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[G.R. No. 91359. September 25, 1992.] different rule.

different rule. "It is obvious that public service would be hindered, and public The constitutionality of the following provisions of R.A. 5487 (otherwise known
safety endangered, if the supreme authority could be subjected to suits at the as the "Private Security Agency Law"), as amended, is questioned by VMPSI in
VETERANS MANPOWER AND PROTECTIVE SERVICES, INC., Petitioner, v. THE instance of every citizen, and, consequently, controlled in the use and its complaint:
COURT OF APPEALS, THE CHIEF OF PHILIPPINE CONSTABULARY and disposition of the means required for the proper administration of the
PHILIPPINE CONSTABULARY SUPERVISORY UNIT FOR SECURITY AND government" (Siren v. U.S. Wall, 152, 19 L. ed. 129, as cited in 78 SCRA 477).
INVESTIGATION AGENCIES (PC-SUSIA),Respondents. "SECTION 4. Who may Organize a Security or Watchman Agency. — Any Filipino
citizen or a corporation, partnership, or association, with a minimum capital of
Franciso A. Lava, Jr. and Andresito X. Fornier for Petitioner. five thousand pesos, one hundred per cent of which is owned and controlled by
DECISION 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
GRIÑO-AQUINO, J.:
those which are already existing at the promulgation of this Decree: . . ." (As
This is a petition for review on certiorari of the decision dated August 11, 1989, amended by P.D. Nos. 11 and 100.)
SYLLABUS
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 "SECTION 17. Rules and Regulations by Chief, Philippine Constabulary. — The
Security and Investigation Agencies (PC-SUSIA) v. Hon. Omar U. Amin and Chief of the Philippine Constabulary, in consultation with the Philippine
1. POLITICAL LAW; IMMUNITY FROM SUIT; THE PHILIPPINE CONSTABULARY
Veterans Manpower and Protective Services, Inc. (VMPSI)," lifting the writ of Association of Detective and Protective Agency Operators, Inc. and subject to
CHIEF AND THE PC-SUSIA MAY NOT BE SUED WITHOUT THE CONSENT OF THE
preliminary injunction which the Regional Trial Court had issued to the PC-SUSIA the provision of existing laws, is hereby authorized to issue the rules and
STATE. — The State may not be sued without its consent (Article XVI, Section 3,
enjoining them from committing acts that would result in the cancellation or regulations necessary to carry out the purpose of this Act."
of the 1987 Constitution). Invoking this rule, the PC Chief and PC-SUSIA contend
that, being instrumentalities of the national government exercising a primarily non-renewal of the license of VMPSI to operate as a security agency.
governmental function of regulating the organization and operation of private VMPSI alleges that the above provisions of R.A. No. 5487 violate the provisions
detective, watchmen, or security guard agencies, said official (the PC Chief) and of the 1987 Constitution against monopolies, unfair competition and
On March 28, 1988, VMPSI filed a complaint in the Regional Trial Court at
agency (PC-SUSIA) may not be sued without the Government’s consent, combinations in restraint of trade, and tend to favor and institutionalize the
Makati, Metro Manila, praying the court to:
especially in this case because VMPSI’s complaint seeks not only to compel the Philippine Association of Detective and Protective Agency Operators, Inc.
public respondents to act in a certain way, but worse, because VMPSI seeks (PADPAO) which is monopolistic because it has an interest in more than one
"A. Forthwith issue a temporary restraining order to preserve the status quo,
actual and compensatory damages in the sum of P1,000,000.00, exemplary security agency.
enjoining the defendants, or any one acting in their place or stead, to refrain
damages in the same amount, and P200,000.00 as attorney’s fees from said
from committing acts that would result in the cancellation or non-renewal of
public respondents. Even if its action prospers, the payment of its monetary Respondent VMPSI likewise questions the validity of paragraph 3, subparagraph
VMPSI’s license;
claims may not be enforced because the State did not consent to appropriate (g) of the Modifying Regulations on the Issuance of License to Operate and
the necessary funds for that purpose. Private Security Licenses and Specifying Regulations for the Operation of
"B. In due time, issue a writ of preliminary injunction to the same effect;
PADPAO issued by then PC Chief Lt. Gen. Fidel V. Ramos, through Col. Sabas V.
2. ID.; ID.; PUBLIC OFFICIAL MAY BE SUED IN HIS PERSONAL CAPACITY IF HE Edades, requiring that "all private security agencies/company security forces
"C. Render decision and judgment declaring null and void the amendment of
ACTS, AMONG OTHERS BEYOND THE SCOPE OF HIS AUTHORITY; CASE AT BAR. must register as members of any PADPAO Chapter organized within the Region
Section 4 of R.A. No. 5487, by PD No. 11 exempting organizations like PADPAO
— A public official may sometimes be held liable in his personal or private where their main offices are located . . ." (pp. 5-6, Complaint in Civil Case No.
from the prohibition that no person shall organize or have an interest in more
capacity if he acts in bad faith, or beyond the scope of his authority or 88-471). As such membership requirement in PADPAO is compulsory in nature,
than one agency, declaring PADPAO as an illegal organization existing in
jurisdiction (Shauf v. Court of Appeals, supra), however, since the acts for which it allegedly violates legal and constitutional provisions against monopolies,
violation of said prohibition, without the illegal exemption provided in PD No.
the PC Chief and PC-SUSIA are being called to account in this case, were unfair competition and combinations in restraint of trade.
11; declaring null and void Section 17 of R.A. No. 5487 which provides for the
performed by them as part of their official duties, without malice, gross
issuance of rules and regulations in consultation with PADPAO, declaring null
negligence, or bad faith, no recovery may be had against them in their private On May 12, 1986, a Memorandum of Agreement was executed by PADPAO and
and void the February 1, 1982 directive of Col. Sabas V. Edadas, in the name of
capacities. the PC Chief, which fixed the minimum monthly contract rate per guard for
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, eight (8) hours of security service per day at P2,255.00 within Metro Manila and
3. ID.; ID.; CONSENT TO BE SUED MUST EMANATE FROM A LEGISLATIVE ACT. — P2,215.00 outside of Metro Manila (Annex B, Petition).
declaring that VMPSI did not engage in ‘cut-throat competition’ in its contract
Waiver of the State’s immunity from suit, being a derogation of sovereignty, will
with MWSS, ordering defendants PC Chief and PC-SUSIA to renew the license of
not be lightly inferred, but must be construed strictissimi juris (Republic v. On June 29, 1987, Odin Security Agency (Odin) filed a complaint with PADPAO
VMPSI; ordering the defendants to refrain from further harassing VMPSI and
Feliciano, 148 SCRA 424). The consent of the State to be sued must emanate accusing VMPSI of cut-throat competition by undercutting its contract rate for
from threatening VMPSI with cancellations or non-renewal of license, without
from statutory authority, hence, from a legislative act, not from a mere security services rendered to the Metropolitan Waterworks and Sewerage
legal and justifiable cause; ordering the defendants to pay to VMPSI the sum of
memorandum. Without such consent, the trial court did not acquire jurisdiction System (MWSS), charging said customer lower than the standard minimum
P1,000,000.00 as actual and compensatory damages, P1,000,000.00 as
over the public respondents. rates provided in the Memorandum of Agreement dated May 12, 1986.
exemplary damages, and P200,000.00 as attorney’s fees and expenses of
litigation; and granting such further or other reliefs to VMPSI as may be deemed
4. ID.; ID.; REASONS BEHIND. — The state immunity doctrine rests upon reasons PADPAO found VMPSI guilty of cut-throat competition, hence, the PADPAO
lawful, equitable and just." (pp. 55-56, Rollo.)
of public policy and the inconvenience and danger which would flow from a
Committee on Discipline recommended the expulsion of VMPSI from PADPAO On November 3, 1988, the PC Chief and PC-SUSIA sought relief by a petition part of their official duties, without malice, gross negligence, or bad faith, no
and the cancellation of its license to operate a security agency (Annex D, for certiorari in the Court of Appeals. recovery may be had against them in their private capacities.
Petition).
On August 11, 1989, the Court of Appeals granted the petition. The dispositive We agree with the observation of the Court of Appeals that the Memorandum
The PC-SUSIA made similar findings and likewise recommended the cancellation portion of its decision reads: of Agreement dated May 12, 1986 does not constitute an implied consent by
of VMPSI’s license (Annex E, Petition). the State to be sued:
"WHEREFORE, the petition for certiorari filed by petitioners PC Chief and PC-
As a result, PADPAO refused to issue a clearance/certificate of membership to SUSIA is hereby GRANTED, and the RTC-Makati, Branch 135, is ordered to "The Memorandum of Agreement dated May 12, 1986 was entered into by the
VMPSI when it requested one. dismiss the complaint filed by respondent VMPSI in Civil Case No. 88-471, PC Chief in relation to the exercise of a function sovereign in nature. The correct
insofar as petitioners PC Chief and PC-SUSIA are concerned, for lack of test for the application of state immunity is not the conclusion of a contract by
VMPSI wrote the PC Chief on March 10, 1988, requesting him to set aside or jurisdiction. The writ of preliminary injunction issued on June 10, 1988, is the State but the legal nature of the act. This was clearly enunciated in the case
disregard the findings of PADPAO and consider VMPSI’s application for renewal dissolved." (pp. 295-296, Rollo.) of United States of America v. Ruiz where the Hon. Supreme Court held:
of its license, even without a certificate of membership from PADPAO (Annex F,
Petition). VMPSI came to us with this petition for review. "‘The restrictive application of State immunity is proper only when the
proceedings arise out of commercial transactions of the foreign sovereign, its
As the PC Chief did not reply, and VMPSI’s license was expiring on March 31, The primary issue in this case is whether or not VMPSI’s complaint against the commercial activities or economic affairs. Stated differently, a State may be said
1988, VMPSI filed Civil Case No. 88-471 in the RTC-Makati, Branch 135, on PC Chief and PC-SUSIA is a suit against the State without its consent. to have descended to the level of an individual and can thus be deemed to have
March 28, 1988 against the PC Chief and PC-SUSIA. On the same date, the court tacitly given its consent to be sued only when it enters into a business contract.
issued a restraining order enjoining the PC Chief and PC-SUSIA "from The answer is yes. It does not apply where the contract relates to the exercise of its functions.’
committing acts that would result in the cancellation or non-renewal of VMPSI’s (136 SCRA 487, 492.)
license" (Annex G, Petition). 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, "In the instant case, the Memorandum of Agreement entered into by the PC
The PC chief and PC-SUSIA filed a "Motion to Dismiss, Opposition to the being instrumentalities of the national government exercising a primarily Chief and PADPAO was intended to professionalize the industry and to
Issuance of Writ of Preliminary Injunction, and Motion to Quash the Temporary governmental function of regulating the organization and operation of private standardize the salaries of security guards as well as the current rates of
Restraining Order," on the grounds that the case is against the State which had detective, watchmen, or security guard agencies, said official (the PC Chief) and security services, clearly, a governmental function. The execution of the said
not given consent thereto and that VMPSI’s license already expired on March agency (PC-SUSIA) may not be sued without the Government’s consent, agreement is incidental to the purpose of R.A. 5487, as amended, which is to
31, 1988, hence, the restraining order or preliminary injunction would not serve especially in this case because VMPSI’s complaint seeks not only to compel the regulate the organization and operation of private detective, watchmen or
any purpose because there was no more license to be cancelled (Annex H, public respondents to act in a certain way, but worse, because VMPSI seeks security guard agencies. (Emphasis ours.)" (pp. 258-259, Rollo.)
Petition). Respondent VMPSI opposed the motion. 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 Waiver of the State’s immunity from suit, being a derogation of sovereignty, will
On April 18, 1988, the lower court denied VMPSI’s application for a writ of public respondents. Even if its action prospers, the payment of its monetary not be lightly inferred, but must be construed strictissimi juris (Republic v.
preliminary injunction for being premature because it "has up to May 31, 1988 claims may not be enforced because the State did not consent to appropriate Feliciano, 148 SCRA 424). The consent of the State to be sued must emanate
within which to file its application for renewal pursuant to Section 2 (e) of the necessary funds for that purpose. from statutory authority, hence, from a legislative act, not from a mere
Presidential Decree No. 199, . . ." (p. 140, Rollo.). memorandum. Without such consent, the trial court did not acquire jurisdiction
Thus did we hold in Shauf v. Court of Appeals, 191 SCRA over the public respondents.
On May 23, 1988, VMPSI reiterated its application for the issuance of a writ of 713:jgc:chanrobles.com.ph
preliminary injunction because PC-SUSIA had rejected payment of the penalty The state immunity doctrine rests upon reasons of public policy and the
for its failure to submit its application for renewal of its license and the "While the doctrine appears to prohibit only suits against the state without its inconvenience and danger which would flow from a different rule. "It is obvious
requirements therefor within the prescribed period in Section 2(e) of the consent, it is also applicable to complaints filed against officials of the state for that public service would be hindered, and public safety endangered, if the
Revised Rules and Regulations Implementing R.A. 5487, as amended by P.D. acts allegedly performed by them in the discharge of their duties. The rule is supreme authority could be subjected to suits at the instance of every citizen,
1919 (Annex M, Petition). that if the judgment against such officials will require the state itself to perform and, consequently, controlled in the use and disposition of the means required
an affirmative act to satisfy the same, such as the appropriation of the amount for the proper administration of the government" (Siren v. U.S. Wall, 152, 19 L.
On June 10, 1998, the RTC-Makati issued a writ of preliminary injunction upon a needed to pay the damages awarded against them, the suit must be regarded ed. 129, as cited in 78 SCRA 477). In the same vein, this Court in Republic v.
bond of P100,000.00, restraining the defendants, or any one acting in their as against the state itself although it has not been formally impleaded." Purisima (78 SCRA 470, 473) rationalized:
behalf, from cancelling or denying renewal of VMPSI’s license, until further (Emphasis supplied.)
orders from the court. "Nonetheless, a continued adherence to the doctrine of nonsuability is not to
A public official may sometimes be held liable in his personal or private capacity be deplored for as against the inconvenience that may be cause [by] private
The PC Chief and PC-SUSIA filed a Motion for Reconsideration of the above if he acts in bad faith, or beyond the scope of his authority or jurisdiction (Shauf parties, the loss of governmental efficiency and the obstacle to the performance
order, but it was denied by the court in its Order of August 10, 1988 (Annex R, v. Court of Appeals, supra), however, since the acts for which the PC Chief and of its multifarious functions are far greater if such a fundamental principle were
Petition). PC-SUSIA are being called to account in this case, were performed by them as 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 The Executive Labor Arbiter rendered a decision on 31 May finding herein connection with the execution of the judgments in the above-stated cases upon
provocation, the loss of time and energy required to defend against law suits, in petitioner and jointly and severallyliable with Sultan Security Agency for the presentation of the appropriate claims or vouchers and receipts by the city
the absence of such a basic principle that constitutes such an effective payment of money claims, aggregating P266,483.91, of the complainant Sheriff, subject to the conditions specified in the NLRC Sheriff, subject to the
obstacles, could very well be imagined." (citing Providence Washington security guards. The petitioner and Sultan Security Agency did not appeal the conditions specified in the NLRC Manual of Instructions for Sheriffs;
Insurance Co. v. Republic, 29 SCRA 598.) decision of the Labor Arbiter. Thus, the decision became final and executory.
5. The right of any of the judgment debtors to claim reimbursement against
WHEREFORE, the petition for review is DENIED and the judgment appealed On 18 July 1991, the Labor Arbiter issued a writ of execution. 5 commanding the each other for any payments made in connection with the satisfaction of the
from is AFFIRMED in toto. No costs. City Sheriff to enforce and execute the judgment against the property of the judgments herein is hereby recognized pursuant to the ruling in the Eagle
two respondents. Forthwith, or on 19 July 1991, the City Sheriff levied on Security case, (supra). In case of dispute between the judgment debtors, the
SO ORDERED. execution the motor vehicles of the petitioner, i.e. one (1) unit Toyota Hi-Ace, Executive Labor Arbiter of the Branch of origin may upon proper petition by any
one (1) unit Toyota Mini Cruiser, and one (1) unit Toyota Crown. 6 These units of the parties conduct arbitration proceedings for the purpose and thereby
were put under the custody of Zacharias Roa, the property custodian of the render his decision after due notice and hearings;
petitioner, pending their sale at public auction or the final settlement of the
case, whichever would come first. 7. Finally, the petition for injunction is Dismissed for lack of basis. The writ of
preliminary injunction previously issued is Lifted and Set Aside and in lieu
G.R. No. 104269 November 11, 1993 A petition for injunction, prohibition and mandamus, with prayer for thereof, a Temporary Stay of Execution is issued for a period of two (2) months
preliminary writ of injunction was filed by the petitioner with the National Labor but not extending beyond the last quarter of calendar year 1991, conditioned
DEPARTMENT OF AGRICULTURE, petitioner,
Relations Commission (NLRC), Cagayan de Oro, alleging, inter alia, that the writ upon the posting of a surety or supersedeas bond by petitioner within ten (10)
vs.
issued was effected without the Labor Arbiter having duly acquired jurisdiction days from notice pursuant to paragraph 3 of this disposition. The motion to
THE NATIONAL LABOR RELATIONS COMMISSION, et al., respondents.
over the petitioner, and that, therefore, the decision of the Labor Arbiter was admit the complaint in intervention isDenied for lack of merit while the motion
Roy Lago Salcedo for private respondents. null and void and all actions pursuant thereto should be deemed equally invalid to dismiss the petition filed by Duty Sheriff is Noted
and of no legal, effect. The petitioner also pointed out that the attachment or
seizure of its property would hamper and jeopardize petitioner's governmental SO ORDERED.
functions to the prejudice of the public good.
VITUG, J.: In this petition for certiorari, the petitioner charges the NLRC with grave abuse
On 27 November 1991, the NLRC promulgated its assailed resolution; viz: of discretion for refusing to quash the writ of execution. The petitioner faults
For consideration are the incidents that flow from the familiar doctrine of non- the NLRC for assuming jurisdiction over a money claim against the Department,
suability of the state. WHEREFORE, premises considered, the following orders are issued: which, it claims, falls under the exclusive jurisdiction of the Commission on
Audit. More importantly, the petitioner asserts, the NLRC has disregarded the
In this petition for certiorari, the Department of Agriculture seeks to nullify the 1. The enforcement and execution of the judgments against petitioner in NLRC cardinal rule on the non-suability of the State.
Resolution, 1 dated 27 November 1991, of the National Labor Relations RABX Cases Nos. 10-10-00455-90; 10-10-0481-90 and 10-10-00519-90 are
Commission (NLRC), Fifth Division, Cagayan de Oro City, denying the petition for temporarily suspended for a period of two (2) months, more or less, but not The private respondents, on the other hand, argue that the petitioner has
injunction, prohibition and mandamus that prays to enjoin permanently the extending beyond the last quarter of calendar year 1991 to enable petitioner to impliedly waived its immunity from suit by concluding a service contract with
NLRC's Regional Arbitration Branch X and Cagayan de Oro City Sheriff from source and raise funds to satisfy the judgment awards against it; Sultan Security Agency.
enforcing the decision 2 of 31 May 1991 of the Executive Labor Arbiter and from
attaching and executing on petitioner's property. 2. Meantime, petitioner is ordered and directed to source for funds within the The basic postulate enshrined in the constitution that "(t)he State may not be
period above-stated and to deposit the sums of money equivalent to the sued without its consent," 7 reflects nothing less than a recognition of the
The Department of Agriculture (herein petitioner) and Sultan Security Agency aggregate amount. it has been adjudged to pay jointly and severally with sovereign character of the State and an express affirmation of the unwritten
entered into a contract 3 on 01 April 1989 for security services to be provided by respondent Sultan Security Agency with the Regional Arbitration Branch X, rule effectively insulating it from the jurisdiction of courts. 8 It is based on the
the latter to the said governmental entity. Save for the increase in the monthly Cagayan de Oro City within the same period for proper dispositions; very essence of sovereignty. As has been aptly observed, by Justice Holmes, a
rate of the guards, the same terms and conditions were also made to apply to sovereign is exempt from suit, not because of any formal conception or
another contract, dated 01 May 1990, between the same parties. Pursuant to 3. In order to ensure compliance with this order, petitioner is likewise directed obsolete theory, but on the logical and practical ground that there can be no
their arrangements, guards were deployed by Sultan Agency in the various to put up and post sufficient surety and supersedeas bond equivalent to at least legal right as against the authority that makes the law on which the right
premises of the petitioner. to fifty (50%) percent of the total monetary award issued by a reputable depends. 9 True, the doctrine, not too infrequently, is derisively called "the royal
bonding company duly accredited by the Supreme Court or by the Regional Trial prerogative of dishonesty" because it grants the state the prerogative to defeat
On 13 September 1990, several guards of the Sultan Security Agency filed a Court of Misamis Oriental to answer for the satisfaction of the money claims in any legitimate claim against it by simply invoking its non-suability. 10 We have
complaint for underpayment of wages, non-payment of 13th month pay, case of failure or default on the part of petitioner to satisfy the money claims; had occasion, to explain in its defense, however, that a continued adherence to
uniform allowances, night shift differential pay, holiday pay and overtime pay,
the doctrine of non-suability cannot be deplored, for the loss of governmental
as well as for damages, 4 before the Regional Arbitration Branch X of Cagayan de 4. The City Sheriff is ordered to immediately release the properties of petitioner
efficiency and the obstacle to the performance of its multifarious functions
Oro City, docketed as NLRC Case No. 10-09-00455-90 (or 10-10-00519-90, its levied on execution within ten (10) days from notice of the posting of sufficient
would be far greater in severity than the inconvenience that may be caused
original docket number), against the Department of Agriculture and Sultan surety or supersedeas bond as specified above. In the meanwhile, petitioner is
private parties, if such fundamental principle is to be abandoned and the
Security Agency. assessed to pay the costs and/or expenses incurred by the City Sheriff, if any, in
availability of judicial remedy is not to be accordingly restricted. 11
The rule, in any case, is not really absolute for it does not say that the state may into the questioned contract; nor that it could have, in fact, performed any act implementing any and all writs of execution issued pursuant to the decision
not be sued under any circumstances. On the contrary, as correctly phrased, the proprietary in character. rendered by the Labor Arbiter against said petitioner.
doctrine only conveys, "the state may not be sued without its consent;" its clear
import then is that the State may at times be sued. 12 The States' consent may But, be that as it may, the claims of private respondents, i.e. for underpayment SO ORDERED.
be given expressly or impliedly. Express consent may be made through a of wages, holiday pay, overtime pay and similar other items, arising from the
general law 13 or a special law. 14 In this jurisdiction, the general law waiving the Contract for Service, clearly constitute money claims. Act No. 3083, aforecited,
immunity of the state from suit is found in Act No. 3083, where the Philippine gives the consent of the State to be "sued upon any moneyed claim involving
government "consents and submits to be sued upon any money claims involving liability arising from contract, express or implied, . . . Pursuant, however, to
liability arising from contract, express or implied, which could serve as a basis of Commonwealth Act ("C.A.") No. 327, as amended by Presidential Decree G.R. No. L-30044 December 19, 1973
civil action between private parties." 15 Implied consent, on the other hand, is ("P.D.") No. 1145, the money claim first be brought to the Commission on Audit.
Thus, inCarabao, Inc., vs. Agricultural Productivity Commission, 20 we ruled: LORENZO SAYSON, as Highway Auditor, Bureau of Public Highways, Cebu First
conceded when the State itself commences litigation, thus opening itself to a
Engineering District; CORNELIO FORNIER, as Regional Supervising Auditor,
counterclaim 16 or when it enters into a contract. 17 In this situation, the
(C)laimants have to prosecute their money claims against the Government Eastern Visayas Region; ASTERIO, BUQUERON, ADVENTOR FERNANDEZ,
government is deemed to have descended to the level of the other contracting
under Commonwealth Act 327, stating that Act 3083 stands now merely as the MANUEL S. LEPATAN, RAMON QUIRANTE, and TEODULFO REGIS, petitioners,
party and to have divested itself of its sovereign immunity. This rule, relied
general law waiving the State's immunity from suit, subject to the general vs.
upon by the NLRC and the private respondents, is not, however, without
limitation expressed in Section 7 thereof that "no execution shall issue upon any FELIPE SINGSON, as sole owner and proprietor of Singkier Motor
qualification. Not all contracts entered into by the government operate as a
judgment rendered by any Court against the Government of the (Philippines), Service, respondent.
waiver of its non-suability; distinction must still be made between one which is
and that the conditions provided in Commonwealth Act 327 for filing money
executed in the exercise of its sovereign function and another which is done in Office of the Solicitor General Felix V. Makasiar and Solicitor Bernardo P. Pardo
claims against the Government must be strictly observed."
its proprietary capacity. 18 for petitioners.
We fail to see any substantial conflict or inconsistency between the provisions
In the Unites States of America vs. Ruiz, 19 where the questioned transaction Teodoro Almase and Casiano U. Laput for respondent.
of C.A. No. 327 and the Labor Code with respect to money claims against the
dealt with improvements on the wharves in the naval installation at Subic Bay,
State. The Labor code, in relation to Act No. 3083, provides the legal basis for
we held:
the State liability but the prosecution, enforcement or satisfaction thereof must
The traditional rule of immunity exempts a State from being sued in the courts still be pursued in accordance with the rules and procedures laid down in C.A. FERNANDO, J.:
of another State without its consent or waiver. This rule is a necessary No. 327, as amended by P.D. 1445.
consequence of the principles of independence and equality of States. The real party in interest before this Court in this certiorari proceeding to
When the state gives its consent to be sued, it does thereby necessarily consent review a decision of the Court of First Instance of Cebu is the Republic of the
However, the rules of International Law are not petrified; they are constantly
to unrestrained execution against it. tersely put, when the State waives its Philippines, although the petitioners are the public officials who were named as
developing and evolving. And because the activities of states have multiplied, it
immunity, all it does, in effect, is to give the other party an opportunity to respondents 1 in a mandamus suit below. Such is the contention of the then
has been necessary to distinguish them — between sovereign and
prove, if it can, that the State has a liability. 21 In Republic vs. Villasor 22 this Solicitor General, now Associate Justice, Felix V. Makasiar, 2 for as he did point
governmental acts ( jure imperii) and private, commercial and proprietary act
Court, in nullifying the issuance of an alias writ of execution directed against the out, what is involved is a money claim against the government, predicated on a
( jure gestionisis). The result is that State immunity now extends only to
funds of the Armed Forces of the Philippines to satisfy a final and executory contract. The basic doctrine of non-suability of the government without its
acts jure imperii. The restrictive application of State immunity is now the rule in
judgment, has explained, thus — consent is thus decisive of the controversy. There is a governing statute that is
the United States, the United Kingdom and other states in Western Europe.
controlling. 3 Respondent Felipe Singson, the claimant, for reasons known to
The universal rule that where the State gives its consent to be sued by private
xxx xxx xxx him, did not choose to abide by its terms. That was a fatal misstep. The lower
parties either by general or special law, it may limit the claimant's action "only
court, however, did not see it that way. We cannot affirm its decision.
The restrictive application of State immunity is proper only when the up to the completion of proceedings anterior to the stage of execution"
proceedings arise out of commercial transactions of the foreign sovereign, its and that the power of the Courts ends when the judgment is rendered, since As found by the lower court, the facts are the following: "In January, 1967, the
commercial activities or economic affairs. Stated differently, a state may be said government funds and properties may not be seized under writs or execution or Office of the District Engineer requisitioned various items of spare parts for the
to have descended to the level of an individual and can this be deemed to have garnishment to satisfy such judgments, is based on obvious considerations of repair of a D-8 bulldozer, ... . The requisition (RIV No. 67/0331) was signed by
actually given its consent to be sued only when it enters into business contracts. public policy. Disbursements of public funds must be covered by the the District Engineer, Adventor Fernandez, and the Requisitioning Officer (civil
It does not apply where the contracts relates to the exercise of its sovereign correspondent appropriation as required by law. The functions and public engineer), Manuel S. Lepatan. ... It was approved by the Secretary of Public
functions. In this case the projects are an integral part of the naval base which is services rendered by the State cannot be allowed to be paralyzed or disrupted Works and Communications, Antonio V. Raquiza. It is noted in the approval of
devoted to the defense of both the United States and the Philippines, by the diversion of public funds from their legitimate and specific objects, as the said requisition that "This is an exception to the telegram dated Feb. 21,
indisputably a function of the government of the highest order; they are not appropriated by law. 23 1967 of the Secretary of Public Works and Communications." ... So, a canvass or
utilized for not dedicated to commercial or business purposes. public bidding was conducted on May 5, 1967 ... . The committee on award
WHEREFORE, the petition is GRANTED. The resolution, dated 27 November
accepted the bid of the Singkier Motor Service [owned by respondent Felipe
In the instant case, the Department of Agriculture has not pretended to have 1991, is hereby REVERSED and SET ASIDE. The writ of execution directed against
Singson] for the sum of P43,530.00. ... Subsequently, it was approved by the
assumed a capacity apart from its being a governmental entity when it entered the property of the Department of Agriculture is nullified, and the public
Secretary of Public Works and Communications; and on May 16, 1967 the
respondents are hereby enjoined permanently from doing, issuing and
Secretary sent a letter-order to the Singkier Motor Service, Mandaue, Cebu
requesting it to immediately deliver the items listed therein for the lot price of Auditing Office, under the provisions of Com. Act 327 ... which prescribe the Heirs of Isidro Guivelondo, docketed as Civil Case No. CEB-23386. Petitioner
P43,530.00. ... It would appear that a purchase order signed by the District conditions under which money claim against the government may be alleged that defendant Associacion Benevola de Cebu was the claimant/owner
Engineer, the Requisitioning Officer and the Procurement Officer, was filed ...." 5 Commonwealth Act No. 327 is quite explicit. It is therein provided: "In of Lot 108-C located in the Banilad Estate, Cebu City; that defendant Engracia
addressed to the Singkier Motor Service. ... In due course the Voucher No. all cases involving the settlement of accounts or claims, other than those of Urot was the claimant/owner of Lots Nos. 108-F, 108-I, 108-G, 6019-A and
07806 reached the hands of Highway Auditor Sayson for pre-audit. He then accountable officers, the Auditor General shall act and decide the same within 6013-A, all of the Banilad Estate; that defendant Heirs of Isidro Guivelondo were
made inquiries about the reasonableness of the price. ... Thus, after finding sixty days, exclusive of Sundays and holidays, after their presentation. If said the claimants/owners of Cadastral Lot No. 1613-D located at Carreta, Mabolo,
from the indorsements of the Division Engineer and the Commissioner of Public accounts or claims need reference to other persons, office or offices, or to a Cebu City; and that the lands are within a blighted urban center which
Highways that the prices of the various spare parts are just and reasonable and party interested, the period aforesaid shall be counted from the time the last petitioner intends to develop as a socialized housing project.[1]
that the requisition was also approved by no less than the Secretary of Public comment necessary to a proper decision is received by
Works and Communications with the verification of V.M. Secarro a him." 6 Thereafter, the procedure for appeal is indicated: "The party aggrieved On November 12, 1999, the Heirs of Isidro Guivelondo, respondents herein,
representative of the Bureau of Supply Coordination, Manila, he approved it for by the final decision of the Auditor General in the settlement of an account or filed a Manifestation stating that they were waiving their objections to
payment in the sum of P34,824.00, with the retention of 20% equivalent to claim may, within thirty days from receipt of the decision, take an appeal in petitioners power to expropriate their properties. Hence, the trial court issued
P8,706.00. ... His reason for withholding the 20% equivalent to P8,706.00 was to writing: (a) To the President of the United States, pending the final and an Order as follows:
submit the voucher with the supporting papers to the Supervising Auditor, complete withdrawal of her sovereignty over the Philippines, or (b) To the
WHEREFORE, the Court hereby declares that the plaintiff has a lawful right to
which he did. ... The voucher ... was paid on June 9, 1967 in the amount of President of the Philippines, or (c) To the Supreme Court of the Philippines if the
expropriate the properties of the defendants who are heirs of Isidro
P34,824.00 to the petitioner [respondent Singson]. On June 10,1967, Highway appellant is a private person or entity." 7
Guivelondo.
Auditor Sayson received a telegram from Supervising Auditor Fornier quoting a
telegraphic message of the General Auditing Office which states: "In view of 2. With the facts undisputed and the statute far from indefinite or ambiguous,
The appointment of commissioners who would ascertain and report to the
excessive prices charge for purchase of spare parts and equipment shown by the appealed decision defies explanation. It would be to disregard a basic
Court the just compensation for said properties will be done as soon as the
vouchers already submitted this Office direct all highway auditors refer General corollary of the cardinal postulate of non-suability. It is true that once consent is
parties shall have submitted to the Court the names of persons desired by them
Office payment similar nature for appropriate action." ... In the interim it would secured, an action may be filed. There is nothing to prevent the State, however,
to be appointed as such commissioners.
appear that when the voucher and the supporting papers reached the GAO, a in such statutory grant, to require that certain administrative proceedings be
canvass was made of the spare parts among the suppliers in Manila, had and be exhausted. Also, the proper forum in the judicial hierarchy can be SO ORDERED.[2]
particularly, the USI (Phil.), which is the exclusive dealer of the spare parts of specified if thereafter an appeal would be taken by the party aggrieved. Here,
there was no ruling of the Auditor General. Even had there been such, the court Thereafter, the trial court appointed three Commissioners to ascertain the
the caterpillar tractors in the Philippines. Said firm thus submitted its quotations
to which the matter should have been elevated is this Tribunal; the lower court correct and just compensation of the properties of respondents. On April 17,
at P2,529.64 only which is P40,000.00 less than the price of the Singkier. ... In
could not legally act on the matter. What transpired was anything but that. It is 2000, the Commissioners submitted their report wherein they recommended
view of the overpricing the GAO took up the matter with the Secretary of Public
quite obvious then that it does not have the imprint of validity. that the just compensation of the subject properties be fixed at P11,200.00 per
Works in a third indorsement of July 18, 1967. ... The Secretary then circularized
square meter.[3] On August 7, 2000, the trial court rendered Partial Judgment
a telegram holding the district engineer responsible for overpricing." 4 What is
WHEREFORE, the decision of the Court of First Instance of Cebu of September 4, adopting the recommendation of the Commissioners and fixing the just
more, charges for malversation were filed against the district engineer and the
1968 is reversed and set aside, and the suit for mandamus filed against compensation of the lands of respondent Heirs of Isidro Guivelondo at
civil engineer involved. It was the failure of the Highways Auditor, one of the
petitioners, respondents below, is dismissed. With costs against respondent P11,200.00 per square meter, to wit:
petitioners before us, that led to the filing of the mandamus suit below, with
Felipe Singson.
now respondent Singson as sole proprietor of Singkier Motor Service, being WHEREFORE, in view of the foregoing premises, judgment is hereby rendered
adjudged as entitled to collect the balance of P8,706.00, the contract in by the Court in this case fixing the just compensation for the lands of the
question having been upheld. Hence this appeal by certiorari. defendants who are the heirs of Isidro Guivelondo, more particularly Lots Nos.
1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 15, 16, 19, 20, 6016-F, 6016-H, 6016-E and
1. To state the facts is to make clear the solidity of the stand taken by the
[G.R. No. 154411. June 19, 2003] 6016-D of Csd-10219, which were sought to be expropriated by the plaintiff at
Republic. The lower court was unmindful of the fundamental doctrine of non-
P11,200.00 per square meter and ordering the plaintiff to pay to the said
suability. So it was stressed in the petition of the then Solicitor General
NATIONAL HOUSING AUTHORITY, petitioner, vs. HEIRS OF ISIDRO defendants the just compensation for the said lands computed at P11,200.00
Makasiar. Thus: "It is apparent that respondent Singson's cause of action is a
GUIVELONDO, COURT OF APPEALS, HON. ISAIAS DICDICAN, Presiding Judge, per square meter.
money claim against the government, for the payment of the alleged balance of
Regional Trial Court, Branch 11, Cebu City, and PASCUAL Y. ABORDO, Sheriff,
the cost of spare parts supplied by him to the Bureau of Public Highways. IT IS SO ORDERED.[4]
Regional Trial Court, Branch 11, Cebu City, respondents.
Assuming momentarily the validity of such claim, although as will be shown
hereunder, the claim is void for the cause or consideration is contrary to law, DECISION Petitioner NHA filed two motions for reconsideration dated August 30, 2000
morals or public policy, mandamus is not the remedy to enforce the collection and August 31, 2000, assailing the inclusion of Lots 12, 13 and 19 as well as the
of such claim against the State but a ordinary action for specific performance ... YNARES-SANTIAGO, J.: amount of just compensation, respectively. Respondent Heirs also filed a
. Actually, the suit disguised as one for mandamus to compel the Auditors to motion for reconsideration of the Partial Judgment. On October 11, 2000, the
approve the vouchers for payment, is a suit against the State, which cannot On February 23, 1999, petitioner National Housing Authority filed with the trial court issued an Omnibus Order denying the motion for reconsideration of
prosper or be entertained by the Court except with the consent of the State ... . Regional Trial Court of Cebu City, Branch 11, an Amended Complaint for respondent Heirs and the August 31, 2000 motion of petitioner, on the ground
In other words, the respondent should have filed his claim with the General eminent domain against Associacion Benevola de Cebu, Engracia Urot and the that the fixing of the just compensation had adequate basis and support. On the
other hand, the trial court granted petitioners August 30, 2000 motion for of the trial court denying its Motion to Dismiss and its Motion for In the early case of City of Manila v. Ruymann,[24] the Court was confronted with
reconsideration on the ground that the Commissioners Report did not include Reconsideration.[15] the question: May the petitioner, in an action for expropriation, after he has
Lots 12, 13 and 19 within its coverage. Thus: been placed in possession of the property and before the termination of the
On February 5, 2002, the Court of Appeals summarily dismissed the action, dismiss the petition? It resolved the issue in the affirmative and held:
WHEREFORE, in view of the foregoing premises, the Court hereby denies the petition. Immediately thereafter, respondent Sheriff Pascual Y. Abordo of the
motion of the heirs of Isidro Guivelondo (with the exception of Carlota Mercado Regional Trial Court of Cebu City, Branch 11, served on petitioner a Notice of The right of the plaintiff to dismiss an action with the consent of the court is
and Juanita Suemith) for reconsideration of the partial judgment rendered in Levy pursuant to the Writ of Execution issued by the trial court to enforce the universally recognized with certain well-defined exceptions. If the plaintiff
this case on August 7, 2000 and plaintiffs motion for reconsideration of said Partial Judgment of August 7, 2000 and the Omnibus Order of October 11, discovers that the action which he commenced was brought for the purpose of
judgment, dated August 31, 2000. 2000.[16] enforcing a right or a benefit, the advisability or necessity of which he later
discovers no longer exists, or that the result of the action would be different
However, the Court hereby grants the plaintiffs motion for reconsideration of On February 18, 2002, the Court of Appeals set aside the dismissal of the from what he had intended, then he should be permitted to withdraw his
said judgment, dated August 30, 2000. Accordingly, the judgment rendered in petition and reinstated the same.[17] Thereafter, a temporary restraining order action, subject to the approval of the court. The plaintiff should not be required
this case on August 7, 2000 is hereby set aside insofar as it has fixed just was issued enjoining respondent sheriff to preserve the status quo.[18] to continue the action, subject to some well-defined exceptions, when it is not
compensations for Lots Nos. 12, 13 and 19 of Csd-10219 because the fixing of to his advantage to do so. Litigation should be discouraged and not
said just compensations appears to lack adequate basis. On May 27, 2002, respondent sheriff served on the Landbank of the Philippines
encouraged. Courts should not require parties to litigate when they no longer
a Notice of Third Garnishment against the deposits, moneys and interests of
desire to do so. Courts, in granting permission to dismiss an action, of course,
SO ORDERED.[5] petitioner therein.[19] Subsequently, respondent sheriff levied on funds and
should always take into consideration the effect which said dismissal would
personal properties of petitioner.[20]
Petitioner filed with the Court of Appeals a petition for certiorari, which was have upon the rights of the defendant.[25]
docketed as CA-G.R. SP No. 61746.[6] Meanwhile, on October 31, 2000, the trial On July 16, 2002, the Court of Appeals rendered the assailed decision dismissing
Subsequently, in Metropolitan Water District v. De Los Angeles,[26] the Court had
court issued an Entry of Judgment over the Partial Judgment dated August 7, the petition for certiorari.[21]
occasion to apply the above-quoted ruling when the petitioner, during the
2000 as modified by the Omnibus Order dated October 11,
Hence, petitioner filed this petition for review, raising the following issues: pendency of the expropriation case, resolved that the land sought to be
2000.[7] Subsequently, respondent Heirs filed a Motion for Execution, which was
condemned was no longer necessary in the maintenance and operation of its
granted on November 22, 2000.
1) WHETHER OR NOT THE STATE CAN BE COMPELLED AND COERCED BY THE system of waterworks. It was held:
On January 31, 2001, the Court of Appeals dismissed the petition for certiorari COURTS TO EXERCISE OR CONTINUE WITH THE EXERCISE OF ITS INHERENT
POWER OF EMINENT DOMAIN; It is not denied that the purpose of the plaintiff was to acquire the land in
on the ground that the Partial Judgment and Omnibus Order became final and
question for a public use. The fundamental basis then of all actions brought for
executory when petitioner failed to appeal the same.[8]
2) WHETHER OR NOT JUDGMENT HAS BECOME FINAL AND EXECUTORY AND IF the expropriation of lands, under the power of eminent domain, is public
Petitioners Motion for Reconsideration and Urgent Ex-Parte Motion for a ESTOPPEL OR LACHES APPLIES TO GOVERNMENT; use. That being true, the very moment that it appears at any stage of the
Clarificatory Ruling were denied in a Resolution dated March 18, 2001.[9] A proceedings that the expropriation is not for a public use, the action must
3) WHETHER OR NOT WRITS OF EXECUTION AND GARNISHMENT MAY BE
petition for review was filed by petitioner with this Court, which was docketed necessarily fail and should be dismissed, for the reason that the action cannot
ISSUED AGAINST THE STATE IN AN EXPROPRIATION WHEREIN THE EXERCISE OF
as G.R. No. 147527. However, the same was denied in a Minute Resolution be maintained at all except when the expropriation is for some public use. That
THE POWER OF EMINENT DOMAIN WILL NOT SERVE PUBLIC USE OR PURPOSE
dated May 9, 2001 for failure to show that the Court of Appeals committed a must be true even during the pendency of the appeal of at any other stage of
{APPLICATION OF SUPREME COURT ADMINISTRATIVE CIRCULAR NO. 10-
reversible error.[10] the proceedings. If, for example, during the trial in the lower court, it should be
2000}.[22]
made to appear to the satisfaction of the court that the expropriation is not for
Petitioner filed a Motion for Reconsideration which was however denied with some public use, it would be the duty and the obligation of the trial court to
Respondent Heirs of Isidro Guivelondo filed their Comment, arguing as follows:
finality on August 20, 2001.[11] dismiss the action. And even during the pendency of the appeal, if it should be
I made to appear to the satisfaction of the appellate court that the expropriation
Prior to the aforesaid denial of the Motion for Reconsideration, petitioner, on
is not for public use, then it would become the duty and the obligation of the
July 16, 2001, filed with the trial court a Motion to Dismiss Civil Case No. CEB- AS EARLIER UPHELD BY THE HONORABLE COURT, THE JUDGMENT OF THE TRIAL appellate court to dismiss it.[27]
23386, complaint for eminent domain, alleging that the implementation of its COURT IS ALREADY FINAL AND EXECUTORY, HENCE, COULD NO LONGER BE
socialized housing project was rendered impossible by the unconscionable value DISTURBED NOR SET ASIDE Notably, the foregoing cases refer to the dismissal of an action for eminent
of the land sought to be expropriated, which the intended beneficiaries can not domain at the instance of the plaintiff during the pendency of the case. The rule
afford.[12] The Motion was denied on September 17, 2001, on the ground that II is different where the case had been decided and the judgment had already
the Partial Judgment had already become final and executory and there was no become final and executory.
THE FUNDS AND ASSETS OF THE PETITIONER ARE NOT EXEMPT FROM LEVY AND
just and equitable reason to warrant the dismissal of the case.[13] Petitioner filed
GARNISHMENT Expropriation proceedings consists of two stages: first, condemnation of the
a Motion for Reconsideration, which was denied in an Order dated November
20, 2001.[14] property after it is determined that its acquisition will be for a public purpose or
III
public use and, second, the determination of just compensation to be paid for
Petitioner thus filed a petition for certiorari with the Court of Appeals, which THE ISSUES RAISED IN THIS SECOND PETITION FOR REVIEW WERE ALREADY the taking of private property to be made by the court with the assistance of
was docketed as CA-G.R. SP No. 68670, praying for the annulment of the Order RESOLVED BY THE HONORABLE COURT[23] not more than three commissioners.[28] Thus:
There are two (2) stages in every action for expropriation. The first is concerned After the rendition of such an order, the plaintiff shall not be permitted to against respondents only to abandon it later when it finds the amount of just
with the determination of the authority of the plaintiff to exercise the power of dismiss or discontinue the proceeding except on such terms as the court deems compensation unacceptable. Indeed, our reprobation in the case of Cosculluela
eminent domain and the propriety of its exercise in the context of the facts just and equitable. (underscoring ours) v. Court of Appeals[36]is apropos:
involved in the suit. It ends with an order, if not of dismissal of the action, of
condemnation declaring that the plaintiff has a lawful right to take the property In the case at bar, petitioner did not appeal the Order of the trial court dated It is arbitrary and capricious for a government agency to initiate expropriation
sought to be condemned, for the public use or purpose described in the December 10, 1999, which declared that it has a lawful right to expropriate the proceedings, seize a persons property, allow the judgment of the court to
complaint, upon the payment of just compensation to be determined as of the properties of respondent Heirs of Isidro Guivelondo. Hence, the Order became become final and executory and then refuse to pay on the ground that there are
date of the filing of the complaint. An order of dismissal, if this be ordained, final and may no longer be subject to review or reversal in any court.[33] A final no appropriations for the property earlier taken and profitably used. We
would be a final one, of course, since it finally disposes of the action and leaves and executory decision or order can no longer be disturbed or reopened no condemn in the strongest possible terms the cavalier attitude of government
nothing more to be done by the Court on the merits. So, too, would an order of matter how erroneous it may be. Although judicial determinations are not officials who adopt such a despotic and irresponsible stance.
condemnation be a final one, for thereafter, as the Rules expressly state, in the infallible, judicial error should be corrected through appeals, not through
repeated suits on the same claim.[34] In order to resolve the issue of the propriety of the garnishment against
proceedings before the Trial Court, no objection to the exercise of the right of
petitioners funds and personal properties, there is a need to first determine its
condemnation (or the propriety thereof) shall be filed or heard.
Petitioner anchors its arguments on the last paragraph of the above-quoted true character as a government entity. Generally, funds and properties of the
The second phase of the eminent domain action is concerned with the Rule 67, Section 4. In essence, it contends that there are just and equitable government cannot be the object of garnishment proceedings even if the
determination by the Court of the just compensation for the property sought to grounds to allow dismissal or discontinuance of the expropriation consent to be sued had been previously granted and the state liability
be taken. This is done by the Court with the assistance of not more than three proceedings. More specifically, petitioner alleges that the intended public use adjudged.[37]
(3) commissioners. The order fixing the just compensation on the basis of the was rendered nugatory by the unreasonable just compensation fixed by the
court, which is beyond the means of the intended beneficiaries of the socialized The universal rule that where the State gives its consent to be sued by private
evidence before, and findings of, the commissioners would be final, too. It
housing project. The argument is tenuous. parties either by general or special law, it may limit claimants action only up to
would finally dispose of the second stage of the suit, and leave nothing more to
the completion of proceedings anterior to the stage of execution and that the
be done by the Court regarding the issue. Obviously, one or another of the
Socialized housing has been recognized as public use for purposes of exercising power of the Courts ends when the judgment is rendered, since government
parties may believe the order to be erroneous in its appreciation of the
the power of eminent domain. funds and properties may not be seized under writs of execution or
evidence or findings of fact or otherwise. Obviously, too, such a dissatisfied
garnishment to satisfy such judgments, is based on obvious considerations of
party may seek a reversal of the order by taking an appeal therefrom.[29] Housing is a basic human need. Shortage in housing is a matter of state concern public policy. Disbursements of public funds must be covered by the
since it directly and significantly affects public health, safety, the environment corresponding appropriation as required by law. The functions and public
The outcome of the first phase of expropriation proceedings, which is either an
and in sum, the general welfare. The public character of housing measures does services rendered by the State cannot be allowed to be paralyzed or disrupted
order of expropriation or an order of dismissal, is final since it finally disposes of
not change because units in housing projects cannot be occupied by all but only by the diversion of public funds from their legitimate and specific objects, as
the case. On the other hand, the second phase ends with an order fixing the
by those who satisfy prescribed qualifications. A beginning has to be made, for appropriated by law.[38]
amount of just compensation. Both orders, being final, are appealable.[30] An
it is not possible to provide housing for all who need it, all at once.
order of condemnation or dismissal is final, resolving the question of whether or
However, if the funds belong to a public corporation or a government-owned or
not the plaintiff has properly and legally exercised its power of eminent xxx xxx xxx. controlled corporation which is clothed with a personality of its own, separate
domain.[31] Once the first order becomes final and no appeal thereto is taken,
and distinct from that of the government, then its funds are not exempt from
the authority to expropriate and its public use can no longer be questioned.[32] In the light of the foregoing, this Court is satisfied that socialized housing falls
garnishment.[39] This is so because when the government enters into
with the confines of public use. xxx xxx xxx. Provisions on economic
The above rule is based on Rule 67, Section 4 of the 1997 Rules of Civil commercial business, it abandons its sovereign capacity and is to be treated like
opportunities inextricably linked with low-cost housing, or slum clearance,
Procedure, which provides: any other corporation.[40]
relocation and resettlement, or slum improvement emphasize the public
purpose of the project.[35] In the case of petitioner NHA, the matter of whether its funds and properties
Order of expropriation. If the objections to and the defenses against the right of
the plaintiff to expropriate the property are overruled, or when no party are exempt from garnishment has already been resolved squarely against its
The public purpose of the socialized housing project is not in any way
appears to defend as required by this Rule, the court may issue an order of predecessor, the Peoples Homesite and Housing Corporation (PHHC), to wit:
diminished by the amount of just compensation that the court has fixed. The
expropriation declaring that the plaintiff has a lawful right to take the property need to provide decent housing to the urban poor dwellers in the locality was The plea for setting aside the notice of garnishment was premised on the funds
sought to be expropriated, for the public use or purpose described in the not lost by the mere fact that the land cost more than petitioner had of the Peoples Homesite and Housing Corporation deposited with petitioner
complaint, upon the payment of just compensation to be determined as of the expected. It is worthy to note that petitioner pursued its petition for certiorari being public in character. There was not even a categorical assertion to that
date of the taking of the property or the filing of the complaint, whichever came with the Court of Appeals assailing the amount of just compensation and its effect. It is only the possibility of its being public in character. The tone was thus
first. petition for review with this Court which eloquently indicates that there still irresolute, the approach diffident. The premise that the funds cold be spoken of
exists a public use for the housing project. It was only after its appeal and as public in character may be accepted in the sense that the Peoples Homesite
A final order sustaining the right to expropriate the property may be appealed
petitions for review were dismissed that petitioner made a complete turn- and Housing Corporation was a government-owned entity. It does not follow
by any party aggrieved thereby. Such appeal, however, shall not prevent the
around and decided it did not want the property anymore. though that they were exempt from garnishment.[41]
court from determining the just compensation to be paid.
Respondent landowners had already been prejudiced by the expropriation This was reiterated in the subsequent case of Philippine Rock Industries, Inc. v.
case. Petitioner cannot be permitted to institute condemnation proceedings Board of Liquidators:[42]
Having a juridical personality separate and distinct from the government, the FACTUAL BACKGROUND 3. The amount of One Hundred Twenty Eight Thousand, Five Hundred
funds of such government-owned and controlled corporations and non- Twenty Nine Pesos and Fourteen Centavos (P128,529.14), as filing fees and
corporate agency, although considered public in character, are not exempt On April 3, 1996, PTA, an agency of the Department of Tourism, whose main other costs of litigation.
from garnishment. This doctrine was applied to suits filed against the Philippine function is to bolster and promote tourism, entered into a contract with Atlantic
Virginia Tobacco Administration (PNB vs. Pabalan, et al., 83 SCRA 695); the Erectors, Inc. (AEI) for the construction of the Intramuros Golf Course Expansion 4. The amount of Three Hundred Thousand Pesos (P300,000.00), as
National Shipyard & Steel Corporation (NASSCO vs. CIR, 118 Phil. 782); the Projects (PAR 60-66) for a contract price of Fifty-Seven Million Nine Hundred moral damages.
Manila Hotel Company (Manila Hotel Employees Asso. vs. Manila Hotel Co., 73 Fifty-Four Thousand Six Hundred Forty-Seven and 94/100 Pesos
(P57,954,647.94). 5. The amount of One Hundred Fifty Thousand (Pesos (P150,000.00),
Phil. 374); and the People's Homesite and Housing Corporation (PNB vs. CIR, 81
as nominal damages, and
SCRA 314). [emphasis ours]
6. The amount of Two Hundred Fifty Thousand Pesos (P250,000.00),
Hence, it is clear that the funds of petitioner NHA are not exempt from
The civil works of the project commenced. Since AEI was incapable of as exemplary damages.
garnishment or execution. Petitioners prayer for injunctive relief to restrain
constructing the golf course aspect of the project, it entered into a sub-contract
respondent Sheriff Pascual Abordo from enforcing the Notice of Levy and
agreement with PHILGOLF, a duly organized domestic corporation, to build the
Garnishment against its funds and properties must, therefore, be denied.
golf course amounting to Twenty-Seven Million Pesos (P27,000,000.00). The
SO ORDERED.[4]
WHEREFORE, in view of the foregoing, the instant petition for review sub-contract agreement also provides that PHILGOLF shall submit its progress
is DENIED. The decision of the Court of Appeals in CA-G.R. SP No. 68670, billings directly to PTA and, in turn, PTA shall directly pay PHILGOLF.[3]
affirming the trial courts Order denying petitioners Motion to Dismiss the
On July 11, 2005, PTA seasonably appealed the case to the CA. But before the
expropriation proceedings in Civil Case No. CEB-23386, is AFFIRMED. Petitioners
appeal of PTA could be perfected, PHILGOLF already filed a motion for
prayer for injunctive relief against the levy and garnishment of its funds and On October 2, 2003, PHILGOLF filed a collection suit against PTA amounting to
execution pending appeal with the RTC. The RTC, in an Order dated June 2,
personal properties is DENIED. The Temporary Restraining Order dated January Eleven Million Eight Hundred Twenty Thousand Five Hundred Fifty and 53/100
2004, granted the motion and a writ of execution pending appeal was issued
22, 2003 is LIFTED. Pesos (P11,820,550.53), plus interest, for the construction of the golf
against PTA. On June 3, 2004, a notice of garnishment was issued against PTAs
course. Within the period to file a responsive pleading, PTA filed a motion for
SO ORDERED. bank account at the Land Bank of the Philippines, NAIA-BOC Branch to fully
extension of time to file an answer.
satisfy the judgment.

On October 30, 2003, the RTC granted the motion for extension of time. PTA
PTA filed a petition for certiorari with the CA, imputing grave abuse of discretion
G.R. No. 176628 filed another motion for extension of time to file an answer. The RTC again
on the part of the RTC for granting the motion for execution pending appeal.
granted the motion.
The CA ruled in favor of PTA and set aside the order granting the motion for
PHILIPPINE TOURISM AUTHORITY,
execution pending appeal.
- versus -
Despite the RTCs liberality of granting two successive motions for extension of
PHILIPPINE GOLF DEVELOPMENT time, PTA failed to answer the complaint. Hence, on April 6, 2004, the RTC
On July 11, 2005, PTA withdrew its appeal of the RTC decision and, instead, filed
rendered a judgment of default, ruling as follows:
& EQUIPMENT, INC. 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
March 19, 2012 gross negligence of PTAs counsel prevented the presentation of evidence before
WHEREFORE, judgment is hereby rendered, ordering the defendant to pay the RTC.
x------------------------------------------------------------------------------------x plaintiff:
RESOLUTION 1. The amount of Eleven Million, Eight Hundred Twenty Thousand,
Five Hundred Fifty Pesos and Fifty Three Centavos (P11,820,550.53), On December 13, 2006, the CA dismissed the petition for annulment of
BRION, J.: judgment for lack of merit. PTA questions this CA action in the present petition
representing defendants outstanding obligation, plus interest thereon of twelve
percent (12%) per annum from the time the unpaid billings of plaintiff were due for certiorari.
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 for payment by the defendant, until they are fully paid.
of Appeals (CA) in CA G.R. SP No. 90402. This CA decision dismissed the petition
2. The amount of Two Hundred Thousand Pesos (P200,000.00), as
for annulment of judgment which sought to set aside the decision[2] of the THE PETITION
attorneys fees.
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 The petition cites three arguments: first, that the negligence of PTAs counsel
obligation to Philippine Golf Development & Equipment, Inc. (PHILGOLF). 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 product of any fraudulent acts committed outside trial, the RTC did not err in The general rule is that a [certiorari] will not issue where the remedy of appeal
negligence of its counsel; and third, that there were no other available remedies declaring PTA in default. is available to the aggrieved party. The remedies of appeal in the ordinary
left for PTA but a petition for annulment of judgment. 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 certiorariunder Rule 65 is not and cannot be a substitute for an
Annulment of judgment is not the proper remedy
appeal, where the latter remedy is available. xxx
OUR RULING
PTAs appropriate remedy was only to appeal the RTC decision. Annulment of
xxxx
We find the petition unmeritorious. 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 The proper recourse of the aggrieved party from a decision of the CA is a
new trial, appeal, petition for relief or other appropriate remedies are no longer petition for review on certiorari under Rule 45 of the Revised Rules of Court. On
available through no fault of petitioner.[12] the other hand, if the error subject of the recourse is one of jurisdiction, or the
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 act complained of was perpetrated by a quasi-judicial officer or agency with
In this case, appeal was an available remedy. There was also no extraordinary
technicalities by simply invoking the negligence of its counsel. This practice, if grave abuse of discretion amounting to lack or excess of jurisdiction, the proper
reason for a petition for annulment of judgment, nor was there any adequate
allowed, would defeat the purpose of the Rules on periods since every party remedy available to the aggrieved party is a petition for certiorari under Rule 65
explanation on why the remedy for new trial or petition for relief could not be
would merely lay the blame on its counsel to avoid any liability. The rule is that of the said Rules. [emphases supplied; citations omitted]
used. The Court is actually at a loss why PTA had withdrawn a properly filed
a client is bound by the acts, even mistakes, of his counsel in the realm of appeal and substituted it with another petition, when PTA could have merely
procedural technique[,]and unless such acts involve gross negligence that the raised the same issues through an ordinary appeal.
claiming party can prove, the acts of a counsel bind the client as if it had been In sum, PTA had the remedy of appealing the RTC decision to the CA and,
the latters acts.[6] 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
PTA was acting in a proprietary character
Rules of Court.
In LBC Express - Metro Manila, Inc. v. Mateo,[7] the Court held that [g]ross PTA also erred in invoking state immunity simply because it is a government
WHEREFORE, premises considered, we hereby DISMISS the petition
negligence is characterized by want of even slight care, acting or omitting to act entity. The application of state immunity is proper only when the proceedings
for certiorari. No costs.
in a situation where there is a duty to act, not inadvertently but willfully and arise out of sovereign transactions and not in cases of commercial activities or
intentionally with a conscious indifference to consequences insofar as other economic affairs. The State, in entering into a business contract, descends to SO ORDERED.
persons may be affected. This cannot be invoked in cases where the counsel is the level of an individual and is deemed to have tacitly given its consent to be
merely negligent in submitting his required pleadings within the period that the sued.[13]
rules mandate.
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. G.R. No. 131544. March 16, 2001]
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 EPG CONSTRUCTION CO., CIPER ELECTRICAL & ENGINEERING, SEPTA
Services Department, on October 10, 2003.[8] Thus, in failing to submit a CONSTRUCTION CO., PHIL. PLUMBING CO., HOME CONSTRUCTION INC.,
responsive pleading within the required time despite sufficient notice, the RTC A special civil action for certiorari under Rule 65 is proper only when there is WORLD BUILDERS CO., GLASS WORLD INC., PERFORMANCE BUILDERS DEVT.
was correct in declaring PTA in default. no other plain, speedy, and adequate remedy CO., DE LEON-ARANETA CONST. CO., J.D. MACAPAGAL CONST. CO., All
represented by their Atty. IN FACT, MARCELO D, FORONDA, petitioners, vs.
Lastly, a special civil action under Rule 65 of the Rules of Court is only available HON. GREGORIO R. VIGILAR, In His Capacity as Secretary of Public Works and
in cases when a tribunal, board or officer exercising judicial or quasi-judicial Highways, respondent.
There was no extrinsic fraud 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 DECISION
Extrinsic fraud refers to any fraudulent act of the prevailing party in the appeal, or any plain, speedy, and adequate remedy in the ordinary course of
litigation which is committed outside of the trial of the case, whereby the law. It is not a mode of appeal, and cannot also be made as a substitute for BUENA, J.:
unsuccessful party has been prevented from exhibiting fully his case, by fraud or appeal. It will not lie in cases where other remedies are available under the law.
deception practiced on him by his opponent.[9] Under the doctrine of this cited Sought to be reversed in the instant Petition for Certiorari is the Decision, dated
case, we do not see the acts of PTAs counsel to be constitutive of extrinsic In Land Bank of the Philippines v. Court of Appeals,[14] the Court had the 07 November 1997, of the Regional Trial Court of Quezon City, Branch 226, in
fraud. occasion to state: Civil Case No. Q-96-29243,[1] dismissing the Petition for Mandamus filed by
herein petitioners against herein respondent Hon. Gregorio Vigilar, in his
The records reveal that the judgment of default[10] was sent via registered mail capacity as Secretary of the Department of Public Works and Highways (DPWH).
to PTAs 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 The tapestry of facts unfurls.
In 1983, the Ministry of Human Settlement, through the BLISS Development Respectfully returned thru the Auditor to the Honorable Secretary, Department officials contracting authority, the same is not binding on the government and
Corporation, initiated a housing project on a government property along the of Public Works and Highways, Port Area, Manila, the above-captioned subject impose no liability therefor.[10]
east bank of the Manggahan Floodway in Pasig City. For this purpose, the (Re: Claim of Ten (10) contractors for payment of Work accomplishments on the
Ministry of Human Settlement entered into a Memorandum of Agreement construction of the COGEO II Housing Project, Pasig, Metro Manila) and Although this Court agrees with respondents postulation that the implied
(MOA) with the Ministry of Public Works and Highways,[2] where the latter reiterating the policy of this office as embodied in COA Circular No. 95-006 contracts, which covered the additional constructions, are void, in view of
undertook to develop the housing site and construct thereon 145 housing units. dated May 18, 1995 totally lifting its pre-audit activities on all financial violation of applicable laws, auditing rules and lack of legal requirements, [11] we
transactions of the agencies of the government involving nonetheless find the instant petition laden with merit and uphold, in the
By virtue of the MOA, the Ministry of Public Works and Highways forged implementation/prosecution of projects and/or payment of claims without interest of substantial justice, petitioners-contractors right to be compensated
individual contracts with herein petitioners EPG Construction Co., Ciper exception so as to vest on agency heads the prerogative to exercise fiscal for the "additional constructions" on the public works housing project, applying
Electrical and Engineering, Septa Construction Co., Phil. Plumbing Co., Home responsibility thereon. the principle of quantum meruit.
Construction Inc., World Builders Inc., Glass World Inc., Performance Builders
Development Co. and De Leon Araneta Construction Co., for the construction of The audit of the transaction shall be done after payment. Interestingly, this case is not of first impression. In Eslao vs. Commission on
the housing units. Under the contracts, the scope of construction and funding Audit,[12] this Court likewise allowed recovery by the contractor on the basis
therefor covered only around 2/3 of each housing unit.[3] After complying with In a letter dated 26 August 1996, respondent DPWH Secretary Gregorio Vigilar of quantum meruit, following our pronouncement in Royal Trust Construction
the terms of said contracts, and by reason of the verbal request and assurance denied the subject money claims prompting herein petitioners to file before the vs. Commission on Audit,[13] thus:
of then DPWH Undersecretary Aber Canlas that additional funds would be Regional Trial Court of Quezon City, Branch 226, a Petition for Mandamus
praying that herein respondent be ordered: In Royal Trust Construction vs. COA, a case involving the widening and
available and forthcoming, petitioners agreed to undertake and perform
deepening of the Betis River in Pampanga at the urgent request of the local
additional constructions[4] for the completion of the housing units, despite the
1) To pay petitioners the total of P5,819,316.00; officials and with the knowledge and consent of the Ministry of Public Works,
absence of appropriations and written contracts to cover subsequent expenses
even without a written contract and the covering appropriation, the project
for the additional constructions. 2) To pay petitioners moral and exemplary damages in the amount to be fixed was undertaken to prevent the overflowing of the neighboring areas and to
by the Court and sum of P500,000.00 as attorneys fees. irrigate the adjacent farmlands. The contractor sought compensation for the
Petitioners then received payment for the construction work duly covered by
the individual written contracts, thereby leaving an unpaid balance of completed portion in the sum of over P1 million. While the payment was
On 18 February 1997, the lower court conducted a pre-trial conference where
P5,918,315.63,[5] which amount represents the expenses for the additional favorably recommended by the Ministry of Public Works, it was denied by the
the parties appeared and filed their respective pre-trial briefs. Further,
constructions for the completion of the existing housing units. On 14 November respondent COA on the ground of violation of mandatory legal provisions as the
respondent submitted a Memorandum to which petitioners filed a Rejoinder.
1988, petitioners sent a demand letter to the DPWH Secretary and submitted existence of corresponding appropriations covering the contract cost. Under
that their claim for payment was favorably recommended by DPWH Assistant On 07 November 1997, the lower court denied the Petition for Mandamus, in a COA Res. No. 36-58 dated November 15, 1986, its existing policy is to allow
Secretary for Legal Services Dominador Madamba, who recognized the Decision which disposed as follows: recovery from covering contracts on the basis of quantum meruit if there is
existence of implied contracts covering the additional delay in the accomplishment of the required certificate of availability of funds
WHEREFORE, in view of all the foregoing, the instant Petition for Mandamus is to support a contract. (Emphasis ours)
constructions. Notwithstanding, DPWH Assistant Secretary Madamba opined
dismissed. The order of September 24, 1997, submitting the Manifestation and
that payment of petitioners money claims should be based on quantum
Motion for Resolution, is hereby withdrawn. In the Royal Construction case, this Court, applying the principle of quantum
meruitand should be forwarded to the Commission on Audit (COA) for its due
meruit in allowing recovery by the contractor, elucidated:
consideration and approval. The money claims were then referred to COA which SO ORDERED.
returned the same to the DPWH Auditor for auditorial action. On the basis of The work done by it (the contractor) was impliedly authorized and later
the Inspection Report of the Auditors Technical Staff, the DPWH Auditor Hence, this petition where the core issue for resolution focuses on the right of expressly acknowledged by the Ministry of Public Works, which has twice
interposed no objection to the payment of the money claims subject to petitioners-contractors to compensation for a public works housing project. recommended favorable action on the petitioners request for payment. Despite
whatever action the COA may adopt. the admitted absence of a specific covering appropriation as required under
In the case before us, respondent, citing among others Sections 46[6] and
COA Resolution No. 36-58, the petitioner may nevertheless be compensated
In a Second Indorsement dated 27 July 1992, the COA returned the documents 47,[7] Chapter 7, Sub-Title B, Title I, Book V of the Administrative Code of 1987
for the services rendered by it, concededly for the public benefit, from the
to the DPWH, stating that funds should first be made available before COA (E.O 292), posits that the existence of appropriations and availability of funds as
general fund allotted by law to the Betis River project. Substantial compliance
could pass upon and act on the money claims. In a Memorandum dated 30 July certified to and verified by the proper accounting officials are conditions sine
with the said resolution, in view of the circumstances of this case, should
1992, then DPWH Secretary Jose De Jesus requested the Secretary of Budget qua non for the execution of government contracts.[8]Respondent harps on the
suffice. The Court also feels that the remedy suggested by the respondent, to
and Management to release public funds for the payment of petitioners money fact that the additional work was pursued through the verbal request of then
wit, the filing of a complaint in court for recovery of the compensation
claims, stating that the amount is urgently needed in order to settle once and DPWH Undersecretary Aber P. Canlas, despite the absence of the corresponding
claimed, would entail additional expense, inconvenience and delay which in
for all this (sic) outstanding obligations of the government. In a Letter of the supplemental contracts and appropriate funding.[9] According to
fairness should be imposed on the petitioner.
Undersecretary of Budget and Management dated 20 December 1994, the respondent, sans showing of certificate of availability of funds, the implied
amount of P5,819,316.00 was then released for the payment of petitioners contracts are considered fatally defective and considered inexistent and void ab Accordingly, in the interest of substantial justice and equity, the respondent
money claims, under Advise of Allotment No. A4-1303-04-41-303. initio. Respondent concludes that inasmuch as the additional work done was Commission on Audit is DIRECTED to determine on a quantum meruit basis the
pursued in violation of the mandatory provisions of the laws concerning total compensation due to the petitioner for the services rendered by it in the
In an Indorsement dated 27 December 1995, the COA referred anew the money contracts involving expenditure of public funds and in excess of the public channel improvement of the Betis River in Pampanga and to allow the payment
claims to the DPWH pursuant to COA Circular 95-006, thus:
thereof immediately upon completion of the said determination. (Emphasis To our mind, it would be the apex of injustice and highly inequitable for us to G.R. Nos. 166309-10 March 9, 2007
ours) defeat petitioners-contractors right to be duly compensated for actual work
performed and services rendered, where both the government and the public REPUBLIC OF THE PHILIPPINES, represented by the COMMISSIONER OF
Similarly, this Court applied the doctrine of quantum meruit in Melchor vs. have, for years, received and accepted benefits from said housing project and CUSTOMS, Petitioner,
Commission on Audit[14] and explained that where payment is based reaped the fruits of petitioners-contractors honest toil and labor. vs.
on quantum meruit, the amount of recovery would only be the reasonable UNIMEX MICRO-ELECTRONICS GmBH, Respondent.
value of the thing or services rendered regardless of any agreement as to Incidentally, respondent likewise argues that the State may not be sued in the
value.[15] instant case, invoking the constitutional doctrine of Non-suability of the DECISION
State,[17] otherwise known as the Royal Prerogative of Dishonesty.
Notably, the peculiar circumstances present in the instant case buttress CORONA, J.:
petitioners claim for compensation for the additional constructions, despite the Respondents argument is misplaced inasmuch as the Principle of State
This is an appeal by certiorari under Rule 45 of the Rules of Court seeking to
illegality and void nature of the implied contracts forged between the DPWH Immunity finds no application in the case before us.
nullify and set aside the decision of the Court of Appeals (CA) dated August 30,
and petitioners-contractors. On this matter, it bears stressing that the illegality
Under these circumstances, respondent may not validly invoke the Royal 20041 and its amended decision of November 30, 20042 in CA-G.R. SP No. 75359
of the subject contracts proceeds from an express declaration or prohibition by
Prerogative of Dishonesty and conveniently hide under the States cloak of and CA-G.R. SP No. 75366.
law,[16] and not from any intrinsic illegality. Stated differently, the subject
contracts are not illegal per se. invincibility against suit,considering that this principle yields to certain settled
The antecedent facts follow.
exceptions. True enough, the rule, in any case, is not absolute for it does not say
Of equal significance are circumstances attendant and peculiar in this case that the state may not be sued under any circumstance.[18] Sometime in April 1985, respondent Unimex Micro-Electronics GmBH (Unimex)
which necessitate allowance of petitioners money claimson the basis shipped a 40-foot container and 171 cartons of Atari game computer cartridges,
of quantum meruit for work accomplished on the government housing project. Thus, in Amigable vs. Cuenca,[19] this Court, in effect, shred the protective
duplicators, expanders, remote controllers, parts and accessories to Handyware
shroud which shields the State from suit, reiterating our decree in the landmark
Phils., Inc. (Handyware). Don Tim Shipping Corporation transported the goods
To begin with, petitioners-contractors assented and agreed to undertake case of Ministerio vs. CFI of Cebu[20] that the doctrine of governmental immunity
with Evergreen Marine Corporation as shipping agent.
additional constructions for the completion of the housing units, believing in from suit cannot serve as an instrument for perpetrating an injustice on a
good faith and in the interest of the government and, in effect, the public in citizen. It is just as important, if not more so, that there be fidelity to legal After the shipment arrived in the Port of Manila on July 9, 1985, the Bureau of
general, that appropriations to cover the additional constructions and norms on the part of officialdom if the rule of law were to be maintained.[21] Customs (BOC) agents discovered that it did not tally with the description
completion of the public works housing project would be available and appearing on the cargo manifest. As a result, BOC instituted seizure proceedings
forthcoming. On this particular score, the records reveal that the verbal request Although the Amigable and Ministerio cases generously tackled the issue of the
against Handyware and later issued a warrant of seizure and detention against
and assurance of then DPWH Undersecretary Canlas led petitioners-contractors States immunity from suit vis a vis the payment of just compensation for
the shipment.
to undertake the completion of the government housing project, despite the expropriated property, this Court nonetheless finds the doctrine enunciated in
absence of covering appropriations, written contracts, and certification of the aforementioned cases applicable to the instant controversy, considering On June 5, 1987, the Collector of Customs issued a default order against
availability of funds, as mandated by law and pertinent auditing rules and that the ends of justice would be subverted if we were to uphold, in this Handyware for failing to appear in the seizure proceedings. After an ex
issuances. To put it differently, the implied contracts, declared void in this case, particular instance, the States immunity from suit. parte hearing, the Collector of Customs forfeited the goods in favor of the
covered only the completion and final phase of construction of the housing government.
To be sure, this Court as the staunch guardian of the citizens rights and welfare
units, which structures, concededly, were already existing, albeit not yet
cannot sanction an injustice so patent on its face, and allow itself to be an Subsequently, on June 15, 1987, respondent Unimex (as shipper and owner of
finished in their entirety at the time the implied contracts were entered into
instrument in the perpetration thereof. Justice and equity sternly demand that the goods) filed a motion to intervene in the seizure proceedings. The Collector
between the government and the contractors.
the States cloak of invincibility against suit be shred in this particular instance, of Customs granted the motion but later on declared the June 5, 1987 default
Further, petitioners-contractors sent to the DPWH Secretary a demand letter and that petitionerscontractors be duly compensated on the basis of quantum order against Handyware as final and executory, thus affirming the goods’
pressing for their money claims, on the strength of a favorable meruit for construction done on the public works housing project. forfeiture in favor of the government.
recommendation from the DPWH Assistant Secretary for Legal Affairs to the
IN VIEW WHEREOF, the instant petition is GRANTED. The assailed decision of Respondent filed a petition for review against petitioner Commissioner of
effect that implied contracts existed and that the money claims had ample basis
the Regional Trial Court dated 07 November 1997 is REVERSED AND SET ASIDE. Customs (BOC Commissioner) in the Court of Tax Appeals (CTA). This case was
applying the principle of quantum meruit. Moreover, as can be gleaned from
docketed as CTA Case No. 4317.3
the records, even the DPWH Auditor interposed no objection to the payment of ACCORDINGLY, the Commission on Audit is hereby directed to determine and
the money claims, subject to whatever action the COA may adopt. ascertain with dispatch, on a quantum meruit basis, the total compensation due In a decision4 dated June 15, 1992, the CTA reversed the forfeiture decree and
to petitioners-contractors for the additional constructions on the housing ordered the release of the subject shipment to respondent subject to the
Beyond this, the sum of P5,819,316.00 representing the amount of petitioners
project and to allow payment thereof upon the completion of said payment of customs duties. The CTA decision became final and executory on
money claims, had already been released by the Department of Budget and
determination. No costs. July 20, 1992. The decision read:
Management (DBM), under Advise of Allotment No. A4-1303-04-41-303. Equally
important is the glaring fact that the construction of the housing units had SO ORDERED. WHEREFORE, the decree of forfeiture of [petitioner] Commissioner of Customs
already been completed by petitioners-contractors and the subject housing is hereby reversed and the subject shipment is hereby ordered released to
units had been, since their completion, under the control and disposition of the [respondent] subject to the condition that the correct duties, taxes, fees and
government pursuant to its public works housing project.
other charges thereon be paid to the Bureau of Customs based on the actual basis the prevailing peso-dollar exchange rate at the time of the importation grounds: (1) the June 15, 1992 CTA judgment could not be altered after it
quality and condition of the shipments at the time of the filing of the instead of the prevailing rate at the time of actual payment pursuant to RA became final and executory; (2) laches has already set in, hence, respondent’s
corresponding import entry in compliance with this decision and further subject 4100.10 It added that respondent was also entitled to legal interest. According to case (reviving the June 15, 1992 CTA judgment) should have been dismissed
to the presentation of Central Bank Release Certificate.5 the CA: outright; (3) the legal interest imposed was erroneous and (4) the government
funds cannot be charged with respondent’s claim without a corresponding
Unfortunately, however, respondent’s counsel failed to secure a writ of …Considering that the BOC was grossly negligent in handling the subject appropriation.
execution to enforce the CTA decision. Instead, it filed separate claims for shipment, this Court finds Unimex entitled to legal interests. Accordingly, the
damages against Don Tim Shipping Corporation and Evergreen Marine actual damages thus awarded shall be subject to 6% interest per annum. Modification of a Final And Executory Judgment
Corporation6 but both cases were dismissed.
Be that as it may, such interest shall accrue only from the date of the CTA In support of its first argument, petitioner contends that once a judgment
On September 5, 2001, respondent filed in the CTA a petition for the revival of Decision on 19 September 2002 since it is from that the quantification of becomes final and executory, it becomes immutable and unalterable, thus the
its June 15, 1992 decision. It prayed for the immediate release by BOC of its Unimex’s damages have been reasonably ascertained… CTA erred in changing the tenor of its June 15, 1992 decision by ordering it to
shipment or, in the alternative, payment of the shipment’s value plus damages. instead pay the value of the goods.14
The BOC Commissioner failed to file his answer, hence, he was declared in xxx xxx xxx
default. We disagree.
Finally, Unimex is likewise entitled to 12% interest per annum in lieu of 6% per
During the ex parte presentation of respondent’s evidence, BOC informed the annum from the time this Decision becomes final and executory until fully paid, Indeed, the general rule is that once a decision becomes final and executory, it
court that the subject shipment could no longer be found at its warehouses. in as much as the interim period is equivalent to a forbearance of credit. cannot be altered or modified. However, this rule is not absolute. In some
cases,15 we held that where facts or events transpire after a decision has
In its decision of September 19, 2002,7 the CTA declared that its June 15, 1992 xxx xxx xxx become executory, which facts constitute a supervening cause rendering the
decision could no longer be executed due to the loss of respondent’s shipment final judgment unenforceable, said judgment may be modified. Also, a final
WHEREFORE, the appealed Decision, dated 19 September 2002, is
so it ordered the BOC Commissioner to pay respondent the commercial value of judgment may be altered when its execution becomes impossible or unjust.
hereby AFFIRMED WITH MODIFICATION in that the Bureau of Customs is
the goods based on the prevailing exchange rate at the time of their
adjudged liable to Unimex for the value of the subject shipment in the amount In the case at bar, parties do not dispute the fact that after the June 15, 1992
importation. The dispositive portion of the decision read:
of $466,885.54. The Bureau of Customs’ liability may be paid in Philippine CTA decision became final and executory, respondent’s goods were inexplicably
WHEREFORE, premises considered, the instant petition is PARTIALLY GRANTED. currency, computed at the exchange rate prevailing at the time of actual lost while under the BOC’s custody. Certainly, this fact presented a supervening
Accordingly, [petitioner] is ORDERED to PAY [respondent] the amount payment with legal interest thereon at the rate of 6% per annum from 19 event warranting the modification of the CTA decision. Even if the CTA had
of P8,675,200.22 representing the commercial value of the shipment at the September 2002 up to its finality. Upon finality of this Decision, the rate of legal maintained its original decision, still petitioner would have been unable to
time of importation subject, however, to the payment of the proper taxes, interest shall be 12% per annum until the value of the subject shipment is fully comply with it for the obvious reason that there was nothing more to deliver to
duties, fees and other charges thereon. The payment shall be taken from the paid.11 respondent.
sale or sales of the goods or properties seized or forfeited by the Bureau of
The BOC Commissioner and respondent again filed their respective MRs of the Laches Did Not Set in to Frustrate Respondent’s Petition to Revive The June
Customs.8
above decision. The Commissioner insisted that the BOC was not liable to 15, 1992 CTA Decision
The BOC Commissioner and respondent filed their respective motions for respondent. On the other hand, respondent’s MR sought payment of the goods’
reconsideration (MRs) of the above decision. value in euros, not in US dollars.12 It also demanded that the 6% legal interest Regarding petitioner’s second argument, we hold that it cannot impugn
be reckoned from the date of its judicial demand on June 15, 1987. respondent’s claim on the basis of laches. Laches is the failure or negligence to
In his MR, the BOC Commissioner argued that the CTA altered its June 15, 1992 assert a right within a reasonable time, giving rise to a presumption that a party
decision by converting it from an action for specific performance into a money On November 30, 2004, the CA denied the BOC Commissioner’s MR and has abandoned it or declined to assert it.16 It is not a mere question of lapse or
judgment.9 On the other hand, respondent contended that the exchange rate granted respondent’s. Accordingly, the decretal portion of its amended decision passage of time but is principally a question of the inequity or unfairness of
prevailing at the time of actual payment should apply. It also argued that the read: permitting a right or claim to be asserted.17
CTA erred in not imposing legal interest on BOC’s obligation.
WHEREFORE, the appealed Decision, dated 19 September 2002, is It is clear from the records that respondent was not guilty of negligence or
The CTA denied both MRs. The BOC Commissioner and the respondent then hereby AFFIRMED WITH MODIFICATION in that the Bureau of Customs is omission. Neither did it abandon its claim against petitioner. We agree with the
filed separate petitions in the CA. The BOC Commissioner’s appeal was adjudged liable to Unimex for the value of the subject shipment in the amount CTA (as later affirmed by the CA) that:
docketed as CA-G.R. SP No. 75359 and respondent’s as CA-G.R. SP No. 75366. of Euro 669,982.565. The Bureau of Custom’s liability [may be] paid in the
The CA consolidated the two cases. Philippine currency, computed at the exchange rate prevailing at the time of There was never negligence or omission to assert its right within a reasonable
actual payment with legal interests thereon at the rate of 6% per annum from period of time on the part of [respondent]. In fact, from the moment it
On August 30, 2004, the CA dismissed the BOC Commissioner’s appeal and 15 June 1987 up to the finality of this Decision. In lieu of the 6% interest, the intervened in the proceedings before the Bureau of Customs up to the present
granted respondent’s. rate of legal interest shall be 12% per annum upon finality of this Decision until time, [respondent] is diligently trying to fight for what it believes is right.
the value of the subject shipment is fully paid.13 [Respondent] may have failed to secure a writ of execution with this court when
In CA-G.R. SP No. 75359, the CA held that the BOC Commissioner was liable for the [CTA decision] became final and executory due to wrong legal advice, yet it
the value of the subject shipment as the same was lost while in its custody. On The Republic of the Philippines, represented by the BOC Commissioner, now does not mean that it was sleeping on its right for it filed a case against the
the other hand, in CA-G.R. SP No. 75366, it ruled that the CTA erred in using as comes to us via this petition assailing the CTA decision on the following
shipping agent and/or the sub-agent. Therefore, there [was never] an occasion the goods to respondent, there was no basis for the computation and/or Government Liability For Actual Damages
wherein petitioner had abandoned or declined to assert its right. 18 imposition of the 6% p.a. legal interest.
Finally, petitioner argues that a money judgment or any charge against the
The rule is that the findings of fact by the lower court,19 if affirmed by the CA, We agree with petitioner. government requires a corresponding appropriation and cannot be decreed by
are conclusive on us.20 Absent any reason that compels us to deviate from the mere judicial order.
rule, as in this case, we shall not disturb such findings. Interest may be paid only either as compensation for the use of money
(monetary interest)24 or as damages (compensatory interest).25 We quote in Although it may be gainsaid that the satisfaction of respondent’s demand will
Moreover, the doctrine of laches is based upon grounds of public policy and agreement the CTA’s disquisition in its decision dated September 19, 2002: ultimately fall on the government, and that, under the political doctrine of
equity. It is invoked to discourage stale claims but is entirely addressed to the "state immunity," it cannot be held liable for governmental acts (jus
sound discretion of the court.21 Since it is an equitable doctrine, its application is Interest may be paid either as compensation for the use of money (monetary imperii),28 we still hold that petitioner cannot escape its liability. The
likewise controlled by reasonable considerations. Thus, the better rule is that interest) referred to in Article 1956 of the New Civil Code or as damages circumstances of this case warrant its exclusion from the purview of the state
courts, under the principle of equity, should not be bound by the doctrine of (compensatory interest) under Article 2209 above cited. As clearly provided in immunity doctrine.
laches if wrong or injustice will result.22 [Article 2209], interest is demandable if: a) there is monetary obligation and b)
debtor incurs delay. As previously discussed, the Court cannot turn a blind eye to BOC’s ineptitude
Given the attendant circumstances, laches cannot stall respondent’s right to and gross negligence in the safekeeping of respondent’s goods. We are not
recover what is due to it especially where BOC’s negligence in the safekeeping This case does not involve a monetary obligation to be covered by Article 2209. likewise unaware of its lackadaisical attitude in failing to provide a cogent
of the goods appears indubitable. There is no denying that BOC exhibited gross There is no dispute that this case was originally filed questioning the seizure of explanation on the goods’ disappearance, considering that they were in its
carelessness and ineptitude in the performance of its duty as it could not even the shipment by the Bureau of Customs. Our decision subject of this action for custody and that they were in fact the subject of litigation. The situation does
explain why or how the goods vanished while in its custody. With this, it is revival [of judgment] did not refer to any monetary obligation by [petitioner] not allow us to reject respondent’s claim on the mere invocation of the doctrine
difficult to exonerate petitioner from liability; otherwise, we would towards the [respondent]. In fact, if there was any monetary obligation of state immunity. Succinctly, the doctrine must be fairly observed and the
countenance a wrong and exacerbate respondent’s loss which to this day has mentioned, it referred to the obligation of [respondent] to pay the correct State should not avail itself of this prerogative to take undue advantage of
remained unrecompensed. taxes, duties, fees and other charges before the release of the goods can be parties that may have legitimate claims against it.29
had. In one case, the Supreme Court held:
More importantly, laches never set in because respondent filed its petition for In Department of Health v. C.V. Canchela & Associates,30 we enunciated that
revival of judgment within the period set by the Rules. In particular, Rule 39, "In a comprehensive sense, the term "debt" embraces not merely money due this Court, as the staunch guardian of the people’s rights and welfare, cannot
Section 6 states: by contract, but whatever one is bound to render to another, either for contract sanction an injustice so patent in its face, and allow itself to be an instrument in
or the requirement of the law, such as tax where the law imposes personal the perpetration thereof. Over time, courts have recognized with almost
SEC. 6. Execution by motion or by independent action. – A final and executory liability therefor." pedantic adherence that what is inconvenient and contrary to reason is not
judgment or order may be executed on motion within five (5) years from the allowed in law.31 Justice and equity now demand that the State’s cloak of
date of its entry. After the lapse of such time, and before it is barred by the Therefore, the government was never a debtor to the petitioner in order that
invincibility against suit and liability be shredded.
statute of limitations, a judgment may be enforced by action. The revived [Article] 2209 could apply. Nor was it in default for there was no monetary
judgment may also be enforced by motion within five (5) years from the date of obligation to pay in the first place. There is default when after demand is made Accordingly, we agree with the lower courts’ directive that, upon payment of
its entry and thereafter by action before it is barred by the statute of either judicially or extrajudicially. In other words, for interest to be demandable the necessary customs duties by respondent, petitioner’s "payment shall be
limitations. under Article 2209, there should be a monetary obligation and the debtor was taken from the sale or sales of goods or properties seized or forfeited by the
in default… Bureau of Customs."32
Furthermore, Article 1144 of the Civil Code, an action "upon a judgment" may
be brought within ten (10) years from the time the right of action accrues. In the instant case, [petitioner] was never under monetary obligation to WHEREFORE, the assailed decisions of the Court of Appeals in CA-G.R. SP Nos.
[respondent], no demand can be made either judicially or extrajudicially. 75359 and 75366 are herebyAFFIRMED with MODIFICATION. Petitioner
The CTA judgment sought to be revived became final and executory on July 20, Parallel thereto, there could be no default… 26 Republic of the Philippines, represented by the Commissioner of the Bureau of
199223 and was accordingly entered into the book of judgments on the same Customs, upon payment of the necessary customs duties by respondent Unimex
date. On the other hand, the petition to revive said judgment was filed on No doubt, the present case does not fall within the first situation. Neither can it
Micro-Electronics GmBH, is hereby ordered to pay respondent the value of the
September 5, 2001. Clearly, the filing of the petition for the revival of judgment be considered as one involving interest based on damages under the second
subject shipment in the amount of Euro 669,982.565. Petitioner’s liability may
was well within the reglementary period provided by law. situation.
be paid in Philippine currency, computed at the exchange rate prevailing at the
More importantly, interest is not chargeable against petitioner except when it time of actual payment.
Legal Interest May Be Imposed for Use of Money or as Compensatory
Damages has expressly stipulated to pay it or when interest is allowed by the legislature
SO ORDERED.
or in eminent domain cases where damages sustained by the owner take the
Petitioner likewise argues that the CA erred in imposing the 6% p.a. legal form of interest at the legal rate.27 Consequently, the CA’s imposition of the
interest. According to petitioner, the obligation to pay legal interest only arises 12% p.a. legal interest upon the finality of the decision of this case until the
by virtue of a contract or on account of damages due to delay or failure to pay value of the goods is fully paid (as forbearance of credit) is likewise bereft of any
the principal on which the interest is exacted. It added that since the June 15, legal anchor.
1992 CTA decision did not involve a monetary award but merely the release of
G.R. No. L-6060 September 30, 1954 4. On November 10, 1951, after the leave of the lower court had been obtained, said court (Rec. on App. pp. 92-93). This order dismissing the complaint in
the intervenor-appellee, Government of the Republic of the Philippines, filed a intervention, but reserving for future adjudication the controversy between
FERNANDO A. FROILAN, plaintiff-appellee, complaint in intervention alleging that Froilan had failed to pay to the Shipping Froilan and the Pan Oriental Shipping Co. has already become final since neither
vs. Commission (which name was later changed to Shipping Administration) the the Government of the Republic of the Philippines nor the Pan Oriental Shipping
PAN ORIENTAL SHIPPING CO., defendant-appellant, balance due on the purchase price of the vessel in question, the interest Co. had appealed therefrom.
REPUBLIC OF THE PHILIPPINES, intervenor-appellee. thereon, and its advances on insurance premium totalling P162,142.95,
excluding the dry-docking expenses incurred on said vessel by the Pan Oriental 9. On May 10, 1952, the Government of the Republic of the Philippines filed a
Quisumbing, Sycip, Quisumbing and Salazar, for appellant. motion to dismiss the counterclaim of the Pan Oriental Shipping Co. against it
Shipping Co.; that intervenor was entitled to the possession of the said vessel
Ernesto Zaragoza for appellee. on the ground that the purpose of said counterclaim was to compel the
either under the terms of the original contract as supplemented by Froilan's
Hilarion U. Jarencio for the intervenor. Government of the Republic of the Philippines to deliver the vessel to it (Pan
letter dated January 28, 1949, or in order that it may cause the extrajudicial sale
thereof under the Chattel Mortgage Law. It, therefore, prayed that Froilan be Oriental Shipping Co.) in the event that the Government of the Republic of the
PARAS, C.J.:
ordered to deliver the vessel in question to its authorized representative, the Philippines recovers the vessel in question from Froilan. In view, however, of
The factual antecedents of this case are sufficiently recited in the brief filed by Board of Liquidators; that Froilan be declared to be without any rights on said the order of the lower court dated February 3, holding that the payment made
the intervenor-appellee as follows: vessel and the amounts he paid thereon forfeited or alternately, that the said by Froilan to the Board of Liquidators constituted full payment of Froilan's
vessel be delivered to the Board of Liquidators in order that the intervenor may obligation to the Shipping Administration, which order had already become
1. On February 3, 1951, plaintiff-appellee, Fernando A. Froilan, filed a complaint final, the claim of the Pan Oriental Shipping Co. against the Republic of the
have its chattel mortgage extrajudicially foreclosed in accordance with the
against the defendant-appellant, Pan Oriental Shipping Co., alleging that he Philippines was no longer feasible, said counterclaim was barred by prior
provisions of the Chattel Mortgage Law; and that pending the hearing on the
purchased from the Shipping Commission the vessel FS-197 for P200,000, judgment and stated no cause of action. It was also alleged that movant was not
merits, the said vessel be delivered to it (Rec. on App. pp. 54-66).
paying P50,000 down and agreeing to pay the balance in installments; that to subject to the jurisdiction of the court in connection with the counterclaim.
secure the payment of the balance of the purchase price, he executed a chattel 5. On November 29, 1951, the Pan Oriental Shipping Co. filed an answer to the (Rec. on App. pp. 94-97). This motion was opposed by the Pan Oriental Shipping
mortgage of said vessel in favor of the Shipping Commission; that for various complaint in intervention alleging that the Government of the Republic of the Co. in its written opposition dated June 4, 1952 (Rec. on app. pp. 19-104).
reason, among them the non-payment of the installments, the Shipping Philippines was obligated to deliver the vessel in question to it by virtue of a
Commission took possession of said vessel and considered the contract of sale contract of bare-boat charter with option to purchase executed on June 16, 10. In an order dated July 1, 1952, the lower court dismissed the counterclaim
cancelled; that the Shipping Commission chartered and delivered said vessel to 1949, by the latter in favor of the former; it also alleged that it had made of the Pan Oriental Shipping Co. as prayed for by the Republic of the Philippines
the defendant-appellant Pan Oriental Shipping Co. subject to the approval of necessary and useful expenses on the vessel and claimed the right of retention (Rec. on App. pp. 104-106).
the President of the Philippines; that he appealed the action of the Shipping of the vessel. It, therefore, prayed that, if the Republic of the Philippines
11. It if from this order of the lower court dismissing its counterclaim against
Commission to the President of the Philippines and, in its meeting on August 25, succeeded in obtaining possession of the said vessel, to comply with its
the Government of the Republic of the Philippines that Pan Oriental Shipping
1950, the Cabinet restored him to all his rights under his original contract with obligations of delivering to it (Pan Oriental Shipping co.) or causing its delivery
Co. has perfected the present appeal (Rec. on App. p. 107).
the Shipping Commission; that he had repeatedly demanded from the Pan by recovering it from Froilan (Rec. on App. pp. 69-81).
Oriental Shipping Co. the possession of the vessel in question but the latter The order of the Court of First Instance of Manila, dismissing the counterclaim
refused to do so. He, therefore, prayed that, upon the approval of the bond 6. On November 29, 1951, Froilan tendered to the Board of Liquidators, which
of the defendant Pan Oriental Shipping Co., from which the latter has appealed,
accompanying his complaint, a writ of replevin be issued for the seizure of said was liquidating the affairs of the Shipping Administration, a check in the amount
reads as follows:
vessel with all its equipment and appurtenances, and that after hearing, he be of P162,576.96 in payment of his obligation to the Shipping Administration for
adjudged to have the rightful possession thereof (Rec. on App. pp. 2-8). the said vessel as claimed in the complaint in intervention of the Government of This is a motion to dismiss the counterclaim interposed by the defendant in its
the Republic of the Philippines. The Board of Liquidators issued an official report answer to the complaint in intervention.
2. On February 3, 1951, the lower court issued the writ of replevin prayed for by therefor stating that it was a 'deposit pending the issuance of an order of the
Froilan and by virtue thereof the Pan Oriental Shipping Co. was divested of its Court of First Instance of Manila' (Rec. on App. pp. 92-93). "The counterclaim states as follows:
possession of said vessel (Rec. on App. p. 47).
7. On December 7, 1951, the Government of the Republic of the Philippines "COUNTERCLAIM
3. On March 1, 1951, Pan Oriental Shipping Co. filed its answer denying the right brought the matter of said payment and the circumstance surrounding it to the
of Froilan to the possession of the said vessel; it alleged that the action of the "As counterclaim against the intervenor Republic of the Philippines, the
attention of the lower court "in order that they may be taken into account by
Cabinet on August 25, 1950, restoring Froilan to his rights under his original defendant alleges:
this Honorable Court in connection with the questions that are not pending
contract with the Shipping Commission was null and void; that, in any event, before it for determination" (Rec. on App. pp. 82-86). "1. That the defendant reproduces herein all the pertinent allegations of the
Froilan had not complied with the conditions precedent imposed by the Cabinet
foregoing answer to the complaint in intervention
for the restoration of his rights to the vessel under the original contract; that it 8. On February 3, 1952, the lower court held that the payment by Froilan of the
suffered damages in the amount of P22,764.59 for wrongful replevin in the amount of P162,576.96 on November 29, 1951, to the Board of Liquidators "2. That, as shown by the allegations of the foregoing answer to the complaint
month of February, 1951, and the sum of P17,651.84 a month as damages constituted a payment and a discharge of Froilan's obligation to the in intervention, the defendant Pan Oriental Shipping Company is entitled to the
suffered for wrongful replevin from March 1, 1951; it alleged that it had Government of the Republic of the Philippines and ordered the dismissal of the possession of the vessel and the intervenor Republic of the Philippines is bound
incurred necessary and useful expenses on the vessel amounting to latter's complaint in intervention. In the same order, the lower court made it under the contract of charter with option to purchase it entered into with the
P127,057.31 and claimed the right to retain said vessel until its useful and very clear that said order did not pre-judge the question involved between defendant to deliver that possession to the defendant — whether it actually has
necessary expenses had been reimbursed (Rec. on App. pp. 8-53). Froilan and the Oriental Shipping Co. which was also pending determination in
the said possession or it does not have that possession from the plaintiff intervention), first, because said counterclaim was filed on November 29, 1951, position and comes down to the level of the defendant. The latter automatically
Fernando A. Froilan and deliver the same to the defendant; before the issuance of the order invoked; and, secondly, because in said order acquires, within certain limits, the right to set up whatever claims and other
of February 8, the court dismissed the complaint in intervention, "without, of defenses he might have against the state. The United States Supreme Court
"3. That, notwithstanding demand, the intervenor Republic of the Philippines course, precluding the determination of the right of the defendant in the instant thus explains:
has not to date complied with its obligation of delivering or causing the delivery case," and subject to the condition that the "release and cancellation of the
of the vessel to the defendant Pan Oriental Shipping Company.1âwphïl.nêt chattel mortgage does not, however, prejudge the question involved between "No direct suit can be maintained against the United States. But when an action
the plaintiff and the defendant which is still the subject of determination in this is brought by the United States to recover money in the hands of a party who
"RELIEF has a legal claim against them, it would be a very rigid principle to deny to him
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 right of setting up such claim in a court of justice, and turn him around to an
"WHEREFORE, the defendant respectfully prays that judgment be rendered
the controversy between the plaintiff and the defendant. That the first application to Congress." (Sinco, Philippine Political Law, Tenth Ed., pp. 36-37,
ordering the intervenor Republic of the Philippines alternatively to deliver to
condition reserved the right of the defendant as against the intervenor, is citing U. S. vs. Ringgold, 8 Pet. 150, 8 L. ed. 899.)
the defendants the possession of the said vessel, or to comply with its
obligation to the defendant or causing the delivery to the latter of the said clearly to be deduced from the fact that the order of February 8 mentioned the
It is however, contended for the intervenor that, if there was at all any waiver, it
vessel by recovering the same from plaintiff, with costs. circumstance that "the question of the expenses of drydocking incurred by the
was in favor of the plaintiff against whom the complaint in intervention was
defendant has been included in its counterclaim against the plaintiff,"
directed. This contention is untenable. As already stated, the complaint in
"The defendant prays for such other remedy as the Court may deem just and apparently as one of the grounds for granting the motion to dismiss the
intervention was in a sense in derogation of the defendant's claim over the
equitable in the premises." complaint in intervention.
possession of the vessel in question.
The ground of the motion to dismiss are (a) That the cause of action is barred by The defendant's failure to appeal from the order of February 8 cannot,
Wherefore, the appealed order is hereby reversed and set aside and the case
prior judgment; (b) That the counterclaim states no cause of action; and (c) That therefore, be held as barring the defendant from proceeding with its
remanded to the lower court for further proceedings. So ordered, without
this Honorable Court has no jurisdiction over the intervenor government of the counterclaim, since, as already stated, said order preserved its right as against
costs.
Republic of the Philippines in connection with the counterclaim of the the intervenor. Indeed, the maintenance of said right is in consonance with Rule
defendant Pan Oriental Shipping Co. 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
The intervenor contends that the complaint in intervention having been
dismiss, the action shall not be dismissed against the defendant's objection
dismissed and no appeal having been taken, the dismissal of said complaint is
unless the counterclaim can remain pending for independent adjudication by
tantamount to a judgment. REPUBLIC OF THE PHILIPPINES G.R. No. 129406
the court."
represented by the PRESIDENTIAL
The complaint in intervention did not contain any claim whatsoever against the COMMISSION ON GOOD
The lower court also erred in holding that, as the intervenor had not made any
defendant Pan Oriental Shipping Co.; hence, the counterclaim has no GOVERNMENT (PCGG),
claim against the defendant, the latter's counterclaim had no foundation. The
foundation.
complaint in intervention sought to recover possession of the vessel in question
- versus -
The question as to whether the Court has jurisdiction over the intervenor with from the plaintiff, and this claim is logically adverse to the position assumed by
regard to the counterclaim, the Court is of the opinion that it has no jurisdiction the defendant that it has a better right to said possession than the plaintiff who SANDIGANBAYAN (SECOND
alleges in his complaint that he is entitled to recover the vessel from the Promulgated:
over said intervenor. DIVISION) and ROBERTO S.
defendant. At any rate a counterclaim should be judged by its own allegations, BENEDICTO March 6, 2006
It appearing, therefore, that the grounds of the motion to dismiss are well and not by the averments of the adverse party. It should be recalled that the
taken, the counterclaim of the defendant is dismissed, without pronouncement defendant's theory is that the plaintiff had already lost his rights under the
as to costs. contract with the Shipping Administration and that, on the other hand, the
defendant is relying on the charter contract executed in its favor by the x----------------------------------------x
The defendant's appeal is predicated upon the following assignments of error: intervenor which is bound to protect the defendant in its possession of the
DECISION
vessel. In other words, the counterclaim calls for specific performance on the
I. The lower court erred in dismissing the counterclaim on the ground of prior
part of the intervenor. As to whether this counterclaim is meritorious is another GARCIA, J.:
judgment.
question which is not now before us.
II. The lower court erred in dismissing the counterclaim on the ground that the Before the Court is this petition for certiorari under Rule 65 of the Rules of
The other ground for dismissing the defendant's counterclaim is that the State Court to nullify and set aside the March 28, 1995[1] and March 13,
counterclaim had no foundation because made to a complaint in intervention
is immune from suit. This is untenable, because by filing its complaint in 1997[2] Resolutions of the Sandiganbayan, Second Division, in Civil Case No.
that contained no claim against the defendant.
intervention the Government in effect waived its right of nonsuability. 0034, insofar as said resolutions ordered the Presidential Commission on Good
III. The lower court erred in dismissing the counterclaim on the ground of Government (PCGG) to pay private respondent Roberto S. Benedicto or his
The immunity of the state from suits does not deprive it of the right to sue
alleged lack of jurisdiction over the intervenor Republic of the Philippines. corporations the value of 227 shares of stock of the Negros Occidental Golf and
private parties in its own courts. The state as plaintiff may avail itself of the
Country Club, Inc. (NOGCCI) at P150,000.00 per share, registered in the name of
We agree with appellant's contention that its counterclaim is not barred by different forms of actions open to private litigants. In short, by taking the
said private respondent or his corporations.
prior judgment (order of February 8, 1952, dismissing the complaint in initiative in an action against a private party, the state surrenders its privileged
The facts: On November 3, 1990, petitioner Republic and private P150,000.00 per share which can be deducted from [the Republics] cash share
respondent Benedicto entered into a Compromise Agreement in Civil Case No. in the Compromise Agreement. [Words in bracket added] (Emphasis Supplied).
Civil Case No. 0034 entitled Republic of the Philippines, plaintiff, v. Roberto S. 0034. The agreement contained a general release
Benedicto, et al., defendants, is a complaint for reconveyance, reversion, clause[5] whereunder petitioner Republic agreed and bound itself to lift the
accounting, reconstitution and damages. The case is one of several suits sequestration on the 227 NOGCCI shares, among other Benedictos
involving ill-gotten or unexplained wealth that petitioner Republic, through the Owing to PCGGs failure to comply with the above directive, Benedicto filed
properties, petitioner Republic acknowledging that it was within private
PCGG, filed with the Sandiganbayan against private respondent Roberto S. in Civil Case No. 0034 a Motion for Compliance dated July 25, 1995, followed by
respondent Benedictos capacity to acquire the same shares out of his income
Benedicto and others pursuant to Executive Order (EO) No. 14,[3] series of 1986. an Ex-Parte Motion for Early Resolution dated February 12, 1996. Acting
from business and the exercise of his profession.[6] Implied in this undertaking is
thereon, the Sandiganbayan promulgated yet another Resolution[9] on February
the recognition bypetitioner Republic that the subject shares of stock could not
23, 1996, dispositively reading:
have been ill-gotten.
Pursuant to its mandate under EO No. 1,[4] series of 1986, the PCGG issued writs
placing under sequestration all business enterprises, entities and other
properties, real and personal, owned or registered in the name of private WHEREFORE, finding merit in the instant motion for early resolution and
In a decision dated October 2, 1992, the Sandiganbayan approved the
respondent Benedicto, or of corporations in which he appeared to have considering that, indeed, the PCGG has not shown any justifiable ground as to
Compromise Agreement and accordingly rendered judgment in accordance with
controlling or majority interest. Among the properties thus sequestered and why it has not complied with its obligation as set forth in the Order of
its terms.
taken over by PCGG fiscal agents were the 227 shares in NOGCCI owned by December 6, 1994 up to this date and which Order was issued pursuant to the
private respondent Benedicto and registered in his name or under the names of Compromise Agreement and has already become final and executory,
corporations he owned or controlled. accordingly, the Presidential Commission on Good Government is hereby given
In the process of implementing the Compromise Agreement, either of the a final extension of fifteen (15) days from receipt hereof within which to comply
parties would, from time to time, move for a ruling by the Sandiganbayan on with the Order of December 6, 1994 as stated hereinabove.
the proper manner of implementing or interpreting a specific provision therein.
Following the sequestration process, PCGG representatives sat as members of
the Board of Directors of NOGCCI, which passed, sometime in October 1986, a
resolution effecting a corporate policy change. The change consisted of On April 1, 1996, PCGG filed a Manifestation with Motion for
assessing a monthly membership due of P150.00 for each NOGCCI share. Prior On February 22, 1994, Benedicto filed in Civil Case No. 0034 a Motion for Reconsideration,[10] praying for the setting aside of the Resolution of February
to this resolution, an investor purchasing more than one NOGCCI share was Release from Sequestration and Return of Sequestered 23, 1996. On April 11, 1996, private respondent Benedicto filed a Motion to
exempt from paying monthly membership due for the second and subsequent Shares/Dividends praying, inter alia, that his NOGCCI shares of stock Enforce Judgment Levy. Resolving these two motions, the Sandiganbayan, in
shares that he/she owned. be specifically released from sequestration and returned, delivered or paid to its second assailed Resolution[11] dated March 13, 1997, denied that portion of
him as part of the parties Compromise Agreement in that case. In a the PCGGs Manifestation with Motion for Reconsiderationconcerning the
Resolution[7] promulgated on December 6, 1994, the Sandiganbayan granted subject 227 NOGCCI shares and granted Benedictos Motion to Enforce
Benedictos aforementioned motion but placed the subject shares under the Judgment Levy.
Subsequently, on March 29, 1987, the NOGCCI Board passed another custody of its Clerk of Court, thus:
resolution, this time increasing the monthly membership due fromP150.00
to P250.00 for each share.
Hence, the Republics present recourse on the sole issue of whether or not the
WHEREFORE, in the light of the foregoing, the said Motion for Release From public respondent Sandiganbayan, Second Division, gravely abused its discretion
Sequestration and Return of Sequestered Shares/Dividends is hereby GRANTED in holding that the PCGG is at fault for not paying the membership dues on the
As sequestrator of the 227 shares of stock in question, PCGG did not pay the and it is directed that said shares/dividends be delivered/placed under the 227 sequestered NOGCCI shares of stock, a failing which eventually led to the
corresponding monthly membership due thereon totalingP2,959,471.00. On custody of the Clerk of Court, Sandiganbayan, Manila subject to this Courts foreclosure sale thereof.
account thereof, the 227 sequestered shares were declared delinquent to be disposition.
disposed of in an auction sale.

The petition lacks merit.


On March 28, 1995, the Sandiganbayan came out with the herein first assailed
Apprised of the above development and evidently to prevent the projected Resolution,[8] which clarified its aforementioned December 6, 1994 Resolution
auction sale of the same shares, PCGG filed a complaint for injunction with the and directed the immediate implementation thereof by requiring PCGG, among
Regional Trial Court (RTC) of Bacolod City, thereat docketed as Civil Case No. To begin with, PCGG itself does not dispute its being considered as a receiver
other things:
5348. The complaint, however, was dismissed, paving the way for the auction insofar as the sequestered 227 NOGCCI shares of stock are concerned.[12] PCGG
sale for the delinquent 227 shares of stock. On August 5, 1989, an auction sale (b) To deliver to the Clerk of Court the 227 sequestered shares of [NOGCCI] also acknowledges that as such receiver, one of its functions is to pay
was conducted. registered in the name of nominees of ROBERTO S. BENEDICTO free from all outstanding debts pertaining to the sequestered entity or property, [13] in this
liens and encumbrances, or in default thereof, to pay their value at case the 227 NOGCCI shares in question. It contends, however, that
membership dues owing to a golf club cannot be considered as an outstanding
debt for which PCGG, as receiver, must pay. It also claims to have exercised due For sure, even if the Sandiganbayan were wrong in its findings, which does not authorized officers, takes the initiative in a suit against a private party, it
diligence to prevent the loss through delinquency sale of the subject NOGCCI seem to be in this case, it is a well-settled rule of jurisprudence thereby descends to the level of a private individual and thus opens itself to
shares, specifically inviting attention to the injunctive suit, i.e., Civil Case No. that certiorari will issue only to correct errors of jurisdiction, not errors of whatever counterclaims or defenses the latter may have against
5348, it filed before the RTC of Bacolod City to enjoin the foreclosure sale of the judgment. Corollarily, errors of procedure or mistakes in the courts findings and it.[25] Petitioner Republics act of filing its complaint in Civil Case No.
shares. conclusions are beyond the corrective hand of certiorari.[14] The extraordinary 0034 constitutes a waiver of its immunity from suit. Being itself the plaintiff in
writ of certiorari may be availed only upon a showing, in the minimum, that the that case, petitioner Republic cannot set up its immunity against private
respondent tribunal or officer exercising judicial or quasi-judicial functions has respondent Benedictos prayers in the same case.
acted without or in excess of its or his jurisdiction, or with grave abuse of
The filing of the injunction complaint adverted to, without more, cannot
discretion.[15]
plausibly tilt the balance in favor of PCGG. To the mind of the Court, such filing
is a case of acting too little and too late. It cannot be over-emphasized that it In fact, by entering into a Compromise Agreement with private
behooved the PCGGs fiscal agents to preserve, like a responsible father of the respondent Benedicto, petitioner Republic thereby stripped itself
family, the value of the shares of stock under their administration. But far from The term grave abuse of discretion connotes capricious and whimsical exercise of itsimmunity from suit and placed itself in the same level of its adversary.
acting as such father, what the fiscal agents did under the premises was to allow of judgment as is equivalent to excess, or a lack of jurisdiction.[16]The abuse When the State enters into contract, through its officers or agents, in
the element of delinquency to set in before acting by embarking on a tedious must be so patent and gross as to amount to an evasion of a positive duty or a furtherance of a legitimate aim and purpose and pursuant to constitutional
process of going to court after the auction sale had been announced and virtual refusal to perform a duty enjoined by law, or to act at all in legislative authority, whereby mutual or reciprocal benefits accrue and rights
scheduled. contemplation of law as where the power is exercised in an arbitrary and and obligations arise therefrom, the State may be sued even without its express
despotic manner by reason of passion or hostility.[17] Sadly, this is completely consent, precisely because by entering into a contract the sovereign descends
absent in the present case. For, at bottom, the assailed resolutions of the to the level of the citizen. Its consent to be sued is implied from the very act of
Sandiganbayan did no more than to direct PCGG to comply with its part of the entering into such contract,[26] breach of which on its part gives the
The PCGGs posture that to the owner of the sequestered shares rests the
bargain under the compromise agreement it freely entered into with private corresponding right to the other party to the agreement.
burden of paying the membership dues is untenable. For one, it lost sight of the
respondent Benedicto. Simply put, the assailed resolutions of the
reality that such dues are basically obligations attached to the shares, which, in
Sandiganbayan have firm basis in fact and in law.
the final analysis, shall be made liable, thru delinquency sale in case of
default in payment of the dues. For another, the PCGG as sequestrator-receiver Finally, it is apropos to stress that the Compromise Agreement in Civil Case No.
of such shares is, as stressed earlier, duty bound to preserve the value of such 0034 envisaged the immediate recovery of alleged ill-gotten wealth without
shares. Needless to state, adopting timely measures to obviate the loss of those Lest it be overlooked, the issue of liability for the shares in further litigation by the government, and buying peace on the part of the aging
shares forms part of such duty and due diligence. question had, as both public and private respondents asserted, Benedicto.[27] Sadly, that stated objective has come to naught as not only had
long become final and executory. Petitioners narration of facts in its present the litigation continued to ensue, but, worse, private
petition is even misleading as it conveniently fails to make reference to two (2) respondent Benedicto passed away on May 15, 2000,[28]with the trial of Civil
resolutions issued by the Sandiganbayan. We refer to that courts resolutions Case No. 0034 still in swing, so much so that the late Benedicto had to be
The Sandiganbayan, to be sure, cannot plausibly be faulted for finding the PCGG
of December 6, 1994[18] and February 23, 1996[19] as well as several intervening substituted by the administratrix of his estate.[29]
liable for the loss of the 227 NOGCCI shares. There can be no quibbling, as
pleadings which served as basis for the decisions reached therein. As it were,
indeed the graft court so declared in its assailed and related resolutions
the present petition questions only and focuses on theMarch 28,
respecting the NOGCCI shares of stock, that PCGGs fiscal agents, while sitting in
1995[20] and March 13, 1997[21] resolutions, which merely reiterated and
the NOGCCI Board of Directors agreed to the amendment of the rule pertaining WHEREFORE, the instant petition is hereby DISMISSED.
clarified the graft courts underlying resolution of December 6, 1994. And to
to membership dues. Hence, it is not amiss to state, as did the Sandiganbayan,
place matters in the proper perspective, PCGGs failure to comply with SO ORDERED.
that the PCGG-designated fiscal agents, no less, had a direct hand in the loss of
the December 6, 1994 resolution prompted the issuance of the clarificatory
the sequestered shares through delinquency and their eventual sale through
and/or reiteratory resolutions aforementioned.
public auction. While perhaps anti-climactic to so mention it at this stage, the
unfortunate loss of the shares ought not to have come to pass had those fiscal
agents prudently not agreed to the passage of the NOGCCI board resolutions
charging membership dues on shares without playing representatives. In a last-ditch attempt to escape liability, petitioner Republic, through the G.R. No. L-30098 February 18, 1970
PCGG, invokes state immunity from suit.[22] As argued, the order for it to pay the
THE COMMISSIONER OF PUBLIC HIGHWAYS and the AUDITOR
value of the delinquent shares would fix monetary liability on a government
GENERAL, petitioners,
agency, thus necessitating the appropriation of public funds to satisfy the
Given the circumstances leading to the auction sale of the subject NOGCCI vs.
judgment claim.[23] But, as private respondent Benedicto correctly countered,
shares, PCGGs lament about public respondent Sandiganbayan having erred or, HON. LOURDES P. SAN DIEGO as Presiding Judge of the Court of First Instance
the PCGG fails to take stock of one of the exceptions to the state immunity
worse still, having gravely abused its discretion in its determination as to who is of Rizal, Branch IX, sitting in Quezon City, TESTATE ESTATE OF N. T. HASHIM
principle, i.e., when the government itself is the suitor, as in Civil Case No. 0034.
at fault for the loss of the shares in question can hardly be given cogency. (Special Proceedings No. 71131 of the Court of First Instance of Manila)
Where, as here, the State itselfis no less the plaintiff in the
represented by its Judicial Administrator, Tomas N. Hashim, TOMAS N.
main case, immunity from suit cannot be effectively invoked.[24] For,
HASHIM, personally, and as Judicial Administrator of the Estate of Hashim,
as jurisprudence teaches, when the State, through its duly
Special Proceedings No. 71131 of the Court of ]First instance of Manila, ALL value,4 which was confirmed, ratified and approved in November, 1966 by the in having delivered such a substantial amount to the special sheriff without
THE LEGAL OR TESTAMENTARY HEIRS of the Estate of Hashim, MANUELA C. Commissioner of Public Highways and the Secretary of Public Works and affording petitioner Bureau a reasonable time to contest the validity of the
FLORENDO, personally as Deputy Clerk, Court of First Instance of Rizal, Communications. On November 7, 1966, the Compromise Agreement garnishment, notwithstanding the bank's being charged with legal knowledge
Quezon City, Branch IX, BENJAMIN GARCIA as "Special Sheriff" appointed by subscribed by counsel for respondent estate and by then Solicitor General that government funds are exempt from execution or garnishment, and
respondent Judge Lourdes P. San Diego, BENJAMIN V. CORUÑA, personally Antonio P. Barredo, now a member of this Court, was submitted to the lower demanding that the bank credit the said petitioner's account in the amount of
and as Chief Documentation Staff, Legal Department, Philippine National Court and under date of November 8, 1966, respondent judge, as prayed for, P209,076.00, which the bank had allowed to be illegally garnished. Respondent
Bank, and the PHILIPPINE NATIONAL BANK, respondents. rendered judgment approving the Compromise Agreement and ordering bank replied on January 6, 1969 that it was not liable for the said garnishment
petitioners, as defendants therein, to pay respondent estate as plaintiff therein, of government funds, alleging that it was not for the bank to decide the
the total sum of P209,076.00 for the expropriated lot. question of legality of the garnishment order and that much as it wanted to
wait until it heard from the Bureau of Public Highways, it was "helpless to
TEEHANKEE, J.: On October 10, 1968, respondent estate filed with the lower Court a motion for refuse delivery under the teeth" of the special order of October 18, 1968,
the issuance of a writ of execution, alleging that petitioners had failed to satisfy directing immediate delivery of the garnished amount.
In this special civil action for certiorari and prohibition, the Court declares null
the judgment in its favor. It further filed on October 12, 1968, an ex-
and void the two questioned orders of respondent Court levying upon funds of
parte motion for the appointment of respondent Benjamin Garcia as special Petitioners therefore filed on January 28, 1969 the present action against
petitioner Bureau of Public Highways on deposit with the Philippine National
sheriff to serve the writ of execution. No opposition having been filed by the respondents, in their capacities as above stated in the title of this case, praying
Bank, by virtue of the fundamental precept that government funds are not
Solicitor General's office to the motion for execution at the hearing thereof on for judgment declaring void the question orders of respondent Court.
subject to execution or garnishment.
October 12, 1968, respondent judge, in an order dated October 14, 1968, Petitioners also sought the issuance of a writ of preliminary mandatory
The background facts follow: granted both motions. injunction for the immediate reimbursement of the garnished sum of
P209,076.00, constituting funds of petitioner Bureau on deposit with the
On or about November 20, 1940, the Government of the Philippines filed a On the same date, October 14, 1968, respondent Garcia, as special sheriff, Philippine National Bank as official depository of Philippine Government funds,
complaint for eminent domain in the Court of First Instance of Rizal1 for the forthwith served a Notice of Garnishment, together with the writ of execution to the said petitioner's account with the bank, so as to forestall the dissipation
expropriation of a parcel of land belonging to N. T. Hashim, with an area of dated October 14, 1968, issued by respondent Manuela C. Florendo as Deputy of said funds, which the government had allocated to its public highways and
14,934 square meters, needed to construct a public road, now known as Clerk of Court, on respondent Philippine National Bank, notifying said bank that infrastructure projects. The Court ordered on January 31, 1969 the issuance of
Epifanio de los Santos Avenue. On November 25, 1940, the Government took levy was thereby made upon funds of petitioners Bureau of Public Highways the writ against the principal respondents solidarily, including respondent judge
possession of the property upon deposit with the City Treasurer of the sum of and the Auditor General on deposit, with the bank to cover the judgment of therein so that she would take forthwith all the necessary measures and
P23,413.64 fixed by the Court therein as the provisional value of all the lots P209,076.00 in favor of respondent estate, and requesting the bank to reply to processes to compel the immediate return of the said government funds to
needed to construct the road, including Hashim's property. The records of the the garnishment within five days. On October 16, 1968, three days before the petitioner Bureau's account with respondent bank. 5
expropriation case were destroyed and lost during the second world war, and expiration of the five-day deadline, respondent Benjamin V. Coruña in his
neither party took any step thereafter to reconstitute the proceedings. capacity as Chief, Documentation Staff, of respondent bank's Legal Department, In compliance with the writ, respondent bank restored the garnished sum of
allegedly acting in excess of his authority and without the knowledge and P209,076.00 to petitioner Bureau's account with it.6 The primary responsibility
In 1958, however, the estate of N.T. Hashim, deceased, through its Judicial consent of the Board of Directors and other ranking officials of respondent for the reimbursement of said amount to petitioner Bureau's account with the
Administrator, Tomas N. Hashim, filed a money claim with the Quezon City bank, replied to the notice of garnishment that in compliance therewith, the respondent bank, however, rested solely on respondent estate, since it is the
Engineer's Office in the sum of P522,620.00, alleging said amount to be the fair bank was holding the amount of P209,076.00 from the account of petitioner judgment creditor that received the amount upon the questioned execution.
market value of the property in question, now already converted and used as a Bureau of Public Highways. Respondent bank alleged that when it was served
public highway. Nothing having come out of its claim, respondent estate filed with Notice to Deliver Money signed by respondent Garcia, as special sheriff, on Strangely enough, as appears now from respondent bank's memorandum in lieu
on August 6, 1963, with the Court of First Instance of Rizal, Quezon City Branch, October 17, 1968, it sent a letter to the officials of the Bureau of Public of oral argument,7 what respondent bank did, acting through respondent
assigned to Branch IX, presided by respondent judge,2 a complaint for the Highways notifying them of the notice of garnishment. Coruña as its counsel, was not to ask respondent estate to reimburse it in turn
recovery of the fair market price of the said property in the sum of P672,030.00 in the same amount, but to file with the probate court with jurisdiction over
against the Bureau of Public Highways, which complaint was amended on Under date of October 16, 1968, respondent estate further filed with the lower respondent estate,8 a motion for the estate to deposit the said amount with it,
August 26, 1963, to include as additional defendants, the Auditor General and Court an ex-parte motion for the issuance of an order ordering respondent bank purportedly in compliance with the writ. Respondent estate
the City Engineer of Quezon City.3 to release and deliver to the special sheriff, respondent Garcia, the garnished thereupon deposited with respondent bank as a savings account the sum of
amount of P209,076.00 deposited under the account of petitioner Bureau, P125,446.00, on which the bank presumably would pay the usual interest,
The issues were joined in the case with the filing by then Solicitor General which motion was granted by respondent judge in an order of October 18, besides. As to the balance of P83,630.00, this sum had been in the interval paid
Arturo A. Alafriz of the State's answer, stating that the Hashim estate was 1968. On the same day, October 18, 1968, respondent Coruña allegedly taking as attorney's fees to Atty. Jesus B. Santos, counsel for the estate, by the
entitled only to the sum of P3,203.00 as the fair market value of the property at advantage of his position, authorized the issuance of a cashier's check of the administrator, allegedly without authority of the probate court.9 Accordingly,
the time that the State took possession thereof on November 25, 1940, with bank in the amount of P209,076.00, taken out of the funds of petitioner Bureau respondent estate has not reimbursed the respondent bank either as to this last
legal interest thereon at 6% per annum, and that said amount had been deposited in current account with the bank and paid the same to respondent amount, and the bank has complacently not taken any steps in the lower court
available and tendered by petitioner Bureau since 1958. The parties thereafter estate, without notice to said petitioner. to require such reimbursement.
worked out a compromise agreement, respondent estate having proposed on
April 28, 1966, a payment of P14.00 per sq. m. for its 14,934 sq.m.-parcel of Later on December 20, 1968, petitioners, through then Solicitor General Felix V. The ancillary questions now belatedly raised by the State may readily be
land or the total amount of P209,076.00, equivalent to the land's total assessed Makasiar, wrote respondent bank complaining that the bank acted precipitately disposed of. Petitioners may not invoke the State's immunity from suit, since
the case below was but a continuation in effect of the pre-war expropriation Government intended itself to be legally liable only for the damages sustained Their second contention that said government funds lost their character as such
proceedings instituted by the State itself. The expropriation of the property, by plaintiff as a result of the negligent act of one of its employees. 13 "the moment they were deposited with the respondent bank", 17 since the
which now forms part of Epifanio, de los Santos Avenue, is a fait accompli and is relation between a depositor and a depository bank is that of creditor and
not questioned by the respondent state. The only question at issue was the The universal rule that where the State gives its consent to be sued by private debtor, is just as untenable, absolutely. Said respondents shockingly ignore the
amount of the just compensation due to respondent estate in payment of the parties either by general or special law, it may limit claimant's action "only up to fact that said government funds were deposited with respondent bank as the
expropriated property, which properly pertained to the jurisdiction of the lower the completion of proceedings anterior to the stage of execution" and that the official depositary of the Philippine Government. Assuming for the nonce the
court. 10 It is elementary that in expropriation proceedings, the State precisely power of the Courts ends when the judgment is rendered, since government creation of such relationship of creditor and debtor, petitioner Bureau thereby
submits to the Court's jurisdiction and asks the Court to affirm its lawful right to funds and properties may not be seized under writs of execution or held a credit against respondent bank whose obligation as debtor was to pay
take the property sought to be expropriated for the public use or purpose garnishment to satisfy such judgments, is based on obvious considerations of upon demand of said petitioner-creditor the public funds thus deposited with it;
described in its complaint and to determine the amount of just compensation to public policy. Disbursements of Public funds must be covered by the even though title to the deposited funds passes to the bank under this theory
be paid therefor. corresponding appropriation as required by law. The functions and public since the funds become mingled with other funds which the bank may employ
services rendered by the State cannot be allowed to be paralyzed or disrupted in its ordinary business, what was garnished was not the bank's own funds but
Neither may the State impugn the validity of the compromise agreement by the diversion of public funds from their legitimate and specific objects, as the credit of petitioner bureau against the bank to receive payment of its funds,
executed by the Solicitor General on behalf of the State with the approval of the appropriated by law. as a consequence of which respondent bank delivered to respondent estate the
proper government officials, on the ground that it was executed only by the garnished amount of P209,076.00 belonging to said petitioner. Petitioner
lawyer of respondent estate, without any showing of having been specially Thus, as pointed out by the Court in Belleng vs. Republic, 14 while the State has
bureau's credit against respondent bank thereby never lost its character as a
authorized to bind the estate thereby, because such alleged lack of authority given its consent to be sued in compensation cases, the pauper-claimant
credit representing government funds thus deposited. The moment the
may be questioned only by the principal or client, and respondent estate as therein must look specifically to the Compensation Guarantee Fund provided by
payment is made by respondent bank on such deposit, what it pays out
such principal has on the contrary confirmed and ratified the compromise the Workmen's Compensation Act for the corresponding disbursement in
represents the public funds thus deposited which are not garnishable and may
agreement. 11 As a matter of fact, the Solicitor General, in representation of the satisfaction of his claim, since the State in Act 3083, the general law waiving its
be expended only for their legitimate objects as authorized by the
State, makes in the petition no prayer for the annulment of the compromise immunity from suit "upon any money claim involving liability arising from
corresponding legislative appropriation. Neither respondent bank nor
agreement or of the respondent court's decision approving the same. contract express or implied," imposed the limitation in Sec. 7 thereof that "no
respondent Coruña are the duly authorized disbursing officers and auditors of
execution shall issue upon any judgment rendered by any Court against the
the Government to authorize and cause payment of the public funds of
On the principal issue, the Court holds that respondent Court's two questioned Government of the (Philippines) under the provisions of this Act;" and that
petitioner Bureau for the benefit or private persons, as they wrongfully did in
orders (1) for execution of the judgment, in pursuance whereof respondent otherwise, the claimant would have to prosecute his money claim against the
this case.
deputy clerk issued the corresponding writ of execution and respondent special State under Commonwealth Act 327.
sheriff issued the notice of garnishment, and (2) for delivery of the garnished 3. Respondents bank and Coruña next pretend that refusal on their part to obey
amount of P209,076.00 to respondent estate as judgment creditor through This doctrine was again stressed by. the Court in Republic vs. Palacio, 15 setting
respondent judge's order to deliver the garnished amount, "which is valid and
respondent special sheriff, are null and void on the fundamental ground that aside as null and void the order of garnishment issued by the sheriff pursuant to
binding unless annulled, would have exposed them for contempt of
government funds are not subject to execution or garnishment. the lower Court's writ of execution on funds of the Pump Irrigation Trust Fund
court." 18 They make no excuse for not having asked the lower court for time
in the account of the Government's Irrigation Service Unit with the Philippine
and opportunity to consult petitioner Bureau or the Solicitor General with
1. As early as 1919, the Court has pointed out that although the Government, as National Bank. The Court emphasized then and re-emphasizes now that
regard to the garnishment and execution of said deposited public funds which
plaintiff in expropriation proceedings, submits itself to the jurisdiction of the judgments against the State or its agencies and instrumentalities in cases where
were allocated to specific government projects, or for not having simply replied
Court and thereby waives its immunity from suit, the judgment that is thus the State has consented to be sued, operate merely to liquidate and establish
to the sheriff that what they held on deposit for petitioner Bureau were non-
rendered requiring its payment of the award determined as just compensation the plaintiff's claim; such judgments may not be enforced by writs of execution
garnishable government funds. They have not given any cogent reason or
for the condemned property as a condition precedent to the transfer to the title or garnishment and it is for the legislature to provide for their payment through
explanation, — charged as they were with knowledge of the nullity of the writ
thereto in its favor, cannot be realized upon execution. 12 The Court there added the corresponding appropriation, as indicated in Act 3083.
of execution and notice of garnishment against government funds, for in the
that it is incumbent upon the legislature to appropriate any additional amount,
2. Respondent bank and its Chief, Documentation Staff, respondent Coruña earlier case of Republic vs. Palacio, supra, they had then prudently and timely
over and above the provisional deposit, that may be necessary to pay the award
have advanced two specious arguments to justify their wrongful delivery of the notified the proper government officials of the attempted levy on the funds of
determined in the judgment, since the Government cannot keep the land and
garnished public funds to respondent estate. Their first contention that the said the Irrigation Service Unit deposited with it, thus enabling the Solicitor General
dishonor the judgment.
government funds by reason of their being deposited by petitioner Bureau to take the corresponding action to annul the garnishment — for their failure to
In another early case, where the government by an act of the Philippine under a current account subject to withdrawal by check, instead of being follow the same prudent course in this case. Indeed, the Court is appalled at the
Legislature, expressly consented to be sued by the plaintiff in an action for deposited as special trust funds, "lost their kind and character as government improper haste and lack of circumspection with which respondent Coruña and
damages and waived its immunity from suit, the Court adjudged the funds," 16 is untenable. As the official depositary of the Philippine Government, other responsible officials of respondent bank precipitately allowed the
Government as not being legally liable on the complaint, since the State under respondent bank and its officials should be the first ones to know that all garnishment and delivery of the large amount involved, all within the period of
our laws would be liable only for torts caused by its special agents, specially government funds deposited with it by any agency or instrumentality of the just four days, even before the expiration of the five-day reglementary period to
commissioned to carry out the acts complained of outside of such agents' government, whether by way of general or special deposit, remain government reply to the sheriff's notice of garnishment. Failure on the State's part to oppose
regular duties. We held that the plaintiff would have to look to the legislature funds, since such government agencies or instrumentalities do not have any the issuance of the writ of execution, which was patently null and void as an
for another legislative enactment and appropriation of sufficient funds, if the non-public or private funds of their own. execution against government funds, could not relieve them of their own
responsibility.
4. Respondents bank and Coruña further made common cause with respondent It thus appears that all this time, respondent bank has not been reimbursed by respondent judge's immunity from civil responsibility covers them, although the
estate beyond the legal issues that should solely concern them, by reason of respondent estate as the party primarily liable for the whole amount of said orders are herein declared null and void. 20
their having wrongfully allowed the garnishment and delivery of government P209,076.00 wrongfully and illegally garnished and received by respondent
funds, instead assailing petitioners for not having come to court with "clean estate. This grave breach of trust and dereliction of duty on the part of ACCORDINGLY, the writs of certiorari and prohibition are granted. The
hands" and asserting that in fairness, justice and equity, petitioners should not respondent bank's officials should be brought to the attention of respondent respondent court's questioned Orders of October 14, and 18, 1968, are declared
impede, obstruct or in any way delay the payment of just compensation to the bank's Board of Directors and management for the appropriate administrative null and void, and all further proceedings in Civil Case No. Q-7441 of the Court
land owners for their property that was occupied way back in 1940. This matter action and other remedial action for the bank to recover the damages it has of First Instance of Rizal, Quezon City, Branch IX are abated. The writ of
of payment of respondent estate's judgment credit is of no concern to them as been made to incur thereby. preliminary mandatory injunction heretofore issued is made permanent, except
custodian and depositary of the public funds deposited with them, whereby as to respondent judge who is excluded therefrom, without prejudice to any
they are charged with the obligation of assuring that the funds are not illegally 6. The Solicitor General has likewise questioned the legality of respondent cause of action that private respondents may have, inter se. Respondent estate
or wrongfully paid out. Court's Order of October 14, 1968, appointing respondent Garcia as "special and respondent Tomas N. Hashim as prayed for by respondent Philippine
sheriff" for the purpose of effecting service of the writ of execution, simply on National Bank in its Answer, are ordered jointly and severally to reimburse said
Since they have gone into the records of the expropriation case, then it should respondent estate's representation that it was desirable "for a speedy respondent bank in the amount of P209,076.00 with legal interest until the date
be noted that they should have considered the vital fact that at the time that enforcement of the writ." of actual reimbursement. Respondents Estate of N. T. Hashim, Philippine
the compromise agreement therein was executed in November, 1966, National Bank and Benjamin Coruña are ordered jointly to pay treble costs.
respondent estate was well aware of the fact that the funds for the payment of The Court finds this general practice of the lower courts of appointing "special
the property in the amount of P209,076.00 still had to be released by the sheriffs" for the service of writs of execution to be unauthorized by law. The The Clerk of Court is directed to furnish copies of this decision to the Board of
Budget Commissioner and that at the time of the garnishment, respondent duty of executing all processes" of the courts in civil cases, particularly, writs of Directors and to the president of respondent Philippine National Bank for their
estate was still making the necessary representations for the corresponding execution, devolves upon the sheriff or his deputies, under Section 183 of the information and appropriate action. So ordered.
release of such amount, pursuant to the Budget Commissioner's favorable Revised Administrative Code and Rule 39, section 8 of the Rules of Court. Unlike
recommendation.19 And with regard to the merits of the case, they should have the service of summons which may be made, aside from the sheriff or other
likewise considered that respondent estate could have no complaint against the proper court officers, "for special reasons by any person especially authorized
fair attitude of the authorities in not having insisted on their original stand in by the judge of the court issuing the summons" under Rule 14, section 5 of the
their answer that respondent estate was entitled only to the sum of P3,203.00 Rules of Court, the law requires that the responsibility of serving writs of G.R. No. L-32667 January 31, 1978
as the fair market value of the property at the time the State took possession execution, which involve the taking delivery of money or property in trust for
the judgment creditor, should be carried out by regularly bonded sheriffs or PHILIPPINE NATIONAL BANK, petitioner,
thereof on November 25, 1940, with legal interests thereon, but rather agreed
other proper court officers. (Sections 183 and 330, Revised Administrative vs.
to pay therefor the greatly revised and increased amount of P209,076.00 at
Code). The bond required by law of the sheriff is conditioned inter alia, "for the COURT OF INDUSTRIAL RELATIONS, GABRIEL V. MANANSALA and GILBERT P.
P14.00 per square meter, not to mention the consequential benefits derived by
delivery or payment to the Government, or the persons entitled thereto, of all LORENZO, in his official capacity as authorized Deputy sheriff, respondents.
said respondent from the construction of the public highway with the resultant
enhanced value of its remaining properties in the area. the property or sums of money that shall officially come into his or their (his
Conrado E. Medina for petitioner.
deputies') hands" (Section 330, idem), and thus avoids the risk of embezzlement
5. The manner in which respondent bank's counsel and officials proceeded to of such properties and moneys. Gabriel V. Manansala in his own behalf.
comply with the writ of preliminary mandatory injunction issued by the Court
commanding respondent estate, its judicial administrator and respondents bank Section 185 of the Revised Administrative Code restrictively authorizes the Jose K. Manguiat, Jr. for respondent Court.
and Coruña, in solidum, to reimburse forthwith the account of petitioner judge of the Court issuing the process or writ to deputize some suitable person
Bureau in the garnished amount of P209,076.00, does not speak well of their only "when the sheriff is party to any action or proceeding or is otherwise
fidelity to the bank's interests. For while respondent bank had restored with its incompetent to serve process therein." The only other contingency provided by
law is when the office of sheriff is vacant, and the judge is then authorized, "in FERNANDO, J.:
own funds the said amount of P209,076.00 to petitioner Bureau's account, it
has not required respondent estate as the party primarily liable therefor as the case of emergency, (to) make a temporary appointment to the office of sheriff
The issue raised in this certiorari proceeding is whether or not an order of the
recipient of the garnished amount to reimburse it in turn in this same amount. ... pending the appointment and qualification of the sheriff in due course; and
now defunct respondent Court of Industrial Relations denying for lack of merit
Rather, said bank officials have allowed respondent estate to keep all this time he may appoint the deputy clerk of the court or other officer in the government
petitioner's motion to quash a notice of garnishment can be stigmatized as a
the whole amount of P209,076.00 wrongfully garnished by it. For as stated service to act in said capacity." (Section 189, idem).
grave abuse of discretion. What was sought to be garnished was the money of
above, respondent bank allowed respondent estate merely to deposit with it as the People's Homesite and Housing Corporation deposited at petitioner's
None of the above contingencies having been shown to be present, respondent
a savings account, of respondent estate, the lesser sum of P125,446.00 on branch in Quezon City, to satisfy a decision of respondent Court which had
Court's order appointing respondent Garcia as "special sheriff" to serve the writ
which the bank presumably has paid and continues paying respondent estate, become final and executory. 1 A writ of execution in favor of private respondent
of execution was devoid of authority.
besides the usual interest rates on such savings accounts, and neither has it Gabriel V. Manansala had previously been issued. 2 He was the counsel of the
taken any steps to require reimbursement to it from respondent estate of the 7. No civil liability attaches, however, to respondents special sheriff and deputy prevailing party, the United Homesite Employees and Laborers Association, in
remainder of P83,630.00 which respondent estate of its own doing and clerk, since they acted strictly pursuant to orders issued by respondent judge in the aforementioned case. The validity of the order assailed is challenged on two
responsibility paid by way of attorney's fees. the discharge of her judicial functions as presiding judge of the lower court, and grounds: (1) that the appointment of respondent Gilbert P. Lorenzo as
authorized deputy sheriff to serve the writ of execution was contrary to law and
(2) that the funds subject of the garnishment "may be public in character." 3 In 1. The plea for setting aside the notice of garnishment was promised on the capacity to sue and be sued, voluntarily strips itself of its sovereign character, so
thus denying the motion to quash, petitioner contended that there was on the funds of the People's homesite and Housing Corporation deposited with far as respects the transactions of the bank, and waives an the privileges of that
part of respondent Court a failure to abide by authoritative doctrines petitioner being "public in character." There was not even a categorical character. As a member of a corporation, a government never exercises its
amounting to a grave abuse of discretion. After a careful consideration of the assertion to that effect. It is only the possibility of its being "public in character." sovereignty. It acts merely as a corporator, and exercises no other power in the
matter, it is the conclusion of this Tribunal that while the authorization of The tone was thus irresolute,the approach difficult The premise that the funds management of the affairs of the corporation, that are expressly given by the
respondent Lorenzo to act as special deputy sheriff to serve the notice of could be spoken of as public in character may be accepted in the sense that the incorporating act." 11 The National Shipyard and Steel Corporation case,
garnishment may be open to objection, the more basic ground that could have People's Homesite and Housing Corporation was a government-owned entity It therefore, merely reaffirmed one of the oldest and soundest doctrines in this
been relied upon — not even categorically raised, petitioner limiting itself to the does not follow though that they were exempt from garnishment. National branch of the law.
assertion that the funds "could be public" in character, thus giving rise to the Shipyard and Steel Corporation v. court of Industrial Relations 6 is squarely in
applicability of the fundamental concept of non-suability — is hardly persuasive. point. As was explicitly stated in the opinion of the then Justice, later Chief 3. The invocation of Republic v. Palacio, 12 as well as Commissioner of Public
The People's Homesite and Housing Corporation had a juridical existence Justice, Concepcion: "The allegation to the effect that the funds of the NASSCO Highways v. San Diego, 13 did not help the cause of petitioner at all The
enabling it sue and be sued. 4 Whatever defect could be attributed therefore to are public funds of the government, and that, as such, the same may not be decisions are not applicable. If properly understood they can easily be
the order denying the motion to quash could not be characterized as a grave garnished, attached or levied upon, is untenable for, as a government owned distinguished. As is clear in the opinion of Justice J.B.L. Reyes in Republic v.
abuse of discretion. Moreover, with the lapse of time during which private and controlled corporation. the NASSCO has a personality of its own, distinct Palacio, the Irrigation Service Unit which was sued was an office and agency
respondent had been unable to execute a judgment in his favor, the equities are and separate from that of the Government. It has pursuant to Section 2 of under the Department of Public Works and Communications. The Republic of
on his side. Accordingly, this petition must be dismissed. Executive Order No. 356, dated October 23, 1950 ..., pursuant to which the the Philippines, through the then Solicitor General, moved for the dismissal of
NASSCO has been established — 'all the powers of a corporation under the such complaint, alleging that it "has no juridical personality to sue and be
The order of August 26, 1970 of respondent Court denying the motion to quash, Corporation Law ...' Accordingly, it may sue and be sued and may be subjected sued." 14 Such a motion to dismiss was denied. The case was tried and plaintiff
subject of this certiorari proceeding, reads as follows: "The Philippine National to court processes just like any other corporation (Section 13, Act No. 1459), as Ildefonso Ortiz, included as private respondent in the Supreme Court
Bank moves to quash the notice of garnishment served upon its branch in amended." 7 The similarities between the aforesaid case and the present proceeding, obtained a favorable money judgment. It became final and
Quezon City by the authorized deputy sheriff of this Court. It contends that the litigation are patent. Petitioner was similarly a government-owned corporation. executory. Thereafter, it appeared that the Solicitor General was served with a
service of the notice by the authorized deputy sheriff of the court contravenes The principal respondent was the Court of Industrial Relations. The prevailing copy of the writ of execution issued by the lower court followed by an order of
Section 11 of Commonwealth Act No. 105, as amended which reads:" 'All writs parties were the employees of petitioner. There was likewise a writ of execution garnishment 15 Again, there was an urgent motion to lift such order, but it was
and processes issued by the Court shall be served and executed free of charge and thereafter notices of garnishment served on several banks. There was an denied. A certiorariand prohibition proceeding was then filed with the Court of
by provincial or city sheriffs, or by any person authorized by this Court, in the objection to such a move and the ruling was adverse to the National Shipyard Appeals. The legality of the issuance of such execution and punishment was
same manner as writs and processes of Courts of First Instance.' Following the and Steel Corporation. Hence the filing of a petition for certiorari. To repeat, the upheld, and the matter was elevated to this Tribunal The Republic was
law, the Bank argues that it is the Sheriff of Quezon City, and not the Clerk of ruling was quite categorical Garnishment was the appropriate remedy for the sustained. The infirmity of the decision reached by the Court of Appeals,
this Court who is its Ex-Officio Sheriff, that has the authority to serve the notice prevailing party which could proceed against the funds of a corporate entity according to the opinion, could be traced to the belief that there was a waiver
of garnishment, and that the actual service by the latter officer of said notice is even if owned or controlled by the government. In a 1941 decision, Manila of "governmental immunity and, by implication, consent to the suit." 16 There
therefore not in order. The Court finds no merit in this argument. Republic Act Hotel Employees Association v. Manila Hotel Company, 8 this Court, through was no such waiver. Even if there were, it was stressed by justice J.B.L. Reyes:
No. 4201 has, since June 19, 1965, already repealed Commonwealth Act No. Justice Ozaeta, held: "On the other hand, it is well settled that when the "It is apparent that this decision of the Court of Appeals suffers from the
103, and under this law, it is now the Clerk of this Court that is at the same time government enters into commercial business, it abandons its sovereign capacity erroneous assumption that because the State has waived its immunity, its
the Ex-Officio Sheriff. As such Ex-Officio Sheriff, the Clerk of this Court has and is to be treated like any other corporation. (Bank of the United States v. property and funds become liable to seizure under the legal process. This
therefore the authority to issue writs of execution and notices of garnishment in Planters' Bank, 9 Wheat, 904, 6 L.ed. 244). By engaging in a particular business emphatically is not the law. (Merritt v. Insular Government, 34 Phil 311)." 17 To
an area encompassing the whole of the country, including Quezon City, since his thru the instrumentality of a corporation, the governmnent divests itself pro levy the execution of such funds, according to him, would thus "amount to a
area of authority is coterminous with that of the Court itself, which is national in hac vice of its sovereign character, so as to render the corporation subject to disbursement without any proper appropriation as required by law
nature. ... At this stage, the Court notes from the record that the appeal to the the rules of law governing private corporations." " 18 InCommissioner of Public Highways v. San Diego, the opening paragraph of
Supreme Court by individual employees of PHHC which questions the award of Justice Teehankee was quite specific as to why there could be neither execution
attorney's fees to Atty. Gabriel V. 2. It is worth noting that the decision referred to, the Bank of the United States nor garnishment of the money of petitioner Bureau of Public Highways: "In this
v. Planters' Bank, 10 was promulgated by the American Supreme Court as early special civil action for certiorari and prohibition, the Court declares null and void
Manansala, has already been dismissed and that the same became final and as 1824, the opinion being penned by the great Chief Justice Marshall. As was the two questioned orders of respondent Court levying upon funds of petitioner
executory on August 9, 1970. There is no longer any reason, therefore, for pointed out by him: "It is, we think, a sound principle, that when a government Bureau of Public Highways on deposit with the Philippine National Bank, by
withholding action in this case. [Wherefore], the motion to quash filed by the becomes a partner in any trading company, it divests itself, so far as concerns virtue of the fundamental precept that government funds are not subject to
Philippine National Bank is denied for lack of merit. The said Bank is therefore the transactions of that company, of its sovereign character, and takes that of a execution or garnishment." 19 The funds appertained to a governmental office,
ordered to comply within five days from receipt with the 'notice of private citizen. Instead of communicating to the company its privileges and its not to a government-owned or controlled corporation with a separate juridical
Garnishment' dated May 6, 1970." 5 There was a motion for reconsideration prerogatives, it descends to a level with those with whom it associates itself, personality. In neither case therefore was there an entity with the capacity to
filed by petitioner, but in a resolution dated September 22, 1970, it was denied. and takes the character which belongs to its associates, and to the business sue and be sued, the funds of which could thereafter be held liable to execution
Hence, this certiorari petition. which is to be transacted. Thus, many states of this Union who have an interest and garnishment in the event of an adverse judgment.
in banks, are not suable even in their own courts; yet they never exempt the
As noted at the outset, the petition lacks merit.
corporation from being sued. The state of Georgia, by giving to the bank the
4. Both the Palacio and the Commissioner of Public Highways decisions, insofar [G.R. No. 113191. September 18, 1996] "The undersigned submits that the request for the 'investigation' of Labor
as they reiterate the doctrine that one of the coronaries of the fundamental Arbiter Nieves de Castro, by the National Labor Relations Commission, has been
concept of non-suability is that governmental funds are immune from DEPARTMENT OF FOREIGN AFFAIRS, petitioner, vs. NATIONAL LABOR erroneously premised on Art. 218(c) of the Labor Code, as cited in the letter of
garnishment, refer to Merritt v. Insular Government, a 1916 decision 20 Since RELATIONS COMMISSION, HON. LABOR ARBITER NIEVES V. DE CASTRO and Secretary Padilla, considering that the provision deals with 'a question, matter
then such a principle has been followed with undeviating rigidity, the latest case JOSE C. MAGNAYI, respondents. or controversy within its (the Commission) jurisdiction' obviously referring to a
in point being Republic v. Villasor, 21 promulgated in 1973. It is an entirely labor dispute within the ambit of Art. 217 (on jurisdiction of Labor Arbiters and
DECISION
different matter if, according to Justice Sanchez in Ramos v. Court of Industrial the Commission over labor cases).
Relations, 22 the office or entity is "possessed of a separate and distinct VITUG, J.:
corporate existence." 23 Then it can sue and be sued. Thereafter, its funds may "The procedure, in the adjudication of labor cases, including raising of defenses,
be levied upon or garnished. That is what happened in this case. The questions raised in the petition for certiorari are a few coincidental matters is prescribed by law. The defense of immunity could have been raised before
relative to the diplomatic immunity extended to the Asian Development Bank the Labor Arbiter by a special appearance which, naturally, may not be
5. With the crucial issue thus resolved in favor of the correctness of the order ("ADB"). considered as a waiver of the very defense being raised. Any decision thereafter
assailed, the other objection raised, namely that respondent Court acted is subject to legal remedies, including appeals to the appropriate division of the
erroneously in having a special sheriff serve to the writ of execution, hardly On 27 January 1993, private respondent initiated NLRC-NCR Case No. 00-01- Commission and/or a petition for certiorari with the Supreme Court, under Rule
needs any extensive decision. It is true that in the aforesaid Commissioner of 0690-93 for his alleged illegal dismissal by ADB and the latter's violation of the 65 of the Rules of Court. Except where an appeal is seasonably and properly
Public Highways opinion, this Court held that there is no authorization in law for "labor-only" contracting law. Two summonses were served, one sent directly to made, neither the Commission nor the undersigned may review, or even
the appointment of special sheriffs for the service of writs of execution. 24 In the the ADB and the other through the Department of Foreign Affairs ("DFA"), both question, the propriety of any decision by a Labor Arbiter. Incidentally, the
order sought to be nullified, the then Judge Joaquin M. Salvador of respondent with a copy of the complaint. Forthwith, the ADB and the DFA notified Commission sits en banc (all fifteen Commissioners)only to promulgate rules of
Court pointed out that under a later Act, 25 the Court of Industrial Relations Act respondent Labor Arbiter that the ADB, as well as its President and Officers, procedure or to formulate policies (Art. 213, Labor Code).
was amended with the proviso that its Clerk of Court was the ex-oficio sheriff. were covered by an immunity from legal process except for borrowings,
The point raised in the petition that it should be the sheriff of Quezon City that guaranties or the sale of securities pursuant to Article 50(1) and Article 55 of "On the other hand, while the undersigned exercises 'administrative supervision
ought to have served the writ of execution would thus clearly appear to be the Agreement Establishing the Asian Development Bank (the "Charter") in over the Commission and its regional branches and all its personnel, including
inconclusive. There is to be sure no thought of deviating from the principle relation to Section 5 and Section 44 of the Agreement Between The Bank And the Executive Labor Arbiters and Labor Arbiters' (penultimate paragraph, Art.
announced in the Commissioner of Public Highways case. That is as it ought to The Government Of The Philippines Regarding The Bank's Headquarters (the 213, Labor Code), he does not have the competence to investigate or review
be. Even if, however, there is sufficient justification for the infirmity attributed "Headquarters Agreement"). any decision of a Labor Arbiter. However, on the purely administrative aspect of
to respondent Court by virtue of such a ruling, still considering all the the decision-making process, he may cause that an investigation be made of any
The Labor Arbiter took cognizance of the complaint on the impression that the misconduct, malfeasance or misfeasance, upon complaint properly made.
circumstances of this case, it clearly does not call for the nullification of the
ADB had waived its diplomatic immunity from suit. In time, the Labor Arbiter
order in question. What cannot be denied is that the writ of execution was
rendered his decision, dated 31 August 1993, that concluded: "If the Department of Foreign Affairs feels that the action of Labor Arbiter
issued as far back as May 5, 1970 by the then Clerk of Court of respondent
Nieves de Castro constitutes misconduct, malfeasance or misfeasance, it is
Tribunal as the authorized sheriff. It would be, to say the least, unfair and "WHEREFORE, above premises considered, judgment is hereby rendered suggested that an appropriate complaint be lodged with the Office of the
unequitable if, on the assumption that such Clerk of Court lacked such declaring the complainant as a regular employee of respondent ADB, and the Ombudsman.
competence, a new writ of execution had to be issued by the proper official At termination of his services as illegal. Accordingly, respondent Bank is hereby
any rate, what is important is that the judgment be executed. That is to achieve ordered: "Thank you for your kind attention."[2]
justice according to law. It would be to carry technicality, therefore, to an
absurd length if just because of such a mistake, assuming that it is, but "1. To immediately reinstate the complainant to his former position Dissatisfied, the DFA lodged the instant petition for certiorari. In this Court's
undoubtedly one committed in good faith, further delay would get be imposed effective September 16, 1993; resolution of 31 January 1994, respondents were required to
on private respondent by characterizing the order sought to be nullified comment. Petitioner was later constrained to make an application for a
amounting to a grave abuse of discretion. "2. To pay complainant full backwages from December 1, 1992 to September restraining order and/or writ of preliminary injunction following the issuance,
15, 1993 in the amount of P42,750.00 (P4,500.00 x 9 months); on 16 March 1994, by the Labor Arbiter of a writ of execution. In a resolution,
WHEREFORE, the petition for certiorari is dismissed. No costs. dated 07 April 1994, the Court issued the temporary restraining order prayed
"3. And to pay complainants other benefits and without loss of seniority rights
for.
and other privileges and benefits due a regular employee of Asian Development
Bank from the time he was terminated on December 31, 1992; 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
"4. To pay 10% attorney's fees of the total entitlements."[1]
submitted a Manifestation (dated 20 June 1994) stating, among other things,
The ADB did not appeal the decision. Instead, on 03 November 1993, the DFA that "after a thorough review of the case and the records," it became convinced
referred the matter to the National Labor Relations Commission ("NLRC"); in its that ADB, indeed, was correct in invoking its immunity from suit under the
referral, the DFA sought a "formal vacation of the void judgment." Replying to Charter and the Headquarters Agreement.
the letter, the NLRC Chairman, wrote:
The Court is of the same view.
Article 50(1) of the Charter provides: suggestion by the principal law officer of the government, x x x or other officer hearing of this case erodes the credibility of the Philippine government before
acting under his direction.Hence, in adherence to the settled principle that the international community, let alone the negative implication of such a suit on
The Bank shall enjoy immunity from every form of legal process, except in cases courts may not so exercise their jurisdiction x x x as to embarrass the executive the official relationship of the Philippine government with the ADB.
arising out of or in connection with the exercise of its powers to borrow money, arm of the government in conducting foreign relations, it is accepted doctrine
to guarantee obligations, or to buy and sell or underwrite the sale of that `in such cases the judicial department of government follows the action of "For the Secretary of Foreign Affairs
securities.[3] the political branch and will not embarrass the latter by assuming an
(Sgd.)
antagonistic jurisdiction.'"[8]
Under Article 55 thereof -
"SIME D. HIDALGO
To the same effect is the decision in International Catholic Migration
All Governors, Directors, alternates, officers and employees of the Bank,
Commission vs. Calleja,[9] which has similarly deemed the Memoranda of the Assistant Secretary"[14]
including experts performing missions for the Bank:
Legal Adviser of the Department of Foreign Affairs to be "a categorical
(1) shall be immune from legal process with respect of acts performed by them recognition by the Executive Branch of Government that ICMC x x x enjoy(s) The Office of the President, likewise, has issued on 18 May 1993 a letter to the
in their official capacity, except when the Bank waives the immunity.[4] immunities accorded to international organizations" and which determination Secretary of Labor, viz:
must be held "conclusive upon the Courts in order not to embarrass a political
Like provisions are found in the Headquarters Agreement. Thus, its Section 5 "Dear Secretary Confesor,
department of Government. In the instant case, the filing of the petition by the
reads: DFA, in behalf of ADB, is itself an affirmance of the government's own "I am writing to draw your attention to a case filed by a certain Jose C. Magnayi
recognition of ADB's immunity. against the Asian Development Bank and its President, Kimimasa Tarumizu,
"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 before the National Labor Relations Commission, National Capital Region
Being an international organization that has been extended a diplomatic status,
money, to guarantee obligations, or to buy and sell or underwrite the sale of Arbitration Board (NLRC NCR Case No. 00-01690-93).
the ADB is independent of the municipal law.[10] In Southeast Asian Fisheries
securities.[5] Development Center vs. Acosta,[11] the Court has cited with approval the "Last March 8, the Labor Arbiter charged with the case, Ms. Nieves V. de Castro,
opinion[12] of the then Minister of Justice; thus - addressed a Notice of Resolution/Order to the Bank which brought it to the
And, with respect to certain officials of the bank, Section 44 of the agreement
states: attention of the Department of Foreign Affairs on the ground that the service of
"One of the basic immunities of an international organization is immunity from
such notice was in violation of the RP-ADB Headquarters Agreement which
local jurisdiction, i.e., that it is immune from the legal writs and processes
Governors, other representatives of Members, Directors, the President, Vice- provided, inter-alia, for the immunity of the Bank, its President and officers
issued by the tribunals of the country where it is found. (See Jenks, Id., pp. 37-
President and executive officers as may be agreed upon between the from every form of legal process, except only, in cases of borrowings,
44). The obvious reason for this is that the subjection of such an organization to
Government and the Bank shall enjoy, during their stay in the Republic of the guarantees or the sale of securities.
the authority of the local courts would afford a convenient medium thru which
Philippines in connection with their official duties with the Bank:
the host government may interfere in their operations or even influence or "The Department of Foreign Affairs, in turn, informed Labor Arbiter Nieves V. de
xxxxxxxxx control its policies and decisions of the organization; besides, such subjection to Castro of this fact by letter dated March 22, copied to you.
local jurisdiction would impair the capacity of such body to discharge its
(b) Immunity from legal process of every kind in respect of words spoken or responsibilities impartially on behalf of its member-states."[13] "Despite this, the labor arbiter in question persisted to send summons, the
written and all acts done by them in their official capacity.[6] latest dated May 4, herewith attached, regarding the Magnayi case.
Contrary to private respondent's assertion, the claim of immunity is not here
The above stipulations of both the Charter and Headquarters Agreement should being raised for the first time; it has been invoked before the forum of origin "The Supreme Court has long settled the matter of diplomatic immunities. In
be able, nay well enough, to establish that, except in the specified cases of through communications sent by petitioner and the ADB to the Labor Arbiter, as WHO vs. Aquino, SCRA 48, it ruled that courts should respect diplomatic
borrowing and guarantee operations, as well as the purchase, sale and well as before the NLRC following the rendition of the questioned judgment by immunities of foreign officials recognized by the Philippine government. Such
underwriting of securities, the ADB enjoys immunity from legal process of every the Labor Arbiter, but evidently to no avail. decision by the Supreme Court forms part of the law of the land.
form. The Banks officers, on their part, enjoy immunity in respect of all acts
performed by them in their official capacity. The Charter and the Headquarters In its communication of 27 May 1993, the DFA, through the Office of Legal "Perhaps you should point out to Labor Arbiter Nieves V. de Castro that
Agreement granting these immunities and privileges are treaty covenants and Affairs, has advised the NLRC: ignorance of the law is a ground for dismissal.
commitments voluntarily assumed by the Philippine government which must be
"Respectfully returned to the Honorable Domingo B. Mabazza, Labor Arbitration "Very truly yours,
respected.
Associate, National Labor Relations Commission, National Capital Judicial
Region, Arbitration Branch, Associated bank Bldg., T.M. Kalaw St., Ermita, (Sgd.)
In World Health Organization vs. Aquino,[7] we have declared:
Manila, the attached Notice of Hearing addressed to the Asian Development
JOSE B. ALEJANDRINO
It is a recognized principle of international law and under our system of Bank, in connection with the aforestated case, for the reason stated in the
separation of powers that diplomatic immunity is essentially a political question Department's 1st Indorsement dated 23 March 1993, copy attached, which is Chairman, PCC-ADB"[15]
and courts should refuse to look beyond a determination by the executive self-explanatory.
branch of the government, and where the plea of diplomatic immunity is Private respondent argues that, by entering into service contracts with different
recognized and affirmed by the executive branch of the government x x x it is "In view of the fact that the Asian Development Bank (ADB) invokes its private companies, ADB has descended to the level of an ordinary party to a
then the duty of the courts to accept the claim of immunity upon appropriate immunity which is sustained by the Department of Foreign Affairs, a continuous
commercial transaction giving rise to a waiver of its immunity from suit. In the is entitled to immunity. If the Secretary of State finds that the defendant is [G.R. No. 120385. October 17, 1996]
case of Holy See vs. Hon. Rosario, Jr.,[16] the Court has held: 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 REPUBLIC OF THE PHILIPPINES, represented by ASSET PRIVATIZATION
There are two conflicting concepts of sovereign immunity, each widely held and procedure is followed, only the Foreign Office issues a certification to that effect TRUST, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, HON.
firmly established. According to the classical or absolute theory, a sovereign instead of submitting a 'suggestion' (O'Connell, I International Law 130 [1965]; EDUARDO J. CARPIO, and PANTRANCO ASSOCIATION OF CONCERNED
cannot, without its consent, be made a respondent in the Courts of another Note: Immunity from Suit of Foreign Sovereign Instrumentalities and EMPLOYEES UNION, respondents.
sovereign. According to the newer or restrictive theory, the immunity of the Obligations, 50 Yale Law Journal 1088 [1941]).
sovereign is recognized only with regard to public acts or acts jure imperii of a RESOLUTION
state, but not with regard to private act or acts jure gestionis. "In the Philippines, the practice is for the foreign government or the
VITUG, J.:
international organization to first secure an executive endorsement of its claim
xxxxxxxxx of sovereign or diplomatic immunity. But how the Philippine Foreign Office Once a judgment becomes final, it is a matter of right for the prevailing party to
conveys its endorsement to the courts varies. In International Catholic be entitled to a writ of execution,[1] so described as the fruit and end of the
Certainly, the mere entering into a contract by a foreign state with a private
Migration Commission vs. Calleja, 190 SCRA 130 (1990), the Secretary of Foreign suit.[2] The decisions of the Labor Arbiters and the National Labor Relations
party cannot be the ultimate test. Such an act can only be the start of the
Affairs just sent a letter directly to the Secretary of Labor and Employment, Commission (NLRC) having gained finality, writs of execution and notices of
inquiry. The logical question is whether the foreign state is engaged in the
informing the latter that the respondent-employer could not be sued because it garnishment have been issued in (a) NLRC NCR Case No. 00-08-05380-
activity in the regular course of business. If the foreign state is not engaged
enjoyed diplomatic immunity. In World Health Organization vs. Aquino, 48 SCRA 93,[3] PANTRANCO EMPLOYEES ASSOCIATION PTGWO vs. PANTRANCO NORTH
regularly in a business or trade, the particular act or transaction must then be
242 (1972), the Secretary of Foreign Affairs sent the trial court a telegram to EXPRESS INC. AND ASSET PRIVATIZATION TRUST; (b) NLRC-NCR Case No. 00-05-
tested by its nature. If the act is in pursuit of a sovereign activity, or an incident
that effect. In Baer vs. Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked the 03587-93,[4] PANTRANCO ASSOCIATION OF CONCERNED EMPLOYEES UNION vs.
thereof, then it is an act jure imperii, especially when it is not undertaken for
Secretary of Foreign Affairs to request the Solicitor General to make, in behalf PANTRANCO NORTH EXPRESS, INC., ASSET PRIVATIZATION TRUST AND
gain or profit.[17]
of the Commander of the United States Naval Base at Olongapo City, Zambales, DEPARTMENT OF TRANSPORTATION AND COMMUNICATION; and, (c) NLRC
The service contracts referred to by private respondent have not been intended a 'suggestion' to respondent Judge. The Solicitor General embodied the CASE NO. SUB-RAB-01-12-7-02255-93,[5] DR. ANTONIO P. CABUGAO vs.
by the ADB for profit or gain but are official acts over which a waiver of 'suggestion' in a manifestation and memorandum as amicus curiae. PANTRANCO NORTH EXPRESS, INC., ASSET PRIVATIZATION TRUST.
immunity would not attach.
"In the case at bench, the Department of Foreign Affairs, through the Office of The writs of execution and notices of garnishment are now sought to be set
With regard to the issue of whether or not the DFA has the legal standing to file Legal Affairs moved with this Court to be allowed to intervene on the side of aside by the Republic, represented by the Asset Privatization Trust (APT), in the
the present petition, and whether or not petitioner has regarded the basic rule petitioner. The Court allowed the said Department to file its memorandum in instant special civil action of prohibition with prayer for the issuance of
thatcertiorari can be availed of only when there is no appeal nor plain, speedy support of petitioner's claim of sovereign immunity. preliminary injunction or temporary restraining order.
and adequate remedy in the ordinary course of law, we hold both in the
"In some cases, the defense of sovereign immunity was submitted directly to Prefatorily, it would be helpful to mention how APT became involved in these
affirmative.
the local courts by the respondents through their private counsels (Raquiza vs. various cases of monetary claims filed by the employees of the Pantranco North
The DFA's function includes, among its other mandates, the determination of Bradford, 75 Phil. 50 [1945]; Miquiabas vs. Philippine-Ryukyus Command, 80 Express, Inc. (PNEI).
persons and institutions covered by diplomatic immunities, a determination Phil. 262 [1948]; United States of America vs. Guinto, 182 SCRA 644 [1990] and
which, when challenged, entitles it to seek relief from the court so as not to companion cases). In cases where the foreign states bypass the Foreign Office, In December of 1978, the full ownership of PNEI was transferred to its creditor,
seriously impair the conduct of the country's foreign relations. The DFA must be the courts can inquire into the facts and make their own determination as to the National Investment Development Corporation (NIDC), a subsidiary of the
allowed to plead its case whenever necessary or advisable to enable it to help the nature of the acts and transactions involved."[20] Philippine National Bank (PNB),[6] following the latters foreclosure of PNEI
keep the credibility of the Philippine government before the international assets. PNEI was one among several companies placed under sequestration by
Relative to the propriety of the extraordinary remedy of certiorari, the Court the Presidential Commission on Good Government (PCGG) shortly after the
community. When international agreements are concluded, the parties thereto
has, under special circumstances, so allowed and entertained such a petition historic 1986 events in EDSA. Some time in January, 1988, the sequestration
are deemed to have likewise accepted the responsibility of seeing to it that
when (a) the questioned order or decision is issued in excess of or without order was lifted to give way to the sale of PNEI by the APT which, in the
their agreements are duly regarded. In our country, this task falls principally on
jurisdiction,[21] or (b) where the order or decision is a patent nullity,[22] which, meanwhile, had taken over the management of the company.[7] The continuing
the DFA as being the highest executive department with the competence and
verily, are the circumstances that can be said to obtain in the present deterioration of its financial condition prompted PNEI to lodge, on 07 May
authority to so act in this aspect of the international arena.[18] In Holy See vs.
case. When an adjudicator is devoid of jurisdiction on a matter before him, his 1992, a Petition for Suspension of Payments with the Securities and Exchange
Hon. Rosario, Jr.,[19] this Court has explained the matter in good detail; viz:
action that assumes otherwise would be a clear nullity. Commission (SEC), a move calculated to prevent further dissipation of PNEIs
"In Public International Law, when a state or international agency wishes to assets and to make PNEI a viable source of income for the government.[8] The
WHEREFORE, the petition for certiorari is GRANTED, and the decision of the
plead sovereign or diplomatic immunity in a foreign court, it requests the management committee, which was created to handle the business operations
Labor Arbiter, dated 31 August 1993 is VACATED for being NULL AND VOID. The
Foreign Office of the state where it is sued to convey to the court that said of PNEI, presented a report to the SEC that recommended, in a move to best
temporary restraining order issued by this Court on 07 April 1994 is hereby
defendant is entitled to immunity. serve the interest of all parties concerned (creditors, employees of PNEI and the
made permanent. No costs.
government), the sale of the company through privatization in accordance with
"In the United States, the procedure followed is the process of 'suggestion,' the rules of the APT. As a cost saving measure, the management committee also
SO ORDERED.
where the foreign state or the international organization sued in an American recommended to the SEC the retrenchment of some 500 employees of
court requests the Secretary of State to make a determination as to whether it
PNEI. The retrenchment was carried out during the months of November and controlled agency, were considered public in nature, they could not be the WHEREFORE, premises considered judgment is hereby rendered ordering
December of 1992 and January of 1993. subject of garnishment.[13] respondent Pantranco North Express, Inc. to pay individual complainants the
following amount as computed.
The filing of various labor complaints against PNEI was the immediate result. (B) NLRC-NCR-00-05-03587-93, the second labor case, involved a claim for
separation pay, 13th month pay and other benefits lodged by PACEU against In addition, respondent company is further directed to pay individual
(A) NLRC NCR Case No. 00-08-05380-93 was started by PEA-PTGWO on 27 PNEI, APT and DOTC. The proceedings that transpired in NLRC-NCR-00-05- complainants the uniformed amount of P1,000.00 representing unpaid gift
August 1993 in the Arbitration Branch of the NLRC-NCR against PNEI and APT 03587-93 were summarized by Labor Arbiter Raul Aquino in his 21 July check and uniform allowance in the amount of P5,868.00 for male complainants
for unfair labor practice, for non-payment of 13th month pay, and various other 1993 decision; viz: and the amount of P5,058.00 for female complainants for the year 1991, 1992
claims. Summonses were served and received by the respective Legal and 1993, with the exemption of complainant Marciano Cleofas who is not
Departments of PNEI and APT. When the case was called for hearing, only PNEI It appears on record that this case was initially set for mandatory conference entitled to uniform allowance. In the case of complainants Rogelio Murillo,
made an appearance through the Office of the Government Corporate Counsel on June 9, 1993. On June 9, 1993, record of the case shows that only the Oronico Ponciano, Pereya Francisco, Bernardo Santos and Felizardo Lambino
(OGCC). In the subsequent hearings, while APT did not formally enter its complainant appeared. Respondents appeared on June 18, 1993 but efforts to respondent is directed to pay each of them the amount of P6,660.00 for the
appearance, it, however, submitted a position paper with a motion to dismiss settle the case failed. period of 1991, 1992 and 1993.
the case.[9] On 14 February 1994, Labor Arbiter Eduardo Carpio rendered a
decision holding PNEI and APT jointly and solidarily liable, viz: Complainants on June 29, 1993, filed their position paper together with their Respondent is likewise directed to pay the attorneys fees equivalent to 10% of
individual computation of claims. On June 30, 1993, parties appeared wherein the total monetary award of THIRTY NINE MILLION SEVEN HUNDRED THIRTY SIX
WHEREFORE, premises considered, judgment is hereby rendered ordering respondents committed to file its position paper on July 8, 1993 with THOUSAND FOUR HUNDRED FIFTY NINE PESOS AND THIRTEEN CENTAVOS
respondents to jointly and severally pay all the covered employees the understanding that with or without the said position paper the case should be (P39,736,459.13)
following: deemed submitted for decision. On July 8, 1993, complainants
appeared.Respondents on its part did not appear neither did it file the required SO ORDERED.[15]
1. 13th month pay and P1,000.00 cash gift for the year 1992; position paper, it did not even explain the reason of its non-appearance.
Since none of the parties appealed, the aforequoted decision eventually
2. medicine allowance from 1991 to September 1993 when the company ceased Citing the agreement on June 30, 1993 hearing this Office issued an Order became final and executory. Upon motion, Labor Arbiter Aquino issued a writ of
its operations; on July 13, 1993, the same states: execution commanding the sheriff, as follows:
3. uniform allowance pursuant to Art. XIII of the CBA; When this case was called for hearing on June 30, 1993, respondent requested NOW THEREFORE, you are hereby commanded to proceed to the premises of
that it be given until July 8, 1993 within which to submit its position paper with the respondent Pantranco North Express, Inc. located at 325 Quezon Blvd.
4. separation pay equivalent to one (1) month for every year of service, a
the understanding that with or without the said position paper, the same shall Extension, Quezon City to collect the amount of P39,736,459.13 and attorneys
fraction of six (6) months to be considered as one (1) whole year; and
be deemed submitted for decision. fees in the amount of P3,973,645.91 plus the execution fee of P40,000.00 as per
5. 10% of the total award as attorneys fees.[10] Manual Instruction for Sheriff in cash and to turn over the same to this Office
This case was set again for hearing on July 8, 1993 at 2:00 p.m. During the for proper disposition.[16]
No appeal was interposed by either the PNEI or the APT from the Carpio hearing, complainants together with counsel appeared while respondent failed
decision. PEA-PTGWO in due time filed an urgent motion for the issuance of a to appear and likewise failed to submit the required position paper. Thus, By virtue of the writ, various pieces of property of PNEI were levied upon and
writ of execution. Acting on the motion, Labor Arbiter Carpio directed the complainants move for the submission of the above-entitled case for decision. sold at public auction. Meanwhile, APT filed an Urgent Ex-Parte Motion to
Research and Information Unit of the NLRC to submit an official computation of Quash Execution.By then, the proceeds of the sale of some property had
ACCORDINGLY, respondent Pantranco North Express, Inc. is hereby ordered to amounted to P1,200,000.00. The amount was deposited with the NLRC pending
PEA-PTGWOs monetary entitlements. PEA-PTGWO, PNEI and APT were all
submit its position paper together with supporting documents within five (5) resolution of APTs motion.
served with copies of the computation directing them to submit their respective
days from receipt of this Order. Failure to comply with this Order shall be
comments thereon. Only PEA-PTGWO submitted its manifestation stating that it
deemed waiver of rights to present evidence hence, the above-entitled case PEA-PTGWO filed a Motion for Intervention before Labor Arbiter Aquino
was agreeable to the computation.
shall be deemed submitted for resolution. No motion for extension shall be claiming interest over the same property of PNEI because of the unions own
A writ of execution, dated 26 May 1994, was eventually issued by Labor Arbiter entertained. monetary claim against the latter.
Carpio. The writ was sought to be implemented by Sheriff Juanito Atienza but
SO ORDERED. The case was re-raffled to Labor Arbiter Ricardo Nora, following the inhibition of
only a partial satisfaction of judgment could be realized (through the sale of
Labor Arbiter Aquino, who issued an order on 19 November 1993 denying both
levied properties of PNEI in the sum of P22,300.00).[11] PEA-PTGWO filed an It appeared on record that respondent did not file the required position paper APTs Urgent Ex-Parte Motion to Quash and PEA-PTGWOs Motion for
urgent motion for the issuance of an alias writ of execution which was favorably despite receipt of the mentioned Order. Intervention. Only PEA-PTGWO appealed to the NLRC for the reversal of the
acted upon. In carrying out the alias writ, Sheriff Atienza served a notice of
order of the Labor Arbiter.
garnishment, dated 16 November 1994, on the Land Bank of the Philippines In consonance therefore with the Order of July 13, 1993 and pursuant to par. c,
upon all x x x credits, interest, bank deposits x x x belonging to respondent Section 11, Rule V New Rules of Procedure of this Office, this case is now On 29 November 1994, an order[17] was issued by the NLRC affirming the
Pantranco North Express, Inc. or the respondent Asset Privatization considered submitted for decision.[14] appealed order of respondent Arbiter. The subsequent motion for
Trust[12] sufficient to cover the remaining balance of the judgment award in the reconsideration was denied by the NLRC in its 21 June 1995 order[18] which
sum of P68,947,756.10. The Land Bank, in turn, responded in one of its letters On 21 July 1993, Labor Arbiter Aquino rendered a decision, the decretal portion
to Sheriff Atienza that since the funds of APT, a government owned and of which read:
became final and executory on 14 July 1995, and thereafter recorded in the instrumentality, among other things, can sue and be sued.[28] This provision REPUBLIC OF THE PHILIPPINES, A.M. No. RTJ-05-1959
Book of Entries of Judgment.[19] indubitably shows that APT can be haled to court.
- versus - (Formerly OCA I.P.I. No. 04-
(C) The complaint in NLRC CASE NO. SUB-RAB-01-12-7-0225-93 was initiated by Nonetheless, we have likewise since explained[29] that suability does not 1941-RTJ)
respondent Antonio Cabugao before the Sub-Regional Arbitration Branch of necessarily mean liability on the part of the particular instrumentality or agency JUDGE VICENTE A. HIDALGO,
NLRC in Dagupan City against PNEI and APT similarly involving claims for of the government; hence Presiding Judge of the Regional Promulgated:
separation pay, 13th month pay and other benefits. Despite receipt of the Trial Court of Manila, Branch 37
When the State gives its consent to be sued, it does not thereby necessarily December 9, 2005
summonses, PNEI and APT failed to file their answers. On 29 August 1994,[20] a
decision was promulgated ordering respondent PNEI to pay the complainant the consent to an unrestrained execution against it. Tersely put, when the State
total amount of P208,954.60. waives its immunity, all it does, in effect, is to give the other party an
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
opportunity to prove, if it can, that the State has a liability. In Republic vs.
The decision became final and executory; hence, upon motion, a writ of Villasor this Court, in nullifying the issuance of an alias writ of execution
execution[21] was issued by Labor Arbiter Gambito. directed against the funds of the Armed Forces of the Philippines to satisfy a
final and executory judgment, has explained, thus- DECISION
Mention might also be made of the fact that in addition to the writs issued by
the labor arbiters, PNEI had likewise been sued and adjudged to pay certain The universal rule that where the State gives its consent to be sued by private CHICO-NAZARIO, J.:
amounts to different judgment creditors.[22] Losses incurred by PNEI continued parties either by general law or special law, it may limit claimants action only up
The instant administrative case arose from the affidavit-complaint[1] dated 19
to mount due to cash-flow problems and the depletion of the aging fleet of to the completion of proceedings anterior to the stage of execution and that the
January 2004 filed by the Republic of the Philippines, represented by Solicitor
buses which were not replaced. The demands for payment of maturing and power of the Courts ends when the judgment is rendered, since government
General Alfredo L. Benipayo, with the Office of the Court Administrator (OCA),
overdue obligations made matters worse. funds and properties may not be seized under writs of execution or
charging Judge Vicente A. Hidalgo with Gross Ignorance of the Law, Manifest
garnishment to satisfy such judgments, is based on obvious considerations of
In NLRC Case No. 00-08-05380-93, Sheriff Atienza attempted to satisfy the Partiality and Conduct Prejudicial to the Interest of the Service relative to Civil
public policy. Disbursements of public funds must be covered by the
judgment against APT funds. Foreseeing that other respondent Sheriffs would Case No. 94075 entitled Tarcila Laperal Mendoza v. The Republic of the
correspondent appropriation as required by law. The functions and public
take similar steps unless seasonably enjoined, the Republic, represented by Philippines, et al.
services rendered by the State cannot be allowed to be paralyzed or disrupted
APT, filed the instant petition. The Court, on 05 July 1995, issued the temporary by the diversion of public funds from their legitimate and specific objects, as
restraining order prayed for.[23] appropriated by law.[30] (Footnotes omitted)
Facts of the case:
The pivotal issue, in the manner the Court sees it, is whether or not, given these Delving into the other crucial question, it would be, in our view, a clear and
case settings, APT itself can be held liable for the obligations of PNEI. patent error to construe the decreed joint and solidary liability of APT (in NLRC On 02 June 1999, Tarcila Laperal Mendoza filed an action for the annulment or
NCR Case No. 00-08-05380-93) as extending beyond what APT has held in or declaration of nullity of the title and deed of sale, reconveyance and/or
The Solicitor-General initially points out that APT, being an agency or
acquired from PNEI. A matter that mus not be overlooked is the fact that the recovery of ownership and possession of a four thousand nine hundred twenty-
instrumentality of the Republic of the Philippines, is immune from suit. The
inclusion of APT as a respondent in the monetary claims against PNEI is merely four-square meter (4,924.60 sq. m. to be exact) property against the Republic of
Court is not persuaded even as it is cognizant of the doctrine that (t)he State
the consequence of its being a conservator of assets, a role that APT normally the Philippines (in whose name the title to the property was transferred and
may not be sued without its consent,[24] for as the Court has so stressed in
plays in, or the relationship that ordinarily it maintains with, corporations registered) in the Regional Trial Court (RTC) of Manila, and was docketed as Civil
Department of Agriculture vs. NLRC,[25] the rule
identified for and while under privatization. The liability of APT under this Case No. 94075. The property in question is located at 1440 Arlegui Street, San
x x x is not really absolute for it does not say that the state may not be sued particular arrangement, nothing else having been shown, should be co- Miguel, Manila. It is also known as the Arlegui Residence which housed two (2)
under any circumstance. On the contrary, as correctly phrased, the doctrine extensive with the amount of assets taken over form the privatized firm. PNEIs Philippine presidents and which now holds the Office of the Press Secretary and
only conveys, the state may not be sued without its consent; its clear import assets obviously remain to be subject to execution by judgment creditors of the News Information Bureau.
then is that the State may at times be sued. The States consent may be given PNEI. Accordingly, the levy and auction sale of the property of PNEI to satisfy
either expressly or impliedly. Express consent may be made through a general the monetary judgment rendered in favor of PNEI employees can be sustained
law or a special law. In this jurisdiction, the general law waiving the immunity of since such assets are to be deemed subject to all valid claims against PNEI.[31]
The case was initially dismissed by the presiding Judge of the Manila RTC
the state from suit is found in Act No. 3083, where the Philippine government (Branch 35) on the ground of state immunity. A petition for certiorari was filed
WHEREFORE, the petition is GRANTED. The notice of garnishment directed
consents and submits to be sued upon any money claim involving liability with the Court of Appeals which reversed the trial courts ruling and remanded
against the funds of APT is NULLIFIED and the temporary restraining order
arising from contract, express or implied, which could serve as a basis of civil the case to the trial court for further proceedings. The Supreme Court sustained
issued by this Court is made PERMANENT. No costs.
action between private parties. Implied consent, on the other hand, is conceded the Court of Appeals decision.
when the State itself commences litigation, thus opening itself to a counter- SO ORDERED.
claim, or when it enters into a contract. (Footnotes omitted)

Proclamation No. 50,[26] creating APT which has been mandated to take title to Upon the inhibition of the presiding Judge of the Manila RTC (Branch 35), the
and possession of, conserve, provisionally manage and dispose of assets that case was re-raffled to the Manila RTC (Branch 37), with respondent Vicente A.
have been identified for privatization or disposition,[27] clearly provides that said Hidalgo as presiding Judge.
interest thereon at the legal rate, and the opportunity cost at the rate of three the interest thereon at the legal rate, and the opportunity cost at the rate of
(3%) per cent per annum, commencing July 1975 continuously up to July 30, three (3%) per cent per annum, commencing July 1975 continuously up to July
In an Order dated 07 July 2003, Judge Hidalgo declared the Republic in default 2003, plus, an additional interest at the legal rate, commencing from this date 30, 2003, plus, an additional interest at the legal rate, commencing from this
for failure of Solicitor Gabriel Francisco Ramirez, the handling solicitor, to file until the whole amount is paid in full; date until the whole amount is paid in full, the plaintiff attorneys fee, in an
the required Answer within the period prayed for in his motion for extension amount equivalent to FIFTEEN (15%) PER CENT of the amount due to the
dated 21 May 2003. The plaintiff was allowed to present her evidence ex parte. plaintiff plus the cost of suit, together with your lawful fees for service of this
execution all in money of the Philippines, which the plaintiff recovered in our
7. Ordering the defendant Republic of the Philippines to pay the plaintiff
Court, Regional Trial Court of Manila on the 27th day of August 2003 against the
attorneys fee, in an amount equivalent to FIFTEEN (15%) PER CENT of the
On 27 August 2003, Judge Hidalgo rendered a decision[2] in favor of plaintiff Republic of the Philippines, Inc. with interest and costs, and that you render the
amount due to the plaintiff.
Mendoza, the dispositive portion of which reads: same to said Tarcila Laperal aside from your own fees on this execution, and to
likewise return this Writ into this Court within sixty (60) days from the date of
receipt hereof with your proceedings endorsed thereon.
With pronouncement as to the costs of the suit.[3]
WHEREFORE, judgment is hereby rendered:

On 30 December 2003, Sheriff IV Carmelo V. Cachero directed Eduardo Sergio


Upon receipt by the Office of the Solicitor General of the judgment by default, G. Edeza of the National Treasurer of the Bureau of Treasury to effect the
1. Declaring the deed of sale dated July 15, 1975, annotated at the back of the Republic moved for new trial on the ground that the gross and inexcusable payment of the sum stated in the decision, thus:
Transfer Certificate of Title No. 118527 as PE:2035/T-118911, as non-existent negligence of Solicitor Ramirez in handling the case does not bind the Republic
and/or fictitious, and, therefore, null and void from the beginning; of the Philippines. It argued that it is entitled to due process of law considering
the enormous amount of the alleged obligations involved. It maintained that
TO: Honorable EDUARDO SERGIO G. EDEZA
plaintiffs cause of action has long prescribed and is legally barred by laches, and
2. Declaring that Transfer Certificate of Title No. 118911 of the defendant that the title registered in the name of the Republic has become indefeasible. National Treasurer of the Philippines, Bureau of Treasury
Republic of the Philippines has no basis, thereby, making it null and void from
beginning; Palacio del Gobernador, Intramuros
The respondent Judge denied the motion for new trial[4]
and the subsequent Manila
motion for reconsideration[5] filed by the Republic. A notice of appeal[6] dated 27
3. Ordering the defendant Register of Deeds for the City of Manila to reinstate November 2003 was filed, but the same was denied[7] on 17 December 2003 on
plaintiffs Transfer Certificate of Title No. 118527; the ground that it was filed beyond the reglementary period. A certificate of
finality[8] of judgment was issued by the Branch Clerk of Court, Atty. Michael B. G R E E TI N G S:
Robles, on 27 November 2003.

4. Ordering the defendant Republic of the Philippines to pay a just On 10 December 2003, respondent issued an order[9] directing the issuance of a
Attached herewith you will find a copy of the WRIT OF EXECUTION issued by the
compensation in the sum of ONE HUNDRED FORTY THREE MILLION SIX writ of execution. On 22 December 2003, a writ of execution[10] was issued,
HON. VICENTE A. HIDALGO, Judge of the Regional Trial Court, Branch 37,
HUNDRED THOUSAN (P143,600,000.00) PESOS, plus interest at the legal rate, which reads, thus:
Manila, in the above-entitled case for your ready reference.
until the whole amount is paid in full for the acquisition of the subject property;

TO: THE BRANCH SHERIFF


By virtue of the said Writ you are hereby directed to cause and or effect the
5. Ordering the plaintiff, upon payment of the just compensation for the
OF BRANCH 37, RTC, MANILA payment of the sum of ONE HUNDRED FORTY THREE MILLION SIX HUNDRED
acquisition of her property, to execute the necessary deed of conveyance in
THOUSAND PESOS (P143,600,000.00), Philippine Currency, as payment for just
favour of the defendant Republic of the Philippines and, on the other hand,
compensation, plus interest at the legal rate, until the whole amount is paid in
directing the defendant Register of Deeds, upon presentation of the said deed
full and the further sum of ONE BILLION FOUR HUNDRED EIGHTY MILLION SIX
of conveyance, to cancel plaintiffs Transfer Certificate of Title in favour of the WE COMMAND you to demand that of the goods and chattels of THE REPUBLIC HUNDRED TWENTY SEVEN THOUSAND SIX HUNDRED EIGHTY EIGHT PESOS
defendant Republic of the Philippines; OF THE PHILIPPINES you cause to be made the sum of ONE HUNDRED FORTY (P1,480,627,688.00) representing the reasonable rental for the use of the
THREE MILLION SIX HUNDRED THOUSAND PESOS (P143,600,000.00) Philippine subject property, the interest thereon at the legal rate, and the opportunity cost
Currency, as payment for just compensation plus interest at the legal rate, until at the rate of three (3%) per annum, commencing July 1975 continuously up to
6. Ordering the defendant Republic of the Philippines to pay the plaintiff the the whole amount is paid in full for the acquisition of the subject property; and July 30, 2003, plus, an additional interest at the legal rate, commencing from
sum of ONE BILLION FOUR HUNDRED EIGHTY MILLION SIX HUNDRED TWENTY the further sum of ONE BILLION FOUR HUNDRED EIGHTY MILLION SIX HUNDRED this date until the whole amount is paid in full, the plaintifs attorneys fee, in an
SEVEN THOUSAND SIX HUNDRED EIGHTY EIGHT (P1,480,627,688.00) PESOS, TWENTY SEVEN THOUSAN SIX HUNDRED EIGHTY EIGHT (P1,480,627,688.00) amount equivalent to FIFTEEN (15%) PERCENT of the amount due to the
representing the reasonable rental for the use of the subject property, the PESOS, representing the reasonable rental for the use of the subject property,
plaintiff plus costs of suit together with all the lawful fees and expenses for the The foregoing antecedents begot the instant administrative complaint[13] raising denied the Republics notice of appeal on 17 December 2003 for being allegedly
service of the Writ of Execution in favor of the above-named plaintiff.[11] the following allegations against respondent Judge: filed out of time;

On 07 January 2004, Sheriff Cachero further directed the National Treasurer to a. The respondent judge assumed jurisdiction and took cognizance of the i. The Republic filed its opposition to the motion for the issuance of a writ of
cause payment of P1,942,576,312.45, thus: plaintiffs complaint despite a clear showing that the action had long prescribed execution on 19 December 2003 and on the same day, the respondent judge
and is already barred by laches. The Republic contends that since the complaint with astonishing speed granted the plaintiffs motion to issue a writ of
showed on its face that the action had prescribed and that the plaintiffs inaction execution.
for a period of almost twenty-four years undoubtedly amounts to laches, the
TO: Honorable EDUARDO SERGIO G. EDEZA
respondent judge was duty bound to dismiss it motu proprio;
National Treasurer of the Philippines, Bureau of Treasury The Republic avers that the respondent Judge is liable for these unjustified and
irregular acts which constitute gross ignorance of the law, manifest partiality
Palacio del Gobernador, Intramuros, M a n i l a
b. The money judgment by default rendered by the respondent judge in the and conduct prejudicial to the best interest of the service.
colossal amount of almost two billion pesos (P2,000,000,000.00) is grossly in
excess of the claim alleged in the complaint in patent violation of Section 3(d),
S i r: Rule 9 of the 1997 Rules of Civil Procedure and grossly disproportionate to the
On 12 February 2004, OCA required[14] respondent Judge to submit his
total amount of docket fees paid;
comment within ten (10) days from receipt.

Pursuant to the WRIT OF EXECUTION issued by the Hon. VICENTE A. HIDALGO,


Judge of the Regional Trial Court, Branch 37, Manila, in the above-entitled case, c. The respondent judge violated the Constitution and the fundamental rule
In his COMMENT[15] dated 15 March 2004, respondent Judge Vicente A. Hidalgo
which was served upon your good office on December 30, 2003, kindly effect that government funds are exempt from execution or garnishment;
claims that the instant administrative complaint was instituted against him in
and/or cause the payment of the total amount of ONE BILLION NINE HUNDRED
order to hide from view a monstrous fiasco. The respondent Judge maintains
FORTY TWO MILLION FIVE HUNDRED SEVENTY SIX THOUSAND THREE HUNDRED
that the Office of the Solicitor General, having failed to fulfil its duty as counsel
TWELVE PESOS AND FORTY FIVE CENTAVOS (P1,942,576,312.45), Philippine
d. The respondent judge ordered the Republic to pay the plaintiffs attorneys for the defendant, is trying to escape criticism and responsibility for bungling
Currency, made payable to:
fees with pronouncement as to the costs of the suit in violation of the clear the case by the simple expedient smokescreen of making the respondent a
provision of Section 1, Rule 142 which provides that no costs shall be allowed convenient scapegoat for its ineptitude and inefficiency.
against the Republic of the Philippines unless otherwise provided by law;
1. TARCILA I. MENDOZA and/or FORTUNATO I. MENDOZA P828,356,119.86 to
be deposited with the Land Bank of the Philippines, Main Office, M.H. del Pilar
The Office of the Solicitor General faults Judge Hidalgo in failing to dismiss the
St., Ermita, Manila under CURRENT ACCOUNT NO. 003402-0014-95;
e. The respondent judge condemned the Republic to suffer the obligation of civil case on the grounds of prescription and laches. The respondent Judge
almost two billion (P2,000,000,000.00) in violation of its right to due process; counters that such grounds do not apply since the deed of sale upon which the
Republics title to the property is based is inexistent and absolutely simulated or
2. TARCILA I. MENDOZA and/or APOLONIA C. SOGUILON P1,065,555,684.78 to fictitious.
be deposited with the Land Bank of the Philippines, Main Office, M.H. del Pilar
f. Awarding the amount of two billion pesos (P2,000,000,000.00) when the
St., Ermita, Manila under CURRENT ACCOUNT NO. 003402-0015-17;
property involved is only valued at more than two million pesos (P2,000,000.00)
and the amount of claim alleged in the complaint is more or less three hundred With respect to the money judgment granted, the respondent Judge maintains
seventy-one million (P371,000,000.00) shows that the respondent judge had that the amount awarded to the plaintiff was based on testimonies of experts.
3. CLERK OF COURT, RTC MANILA P38,851,606.25 to be deposited with the Land been partial in favor of the plaintiff; The amount of damages given, the respondent explains, is within the four
Bank of the Philippines, YMCA Branch, Arroceros St., Ermita, Manila under corners of the prayer made in the complaint, i.e., such other relief, just and
ACCOUNT NO. 0591-0116-34; equitable, under the premises.
g. The certificate of finality of the judgment by default was hastily issued on
27 November 2003, the very same day the Republic filed a notice of appeal;
4. CLERK OF COURT, RTC MANILA P9,712,901.56 to be deposited with the Land The Office of the Solicitor General insists that the motion for new trial should be
Bank of the Philippines, YMCA Branch, Arroceros St., Ermita, Manila under granted because the gross and inexcusable negligence of Solicitor Ramirez has
ACCOUNT NO. 0591-1744-28.[12] impaired the rights of the Republic, depriving it of its property without due
h. The Republic had until 20 December 2003 to submit its opposition to the
process of law. The respondent Judge contends that the Office of the Solicitor
motion for the issuance of the writ of execution, yet the respondent judge
General is no ordinary advocate which, due to various constraints and
limitations, can be conceded to commit acts constitutive of negligence, mistake Anent the accusation of the respondent that he is being used by the Office of In declaring the government answerable to the attorneys fees of the plaintiff
or lack of competence. He notes that all pleadings bear at least three (3) the Solicitor General as a scapegoat for allegedly bungling the case, the Republic and other costs of the suit, the respondent utterly disregarded the well-
signatures - that of the handling solicitor, the assistant solicitor general and the counters that the respondent himself cannot justify his actions by hiding under established rule that costs of suit are not recoverable against the government
solicitor general, showing that pleadings go through the rung of the ladder of the cloak of speedy disposition of the case as prescribed by the Court. (Section 1, Rule 142, Rules of Court). As early as 15 November 1918, we ruled in
authority ensuring their conformity to existing jurisprudence and compliance the case ofHong Kong and Shanghai Banking Corporation v. Rafferty[19] that no
with procedural rules. costs shall be allowed against the government of the Philippine Islands where
the government is the unsuccessful party. This was reiterated in the case
On 14 April 2005, the OCA issued its recommendation,[17] thus:
of Philippines Veterans Affairs Office v. Anover[20] and The Philippine Veterans
Affairs Office v. Tamayo,[21] when we ruled that court costs are not recoverable
It is also contended by the Republic that the certificate of finality of the
from a government agency.
judgment by default was hastily issued, showing the manifest partiality of the
In view of the foregoing, we respectfully submit for the consideration of the
respondent Judge for the plaintiff. The respondent Judge avers that upon the
Honorable Court the following recommendation:
denial of the motion for new trial which the Office of the Solicitor General
received on 09 October 2003, the Republic had only one (1) day left or until 10 Upon finality of the decision dated 27 August 2003, respondent Judge directed
October 2003 to file its appeal. Instead of filing its appeal, it filed a motion for the issuance of the writ of execution and subsequently issued the writ of
reconsideration on 24 October 2003 which the respondent denied in an order 1. That the instant administrative complaint be RE DOCKETED as a regular execution on 22 December 2003.
dated 25 November 2003. This is contrary to the provision in the Rules of Court administrative matter;
that (a)n order denying a motion for new trial or reconsideration is not It is settled that when the State gives its consent to be sued, it does not thereby
appealable, the remedy being an appeal from the judgment or final order (Sec. necessarily consent to an unrestrained execution against it. Tersely put, when
9, Rule 37, 1997 Rules of Civil Procedure). The respondent Judge argues that the the State waives its immunity, all it does, in effect, is to give the other party an
2. That Judge Vicente A. Hidalgo, Presiding Judge, Regional Trial Court (Branch
filing of the notice of appeal on 27 November 2003, forty-eight (48) days from opportunity to prove, if it can, that the state has a liability. In Republic v.
37), Manila be found administratively liable for GROSS IGNORANCE OF THE LAW
the last day to perfect appeal, was made too late because the decision had Villasor[22]this Court, in nullifying the issuance of an alias writ of execution
OR PROCEDURE under Sec. 8 (9), Rule 140 of the Rules of Court; and
already become final and executory. directed against the funds of the Armed Forces of the Philippines to satisfy a
final and executory judgment, has explained, thus

3. That Judge Hidalgo be FINED in the amount of forty thousand pesos


In its REPLY[16] dated 03 March 2004, the Republic reiterates its charges of gross (P40,000.00) and be WARNED that a repetition of the same or similar acts will
ignorance of the law, manifest partiality, violation of due process and conduct . . . The universal rule that where the State gives its consent to be sued by
be dealt with more severely.
prejudicial to the best interest of the service against Judge Hidalgo. The private parties either by general or special law, it may limit claimants action
Republic insists that the respondent Judge deserves to be dismissed from the only up to the completion of proceedings anterior to the stage of execution and
service for being guilty of the foregoing offenses. that the power of the Courts ends when the judgment is rendered, since
The recommendation of the OCA is well-taken. 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
The Republic asserts that the motion for new trial was filed to rectify the grossly correspondent appropriation as required by law. The functions and public
negligent act of the handling solicitor which gravely prejudiced its interest. It In the present case, respondent Judge patently committed two inexcusable
services rendered by the State cannot be allowed to paralyzed or disrupted by
maintains that the Judge violated its right to due process when he proceeded to procedural errors the pronouncement of costs against the government and the
the diversion of public funds from their legitimate and specific objects, as
hold it liable for the omissions and negligence of a lawyer who had ceased to be subsequent issuance of the writ of execution, in violation of settled rules and
appropriated by law.[23]
the authorized agent of the government. jurisprudence.

In the decision dated 27 August 2003, respondent Judge declared the Republic
liable for payment of attorneys fees and cost of suit, pertinent portion of which In Administrative Circular No. 10-2000 dated 25 October 2000, all judges of
It is also contended that the respondent Judge violated the Constitution and the reads: lower courts were advised to exercise utmost caution, prudence and
fundamental rule that government funds are exempt from execution or judiciousness in the issuance of writs of execution to satisfy money judgments
garnishment when he caused the issuance of the writ of execution against the against government agencies and local government units. Judges, thus, cannot
Republic. It is likewise asserted that in ordering the Republic to pay the indiscriminately issue writs of execution against the government to enforce
7. Ordering the defendant Republic of the Philippines to pay the plaintiff
attorneys fees of plaintiff and the cost of the suit, the respondent violated the money judgments.
attorneys fee, in an amount equivalent to FIFTEEN (15%) PER CENT of the
clear provision of Section 1, Rule 142 of the Rules of Court heretofore cited. In
amount due to the plaintiff.
these two issues, the Republic observes that the respondent is conspicuously
silent because he cannot offer any defense, as his actions are glaringly illegal.
It is clear that respondent Judge ought to be sanctioned for his failure to
With pronouncement as to the costs of the suit.[18] properly apply the court procedure. As can be seen, the law involved is simple
and elementary. When the law is sufficiently basic, a judge owes it to his office corporations: Provided, however, that the forfeiture of benefits shall in no case This is an appeal by both parties from a judgment of the Court of First Instance
to simply apply it, and anything less than that would be constitutive of gross include accrued leave credits; of the city of Manila in favor of the plaintiff for the sum of P14,741, together
ignorance of the law. In short, when the law is so elementary, not to be aware with the costs of the cause.
of it constitutes gross ignorance of the law.[24] When the inefficiency springs
from a failure to consider so basic and elementary a rule, a law or principle in Counsel for the plaintiff insist that the trial court erred (1) "in limiting the
2. Suspension from office without salary and other benefits for general damages which the plaintiff suffered to P5,000, instead of P25,000 as
the discharge of his duties, a judge is either too incompetent and undeserving
more than three (3) but not exceeding six (6) months; or claimed in the complaint," and (2) "in limiting the time when plaintiff was
of the position and title he holds or is too vicious that the oversight or omission
was deliberately done in bad faith and in grave abuse of judicial authority.[25] 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
Canon 4 of the Canon of Judicial Ethics requires that a judge should be studious 3. A fine of more than P20,000.00 but not exceeding P40,000.00. complaint."
of the principles of law; while Canon 18 mandates that he should administer his
office with due regard to the integrity of the system of the law itself, The Attorney-General on behalf of the defendant urges that the trial court
remembering that he is not a depositary of arbitrary power, but a judge under erred: (a) in finding that the collision between the plaintiff's motorcycle and the
Taking into consideration the length of service[30] rendered by respondent Judge ambulance of the General Hospital was due to the negligence of the chauffeur;
the sanction of law.[26] The maxim ignorance of the law excuses no one has
and following our rulings in Gamas v. Oco,[31] and Sule v. Biteng,[32] a fine (b) in holding that the Government of the Philippine Islands is liable for the
special application to judges, who, under Rule 1.01 of the Code of Judicial
of P20,000.00 is justified. damages sustained by the plaintiff as a result of the collision, even if it be true
Conduct, should be the embodiment of competence, integrity, and
independence. Competence is a mark of a good judge. When a judge displays an that the collision was due to the negligence of the chauffeur; and (c) in
The other charges against Judge Hidalgo and the issues arising therefrom are
utter lack of familiarity with the rules, he erodes the publics confidence in the rendering judgment against the defendant for the sum of P14,741.
judicial matters not subject to administrative scrutiny. The Republic has, in fact,
competence of our courts.[27] It is highly imperative that judges be conversant filed a petition for certiorari on 30 January 2004 against the respondent, The trial court's findings of fact, which are fully supported by the record, are as
with the law and basic legal principles.[28] Basic legal procedures must be at the docketed as G.R. No. 161657, and remains pending before the Third Division. follows:
palm of a judges hands.[29] The present administrative case is without prejudice to any other action which
may be taken on said petition. 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,
In the case at bar, respondent Judge not only failed to perform his duties in passing along the west side thereof at a speed of ten to twelve miles an hour,
accordance with the Rules, but he also acted wilfully and in gross disregard of upon crossing Taft Avenue and when he was ten feet from the southwestern
All told, this Court once again seizes the moment to remind judges to keep
the law and controlling jurisprudence. He was ignorant of the basic and simple intersection of said streets, the General Hospital ambulance, upon reaching said
abreast of the rules and recent pronouncements of this Court, so they may
procedural rules by issuing the writ of execution and pronouncing the costs of avenue, instead of turning toward the south, after passing the center thereof,
evolve into more effective dispensers of justice -- magistrates of the law in the
suit against the government. Verily, respondent Judges actions visibly indicate so that it would be on the left side of said avenue, as is prescribed by the
truest sense of the word.[33]
his lack of sufficient grasp of the law. 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
WHEREFORE, the Court finds respondent Judge Vicente A. Hidalgo plaintiff, who was already six feet from the southwestern point or from the post
For issuing the writ of execution and pronouncing the costs of the suit against administratively liable for gross ignorance of the law and is accordingly fined the place there.
the government, we deem that the respondent Judge is liable for gross amount of TWENTY THOUSAND (P20,000.00) PESOS with a stern warning that a
ignorance of the law or procedure under Rule 140 of the Rules of Court. repetition of the same or similar act will be dealt with more severely. 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
SO ORDERED. taken to the General Hospital, he was suffering from a depression in the left
parietal region, a would in the same place and in the back part of his head,
Under Rule 140, Section 8, of the Rules of Court, as amended by A.M. No. 01-8-
while blood issued from his nose and he was entirely unconscious.
10 SC, gross ignorance of the law or procedure is classified as a serious charge.
As to the penalty imposed, Section 11 of the same Rule provides: The marks revealed that he had one or more fractures of the skull and that the
grey matter and brain was had suffered material injury. At ten o'clock of the
G.R. No. L-11154 March 21, 1916
night in question, which was the time set for performing the operation, his
SEC. 11. Sanctions. - A. If the respondent is guilty of a serious charge, any of the E. MERRITT, plaintiff-appellant, pulse was so weak and so irregular that, in his opinion, there was little hope
following sanctions may be imposed: vs. that he would live. His right leg was broken in such a way that the fracture
GOVERNMENT OF THE PHILIPPINE ISLANDS, defendant-appellant. extended to the outer skin in such manner that it might be regarded as double
and the would be exposed to infection, for which reason it was of the most
Crossfield and O'Brien for plaintiff. serious nature.
1. Dismissal from the service, forfeiture of all or part of the Attorney-General Avanceña for defendant..
benefits as the Court may determine, and disqualification from reinstatement At another examination six days before the day of the trial, Dr. Saleeby noticed
or appointment to any public office, including government-owned or controlled TRENT, J.: 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. An Act authorizing E. Merritt to bring suit against the Government of the amount of damages sustained by the plaintiff as a result of the collision. Does
Examination of his head revealed a notable readjustment of the functions of the Philippine Islands and authorizing the Attorney-General of said Islands to the Act authorize us to hold that the Government is legally liable for that
brain and nerves. The patient apparently was slightly deaf, had a light weakness appear in said suit. amount? If not, we must look elsewhere for such authority, if it exists.
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 Whereas a claim has been filed against the Government of the Philippine Islands The Government of the Philippine Islands having been "modeled after the
attempted to use his money for mathematical calculations. by Mr. E. Merritt, of Manila, for damages resulting from a collision between his Federal and State Governments in the United States," we may look to the
motorcycle and the ambulance of the General Hospital on March twenty-fifth, decisions of the high courts of that country for aid in determining the purpose
According to the various merchants who testified as witnesses, the plaintiff's nineteen hundred and thirteen; and scope of Act No. 2457.
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 Whereas it is not known who is responsible for the accident nor is it possible to In the United States the rule that the state is not liable for the torts committed
undergone a noticeable depreciation, for he had lost the agility, energy, and determine the amount of damages, if any, to which the claimant is entitled; and by its officers or agents whom it employs, except when expressly made so by
ability that he had constantly displayed before the accident as one of the best legislative enactment, is well settled. "The Government," says Justice Story,
Whereas the Director of Public Works and the Attorney-General recommended "does not undertake to guarantee to any person the fidelity of the officers or
constructors of wooden buildings and he could not now earn even a half of the
that an Act be passed by the Legislature authorizing Mr. E. Merritt to bring suit agents whom it employs, since that would involve it in all its operations in
income that he had secured for his work because he had lost 50 per cent of his
in the courts against the Government, in order that said questions may be endless embarrassments, difficulties and losses, which would be subversive of
efficiency. As a contractor, he could no longer, as he had before done, climb up
decided: Now, therefore, the public interest." (Claussen vs. City of Luverne, 103 Minn., 491, citing U. S. vs.
ladders and scaffoldings to reach the highest parts of the building.
Kirkpatrick, 9 Wheat, 720; 6 L. Ed., 199; and Beers vs. States, 20 How., 527; 15 L.
By authority of the United States, be it enacted by the Philippine Legislature,
As a consequence of the loss the plaintiff suffered in the efficiency of his work Ed., 991.)
that:
as a contractor, he had to dissolved the partnership he had formed with the
engineer. Wilson, because he was incapacitated from making mathematical In the case of Melvin vs. State (121 Cal., 16), the plaintiff sought to recover
SECTION 1. E. Merritt is hereby authorized to bring suit in the Court of First
calculations on account of the condition of his leg and of his mental faculties, damages from the state for personal injuries received on account of the
Instance of the city of Manila against the Government of the Philippine Islands
and he had to give up a contract he had for the construction of the Uy Chaco negligence of the state officers at the state fair, a state institution created by
in order to fix the responsibility for the collision between his motorcycle and the
building." the legislature for the purpose of improving agricultural and kindred industries;
ambulance of the General Hospital, and to determine the amount of the
to disseminate information calculated to educate and benefit the industrial
damages, if any, to which Mr. E. Merritt is entitled on account of said collision,
We may say at the outset that we are in full accord with the trial court to the classes; and to advance by such means the material interests of the state, being
and the Attorney-General of the Philippine Islands is hereby authorized and
effect that the collision between the plaintiff's motorcycle and the ambulance objects similar to those sought by the public school system. In passing upon the
directed to appear at the trial on the behalf of the Government of said Islands,
of the General Hospital was due solely to the negligence of the chauffeur. question of the state's liability for the negligent acts of its officers or agents, the
to defendant said Government at the same.
court said:
The two items which constitute a part of the P14,741 and which are drawn in
SEC. 2. This Act shall take effect on its passage.
question by the plaintiff are (a) P5,000, the award awarded for permanent No claim arises against any government is favor of an individual, by reason of
injuries, and (b) the P2,666, the amount allowed for the loss of wages during Enacted, February 3, 1915. the misfeasance, laches, or unauthorized exercise of powers by its officers or
the time the plaintiff was incapacitated from pursuing his occupation. We find agents. (Citing Gibbons vs. U. S., 8 Wall., 269; Clodfelter vs. State, 86 N. C., 51,
nothing in the record which would justify us in increasing the amount of the Did the defendant, in enacting the above quoted Act, simply waive its immunity 53; 41 Am. Rep., 440; Chapman vs. State, 104 Cal., 690; 43 Am. St. Rep., 158;
first. As to the second, the record shows, and the trial court so found, that the from suit or did it also concede its liability to the plaintiff? If only the former, Green vs. State, 73 Cal., 29; Bourn vs. Hart, 93 Cal., 321; 27 Am. St. Rep., 203;
plaintiff's services as a contractor were worth P1,000 per month. The court, then it cannot be held that the Act created any new cause of action in favor of Story on Agency, sec. 319.)
however, limited the time to two months and twenty-one days, which the the plaintiff or extended the defendant's liability to any case not previously
plaintiff was actually confined in the hospital. In this we think there was error, recognized. As to the scope of legislative enactments permitting individuals to sue the state
because it was clearly established that the plaintiff was wholly incapacitated for where the cause of action arises out of either fort or contract, the rule is stated
All admit that the Insular Government (the defendant) cannot be sued by an in 36 Cyc., 915, thus:
a period of six months. The mere fact that he remained in the hospital only two
individual without its consent. It is also admitted that the instant case is one
months and twenty-one days while the remainder of the six months was spent
against the Government. As the consent of the Government to be sued by the By consenting to be sued a state simply waives its immunity from suit. It does
in his home, would not prevent recovery for the whole time. We, therefore, find
plaintiff was entirely voluntary on its part, it is our duty to look carefully into the not thereby concede its liability to plaintiff, or create any cause of action in his
that the amount of damages sustained by the plaintiff, without any fault on his
terms of the consent, and render judgment accordingly. favor, or extend its liability to any cause not previously recognized. It merely
part, is P18,075.
gives a remedy to enforce a preexisting liability and submits itself to the
The plaintiff was authorized to bring this action against the Government "in jurisdiction of the court, subject to its right to interpose any lawful defense.
As the negligence which caused the collision is a tort committed by an agent or
order to fix the responsibility for the collision between his motorcycle and the
employee of the Government, the inquiry at once arises whether the
ambulance of the General Hospital and to determine the amount of the In Apfelbacher vs. State (152 N. W., 144, advanced sheets), decided April 16,
Government is legally-liable for the damages resulting therefrom.
damages, if any, to which Mr. E. Merritt is entitled on account of said collision, . 1915, the Act of 1913, which authorized the bringing of this suit, read:
Act No. 2457, effective February 3, 1915, reads: . . ." These were the two questions submitted to the court for determination.
SECTION 1. Authority is hereby given to George Apfelbacher, of the town of
The Act was passed "in order that said questions may be decided." We have
Summit, Waukesha County, Wisconsin, to bring suit in such court or courts and
"decided" that the accident was due solely to the negligence of the chauffeur,
in such form or forms as he may be advised for the purpose of settling and
who was at the time an employee of the defendant, and we have also fixed the
determining all controversies which he may now have with the State of provide a judicial tribunal where well recognized existing liabilities can be the persons mentioned in said article prove that they employed all the diligence
Wisconsin, or its duly authorized officers and agents, relative to the mill adjudicated. of a good father of a family to avoid the damage, and among these persons,
property of said George Apfelbacher, the fish hatchery of the State of Wisconsin called upon to answer in a direct and not a subsidiary manner, are found, in
on the Bark River, and the mill property of Evan Humphrey at the lower end of In Sipple vs. State (99 N. Y., 284), where the board of the canal claims had, by addition to the mother or the father in a proper case, guardians and owners or
Nagawicka Lake, and relative to the use of the waters of said Bark River and the terms of the statute of New York, jurisdiction of claims for damages for directors of an establishment or enterprise, the state, but not always, except
Nagawicka Lake, all in the county of Waukesha, Wisconsin. injuries in the management of the canals such as the plaintiff had sustained, when it acts through the agency of a special agent, doubtless because and only
Chief Justice Ruger remarks: "It must be conceded that the state can be made in this case, the fault or negligence, which is the original basis of this kind of
In determining the scope of this act, the court said: liable for injuries arising from the negligence of its agents or servants, only by objections, must be presumed to lie with the state.
force of some positive statute assuming such liability."
Plaintiff claims that by the enactment of this law the legislature admitted That although in some cases the state might by virtue of the general principle
liability on the part of the state for the acts of its officers, and that the suit now It being quite clear that Act No. 2457 does not operate to extend the set forth in article 1902 respond for all the damage that is occasioned to private
stands just as it would stand between private parties. It is difficult to see how Government's liability to any cause not previously recognized, we will now parties by orders or resolutions which by fault or negligence are made by
the act does, or was intended to do, more than remove the state's immunity examine the substantive law touching the defendant's liability for the negligent branches of the central administration acting in the name and representation of
from suit. It simply gives authority to commence suit for the purpose of settling acts of its officers, agents, and employees. Paragraph 5 of article 1903 of the the state itself and as an external expression of its sovereignty in the exercise of
plaintiff's controversies with the estate. Nowhere in the act is there a whisper Civil Code reads: its executive powers, yet said article is not applicable in the case of damages
or suggestion that the court or courts in the disposition of the suit shall depart said to have been occasioned to the petitioners by an executive official, acting in
from well established principles of law, or that the amount of damages is the The state is liable in this sense when it acts through a special agent, but not
the exercise of his powers, in proceedings to enforce the collections of certain
only question to be settled. The act opened the door of the court to the when the damage should have been caused by the official to whom properly it
property taxes owing by the owner of the property which they hold in sublease.
plaintiff. It did not pass upon the question of liability, but left the suit just where pertained to do the act performed, in which case the provisions of the
it would be in the absence of the state's immunity from suit. If the Legislature preceding article shall be applicable. That the responsibility of the state is limited by article 1903 to the case wherein
had intended to change the rule that obtained in this state so long and to it acts through a special agent (and a special agent, in the sense in which these
The supreme court of Spain in defining the scope of this paragraph said:
declare liability on the part of the state, it would not have left so important a words are employed, is one who receives a definite and fixed order or
matter to mere inference, but would have done so in express terms. (Murdock That the obligation to indemnify for damages which a third person causes to commission, foreign to the exercise of the duties of his office if he is a special
Grate Co. vs. Commonwealth, 152 Mass., 28; 24 N.E., 854; 8 L. R. A., 399.) another by his fault or negligence is based, as is evidenced by the same Law 3, official) so that in representation of the state and being bound to act as an
Title 15, Partida 7, on that the person obligated, by his own fault or negligence, agent thereof, he executes the trust confided to him. This concept does not
In Denning vs. State (123 Cal., 316), the provisions of the Act of 1893, relied apply to any executive agent who is an employee of the acting administration
takes part in the act or omission of the third party who caused the damage. It
upon and considered, are as follows: and who on his own responsibility performs the functions which are inherent in
follows therefrom that the state, by virtue of such provisions of law, is not
responsible for the damages suffered by private individuals in consequence of and naturally pertain to his office and which are regulated by law and the
All persons who have, or shall hereafter have, claims on contract or for
acts performed by its employees in the discharge of the functions pertaining to regulations." (Supreme Court of Spain, May 18, 1904; 98 Jur. Civ., 389, 390.)
negligence against the state not allowed by the state board of examiners, are
hereby authorized, on the terms and conditions herein contained, to bring suit their office, because neither fault nor even negligence can be presumed on the
That according to paragraph 5 of article 1903 of the Civil Code and the principle
thereon against the state in any of the courts of this state of competent part of the state in the organization of branches of public service and in the
laid down in a decision, among others, of the 18th of May, 1904, in a damage
jurisdiction, and prosecute the same to final judgment. The rules of practice in appointment of its agents; on the contrary, we must presuppose all foresight
case, the responsibility of the state is limited to that which it contracts through
civil cases shall apply to such suits, except as herein otherwise provided. humanly possible on its part in order that each branch of service serves the
a special agent, duly empowered by a definite order or commission to perform
general weal an that of private persons interested in its operation. Between
some act or charged with some definite purpose which gives rise to the claim,
And the court said: these latter and the state, therefore, no relations of a private nature governed
and not where the claim is based on acts or omissions imputable to a public
by the civil law can arise except in a case where the state acts as a judicial
This statute has been considered by this court in at least two cases, arising official charged with some administrative or technical office who can be held to
person capable of acquiring rights and contracting obligations. (Supreme Court
under different facts, and in both it was held that said statute did not create any the proper responsibility in the manner laid down by the law of civil
of Spain, January 7, 1898; 83 Jur. Civ., 24.)
liability or cause of action against the state where none existed before, but responsibility. Consequently, the trial court in not so deciding and in sentencing
merely gave an additional remedy to enforce such liability as would have That the Civil Code in chapter 2, title 16, book 4, regulates the obligations which the said entity to the payment of damages, caused by an official of the second
existed if the statute had not been enacted. (Chapman vs. State, 104 Cal., 690; arise out of fault or negligence; and whereas in the first article thereof. No. class referred to, has by erroneous interpretation infringed the provisions of
43 Am. St. Rep., 158; Melvin vs. State, 121 Cal., 16.) 1902, where the general principle is laid down that where a person who by an articles 1902 and 1903 of the Civil Code. (Supreme Court of Spain, July 30, 1911;
act or omission causes damage to another through fault or negligence, shall be 122 Jur. Civ., 146.)
A statute of Massachusetts enacted in 1887 gave to the superior court obliged to repair the damage so done, reference is made to acts or omissions of
"jurisdiction of all claims against the commonwealth, whether at law or in It is, therefore, evidence that the State (the Government of the Philippine
the persons who directly or indirectly cause the damage, the following articles
equity," with an exception not necessary to be here mentioned. In construing Islands) is only liable, according to the above quoted decisions of the Supreme
refers to this persons and imposes an identical obligation upon those who
this statute the court, in Murdock Grate Co. vs. Commonwealth (152 Mass., 28), Court of Spain, for the acts of its agents, officers and employees when they act
maintain fixed relations of authority and superiority over the authors of the
said: as special agents within the meaning of paragraph 5 of article 1903, supra, and
damage, because the law presumes that in consequence of such relations the
that the chauffeur of the ambulance of the General Hospital was not such an
evil caused by their own fault or negligence is imputable to them. This legal
The statute we are discussing disclose no intention to create against the state a agent.
presumption gives way to proof, however, because, as held in the last
new and heretofore unrecognized class of liabilities, but only an intention to
paragraph of article 1903, responsibility for acts of third persons ceases when
For the foregoing reasons, the judgment appealed from must be reversed, At about 7 o'clock in the morning of December 16, 1965, a collision occurred On October 10, 1979 the trial court rendered a decision, the dispositive portion
without costs in this instance. Whether the Government intends to make itself involving a passenger jeepney driven by Bernardo Balagot and owned by the is hereunder quoted as follows:
legally liable for the amount of damages above set forth, which the plaintiff has Estate of Macario Nieveras, a gravel and sand truck driven by Jose Manandeg
sustained by reason of the negligent acts of one of its employees, by legislative and owned by Tanquilino Velasquez and a dump truck of the Municipality of San IN VIEW OF ALL OF (sic) THE FOREGOING, judgment is hereby rendered for the
enactment and by appropriating sufficient funds therefor, we are not called Fernando, La Union and driven by Alfredo Bislig. Due to the impact, several plaintiffs, and defendants Municipality of San Fernando, La Union and Alfredo
upon to determine. This matter rests solely with the Legislature and not with passengers of the jeepney including Laureano Baniña Sr. died as a result of the Bislig are ordered to pay jointly and severally, plaintiffs Juana Rimando-Baniña,
the courts. injuries they sustained and four (4) others suffered varying degrees of physical Mrs. Priscilla B. Surell, Laureano Baniña Jr., Sor Marietta Baniña, Mrs. Fe B.
injuries. Soriano, Montano Baniña, Orja Baniña and Lydia B. Baniña the sums of
P1,500.00 as funeral expenses and P24,744.24 as the lost expected earnings of
On December 11, 1966, the private respondents instituted a compliant for the late Laureano Baniña Sr., P30,000.00 as moral damages, and P2,500.00 as
damages against the Estate of Macario Nieveras and Bernardo Balagot, owner attorney's fees. Costs against said defendants.
and driver, respectively, of the passenger jeepney, which was docketed Civil
G.R. No. L-52179 April 8, 1991 The Complaint is dismissed as to defendants Estate of Macario Nieveras and
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 Bernardo Balagot.
MUNICIPALITY OF SAN FERNANDO, LA UNION, petitioner
vs. against the petitioner and the driver of a dump truck of petitioner.
SO ORDERED. (Rollo, p. 30)
HON. JUDGE ROMEO N. FIRME, JUANA RIMANDO-BANIÑA, IAUREANO
Thereafter, the case was subsequently transferred to Branch IV, presided over
BANIÑA, JR., SOR MARIETA BANIÑA, MONTANO BANIÑA, ORJA BANIÑA, AND Petitioner filed a motion for reconsideration and for a new trial without
by respondent judge and was subsequently docketed as Civil Case No. 107-Bg.
LYDIA R. BANIÑA, respondents. prejudice to another motion which was then pending. However, respondent
By virtue of a court order dated May 7, 1975, the private respondents amended
judge issued another order dated November 7, 1979 denying the motion for
Mauro C. Cabading, Jr. for petitioner. the complaint wherein the petitioner and its regular employee, Alfredo Bislig
reconsideration of the order of September 7, 1979 for having been filed out of
Simeon G. Hipol for private respondent. were impleaded for the first time as defendants. Petitioner filed its answer and
time.
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 Finally, the respondent judge issued an order dated December 3, 1979
driver of the passenger jeepney as the proximate cause of the collision. 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
MEDIALDEA, J.: In the course of the proceedings, the respondent judge issued the following
higher court in accordance with the Rules of Court. Hence, this petition.
questioned orders, to wit:
This is a petition for certiorari with prayer for the issuance of a writ of
Petitioner maintains that the respondent judge committed grave abuse of
preliminary mandatory injunction seeking the nullification or modification of (1) Order dated November 4, 1975 dismissing the cross-claim against Bernardo
discretion amounting to excess of jurisdiction in issuing the aforesaid orders and
the proceedings and the orders issued by the respondent Judge Romeo N. Balagot;
in rendering a decision. Furthermore, petitioner asserts that while appeal of the
Firme, in his capacity as the presiding judge of the Court of First Instance of La
(2) Order dated July 13, 1976 admitting the Amended Answer of the decision maybe available, the same is not the speedy and adequate remedy in
Union, Second Judicial District, Branch IV, Bauang, La Union in Civil Case No.
Municipality of San Fernando, La Union and Bislig and setting the hearing on the the ordinary course of law.
107-BG, entitled "Juana Rimando Baniña, et al. vs. Macario Nieveras, et al."
dated November 4, 1975; July 13, 1976; August 23,1976; February 23, 1977; affirmative defenses only with respect to the supposed lack of jurisdiction;
On the other hand, private respondents controvert the position of the
March 16, 1977; July 26, 1979; September 7, 1979; November 7, 1979 and petitioner and allege that the petition is devoid of merit, utterly lacking the
(3) Order dated August 23, 1976 deferring there resolution of the grounds for
December 3, 1979 and the decision dated October 10, 1979 ordering good faith which is indispensable in a petition for certiorari and prohibition.
the Motion to Dismiss until the trial;
defendants Municipality of San Fernando, La Union and Alfredo Bislig to pay, (Rollo, p. 42.) In addition, the private respondents stress that petitioner has not
jointly and severally, the plaintiffs for funeral expenses, actual damages (4) Order dated February 23, 1977 denying the motion for reconsideration of considered that every court, including respondent court, has the inherent
consisting of the loss of earning capacity of the deceased, attorney's fees and the order of July 13, 1976 filed by the Municipality and Bislig for having been power to amend and control its process and orders so as to make them
costs of suit and dismissing the complaint against the Estate of Macario filed out of time; conformable to law and justice. (Rollo, p. 43.)
Nieveras and Bernardo Balagot.
(5) Order dated March 16, 1977 reiterating the denial of the motion for The controversy boils down to the main issue of whether or not the respondent
The antecedent facts are as follows: reconsideration of the order of July 13, 1976; 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
Petitioner Municipality of San Fernando, La Union is a municipal corporation (6) Order dated July 26, 1979 declaring the case deemed submitted for decision jurisdiction in a motion to dismiss.
existing under and in accordance with the laws of the Republic of the it appearing that parties have not yet submitted their respective memoranda
Philippines. Respondent Honorable Judge Romeo N. Firme is impleaded in his despite the court's direction; and In the case at bar, the respondent judge deferred the resolution of the defense
official capacity as the presiding judge of the Court of First Instance of La Union, of non-suability of the State amounting to lack of jurisdiction until trial.
Branch IV, Bauang, La Union. While private respondents Juana Rimando-Baniña, (7) Order dated September 7, 1979 denying the petitioner's motion for However, said respondent judge failed to resolve such defense, proceeded with
Laureano Baniña, Jr., Sor Marietta Baniña, Montano Baniña, Orja Baniña and reconsideration and/or order to recall prosecution witnesses for cross the trial and thereafter rendered a decision against the municipality and its
Lydia R. Baniña are heirs of the deceased Laureano Baniña Sr. and plaintiffs in examination. driver.
Civil Case No. 107-Bg before the aforesaid court.
The respondent judge did not commit grave abuse of discretion when in the Another statement of the test is given in City of Kokomo vs. Loy, decided by the ACCORDINGLY, the petition is GRANTED and the decision of the respondent
exercise of its judgment it arbitrarily failed to resolve the vital issue of non- Supreme Court of Indiana in 1916, thus: court is hereby modified, absolving the petitioner municipality of any liability in
suability of the State in the guise of the municipality. However, said judge acted favor of private respondents.
in excess of his jurisdiction when in his decision dated October 10, 1979 he held Municipal corporations exist in a dual capacity, and their functions are twofold.
the municipality liable for the quasi-delict committed by its regular employee. In one they exercise the right springing from sovereignty, and while in the SO ORDERED.
performance of the duties pertaining thereto, their acts are political and
The doctrine of non-suability of the State is expressly provided for in Article XVI, governmental. Their officers and agents in such capacity, though elected or
Section 3 of the Constitution, to wit: "the State may not be sued without its appointed by them, are nevertheless public functionaries performing a public
consent." 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 THE MUNICIPALITY OF HAGONOY, G.R. No. 168289
Stated in simple parlance, the general rule is that the State may not be sued right, arising from their existence as legal persons and not as public agencies. BULACAN, represented by the HON.
except when it gives consent to be sued. Consent takes the form of express or Their officers and agents in the performance of such functions act in behalf of FELIX V. OPLE, Municipal Mayor, and
implied consent. the municipalities in their corporate or individual capacity, and not for the state FELIX V. OPLE, in his personal capacity,
or sovereign power." (112 N.E., 994-995) (Ibid, pp. 605-606.)
Express consent may be embodied in a general law or a special law. The
- versus -
standing consent of the State to be sued in case of money claims involving It has already been remarked that municipal corporations are suable because
liability arising from contracts is found in Act No. 3083. A special law may be their charters grant them the competence to sue and be sued. Nevertheless, HON. SIMEON P. DUMDUM, JR., in his
Promulgated:
passed to enable a person to sue the government for an alleged quasi-delict, as they are generally not liable for torts committed by them in the discharge of capacity as the Presiding Judge of the
in Merritt v. Government of the Philippine Islands (34 Phil 311). (see United governmental functions and can be held answerable only if it can be shown that REGIONAL TRIAL COURT, BRANCH 7, March 22, 2010
States of America v. Guinto, G.R. No. 76607, February 26, 1990, 182 SCRA 644, they were acting in a proprietary capacity. In permitting such entities to be CEBU CITY; HON. CLERK OF COURT &
654.) sued, the State merely gives the claimant the right to show that the defendant EX-OFFICIO SHERIFF of the REGIONAL
was not acting in its governmental capacity when the injury was committed or TRIAL COURT of CEBU CITY; HON. CLERK
Consent is implied when the government enters into business contracts,
that the case comes under the exceptions recognized by law. Failing this, the OF COURT & EX-OFFICIO SHERIFF of the
thereby descending to the level of the other contracting party, and also when
claimant cannot recover. (Cruz, supra, p. 44.) REGIONAL TRIAL COURT of BULACAN
the State files a complaint, thus opening itself to a counterclaim. (Ibid)
and his DEPUTIES; and EMILY ROSE GO
In the case at bar, the driver of the dump truck of the municipality insists that KO LIM CHAO, doing business under the
Municipal corporations, for example, like provinces and cities, are agencies of
"he was on his way to the Naguilian river to get a load of sand and gravel for the name and style KD SURPLUS,
the State when they are engaged in governmental functions and therefore
repair of San Fernando's municipal streets." (Rollo, p. 29.)
should enjoy the sovereign immunity from suit. Nevertheless, they are subject
to suit even in the performance of such functions because their charter In the absence of any evidence to the contrary, the regularity of the
provided that they can sue and be sued. (Cruz, Philippine Political Law, 1987 performance of official duty is presumed pursuant to Section 3(m) of Rule 131 x-----------------------------------------------------------------------------------------x
Edition, p. 39) 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.
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 DECISION
We already stressed in the case of Palafox, et. al. vs. Province of Ilocos Norte,
and the established facts. The circumstance that a state is suable does not the District Engineer, and the Provincial Treasurer (102 Phil 1186) that "the PERALTA, J.:
necessarily mean that it is liable; on the other hand, it can never be held liable if construction or maintenance of roads in which the truck and the driver worked
it does not first consent to be sued. Liability is not conceded by the mere fact at the time of the accident are admittedly governmental activities." This is a Joint Petition[1] under Rule 45 of the Rules of Court brought by the
that the state has allowed itself to be sued. When the state does waive its Municipality of Hagonoy, Bulacan and its former chief executive, Mayor Felix V.
sovereign immunity, it is only giving the plaintiff the chance to prove, if it can, After a careful examination of existing laws and jurisprudence, We arrive at the Ople in his official and personal capacity, from the January 31, 2005
that the defendant is liable." (United States of America vs. Guinto, supra, p. 659- conclusion that the municipality cannot be held liable for the torts committed by Decision[2] and the May 23, 2005 Resolution[3] of the Court of Appeals in CA-G.R.
660) its regular employee, who was then engaged in the discharge of governmental SP No. 81888. The assailed decision affirmed the October 20,
functions. Hence, the death of the passenger –– tragic and deplorable though it 2003 Order[4] issued by the Regional Trial Court of Cebu City, Branch 7 in Civil
Anent the issue of whether or not the municipality is liable for the torts may be –– imposed on the municipality no duty to pay monetary compensation. Case No. CEB-28587denying petitioners motion to dismiss and motion to
committed by its employee, the test of liability of the municipality depends on
discharge/dissolve the writ of preliminary attachment previously issued in the
whether or not the driver, acting in behalf of the municipality, is performing All premises considered, the Court is convinced that the respondent judge's
case. The assailed resolution denied reconsideration.
governmental or proprietary functions. As emphasized in the case of Torio vs. dereliction in failing to resolve the issue of non-suability did not amount to
Fontanilla (G. R. No. L-29993, October 23, 1978. 85 SCRA 599, 606), the grave abuse of discretion. But said judge exceeded his jurisdiction when it ruled
distinction of powers becomes important for purposes of determining the on the issue of liability.
liability of the municipality for the acts of its agents which result in an injury to The case stems from a Complaint[5] filed by herein private respondent Emily
third persons. Rose Go Ko Lim Chao against herein petitioners, the Municipality of Hagonoy,
Bulacan and its chief executive, Felix V. Ople (Ople) for collection of a sum of
money and damages. It was alleged that sometime in the middle of the year On October 20, 2003, the trial court issued an Order[14] denying the two We now rule on the petition.
2000, respondent, doing business as KD Surplus and as such engaged in buying motions. Petitioners moved for reconsideration, but they were denied in an
and selling surplus trucks, heavy equipment, machinery, spare parts and related Order[15]dated December 29, 2003.
supplies, was contacted by petitioner Ople. Respondent had entered into an
To begin with, the Statute of Frauds found in paragraph (2), Article 1403 of the
agreement with petitioner municipality through Ople for the delivery of motor
Civil Code,[20] requires for enforceability certain contracts enumerated therein
vehicles, which supposedly were needed to carry out certain developmental
Believing that the trial court had committed grave abuse of discretion in issuing to be evidenced by some note or memorandum. The term Statute of Frauds is
undertakings in the municipality. Respondent claimed that because of Oples
the two orders, petitioners elevated the matter to the Court of Appeals via a descriptive of statutes that require certain classes of contracts to be in writing;
earnest representation that funds had already been allocated for the project,
petition for certiorari under Rule 65. In it, they faulted the trial court for not and that do not deprive the parties of the right to contract with respect to the
she agreed to deliver from her principal place of business in Cebu City twenty-
dismissing the complaint despite the fact that the alleged contract was matters therein involved, but merely regulate the formalities of the contract
one motor vehicles whose value totaled P5,820,000.00. To prove this, she
unenforceable under the statute of frauds, as well as for ordering the filing of necessary to render it enforceable.[21]
attached to the complaint copies of the bills of lading showing that the items
an answer and in effect allowing private respondent to prove that she did make
were consigned, delivered to and received by petitioner municipality on
several deliveries of the subject motor vehicles. Additionally, it was likewise
different dates.[6] However, despite having made several deliveries, Ople
asserted that the trial court committed grave abuse of discretion in not
allegedly did not heed respondents claim for payment. As of the filing of the In other words, the Statute of Frauds only lays down the method by which the
discharging/dissolving the writ of preliminary attachment, as prayed for in the
complaint, the total obligation of petitioner had already enumerated contracts may be proved. But it does not declare them invalid
motion, and in effect disregarding the rule that the local government is immune
totaled P10,026,060.13 exclusive of penalties and damages. Thus, respondent because they are not reduced to writing inasmuch as, by law, contracts are
from suit.
prayed for full payment of the said amount, with interest at not less than 2% obligatory in whatever form they may have been entered into, provided all the
per month, plus P500,000.00 as damages for business losses, P500,000.00 as essential requisites for their validity are present.[22] The object is to prevent
exemplary damages, attorneys fees of P100,000.00 and the costs of the suit. fraud and perjury in the enforcement of obligations depending, for evidence
On January 31, 2005, following assessment of the parties arguments, the Court thereof, on the unassisted memory of witnesses by requiring certain
of Appeals, finding no merit in the petition, upheld private respondents claim enumerated contracts and transactions to be evidenced by a writing signed by
and affirmed the trial courts order.[16] Petitioners moved for reconsideration, the party to be charged.[23]The effect of noncompliance with this requirement is
On February 13, 2003, the trial court issued an Order[7] granting respondents
but the same was likewise denied for lack of merit and for being a mere scrap of simply that no action can be enforced under the given contracts.[24] If an action
prayer for a writ of preliminary attachment conditioned upon the posting of a
paper for having been filed by an unauthorized counsel.[17] Hence, this petition. is nevertheless filed in court, it shall warrant a dismissal under Section
bond equivalent to the amount of the claim. On March 20, 2003, the trial court
1(i),[25] Rule 16 of the Rules of Court, unless there has been, among others, total
issued the Writ of Preliminary Attachment[8] directing the sheriff to attach the
or partial performance of the obligation on the part of either party.[26]
estate, real and personal properties of petitioners.
In their present recourse, which raises no matter different from those passed
upon by the Court of Appeals, petitioners ascribe error to the Court of Appeals
for dismissing their challenge against the trial courts October 20 and December It has been private respondents consistent stand, since the inception of the
Instead of addressing private respondents allegations, petitioners filed a Motion
29, 2003 Orders. Again, they reason that the complaint should have been instant case that she has entered into a contract with petitioners. As far as she
to Dismiss[9] on the ground that the claim on which the action had been brought
dismissed at the first instance based on unenforceability and that the motion to is concerned, she has already performed her part of the obligation under the
was unenforceable under the statute of frauds, pointing out that there was no
dissolve/discharge the preliminary attachment should have been granted.[18] agreement by undertaking the delivery of the 21 motor vehicles contracted for
written contract or document that would evince the supposed agreement they
by Ople in the name of petitioner municipality. This claim is well substantiated
entered into with respondent. They averred that contracts of this nature, before
at least for the initial purpose of setting out a valid cause of action against
being undertaken by the municipality, would ordinarily be subject to several
petitioners by copies of the bills of lading attached to the complaint, naming
preconditions such as a public bidding and prior approval of the municipal Commenting on the petition, private respondent notes that with respect to the
petitioner municipality as consignee of the shipment. Petitioners have not at
council which, in this case, did not obtain. From this, petitioners impress upon Court of Appeals denial of the certiorari petition, the same was rightly done, as
any time expressly denied this allegation and, hence, the same is binding on the
us the notion that no contract was ever entered into by the local government the fact of delivery may be properly and adequately addressed at the trial of the
trial court for the purpose of ruling on the motion to dismiss. In other words,
with respondent.[10] To address the claim that respondent had made the case on the merits; and that the dissolution of the writ of preliminary
since there exists an indication by way of allegation that there has been
deliveries under the agreement, they advanced that the bills of lading attached attachment was not proper under the premises inasmuch as the application for
performance of the obligation on the part of respondent, the case is excluded
to the complaint were hardly probative, inasmuch as these documents had the writ sufficiently alleged fraud on the part of petitioners. In the same breath,
from the coverage of the rule on dismissals based on unenforceability under the
been accomplished and handled exclusively by respondent herself as well as by respondent laments that the denial of petitioners motion for reconsideration
statute of frauds, and either party may then enforce its claims against the other.
her employees and agents.[11] was rightly done by the Court of Appeals, because it raised no new matter that
had not yet been addressed.[19]

No other principle in remedial law is more settled than that when a motion to
Petitioners also filed a Motion to Dissolve and/or Discharge the Writ of
dismiss is filed, the material allegations of the complaint are deemed to be
Preliminary Attachment Already Issued,[12] invoking immunity of the state from After the filing of the parties respective memoranda, the case was deemed
hypothetically admitted.[27] This hypothetical admission, according
suit, unenforceability of the contract, and failure to substantiate the allegation submitted for decision.
to Viewmaster Construction Corporation v. Roxas[28] and Navoa v. Court of
of fraud.[13]
Appeals,[29]extends not only to the relevant and material facts well pleaded in
the complaint, but also to inferences that may be fairly deduced from arguments offered by petitioners against the writ of preliminary attachment public policy. Disbursements of public funds must be covered by the
them. Thus, where it appears that the allegations in the complaint furnish clearly touch on matters that when ruled upon in the hearing for the motion to corresponding appropriations as required by law. The functions and public
sufficient basis on which the complaint can be maintained, the same should not discharge, would amount to a trial of the case on the merits.[33] services rendered by the State cannot be allowed to be paralyzed or disrupted
be dismissed regardless of the defenses that may be raised by the by the diversion of public funds from their legitimate and specific objects. x x
defendants.[30] Stated differently, where the motion to dismiss is predicated on x[39]
grounds that are not indubitable, the better policy is to deny the motion
The general rule spelled out in Section 3, Article XVI of the Constitution is that
without prejudice to taking such measures as may be proper to assure that the
the state and its political subdivisions may not be sued without their
ends of justice may be served.[31]
consent. Otherwise put, they are open to suit but only when they consent to With this in mind, the Court holds that the writ of preliminary attachment must
it. Consent is implied when the government enters into a business contract, as it be dissolved and, indeed, it must not have been issued in the very first
then descends to the level of the other contracting party; or it may be place. While there is merit in private respondents position that she, by affidavit,
It is interesting to note at this point that in their bid to have the embodied in a general or special law[34] such as that found in Book I, Title I, was able to substantiate the allegation of fraud in the same way that the fraud
case dismissed, petitioners theorize that there could not have been a contract Chapter 2, Section 22 of the Local Government Code of 1991, which vests local attributable to petitioners was sufficiently alleged in the complaint and, hence,
by which the municipality agreed to be bound, because it was not shown that government units with certain corporate powers one of them is the power to the issuance of the writ would have been justified. Still, the writ of attachment
there had been compliance with the required bidding or that the municipal sue and be sued. in this case would only prove to be useless and unnecessary under the
council had approved the contract. The argument is flawed. By invoking premises, since the property of the municipality may not, in the event that
unenforceability under the Statute of Frauds, petitioners are in effect respondents claim is validated, be subjected to writs of execution and
acknowledging the existence of a contract between them and private garnishment unless, of course, there has been a corresponding appropriation
Be that as it may, a difference lies between suability and liability. As held in City
respondent only, the said contract cannot be enforced by action for being non- provided by law.[40]
of Caloocan v. Allarde,[35] where the suability of the state is conceded and by
compliant with the legal requisite that it be reduced into writing. Suffice it to
which liability is ascertained judicially, the state is at liberty to determine for
say that while this assertion might be a viable defense against respondents
itself whether to satisfy the judgment or not. Execution may not issue upon
claim, it is principally a matter of evidence that may be properly ventilated at
such judgment, because statutes waiving non-suability do not authorize the Anent the other issues raised by petitioners relative to the denial of their
the trial of the case on the merits.
seizure of property to satisfy judgments recovered from the action. These motion to dissolve the writ of attachment, i.e., unenforceability of the contract
statutes only convey an implication that the legislature will recognize such and the veracity of private respondents allegation of fraud, suffice it to say that
judgment as final and make provisions for its full satisfaction. Thus, where these pertain to the merits of the main action. Hence, these issues are not to be
Verily, no grave abuse of discretion has been committed by the trial court in consent to be sued is given by general or special law, the implication thereof is taken up in resolving the motion to discharge, lest we run the risk of deciding or
denying petitioners motion to dismiss this case. The Court of Appeals is thus limited only to the resultant verdict on the action before execution of the prejudging the main case and force a trial on the merits at this stage of the
correct in affirming the same. judgment.[36] proceedings.[41]

We now address the question of whether there is a valid reason to deny Traders Royal Bank v. Intermediate Appellate Court,[37] citing Commissioner of There is one final concern raised by petitioners relative to the denial of their
petitioners motion to discharge the writ of preliminary attachment. Public Highways v. San Diego,[38] is instructive on this point. In that case which motion for reconsideration. They complain that it was an error for the Court of
involved a suit on a contract entered into by an entity supervised by the Office Appeals to have denied the motion on the ground that the same was filed by an
of the President, the Court held that while the said entity opened itself to suit unauthorized counsel and, hence, must be treated as a mere scrap of paper.[42]
by entering into the subject contract with a private entity; still, the trial court
Petitioners, advocating a negative stance on this issue, posit that as a municipal
was in error in ordering the garnishment of its funds, which were public in
corporation, the Municipality of Hagonoy is immune from suit, and that its
nature and, hence, beyond the reach of garnishment and attachment
properties are by law exempt from execution and garnishment. Hence, they It can be derived from the records that petitioner Ople, in his personal capacity,
proceedings. Accordingly, the Court ordered that the writ of preliminary
submit that not only was there an error committed by the trial court in denying filed his Rule 65 petition with the Court of Appeals through the representation
attachment issued in that case be lifted, and that the parties be allowed to
their motion to dissolve the writ of preliminary attachment; they also advance of the law firm Chan Robles & Associates. Later on, municipal legal officer
prove their respective claims at the trial on the merits. There, the Court
that it should not have been issued in the first place. Nevertheless, they believe Joselito Reyes, counsel for petitioner Ople, in his official capacity and for
highlighted the reason for the rule, to wit:
that respondent has not been able to substantiate her allegations of fraud petitioner municipality, filed with the Court of Appeals a Manifestation with
necessary for the issuance of the writ.[32] Entry of Appearance[43] to the effect that he, as counsel, was adopting all the
pleadings filed for and in behalf of [Oples personal representation] relative to
The universal rule that where the State gives its consent to be sued by private this case.[44]
parties either by general or special law, it may limit claimants action only up to
Private respondent, for her part, counters that, contrary to petitioners claim,
the completion of proceedings anterior to the stage of execution and that the
she has amply discussed the basis for the issuance of the writ of preliminary
power of the Courts ends when the judgment is rendered, since government
attachment in her affidavit; and that petitioners claim of immunity from suit is It appears, however, that after the issuance of the Court of Appeals decision,
funds and properties may not be seized under writs of execution or
negated by Section 22 of the Local Government Code, which vests municipal only Oples personal representation signed the motion for reconsideration.There
garnishment to satisfy such judgments, is based on obvious considerations of
corporations with the power to sue and be sued. Further, she contends that the is no showing that the municipal legal officer made the same manifestation, as
he previously did upon the filing of the petition.[45] From this, the Court of
Appeals concluded that it was as if petitioner municipality and petitioner Ople,
in his official capacity, had never moved for reconsideration of the assailed
decision, and adverts to the ruling in Ramos v. Court of
Appeals[46] and Municipality of Pililla, Rizal v. Court of Appeals [47] that only under
well-defined exceptions may a private counsel be engaged in lawsuits involving
a municipality, none of which exceptions obtains in this case.[48]

The Court of Appeals is mistaken. As can be seen from the manner in which the
Manifestation with Entry of Appearance is worded, it is clear that petitioner
municipalitys legal officer was intent on adopting, for both the municipality and
Mayor Ople, not only the certiorari petition filed with the Court of Appeals, but
also all other pleadings that may be filed thereafter by Oples personal
representation, including the motion for reconsideration subject of this case. In
any event, however, the said motion for reconsideration would warrant a
denial, because there seems to be no matter raised therein that has not yet
been previously addressed in the assailed decision of the Court of Appeals as
well as in the proceedings below, and that would have otherwise warranted a
different treatment of the issues involved.

WHEREFORE, the Petition is GRANTED IN PART. The January 31, 2005 Decision
of the Court of Appeals in CA-G.R. SP No. 81888 is AFFIRMEDinsofar as it
affirmed the October 20, 2003 Decision of the Regional Trial Court of Cebu City,
Branch 7 denying petitioners motion to dismiss in Civil Case No.CEB-28587. The
assailed decision is REVERSED insofar as it affirmed the said trial courts denial of
petitioners motion to discharge the writ of preliminary attachment issued in
that case. Accordingly, the August 4, 2003 Writ of Preliminary Attachment
issued in Civil Case No. CEB-28587 is ordered lifted.

SO ORDERED.