipt of the order dismissing a
motion for a new trial or motion for reconsideration.
The retroactive application of the fresh-period rule, a procedural law that
aims "to regiment or make the appeal period uniform, to be counted from
receipt of the order denying the motion for new trial, motion for
reconsideration (whether full or partial) or any final order or resolution," 99
is impervious to any serious challenge. This is because there are no vested
rights in rules of procedure. 100 A law or regulation is procedural when it
prescribes rules and forms of procedure in order that courts may be able to
administer justice. 101 It does not come within the legal conception of a
retroactive law, or is not subject of the general rule prohibiting the
retroactive operation of statutes, but is given retroactive effect in actions
pending and undetermined at the time of its passage without violating any
right of a person who may feel that he is adversely affected. AEIcSa
We have further said that a procedural rule that is amended for the benefit
of litigants in furtherance of the administration ofjustice shall be
retroactively applied to likewise favor actions then pending, as equity
delights in equality. 102 We may even relax stringent procedural rules in

order to serve substantial justice and in the exercise of this Court's equity
jurisdiction. 103Equity jurisdiction aims to do complete justice in cases
where a court of law is unable to adapt its judgments to the special
circumstances of a case because of the inflexibility of its statutory or legal
jurisdiction. 104
It is cogent to add in this regard that to deny the benefit of the fresh-period
rule to the UP would amount to injustice and absurdity injustice, because
the judgment in question was issued on November 28, 2001 as compared to
the judgment inNeypes that was rendered in 1998; absurdity, because
parties receiving notices of judgment and final orders issued in the year
1998 would enjoy the benefit of the fresh-period rule but the later rulings of
the lower courts like that herein would not.105
Consequently, even if the reckoning started from May 17, 2002, when Atty.
Nolasco received the denial, the UP's filing on June 3, 2002 of the notice of
appeal was not tardy within the context of the fresh-period rule. For the UP,
the fresh period of 15-days counted from service of the denial of the motion
for reconsideration would end on June 1, 2002, which was a Saturday.
Hence, the UP had until the next working day, or June 3, 2002, a Monday,
within which to appeal, conformably with Section 1of Rule 22, Rules of
Court, which holds that: "If the last day of the period, as thus computed,
falls on a Saturday, a Sunday, or a legal holiday in the place where the court
sits, the time shall not run until the next working day."
IV
Awards of monetary damages,
being devoid of factual and legal bases,
did not attain finality and should be deleted
Section 14 of Article VIII of the Constitution prescribes that express findings
of fact and of law should be made in the decision rendered by any court, to
wit:
Section 14. No decision shall be rendered by any court without expressing
therein clearly and distinctly the facts and the law on which it is based.
No petition for review or motion for reconsideration of a decision of the
court shall be refused due course or denied without stating the legal basis
therefor. cDHAES

Implementing the constitutional provision in civil actions is Section 1 of Rule


36, Rules of Court, viz.:
Section 1. Rendition of judgments and final orders. A judgment or final
order determining the merits of the case shall be in writing personally and
directly prepared by the judge, stating clearly and distinctly the facts and
the law on which it is based, signed by him, and filed with the clerk of the
court. (1a)
The Constitution and the Rules of Court apparently delineate two main
essential parts of a judgment, namely: the body and the decretal portion.
Although the latter is the controlling part, 106 the importance of the former
is not to be lightly regarded because it is there where the court clearly and
distinctly states its findings of fact and of law on which the decision is
based. To state it differently, one without the other is ineffectual and
useless. The omission of either inevitably results in a judgment that violates
the letter and the spirit of the Constitution and the Rules of Court.
The term findings of fact that must be found in the body of the decision
refers to statements of fact, not to conclusions oflaw. 107 Unlike in
pleadings where ultimate facts alone need to be stated, the Constitution
and the Rules of Court require not only that a decision should state the
ultimate facts but also that it should specify the supporting evidentiary
facts, for they are what are called the findings of fact.
The importance of the findings of fact and of law cannot be overstated. The
reason and purpose of the Constitution and theRules of Court in that regard
are obviously to inform the parties why they win or lose, and what their
rights and obligations are. Only thereby is the demand of due process met
as to the parties. As Justice Isagani A. Cruz explained in Nicos Industrial
Corporation v. Court of Appeals: 108
It is a requirement of due process that the parties to a litigation be informed
of how it was decided, with an explanationof the factual and legal reasons
that led to the conclusions of the court. The court cannot simply say that
judgment is rendered in favor of X and against Y and just leave it at that
without any justification whatsoever for its action. The losing party is
entitled to know why he lost, so he may appeal to a higher court, if
permitted, should he believe that the decision should be reversed. A
decision that does not clearly and distinctly state the facts and the law on
which it is based leaves the parties in the dark as to how it was reached and
is especially prejudicial to the losing party, who is unable to pinpoint the
possible errors of the court for review by a higher tribunal. AECacS

Here, the decision of the RTC justified the grant of actual and moral
damages, and attorney's fees in the following terse manner, viz.:
. . . The Court is not unmindful that due to defendants' unjustified refusal to
pay their outstanding obligation to plaintiff, the same suffered losses and
incurred expenses as he was forced to re-mortgage his house and lot
located in Quezon City to Metrobank (Exh. "CC") and BPI Bank just to pay its
monetary obligations in the form of interest and penalties incurred in the
course of the construction of the subject project. 109
The statement that "due to defendants' unjustified refusal to pay their
outstanding obligation to plaintiff, the same suffered losses and incurred
expenses as he was forced to re-mortgage his house and lot located in
Quezon City to Metrobank (Exh. "CC") and BPI Bank just to pay its monetary
obligations in the form of interest and penalties incurred in the course of the
construction of the subject project" was only a conclusion of fact and law
that did not comply with the constitutional and statutory prescription. The
statement specified no detailed expenses or losses constituting the
P5,716,729.00 actual damages sustained by Stern Builders in relation to the
construction project or to other pecuniary hardships. The omission of such
expenses or losses directly indicated that Stern Builders did not prove them
at all, which then contravened Article 2199, Civil Code, the statutory basis
for the award of actual damages, which entitled a person to an adequate
compensation only for such pecuniary loss suffered by him as he has duly
proved. As such, the actual damages allowed by the RTC, being bereft
offactual support, were speculative and whimsical. Without the clear and
distinct findings of fact and law, the award amounted only to an ipse dixit on
the part of the RTC, 110 and did not attain finality.
There was also no clear and distinct statement of the factual and legal
support for the award of moral damages in the substantial amount of
P10,000,000.00. The award was thus also speculative and whimsical. Like
the actual damages, the moral damages constituted another judicial ipse
dixit, the inevitable consequence of which was to render the award of moral
damages incapable of attaining finality. In addition, the grant of moral
damages in that manner contravened the law that permitted the recovery of
moral damages as the means to assuage "physical suffering, mental
anguish, fright, serious anxiety, besmirched reputation, wounded feelings,
moral shock, social humiliation, and similar injury." 111 The contraventionof
the law was manifest considering that Stern Builders, as an artificial person,
was incapable of experiencing pain and moral sufferings. 112 Assuming that
in granting the substantial amount of P10,000,000.00 as moral damages,
the RTC might have had in mind that dela Cruz had himself suffered mental

anguish and anxiety. If that was the case, then the RTC obviously
disregarded his separate and distinct personality from that of Stern Builders.
113 Moreover, his moral and emotional sufferings as the President of Stern
Builders were not the sufferings of Stern Builders. Lastly, the RTC violated
the basic principle that moral damages were not intended to enrich the
plaintiff at the expense of the defendant, but to restore the plaintiff to his
status quo ante as much as possible. Taken together, therefore, all these
considerations exposed the substantial amount of P10,000,000.00 allowed
as moral damages not only to be factually baseless and legally indefensible,
but also to be unconscionable, inequitable and unreasonable. cSTDIC
Like the actual and moral damages, the P150,000.00, plus P1,500.00 per
appearance, granted as attorney's fees were factually unwarranted and
devoid of legal basis. The general rule is that a successful litigant cannot
recover attorney's fees as part of the damages to be assessed against the
losing party because of the policy that no premium should be placed on the
right to litigate. 114 Prior to the effectivity of the present Civil Code, indeed,
such fees could be recovered only when there was a stipulation to that
effect. It was only under the present Civil Code that the right to collect
attorney's fees in the cases mentioned in Article 2208 115 of the Civil Code
came to be recognized. 116 Nonetheless, with attorney's fees being allowed
in the concept of actual damages, 117 their amounts must be factually and
legally justified in the body of the decision and not stated for the first time
in the decretal portion. 118 Stating the amounts only in the dispositive
portion of the judgment is not enough; 119 a rendition of the factual and
legal justifications for them must also be laid out in the body of the decision.
120
That the attorney's fees granted to the private respondents did not satisfy
the foregoing requirement suffices for the Court to undo them. 121 The
grant was ineffectual for being contrary to law and public policy, it being
clear that the express findings offact and law were intended to bring the
case within the exception and thereby justify the award of the attorney's
fees. Devoidof such express findings, the award was a conclusion without a
premise, its basis being improperly left to speculation and conjecture. 122
Nonetheless, the absence of findings of fact and of any statement of the law
and jurisprudence on which the awards of actual and moral damages, as
well as of attorney's fees, were based was a fatal flaw that invalidated the
decision of the RTC only as to such awards. As the Court declared in Velarde
v. Social Justice Society, 123 the failure to comply with the constitutional
requirement for a clear and distinct statement of the supporting facts and
law "is a grave abuse of discretion amounting to lack or excess of

jurisdiction" and that "(d)ecisions or orders issued in careless disregard of


the constitutional mandate are a patent nullity and must be struck down as
void." 124 The other item granted by the RTC (i.e., P503,462.74) shall stand,
subject to the action of the COA as stated herein.
WHEREFORE, the Court GRANTS the petition for review on certiorari;
REVERSES and SETS ASIDE the decision of the Court ofAppeals under
review; ANNULS the orders for the garnishment of the funds of the
University of the Philippines and for the release of the garnished amount to
Stern Builders Corporation and Servillano dela Cruz; and DELETES from the
decision ofthe Regional Trial Court dated November 28, 2001 for being void
only the awards of actual damages of P5,716,729.00, moral damages of
P10,000,000.00, and attorney's fees of P150,000.00, plus P1,500.00 per
appearance, in favor of Stern Builders Corporation and Servillano dela Cruz.
The Court ORDERS Stern Builders Corporation and Servillano dela Cruz to
redeposit the amount of P16,370,191.74 within 10 days from receipt of this
decision.
Costs of suit to be paid by the private respondents.
SO ORDERED. TaHDAS
Leonardo-de Castro, Del Castillo, Villarama, Jr. and Perlas-Bernabe, JJ.,
concur.
||| (University of the Philippines v. Dizon, G.R. No. 171182, [August 23,
2012], 693 PHIL 226-268)

49. REPUBLIC V FELICIANO


[G.R. No. 70853. March 12, 1987.]
REPUBLIC OF THE PHILIPPINES, petitioner-appellee, vs. PABLO FELICIANO
and INTERMEDIATE APPELLATE COURT, respondents-appellants.
DECISION
YAP, J p:
Petitioner seeks the review of the decision of the Intermediate Appellate
Court dated April 30, 1985 reversing the order of the Court of First Instance

of Camarines Sur, Branch VI, dated August 21, 1980, which dismissed the
complaint of respondent Pablo Feliciano for recovery of ownership and
possession of a parcel of land on the ground of non-suability of the State.
LLpr
The background of the present controversy may be briefly summarized as
follows:
On January 22, 1970, respondent Feliciano filed a complaint with the then
Court of First Instance of Camarines Sur against theRepublic of the
Philippines, represented by the Land Authority, for the recovery of
ownership and possession of a parcel of land, consisting of four (4) lots with
an aggregate area of 1,364.4177 hectares, situated in the Barrio of
Salvacion, Municipality of Tinambac, Camarines Sur. Plaintiff alleged that he
bought the property in question from Victor Gardiola by virtue of a Contract
of Sale dated May 31, 1952, followed by a Deed of Absolute Sale on October
30, 1954; that Gardiola had acquired the property by purchase from the
heirs of Francisco Abrazado whose title to the said property was evidenced
by aninformacion posesoria; that upon plaintiff's purchase of the property,
he took actual possession of the same, introduced various improvements
therein and caused it to be surveyed in July 1952, which survey was
approved by the Director of Lands on October 24, 1954; that on November
1, 1954, President Ramon Magsaysay issued Proclamation No. 90 reserving
for settlement purposes, under the administration of the National
Resettlement and Rehabilitation Administration (NARRA), a tract of land
situated in the Municipalities of Tinambac and Siruma, Camarines Sur, after
which the NARRA and its successor agency, the Land Authority, started
subdividing and distributing the land to the settlers; that the property in
question, while located within the reservation established under
Proclamation No. 90, was the private property of plaintiff and should
therefore be excluded therefrom. Plaintiff prayed that he be declared the
rightful and true owner of the property in question consisting of 1,364.4177
hectares; that his title of ownership based on informacion posesoria of his
predecessor-in-interest be declared legal, valid and subsisting and that
defendant be ordered to cancel and nullify all awards to the settlers. LLphil
The defendant, represented by the Land Authority, filed an answer, raising
by way of affirmative defenses lack of sufficient cause of action and
prescription.
On August 29, 1970. the trial court, through Judge Rafael S. Sison, rendered
a decision declaring Lot No. 1, with an area of 701.9064 hectares, to be the
private property of the plaintiff, "being covered by a possessory information

title in the name of his predecessor-in-interest" and declaring said lot


excluded from the NARRA settlement reservation. The court declared the
rest of the property claimed by plaintiff, i.e. Lots 2, 3 and 4, reverted to the
public domain.
A motion to intervene and to set aside the decision of August 29, 1970 was
filed by eighty-six (86) settlers, together with the barrio council of Pag-asay,
alleging among other things that intervenors had been in possession of the
land in question for more than twenty (20) years under claim of ownership.
On January 25, 1971, the court a quo reconsidered its decision, reopened
the case and directed the intervenors to file their corresponding pleadings
and present their evidence; all evidence already presented were to remain
but plaintiff, as well as the Republic of the Philippines, could present
additional evidence if they so desire. The plaintiff presented additional
evidence on July 30, 1971, and the case was set for hearing for the
reception of intervenors' evidence on August 30 and August 31, 1971.
On August 30, 1971, the date set for the presentation of the evidence for
intervenors, the latter did not appear but submitted a motion for
postponement and resetting of the hearing on the next day, August 31,
1971. The trial court denied the motion for postponement and allowed
plaintiff to offer his evidence "en ausencia," after which the case would be
deemed submitted for decision. On the following day, August 31, 1971,
Judge Sison rendered a decision reiterating his decision of August 29, 1970.
prcd
A motion for reconsideration was immediately filed by the intervenors. But
before this motion was acted upon, plaintiff filed a motion for execution,
dated November 18, 1971. On December 10, 1971, the lower court, this
time through Judge Miguel Navarro, issued an order denying the motion for
execution and setting aside the order denying intervenors' motion for
postponement. The case was reopened to allow intervenors to present their
evidence. Unable to secure a reconsideration of Judge Navarro's order, the
plaintiff went to the Intermediate Appellate Court on a petition for certiorari.
Said petition was, however, denied by the Intermediate Appellate Court, and
petitioners brought the matter to this Court in G.R. No. 36163, which was
denied on May 3, 1973 Consequently, the case was remanded to the court a
quo for further proceedings.
On August 31, 1970, intervenors filed a motion to dismiss, principally on the
ground that the Republic of the Philippines cannot be sued without its

consent and hence the action cannot prosper. The motion was opposed by
the plaintiff.
On August 21, 1980, the trial court, through Judge Esteban Lising, issued the
questioned order dismissing the case for lack of jurisdiction. Respondent
moved for reconsideration, while the Solicitor General, on behalf of the
Republic of the Philippines filed its opposition thereto, maintaining that the
dismissal was proper on the ground of non-suability of the State and also on
the ground that the existence and or authenticity of the purported
possessory information title of the respondents' predecessor-in-interest had
not been demonstrated and that at any rate, the same is not evidence of
title, or if it is, its efficacy has been lost by prescription and laches. LexLib
Upon denial of the motion for reconsideration, plaintiff again went to the
Intermediate Appellate Court on petition for certiorari. On April 30, 1985,
the respondent appellate court rendered its decision reversing the order of
Judge Lising and remanding the case to the court a quo for further
proceedings. Hence this petition.
We find the petition meritorious. The doctrine of non-suability of the State
has proper application in this case. The plaintiff has impleaded the Republic
of the Philippines as defendant in an action for recovery of ownership and
possession of a parcel of land, bringing the State to court just like any
private person who is claimed to be usurping a piece of property. A suit for
the recovery of property is not an action in rem, but an action in personam.
1 It is an action directed against a specific party or parties, and any
judgment therein binds only such party or parties. The complaint filed by
plaintiff, the private respondent herein, is directed against the Republic of
the Philippines, represented by the Land Authority, a governmental agency
created by Republic Act No. 3844.
By its caption and its allegation and prayer, the complaint is clearly a suit
against the State, which under settled jurisprudence is not permitted,
except upon a showing that the State has consented to be sued, either
expressly or by implication through the use of statutory language too plain
to be misinterpreted. 2 There is no such showing in the instant case. Worse,
the complaint itself fails to allege the existence of such consent. This is a
fatal defect, 3 and on this basis alone, the complaint should have been
dismissed.
The failure of the petitioner to assert the defense of immunity from suit
when the case was tried before the court a quo, as alleged by private

respondent, is not fatal. It is now settled that such defense "may be invoked
by the courts sua sponte at any stage of the proceedings." 4
Private respondent contends that the consent of petitioner may be read
from the Proclamation itself, when it established the reservation "subject to
private rights, if any there be." We do not agree. No such consent can be
drawn from the language of the Proclamation. The exclusion of existing
private rights from the reservation established by Proclamation No. 90 can
not be construed as a waiver of the immunity of the State from suit. Waiver
of immunity, being a derogation of sovereignty, will not be inferred lightly,
but must be construed in strictissimi juris. 5 Moreover, the Proclamation is
not a legislative act. The consent of the State to be sued must emanate
from statutory authority. Waiver of State immunity can only be made by an
act of the legislative body. prcd
Neither is there merit in respondent's submission. which the respondent
appellate court sustained, on the basis of our decision in the Begosa case, 6
that the present action is not a suit against the State within the rule of State
immunity from suit, because plaintiff does not seek to divest the
Government of any of its lands or its funds. It is contended that the
complaint involves land not owned by the State, but private land belonging
to the plaintiff, hence the Government is not being divested of any of its
properties. There is some sophistry involved in this argument, since the
character of the land sought to be recovered still remains to be established,
and the plaintiff's action is directed against the State precisely to compel
the latter to litigate the ownership and possession of the property. In other
words, the plaintiff is out to establish that he is the owner of the land in
question based, incidentally, on an informacion posesoria of dubious value,
and he seeks to establish his claim of ownership by suing the Republic of
the Philippines in an action in personam.
The inscription in the property registry of an informacion posesoria under
the Spanish Mortgage Law was a means provided by the law then in force in
the Philippines prior to the transfer of sovereignty from Spain to the United
States of America, to record a claimant's actual possession of a piece of
land, established through an ex parte proceeding conducted in accordance
with prescribed rules. 7 Such inscription merely furnishes, at best, prima
facie evidence of the fact that at the time the proceeding was held, the
claimant was in possession of the land under a claim of right as set forth in
his application. 8 The possessory information could ripen into a record of
ownership after the lapse of 20 years (later reduced to 10 years), upon the

fulfillment of the requisites prescribed in Article 393 of the Spanish


Mortgage Law. 9
There is no showing in the case at bar that the informacion posesoria held
by the respondent had been converted into a record of ownership. Such
possessory information, therefore, remained at best mere prima facie
evidence of possession. Using this possessory information, the respondent
could have applied for judicial confirmation of imperfect title under the
Public Land Act, which is an action in rem. However, having failed to do so,
it is rather late for him to pursue this avenue at this time. Respondent must
also contend, as the records disclose, with the fact admitted by him and
stated in the decision of the Court a quo that settlers have been occupying
and cultivating the land in question since even before the outbreak of the
war, which puts in grave doubt his own claim of possession. cdll
Worthy of note is the fact, as pointed out by the Solicitor General, that the
informacion posesoria registered in the Office of the Register of Deed of
Camarines Sur on September 23, 1952 was a "reconstituted" possessory
information; it was "reconstituted from the duplicate presented to this office
(Register of Deeds) by Dr. Pablo Feliciano," without the submission of proof
that the alleged duplicate was authentic or that the original thereof was
lost. Reconstitution can be validly made only in case of loss of the original.
10 These circumstances raise grave doubts as to the authenticity and
validity of the "informacion posesoria" relied upon by respondent Feliciano.
Adding to the dubiousness of said document is the fact that "possessory
information calls for an area of only 100 hectares," 11 whereas the land
claimed by respondent Feliciano comprises 1,364.4177 hectares, later
reduced to 701.9064 hectares. Courts should be wary in accepting
"possessory information" documents, as well as other purportedly old
Spanish titles, as proof of alleged ownership of lands.
WHEREFORE, judgment is hereby rendered reversing and setting aside the
appealed decision of the Intermediate Appellate Court, dated April 30, 1985,
and affirming the order of the court a quo, dated August 21, 1980,
dismissing the complaint filed by respondent Pablo Feliciano against the
Republic of the Philippines. No costs. cdphil
SO ORDERED.
Narvasa, Cruz, Feliciano, Gancayco and Sarmiento, JJ., concur.
Melencio-Herrera, J., on leave.

||| (Republic v. Feliciano, G.R. No. 70853, [March 12, 1987], 232 PHIL 391399)

50. MUN. OF SAN FERNANDO V FIRME


[G.R. No. 52179. April 8, 1991.]
MUNICIPALITY OF SAN FERNANDO, LA UNION, petitioner, vs. HON. JUDGE
ROMEO N. FIRME, JUANA RIMANDO-BANIA, LAUREANO BANIA, JR., SOR
MARIETA BANIA, MONTANO BANIA ORJA BANIA AND LYDIA R. BANIA,
respondents.
Mauro C . Cabading, Jr. for petitioner.
Simeon G. Hipol for private respondent.
DECISION
MEDIALDEA, J p:
This is a petition for certiorari with prayer for the issuance of a writ of
preliminary mandatory injunction seeking the nullification or modification of
the proceedings and the orders issued by the respondent Judge Romeo N.
Firme, in his capacity as the presiding judge of the Court of First Instance of
La Union, Second Judicial District, Branch IV, Bauang, La Union in Civil Case

No. 107-BG, entitled "Juana Rimando Bania, et al. vs. Macario Nieveras, et
al." dated November 4, 1975; July 13, 1976; August 23, 1976; February 23,
1977; March 16, 1977; July 26, 1979; September 7, 1979; November 7, 1979
and December 3, 1979 and the decision dated October 10, 1979 ordering
defendants Municipality of San Fernando, La Union and Alfredo Bislig to pay,
jointly and severally, the plaintiffs for funeral expenses, actual damages
consisting of the loss of earning capacity of the deceased, attorney's fees
and costs of suit and dismissing the complaint against the Estate of Macario
Nieveras and Bernardo Balagot.
The antecedent facts are as follows:
Petitioner Municipality of San Fernando, La Union is a municipal corporation
existing under and in accordance with the lawsof the Republic of the
Philippines. Respondent Honorable Judge Romeo N. Firme is impleaded in his
official capacity as the presiding judge of the Court of First Instance of La
Union, Branch IV, Bauang, La Union. While private respondents Juana
Rimando-Bania, Laureano Bania, Jr., Sor Marietta Bania, Montano Bania,
Orja Bania and Lydia R. Bania are heirs ofthe deceased Laureano Bania
Sr. and plaintiffs in Civil Case No. 107-Bg before the aforesaid court.
At about 7 o'clock in the morning of December 16, 1965, a collision occurred
involving a passenger jeepney driven by Bernardo Balagot and owned by
the Estate of Macario Nieveras, a gravel and sand truck driven by Jose
Manandeg and owned by Tanquilino Velasquez and a dump truck of the
Municipality of San Fernando, La Union and driven by Alfredo Bislig. Due to
the impact, several passengers of the jeepney including Laureano Bania Sr.
died as a result of the injuries they sustained and four (4) others suffered
varying degrees of physical injuries.
On December 11, 1966, the private respondents instituted a complaint for
damages against the Estate of Macario Nieveras and Bernardo Balagot,
owner and driver, respectively, of the passenger jeepney, which was
docketed Civil Case No. 2183 in the Court of First Instance of La Union,
Branch I, San Fernando, La Union. However, the aforesaid defendants filed a
Third Party Complaint against the petitioner and the driver of a dump truck
of petitioner. llcd
Thereafter, the case was subsequently transferred to Branch IV, presided
over by respondent judge and was subsequently docketed as Civil Case No.
107-Bg. By virtue of a court order dated May 7, 1975, the private
respondents amended the complaint wherein the petitioner and its regular
employee, Alfredo Bislig were impleaded for the first time as defendants.

Petitioner filed its answer and raised affirmative defenses such as lack of
cause of action, non-suability of the State, prescription of cause of action
and the negligence of the owner and driver of the passenger jeepney as the
proximate causeof the collision. cdll
In the course of the proceedings, the respondent judge issued the following
questioned orders, to wit:
(1) Order dated November 4, 1975 dismissing the cross-claim against
Bernardo Balagot;
(2) Order dated July 13, 1976 admitting the Amended Answer of the
Municipality of San Fernando, La Union and Bislig and setting the hearing on
the affirmative defenses only with respect to the supposed lack of
jurisdiction;
(3) Order dated August 23, 1976 deferring the resolution of the grounds for
the Motion to Dismiss until the trial;
(4) Order dated February 23, 1977 denying the motion for reconsideration of
the order of July 13, 1976 filed by theMunicipality and Bislig for having been
filed out of time;
(5) Order dated March 16, 1977 reiterating the denial of the motion for
reconsideration of the order of July 13, 1976;
(6) Order dated July 26, 1979 declaring the case deemed submitted for
decision it appearing that parties have not yet submitted their respective
memoranda despite the court's direction; and
(7) Order dated September 7, 1979 denying the petitioner's motion for
reconsideration and or order to recall prosecution witnesses for cross
examination.
On October 10, 1979 the trial court rendered a decision, the dispositive
portion is hereunder quoted as follows:
"IN VIEW OF ALL OF (sic) THE FOREGOING, judgment is hereby rendered for
the plaintiffs, and defendants Municipality ofSan Fernando, La Union and
Alfredo Bislig are ordered to pay jointly and severally, plaintiffs Juana
Rimando-Bania, Mrs. Priscilla B. Surell, Laureano Bania, Jr., Sor Marietta
Bania, Mrs. Fe B. Soriano, Montano Bania, Orja Bania and Lydia B.
Bania the sums of P1,500.00 as funeral expenses and P24,744.24 as the
lost expected earnings of the late Laureano Bania Sr., P30,000.00 as moral

damages, and P2,500.00 as attorney's fees. Costs against said defendants.


cdasia
"The Complaint is dismissed as to defendants Estate of Macario Nieveras
and Bernardo Balagot.
"SO ORDERED." (Rollo, p. 30)
Petitioner filed a motion for reconsideration and for a new trial without
prejudice to another motion which was then pending. However, respondent
judge issued another order dated November 7, 1979 denying the motion for
reconsideration of the order of September 7, 1979 for having been filed out
of time.
Finally, the respondent judge issued an order dated December 3, 1979
providing that if defendants municipality and Bislig further wish to pursue
the matter disposed of in the order of July 26, 1979, such should be
elevated to a higher court in accordance with the Rules of Court. Hence, this
petition.
Petitioner maintains that the respondent judge committed grave abuse of
discretion amounting to excess of jurisdiction in issuing the aforesaid orders
and in rendering a decision. Furthermore, petitioner asserts that while
appeal of the decision may be available, the same is not the speedy and
adequate remedy in the ordinary course of law.
On the other hand, private respondents controvert the position of the
petitioner and allege that the petition is devoid ofmerit, utterly lacking the
good faith which is indispensable in a petition for certiorari and prohibition.
(Rollo, p. 42.) In addition, the private respondents stress that petitioner has
not considered that every court, including respondent court, has the
inherent power to amend and control its process and orders so as to make
them conformable to law and justice. (Rollo, p. 43.)
The controversy boils down to the main issue of whether or not the
respondent court committed grave abuse of discretion when it deferred and
failed to resolve the defense of non-suability of the State amounting to lack
of jurisdiction in a motion to dismiss.
In the case at bar, the respondent judge deferred the resolution of the
defense of non-suability of the State amounting to lack of jurisdiction until
trial. However, said respondent judge failed to resolve such defense,
proceeded with the trial and thereafter rendered a decision against the
municipality and its driver.

The respondent judge did not commit grave abuse of discretion when in the
exercise of its judgment it arbitrarily failed to resolve the vital issue of nonsuability of the State in the guise of the municipality. However, said judge
acted in excess of his jurisdiction when in his decision dated October 10,
1979 he held the municipality liable for the quasi-delict committed by its
regular employee. cdll
The doctrine of non-suability of the State is expressly provided for in Article
XVI, Section 3 of the Constitution, to wit: "the State may not be sued
without its consent."
Stated in simple parlance, the general rule is that the State may not be
sued except when it gives consent to be sued. Consent takes the form of
express or implied consent.
Express consent may be embodied in a general law or a special law. The
standing consent of the State to be sued in case ofmoney claims involving
liability arising from contracts is found in Act No. 3083. A special law may be
passed to enable a person to sue the government for an alleged quasidelict, as in Merritt v. Government of the Philippine Islands (34 Phil 311).
(see United States of America v. Guinto, G.R. No. 76607, February 26, 1990,
182 SCRA 644, 654.)
Consent is implied when the government enters into business contracts,
thereby descending to the level of the other contracting party, and also
when the State files a complaint, thus opening itself to a counterclaim. (Ibid)
Municipal corporations, for example, like provinces and cities, are agencies
of the State when they are engaged in governmental functions and
therefore should enjoy the sovereign immunity from suit. Nevertheless, they
are subject to suit even in the performance of such functions because their
charter provided that they can sue and be sued. (Cruz, Philippine Political
Law, 1987 Edition, p. 39)
A distinction should first be made between suability and liability. "Suability
depends on the consent of the state to be sued, liability on the applicable
law and the established facts. The circumstance that a state is suable does
not necessarily mean that it is liable; on the other hand, it can never be held
liable if it does not first consent to be sued. Liability is not conceded by the
mere fact that the state has allowed itself to be sued. When the state does
waive its sovereign immunity, it is only giving the plaintiff the chance to
prove, if it can, that the defendant is liable." (United States of America v.
Guinto, supra, p. 659-660).

Anent the issue of whether or not the municipality is liable for the torts
committed by its employee, the test of liability of themunicipality depends
on whether or not the driver, acting in behalf of the municipality, is
performing governmental or proprietary functions. As emphasized in the
case of Torio v. Fontanilla (G.R. No. L-29993, October 23, 1978. 85 SCRA
599, 606), the distinction of powers becomes important for purposes of
determining the liability of the municipality for the acts of its agents which
result in an injury to third persons.
Another statement of the test is given in City of Kokomo v. Loy, decided by
the Supreme Court of Indiana in 1916, thus:
"Municipal corporations exist in a dual capacity, and their functions are
twofold. In one they exercise the right springing from sovereignty, and while
in the performance of the duties pertaining thereto, their acts are political
and governmental. Their officers and agents in such capacity, though
elected or appointed by them, are nevertheless public functionaries
performing a public service, and as such they are officers, agents, and
servants of the state. In the other capacity the municipalities exercise a
private, proprietary or corporate right, arising from their existence as legal
persons and not as public agencies. Their officers and agents in the
performance of such functions act in behalf of the municipalities in their
corporate or individual capacity, and not for the state or sovereign power."
(112 N.E., 994-995) (Ibid, pp. 605-606.)
It has already been remarked that municipal corporations are suable
because their charters grant them the competence to sue and be sued.
Nevertheless, they are generally not liable for torts committed by them in
the discharge of governmental functions and can be held answerable only if
it can be shown that they were acting in a proprietary capacity. In permitting
such entities to be sued, the State merely gives the claimant the right to
show that the defendant was not acting in its governmental capacity when
the injury was committed or that the case comes under the exceptions
recognized by law. Failing this, the claimant cannot recover. (Cruz, supra, p.
44.)
In the case at bar, the driver of the dump truck of the municipality insists
that "he was on his way to the Naguilian river to get a load of sand and
gravel for the repair of San Fernando's municipal streets." (Rollo, p. 29.)
In the absence of any evidence to the contrary, the regularity of the
performance of official duty is presumed pursuant toSection 3(m) of Rule

131 of the Revised Rules of Court. Hence, We rule that the driver of the
dump truck was performing duties or tasks pertaining to his office. LexLib
We already stressed in the case of Palafox, et al. v. Province of Ilocos Norte,
the District Engineer, and the Provincial Treasurer(102 Phil 1186) that "the
construction or maintenance of roads in which the truck and the driver
worked at the time of the accident are admittedly governmental activities."
After a careful examination of existing laws and jurisprudence, We arrive at
the conclusion that the municipality cannot be held liable for the torts
committed by its regular employee, who was then engaged in the discharge
of governmental functions. Hence, the death of the passenger tragic and
deplorable though it may be imposed on the municipality no duty to pay
monetary compensation.
All premises considered, the Court is convinced that the respondent judge's
dereliction in failing to resolve the issue of non-suability did not amount to
grave abuse of discretion. But said judge exceeded his jurisdiction when it
ruled on the issue ofliability.
ACCORDINGLY, the petition is GRANTED and the decision of the respondent
court is hereby modified, absolving the petitionermunicipality of any liability
in favor of private respondents.
SO ORDERED.
Narvasa, Cruz, Gancayco and Grio-Aquino, JJ., concur.
||| (Municipality of San Fernando, La Union v. Firme, G.R. No. 52179, [April 8,
1991], 273 PHIL 56-65)

51. MERRITT V GOVTOF THE PHIL ISLANDS


FIRST DIVISION
[G.R. No. 11154. March 21, 1916.]
E. MERRITT, plaintiff-appellant, vs. GOVERNMENT OF THE PHILIPPINE
ISLANDS, defendant-appellant.
Crossfield & O'Brien for plaintiff.
Attorney-General Avancea for defendant.
SYLLABUS
1. DAMAGES; MEASURE OF. Where the evidence shows that the plaintiff
was wholly incapacitated for six months it is an error to restrict the damages
to a shorter period during which he was confined in the hospital.
2. SPECIAL STATUTES; CONSENT OF THE STATE TO BE SUED;
CONSTRUCTION. The Government of thePhilippine Islands having been
"modeled after the federal and state governments of the United States' the
decisions of thehigh courts of that country may be used in determining the
scope and purpose of a special statute.
3. ID.; ID.; ID. The state not being liable to suit except by its express
consent, an act abrogating that immunity will be strictly construed.

4. ID.; ID.; ID. An act permitting a suit against the state gives rise to no
liability not previously existing unless it is clearly expressed in the act.
5. GOVERNMENT OF THE PHILIPPINE ISLANDS; LIABILITY FOR THE
NEGLIGENT ACTS OF ITS OFFICERS, AGENTS, AND EMPLOYEES. The
Government of the Philippine Islands in only liable for the negligent acts of
its officers, agents, and employees when they are acting as special agents
within the meaning of paragraph 5 of article 1903 of the Civil code, and a
chauffeur of the General Hospital is not such a special agent.
DECISION
TRENT, J p:
This is an appeal by both partied from a judgment of the Court of First
Instance of the city of Manila in favor of theplaintiff for the sum of P14,741,
together with the costs of the cause.
Counsel for the plaintiff insist that the trial court erred (1) "in limiting the
general damages which the plaintiff suffered to P5,000, instead of P25,000
as claimed in the complaint," and (2) "in limiting the time when plaintiff was
entirely disabled to two months and twenty-one days and fixing the damage
accordingly in the sum of P2,666, instead of P6,000 as claimed by plaintiff in
his complaint."
The Attorney-General on behalf of the defendant urges that the trial court
erred: (a) in finding that the collision between the plaintiff's motorcycle and
the ambulance of the General Hospital was due to the negligence of the
chauffeur; (b) in holding that the Government of the Philippine Islands is
liable for the damages sustained by the plaintiff as a resultof the collision,
even if it be true that collision was due to the negligence of the chauffeur;
and (c) in rendering judgment against the defendant for the sum of P14,741.
The trial court's findings of fact, which are fully supported by the record, are
as follows:
"It is a fact not disputed by counsel for the defendant that when the
plaintiff, riding on a motorcycle, was going toward the western part of Calle
Padre Faura, passing along the west side thereof at a speed of ten to twelve
miles and hour, upon crossing Taft Avenue and when he was ten feet from
the southwestern intersection of said streets, theGeneral Hospital
ambulance, upon reaching said avenue, instead of turning toward the south,
after passing the center thereof, so that it would be on the left side of said
avenue, as is prescribed by the ordinance and the Motor Vehicle Act, turned
suddenly and unexpectedly and long before reaching the center of the

street, into the right side of Taft Avenue, without having sounded any
whistle or horn, by which movement it struck the plaintiff, who was already
six feet from thesouthwestern point or from the post placed there.
"By reason of the resulting collision, the plaintiff was so severely injured
that, according to Dr. Saleeby, who examined him on the very same day
that he was taken to the General Hospital, he was suffering from a
depression in theleft parietal region, a wound in the same place and in beck
part of his head, while blood issued from his nose and he was entirely
unconscious.
"The marks revealed that he had one or more fractures of the skull and that
the grey matter and brain mass had suffered material injury. At ten o'clock
of the night in question, which was the time set for performing the
operation, his pulse was so weak and so irregular that, in his opinion, there
was little hope that he would live. His right leg was broken in such a way
that the fracture extended to the outer skin in such manner that it might be
regarded as double and thewound would be expose to infection, for which
reason it was of the most serious nature.
"At another examination six days before the day of the trial, Dr. Saleeby
notice that the plaintiff's leg showed a contraction of an inch and a half and
a curvature that made his leg very weak and painful at the point of the
fracture. Examination of his head revealed a notable re-adjustment of the
functions of the brain and nerves. The patient apparently was slightly deaf,
had a slight weakness in his eyes and in his mental condition. This latter
weakness was always noticed when the plaintiff had to do any difficult
mental labor, especially when he attempted to use his memory for
mathematical calculations.
"According to the various merchants who testified as witnesses, the
plaintiff's mental and physical condition prior to the accident was excellent,
and that after having received the injuries that have been discussed, his
physical condition had undergone a noticeable depreciation, for he had lost
the agility, energy, and ability that he had constantly displayed before the
accident as one of the best constructors of wooden buildings and he could
not now earn even a half of theincome that he had secured for his work
because he had lost 50 per cent of his efficiency. As a contractor, he could
no longer, as he had before done, climb up ladders and scaffoldings to reach
the highest parts of the building.
"As a consequence of the loss the plaintiff suffered in the efficiency of his
work as a contractor, he had to dissolvethe partnership he had formed with

the engineer, Wilson, because he was incapacitated from making


mathematical calculations on account of the condition of his leg and of his
mental faculties, and he had to give up a contract he had forthe
construction of the Uy Chaco building."
We may say at the outset that we are in full accord with the trial court to the
effect that the collision between theplaintiff's motorcycle and the
ambulance of the General Hospital was due solely to the negligence of the
chauffeur.
The two items which constitute a part of the P14,741 and which are drawn
in question by the plaintiff are (a) P5,000,the amount awarded for
permanent injuries, and (b) the P2,666, the amount allowed for the loss of
wages during the timethe plaintiff was incapacitated from pursuing his
occupation. We fund nothing in the record which would justify us in
increasing the amount of the first. as to the second, the record shows, and
the trial court so found, that the plaintiff's services as a contractor were
worth P1,000 per month. The court, however, limited the time to two
months and twenty-one days, which the plaintiff was actually confined in
the hospital. In this we think there was error, because it was clearly
established that the plaintiff was wholly incapacitated for a period of sex
months. The mere fact that he remained in thehospital only two months and
twenty-one days while the remainder of the six months was spent in his
home, would not prevent recovery for the whole time. We, therefore, find
that the amount of damages sustained by the plaintiff, without any fault on
his part, is P18,075.
As the negligence which caused the collision is a tort committed by an
agent or employee of the Government, theinquiry at once arises whether
the Government is legally liable for the damages resulting therefrom.
Act No. 2457, effective February 3, 1915, reads:
"An act authorizing E. Merritt to bring suit against the Government of the
Philippine Islands and authorizing theAttorney-General of said Islands to
appear in said suit.
"Whereas a claim has been filed against the Government of the Philippine
Islands by Mr. E. Merritt, of Manila, for damages resulting from a collision
between his motorcycle and the ambulance of the General Hospital on
March twenty-fifth, nineteen hundred and thirteen;

"Whereas it is not known who is responsible for the accident nor is it


possible to determine the amount ofdamages, if any , to which the claimant
is entitled; and
"Whereas the Director of Public Works and the Attorney-General recommend
that an act be passed by theLegislature authorizing Mr. E. Merritt to bring
suit in the courts against the Government, in order that said questions may
be decided: Now, therefore,
"By authority of the United States, be it enacted by the Philippine
Legislature, that:
"SECTION 1. E. Merritt is hereby authorized to bring suit in the Court of First
Instance of the city of Manila against the Government of the Philippine
Islands in order to fix the responsibility for the collision between his
motorcycle and the ambulance of the General Hospital, and to determine
the amount of the damages, if any, to which Mr. E. Merrittis entitled on
account of said collision, and the attorney-General of the Philippine Islands
is hereby authorized and directed to appear at the trial on the behalf of the
Government of said Islands, to defend said Government at the same.
"SEC. 2. This Act shall take effect on its passage.
"Enacted, February 3, 1915."
Did the defendant, in enacting the above quoted act, simply waive its
immunity from suit or did it also concede its liability to the plaintiff? If only
the former, then it cannot be held that the Act created any new cause of
action in favor ofthe plaintiff or extended the defendant's liability to any
case not previously recognized.
All admit that the Insular Government (the defendant) cannot be sued by an
individual without its consent. It is also admitted that the instant case is one
against the Government. As the consent of the Government to be sued by
theplaintiff was entirely voluntary on its part, it is our duty to look carefully
into the terms of the consent, and render judgment accordingly.
The plaintiff was authorized to bring this action against the Government "in
order to fix the responsibility for thecollision between his motorcycle and
the ambulance of the General Hospital and to determine the amount of
thedamages, if any, to which Mr. E. Merritt is entitled on account of said
collision, . . . ." These were the two questions submitted to the court for
determination. The Act was passed "in order that said questions may be

decided." We have "decided" that the accident was due solely to the
negligence of the chauffeur, who was at the time an employee of
thedefendant, and we have also fixed the amount of damages sustained by
the plaintiff as a result of the collision. Does theAct authorize us to hold that
the Government is legally liable for that amount? If not, we must look
elsewhere for such authority, if it exists.
The Government of the Philippine Islands having been "modeled after the
Federal and state Governments in theUnited States," we may look to the
decisions of the high courts of that country for aid in determining the
purpose and scope of Act No. 2457.
In the United States the rule that the state is not liable for the torts
committed by its officers or agents whom it employs, except when expressly
made so by legislative enactment, is well settled. "The Government," says
Justice Story, "does not undertake to guarantee to any person the fidelity of
the officers or agents whom it employs, since that would involve it in all its
operations in endless embarrassments, difficulties and losses, which would
be subversive of the public interest." (Claussen vs. City of Luverne, 103
Minn., 491, citing U.S. vs. Kirkpatrick, 9 Wheat, 720; 6 L. Ed., 199; and Beers
vs.State, 20 How., 527; 15 L. Ed., 991.)
In the case of Melvin vs. State ( 121 Cal., 16), the plaintiff sought to recover
damages from the state for personal injuries received on account of the
negligence of the state officers at the state fair, a state institution created
by thelegislature for the purpose of improving agricultural and kindred
industries; to disseminate information calculated to educate and benefit the
industrial classes; and to advance to educate and benefit the industrial
classes; and to advance by such means the material interests of the state,
being objects similar to those sought by the public school system. In passing
upon the question of the state's liability for the negligent acts of its officers
or agents, the court said:
"No claim arises against any government in favor of an individual, by reason
of the misfeasance, laces, or unauthorized exercise of powers by its officers
or agents." (Citing Gibbons vs. U.S., 8 Wall., 269; Clodfelter vs. State, 86
N.C., 51, 53; 41 Am. Rep., 440; Chapman vs. State, 104 Cal., 690; 43 Am. St.
Rep., 158; Green vs. State, 73 Cal., 29; Bournvs. Hart, 93 Cal., 321; 27 Am.
St. Rep., 203; Story on Agency, sec. 319.)
As to the scope of legislative enactments permitting individuals to sue the
state where the cause of action arises outof either tort or contract, the rule
is stated in 36 Cyc., 915, thus:

"By consenting to be sued a state simply waives its immunity from suit. It
does not thereby concede its liability to plaintiff, or create any cause of
action in his favor, or extend its liability to any cause not previously
recognized. It merely gives a remedy to enforce a preexisting liability and
submits itself to the jurisdiction of the court, subject to its right to interpose
any lawful defense."
In Apfelbacher vs. State (152 N. W., 144, advanced sheets), decided April
16, 1915, the Act of 1913, which authorizedthe bringing of this suit, read:
"SECTION 1. Authority is hereby given to George Apfelbacher, of the town of
Summit, Waukesha County, Wisconsin, to bring suit in such court or courts
and in such form or forms as he may be advised for the purpose ofsettling
and determining all controversies which he may now have with the State of
Wisconsin, or its duly authorizes officers and agents, relative to the mill
property of said George Apfelbacher, the fish hatchery of the State
Wisconsin onthe Bark River, and the mill property of Evan Humphrey at the
lower end of Nagawicka Lake, and relative to the use of thewaters of said
Bark River and Nagawicka Lake, all in the county of Waukesha, Wisconsin."
In determining the scope of this act, the court said;
"Plaintiff claims that by the enactment of this law the legislature admitted
liability on the part of the state for theacts of its officers, and that the suit
now stands just as it would stand between private parties. It is difficult to
see how theact does, or was intended to do, more than remove the state's
immunity from suit. It simply gives authority commence suit for the purpose
of settling plaintiff's controversies with the state. Nowhere in the act is there
a whisper or suggestion that the court or courts in the disposition of the suit
shall depart from well established principles of law, or that theamount of
damages is the only question to be settled. The act opened the door of the
court to the plaintiff. It did not pass upon the question of liability, but left
the suit just where it would be in the absence of the state's immunity from
suit. Ifthe Legislature had intended to change the rule that obtained in this
state so long and to declare liability on the part ofthe state, it would not
have left so important a matter to mere inference but would have done so in
express terms. (Murdoc Grate Co. vs. Commonwealth, 152 Mass., 28; 24 N.
E., 854; 8 L. R.A., 399)"
In Denning vs. state (123 Cal., 316), the provisions of the Act of 1893, relied
upon and considered, are as follows:
"All persons who have, or shall hereafter have claims on contract or for
negligence against the state not allowed bythe state board of examiners,

are hereby authorized, on the terms and conditions herein contained, to


bring suit thereon against the state in any of the courts of this state of
competent jurisdiction, and prosecute the same to final judgment.The rules
of practice in civil cases shall apply to such suits, except as herein otherwise
provided."
And the court said:
"This statute has been considered by this court in at least two cases, arising
under different facts, and in both it was held that said statute did not create
any liability or cause of action against the state where none existed before,
but merely gave an additional remedy to enforce such liability as would
have existed if the statute had not been enacted. (Chapman vs. State, 104
Cal., 690; 43 Am. St. Rep., 158; Melvin vs. State, 121 Cal., 16.)"
A statute of Massachusetts enacted in 1887 gave to the superior court
"jurisdiction of all claims against thecommonwealth, whether at law or in
equity," with an exception not necessary to be here mentioned. In
construing this statute the court, in Murdock Grate Co. vs. Commonwealth
(152 Mass., 28), said:
"The statute we are discussing discloses no intention to create against the
state a new and heretofore unrecognized class of liabilities, but only an
intention to provide a judicial tribunal where well recognized existing
liabilities can be adjudicated."
In Sipple vs. State (99 N. Y., 284), where the board of the canal claims had,
by the terms of the statute of New York, jurisdiction of claims for damages
for injuries in the management of the canals such as the plaintiff had
sustained, Chief Justice Ruger remarks; "It must be conceded
that the state can be made liable for injuries arising from the negligence of
its agents or servants, only by force ofsome positive statute assuming such
liability."
It being quite clear that Act No. 2457 does not operate to extend the
Government's liability to any cause not previously recognized, we will now
examine the substantive law touching the defendant's liability for the
negligent acts ofits officers, agents, and employees. Paragraph 5 of article
1903 of the civil Code reads:
"The state is liable in this sense when it acts through a special agent, but
not when the damage should have been caused by the official to whom
properly it pertained to do the act performed, in which case the provisions
of thepreceding article shall be applicable."

The supreme court of Spain in defining the scope of this paragraph said:
"That the obligation to indemnify for damages which a third person causes
another by his fault or negligence is based, as is evidenced by the same
Law 3, Title 15, Partida 7, on that the person obligated, by his own fault or
negligence, takes part in the act or omission of the third party who caused
the damage. It follows therefrom that the state by virtueof such provision of
law, is not responsible for the damages suffered by private individuals in
consequence of acts performed by its employees in the discharge of the
functions pertaining to their office, because neither fault nor even
negligence can be presumed on the part of the state in the organization of
branches of the public service and in theappointment of its agents; on the
contrary, we must presuppose all foresight humanly possible on its part in
order that each branch of service serves the general weal and that of
private persons interested in its operation. Between these latter and the
state therefore, no relations of a private nature governed by the civil law
can arise except in a case wherethe state acts as a judicial person capable
of acquiring rights and contracting obligations." (Supreme Court of Spain,
January 7, 1898; 83 Jur. Civ., 24.)
"That the Civil Code in chapter 2, title 16, book 4, regulates the obligations
which arise out of fault or negligence; and whereas in the first articles
thereof, No. 1902, where the general principle is laid down that where a
person who by an act or omission causes damage to another through fault
or negligence, shall be obliged to repair the damage so done, reference is
made to acts or omissions of the persons who directly or indirectly cause
the damage, the following article refers to third persons and imposes an
identical obligation upon those who maintain fixed relations of authority and
superiority over the authors of the damage, because the law presumes that
in consequence of such relations the evil caused by their own fault or
negligence is imputable to them. This legal presumption gives way to proof,
however, because, as held in the last paragraph of article 1903,
responsibility for acts of third persons ceases when the persons mentioned
in said article prove that they employed all the diligence of a good father of
a family to avoid the damage, and among these persons, called up[on to
answer in a direct and not a subsidiary manner, are found, in addition to
themother or the father in a proper case, guardians and owners or director
of an establishment or enterprise, the state, but not always, except when it
acts through the agency of a special agent, doubtless because and only in
this case, the fault or negligence, which is the original basis of this kind of
objections, must be presumed to lie with the state.

"That although in some cases the state might by virtue of the general
principle set forth in article 1902 respond for all the damage that is
occasioned to private parties by orders or resolutions which by fault or
negligence are made by branches of the central administration acting in the
name and representation of the state itself and as an external expression of
its sovereignty in the exercise of its executive powers, yet said article is not
applicable in the case ofdamages said to have been occasioned to the
petitioners by an executive official, acting in the exercise of his powers, in
proceedings to enforce the collections of certain property taxes owing by
the owner of the property which they hold in sublease.
"That the responsibility of the state is limited by article 1903 to the case
wherein it acts through a special agent (and a special agent, in the sense in
which these words are employed, is one who receives a definite and fixed
order or commission, foreign to the exercise of the duties of his office if he is
a special official) so that in representation of the state and being bound to
act as an agent thereof he executed the trust confided to him. this concept
does not apply to any executive agent who is an employee of the active
administration and who in his own responsibility performs the functions
which are inherent in and naturally pertain to his office and which are
regulated by law and the regulations." (Supreme Court of Spain, May 18,
1904; 98 Jur. Civ., 389, 390.)
"That according to paragraph 5 of article 1903 of the Civil Code and the
principle laid down in a decision, among others, of the 18th of May, 1904, in
a damage case, the responsibility of the state is limited to that which it
contracts through a special agent, duly empowered by a definite order or
commission to perform some act or charged with some definite purpose
which gives rise to the claim, and not where the claim is based on acts or
omissions imputable to a public official charge with some administrative or
technical office who can be held to the proper responsibility in themanner
laid down by the law of civil responsibility. Consequently, the trial court in
not so deciding and in sentencing thesaid entity to the payment of
damages, caused by an official of the second class referred to, has by
erroneous interpretation infringed the provisions of articles 1902 and 1903
of the Civil Code." (Supreme Court of Spain, July 30, 1911; 122 Jur. Civ., 146)
It is, therefore, evident that the State (the Government of the Philippine
Islands) is only liable, according to the above quoted decisions of the
Supreme Court of Spain, for the acts of its agents, officers and employees
when they act as special agents within the meaning of paragraph 5 of
article 1903, supra, and that the chauffeur of the ambulance of the General
Hospital was not such an agent.

For the foregoing reasons, the judgment appealed from must be reversed,
without costs in this instance. Whetherthe Government intends to make
itself legally liable for the amount of damages above set forth, which the
plaintiff has sustained by reason of the negligent acts of one of its
employees, by legislative enactment and by appropriating sufficient funds
therefor, we are not called upon to determine. This matter rests solely with
the Legislature and not with the courts.
Arellano, C.J., Torres, Johnson and Moreland, JJ., concur.
||| (Merritt v. Government of the Philippine Islands, G.R. No. 11154, [March
21, 1916], 34 PHIL 311-323)

52. RAYO V CFI OF BULACAN


SECOND DIVISION
[G.R. No. L-55273-83. December 19, 1981.]

GAUDENCIO RAYO, BIENVINIDO PASCUAL, TOMAS MANUEL, MARIANO CRUZ,


PEDRO BARTOLOME, BERNARDINO CRUZ, JOSE PALAD, LUCIO FAJARDO,
FRANCISCO RAYOS, ANGEL TORRES, NORBERTO TORRES, RODELIO JOAQUIN,
PEDRO AQUINO, APOLINARIO BARTOLOME, MAMERTO BERNARDO, CIRIACO
CASTILLO, GREGORIO CRUZ, SIMEON ESTRELLA, EPIFANIO MARCELO,
HERMOGENES SAN PEDRO, JUAN SANTOS, ELIZABETH ABAN, MARCELINA
BERNABE, BUENAVENTURA CRUZ, ANTONIO MENESES, ROMAN SAN PEDRO,
LOPEZ ESPINOSA, GODOFREDO PUNZAL, JULIANA GARCIA, LEBERATO
SARMIENTO, INOCENCIO DE LEON, CARLOS CORREA, REYNALDO CASIMIRO,
ANTONIO GENER, GAUDENCIO CASTILLO, MATIAS PEREZ, CRISPINIANO
TORRES, CRESENCIO CRUZ, PROTACIO BERNABE, MARIANO ANDRES,
CRISOSTOMO CRUZ, MARCOS EUSTAQUIO, PABLO LEGASPI, VICENTE
PASCUAL, ALEJANDRA SISON, EUFRACIO TORRES, ROGELIO BARTOLOME,
RODOLFO BERNARDO, APOLONIO CASTILLO, MARCELINO DALMACIO,
EUTIQUIO LEGASPI, LORENZO LUCIANO and GREGORIO PALAD, petitioners,
vs. COURT OF FIRST INSTANCE OF BULACAN, BRANCH V, STA. MARIA, and
NATIONAL POWER CORPORATION,respondents.
Efren C. Carag for petitioners.
Solicitor General Estelito P. Mendoza, Assistant Solicitor General Reynato S.
Puno and Solicitor Jesus P. Castilo for respondent NPC.
SYNOPSIS
Separate complaints for damages arising from the precipitate and
simultaneous opening of floodgates of the Angat Dam resulting in the
inundation of several Bulacan towns were filed by petitioners before
respondent Court against the National Power Corporation (NPC) and the
plant superintendent of Angat Dam. In its answer, the NPC invoked a special
and affirmative defense that in the operation of the Angat Dam, it is
performing a purely governmental function, hence it can not be sued
without the express consent of the State. It asked for dismissal of the case.
Respondent court ordered the dismissal of the complaint against the NPC
over the opposition of petitioners stating that the NPC performs
governmental function with respect to the management and operation of
the Angat Dam, and that its power to sue and be sued under its Charter
does not include the power to be sued for tort. Respondent Court denied
reconsideration of its order. Hence, this petition.
The Supreme Court held that the NPC is a government owned and controlled
corporation which has a personality of its own, distinct and separate from
that of the Government; and that under the NPC Charter provision, its power

to "sue and be sued in any court" is without qualification on the cause of


action, and accordingly, it can include a tort claim such as the one instituted
by the petitioner.
Petition granted.
SYLLABUS
ADMINISTRATIVE LAW; NATIONAL POWER CORPORATION, A PRIVATE
CORPORATION; POWER TO SUE AND BE SUED; INCLUDES TORT CLAIMS;
CASE AT BAR. In organising the National Power Corporation, the
government has organised a private corporation, put money in it and has
allowed it to sue and to be sued in any court under its Charter (R.A. No.
6395, Sec. 3(d)). As a government owned and controlled corporation, it has
a personality of its own, distinct and separate from that of the Government
(See National Shipyards and Steel Corp. vs. CIR, et al., L-17874, August 31,
1963, 8 SCRA 781.) The Charter provision that the NPC can sue and be sued
in any court is without qualification on the cause of action and accordingly it
can include a tort claim.
DECISION
ABAD SANTOS, J p:
The relevant antecedents of this case are narrated in the petition and have
not been controverted, namely:
"3. At about midnight on October 26, 1978, during the height of that
infamous typhoon "KADING", the respondent corporation, acting through its
plant superintendent, Benjamin Chavez, opened or caused to be opened
simultaneously all the three floodgates of the Angat Dam. And as a direct
and immediate result of the sudden, precipitate and simultaneous opening
of said floodgates several towns in Bulacan were inundated. Hardest-hit was
Norzagaray. About a hundred of its residents died or were reported to have
died and properties worth million of pesos destroyed or washed away. This
flood was unprecedented in Norzagaray.
"4. Petitioners, who were among the many unfortunate victims of that mancaused flood, filed with the respondent Court eleven complaints for
damages against the respondent corporation and the plant superintendent
of Angat Dam, Benjamin Chavez, docketed as Civil Cases Nos. SM-950, 951,
953, 958, 959, 964, 965, 966, 981, 982 and 983. These complaints though
separately filed have a common/similar cause of action . . .

"5. Respondent corporation filed separate answers to each of these eleven


complaints. Apart from traversing the material averments in the complaints
and setting forth counterclaims for damages respondent corporation
invoked in each answer a special and affirmative defense that 'in the
operation of the Angat Dam,' it is 'performing a purely governmental
function', hence it 'can not be sued without the express consent of the
State.'. . .
"6. On motion of the respondent corporation a preliminary hearing was held
on its affirmative defense as though a motion to dismiss were filed.
Petitioners opposed the prayer for dismissal and contended that respondent
corporation is performing not governmental but merely proprietary
functions and that under its own organic act, Section 3(d) ofRepublic Act No.
6395, it can 'sue and be sued in any court.' . . .
"7. On July 29, 1980 petitioners received a copy of the questioned order of
the respondent Court dated December 21, 1979 dismissing all their
complaints as against the respondent corporation thereby leaving the
superintendent of the Angat Dam, Benjamin Chavez, as the sole partydefendant . . .
"8. On August 7, 1980 petitioners filed with the respondent Court a motion
for reconsideration of the questioned order of dismissal . . .
"9. The respondent Court denied petitioners' motion for reconsideration in
its order dated October 3, 1980.. Hence, the present petition for review on
certiorari under Republic Act No. 5440." (Rollo, pp. 3-6.)
The Order of dismissal dated December 12, 1979, reads as follows:
"Under consideration is a motion to dismiss embodied as a special
affirmative defense in the answer filed by defendant NPC on the grounds
that said defendant performs a purely governmental function in the
operation of the Angat Dam and cannot therefore be sued for damages in
the instant cases in connection therewith.
"Plaintiffs' opposition to said motion to dismiss, relying on Sec. 3 (d) of
Republic Act 6396 which imposes on the NPC the power and liability to sue
and be sued in any court, is not tenable since the same refer to such
matters only as are within the scope of the other corporate powers of said
defendant and not matters of tort as in the instant cases. It being an agency
performing a purely governmental function in the operation of the Angat
Dam, said defendant was not given any right to commit wrongs upon

individuals. To sue said defendant for tort may require the express consent
of the State.
"WHEREFORE, the cases against defendant NPC are hereby dismissed."
(Rollo, p. 60.)
The Order dated October 3, 1980, denying the motion for reconsideration
filed by the plaintiffs is pro forma; the motion was simply denied for lack of
merit. (Rollo, p. 74.)
The petition to review the two orders of the public respondent was filed on
October 16, 1980, and on October 27, 1980, We required the respondents to
comment. It was only on April 13, 1981, after a number of extensions, that
the Solicitor General filed the required comment. (Rollo, pp. 107-114.)
LexLib
On May 27, 1980, We required the parties to file simultaneous memoranda
within twenty (20) days from notice. (Rollo, p. 115.) Petitioners filed their
memorandum on July 22, 1981. (Rollo, pp. 118-125.) The Solicitor General
filed a number of motions for extension of time to file his memorandum. We
granted the seventh extension with a warning that there would beno further
extension. Despite the warning the Solicitor General moved for an eighth
extension which We denied on November 9, 1981. A motion for a ninth
extension was similarly denied on November 18, 1981. The decision in this
case is, therefore, without the memorandum of the Solicitor General.
The parties are agreed that the Order dated December 21, 1979, raises the
following issues:
1. Whether respondent National Power Corporation performs a
governmental function with respect to the management and operation of
the Angat Dam; and
2. Whether the power of respondent National Power Corporation to sue and
be sued under its organic charter includes the power to be sued for tort.
The petition is highly impressed with merit.
It is not necessary to write an extended dissertation on whether or not the
NPC performs a governmental function with respect to the management and
operation of the Angat Dam. It is sufficient to say that the government has
organized a private corporation, put money in it and has allowed it to sue
and be sued in any court under its charter. (R.A. No. 6395, Sec. 3[d].) As a
government owned and controlled corporation, it has a personality of its
own, distinct and separate from that of the Government. (See National

Shipyards and Steel Corp. vs. CIR, et al., L-17874, August 31, 1963, 8 SCRA
781.) Moreover, the charter provision that the NPC can "sue and be sued in
any court" is without qualification on the cause of action and accordingly it
can include a tort claim such as the one instituted by petitioners. llcd
WHEREFORE, the petition is hereby granted; the Orders of the respondent
court dated December 12, 1979 and October 3, 1980, are set aside; and
said court is ordered to reinstate the complaints of the petitioners. Costs
against the NPC.
SO ORDERED.
Barredo, (Chairman), Aquino, De Castro, Ericta and Escolin, JJ., concur.
Concepcion Jr., J., on leave, but the Chairman certified that he voted to grant
the petition.
||| (Rayo v. Court of First Instance of Bulacan, G.R. No. L-55273-83,
[December 19, 1981])

53. FROILAN V PAN ORIENTAL SHIPPING


EN BANC
[G.R. No. L-6060. September 30, 1954.]
FERNANDO A. FROILAN, plaintiff-appellee, vs. PAN ORIENTAL SHIPPING CO.,
defendant-appellant, REPUBLIC OF THE PHILIPPINES, intervenor-appellee.
Quisumbing, Sycip, Quisumbing & Salazar, for appellant.
Ernesto Zaragoza, for appellee.
Hilarion U. Jarencio, for the intervenor.
SYLLABUS

1. PLEADING AND PRACTICE; COMPLAINT IN INTERVENTION; COUNTERCLAIM


NOT BARRED BY PRIOR JUDGMENT FOR FAILURE TO APPEAL FROM
DISMISSAL OF COMPLAINT IN INTERVENTION WITH RESERVATION. An
order dismissing the complaint in intervention after a counterclaim has been
filed but reserving the right of the defendant as against the intervenor, does
not bar at the defendant from proceeding with its counterclaim against the
intervenor, notwithstanding the failure of the defendant to appeal from said
order.
2. ID.; ID.; ID.; COUNTERCLAIM FOR SPECIFIC PERFORMANCE STATES A
CAUSE OF ACTION. The complaint in the intervention sought to recover
possession of the vessel in question from the plaintiff, which claim is
adverse to the position assumed by the defendant that it has a better right
to said possession than the plaintiff, on the theory that the latter had
already lost his rights over the same, and that, on the other hand, the
defendant is relying on the charter contract executed in its favor by the
intervenor. Held: The counterclaim calls for specific performance on the part
of the intervenor and therefore states a cause of action.
3. ID.; ID.; ID.; ID.; FILING OF COMPLAINT N INTERVENTION BY THE
GOVERNMENT IS WAIVER OF NONSUABILITY. The filing by the Government
of a complaint in intervention is in effect a wavier of its right of nonsuability.
DECISION
PARAS, C.J p:
The factual antecedents of this case are sufficiently recited in the brief filed
by the intervenor-appellee as follows:
"1. On February 3, 1951, plaintiff-appellee, Fernando A. Froilan, filed a
complaint against the defendant-appellant, Pan Oriental Shipping Co.,
alleging that he purchased from the Shipping Commission the vessel FS-197
for P200,000, paying P50,000 down and agreeing to pay the balance in
installments; that to secure the payment of the balance of the purchase
price, he executed a chattel mortgage of said vessel in favor of the Shipping
Commission; that for various reasons, among them the non-payment of the
installments, the Shipping Commission tool possession of said vessel and
considered the contract of sale cancelled; that the Shipping Commission
chartered and delivered said vessel to the defendant-appellant Pan Oriental
Shipping Co. subject to the approval of the President of the Philippines; that
he appealed the action of the Shipping Commission to the President of the
Philippines and, in its meeting on August 25, 1950, the Cabinet restored him
to all his rights under his original contract with the Shipping Commission;

that he had repeatedly demanded from the Pan Oriental Shipping Co. the
possession of the vessel in question but the latter refused to do so. He,
therefore, prayed that, upon the approval of the bond accompanying his
complaint, a writ of replevin be issued for the seizure of said vessel with all
its equipment and appurtenances, and that after hearing, he be adjudged to
have the rightful possession thereof (Rec. on App. pp. 2-8).
"2. On February 3, 1951, the lower court issued the writ of replevin prayed
for by Froilan and by virtue thereof the Pan Oriental Shipping Co. was
divested of its possession of said vessel (Rec. on App. p. 47).
"3. On March 1, 1951, Pan Oriental Shipping Co. filed its answer denying the
right of Froilan to the possession of the said vessel; it alleged that the action
of the Cabinet on August 25, 1950, restoring Froilan to his rights under his
original contract with the Shipping Commission was null and void; that, in
any event, Froilan had not complied with the condition precedent imposed
by the Cabinet for the restoration of his rights to the vessel under the
original contract; that it suffered damages in the amount of P22, 764.59 for
wrongful replevin in the month of February, 1951, and the sum of
P17,651.84 a month as damages suffered for wrongful replevin from March
1, 1951; it is alleged that it has incurred necessary and useful expenses on
the vessel amounting to P127,057.31 and claimed the right to retain said
vessel until its useful and necessary expenses had been reimbursed (Rec.
on App. pp. 8-53).
"4. On November 10, 1951, after the leave of the lower court had been
obtained, the intervenor-appellee, Government of the Republic of the
Philippines, filed a complaint in intervention alleging that Froilan had failed
to pay to the Shipping Commission (which name was later changed to
Shipping Administration) the balance due on the purchase price of the
vessel in question, the interest excluding the dry-docking expenses incurred
on said vessel by the session of the said vessel either under the terms of
the original contract as supplemented by Froilan's letter dated January 28,
1949, or in order that it may cause the extrajudicial sale thereof under the
Chattel Mortgage Law. It, therefore, prayed thatFroilan be declared to be
without any rights on said vessel and the amounts he paid thereon forfeited
or alternately that the said vessel be delivered to the Board of Liquidators in
order that the intervenor may have its chattel mortgage extrajudicially
foreclosed in accordance with the provisions of the Chattel Mortgage Law;
and that pending the hearing on the merits, the said vessel be delivered to
its (Rec. on App. pp. 54-66).

"5. On November 29, 1951, the Pan Oriental Shipping Co. filed an answer to
the complaint in intervention alleging that the Government of the Republic
of the Philippines was obligated to deliver the vessel in question to it by
virtue of a contract of bareboat charter with option to purchase executed on
June 16, 1949, by the latter in favor of the former; it also alleged that it had
made necessary and useful expenses of the vessel and claimed the right of
retention of the vessel. It, therefore, prayed that, if the Republic vessel, to
comply with its obligations of delivering to it (Pan OrientalShipping Co.) or
causing its delivery by recovering it from Froilan (Rec. on App. pp. 69-81).
"6. On November 29, 1951, Froilan tendered to the Board of Liquidators,
which was liquidating the affairs of the Shipping Administration, a check in
the amount of P162,576.96 in payment of his obligation to the
ShippingAdministration for the said vessel as claimed in the complaint in
intervention of the Government of the Republic of the Philippines. The Board
of Liquidators issued an official report therefor stating that it was a 'deposit
pending the issuance of an order of the Court of First Instance of Manila'
(Rec. on App. pp. 92-93).
"7. On December 7, 1951, the Government of the Republic of the Philippines
brought the matter of said payment and the circumstances surrounding it to
the attention of the lower court 'in order that they may be taken into
account by this Honorable Court in connection with question that are now
pending before it for determination' (Rec. on App. pp. 82-86).
"8. On February 3, 1952, the lower court held that the payment by Froilan of
the amount of P162,576.96 On November 29, 1951, to the Board of
Liquidators constituted a payment and a discharge of Froilan's obligation to
the Government of the Republic of the Philippines and ordered the dismissal
of the latter's complaint in intervention. In the same order, the lower court
made it very clear that said order did not pre-judge the question involved
between Froilanand the Oriental Shipping Co. which was also pending
determination in said court (Rec. on App. pp. 92-93). This order dismissing
the complaint in intervention, but reserving for future adjudication the
controversy between Froilan and thePan Oriental Shipping Co. had already
become final since neither the Government of the Republic of the
Philippines nor the Pan Oriental Shipping Co. had appealed therefrom.
"9. On May 10, 1952, the Government of the Republic of the Philippines filed
a motion to dismiss the counterclaim of the Pan Oriental Shipping Co.
against it on the ground that the purpose of said counterclaim was to
compel the Government of the Republic of the Philippines to deliver the
vessel to it (Pan Oriental Shipping Co.) in the event that the Government of

the Republic of the Philippines recovers the vessel in question from Froilan.
In view, however, of the order of the order of the lower court dated February
3, 1952, holding that the payment made by Froilan's obligation to the
Shipping Administration, which order had already become final, the
counterclaim of the Pan OrientalShipping Co. against the Republic of the
Philippines was no longer feasible, said counterclaim was barred by prior
judgment and stated no cause of action. It was also alleged that movant
was not subject to the jurisdiction of the court in connection with the
counterclaim. (Rec. on App. pp. 94-97). This motion was opposed by the Pan
Oriental Shipping Co. in its written opposition dated June 4, 1952 (Rec. on
App. pp. 19-104).
"10. In an order dated July 1, 1952, the lower court dismissed the
counterclaim of the Pan Oriental Shipping Co. as prayed for by the Republic
of the Philippines (Rec. App. pp. 104-106).
"11. It is from this order of the lower court dismissing its counterclaim
against the Government of the Republic of the Philippines that Pan Oriental
Shipping Co. has perfected the present appeal (Rec. App. pp. 107)."
The order of the Court of First Instance of Manila, dismissing the
counterclaim of the defendant Pan OrientalShipping Co., from which the
latter has appealed, reads as follows:
"This is a motion to dismiss the counterclaim interposed by the defendant in
its answer to the complaint in intervention.
"The counterclaim stated as follows:
'COUNTERCLAIM
'As counterclaim against the intervenor Republic of the Philippines, the
defendant alleges:
'1. That the defendant reproduces herein all the pertinent allegations of the
foregoing answer to the complaint in intervention.
'2. That, as shown by the allegations of the foregoing answer to the
complaint in intervention, the defendant Pan Oriental Shipping Company is
entitled to the possession of the vessel and the intervenor Republic of the
Philippines is bound under the contract of charter with option to purchase it
entered into with the defendant to deliver that possession to the defendant
whether it actually has the said possession from the plaintiff Fernando A.
Froilan and deliver the same to the defendant;

'3. That, notwithstanding demand, the intervenor Republic of the Philippines


has not to date complied with its obligation of delivering or causing the
delivery of the vessel to the defendant Pan Oriental ShippingCompany.
'RELIEF
'WHEREFORE, the defendant respectfully prays that judgment be rendered
ordering the intervenor Republic of the Philippines alternatively to deliver to
the defendants the possession of the said vessel, or to comply with its
obligation to the defendant causing the delivery to the latter of the said
vessel by recovering the same from plaintiff, with costs.
'The defendant prays for such other remedy as the Court may deem just
and equitable in the premises."
"The ground of the motion to dismiss are (a) That the cause of action is
barred by prior judgment; (b) That the counterclaim stated no cause of
action; (c) That this Honorable Court has no jurisdiction over the intervenor
government of the Republic of the Philippines in connection with the
counterclaim of the defendant Pan Oriental Shipping Co.
"The intervenor contends that the complaint in intervention having been
dismissed and no appeal having been taken, the dismissal of said complaint
is tantamount to a judgment.
"The complaint in intervention did not contain any claim whatsoever against
the defendant Pan Oriental ShippingCo.; hence, the counterclaim has no
foundation.
"The question as to whether the Court has jurisdiction over the intervenor
with regard to the counterclaim, the Court is of the opinion that it has no
jurisdiction over said intervenor.
"It appearing, therefore, that the grounds of the motion to dismiss are well
taken, the counterclaim of the defendant is dismissed, without
pronouncement as to costs."
The defendant's appeal is predicated upon the following assignments of
error:
"I. The lower court erred in dismissing the counterclaim on the ground of
prior judgment.
II. The lower court erred in dismissing the counterclaim on the ground that
the counterclaim had no foundation because made to a complaint in
intervention that over the intervenor Republic of the Philippines.

III. The lower court erred in dismissing the counterclaim on the ground of
alleged lack of jurisdiction over the intervenor Republic of the Philippines."
We agree with appellant's contention that its counterclaim is not barred by
prior judgment (order of February 8, 1952, dismissing the complaint in
intervention), first, because said counterclaim was filed on November 29,
1951, before the issuance of the order invoked; and, secondly, because in
said order of February 8, the court dismissed the complaint in intervention,
"without, of course, precluding the determination of the right of the
defendant in the instant case," and subject to the condition that the
"release and cancellation of the chattel mortgage does not, however,
prejudge the question involved between the plaintiff and the defendant
which is still the subject of determination in this case." It is to be noted that
the first condition referred to the right of the defendant, as distinguished
from the second condition that expressly specified the controversy between
the plaintiff and the defendant. That the first condition reserved the right of
the defendant as against the intervenor, is clearly to be deduced from the
fact that the order of February 8 mentioned the circumstance that "the
question of the expenses of drydocking incurred by the counterclaim against
the plaintiff," apparently as one of the grounds for granting the motion to
dismiss the complaint in intervention.
The defendant's failure to appeal from the order of February 8 cannot,
therefore, be held as barring the defendant from proceeding with its
counterclaim, since, as already stated, said order preserved its right as
against the intervenor. Indeed, the maintenance of said right is in
consonance with Rule 30, section 2, of the Rules of Court providing that "if a
counterclaim has been pleaded by a defendant prior to the service upon him
of the plaintiff's motion to dismiss, the action shall not be dismissed against
the defendant's objection unless the counterclaim can remain pending for
independent adjudication by the court."
The lower court also erred in holding that, as the intervenor had not made
any claim against the defendant, the latter's counterclaim had no
foundation. The complaint in intervention sought to recover possession of
the vessel in question from the plaintiff, and this claim is logically adverse to
the position assumed by the defendant that it has a better right to said
possession than the plaintiff who alleges in his complaint that he is entitled
to recover the vessel from the defendant. At any rate a counterclaim should
judge by its own allegations, and not by the averments of the adverse party.
It should be recalled that the defendant's theory is that the plaintiff had
already lost his rights under the contract with theShipping Administration
and that, on the other hand, the defendant is relying on the charter contract

executed in its favor by the intervenor which is bound to protect the


defendant in its possession of the vessel. In other words, the counter-claim
calls for specific performance on the part of the intervenor. As to whether
this counterclaim is meritorious is another question is not now before us.
The other ground for dismissing the defendant's counterclaim is that the
State is immune from suit. This is untenable, because by filing its complaint
in intervention the Government in effect waived its right of nonsuability.
"The immunity of the state from the suits does not deprive it of the right to
sue private parties in its own courts. The state as plaintiff may avail itself of
the different forms of actions open to private litigants. In short, by taking
the initiative in an action against a private party, the state surrenders its
privileged position and comes down to the level of the defendant. The latter
automatically acquires, within certain limits, the right to set up whatever
claims and other defense he might have against the state. The United
States Supreme Court thus explains:
'No direct suit can be maintained against the United States. But when an
action is brought by the United States to recover money in the hands of a
party who has a legal claim against them, it would be a very rigid principle
to deny to him the right of setting up such claim in a court of justice, and
turn him around to an application to Congress.'". (Sinco, Philippine Political
Law, Tenth Ed., pp. 36-37. citing U.S. vs. Ringgold, 8 Pet. 150, 8 L. ed. 899.)
It is however, contended for the intervenor that, if there was at all any
waiver, it was in favor of the plaintiff against whom the complainant in
intervention was directed. This contention is untenable. As already stated,
the complaint in intervention was in a sense in derogation of the
defendant's claim over the possession of the vessel in question.
Wherefore, the appealed order is hereby reversed and set aside and the
case remanded to the lower court for further proceedings. So ordered,
without costs.
Pablo, Padilla, Montemayor, Reyes, A., Jugo, Bautista Angelo, Concepcion
and Reyes, J.B.L., JJ., concur.
||| (Froilan v. Pan Oriental Shipping Co., G.R. No. L-6060, [September 30,
1954], 95 PHIL 905-913)

54. USA V GUINTO


EN BANC
[G.R. No. 76607. February 26, 1990.]
UNITED STATES OF AMERICA, FREDERICK M. SMOUSE AND YVONNE REEVES,
petitioners, vs. HON. ELIODORO B. GUINTO, Presiding Judge, Branch LVII,
Regional Trial Court, Angeles City, ROBERTO T. VALENCIA, EMERENCIANA C.
TANGLAO, AND PABLO C. DEL PILAR, respondents.
[G.R. No. 79470. February 26, 1990.]
UNITED STATES OF AMERICA, ANTHONY LAMACHIA, T/SGT. USAF, WILFREDO
BELSA, PETER ORASCION AND ROSE CARTALLA, petitioners, vs. HON.
RODOLFO D. RODRIGO, as Presiding Judge of Branch 7, Regional Trial Court
(BAGUIO CITY), La Trinidad, Benguet and FABIAN GENOVE, respondents.

[G.R. No. 80018. February 26, 1990.]


UNITED STATES OF AMERICA, TOMI J. KINGI, DARREL D. DYE and STEVEN F.
BOSTICK, petitioners, vs. HON. JOSEFINA D. CEBALLOS, As Presiding Judge,
Regional
Trial
Court,
Branch
66,
Capas,
Tarlac,
and
LUIS
BAUTISTA,respondents.
[G.R. No. 80258. February 26, 1990.]
UNITED STATES OF AMERICA, MAJOR GENERAL MICHAEL P. C. CARNS, AIC
ERNEST E. RIVENBURGH, AIC ROBIN BLEVINS, SGT. NOEL A. GONZALES, SGT.
THOMAS MITCHELL, SGT. WAYNE L. BENJAMIN, ET AL., petitioners, vs.HON.
CONCEPCION S. ALARCON VERGARA, as Presiding Judge, Branch 62
REGIONAL TRIAL COURT, Angeles City, and RICKY SANCHEZ, FREDDIE
SANCHEZ AKA FREDDIE RIVERA, EDWIN MARIANO, AKA JESSIE DOLORES
SANGALANG, ET AL., respondents.
Luna, Sison & Manas Law Office for petitioners.
SYLLABUS
1. CONSTITUTIONAL LAW; DOCTRINE OF STATE IMMUNITY FROM SUIT;
GENERALLY ACCEPTED PRINCIPLE OF INTERNATIONAL LAW; EMBODIED IN
PHILIPPINE CONSTITUTION. The rule that a state may not be sued without
its consent, now expressed in Article XVI, Section 3, of the 1987
Constitution, is one of the generally accepted principles of international law
that we have adopted as part of the law of our land under Article II, Section
2. This latter provision merely reiterates a policy earlier embodied in the
1935 and 1973 Constitutions and also intended to manifest our resolve to
abide by the rules of the international community.
2. ID., ID., ID., PRINCIPLE DEEMED INCORPORATED IN THE LAW OF EVERY
CIVILIZED STATE; STATE IS AUTOMATICALLY OBLIGATED TO COMPLY WITH
THE PRINCIPLE. Even without such affirmation, we would still be bound by
the generally accepted principles of international law under the doctrine of
incorporation. Under this doctrine, as accepted by the majority of states,
such principles are deemed incorporated in the law of every civilized state
as a condition and consequence of its membership in the society of nations.
Upon its admission to such society, the state is automatically obligated to
comply with these principles in its relations with other states.
3. ID.; ID.; BASIS. As applied to the local state, the doctrine of state
immunity is based on the justification given by Justice Holmes that "there
can be no legal right against the authority which makes the law on which
the right depends." There are other practical reasons for the enforcement of

the doctrine. In the case of the foreign state sought to be impleaded in the
local jurisdiction, the added inhibition is expressed in the maxim par in
parem, non habet imperium. All states are sovereign equals and cannot
assert jurisdiction over one another. A contrary disposition would, in the
language of a celebrated case, "unduly vex the peace of nations."
4. ID., ID., APPLIES TO OFFICIALS OF THE STATE FOR ACTS PERFORMED IN
THE DISCHARGE OF THEIR DUTIES. While the doctrine appears to prohibit
only suits against the state without its consent, it is also applicable to
complaints filed against officials of the state for acts allegedly performed by
them in the discharge of their duties. The rule is that if the judgment against
such officials will require the state itself to perform an affirmative act to
satisfy the same, such as the appropriation of the amount needed to pay
the damages awarded against them, the suit must be regarded as against
the state itself although it has not been formally impleaded. In such a
situation, the state may move to dismiss the complaint on the ground that it
has been filed without its consent.
5. ID., ID., NOT ABSOLUTE AND MAY BE SUED IF STATE GIVES CONSENT.
The doctrine is sometimes derisively called "the royal prerogative of
dishonesty" because of the privilege it grants the state to defeat any
legitimate claim against it by simply invoking its non-suability. That is hardly
fair, at least in democratic societies, for the state is not an unfeeling tyrant
unmoved by the valid claims of its citizens. In fact, the doctrine is not
absolute and does not say the state may not be sued under any
circumstance. On the contrary, the rule says that the state may not be sued
without its consent, which clearly imports that it may be sued if it consents.
6. ID., ID., ID., CONSENT MAY BE GIVEN EXPRESSLY OR IMPLIEDLY. The
consent of the state to be sued may be manifested expressly or impliedly.
Express consent may be embodied in a general law or a special law.
Consent is implied when the state enters into a contract or it itself
commences litigation.
7. ID., ID., ID., ID., WAIVER OF IMMUNITY; INSTANCES. The general law
waiving the immunity of the state from suit is found in Act No. 3083, under
which the Philippine government "consents and submits to be sued upon
any moneyed claim involving liability arising from contract, express or
implied, which could serve as a basis of civil action between private
parties." In Merritt v. Government of the Philippine Islands, a special law was
passed to enable a person to sue the government for an alleged tort. When
the government enters into a contract, it is deemed to have descended to
the level of the other contracting party and divested of its sovereign

immunity from suit with its implied consent. Waiver is also implied when the
government files a complaint, thus opening itself to a counterclaim.
8. ID., ID., ID., ID., ID., ID., EXCEPTIONS. The above rules are subject to
qualification. Express consent is effected only by the will of the legislature
through the medium of a duly enacted statute. We have held that not all
contracts entered into by the government will operate as a waiver of its
non-suability; distinction must be made between its sovereign and
proprietary acts. As for the filing of a complaint by the government, suability
will result only where the government is claiming affirmative relief from the
defendant.
9. ID., ID., ID., ID., ID., UNITED STATES OF AMERICA DEEMED TO HAVE
IMPLIEDLY WAIVED ITS NON-SUABILITY IF IT HAS ENTERED INTO A
CONTRACT IN ITS PROPRIETARY CAPACITY. There is no question that the
United States of America, like any other state, will be deemed to have
impliedly waived its non-suability if it has entered into a contract in its
proprietary or private capacity. It is only when the contract involves its
sovereign or governmental capacity that no such waiver may be implied.
This was our ruling in United States of America v. Ruiz, where the
transaction in question dealt with the improvement of the wharves in the
naval installation at Subic Bay. As this was a clearly governmental function,
we held that the contract did not operate to divest the United States of its
sovereign immunity from suit.
10. ID., ID., ID., ID., ID., CHARGES MAY NOT BE SUMMARILY DISMISSED ON
MERE ASSERTION THAT ACTS ARE IMPUTABLE TO THE UNITED STATES OF
AMERICA. The other petitioners in the cases before us all aver they have
acted in the discharge of their official functions as officers or agents of the
United States. However, this is a matter of evidence. The charges against
them may not be summarily dismissed on their mere assertion that their
acts are imputable to the United States of America, which has not given its
consent to be sued. In fact, the defendants are sought to be held
answerable for personal torts in which the United States itself is not
involved. If found liable, they and they alone must satisfy the judgment.
11. ID., ID., ID., ID., ID., PETITIONERS CHARGED WITH THE ENFORCEMENT
OF LAW REGARDING PROHIBITED DRUGS ARE AGENTS OF THE UNITED
STATES. It is clear from a study of the records of G.R. No. 80018 that the
individually-named petitioners therein were acting in the exercise of their
official functions when they conducted the buy-bust operation against the
complainant and thereafter testified against him at his trial. The said
petitioners were in fact connected with the Air Force Office of Special

Investigators and were charged precisely with the function of preventing the
distribution, possession and use of prohibited drugs and prosecuting those
guilty of such acts. It cannot for a moment be imagined that they were
acting in their private or unofficial capacity when they apprehended and
later testified against the complainant. It follows that for discharging their
duties as agents of the United States, they cannot be directly impleaded for
acts imputable to their principal, which has not given its consent to be sued.
12. ID., ID., ID., ID., ID., SUABILITY AND LIABILITY, DIFFERENTIATED. There
seems to be a failure to distinguish between suability and liability and a
misconception that the two terms are synonymous. Suability depends on
the consent of the state to be sued, liability on the applicable law and the
established facts. The circumstance that a state is suable does not
necessarily mean that it is liable; on the other hand, it can never be held
liable if it does not first consent to be sued. Liability is not conceded by the
mere fact that the state has allowed itself to be sued. When the state does
waive its sovereign immunity, it is only giving the plaintiff the chance to
prove, if it can, that the defendant is liable.
13. ID., ID., ID., ID., ID., ARTICLE 2180 OF THE CIVIL CODE ESTABLISHES A
RULE OF LIABILITY. The private respondent invokes Article 2180 of the
Civil Code which holds the government liable if it acts through a special
agent. The argument, it would seem, is premised on the ground that since
the officers are designated "special agents," the United States government
should be liable for their torts. The said article establishes a rule of liability,
not suability. The government may be held liable under this rule only if it
first allows itself to be sued through any of the accepted forms of consent.
14. ID., ID., ID., ID., ID., AN AGENT PERFORMING REGULAR FUNCTIONS IS
NOT A SPECIAL AGENT EVEN IF SO DENOMINATED; ARTICLE APPLIES ONLY
TO PHILIPPINE GOVERNMENT. Moreover, the agent performing his regular
functions is not a special agent even if he is so denominated, as in the case
at bar. No less important, the said provision appears to regulate only the
relations of the local state with its inhabitants and, hence, applies only to
the Philippine government and not to foreign governments impleaded in our
courts.
15. ID., ID., ID., ID., ID., EXPRESS WAIVER MUST BE EFFECTED THROUGH A
DULY-ENACTED STATUTE. We reject the conclusion of the trial court that
the answer filed by the special counsel of the Office of the Sheriff Judge
Advocate of Clark Air Base was a submission by the United States
government to its jurisdiction. As we noted in Republic v. Purisima, express

waiver of immunity cannot be made by a mere counsel of the government


but must be effected through a duly-enacted statute. Neither does such
answer come under the implied forms of consent as earlier discussed.
16. ID., ID., ID., ID., ID., INQUIRY MUST BE MADE AS TO WHAT CAPACITY
PETITIONERS WERE ACTING. But even as we are certain that individual
petitioners in G.R. No. 80018 were acting in the discharge of their official
functions, we hesitate to make the same conclusion in G.R. No. 80258. The
contradictory factual allegations in this case deserve in our view a closer
study of what actually happened to the plaintiffs. The record is too meager
to indicate if the defendants were really discharging their official duties or
had actually exceeded their authority when the incident in question
occurred. Lacking this information, this Court cannot directly decide this
case. The needed inquiry must first be made by the lower court so it may
assess and resolve the conflicting claims of the parties on the basis of the
evidence that has yet to be presented at the trial. Only after it shall have
determined in what capacity the petitioners were acting at the time of the
incident in question will this Court determine, if still necessary, if the
doctrine of state immunity is applicable.
17. ID., ID., ID., ID., ID., DOCTRINE CANNOT BE INVOKED WHERE THE STATE
ENTERED INTO A CONTRACT IN THE DISCHARGE OF ITS PROPRIETARY
FUNCTION; CASE AT BAR. From the circumstances, the Court can assume
that the restaurant services offered at the John Hay Air Station partake of
the nature of a business enterprise undertaken by the United States
government in its proprietary capacity. Such services are not extended to
the American servicemen for free as a perquisite of membership in the
Armed Forces of the United States. Neither does it appear that they are
exclusively offered to these servicemen; on the contrary, it is well known
that they are available to the general public as well, including the tourists in
Baguio City, many of whom make it a point to visit John Hay for this reason.
All persons availing themselves of this facility pay for the privilege like all
other customers as in ordinary restaurants. Although the prices are
concededly reasonable and relatively low, such services are undoubtedly
operated for profit, as a commercial and not a governmental activity. The
consequence of this finding is that the petitioners cannot invoke the
doctrine of state immunity to justify the dismissal of the damage suit
against them by Genove. Such defense will not prosper even if it be
established that they were acting as agents of the United States when they
investigated and later dismissed Genove. For that matter, not even the
United States government itself can claim such immunity. The reason is that
by entering into the employment contract with Genove in the discharge of

its proprietary functions, it impliedly divested itself of its sovereign


immunity from suit.
18. LABOR AND SOCIAL LEGISLATION; TERMINATION OF EMPLOYMENT;
DISMISSAL FOR THE UNBELIEVABLY NAUSEATING ACT IS PROPER. The
dismissal of the private respondent was decided upon only after a thorough
investigation where it was established beyond doubt that he had polluted
the soup stock with urine. The investigation, in fact, did not stop there.
Despite the definitive finding of Genove's guilt, the case was still referred to
the board of arbitrators provided for in the collective bargaining agreement.
This board unanimously affirmed the findings of the investigators and
recommended Genove's dismissal. There was nothing arbitrary about the
proceedings. The petitioners acted quite properly in terminating the private
respondent's employment for his unbelievably nauseating act. It is
surprising that he should still have the temerity to file his complaint for
damages after committing his utterly disgusting offense.
19. ID.; ID.; BARBERSHOPS ARE NOT AGENCIES OF THE UNITED STATES
ARMED FORCES; IMMUNITY FROM SUIT CANNOT BE INVOKED. Concerning
G.R. No. 76607, we also find that the barbershops subject of the
concessions granted by the United States government are commercial
enterprises operated by private persons. They are not agencies of the
United States Armed Forces nor are their facilities demandable as a matter
of right by the American servicemen. This being the case, the petitioners
cannot plead any immunity from the complaint filed by the private
respondents in the court below. The contracts in question being decidedly
commercial, the conclusion reached in the United States of America v. Ruiz
case cannot be applied here.
DECISION
CRUZ, J p:
These cases have been consolidated because they all involve the doctrine of
state immunity. The United States of America was not impleaded in the
complaints below but has moved to dismiss on the ground that they are in
effect suits against it to which it has not consented. It is now contesting the
denial of its motions by the respondent judges. cdll
In G.R. No. 76607, the private respondents are suing several officers of the
U.S. Air Force stationed in Clark Air Base in connection with the bidding
conducted by them for contracts for barbering services in the said base.

On February 24, 1986, the Western Pacific Contracting Office, Okinawa Area
Exchange, U.S. Air Force, solicited bids for such contracts through its
contracting officer, James F. Shaw. Among those who submitted their bids
were private respondents Roberto T. Valencia, Emerenciana C. Tanglao, and
Pablo C. del Pilar. Valencia had been a concessionaire inside Clark for 34
years; del Pilar for 12 years; and Tanglao for 50 years. LLjur
The bidding was won by Ramon Dizon, over the objection of the private
respondents, who claimed that he had made a bid for four facilities,
including the Civil Engineering Area, which was not included in the invitation
to bid.
The private respondents complained to the Philippine Area Exchange
(PHAX). The latter, through its representatives, petitioners Yvonne Reeves
and Frederic M. Smouse, explained that the Civil Engineering concession
had not been awarded to Dizon as a result of the February 24, 1986
solicitation. Dizon was already operating this concession, then known as the
NCO club concession, and the expiration of the contract had been extended
from June 30, 1986 to August 31, 1986. They further explained that the
solicitation of the CE barbershop would be available only by the end of June
and the private respondents would be notified. Cdpr
On June 30,1986, the private respondents filed a complaint in the court
below to compel PHAX and the individual petitioners to cancel the award to
defendant Dizon, to conduct a rebidding for the barbershop concessions and
to allow the private respondents by a writ of preliminary injunction to
continue operating the concessions pending litigation. 1
Upon the filing of the complaint, the respondent court issued an ex parte
order directing the individual petitioners to maintain the status quo.
On July 22, 1986, the petitioners filed a motion to dismiss and opposition to
the petition for preliminary injunction on the ground that the action was in
effect a suit against the United States of America, which had not waived its
non-suability. The individual defendants, as officials/employees of the U.S.
Air Force, were also immune from suit.
On the same date, July 22, 1986, the trial court denied the application for a
writ of preliminary injunction.
On October 10, 1988, the trial court denied the petitioners' motion to
dismiss, holding in part as follows:
From the pleadings thus far presented to this Court by the parties, the
Court's attention is called by the relationship between the plaintiffs as well

as the defendants, including the US Government in that prior to the bidding


or solicitation in question, there was a binding contract between the
plaintiffs as well as the defendants, including the US Government. By virtue
of said contract of concession, it is the Court's understanding that neither
the US Government nor the herein principal defendants would become the
employer/s of the plaintiffs but that the latter are the employers themselves
of the barbers, etc. with the employer, the plaintiffs herein, remitting the
stipulated percentage of commissions to the Philippine Area Exchange. The
same circumstance would become m effect when the Philippine Area
Exchange opened for bidding or solicitation the questioned barber shop
concessions. To this extent, therefore, indeed a commercial transaction has
been entered, and for purposes of the said solicitation, would necessarily be
entered between the plaintiffs as well as the defendants.
The Court, further, is of the view that Article XVIII of the RP-US Bases
Agreement does not cover such kind of services falling under the
concessionaireship, such as a barber shop concession. 2
On December 11, 1986, following the filing of the herein petition for
certiorari and prohibition with preliminary injunction, we issued a temporary
restraining order against further proceedings in the court below. 3
In G.R. No. 79470, Fabian Genove filed a complaint for damages against
petitioners Anthony Lamachia, Wilfredo Belsa, Rose Cartalla and Peter
Orascion for his dismissal as cook in the U.S. Air Force Recreation Center at
the John Hay Air Station in Baguio City. It had been ascertained after
investigation, from the testimony of Belsa, Cartalla and Orascion, that
Genove had poured urine into the soup stock used in cooking the
vegetables served to the club customers. Lamachia, as club manager,
suspended him and thereafter referred the case to a board of arbitrators
conformably to the collective bargaining agreement between the Center and
its employees. The board unanimously found him guilty and recommended
his dismissal. This was effected on March 5, 1986, by Col. David C. Kimball,
Commander of the 3rd Combat Support Group, PACAF Clark Air Force Base.
Genove's reaction was to file his complaint in the Regional Trial Court of
Baguio City against the individual petitioners. 4
On March 13, 1987, the defendants, joined by the United States of America,
moved to dismiss the complaint, alleging that Lamachia, as an officer of the
U.S. Air Force stationed at John Hay Air Station, was immune from suit for
the acts done by him in his official capacity. They argued that the suit was in

effect against the United States, which had not given its consent to be sued.
Cdpr
This motion was denied by the respondent judge on June 4, 1987, in an
order which read in part:
It is the understanding of the Court, based on the allegations of the
complaint which have been hypothetically admitted by defendants upon
the filing of their motion to dismiss that although defendants acted
initially in their official capacities, their going beyond what their functions
called for brought them out of the protective mantle of whatever immunities
they may have had in the beginning. Thus, the allegation that the acts
complained of were "illegal," done, with "extreme bad faith" and with "preconceived sinister plan to harass and finally dismiss" the plaintiff, gains
significance. 5
The petitioners then came to this Court seeking certiorari and prohibition
with preliminary injunction.
In G.R. No. 80018, Luis Bautista, who was employed as a barracks boy in
Camp O'Donnell, an extension of Clark Air Base, was arrested following a
buy-bust operation conducted by the individual petitioners herein, namely,
Tomi J. King, Darrel D. Dye and Stephen F. Bostick, officers of the U.S. Air
Force and special agents of the Air Force Office of Special Investigators
(AFOSI). On the basis of the sworn statements made by them, an
information for violation of R.A. 6425, otherwise known as the Dangerous
Drugs Act, was filed against Bautista in the Regional Trial Court of Tarlac.
The above-named officers testified against him at his trial. As a result of the
filing of the charge, Bautista was dismissed from his employment. He then
filed a complaint for damages against the individual petitioners herein
claiming that it was because of their acts that he was removed. 6
During the period for filing of the answer, Mariano Y. Navarro, a special
counsel assigned to the International Law Division, Office of the Staff Judge
Advocate of Clark Air Base, entered a special appearance for the defendants
and moved for an extension within which to file an "answer and/or other
pleadings." His reason was that the Attorney General of the United States
had not yet designated counsel to represent the defendants, who were
being sued for their official acts. Within the extended period, the
defendants, without the assistance of counsel or authority from the U.S.
Department of Justice, filed their answer. They alleged therein as affirmative
defenses that they had only done their duty in the enforcement of the laws

of the Philippines inside the American bases pursuant to the RP-US Military
Bases Agreement.
On May 7, 1987, the law firm of Luna, Sison and Manas, having been
retained to represent the defendants, filed with leave of court a motion to
withdraw the answer and dismiss the complaint. The ground invoked was
that the defendants were acting in their official capacity when they did the
acts complained of and that the complaint against them was in effect a suit
against the United States without its consent. prcd
The motion was denied by the respondent judge in his order dated
September 11, 1987, which held that the claimed immunity under the
Military Bases Agreement covered only criminal and not civil cases.
Moreover, the defendants had come under the jurisdiction of the court when
they submitted their answer. 7
Following the filing of the herein petition for certiorari and prohibition with
preliminary injunction, we issued on October 14, 1987, a temporary
restraining order. 8
In G.R. No. 80258, a complaint for damages was filed by the private
respondents against the herein petitioners (except the United States of
America), for injuries allegedly sustained by the plaintiffs as a result of the
acts of the defendants. 9 There is a conflict of factual allegations here.
According to the plaintiffs, the defendants beat them up, handcuffed them
and unleashed dogs on them which bit them in several parts of their bodies
and caused extensive injuries to them. The defendants deny this and claim
the plaintiffs were arrested for theft and were bitten by the dogs because
they were struggling and resisting arrest. The defendants stress that the
dogs were called off and the plaintiffs were immediately taken to the
medical center for treatment of their wounds.
In a motion to dismiss the complaint, the United States of America and the
individually named defendants argued that the suit was in effect a suit
against the United States, which had not given its consent to be sued. The
defendants were also immune from suit under the RP-US Bases Treaty for
acts done by them in the performance of their official functions.
The motion to dismiss was denied by the trial court in its order dated August
10, 1987, reading in part as follows:
The defendants certainly cannot correctly argue that they are immune from
suit. The allegations, of the complaint which is sought to be dismissed, had
to be hypothetically admitted and whatever ground the defendants may

have, had to be ventilated during the trial of the case on the merits. The
complaint alleged criminal acts against the individually-named defendants
and from the nature of said acts it could not be said that they are Acts of
State, for which immunity should be invoked. If the Filipinos themselves are
duty bound to respect, obey and submit themselves to the laws of the
country, with more reason, the members of the United States Armed Forces
who are being treated as guests of this country should respect, obey and
submit themselves to its laws. 10
and so was the motion for reconsideration. The defendants submitted their
answer as required but subsequently filed their petition for certiorari and
prohibition with preliminary injunction with this Court. We issued a
temporary restraining order on October 27, 1987. 11
II
The rule that a state may not be sued without its consent, now expressed in
Article XVI, Section 3, of the 1987 Constitution, is one of the generally
accepted principles of international law that we have adopted as part of the
law of our land under Article II, Section 2. This latter provision merely
reiterates a policy earlier embodied in the 1935 and 1973 Constitutions and
also intended to manifest our resolve to abide by the rules of the
international community.
Even without such affirmation, we would still be bound by the generally
accepted principles of international law under the doctrine of incorporation.
Under this doctrine, as accepted by the majority of states, such principles
are deemed incorporated in the law of every civilized state as a condition
and consequence of its membership in the society of nations. Upon its
admission to such society, the state is automatically obligated to comply
with these principles in its relations with other states.
As applied to the local state, the doctrine of state immunity is based on the
justification given by Justice Holmes that "there can be no legal right against
the authority which makes the law on which the right depends." 12 There
are other practical reasons for the enforcement of the doctrine. In the case
of the foreign state sought to be impleaded in the local jurisdiction, the
added inhibition is expressed in the maxim par in parem, non habet
imperium. All states are sovereign equals and cannot assert jurisdiction over
one another. A contrary disposition would, in the language of a celebrated
case, "unduly vex the peace of nations." 13
While the doctrine appears to prohibit only suits against the state without its
consent, it is also applicable to complaints filed against officials of the state

for acts allegedly performed by them in the discharge of their duties. The
rule is that if the judgment against such officials will require the state itself
to perform an affirmative act to satisfy the same, such as the appropriation
of the amount needed to pay the damages awarded against them, the suit
must be regarded as against the state itself although it has not been
formally impleaded. 14 In such a situation, the state may move to dismiss
the complaint on the ground that it has been filed without its consent.
The doctrine is sometimes derisively called "the royal prerogative of
dishonesty" because of the privilege it grants the state to defeat any
legitimate claim against it by simply invoking its non-suability. That is hardly
fair, at least in democratic societies, for the state is not an unfeeling tyrant
unmoved by the valid claims of its citizens. In fact, the doctrine is not
absolute and does not say the state may not be sued under any
circumstance. On the contrary, the rule says that the state may not be sued
without its consent, which clearly imports that it may be sued if it consents.
The consent of the state to be sued may be manifested expressly or
impliedly. Express consent may be embodied in a general law or a special
law. Consent is implied when the state enters into a contract or it itself
commences litigation.
The general law waiving the immunity of the state from suit is found in Act
No. 3083, under which the Philippine government "consents and submits to
be sued upon any moneyed claim involving liability arising from contract,
express or implied, which could serve as a basis of civil action between
private parties." In Merritt v. Government of the Philippine Islands, 15 a
special law was passed to enable a person to sue the government for an
alleged tort. When the government enters into a contract, it is deemed to
have descended to the level of the other contracting party and divested of
its sovereign immunity from suit with its implied consent. 16 Waiver is also
implied when the government files a complaint, thus opening itself to a
counterclaim. 17
The above rules are subject to qualification. Express consent is effected only
by the will of the legislature through the medium of a duly enacted statute.
18 We have held that not all contracts entered into by the government will
operate as a waiver of its non-suability; distinction must be made between
its sovereign and proprietary acts. 19 As for the filing of a complaint by the
government, suability will result only where the government is claiming
affirmative relief from the defendant. 20

In the case of the United States of America, the customary rule of


international law on state immunity is expressed with more specificity in the
RP-US Bases Treaty. Article III thereof provides as follows:
It is mutually agreed that the United States shall have the rights, power and
authority within the bases which are necessary for the establishment, use,
operation and defense thereof or appropriate for the control thereof and all
the rights, power and authority within the limits of the territorial waters and
air space adjacent to, or in the vicinity of, the bases which are necessary to
provide access to them or appropriate for their control.
The petitioners also rely heavily on Baer v. Tizon, 21 along with several
other decisions, to support their position that they are not suable in the
cases below, the United States not having waived its sovereign immunity
from suit. It is emphasized that in Baer, the Court held:
The invocation of the doctrine of immunity from suit of a foreign state
without its consent is appropriate. More specifically, insofar as alien armed
forces is concerned, the starting point is Raquiza v. Bradford, a 1945
decision. In dismissing a habeas corpus petition for the release of
petitioners confined by American army authorities, Justice Hilado, speaking
for the Court, cited Coleman v. Tennessee, where it was explicitly declared:
`It is well settled that a foreign army, permitted to march through a friendly
country or to be stationed in it, by permission of its government or
sovereign, is exempt from the civil and criminal jurisdiction of the place.'
Two years later, in Tubb and Tedrow v. Griess, this Court relied on the ruling
in Raquiza v. Bradford and cited in support thereof excerpts from the works
of the following authoritative writers: Vattel, Wheaton, Hall, Lawrence,
Oppenheim, Westlake, Hyde, and McNair and Lauterpacht. Accuracy
demands the clarification that after the conclusion of the PhilippineAmerican Military Bases Agreement, the treaty provisions should control on
such matter, the assumption being that there was a manifestation of the
submission to jurisdiction on the part of the foreign power whenever
appropriate. More to the point is Syquia v. Almeda Lopez, where plaintiffs as
lessors sued the Commanding General of the United States Army in the
Philippines, seeking the restoration to them of the apartment buildings they
owned leased to the United States armed forces stationed in the Manila
area. A motion to dismiss on the ground of non-suability was filed and
upheld by respondent Judge. The matter was taken to this Court in a
mandamus proceeding. It failed. It was the ruling that respondent Judge
acted correctly considering that the `action must be considered as one
against the U.S. Government.' The opinion of Justice Montemayor continued:
`It is clear that the courts of the Philippines including the Municipal Court of

Manila have no jurisdiction over the present case for unlawful detainer. The
question of lack of jurisdiction was raised and interposed at the very
beginning of the action. The U.S. Government has not given its consent to
the filing of this suit which is essentially against her, though not in name.
Moreover, this is not only a case of a citizen filing a suit against his own
Government without the latter's consent but it is of a citizen filing an action
against a foreign government without said government's consent, which
renders more obvious the lack of jurisdiction of the courts of his country. The
principles of law behind this rule are so elementary and of such general
acceptance that we deem it unnecessary to cite authorities in support
thereof.' Then came Marvel Building Corporation v. Philippine War Damage
Commission, where respondent, a United States Agency established to
compensate damages suffered by the Philippines during World War II was
held as falling within the above doctrine as the suit against it `would
eventually be a charge against or financial liability of the United States
Government because . . ., the Commission has no funds of its own for the
purpose of paying money judgments.' The Syquia ruling was again explicitly
relied upon in Marquez Lim v. Nelson, involving a complaint for the recovery
of a motor launch, plus damages, the special defense interposed being `that
the vessel belonged to the United States Government, that the defendants
merely acted as agents of said Government, and that the United States
Government is therefore the real party in interest.' So it was in Philippine
Alien Property Administration v. Castelo, where it was held that a suit
against Alien Property Custodian and the Attorney General of the United
States involving vested property under the Trading with the Enemy Act is in
substance a suit against the United States. To the same effect is Parreno v.
McGranery, as the following excerpt from the opinion of Justice Tuazon
clearly shows: `It is a widely accepted principle of international law, which is
made a part of the law of the land (Article II, Section 3 of the Constitution),
that a foreign state may not be brought to suit before the courts of another
state or its own courts without its consent.' Finally, there is Johnson v.
Turner, an appeal by the defendant, then Commanding General, Philippine
Command (Air Force, with office at Clark Field) from a decision ordering the
return to plaintiff of the confiscated military payment certificates known as
scrip money. In reversing the lower court decision, this Tribunal, through
Justice Montemayor, relied on Syquia v. Almeda Lopez, explaining why it
could not be sustained. LLphil
It bears stressing at this point that the above observations do not confer on
the United States of America a blanket immunity for all acts done by it or its
agents in the Philippines. Neither may the other petitioners claim that they

are also insulated from suit in this country merely because they have acted
as agents of the United States in the discharge of their official functions.
There is no question that the United States of America, like any other state,
will be deemed to have impliedly waived its non-suability if it has entered
into a contract in its proprietary or private capacity. It is only when the
contract involves its sovereign or governmental capacity that no such
waiver may be implied. This was our ruling in United States of America v.
Ruiz, 22 where the transaction in question dealt with the improvement of
the wharves in the naval installation at Subic Bay. As this was a clearly
governmental function, we held that the contract did not operate to divest
the United States of its sovereign immunity from suit. In the words of Justice
Vicente Abad Santos:
The traditional rule of immunity exempts a State from being sued in the
courts of another State without its consent or waiver. This rule is a
necessary consequence of the principles of independence and equality of
States. However, the rules of International Law are not petrified; they are
constantly developing and evolving. And because the activities of states
have multiplied, it has been necessary to distinguish them between
sovereign and governmental acts (jure imperii) and private, commercial and
proprietary acts (jure gestionis). The result is that State immunity now
extends only to acts jure imperii. The restrictive application of State
immunity is now the rule in the United States, the United Kingdom and other
states in Western Europe.
xxx xxx xxx
The restrictive application of State immunity is proper only when the
proceedings arise out of commercial transactions of the foreign sovereign,
its commercial activities or economic affairs. Stated differently, a State may
be said to have descended to the level of an individual and can thus be
deemed to have tacitly given its consent to be sued only when it enters into
business contracts. It does not apply where the contract relates to the
exercise of its sovereign functions. In this case the projects are an integral
part of the naval base which is devoted to the defense of both the United
States and the Philippines, indisputably a function of the government of the
highest order; they are not utilized for nor dedicated to commercial or
business purposes.
The other petitioners in the cases before us all aver they have acted in the
discharge of their official functions as officers or agents of the United States.
However, this is a matter of evidence. The charges against them may not be

summarily dismissed on their mere assertion that their acts are imputable
to the United States of America, which has not given its consent to be sued.
In fact, the defendants are sought to be held answerable for personal torts
in which the United States itself is not involved. If found liable, they and
they alone must satisfy the judgment.
In Festejo v. Fernando, 23 a bureau director, acting without any authority
whatsoever, appropriated private land and converted it into public irrigation
ditches. Sued for the value of the lots invalidly taken by him, he moved to
dismiss the complaint on the ground that the suit was in effect against the
Philippine government, which had not given its consent to be sued. This
Court sustained the denial of the motion and held that the doctrine of state
immunity was not applicable. The director was being sued in his private
capacity for a personal tort.
With these considerations in mind, we now proceed to resolve the cases at
hand.
III
It is clear from a study of the records of G.R. No. 80018 that the individuallynamed petitioners therein were acting in the exercise of their official
functions when they conducted the buy-bust operation against the
complainant and thereafter testified against him at his trial. The said
petitioners were in fact connected with the Air Force Office of Special
Investigators and were charged precisely with the function of preventing the
distribution, possession and use of prohibited drugs and prosecuting those
guilty of such acts. It cannot for a moment be imagined that they were
acting in their private or unofficial capacity when they apprehended and
later testified against the complainant. It follows that for discharging their
duties as agents of the United States, they cannot be directly impleaded for
acts imputable to their principal, which has not given its consent to be sued.
As we observed in Sanders v. Veridiano: 24
Given the official character of the above-described letters, we have to
conclude that the petitioners were, legally speaking, being sued as officers
of the United States government. As they have acted on behalf of that
government, and within the scope of their authority, it is that government,
and not the petitioners personally, that is responsible for their acts.
The private respondent invokes Article 2180 of the Civil Code which holds
the government liable if it acts through a special agent. The argument, it
would seem, is premised on the ground that since the officers are

designated "special agents," the United States government should be liable


for their torts.
There seems to be a failure to distinguish between suability and liability and
a misconception that the two terms are synonymous. Suability depends on
the consent of the state to be sued, liability on the applicable law and the
established facts. The circumstance that a state is suable does not
necessarily mean that it is liable; on the other hand, it can never be held
liable if it does not first consent to be sued. Liability is not conceded by the
mere fact that the state has allowed itself to be sued. When the state does
waive its sovereign immunity, it is only giving the plaintiff the chance to
prove, if it can, that the defendant is liable.
The said article establishes a rule of liability, not suability. The government
may be held liable under this rule only if it first allows itself to be sued
through any of the accepted forms of consent.
Moreover, the agent performing his regular functions is not a special agent
even if he is so denominated, as in the case at bar. No less important, the
said provision appears to regulate only the relations of the local state with
its inhabitants and, hence, applies only to the Philippine government and
not to foreign governments impleaded in our courts.
We reject the conclusion of the trial court that the answer filed by the
special counsel of the Office of the Sheriff Judge Advocate of Clark Air Base
was a submission by the United States government to its jurisdiction. As we
noted in Republic v. Purisima, 25 express waiver of immunity cannot be
made by a mere counsel of the government but must be effected through a
duly-enacted statute. Neither does such answer come under the implied
forms of consent as earlier discussed. Cdpr
But even as we are certain that the individual petitioners in G.R. No. 80018
were acting in the discharge of their official functions, we hesitate to make
the same conclusion in G.R. No. 80258. The contradictory factual allegations
in this case deserve in our view a closer study of what actually happened to
the plaintiffs. The record is too meager to indicate if the defendants were
really discharging their official duties or had actually exceeded their
authority when the incident in question occurred. Lacking this information,
this Court cannot directly decide this case. The needed inquiry must first be
made by the lower court so it may assess and resolve the conflicting claims
of the parties on the basis of the evidence that has yet to be presented at
the trial. Only after it shall have determined in what capacity the petitioners

were acting at the time of the incident in question will this Court determine,
if still necessary, if the doctrine of state immunity is applicable.
In G.R. No. 79470, private respondent Genove was employed as a cook in
the Main Club located at the U.S. Air Force Recreation Center, also known as
the Open Mess Complex, at John Hay Air Station. As manager of this
complex, petitioner Lamachia is responsible for eleven diversified activities
generating an annual income of $2 million. Under his executive
management are three service restaurants, a cafeteria, a bakery, a Class VI
store, a coffee and pantry shop, a main cashier cage, an administrative
office, and a decentralized warehouse which maintains a stock level of
$200,000.00 per month in resale items. He supervises 167 employees, one
of whom was Genove, with whom the United States government has
concluded a collective bargaining agreement.
From these circumstances, the Court can assume that the restaurant
services offered at the John Hay Air Station partake of the nature of a
business enterprise undertaken by the United States government in its
proprietary capacity. Such services are not extended to the American
servicemen for free as a perquisite of membership in the Armed Forces of
the United States. Neither does it appear that they are exclusively offered to
these servicemen; on the contrary, it is well known that they are available
to the general public as well, including the tourists in Baguio City, many of
whom make it a point to visit John Hay for this reason. All persons availing
themselves of this facility pay for the privilege like all other customers as in
ordinary restaurants. Although the prices are concededly reasonable and
relatively low, such services are undoubtedly operated for profit, as a
commercial and not a governmental activity.
The consequence of this finding is that the petitioners cannot invoke the
doctrine of state immunity to justify the dismissal of the damage suit
against them by Genove. Such defense will not prosper even if it be
established that they were acting as agents of the United States when they
investigated and later dismissed Genove. For that matter, not even the
United States government itself can claim such immunity. The reason is that
by entering into the employment contract with Genove in the discharge of
its proprietary functions, it impliedly divested itself of its sovereign
immunity from suit.
But these considerations notwithstanding, we hold that the complaint
against the petitioners in the court below must still be dismissed. While
suable, the petitioners are nevertheless not liable. It is obvious that the

claim for damages cannot be allowed on the strength of the evidence before
us, which we have carefully examined.
The dismissal of the private respondent was decided upon only after a
thorough investigation where it was established beyond doubt that he had
polluted the soup stock with urine. The investigation, in fact, did not stop
there. Despite the definitive finding of Genove's guilt, the case was still
referred to the board of arbitrators provided for in the collective bargaining
agreement. This board unanimously affirmed the findings of the
investigators and recommended Genove's dismissal. There was nothing
arbitrary about the proceedings. The petitioners acted quite properly in
terminating the private respondent's employment for his unbelievably
nauseating act. It is surprising that he should still have the temerity to file
his complaint for damages after committing his utterly disgusting offense.
Concerning G.R. No. 76607, we also find that the barbershops subject of the
concessions granted by the United States government are commercial
enterprises operated by private persons. They are not agencies of the
United States Armed Forces nor are their facilities demandable as a matter
of right by the American servicemen. These establishments provide for the
grooming needs of their customers and offer not only the basic haircut and
shave (as required in most military organizations) but such other amenities
as shampoo, massage, manicure and other similar indulgences. And all for a
fee. Interestingly, one of the concessionaires, private respondent Valencia,
was even sent abroad to improve his tonsorial business, presumably for the
benefit of his customers . No less significantly, if not more so, all the
barbershop concessionaires are, under the terms of their contracts, required
to remit to the United States government fixed commissions in
consideration of the exclusive concessions granted to them in their
respective areas.
This being the case, the petitioners cannot plead any immunity from the
complaint filed by the private respondents in the court below. The contracts
in question being decidedly commercial, the conclusion reached in the
United States of America v. Ruiz case cannot be applied here.
The Court would have directly resolved the claims against the defendants as
we have done in G.R. No. 79470, except for the paucity of the record in the
case at hand. The evidence of the alleged irregularity in the grant of the
barbershop concessions is not before us. This means that, as in G.R. No.
80258, the respondent court will have to receive that evidence first, so it
can later determine on the basis thereof if the plaintiffs are entitled to the

relief they seek. Accordingly, this case must also be remanded to the court
below for further proceedings.
IV
There are a number of other cases now pending before us which also
involve the question of the immunity of the United States from the
jurisdiction of the Philippines. This is cause for regret, indeed, as they mar
the traditional friendship between two countries long allied in the cause of
democracy. It is hoped that the so-called "irritants" in their relations will be
resolved in a spirit of mutual accommodation and respect, without the
inconvenience and asperity of litigation and always with justice to both
parties.
WHEREFORE, after considering all the above premises, the Court hereby
renders judgment as follows:
1. In G.R. No. 76607, the petition is DISMISSED and the respondent judge is
directed to proceed with the hearing and decision of Civil Case No. 4772.
The temporary restraining order dated December 11, 1986, is LIFTED.
2. In G.R. No. 79470, the petition is GRANTED and Civil Case No. 829-R(298)
is DISMISSED.
3. In G.R. No. 80018, the petition is GRANTED and Civil Case No. 115-C-87 is
DISMISSED. The temporary restraining order dated October 14, 1987, is
made permanent.
4. In G.R. No. 80258, the petition is DISMISSED and the respondent court is
directed to proceed with the hearing and decision of Civil Case No. 4996.
The temporary restraining order dated October 27, 1987, is LIFTED. LibLex
All without any pronouncement as to costs.
SO ORDERED.
Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano,
Gancayco, Padilla, Bidin, Sarmiento, Cortes, Grio-Aquino, Medialdea and
Regalado, JJ., concur.
||| (United States of America v. Guinto, G.R. No. 76607, 79470, 80018,
80258, [February 26, 1990], 261 PHIL 777-802)

55. USA V RUIZ


[G.R. No. L-35645. May 22, 1985.]
UNITED STATES OF AMERICA, CAPT. JAMES E. GALLOWAY, WILLIAM I.
COLLINS and ROBERT GOHIER,petitioners, vs. HON. V.M. RUIZ, Presiding
Judge of Branch XV, Court of First Instance of Rizal and ELIGIO DE GUZMAN
& CO., INC., respondents.
Sycip, Salazar, Luna & Manalo & Feliciano Law Office for petitioners.
Albert, Vergara, Benares, Perlas & Dominguez Law Office for respondents.
DECISION
ABAD SANTOS, J p:

This is a petition to review, set aside certain orders and restrain the
respondent judge from trying Civil Case No. 779-M of the defunct Court of
First Instance of Rizal.
The factual background is as follows:
At times material to this case, the United States of America had a naval
base in Subic, Zambales. The base was one of those provided in the Military
Bases Agreement between the Philippines and the United States.
Sometime in May, 1972, the United States invited the submission of bids for
the following projects:
1. Repair fender system, Alava Wharf at the U.S. Naval Station Subic Bay,
Philippines.
2. Repair typhoon damage to NAS Cubi shoreline; repair typhoon damage to
shoreline revetment, NAVBASE Subic; and repair to Leyte Wharf approach,
NAVBASE Subic Bay, Philippines. LLpr
Eligio de Guzman & Co., Inc. responded to the invitation and submitted bids.
Subsequent thereto, the company received from the United States two
telegrams requesting it to confirm its price proposals and for the name of its
bonding company. The company complied with the requests. [In its
complaint, the company alleges that the United States had accepted its bids
because "A request to confirm a price proposal confirms the acceptance of a
bid pursuant to defendant United States' bidding practices." (Rollo, p. 30.)
The truth of this allegation has not been tested because the case has not
reached the trial stage.]
In June, 1972, the company received a letter which was signed by William I.
Collins, Director, Contracts Division, Naval Facilities Engineering Command,
Southwest Pacific, Department of the Navy of the United States, who is one
of the petitioners herein. The letter said that the company did not qualify to
receive an award for the projects because of its previous unsatisfactory
performance rating on a repair contract for the sea wall at the boat landings
of the U.S. Naval Station in Subic Bay. The letter further said that the
projects had been awarded to third parties.
In the abovementioned Civil Case No. 779-M, the company sued the United
States of America and Messrs. James E. Galloway, William I. Collins and
Robert Gohier all members of the Engineering Command of the U.S. Navy.
The complaint is to order the defendants to allow the plaintiff to perform the
work on the projects and, in the event that specific performance was no
longer possible, to order the defendants to pay damages. The company also

asked for the issuance of a writ of preliminary injunction to restrain the


defendants from entering into contracts with third parties for work on the
projects.
The defendants entered their special appearance "for the purpose only of
questioning the jurisdiction of this court over the subject matter of the
complaint and the persons of defendants, the subject matter of the
complaint being acts and omissions of the individual defendants as agents
of defendant United States of America, a foreign sovereign which has not
given her consent to this suit or any other suit for the causes of action
asserted in the complaint." (Rollo, p. 50.)
Subsequently the defendants filed a motion to dismiss the complaint which
included an opposition to the issuance of the writ of preliminary injunction.
The company opposed the motion. The trial court denied the motion and
issued the writ. The defendants moved twice to reconsider but to no avail.
Hence the instant petition which seeks to restrain perpetually the
proceedings in Civil Case No. 779-M for lack of jurisdiction on the part of the
trial court.
The petition is highly impressed with merit. LexLib
The traditional rule of State immunity exempts a State from being sued in
the courts of another State without its consent or waiver. This rule is a
necessary consequence of the principles of independence and equality of
States. However, the rules of International Law are not petrified; they are
constantly developing and evolving. And because the activities of states
have multiplied, it has been necessary to distinguish them between
sovereign and governmental acts (jure imperii) and private, commercial and
proprietary acts (jure gestionis). The result is that State immunity now
extends only to acts jure imperii. The restrictive application of State
immunity is now the rule in the United States, the United Kingdom and other
states in western Europe. (See Coquia and Defensor-Santiago, Public
International Law, pp. 207-209 [1984].) 2006cdtai
The respondent judge recognized the restrictive doctrine of State immunity
when he said in his Order denying the defendants' (now petitioners) motion:
"A distinction should be made between a strictly governmental function of
the sovereign state from its private, proprietary or non-governmental acts."
(Rollo, p. 20.) However, the respondent judge also said: "It is the Court's
considered opinion that entering into a contract for the repair of wharves or
shoreline is certainly not a governmental function altho it may partake of a
public nature or character. As aptly pointed out by plaintiff's counsel in his

reply citing the ruling in the case of Lyons, Inc., [104 Phil. 594 (1958)], and
which this Court quotes with approval, viz.:
'It is however contended that when a sovereign state enters into a contract
with a private person, the state can be sued upon the theory that it has
descended to the level of an individual from which it can be implied that it
has given its consent to be sued under the contract. . . .
xxx xxx xxx
'We agree to the above contention, and considering that the United States
government, through its agency at Subic Bay, entered into a contract with
appellant for stevedoring and miscellaneous labor services within the Subic
Bay Area, a U.S. Naval Reservation, it is evident that it can bring an action
before our courts for any contractual liability that political entity may
assume under the contract. The trial court, therefore, has jurisdiction to
entertain this case . . .'" (Rollo, pp. 20-21.)
The reliance placed on Lyons by the respondent judge is misplaced for the
following reasons:
In Harry Lyons, Inc. vs. The United States of America supra, plaintiff brought
suit in the Court of First Instance of Manila to collect several sums of money
on account of a contract between plaintiff and defendant. The defendant
filed a motion to dismiss on the ground that the court had no jurisdiction
over defendant and over the subject matter of the action. The court granted
the motion on the grounds that: (a) it had no jurisdiction over the defendant
who did not give its consent to the suit; and (b) plaintiff failed to exhaust
the administrative remedies provided in the contract. The order of dismissal
was elevated to this Court for review. cdrep
In sustaining the action of the lower court, this Court said:
"It appearing in the complaint that appellant has not complied with the
procedure laid down in Article XXI of the contract regarding the prosecution
of its claim against the United States Government, or, stated differently, it
has failed to first exhaust its administrative remedies against said
Government, the lower court acted properly in dismissing this case." (At p.
598.)
It can thus be seen that the statement in respect of the waiver of State
immunity from suit was purely gratuitous and, therefore, obiter so that it
has no value as an imperative authority.

The restrictive application of State immunity is proper only when the


proceedings arise out of commercial transactions of the foreign sovereign,
its commercial activities or economic affairs. Stated differently, a State may
be said to have descended to the level of an individual and can thus be
deemed to have tacitly given its consent to be sued only when it enters into
business contracts. It does not apply where the contract relates to the
exercise of its sovereign functions. In this case the projects are an integral
part of the naval base which is devoted to the defense of both the United
States and the Philippines, indisputably a function of the government of the
highest order; they are not utilized for nor dedicated to commercial or
business purposes.
That the correct test for the application of State immunity is not the
conclusion of a contract by a State but the legal nature of the act is shown
in Syquia vs. Lopez, 84 Phil. 312 (1949). In that case the plaintiffs leased
three apartment buildings to the United States of America for the use of its
military officials. The plaintiffs sued to recover possession of the premises
on the ground that the term of the leases had expired, They also asked for
increased rentals until the apartments shall have been vacated.
The defendants who were armed forces officers of the United States moved
to dismiss the suit for lack of jurisdiction on the part of the court. The
Municipal Court of Manila granted the motion to dismiss; sustained by the
Court of First Instance, the plaintiffs went to this Court for review on
certiorari. In denying the petition, this Court said:
"On the basis of the foregoing considerations we are of the belief and we
hold that the real party defendant in interest is the Government of the
United States of America; that any judgment for back or increased rentals or
damages will have to be paid not by defendants Moore and Tillman and
their 64 co-defendants but by the said U.S. Government. On the basis of the
ruling in the case of Land vs. Dollar already cited, and on what we have
already stated, the present action must be considered as one against the
U.S. Government. It is clear that the courts of the Philippines including the
Municipal Court of Manila have no jurisdiction over the present case for
unlawful detainer. The question of lack of jurisdiction was raised and
interposed at the very beginning of the action. The U.S. Government has not
given its consent to the filing of this suit which is essentially against her,
though not in name. Moreover, this is not only a case of a citizen filing a suit
against his own Government without the latter's consent but it is of a citizen
filing an action against a foreign government without said government's
consent, which renders more obvious the lack of jurisdiction of the courts of
his country. The principles of law behind this rule are so elementary and of

such general acceptance that we deem it unnecessary to cite authorities in


support thereof." (At p. 323.) LLphil
In Syquia, the United States concluded contracts with private individuals but
the contracts notwithstanding the United States was not deemed to have
given or waived its consent to be sued for the reason that the contracts
were for jure imperii and not for jure gestionis.
WHEREFORE, the petition is granted; the questioned orders of the
respondent judge are set aside and Civil Case No. 779-M is dismissed. Costs
against the private respondent.
SO ORDERED.
Teehankee, Aquino, Concepcion, Jr., Melencio-Herrera, Plana, Escolin, Relova
Gutierrez, Jr., De la Fuente, Cuevas and Alampay, JJ., concur.
Fernando, C.J., took no part.
Separate Opinions
MAKASIAR, J., dissents:
The petition should be dismissed and the proceedings in Civil Case No. 779M in the defunct CFI (now RTC) of Rizal be allowed to continue therein.
In the case of Lyons vs. the United States of America (104 Phil. 593), where
the contract entered into between the plaintiff (Harry Lyons, Inc.) and the
defendant (U.S. Government) involved stevedoring and labor services within
the Subic Bay area, this Court further stated that inasmuch as ". . . the
United States Government, through its agency at Subic Bay, entered into a
contract with appellant for stevedoring and miscellaneous labor services
within the Subic Bay area, a U.S. Navy Reservation, it is evident that it can
bring an action before our courts for any contractual liability that political
entity may assume under the contract."
When the U.S. Government, through its agency at Subic Bay, confirmed the
acceptance of a bid of a private company for the repair of wharves or
shoreline in the Subic Bay area, it is deemed to have entered into a contract
and thus waived the mantle of sovereign immunity from suit and descended
to the level of the ordinary citizen. Its consent to be sued, therefore, is
implied from its act of entering into a contract (Santos vs. Santos, 92 Phil.
281, 284).

Justice and fairness dictate that a foreign government that commits a


breach of its contractual obligation in the case at bar by the unilateral
cancellation of the award for the project by the United States government,
through its agency at Subic Bay should not be allowed to take undue
advantage of a party who may have legitimate claims against it by seeking
refuge behind the shield of non-suability. A contrary view would render a
Filipino citizen, as in the instant case, helpless and without redress in his
own country for violation of his rights committed by the agents of the
foreign government professing to act in its name. cdll
Appropriate are the words of Justice Perfecto in his dissenting opinion in
Syquia vs. Almeda Lopez, 84 Phil. 312, 325:
"Although, generally, foreign governments are beyond the jurisdiction of
domestic courts of justice, such rule is inapplicable to cases in which the
foreign government enters into private contracts with the citizens of the
court's jurisdiction. A contrary view would simply run against all principles of
decency and violative of all tenets of morals.
"Moral principles and principles of justice are as valid and applicable as well
with regard to private individuals as with regard to governments either
domestic or foreign. Once a foreign government enters into a private
contract with the private citizens of another country, such foreign
government cannot shield its non-performance or contravention of the
terms of the contract under the cloak of non-jurisdiction. To place such
foreign government beyond the jurisdiction of the domestic courts is to give
approval to the execution of unilateral contracts, graphically described in
Spanish as 'contratos leoninos,' because one party gets the lion's share to
the detriment of the other. To give validity to such contract is to sanctify bad
faith, deceit, fraud. We prefer to adhere to the thesis that all parties in a
private contract, including governments and the most powerful of them, are
amenable to law, and that such contracts are enforceable through the help
of the courts of justice with jurisdiction to take cognizance of any violation
of such contracts if the same had been entered into only by private
individuals."
Constant resort by a foreign state or its agents to the doctrine of State
immunity in this jurisdiction impinges unduly upon our sovereignty and
dignity as a nation. Its application will particularly discourage Filipino or
domestic contractors from transacting business and entering into contracts
with United States authorities or facilities in the Philippines whether
naval, air or ground forces because the difficulty, if not impossibility, of
enforcing a validly executed contract and of seeking judicial remedy in our

own courts for breaches of contractual obligation committed by agents of


the United States government, always looms large, thereby hampering the
growth of Filipino enterprises and creating a virtual monopoly in our own
country by United States contractors of contracts for services or supplies
with the various U.S. offices and agencies operating in the Philippines.
The sanctity of upholding agreements freely entered into by the parties
cannot be over emphasized. Whether the parties are nations or private
individuals, it is to be reasonably assumed and expected that the
undertakings in the contract will becomplied with in good faith.
One glaring fact of modern day civilization is that a big and powerful nation,
like the United States of America, can always overwhelm small and weak
nations. The declaration in the United Nations Charter that its member
states are equal and sovereign, becomes hollow and meaningless because
big nations wielding economic and military superiority impose upon and
dictate to small nations, subverting their sovereignty and dignity as nations.
Thus, more often than not, when U.S. interest clashes with the interest of
small nations, the American governmental agencies or its citizens invoke
principles of international law for their own benefit.
In the case at bar, the efficacy of the contract between the U.S. Naval
authorities at Subic Bay on one hand, and herein private respondent on the
other, was honored more in the breach than in the compliance. The opinion
of the majority will certainly open the floodgates of more violations of
contractual obligations. American authorities or any foreign government in
the Philippines for that matter, dealing with the citizens of this country, can
conveniently seek protective cover under the majority opinion. The result is
disastrous to the Philippines. LibLex
This opinion of the majority manifests a neo-colonial mentality. It fosters
economic imperialism and foreign political ascendancy in our Republic.
The doctrine of government immunity from suit cannot and should not serve
as an instrument for perpetrating an injustice on a citizen (Amigable vs.
Cuenca, L-26400, February 29, 1972, 43 SCRA 360; Ministerio vs. Court of
First Instance, L-31635, August 31, 1971, 40 SCRA 464).
Under the doctrine of implied waiver of its non-suability, the United States
government, through its naval authorities at Subic Bay, should be held
amenable to lawsuits in our country like any other juristic person.
The invocation by the petitioner United States of America is not in accord
with paragraph 3 of Article III of the original RP-US Military Bases Agreement

of March 14, 1947, which states that "in the exercise of the abovementioned rights, powers and authority, the United States agrees that the
powers granted to it will not be used unreasonably. . . ." (italics supplied).
Nor is such posture of the petitioners herein in harmony with the
amendment dated May 27, 1968 to the aforesaid RP-US Military Bases
Agreement, which recognizes "the need to promote and maintain sound
employment practices which will assure equality of treatment of all
employees . . . and continuing favorable employer-employee relations . . ."
and "(B)elieving that an agreement will be mutually beneficial and will
strengthen the democratic institutions cherished by both Governments, . . .
the United States Government agrees to accord preferential employment of
Filipino citizens in the Bases, thus (1) the U.S. Forces in the Philippines shall
fill the needs for civilian employment by employing Filipino citizens, etc."
(Par. 1, Art. I of the Amendment of May 27, 1968).
Neither does the invocation by petitioners of state immunity from suit
express fidelity to paragraph 1 of Article IV of the aforesaid amendment of
May 27, 1968 which directs that "contractors and concessionaires
performing work for the U.S. Armed Forces shall be required by their
contract or concession agreements to comply with all applicable Philippine
labor laws and regulations," even though paragraph 2 thereof affirms that
"nothing in this Agreement shall imply any waiver by either of the two
Governments of such immunity under international law."
Reliance by petitioners on the non-suability of the United States
Government before the local courts, actually clashes with No. III on respect
for Philippine law of the Memorandum of Agreement signed on January 7,
1979, also amending RP-US Military Bases Agreement, which stresses that
"it is the duty of members of the United States Forces, the civilian
component and their dependents, to respect the laws of the Republic of the
Philippines and to abstain from any activity inconsistent with the spirit of
the Military Bases Agreement and, in particular, from any political activity in
the Philippines. The United States shall take all measures within its authority
to insure that they adhere to them" (italics supplied). cdll
The foregoing duty imposed by the amendment to the Agreement is further
emphasized by No. IV on the economic and social improvement of areas
surrounding the bases, which directs that "moreover, the United States
Forces shall procure goods and services in the Philippines to the maximum
extent feasible" (italics supplied).

Under No. VI on labor and taxation of the said amendment of January 6,


1979 in connection with the discussions on possible revisions or alterations
of the Agreement of May 27, 1968, "the discussions shall be conducted on
the basis of the principles of equality of treatment, the right to organize,
and bargain collectively, and respect for the sovereignty of the Republic of
the Philippines" (italics supplied).
The majority opinion seems to mock the provision of paragraph 1 of the
joint statement of President Marcos and Vice-President Mondale of the
United States dated May 4, 1978 that "the United States re-affirms that
Philippine sovereignty extends over the bases and that Its base shall be
under the command of a Philippine Base Commander," which is supposed to
underscore the joint Communique of President Marcos and U.S. President
Ford of December 7, 1975, under which "they affirm that sovereign equality,
territorial integrity and political independence of all States are fundamental
principles which both countries scrupulously respect; and that "they confirm
that mutual respect for the dignity of each nation shall characterize their
friendship as well as the alliance between their two countries."
The majority opinion negates the statement on the delineation of the
powers, duties and responsibilities of both the Philippine and American Base
Commanders that "in the performance of their duties, the Philippine Base
Commander and the American Base Commander shall be guided by full
respect for Philippine sovereignty on the one hand and the assurance of
unhampered U.S. military operations on the other hand;" and that "they
shall promote cooperation, understanding and harmonious relations within
the Base and with the general public in the proximate vicinity thereof" (par.
2 & par. 3 of the Annex covered by the exchange of notes, January 7, 1979,
between Ambassador Richard W. Murphy and Minister of Foreign Affairs
Carlos P. Romulo, italics supplied).
||| (US v. V.M. Ruiz, G.R. No. L-35645, [May 22, 1985], 221 PHIL 179-191)

56. USA v Guinto SUPRA

57. REPUBLIC V INDONESIA V VINZON


[G.R. No. 154705. June 26, 2003.]
THE REPUBLIC OF INDONESIA, HIS EXCELLENCY AMBASSADOR SOERATMIN,
and MINISTER COUNSELLOR AZHARI KASIM, petitioners, vs. JAMES VINZON,
doing business under the name and style of VINZON TRADE AND SERVICES,
respondent.
Quasha Ancheta Pena & Nolasco for petitioners.
Fornier Fornier Sao & Lagumbay Law Firm for J. Vinzon.
SYNOPSIS
In August 1995, petitioner Republic of Indonesia entered into a Maintenance
Agreement for its specified buildings in the embassy with respondent James
Vinzon as sole proprietor of Vinzon Trade and Services. The said Agreement
was effective for four years and will renew itself automatically unless
cancelled by either party by giving thirty days prior written notice from the
date of expiry. Before August 1999, respondent was informed that the
renewal of the agreement shall be at the discretion of the incoming Chief of
Administration, petitioner Minister Counsellor Azhari Kasim. On August 31,
2000, the Indonesian Embassy terminated the said agreement. Respondent
claimed that the said termination was arbitrary and unlawful. Thus, he filed
a complaint against petitioners in the Regional Trial Court of Makati, Branch
145. In response, petitioners filed a motion to dismiss by alleging that the
Republic of Indonesia has sovereign immunity from suit and that
Ambassador Soeratmin and Minister Counsellor Kasim enjoy diplomatic
immunity. The trial court denied petitioners' motion to dismiss. The Court of
Appeals likewise denied petitioners' petition for certiorari and prohibition in
relation thereto. Hence, this petition for review on certiorari.
The Court held that the immunity of the sovereign is recognized only with
regard to public acts or acts jure imperii, but not with regard to private acts
or acts jure gestionis. In this case, there is no dispute that the establishment
of a diplomatic mission is an act jure imperii. A sovereign state does not
merely establish a diplomatic mission and leave it at that; the establishment
of a diplomatic mission encompasses its maintenance and upkeep. Hence,

the State may enter into contracts with private entities to maintain the
premises, furnishings and equipment of the embassy and the living quarters
of its agents and officials. It is, therefore, clear that petitioner Republic of
Indonesia was acting in pursuit of a sovereign activity when it entered into a
contract with respondent for the upkeep or maintenance of the air
conditioning units, generator sets, electrical facilities, water heaters, and
water motor pumps of the Indonesian Embassy and the official residence of
the Indonesian ambassador.
Moreover, the act of petitioners Ambassador Soeratmin and Minister
Counsellor Kasim in terminating the Maintenance Agreement is not covered
by the exceptions provided in Article 31 of the Vienna Convention on
Diplomatic Relations. Accordingly, the petition was granted and the
complaint against petitioners was dismissal.
SYLLABUS
1. PUBLIC INTERNATIONAL LAW; DOCTRINE OF SOVEREIGN IMMUNITY;
NECESSARY CONSEQUENCE OF THE PRINCIPLE OF INDEPENDENCE AND
EQUALITY OF STATES. International law is founded largely upon the
principles of reciprocity, comity, independence, and equality of States which
were adopted as part of the law of our land under Article II, Section 2 of the
1987 Constitution. The rule that a State may not be sued without its consent
is a necessary consequence of the principles of independence and equality
of States. As enunciated in Sanders v. Veridiano II, the practical justification
for the doctrine of sovereign immunity is that there can be no legal right
against the authority that makes the law on which the right depends. In the
case of foreign States, the rule is derived from the principle of the sovereign
equality of States, as expressed in the maximpar in parem non habet
imperium. All states are sovereign equals and cannot assert jurisdiction over
one another. A contrary attitude would "unduly vex the peace of nations."
2. ID.; ID.; RECOGNIZED WITH REGARD TO PUBLIC ACTS ONLY. The rules
of International Law, however, are neither unyielding nor impervious to
change. The increasing need of sovereign States to enter into purely
commercial activities remotely connected with the discharge of their
governmental functions brought about a new concept of sovereign
immunity. This concept, the restrictive theory, holds that the immunity of
the sovereign is recognized only with regard to public acts or acts jure
imperii, but not with regard to private acts or acts jure gestionis.
3. ID.; ID.; ID.; ENTERING INTO A CONTRACT BY FOREIGN STATE WITH
PRIVATE PARTY CANNOT BE THE ULTIMATE TEST OF WHETHER OR NOT IT IS

A PUBLIC OR PRIVATE ACT. In United States v. Ruiz, for instance, we held


that the conduct of public bidding for the repair of a wharf at a United
States Naval Station is an act jure imperii. On the other hand, we considered
as an act jure gestionis the hiring of a cook in the recreation center catering
to American servicemen and the general public at the John Hay Air Station
in Baguio City, as well as the bidding for the operation of barber shops in
Clark Air Base in Angeles City. Apropos the present case, the mere entering
into a contract by a foreign State with a private party cannot be construed
as the ultimate test of whether or not it is an act jure imperii or jure
gestionis. Such act is only the start of the inquiry. Is the foreign State
engaged in the regular conduct of a business? If the foreign State is not
engaged regularly in a business or commercial activity, and in this case it
has not been shown to be so engaged, the particular act or transaction must
then be tested by its nature. If the act is in pursuit of a sovereign activity, or
an incident thereof, then it is an act jure imperii.
4. ID.; ID.; PROVISION IN A CONTRACT THAT ANY LEGAL ACTION ARISING
OUT OF THE AGREEMENT SHALL BE SETTLED ACCORDING TO PHILIPPINE
LAWS IS NOT A WAIVER OF SOVEREIGN IMMUNITY FROM SUIT. [T]he
existence alone of a paragraph in a contract stating that any legal action
arising out of the agreement shall be settled according to the laws of the
Philippines and by a specified court of the Philippines is not necessarily a
waiver of sovereign immunity from suit. The aforesaid provision contains
language not necessarily inconsistent with sovereign immunity. On the other
hand, such provision may also be meant to apply where the sovereign party
elects to sue in the local courts, or otherwise waives its immunity by any
subsequent act. The applicability of Philippine laws must be deemed to
include Philippine laws in its totality, including the principle recognizing
sovereign immunity. Hence, the proper court may have no proper action, by
way of settling the case, except to dismiss it.
5. ID.; ID.; ID.; SUBMISSION BY A FOREIGN STATE TO LOCAL JURISDICTION
MUST BE CLEAR AND UNEQUIVOCAL. Submission by a foreign state to
local jurisdiction must be clear and unequivocal. It must be given explicitly
or by necessary implication. CaDSHE
6. ID.; ID.; MAINTENANCE OF THE PREMISES, FURNISHINGS AND EQUIPMENT
OF THE EMBASSY AND THE LIVING QUARTERS OF THE AGENTS AND
OFFICIALS OF A FOREIGN STATE IS A PUBLIC ACT. There is no dispute that
the establishment of a diplomatic mission is an act jure imperii. A sovereign
State does not merely establish a diplomatic mission and leave it at that;
the establishment of a diplomatic mission encompasses its maintenance
and upkeep. Hence, the State may enter into contracts with private entities

to maintain the premises, furnishings and equipment of the embassy and


the living quarters of its agents and officials. It is therefore clear that
petitioner Republic of Indonesia was acting in pursuit of a sovereign activity
when it entered into a contract with respondent for the upkeep or
maintenance of the air conditioning units, generator sets, electrical
facilities, water heaters, and water motor pumps of the Indonesian Embassy
and the official residence of the Indonesian ambassador. cSATEH
7. ID.; VIENNA CONVENTION ON DIPLOMATIC RELATIONS; IMMUNITY FROM
SUITS OF DIPLOMATIC, AGENTS, APPLICABLE IN CASE AT BAR. On the
matter of whether or not petitioners Ambassador Soeratmin and Minister
Counsellor Kasim may be sued herein in their private capacities, Article 31
of the Vienna Convention on Diplomatic Relations provides: " . . . 1. A
diplomatic agent shall enjoy immunity from the criminal jurisdiction of the
receiving State. He shall also enjoy immunity from its civil and
administrative jurisdiction, except in the case of: (a) a real action relating to
private immovable property situated in the territory of the receiving State,
unless he holds it on behalf of the sending State for the purposes of the
mission; (b) an action relating to succession in which the diplomatic agent is
involved as executor, administrator, heir or legatee as a private person and
not on behalf of the sending State; (c) an action relating to any professional
or commercial activity exercised by the diplomatic agent in the receiving
State outside his official functions. . . . " The act of petitioners Ambassador
Soeratinin and Minister Counsellor Kasim in terminating the Maintenance
Agreement is not covered by the exceptions provided in the
abovementioned provision. The Solicitor General believes that said act may
fall under subparagraph (c) thereof, but said provision clearly applies only to
a situation where the diplomatic agent engages in any professional or
commercial activityoutside official functions, which is not the case herein.
DECISION
AZCUNA, J p:
This is a petition for review on certiorari to set aside the Decision of the
Court of Appeals dated May 30, 2002 and its Resolution dated August 16,
2002, in CA-G.R. SP No. 66894 entitled "The Republic of Indonesia, His
Excellency Ambassador Soeratmin and Minister Counselor Azhari Kasim v.
Hon. Cesar Santamaria, Presiding Judge, RTC Branch 145, Makati City, and
James Vinzon, doing business under the name and style of Vinzon Trade and
Services."

Petitioner, Republic of Indonesia, represented by its Counsellor, Siti Partinah,


entered into a Maintenance Agreement in August 1995 with respondent
James Vinzon, sole proprietor of Vinzon Trade and Services. The
Maintenance Agreement stated that respondent shall, for a consideration,
maintain specified equipment at the Embassy Main Building, Embassy
Annex Building and the Wisma Duta, the official residence of petitioner
Ambassador Soeratmin. The equipment covered by the Maintenance
Agreement are air conditioning units, generator sets, electrical facilities,
water heaters, and water motor pumps. It is likewise stated therein that the
agreement shall be effective for a period of four years and will renew itself
automatically unless cancelled by either party by giving thirty days prior
written notice from the date of expiry. 1
Petitioners claim that sometime prior to the date of expiration of the said
agreement, or before August 1999, they informed respondent that the
renewal of the agreement shall be at the discretion of the incoming Chief of
Administration, Minister Counsellor Azhari Kasim, who was expected to
arrive in February 2000. When Minister Counsellor Kasim assumed the
position of Chief of Administration in March 2000, he allegedly found
respondent's work and services unsatisfactory and not in compliance with
the standards set in the Maintenance Agreement. Hence, the Indonesian
Embassy terminated the agreement in a letter dated August 31, 2000. 2
Petitioners claim, moreover, that they had earlier verbally informed
respondent of their decision to terminate the agreement.
On the other hand, respondent claims that the aforesaid termination was
arbitrary and unlawful. Respondent cites various circumstances which
purportedly negated petitioners' alleged dissatisfaction over respondent's
services: (a) in July 2000, Minister Counsellor Kasim still requested
respondent to assign to the embassy an additional full-time worker to assist
one of his other workers; (b) in August 2000, Minister Counsellor Kasim
asked respondent to donate a prize, which the latter did, on the occasion of
the Indonesian Independence Day golf tournament; and (c) in a letter dated
August 22, 2000, petitioner Ambassador Soeratmin thanked respondent for
sponsoring a prize and expressed his hope that the cordial relations happily
existing between them will continue to prosper and be strengthened in the
coming years.
Hence, on December 15, 2000, respondent filed a complaint 3 against
petitioners docketed as Civil Case No. 18203 in the Regional Trial Court
(RTC) of Makati, Branch 145. On February 20, 2001, petitioners filed a
Motion to Dismiss, alleging that theRepublic of Indonesia, as a foreign
sovereign State, has sovereign immunity from suit and cannot be sued as a

party-defendant in the Philippines. The said motion further alleged that


Ambassador Soeratmin and Minister Counsellor Kasim are diplomatic agents
as defined under the Vienna Convention on Diplomatic Relations and
therefore enjoy diplomatic immunity.4 In turn, respondent filed on March 20,
2001, an Opposition to the said motion alleging that the Republic of
Indonesia has expressly waived its immunity from suit. He based this claim
upon the following provision in the Maintenance Agreement:
"Any legal action arising out of this Maintenance Agreement shall be settled
according to the laws of the Philippines and by the proper court of Makati
City, Philippines."
Respondent's Opposition likewise alleged that Ambassador Soeratmin and
Minister Counsellor Kasim can be sued and held liable in their private
capacities for tortious acts done with malice and bad faith. 5
On May 17, 2001, the trial court denied herein petitioners' Motion to
Dismiss. It likewise denied the Motion for Reconsideration subsequently
filed.
The trial court's denial of the Motion to Dismiss was brought up to the Court
of Appeals by herein petitioners in a petition forcertiorari and prohibition.
Said petition, docketed as CA-G.R. SP No. 66894, alleged that the trial court
gravely abused its discretion in ruling that the Republic of Indonesia gave its
consent to be sued and voluntarily submitted itself to the laws and
jurisdiction of Philippine courts and that petitioners Ambassador Soeratmin
and Minister Counsellor Kasim waived their immunity from suit.
On May 30, 2002, the Court of Appeals rendered its assailed decision
denying the petition for lack of merit. 6 On August 16, 2002, it denied herein
petitioners' motion for reconsideration. 7
Hence, this petition.
In the case at bar, petitioners raise the sole issue of whether or not the
Court of Appeals erred in sustaining the trial court's decision that petitioners
have waived their immunity from suit by using as its basis the
abovementioned provision in the Maintenance Agreement.
The petition is impressed with merit.
International law is founded largely upon the principles of reciprocity,
comity, independence, and equality of States which were adopted as part of
the law of our land under Article II, Section 2 of the 1987 Constitution. 8 The
rule that a State may not be sued without its consent is a necessary

consequence of the principles of independence and equality of States. 9 As


enunciated in Sanders v. Veridiano II, 10 the practical justification for the
doctrine of sovereign immunity is that there can be no legal right against
the authority that makes the law on which the right depends. In the case of
foreign States, the rule is derived from the principle of the sovereign
equality of States, as expressed in the maxim par in parem non habet
imperium. All states are sovereign equals and cannot assert jurisdiction over
one another. 11 A contrary attitude would "unduly vex the peace of
nations." 12
The rules of International Law, however, are neither unyielding nor
impervious to change. The increasing need of sovereign States to enter into
purely commercial activities remotely connected with the discharge of their
governmental functions brought about a new concept of sovereign
immunity. This concept, the restrictive theory, holds that the immunity of
the sovereign is recognized only with regard to public acts or acts jure
imperii, but not with regard to private acts or acts jure gestionis. 13
In United States v. Ruiz, 14 for instance, we held that the conduct of public
bidding for the repair of a wharf at a United States Naval Station is an act
jure imperii. On the other hand, we considered as an act jure gestionis the
hiring of a cook in the recreation center catering to American servicemen
and the general public at the John Hay Air Station in Baguio City, 15 as well
as the bidding for the operation of barber shops in Clark Air Base in Angeles
City. 16
Apropos the present case, the mere entering into a contract by a foreign
State with a private party cannot be construed as the ultimate test of
whether or not it is an act jure imperii or jure gestionis. Such act is only the
start of the inquiry. Is the foreign State engaged in the regular conduct of a
business? If the foreign State is not engaged regularly in a business or
commercial activity, and in this case it has not been shown to be so
engaged, the particular act or transaction must then be tested by its nature.
If the act is in pursuit of a sovereign activity, or an incident thereof, then it
is an act jure imperii. 17
Hence, the existence alone, of a paragraph in a contract stating that any
legal action arising out of the agreement shall be settled according to the
laws of the Philippines and by a specified court of the Philippines is not
necessarily a waiver of sovereign immunity from suit. The aforesaid
provision contains language not necessarily inconsistent with sovereign
immunity. On the other hand, such provision may also be meant to apply
where the sovereign party elects to sue in the local courts, or otherwise

waives its immunity by any subsequent act. The applicability of Philippine


laws must be deemed to include Philippine laws in its totality, including the
principle recognizing sovereign immunity. Hence, the proper court may have
no proper action, by way of settling the case, except to dismiss it. AEaSTC
Submission by a foreign state to local jurisdiction must be clear and
unequivocal. It must be given explicitly or by necessary implication. We find
no such waiver in this case.
Respondent concedes that the establishment of a diplomatic mission is a
sovereign function. On the other hand, he argues that the actual physical
maintenance of the premises of the diplomatic mission, such as the upkeep
of its furnishings and equipment, is no longer a sovereign function of the
State. 18
We disagree. There is no dispute that the establishment of a diplomatic
mission is an act jure imperii. A sovereign State does not merely establish a
diplomatic mission and leave it at that; the establishment of a diplomatic
mission encompasses its maintenance and upkeep. Hence, the State may
enter into contracts with private entities to maintain the premises,
furnishings and equipment of the embassy and the living quarters of its
agents and officials. It is therefore clear that petitioner Republic of Indonesia
was acting in pursuit of a sovereign activity when it entered into a contract
with respondent for the upkeep or maintenance of the air conditioning units,
generator sets, electrical facilities, water heaters, and water motor pumps
of the Indonesian Embassy and the official residence of the Indonesian
ambassador.
The Solicitor General, in his Comment, submits the view that, "the
Maintenance Agreement was entered into by the Republicof Indonesia in the
discharge of its governmental functions. In such a case, it cannot be
deemed to have waived its immunity from suit." As to the paragraph in the
agreement relied upon by respondent, the Solicitor General states that it
"was not a waiver of their immunity from suit but a mere stipulation that in
the event they do waive their immunity, Philippine laws shall govern the
resolution of any legal action arising out of the agreement and the proper
court in Makati City shall be the agreed venue thereof. 19
On the matter of whether or not petitioners Ambassador Soeratmin and
Minister Counsellor Kasim may be sued herein in their private capacities,
Article 31 of the Vienna Convention on Diplomatic Relations provides:
xxx xxx xxx

1. A diplomatic agent shall enjoy immunity from the criminal jurisdiction of


the receiving State. He shall also enjoy immunity from its civil and
administrative jurisdiction, except in the case of:
(a) a real action relating to private immovable property situated in the
territory of the receiving State, unless he holds it on behalf of the sending
State for the purposes of the mission;
(b) an action relating to succession in which the diplomatic agent is involved
as executor, administrator, heir or legatee as a private person and not on
behalf of the sending State;
(c) an action relating to any professional or commercial activity exercised by
the diplomatic agent in the receiving State outside his official functions.
xxx xxx xxx
The act of petitioners Ambassador Soeratmin and Minister Counsellor Kasim
in terminating the Maintenance Agreement is not covered by the exceptions
provided in the abovementioned provision.
The Solicitor General believes that said act may fall under subparagraph (c)
thereof, 20 but said provision clearly applies only to a situation where the
diplomatic agent engages in any professional or commercial activity outside
official functions, which is not the case herein.
WHEREFORE, the petition is hereby GRANTED. The decision and resolution
of the Court of Appeals in CA G.R. SP No. 66894 are REVERSED and SET
ASIDE and the complaint in Civil Case No. 18203 against petitioners is
DISMISSED. EcIaTA
No costs.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Puno, Vitug, Panganiban, Quisumbing, YnaresSantiago, Sandoval-Gutierrez, Carpio, Corona, Carpio Morales, and Callejo,
Sr., JJ., concur.
Austria-Martinez, J., on official leave.
||| (Republic of Indonesia v. Vinzon, G.R. No. 154705, [June 26, 2003], 452
PHIL 1100-1111)

58. MINISTERIO V CFI CEBU


[G.R. No. L-31635. August 31, 1971.]
ANGEL MINISTERIO and ASUNCION SADAYA, petitioners, vs. THE COURT OF
FIRST INSTANCE OF CEBU, Fourth Branch, Presided by the Honorable, Judge
JOSE C. BORROMEO, THE PUBLIC HIGHWAY COMMISSIONER, and THE
AUDITOR GENERAL, respondents.
Erilerto Seno for petitioners.
Solicitor General Felix Q. Antonio, Acting First Assistant Solicitor General
Antonio A. Torres and Solicitor Norberto P. Eduardofor respondents.
SYLLABUS
1. POLITICAL LAW; STATE; IMMUNITY FROM SUIT WITHOUT CONSENT; WHEN
THE LITIGATIONS WOULD RESULT IN FINANCIAL RESPONSIBILITY. The
government is immune from suit without its consent. Nor is it indispensable
that it be the party proceeded against. If it appears that the action would in
fact hold it liable, the doctrine calls for application. It follows then that even
if the defendants named were public officials, such a principle could still be
an effective bar. This is clearly so where a litigation would result in a
financial responsibility for the government, whether in the disbursements of
funds or loss of property. Under such circumstances, the liability of the
official sued is not personal. The party that could be adversely affected is
the government. Hence the defense of non-suability may be interposed.
2. ID.; ID.; ID.; UNAUTHORIZED ACTS OF GOVERNMENT OFFICIALS, NOT
WITHIN THE RULE OF IMMUNITY. It is a different matter where the public
official is made to account in his capacity as such for acts contrary to law
and injurious to the rights of plaintiff. As was clearly set forth by Justice
Zaldivar in Director of the Bureau of Telecommunications vs. Aligaen (33

SCRA 368): "Inasmuch as the State authorizes only legal acts by its officers,
unauthorized acts of government officials or officers are not acts of the
State, and an action against the officials or officers by one whose rights
have been invaded or violated by such acts, for the protection of his rights,
is not a suit against the State within the rule of immunity of the State from
suit. In the same tenor, it has been said that an action at law or suit in
equity against a State officer or the director of a State department on the
ground that, while claiming to act for the State, he violates or invades the
personal and property rights of the plaintiff, under an unconstitutional act or
under an assumption of authority which he does not have, is not a suit
against the State within the constitutional provision that the State may not
be sued without its consent."
3. ID.; ID.; ID.; ID.; DOCTRINE CANNOT SERVE AS AN INSTRUMENT FOR
PERPETRATING AN INJUSTICE ON A CITIZEN. If the constitutional mandate
that the owner be compensated for property taken for public use were to be
respected, as it should, then a suit of this character should not be
summarily dismissed. The doctrine of governmental immunity from suit
cannot serve as an instrument for perpetrating an injustice on a citizen. It is
unthinkable then that precisely because there was a failure to abide by what
the law requires, the government would stand to benefit. It is just as
important, if not more so, that there be fidelity to legal norms on the part of
officialdom if the rule of law were to be maintained. It is not too much to say
that when the government takes any property for public use, which is
conditioned upon the payment of just compensation, to be judicially
ascertained, it makes manifest that it submits to the jurisdiction of a court.
There is no thought then that the doctrine of immunity from suit could still
be appropriately invoked.
DECISION
FERNANDO, J p:
What is before this Court for determination in this appeal by certiorari to
review a decision of the Court of First Instance of Cebu is the question of
whether or not plaintiffs, now petitioners, seeking the just compensation to
which they are entitled under the Constitution for the expropriation of their
property necessary for the widening of a street, no condemnation
proceeding having been filed, could sue defendants Public Highway
Commissioner and the Auditor General, in their capacity as public officials
without thereby violating the principle of government immunity from suit
without its consent. The lower court, relying on what it considered to be
authoritative precedents, held that they could not and dismissed the suit.

The matter was then elevated to us. After a careful consideration and with a
view to avoiding the grave inconvenience, not to say possible injustice
contrary to the constitutional mandate, that would be the result if no such
suit were permitted, this Court arrives at a different conclusion and sustains
the right of the plaintiff to file a suit of this character. Accordingly, we
reverse.
Petitioners as plaintiffs in a complaint filed with the Court of First Instance of
Cebu, dated April 13, 1966, sought the payment of just compensation for a
registered lot, containing an area of 1045 square meters, alleging that in
1927 the National Government through its authorized representatives took
physical and material possession of it and used it for the widening of the
Gorordo Avenue, a national road, Cebu City, without paying just
compensation and without any agreement, either written or verbal. There
was an allegation of repeated demands for the payment of its price or
return of its possession, but defendants Public Highway Commissioner and
the Auditor General refused to restore its possession. It was further alleged
that on August 25, 1965, the appraisal committee of the City of Cebu
approved Resolution No. 90, appraising the reasonable and just price of Lot
No. 647-B at P50.00 per square meter or a total price of P52,250.00.
Thereafter, the complaint was amended on June 30, 1966 in the sense that
the remedy prayed for was in the alternative, either the restoration of
possession or the payment of the just compensation.
In the answer filed by defendants, now respondents, through the then
Solicitor General, now Associate Justice, Antonio P. Barredo, the principal
defense relied upon was that the suit in reality was one against the
government and therefore should be dismissed, no consent having been
shown. Then on July 11, 1969, the parties submitted a stipulation of facts to
this effect: "That the plaintiffs are the registered owners of Lot 647-B of the
Banilad estate described in the Survey plan RS-600 GLRO Record No. 5988
and more particularly described in Transfer Certificate of Title No. RT-5963
containing an area of 1,045 square meters; That the National Government in
1927 took possession of Lot 647-B Banilad estate, and used the same for
the widening of Gorordo Avenue; That the Appraisal Committee of Cebu City
approved Resolution No. 90, Series of 1965 fixing the price of Lot No. 647-B
at P50.00 per square meter; That Lot No. 647-B is still in the possession of
the National Government the same being utilized as part of the Gorordo
Avenue, Cebu City, and that the National Government has not as yet paid
the value of the land which is being utilized for public use." 1
The lower court decision now under review was promulgated on January 30,
1969. As is evident from the excerpt to be cited, the plea that the suit was

against the government without its consent having been manifested met
with a favorable response. Thus: "It is uncontroverted that the land in
question is used by the National Government for road purposes. No
evidence was presented whether or not there was an agreement or contract
between the government and the original owner and whether payment was
paid or not to the original owner of the land. It may be presumed that when
the land was taken by the government the payment of its value was made
thereafter and no satisfactory explanation was given why this case was filed
only in 1966. But granting that no compensation was given to the owner of
the land, the case is undoubtedly against the National Government and
there is no showing that the government has consented to be sued in this
case. It may be contended that the present case is brought against the
Public Highway Commissioner and the Auditor General and not against the
National Government. Considering that the herein defendants are sued in
their official capacity the action is one against the National Government who
should have been made a party in this case, but, as stated before, with its
consent." 2
Then came this petition for certiorari to review the above decision. The
principal error assigned would impugn the holding that the case being
against the national government which was sued without its consent should
be dismissed, as it was in fact dismissed. As was indicated in the opening
paragraph of this opinion, this assignment of error is justified. The decision
of the lower court cannot stand. We shall proceed to explain why.
1. The government is immune from suit without its consent. 3 Nor is it
indispensable that it be the party proceeded against. If it appears that the
action would in fact hold it liable, the doctrine calls for application. It follows
then that even if the defendants named were public officials, such a
principle could still be an effective bar. This is clearly so where a litigation
would result in a financial responsibility for the government, whether in the
disbursements of funds or loss of property. Under such circumstances, the
liability of the official sued is not personal. The party that could be adversely
affected is the government. Hence the defense of non-suability may be
interposed. 4
So it has been categorically set forth in Syquia v. Almeda Lopez: 5
"However, and this is important, where the judgment in such a case would
result not only in the recovery of possession of the property in favor of said
citizen but also in a charge against or financial liability to the Government,
then the suit should be regarded as one against the government itself, and,
consequently, it cannot prosper or be validly entertained by the courts
except with the consent of said Government." 6

2. It is a different matter where the public official is made to account in his


capacity as such for acts contrary to law and injurious to the rights of
plaintiff. As was clearly set forth by Justice Zaldivar in Director of the Bureau
of Telecommunications v. Aligean: 7 "Inasmuch as the State authorizes only
legal acts by its officers, unauthorized acts of government officials or
officers are not acts of the State, and an action against the officials or
officers by one whose rights have been invaded or violated by such acts, for
the protection of his rights, is not a suit against the State within the rule of
immunity of the State from suit. In the same tenor, it has been said that an
action at law or suit in equity against a State officer or the director of a
State department on the ground that, while claiming to act for the State, he
violates or invades the personal and property rights of the plaintiff, under an
unconstitutional act or under an assumption of authority which he does not
have, is not a suit against the State within the constitutional provision that
the State may not be sued without its consent." 8
3. It would follow then that the prayer in the amended complaint of
petitioners being in the alternative, the lower court, instead of dismissing
the same, could have passed upon the claim of plaintiffs there, now
petitioners, for the recovery of the possession of the disputed lot, since no
proceeding for eminent domain, as required by the then Code of Civil
Procedure, was instituted. 9 However, as noted in Alfonso v. Pasay City, 10
this Court speaking through Justice Montemayor, restoration would be
"neither convenient nor feasible because it is now and has been used for
road purposes." 11 The only relief, in the opinion of this Court, would be for
the government "to make due compensation, . . .," 12 It was made clear in
such decision that compensation should have been made "as far back as
the date of the taking." Does it result, therefore, that petitioners would be
absolutely remediless since recovery of possession is in effect barred by the
above decision? If the constitutional mandate that the owner be
compensated for property taken for public use 13 were to be respected, as
it should, then a suit of this character should not be summarily dismissed.
The doctrine of governmental immunity from suit cannot serve as an
instrument for perpetrating an injustice on a citizen. Had the government
followed the procedure indicated by the governing law at the time, a
complaint would have been filed by it, and only upon payment of the
compensation fixed by the judgment, or after tender to the party entitled to
such payment of the amount fixed, may it "have the right to enter in and
upon the land so condemned" to appropriate the same to the public use
defined in the judgment." 14 If there were an observance of procedural
regularity, petitioners would not be in the sad plaint they are now. It is

unthinkable then that precisely because there was a failure to abide by what
the law requires, the government would stand to benefit. It is just as
important, if not more so, that there be fidelity to legal norms on the part of
officialdom if the rule of law were to be maintained. It is not too much to say
that when the government takes any property for public use, which is
conditioned upon the payment of just compensation, to be judicially
ascertained, it makes manifest that it submits to the jurisdiction of a court.
There is no thought then that the doctrine of immunity from suit could still
be appropriately invoked. 15
Accordingly, the lower court decision is reversed so that the court may
proceed with the complaint and determine the compensation to which
petitioners are entitled, taking into account the ruling in the above Alfonso
case: "As to the value of the property, although the plaintiff claims the
present market value thereof, the rule is that to determine due
compensation for lands appropriated by the Government, the basis should
be the price or value at the time that it was taken from the owner and
appropriated by the Government." 16
WHEREFORE, the lower court decision of January 30, 1969 dismissing the
complaint is reversed and the case remanded to the lower court for
proceedings in accordance with law.
Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Castro, Teehankee, Villamor and
Makasiar, JJ ., concur.
Concepcion, C .J ., took no part.
Barredo, J ., did not take part.
||| (Ministerio v. Court of First Instance of Cebu, G.R. No. L-31635, [August
31, 1971], 148-B PHIL 474-481)

59. SANDERS V VERIDIANO SUPRA

60. MERRITT V GOVT OF THE PHIL ISLANDS SUPRA

61. FONTANILLA V MALIAMAN


259 PHIL 302-313
SECOND DIVISION
[G.R. No. 55963. December 1, 1989.]
SPOUSES JOSE FONTANILLA AND VIRGINIA FONTANILLA,petitioners, vs.
HONORABLE INOCENCIO D. MALIAMAN and NATIONAL IRRIGATION
ADMINISTRATION, respondents.
[G.R. No. 61045. December 1, 1989.]
NATIONAL IRRIGATION ADMINISTRATION, appellant, vs. SPOUSES JOSE
FONTANILLA and VIRGINIA FONTANILLA, appellees.
Cecilio V. Suarez, Jr. for Spouses Fontanilla.
Felicisimo C. Villaflor for NIA.

SYLLABUS
1. CIVIL LAW; TORTS AND DAMAGES; ASPECTS OF THE LIABILITY OF STATE
FOR DAMAGES. The liability of the State has two aspects, namely: 1. Its
public or governmental aspects where it is liable for the tortious acts of
special agents only. 2. Its private or business aspects (as when it engages in
private enterprises) where it becomes liable as an ordinary employer. (p.
961, Civil Code of the Philippines; Annotated, Paras, 1986 Ed.). In this
jurisdiction, the State assumes a limited liability for the damage caused by
the tortious acts or conduct of its special agent.
2. ID.; ID.; ID.; INSTANCES WHEN THE GOVERNMENT ASSUMES LIABILITY
FOR ACTS DONE THROUGH ITS SPECIAL AGENTS. Under paragraph 6 of
Art. 2180, the State has voluntarily assumed liability for acts done through
special agents. The State's agent, if a public official, must not only be
specially commissioned to do a particular task but that such task must be
foreign to said official's usual governmental functions. If the State's agent is
not a public official, and is commissioned to perform non-govern mental
functions, then the State assumes the role of an ordinary employer and will
be held liable as such for its agent's tort. Where the government
commissions a private individual for a special governmental task, it is acting
through a special agent within the meaning of the provision. (Torts and
Damages, Sangco, p. 347, 1984 Ed.).
3. ADMINISTRATIVE LAW; GOVERNMENTAL AND PROPRIETARY FUNCTIONS
DINSTINGUISHED. Certain functions and activities, which can be
performed only by the government, are more or less generally agreed to be
"governmental" in character, and so the State is immune from tort liability.
On the other hand, a service which might as well be provided by a private
corporation, and particularly when it collects revenues from it, the function
is considered a "proprietary" one, as to which there may be liability for the
torts of agents within the scope of their employment.
4. ID.; NATIONAL IRRIGATION ADMINISTRATION; A GOVERNMENT
CORPORATION WITH JURIDICAL PERSONALITY WHICH CAN BE HELD
ANSWERABLE FOR DAMAGES. The National Irrigation Administration is an
agency of the government exercising proprietary functions, by express
provision ofRep. Act No. 3601. It is a government corporation with juridical
personality and not a mere agency of the government. Since it is a
corporate body performing non-governmental functions, it now becomes
liable for the damage caused by the accident resulting from the tortious act
of its driver-employee. In this particular case, the NIA assumes the

responsibility of an ordinary employer and as such, it becomes answerable


for damages.
5. CIVIL LAW; TORTS AND DAMAGES; NEGLIGENCE IN THE SELECTION AND
SUPERVISION OF EMPLOYEE; CASE OF. It should be emphasized that the
accident happened along the Maharlika National Road within the city limits
of San Jose City, an urban area. Considering the fact that the victim was
thrown 50 meters away from the point of impact, there is a strong indication
that driver Garcia was driving at a high speed. This is confirmed by the fact
that the pick-up suffered substantial and heavy damage as above-described
and the fact that the NIA group was then "in a hurry to reach the campsite
as early as possible", as shown by their not stopping to find out what they
bumped as would have been their normal and initial reaction. Evidently,
there was negligence in the supervision of the driver for the reason that
they were travelling at a high speed within the city limits and yet the
supervisor of the group, Ely Salonga, failed to caution and make the driver
observe the proper and allowed speed limit within the city. Under the
situation, such negligence is further aggravated by their desire to reach
their destination without even checking whether or not the vehicle suffered
damage from the object it bumped, thus showing imprudence and
recklessness on the part of both the driver and the supervisor in the group.
6. ID.; ID.; ID.; INSTANCES WHEN EMPLOYER WOULD STILL BE LIABLE EVEN
IN THE ABSENCE THEREOF. This Court has ruled that even if the employer
can prove the diligence in the selection and supervision (the latter aspect
has not been established herein) of the employee, still if he ratifies the
wrongful acts, or take no step to avert further damage, the employer would
still be liable. (Maxion vs. Manila Railroad Co., 44 Phil. 597).
7. ID.; ID.; FAILURE OF DRIVER TO KEEP A PROPER LOOK OUT IN THE LINE TO
BE TRAVERSED CONSTITUTES NEGLIGENCE. In the case of Vda. de
Bonifacio vs. B.L.T. Bus Co. (L-26810, August 31, 1970, 34 SCRA 618), this
Court held that a driver should be especially watchful in anticipation of
others who may be using the highway, and his failure to keep a proper look
out for reasons and objects in the line to be traversed constitutes
negligence.
DECISION
PARAS, J p:
In G.R. No. 55963, the petition for review on certiorari seeks the affirmance
of the decision dated March 20, 1980 of the then Court of First Instance of
Nueva Ecija, Branch VIII, at San Jose City, and its modification with respect

to the denial of petitioner's claim for moral and exemplary damages and
attorney's fees.
In G.R. No. 61045, respondent National Irrigation Administration seeks the
reversal of the aforesaid decision of the lower court. The original appeal of
this case before the Court of Appeals was certified to this Court and in the
resolution of July 7, 1982, it was docketed with the aforecited number. And
in the resolution of April 3, this case was consolidated with G.R. No. 55963.
It appears that on August 21, 1976 at about 6:30 P.M., a pick-up owned and
operated by respondent National Irrigation Administration, a government
agency bearing Plate No. IN-651, then driven officially by Hugo Garcia, an
employee of said agency as its regular driver, bumped a bicycle ridden by
Francisco Fontanilla, son of herein petitioners, and Restituto Deligo, at
Maasin, San Jose City along the Maharlika Highway. As a result of the
impact, Francisco Fontanilla and Restituto Deligo were injured and brought
to the San Jose City Emergency Hospital for treatment. Fontanillawas later
transferred to the Cabanatuan Provincial Hospital where he died.
Garcia was then a regular
Administration who, at the time
driver and who qualified for
respondent after having passed
rules and maintenance of
Administration authorities. prLL

driver of respondent National Irrigation


of the accident, was a licensed professional
employment as such regular driver of
the written and oral examinations on traffic
vehicles given by National Irrigation

The within petition is thus an offshot of the action (Civil Case No. SJC-56)
instituted by petitioners-spouses on April 17, 1978 against respondent NIA
before the then Court of First Instance of Nueva Ecija, Branch VIII at San Jose
City, for damages in connection with the death of their son resulting from
the aforestated accident.
After trial, the trial court rendered judgment on March 20, 1980 which
directed respondent National Irrigation Administration to pay damages
(death benefits) and actual expenses to petitioners. The dispositive portion
of the decision reads thus.
". . . Judgment is hereby rendered ordering the defendant National Irrigation
Administration to pay to the heirs of the deceased P12,000.00 for the death
of Francisco Fontanilla; P3,389.00 which the parents of the deceased had
spent for the hospitalization and burial of the deceased Francisco Fontanilla;
and to pay the costs." (Brief for the petitioners spouses Fontanilla, p. 4;
Rollo, p. 132).

Respondent National Irrigation Administration filed on April 21, 1980, its


motion for reconsideration of the aforesaid decision which respondent trial
court denied in its Order of June 13, 1980. Respondent National Irrigation
Administration thus appealed said decision to the Court of Appeals (C.A.G.R. No. 67237-R) where it filed its brief for appellant in support of its
position.
Instead of filing the required brief in the aforecited Court of Appeals case,
petitioners filed the instant petition with this Court.
The sole issue for the resolution of the Court is: Whether or not the award of
moral damages, exemplary damages and attorney's fees is legally proper in
a complaint for damages based on quasi-delict which resulted in the death
of the son of herein petitioners.
Petitioners allege:
1. The award of moral damages is specifically allowable under paragraph 3
of Article 2206 of the New Civil Code which provides that the spouse,
legitimate and illegitimate descendants and ascendants of the deceased
may demand moral damages for mental anguish by reason of the death of
the deceased. Should moral damages be granted, the award should be
made to each of petitioners-spousesindividually and in varying amounts
depending upon proof of mental and depth of intensity of the same, which
should not be less than P50,000.00 for each of them.
2. The decision of the trial court had made an impression that respondent
National Irrigation Administration acted with gross negligence because of
the accident and the subsequent failure of the National Irrigation
Administration personnel including the driver to stop in order to give
assistance to the victims. Thus, by reason of the gross negligence of
respondent, petitioners become entitled to exemplary damages under Arts.
2231 and 2229 of the New Civil Code.
3. Petitioners are entitled to an award of attorney's fees, the amount of
which (20%) had been sufficiently established in the hearing of May 23,
1979.
4. This petition has been filed only for the purpose of reviewing the findings
of the lower court upon which the disallowance of moral damages,
exemplary damages and attorney's fees was based and not for the purpose
of disturbing the other findings of fact and conclusions of law.

The Solicitor General, taking up the cudgels for public respondent National
Irrigation Administration, contends thus: LLphil
1. The filing of the instant petition is not proper in view of the appeal taken
by respondent National Irrigation Administration to the Court of Appeals
against the judgment sought to be reviewed. The focal issue raised in
respondent's appeal to the Court of Appeals involves the question as to
whether or not the driver of the vehicle that bumped the victims was
negligent in his operation of said vehicle. It thus becomes necessary that
before petitioners' claim for moral and exemplary damages could be
resolved, there should first be a finding of negligence on the part of
respondent's employee-driver. In this regard, the Solicitor General alleges
that the trial court decision does not categorically contain such finding.
2. The filing of the "Appearance and Urgent Motion For Leave to File PlaintiffAppellee's Brief' dated December 28, 1981 by petitioners in the appeal (CAG.R. No. 67237-R; and G.R. No. 61045) of the respondent National Irrigation
Administration before the Court of Appeals, is an explicit admission of said
petitioners that the herein petition, is not proper. Inconsistent procedures
are manifest because while petitioners question the findings of fact in the
Court of Appeals, they present only the questions of law before this Court
which posture confirms their admission of the facts.
3. The fact that the parties failed to agree on whether or not negligence
caused the vehicular accident involves a question of fact which petitioners
should have brought to the Court of Appeals within the reglementary period.
Hence, the decision of the trial court has become final as to the petitioners
and for this reason alone, the petition should be dismissed.
4. Respondent Judge acted within his jurisdiction, sound discretion and in
conformity with the law.
5. Respondents do not assail petitioners' claim to moral and exemplary
damages by reason of the shock and subsequent illness they suffered
because of the death of their son. Respondent National Irrigation
Administration, however, avers that it cannot be held liable for the damages
because it is an agency of the State performing governmental functions and
driver Hugo Garcia was a regular driver of the vehicle, not a special agent
who was performing a job or act foreign to his usual duties. Hence, the
liability for the tortious act should not be borne by respondent government
agency but by driver Garcia who should answer for the consequences of his
act.

6. Even as the trial court touched on the failure or laxity of respondent


National Irrigation Administration in exercising due diligence in the selection
and supervision of its employee, the matter of due diligence is not an issue
in this case since driver Garcia was not its special agent but a regular driver
of the vehicle.
The sole legal question on whether or not petitioners may be entitled to an
award of moral and exemplary damages and attorney's fees can very well
be answered with the application of Arts. 2176 and 2180 of the New Civil
Code. cdll
Art. 2176 thus provides:
"Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence,
if there is no pre-existing contractual relation between the parties, is called
a quasi-delict and is governed by the provisions of this Chapter."
Paragraphs 5 and 6 of Art. 2180 read as follows:
"Employers shall be liable for the damages caused by their employees and
household helpers acting within the scope of their assigned tasks, even
though the former are not engaged in any business or industry."
"The State is responsible in like manner when it acts through a special
agent; but not when the damage has been caused by the official to whom
the task done properly pertains, in which case what is provided in Art. 2176
shall be applicable."
The liability of the State has two aspects, namely:
1. Its public or governmental aspects where it is liable for the tortious acts
of special agents only.
2 Its private or business aspects (as when it engages in private enterprises)
where it becomes liable as an ordinary employer. (p. 961, Civil Code of the
Philippines; Annotated, Paras, 1986 Ed.).
In this jurisdiction, the State assumes a limited liability for the damage
caused by the tortious acts or conduct of its special agent.
Under the aforequoted paragraph 6 of Art. 2180, the State has voluntarily
assumed liability for acts done through special agents. The State's agent, if
a public official, must not only be specially commissioned to do a particular
task but that such task must be foreign to said official's usual governmental
functions. If the State's agent is not a public official, and is commissioned to

perform non-govern mental functions, then the State assumes the role of an
ordinary employer and will be held liable as such for its agent's tort. Where
the government commissions a private individual for a special governmental
task, it is acting through a special agent within the meaning of the
provision. (Torts and Damages, Sangco, p. 347, 1984 Ed.).
Certain functions and activities, which can be performed only by the
government, are more or less generally agreed to be "governmental" in
character, and so the State is immune from tort liability. On the other hand,
a service which might as well be provided by a private corporation, and
particularly when it collects revenues from it, the function is considered a
"proprietary" one, as to which there may be liability for the torts of agents
within the scope of their employment. LLphil
The National Irrigation Administration is an agency of the government
exercising proprietary functions, by express provision of Rep. Act No. 3601.
Section 1 of said Act provides:
"Section 1. Name and domicile. A body corporate is hereby created which
shall be known as the National Irrigation Administration, hereinafter called
the NIA for short, which shall be organized immediately after the approval of
this Act. It shall have its principal seat of business in the City of Manila and
shall have representatives in all provinces for the proper conduct of its
business.'
Section 2 of said law spells out some of the NIA's proprietary functions. Thus

"Sec. 2. Powers and objectives. The NIA shall have the following powers
and objectives:
"(a) . . .
"(b) . . .
"(c) To collect from the users of each irrigation system constructed by it
such fees as may be necessary to finance the continuous operation of the
system and reimburse within a certain period not less than twenty-five
years cost of construction thereof; and
"(d) To do all such other things and to transact all such business as are
directly or indirectly necessary, incidental or conducive to the attainment of
the above objectives."

Indubitably, the NIA is a government corporation with juridical personality


and not a mere agency of the government. Since it is a corporate body
performing non-governmental functions, it now becomes liable for the
damage caused by the accident resulting from the tortious act of its driveremployee. In this particular case, the NIA assumes the responsibility of an
ordinary employer and as such, it becomes answerable for damages.
This assumption of liability, however, is predicated upon the existence of
negligence on the part of respondent NIA. The negligence referred to here is
the negligence of supervision.
At this juncture, the matter of due diligence on the part of respondent NIA
becomes a crucial issue in determining its liability since it has been
established that respondent is a government agency performing proprietary
functions and as such, it assumes the posture of an ordinary employer
which, under Par. 5 of Art. 2180, is responsible for the damages caused by
its employees provided that it has failed to observe or exercise due
diligence in the selection and supervision of the driver. prcd
It will be noted from the assailed decision of the trial court that "as a result
of the impact, Francisco Fontanilla was thrown to a distance 50 meters away
from the point of impact while Restituto Deligo was thrown a little bit further
away. The impact took place almost at the edge of the cemented portion of
the road." (Italics supplied) [page 26, Rollo].
The lower court further declared that "a speeding vehicle coming in contact
with a person causes force and impact upon the vehicle that anyone in the
vehicle cannot fail to notice. As a matter of fact, the impact was so strong
as shown by the fact that thevehicle suffered dents on the right side of the
radiator guard, the hood, the fender and a crack on the radiator as shown
by the investigation report (Exhibit "E"). (Emphasis supplied) [page 29,
Rollo].
It should be emphasized that the accident happened along the Maharlika
National Road within the city limits of San Jose City, an urban area.
Considering the fact that the victim was thrown 50 meters away from the
point of impact, there is a strong indication that driver Garcia was driving at
a high speed. This is confirmed by the fact that the pick-up suffered
substantial and heavy damage as above-described and the fact that the NIA
group was then "in a hurry to reach the campsite as early as possible", as
shown by their not stopping to find out what they bumped as would have
been their normal and initial reaction.

Evidently, there was negligence in the supervision of the driver for the
reason that they were travelling at a high speed within the city limits and
yet the supervisor of the group, Ely Salonga, failed to caution and make the
driver observe the proper and allowed speed limit within the city. Under the
situation, such negligence is further aggravated by their desire to reach
their destination without even checking whether or not the vehicle suffered
damage from the object it bumped, thus showing imprudence and
recklessness on the part of both the driver and the supervisor in the group.
Cdpr
Significantly, this Court has ruled that even if the employer can prove the
diligence in the selection and supervision (the latter aspect has not been
established herein) of the employee, still if he ratifies the wrongful acts, or
take no step to avert further damage, the employer would still be liable.
(Maxion vs. Manila Railroad Co., 44 Phil. 597).
Thus, too, in the case of Vda. de Bonifacio vs. B.L.T. Bus Co. (L-26810,
August 31, 1970, 34 SCRA 618), this Court held that a driver should be
especially watchful in anticipation of others who may be using the highway,
and his failure to keep a proper look out for reasons and objects in the line
to be traversed constitutes negligence.
Considering the foregoing, respondent NIA is hereby directed to pay herein
petitioners-spouses the amounts of P12,000.00 for the death of Francisco
Fontanilla; P3,389.00 for hospitalization and burial expenses of the
aforenamed deceased; P30,000.00 as moral damages; P8,000.00 as
exemplary damages and attorney's fees of 20% of the total award.
SO ORDERED.
Padilla, Sarmiento and Regalado, JJ., concur.
Melencio-Herrera (Chairman), J., is on leave.
||| (Fontanilla v. Maliaman, G.R. No. 55963, 61045, [December 1, 1989], 259
PHIL 302-313)

62. REPUBLIC V VILLASOR


[G.R. No. L-30671. November 28, 1973.]
REPUBLIC OF THE PHILIPPINES, petitioner, vs. HON. GUILLERMO P. VILLASOR,
as Judge of the Court of First Instance of Cebu, Branch I, THE PROVINCIALSHERIFF OF RIZAL, THE SHERIFF OF QUEZON CITY, and THE SHERIFF OF THE
CITY OF MANILA, THE CLERK OF COURT, Court of First Instance of Cebu, P.J.
KIENER CO., LTD., GAVINO UNCHUAN, and INTERNATIONAL CONSTRUCTION
CORPORATION, respondents.
Solicitor General Felix V . Makasiar and Solicitor Bernardo P. Pardo for
petitioner.
Andres T . Velarde & Marcelo B. Fernan for respondents.
DECISION
FERNANDO, J p:
The Republic of the Philippines in this certiorari and prohibition proceeding
challenges the validity of an order issued by respondent Judge Guillermo P.
Villasor, then of the Court of First Instance of Cebu, Branch I, 1 declaring a

decision final and executory and of an alias writ of execution directed


against the funds of the Armed Forces of the Philippines subsequently
issued in pursuance thereof, the alleged ground being excess of jurisdiction,
or at the very least, grave abuse of discretion. As thus simply and tersely
put, with the facts being undisputed and the principle of law that calls for
application indisputable, the outcome is predictable. The Republic of the
Philippines is entitled to the writs prayed for. Respondent Judge ought not to
have acted thus. The order thus impugned and the alias writ of execution
must be nullified.
In the petition filed by the Republic of the Philippines on July 7, 1969, a
summary of facts was set forth thus: "7. On July 3, 1961, a decision was
rendered in Special Proceedings No. 2156-R in favor of respondents P. J.
Kiener Co., Ltd., Gavino Unchuan, and International Construction
Corporation, and against the petitioner herein, confirming the arbitration
award in the amount of P1,712,396.40, subject of Special Proceedings. 8. On
June 24, 1969, respondent Honorable Guillermo P.Villasor, issued an Order
declaring the aforestated decision of July 3, 1961 final and executory,
directing the Sheriffs of Rizal Province, Quezon City [as well as] Manila to
execute the said decision. 9. Pursuant to the said Order dated June 24,
1969, the corresponding Alias Writ of Execution [was issued] dated June 26,
1969, . . . 10. On the strength of the afore-mentioned Alias Writ of Execution
dated June 26, 1969, the Provincial Sheriff of Rizal (respondent herein)
served notices of garnishment dated June 28, 1969 with several Banks,
specially on the `monies due the Armed Forces of the Philippines in the form
of deposits, sufficient to cover the amount mentioned in the said Writ of
Execution'; the Philippine Veterans Bank received the same notice of
garnishment on June 30, 1969 . . . 11. The funds of the Armed Forces of the
Philippines on deposit with the Banks, particularly, with the Philippine
Veterans Bank and the Philippine National Bank [or] their branches are
public funds duly appropriated and allocated for the payment of pensions of
retirees, pay and allowances of military and civilian personnel and for
maintenance and operations of the Armed Forces of the Philippines, as per
Certification dated July 3, 1969 by the AFP Comptroller, . . ." 2 The
paragraph immediately succeeding in such petition then alleged: "12.
Respondent Judge, Honorable Guillermo P. Villasor, acted in excess of
jurisdiction [or] with grave abuse of discretion amounting to lack of
jurisdiction in granting the issuance of an alias writ of execution against the
properties of the Armed Forces of the Philippines, hence, the Alias Writ of
Execution and notices of garnishment issued pursuant thereto are null and
void." 3 In the answer filed by respondents, through counsel Andres T.
Velarde and Marcelo B. Fernan, the facts set forth were admitted with the

only qualification being that the total award was in the amount of
P2,372,331.40. 4
The Republic of the Philippines, as mentioned at the outset, did right in filing
this certiorari and prohibition proceeding. What was done by respondent
Judge is not in conformity with the dictates of the Constitution.
It is a fundamental postulate of constitutionalism flowing from the juristic
concept of sovereignty that the state as well as its government is immune
from suit unless it gives its consent. It is readily understandable why it must
be so. In the classic formulation of Holmes: "A sovereign is exempt from
suit, not because of any formal conception or obsolete theory, but on the
logical and practical ground that there can be no legal right as against the
authority that makes the law on which the right depends." 5 Sociological
jurisprudence supplies an answer not dissimilar. So it was indicated in a
recent decision, Providence Washington Insurance Co. v. Republic of the
Philippines, 6 with its affirmation that "a continued adherence to the
doctrine of non-suability is not to be deplored for as against the
inconvenience that may be caused private parties, the loss of governmental
efficiency and the obstacle to the performance of its multifarious functions
are far greater if such a fundamental principle were abandoned and the
availability of judicial remedy were not thus restricted. With the well known
propensity on the part of our people to go to court, at the least provocation,
the loss of time and energy required to defend against law suits, in the
absence of such a basic principle that constitutes such an effective obstacle,
could very well be imagined." 7
This fundamental postulate underlying the 1935 Constitution is now made
explicit in the revised charter. It is therein expressly provided: "The State
may not be sued without its consent." 8 A corollary, both dictated by logic
and sound sense from such a basic concept is that public funds cannot be
the object of a garnishment proceeding even if the consent to be sued had
been previously granted and the state liability adjudged. Thus in the recent
case of Commissioner of Public Highways v. San Diego, 9 such a well-settled
doctrine was restated in the opinion of Justice Teehankee: "The universal
rule 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 appropriation 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, as appropriated by law." 10 Such a principle applies
even to an attempted garnishment of a salary that had accrued in favor of
an employee. Director of Commerce and Industry v. Concepcion, 11 speaks
to that effect. Justice Malcolm as ponenteleft no doubt on that score. Thus:
"A rule, which has never been seriously questioned, is that money in the
hands of public officers, although it may be due government employees, is
not liable to the creditors of these employees in the process of garnishment.
One reason is, that the State, by virtue of its sovereignty, may not be sued
in its own courts except by express authorization by the Legislature, and to
subject its officers to garnishment would be to permit indirectly what is
prohibited directly. Another reason is that moneys sought to be garnished,
as long as they remain in the hands of the disbursing officer of the
Government, belong to the latter, although the defendant in garnishment
may be entitled to a specific portion thereof. And still another reason which
covers both of the foregoing is that every consideration of public policy
forbids it." 12
In the light of the above, it is made abundantly clear why the Republic of the
Philippines could rightfully allege a legitimate grievance.
WHEREFORE, the writs of certiorari and prohibition are granted, nullifying
and setting aside both the order of June 24, 1969 declaring executory the
decision of July 3, 1961 as well as the alias writ of execution issued
thereunder. The preliminary injunction issued by this Court on July 12, 1969
is hereby made permanent.
Zaldivar, Antonio, Fernandez and Aquino, JJ ., concur.
Barredo, J ., did not take part.
||| (Republic v. Villasor, G.R. No. L-30671, [November 28, 1973], 153 PHIL
356-362)

64. MUNICIPALITY OF MAKATI V CA


THIRD DIVISION
G.R. Nos. 89898-99 October 1, 1990
MUNICIPALITY OF MAKATI, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, HON. SALVADOR P. DE GUZMAN, JR.,
as Judge RTC of Makati, Branch CXLII ADMIRAL FINANCE CREDITORS
CONSORTIUM, INC., and SHERIFF SILVINO R. PASTRANA,respondents.
Defante & Elegado for petitioner.
Roberto B. Lugue for private respondent Admiral Finance Creditors'
Consortium, Inc.
RESOLUTION
CORTS, J.:
The present petition for review is an off-shoot of expropriation proceedings
initiated by petitioner Municipality of Makati against private respondent
Admiral Finance Creditors Consortium, Inc., Home Building System & Realty
Corporation and one Arceli P. Jo, involving a parcel of land and
improvements thereon located at Mayapis St., San Antonio Village, Makati
and registered in the name of Arceli P. Jo under TCT No. S-5499.
It appears that the action for eminent domain was filed on May 20, 1986,
docketed as Civil Case No. 13699. Attached to petitioner's complaint was a
certification that a bank account (Account No. S/A 265-537154-3) had been
opened with the PNB Buendia Branch under petitioner's name containing
the sum of P417,510.00, made pursuant to the provisions of Pres. Decree
No. 42. After due hearing where the parties presented their respective
appraisal reports regarding the value of the property, respondent RTC judge
rendered a decision on June 4, 1987, fixing the appraised value of the
property at P5,291,666.00, and ordering petitioner to pay this amount

minus the advanced payment of P338,160.00 which was earlier released to


private respondent.
After this decision became final and executory, private respondent moved
for the issuance of a writ of execution. This motion was granted by
respondent RTC judge. After issuance of the writ of execution, a Notice of
Garnishment dated January 14, 1988 was served by respondent sheriff
Silvino R. Pastrana upon the manager of the PNB Buendia Branch. However,
respondent sheriff was informed that a "hold code" was placed on the
account of petitioner. As a result of this, private respondent filed a motion
dated January 27, 1988 praying that an order be issued directing the bank
to deliver to respondent sheriff the amount equivalent to the unpaid balance
due under the RTC decision dated June 4, 1987.
Petitioner filed a motion to lift the garnishment, on the ground that the
manner of payment of the expropriation amount should be done in
installments which the respondent RTC judge failed to state in his decision.
Private respondent filed its opposition to the motion.
Pending resolution of the above motions, petitioner filed on July 20, 1988 a
"Manifestation" informing the court that private respondent was no longer
the true and lawful owner of the subject property because a new title over
the property had been registered in the name of Philippine Savings Bank,
Inc. (PSB) Respondent RTC judge issued an order requiring PSB to make
available the documents pertaining to its transactions over the subject
property, and the PNB Buendia Branch to reveal the amount in petitioner's
account which was garnished by respondent sheriff. In compliance with this
order, PSB filed a manifestation informing the court that it had consolidated
its ownership over the property as mortgagee/purchaser at an extrajudicial
foreclosure sale held on April 20, 1987. After several conferences, PSB and
private respondent entered into a compromise agreement whereby they
agreed to divide between themselves the compensation due from the
expropriation proceedings.
Respondent trial judge subsequently issued an order dated September 8,
1988 which: (1) approved the compromise agreement; (2) ordered PNB
Buendia Branch to immediately release to PSB the sum of P4,953,506.45
which corresponds to the balance of the appraised value of the subject
property under the RTC decision dated June 4, 1987, from the garnished
account of petitioner; and, (3) ordered PSB and private respondent to
execute the necessary deed of conveyance over the subject property in
favor of petitioner. Petitioner's motion to lift the garnishment was denied.

Petitioner filed a motion for reconsideration, which was duly opposed by


private respondent. On the other hand, for failure of the manager of the PNB
Buendia Branch to comply with the order dated September 8, 1988, private
respondent filed two succeeding motions to require the bank manager to
show cause why he should not be held in contempt of court. During the
hearings conducted for the above motions, the general manager of the PNB
Buendia Branch, a Mr. Antonio Bautista, informed the court that he was still
waiting for proper authorization from the PNB head office enabling him to
make a disbursement for the amount so ordered. For its part, petitioner
contended that its funds at the PNB Buendia Branch could neither be
garnished nor levied upon execution, for to do so would result in the
disbursement of public funds without the proper appropriation required
under the law, citing the case of Republic of the Philippines v. Palacio [G.R.
No. L-20322, May 29, 1968, 23 SCRA 899].
Respondent trial judge issued an order dated December 21, 1988 denying
petitioner's motion for reconsideration on the ground that the doctrine
enunciated in Republic v. Palacio did not apply to the case because
petitioner's PNB Account No. S/A 265-537154-3 was an account specifically
opened for the expropriation proceedings of the subject property pursuant
to Pres. Decree No. 42. Respondent RTC judge likewise declared Mr. Antonio
Bautista guilty of contempt of court for his inexcusable refusal to obey the
order dated September 8, 1988, and thus ordered his arrest and detention
until his compliance with the said order.
Petitioner and the bank manager of PNB Buendia Branch then filed separate
petitions for certiorari with the Court of Appeals, which were eventually
consolidated. In a decision promulgated on June 28, 1989, the Court of
Appeals dismissed both petitions for lack of merit, sustained the jurisdiction
of respondent RTC judge over the funds contained in petitioner's PNB
Account No. 265-537154-3, and affirmed his authority to levy on such funds.
Its motion for reconsideration having been denied by the Court of Appeals,
petitioner now files the present petition for review with prayer for
preliminary injunction.
On November 20, 1989, the Court resolved to issue a temporary restraining
order enjoining respondent RTC judge, respondent sheriff, and their
representatives, from enforcing and/or carrying out the RTC order dated
December 21, 1988 and the writ of garnishment issued pursuant thereto.
Private respondent then filed its comment to the petition, while petitioner
filed its reply.

Petitioner not only reiterates the arguments adduced in its petition before
the Court of Appeals, but also alleges for the first time that it has actually
two accounts with the PNB Buendia Branch, to wit:
xxx xxx xxx
(1) Account No. S/A 265-537154-3 exclusively for the expropriation of the
subject property, with an outstanding balance of P99,743.94.
(2) Account No. S/A 263-530850-7 for statutory obligations and other
purposes of the municipal government, with a balance of P170,098,421.72,
as of July 12, 1989.
xxx xxx xxx
[Petition, pp. 6-7; Rollo, pp. 11-12.]
Because the petitioner has belatedly alleged only in this Court the existence
of two bank accounts, it may fairly be asked whether the second account
was opened only for the purpose of undermining the legal basis of the
assailed orders of respondent RTC judge and the decision of the Court of
Appeals, and strengthening its reliance on the doctrine that public funds are
exempted from garnishment or execution as enunciated in Republic v.
Palacio [supra.] At any rate, the Court will give petitioner the benefit of the
doubt, and proceed to resolve the principal issues presented based on the
factual circumstances thus alleged by petitioner.
Admitting that its PNB Account No. S/A 265-537154-3 was specifically
opened for expropriation proceedings it had initiated over the subject
property, petitioner poses no objection to the garnishment or the levy under
execution of the funds deposited therein amounting to P99,743.94.
However, it is petitioner's main contention that inasmuch as the assailed
orders of respondent RTC judge involved the net amount of P4,965,506.45,
the funds garnished by respondent sheriff in excess of P99,743.94, which
are public funds earmarked for the municipal government's other statutory
obligations, are exempted from execution without the proper appropriation
required under the law.
There is merit in this contention. The funds deposited in the second PNB
Account No. S/A 263-530850-7 are public funds of the municipal
government. In this jurisdiction, well-settled is the rule that public funds are
not subject to levy and execution, unless otherwise provided for by statute
[Republic v. Palacio, supra.; The Commissioner of Public Highways v. San
Diego, G.R. No. L-30098, February 18, 1970, 31 SCRA 616]. More
particularly, the properties of a municipality, whether real or personal, which

are necessary for public use cannot be attached and sold at execution sale
to satisfy a money judgment against the municipality. Municipal revenues
derived from taxes, licenses and market fees, and which are intended
primarily and exclusively for the purpose of financing the governmental
activities and functions of the municipality, are exempt from execution [See
Viuda De Tan Toco v. The Municipal Council of Iloilo, 49 Phil. 52 (1926): The
Municipality of Paoay, Ilocos Norte v. Manaois, 86 Phil. 629 (1950);
Municipality of San Miguel, Bulacan v. Fernandez, G.R. No. 61744, June 25,
1984, 130 SCRA 56]. The foregoing rule finds application in the case at bar.
Absent a showing that the municipal council of Makati has passed an
ordinance appropriating from its public funds an amount corresponding to
the balance due under the RTC decision dated June 4, 1987, less the sum of
P99,743.94 deposited in Account No. S/A 265-537154-3, no levy under
execution may be validly effected on the public funds of petitioner
deposited in Account No. S/A 263-530850-7.
Nevertheless, this is not to say that private respondent and PSB are left with
no legal recourse. Where a municipality fails or refuses, without justifiable
reason, to effect payment of a final money judgment rendered against it,
the claimant may avail of the remedy of mandamus in order to compel the
enactment and approval of the necessary appropriation ordinance, and the
corresponding disbursement of municipal funds therefor [SeeViuda De Tan
Toco v. The Municipal Council of Iloilo, supra; Baldivia v. Lota, 107 Phil. 1099
(1960); Yuviengco v. Gonzales, 108 Phil. 247 (1960)].
In the case at bar, the validity of the RTC decision dated June 4, 1987 is not
disputed by petitioner. No appeal was taken therefrom. For three years now,
petitioner has enjoyed possession and use of the subject property
notwithstanding its inexcusable failure to comply with its legal obligation to
pay just compensation. Petitioner has benefited from its possession of the
property since the same has been the site of Makati West High School since
the school year 1986-1987. This Court will not condone petitioner's blatant
refusal to settle its legal obligation arising from expropriation proceedings it
had in fact initiated. It cannot be over-emphasized that, within the context
of the State's inherent power of eminent domain,
. . . [j]ust compensation means not only the correct determination of the
amount to be paid to the owner of the land but also the payment of the land
within a reasonable time from its taking. Without prompt payment,
compensation cannot be considered "just" for the property owner is made to
suffer the consequence of being immediately deprived of his land while
being made to wait for a decade or more before actually receiving the
amount necessary to cope with his loss [Cosculluela v. The Honorable Court

of Appeals, G.R. No. 77765, August 15, 1988, 164 SCRA 393, 400. See also
Provincial Government of Sorsogon v. Vda. de Villaroya, G.R. No. 64037,
August 27, 1987, 153 SCRA 291].
The State's power of eminent domain should be exercised within the bounds
of fair play and justice. In the case at bar, considering that valuable property
has been taken, the compensation to be paid fixed and the municipality is in
full possession and utilizing the property for public purpose, for three (3)
years, the Court finds that the municipality has had more than reasonable
time to pay full compensation.
WHEREFORE, the Court Resolved to ORDER petitioner Municipality of Makati
to immediately pay Philippine Savings Bank, Inc. and private respondent the
amount of P4,953,506.45. Petitioner is hereby required to submit to this
Court a report of its compliance with the foregoing order within a nonextendible period of SIXTY (60) DAYS from the date of receipt of this
resolution.
The order of respondent RTC judge dated December 21, 1988, which was
rendered in Civil Case No. 13699, is SET ASIDE and the temporary
restraining order issued by the Court on November 20, 1989 is MADE
PERMANENT.
SO ORDERED.

64. NHA v Guivelondo


[G.R. No. 166518. June 16, 2009.]

NATIONAL HOUSING AUTHORITY, petitioner, vs. HEIRS OF ISIDRO


GUIVELONDO, REGIONAL TRIAL COURT OF CEBU CITY, BRANCH 19, and the
COURT OF APPEALS, respondents.
DECISION
PUNO, C.J p:
Before us is a petition for review on certiorari under Rule 45 seeking the
reversal of the Decision 1 of the Court of Appeals (CA) in CA G.R. SP No.
85807 affirming the omnibus order 2 of the Regional Trial Court (RTC),
Branch 19, Cebu City, and the order 3 denying the reconsideration thereof.
This case is an offshoot of G.R. No. 154411, promulgated on June 19, 2003,
entitled National Housing Authority (NHA) v. Heirs of Guivelondo, in which
we resolved once and for all the validity of the order of expropriation issued
by the RTC of Cebu City, Branch 11, condemning the properties of
respondents located in Barangay Carreta, Cebu City at P11,200.00 per
square meter and the propriety of the garnishment against petitioner's
funds and personal properties for the payment of just compensation to
respondents. Pending the final resolution of G.R. No. 154411, a writ of
execution was issued on January 14, 2001 by the RTC, Branch 11 in the
amount of P104,641,600.00, as computed from respondents' 9,343 square
meters of land valued at P11,200.00 each. Pursuant to said writ of
execution, the court sheriff of RTC, Branch 11, Mr. Pascual Abordo,
commenced levy and garnishment upon NHA properties, which included
bank deposits in various banks. Hence, on June 16, 2001, the Philippine
National Bank (PNB) and the Land Bank of the Philippines (LBP) released the
amount of P24,305,774.82 to respondents, bringing the balance of the
unsatisfied just compensation to P80,335,825.18. On December 26, 2001,
petitioner's account with the Philippine Veterans' Bank (PVB) was garnished
in the amount of P24,305,774.82, which then brought the computed balance
of unpaid just compensation to P80,299,506.72, though the PVB had yet to
release said amount to respondents. On July 10, 2003, the Development
Bank of the Philippines (DBP) released the garnished amount of
P78,754,907.07, further bringing down the balance to P1,544,299.65.
Subsequently, on July 31, 2003, upon the release by the LBP of the
garnished amount of P1,474,299.65, the payment of respondents' just
compensation seemed to have been fully satisfied, save for the release of
the earlier garnished amount of P24,305.774.82. Finally, on August 28,
2003, the amount of P36,318.46 was remitted to respondents by the PVB,
prompting Sheriff Abordo to issue a notice of lifting or discharge of

levy/garnishment to the PNB, LBP, DBP, PVB and to the General


Manager/Property Custodian of NHA.
On October 8, 2003, Sheriff Abordo received a letter from respondents'
counsel requesting the former for the listing of the garnished and released
accounts of petitioner. In his reply letter dated October 9, 2003, Sheriff
Abordo summarized said garnishments and revealed that there was an
unsatisfied amount of P70,300.00. Hence, in his progress report to the RTC,
Branch 11, dated October 14, 2003, Sheriff Abordo informed the court to
wit: cDAITS
Further, undersigned Sheriff respectfully informs the Honorable Court that
when he prepared his aforesaid Reply Letter and made a reconciliation of
the garnished and released accounts of plaintiff, he discovered that he
inaccuratelyreflected in his Progress Report dated July 14, 2003 a balance of
P80,229,206.72 where it should have beenP80,299,206.72 which, as stated
in the same report "was arrived at after deducting from the total just
compensation of P104,641,600.00 the garnished and released money
deposits of NHA with PNB and Landbank in the amount of P24,305,774.82
and the garnished but not yet released/claimed money deposit of NHA with"
Philippine Veterans Bank in the amount of P36,618.46. In other words, by
mathematical computation: P104,641,600.00 P24,305,774.82
P36,618.36 = P80,299,206.72 and not P80,229,206.72. The balance
reflected in the undersigned Sheriff's Progress Report dated July 14, 2003 is
short by P70,000.00, hence, this did not result to over satisfaction of the
judgment of the Honorable Court.
Furthermore, undersigned Sheriff respectfully informs the Honorable Court
that the amount released by Philippine Veterans Bank is only P36,318.46
albeit its letter dated December 26, 2001 stated an amount of P36,618.46
(short by P300). 4 (emphases in the original)
On November 6, 2003, seeking to claim the unsatisfied amount of
P70,300.00, respondents filed with the RTC a motion for the issuance of an
alias writ of execution. On November 12, 2003, respondents likewise filed a
motion for payment of interest anchored on the premise that petitioner
made piecemeal payments of the judgment amount, causing a 32-month
delay in the full satisfaction thereof which entitled respondents to the
payment of a legal interest of 12% per annum. To simplify matters,
respondents confined their claim to the interest for the principal amount of
P80,335,825.18 reckoned from October 31, 2000, the date the entry of
judgment was issued, to July 2003, when the last garnishment took place,

without including the P70,300.00 yet to be satisfied in the said principal


amount.
Pursuant to a motion for inhibition filed by petitioner on August 4, 2003, the
case was re-raffled to the RTC, Branch 19, which ordered petitioner to file its
comment/opposition to both motions. After hearing the case, the RTC,
Branch 19 issued an omnibus order dated February 16, 2004, disposing of
the issues as follows:
WHEREFORE, on the Motion for Issuance of an Alias Writ of [E]xecution, the
same is GRANTED. Let an Alias Writ of Execution issue to satisfy the
shortage amount of Php70,300.00.
Defendants' Motion for Payment of Interest is likewise GRANTED. Plaintiff is
hereby directed to pay the defendants within five (5) days from receipt
hereof the amount of Php25,695,746.15 representing interest of 12% p.a.
for thirty two (32) months of the unsatisfied portion of the just
compensation in the amount of Php80,299,206.72. Plaintiff is further
directed to pay interest of 12% p.a. on the Php25,695,746.15 interest from
the date the five-day period given by the Court expired until the same is
paid.
xxx xxx xxx
SO ORDERED. 5
On February 24, 2004, petitioner filed a motion for reconsideration which
was denied by the RTC, Branch 19 in an order dated July 27, 2004.
Aggrieved, petitioner filed a petition for review on certiorari with the CA
which was denied for lack of merit in a decision dated December 16, 2004,
ratiocinating thus:
We now come to the question on whether respondent judge was correct in
imposing interest of 12% per annum for the delay in payment of just
compensation by petitioner sans an explicit pronouncement for such
provision in the decision. We rule in the affirmative on the following reasons:
HEcaIC
1) A judgment is not confined to what appears on the face of the decision
but also those necessarily included therein or necessary thereto. Where a
legal provision exists providing for legal interest, the same not only
constitute judicial notice, but by operation of law, becomes inherent in
every decision.

2) The imposition of interest at the time the decision was rendered would be
purely conjectural and speculative considering that delay in the payment
could only be ascertained at the time following after the rendition of the
decision. The remedy for any delay may be ventilated during the execution
stage as in this case. Delay takes the nature of a supervening event
between the rendition of the decision and its due execution, and the judge
may take cognizance of it not only for the purpose of expediency but also to
prevent multiplicity of suits. At any rate, the judge is now familiar with the
history and development of the case, and it is he who can give the most
prudent assessment over an issue such as that of delay and the
concomitant damages for the delay.
xxx xxx xxx
Conversely, [w]e also find nothing irregular in issuance of the alias writ of
execution by respondent judge covering the deficiency in the actual
judgment amount. The rule is that the execution must conform substantially
to that ordained or decreed in the dispositive part of the decision. Therefore,
upon report of the sheriff of a deficiency in the execution of the judgment
amount, an alias writ of execution covering said deficiency is proper. 6
Hence, petitioner filed the instant petition for review, where it argues that
the CA gravely erred in affirming the RTC when it granted respondents'
motion for issuance of an alias writ of execution and motion for payment of
interest, considering that expropriation proceedings have already been
terminated and that the order to pay respondents just compensation was
silent on the payment of interest.
We deny the petition.
As a side issue, petitioner points out that the CA erred in ruling that RTC,
Branch 19 had jurisdiction over the case, as petitioner was allegedly not
notified of 1) the Order dated October 16, 2003 where the Presiding Judge of
Branch 11 inhibited himself from handling the expropriation, 2) the Order of
the Executive Judge of the RTC approving such inhibition, and 3) the Order
re-raffling the case to RTC, Branch 11. We are not convinced. In the first
place, it was petitioner which filed a Motion for Inhibition against the
presiding judge of RTC, Branch 11, Hon. Isaias Dicdican, a move that
precipitated the re-raffling of the case to Branch 19 of the same RTC. Hence,
petitioner cannot deny that it had knowledge of moves to have the case
handled by another branch. Assuming arguendo that petitioner honestly
believed that the case was still pending with Branch 11, petitioner still
cannot claim that it had no knowledge of the proceedings in Branch 19. It is

well to remember that the court frowns upon the undesirable practice of a
party submitting his case for decision and then accepting the judgment only
if favorable, and attacking it for lack of jurisdiction when adverse. 7 While
jurisdiction of a tribunal may be challenged at any time, sound public policy
bars petitioner from doing so after having procured that jurisdiction himself,
speculating on the fortunes of litigation. 8 In the instant case, the fact
remains that petitioner filed motions with Branch 19 and even sought relief
therefrom when it opposed the two motions subject of this petition. As such,
it is estopped from attacking the jurisdiction of RTC, Branch 19 in the instant
case.
Petitioner likewise contends that the trial court erred in exercising
jurisdiction in resolving the two motions as the subject thereof constituted
new, independent, separate, and substantial matters which are foreign to
the expropriation case which had already been terminated. 9 Petitioner's
contention is untenable.
It is well-settled that the jurisdiction of the court to execute its judgment
continues even after the judgment had become final for the purpose of
enforcement of judgment. 10 The present case is no exception. Therefore,
notwithstanding the final resolution on the validity of the expropriation
made by this Court on June 19, 2003 in G.R. No. 154411, the RTC, Branch 19
can still rule on the motions for the issuance of an alias writ of execution
and payment of interest. As the CA correctly stated: ". . . the duty of the
court does not end with the tender of the decision. Equal is the duty of the
court to enforce said decision to the fullest of its intent, tenor and mandate.
To sustain a contrary view would not only trivialize the decision, but would
also render it meaningless; the justice sought by the aggrieved party and
supposedly conferred by the court turned inutile." 11 EAaHTI
On the issue of payment of interest, we find petitioner's theory implausible.
Petitioner insists that the payment of interest to respondents is not proper
since nowhere in the records from the orders of the RTC all the way to this
Court does it state that respondents are entitled to damages. 12 As such,
petitioner asserts that respondents had already waived its right to claim
interest. We are not persuaded.
In support of its argument, petitioner cites Dalmacio Urtula v. Republic of
the Philippines, 13 which ruled that:
xxx xxx xxx

Urtula's dilemma lies in his mistaken concept of the nature of the interest
that he failed to claim in the expropriation case and which he now claims in
this separate case. Said interest is not contractual, nor based on delict or
quasi-delict, but one that
runs as a matter of law and follows as a matter of course from the right of
the landowner to be placed in as good a position as money can accomplish,
as of the date of the taking (30 C.J.S. 230).
Understood as such, Urtula, as defendant in the expropriation case, could
have raised the matter of interest before the trial court even if there had
been no actual taking yet by the Republic and the said court could have
included the payment of interest in its judgment but conditioned upon the
actual taking, because the rate of interest upon the amount of just
compensation (6%) is a known factor, and it can reasonably be expected
that at some future time, the expropriator would take possession of the
property, though the date be not fixed. In this way, multiple suits would be
avoided. Moreover, nothing prevented appellee from calling the attention of
the appellate courts (even by motion to reconsider before judgment became
final) to the subsequent taking of possession by the condemnor, and asking
for allowance of interest on the indemnity, since that followed the taking as
a matter of course, and raised no issue requiring remand of the records to
the Court of origin.
As the issue of interest could have been raised in the former case but was
not raised, res judicata blocks the recovery of interest in the present case. It
is settled that a former judgment constitutes a bar, as between the parties,
not only as to matters expressly adjudged, but all matters that could have
been adjudged at the time. It follows that interest upon the unrecoverable
interest, which plaintiff also seeks, cannot, likewise, be granted.
It is not amiss to note that Section 3 of Rule 67 of the Revised Rules of
Court, in fact, directs the defendant in an expropriation case to "present in a
single motion to dismiss or for other appropriate relief, all of his objections
and defenses . . ." and if not so presented "are waived". As it is, the
judgment allowing the collection of interest, now under appeal in effect
amends the final judgment in the expropriation case, a procedure abhorrent
to orderly judicial proceedings. 14 (citations omitted)
Unfortunately for petitioner, the abovequoted doctrine is not applicable to
the instant case for the simple reason that respondents herein do not ask
for interest as part of the judgment in an expropriation case, but for interest
which is imposed due to the delay in the payment of a money judgment. As

stated above, the former is imposed in order to place the owner in a position
as good as (but not better than) the position he was in before the taking
occurred, while the latter is considered as legal interest, to be computed at
12% per annum from such finality until its satisfaction, 15 because the
interim period is deemed to be equivalent to a forebearance of credit. 16
Consequently, the award of the former needs to be stated in the judgment,
while the award of the latter need not. 17 Moreover, the former is computed
from the date of possession or filing of the complaint for expropriation, 18
the latter is merely computed from the time the judgment becomes final
and executory.19 Therefore, we find no patent error in the imposition of
interest on petitioner.
As to the issue of the validity of the alias writ of execution, we affirm the
finding of the CA that there was no irregularity in the issuance thereof. 20
The rule is that a writ of execution must conform substantially to every
essential particular of the judgment promulgated. 21 An execution which is
not in harmony with the judgment is bereft of validity; it must conform
particularly to that ordained in the dispositive portion of the decision. 22 In
the case at bar, the sheriff himself discovered a deficiency in the execution
of the judgment in the amount of P70,300.00. Therefore, upon report of the
same by the sheriff, an alias writ of execution covering said deficiency is
only proper to preserve the tenor of the judgment and to ensure the faithful
execution thereof.
IN VIEW WHEREOF, the instant petition is DENIED. The decision of the Court
of Appeals is AFFIRMED.
SO ORDERED. ACcaET
||| (NHA v. Heirs of Guivelondo, G.R. No. 166518, [June 16, 2009], 607 PHIL
184-194)

75. KULAYAN V TAN


EN BANC
G.R. No. 187298

July 03, 2012

JAMAR M. KULAYAN, TEMOGEN S. TULAWIE, HJI. MOH. YUSOP ISMI, JULHAJAN


AWADI, and SPO1 SATTAL H. JADJULI, Petitioners,
vs.
GOV. ABDUSAKUR M. TAN, in his capacity as Governor of Sulu; GEN.
JUANCHO SABAN, COL. EUGENIO CLEMEN PN, P/SUPT. JULASIRIM KASIM and
P/SUPT. BIENVENIDO G. LATAG, in their capacity as officers of the Phil.
Marines and Phil. National Police, respectively, Respondents.
DECISION
SERENO, J.:
On 15 January 2009, three members from the International Committee of
the Red Cross (ICRC) were kidnapped in the vicinity of the Provincial Capitol
in Patikul, Sulu.1 Andres Notter, a Swiss national and head of the ICRC in
Zamboanga City, Eugenio Vagni, an Italian national and ICRC delegate, and
Marie Jean Lacaba, a Filipino engineer, were purportedly inspecting a water
and sanitation project for the Sulu Provincial Jail when inspecting a water
and sanitation project for the Sulu Provincial Jail when they were seized by
three armed men who were later confirmed to be members of the Abu
Sayyaf Group (ASG).2 The leader of the alleged kidnappers was identified as
Raden Abu, a former guard at the Sulu Provincial Jail. News reports linked
Abu to Albader Parad, one of the known leaders of the Abu Sayyaf.
On 21 January 2009, a task force was created by the ICRC and the Philippine
National Police (PNP), which then organized a parallel local group known as
the Local Crisis Committee.3 The local group, later renamed Sulu Crisis
Management Committee, convened under the leadership of respondent
Abdusakur Mahail Tan, the Provincial Governor of Sulu. Its armed forces
component was headed by respondents General Juancho Saban, and his
deputy, Colonel Eugenio Clemen. The PNP component was headed by
respondent Police Superintendent Bienvenido G. Latag, the Police Deputy

Director for Operations of the Autonomous Region of Muslim Mindanao


(ARMM).4
Governor Tan organized the Civilian Emergency Force (CEF), a group of
armed male civilians coming from different municipalities, who were
redeployed to surrounding areas of Patikul.5 The organization of the CEF
was embodied in a "Memorandum of Understanding"6 entered into between
three parties: the provincial government of Sulu, represented by Governor
Tan; the Armed Forces of the Philippines, represented by Gen. Saban; and
the Philippine National Police, represented by P/SUPT. Latag. The Whereas
clauses of the Memorandum alluded to the extraordinary situation in Sulu,
and the willingness of civilian supporters of the municipal mayors to offer
their services in order that "the early and safe rescue of the hostages may
be achieved."7
This Memorandum, which was labeled secret on its all pages, also outlined
the responsibilities of each of the party signatories, as follows:
Responsibilities of the Provincial Government:
1) The Provincial Government shall source the funds and logistics needed for
the activation of the CEF;
2) The Provincial Government shall identify the Local Government Units
which shall participate in the operations and to propose them for the
approval of the parties to this agreement;
3) The Provincial Government shall ensure that there will be no unilateral
action(s) by the CEF without the knowledge and approval by both parties.
Responsibilities of AFP/PNP/ TF ICRC (Task Force ICRC):
1) The AFP/PNP shall remain the authority as prescribed by law in military
operations and law enforcement;
2) The AFP/PNP shall ensure the orderly deployment of the CEF in the
performance of their assigned task(s);
3) The AFP/PNP shall ensure the safe movements of the CEF in identified
areas of operation(s);
4) The AFP/PNP shall provide the necessary support and/or assistance as
called for in the course of operation(s)/movements of the CEF.8
Meanwhile, Ronaldo Puno, then Secretary of the Department of Interior and
Local Government, announced to the media that government troops had

cornered some one hundred and twenty (120) Abu Sayyaf members along
with the three (3) hostages.9 However, the ASG made
contact with the authorities and demanded that the military pull its troops
back from the jungle area.10 The government troops yielded and went back
to their barracks; the Philippine Marines withdrew to their camp, while police
and civilian forces pulled back from the terrorists stronghold by ten (10) to
fifteen (15) kilometers. Threatening that one of the hostages will be
beheaded, the ASG further demanded the evacuation of the military camps
and bases in the different barangays in Jolo.11 The authorities were given
no later than 2:00 oclock in the afternoon of 31 March 2009 to comply.12
On 31 March 2009, Governor Tan issued Proclamation No. 1, Series of 2009
(Proclamation 1-09), declaring a state of emergency in the province of
Sulu.13 It cited the kidnapping incident as a ground for the said declaration,
describing it as a terrorist act pursuant to the Human Security Act (R.A.
9372). It also invoked Section 465 of the Local Government Code of 1991
(R.A. 7160), which bestows on the Provincial Governor the power to carry
out emergency measures during man-made and natural disasters and
calamities, and to call upon the appropriate national law enforcement
agencies to suppress disorder and lawless violence.
In the same Proclamation, respondent Tan called upon the PNP and the CEF
to set up checkpoints and chokepoints, conduct general search and seizures
including arrests, and other actions necessary to ensure public safety. The
pertinent portion of the proclamation states:
NOW, THEREFORE, BY VIRTUE OF THE POWERS VESTED IN ME BY LAW, I,
ABDUSAKUR MAHAIL TAN, GOVERNOR OF THE PROVINCE OF SULU, DO
HEREBY DECLARE A STATE OF EMERGENCY IN THE PROVINCE OF SULU, AND
CALL ON THE PHILIPPINE NATIONAL POLICE WITH THE ASSISTANCE OF THE
ARMED FORCES OF THE PHILIPPINES AND THE CIVILIAN EMERGENCY FORCE
TO IMPLEMENT THE FOLLOWING:
1. The setting-up of checkpoints and chokepoints in the province;
2. The imposition of curfew for the entire province subject to such
Guidelines as may be issued by proper authorities;
3. The conduct of General Search and Seizure including arrests in the
pursuit of the kidnappers and their supporters; and
4. To conduct such other actions or police operations as may be necessary
to ensure public safety.

DONE AT THE PROVINCIAL CAPITOL, PROVINCE OF SULU THIS


31STDAY OF MARCH 2009. Sgd. Abdusakur M. Tan Governor.14
On 1 April 2009, SPO1 Sattal Jadjuli was instructed by his superior to report
to respondent P/SUPT. Julasirim Kasim.15 Upon arriving at the police station,
he was booked, and interviewed about his relationship to Musin, Jaiton, and
Julamin, who were all his deceased relatives. Upon admitting that he was
indeed related to the three, he was detained. After a few hours, former
Punong Barangay Juljahan Awadi, Hadji Hadjirul Bambra, Abdugajir Hadjirul,
as well as PO2 Marcial Hajan, SPO3 Muhilmi Ismula, Punong Barangay Alano
Mohammad and jeepney driver Abduhadi Sabdani, were also arrested.16
The affidavit17 of the apprehending officer alleged that they were
suspected ASG supporters and were being arrested under Proclamation 109. The following day, 2 April 2009, the hostage Mary Jane Lacaba was
released by the ASG.
On 4 April 2009, the office of Governor Tan distributed to civic organizations,
copies of the "Guidelines for the Implementation of Proclamation No. 1,
Series of 2009 Declaring a State of Emergency in the Province of Sulu."18
These Guidelines suspended all Permits to Carry
Firearms Outside of Residence (PTCFORs) issued
and allowed civilians to seek exemption from the
to the Office of the Governor and obtaining the
cards. The said guidelines also allowed general
designated checkpoints and chokepoints.

by the Chief of the PNP,


gun ban only by applying
appropriate identification
searches and seizures in

On 16 April 2009, Jamar M. Kulayan, Temogen S. Tulawie, Hadji Mohammad


Yusop Ismi, Ahajan Awadi, and SPO1 Sattal H. Jadjuli, residents of Patikul,
Sulu, filed the present Petition for Certiorari and Prohibition,19 claiming that
Proclamation 1-09 was issued with grave abuse of discretion amounting to
lack or excess of jurisdiction, as it threatened fundamental freedoms
guaranteed under Article III of the 1987 Constitution.
Petitioners contend that Proclamation No. 1 and its Implementing Guidelines
were issued ultra vires, and thus null and void, for violating Sections 1 and
18, Article VII of the Constitution, which grants the President sole authority
to exercise emergency powers and calling-out powers as the chief executive
of the Republic and commander-in-chief of the armed forces.20 Additionally,
petitioners claim that the Provincial Governor is not authorized by any law
to create civilian armed forces under his command, nor regulate and limit
the issuances of PTCFORs to his own private army.

In his Comment, Governor Tan contended that petitioners violated the


doctrine on hierarchy of courts when they filed the instant petition directly
in the court of last resort, even if both the Court of Appeals (CA) and the
Regional Trial Courts (RTC) possessed concurrent jurisdiction with the
Supreme Court under Rule 65.21 This is the only procedural defense raised
by respondent Tan. Respondents Gen. Juancho Saban, Col. Eugenio Clemen,
P/SUPT. Julasirim Kasim, and P/SUPT. Bienvenido Latag did not file their
respective Comments.1wphi1
On the substantive issues, respondents deny that Proclamation 1-09 was
issued ultra vires, as Governor Tan allegedly acted pursuant to Sections 16
and 465 of the Local Government Code, which empowers the Provincial
Governor to carry out emergency measures during calamities and disasters,
and to call upon the appropriate national law enforcement agencies to
suppress disorder, riot, lawless violence, rebellion or sedition.22
Furthermore, the Sangguniang Panlalawigan of Sulu authorized the
declaration of a state of emergency as evidenced by Resolution No. 4,
Series of 2009 issued on 31 March 2009 during its regular session.23
The threshold issue in the present case is whether or not Section 465, in
relation to Section 16, of the Local Government Code authorizes the
respondent governor to declare a state of emergency, and exercise the
powers enumerated under Proclamation 1-09, specifically the conduct of
general searches and seizures. Subsumed herein is the secondary question
of whether or not the provincial governor is similarly clothed with authority
to convene the CEF under the said provisions.
We grant the petition.
I. Transcendental public Importance warrants a relaxation of the Doctrine of
Hierarchy of Courts
We first dispose of respondents invocation of the doctrine of hierarchy of
courts which allegedly prevents judicial review by this Court in the present
case, citing for this specific purpose, Montes v. Court of Appeals and Purok
Bagong Silang Association, Inc. v. Yuipco.24 Simply put, the
doctrine provides that where the issuance of an extraordinary writ is also
within the competence of the CA or the RTC, it is in either of these courts
and not in the Supreme Court, that the specific action for the issuance of
such writ must be sought unless special and important laws are clearly and
specifically set forth in the petition. The reason for this is that this Court is a
court of last resort and must so remain if it is to perform the functions

assigned to it by the Constitution and immemorial tradition. It cannot be


burdened with deciding cases in the first instance.25
The said rule, however, is not without exception. In Chavez v. PEA-Amari,26
the Court stated:
PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking
relief directly from the Court. The principle of hierarchy of courts applies
generally to cases involving factual questions. As it is not a trier of facts, the
Court cannot entertain cases involving factual issues. The instant case,
however, raises constitutional questions of transcendental importance to
the public. The Court can resolve this case without determining any factual
issue related to the case. Also, the instant case is a petition for mandamus
which falls under the original jurisdiction of the Court under Section 5,
Article VIII of the Constitution. We resolve to exercise primary jurisdiction
over the instant case.27
The instant case stems from a petition for certiorari and prohibition, over
which the Supreme Court possesses original jurisdiction.28 More crucially,
this case involves acts of a public official which pertain to restrictive
custody, and is thus impressed with transcendental public importance that
would warrant the relaxation of the general rule. The Court would be remiss
in its constitutional duties were it to dismiss the present petition solely due
to claims of judicial hierarchy.
In David v. Macapagal-Arroyo,29 the Court highlighted the transcendental
public importance involved in cases that concern restrictive custody,
because judicial review in these cases serves as "a manifestation of the
crucial defense of civilians in police power cases due to the diminution of
their basic liberties under the guise of a state of emergency."30 Otherwise,
the importance of the high tribunal as the court of last resort would be put
to naught, considering the nature of "emergency" cases, wherein the
proclamations and issuances are inherently short-lived. In finally disposing
of the claim that the issue had become moot and academic, the Court also
cited transcendental public importance as an exception, stating:
Sa kabila ng pagiging akademiko na lamang ng mga isyu tungkol sa
mahigpit na pangangalaga (restrictive custody) at pagmonitor ng galaw
(monitoring of movements) ng nagpepetisyon, dedesisyunan namin ito (a)
dahil sa nangingibabaw na interes ng madla na nakapaloob dito,
(b) dahil sa posibilidad na maaaring maulit ang pangyayari at (c) dahil
kailangang maturuan ang kapulisan tungkol dito.

The moot and academic principle is not a magical formula that can
automatically dissuade the courts in resolving a case. Courts will decide
cases, otherwise moot and academic, if: first, there is a grave violation of
the Constitution; second, the exceptional character of the situation and the
paramount public interest is involved; third, when [the] constitutional issue
raised requires formulation of controlling principles to guide the bench, the
bar, and the public; and fourth, the case is capable of repetition yet evading
review.
There is no question that the issues being raised affect the public interest,
involving as they do the peoples basic rights to freedom of expression, of
assembly and of the press. Moreover, the
Court has the duty to formulate guiding and controlling constitutional
precepts, doctrines or rules. It has the symbolic function of educating the
bench and the bar, and in the present petitions, the military and the police,
on the extent of the protection given by constitutional guarantees. And
lastly, respondents contested actions are capable of repetition. Certainly,
the petitions are subject to judicial review.
Evidently, the triple reasons We advanced at the start of Our ruling are
justified under the foregoing exceptions. Every bad, unusual incident where
police officers figure in generates public interest and people watch what will
be done or not done to them. Lack of disciplinary steps taken against them
erode public confidence in the police institution. As petitioners themselves
assert, the restrictive custody of policemen under investigation is an
existing practice, hence, the issue is bound to crop up every now and then.
The matter is capable of repetition or susceptible of recurrence. It better be
resolved now for the education and guidance of all concerned.31 (Emphasis
supplied)
Hence, the instant petition is given due course, impressed as it is with
transcendental public importance.
II. Only the President is vested with calling-out powers, as the commanderin-chief of the Republic
i. One executive, one commander-in-chief
As early as Villena v. Secretary of Interior,32 it has already been established
that there is one repository of executive powers, and that is the President of
the Republic. This means that when Section 1, Article VII of the Constitution
speaks of executive power, it is granted to the President and no one else.33
As emphasized by Justice Jose P. Laurel, in his ponencia in Villena:

With reference to the Executive Department of the government, there is one


purpose which is crystal-clear and is readily visible without the projection of
judicial searchlight, and that is the establishment of a single, not plural,
Executive. The first section of Article VII of the Constitution, dealing with the
Executive Department, begins with the enunciation of the principle that
"The executive power shall be vested in a President of the Philippines." This
means that the President of the Philippines is the Executive of the
Government of the Philippines, and no other.34
Corollarily, it is only the President, as Executive, who is authorized to
exercise emergency powers as provided under Section 23, Article VI, of the
Constitution, as well as what became known as the calling-out powers under
Section 7, Article VII thereof.
ii. The exceptional character of Commander-in-Chief powers dictate that
they are exercised by one president
Springing from the well-entrenched constitutional precept of One President
is the notion that there are certain acts which, by their very nature, may
only be performed by the president as the Head of the State. One of these
acts or prerogatives is the bundle of Commander-in-Chief powers to which
the "calling-out" powers constitutes a portion. The Presidents Emergency
Powers, on the other hand, is balanced only by the legislative act of
Congress, as embodied in the second paragraph of Section 23, Article 6 of
the Constitution:
Article 6, Sec 23(2). In times of war or other national emergency, the
Congress may, by law, authorize the President, for a limited period and
subject to such restrictions as it may prescribe, to exercise powers
necessary and proper to carry out a declared national policy. Unless sooner
withdrawn by resolution of the Congress, such powers shall cease upon the
next adjournment thereof.35
Article 7, Sec 18. The President shall be the Commander-in-Chief of all
armed forces of the Philippines and whenever it becomes necessary, he
may call out such armed forces to prevent or suppress lawless violence,
invasion or rebellion. In case of invasion or rebellion, when the public safety
requires it, he may, for a period not exceeding sixty days, suspend the
privilege of the writ of habeas corpus or place the Philippines or any part
thereof under martial law. Within forty-eight hours from the proclamation of
martial law or the suspension of the privilege of the writ of habeas corpus,
the President shall submit a report in person or in writing to the Congress.
The Congress, voting jointly, by a vote of at least a majority of all its

Members in regular or special session, may revoke such proclamation or


suspension, which revocation shall not be set aside by the President. Upon
the initiative of the President, the Congress may, in the same manner,
extend such proclamation or suspension for a period to be determined by
the Congress, if the invasion or rebellion shall persist and public safety
requires it.
The Congress, if not in session, shall, within twenty-four hours following
such proclamation or suspension, convene in accordance with its rules
without need of a call.36
The power to declare a state of martial law is subject to the Supreme
Courts authority to review the factual basis thereof. 37 By constitutional
fiat, the calling-out powers, which is of lesser gravity than the power to
declare martial law, is bestowed upon the President alone. As noted in
Villena, "(t)here are certain constitutional powers and prerogatives of the
Chief Executive of the Nation which must be exercised by him in person and
no amount of approval or ratification will validate the exercise of any of
those powers by any other person. Such, for instance, is his power to
suspend the writ of habeas corpus and proclaim martial law x x x.38
Indeed, while the President is still a civilian, Article II, Section 339 of the
Constitution mandates that civilian authority is, at all times, supreme over
the military, making the civilian president the nations supreme military
leader. The net effect of Article II, Section 3, when read with Article VII,
Section 18, is that a civilian President is the ceremonial, legal and
administrative head of the armed forces. The Constitution does not require
that the President must be possessed of military training and talents, but as
Commander-in-Chief, he has the power to direct military operations and to
determine military strategy. Normally, he would be expected to delegate the
actual command of the armed forces to military experts; but the ultimate
power is his.40 As Commander-in-Chief, he is authorized to direct the
movements of the naval and military forces placed by law at his command,
and to employ them in the manner he may deem most effectual.41
In the case of Integrated Bar of the Philippines v. Zamora,42 the Court had
occasion to rule that the calling-out powers belong solely to the President as
commander-in-chief:
When the President calls the armed forces to prevent or suppress lawless
violence, invasion or rebellion, he necessarily exercises a discretionary
power solely vested in his wisdom. This is clear from the intent of the
framers and from the text of the Constitution itself. The Court, thus, cannot

be called upon to overrule the Presidents wisdom or substitute its own.


However, this does not prevent an examination of whether such power was
exercised within permissible constitutional limits or whether it was exercised
in a manner constituting grave abuse of discretion. In view of the
constitutional intent to give the President full discretionary power to
determine the necessity of calling out the armed forces, it is incumbent
upon the petitioner to show that the Presidents decision is totally bereft of
factual basis.
There is a clear textual commitment under the Constitution to bestow on
the President full discretionary power to call out the armed forces and to
determine the necessity for the exercise of such power.43 (Emphasis
supplied)
Under the foregoing provisions, Congress may revoke such proclamation or
suspension and the Court may review the sufficiency of the factual basis
thereof. However, there is no such equivalent provision dealing with the
revocation or review of the Presidents action to call out the armed forces.
The distinction places the calling out power in a different category from the
power to declare martial law and the power to suspend the privilege of the
writ of habeas corpus, otherwise, the framers of the Constitution would have
simply lumped together the three powers and provided for their revocation
and review without any qualification.44
That the power to call upon the armed forces is discretionary on the
president is clear from the deliberation of the Constitutional Commission:
FR. BERNAS. It will not make any difference. I may add that there is a
graduated power of the President as Commander-in-Chief. First, he can call
out such Armed Forces as may be necessary to suppress lawless violence;
then he can suspend the privilege of the writ of habeas corpus, then he can
impose martial law. This is a graduated sequence.
When he judges that it is necessary to impose martial law or suspend the
privilege of the writ of habeas corpus, his judgment is subject to review. We
are making it subject to review by the Supreme Court and subject to
concurrence by the National Assembly. But when he exercises this lesser
power of calling on the Armed Forces, when he says it is necessary, it is my
opinion that his judgment cannot be reviewed by anybody.
xxx

xxx

xxx

MR. REGALADO. That does not require any concurrence by the legislature
nor is it subject to judicial review.

The reason for the difference in the treatment of the aforementioned powers
highlights the intent to grant the President the widest leeway and broadest
discretion in using the power to call out because it is considered as the
lesser and more benign power compared to the power to suspend the
privilege of the writ of habeas corpus and the power to impose martial law,
both of which involve the curtailment and suppression of certain basic civil
rights and individual freedoms, and thus necessitating safeguards by
Congress and review by this Court.
x x x Thus, it is the unclouded intent of the Constitution to vest upon the
President, as Commander-in-Chief of the Armed Forces, full discretion to call
forth the military when in his judgment it is necessary to do so in order to
prevent or suppress lawless violence, invasion or rebellion.45 (Emphasis
Supplied)
In the more recent case of Constantino, Jr. v. Cuisia,46 the Court
characterized these powers as exclusive to the President, precisely because
they are of exceptional import:
These distinctions hold true to this day as they remain embodied in our
fundamental law. There are certain presidential powers which arise out of
exceptional circumstances, and if exercised, would involve the suspension of
fundamental freedoms, or at least call for the supersedence of executive
prerogatives over those exercised by co-equal branches of government. The
declaration of martial law, the suspension of the writ of habeas corpus, and
the exercise of the pardoning power, notwithstanding the judicial
determination of guilt of the accused, all fall within this special class that
demands the exclusive exercise by the President of the constitutionally
vested power. The list is by no means exclusive, but there must be a
showing that the executive power in question is of similar gravitas and
exceptional import.47
In addition to being the commander-in-chief of the armed forces, the
President also acts as the leader of the countrys police forces, under the
mandate of Section 17, Article VII of the Constitution, which provides that,
"The President shall have control of all the executive departments, bureaus,
and offices. He shall ensure that the laws be faithfully executed." During the
deliberations of the Constitutional Commission on the framing of this
provision, Fr. Bernas defended the retention of the word "control,"
employing the same rationale of singularity of the office of the president, as
the only Executive under the presidential form of government.48

Regarding the countrys police force, Section 6, Article XVI of the


Constitution states that: "The State shall establish and maintain one police
force, which shall be national in scope and civilian in character, to be
administered and controlled by a national police commission. The authority
of local executives over the police units in their jurisdiction shall be provided
by law."49
A local chief executive, such as the provincial governor, exercises
operational supervision over the police,50 and may exercise control only in
day-to-day operations, viz:
Mr. Natividad: By experience, it is not advisable to provide either in our
Constitution or by law full control of the police by the local chief executive
and local executives, the mayors. By our experience, this has spawned
warlordism, bossism and sanctuaries for vices and abuses. If the national
government does not have a mechanism to supervise these 1,500 legally,
technically separate police forces, plus 61 city police forces, fragmented
police system, we will have a lot of difficulty in presenting a modern
professional police force. So that a certain amount of supervision and
control will have to be exercised by the national government.
For example, if a local government, a town cannot handle its peace and
order problems or police problems, such as riots, conflagrations or
organized crime, the national government may come in, especially if
requested by the local executives. Under that situation, if they come in
under such an extraordinary situation, they will be in control. But if the dayto-day business of police investigation of crime, crime prevention, activities,
traffic control, is all lodged in the mayors, and if they are in complete
operational control of the day-to-day business of police service, what the
national government would control would be the administrative aspect.
xxx

xxx

xxx

Mr. de los Reyes: so the operational control on a day-to-day basis, meaning,


the usual duties being performed by the ordinary policemen, will be under
the supervision of the local executives?
Mr. Natividad: Yes, Madam President.
xxx

xxx

xxx

Mr. de los Reyes: But in exceptional cases, even the operational control can
be taken over by the National Police Commission?

Mr. Natividad: If the situation is beyond the capacity of the local


governments.51 (Emphases supplied)
Furthermore according to the framers, it is still the President who is
authorized to exercise supervision and control over the police, through the
National Police Commission:
Mr. Rodrigo: Just a few questions. The President of the Philippines is the
Commander-in-Chief of all the armed forces.
Mr. Natividad: Yes, Madam President.
Mr. Rodrigo: Since the national police is not integrated with the armed
forces, I do not suppose they come under the Commander-in-Chief powers
of the President of the Philippines.
Mr. Natividad: They do, Madam President. By law, they are under the
supervision and control of the President of the Philippines.
Mr. Rodrigo: Yes, but the President is not the Commander-in-Chief of the
national police.
Mr. Natividad: He is the President.
Mr. Rodrigo: Yes, the Executive. But they do not come under that specific
provision that the President is the Commander-in-Chief of all the armed
forces.
Mr. Natividad: No, not under the Commander-in-Chief provision.
Mr. Rodrigo: There are two other powers of the President. The
President has control over ministries, bureaus and offices, and supervision
over local governments. Under which does the police fall, under control or
under supervision?
Mr. Natividad: Both, Madam President.
Mr. Rodrigo: Control and supervision.
Mr. Natividad: Yes, in fact, the National Police Commission is under the
Office of the President.52
In the discussions of the Constitutional Commission regarding the above
provision it is clear that the framers never intended for local chief
executives to exercise unbridled control over the police in emergency
situations. This is without prejudice to their authority over police units in

their jurisdiction as provided by law, and their prerogative to seek


assistance from the police in day to day situations, as contemplated by the
Constitutional Commission. But as a civilian agency of the government, the
police, through the NAPOLCOM, properly comes within, and is subject to, the
exercise by the President of the power of executive control.53
iii. The provincial governor does not possess the same calling-out powers as
the President
Given the foregoing, respondent provincial governor is not endowed with
the power to call upon the armed forces at his own bidding. In issuing the
assailed proclamation, Governor Tan exceeded his authority when he
declared a state of emergency and called upon the Armed Forces, the
police, and his own Civilian Emergency Force. The calling-out powers
contemplated under the Constitution is exclusive to the President. An
exercise by another official, even if he is the local chief executive, is ultra
vires, and may not be justified by the invocation of Section 465 of the Local
Government Code, as will be discussed subsequently.
Respondents, however, justify this stance by stating that nowhere in the
seminal case of David v. Arroyo, which dealt squarely with the issue of the
declaration of a state of emergency, does it limit the said authority to the
President alone. Respondents contend that the ruling in David expressly
limits the authority to declare a national emergency, a condition which
covers the entire country, and does not include emergency situations in
local government units.54 This claim is belied by the clear intent of the
framers that in all situations involving threats to security, such as lawless
violence, invasion or rebellion, even in localized areas, it is still the President
who possesses the sole authority to exercise calling-out powers. As reflected
in the Journal of the Constitutional Commission:
Thereafter, Mr. Padilla proposed on line 29 to insert the phrase OR PUBLIC
DISORDER in lieu of "invasion or rebellion." Mr. Sumulong stated that the
committee could not accept the amendment because under the first section
of Section 15, the President may call out and make use of the armed forces
to prevent or suppress not only lawless violence but even invasion or
rebellion without declaring martial law. He observed that by deleting
"invasion or rebellion" and substituting PUBLIC DISORDER, the President
would have to declare martial law before he can make use of the armed
forces to prevent or suppress lawless invasion or rebellion.
Mr. Padilla, in reply thereto, stated that the first sentence contemplates a
lighter situation where there is some lawless violence in a small portion of

the country or public disorder in another at which times, the armed forces
can be called to prevent or suppress these incidents. He noted that the
Commander-in-Chief can do so in a minor degree but he can also exercise
such powers should the situation worsen. The words "invasion or rebellion"
to be eliminated on line 14 are covered by the following sentence which
provides for "invasion or rebellion." He maintained that the proposed
amendment does not mean that under such circumstances, the President
cannot call on the armed forces to prevent or suppress the same.55
(Emphasis supplied)
III. Section 465 of the Local
Government Code cannot be invoked to justify the powers enumerated
under Proclamation 1-09
Respondent governor characterized the kidnapping of the three ICRC
workers as a terroristic act, and used this incident to justify the exercise of
the powers enumerated under Proclamation 1-09.56 He invokes Section
465, in relation to Section 16, of the Local Government Code, which
purportedly allows the governor to carry out emergency measures and call
upon the appropriate national law enforcement agencies for assistance. But
a closer look at the said proclamation shows that there is no provision in the
Local Government Code nor in any law on which the broad and unwarranted
powers granted to the Governor may be based.
Petitioners cite the implementation of "General Search and Seizure including
arrests in the pursuit of the kidnappers and their supporters,"57 as being
violative of the constitutional proscription on general search warrants and
general seizures. Petitioners rightly assert that this alone would be sufficient
to render the proclamation void, as general searches and seizures are
proscribed, for being violative of the rights enshrined in the Bill of Rights,
particularly:
The right of the people to be secure in their persons, houses, papers, and
effects against unreasonable searches and seizures of whatever nature and
for any purpose shall be inviolable, and no search warrant or warrant of
arrest shall issue except upon probable cause to be determined personally
by the judge after examination under oath or affirmation of the complainant
and the witnesses he may produce, and particularly describing the place to
be searched and the persons or things to be seized.58
In fact, respondent governor has arrogated unto himself powers exceeding
even the martial law powers of the President, because as the Constitution
itself declares, "A state of martial law does not suspend the operation of the

Constitution, nor supplant the functioning of the civil courts or legislative


assemblies, nor authorize the conferment of the jurisdiction on military
courts and agencies over civilians where civil courts are able to function, nor
automatically suspend the privilege of the writ."59
We find, and so hold, that there is nothing in the Local Government Code
which justifies the acts sanctioned under the said Proclamation. Not even
Section 465 of the said Code, in relation to Section 16, which states:
Section 465. The
Compensation.
xxx

xxx

Chief

Executive:

Powers,

Duties,

Functions,

and

xxx

(b) For efficient, effective and economical governance the purpose of which
is the general welfare of the province and its inhabitants pursuant to Section
16 of this Code, the provincial governor shall:
(1) Exercise general supervision and control over all programs, projects,
services, and activities of the provincial government, and in this connection,
shall:
xxx

xxx

xxx

(vii) Carry out such emergency measures as may be necessary during and
in the aftermath of man-made and natural disasters and calamities;
(2) Enforce all laws and ordinances relative to the governance of the
province and the exercise of the appropriate corporate powers provided for
under Section 22 of this Code, implement all approved policies, programs,
projects, services and activities of the province and, in addition to the
foregoing, shall:
xxx

xxx

xxx

(vi) Call upon the appropriate national law enforcement agencies to


suppress disorder, riot, lawless violence, rebellion or sedition or to
apprehend violators of the law when public interest so requires and the
police forces of the component city or municipality where the disorder or
violation is happening are inadequate to cope with the situation or the
violators.
Section 16. General Welfare. - Every local government unit shall exercise the
powers expressly granted, those necessarily implied therefrom, as well as
powers necessary, appropriate, or incidental for its efficient and effective
governance, and those which are essential to the promotion of the general

welfare. Within their respective territorial jurisdictions, local government


units shall ensure and support, among other things, the preservation and
enrichment of culture, promote health and safety, enhance the right of the
people to a balanced ecology, encourage and support the development of
appropriate and self-reliant scientific and technological capabilities, improve
public morals, enhance economic prosperity and social justice, promote full
employment among their residents, maintain peace and order, and preserve
the comfort and convenience of their inhabitants. (Emphases supplied)
Respondents cannot rely on paragraph 1, subparagraph (vii) of Article 465
above, as the said provision expressly refers to calamities and disasters,
whether man-made or natural. The governor, as local chief executive of the
province, is certainly empowered to enact and implement emergency
measures during these occurrences. But the kidnapping incident in the case
at bar cannot be considered as a calamity or a disaster. Respondents cannot
find any legal mooring under this provision to justify their actions.
Paragraph 2, subparagraph (vi) of the same provision is equally inapplicable
for two reasons. First, the Armed Forces of the Philippines does not fall
under the category of a "national law enforcement agency," to which the
National Police Commission (NAPOLCOM) and its departments belong.
Its mandate is to uphold the sovereignty of the Philippines, support the
Constitution, and defend the Republic against all enemies, foreign and
domestic. Its aim is also to secure the integrity of the national territory.60
Second, there was no evidence or even an allegation on record that the
local police forces were inadequate to cope with the situation or apprehend
the violators. If they were inadequate, the recourse of the provincial
governor was to ask the assistance of the Secretary of Interior and Local
Government, or such other authorized officials, for the assistance of national
law enforcement agencies.
The Local Government Code does not involve the diminution of central
powers inherently vested in the National Government, especially not the
prerogatives solely granted by the Constitution to the President in matters
of security and defense.
The intent behind the powers granted to local government units is fiscal,
economic, and administrative in nature.1wphi1 The Code is concerned only
with powers that would make the delivery of basic services more effective to
the constituents,61 and should not be unduly stretched to confer calling-out
powers on local executives.

In the sponsorship remarks for Republic Act 7160, it was stated that the
devolution of powers is a step towards the autonomy of local government
units (LGUs), and is actually an experiment whose success heavily relies on
the power of taxation of the LGUs. The underpinnings of the Code can be
found in Section 5, Article II of the 1973 Constitution, which allowed LGUs to
create their own sources of revenue.62 During the interpellation made by
Mr. Tirol addressed to Mr. de Pedro, the latter emphasized that
"Decentralization is an administrative concept and the process of shifting
and delegating power from a central point to subordinate levels to promote
independence, responsibility, and quicker decision-making. (I)t does not
involve any transfer of final authority from the national to field levels, nor
diminution of central office powers and responsibilities. Certain government
agencies, including the police force, are exempted from the decentralization
process because their functions are not inherent in local government
units."63
IV. Provincial governor is not authorized to convene CEF
Pursuant to the national policy to establish one police force, the
organization of private citizen armies is proscribed. Section 24 of Article
XVIII of the Constitution mandates that:
Private armies and other armed groups not recognized by duly constituted
authority shall be dismantled. All paramilitary forces including Civilian Home
Defense Forces (CHDF) not consistent with the citizen armed force
established in this Constitution, shall be dissolved or, where appropriate,
converted into the regular force.
Additionally, Section 21of Article XI states that, "The preservation of peace
and order within the regions shall be the responsibility of the local police
agencies which shall be organized, maintained, supervised, and utilized in
accordance with applicable laws. The defense and security of the regions
shall be the responsibility of the National Government."
Taken in conjunction with each other, it becomes clear that the Constitution
does not authorize the organization of private armed groups similar to the
CEF convened by the respondent Governor. The framers of the Constitution
were themselves wary of armed citizens groups, as shown in the following
proceedings:
MR. GARCIA: I think it is very clear that the problem we have here is a
paramilitary force operating under the cloak, under the mantle of legality is
creating a lot of problems precisely by being able to operate as an
independent private army for many regional warlords. And at the same

time, this I think has been the thrust, the intent of many of the discussions
and objections to the paramilitary units and the armed groups.
MR. PADILLA: My proposal covers two parts: the private armies of political
warlords and other armed torces not recognized by constituted authority
which shall be dismantled and dissolved. In my trips to the provinces, I
heard of many abuses committed by the CHDF (Civilian Home Defense
Forces), specially in Escalante, Negros Occidental. But I do not know
whether a particular CHDF is approved or authorized by competent
authority. If it is not authorized, then the CHDF will have to be dismantled. If
some CHDFs, say in other provinces, are authorized by constituted
authority, by the Armed Forces of the Philippines, through the Chief of Staff
or the Minister of National Defense, if they are recognized and authorized,
then they will not be dismantled. But I cannot give a categorical answer to
any specific CHDF unit, only the principle that if they are armed forces which
are not authorized, then they should be dismantled. 64 (Emphasis supplied)
Thus, with the discussions in the Constitutional Commission as guide, the
creation of the Civilian Emergency Force (CEF) in the present case, is also
invalid.
WHEREFORE, the instant petition is GRANTED. Judgment is rendered
commanding respondents to desist from further proceedings m
implementing Proclamation No. 1, Series of 2009, and its Implementing
Guidelines. The said proclamation and guidelines are hereby declared NULL
and VOID for having been issued in grave abuse of discretion, amounting to
lack or excess of jurisdiction.
SO ORDERED.
MARIA LOURDES P. A. SERENO
Associate Justice

76. Gamboa vs Chan


G.R. No. 193636

July 24, 2012

MARYNETTE R. GAMBOA, Petitioner,


vs.
P/SSUPT. MARLOU C. CHAN, in his capacity as the PNP-Provincial Director of
Ilocos Norte, and P/SUPT. WILLIAM 0. FANG, in his capacity as Chief,
Intelligence Division, PNP Provincial Office, Ilocos Norte, Respondents.

DECISION

SERENO, J.:

Before this Court is an Appeal by Certiorari (Under Rule 45 of the Rules of


Court) filed pursuant to Rule 191 of the Rule on the Writ of Habeas Data,2
seeking a review of the 9 September 2010 Decision in Special Proc. No.
14979 of the Regional Trial Court, First Judicial Region, Laoag City, Branch 13
(RTC Br. 13).3 The questioned Decision denied petitioner the privilege of the
writ of habeas data.4

At the time the present Petition was filed, petitioner Marynette R. Gamboa
(Gamboa) was the Mayor of Dingras, Ilocos Norte.5 Meanwhile, respondent
Police Senior Superintendent (P/SSUPT.) Marlou C. Chan was the Officer-inCharge, and respondent Police Superintendent (P/SUPT.) William O. Fang was
the Chief of the Provincial Investigation and Detective Management Branch,
both of the Ilocos Norte Police Provincial Office.6

On 8 December 2009, former President Gloria Macapagal-Arroyo issued


Administrative Order No. 275 (A.O. 275), "Creating an Independent
Commission to Address the Alleged Existence of Private Armies in the
Country."7 The body, which was later on referred to as the Zearosa
Commission,8 was formed to investigate the existence of private army
groups (PAGs) in the country with a view to eliminating them before the 10
May 2010 elections and dismantling them permanently in the future.9 Upon
the conclusion of its investigation, the Zearosa Commission released and
submitted to the Office of the President a confidential report entitled "A
Journey Towards H.O.P.E.: The Independent Commission Against Private
Armies Report to the President" (the Report).10

Gamboa alleged that the Philippine National Police in Ilocos Norte (PNP
Ilocos Norte) conducted a series of surveillance operations against her and
her aides,11 and classified her as someone who keeps a PAG.12 Purportedly
without the benefit of data verification, PNPIlocos Norte forwarded the
information gathered on her to the Zearosa Commission,13 thereby
causing her inclusion in the Reports enumeration of individuals maintaining
PAGs.14 More specifically, she pointed out the following items reflected
therein:

(a) The Report cited the PNP as its source for the portion regarding the
status of PAGs in the Philippines.15

(b) The Report stated that "x x x the PNP organized one dedicated Special
Task Group (STG) for each private armed group (PAG) to monitor and
counteract their activities."16

(c) Attached as Appendix "F" of the Report is a tabulation generated by the


PNP and captioned as "Status of PAGs Monitoring by STGs as of April 19,
2010," which classifies PAGs in the country according to region, indicates
their identity, and lists the prominent personalities with whom these groups
are associated.17 The first entry in the table names a PAG, known as the
Gamboa Group, linked to herein petitioner Gamboa.18

(d) Statistics on the status of PAGs were based on data from the PNP, to wit:

The resolutions were the subject of a national press conference held in


Malacaang on March 24, 2010 at which time, the Commission was also
asked to comment on the PNP report that out of one hundred seventeen
(117) partisan armed groups validated, twenty-four (24) had been
dismantled with sixty-seven (67) members apprehended and more than
eighty-six (86) firearms confiscated.

Commissioner Herman Basbao qualified that said statistics were based on


PNP data but that the more significant fact from his report is that the PNP
has been vigilant in monitoring the activities of these armed groups and this
vigilance is largely due to the existence of the Commission which has
continued communicating with the Armed Forces of the Philippines (AFP)
and PNP personnel in the field to constantly provide data on the activities of
the PAGs. Commissioner Basbao stressed that the Commissions efforts
have preempted the formation of the PAGs because now everyone is aware
that there is a body monitoring the PAGs movement through the PNP.
Commissioner Lieutenant General Edilberto Pardo Adan also clarified that

the PAGs are being destabilized so that their ability to threaten and sow fear
during the election has been considerably weakened.19

(e) The Report briefly touched upon the validation system of the PNP:

Also, in order to provide the Commission with accurate data which is truly
reflective of the situation in the field, the PNP complied with the
Commissions recommendation that they revise their validation system to
include those PAGs previously listed as dormant. In the most recent briefing
provided by the PNP on April 26, 2010, there are one hundred seven (107)
existing PAGs. Of these groups, the PNP reported that seven (7) PAGs have
been reorganized.20

On 6 and 7 July 2010, ABS-CBN broadcasted on its evening news program


the portion of the Report naming Gamboa as one of the politicians alleged
to be maintaining a PAG.21 Gamboa averred that her association with a PAG
also appeared on print media.22 Thus, she was publicly tagged as someone
who maintains a PAG on the basis of the unverified information that the PNPIlocos Norte gathered and forwarded to the Zearosa Commission.23 As a
result, she claimed that her malicious or reckless inclusion in the
enumeration of personalities maintaining a PAG as published in the Report
also made her, as well as her supporters and other people identified with
her, susceptible to harassment and police surveillance operations.24

Contending that her right to privacy was violated and her reputation
maligned and destroyed, Gamboa filed a Petition dated 9 July 2010 for the
issuance of a writ of habeas data against respondents in their capacities as
officials of the PNP-Ilocos Norte.25 In her Petition, she prayed for the
following reliefs: (a) destruction of the unverified reports from the PNP-Ilocos
Norte database; (b) withdrawal of all information forwarded to higher PNP
officials; (c) rectification of the damage done to her honor; (d) ordering
respondents to refrain from forwarding unverified reports against her; and
(e) restraining respondents from making baseless reports.26

The case was docketed as Special Proc. No. 14979 and was raffled to RTC Br.
13, which issued the corresponding writ on 14 July 2010 after finding the
Petition meritorious on its face.27 Thus, the trial court (a) instructed
respondents to submit all information and reports forwarded to and used by
the Zearosa Commission as basis to include her in the list of persons
maintaining PAGs; (b) directed respondents, and any person acting on their
behalf, to cease and desist from forwarding to the Zearosa Commission, or
to any other government entity, information that they may have gathered
against her without the approval of the court; (c) ordered respondents to
make a written return of the writ together with supporting affidavits; and (d)
scheduled the summary hearing of the case on 23 July 2010.28

In their Return of the Writ, respondents alleged that they had acted within
the bounds of their mandate in conducting the investigation and
surveillance of Gamboa.29 The information stored in their database
supposedly pertained to two criminal cases in which she was implicated,
namely: (a) a Complaint for murder and frustrated murder docketed as NPS
DOC No. 1-04-INQ-091-00077, and (b) a Complaint for murder, frustrated
murder and direct assault upon a person in authority, as well as indirect
assault and multiple attempted murder, docketed as NPS DOCKET No. 1-04INV-10-A-00009.30

Respondents likewise asserted that the Petition was incomplete for failing to
comply with the following requisites under the Rule on the Writ of Habeas
Data: (a) the manner in which the right to privacy was violated or
threatened with violation and how it affected the right to life, liberty or
security of Gamboa; (b) the actions and recourses she took to secure the
data or information; and (c) the location of the files, registers or databases,
the government office, and the person in charge, in possession or in control
of the data or information.31 They also contended that the Petition for Writ
of Habeas Data, being limited to cases of extrajudicial killings and enforced
disappearances, was not the proper remedy to address the alleged
besmirching of the reputation of Gamboa.32

RTC Br. 13, in its assailed Decision dated 9 September 2010, dismissed the
Petition.33 The trial court categorically ruled that the inclusion of Gamboa in
the list of persons maintaining PAGs, as published in the Report, constituted
a violation of her right to privacy, to wit:

In this light, it cannot also be disputed that by her inclusion in the list of
persons maintaining PAGs, Gamboas right to privacy indubitably has been
violated. The violation understandably affects her life, liberty and security
enormously. The untold misery that comes with the tag of having a PAG
could even be insurmountable. As she essentially alleged in her petition, she
fears for her security that at any time of the day the unlimited powers of
respondents may likely be exercised to further malign and destroy her
reputation and to transgress her right to life.

By her inclusion in the list of persons maintaining PAGs, it is likewise


undisputed that there was certainly intrusion into Gamboas activities. It
cannot be denied that information was gathered as basis therefor. After all,
under Administrative Order No. 275, the Zearosa Commission was tasked
to investigate the existence of private armies in the country, with all the
powers of an investigative body under Section 37, Chapter 9, Book I of the
Administrative Code of 1987.

xxx

xxx

xxx

By her inclusion in the list of persons maintaining PAGs, Gamboa alleged as


she accused respondents, who are public officials, of having gathered and
provided information that made the Zearosa Commission to include her in
the list. Obviously, it was this gathering and forwarding of information
supposedly by respondents that petitioner barks at as unlawful. x x x.34

Despite the foregoing findings, RTC Br. 13 nevertheless dismissed the


Petition on the ground that Gamboa failed to prove through substantial
evidence that the subject information originated from respondents, and that
they forwarded this database to the Zearosa Commission without the
benefit of prior verification.35 The trial court also ruled that even before
respondents assumed their official positions, information on her may have
already been acquired.36 Finally, it held that the Zearosa Commission, as
the body tasked to gather information on PAGs and authorized to disclose
information on her, should have been impleaded as a necessary if not a
compulsory party to the Petition.37

Gamboa then filed the instant Appeal by Certiorari dated 24 September


2010,38 raising the following assignment of errors:

1. The trial court erred in ruling that the Zearosa Commission be


impleaded as either a necessary or indispensable party;

2. The trial court erred in declaring that Gamboa failed to present sufficient
proof to link respondents as the informant to [sic] the Zearosa
Commission;

3. The trial court failed to satisfy the spirit of Habeas Data;

4. The trial court erred in pronouncing that the reliance of the Zearosa
Commission to [sic] the PNP as alleged by Gamboa is an assumption;

5. The trial court erred in making a point that respondents are distinct to
PNP as an agency.39

On the other hand, respondents maintain the following arguments: (a)


Gamboa failed to present substantial evidence to show that her right to
privacy in life, liberty or security was violated, and (b) the trial court
correctly dismissed the Petition on the ground that she had failed to present
sufficient proof showing that respondents were the source of the report
naming her as one who maintains a PAG.40

Meanwhile, Gamboa argues that although A.O. 275 was a lawful order,
fulfilling the mandate to dismantle PAGs in the country should be done in
accordance with due process, such that the gathering and forwarding of
unverified information on her must be considered unlawful.41 She also
reiterates that she was able to present sufficient evidence showing that the
subject information originated from respondents.42

In determining whether Gamboa should be granted the privilege of the writ


of habeas data, this Court is called upon to, first, unpack the concept of the
right to privacy; second, explain the writ of habeas data as an extraordinary
remedy that seeks to protect the right to informational privacy; and finally,
contextualize the right to privacy vis--vis the state interest involved in the
case at bar.

The Right to Privacy

The right to privacy, as an inherent concept of liberty, has long been


recognized as a constitutional right. This Court, in Morfe v. Mutuc,43 thus
enunciated:

The due process question touching on an alleged deprivation of liberty as


thus resolved goes a long way in disposing of the objections raised by
plaintiff that the provision on the periodical submission of a sworn
statement of assets and liabilities is violative of the constitutional right to
privacy. There is much to be said for this view of Justice Douglas: "Liberty in
the constitutional sense must mean more than freedom from unlawful
governmental restraint; it must include privacy as well, if it is to be a
repository of freedom. The right to be let alone is indeed the beginning of all
freedom." As a matter of fact, this right to be let alone is, to quote from Mr.
Justice Brandeis "the most comprehensive of rights and the right most
valued by civilized men."

The concept of liberty would be emasculated if it does not likewise compel


respect for his personality as a unique individual whose claim to privacy and
interference demands respect. xxx.

xxx

xxx

xxx

x x x In the leading case of Griswold v. Connecticut, Justice Douglas,


speaking for five members of the Court, stated: "Various guarantees create

zones of privacy. The right of association contained in the penumbra of the


First Amendment is one, as we have seen. The Third Amendment in its
prohibition against the quartering of soldiers in any house in time of peace
without the consent of the owner is another facet of that privacy. The Fourth
Amendment explicitly affirms the right of the people to be secure in their
persons, houses, papers, and effects, against unreasonable searches and
seizures. The Fifth Amendment in its Self-Incrimination Clause enables the
citizen to create a zone of privacy which government may not force him to
surrender to his detriment. The Ninth Amendment provides: The
enumeration in the Constitution, of certain rights, shall not be construed to
deny or disparage others retained by the people." After referring to various
American Supreme Court decisions, Justice Douglas continued: "These cases
bear witness that the right of privacy which presses for recognition is a
legitimate one."

xxx

xxx

xxx

So it is likewise in our jurisdiction. The right to privacy as such is accorded


recognition independently of its identification with liberty; in itself, it is fully
deserving of constitutional protection. The language of Prof. Emerson is
particularly apt: "The concept of limited government has always included
the idea that governmental powers stop short of certain intrusions into the
personal life of the citizen. This is indeed one of the basic distinctions
between absolute and limited government. Ultimate and pervasive control
of the individual, in all aspects of his life, is the hallmark of the absolute
state. In contrast, a system of limited government, safeguards a private
sector, which belongs to the individual, firmly distinguishing it from the
public sector, which the state can control. Protection of this private sector
protection, in other words, of the dignity and integrity of the individual
has become increasingly important as modern society has developed. All
the forces of a technological age industrialization, urbanization, and
organization operate to narrow the area of privacy and facilitate intrusion
into it. In modern terms, the capacity to maintain and support this enclave
of private life marks the difference between a democratic and a totalitarian
society."44 (Emphases supplied)

In Ople v. Torres,45 this Court traced the constitutional and statutory bases
of the right to privacy in Philippine jurisdiction, to wit:

Indeed, if we extend our judicial gaze we will find that the right of privacy is
recognized and enshrined in several provisions of our Constitution. It is
expressly recognized in section 3 (1) of the Bill of Rights:

Sec. 3. (1) The privacy of communication and correspondence shall be


inviolable except upon lawful order of the court, or when public safety or
order requires otherwise as prescribed by law.

Other facets of the right to privacy are protected in various provisions of the
Bill of Rights, viz:

Sec. 1. No person shall be deprived of life, liberty, or property without due


process of law, nor shall any person be denied the equal protection of the
laws.

Sec. 2. The right of the people to be secure in their persons, houses, papers,
and effects against unreasonable searches and seizures of whatever nature
and for any purpose shall be inviolable, and no search warrant or warrant of
arrest shall issue except upon probable cause to be determined personally
by the judge after examination under oath or affirmation of the complainant
and the witnesses he may produce, and particularly describing the place to
be searched and the persons or things to be seized.

xxx

xxx

xxx

Sec. 6. The liberty of abode and of changing the same within the limits
prescribed by law shall not be impaired except upon lawful order of the
court. Neither shall the right to travel be impaired except in the interest of
national security, public safety, or public health as may be provided by law.

xxx

xxx

xxx

Sec. 8. The right of the people, including those employed in the public and
private sectors, to form unions, associations, or societies for purposes not
contrary to law shall not be abridged.

Sec. 17. No person shall be compelled to be a witness against himself.

Zones of privacy are likewise recognized and protected in our laws. The Civil
Code provides that "every person shall respect the dignity, personality,
privacy and peace of mind of his neighbors and other persons" and punishes
as actionable torts several acts by a person of meddling and prying into the
privacy of another. It also holds a public officer or employee or any private
individual liable for damages for any violation of the rights and liberties of
another person, and recognizes the privacy of letters and other private
communications. The Revised Penal Code makes a crime the violation of
secrets by an officer, the revelation of trade and industrial secrets, and
trespass to dwelling. Invasion of privacy is an offense in special laws like the
Anti-Wiretapping Law, the Secrecy of Bank Deposits Act and the Intellectual
Property Code. The Rules of Court on privileged communication likewise
recognize the privacy of certain information.

Unlike the dissenters, we prescind from the premise that the right to privacy
is a fundamental right guaranteed by the Constitution, hence, it is the
burden of government to show that A.O. No. 308 is justified by some
compelling state interest and that it is narrowly drawn. x x x.46 (Emphases
supplied)

Clearly, the right to privacy is considered a fundamental right that must be


protected from intrusion or constraint. However, in Standard Chartered Bank
v. Senate Committee on Banks,47 this Court underscored that the right to
privacy is not absolute, viz:

With respect to the right of privacy which petitioners claim respondent has
violated, suffice it to state that privacy is not an absolute right. While it is
true that Section 21, Article VI of the Constitution, guarantees respect for

the rights of persons affected by the legislative investigation, not every


invocation of the right to privacy should be allowed to thwart a legitimate
congressional inquiry. In Sabio v. Gordon, we have held that the right of the
people to access information on matters of public concern generally prevails
over the right to privacy of ordinary financial transactions. In that case, we
declared that the right to privacy is not absolute where there is an
overriding compelling state interest. Employing the rational basis
relationship test, as laid down in Morfe v. Mutuc, there is no infringement of
the individuals right to privacy as the requirement to disclosure information
is for a valid purpose, in this case, to ensure that the government agencies
involved in regulating banking transactions adequately protect the public
who invest in foreign securities. Suffice it to state that this purpose
constitutes a reason compelling enough to proceed with the assailed
legislative investigation.48

Therefore, when the right to privacy finds tension with a competing state
objective, the courts are required to weigh both notions. In these cases,
although considered a fundamental right, the right to privacy may
nevertheless succumb to an opposing or overriding state interest deemed
legitimate and compelling.

The Writ of Habeas Data

The writ of habeas data is an independent and summary remedy designed


to protect the image, privacy, honor, information, and freedom of
information of an individual, and to provide a forum to enforce ones right to
the truth and to informational privacy.49 It seeks to protect a persons right
to control information regarding oneself, particularly in instances in which
such information is being collected through unlawful means in order to
achieve unlawful ends.50 It must be emphasized that in order for the
privilege of the writ to be granted, there must exist a nexus between the
right to privacy on the one hand, and the right to life, liberty or security on
the other. Section 1 of the Rule on the Writ of Habeas Data reads:

Habeas data. The writ of habeas data is a remedy available to any person
whose right to privacy in life, liberty or security is violated or threatened by
an unlawful act or omission of a public official or employee, or of a private

individual or entity engaged in the gathering, collecting or storing of data


information regarding the person, family, home and correspondence of the
aggrieved party.

The notion of informational privacy is still developing in Philippine law and


jurisprudence. Considering that even the Latin American habeas data, on
which our own Rule on the Writ of Habeas Data is rooted, finds its origins
from the European tradition of data protection,51 this Court can be guided
by cases on the protection of personal data decided by the European Court
of Human Rights (ECHR). Of particular note is Leander v. Sweden,52 in
which the ECHR balanced the right of citizens to be free from interference in
their private affairs with the right of the state to protect its national security.
In this case, Torsten Leander (Leander), a Swedish citizen, worked as a
temporary replacement museum technician at the Naval Museum, which
was adjacent to a restricted military security zone.53 He was refused
employment when the requisite personnel control resulted in an unfavorable
outcome on the basis of information in the secret police register, which was
kept in accordance with the Personnel Control Ordinance and to which he
was prevented access.54 He claimed, among others, that this procedure of
security control violated Article 8 of the European Convention of Human
Rights55 on the right to privacy, as nothing in his personal or political
background would warrant his classification in the register as a security
risk.56

The ECHR ruled that the storage in the secret police register of information
relating to the private life of Leander, coupled with the refusal to allow him
the opportunity to refute the same, amounted to an interference in his right
to respect for private life.57 However, the ECHR held that the interference
was justified on the following grounds: (a) the personnel control system had
a legitimate aim, which was the protection of national security,58 and (b)
the Personnel Control Ordinance gave the citizens adequate indication as to
the scope and the manner of exercising discretion in the collection,
recording and release of information by the authorities.59 The following
statements of the ECHR must be emphasized:

58. The notion of necessity implies that the interference corresponds to a


pressing social need and, in particular, that it is proportionate to the

legitimate aim pursued (see, inter alia, the Gillow judgment of 24 November
1986, Series A no. 109, p. 22, 55).

59. However, the Court recognises that the national authorities enjoy a
margin of appreciation, the scope of which will depend not only on the
nature of the legitimate aim pursued but also on the particular nature of the
interference involved. In the instant case, the interest of the respondent
State in protecting its national security must be balanced against the
seriousness of the interference with the applicants right to respect for his
private life.

There can be no doubt as to the necessity, for the purpose of protecting


national security, for the Contracting States to have laws granting the
competent domestic authorities power, firstly, to collect and store in
registers not accessible to the public information on persons and, secondly,
to use this information when assessing the suitability of candidates for
employment in posts of importance for national security.

Admittedly, the contested interference adversely affected Mr. Leanders


legitimate interests through the consequences it had on his possibilities of
access to certain sensitive posts within the public service. On the other
hand, the right of access to public service is not as such enshrined in the
Convention (see, inter alia, the Kosiek judgment of 28 August 1986, Series A
no. 105, p. 20, 34-35), and, apart from those consequences, the
interference did not constitute an obstacle to his leading a private life of his
own choosing.

In these circumstances, the Court accepts that the margin of appreciation


available to the respondent State in assessing the pressing social need in
the present case, and in particular in choosing the means for achieving the
legitimate aim of protecting national security, was a wide one.

xxx

xxx

xxx

66. The fact that the information released to the military authorities was not
communicated to Mr. Leander cannot by itself warrant the conclusion that
the interference was not "necessary in a democratic society in the interests
of national security", as it is the very absence of such communication which,
at least partly, ensures the efficacy of the personnel control procedure (see,
mutatis mutandis, the above-mentioned Klass and Others judgment, Series
A no. 28, p. 27, 58).

The Court notes, however, that various authorities consulted before the
issue of the Ordinance of 1969, including the Chancellor of Justice and the
Parliamentary Ombudsman, considered it desirable that the rule of
communication to the person concerned, as contained in section 13 of the
Ordinance, should be effectively applied in so far as it did not jeopardise the
purpose of the control (see paragraph 31 above).

67. The Court, like the Commission, thus reaches the conclusion that the
safeguards contained in the Swedish personnel control system meet the
requirements of paragraph 2 of Article 8 (art. 8-2). Having regard to the
wide margin of appreciation available to it, the respondent State was
entitled to consider that in the present case the interests of national
security prevailed over the individual interests of the applicant (see
paragraph 59 above). The interference to which Mr. Leander was subjected
cannot therefore be said to have been disproportionate to the legitimate
aim pursued. (Emphases supplied)

Leander illustrates how the right to informational privacy, as a specific


component of the right to privacy, may yield to an overriding legitimate
state interest. In similar fashion, the determination of whether the privilege
of the writ of habeas data, being an extraordinary remedy, may be granted
in this case entails a delicate balancing of the alleged intrusion upon the
private life of Gamboa and the relevant state interest involved.

The collection and forwarding of information by the PNP vis--vis the interest
of the state to dismantle private armies.

The Constitution explicitly mandates the dismantling of private armies and


other armed groups not recognized by the duly constituted authority.60 It
also provides for the establishment of one police force that is national in
scope and civilian in character, and is controlled and administered by a
national police commission.61

Taking into account these constitutional fiats, it is clear that the issuance of
A.O. 275 articulates a legitimate state aim, which is to investigate the
existence of PAGs with the ultimate objective of dismantling them
permanently.

To enable the Zearosa Commission to achieve its goals, A.O. 275 clothed it
with the powers of an investigative body, including the power to summon
witnesses, administer oaths, take testimony or evidence relevant to the
investigation and use compulsory processes to produce documents, books,
and records.62 A.O. 275 likewise authorized the Zearosa Commission to
deputize the Armed Forces of the Philippines, the National Bureau of
Investigation, the Department of Justice, the PNP, and any other law
enforcement agency to assist the commission in the performance of its
functions.63

Meanwhile, the PNP, as the national police force, is empowered by law to (a)
enforce all laws and ordinances relative to the protection of lives and
properties; (b) maintain peace and order and take all necessary steps to
ensure public safety; and (c) investigate and prevent crimes.64

Pursuant to the state interest of dismantling PAGs, as well as the foregoing


powers and functions accorded to the Zearosa Commission and the PNP,
the latter collected information on individuals suspected of maintaining
PAGs, monitored them and counteracted their activities.65 One of those
individuals is herein petitioner Gamboa.

This Court holds that Gamboa was able to sufficiently establish that the data
contained in the Report listing her as a PAG coddler came from the PNP.
Contrary to the ruling of the trial court, however, the forwarding of

information by the PNP to the Zearosa Commission was not an unlawful act
that violated or threatened her right to privacy in life, liberty or security.

The PNP was rationally expected to forward and share intelligence regarding
PAGs with the body specifically created for the purpose of investigating the
existence of these notorious groups. Moreover, the Zearosa Commission
was explicitly authorized to deputize the police force in the fulfillment of the
formers mandate, and thus had the power to request assistance from the
latter.

Following the pronouncements of the ECHR in Leander, the fact that the PNP
released information to the Zearosa Commission without prior
communication to Gamboa and without affording her the opportunity to
refute the same cannot be interpreted as a violation or threat to her right to
privacy since that act is an inherent and crucial component of intelligencegathering and investigation.1wphi1 Additionally, Gamboa herself admitted
that the PNP had a validation system, which was used to update information
on individuals associated with PAGs and to ensure that the data mirrored the
situation on the field.66 Thus, safeguards were put in place to make sure
that the information collected maintained its integrity and accuracy.

Pending the enactment of legislation on data protection, this Court declines


to make any further determination as to the propriety of sharing information
during specific stages of intelligence gathering. To do otherwise would
supplant the discretion of investigative bodies in the accomplishment of
their functions, resulting in an undue encroachment on their competence.

However, to accord the right to privacy with the kind of protection


established in existing law and jurisprudence, this Court nonetheless deems
it necessary to caution these investigating entities that information-sharing
must observe strict confidentiality. Intelligence gathered must be released
exclusively to the authorities empowered to receive the relevant
information. After all, inherent to the right to privacy is the freedom from
"unwarranted exploitation of ones person or from intrusion into ones
private activities in such a way as to cause humiliation to a persons
ordinary sensibilities."67

In this case, respondents admitted the existence of the Report, but


emphasized its confidential nature.1wphi1 That it was leaked to third
parties and the media was regrettable, even warranting reproach. But it
must be stressed that Gamboa failed to establish that respondents were
responsible for this unintended disclosure. In any event, there are other
reliefs available to her to address the purported damage to her reputation,
making a resort to the extraordinary remedy of the writ of habeas data
unnecessary and improper.

Finally, this Court rules that Gamboa was unable to prove through
substantial evidence that her inclusion in the list of individuals maintaining
PAGs made her and her supporters susceptible to harassment and to
increased police surveillance. In this regard, respondents sufficiently
explained that the investigations conducted against her were in relation to
the criminal cases in which she was implicated. As public officials, they
enjoy the presumption of regularity, which she failed to overcome.

It is clear from the foregoing discussion that the state interest of dismantling
PAGs far outweighs the alleged intrusion on the private life of Gamboa,
especially when the collection and forwarding by the PNP of information
against her was pursuant to a lawful mandate. Therefore, the privilege of
the writ of habeas data must be denied.

WHEREFORE, the instant petition for review is DENIED. The assailed


Decision in Special Proc. No. 14979 dated 9 September 2010 of the Regional
Trial Court, Laoag City, Br. 13, insofar as it denies Gamboa the privilege of
the writ of habeas data, is AFFIRMED.

SO ORDERED.

77. People vs Lagman

EN BANC

G.R. No. L-45892

July 13, 1938

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,


vs.
TRANQUILINO LAGMAN, defendant-appellant.

-----------------------------

G.R. No. L-45893

July 13, 1938

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,


vs.
PRIMITIVO DE SOSA, defendant-appellant.

Severino P. Izon for appellants.


Office of the Solicitor-General Tuason for appellee.

AVANCEA, J.:

In these two cases (G.R. Nos. L-45892 and 45893), the appellants
Tranquilino and Primitivo de Sosa are charged with a violation of section 60
of Commonwealth Act No. 1, known as the National Defense Law. It is
alleged that these two appellants, being Filipinos and having reached the
age of twenty years in 1936, willfully and unlawfully refused to register in
the military service between the 1st and 7th of April of said year,
notwithstanding the fact that they had been required to do so. The evidence
shows that these two appellants were duly notified by the corresponding

authorities to appear before the Acceptance Board in order to register for


military service in accordance with law, and that the said appellants, in spite
of these notices, had not registered up to the date of the filing of the
information.

The appellants do not deny these facts, but they allege in defense that they
have not registered in the military service because Primitivo de Sosa is
fatherless and has a mother and a brother eight years old to support, and
Tranquilino Lagman also has a father to support, has no military learnings,
and does not wish to kill or be killed.

Each of these appellants was sentenced by the Court of First Instance to one
month and one day of imprisonment, with the costs.

In this instance, the validity of the National Defense Law, under which the
accused were sentenced, is impugned on the ground that it is
unconstitutional. Section 2, Article II of the Constitution of the Philippines
provides as follows:

SEC. 2. The defense of the state is a prime duty of government, and in the
fulfillment of this duty all citizens may be required by law to render personal
military or civil service.

The National Defense Law, in so far as it establishes compulsory military


service, does not go against this constitutional provision but is, on the
contrary, in faithful compliance therewith. The duty of the Government to
defend the State cannot be performed except through an army. To leave the
organization of an army to the will of the citizens would be to make this duty
of the Government excusable should there be no sufficient men who
volunteer to enlist therein.1vvphl.nt

In the United States the courts have held in a series of decisions that the
compulsory military service adopted by reason of the civil war and the world
war does not violate the Constitution, because the power to establish it is

derived from that granted to Congress to declare war and to organize and
maintain an army. This is so because the right of the Government to require
compulsory military service is a consequence of its duty to defend the State
and is reciprocal with its duty to defend the life, liberty, and property of the
citizen. In the case of Jacobson vs. Massachusetts (197 U.S., 11; 25 Sup. Ct.
Rep., 385), it was said that, without violating the Constitution, a person may
be compelled by force, if need be, against his will, against his pecuniary
interests, and even against his religious or political convictions, to take his
place in the ranks of the army of his country, and risk the chance of being
shot down in its defense. In the case of United States vs. Olson (253 Fed.,
233), it was also said that this is not deprivation of property without due
process of law, because, in its just sense, there is no right of property to an
office or employment.

The circumstance that these decisions refer to laws enacted by reason on


the actual existence of war does not make our case any different, inasmuch
as, in the last analysis, what justifies compulsory military service is the
defense of the State, whether actual or whether in preparation to make it
more effective, in case of need. The circumstance that the appellants have
dependent families to support does not excuse them from their duty to
present themselves before the Acceptance Board because, if such
circumstance exists, they can ask for determent in complying with their
duty and, at all events, they can obtain the proper pecuniary allowance to
attend to these family responsibilities (secs. 65 and 69 of Commonwealth
Act No. 1).

The appealed judgment rendered in these two cases is affirmed, with the
costs to the appellants. So ordered.

Villa-Real, Imperial, Diaz, Laurel and Concepcion, JJ., concur.

78. Aglipay vs Ruiz

G.R. No. L-45459

March 13, 1937

GREGORIO AGLIPAY, petitioner,


vs.
JUAN RUIZ, respondent.

Vicente Sotto for petitioner.


Office of the Solicitor-General Tuason for respondent.

LAUREL, J.:

The petitioner, Mons. Gregorio Aglipay, Supreme Head of the Philippine


Independent Church, seeks the issuance from this court of a writ of
prohibition to prevent the respondent Director of Posts from issuing and
selling postage stamps commemorative of the Thirty-third International
Eucharistic Congress.

In May, 1936, the Director of Posts announced in the dailies of Manila that
he would order the issues of postage stamps commemorating the
celebration in the City of Manila of the Thirty-third international Eucharistic
Congress, organized by the Roman Catholic Church. The petitioner, in the
fulfillment of what he considers to be a civic duty, requested Vicente Sotto,
Esq., member of the Philippine Bar, to denounce the matter to the President
of the Philippines. In spite of the protest of the petitioner's attorney, the
respondent publicly announced having sent to the United States the designs
of the postage stamps for printing as follows:

"In the center is chalice, with grape vine and stalks of wheat as border
design. The stamps are blue, green, brown, cardinal red, violet and orange,
1 inch by 1,094 inches. The denominations are for 2, 6, 16, 20, 36 and 50
centavos." The said stamps were actually issued and sold though the
greater part thereof, to this day, remains unsold. The further sale of the
stamps is sought to be prevented by the petitioner herein.

The Solicitor-General contends that the writ of prohibition is not the proper
legal remedy in the instant case, although he admits that the writ may
properly restrain ministerial functions. While, generally, prohibition as an
extraordinary legal writ will not issue to restrain or control the performance
of other than judicial or quasi-judicial functions (50 C. J., 6580, its issuance
and enforcement are regulated by statute and in this jurisdiction may issue
to . . . inferior tribunals, corporations, boards, or persons, whether
excercising functions judicial or ministerial, which are without or in excess of
the jurisdiction of such tribunal, corporation, board, or person, . . . ." (Secs.
516 and 226, Code of Civil Procedure.) The terms "judicial" and "ministerial"
used with reference to "functions" in the statute are undoubtedly
comprehensive and include the challenged act of the respondent Director of
Posts in the present case, which act because alleged to be violative of the
Constitution is a fortiorari "without or in excess of . . . jurisdiction." The
statutory rule, therefore, in the jurisdiction is that the writ of prohibition is
not confined exclusively to courts or tribunals to keep them within the limits
of their own jurisdiction and to prevent them from encroaching upon the
jurisdiction of other tribunals, but will issue, in appropriate cases, to an
officer or person whose acts are without or in excess of his authority. Not
infrequently, "the writ is granted, where it is necessary for the orderly
administration of justice, or to prevent the use of the strong arm of the law
in an oppressive or vindictive manner, or a multiplicity of actions."
(Dimayuga and Fajardo vs. Fernandez [1923], 43 Phil., 304, 307.)

The more important question raised refers to the alleged violation of the
Constitution by the respondent in issuing and selling postage stamps
commemorative of the Thirty-third International Eucharistic Congress. It is
alleged that this action of the respondent is violative of the provisions of
section 23, subsection 3, Article VI, of the Constitution of the Philippines,
which provides as follows:

No public money or property shall ever be appropriated, applied, or used,


directly or indirectly, for the use, benefit, or support of any sect, church,
denomination, secretarian, institution, or system of religion, or for the use,
benefit, or support of any priest, preacher, minister, or other religious
teacher or dignitary as such, except when such priest, preacher, minister, or
dignitary is assigned to the armed forces or to any penal institution,
orphanage, or leprosarium.

The prohibition herein expressed is a direct corollary of the principle of


separation of church and state. Without the necessity of adverting to the
historical background of this principle in our country, it is sufficient to say
that our history, not to speak of the history of mankind, has taught us that
the union of church and state is prejudicial to both, for ocassions might arise
when the estate will use the church, and the church the state, as a weapon
in the furtherance of their recognized this principle of separation of church
and state in the early stages of our constitutional development; it was
inserted in the Treaty of Paris between the United States and Spain of
December 10, 1898, reiterated in President McKinley's Instructions of the
Philippine Commission, reaffirmed in the Philippine Bill of 1902 and in the
autonomy Act of August 29, 1916, and finally embodied in the constitution
of the Philippines as the supreme expression of the Filipino people. It is
almost trite to say now that in this country we enjoy both religious and civil
freedom. All the officers of the Government, from the highest to the lowest,
in taking their oath to support and defend the constitution, bind themselves
to recognize and respect the constitutional guarantee of religious freedom,
with its inherent limitations and recognized implications. It should be stated
that what is guaranteed by our Constitution is religious liberty, not mere
religious toleration.

Religious freedom, however, as a constitutional mandate is not inhibition of


profound reverence for religion and is not denial of its influence in human
affairs. Religion as a profession of faith to an active power that binds and
elevates man to his Creator is recognized. And, in so far as it instills into the
minds the purest principles of morality, its influence is deeply felt and highly
appreciated. When the Filipino people, in the preamble of their Constitution,
implored "the aid of Divine Providence, in order to establish a government
that shall embody their ideals, conserve and develop the patrimony of the
nation, promote the general welfare, and secure to themselves and their
posterity the blessings of independence under a regime of justice, liberty

and democracy," they thereby manifested reliance upon Him who guides
the destinies of men and nations. The elevating influence of religion in
human society is recognized here as elsewhere. In fact, certain general
concessions are indiscriminately accorded to religious sects and
denominations. Our Constitution and laws exempt from taxation properties
devoted exclusively to religious purposes (sec. 14, subsec. 3, Art. VI,
Constitution of the Philippines and sec. 1, subsec. 4, Ordinance appended
thereto; Assessment Law, sec. 344, par. [c]. Adm. Code). Sectarian aid is not
prohibited when a priest, preacher, minister or other religious teacher or
dignitary as such is assigned to the armed forces or to any penal institution,
orphanage or leprosarium 9 sec. 13, subsec. 3, Art. VI, Constitution of the
Philippines). Optional religious instruction in the public schools is by
constitutional mandate allowed (sec. 5, Art. XIII, Constitution of the
Philippines, in relation to sec. 928, Adm. Code). Thursday and Friday of Holy
Week, Thanksgiving Day, Christmas Day, and Sundays and made legal
holidays (sec. 29, Adm. Code) because of the secular idea that their
observance is conclusive to beneficial moral results. The law allows divorce
but punishes polygamy and bigamy; and certain crimes against religious
worship are considered crimes against the fundamental laws of the state
(see arts. 132 and 133, Revised Penal Code).

In the case at bar, it appears that the respondent Director of Posts issued
the postage stamps in question under the provisions of Act No. 4052 of the
Philippine Legislature. This Act is as follows:

No. 4052. AN ACT APPROPRIATING THE SUM OF SIXTY THOUSAND PESOS


AND MAKING THE SAME AVAILABLE OUT OF ANY FUNDS IN THE INSULAR
TREASURY NOT OTHERWISE APPROPRIATED FOR THE COST OF PLATES AND
PRINTING OF POSTAGE STAMPS WITH NEW DESIGNS, AND FOR OTHER
PURPOSES.

Be it enacted by the Senate and House of Representatives of the Philippines


in Legislature assembled and by the authority of the same:

SECTION 1. The sum of sixty thousand pesos is hereby appropriated and


made immediately available out of any funds in the Insular Treasury not

otherwise appropriated, for the costs of plates and printing of postage


stamps with new designs, and other expenses incident thereto.

SEC. 2. The Director of Posts, with the approval of the Secretary of Public
Works and Communications, is hereby authorized to dispose of the whole or
any portion of the amount herein appropriated in the manner indicated and
as often as may be deemed advantageous to the Government.

SEC. 3. This amount or any portion thereof not otherwise expended shall not
revert to the Treasury.

SEC. 4. This act shall take effect on its approval.

Approved, February 21, 1933.

It will be seen that the Act appropriates the sum of sixty thousand pesos for
the costs of plates and printing of postage stamps with new designs and
other expenses incident thereto, and authorizes the Director of Posts, with
the approval of the Secretary of Public Works and Communications, to
dispose of the amount appropriated in the manner indicated and "as often
as may be deemed advantageous to the Government". The printing and
issuance of the postage stamps in question appears to have been approved
by authority of the President of the Philippines in a letter dated September
1, 1936, made part of the respondent's memorandum as Exhibit A. The
respondent alleges that the Government of the Philippines would suffer
losses if the writ prayed for is granted. He estimates the revenue to be
derived from the sale of the postage stamps in question at P1,618,17.10
and states that there still remain to be sold stamps worth P1,402,279.02.

Act No. 4052 contemplates no religious purpose in view. What it gives the
Director of Posts is the discretionary power to determine when the issuance
of special postage stamps would be "advantageous to the Government." Of
course, the phrase "advantageous to the Government" does not authorize
the violation of the Constitution. It does not authorize the appropriation, use

or application of public money or property for the use, benefit or support of


a particular sect or church. In the present case, however, the issuance of
the postage stamps in question by the Director of Posts and the Secretary of
Public Works and Communications was not inspired by any sectarian
denomination. The stamps were not issue and sold for the benefit of the
Roman Catholic Church. Nor were money derived from the sale of the
stamps given to that church. On the contrary, it appears from the latter of
the Director of Posts of June 5, 1936, incorporated on page 2 of the
petitioner's complaint, that the only purpose in issuing and selling the
stamps was "to advertise the Philippines and attract more tourist to this
country." The officials concerned merely, took advantage of an event
considered of international importance "to give publicity to the Philippines
and its people" (Letter of the Undersecretary of Public Works and
Communications to the President of the Philippines, June 9, 1936; p. 3,
petitioner's complaint). It is significant to note that the stamps as actually
designed and printed (Exhibit 2), instead of showing a Catholic Church
chalice as originally planned, contains a map of the Philippines and the
location of the City of Manila, and an inscription as follows: "Seat XXXIII
International Eucharistic Congress, Feb. 3-7,1937." What is emphasized is
not the Eucharistic Congress itself but Manila, the capital of the Philippines,
as the seat of that congress. It is obvious that while the issuance and sale of
the stamps in question may be said to be inseparably linked with an event
of a religious character, the resulting propaganda, if any, received by the
Roman Catholic Church, was not the aim and purpose of the Government.
We are of the opinion that the Government should not be embarassed in its
activities simply because of incidental results, more or less religious in
character, if the purpose had in view is one which could legitimately be
undertaken by appropriate legislation. The main purpose should not be
frustrated by its subordinate to mere incidental results not contemplated.
(Vide Bradfield vs. Roberts, 175 U. S., 295; 20 Sup. Ct. Rep., 121; 44 Law.
ed., 168.)

We are much impressed with the vehement appeal of counsel for the
petitioner to maintain inviolate the complete separation of church and state
and curb any attempt to infringe by indirection a constitutional inhibition.
Indeed, in the Philippines, once the scene of religious intolerance and
prescription, care should be taken that at this stage of our political
development nothing is done by the Government or its officials that may
lead to the belief that the Government is taking sides or favoring a
particular religious sect or institution. But, upon very serious reflection,

examination of Act No. 4052, and scrutiny of the attending circumstances,


we have come to the conclusion that there has been no constitutional
infraction in the case at bar, Act No. 4052 grants the Director of Posts, with
the approval of the Secretary of Public Works and Communications,
discretion to misuse postage stamps with new designs "as often as may be
deemed advantageous to the Government." Even if we were to assume that
these officials made use of a poor judgment in issuing and selling the
postage stamps in question still, the case of the petitioner would fail to take
in weight. Between the exercise of a poor judgment and the
unconstitutionality of the step taken, a gap exists which is yet to be filled to
justify the court in setting aside the official act assailed as coming within a
constitutional inhibition.

The petition for a writ of prohibition


pronouncement as to costs. So ordered.

is

hereby

denied,

without

Avancea, C.J., Villa-Real, Abad Santos, Imperial, Diaz and Concepcion, JJ.,
concur.

79. Austria vs NLRC

G.R. No. 124382

August 16, 1999

PASTOR DIONISIO V. AUSTRIA, petitioner,


vs.
HON. NATIONAL LABOR RELATIONS COMMISSION (Fourth Division), CEBU
CITY, CENTRAL PHILIPPINE UNION MISSION CORPORATION OF THE SEVENTHDAY ADVENTISTS, ELDER HECTOR V. GAYARES, PASTORS REUBEN MORALDE,
OSCAR L. ALOLOR, WILLIAM U. DONATO, JOEL WALES, ELY SACAY, GIDEON
BUHAT, ISACHAR GARSULA, ELISEO DOBLE, PORFIRIO BALACY, DAVID
RODRIGO, LORETO MAYPA, MR. RUFO GASAPO, MR. EUFRONIO IBESATE,
MRS. TESSIE BALACY, MR. ZOSIMO KARA-AN, and MR. ELEUTERIO LOBITANA,
respondents.

KAPUNAN, J.:

Subject of the instant petition for certiorari under Rule 65 of the Rules of
Court is the Resolution1 of public respondent National Labor Relations
Commission (the "NLRC"), rendered on 23 January 1996, in NLRC Case No.
V-0120-93, entitled "Pastor Dionisio V. Austria vs. Central Philippine Union
Mission Corporation of Seventh Day Adventists, et al.," which dismissed the
case for illegal dismissal filed by the petitioner against private respondents
for lack of jurisdiction.1wphi1.nt

Private Respondent Central Philippine Union Mission Corporation of the


Seventh-Day Adventists (hereinafter referred to as the "SDA") is a religious
corporation duly organized and existing under Philippine law and is
represented in this case by the other private respondents, officers of the
SDA. Petitioner, on the other hand, was a Pastor of the SDA until 31 October
1991, when his services were terminated.

The records show that petitioner Pastor Dionisio V. Austria worked with the
SDA for twenty eight (28) years from 1963 to 1991.2 He began his work with
the SDA on 15 July 1963 as a literature evangelist, selling literature of the
SDA over the island of Negros. From then on, petitioner worked his way up
the ladder and got promoted several times. In January, 1968, petitioner
became the Assistant Publishing Director in the West Visayan Mission of the
SDA. In July, 1972, he was elevated to the position of Pastor in the West
Visayan Mission covering the island of Panay, and the provinces of Romblon
and Guimaras. Petitioner held the same position up to 1988. Finally, in 1989,
petitioner was promoted as District Pastor of the Negros Mission of the SDA
and was assigned at Sagay, Balintawak and Toboso, Negros Occidental, with
twelve (12) churches under his jurisdiction. In January, 1991, petitioner was
transferred to Bacolod City. He held the position of district pastor until his
services were terminated on 31 October 1991.

On various occasions from August up to October, 1991, petitioner received


several communications3 from Mr. Eufronio Ibesate, the treasurer of the
Negros Mission asking him to admit accountability and responsibility for the
church tithes and offerings collected by his wife, Mrs. Thelma Austria, in his

district which amounted to P15,078.10, and to remit the same to the Negros
Mission.

In his written explanation dated 11 October 1991,4 petitioner reasoned out


that he should not be made accountable for the unremitted collections since
it was private respondents Pastor Gideon Buhat and Mr. Eufronio Ibesate
who authorized his wife to collect the tithes and offerings since he was very
sick to do the collecting at that time.

Thereafter, on 16 October 1991, at around 7:30 a.m., petitioner went to the


office of Pastor Buhat, the president of the Negros Mission. During said call,
petitioner tried to persuade Pastor Buhat to convene the Executive
Committee for the purpose of settling the dispute between him and the
private respondent, Pastor David Rodrigo. The dispute between Pastor
Rodrigo and petitioner arose from an incident in which petitioner assisted
his friend, Danny Diamada, to collect from Pastor Rodrigo the unpaid
balance for the repair of the latter's motor vehicle which he failed to pay to
Diamada.5 Due to the assistance of petitioner in collecting Pastor Rodrigo's
debt, the latter harbored ill-feelings against petitioner. When news reached
petitioner that Pastor Rodrigo was about to file a complaint against him with
the Negros Mission, he immediately proceeded to the office of Pastor Buhat
on the date abovementioned and asked the latter to convene the Executive
Committee. Pastor Buhat denied the request of petitioner since some
committee members were out of town and there was no quorum.
Thereafter, the two exchanged heated arguments. Petitioner then left the
office of Pastor Buhat. While on his way out, petitioner overheard Pastor
Buhat saying, "Pastor daw inisog na ina iya (Pador you are talking tough)."6
Irked by such remark, petitioner returned to the office of Pastor Buhat, and
tried to overturn the latter's table, though unsuccessfully, since it was
heavy. Thereafter, petitioner banged the attach case of Pastor Buhat on the
table, scattered the books in his office, and threw the phone.7 Fortunately,
private respondents Pastors Yonilo Leopoldo and Claudio Montao were
around and they pacified both Pastor Buhat and petitioner.

On 17 October 1991, petitioner received a letter8 inviting him and his wife
to attend the Executive Committee meeting at the Negros Mission
Conference Room on 21 October 1991, at nine in the morning. To be
discussed in the meeting were the non-remittance of church collection and

the events that transpired on 16 October 1991. A fact-finding committee


was created to investigate petitioner. For two (2) days, from October 21 and
22, the fact-finding committee conducted an investigation of petitioner.
Sensing that the result of the investigation might be one-sided, petitioner
immediately wrote Pastor Rueben Moralde, president of the SDA and
chairman of the fact-finding committee, requesting that certain members of
the fact-finding committee be excluded in the investigation and resolution of
the case.9 Out of the six (6) members requested to inhibit themselves from
the investigation and decision-making, only two (2) were actually excluded,
namely: Pastor Buhat and Pastor Rodrigo. Subsequently, on 29 October
1991, petitioner received a letter of dismissal10 citing misappropriation of
denominational funds, willful breach of trust, serious misconduct, gross and
habitual neglect of duties, and commission of an offense against the person
of employer's duly authorized representative, as grounds for the termination
of his services.

Reacting against the adverse decision of the SDA, petitioner filed a


complaint11 on 14 November 1991, before the Labor Arbiter for illegal
dismissal against the SDA and its officers and prayed for reinstatement with
backwages and benefits, moral and exemplary damages and other labor law
benefits.

On 15 February 1993, Labor Arbiter Cesar D. Sideo rendered a decision in


favor of petitioner, the dispositive portion of which reads thus:

WHEREFORE, PREMISES CONSIDERED, respondents CENTRAL PHILIPPINE


UNION MISSION CORPORATION OF THE SEVENTH-DAY ADVENTISTS
(CPUMCSDA) and its officers, respondents herein, are hereby ordered to
immediately reinstate complainant Pastor Dionisio Austria to his former
position as Pastor of Brgy. Taculing, Progreso and Banago, Bacolod City,
without loss of seniority and other rights and backwages in the amount of
ONE HUNDRED FIFTEEN THOUSAND EIGHT HUNDRED THIRTY PESOS
(P115,830.00) without deductions and qualificatioons.

Respondent CPUMCSDA is further ordered to pay complainant the following:

A.

13th month pay

B.

Allowance

4,770.83

C.

Service Incentive

Leave Pay

Moral Damages

E.

Exemplary

F.

21,060.00

3,461.85

D.

Damages

50,000.00

25,000.00

Attorney's Fee

22,012.27

SO ORDERED.12

The SDA, through its officers, appealed the decision of the Labor Arbiter to
the National Labor Labor Relations Commission, Fourth Division, Cebu City.
In a decision, dated 26 August 1994, the NLRC vacated the findings of the
Labor Arbiter. The decretal portion of the NLRC decision states:

WHEREFORE, the Decision appealed from is hereby VACATED and a new one
ENTERED dismissing this case for want of merit.

SO ORDERED.13

Petitioner filed a motion for reconsideration of the above-named decision.


On 18 July 1995, the NLRC issued a Resolution reversing its original decision.
The dispositive portion of the resolution reads:

WHEREFORE, premises considered, Our decision dated August 26, 1994 is


VACATED and the decision of the Labor Arbiter dated February 15, 1993 is
REINSTATED.

SO ORDERED.14

In view of the reversal of the original decision of the NLRC, the SDA filed a
motion for reconsideration of the above resolution. Notable in the motion for
reconsideration filed by private respondents is their invocation, for the first
time on appeal, that the Labor Arbiter has no jurisdiction over the complaint
filed by petitioner due to the constitutional provision on the separation of
church and state since the case allegedly involved an ecclesiastical affair to
which the State cannot interfere.

The NLRC, without ruling on the merits of the case, reversed itself once
again, sustained the argument posed by private respondents and,
accordingly, dismissed the complaint of petitioner. The dispositive portion of
the NLRC resolution dated 23 January 1996, subject of the present petition,
is as follows:

WHEREFORE, in view of all the foregoing, the instant motion for


reconsideration is hereby granted. Accordingly, this case is hereby
DISMISSED for lack of jurisdiction.

SO ORDERED.15

Hence, the recourse to this Court by petitioner.

After the filing of the petition, the Court ordered the Office of the Solicitor
General (the "OSG") to file its comment on behalf of public respondent
NLRC. Interestingly, the OSG filed a manifestation and motion in lieu of
comment16 setting forth its stand that it cannot sustain the resolution of
the NLRC. In its manifestation, the OSG submits that the termination of
petitioner from his employment may be questioned before the NLRC as the
same is secular in nature, not ecclesiastical. After the submission of
memoranda of all the parties, the case was submitted for decision.

The issues to be resolved in this petition are:

1)
Whether or not the Labor Arbiter/NLRC has jurisdiction to try and
decide the complaint filed by petitioner against the SDA;

2)
Whether or not the termination of the services of petitioner is an
ecclesiastical affair, and, as such, involves the separation of church and
state; and

3)

Whether or not such termination is valid.

The first two issues shall be resolved jointly, since they are related.

Private respondents contend that by virtue of the doctrine of separation of


church and state, the Labor Arbiter and the NLRC have no jurisdiction to
entertain the complaint filed by petitioner. Since the matter at bar allegedly
involves the discipline of a religious minister, it is to be considered a purely
ecclesiastical affair to which the State has no right to interfere.

The contention of private respondents deserves scant consideration. The


principle of separation of church and state finds no application in this case.

The rationale of the principle of the separation of church and state is


summed up in the familiar saying, "Strong fences make good-neighbors."17
The idea advocated by this principle is to delineate the boundaries between
the two institutions and thus avoid encroachments by one against the other
because of a misunderstanding of the limits of their respective exclusive
jurisdictions.18 The demarcation line calls on the entities to "render
therefore unto Ceasar the things that are Ceasar's and unto God the things
that are God's."19 While the state is prohibited from interfering in purely
ecclesiastical affairs, the Church is likewise barred from meddling in purely
secular matters.20

The case at bar does not concern an ecclesiastical or purely religious affair
as to bar the State from taking cognizance of the same. An ecclesiastical
affair is "one that concerns doctrine, creed, or form of worship of the church,
or the adoption and enforcement within a religious association of needful
laws and regulations for the government of the membership, and the power
of excluding from such associations those deemed unworthy of
membership.21 Based on this definition, an ecclesiastical affair involves the
relationship between the church and its members and relate to matters of
faith, religious doctrines, worship and governance of the congregation. To be
concrete, examples of this so-called ecclesiastical affairs to which the State
cannot meddle are proceedings for excommunication, ordinations of
religious ministers, administration of sacraments and other activities with
attached religious significance. The case at bar does not even remotely
concern any of the abovecited examples. While the matter at hand relates
to the church and its religious minister it does not ipso facto give the case a
religious significance. Simply stated, what is involved here is the
relationship of the church as an employer and the minister as an employee.
It is purely secular and has no relation whatsoever with the practice of faith,
worship or doctrines of the church. In this case, petitioner was not excommunicated or expelled from the membership of the SDA but was
terminated from employment. Indeed, the matter of terminating an
employee, which is purely secular in nature, is different from the
ecclesiastical act of expelling a member from the religious congregation.

As pointed out by the OSG in its memorandum, the grounds invoked for
petitioner's dismissal, namely: misappropriation of denominational funds,
willful breach of trust, serious misconduct, gross and habitual neglect of
duties and commission of an offense against the person of his employer's

duly authorized representative, are all based on Article 282 of the Labor
Code which enumerates the just causes for termination of employment.22
By this alone, it is palpable that the reason for petitioner's dismissal from
the service is not religious in nature. Coupled with this is the act of the SDA
in furnishing NLRC with a copy of petitioner's letter of termination. As aptly
stated by the OSG, this again is an eloquent admission by private
respondents that NLRC has jurisdiction over the case. Aside from these, SDA
admitted in a certification23 issued by its officer, Mr. Ibesate, that petitioner
has been its employee for twenty-eight (28) years. SDA even registered
petitioner with the Social Security System (SSS) as its employee. As a
matter of fact, the worker's records of petitioner have been submitted by
private respondents as part of their exhibits. From all of these it is clear that
when the SDA terminated the services of petitioner, it was merely exercising
its management prerogative to fire an employee which it believes to be
unfit for the job. As such, the State, through the Labor Arbiter and the NLRC,
has the right to take cognizance of the case and to determine whether the
SDA, as employer, rightfully exercised its management prerogative to
dismiss an employee. This is in consonance with the mandate of the
Constitution to afford full protection to labor.

Under the Labor Code, the provision which governs the dismissal of
employees, is comprehensive enough to include religious corporations, such
as the SDA, in its coverage. Article 278 of the Labor Code on postemployment states that "the provisions of this Title shall apply to all
establishments or undertakings, whether for profit or not." Obviously, the
cited article does not make any exception in favor of a religious corporation.
This is made more evident by the fact that the Rules Implementing the
Labor Code, particularly, Section 1, Rule 1, Book VI on the Termination of
Employment and Retirement, categorically includes religious institutions in
the coverage of the law, to wit:

Sec. 1.
Coverage. This Rule shall apply to all establishments and
undertakings, whether operated for profit or not, including educational,
medical, charitable and religious institutions and organizations, in cases of
regular employment with the exception of the Government and its political
subdivisions including government-owned or controlled corporations.24

With this clear mandate, the SDA cannot hide behind the mantle of
protection of the doctrine of separation of church and state to avoid its
responsibilities as an employer under the Labor Code.

Finally, as correctly pointed out by petitioner, private respondents are


estopped from raising the issue of lack of jurisdiction for the first time on
appeal. It is already too late in the day for private respondents to question
the jurisdiction of the NLRC and the Labor Arbiter since the SDA had fully
participated in the trials and hearings of the case from start to finish. The
Court has already ruled that the active participation of a party against
whom the action war brought, coupled with his failure to object to the
jurisdiction of the court or quasi-judicial body where the action is pending, is
tantamount to an invocation of that jurisdiction and a willingness to abide
by the resolution of the case and will bar said party from later on impugning
the court or body's jurisdiction.25 Thus, the active participation of private
respondents in the proceedings before the Labor Arbiter and the NLRC
mooted the question on jurisdiction.

The jurisdictional question now settled, we shall now proceed to determine


whether the dismissal of petitioner was valid.

At the outset, we note that as a general rule, findings of fact of


administrative bodies like the NLRC are binding upon this Court. A review of
such findings is justified, however, in instances when the findings of the
NLRC differ from those of the labor arbiter, as in this case.26 When the
findings of NLRC do not agree with those of the Labor Arbiter, this Court
must of necessity review the records to determine which findings should be
preferred as more comfortable to the evidentiary facts.27

We turn now to the crux of the matter. In termination cases, the settled rule
is that the burden of proving that the termination was for a valid or
authorized cause rests on the employer.28 Thus, private respondents must
not merely rely on the weaknesses of petitioner's evidence but must stand
on the merits of their own defense.

The issue being the legality of petitioner's dismissal, the same must be
measured against the requisites for a valid dismissal, namely: (a) the
employee must be afforded due process, i.e., he must be given an
opportunity to be heard and to defend himself, and; (b) the dismissal must
be for a valid cause as provided in Article 282 of the Labor Code.29 Without
the concurrence of this twin requirements, the termination would, in the
eyes of the law, be illegal.30

Before the services of an employee can be validly terminated, Article 277


(b) of the Labor Code and Section 2, Rule XXIII, Book V of the Rules
Implementing the Labor Code further require the employer to furnish the
employee with two (2) written notices, to wit: (a) a written notice served on
the employee specifying the ground or grounds for termination, and giving
to said employee reasonable opportunity within which to explain his side;
and, (b) a written notice of termination served on the employee indicating
that upon due consideration of all the circumstances, grounds have been
established to justify his termination.

The first notice, which may be considered as the proper charge, serves to
apprise the employee of the particular acts or omissions for which his
dismissal is sought.31 The second notice on the other hand seeks to inform
the employee of the employer's decision to dismiss him.32 This decision,
however, must come only after the employee is given a reasonable period
from receipt of the first notice within which to answer the charge and ample
opportunity to be heard and defend himself with the assistance of a
representative, if he so desires.33 This is in consonance with the express
provision of the law on the protection to labor and the broader dictates of
procedural due process.34 Non-compliance therewith is fatal because these
requirements are conditions sine qua non before dismissal may be validly
effected.35

Private respondent failed to substantially comply with the above


requirements. With regard to the first notice, the letter,36 dated 17 October
1991, which notified petitioner and his wife to attend the meeting on 21
October 1991, cannot be construed as the written charge required by law. A
perusal of the said letter reveals that it never categorically stated the
particular acts or omissions on which petitioner's impending termination
was grounded. In fact, the letter never even mentioned that petitioner

would be subject to investigation. The letter merely mentioned that


petitioner and his wife were invited to a meeting wherein what would be
discussed were the alleged unremitted church tithes and the events that
transpired on 16 October 1991. Thus, petitioner was surprised to find out
that the alleged meeting turned out to be an investigation. From the tenor
of the letter, it cannot be presumed that petitioner was actually on the
verge of dismissal. The alleged grounds for the dismissal of petitioner from
the service were only revealed to him when the actual letter of dismissal
was finally issued. For this reason, it cannot be said that petitioner was
given enough opportunity to properly prepare for his defense. While
admittedly, private respondents complied with the second requirement, the
notice of termination, this does not cure the initial defect of lack of the
proper written charge required by law.

In the letter of termination,37 dated 29 October 1991, private respondents


enumerated the following as grounds for the dismissal of petitioner, namely:
misappropriation of denominational funds, willful breach of trust, serious
misconduct, gross and habitual neglect of duties, and commission of an
offense against the person of employer's duly authorized representative.
Breach of trust and misappropriation of denominational funds refer to the
alleged failure of petitioner to remit to the treasurer of the Negros Mission
tithes, collections and offerings amounting to P15,078.10 which were
collected by his wife, Mrs. Thelma Austria, in the churches under his
jurisdiction. On the other hand, serious misconduct and commission of an
offense against the person of the employer's duly authorized representative
pertain to the 16 October 1991 incident wherein petitioner allegedly
committed an act of violence in the office of Pastor Gideon Buhat. The final
ground invoked by private respondents is gross and habitual neglect of
duties allegedly committed by petitioner.

We cannot sustain the validity of dismissal based on the ground of breach of


trust. Private respondents allege that they have lost their confidence in
petitioner for his failure, despite demands, to remit the tithes and offerings
amounting to P15,078.10, which were collected in his district. A careful
study of the voluminous records of the case reveals that there is simply no
basis for the alleged loss of confidence and breach of trust. Settled is the
rule that under Article 282 (c) of the Labor Code, the breach of trust must
be willful. A breach is willful if it is done intentionally, knowingly and
purposely, without justifiable excuse, as distinguished from an act done

carelessly, thoughtlessly, heedlessly or inadvertently.38 It must rest on


substantial grounds and not on the employer's arbitrariness, whims,
caprices or suspicion; otherwise the employee would eternally remain at the
mercy of the employer.39 It should be genuine and not simulated.40 This
ground has never been intended to afford an occasion for abuse, because of
its subjective nature. The records show that there were only six (6)
instances when petitioner personally collected and received from the church
treasurers the tithes, collections, and donations for the church.41 The
stenographic notes on the testimony of Naomi Geniebla, the Negros Mission
Church Auditor and a witness for private respondents, show that Pastor
Austria was able to remit all his collections to the treasurer of the Negros
Mission.42

Though private respondents were able to establish that petitioner collected


and received tithes and donations several times, they were notable to
establish that petitioner failed to remit the same to the Negros Mission, and
that he pocketed the amount and used it for his personal purpose. In fact,
as admitted by their own witness, Naomi Geniebla, petitioner remitted the
amounts which he collected to the Negros Mission for which corresponding
receipts were issued to him. Thus, the allegations of private respondents
that petitioner breached their trust have no leg to stand on.

In a vain attempt to support their claim of breach of trust, private


respondents try to pin on petitioner the alleged non-remittance of the tithes
collected by his wife. This argument deserves little consideration. First of all,
as proven by convincing and substantial evidence consisting of the
testimonies of the witnesses for private respondents who are church
treasurers, it was Mrs. Thelma Austria who actually collected the tithes and
donations from them, and, who failed to remit the same to the treasurer of
the Negros Mission. The testimony of these church treasurers were
corroborated and confirmed by Ms. Geniebla and Mr. Ibesate, officers of the
SDA. Hence, in the absence of conspiracy and collusion, which private
respondents failed to demonstrate, between petitioner and his wife,
petitioner cannot be made accountable for the alleged infraction committed
by his wife. After all, they still have separate and distinct personalities. For
this reason, the Labor Arbiter found it difficult to see the basis for the
alleged loss of confidence and breach of trust. The Court does not find any
cogent reason, therefore, to digress from the findings of the Labor Arbiter
which is fully supported by the evidence on record.

With respect to the grounds of serious misconduct and commission of an


offense against the person of the employer's duly authorized representative,
we find the same unmeritorious and, as such, do not warrant petitioner's
dismissal from the service.

Misconduct has been defined as improper or wrong conduct. It is the


transgression of some established and definite rule of action, a forbidden
act, a dereliction of duty, willful in character, and implies wrongful intent
and not mere error in judgment.43 For misconduct to be considered serious
it must be of such grave and aggravated character and not merely trivial or
unimportant.44 Based on this standard, we believe that the act of petitioner
in banging the attach case on the table, throwing the telephone and
scattering the books in the office of Pastor Buhat, although improper, cannot
be considered as grave enough to be considered as serious misconduct.
After all, as correctly observed by the Labor Arbiter, though petitioner
committed damage to property, he did not physically assault Pastor Buhat
or any other pastor present during the incident of 16 October 1991. In fact,
the alleged offense committed upon the person of the employer's
representatives was never really established or proven by private
respondents. Hence, there is no basis for the allegation that petitioner's act
constituted serious misconduct or that the same was an offense against the
person of the employer's duly authorized representative. As such, the cited
actuation of petitioner does not justify the ultimate penalty of dismissal
from employment. While the Constitution does condone wrongdoing by the
employee, it nevertheless urges a moderation of the sanctions that may be
applied to him in light of the many disadvantages that weigh heavily on him
like an albatross on his neck.45 Where a penalty less punitive would suffice,
whatever missteps may have been committed by the worker ought not be
visited with a consequence so severe such as dismissal from
employment.46 For the foregoing reasons, we believe that the minor
infraction committed by petitioner does not merit the ultimate penalty of
dismissal.

The final ground alleged by private respondents in terminating petitioner,


gross and habitual neglect of duties, does not require an exhaustive
discussion. Suffice it to say that all private respondents had were allegations
but not proof. Aside from merely citing the said ground, private respondents

failed to prove culpability on the part of petitioner. In fact, the evidence on


record shows otherwise. Petitioner's rise from the ranks disclose that he was
actually a hard-worker. Private respondents' evidence,47 which consisted of
petitioner's Worker's Reports, revealed how petitioner travelled to different
churches to attend to the faithful under his care. Indeed, he labored hard for
the SDA, but, in return, he was rewarded with a dismissal from the service
for a non-existent cause.

In view of the foregoing, we sustain the finding of the Labor Arbiter that
petitioner was terminated from service without just or lawful cause. Having
been illegally dismissed, petitioner is entitled to reinstatement to his former
position without loss of seniority right48 and the payment of full backwages
without any deduction corresponding to the period from his illegal dismissal
up to actual reinstatement.46

WHEREFORE, the petition for certiorari is GRANTED. The challenged


Resolution of public respondent National Labor Relations Commission,
rendered on 23 January 1996, is NULLIFIED and SET ASIDE. The Decision of
the Labor Arbiter, dated 15 February 1993, is REINSTATED and hereby
AFFIRMED.1wphi1.nt

SO ORDERED.

Davide, Jr., C.J., Puno, Pardo and Ynares-Santiago, JJ., concur.

80. People vs Caranca

G.R. No. 137268

March 26, 2001

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,


vs.

EUTIQUIA CARMEN @ Mother Perpetuala, CELEDONIA FABIE @ Isabel Fabie,


DELIA SIBONGA @ Deding Sibonga, ALEXANDER SIBONGA @ Nonoy Sibonga,
and REYNARIO NUEZ @ Rey Nuez, accused-appellants.

MENDOZA, J.:

This is an appeal from the decision1 of the Regional Trial Court, Branch 14,
Cebu City, finding accused-appellants Eutiquia Carmen @ Mother
Perpetuala, Celedonia Fabie @ Isabel Fabie, Delia Sibonga @ Deding
Sibonga, Alexander Sibonga @ Nonoy Sibonga, and Reynario Nuez @ Rey
Nuez guilty of murder and sentencing them to suffer the penalty of
reclusion perpetua and to pay the heirs of the victim the amount of
P50,000.00 as indemnity as well as the costs.

The information2 against accused-appellants alleged:

That on or about the 27th day of January, 1997 at about 2:00 o'clock p.m.,
in the City of Cebu, Philippines, and within the jurisdiction of this Honorable
Court, the said accused, conniving and confederating together and mutually
helping one another, with deliberate intent, with intent to kill, with treachery
and evident premeditation, did then and there inflict fatal physical injuries
on one Randy Luntayao which injuries caused the death of the said Randy
Luntayao.

Accused-appellants pleaded not guilty to the charge, whereupon they were


tried.

The prosecution presented evidence showing the following: At around 2


o'clock in the afternoon of January 27, 1997, Honey Fe Abella, 10, and her
friend Frances Claire Rivera, 7, were playing takyan in front of the house of
one Bebing Lastimoso in Quiot, Pardo, Cebu City, when suddenly they heard
a child shout, "Tabang ma!" ("Help mother!"). The cry came from the
direction of the house of accused-appellant Carmen, who is also known in
their neighborhood as Mother Perpetuala. The two children ran towards

Mother Perpetuala's house.3 What Honey Fe saw on which she testified in


court, is summarized in the decision of the trial court, to wit:

While there[,] she saw a boy, whose name . . . she [later] came to know as
one Randy Luntayao, . . . being immersed head first in a drum of water.
Accused Alexander Sibonga was holding the waist of the body while accused
Reynario Nuez held the hands of the boy at the back. Accused Eutiquia
Carmen, Delia Sibonga, and Celedonia Fabie were pushing down the boy's
head into the water. She heard the boy shouting "Ma, help" for two times.
Later, she saw accused Reynario or Rey Nuez tie the boy on the bench with
a green rope as big as her little finger. . . . After that Eutiquia Carmen
poured [water from] a plastic container (galon) . . . into the mouth of the
boy. Each time the boy struggled to raise his head, accused Alexander
Sibonga banged the boy's head against the bench [to] which the boy was
tied down. She even heard the banging sound everytime the boy's head hit
the bench. For about five times she heard it. According to this witness after
forcing the boy to drink water, Eutiquia Carmen and accused Celedonia
Fabie alias Isabel Fabie took turns in pounding the boy's chest with their
clenched fists. All the time Rey Nuez held down the boy's feet to the
bench. She also witnessed . . . Celedonia Fabie dropped her weight, buttocks
first, on the body of the boy. Later on, Eutiquia Carmen ordered Delia or
Deding Sibonga to get a knife from the kitchen. Eutiquia Carmen then slowly
plunged the stainless knife on the left side of the boy's body and with the
use of a plastic gallon container, the top portion of which was cut out,
Eutiquia Carmen [caught] the blood dripping from the left side of the boy's
body. Honey Fe heard the moaning coming from the tortured boy. Much later
she saw Nonoy or Alexander Sibonga, Reynario Nuez, Delia Sibonga,
Celedonia Fabie, and Eutiquia Carmen carry the boy into the house.4

Eddie Luntayao, father of the victim, testified that he has five children, the
eldest of whom, Randy, was 13 years old at the time of the incident. On
November 20, 1996, Randy had a "nervous breakdown" which Eddie
thought was due to Randy having to skip meals whenever he took the boy
with him to the farm. According to Eddie, his son started talking to himself
and laughing. On January 26, 1997, upon the suggestion of accusedappellant Reynario Nuez, Eddie and his wife Perlita and their three children
(Randy, Jesrel, 7, and Lesyl, 1) went with accused-appellant Nuez to Cebu.
They arrived in Cebu at around 1 o'clock in the afternoon of the same day
and spent the night in Nuez's house in Tangke, Talisay.

The following day, they went to the house of accused-appellant Carmen in


Quiot, Pardo,5 where all of the accused-appellants were present. Eddie
talked to accused-appellant Carmen regarding his son's condition. He was
told that the boy was possessed by a "bad spirit," which accused-appellant
Carmen said she could exorcise. She warned, however, that as the spirit
might transfer to Eddie, it was best to conduct the healing prayer without
him. Accused-appellants then led Randy out of the house, while Eddie and
his wife and two daughters were locked inside a room in the house.6

After a while, Eddie heard his son twice shout "Ma, tabang!" ("Mother,
help!"). Eddie tried to go out of the room to find out what was happening to
his son, but the door was locked. After about an hour, the Luntayaos were
transferred to the prayer room which was located near the main door of the
house.7

A few hours later, at around 5 o'clock in the afternoon, accused-appellants


carried Randy into the prayer room and placed him on the altar. Eddie was
shocked by what he saw. Randy's face was bluish and contused, while his
tongue was sticking out of his mouth. It was clear to Eddie that his son was
already dead. He wanted to see his son's body, but he was stopped from
doing so by accused-appellant Eutiquia Carmen who told him not to go near
his son because the latter would be resurrected at 7 o'clock that evening.8

After 7 o'clock that evening, accused-appellant Carmen asked a member of


her group to call the funeral parlor and bring a coffin as the child was
already dead. It was arranged that the body would be transferred to the
house of accused-appellant Nuez. Thus, that night, the Luntayao family,
accompanied by accused-appellant Nuez, took Randy's body to Nunez's
house in Tangke, Talisay. The following day, January 28, 1997, accusedappellant Nuez told Eddie to go with him to the Talisay Municipal Health
Office to report Randy's death and told him to keep quiet or they might not
be able to get the necessary papers for his son's burial. Nuez took care of
securing the death certificate which Eddie signed.9

At around 3 o'clock in the afternoon of January 28, 1997, accused-appellant


Carmen went to Tangke, Talisay to ensure that the body was buried. Eddie
and his wife told her that they preferred to bring their son's body with them
to Sikatuna, Isabela, Negros Occidental but they were told by accusedappellant Carmen that this was not possible as she and the other accusedappellants might be arrested. That same afternoon, Randy Luntayao was
buried in Tangke, Talisay.10

After Eddie and his family had returned home to Negros Occidental, Eddie
sought assistance from the Bombo Radyo station in Bacolod City which
referred him to the regional office of the National Bureau of Investigation
(NBI) in the city. On February 3, 1997, Eddie filed a complaint for murder
against accused-appellant Nuez and the other members of his group.11 He
also asked for the exhumation and autopsy of the remains of his son.12 As
the incident took place in Cebu, his complaint was referred to the NBI office
in Cebu City.

Modesto Cajita, head of NBI, Region VII (Cebu), took over the investigation
of the case. He testified that he met with Eddie Luntayao and supervised
the exhumation and autopsy of the body of Randy Luntayao.13 Cajita
testified that he also met with accused-appellant Carmen and after
admitting that she and the other accused-appellants conducted a "pray-over
healing" session on the victim on January 27, 1997, accused-appellant
Carmen refused to give any further statement. Cajita noticed a wooden
bench in the kitchen of Carmen's house, which, with Carmen's permission,
he took with him to the NBI office for examination. Cajita admitted he did
not know the results of the examination.14

Dr. Ronaldo B. Mendez, the NBI medico-legal officer who conducted the
autopsy on Randy Luntayao, testified that he, the victim's father, and some
NBI agents, exhumed the victim's body on February 20, 1997 at Tangke
Catholic Cemetery in the Tangke, Talisay, Cebu. He conducted the autopsy
on the same day and later submitted the following report (Exhs. E and F):15

FINDINGS

Body in advanced stage of decomposition wearing a white shirt and shorts


wrapped in printed blanket (white and orange) placed in white wooden
coffin and buried underground about 4 feet deep.

Contusion, 3.0 x 4.0 cms. chest, anterior, left side.

Fracture, 3rd rib, left, mid-clavicular line.

Fracture, linear, occipital bone right side extending to the bases of middle
cranial fossae right to left down to the occipital bone, left side.

Fracture, diastatic, lamboidal suture, bilateral.

Internal organs in advanced stage of decomposition.

Cranial vault almost empty.

CAUSE OF DEATH: [The victim] could have died due to the internal effects of
a traumatic head injury and/or traumatic chest injury.

Dr. Mendez testified that the contusion on the victim's chest was caused by
contact with a hard blunt instrument. He added that the fracture on the rib
was complete while that found on the base of the skull followed a serrated
or uneven pattern. He said that the latter injury could have been caused by
the forcible contact of that part of the body with a blunt object such as a
wooden bench.16

On cross-examination, Dr. Mendez admitted that he did not find any stab
wound on the victim's body but explained that this could be due to the fact
that at the time the body was exhumed and examined, it was already in an

advanced state of decomposition rendering such wound, if present,


unrecognizable.17

Accused-appellants did not testify. Instead, the defense presented: (a) Ritsel
Blase, an alleged eyewitness to the incident; (b) Maria Lilina Jimenez,
Visitacion Seniega, and Josefina Abing, alleged former "patients" of accusedappellant Carmen; (c) Dr. Milagros Carloto, the municipal health officer of
Talisay, Cebu and; (d) Atty. Salvador Solima of the Cebu City Prosecutor's
Office.

Ritsel Blase, 21, testified that since 1987 she had been with the group of
accused-appellant Carmen, whom she calls Mother Perpetuala. She
recounted that at around 2 o'clock in the afternoon of January 27, 1997,
while she was in the house of accused-appellant Carmen, she saw Eddie
Luntayao talking with the latter regarding the treatment of his son. The boy
was later led to the kitchen and given a bath prior to "treatment." After
water was poured on the boy, he became unruly prompting accusedappellant Carmen to decide not to continue with the "treatment," but the
boy's parents allegedly prevailed upon her to continue. As the boy
continued to resist, accused-appellant Carmen told accused-appellants Delia
Sibonga and Celedonia Fabie to help her (Carmen) lay the boy on a bench.
As the child resisted all the more, Eddie Luntayao allegedly told the group to
tie the boy to the bench. Accused-appellant Delia Sibonga got hold of a
nylon rope which was used to tie the child to the bench. Then Carmen, Delia
Sibonga, and Fabie prayed over the child, but as the latter started hitting his
head against the bench, Carmen asked Nuez to place his hands under the
boy's head to cushion the impact of the blow everytime the child brought
down his head. To stop the boy from struggling, accused-appellant Fabie
held the boy's legs, while accused-appellant Nuez held his shoulders. After
praying over the boy, the latter was released and carried inside the house.
Accused-appellant Alexander Sibonga, who had arrived, helped carry the
boy inside. After this, Blase said she no longer knew what happened inside
the house as she stayed outside to finish the laundry.18

Blase testified that the parents of Randy Luntayao witnessed the "prayover" of their son from beginning to end. She denied that accusedappellants Fabie and Delia Sibonga struck the victim on his chest with their
fists. According to her, neither did accused-appellant Carmen stab the boy.

She claimed that Randy was still alive when he was taken inside the
house.19

The defense presented Maria Lilia Jimenez, 20, Visitacion Seniega, 39, and
Josefina Abing, 39, who testified that accused-appellant Carmen had cured
them of their illnesses by merely praying over them and without applying
any form of physical violence on them.20

Milagros Carloto, Municipal Health Officer of Talisay, Cebu, was also


presented by the defense to testify on the death certificate she issued in
which she indicated that Randy Luntayao died of pneumonia. According to
her, Eddie Luntayao came to her office on January 28, 1997 to ask for the
issuance of a death certificate for his son Randy Luntayao who had allegedly
suffered from cough and fever.21

On cross-examination, Dr. Carloto admitted that she never saw the body of
the victim as she merely relied on what she had been told by Eddie
Luntayao. She said that it was a midwife, Mrs. Revina Laviosa, who
examined the victim's body.22

The last witness for the defense, Assistant City Prosecutor Salvador Solima,
was presented to identify the resolution he had prepared (Exh. 8)23 on the
re-investigation of the case in which he recommended the dismissal of the
charge against accused-appellants. His testimony was dispensed with,
however, as the prosecution stipulated on the matters Solima was going to
testify with the qualification that Solima's recommendation was disapproved
by City Prosecutor Primo Miro.24

The prosecution recalled Eddie Luntayao to the stand to rebut the


testimonies of Ritsel Blase and Dr. Milagros Carloto. Eddie denied having
witnessed what accused-appellants did to his son. He reiterated his earlier
claim that after accused-appellants had taken Randy, he and his wife and
two daughters were locked inside a room. He disputed Blase's statement
that his son was still alive when he was brought into the prayer room. He

said he saw that his son's head slumped while being carried by accusedappellants.25

As for the testimony of Dr. Carloto, Eddie admitted having talked with her
when he and accused-appellant Nuez went to her office on January 28,
1997. However, he denied having told her that his son was suffering from
fever and cough as he told her that Randy had a nervous breakdown. He
took exception to Dr. Carloto's statement that he was alone when he went
to her office because it was Nuez who insisted that he (Eddie) accompany
him in order to secure the death certificate.26

On November 18, 1998, the trial court rendered a decision, the dispositive
portion of which states:

WHEREFORE, in view of the foregoing facts and circumstances, [the]


accused are all found guilty beyond reasonable doubt of the crime of Murder
and are hereby [sentenced] to suffer the penalty of RECLUSION PERPETUA,
with the accessory penalties of the law; to indemnify jointly and severally
the heirs of the deceased Randy Luntayao in the sum of P50,000.00; and to
pay the costs. The accused, are, however, credited in full during the whole
period of their detention provided they will signify in writing that they will
abide by all the rules and regulations of the penitentiary.27

In finding accused-appellants guilty of murder, the trial court stated:

Killing a person with treachery is murder even if there is no intent to kill.


When death occurs, it is presumed to be the natural consequence of
physical injuries inflicted. Since the defendant did commit the crime with
treachery, he is guilty of murder, because of the voluntary presence of the
qualifying circumstance of treachery (P v. Cagoco, 58 Phil. 530). All the
accused in the case at bar had contributed different acts in mercilessly
inflicting injuries to the victim. For having immersed the head of the victim
into the barrel of water, all the herein accused should be held responsible
for all the consequences even if the result be different from that which was
intended (Art. 4, par. 1, RPC). It is pointed out that in P. v. Cagoco, 58 Phil.

524, even if there was no intent to kill[,] in inflicting physical injuries with
treachery, the accused in that case was convicted of murder. In murder
qualified by treachery, it is required only that there is treachery in the
attack, and this is true even if the offender has no intent to kill the person
assaulted. Under the guise of a ritual or treatment, the accused should not
have intentionally immersed upside down the head of Randy Luntayao into
a barrel of water; banged his head against the bench; pounded his chest
with fists, or plunged a kitchen knife to his side so that blood would come
out for these acts would surely cause death to the victim. . . .

One who commits an intentional felony is responsible for all the


consequences which may naturally and logically result therefrom, whether
foreseen or intended or not. Ordinarily, when a person commits a felony
with malice, he intends the consequences of his felonious act. In view of
paragraph 1 of Art. 4, a person committing a felony is criminally liable
although the consequences of his felonious acts are not intended by
him. . . .

....

Intent is presumed from the commission of an unlawful act. The


presumption of criminal intent may arise from the proof of the criminal act
and it is for the accused to rebut this presumption. In the case at bar, there
is enough evidence that the accused confederated with one another in
inflicting physical harm to the victim (an illegal act). These acts were
intentional, and the wrong done resulted in the death of their victim. Hence,
they are liable for all the direct and natural consequences of their unlawful
act, even if the ultimate result had not been intended.28

Hence, this appeal. Accused-appellants allege that the trial court erred in
convicting them of murder.29

First. It would appear that accused-appellants are members of a cult and


that the bizarre ritual performed over the victim was consented to by the
victim's parents. With the permission of the victim's parents, accused-

appellant Carmen, together with the other accused-appellants, proceeded to


subject the boy to a "treatment" calculated to drive the "bad spirit" from the
boy's body. Unfortunately, the strange procedure resulted in the death of
the boy. Thus, accused-appellants had no criminal intent to kill the boy.
Their liability arises from their reckless imprudence because they ought that
to know their actions would not bring about the cure. They are, therefore,
guilty of reckless imprudence resulting in homicide and not of murder.

Art. 365 of the Revised Penal Code, as amended, states that reckless
imprudence consists in voluntarily, but without malice, doing or failing to do
an act from which material damage results by reason of inexcusable lack of
precaution on the part of the person performing such act. Compared to
intentional felonies, such as homicide or murder, what takes the place of the
element of malice or intention to commit a wrong or evil is the failure of the
offender to take precautions due to lack of skill taking into account his
employment, or occupation, degree of intelligence, physical condition, and
other circumstances regarding persons, time, and place.

The elements of reckless imprudence are apparent in the acts done by


accused-appellants which, because of their lack of medical skill in treating
the victim of his alleged ailment, resulted in the latter's death. As already
stated, accused-appellants, none of whom is a medical practitioner, belong
to a religious group, known as the Missionaries of Our Lady of Fatima, which
is engaged in faith healing.

In United States v. Divino,30 the accused, who was not a licensed physician,
in an attempt to cure the victim of ulcers in her feet, wrapped a piece of
clothing which had been soaked in petroleum around the victim's feet and
then lighted the clothing, thereby causing injuries to the victim. The Court
held the accused liable for reckless imprudence resulting in physical
injuries. It was noted that the accused had no intention to cause an evil but
rather to remedy the victim's ailment.

In another case, People v. Vda. de Golez,31 the Court ruled that the proper
charge to file against a non-medical practitioner, who had treated the victim
despite the fact that she did not possess the necessary technical knowledge

or skill to do so and caused the latter's death, was homicide through


reckless imprudence.

The trial court's reliance on the rule that criminal intent is presumed from
the commission of an unlawful act is untenable because such presumption
only holds in the absence of proof to the contrary.32 The facts of the case
indubitably show the absence of intent to kill on the part of the accusedappellants. Indeed, the trial court's findings can be sustained only if the
circumstances of the case are ignored and the Court limits itself to the time
when accused-appellants undertook their unauthorized "treatment" of the
victim. Obviously, such an evaluation of the case cannot be allowed.

Consequently, treachery cannot be appreciated for in the absence of intent


to kill, there is no treachery or the deliberate employment of means,
methods, and manner of execution to ensure the safety of the accused from
the defensive or retaliatory attacks coming from the victim.33 Viewed in this
light, the acts which the trial court saw as manifestations of treachery in
fact relate to efforts by accused-appellants to restrain Randy Luntayao so
that they can effect the cure on him.

On the other hand, there is no merit in accused-appellants' contention that


the testimony of prosecution eyewitness Honey Fe Abella is not credible.
The Court is more than convinced of Honey Fe's credibility. Her testimony is
clear, straightforward, and is far from having been coached or contrived.
She was only a few meters away from the kitchen where accused-appellants
conducted their "pray-over" healing session not to mention that she had a
good vantage point as the kitchen had no roof nor walls but only a pantry.
Her testimony was corroborated by the autopsy findings of Dr. Mendez who,
consistent with Honey Fe's testimony, noted fractures on the third left rib
and on the base of the victim's skull. With regard to Dr. Mendez's failure to
find any stab wound in the victim's body, he himself had explained that
such could be due to the fact that at the time the autopsy was conducted,
the cadaver was already in an advanced state of decomposition. Randy
Luntayao's cadaver was exhumed 24 days after it had been buried.
Considering the length of time which had elapsed and the fact that the
cadaver had not been embalmed, it was very likely that the soft tissues had
so decomposed that, as Dr. Mendez said, it was no longer possible to
determine whether there was a stab wound. As for the other points raised

by accused-appellants to detract the credibility of Honey Fe's testimony, the


same appear to be only minor and trivial at best.

Accused-appellants contend that the failure of the prosecution to present


the testimony of Frances Claire Rivera as well as the knife used in stabbing
Randy Luntayao puts in doubt the prosecution's evidence. We do not think
so. The presentation of the knife in evidence is not indispensable.34

Finally, accused-appellants make much of the fact that although the case
was tried under Judge Renato C. Dacudao, the decision was rendered by
Judge Galicano Arriesgado who took over the case after the prosecution and
the defense had rested their cases.35 However, the fact that the judge who
wrote the decision did not hear the testimonies of the witnesses does not
make him less competent to render a decision, since his ruling is based on
the records of the case and the transcript of stenographic notes of the
testimonies of the witnesses.36

Second. The question now is whether accused-appellants can be held liable


for reckless imprudence resulting in homicide, considering that the
information charges them with murder. We hold that they can.

Rule 120 of the Revised Rules of Criminal Procedure provides in pertinent


parts:

SEC. 4. Judgment in case of variance between allegation and proof. When


there is variance between the offense charged in the complaint or
information and that proved, and the offense as charged is included in or
necessarily includes the offense proved, the accused shall be convicted of
the offense proved which is included in the offense charged, or of the
offense charged which is included in the offense proved.

SEC. 5. When an offense includes or is included in another. An offense


charged necessarily includes the offense proved when some of the essential
elements or ingredients of the former, as alleged in the complaint or

information, constitute the latter. And an offense charged is necessarily


included in the offense proved, when the essential ingredients of the former
constitute or form part of those constituting the latter.

In Samson v. Court of Appeals,37 the accused were charged with, and


convicted of, estafa through falsification of public document. The Court of
Appeals modified the judgment and held one of the accused liable for estafa
through falsification by negligence. On appeal, it was contended that the
appeals court erred in holding the accused liable for estafa through
negligence because the information charged him with having wilfully
committed estafa. In overruling this contention, the Court held:

While a criminal negligent act is not a simple modality of a willful crime, as


we held in Quizon v. Justice of the Peace of Bacolor, G.R. No. L-6641, July 28,
1955, but a distinct crime in itself, designated as a quasi offense in our
Penal Code, it may however be said that a conviction for the former can be
had under an information exclusively charging the commission of a willful
offense, upon the theory that the greater includes the lesser offense. This is
the situation that obtains in the present case. Appellant was charged with
willful falsification but from the evidence submitted by the parties, the Court
of Appeals found that in effecting the falsification which made possible the
cashing of the checks in question, appellant did not act with criminal intent
but merely failed to take proper and adequate means to assure himself of
the identity of the real claimants as an ordinary prudent man would do. In
other words, the information alleges acts which charge willful falsification
but which turned out to be not willful but negligent. This is a case covered
by the rule when there is a variance between the allegation and proof. . . .

The fact that the information does not allege that the falsification was
committed with imprudence is of no moment for here this deficiency
appears supplied by the evidence submitted by appellant himself and the
result has proven beneficial to him. Certainly, having alleged that the
falsification has been willful, it would be incongruous to allege at the same
time that it was committed with imprudence for a charge of criminal intent
is incompatible with the concept of negligence.

In People v. Fernando,38 the accused was charged with, and convicted of,
murder by the trial court. On appeal, this Court modified the judgment and
held the accused liable for reckless imprudence resulting in homicide after
finding that he did not act with criminal intent.

Third. Coming now to the imposable penalty, under Art. 365, reckless
imprudence resulting in homicide is punishable by arresto mayor in its
maximum period to prision correccional in its medium period. In this case,
taking into account the pertinent provisions of Indeterminate Sentence Law,
the accused-appellants should suffer the penalty of four (4) months of
arresto mayor, as minimum, to four (4) years and two (2) months of prision
correccional, as maximum.

As to their civil liability, accused-appellants should pay the heirs of Randy


Luntayao an indemnity in the amount of P50,000.00 and moral damages
also in the amount of P50,000.00.39 In addition, they should pay exemplary
damages in the amount of P30,000.00 in view of accused-appellants' gross
negligence in attempting to "cure" the victim without a license to practice
medicine and to give an example or correction for the public good.40

WHEREFORE, the decision of the Regional Trial Court, Branch 14, Cebu City,
is AFFIRMED with the MODIFICATION that accused-appellants are hereby
declared guilty of reckless imprudence resulting in homicide and are each
sentenced to suffer an indeterminate prison term of four (4) months of
arresto mayor, as minimum, to four (4) years and two (2) months of prision
correccional, as maximum. In addition, accused-appellants are ORDERED
jointly and severally to pay the heirs of Randy Luntayao indemnity in the
amount of P50,000.00, moral damages in the amount of P50,000.00, and
exemplary damages in the amount of P30,000.00.

SO ORDERED.

Bellosillo, Buena, and De Leon, Jr., JJ., concur


Quisumbing, J., on leave.

81. Calalang vs Williams

FIRST DIVISION

[G.R. No. 47800. December 2, 1940.]

MAXIMO CALALANG, Petitioner, v. A. D. WILLIAMS, ET AL., Respondents.

Maximo Calalang in his own behalf.

Solicitor General Ozaeta and Assistant Solicitor General Amparo for


respondents Williams, Fragante and Bayan

City Fiscal Mabanag for the other respondents.

SYLLABUS

1. CONSTITUTIONAL LAW; CONSTITUTIONALITY OF COMMONWEALTH ACT


No. 648; DELEGATION OF LEGISLATIVE POWER; AUTHORITY OF DIRECTOR OF
PUBLIC WORKS AND SECRETARY OF PUBLIC WORKS AND COMMUNICATIONS
TO PROMULGATE RULES AND REGULATIONS. The provisions of section 1
of Commonwealth Act No. 648 do not confer legislative power upon the
Director of Public Works and the Secretary of Public Works and
Communications. The authority therein conferred upon them and under
which they promulgated the rules and regulations now complained of is not
to determine what public policy demands but merely to carry out the
legislative policy laid down by the National Assembly in said Act, to wit, "to
promote safe transit upon, and avoid obstructions on, roads and streets
designated as national roads by acts of the National Assembly or by
executive orders of the President of the Philippines" and to close them

temporarily to any or all classes of traffic "whenever the condition of the


road or the traffic thereon makes such action necessary or advisable in the
public convenience and interest." The delegated power, if at all, therefore, is
not the determination of what the law shall be, but merely the
ascertainment of the facts and circumstances upon which the application of
said law is to be predicated. To promulgate rules and regulations on the use
of national roads and to determine when and how long a national road
should be closed to traffic, in view of the condition of the road or the traffic
thereon and the requirements of public convenience and interest, is an
administrative function which cannot be directly discharged by the National
Assembly. It must depend on the discretion of some other government
official to whom is confided the duty of determining whether the proper
occasion exists for executing the law. But it cannot be said that the exercise
of such discretion is the making of the law.

2. ID.; ID.; POLICE POWER; PERSONAL LIBERTY; GOVERNMENTAL AUTHORITY.


Commonwealth Act No. 548 was passed by the National Assembly in the
exercise of the paramount police power of the state. Said Act, by virtue of
which the rules and regulations complained of were promulgated, aims to
promote safe transit upon and avoid obstructions on national roads, in the
interest and convenience of the public. In enacting said law, therefore, the
National Assembly was prompted by considerations of public convenience
and welfare. It was inspired by a desire to relieve congestion of traffic, which
is, to say the least, a menace to public safety. Public welfare, then, lies at
the bottom of the enactment of said law, and the state in order to promote
the general welfare may interfere with personal liberty, with property, and
with business and occupations. Persons and property may be subjected to
all kinds of restraints and burdens, in order to secure the general comfort,
health, and prosperity of the state (U.S. v. Gomer Jesus, 31 Phil., 218). To
this fundamental aim of our Government the rights of the individual are
subordinated. Liberty is a blessing without which life is a misery, but liberty
should not be made to prevail over authority because then society will fall
into anarchy. Neither should authority be made to prevail over liberty
because then the individual will fall into slavery. The citizen should achieve
the required balance of liberty and authority in his mind through education
and, personal discipline, so that there may be established the resultant
equilibrium, which means peace and order and happiness for all. The
moment greater authority is conferred upon the government, logically so
much is withdrawn from the residuum of liberty which resides in the people.

The paradox lies in the fact that the apparent curtailment of liberty is
precisely the very means of insuring its preservation.

3. ID.; ID.; SOCIAL JUSTICE. Social justice is "neither communism, nor


despotism, nor atomism, nor anarchy," but the humanization of laws and
the equalization of social and economic forces by the State so that justice in
its rational and objectively secular conception may at least be
approximated. Social justice means the promotion of the welfare of all the
people, the adoption by the Government of measures calculated to insure
economic stability of all the competent elements of society, through the
maintenance of a proper economic and social equilibrium in the
interrelations of the members of the community, constitutionally, through
the adoption of measures legally justifiable, or extra-constitutionally,
through the exercise of powers underlying the existence of all governments
on the time-honored principle of salus populi est suprema lex. Social justice,
therefore, must be founded on the recognition of the necessity of
interdependence among divers and diverse units of a society and of the
protection that should be equally and evenly extended to all groups as a
combined force in our social and economic life, consistent with the
fundamental and paramount objective of the state of promoting the health,
comfort, and quiet of all persons, and of bringing about "the greatest good
to the greatest number."

DECISION

LAUREL, J.:

Maximo Calalang, in his capacity as a private citizen and as a taxpayer of


Manila, brought before this court this petition for a writ of prohibition against
the respondents, A. D. Williams, as Chairman of the National Traffic
Commission; Vicente Fragante, as Director of Public Works; Sergio Bayan, as
Acting Secretary of Public Works and Communications; Eulogio Rodriguez, as

Mayor of the City of Manila; and Juan Dominguez, as Acting Chief of Police of
Manila.

It is alleged in the petition that the National Traffic Commission, in its


resolution of July 17, 1940, resolved to recommend to the Director of Public
Works and to the Secretary of Public Works and Communications that
animal-drawn vehicles be prohibited from passing along Rosario Street
extending from Plaza Calderon de la Barca to Dasmarias Street, from 7:30
a.m. to 12:30 p.m. and from 1:30 p.m. to 5:30 p.m.; and along Rizal Avenue
extending from the railroad crossing at Antipolo Street to Echague Street,
from 7 a.m. to 11 p.m., from a period of one year from the date of the
opening of the Colgante Bridge to traffic; that the Chairman of the National
Traffic Commission, on July 18, 1940 recommended to the Director of Public
Works the adoption of the measure proposed in the resolution
aforementioned, in pursuance of the provisions of Commonwealth Act No.
548 which authorizes said Director of Public Works, with the approval of the
Secretary of Public Works and Communications, to promulgate rules and
regulations to regulate and control the use of and traffic on national roads;
that on August 2, 1940, the Director of Public Works, in his first indorsement
to the Secretary of Public Works and Communications, recommended to the
latter the approval of the recommendation made by the Chairman of the
National Traffic Commission as aforesaid, with the modification that the
closing of Rizal Avenue to traffic to animal-drawn vehicles be limited to the
portion thereof extending from the railroad crossing at Antipolo Street to
Azcarraga Street; that on August 10, 1940, the Secretary of Public Works
and Communications, in his second indorsement addressed to the Director
of Public Works, approved the recommendation of the latter that Rosario
Street and Rizal Avenue be closed to traffic of animal-drawn vehicles,
between the points and during the hours as above indicated, for a period of
one year from the date of the opening of the Colgante Bridge to traffic; that
the Mayor of Manila and the Acting Chief of Police of Manila have enforced
and caused to be enforced the rules and regulations thus adopted; that as a
consequence of such enforcement, all animal-drawn vehicles are not
allowed to pass and pick up passengers in the places above-mentioned to
the detriment not only of their owners but of the riding public as well.

It is contended by the petitioner that Commonwealth Act No. 548 by which


the Director of Public Works, with the approval of the Secretary of Public
Works and Communications, is authorized to promulgate rules and

regulations for the regulation and control of the use of and traffic on
national roads and streets is unconstitutional because it constitutes an
undue delegation of legislative power. This contention is untenable. As was
observed by this court in Rubi v. Provincial Board of Mindoro (39 Phil, 660,
700), "The rule has nowhere been better stated than in the early Ohio case
decided by Judge Ranney, and since followed in a multitude of cases,
namely: The true distinction therefore is between the delegation of power
to make the law, which necessarily involves a discretion as to what it shall
be, and conferring an authority or discretion as to its execution, to be
exercised under and in pursuance of the law. The first cannot be done; to
the latter no valid objection can be made. (Cincinnati, W. & Z. R. Co. v.
Commrs. Clinton County, 1 Ohio St., 88.) Discretion, as held by Chief Justice
Marshall in Wayman v. Southard (10 Wheat., 1) may be committed by the
Legislature to an executive department or official. The Legislature may
make decisions of executive departments or subordinate officials thereof, to
whom it has committed the execution of certain acts, final on questions of
fact. (U.S. v. Kinkead, 248 Fed., 141.) The growing tendency in the decisions
is to give prominence to the necessity of the case."cralaw virtua1aw library

Section
1
of
Commonwealth
follows:jgc:chanrobles.com.ph

Act

No.

548

reads

as

"SECTION 1. To promote safe transit upon, and avoid obstructions on, roads
and streets designated as national roads by acts of the National Assembly
or by executive orders of the President of the Philippines, the Director of
Public Works, with the approval of the Secretary of Public Works and
Communications, shall promulgate the necessary rules and regulations to
regulate and control the use of and traffic on such roads and streets. Such
rules and regulations, with the approval of the President, may contain
provisions controlling or regulating the construction of buildings or other
structures within a reasonable distance from along the national roads. Such
roads may be temporarily closed to any or all classes of traffic by the
Director of Public Works and his duly authorized representatives whenever
the condition of the road or the traffic thereon makes such action necessary
or advisable in the public convenience and interest, or for a specified period,
with
the
approval
of
the
Secretary
of
Public
Works
and
Communications."cralaw virtua1aw library

The above provisions of law do not confer legislative power upon the
Director of Public Works and the Secretary of Public Works and
Communications. The authority therein conferred upon them and under
which they promulgated the rules and regulations now complained of is not
to determine what public policy demands but merely to carry out the
legislative policy laid down by the National Assembly in said Act, to wit, "to
promote safe transit upon and avoid obstructions on, roads and streets
designated as national roads by acts of the National Assembly or by
executive orders of the President of the Philippines" and to close them
temporarily to any or all classes of traffic "whenever the condition of the
road or the traffic makes such action necessary or advisable in the public
convenience and interest." The delegated power, if at all, therefore, is not
the determination of what the law shall be, but merely the ascertainment of
the facts and circumstances upon which the application of said law is to be
predicated. To promulgate rules and regulations on the use of national roads
and to determine when and how long a national road should be closed to
traffic, in view of the condition of the road or the traffic thereon and the
requirements of public convenience and interest, is an administrative
function which cannot be directly discharged by the National Assembly. It
must depend on the discretion of some other government official to whom is
confided the duty of determining whether the proper occasion exists for
executing the law. But it cannot be said that the exercise of such discretion
is the making of the law. As was said in Lockes Appeal (72 Pa. 491): "To
assert that a law is less than a law, because it is made to depend on a
future event or act, is to rob the Legislature of the power to act wisely for
the public welfare whenever a law is passed relating to a state of affairs not
yet developed, or to things future and impossible to fully know." The proper
distinction the court said was this: "The Legislature cannot delegate its
power to make the law; but it can make a law to delegate a power to
determine some fact or state of things upon which the law makes, or
intends to make, its own action depend. To deny this would be to stop the
wheels of government. There are many things upon which wise and useful
legislation must depend which cannot be known to the law-making power,
and, must, therefore, be a subject of inquiry and determination outside of
the halls of legislation." (Field v. Clark, 143 U. S. 649, 694; 36 L. Ed. 294.)

In the case of People v. Rosenthal and Osmea, G.R. Nos. 46076 and 46077,
promulgated June 12, 1939, and in Pangasinan Transportation v. The Public
Service Commission, G.R. No. 47065, promulgated June 26, 1940, this Court
had occasion to observe that the principle of separation of powers has been

made to adapt itself to the complexities of modern governments, giving rise


to the adoption, within certain limits, of the principle of "subordinate
legislation," not only in the United States and England but in practically all
modern governments. Accordingly, with the growing complexity of modern
life, the multiplication of the subjects of governmental regulations, and the
increased difficulty of administering the laws, the rigidity of the theory of
separation of governmental powers has, to a large extent, been relaxed by
permitting the delegation of greater powers by the legislative and vesting a
larger amount of discretion in administrative and executive officials, not
only in the execution of the laws, but also in the promulgation of certain
rules and regulations calculated to promote public interest.

The petitioner further contends that the rules and regulations promulgated
by the respondents pursuant to the provisions of Commonwealth Act No.
548 constitute an unlawful interference with legitimate business or trade
and abridge the right to personal liberty and freedom of locomotion.
Commonwealth Act No. 548 was passed by the National Assembly in the
exercise of the paramount police power of the state.

Said Act, by virtue of which the rules and regulations complained of were
promulgated, aims to promote safe transit upon and avoid obstructions on
national roads, in the interest and convenience of the public. In enacting
said law, therefore, the National Assembly was prompted by considerations
of public convenience and welfare. It was inspired by a desire to relieve
congestion of traffic. which is, to say the least, a menace to public safety.
Public welfare, then, lies at the bottom of the enactment of said law, and the
state in order to promote the general welfare may interfere with personal
liberty, with property, and with business and occupations. Persons and
property may be subjected to all kinds of restraints and burdens, in order to
secure the general comfort, health, and prosperity of the state (U.S. v.
Gomez Jesus, 31 Phil., 218). To this fundamental aim of our Government the
rights of the individual are subordinated. Liberty is a blessing without which
life is a misery, but liberty should not be made to prevail over authority
because then society will fall into anarchy. Neither should authority be made
to prevail over liberty because then the individual will fall into slavery. The
citizen should achieve the required balance of liberty and authority in his
mind through education and personal discipline, so that there may be
established the resultant equilibrium, which means peace and order and
happiness for all. The moment greater authority is conferred upon the

government, logically so much is withdrawn from the residuum of liberty


which resides in the people. The paradox lies in the fact that the apparent
curtailment of liberty is precisely the very means of insuring its
preservation.

The scope of police power keeps expanding as civilization advances. As was


said in the case of Dobbins v. Los Angeles (195 U.S. 223, 238; 49 L. ed.
169), "the right to exercise the police power is a continuing one, and a
business lawful today may in the future, because of the changed situation,
the growth of population or other causes, become a menace to the public
health and welfare, and be required to yield to the public good." And in
People v. Pomar (46 Phil., 440), it was observed that "advancing civilization
is bringing within the police power of the state today things which were not
thought of as being within such power yesterday. The development of
civilization, the rapidly increasing population, the growth of public opinion,
with an increasing desire on the part of the masses and of the government
to look after and care for the interests of the individuals of the state, have
brought within the police power many questions for regulation which
formerly were not so considered."cralaw virtua1aw library

The petitioner finally avers that the rules and regulations complained of
infringe upon the constitutional precept regarding the promotion of social
justice to insure the well-being and economic security of all the people. The
promotion of social justice, however, is to be achieved not through a
mistaken sympathy towards any given group. Social justice is "neither
communism, nor despotism, nor atomism, nor anarchy," but the
humanization of laws and the equalization of social and economic forces by
the State so that justice in its rational and objectively secular conception
may at least be approximated. Social justice means the promotion of the
welfare of all the people, the adoption by the Government of measures
calculated to insure economic stability of all the competent elements of
society, through the maintenance of a proper economic and social
equilibrium in the interrelations of the members of the community,
constitutionally, through the adoption of measures legally justifiable, or
extra-constitutionally, through the exercise of powers underlying the
existence of all governments on the time-honored principle of salus populi
est suprema lex.

Social justice, therefore, must be founded on the recognition of the


necessity of interdependence among divers and diverse units of a society
and of the protection that should be equally and evenly extended to all
groups as a combined force in our social and economic life, consistent with
the fundamental and paramount objective of the state of promoting the
health, comfort, and quiet of all persons, and of bringing about "the greatest
good to the greatest number."cralaw virtua1aw library

In view of the foregoing, the writ of prohibition prayed for is hereby denied,
with costs against the petitioner. So ordered.

Avancea, C.J., Imperial, Diaz. and Horrilleno. JJ. concur.

82. Serrano vs Gallant Maritime Services

R. No. 167614

March 24, 2009

ANTONIO M. SERRANO, Petitioner,


vs.
Gallant MARITIME SERVICES, INC. and MARLOW NAVIGATION CO., INC.,
Respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

For decades, the toil of solitary migrants has helped lift entire families and
communities out of poverty. Their earnings have built houses, provided
health care, equipped schools and planted the seeds of businesses. They
have woven together the world by transmitting ideas and knowledge from
country to country. They have provided the dynamic human link between
cultures, societies and economies. Yet, only recently have we begun to
understand not only how much international migration impacts
development, but how smart public policies can magnify this effect.

United Nations Secretary-General Ban Ki-Moon


Global Forum on Migration and Development
Brussels, July 10, 20071

For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th
paragraph of Section 10, Republic Act (R.A.) No. 8042,2 to wit:

Sec. 10. Money Claims. - x x x In case of termination of overseas


employment without just, valid or authorized cause as defined by law or
contract, the workers shall be entitled to the full reimbursement of his
placement fee with interest of twelve percent (12%) per annum, plus his
salaries for the unexpired portion of his employment contract or for three
(3) months for every year of the unexpired term, whichever is less.

x x x x (Emphasis and underscoring supplied)

does not magnify the contributions of overseas Filipino workers (OFWs) to


national development, but exacerbates the hardships borne by them by
unduly limiting their entitlement in case of illegal dismissal to their lumpsum salary either for the unexpired portion of their employment contract "or
for three months for every year of the unexpired term, whichever is less"
(subject clause). Petitioner claims that the last clause violates the OFWs'
constitutional rights in that it impairs the terms of their contract, deprives
them of equal protection and denies them due process.

By way of Petition for Review under Rule 45 of the Rules of Court, petitioner
assails the December 8, 2004 Decision3 and April 1, 2005 Resolution4 of the
Court of Appeals (CA), which applied the subject clause, entreating this
Court to declare the subject clause unconstitutional.

Petitioner was hired by Gallant Maritime Services, Inc. and Marlow


Navigation Co., Ltd. (respondents) under a Philippine Overseas Employment
Administration (POEA)-approved Contract of Employment with the following
terms and conditions:

Duration of contract 12 months


Position

Chief Officer

Basic monthly salary

US$1,400.00

Hours of work 48.0 hours per week


Overtime US$700.00 per month
Vacation leave with pay 7.00 days per month5
On March 19, 1998, the date of his departure, petitioner was constrained to
accept a downgraded employment contract for the position of Second
Officer with a monthly salary of US$1,000.00, upon the assurance and
representation of respondents that he would be made Chief Officer by the
end of April 1998.6

Respondents did not deliver on their promise to make petitioner Chief


Officer.7 Hence, petitioner refused to stay on as Second Officer and was
repatriated to the Philippines on May 26, 1998.8

Petitioner's employment contract was for a period of 12 months or from


March 19, 1998 up to March 19, 1999, but at the time of his repatriation on
May 26, 1998, he had served only two (2) months and seven (7) days of his
contract, leaving an unexpired portion of nine (9) months and twenty-three
(23) days.

Petitioner filed with the Labor Arbiter (LA) a Complaint9 against respondents
for constructive dismissal and for payment of his money claims in the total
amount of US$26,442.73, broken down as follows:

May 27/31, 1998 (5 days) incl. Leave pay


June 01/30, 1998

2,590.00

July 01/31, 1998

2,590.00

US$ 413.90

August 01/31, 1998 2,590.00


Sept. 01/30, 1998

2,590.00

Oct. 01/31, 1998

2,590.00

Nov. 01/30, 1998

2,590.00

Dec. 01/31, 1998

2,590.00

Jan. 01/31, 1999

2,590.00

Feb. 01/28, 1999

2,590.00

Mar. 1/19, 1999 (19 days) incl. leave pay 1,640.00


-------------------------------------------------------------------------------25,382.23
Amount adjusted to chief mate's salary
(March 19/31, 1998 to April 1/30, 1998) +

1,060.5010

---------------------------------------------------------------------------------------------TOTAL CLAIM

US$ 26,442.7311

as well as moral and exemplary damages and attorney's fees.

The LA rendered a Decision dated July 15, 1999, declaring the dismissal of
petitioner illegal and awarding him monetary benefits, to wit:

WHEREFORE, premises considered, judgment is hereby rendered declaring


that the dismissal of the complainant (petitioner) by the respondents in the
above-entitled case was illegal and the respondents are hereby ordered to
pay the complainant [petitioner], jointly and severally, in Philippine
Currency, based on the rate of exchange prevailing at the time of payment,
the amount of EIGHT THOUSAND SEVEN HUNDRED SEVENTY U.S. DOLLARS
(US $8,770.00), representing the complainants salary for three (3) months
of the unexpired portion of the aforesaid contract of employment.1avvphi1

The respondents are likewise ordered to pay the complainant [petitioner],


jointly and severally, in Philippine Currency, based on the rate of exchange
prevailing at the time of payment, the amount of FORTY FIVE U.S. DOLLARS
(US$ 45.00),12 representing the complainants claim for a salary
differential. In addition, the respondents are hereby ordered to pay the
complainant, jointly and severally, in Philippine Currency, at the exchange
rate prevailing at the time of payment, the complainants (petitioner's)
claim for attorneys fees equivalent to ten percent (10%) of the total
amount awarded to the aforesaid employee under this Decision.

The claims of the complainant for moral and exemplary damages are hereby
DISMISSED for lack of merit.

All other claims are hereby DISMISSED.

SO ORDERED.13 (Emphasis supplied)

In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his


computation on the salary period of three months only -- rather than the
entire unexpired portion of nine months and 23 days of petitioner's
employment contract - applying the subject clause. However, the LA applied
the salary rate of US$2,590.00, consisting of petitioner's "[b]asic salary,
US$1,400.00/month + US$700.00/month, fixed overtime pay, +
US$490.00/month, vacation leave pay = US$2,590.00/compensation per
month."14

Respondents appealed15 to the National Labor Relations Commission


(NLRC) to question the finding of the LA that petitioner was illegally
dismissed.

Petitioner also appealed16 to the NLRC on the sole issue that the LA erred in
not applying the ruling of the Court in Triple Integrated Services, Inc. v.
National Labor Relations Commission17 that in case of illegal dismissal,
OFWs are entitled to their salaries for the unexpired portion of their
contracts.18

In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to
wit:

WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. Respondents are


hereby ordered to pay complainant, jointly and severally, in Philippine
currency, at the prevailing rate of exchange at the time of payment the
following:

1. Three (3) months salary


$1,400 x 3

US$4,200.00

2. Salary differential 45.00


US$4,245.00
3. 10% Attorneys fees
TOTAL

424.50

US$4,669.50

The other findings are affirmed.

SO ORDERED.19

The NLRC corrected the LA's computation of the lump-sum salary awarded
to petitioner by reducing the applicable salary rate from US$2,590.00 to
US$1,400.00 because R.A. No. 8042 "does not provide for the award of

overtime pay, which should be proven to have been actually performed, and
for vacation leave pay."20

Petitioner filed a Motion for Partial Reconsideration, but this time he


questioned the constitutionality of the subject clause.21 The NLRC denied
the motion.22

Petitioner filed a Petition for Certiorari23 with the CA, reiterating the
constitutional challenge against the subject clause.24 After initially
dismissing the petition on a technicality, the CA eventually gave due course
to it, as directed by this Court in its Resolution dated August 7, 2003 which
granted the petition for certiorari, docketed as G.R. No. 151833, filed by
petitioner.

In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on


the reduction of the applicable salary rate; however, the CA skirted the
constitutional issue raised by petitioner.25

His Motion for Reconsideration26 having been denied by the CA,27


petitioner brings his cause to this Court on the following grounds:

The Court of Appeals and the labor tribunals have decided the case in a way
not in accord with applicable decision of the Supreme Court involving similar
issue of granting unto the migrant worker back wages equal to the
unexpired portion of his contract of employment instead of limiting it to
three (3) months

II

In the alternative that the Court of Appeals and the Labor Tribunals were
merely applying their interpretation of Section 10 of Republic Act No. 8042,
it is submitted that the Court of Appeals gravely erred in law when it failed
to discharge its judicial duty to decide questions of substance not
theretofore determined by the Honorable Supreme Court, particularly, the
constitutional issues raised by the petitioner on the constitutionality of said
law, which unreasonably, unfairly and arbitrarily limits payment of the
award for back wages of overseas workers to three (3) months.

III

Even without considering the constitutional limitations [of] Sec. 10 of


Republic Act No. 8042, the Court of Appeals gravely erred in law in
excluding from petitioners award the overtime pay and vacation pay
provided in his contract since under the contract they form part of his
salary.28

On February 26, 2008, petitioner wrote the Court to withdraw his petition as
he is already old and sickly, and he intends to make use of the monetary
award for his medical treatment and medication.29 Required to comment,
counsel for petitioner filed a motion, urging the court to allow partial
execution of the undisputed monetary award and, at the same time, praying
that the constitutional question be resolved.30

Considering that the parties have filed their respective memoranda, the
Court now takes up the full merit of the petition mindful of the extreme
importance of the constitutional question raised therein.

On the first and second issues

The unanimous finding of the LA, NLRC and CA that the dismissal of
petitioner was illegal is not disputed. Likewise not disputed is the salary
differential of US$45.00 awarded to petitioner in all three fora. What

remains disputed is only the computation of the lump-sum salary to be


awarded to petitioner by reason of his illegal dismissal.

Applying the subject clause, the NLRC and the CA computed the lump-sum
salary of petitioner at the monthly rate of US$1,400.00 covering the period
of three months out of the unexpired portion of nine months and 23 days of
his employment contract or a total of US$4,200.00.

Impugning the constitutionality of the subject clause, petitioner contends


that, in addition to the US$4,200.00 awarded by the NLRC and the CA, he is
entitled to US$21,182.23 more or a total of US$25,382.23, equivalent to his
salaries for the entire nine months and 23 days left of his employment
contract, computed at the monthly rate of US$2,590.00.31

The Arguments of Petitioner

Petitioner contends that the subject clause is unconstitutional because it


unduly impairs the freedom of OFWs to negotiate for and stipulate in their
overseas employment contracts a determinate employment period and a
fixed salary package.32 It also impinges on the equal protection clause, for
it treats OFWs differently from local Filipino workers (local workers) by
putting a cap on the amount of lump-sum salary to which OFWs are entitled
in case of illegal dismissal, while setting no limit to the same monetary
award for local workers when their dismissal is declared illegal; that the
disparate treatment is not reasonable as there is no substantial distinction
between the two groups;33 and that it defeats Section 18,34 Article II of the
Constitution which guarantees the protection of the rights and welfare of all
Filipino workers, whether deployed locally or overseas.35

Moreover, petitioner argues that the decisions of the CA and the labor
tribunals are not in line with existing jurisprudence on the issue of money
claims of illegally dismissed OFWs. Though there are conflicting rulings on
this, petitioner urges the Court to sort them out for the guidance of affected
OFWs.36

Petitioner further underscores that the insertion of the subject clause into
R.A. No. 8042 serves no other purpose but to benefit local placement
agencies. He marks the statement made by the Solicitor General in his
Memorandum, viz.:

Often, placement agencies, their liability being solidary, shoulder the


payment of money claims in the event that jurisdiction over the foreign
employer is not acquired by the court or if the foreign employer reneges on
its obligation. Hence, placement agencies that are in good faith and which
fulfill their obligations are unnecessarily penalized for the acts of the foreign
employer. To protect them and to promote their continued helpful
contribution in deploying Filipino migrant workers, liability for money claims
was reduced under Section 10 of R.A. No. 8042. 37 (Emphasis supplied)

Petitioner argues that in mitigating the solidary liability of placement


agencies, the subject clause sacrifices the well-being of OFWs. Not only
that, the provision makes foreign employers better off than local employers
because in cases involving the illegal dismissal of employees, foreign
employers are liable for salaries covering a maximum of only three months
of the unexpired employment contract while local employers are liable for
the full lump-sum salaries of their employees. As petitioner puts it:

In terms of practical application, the local employers are not limited to the
amount of backwages they have to give their employees they have illegally
dismissed, following well-entrenched and unequivocal jurisprudence on the
matter. On the other hand, foreign employers will only be limited to giving
the illegally dismissed migrant workers the maximum of three (3) months
unpaid salaries notwithstanding the unexpired term of the contract that can
be more than three (3) months.38

Lastly, petitioner claims that the subject clause violates the due process
clause, for it deprives him of the salaries and other emoluments he is
entitled to under his fixed-period employment contract.39

The Arguments of Respondents

In their Comment and Memorandum, respondents contend that the


constitutional issue should not be entertained, for this was belatedly
interposed by petitioner in his appeal before the CA, and not at the earliest
opportunity, which was when he filed an appeal before the NLRC.40

The Arguments of the Solicitor General

The Solicitor General (OSG)41 points out that as R.A. No. 8042 took effect
on July 15, 1995, its provisions could not have impaired petitioner's 1998
employment contract. Rather, R.A. No. 8042 having preceded petitioner's
contract, the provisions thereof are deemed part of the minimum terms of
petitioner's employment, especially on the matter of money claims, as this
was not stipulated upon by the parties.42

Moreover, the OSG emphasizes that OFWs and local workers differ in terms
of the nature of their employment, such that their rights to monetary
benefits must necessarily be treated differently. The OSG enumerates the
essential elements that distinguish OFWs from local workers: first, while
local workers perform their jobs within Philippine territory, OFWs perform
their jobs for foreign employers, over whom it is difficult for our courts to
acquire jurisdiction, or against whom it is almost impossible to enforce
judgment; and second, as held in Coyoca v. National Labor Relations
Commission43 and Millares v. National Labor Relations Commission,44
OFWs are contractual employees who can never acquire regular
employment status, unlike local workers who are or can become regular
employees. Hence, the OSG posits that there are rights and privileges
exclusive to local workers, but not available to OFWs; that these
peculiarities make for a reasonable and valid basis for the differentiated
treatment under the subject clause of the money claims of OFWs who are
illegally dismissed. Thus, the provision does not violate the equal protection
clause nor Section 18, Article II of the Constitution.45

Lastly, the OSG defends the rationale behind the subject clause as a police
power measure adopted to mitigate the solidary liability of placement
agencies for this "redounds to the benefit of the migrant workers whose

welfare the government seeks to promote. The survival of legitimate


placement agencies helps [assure] the government that migrant workers
are properly deployed and are employed under decent and humane
conditions."46

The Court's Ruling

The Court sustains petitioner on the first and second issues.

When the Court is called upon to exercise its power of judicial review of the
acts of its co-equals, such as the Congress, it does so only when these
conditions obtain: (1) that there is an actual case or controversy involving a
conflict of rights susceptible of judicial determination;47 (2) that the
constitutional question is raised by a proper party48 and at the earliest
opportunity;49 and (3) that the constitutional question is the very lis mota
of the case,50 otherwise the Court will dismiss the case or decide the same
on some other ground.51

Without a doubt, there exists in this case an actual controversy directly


involving petitioner who is personally aggrieved that the labor tribunals and
the CA computed his monetary award based on the salary period of three
months only as provided under the subject clause.

The constitutional challenge is also timely. It should be borne in mind that


the requirement that a constitutional issue be raised at the earliest
opportunity entails the interposition of the issue in the pleadings before a
competent court, such that, if the issue is not raised in the pleadings before
that competent court, it cannot be considered at the trial and, if not
considered in the trial, it cannot be considered on appeal.52 Records
disclose that the issue on the constitutionality of the subject clause was first
raised, not in petitioner's appeal with the NLRC, but in his Motion for Partial
Reconsideration with said labor tribunal,53 and reiterated in his Petition for
Certiorari before the CA.54 Nonetheless, the issue is deemed seasonably
raised because it is not the NLRC but the CA which has the competence to
resolve the constitutional issue. The NLRC is a labor tribunal that merely

performs a quasi-judicial function its function in the present case is limited


to determining questions of fact to which the legislative policy of R.A. No.
8042 is to be applied and to resolving such questions in accordance with the
standards laid down by the law itself;55 thus, its foremost function is to
administer and enforce R.A. No. 8042, and not to inquire into the validity of
its provisions. The CA, on the other hand, is vested with the power of judicial
review or the power to declare unconstitutional a law or a provision thereof,
such as the subject clause.56 Petitioner's interposition of the constitutional
issue before the CA was undoubtedly seasonable. The CA was therefore
remiss in failing to take up the issue in its decision.

The third condition that the constitutional issue be critical to the resolution
of the case likewise obtains because the monetary claim of petitioner to his
lump-sum salary for the entire unexpired portion of his 12-month
employment contract, and not just for a period of three months, strikes at
the very core of the subject clause.

Thus, the stage is all set for the determination of the constitutionality of the
subject clause.

Does the subject clause violate Section 10,


Article III of the Constitution on non-impairment
of contracts?

The answer is in the negative.

Petitioner's claim that the subject clause unduly interferes with the
stipulations in his contract on the term of his employment and the fixed
salary package he will receive57 is not tenable.

Section 10, Article III of the Constitution provides:

No law impairing the obligation of contracts shall be passed.

The prohibition is aligned with the general principle that laws newly enacted
have only a prospective operation,58 and cannot affect acts or contracts
already perfected;59 however, as to laws already in existence, their
provisions are read into contracts and deemed a part thereof.60 Thus, the
non-impairment clause under Section 10, Article II is limited in application to
laws about to be enacted that would in any way derogate from existing acts
or contracts by enlarging, abridging or in any manner changing the
intention of the parties thereto.

As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995
preceded the execution of the employment contract between petitioner and
respondents in 1998. Hence, it cannot be argued that R.A. No. 8042,
particularly the subject clause, impaired the employment contract of the
parties. Rather, when the parties executed their 1998 employment contract,
they were deemed to have incorporated into it all the provisions of R.A. No.
8042.

But even if the Court were to disregard the timeline, the subject clause may
not be declared unconstitutional on the ground that it impinges on the
impairment clause, for the law was enacted in the exercise of the police
power of the State to regulate a business, profession or calling, particularly
the recruitment and deployment of OFWs, with the noble end in view of
ensuring respect for the dignity and well-being of OFWs wherever they may
be employed.61 Police power legislations adopted by the State to promote
the health, morals, peace, education, good order, safety, and general
welfare of the people are generally applicable not only to future contracts
but even to those already in existence, for all private contracts must yield to
the superior and legitimate measures taken by the State to promote public
welfare.62

Does the subject clause violate Section 1,


Article III of the Constitution, and Section 18,
Article II and Section 3, Article XIII on labor

as a protected sector?

The answer is in the affirmative.

Section 1, Article III of the Constitution guarantees:

No person shall be deprived of life, liberty, or property without due process


of law nor shall any person be denied the equal protection of the law.

Section 18,63 Article II and Section 3,64 Article XIII accord all members of
the labor sector, without distinction as to place of deployment, full
protection of their rights and welfare.

To Filipino workers, the rights guaranteed under the foregoing constitutional


provisions translate to economic security and parity: all monetary benefits
should be equally enjoyed by workers of similar category, while all monetary
obligations should be borne by them in equal degree; none should be
denied the protection of the laws which is enjoyed by, or spared the burden
imposed on, others in like circumstances.65

Such rights are not absolute but subject to the inherent power of Congress
to incorporate, when it sees fit, a system of classification into its legislation;
however, to be valid, the classification must comply with these
requirements: 1) it is based on substantial distinctions; 2) it is germane to
the purposes of the law; 3) it is not limited to existing conditions only; and
4) it applies equally to all members of the class.66

There are three levels of scrutiny at which the Court reviews the
constitutionality of a classification embodied in a law: a) the deferential or
rational basis scrutiny in which the challenged classification needs only be
shown to be rationally related to serving a legitimate state interest;67 b) the
middle-tier or intermediate scrutiny in which the government must show
that the challenged classification serves an important state interest and that

the classification is at least substantially related to serving that interest;68


and c) strict judicial scrutiny69 in which a legislative classification which
impermissibly interferes with the exercise of a fundamental right70 or
operates to the peculiar disadvantage of a suspect class71 is presumed
unconstitutional, and the burden is upon the government to prove that the
classification is necessary to achieve a compelling state interest and that it
is the least restrictive means to protect such interest.72

Under American jurisprudence, strict judicial scrutiny is triggered by suspect


classifications73 based on race74 or gender75 but not when the
classification is drawn along income categories.76

It is different in the Philippine setting. In Central Bank (now Bangko Sentral


ng Pilipinas) Employee Association, Inc. v. Bangko Sentral ng Pilipinas,77 the
constitutionality of a provision in the charter of the Bangko Sentral ng
Pilipinas (BSP), a government financial institution (GFI), was challenged for
maintaining its rank-and-file employees under the Salary Standardization
Law (SSL), even when the rank-and-file employees of other GFIs had been
exempted from the SSL by their respective charters. Finding that the
disputed provision contained a suspect classification based on salary grade,
the Court deliberately employed the standard of strict judicial scrutiny in its
review of the constitutionality of said provision. More significantly, it was in
this case that the Court revealed the broad outlines of its judicial
philosophy, to wit:

Congress retains its wide discretion in providing for a valid classification,


and its policies should be accorded recognition and respect by the courts of
justice except when they run afoul of the Constitution. The deference stops
where the classification violates a fundamental right, or prejudices persons
accorded special protection by the Constitution. When these violations arise,
this Court must discharge its primary role as the vanguard of constitutional
guaranties, and require a stricter and more exacting adherence to
constitutional limitations. Rational basis should not suffice.

Admittedly, the view that prejudice to persons accorded special protection


by the Constitution requires a stricter judicial scrutiny finds no support in
American or English jurisprudence. Nevertheless, these foreign decisions

and authorities are not per se controlling in this jurisdiction. At best, they
are persuasive and have been used to support many of our decisions. We
should not place undue and fawning reliance upon them and regard them as
indispensable mental crutches without which we cannot come to our own
decisions through the employment of our own endowments. We live in a
different ambience and must decide our own problems in the light of our
own interests and needs, and of our qualities and even idiosyncrasies as a
people, and always with our own concept of law and justice. Our laws must
be construed in accordance with the intention of our own lawmakers and
such intent may be deduced from the language of each law and the context
of other local legislation related thereto. More importantly, they must be
construed to serve our own public interest which is the be-all and the end-all
of all our laws. And it need not be stressed that our public interest is distinct
and different from others.

xxxx

Further, the quest for a better and more "equal" world calls for the use of
equal protection as a tool of effective judicial intervention.

Equality is one ideal which cries out for bold attention and action in the
Constitution. The Preamble proclaims "equality" as an ideal precisely in
protest against crushing inequities in Philippine society. The command to
promote social justice in Article II, Section 10, in "all phases of national
development," further explicitated in Article XIII, are clear commands to the
State to take affirmative action in the direction of greater equality. x x x
[T]here is thus in the Philippine Constitution no lack of doctrinal support for
a more vigorous state effort towards achieving a reasonable measure of
equality.

Our present Constitution has gone further in guaranteeing vital social and
economic rights to marginalized groups of society, including labor. Under
the policy of social justice, the law bends over backward to accommodate
the interests of the working class on the humane justification that those
with less privilege in life should have more in law. And the obligation to
afford protection to labor is incumbent not only on the legislative and
executive branches but also on the judiciary to translate this pledge into a

living reality. Social justice calls for the humanization of laws and the
equalization of social and economic forces by the State so that justice in its
rational and objectively secular conception may at least be approximated.

xxxx

Under most circumstances, the Court will exercise judicial restraint in


deciding questions of constitutionality, recognizing the broad discretion
given to Congress in exercising its legislative power. Judicial scrutiny would
be based on the "rational basis" test, and the legislative discretion would be
given deferential treatment.

But if the challenge to the statute is premised on the denial of a


fundamental right, or the perpetua