List of Cases (State Immunity)

1. Republic vs. Villasor, 54 SCRA 83 1

2. Department of Agriculture vs. NLRC, 227 SCRA 693 3

3. Republic vs. Feliciano, 148 SCRA 424 7

4. Del Mar vs. PVA, 51 SCRA 340 10

5. PNB vs. CIR, 81 SCRA 314 14

6. Lansang vs. Court of Appeals, G.R.No. 102667, February 23, 2000 17

7. Republic s. Sandoval, 220 SCRA 124 20

8. Meritt vs. Government of Philippine Islands, 34 Phil. 311 27

9. USA vs. Ruiz, 136 SCRA 487 32

10. Amigable vs. Cuenca, G.R. No. L-26400, February 29, 1972 40

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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.

Office of the Solicitor General Felix V. Makasiar and Solicitor Bernardo P. Pardo for petitioner.

Andres T. Velarde and Marcelo B. Fernan for respondents.

FERNANDO, J.:

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., GavinoUnchuan, 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 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

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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.

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G.R. No. 104269 November 11, 1993

DEPARTMENT OF AGRICULTURE, petitioner,

vs. THE NATIONAL LABOR RELATIONS COMMISSION, et al., respondents.

Roy Lago Salcedo for private respondents.

VITUG, J.:

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 severallyliable 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 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;

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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 within ten (10) days from notice pursuant to paragraph 3 of this disposition. The motion to admit the complaint in intervention isDenied 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 law 13 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 counterclaim 16 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

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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 ( jureimperii) and private, commercial and proprietary act ( jure gestionisis). The result is that State immunity now extends only to acts jure imperii. The restrictive application of State immunity is now the rule in the United States, the United Kingdom and other states in Western Europe.

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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, inCarabao, 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

6

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

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.

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G.R. No. 70853 March 12, 1987

REPUBLIC OF THE PHILIPPINES, petitioner-appellee,

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

YAP, J.:

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 informacionposesoria 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 oninformacionposesoria 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.

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

8

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.

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 suasponte 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 instrictissimijuris. 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 informacionposesoria 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 informacionposesoria 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 parteproceeding conducted in accordance

with prescribed rules. 7 Such inscription merely furnishes, at best, prima facieevidence 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.

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There is no showing in the case at bar that the informacionposesoria 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 informacionposesoria 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 "informacionposesoria" relied upon by respondent Feliciano. Adding to the dubiousness of said document is the fact that "possessory information calls for an area of only 100 hectares," 11 whereas the land claimed by respondent Feliciano comprises 1,364.4177 hectares, later reduced to 701-9064 hectares. Courts should be wary in accepting "possessory information documents, as well as other purportedly old Spanish titles, as proof of alleged ownership of lands.

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

SO ORDERED.

10

QUIRICO DEL MAR, petitioner and appellee,

vs. THE PHILIPPINE VETERANS ADMINISTRATION, respondent and

appellant.

Quirico del Mar in his own behalf.

Office of the Solicitor General Felix V. Makasiar, First Assistant Solicitor General Esmeraldo Umali and Solicitor Eulogio Raquel Santos for respondent appellant.

CASTRO, J.:

On June 20, 1964, Quirico del Mar (hereinafter referred to del Mar) filed with the Court of First Instance of Cebu petition for mandamus (civil case R-8465) against the Philippine Veterans Administration (hereinafter referred to the PVA to compel the latter to continue paying him monthly life pension of P50 from the date of its cancellation in March 1950 to June 20, 1957, and thereafter, or from June 22 1957 his monthly life pension, as increased by Republic Act 1920, 1 of P100 and to pay to him as well the monthly living allowance of P10 for each of his unmarried minor children below eighteen years of age, 2 pursuant to the said Republic Act 1920 which took effect on June 22, 1957. Del Mar also asked for compensatory, moral and exemplary damages.

In his petition below, del Mar averred that he served during World War II as chief judge advocate of the Cebu Area Command (a duly recognized guerrilla organization) with the rank of major; that he subsequently obtained an honorable discharge from the service on October 20, 1946 on a certificate of permanent total physical disability; that upon proper claim presented and after hearing and adjudication, the Philippine Veterans Board (the PVA's predecessor granted him a monthly life pension of P50 effective January 28, 1947; that in March 1950, the said Board discontinued payment of his monthly life pension on the ground that his receipt of a similar pension from the United States Government, through the United States Veterans Administration, by reason of military service rendered in the United States Army in the Far East during World War II, precluded him from receiving any further monthly life pension from the Philippine Government; that he wrote the said Board twice demanding that it continue paying his monthly life pension, impugning the cancellation thereof as illegal; and that his demands went unheeded.

The PVA reiterated its contention that del Mar's receipt of a similar pension from the United States Government effectively barred him from claiming and receiving from the Philippine Government the monthly life pension granted him as well as the monthly allowances he claimed for his five living unmarried minor children below eighteen years of age. The PVA also asserted that it is discretionary on its part to grant or discontinue the pension sought by del Mar. In addition, it alleged that the action of del Mar was premature because of his failure to exhaust administrative remedies before invoking judicial intervention, and that the court a quo was without jurisdiction to try the case as del Mar demand partakes of a money claim against the PVA — a mere agency of the Philippine Government — and, in effect, of a suit against the Government which is not suitable without its consent. The PVA thus prayed for the dismissal of the petition.

After due trial, the court a quo rendered judgment upholding del Mar claims. In its decision dated February 27, 1965, the court (1) ordered the PVA to pay to del Mar his monthly life pension corresponding to the period from April 1950 to May 1957 at the rate of P50 a month, adding up to P4,334.86, and his monthly life pension corresponding to the period from June 22, 1957 to February 1965 at the amount of P100 a month totalling P9,200, and thereafter to continue to pay his monthly life pension at the rate of P100. a month; (2) directed del Mar to file with the PVA the corresponding written application for the payment to him of the monthly living allowance of P10 for each of his five living unmarried minor children from June 22, 1957; and ordered the PVA to give due course to the written application as soon as del Mar shall have filed the same with it, and once approved, to make the necessary payment of the accumulated unpaid living allowances due to each of the said children from June 22, 1957 as well as the current ones until each one of them ceases to be entitled to the same; and (3 directed the PVA in the event of unavailability of funds to pay the claims aforementioned, to set aside funds from such as intended to pay the veterans' living pensions, or to cause the same to be appropriated in its budget in order to comply with the judgment. For lack of basis, the court a quo omitted to pass judgment on del Mar's claim for moral and exemplary damages.

Hence, the present appeal by the PVA.

The PVA alleges that the court a quo erred (1) in not holding itself without jurisdiction to try civil case R-8465; (2) in no finding as premature the petition for mandamus filed by del Mar due to the failure of the latter to exhaust available administrative remedies before seeking judicial intervention; (3) in declaring null and void section 6 of PVA Regulation No. 2 relied upon by it in discontinuing the monthly life pension of del Mar since March 1950; (4) in not finding it discretionary on the part of the PVA to grant or discontinue the

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said suspension; (5) in ordering it to pay to del Mar the amounts stated in the judgment; and (6) in ordering it to give due course to and approve the application which the said court directed del Mar to file for the payment to the latter of the monthly living allowance for each of his living unmarried minor children below eighteen years of age.

This appeal raises several questions which will be discussed in seriatim.

1. The PVA argues that the court a quo was without jurisdiction to try civil case R-8465 because it involves a money claim against the said PVA — a mere agency of the Government performing governmental functions with no juridical personality of its own — and, in reality, partakes of an action against the Philippine Government which is immune from suit without its consent, citing this Court's observation in Republic of the Philippine vs. Ramolete and Del Mar, 3 to wit:

....a charge against the Government where the money involved is part of the public funds, is a suit against the Government, and the happenstance that the action is directed against the PVA as an entity and not against the Republic of the Philippines is of no moment. Perforce, the Republic of the Philippines, on matters of administration of all benefits due to the veterans of revolutions and wars, and to their heirs and beneficiaries, acts and has to act through its agency and instrumentality, the PVA. The suit should therefore be regarded as one against the Republic of the Philippines; the PVA is therefore exempt from the filing of an appeal bond.

The PVA labors under a muddled and mistaken appreciation of the aforecited observation. This Court stated in precise language the sole issue for resolution in that case, thus:

Is the PVA exempt from the filing of an appeal bond? To resolve this issue, we must initially determine whether the PVA is an agency or instrumentality of the Republic of the Philippines, and, in the affirmative, whether it exercises governmental functions.

Indeed, the decisive point in the aforementioned case related to the status of the PVA as an agency or instrumentality of the Republic of the Philippines exercising governmental functions as to be entitled to

exemption from the filing of the appeal bond per section 16 of Rule 141 of the Rules of Court, not to the nature of the claim sought to be enforced by the private respondent therein (del Mar) against the said PVA. Thus, in the said case, this Court made a lengthy disquisition on the history, development and organization of the PVA to show conclusively that the same is an entity or agency of the Republic of the Philippines performing governmental functions. True, this Court referred to the claim of the private respondent therein as "a claim for a sum of money against the Government, which claim, if adjudged finally to be meritorious, would render the Republic of the Philippines liable therefor," since the funds from which the claim was to be satisfied were funds appropriated by Congress for the PVA; but this Court properly and advisedly omitted any study and consideration of the question of suitability or non-suitability of the Government in connection therewith.

As a general proposition, the rule — well-settled in this jurisdiction — on the immunity of the Government from suit without its consent holds true in all actions resulting in "adverse consequences on the public treasury, whether in the disbursements of funds or loss of property." 4 Needless to state, in such actions, which, in effect, constitute suits against the Government, the court has no option but to dismiss them. Nonetheless, the rule admits of an exception. It finds no application where a claimant institutes an action against a functionary who fails to comply with his statutory duty to release the amount claimed from the public funds already appropriated by statute for the benefit of the said claimant. 5 As clearly discernible from the circumstances, the case at bar falls under the exception.

2. The second question posed by the PVA relates to del Mar alleged failure to exhaust administrative remedies before resorting to court action. Suffice it to state that where a case as in the present controversy — involves a question solely of a legal nature, there arises no need for the litigant to resort to all administrative remedies available to him before seeking judicial relief. 6

3. The validity of section 6 of Regulation No. 2 of the "Rules and Regulations on Veterans' Benefits" adopted by the PVA constitutes the core of the present controversy. The said section 6 reads as follows:

SEC. 6. Effect of receipt of USVA pension benefit — termination, reduction. — An award of a similar disability compensation from the US Veterans Administration shall be a ground for the cancellation of a disability pension

12

granted under the Regulation: Provided, however, That if and while the disability compensation awarded by the US Veterans Administration is less than the pension granted hereunder, the difference in amount shall be assumed and paid by the PVA: Provided, further, That upon proper application, the disability award previously cancelled may be restored upon the termination of the US Veterans Administration award if the cause of such termination is due to negative military service report of the pensioner certified by the US Department of the Army and not for any other valid cause: Provided, finally, That the veteran is

medically determined to be still suffering from the disability for which he was previously awarded a pension. Payment of pension thus restored shall take effect or shall commence only from the date of approval of restoration and when funds become available.

Pursuant to the foregoing, the PVA cancelled and discontinued the monthly life pension of del Mar reasoning that the latter's receipt of a similar pension from the United States Government precluded his enjoying any like benefit from the Philippine Government. The PVA avers that it adopted the aforequoted section 6 in order to carry out and implement section 9 of Republic Act 65, as amended, 7 particularly its excepting clause. Said section 9 reads:

SEC. 9. The persons mentioned in sections one and two hereof who are permanently incapacitated from work owing to sickness, disease or injuries sustained in line of duty, shall be given a life pension of one hundred pesos a month, and ten pesos a month for each of his unmarried minor children below eighteen years of age, unless they are actually receiving a similar pension from other Government funds, and shall receive, in addition, the necessary hospitalization and medical care. 8

The PVA reads the phrase "from other Government funds" in the excepting clause of the aforecited provision as necessarily including funds of the United States Government. And without question, the pension del Mar receives from the United States Veterans Administration comes from the funds of the United States Government.

On the other hand, del Mar avers that section 6 of Regulation No. 2 illegally effects the suspension of the operation of section 9 of Republic Act 65, as

amended, and argues that under section 20 9 of Republic Act 65, as amended, the power suspend the payment of the monthly life pension awarded to disabled veteran belongs exclusively to the President of the Philippines, not to the PVA which, in the case at bar, illegally arrogated unto itself the said power. Furthermore, del Mar states, the PVA "deliberately misinterprets" the phrase from other Government funds" in extending its scope to include United States Government funds.

The principle recognizing the necessity of vesting administrative authorities with the power to promulgate rules and regulations to implement a given statute and to effectual its policies, provided such rules and regulations conform to the terms and standards prescribed by the statute as well purport to carry into effect its general policies, constitutes well established doctrine in this jurisdiction. 10 In Teoxon v. Members of the Board of Administrators, Philippine Veterans Administration, suprea, this Court fittingly stated: .

... the Constitution limits the authority of the President, in whom all executive power resides, to take care that the laws be faithfully executed. No lesser administrative executive office or agency then can, contrary to the express language of the Constitution, assert for itself a more extensive prerogative. Necessarily, it is bound to observe the constitutional mandate. There must be strict compliance with the legislative enactment. Its terms must be followed. The statute requires adherence to, not departure from, its provisions. No deviation is allowable.

Section 11 of Republic Act 2665 11 empowers the PVA to adopt rules and regulations, thus:

SEC. 11. Policies, rules and regulations. — Subject to existing laws, the Administration shall have the power to promulgate and issue rules and regulations as may be found necessary to govern its operations and to carry out that aims and purposes of this Act and of all other laws to be administered by the Administration.

Pursuant to this rule making authority, the PVA — allegedly' to implement section 9 of Republic Act 65, as amended promulgated its "Rules and Regulations on Veterans' Benefits," section 6 of Regulation No. 2 of which cancels the disability pension granted if the beneficiary receives a similar compensation from the United States Veterans Administration. In effect, the PVA by adopting section 6 of Regulation No. 2, suspended the operation of

13

section 9' of Republic Act 65, as amended. This, Republic Act 65, as amended, forbids the PVA to do for it expressly authorizes only the President of the Philippines to suspend the operation of any of its provisions "if and when the Congress of the United States approves the pending GI Bill of Rights applicable to the Philippines the provisions of which are identical or similar to the provisions of this Act." Clearly then, section 6 of Regulation No. 2 not only negates the very spirit behind section 9 of Republic Act 65, as amended, but also contravenes the express mandate of section 20 thereof.

The PVA's pretense that del Mar case falls under the clause of section 9 of Republic Act 65, as amended, which excepts those who "are actually receiving a similar pension from other Government funds" from the coverage of said section 9 — predicated upon its interpretation that the phrase other Government funds" includes funds of the United States Government — fails to persuade this Court as a valid argument to justify its cancellation of del Mar monthly life pens Section 9 of Republic Act 65, as amended, in providing for the excepting clause, obviously intends to prevent the receipt the same beneficiary of concurrent or multiple pensions benefits similar to each other in nature and basis, although coursed through different departments or agencies, but paid out of the funds of the same Government. Any contrary interpretation resulting in the derogation of the interests of the beneficiary who likewise receives a similar pension paid out funds of other Governments, conflicts with the establish axiom ordaining the construction of pension laws of war veterans in favor of those seeking their benefits.

The record of the case at bar being completely bereft of any indication to show the suspension by the President of the Philippines — pursuant to section 20 of Republic Act 65, amended — of the operation of any of the provisions of the said statute, this Court perforce must uphold del Mar claims.

4. The rest of the assigned errors relate to the allege undue interference by the court a quo with the purely discretionary functions of the PVA in the matter of granting discontinuing the pension benefits.

The law concedes to administrative bodies — like the PVA — the authority to act on and decide claims and applications in accordance with their judgment, in the exercise of their adjudicatory capacity. Because of their acquired expertise in specific matters within the purview of their respective jurisdictions, the findings of these administrative bodies merit not only great

weight but also respect and finality. "There is limit, however, to such a deference paid to the actuations or such bodies, Clearly, where there has been a failure to interpret and apply the statutory provisions in question, judicial power should assert itself. Under the theory of separation of power it is to the judiciary, and to the judiciary alone, that the final say on questions of law in appropriate cases coming before it is vested." 12

All told, no roadblock stands in the way of del Mar's demand for the continuance of his monthly life pension.

In view, however, of the further amendment by Congress of section 9 of Republic Act 65, as amended, through Republic Act 5753 — the provisions of which took effect on June 21, 1969 — there arises the need to modify the judgment a quo in order to make it conform to the said statute as it now stands. Republic Act 5753, in further amending section 9 of Republic Act 65, as amended, grants every totally disabled veteran of World War II "a life pension of two hundred pesos a month, and thirty pesos a month for his wife and each of his unmarried minor children below eighteen years of age."

ACCORDINGLY, this Court adjudges the appelleeQuirico del Mar entitled to his life pension (1) at the rate of P50 a month effective as of April 1950 to May 1957, per Republic Act 65; (2) at the rate of P100 a month effective as of June 22, 1957 to May 1969, per Republic Act 65 as amended by Republic Act 1920; and (3) at the rate of P200 a month effective as of June 21, 1969, per Republic Act 65 as further amended by Republic Act 5753. This Court directs the appellant Philippine Veterans Administration to compute and then to pay to the appelleedel Mar his past and accumulated monthly life pension at the aforementioned statutory rates.

Regarding the monthly living allowance the appellee del Mar asks for each of his five "living unmarried minor children below eighteen years of age," it appearing that he has not filed any proper application therefor with the appellant PVA but simply included them in his claim for the restoration of his discontinued monthly life pension, the appellee del Mar may, if he so desires, comply with section 15 of Republic Act 65, as amended, which requires that "[A]ny person who desires to take advantage of the rights and privileges provided for in this Act should file his application" with the Philippine Veterans Administration, and the latter is hereby ordered to consider and pass upon the merits of such application, if filed, particular reference to the entitlement qualifications of intended beneficiaries. No pronouncement as to costs.

14

PHILIPPINE NATIONAL BANK, petitioner,

vs. COURT OF INDUSTRIAL RELATIONS, GABRIEL V. MANANSALA and GILBERT P. LORENZO, in his official capacity as authorized Deputy sheriff, respondents.

Conrado E. Medina for petitioner.

Gabriel V. Manansala in his own behalf.

Jose K. Manguiat, Jr. for respondent Court.

FERNANDO, J.:

The issue raised in this certiorari proceeding is whether or not an order of

the now defunct respondent Court of Industrial Relations denying for lack of merit petitioner's motion to quash a notice of garnishment can be stigmatized as a grave abuse of discretion. What was sought to be garnished was the money of the People's Homesite and Housing Corporation deposited at petitioner's branch in Quezon City, to satisfy a decision of respondent Court which had become final and executory. 1 A writ of execution in favor of private respondent Gabriel V. Manansala had previously been issued. 2 He was the counsel of the prevailing party, the United Homesite Employees and Laborers Association, in the aforementioned case. The validity of the order assailed is challenged on two grounds: (1) that the appointment of respondent Gilbert P. Lorenzo as authorized deputy sheriff to serve the writ of execution was contrary to law and (2) that the funds subject of the garnishment "may be public in character." 3 In thus denying the motion to quash, petitioner contended that there was on the part of respondent Court a failure to abide by authoritative doctrines amounting to a grave abuse of discretion. After a careful consideration of the matter, it is the conclusion of this Tribunal that while the authorization of respondent Lorenzo to act as special deputy sheriff to serve the notice of garnishment may be open to objection, the more basic ground that could have been relied upon — not even categorically raised, petitioner limiting itself to the assertion that the funds "could be public" in character, thus giving rise to the applicability of the fundamental concept of non-suability — is hardly persuasive. The People's Homesite and Housing Corporation had a juridical existence enabling it sue and be sued. 4 Whatever defect could be attributed therefore to the order denying the motion to quash could not be characterized as a grave abuse of discretion. Moreover, with the lapse of time during which private respondent had been unable to execute a judgment in his favor, the equities are on his side. Accordingly, this petition must be dismissed.

The order of August 26, 1970 of respondent Court denying the motion to quash, subject of this certiorari proceeding, reads as follows: "The Philippine National Bank moves to quash the notice of garnishment served upon its branch in Quezon City by the authorized deputy sheriff of this Court. It contends that the service of the notice by the authorized deputy sheriff of the court contravenes Section 11 of Commonwealth Act No. 105, as amended which reads:" 'All writs and processes issued by the Court shall be served and executed free of charge by provincial or city sheriffs, or by any person authorized by this Court, in the same manner as writs and processes of Courts of First Instance.' Following the law, the Bank argues that it is the Sheriff of Quezon City, and not the Clerk of this Court who is its Ex-Officio Sheriff, that has the authority to serve the notice of garnishment, and that the actual service by the latter officer of said notice is therefore not in order. The Court finds no merit in this argument. Republic Act No. 4201 has, since June 19, 1965, already repealed Commonwealth Act No. 103, and under this law, it is now the Clerk of this Court that is at the same time the Ex-Officio Sheriff. As such Ex-Officio Sheriff, the Clerk of this Court has therefore the authority to issue writs of execution and notices of garnishment in an area encompassing the whole of the country, including Quezon City, since his area of authority is coterminous with that of the Court itself, which is national in nature. ... At this stage, the Court notes from the record that the appeal to the Supreme Court by individual employees of PHHC which questions the award of attorney's fees to Atty. Gabriel V.

Manansala, has already been dismissed and that the same became final and executory on August 9, 1970. There is no longer any reason, therefore, for withholding action in this case. [Wherefore], the motion to quash filed by the Philippine National Bank is denied for lack of merit. The said Bank is therefore ordered to comply within five days from receipt with the 'notice of Garnishment' dated May 6, 1970." 5 There was a motion for reconsideration filed by petitioner, but in a resolution dated September 22, 1970, it was denied. Hence, this certiorari petition.

As noted at the outset, the petition lacks merit.

1. The plea for setting aside the notice of garnishment was promised on the funds of the People's homesite and Housing Corporation deposited with petitioner being "public in character." There was not even a categorical assertion to that effect. It is only the possibility of its being "public in character." The tone was thus irresolute,the approach difficult The premise that the funds could be spoken of as public in character may be accepted in the sense that the People's 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

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Industrial Relations 6 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 ...' Accordingly, it may sue and be sued and may be subjected to court processes just like any other corporation (Section 13, Act No. 1459), as amended." 7 The similarities between the aforesaid case and the present litigation are patent. Petitioner was similarly a government-owned corporation. The principal respondent was the Court of Industrial Relations. The prevailing parties were the employees of petitioner. There was likewise a writ of execution and thereafter notices of garnishment served on several banks. There was an objection to such a move and the ruling was adverse to the National Shipyard and Steel Corporation. Hence the filing of a petition for certiorari. To repeat, the ruling was quite categorical Garnishment 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. In a 1941 decision, Manila Hotel Employees Association v. Manila Hotel Company, 8 this Court, through Justice Ozaeta, held: "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 governmnent divests itself pro hac vice of its sovereign character, so as to render the corporation subject to the rules of law governing private corporations."

2. It is worth noting that the decision referred to, the Bank of the United States v. Planters' Bank, 10 was promulgated by the American Supreme Court as

early as 1824, the opinion being penned by the great Chief Justice Marshall. As was pointed out by him: "It is, we think, a sound principle, that when a government becomes a partner in any trading company, it divests itself, so far as concerns the transactions of that company, of its sovereign character, and takes that of a private citizen. Instead of communicating to the company its privileges and its prerogatives, it descends to a level with those with whom it associates itself, and takes the character which belongs to its associates, and to the business which is to be transacted. Thus, many states of this Union who have an interest in banks, are not suable even in their own courts; yet they never exempt the corporation from being sued. The state of Georgia, by giving to the bank the capacity to sue and be sued, voluntarily strips itself of its sovereign character, so far as respects the transactions of the bank, and waives an the privileges of that character. As a member of a corporation, a government never exercises its sovereignty. It acts merely as a corporator, and exercises no other power in the management of the affairs of the corporation, that are expressly given by the incorporating act." 11 The National Shipyard and Steel Corporation case, therefore, merely reaffirmed one of the oldest and soundest doctrines in this branch of the law.

3. The invocation of Republic v. Palacio, 12 as well as Commissioner of Public Highways v. San Diego, 13 did not help the cause of petitioner at all The decisions are

not applicable. If properly understood they can easily be distinguished. As is clear in the opinion of Justice J.B.L. Reyes in Republic v. Palacio, the Irrigation Service Unit which was sued was an office and agency under the Department of Public Works and Communications. The Republic of the Philippines, through the then Solicitor General, moved for the dismissal of such complaint, alleging that it "has no juridical personality to sue and be sued." 14 Such a motion to dismiss was denied. The case was tried and plaintiff Ildefonso Ortiz, included as private respondent in the Supreme Court proceeding, obtained a favorable money judgment. It became final and executory. Thereafter, it appeared that the Solicitor General was served with a copy of the writ of execution issued by the lower court followed by an order of garnishment 15 Again, there was an urgent motion to lift such order, but it was denied. A certiorariand prohibition proceeding was then filed with the Court of Appeals. The legality of the issuance of such execution and punishment was upheld, and the matter was elevated to this Tribunal The Republic was sustained. The infirmity of the decision reached by the Court of Appeals, according to the opinion, could be traced to the belief that there was a waiver of "governmental immunity and, by implication, consent to the suit." 16 There was no such waiver. Even if there were, it was stressed by justice J.B.L. Reyes: "It is apparent that this decision of the Court of Appeals suffers from the erroneous assumption that because the State has waived its immunity, its property and funds become liable to seizure under the legal process. This emphatically is not the law. (Merritt v. Insular Government, 34 Phil 311)." 17 To levy the execution of such funds, according to him, would thus "amount to a disbursement without any proper appropriation as required by law " 18 InCommissioner of Public Highways v. San Diego, the opening paragraph of Justice Teehankee was quite specific as to why there could be neither execution nor garnishment of the money of petitioner Bureau of Public Highways: "In this special civil action for certiorari and prohibition, the Court declares null and void the two questioned orders of respondent Court levying upon funds of petitioner Bureau of Public Highways on deposit with the Philippine National Bank, by virtue of the fundamental precept that government funds are not subject to execution or garnishment." 19 The funds appertained to a governmental office, not to a government-owned or controlled corporation with a separate juridical personality. In neither case therefore was there an entity with the capacity to sue and be sued, the funds of which could thereafter be held liable to execution and garnishment in the event of an adverse judgment.

4. Both the Palacio and the Commissioner of Public Highways decisions, insofar as they reiterate the doctrine that one of the coronaries of the fundamental concept of non-suability is that governmental funds are immune from garnishment, refer to Merritt v. Insular Government, a 1916 decision 20 Since then such a principle has been followed with undeviating rigidity, the latest case in point being Republic v. Villasor, 21 promulgated in 1973. It is an entirely different matter if, according to Justice Sanchez in Ramos v. Court of Industrial Relations, 22 the office or entity is "possessed of a separate and distinct corporate existence." 23 Then it can sue and be sued. Thereafter, its funds may be levied upon or garnished. That is what happened in this case.

5. With the crucial issue thus resolved in favor of the correctness of the order assailed, the other objection raised, namely that respondent Court acted

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erroneously in having a special sheriff serve to the writ of execution, hardly needs any extensive decision. It is true that in the aforesaid Commissioner of Public Highways opinion, this Court held that there is no authorization in law for the appointment of special sheriffs for the service of writs of execution.24 In the order sought to be nullified, the then Judge Joaquin M. Salvador of respondent Court pointed out that under a later Act, 25 the Court of Industrial Relations Act was amended with the proviso that its Clerk of Court was the ex-oficio sheriff. The point raised in the petition that it should be the sheriff of Quezon City that ought to have served the writ of execution would thus clearly appear to be inconclusive. There is to be sure no thought of deviating from the principle announced in the Commissioner of Public Highways case. That is as it ought to be. Even if, however, there is sufficient justification for the infirmity attributed to respondent Court by virtue of such a ruling, still considering all the circumstances of this case, it clearly does not call for the nullification of the order in question. What cannot be denied is that the writ of execution was issued as far back as May 5, 1970 by the then Clerk of Court of respondent Tribunal as the authorized sheriff. It would be, to say the least, unfair and unequitable if, on the assumption that such Clerk of Court lacked such competence, a new writ of execution had to be issued by the proper official At any rate, what is important is that the judgment be executed. That is to achieve justice according to law. It would be to carry technicality, therefore, to an absurd length if just because of such a mistake, assuming that it is, but undoubtedly one committed in good faith, further delay would get be imposed on private respondent by characterizing the order sought to be nullified amounting to a grave abuse of discretion.

WHEREFORE, the petition for certiorari is dismissed. No costs.

17

AMADO J. LANSANG, petitioner,

vs. COURT OF APPEALS, GENERAL ASSEMBLY OF THE BLIND, INC., and JOSE IGLESIAS, respondents.

QUISUMBING, J.:

Before us is a petition to review the decision of the Court of Appeals in C.A. G.R. CV No. 27244, which set aside the ruling of the Regional Trial Court, Manila, Branch 8, in Civil Case No. 88-43887, and ordered petitioner Amado J. Lansang to pay private respondent Jose Iglesias P50,000.00 in moral damages, P10,000.00 in exemplary damages and P5,000.00 in attorney's fees.

Like public streets, public parks are beyond the commerce of man. However, private respondents were allegedly awarded a "verbal contract of lease" in 1970 by the National Parks Development Committee (NPDC), a government initiated civic body engaged in the development of national parks, including Rizal Park,1 but actually administered by high profile civic leaders and journalists. Whoever in NPDC gave such "verbal" accommodation to private respondents was unclear, for indeed no document or instrument appears on record to show the grantor of the verbal license to private respondents to occupy a portion of the government park dedicated to the national hero's memory.

Private respondents were allegedly given office and library space as well as kiosks area selling food and drinks. One such kiosk was located along T.M. Kalaw St., in front of the Army and Navy Club. Private respondent General Assembly of the Blind, Inc. (GABI) was to remit to NPDC, 40 percent of the profits derived from operating the kiosks,2 without again anything shown in the record who received the share of the profits or how they were used or spent.

With the change of government after the EDSA Revolution, the new Chairman of the NPDC, herein petitioner, sought to clean up Rizal Park. In a written notice dated February 23, 1988 and received by private respondents on February 29, 1988, petitioner terminated the so-called verbal agreement with GABI and demanded that the latter vacate the premises and the kiosks it ran privately within the public park.3 In another notice dated March 5, 1988, respondents were given until March 8, 1988 to vacate.4

The latter notice was signed by private respondent Iglesias, GABI president, allegedly to indicate his conformity to its contents. However, Iglesias, who is

totally blind, claims that he was deceived into signing the notice. He was allegedly told by Ricardo Villanueva, then chief warden of Rizal Park, that he was merely acknowledging receipt of the notice. Although blind, Iglesias as president was knowledgeable enough to run GABI as well as its business.

On the day of the supposed eviction, GABI filed an action for damages and injunction in the Regional Trial Court against petitioner, Villanueva, and "all persons acting on their behalf".5 The trial court issued a temporary restraining order on the same day.6

The TRO expired on March 28, 1988. The following day, GABI was finally evicted by NPDC.

GABI's action for damages and injunction was subsequently dismissed by the RTC, ruling that the complaint was actually directed against the State which could not be sued without its consent. Moreover, the trial court ruled that GABI could not claim damages under the alleged oral lease agreement since GABI was a mere accommodation concessionaire. As such, it could only recover damages upon proof of the profits it could realize from the conclusion. The trial court noted that no such proof was presented. 1âwphi 1.nêt

On appeal, the Court of Appeals reversed the decision of the trial court.

The Court of Appeals ruled that the mere allegation that a government official is being sued in his official capacity is not enough to protect such official from liability for acts done without or in excess of his authority.7 Granting that petitioner had the authority to evict GABI from Rizal Park, "the abusive and capricious manner in which that authority was exercised amounted to a legal wrong for which he must now be held liable for damages"8 according to the Court of Appeals.

The Court of Appeals noted that, as the trial court observed, the eviction of GABI came at the heels of two significant incidents. First, after private respondent Iglesias extended monetary support to striking workers of the NPDC, and second, after Iglesias sent the Tanodbayan, a letter on November 26, 1987, denouncing alleged graft and corruption in the NPDC.9 These, according to the Court of Appeals, should not have been taken against GABI, which had been occupying Rizal Park for nearly 20 years. GABI was evicted purportedly for violating its verbal agreement with NPDC.10 However, the Court of Appeals pointed out that NPDC failed to present proof of such violation.11

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The Court of Appeals found petitioner liable for damages under Articles 19, 21, and 24 of the Civil Code.12

The Court of Appeals absolved from liability all other persons impleaded in GABI's complaint since it appeared that they were merely acting under the orders of petitioner. The new officers of NPDC, additionally impleaded by GABI, were likewise absolved from liability, absent any showing that they participated in the acts complained of. Petitioner was ordered to pay private respondent Iglesias moral and exemplary damages and attorney's fees.

Hence, this petition, in which petitioner raises the following issues:

I. WHETHER OR NOT RESPONDENT COURT ERRED IN NOT HOLDING THAT PRIVATE RESPONDENTS' COMPLAINT AGAINST PETITIONER, AS CHAIRMAN OF NPDC, AND HIS CO-DEFENDANTS IN CIVIL CASE NO. 88-43887, IS IN EFFECT A SUIT AGAINST THE STATE WHICH CANNOT BE SUED WITHOUT ITS CONSENT.

II. WHETHER OR NOT RESPONDENT COURT ERRED IN NOT HOLDING THAT PETITIONER'S ACT OF TERMINATING RESPONDENT GABI'S CONCESSION IS VALID AND DONE IN THE LAWFUL PERFORMANCE OF OFFICIAL DUTY.13

Petitioner insists that the complaint filed against him is in reality a complaint against the State, which could not prosper without the latter's consent. He anchors his argument on the fact that NPDC is a government agency, and that when he ordered the eviction of GABI, he was acting in his capacity as chairman of NPDC. Petitioner avers that the mere allegation that he was being sued in his personal capacity did not remove the case from the coverage of the law of public officers and the doctrine of state immunity.

Petitioner points out that Iglesias signed the notice of eviction to indicate his conformity thereto. He contends that as evidence of private respondents' bad faith, they sued petitioner instead of complying with their undertaking to vacate their library and kiosk at Rizal Park.

Petitioner adds that during the actual eviction, no untoward incident occurred. GABI's properties were properly inventoried and stored.

According to petitioner, the Court of Appeals' observation that the eviction was prompted by Iglesias' support for striking NPDC workers and the letter-complaint sent to the Tanodbayan is merely conjectural.

Finally, petitioner avers that the move to evict GABI and award the spaces it occupied to another group was an executive policy decision within the discretion of NPDC. GABI's possession of the kiosks as concessionaire was by mere tolerance of NPDC and, thus, such possession may be withdrawn at any time, with or without cause.

On the other hand, private respondents aver that petitioner acted beyond the scope of his authority when he showed malice and bad faith in ordering GABI's ejectment from Rizal Park. Quoting from the decision of the Court of Appeals, private respondents argue that petitioner is liable for damages for performing acts "to injure an individual rather than to discharge a public duty."14

While private respondents recognize the authority of petitioner to terminate the agreement with GABI "if [the contract] is prejudicial to the interest of the NPDC,"15 they maintain that petitioner's personal interest, and not that of the NPDC, was the root cause of GABI's ejecment.

The doctrine of state immunity from suit applies to complaints filed against public officials for acts done in the performance of their duties. The rule is that the suit must be regarded as one against the state where satisfaction of the judgment against the public official concerned will require the state itself to perform a positive act, such as appropriation of the amount necessary to pay the damages awarded to the plaintiff.16

The rule does not apply where the public official is charged in his official capacity for acts that are unlawful and injurious to the rights of others.17 Public officials are not exempt, in their personal capacity, from liability arising from acts committed in bad faith.18

Neither does it apply where the public official is clearly being sued not in his official capacity but in his personal capacity, although the acts complained of may have been committed while he occupied a public position.

We are convinced that petitioner is being sued not in his capacity as NPDC chairman but in his personal capacity. The complaint filed by private respondents in the RTC merely identified petitioner as chairman of the NPDC, but did not categorically state that he is being sued in that

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capacity.19 Also, it is evident from paragraph 4 of said complaint that petitioner was sued allegedly for having personal motives in ordering the ejectment of GABI from Rizal Park.

4. Defendant AMADO J. LANSANG, JR., the Chairman of the National Parks Development Committee, acting under the spirit of revenge, ill-will, evil motive and personal resentment against plaintiff JOSE IGLESIAS, served on the plaintiff corporation a letter, dated February 23, 1988 terminating plaintiffs lease agreement with a demand for the plaintiff corporation to vacate its office premises. . .20 (Emphasis supplied.)

The parties do not dispute that it was petitioner who ordered the ejectment of GABI from their office and kiosk at Rizal Park. There is also no dispute that petitioner, as chairman of the NPDC which was the agency tasked to administer Rizal Park, had the authority to terminate the agreement with GABI21 and order the organization's ejectment. The question now is whether or not petitioner abused his authority in ordering the ejectment of private respondents.

We find, however, no evidence of such abuse of authority on record. As earlier stated, Rizal Park is beyond the commerce of man and, thus, could not be the subject of a lease contract. Admittedly, there was no written contract. That private respondents were allowed to occupy office and kiosk spaces in the park was only a matter of accommodation by the previous administrator. This being so, also admittedly, petitioner may validly discontinue the accommodation extended to private respondents, who may be ejected from the park when necessary. Private respondents cannot and does not claim a vested right to continue to occupy Rizal Park.

The Court of Appeals awarded private respondent Iglesias moral and exemplary damages and attorney's fees. However, we find no evidence on record to support Iglesias' claim that he suffered moral injury as a result of GABI's ejectment from Rizal Park. Absent any satisfactory proof upon which the Court may base the amount of damages suffered, the award of moral damages cannot be sustained.22

Neither can we sustain the award of exemplary damages, which may only be awarded in addition to moral, temperate, liquidated, or compensatory damages.23 We also disallow the award for attorney's fees, which can only be recovered per stipulation of the parties, which is absent in this case. There is no showing that any of the exceptions justifying the award of attorney's fees absent a stipulation is present in this case.24

WHEREFORE, the instant petition is GRANTED. The decision of the Court of Appeals in CA-G.R. CV No. 27244 is hereby SET ASIDE, and the DISMISSAL of the complaint for damages by the trial court for want of merit is AFFIRMED. No costs.

SO ORDERED.1âw phi1.nêt

20

G.R. No. 84607 March 19, 1993

REPUBLIC OF THE PHILIPPINES, GEN. RAMON MONTANO, GEN. ALFREDO LIM, GEN. ALEXANDER AGUIRRE, COL. EDGAR DULA TORRES, COL. CEZAR NAZARENO, MAJ. FILEMON GASMEN, PAT. NICANOR ABANDO, PFC SERAFIN CEBU, JR., GEN. BRIGIDO PAREDES, COL. ROGELIO MONFORTE, PFC ANTONIO LUCERO, PAT. JOSE MENDIOLA, PAT. NELSON TUASON, POLICE CORPORAL PANFILO ROGOS, POLICE LT. JUAN B. BELTRAN, PAT. NOEL MANAGBAO, MARINE THIRD CLASS TRAINEE (3CT) NOLITO NOGATO, 3CT ALEJANDRO B. NAGUIO, JR., EFREN ARCILLAS, 3CT AGERICO LUNA, 3CT BASILIO BORJA, 3CT MANOLITO LUSPO, 3CT CRISTITUTO GERVACIO, 3CT MANUEL DELA CRUZ, JR., MARINE (CDC) BN., (CIVIL DISTURBANCE CONTROL), MOBILE DISPERSAL TEAM (MDT), LT. ROMEO PAQUINTO, LT. LAONGLAANG GOCE, MAJ. DEMETRIO DE LA CRUZ, POLICE CAPTAIN RODOLFO NAVAL, JOHN DOE, RICHARD DOE, ROBERTO DOE AND OTHER DOES, petitioners,

vs. HON. EDILBERTO G. SANDOVAL, Regional Trial Court of Manila, Branch IX, ERLINDA C. CAYLAO, ANATALIA ANGELES PEREZ, MYRNA BAUTISTA, CIPRIANA EVANGELIO, ELMA GRAMPA, AMELIA GUTIERREZ, NEMESIO LAKINDANUM, PURITA YUMUL, MIGUEL ARABE, TERESITA ARJONA, RONALDO CAMPOMANES AND CARMENCITA ARDONI VDA. DE CAMPOMANES, ROGELIO DOMUNICO, in their capacity as heirs of the deceased (ROBERTO C. CAYLAO, SONNY "BOY" PEREZ, DIONESIO BAUTISTA, DANTE EVANGELIO, ADELFA ARIBE, DANILO ARJONA, VICENTE CAMPOMANES, RONILO DOMUNICO) respectively; and (names of sixty-two injured victims) EDDIE AGUINALDO, FELICISIMO ALBASIA, NAPOLEON BAUTISTA, DANILO CRUZ, EDDIE MENSOLA, ALBERT PITALBO, VICENTE ROSEL, RUBEN CARRIEDO, JOY CRUZ, HONORIO LABAMBA, JR., EFREN MACARAIG, SOLOMON MANALOTO, ROMEO DURAN, NILO TAGUBAT, JUN CARSELLAR, JOEY CLEMENTE, GERARDO COYOCA, LUISITO DACO, BENJAMIN DELA CRUZ, ARTHUR FONTANILLA, WILSON GARCIA, CARLOS SIRAY, JOSE PERRAS, TOMAS VALLOS, ARNOLD ENAJE, MARIANITA DIMAPILIS, FRANCISCO ANGELES, MARCELO ESGUERRA, JOSE FERRER, RODEL DE GUIA, ELVIS MENDOZA, VICTORIANO QUIJANO, JOEY ADIME, RESIENO ADUL, ALBERTO TARSONA, CARLOS ALCANTARA, MAMERTO ALIAS, EMELITO ALMONTE, BENILDA ALONUEVO, EMMA ABADILLO, REYNALDO CABALLES, JR., JAIME CALDETO, FABIAN CANTELEJO, RODRIGO CARABARA, ENRIQUE DELGADO, JUN DELOS SANTOS, MARIO DEMASACA, FRANCISCO GONZALES, ERNESTO GONZALES, RAMIRO JAMIL, JUAN LUCENA, PERLITO

SALAYSAY, JOHNNY SANTOS, MARCELO SANTOS, EMIL SAYAO, BAYANI UMALI, REMIGIO MAHALIN, BONG MANLULO, ARMANDO MATIENZO, CARLO MEDINA, LITO NOVENARIO, and ROSELLA ROBALE, respondents.

G.R. No. 84645 March 19, 1993

ERLINDA C. CAYLAO, ANATALIA ANGELES PEREZ, MYRNA BAUTISTA, CIPRIANA EVANGELIO, ELMA GRAMPA, AMELIA GUTIERREZ, NEMESIO LAKINDANUM, PURITA YUMUL, MIGUEL ARABE, TERESITA ARJONA, RONALDO CAMPOMANES AND CARMENCITA ARDONI VDA. DE CAMPOMANES, ROGELIO DOMUNICO, in their capacity as heirs of the deceased (ROBERTO C. CAYLAO, SONNY "BOY" PEREZ, DIONESIO GRAMPA, ANGELITO GUTIERREZ, BERNABE LAKINDANUM, ROBERTO YUMUL, LEOPOLDO ALONZO, ADELFA ARIBE, DANILO ARJONA, VICENTE CAMPOMANES, RONILO DOMUNICO) respectively; and (names of sixty-two injured victims) EDDIE AGUINALDO, FELICISIMO ALBASIA, NAPOLEON BAUTISTA, DANILO CRUZ, EDDIE MENSOLA, ALBERT PITALBO, VICENTE ROSEL, RUBEN CARRIEDO, JOY CRUZ, HONORIO LABAMBA, JR. EFREN MACARAIG, SOLOMON MANALOTO, ROMEO DURAN, NILO TAGUBAT, JUN CARSELLAR, JOEY CLEMENTE, GERARDO COYOCA, LUISITO DACO, BENJAMIN DELA CRUZ, ARTHUR FONTANILLA, WILSON GARCIA, CARLOS SIRAY, JOSE PERRAS TOMAS VALLOS, ARNOLD ENAJE, MARIANITA DIMAPILIS, FRANCISCO ANGELES, MARCELO ESGUERRA, JOSE FERRER, RODEL DE GUIA, ELVIS MENDOZA, VICTORINO QUIJANO, JOEY ADIME, RESIENO ADUL, ALBERTO TARSONA, CARLOS ALCANTARA, MAMERTO ALIAS, EMELITO ALMONTE, BENILDA ALONUEVO, EMMA ABADILLO, REYNALDO CABALLES, JR., JAIME CALDETO, FABIAN CANTELEJO, RODRIGO CARABARA, ENRIQUE DELGADO, JUN DELOS SANTOS, MARIO DEMASACA, FRANCISCO GONZALES, ERNESTO GONZALES, RAMIRO JAMIL, JUAN LUCENA, PERLITO SALAYSAY, JOHNNY SANTOS, MARCELO SANTOS, EMIL SAYAO, BAYANI UMALI, REMIGIO MAHALIN, BONG MANLULO, ARMANDO MATIENZO, CARLO MEDINA, LITO NOVENARIO, ROSELLA ROBALE, petitioners, vs. REPUBLIC OF THE PHILIPPINES, and HONORABLE EDILBERTO G. SANDOVAL, Regional Trial Court of Manila, Branch 9, respondents.

The Solicitor General for the Republic of the Philippines.

21

Structural Alternative Legal Assistance for Grassroots for petitioners in 84645 & private respondents in 84607.

CAMPOS, JR., J.:

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 "ErlindaCaylao, et al. vs. Republic of the Philippines, et al."

The pertinent portion of the questioned Order 2 dated May 31, 1988, reads as follows:

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

WHEREFORE, the case as against the defendant Republic of the Philippines is hereby dismissed. As against the rest of the defendants the motion to dismiss is denied. They are given a period of ten (10) days from

receipt of this order within which to file their respective pleadings.

On the other hand, the Order 3, dated August 8, 1988, denied the motions filed by both parties, for a reconsideration of the abovecited Order, respondent Judge finding no cogent reason to disturb the said order.

The massacre was the culmination of eight days and seven nights of encampment by members of the militant KilusangMagbubukidsaPilipinas (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

22

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: ". . . inalisnaminangbarikadabilangkahilinganngatingPresidente, perokinakailanganalisin din niyaangbarikadasaMendiolasapagkatbubutasin din naminiyon at dadanakangdugo . . . ." 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), BagongAlyansangMakabayan (BAYAN), League of Filipino Students (LFS) and KongresongPagkakaisangMaralitangLungsod (KPML).

At around 1:00 p.m., the marchers reached LiwasangBonifacio where they held a brief program. It was at this point that some of the marchers entered the eastern side of the Post Office Building, and removed the steel bars surrounding the garden. Thereafter, they joined the march to 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 Mendiolabridge. 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 Mendiolastreet, 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

23

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 Commander, Colonel CezarNazareno, about the

adequacy and readiness of his forces, it was agreed that Police General Alfredo S. Lim would designate Police Colonel Edgar DulaTorresand 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 Mendiolabridge 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. LaonglaanGocesped 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 LiwasangBonifacio 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 PambansaBlg. 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 PambansaBlg. 880.

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(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 PambansaBlg. 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 PambansaBlg. 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 — "bubutasinnaminangbarikada . . Dadanak and dugo . . . Angnagugutomnamagsasaka ay gagawangsarilingbutas. . .

(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 LiwasangBonifacio to disperse the remnants of the marchers.

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

From the results of the probe, the Commission recommended 9 the criminal prosecution of four unidentified, uniformed individuals, shown either on tape or in pictures, firing at the direction of the marchers. In connection with this, it was the Commission's recommendation that the National Bureau of Investigation (NBI) be tasked to undertake investigations regarding the identities of those who actually fired their guns that resulted in the death of or injury to the victims of the incident. The Commission also suggested that all the commissioned officers of both the Western Police District and the INP Field Force, who were armed during the incident, be prosecuted for violation of paragraph 4(g) of Section 13, Batas PambansaBlg. 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 PambansaBlg. 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) Police Gen. Edgar Dula Torres; (4) Police Maj. Demetrio dela Cruz; (5) Col. CezarNazareno; and (5) Maj. FelimonGasmin, 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,

25

(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 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

26

that the State has admitted any liability, much less can it be inferred that it has consented to the suit.

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

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

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

(1) When the Republic is sued by name;

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

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

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

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

While it is true that nothing is better settled than the general rule that a sovereign state and its political subdivisions cannot be sued in the courts except when it has given its consent, it cannot be invoked by both the military officers to release them from any liability, and by the heirs and

victims to demand indemnification from the government. The principle of state immunity from suit does not apply, as in this case, when the relief demanded by the suit requires no affirmative official action on the part of the State nor the affirmative discharge of any obligation which belongs to the State in its political capacity, even though the officers or agents who are made defendants claim to hold or act only by virtue of a title of the state and as its agents and servants. 22 This Court has made it quite clear that even a "high

position in the government does not confer a license to persecute or recklessly injure another." 23

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

acted beyond the scope of their authority, may be held liable for damages.

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

SO ORDERED.

27

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

E. MERRITT, plaintiff-appellant,

vs. GOVERNMENT OF THE PHILIPPINE ISLANDS, defendant-appellant.

Crossfield and O'Brien for plaintiff. Attorney-General Avanceña for defendant..

TRENT, J.:

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 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

28

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."

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.

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

29

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 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

30

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:

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

31

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.)

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.

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

UNITED STATES OF AMERICA, CAPT. JAMES E. GALLOWAY, WILLIAM I. COLLINS and ROBERT GOHIER,petitioners,

vs. HON. V. M. RUIZ, Presiding Judge of Branch XV, Court of First Instance of Rizal and ELIGIO DE GUZMAN & CO., INC., respondents.

Sycip, Salazar, Luna & Manalo & Feliciano Law for petitioners.

Albert, Vergara, Benares, Perias& Dominguez Law Office for respondents.

ABAD SANTOS, J.:

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

33

necessary consequence of the principles of independence and equality of States. However, the rules of International Law are not petrified; they are constantly developing and evolving. And because the activities of states have multiplied, it has been necessary to distinguish them-between sovereign and governmental acts (jure imperii) and private, commercial and proprietary acts (jure gestionis). The result is that State immunity now extends only to acts jure 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. ...

xxxxxxxxx

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.

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.

34

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 forjureimperii 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.

Teehankee, Aquino, Concepcion, Jr., Melencio-Herrera, Plana, * Escolin, Relova,

Gutierrez, Jr., De la Fuente, Cuevas and Alampay, JJ., concur.

Fernando, C.J., took no part.

Separate Opinions

MAKASIAR, J., dissenting:

The petition should be dismissed and the proceedings in Civil Case No. 779-M in the defunct CFI (now RTC) of Rizal be allowed to continue therein.

In the case of Lyons vs. the United States of America (104 Phil. 593), where the contract entered into between the plaintiff (Harry Lyons, Inc.) and the defendant (U.S. Government) involved stevedoring and labor services within the Subic Bay area, this Court further stated that inasmuch as ". . . the United States Government. through its agency at Subic Bay, entered into a contract with appellant for stevedoring and miscellaneous labor services within the Subic Bay area, a U.S. Navy Reservation, it is evident that it can bring an action before our courts for any contractual liability that that political entity may assume under the contract."

When the U.S. Government, through its agency at Subic Bay, confirmed the acceptance of a bid of a private company for the repair of wharves or shoreline in the Subic Bay area, it is deemed to have entered into a contract and thus waived the mantle of sovereign immunity from suit and descended to the level of the ordinary citizen. Its consent to be sued, therefore, is implied from its act of entering into a contract (Santos vs. Santos, 92 Phil. 281, 284).

Justice and fairness dictate that a foreign government that commits a breach of its contractual obligation in the case at bar by the unilateral cancellation of the award for the project by the United States government, through its agency at Subic Bay should not be allowed to take undue advantage of a party who may have legitimate claims against it by seeking refuge behind the shield of non-suability. A contrary view would render a Filipino citizen, as in the instant case, helpless and without redress in his own country for violation of his rights committed by the agents of the foreign government professing to act in its name.

35

Appropriate are the words of Justice Perfecto in his dissenting opinion in Syquia vs. Almeda Lopez, 84 Phil. 312, 325:

Although, generally, foreign governments are beyond the jurisdiction of domestic courts of justice, such rule is inapplicable to cases in which the foreign government enters into private contracts with the citizens of the court's jurisdiction. A contrary view would simply run against all principles of decency and violative of all tenets of morals.

Moral principles and principles of justice are as valid and applicable as well with regard to private individuals as with regard to governments either domestic or foreign. Once a foreign government enters into a private contract with the private citizens of another country, such foreign government cannot shield its non-performance or contravention of the terms of the contract under the cloak of non-jurisdiction. To place such foreign government beyond the jurisdiction of the domestic courts is to give approval to the execution of unilateral contracts, graphically described in Spanish as 'contratosleoninos', because one party gets the lion's share to the detriment of the other. To give validity to such contract is to sanctify bad faith, deceit, fraud. We prefer to adhere to the thesis that all parties in a private contract, including governments and the most powerful of them, are amenable to law, and that such contracts are enforceable through the help of the courts of justice with jurisdiction to take cognizance of any violation of such contracts if the same had been entered into only by private individuals.

Constant resort by a foreign state or its agents to the doctrine of State immunity in this jurisdiction impinges unduly upon our sovereignty and dignity as a nation. Its application will particularly discourage Filipino or domestic contractors from transacting business and entering into contracts with United States authorities or facilities in the Philippines whether naval, air or ground forces-because the difficulty, if not impossibility, of enforcing a validly executed contract and of seeking judicial remedy in our own courts for breaches of contractual obligation committed by agents of the United States government, always, looms large, thereby hampering the growth of Filipino enterprises and creating a virtual monopoly in our own country by United States contractors of contracts for services or supplies with the various U.S. offices and agencies operating in the Philippines.

The sanctity of upholding agreements freely entered into by the parties cannot be over emphasized. Whether the parties are nations or private individuals, it is to be reasonably assumed and expected that the undertakings in the contract will be complied with in good faith.

One glaring fact of modern day civilization is that a big and powerful nation, like the United States of America, can always overwhelm small and weak nations. The declaration in the United Nations Charter that its member states are equal and sovereign, becomes hollow and meaningless because big nations wielding economic and military superiority impose upon and dictate to small nations, subverting their sovereignty and dignity as nations. Thus, more often than not, when U.S. interest clashes with the interest of small nations, the American governmental agencies or its citizens invoke principles of international law for their own benefit.

In the case at bar, the efficacy of the contract between the U.S. Naval authorities at Subic Bay on one hand, and herein private respondent on the other, was honored more in the breach than in the compliance The opinion of the majority will certainly open the floodgates of more violations of contractual obligations. American authorities or any foreign government in the Philippines for that matter, dealing with the citizens of this country, can conveniently seek protective cover under the majority opinion. The result is disastrous to the Philippines.

This opinion of the majority manifests a neo-colonial mentality. It fosters economic imperialism and foreign political ascendancy in our Republic.

The doctrine of government immunity from suit cannot and should not serve as an instrument for perpetrating an injustice on a citizen (Amigable vs. Cuenca, L-26400, February 29, 1972, 43 SCRA 360; Ministerio vs. Court of First Instance, L-31635, August 31, 1971, 40 SCRA 464).

Under the doctrine of implied waiver of its non-suability, the United States government, through its naval authorities at Subic Bay, should be held amenable to lawsuits in our country like any other juristic person.

The invocation by the petitioner United States of America is not in accord with paragraph 3 of Article III of the original RP-US Military Bases Agreement of March 14, 1947, which states that "in the exercise of the above-mentioned rights, powers and authority, the United States agrees that the powers granted to it will not be used unreasonably. . ." (Emphasis supplied).

36

Nor is such posture of the petitioners herein in harmony with the amendment dated May 27, 1968 to the aforesaid RP-US Military Bases Agreement, which recognizes "the need to promote and maintain sound employment practices which will assure equality of treatment of all employees ... and continuing favorable employer-employee relations ..." and "(B)elieving that an agreement will be mutually beneficial and will strengthen the democratic institutions cherished by both Governments, ... the United States Government agrees to accord preferential employment of Filipino citizens in the Bases, thus (1) the U.S. Forces in the Philippines shall fill the needs for civilian employment by employing Filipino citizens, etc." (Par. 1, Art. I of the Amendment of May 27, 1968).

Neither does the invocation by petitioners of state immunity from suit express fidelity to paragraph 1 of Article IV of the aforesaid amendment of May 2 7, 1968 which directs that " contractors and concessionaires performing work for the U.S. Armed Forces shall be required by their contract or concession agreements to comply with all applicable Philippine labor laws and regulations, " even though paragraph 2 thereof affirms that "nothing in this Agreement shall imply any waiver by either of the two Governments of such immunity under international law."

Reliance by petitioners on the non-suability of the United States Government before the local courts, actually clashes with No. III on respect for Philippine law of the Memorandum of Agreement signed on January 7, 1979, also amending RP-US Military Bases Agreement, which stresses that "it is the duty of members of the United States Forces, the civilian component and their dependents, to respect the laws of the Republic of the Philippines and to abstain from any activity inconsistent with the spirit of the Military Bases Agreement and, in particular, from any political activity in the Philippines. The United States shag take all measures within its authority to insure that they adhere to them (Emphasis supplied).

The foregoing duty imposed by the amendment to the Agreement is further emphasized by No. IV on the economic and social improvement of areas surrounding the bases, which directs that "moreover, the United States Forces shall procure goods and services in the Philippines to the maximum extent feasible" (Emphasis supplied).

Under No. VI on labor and taxation of the said amendment of January 6, 1979 in connection with the discussions on possible revisions or alterations of the Agreement of May 27, 1968, "the discussions shall be conducted on the basis of the principles of equality of treatment, the right to organize, and

bargain collectively, and respect for the sovereignty of the Republic of the Philippines" (Emphasis supplied)

The majority opinion seems to mock the provision of paragraph 1 of the joint statement of President Marcos and Vice-President Mondale of the United States dated May 4, 1978 that "the United States re-affirms that Philippine sovereignty extends over the bases and that Its base shall be under the command of a Philippine Base Commander, " which is supposed to underscore the joint Communique of President Marcos and U.S. President Ford of December 7, 1975, under which "they affirm that sovereign equality, territorial integrity and political independence of all States are fundamental principles which both countries scrupulously respect; and that "they confirm that mutual respect for the dignity of each nation shall characterize their friendship as well as the alliance between their two countries. "

The majority opinion negates the statement on the delineation of the powers, duties and responsibilities of both the Philippine and American Base Commanders that "in the performance of their duties, the Philippine Base Commander and the American Base Commander shall be guided by full respect for Philippine sovereignty on the one hand and the assurance of unhampered U.S. military operations on the other hand and that "they shall promote cooperation understanding and harmonious relations within the Base and with the general public in the proximate vicinity thereof" (par. 2 & par. 3 of the Annex covered by the exchange of notes, January 7, 1979, between Ambassador Richard W. Murphy and Minister of Foreign Affairs Carlos P. Romulo, Emphasis supplied).

Separate Opinions

MAKASIAR, J., dissenting:

The petition should be dismissed and the proceedings in Civil Case No. 779-M in the defunct CFI (now RTC) of Rizal be allowed to continue therein.

In the case of Lyons vs. the United States of America (104 Phil. 593), where the contract entered into between the plaintiff (Harry Lyons, Inc.) and the defendant (U.S. Government) involved stevedoring and labor services within the Subic Bay area, this Court further stated that inasmuch as ". . . the

37

United States Government. through its agency at Subic Bay, entered into a contract with appellant for stevedoring and miscellaneous labor services within the Subic Bay area, a U.S. Navy Reservation, it is evident that it can bring an action before our courts for any contractual liability that that political entity may assume under the contract."

When the U.S. Government, through its agency at Subic Bay, confirmed the acceptance of a bid of a private company for the repair of wharves or shoreline in the Subic Bay area, it is deemed to have entered into a contract and thus waived the mantle of sovereign immunity from suit and descended to the level of the ordinary citizen. Its consent to be sued, therefore, is implied from its act of entering into a contract (Santos vs. Santos, 92 Phil. 281, 284).

Justice and fairness dictate that a foreign government that commits a breach of its contractual obligation in the case at bar by the unilateral cancellation of the award for the project by the United States government, through its agency at Subic Bay should not be allowed to take undue advantage of a party who may have legitimate claims against it by seeking refuge behind the shield of non-suability. A contrary view would render a Filipino citizen, as in the instant case, helpless and without redress in his own country for violation of his rights committed by the agents of the foreign government professing to act in its name.

Appropriate are the words of Justice Perfecto in his dissenting opinion in Syquia vs. Almeda Lopez, 84 Phil. 312, 325:

Although, generally, foreign governments are beyond the jurisdiction of domestic courts of justice, such rule is inapplicable to cases in which the foreign government enters into private contracts with the citizens of the court's jurisdiction. A contrary view would simply run against all principles of decency and violative of all tenets of morals.

Moral principles and principles of justice are as valid and applicable as well with regard to private individuals as with regard to governments either domestic or foreign. Once a foreign government enters into a private contract with the private citizens of another country, such foreign government cannot shield its non-performance or contravention of the terms of the contract under the cloak of non-jurisdiction. To place such foreign government beyond the jurisdiction of the domestic courts is to give

approval to the execution of unilateral contracts, graphically described in Spanish as 'contratosleoninos', because one party gets the lion's share to the detriment of the other. To give validity to such contract is to sanctify bad faith, deceit, fraud. We prefer to adhere to the thesis that all parties in a private contract, including governments and the most powerful of them, are amenable to law, and that such contracts are enforceable through the help of the courts of justice with jurisdiction to take cognizance of any violation of such contracts if the same had been entered into only by private individuals.

Constant resort by a foreign state or its agents to the doctrine of State immunity in this jurisdiction impinges unduly upon our sovereignty and dignity as a nation. Its application will particularly discourage Filipino or domestic contractors from transacting business and entering into contracts with United States authorities or facilities in the Philippines whether naval, air or ground forces-because the difficulty, if not impossibility, of enforcing a validly executed contract and of seeking judicial remedy in our own courts for breaches of contractual obligation committed by agents of the United States government, always, looms large, thereby hampering the growth of Filipino enterprises and creating a virtual monopoly in our own country by United States contractors of contracts for services or supplies with the various U.S. offices and agencies operating in the Philippines.

The sanctity of upholding agreements freely entered into by the parties cannot be over emphasized. Whether the parties are nations or private individuals, it is to be reasonably assumed and expected that the undertakings in the contract will be complied with in good faith.

One glaring fact of modern day civilization is that a big and powerful nation, like the United States of America, can always overwhelm small and weak nations. The declaration in the United Nations Charter that its member states are equal and sovereign, becomes hollow and meaningless because big nations wielding economic and military superiority impose upon and dictate to small nations, subverting their sovereignty and dignity as nations. Thus, more often than not, when U.S. interest clashes with the interest of small nations, the American governmental agencies or its citizens invoke principles of international law for their own benefit.

In the case at bar, the efficacy of the contract between the U.S. Naval authorities at Subic Bay on one hand, and herein private respondent on the other, was honored more in the breach than in the compliance The opinion

38

of the majority will certainly open the floodgates of more violations of contractual obligations. American authorities or any foreign government in the Philippines for that matter, dealing with the citizens of this country, can conveniently seek protective cover under the majority opinion. The result is disastrous to the Philippines.

This opinion of the majority manifests a neo-colonial mentality. It fosters economic imperialism and foreign political ascendancy in our Republic.

The doctrine of government immunity from suit cannot and should not serve as an instrument for perpetrating an injustice on a citizen (Amigable vs. Cuenca, L-26400, February 29, 1972, 43 SCRA 360; Ministerio vs. Court of First Instance, L-31635, August 31, 1971, 40 SCRA 464).

Under the doctrine of implied waiver of its non-suability, the United States government, through its naval authorities at Subic Bay, should be held amenable to lawsuits in our country like any other juristic person.

The invocation by the petitioner United States of America is not in accord with paragraph 3 of Article III of the original RP-US Military Bases Agreement of March 14, 1947, which states that "in the exercise of the above-mentioned rights, powers and authority, the United States agrees that the powers granted to it will not be used unreasonably. . ." (Emphasis supplied).

Nor is such posture of the petitioners herein in harmony with the amendment dated May 27, 1968 to the aforesaid RP-US Military Bases Agreement, which recognizes "the need to promote and maintain sound employment practices which will assure equality of treatment of all employees ... and continuing favorable employer-employee relations ..." and "(B)elieving that an agreement will be mutually beneficial and will strengthen the democratic institutions cherished by both Governments, ... the United States Government agrees to accord preferential employment of Filipino citizens in the Bases, thus (1) the U.S. Forces in the Philippines shall fill the needs for civilian employment by employing Filipino citizens, etc." (Par. 1, Art. I of the Amendment of May 27, 1968).

Neither does the invocation by petitioners of state immunity from suit express fidelity to paragraph 1 of Article IV of the aforesaid amendment of May 2 7, 1968 which directs that " contractors and concessionaires performing work for the U.S. Armed Forces shall be required by their contract or concession agreements to comply with all applicable Philippine labor laws and regulations, " even though paragraph 2 thereof affirms that

"nothing in this Agreement shall imply any waiver by either of the two Governments of such immunity under international law."

Reliance by petitioners on the non-suability of the United States Government before the local courts, actually clashes with No. III on respect for Philippine law of the Memorandum of Agreement signed on January 7, 1979, also amending RP-US Military Bases Agreement, which stresses that "it is the duty of members of the United States Forces, the civilian component and their dependents, to respect the laws of the Republic of the Philippines and to abstain from any activity inconsistent with the spirit of the Military Bases Agreement and, in particular, from any political activity in the Philippines. The United States shag take all measures within its authority to insure that they adhere to them (Emphasis supplied).

The foregoing duty imposed by the amendment to the Agreement is further emphasized by No. IV on the economic and social improvement of areas surrounding the bases, which directs that "moreover, the United States Forces shall procure goods and services in the Philippines to the maximum extent feasible" (Emphasis supplied).

Under No. VI on labor and taxation of the said amendment of January 6, 1979 in connection with the discussions on possible revisions or alterations of the Agreement of May 27, 1968, "the discussions shall be conducted on the basis of the principles of equality of treatment, the right to organize, and bargain collectively, and respect for the sovereignty of the Republic of the Philippines" (Emphasis supplied)

The majority opinion seems to mock the provision of paragraph 1 of the joint statement of President Marcos and Vice-President Mondale of the United States dated May 4, 1978 that "the United States re-affirms that Philippine sovereignty extends over the bases and that Its base shall be under the command of a Philippine Base Commander, " which is supposed to underscore the joint Communique of President Marcos and U.S. President Ford of December 7, 1975, under which "they affirm that sovereign equality, territorial integrity and political independence of all States are fundamental principles which both countries scrupulously respect; and that "they confirm that mutual respect for the dignity of each nation shall characterize their friendship as well as the alliance between their two countries. "

The majority opinion negates the statement on the delineation of the powers, duties and responsibilities of both the Philippine and American Base Commanders that "in the performance of their duties, the Philippine Base Commander and the American Base Commander shall be guided by full

39

respect for Philippine sovereignty on the one hand and the assurance of unhampered U.S. military operations on the other hand and that "they shall promote cooperation understanding and harmonious relations within the Base and with the general public in the proximate vicinity thereof" (par. 2 & par. 3 of the Annex covered by the exchange of notes, January 7, 1979, between Ambassador Richard W. Murphy and Minister of Foreign Affairs Carlos P. Romulo, Emphasis supplied).

40

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.

MAKALINTAL, J.:p

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." *

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: .

41

... . 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 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.