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G.R. No. 183591             October 14, 2008

THE PROVINCE OF NORTH COTABATO, petitioners,

vs.
THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES PEACE PANEL ON ANCESTRAL
DOMAIN (GRP), , respondents.

I. FACTUAL ANTECEDENTS OF THE PETITIONS

On August 5, 2008, the Government of the Republic of the Philippines (GRP) and the MILF, through the
Chairpersons of their respective peace negotiating panels, were scheduled to sign a Memorandum of
Agreement on the Ancestral Domain (MOA-AD) Aspect of the GRP-MILF Tripoli Agreement on Peace of 2001
in Kuala Lumpur, Malaysia.

The MILF is a rebel group which was established in March 1984 when, under the leadership of the late
Salamat Hashim, it splintered from the Moro National Liberation Front (MNLF) then headed by Nur Misuari, on
the ground, among others, of what Salamat perceived to be the manipulation of the MNLF away from an
Islamic basis towards Marxist-Maoist orientations.1

The signing of the MOA-AD between the GRP and the MILF was not to materialize, however, for upon motion
of petitioners, specifically those who filed their cases before the scheduled signing of the MOA-AD, this Court
issued a Temporary Restraining Order enjoining the GRP from signing the same.

The MOA-AD was preceded by a long process of negotiation and the concluding of several prior agreements
between the two parties beginning in 1996, when the GRP-MILF peace negotiations began. On July 18, 1997,
the GRP and MILF Peace Panels signed the Agreement on General Cessation of Hostilities. The following
year, they signed the General Framework of Agreement of Intent on August 27, 1998.

The Solicitor General, who represents respondents, summarizes the MOA-AD by stating that the same
contained, among others, the commitment of the parties to pursue peace negotiations, protect and respect
human rights, negotiate with sincerity in the resolution and pacific settlement of the conflict, and refrain from
the use of threat or force to attain undue advantage while the peace negotiations on the substantive agenda
are on-going.2

Early on, however, it was evident that there was not going to be any smooth sailing in the GRP-MILF peace
process. Towards the end of 1999 up to early 2000, the MILF attacked a number of municipalities in Central
Mindanao and, in March 2000, it took control of the town hall of Kauswagan, Lanao del Norte. 3 In response,
then President Joseph Estrada declared and carried out an "all-out-war" against the MILF.

When President Gloria Macapagal-Arroyo assumed office, the military offensive against the MILF was
suspended and the government sought a resumption of the peace talks. The MILF, according to a leading
MILF member, initially responded with deep reservation, but when President Arroyo asked the Government of
Malaysia through Prime Minister Mahathir Mohammad to help convince the MILF to return to the negotiating
table, the MILF convened its Central Committee to seriously discuss the matter and, eventually, decided to
meet with the GRP.4

The parties met in Kuala Lumpur on March 24, 2001, with the talks being facilitated by the Malaysian
government, the parties signing on the same date the Agreement on the General Framework for the
Resumption of Peace Talks Between the GRP and the MILF. The MILF thereafter suspended all its military
actions.5

Formal peace talks between the parties were held in Tripoli, Libya from June 20-22, 2001, the outcome of
which was the GRP-MILF Tripoli Agreement on Peace (Tripoli Agreement 2001) containing the basic principles
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and agenda on the following aspects of the negotiation: Security Aspect, Rehabilitation Aspect,

and Ancestral Domain Aspect. With regard to the Ancestral Domain Aspect, the parties in Tripoli Agreement
2001 simply agreed "that the same be discussed further by the Parties in their next meeting."

A second round of peace talks was held in Cyberjaya, Malaysia on August 5-7, 2001 which ended with the
signing of the Implementing Guidelines on the Security Aspect of the Tripoli Agreement 2001 leading to a
ceasefire status between the parties. This was followed by the Implementing Guidelines on the Humanitarian
Rehabilitation and Development Aspects of the Tripoli Agreement 2001, which was signed on May 7, 2002 at
Putrajaya, Malaysia. Nonetheless, there were many incidence of violence between government forces and the
MILF from 2002 to 2003.

Meanwhile, then MILF Chairman Salamat Hashim passed away on July 13, 2003 and he was replaced by Al
Haj Murad, who was then the chief peace negotiator of the MILF. Murad's position as chief peace negotiator
was taken over by Mohagher Iqbal.6

In 2005, several exploratory talks were held between the parties in Kuala Lumpur, eventually leading to the
crafting of the draft MOA-AD in its final form, which, as mentioned, was set to be signed last August 5, 2008.

II. STATEMENT OF THE PROCEEDINGS

Before the Court is what is perhaps the most contentious "consensus" ever embodied in an instrument - the
MOA-AD which is assailed principally by the present petitions bearing docket numbers 183591, 183752,
183893, 183951 and 183962.

Commonly impleaded as respondents are the GRP Peace Panel on Ancestral Domain 7 and the Presidential
Adviser on the Peace Process (PAPP) Hermogenes Esperon, Jr.

On July 23, 2008, the Province of North Cotabato8 and Vice-Governor Emmanuel Piñol filed a petition,
docketed as G.R. No. 183591, for Mandamus and Prohibition with Prayer for the Issuance of Writ of
Preliminary Injunction and Temporary Restraining Order.9 Invoking the right to information on matters of public
concern, petitioners seek to compel respondents to disclose and furnish them the complete and official copies
of the MOA-AD including its attachments, and to prohibit the slated signing of the MOA-AD, pending the
disclosure of the contents of the MOA-AD and the holding of a public consultation thereon. Supplementarily,
petitioners pray that the MOA-AD be declared unconstitutional.10

This initial petition was followed by another one, docketed as G.R. No. 183752, also for Mandamus and
Prohibition11 filed by the City of Zamboanga,12 Mayor Celso Lobregat, Rep. Ma. Isabelle Climaco and Rep.
Erico Basilio Fabian who likewise pray for similar injunctive reliefs. Petitioners herein moreover pray that the
City of Zamboanga be excluded from the Bangsamoro Homeland and/or Bangsamoro Juridical Entity and, in
the alternative, that the MOA-AD be declared null and void.

By Resolution of August 4, 2008, the Court issued a Temporary Restraining Order commanding and directing
public respondents and their agents to cease and desist from formally signing the MOA-AD. 13 The Court also
required the Solicitor General to submit to the Court and petitioners the official copy of the final draft of the
MOA-AD,14 to which she complied.15

Meanwhile, the City of Iligan16 filed a petition for Injunction and/or Declaratory Relief, docketed as G.R. No.
183893, praying that respondents be enjoined from signing the MOA-AD or, if the same had already been
signed, from implementing the same, and that the MOA-AD be declared unconstitutional. Petitioners
herein additionally implead Executive Secretary Eduardo Ermita as respondent.

The Province of Zamboanga del Norte,17 Governor Rolando Yebes, Vice-Governor Francis Olvis, Rep. Cecilia
Jalosjos-Carreon, Rep. Cesar Jalosjos, and the members18 of the Sangguniang Panlalawigan of Zamboanga
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del Norte filed on August 15, 2008 a petition for Certiorari, Mandamus and Prohibition, 19 docketed as G.R. No.
183951. They pray, inter alia, that the MOA-AD be declared null and void and without operative effect, and that
respondents be enjoined from executing the MOA-AD.

On August 19, 2008, Ernesto Maceda, Jejomar Binay, and Aquilino Pimentel III filed a petition for
Prohibition,20 docketed as G.R. No. 183962, praying for a judgment prohibiting and permanently enjoining
respondents from formally signing and executing the MOA-AD and or any other agreement derived therefrom
or similar thereto, and nullifying the MOA-AD for being unconstitutional and illegal. Petitioners
herein additionally implead as respondent the MILF Peace Negotiating Panel represented by its Chairman
Mohagher Iqbal.

Various parties moved to intervene and were granted leave of court to file their petitions-/comments-in-
intervention. Petitioners-in-Intervention include Senator Manuel A. Roxas, former Senate President Franklin
Drilon and Atty. Adel Tamano, the City of Isabela21 and Mayor Cherrylyn Santos-Akbar, the Province of Sultan
Kudarat22 and Gov. Suharto Mangudadatu, the Municipality of Linamon in Lanao del Norte,23 Ruy Elias Lopez
of Davao City and of the Bagobo tribe, Sangguniang Panlungsod member Marino Ridao and businessman
Kisin Buxani, both of Cotabato City; and lawyers Carlo Gomez, Gerardo Dilig, Nesario Awat, Joselito Alisuag,
Richalex Jagmis, all of Palawan City. The Muslim Legal Assistance Foundation, Inc. (Muslaf) and the Muslim
Multi-Sectoral Movement for Peace and Development (MMMPD) filed their respective Comments-in-
Intervention.

By subsequent Resolutions, the Court ordered the consolidation of the petitions. Respondents filed Comments
on the petitions, while some of petitioners submitted their respective Replies.

Respondents, by Manifestation and Motion of August 19, 2008, stated that the Executive Department shall
thoroughly review the MOA-AD and pursue further negotiations to address the issues hurled against it, and
thus moved to dismiss the cases. In the succeeding exchange of pleadings, respondents' motion was met with
vigorous opposition from petitioners.

The cases were heard on oral argument on August 15, 22 and 29, 2008 that tackled the following principal
issues:

2. Whether the constitutionality and the legality of the MOA is ripe for adjudication;

3. Whether respondent Government of the Republic of the Philippines Peace Panel committed grave
abuse of discretion amounting to lack or excess of jurisdiction when it negotiated and initiated the MOA
vis-à-vis ISSUES Nos. 4 and 5;

4. Whether there is a violation of the people's right to information on matters of public concern (1987
Constitution, Article III, Sec. 7) under a state policy of full disclosure of all its transactions involving
public interest (1987 Constitution, Article II, Sec. 28) including public consultation under Republic Act
No. 7160 (LOCAL GOVERNMENT CODE OF 1991)[;]

If it is in the affirmative, whether prohibition under Rule 65 of the 1997 Rules of Civil Procedure is an

appropriate remedy;

5. Whether by signing the MOA, the Government of the Republic of the Philippines would be BINDING
itself

a) to create and recognize the Bangsamoro Juridical Entity (BJE) as a separate state, or a
juridical, territorial or political subdivision not recognized by law;

b) to revise or amend the Constitution and existing laws to conform to the MOA;
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c) to concede to or recognize the claim of the Moro Islamic Liberation Front for ancestral domain
in violation of Republic Act No. 8371 (THE INDIGENOUS PEOPLES RIGHTS ACT OF 1997),
particularly Section 3(g) & Chapter VII (DELINEATION, RECOGNITION OF ANCESTRAL
DOMAINS)[;]

If in the affirmative, whether the Executive Branch has the authority to so bind the Government of the
Republic of the Philippines;

6. Whether the inclusion/exclusion of the Province of North Cotabato, Cities of Zamboanga, Iligan and
Isabela, and the Municipality of Linamon, Lanao del Norte in/from the areas covered by the projected
Bangsamoro Homeland is a justiciable question; and

7. Whether desistance from signing the MOA derogates any prior valid commitments of the
Government of the Republic of the Philippines.24

The Court, thereafter, ordered the parties to submit their respective Memoranda. Most of the parties submitted
their memoranda on time.

III. OVERVIEW OF THE MOA-AD

As a necessary backdrop to the consideration of the objections raised in the subject five petitions and six
petitions-in-intervention against the MOA-AD, as well as the two comments-in-intervention in favor of the MOA-
AD, the Court takes an overview of the MOA.

The MOA-AD identifies the Parties to it as the GRP and the MILF.

Under the heading "Terms of Reference" (TOR), the MOA-AD includes not only four earlier agreements
between the GRP and MILF, but also two agreements between the GRP and the MNLF: the 1976 Tripoli
Agreement, and the Final Peace Agreement on the Implementation of the 1976 Tripoli Agreement, signed on
September 2, 1996 during the administration of President Fidel Ramos.

The MOA-AD also identifies as TOR two local statutes - the organic act for the Autonomous Region in Muslim
Mindanao (ARMM)25 and the Indigenous Peoples Rights Act (IPRA), 26 and several international law
instruments - the ILO Convention No. 169 Concerning Indigenous and Tribal Peoples in Independent Countries
in relation to the UN Declaration on the Rights of the Indigenous Peoples, and the UN Charter, among others.

The MOA-AD includes as a final TOR the generic category of "compact rights entrenchment emanating from
the regime of dar-ul-mua'hada (or territory under compact) and dar-ul-sulh (or
territory under peace agreement) that partakes the nature of a treaty device."

During the height of the Muslim Empire, early Muslim jurists tended to see the world through a simple
dichotomy: there was the dar-ul-Islam (the Abode of Islam) and dar-ul-harb (the Abode of War). The first
referred to those lands where Islamic laws held sway, while the second denoted those lands where Muslims
were persecuted or where Muslim laws were outlawed or ineffective. 27 This way of viewing the world, however,
became more complex through the centuries as the Islamic world became part of the international community
of nations.

As Muslim States entered into treaties with their neighbors, even with distant States and inter-governmental
organizations, the classical division of the world into dar-ul-Islam and dar-ul-harb eventually lost its meaning.
New terms were drawn up to describe novel ways of perceiving non-Muslim territories. For instance, areas
like dar-ul-mua'hada (land of compact) and dar-ul-sulh (land of treaty) referred to countries which, though
under a secular regime, maintained peaceful and cooperative relations with Muslim States, having been bound
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to each other by treaty or agreement. Dar-ul-aman (land of order), on the other hand, referred to countries
which, though not bound by treaty with Muslim States, maintained freedom of religion for Muslims.28

It thus appears that the "compact rights entrenchment" emanating from the regime of dar-ul-mua'hada and dar-
ul-sulh simply refers to all other agreements between the MILF and the Philippine government - the Philippines
being the land of compact and peace agreement - that partake of the nature of a treaty device, "treaty" being
broadly defined as "any solemn agreement in writing that sets out understandings, obligations, and benefits for
both parties which provides for a framework that elaborates the principles declared in the [MOA-AD]."29

The MOA-AD states that the Parties "HAVE AGREED AND ACKNOWLEDGED AS FOLLOWS," and starts
with its main body.

The main body of the MOA-AD is divided into four strands, namely, Concepts and Principles, Territory,
Resources, and Governance.

A. CONCEPTS AND PRINCIPLES

This strand begins with the statement that it is "the birthright of all Moros and all Indigenous peoples of
Mindanao to identify themselves and be accepted as ‘Bangsamoros.'" It defines "Bangsamoro people" as
the natives or original inhabitants of Mindanao and its adjacent islands including Palawan and the Sulu
archipelago at the time of conquest or colonization, and their descendants whether mixed or of full
blood, including their spouses.30

Thus, the concept of "Bangsamoro," as defined in this strand of the MOA-AD, includes not only "Moros" as
traditionally understood even by Muslims,31 but all indigenous peoples of Mindanao and its adjacent islands.
The MOA-AD adds that the freedom of choice of indigenous peoples shall be respected. What this freedom of
choice consists in has not been specifically defined.

The MOA-AD proceeds to refer to the "Bangsamoro homeland," the ownership of which is vested exclusively
in the Bangsamoro people by virtue of their prior rights of occupation.32 Both parties to the MOA-AD
acknowledge that ancestral domain does not form part of the public domain.33

The Bangsamoro people are acknowledged as having the right to self-governance, which right is said to be
rooted on ancestral territoriality exercised originally under the suzerain authority of their sultanates and the Pat
a Pangampong ku Ranaw. The sultanates were described as states or "karajaan/kadatuan" resembling a body
politic endowed with all the elements of a nation-state in the modern sense.34

The MOA-AD thus grounds the right to self-governance of the Bangsamoro people on the past suzerain
authority of the sultanates. As gathered, the territory defined as the Bangsamoro homeland was ruled by
several sultanates and, specifically in the case of the Maranao, by the Pat a Pangampong ku Ranaw, a
confederation of independent principalities (pangampong) each ruled by datus and sultans, none of whom was
supreme over the others.35

The MOA-AD goes on to describe the Bangsamoro people as "the ‘First Nation' with defined territory and with
a system of government having entered into treaties of amity and commerce with foreign nations."

The term "First Nation" is of Canadian origin referring to the indigenous peoples of that territory, particularly
those known as Indians. In Canada, each of these indigenous peoples is equally entitled to be called "First
Nation," hence, all of them are usually described collectively by the plural "First Nations."36 To that extent, the
MOA-AD, by identifying the Bangsamoro people as "the First Nation" - suggesting its exclusive entitlement to
that designation - departs from the Canadian usage of the term.
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The MOA-AD then mentions for the first time the "Bangsamoro Juridical Entity" (BJE) to which it grants the
authority and jurisdiction over the Ancestral Domain and Ancestral Lands of the Bangsamoro.37

B. TERRITORY

The territory of the Bangsamoro homeland is described as the land mass as well as the maritime, terrestrial,
fluvial and alluvial domains, including the aerial domain and the atmospheric space above it, embracing the
Mindanao-Sulu-Palawan geographic region.38

More specifically, the core of the BJE is defined as the present geographic area of the ARMM - thus
constituting the following areas: Lanao del Sur, Maguindanao, Sulu, Tawi-Tawi, Basilan, and Marawi City.
Significantly, this core also includes certain municipalities of Lanao del Norte that voted for inclusion in the
ARMM in the 2001 plebiscite.39

Outside of this core, the BJE is to cover other provinces, cities, municipalities and barangays, which are
grouped into two categories, Category A and Category B. Each of these areas is to be subjected to a plebiscite
to be held on different dates, years apart from each other. Thus, Category A areas are to be subjected to a
plebiscite not later than twelve (12) months following the signing of the MOA-AD. 40 Category B areas, also
called "Special Intervention Areas," on the other hand, are to be subjected to a plebiscite twenty-five (25) years
from the signing of a separate agreement - the Comprehensive Compact.41

The Parties to the MOA-AD stipulate that the BJE shall have jurisdiction over all natural resources within its
"internal waters," defined as extending fifteen (15) kilometers from the coastline of the BJE area;42 that the BJE
shall also have "territorial waters," which shall stretch beyond the BJE internal waters up to the baselines of the
Republic of the Philippines (RP) south east and south west of mainland Mindanao; and that within
these territorial waters, the BJE and the "Central Government"  (used interchangeably with RP) shall
exercise joint jurisdiction, authority and management over all natural resources.43 Notably, the jurisdiction over
the internal waters is not similarly described as "joint."

The MOA-AD further provides for the sharing of minerals on the territorial waters between the Central
Government and the BJE, in favor of the latter, through production sharing and economic cooperation
agreement.44 The activities which the Parties are allowed to conduct on the territorial waters are enumerated,
among which are the exploration and utilization of natural resources, regulation of shipping and fishing
activities, and the enforcement of police and safety measures. 45 There is no similar provision on the sharing of
minerals and allowed activities with respect to the internal waters of the BJE.

C. RESOURCES

The MOA-AD states that the BJE is free to enter into any economic cooperation and trade relations with
foreign countries and shall have the option to establish trade missions in those countries. Such relationships
and understandings, however, are not to include aggression against the GRP. The BJE may also enter into
environmental cooperation agreements.46

The external defense of the BJE is to remain the duty and obligation of the Central Government. The Central
Government is also bound to "take necessary steps to ensure the BJE's participation in international meetings
and events" like those of the ASEAN and the specialized agencies of the UN. The BJE is to be entitled to
participate in Philippine official missions and delegations for the negotiation of border agreements or protocols
for environmental protection and equitable sharing of incomes and revenues involving the bodies of water
adjacent to or between the islands forming part of the ancestral domain.47

With regard to the right of exploring for, producing, and obtaining all potential sources of energy, petroleum,
fossil fuel, mineral oil and natural gas, the jurisdiction and control thereon is to be vested in the BJE "as the
party having control within its territorial jurisdiction." This right carries the proviso that, "in times of national
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emergency, when public interest so requires," the Central Government may, for a fixed period and under
reasonable terms as may be agreed upon by both Parties, assume or direct the operation of such resources.48

The sharing between the Central Government and the BJE of total production pertaining to natural resources is
to be 75:25 in favor of the BJE.49

The MOA-AD provides that legitimate grievances of the Bangsamoro people arising from any unjust
dispossession of their territorial and proprietary rights, customary land tenures, or their marginalization shall be
acknowledged. Whenever restoration is no longer possible, reparation is to be in such form as mutually
determined by the Parties.50

The BJE may modify or cancel the forest concessions, timber licenses, contracts or agreements, mining
concessions, Mineral Production and Sharing Agreements (MPSA), Industrial Forest Management Agreements
(IFMA), and other land tenure instruments granted by the Philippine Government, including those issued by the
present ARMM.51

D. GOVERNANCE

The MOA-AD binds the Parties to invite a multinational third-party to observe and monitor the implementation
of the Comprehensive Compact. This compact is to embody the "details for the effective enforcement" and
"the mechanisms and modalities for the actual implementation" of the MOA-AD. The MOA-AD explicitly
provides that the participation of the third party shall not in any way affect the status of the relationship
between the Central Government and the BJE.52

The "associative" relationship

between the Central Government
and the BJE

The MOA-AD describes the relationship of the Central Government and the BJE as "associative,"
characterized by shared authority and responsibility. And it states that the structure of governance is to be
based on executive, legislative, judicial, and administrative institutions with defined powers and functions in the
Comprehensive Compact.

The MOA-AD provides that its provisions requiring "amendments to the existing legal framework" shall take
effect upon signing of the Comprehensive Compact and upon effecting the aforesaid amendments, with due
regard to the non-derogation of prior agreements and within the stipulated timeframe to be contained in the
Comprehensive Compact. As will be discussed later, much of the present controversy hangs on the
legality of this provision.

The BJE is granted the power to build, develop and maintain its own institutions inclusive of civil service,
electoral, financial and banking, education, legislation, legal, economic, police and internal security force,
judicial system and correctional institutions, the details of which shall be discussed in the negotiation of the
comprehensive compact.

As stated early on, the MOA-AD was set to be signed on August 5, 2008 by Rodolfo Garcia and Mohagher
Iqbal, Chairpersons of the Peace Negotiating Panels of the GRP and the MILF, respectively. Notably, the
penultimate paragraph of the MOA-AD identifies the signatories as "the representatives of the Parties,"
meaning the GRP and MILF themselves, and not merely of the negotiating panels.53 In addition, the signature
page of the MOA-AD states that it is "WITNESSED BY" Datuk Othman Bin Abd Razak, Special Adviser to the
Prime Minister of Malaysia, "ENDORSED BY" Ambassador Sayed Elmasry, Adviser to Organization of the
Islamic Conference (OIC) Secretary General and Special Envoy for Peace Process in Southern Philippines,
and SIGNED "IN THE PRESENCE OF" Dr. Albert G. Romulo, Secretary of Foreign Affairs of RP and Dato'
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Seri Utama Dr. Rais Bin Yatim, Minister of Foreign Affairs, Malaysia, all of whom were scheduled to sign the
Agreement last August 5, 2008.

Annexed to the MOA-AD are two documents containing the respective lists cum maps of the provinces,
municipalities, and barangays under Categories A and B earlier mentioned in the discussion on the strand on
TERRITORY.

IV. PROCEDURAL ISSUES

V. SUBSTANTIVE ISSUES

As culled from the Petitions and Petitions-in-Intervention, there are basically two SUBSTANTIVE issues to be
resolved, one relating to the manner in which the MOA-AD was negotiated and finalized, the other relating
to its provisions, viz:

1. Did respondents violate constitutional and statutory provisions on public consultation and the right to
information when they negotiated and later initialed the MOA-AD?

2. Do the contents of the MOA-AD violate the Constitution and the laws?

ON THE FIRST SUBSTANTIVE ISSUE

Petitioners invoke their constitutional right to information on matters of public concern, as provided in

Section 7, Article III on the Bill of Rights:

ON THE SECOND SUBSTANTIVE ISSUE

With regard to the provisions of the MOA-AD, there can be no question that they cannot all be accommodated
under the present Constitution and laws. Respondents have admitted as much in the oral arguments before
this Court, and the MOA-AD itself recognizes the need to amend the existing legal framework to render
effective at least some of its provisions. Respondents, nonetheless, counter that the MOA-AD is free of any
legal infirmity because any provisions therein which are inconsistent with the present legal framework will not
be effective until the necessary changes to that framework are made. The validity of this argument will be
considered later. For now, the Court shall pass upon how

The MOA-AD is inconsistent with the Constitution and laws as presently worded.

In general, the objections against the MOA-AD center on the extent of the powers conceded therein to the
BJE. Petitioners assert that the powers granted to the BJE exceed those granted to any local government
under present laws, and even go beyond those of the present ARMM. Before assessing some of the specific
powers that would have been vested in the BJE, however, it would be useful to turn first to a general idea that
serves as a unifying link to the different provisions of the MOA-AD, namely, the international law concept
of association. Significantly, the MOA-AD explicitly alludes to this concept, indicating that the Parties actually
framed its provisions with it in mind.

Association is referred to in paragraph 3 on TERRITORY, paragraph 11 on RESOURCES, and paragraph 4

on GOVERNANCE. It is in the last mentioned provision, however, that the MOA-AD most clearly uses it to
describe the envisioned relationship between the BJE and the Central Government.

4. The relationship between the Central Government and the Bangsamoro juridical entity shall
be associative characterized by shared authority and responsibility with a structure of governance
based on executive, legislative, judicial and administrative institutions with defined powers and
functions in the comprehensive compact. A period of transition shall be established in a comprehensive
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peace compact specifying the relationship between the Central Government and the BJE. (Emphasis
and underscoring supplied)

The nature of the "associative" relationship may have been intended to be defined more precisely in the still to
be forged Comprehensive Compact. Nonetheless, given that there is a concept of "association" in international
law, and the MOA-AD - by its inclusion of international law instruments in its TOR- placed itself in an
international legal context, that concept of association may be brought to bear in understanding the use of the
term "associative" in the MOA-AD.

Keitner and Reisman state that

[a]n association is formed when two states of unequal power voluntarily establish durable links. In the
basic model, one state, the associate, delegates certain responsibilities to the other, the
principal, while maintaining its international status as a state. Free associations represent a
middle ground between integration and independence. x x x150 (Emphasis and underscoring
supplied)

For purposes of illustration, the Republic of the Marshall Islands and the Federated States of Micronesia
(FSM), formerly part of the U.S.-administered Trust Territory of the Pacific Islands, 151 are associated states of
the U.S. pursuant to a Compact of Free Association. The currency in these countries is the U.S. dollar,
indicating their very close ties with the U.S., yet they issue their own travel documents, which is a mark of their
statehood. Their international legal status as states was confirmed by the UN Security Council and by their
admission to UN membership.

According to their compacts of free association, the Marshall Islands and the FSM generally have the capacity
to conduct foreign affairs in their own name and right, such capacity extending to matters such as the law of
the sea, marine resources, trade, banking, postal, civil aviation, and cultural relations. The U.S. government,
when conducting its foreign affairs, is obligated to consult with the governments of the Marshall Islands or the
FSM on matters which it (U.S. government) regards as relating to or affecting either government.

In the event of attacks or threats against the Marshall Islands or the FSM, the U.S. government has the
authority and obligation to defend them as if they were part of U.S. territory. The U.S. government, moreover,
has the option of establishing and using military areas and facilities within these associated states and has the
right to bar the military personnel of any third country from having access to these territories for military
purposes.

It bears noting that in U.S. constitutional and international practice, free association is understood as an
international association between sovereigns. The Compact of Free Association is a treaty which is
subordinate to the associated nation's national constitution, and each party may terminate the association
consistent with the right of independence. It has been said that, with the admission of the U.S.-associated
states to the UN in 1990, the UN recognized that the American model of free association is actually based on
an underlying status of independence.152

In international practice, the "associated state" arrangement has usually been used as a transitional device of
former colonies on their way to full independence. Examples of states that have passed through the status of
associated states as a transitional phase are Antigua, St. Kitts-Nevis-Anguilla, Dominica, St. Lucia, St. Vincent
and Grenada. All have since become independent states.153

Back to the MOA-AD, it contains many provisions which are consistent with the international legal concept
of association, specifically the following: the BJE's capacity to enter into economic and trade relations with
foreign countries, the commitment of the Central Government to ensure the BJE's participation in meetings and
events in the ASEAN and the specialized UN agencies, and the continuing responsibility of the Central
Government over external defense. Moreover, the BJE's right to participate in Philippine official missions
 Page 10 of 129

bearing on negotiation of border agreements, environmental protection, and sharing of revenues pertaining to
the bodies of water adjacent to or between the islands forming part of the ancestral domain, resembles the
right of the governments of FSM and the Marshall Islands to be consulted by the U.S. government on any
foreign affairs matter affecting them.

These provisions of the MOA indicate, among other things, that the Parties aimed to vest in the BJE the
status of an associated state or, at any rate, a status closely approximating it.

The concept of association is not recognized under the present Constitution

No province, city, or municipality, not even the ARMM, is recognized under our laws as having an "associative"
relationship with the national government. Indeed, the concept implies powers that go beyond anything ever
granted by the Constitution to any local or regional government. It also implies the recognition of
the associated entity as a state. The Constitution, however, does not contemplate any state in this jurisdiction
other than the Philippine State, much less does it provide for a transitory status that aims to prepare any part of
Philippine territory for independence.

Even the mere concept animating many of the MOA-AD's provisions, therefore, already requires for its validity
the amendment of constitutional provisions, specifically the following provisions of Article X:

SECTION 1. The territorial and political subdivisions of the Republic of the Philippines are
the provinces, cities, municipalities, and barangays. There shall be autonomous regions in
Muslim Mindanao and the Cordilleras as hereinafter provided.

SECTION 15. There shall be created autonomous regions in Muslim Mindanao and in the Cordilleras
consisting of provinces, cities, municipalities, and geographical areas sharing common and distinctive
historical and cultural heritage, economic and social structures, and other relevant
characteristics within the framework of this Constitution and the national sovereignty as well as
territorial integrity of the Republic of the Philippines.

The BJE is a far more powerful

entity than the autonomous region
recognized in the Constitution

It is not merely an expanded version of the ARMM, the status of its relationship with the national government
being fundamentally different from that of the ARMM. Indeed, BJE is a state in all but name as it meets the
criteria of a state laid down in the Montevideo Convention,154 namely, a permanent population, a defined
territory, a government, and a capacity to enter into relations with other states.

Even assuming arguendo that the MOA-AD would not necessarily sever any portion of Philippine territory, the
spirit animating it - which has betrayed itself by its use of the concept of association - runs counter to the
national sovereignty and territorial integrity of the Republic.

The defining concept underlying the relationship between the national government and the BJE being
itself contrary to the present Constitution, it is not surprising that many of the specific provisions of
the MOA-AD on the formation and powers of the BJE are in conflict with the Constitution and the laws.

Article X, Section 18 of the Constitution provides that "[t]he creation of the autonomous region shall be
effective when approved by a majority of the votes cast by the constituent units in a plebiscite called for the
purpose, provided that only provinces, cities, and geographic areas voting favorably in such plebiscite
shall be included in the autonomous region." (Emphasis supplied)
 Page 11 of 129

As reflected above, the BJE is more of a state than an autonomous region. But even assuming that it is
covered by the term "autonomous region" in the constitutional provision just quoted, the MOA-AD would still be
in conflict with it. Under paragraph 2(c) on TERRITORY in relation to 2(d) and 2(e), the present geographic
area of the ARMM and, in addition, the municipalities of Lanao del Norte which voted for inclusion in the
ARMM during the 2001 plebiscite - Baloi, Munai, Nunungan, Pantar, Tagoloan and Tangkal - are automatically
part of the BJE without need of another plebiscite, in contrast to the areas under Categories A and B
mentioned earlier in the overview. That the present components of the ARMM and the above-mentioned
municipalities voted for inclusion therein in 2001, however, does not render another plebiscite unnecessary
under the Constitution, precisely because what these areas voted for then was their inclusion in the
ARMM, not the BJE.

The MOA-AD, moreover, would not

comply with Article X, Section 20 of
the Constitution

since that provision defines the powers of autonomous regions as follows:

SECTION 20. Within its territorial jurisdiction and subject to the provisions of this Constitution and
national laws, the organic act of autonomous regions shall provide for legislative powers over:

(1) Administrative organization;

(2) Creation of sources of revenues;

(3) Ancestral domain and natural resources;

(4) Personal, family, and property relations;

(5) Regional urban and rural planning development;

(6) Economic, social, and tourism development;

(7) Educational policies;

(8) Preservation and development of the cultural heritage; and

(9) Such other matters as may be authorized by law for the promotion of the general welfare of the
people of the region. (Underscoring supplied)

Again on the premise that the BJE may be regarded as an autonomous region, the MOA-AD would require an
amendment that would expand the above-quoted provision. The mere passage of new legislation pursuant to
sub-paragraph No. 9 of said constitutional provision would not suffice, since any new law that might vest in the
BJE the powers found in the MOA-AD must, itself, comply with other provisions of the Constitution. It would not
do, for instance, to merely pass legislation vesting the BJE with treaty-making power in order to accommodate
paragraph 4 of the strand on RESOURCES which states: "The BJE is free to enter into any economic
cooperation and trade relations with foreign countries: provided, however, that such relationships and
understandings do not include aggression against the Government of the Republic of the Philippines x x x."
Under our constitutional system, it is only the President who has that power. Pimentel v. Executive
Secretary155 instructs:

In our system of government, the President, being the head of state, is regarded as the sole
organ and authority in external relations and is the country's sole representative with foreign
nations. As the chief architect of foreign policy, the President acts as the country's mouthpiece with
 Page 12 of 129

respect to international affairs. Hence, the President is vested with the authority to deal with foreign
states and governments, extend or withhold recognition, maintain diplomatic relations, enter into
treaties, and otherwise transact the business of foreign relations. In the realm of treaty-making,
the President has the sole authority to negotiate with other states.  (Emphasis and underscoring
supplied)

Article II, Section 22 of the Constitution must also be amended if the scheme envisioned in the MOA-
AD is to be effected. That constitutional provision states: "The State recognizes and promotes the rights
of indigenous cultural communities within the framework of national unity and development." (Underscoring
supplied) An associative arrangement does not uphold national unity. While there may be a semblance of unity
because of the associative ties between the BJE and the national government, the act of placing a portion of
Philippine territory in a status which, in international practice, has generally been a preparation for
independence, is certainly not conducive to national unity.

Besides being irreconcilable with the Constitution, the MOA-AD is also inconsistent with prevailing statutory
law, among which are R.A. No. 9054156 or the Organic Act of the ARMM, and the IPRA.157

Article X, Section 3 of the Organic Act of the ARMM is a bar to the adoption of the definition of
"Bangsamoro people" used in the MOA-AD. Paragraph 1 on Concepts and Principles states:

1. It is the birthright of all Moros and all Indigenous peoples of Mindanao to identify themselves
and be accepted as "Bangsamoros". The Bangsamoro people refers to those who are natives or
original inhabitants of Mindanao and its adjacent islands including Palawan and the Sulu
archipelago at the time of conquest or colonization of its descendants whether mixed or of full blood.
Spouses and their descendants are classified as Bangsamoro. The freedom of choice of the
Indigenous people shall be respected. (Emphasis and underscoring supplied)

This use of the term Bangsamoro sharply contrasts with that found in the Article X, Section 3 of the Organic
Act, which, rather than lumping together the identities of the Bangsamoro and other indigenous peoples living
in Mindanao, clearly distinguishes between Bangsamoro people and Tribal peoples, as follows:

"As used in this Organic Act, the phrase "indigenous cultural community" refers to Filipino citizens
residing in the autonomous region who are:

(a) Tribal peoples. These are citizens whose social, cultural and economic conditions distinguish them
from other sectors of the national community; and

(b) Bangsa Moro people. These are citizens who are believers in Islam and who have retained
some or all of their own social, economic, cultural, and political institutions."

Respecting the IPRA, it lays down the prevailing procedure for the delineation and recognition of ancestral
domains. The MOA-AD's manner of delineating the ancestral domain of the Bangsamoro people is a clear
departure from that procedure. By paragraph 1 of Territory, the Parties simply agree that, subject to the
delimitations in the agreed Schedules, "[t]he Bangsamoro homeland and historic territory refer to the land
mass as well as the maritime, terrestrial, fluvial and alluvial domains, and the aerial domain, the atmospheric
space above it, embracing the Mindanao-Sulu-Palawan geographic region."

Chapter VIII of the IPRA, on the other hand, lays down a detailed procedure, as illustrated in the following
provisions thereof:

SECTION 52. Delineation Process. - The identification and delineation of ancestral domains shall be
done in accordance with the following procedures:
 Page 13 of 129

xxxx

b) Petition for Delineation. - The process of delineating a specific perimeter may be initiated by the
NCIP with the consent of the ICC/IP concerned, or through a Petition for Delineation filed with the
NCIP, by a majority of the members of the ICCs/IPs;

c) Delineation Proper. - The official delineation of ancestral domain boundaries including census of all
community members therein, shall be immediately undertaken by the Ancestral Domains Office upon
filing of the application by the ICCs/IPs concerned. Delineation will be done in coordination with the
community concerned and shall at all times include genuine involvement and participation by the
members of the communities concerned;

d) Proof Required. - Proof of Ancestral Domain Claims shall include the testimony of elders or
community under oath, and other documents directly or indirectly attesting to the possession or
occupation of the area since time immemorial by such ICCs/IPs in the concept of owners which shall be
any one (1) of the following authentic documents:

1) Written accounts of the ICCs/IPs customs and traditions;

2) Written accounts of the ICCs/IPs political structure and institution;

3) Pictures showing long term occupation such as those of old improvements, burial grounds,
sacred places and old villages;

4) Historical accounts, including pacts and agreements concerning boundaries entered into by
the ICCs/IPs concerned with other ICCs/IPs;

5) Survey plans and sketch maps;

6) Anthropological data;

7) Genealogical surveys;

8) Pictures and descriptive histories of traditional communal forests and hunting grounds;

9) Pictures and descriptive histories of traditional landmarks such as mountains, rivers, creeks,
ridges, hills, terraces and the like; and

10) Write-ups of names and places derived from the native dialect of the community.

e) Preparation of Maps. - On the basis of such investigation and the findings of fact based thereon, the
Ancestral Domains Office of the NCIP shall prepare a perimeter map, complete with technical
descriptions, and a description of the natural features and landmarks embraced therein;

f) Report of Investigation and Other Documents. - A complete copy of the preliminary census and a
report of investigation, shall be prepared by the Ancestral Domains Office of the NCIP;

g) Notice and Publication. - A copy of each document, including a translation in the native language of
the ICCs/IPs concerned shall be posted in a prominent place therein for at least fifteen (15) days. A
copy of the document shall also be posted at the local, provincial and regional offices of the NCIP, and
shall be published in a newspaper of general circulation once a week for two (2) consecutive weeks to
allow other claimants to file opposition thereto within fifteen (15) days from date of such publication:
Provided, That in areas where no such newspaper exists, broadcasting in a radio station will be a valid
 Page 14 of 129

substitute: Provided, further, That mere posting shall be deemed sufficient if both newspaper and radio
station are not available;

h) Endorsement to NCIP. - Within fifteen (15) days from publication, and of the inspection process, the
Ancestral Domains Office shall prepare a report to the NCIP endorsing a favorable action upon a claim
that is deemed to have sufficient proof. However, if the proof is deemed insufficient, the Ancestral
Domains Office shall require the submission of additional evidence: Provided, That the Ancestral
Domains Office shall reject any claim that is deemed patently false or fraudulent after inspection and
verification: Provided, further, That in case of rejection, the Ancestral Domains Office shall give the
applicant due notice, copy furnished all concerned, containing the grounds for denial. The denial shall
be appealable to the NCIP: Provided, furthermore, That in cases where there are conflicting claims
among ICCs/IPs on the boundaries of ancestral domain claims, the Ancestral Domains Office shall
cause the contending parties to meet and assist them in coming up with a preliminary resolution of the
conflict, without prejudice to its full adjudication according to the section below.

xxxx

To remove all doubts about the irreconcilability of the MOA-AD with the present legal system, a discussion of
not only the Constitution and domestic statutes, but also of international law is in order, for

Article II, Section 2 of the Constitution states that the Philippines "adopts the generally accepted
principles of international law as part of the law of the land."

Applying this provision of the Constitution, the Court, in Mejoff v. Director of Prisons,158 held that the Universal
Declaration of Human Rights is part of the law of the land on account of which it ordered the release on bail of
a detained alien of Russian descent whose deportation order had not been executed even after two years.
Similarly, the Court in Agustin v. Edu159 applied the aforesaid constitutional provision to the 1968 Vienna
Convention on Road Signs and Signals.

International law has long recognized the right to self-determination of "peoples," understood not merely as the
entire population of a State but also a portion thereof. In considering the question of whether the people of
Quebec had a right to unilaterally secede from Canada, the Canadian Supreme Court in REFERENCE RE
SECESSION OF QUEBEC160 had occasion to acknowledge that "the right of a people to self-determination is
now so widely recognized in international conventions that the principle has acquired a status beyond
‘convention' and is considered a general principle of international law."

Among the conventions referred to are the International Covenant on Civil and Political Rights 161 and the
International Covenant on Economic, Social and Cultural Rights162 which state, in Article 1 of both covenants,
that all peoples, by virtue of the right of self-determination, "freely determine their political status and freely
pursue their economic, social, and cultural development."

The people's right to self-determination should not, however, be understood as extending to a unilateral right of
secession. A distinction should be made between the right of internal and external self-determination.
REFERENCE RE SECESSION OF QUEBEC is again instructive:

"(ii) Scope of the Right to Self-determination

126. The recognized sources of international law establish that the right to self-determination of a
people is normally fulfilled through internal self-determination - a people's pursuit of its
political, economic, social and cultural development within the framework of an existing state.  A
right to external self-determination (which in this case potentially takes the form of the assertion
of a right to unilateral secession) arises in only the most extreme of cases and, even then, under
carefully defined circumstances. x x x
 Page 15 of 129

External self-determination can be defined as in the following statement from the Declaration on

Friendly Relations, supra, as

The establishment of a sovereign and independent State, the free association or integration with
an independent State or the emergence into any other political status freely determined by
a people constitute modes of implementing the right of self-determination by that people. (Emphasis
added)

127. The international law principle of self-determination has evolved within a framework of

respect for the territorial integrity of existing states. The various international documents that
support the existence of a people's right to self-determination also contain parallel statements
supportive of the conclusion that the exercise of such a right must be sufficiently limited to prevent
threats to an existing state's territorial integrity or the stability of relations between sovereign states.

x x x x (Emphasis, italics and underscoring supplied)

The Canadian Court went on to discuss the exceptional cases in which the right to external self-determination
can arise, namely, where a people is under colonial rule, is subject to foreign domination or exploitation outside
a colonial context, and - less definitely but asserted by a number of commentators - is blocked from the
meaningful exercise of its right to internal self-determination. The Court ultimately held that the population of
Quebec had no right to secession, as the same is not under colonial rule or foreign domination, nor is it being
deprived of the freedom to make political choices and pursue economic, social and cultural development, citing
that Quebec is equitably represented in legislative, executive and judicial institutions within Canada, even
occupying prominent positions therein.

The exceptional nature of the right of secession is further exemplified in the REPORT OF THE
INTERNATIONAL COMMITTEE OF JURISTS ON THE LEGAL ASPECTS OF THE AALAND ISLANDS
QUESTION.163 There, Sweden presented to the Council of the League of Nations the question of whether the
inhabitants of the Aaland Islands should be authorized to determine by plebiscite if the archipelago should
remain under Finnish sovereignty or be incorporated in the kingdom of Sweden. The Council, before resolving
the question, appointed an International Committee composed of three jurists to submit an opinion on the
preliminary issue of whether the dispute should, based on international law, be entirely left to the domestic
jurisdiction of Finland. The Committee stated the rule as follows:

x x x [I]n the absence of express provisions in international treaties, the right of disposing of national
territory is essentially an attribute of the sovereignty of every State. Positive International Law
does not recognize the right of national groups, as such, to separate themselves from the State
of which they form part by the simple expression of a wish, any more than it recognizes the right of
other States to claim such a separation. Generally speaking, the grant or refusal of the right to a
portion of its population of determining its own political fate by plebiscite or by some other
method, is, exclusively, an attribute of the sovereignty of every State which is definitively
constituted. A dispute between two States concerning such a question, under normal conditions
therefore, bears upon a question which International Law leaves entirely to the domestic jurisdiction of
one of the States concerned. Any other solution would amount to an infringement of sovereign rights of
a State and would involve the risk of creating difficulties and a lack of stability which would not only be
contrary to the very idea embodied in term "State," but would also endanger the interests of the
international community. If this right is not possessed by a large or small section of a nation, neither can
it be held by the State to which the national group wishes to be attached, nor by any other State.
(Emphasis and underscoring supplied)

The Committee held that the dispute concerning the Aaland Islands did not refer to a question which is left by
international law to the domestic jurisdiction of Finland, thereby applying the exception rather than the rule
elucidated above. Its ground for departing from the general rule, however, was a very narrow one, namely, the
 Page 16 of 129

Aaland Islands agitation originated at a time when Finland was undergoing drastic political transformation. The
internal situation of Finland was, according to the Committee, so abnormal that, for a considerable time, the
conditions required for the formation of a sovereign State did not exist. In the midst of revolution, anarchy, and
civil war, the legitimacy of the Finnish national government was disputed by a large section of the people, and
it had, in fact, been chased from the capital and forcibly prevented from carrying out its duties. The armed
camps and the police were divided into two opposing forces. In light of these circumstances, Finland was not,
during the relevant time period, a "definitively constituted" sovereign state. The Committee, therefore, found
that Finland did not possess the right to withhold from a portion of its population the option to separate itself - a
right which sovereign nations generally have with respect to their own populations.

Turning now to the more specific category of indigenous peoples, this term has been used, in scholarship as
well as international, regional, and state practices, to refer to groups with distinct cultures, histories, and
connections to land (spiritual and otherwise) that have been forcibly incorporated into a larger governing
society. These groups are regarded as "indigenous" since they are the living descendants of pre-invasion
inhabitants of lands now dominated by others. Otherwise stated, indigenous peoples, nations, or communities
are culturally distinctive groups that find themselves engulfed by settler societies born of the forces of empire
and conquest.164 Examples of groups who have been regarded as indigenous peoples are the Maori of New
Zealand and the aboriginal peoples of Canada.

As with the broader category of "peoples," indigenous peoples situated within states do not have a general
right to independence or secession from those states under international law, 165 but they do have rights
amounting to what was discussed above as the right to internal self-determination.

In a historic development last September 13, 2007, the UN General Assembly adopted the United Nations
Declaration on the Rights of Indigenous Peoples (UN DRIP) through General Assembly Resolution 61/295.
The vote was 143 to 4, the Philippines being included among those in favor, and the four voting against being
Australia, Canada, New Zealand, and the U.S. The Declaration clearly recognized the right of indigenous
peoples to self-determination, encompassing the right to autonomy or self-government, to wit:

Article 3

Indigenous peoples have the right to self-determination. By virtue of that right they freely determine
their political status and freely pursue their economic, social and cultural development.

Article 4

Indigenous peoples, in exercising their right to self-determination, have the right to autonomy or self-

government in matters relating to their internal and local affairs, as well as ways and means for
financing their autonomous functions.

Article 5

Indigenous peoples have the right to maintain and strengthen their distinct political, legal, economic,
social and cultural institutions, while retaining their right to participate fully, if they so choose, in the
political, economic, social and cultural life of the State.

Self-government, as used in international legal discourse pertaining to indigenous peoples, has been
understood as equivalent to "internal self-determination."166 The extent of self-determination provided for in the
UN DRIP is more particularly defined in its subsequent articles, some of which are quoted hereunder:

Article 8
 Page 17 of 129

1. Indigenous peoples and individuals have the right not to be subjected to forced assimilation or
destruction of their culture.

2. States shall provide effective mechanisms for prevention of, and redress for:

(a) Any action which has the aim or effect of depriving them of their integrity as distinct
peoples, or of their cultural values or ethnic identities;

(b) Any action which has the aim or effect of dispossessing them of their lands, territories or
resources;

(c) Any form of forced population transfer which has the aim or effect of violating or
undermining any of their rights;

(d) Any form of forced assimilation or integration;

(e) Any form of propaganda designed to promote or incite racial or ethnic discrimination

directed against them.

Article 21

1. Indigenous peoples have the right, without discrimination, to the improvement of their economic and
social conditions, including, inter alia, in the areas of education, employment, vocational training and
retraining, housing, sanitation, health and social security.

2. States shall take effective measures and, where appropriate, special measures to ensure continuing
improvement of their economic and social conditions. Particular attention shall be paid to the rights and
special needs of indigenous elders, women, youth, children and persons with disabilities.

Article 26

1. Indigenous peoples have the right to the lands, territories and resources which they have
traditionally owned, occupied or otherwise used or acquired.

2. Indigenous peoples have the right to own, use, develop and control the lands, territories and
resources that they possess by reason of traditional ownership or other traditional occupation or use, as
well as those which they have otherwise acquired.

3. States shall give legal recognition and protection to these lands, territories and resources. Such
recognition shall be conducted with due respect to the customs, traditions and land tenure systems of
the indigenous peoples concerned.

Article 30

1. Military activities shall not take place in the lands or territories of indigenous peoples, unless justified
by a relevant public interest or otherwise freely agreed with or requested by the indigenous peoples
concerned.

2. States shall undertake effective consultations with the indigenous peoples concerned, through
appropriate procedures and in particular through their representative institutions, prior to using their
lands or territories for military activities.
 Page 18 of 129

Article 32

1. Indigenous peoples have the right to determine and develop priorities and strategies for the
development or use of their lands or territories and other resources.

2. States shall consult and cooperate in good faith with the indigenous peoples concerned through their
own representative institutions in order to obtain their free and informed consent prior to the approval of
any project affecting their lands or territories and other resources, particularly in connection with the
development, utilization or exploitation of mineral, water or other resources.

3. States shall provide effective mechanisms for just and fair redress for any such activities, and
appropriate measures shall be taken to mitigate adverse environmental, economic, social, cultural or
spiritual impact.

Article 37

1. Indigenous peoples have the right to the recognition, observance and enforcement of treaties,
agreements and other constructive arrangements concluded with States or their successors and to
have States honour and respect such treaties, agreements and other constructive arrangements.

2. Nothing in this Declaration may be interpreted as diminishing or eliminating the rights of indigenous
peoples contained in treaties, agreements and other constructive arrangements.

Article 38

States in consultation and cooperation with indigenous peoples, shall take the appropriate measures,
including legislative measures, to achieve the ends of this Declaration.

Assuming that the UN DRIP, like the Universal Declaration on Human Rights, must now be regarded as
embodying customary international law - a question which the Court need not definitively resolve here - the
obligations enumerated therein do not strictly require the Republic to grant the Bangsamoro people, through
the instrumentality of the BJE, the particular rights and powers provided for in the MOA-AD. Even the more
specific provisions of the UN DRIP are general in scope, allowing for flexibility in its application by the different
States.

There is, for instance, no requirement in the UN DRIP that States now guarantee indigenous peoples their own
police and internal security force. Indeed, Article 8 presupposes that it is the State which will provide protection
for indigenous peoples against acts like the forced dispossession of their lands - a function that is normally
performed by police officers. If the protection of a right so essential to indigenous people's identity is
acknowledged to be the responsibility of the State, then surely the protection of rights less significant to them
as such peoples would also be the duty of States. Nor is there in the UN DRIP an acknowledgement of the
right of indigenous peoples to the aerial domain and atmospheric space. What it upholds, in Article 26 thereof,
is the right of indigenous peoples to the lands, territories and resources which they have traditionally owned,
occupied or otherwise used or acquired.

Moreover, the UN DRIP, while upholding the right of indigenous peoples to autonomy, does not obligate States
to grant indigenous peoples the near-independent status of an associated state. All the rights recognized in
that document are qualified in Article 46 as follows:

1. Nothing in this Declaration may be interpreted as implying for any State, people, group or person
any right to engage in any activity or to perform any act contrary to the Charter of the United Nations
or construed as authorizing or encouraging any action which would dismember or impair, totally
or in part, the territorial integrity or political unity of sovereign and independent States.
 Page 19 of 129

Even if the UN DRIP were considered as part of the law of the land pursuant to Article II, Section 2 of the
Constitution, it would not suffice to uphold the validity of the MOA-AD so as to render its compliance with other
laws unnecessary.

It is, therefore, clear that the MOA-AD contains numerous provisions that cannot be reconciled with the
Constitution and the laws as presently worded. Respondents proffer, however, that the signing of the MOA-
AD alone would not have entailed any violation of law or grave abuse of discretion on their part, precisely
because it stipulates that the provisions thereof inconsistent with the laws shall not take effect until these laws
are amended. They cite paragraph 7 of the MOA-AD strand on GOVERNANCE quoted earlier, but which is
reproduced below for convenience:

7. The Parties agree that the mechanisms and modalities for the actual implementation of this MOA-AD
shall be spelt out in the Comprehensive Compact to mutually take such steps to enable it to occur
effectively.

Any provisions of the MOA-AD requiring amendments to the existing legal framework shall come into
force upon signing of a Comprehensive Compact and upon effecting the necessary changes to the
legal framework with due regard to non derogation of prior agreements and within the stipulated
timeframe to be contained in the Comprehensive Compact.

Indeed, the foregoing stipulation keeps many controversial provisions of the MOA-AD from coming into force
until the necessary changes to the legal framework are effected. While the word "Constitution" is not
mentioned in the provision now under consideration or anywhere else in the MOA-AD, the term "legal
framework" is certainly broad enough to include the Constitution.

Notwithstanding the suspensive clause, however, respondents, by their mere act of incorporating in the MOA-
AD the provisions thereof regarding the associative relationship between the BJE and the Central Government,
have already violated the Memorandum of Instructions From The President dated March 1, 2001, which states
that the "negotiations shall be conducted in accordance with x x x the principles of the sovereignty
and territorial integrity of the Republic of the Philippines." (Emphasis supplied) Establishing an associative
relationship between the BJE and the Central Government is, for the reasons already discussed, a preparation
for independence, or worse, an implicit acknowledgment of an independent status already prevailing.

Even apart from the above-mentioned Memorandum, however, the MOA-AD is defective because the
suspensive clause is invalid, as discussed below.

The authority of the GRP Peace Negotiating Panel to negotiate with the MILF is founded on E.O. No. 3,
Section 5(c), which states that there shall be established Government Peace Negotiating Panels for
negotiations with different rebel groups to be "appointed by the President as her official emissaries to conduct
negotiations, dialogues, and face-to-face discussions with rebel groups." These negotiating panels are to
report to the President, through the PAPP on the conduct and progress of the negotiations.

It bears noting that the GRP Peace Panel, in exploring lasting solutions to the Moro Problem through its
negotiations with the MILF, was not restricted by E.O. No. 3 only to those options available under the laws as
they presently stand. One of the components of a comprehensive peace process, which E.O. No. 3 collectively
refers to as the "Paths to Peace," is the pursuit of social, economic, and political reforms which may require
new legislation or even constitutional amendments. Sec. 4(a) of E.O. No. 3, which reiterates Section 3(a), of
E.O. No. 125,167 states:

SECTION 4. The Six Paths to Peace. - The components of the comprehensive peace process
comprise the processes known as the "Paths to Peace". These component processes are interrelated
and not mutually exclusive, and must therefore be pursued simultaneously in a coordinated and
integrated fashion. They shall include, but may not be limited to, the following:
 Page 20 of 129

a. PURSUIT OF SOCIAL, ECONOMIC AND POLITICAL REFORMS. This component involves

the vigorous implementation of various policies, reforms, programs and projects aimed at
addressing the root causes of internal armed conflicts and social unrest. This may require
administrative action, new legislation or even constitutional amendments.

x x x x (Emphasis supplied)

The MOA-AD, therefore, may reasonably be perceived as an attempt of respondents to address, pursuant to
this provision of E.O. No. 3, the root causes of the armed conflict in Mindanao. The E.O. authorized them to
"think outside the box," so to speak. Hence, they negotiated and were set on signing the MOA-AD that
included various social, economic, and political reforms which cannot, however, all be accommodated within
the present legal framework, and which thus would require new legislation and constitutional amendments.

The inquiry on the legality of the "suspensive clause," however, cannot stop here, because it must be
asked whether the President herself may exercise the power delegated to the GRP Peace Panel under
E.O. No. 3, Sec. 4(a).

The President cannot delegate a power that she herself does not possess. May the President, in the course of
peace negotiations, agree to pursue reforms that would require new legislation and constitutional amendments,
or should the reforms be restricted only to those solutions which the present laws allow? The answer to this
question requires a discussion of the extent of the President's power to conduct peace negotiations.

That the authority of the President to conduct peace negotiations with rebel groups is not explicitly mentioned
in the Constitution does not mean that she has no such authority. In Sanlakas v. Executive Secretary,168 in
issue was the authority of the President to declare a state of rebellion - an authority which is not expressly
provided for in the Constitution. The Court held thus:

"In her ponencia in Marcos v. Manglapus, Justice Cortes put her thesis into jurisprudence. There, the
Court, by a slim 8-7 margin, upheld the President's power to forbid the return of her exiled predecessor.
The rationale for the majority's ruling rested on the President's

. . . unstated residual powers which are implied from the grant of executive power and
which are necessary for her to comply with her duties under the Constitution. The
powers of the President are not limited to what are expressly enumerated in the article on
the Executive Department and in scattered provisions of the Constitution. This is so,
notwithstanding the avowed intent of the members of the Constitutional Commission of 1986 to
limit the powers of the President as a reaction to the abuses under the regime of Mr. Marcos, for
the result was a limitation of specific powers of the President, particularly those relating to the
commander-in-chief clause, but not a diminution of the general grant of executive power.

Thus, the President's authority to declare a state of rebellion springs in the main from her
powers as chief executive and, at the same time, draws strength from her Commander-in-Chief
powers. x x x (Emphasis and underscoring supplied)

Similarly, the President's power to conduct peace negotiations is implicitly included in her powers as Chief
Executive and Commander-in-Chief. As Chief Executive, the President has the general responsibility to
promote public peace, and as Commander-in-Chief, she has the more specific duty to prevent and suppress
rebellion and lawless violence.169

As the experience of nations which have similarly gone through internal armed conflict will show, however,
peace is rarely attained by simply pursuing a military solution. Oftentimes, changes as far-reaching as a
fundamental reconfiguration of the nation's constitutional structure is required. The observations of Dr. Kirsti
Samuels are enlightening, to wit:
 Page 21 of 129

x x x [T]he fact remains that a successful political and governance transition must form the core of any
post-conflict peace-building mission. As we have observed in Liberia and Haiti over the last ten years,
conflict cessation without modification of the political environment, even where state-building is
undertaken through technical electoral assistance and institution- or capacity-building, is unlikely to
succeed. On average, more than 50 percent of states emerging from conflict return to conflict.
Moreover, a substantial proportion of transitions have resulted in weak or limited democracies.

The design of a constitution and its constitution-making process can play an important role in the
political and governance transition. Constitution-making after conflict is an opportunity to create a
common vision of the future of a state and a road map on how to get there. The constitution can be
partly a peace agreement and partly a framework setting up the rules by which the new democracy will
operate.170

In the same vein, Professor Christine Bell, in her article on the nature and legal status of peace agreements,
observed that the typical way that peace agreements establish or confirm mechanisms for demilitarization and
demobilization is by linking them to new constitutional structures addressing governance, elections, and
legal and human rights institutions.171

In the Philippine experience, the link between peace agreements and constitution-making has been recognized
by no less than the framers of the Constitution. Behind the provisions of the Constitution on autonomous
regions172 is the framers' intention to implement a particular peace agreement, namely, the Tripoli Agreement
of 1976 between the GRP and the MNLF, signed by then Undersecretary of National Defense Carmelo Z.
Barbero and then MNLF Chairman Nur Misuari.

MR. ROMULO. There are other speakers; so, although I have some more questions, I will reserve my
right to ask them if they are not covered by the other speakers. I have only two questions.

I heard one of the Commissioners say that local autonomy already exists in the Muslim region; it
is working very well; it has, in fact, diminished a great deal of the problems. So, my question is: since
that already exists, why do we have to go into something new?

MR. OPLE. May I answer that on behalf of Chairman Nolledo. Commissioner Yusup Abubakar is right
that certain definite steps have been taken to implement the provisions of the Tripoli Agreement
with respect to an autonomous region in Mindanao. This is a good first step, but there is no
question that this is merely a partial response to the Tripoli Agreement itself and to the fuller
standard of regional autonomy contemplated in that agreement, and now by state
policy.173(Emphasis supplied)

The constitutional provisions on autonomy and the statutes enacted pursuant to them have, to the credit of
their drafters, been partly successful. Nonetheless, the Filipino people are still faced with the reality of an on-
going conflict between the Government and the MILF. If the President is to be expected to find means for
bringing this conflict to an end and to achieve lasting peace in Mindanao, then she must be given the leeway to
explore, in the course of peace negotiations, solutions that may require changes to the Constitution for their
implementation. Being uniquely vested with the power to conduct peace negotiations with rebel groups, the
President is in a singular position to know the precise nature of their grievances which, if resolved, may bring
an end to hostilities.

The President may not, of course, unilaterally implement the solutions that she considers viable, but she may
not be prevented from submitting them as recommendations to Congress, which could then, if it is minded, act
upon them pursuant to the legal procedures for constitutional amendment and revision. In particular, Congress
would have the option, pursuant to Article XVII, Sections 1 and 3 of the Constitution, to propose the
recommended amendments or revision to the people, call a constitutional convention, or submit to the
electorate the question of calling such a convention.
 Page 22 of 129

While the President does not possess constituent powers - as those powers may be exercised only by
Congress, a Constitutional Convention, or the people through initiative and referendum - she may submit
proposals for constitutional change to Congress in a manner that does not involve the arrogation of constituent
powers.

In Sanidad v. COMELEC,174 in issue was the legality of then President Marcos' act of directly submitting
proposals for constitutional amendments to a referendum, bypassing the interim National Assembly which was
the body vested by the 1973 Constitution with the power to propose such amendments. President Marcos, it
will be recalled, never convened the interim National Assembly. The majority upheld the President's act,
holding that "the urges of absolute necessity" compelled the President as the agent of the people to act as he
did, there being no interim National Assembly to propose constitutional amendments. Against this ruling,
Justices Teehankee and Muñoz Palma vigorously dissented. The Court's concern at present, however, is not
with regard to the point on which it was then divided in that controversial case, but on that which was not
disputed by either side.

Justice Teehankee's dissent,175 in particular, bears noting. While he disagreed that the President may directly
submit proposed constitutional amendments to a referendum, implicit in his opinion is a recognition that he
would have upheld the President's action along with the majority had the President convened the interim
National Assembly and coursed his proposals through it. Thus Justice Teehankee opined:

"Since the Constitution provides for the organization of the essential departments of government,
defines and delimits the powers of each and prescribes the manner of the exercise of such powers, and
the constituent power has not been granted to but has been withheld from the President or Prime
Minister, it follows that the President's questioned decrees proposing and submitting constitutional
amendments directly to the people (without the intervention of the interim National Assembly in
whom the power is expressly vested) are devoid of constitutional and legal basis."176 (Emphasis
supplied)

From the foregoing discussion, the principle may be inferred that the President - in the course of conducting
peace negotiations - may validly consider implementing even those policies that require changes to the
Constitution, but she may not unilaterally implement them without the intervention of Congress, or act in
any way as if the assent of that body were assumed as a certainty.

Since, under the present Constitution, the people also have the power to directly propose amendments through
initiative and referendum, the President may also submit her recommendations to the people, not as a formal
proposal to be voted on in a plebiscite similar to what President Marcos did in Sanidad, but for their
independent consideration of whether these recommendations merit being formally proposed through initiative.

These recommendations, however, may amount to nothing more than the President's suggestions to the
people, for any further involvement in the process of initiative by the Chief Executive may vitiate its character
as a genuine "people's initiative." The only initiative recognized by the Constitution is that which truly proceeds
from the people. As the Court stated in Lambino v. COMELEC:177

"The Lambino Group claims that their initiative is the ‘people's voice.' However, the Lambino Group
unabashedly states in ULAP Resolution No. 2006-02, in the verification of their petition with the
COMELEC, that ‘ULAP maintains its unqualified support to the agenda of Her Excellency President
Gloria Macapagal-Arroyo for constitutional reforms.' The Lambino Group thus admits that their
‘people's' initiative is an ‘unqualified support to the agenda' of the incumbent President to change the
Constitution. This forewarns the Court to be wary of incantations of ‘people's voice' or ‘sovereign will' in
the present initiative."

It will be observed that the President has authority, as stated in her oath of office, 178 only to preserve and
defend the Constitution. Such presidential power does not, however, extend to allowing her to change the
 Page 23 of 129

Constitution, but simply to recommend proposed amendments or revision. As long as she limits herself to
recommending these changes and submits to the proper procedure for constitutional amendments and
revision, her mere recommendation need not be construed as an unconstitutional act.

The foregoing discussion focused on the President's authority to propose constitutional amendments, since

her authority to propose new legislation is not in controversy. It has been an accepted practice for Presidents
in this jurisdiction to propose new legislation. One of the more prominent instances the practice is usually done
is in the yearly State of the Nation Address of the President to Congress. Moreover, the annual general
appropriations bill has always been based on the budget prepared by the President, which - for all intents and
purposes - is a proposal for new legislation coming from the President.179

The "suspensive clause" in the MOA-AD viewed in light of the above-discussed standards

Given the limited nature of the President's authority to propose constitutional amendments, she cannot
guarantee to any third party that the required amendments will eventually be put in place, nor even be
submitted to a plebiscite. The most she could do is submit these proposals as recommendations either to
Congress or the people, in whom constituent powers are vested.

Paragraph 7 on Governance of the MOA-AD states, however, that all provisions thereof which cannot be
reconciled with the present Constitution and laws "shall come into force upon signing of a Comprehensive
Compact and upon effecting the necessary changes to the legal framework." This stipulation does not bear the
marks of a suspensive condition - defined in civil law as a future and uncertain event - but of a term. It is not a
question of whether the necessary changes to the legal framework will be effected, but when. That there is no
uncertainty being contemplated is plain from what follows, for the paragraph goes on to state that the
contemplated changes shall be "with due regard to non derogation of prior agreements and within the
stipulated timeframe to be contained in the Comprehensive Compact."

Pursuant to this stipulation, therefore, it is mandatory for the GRP to effect the changes to the legal framework
contemplated in the MOA-AD - which changes would include constitutional amendments, as discussed earlier.
It bears noting that,

By the time these changes are put in place, the MOA-AD itself would be counted among the "prior
agreements" from which there could be no derogation.

What remains for discussion in the Comprehensive Compact would merely be the implementing details for
these "consensus points" and, notably, the deadline for effecting the contemplated changes to the legal
framework.

Plainly, stipulation-paragraph 7 on GOVERNANCE is inconsistent with the limits of the President's

authority to propose constitutional amendments, it being a virtual guarantee that the Constitution and the
laws of the Republic of the Philippines will certainly be adjusted to conform to all the "consensus points" found
in the MOA-AD. Hence, it must be struck down as unconstitutional.

A comparison between the "suspensive clause" of the MOA-AD with a similar provision appearing in the 1996
final peace agreement between the MNLF and the GRP is most instructive.

As a backdrop, the parties to the 1996 Agreement stipulated that it would be implemented in two
phases. Phase I covered a three-year transitional period involving the putting up of new administrative
structures through Executive Order, such as the Special Zone of Peace and Development (SZOPAD) and the
Southern Philippines Council for Peace and Development (SPCPD), while Phase II covered the establishment
of the new regional autonomous government through amendment or repeal of R.A. No. 6734, which was then
the Organic Act of the ARMM.
 Page 24 of 129

The stipulations on Phase II consisted of specific agreements on the structure of the expanded autonomous
region envisioned by the parties. To that extent, they are similar to the provisions of the MOA-AD. There is,
however, a crucial difference between the two agreements. While the MOA-AD virtually guarantees that the
"necessary changes to the legal framework" will be put in place, the GRP-MNLF final peace agreement
states thus: "Accordingly, these provisions [on Phase II] shall be recommended by the GRP to Congress for
incorporation in the amendatory or repealing law."

Concerns have been raised that the MOA-AD would have given rise to a binding international law obligation on
the part of the Philippines to change its Constitution in conformity thereto, on the ground that it may be
considered either as a binding agreement under international law, or a unilateral declaration of the Philippine
government to the international community that it would grant to the Bangsamoro people all the concessions
therein stated. Neither ground finds sufficient support in international law, however.

The MOA-AD, as earlier mentioned in the overview thereof, would have included foreign dignitaries as
signatories. In addition, representatives of other nations were invited to witness its signing in Kuala Lumpur.
These circumstances readily lead one to surmise that the MOA-AD would have had the status of a binding
international agreement had it been signed. An examination of the prevailing principles in international law,
however, leads to the contrary conclusion.

The Decision on Challenge to Jurisdiction: Lomé Accord Amnesty180 (the Lomé Accord case) of the Special
Court of Sierra Leone is enlightening. The Lomé Accord was a peace agreement signed on July 7, 1999
between the Government of Sierra Leone and the Revolutionary United Front (RUF), a rebel group with which
the Sierra Leone Government had been in armed conflict for around eight years at the time of signing. There
were non-contracting signatories to the agreement, among which were the Government of the Togolese
Republic, the Economic Community of West African States, and the UN.

On January 16, 2002, after a successful negotiation between the UN Secretary-General and the Sierra Leone
Government, another agreement was entered into by the UN and that Government whereby the Special Court
of Sierra Leone was established. The sole purpose of the Special Court, an international court, was to try
persons who bore the greatest responsibility for serious violations of international humanitarian law and Sierra
Leonean law committed in the territory of Sierra Leone since November 30, 1996.

Among the stipulations of the Lomé Accord was a provision for the full pardon of the members of the RUF with
respect to anything done by them in pursuit of their objectives as members of that organization since the
conflict began.

In the Lomé Accord case, the Defence argued that the Accord created an internationally binding obligation
not to prosecute the beneficiaries of the amnesty provided therein, citing, among other things, the participation
of foreign dignitaries and international organizations in the finalization of that agreement. The Special Court,
however, rejected this argument, ruling that the Lome Accord is not a treaty and that it can only create binding
obligations and rights between the parties in municipal law, not in international law. Hence, the Special Court
held, it is ineffective in depriving an international court like it of jurisdiction.

"37. In regard to the nature of a negotiated settlement of an internal armed conflict it is easy to

assume and to argue with some degree of plausibility, as Defence counsel for the defendants
seem to have done, that the mere fact that in addition to the parties to the conflict, the
document formalizing the settlement is signed by foreign heads of state or their representatives
and representatives of international organizations, means the agreement of the parties is
internationalized so as to create obligations in international law.

xxxx
 Page 25 of 129

40. Almost every conflict resolution will involve the parties to the conflict and the mediator or facilitator
of the settlement, or persons or bodies under whose auspices the settlement took place but who are
not at all parties to the conflict, are not contracting parties and who do not claim any obligation from the
contracting parties or incur any obligation from the settlement.

41. In this case, the parties to the conflict are the lawful authority of the State and the RUF which
has no status of statehood and is to all intents and purposes a faction within the state. The non-
contracting signatories of the Lomé Agreement were moral guarantors of the principle that, in
the terms of Article XXXIV of the Agreement, "this peace agreement is implemented with
integrity and in good faith by both parties". The moral guarantors assumed no legal
obligation. It is recalled that the UN by its representative appended, presumably for avoidance of
doubt, an understanding of the extent of the agreement to be implemented as not including certain
international crimes.

42. An international agreement in the nature of a treaty must create rights and obligations regulated by
international law so that a breach of its terms will be a breach determined under international law which
will also provide principle means of enforcement. The Lomé Agreement created neither rights nor
obligations capable of being regulated by international law. An agreement such as the Lomé
Agreement which brings to an end an internal armed conflict no doubt creates a factual
situation of restoration of peace that the international community acting through the Security
Council may take note of. That, however, will not convert it to an international agreement which
creates an obligation enforceable in international, as distinguished from municipal, law. A
breach of the terms of such a peace agreement resulting in resumption of internal armed conflict or
creating a threat to peace in the determination of the Security Council may indicate a reversal of the
factual situation of peace to be visited with possible legal consequences arising from the new situation
of conflict created. Such consequences such as action by the Security Council pursuant to Chapter VII
arise from the situation and not from the agreement, nor from the obligation imposed by it. Such action
cannot be regarded as a remedy for the breach. A peace agreement which settles an internal armed
conflict cannot be ascribed the same status as one which settles an international armed conflict
which, essentially, must be between two or more warring States. The Lomé Agreement cannot
be characterised as an international instrument. x x x" (Emphasis, italics and underscoring
supplied)

Similarly, that the MOA-AD would have been signed by representatives of States and international
organizations not parties to the Agreement would not have sufficed to vest in it a binding character under
international law.

In another vein, concern has been raised that the MOA-AD would amount to a unilateral declaration of the
Philippine State, binding under international law, that it would comply with all the stipulations stated therein,
with the result that it would have to amend its Constitution accordingly regardless of the true will of the people.
Cited as authority for this view is Australia v. France,181 also known as the Nuclear Tests Case, decided by the
International Court of Justice (ICJ).

In the Nuclear Tests Case, Australia challenged before the ICJ the legality of France's nuclear tests in the
South Pacific. France refused to appear in the case, but public statements from its President, and similar
statements from other French officials including its Minister of Defence, that its 1974 series of atmospheric
tests would be its last, persuaded the ICJ to dismiss the case. 182 Those statements, the ICJ held, amounted to
a legal undertaking addressed to the international community, which required no acceptance from other States
for it to become effective.

Essential to the ICJ ruling is its finding that the French government intended to be bound to the international
community in issuing its public statements, viz:
 Page 26 of 129

43. It is well recognized that declarations made by way of unilateral acts, concerning legal or factual
situations, may have the effect of creating legal obligations. Declarations of this kind may be, and often
are, very specific. When it is the intention of the State making the declaration that it should
become bound according to its terms, that intention confers on the declaration the character of
a legal undertaking, the State being thenceforth legally required to follow a course of conduct
consistent with the declaration. An undertaking of this kind, if given publicly, and with an intent to be
bound, even though not made within the context of international negotiations, is binding. In these
circumstances, nothing in the nature of a quid pro quo nor any subsequent acceptance of the
declaration, nor even any reply or reaction from other States, is required for the declaration to take
effect, since such a requirement would be inconsistent with the strictly unilateral nature of the juridical
act by which the pronouncement by the State was made.

44. Of course, not all unilateral acts imply obligation; but a State may choose to take up a certain
position in relation to a particular matter with the intention of being bound-the intention is to be
ascertained by interpretation of the act. When States make statements by which their freedom of
action is to be limited, a restrictive interpretation is called for.

xxxx

51. In announcing that the 1974 series of atmospheric tests would be the last, the French
Government conveyed to the world at large, including the Applicant, its intention effectively to
terminate these tests. It was bound to assume that other States might take note of these
statements and rely on their being effective. The validity of these statements and their legal
consequences must be considered within the general framework of the security of international
intercourse, and the confidence and trust which are so essential in the relations among States. It is
from the actual substance of these statements, and from the circumstances attending their
making, that the legal implications of the unilateral act must be deduced. The objects of these
statements are clear and they were addressed to the international community as a whole, and
the Court holds that they constitute an undertaking possessing legal effect. The Court considers
*270 that the President of the Republic, in deciding upon the effective cessation of atmospheric tests,
gave an undertaking to the international community to which his words were addressed. x x x
(Emphasis and underscoring supplied)

As gathered from the above-quoted ruling of the ICJ, public statements of a state representative may be
construed as a unilateral declaration only when the following conditions are present: the statements were
clearly addressed to the international community, the state intended to be bound to that community by its
statements, and that not to give legal effect to those statements would be detrimental to the security of
international intercourse. Plainly, unilateral declarations arise only in peculiar circumstances.

The limited applicability of the Nuclear Tests Case ruling was recognized in a later case decided by the ICJ
entitled Burkina Faso v. Mali,183 also known as the Case Concerning the Frontier Dispute. The public
declaration subject of that case was a statement made by the President of Mali, in an interview by a foreign
press agency, that Mali would abide by the decision to be issued by a commission of the Organization of
African Unity on a frontier dispute then pending between Mali and Burkina Faso.

Unlike in the Nuclear Tests Case, the ICJ held that the statement of Mali's President was not a unilateral act
with legal implications. It clarified that its ruling in the Nuclear Tests case rested on the peculiar circumstances
surrounding the French declaration subject thereof, to wit:

40. In order to assess the intentions of the author of a unilateral act, account must be taken of all the
factual circumstances in which the act occurred. For example, in the Nuclear Tests cases, the Court
took the view that since the applicant States were not the only ones concerned at the possible
continuance of atmospheric testing by the French Government, that Government's unilateral
 Page 27 of 129

declarations had ‘conveyed to the world at large, including the Applicant, its intention
effectively to terminate these tests‘ (I.C.J. Reports 1974, p. 269, para. 51; p. 474, para. 53). In the
particular circumstances of those cases, the French Government could not express an intention
to be bound otherwise than by unilateral declarations. It is difficult to see how it could have
accepted the terms of a negotiated solution with each of the applicants without thereby
jeopardizing its contention that its conduct was lawful. The circumstances of the present case
are radically different. Here, there was nothing to hinder the Parties from manifesting an
intention to accept the binding character of the conclusions of the Organization of African Unity
Mediation Commission by the normal method: a formal agreement on the basis of
reciprocity. Since no agreement of this kind was concluded between the Parties, the Chamber finds
that there are no grounds to interpret the declaration made by Mali's head of State on 11 April 1975 as
a unilateral act with legal implications in regard to the present case. (Emphasis and underscoring
supplied)

Assessing the MOA-AD in light of the above criteria, it would not have amounted to a unilateral declaration on
the part of the Philippine State to the international community. The Philippine panel did not draft the same with
the clear intention of being bound thereby to the international community as a whole or to any State, but only to
the MILF. While there were States and international organizations involved, one way or another, in the
negotiation and projected signing of the MOA-AD, they participated merely as witnesses or, in the case of
Malaysia, as facilitator. As held in the Lomé Accord case, the mere fact that in addition to the parties to the
conflict, the peace settlement is signed by representatives of states and international organizations
does not mean that the agreement is internationalized so as to create obligations in international law.

Since the commitments in the MOA-AD were not addressed to States, not to give legal effect to such
commitments would not be detrimental to the security of international intercourse - to the trust and confidence
essential in the relations among States.

In one important respect, the circumstances surrounding the MOA-AD are closer to that of Burkina
Faso wherein, as already discussed, the Mali President's statement was not held to be a binding unilateral
declaration by the ICJ. As in that case, there was also nothing to hinder the Philippine panel, had it really been
its intention to be bound to other States, to manifest that intention by formal agreement. Here, that formal
agreement would have come about by the inclusion in the MOA-AD of a clear commitment to be legally bound
to the international community, not just the MILF, and by an equally clear indication that the signatures of the
participating states-representatives would constitute an acceptance of that commitment. Entering into such a
formal agreement would not have resulted in a loss of face for the Philippine government before the
international community, which was one of the difficulties that prevented the French Government from entering
into a formal agreement with other countries. That the Philippine panel did not enter into such a formal
agreement suggests that it had no intention to be bound to the international community. On that ground, the
MOA-AD may not be considered a unilateral declaration under international law.

The MOA-AD not being a document that can bind the Philippines under international law notwithstanding,
respondents' almost consummated act of guaranteeing amendments to the legal framework is, by itself,
sufficient to constitute grave abuse of discretion. The grave abuse lies not in the fact that they considered,
as a solution to the Moro Problem, the creation of a state within a state, but in their brazen willingness
to guarantee that Congress and the sovereign Filipino people would give their imprimatur to their
solution. Upholding such an act would amount to authorizing a usurpation of the constituent powers vested
only in Congress, a Constitutional Convention, or the people themselves through the process of initiative, for
the only way that the Executive can ensure the outcome of the amendment process is through an undue
influence or interference with that process.

The sovereign people may, if it so desired, go to the extent of giving up a portion of its own territory to the
Moros for the sake of peace, for it can change the Constitution in any it wants, so long as the change is not
inconsistent with what, in international law, is known as Jus Cogens.184 Respondents, however, may not
preempt it in that decision.
 Page 28 of 129

SUMMARY

The petitions are ripe for adjudication. The failure of respondents to consult the local government units or
communities affected constitutes a departure by respondents from their mandate under E.O. No. 3. Moreover,
respondents exceeded their authority by the mere act of guaranteeing amendments to the Constitution. Any
alleged violation of the Constitution by any branch of government is a proper matter for judicial review.

As the petitions involve constitutional issues which are of paramount public interest or of transcendental
importance, the Court grants the petitioners, petitioners-in-intervention and intervening respondents the
requisite locus standi in keeping with the liberal stance adopted in David v. Macapagal-Arroyo.

Contrary to the assertion of respondents that the non-signing of the MOA-AD and the eventual dissolution of
the GRP Peace Panel mooted the present petitions, the Court finds that the present petitions provide an
exception to the "moot and academic" principle in view of (a) the grave violation of the Constitution involved;
(b) the exceptional character of the situation and paramount public interest; (c) the need to formulate
controlling principles to guide the bench, the bar, and the public; and (d) the fact that the case is capable of
repetition yet evading review.

The MOA-AD is a significant part of a series of agreements necessary to carry out the GRP-MILF Tripoli
Agreement on Peace signed by the government and the MILF back in June 2001. Hence, the present MOA-AD
can be renegotiated or another one drawn up that could contain similar or significantly dissimilar provisions
compared to the original.

The Court, however, finds that the prayers for mandamus have been rendered moot in view of the
respondents' action in providing the Court and the petitioners with the official copy of the final draft of the MOA-
AD and its annexes.

The people's right to information on matters of public concern under Sec. 7, Article III of the Constitution is
in splendid symmetry with the state policy of full public disclosure of all its transactions involving public interest
under Sec. 28, Article II of the Constitution. The right to information guarantees the right of the people to
demand information, while Section 28 recognizes the duty of officialdom to give information even if nobody
demands. The complete and effective exercise of the right to information necessitates that its complementary
provision on public disclosure derive the same self-executory nature, subject only to reasonable safeguards or
limitations as may be provided by law.

The contents of the MOA-AD is a matter of paramount public concern involving public interest in the highest
order. In declaring that the right to information contemplates steps and negotiations leading to the
consummation of the contract, jurisprudence finds no distinction as to the executory nature or commercial
character of the agreement.

An essential element of these twin freedoms is to keep a continuing dialogue or process of communication
between the government and the people. Corollary to these twin rights is the design for feedback mechanisms.
The right to public consultation was envisioned to be a species of these public rights.

At least three pertinent laws animate these constitutional imperatives and justify the exercise of the people's
right to be consulted on relevant matters relating to the peace agenda.

One, E.O. No. 3 itself is replete with mechanics for continuing consultations on both national and local levels
and for a principal forum for consensus-building. In fact, it is the duty of the Presidential Adviser on the Peace
Process to conduct regular dialogues to seek relevant information, comments, advice, and recommendations
from peace partners and concerned sectors of society.
 Page 29 of 129

Two, Republic Act No. 7160 or the Local Government Code of 1991 requires all national offices to conduct
consultations before any project or program critical to the environment and human ecology including those that
may call for the eviction of a particular group of people residing in such locality, is implemented therein. The
MOA-AD is one peculiar program that unequivocally and unilaterally vests ownership of a vast territory to the
Bangsamoro people, which could pervasively and drastically result to the diaspora or displacement of a great
number of inhabitants from their total environment.

Three, Republic Act No. 8371 or the Indigenous Peoples Rights Act of 1997 provides for clear-cut procedure
for the recognition and delineation of ancestral domain, which entails, among other things, the observance of
the free and prior informed consent of the Indigenous Cultural Communities/Indigenous Peoples. Notably, the
statute does not grant the Executive Department or any government agency the power to delineate and
recognize an ancestral domain claim by mere agreement or compromise.

The invocation of the doctrine of executive privilege as a defense to the general right to information or the
specific right to consultation is untenable. The various explicit legal provisions fly in the face of executive
secrecy. In any event, respondents effectively waived such defense after it unconditionally disclosed the official
copies of the final draft of the MOA-AD, for judicial compliance and public scrutiny.

In sum, the Presidential Adviser on the Peace Process committed grave abuse of discretion when he failed to
carry out the pertinent consultation process, as mandated by E.O. No. 3, Republic Act No. 7160, and Republic
Act No. 8371. The furtive process by which the MOA-AD was designed and crafted runs contrary to and in
excess of the legal authority, and amounts to a whimsical, capricious, oppressive, arbitrary and despotic
exercise thereof. It illustrates a gross evasion of positive duty and a virtual refusal to perform the duty enjoined.

The MOA-AD cannot be reconciled with the present Constitution and laws. Not only its specific provisions but
the very concept underlying them, namely, the associative relationship envisioned between the GRP and the
BJE, are unconstitutional, for the concept presupposes that the associated entity is a state and implies that
the same is on its way to independence.

While there is a clause in the MOA-AD stating that the provisions thereof inconsistent with the present legal
framework will not be effective until that framework is amended, the same does not cure its defect. The
inclusion of provisions in the MOA-AD establishing an associative relationship between the BJE and the
Central Government is, itself, a violation of the Memorandum of Instructions From The President dated March
1, 2001, addressed to the government peace panel. Moreover, as the clause is worded, it virtually guarantees
that the necessary amendments to the Constitution and the laws will eventually be put in place. Neither the
GRP Peace Panel nor the President herself is authorized to make such a guarantee. Upholding such an act
would amount to authorizing a usurpation of the constituent powers vested only in Congress, a Constitutional
Convention, or the people themselves through the process of initiative, for the only way that the Executive can
ensure the outcome of the amendment process is through an undue influence or interference with that
process.

While the MOA-AD would not amount to an international agreement or unilateral declaration binding on the
Philippines under international law, respondents' act of guaranteeing amendments is, by itself, already a
constitutional violation that renders the MOA-AD fatally defective.

WHEREFORE, respondents' motion to dismiss is DENIED. The main and intervening petitions are GIVEN
DUE COURSE and hereby GRANTED.

The Memorandum of Agreement on the Ancestral Domain Aspect of the GRP-MILF Tripoli Agreement on
Peace of 2001 is declared contrary to law and the Constitution.

SO ORDERED.
 Page 30 of 129

NATIONAL TERRITORY

G.R No. 187167               August 16, 2011

PROF. MERLIN M. MAGALLONA, Petitioners,

vs.
HON. EDUARDO ERMITA, IN HIS CAPACITY AS EXECUTIVE SECRETARY, , Respondents.

The Case

This original action for the writs of certiorari and prohibition assails the constitutionality of Republic Act No.
95221 (RA 9522) adjusting the country’s archipelagic baselines and classifying the baseline regime of nearby
territories.

The Antecedents

In 1961, Congress passed Republic Act No. 3046 (RA 3046)2 demarcating the maritime baselines of the
Philippines as an archipelagic State.3 This law followed the framing of the Convention on the Territorial Sea
and the Contiguous Zone in 1958 (UNCLOS I),4 codifying, among others, the sovereign right of States parties
over their "territorial sea," the breadth of which, however, was left undetermined. Attempts to fill this void during
the second round of negotiations in Geneva in 1960 (UNCLOS II) proved futile. Thus, domestically, RA 3046
remained unchanged for nearly five decades, save for legislation passed in 1968 (Republic Act No. 5446 [RA
5446]) correcting typographical errors and reserving the drawing of baselines around Sabah in North Borneo.

In March 2009, Congress amended RA 3046 by enacting RA 9522, the statute now under scrutiny. The
change was prompted by the need to make RA 3046 compliant with the terms of the United Nations
Convention on the Law of the Sea (UNCLOS III),5 which the Philippines ratified on 27 February 1984.6 Among
others, UNCLOS III prescribes the water-land ratio, length, and contour of baselines of archipelagic States like
the Philippines7 and sets the deadline for the filing of application for the extended continental shelf.8 Complying
with these requirements, RA 9522 shortened one baseline, optimized the location of some basepoints around
the Philippine archipelago and classified adjacent territories, namely, the Kalayaan Island Group (KIG) and the
Scarborough Shoal, as "regimes of islands" whose islands generate their own applicable maritime zones.
 Page 31 of 129

Petitioners, professors of law, law students and a legislator, in their respective capacities as "citizens,
taxpayers or x x x legislators,"9 as the case may be, assail the constitutionality of RA 9522 on two principal
grounds, namely: (1) RA 9522 reduces Philippine maritime territory, and logically, the reach of the Philippine
state’s sovereign power, in violation of Article 1 of the 1987 Constitution,10 embodying the terms of the Treaty
of Paris11 and ancillary treaties,12 and (2) RA 9522 opens the country’s waters landward of the baselines to
maritime passage by all vessels and aircrafts, undermining Philippine sovereignty and national security,
contravening the country’s nuclear-free policy, and damaging marine resources, in violation of relevant
constitutional provisions.13

In addition, petitioners contend that RA 9522’s treatment of the KIG as "regime of islands" not only results in
the loss of a large maritime area but also prejudices the livelihood of subsistence fishermen.14 To buttress their
argument of territorial diminution, petitioners facially attack RA 9522 for what it excluded and included – its
failure to reference either the Treaty of Paris or Sabah and its use of UNCLOS III’s framework of regime of
islands to determine the maritime zones of the KIG and the Scarborough Shoal.

Commenting on the petition, respondent officials raised threshold issues questioning (1) the petition’s
compliance with the case or controversy requirement for judicial review grounded on petitioners’ alleged lack
of locus standi and (2) the propriety of the writs of certiorari and prohibition to assail the constitutionality of RA
9522. On the merits, respondents defended RA 9522 as the country’s compliance with the terms of UNCLOS
III, preserving Philippine territory over the KIG or Scarborough Shoal. Respondents add that RA 9522 does not
undermine the country’s security, environment and economic interests or relinquish the Philippines’ claim over
Sabah.

Respondents also question the normative force, under international law, of petitioners’ assertion that what
Spain ceded to the United States under the Treaty of Paris were the islands and all the waters found within the
boundaries of the rectangular area drawn under the Treaty of Paris.

We left unacted petitioners’ prayer for an injunctive writ.

The Issues

The petition raises the following issues:

1. Preliminarily –

1. Whether petitioners possess locus standi to bring this suit; and

2. Whether the writs of certiorari and prohibition are the proper remedies to assail the
constitutionality of RA 9522.

2. On the merits, whether RA 9522 is unconstitutional.

The Ruling of the Court

On the threshold issues, we hold that (1) petitioners possess locus standi to bring this suit as citizens and (2)
the writs of certiorari and prohibition are proper remedies to test the constitutionality of RA 9522. On the merits,
we find no basis to declare RA 9522 unconstitutional.

RA 9522 is Not Unconstitutional

RA 9522 is a Statutory Tool
to Demarcate the Country’s
Maritime Zones and Continental
 Page 32 of 129

Shelf Under UNCLOS III, not to

Delineate Philippine Territory

Petitioners submit that RA 9522 "dismembers a large portion of the national territory"21 because it discards the
pre-UNCLOS III demarcation of Philippine territory under the Treaty of Paris and related treaties, successively
encoded in the definition of national territory under the 1935, 1973 and 1987 Constitutions. Petitioners theorize
that this constitutional definition trumps any treaty or statutory provision denying the Philippines sovereign
control over waters, beyond the territorial sea recognized at the time of the Treaty of Paris, that Spain
supposedly ceded to the United States. Petitioners argue that from the Treaty of Paris’ technical description,
Philippine sovereignty over territorial waters extends hundreds of nautical miles around the Philippine
archipelago, embracing the rectangular area delineated in the Treaty of Paris.22

Petitioners’ theory fails to persuade us.

UNCLOS III has nothing to do with the acquisition (or loss) of territory. It is a multilateral treaty regulating,
among others, sea-use rights over maritime zones (i.e., the territorial waters [12 nautical miles from the
baselines], contiguous zone [24 nautical miles from the baselines], exclusive economic zone [200 nautical
miles from the baselines]), and continental shelves that UNCLOS III delimits.23 UNCLOS III was the
culmination of decades-long negotiations among United Nations members to codify norms regulating the
conduct of States in the world’s oceans and submarine areas, recognizing coastal and archipelagic States’
graduated authority over a limited span of waters and submarine lands along their coasts.

On the other hand, baselines laws such as RA 9522 are enacted by UNCLOS III States parties to mark-out
specific basepoints along their coasts from which baselines are drawn, either straight or contoured, to serve as
geographic starting points to measure the breadth of the maritime zones and continental shelf. Article 48 of
UNCLOS III on archipelagic States like ours could not be any clearer:

Article 48. Measurement of the breadth of the territorial sea, the contiguous zone, the exclusive economic zone
and the continental shelf. – The breadth of the territorial sea, the contiguous zone, the exclusive economic
zone and the continental shelf shall be measured from archipelagic baselines drawn in accordance with
article 47. (Emphasis supplied)

Thus, baselines laws are nothing but statutory mechanisms for UNCLOS III States parties to delimit with
precision the extent of their maritime zones and continental shelves. In turn, this gives notice to the rest of the
international community of the scope of the maritime space and submarine areas within which States parties
exercise treaty-based rights, namely, the exercise of sovereignty over territorial waters (Article 2), the
jurisdiction to enforce customs, fiscal, immigration, and sanitation laws in the contiguous zone (Article 33), and
the right to exploit the living and non-living resources in the exclusive economic zone (Article 56) and
continental shelf (Article 77).

Even under petitioners’ theory that the Philippine territory embraces the islands and all the waters within the
rectangular area delimited in the Treaty of Paris, the baselines of the Philippines would still have to be drawn in
accordance with RA 9522 because this is the only way to draw the baselines in conformity with UNCLOS III.
The baselines cannot be drawn from the boundaries or other portions of the rectangular area delineated in the
Treaty of Paris, but from the "outermost islands and drying reefs of the archipelago."24

UNCLOS III and its ancillary baselines laws play no role in the acquisition, enlargement or, as petitioners claim,
diminution of territory. Under traditional international law typology, States acquire (or conversely, lose) territory
through occupation, accretion, cession and prescription,25 not by executing multilateral treaties on the
regulations of sea-use rights or enacting statutes to comply with the treaty’s terms to delimit maritime zones
and continental shelves. Territorial claims to land features are outside UNCLOS III, and are instead governed
by the rules on general international law.26
 Page 33 of 129

RA 9522’s Use of the Framework

of Regime of Islands to Determine the
Maritime Zones of the KIG and the
Scarborough Shoal, not Inconsistent
with the Philippines’ Claim of Sovereignty
Over these Areas

Petitioners next submit that RA 9522’s use of UNCLOS III’s regime of islands framework to draw the baselines,
and to measure the breadth of the applicable maritime zones of the KIG, "weakens our territorial claim" over
that area.27 Petitioners add that the KIG’s (and Scarborough Shoal’s) exclusion from the Philippine archipelagic
baselines results in the loss of "about 15,000 square nautical miles of territorial waters," prejudicing the
livelihood of subsistence fishermen.28 A comparison of the configuration of the baselines drawn under RA 3046
and RA 9522 and the extent of maritime space encompassed by each law, coupled with a reading of the text of
RA 9522 and its congressional deliberations, vis-à-vis the Philippines’ obligations under UNCLOS III, belie this
view.1avvphi1

The configuration of the baselines drawn under RA 3046 and RA 9522 shows that RA 9522 merely followed
the basepoints mapped by RA 3046, save for at least nine basepoints that RA 9522 skipped to optimize the
location of basepoints and adjust the length of one baseline (and thus comply with UNCLOS III’s limitation on
the maximum length of baselines). Under RA 3046, as under RA 9522, the KIG and the Scarborough Shoal lie
outside of the baselines drawn around the Philippine archipelago. This undeniable cartographic fact takes the
wind out of petitioners’ argument branding RA 9522 as a statutory renunciation of the Philippines’ claim over
the KIG, assuming that baselines are relevant for this purpose.

Petitioners’ assertion of loss of "about 15,000 square nautical miles of territorial waters" under RA 9522 is
similarly unfounded both in fact and law. On the contrary, RA 9522, by optimizing the location of
basepoints, increased the Philippines’ total maritime space (covering its internal waters, territorial sea and
exclusive economic zone) by 145,216 square nautical miles, as shown in the table below:29

Extent of maritime area using

Extent of maritime area using
RA 3046, as amended, taking
RA 9522, taking into account
  into account the Treaty of Paris’
UNCLOS III (in square nautical
delimitation (in square nautical
miles)
miles)

Internal or archipelagic
waters 166,858 171,435
Territorial Sea 274,136 32,106
Exclusive Economic Zone   382,669
TOTAL 440,994 586,210

Thus, as the map below shows, the reach of the exclusive economic zone drawn under RA 9522 even extends
way beyond the waters covered by the rectangular demarcation under the Treaty of Paris. Of course, where
there are overlapping exclusive economic zones of opposite or adjacent States, there will have to be a
delineation of maritime boundaries in accordance with UNCLOS III.30
 Page 34 of 129

Further, petitioners’ argument that the KIG now lies outside Philippine territory because the baselines that RA
9522 draws do not enclose the KIG is negated by RA 9522 itself. Section 2 of the law commits to text the
Philippines’ continued claim of sovereignty and jurisdiction over the KIG and the Scarborough Shoal:

SEC. 2. The baselines in the following areas over which the Philippines likewise exercises sovereignty
and jurisdiction shall be determined as "Regime of Islands" under the Republic of the Philippines consistent
with Article 121 of the United Nations Convention on the Law of the Sea (UNCLOS):

a) The Kalayaan Island Group as constituted under Presidential Decree No. 1596 and

b) Bajo de Masinloc, also known as Scarborough Shoal. (Emphasis supplied)

Had Congress in RA 9522 enclosed the KIG and the Scarborough Shoal as part of the Philippine archipelago,
adverse legal effects would have ensued. The Philippines would have committed a breach of two provisions of
UNCLOS III. First, Article 47 (3) of UNCLOS III requires that "[t]he drawing of such baselines shall not depart
to any appreciable extent from the general configuration of the archipelago." Second, Article 47 (2) of UNCLOS
III requires that "the length of the baselines shall not exceed 100 nautical miles," save for three per cent (3%)
of the total number of baselines which can reach up to 125 nautical miles.31

Although the Philippines has consistently claimed sovereignty over the KIG32 and the Scarborough Shoal for
several decades, these outlying areas are located at an appreciable distance from the nearest shoreline of the
Philippine archipelago,33 such that any straight baseline loped around them from the nearest basepoint will
inevitably "depart to an appreciable extent from the general configuration of the archipelago."
 Page 35 of 129

The principal sponsor of RA 9522 in the Senate, Senator Miriam Defensor-Santiago, took pains to emphasize
the foregoing during the Senate deliberations:

What we call the Kalayaan Island Group or what the rest of the world call[] the Spratlys and the Scarborough
Shoal are outside our archipelagic baseline because if we put them inside our baselines we might be accused
of violating the provision of international law which states: "The drawing of such baseline shall not depart to
any appreciable extent from the general configuration of the archipelago." So sa loob ng ating baseline, dapat
magkalapit ang mga islands. Dahil malayo ang Scarborough Shoal, hindi natin masasabing malapit sila sa atin
although we are still allowed by international law to claim them as our own.

This is called contested islands outside our configuration. We see that our archipelago is defined by the orange
line which [we] call[] archipelagic baseline. Ngayon, tingnan ninyo ang maliit na circle doon sa itaas, that is
Scarborough Shoal, itong malaking circle sa ibaba, that is Kalayaan Group or the Spratlys. Malayo na sila sa
ating archipelago kaya kung ilihis pa natin ang dating archipelagic baselines para lamang masama itong
dalawang circles, hindi na sila magkalapit at baka hindi na tatanggapin ng United Nations because of the rule
that it should follow the natural configuration of the archipelago.34 (Emphasis supplied)

Similarly, the length of one baseline that RA 3046 drew exceeded UNCLOS III’s limits.1avvphi1 The need to
shorten this baseline, and in addition, to optimize the location of basepoints using current maps, became
imperative as discussed by respondents:

[T]he amendment of the baselines law was necessary to enable the Philippines to draw the outer limits of its
maritime zones including the extended continental shelf in the manner provided by Article 47 of [UNCLOS III].
As defined by R.A. 3046, as amended by R.A. 5446, the baselines suffer from some technical deficiencies, to
wit:

1. The length of the baseline across Moro Gulf (from Middle of 3 Rock Awash to Tongquil Point) is
140.06 nautical miles x x x. This exceeds the maximum length allowed under Article 47(2) of the
[UNCLOS III], which states that "The length of such baselines shall not exceed 100 nautical miles,
except that up to 3 per cent of the total number of baselines enclosing any archipelago may exceed that
length, up to a maximum length of 125 nautical miles."

2. The selection of basepoints is not optimal. At least 9 basepoints can be skipped or deleted from the
baselines system. This will enclose an additional 2,195 nautical miles of water.

3. Finally, the basepoints were drawn from maps existing in 1968, and not established by geodetic
survey methods. Accordingly, some of the points, particularly along the west coasts of Luzon down to
Palawan were later found to be located either inland or on water, not on low-water line and drying reefs
as prescribed by Article 47.35

Hence, far from surrendering the Philippines’ claim over the KIG and the Scarborough Shoal, Congress’
decision to classify the KIG and the Scarborough Shoal as "‘Regime[s] of Islands’ under the Republic of the
Philippines consistent with Article 121"36 of UNCLOS III manifests the Philippine State’s responsible
observance of its pacta sunt servanda obligation under UNCLOS III. Under Article 121 of UNCLOS III, any
"naturally formed area of land, surrounded by water, which is above water at high tide," such as portions of the
KIG, qualifies under the category of "regime of islands," whose islands generate their own applicable maritime
zones.37

Statutory Claim Over Sabah under

RA 5446 Retained
 Page 36 of 129

Petitioners’ argument for the invalidity of RA 9522 for its failure to textualize the Philippines’ claim over Sabah
in North Borneo is also untenable. Section 2 of RA 5446, which RA 9522 did not repeal, keeps open the door
for drawing the baselines of Sabah:

Section 2. The definition of the baselines of the territorial sea of the Philippine Archipelago as provided in this
Act is without prejudice to the delineation of the baselines of the territorial sea around the territory of
Sabah, situated in North Borneo, over which the Republic of the Philippines has acquired dominion
and sovereignty. (Emphasis supplied)

UNCLOS III and RA 9522 not

Incompatible with the Constitution’s
Delineation of Internal Waters

As their final argument against the validity of RA 9522, petitioners contend that the law unconstitutionally
"converts" internal waters into archipelagic waters, hence subjecting these waters to the right of innocent and
sea lanes passage under UNCLOS III, including overflight. Petitioners extrapolate that these passage rights
indubitably expose Philippine internal waters to nuclear and maritime pollution hazards, in violation of the
Constitution.38

Whether referred to as Philippine "internal waters" under Article I of the Constitution 39 or as "archipelagic
waters" under UNCLOS III (Article 49 [1]), the Philippines exercises sovereignty over the body of water lying
landward of the baselines, including the air space over it and the submarine areas underneath. UNCLOS III
affirms this:

Article 49. Legal status of archipelagic waters, of the air space over archipelagic waters and of their bed and
subsoil. –

1. The sovereignty of an archipelagic State extends to the waters enclosed by the archipelagic

baselines drawn in accordance with article 47, described as archipelagic waters, regardless of their
depth or distance from the coast.

2. This sovereignty extends to the air space over the archipelagic waters, as well as to their bed
and subsoil, and the resources contained therein.

xxxx

4. The regime of archipelagic sea lanes passage established in this Part shall not in other respects
affect the status of the archipelagic waters, including the sea lanes, or the exercise by the
archipelagic State of its sovereignty over such waters and their air space, bed and subsoil, and
the resources contained therein. (Emphasis supplied)

The fact of sovereignty, however, does not preclude the operation of municipal and international law norms
subjecting the territorial sea or archipelagic waters to necessary, if not marginal, burdens in the interest of
maintaining unimpeded, expeditious international navigation, consistent with the international law principle of
freedom of navigation. Thus, domestically, the political branches of the Philippine government, in the
competent discharge of their constitutional powers, may pass legislation designating routes within the
archipelagic waters to regulate innocent and sea lanes passage.40 Indeed, bills drawing nautical highways for
sea lanes passage are now pending in Congress.41

In the absence of municipal legislation, international law norms, now codified in UNCLOS III, operate to grant
innocent passage rights over the territorial sea or archipelagic waters, subject to the treaty’s limitations and
conditions for their exercise.42 Significantly, the right of innocent passage is a customary international
law,43 thus automatically incorporated in the corpus of Philippine law.44 No modern State can validly invoke its
 Page 37 of 129

sovereignty to absolutely forbid innocent passage that is exercised in accordance with customary international
law without risking retaliatory measures from the international community.

The fact that for archipelagic States, their archipelagic waters are subject to both the right of innocent passage
and sea lanes passage45 does not place them in lesser footing vis-à-vis continental coastal States which are
subject, in their territorial sea, to the right of innocent passage and the right of transit passage through
international straits. The imposition of these passage rights through archipelagic waters under UNCLOS III was
a concession by archipelagic States, in exchange for their right to claim all the waters landward of their
baselines, regardless of their depth or distance from the coast, as archipelagic waters subject to their territorial
sovereignty. More importantly, the recognition of archipelagic States’ archipelago and the waters enclosed by
their baselines as one cohesive entity prevents the treatment of their islands as separate islands under
UNCLOS III.46 Separate islands generate their own maritime zones, placing the waters between islands
separated by more than 24 nautical miles beyond the States’ territorial sovereignty, subjecting these waters to
the rights of other States under UNCLOS III.47

Petitioners’ invocation of non-executory constitutional provisions in Article II (Declaration of Principles and

State Policies)48 must also fail. Our present state of jurisprudence considers the provisions in Article II as mere
legislative guides, which, absent enabling legislation, "do not embody judicially enforceable constitutional rights
x x x."49 Article II provisions serve as guides in formulating and interpreting implementing legislation, as well as
in interpreting executory provisions of the Constitution. Although Oposa v. Factoran50 treated the right to a
healthful and balanced ecology under Section 16 of Article II as an exception, the present petition lacks factual
basis to substantiate the claimed constitutional violation. The other provisions petitioners cite, relating to the
protection of marine wealth (Article XII, Section 2, paragraph 251 ) and subsistence fishermen (Article XIII,
Section 752 ), are not violated by RA 9522.

In fact, the demarcation of the baselines enables the Philippines to delimit its exclusive economic zone,
reserving solely to the Philippines the exploitation of all living and non-living resources within such zone. Such
a maritime delineation binds the international community since the delineation is in strict observance of
UNCLOS III. If the maritime delineation is contrary to UNCLOS III, the international community will of course
reject it and will refuse to be bound by it.

UNCLOS III favors States with a long coastline like the Philippines. UNCLOS III creates a sui generis maritime
space – the exclusive economic zone – in waters previously part of the high seas. UNCLOS III grants new
rights to coastal States to exclusively exploit the resources found within this zone up to 200 nautical
miles.53 UNCLOS III, however, preserves the traditional freedom of navigation of other States that attached to
this zone beyond the territorial sea before UNCLOS III.

RA 9522 and the Philippines’ Maritime Zones

Petitioners hold the view that, based on the permissive text of UNCLOS III, Congress was not bound to pass
RA 9522.54 We have looked at the relevant provision of UNCLOS III55 and we find petitioners’ reading plausible.
Nevertheless, the prerogative of choosing this option belongs to Congress, not to this Court. Moreover, the
luxury of choosing this option comes at a very steep price. Absent an UNCLOS III compliant baselines law, an
archipelagic State like the Philippines will find itself devoid of internationally acceptable baselines from where
the breadth of its maritime zones and continental shelf is measured. This is recipe for a two-fronted
disaster: first, it sends an open invitation to the seafaring powers to freely enter and exploit the resources in the
waters and submarine areas around our archipelago; and second, it weakens the country’s case in any
international dispute over Philippine maritime space. These are consequences Congress wisely avoided.

The enactment of UNCLOS III compliant baselines law for the Philippine archipelago and adjacent areas, as
embodied in RA 9522, allows an internationally-recognized delimitation of the breadth of the Philippines’
maritime zones and continental shelf. RA 9522 is therefore a most vital step on the part of the Philippines in
safeguarding its maritime zones, consistent with the Constitution and our national interest.
 Page 38 of 129

WHEREFORE, we DISMISS the petition.

SO ORDERED.

STATE IMMUNITY: BASIS

G.R. No. L-30671 November 28, 1973

REPUBLIC OF THE PHILIPPINES, petitioner,

vs.
HON. GUILLERMO P. VILLASOR, as Judge of the Court of First Instance of Cebu, Branch I, THE
PROVINCIAL SHERIFF OF RIZAL, THE SHERIFF OF QUEZON CITY, and THE SHERIFF OF THE CITY OF
MANILA, THE CLERK OF COURT, Court of First Instance of Cebu, P. J. KIENER CO., LTD., GAVINO
UNCHUAN, AND INTERNATIONAL CONSTRUCTION CORPORATION, respondents.

The Republic of the Philippines in this certiorari and prohibition proceeding challenges the validity of an order
issued by respondent Judge Guillermo P. Villasor, then of the Court of First Instance of Cebu, Branch
I,1 declaring a decision final and executory and of an alias writ of execution directed against the funds of the
Armed Forces of the Philippines subsequently issued in pursuance thereof, the alleged ground being excess of
jurisdiction, or at the very least, grave abuse of discretion. As thus simply and tersely put, with the facts being
undisputed and the principle of law that calls for application indisputable, the outcome is predictable. The
Republic of the Philippines is entitled to the writs prayed for. Respondent Judge ought not to have acted thus.
The order thus impugned and the alias writ of execution must be nullified.

In the petition filed by the Republic of the Philippines on July 7, 1969, a summary of facts was set forth thus:
"7. On July 3, 1961, a decision was rendered in Special Proceedings No. 2156-R in favor of respondents P. J.
Kiener Co., Ltd., Gavino Unchuan, and International Construction Corporation, and against the petitioner
herein, confirming the arbitration award in the amount of P1,712,396.40, subject of Special Proceedings. 8. On
June 24, 1969, respondent Honorable Guillermo P. Villasor, issued an Order declaring the aforestated decision
of July 3, 1961 final and executory, directing the Sheriffs of Rizal Province, Quezon City [as well as] Manila to
execute the said decision. 9. Pursuant to the said Order dated June 24, 1969, the corresponding Alias Writ of
Execution [was issued] dated June 26, 1969, .... 10. On the strength of the afore-mentioned Alias Writ of
Execution dated June 26, 1969, the Provincial Sheriff of Rizal (respondent herein) served notices of
garnishment dated June 28, 1969 with several Banks, specially on the "monies due the Armed Forces of the
Philippines in the form of deposits sufficient to cover the amount mentioned in the said Writ of Execution"; the
Philippine Veterans Bank received the same notice of garnishment on June 30, 1969 .... 11. The funds of the
Armed Forces of the Philippines on deposit with the Banks, particularly, with the Philippine Veterans Bank and
the Philippine National Bank [or] their branches are public funds duly appropriated and allocated for the
payment of pensions of retirees, pay and allowances of military and civilian personnel and for maintenance and
operations of the Armed Forces of the Philippines, as per Certification dated July 3, 1969 by the AFP
Controller,..."2. The paragraph immediately succeeding in such petition then alleged: "12. Respondent Judge,
Honorable Guillermo P. Villasor, acted in excess of jurisdiction [or] with grave abuse of discretion amounting to
lack of jurisdiction in granting the issuance of an alias writ of execution against the properties of the Armed
Forces of the Philippines, hence, the Alias Writ of Execution and notices of garnishment issued pursuant
thereto are null and void."3 In the answer filed by respondents, through counsel Andres T. Velarde and Marcelo
B. Fernan, the facts set forth were admitted with the only qualification being that the total award was in the
amount of P2,372,331.40.4

The Republic of the Philippines, as mentioned at the outset, did right in filing this certiorari and prohibition
proceeding. What was done by respondent Judge is not in conformity with the dictates of the Constitution. .

It is a fundamental postulate of constitutionalism flowing from the juristic concept of sovereignty that the state
as well as its government is immune from suit unless it gives its consent. It is readily understandable why it
 Page 39 of 129

must be so. In the classic formulation of Holmes: "A sovereign is exempt from suit, not because of any formal
conception or obsolete theory, but on the logical and practical ground that there can be no legal right as
against the authority that makes the law on which the right depends." 5 Sociological jurisprudence supplies an
answer not dissimilar. So it was indicated in a recent decision, Providence Washington Insurance Co. v.
Republic of the Philippines,6 with its affirmation that "a continued adherence to the doctrine of non-suability is
not to be deplored for as against the inconvenience that may be caused private parties, the loss of
governmental efficiency and the obstacle to the performance of its multifarious functions are far greater if such
a fundamental principle were abandoned and the availability of judicial remedy were not thus restricted. With
the well known propensity on the part of our people to go to court, at the least provocation, the loss of time and
energy required to defend against law suits, in the absence of such a basic principle that constitutes such an
effective obstacle, could very well be imagined."7

This fundamental postulate underlying the 1935 Constitution is now made explicit in the revised charter. It is
therein expressly provided: "The State may not be sued without its consent."8 A corollary, both dictated by logic
and sound sense from a basic concept is that public funds cannot be the object of a garnishment proceeding
even if the consent to be sued had been previously granted and the state liability adjudged. Thus in the recent
case of Commissioner of Public Highways v. San Diego,9 such a well-settled doctrine was restated in the
opinion of Justice Teehankee: "The universal rule that where the State gives its consent to be sued by private
parties either by general or special law, it may limit claimant's action 'only up to the completion of proceedings
anterior to the stage of execution' and that the power of the Courts ends when the judgment is rendered, since
government funds and properties may not be seized under writs of execution or garnishment to satisfy such
judgments, is based on obvious considerations of public policy. Disbursements of public funds must be
covered by the corresponding appropriation as required by law. The functions and public services rendered by
the State cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their legitimate
and specific objects, as appropriated by law." 10 Such a principle applies even to an attempted garnishment of
a salary that had accrued in favor of an employee. Director of Commerce and Industry v.
Concepcion, 11 speaks to that effect. Justice Malcolm as ponente left no doubt on that score. Thus: "A rule
which has never been seriously questioned, is that money in the hands of public officers, although it may be
due government employees, is not liable to the creditors of these employees in the process of garnishment.
One reason is, that the State, by virtue of its sovereignty, may not be sued in its own courts except by express
authorization by the Legislature, and to subject its officers to garnishment would be to permit indirectly what is
prohibited directly. Another reason is that moneys sought to be garnished, as long as they remain in the hands
of the disbursing officer of the Government, belong to the latter, although the defendant in garnishment may be
entitled to a specific portion thereof. And still another reason which covers both of the foregoing is that every
consideration of public policy forbids it." 12

In the light of the above, it is made abundantly clear why the Republic of the Philippines could rightfully allege a
legitimate grievance.

WHEREFORE, the writs of certiorari and prohibition are granted, nullifying and setting aside both the order of
June 24, 1969 declaring executory the decision of July 3, 1961 as well as the alias writ of execution issued
thereunder. The preliminary injunction issued by this Court on July 12, 1969 is hereby made permanent.
 Page 40 of 129

STATE IMMUNITY: TEST TO DETERMINE IF SUIT AGAINST THE STATE

G.R. No. 70853 March 12, 1987

REPUBLIC OF THE PHILIPPINES, petitioner-appellee,

vs.
PABLO FELICIANO and INTERMEDIATE APPELLATE COURT, respondents-appellants.

Petitioner seeks the review of the decision of the Intermediate Appellate Court dated April 30, 1985 reversing
the order of the Court of First Instance of Camarines Sur, Branch VI, dated August 21, 1980, which dismissed
the complaint of respondent Pablo Feliciano for recovery of ownership and possession of a parcel of land on
the ground of non-suability of the State.

The background of the present controversy may be briefly summarized as follows:

On January 22, 1970, respondent Feliciano filed a complaint with the then Court of First Instance of Camarines
Sur against the Republic of the Philippines, represented by the Land Authority, for the recovery of ownership
and possession of a parcel of land, consisting of four (4) lots with an aggregate area of 1,364.4177 hectares,
situated in the Barrio of Salvacion, Municipality of Tinambac, Camarines Sur. Plaintiff alleged that he bought
the property in question from Victor Gardiola by virtue of a Contract of Sale dated May 31, 1952, followed by a
Deed of Absolute Sale on October 30, 1954; that Gardiola had acquired the property by purchase from the
heirs of Francisco Abrazado whose title to the said property was evidenced by an informacion posesoria that
upon plaintiff's purchase of the property, he took actual possession of the same, introduced various
improvements therein and caused it to be surveyed in July 1952, which survey was approved by the Director of
Lands on October 24, 1954; that on November 1, 1954, President Ramon Magsaysay issued Proclamation No.
90 reserving for settlement purposes, under the administration of the National Resettlement and Rehabilitation
Administration (NARRA), a tract of land situated in the Municipalities of Tinambac and Siruma, Camarines Sur,
after which the NARRA and its successor agency, the Land Authority, started sub-dividing and distributing the
land to the settlers; that the property in question, while located within the reservation established under
Proclamation No. 90, was the private property of plaintiff and should therefore be excluded therefrom. Plaintiff
prayed that he be declared the rightful and true owner of the property in question consisting of 1,364.4177
hectares; that his title of ownership based on informacion posesoria of his predecessor-in-interest be declared
legal valid and subsisting and that defendant be ordered to cancel and nullify all awards to the settlers.

The defendant, represented by the Land Authority, filed an answer, raising by way of affirmative defenses lack
of sufficient cause of action and prescription.

On August 29, 1970, the trial court, through Judge Rafael S. Sison, rendered a decision declaring Lot No. 1,
with an area of 701.9064 hectares, to be the private property of the plaintiff, "being covered by a possessory
information title in the name of his predecessor-in-interest" and declaring said lot excluded from the NARRA
settlement reservation. The court declared the rest of the property claimed by plaintiff, i.e. Lots 2, 3 and 4,
reverted to the public domain.

A motion to intervene and to set aside the decision of August 29, 1970 was filed by eighty-six (86) settlers,
together with the barrio council of Pag-asay, alleging among other things that intervenors had been in
possession of the land in question for more than twenty (20) years under claim of ownership.
 Page 41 of 129

On January 25, 1971, the court a quo reconsidered its decision, reopened the case and directed the
intervenors to file their corresponding pleadings and present their evidence; all evidence already presented
were to remain but plaintiff, as well as the Republic of the Philippines, could present additional evidence if they
so desire. The plaintiff presented additional evidence on July 30, 1971, and the case was set for hearing for the
reception of intervenors' evidence on August 30 and August 31, 1971.

On August 30, 1971, the date set for the presentation of the evidence for intervenors, the latter did not appear
but submitted a motion for postponement and resetting of the hearing on the next day, August 31, 1971. The
trial court denied the motion for postponement and allowed plaintiff to offer his evidence "en ausencia," after
which the case would be deemed submitted for decision. On the following day, August 31, 1971, Judge Sison
rendered a decision reiterating his decision of August 29, 1970.

A motion for reconsideration was immediately filed by the intervenors. But before this motion was acted upon,
plaintiff filed a motion for execution, dated November 18, 1971. On December 10, 1971, the lower court, this
time through Judge Miguel Navarro, issued an order denying the motion for execution and setting aside the
order denying intervenors' motion for postponement. The case was reopened to allow intervenors to present
their evidence. Unable to secure a reconsideration of Judge Navarro's order, the plaintiff went to the
Intermediate Appellate Court on a petition for certiorari. Said petition was, however, denied by the Intermediate
Appellate Court, and petitioners brought the matter to this Court in G.R. No. 36163, which was denied on May
3, 1973 Consequently, the case was remanded to the court a quo for further proceedings.

On August 31, 1970, intervenors filed a motion to dismiss, principally on the ground that the Republic of the
Philippines cannot be sued without its consent and hence the action cannot prosper. The motion was opposed
by the plaintiff.

On August 21, 1980, the trial court, through Judge Esteban Lising, issued the questioned order dismissing the
case for lack of jurisdiction. Respondent moved for reconsideration, while the Solicitor General, on behalf of
the Republic of the Philippines filed its opposition thereto, maintaining that the dismissal was proper on the
ground of non-suability of the State and also on the ground that the existence and/or authenticity of the
purported possessory information title of the respondents' predecessor-in-interest had not been demonstrated
and that at any rate, the same is not evidence of title, or if it is, its efficacy has been lost by prescription and
laches.

Upon denial of the motion for reconsideration, plaintiff again went to the Intermediate Appellate Court on
petition for certiorari. On April 30, 1985, the respondent appellate court rendered its decision reversing the
order of Judge Lising and remanding the case to the court a quo for further proceedings. Hence this petition.

We find the petition meritorious. The doctrine of non-suability of the State has proper application in this case.
The plaintiff has impleaded the Republic of the Philippines as defendant in an action for recovery of ownership
and possession of a parcel of land, bringing the State to court just like any private person who is claimed to be
usurping a piece of property. A suit for the recovery of property is not an action in rem, but an action in
personam. 1 It is an action directed against a specific party or parties, and any judgment therein binds only
such party or parties. The complaint filed by plaintiff, the private respondent herein, is directed against the
Republic of the Philippines, represented by the Land Authority, a governmental agency created by Republic
Act No. 3844.

By its caption and its allegation and prayer, the complaint is clearly a suit against the State, which under settled
jurisprudence is not permitted, except upon a showing that the State has consented to be sued, either
expressly or by implication through the use of statutory language too plain to be misinterpreted.2 There is no
such showing in the instant case. Worse, the complaint itself fails to allege the existence of such consent. This
is a fatal defect, 3 and on this basis alone, the complaint should have been dismissed.
 Page 42 of 129

The failure of the petitioner to assert the defense of immunity from suit when the case was tried before the
court a quo, as alleged by private respondent, is not fatal. It is now settled that such defense "may be invoked
by the courts sua sponte at any stage of the proceedings." 4

Private respondent contends that the consent of petitioner may be read from the Proclamation itself, when it
established the reservation " subject to private rights, if any there be. " We do not agree. No such consent can
be drawn from the language of the Proclamation. The exclusion of existing private rights from the reservation
established by Proclamation No. 90 can not be construed as a waiver of the immunity of the State from suit.
Waiver of immunity, being a derogation of sovereignty, will not be inferred lightly. but must be construed
in strictissimi juris. 5 Moreover, the Proclamation is not a legislative act. The consent of the State to be sued
must emanate from statutory authority. Waiver of State immunity can only be made by an act of the legislative
body.

Neither is there merit in respondent's submission, which the respondent appellate court sustained, on the basis
of our decision in the Begosa case, 6 that the present action is not a suit against the State within the rule of
State immunity from suit, because plaintiff does not seek to divest the Government of any of its lands or its
funds. It is contended that the complaint involves land not owned by the State, but private land belonging to the
plaintiff, hence the Government is not being divested of any of its properties. There is some sophistry involved
in this argument, since the character of the land sought to be recovered still remains to be established, and the
plaintiff's action is directed against the State precisely to compel the latter to litigate the ownership and
possession of the property. In other words, the plaintiff is out to establish that he is the owner of the land in
question based, incidentally, on an informacion posesoria of dubious value, and he seeks to establish his claim
of ownership by suing the Republic of the Philippines in an action in personam.

The inscription in the property registry of an informacion posesoria under the Spanish Mortgage Law was a
means provided by the law then in force in the Philippines prior to the transfer of sovereignty from Spain to the
United States of America, to record a claimant's actual possession of a piece of land, established through
an ex parte proceeding conducted in accordance with prescribed rules. 7 Such inscription merely furnishes, at
best, prima facie evidence of the fact that at the time the proceeding was held, the claimant was in possession
of the land under a claim of right as set forth in his application. 8 The possessory information could ripen into a
record of ownership after the lapse of 20 years (later reduced to 10 years), upon the fulfillment of the requisites
prescribed in Article 393 of the Spanish Mortgage Law.

There is no showing in the case at bar that the informacion posesoria held by the respondent had been
converted into a record of ownership. Such possessory information, therefore, remained at best mere prima
facie evidence of possession. Using this possessory information, the respondent could have applied for judicial
confirmation of imperfect title under the Public Land Act, which is an action in rem. However, having failed to
do so, it is rather late for him to pursue this avenue at this time. Respondent must also contend, as the records
disclose, with the fact admitted by him and stated in the decision of the Court a quo that settlers have been
occupying and cultivating the land in question since even before the outbreak of the war, which puts in grave
doubt his own claim of possession.

Worthy of note is the fact, as pointed out by the Solicitor General, that the informacion posesoria registered in
the Office of the Register of Deed of Camarines Sur on September 23, 1952 was a "reconstituted" possessory
information; it was "reconstituted from the duplicate presented to this office (Register of Deeds) by Dr. Pablo
Feliciano," without the submission of proof that the alleged duplicate was authentic or that the original thereof
was lost. Reconstitution can be validly made only in case of loss of the original. 10 These circumstances raise
grave doubts as to the authenticity and validity of the "informacion posesoria" relied upon by respondent
Feliciano. Adding to the dubiousness of said document is the fact that "possessory information calls for an area
of only 100 hectares," 11 whereas the land claimed by respondent Feliciano comprises 1,364.4177 hectares,
later reduced to 701-9064 hectares. Courts should be wary in accepting "possessory information documents,
as well as other purportedly old Spanish titles, as proof of alleged ownership of lands.
 Page 43 of 129

WHEREFORE, judgment is hereby rendered reversing and setting aside the appealed decision of the
Intermediate Appellate Court, dated April 30, 1985, and affirming the order of the court a quo, dated August 21,
1980, dismissing the complaint filed by respondent Pablo Feliciano against the Republic of the Philippines. No
costs.

SO ORDERED.

STATE IMMUNITY: SUIT AGAINST GOVERNMENT AGENCIES: INCORPORATED

G.R. No. L-55273-83 December 19, 1981

GAUDENCIO RAYO, petitioners,
vs.
COURT OF FIRST INSTANCE OF BULACAN, BRANCH V, STA. MARIA, and NATIONAL POWER
CORPORATION, respondents.

The relevant antecedents of this case are narrated in the petition and have not been controverted, namely:

3. At about midnight on October 26, 1978, during the height of that infamous typhoon "KADING"
the respondent corporation, acting through its plant superintendent, Benjamin Chavez, opened
or caused to be opened simultaneously all the three floodgates of the Angat Dam. And as a
direct and immediate result of the sudden, precipitate and simultaneous opening of said
floodgates several towns in Bulacan were inundated. Hardest-hit was Norzagaray. About a
hundred of its residents died or were reported to have died and properties worth million of pesos
destroyed or washed away. This flood was unprecedented in Norzagaray.

4. Petitioners, who were among the many unfortunate victims of that man-caused flood, filed
with the respondent Court eleven complaints for damages against the respondent corporation
and the plant superintendent of Angat Dam, Benjamin Chavez, docketed as Civil Cases Nos.
SM-950 951, 953, 958, 959, 964, 965, 966, 981, 982 and 983. These complaints though
separately filed have a common/similar cause of action. ...

5. Respondent corporation filed separate answers to each of these eleven complaints. Apart
from traversing the material averments in the complaints and setting forth counterclaims for
damages respondent corporation invoked in each answer a special and affirmative defense that
"in the operation of the Angat Dam," it is "performing a purely governmental function", hence it
"can not be sued without the express consent of the State." ...

6. On motion of the respondent corporation a preliminary hearing was held on its affirmative
defense as though a motion to dismiss were filed. Petitioners opposed the prayer for dismissal
and contended that respondent corporation is performing not governmental but
merely proprietary functions and that under its own organic act, Section 3 (d) of Republic Act
No. 6395, it can sue and be sued in any court. ...

7. On July 29, 1980 petitioners received a copy of the questioned order of the respondent Court
dated December 21, 1979 dismissing all their complaints as against the respondent corporation
thereby leaving the superintendent of the Angat Dam, Benjamin Chavez, as the sole party-
defendant. ...
 Page 44 of 129

8. On August 7, 1980 petitioners filed with the respondent Court a motion for reconsideration of
the questioned order of dismissal. ...

9. The respondent Court denied petitioners' motion for reconsideration in its order dated
October 3, 1980. ... Hence, the present petition for review on certiorari under Republic Act No.
5440. (Rollo, pp. 3-6.)

The Order of dismissal dated December 12, 1979, reads as follows:

Under consideration is a motion to dismiss embodied as a special affirmative defense in the

answer filed by defendant NPC on the grounds that said defendant performs a purely
governmental function in the operation of the Angat Dam and cannot therefore be sued for
damages in the instant cases in connection therewith.

Plaintiffs' opposition to said motion to discuss, relying on Sec. 3 (d) of Republic Act 6396 which
imposes on the NPC the power and liability to sue and be sued in any court, is not tenable since
the same refer to such matters only as are within the scope of the other corporate powers of
said defendant and not matters of tort as in the instant cases. It being an agency performing a
purely governmental function in the operation of the Angat Dam, said defendant was not given
any right to commit wrongs upon individuals. To sue said defendant for tort may require the
express consent of the State.

WHEREFORE, the cases against defendant NPC are hereby dismissed. (Rollo, p. 60.)

The Order dated October 3, 1980, denying the motion for reconsideration filed by the plaintiffs is pro forma; the
motion was simply denied for lack of merit. (Rollo, p. 74.)

The petition to review the two orders of the public respondent was filed on October 16, 1980, and on October
27, 1980, We required the respondents to comment. It was only on April 13, 1981, after a number of
extensions, that the Solicitor General filed the required comment. (Rollo, pp. 107-114.)

On May 27, 1980, We required the parties to file simultaneous memoranda within twenty (20) days from notice.
(Rollo, p. 115.) Petitioners filed their memorandum on July 22, 1981. (Rollo, pp. 118-125.) The Solicitor
General filed a number of motions for extension of time to file his memorandum. We granted the seventh
extension with a warning that there would be no further extension. Despite the warning the Solicitor General
moved for an eighth extension which We denied on November 9, 1981. A motion for a ninth extension was
similarly denied on November 18, 1981. The decision in this case is therefore, without the memorandum of the
Solicitor General.

The parties are agreed that the Order dated December 21, 1979, raises the following issues:

1. Whether respondent National Power Corporation performs a governmental function with respect to the
management and operation of the Angat Dam; and

2. Whether the power of respondent National Power Corporation to sue and be sued under its organic charter
includes the power to be sued for tort.

The petition is highly impressed with merit.

It is not necessary to write an extended dissertation on whether or not the NPC performs a governmental
function with respect to the management and operation of the Angat Dam. It is sufficient to say that the
government has organized a private corporation, put money in it and has allowed it to sue and be sued in any
court under its charter. (R.A. No. 6395, Sec. 3 (d).) As a government owned and controlled corporation, it has a
 Page 45 of 129

personality of its own, distinct and separate from that of the Government. (See National Shipyards and Steel
Corp. vs. CIR, et al., L-17874, August 31, 1963, 8 SCRA 781.) Moreover, the charter provision that the NPC
can "sue and be sued in any court" is without qualification on the cause of action and accordingly it can include
a tort claim such as the one instituted by the petitioners.

WHEREFORE, the petition is hereby granted; the Orders of the respondent court dated December 12, 1979
and October 3, 1980, are set aside; and said court is ordered to reinstate the complaints of the petitioners.
Costs against the NPC.

SO ORDERED.

STATE IMMUNITY: SUIT AGAINST GOVERNMENT AGENCIES: INCORPORATED

G.R. No. L-52179             April 8, 1991

MUNICIPALITY OF SAN FERNANDO, LA UNION, petitioner

vs.
HON. JUDGE ROMEO N. FIRME, JUANA RIMANDO-BANIÑA, IAUREANO BANIÑA, JR., SOR MARIETA
BANIÑA, MONTANO BANIÑA, ORJA BANIÑA, AND LYDIA R. BANIÑA, respondents.

This is a petition for certiorari with prayer for the issuance of a writ of preliminary mandatory injunction seeking
the nullification or modification of the proceedings and the orders issued by the respondent Judge Romeo N.
Firme, in his capacity as the presiding judge of the Court of First Instance of La Union, Second Judicial District,
Branch IV, Bauang, La Union in Civil Case No. 107-BG, entitled "Juana Rimando Baniña, et al. vs. Macario
Nieveras, et al." dated November 4, 1975; July 13, 1976; August 23,1976; February 23, 1977; March 16, 1977;
July 26, 1979; September 7, 1979; November 7, 1979 and December 3, 1979 and the decision dated October
10, 1979 ordering defendants Municipality of San Fernando, La Union and Alfredo Bislig to pay, jointly and
severally, the plaintiffs for funeral expenses, actual damages consisting of the loss of earning capacity of the
deceased, attorney's fees and costs of suit and dismissing the complaint against the Estate of Macario
Nieveras and Bernardo Balagot.

The antecedent facts are as follows:

Petitioner Municipality of San Fernando, La Union is a municipal corporation existing under and in accordance
with the laws of the Republic of the Philippines. Respondent Honorable Judge Romeo N. Firme is impleaded in
his official capacity as the presiding judge of the Court of First Instance of La Union, Branch IV, Bauang, La
Union. While private respondents Juana Rimando-Baniña, Laureano Baniña, Jr., Sor Marietta Baniña,
Montano Baniña, Orja Baniña and Lydia R. Baniña are heirs of the deceased Laureano Baniña Sr. and
plaintiffs in Civil Case No. 107-Bg before the aforesaid court.

At about 7 o'clock in the morning of December 16, 1965, a collision occurred involving a passenger jeepney
driven by Bernardo Balagot and owned by the Estate of Macario Nieveras, a gravel and sand truck driven by
Jose Manandeg and owned by Tanquilino Velasquez and a dump truck of the Municipality of San Fernando,
La Union and driven by Alfredo Bislig. Due to the impact, several passengers of the jeepney including
Laureano Baniña Sr. died as a result of the injuries they sustained and four (4) others suffered varying degrees
of physical injuries.

On December 11, 1966, the private respondents instituted a compliant for damages against the Estate of
Macario Nieveras and Bernardo Balagot, owner and driver, respectively, of the passenger jeepney, which was
 Page 46 of 129

docketed Civil Case No. 2183 in the Court of First Instance of La Union, Branch I, San Fernando, La Union.
However, the aforesaid defendants filed a Third Party Complaint against the petitioner and the driver of a dump
truck of petitioner.

Thereafter, the case was subsequently transferred to Branch IV, presided over by respondent judge and was
subsequently docketed as Civil Case No. 107-Bg. By virtue of a court order dated May 7, 1975, the private
respondents amended the complaint wherein the petitioner and its regular employee, Alfredo Bislig were
impleaded for the first time as defendants. Petitioner filed its answer and raised affirmative defenses such as
lack of cause of action, non-suability of the State, prescription of cause of action and the negligence of the
owner and driver of the passenger jeepney as the proximate cause of the collision.

In the course of the proceedings, the respondent judge issued the following questioned orders, to wit:

(1) Order dated November 4, 1975 dismissing the cross-claim against Bernardo Balagot;

(2) Order dated July 13, 1976 admitting the Amended Answer of the Municipality of San Fernando, La
Union and Bislig and setting the hearing on the affirmative defenses only with respect to the supposed
lack of jurisdiction;

(3) Order dated August 23, 1976 deferring there resolution of the grounds for the Motion to Dismiss
until the trial;

(4) Order dated February 23, 1977 denying the motion for reconsideration of the order of July 13, 1976
filed by the Municipality and Bislig for having been filed out of time;

(5) Order dated March 16, 1977 reiterating the denial of the motion for reconsideration of the order of
July 13, 1976;

(6) Order dated July 26, 1979 declaring the case deemed submitted for decision it appearing that
parties have not yet submitted their respective memoranda despite the court's direction; and

(7) Order dated September 7, 1979 denying the petitioner's motion for reconsideration and/or order to
recall prosecution witnesses for cross examination.

On October 10, 1979 the trial court rendered a decision, the dispositive portion is hereunder quoted as follows:

IN VIEW OF ALL OF (sic) THE FOREGOING, judgment is hereby rendered for the plaintiffs, and
defendants Municipality of San Fernando, La Union and Alfredo Bislig are ordered to pay jointly and
severally, plaintiffs Juana Rimando-Baniña, Mrs. Priscilla B. Surell, Laureano Baniña Jr., Sor Marietta
Baniña, Mrs. Fe B. 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 the late Laureano Baniña Sr.,
P30,000.00 as moral damages, and P2,500.00 as attorney's fees. Costs against said defendants.

The Complaint is dismissed as to defendants Estate of Macario Nieveras and Bernardo Balagot.

SO ORDERED. (Rollo, p. 30)

Petitioner filed a motion for reconsideration and for a new trial without prejudice to another motion which was
then pending. However, respondent judge issued another order dated November 7, 1979 denying the motion
for reconsideration of the order of September 7, 1979 for having been filed out of time.
 Page 47 of 129

Finally, the respondent judge issued an order dated December 3, 1979 providing that if defendants municipality
and Bislig further wish to pursue the matter disposed of in the order of July 26, 1979, such should be elevated
to a higher court in accordance with the Rules of Court. Hence, this petition.

Petitioner maintains that the respondent judge committed grave abuse of discretion amounting to excess of
jurisdiction in issuing the aforesaid orders and in rendering a decision. Furthermore, petitioner asserts that
while appeal of the decision maybe available, the same is not the speedy and adequate remedy in the ordinary
course of law.

On the other hand, private respondents controvert the position of the petitioner and allege that the petition is
devoid of merit, utterly lacking the good faith which is indispensable in a petition for certiorari and prohibition.
(Rollo, p. 42.) In addition, the private respondents stress that petitioner has not considered that every court,
including respondent court, has the inherent power to amend and control its process and orders so as to make
them conformable to law and justice. (Rollo, p. 43.)

The controversy boils down to the main issue of whether or not the respondent court committed grave abuse of
discretion when it deferred and failed to resolve the defense of non-suability of the State amounting to lack of
jurisdiction in a motion to dismiss.

In the case at bar, the respondent judge deferred the resolution of the defense of non-suability of the State
amounting to lack of jurisdiction until trial. However, said respondent judge failed to resolve such defense,
proceeded with the trial and thereafter rendered a decision against the municipality and its driver.

The respondent judge did not commit grave abuse of discretion when in the exercise of its judgment it
arbitrarily failed to resolve the vital issue of non-suability of the State in the guise of the municipality. However,
said judge acted in excess of his jurisdiction when in his decision dated October 10, 1979 he held the
municipality liable for the quasi-delict committed by its regular employee.

The doctrine of non-suability of the State is expressly provided for in Article XVI, Section 3 of the Constitution,
to wit: "the State may not be sued without its consent."

Stated in simple parlance, the general rule is that the State may not be sued except when it gives consent to
be sued. Consent takes the form of express or implied consent.

Express consent may be embodied in a general law or a special law. The standing consent of the State to be
sued in case of money claims involving liability arising from contracts is found in Act No. 3083. A special law
may be passed to enable a person to sue the government for an alleged quasi-delict, as in Merritt v.
Government of the Philippine Islands (34 Phil 311). (see United States of America v. Guinto, G.R. No. 76607,
February 26, 1990, 182 SCRA 644, 654.)

Consent is implied when the government enters into business contracts, thereby descending to the level of the
other contracting party, and also when the State files a complaint, thus opening itself to a counterclaim. (Ibid)

Municipal corporations, for example, like provinces and cities, are agencies of the State when they are
engaged in governmental functions and therefore should enjoy the sovereign immunity from suit. Nevertheless,
they are subject to suit even in the performance of such functions because their charter provided that they can
sue and be sued. (Cruz, Philippine Political Law, 1987 Edition, p. 39)

A distinction should first be made between suability and liability. "Suability depends on the consent of the state
to be sued, liability on the applicable law and the established facts. The circumstance that a state is suable
does not necessarily mean that it is liable; on the other hand, it can never be held liable if it does not first
consent to be sued. Liability is not conceded by the mere fact that the state has allowed itself to be sued.
 Page 48 of 129

When the state does waive its sovereign immunity, it is only giving the plaintiff the chance to prove, if it can,
that the defendant is liable." (United States of America vs. Guinto, supra, p. 659-660)

Anent the issue of whether or not the municipality is liable for the torts committed by its employee, the test of
liability of the municipality depends on whether or not the driver, acting in behalf of the municipality, is
performing governmental or proprietary functions. As emphasized in the case of Torio vs. Fontanilla (G. R. No.
L-29993, October 23, 1978. 85 SCRA 599, 606), the distinction of powers becomes important for purposes of
determining the liability of the municipality for the acts of its agents which result in an injury to third persons.

Another statement of the test is given in City of Kokomo vs. Loy, decided by the Supreme Court of Indiana in
1916, thus:

Municipal corporations exist in a dual capacity, and their functions are twofold. In one they exercise the
right springing from sovereignty, and while in the performance of the duties pertaining thereto, their acts
are political and governmental. Their officers and agents in such capacity, though elected or appointed
by them, are nevertheless public functionaries performing a public service, and as such they are
officers, agents, and servants of the state. In the other capacity the municipalities exercise a private,
proprietary or corporate right, arising from their existence as legal persons and not as public agencies.
Their officers and agents in the performance of such functions act in behalf of the municipalities in their
corporate or individual capacity, and not for the state or sovereign power." (112 N.E., 994-995) (Ibid,
pp. 605-606.)

It has already been remarked that municipal corporations are suable because their charters grant them the
competence to sue and be sued. Nevertheless, they are generally not liable for torts committed by them in the
discharge of governmental functions and can be held answerable only if it can be shown that they were acting
in a proprietary capacity. In permitting such entities to be sued, the State merely gives the claimant the right to
show that the defendant was not acting in its governmental capacity when the injury was committed or that the
case comes under the exceptions recognized by law. Failing this, the claimant cannot recover. (Cruz, supra, p.
44.)

In the case at bar, the driver of the dump truck of the municipality insists that "he was on his way to the
Naguilian river to get a load of sand and gravel for the repair of San Fernando's municipal streets." (Rollo, p.
29.)

In the absence of any evidence to the contrary, the regularity of the performance of official duty is presumed
pursuant to Section 3(m) of Rule 131 of the Revised Rules of Court. Hence, We rule that the driver of the dump
truck was performing duties or tasks pertaining to his office.

We already stressed in the case of Palafox, et. al. vs. Province of Ilocos Norte, the District Engineer, and the
Provincial Treasurer (102 Phil 1186) that "the construction or maintenance of roads in which the truck and the
driver worked at the time of the accident are admittedly governmental activities."

After a careful examination of existing laws and jurisprudence, We arrive at the conclusion that the municipality
cannot be held liable for the torts committed by its regular employee, who was then engaged in the discharge
of governmental functions. Hence, the death of the passenger –– tragic and deplorable though it may be ––
imposed on the municipality no duty to pay monetary compensation.

All premises considered, the Court is convinced that the respondent judge's dereliction in failing to resolve the
issue of non-suability did not amount to grave abuse of discretion. But said judge exceeded his jurisdiction
when it ruled on the issue of liability.

ACCORDINGLY, the petition is GRANTED and the decision of the respondent court is hereby modified,
absolving the petitioner municipality of any liability in favor of private respondents.
 Page 49 of 129

SO ORDERED.

STATE IMMUNITY: SUIT AGAINST GOVERNMENT AGENCIES: UNINCORPORATED

G.R. No. 104269 November 11, 1993

DEPARTMENT OF AGRICULTURE, petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION, et al., respondents.

For consideration are the incidents that flow from the familiar doctrine of non-suability of the state.

In this petition for certiorari, the Department of Agriculture seeks to nullify the Resolution, 1 dated 27 November
1991, of the National Labor Relations Commission (NLRC), Fifth Division, Cagayan de Oro City, denying the
petition for injunction, prohibition and mandamus that prays to enjoin permanently the NLRC's Regional
Arbitration Branch X and Cagayan de Oro City Sheriff from enforcing the decision 2 of 31 May 1991 of the
Executive Labor Arbiter and from attaching and executing on petitioner's property.

The Department of Agriculture (herein petitioner) and Sultan Security Agency entered into a contract 3 on 01
April 1989 for security services to be provided by the latter to the said governmental entity. Save for the
increase in the monthly rate of the guards, the same terms and conditions were also made to apply to another
contract, dated 01 May 1990, between the same parties. Pursuant to their arrangements, guards were
deployed by Sultan Agency in the various premises of the petitioner.

On 13 September 1990, several guards of the Sultan Security Agency filed a complaint for underpayment of
wages, non-payment of 13th month pay, uniform allowances, night shift differential pay, holiday pay and
overtime pay, as well as for damages,4 before the Regional Arbitration Branch X of Cagayan de Oro City,
docketed as NLRC Case No. 10-09-00455-90 (or 10-10-00519-90, its original docket number), against the
Department of Agriculture and Sultan Security Agency.

The Executive Labor Arbiter rendered a decision on 31 May finding herein petitioner
and jointly and severally liable with Sultan Security Agency for the payment of money claims, aggregating
P266,483.91, of the complainant security guards. The petitioner and Sultan Security Agency did not appeal the
decision of the Labor Arbiter. Thus, the decision became final and executory.

On 18 July 1991, the Labor Arbiter issued a writ of execution. 5 commanding the City Sheriff to enforce and
execute the judgment against the property of the two respondents. Forthwith, or on 19 July 1991, the City
 Page 50 of 129

Sheriff levied on execution the motor vehicles of the petitioner, i.e. one (1) unit Toyota Hi-Ace, one (1) unit
Toyota Mini Cruiser, and one (1) unit Toyota Crown.6 These units were put under the custody of Zacharias
Roa, the property custodian of the petitioner, pending their sale at public auction or the final settlement of the
case, whichever would come first.

A petition for injunction, prohibition and mandamus, with prayer for preliminary writ of injunction was filed by
the petitioner with the National Labor Relations Commission (NLRC), Cagayan de Oro, alleging, inter alia, that
the writ issued was effected without the Labor Arbiter having duly acquired jurisdiction over the petitioner, and
that, therefore, the decision of the Labor Arbiter was null and void and all actions pursuant thereto should be
deemed equally invalid 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 functions to the prejudice of the public
good.

On 27 November 1991, the NLRC promulgated its assailed resolution; viz:

WHEREFORE, premises considered, the following orders are issued:

1. The enforcement and execution of the judgments against petitioner in NLRC RABX Cases
Nos. 10-10-00455-90; 10-10-0481-90 and 10-10-00519-90 are temporarily suspended for a
period of two (2) months, more or less, but not extending beyond the last quarter of calendar
year 1991 to enable petitioner to source and raise funds to satisfy the judgment awards against
it;

2. Meantime, petitioner is ordered and directed to source for funds within the period above-
stated and to deposit the sums of money equivalent to the aggregate amount. it has been
adjudged to pay jointly and severally with respondent Sultan Security Agency with the Regional
Arbitration Branch X, Cagayan de Oro City within the same period for proper dispositions;

3. In order to ensure compliance with this order, petitioner is likewise directed to put up and post
sufficient surety and supersedeas bond equivalent to at least to fifty (50%) percent of the total
monetary award issued by a reputable bonding company duly accredited by the Supreme Court
or by the Regional Trial Court of Misamis Oriental to answer for the satisfaction of the money
claims in case of failure or default on the part of petitioner to satisfy the money claims;

4. The City Sheriff is ordered to immediately release the properties of petitioner levied on
execution within ten (10) days from notice of the posting of sufficient surety or supersedeas
bond as specified above. In the meanwhile, petitioner is assessed to pay the costs and/or
expenses incurred by the City Sheriff, if any, in connection with the execution of the judgments
in the above-stated cases upon presentation of the appropriate claims or vouchers and receipts
by the city Sheriff, subject to the conditions specified in the NLRC Sheriff, subject to the
conditions specified in the NLRC Manual of Instructions for Sheriffs;

5. The right of any of the judgment debtors to claim reimbursement against each other for any
payments made in connection with the satisfaction of the judgments herein is hereby recognized
pursuant to the ruling in the Eagle Security case, (supra). In case of dispute between the
judgment debtors, the Executive Labor Arbiter of the Branch of origin may upon proper petition
by any of the parties conduct arbitration proceedings for the purpose and thereby render his
decision after due notice and hearings;

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 thereof, a Temporary Stay of
Execution is issued for a period of two (2) months but not extending beyond the last quarter of
calendar year 1991, conditioned upon the posting of a surety or supersedeas bond by petitioner
 Page 51 of 129

within ten (10) days from notice pursuant to paragraph 3 of this disposition. The motion to admit
the complaint in intervention is Denied for lack of merit while the motion to dismiss the petition
filed by Duty Sheriff is Noted

SO ORDERED.

In this petition for certiorari, the petitioner charges the NLRC with grave abuse of discretion for refusing to
quash the writ of execution. The petitioner faults the NLRC for assuming jurisdiction over a money claim
against the Department, which, it claims, falls under the exclusive jurisdiction of the Commission on Audit.
More importantly, the petitioner asserts, the NLRC has disregarded the cardinal rule on the non-suability of the
State.

The private respondents, on the other hand, argue that the petitioner has impliedly waived its immunity from
suit by concluding a service contract with Sultan Security Agency.

The basic postulate enshrined in the constitution that "(t)he State may not be sued without its
consent," 7 reflects nothing less than a recognition of the sovereign character of the State and an express
affirmation of the unwritten rule effectively insulating it from the jurisdiction of courts. 8 It is based on the very
essence of sovereignty. As has been aptly observed, by Justice Holmes, a sovereign is exempt from suit, not
because of any formal conception or obsolete theory, but on the logical and practical ground that there can be
no legal right as against the authority that makes the law on which the right depends. 9 True, the doctrine, not
too infrequently, is derisively called "the royal prerogative of dishonesty" because it grants the state the
prerogative to defeat any legitimate claim against it by simply invoking its non-suability. 10 We have had
occasion, to explain in its defense, however, that a continued adherence to the doctrine of non-suability cannot
be deplored, for the loss of governmental efficiency and the obstacle to the performance of its multifarious
functions would be far greater in severity than the inconvenience that may be caused private parties, if such
fundamental principle is to be abandoned and the 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 not be sued under any
circumstances. On the contrary, as correctly phrased, the 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 be
given expressly or impliedly. Express consent may be made through a general law13 or a special law. 14 In this
jurisdiction, the general law waiving the immunity of the state from suit is found in Act No. 3083, where the
Philippine government "consents and submits to be sued upon any money claims involving liability arising from
contract, express or implied, which could serve as a basis of civil action between private parties." 15 Implied
consent, on the other hand, is conceded when the State itself commences litigation, thus opening itself to a
counterclaim16 or when it enters into a contract. 17 In this situation, the government is deemed to have
descended to the level of the other contracting party and to have divested itself of its sovereign immunity. This
rule, relied upon by the NLRC and the private respondents, is not, however, without qualification. Not all
contracts entered into by the government operate as a waiver of its non-suability; distinction must still be made
between one which is executed in the exercise of its sovereign function and another which is done in its
proprietary capacity. 18

In the Unites States of America vs. Ruiz, 19 where the questioned transaction dealt with improvements on the
wharves in the naval installation at Subic Bay, we held:

The traditional rule of immunity exempts a State from being sued in the courts of another State
without its consent or waiver. This rule is a necessary consequence of the principles of
independence and equality of States. However, the rules of International Law are not petrified;
they are constantly developing and evolving. And because the activities of states have
multiplied, it has been necessary to distinguish them — between sovereign and governmental
acts ( jure imperii) and private, commercial and proprietary act ( jure gestionisis). The result is
 Page 52 of 129

that State immunity now extends only to acts jure imperii. The restrictive application of State
immunity is now the rule in the United States, the United Kingdom and other states in Western
Europe.

xxx xxx xxx

The restrictive application of State immunity is proper only when the proceedings arise out of
commercial transactions of the foreign sovereign, its commercial activities or economic affairs.
Stated differently, a state may be said to have descended to the level of an individual and can
this be deemed to have actually given its consent to be sued only when it enters into business
contracts. It does not apply where the contracts relates to the exercise of its sovereign
functions. In this case the projects are an integral part of the naval base which is devoted to the
defense of both the United States and the Philippines, indisputably a function of the government
of the highest order; they are not utilized for not dedicated to commercial or business purposes.

In the instant case, the Department of Agriculture has not pretended to have assumed a capacity apart from its
being a governmental entity when it entered into the questioned contract; nor that it could have, in fact,
performed any act proprietary in character.

But, be that as it may, the claims of private respondents, i.e. for underpayment of wages, holiday pay, overtime
pay and similar other items, arising from the Contract for Service, clearly constitute money claims. Act No.
3083, aforecited, gives the consent of the State to be "sued upon any moneyed claim involving liability arising
from contract, express or implied, . . . Pursuant, however, to Commonwealth Act ("C.A.") No. 327, as amended
by Presidential Decree ("P.D.") No. 1145, the money claim first be brought to the Commission on Audit. Thus,
in Carabao, Inc., vs. Agricultural Productivity Commission, 20 we ruled:

(C)laimants have to prosecute their money claims against the Government under
Commonwealth Act 327, stating that Act 3083 stands now merely as the general law waiving
the State's immunity from suit, subject to the general limitation expressed in Section 7 thereof
that "no execution shall issue upon any judgment rendered by any Court against the
Government of the (Philippines), and that the conditions provided in Commonwealth Act 327 for
filing money claims against the Government must be strictly observed."

We fail to see any substantial conflict or inconsistency between the provisions of C.A. No. 327 and the Labor
Code with respect to money claims against the State. The Labor code, in relation to Act No. 3083, provides the
legal basis for the State liability but the prosecution, enforcement or satisfaction thereof must still be pursued in
accordance with the rules and procedures laid down in C.A. No. 327, as amended by P.D. 1445.

When the state gives its consent to be sued, it does thereby necessarily consent to unrestrained execution
against it. tersely put, when the State waives its immunity, all it does, in effect, is to give the other party an
opportunity to prove, if it can, that the State has a liability. 21 In Republic vs. Villasor 22 this Court, in nullifying
the issuance of an alias writ of execution directed against the funds of the Armed Forces of the Philippines to
satisfy a final and executory judgment, has explained, thus —

The universal rule that where the State gives its consent to be sued by private parties either by
general or special law, it may limit the claimant's action "only up to the completion of
proceedings anterior to the stage of execution" and that the power of the Courts ends when the
judgment is rendered, since government funds and properties may not be seized under writs or
execution or garnishment to satisfy such judgments, is based on obvious considerations of
public policy. Disbursements of public funds must be covered by the correspondent
appropriation as required by law. The functions and public services rendered by the State
cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their
legitimate and specific objects, as appropriated by law.23
 Page 53 of 129

WHEREFORE, the petition is GRANTED. The resolution, dated 27 November 1991, is hereby REVERSED
and SET ASIDE. The writ of execution directed against the property of the Department of Agriculture is
nullified, and the public respondents are hereby enjoined permanently from doing, issuing and implementing
any and all writs of execution issued pursuant to the decision rendered by the Labor Arbiter against said
petitioner.

SO ORDERED.

STATE IMMUNITY: SUIT AGAINST PUBLIC OFFICERS

G.R. No. L-46930 June 10, 1988

DALE SANDERS, AND A.S. MOREAU, JR, petitioners,

vs.
HON. REGINO T. VERIDIANO II, as Presiding Judge, Branch I, Court of First Instance of Zambales,
Olongapo City, ANTHONY M. ROSSI and RALPH L. WYERS, respondents.

The basic issue to be resolved in this case is whether or not the petitioners were performing their official duties
when they did the acts for which they have been sued for damages by the private respondents. Once this
question is decided, the other answers will fall into place and this petition need not detain us any longer than it
already has.

Petitioner Sanders was, at the time the incident in question occurred, the special services director of the U.S.
Naval Station (NAVSTA) in Olongapo City. 1 Petitioner Moreau was the commanding officer of the Subic Naval
Base, which includes the said station. 2 Private respondent Rossi is an American citizen with permanent
residence in the Philippines,3 as so was private respondent Wyer, who died two years ago. 4 They were both
employed as gameroom attendants in the special services department of the NAVSTA, the former having been
hired in 1971 and the latter in 1969. 5

On October 3, 1975, the private respondents were advised that their employment had been converted from
permanent full-time to permanent part-time, effective October 18, 1975. 6 Their reaction was to protest this
conversion and to institute grievance proceedings conformably to the pertinent rules and regulations of the
U.S. Department of Defense. The result was a recommendation from the hearing officer who conducted the
proceedings for the reinstatement of the private respondents to permanent full-time status plus backwages.
 Page 54 of 129

The report on the hearing contained the observation that "Special Services management practices an
autocratic form of supervision." 7

In a letter addressed to petitioner Moreau on May 17, 1976 (Annex "A" of the complaint), Sanders disagreed
with the hearing officer's report and asked for the rejection of the abovestated recommendation. The letter
contained the statements that: a ) "Mr. Rossi tends to alienate most co-workers and supervisors;" b) "Messrs.
Rossi and Wyers have proven, according to their immediate supervisors, to be difficult employees to
supervise;" and c) "even though the grievants were under oath not to discuss the case with anyone, (they)
placed the records in public places where others not involved in the case could hear."

On November 7, 1975, before the start of the grievance hearings, a-letter (Annex "B" of the complaint)
purportedly corning from petitioner Moreau as the commanding general of the U.S. Naval Station in Subic Bay
was sent to the Chief of Naval Personnel explaining the change of the private respondent's employment status
and requesting concurrence therewith. The letter did not carry his signature but was signed by W.B. Moore, Jr.
"by direction," presumably of Moreau.

On the basis of these antecedent facts, the private respondent filed in the Court of First Instance of Olongapo
City a for damages against the herein petitioners on November 8, 1976.8 The plaintiffs claimed that the letters
contained libelous imputations that had exposed them to ridicule and caused them mental anguish and that the
prejudgment of the grievance proceedings was an invasion of their personal and proprietary rights.

The private respondents made it clear that the petitioners were being sued in their private or personal capacity.
However, in a motion to dismiss filed under a special appearance, the petitioners argued that the acts
complained of were performed by them in the discharge of their official duties and that, consequently, the court
had no jurisdiction over them under the doctrine of state immunity.

After extensive written arguments between the parties, the motion was denied in an order dated March 8,
1977, 9 on the main ground that the petitioners had not presented any evidence that their acts were official in
nature and not personal torts, moreover, the allegation in the complaint was that the defendants had acted
maliciously and in bad faith. The same order issued a writ of preliminary attachment, conditioned upon the
filing of a P10,000.00 bond by the plaintiffs, against the properties of petitioner Moreau, who allegedly was then
about to leave the Philippines. Subsequently, to make matters worse for the defendants, petitioner Moreau was
declared in a default by the trial court in its order dated August 9, 1977. The motion to lift the default order on
the ground that Moreau's failure to appear at the pre-trial conference was the result of some misunderstanding,
and the motion for reconsideration of the denial of the motion to dismiss, which was filed by the petitioner's
new lawyers, were denied by the respondent court on September 7, 1977.

This petition for certiorari, prohibition and preliminary injunction was thereafter filed before this Court, on the
contention that the above-narrated acts of the respondent court are tainted with grave abuse of discretion
amounting to lack of jurisdiction.

We return now to the basic question of whether the petitioners were acting officially or only in their private
capacities when they did the acts for which the private respondents have sued them for damages.

It is stressed at the outset that the mere allegation that a government functionary is being sued in his personal
capacity will not automatically remove him from the protection of the law of public officers and, if appropriate,
the doctrine of state immunity. By the same token, the mere invocation of official character will not suffice to
insulate him from suability and liability for an act imputed to him as a personal tort committed without or in
excess of his authority. These well-settled principles are applicable not only to the officers of the local state but
also where the person sued in its courts pertains to the government of a foreign state, as in the present case.

The respondent judge, apparently finding that the complained acts were prima facie personal and tortious,
decided to proceed to trial to determine inter alia their precise character on the strength of the evidence to be
 Page 55 of 129

submitted by the parties. The petitioners have objected, arguing that no such evidence was needed to
substantiate their claim of jurisdictional immunity. Pending resolution of this question, we issued a temporary
restraining order on September 26, 1977, that has since then suspended the proceedings in this case in the
court a quo.

In past cases, this Court has held that where the character of the act complained of can be determined from
the pleadings exchanged between the parties before the trial, it is not necessary for the court to require them to
belabor the point at a trial still to be conducted. Such a proceeding would be superfluous, not to say unfair to
the defendant who is subjected to unnecessary and avoidable inconvenience.

Thus, in Baer v. Tizon, 10 we held that a motion to dismiss a complaint against the commanding general of the
Olongapo Naval Base should not have been denied because it had been sufficiently shown that the act for
which he was being sued was done in his official capacity on behalf of the American government. The United
States had not given its consent to be sued. It was the reverse situation in Syquia v. Almeda Lopez," where we
sustained the order of the lower court granting a where we motion to dismiss a complaint against certain
officers of the U.S. armed forces also shown to be acting officially in the name of the American government.
The United States had also not waived its immunity from suit. Only three years ago, in United States of
America v. Ruiz, 12 we set aside the denial by the lower court of a motion to dismiss a complaint for damages
filed against the United States and several of its officials, it appearing that the act complained of was
governmental rather than proprietary, and certainly not personal. In these and several other cases 13 the Court
found it redundant to prolong the other case proceedings after it had become clear that the suit could not
prosper because the acts complained of were covered by the doctrine of state immunity.

It is abundantly clear in the present case that the acts for which the petitioners are being called to account
were performed by them in the discharge of their official duties. Sanders, as director of the special services
department of NAVSTA, undoubtedly had supervision over its personnel, including the private respondents,
and had a hand in their employment, work assignments, discipline, dismissal and other related matters. It is not
disputed that the letter he had written was in fact a reply to a request from his superior, the other petitioner, for
more information regarding the case of the private respondents.14 Moreover, even in the absence of such
request, he still was within his rights in reacting to the hearing officer's criticism—in effect a direct attack
against him—-that Special Services was practicing "an autocratic form of supervision."

As for Moreau,what he is claimed to have done was write the Chief of Naval Personnel for concurrence with
the conversion of the private respondents' type of employment even before the grievance proceedings had
even commenced. Disregarding for the nonce the question of its timeliness, this act is clearly official in nature,
performed by Moreau as the immediate superior of Sanders and directly answerable to Naval Personnel in
matters involving the special services department of NAVSTA In fact, the letter dealt with the financial and
budgetary problems of the department and contained recommendations for their solution, including the re-
designation of the private respondents. There was nothing personal or private about it.

Given the official character of the above-described letters, we have to conclude that the petitioners were,
legally speaking, being sued as officers of the United States government. As they have acted on behalf of that
government, and within the scope of their authority, it is that government, and not the petitioners personally,
that is responsible for their acts. Assuming that the trial can proceed and it is proved that the claimants have a
right to the payment of damages, such award will have to be satisfied not by the petitioners in their personal
capacities but by the United States government as their principal. This will require that government to perform
an affirmative act to satisfy the judgment, viz, the appropriation of the necessary amount to cover the damages
awarded, thus making the action a suit against that government without its consent.

There should be no question by now that such complaint cannot prosper unless the government sought to be
held ultimately liable has given its consent to' be sued. So we have ruled not only in Baer but in many other
decisions where we upheld the doctrine of state immunity as applicable not only to our own government but
also to foreign states sought to be subjected to the jurisdiction of our courts. 15
 Page 56 of 129

The practical justification for the doctrine, as Holmes put it, is that "there can be no legal right against the
authority which makes the law on which the right depends.16 In the case of foreign states, the rule is derived
from the principle of the sovereign equality of states which wisely admonishes that par in parem non habet
imperium and that a contrary attitude would "unduly vex the peace of nations." 17 Our adherence to this precept
is formally expressed in Article II, Section 2, of our Constitution, where we reiterate from our previous charters
that the Philippines "adopts the generally accepted principles of international law as part of the law of the land.

All this is not to say that in no case may a public officer be sued as such without the previous consent of the
state. To be sure, there are a number of well-recognized exceptions. It is clear that a public officer may be
sued as such to compel him to do an act required by law, as where, say, a register of deeds refuses to record
a deed of sale; 18 or to restrain a Cabinet member, for example, from enforcing a law claimed to be
unconstitutional; 19 or to compel the national treasurer to pay damages from an already appropriated assurance
fund; 20 or the commissioner of internal revenue to refund tax over-payments from a fund already available for
the purpose; 21 or, in general, to secure a judgment that the officer impleaded may satisfy by himself without
the government itself having to do a positive act to assist him. We have also held that where the government
itself has violated its own laws, the aggrieved party may directly implead the government even without first
filing his claim with the Commission on Audit as normally required, as the doctrine of state immunity "cannot be
used as an instrument for perpetrating an injustice." 22

This case must also be distinguished from such decisions as Festejo v. Fernando, 23 where the Court held that
a bureau director could be sued for damages on a personal tort committed by him when he acted without or in
excess of authority in forcibly taking private property without paying just compensation therefor although he did
convert it into a public irrigation canal. It was not necessary to secure the previous consent of the state, nor
could it be validly impleaded as a party defendant, as it was not responsible for the defendant's unauthorized
act.

The case at bar, to repeat, comes under the rule and not under any of the recognized exceptions. The
government of the United States has not given its consent to be sued for the official acts of the petitioners, who
cannot satisfy any judgment that may be rendered against them. As it is the American government itself that
will have to perform the affirmative act of appropriating the amount that may be adjudged for the private
respondents, the complaint must be dismissed for lack of jurisdiction.

The Court finds that, even under the law of public officers, the acts of the petitioners are protected by the
presumption of good faith, which has not been overturned by the private respondents. Even mistakes
concededly committed by such public officers are not actionable as long as it is not shown that they were
motivated by malice or gross negligence amounting to bad faith. 24 This, to, is well settled .25 Furthermore,
applying now our own penal laws, the letters come under the concept of privileged communications and are
not punishable, 26 let alone the fact that the resented remarks are not defamatory by our standards. It seems
the private respondents have overstated their case.

A final consideration is that since the questioned acts were done in the Olongapo Naval Base by the petitioners
in the performance of their official duties and the private respondents are themselves American citizens, it
would seem only proper for the courts of this country to refrain from taking cognizance of this matter and to
treat it as coming under the internal administration of the said base.

The petitioners' counsel have submitted a memorandum replete with citations of American cases, as if they
were arguing before a court of the United States. The Court is bemused by such attitude. While these
decisions do have persuasive effect upon us, they can at best be invoked only to support our own
jurisprudence, which we have developed and enriched on the basis of our own persuasions as a people,
particularly since we became independent in 1946.

We appreciate the assistance foreign decisions offer us, and not only from the United States but also from
Spain and other countries from which we have derived some if not most of our own laws. But we should not
 Page 57 of 129

place undue and fawning reliance upon them and regard them as indispensable mental crutches without which
we cannot come to our own decisions through the employment of our own endowments We live in a different
ambience and must decide our own problems in the light of our own interests and needs, and of our qualities
and even idiosyncrasies as a people, and always with our own concept of law and justice.

The private respondents must, if they are still sominded, pursue their claim against the petitioners in
accordance with the laws of the United States, of which they are all citizens and under whose jurisdiction the
alleged offenses were committed. Even assuming that our own laws are applicable, the United States
government has not decided to give its consent to be sued in our courts, which therefore has not acquired the
competence to act on the said claim,.

WHEREFORE, the petition is GRANTED. The challenged orders dated March 8,1977, August 9,1977, and
September 7, 1977, are SET ASIDE. The respondent court is directed to DISMISS Civil Case No. 2077-O. Our
Temporary restraining order of September 26,1977, is made PERMANENT. No costs.

SO ORDERED.

STATE IMMUNITY: SUIT AGAINST PUBLIC OFFICERS

G.R. No. 84607 March 19, 1993

REPUBLIC OF THE PHILIPPINES, petitioners,

vs.
HON. EDILBERTO G. SANDOVAL, Regional Trial Court of Manila, Branch IX, respondents.

People may have already forgotten the tragedy that transpired on January 22, 1987. It is quite ironic that then,
some journalists called it a Black Thursday, as a grim reminder to the nation of the misfortune that befell twelve
(12) rallyists. But for most Filipinos now, the Mendiola massacre may now just as well be a chapter in our
history books. For those however, who have become widows and orphans, certainly they would not settle for
just that. They seek retribution for the lives taken that will never be brought back to life again.

Hence, the heirs of the deceased, together with those injured (Caylao group), instituted this petition, docketed
as G.R. No. 84645, under Section 1 of Rule 65 of the Rules of Court, seeking the reversal and setting aside of
the Orders of respondent Judge Sandoval,1 dated May 31 and August 8, 1988, dismissing the complaint for
damages of herein petitioners against the Republic of the Philippines in Civil Case No. 88-43351.

Petitioner, the Republic of the Philippines, through a similar remedy, docketed as G.R. No. 84607, seeks to set
aside the Order of respondent Judge dated May 31, 1988, in Civil Case No. 88-43351 entitled "Erlinda Caylao,
et al. vs. Republic of the Philippines, et al."

The pertinent portion of the questioned Order2 dated May 31, 1988, reads as follows:
 Page 58 of 129

With respect however to the other defendants, the impleaded Military Officers, since they are
being charged in their personal and official capacity, and holding them liable, if at all, would not
result in financial responsibility of the government, the principle of immunity from suit can not
conveniently and correspondingly be applied to them.

WHEREFORE, the case as against the defendant Republic of the Philippines is hereby
dismissed. As against the rest of the defendants the motion to dismiss is denied. They are given
a period of ten (10) days from receipt of this order within which to file their respective pleadings.

On the other hand, the Order3 , dated August 8, 1988, denied the motions filed by both parties, for a
reconsideration of the abovecited Order, respondent Judge finding no cogent reason to disturb the said order.

The massacre was the culmination of eight days and seven nights of encampment by members of the militant
Kilusang Magbubukid sa Pilipinas (KMP) at the then Ministry (now Department) of Agrarian Reform (MAR) at
the Philippine Tobacco Administration Building along Elliptical Road in Diliman, Quezon City.

The farmers and their sympathizers presented their demands for what they called "genuine agrarian reform".
The KMP, led by its national president, Jaime Tadeo, presented their problems and demands, among which
were: (a) giving lands for free to farmers; (b) zero retention of lands by landlords; and (c) stop amortizations of
land payments.

The dialogue between the farmers and the MAR officials began on January 15, 1987. The two days that
followed saw a marked increase in people at the encampment. It was only on January 19, 1987 that Jaime
Tadeo arrived to meet with then Minister Heherson Alvarez, only to be informed that the Minister can only meet
with him the following day. On January 20, 1987, the meeting was held at the MAR conference room. Tadeo
demanded that the minimum comprehensive land reform program be granted immediately. Minister Alvarez,
for his part, can only promise to do his best to bring the matter to the attention of then President Aquino, during
the cabinet meeting on January 21, 1987.

Tension mounted the following day. The farmers, now on their seventh day of encampment, barricaded the
MAR premises and prevented the employees from going inside their offices. They hoisted the KMP flag
together with the Philippine flag.

At around 6:30 p.m. of the same day, Minister Alvarez, in a meeting with Tadeo and his leaders, advised the
latter to instead wait for the ratification of the 1987 Constitution and just allow the government to implement its
comprehensive land reform program. Tadeo, however, countered by saying that he did not believe in the
Constitution and that a genuine land reform cannot be realized under a landlord-controlled Congress. A heated
discussion ensued between Tadeo and Minister Alvarez. This notwithstanding, Minister Alvarez suggested a
negotiating panel from each side to meet again the following day.

On January 22, 1987, Tadeo's group instead decided to march to Malacañang to air their demands. Before the
march started, Tadeo talked to the press and TV media. He uttered fiery words, the most telling of which were:
". . . inalis namin ang barikada bilang kahilingan ng ating Presidente, pero kinakailangan alisin din niya ang
barikada sa Mendiola sapagkat bubutasin din namin iyon at dadanak ang dugo . . . ."4

The farmers then proceeded to march to Malacañang, from Quezon Memorial Circle, at 10:00 a.m. They were
later joined by members of other sectoral organizations such as the Kilusang Mayo Uno (KMU), Bagong
Alyansang Makabayan (BAYAN), League of Filipino Students (LFS) and Kongreso ng Pagkakaisa ng
Maralitang Lungsod (KPML).

At around 1:00 p.m., the marchers reached Liwasang Bonifacio where they held a brief program. It was at this
point that some of the marchers entered the eastern side of the Post Office Building, and removed the steel
 Page 59 of 129

bars surrounding the garden. Thereafter, they joined the march to Malacañang. At about 4:30 p.m., they
reached C.M. Recto Avenue.

In anticipation of a civil disturbance, and acting upon reports received by the Capital Regional Command
(CAPCOM) that the rallyists would proceed to Mendiola to break through the police lines and rush towards
Malacañang, CAPCOM Commander General Ramon E. Montaño inspected the preparations and adequacy of
the government forces to quell impending attacks.

OPLAN YELLOW (Revised) was put into effect. Task Force Nazareno under the command of Col. Cesar
Nazareno was deployed at the vicinity of Malacañang. The civil disturbance control units of the Western Police
District under Police Brigadier General Alfredo S. Lim were also activated.

Intelligence reports were also received that the KMP was heavily infiltrated by CPP/NPA elements and that an
insurrection was impending. The threat seemed grave as there were also reports that San Beda College and
Centro Escolar University would be forcibly occupied.

In its report, the Citizens' Mendiola Commission (a body specifically tasked to investigate the facts surrounding
the incident, Commission for short) stated that the government anti-riot forces were assembled at Mendiola in
a formation of three phalanges, in the following manner:

(1) The first line was composed of policemen from police stations Nos. 3, 4, 6, 7, 8, 9 and 10
and the Chinatown detachment of the Western Police District. Police Colonel Edgar Dula
Torres, Deputy Superintendent of the Western Police District, was designated as ground
commander of the CDC first line of defense. The WPD CDC elements were positioned at the
intersection of Mendiola and Legarda Streets after they were ordered to move forward from the
top of Mendiola bridge. The WPD forces were in khaki uniform and carried the standard CDC
equipment — aluminum shields, truncheons and gas masks.

(2) At the second line of defense about ten (10) yards behind the WPD policemen were the
elements of the Integrated National Police (INP) Field Force stationed at Fort Bonifacio from the
61st and 62nd INP Field Force, who carried also the standard CDC equipment — truncheons,
shields and gas masks. The INP Field Force was under the command of Police Major Demetrio
dela Cruz.

(3) Forming the third line was the Marine Civil Disturbance Control Battalion composed of the
first and second companies of the Philippine Marines stationed at Fort Bonifacio. The marines
were all equipped with shields, truncheons and M-16 rifles (armalites) slung at their
backs, under the command of Major Felimon B. Gasmin. The Marine CDC Battalion was
positioned in line formation ten (10) yards farther behind the INP Field Force.

At the back of the marines were four (4) 6 x 6 army trucks, occupying the entire width of
Mendiola street, followed immediately by two water cannons, one on each side of the street and
eight fire trucks, four trucks on each side of the street. The eight fire trucks from Fire District I of
Manila under Fire Superintendent Mario C. Tanchanco, were to supply water to the two water
cannons.

Stationed farther behind the CDC forces were the two Mobile Dispersal Teams (MDT) each
composed of two tear gas grenadiers, two spotters, an assistant grenadier, a driver and the
team leader.

In front of the College of the Holy Spirit near Gate 4 of Malacañang stood the VOLVO Mobile
Communications Van of the Commanding General of CAPCOM/INP, General Ramon E.
Montaño. At this command post, after General Montaño had conferred with TF Nazareno
 Page 60 of 129

Commander, Colonel Cezar Nazareno, about the adequacy and readiness of his forces, it was
agreed that Police General Alfredo S. Lim would designate Police Colonel Edgar Dula
Torres and Police Major Conrado Francisco as negotiators with the marchers. Police General
Lim then proceeded to the WPD CDC elements already positioned at the foot of Mendiola
bridge to relay to Police Colonel Torres and Police Major Francisco the instructions that the
latter would negotiate with the marchers.5 (Emphasis supplied)

The marchers, at around 4:30 p.m., numbered about 10,000 to 15,000. From C.M. Recto Avenue, they
proceeded toward the police lines. No dialogue took place between the marchers and the anti-riot squad. It
was at this moment that a clash occurred and, borrowing the words of the Commission "pandemonium broke
loose". The Commission stated in its findings, to wit:

. . . There was an explosion followed by throwing of pillboxes, stones and bottles. Steel bars,
wooden clubs and lead pipes were used against the police. The police fought back with their
shields and truncheons. The police line was breached. Suddenly shots were heard. The
demonstrators disengaged from the government forces and retreated towards C.M. Recto
Avenue. But sporadic firing continued from the government forces.

After the firing ceased, two MDTs headed by Lt. Romeo Paquinto and Lt. Laonglaan Goce sped
towards Legarda Street and lobbed tear gas at the remaining rallyist still grouped in the vicinity
of Mendiola. After dispersing the crowd, the two MDTs, together with the two WPD MDTs,
proceeded to Liwasang Bonifacio upon order of General Montaño to disperse the rallyists
assembled thereat. Assisting the MDTs were a number of policemen from the WPD, attired in
civilian clothes with white head bands, who were armed with long firearms.6 (Emphasis ours)

After the clash, twelve (12) marchers were officially confirmed dead, although according to Tadeo, there were
thirteen (13) dead, but he was not able to give the name and address of said victim. Thirty-nine (39) were
wounded by gunshots and twelve (12) sustained minor injuries, all belonging to the group of the marchers.

Of the police and military personnel, three (3) sustained gunshot wounds and twenty (20) suffered minor
physical injuries such as abrasions, contusions and the like.

In the aftermath of the confrontation, then President Corazon C. Aquino issued Administrative Order No.
11,7 (A.O. 11, for brevity) dated January 22, 1987, which created the Citizens' Mendiola Commission. The body
was composed of retired Supreme Court Justice Vicente Abad Santos as Chairman, retired Supreme Court
Justice Jose Y. Feria and Mr. Antonio U. Miranda, both as members. A.O. 11 stated that the Commission was
created precisely for the "purpose of conducting an investigation of the disorder, deaths, and casualties that
took place in the vicinity of Mendiola Bridge and Mendiola Street and Claro M. Recto Avenue, Manila, in the
afternoon of January 22, 1987". The Commission was expected to have submitted its findings not later than
February 6, 1987. But it failed to do so. Consequently, the deadline was moved to February 16, 1987 by
Administrative Order No. 13. Again, the Commission was unable to meet this deadline. Finally, on February 27,
1987, it submitted its report, in accordance with Administrative Order No. 17, issued on February 11, 1987.

In its report, the Commission recapitulated its findings, to wit:

(1) The march to Mendiola of the KMP led by Jaime Tadeo, together with the other sectoral
groups, was not covered by any permit as required under Batas Pambansa Blg. 880, the Public
Assembly Act of 1985, in violation of paragraph (a) Section 13, punishable under paragraph (a),
Section 14 of said law.

(2) The crowd dispersal control units of the police and the military were armed with .38 and .45
caliber handguns, and M-16 armalites, which is a prohibited act under paragraph 4(g), Section
13, and punishable under paragraph (b), Section 14 of Batas Pambansa Blg. 880.
 Page 61 of 129

(3) The security men assigned to protect the WPD, INP Field Force, the Marines and supporting
military units, as well as the security officers of the police and military commanders were
in civilian attire in violation of paragraph (a), Section 10, Batas Pambansa 880.

(4) There was unnecessary firing by the police and military crowd dispersal control units in
dispersing the marchers, a prohibited act under paragraph (e), Section 13, and punishable
under paragraph (b), Section 14, Batas Pambansa Blg. 880.

(5) The carrying and use of steel bars, pillboxes, darts, lead pipe, wooden clubs with spikes, and
guns by the marchers as offensive weapons are prohibited acts punishable under paragraph
(g), Section 13, and punishable under paragraph (e), Section 14 of Batas Pambansa Blg. 880.

(6) The KMP farmers broke off further negotiations with the MAR officials and were determined
to march to Malacañang, emboldened as they are, by the inflammatory and incendiary
utterances of their leader, Jaime Tadeo — "bubutasin namin ang barikada . . Dadanak and
dugo . . . Ang nagugutom na magsasaka ay gagawa ng sariling butas. . .

(7) There was no dialogue between the rallyists and the government forces. Upon approaching
the intersections of Legarda and Mendiola, the marchers began pushing the police lines and
penetrated and broke through the first line of the CDC contingent.

(8) The police fought back with their truncheons and shields. They stood their ground but the
CDC line was breached. There ensued gunfire from both sides. It is not clear who started the
firing.

(9) At the onset of the disturbance and violence, the water cannons and tear gas were not put
into effective use to disperse the rioting crowd.

(10) The water cannons and fire trucks were not put into operation because (a) there was no
order to use them; (b) they were incorrectly prepositioned; and (c) they were out of range of the
marchers.

(11) Tear gas was not used at the start of the disturbance to disperse the rioters. After the
crowd had dispersed and the wounded and dead were being carried away, the MDTs of the
police and the military with their tear gas equipment and components conducted dispersal
operations in the Mendiola area and proceeded to Liwasang Bonifacio to disperse the remnants
of the marchers.

(12) No barbed wire barricade was used in Mendiola but no official reason was given for its
absence.8

From the results of the probe, the Commission recommended9 the criminal prosecution of four unidentified,
uniformed individuals, shown either on tape or in pictures, firing at the direction of the marchers. In connection
with this, it was the Commission's recommendation that the National Bureau of Investigation (NBI) be tasked to
undertake investigations regarding the identities of those who actually fired their guns that resulted in the death
of or injury to the victims of the incident. The Commission also suggested that all the commissioned officers of
both the Western Police District and the INP Field Force, who were armed during the incident, be prosecuted
for violation of paragraph 4(g) of Section 13, Batas Pambansa Blg. 880, the Public Assembly Act of 1985. The
Commission's recommendation also included the prosecution of the marchers, for carrying deadly or offensive
weapons, but whose identities have yet to be established. As for Jaime Tadeo, the Commission said that he
should be prosecuted both for violation of paragraph (a), Section 13, Batas Pambansa Blg. 880 for holding the
rally without a permit and for violation of Article 142, as amended, of the Revised Penal Code for inciting to
sedition. As for the following officers, namely: (1) Gen. Ramon E. Montaño; (2) Police Gen. Alfredo S. Lim; (3)
 Page 62 of 129

Police Gen. Edgar Dula Torres; (4) Police Maj. Demetrio dela Cruz; (5) Col. Cezar Nazareno; and (5) Maj.
Felimon Gasmin, for their failure to make effective use of their skill and experience in directing the dispersal
operations in Mendiola, administrative sanctions were recommended to be imposed.

The last and the most significant recommendation of the Commission was for the deceased and wounded
victims of the Mendiola incident to be compensated by the government. It was this portion that petitioners
(Caylao group) invoke in their claim for damages from the government.

Notwithstanding such recommendation, no concrete form of compensation was received by the victims. Thus,
on July 27, 1987, herein petitioners, (Caylao group) filed a formal letter of demand for compensation from the
Government. 10 This formal demand was indorsed by the office of the Executive Secretary to the Department of
Budget and Management (DBM) on August 13, 1987. The House Committee on Human Rights, on February
10, 1988, recommended the expeditious payment of compensation to the Mendiola victims. 11

After almost a year, on January 20, 1988, petitioners (Caylao group) were constrained to institute an action for
damages against the Republic of the Philippines, together with the military officers, and personnel involved in
the Mendiola incident, before the trial court. The complaint was docketed as Civil Case No. 88-43351.

On February 23, 1988, the Solicitor General filed a Motion to Dismiss on the ground that the State cannot be
sued without its consent. Petitioners opposed said motion on March 16, 1988, maintaining that the State has
waived its immunity from suit and that the dismissal of the instant action is contrary to both the Constitution and
the International Law on Human Rights.

Respondent Judge Sandoval, in his first questioned Order, dismissed the complaint as against the Republic of
the Philippines on the ground that there was no waiver by the State. Petitioners (Caylao group) filed a Motion
for Reconsideration therefrom, but the same was denied by respondent judge in his Order dated August 8,
1988. Consequently, Caylao and her co-petitioners filed the instant petition.

On the other hand, the Republic of the Philippines, together with the military officers and personnel impleaded
as defendants in the court below, filed its petition for certiorari.

Having arisen from the same factual beginnings and raising practically identical issues, the two (2) petitions
were consolidated and will therefore be jointly dealt with and resolved in this Decision.

The resolution of both petitions revolves around the main issue of whether or not the State has waived its
immunity from suit.

Petitioners (Caylao group) advance the argument that the State has impliedly waived its sovereign immunity
from suit. It is their considered view that by the recommendation made by the Commission for the government
to indemnify the heirs and victims of the Mendiola incident and by the public addresses made by then
President Aquino in the aftermath of the killings, the State has consented to be sued.

Under our Constitution the principle of immunity of the government from suit is expressly provided in Article
XVI, Section 3. The principle is based on the very essence of sovereignty, and on the practical ground that
there can be no legal right as against the authority that makes the law on which the right depends. 12 It also
rests on reasons of public policy — that public service would be hindered, and the public endangered, if the
sovereign authority could be subjected to law suits at the instance of every citizen and consequently controlled
in the uses and dispositions of the means required for the proper administration of the government. 13

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

Firstly, the recommendation made by the Commission regarding indemnification of the heirs of the deceased
and the victims of the incident by the government does not in any way mean that liability automatically attaches
 Page 63 of 129

to the State. It is important to note that A.O. 11 expressly states that the purpose of creating the Commission
was to have a body that will conduct an "investigation of the disorder, deaths and casualties that took
place." 14 In the exercise of its functions, A.O. 11 provides guidelines, and what is relevant to Our discussion
reads:

1 Its conclusions regarding the existence of probable cause for the commission of any offense
and of the persons probably guilty of the same shall be sufficient compliance with the rules on
preliminary investigation and the charges arising therefrom may be filed directly with the proper
court. 15

In effect, whatever may be the findings of the Commission, the same shall only serve as the cause of action in
the event that any party decides to litigate his/her claim. Therefore, the Commission is merely a preliminary
venue. The Commission is not the end in itself. Whatever recommendation it makes cannot in any way bind
the State immediately, such recommendation not having become final and, executory. This is precisely the
essence of it being a fact-finding body.

Secondly, whatever acts or utterances that then President Aquino may have done or said, the same are not
tantamount to the State having waived its immunity from suit. The President's act of joining the marchers, days
after the incident, does not mean that there was an admission by the State of any liability. In fact to borrow the
words of petitioners (Caylao group), "it was an act of solidarity by the government with the people". Moreover,
petitioners rely on President Aquino's speech promising that the government would address the grievances of
the rallyists. By this alone, it cannot be inferred that the State has admitted any liability, much less can it be
inferred that it has consented to the suit.

Although consent to be sued may be given impliedly, still it cannot be maintained that such consent was given
considering the circumstances obtaining in the instant case.

Thirdly, the case does not qualify as a suit against the State.

Some instances when a suit against the State is proper are: 16

(1) When the Republic is sued by name;

(2) When the suit is against an unincorporated government agency;

(3) When the, suit is on its face against a government officer but the case is such that ultimate liability will
belong not to the officer but to the government.

While the Republic in this case is sued by name, the ultimate liability does not pertain to the government.
Although the military officers and personnel, then party defendants, were discharging their official functions
when the incident occurred, their functions ceased to be official the moment they exceeded their authority.
Based on the Commission findings, there was lack of justification by the government forces in the use of
firearms. 17 Moreover, the members of the police and military crowd dispersal units committed a prohibited act
under B.P. Blg. 880 18 as there was unnecessary firing by them in dispersing the marchers. 19

As early as 1954, this Court has pronounced that an officer cannot shelter himself by the plea that he is a
public agent acting under the color of his office when his acts are wholly without authority. 20 Until recently in
1991, 21 this doctrine still found application, this Court saying that immunity from suit cannot institutionalize
irresponsibility and non-accountability nor grant a privileged status not claimed by any other official of the
Republic. The military and police forces were deployed to ensure that the rally would be peaceful and orderly
as well as to guarantee the safety of the very people that they are duty-bound to protect. However, the facts as
found by the trial court showed that they fired at the unruly crowd to disperse the latter.
 Page 64 of 129

While it is true that nothing is better settled than the general rule that a sovereign state and its political
subdivisions cannot be sued in the courts except when it has given its consent, it cannot be invoked by both
the military officers to release them from any liability, and by the heirs and victims to demand indemnification
from the government. The principle of state immunity from suit does not apply, as in this case, when the relief
demanded by the suit requires no affirmative official action on the part of the State nor the affirmative
discharge of any obligation which belongs to the State in its political capacity, even though the officers or
agents who are made defendants claim to hold or act only by virtue of a title of the state and as its agents and
servants. 22 This Court has made it quite clear that even a "high position in the government does not confer a
license to persecute or recklessly injure another." 23

The inescapable conclusion is that the State cannot be held civilly liable for the deaths that followed the
incident. Instead, the liability should fall on the named defendants in the lower court. In line with the ruling of
this court in Shauf vs. Court of Appeals, 24 herein public officials, having been found to have acted beyond the
scope of their authority, may be held liable for damages.

WHEREFORE, finding no reversible error and no grave abuse of discretion committed by respondent Judge in
issuing the questioned orders, the instant petitions are hereby DISMISSED.

SO ORDERED.

STATE IMMUNITY: CONSENT: EXPRESS CONSENT

G.R. No. L-26400 February 29, 1972

VICTORIA AMIGABLE, plaintiff-appellant,
vs.
NICOLAS CUENCA, as Commissioner of Public Highways and REPUBLIC OF THE
PHILIPPINES, defendants-appellees.

This is an appeal from the decision of the Court of First Instance of Cebu in its Civil Case No. R-5977,
dismissing the plaintiff's complaint.

Victoria Amigable, the appellant herein, is the registered owner of Lot No. 639 of the Banilad Estate in Cebu
City as shown by Transfer Certificate of Title No. T-18060, which superseded Transfer Certificate of Title No.
RT-3272 (T-3435) issued to her by the Register of Deeds of Cebu on February 1, 1924. No annotation in favor
of the government of any right or interest in the property appears at the back of the certificate. Without prior
expropriation or negotiated sale, the government used a portion of said lot, with an area of 6,167 square
meters, for the construction of the Mango and Gorordo Avenues.

It appears that said avenues were already existing in 1921 although "they were in bad condition and very
narrow, unlike the wide and beautiful avenues that they are now," and "that the tracing of said roads was
begun in 1924, and the formal construction in
1925." *
 Page 65 of 129

On March 27, 1958 Amigable's counsel wrote the President of the Philippines, requesting payment of the
portion of her lot which had been appropriated by the government. The claim was indorsed to the Auditor
General, who disallowed it in his 9th Indorsement dated December 9, 1958. A copy of said indorsement was
transmitted to Amigable's counsel by the Office of the President on January 7, 1959.

On February 6, 1959 Amigable filed in the court a quo a complaint, which was later amended on April 17, 1959
upon motion of the defendants, against the Republic of the Philippines and Nicolas Cuenca, in his capacity as
Commissioner of Public Highways for the recovery of ownership and possession of the 6,167 square meters of
land traversed by the Mango and Gorordo Avenues. She also sought the payment of compensatory damages
in the sum of P50,000.00 for the illegal occupation of her land, moral damages in the sum of P25,000.00,
attorney's fees in the sum of P5,000.00 and the costs of the suit.

Within the reglementary period the defendants filed a joint answer denying the material allegations of the
complaint and interposing the following affirmative defenses, to wit: (1) that the action was premature, the
claim not having been filed first with the Office of the Auditor General; (2) that the right of action for the
recovery of any amount which might be due the plaintiff, if any, had already prescribed; (3) that the action
being a suit against the Government, the claim for moral damages, attorney's fees and costs had no valid
basis since as to these items the Government had not given its consent to be sued; and (4) that inasmuch as it
was the province of Cebu that appropriated and used the area involved in the construction of Mango Avenue,
plaintiff had no cause of action against the defendants.

During the scheduled hearings nobody appeared for the defendants notwithstanding due notice, so the trial
court proceeded to receive the plaintiff's evidence ex parte. On July 29, 1959 said court rendered its decision
holding that it had no jurisdiction over the plaintiff's cause of action for the recovery of possession and
ownership of the portion of her lot in question on the ground that the government cannot be sued without its
consent; that it had neither original nor appellate jurisdiction to hear, try and decide plaintiff's claim for
compensatory damages in the sum of P50,000.00, the same being a money claim against the government;
and that the claim for moral damages had long prescribed, nor did it have jurisdiction over said claim because
the government had not given its consent to be sued. Accordingly, the complaint was dismissed. Unable to
secure a reconsideration, the plaintiff appealed to the Court of Appeals, which subsequently certified the case
to Us, there being no question of fact involved.

The issue here is whether or not the appellant may properly sue the government under the facts of the case.

In the case of Ministerio vs. Court of First Instance of Cebu,1 involving a claim for payment of the value of a
portion of land used for the widening of the Gorordo Avenue in Cebu City, this Court, through Mr. Justice
Enrique M. Fernando, held that where the government takes away property from a private landowner for public
use without going through the legal process of expropriation or negotiated sale, the aggrieved party may
properly maintain a suit against the government without thereby violating the doctrine of governmental
immunity from suit without its consent. We there said: .

... . If the constitutional mandate that the owner be compensated for property taken for public
use were to be respected, as it should, then a suit of this character should not be summarily
dismissed. The doctrine of governmental immunity from suit cannot serve as an instrument for
perpetrating an injustice on a citizen. Had the government followed the procedure indicated by
the governing law at the time, a complaint would have been filed by it, and only upon payment
of the compensation fixed by the judgment, or after tender to the party entitled to such payment
of the amount fixed, may it "have the right to enter in and upon the land so condemned, to
appropriate the same to the public use defined in the judgment." If there were an observance of
procedural regularity, petitioners would not be in the sad plaint they are now. It is unthinkable
then that precisely because there was a failure to abide by what the law requires, the
government would stand to benefit. It is just as important, if not more so, that there be fidelity to
legal norms on the part of officialdom if the rule of law were to be maintained. It is not too much
to say that when the government takes any property for public use, which is conditioned upon
 Page 66 of 129

the payment of just compensation, to be judicially ascertained, it makes manifest that it submits
to the jurisdiction of a court. There is no thought then that the doctrine of immunity from suit
could still be appropriately invoked.

Considering that no annotation in favor of the government appears at the back of her certificate of title and that
she has not executed any deed of conveyance of any portion of her lot to the government, the appellant
remains the owner of the whole lot. As registered owner, she could bring an action to recover possession of
the portion of land in question at anytime because possession is one of the attributes of ownership. However,
since restoration of possession of said portion by the government is neither convenient nor feasible at this time
because it is now and has been used for road purposes, the only relief available is for the government to make
due compensation which it could and should have done years ago. To determine the due compensation for the
land, the basis should be the price or value thereof at the time of the taking.2

As regards the claim for damages, the plaintiff is entitled thereto in the form of legal interest on the price of the
land from the time it was taken up to the time that payment is made by the government. 3 In addition, the
government should pay for attorney's fees, the amount of which should be fixed by the trial court after hearing.

WHEREFORE, the decision appealed from is hereby set aside and the case remanded to the court a quo for
the determination of compensation, including attorney's fees, to which the appellant is entitled as above
indicated. No pronouncement as to costs.

STATE IMMUNITY: CONSENT: EXPRESS CONSENT

G.R. No. 90478 November 21, 1991

REPUBLIC OF THE PHILIPPINES (PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT), petitioner,

vs.
SANDIGANBAYAN, BIENVENIDO R. TANTOCO, JR. and DOMINADOR R. SANTIAGO, respondents.

Private respondents Bienvenido R. Tantoco, Jr. and Dominador R. Santiago — together with Ferdinand E.
Marcos, Imelda R. Marcos, Bienvenido R. Tantoco, Sr., Gliceria R. Tantoco, and Maria Lourdes Tantoco-
Pineda-are defendants in Civil Case No. 0008 of the Sandiganbayan. The case was commenced on July 21,
1987 by the Presidential Commission on Good Government (PCGG) in behalf of the Republic of the
Philippines. The complaint which initiated the action was denominated one "for reconveyance, reversion,
accounting, restitution and damages," and was avowedly filed pursuant to Executive Order No. 14 of President
Corazon C. Aquino.

After having been served with summons, Tantoco, Jr. and Santiago, instead of filing their answer, jointly filed a
"MOTION TO STRIKE OUT SOME PORTIONS OF THE COMPLAINT AND FOR BILL OF PARTICULARS OF
OTHER PORTIONS" dated Nov. 3, 1987. 1 The PCGG filed an opposition thereto, 2 and the movants, a reply
to the opposition. 3 By order dated January 29, 1988, the Sandiganbayan, in order to expedite proceedings
and accommodate the defendants, gave the PCGG forty-five (45) days to expand its complaint to make more
specific certain allegations. 4
 Page 67 of 129

Tantoco and Santiago then presented a "motion for leave to file interrogatories under Rule 25 of the Rules of
Court" dated February 1, 1988, and "Interrogatories under Rule 25." 5 Basically, they sought an answer to the
question: "Who were the Commissioners of the PCGG (aside from its Chairman, Hon. Ramon Diaz, who
verified the complaint) who approved or authorized the inclusion of Messrs. Bienvenido R. Tantoco, Jr. and
Dominador R. Santiago as defendants in the . . case?" 6 The PCGG responded by filing a motion dated
February 9, 1988 to strike out said motion and interrogatories as being impertinent, "queer," "weird," or
"procedurally bizarre as the purpose thereof lacks merit as it is improper, impertinent and irrelevant under any
guise." 7

On March 18, 1988, in compliance with the Order of January 29, 1988, the PCGG filed an Expanded
Complaint. 8 As this expanded complaint, Tantoco and Santiago reiterated their motion for bill of particulars,
through a Manifestation dated April 11, 1988. 9

Afterwards, by Resolution dated July 4, 1988, 10 the Sandiganbayan denied the motion to strike out, for bill of
particulars, and for leave to file interrogatories, holding them to be without legal and factual basis. Also denied
was the PCGG's motion to strike out impertinent pleading dated February 9, 1988. The Sandiganbayan
declared inter alia the complaint to be "sufficiently definite and clear enough," there are adequate allegations . .
which clearly portray the supposed involvement and/or alleged participation of defendants-movants in the
transactions described in detail in said Complaint," and "the other matters sought for particularization are
evidentiary in nature which should be ventilated in the pre-trial or trial proper . ." It also opined that "(s)ervice of
interrogatories before joinder of issue and without leave of court is premature . . (absent) any special or
extraordinary circumstances . . which would justify . . (the same)."

Tantoco and Santiago then filed an Answer with Compulsory Counterclaim under date of July 18, 1988. 11 In
response, the PCGG presented a "Reply to Answer with Motion to Dismiss Compulsory Counterclaim " 12

The case was set for pre-trial on July 31, 1989. 13 On July 25, 1989, the PCGG submitted its PRE-
TRIAL. 14 The pre-trial was however reset to September 11, 1989, and all other parties were required to
submit pre-trial briefs on or before that date. 15

On July 27, 1989 Tantoco and Santiago filed with the Sandiganbayan a pleading denominated "Interrogatories
to Plaintiff," 16 and on August 2, 1989, an "Amended Interrogatories to Plaintiff"' 17 as well as a Motion for
Production and Inspection of Documents. 18

The amended interrogatories chiefly sought factual details relative to specific averments of PCGG's amended
complaint, through such questions, for instance, as—

1. In connection with the allegations . . in paragraph 1 . ., what specific property or properties does the
plaintiff claim it has the right to recover from defendants Tantoco, Jr. and Santiago for being ill-gotten?

3. In connection with the allegations . . in paragraph 10 (a) . . what specific act or acts . . were
committed by defendants Tantoco, Jr. and Santiago in "concert with" defendant Ferdinand Marcos and
in furtherance or pursuit, of the alleged systematic plan of said defendant Marcos to accumulate ill-
gotten wealth?"

5. In connection with . . paragraph 13 . ., what specific act or acts of the defendants Tantoco, Jr. and
Santiago . . were committed by said defendants as part, or in furtherance, of the alleged plan to
conceal assets of defendants Ferdinand and Imelda Marcos?

7. In connection with . . paragraph 15(c) . . is it plaintiff's position or theory of the case that Tourist Duty
Free Shops, Inc., including all the assets of said corporation, are beneficially owned by either or both
defendants Ferdinand and Imelda Marcos and that the defendants Tantoco, Jr. and Santiago, as well
 Page 68 of 129

as, the other stockholders of record of the same corporation are mere "dummies" of said defendants
Ferdinand and /or Imelda R. Marcos?

On the other hand, the motion for production and inspection of documents prayed for examination and copying
of—

1) the "official records and other evidence" on the basis of which the verification of the Amended
Complaint asserted that the allegations thereof are "true and correct;"

2) the documents listed in PCGG's Pre-Trial Brief as those "intended to be presented and . . marked as
exhibits for the plaintiff;" and

3) "the minutes of the meeting of the PCGG which chronicles the discussion (if any) and the decision
(of the Chairman and members) to file the complaint" in the case at bar.

By Resolutions dated August 21, 1989 and August 25, 1989, the Sandiganbayan admitted the Amended
Interrogatories and granted the motion for production and inspection of documents (production being
scheduled on September 14 and 15, 1989), respectively.

On September 1, 1989, the PCGG filed a Motion for Reconsideration of the Resolution of August 25, 1989
(allowing production and inspection of documents). It argued that

1) since the documents subject thereof would be marked as exhibits during the pre-trial on September 11,
1989 anyway, the order for "their production and inspection on September 14 and 15, are purposeless and
unnecessary;"

2) movants already know of the existence and contents of the document which "are clearly described . . (in)
plaintiff's Pre-Trial Brief;"

3) the documents are "privileged in character" since they are intended to be used against the PCGG and/or its
Commissioners in violation of Section 4, Executive Order No. 1, viz.:

(a) No civil action shall lie against the Commission or any member thereof for anything done or omitted
in the discharge of the task contemplated by this Order.

(b) No member or staff of the Commission shall be required to testify or produce evidence in any
judicial, legislative, or administrative proceeding concerning matters within its official cognizance.

It also filed on September 4, 1989 an opposition to the Amended Interrogatories, 19 which the Sandiganbayan
treated as a motion for reconsideration of the Resolution of August 21, 1989 (admitting the Amended
Interrogatories). The opposition alleged that —

1) the interrogatories "are not specific and do not name the person to whom they are propounded . .," or "who
in the PCGG, in particular, . . (should) answer the interrogatories;"

2) the interrogatories delve into "factual matters which had already been decreed . . as part of the proof of the
Complaint upon trial . .;"

3) the interrogatories "are frivolous" since they inquire about "matters of fact . . which defendants . . sought
to . . (extract) through their aborted Motion for Bill of Particulars;"

4) the interrogatories "are really in the nature of a deposition, which is prematurely filed and irregularly utilized .
. (since) the order of trial calls for plaintiff to first present its evidence."
 Page 69 of 129

Tantoco and Santiago filed a reply and opposition on September 18, 1989.

After hearing, the Sandiganbayan promulgated two (2) Resolutions on September 29, 1989, the first, denying
reconsideration (of the Resolution allowing production of documents), and the second, reiterating by
implication the permission to serve the amended interrogatories on the plaintiff (PCGG). 20

Hence, this petition for certiorari.

The PCGG contends that said orders, both dated September 29, 1989, should be nullified because rendered
with grave abuse of discretion amounting to excess of jurisdiction. More particularly, it claims —

a) as regards the order allowing the amended interrogatories to the plaintiff PCGG:

1) that said interrogatories are not specific and do not name the particular individuals to whom they are
propounded, being addressed only to the PCGG;

2) that the interrogatories deal with factual matters which the Sandiganbayan (in denying the movants'
motion for bill of particulars) had already declared to be part of the PCGG's proof upon trial; and

3) that the interrogatories would make PCGG Commissioners and officers witnesses, in contravention
of Executive Order No. 14 and related issuances; and

b) as regards the order granting the motion for production of documents:

1) that movants had not shown any good cause therefor;

2) that some documents sought to be produced and inspected had already been presented in Court
and marked preliminarily as PCGG's exhibits, and the movants had viewed, scrutinized and even
offered objections thereto and made comments thereon; and

3) that the other documents sought to be produced are either —

(a) privileged in character or confidential in nature and their use is proscribed by the immunity
provisions of Executive Order No. 1, or

(b) non-existent, or mere products of the movants' suspicion and fear.

This Court issued a temporary restraining order on October 27, 1989, directing the Sandiganbayan to
desist from enforcing its questioned resolutions of September 29, 1989 in Civil Case No. 0008. 21

After the issues were delineated and argued at no little length by the parties, the Solicitor General
withdrew "as counsel for plaintiff . . with the reservation, however, conformably with Presidential Decree
No. 478, the provisions of Executive Order No. 292, as well as the decisional law of 'Orbos v. Civil
Service Commission, et al.,' (G.R. No. 92561, September 12, 1990) 22 to submit his
comment/observation on incidents/matters pending with this . . Court if called for by circumstances in
the interest of the Government or if he is so required by the Court." 23 This, the Court allowed by
Resolution dated January 21, 1991. 24

Subsequently, PCGG Commissioner Maximo A. Maceren advised the Court that the cases from which
the Solicitor General had withdrawn would henceforth be under his (Maceren's) charge "and/or any of
 Page 70 of 129

the following private attorneys: Eliseo B. Alampay, Jr., Mario E. Ongkiko, Mario Jalandoni and such
other attorneys as it may later authorize." 25

The facts not being in dispute, and it appearing that the parties have fully ventilated their respective
positions, the Court now proceeds to decide the case.

Involved in the present proceedings are two of the modes of discovery provided in the Rules of Court:
interrogatories to parties , 26 and production and inspection of documents and things. 27 Now, it
appears to the Court that among far too many lawyers (and not a few judges), there is, if not a
regrettable unfamiliarity and even outright ignorance about the nature, purposes and operation of the
modes of discovery, at least a strong yet unreasoned and unreasonable disinclination to resort to them
— which is a great pity for the intelligent and adequate use of the deposition-discovery mechanism,
coupled with pre-trial procedure, could, as the experience of other jurisdictions convincingly
demonstrates, effectively shorten the period of litigation and speed up adjudication. 28 Hence, a few
words about these remedies is not at all inappropriate.

The resolution of controversies is, as everyone knows, the raison d'etre of courts. This essential
function is accomplished by first, the ascertainment of all the material and relevant facts from the
pleadings and from the evidence adduced by the parties, and second, after that determination of the
facts has been completed, by the application of the law thereto to the end that the controversy may be
settled authoritatively, definitely and finally.

It is for this reason that a substantial part of the adjective law in this jurisdiction is occupied with
assuring that all the facts are indeed presented to the Court; for obviously, to the extent that
adjudication is made on the basis of incomplete facts, to that extent there is faultiness in the
approximation of objective justice. It is thus the obligation of lawyers no less than of judges to see that
this objective is attained; that is to say, that there no suppression, obscuration, misrepresentation or
distortion of the facts; and that no party be unaware of any fact material a relevant to the action, or
surprised by any factual detail suddenly brought to his attention during the trial. 29

Seventy-one years ago, in Alonso v. Villamor, 30 this Court described the nature and object of litigation
and in the process laid down the standards by which judicial contests are to be conducted in this
jurisdiction. It said:

A litigation is not a game of technicalities in which one, more deeply schooled and skilled in the
subtle art of movement and position, entraps and destroys the other. It is, rather a contest in
which each contending party fully and fairly lays before the court the facts in issue and then
brushing aside as wholly trivial and indecisive all imperfections of form and technicalities of
procedure, asks that justice be done on the merits. Lawsuits, unlike duels, are not to be won by
a rapier's thrust. Technicality, when it deserts its proper office as an aid to justice and becomes
its great hindrance and chief enemy, deserves scant consideration from courts. There should be
no vested right in technicalities. . . .

The message is plain. It is the duty of each contending party to lay before the court the facts in issue-
fully and fairly; i.e., to present to the court all the material and relevant facts known to him, suppressing
or concealing nothing, nor preventing another party, by clever and adroit manipulation of the technical
rules of pleading and evidence, from also presenting all the facts within his knowledge.
 Page 71 of 129

Initially, that undertaking of laying the facts before the court is accomplished by the pleadings filed by
the parties; but that, only in a very general way. Only "ultimate facts" are set forth in the pleadings;
hence, only the barest outline of the facfual basis of a party's claims or defenses is limned in his
pleadings. The law says that every pleading "shall contain in a methodical and logical form, a plain,
concise and direct statement of the ultimate facts on which the party pleading relies for his claim or
defense, as the case may be, omitting the statement of mere evidentiary facts." 31

Parenthetically, if this requirement is not observed, i.e., the ultimate facts are alleged too generally or
"not averred with sufficient definiteness or particularity to enable . . (an adverse party) properly to
prepare his responsive pleading or to prepare for trial," a bill of particulars seeking a "more definite
statement" may be ordered by the court on motion of a party. The office of a bill of particulars is,
however, limited to making more particular or definite the ultimate facts in a pleading It is not its office to
supply evidentiary matters. And the common perception is that said evidentiary details are made known
to the parties and the court only during the trial, when proof is adduced on the issues of fact arising
from the pleadings.

The truth is that "evidentiary matters" may be inquired into and learned by the parties before the trial.
Indeed, it is the purpose and policy of the law that the parties — before the trial if not indeed even
before the pre-trial — should discover or inform themselves of all the facts relevant to the action, not
only those known to them individually, but also those known to adversaries; in other words,
the desideratum is that civil trials should not be carried on in the dark; and the Rules of Court make this
ideal possible through the deposition-discovery mechanism set forth in Rules 24 to 29. The experience
in other jurisdictions has been that ample discovery before trial, under proper regulation, accomplished
one of the most necessary of modern procedure: it not only eliminates unessential issue from trials
thereby shortening them considerably, but also requires parties to play the game with the cards on the
table so that the possibility of fair settlement before trial is measurably increased. . ." 32

As just intimated, the deposition-discovery procedure was designed to remedy the conceded
inadequacy and cumbersomeness of the pre-trial functions of notice-giving, issue-formulation and fact
revelation theretofore performed primarily by the pleadings.

The various modes or instruments of discovery are meant to serve (1) as a device, along with the pre-
trial hearing under Rule 20, to narrow and clarify the basic issues between the parties, and (2) as a
device for ascertaining the facts relative to those issues. The evident purpose is, to repeat, to enable
parties, consistent with recognized privileges, to obtain the fullest possible knowledge of the issues and
facts before trials and thus prevent that said trials are carried on in the dark. 33

To this end, the field of inquiry that may be covered by depositions or interrogatories is as broad as
when the interrogated party is called as a witness to testify orally at trial. The inquiry extends to all facts
which are relevant, whether they be ultimate or evidentiary, excepting only those matters which are
privileged. The objective is as much to give every party the fullest possible information of all the
relevant facts before the trial as to obtain evidence for use upon said trial. The principle is reflected in
Section 2, Rule 24 (governing depositions) 34 which generally allows the examination of a deponent —
 Page 72 of 129

1) "regarding any matter, not privileged, which is relevant to the subject of the pending action,
whether relating to the claim or defense of any other party;"

2) as well as:

(a) "the existence, description, nature, custody, condition and location of any books, documents,
or other tangible things" and

(b) "the identity and location of persons having knowledge of relevant facts."

What is chiefly contemplated is the discovery of every bit of information which may be useful in the
preparation for trial, such as the identity and location of persons having knowledge of relevant facts;
those relevant facts themselves; and the existence, description, nature, custody, condition, and location
of any books, documents, or other tangible things. Hence, "the deposition-discovery rules are to be
accorded a broad and liberal treatment. No longer can the time-honored cry of "fishing expedition"
serve to preclude a party from inquiring into the facts underlying his opponent's case. Mutual
knowledge of all the relevant facts gathered by both parties is essential to proper litigation. To that end,
either party may compel the other to disgorge whatever facts he has in his possession. The deposition-
discovery procedure simply advances the stage at which the disclosure can be compelled from the time
of trial to the period preceding it, thus reducing the possibility, of surprise, . . . 35

In line with this principle of according liberal treatment to the deposition-discovery mechanism, such
modes of discovery as (a) depositions (whether by oral examination or written interrogatories) under
Rule 24, (b) interrogatories to parties under Rule 25, and (c) requests for admissions under Rule 26,
may be availed of without leave of court, and generally, without court intervention. The Rules of Court
explicitly provide that leave of court is not necessary to avail of said modes of discovery after an answer
to the complaint has been served. 36 It is only when an answer has not yet been filed (but after
jurisdiction has been obtained over the defendant or property subject of the action) that prior leave of
court is needed to avail of these modes of discovery, the reason being that at that time the issues are
not yet joined and the disputed facts are not clear. 37

On the other hand, leave of court is required as regards discovery by (a) production or inspection of
documents or things in accordance with Rule 27, or (b) physical and mental examination of persons
under Rule 28, which may be granted upon due application and a showing of due cause.

To ensure that availment of the modes of discovery is otherwise untrammeled and efficacious, the law
imposes serious sanctions on the party who refuses to make discovery, such as dismissing the action
or proceeding or part thereof, or rendering judgment by default against the disobedient party; contempt
of court, or arrest of the party or agent of the party; payment of the amount of reasonable expenses
incurred in obtaining a court order to compel discovery; taking the matters inquired into as established
in accordance with the claim of the party seeking discovery; refusal to allow the disobedient party
support or oppose designated claims or defenses; striking out pleadings or parts thereof; staying further
proceedings. 38

Of course, there are limitations to discovery, even when permitted to be undertaken without leave and
without judicial intervention. "As indicated by (the) Rules . . ., limitations inevitably arise when it can be
shown that the examination is being conducted in bad faith or in such a manner as to annoy, embarass,
or oppress the person subject to the inquiry.  39 And . . . further limitations come into existence when
the inquiry touches upon the irrelevant or encroaches upon the recognized domains of privilege." 40
 Page 73 of 129

In fine, the liberty of a party to make discovery is well nigh unrestricted if the matters inquired into are
otherwise relevant and not privileged, and the inquiry is made in good faith and within the bounds of the
law.

It is in light of these broad principles underlying the deposition-discovery mechanism, in relation of

course to the particular rules directly involved, that the issues in this case will now be resolved.

The petitioner's objections to the interrogatories served on it in accordance with Rule 25 of the Rules of
Court cannot be sustained.

It should initially be pointed out — as regards the private respondents "Motion for Leave to File
Interrogatories" dated February 1, 1988 41 — that it was correct for them to seek leave to serve
interrogatories, because discovery was being availed of before an answer had been served. In such a
situation, i.e., "after jurisdiction has been obtained over any defendant or over property subject of the
action" but before answer, Section 1 of Rule 24 (treating of depositions), in relation to Section 1 of Rule
25 (dealing with interrogatories to parties) explicitly requires "leave of court." 42 But there was no need
for the private respondents to seek such leave to serve their "Amended Interrogatories to Plaintiff"
(dated August 2, 1989 43) after they had filed their answer to the PCGG's complaint, just as there was
no need for the Sandiganbayan to act thereon.

1. The petitioner's first contention — that the interrogatories in question are defective because they (a)
do not name the particular individuals to whom they are propounded, being addressed only to the
PCGG, and (b) are "fundamentally the same matters . . (private respondents) sought to be clarified
through their aborted Motion . . for Bill of Particulars" — are untenable and quickly disposed of.

The first part of petitioner's submission is adequately confuted by Section 1, Rule 25 which states that if
the party served with interrogatories is a juridical entity such as "a public or private corporation or a
partnership or association," the same shall be "answered . . by any officer thereof competent to testify
in its behalf." There is absolutely no reason why this proposition should not be applied by analogy to
the interrogatories served on the PCGG. That the interrogatories are addressed only to the PCGG,
without naming any specific commissioner o officer thereof, is utterly of no consequence, and may not
be invoked as a reason to refuse to answer. As the rule states, the interrogatories shall be answered
"by any officer thereof competent to testify in its behalf."

That the matters on which discovery is desired are the same matters subject of a prior motion for bill of
particulars addressed to the PCGG's amended complaint — and denied for lack of merit — is beside
the point. Indeed, as already pointed out above, a bill of particulars may elicit only ultimate facts, not so-
called evidentiary facts. The latter are without doubt proper subject of discovery. 44

Neither may it be validly argued that the amended interrogatories lack specificity. The merest glance at
them disproves the argument. The interrogatories are made to relate to individual paragraphs of the
PCGG's expanded complaint and inquire about details of the ultimate facts therein alleged. What the
PCGG may properly do is to object to specific items of the interrogatories, on the ground of lack of
relevancy, or privilege, or that the inquiries are being made in bad faith, or simply to embarass or
oppress it. 45 But until such an objection is presented and sustained, the obligation to answer subsists.

2. That the interrogatories deal with factual matters which will be part of the PCGG's proof upon trial, is
not ground for suppressing them either. As already pointed out, it is the precise purpose of discovery to
ensure mutual knowledge of all the relevant facts on the part of all parties even before trial, this being
 Page 74 of 129

deemed essential to proper litigation. This is why either party may compel the other to disgorge
whatever facts he has in his possession; and the stage at which disclosure of evidence is made is
advanced from the time of trial to the period preceding it.

3. Also unmeritorious is the objection that the interrogatories would make PCGG Commissioners and
officers witnesses, in contravention of Executive Order No. 14 and related issuances. In the first place,
there is nothing at all wrong in a party's making his adversary his witness . 46 This is expressly allowed
by Section 6, Rule 132 of the Rules of Court, viz.:

Sec. 6. Direct examination of unwilling or hostile witnesses. — A party may . . . call an adverse
party or an officer, director, or managing agent of a public or private corporation or of a
partnership or association which is an adverse party, and interrogate him by leading questions
and contradict and impeach him in all respects as if he had been called by the adverse party,
and the witness thus called may be contradicted and impeached by or on behalf of the adverse
party also, and may be cross-examined by the adverse party only upon the subject-matter of his
examination in chief.

The PCGG insinuates that the private respondents are engaged on a "fishing expedition," apart from
the fact that the information sought is immaterial since they are evidently meant to establish a claim
against PCGG officers who are not parties to the action. It suffices to point out that "fishing expeditions"
are precisely permitted through the modes of discovery. 47 Moreover, a defendant who files a
counterclaim against the plaintiff is allowed by the Rules to implead persons (therefore strangers to the
action) as additional defendants on said counterclaim. This may be done pursuant to Section 14, Rule 6
of the Rules, to wit:

Sec. 14. Bringing new parties. — When the presence of parties other than those to the original
action is required for the granting of complete relief in the determination of a counterclaim or
cross-claim, the court shall order them to be brought in as defendants, if jurisdiction over them
can be obtained."

The PCGG's assertion that it or its members are not amenable to any civil action "for anything done or
omitted in the discharge of the task contemplated by . . (Executive) Order (No. 1)," is not a ground to
refuse to answer the interrogatories. The disclosure of facto relevant to the action and which are not
self-incriminatory or otherwise privileged is one thing; the matter of whether or not liability may arise
from the facts disclosed in light of Executive Order
No. 1, is another. No doubt, the latter proposition may properly be set up by way of defense in the
action.

The apprehension has been expressed that the answers to the interrogatories may be utilized as
foundation for a counterclaim against the PCGG or its members and officers. They will be. The private
respondents have made no secret that this is in fact their intention. Withal, the Court is unable to uphold
the proposition that while the PCGG obviously feels itself at liberty to bring actions on the basis of its
study and appreciation of the evidence in its possession, the parties sued should not be free to file
counterclaims in the same actions against the PCGG or its officers for gross neglect or ignorance, if not
downright bad faith or malice in the commencement or initiation of such judicial proceedings, or that in
the actions that it may bring, the PCGG may opt not to be bound by rule applicable to the parties it has
sued, e.g., the rules of discovery.

So, too, the PCGG's postulation that none of its members may be "required to testify or produce
evidence in any judicial . . proceeding concerning matters within its official cognizance," has no
application to a judicial proceeding it has itself initiated. As just suggested, the act of bringing suit must
entail a waiver of the exemption from giving evidence; by bringing suit it brings itself within the
operation and scope of all the rules governing civil actions, including the rights and duties under the
 Page 75 of 129

rules of discovery. Otherwise, the absurd would have to be conceded, that while the parties it has
impleaded as defendants may be required to "disgorge all the facts" within their knowledge and in their
possession, it may not itself be subject to a like compulsion.

The State is, of course, immune from suit in the sense that it cannot, as a rule, be sued without its
consent. But it is axiomatic that in filing an action, it divests itself of its sovereign character and sheds
its immunity from suit, descending to the level of an ordinary litigant. The PCGG cannot claim a
superior or preferred status to the State, even while assuming to represent or act for the State. 48

The suggestion 49 that the State makes no implied waiver of immunity by filing suit except when in so
doing it acts in, or in matters concerning, its proprietary or non-governmental capacity, is unacceptable;
it attempts a distinction without support in principle or precedent. On the contrary —

The consent of the State to be sued may be given expressly or impliedly. Express consent may
be manifested either through a general law or a special law. Implied consent is given when the
State itself commences litigation or when it enters into a contract. 50

The immunity of the State from suits does not deprive it of the right to sue private parties in its
own courts. The state as plaintiff may avail itself of the different forms of actions open to private
litigants. In short, by taking the initiative in an action against the private parties, the state
surrenders its privileged position and comes down to the level of the defendant. The latter
automatically acquires, within certain limits, the right to set up whatever claims and other
defenses he might have against the state. . . . (Sinco, Philippine Political Law, Tenth E., pp. 36-
37, citing U.S. vs. Ringgold, 8 Pet. 150, 8 L. ed. 899)" 51

It can hardly be doubted that in exercising the right of eminent domain, the State exercises its   jus
imperii, as distinguished from its proprietary rights or jus gestionis. Yet, even in that area, it has been
held that where private property has been taken in expropriation without just compensation being paid,
the defense of immunity from suit cannot be set up by the State against an action for payment by the
owner. 52

The Court also finds itself unable to sustain the PCGG's other principal contention, of the nullity of the
Sandiganbayan's Order for the production and inspection of specified documents and things allegedly
in its possession.

The Court gives short shrift to the argument that some documents sought to be produced and
inspected had already been presented in Court and marked preliminarily as PCGG's exhibits, the
movants having in fact viewed, scrutinized and even offered objections thereto and made comments
thereon. Obviously, there is nothing secret or confidential about these documents. No serious objection
can therefore be presented to the desire of the private respondents to have copies of those documents
in order to study them some more or otherwise use them during the trial for any purpose allowed by
law.

The PCGG says that some of the documents are non-existent. This it can allege in response to the
corresponding question in the interrogatories, and it will incur no sanction for doing so unless it is
subsequently established that the denial is false.

The claim that use of the documents is proscribed by Executive Order No. 1 has already been dealt
with. The PCGG is however at liberty to allege and prove that said documents fall within some other
privilege, constitutional or statutory.
 Page 76 of 129

The Court finally finds that, contrary to the petitioner's theory, there is good cause for the production
and inspection of the documents subject of the motion dated August 3, 1989. 53 Some of the
documents are, according to the verification of the amended complaint, the basis of several of the
material allegations of said complaint. Others, admittedly, are to be used in evidence by the plaintiff. It
is matters such as these into which inquiry is precisely allowed by the rules of discovery, to the end that
the parties may adequately prepare for pre-trial and trial. The only other documents sought to be
produced are needed in relation to the allegations of the counterclaim. Their relevance is indisputable;
their disclosure may not be opposed.

One last word. Due no doubt to the deplorable unfamiliarity respecting the nature, purposes and
operation of the modes of discovery earlier
mentioned, 54 there also appears to be a widely entertained idea that application of said modes is a
complicated matter, unduly expensive and dilatory. Nothing could be farther from the truth. For
example, as will already have been noted from the preceding discussion, all that is entailed to activate
or put in motion the process of discovery by interrogatories to parties under Rule 25 of the Rules of
Court, is simply the delivery directly to a party of a letter setting forth a list of least questions with the
request that they be answered individually. 55 That is all. The service of such a communication on the
party has the effect of imposing on him the obligation of answering the questions "separately and fully
in writing underoath," and serving "a copy of the answers on the party submitting the interrogatories
within fifteen (15) days after service of the interrogatories . . ." 56 The sanctions for refusing to make
discovery have already been mentioned. 57 So, too, discovery under Rule 26 is begun by nothing more
complex than the service on a party of a letter or other written communication containing a request that
specific facts therein set forth and/or particular documents copies of which are thereto appended, be
admitted in writing. 58 That is all. Again, the receipt of such a communication by the party has the effect
of imposing on him the obligation of serving the party requesting admission with "a sworn statement
either denying specifically the matters of which an admission is requested or setting forth in detail the
reasons why he cannot truthfully either admit or deny those matters," failing in which "(e)ach of the
matters of which admission is requested shall be deemed admitted." 59 The taking of depositions in
accordance with Rule 24 (either on oral examination or by written interrogatories) while somewhat less
simple, is nonetheless by no means as complicated as seems to be the lamentably extensive notion.

WHEREFORE, the petition is DENIED, without pronouncement as to costs. The temporary restraining
order issued on October 27, 1989 is hereby LIFTED AND SET ASIDE.

SO ORDERED.

STATE IMMUNITY: CONSENT: EXPRESS CONSENT

G.R. No. L-11154            March 21, 1916

E. MERRITT, plaintiff-appellant,
vs.
GOVERNMENT OF THE PHILIPPINE ISLANDS, defendant-appellant.

This is an appeal by both parties from a judgment of the Court of First Instance of the city of Manila in favor of
the plaintiff for the sum of P14,741, together with the costs of the cause.

Counsel for the plaintiff insist that the trial court erred (1) "in limiting the general damages which the plaintiff
suffered to P5,000, instead of P25,000 as claimed in the complaint," and (2) "in limiting the time when plaintiff
 Page 77 of 129

was entirely disabled to two months and twenty-one days and fixing the damage accordingly in the sum of
P2,666, instead of P6,000 as claimed by plaintiff in his complaint."

The Attorney-General on behalf of the defendant urges that the trial court erred: (a) in finding that the collision
between the plaintiff's motorcycle and the ambulance of the General Hospital was due to the negligence of the
chauffeur; (b) in holding that the Government of the Philippine Islands is liable for the damages sustained by
the plaintiff as a result of the collision, even if it be true that the collision was due to the negligence of the
chauffeur; and (c) in rendering judgment against the defendant for the sum of P14,741.

The trial court's findings of fact, which are fully supported by the record, are as follows:

It is a fact not disputed by counsel for the defendant that when the plaintiff, riding on a motorcycle, was
going toward the western part of Calle Padre Faura, passing along the west side thereof at a speed of
ten to twelve miles an hour, upon crossing Taft Avenue and when he was ten feet from the
southwestern intersection of said streets, the General Hospital ambulance, upon reaching said avenue,
instead of turning toward the south, after passing the center thereof, so that it would be on the left side
of said avenue, as is prescribed by the ordinance and the Motor Vehicle Act, turned suddenly and
unexpectedly and long before reaching the center of the street, into the right side of Taft Avenue,
without having sounded any whistle or horn, by which movement it struck the plaintiff, who was already
six feet from the southwestern point or from the post place there.

By reason of the resulting collision, the plaintiff was so severely injured that, according to Dr. Saleeby,
who examined him on the very same day that he was taken to the General Hospital, he was suffering
from a depression in the left parietal region, a would in the same place and in the back part of his head,
while blood issued from his nose and he was entirely unconscious.

The marks revealed that he had one or more fractures of the skull and that the grey matter and brain
was had suffered material injury. At ten o'clock of the night in question, which was the time set for
performing the operation, his pulse was so weak and so irregular that, in his opinion, there was little
hope that he would live. His right leg was broken in such a way that the fracture extended to the outer
skin in such manner that it might be regarded as double and the would be exposed to infection, for
which reason it was of the most serious nature.

At another examination six days before the day of the trial, Dr. Saleeby noticed that the plaintiff's leg
showed a contraction of an inch and a half and a curvature that made his leg very weak and painful at
the point of the fracture. Examination of his head revealed a notable readjustment of the functions of
the brain and nerves. The patient apparently was slightly deaf, had a light weakness in his eyes and in
his mental condition. This latter weakness was always noticed when the plaintiff had to do any difficult
mental labor, especially when he attempted to use his money for mathematical calculations.

According to the various merchants who testified as witnesses, the plaintiff's mental and physical
condition prior to the accident was excellent, and that after having received the injuries that have been
discussed, his physical condition had undergone a noticeable depreciation, for he had lost the agility,
energy, and ability that he had constantly displayed before the accident as one of the best constructors
of wooden buildings and he could not now earn even a half of the income that he had secured for his
work because he had lost 50 per cent of his efficiency. As a contractor, he could no longer, as he had
before done, climb up ladders and scaffoldings to reach the highest parts of the building.

As a consequence of the loss the plaintiff suffered in the efficiency of his work as a contractor, he had
to dissolved the partnership he had formed with the engineer. Wilson, because he was incapacitated
from making mathematical calculations on account of the condition of his leg and of his mental
faculties, and he had to give up a contract he had for the construction of the Uy Chaco building."
 Page 78 of 129

We may say at the outset that we are in full accord with the trial court to the effect that the collision between
the plaintiff's motorcycle and the ambulance of the General Hospital was due solely to the negligence of the
chauffeur.

The two items which constitute a part of the P14,741 and which are drawn in question by the plaintiff are (a)
P5,000, the award awarded for permanent injuries, and (b) the P2,666, the amount allowed for the loss of
wages during the time the plaintiff was incapacitated from pursuing his occupation. We find nothing in the
record which would justify us in increasing the amount of the first. As to the second, the record shows, and the
trial court so found, that the plaintiff's services as a contractor were worth P1,000 per month. The court,
however, limited the time to two months and twenty-one days, which the plaintiff was actually confined in the
hospital. In this we think there was error, because it was clearly established that the plaintiff was wholly
incapacitated for a period of six months. The mere fact that he remained in the hospital only two months and
twenty-one days while the remainder of the six months was spent in his home, would not prevent recovery for
the whole time. We, therefore, find that the amount of damages sustained by the plaintiff, without any fault on
his part, is P18,075.

As the negligence which caused the collision is a tort committed by an agent or employee of the Government,
the inquiry at once arises whether the Government is legally-liable for the damages resulting therefrom.

Act No. 2457, effective February 3, 1915, reads:

An Act authorizing E. Merritt to bring suit against the Government of the Philippine Islands and
authorizing the Attorney-General of said Islands to appear in said suit.

Whereas a claim has been filed against the Government of the Philippine Islands by Mr. E. Merritt, of
Manila, for damages resulting from a collision between his motorcycle and the ambulance of the
General Hospital on March twenty-fifth, nineteen hundred and thirteen;

Whereas it is not known who is responsible for the accident nor is it possible to determine the amount
of damages, if any, to which the claimant is entitled; and

Whereas the Director of Public Works and the Attorney-General recommended that an Act be passed
by the Legislature authorizing Mr. E. Merritt to bring suit in the courts against the Government, in order
that said questions may be decided: Now, therefore,

By authority of the United States, be it enacted by the Philippine Legislature, that:

SECTION 1. E. Merritt is hereby authorized to bring suit in the Court of First Instance of the city of
Manila against the Government of the Philippine Islands in order to fix the responsibility for the collision
between his motorcycle and the ambulance of the General Hospital, and to determine the amount of
the damages, if any, to which Mr. E. Merritt is entitled on account of said collision, and the Attorney-
General of the Philippine Islands is hereby authorized and directed to appear at the trial on the behalf of
the Government of said Islands, to defendant said Government at the same.

SEC. 2. This Act shall take effect on its passage.

Enacted, February 3, 1915.

Did the defendant, in enacting the above quoted Act, simply waive its immunity from suit or did it also concede
its liability to the plaintiff? If only the former, then it cannot be held that the Act created any new cause of action
in favor of the plaintiff or extended the defendant's liability to any case not previously recognized.
 Page 79 of 129

All admit that the Insular Government (the defendant) cannot be sued by an individual without its consent. It is
also admitted that the instant case is one against the Government. As the consent of the Government to be
sued by the plaintiff was entirely voluntary on its part, it is our duty to look carefully into the terms of the
consent, and render judgment accordingly.

The plaintiff was authorized to bring this action against the Government "in order to fix the responsibility for the
collision between his motorcycle and the ambulance of the General Hospital and to determine the amount of
the damages, if any, to which Mr. E. Merritt is entitled on account of said collision, . . . ." These were the two
questions submitted to the court for determination. The Act was passed "in order that said questions may be
decided." We have "decided" that the accident was due solely to the negligence of the chauffeur, who was at
the time an employee of the defendant, and we have also fixed the amount of damages sustained by the
plaintiff as a result of the collision. Does the Act authorize us to hold that the Government is legally liable for
that amount? If not, we must look elsewhere for such authority, if it exists.

The Government of the Philippine Islands having been "modeled after the Federal and State Governments in
the United States," we may look to the decisions of the high courts of that country for aid in determining the
purpose and scope of Act No. 2457.

In the United States the rule that the state is not liable for the torts committed by its officers or agents whom it
employs, except when expressly made so by legislative enactment, is well settled. "The Government," says
Justice Story, "does not undertake to guarantee to any person the fidelity of the officers or agents whom it
employs, since that would involve it in all its operations in endless embarrassments, difficulties and losses,
which would be subversive of the public interest." (Claussen vs. City of Luverne, 103 Minn., 491, citing U. S.
vs. Kirkpatrick, 9 Wheat, 720; 6 L. Ed., 199; and Beers vs. States, 20 How., 527; 15 L. Ed., 991.)

In the case of Melvin vs. State (121 Cal., 16), the plaintiff sought to recover damages from the state for
personal injuries received on account of the negligence of the state officers at the state fair, a state institution
created by the legislature for the purpose of improving agricultural and kindred industries; to disseminate
information calculated to educate and benefit the industrial classes; and to advance by such means the
material interests of the state, being objects similar to those sought by the public school system. In passing
upon the question of the state's liability for the negligent acts of its officers or agents, the court said:

No claim arises against any government is favor of an individual, by reason of the misfeasance, laches,
or unauthorized exercise of powers by its officers or agents. (Citing Gibbons vs. U. S., 8 Wall., 269;
Clodfelter vs. State, 86 N. C., 51, 53; 41 Am. Rep., 440; Chapman vs. State, 104 Cal., 690; 43 Am. St.
Rep., 158; Green vs. State, 73 Cal., 29; Bourn vs. Hart, 93 Cal., 321; 27 Am. St. Rep., 203; Story on
Agency, sec. 319.)

As to the scope of legislative enactments permitting individuals to sue the state where the cause of action
arises out of either fort or contract, the rule is stated in 36 Cyc., 915, thus:

By consenting to be sued a state simply waives its immunity from suit. It does not thereby concede its
liability to plaintiff, or create any cause of action in his favor, or extend its liability to any cause not
previously recognized. It merely gives a remedy to enforce a preexisting liability and submits itself to
the jurisdiction of the court, subject to its right to interpose any lawful defense.

In Apfelbacher vs. State (152 N. W., 144, advanced sheets), decided April 16, 1915, the Act of 1913, which
authorized the bringing of this suit, read:

SECTION 1. Authority is hereby given to George Apfelbacher, of the town of Summit, Waukesha
County, Wisconsin, to bring suit in such court or courts and in such form or forms as he may be advised
for the purpose of settling and determining all controversies which he may now have with the State of
Wisconsin, or its duly authorized officers and agents, relative to the mill property of said George
 Page 80 of 129

Apfelbacher, the fish hatchery of the State of Wisconsin on the Bark River, and the mill property of
Evan Humphrey at the lower end of Nagawicka Lake, and relative to the use of the waters of said Bark
River and Nagawicka Lake, all in the county of Waukesha, Wisconsin.

In determining the scope of this act, the court said:

Plaintiff claims that by the enactment of this law the legislature admitted liability on the part of the state
for the acts of its officers, and that the suit now stands just as it would stand between private parties. It
is difficult to see how the act does, or was intended to do, more than remove the state's immunity from
suit. It simply gives authority to commence suit for the purpose of settling plaintiff's controversies with
the estate. Nowhere in the act is there a whisper or suggestion that the court or courts in the disposition
of the suit shall depart from well established principles of law, or that the amount of damages is the only
question to be settled. The act opened the door of the court to the plaintiff. It did not pass upon the
question of liability, but left the suit just where it would be in the absence of the state's immunity from
suit. If the Legislature had intended to change the rule that obtained in this state so long and to declare
liability on the part of the state, it would not have left so important a matter to mere inference, but would
have done so in express terms. (Murdock Grate Co. vs. Commonwealth, 152 Mass., 28; 24 N.E., 854; 8
L. R. A., 399.)

In Denning vs. State (123 Cal., 316), the provisions of the Act of 1893, relied upon and considered, are as
follows:

All persons who have, or shall hereafter have, claims on contract or for negligence against the state not
allowed by the state board of examiners, are hereby authorized, on the terms and conditions herein
contained, to bring suit thereon against the state in any of the courts of this state of competent
jurisdiction, and prosecute the same to final judgment. The rules of practice in civil cases shall apply to
such suits, except as herein otherwise provided.

And the court said:

This statute has been considered by this court in at least two cases, arising under different facts, and in
both it was held that said statute did not create any liability or cause of action against the state where
none existed before, but merely gave an additional remedy to enforce such liability as would have
existed if the statute had not been enacted. (Chapman vs. State, 104 Cal., 690; 43 Am. St. Rep., 158;
Melvin vs. State, 121 Cal., 16.)

A statute of Massachusetts enacted in 1887 gave to the superior court "jurisdiction of all claims against the
commonwealth, whether at law or in equity," with an exception not necessary to be here mentioned. In
construing this statute the court, in Murdock Grate Co. vs. Commonwealth (152 Mass., 28), said:

The statute we are discussing disclose no intention to create against the state a new and heretofore
unrecognized class of liabilities, but only an intention to provide a judicial tribunal where well recognized
existing liabilities can be adjudicated.

In Sipple vs. State (99 N. Y., 284), where the board of the canal claims had, by the terms of the statute of New
York, jurisdiction of claims for damages for injuries in the management of the canals such as the plaintiff had
sustained, Chief Justice Ruger remarks: "It must be conceded that the state can be made liable for injuries
arising from the negligence of its agents or servants, only by force of some positive statute assuming such
liability."

It being quite clear that Act No. 2457 does not operate to extend the Government's liability to any cause not
previously recognized, we will now examine the substantive law touching the defendant's liability for the
negligent acts of its officers, agents, and employees. Paragraph 5 of article 1903 of the Civil Code reads:
 Page 81 of 129

The state is liable in this sense when it acts through a special agent, but not when the damage should
have been caused by the official to whom properly it pertained to do the act performed, in which case
the provisions of the preceding article shall be applicable.

The supreme court of Spain in defining the scope of this paragraph said:

That the obligation to indemnify for damages which a third person causes to another by his fault or
negligence is based, as is evidenced by the same Law 3, Title 15, Partida 7, on that the person
obligated, by his own fault or negligence, takes part in the act or omission of the third party who caused
the damage. It follows therefrom that the state, by virtue of such provisions of law, is not responsible for
the damages suffered by private individuals in consequence of acts performed by its employees in the
discharge of the functions pertaining to their office, because neither fault nor even negligence can be
presumed on the part of the state in the organization of branches of public service and in the
appointment of its agents; on the contrary, we must presuppose all foresight humanly possible on its
part in order that each branch of service serves the general weal an that of private persons interested in
its operation. Between these latter and the state, therefore, no relations of a private nature governed by
the civil law can arise except in a case where the state acts as a judicial person capable of acquiring
rights and contracting obligations. (Supreme Court of Spain, January 7, 1898; 83 Jur. Civ., 24.)

That the Civil Code in chapter 2, title 16, book 4, regulates the obligations which arise out of fault or
negligence; and whereas in the first article thereof. No. 1902, where the general principle is laid down
that where a person who by an act or omission causes damage to another through fault or negligence,
shall be obliged to repair the damage so done, reference is made to acts or omissions of the persons
who directly or indirectly cause the damage, the following articles refers to this persons and imposes an
identical obligation upon those who maintain fixed relations of authority and superiority over the authors
of the damage, because the law presumes that in consequence of such relations the evil caused by
their own fault or negligence is imputable to them. This legal presumption gives way to proof, however,
because, as held in the last paragraph of article 1903, responsibility for acts of third persons ceases
when the persons mentioned in said article prove that they employed all the diligence of a good father
of a family to avoid the damage, and among these persons, called upon to answer in a direct and not a
subsidiary manner, are found, in addition to the mother or the father in a proper case, guardians and
owners or directors of an establishment or enterprise, the state, but not always, except when it acts
through the agency of a special agent, doubtless because and only in this case, the fault or negligence,
which is the original basis of this kind of objections, must be presumed to lie with the state.

That although in some cases the state might by virtue of the general principle set forth in article 1902
respond for all the damage that is occasioned to private parties by orders or resolutions which by fault
or negligence are made by branches of the central administration acting in the name and
representation of the state itself and as an external expression of its sovereignty in the exercise of its
executive powers, yet said article is not applicable in the case of damages said to have been
occasioned to the petitioners by an executive official, acting in the exercise of his powers, in
proceedings to enforce the collections of certain property taxes owing by the owner of the property
which they hold in sublease.

That the responsibility of the state is limited by article 1903 to the case wherein it acts through a special
agent (and a special agent, in the sense in which these words are employed, is one who receives a
definite and fixed order or commission, foreign to the exercise of the duties of his office if he is a special
official) so that in representation of the state and being bound to act as an agent thereof, he executes
the trust confided to him. This concept does not apply to any executive agent who is an employee of
the acting administration and who on his own responsibility performs the functions which are inherent in
and naturally pertain to his office and which are regulated by law and the regulations." (Supreme Court
of Spain, May 18, 1904; 98 Jur. Civ., 389, 390.)
 Page 82 of 129

That according to paragraph 5 of article 1903 of the Civil Code and the principle laid down in a decision,
among others, of the 18th of May, 1904, in a damage case, the responsibility of the state is limited to
that which it contracts through a special agent, duly empowered by a definite order or commission to
perform some act or charged with some definite purpose which gives rise to the claim, and not where
the claim is based on acts or omissions imputable to a public official charged with some administrative
or technical office who can be held to the proper responsibility in the manner laid down by the law of
civil responsibility. Consequently, the trial court in not so deciding and in sentencing the said entity to
the payment of damages, caused by an official of the second class referred to, has by erroneous
interpretation infringed the provisions of articles 1902 and 1903 of the Civil Code. (Supreme Court of
Spain, July 30, 1911; 122 Jur. Civ., 146.)

It is, therefore, evidence that the State (the Government of the Philippine Islands) is only liable, according to
the above quoted decisions of the Supreme Court of Spain, for the acts of its agents, officers and employees
when they act as special agents within the meaning of paragraph 5 of article 1903, supra, and that the
chauffeur of the ambulance of the General Hospital was not such an agent.

For the foregoing reasons, the judgment appealed from must be reversed, without costs in this instance.
Whether the Government intends to make itself legally liable for the amount of damages above set forth, which
the plaintiff has sustained by reason of the negligent acts of one of its employees, by legislative enactment and
by appropriating sufficient funds therefor, we are not called upon to determine. This matter rests solely with the
Legislature and not with the courts.

STATE IMMUNITY: CONSENT: IMPLIED CONSENT

G.R. No. L-35645 May 22, 1985

UNITED STATES OF AMERICA, CAPT. JAMES E. GALLOWAY, WILLIAM I. COLLINS and ROBERT
GOHIER, petitioners,
vs.
HON. V. M. RUIZ, Presiding Judge of Branch XV, Court of First Instance of Rizal and ELIGIO DE
GUZMAN & CO., INC., respondents.
 Page 83 of 129

This is a petition to review, set aside certain orders and restrain the respondent judge from trying Civil Case
No. 779M of the defunct Court of First Instance of Rizal.

The factual background is as follows:

At times material to this case, the United States of America had a naval base in Subic, Zambales. The base
was one of those provided in the Military Bases Agreement between the Philippines and the United States.

Sometime in May, 1972, the United States invited the submission of bids for the following projects

1. Repair offender system, Alava Wharf at the U.S. Naval Station Subic Bay, Philippines.

2. Repair typhoon damage to NAS Cubi shoreline; repair typhoon damage to shoreline revetment, NAVBASE
Subic; and repair to Leyte Wharf approach, NAVBASE Subic Bay, Philippines.

Eligio de Guzman & Co., Inc. responded to the invitation and submitted bids. Subsequent thereto, the company
received from the United States two telegrams requesting it to confirm its price proposals and for the name of
its bonding company. The company complied with the requests. [In its complaint, the company alleges that the
United States had accepted its bids because "A request to confirm a price proposal confirms the acceptance of
a bid pursuant to defendant United States' bidding practices." (Rollo, p. 30.) The truth of this allegation has not
been tested because the case has not reached the trial stage.]

In June, 1972, the company received a letter which was signed by Wilham I. Collins, Director, Contracts
Division, Naval Facilities Engineering Command, Southwest Pacific, Department of the Navy of the United
States, who is one of the petitioners herein. The letter said that the company did not qualify to receive an
award for the projects because of its previous unsatisfactory performance rating on a repair contract for the
sea wall at the boat landings of the U.S. Naval Station in Subic Bay. The letter further said that the projects had
been awarded to third parties. In the abovementioned Civil Case No. 779-M, the company sued the United
States of America and Messrs. James E. Galloway, William I. Collins and Robert Gohier all members of the
Engineering Command of the U.S. Navy. The complaint is to order the defendants to allow the plaintiff to
perform the work on the projects and, in the event that specific performance was no longer possible, to order
the defendants to pay damages. The company also asked for the issuance of a writ of preliminary injunction to
restrain the defendants from entering into contracts with third parties for work on the projects.

The defendants entered their special appearance for the purpose only of questioning the jurisdiction of this
court over the subject matter of the complaint and the persons of defendants, the subject matter of the
complaint being acts and omissions of the individual defendants as agents of defendant United States of
America, a foreign sovereign which has not given her consent to this suit or any other suit for the causes of
action asserted in the complaint." (Rollo, p. 50.)

Subsequently the defendants filed a motion to dismiss the complaint which included an opposition to the
issuance of the writ of preliminary injunction. The company opposed the motion. The trial court denied the
motion and issued the writ. The defendants moved twice to reconsider but to no avail. Hence the instant
petition which seeks to restrain perpetually the proceedings in Civil Case No. 779-M for lack of jurisdiction on
the part of the trial court.

The petition is highly impressed with merit.

The traditional rule of State immunity exempts a State from being sued in the courts of another State without its
consent or waiver. This rule is a necessary consequence of the principles of independence and equality of
States. However, the rules of International Law are not petrified; they are constantly developing and evolving.
And because the activities of states have multiplied, it has been necessary to distinguish them-between
sovereign and governmental acts (jure imperii) and private, commercial and proprietary acts (jure gestionis).
 Page 84 of 129

The result is that State immunity now extends only to acts jure imperil The restrictive application of State
immunity is now the rule in the United States, the United Kingdom and other states in western Europe. (See
Coquia and Defensor Santiago, Public International Law, pp. 207-209 [1984].)

The respondent judge recognized the restrictive doctrine of State immunity when he said in his Order denying
the defendants' (now petitioners) motion: " A distinction should be made between a strictly governmental
function of the sovereign state from its private, proprietary or non- governmental acts (Rollo, p. 20.) However,
the respondent judge also said: "It is the Court's considered opinion that entering into a contract for the repair
of wharves or shoreline is certainly not a governmental function altho it may partake of a public nature or
character. As aptly pointed out by plaintiff's counsel in his reply citing the ruling in the case of Lyons, Inc., [104
Phil. 594 (1958)], and which this Court quotes with approval, viz.:

It is however contended that when a sovereign state enters into a contract with a private person,
the state can be sued upon the theory that it has descended to the level of an individual from
which it can be implied that it has given its consent to be sued under the contract. ...

xxx xxx xxx

We agree to the above contention, and considering that the United States government, through
its agency at Subic Bay, entered into a contract with appellant for stevedoring and
miscellaneous labor services within the Subic Bay Area, a U.S. Naval Reservation, it is evident
that it can bring an action before our courts for any contractual liability that that political entity
may assume under the contract. The trial court, therefore, has jurisdiction to entertain this
case ... (Rollo, pp. 20-21.)

The reliance placed on Lyons by the respondent judge is misplaced for the following reasons:

In Harry Lyons, Inc. vs. The United States of America, supra, plaintiff brought suit in the Court of First Instance
of Manila to collect several sums of money on account of a contract between plaintiff and defendant. The
defendant filed a motion to dismiss on the ground that the court had no jurisdiction over defendant and over the
subject matter of the action. The court granted the motion on the grounds that: (a) it had no jurisdiction over the
defendant who did not give its consent to the suit; and (b) plaintiff failed to exhaust the administrative remedies
provided in the contract. The order of dismissal was elevated to this Court for review.

In sustaining the action of the lower court, this Court said:

It appearing in the complaint that appellant has not complied with the procedure laid down in
Article XXI of the contract regarding the prosecution of its claim against the United States
Government, or, stated differently, it has failed to first exhaust its administrative remedies
against said Government, the lower court acted properly in dismissing this case.(At p. 598.)

It can thus be seen that the statement in respect of the waiver of State immunity from suit was purely
gratuitous and, therefore, obiter so that it has no value as an imperative authority.

The restrictive application of State immunity is proper only when the proceedings arise out of commercial
transactions of the foreign sovereign, its commercial activities or economic affairs. Stated differently, a State
may be said to have descended to the level of an individual and can thus be deemed to have tacitly given its
consent to be sued only when it enters into business contracts. It does not apply where the contract relates to
the exercise of its sovereign functions. In this case the projects are an integral part of the naval base which is
devoted to the defense of both the United States and the Philippines, indisputably a function of the government
of the highest order; they are not utilized for nor dedicated to commercial or business purposes.
 Page 85 of 129

That the correct test for the application of State immunity is not the conclusion of a contract by a State but the
legal nature of the act is shown in Syquia vs. Lopez, 84 Phil. 312 (1949). In that case the plaintiffs leased three
apartment buildings to the United States of America for the use of its military officials. The plaintiffs sued to
recover possession of the premises on the ground that the term of the leases had expired. They also asked for
increased rentals until the apartments shall have been vacated.

The defendants who were armed forces officers of the United States moved to dismiss the suit for lack of
jurisdiction in the part of the court. The Municipal Court of Manila granted the motion to dismiss; sustained by
the Court of First Instance, the plaintiffs went to this Court for review on certiorari. In denying the petition, this
Court said:

On the basis of the foregoing considerations we are of the belief and we hold that the real party
defendant in interest is the Government of the United States of America; that any judgment for
back or Increased rentals or damages will have to be paid not by defendants Moore and Tillman
and their 64 co-defendants but by the said U.S. Government. On the basis of the ruling in the
case of Land vs. Dollar already cited, and on what we have already stated, the present action
must be considered as one against the U.S. Government. It is clear hat the courts of the
Philippines including the Municipal Court of Manila have no jurisdiction over the present case for
unlawful detainer. The question of lack of jurisdiction was raised and interposed at the very
beginning of the action. The U.S. Government has not , given its consent to the filing of this suit
which is essentially against her, though not in name. Moreover, this is not only a case of a
citizen filing a suit against his own Government without the latter's consent but it is of a citizen
filing an action against a foreign government without said government's consent, which renders
more obvious the lack of jurisdiction of the courts of his country. The principles of law behind
this rule are so elementary and of such general acceptance that we deem it unnecessary to cite
authorities in support thereof. (At p. 323.)

In Syquia,the United States concluded contracts with private individuals but the contracts notwithstanding the
States was not deemed to have given or waived its consent to be sued for the reason that the contracts were
for jure imperii and not for jure gestionis.

WHEREFORE, the petition is granted; the questioned orders of the respondent judge are set aside and Civil
Case No. is dismissed. Costs against the private respondent.

STATE IMMUNITY: CONSENT: IMPLIED CONSENT

G.R. No. 101949 December 1, 1994

THE HOLY SEE, petitioner,

vs.
 Page 86 of 129

THE HON. ERIBERTO U. ROSARIO, JR., as Presiding Judge of the Regional Trial Court of Makati,
Branch 61 and STARBRIGHT SALES ENTERPRISES, INC., respondents.

This is a petition for certiorari under Rule 65 of the Revised Rules of Court to reverse and set aside the Orders
dated June 20, 1991 and September 19, 1991 of the Regional Trial Court, Branch 61, Makati, Metro Manila in
Civil Case No. 90-183.

The Order dated June 20, 1991 denied the motion of petitioner to dismiss the complaint in Civil Case No. 90-
183, while the Order dated September 19, 1991 denied the motion for reconsideration of the June 20,1991
Order.

Petitioner is the Holy See who exercises sovereignty over the Vatican City in Rome, Italy, and is represented in
the Philippines by the Papal Nuncio.

Private respondent, Starbright Sales Enterprises, Inc., is a domestic corporation engaged in the real estate
business.

This petition arose from a controversy over a parcel of land consisting of 6,000 square meters (Lot 5-A,
Transfer Certificate of Title No. 390440) located in the Municipality of Parañaque, Metro Manila and registered
in the name of petitioner.

Said Lot 5-A is contiguous to Lots 5-B and 5-D which are covered by Transfer Certificates of Title Nos. 271108
and 265388 respectively and registered in the name of the Philippine Realty Corporation (PRC).

The three lots were sold to Ramon Licup, through Msgr. Domingo A. Cirilos, Jr., acting as agent to the sellers.
Later, Licup assigned his rights to the sale to private respondent.

In view of the refusal of the squatters to vacate the lots sold to private respondent, a dispute arose as to who of
the parties has the responsibility of evicting and clearing the land of squatters. Complicating the relations of the
parties was the sale by petitioner of Lot 5-A to Tropicana Properties and Development Corporation
(Tropicana).

On January 23, 1990, private respondent filed a complaint with the Regional Trial Court, Branch 61, Makati,
Metro Manila for annulment of the sale of the three parcels of land, and specific performance and damages
against petitioner, represented by the Papal Nuncio, and three other defendants: namely, Msgr. Domingo A.
Cirilos, Jr., the PRC and Tropicana (Civil Case No.
90-183).

The complaint alleged that: (1) on April 17, 1988, Msgr. Cirilos, Jr., on behalf of petitioner and the PRC, agreed
to sell to Ramon Licup Lots 5-A, 5-B and 5-D at the price of P1,240.00 per square meters; (2) the agreement to
sell was made on the condition that earnest money of P100,000.00 be paid by Licup to the sellers, and that the
sellers clear the said lots of squatters who were then occupying the same; (3) Licup paid the earnest money to
Msgr. Cirilos; (4) in the same month, Licup assigned his rights over the property to private respondent and
informed the sellers of the said assignment; (5) thereafter, private respondent demanded from Msgr. Cirilos
that the sellers fulfill their undertaking and clear the property of squatters; however, Msgr. Cirilos informed
private respondent of the squatters' refusal to vacate the lots, proposing instead either that private respondent
undertake the eviction or that the earnest money be returned to the latter; (6) private respondent
counterproposed that if it would undertake the eviction of the squatters, the purchase price of the lots should
be reduced from P1,240.00 to P1,150.00 per square meter; (7) Msgr. Cirilos returned the earnest money of
P100,000.00 and wrote private respondent giving it seven days from receipt of the letter to pay the original
purchase price in cash; (8) private respondent sent the earnest money back to the sellers, but later discovered
 Page 87 of 129

that on March 30, 1989, petitioner and the PRC, without notice to private respondent, sold the lots to
Tropicana, as evidenced by two separate Deeds of Sale, one over Lot 5-A, and another over Lots 5-B and 5-D;
and that the sellers' transfer certificate of title over the lots were cancelled, transferred and registered in the
name of Tropicana; (9) Tropicana induced petitioner and the PRC to sell the lots to it and thus enriched itself at
the expense of private respondent; (10) private respondent demanded the rescission of the sale to Tropicana
and the reconveyance of the lots, to no avail; and (11) private respondent is willing and able to comply with the
terms of the contract to sell and has actually made plans to develop the lots into a townhouse project, but in
view of the sellers' breach, it lost profits of not less than P30,000.000.00.

Private respondent thus prayed for: (1) the annulment of the Deeds of Sale between petitioner and the PRC on
the one hand, and Tropicana on the other; (2) the reconveyance of the lots in question; (3) specific
performance of the agreement to sell between it and the owners of the lots; and (4) damages.

On June 8, 1990, petitioner and Msgr. Cirilos separately moved to dismiss the complaint — petitioner for lack
of jurisdiction based on sovereign immunity from suit, and Msgr. Cirilos for being an improper party. An
opposition to the motion was filed by private respondent.

On June 20, 1991, the trial court issued an order denying, among others, petitioner's motion to dismiss after
finding that petitioner "shed off [its] sovereign immunity by entering into the business contract in question"
(Rollo, pp. 20-21).

On July 12, 1991, petitioner moved for reconsideration of the order. On August 30, 1991, petitioner filed a
"Motion for a Hearing for the Sole Purpose of Establishing Factual Allegation for claim of Immunity as a
Jurisdictional Defense." So as to facilitate the determination of its defense of sovereign immunity, petitioner
prayed that a hearing be conducted to allow it to establish certain facts upon which the said defense is based.
Private respondent opposed this motion as well as the motion for reconsideration.

On October 1, 1991, the trial court issued an order deferring the resolution on the motion for reconsideration
until after trial on the merits and directing petitioner to file its answer (Rollo, p. 22).

Petitioner forthwith elevated the matter to us. In its petition, petitioner invokes the privilege of sovereign
immunity only on its own behalf and on behalf of its official representative, the Papal Nuncio.

On December 9, 1991, a Motion for Intervention was filed before us by the Department of Foreign Affairs,
claiming that it has a legal interest in the outcome of the case as regards the diplomatic immunity of petitioner,
and that it "adopts by reference, the allegations contained in the petition of the Holy See insofar as they refer to
arguments relative to its claim of sovereign immunity from suit" (Rollo, p. 87).

Private respondent opposed the intervention of the Department of Foreign Affairs. In compliance with the
resolution of this Court, both parties and the Department of Foreign Affairs submitted their respective
memoranda.

II

A preliminary matter to be threshed out is the procedural issue of whether the petition for certiorari under Rule
65 of the Revised Rules of Court can be availed of to question the order denying petitioner's motion to dismiss.
The general rule is that an order denying a motion to dismiss is not reviewable by the appellate courts, the
remedy of the movant being to file his answer and to proceed with the hearing before the trial court. But the
general rule admits of exceptions, and one of these is when it is very clear in the records that the trial court has
no alternative but to dismiss the complaint (Philippine National Bank v. Florendo, 206 SCRA 582 [1992];
Zagada v. Civil Service Commission, 216 SCRA 114 [1992]. In such a case, it would be a sheer waste of time
and energy to require the parties to undergo the rigors of a trial.
 Page 88 of 129

The other procedural question raised by private respondent is the personality or legal interest of the
Department of Foreign Affairs to intervene in the case in behalf of the Holy See (Rollo, pp. 186-190).

In Public International Law, when a state or international agency wishes to plead sovereign or diplomatic
immunity in a foreign court, it requests the Foreign Office of the state where it is sued to convey to the court
that said defendant is entitled to immunity.

In the United States, the procedure followed is the process of "suggestion," where the foreign state or the
international organization sued in an American court requests the Secretary of State to make a determination
as to whether it is entitled to immunity. If the Secretary of State finds that the defendant is immune from suit,
he, in turn, asks the Attorney General to submit to the court a "suggestion" that the defendant is entitled to
immunity. In England, a similar procedure is followed, only the Foreign Office issues a certification to that effect
instead of submitting a "suggestion" (O'Connell, I International Law 130 [1965]; Note: Immunity from Suit of
Foreign Sovereign Instrumentalities and Obligations, 50 Yale Law Journal 1088 [1941]).

In the Philippines, the practice is for the foreign government or the international organization to first secure an
executive endorsement of its claim of sovereign or diplomatic immunity. But how the Philippine Foreign Office
conveys its endorsement to the courts varies. In International Catholic Migration Commission v. Calleja, 190
SCRA 130 (1990), the Secretary of Foreign Affairs just sent a letter directly to the Secretary of Labor and
Employment, informing the latter that the respondent-employer could not be sued because it enjoyed
diplomatic immunity. In World Health Organization v. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign
Affairs sent the trial court a telegram to that effect. In Baer v. Tizon, 57 SCRA 1 (1974), the U.S. Embassy
asked the Secretary of Foreign Affairs to request the Solicitor General to make, in behalf of the Commander of
the United States Naval Base at Olongapo City, Zambales, a "suggestion" to respondent Judge. The Solicitor
General embodied the "suggestion" in a Manifestation and Memorandum as amicus curiae.

In the case at bench, the Department of Foreign Affairs, through the Office of Legal Affairs moved with this
Court to be allowed to intervene on the side of petitioner. The Court allowed the said Department to file its
memorandum in support of petitioner's claim of sovereign immunity.

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

III

The burden of the petition is that respondent trial court has no jurisdiction over petitioner, being a foreign state
enjoying sovereign immunity. On the other hand, private respondent insists that the doctrine of non-suability is
not anymore absolute and that petitioner has divested itself of such a cloak when, of its own free will, it entered
into a commercial transaction for the sale of a parcel of land located in the Philippines.

A. The Holy See

Before we determine the issue of petitioner's non-suability, a brief look into its status as a sovereign state is in
order.

Before the annexation of the Papal States by Italy in 1870, the Pope was the monarch and he, as the Holy
See, was considered a subject of International Law. With the loss of the Papal States and the limitation of the
territory under the Holy See to an area of 108.7 acres, the position of the Holy See in International Law
became controversial (Salonga and Yap, Public International Law 36-37 [1992]).
 Page 89 of 129

In 1929, Italy and the Holy See entered into the Lateran Treaty, where Italy recognized the exclusive dominion
and sovereign jurisdiction of the Holy See over the Vatican City. It also recognized the right of the Holy See to
receive foreign diplomats, to send its own diplomats to foreign countries, and to enter into treaties according to
International Law (Garcia, Questions and Problems In International Law, Public and Private 81 [1948]).

The Lateran Treaty established the statehood of the Vatican City "for the purpose of assuring to the Holy See
absolute and visible independence and of guaranteeing to it indisputable sovereignty also in the field of
international relations" (O'Connell, I International Law 311 [1965]).

In view of the wordings of the Lateran Treaty, it is difficult to determine whether the statehood is vested in the
Holy See or in the Vatican City. Some writers even suggested that the treaty created two international persons
— the Holy See and Vatican City (Salonga and Yap, supra, 37).

The Vatican City fits into none of the established categories of states, and the attribution to it of "sovereignty"
must be made in a sense different from that in which it is applied to other states (Fenwick, International Law
124-125 [1948]; Cruz, International Law 37 [1991]). In a community of national states, the Vatican City
represents an entity organized not for political but for ecclesiastical purposes and international objects. Despite
its size and object, the Vatican City has an independent government of its own, with the Pope, who is also
head of the Roman Catholic Church, as the Holy See or Head of State, in conformity with its traditions, and the
demands of its mission in the world. Indeed, the world-wide interests and activities of the Vatican City are such
as to make it in a sense an "international state" (Fenwick, supra., 125; Kelsen, Principles of International Law
160 [1956]).

One authority wrote that the recognition of the Vatican City as a state has significant implication — that it is
possible for any entity pursuing objects essentially different from those pursued by states to be invested with
international personality (Kunz, The Status of the Holy See in International Law, 46 The American Journal of
International Law 308 [1952]).

Inasmuch as the Pope prefers to conduct foreign relations and enter into transactions as the Holy See and not
in the name of the Vatican City, one can conclude that in the Pope's own view, it is the Holy See that is the
international person.

The Republic of the Philippines has accorded the Holy See the status of a foreign sovereign. The Holy See,
through its Ambassador, the Papal Nuncio, has had diplomatic representations with the Philippine government
since 1957 (Rollo, p. 87). This appears to be the universal practice in international relations.

B. Sovereign Immunity

As expressed in Section 2 of Article II of the 1987 Constitution, we have adopted the generally accepted
principles of International Law. Even without this affirmation, such principles of International Law are deemed
incorporated as part of the law of the land as a condition and consequence of our admission in the society of
nations (United States of America v. Guinto, 182 SCRA 644 [1990]).

There are two conflicting concepts of sovereign immunity, each widely held and firmly established. According
to the classical or absolute theory, a sovereign cannot, without its consent, be made a respondent in the courts
of another sovereign. According to the newer or restrictive theory, the immunity of the sovereign is recognized
only with regard to public acts or acts jure imperii of a state, but not with regard to private acts or acts jure
gestionis
(United States of America v. Ruiz, 136 SCRA 487 [1987]; Coquia and Defensor-Santiago, Public International
Law 194 [1984]).

Some states passed legislation to serve as guidelines for the executive or judicial determination when an act
may be considered as jure gestionis. The United States passed the Foreign Sovereign Immunities Act of 1976,
 Page 90 of 129

which defines a commercial activity as "either a regular course of commercial conduct or a particular
commercial transaction or act." Furthermore, the law declared that the "commercial character of the activity
shall be determined by reference to the nature of the course of conduct or particular transaction or act, rather
than by reference to its purpose." The Canadian Parliament enacted in 1982 an Act to Provide For State
Immunity in Canadian Courts. The Act defines a "commercial activity" as any particular transaction, act or
conduct or any regular course of conduct that by reason of its nature, is of a "commercial character."

The restrictive theory, which is intended to be a solution to the host of problems involving the issue of
sovereign immunity, has created problems of its own. Legal treatises and the decisions in countries which
follow the restrictive theory have difficulty in characterizing whether a contract of a sovereign state with a
private party is an act jure gestionis or an act jure imperii.

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

This Court has considered the following transactions by a foreign state with private parties as acts jure imperii:
(1) the lease by a foreign government of apartment buildings for use of its military officers (Syquia v. Lopez, 84
Phil. 312 [1949]; (2) the conduct of public bidding for the repair of a wharf at a United States Naval Station
(United States of America v. Ruiz, supra.); and (3) the change of employment status of base employees
(Sanders v. Veridiano, 162 SCRA 88 [1988]).

On the other hand, this Court has considered the following transactions by a foreign state with private parties
as acts jure gestionis: (1) the hiring of a cook in the recreation center, consisting of three restaurants, a
cafeteria, a bakery, a store, and a coffee and pastry shop at the John Hay Air Station in Baguio City, to cater to
American servicemen and the general public (United States of America v. Rodrigo, 182 SCRA 644 [1990]); and
(2) the bidding for the operation of barber shops in Clark Air Base in Angeles City (United States of America v.
Guinto, 182 SCRA 644 [1990]). The operation of the restaurants and other facilities open to the general public
is undoubtedly for profit as a commercial and not a governmental activity. By entering into the employment
contract with the cook in the discharge of its proprietary function, the United States government impliedly
divested itself of its sovereign immunity from suit.

In the absence of legislation defining what activities and transactions shall be considered "commercial" and as
constituting acts jure gestionis, we have to come out with our own guidelines, tentative they may be.

Certainly, the mere entering into a contract by a foreign state with a private party cannot be the ultimate test.
Such an act can only be the start of the inquiry. The logical question is whether the foreign state is engaged in
the activity in the regular course of business. If the foreign state is not engaged regularly in a business or trade,
the particular act or transaction must then be tested by its nature. If the act is in pursuit of a sovereign activity,
or an incident thereof, then it is an act jure imperii, especially when it is not undertaken for gain or profit.

As held in United States of America v. Guinto, (supra):

There is no question that the United States of America, like any other state, will be deemed to
have impliedly waived its non-suability if it has entered into a contract in its proprietary or private
capacity. It is only when the contract involves its sovereign or governmental capacity that no
such waiver may be implied.

In the case at bench, if petitioner has bought and sold lands in the ordinary course of a real estate business,
surely the said transaction can be categorized as an act jure gestionis. However, petitioner has denied that the
acquisition and subsequent disposal of Lot 5-A were made for profit but claimed that it acquired said property
for the site of its mission or the Apostolic Nunciature in the Philippines. Private respondent failed to dispute
said claim.
 Page 91 of 129

Lot 5-A was acquired by petitioner as a donation from the Archdiocese of Manila. The donation was made not
for commercial purpose, but for the use of petitioner to construct thereon the official place of residence of the
Papal Nuncio. The right of a foreign sovereign to acquire property, real or personal, in a receiving state,
necessary for the creation and maintenance of its diplomatic mission, is recognized in the 1961 Vienna
Convention on Diplomatic Relations (Arts. 20-22). This treaty was concurred in by the Philippine Senate and
entered into force in the Philippines on November 15, 1965.

In Article 31(a) of the Convention, a diplomatic envoy is granted immunity from the civil and administrative
jurisdiction of the receiving state over any real action relating to private immovable property situated in the
territory of the receiving state which the envoy holds on behalf of the sending state for the purposes of the
mission. If this immunity is provided for a diplomatic envoy, with all the more reason should immunity be
recognized as regards the sovereign itself, which in this case is the Holy See.

The decision to transfer the property and the subsequent disposal thereof are likewise clothed with a
governmental character. Petitioner did not sell Lot
5-A for profit or gain. It merely wanted to dispose off the same because the squatters living thereon made it
almost impossible for petitioner to use it for the purpose of the donation. The fact that squatters have occupied
and are still occupying the lot, and that they stubbornly refuse to leave the premises, has been admitted by
private respondent in its complaint (Rollo, pp. 26, 27).

The issue of petitioner's non-suability can be determined by the trial court without going to trial in the light of
the pleadings, particularly the admission of private respondent. Besides, the privilege of sovereign immunity in
this case was sufficiently established by the Memorandum and Certification of the Department of Foreign
Affairs. As the department tasked with the conduct of the Philippines' foreign relations (Administrative Code of
1987, Book IV, Title I, Sec. 3), the Department of Foreign Affairs has formally intervened in this case and
officially certified that the Embassy of the Holy See is a duly accredited diplomatic mission to the Republic of
the Philippines exempt from local jurisdiction and entitled to all the rights, privileges and immunities of a
diplomatic mission or embassy in this country (Rollo, pp. 156-157). The determination of the executive arm of
government that a state or instrumentality is entitled to sovereign or diplomatic immunity is a political question
that is conclusive upon the courts (International Catholic Migration Commission v. Calleja, 190 SCRA 130
[1990]). Where the plea of immunity is recognized and affirmed by the executive branch, it is the duty of the
courts to accept this claim so as not to embarrass the executive arm of the government in conducting the
country's foreign relations (World Health Organization v. Aquino, 48 SCRA 242 [1972]). As in International
Catholic Migration Commission and in World Health Organization, we abide by the certification of the
Department of Foreign Affairs.

Ordinarily, the procedure would be to remand the case and order the trial court to conduct a hearing to
establish the facts alleged by petitioner in its motion. In view of said certification, such procedure would
however be pointless and unduly circuitous (Ortigas & Co. Ltd. Partnership v. Judge Tirso Velasco, G.R. No.
109645, July 25, 1994).

IV

Private respondent is not left without any legal remedy for the redress of its grievances. Under both Public
International Law and Transnational Law, a person who feels aggrieved by the acts of a foreign sovereign can
ask his own government to espouse his cause through diplomatic channels.

Private respondent can ask the Philippine government, through the Foreign Office, to espouse its claims
against the Holy See. Its first task is to persuade the Philippine government to take up with the Holy See the
validity of its claims. Of course, the Foreign Office shall first make a determination of the impact of its espousal
on the relations between the Philippine government and the Holy See (Young, Remedies of Private Claimants
Against Foreign States, Selected Readings on Protection by Law of Private Foreign Investments 905, 919
[1964]). Once the Philippine government decides to espouse the claim, the latter ceases to be a private cause.
 Page 92 of 129

According to the Permanent Court of International Justice, the forerunner of the International Court of Justice:

By taking up the case of one of its subjects and by reporting to diplomatic action or international
judicial proceedings on his behalf, a State is in reality asserting its own rights — its right to
ensure, in the person of its subjects, respect for the rules of international law (The Mavrommatis
Palestine Concessions, 1 Hudson, World Court Reports 293, 302 [1924]).

WHEREFORE, the petition for certiorari is GRANTED and the complaint in Civil Case No. 90-183 against
petitioner is DISMISSED.

SO ORDERED.

STATE IMMUNITY: SCOPE OF CONSENT

 Page 93 of 129

G.R. No. L-33112 June 15, 1978

PHILIPPINE NATIONAL BANK, petitioner,

vs.
HON. JUDGE JAVIER PABALAN, Judge of the Court of First Instance, Branch III, La Union, AGOO
TOBACCO PLANTERS ASSOCIATION, INC., PHILIPPINE VIRGINIA TOBACCO ADMINISTRATION, and
PANFILO P. JIMENEZ, Deputy Sheriff, La Union, respondents.

The reliance of petitioner Philippine National Bank in this certiorari and prohibition proceeding against
respondent Judge Javier Pabalan who issued a writ of execution, 1 followed thereafter by a notice of
garnishment of the funds of respondent Philippine Virginia Tobacco Administration, 2 deposited with it, is on the
fundamental constitutional law doctrine of non-suability of a state, it being alleged that such funds are public in
character. This is not the first time petitioner raised that issue. It did so before in Philippine National Bank v.
Court of industrial Relations, 3 decided only last January. It did not meet with success, this Court ruling in
accordance with the two previous cases of National Shipyard and Steel Corporation 4 and Manila Hotel
Employees Association v. Manila Hotel Company,5 that funds of public corporations which can sue and be
sued were not exempt from garnishment. As respondent Philippine Virginia Tobacco Administration is likewise
a public corporation possessed of the same attributes,6 a similar outcome is indicated. This petition must be
dismissed.

It is undisputed that the judgment against respondent Philippine Virginia Tobacco Administration had reached
the stage of finality. A writ of execution was, therefore, in order. It was accordingly issued on December 17,
1970. 7 There was a notice of garnishment for the full amount mentioned in such writ of execution in the sum of
P12,724,66. 8 In view of the objection, however, by petitioner Philippine National Bank on the above ground,
coupled with an inquiry as to whether or not respondent Philippine Virginia Tobacco Administration had funds
deposited with petitioner's La Union branch, it was not until January 25, 1971 that the order sought to be set
aside in this certiorari proceeding was issued by respondent Judge. 9 Its dispositive portion reads as follows:
Conformably with the foregoing, it is now ordered, in accordance with law, that sufficient funds of the Philippine
Virginia Tobacco Administration now deposited with the Philippine National Bank, La Union Branch, shall be
garnished and delivered to the plaintiff immediately to satisfy the Writ of Execution for one-half of the amount
awarded in the decision of November 16, 1970." 10 Hence this certiorari and prohibition proceeding.

As noted at the outset, petitioner Philippine National Bank would invoke the doctrine of non-suability. It is to be
admitted that under the present Constitution, what was formerly implicit as a fundamental doctrine in
constitutional law has been set forth in express terms: "The State may not be sued without its consent." 11 If the
funds appertained to one of the regular departments or offices in the government, then, certainly, such a
provision would be a bar to garnishment. Such is not the case here. Garnishment would lie. Only last January,
as noted in the opening paragraph of this decision, this Court, in a case brought by the same petitioner
precisely invoking such a doctrine, left no doubt that the funds of public corporations could properly be made
the object of a notice of garnishment. Accordingly, this petition must fail.

1. The alleged grave abuse of discretion, the basis of this certiorari proceeding, was sought to be justified on
the failure of respondent Judge to set aside the notice of garnishment of funds belonging to respondent
Philippine Virginia Tobacco Administration. This excerpt from the aforecited decision of Philippine National
Bank v. Court of Industrial Relations makes manifest why such an argument is far from persuasive. "The
premise that the funds could be spoken as public character may be accepted in the sense that the People
Homesite and Housing Corporation was a government-owned entity. It does not follow though that they were
exempt. from garnishment. National Shipyard and Steel Corporation v. Court of Industrial Relations is squarely
in point. As was explicitly stated in the opinion of the then Justice, later Chief Justice, Concepcion: "The
allegation to the effect that the funds of the NASSCO are public funds of the government, and that, as such,
the same may not be garnished, attached or levied upon, is untenable for, as a government owned and
controlled corporation, the NASSCO has a personality of its own. distinct and separate from that of the
Government. It has — pursuant to Section 2 of Executive Order No. 356, dated October 23, 1950 ... , pursuant
to which The NASSCO has been established — all the powers of a corporation under the Corporation Law ... ."
 Page 94 of 129

Accordingly, it may be sue and be sued and may be subjected to court processes just like any other
corporation (Section 13, Act No. 1459, as amended.)" ... To repeat, the ruling was the appropriate remedy for
the prevailing party which could proceed against the funds of a corporate entity even if owned or controlled by
the government." 12

2. The National Shipyard and Steel Corporation decision was not the first of its kind. The ruling therein could
be inferred from the judgment announced in Manila Hotel Employees Association v. Manila Hotel Company,
decided as far back as 1941. 13 In the language of its ponente Justice Ozaeta "On the other hand, it is well-
settled that when the government enters into commercial business, it abandons its sovereign capacity and is to
be treated like any other corporation. (Bank of the United States v. Planters' Bank, 9 Wheat. 904, 6 L.ed. 244).
By engaging in a particular business thru the instrumentality of a corporation, the government divests itself pro
hac vice of its sovereign character, so as to render the corporation subject to the rules of law governing private
corporations." 14 It is worth mentioning that Justice Ozaeta could find support for such a pronouncement from
the leading American Supreme Court case of united States v. Planters' Bank, 15 with the opinion coming from
the illustrious Chief Justice Marshall. It was handed down more than one hundred fifty years ago, 1824 to be
exact. It is apparent, therefore, that petitioner Bank could it legally set forth as a bar or impediment to a notice
of garnishment the doctrine of non-suability.

WHEREFORE, this petition for certiorari and prohibition is dismissed. No costs.

 Page 95 of 129

STATE IMMUNITY: SCOPE OF CONSENT

G.R. No. L-61744 June 25, 1984

MUNICIPALITY OF SAN MIGUEL, BULACAN, petitioner,

vs.
HONORABLE OSCAR C. FERNANDEZ, in his capacity as the Presiding Judge, Branch IV, Baliuag,
Bulacan, The PROVINCIAL SHERIFF of Bulacan, MARGARITA D. VDA. DE IMPERIO, ADORACION
IMPERIO, RODOLFO IMPERIO, CONRADO IMPERIO, ERNESTO IMPERIO, ALFREDO IMPERIO, CARLOS
IMPERIO, JR., JUAN IMPERIO and SPOUSES MARCELO PINEDA and LUCILA PONGCO, respondents.

In Civil Case No. 604-B, entitled "Margarita D. Vda. de Imperio, et al. vs. Municipal Government of San Miguel,
Bulacan, et al.", the then Court of First Instance of Bulacan, on April 28, 1978, rendered judgment holding
herein petitioner municipality liable to private respondents, as follows:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs and
against the defendant Municipal Government of San Miguel Bulacan, represented by Mayor Mar
Marcelo G. Aure and its Municipal Treasurer:

1. ordering the partial revocation of the Deed of Donation signed by the deceased Carlos
Imperio in favor of the Municipality of San Miguel Bulacan, dated October 27, 1947 insofar as
Lots Nos. 1, 2, 3, 4 and 5, Block 11 of Subdivision Plan Psd-20831 are concerned, with an
aggregate total area of 4,646 square meters, which lots are among those covered and
described under TCT No. T-1831 of the Register of Deeds of Bulacan in the name of the
Municipal Government of San Miguel Bulacan,

2. ordering the defendant to execute the corresponding Deed of Reconveyance over the
aforementioned five lots in favor of the plaintiffs in the proportion of the undivided one-half (½)
share in the name of plaintiffs Margarita D. Vda. de Imperio, Adoracion, Rodolfo, Conrado,
Ernesto, Alfredo, Carlos, Jr. and Juan, all surnamed Imperio, and the remaining undivided one-
half (½) share in favor of plaintiffs uses Marcelo E. Pineda and Lucila Pongco;

3. ordering the defendant municipality to pay to the plaintiffs in the proportion mentioned in the
immediately preceding paragraph the sum of P64,440.00 corresponding to the rentals it has
collected from the occupants for their use and occupation of the premises from 1970 up to and
including 1975, plus interest thereon at the legal rate from January 1970 until fully paid;

4. ordering the restoration of ownership and possession over the five lots in question in favor of
the plaintiffs in the same proportion aforementioned;

5. ordering the defendant to pay the plaintiffs the sum of P3,000.00 for attomey's fees; and to
pay the cost of suit.

The counterclaim of the defendant is hereby ordered dismissed for lack of evidence presented
to substantiate the same.

SO ORDERED. (pp. 11-12, Rollo)

The foregoing judgment became final when herein petitioner's appeal was dismissed due to its failure to file the
record on appeal on time. The dismissal was affirmed by the then Court of Appeals in CA-G.R. No. SP-12118
and by this Court in G.R. No. 59938. Thereafter, herein private respondents moved for issuance of a writ of
execution for the satisfaction of the judgment. Respondent judge, on July 27, 1982, issued an order, to wit:
 Page 96 of 129

Considering that an entry of judgment had already been made on June 14, 1982 in G. R. No. L-
59938 and;

Considering further that there is no opposition to plaintiffs' motion for execution dated July 23,
1983;

Let a writ of execution be so issued, as prayed for in the aforestated motion. (p. 10, Rollo)

Petitioner, on July 30, 1982, filed a Motion to Quash the writ of execution on the ground that the municipality's
property or funds are all public funds exempt from execution. The said motion to quash was, however, denied
by the respondent judge in an order dated August 23, 1982 and the alias writ of execution stands in full force
and effect.

On September 13, 1982, respondent judge issued an order which in part, states:

It is clear and evident from the foregoing that defendant has more than enough funds to meet its
judgment obligation. Municipal Treasurer Miguel C, Roura of San Miguel, Bulacan and
Provincial Treasurer of Bulacan Agustin O. Talavera are therefor hereby ordered to comply with
the money judgment rendered by Judge Agustin C. Bagasao against said municipality. In like
manner, the municipal authorities of San Miguel, Bulacan are likewise ordered to desist from
plaintiffs' legal possession of the property already returned to plaintiffs by virtue of the alias writ
of execution.

Finally, defendants are hereby given an inextendible period of ten (10) days from receipt of a
copy of this order by the Office of the Provincial Fiscal of Bulacan within which to submit their
written compliance, (p. 24, Rollo)

When the treasurers (provincial and municipal) failed to comply with the order of September 13, 1982,
respondent judge issued an order for their arrest and that they will be release only upon compliance thereof.

Hence, the present petition on the issue whether the funds of the Municipality of San Miguel, Bulacan, in the
hands of the provincial and municipal treasurers of Bulacan and San Miguel, respectively, are public funds
which are exempt from execution for the satisfaction of the money judgment in Civil Case No. 604-B.

Well settled is the rule that public funds are not subject to levy and execution. The reason for this was
explained in the case of Municipality of Paoay vs. Manaois, 86 Phil. 629 "that they are held in trust for the
people, intended and used for the accomplishment of the purposes for which municipal corporations are
created, and that to subject said properties and public funds to execution would materially impede, even defeat
and in some instances destroy said purpose." And, in Tantoco vs. Municipal Council of Iloilo, 49 Phil. 52, it was
held that "it is the settled doctrine of the law that not only the public property but also the taxes and public
revenues of such corporations Cannot be seized under execution against them, either in the treasury or when
in transit to it. Judgments rendered for taxes, and the proceeds of such judgments in the hands of officers of
the law, are not subject to execution unless so declared by statute." Thus, it is clear that all the funds of
petitioner municipality in the possession of the Municipal Treasurer of San Miguel, as well as those in the
possession of the Provincial Treasurer of Bulacan, are also public funds and as such they are exempt from
execution.

Besides, Presidential Decree No. 477, known as "The Decree on Local Fiscal Administration", Section 2 (a),
provides:

SEC. 2. Fundamental Principles. — Local government financial affairs, transactions, and

operations shall be governed by the fundamental principles set forth hereunder:
 Page 97 of 129

(a) No money shall be paid out of the treasury except in pursuance of a lawful appropriation or
other specific statutory authority.

xxx xxx xxx

Otherwise stated, there must be a corresponding appropriation in the form of an ordinance duly passed by the
Sangguniang Bayan before any money of the municipality may be paid out. In the case at bar, it has not been
shown that the Sangguniang Bayan has passed an ordinance to this effect.

Furthermore, Section 15, Rule 39 of the New Rules of Court, outlines the procedure for the enforcement of
money judgment:

(a) By levying on all the property of the debtor, whether real or personal, not otherwise exempt
from execution, or only on such part of the property as is sufficient to satisfy the judgment and
accruing cost, if he has more than sufficient property for the purpose;

(b) By selling the property levied upon;

(c) By paying the judgment-creditor so much of the proceeds as will satisfy the judgment and
accruing costs; and

(d) By delivering to the judgment-debtor the excess, if any, unless otherwise, directed by
judgment or order of the court.

The foregoing has not been followed in the case at bar.

ACCORDINGLY, the petition is granted and the order of respondent judge, dated July 27, 1982, granting
issuance of a writ of execution; the alias writ of execution, dated July 27, 1982; and the order of respondent
judge, dated September 13, 1982, directing the Provincial Treasurer of Bulacan and the Municipal Treasurer of
San Miguel, Bulacan to comply with the money judgments, are SET ASIDE; and respondents are hereby
enjoined from implementing the writ of execution.

SO ORDERED.
 Page 98 of 129

STATE IMMUNITY: SCOPE OF CONSENT

G.R. Nos. 89898-99 October 1, 1990

MUNICIPALITY OF MAKATI, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, HON. SALVADOR P. DE GUZMAN, JR., as Judge RTC of
Makati, Branch CXLII ADMIRAL FINANCE CREDITORS CONSORTIUM, INC., and SHERIFF SILVINO R.
PASTRANA, respondents.

The present petition for review is an off-shoot of expropriation proceedings initiated by petitioner Municipality of
Makati against private respondent Admiral Finance Creditors Consortium, Inc., Home Building System &
Realty Corporation and one Arceli P. Jo, involving a parcel of land and improvements thereon located at
Mayapis St., San Antonio Village, Makati and registered in the name of Arceli P. Jo under TCT No. S-5499.

It appears that the action for eminent domain was filed on May 20, 1986, docketed as Civil Case No. 13699.
Attached to petitioner's complaint was a certification that a bank account (Account No. S/A 265-537154-3) had
been opened with the PNB Buendia Branch under petitioner's name containing the sum of P417,510.00, made
pursuant to the provisions of Pres. Decree No. 42. After due hearing where the parties presented their
respective appraisal reports regarding the value of the property, respondent RTC judge rendered a decision on
June 4, 1987, fixing the appraised value of the property at P5,291,666.00, and ordering petitioner to pay this
amount minus the advanced payment of P338,160.00 which was earlier released to private respondent.

After this decision became final and executory, private respondent moved for the issuance of a writ of
execution. This motion was granted by respondent RTC judge. After issuance of the writ of execution, a Notice
of Garnishment dated January 14, 1988 was served by respondent sheriff Silvino R. Pastrana upon the
manager of the PNB Buendia Branch. However, respondent sheriff was informed that a "hold code" was
placed on the account of petitioner. As a result of this, private respondent filed a motion dated January 27,
1988 praying that an order be issued directing the bank to deliver to respondent sheriff the amount equivalent
to the unpaid balance due under the RTC decision dated June 4, 1987.

Petitioner filed a motion to lift the garnishment, on the ground that the manner of payment of the expropriation
amount should be done in installments which the respondent RTC judge failed to state in his decision. Private
respondent filed its opposition to the motion.

Pending resolution of the above motions, petitioner filed on July 20, 1988 a "Manifestation" informing the court
that private respondent was no longer the true and lawful owner of the subject property because a new title
over the property had been registered in the name of Philippine Savings Bank, Inc. (PSB) Respondent RTC
judge issued an order requiring PSB to make available the documents pertaining to its transactions over the
subject property, and the PNB Buendia Branch to reveal the amount in petitioner's account which was
garnished by respondent sheriff. In compliance with this order, PSB filed a manifestation informing the court
that it had consolidated its ownership over the property as mortgagee/purchaser at an extrajudicial foreclosure
sale held on April 20, 1987. After several conferences, PSB and private respondent entered into a compromise
agreement whereby they agreed to divide between themselves the compensation due from the expropriation
proceedings.

Respondent trial judge subsequently issued an order dated September 8, 1988 which: (1) approved the
compromise agreement; (2) ordered PNB Buendia Branch to immediately release to PSB the sum of
P4,953,506.45 which corresponds to the balance of the appraised value of the subject property under the RTC
 Page 99 of 129

decision dated June 4, 1987, from the garnished account of petitioner; and, (3) ordered PSB and private
respondent to execute the necessary deed of conveyance over the subject property in favor of petitioner.
Petitioner's motion to lift the garnishment was denied.

Petitioner filed a motion for reconsideration, which was duly opposed by private respondent. On the other
hand, for failure of the manager of the PNB Buendia Branch to comply with the order dated September 8,
1988, private respondent filed two succeeding motions to require the bank manager to show cause why he
should not be held in contempt of court. During the hearings conducted for the above motions, the general
manager of the PNB Buendia Branch, a Mr. Antonio Bautista, informed the court that he was still waiting for
proper authorization from the PNB head office enabling him to make a disbursement for the amount so
ordered. For its part, petitioner contended that its funds at the PNB Buendia Branch could neither be garnished
nor levied upon execution, for to do so would result in the disbursement of public funds without the proper
appropriation required under the law, citing the case of Republic of the Philippines v. Palacio [G.R. No. L-
20322, May 29, 1968, 23 SCRA 899].

Respondent trial judge issued an order dated December 21, 1988 denying petitioner's motion for
reconsideration on the ground that the doctrine enunciated in Republic v. Palacio did not apply to the case
because petitioner's PNB Account No. S/A 265-537154-3 was an account specifically opened for the
expropriation proceedings of the subject property pursuant to Pres. Decree No. 42. Respondent RTC judge
likewise declared Mr. Antonio Bautista guilty of contempt of court for his inexcusable refusal to obey the order
dated September 8, 1988, and thus ordered his arrest and detention until his compliance with the said order.

Petitioner and the bank manager of PNB Buendia Branch then filed separate petitions for certiorari with the
Court of Appeals, which were eventually consolidated. In a decision promulgated on June 28, 1989, the Court
of Appeals dismissed both petitions for lack of merit, sustained the jurisdiction of respondent RTC judge over
the funds contained in petitioner's PNB Account No. 265-537154-3, and affirmed his authority to levy on such
funds.

Its motion for reconsideration having been denied by the Court of Appeals, petitioner now files the present
petition for review with prayer for preliminary injunction.

On November 20, 1989, the Court resolved to issue a temporary restraining order enjoining respondent RTC
judge, respondent sheriff, and their representatives, from enforcing and/or carrying out the RTC order dated
December 21, 1988 and the writ of garnishment issued pursuant thereto. Private respondent then filed its
comment to the petition, while petitioner filed its reply.

Petitioner not only reiterates the arguments adduced in its petition before the Court of Appeals, but also alleges
for the first time that it has actually two accounts with the PNB Buendia Branch, to wit:

xxx xxx xxx

(1) Account No. S/A 265-537154-3 — exclusively for the expropriation of the subject property,
with an outstanding balance of P99,743.94.

(2) Account No. S/A 263-530850-7 — for statutory obligations and other purposes of the
municipal government, with a balance of P170,098,421.72, as of July 12, 1989.

xxx xxx xxx

[Petition, pp. 6-7; Rollo, pp. 11-12.]

Because the petitioner has belatedly alleged only in this Court the existence of two bank accounts, it may fairly
be asked whether the second account was opened only for the purpose of undermining the legal basis of the
 Page 100 of 129

assailed orders of respondent RTC judge and the decision of the Court of Appeals, and strengthening its
reliance on the doctrine that public funds are exempted from garnishment or execution as enunciated
in Republic v. Palacio [supra.] At any rate, the Court will give petitioner the benefit of the doubt, and proceed to
resolve the principal issues presented based on the factual circumstances thus alleged by petitioner.

Admitting that its PNB Account No. S/A 265-537154-3 was specifically opened for expropriation proceedings it
had initiated over the subject property, petitioner poses no objection to the garnishment or the levy under
execution of the funds deposited therein amounting to P99,743.94. However, it is petitioner's main contention
that inasmuch as the assailed orders of respondent RTC judge involved the net amount of P4,965,506.45, the
funds garnished by respondent sheriff in excess of P99,743.94, which are public funds earmarked for the
municipal government's other statutory obligations, are exempted from execution without the proper
appropriation required under the law.

There is merit in this contention. The funds deposited in the second PNB Account No. S/A 263-530850-7 are
public funds of the municipal government. In this jurisdiction, well-settled is the rule that public funds are not
subject to levy and execution, unless otherwise provided for by statute [Republic v. Palacio, supra.; The
Commissioner of Public Highways v. San Diego, G.R. No. L-30098, February 18, 1970, 31 SCRA 616]. More
particularly, the properties of a municipality, whether real or personal, which are necessary for public use
cannot be attached and sold at execution sale to satisfy a money judgment against the municipality. Municipal
revenues derived from taxes, licenses and market fees, and which are intended primarily and exclusively for
the purpose of financing the governmental activities and functions of the municipality, are exempt from
execution [See Viuda De Tan Toco v. The Municipal Council of Iloilo, 49 Phil. 52 (1926): The Municipality of
Paoay, Ilocos Norte v. Manaois, 86 Phil. 629 (1950); Municipality of San Miguel, Bulacan v. Fernandez, G.R.
No. 61744, June 25, 1984, 130 SCRA 56]. The foregoing rule finds application in the case at bar. Absent a
showing that the municipal council of Makati has passed an ordinance appropriating from its public funds an
amount corresponding to the balance due under the RTC decision dated June 4, 1987, less the sum of
P99,743.94 deposited in Account No. S/A 265-537154-3, no levy under execution may be validly effected on
the public funds of petitioner deposited in Account No. S/A 263-530850-7.

Nevertheless, this is not to say that private respondent and PSB are left with no legal recourse. Where a
municipality fails or refuses, without justifiable reason, to effect payment of a final money judgment rendered
against it, the claimant may avail of the remedy of mandamus in order to compel the enactment and approval
of the necessary appropriation ordinance, and the corresponding disbursement of municipal funds therefor
[See Viuda De Tan Toco v. The Municipal Council of Iloilo, supra; Baldivia v. Lota, 107 Phil. 1099 (1960);
Yuviengco v. Gonzales, 108 Phil. 247 (1960)].

In the case at bar, the validity of the RTC decision dated June 4, 1987 is not disputed by petitioner. No appeal
was taken therefrom. For three years now, petitioner has enjoyed possession and use of the subject property
notwithstanding its inexcusable failure to comply with its legal obligation to pay just compensation. Petitioner
has benefited from its possession of the property since the same has been the site of Makati West High School
since the school year 1986-1987. This Court will not condone petitioner's blatant refusal to settle its legal
obligation arising from expropriation proceedings it had in fact initiated. It cannot be over-emphasized that,
within the context of the State's inherent power of eminent domain,

. . . [j]ust compensation means not only the correct determination of the amount to be paid to the
owner of the land but also the payment of the land within a reasonable time from its taking.
Without prompt payment, compensation cannot be considered "just" for the property owner is
made to suffer the consequence of being immediately deprived of his land while being made to
wait for a decade or more before actually receiving the amount necessary to cope with his loss
[Cosculluela v. The Honorable Court of Appeals, G.R. No. 77765, August 15, 1988, 164 SCRA
393, 400. See also Provincial Government of Sorsogon v. Vda. de Villaroya, G.R. No. 64037,
August 27, 1987, 153 SCRA 291].
 Page 101 of 129

The State's power of eminent domain should be exercised within the bounds of fair play and justice. In the
case at bar, considering that valuable property has been taken, the compensation to be paid fixed and the
municipality is in full possession and utilizing the property for public purpose, for three (3) years, the Court finds
that the municipality has had more than reasonable time to pay full compensation.

WHEREFORE, the Court Resolved to ORDER petitioner Municipality of Makati to immediately pay Philippine
Savings Bank, Inc. and private respondent the amount of P4,953,506.45. Petitioner is hereby required to
submit to this Court a report of its compliance with the foregoing order within a non-extendible period of SIXTY
(60) DAYS from the date of receipt of this resolution.

The order of respondent RTC judge dated December 21, 1988, which was rendered in Civil Case No. 13699, is
SET ASIDE and the temporary restraining order issued by the Court on November 20, 1989 is MADE
PERMANENT.

SO ORDERED.
 Page 102 of 129

IMMUNITY FROM SUIT OF STATES AND INTERNATIONAL ORG

G.R. No. 154705               June 26, 2003

THE REPUBLIC OF INDONESIA, HIS EXCELLENCY AMBASSADOR SOERATMIN, and MINISTER

COUNSELLOR AZHARI KASIM, Petitioners,
vs.
JAMES VINZON, doing business under the name and style of VINZON TRADE AND
SERVICES, Respondent.

DECISION

AZCUNA, J:

This is a petition for review on certiorari to set aside the Decision of the Court of Appeals dated May 30, 2002
and its Resolution dated August 16, 2002, in CA-G.R. SP No. 66894 entitled "The Republic of Indonesia, His
Excellency Ambassador Soeratmin and Minister Counselor Azhari Kasim v. Hon. Cesar Santamaria, Presiding
Judge, RTC Branch 145, Makati City, and James Vinzon, doing business under the name and style of Vinzon
Trade and Services."

Petitioner, Republic of Indonesia, represented by its Counsellor, Siti Partinah, entered into a Maintenance
Agreement in August 1995 with respondent James Vinzon, sole proprietor of Vinzon Trade and Services. The
Maintenance Agreement stated that respondent shall, for a consideration, maintain specified equipment at the
Embassy Main Building, Embassy Annex Building and the Wisma Duta, the official residence of petitioner
Ambassador Soeratmin. The equipment covered by the Maintenance Agreement are air conditioning units,
generator sets, electrical facilities, water heaters, and water motor pumps. It is likewise stated therein that the
agreement shall be effective for a period of four years and will renew itself automatically unless cancelled by
either party by giving thirty days prior written notice from the date of expiry.1

Petitioners claim that sometime prior to the date of expiration of the said agreement, or before August 1999,
they informed respondent that the renewal of the agreement shall be at the discretion of the incoming Chief of
Administration, Minister Counsellor Azhari Kasim, who was expected to arrive in February 2000. When Minister
Counsellor Kasim assumed the position of Chief of Administration in March 2000, he allegedly found
respondent’s work and services unsatisfactory and not in compliance with the standards set in the
Maintenance Agreement. Hence, the Indonesian Embassy terminated the agreement in a letter dated August
31, 2000.2 Petitioners claim, moreover, that they had earlier verbally informed respondent of their decision to
terminate the agreement.

On the other hand, respondent claims that the aforesaid termination was arbitrary and unlawful. Respondent
cites various circumstances which purportedly negated petitioners’ alleged dissatisfaction over respondent’s
services: (a) in July 2000, Minister Counsellor Kasim still requested respondent to assign to the embassy an
additional full-time worker to assist one of his other workers; (b) in August 2000, Minister Counsellor Kasim
asked respondent to donate a prize, which the latter did, on the occasion of the Indonesian Independence Day
golf tournament; and (c) in a letter dated August 22, 2000, petitioner Ambassador Soeratmin thanked
respondent for sponsoring a prize and expressed his hope that the cordial relations happily existing between
them will continue to prosper and be strengthened in the coming years.
 Page 103 of 129

Hence, on December 15, 2000, respondent filed a complaint3 against petitioners docketed as Civil Case No.
18203 in the Regional Trial Court (RTC) of Makati, Branch 145. On February 20, 2001, petitioners filed a
Motion to Dismiss, alleging that the Republic of Indonesia, as a foreign sovereign State, has sovereign
immunity from suit and cannot be sued as a party-defendant in the Philippines. The said motion further alleged
that Ambassador Soeratmin and Minister Counsellor Kasim are diplomatic agents as defined under the Vienna
Convention on Diplomatic Relations and therefore enjoy diplomatic immunity.4 In turn, respondent filed on
March 20, 2001, an Opposition to the said motion alleging that the Republic of Indonesia has expressly waived
its immunity from suit. He based this claim upon the following provision in the Maintenance Agreement:

"Any legal action arising out of this Maintenance Agreement shall be settled according to the laws of the
Philippines and by the proper court of Makati City, Philippines."

Respondent’s Opposition likewise alleged that Ambassador Soeratmin and Minister Counsellor Kasim can be
sued and held liable in their private capacities for tortious acts done with malice and bad faith.5

On May 17, 2001, the trial court denied herein petitioners’ Motion to Dismiss. It likewise denied the Motion for
Reconsideration subsequently filed.

The trial court’s denial of the Motion to Dismiss was brought up to the Court of Appeals by herein petitioners in
a petition for certiorari and prohibition. Said petition, docketed as CA-G.R. SP No. 66894, alleged that the trial
court gravely abused its discretion in ruling that the Republic of Indonesia gave its consent to be sued and
voluntarily submitted itself to the laws and jurisdiction of Philippine courts and that petitioners Ambassador
Soeratmin and Minister Counsellor Kasim waived their immunity from suit.

On May 30, 2002, the Court of Appeals rendered its assailed decision denying the petition for lack of merit. 6 On
August 16, 2002, it denied herein petitioners’ motion for reconsideration.7

Hence, this petition.

In the case at bar, petitioners raise the sole issue of whether or not the Court of Appeals erred in sustaining the
trial court’s decision that petitioners have waived their immunity from suit by using as its basis the
abovementioned provision in the Maintenance Agreement.

The petition is impressed with merit.

International law is founded largely upon the principles of reciprocity, comity, independence, and equality of
States which were adopted as part of the law of our land under Article II, Section 2 of the 1987
Constitution.8 The rule that a State may not be sued without its consent is a necessary consequence of the
principles of independence and equality of States.9 As enunciated in Sanders v. Veridiano II,10 the practical
justification for the doctrine of sovereign immunity is that there can be no legal right against the authority that
makes the law on which the right depends. In the case of foreign States, the rule is derived from the principle
of the sovereign equality of States, as expressed in the maxim par in parem non habet imperium. All states are
sovereign equals and cannot assert jurisdiction over one another.11 A contrary attitude would "unduly vex the
peace of nations."12

The rules of International Law, however, are neither unyielding nor impervious to change. The increasing need
of sovereign States to enter into purely commercial activities remotely connected with the discharge of their
governmental functions brought about a new concept of sovereign immunity. This concept, the restrictive
theory, holds that the immunity of the sovereign is recognized only with regard to public acts or acts jure
imperii, but not with regard to private acts or acts jure gestionis.13

In United States v. Ruiz,14 for instance, we held that the conduct of public bidding for the repair of a wharf at a
United States Naval Station is an act jure imperii. On the other hand, we considered as an act jure
 Page 104 of 129

gestionis the hiring of a cook in the recreation center catering to American servicemen and the general public
at the John Hay Air Station in Baguio City,15 as well as the bidding for the operation of barber shops in Clark Air
Base in Angeles City.16

Apropos the present case, the mere entering into a contract by a foreign State with a private party cannot be
construed as the ultimate test of whether or not it is an act jure imperii or jure gestionis. Such act is only the
start of the inquiry. Is the foreign State engaged in the regular conduct of a business? If the foreign State is not
engaged regularly in a business or commercial activity, and in this case it has not been shown to be so
engaged, the particular act or transaction must then be tested by its nature. If the act is in pursuit of a
sovereign activity, or an incident thereof, then it is an act jure imperii.17

Hence, the existence alone of a paragraph in a contract stating that any legal action arising out of the
agreement shall be settled according to the laws of the Philippines and by a specified court of the Philippines is
not necessarily a waiver of sovereign immunity from suit. The aforesaid provision contains language not
necessarily inconsistent with sovereign immunity. On the other hand, such provision may also be meant to
apply where the sovereign party elects to sue in the local courts, or otherwise waives its immunity by any
subsequent act. The applicability of Philippine laws must be deemed to include Philippine laws in its totality,
including the principle recognizing sovereign immunity. Hence, the proper court may have no proper action, by
way of settling the case, except to dismiss it.

Submission by a foreign state to local jurisdiction must be clear and unequivocal. It must be given explicitly or
by necessary implication. We find no such waiver in this case.

Respondent concedes that the establishment of a diplomatic mission is a sovereign function.1âwphi1 On the
other hand, he argues that the actual physical maintenance of the premises of the diplomatic mission, such as
the upkeep of its furnishings and equipment, is no longer a sovereign function of the State.18

We disagree. There is no dispute that the establishment of a diplomatic mission is an act jure imperii. A
sovereign State does not merely establish a diplomatic mission and leave it at that; the establishment of a
diplomatic mission encompasses its maintenance and upkeep. Hence, the State may enter into contracts with
private entities to maintain the premises, furnishings and equipment of the embassy and the living quarters of
its agents and officials. It is therefore clear that petitioner Republic of Indonesia was acting in pursuit of a
sovereign activity when it entered into a contract with respondent for the upkeep or maintenance of the air
conditioning units, generator sets, electrical facilities, water heaters, and water motor pumps of the Indonesian
Embassy and the official residence of the Indonesian ambassador.

The Solicitor General, in his Comment, submits the view that, "the Maintenance Agreement was entered into
by the Republic of Indonesia in the discharge of its governmental functions. In such a case, it cannot be
deemed to have waived its immunity from suit." As to the paragraph in the agreement relied upon by
respondent, the Solicitor General states that it "was not a waiver of their immunity from suit but a mere
stipulation that in the event they do waive their immunity, Philippine laws shall govern the resolution of any
legal action arising out of the agreement and the proper court in Makati City shall be the agreed venue
thereof.19

On the matter of whether or not petitioners Ambassador Soeratmin and Minister Counsellor Kasim may be
sued herein in their private capacities, Article 31 of the Vienna Convention on Diplomatic Relations provides:

xxx

1. A diplomatic agent shall enjoy immunity from the criminal jurisidiction of the receiving State. He shall also
enjoy immunity from its civil and administrative jurisdiction, except in the case of:
 Page 105 of 129

(a) a real action relating to private immovable property situated in the territory of the receiving State,
unless he holds it on behalf of the sending State for the purposes of the mission;

(b) an action relating to succession in which the diplomatic agent is involved as executor, administrator,
heir or legatee as a private person and not on behalf of the sending State;

(c) an action relating to any professional or commercial activity exercised by the diplomatic agent in the
receiving State outside his official functions.

xxx

The act of petitioners Ambassador Soeratmin and Minister Counsellor Kasim in terminating the Maintenance
Agreement is not covered by the exceptions provided in the abovementioned provision.

The Solicitor General believes that said act may fall under subparagraph (c) thereof,20 but said provision clearly
applies only to a situation where the diplomatic agent engages in any professional or commercial
activity outside official functions, which is not the case herein.

WHEREFORE, the petition is hereby GRANTED. The decision and resolution of the Court of Appeals in CA
G.R. SP No. 66894 are REVERSED and SET ASIDE and the complaint in Civil Case No. 18203 against
petitioners is DISMISSED.

No costs.

SO ORDERED.
 Page 106 of 129

IMMUNITY FROM SUIT OF STATES AND INTERNATIONAL ORG

G.R. No. 85750 September 28, 1990

INTERNATIONAL CATHOLIC IMMIGRATION COMMISSION, petitioner

vs
HON. PURA CALLEJA IN HER CAPACITY AS DIRECTOR OF THE BUREAU OF LABOR RELATIONS
AND TRADE UNIONS OF THE PHILIPPINES AND ALLIED SERVICES (TUPAS) WFTU respondents.

Consolidated on 11 December 1989, these two cases involve the validity of the claim of immunity by the
International Catholic Migration Commission (ICMC) and the International Rice Research Institute, Inc. (IRRI)
from the application of Philippine labor laws.

Facts and Issues

A. G.R. No. 85750 — the International Catholic Migration Commission (ICMC) Case.

As an aftermath of the Vietnam War, the plight of Vietnamese refugees fleeing from South Vietnam's
communist rule confronted the international community.

In response to this crisis, on 23 February 1981, an Agreement was forged between the Philippine Government
and the United Nations High Commissioner for Refugees whereby an operating center for processing Indo-
Chinese refugees for eventual resettlement to other countries was to be established in Bataan (Annex
"A", Rollo, pp. 22-32).

ICMC was one of those accredited by the Philippine Government to operate the refugee processing center in
Morong, Bataan. It was incorporated in New York, USA, at the request of the Holy See, as a non-profit agency
involved in international humanitarian and voluntary work. It is duly registered with the United Nations
Economic and Social Council (ECOSOC) and enjoys Consultative Status, Category II. As an international
organization rendering voluntary and humanitarian services in the Philippines, its activities are parallel to those
of the International Committee for Migration (ICM) and the International Committee of the Red Cross (ICRC)
[DOLE Records of BLR Case No. A-2-62-87, ICMC v. Calleja, Vol. 1].

On 14 July 1986, Trade Unions of the Philippines and Allied Services (TUPAS) filed with the then Ministry of
Labor and Employment a Petition for Certification Election among the rank and file members employed by
ICMC The latter opposed the petition on the ground that it is an international organization registered with the
United Nations and, hence, enjoys diplomatic immunity.

On 5 February 1987, Med-Arbiter Anastacio L. Bactin sustained ICMC and dismissed the petition for lack of
jurisdiction.
 Page 107 of 129

On appeal by TUPAS, Director Pura Calleja of the Bureau of Labor Relations (BLR), reversed the Med-
Arbiter's Decision and ordered the immediate conduct of a certification election. At that time, ICMC's request
for recognition as a specialized agency was still pending with the Department of Foreign Affairs (DEFORAF).

Subsequently, however, on 15 July 1988, the Philippine Government, through the DEFORAF, granted ICMC
the status of a specialized agency with corresponding diplomatic privileges and immunities, as evidenced by a
Memorandum of Agreement between the Government and ICMC (Annex "E", Petition, Rollo, pp. 41-43), infra.

ICMC then sought the immediate dismissal of the TUPAS Petition for Certification Election invoking the
immunity expressly granted but the same was denied by respondent BLR Director who, again, ordered the
immediate conduct of a pre-election conference. ICMC's two Motions for Reconsideration were denied despite
an opinion rendered by DEFORAF on 17 October 1988 that said BLR Order violated ICMC's diplomatic
immunity.

Thus, on 24 November 1988, ICMC filed the present Petition for Certiorari with Preliminary Injunction assailing
the BLR Order.

On 28 November 1988, the Court issued a Temporary Restraining Order enjoining the holding of the
certification election.

On 10 January 1989, the DEFORAF, through its Legal Adviser, retired Justice Jorge C. Coquia of the Court of
Appeals, filed a Motion for Intervention alleging that, as the highest executive department with the competence
and authority to act on matters involving diplomatic immunity and privileges, and tasked with the conduct of
Philippine diplomatic and consular relations with foreign governments and UN organizations, it has a legal
interest in the outcome of this case.

Over the opposition of the Solicitor General, the Court allowed DEFORAF intervention.

On 12 July 1989, the Second Division gave due course to the ICMC Petition and required the submittal of
memoranda by the parties, which has been complied with.

As initially stated, the issue is whether or not the grant of diplomatic privileges and immunites to ICMC extends
to immunity from the application of Philippine labor laws.

ICMC sustains the affirmative of the proposition citing (1) its Memorandum of Agreement with the Philippine
Government giving it the status of a specialized agency, (infra); (2) the Convention on the Privileges and
Immunities of Specialized Agencies, adopted by the UN General Assembly on 21 November 1947 and
concurred in by the Philippine Senate through Resolution No. 91 on 17 May 1949 (the Philippine Instrument of
Ratification was signed by the President on 30 August 1949 and deposited with the UN on 20 March
1950) infra; and (3) Article II, Section 2 of the 1987 Constitution, which declares that the Philippines adopts the
generally accepted principles of international law as part of the law of the land.

Intervenor DEFORAF upholds ICMC'S claim of diplomatic immunity and seeks an affirmance of the DEFORAF
determination that the BLR Order for a certification election among the ICMC employees is violative of the
diplomatic immunity of said organization.

Respondent BLR Director, on the other hand, with whom the Solicitor General agrees, cites State policy and
Philippine labor laws to justify its assailed Order, particularly, Article II, Section 18 and Article III, Section 8 of
the 1987 Constitution, infra; and Articles 243 and 246 of the Labor Code, as amended, ibid. In addition, she
contends that a certification election is not a litigation but a mere investigation of a non-adversary, fact-finding
character. It is not a suit against ICMC its property, funds or assets, but is the sole concern of the workers
themselves.
 Page 108 of 129

B. G.R. No. 89331 — (The International Rice Research Institute [IRRI] Case).

Before a Decision could be rendered in the ICMC Case, the Third Division, on 11 December 1989, resolved to
consolidate G.R. No. 89331 pending before it with G.R. No. 85750, the lower-numbered case pending with the
Second Division, upon manifestation by the Solicitor General that both cases involve similar issues.

The facts disclose that on 9 December 1959, the Philippine Government and the Ford and Rockefeller
Foundations signed a Memorandum of Understanding establishing the International Rice Research Institute
(IRRI) at Los Baños, Laguna. It was intended to be an autonomous, philanthropic, tax-free, non-profit, non-
stock organization designed to carry out the principal objective of conducting "basic research on the rice plant,
on all phases of rice production, management, distribution and utilization with a view to attaining nutritive and
economic advantage or benefit for the people of Asia and other major rice-growing areas through improvement
in quality and quantity of rice."

Initially, IRRI was organized and registered with the Securities and Exchange Commission as a private
corporation subject to all laws and regulations. However, by virtue of Pres. Decree No. 1620, promulgated on
19 April 1979, IRRI was granted the status, prerogatives, privileges and immunities of an international
organization.

The Organized Labor Association in Line Industries and Agriculture (OLALIA), is a legitimate labor organization
with an existing local union, the Kapisanan ng Manggagawa at TAC sa IRRI (Kapisanan, for short) in
respondent IRRI.

On 20 April 1987, the Kapisanan filed a Petition for Direct Certification Election with Region IV, Regional Office
of the Department of Labor and Employment (DOLE).

IRRI opposed the petition invoking Pres. Decree No. 1620 conferring upon it the status of an international
organization and granting it immunity from all civil, criminal and administrative proceedings under Philippine
laws.

On 7 July 1987, Med-Arbiter Leonardo M. Garcia, upheld the opposition on the basis of Pres. Decree No. 1620
and dismissed the Petition for Direct Certification.

On appeal, the BLR Director, who is the public respondent in the ICMC Case, set aside the Med-Arbiter's
Order and authorized the calling of a certification election among the rank-and-file employees of IRRI. Said
Director relied on Article 243 of the Labor Code, as amended, infra and Article XIII, Section 3 of the 1987
Constitution, 1 and held that "the immunities and privileges granted to IRRI do not include exemption from
coverage of our Labor Laws." Reconsideration sought by IRRI was denied.

On appeal, the Secretary of Labor, in a Resolution of 5 July 1989, set aside the BLR Director's Order,
dismissed the Petition for Certification Election, and held that the grant of specialized agency status by the
Philippine Government to the IRRI bars DOLE from assuming and exercising jurisdiction over IRRI Said
Resolution reads in part as follows:

Presidential Decree No. 1620 which grants to the IRRI the status, prerogatives, privileges and
immunities of an international organization is clear and explicit. It provides in categorical terms
that:

Art. 3 — The Institute shall enjoy immunity from any penal, civil and administrative proceedings,
except insofar as immunity has been expressly waived by the Director-General of the Institution
or his authorized representative.
 Page 109 of 129

Verily, unless and until the Institute expressly waives its immunity, no summons, subpoena,
orders, decisions or proceedings ordered by any court or administrative or quasi-judicial agency
are enforceable as against the Institute. In the case at bar there was no such waiver made by
the Director-General of the Institute. Indeed, the Institute, at the very first opportunity already
vehemently questioned the jurisdiction of this Department by filing an ex-parte motion to dismiss
the case.

Hence, the present Petition for Certiorari filed by Kapisanan alleging grave abuse of discretion by respondent
Secretary of Labor in upholding IRRI's diplomatic immunity.

The Third Division, to which the case was originally assigned, required the respondents to comment on the
petition. In a Manifestation filed on 4 August 1990, the Secretary of Labor declared that it was "not adopting as
his own" the decision of the BLR Director in the ICMC Case as well as the Comment of the Solicitor General
sustaining said Director. The last pleading was filed by IRRI on 14 August 1990.

Instead of a Comment, the Solicitor General filed a Manifestation and Motion praying that he be excused from
filing a comment "it appearing that in the earlier case of International Catholic Migration Commission v. Hon.
Pura Calleja, G.R. No. 85750. the Office of the Solicitor General had sustained the stand of Director Calleja on
the very same issue now before it, which position has been superseded by respondent Secretary of Labor in
G.R. No. 89331," the present case. The Court acceded to the Solicitor General's prayer.

The Court is now asked to rule upon whether or not the Secretary of Labor committed grave abuse of
discretion in dismissing the Petition for Certification Election filed by Kapisanan.

Kapisanan contends that Article 3 of Pres. Decree No. 1620 granting IRRI the status, privileges, prerogatives
and immunities of an international organization, invoked by the Secretary of Labor, is unconstitutional in so far
as it deprives the Filipino workers of their fundamental and constitutional right to form trade unions for the
purpose of collective bargaining as enshrined in the 1987 Constitution.

A procedural issue is also raised. Kapisanan faults respondent Secretary of Labor for entertaining IRRI'S
appeal from the Order of the Director of the Bureau of Labor Relations directing the holding of a certification
election. Kapisanan contends that pursuant to Sections 7, 8, 9 and 10 of Rule V 2 of the Omnibus Rules
Implementing the Labor Code, the Order of the BLR Director had become final and unappeable and that,
therefore, the Secretary of Labor had no more jurisdiction over the said appeal.

On the other hand, in entertaining the appeal, the Secretary of Labor relied on Section 25 of Rep. Act. No.
6715, which took effect on 21 March 1989, providing for the direct filing of appeal from the Med-Arbiter to the
Office of the Secretary of Labor and Employment instead of to the Director of the Bureau of Labor Relations in
cases involving certification election orders.

III

Findings in Both Cases.

There can be no question that diplomatic immunity has, in fact, been granted ICMC and IRRI.

Article II of the Memorandum of Agreement between the Philippine Government and ICMC provides that ICMC
shall have a status "similar to that of a specialized agency." Article III, Sections 4 and 5 of the Convention on
the Privileges and Immunities of Specialized Agencies, adopted by the UN General Assembly on 21 November
1947 and concurred in by the Philippine Senate through Resolution No. 19 on 17 May 1949, explicitly provides:

Art. III, Section 4. The specialized agencies, their property and assets, wherever located and by
whomsoever held, shall enjoy immunity from every form of legal process except insofar as in
 Page 110 of 129

any particular case they have expressly waived their immunity. It is, however, understood that
no waiver of immunity shall extend to any measure of execution.

Sec. 5. — The premises of the specialized agencies shall be inviolable. The property and assets
of the specialized agencies, wherever located and by whomsoever held shall be immune from
search, requisition, confiscation, expropriation and any other form of interference, whether by
executive, administrative, judicial or legislative action. (Emphasis supplied).

IRRI is similarly situated, Pres. Decree No. 1620, Article 3, is explicit in its grant of immunity, thus:

Art. 3. Immunity from Legal Process. — The Institute shall enjoy immunity from any penal, civil
and administrative proceedings, except insofar as that immunity has been expressly waived by
the Director-General of the Institute or his authorized representatives.

Thus it is that the DEFORAF, through its Legal Adviser, sustained ICMC'S invocation of immunity when in a
Memorandum, dated 17 October 1988, it expressed the view that "the Order of the Director of the Bureau of
Labor Relations dated 21 September 1988 for the conduct of Certification Election within ICMC violates the
diplomatic immunity of the organization." Similarly, in respect of IRRI, the DEFORAF speaking through The
Acting Secretary of Foreign Affairs, Jose D. Ingles, in a letter, dated 17 June 1987, to the Secretary of Labor,
maintained that "IRRI enjoys immunity from the jurisdiction of DOLE in this particular instance."

The foregoing opinions constitute a categorical recognition by the Executive Branch of the Government that
ICMC and IRRI enjoy immunities accorded to international organizations, which determination has been held to
be a political question conclusive upon the Courts in order not to embarrass a political department of
Government.

It is a recognized principle of international law and under our system of separation of powers
that diplomatic immunity is essentially a political question and courts should refuse to look
beyond a determination by the executive branch of the government, and where the plea of
diplomatic immunity is recognized and affirmed by the executive branch of the government as in
the case at bar, it is then the duty of the courts to accept the claim of immunity upon appropriate
suggestion by the principal law officer of the government . . . or other officer acting under his
direction. Hence, in adherence to the settled principle that courts may not so exercise their
jurisdiction . . . as to embarrass the executive arm of the government in conducting foreign
relations, it is accepted doctrine that in such cases the judicial department of (this) government
follows the action of the political branch and will not embarrass the latter by assuming an
antagonistic jurisdiction. 3

A brief look into the nature of international organizations and specialized agencies is in order. The term
"international organization" is generally used to describe an organization set up by agreement between two or
more states. 4 Under contemporary international law, such organizations are endowed with some degree of
international legal personality 5 such that they are capable of exercising specific rights, duties and
powers. 6 They are organized mainly as a means for conducting general international business in which the
member states have an interest. 7 The United Nations, for instance, is an international organization dedicated
to the propagation of world peace.

"Specialized agencies" are international organizations having functions in particular fields. The term appears in
Articles 57 8 and 63 9 of the Charter of the United Nations:

The Charter, while it invests the United Nations with the general task of promoting progress and
international cooperation in economic, social, health, cultural, educational and related matters,
contemplates that these tasks will be mainly fulfilled not by organs of the United Nations itself
but by autonomous international organizations established by inter-governmental agreements
 Page 111 of 129

outside the United Nations. There are now many such international agencies having functions in
many different fields, e.g. in posts, telecommunications, railways, canals, rivers, sea transport,
civil aviation, meteorology, atomic energy, finance, trade, education and culture, health and
refugees. Some are virtually world-wide in their membership, some are regional or otherwise
limited in their membership. The Charter provides that those agencies which have "wide
international responsibilities" are to be brought into relationship with the United Nations by
agreements entered into between them and the Economic and Social Council, are then to be
known as "specialized agencies." 10

The rapid growth of international organizations under contemporary international law has paved the way for the
development of the concept of international immunities.

It is now usual for the constitutions of international organizations to contain provisions conferring
certain immunities on the organizations themselves, representatives of their member states and
persons acting on behalf of the organizations. A series of conventions, agreements and
protocols defining the immunities of various international organizations in relation to their
members generally are now widely in force; . . . 11

There are basically three propositions underlying the grant of international immunities to international
organizations. These principles, contained in the ILO Memorandum are stated thus: 1) international institutions
should have a status which protects them against control or interference by any one government in the
performance of functions for the effective discharge of which they are responsible to democratically constituted
international bodies in which all the nations concerned are represented; 2) no country should derive any
national financial advantage by levying fiscal charges on common international funds; and 3) the international
organization should, as a collectivity of States members, be accorded the facilities for the conduct of its official
business customarily extended to each other by its individual member States. 12 The theory behind all three
propositions is said to be essentially institutional in character. "It is not concerned with the status, dignity or
privileges of individuals, but with the elements of functional independence necessary to free international
institutions from national control and to enable them to discharge their responsibilities impartially on behalf of
all their members. 13 The raison d'etre for these immunities is the assurance of unimpeded performance of their
functions by the agencies concerned.

The grant of immunity from local jurisdiction to ICMC and IRRI is clearly necessitated by their international
character and respective purposes. The objective is to avoid the danger of partiality and interference by the
host country in their internal workings. The exercise of jurisdiction by the Department of Labor in these
instances would defeat the very purpose of immunity, which is to shield the affairs of international
organizations, in accordance with international practice, from political pressure or control by the host country to
the prejudice of member States of the organization, and to ensure the unhampered performance of their
functions.

ICMC's and IRRI's immunity from local jurisdiction by no means deprives labor of its basic rights, which are
guaranteed by Article II, Section 18, 14 Article III, Section 8, 15 and Article XIII, Section 3 (supra), of the 1987
Constitution; and implemented by Articles 243 and 246 of the Labor Code, 16 relied on by the BLR Director and
by Kapisanan.

For, ICMC employees are not without recourse whenever there are disputes to be settled. Section 31 of the
Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations 17 provides that
"each specialized agency shall make provision for appropriate modes of settlement of: (a) disputes arising out
of contracts or other disputes of private character to which the specialized agency is a party." Moreover,
pursuant to Article IV of the Memorandum of Agreement between ICMC the the Philippine Government,
whenever there is any abuse of privilege by ICMC, the Government is free to withdraw the privileges and
immunities accorded. Thus:
 Page 112 of 129

Art. IV. Cooperation with Government Authorities. — 1. The Commission shall cooperate at all
times with the appropriate authorities of the Government to ensure the observance of Philippine
laws, rules and regulations, facilitate the proper administration of justice and prevent the
occurrences of any abuse of the privileges and immunities granted its officials and alien
employees in Article III of this Agreement to the Commission.

2. In the event that the Government determines that there has been an abuse of the privileges
and immunities granted under this Agreement, consultations shall be held between the
Government and the Commission to determine whether any such abuse has occurred and, if so,
the Government shall withdraw the privileges and immunities granted the Commission and its
officials.

Neither are the employees of IRRI without remedy in case of dispute with management as, in fact, there had
been organized a forum for better management-employee relationship as evidenced by the formation of the
Council of IRRI Employees and Management (CIEM) wherein "both management and employees were and
still are represented for purposes of maintaining mutual and beneficial cooperation between IRRI and its
employees." The existence of this Union factually and tellingly belies the argument that Pres. Decree No. 1620,
which grants to IRRI the status, privileges and immunities of an international organization, deprives its
employees of the right to self-organization.

The immunity granted being "from every form of legal process except in so far as in any particular case they
have expressly waived their immunity," it is inaccurate to state that a certification election is beyond the scope
of that immunity for the reason that it is not a suit against ICMC. A certification election cannot be viewed as an
independent or isolated process. It could tugger off a series of events in the collective bargaining process
together with related incidents and/or concerted activities, which could inevitably involve ICMC in the "legal
process," which includes "any penal, civil and administrative proceedings." The eventuality of Court litigation is
neither remote and from which international organizations are precisely shielded to safeguard them from the
disruption of their functions. Clauses on jurisdictional immunity are said to be standard provisions in the
constitutions of international Organizations. "The immunity covers the organization concerned, its property and
its assets. It is equally applicable to proceedings in personam and proceedings in rem." 18

We take note of a Manifestation, dated 28 September 1989, in the ICMC Case (p. 161, Rollo), wherein TUPAS
calls attention to the case entitled "International Catholic Migration Commission v. NLRC, et als., (G.R. No.
72222, 30 January 1989, 169 SCRA 606), and claims that, having taken cognizance of that dispute (on the
issue of payment of salary for the unexpired portion of a six-month probationary employment), the Court is now
estopped from passing upon the question of DOLE jurisdiction petition over ICMC.

We find no merit to said submission. Not only did the facts of said controversy occur between 1983-1985, or
before the grant to ICMC on 15 July 1988 of the status of a specialized agency with corresponding immunities,
but also because ICMC in that case did not invoke its immunity and, therefore, may be deemed to have waived
it, assuming that during that period (1983-1985) it was tacitly recognized as enjoying such immunity.

Anent the procedural issue raised in the IRRI Case, suffice it to state that the Decision of the BLR Director,
dated 15 February 1989, had not become final because of a Motion for Reconsideration filed by IRRI Said
Motion was acted upon only on 30 March 1989 when Rep. Act No. 6715, which provides for direct appeals
from the Orders of the Med-Arbiter to the Secretary of Labor in certification election cases either from the order
or the results of the election itself, was already in effect, specifically since 21 March 1989. Hence, no grave
abuse of discretion may be imputed to respondent Secretary of Labor in his assumption of appellate
jurisdiction, contrary to Kapisanan's allegations. The pertinent portion of that law provides:

Art. 259. — Any party to an election may appeal the order or results of the election as
determined by the Med-Arbiter directly to the Secretary of Labor and Employment on the
ground that the rules and regulations or parts thereof established by the Secretary of Labor and
 Page 113 of 129

Employment for the conduct of the election have been violated. Such appeal shall be decided
within 15 calendar days (Emphasis supplied).

En passant, the Court is gratified to note that the heretofore antagonistic positions assumed by two
departments of the executive branch of government have been rectified and the resultant embarrassment to
the Philippine Government in the eyes of the international community now, hopefully, effaced.

WHEREFORE, in G.R. No. 85750 (the ICMC Case), the Petition is GRANTED, the Order of the Bureau of
Labor Relations for certification election is SET ASIDE, and the Temporary Restraining Order earlier issued is
made PERMANENT.

In G.R. No. 89331 (the IRRI Case), the Petition is Dismissed, no grave abuse of discretion having been
committed by the Secretary of Labor and Employment in dismissing the Petition for Certification Election.

No pronouncement as to costs.

SO ORDERED.

STATE IMMUNITY: SUABILIR NOT EQUATED WITH OUTRIGHT LIABILITY

G.R. No. 171182               August 23, 2012

UNIVERSITY OF THE PHILIPPINES, JOSE V. ABUEVA, RAUL P. DE GUZMAN, RUBEN P. ASPIRAS,

EMMANUEL P. BELLO, WILFREDO P. DAVID, CASIANO S. ABRIGO, and JOSEFINA R.
LICUANAN, Petitioners,
vs.
HON. AGUSTIN S. DIZON, his capacity as Presiding Judge of the Regional Trial Court of Quezon City,
Branch 80, STERN BUILDERS, INC., and SERVILLANO DELA CRUZ, Respondents.

DECISION

BERSAMIN, J.:

Trial judges should not immediately issue writs of execution or garnishment against the Government or any of
its subdivisions, agencies and instrumentalities to enforce money judgments. 1 They should bear in mind that
the primary jurisdiction to examine, audit and settle all claims of any sort due from the Government or any of its
subdivisions, agencies and instrumentalities pertains to the Commission on Audit (COA) pursuant to
Presidential Decree No. 1445 (Government Auditing Code of the Philippines).

The Case

On appeal by the University of the Philippines and its then incumbent officials (collectively, the UP) is the
decision promulgated on September 16, 2005,2 whereby the Court of Appeals (CA) upheld the order of the
Regional Trial Court (RTC), Branch 80, in Quezon City that directed the garnishment of public funds amounting
to ₱ 16,370,191.74 belonging to the UP to satisfy the writ of execution issued to enforce the already final and
executory judgment against the UP.

Antecedents

On August 30, 1990, the UP, through its then President Jose V. Abueva, entered into a General Construction
Agreement with respondent Stern Builders Corporation (Stern Builders), represented by its President and
General Manager Servillano dela Cruz, for the construction of the extension building and the renovation of the
College of Arts and Sciences Building in the campus of the University of the Philippines in Los Baños (UPLB).3
 Page 114 of 129

In the course of the implementation of the contract, Stern Builders submitted three progress billings
corresponding to the work accomplished, but the UP paid only two of the billings. The third billing worth ₱
273,729.47 was not paid due to its disallowance by the Commission on Audit (COA). Despite the lifting of the
disallowance, the UP failed to pay the billing, prompting Stern Builders and dela Cruz to sue the UP and its co-
respondent officials to collect the unpaid billing and to recover various damages. The suit, entitled Stern
Builders Corporation and Servillano R. Dela Cruz v. University of the Philippines Systems, Jose V. Abueva,
Raul P. de Guzman, Ruben P. Aspiras, Emmanuel P. Bello, Wilfredo P. David, Casiano S. Abrigo, and
Josefina R. Licuanan, was docketed as Civil Case No. Q-93-14971 of the Regional Trial Court in Quezon City
(RTC).4

After trial, on November 28, 2001, the RTC rendered its decision in favor of the plaintiffs,5 viz:

Wherefore, in the light of the foregoing, judgment is hereby rendered in favor of the plaintiff and against the
defendants ordering the latter to pay plaintiff, jointly and severally, the following, to wit:

1. ₱ 503,462.74 amount of the third billing, additional accomplished work and retention money

2. ₱ 5,716,729.00 in actual damages

3. ₱ 10,000,000.00 in moral damages

4. ₱ 150,000.00 and ₱ 1,500.00 per appearance as attorney’s fees; and

5. Costs of suit.

SO ORDERED.

Following the RTC’s denial of its motion for reconsideration on May 7, 2002, 6 the UP filed a notice of appeal on
June 3, 2002.7 Stern Builders and dela Cruz opposed the notice of appeal on the ground of its filing being
belated, and moved for the execution of the decision. The UP countered that the notice of appeal was filed
within the reglementary period because the UP’s Office of Legal Affairs (OLS) in Diliman, Quezon City received
the order of denial only on May 31, 2002. On September 26, 2002, the RTC denied due course to the notice of
appeal for having been filed out of time and granted the private respondents’ motion for execution.8

The RTC issued the writ of execution on October 4, 2002,9 and the sheriff of the RTC served the writ of
execution and notice of demand upon the UP, through its counsel, on October 9, 2002.10 The UP filed an
urgent motion to reconsider the order dated September 26, 2002, to quash the writ of execution dated October
4, 2002, and to restrain the proceedings.11 However, the RTC denied the urgent motion on April 1, 2003.12

On June 24, 2003, the UP assailed the denial of due course to its appeal through a petition for certiorari in the
Court of Appeals (CA), docketed as CA-G.R. No. 77395.13

On February 24, 2004, the CA dismissed the petition for certiorari upon finding that the UP’s notice of appeal
had been filed late,14 stating:

Records clearly show that petitioners received a copy of the Decision dated November 28, 2001 and January
7, 2002, thus, they had until January 22, 2002 within which to file their appeal. On January 16, 2002 or after
the lapse of nine (9) days, petitioners through their counsel Atty. Nolasco filed a Motion for Reconsideration of
the aforesaid decision, hence, pursuant to the rules, petitioners still had six (6) remaining days to file their
appeal. As admitted by the petitioners in their petition (Rollo, p. 25), Atty. Nolasco received a copy of the Order
denying their motion for reconsideration on May 17, 2002, thus, petitioners still has until May 23, 2002 (the
remaining six (6) days) within which to file their appeal. Obviously, petitioners were not able to file their Notice
of Appeal on May 23, 2002 as it was only filed on June 3, 2002.
 Page 115 of 129

In view of the said circumstances, We are of the belief and so holds that the Notice of Appeal filed by the
petitioners was really filed out of time, the same having been filed seventeen (17) days late of the reglementary
period. By reason of which, the decision dated November 28, 2001 had already become final and executory.
"Settled is the rule that the perfection of an appeal in the manner and within the period permitted by law is not
only mandatory but jurisdictional, and failure to perfect that appeal renders the challenged judgment final and
executory. This is not an empty procedural rule but is grounded on fundamental considerations of public policy
and sound practice." (Ram’s Studio and Photographic Equipment, Inc. vs. Court of Appeals, 346 SCRA 691,
696). Indeed, Atty. Nolasco received the order of denial of the Motion for Reconsideration on May 17, 2002 but
filed a Notice of Appeal only on June 3, 3003. As such, the decision of the lower court ipso facto became final
when no appeal was perfected after the lapse of the reglementary period. This procedural caveat cannot be
trifled with, not even by the High Court.15

The UP sought a reconsideration, but the CA denied the UP’s motion for reconsideration on April 19, 2004.16

On May 11, 2004, the UP appealed to the Court by petition for review on certiorari (G.R. No. 163501).

On June 23, 2004, the Court denied the petition for review.17 The UP moved for the reconsideration of the
denial of its petition for review on August 29, 2004, 18 but the Court denied the motion on October 6, 2004. 19 The
denial became final and executory on November 12, 2004.20

In the meanwhile that the UP was exhausting the available remedies to overturn the denial of due course to the
appeal and the issuance of the writ of execution, Stern Builders and dela Cruz filed in the RTC their motions for
execution despite their previous motion having already been granted and despite the writ of execution having
already issued. On June 11, 2003, the RTC granted another motion for execution filed on May 9, 2003
(although the RTC had already issued the writ of execution on October 4, 2002).21

On June 23, 2003 and July 25, 2003, respectively, the sheriff served notices of garnishment on the UP’s
depository banks, namely: Land Bank of the Philippines (Buendia Branch) and the Development Bank of the
Philippines (DBP), Commonwealth Branch.22 The UP assailed the garnishment through an urgent motion to
quash the notices of garnishment;23 and a motion to quash the writ of execution dated May 9, 2003.24

On their part, Stern Builders and dela Cruz filed their ex parte motion for issuance of a release order.25

On October 14, 2003, the RTC denied the UP’s urgent motion to quash, and granted Stern Builders and dela
Cruz’s ex parte motion for issuance of a release order.26

The UP moved for the reconsideration of the order of October 14, 2003, but the RTC denied the motion on
November 7, 2003.27

On January 12, 2004, Stern Builders and dela Cruz again sought the release of the garnished funds. 28 Despite
the UP’s opposition,29 the RTC granted the motion to release the garnished funds on March 16, 2004.30 On April
20, 2004, however, the RTC held in abeyance the enforcement of the writs of execution issued on October 4,
2002 and June 3, 2003 and all the ensuing notices of garnishment, citing Section 4, Rule 52, Rules of Court,
which provided that the pendency of a timely motion for reconsideration stayed the execution of the
judgment.31

On December 21, 2004, the RTC, through respondent Judge Agustin S. Dizon, authorized the release of the
garnished funds of the UP,32 to wit:

WHEREFORE, premises considered, there being no more legal impediment for the release of the garnished
amount in satisfaction of the judgment award in the instant case, let the amount garnished be immediately
released by the Development Bank of the Philippines, Commonwealth Branch, Quezon City in favor of the
plaintiff.
 Page 116 of 129

SO ORDERED.

The UP was served on January 3, 2005 with the order of December 21, 2004 directing DBP to release the
garnished funds.33

On January 6, 2005, Stern Builders and dela Cruz moved to cite DBP in direct contempt of court for its non-
compliance with the order of release.34

Thereupon, on January 10, 2005, the UP brought a petition for certiorari in the CA to challenge the jurisdiction
of the RTC in issuing the order of December 21, 2004 (CA-G.R. CV No. 88125). 35 Aside from raising the denial
of due process, the UP averred that the RTC committed grave abuse of discretion amounting to lack or excess
of jurisdiction in ruling that there was no longer any legal impediment to the release of the garnished funds.
The UP argued that government funds and properties could not be seized by virtue of writs of execution or
garnishment, as held in Department of Agriculture v. National Labor Relations Commission, 36 and citing Section
84 of Presidential Decree No. 1445 to the effect that "revenue funds shall not be paid out of any public treasury
or depository except in pursuance of an appropriation law or other specific statutory authority;" and that the
order of garnishment clashed with the ruling in University of the Philippines Board of Regents v. Ligot-Telan 37 to
the effect that the funds belonging to the UP were public funds.

On January 19, 2005, the CA issued a temporary restraining order (TRO) upon application by the UP.38

On March 22, 2005, Stern Builders and dela Cruz filed in the RTC their amended motion for sheriff’s
assistance to implement the release order dated December 21, 2004, stating that the 60-day period of the TRO
of the CA had already lapsed. 39 The UP opposed the amended motion and countered that the implementation
of the release order be suspended.40

On May 3, 2005, the RTC granted the amended motion for sheriff’s assistance and directed the sheriff to
proceed to the DBP to receive the check in satisfaction of the judgment.41

The UP sought the reconsideration of the order of May 3, 2005.42

On May 16, 2005, DBP filed a motion to consign the check representing the judgment award and to dismiss
the motion to cite its officials in contempt of court.43

On May 23, 2005, the UP presented a motion to withhold the release of the payment of the judgment award.44

On July 8, 2005, the RTC resolved all the pending matters,45 noting that the DBP had already delivered to the
sheriff Manager’s Check No. 811941 for ₱ 16,370,191.74 representing the garnished funds payable to the
order of Stern Builders and dela Cruz as its compliance with the RTC’s order dated December 21,
2004.46 However, the RTC directed in the same order that Stern Builders and dela Cruz should not encash the
check or withdraw its amount pending the final resolution of the UP’s petition for certiorari, to wit:47

To enable the money represented in the check in question (No. 00008119411) to earn interest during the
pendency of the defendant University of the Philippines application for a writ of injunction with the Court of
Appeals the same may now be deposited by the plaintiff at the garnishee Bank (Development Bank of the
Philippines), the disposition of the amount represented therein being subject to the final outcome of the case of
the University of the Philippines et al., vs. Hon. Agustin S. Dizon et al., (CA G.R. 88125) before the Court of
Appeals.

Let it be stated herein that the plaintiff is not authorized to encash and withdraw the amount represented in the
check in question and enjoy the same in the fashion of an owner during the pendency of the case between the
parties before the Court of Appeals which may or may not be resolved in plaintiff’s favor.
 Page 117 of 129

With the end in view of seeing to it that the check in question is deposited by the plaintiff at the Development
Bank of the Philippines (garnishee bank), Branch Sheriff Herlan Velasco is directed to accompany and/or
escort the plaintiff in making the deposit of the check in question.

SO ORDERED.

On September 16, 2005, the CA promulgated its assailed decision dismissing the UP’s petition for certiorari,
ruling that the UP had been given ample opportunity to contest the motion to direct the DBP to deposit the
check in the name of Stern Builders and dela Cruz; and that the garnished funds could be the proper subject of
garnishment because they had been already earmarked for the project, with the UP holding the funds only in a
fiduciary capacity,48 viz:

Petitioners next argue that the UP funds may not be seized for execution or garnishment to satisfy the
judgment award. Citing Department of Agriculture vs. NLRC, University of the Philippines Board of Regents vs.
Hon. Ligot-Telan, petitioners contend that UP deposits at Land Bank and the Development Bank of the
Philippines, being government funds, may not be released absent an appropriations bill from Congress.

The argument is specious. UP entered into a contract with private respondents for the expansion and
renovation of the Arts and Sciences Building of its campus in Los Baños, Laguna. Decidedly, there was
already an appropriations earmarked for the said project. The said funds are retained by UP, in a fiduciary
capacity, pending completion of the construction project.

We agree with the trial Court [sic] observation on this score:

"4. Executive Order No. 109 (Directing all National Government Agencies to Revert Certain Accounts
Payable to the Cumulative Result of Operations of the National Government and for Other Purposes)
Section 9. Reversion of Accounts Payable, provides that, all 1995 and prior years documented
accounts payable and all undocumented accounts regardless of the year they were incurred shall be
reverted to the Cumulative Result of Operations of the National Government (CROU). This shall apply
to accounts payable of all funds, except fiduciary funds, as long as the purpose for which the funds
were created have not been accomplished and accounts payable under foreign assisted projects for the
duration of the said project. In this regard, the Department of Budget and Management issued Joint-
Circular No. 99-6 4.0 (4.3) Procedural Guidelines which provides that all accounts payable that reverted
to the CROU may be considered for payment upon determination thru administrative process, of the
existence, validity and legality of the claim. Thus, the allegation of the defendants that considering no
appropriation for the payment of any amount awarded to plaintiffs appellee the funds of defendant-
appellants may not be seized pursuant to a writ of execution issued by the regular court is misplaced.
Surely when the defendants and the plaintiff entered into the General Construction of Agreement there
is an amount already allocated by the latter for the said project which is no longer subject of future
appropriation."49

After the CA denied their motion for reconsideration on December 23, 2005, the petitioners appealed by
petition for review.

Matters Arising During the Pendency of the Petition

On January 30, 2006, Judge Dizon of the RTC (Branch 80) denied Stern Builders and dela Cruz’s motion to
withdraw the deposit, in consideration of the UP’s intention to appeal to the CA,50 stating:

Since it appears that the defendants are intending to file a petition for review of the Court of Appeals resolution
in CA-G.R. No. 88125 within the reglementary period of fifteen (15) days from receipt of resolution, the Court
agrees with the defendants stand that the granting of plaintiffs’ subject motion is premature.
 Page 118 of 129

Let it be stated that what the Court meant by its Order dated July 8, 2005 which states in part that the
"disposition of the amount represented therein being subject to the final outcome of the case of the University
of the Philippines, et. al., vs. Hon. Agustin S. Dizon et al., (CA G.R. No. 88125 before the Court of Appeals) is
that the judgment or resolution of said court has to be final and executory, for if the same will still be elevated
to the Supreme Court, it will not attain finality yet until the highest court has rendered its own final judgment or
resolution.51

However, on January 22, 2007, the UP filed an Urgent Application for A Temporary Restraining Order and/or A
Writ of Preliminary Injunction,52 averring that on January 3, 2007, Judge Maria Theresa dela Torre-Yadao (who
had meanwhile replaced Judge Dizon upon the latter’s appointment to the CA) had issued another order
allowing Stern Builders and dela Cruz to withdraw the deposit,53 to wit:

It bears stressing that defendants’ liability for the payment of the judgment obligation has become indubitable
due to the final and executory nature of the Decision dated November 28, 2001. Insofar as the payment of the
[sic] judgment obligation is concerned, the Court believes that there is nothing more the defendant can do to
escape liability. It is observed that there is nothing more the defendant can do to escape liability. It is observed
that defendant U.P. System had already exhausted all its legal remedies to overturn, set aside or modify the
decision (dated November 28, 2001( rendered against it. The way the Court sees it, defendant U.P. System’s
petition before the Supreme Court concerns only with the manner by which said judgment award should be
satisfied. It has nothing to do with the legality or propriety thereof, although it prays for the deletion of [sic]
reduction of the award of moral damages.

It must be emphasized that this Court’s finding, i.e., that there was sufficient appropriation earmarked for the
project, was upheld by the Court of Appeals in its decision dated September 16, 2005. Being a finding of fact,
the Supreme Court will, ordinarily, not disturb the same was said Court is not a trier of fact. Such being the
case, defendants’ arguments that there was no sufficient appropriation for the payment of the judgment
obligation must fail.

While it is true that the former Presiding Judge of this Court in its Order dated January 30, 2006 had stated
that:

Let it be stated that what the Court meant by its Order dated July 8, 2005 which states in part that the
"disposition of the amount represented therein being subject to the final outcome of the case of the University
of the Philippines, et. al., vs. Hon. Agustin S. Dizon et al., (CA G.R. No. 88125 before the Court of Appeals) is
that the judgment or resolution of said court has to be final and executory, for if the same will still be elevated
to the Supreme Court, it will not attain finality yet until the highest court has rendered its own final judgment or
resolution.

it should be noted that neither the Court of Appeals nor the Supreme Court issued a preliminary injunction
enjoining the release or withdrawal of the garnished amount. In fact, in its present petition for review before the
Supreme Court, U.P. System has not prayed for the issuance of a writ of preliminary injunction. Thus, the
Court doubts whether such writ is forthcoming.

The Court honestly believes that if defendants’ petition assailing the Order of this Court dated December 31,
2004 granting the motion for the release of the garnished amount was meritorious, the Court of Appeals would
have issued a writ of injunction enjoining the same. Instead, said appellate court not only refused to issue a wit
of preliminary injunction prayed for by U.P. System but denied the petition, as well.54

The UP contended that Judge Yadao thereby effectively reversed the January 30, 2006 order of Judge Dizon
disallowing the withdrawal of the garnished amount until after the decision in the case would have become final
and executory.
 Page 119 of 129

Although the Court issued a TRO on January 24, 2007 to enjoin Judge Yadao and all persons acting pursuant
to her authority from enforcing her order of January 3, 2007, 55 it appears that on January 16, 2007, or prior to
the issuance of the TRO, she had already directed the DBP to forthwith release the garnished amount to Stern
Builders and dela Cruz; 56 and that DBP had forthwith complied with the order on January 17, 2007 upon the
sheriff’s service of the order of Judge Yadao.57

These intervening developments impelled the UP to file in this Court a supplemental petition on January 26,
2007,58 alleging that the RTC (Judge Yadao) gravely erred in ordering the immediate release of the garnished
amount despite the pendency of the petition for review in this Court.

The UP filed a second supplemental petition59 after the RTC (Judge Yadao) denied the UP’s motion for the
redeposit of the withdrawn amount on April 10, 2007,60 to wit:

This resolves defendant U.P. System’s Urgent Motion to Redeposit Judgment Award praying that plaintiffs be
directed to redeposit the judgment award to DBP pursuant to the Temporary Restraining Order issued by the
Supreme Court. Plaintiffs opposed the motion and countered that the Temporary Restraining Order issued by
the Supreme Court has become moot and academic considering that the act sought to be restrained by it has
already been performed. They also alleged that the redeposit of the judgment award was no longer feasible as
they have already spent the same.

It bears stressing, if only to set the record straight, that this Court did not – in its Order dated January 3, 2007
(the implementation of which was restrained by the Supreme Court in its Resolution dated January 24, 2002) –
direct that that garnished amount "be deposited with the garnishee bank (Development Bank of the
Philippines)". In the first place, there was no need to order DBP to make such deposit, as the garnished
amount was already deposited in the account of plaintiffs with the DBP as early as May 13, 2005. What the
Court granted in its Order dated January 3, 2007 was plaintiff’s motion to allow the release of said deposit. It
must be recalled that the Court found plaintiff’s motion meritorious and, at that time, there was no restraining
order or preliminary injunction from either the Court of Appeals or the Supreme Court which could have
enjoined the release of plaintiffs’ deposit. The Court also took into account the following factors:

a) the Decision in this case had long been final and executory after it was rendered on November 28,
2001;

b) the propriety of the dismissal of U.P. System’s appeal was upheld by the Supreme Court;

c) a writ of execution had been issued;

d) defendant U.P. System’s deposit with DBP was garnished pursuant to a lawful writ of execution
issued by the Court; and

e) the garnished amount had already been turned over to the plaintiffs and deposited in their account
with DBP.

The garnished amount, as discussed in the Order dated January 16, 2007, was already owned by the plaintiffs,
having been delivered to them by the Deputy Sheriff of this Court pursuant to par. (c), Section 9, Rule 39 of the
1997 Rules of Civil Procedure. Moreover, the judgment obligation has already been fully satisfied as per
Report of the Deputy Sheriff.

Anent the Temporary Restraining Order issued by the Supreme Court, the same has become functus oficio,
having been issued after the garnished amount had been released to the plaintiffs. The judgment debt was
released to the plaintiffs on January 17, 2007, while the Temporary Restraining Order issued by the Supreme
Court was received by this Court on February 2, 2007. At the time of the issuance of the Restraining Order, the
act sought to be restrained had already been done, thereby rendering the said Order ineffectual.
 Page 120 of 129

After a careful and thorough study of the arguments advanced by the parties, the Court is of the considered
opinion that there is no legal basis to grant defendant U.P. System’s motion to redeposit the judgment amount.
Granting said motion is not only contrary to law, but it will also render this Court’s final executory judgment
nugatory. Litigation must end and terminate sometime and somewhere, and it is essential to an effective
administration of justice that once a judgment has become final the issue or cause involved therein should be
laid to rest. This doctrine of finality of judgment is grounded on fundamental considerations of public policy and
sound practice. In fact, nothing is more settled in law than that once a judgment attains finality it thereby
becomes immutable and unalterable. It may no longer be modified in any respect, even if the modification is
meant to correct what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the
modification is attempted to be made by the court rendering it or by the highest court of the land.

WHEREFORE, premises considered, finding defendant U.P. System’s Urgent Motion to Redeposit Judgment
Award devoid of merit, the same is hereby DENIED.

SO ORDERED.

Issues

The UP now submits that:

THE COURT OF APPEALS COMMITTED GRAVE ERROR IN DISMISSING THE PETITION, ALLOWING IN
EFFECT THE GARNISHMENT OF UP FUNDS, WHEN IT RULED THAT FUNDS HAVE ALREADY BEEN
EARMARKED FOR THE CONSTRUCTION PROJECT; AND THUS, THERE IS NO NEED FOR FURTHER
APPROPRIATIONS.

II

THE COURT OF APPEALS COMMITTED GRAVE ERROR IN ALLOWING GARNISHMENT OF A STATE

UNIVERSITY’S FUNDS IN VIOLATION OF ARTICLE XIV, SECTION 5(5) OF THE CONSTITUTION.

III

IN THE ALTERNATIVE, THE UNIVERSITY INVOKES EQUITY AND THE REVIEW POWERS OF THIS
HONORABLE COURT TO MODIFY, IF NOT TOTALLY DELETE THE AWARD OF ₱ 10 MILLION AS MORAL
DAMAGES TO RESPONDENTS.

IV

THE RTC-BRANCH 80 COMMITTED GRAVE ERROR IN ORDERING THE IMMEDIATE RELEASE OF THE
JUDGMENT AWARD IN ITS ORDER DATED 3 JANUARY 2007 ON THE GROUND OF EQUITY AND
JUDICIAL COURTESY.

THE RTC-BRANCH 80 COMMITTED GRAVE ERROR IN ORDERING THE IMMEDIATE RELEASE OF THE
JUDGMENT AWARD IN ITS ORDER DATED 16 JANUARY 2007 ON THE GROUND THAT PETITIONER
UNIVERSITY STILL HAS A PENDING MOTION FOR RECONSIDERATION OF THE ORDER DATED 3
JANUARY 2007.

VI
 Page 121 of 129

THE RTC-BRANCH 80 COMMITTED GRAVE ERROR IN NOT ORDERING THE REDEPOSIT OF THE
GARNISHED AMOUNT TO THE DBP IN VIOLATION OF THE CLEAR LANGUAGE OF THE SUPREME
COURT RESOLUTION DATED 24 JANUARY 2007.

The UP argues that the amount earmarked for the construction project had been purposely set aside only for
the aborted project and did not include incidental matters like the awards of actual damages, moral damages
and attorney’s fees. In support of its argument, the UP cited Article 12.2 of the General Construction
Agreement, which stipulated that no deductions would be allowed for the payment of claims, damages, losses
and expenses, including attorney’s fees, in case of any litigation arising out of the performance of the work.
The UP insists that the CA decision was inconsistent with the rulings in Commissioner of Public Highways v.
San Diego61 and Department of Agriculture v. NLRC62 to the effect that government funds and properties could
not be seized under writs of execution or garnishment to satisfy judgment awards.

Furthermore, the UP contends that the CA contravened Section 5, Article XIV of the Constitution by allowing
the garnishment of UP funds, because the garnishment resulted in a substantial reduction of the UP’s limited
budget allocated for the remuneration, job satisfaction and fulfillment of the best available teachers; that Judge
Yadao should have exhibited judicial courtesy towards the Court due to the pendency of the UP’s petition for
review; and that she should have also desisted from declaring that the TRO issued by this Court had become
functus officio.

Lastly, the UP states that the awards of actual damages of ₱ 5,716,729.00 and moral damages of ₱ 10 million
should be reduced, if not entirely deleted, due to its being unconscionable, inequitable and detrimental to
public service.

In contrast, Stern Builders and dela Cruz aver that the petition for review was fatally defective for its failure to
mention the other cases upon the same issues pending between the parties (i.e., CA-G.R. No. 77395 and G.R
No. 163501); that the UP was evidently resorting to forum shopping, and to delaying the satisfaction of the final
judgment by the filing of its petition for review; that the ruling in Commissioner of Public Works v. San Diego
had no application because there was an appropriation for the project; that the UP retained the funds allotted
for the project only in a fiduciary capacity; that the contract price had been meanwhile adjusted to ₱
22,338,553.25, an amount already more than sufficient to cover the judgment award; that the UP’s prayer to
reduce or delete the award of damages had no factual basis, because they had been gravely wronged, had
been deprived of their source of income, and had suffered untold miseries, discomfort, humiliation and
sleepless years; that dela Cruz had even been constrained to sell his house, his equipment and the
implements of his trade, and together with his family had been forced to live miserably because of the wrongful
actuations of the UP; and that the RTC correctly declared the Court’s TRO to be already functus officio by
reason of the withdrawal of the garnished amount from the DBP.

The decisive issues to be considered and passed upon are, therefore:

(a) whether the funds of the UP were the proper subject of garnishment in order to satisfy the judgment award;
and (b) whether the UP’s prayer for the deletion of the awards of actual damages of ₱ 5,716,729.00, moral
damages of ₱ 10,000,000.00 and attorney’s fees of ₱ 150,000.00 plus ₱ 1,500.00 per appearance could be
granted despite the finality of the judgment of the RTC.

Ruling

The petition for review is meritorious.

I.
UP’s funds, being government funds,
are not subject to garnishment
 Page 122 of 129

The UP was founded on June 18, 1908 through Act 1870 to provide advanced instruction in literature,
philosophy, the sciences, and arts, and to give professional and technical training to deserving
students.63 Despite its establishment as a body corporate,64 the UP remains to be a "chartered
institution"65 performing a legitimate government function. It is an institution of higher learning, not a corporation
established for profit and declaring any dividends.66 In enacting Republic Act No. 9500 (The University of the
Philippines Charter of 2008), Congress has declared the UP as the national university 67 "dedicated to the
search for truth and knowledge as well as the development of future leaders."68

Irrefragably, the UP is a government instrumentality,69 performing the State’s constitutional mandate of

promoting quality and accessible education.70 As a government instrumentality, the UP administers special
funds sourced from the fees and income enumerated under Act No. 1870 and Section 1 of Executive Order
No. 714,71 and from the yearly appropriations, to achieve the purposes laid down by Section 2 of Act 1870, as
expanded in Republic Act No. 9500.72 All the funds going into the possession of the UP, including any interest
accruing from the deposit of such funds in any banking institution, constitute a "special trust fund," the
disbursement of which should always be aligned with the UP’s mission and purpose,73 and should always be
subject to auditing by the COA.74

Presidential Decree No. 1445 defines a "trust fund" as a fund that officially comes in the possession of an
agency of the government or of a public officer as trustee, agent or administrator, or that is received for the
fulfillment of some obligation.75 A trust fund may be utilized only for the "specific purpose for which the trust was
created or the funds received."76

The funds of the UP are government funds that are public in character. They include the income accruing from
the use of real property ceded to the UP that may be spent only for the attainment of its institutional
objectives.77 Hence, the funds subject of this action could not be validly made the subject of the RTC’s writ of
execution or garnishment. The adverse judgment rendered against the UP in a suit to which it had impliedly
consented was not immediately enforceable by execution against the UP,78 because suability of the State did
not necessarily mean its liability.79

A marked distinction exists between suability of the State and its liability. As the Court succinctly stated in
Municipality of San Fernando, La Union v. Firme:80

A distinction should first be made between suability and liability. "Suability depends on the consent of the state
to be sued, liability on the applicable law and the established facts. The circumstance that a state is suable
does not necessarily mean that it is liable; on the other hand, it can never be held liable if it does not first
consent to be sued. Liability is not conceded by the mere fact that the state has allowed itself to be sued.
When the state does waive its sovereign immunity, it is only giving the plaintiff the chance to prove, if it can,
that the defendant is liable.

Also, in Republic v. Villasor,81 where the issuance of an alias writ of execution directed against the funds of the
Armed Forces of the Philippines to satisfy a final and executory judgment was nullified, the Court said:

xxx The universal rule that where the State gives its consent to be sued by private parties either by general or
special law, it may limit claimant’s action "only up to the completion of proceedings anterior to the stage of
execution" and that the power of the Courts ends when the judgment is rendered, since government funds and
properties may not be seized under writs of execution or garnishment to satisfy such judgments, is based on
obvious considerations of public policy. Disbursements of public funds must be covered by the corresponding
appropriation as required by law. The functions and public services rendered by the State cannot be allowed to
be paralyzed or disrupted by the diversion of public funds from their legitimate and specific objects, as
appropriated by law.

The UP correctly submits here that the garnishment of its funds to satisfy the judgment awards of actual and
moral damages (including attorney’s fees) was not validly made if there was no special appropriation by
 Page 123 of 129

Congress to cover the liability. It was, therefore, legally unwarranted for the CA to agree with the RTC’s holding
in the order issued on April 1, 2003 that no appropriation by Congress to allocate and set aside the payment of
the judgment awards was necessary because "there (were) already an appropriations (sic) earmarked for the
said project."82 The CA and the RTC thereby unjustifiably ignored the legal restriction imposed on the trust
funds of the Government and its agencies and instrumentalities to be used exclusively to fulfill the purposes for
which the trusts were created or for which the funds were received except upon express authorization by
Congress or by the head of a government agency in control of the funds, and subject to pertinent budgetary
laws, rules and regulations.83

Indeed, an appropriation by Congress was required before the judgment that rendered the UP liable for moral
and actual damages (including attorney’s fees) would be satisfied considering that such monetary liabilities
were not covered by the "appropriations earmarked for the said project." The Constitution strictly mandated
that "(n)o money shall be paid out of the Treasury except in pursuance of an appropriation made by law."84

II
COA must adjudicate private respondents’ claim
before execution should proceed

The execution of the monetary judgment against the UP was within the primary jurisdiction of the COA. This
was expressly provided in Section 26 of Presidential Decree No. 1445, to wit:

Section 26. General jurisdiction. - The authority and powers of the Commission shall extend to and
comprehend all matters relating to auditing procedures, systems and controls, the keeping of the general
accounts of the Government, the preservation of vouchers pertaining thereto for a period of ten years, the
examination and inspection of the books, records, and papers relating to those accounts; and the audit and
settlement of the accounts of all persons respecting funds or property received or held by them in an
accountable capacity, as well as the examination, audit, and settlement of all debts and claims of any sort due
from or owing to the Government or any of its subdivisions, agencies and instrumentalities. The said
jurisdiction extends to all government-owned or controlled corporations, including their subsidiaries, and other
self-governing boards, commissions, or agencies of the Government, and as herein prescribed, including non
governmental entities subsidized by the government, those funded by donations through the government,
those required to pay levies or government share, and those for which the government has put up a
counterpart fund or those partly funded by the government.

It was of no moment that a final and executory decision already validated the claim against the UP. The
settlement of the monetary claim was still subject to the primary jurisdiction of the COA despite the final
decision of the RTC having already validated the claim. 85 As such, Stern Builders and dela Cruz as the
claimants had no alternative except to first seek the approval of the COA of their monetary claim.

On its part, the RTC should have exercised utmost caution, prudence and judiciousness in dealing with the
motions for execution against the UP and the garnishment of the UP’s funds. The RTC had no authority to
direct the immediate withdrawal of any portion of the garnished funds from the depository banks of the UP. By
eschewing utmost caution, prudence and judiciousness in dealing with the execution and garnishment, and by
authorizing the withdrawal of the garnished funds of the UP, the RTC acted beyond its jurisdiction, and all its
orders and issuances thereon were void and of no legal effect, specifically: (a) the order Judge Yadao issued
on January 3, 2007 allowing Stern Builders and dela Cruz to withdraw the deposited garnished amount; (b) the
order Judge Yadao issued on January 16, 2007 directing DBP to forthwith release the garnish amount to Stern
Builders and dela Cruz; (c) the sheriff’s report of January 17, 2007 manifesting the full satisfaction of the writ of
execution; and (d) the order of April 10, 2007 deying the UP’s motion for the redeposit of the withdrawn
amount. Hence, such orders and issuances should be struck down without exception.

Nothing extenuated Judge Yadao’s successive violations of Presidential Decree No. 1445. She was aware of
Presidential Decree No. 1445, considering that the Court circulated to all judges its Administrative Circular No.
 Page 124 of 129

10-2000,86 issued on October 25, 2000, enjoining them "to observe utmost caution, prudence and
judiciousness in the issuance of writs of execution to satisfy money judgments against government agencies
and local government units" precisely in order to prevent the circumvention of Presidential Decree No. 1445,
as well as of the rules and procedures of the COA, to wit:

In order to prevent possible circumvention of the rules and procedures of the Commission on Audit,
judges are hereby enjoined to observe utmost caution, prudence and judiciousness in the issuance of
writs of execution to satisfy money judgments against government agencies and local government
units.

Judges should bear in mind that in Commissioner of Public Highways v. San Diego (31 SCRA 617, 625 1970),
this Court explicitly stated:

"The universal rule that where the State gives its consent to be sued by private parties either by general or
special law, it may limit claimant’s action ‘only up to the completion of proceedings anterior to the stage of
execution’ and that the power of the Court ends when the judgment is rendered, since government funds and
properties may not be seized under writs of execution or garnishment to satisfy such judgments, is based on
obvious considerations of public policy. Disbursements of public funds must be covered by the corresponding
appropriation as required by law. The functions and public services rendered by the State cannot be allowed to
be paralyzed or disrupted by the diversion of public funds from their legitimate and specific objects, as
appropriated by law.

Moreover, it is settled jurisprudence that upon determination of State liability, the prosecution,
enforcement or satisfaction thereof must still be pursued in accordance with the rules and procedures
laid down in P.D. No. 1445, otherwise known as the Government Auditing Code of the Philippines
(Department of Agriculture v. NLRC, 227 SCRA 693, 701-02 1993 citing Republic vs. Villasor, 54 SCRA
84 1973). All money claims against the Government must first be filed with the Commission on Audit
which must act upon it within sixty days. Rejection of the claim will authorize the claimant to elevate
the matter to the Supreme Court on certiorari and in effect, sue the State thereby (P.D. 1445, Sections
49-50).

However, notwithstanding the rule that government properties are not subject to levy and execution unless
otherwise provided for by statute (Republic v. Palacio, 23 SCRA 899 1968; Commissioner of Public Highways
v. San Diego, supra) or municipal ordinance (Municipality of Makati v. Court of Appeals, 190 SCRA 206 1990),
the Court has, in various instances, distinguished between government funds and properties for public use and
those not held for public use. Thus, in Viuda de Tan Toco v. Municipal Council of Iloilo (49 Phil 52 1926, the
Court ruled that "where property of a municipal or other public corporation is sought to be subjected to
execution to satisfy judgments recovered against such corporation, the question as to whether such property is
leviable or not is to be determined by the usage and purposes for which it is held." The following can be culled
from Viuda de Tan Toco v. Municipal Council of Iloilo:

1. Properties held for public uses – and generally everything held for governmental purposes – are not
subject to levy and sale under execution against such corporation. The same rule applies to funds in
the hands of a public officer and taxes due to a municipal corporation.

2. Where a municipal corporation owns in its proprietary capacity, as distinguished from its public or
government capacity, property not used or used for a public purpose but for quasi-private purposes, it is the
general rule that such property may be seized and sold under execution against the corporation.

3. Property held for public purposes is not subject to execution merely because it is temporarily used for private
purposes. If the public use is wholly abandoned, such property becomes subject to execution.
 Page 125 of 129

This Administrative Circular shall take effect immediately and the Court Administrator shall see to it that it is
faithfully implemented.

Although Judge Yadao pointed out that neither the CA nor the Court had issued as of then any writ of
preliminary injunction to enjoin the release or withdrawal of the garnished amount, she did not need any writ of
injunction from a superior court to compel her obedience to the law. The Court is disturbed that an experienced
judge like her should look at public laws like Presidential Decree No. 1445 dismissively instead of loyally
following and unquestioningly implementing them. That she did so turned her court into an oppressive bastion
of mindless tyranny instead of having it as a true haven for the seekers of justice like the UP.

III
Period of appeal did not start without effective
service of decision upon counsel of record;
Fresh-period rule announced in
Neypes v. Court of Appeals
can be given retroactive application

The UP next pleads that the Court gives due course to its petition for review in the name of equity in order to
reverse or modify the adverse judgment against it despite its finality. At stake in the UP’s plea for equity was
the return of the amount of ₱ 16,370,191.74 illegally garnished from its trust funds. Obstructing the plea is the
finality of the judgment based on the supposed tardiness of UP’s appeal, which the RTC declared on
September 26, 2002. The CA upheld the declaration of finality on February 24, 2004, and the Court itself
denied the UP’s petition for review on that issue on May 11, 2004 (G.R. No. 163501). The denial became final
on November 12, 2004.

It is true that a decision that has attained finality becomes immutable and unalterable, and cannot be modified
in any respect,87 even if the modification is meant to correct erroneous conclusions of fact and law, and
whether the modification is made by the court that rendered it or by this Court as the highest court of the
land.88 Public policy dictates that once a judgment becomes final, executory and unappealable, the prevailing
party should not be deprived of the fruits of victory by some subterfuge devised by the losing party. Unjustified
delay in the enforcement of such judgment sets at naught the role and purpose of the courts to resolve
justiciable controversies with finality.89 Indeed, all litigations must at some time end, even at the risk of
occasional errors.

But the doctrine of immutability of a final judgment has not been absolute, and has admitted several
exceptions, among them: (a) the correction of clerical errors; (b) the so-called nunc pro tunc entries that cause
no prejudice to any party; (c) void judgments; and (d) whenever circumstances transpire after the finality of the
decision that render its execution unjust and inequitable.90 Moreover, in Heirs of Maura So v. Obliosca,91 we
stated that despite the absence of the preceding circumstances, the Court is not precluded from brushing aside
procedural norms if only to serve the higher interests of justice and equity. Also, in Gumaru v. Quirino State
College,92 the Court nullified the proceedings and the writ of execution issued by the RTC for the reason that
respondent state college had not been represented in the litigation by the Office of the Solicitor General.

We rule that the UP’s plea for equity warrants the Court’s exercise of the exceptional power to disregard the
declaration of finality of the judgment of the RTC for being in clear violation of the UP’s right to due process.

Both the CA and the RTC found the filing on June 3, 2002 by the UP of the notice of appeal to be tardy. They
based their finding on the fact that only six days remained of the UP’s reglementary 15-day period within which
to file the notice of appeal because the UP had filed a motion for reconsideration on January 16, 2002 vis-à-vis
the RTC’s decision the UP received on January 7, 2002; and that because the denial of the motion for
reconsideration had been served upon Atty. Felimon D. Nolasco of the UPLB Legal Office on May 17, 2002,
the UP had only until May 23, 2002 within which to file the notice of appeal.
 Page 126 of 129

The UP counters that the service of the denial of the motion for reconsideration upon Atty. Nolasco was
defective considering that its counsel of record was not Atty. Nolasco of the UPLB Legal Office but the OLS in
Diliman, Quezon City; and that the period of appeal should be reckoned from May 31, 2002, the date when the
OLS received the order. The UP submits that the filing of the notice of appeal on June 3, 2002 was well within
the reglementary period to appeal.

We agree with the submission of the UP.

Firstly, the service of the denial of the motion for reconsideration upon Atty. Nolasco of the UPLB Legal Office
was invalid and ineffectual because he was admittedly not the counsel of record of the UP. The rule is that it is
on the counsel and not the client that the service should be made.93

That counsel was the OLS in Diliman, Quezon City, which was served with the denial only on May 31, 2002.
As such, the running of the remaining period of six days resumed only on June 1, 2002, 94 rendering the filing of
the UP’s notice of appeal on June 3, 2002 timely and well within the remaining days of the UP’s period to
appeal.

Verily, the service of the denial of the motion for reconsideration could only be validly made upon the OLS in
Diliman, and no other. The fact that Atty. Nolasco was in the employ of the UP at the UPLB Legal Office did not
render the service upon him effective. It is settled that where a party has appeared by counsel, service must be
made upon such counsel.95 Service on the party or the party’s employee is not effective because such notice is
not notice in law.96 This is clear enough from Section 2, second paragraph, of Rule 13, Rules of Court, which
explicitly states that: "If any party has appeared by counsel, service upon him shall be made upon his counsel
or one of them, unless service upon the party himself is ordered by the court. Where one counsel appears for
several parties, he shall only be entitled to one copy of any paper served upon him by the opposite side." As
such, the period to appeal resumed only on June 1, 2002, the date following the service on May 31, 2002 upon
the OLS in Diliman of the copy of the decision of the RTC, not from the date when the UP was notified.97

Accordingly, the declaration of finality of the judgment of the RTC, being devoid of factual and legal bases, is
set aside.

Secondly, even assuming that the service upon Atty. Nolasco was valid and effective, such that the remaining
period for the UP to take a timely appeal would end by May 23, 2002, it would still not be correct to find that the
judgment of the RTC became final and immutable thereafter due to the notice of appeal being filed too late on
June 3, 2002.

In so declaring the judgment of the RTC as final against the UP, the CA and the RTC applied the rule
contained in the second paragraph of Section 3, Rule 41 of the Rules of Court to the effect that the filing of a
motion for reconsideration interrupted the running of the period for filing the appeal; and that the period
resumed upon notice of the denial of the motion for reconsideration. For that reason, the CA and the RTC
might not be taken to task for strictly adhering to the rule then prevailing.

However, equity calls for the retroactive application in the UP’s favor of the fresh-period rule that the Court first
announced in mid-September of 2005 through its ruling in Neypes v. Court of Appeals,98 viz:

To standardize the appeal periods provided in the Rules and to afford litigants fair opportunity to appeal their
cases, the Court deems it practical to allow a fresh period of 15 days within which to file the notice of appeal in
the Regional Trial Court, counted from receipt of the order dismissing a motion for a new trial or motion for
reconsideration.

The retroactive application of the fresh-period rule, a procedural law that aims "to regiment or make the appeal
period uniform, to be counted from receipt of the order denying the motion for new trial, motion for
reconsideration (whether full or partial) or any final order or resolution," 99 is impervious to any serious
 Page 127 of 129

challenge. This is because there are no vested rights in rules of procedure. 100 A law or regulation is procedural
when it prescribes rules and forms of procedure in order that courts may be able to administer justice. 101 It does
not come within the legal conception of a retroactive law, or is not subject of the general rule prohibiting the
retroactive operation of statues, but is given retroactive effect in actions pending and undetermined at the time
of its passage without violating any right of a person who may feel that he is adversely affected.

We have further said that a procedural rule that is amended for the benefit of litigants in furtherance of the
administration of justice shall be retroactively applied to likewise favor actions then pending, as equity delights
in equality.102 We may even relax stringent procedural rules in order to serve substantial justice and in the
exercise of this Court’s equity jurisdiction.103 Equity jurisdiction aims to do complete justice in cases where a
court of law is unable to adapt its judgments to the special circumstances of a case because of the inflexibility
of its statutory or legal jurisdiction.104

It is cogent to add in this regard that to deny the benefit of the fresh-period rule to the UP would amount to
injustice and absurdity – injustice, because the judgment in question was issued on November 28, 2001 as
compared to the judgment in Neypes that was rendered in 1998; absurdity, because parties receiving notices
of judgment and final orders issued in the year 1998 would enjoy the benefit of the fresh-period rule but the
later rulings of the lower courts like that herein would not.105

Consequently, even if the reckoning started from May 17, 2002, when Atty. Nolasco received the denial, the
UP’s filing on June 3, 2002 of the notice of appeal was not tardy within the context of the fresh-period rule. For
the UP, the fresh period of 15-days counted from service of the denial of the motion for reconsideration would
end on June 1, 2002, which was a Saturday. Hence, the UP had until the next working day, or June 3, 2002, a
Monday, within which to appeal, conformably with Section 1 of Rule 22, Rules of Court, which holds that: "If the
last day of the period, as thus computed, falls on a Saturday, a Sunday, or a legal holiday in the place where
the court sits, the time shall not run until the next working day."

IV
Awards of monetary damages,
being devoid of factual and legal bases,
did not attain finality and should be deleted

Section 14 of Article VIII of the Constitution prescribes that express findings of fact and of law should be made
in the decision rendered by any court, to wit:

Section 14. No decision shall be rendered by any court without expressing therein clearly and distinctly the
facts and the law on which it is based.

No petition for review or motion for reconsideration of a decision of the court shall be refused due course or
denied without stating the legal basis therefor.

Implementing the constitutional provision in civil actions is Section 1 of Rule 36, Rules of Court, viz:

Section 1. Rendition of judgments and final orders. — A judgment or final order determining the merits of the
case shall be in writing personally and directly prepared by the judge, stating clearly and distinctly the facts and
the law on which it is based, signed by him, and filed with the clerk of the court. (1a)

The Constitution and the Rules of Court apparently delineate two main essential parts of a judgment, namely:
the body and the decretal portion. Although the latter is the controlling part,106 the importance of the former is
not to be lightly regarded because it is there where the court clearly and distinctly states its findings of fact and
of law on which the decision is based. To state it differently, one without the other is ineffectual and useless.
The omission of either inevitably results in a judgment that violates the letter and the spirit of the Constitution
and the Rules of Court.
 Page 128 of 129

The term findings of fact that must be found in the body of the decision refers to statements of fact, not to
conclusions of law.107 Unlike in pleadings where ultimate facts alone need to be stated, the Constitution and the
Rules of Court require not only that a decision should state the ultimate facts but also that it should specify the
supporting evidentiary facts, for they are what are called the findings of fact.

The importance of the findings of fact and of law cannot be overstated. The reason and purpose of the
Constitution and the Rules of Court in that regard are obviously to inform the parties why they win or lose, and
what their rights and obligations are. Only thereby is the demand of due process met as to the parties. As
Justice Isagani A. Cruz explained in Nicos Industrial Corporation v. Court of Appeals:108

It is a requirement of due process that the parties to a litigation be informed of how it was decided, with an
explanation of the factual and legal reasons that led to the conclusions of the court. The court cannot simply
say that judgment is rendered in favor of X and against Y and just leave it at that without any justification
whatsoever for its action. The losing party is entitled to know why he lost, so he may appeal to a higher court, if
permitted, should he believe that the decision should be reversed. A decision that does not clearly and
distinctly state the facts and the law on which it is based leaves the parties in the dark as to how it was reached
and is especially prejudicial to the losing party, who is unable to pinpoint the possible errors of the court for
review by a higher tribunal.

Here, the decision of the RTC justified the grant of actual and moral damages, and attorney’s fees in the
following terse manner, viz:

xxx The Court is not unmindful that due to defendants’ unjustified refusal to pay their outstanding obligation to
plaintiff, the same suffered losses and incurred expenses as he was forced to re-mortgage his house and lot
located in Quezon City to Metrobank (Exh. "CC") and BPI Bank just to pay its monetary obligations in the form
of interest and penalties incurred in the course of the construction of the subject project.109

The statement that "due to defendants’ unjustified refusal to pay their outstanding obligation to plaintiff, the
same suffered losses and incurred expenses as he was forced to re-mortgage his house and lot located in
Quezon City to Metrobank (Exh. "CC") and BPI Bank just to pay its monetary obligations in the form of interest
and penalties incurred in the course of the construction of the subject project" was only a conclusion of fact
and law that did not comply with the constitutional and statutory prescription. The statement specified no
detailed expenses or losses constituting the ₱ 5,716,729.00 actual damages sustained by Stern Builders in
relation to the construction project or to other pecuniary hardships. The omission of such expenses or losses
directly indicated that Stern Builders did not prove them at all, which then contravened Article 2199, Civil Code,
the statutory basis for the award of actual damages, which entitled a person to an adequate compensation only
for such pecuniary loss suffered by him as he has duly proved. As such, the actual damages allowed by the
RTC, being bereft of factual support, were speculative and whimsical. Without the clear and distinct findings of
fact and law, the award amounted only to an ipse dixit on the part of the RTC,110 and did not attain finality.

There was also no clear and distinct statement of the factual and legal support for the award of moral damages
in the substantial amount of ₱ 10,000,000.00. The award was thus also speculative and whimsical. Like the
actual damages, the moral damages constituted another judicial ipse dixit, the inevitable consequence of which
was to render the award of moral damages incapable of attaining finality. In addition, the grant of moral
damages in that manner contravened the law that permitted the recovery of moral damages as the means to
assuage "physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings,
moral shock, social humiliation, and similar injury."111 The contravention of the law was manifest considering
that Stern Builders, as an artificial person, was incapable of experiencing pain and moral
sufferings.112 Assuming that in granting the substantial amount of ₱ 10,000,000.00 as moral damages, the RTC
might have had in mind that dela Cruz had himself suffered mental anguish and anxiety. If that was the case,
then the RTC obviously disregarded his separate and distinct personality from that of Stern
Builders.113 Moreover, his moral and emotional sufferings as the President of Stern Builders were not the
sufferings of Stern Builders. Lastly, the RTC violated the basic principle that moral damages were not intended
to enrich the plaintiff at the expense of the defendant, but to restore the plaintiff to his status quo ante as much
 Page 129 of 129

as possible. Taken together, therefore, all these considerations exposed the substantial amount of ₱
10,000,000.00 allowed as moral damages not only to be factually baseless and legally indefensible, but also to
be unconscionable, inequitable and unreasonable.

Like the actual and moral damages, the ₱ 150,000.00, plus ₱ 1,500.00 per appearance, granted as attorney’s
fees were factually unwarranted and devoid of legal basis. The general rule is that a successful litigant cannot
recover attorney’s fees as part of the damages to be assessed against the losing party because of the policy
that no premium should be placed on the right to litigate.114 Prior to the effectivity of the present Civil Code,
indeed, such fees could be recovered only when there was a stipulation to that effect. It was only under the
present Civil Code that the right to collect attorney’s fees in the cases mentioned in Article 2208 115 of the Civil
Code came to be recognized.116 Nonetheless, with attorney’s fees being allowed in the concept of actual
damages,117 their amounts must be factually and legally justified in the body of the decision and not stated for
the first time in the decretal portion.118 Stating the amounts only in the dispositive portion of the judgment is not
enough;119 a rendition of the factual and legal justifications for them must also be laid out in the body of the
decision.120

That the attorney’s fees granted to the private respondents did not satisfy the foregoing requirement suffices
for the Court to undo them.121 The grant was ineffectual for being contrary to law and public policy, it being
clear that the express findings of fact and law were intended to bring the case within the exception and thereby
justify the award of the attorney’s fees. Devoid of such express findings, the award was a conclusion without a
premise, its basis being improperly left to speculation and conjecture.122

Nonetheless, the absence of findings of fact and of any statement of the law and jurisprudence on which the
awards of actual and moral damages, as well as of attorney’s fees, were based was a fatal flaw that invalidated
the decision of the RTC only as to such awards. As the Court declared in Velarde v. Social Justice
Society,123 the failure to comply with the constitutional requirement for a clear and distinct statement of the
supporting facts and law "is a grave abuse of discretion amounting to lack or excess of jurisdiction" and that
"(d)ecisions or orders issued in careless disregard of the constitutional mandate are a patent nullity and must
be struck down as void."124 The other item granted by the RTC (i.e., ₱ 503,462.74) shall stand, subject to the
action of the COA as stated herein.

WHEREFORE, the Court GRANTS the petition for review on certiorari; REVERSES and SETS ASIDE the

decision of the Court of Appeals under review; ANNULS the orders for the garnishment of the funds of the
University of the Philippines and for the release of the garnished amount to Stern Builders Corporation and
Servillano dela Cruz; and DELETES from the decision of the Regional Trial Court dated November 28, 2001
for being void only the awards of actual damages of ₱ 5,716,729.00, moral damages of ₱ 10,000,000.00, and
attorney's fees of ₱ 150,000.00, plus ₱ 1,500.00 per appearance, in favor of Stern Builders Corporation and
Servillano dela Cruz.

The Court ORDERS Stem Builders Corporation and Servillano dela Cruz to redeposit the amount of ₱
16,370,191.74 within 10 days from receipt of this decision.

Costs of suit to be paid by the private respondents.

SO ORDERED.